If Publishers Can't Cover Their Costs With $10 Ebooks, Then They Deserve To Go Out Of Business
from the you-don't-price-based-on-your-bloated-infrastructure dept
With the legal dispute over ebook pricing going on, one thing we’ve heard over and over again from the traditional publishing industry and their supporters is that higher prices for ebooks make sense because of all of the “costs” that the publishers have to cover. This is a fundamental error in how pricing (and economics) works. It reminds me of the MPAA folks who demand to know the business model for making $200 million movies. Years ago, someone who understood these things taught me why cost-based pricing will always get you into trouble. If you start from the overall pricing, including overhead and other fixed costs, then you’re not basing the price on what the consumer values — and, more importantly, you’re taking away your own incentives to become more efficient and decrease costs. Instead, you’re just “baking them in.” But the most important reason not to base pricing on overhead costs is that your competitors won’t do that, and they’ll under cut your price and then you’re in serious trouble.
That moment of reckoning is coming for book publishers, even if they don’t realize it yet. David Pakman, who watched all of this happen in the music industry for years, is pointing out that publishers are fooling themselves if they keep trying to rationalize higher ebook pricing:
In all the discussions about why book publishers demand that eBooks should be $15 and not $10, they say it is because they cannot afford to sell books at $10. That is, they cannot cover their legacy cost models on that number. Right. Which is why you must rebuild your cost structure for a digital goods industry with far lower prices. You start by paying your top execs much less than millions of dollars a year. Then you move your offices out of fancy midtown office buildings. Why should eBooks cost $15? Amazon is far more of an expert on optimal book pricing. They have far more data than publishers, since they experiment with pricing hundreds of thousands of times a day across millions of titles. Amazon can tell you the exact price for a title that will produce the most number of copies sold. Amazon is pretty sure that number is closer to $10 than to $15. Yes, they want to sell more Kindles. And they believe that lower eBook prices mean more eBooks sold which means more demand for Kindle. The negative coverage of Amazon is centered on them selling eBooks below cost in order to reach the $10 price point. But that is a function of publishers setting the cost higher than $10. If the profit-maximizing price for an eBook is $10, then publishers must adapt to set a wholesale price lower than that, even if it means your legacy cost structure doesn’t allow it. And that’s the rub.
The public seems much more interested in lower prices, not higher prices. You can understand why the publishers don’t like it, but they really ought to learn how pricing elasticity works. They can make a lot more money with more optimal pricing.
Filed Under: ebooks, fixed costs, pricing, publishing
Comments on “If Publishers Can't Cover Their Costs With $10 Ebooks, Then They Deserve To Go Out Of Business”
Help me out here...
I almost can understand the cost of a book around $15.00 because you have to also include in the price of the printing process. However, with ebooks, you don’t have to worry about that.
This is what makes no sense to me. You price it like a regular book, I most likely buy the book and not worry about the ebook.
Then if a friend wants to borrow the book, I’ll lend him the book.
Re: Help me out here...
You price it like a regular book, I most likely buy the book and not worry about the ebook.
Re: Re: Help me out here...
Html fail, I think.
If you price it like a regular book, or if you put DRM on the ebook, or if you release the ebook even one day after the print version, then I will pirate it.
Cut the shit and you’ll get my money, otherwise, you won’t.
Re: Re: Re: Help me out here...
precisely. i’m willing to chip a buck or two, straight to the author, anything more than that for a file i’ll delete from my kindle 5 minutes after i finish it, and i’m headed for demonoid.
Re: Help me out here...
Servers, ISP costs, website hosting, premises housing the servers, software, security for data centres. Then there are the usual costs like publisher fees, agent fees etc that don’t go away no matter what the format.
All of that ain’t cheap, why do people forget those costs?
Re: Re: Help me out here...
Doesn’t seem like hosting a < 1MB file should cost much, even if its being downloaded frequently.
Most of your costs are sunk costs. You need to look at the marginal cost.
Re: Re: Help me out here...
Completely avoided if you go with a cyberlocker like Megaupload or FileServe…oh shit, I forgot. Apparently, the music and movie industry wisely declared the cyberlocker industry to be blasphemous.
Re: Re: Help me out here...
Cause a retailer like Amazon probably hosts from their own server farms. Therefore the costs to the publisher shouldn’t be that different from any other corporation in America.
Re: Re: Help me out here...
All of that ain’t cheap, why do people forget those costs?
No one is forgetting those costs. However, the hosting costs are a fraction of the cost to print, warehouse, distribute and sell physical books. Of course those digital costs are usually covered by the ebook seller (Amazon, Apple etc) and come out of the 30% they charge in the agency model.
The publisher agent and other fees are the primary reason why the costs are kept artificially high. Those are the vast majority of the cost of the book, cutting into the amount paid to the author.
Re: Re: Help me out here...
First off, use an established ebook store (like Amazon) so that all the data center costs are covered regardless of sales and they just take a percentage of each sale. Next you trim the rest of your costs as much as possible. Then you price your ebook for maximum revenue, which Amazon believes is about $10. The phrase “we can’t afford to sell for less than” whatever amount only makes sense when you have a cost for each bit. My company sells machines that cost us several million dollars each to make, we have low production volume, therefore we must charge very large dollar amounts to stay in business. If we could increase production volume, or reduce our cost per machine we could charge a lot less. However, the many millions we spend in development doesn’t factor into our pricing because it is money already spent. The best thing for us to do now is make as much money as we can moving forward without worrying about how much we spent in the past. The only thing return on investment affects here is what new products we will develop.
Re: Re: Help me out here...
Like Zach says, nobody is “forgetting” those costs. They are there no matter what – they’re sunk costs. Since the marginal cost for an additional ebook sold is nearly zero it makes the most economic sense to sell as many as possible at a price that the consumers consider to be reasonable.
Would you rather sell 100 units at $15ea or 1000 at $5ea? Get out your calculator, we’ll wait…
Re: Re: Re: Help me out here...
This is true, this I understand.
What I don’t get is why a higher sales volume and correspondingly higher profits would require a publisher to lower their operating costs, as the article suggests they should. If more money can be expected, why would the operating costs need to decrease? It seems like there are two conflicting messages here.
Re: Re: Re:2 Help me out here...
The way I understand it, the publishers are either claiming they have marginal costs they don’t actually have, or they are taking their operating and sunk costs and figuring them into their per unit prices.
If the later is the case, they’re operating on the assumption that they have to make a return on their money by so many sales, otherwise they probably believe they’ll never recoup those losses or make a decent return on investment, at least not in a period of time investors would be happy with.
If it’s the former, they’re just playing a PR game to justify price fixing in order to get better margins.
Either way, it smacks of dishonesty, especially when a paperback with actual marginal costs for the publisher (for materials, labor, shipping, storage, etc) regularly goes for far less than what they ask for the ebook.
Re: Re: Re:2 Help me out here...
Think of it as “higher sales volume and consequently higher revenue” rather than higher profit.
Overall, your profit will be N * P – C (number of sales * price per book minus costs). If we’re assuming that marginal costs are about zero, then the two parts of that equation are essentially independent of each other. So you’ll want to set a price that maximises your revenue N * P (e.g. MSC’s 1000 * $5 above), and you’ll want to minimise your costs, C.
We can (and seemingly incessantly do!) debate how close the marginal costs are to zero, and you can tweak the simplified formula above to allow for that, but it doesn’t change the dynamics of the situation very much unless your marginal costs are large relative to the price.
The main point of the article is that the publishers are effectively saying that they can’t change C at all, and so they need to set P at a high value in order to make a profit. If it’s really true that they can’t do much about C (possible, but not very likely), and the dynamics of the market will no longer support that high P, then they no longer have a viable business model.
Re: Re: Re:2 Help me out here...
Think of it as “higher sales volume and consequently higher revenue” rather than higher profit.
Overall, your profit will be N * P – C (number of sales * price per book minus costs). If we’re assuming that marginal costs are about zero, then the two parts of that equation are essentially independent of each other. So you’ll want to set a price that maximises your revenue N * P (e.g. MSC’s 1000 * $5 above), and you’ll want to minimise your costs, C.
We can (and seemingly incessantly do!) debate how close the marginal costs are to zero, and you can tweak the simplified formula above to allow for that, but it doesn’t change the dynamics of the situation very much unless your marginal costs are large relative to the price.
The main point of the article is that the publishers are effectively saying that they can’t change C at all, and so they need to set P at a high value in order to make a profit. If it’s really true that they can’t do much about C (possible, but not very likely), and the dynamics of the market will no longer support that high P, then they no longer have a viable business model.
Re: Re: Re:2 Help me out here...
Because, ina fundamentally capitalist society, there are two theoretical ways toi make more profits: lower operating costs or collude to keep competition out. Most publiushing houses chose the latter, rather than looking at the former and looking to reduce operating costs.
Re: Re: Help me out here...
If we’re talking Amazon or similar sized online bookstore then at some point the costs of being on line peak and then decline over time as you get more efficient at managing the servers and transactions. Software MAY be a cost if you’re using closed source but in the server market Linux or other open source OS has more than enough high end software to manage and keep a web presence going without the costs associated with closed source and setup costs for open source are the same or less than close source.
Publisher fees are negotiable as are agent fees by the author. The latter as the retailer, say Amazon, you may or may not choose to absorb.
In the end none of these are fixed costs and none of them are of any interest to the public/book buyer (market) nor should they be.
Meanwhile as the same market knows the major cost of dead tree publishing — paper costs, press time, bindery, transportation and so on are gone in ebooks. So if you, as a publisher want to charge me the same amount for an ebook as you would for the hardcover dead tree book then I’ll look elsewhere. DRM the ebook and I’ll go elsewhere for my reading needs.
Of course, all you’ve done, as a publisher, is fertilize the “piracy” garden and water it and then you’ll act surprised when the ebook with DRM broken suddenly appears on the Internet somewhere for download.
If all of these require a change in how a publisher does business then, as uncomfortable as it will be, they need to adapt. Like any other business, if you/they don’t adapt then you/they will fail.
Re: Re: Help me out here...
Because people are downloading directly from Amazon, so publishers don’t have to worry about those costs.
Re: Re: Help me out here...
“All of that ain’t cheap, why do people forget those costs?”
People don’t forget, they just realise that these costs do not increase exponentially depending on the number of books being hosted (e.g. minus bandwidth, a 500Gb drive with 10 books costs the same to host and run as a 500Gb drive with 10,000,000 books).
Print another 20,000 physical books, your marginal costs increase, ranging from sourcing raw material to printing, distribution, wastage, restocking, etc. Sell an extra 20,000 eBooks, your costs remain virtually identical except for bandwidth and marketing.
Re: Re: Help me out here...
Servers, ISP costs, website hosting, premises housing the servers, software, security for data centres. Then there are the usual costs like publisher fees, agent fees etc that don’t go away no matter what the format.
All of that ain’t cheap, why do people forget those costs?
Rumvi has all those costs – and sells ebooks in multiple DRM free formats at prices well below $10.
Is English a more expensive language than Russian?
Re: Re: Re: Help me out here...
Actually, we use bigger fonts, which takes up more storage space, which ends up being more expensive.
Re: Re: Help me out here...
My raw cost to serve content is ~$20/200GB or about 10 cents/GB. A large book is about 2MB or 2/1000 of one GB. This is a cost of approximately 0.02 cents. This is paying full retail for data center space and equipment rental. Even if brining this process in-house cost two orders of magnitude more, it would not be relevant to this discussion.
Re: Help me out here...
And that is what they ultimately want. They want you to buy the regular book and for the ebook business to fail so they don’t have to change anything.
Re: Re: Help me out here...
I’d have to disagree there, an ebook is pretty much nothing but profit, since once the file is out there it can be ‘sold’ just shy of an infinite number of times without ever having to make it again.
Given that they must love the idea of ebooks, what they don’t love however is people starting to realize that it never needs to be manufactured again, and thereby shouldn’t cost anywhere near as much as a physical book.
So in essence, while they probably love the idea of zero cost books, what they don’t like, and are fighting is the idea that because it costs less, and drastically so, for them to distribute and sell the ebook, that the price should likewise drop accordingly.
Re: Help me out here...
Plus, unlike with a real book that even after 10 million copies, you still have to pay for all of the cost to make that specific copy of a book, with e-books, once you’ve recovered your initial investment, all the copies made after thatrcost ZERO dollars.
So basically I would even like to see popular books cost only 99 cents after a while.
Re: Help me out here...
Understandable argument; however, I believe that half the cost of the book goes toward marketing and advertising.
The public doesn’t care about the “baked in” costs or subsidizing continuing legacy costs, which sounds suspiciously like cross subsidization, fancy headquarters and a host of other things which include obscene executive salaries what they public wants when they put their consumer hat on is what they (the market) considers a reasonable price.
If a massive retailer such as Amazon has determined that $10 for an ebook is the magic price point that people will buy at then that’s what the ebooks will sell for for in their store. Should that lead other retailers to insist that the retail price is $10 then too bad for the publishers. The price the publisher wants is supposed to be the suggested retail price anyway. If that drives down the wholesale price, it does.
What the publishers lose in up front pricing they gain back in quantity sold. After all publishing an ebook is a few factors less expensive than a hardcover and the public (market) knows that. If publishers want to add book tour and other promotional costs into their suggested price good for them. The retailer is under no obligation to pass those costs on. Only to sell the books they ordered.
Re: Response to: TtfnJohn on Apr 17th, 2012 @ 3:58pm
Well done for just repeating what was in the article. Why didn’t you just cut and paste it again. Or more simply just type “I agree”
Re: Re: Response to: TtfnJohn on Apr 17th, 2012 @ 3:58pm
I needed to give you a reason to post something and add an adhom or two.
I'm with you, but...
I agree that publishers are *acting* as though they don’t understand basic economics.
I’ve noticed on Techdirt that you seem to ignore the “meta-game”. Book publishers, the MPAA, the RIAA, etc act as if they don’t understand econ 101, and you take them at face value and assume they don’t get it. Of course they get it, but it is not in their best interest to acknowledge that their spin is nonsense, so they reframe the debate in a way that they hope will appeal to voters, the media, etc. The poor set painters, the starving writers, an industry on a verge of collapse and the imminent damage to local economies, that kind of bullshit.
So why not start playing the meta-game? Publishers are *pretending* that they don’t understand what sunk costs are and that the price tends toward the marginal cost over time. (that would be about $0.01 for an eBook). These guys went to college, they’re not stupid. So stop calling them stupid and start calling them what they are: lying assholes.
Re: I'm with you, but...
“So stop calling them stupid and start calling them what they are: lying assholes.”
