Yet another thumb of the nose from publishers

[DMcCunney]

Originally Posted by starrigger

The failure of publishers to lower ebook prices when books hit paperback is, I think, not so much due to greedy design as to clerical inattention. When my own novel Sunborn came out as a Tor ebook, around the same time that the agency model kicked in, the ebook was at a higher price than the recently published paperback. I brought this to their attention, and they promptly lowered the ebook price to match the paperback. This sort of thing happens in publishing all the time.

Yep.

A lot of the "They had to know" comments about publishers on this thread prompt a "What do you mean by 'they'?" response from me. Most publishers are units of big companies, and employ thousands of people. Assuming that all employees are of the same mind and on the same page is just silly. Often the left hand really doesn't know what the right hand is doing, and sometimes that bites them on the butt.

I dislike the agency model, not because of higher prices--in general, the prices seem about the same to me--but because it prohibits discounting and kills competition among bookstores (other than choice of platform). It's killing Fictionwise, whose great sales were once a main reason to shop there; now those sales are limited to non-agency publishers (which, to be fair, still includes a lot of great books).

I don't like the agency model, either, but I recognize what prompted it.

And Fictionwise is part of B&N these days, so I don't see them emitting death rattles just yet.
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Dennis

[DMcCunney]

Originally Posted by Elfwreck

But the result to the publisher is the same: the content is read by another person, and the publisher received no payment for that.

Correct. But in the case of a pbook, it already sold once, and the publisher collected the revenue.

With pbooks, there's a *chance* that if the reader liked it, she'll go buy a copy of her own... but there's also a chance that the buyer will just give it to her, or that she'll buy that copy from eBay or a used book store or a yard sale. Especially given how fast books go out of print.

The used book market--and more, the used book friendly-exchange communities--are every bit as much "threat" to publishers as the torrent networks.

Nope. By the time a pbook hits the used bookstore market, the likelihood is that it is off the shelves in retailers. It is not competing against new copies currently on sale. Competition for shelf space is rampant, books must be cleared to make room for new releases, and books that don't fly off the shelves don't get reordered. (In an airport newsstand, the average life of a PB was about two weeks the last I knew. It's better in a bookstore, but not a whole lot.)

Publishers (or more likely, innovative indie authors) *need* to find a way to allow used ebook exchanges--or they'll continue the way they're happening now, growing to the level that they occur in the music industry.

Do you know a way to do it? It requires that if I sell you a pre-owned ebook, I no longer have it. The value is in scarcity. If I still have it and can simply give you a copy, what incentive is there for you to pay me? It's hard for me to successfully charge you in those circumstances.

Music's less affected by them, because music artists make money from performances, which can't be digitized. Book authors don't have that option. (At least not as a steady revenue stream.) We desperately need a legit way to share ebooks with friends, one that's not contingent on "if this sounds interesting to you, buy a new copy from <website> at full price."

Yes, the model in music is changing. It used to be that the album was the product, and a tour was something the band did to promote the album. these days, it's topsy-turvy, and bands are seeing the gig as the product, and the CD as a souvenir of the gig. An old friend leads a popular indie band. They make their living touring. He'd like you to buy the CDs, but if you rip them and share them with friends, fine by him: they more people who hear the music, the more who come to see them when they play.

And while authors can't exactly go on tour, a similar dynamic is in place. The Baen Free Library was originally intended to promote authors. You downloaded one of more full novels from the Free Library, decided you liked what the author did, and bought the new one from that author when it came out.

What the author hopes for is that people getting a free copy of one of their books, legit or otherwise, will like their stuff enough to seek out and buy future works. The challenge for the author is to provide value worth paying for and make it as easy as possible for readers to give her money.
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Dennis

[DMcCunney]

Originally Posted by Barcey

Amazon's distribution model allows them to sell hardcovers at a cheaper price but I wouldn't agree that operational efficiency is "devaluing the book market". If anything I would argue that it's the stores that only sell bestsellers that have devalued the hardcover. It was the publishers decision to increase distribution through big box stores that have devalued the book market.

It doesn't work that way.

