Below is a link to a New York Times article stating that Macmillan (Tor is an imprint) has pulled all of its books from Amazon due to the price point for e-books on Amazon.
The link below is a commentary on that article (which also links to the NYT article).
--William
How easy would it be to erase or modify information when it is all electronic? And how about portability? I have a load of 8 inch radio shack disks that are next to impossible for me to access now. A true hacked could probably manage it, but not me.
When you need a device to read information (and stories) it becomes chancy about it being available a fifty, a hundred, a thousand years or more down the road. Or even recognizable.
Now the war is on. Can a bookseller really shut down a publisher? Can publishers regain control of their ebook future? I find myself oddly rooting apple to succeed.
http://www.publishersmarketplace.com/lunch/free/
[This message has been edited by WBSchmidt (edited January 31, 2010).]
Then again, this might be really good news for other bookstores, like Borders. :-P
Cory Doctorow, for example, is a wildly successful author who offers his books in print but also for free download from his website in a huge variety of formats (ranging from pdf to txt to e-book, etc).
If your work is digital, you don't have to worry about things like shipping costs, paper, ink, etc. All you have to worry about is bandwidth, and that is much, MUCH cheaper than all of the above.
Amazon doesn't want to raise prices (right now) because cheap e-books drive people to use their device over others, but they have no choice. And they couldn't give in to Macmillan without making some kindle users very angry. One of the major selling points they use for the kindle is $9.99 bestsellers. They need to be able to show all the outraged users that they fought as hard as they could.
I think that everyone at both companies knew how it would turn out, and all the melodramatic shut downs and press releases were just for PR purposes.
[This message has been edited by Betsy Hammer (edited February 01, 2010).]
The issue of being able to publish on the internet and getting anybody to read your work and get paid for their reading are two entirely different issues. One thing that you know you're going to get when you buy a book, is a bit of quality control. Although there are always mistakes (I found one in a very successful fantasy series over the weekend) and some ill-chosen prose, but you know the book is going to have crossed a few hurdles before it's thrust into the public domain.
There are two elements that need to arise in order for self-publishing to really make inroads: A QC certification process (like a Good Housekeeping Seal of Editing) and an established marketing channel.
Unless you are familiar with the author, there are zero assurances that the writing has gone through any kind of QC. That means you have to put up with clunky paragraphs, grammar, misspellings, large plot holes, characters changing in non-believable ways, etc., etc. An organization or two that let readers know the work had gone through some kind of review would give some kind of indication that the book had been gone over for obvious errors. A seal or other indicator would provide the reader with some confidence that they weren't about to read something unintelligible.
A marketing organization (or organizations) needs to be established that gives self-publishers some kind of access to readers. A blog is good for an identified following, but how does one get the following. In a self-published environment, there are no editors, there are no book signings, there are no press releases or reviews. All of that infrastructure needs to be established before self-publishing can be a real alternative to publishing books and then posting them as e-books.
There are some marketing organizations out there like I mentioned above, but I'm not an e-book person at this time.
Some food for thought.
When you consider that an ebook doesn't have any printing costs (ink, paper, binding, etc) and it doesn't have any storage costs, then raising the price of an ebook means that someone is getting a huge profit from them, and I'd be willing to bet it isn't the author.
quote:
When you consider that an ebook doesn't have any printing costs (ink, paper, binding, etc) and it doesn't have any storage costs, then raising the price of an ebook means that someone is getting a huge profit from them, and I'd be willing to bet it isn't the author.
That's what I would think. However, I remember a previous discussion regarding e-book prices and one side of this argument stated that the costs for providing e-books are greater than what one would expect. So far I have not heard what those "other" costs are that would justify these higher prices. Some of these "other" costs include the IT infrastructure to store and deliver these e-books. However, I do not see how these costs would be sufficient to justify these prices either.
Storage and distribution are minimal in the current era of web page assembly. Amazon's product pages are filled with ads. Does the author get a cut of the page view revenue that their work has generated for Amazon? Amazon is currently selling huge chunks of memory for incredibly low prices, so it isn't hardware.
So where does the money go? I suspect what we are currently looking at is a dispute between how much the publishers and the DISTRIBUTOR (Amazon) split. I'm sure we are in the beginning stages of this upheaval.
