What is with these Publishers?

[kjk]

Originally Posted by Dumas

I suggest that for your analogy to work along the lines of the CD, readers would have to purchase the book they want along with several others they don't want at an increased cost (after all, they're getting more pages, hence greater value) even though they only wanted one particular book.

I should have been more clear-I meant that a novel was less like one song and more like a collection of songs, and shouldn't be priced similarly to one song.

I actually don't necessarily think iTunes is necessarily a "fair model", but the OP used it as what he thought was a good example.

And sorry, but I'm not going along with the hypothetical one song = one novel, but if it works for your argument, go for it.

[Dark123]

Originally Posted by kjk

I should have been more clear-I meant that a novel was less like one song and more like a collection of songs, and shouldn't be priced similarly to one song.

I actually don't necessarily think iTunes is necessarily a "fair model", but the OP used it as what he thought was a good example.

And sorry, but I'm not going along with the hypothetical one song = one novel, but if it works for your argument, go for it.

In the UK, iTunes charge average £7.99 for an album (Source)
What I am saying is that because distributing it in digital costs them far less, they should pass on the savings to the consumer. If eBooks become £5 for new releases and when the paperback comes out reduce the eBook price to £2.
The prices of eBook Readers have come down now as well. Waterstones sells one (which I got) for £130 and WHSmith sells a Sony one for £140. I think more people will start to buy eBook Readers.
They should jump ahead and start to offer eBooks at a better price before more people buy eBook Readers. This way there will be a place where they can buy eBooks easier and is not expensive.
They should not do what the RIAA did with Napster by closing it. When it closed Kazaa, BearShare, dozens of others opened up and it was too late. This is not 5+ years ago were everyone had 56kbit modems, everyone in the UK has 2mbit connection average, if they don't provide a cheap and easy way of buying eBooks people are just going to pirate them. BitTorrent has made it so easy for the average user to pirate anything that they will lose out in the end. Also back then there was none of these free upload sites like RapidShare, MegaUpload etc and now there is they've made it even worse, because they are so easy to use and they don't need extra program to download.
Sorry about the working with dollars. I was thinking in pounds and didn't convert it. This is why I wrote in pounds now.

[kjk]

Originally Posted by eBookNewbie123

In the UK, iTunes charge average £7.99 for an album (Source)
What I am saying is that because distributing it in digital costs them far less, they should pass on the savings to the consumer. If eBooks become £5 for new releases and when the paperback comes out reduce the eBook price to £2.
The prices of eBook Readers have come down now as well. Waterstones sells one (which I got) for £130 and WHSmith sells a Sony one for £140. I think more people will start to buy eBook Readers.
They should jump ahead and start to offer eBooks at a better price before more people buy eBook Readers. This way there will be a place where they can buy eBooks easier and is not expensive.
They should not do what the RIAA did with Napster by closing it. When it closed Kazaa, BearShare, dozens of others opened up and it was too late. This is not 5+ years ago were everyone had 56kbit modems, everyone in the UK has 2mbit connection average, if they don't provide a cheap and easy way of buying eBooks people are just going to pirate them. BitTorrent has made it so easy for the average user to pirate anything that they will lose out in the end. Also back then there was none of these free upload sites like RapidShare, MegaUpload etc and now there is they've made it even worse, because they are so easy to use and they don't need extra program to download.
Sorry about the working with dollars. I was thinking in pounds and didn't convert it. This is why I wrote in pounds now.

I definitely agree with you (and others) that the current model won't work in the digital age...I guess for me I always look at the proposed price of the book(i.e. £2) and start backing out the author's percentage...I understand its around 15% for new authors, probably a lot more for established ones? The pie just seems really sliced thin, unless the author gets around 50% or so.

[Krystian Galaj]

Originally Posted by Dumas

I think the reason they wouldn't release it for a price well in excess of the HB is because they would have a very difficult time making an argument for value.

Why would they have to make an argument for value? No one has to buy the book, if it's too expensive for them. They can just say "this is our price", why not? They can't do anything about piracy anyway, and not releasing the ebook at all doesn't make it less likely to appear on the darknet, if it's popular.

Originally Posted by Dumas

The publishers' difficulty is maintaining the perception of value in a state of abundance. Instead of working and thinking in the state of abundance and what it can do for them, they are doing everything they can to create scarcity. People are generally resistant to change, and publishers are people too.

But by not releasing the ebook when they can do so, they create absence - and don't get a single dollar out of it.

