ANOTHER "Why Do Ebooks Cost So Much?" ARTICLE

[DMcCunney]

Originally Posted by murraypaul

We keep going round this circle.
You are talking about the cost prior to printing. These are fixed costs.
That excludes printing, warehousing, distribution and retail. These are variable costs.
The variable costs can be dramatically reduced. That means that there is now no downside to increasing volume. That means greater profit can be made by selling greater volume at a lower cost.
To suggest that you cannot significantly reduce costs in an industry that currently physically destroys about half of the product it produces beggars belief.

What part of "80% of the costs of producing the book are incurred before the book reaches the point of publication in printed or electronic format" is not clear to you?

And the costs incurred before print/bind/warehouse/distribute are also variable.

Part of our disagreement is that I think you see far greater cost savings by eliminating the print edition than I do, and have an unrealistic idea of how much ebook prices can be lowered if they are removed from the equation.

You also have an unrealistic idea of how much producers will lower prices, even if those costs don't exist.

If I'm a publisher, I need to make money on sales of my books. I have to make a profit. And the question I ask if I'm smart (and all too many in publishing or any other industry aren't) is not "What is the maximum profit I can make?" It's "What is the minimum amount of profit I have to make to survive?" One of the problems facing publishing (and other industries) is that the answer to my question is often higher than the best answer they can determine to the "maximum profit they can make" question. They're in trouble.

Pricing experiments in the gaming industry, which has very large fixed cost of production: http://www.next-gen.biz/features/val...-too-expensive

It depends upon the game and the platform, but the gaming industry is a lot closer to the movie industry in business model than publishing.

And the quotes in the article aren't as meaningful as you might wish. Without knowing underlying numbers, percentages aren't very informative. "Sales went up 3000%!" Super. From how many units to how many units? What was the original price you reduced? What does this mean in terms of actual revenue and profit?

The sort of games that drive the development of high end video cards by people like nVidia and AMD/ATI are enormously expensive. They need script writers, artists, musicians, programmers, QA personnel... They can take years and cost millions to develop, and if the house that develops them doesn't have a hit, it might go belly up, just as movie studios have when too many pictures they released bombed.

If that happens, you can't really argue that high prices were to blame. If the games generates the buzz, and gets rave reviews from early adopters, it will sell. If it doesn't, a cheaper price won't save it.

Games are not so much competing for the player's money as for their time. You're only going to play one game at any particular moment, and if the game is a really good one from your perspective, it may be the only game you'll play for some time after acquiring it. It doesn't matter how cheap another game is, if you'll never play it.

Books are in an analogous position: they compete for time more than money. You can be reading a book, or watching TV/going to a movie/going to a club to see a band/going to a sports event/playing a game...

My scarce resource isn't money to buy books - it's time to read them once I have.
______
Dennis

[Fbone]

Originally Posted by Elfwreck

If big publishers were prone to "taking a chance" on experimental or edgy books that might not otherwise see print, I could understand this point. But my experience is that the bigger the company, the *more* mainstream and predictable its offerings. It's the small companies that take chances on books that may not have a large following.

I believe the large publishers use their small imprints for the non-mainstream and riskier publications.

[Fbone]

Originally Posted by Elfwreck

Some will buy under those terms anyway, but not everyone who'll buy a new pbook will spend the same money on a book they can't give away if they don't care to re-read it.

Absolutely. Less value lower price willing to pay.

[DMcCunney]

Originally Posted by Fbone

I believe the large publishers use their small imprints for the non-mainstream and riskier publications.

That's part of what imprints are all about. They are specifically intended to publish certain types of books, appealing to certain market segments. They may spawn bestsellers (and the champagne corks will pop and joy will abound if they do), but that's not their purpose.

The question for the parent company is whether the imprint reaches a large enough market and makes a good enough contribution to revenue and profit. In some cases, prestige is also a factor, and an imprint might exist that publishes "important" books that win awards, gain critical fame, and wind up being taught in literature lasses, but which don't actually sell all that well.