I think you give them too much credit. Economics (and they ARE engaged in Economics) is a Science. Unfortunately I believe that what runs the companies today are Business School Graduates who slept through Economics. There doesn’t seem to be any acknowledgment AT ALL that the Consumer has any part in the equations when, in fact, the Consumer is probably the most important variable! I believe that this is a failure of our higher education system that has reduced commerce to equations which do not reflect the marketplace. Unfortunately those in the driver’s seats have, successfully so far, been able to reflect the blame from their own actions and decisions.
Time heals all wounds. Wait for it …
Bill W
Re: Re: I'm with you, but...
Economics is a ‘science’ the way Alchemy is a ‘science’. It may lead to something real, but it has an awful lot of assumptions and guesswork in there.
Ok, I’m being a bit harsh on economics there (the problem is usually idealogically driven economists), but there is no way it’s a ‘hard’ science – at best it’s a soft science like sociology or elements of psychology.
Re: I'm with you, but...
1.previous thread: apologies for *real* moron-in-a-hurry mistake of *assuming* (because of the layout), that the first and second videos in a recent article were the competing exemplars of song copying, when they were the same…
2. absolutely agree with your conclusion: call a lying asshole a lying asshole…
a LARGE part of our current mess in society/gummint, is that there is -for all intents and purposes- NO ACCOUNTABILITY…
lying assholes get away with being lying assholes: not ONLY getting away with the crime, getting away with the loot, and getting away with the lies, they also suffer NO ‘shame’ (HA! what a concept!), no social penalties, nothing but net…
net profit for the 1%…
net losses for us 99%…
3. *of course*, mike/techdirtians have to adhere to certain methods of circumspection when calling a lying asshole a lying asshole…
when it comes down to *their* millionaire lying asshole lawyers against li’l ole *you*, whachewgonnadew ? ? ?
*EVEN IF* you are 100% in the ‘right’ (does that even matter, these days ? ? ?)
4. further, i will double down on the idea that disingenuous politicians, bidness leaders, etc, need to be called out on their bullshit…
except, that’s why they don’t bother ‘buying off’ the media, they just *BOUGHT* the media:
The first rule of Empire Club, is you don’t talk about Empire Club…
hee hee hee
ho ho ho
ha ha ha
ak ak ak
art guerrilla
aka ann archy
eof
Re:
well, of course they are lying assholes…
but i do believe they are stupid as well.
they coulda got out in front, with e-books,
and used near-zero marginal costs to _boost_
their profits, even while lowering prices…
cannibalize yourself, so nobody else _can_.
maybe they went to college, but they slept,
so it was just a big waste of daddy’s money.
-bowerbird
But, but… that’s why we need monopolies!
Books don't cost all that much to print.
When you buy a print book, you’re paying the author, editor, lawyers, etc, and a little bit for the copy itself. Does anyone really think it costs five or ten dollars to print a book?
Ebook pricing is so high because enough people are willing to pay for the convenience.
Suggesting that the “over paid” executives take a large pay cut in order to reduce the cost of their products is not only fanciful and naive, it’s just petty.
Maybe there would be a flood of ebook purchases if the prices dropped, but unless you really think decisions are being made by absolute fools who do not wish to sell more of a product that costs almost nothing to distribute, it would make sense to stop complaining about decisions you don’t understand and instead vote with your wallet until the prices are more to your liking.
Re: Books don't cost all that much to print.
Self published authors have found that the sweet spot for novels is around $3. They have learned that any higher than that cuts the amount of sales so far down that the higher revenue per book is countered by the reduced sales. Many self pubbed authors are making a good living selling at that price. To think that publishers couldn’t do well at $10 is somewhat idiotic.
Re: Books don't cost all that much to print.
I suspect that the marginal cost of printing a book is less than a few dollars and distributing those books to retailers costs about the same. Let’s say that that the marginal cost of printing and shipping a book is $2. Are you telling me that the marginal cost of hosting that same book is the same?
There are lots of benefits to ebooks, DRM isn’t one of them. That alone reduces the price people are willing to pay (for me, that price drops to zero). There are other things that people like about having a physical book. Some of those reasons are valid, some are probably just traditional hold overs that may or may not be relegated to the dust-bin of history in a few years, but are nonetheless still reasons why people will pay more for physical and less for ebooks.
Re: Re: Books don't cost all that much to print.
So you do think it is fools making the decisions. Fair enough. I will add this, though: a self published author needs only the money for herself. A major publishing company has hundreds or thousands of people to pay.
A self published author will probably compose, edit, publish, etc her book with little or no help. A major publishing company has dozens of people working on each book. Editors, illustrators, promoters, agents, legal council, etc. Those people must be paid and without all them the result would a substandard book that very few people read, or a terrific book that very few people read. Or an okay book that very few people read.
Re: Re: Re: Books don't cost all that much to print.
I don’t understand this idea that you need 1000 or even 100 people to make a successful book. Many self pubbed authors are making 5-6 figures a year selling books that had a creator of one maybe 2 or 3 depending on cover art and illustrations. If it is possible to make 5 figures going it alone, why go the publisher route and potentially make less due to the overhead cost of the publishing house?
Re: Re: Re:2 Books don't cost all that much to print.
Self publishing sure sounds like a good alternative. It can’t be much more difficult than signing with a publisher. Although I do wonder why more established authors don’t self publish. Surely they aren’t all prohibited by their current or former publishers.
Re: Re: Re:3 Books don't cost all that much to print.
having spoken to some of my favorite authors on this topic, once your signed by a publisher many times the contract is such that you would have to buy your way out of it, sometimes its based on your next X number of titles, sometimes its year based, either way, the costs are pretty high.
self publishing is getting more and more attractive tho, you can hire a proof reader pretty cheaply these days, you can get books printed pretty cheaply as well, or use ebooks.
note: self publish cost of a full novle according to a family friend who self publishes her own religious novels is between 1.50 and 3.00 a book depending on binding, size and complexity(color illustrations and such cost more then a basic paperback.)
its not all flowers and ponies tho, sometimes you get into situations where the big publishers try and crush you if you wont sign with them….false dmca notices and such….real mess…..god i love this country…..the great Incorporated States of America….
Re: Re: Books don't cost all that much to print.
DRM reduces the incidence of theft. I have never been inconvenienced by DRM and I should think theft is not tolerated or perpetrated by civilized people. I think lending a book once or twice is a reasonable right for the customer.
Like I said before, people pay a premium on ebooks for the CONVENIENCE. If you don’t think people should be expected to say more for convenience you must also think overnight shipping should cost the same as standard shipping.
Re: Re: Re: Books don't cost all that much to print.
DRM/etc does NOT reduce the incidence of theft, IT INCREASES IT ! ! !
*BECAUSE* it makes a layer of complication that is not inherent in the product/service, it is an INFERIOR product to the pirated/stripped versions: THE PIRATED VERSIONS ARE MORE ‘VALUABLE’/useful ! ! !
‘Honest’, full-retail paying chumps end up with an inferior product, and ‘dishonest’, non-paying pirates end up with a superior product…
…and that is TOTALLY on the doorstep of the producers
besides forgiving my irate caps, *please* tell my mother-in-law *WHY* the ebooks she BOUGHT for her nook at PREMIUM HARDBACK prices, don’t ‘allow’ her to ‘lend’ or send ‘HER’ ebooks to anyone else ? ? ?
(WHICH IS THE WHOLE REASON SHE BOUGHT THEM, *before* she found out she couldn’t -naturally enough, so she thought!- send them to WHOEVER she wanted to, WHENEVER she wanted to, HOWEVER she wanted to do so…
silly oldster, she actually thought she -you know- “bought” something, not just had some sort of one-sided ‘license’ or other legal mumbo jumbo…
please, tell her why she is wrong to think she got ripped off AND screwed over using ‘legitimate’ media companies…
art guerrilla
aka ann archy
eof
Re: Re: Re:2 Books don't cost all that much to print.
I have still never been shown how DRM harms the informed consumer. You wouldn’t buy a phone that doesn’t work in your country, and you shouldn’t buy a product that doesn’t do what you want it to do.
There is no question that many people feel cheated when they discover unknown limitations on things they buy, but all it takes is a simple internet search,or a request to someone to do it in one’s stead, to obtain any information one wishes, especially about items as widely discussed as consumable media.
Re: Re: Re:3 Books don't cost all that much to print.
DRM has definitely harmed the consumer, informed or not. DRM locks users into their specific devices, if I have a Kindle and it breaks or I want to switch to nook, I can’t just switch any book I bought over to the nook. Unless by informed you mean those willing to break the DRM. There was an article on here awhile ago about I think it was Ubisoft where the legit consumers couldn’t play their game because the DRM authentication servers were being migrated. Always online DRM prevents users from using their paid for content offline (and it’s not just multiplayer/online products that use this). UltraViolet is so horribly broken because of the DRM people don’t use it, I saw today on facebook Star Trek was advertising how you could get it on UV and almost all the comments talked about how terrible UV is. And there are lots and lots more examples of how DRM hurts consumers, while doing nothing to prevent unauthorized access.
Re: Re: Re:4 Books don't cost all that much to print.
@Tim K. By your logic, all PlayStation games should work on an Xbox in case your PlayStation breaks. Why would a company sell something that also raises the value of a competitor’s product if they don’t have to?
How about paper books? If you lose your copy, should the publisher or retailer provide you a way to reattain it? If you break your kindle, buy another one and be more careful with the replacement.
I most certainly do not mean, by “informed”, those who break DRM. When you purchase the right to use a product like an ebook, you agree to certain terms, which include honoring the intent of the publisher’s usage license granted you by your purchase. Breaking the DRM for any reason not specifically allowed by the content owner is a violation of that use agreement.
Re: Re: Re:5 Books don't cost all that much to print.
And ebook is not a video game. What you’re saying is that I buy a DVD that only works in Sony’s players, I can’t then play it on a JVC player. That’s ridiculous. This isn’t an issue of coding the material, itself, for a single system (your apples to oranges comparison of Xbox vs Playstation). This is why I break DRM despite the law.
Re: Re: Re:3 Books don't cost all that much to print.
should a person buying a Hardback book have to be “informed”?
I’ve dealt with enough DRM in various media to realize that the only reason management includes it is to placate moronic shareholders who think DRM actually discourages pirating. Any upper level suit whose been in the field long enough knows its futile. Even more futile is arguing the morality/ethics of piracy. Whether you believe its proper or not, its a fact of life that isn’t going away no matter how angry “honest” folks get. In the end, the ONLY people who are effected by DRM are the people who bought the product honestly. The only alternative is to make sure those that DO pay are well rewarded for paying for a legit copy.
Re: Re: Re:3 Books don't cost all that much to print.
I have read your several comments and compliment you on trying to play the role of devil’s advocate. The responses you have received highlight much of the problem that is exhibited here…writer’s of articles and commenters who have no in-depth experience within the industries they are telling “You don’t get it! We are in the era of the internet, and what has come before has little to no bearing on the future. Besides, you do not even understand basic economics.”
I have never worked in the book publishing industry, and well know it would be foolish of me to tell those who know it up and down, left and right, and front and back that they “know not of what they speak”. The fact of the matter is such persons do know, but unlike self-styled experts outside the industry they also realize that there are a myriad of facts that need to be taken into account to sustain a business. With ebooks comes intra-brand competition, which may make sense in some cases and none in others. With a focus on ebooks the brick and mortar retailers may be on a course to extinction. Yet, these same ignorant members of the industry do have financial data in hand that promotion of the book and mortar retailers significantly promotes their business objectives. Etc., etc., etc.
The same criticism is leveled at software developers for the consumer and business markets. “It is digital. Your business model will fail for the very reasons we, outside your industry, have been telling you. Give away the non-scarcity and make oodles of money on selling scarcity.” Do they really believe these companies are so ignorant they have not taken a look at this? Has it occurred to the critics that selling scarcity (and please spare me Red Hat) may in some instances require mergers with hardware manufacturers? Do we really want companies like Adobe to be intergrated into a company that sells hardware, and only dabbles in software on the side? Is that an optimum approach, or is it but one of many, which may include continuation with the status quo. I honestly do not know the answer. All I do know is that every company has a unique set of circumstances, and there is no one size fits all, generalized solution that is based upon Economics 101. The situation is far more complex.
Again, I thank you for your comments, and admire your tenacity trying to bring other considerations into the discussion. It is a shame that these other considerations are summarily dismissed for some of the reasons noted above. They have an opportunity to learn, but eschew the opportunity in favor of what they consider “truisms” that sometimes are and many times are not.
Re: Re: Re:4 Books don't cost all that much to print.
Argument to authority. I.E you are only allowed to comment if you are an insider.
That’s a logical fallacy.
Clue for you: The insiders aren’t grokking the new technology and the new world and really should be taking some advice from people who get the tech and the new world.
Re: Re: Re:4 Books don't cost all that much to print.
I have never worked in the book publishing industry, and well know it would be foolish of me to tell those who know it up and down, left and right, and front and back that they “know not of what they speak”.
Really doesn’t look like they know it up and down, left and right, does it? Besides adding digital DOES change the landscape tremendously so different variables have to be taken into account.
Re: Re: Re:4 Books don't cost all that much to print.
Yes, I like a good debate. When others agree with me, I question the wisdom of my words.
Re: Re: Re:3 Books don't cost all that much to print.
I have still never been shown how DRM harms the informed consumer
I have still never been shown how DRM benefits the (informed) customer. So why would he be willing to pay for it?
Re: Re: Re:3 Books don't cost all that much to print.
How are you defining “harm”? DRM makes products more expensive because the technology adds to the costs to produce the content and can increase device costs because it allows lock-in to specific devices for specific content. That “harms” the consumer.
We increasingly live in a “global village” so I can have friends in the US that I can see and talk to whenever I want essentially for free, but I can’t read the book they are reading because it’s “not available in my country”? That “harms” the consumer and more to the point it harms the publisher because they’ve lost a sale for no reason.
“Harm to the consumer” includes anything makes the product cost more, removes consumer choice or makes the product less valuable than it should be. Technology is supposed to improve not regress. When you move from an old technology to a new and make the new iteration less useful and functional than the original that very much “harms the consumer” informed or otherwise if for no other reason than it transforms the truly “informed” customer instantly into a criminal.
Oh, and country-locked phones? That’s kind of the point. Technical progress – I expect to be sold a product that will operate to the limits of technical possibility. 10 years ago I’d buy a phone that operated in my country perhaps. Now if I buy a phone I expect it to work in almost every country or I’m not interested. More to the point these days I don’t expect to pay more for one that can because in a global market it’s actually cheaper for them to manufacture a single device that works everywhere than it is to create and support multiple versions.
Re: Re: Re:3 Books don't cost all that much to print.
“I have still never been shown how DRM harms the informed consumer.”
Then you haven’t been paying attention. Some Examples starting with e-books, and then moving on.
Amazon removing books people had legitimently payed for from their Kindles.