[Dark123]

Originally Posted by kjk

I definitely agree with you (and others) that the current model won't work in the digital age...I guess for me I always look at the proposed price of the book(i.e. £2) and start backing out the author's percentage...I understand its around 15% for new authors, probably a lot more for established ones? The pie just seems really sliced thin, unless the author gets around 50% or so.

From what I understand is the reason they say 15% is because of the printing, materials, transportation etc. This arguments becomes null because digital distribution is a lot cheaper so they should be able to give the author a greater percentage.

[Dumas]

Originally Posted by Krystian Galaj

Why would they have to make an argument for value? No one has to buy the book, if it's too expensive for them. They can just say "this is our price", why not?

Technically, in economic theory, value and price are not interchangeable and refer to two different things. Among other things, the subjective theory of value holds that to possess value an object must be both useful and scarce. Since digital forms by nature are not scarce, the value proposition becomes even more difficult to make as the price applied to abundant goods becomes increasingly greater than those of comparable scarce goods.

Originally Posted by Krystian Galaj

They can't do anything about piracy anyway, and not releasing the ebook at all doesn't make it less likely to appear on the darknet, if it's popular.

But by not releasing the ebook when they can do so, they create absence - and don't get a single dollar out of it.

All true and this is where the publisher scarcity mindset plays to their detriment. It seems they would rather make nothing from nothing (a negative or at best revenue neutral) instead of something from nothing (a positive).

[Kali Yuga]

Originally Posted by eBookNewbie123

If you go to http://www.squarespace.com/pricing/ you will see that their highest plan is $50 a month and they give you 5GB storage.....

You can't seriously believe that an organization like Amazon will work with just a shared hosting setup?

They need storage that can be increased on the fly, without any disruption in services (i.e. high availability, clustering etcetera). They need databases that tie into Whispernet (which they developed from scratch), their web front-end, purchasing, and storage. All of that needs backup, IT staff, developers, bandwidth, cell phone services, electricity, security, new and replacement hardware, not to mention the data center it's all put in. Not much of this is "redundant," as Amazon needs to expand their capabilities for the new functions and new customers. And, of course, there's the usual costs of doing business with a few million customers: publisher's cut, insurance, taxes, legal, customer service, marketing, PR, management, debt management, and profit.

And let's not forget, due to the economies of scale and aspects like print-on-demand and deals with distributors, it doesn't cost Amazon much to store and sell paper books. One of the reasons they were killing everyone else in the business is because they, in particular, were hyper-efficient and did not have to maintain thousands of physical stores. Even shipping costs them almost nothing, again due to scale and charging customers for S&H.

Originally Posted by eBookNewbie123

Wouldn't they actually save money going digital early too?

Around 95% of book sales are in paper form. Until that ratio is reversed, they need to make a paper format anyway, unless it's a specialty item. Ergo, no money saved.

Originally Posted by eBookNewbie123

If they decided to sell each eBook at a price of $1 they still make $399,950 profit.

Your math is way off. If the profit margins were that big, Amazon would be outperforming every company on the Fortune 500.

This reminds me of people who go somewhere like Thailand, see that a sarong that costs $20 back in the US sells for $1 over there, and gets dollar signs in their eyes. They fail to figure in all the other costs associated in either setting up a shop, or building a reliable supply chain for a wholesale business.

Ebooks cost slightly less to distribute than paper books; and in most cases, ebooks are priced less than paper. However, since it does not cost 90% less to produce and distribute an ebook than it does a paper book, it makes no sense to expect the retail price to be 90% lower.

While I won't say that the pricing situation is perfectly resolved -- it never is, since ultimately there is no objective number by which prices can ever be set for any product -- the problem isn't that they are charging too much; it's that your expectations are out of line with what is economically feasible.

[Dark123]

Originally Posted by Kali Yuga

You can't seriously believe that an organization like Amazon will work with just a shared hosting setup?

They need storage that can be increased on the fly, without any disruption in services (i.e. high availability, clustering etcetera). They need databases that tie into Whispernet (which they developed from scratch), their web front-end, purchasing, and storage. All of that needs backup, IT staff, developers, bandwidth, cell phone services, electricity, security, new and replacement hardware, not to mention the data center it's all put in. Not much of this is "redundant," as Amazon needs to expand their capabilities for the new functions and new customers. And, of course, there's the usual costs of doing business with a few million customers: publisher's cut, insurance, taxes, legal, customer service, marketing, PR, management, debt management, and profit.