KDW came up with the quintessential question for all of us. And I suspect that the answer is the author's cut remains the same.
[This message has been edited by Owasm (edited February 01, 2010).]
My guess is as it reaches crisis point we'll see one of several scenarios play out: Big-name authors refusing to sell publishers their electronic rights and self-publishing the electronic version for huge profits; The author's version of the screenwriter's guild strike; Publishers with more capital spending more of it on advertising and promotion (yeah, right).
Either way, I'm inclined to believe an essentially unbalanced system isn't going to stay unbalanced; people entering the market on the profitable side and leaving the market on the unprofitable side will burst the bubble and a better scenario will ensue.
This Salon article says the paper, printing, and binding is about 20% of the cost. http://dir.salon.com/story/books/feature/2002/12/03/prices/index.html
This one suggests 8-10%: http://blog.laptopmag.com/ebook-price-war
If you drop a $25 book by 20%, wow, you go to $20. So the pricing suggested for ebooks has very little to do with it should cost less because we don't have paper involved. This isn't about trees and trucks. Here are some of the categories of fixed costs.
Editorial
Packaging (cover design & production)
Typeset & Interior layouts
Marketing
Sales force
Author's advance
I've linked to a number of well-reasoned blogs about Amazon vs. Macmillan on my site, including an excellent post by Tobias Buckell on book costs: http://johndbrown.com/2010/02/amazon-vs-macmillan-hey-wait-you-pulled-my-book/
[This message has been edited by johnbrown (edited February 01, 2010).]
Example from my contract. I get a royalty percentage based on the "suggested retail price," not the actual. For high discounts (discounted 60% or more from SRP) I get less to none.
So higher prices does not mean higher author earnings unless we're talking about the cross over from deep discount.
[This message has been edited by johnbrown (edited February 01, 2010).]
Long story short: The cost of storage and printing are a small part of what it takes to produce a book. Most of the money goes to writing (which is our job,) editing, marketing, and administration. In other words people's jobs. This is the kind of work done on E-books and dead tree editions equally.
Also he points out that Amazon is actually paying the publishers more than 9.99 per book and doing a kind of loss leader thing to sell kindles. This can't continue forever.
Amazon has done this in the past to some vanity presses, but this time doing it to one of the largest houses in the world is kinda shooting themselves in the foot.
It's the predatory pricing that publishers hate. It turns books into commodities and hurts traditional booksellers. Publishers also worry about market dominance. If Amazon owns the eBook market, then Amazon can ratchet up the price any time they want, they can broker all kinds of deals to their advantage. Without competition, we all suffer.
If you buy an eBook from Apple, at least you'll be able to use it on the platform of your choice.
The complaints from blogging authors with books published by Macmillan (Tor for example) seems to be that Amazon's pulling of their print titles is the damning offense, since today none of these authors claims more than 5% of sales in e-book format.
All of the arguments about production costs seem to me arguments against self publishing, having little to do with the value-based pricing of bestsellers (what the argument between Amazon and Macmillan is about).
"PS - Hey, Amazon. When cutting off publishers, don’t start with the one that has the most science fiction writers. We will blog you dead!"
True dat.
[This message has been edited by JamieFord (edited February 02, 2010).]
quote:
The complaints from blogging authors with books published by Macmillan (Tor for example) seems to be that Amazon's pulling of their print titles is the damning offense, since today none of these authors claims more than 5% of sales in e-book format.
That's the part of this that offends me, personally. I'm okay with them fighting over e-books and deciding to pull e-books or stop purchasing e-books from Macmillan. But a blanket refusal to sell any printed books by Macmillan - without any warning - seems a disproportional response. Especially since, unless I'm completely misunderstanding the book industry, Amazon is legally entitled to a refund of its purchase price if it then decides to ship back to Macmillan all those books it now refuses to sell. (Not that I expect them to do this, but then again I didn't expect their boycott, either.)
quote:
OSC urges his readers not to buy from Amazon until they stop bullying publishers and authors and just sell books. Please use the links to Barnes and Noble provided on this site.