Publishers sell to wholesalers and large retailers. The retail industry has been steadily consolidating. Small "Mom and Pop" bookstores have been folding under pressure from the chains. How much the publisher gets per copy from the wholesaler or retailer is governed by the volume of the sale. The more copies you buy, the cheaper a per copy price you'll be charged. The big chains can translate those lower wholesale prices into cheaper retail prices, and the smaller stores can't match that pricing and make money. (And the small stores aren't big enough to be worth a publisher's while to sell to directly. They must buy from a wholesaler, who has their own margin to think about.)

The big chains, in turn, are under pressure from warehouse stores like CostCo and Sam's Club, who buy in even higher volumes and can charge even lower prices. And Amazon is putting pressure on everyone.

Part of the problem facing the industry is that buying decisions are concentrated in increasingly fewer hands. Nobody knows the book buyers for CostCo and Sam's Club, for example, but they have enormous clout in the industry due to the volume they purchase. And because of the size of their operations, they have to sell an awful lot of something to make it worth selling at all. They are, after all, a classic case of accepting low margins and making it up on volume, so they'll buy what they think will sell in volume. In the case of books, that's bestsellers.

Don't blame the publishers for this. They aren't responsible for the contraction of the book retail industry. They are just as happy selling to anyone who would like to buy. The retail industry is consolidating because everyone wants to buy their stuff at the lowest price they can get, and the smaller outlets simply can't sell as cheap as the big guys.
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Dennis

[Freeshadow]

Originally Posted by DMcCunney

They do. Reserve against returns is a standard element in the book budget.

But don't assume ebooks come along for the ride free, with other costs borne by and allocated to print editions. There won't be "returns" on an ebook, but the ebook will still be expected to make a contribution to revenue and profit. A share of the overall cost will be allocated to the ebook version.

It may seem possible to price an ebook lower because returns aren't a factor, but "possible" and "desirable" are different things.

Pricing in a competitive economy is always "What the market will bear", and it's in the producer's interest to charge a higher price if they can get it. The usual argument is "Yeah, but they could sell a lot more if it were cheaper!"

Well, maybe not.

In the case of ebooks, you might legitimately claim that ebooks overall might sell more if they were cheaper. But the buyer isn't looking at all ebooks. They are looking at specific titles they are interested in buying.

When a publisher buys a manuscript, they will make a guess as to how many copies the book will sell, and the advance they give the author will be based on that guess. Sometimes they guess wrong on the high end, and the book doesn't sell enough copies to "earn out" (sell enough to recover their costs and cover what they paid the author.) Most books fall into this category, and the advance is all the author sees. They don't see additional royalties. Far less often, they guess low, have an unexpected hit on their hands, go back for additional printings, and see an unexpected entry on the best seller lists. Champagne is poured and there is joy all around.
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Dennis

Yeah, I'm aware of that, so let me put a better focus on my poition.
what puzzles me is that publishers don't say:

"

• Hey an ebooks server-space comsumption is not worth mentioning in comparison to the shelf space competition, thus every reseller can offer the whole actual +backshelf stuff of our authors simultaneously.
  
• No is-a-reprint-worth-it-risk-calculation so later coming/new fans will always be able to get the whole stuff / complete series (even if there will be only 18 new fans per year for a series it'still bigger than none and the series may be damn long.)
• Now we don't need to fear about paybacks for truckloads of books if book foobar misses absolutely bottomless bad - its just 1 file on the resellers server.
  
• Much more people may order the authors genuine language edition, who haven't bought it before, due to the shipping costs... etc.

ergo:embrace and promote the ebook"

what I meant ebooks are offering chances which were often too much a risk with paper.
Instead of trying to make the most of the new posibilities they seem trying to fight it.

[DMcCunney]

Originally Posted by JSWolf

But you knew the price would drop and chose to buy it at the higher price to get it when it was first released. When a high price eBook is released to go along with the hardcover, we have no guarantee that it will drop in price when the paperback is released. So we could be stuck with a hardcover priced eBook when there is a paperback version out there for a lot less.

So what? If you buy the hardcover, or the high priced ebook released at the same time, the likelihood is that you are paying a premium for early access. You don't want to wait for the cheaper priced edition. If you were willing to wait for the PB/cheaper ebook, you wouldn't have bought at the higher price now.

If I buy a higher priced ebook now, it's because I want to read it now. I'm paying extra for the privilege. I won't feel like I've been treated unfairly if the ebook price later drops. I knew that could happen going in, and I chose not to wait till the price dropped. If I whined and bitched about it later when the price did drop, that wouldn't be publisher greed, it would be consumer greed, and I have little respect for either form.