And let's not forget, due to the economies of scale and aspects like print-on-demand and deals with distributors, it doesn't cost Amazon much to store and sell paper books. One of the reasons they were killing everyone else in the business is because they, in particular, were hyper-efficient and did not have to maintain thousands of physical stores. Even shipping costs them almost nothing, again due to scale and charging customers for S&H.



Around 95% of book sales are in paper form. Until that ratio is reversed, they need to make a paper format anyway, unless it's a specialty item. Ergo, no money saved.



Your math is way off. If the profit margins were that big, Amazon would be outperforming every company on the Fortune 500.

This reminds me of people who go somewhere like Thailand, see that a sarong that costs $20 back in the US sells for $1 over there, and gets dollar signs in their eyes. They fail to figure in all the other costs associated in either setting up a shop, or building a reliable supply chain for a wholesale business.

Ebooks cost slightly less to distribute than paper books; and in most cases, ebooks are priced less than paper. However, since it does not cost 90% less to produce and distribute an ebook than it does a paper book, it makes no sense to expect the retail price to be 90% lower.

While I won't say that the pricing situation is perfectly resolved -- it never is, since ultimately there is no objective number by which prices can ever be set for any product -- the problem isn't that they are charging too much; it's that your expectations are out of line with what is economically feasible.

This why I am saying sell it through Amazon. They already have everything in place. The datacenter, IT Staff the whole lot. Their datacenter was underused to the point they created Amazon Could Computing. Selling it through Amazon will cost them much less than printing, binding etc.

[DawnFalcon]

Originally Posted by Kali Yuga

Ebooks cost slightly less to distribute than paper books; and in most cases, ebooks are priced less than paper. However, since it does not cost 90% less to produce and distribute an ebook than it does a paper book, it makes no sense to expect the retail price to be 90% lower.

Equally, it makes no sense when it is ~30% cheaper for, as is common, for the retail price to be ~25% higher.

[NightGeometry]

Originally Posted by eBookNewbie123

This why I am saying sell it through Amazon. They already have everything in place. The datacenter, IT Staff the whole lot. Their datacenter was underused to the point they created Amazon Could Computing. Selling it through Amazon will cost them much less than printing, binding etc.

Was it on here that I read someone talking about Amazon being a cloud computing company, the book store is 'just' a reference / proof of concept implementation. (That's obviously not currently true, but it actually may be at some point).

Anyway - just because Amazon have those things, doesn't mean it doesn't cost anything. If ebooks start to sell for $2, then pbook sales go down, then Amazon's costs need to come completely out of ebooks, and the price rockets.

Personally I understand that a books cost is not just the unit cost, and that that is a potential small part of cost. However, surely the balance is sell 10 copies @ £20 or 1000 @ £1. The latter is obviously the better value proposition for ebooks, but likely not for pbooks. Then again someone was quoted recently pointing out that most readers have a shortage of time over money. If the price of books were 1/10 what they are now, I wouldn't suddenly read 10 as many books. I suspect a lot of people here are also in that position, we are by our nature voracious readers. However if the average person only reads a few books a year (just the years best sellers), then they are unlikely to read more without some prompting, and they seem extremely unlikely to buy an ereader given that value proposition.

I'd guess the push for news papers and magazines on devices is one way of prompting people to buy more books. Get people to read their paper on an ereader, and suddenly they could also use the same device for books...

(I go off topic so often, I don't even remember what the original discussion was about.)

[Kali Yuga]

Originally Posted by eBookNewbie123

This why I am saying sell it through Amazon. They already have everything in place. The datacenter, IT Staff the whole lot. Their datacenter was underused to the point they created Amazon Could Computing. Selling it through Amazon will cost them much less than printing, binding etc.

Please re-read my post. The "they" in the 2nd paragraph refers specifically to Amazon.

It does cost Amazon less to do this than a publisher, since they can scale up some existing infrastructure. But it still increases their costs, as they had to integrate this to a running system that needs extremely high availability, have developer costs, etcetera.

Also, the publisher charges Amazon a wholesale price for every book Amazon sells. So, let's say the publisher charges Amazon $10 for the ebook or the hardcover. It might cost Amazon $0.50 to deliver the ebook, and $1 to deliver the paper copy -- especially since Amazon charges more than it costs them to ship the paper book(s). Hardly a huge cost savings for Amazon.

