Booksquare

37 responses so far ↓

• Pauline Jones // Apr 6, 2009 at 10:43 am

  It’s not just at amazon that these publishers are over pricing ebooks. They are doing it at ALL ebook outlets (and in some places, asking even more than the amazon editions!). It’s really disgusting.

  The good news is, if you buy multiformat from places that offer one price/all formats pricing, like fictionwise, then you can easily load your books to whatever device you happen to own.

• trav // Apr 6, 2009 at 12:23 pm

  Wow. This speaks to a gazillion things going on right now. Let me say, I support consumer movements and agree that the publishing industry has yet to figure out ebook pricing. I totally get it and agree.

  But I really doubt that publishers are “treating customers with blatant disrespect” by experimenting with their pricing. Are publishers off the mark? Messing up? Slow to respond? I’d say yes on all fronts.

  Why some pubs are pricing so high? Because they are scared and lost.
  Consumers now believe “if you don’t provide your product to me in the format I want and at the price I want, right now… I am justified in stealing it”.
  And that’s just wrong.
  You summed it up when you said

  “…a the path to rampant piracy.”

  I honestly believe that publishers everywhere understand that customers have the ability to steal their content. And that’s why all the experimentation. I agree that publishers better ramp up efforts and get new products out there or they will be left behind. But that’s always been the case in business. Innovate or get left behind.

  The only difference here is that the end-user almost feels righteous in their ability to steal content simply because the producer is unable to deliver it as quickly as wanted or in the correct format.

  But a boycott is exactly what is needed to get the movement started. The entire industry is wondering what the market will tolerate. So this tells them.

  If you don’t like the prices, then don’t buy it.
  That, with enough like-minded folks, will send the message.
  But don’t pirate it.
  That just gives ammo to the other side.

• Kassia Krozser // Apr 6, 2009 at 1:04 pm

  Trav — I do think the current pricing “experimentation” smacks of disrespect. Consumers have been speaking to this point for quite some time (the early adopters of ebooks have been supporting this market for well over ten years; major publishers are somewhat late to the game). Pricing an ebook at $26.99 is not experimentation; it’s cluelessness wrapped in protecting an established business model (one that has served the business very well for quite some time).

  So, yeah, it’s disrespectful to enter a market where customers have been working with the product, understand what they’re getting, are aware of the pitfalls…and then to try to charge them a price that makes no sense in relationship to all those factors.

  I should also note that those publishers who are getting this right, including listening to customers, are winning a lot of respect and love in the form of sales and word-of-mouth. There are more of them than you’d think!

  The sad truth is that many current policies are creating pirates out of customers. Yes, there are those who will stamp their feet and turn to piracy as a matter of course, but I think those are the exceptions to the rules. There is a sense of immediate gratification, but there is also a strong instinct/understanding of paying for content. I think the customer who is ready and willing to pay for information/news/content/story is often overlooked and underserved.

  What should be of more concern is that ordinary readers are becoming pirates due to their inability to use legally purchased books in a manner that suits their personal needs. Case in point: I bought two d-books from a major publisher. Due to problems with the authorization process on the Adobe Digital Editions server, I could not read those books (bonus: I now think three times before considering *any* book that uses Digital Editions…and I’m not alone). It would have been easy for me to check a torrent-stream to grab a copy of the book (knowing from various sources that publisher has clueless customers who think they’re “helping” by posting scans of the books). That’s piracy, but given the fact that I’d legally purchased those books, it’s also fair play (I did not choose the torrent route, of course, but other have…just to read something they’ve paid for).

  Then there are examples of companies like Overdrive taking their books offline at Fictionwise. Hello? What about the customers who purchased those books and couldn’t get them downloaded in time? Some publishers made good on these lost products, but again, you can see why consumers might choose alternatives to legal channels.

  I am one who believes the key to making pirates is making it hard — either through technology or price — to be a legal customer. Charging more for an ebook than the print edition? Not showing much love to your customers. Making me jump through hoops to read? Ditto.

  (I would also note that in this time of experimentation, there are also many production issues. I’ve purchased two Kindle editions with double-spaced paragraphs — try reading that! — and in on instance, the publisher has been over backward to figure out the problem. In the other, well, had I paid full list price for that experience, it wouldn’t have been pretty. Again, not necessarily intentional problems by the publishers, but given that these are known problems, does it really make sense to continue with past practices?).

• Mark Bloomfield // Apr 6, 2009 at 1:16 pm

  The $9.99 price point is a strategic ploy meant to propel the kindle to market leadership. Check! Amazon is selling many (if not most) of the books at this price point at a loss – publishers (for the most part) are pricing the ebook at or near the srp for the book. Amazon is close (if not already there) to being able to disintermediate the publisher – especially if the publisher isn’t adding value. Publishers have a privileged relationship with retailers – but AUTHORS have a privileged relationship with their readers. Amazon is unique among retailers in offering the author direct access to their readers. Tough times ahead for bricks and mortar retail and big trade publishing.

• Alan Huizenga // Apr 6, 2009 at 1:22 pm

  Working for a publisher in the digital publishing arena, I can say that we’re not intentionally trying to disrespect customers. There is a big debate going on about the pricing of digital editions. Our perspective has been to put value on the content. What is content worth? The fact the the product is digital or physical only affects the COGS. Regardless of format, it still costs the same amount of money to bring the book to market. We discount our digital editions by the amount of the COGS, since that is what the consumer is saving by purchasing a digital edition. The consumer is still getting the same amount of content if he/she were purchasing the physical book. If we assume the digital edition is always worth something under $10, then that will reduce the amount of content a publisher can make available within each volume.

  Just my two cents from the other side of the aisle!

• J.C. Wilder // Apr 6, 2009 at 1:35 pm

  I think this issue has more to do with the publishers more than Amazon. I’ve been in epublishing a long time and I see the same thing happening over and over now that NY has jumped into the fray. The publishers (primarily NY) are drastically overpricing their books and here is an example:

  Nora Roberts’ The Pagan Stone
  Paperback 7.99
  Kindle 6.39
  Mobipocket.com 7.99

  What is the justification for the pricing? I can go to my local bookseller and get a decent discount on a new paperback that, in this case, would make it CHEAPER than the ebook.

