Is Publishing Doomed? JOHN B. THOMPSON with Williams Cole

[GA Russell]

Originally Posted by Andrew H.

I'm not even sure what your argument is - because "publishers," 40 years ago, stated that book prices were increasing due to higher raw material costs....what, exactly?

The price increases were huge. The publishers said that their paper costs were a large part of their costs. Were the publishers lying then, or are they lying now?

[J. Strnad]

Were the publishers lying then, or are they lying now?

Only one way to tell: Were their lips moving?

[karunaji]

Originally Posted by Kali Yuga

Not really. Those of us who have been alive and aware of technology for some time have seen a lot of "inevitable" technology fall by the wayside. CD-ROMs, HD-DVD, video-on-demand, Minidisc, .NET, the Apple Cube, Linux on the Desktop, the Paperless Office....

It clearly shows the inevitable acceptance of better technology. Better means better in all practical aspects, not what some corporate dudes is trying to push in market.

It's a mistake to look only at the winners and on that basis proclaim that technological progress, let alone a specific item, is an "inevitable" winner.

I wasn't thinking about any particular device but the technology X that is better than paper. Currently e-readers are better than paper only for a limited segment.

Plus, he's looking at a larger context. In many cases, it's not the technology itself that is driving social changes; in many cases, it's social changes that make a technology possible to flourish.

He is confusing technology with technology development. Definitely, there are many social reasons which push societies to become more innovative or stagnating. But once technology is there (cheap, accessible and convenient), there is nothing you can do to stop its proliferation. Nowadays even homeless and illiterate people in India may have cell phones even though they would not be allowed to enter most shops that sell them.

[Sil_liS]

The internet is always full of information, if you are looking for it.

There is information from the point of view of a library.

There is a Survey of Book-Buying Behavior for 2010.

Wikipedia has a page on the Fixed Book Price Agreement.

The bad news is that books are going to be more expensive next year.

[Kali Yuga]

Originally Posted by GA Russell

The price increases were huge. The publishers said that their paper costs were a large part of their costs. Were the publishers lying then, or are they lying now?

And that was what, 30-40 years ago? Has it occurred to you that maybe, just maybe, the cost structures have changed since then?

Digital typesetting, huge leaps in productivity, printing in China, changes in raw material costs, economies of scale, POD for smaller print runs, better data analysis and dramatically increased efficiencies on the back end all drive down the costs of the paper part of the book biz. This results in paper costs occupying an increasingly smaller part of the total costs.

Any business engages in a certain amount of "exaggeration." So do you, and I, and every other human capable of communicating. That said, it does not seem unreasonable at all that the composition of a book's costs have dramatically changed in the past 35+ years.

[HamsterRage]

Originally Posted by Kali Yuga

And that was what, 30-40 years ago? Has it occurred to you that maybe, just maybe, the cost structures have changed since then?

Digital typesetting, huge leaps in productivity, printing in China, changes in raw material costs, economies of scale, POD for smaller print runs, better data analysis and dramatically increased efficiencies on the back end all drive down the costs of the paper part of the book biz. This results in paper costs occupying an increasingly smaller part of the total costs.

Interesting, but we've never seen the price of books drop, or even a decrease in the rate at which the prices are increasing due to all of these "huge leaps in productivity".

There was another thread recently that had the data to show that the price of books has continued basically doubled or tripled the rate of inflation since the 70s. That would seem to counter any argument of, "but think of how fast the price of books would have risen without those leaps of productivity".

[asjogren]

We have seen the pattern in many industries. Once an industry matures, the extreme Corporatists start buying up the small competitors. They get bigger-and-bigger until they can start to dictate terms and prices on their suppliers. Next to the end is when these Corporatists start to dictate terms and prices to their customers.

They can delay the inevitable by buying Government favor and using the power of the State to further their Corporate goals.

I think that the large, full function, general Publishing House is near the end. If we see a merger or acquisition within the Big 6 - that will confirm it.

It appears to me that the Next Wave is bypass. Bypass of the large Publishing House. My guess is that the Author's Agent will take on a much larger role. And that many of the functions currently provided by the large Publishing House will be contract services - probably contracted through the Author's Agent.