I am surprised that OSC would make this statement, making it into a simple Amazon = bully equation. It is not that simplistic - both parties are trying to look after the interests of their own company, and, as with Braess Paradox, neither is really fully considering the interest of the community as a whole. I have no belief that Amazon is the pure party in this dispute. But neither do I believe that MacMillan is innocent either, or holding either the authors or the consumers as a high priority.
This is a dispute about the resale of books. Amazon purchases them from the publishers at what can often be higher prices than they sell them under a loss-lead model, so the publishers are not "out of pocket" - a sale to Amazon is the same as a sale to any other large distributer, even if the resale price is lower than that selling price. If publishers need to have a finer control over the price of the ebooks, and there are good reasons to want this, then would it not be better to go direct to the ultimate customers? Where Amazon is selling at a loss, you could say it is helping the publishers because more books are being sold than would otherwise have been.
By attempting to prevent Amazon from setting their own price for the resale of ebooks, MacMillan is a) attempting to make Amazon enter into what some people think is a price fixing arrangement, which could become an expensive legal problem, and b) consciously or unconsciously trying to slow or prevent the ebook market becoming established.
It is this second issue that is the more interesting. Ebooks take away a major area of publishing that economies of scale give a significant advantage to the big, vertically-integrated players, that of printing, distributing, warehousing and accepting the risk of needing to destroy unsold product. The advent of ebooks lowers the barrier of entry for smaller players to enter the system which can, by specialising, carve out more efficient niches in the publishing industry, such as editing houses or marketing specialists. This is a considerable threat to the "long term" viability of these large publishing houses that currently are kept viable due to the dual disincentive of high barriers for entry and low profitability inherent in this mature industry. And note, it was MacMillan itself that said that this impass is about its long term survival.
[This message has been edited by Brendan (edited February 03, 2010).]
quote:
I'm not sure either company is the bad guy. There are a couple of things to this story that you have to understand.Right now Amazon is losing money when they sell e-books for $9.99. They actually buy most of the books for more than that. I know that seems weird, but I saw a ton of that during my days as an internet CEO during the dot com bubble. You may not remember E-Toys, but they were the company that was going to smash Toys-R-Us. Toys-R-US actually asked if E-Toys would sell of their toys on line for them and they said no. Well they were paying on average $80 per customer in advertising to get a customer to come to their site and buy a toy. How much did they make on each sale? Nothing? They lost money on every sale. But they wanted to become the standard in on-line toy shopping. Amazon wants the Kindle to become the standard in e-reading so they are essentially paying people to buy their e-books.
Macmillan is extremely worried about setting an unsustainable price point on e-books. If people get too used to paying $9.99 and Amazon becomes the 800 pound gorilla, they could (and would) force publishers to drop their prices. Publishers have always set their own suggested retail price. It's a big part of how they market a book. Have you ever noticed how as an author gets bigger, the same size hardback goes up in price? They also delay paperbacks for a year so that they don't erode HB sales. Macmillan actually offered to pay Amazon more, but demanded that they set the price of their books above the $9.99 rate.
All the rest-taking down the buy buttons, etc. was posturing. Amazon wants to be the low price leader to secure the Kindle as a virtual monopoly, Macmillian knows that if Amazon sets price points at $9.99, you will come to expect and demand that price as a consumer.
So how does this affect you the author? Well you just asked for two things higher sales and higher royalties. In the e-book world at the moment those are opposing forces. The lower priced books are outselling the higher priced books. But the lower the list price, the lower the royalty. A lot of people think a book should sell for much less when it is electronic. After all, there is no physical book to print. The thing to be aware of is that a hardback book with a nice dust jacket and internal illustrations runs about four bucks per book to print. If that hard back has a retail price of $25, bookstores probably pay between $12.50 to $15.00 per book. Take away the $4 printing cost and the gross per book is $8.50 to $11.00. This is what pays for editors, layout, artists, marketing, sales, royalties, and all the other publisher overhead. If a book sells for $9.99 where does the money come from to cover those costs? Will the reseller of the e-books still pay $8.50 to $11.00? Nope. I guarantee you that your royalty as an author will be less for a book that sells for $9.99, because your royalty is typically based as a % of the listed retail price.