Many years ago, I worked in retail, and at one point a friend who worked in the same store was going on about the stuff the buyer for the China department had picked up in Europe. "This is such shit!" he said, as he unpacked it. "But the shit sells son!", said the canny old buyer. The store was considered the high end department store in the area, and sold expensive high end goods, but it's a good bet the China department made more money on German kitsch than expensive Wedgewood settings.

So it is with publishing. The National Book Award winner is what the publisher points to with pride saying "We published that!", but the trashy romance novel might pay the bills.
______
Dennis

[indie]

I haven't read them all, but the comments in this thread are hilarious.

[murraypaul]

Originally Posted by DMcCunney

What part of "80% of the costs of producing the book are incurred before the book reaches the point of publication in printed or electronic format" is not clear to you?

The part where those costs are all that matter. They are not the cost of the book to the purchaser.
You are completely ignoring everything that occurs after this point, including retail. That is unrealistic. In the eBook model the retailer does much less than in the pBook model, and over time the retail commission will be forced down. That is why store lock-in plays well for Amazon, it means the publishers have to go through them to (easily) get to Kindle users. If the market standardises on ePub with generic DRM then in less that 5 years you will see large publishers running their own eBook stores and cutting Amazon/B&N/... out entirely.

And the costs incurred before print/bind/warehouse/distribute are also variable.

How?
You pay the advance once. You edit once, you typeset once per edition, you publicise once per stage of release. How do these costs increase if you sell 10000 books rather than 1000?

Part of our disagreement is that I think you see far greater cost savings by eliminating the print edition than I do, and have an unrealistic idea of how much ebook prices can be lowered if they are removed from the equation.

Half the product that they paid to produce gets destroyed. How can that not be inefficient? You have printed and bound a book, shipped it to a retailer, taken up shelf space (which ultimately the retailer will charge you for one way or another, maybe by higher margins on next years books), and got nothing for it. Every eBook that gets 'produced' gets sold.

You also have an unrealistic idea of how much producers will lower prices, even if those costs don't exist.

That is a separate issue. The question is how much they could be cheaper. Publishers keeping the prices high is why people are complaining.

If I'm a publisher, I need to make money on sales of my books. I have to make a profit. And the question I ask if I'm smart (and all too many in publishing or any other industry aren't) is not "What is the maximum profit I can make?" It's "What is the minimum amount of profit I have to make to survive?" One of the problems facing publishing (and other industries) is that the answer to my question is often higher than the best answer they can determine to the "maximum profit they can make" question. They're in trouble.

And some of them will change and thrive, some of them will not and will collapse. That is capitalism, the ones that cannot adapt will be beaten by the ones that can.

And the quotes in the article aren't as meaningful as you might wish. Without knowing underlying numbers, percentages aren't very informative. "Sales went up 3000%!" Super. From how many units to how many units? What was the original price you reduced? What does this mean in terms of actual revenue and profit?

The 3000% was revenue, not units.

Books are in an analogous position: they compete for time more than money.

If the implication (of the entire section, not just what I have quoted) is that demand is inelastic, then I disagree strongly. The Kindle makes impluse buying also zero effort. Amazon recommends a book, you read the blurb, think it looks interesting, and look at the price. There will be a price limit that means immediate sale, one that means read sample and one that means move on.
I did this a couple of days ago, for Wolf Hall. I'd never heard of it before, but it sounded interesting, had won an award, which is presumably an indication that it isn't terrible, and (most importantly of all) was less than $5. For that price I'll take a chance. If it had been $10 I'd have moved on.
The three Stieg Larsson books were also <$5, I've heard good things about them, so I picked them up. I've got Fagles' Illiad in paper, but is was less than $5, so I picked up a Kindle edition. And so on.
You make a small amount of money by competing with your competition for a limited market. You make a large amount of money by expanding to a larger market.
There are getting on for 100 million iThings out there than can run iBooks/Kindle/... Most of the owners are probably not regular readers, but might be interested in the latest sports book, autobiography, tv tie in, ..., if they are made aware they can get it, and it is an an impulse buying price.

[JoeKeppler]

While this may be 'another' thread about the sometimes high price of e-books, and though I might have missed many a discussion on it, I still think this is a great topic.

I'm going to reeeeeally attempt to avoid sounding like I'm shilling here, so please bear with me, but my views on this topic are intertwined with a recent conversation I had about my own book with a "pirate" friend of mine. I'll try and keep it down!

