Ex-CEO of Random House on ebook pricing and the future of publishing

[garygibsonsf]

Until now I've not particularly commented on discussions on MobileRead about ebook pricing, at least partly because a few of them seemed based more on wish-fulfillment and a misunderstanding of the skills required not only to write a book, but also to identify whether or not it's in fact publishable, then to edit it if it is (a process rather more complicated than crossing t's and dotting i's), design it, and ultimately find a way to get it to the people most likely to want to read it. But even lthough I'm part of the business, I have no great personal awareness of the actual related costs of the industry.

However, I stumbled across this fascinating article co-written by the ex-CEO of Random House which does indeed seem to suggest ebooks at lower prices might become the way forward. I'm a wee bit wary since there are CEO's of major corporations out there who believe the internet is made of tiny tubes, nonetheless to hear someone on the business side of publishing at its highest level advocating lower prices strikes me as of more than casual interest and certainly worth evaluating:

"Publishers will not disappear, though their role will inevitably alter. Certain ancillary activities like warehousing, shipping and distribution, production, and inventory management will need to be stripped away. Other activities like editorial and consumer marketing will become, if anything, more important in the digital world. Lost in the doomsdayer debate about publishers’ future is that their unique role as intermediaries has always been about discovering and promoting talent and content—rather than printing and distributing. There is life after print death for publishers, but only in a streamlined and refocused configuration, working constructively with online retailers and authors to ensure that book reading is not the ultimate loser in the digital revolution."

To my own mind there is the possibility that books might become too low in price (six to eight dollars strikes me as about right, and some of the prices on Fictionwise and elsewhere are indeed outrageous). Skilled people involved in publishing apart from just the writers - editors, promotional staff, literary agents, designers, artists, and so forth - need adequately compensated for their work. That means there needs to be a certain level of returns on books to reward their work. However, I have reason to believe the kind of digital revolution discussed here is still quite a ways off; ebook sales still represent only a tiny proportion of sales relative to those of p-books, but perhaps there's rather less excuse now or in the near future for $25 ebooks.

[zelda_pinwheel]

why is that guy the EX ceo of Random House ?? he has great vision ! that is an excellent article and i think there are many very important points made, including but not limited to the points about pricing (although, his idea of "dynamic prices" starting at 39.99$ for a new best seller to capitalise on "pent-up demand and the relative price insensitivity of his most devoted fans" to drop to 4$ later seems a bit extreme to me... 40$ for an ebook ??? in what reality ???).

i particularly find interesting how he puts the focus on publishers in "their unique role as intermediaries has always been about discovering and promoting talent and content—rather than printing and distributing" which i think is a key point which is often lost sight of in the debate about ebooks / the future of the publishing industry.

for instance, he points out that the real questions that publishers should be asking themselves are not "will ebooks kill publishing" etc. but rather :

1. How can we enhance the reader’s overall experience—not just reading, but browsing, purchasing and library-building, and not just through print or digital media, but through a combination of both?

2. How can we create pricing options that will increase demand for books and offset the decline in book readership?

3. How can we build a new business model that is attractive to authors and sufficiently profitable for publishers and online retailers?

i really hope that this article will be read by as many people as possible in the industry and they will take it to heart, and i hope also that both Peter Olson and Bharat N. Anand will play active roles and have significant influence in the emerging ebook landscape.


ps. "internet made of tiny tubes" you mean it's not ?

[Jack Tingle]

What's ironic about the article is that Mr. Olson's innovative vision (and I credit him with having vision) is still technologically years out of date. All of his technical suggestions are things you can do today if you want to invest a small amount of money and a slightly larger amount of time. If someone wanted to do them routinely, it would be a few million and a year to put them into place in something like Express or Indesign.

His 3 points are insightful, and some publishing company ought to snap him up, or at least give him a consulting contract and actually listen to him.

Regards,
Jack Tingle

[David Munch]

10$ for a new ebook is fine by me. Everything above I would never pay.