So then you have to ask yourself if you will sell more books. If I make 2/3rd of the royalty, but sell twice as many books, hurray. If I make 2/3rds as much royalty and don't sell more books, boo. So we'll have to see how many people buy twice as many books because they are roughly half the price.
What effect does this have on self-publishing. First, this latest deal has no effect on self published e-books at all, in my opinion. But e-publishing does have some effect. For one thing,l it's easier and cheaper, which should be good. It means more books can get to market. But POD also brought down the cost of self publishing. It made it easier and cheaper to publish your own book. How did that work out? Now it is almost impossible for a self-published author to get their books in bookstores because anyone can publish a book. At the moment e-publishing is enough of a novelty that selling a book for a low price or free gets you quite a few downloads. But I believe that window will close. Why? Well when was the last time you went to Amazon, chose the mystery genre and sorted by price? Are you really interested in buying the $0.99 thriller by the author you've never heard of? I think e-books will be like anything else. There will still be more of the most popular books sold. The possibly great thing is that if you manage to create a buzz, anyone with a reader and an account will be able to download your book in seconds. So distribution will be up, but you still have to create demand. A low price won't be enough.
That my twelve cents. (Two cents if you get the e-version. Tell your friends!)
Printed books last a long time. I have many paperbacks older than me. How many electronic devices will still work in 40 years? The books are just as readable now as they were then. Printed books can be resold, and loaned to friends (preferably friends who know how to properly care for books and not dog ear the pages).
Ebooks are bound to a store, and usually a device, in this case the kindle. If the store goes out of business, the life of the book you have paid for is now bound to whatever device you have to read it on. You can't resell an ebook, since it is sold only to you and lacks the right to resell it. You can't loan an ebook, unless you are willing to loan your expensive reader.
I like the convenience of the reader, but I love real books. The problem is not the format, but the business model. Ten dollars for an ebook is rather high in my view when a nice new paperback of the same thing runs for less.
I'm all in favor of publishers and authors getting paid for their hard work, but unless they put things into perspective, I'll keep buying my dead tree versions that should last longer than I will.
quote:
You can't loan an ebook, unless you are willing to loan your expensive reader.
Barnes & Noble's ebook reader, the nook, has a loan feature. You can loan it to a friend for 2 weeks (friend has to have the same device and presumably you have to know the friend's username.)
The Kindle and nook also have other reader software you can download for free to read on an iphone, smartphone, or your own computer. In those cases, provided you enter your information on each device you intend to use, you typically have access to your entire ebook library.
Not to say your other points about the book being tethered to one particular platform (kindle, nook, sony ereader, etc.) aren't valid - that's going to be one of the more interesting directions this whole thing takes in the coming years. And with cloud computing...there's no guarantee that digital information from today will be obsolete in 40 years, even though that's what history has (for the most part - plenty of legacy systems exceptions out there...) shown us so far.
In my humble opinion, this is the fun part. 
As speculative fiction writers, there's a lot of juicy stuff in this space of what the digital future holds...what will technologies look like in the future? How will our existing digital content migrate? Will it become obsolete? I have a hard time believing straight information-based content like text of a story or the audio recording of a song will get thrown out with the bathwater, but fully expect that digital players and readers and what not will be very different even just 10 years from now than they are today.
Is this the same marketing strategy where the publisher believes that the reader will think a $15 dollar book must be a "better read" than a $10 book?
I understand publishers have to make money - but 10 bucks!? I think they would sell more volume at $5/bk and still make the same amount.
The only thing I can think of why the publishers want to raise a price that is already high and do it for legitimate reasons is that 1) the people who buy paper copies wont feel cheated or pressured to buy a kindle, 2) there's a greater chance some jerk will crack the kindle code and illegally distribute the copy... and 3) becuase they already printed the covers with 15.99 on it.
I see many arguments against the publishers charging $15 for an ebook. I'm curious as to why this is such an issue.
1) Are you an ebook reader?
If not, then why does the price increase matter to you? If you don't buy the product in the first place then the price is irrelevant to you, right?
2) What percentage of the paper-based books you buy are hardcover?
If you primarily purchase paperbacks for $5 to $8 then I can certainly see a $15 price being an issue because that would be double your normal price.
