Nathan Bransford, Author


Tuesday, February 2, 2010

What Should an E-book Cost?

Before you read the below post, please vote in the following poll. For a brand new book that is also available in hardcover at $25.00, what do you think the e-book should cost? (People who subscribe via e-mail will need to click through to see the poll).


Did you vote? Cool.

(and let me pre-empt my not-interested-in-ebook friends: I know. There's no option for backlighting grayscale look feel smell DRM you'll go blind bathtub. Just vote for the option you feel sounds about right)

Now. As I'm writing this post, I have no idea how that poll will go and what consumers think a new e-book should cost, but I can confidently guess it's less than what publishers think they should cost.

As everyone knows, once the first e-book copy is produced it doesn't really cost much extra for the next million to be shipped electronically. When they sell e-books, publishers save on printing, binding, warehousing, shipping, returns, etc. etc. etc. Therefore, e-books save publishers money and consumers expect that e-books should be cheaper than paper books (and agents and authors expect that their electronic royalties should be higher than with paper book royalties).

So. How much do publishers save with e-books?

According to HarperStudio publisher Bob Miller, the printing/binding cost of most books is about $2.00. Let's just say for the purposes of this post that the other incidental costs relating to print books (shipping, warehousing, returns) comes to another couple of dollars, so, let's say, print costs translate to roughly $4.00 on a $25.00 hardcover. (I'm not a publisher and thus this number should be taken with a grain of salt. Also it varies from book to book).

Thus, assuming the discounts to booksellers and e-booksellers are the same, in order to preserve the same profit margin on an e-book for this $25.00 hardcover, an e-book would need to cost roughly $17.00.

(The math: $25 x 50% discount = $12.50 to publisher, minus $4.00 print costs = $8.50; $17.00 x 50% discount = $8.50. Note that the $8.50 is not profit - that is the chunk out of which they have to cover costs and pay authors. Also see this post and this post for more info on how revenue is broken down between bookseller, publisher, agent and author.)

Where do the other costs of producing an e-book go? Paying the author, marketing and publicity, editorial, sales, production, overhead, accounting, etc. These are fixed costs that exist whether it's a print book or an e-book.

Now, I understand that lower prices result in more sales, and that publishers might need to recalibrate their pricing model to best utilize electronic sales. Margin per copy isn't everything if publishers are able to make it up in volume. Also bear in mind that for now, as I explained yesterday, major publishers (with the exception now of Macmillan) are being paid for Kindle e-books on the basis of the hardcover list price, not the price Amazon actually charges.

But what we're seeing from the Macmillan/Amazon spat is great anxiety on the part of the publishers about a (for now completely theoretical) future in which they receive income based on a $9.99 price point. This was never a business with huge profits. If publishers are ever paid on the basis of a $9.99 price point for their blockbuster books rather than $24.95 the pie will have shrunk by over half. And that is striking fear into the heart of publishers. Publishers want to push up from $9.99 so badly some are willing to accept less money per copy sold just to make that happen.

And yet, underlying all of this nuts and bolts reality for publishers is a cold fact. When it comes to a publishers' fixed costs and margins and legacy business models: consumers don't care. They have their own idea about what an e-book "should" cost. An e-book feels like it should cost a lot less than something tangible like a paper book. And in a digital era consumers can ruthlessly enforce the perceived value of a digital product with their dollars and with piracy.

You can plainly see the dilemma the publishers are facing, especially if/when e-books grow to be bigger than print book sales. There's a gap between their margins and the e-book expectations of consumers. Right now Amazon is filling that gap by taking losses on e-books in order to sell Kindles. But publishers worry that can't last forever. The pressure is building, and someone is likely going to feel the squeeze, as authors already are.






204 comments:

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Anonymous said...

i think they should cost 5-10 BECAUSE i buy more ebooks then books. i mean WAY MORE .

i can trade books w/ family

maybe a 'bulk purchase plan' would work. like buy credits for x number of books for x dollars.

seriously books get expensive. if they were more affordable people would read more. (and lots of local libs don't carry 'specialty' books)

Bane of Anubis said...