The electronic medium for book reading was as foul and alien to me as possible about two years ago. I detested the idea of not having a physical copy of my favorite author's latest... but then, I was - possibly still am - a blind curmudgeon. I didn't own a reader and I'd never come close to trying.

So I self-published my debut novel first in hardcover and then, about 4-5 months later, paperback. I listed both for $24.99 and $14.99 respectively. As you might imagine, being a new author, I sold maybe 400 out of the 1500 or so I ordered. Most were to friends and family. Needless to say, I didn't recoup all my production costs.

I won't bore you with my e-reader Baptism moment, but I'll say it was decently recent, and completely awesome. I am now a big believer in this medium - possibly more so than it's elitist older brother.

So I had a conversation with a friend of mine that became an e-convert well before me about creating my book for the electronic medium. I told him I was clueless, but excited about going digital. I told him how much I was looking to charge for it. He laughed and shook his head when I said $9.99.

What's so funny, I asked? He told me that whenever he saw a book by an author he didn't know that sounded intriguing in the slightest but was listed at the price I had mentioned, he'd just head over to his favorite "torrent" site and pirate the book for nothing. A Pirate's code, I suppose.

My feathers were significantly ruffled at hearing this, but rather than lecture, I decided to ask instead what he thought an acceptable price would be for an e-book in his eyes? Was there a limit that he would agree to? Or did he just pirate everything?

Turns out my "pirate" buddy did have some morals after all. He thought about it and hypothesized that if he saw a book on the e-marketplace that intrigued him that sat below the 5 dollar mark, he'd probably give it a chance. But that was his cutoff.

Terribly sorry for the long response here, but that was the setup. I'm curious myself now - because his response made sense to me, especially when discussed in length - for those of you arguing that publishers charge too much for e-books; what is your cutoff price? Do you have one?

I'm very much of the "App Store" mind now myself : there's a reason 1-2 dollar time wasters such as "Doodle Jump" or "Angry Birds" have now made their programmers/authors millions in gross... and I personally believe it's because they took a chance on trying to catch the eye of thrifty folks... which, in this economy, seems to be the lot of us!

Thanks for your time, my apologies for taking so much of it!

[M. R. Mathias]

The content of a book can cause it to be worth more than an even better formatted, better edited similar title. For instance: A book written in prison, actually a 700,000 word epic trilogy, written in longhand in a maximum security prison cell in Texas by a convict with a HS diploma and a violent prison record is worth something extra just for the simple fact that you can't read that kind of material every day-- A note to the editors reading this, that was a run on sentence. Something us uneducated writers of nine full length novels and sixty short stories, do all the time-- when you read something so rare as the kind of epic I am speaking of and find that it is in fact good (even though it had flaws, but is exactly what it is supposed to be) You'll understand that paying 9.88 for it was a bargain for you, because this book was written by a convict nut case, not about one. And you can buy a thousand books for
.99 and never get to know that the person who wrote it was really sitting in a dungeon with a gross of crappy prison issued ink pens writing it.

So there is a reason for some ebooks to be relativly expensive. Just my .03 cents

[murraypaul]

Originally Posted by M. R. Mathias

The content of a book can cause it to be worth more than an even better formatted, better edited similar title. [...] So there is a reason for some ebooks to be relativly expensive. Just my .03 cents

The problem is that people won't realise the value until they have read it, so it is a bit of a catch-22. A lower priced book is more likely to be bought on a whim than a higher priced one. Free samples can help though.

[Scott Nicholson]

Actually, consumers have a great deal to say about the price of e-books, if they chose to weigh in and be patient. It's going to be classic supply-and-demand as soon as another million ebooks get dumped into the pipeline, and I predict 10 million by 2015.

A reader doesn't care if a novel took the writer 20 years to write. They don't care if a publisher has to pay off a bunch of staff people, lawyers, board of directors, and shareholders. They don't care if Steve Jobs thinks ebooks should be $15.

A reader wants the best experience at the lowest possible price.

Scott

[Elfwreck]

Originally Posted by JoeKeppler

While this may be 'another' thread about the sometimes high price of e-books, and though I might have missed many a discussion on it, I still think this is a great topic.