Sony installing a root kit on peoples computers as part of a DRM scheme, that slowed down people machines and cause instability problems.
People loosing access to content they had paid for because the company went belly up and closed their DRM servers.
Video tapes that would not play in any machine that had a slight alignment problem because of the DRM.
CD’s that had popping noises and drop outs because of the DRM watermarking.
In early days of computers, software that would not load if the floppy drive was not perfectly aligned.
Current software not being able to be reinstalled after upgrading hardware because the DRM thinks it is a different machine.
etc. etc.
Re: Re: Re:3 Books don't cost all that much to print.
Absolutely correct. DRM does not harm an informed consumer, because they will pirate the non-DRM’d version and be much happier.
#piracyiseverywhere
Re: Re: Re: Books don't cost all that much to print.
1) it is not theft. Write that on the blackboard 100 times.
2) If you have never been inconvenienced by DRM, you really are not using much in the way of DRMd content or products. Legitimately purchased digital goods bite me in the ass all the time.
Re: Re: Re:2 Books don't cost all that much to print.
@DC. What is not theft? Taking something without paying the required fee? That is what you do when you circumvent DRM, in most cases.
Perhaps you mean that since the rightful owner hasn’t been deprived access to the product because it was a digital copy, no theft has taken place.
Either way, the product was created with the invention of exchanging use of it for money. Without that assumption, very little would be produced. Without people paying for products, very little would ever be accomplished.
And as for the popular complaint about Electronic “The worst company in America” Arts, their DRM has caused a handful of minor problems for a few people. It is a reasonable expectation to be able to play a game you purchased whenever you like, but it is not practical or sensible to demand perfection from any company. I use Origin and I have found it to be a reasonably well executed system. After I had to replace my hard drive and motherboard, I simply installed Origin, logged in, and redownloaded all my games. It works fine, but then, I only use software I obtain legally, and my expectations are based on that sensibility.
Re: Re: Re:3 Books don't cost all that much to print.
Circumventing DRM isn’t theft because you need to have the DRM’d thing in order to circumvent the DRM. You’re not gaining anything that you didn’t pay for because you’ve already paid for the thing. You’re just putting it somewhere else.
Re: Re: Re: Books don't cost all that much to print.
DRM reduces the incidence of theft.
Never has, never will.
Re: Re: Re: DRM reduces the incidence of theft.
Funny how so many people come across this site for the first time, and spout the same old nonsense that they?ve been so brainwashed into uncritically believing elsewhere that they assume it?s true without even thinking about it.
Guess what, this site doesn?t just say stuff that clashes with your particular cognitive dissonance infliction, it takes the trouble to back up what it claims with proper references, so you can check them up for yourself and confirm that Mike and his co-contributors aren?t just blowing smoke out their arses.
If you want to learn about the gulf between what promoters of DRM continue to fondly hope it will achieve (contrary to all the evidence), and what it actually achieves in the real world, start here.
Re: Re: Re: Books don't cost all that much to print.
Wrong, wrong, wrong! Your example is off base: obviously overnight shipping costs a premium because of the logistics involved first and foremost; and enough people are willing to pay more for the convenience, second, for them to offer the service as an option. On the other hand, if because of advancement(s) in technology, overnight shipping was cheaper then standard shipping for the servicer you would still expect the cutomer to pay more? Of course they should NOT just for convenience alone for that then is akin to price gouging.
Re: Re: Re:2 Books don't cost all that much to print.
@Eponymous Coward. It is impossible to have a sensible discussion with someone who thinks pricing shouldn’t be based upon desirability, only the raw cost of the good or service.
Re: Re: Re:3 Books don't cost all that much to print.
Excuse me, are you conflating desirability with convenience for the two are not the same? Or is this your revisionist attempt to spin what you originally said for it had nothing to do with desirability? Of course the market prices around desirability, there is no need to debate that vector.
Re: Re: Re:3 Books don't cost all that much to print.
Excuse me, are you conflating desirability with convenience for the two are not the same? Or is this your revisionist attempt to spin what you originally said for it had nothing to do with desirability? Of course the market prices around desirability, there is no need to debate that vector.
Re: Re: Re: Books don't cost all that much to print.
“DRM reduces the incidence of theft”
No, it doesn’t. Don’t believe me? Search for free copies of the last book you bought. I’ll bet it’s available from a pirate site in a non-DRM format. The only people the DRM inconveniences are the people buying it.
“I have never been inconvenienced by DRM”
Lucky you for not using a device where the DRM on a particular book is not compatible with the book you wish to read (e.g. owning a Nook but the book you wish to read is only available on kindle).
The fact that others do not share your good fortune does not make them “thieves”.
“If you don’t think people should be expected to say more for convenience you must also think overnight shipping should cost the same as standard shipping.”
This is one of the dumbest statements I’ve read here in a while, to be honest. Pray tell, why do you think shipping costs are different for physical goods depending on speed (hint: it costs more to provide that quicker service)? Now think why people complain when a digital good costs more than a physical good (hint: it costs LESS to ship than a physical good). See the difference?
Re: Re: Re: Books don't cost all that much to print.
poor analogy, first, overnight shipping actually has real cost, you have a physical product to package and ship, people have to move that product, fule is used to power the conveyance used to move that product…. I could go on and on.
And I REALLY hate to have to tell you this, but DRM has never worked, it never will work, it dosnt boost sales, it hampers them, it dosnt stop pirates from getting ahold of the product free, I have yet to see ANY drm scheme thats not been broken, and in most cases in short order(sometimes before the drm is even officially released to the public)
DRM only harms those who are honest and pay for products, It makes prudcts less valuable and also makes them cost more, DRM is not free, they have to pass the cost on to the consumer.
DRM treats the paying LEGAL consumer as a thief, this is not good, this dosnt help sales, and as more and more people learn about it, they buy less and less products that ASSume they are thieves.
I for one know many people who refuse to buy products that ASSume they are thieves, they figure they may as well become “thieves” if thats how they are going to be treated weather they pay or not.
Re: Re: Re:2 Books don't cost all that much to print.
forgot the respond to the cost of ebooks vs the dead tree verity.
first publishers do not pay the distribution cost of ebooks, retailers do, they are also forced to pay extremely high fees to get the DRM software and management systems….
publishers make what amounts to free money off ebooks once the initial outlay for producing the printed versions made, theres no additional cost to the publisher at all, ITS ALL GRAVY….and they want higher profits not for the conveniance, but to keep their old pricing model in place.
DRM as with game publishers isnt about maximizing profits, its about ensuring people that dont pay for your product dont enjoy it….they do not think about it in profit terms if you actually listen to these kind of people.
I Know publicly they say its about profits, but in reality thats not how they act or even think within companies, I say this having worked for and with some of these types of companies, they really do think about it in terms of “dont pay me, dont enjoy my product” even if you CANT pay them for it(some games/movies/books dont come to some markets in a legally purchasable way)
DRM has no logical justification when you know the facts behind it.
DRM only exists to make the DRM makers richer and make the DRM users feel like they are combating a problem that really is a non-problem if you have a good product.
Re: Re: Books don't cost all that much to print.
If you want to get a feel for the costs of physical books, look at public domain books. Retail prices on hardbacks can be as low as $10-$12. About half of that is the wholesale cost to the retailer, which is the printer’s cost for manufacture, shipping, and profit. Without royalties to authors and publishers and without retail costs, that slab of beautiful dead tree *still* only costs about $6. A new release from a popular author in hardback will cost at least $25, list price. It probably has higher quality paper than the cheap public domain edition, but $13 wholesale minus $2 in upgraded raw material minus $6 base manufacture and distribution STILL only equals $5 FOR ALL THE PUBLISHER AND AUTHOR OVERHEAD! If your e-distributor is taking 30%, you, as a publisher, can make the SAME profit per copy on a $7 ebook as you can on a $25 hardback.
The idea that ebooks should cost anywhere near the same as a print book is beyond silly. The people who are buying them currently put a high premium on convenience. The market will decide how long that lasts, unless price-fixing, vendor lock-in, or rent-seeking legislation breaks the market.
Re: Books don't cost all that much to print.
I agree with the vote with your wallet part, but not the stop complaining part. Complaining and raising a stink is an essential part of the process. If we all just just up and stopped buying, nobody would know why the buying stopped and the underlying problem is less likely to get fixed.
So I say we should copiously complain and vote with our wallets.
Except when your competition undercuts you, you call infringement and sue based on copyright/trademark violations, issure DMCA takedowns, and other foolish things to protect the children from the pirates!!!
This whole eBook cost thing has me baffled as well. I cannot understand how anybody can side with Apple or the publisher’s on this one. I’m no fan of Amazon’s DRM (disclaimer: I own a Kindle, but the only books I have on it are public domain books from both Amazon and Project Gutenberg), and I can see why people are afraid that Amazon will lock people in to their ecosystem because of it, but that’s a separate issue. We already learned from the record labels deal with Apple that DRM insisted upon by the labels was what gave Apple’s iTunes the power it had over the labels. The publisher’s pushed Amazon to include DRM. They willingly handed that power to Amazon.
Prices should always be set between the buyer and the seller. The manufacturer, publisher, engineer, distributor, marketer, wholesaler, and their little dogs too can go find a field and sit in it. If they aren’t the buyer or the seller then they don’t get to decide on the price. Once they’ve sold it to the retailer at a price agreed upon between them and the retailer, the retailer can set the price between it and the reader.
As for the predatory pricing accusation against Amazon I’ve seen floating around, that is complete and utter hogwash. If Amazon decided to raise the price of ebooks after driving out competition, it’s not like Apple, Google, the publishers or even a new entrant couldn’t jump into the market quickly. This isn’t Standard Oil. I know we just had an article that talked about the cost of getting into eBook retailing, but that cost is peanuts compared to the barrier to entry in refining and distributing oil. And again, that cost was because of DRM, once again showing that publisher’s insistence on it is their own problem. Don’t require DRM and you’ve reduced even more the cost of competing with Amazon if you’re afraid of them being a monopoly in ebook retailing. The predatory pricing accusation is bumpkin, and that’s without even having to discuss the validity of predatory pricing being illegal.
As for the CEO of MacMillan’s statement: Only an idiot would believe the stupidity that dripped from his brain. So what if you were alone when you decided to go to the agency model. Who were you discussing the deal with before? I’m not saying he’s guilty, only that his proposed reason why he couldn’t possibly be guilty is moronic. He also said:
So they specifically wanted to make less money so that they could foster competition? What a crock. Get rid of the DRM, that’ll open up competition. No, you did it because you wanted more money and control of the book, of the reader and of the retailer.
Mike, I normally love your stuff, but as an aspiring author, I’ve come to realize that many people seriously have no damn clue about the costs of writing and publishing,
“Oh, eBooks are zero-cost publishing.” Yeah, until you bring in the time and effort it takes to write, the proofreading (professional proofreading costs money), the time and effort it takes to make a professional-looking product masters, money needed for any illustrations not made by the author, server and bandwidth fees, transation fees attached to sales, sales taxes, income taxes… There’s a LOT more cost to writing than anyone is willing to acknowledge. Especially if you want to self-publish on an open platform.
Re: Re:
“Oh, eBooks are zero-cost publishing.” Yeah, until you bring in the time and effort it takes to write, the proofreading (professional proofreading costs money), the time and effort it takes to make a professional-looking product masters, money needed for any illustrations not made by the author, server and bandwidth fees, transation fees attached to sales, sales taxes, income taxes… There’s a LOT more cost to writing than anyone is willing to acknowledge. Especially if you want to self-publish on an open platform.
There are a lot of costs to everything, but a lot of what you list are not expensive or are paid for during the whole process. Let’s look at a few:
server and bandwidth fees, transation fees attached to sales, sales taxes, income taxes
All these costs are covered by the seller, whether that is Amazon, Apple, Barnes and Noble, or Smashwords. It all comes out of the 30% cut they take. So all that is accounted for.
professional-looking product masters, money needed for any illustrations not made by the author
These can easily be contracted out for a an upfront fee. For example, I was recently made aware of a friend of JA Konrath who does professional ebook cover design for a flat $150 ( http://www.extendedimagery.com/ )
An illustrator can also be easily found and funded. There are a lot of places around the internet where you can find very creative and very professional looking amateur artists who would be willing to illustrate a book for a flat fee or even a small percentage of sales (15% for example). These costs are not astronomical and can easily be made.
the proofreading (professional proofreading costs money)
Proofreading and editing can be relatively expensive, but are again a one time cost. You could even crowdsource the proofreading and editing if you wanted to save all costs associated with it. It just takes a creative mind.
As for the time and effort it takes to write, that is what the 70% of the ebook is meant for. To pay the author what the market thinks that author’s time is worth. The more books you sell, the more the market values your work and the more money you make.
There are not a lot of costs that can’t be covered easily by the 70% of the $10 or under price of an ebook.
Re: Re: Re:
If you’re willing to trust and use iBookStore, Amazon, and B&N. Some of us don’t thanks to their DRM. I buy books from them, but I’d never sell my works through them.
Even if I did publish through them, I’d have to be pretty damn lucky to sell enough units to recover what I had to put into it myself.
Re: Re: Re: Re:
“I buy books from them, but I’d never sell my works through them.”
Neither do I. That just means that you have to have other ways of directly reaching your target audience and (gently) promoting your books to them. For example, I accomplish this by answering thousands of Android app development questions per year, releasing open source components, delivering presentations at Meetups and conferences, and so on.
Re: Re: Re: Re:
If you’re willing to trust and use iBookStore, Amazon, and B&N. Some of us don’t thanks to their DRM. I buy books from them, but I’d never sell my works through them.
Interesting comment considering a few things: 1) Amazon’s DRM is optional and set by the author/publisher. As a self pubbed author, you don’t have to use DRM. 2) There are alternative sellers that don’t use DRM such as Smashwords. So there are non-DRM options available as a writer.
Now the idea that you are willing to buy a DRMed book but not sell one is also interesting .You are willing to be the victim of digital abuse but not the abuser. Very interesting indeed.
Even if I did publish through them, I’d have to be pretty damn lucky to sell enough units to recover what I had to put into it myself.
Not lucky, just willing to work for it. Many authors are making 5-6 figures a year self publishing. They are able to do this 1) because their price is low enough for large sales. 2) they are willing to put themselves out there and market their books. 3) They write more than 1 book a year. Many write as many as 1 a month.
Luck has very little to do with self published success. I think you would find that luck plays far more a factor in traditional publishing.
Re: Re: Re:2 Re:
Oh please. This is bullshit. Luck plays a gigantic factor in both cases. It is not easy to be successful writing, it’s just not. There are no guarantees no matter which path you choose.
Re: Re: Re:3 Re:
I never said there were guarantees. I said that there is no luck. A successful writing career comes to those willing to work hard for it.