  There are expenses associated with epublishing that don’t pertain to print such as technology (DRM), delivery (storage and delivery of ebooks to your computer / reader) but neither of those equals the price the publishers are charging.

  In reality, readers are almost being punished for reading ebooks. I paid 359.00 for my Kindle and thanks to the rapidly escalating prices for ebooks, it till take a very long time to recoup any of that.

  I won’t buy an ebook over 6.00 unless its a hardback and 9.99 is an equitable price.

  Piracy? DRM doesn’t accomplish anything other than to annoy the readers who aren’t going to pirate ebooks. Trust me, the pirates can crack the DRM before it’s even released…

• trav // Apr 6, 2009 at 1:43 pm

  Adobe DE is certainly not the way to go. I’m a big proponent of social DRM, if any DRM at all. I’d rather see no DRM on my ebooks.

  I’m still not sure I agree with you on the “disrespect” part, but even if they leave their prices inflated, that’s ok, because they will fail. Right? They will be put out of business, because with high prices, they aren’t competitive. That’s the way it should be.

  But that’s not the way it’s all playing out. If a book is released as a HB, then people wait for the paperback. They don’t go steal the HB because a cheaper version isn’t available. But if a book is released as a DRM Kindle book and the consumer wants a Sony epub, then they go steal it… and feel as if they are in the right. Which they are not. The publisher should have provided it in all formats and didn’t so they should fail. But the consumer should not feel vindicated in stealing.

  I wish Scholastic would give a breakdown of the last Harry Potter book. With a 12 million unit print run, what do you think the print bill was per book? A buck fifty, maybe?
  So if you take off the cost of printing the book and shipping the book, you get to about, what, $5 per unit? So $30 minus the $5 is, $25 to keep the lights on, pay editors, rights agents, etc.
  Not to mention new designers to make sure the book is reformatted for the Kindle, Sony, Iliad, mobipocket, iPhone, etc.
  Since consumers want the book in all formats all at once.

  But $25 is viewed as too much for an ebook.

  That’s because consumers have yet to see a book as anything other than the final pulpable product in their hand.
  They are oblivious to the year of development that they are holding.

  The industry is changing and will catch up to what consumers need and deserve. But the pirates need not be vindicated in their stealing.
  If you buy a crappy product, then the manufacturer should make it right. That’s no different in publishing. Publishers shouldn’t be cranking out ebooks if they can’t answer emails to help the customers deal with unnecessary complicated DRM issues.

  Do prices need to drop? Yes. Does ePub need wider adoption? Yes. Are publishers listening? Let’s hope so.

• Kassia Krozser // Apr 6, 2009 at 1:47 pm

  Alan –Thanks for weighing in. I have heard this argument quite a bit, but, speaking purely as a consumer (albeit one who has run the numbers and agrees with you on the financial side…to an extent), it’s not true that we’re getting the same amount of content. We might be getting the same number of words, but we are not getting the same content. We don’t get cover copy (easily rectified), but we *do* get endless blurbs (can be more annoying in digital than print…). We can’t share the book. We can’t resell the book. And, frankly, if you lay the two editions side-by-side, we’re not getting the same experience. We buy d-books for many reasons, despite these differences (as many people note, ain’t nothing wrong with a paper book, unless you’re trying to pack a library for an extended vacation…and the airline is cracking down on overweight and extra luggage!). It’s still early days in this market, and the consumer is investing, if you will, in your future. Knowing all this, consumers weigh the value they’re getting against the value they’re losing.

  As a consumer, I know I’m, essentially, licensing the book and that gives me more limited rights than if I purchase a book. If the DRM/hardware/software/universe changes, there’s a chance we’ll lose access to the book. I noted in another comment some difficulties faced by consumers. There are reasons ebooks are perceived to have a different value for consumers than they have for publishers. The same content — if it truly the same — is not a strong argument on your side when weighed against consumer arguments.

  If I were to be even more devil’s advocate-y, I’d note that finding business models that support existing costs — ebooks are not free to create, market, edit, etc! — while pricing in a consumer-friendly manner is exactly what traditional print publishers should be doing. I noted that digital books are a blip on the P&L right now. Rethink the structure now while you’re still at 1%. As sales grow and consumers become more savvy and demanding, you will be glad you did. Some in the business disagree when I say digital should be treated like a whole new market. I believe trying to shove this new distribution stream into existing business practices pigeonholes publishers. Treating it differently, thinking differently, that’s the path to success.

  As noted, this is how successful digital publishers are thinking.

• Kassia Krozser // Apr 6, 2009 at 2:00 pm

  Trav — Sadly, the Harry Potter example is not a good one. There was not a single legal copy of any book in that series sold in the digital market. Not one. Not available. The author does not believe that is how the book should be read. So while the book was on the pirate streams even more the final title was released, consumers were not offered a legal option to buy it.

  I don’t buy the idea that consumers are oblivious to the effort that goes into books, it’s just that they have a different value system for those books. I read very fast — it’s a curse and a blessing — so I spend a lot of money on books because. My husband reads slowly (ditto on curse/blessing), so he spends less but is very choosy about what he buys. Me? I’ll take lots of chances. We’re both good customers for the publishing business, but I couldn’t afford to be the customer I am if I paid higher prices for the books I buy. In the Christopher Moore example I cited, I didn’t buy his book, but bought two books from another author/publisher. That’s what should be feared. I wanted books by both authors, weighed various factors, and went with the one that gave me the best value.

  There will be a group of people who steal. No way around it, including DRM (I, too, believe social DRM has a better chance than most other schemes). But looking at your example of the Sony version versus the Kindle version, consider the consumer. Why would a publisher make a book available to only one subset of consumers? What does that say to the other subsets (remember, most people don’t read on dedicated devices; they’re still using computers and PDAs and iPhones)? Oh we like you as a customer, but we like that reader better? The key is to make the entire experience optimal for the people who are ready and willing to pay money for books.

• Kassia Krozser // Apr 6, 2009 at 2:07 pm

  J.C. — your comments mirror those of many of the readers in my recent survey. And maybe that’s the takeaway here: even if it isn’t intentional (and I think it mostly is not), the fact is that consumers feel a bit shafted by current e-book business practices. You’re one of the authors and readers I mean when I talk about a market that has been growing and developing standards for over ten years.