As I understand, the publishers want to start pricing new books at $15 while the hardback is out, then reduce that price over time (e.g. when a paperback version is released). If that is correct and they follow through with this, then the price of the ebook will less then the current paper-based version (hardcover, trade, or paperback).
If you're someone who wants to use ebooks the price will actually be cheaper for you. If you're the type who has to have a book when its released you would normally buy a $30 hardcover. Well, now you only have to pay $15. I don't see the problem. This, of course, depends upon the "over time pricing" that the publishers utilize for ebooks.
Please correct me, but I see this as being potentially cheaper for those who want to move over to reading ebooks.
--William
We may be at the beginning of a format war similar to Beta v. VHS or Blu-Ray v. HD. If that is the case I will want to wait for a while to see which format becomes the "standard." Hopefully at that time it will not matter what hardware reader you purchase. After all, all Blu-Ray players are capable of playing any Blu-Ray disc.
Until then I will hold off, but I do hope it is resolved soon because I would like to move over to ebooks.
Paperback, in fact, are generally sold at absolutely wafer-thin margins in terms of profit. The reason hardbacks cost more and come out first is that very often that is where a publisher can make a profit on a book. If pricing is just based on the paperback (and ebook) models, then publishers will have to find other ways of making money, or cutting costs.
A lot of people argue that because the reproduction cost of ebooks is effectively zero, they should be really really cheap.
Interestingly, the reproduction cost of computer games, or DVDs of movies/TV series, is effectively zero, but I don't see the same arguments ocurring there. Sadly, we seem to have developed a generation of readers who seem to assume tht textual content appears out of nowhere and has no creative cost, even though they do not think the same about other media.
Now consider this - using the current system, almost all the sales have to be made in that first few weeks. This is a tight time limit, and a new book has to sell well for the publisher to take these risks and keep inventory. That means they MAY do it for an established author, but they won't do it for a new author. The risks are too high. If they don't sell very well in the first month, they don't get a second chance.
So how do ebooks change this risk equation. It doesn't change the fact that there are significant upfront costs associated with the creation. There is still the risk that this is not covered. However,
1) These costs are lower
2) There is no inventory that can be taxed (perhaps one electronic copy)
3) The sale period isn't limited to a single month or two, which can be essential for new authors establishing a readership
4) There is no limit to the number of books that can be sold (no out of print category). Once the initial costs are covered, then all books sold thereafter is profit (minus the profit taken by other profit sharers, and some continuous costs if marketing is extended beyond the initial period)
This is a considerable change in risk. But if you lower the risk, then you lower the barrier to entry for new players. Consequently, even though the market may grow, market share will likely fall, and with that, profits. This would make the current publishers nervous.
[This message has been edited by Brendan (edited February 18, 2010).]
tcher- I'm aware of creative costs - but let's face it the internet is about how many you can sell. reducing the price is a business strategy to get more to buy. The cheaper it is the more people will buy easily. That's why I think $3-$5.00 would be better - and not just for me. It makes sense to offer ebooks for less because then more people will buy more ebooks online. Is there a fear that readers are a limited and small number who only buy a limited number of books a week? I spend more on books now that I did before the ebook formats came out! It's too convenient sometimes...
---
I think there are only 4 reasons to not sell it cheaper electronically 1) The book is not good so make your money before people find out, 2) The book is good, but people will think it isn't if it's cheap, 3) It's not fair to paper readers who pay higher - heck, they might want it cheaper too, 4) greeeeeeed!
For example I want to give that Percy Jackson series a chance - see if it's any good. But am I gonna pay 10 bucks anywhere for it? Forget it! If they lowered their price to 4 bucks I would have gambled on the book. Proof that fence-sitters like me would'nt mind losing 4 bucks on a book. But it's too rich for my blood now. Not unless the word of mouth was better.
I'm probably not counting stolen copies or borrowed copies - personally I think that will happen less if the prices were cheaper. I mean who'll steal it if it's 5 bucks? I still think it's overpriced just to give the reader the sense that the price indicates quality.
quote:
I'm probably not counting stolen copies or borrowed copies - personally I think that will happen less if the prices were cheaper. I mean who'll steal it if it's 5 bucks? I still think it's overpriced just to give the reader the sense that the price indicates quality.