Where's the $0 option? :) -- JA Konrath's got some interesting points and numbers regarding the free model, though I think he stole my oh-so-novel idea of using ads to create income (Google does this? Facebook, too? You don't say.)

karen wester newton said...

I don't see a poll, Nathan-- no link or anything.

I feel so bad for the many authors hurt by this brouhaha. The whole situation is fraught with irony, because everyone involved loves books. And the authors, who are most directly affected by book prices, have the least control!

Bradley Robb said...

The great thing about eBooks is that, when priced low enough, the scale of volume far outpaces per-unit savings at the higher end.

If eBooks are priced in "impulse buy" territory, consumers can become far more accustomed to buying before trying and not into using illicit means to sample.

The other item to consider is that "pricing to cost" is always a losing tactic because it limits flexibility. Costing to price is the modus operandi of digital commerce.

J.A. Konrath has been quite public about his successes and failures when selling digitally. His personal ideal price is $1.99 (though he'll be forced to price at $2.99 to take advantage of the new Amazon Agency model offered last week).

I've been saying for over a year now that $2.99 is perhaps the ideal price point (given favorable revenue splits) to maximize sales and win out in pure volume.

Several authors and numerous publishers are quick to play the value card, but in a digital environment the onus of value has shifted. Publishers are no longer selling to retailers. Under the agency model, publishers are now selling to consumers. And with consumers, you have to meet their value, not ask them to meet ours.

karen wester newton said...

Oh, there it is! You know, an interesting point would be, what should the cost be once the book is out in paperback? One reason so many Kindle owners are steamed at Macmillan is they don't seem to lower the kindle price once the paperback comes out. It might be under $10, but the paperback is still cheaper.

Ink said...

I found it interesting yesterday that a lot of people are picking Amazon on account of seeing Macmillan as employing a short term strategy to protect their hardcover sales (and thus seeing Amazon as the more forward looking and industry beneficial).

Which is curious, because to me it looks more like a very farsighted move by Macmillan for a very different aim - that as yet undiscovered future Nathan mentioned. The key point is that Amazon is selling the books as loss leaders. They're losing money on books to make money on Kindles. Probably a lot of money on Kindles.

But how long will this last? The basic fact is that the Kindle is, right now, in a boom market. A new technology, a changing framework... they push the change and supply the technology to feed it. Profitable. But boom markets are limited. At some point in the future the Kindle market will become saturated. Most of the people who want an ereader will have one. Yes, they'll still sell some, and people will replace old ones. There will still be money there. But the big boom profits will vanish, and gross sales will deteriorate to a lesser, more steady level. But after the boom ends there will be millions of ereaders out there and the ebook sales will be going up and up and up.

So... decreasing profits from selling Kindles and increased losses from the sale of books to feed the Kindles already sold into that saturated market. That's not good for Amazon. Obviously they won't just sit there and do nothing.

Two likely options:

1) Amazon raises their prices, regardless of the noble ideal of $9.99 a book. And, after selling books as loss leaders for a few years, there's the fear that they'll have something close to a monopoly and will be able to set prices however they want. Not usually good for the consumer.

or 2) Amazon holds to the 9.99 ideal and simply slaps publishers and authors in the face with new demands. They'll carve their profits out of the writer/publisher share, and maybe at a fatal level.

I agree that Macmillan and the other big publishers are fearing this latter option in particular. Will Amazon turn on them? But if Apple could provide the same opportunities as Amazon... the publishers then have some leverage to negotiate different terms of sale.

I think those publishers are probably looking at their bottom lines right now very closely. Because the big publishers could simply take their ebook business elsewhere. I'm sure Apple would be happy to step in. There would be short term losses, certainly, as some ebook sales would be lost during the switch. But much better now, when ebook sales are still only a small percentage of the market, than in a few years when that percentage (and thus the initial loss) would be much greater.