It's a recurring topic, and plenty of us love new rounds of it. The commercial landscape keeps changing, so there's always new aspects to discuss.

I'm going to reeeeeally attempt to avoid sounding like I'm shilling here, so please bear with me,

Shilling is fine as long as you're contributing to the discussion as well! (Shilling without contributing is also fine, but we have a different forum for that.) We like authors. We like knowing about new ebooks. We like knowing what made them decide to release their works as ebooks.

Turns out my "pirate" buddy did have some morals after all. He thought about it and hypothesized that if he saw a book on the e-marketplace that intrigued him that sat below the 5 dollar mark, he'd probably give it a chance. But that was his cutoff.

That's about my cutoff. I've bought a tiny handful of ebooks at more than $5, mostly from Baen, but I'm at a point of realizing the only reason I'd pay more than $6 (Baen's price) for an ebook is either believing I'll really love the book and want to re-read it several times, or wanting it as a reference work.

I'll buy more-than-$5 PDFs of gaming books. I'm not likely to buy popular novels, in part because the ones I'd consider for over $6 tend to be infected with DRM. I vote with my dollars... publishers who only release DRM'd ebooks obviously aren't interested in my business; I can find something else to read instead. If I really want to read that book, I can borrow the pbook from a friend, or wait for it to show up used for a few dollars.

[Ravensknight]

Originally Posted by M. R. Mathias

A book written in prison, actually a 700,000 word epic trilogy, written in longhand in a maximum security prison cell in Texas by a convict with a HS diploma and a violent prison record is worth something extra just for the simple fact that you can't read that kind of material every day...

No, it is not worth something extra. The background of the author, when it has NOTHING to do with the story, adds/detracts not at all from the value of the story.
I'm not paying $10 to read a fantasy novel by a no-name prison hack. I'd pay maybe $2-3 to try out a new author though. And if I liked the story, then I'd buy later novels, probably at a higher price.
But it would have to do with the quality of the story, not the authors lifestyle.

[Fbone]

Originally Posted by Elfwreck

If I really want to read that book, I can borrow the pbook from a friend, or wait for it to show up used for a few dollars.

Or borrow from your local public library either in printed or digital format. You paid for the library book might as well take advantage of it.

And SF area libraries have very good digital inventories.

[Elfwreck]

Originally Posted by Ravensknight

No, it is not worth something extra. The background of the author, when it has NOTHING to do with the story, adds/detracts not at all from the value of the story.

I can go as far as acknowledging that the author's background can make me interested in a story, and give it context. I'm more interested in reading a story about the horrors of the Vietnam war from a veteran than a civilian, even if both stories are fiction; the veteran's fiction is based on real experiences, and that's likely to add realism to the story.

And I don't care to read "How To Make Your Relationship Work" books by authors who've been divorced three times.

So an epic trilogy written by a man in prison might be of more interest, depending on the topic of the novels. Does it involve slavery? Imprisonment? Punishment? Crime deterrents? Mind control/brainwashing? Legal maneuvering? A prisoner's perspective on any of those might be worth reading, even through the additional filter of characters & a fictional setting. However, an epic fantasy trilogy about saving the world with the use of a Magical McGuffin... meh. Have read plenty of those. Can't see how a random guy in prison is going to write one better than what I've already read, by virtue of his isolation.

[Elfwreck]

Originally Posted by Fbone

Or borrow from your local public library either in printed or digital format. You paid for the library book might as well take advantage of it.

And SF area libraries have very good digital inventories.

I can't, at the moment, do digital library books; I'm not dealing with ADE. (This is in part a lack of desire to support DRM at all, and in part geek-laziness; the hassle of ADE, registration over dialup, and the tweaking involved to get the books onto my PRS-505 are more than I want to deal with.) When I run out of good fanfic, I may reconsider dealing with free-and-temp DRM'd ebooks--but odds are, I'll watch Buffy, SGA & Supernatural in order to read fanfic for those before I install DRM-reading software.

And currently, odds are that any book I actively want to read will be available through my friends faster than I'll be able to find it at a library I have easy access to.