Amazon says 'will have to capitulate and accept Macmillan's terms'

[Lemurion]

Originally Posted by zerospinboson

If there is a way to get a representative sample of 'paper' buyers to read the things on e-readers, I don't see why you couldn't use ebook 'sales' (or ratings) as an indicating for whether or not to do a paper run. After seeing how indicative ebook sales/ratings are for paper sales, they can then decide whether or not to invest additional money in the book or not.. It's not really rational to become more risk-acceptant if expected value is lower than the expected cost. (Yes, they will have a different EV calculated when they decide to do so anyway, but that's only because they don't trust the statistics/sample then.)
Of course, this all requires flexible thinking, and some risk-taking, which may be unrealistic for those status quo thinkers, but that's what being a company in a free-market society is all about.
Still, I don't really see what they have to lose. If they're losing money on most of the titles anyway, the possibility of losing some money on a small-ish pilot project shouldn't matter too much.
Explore/exploit. Landscapes shift. ;-)

Trying new things is a good idea, but this one is quite likely to cost the publishers their shirt.

They're still incurring most of the same costs they are currently under your model as they do under the current model, but now they're starting off by selling to a small percentage of the market (and if I follow you for a lower price) and if they do manage to sell these ebooks to paper book readers they'll sell to the "must have it now" crowd who would normally pay the higher prices.

They would lose a lot more money than they do currently.

You would likely not see that many bestsellers either - because part of the bestseller phenomenon comes from huge displays of perhaps hundreds of books at the front of the bookstore - and there's no way to replicate that with ebooks.

Profit margins are too slim as it is, they just can't afford it without serious cost-cutting measures and the people who would suffer most are writers, artists, and editors; because it's their pay or jobs that would be cut.

[zerospinboson]

Originally Posted by Lemurion

Trying new things is a good idea, but this one is quite likely to cost the publishers their shirt.

They're still incurring most of the same costs they are currently under your model as they do under the current model, but now they're starting off by selling to a small percentage of the market (and if I follow you for a lower price) and if they do manage to sell these ebooks to paper book readers they'll sell to the "must have it now" crowd who would normally pay the higher prices..

Please define most of the same costs.. What does this mean? $50k per book by a new author? 100k? I would think that if they could avoid 40% of the possible losses on any given new author, this will result in a 66% larger new-author market. But then, I'm a cynic.
Secondly, I'm not suggesting they try it for "recognized" golden geese, I'm wondering whether it decrease the risk (that is, projected losses) per individual new author that they give a chance. (Who won't cause the "bestseller feeling/selffulfillingprophecy" (whatever that is in actuality apart from a herd phenomenon) anyway.)

[Lemurion]

Originally Posted by zerospinboson

Please define most of the same costs.. What does this mean? $50k per book by a new author? 100k? I would think that if they could avoid 40% of the possible losses on any given new author, this will result in a 66% larger new-author market. But then, I'm a cynic.
Secondly, I'm not suggesting they try it for "recognized" golden geese, I'm wondering whether it decrease the risk (that is, projected losses) per individual new author that they give a chance. (Who won't cause the "bestseller feeling/selffulfillingprophecy" (whatever that is in actuality apart from a herd phenomenon) anyway.)

I'll be glad to define those costs:

1) All acquisition costs and editorial costs:
The author's advance (including agent's commission), the cost of both editing and proofing the manuscript.
2) Art costs:
Cover art needs to be commissioned and paid for.
3) Advertising and marketing costs:
One of the biggest advantages of going with a recognized publisher is that they do handle advertising and marketing.
4) *Layout and typesetting costs*:
I'm starring this one because a case can be made that it's not strictly necessary for reflowable formats, but even they often look better when hand laid out. (Look at Zelda's wonderful "Three men in a Boat" for an example.) However, many companies still release in PDF, and that does require the same layout and typesetting as paper.
5) General overhead costs:
Everything from rent to lights to secretaries. All those costs that every business has to cover.

None of those costs go away from a move to e-only initial publication.

All these costs are incurred before they sell a single copy in any format.

[Daithi]

I think something like zerospinboson is suggesting could work. Since this is a "test the waters" concept the publisher could simply offer prospective authors the option to place their manuscript in ebook format and if it sells well they will develop it further and release it in printed form. No advances; no editing; no marketing; a generic cover art overlayed with the title (like this).

If the author can sell 5,000 copies then the publisher can invest in advances, editing, custom covers, marketing, etc.

[DawnFalcon]

Originally Posted by MerLock

I just have this impression that the gaming industry is filled with young and intelligent people who are able/willing to think outside the box.

Yea, it's filled with young people because it burns out it's talent so fast. Believe me it's got plenty of issues of it's own. And things like the ME2 DLC charging go down like a lead brick in the marketplace... (not to mention the fact that there's no legal bar on reselling it, as well as the game, in the UK)

[guyanonymous]

Even the gaming industry will go through further shifts in their business models - they're just occurring faster and the industry responding faster.