And if the high priced ebook doesn't drop in price when the ebook comes out, again, so what? I bought high originally because I wanted to read it then, not later. If it did drop in price, I'd have no cause to complain. It was my choice to pay the higher initial price. If it does drop, I still have no legitimate beef, because I already have the ebook, at a price I was willing to pay when I bought it.

People who don't already have the book face the decision of whether they want the ebook badly enough to pay more than the paperback, but that's a separate question. (I will be more sympathetic to those thinking the ebook is overpriced.)

Mind you however, some paperbacks are expensive as the publishers have switched to another scam on the public. Those nice larger sized paperbacks. The ones that are larger just so they can charge more. No wonder reading is down and sales are down. You want people to buy your product, you do not raise the price when the price they were paying is a price they were willing to pay. Not now with tough times.

Those larger formats continue because they work. Larger formats and the same book spread over more pages by using a larger font are all efforts to let the consumer feel they are getting something for the higher price. (And the higher price is one the publisher may have no choice but to charge, if they want to stay in business.)
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Dennis

[MrPLD]

From a company perspective, it's often good to play up all the negatives and overblow the potential costs so that when it comes to the end of financial year you have some juicy reasons to use to artificially justify however which way your profits/losses went.

They know it's cheaper/easier/faster with eBooks but why give up a classic "new technology problems" bushel of excuses?

[Starearedkid]

Originally Posted by DMcCunney

Yep.

A lot of the "They had to know" comments about publishers on this thread prompt a "What do you mean by 'they'?" response from me. Most publishers are units of big companies, and employ thousands of people. Assuming that all employees are of the same mind and on the same page is just silly. Often the left hand really doesn't know what the right hand is doing, and sometimes that bites them on the butt.

Dennis

That isn't necessarily true. Hatchette is one publisher where the e-books are consistently two dollars higher than the LIST price of the paperback. (7.99 vs. 9.99) I e-mailed them about it a few times, and only got the response: "Those are the prices and we aren't changing them for the time being.) Well before the agency model; I bought about 10-20 of their reasonably priced e-books. (Which was a duplicate buy because many of them I already owned) Since the books now are higher than paperbacks that have been in circulation for years, I haven't bought any of their e-books. Or paperback books. Or hardcovers.

I just borrow from friends or the library and it is a shame because I would buy them if they were priced reasonably.

[charleski]

Originally Posted by Barcey

If the price is much higher then people expect to pay it's viewed as gouging or an insult. Everyone has their own level but you don't want to alienate the majority of your customers.

This is why Apple, with their $5,000 computers, and Louis Vuitton, with their $1000 handbags, are so unpopular...

You seem determined to view expensive goods as a personal insult.

Originally Posted by DMcCunney

A lot of the "They had to know" comments about publishers on this thread prompt a "What do you mean by 'they'?" response from me. Most publishers are units of big companies, and employ thousands of people. Assuming that all employees are of the same mind and on the same page is just silly. Often the left hand really doesn't know what the right hand is doing, and sometimes that bites them on the butt.

Meh, I'm not really convinced by that. A modern accounting department should have no trouble keeping track of linked products. They aren't recording their prices on slips of paper, and the failure to maintain parallel pricing windows is sheer incompetence, though I'd accept that part of the responsibility lies with the retailers.

[starrigger]

And Fictionwise is part of B&N these days, so I don't see them emitting death rattles just yet.

I think Fictionwise is suffering enormously, Dennis. Yes, they're owned by B&N, but they're getting no visible support. They still don't have most of the agency-publisher books, and customers are leaving in droves. Their membership program is gone except for grandfathered members. Their individualized "publishers stores" are gone, or about to be gone. My other ebook publisher reports that earnings through FW have dropped significantly in the last year.

I still shop at FW, but they seem to be fading into a niche market status for the smaller publishers (and I think Random House, since they're non-agency).

[starrigger]

Originally Posted by charleski

A modern accounting department should have no trouble keeping track of linked products. They aren't recording their prices on slips of paper...

Hmm. Modern accounting department...publishers. Publishers...modern accounting department...

