Article on ebook profits

[tompe]

Originally Posted by Sil_liS

I was talking about the bottom line from a purely economical point of view. If you decide that you don't like a pbook that you bought/received as a gift you have the option to resell or donate. You don't have that option with ebooks, so the economical value is lower. Add to that the fact that it costs less to make and distribute and the price should be lower.

And since I can search the value is higher so maybe for a lot of reader the value of the ebook is higher than the value of the pbook. So how can you say that it always is the case that the price should be lower?

[Andrew H.]

Originally Posted by Barcey

Or just make your own copy for free. After all, the big publishers aren't price fixing and copyright violation isn't stealing. If the BPH's want to play that game they'll lose.

It's theft in my jurisdiction. It's only under federal law that the crime has a different name - but I don't think that the name matters much, as you are appropriating someone's work without paying them for it. That's "stealing" in my book. This has been an issue for people who produce or sell things as long as things have been produced or sold.

Highroller's reaction is very typical to the irrational e-book pricing. Pricing e-books higher then what a paper version is selling for will just continue to upset people. "Experimenting" to find out the maximum price that people will pay (before they get pissed of and stop buying) is not how you price virtual goods. That's what market research is for. You have to do it properly and you have to accept the results and then figure out how you can deliver to that price point, increase the product value or go out of business.

Consumers are not going to react the way you think they should. Virtual goods have different economic rules then physical goods. Pretending they don't doesn't make it so.

A lot of people seem to be buying e-books from agency publishers. I mean, agency pricing was introduced, seemingly everyone on the internet complained, and yet sales tripled. I'm not sure that the rules are as different as people wish them to be.

[Blue Tyson]

Depends what you mean by tripled, as the last few months figures were reported, sales have been flat....

[Sil_liS]

Originally Posted by DMcCunney

That's a retailer issue for the most part. How would you suggest a publisher address it? (The obvious answer is "sell direct", but this is something the large publishers will approach carefully. When you sell products through retailers, you can expect your retail partners to be unhappy if you sell direct, as you might be in competition with them. Since the retailers are your partners, and you need them, you'll think hard about just how you'll sell direct.)

Any retailer is probably unhappy about the publisher using other retailers as well, but that never stopped the system from working. And the fact that Amazon sells used books is in direct competition with the publishers, but that doesn't stop the system from working either.

Originally Posted by DMcCunney

Whether the customer gets more is a matter of perception. I've encountered a poster on MR who feels that having the book in electronic format adds value due to convenience and the ability to carry and read anywhere, and is willing to pay a premium for it. I might not, but I'm not going to say he's wrong in his perception.

You can also carry pbooks around. For ebooks you would also need a reader to perform that simple function.

[Sil_liS]

Originally Posted by tompe

And since I can search the value is higher so maybe for a lot of reader the value of the ebook is higher than the value of the pbook. So how can you say that it always is the case that the price should be lower?

The ability to search comes from the software that is used to view the ebook. And there are some science pbooks for example that have an index at the end to help you look for specific words.

[elcreative]

Yes but my one eReader (modded) is now an eLibrary and I carry 25k books with me... choice at any time wherever I am, fiction or non-fiction, even reference works... try carrying that lot around with you... and even allowing for the Public Domain classics that dominate, the content of my eReader is worth a seriously larger amount than the eReader lone cost, after all even PD classics cost money if bought in paper...

Originally Posted by Sil_liS

You can also carry pbooks around. For ebooks you would also need a reader to perform that simple function.

[tompe]

Originally Posted by Sil_liS

The ability to search comes from the software that is used to view the ebook. And there are some science pbooks for example that have an index at the end to help you look for specific words.

The pre-condition for the software to work is that there is en ebook at all. So an ebook will have a higher value than a pbook with respect to searchability and possibility to annotate ans export annotations.

[DMcCunney]

Originally Posted by Barcey

The market research firms don't just ask the customers what the price should be. There is a science to it and they're very good at it.

I worked for market research firms for over ten years. I think I know something about it. I've seen it done well, and badly.

The fact that the answer was provided through market research doesn't mean it's right.

No it's not easy but that's how business works. When Ford created their first automobile they built it to a price point that a teacher could afford. They didn't just build it and say too bad that's what it costs.

Ford's innovations were in what we would call flexible mass production, and their manufacturing improvements permitted the price point they hit.

Often, "Too bad, that's what it costs" is the answer, like it or not, because that is what it costs.

Change the term of sale so that the consumer maintains the right to read the book for the their own personal use for the remainder of their life. They can't resell it, but they own it.

That's how I see my ebooks now. Of course, I don't get books encumbered by DRM, or purchase from vendors who might suddenly make them unavailable.

Add a satisfaction guarantee. If you don't like it we'll refund your money.

Such guarantees are normally offered by the seller, which in this case is the retailer. If the publisher is selling direct, they might offer such a guarantee. If sales are through retailers, it gets harder.

Improve the quality.

In what sense? Improving the formatting for the user's particular device?

Anyone can create copies, so you can't corner the market or hold a monopoly. You have to be much more careful about customer satisfaction. With a physical product the seller is negotiating from a stronger position.

Agreed, but it still doesn't change the rules I was referring to. Products have costs, and profit they have to make to remain in business, whether the product is physical or virtual. Customer satisfaction is critical either way, but I'm not sure I see it as more critical for a virtual product.

I believe the disagreement comes from much more then this. Electronically distributing a 1MB file is much cheaper then selling through brick and mortar stores so 50% of the list price disappears in most consumers view. The print/bind/warehouse/distribution/return costs come out of the wholesale price. The publishers are trying to take a couple bucks of the list price and consumers aren't buying that story.