[leebase]

Originally Posted by HamsterRage

Interesting, but we've never seen the price of books drop, or even a decrease in the rate at which the prices are increasing due to all of these "huge leaps in productivity".

Right -- BECAUSE -- the cost of making a book IS NOT, nor HAS IT EVER BEEN, all that relevant to the price of a book.

The '70's was full of "we have to increase prices because...". There was gas, and sugar, and all manner of other "we have to increase prices because..." shennigans going on. Books were no different.

Why is this such a hard concept to grasp? The hard back is simply the "in demand" format for maximum profits for books. Take a look at movies. The just released, new in the theater movie commands the highest ticket prices.

Then the movie moves on to the cheaper theaters. You think there's any reason for the movie to be cheaper OTHER than demand? THEN the movies are seen in exclusive Pay per view, hotels and the like. THEN it appears as a DVD release -- then Red Box, then the premium cable channels like HBO, then for free exlusively on a network channel yadda yadda.

At what point has the cost of that movie change? It hasn't. It's the SAME movie product. The only change is in the demand, and thus the prices that can be commanded for it.

Lee

[leebase]

Originally Posted by asjogren

We have seen the pattern in many industries. Once an industry matures, the extreme Corporatists start buying up the small competitors. They get bigger-and-bigger until they can start to dictate terms and prices on their suppliers. Next to the end is when these Corporatists start to dictate terms and prices to their customers.

Yeah -- like AMAZON was doing by using predatory pricing of ebooks to drive out any competition. Folks, Amazon was the bad guy in this story.

Lee

[karunaji]

Originally Posted by HamsterRage

Interesting, but we've never seen the price of books drop, or even a decrease in the rate at which the prices are increasing due to all of these "huge leaps in productivity".

Most literary first novels net between 3,000 and 7,000 hardcover copies. Source: here.

There is a lot of human work hours involved in producing a book. For example, the most basic proofreading of a book that is 100K words long normally requires at least 100 hours. Sometimes there are several rounds of editing, then final proofreading, formatting, illustrations, covers, typesetting etc. It costs tens of thousands of dollars to properly publish a book. All done by educated professionals who demand to be well paid because unlike authors they don't get royalties. If it takes 300 hours (low estimate) on proofreading and editing, formatting, typesetting etc., it will cost a publishing house about $15,000.

Add advance to author, royalties, agent's cut etc and considering unpredictability of actual sales, it is not possible to sell books for $3 and make a profit in most cases.

I think that the figure that paper and printing comprises only 10% of the total price is more or less correct. Big companies try to squeeze even that price down but it is not a wonder that they consider e-books unimportant from the cost saving point. The change in distribution model and pricing strategy is much bigger headache for publishers.

[HamsterRage]

Originally Posted by leebase

Right -- BECAUSE -- the cost of making a book IS NOT, nor HAS IT EVER BEEN, all that relevant to the price of a book.

The '70's was full of "we have to increase prices because...". There was gas, and sugar, and all manner of other "we have to increase prices because..." shennigans going on. Books were no different.

Except that books went up way faster than inflation in the 70s, and have continued since.

I think the real problem all along has that each publisher has had a monopoly on each of the individual titles that they sell. So if you want the latest Stephen King novel, there's only one source for it and the price has been fairly close to fixed. That's driven the price of everything up, because for any author/price combination there's likely to be some number of people who'll pony up the cash.

That's seems a little bit like what happens with major league sports teams, where there's always some team ready to break the previous record when a big-name player goes on the market. After a few years, everyone is left scratching their heads and wondering, "How did this get so out of hand?"

Personally, I don't mind if the initial price starts out high because I'm happy to wait. But the price has to continue to drop over time to some point that's reasonable.

[Andrew H.]

Originally Posted by leebase

Yeah -- like AMAZON was doing by using predatory pricing of ebooks to drive out any competition. Folks, Amazon was the bad guy in this story.

Lee

Amazon offered very low prices on a *tiny* percentage of their e-book sales. (NY Times bestsellers). This isn't predatory pricing, it's not illegal, and it's no different from what grocery stores do every week.