I compared the traditional route to luck as it plays out more like a lottery in which you toss your manuscript out to as many publishers as possible and pray that you get a contract.
With the self pubbed route, you go directly to the market and write until you have a hit that the market likes. What differentiates this from the traditional route is that even if you only sell a few copies of failed books, you have still sold some and they are making you some money. The traditional route finds that you have a lot of failed transcripts sitting around doing you no good.
Re: Re: Re:3 Re:
It’s absolutely true that it’s not easy to be successful writing. The hardest part is being *good* at writing.
My first experience with an “e-book” that was free and self-published informed my outlook on aspiring authors. I don’t remember the author or the title, but it was about anarcho-capitalists in conflict with an incompetent federal government and a space vehicle launched from a semi-plausible maglev ramp. Despite the intriguing premise, it read like a political wish-fulfillment fantasy. It wasn’t really that good overall, but it wasn’t a waste of my time.
The reason I regret reading it was because of the author’s attitude as he presented his work. He complained about not making money when he had tried to sell his book. He complained about pirates posting copies of his book on message boards. He sounded downright petulant when he explained that he was now offering it for free because it was being pirated anyway.
He did have other writing available for sale on his website, but between his attitude (CwF fail) and his lack of finesse in writing (RtB fail) I had no desire to part with my money to compensate him for what I had read or to buy additional stories.
Perhaps this author had the bad luck to be unskilled at his desired trade?
Re: Re: Re: Re:
“Even if I did publish through them, I’d have to be pretty damn lucky to sell enough units to recover what I had to put into it myself.”
AFAIK, you wouldn’t be signing an exclusive contract with those platforms? Maybe I’m wrong, but if not, how would they stop you from making money elsewhere as you’re presumably currently doing? Unless there’s contract issues I’m not aware of, surely all you’re doing is blocking yourself off from the people who exclusively use those platforms?
Re: Re:
With regards to your laundry list of “costs”:
– It takes “time and effort” to do anything, from writing to flipping burgers
– Choose a business model that does not require professional proofreading (e.g., continuously updated books, with rewards to readers who find flaws)
– Digital books do not typically require “professional-looking product masters”, and for POD, a word processor and a mid-range edition of Adobe Acrobat will typically suffice
– Don’t include many (any?) illustrations that you cannot do yourself
– Server and bandwidth fees will be negligible (Amazon S3 is costing me less than $100/month for several GB of subscriber material)
– Sales transaction fees should run ~3%, if you use the right services
– Sales taxes, in the US, are typically charged on top of your sale price and therefore are not a cost
– You would pay income taxes on any income, whether from writing or from flipping burgers
Aspiring self-publishers should read the works of Aaron Shepard (_POD for Profit_ and _Aiming at Amazon_) to get a better handle on the cost structures involved.
Re: Re: Re:
there are a good number of better PDF creators and editors on the market today, I use a few, a CHEAP(free) way is print to pdf, I personally normally use Nuance PDF Converter Pro, Acrobat couldnt make a properly formatted pdf out of a .doc a friend of mine created, he owns the top edition of acrobat, he asked for help, I had him send me his file with dropbox, then sent back a pdf, took all of 20seconds to convert the doc to a properly formatted PDF using Nuance PDF converter…
sorry point is, you can do this stuff on the cheap, I use to also have a tool that could take almost any format and convert it to various eBook formats, cant remember what it was called tho….
I would likely pick the option of offering a few formats like project Gutenberg do.
formats I like for ebooks
TXT(text format, least favored but most supported)
RTF(rich text format, preserves formatting but is also widely supported on devices)
HTML(HyperText Markup Language), this is what most of the internet runs on, its very widely supported by devices even old palm and windows CE pocket pc’s)
EPUB (short for electronic publication; alternatively capitalized as ePub, ePUB, EPub, or epub, with “EPUB” preferred by the vendor)
the great thing about all of these options is its pretty easy and cheap to support them all, even PDF is easy and pretty cheap to support.
Honestly, if you want to self publish format shouldnt be a barrier at all….unless you yourself make it one.
Re: Re: Re: Re:
forgot I was going to share a link
http://www.ebookweek.com/
found via Project Gutenbergs main page, alot of good info there 🙂
Re: Re: Re: Re:
Calibre? Fantastic product and worth donating to.
Re:
Terra, thanks for your post to this thread as a real live author. After all it is your product that we are discussing!
But I must object to your objection.
The contract/arrangement between you and your publisher has nothing at all to do with the arrangement between your publisher and the readers of your books.
Really. That is unless you are providing your books directly to your readers which is an interesting option but probably beyond the scope of his discussion.
Why do you care what your publisher charges for your book? That seems to be their own decision and is unrelated to your compensation for your efforts. If your publisher somehow equates YOUR remuneration to THEIR marketing efforts then I truly believe you need a new publisher.
Let’s say I’m mining coal. I have my family working for me so my costs are low. I sell it to the local coal company which delivers it to the local homes and businesses. If I send the coal to the company which, in my mind, compensates me and my family for the effort we expend to mine the coal then what do I care what they charge for the coal?
Not only that, but what if they LOWER the price for the coal? And, by doing that INCREASE the demand for the coal? Wouldn’t that be better?
BUT, BUT, you say. If they lower the cost of an INFINITE GOOD (ebooks) it’s not the same thing!!!
Bingo!!!
You made the original agreement to your liking, it benefitted you. And you got the extra exposure which is an unexpected “future good” which cost you nothing.
Sorry, I don’t buy your argument.
Re: Re:
I am more of a engineering/technical person but…
I think the point is those costs don’t matter to the consumer. The X consumers will buy your product for price Y. The goal is to maximize X*Y.
The sunk costs are completely irrelevant to the economics. The sunk costs were your risk when getting into the business.
MPAA/RIAA/IFPI/BRIEN and all these other trade groups would prefer not to compete on price. They want to compete on the size of their infrastructure. If they can fool everyone into thinking that bigger infrastructure and bigger advertising campaigns will always result in a better product, they will win.
If they are forced to compete on price, they will lose their fat executive salaries and the consumer will win better prices and more selection.
If anyone cares to critique the economics analysis of a simple electrical engineer, feel free.
Re: Re: Re:
I guess there is one possible mistake. It is always possible that they could retain their fat executive salaries because they are so out of touch with the economics that they are already losing money.
There is actually some evidence that may be the case already.
Re: Response to: Terra Ezeri on Apr 17th, 2012 @ 4:21pm
How does that justfy the same price as the printed version. You have those expenses in both versions. However in digital versions you don’t have printing costs for ink, paper, cutting, & binding. You don’t have shipping or warehouse costs. You don’t have the risks of production overruns or underruns. All of that you have in traditional books. How then are they priced the same?
Re: Re:
Some people think hamburgers should be cheap, but they aren’t factoring in the amount of time and effort that a farmer has to put in to raise a cow from a calf, and that isn’t the end of it. There’s transport and slaughter and butchering etc.
Gherkins have a story of their own too.
It simply would not be cost effective to sell a burger for less than say $500, and that is a fact.
Re: Re:
So costs that you can arrange not to bear: hosting etc.
Sunk costs. Sunk costs go into the equation for your profits. If you put them into the equation for your price, you are doing it wrong.
Re: Re:
Terra the customer doesn’t have to cover all your costs, especially if the sum of those costs drive the price of the product beyond what the consumer values it at. If, for example, you spend 20 years of your life writing your novel do you honestly believe then that you should recoup that time spent through the price of your book? Unless it is the greatest novel ever written not enough are going to buy it at $80 a book for you to get a fair return on your time invested. Even if you spent 2 years writing it and sell it at $20 no one is forced to buy it. The customer can wait for it to hit the sale bin and it becomes a loss for the publisher. This is how the market works and it doesn’t give a damn what went into a product, only what it values it at (unless you have really dedicated fans that care about your well being as an artist). So too if people are only willing to pay $10 for an ebook then some costs need to be cut to make that price a reality. In the end are you in the business to sell books, or to haggle with your customer that their expectations are unreasonable?
Re: Re:
You seem to be confusing a lot of things here.
First of all, nobody says that digital publishing costs nothing at all. What’s being said is that the *marginal* costs don’t increase. Most of the costs you mention remain the same whether you sell one book or a million.
Since higher prices often put readers off buying, and you have minimal marginal costs to cover by selling more books, why not offer them at a price people are willing to pay, rather than an arbitrarily high price that puts many readers off? If you sell 1000 copies at $10 but could sell 3000 at $5, you’re not worse off despite higher sales tax and bandwidth bills.
As I’ve said many times, I’m an avid reader but I baulk at paying more than $5 for digital content, especially from an author I’m not familiar with. At even $10 you may lose my purchase unless you’ve written something particularly compelling. $15? Forget it, no digital file’s worth that much.
calling bs bs
hummmmm….. then how pray tell can they sell a paperback for $4.95 to $9.95(full list) and allow wally’s world to discount 30%.
1. first run books have a value of full list or better…
due to a “small” run = sold out
2. print other than first are printed as needed per orders received.= mostly sold as only the last printing is returned
3. paperback books are published based on sales of hardback
sales may vary as per popularity however copies held for “reprint sales”
item 1 + 2 + 3 have now paid for ALL expenses for any book that would sell also as an ebook.
cost of ebook less than $.03 cents per meg..(very high est.) art work….paid
digital prep done as this is the same as sent to printer…..paid
site hosting ….ibooks amazon etc. no cost….
now please tell me what costs more for that ebook(and please.. only the costs not covered above)than a printed paperback shipped,handled 3 times, and sold to me at walmar
for $4.44????
I think you got the decimal in the wrong place. If publishers can’t cover their costs With $1 Ebooks, Then They Deserve To Go Out Of Business. If Apple can sell music at this price why can’t publishers?
$10 for an ebook???
Am I the only one that thinks paying $10 for an ebook is INSANE? Even at $8 for a paperback I sometimes think about it; my book buying has been cut down a lot since Borders closed and took their 30% off coupons with them.
Paper Cuts
I?m old enough to remember, from the 1970s or so, when the prices of books and magazines kept going up and up, the blame being firmly fixed on the rising cost of paper. So it appeared that paper was a big part of the costs of publishing books and magazines.
So now this cost is gone, not only are the publishers not charging less, they are even charging more? So paper wasn?t a big part of the cost of publishing after all? And we?ve been robbed over all these years?
Re: Paper Cuts
Look at the cost of Internet access. Recently, in my area, they went up by quite a bit. Cable too.
Re: Re: Look at the cost of Internet access.
But the publishers aren?t paying for any of that. Amazon, Apple etc are doing the Internet distribution for them.
Heck, the entire Internet itself will happily distribute anything you want at no cost to you, if you let it.
Pricing by cost
In the real world, if the price doesn’t exceed the marginal production cost the company goes out of business fast. If it doesn’t exceed cost by enough to cover the fixed costs it goes out of business slowly, and nobody wants to get into that line. But if it exceeds it by too much somebody else is going to move in and take the business away. The only way that someone can sell for far more than the marginal production cost for an extended period is by enforcing some sort of broken market employing barriers to entry.
The publishers keep telling us how we should be happy to pay far more than the marginal production cost because we have to pay all their sunk costs, which manage to be far more than the marginal production cost. It’s been my life experience that whenever I hear that I know that I’m in for one of those encounters where the vast majority of the satisfaction is going to accrue to the more powerful.
If you want an example of what goes wrong when you start thinking in terms of price by cost, look at the aerospace/defense world. The government wants everything to be as cheap as possible, so they are only willing to pay “cost” plus a small margin. Because of that the contractors spend their time figuring out how to make everything a cost that they can pass on to the purchaser, rather than figuring out how to take cost out so they get to keep the difference between the sale price and the total cost. Does anyone think that ANYTHING in the cost plus world is reasonably priced?
Cost Pricing
I think you’ll find the economists argument against cost pricing is more to do with the fact it doesn’t maximise profits and not ‘baking in’ your cost structure as you put it.
eg if a widget costs $1 to make and you just set a 20 percent profit margin you sell it for $1.20 when in fact the market may have paid $5.
In this case the publishers are trying to do the same – extract as much out of the market as they can so in economic theory its more to do with demand and consumer surplus. In Australia it gets even worse for printed works with the publishers having an exclusive right (ie retail shops can’t import from other sources) for a period and they still cry poor.
Re: Cost Pricing
According to Amazon, the way to maximize profit would be to sell it <= $9.99. Sure people will pay more, but more people will pay less. So in order to extract as much out of the market they need to lower their price
Re: Cost Pricing
“eg if a widget costs $1 to make and you just set a 20 percent profit margin you sell it for $1.20 when in fact the market may have paid $5. “
Indeed. However, what the publisher are doing is the equivalent of setting the widget at $5 to begin with. The market reacts, they start to lose sales and their reaction is not to reduce the prices and sell more units, but to try to increase the price to $10 in the hopes they claw back their costs that way.
By all means, charge what the market can bear. But, the market is moving toward lower prices.
book pricing
I hedge sometimes back and forth between believing publishers are just pretending to be stupid or that they really are. I don’t think that they truly believe the propaganda they throw around about ebooks. I think they know full well that they could sell ebooks for even less than $10 very profitably. The problem is that pricing in that range ultimately guts the $25 or $30 per book hardcover market where they make very, very nice margins based on their economies of scale in production costs and the fact that they can essentially pick winners and losers due to their control of what gets primary placement in bookstores and physical retail outlets. Ebooks are a much more level playing field that requires a different type of marketing than they are used to, and they don’t have the ability to prioritize the books they want at the head of the line. Their decisions with regards to ebooks, often seeming incoherent or absurd, really are attempts to slow or sabotage ebooks to shield their preferred print market. So, no, I don’t think they’re stupid in this sense. What they are is arrogant in thinking they can actually achieve that goal in the long run.
For as long as anyone remembers, the infrastructure of big publishers is the exact trait that earned them their positions atop the industry and served as an effective barrier to new competition that didn’t play by the same rules from entering the game. They simply don’t see that things have changed so much that their infrastructure is quickly becoming a hindrance, and is actually now attracting new, nimble and more efficient competition to the market that they no longer possess any real deterrent to prevent, be it small publishers, online retailers and even independent self publishers who can now all compete on essentially the same terms in the ebook market for a pittance of the infrastructure costs they’re saddled with.
The real trouble for publishers comes when they are finally forced to significantly trim that infrastructure (I give it two years, at the most) and how they go about doing that. Will the follow the newspaper industry that handicapped itself by laying off skilled, content workers in massive numbers to preserve the bloated, highly paid management structure, or will they reinvent themselves from the ground up. I’m betting it’ll be the former.
Re: book pricing
Agreed, the executives are going to keep their high-paid jobs for as long as they possibly can, shareholders be damned. Expect a round of consolidations as idiots with more money buy out other idiots who have hit the financial wall. Ultimately, the bottom-feeders will move in and quite a few rather tasty inner-city properties will be for sale.