  One problem, I think, is that publishers have not done a good job explaining their position to readers. Nor have they done a good job listening to what readers have to say. This is a new dialogue for publishers; the end consumer has not always been their traditional customer, but in this market, that has changed. People don’t blame Amazon, they blame St. Martin’s. They don’t blame the author, they blame HarperCollins. And I can explain the publisher position and the reader position over and over, but until someone says, “hey, we hear you, let’s solve this problem”, readers will, as Trav noted, vote with their wallets. And the biggest book buyers are not voting for books over ten dollars.

• Alan Huizenga // Apr 6, 2009 at 2:18 pm

  Kassia, thanks for your comments. I agree that the DRM issue is still being hotly debated and needs to be resolved. If readers can share digital editions, then perhaps part of your argument is addressed.

  I think that the rush to give higher royalties to authors and drastically discounting ebooks were major reasons for the early failure of digital publishing. Consumers will pay for content if they feel it is worth it. Backcover copy really doesn’t give a physical book any more value. I believe that digital publishing provides publishers with the opportunity to provide additional content that will enable consumers to interact with the author in more meaningful ways. I believe if we add content to digital editions that isn’t available in the print edition, price will not be much of an issue.

  The industry is still experimenting in this area and I think if we set the market value of digital editions too low, then we run the risk of devaluing our content in the long term.

  But, we’re committed to being successful in both arenas, so we’re listening to all the voices out there!

• Kassia Krozser // Apr 6, 2009 at 2:32 pm

  Really must leave the house for work stuff, but wanted to circle back to this final comment from Alan (because I do believe he’s committed to getting this right and I thank him for entering this discussion). A while back, I totally would have agreed with you on things like cover copy, but in said survey, found a lot of readers missed it. I think they missed the sense of “extras” that are implied by cover copy. It’s a consideration — to compensate for consumer losses, maybe consider giving them something to replace them?

  I hear you on the idea of “devaluing” your content, and believe you hear me on the idea that my value for content differs from yours. I would note that there are many high royalty digital publishers who are doing just fine, though they remain niche, and the money, by larger house standards, is small. Though by small pub standards, it’s respectable. The early failure — if it truly existed — was more in the rose-colored vision of the market versus reality. Everyone is getting better at this, but as JC Wilder noted in her comment, she’s been successful for many years. As authors and agents decouple the print from the digital when licensing rights to publishers, we’ll see some interesting deals as there is more following of the money. In many ways, when it comes to digital distribution, big publishers don’t hold an advantage over small. In other areas they do.

  (I know you’re looking at what Thomas Nelson is doing with great interest, as am I. Their recent move to book not format was very smart, in my opinion, and I hope others see it as a model!)

• Links of Interest (At Least to Me) 06/04/2009 « Eoin Purcell’s Blog // Apr 6, 2009 at 2:46 pm

  […] There is a boycott going on of Amazon Kindle books that are priced over $9.99. Kassia has a good analysis. Here […]

• C.A. Young // Apr 6, 2009 at 2:46 pm

  Trav said:

  “The only difference here is that the end-user almost feels righteous in their ability to steal content simply because the producer is unable to deliver it as quickly as wanted or in the correct format.”

  I disagree.

  The few times I’ve felt, as you say, righteous in feeling tempted to steal something is when I’m being screwed.

  Paying more for a proprietary e-book with more problems and fewer features than the print edition? Screwed. The only possible advantages I can fathom there are speed of delivery and portability, but the Kindle’s no more portable than a paperback. Plus, you can’t take it in the tub.

  Worse, e-books fail in that the are often difficult/impossible to back up or transfer to another format. That makes them a potentially bad investment right now. Charging more than print value for something that may or may not work in the future? Not exactly the fast track to getting me to buy.

  I agree with Krozser that there are special cases where you can charge more than print. For example, something that’s out of print, or went out of print a while back I could see charging an equitable print-like price.

  But considering that there is no book to bind, no cover, no materials, etc. I have to wonder what publishers think they’re selling.

• PublishingMojo // Apr 6, 2009 at 3:17 pm

  “As a consumer, I know I’m, essentially, licensing the book and that gives me more limited rights than if I purchase a book.”

  Of course you won’t pay as much for an ebook as you will for a hard-copy book. The price of ebook content, whether it’s 10 dollars or 10 cents, is only a fraction of the total cost of ownership. Over a period of years or decades, you’ll have to buy a series of new ebook devices and software upgrades, and of course pay monthly for internet access. The retail price of a hard-copy book may be much higher, but it’s the only money you’ll ever have to spend to use that content forever.
  Landlords can’t get away with charging as much to rent a home as to buy one. Readers have figured it out: ebooks are rentals. How long will it take publishers to figure it out?

• Mike Cane // Apr 6, 2009 at 4:43 pm

  I think it’d be very difficult for a publisher to gauge any impact from a boycott.

  1) The economy stinks

  2) The eBook market is still too minuscule that the effect of a boycott could look like a rounding error

  3) eBooks are available in several formats, so how can they really tell *which* is being boycotted? “We’re boycotting Kindle,” you say? Well, what about the same high price being charged for a Sony BeBB, universal ePub, or Mobi version?

  Good luck nonetheless.

• teXtes » Blog Archive » Détournement de tags // Apr 6, 2009 at 4:59 pm

  […] trouvé cette information sur le blog de Kassia Krozser, et elle est très incisive dans le commentaire qu’elle adresse aussi aux […]

• Kassia Krozser // Apr 6, 2009 at 9:31 pm

  Mike — I don’t disagree (yay!), but wonder if publishers will feel more pain due to overall bad publicity. Stranger things have happened.

• La Feuille » Archive du blog » A qui profite la voix des consommateurs ? // Apr 7, 2009 at 1:01 am

  […] cette citation de Kassia Krozser en réponse : “La voix des consommateurs ca devenir de plus en plus forte. Peut être […]

• jim duncan // Apr 7, 2009 at 9:19 am

  I wonder how long it will be before there is a standard format that can be used across devices? Or when this will go the cell phone route, and readers will be cheap – subsidized by service subscriptions? It does seem a bit odd that publishers are not trying to put more effort into informing the public about why books cost what they do, and that printing costs are not where the bulk of book costs reside.