I'm guessing publishers are thinking that now is one of the optimal times to make a stand. Amazon's only real response, other than to play ball with the publishers, is the nuclear option. The threat (right now) of withholding paper book sales. But that's Amazon's revenue stream as well as the publishers... a dangerous game of chicken indeed, and one likely fraught with a lot of legal complications. And maybe Apple would be saying "Hey, we can handle the paper book sales too..." Or some other enterprising company with the same idea.

I think everyone's jockeying for position in a race that's only just started.

Scott Marlowe said...

once the first e-book copy is produced it doesn't really cost much extra for the next million to be shipped electronically

Exactly. So there's some upfront costs which are more than made up for in the long term. Few years back eBooks weren't even the hot topic that they are today. Publishers should be happy they have another means by which to extend their viability instead of trying to gouge consumers.

Kate London said...

When I'm buying a book,(digital or otherwise)I don't really care about how it is packaged, but more about the QUALITY of the story. For some authors I would gladly pay $25 for thier eBook, and others I would only pay $1 for a hardback.

I think Amazon should let the market decide who is worth what.

T. Anne said...

Right now I'm snapping up e-books at the 9.99 or less price point. A $17 book would make me say whoa and wait for some kind of sale or reduction. But then again, I don't purchase $25. brand new hardcovers either. I hate to sound that way because I am a writer and I do want to see the business prosper, but I'm a consumer too.

Kate said...

How did things go down with the CD to MP3 switch? Speaking for myself, I didn't necessarily expect to pay less for music just because I didn't get a CD too. Again, I'm not an expert, but it doesn't seem like music is THAT much cheaper (as in 75% cheaper, give or take) now that it's mostly distributed electronically. Ya know?

And yet, I don't want to pay $25 for an ebook. I don't even want to pay $25 for a hardback book. In fact, I don't pay $25 for a hardback. I wait for paperback. I am the quintessential fickle consumer, I guess.

Nathan Bransford said...

I think people might be a little sanguine about the potential for very low priced e-book sales making up for low margins in volume. For one reason, at least some of these sales would come at the expense of paper books that have a much higher margin.

For the other - do you really think twice as many books would be sold if everyone cut their prices in half? I'm not so sure.

Nathan Bransford said...

Well said, Ink.

Ink said...

And Bane, you're killing me... you gonna stick ads in my books? Man. Luckily Toronto beat the Lakers the other day, or I'd be really steamed at you.

John Ross Harvey said...

My current books are between $14 and around $6 so an ebook should be $2 - $5. My opinion anyway.

Not that mine are selling to begin with. Not even a charity incentive is working.

www. (my name) .com

Favoured Girl said...

I think an ebook shouldn't cost more than $10 and that is really the maximum I'm prepared to pay. Publishers really need to be creative with keeping their costs to a minimum if they want to remain in business. In a tight economy, books are considered a luxury by consumers. If they are too pricey, there are other things for people to spend their money on.

Anonymous said...

I am weary of this "what a book should cost" argument. If $17.00 is a sustainable price (I voted the 10-14 & then read your post), then let's go with that.

There are so many unseen costs to producing a book - I think it would behoove bloggers, rather than taking up the cri d'coeur of Americans spoiled by our economy of scale, to educate people about these costs.

@anony 11:52, I don't care how many books you buy. maybe you need to buy fewer or buy more carefully. this drive to buy everything without any interest or grasp in what it takes to deliver that to you insults every writer / agent / editor / publisher who labors to bring you something finite and pleasurable.

Amazon's gaming the system to benefit Kindle sales (what's the REAL COST of that cheap slap of plastic? both production and environmental ie., disposition of when it hits planned obsolescence?) is equally tiresome. I go out of my way not to buy from them. In fact, 100% of my purchases are from my local independent bookstore w/ the occassional B&N purchase. I buy very carefully. I buy what I plan to read (not just own or the first graph). And then I do what is my right with a physical object: I pass it onto to another person.

annmariegamble said...