It will all take years. We here at Techdirt will be jeering at them the whole time.
Re: book pricing
I think Dan Meadows has it pegged. Publishing houses love cushy middle management and upper management posts. It’s those bloated salaries that are interfering with the all-important margins, especially as print sales dwindle in response to the strengthening ebook market. Most traditional publishers are too political, old-fashioned, and arrogant to even consider a restructuring that would enable them to compete with the lean and mean newcomers, but I can see them hanging in there for a long time yet.
On the bright side, it looks like authors seem to be tiring of paltry royalties and half-hearted promotions by overworked publicity/marketing teams. I’m all in favor of a bit of a shake-up for this fusty industry, and I look forward to seeing how things shape up as authors become more empowered and take their business elsewhere.
Kodak Business Plan?
I wonder if they have some old Kodak employees at the top?
After all they appear reluctant to embrace the ebook world in fear it might hurt their existing physical book market…. sounds a lot like Kodak and we know what happened to them.
Publishers are full of it!
$10? $15? for an eBook? They are out of their minds. If they aren’t, then how does Baen, one of the biggest fantasy/sci-fi publishers make money selling their eBooks (without DRM no less) for $6?
1. I won’t pay a penny for ANYTHING with DRM – DVD’s being the only exception because their DRM is totally broken and ignored by everyone.
2. I only pay Baen more than $6 when I can’t wait and just HAVE to get the advanced reader’s copy of a volume. My only complaint here (they are $15) is that they don’t let you get the published volume when it is released unless you pay them another $6. Sounds like I won’t be paying them the premium much longer…
So, I think Baen has hit the sweet spot for eBooks prices. I’ll buy a bunch (and I do) at $6, especially since I can read it on my computer (online if I want), on my Palm (now in retirement), on my Android phone, and on my eBook reader (it is NOT from a major book seller).
$10 or $15 for an eBook? There is zero printing, binding, and shipping costs. The relative costs of online hosting compared to that is likely peanuts on a per unit basis, and the printing is just-in-time (copy bits to the network), doesn’t cost overtime, and works 24×7.
Owning vs having the license
When there is little difference between hardback and digital I get the hardback. It is all about the ownership to me. I will probably always feel a bit ripped off if I can’t sell or give away what I’ve bought.
Until I can treat my ebooks in the same manner as my pbooks I won’t pay as much for them.
Did i miss something?
If your customer, or reseller, can but your product from you, at your price, and then sell if for cheaper to someone else and not go out of business, aren?t you doing it wrong
framing error.
Mike, you don’t get it, do you? If the current market for books (print or whatever) comes in on average at $15, why the heck should they make ebooks cheaper?
All it would do it encourage people to the cheaper format, and each one that did so would spend 33% less.
It doesn’t make sense for anyone to push a format change at a lower price, thus rending your existing profitable business a wreck.
Re: Re:
The point is, in a competitive market place, if you don’t undersell your competitors they will undersell you.
If the market is rigged then you can get away with raising prices as distribution costs shrink. The current market conditions are a clear indication of illegal, anti-competitive behavior.
Re: Re:
The error is in your logic: being that the market for a product is determined by the customer, NOT the producer, and it is them that will push a format change. Obviously the customer will go for what works best for their interests, again NOT the producers, and the producer has to follow or watch another capture the new/changing market space. Much to the producers potential chagrin the consumer isn’t a vassal or serf bound to their empires…
Re: Re:
The error is in your logic: being that the market for a product is determined by the customer, NOT the producer, and it is them that will push a format change. Obviously the customer will go for what works best for their interests, again NOT the producers, and the producer has to follow or watch another capture the new/changing market space. Much to the producers potential chagrin the consumer isn’t a vassal or serf bound to their empires…
Re: Re:
It doesn’t make sense for anyone to push a format change at a lower price, thus rending your existing profitable business a wreck.
Until smarter competitors come along and destroy your business.
This is why *visionary* companies get ahead of the crowd and do this themselves. Stupid, blind companies asking to die follow your plan.
Smart companies understand the innovator’s dilemma. You don’t, clearly.
Re: Re: Re:
Mike, thanks for the insult, as always, you are a snarky fuck when you want to be (most of the time).
What you are missing in this is that technically, there is no competition. If a publishing company has the rights to a book, then they have the rights to the book. There is no competition for that book. At best, they may face competition from other books written by other authors. But those authors and publishing companies also see the same issue, that they need to make sure they aren’t blasting out their income stream just to make a few more potential readers happy.
The innovators dilemma really cannot be directly applied when the product you create is unique.
Remember: In music and movies, the only thing driving the business models to change right now is piracy, which is unfair competition with the same product. If the product the pirates tried to compete with was only Sita Sings the Blues, then there would be no issue and nothing driving.
The book market isn’t likely to go anywhere until a large percentage of the business is done outside of the mainstream companies. Until then, they will be bottom line oriented and are unlikely to hurt their own bottom line just to make you happy.
Re: Re: Re: Re:
“There is no competition for that book. At best, they may face competition from other books written by other authors.”
This is the typical attitude of someone who overvalues their own content. You assume that people are so intent on obtaining your content in particular that they will pay any price. Yes, you have exclusive rights to that particular title, that means people will buy it under the terms you set, right?
Sadly, that’s wrong. If I want a new book, I’ll look at what interests me. On the Kindle store, for example, your competition isn’t just what’s out that week, but everything ever released on the format. Sure, I’ll prefer a particular title or author, or may prefer a new release, but if there’s $5-10 difference between titles I’ll buy the cheaper one unless I see something truly compelling. I’m not bound to buy your title in particular.
Guess what? You just priced yourself out of the market for my purchase and another publisher took the money. If they do this on a regular basis with a large number of customers because they’ve worked out how to recoup greater profits by offering consumer friendly priced, you deservedly go out of business.
“Remember: In music and movies, the only thing driving the business models to change right now is piracy, which is unfair competition with the same product.”
So, are you saying that eBooks aren’t pirated, or that music and movies don’t also compete with other titles? Either way, what a pile of bull. I’d list the actual competition music and movies are facing, both within and outside of their own specific marketplace, but you’d ignore them as usual.
“Sita Sings the Blues”
I’ve honestly never seen anybody so obsessed with trashing a particular work at every opportunity, especially one that was offered to you for nothing. Yes, we get it, you watched it and you didn’t like it. I didn’t particularly care for Megamind. Does that mean that Dreamworks’ business model is suspect or that I should spend every waking moment trashing its director?
Get over it.
Re: Re: Re:2 Re:
“This is the typical attitude of someone who overvalues their own content. You assume that people are so intent on obtaining your content in particular that they will pay any price. “
Paul, if you want another book, you are free to obtain that however you want. The real trick here is you don’t have any right to dictate to one company that they must meet the lower price of another company on a different product, just because it makes you feel better. If you want the book, pay the price. If you don’t then move on – if enough people move on, the book seller may change how they do things.
You are trying to achieve a change in their marketing at gun point. Vote with your dollars, and let them do it whatever they want. If they fail, they fail – LET THEM FAIL.
Why get all uppity about it? If you have a better business model, use it, beat them with it, and ruin them with it. DOn’t force it down their throat because “it’s good for them”.
“So, are you saying that eBooks aren’t pirated, or that music and movies don’t also compete with other titles? Either way, what a pile of bull”
Why? Ebooks are still in their infancy, and are not yet facing an overwhleming flood of pirated material. This is most because of the combination of some DRM, some incompatibility between formats, but mostly because digitizing books is hard work that most script kiddie pirates aren’t willing to do. As more and more books get released as Ebooks, you can expect piracy to ravage the market as well.
It’s bull to ignore the effects of piracy on retail sales.
“I’ve honestly never seen anybody so obsessed with trashing a particular work at every opportunity, especially one that was offered to you for nothing. “
I just use that as an example of a work that is held in high praise here, that is a great example of the future of film making… and yet, very few people in reality want it, few would pay for it, and so on. It is to me the ultimate proof of a sort of willful blindness by supporters of the “new models” as to what they will receive as product if their succeed in their attempts to tear down the current systems in place. We are perhaps doomed to bad youtube videos of guys getting kicked in the crotch, and movies that few people want even when they are free.
Remember, the difference between Megamind and Sita Sings the Blurs is simple: Megamind is the worst possible, Sita is perhaps the best end product of the new system – and Megamind still has done more business. Damn, that sucks!
Re: Re: Re:3 Re:
“Paul, if you want another book, you are free to obtain that however you want. The real trick here is you don’t have any right to dictate to one company that they must meet the lower price of another company on a different product, just because it makes you feel better”
I have no idea what you’re blathering on about here, but I certainly do have the right to dictate prices. It’s called the free market. Your price is too high? No sale. I can get another product at a better price or I can buy from a competing retailer cheaper? I’ll do so. I don’t see that I’m suggesting anything else.
“You are trying to achieve a change in their marketing at gun point. “
Please explain how I’m doing this other than the mechanisms of the free market that predate their entire business.
“Ebooks are still in their infancy, and are not yet facing an overwhleming flood of pirated material. “
So, surely now’s the time to get it right, for once? Piracy is just people getting hold of what they wish to when they are either blocked or priced out of legal methods. Why is addressing this before it becomes a real problem wrong?
“I just use that as an example of a work that is held in high praise here, that is a great example of the future of film making..”
Please cite where someone has actually said this. No, not the business model the leveraging of free or pointing out that corporate dollars are not the only incentive for creativity. Actual citations of where somebody has said that it’s creatively the future. Hell, even where someone has claimed this is the best possible under alternate business models (note the plural, stop pretending there’s only one).
I’ll wait, like I’ve been waiting for citations from you on every one of your claims. Again, we get it, that particular film is not to your tastes. That means nothing.
“Sita is perhaps the best end product of the new system “
Again, citation needed.
“Megamind still has done more business”
Yes, a soulless corporate product with more than 100x (perhaps even 1000x) more budget for its marketing than Sita’s entire production budget took in more gross revenue. This is my shocked face.
How does this invalidate an entire business model, again? John Carter also took in more gross than Sita, but I doubt anybody’s retiring off that particular fiasco… I can carry on pointing out major movies that lost tens or even hundreds of millions of dollars if you wish to argue further, or just accept that you not liking one film does not a business model refute.
Re: Re: Re:3 Re:
Ha ha ha haha hahaha hahahahaha hahahahahahahahahahahahaaaaaaaaaaaaaaaaaaaaa!!!!!!!!!!!!!!!!!!
Clearly you haven’t looked too hard.
Re: Re: Re: Re:
>Mike, thanks for the insult, as always, you are a snarky fuck when you want to be (most of the time).
And you’re the epitome of gentlemanly behaviour.
Free Android Apk Softwares Downloads 2012
If you’re willing to trust and use iBookStore, Amazon, and B&N. Some of us don’t thanks to their DRM. I buy books from them, but I’d never sell my works through them.
“book publishers demand that eBooks should be $15 and not $10, they say it is because they cannot afford to sell books at $10”
Well, that’s OK. As a reader, I cannot *afford* to BUY books at $15 a pop – especially digital books with no resale value. I will simply buy cheaper books, used physical ones if necessary but more likely from one of your competitors – be it another publisher or another form of entertainment. There’s no way in hell I’m buying a restricted digital file for more than I pay for a heavy physical bunch of printed paper that can be used in any way I wish. That can somehow be created and shipped halfway around the world more cheaply than the transmission of a text file? Bull.
Enjoy your losses, you deserve them.
A good topic which cause much disputes.That’s right,as a consumer, nobody would consider how much cost publishers will spend, they just care about how much they could get and if they agree to spend the cost to get it.
It is easy for us to find good quality and cheap resources from online shopping website
I think everyone is forgetting the non-profit university presses – scholarly publishers who still have very real costs, but for whom the pricing on an ebook is crucial. We still must pay copyeditors, typesetters, marketing, etc, but our books are niche and will not sell hundreds of thousands of copies. By law we can’t make a profit, but many are struggling in the new marketplace to break even. There are many costs associated with creating an ebook, and to be forced into losses with them are killing us.
Re: Re:
Sure, but do you recoup that money after 1 sold book (nope), or after 10 (unlikely), or after 100 (rather more probable)? Do you expect immediate return on investment, or can it be a bit in the future?
Copyeditors, typesetters (for ebooks?), marketing have already been paid before the books even land in the shops. So tying their fees to the book prices is dumb.
It’s like the movie studios argument, that piracy hurts the boom operator. Nonsense, he already got paid. It’s the ROI that you’re worried about. And that’s a whole different ballgame.
That's just one part of the argument
Great article and highlights one of the pain points in eBook pricing. But it doesn’t go far enough for me.
The publishers have to stop thinking of prices per unit sold, because there are no stocking fees, there is no shelf storage needed, no warehouses needed to store the unsold books, in fact there are no unsold books.
And you can recoup on your investment at a later date as well. Because you can keep selling the books, well into the future.
The books also will never get sold out, and they only have to create one master copy, out of which, without loss of quality, an unlimited amount of other copies can be made.
These old type publishers are missing the boat on this one, the smaller publishers that do understand the vastness and limitlessness of the internet will steal these publishers lunch money, and will keep playing the ball between the feet of these lumbering dinosaurs.
Helpless
Its becoming more and more clearer that these industries have no clue on how to innovate their business models. They just can’t. They don’t want to and they dont’ know how. Cowards.
$10. e books from Amazon – maybe 5 years ago – most first runs today are $14.95! Where’s the love Amazon?
Re: Re:
$10. e books from Amazon – maybe 5 years ago – most first runs today are $14.95! Where’s the love Amazon?
That’s exactly what the price fixing lawsuit against Apple & the publishers is about. The publishers don’t let Amazon set its own prices anymore – the deal with Apple caused ebook prices to go up by around $3-5 across the board
Oh god it's too depressing.
I agree with the editorial stance of Techdirt and its columnists on many things, but here I have to part ways. Actually I had to register an account in order to comment, so sad and frustrated does this make me.
Comments on this thread include, among many other similar ones:
“I almost can understand the cost of a book around $15.00 because you have to also include in the price of the printing process. However, with ebooks, you don’t have to worry about that.”
“The public doesn’t care about the “baked in” costs or subsidizing continuing legacy costs, which sounds suspiciously like cross subsidization, fancy headquarters and a host of other things which include obscene executive salaries”
“The publisher agent and other fees are the primary reason why the costs are kept artificially high. Those are the vast majority of the cost of the book, cutting into the amount paid to the author.”
None of these people has a clue.
Look, folks: paper is cheap. We save maybe 10% of cover price by not having to print things, although there are all kinds other costs involved in running an ebook business (like the dozen or so full-time staff we have on site.)