  People want convenience and extras when it comes to this sort of thing, or so my limited knowledge on this subject indicates. The public perceives a loss of value by getting a book on screen. They will need to get more than just the words for that perception to change I think. If I were to guess, I would say that we’ll see subscription based book programs. Your monthly fee will allow access to a certain number of downloads. Premium service will mean more downloads and access to greater content like author interviews and whatever else the industry comes up with that will be considered value-added content. The technology still seems to be sorting itself out, so of course things are all over the place right now, but it will settle down over the next couple of years I imagine.

  Speaking of the loss of cover copy, which was mentioned before, I’ll be we see a reader down the road which will display the front and back cover copy right on the front and back of the reader, so that it looks like you’re carrying the actual book around. That flexible, plastic screen technology is developing at lightning speed now, so just wait. Readers will gradually morph into something that looks a hell of a lot like your standard paperback, with more features packed inside.

• e-Books Pricing - Revisited « PROSELADY // Apr 7, 2009 at 4:43 pm

  […] 7, 2009 by proselady Booksquare noted that a boycott’s underway:  A cadre of ‘revolutionaries’ won’t buy […]

• KatG // Apr 8, 2009 at 10:02 am

  What we have here is a problem in cross focusing between two industries. In electronics and computer, hardware and software programs are the money makers and product to run on the hardware and software are throwaway, extra money items to draw in customers and make them happy. It’s the iPod and the iPhone that make the real money, not the applications or the iTunes, which the company throws off for 99 cents a hit. (Though they’ve just recently raised the price.) Occasional free content and software is even better for promotion.

  But in the book publishing industry, the books are the focus because that’s all you’re really selling. The publishers aren’t the ones selling the e-readers and getting the $298 for the Kindle. The publishers are only selling iTunes, and the market so far is quite small, with companies like Amazon who want big discounts but are not necessarily always passing those discounts on to customers.

  So if they are going to make any money at it, they figure they have to price it high right now, waiting for more e-readers to be available, which will force the product prices down because more product can sell. Mostly, the publishers would at this point prefer just to sell electronic rights to e-publishers who then put out the e-books, rather than the publishers having to find a way to do it.

  Now, if the publishers made the e-readers too, that would be a different story, but as the most technologically backwards industry and in deep financial trouble, they aren’t set up to do it. And not only would they have to compete with something like Amazon if they tried, but with companies like Sony and Verizon, for whom the entire book publishing industry is lunch money.

  There’s clearly a growing market there, but the publishers are having trouble finding a way to make money from it. And customers, used to getting a whole CD for $10 on iTunes, cheaper than in the stores, don’t get why books aren’t like iTunes, and ereaders aren’t cheaper yet like MP3 players, and are throwing an understandable fit. The problem is that the market demand is outstripping the market technology at this point.

  I’m glad that Verizon, etc., are coming into the game to help with market technology. They’ll bring other media with them, which is how e-readers or multi-devices with e-readers will take off. But the question is whether they’ll stay. Because if the e-readers, the hardware, don’t sell well enough, and if everyone can’t figure out a way to do the book content like iTunes, those companies are likely to lose interest, just like they did in the early 1990’s.

  I don’t know if a boycott is going to do any good. It might force Amazon to lower prices and subdue publishers to keep its share with new players coming in, but it might simply mean that the Kindle becomes less popular, which then makes making e-readers less interesting to companies like Verizon.

• debbsmith // Apr 8, 2009 at 11:13 am

  As a small press publisher and author, both in print and ebook, I’m disgusted at this boycott and feel it’s unfairly punishing authors and publishers while ignoring the 800 pound gorilla in the corner: Amazon and other retailers continue to take 50 percent or more of the cover price for ebooks just as they take for print products. THIS IS A PRIMARY REASON authors and pubs cannot afford to discount ebooks as much as consumers think they should. But on another note, consumers want cheap stuff. Period. They can attempt to justify it in any righteous way that sounds morally responsible, but the fact remains: they don’t want to pay the full value for valuable content. All of you who are calling for dirt-cheap ebooks continue to miss the point that publishing an ebook has costs associated with it that have NOTHING TO DO WITH PRINTING COSTS. If you drive down the value of ebooks you will, eventually, drive all but a few self-supported, wealthy authors and boutique publishers out of business.

• Barbara // Apr 8, 2009 at 11:17 am

  I didn’t know that I was part of an “official” boycott. I was an early adopter of the Kindle, love the magic of easy download, and may never download via computer/another source ever. But I do not want to pay more than $9.99 — instead I’ll wait for a discounted paperback or a library copy.
  Amazon has given the consumer “value added service”; waiting for the publishers to catch up. Why would I pay more for a more ethereal product?

• Megan // Apr 8, 2009 at 11:37 am

  As a member of the publishing industry, I totally agree with debbsmith’s comment. Amazon.com takes a huge percentage of a Kindle’s list price, forcing publishers to charge the prices that they do in order to be able to make even a miniscule profit (and thus stay in business). Keep in mind that producing a book in any format costs money (royalty fees for the author, editorial costs, etc.).

• Kassia Krozser // Apr 8, 2009 at 1:40 pm

  Deb and Megan, with all due respect, I think you’re both looking at this the wrong way. Setting aside the various problems with Amazon and their drive to force deeper discounts, you, as publishers, have the right to set whatever price you deem fair for your books. We, as consumers, have the right to not purchase books if we believe the value we receive for the price we pay is not appropriate. As a long-time ebook customer, I have made the personal decision that I will not pay more than ten dollars for a book. As I noted, I can see instances where going over that level makes sense, but, like many others, cannot think of any concrete examples right now. The market, the technology, and, frankly, your (publisher) quality is not there yet.

  I think it’s a huge mistake assume that consumers do not understand the fixed and variable costs associated with bringing a book to market. I think you’d be surprised by the people who buy your books. They get the economics, but they, and this is important, wholly understand what they are purchasing (I used the term license in another comment for this very reason). One thing is very clear: a digital book is not the same thing as a physical book. If your customers undestand this and make purchasing decisions on the basis, why can’t you?