Another reason people think e-books should cost less is the perception that they get less. I may have already spend hundreds on the e-reader. I can't (easily) pass it on to my mom when I've finished reading it. I frequently don't get the illustrations or even nice page layout. And after Amazon's "1984" debacle, I'd wonder which books would still be on my reader when I got up in the morning.

I empathize that publishers are having to invest in research and development for the new technology and distribution models. But the expectation that consumers ought to be happy to cover these costs until new standards settle into place seems at best naïve.

Rick O said...

"Right now Amazon is [..] taking losses on e-books in order to sell Kindles."

In this case, "taking losses" is a bit of misdirection though, right? They are paper losses. That's what I don't get in all of this -- everyone is screaming about how much money will be lost. But it won't -- it's all just paper losses and accounting tricks.

It's like the people complaining that their house has lost value over the last two years -- a paper loss. The house hasn't lost anything, they just paid too much to begin with. The housing market is adjusting to the new economic model. (... wherein people can't just print money anymore.)

The same could be said about ebooks: the paper loss being decried right now is only because the system is adjusting to the new model.

Joseph L. Selby said...

Your math is immediately flawed in that you assume a 50/50 split between publisher and marketplace for ebooks. Both Amazon and Apple are pushing 70/30, so to match a $25 book, an ebook need only be $12.14.

And that does nothing to combat perceived value. If I'm buying a brand new hardback, I'm getting it at 30% off anywhere I shop, so I'm buying the book for only $17.50 and I get to keep it forever and put it on a shelf and blah blah blah. Versus a file that sits on the marketplace's server that I can't move to different devices? The value of the product just isn't the same.

David H. Burton said...

I'm going out on a limb here, but I'm going to speculate that your blog is primarily followed by book industry types (authors, agents, editors, etc).

I can't help but wonder if this poll will be slightly skewed simply because the majority of those voting have a stake in this business. Yes, we are all book lovers, but the average consumer may vote differently simply because they don't have as vested an interest.

Just a thought.

sharigreen said...

I figure e-books should only be a few bucks cheaper (say, reg price minus the $4 print/production costs). We're paying for the content, not the paper it's printed on.

Anonymous said...

When ebooks are created/published the same time as the hardcover/print book, then my arguement is this:

The hardcover/print carries the cost of editing/production/print. Once you've made that, the ebook seems incidental. Click, click, done, it's up for sale. It seems almost like its an afterthought.

The ebook isn't the ONLY release. It's more of a supplemental release. You did all the work with the print copy you made, sales tend to go with the print copy, so why not use that to recoup the cost? Ebooks seem almost like pure profit - like soda or popcorn at your movie theater.

Once it starts to be an "ONLY EBOOK" release, then I understand putting the pressure of recouping costs on the price. But for simultaneous releases, it doesn't quite make sense to me.

I'm not in publishing. I'm mentioning all this as a consumer only. This is just my opinion, but I think it's something that maybe publishers should address. They mention that print costs are only $2-3, but that relies on the idea that there's only ONE format in which the book is being offered, and with print and digital, there's TWO.

Yes, I want my authors to get paid. Lots of money. But I also want a straight answer about some of these inconsistencies.

Prove me wrong, publishers, please!

Anonymous said...

It's very simple: CUT OVERHEAD!

I plan on starting a publishing company and doing precisely that.

sjp

Nathan Bransford said...

joseph-

That's not quite right. The 70/30 model is based on a lower price point, rather than the hardcover list price. 50% of the hardcover price is more than 70% of $14.99. See my post yesterday for more.

Kate said...

Favoured Girl makes a good point. The other day, I calculated that I have well over 600 worth of unread books in my apartment. (I'm sure many of us have WAAYYY more than that, book hoarders, ya know). So books on my reading list that I don't currently own are moving down the list until I've read the books that I do own. (Among the list of 'read' books, Nathan: The Secret Year. Great!)