All producer costs come out of the wholesale price.

The fact that the consumer thinks that 50% of the list price disappears because it's an electronic file doesn't make it so. It wouldn't be the first time consumers held a mistaken viewpoint about a product.

If you suggest the publishers should somehow try to adjust to be able to sell at that 50% lower price, I understand the reasoning, but don't advice holding your breath waiting for it to occur.

The other point of view is the customer's perceived value of the product. They're being told they don't own it, they can't sell it, it could go away tomorrow and there's nothing they can do. The value relative to a paper copy is less but they're being asked to pay more. Either way they looks at it they get pissed.

True enough if they are being told that, but I don't think that's the case across the board.
______
Dennis

[screwballl]

Books will be priced at what the market allows for. If it is too expensive, then few people will buy it. If it is too low then the company loses money. Some publishers price it higher in order to sell the paper versions which allow them much higher profits... 25 cents worth of paper versus their "modified pricing" claims showing it costs them $5 per ebook (as a generic example, not actual numbers).
If you look at some of the ebook best sellers on the mainstream company websites like B&N and Amazon, the majority of titles listed are in the $2-5 range.

[Sil_liS]

Originally Posted by elcreative

Yes but my one eReader (modded) is now an eLibrary and I carry 25k books with me... choice at any time wherever I am, fiction or non-fiction, even reference works... try carrying that lot around with you... and even allowing for the Public Domain classics that dominate, the content of my eReader is worth a seriously larger amount than the eReader lone cost, after all even PD classics cost money if bought in paper...

There is reading for pleasure and reading for work.
When it comes to reading for pleasure I read one book at a time, and I don't really see why I should have that many books with me.
When it comes to reading for work I indeed need more books, but I don't think that we were discussing the price & value of work-related books.

If you read fast enough, and you do nothing else, you might read 1 book/day. That means that you could read the 25k books that you have in a little over 68 years. Do you really need to carry all of them with you?

[Sil_liS]

Originally Posted by tompe

The pre-condition for the software to work is that there is en ebook at all. So an ebook will have a higher value than a pbook with respect to searchability and possibility to annotate ans export annotations.

That doesn't make any sense. I can run an application without opening a book, but I can't view the book without an application. And the ability to search and annotate belongs entirely to the software. You should be able to realize that not every software that lets you view the book also lets you search and annotate.

[screwballl]

Real world cost:

Out of the gross revenue for each hardcover book, the publisher pays about $3.25 to print, store and ship the book, including unsold copies returned to the publisher by booksellers.
For paperback, manufacturing and marketing costs average around $1 but may go higher or lower depending on the title. Most of these costs will decline on a per-unit basis as a book sells more copies.

Now let’s look at an e-book. Under the agreements with Apple, the publishers will set the consumer price and the retailer will act as an agent, earning a 30 percent commission on each sale. So on a $12.99 e-book, the publisher takes in $9.09. Out of that gross revenue, the publisher pays about 50 cents to convert the text to a digital file, typeset it in digital form and copy-edit it. Marketing is about 78 cents.

The author’s royalty — a subject of fierce debate between literary agents and publishing executives — is calculated among some of the large trade publishers as 25 percent of the gross revenue, while others are calculating it off the consumer price. So on a $12.99 e-book, the royalty could be anywhere from $2.27 to $3.25.

All that leaves the publisher with something ranging from $4.56 to $5.54, before paying overhead costs or writing off unearned advances.

So you figure that 50 cents to make an ebook alone is far off from the several dollars that some companies proclaim. Others that you see for only a few dollars just means that the author was paid and very few people will enjoy the books, so the selling company has it basically at cost.

[elcreative]

Here we go again... why should I have to choose which book I want to read before I go anywhere/do anything... if they're in the reader then I decide at the time I want to read rather than in advance. At least I'll never run out of things I'd like to read... by your spurious argument I should never buy more books than I can read but I acquire/buy my books on the basis that I might like to read them someday... I've probably at least 3.5k in paper that I haven't read yet either, so what. The main answer being YES, I do need to carry them all with me... others failure of imagination is no reason to restrict mine...

Originally Posted by Sil_liS

There is reading for pleasure and reading for work.
When it comes to reading for pleasure I read one book at a time, and I don't really see why I should have that many books with me.
When it comes to reading for work I indeed need more books, but I don't think that we were discussing the price & value of work-related books.

If you read fast enough, and you do nothing else, you might read 1 book/day. That means that you could read the 25k books that you have in a little over 68 years. Do you really need to carry all of them with you?

[Sil_liS]

Originally Posted by elcreative

Here we go again... why should I have to choose which book I want to read before I go anywhere/do anything... if they're in the reader then I decide at the time I want to read rather than in advance.

I read books. As soon as I'm done reading a book I start another one. For me reading is not related to going on a trip. But if you only read ebooks while you're travelling you have a point.

Originally Posted by elcreative

At least I'll never run out of things I'd like to read... by your spurious argument I should never buy more books than I can read but I acquire/buy my books on the basis that I might like to read them someday...

I wasn't saying that you should buy a new book when you are finished with the one that you are reading. I was saying that buying more books than you can read in your lifetime doesn't make sense to me. But I'm sure the publishers are extremely happy with customers like you.

Originally Posted by elcreative

I've probably at least 3.5k in paper that I haven't read yet either, so what. The main answer being YES, I do need to carry them all with me... others failure of imagination is no reason to restrict mine...

Have fun reading them!

[Highroller]

He said acquire/buy. Doesn't mean he bought them all. Maybe 95% of his collection consists of free out of copyright classics ) Not saying that is the case but its possible.