But the real push for the eBOok market is definately going to be, when the readers fall in price and become available everywhere (Like in my country! :P)

[Moejoe]

more important in the digital world. Lost in the doomsdayer debate about publishers’ future is that their unique role as intermediaries has always been about discovering and promoting talent and content

See this is what bothers me, and continues to bother me about these people commenting on the publishing industry and how it can adapt. None of them can actually envision a point where we don't need the publishing companies at all. We've had this 'intermediary' for going on 100 years now, and it's not about discovering and promoting talent...it never was and never will be. It was, and is always about bottom lines, what will sell the most units. That's why we get so many bland knock-offs of what has come before, why the shelves are crammed to bursting with celebrity biographies and flavour-of-the-month fiction.

Promoting talent? It's bs PR talk at its finest. They're all terrified that readers will take over the role of discovery and authors will promote themselves. Once that happens, what use are publishers in a digital age? Why have one more barrier between creator and audience that is no longer needed?

Someone posted in an earlier thread that the ebook world was like the Wild Wild West, and I have only one thing to say to that --

YEE-HAW!!!

[rhadin]

Originally Posted by Moejoe

. . . We've had this 'intermediary' for going on 100 years now, and it's not about discovering and promoting talent...it never was and never will be. It was, and is always about bottom lines, what will sell the most units. . . .

There was a time when discovering and promoting talent was what publishing was all about. Back in the early 20th century this was quite true. Writers like Hemingway would never have made it without the care, nurturing, and feeding (and drying out) provided by publishers. Bennett Cerf was a terrific editor who put content and talent above profits when he ran the publishing company.

The change to bottom line thinking only came about with the consolidation of the publishing industry, which began in earnest in the late 1970s-early 1980s. I know from my own experience that when the family owned publishers ran things, editors were respected, decently paid, and were expected to provide quality work. Today all that matters is price. The editor willing to work for the lowest price is the editor hired, regardless of the editor's skill level. Some publishers today do not even provide editorial services -- the author is expected to do it all, which is not a path to high quality. I am even familiar with a couple of publishers who entire editing process is to run Microsoft Word's Spellcheck over the manuscript, which is why it is becoming increasingly frequent to read, for example, "there" when it should be "their".

Anyway, your statement is only partially true -- both in the past and today. There are quality publishers today, albeit few, who do care more about finding and promoting talent, and there were a lot of such publishers in the old days of publishing.

[Andybaby]

Originally Posted by zelda_pinwheel

why is that guy the EX ceo of Random House ?? he has great vision ! that is an excellent article and i think there are many very important points made, including but not limited to the points about pricing (although, his idea of "dynamic prices" starting at 39.99$ for a new best seller to capitalise on "pent-up demand and the relative price insensitivity of his most devoted fans" to drop to 4$ later seems a bit extreme to me... 40$ for an ebook ??? in what reality ???).

well 40 no. but for a brand new book. in the first 2 weeks to a month of release. I think should cost $20-25. the price of an average DVD on its first release. and then the price drops as the people stop buying it automatically to keep the price up with the demand, so it sells the same amount of copies every week. I think that's fair in all honesty. lets them make the most amount of money and have sales figures not to gawk at. and lets them make the most amount of money.

people who read ebooks read more than people who don't. for people who have to read the latest now

[CCDMan]

As it always does, the market will determine price. Once devices are cheap, it could be that more reading will ensue, not less, since no trip to the store will be required and spur of the moment purchases will be enabled (look at the Apple app store for that).

The real problem now for much media is that we are in the very early stages. It could easily take another 20 years for devices to become dirt cheap and ubiquitous and one or two formats to become dominant and DRM to go away. We see that happening to a degree in the music industry and the first mp3 player was 1998 - that is now only a bit over half of the 20 years I suggest. It may or may not take that long for books (or movies and TV) but it surely won't be quick for any media.

Reading will survive as will publishers, but I think that the guy is right, they will likely evolve into more publicists than publishers.

[thebrave]

To my own mind there is the possibility that books might become too low in price (six to eight dollars strikes me as about right, and some of the prices on Fictionwise and elsewhere are indeed outrageous). Skilled people involved in publishing apart from just the writers - editors, promotional staff, literary agents, designers, artists, and so forth - need adequately compensated for their work. That means there needs to be a certain level of returns on books to reward their work. However, I have reason to believe the kind of digital revolution discussed here is still quite a ways off; ebook sales still represent only a tiny proportion of sales relative to those of p-books, but perhaps there's rather less excuse now or in the near future for $25 ebooks.