I'm against these same issues in my business right now. My work has value. I provide a skill that has value. But I can't control the fact that consumers aren't willing to pay what I think it's worth. Items, service, stocks, whatever, are only WORTH what people will pay for them. Anything else is just theory. Or wishful thinking. Painful.

Moira Young said...

Okay, I'm thinking hypothetically right now, as an unpublished writer who hopes to be published in the next few years and therefore may have to deal with these issues, so consider this comment to be open brainstorming ... but say the price *does* drop or remain at a $9.99 price point. Say that way more books are sold at a lower price point and everyone reads way more because of it.

Would that, then, possibly speak well for any author who has the savvy to advertise their books online, in whatever way they can? Does that mean that books will get by more on their own merit? Will we see the death of advances? Will we see the death of writers who can't sell well? And will we see that niche writers who know how to promote themselves are able to actually reach their entire niche audience?

Will Espresso machines replace print publishing overall? Will publishers release "special hardcover collectors' editions" only for books already on the bestseller list?

Most importantly, what does it all mean for writers? Are we wise to support higher or lower price points? If we reach a point where we rely on selling lots of copies, does DRM become a good thing?

And can they come out with DRM that protects authors but doesn't interfere with accessibility for the print-impaired, and DRM where the bookseller doesn't have the ability to edit bookshelves and wishlists and play Big Brother?

Hmmm. I thought I knew where I stood, but it's all back to Team My Head Hurts.

James said...

I've never bought an ebook and don't have a reader, so take this with a grain of salt, but I certainly wouldn't pay more than 9.99 (and even that seems high)for a book that I may have to repurchase someday if/when the technology changes, or I get a different brand of reader. If it's a book I'll never read again, I'll get it from a library, if I will read it again, I'll shell out for the paper copy. I learned after buying VHS tapes and then DVDs not to purchase very much content dependent on changing technologies. I doubt I'll buy many blu-rays for that reason, and I doubt I'll buy many ebooks either.

Nathan Bransford said...

anon@12:11-

Production costs may be covered by the print book for now, but that era doesn't look like it's going to be around for long. Publishers can't count on the fact that five to ten years from now they'll still have print books to rely on. They have to find a model that works for e-books, and this is what this post gets at.

Chuck H. said...

OK,Bransford, I voted though I really don't care. I buy very few books and the ones I do are $40-$50 each. However, those books will around for my great-great-grandchildren to read (my great-grandchildren are here already). Digital books? Probably not so much.

Wendy Qualls said...

Okay, so the actual printing/binding costs aren't that big a chunk of the hardcover price - what about the shipping/storing/inventory costs? Those are also eliminated with ebooks, and those have to make up a few more bucks of the total price. With an ebook, you have to have server space (and IT folks to manage) a virtual store on the front end - but on the back end, you pretty much only need a copy and a few backups for redundancy. On the other hand, paper books require warehouses, trucks, forklift operators, tape/boxes/shipping pallets, gasoline to transport them with . . . even with Amazon's consolidated warehouse model, that can't be cheap.

Nathan Bransford said...

wendy-

I discussed that, it's part of the $4.00.

Bradley Robb said...

@Nathan

I've got a graph for you - http://www.flickr.com/photos/soporic/4325564480/sizes/o/

That's based on the stats presented by Verso Digital at DBW last week, albeit mathematically corrected.

As O'Reilly found out, raising prices creates a massive and marked decrease in sales. When O'Reilly raised the price of an iPhone eBook app from $5 to $10 there was a 75% drop in sales. They were making twice as much per unit, but receiving half the total revenue. The actual book price? $30.

Those sales difference when modeled on the $13 eBook (from a $10) predict a 43.72% drop, and moving from $10 to $15 predicts a 65.34% drop. This means that publishers might see a small total revenue gain at $13, but will see marked drop at $15.

Unfortunately, the data set I have doesn't account for prices below $10, so I have to use Konrath's anecdotal evidence, but the change is much larger than you'd think.

And since authors and agents receive a percent, pushing for the highest total revenue is in all of our best interests.