The cost and availability of tools to do the job (programming, art, music, video, animation etc) are decreasing and increasing, respectively, as is the quality of what they can do. "Fans" are creating extra content that, in some cases (IMHO) equals or surpasses what the massive publishers are doing. (This goes for music, art, photography, etc these days too.)

The movie industry has developed such bloated costs that they're dependent on the next big "fad" that requires people to come to theaters. Historically it took a fair while to get quality movies for each of the new movie eras (silent/talkies (bw with sound)/colour/special effects/and now 3d). TV, the VCR etc, didn't kill movies in the theater, just crappy movies in the theater. Now, with more exceptions, most people I know only go to a movie in the theater because it provides an arguably better experience (big special effects/action movies....maybe 3d?). At some point, I really hope, the floor will burst and the high salaries demanded, profits, etc, will change to "reasonable" again and the theater business will have a hope in hell of surviving. (ok, that was a ramble...sorry! )

[Pardoz]

Originally Posted by Lemurion

1) All acquisition costs and editorial costs:
The author's advance (including agent's commission), the cost of both editing and proofing the manuscript.
2) Art costs:
Cover art needs to be commissioned and paid for.
3) Advertising and marketing costs:
One of the biggest advantages of going with a recognized publisher is that they do handle advertising and marketing.
4) *Layout and typesetting costs*:
I'm starring this one because a case can be made that it's not strictly necessary for reflowable formats, but even they often look better when hand laid out. (Look at Zelda's wonderful "Three men in a Boat" for an example.) However, many companies still release in PDF, and that does require the same layout and typesetting as paper.
5) General overhead costs:
Everything from rent to lights to secretaries. All those costs that every business has to cover.

None of those costs go away from a move to e-only initial publication.

Going down the list:

1) Stays constant, obviously. Of course that means that if you sell e-books in addition to printed copies, the cost is spread among more sales, and the costs for all formats should go down. But you can take as given that publishers will always claim that all e-book sales are cannibalizing a paper sale, even if total sales numbers increase.

2) Is a non-issue on many commercial e-books, since they don't include cover art.

3) Again, a non-issue on the vast majority of books, regardless of format, since they receive precisely zero marketing or publicity from the publisher.

4) A middle case, as you pointed out yourself. Obviously *some* costs are involved here.

5) Again, stay constant overall, but again, see (1) above on why this should mean cheaper prices on all formats, but won't.

You've left out a huge piece of the actual cost of a paper book, though - returns. When 35% of your print run ends up pulped in a landfill that drives up the proportion of the cost each individual book sold needs to recoup significantly. Returns on e-books run in the tens and hundreds, not the tens and hundreds of thousands, and that's an enormous saving.

Further, do keep in mind that the current aberrant reliance on creating a certain number of hardcover bestsellers per year (and bestsellers are made, not born) is a comparatively recent thing that has a lot more to do with tax law than anything inherent in the act of publishing.

[Lemurion]

Originally Posted by Pardoz

Going down the list:

1) Stays constant, obviously. Of course that means that if you sell e-books in addition to printed copies, the cost is spread among more sales, and the costs for all formats should go down. But you can take as given that publishers will always claim that all e-book sales are cannibalizing a paper sale, even if total sales numbers increase.

2) Is a non-issue on many commercial e-books, since they don't include cover art.

3) Again, a non-issue on the vast majority of books, regardless of format, since they receive precisely zero marketing or publicity from the publisher.

4) A middle case, as you pointed out yourself. Obviously *some* costs are involved here.

5) Again, stay constant overall, but again, see (1) above on why this should mean cheaper prices on all formats, but won't.

You've left out a huge piece of the actual cost of a paper book, though - returns. When 35% of your print run ends up pulped in a landfill that drives up the proportion of the cost each individual book sold needs to recoup significantly. Returns on e-books run in the tens and hundreds, not the tens and hundreds of thousands, and that's an enormous saving.

Further, do keep in mind that the current aberrant reliance on creating a certain number of hardcover bestsellers per year (and bestsellers are made, not born) is a comparatively recent thing that has a lot more to do with tax law than anything inherent in the act of publishing.

Have you checked the prices of books lately? Hardcover books haven't moved in price in the last decade and paperbacks haven't moved in the last fifteen years. Holding a constant price for that amount of time is close enough to reducing prices for my money.

Some commercial ebooks don't include cover art, but many of the ones I buy do. So it's an issue.

Publishers do not market directly to the reader, they market to the trade and so most of their marketing is invisible to the general public.

The other point that seems to be missed is that publishers have a fiduciary duty to their stockholders to try to increase profits. If publishers increase sales by expanding into a new market and then immediately reduce prices on other products so as not to increase their profits, then they are not doing their jobs. In fact, it sounds pretty communist to me.

