Ebook Pricing

[Freeshadow]

Originally Posted by murraypaul

Um, what?
A price set by the publisher is automatically fair?

well, having had the pleasure of communicating with Neil here, having read his statments on various topics, and seen his decisions about some issues I'm more than willing to assume the said in case of bewrite-published items.

[karenr_nz]

This thread is interesting on many levels - here are my two cents worth:

Firstly, thank you Neil for providing a publishers perspective. I certainly didn't realise that many retail outlets required that prices be the same across all stores. It seems to me that this is shooting themselves (and the publishers) in the foot, as it removes the option to discount, and thus differentiate their retail outlet from others, and leaves the publisher in the sticky position of having to insist on the Agency pricing model.

Secondly, to Steven Lake, the price I am willing to pay for an ebook is entirely dependent on whether the author is known to me. I have bought several ebooks from favorite authors as either new releases or eARC's (thanks Baen) at around $15 US (admitedly, this is basically the same as a MMPB in NZ dollars). If I could by the next book of the Wheel of Time (due out in 2 weeks, geo-restricted to hell and back) I would be willing to pay upwards of $20US, but instead have to by as a DTB. However, for unknown authors I would generally consider $6-8US as a reasonable price if it has been through a publisher or <$5US if self-published.

Finally, in NZ as in Australia, the selection of ebooks that we can purchase has fallen by at least half in the past year due to geo-restrictions. So at the moment, all I can say is 'thank you' to the RedGroup for at least providing some content to those of us downunder, and a big hurry up for getting the remaining big publishers on board. Prices are an issue, but I will quibble over how much something is priced at when I can actually access it - until then, please just try and make more content available!

[neilmarr]

Just for interest, Karen, we signed only today a contract with the EZread retailer. We did ask for quite some adjustment to their original draft (and our new terms were accepted), but it comes in fair and square like this:

*30% retail commission.
*All books offered DRM-free, text-to-talk authorised, no geographical restrictions.
*No adjustment (upward or downward) of a $5.95 cover price across the board in all countries.

Again, though, we would be in breach of contract ourselves if another retailer decided to slash our price withour consultation (as some do -- even those who have exchanged a similar contract).

Upward adjustment is also in breach of our contracts, but -- as with the main player, Amazon -- it takes so long to put things to rights that, meantime, our reader reputation as publishers and our sales potential in the general marketplace is compromised.

Sure, some publishers aren't exactly white hats and exploit rather than play fair. But it ain't always the publisher's fault when prices go haywire, as some buyers seem to think ... with encouragement from open letters like the latest from Amazon. Often there's equal blame on both sides.

I really am ready to take it on the chin if we make a mistake (and we'll immediately put it right if a single reader/buyer points out our error), but I hate to be herded in as a scapegoat for questionable retail practices.

Slainte. Neil

[murraypaul]

Originally Posted by neilmarr

Just for interest, Karen, we signed only today a contract with the EZread retailer. We did ask for quite some adjustment to their original draft (and our new terms were accepted), but it comes in fair and square like this:

*30% retail commission.
*All books offered DRM-free, text-to-talk authorised, no geographical restrictions.
*No adjustment (upward or downward) of a $5.95 cover price across the board in all countries.

Again, though, we would be in breach of contract ourselves if another retailer decided to slash our price withour consultation (as some do -- even those who have exchanged a similar contract).

Upward adjustment is also in breach of our contracts, but -- as with the main player, Amazon -- it takes so long to put things to rights that, meantime, our reader reputation as publishers and our sales potential in the general marketplace is compromised.

Sure, some publishers aren't exactly white hats and exploit rather than play fair. But it ain't always the publisher's fault when prices go haywire, as some buyers seem to think ... with encouragement from open letters like the latest from Amazon. Often there's equal blame on both sides.

I really am ready to take it on the chin if we make a mistake (and we'll immediately put it right if a single reader/buyer points out our error), but I hate to be herded in as a scapegoat for questionable retail practices.

Well this is exactly the sort of agreement most people around here decry when it is one of the major publishers doing it, a fixed price with no ability for a retailer to offer discounts or offers.

[neilmarr]

What you don't catch, Paul, is that our price is set low -- at 50%, or much less, of the corresponding paperback edition, which is what we can carry without losing money on each sale. Strict Agency 5 fixed-pricing by the bigger publishers sets the bar much higher so that the buyer loses.

The EZread agreement with us puts the buyer on a win-win. Fair pricing that cannot be cut by the retailer without consultation, but also cannot be increased willy-nilly as Amazon is prone to do with Kindle ebook prices.

If one retailer arbitrarily slashes the ebook price on any of our ebook titles, WE (the publisher) would be in breach of our EZread agreement if we didn't immediately inform them and lower across-the-board cover price to an equal level at their store, too.

Cheers. Neil

PS: Here's a wee point for you to ponder: The print per-item cost of a PoD paperback is very much higher than it is for a mass-run product by a major house.

This means that smaller fry like BeWrite Books make a hugely significant saving when print cost is out of the picture and this can be affordably reflected in low ebook prices. The Big Five, however, save much less against print by producing the ebook edition of a title.