  Frankly, I don’t think publishers have done a good job explaining their position on prices, but even if that happens, the consumer will still make choices based on factors known only to each individual purchaser. Your job as publisher is to either make a product the consumer wants to buy at the price you’ve set or figure out a way to make this aspect of your business work to the price consumers are willing to pay. This is the tough love part of the future. There is a lot of consumer anger right now, and we’ve seen two major examples of it this week.

  If I were a publisher, I’d stop thinking with the 20th century pricing mindset. Different product, different price model. Right now, for most publishers, ebooks represent less than 1% of your revenue. Less than 1%. Can you honestly tell me that reducing the price to be in line with consumer expectations is going to kill your business? The only thing that will kill your (digital) business is assuming you are smarter than your customers. You have failed miserably in the task of making your case for charging high prices for less book.

  Compounding the problem by expressing anger at your customers for failing to understand how you can’t make your business work doesn’t help. As a consumer, there are very few books I have to buy, but there are many books I want to buy. While I am sympathetic to (and knowledgeable about) the realities of costs in your business, I cannot base my purchasing decisions on propping up your business model. Then again, I like to think I, like every one of these book-buying protestors, am doing my part by paying for my books. I don’t pirate, I don’t buy used. I buy my books.

  When publishers talk about paying full value for valuable content, it’s natural to ask who is doing the valuing. If I pay $26.99 for a hardcover novel and it’s a piece of crap (and, boy, has this happened!), clearly the publisher’s value system is out of whack with mine. If I end up buying four copies of a $6.99 novel because it’s just that good and I want to give it away to all my friends, does that mean the publisher values the book less than me? There are many books I hold onto forever, but there are far more that go into the charity pile immediately because while they offered a moment’s pleasure, that was all (though with ebooks, I cannot do that much). Value is in the eye of the beholder.

  There will be winners and losers as this new market grows in customers. The winners will be the ones who understand how to adapt their business to different economic realities while publishing books people want to buy and read. The losers will be the ones cannot figure out how to retool their models. I don’t think it’s a matter of self-supported wealthy author versus boutique publishers. I think it’s a matter of creative minds versus 20th century thinkers. Either you want to succeed in digital books, or you don’t. If you do, then you’ll figure out how.

• Jill Monroe // Apr 8, 2009 at 2:33 pm

  That vision you had of the tech support in future my future was horrific.

• ed fitzgerald // Apr 8, 2009 at 6:12 pm

  Folks, this is eerily reminiscent of the music industry during the rise of the CD in the ’80s. Suddenly, they had a duplicating format that cost far less to manufacture and package than vinyl discs, and what did they do? Record Companies nearly tripled the price of their product, setting the stage for the rampant file-sharing and piracy that is now crippling that industry. Looks like the book business is falling all over itself to follow the record business down the rabbit hole.

• Miki S // Apr 8, 2009 at 10:31 pm

  My question is, where can we find valid email and/or snail mail addresses for the publishers?

  I have been wanting to complain — in writing — to St. Martins about their twice-the-print-book pricing since last year, but the only contact information I could find online was a general address, no contact. Now Simon & Schuster is charging 9.99 for books being released as 7.99 paperbacks.

  I work for a big company and un-directed mail goes every where and no where — but seldom makes it to someone who can actually make a difference.

  Fictionwise (and the other ebook sellers) say the pricing is controlled by the publishers. And even though Fictionwise often offers these badly priced books with good micropay dollars, I’ve decided to not buy them even then. SM and S&S don’t know I got it at a deal, they only know some other sucker paid their insulting prices.

  So where can we find good contact information for those publishers?

• Bill // Apr 9, 2009 at 7:08 pm

  Kassia – “The key to making pirates is making it hard — either through technology or price — to be a legal customer?!”

  While I respect the technological frustrations – and feel etailers should immediately honor their commitment by providing a new digital file – I can’t buy into the pricing argument. I happen to really want the new BMW at the dealer’s down the street, but feel the price is too high. Does that validate the argument that BMW is then turning me into a car thief for not lowering their prices?!

  Buying is a conscious choice no matter the purchase – show me any product and I’ll point out pricing that doesn’t seem to make sense. However, I have the right to buy what I can justify as a sound price or not buy that which I feel is exorbitant. But I don’t have the right to steal it as a result.

  Choice is more important to me than price and that’s been improving in leaps and bounds. While I can agree that the response to the Kindle has challenged traditional print publishers, I also recognize that they have responded to demand by a large degree. Kindle launched a year and a half ago with just the Top 20 publishers onboard and 85,000 titles. It now claims 250,000 and most of publishing is onboard. I’m willing to give publishers the benefit of the doubt that in order to achieve such rapid results (in a glacierly-paced industry) there were costs involved – and an expectation of a return on investment. There’s no such thng as gravy in an industry that’s been stagnant for years and finally sees a 1% glimmer of recovery through digital sales.

  When it comes down to it we’ve decided to be digital readers because it’s a fascinating merging of our love of reading and technology – and, let’s face it, we like being in on the ground floor of the future. The arbitrary expectation that we should be immediately rewarded for that – and that if we’re not we’re perfectly entitled to take what we want – doesn’t square with me.

  Also, why isn’t anyone demanding that Amazon lower the price of the Kindle? $199 sounds good to me – and if I can’t get it at that price, I’ll steal one.

• Kassia Krozser // Apr 9, 2009 at 8:08 pm

  Bill, I will agree that I was a tad hyperbolic in my statement about pricing and piracy, but it does reflect a feeling on the part of consumers. I do not, will not ever advocate piracy (I don’t even buy used books or music because it is critical to me that the artists be paid for their work), yet I believe it’s important to acknowledge that this is a consideration for other customers. It doesn’t make it right, and yes, there will always be the type of consumer who believes *any* price is too high. If the book industry does not make a serious attempt to address the pricing concern with its customers — and I do not see where they have even begun that conversation — they will only fuel consumer anger.

  (And speaking of used books, I think it’s instructive to recognize that many readers patronize secondary markets, including markets that sell books at such low prices that they might as well be free, because they cannot afford (or find) books in traditional retail outlets; this are legal purchases, but might offer some insight into the motivation of customers who frequent pirate sites for books. Just a thought as I consider your comments.)

