Ask a publisher?

[JMikeD]

Originally Posted by pilotbob

Granted, there are some products that are the same price no matter where you go, Apple, Nintendo, XBox... prices are controlled... you can't sell these devices at any amount other than the set MSRP.
BOb

I wonder from time to time how Apple gets away with price-fixing. I thought there were laws against that sort of thing.

I learned from the irate publisher guy that in Germany, prices for books are fixed by the publisher. Discounting books is against German law. The EU (and the Swiss, in particular) are upset about this and have challenged it.

[DMcCunney]

Originally Posted by GeoffC

and the 'obvious' way is to cut costs, in other words removing the vast expence of keeping a printing press and its drain on resources...removing the costs of transport and storage...

Not obvious at all.

First, the publishers don't own the presses, and don't have the cost of maintaining them. They contract the work out to printers with the capacity to handle the volume. (Supply chain management is a major headache, as all of the pieces need to be in place at particular times, to insure that books scheduled for release are actually available when stated. Authors who miss deadlines are a particularly thorny problem... )

They do pay for the printing, shipping, and warehousing.

as a business model it makes more sense for publishers to ditch paper forms of most popular books and actively encourage by all means the electronic options...

their biggest problem is likely to be creating a large enough customer base, which should not be difficult if the will is really there...

It makes sense if the market the publisher serves is all capable of downloading and reading electronic books, and wants to read ebooks rather than paper books.

This is not currently the case, and is unlikely to be for the foreseeable future.

Personally, I consider ebooks an additional format for books, and not a replacement for paper books, and I have large numbers of both.

Dropping the costs of printing, warehousing, and distribution will not magically solve publisher's ills. The bigger problem is that books compete for the potential reader's discretionary time as well as their money. Reading is a foreground activity, demanding your attention. What might the potential reader being doing instead of reading a book?

The biggest problem publishing faces is simply that too many people would rather do other things than read.
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Dennis

[Taylor514ce]

Originally Posted by GeoffC

and the 'obvious' way is to cut costs, in other words removing the vast expence of keeping a printing press and its drain on resources...removing the costs of transport and storage...

as a business model it makes more sense for publishers to ditch paper forms of most popular books and actively encourage by all means the electronic options...

their biggest problem is likely to be creating a large enough customer base, which should not be difficult if the will is really there...

Printing costs are passed on to the consumer; the publisher doesn't carry the cost of printing. Nor do most publishers "keep" a printing press. Printing companies do. What "drain on resources" do you mean? Presses run on electricity and consume paper and ink. Paper is a renewable resource, and most inks these days are water-based. And the electricity consumed in producing a printed book is probably much less than that consumed in reading all the e-book editions.

I'm biased, as a 20-year veteran of the printing industry and author of many electronic workflow systems for printers, but I think I know enough about it to point out that the PRINTING of the books is not an expense the PUBLISHER worries about overmuch.

[pilotbob]

Originally Posted by Taylor514ce

I'm biased, as a 20-year veteran of the printing industry and author of many electronic workflow systems for printers, but I think I know enough about it to point out that the PRINTING of the books is not an expense the PUBLISHER worries about overmuch.

What about storage, delivery, warehousing, disposal. With an eBook you don't need to decided if the initial run is to be 10k or 100k. You just create a file as the books are purchased. This has GOT to be less expensive than printing etc. As you say, the "cost" of all this is in the price of the book. If those costs were eliminated and the books are sold for the same price (which already seems to be the case with eBooks) then the publisher gets that extra money, yes?

BOb

[cush]

Originally Posted by pilotbob

What about storage, delivery, warehousing, disposal. With an eBook you don't need to decided if the initial run is to be 10k or 100k. You just create a file as the books are purchased. This has GOT to be less expensive than printing etc. As you say, the "cost" of all this is in the price of the book. If those costs were eliminated and the books are sold for the same price (which already seems to be the case with eBooks) then the publisher gets that extra money, yes?