So we can offer very low prices on ebooks whereas the bigger players must set the price higher to reflect a smaller saving and (as we also must) to balance the account between ebook and treebook sales to cover other standing costs.

Agency 5, therefore, works for them but not for the consumer. Our much, much lower fixed price, on the other hand, works all round in everyone's favour. N

[murraypaul]

Originally Posted by neilmarr

What you don't catch, Paul, is that our price is set low -- at 50%, or much less, of the corresponding paperback edition, which is what we can carry without losing money on each sale. Strict Agency 5 fixed-pricing by the bigger publishers sets the bar much higher so that the buyer loses.

That is a quantative difference though, not a qualitative one.
You are saying that their fixed price is bad, but your fixed price is good.

The EZread agreement with us puts the buyer on a win-win. Fair pricing that cannot be cut by the retailer without consultation, but also cannot be increased willy-nilly as Amazon is prone to do with Kindle ebook prices.

If one retailer arbitrarily slashes the ebook price on any of our ebook titles, WE (the publisher) would be in breach of our EZread agreement if we didn't immediately inform them and lower across-the-board cover price to an equal level at their store, too.

But that is because you have chosen to sign these sorts of agreements.
If you hadn't, how would you be hurt by an agreement that gave you fixed royalties of 30% of $5.95, and let the retailers set the prices? Like any other product, you sell at a wholesale price, and let others worry about the retail side.
You get the same amount per book, and there would be competition between retailers. If one wants to put your book on sale, you get more sales, at the same amount per book.
A fixed price that stops the retailer selling to me a lower price is not a win for me. Currently in the UK Amazon are selling eBooks for dramatically less than other retailers, in the order of 50% of the price. Forcing a fixed price means I would pay more for the same book.

So we can offer very low prices on ebooks whereas the bigger players must set the price higher to reflect a smaller saving and (as we also must) to balance the account between ebook and treebook sales to cover other standing costs.

Agency 5, therefore, works for them but not for the consumer. Our much, much lower fixed price, on the other hand, works all round in everyone's favour.

But 'very low' is your opinion of the price, not an objective measure. I'm sure some of the big publishers honestly believe their prices are fair as well, that doesn't change the view from the consumers point of view that contracts have been written to prevent any form of retail competition, to fix prices at a certain level. Hard to find an example where price-fixing helps consumers. (Outside of price-limiting (setting a ceiling) for services from monopolies)

[neilmarr]

Thanks, Paul. Good points.

Let me pick up on this: ***how would you be hurt by an agreement that gave you fixed royalties of 30% of $5.95, and let the retailers set the prices? Like any other product, you sell at a wholesale price, and let others worry about the retail side.***

That would be fine if it were the case, Paul. Sadly, it ain't. Unlike with treebooks, where publishers still do receive return on Recommended Retail Price when a store discounts (unless by mutual agreement), publishers' returns on ebooks are on 'sold at' price and not RRP at the stores we deal with.

A promotional loss-leader on an ebook benefits only the retailer.

And, as I say, if one store discounts an ebook, we are contractually obliged to immediately reduce cover price everywhere else. It's administratively difficult to keep track and can easily lead to actually losing money on each sale of a discounted title.

Again, though, such a loss on ebooks would hurt bigger publishers using mass print run for treebooks more than it would smaller houses using more expensive PoD production for paperback because we have a slightly greater margin for loss than the main players in digital.

Even where a publisher does receive commission on full RRP of digital versions, price slashing of the ebook would seriously damage treebook sales and upset the balance of carefully apportioned publishing costs. Hence the imposition of their Agency 5 model.

Very best. Neil

[karenr_nz]

Neil, I would just like to thank you for providing such honest and open information from a publishers perspective. Those of us on the purchaser side of the equation do not usually get to see this, and it is very instructive.



I think many people here at MR, myself included, have assumed that the retailing of ebooks should be fundamentally the same as the retailing of pbooks, and thus we have failed to understand some of the issues associated with ebooks. The key one is that, unlike pbooks, retailers do not own the products that they are on-selling. My understanding of the process is below - please correct me if I am incorrect on any points.

With a pbook, the bookseller purchases the book from the publisher/distributor at a cost, usually around 50% of RRP. They can then choose to price that book however they choose - because they own it/have paid for it, and can thus sell it below cost, or at twice RRP if they choose.

However, with an ebook, the retailer does not purchase x number of licenses to then on-sell, but rather acts as an intermediatary between the purchaser and the publisher - in other words, they act as the publishers agent. So the publisher sets the terms and conditions for sale, and pays the retailer a commission on the sale.

[neilmarr]

You've got it right, Karen. Ebooks (as with the basic principle of PoD) are non-inventory. Retailers don't hold stock. They provide only a shop window There's nothing on the shelves inside and nobody at a counter to add a human face between publisher/author and reader. You place an order based on your choice from the window display, pay in advance, and the goods are delivered from a file base. In the old days of PoD, the system was the same (in fact, it still largely is) and Amazon and others negotiated commissions areound 25% with publishers. Now some online retail shops are often demanding the same penal retail commissions as the brick-and-mortar stores with their stock, storage, staff, building, etc, etc, overheads. Cheers. Neil