[Elfwreck]

Originally Posted by Lemurion

The other point that seems to be missed is that publishers have a fiduciary duty to their stockholders to try to increase profits. If publishers increase sales by expanding into a new market and then immediately reduce prices on other products so as not to increase their profits, then they are not doing their jobs. In fact, it sounds pretty communist to me.

They could increase profits by lowering cost-per-unit and increasing sales dramatically. Baen and several small publishers manage to do this. If their real concern were "increased profit," they'd look at what makes ebooks sell well (no DRM, low price per book, complete series esp. when a new one is released, multiple filetype availability, don't fret about filesharing as long as the actual sales are decent). They're not trying to increase ebook profits; they're trying to prevent ebooks from cutting into hardcover profits even a little bit--because the ebook market scares & confuses them, and they understand paper.

They just don't want to acknowledge that the paper book market is going to change, too.

[bwaldron]

Originally Posted by Elfwreck

They could increase profits by lowering cost-per-unit and increasing sales dramatically. Baen and several small publishers manage to do this. If their real concern were "increased profit," they'd look at what makes ebooks sell well (no DRM, low price per book, complete series esp. when a new one is released, multiple filetype availability, don't fret about filesharing as long as the actual sales are decent). They're not trying to increase ebook profits; they're trying to prevent ebooks from cutting into hardcover profits even a little bit--because the ebook market scares & confuses them, and they understand paper.

They just don't want to acknowledge that the paper book market is going to change, too.

Not to mention looking at their out-of-print backlist and creating ebooks from them -- no need to do paper, but an ebook can stay "in print" with extremely very high marginal revenue. With judicious prioritizing, there is money there that ebook readers are willing to spend and that they are leaving on the table.

[Lemurion]

Creating ebooks from the out of print backlist is one thing I believe Macmillan was going to do with the $5.99 end of the price spectrum everyone seems to be forgetting. However, even that may take time and cost money because they will need to obtain the digital rights and then digitize the books.

After all, Baen has been snapping up those rights left and right (and good on them for doing so).

[guyanonymous]

I don't think anyone is denying that the $5.99 stuff is in their stated plans. But so far, nobody's brought forth any evidence that they've moved in this direction with other older books as yet.

[DawnFalcon]

Originally Posted by Lemurion

After all, Baen has been snapping up those rights left and right (and good on them for doing so).

To be clear, Baen takes non-exclusive electronic rights.

They quite literally put their money where their beliefs are.

[random50]

Originally Posted by Kali Yuga

Last but not least, there is absolutely no reason why there needs to be a direct link between the public's perception of the cost of a good (accurate or otherwise), and its final price. The price is merely what the market will bear, and it's way too early in the game to categorically state that $10 is the only price for a new book that can possibly work.

I'm not sure this is true any more. Publishers are now competing with pirates supplying free and often superior versions of the same product. Publishers are basically relying on three very flimsy selling points:

1) Lack of computer literacy and awareness of pirated sources. They're living on borrowed time here. You'll already be very hard pressed to find anyone under 30 who would find it a struggle to learn how to pirate digital products, and I suspect the vast majority have already done so at least once.
2) Morality. Most people would like to reward the creator of the work. That sympathy often doesn't extend to the large corporations who help to bring that work to market, however unfair that may be.
3) Fear of the law. Again, I think this is a generational thing that is rapidly dying out, at least as far as piracy goes. There is potential for change here if there are a few high profile cases, however.

Considering the weak position that puts the publishers in, I think there is a genuine need for prices and public perception to be somewhat in line. At least, if you want to have any hope of remaining in business.

We are creatures of habit. It's only the first few illegal downloads that feel strange and wrong to most. Once the individual gets used to breaking the law in this way, then as a seller you've *really* screwed yourself, because you aren't going to get that customer back simply by lowering the price a little.

[random50]

Originally Posted by Lemurion

Also, it's not quite as simple in a corporate environment to run a word doc through mobigen in order to create an ebook.

Well, it should be, especially if we're talking about an ebook only release to test the market. Poor formatting is more likely to be excused if the ebook is the only available format, and if it's sold at a slightly reduced price. It can be tidied up later if the title sells well enough to warrant a more general release, and since many ebook stores allow you to redownload your titles, the original buyers would also get a tidied up version.

By the way, from what I've seen of the older titles slowly becoming available, publishers aren't doing a damn thing about quality control. Frankly, if the conversion isn't automated, then the proofreaders are total morons. I don't see why they would take a more diligent approach to an ebook only release.

There are multiple runs involved for different formats, and both DRM and software licensing costs to be covered (as well as the salaries of the people doing the conversion). These are all added costs that have to be covered somewhere.

DRM costs do not have to be covered.