  And the anger exists. It’s not my job to subsidize investments in technology made by publishers; it’s my job to buy books legally. Luckily for the publishing industry, I am really, really good at that. However, using your BMW example, I know a few things about my purchase of an electronic book: a) I cannot buy it used to reduce the price I pay; b) I cannot negotiate a price with the retailer; c) if I choose to pay full amount because I believe the price is equal to the value I get from the book, I do not have any rights to resell the book should I decide to invest in a new model. The dawn of the digital era has lead to some great advances for readers, but it’s also lead to a loss of rights and privileges.

  This is not a brand-new market that emerged with the Kindle. I’ve been buying and reading ebooks for over ten years, and I’m not unique nor was I early-early to the game.

  I would suggest that the digitization process started long before the Kindle was introduced. Publishers knew they had to make this move, and even at their (agreed!) glacial pace, they were making sure they were positioned for the future. I am happy and proud that they’ve made so many books available in a short period of time (and am even happier that the digitization of backlist is proceeding rapidly; while the per-title money may not be huge, there is long-tail value in older titles).

  Finally — and thanks for letting me argue back! — I think the reason there isn’t demand for a lower price on the Kindle is that most readers don’t read digital books on the Kindle. In fact, I think many in the industry would be shocked at the mish-mosh of devices used for reading. I know I was, and I’m pretty clued into this business. The frustration from non-Kindle readers comes from the fact that while Amazon is able to use market clout and “subsidization” of prices to keep many books at the $9.99 price point, other retailers cannot do this. It actually pushes people toward the Kindle, when they can afford it, meaning it thwarts competition for devices and retailers. I’m not crazy about that. You think the Amazon customers are crazy angry? Go outside that ecosphere and listen to what customers are saying, doing, enduring.

  Piracy is bad. If you love books, piracy is the worst thing you can do for them. As I said in reponse to Deb and Megan, publishers have done a lousy job of making the case for the prices they charge for ebooks. They’ve done a bad job of listening to the customer perspective. They’ve done a horrible job in ensuring that it is easy to read books that have been legally purchased. I think book customers, somewhat unlike music customers, are willing to give publishers as much benefit of the doubt and encouragement as possible. But we need to acknowledge issues now.

• KatG // Apr 9, 2009 at 8:55 pm

  I understand what you’re saying about publishers, Kassia, but I think you’re letting retailers off the hook as non-involved in the process. Retailers (and wholesalers who are getting in on the act,) have enormous power in book publishing, electronic or not. They dictate terms and they dictate prices. Amazon rules the on-line business which is becoming increasingly important. In the U.S., Borders and Barnes & Noble supply nearly 50% of the publishers’ income — and they are trying to sell e-books too.

  Amazon used to lose tons and tons of money. It did so by pricing its books and products so cheap that it built up market share even though it wasn’t making a profit for years. Amazon was funded by venture capital and other income sources publishers don’t have (or for some aren’t given by their corporate parents.) You say that they are dropping profit to keep the prices down, but evidently they don’t want to drop profit that much and use the strategies that made them successful in the first place to establish a large market share in the emerging electronics market. Even if publishers drop their e-book prices — if the people who supply them with e-book versions will cooperate — if Amazon won’t drop their mark-up further and other retailers too, prices won’t drop that much. Amazon and the other companies are the ones selling the e-readers and the e-readers need to be cheaper. Why doesn’t Amazon drop the price of the Kindle significantly in order to make it even more appealing? It’s not the $10 a title I object to; it’s the several hundred dollars for a device that might break down in a month and be obsolete in a year. That’s why many e-book readers don’t want to be tied down to the Kindle.

  You’re asking publishers to make all the sacrifices and blaming them for all the problems. And authors too, who are in even a worse money bind than publishers. You’re asking them to be efficient, strategic producers of a product they barely understand and which makes up only a tiny, unprofitable part of their market. The only way the situation is going to improve for e-book customers is if there are joint efforts between publishers, authors, Amazon, other e-reader manufacturers, e-book retailers and wholesalers, and e-book manufacturers. Which is going to take awhile and not just because of piracy concerns.

  The good news is that while people are pushed toward the Kindle for the moment, that dominance is going to be short-lived if these other companies all pool into the market. Some of these companies will undoubtedly slash e-book prices to the bone and take the loss, because they have deep pockets and because it gets customers to buy their hardware e-reader and/or use their services. That’s what I expected Amazon to do with the Kindle and I’ve been very surprised that they haven’t done it.

  I think people have a perfect right to boycott Amazon if they want to (man, these conversations always make me sound like I hate Amazon which is totally not the case,) but as long as people are paying $50 for computer games that only play on one game system, I think expecting e-books to sell for $3 and be usable everywhere, right now this instant, when the industry is just getting born — that’s unreasonable.

• Kassia Krozser // Apr 9, 2009 at 9:40 pm

  Good point Kat (and I don’t hate Amazon as much as I want competition). So, looking at Amazon and other retailers. Amazon is extremely aggressive in pushing deeper discounts (price, and that includes things like shipping costs, being their main competitive advantage). Likewise, Borders, Barnes & Noble, WalMart, and Costco are pushing for ever lower prices. In the physical book market, this impacts independent bookstores. They cannot compete against the big box (and I’ll include Amazon here) retailers. These discounts are particularly problematic because they squeeze already thin margins…and because the way authors are paid is based not on the amount actually received by the publisher, but on the retail price (as printed). This is not a hard and fast rule as there are publishers who pay on net, but I think we’re mostly talking traditional structure here.

  I do not believe these retailers (should they all survive) will return to the traditional relationship. Consumers like lower prices for books, and, whether or not it’s the right thing to do (and I can argue both sides), there is a certain price expectation for a large number of book consumers. Still talking physical market. So how do publishers compensate? One way, the way hated by authors, is to change how royalties are calculated. To me, that’s a good first step, but it’s not going to address historical contracts, and it’s going to get a lot of pushback. Authors like the current structure because the royalty on hardcover — and that’s the issue — is higher than on mass market or, I think, trade (not sure about trade). I can’t blame them, even as I see how the marketplace has changed.