Which is why no one ever brought an anti-trust action against Amazon.

Anti-competitive behavior is bad because it hurts the *consumer.* This act may have hurt competitors, but it certainly didn't hurt consumers. Antitrust laws are designed to protect consumers, not competitors.

I mean, Baen *gives away* books. Are they engaged in predatory pricing? Or something worse,since there's no pricing at all.

[leebase]

Originally Posted by Andrew H.

Amazon offered very low prices on a *tiny* percentage of their e-book sales. (NY Times bestsellers). This isn't predatory pricing, it's not illegal, and it's no different from what grocery stores do every week.

It is different than what groceries do. It was the entire NYT's Best Seller's list, every day. That they have a million public domain books, and hundreds of thousands of low volume titles -- does nothing to mitigate that they were using predatory pricing on the most in demand, high volume books.

Look -- publisher's didn't go to war with Amazon for nothing. Look also at folks' response. If it wasn't that many books being subsidized, then there'd have been little complaining.

Originally Posted by Andrew H.

I mean, Baen *gives away* books. Are they engaged in predatory pricing? Or something worse,since there's no pricing at all.

Baen isn't giving away someone ELSE's products. They aren't buying Tor books and then giving them away for free.

I know....people love the free tit to suckle on. It's disturbing when someone stops paying for your suckle.

Lee

[Andrew H.]

Originally Posted by leebase

It is different than what groceries do. It was the entire NYT's Best Seller's list, every day. That they have a million public domain books, and hundreds of thousands of low volume titles -- does nothing to mitigate that they were using predatory pricing on the most in demand, high volume books.

It's not the entire NYT bestseller list. It's the NY Times hardcover bestseller list. 15 books.

Look -- publisher's didn't go to war with Amazon for nothing. Look also at folks' response. If it wasn't that many books being subsidized, then there'd have been little complaining.

Publishers didn't go to war with Amazon to protect the consumer.

Baen isn't giving away someone ELSE's products. They aren't buying Tor books and then giving them away for free.

Reasonable point about Baen.

I know....people love the free tit to suckle on. It's disturbing when someone stops paying for your suckle.

Lee

Aside from the fact that your absence of argument has led you to resort to insults, your insult doesn't even make any sense. There is no "free tit," nor was someone else "paying for" the "suckle." I'm not buying my books on welfare.

Publishers went to war with Amazon for their own purposes. Not to protect consumers...and the result has been detrimental to consumers.

[Kali Yuga]

Originally Posted by HamsterRage

Interesting, but we've never seen the price of books drop....

We also haven't seen publisher's profits soar into the stratosphere, and as Thompson points out, other costs -- notably author advances (though afaik, not royalty rates) -- have been steadily increasing.

Net profit is apparently around 10% for the industry. I'd say that's pretty good, and I'd be a bit hard pressed to call it "extortionate." Unlike, oh, drug manufacturers -- 22% profit margins in that sector.

I don't know how the sector's profit margins have changed since the 70s, I'll see what I can dig up. However the business has also radically changed since then, so I'm not sure how far back you can really make a fair comparison.

Originally Posted by HamsterRage

There was another thread recently that had the data to show that the price of books has continued basically doubled or tripled the rate of inflation since the 70s....

The price of books is higher, when adjusted for inflation, than it was in the early 70s.

However, it is exceedingly rare for one specific product to track the CPIX perfectly at a given time. Would you expect the percentage changes in the cost of cars, oil, rice and paper to be identical at all times?


As a comparison: Ford Mustang Fastback, 1970, sticker price $2,771 (or $15,000 in 2009 dollars). Ford Mustang V6 2011, $23,000. Assuming the two are roughly equivalent vehicles, we could assert that "Mustangs outpaced the CPIX by 50%."

Now, I don't have many doubts that the cost of the manufacturing has dropped significantly since the 70s; there's far more automation, lots of production is offshore, and so forth. Should we expect the 2011 Mustang to cost $10k instead of $23k? Are we getting jacked if it isn't? Should consumers rail against Ford for their extortionate pricing?