If publishers really want to get out from under Amazon's thumb, demand DRM-free or DRM-interoperable eBooks. That way, device lock-in is mitigated. Customers are far more beholden to the device they've sunk hundreds of dollars into and holds their library hostage than they are authors or publishers they like.

Bane of Anubis said...

Bryan, you can always buy the ad-free model for $9.99. For $19.99, you can get the one w/ interactive clips and hyperlinks. People like options almost as much as they like free.

As far as the northern territory debacle of 2010, I must say the K- Train is starting to look a bit rusty.

Scott said...

I agree with the first post. I mean, I have a ton of hardbacks that were given to me by friends as "you must read this". The publisher got zip, nada, nothing from me, nor do they get anything when I pass said books on to friends/family. Now, with ebooks I'm paying for every single book, so, technically, the publisher is making (and/or losing depending on the math) money with every e-purchase.

It seems to me, since e-books aren't transferable through Kindle, that e-books would be the wave of future. Just a thought.

josephrobertlewis said...

What about a dynamic pricing model? For instance, if your book on Amazon only sells 5 copies this month, the price is automatically reduced by 50 cents for next month(because it is in low demand). But if your book sells 500 copies this month, then the price goes up 2 dollars for next month (because it is popular). Thus, popular books become more expensive and unpopular books become more affordable, dynamically balancing cost and demand (because there is no such thing as "supply" and demand in a digital economy).

Scott Marlowe said...

I can't help but wonder if this poll will be slightly skewed simply because the majority of those voting have a stake in this business.

I was thinking the same thing. The poll is kind of meaningless w/out accompanying demographics. But oh well... it is what it is.

Cheryl said...

I've paid $15 for a digital download of a $20 new release movie. Why wouldn't I pay a similar amount for an e-book?

I believe the pricing of e-books should follow the pricing of the print publication. If it's a new release and only available in hardcover for $25, a $15 e-price doesn't seem unreasonable. If I don't like those prices, I'll wait for them to fall when the trade paperback and mass market version become available.

Just because consumers want it when they want it, doesn't mean it should be given away for pennies on the dollar.

Reena Jacobs said...

I understand the concept of maintaining a profit margin. From your model HC have a higher profit margin than MM books. Also, authors tend to receive a higher commission percentage on HC. However, should the profit margin be the same for an eBook?

Regardless on whether the publisher releases the HC or MM version first, an eBook is a version onto itself, and thus deserves a different profit margin. My understanding is authors often receive a higher royalty on eBooks than HC or MM versions. Publishers can afford to give more because of the low costs of producing electronic copies in mass.

I'm not saying to lower or raise the cost of eBooks or change the royalties for authors. However, I think its unfair to think of eBooks in terms of MM, HC, or trade copies for that matter.

I can't imagine a publisher trying to force a $25 price tag on a MM book just because the HC version has a higher profit margin. Each version has a different profit margin, which I think deserves different pricing models.

I wonder why they don't focus on staggering the release date on the eBooks instead of trying to force it into a model that fits another version.

Nathan Bransford said...

Of course it's unscientific, it's a blog!

Anonymous said...

Amazon is taking a loss on SOME books (typically the "best sellers" from mainstream publishers), and these make up about 20% of total sales in the Kindle store.

I know they are making money on my books, as I am an independent (they keep 65% of revenue from my sales). So, overall, they are not losing on the Kindle store, just on certain popular titles.

The loss leader come-on is great marketing. My supermarket does the same thing . . . they put the milk or bread or eggs on sale, at a loss, to get me in the door. While I'm there I also buy the profit generating items . . . meat, canned goods, etc. So overall, they make money on my order.

The milk vendor doesn't tell them what price to put on the product . . . the store sets the retail price, and if they want to sell an item at a loss this week . . . . that's their business . . .

Anonymous said...