  On the digital book side, there is a lot of going with traditional pricing/reporting models. Okay, that puts certain demands on digital books — again, not the same thing as print books, at least not with the technology and laws we have — that require a certain return. The $9.99 price point is untenable for publishers if they are paying royalties on a $26.99 list price. Amazon is currently subsidizing this difference, and while there is evidence (price creep) that this practice is fading, there is also a strong sentiment on the part of consumers for a certain price for a certain type of book. The best analogy is mass market paperback: nobody would consider paying close to thirty dollars for that edition. When publishers model ultimates for books, they factor in sales at various price points (provided they acquire them all in a single house). How many units must be sold to recoup expenses, including the advance. Where is breakeven? Where is profitablity?

  (At this point in time, I would argue that the 1% digital sales weren’t factored into those projections, though it’s fair to say that some of those sales represent lost hardcover — and that’s what we’re really talking about — sales while some represent customers who would have waited to purchase the even-cheaper paperback.)

  There is pressure on the consumer side (see: not the same thing as physical, though there is clear tolerance for paying higher-than-mass market-prices). There is pressure from Amazon who wants the Kindle to succeed, yet is more willing to subsidize the difference between the publisher discount and $9.99 price point than to discount the device (I am wondering if this is because the bulk of purchases fall under the ten dollar threshold, meaning lots more mass market-type purchases?). There is pressure from other retailers who also use low prices as a competitive edge (there are consumers who are very price conscious, especially in this economy, and they tend to buy the “bigger” books as they’re shopping at retailers who stock a limited number of titles). And there is pressure from existing contracts and business practices.

  I don’t see an easy way for publishers to meet all these pressures on the physical book side, though I’m sure you can see areas where publishers can improve their position. But we are talking digital books. Right now, there is no digital retailer capable of competing with Amazon on price — as long as the price we’re talking about means the hardcover or sometimes trade price. I think the pressure from other retailers will increase. Once books move into other formats, the playing field among retailers levels. I’ve argued that the first step to success is treating digital books as a new market, creating a new financial model essentially. When a book is acquired by a publisher, the financial calculation should not necessarily (okay should not) be based upon recouping all costs at a single price point when there is market push toward, well, day-and-date physical and digital release. Rethink the model with different assumptions (1%, 2% digital, but base the revenue and payout on the reality of what you can reasonably expect to receive, not a list amount that will rarely be achieved).

  This is a really long way of saying that retailers, who answer to consumers, aren’t likely to back off from their demands for deeper discounts. Raising prices would reduce sales (or so I imagine). I’m not sure we can pretend that books are a greater value for consumers than other entertainment media anymore. I’m also seeing a long, difficult transition for the print side (which, frankly, faces far more of a profitability squeeze than the digital side). Right now, digital is showing increased sales (some, again, at the cost of hardcover), and if there’s an opportunity to bring in new customers — either readers who now see digital as a way to get into books or readers who waited for cheaper editions (sometimes, ahem, forgetting about the book entirely due to lack of second wave marketing) — it’s worth rethinking the way business has always been done.

  Otherwise, I worry (and yeah, I really worry about this stuff), we’ll see even more emphasis on those “big” sellers and less investment in the books that might not make money on volume.

  I’m not sure, but am not disagreeing, that the comparison to games is apples to apples. Different media, different experience, different user options, including resale (to a degree, I’m sure).

• KatG // Apr 10, 2009 at 8:50 pm

  I think you misunderstood me a bit. I was saying Amazon can discount prices of e-books even more than now and lose money on them to establish a bigger market share. Amazon doesn’t have to get a bigger discount from publishers to do this. Although it could, because whatever discount Amazon demands from publishers, Amazon gets. It just has to delay profitability even further, in return for greater volume and later improvement, as it did with print books. It needs to drop the price of buying a Kindle, and it better do it soon before these other e-readers multiply on the market.

  Author royalties are not publishers’ big problem. Large advances against royalties can be a problem because if the author doesn’t earn back the advance from his share, the publisher still has to pay it and takes a loss. But 75% of the advances aren’t large ones, and if there’s a loss on those, it doesn’t necessarily stop them from making money on a book. Publishers’ bigger costs on print books are print and paper expenses, production, shipping, returns shipping, co-opt advertising and such, which have to be paid whether a book sells or not.

  A hardcover costs more to make and ship, so the author gets higher royalties. A trade paper has royalties between hardcover and mass market because it is in between on cost to make and ship. (But the royalties are based on invoice price, not retail, which is retail price minus certain freight costs.) For heavily discounted sales to vendors, for sales like clients like Amazon, publishers often pay authors a reduced royalty or a royalty on net monies received, not per unit invoice price. And I can guarantee you on nearly every e-book sale, authors are getting a royalty based on net receipts, not retail price, even if the author made the deal directly with an electronic publisher/retailer. So that’s not the problem. Print books are suffering much more from a lack of vendors and wholesale market and from returns, plus now the slump in sales.

  The problem is that e-books are expensive for publishers to make (convert and code essentially) because most can’t really do it themselves, nor will be able to in the future. And while e-books don’t have to be shipped, they do have to be stored. So if the e-book manufacturers, which includes Amazon itself, are not being accomodating on the costs, then the e-book market isn’t large enough for the publisher to reduce the price in hopes of making it up on volume, and publishers can’t afford that loss, even temporarily, like Amazon can. Publishers can handle large price discounts for retailers, especially if they don’t have to deal with returns, but production costs sink them.

  Again, Random House is never going to be Sony. Or to put it differently, when it comes to e-books, Sony is like Random House and Random House is like a small press in New England, so you can imagine what a small press in New England is going through. It won’t be the publishers who build the e-book market; it will be the electronics industry, with e-books being just a tiny part of the much wider electronic media industry, supplying people with newspapers, magazines, webfeeds, games, reference databases, GPS, etc. The electronics companies build the e-readers, and e-readers may just be a transitional stage for multi-device tools that access every possible download, make a great floor wax and can be served as a jam. 🙂

  Publishers will then just contract to sell e-titles. Right now, they don’t want the e-market to undercut book sales, which is short-sighted, and they’re not sure how the market will develop. They’re waiting to see what Verizon will do, if Amazon stays top dog, etc. When we have more devices and more of the download market worked out, then prices of e-books should drop. So if the electronics companies jump in, you’ll have what you want. But those companies — they expect a much higher return on products than publishers do.