BOb

It would certainly seem that way to me. It would also give the publisher some "wiggle room" to compete on price, too. The ability to react rapidly to market demand, as you note, for a specific title would also seem to be a significant competitive advantage.

As others have pointed out in this thread the DRM issue is a big one. Until the industry adopts a standard that will function across most, if not all, platforms the promise of ebooks will not be realized. DRM is being used not only to prevent uncompensated sharing and downloading but to restrict competition and force (perhaps too strong a word) use of a specific platform and, most importantly from the vendor's viewpoint, book source. Amazon Kindle is a good example of this model which has been so successful for Apple.

By the way, I've just ordered a second Kindle so I guess in my case the business model is working.

[DMcCunney]

Originally Posted by pilotbob

What about storage, delivery, warehousing, disposal. With an eBook you don't need to decided if the initial run is to be 10k or 100k. You just create a file as the books are purchased. This has GOT to be less expensive than printing etc. As you say, the "cost" of all this is in the price of the book. If those costs were eliminated and the books are sold for the same price (which already seems to be the case with eBooks) then the publisher gets that extra money, yes?

Warehousing and distribution are also factored into the cover price.

And eliminating those costs doesn't necessarily provide the advantage you might wish.

When a publisher contracts for a book, the biggest imponderable is "How many copies will it sell?" The publisher's guess on that determines what they are willing to pay as an advance, and how generous the contract terms will be.

A book expected to sell really well will get a larger initial print order, but that's not the biggest factor in the costs. When you are printing a book, setup and makeready are big costs. Once the book is on the press, ready to go, the incremental cost of printing one more copy is a tiny fraction of the total cost. Indeed, economies of scale come into play: the more copies you print, the larger a base you have over which to spread the overhead, and the overhead becomes a proportionately smaller amount of each book's unit cost.

(While technology has changed matters somewhat in recent years, this is why it usually wasn't economic to do color printing in short runs. The cost per copy was simply too great.)

The publisher sells to the wholesaler at an agreed upon quantity discount. The wholesaler resells to the retailer. (In the case of really big retailers, like B&N or Borders, the publisher probably sells direct.) The price the retailer charges you may be discounted, but that comes out of the retailer's margin. Huge discounts by retailers tend to be "loss leaders", to get the customer into the store, where they are likely to walk out with other titles besides the one in the discount offer.

And the sort of discounts folks like Borders can offer, and the reason why the independent bookstores are getting squeezed, is bound up in the whole economies of scale issue. Borders can get a much better price per copy ordering 50,000 of a bestseller to supply their nationwide chain than the local bookstore can ordering 50 from Ingram, can pass that price advantage to the customer, and does.

Yes, an ebook can be cheaper to produce and sell, because manufacturing, warehousing, and distribution essentially go away as costs, and the resulting book can be sold cheaper.

So what? Is price the only issue affecting book sales? Is the number of books you read constrained by the number you can afford to buy?

It isn't here. My constraint is the time I have available to read the books, and I have a very large To Be Read stack in both paper and electronic editions. (The advantage to the electronic TBR stack is that you don't need to call the paramedics if it topples over on me...)

Books compete for the reader's discretionary time as well as dollars, and must vie for attention with all of the other things the reader might do instead. A shift to ebooks won't affect that equation at all.
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Dennis

[DMcCunney]

Originally Posted by JMikeD

I wonder from time to time how Apple gets away with price-fixing. I thought there were laws against that sort of thing.

Not the way you think.

There are laws forbidding retailers from colluding to set a price for a product, as price is assumed to be an area in which they'll compete.

There is no law that requires a manufacturer to sell to a retailer if they don't want to, and they can set a price at which their product will be sold. A retailer that undercuts on the price to gain a competitive edge over other retailers may find he can no longer get products from that manufacturer.

Apple products are popular enough that retailers play by Apple's rules or they don't play at all.