Nope. There's just no way to use those two phrases in the same sentence without lapsing into oxymoron.

[DMcCunney]

Originally Posted by mrscoach

I have to say that I am enjoying this back and forth with Dennis. See we can debate nicely.

I always debate nicely. I see no benefit in not doing so. Being unpleasant simply puts people's backs up, and makes them even less inclined to listen to anything I might say.

Besides, this is a public forum. the person I'm talking to may not agree with me, but others reading it may get something of value from the exchange.

Fine by me, either way.

I can even see his point of view, I just don't share it. He has made some good points.

Thank you.

I don't assume everyone will agree with my views. But I've been an observer of publishing for decades, know a number of folks in publishing, and have learned a bit about how books are made and sold. I try to convey some of that understanding in my posts.

There's an awful lot of wishful thinking in publishing about how much can be charged for an ebook, and even more wishful thinking on the buyer's end about how cheap an ebook can be. Puncturing the latter balloon tends to get strong resistance from people wedded to an inaccurate picture of the industry and the process, who simply don't want to believe anything that suggests they not only won't, but can't get the pricing they desire, because the publishers want to stay in business.

But in practical terms, it doesn't matter whether my view is correct, or whether the publishers are all greedy rip offs gouging the customer when they could be charging less. The basic question will be "Will I get ebooks priced at the level I want to pay?" and depending on what that level is, the likely answer will be "No. You won't. Deal with it."

And I think we both feel the publishers are currently shooting themselves in the foot.

They are indeed. I've never accused publishers of intelligence or sense.
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Dennis

[DMcCunney]

Originally Posted by charleski

Meh, I'm not really convinced by that. A modern accounting department should have no trouble keeping track of linked products. They aren't recording their prices on slips of paper, and the failure to maintain parallel pricing windows is sheer incompetence, though I'd accept that part of the responsibility lies with the retailers.

It would be nice if they had modern accounting departments. Or modern systems, period.

I mentioned upthread the experience of an old friend years back consulting with a PB house to re-invigorate their SF line. It took him seven months simply to determine who they had under contract for what, another five months to dot Is, cross Ts, and get new contracts in place, and they still lost valuable properties because they had forgotten they had the rights to a book, but the author's or author's agents had not, and sent a formal request that the rights revert as soon as the contract was up.

You would think a publisher could at least keep track of what books they had under contract and when the rights would lapse, but you would have been wrong.

It was years ago, and systems have gotten much better since, but the best system in the world is no use if it isn't properly applied.

And publishers aren't retailers. Amazon is a retailer. They have the systems, and an incentive to use them properly. I expect them to have a properly designed and maintained database, with people whose full time responsibility is to make sure that things like proper product linkages are maintained and that linked prices are correct. Publishers don't have that level of incentive, nor the underlying database, nor the people devoted to its maintenance. (You can argue that they should, but they won't want to spend the money required.)

In many cases, it is sheer incompetence.
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Dennis

[Gwen Morse]

Originally Posted by DMcCunney

Amazon's pricing and selection are such that Kindle owners don't see this as an onerous restriction, but it's still vendor lock-in.

The question is whether Amazon is playing the loss-leader game and accepting no margin or a loss to build market share. It's possible, but I doubt it. I definitely doubt it in the US market affected by Agency Pricing. The publishers were reacting to lowered revenues because Kindle editions were competing with hardcovers. If Amazon was actually paying publishers the same price for the Kindle edition as the hardcover, Amazon would be putting the loss in "loss leader", and I really don't see them doing that. Retailers will accept lower margins (or even losses) on selected hardcover titles to generate traffic and other sales. (The Harry Potter books were popular for this.) They won't do it across the board on all new titles. They want to stay in business.
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Dennis

I don't know what Amazon is or was actually doing. I'm not an insider with information about their hidden financial workings.

However, reading about the issue online in blogs/news sources/etc, it had been stated multiple times by multiple sources, that when Amazon was charging $9.99 for new ebooks, it was selling them at a loss and publishers were being paid some amount which was higher than the selling price and additionally was the amount they had requested (I don't recall anything comparing it to hardback costs, probably because no one had those numbers and Amazon wasn't telling).

The reasoning provided was that Amazon wanted to become the primary source of ebooks and were able to support the Kindle division with profits from the ebook division.