Publishing staff, even executives, are pretty cheap. We cost very little compared to other industries. I reheat a lot of soup.
Publishing companies are both pretty lean – the first major component of our business model is bulk purchasing of services like editorial and design, much more efficient than freelancing everything – and modestly profitable; our profit margins are not high. Check out the accounts if you like.
Where does the money go in making a book?
The biggest line item is the up-front, nonreturnable advance for the author, who never has to pay a penny to their publisher. We pay you to write the book, we polish and package and lavish all kinds of love on it – most of which is completely opaque to the consumer, because they only tend to notice bad packaging and editing etc. In return we get a bigger cut of the back end than you (though not a huge cut.)
Shifting risk away from the author may well be attractive to the author. If you want to self-publish, it’s more of a gamble, because you need to pay up-front for stuff like design and editing. By all means hire that amateur off deviantart to do your cover art and try to crowdsource proofreading. Let me know how that works out for you. That’s the other big cost in book publishing.
You can’t simply divorce the ebook edition from the paperback edition and pretend all the major costs are sunk and irrelevant. You have to look at the P&L for a *book*, not a single edition. Have you ever run a P&L costing for a book? If not, stop lecturing us about what it costs to make one.
What depresses me is that *nobody* without direct experience seems to have a fucking clue about the economics of book publishing, and in the absence of any knowledge, have concluded that we do nothing, that we sit on our asses in gilded offices eating bon-bons, and the sooner we are swept away and everyone is their own self-publisher the better. Well, I hope you enjoy reading slush. I really do.
Re: Oh god it's too depressing.
Nice comment, but you don’t answer the question of why:
A Hardback lists at 24.99 but can be found for 19.99 discounted early and far less when they are trying to close it out.
A paperback lists at 9.99 but can be found for $6.99 discounted.
A e-book lists for 14.99 and can not be found discounted anywhere do to collusion.
?????
Re: Oh god it's too depressing.
Author advances are only a cost if you pay one. I don’t know if it’s common practice at your publishing house or not but if you do then I agree with what follows beginning with “We pay you to write the book..” assuming the you is the author. As well as designers, editors and all the other things which go into it. Lovingly or not. 😉 Not all publishers pay advances to all their authors, though, so that cost for that/those books doesn’t exist. Incidentally there are some incredible artists at DeviantArt who would do a wonderful job designing a cover for a book. I’d worry about them selecting the type face, mind you, because that’s not what they do. And that’s part of the “interior” design of a book.
For all of that sort of thing I stand by what I said about the public (aka the Market) doesn’t care about any of that. Nor should it. If you as a publisher set the price too high the book won’t sell no matter how wonderful it is. After all, in a free market nothing guarantees that you will recoup your costs much less make a profit and that’s where you and I part company if I read you correctly.
As you say, there’s not really just a comparison between the paperback editions or the ebook edition any more than there is a direct comparison between the hard cover or the paperback or the soft cover of that same book. (Though often I’ve seen that the soft cover and hard cover have the same cover, layout and type face along with other design features.)
I can agree till the cows come home about all of that and the rest of the P&L the moment I become a customer I just don’t care. I want the best price I can get or I’m not buying. The same issue arises with the ebook. Particularly if the ebook comes encumbered by DRM which reduces it’s value to me. A book, hardcover, softcover, paperback or ebook is not a video game though I do expect to be able to do with the ebook what I can do with the dead tree editions. That is NOT an unreasonable expectation. In fact, it’s perfectly reasonable.
Yes, more people are buying books, perhaps not reading them but buying them.
But if your industry doesn’t wish to be tarred with the same well-deserved brush that the RIAA and MPAA have been then I suggest that you need to drop DRM on ebooks and stop pretending that the price on the cover is the price the retailer must sell the book for no matter what format that it’s in. And work with and for your customers/readers in getting a standard ebook format that will work on a Kindle, iPad or whatever device it is placed on. You’ll get nothing but praise. Perhaps a few more sales too.
A reduction in infringing files floating around out there? I’d suggest very strongly that you would but if fear of piracy is all that strong then I guess you’ll stick with DRM which will only increase piracy and legitimate buyers cracking the DRM attached to their legally purchased book.
It all doesn’t have to be too depressing, just a bit of a rethink on the publishers part about things like DRM and behaving publicly like the MPAA and RIAA. Or lining up with them. Take a chance and work with your customers. Don’t treat them (us) as real or potential thieves.
People still read?
Publishing in a dying industry. Less and less people are reading books now, and fewer will as older generations die off. Ebooks is the only future that this industry has. They should really learn how to expand their customer base, and cheaper books are probably a good place to start.
Re: People still read?
No, more and more people are reading books now. I’m looking at our results and I’m seeing explosive ebook growth on top of steady print sales. Our turnover is up year-on-year and has been for some time now; this is what I see across the rest of the Big Six, too.
Basically all the data that crosses my desk implies that you don’t know what you’re talking about.
Re: Re: People still read?
I think he was refering to paper books when he said “less people are reading books”, but your answer raises the following question.
If you are seeing explosive ebook growth on top of steady print sales, what the hell are you complaining about???
Once again I have to go back and say not all publishers are big commercial publishers. University presses are non-profit, we publish scholarly books that are used by researchers and students, as well as things like regional histories. We also publish scholarly journals which are many times made available for free through sites like Project Muse and JSTOR.
We barely break even, people are definitely still reading our books, and we’re absolutely not trying to crush the little guy. Please don’t lump us into one homogeneous mass, because we’re very, very different from our big commercial cousins. Things like this affect us too, and we still have costs to offset though we’re not-for-profit institutions. We are no longer flush with subsidies from our guiding institutions, and we’re doing the best we can to innovate and embrace digital technology.
Publishing is not some monolithic establishment. There are many different kinds of publishers, and some of us are doing our best to work with our customers to find the right price and the right technologies.
Re: Re:
No, publishing is not monolithic. Nor is all publishing commercial in nature. Though I’d argue that not all university publishers are non-profits particularly after looking at the list of books that are not curriculum books printed and sold by the likes of Oxford University Press.
Part of the issue with scholarly presses at the University level is that the market is built in particularly with books set on curriculum so the sales are, to some degree, built in. Some university presses do work co-cooperatively with other schools to bring down pricing as well. I don’t know about your institution. Not all are non-profit which is why I mentioned Oxford though I do understand that a percentage of what profits they do make is returned to the school. That and I don’t know what co-operative relationships you may have with other schools.
I will congratulate you, and other university presses, in the wealth of information I find on the Web that were originally published on paper and are now freely available if somewhat out of date. It’s enabled me to research a couple of topics that would otherwise have been difficult to do when I took up an new “hobby”.
You’re perfectly correct in pointing out that publishing covers a lot of ground from the Big Six to small presses in small towns publishing local material of various sorts. And that we shouldn’t fall into the trap of lumping it all into the same basket as the big commercial presses. Thanks for pointing that out and good luck.
why bother with the conditional?
Forget the “if” statement here — publishers simply deserve to go out of business.
They contribute nothing these days. They are merely worthless middlemen.
I might contribute to an author, if I like his or her work. But I will never give one goddamn cent to a publisher.
Re: why bother with the conditional?
For those of us who work for non-profits and who don’t make much money but do this out of love this saddens me. We publish things other publishers won’t touch like poets outside of the mainstream and regional histories, journals that allow others to expand on fellow scientists’ work. We do good work, and we do it for the community. Not all of us are out to make money at any cost.
Legacy
The biggest problem in the publishing field, along with the recording industry and the movie industry, is simply the desire not to change the way things are done. A lot of the overhead costs that people are detailing here just simply aren’t necessary. And because of that, you may see editors moving to start their own e-book imprint and running it out of their homes.
As some people have suggested, you don’t need million-dollar a year offices in Manhattan. You don’t need an army of secretaries and assistants. And you don’t need executives making millions of dollars a year while the average writer gets a paltry $5000 advance and $1 per copy after the advance is paid. A handful of people could run a successful e-book publishing house and still offer much more favorable terms to their authors.
capitalism
Isn’t this just basic economics? If the consumer doesn’t want to pay more than $10 for an ebook – – – – WE WON’T! Then, the publishers will go out of business entirely. If the price point is $10 for an ebook, figure out a way to produce them for $10!
capitalism
Isn’t this just basic economics? If the consumer doesn’t want to pay more than $10 for an ebook – – – – WE WON’T! Then, the publishers will go out of business entirely. If the price point is $10 for an ebook, figure out a way to produce them for $10!
Selling e-books at marginal cost
I am busy writing my first e-book for an hour or two each morning. I want to sell The Art of the Meme at the cheapest possible price as a kind of referendum on whether Netizens are interested in reading the inside story of the Mentifex AI project in artificial intelligence. When Amazon e-books gave into the publishing racketeers and raised their prices upwards from $9.99, I was really annoyed and disgusted. Now I am glad to see a more legitimate price-structure return to the e-book marketplace.
Leave economics to the experts ...
Wall Street Journal 13.4.2012:
“Near term, stronger e-book sales would be good for publishers. E-books are cheaper to produce?lacking costly printing and binding?and are more efficient to distribute, since unsold books don’t need to be returned to publishers. That has boosted publishers’ profits in the past year or so even as revenues have eroded from falling sales of pricier hardcover books.
Random House, for instance, reported that earnings before interest and taxes jumped 6.9% in 2011 despite a 4.3% revenue drop. Simon & Schuster’s adjusted Ebitda rose 40% to $28 million in the fourth quarter from a year-earlier even as revenue fell 1%.”
If Publishers Can't Cover Their Costs With $10 Ebooks, Then They Deserve To Go Out Of Business
Totally agree. Along with oil companie, record companies, Microsoft, Google, concert promoters, etc.
OMG. JUST STOP.
Will everyone stop making the ridiculous straw man argument that book publishers want to raise the price point so they’ll make more money? There is literally NO ONE anywhere who is claiming that this is even remotely a factor. None of this has to do with “covering their costs”. At all. The reason why: they won’t make more money. Go Google “agency model pricing” for a second. Publishers make LESS money selling their books on the agency model. The increased price point goes to the vendor. So who makes more money in this scenario? Amazon.
So why is Amazon fighting tooth and nail against agency model pricing then? Because they currently sell e-books at a loss. When you buy that e-book for $10, Amazon sends the publisher $11. Why? Amazon is the largest retailer in the world, and they can afford to burn tens of millions of dollars seizing market share and destroying competition. Because who can compete with a negative profit margin? With a strategy of willfully losing money? Amazon has deep pockets and can keep it up as long as they have to.
And as an addendum: people who think removing a book’s physical instantiation should drop the cost of a book by 75% aren’t really thinking it through. Say a store sells a book at its list price of $25. About 46% of that goes to the retailer (normally – I think Amazon’s margins are in the single digits), of that $13.50 that goes to the publisher, maybe 15-20% is what the actual physical item costs (it’s just paper, after all). So like, around $2.50. Imagining that dropping a paper copy from the equation should drop a book from $25 to like $5 (which I’ve seen people seriously suggest) is ludicrous. The rest goes to, you know, actually having a publishing company – paying your writers, editors, marketers, PR people, quality control, your account reps, the artists who put pretty pictures on the cover. I swear, it seems that most of the time people imagine a writer comes in, and a guy likes their book and they e-mail an MS Word doc to the printers and a couple days later they’re in business. That’s not the publishing business any more than Hollywood is only made of the people on set. Content producers are only one part of the business.
Re: OMG. JUST STOP.
Wow. You are completely wrong and have no idea why.
The agency model is when the publisher chooses the end price and the seller keeps 30%. So when the publisher sets the price at $15, Amazon gets $4.50 and the publisher gets $11.50.
Under Amazon’s wholesale model, the publisher was paid half the hardbook price, which was around $15 to the publisher and Amazon sold the book at whatever price it wanted.
Under the Agency model, both the publishers and the author make less money, but for some reason they prefer that over making more money, all because they didn’t want Amazon pricing below what they thought was a price that would keep people buying paper books.
Books don't cost all that much to print.
“By your logic, all PlayStation games should work on an Xbox in case your PlayStation breaks.”
What a ridiculous strawman fallacy.
Playstations and XBoxes are totally different devices. They don’t use the same software, just as PCs and Macs don’t use the same software, just as you can’t play a Blu-Ray in your VCR. There’s a real, honest reason why games may work on one but not on another. The devices simply cannot use each other’s formats.
DRM, on the other hand is artificial. ALL eBook readers are capable of reading non-DRMed formats. The decision to sell a book in a restricted DRM format is one taken by the publisher or retailer with no technical justification. it’s a commercial decision, made on the basis that if they can restrict people to certain devices and uses then they’ll make more money and “defeat” piracy. Neither of these are true, so it just remains an anti-consumer practice that’s totally artificial and totally optional.
“If you lose your copy, should the publisher or retailer provide you a way to reattain it?”
No, because it’s totally different thing. As you later admit, when you buy an eBook you’re buying a licence, not a product. If I’m licencing a book you can be damn sure I’ll insist on being able to access it. If I lose the book, I’ve lost it, but I’m not bound by any bullshit restrictions when I do have it in my possession, either.
“When you purchase the right to use a product like an ebook, you agree to certain terms, which include honoring the intent of the publisher’s usage license granted you by your purchase.”
OK. So then, when so many of us refuse that contract and refuse to buy DRMed material, stop bitching about piracy. You made your bed, lie in it.
Books don't cost all that much to print.
“Either way, the product was created with the invention of exchanging use of it for money.”
So was the book I lent to my friend a few days ago, which I myself bought second hand. Does that mean we should be punished? If not, why not, and why is this different to obtaining the product digitally?
The difference between theft and infringement is simple – in the former, somebody is deprived of the original product, in the latter they still have it. There’s only the *potential* of a lost sale. Use the terms correctly, and you’ll find less objections to your words.
“their DRM has caused a handful of minor problems for a few people.”
By “people”, you mean “paying customers who were unable to use their legally purchased software”. Pirates had no such problems, and there are pirated versions of all their DRMed games available.
See the problem?
“I simply installed Origin, logged in, and redownloaded all my games.”
What will you do if it happens again, after Origin’s servers have been shut down, or are otherwise unavailable to let you access your software?
$15 Ebook
And one day the butcher’s union decides they cannot sell beef for less than $15 per pound, regardless of cut or quality. A lot of sunk costs there. Who is going to continue to eat hamburger 6 days a week with a roast on Sunday?
I may buy filet mignon in the future, but I won’t be buying anymore hamburger.
Help me out here...
This is exactly what we’re trying to say is wrong. Marketing is considered a sunk cost, and it is mathematically unwise to include sunk costs in your prices.