How's cheaper pricing working for the music industry? Why steal a song if it's only 1 buck?
I know there are people out there who steal books. they'll steal it no matter what. They are the "all info should be free" crowd. Nutters...
I don't know anyone who steals music anymore - Itunes is too convenient and a buck for a music an amazing deal and you know their making more money than ever before.
Besides, the true thieves don't value the music - they do it just to steal. It wouldn't matter if it was 1 cent or 50 bucks - they'd still steal it on principle. Same thing will happen for books. The honest folk will buy them for the convenience and cheap price and right thing to do. The thieves will still steal.
quote:
Brendan, without some references or support I have a hard time accepting your assertion that publishers regularly print 300-400% more books than they sell. I'm not saying that it never happens, but to say that it's an industry standard sounds just a tad far-fetched. That's just not good business, and one would think that a reasonable publisher would have a rough idea of what a book would sell.
Fair enough. The source of this information was below, an interview with Kevin J. Anderson, about 18 minutes in. Given his experience in the field, I have no reason to mistrust his knowledge. Note, however, this was online before the current controversy. On re-listening, it was 2 to 3, not 3 to 4, but the point still remains. And yes, it is bad business.
http://media.libsyn.com/media/readingandwritingpodcast/Reading_and_Writing_10.mp3
quote:
For example I want to give that Percy Jackson series a chance - see if it's any good. But am I gonna pay 10 bucks anywhere for it?
I very much enjoyed the Percy books. I bought the first three as a box set via Scholastic's direct-to-school sales (my kids come home with the fliers every month) for about $10. The others I bought at a regular store, including the last in hardback. They're worth a read, I found them loads of fun. It's first person, wry and sarcastic, and there's a lot of humor. If you've seen the movie, though, the books are pretty different (funnier, in my opinion.) They seemed to have used the first book as more of a guideline than a starting point for a script.
But I also feel compelled to again suggest what's probably right in front of everyone's noses but they aren't thinking about it...
Your public library surely has several copies too. 
We borrowed the audio CDs last summer and listened to them on car drives all over. They are shelved with the JR fiction (older of the younger categories in a library. J generally deals with children 12 and younger, JR generally hits 12-14, YA generally is for over 14, but also for more mature themes, regardless of age of protagonist. E.g., THE BOOK THIEF features a protagonist who starts out at age 11, but it's typically shelved with YA books because it's set in WWII and narrated by death. As you might imagine, mature themes abound.)
These are only 2 things that publishers could do to save a lot of overhead and completely change their profit model. I am sure that people who are more familiar with the inner workings of the publishing business could point out a whole lot more ways the publishers could cut their costs without having to cut any jobs.So as long as they insist on holding on to out-dated business models, it's hard for me to feel to sorry for them.
But I'm still going to buy books.
I think moving out of NY, and relocating the warehouses would indeed save money, but I don't think it would necessarily "fix" the overall problem of "what is the new business model?"
I do think more and more small presses will be popping up, and POD will be the rule of the game in the future.
How's this for a POD business model. You walk into a bookstore and start looking through the shelves, and you notice that there is only one copy of every book. You look around for a while and find one that you want and take it to the front counter. The nice, helpful person behind the counter takes the book and scans it, but doesn't put it in a bag or even ask you for money, instead, tells you to come back in about 20 minutes. So you browse some more. 20 minutes later you go back to the counter and get your freshly printed trade paperback book at a great price.
Imagine a business model where there is no stock to carry, no print runs, no distribution, no warehouses. Each bookstore has the ability to print their own books on demand. A book would never be out of stock, and would never have to go out of print.
I like this model better than the traditional POD since I like going to bookstores and browsing. This is another example of how publishers could minimize their risk and lower costs since no book would be printed that wasn't already sold. This would require some serious collaboration between the publishers and book sellers however.
quote:
This would require some serious collaboration between the publishers and book sellers however.
Do small presses like Subterranean or Gauntlet have brick and mortar stores? They could use their name, and also be a used book store, in addition to the titles they carry. A specialty store, like Apple, except with books.
Not sure if that would actually work, but couple it with the POD model outlined by jayazman, and a handful of authors that do business with these small presses...I don't know. Just a thought.