I don't have the exact figures -- no one does, really, and it would be extremely difficult to calculate without full access to Amazon's transaction data, a skilled database programmer and a skilled accountant (and would vary greatly based on actual sales figures). But I'd be surprised if it costs Amazon all that much more to manage paper than it does to handle the ebooks, especially when you add in developer costs and customer service.

And as mentioned previously, it costs around 15% less for the publisher to make the ebook than it does the paper book, especially for larger publishing houses. So even if we think Amazon can save another 5%, we are not looking at anywhere near a 75-90% reduction in the price charged to the consumer.

That is, of course, assuming there is any reason to link the ebook price to actual costs; and there isn't. The price can be (economically and ethically) any amount above costs that the market will bear.

And much in the same way that if all you want to pay for a DVD is $5, don't be surprised if that cost preference freezes you out of a big part of what's available.

[kjk]

Originally Posted by Kali Yuga

That is, of course, assuming there is any reason to link the ebook price to actual costs; and there isn't. The price can be (economically and ethically) any amount above costs that the market will bear.

This to me, is really the point. Everyone gets that like all digital media, conceptually, the 2nd and subsequent "copies" of an eBook are practically free. The real question is how much the "first" copy costs

[HansTWN]

Originally Posted by kjk

This to me, is really the point. Everyone gets that like all digital media, conceptually, the 2nd and subsequent "copies" of an eBook are practically free. The real question is how much the "first" copy costs

Isn't it the same for a paperbook? Once you bought the press, did the layout, got the machine up and running then you only have the almost negligible cost (for large runs) of paper and print. Electricity you need to delivery ebooks, too. The point is all costs included in that "first book" (including all overheads, editing, layout, salaries and wages, taxes, etc) have to be recovered. And they will be spread out over the number of copies made, both e and p. And corporations exist to make a profit (when did that become a dirty word) just as people got to work to make a profit (salary or wage). Prices will come down when companies can be sure that they will sell more units that way and increase overall income. Right now we would get a lot of companies going belly up and a lot of unemployment if the prices for ebooks were as low as some hope them to be.

When someone is getting paid a wage, why don't we say "hey, he only needs 500 a month to survive, why should he be paid 2000? That will make our ebooks more expensive!". You have to pay people a market wage and books, e or p, have to sell at a market price. If we the buyers decide that is too expensive and stay away, that is when things will be changing. Not buy analyzing publishers' and booksellers' cost structures. They want to mark up 1% or 500%, it is a free world! (unless you live in some European country with government controlled fixed prices on books -- which are invariably much, much higher).

[kjk]

Originally Posted by HansTWN

Isn't it the same for a paperbook? Once you bought the press, did the layout, got the machine up and running then you only have the almost negligible cost of paper and print. Electricity you need to delivery ebooks, too. The point is all costs included in that "first book" (including all overheads, editing, layout, salaries and wages, taxes, etc) have to be recovered. And they will be spread out over the number of copies made, both e and p. And corporations exist to make a profit (when did that become a dirty word) just as people got to work to make a profit (salary or wage). Prices will come down when companies can be sure that they will sell more units that way and increase overall income. Right now we would get a lot of companies going belly up and a lot of unemployment if the prices for ebooks were as low as some hope them to be.

No, my point is you can debate the physical costs of a product all you like, and come up with any number of calculations for it, (i.e. the 2nd book is free) but does that really give you what the book, physical or otherwise, should really cost? The cost of the "first book" isn't a set formula, nor should it be.

Saying a book should cost x or y because this is what paper costs is just as deceptive as saying this is what digital storage/file transfer costs, so that's how we should set book prices.

Isn't the market supposed to set prices?

[HansTWN]

Originally Posted by kjk

No, my point is you can debate the physical costs of a product all you like, and come up with any number of calculations for it, (i.e. the 2nd book is free) but does that really give you what the book, physical or otherwise, should really cost? The cost of the "first book" isn't a set formula, nor should it be.

Saying a book should cost x or y because this is what paper costs is just as deceptive as saying this is what digital storage/file transfer costs, so that's how we should set book prices.

Isn't the market supposed to set prices?

The market is setting prices -- people are either buying or they refuse to buy. That is the only way. And if the price at which people are willing to buy is below cost and some profit then nobody wants to sell and the product will not be available.

I just wanted to point out that is makes no sense looking at the cost of producing an additional unit only as a pricing guideline, unless it is a physical product that is expensive to produce, like a car.