Digital goods really illustrate this point extremely well, because it makes the “total cost” equation extremely simple:
normally (sunk costs) + (units sold * marginal cost), but since marginal costs are so close to 0, it’s even simpler:
(sunk costs)
At this point, once you have reduced your sunk costs as much as possible, the only variable you need to worry about is the number of units sold. As an example, you spend $1.5 million on sunk costs (including marketing). As stated before, if you only sell 100,000 units at a price point of $15, you’ve barely recovered your sunk costs. But by reducing the price to $10 you sell 300,000 units, you’ve now recovered twice your sunk costs – this is the entire reason why it’s unwise to factor sunk costs into your pricing.
I'm with you, but...
it is a ‘science’, but it has more in common with the weather and earthquakes than it does gravity and the laws of motion. current economic theory keeps trying to treat it as the latter Anyway, Ignores that the consumers are not necessarily rational actors AND that, unlike with motion and such, the consumers have Minds, observe the results of the economists’ experiments, and then Change Their Behaviour (in admittedly predictable ways) in response.
it’s also one of the few (perhaps the only) ‘science’ where ‘reality does not match the model’ results in ‘reality is doing it wrong’ as the accepted correct response rather than ‘clearly we need a new model’. the usual response to ‘this model produced erronious results!’ is ‘well, it doesn’t account for (90% of EVERYTHING), which you have to compensate for, but it’s still right.
basically there’s a lot of useful data fragments about how certain sub-componants of it interact, but that’s about it.
you want actually USEFUL economic data and theory? employ a bunch of compitent statisticians and historians to work it out for you. avoid economists at all costs.
Re:
‘sad but true’ button, where art thou?
$10 for an ebook???
… silly American money…
the NZ dollar was getting on toward being worth US80c at one point… (not sure what the current rate is)… paperbacks Still cost 17(really rare) to 30 NZD… (20-25 being most common.)
then again, i’m always baffled by the value of the US dollar… the things that are cheaper or more expensive often seem to make no sense, even allowing for cost of living vs income based maths rather than exchange rate maths…
Books don't cost all that much to print.
laws designed to protect you, have never worked and never will
abolish those too while your at it, makes sense right?
Help me out here...
You are forgetting a key component here. Books, from a data perspective, are small items. Pretty much every book published in the last year could be stored on a single hard drive!. And therefore the associated costs for data services are actually probably relatively small. Indeed, this is demonstrated by the fact that companies like smashwords can publish books for tiny prices (usually under $5 and often $3, and quite a few books are free!). As for those fees you are talking about? Given the right restructuring of the industry, I can see agents going away.
Books don't cost all that much to print.
The telling story of production and distribution costs (excluding the fixed costs of writing, editing,layout etc.) is with authors’ backlist. If the cost of printing a backlist book for sale as a paper copy is roughly the same as selling that backlist as a ebook, why has the rise of ebooks launched a massive battle over backlist rights and led to a huge increse in the amount of backlist titles available to consumers?
Help me out here...
Guys, you’re missing the point with the costs.
Since it seems obvious to all of us that ebooks will soon be the ONLY edition of many types of book, we need to price the ebooks from the start in such a way that we can cover those costs.
First, almost no one in publishing makes more than a bare living wage. And many, many of them have to take second jobs in order to keep eating. The costs are not from stupid things.
They’re from things like editing (all 3 types: structural-, line-, and copy-editing), design (including the “cover image” for the ebook) and author royalties.
These aren’t sunk costs. These are FIXED costs of producing an edition.
The variable costs of selling another copy of an ebook are less than the variable costs of selling another copy of a printed one, but not much less. Distribution is still a huge chunk. Author royalties are a big piece of what’s left.
If you want the professionally published books to have been edited, and then get high quality file conversions, the prices are going to have to continue to be more than the shoe-string self-publisher can do.
ebook pricing
The problem with not using cost based pricing is clear and will result in the destruction of publishing much like it has for the music industry. So called optimal pricing merely enables big players to gain market share by “dumping” under-priced goods while not retaining enough capital to reinvest in further production. It’s suicidal. There were no winners on the Titanic.
Help me out here...
Books don’t usually sell very many copies, compared to most other industries, and they have very low unit prices for something with so few units.
The development costs have to figure into your pricing sooner or later, because if they don’t get covered eventually, you go out of business.
Note that publishing is one of the lowest margin industries around, not because the people in it are dinosaurs but because it’s a low-price/low-volume business.
That’s different, btw, from the music business or the movies or . . .
Help me out here...
There is a built in maximum number of copies that any book is likely to sell at any price.
We’re not talking toothpaste or widgets. Books have limited audiences and limited sales lives, with very small long-tail sales after the end of those lives.
Do the calculus, figure out the area under that curve, because believe it or not, we have. It’s pretty darned small.
If you don’t cover the development costs (aka editorial, acquisitions, file conversion and subsequent clean up, etc, etc) within a few thousand copies, you NEVER WILL.
Truly, publishers aren’t as stupid as all of you clearly think we are.
simpleton
sorry. that article is just too simple. there’s a big difference between the markets for the most popular novel and the best book out there on African development economics. author is just too simple to appreciate the subtle contexts. And this article is the only type of publication that would be available at the margins when 10 bucks is the price. fewer valuable publishers will make the investment in new titles. great. more kim kardashian lifestyle tip, bloggers looking for attention, and a book of interesting tweets.
The Cost of Reading
Of course ebooks should be less expensive; after all, I’m the one providing the reading surface in the form of my ebook reader. Basically I’m paying for electronic paper, so the ebook better be less than the printed one. Besides. . . do you want me to buy just one of your printed books at a higher cost; or several of your ebooks at a lower cost???
Help me out here...
I understand the point you’re trying to make, but the point from a customer point of view (at least for me) is this: I will not buy an eBook that costs over $5. Partly, that’s because it’s rare for me to buy a physical book for over $5-8 and the eBook is actually worth less to me (usually can’t be lent, no resale value, etc.). Partly it’s due to the DRM restrictions. Partly it’s because I recognise that the marginal costs are far lower (and fixed costs are often the same and shared with the physical copy). Partly it’s because there’s a lot of competition at the lower price point, and higher-priced eBooks have to be something special to justify the extra expense.
Yet, publishers are often pricing eBooks *higher* than physical books. Sorry, no sale. If you can find enough people willing to pay $15 to make back your costs, then so be it. Just don’t whine about piracy if you don’t, when you’ve priced yourself out of the market for a lot of people.
scholarly publishing
So, tell me what happens when consumers feel that $9.99 is the right price for EVERY kind of book because Amazon has decided that it is the right price for trade books. Where does this leave, e.g., scholarly publishers like university presses whose overheads do NOT include high-paid CEOs, fancy offices , etc., but do value things like good copyediting, design, and production. If presses sell their books at $9.99, their parent universities will have two choices: close them down, or subsidize them even much more heavily than they are doing now.
Help me out here...
Servers and ISP costs for ebook sales are down to the retailer, not the publisher. Amazon isn’t the one who is pushing for higher ebook prices.
Help me out here...
Actually, IPG put out some numbers on ebook costs vs. treebook costs. Some very specific numbers. And it doesn’t cost as godawful much as everyone makes it out to cost to have the book edited, marketed, and so forth; I ran some numbers on *my* blog and found that a $9 ebook price point could be just as profitable to the publisher as a $14.95 trade paperback–and that’s not even the lowest profitable price point. I think there’s a fair amount of wiggle-room there that nobody on the industry-side is discussing.
Every product on the market has to go through some form of “editing, polishing, marketing, distribution.” Books might be high art–well, some of them–but no product springs into being ready to be marketed. There’s research and development, then testing, then production, then more testing, test markets, advertising, sales, distribution. The book business is still a business, and the publishers’ business models should be efficient and cost-effective. Publishers cannot keep expecting us just to pay whatever they think a book is worth, because they now have competition from multiple sectors that won’t go away.
So wrong in so many ways
I’m a publisher. Have been for 30 years. Used to be in the music business too. There are so many bad assumptions in this story I barely know where to start. 1) Not all publishers are BIG NYC firms making huge salaries. There used to be thousands of small publishers. There also used to be tens of thousands of bookstores. 2) The record companies relinquished all of their GLOBAL manufacturing rights to Amazon and Apple for ZERO advance. They then allowed these “licensees” (which actually means “manufacturers”) to set the retail price AND the royalty rate. This is why the music industry is in the toilet. They went from $14B in 2000 to less than $4B in 2010. No one seems to be able to explain how or why this is good for the OWNER of the music. Of course the internet is supposed to be the great equalizer so if the consumer is being well served by the notion that the theme tune from Gilligan’s Island is “worth” the same as “Hey Jude” then knock yourself out. If a song is “just a song” and should be sold “by the pound” then you’ll get what you pay for.
As for books, well…before posting such badly uninformed articles as this perhaps Mr Masnick should try being in the publishing industry for a while. The average publisher used to get paid 50% of retail for books. This was the paradigm for more than a hundred years. The retailer made 50%. When the publisher was paid 50%, books were cheaper because both the publisher and the retailer were making a fair share. Since Amazon came on the scene as a “retailer” they took that 50% margin and slashed into their share by deep discounting to the consumer. They were able to do this because they had no stores and barely any overhead. They didn’t inventory anything and only bought what they sold. Good for them. So instead of making 50%, like all their retail competitors, they figured they could make 10% or 5% and crush their competition. Since they didn’t hold inventory they could sell at zero margin to put their competition under. So they did this very effectively. We’ve gone from 35,000 bookstores to less than 3,000 in the last five years. Part of this “wipe em out” strategy was to sell used books alongside the new books and simply play library. The publisher and author get nothing for the sale of a used book. So they assaulted their retail competition and both new and used vendors dropped like flies. Then they went after the distributors by demanding higher margins. The distributors responded by cutting into the publishers’ (and therefore the authors’) cut. Next Amazon said “sell to us directly”. So they tried to kill the wholesalers and distributors. Which they are now doing very effectively. Next they said to the authors, “we’ll be your publisher”. Just upload your ebook here and we’ll only take 70% of the money. At that point some publishers fought back because many of them OWNED the intellectual property (i.e. they BOUGHT and PAID for it)and so they went and cut a deal with Apple who said they’d provide the same service but only take 30%.
Many publishers BOUGHT the IP from the authors. They paid good money for it. They OWN it. Do you OWN something Mr Masnick? Did you ever buy something? When was the last time someone told you that you have no right to sell what you OWN for the price you set? If you price it too high. No one buys it. But it’s yours to do what you want with it. No one is entitled to tell you to sell your property for less than it is worth to you.
Which brings us to ebooks. As a publisher my gross margins on my property have had 28% skimmed off the top by Amazon’s predatory practices in the last five years. I used to get 45-50% of the retail price. That dropped to 36% and then just last week Amazon decided to TAKE another 3% of my share for “marketing”. That’s 3% off 36% which leaves me 33%. So on a $10 book I now get $3.30. Out of that I pay the author, the printer, the editor, layout person, accountant, fact checker, lawyer (yes you have to pay the lawyer unless you want contracts that are useless) sales person, photo rights, marketer, foreign rights agents, etc etc. Yeah I’m REALLY getting rich. (Notice that only ONE of those things listed here involves the actual paper book). If Mr Masnick can point to any of the jobs listed above and explain how a GOOD publisher is supposed to function without them I’d love to hear it. I’m sure GM could save money by not putting brakes on their cars too. Gotta get rid of that Bloat, you know…
As if this isn’t bad enough, Amazon having been bullied into matching Apple’s more generous offer on ebooks, extremely reluctantly changed their share from 70% to 30% of the pie, but ONLY if you sell the book for less than $10. So if you spent 20 years writing down how you figured out the cure for cancer, tough. It’s worth the same as a six page hamburger recipe.
When are people like Mr Masnick going to realize that PUBLISHING is not PRINTING. Publishing is about expertise. Like any other industry it is about recognizing something worthwhile and investing in it. Any moron can string a sentence together but that doesn’t mean people want to pay money for it. In the case of non-fiction, publishers, bookstore owners, teachers and librarians serve an indispensable function to sort out what is accurate and what isn’t. What is new and unique and what isn’t. What is plagiarized and what isn’t. What is well written and what isn’t. It’s not just PAPER. The paper only accounts for maybe 10-15% of the cost. Forget the paper. That’s like saying a person is just a sack of water and $10 of chemicals. Based on this argument a brand new car should be $2000 because “hey it’s just metal and plastic.” Or maybe the computer you wrote this lame article with should have only cost $20 because the processor is just melted sand. If you can’t recognize the difference between the two meanings of the word VALUE, you have bigger problems than getting stuffed by ebook prices.
Finally, Amazon recently started discounting ebooks. SO if you are an author and you go it alone and bypass the publisher and the distributor and the wholesaler and go for the big 70% from Amazon. Don’t kid yourself into thinking you’re getting $7. They have recently started dropping the price, without any consultation with the OWNER of the book, and paying 70% of that lower number. Some people who thought they were getting $7 are now getting paid $2. Amazon is now distributor, library, manufacturer, retailer, licensee and publisher. They are price fixing everything at the low end to drive ALL of their competition out of business. And when I say competition I mean everyone else in the book business except the authors. Meanwhile,they are telling the authors what the price will be on their property while simultaneously depriving them of other places to sell it. There are laws against this, but for some reason the Justice Dept went after the people who were trying to break Amazon’s grip. Oh yeah and Amazon have also completely ignored requests to remove pirated ebooks from their site or pay anything to the owner of the text.
If someone found an unpublished novel by Ernest Hemingway, paid $50K to authenticate it, paid the family $2M to publish it and then spent another $1M marketing it. Who should decide what it is worth? If your answer to this question is “Amazon” then you should walk into your local car dealership and offer them scrap metal price for a brand new Corvette and see how far you get.
So wrong in so many ways
Love the totally illogical rant, but I guess if that’s you’re bag.
No time to disabuse you of all the contradictions, so I’ll stick with just the one. First you insist that if you own something you get to decide what to do with it. That’s absolutely true. But then, you later decide that Amazon can’t buy the books and sell it for whatever price it wants.
And that’s why you’re failing in business.
Oh, and by the way, there are MORE publishers today than in the past, despite your claim to the contrary. Also, significantly more books being published. And the industry is growing. According to Bookstats, the industry grew nicely over the past few years despite the recession.
Also, in 2002, 250,000 books were published. In 2010 that number was over 3 million. Perhaps the problem is you don’t know how to compete in the new market place where there’s a lot more competition.
And don’t cry about how many of those books are self-published. Even if we go by “traditional” publishing standards, the industry is growing nicely: 215k published in 2002, to 316k in 2010.
Can’t keep up? Too bad. You deserve to go out of business.