If publishers had simply been losing money on ebooks, they could have renegotiated their contracts with Amazon. After all, by instituting Agency pricing they _did_ rewrite their contracts with almost no warning at all.

Perhaps if publishers had increased the amount they asked Amazon to pay, it would have put more pressure on Amazon to increase prices themselves (it might have been harder to justify the losses).

I don't think anyone reported Agency pricing was put into place because publishers were losing money on ebook sales (vs. hardback sales). Agency pricing was supposedly put into place because publishers were worried about the future "perceived" value of ebooks. If everyone expected to pay $9.99 for a freshly published ebook, they'd scream at the price increasing sharply in the future to bring them in line with hardback prices.

Shifting back to the "now" of things, that prediction was certainly correct. People _do_ resent being asked to pay hardback prices for ebooks. Now, I don't think anyone is saying Amazon is taking a loss on ebooks, in fact, one of the stated purposes of the Agency model was to force Amazon to make a profit on ebooks (by not allowing them to discount).

All of that aside for a bit, the publishers have spent the last 25+ years convincing the reading public that hardcover books justified sharply increasing book prices. When paper supplies were costly, book prices went up. Ink prices went up -> so did books. Etc. Etc.

Now, having spent all this time convincing us that we should feel obligated to pay more for hardcovers, when there's a popular medium involving none of these costs and people look for a corresponding discount on book prices, they magically have become only 15% (or so, varying by source) of the cost of a book.

I personally think the issue is that publishers controlled the distribution channels of books (just as record companies controlled the distribution of music, and the studios controlled the distribution of movies). During the past 20-25 years, there has been increasing global communication and prosperity (thank you Internet!), and that led to increasing profits. However, (a) the profitability joyride is over and (b) content creators can distribute their content on their own (thank you again, Internet!)

So now book publishers are scrambling around in fear, trying to stay in business any way they can.

The thing is, I don't feel sorry for them. No one feels sorry for me taking a total of $10/hour in systematic pay cuts over the past 10 years (that is, I was making $10 more per hour a decade ago, doing nearly the same job). I've had to do this because the I.T. market collapsed and if I want to have a steady job that lets me feed my family, I have to be realistic about what I can expect to get paid. I don't say this to be self-pitying, it's just a simple reality. I used to expect to get paid much more than I expect to be paid today. Globalization has brought costs down, and pay down as well.

If they want to distribute other peoples content, publishers *have* to be willing to accept cuts, and probably much sharper ones than I've experienced. Distribution of products _EXCEPT IN THE CASE OF MONOPOLIES_ is always a cut-throat business.

Agency pricing is just delaying the inevitable.

[Gwen Morse]

Originally Posted by DMcCunney

It would be nice if they had modern accounting departments. Or modern systems, period.

I mentioned upthread the experience of an old friend years back consulting with a PB house to re-invigorate their SF line. It took him seven months simply to determine who they had under contract for what, another five months to dot Is, cross Ts, and get new contracts in place, and they still lost valuable properties because they had forgotten they had the rights to a book, but the author's or author's agents had not, and sent a formal request that the rights revert as soon as the contract was up.

You would think a publisher could at least keep track of what books they had under contract and when the rights would lapse, but you would have been wrong.

In many cases, it is sheer incompetence.
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Dennis

If they're that incompetent, they deserve even less to stay in business.

[Barcey]

Originally Posted by charleski

This is why Apple, with their $5,000 computers, and Louis Vuitton, with their $1000 handbags, are so unpopular...

You seem determined to view expensive goods as a personal insult.

No, I don't take it as a personal insult. You can never make everyone happy with pricing but you have to do market research to set the price that will keep that majority of your customers happy. Apple does that very well.

I don't think the fact that 20,000 people bought the ebook meant that it was priced appropriately. I believe that if you surveyed the people that bought the book over 20% would say they thought it was overpriced.

I've observed a lot of anger about ebook pricing and it's not just in this forum. I've attributed the anger to people being insulted by the pricing in that there is no rational to it and they feel price gouged.

I think it's reasonable to expect an ebook to be a couple bucks cheaper then the least expensive paper version and that's all I've seen Amazon trying to do. The publishers have failed to demonstrate any desire to do this. This is more apparent if you look at the pricing of ebooks that have been released for over a year and compare the price to the paperback price.