(And I suspect most of them are happy enough to go along, as it removes an area where they must worry about their margins. Consumer electronics is brutally cut throat in the US, with a number of retailers unable to make the cut. CompUSA is the most recent casualty.

Here in NYC, the competition is the grey market discounter who sets up shop, sells below cost, and is out of business in 6 months. How do you compete with that?)

I learned from the irate publisher guy that in Germany, prices for books are fixed by the publisher. Discounting books is against German law. The EU (and the Swiss, in particular) are upset about this and have challenged it.

It will be interesting to see where that challenge goes. It's all part of the fun of the EU. It's forcing some rather interesting and painful challenges on member countries so that everyone will do things the same way. I'm not betting either way on the long term prospects of the EU as they attempt to deal with the differences.

Germany is a Prime Mover in the EU. What does it do if Germany says "No! We're not changing this law?"
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Dennis

[slm]

Just for the record--Switzerland is not an EU member.
Also the EU system imposes costly penalties to countries that do not conform to EU law and decisions.

[JMikeD]

Originally Posted by slm

Just for the record--Switzerland is not an EU member.

I can't believe I let that slip by.... before I retired, I had to deal with all that stuff almost on a daily basis. I guess when I retired, I *really* retired.

[HarryT]

Originally Posted by DMcCunney

There is no law that requires a manufacturer to sell to a retailer if they don't want to, and they can set a price at which their product will be sold. A retailer that undercuts on the price to gain a competitive edge over other retailers may find he can no longer get products from that manufacturer.

That practice is specifically illegal in the EU.

[DMcCunney]

Originally Posted by HarryT

That practice is specifically illegal in the EU.

So a manufacturer can not stop supplying a retailer who does not comply with pricing guidelines?

Under what circumstances can a manufacturer refuse to supply a retailer (other than non-payment of bills)?
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Dennis

[HarryT]

I don't know what the "rules" are, but TV manufacturers in the UK were prosecuted a few years ago for operating exactly such a price-fixing cartel, and refusing to supply retailers who discounted prices.

[DMcCunney]

Originally Posted by HarryT

I don't know what the "rules" are, but TV manufacturers in the UK were prosecuted a few years ago for operating exactly such a price-fixing cartel, and refusing to supply retailers who discounted prices.

In this case, it isn't a price-fixing cartel among manufacturers. That's illegal here too. It's a single manufacturer refusing to sell to merchants who don't comply with its pricing guidelines. AFAIK, that's not illegal. (If I were a manufacturer, I'd be quite unhappy at laws that required me to sell to anyone. Some of the people who resold my products could behave in ways damaging to me, and I'd want the option to cut them off if they did.)
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Dennis

[pilotbob]

Harry... are there places that sell the iPod for prices other than the Apple set price?

I know some stores still get around this. For example, the can't discount the iPod, but we got a $50 Best Buy gift card when we bought an iPod Touch. Not quite the same but it worked out to a $50 discount since we are bound to have spent more money there anyway.

Also, some places will bundle the Nintendo DS with various games and third party add-ons like cases and such and you are basically getting the third party stuff for free. Still, not the same a cash off... but they are getting around the Nintendo set prices.

BOb

[LazyScot]

Originally Posted by JMikeD

He did bring an interesting point to light, though. In Germany it's illegal to discount books, even by online sales (I researched this after his email). As a consequence, there is a small bookstore on every corner, and a plethora of publishers. Of course, German doesn't appear to be a TV-centered country as the US is. Books are highly regarded as part of their culture there.

It used to be the same in the UK under the Net Book Agreement. I think the wikipedia article is roughtly correct -- but I can't remember the exact details. As to how much the death of the Net Book Agreement has damaged the UK book industry, I can't say (perhaps others can say). We probably have less bookshops, but I'm lucky enough to still have an independent one in my town.

I remember claims of doom for the british book industry when the Net Book Agreement (I'm not calling it NBA for the benefits of our US readers ). Yet there still seems to be a large range of books available. And at least one or two publishers.