So wrong in so many ways
BobSteve, I was going to try to write this letter but you have done it better. The trouble is, the Masnicks of the world lack the attention span to read it through to the end. So they go on repeating this ignorant nonsense about the cost of books over and over, never coming any closer to an understanding of the reality. What they are really advocating is a recipe for the books on Lulu.com. But nobody wants those books. The average sale per title is 12 copies. You’d think that would tell them something about the value of a service that creates books that people want, and the cost of doing that but no, the penny never drops.
OMG. JUST STOP.
Huh? Does this sound plausible to anyone? Why would the publishers go to court to earn less money? This is flat out misinformation.
So wrong in so many ways
BobSteve, I was going to try to write this letter but you have done it better. The trouble is, the Masnicks of the world lack the attention span to read it through to the end.
I read that ignorant tripe right up to the end. You should try taking at least a basic economics course. Otherwise you end up looking silly.
I live in the real world. You should join us. It’s fun.
What they are really advocating is a recipe for the books on Lulu.com. But nobody wants those books. The average sale per title is 12 copies. You’d think that would tell them something about the value of a service that creates books that people want, and the cost of doing that but no, the penny never drops.
Dude. If you’re using average sale, you’re missing the point. Of course most people don’t want those books, so who the fuck cares? But don’t tell me that good self-publishing can’t sell. Tell that to Joe Konrath, Barry Eisler and the like.
And watch them laugh in your face.
So wrong in so many ways
Er, well if you insist on only one contradiction (despite you putting up at least three). Let’s do that one to start. Of course Amazon can buy the books and sell them for whatever they want. I never said otherwise. The big thing you seem to be missing is that they AREN’T paying what they say they will pay. Did you miss the part about them saying “upload your book here at $9.95 and we’ll pay you 70%” and then they discount it to $2.95 and pay $2? That’s their way of saying we’ll pay you whatever we see fit, not what you billed us. You show me a business that operates on those terms and survives. Oh and meanwhile they say “please Mr Fed sue my competition and my suppliers for me because they want to operate without selling to me”. Boo hoo.
Also Amazon have been selling PIRATED titles and despite being threatened with legal action have basically said “sue me” because they can outlast any small IP owner in court. They’ve been doing that for years to both publishers, authors, bands and record companies.
And, oh yes, undoubtedly there are more “publishers” in your world. In your world anyone who pumps out photocopies at Kinkos is a publisher. That’s the same as saying there are tens of thousands of people who write encyclopedias because 100,000 people edit Wikipedia. Just because they can do it doesn’t mean they’re good at it.
Number of titles doesn’t translate into quality (or an increase in an industry). By that reckoning (and undoubtedly Amazon’s reckoning) a six year old writing and uploading an ebook about quantum mechanics is a “book”.
And if you want to stick with the “traditional” number of titles going up. That’s because the publishers are doing the only thing that they can do. Put out more titles to compensate for the fact that their print runs have dropped by 1000% in the last five years because there is nowhere left to sell them. So by your reckoning Amazon has picked up ALL the slack left by the downfall of 32,000 book stores? Dream on.
Clearly you just don’t get it. You’re one of these people that thinks you should get everything for free or less. Of course you completely ignore the fact that the music business adopted your preferred methods and look where it got them. There are probably way more bands in the world than five years ago. I don’t see a single one of these new bands selling out JFK stadium.
You obviously know nothing about publishing since you also completely ignored what I said about what a publisher does. It’s all about numbers to you. I tell you what, I’ll upload half a million single page books to Amazon as ebooks and you can tell people how robust the industry is.
There are two issues here. Should Amazon be allowed to become so big that they have no competition? And two, should the owner of the intellectual property be allowed to get paid what they ask for it? According to you, Amazon should be allowed to do whatever they like, despite the anti-trust laws, and the owners of the IP should take whatever crumbs are doled out to them.
Soon maybe there will be billions of books on Amazon, because clearly that’s how we measure the intellect and sophistication of a society. Volume. Sure…that works. I’ll start selling books by the pound next week. If only I’d figured that out all on my own. I’m so glad I have you to advise me.
So wrong in so many ways
Who said self publishing doesn’t sell? And you just argued against yourself. “If you’re using average sale, you’re missing the point. Of course most people don’t want those books, so who the fuck cares?” So what you’re saying is we have a really robust industry because “look at all the titles being published” but “nobody wants those books”. I’d also love to hear what economics course you took that says you can make the same profit regardless of whether your customer pays you or not.
So wrong in so many ways
Clearly you just don’t get it. You’re one of these people that thinks you should get everything for free or less. Of course you completely ignore the fact that the music business adopted your preferred methods and look where it got them
You must be new here.
Perhaps try to do some research before you look even more ignorant than your already do.
Soon maybe there will be billions of books on Amazon, because clearly that’s how we measure the intellect and sophistication of a society. Volume. Sure…that works. I’ll start selling books by the pound next week. If only I’d figured that out all on my own. I’m so glad I have you to advise me.
Good luck. If you don’t want the advice of people who actually understand economics, then you fail miserably and we’ll all watch and laugh.
Good luck. Whine away.
So wrong in so many ways
Heh. So when I prove you’re clueless you attack back by misreading what I wrote? Stunning. But expected.
Good luck. You need it, because people a lot smarter than you are eating your lunch.
So wrong in so many ways
Let me see if I got this right.
1) Your argument for a robust industry is how many titles were published. You then ignored the average print run of these many, many titles you were telling us about and said it doesn’t matter that “most people don’t want those books” (your words).
2) You ignore the fact that I didn’t say either of the things you attributed to me.
3) You evade my point about whether Amazon should pay what they are billed.
You ignore all of the facts I have presented about the process, the industry and the margins (that I live with every day) and the best you can do is insult me. Surely you have to know that if you write stuff like this there are going to be people who disagree with you? Either ignore them, fight them politely or be persuaded to agree with them. But don’t just insult them, even if you’re right and I’m wrong. Maybe I shouldn’t have targeted you so specifically by name in my first post but I was asking you legitimate questions. Have you ever been in the publishing business? Have you ever had someone dictate to you what you must sell your own property for? Do you know the distinction between publishing and printing? Based on your article I think these were valid questions. However, since it’s your forum I suppose you can say whatever you like and I do want to at least thank you for paying attention to this issue and providing somewhere for my counterpoint. BTW my lunch is fine, I cut off Amazon three years ago. I’ll give you the last word. I’m done.
The Cost of Publishing
Great point and you’ve put the author’s plight front and center. An author comes up with the idea, writes the book and then has to share the reward. Until today.
For the first time Booktango.com gives e-book authors the ability to publish for free and keep the entire sale price of their e-book. That means if an e-book is sold for $4.99 through the Booktango bookstore, the author gets the full $4.99. If its sold through another outlet, the e-books retailer takes their standard fee, and the author gets the rest. Booktango takes nothing.
Prospective readers decide the value of a book, but the author should benefit fully from the work they have done.
Help me out here...
“Servers, ISP costs, website hosting, premises housing the servers, software, security for data centres.”
Redundant.
The only thing a business pays for is ISP costs which integrate all the other things you mention.
And since the ISP handles multiple accounts, the cost per client is mimimal.
“Then there are the usual costs like publisher fees, agent fees etc that don’t go away no matter what the format.”
What are the nebulous “publisher fees” you speak of, and how do they apply to e-books?
Printing is the single biggest cost in publishing, and that’s eliminated in e-books.
Help me out here...
“Books have limited audiences and limited sales lives, with very small long-tail sales after the end of those lives.”
Then why are you trying to extend copyright to just-short-of-eternity?
Help me out here...
“Books, from a data perspective, are small items. Pretty much every book published in the last year could be stored on a single hard drive!”
Except for art books or graphic novels, both of which have multiple image files ranging from 1/2 MB to 5 MB per image.
From a $10 ebook, after discounts insisted on by the eRetailer, a publisher gets about $5, out of which the publisher pays a royalty to the author.
In most cases this is 25% of the %5, leaving $3.75 for the publisher.
Out of the $3.75, the publisher covers conversion costs, in-house editing of the converted files, negotiate contracts with the various eRetailers, update bibliographic data, maintains accounts for royalty payments, etc.
$ 10 eBooks (Textbooks)
Selling specialized textbooks for 10 $ is a nonsense in many cases. I am myself preparing a book on Daltonism (Color Blindness). How much people would be interested you think?
I?ll tell you: about 2-300 (not 300.000!). And 300 would be a dream result. Following your theory, that would result in a TURNOVER of 3000 USD at best! The author has been working on it for more than 3 years, proof reading (you think that is free? Think again..), translation from French to English, copyrighted illustrations (free you think?). Art work (Layout), sending flyers to addresses of members of specialized societies (Color Blindness Research): there you pay for the addresses, the 4-color flyer?s and the postage. Now comes the best: the bookseller naturally wants a discount too. Amazon especially! I did not mention royalties, because most of the time Scholars are waving this, knowing the publisher?s problems.
You still believe we should put a 10 $ price tag? Then you have a problem.
e-book pricing
These are good points. But what you call “legacy costs” are a reality and publishers are in a very troublesome transition. Eventually it will be good for both the consumer and the publisher. Think of eliminating returns, warehouseing etc. But now publishers have to bear the brunt of both print and e-book. As always these things evolve and yes, the music industry sure did not handle it well. Maybe publishing won’t either – but deal with it they will. I tend to be on the publishers side in these things because of my role leading the Evangelical Christian Publishers Association for 17 years. But, today almost all of my reading – and my bok pufrchases are on Kindle Fire.
with ebooks, u can just send the ebook to a friend. its easier to share amongst friends than a hardcover. more sharing, less buying,….
look at the music industry
Help me out here...
Then keep your money. Costs don’t just vanish because of the format. Also you get to sit on your lard “ass” and download your book from the comfort of your home (if you have one), not spending money on gas (which is upwards of $4 now). Ereading devices also come w/adjustible font & text-to-voice, so the device can read aloud your ebook. Your problem is you feel entitled to your entertainment for free, and that’s not going to happen so forget it. Save your threats. You are the vocal minority & no one is going to cave in to your so-called “demands”. $13 is a reasonable price for ebooks as it stands. If you don’t want to pay it, get lost. The majority of people will pay for convenience. Goodbye.
Help me out here...
“Your problem is you feel entitled to your entertainment for free”
Keep repeating this lie about everybody you meet, but it will never become true. Have any evidence that Joe is a pirate, or is that just what you pulled out of your ass? Your type always seems to forget that simply not consuming your product is a valid position – and until very recently one I held about eBooks (I for one recently replaced my purchases of second hand physical media with Kindle books, but only at the same price point I was paying for physical. No way I’m paying more for DRM, and you get more of my money from lower priced ebooks than you’d ever get from second hand physical). Berating people who choose to spend their money elsewhere will not make them buy from you.
“$13 is a reasonable price for ebooks as it stands. If you don’t want to pay it, get lost.”
No it’s not, and you don’t get to not pass your reduced costs on to customers (the aforementioned gas, which btw you as a publisher also don’t have to spend when transferring digital files). Stop bitching about piracy when your arrogantly stupid positions chase away customers, OK?
Help me out here...
“$13 is a reasonable price for ebooks as it stands.”
That’s five more than your average paperback, so no, it’s not.
"Goddamn ebook publishers"
The subject line is the google search I used to find this article. Funny how the publishers see a weakening competitive position and play it as if they have a position of strength. They bully Amazon, forcing them to charge more for ebooks than they want to. I hope they get nailed to the wall for anti-competitive behavior/collusion. I don’t want them hobbled by litigation, but I do want to see prices on new releases and older ebooks drop. Older books should be priced to compete with what a used book would get. Maybe even cheaper, since with an ebook, you really don’t own the book in the traditional sense. You can’t lend it or sell it, so it is worth a lesser amount than a traditional book.
Books don't cost all that much to print.
I am a writer and believe after working years on my book series I deserve to be paid 20 per volume. If it was a printed copy I would get it. Because. My book is high quality. Not crap! Now I must condense my book even further so I can be paid 5.99 this is toolow with al the things in which my book offers. I agree most e books should be cheap but so should printed copies and so we have a war between digital and print so lets compare.
First off digital formats are crap and so printed copies wins hands down.
Page font is better for digitalcopies and sometimes can even be adjusted.
Lighting is also better with digital copies so I can read it in complete darkness so I don’t have to leave a light on.
Digital copies are easier to come back to so I don’t have to book mark it
digital copies are more handy. So I can take it anywhere with me thousands of books all in a little device. You can’t do that with printed copies.
printed copies let you share so that’s a advantage
Printed old books can collect dust and mold which is a hazard to your health
old books Can be destroyed easily but digital books are never going to be destroyed yes your tablet computer and phone might crash but if You save them then you will have it for ages.
So digital copies wins hands down unless the coming apocalypse happens then printed copies will be like gold. Oh and one more thing its eco so no tree killing which am for less trees being cut down the better.
Books don't cost all that much to print.
Good luck to you.
Nearly all of your arguments are you trying to justify a price people don’t want to pay.
That’s not how it works.
In the meantime, people who lower their prices are discovering they make more money. Price elasticity for the win.
http://www.techdirt.com/blog/casestudies/articles/20131102/23220925108/price-elasticity-can-work-dropping-ebook-price-to-1-catapulted-year-old-book-onto-nyt-best-seller-list.shtml
Books don't cost all that much to print.
“I am a writer and believe after working years on my book series I deserve to be paid 20 per volume”
I am a reader and would never pay $20 for a book, printed or digital. I have never done so, except for a few hardbacks from favourite authors, and usually only then because they were bought with vouchers I received as a gift rather than with my own money. I would also not pay $5.99 for an eBook, given the lack of aesthetic qualities, resale value, etc.
That’s not to say that your writing has no worth, only that I have an amount I will pay for a book by any author, and if a favourite author of mine struggles to command your ideal prices from most readers, then it’s not going to get that. You either adjust your pricing for the market or get nothing from most people. if my price ceiling is $3 and another author is offering a book at that price that promises to be of equal or greater quality, I’ll buy that one.
Stick to your guns all you want, but you get paid the market value, not what you think is ideal. I also hope your writing is better than your comment here. You conflate time spent with the price of the end product (that’s not how these things work). You say “digital copies are crap”, but then list numerous reasons why they’re superior to print. You don’t seem to understand the differing marginal costs involved in a physical print run compared to digital distribution and why these would lead to differing pricing. This doesn’t bode well for whatever you’ve created.
I wish you well in all your endeavours, but I can’t help but thing this is yet another “author” who has some very good reasons not to use the free promotional opportunity sites like this provide for authors and other artists. In all the years I’ve been here, I’ve read lots of claims from people claiming to have insider knowledge, but it’s very rare that someone is willing to identify themselves while doing so. That’s rather suspicious to me.
Thank for posting!
This is a great post that I valued much. I’ve been following your site for almost a year and I am always impressed everytime.
i like this post
I am writing to thank you for everything you have done for me.