  Publishers are going to have to change. But they’ll do it slow and conservatively. And the bestseller mentality you worry about — that’s been going on for some time, but they are also such a turtle industry that they do keep putting out the small books, just some less when times get tight. In order for publishers to survive, they have to have as wide a range of books as possible, and can make use of niches. The tiny sales that publishers get on some books and are happy with would completely blow the minds of those in electronics.

  This is a big adjustment to more than one industry, it’s not going to happen overnight. But I expect book publishing to limp along while it’s happening. I am curious to see if publishers use the e-book market, the development of e-readers by the electronics industry and the economic depression to finally browbeat the booksellers into modifying and somewhat dropping the returns system.

• Kassia Krozser // Apr 11, 2009 at 10:55 am

  Kat — Depressingly (truly! this is not the stuff that makes me proud), I know the costs and revenues a little too well (which is why I laughed at the surely Freudian “co-opt” because that’s really what it is). Every now and then, I run the numbers just to see if maybe my calculations were wrong the last time (which is why I think it’s fairer to say that some publishers pay digital royalties on net receipts, but not all, due to issues including licensing versus standard distribution).

  (At Editorial AssThere was an excellent response to the New York Times article on advances; Moonrat sums up my thoughts on the issue quite nicely.)

  However, this still misses the point. Even if other vendors move into ebook sales (and other devices force down the price of the Kindle, which will happen), the acquisition, editing, marketing will still largely fall on the publishers. New entrants into the retail space won’t lower house costs. Business as usual needs to be rethought (and the publishers who are rethinking are leading the way). As you note, retail space for print books is down. Hardcover sales are seeing a decline (is this just a reflection of the current economic condition or a genuine trend?). Attention from readers is increasingly fragmented. They read and write more, but books are only part of that mix.

  Amazon is, for better or worse (and I think better for consumers, worse for publishers) squeezing prices for print and digital books lower. Big retailers compete in the physical world thanks to co-op, which is just another way of increasing discounts; small retailers simply cannot compete on that level, but it’s interesting to watch as they are trying to figure out how to change to compete. I think there’s a good chance they will figure it out. All of these pressures exist for publishers and they’re not going to catch a break.

  So for these hardcover deals where sales are declining, how can publishers recoup some of the loss? Not just the loss from unrecouped advances (an institutional hazard) but the loss from sales that simply aren’t happening? In a perfect world, digital sales would fill in the gap, but that’s not going to happen, especially at the prices being demanded. Amazon is a single digital retailer, albeit one who has subsidized prices in order to achieve the even more desirable consumer lock-in (people who pay $350 for a device are going to get their money’s worth, generally). Other retailers do better on digital books that cost far less.

  As noted in a recent NYT article, 50% of digital sales for Fictionwise are romance, generally a genre priced at mass market levels. We know that science fiction/fantasy does reasonably well in ebooks, again a genre that is often priced for the mass market. Those high-priced ebooks aren’t selling at the same levels.

  So again, looking at filling the gap. If the current pricing structure continues, there will be a reasonable number of digital sales at Amazon, especially if a book currently in hardcover is sold electronically for $9.99. If the price is higher for the ebook, consumers will either wait (increasing the chances of them forgetting about the book) or buy something else. If the price is competitive with market expectations — again, readers know what they’re buying here, and I think it’s really important to keep emphasizing this; they get the difference) — then some of those future mass market customers might buy the book at the higher price.

  Knowing the expenses, knowing that publishers have a workflow that includes creating the digital edition last (a process which is changing and I think will be better for print as well), knowing that fixed costs and overhead exist regardless of price point, knowing that hardcover sales are down, and knowing that there is a growing market for ebooks — knowing all of these things, it doesn’t change the core issue: if customers won’t pay hardcover prices for digital books, then it’s not the customer who loses.

• KatG // Apr 11, 2009 at 8:39 pm

  “it doesn’t change the core issue: if customers won’t pay hardcover prices for digital books, then it’s not the customer who loses.”

  Agreed. (Though still not agreeing on the net receipts versus royalty on retail price. Electronics is a subsidiary rights market, so if licensed, it tends to be 50% for the author of a royalty on net receipts, with the publisher getting the other half as licensing money, and if the publisher hires a company to make the e-book instead of licensing the rights, it’s likely to be a 5-10% royalty for the author on net receipts. This is what is done on audio books as well. )

  And they are experimenting. Penguin with its thing at the convention, Harper, so on. Random House/BDD is slower, but that house is under a worse financial situation and laying off people left and right while consolidating their imprints. The e-market could be much larger for publishers than 3% if they worked at it, but cash, know-how, stability, coordination, etc. — all are lacking right now in the major trade houses. They are losing sales because of it, but it isn’t easily corrected by just saying the publishers should do better. They aren’t capable of doing that much better yet.

  Whereas romance publishers who have popped up selling both digital and print offerings have been developing the market much more swiftly. (There are a lot of rumors that many of them are shafting their authors, so that may be an issue for how successful they’ll be.) Remember, paperback and hardcover used to be two different industries and the paperback market was much larger, including comics and magazines as well. So yeah, mass market companies making an effort into e-books are probably going to do better.

  What will also be interesting to see is what companies like book packagers, multi-medium publishers, and POD companies do with the market. They may be the ones who come up with the most useful business models. Which is why I suggested that a better make-up for that panel would have been someone from Alloy Entertainment, someone from a firm like McSweeney’s, etc., because these people have been much more proficient at using the Web and building product in multiple formats. (Although again, Alloy has been under suspicion of not so kosher behavior.)

  Another probable price dropper — publishers will probably more and more want to license the sub rights to e-publishers and it will be e-publishers who set the prices for e-books.

  Consumers will eventually get what they want, but again, it’s not going to be fast. That means publishers lose sales and opportunities, and they need to start taking it more seriously. But book publishing is reactive, not innovative, and again, change is not going to be overnight. They’ll wait and see and make sure it’s safe before they do sensible things, some of them. Not that this is not frustrating.

  I do think that while Amazon priced the Kindle way too high and while publishers really need to start bundling print and e-book packages together to expand the market, that the Kindle has overall helped. It’s helped the average consumer feel that an e-reader would not be that strange a thing for them to have. Which is the first step into having such devices become ubiquitous, which will also lower prices.

• Book News and Views « Books Worth Reading // May 5, 2009 at 2:43 pm

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