But I think you're forgetting the point of the whole ebook idea and the war on DRM. Now that the distribution has hardly any cost, now that you haven't any stocks or any other dead-tree related cost, I think we have to rethink how all those digital good cost.

IMHO, an ebook sold $2 could easily make more profit than its $14.99 physical counterpart.... but the ebook have to be available on any platform (phone, computer, ebook reader) and samples should be freely available.

[dirtylc]

I have said it on multiple occasions. E-books will be cheaper unless consumers are naive enough to pay higher prices for content. Publishing is an outdated industry that needs to reinvent itself. I for one am tired of not buying dtb because they are too expensive. These same folks fought paperback books with infinite gusto and are now fighting e-books also. Think about that they are squeezing a market that has seen 200% growth, who the heck does that? Look at Amazon they are making money hand over fist with the Kindle and its drm laden books because 9.99 is a price that most people can spend comfortably at.

[garygibsonsf]

"

IMHO, an ebook sold $2 could easily make more profit than its $14.99 physical counterpart.... but the ebook have to be available on any platform (phone, computer, ebook reader) and samples should be freely available."

Oh come on ... I wasn't even going to reply to this point because it's so patently ridiculous, but really? You're telling me that you're so cheap you wouldn't spend five to ten measly dollars on a piece of entertainment that some poor git has slaved over for at least a year, if not longer, with all the attendant research that might well go with it?

I could just about accept the 2 dollars argument for an older book that's deep into the long tail ... heck, quite a few people have books like that up for free now. But it's a ridiculous notion. I've seen this view promulgated on these boards, and I'm sorry but it annoys the hell out of me. You're effectively saying you want me and other people like me to do the next best thing to giving away our work for free. Sorry, doesn't cut it. You want quality entertainment, pay for a decent price for it.

[dadioflex]

Edit.

[dadioflex]

Edit.

[Penforhire]

I sort of understand the promoting talent aspect but I feel that paradigm will still be broken. The noise-to-signal ratio is increasing on the internet. I expect we will evolve toward a group consensus or trust rating system to avoid more of the chaff. That applies to books as well. We will search for aggregate ratings from individuals or groups with our taste. I suppose a publisher could be one of those trusted sources but why would I trust a publisher more than, say, a SF reading group?

When we stumble across authors we like why wouldn't we simply track their new work from their personal blogs or sites? No need for a publisher to tell me there is a new book available from them. I've probably been following the book's progress prior to release!

[MerLock]

Originally Posted by dadioflex

Did we see this?

http://www.forbes.com/2009/06/04/boo...e-twitter.html

Anyway. If books were cheaper, would you read more? Do you read according to what you can afford? Just playing Devil's Advocate. I'm all for cheaper ebooks, but I think a two dollar ebook might sell better than a fifteen dollar one, but over all there are going to be winners and losers.

From that article above.

"In short, book-writing is a worse-than-ever means to a livelihood, and mass-market renown is disappearing as a concept, fractioning into a million niches."

ie, if people forego the fifteen dollar book in favour of the two dollar one, then some talented writers are going to be looking for a different way to make a living.

I'm not sure how much the cost difference is between producing a paper back book versus supplying digital versions. My guess is that after the initial cost of setting up the infrastructure to produce and sell digital books the cost to maintain that infrastructure would be less than what it is now to produce, storing and shipping paper back books.

In my opinion, when we talk about lower cost for digital books we are talking about passing that savings by going digital on to the consumer. What ever that difference happens to be.

So in most cases, the writer could still be compensated the same because the cost is deducted from production and distribution. Depends on the publisher I guess.

As a consumer, I would still pay a premium for new releases as long as it's reasonable. Market that 15 dollar book at 10 dollars and the publishers could still make money if it in fact cheaper to produce and distrubute digital books.

Lets say I grow and sell apples for a living. I sell them at $2.00 dollars each but it takes $1.00 for me to grow one. However, I discover a cheaper way to grow them and the new way allows me to grow them at $0.50 each. If i sold the apples now at $1.50 I would still be bringing in as much as I did beore. But of course if this was real, I probably wouldn't be selling any apples at those prices