If the e-reader was free (or $25.00 with ten books) and the books stable and sharable (like real books) and between 9.99-12.00, then I would get three e-readers (and 30 books). Right now I am not planning on buying an unstable, expensive, stand alone reader.
That the books are over $5.00 for a several hundred dollar reader offends me more than the technology excites me.
I wonder, why not proceed like movies: first release at the theaters (translation: hardcover)/
then–later– release at the video stores (translation paperback and e-reader higher end) and THEN to e-book discounted?

josephrobertlewis said...

You can't compate books to movies. Watching a movie in the theater is a very different experience from (1) seeing it on a plane, (2) renting it from a store, (3) getting the 3-disk DVD, or (4) watching it on TV.

But reading a book is always the same experience, it's just text. It's not any bigger or louder or more social with more features (yet) just because it's a hard cover vs MM vs ebook. Thus, the pricing really should be more similar across book types.

Kristi said...

I'm one of your not-interested-in-ebooks-friends but I did vote. It seems this whole issue isn't going away anytime soon. *sigh*

dawt said...

I think along the same lines as Kate London's comment, I'll pay more for books written by my favorite authors or books that look especially delicious.

I prefer to buy my books second-hand, anywhere between $1 and $10, and I also take advantage of on-line swap sites (cost is postage only, average is about $3). When it comes to my favorite authors, though, I'll pay the full cover price for a hard back because I intend to keep them forever. (I love, love, love it when I can buy an autographed HB directly from the author!)

I understand all of the hoopla concerning the value of e-books, nothing is very clear-cut. I just hope that, in the end, everyone gets their fair piece of the profit pie without gouging readers' wallets.

Fiona said...

Several bloggers have calculated publisher's overheads like this, and all of them have left out the cost of distribution and returns.

Given that there's an approximate 50% return rate on print books, which doesn't exist for ebooks, that's a huge chunk of the cost that vanishes.

Returns are what makes the publishing industry lag behind most other industries; the lukewarm response to the espresso machine and the all-out panic over ebooks has been beyond disappointing.

Erin said...

I don't get the same value from an ebook. I don't. Yes, I get the same text, but I can't pass it along to a friend or sell it to a used bookstore. Moreover, there is currently no end in sight to the format wars (no, Apple, you did not help us on this one!). As a result, I can't be sure that the hundreds of kindle books I own will still work in five years when all of this shakes out. Value is not just about the perceived shipping/storage/paper costs of the publisher. I get less. There's nothing "perceived" about it. I'm fine with that at this point because I pay less for the books, and I adore the convenience of purchased the next book I must. have. this. instant. from the comfort of my home at 2AM.

Annalee said...

In trying to discern the value of a new hardcover-title ebook, I think it's important to factor not just the value of that particular book, but all the books it's subsidizing. All the new authors and smaller projects that publishers are able to take risks on because--and only because--they have revenue from blockbuster releases.

Would I pay $17 for a brand-new ebook? Yes I would (assuming [insert my usual DRM screed here]). The alternative is a world where only mega-blockbusters get published, and books with smaller audiences get shut out.

Amazon isn't interested in low prices for consumers. It's interested in selling kindles. Personally, I'm interested in the market model that's going to make the most cool stuff available for me to read. And $10 new releases of blockbuster titles aint it.

Anonymous said...

Look I love books. Love them. I read EVERYTHING (well except romance and YA vampire angst) and always will.

I see everyone's point of view here, but honestly, one thing keep jumping out at me in the (seemingly) monthly internet flurry of publishing industry upheavals.

Publishers have a ridiculous business model and they don't know how to adjust it to 2010. A $25 book with $4 in cost that you sell to retails for $12.5 and net $8.5 to cover all of you expenses yada yada yada - really? Exactly how long did you think this system was going to work??? (not YOU Nathan - I mean the industry)

So Joe Author's book comes out and XYZ publishing brings in $8.5 on every sale to pay the author -say - 10% of cover ($2.5) and is left with $6 to pay staff, promotion, lights, heat and rent.

That $8.5 on the $25 cover price is ~ 35% gross profit aka before expenses. That's a good profit margin in most businesses. If publishing is struggling with 35% gross and can't pull a better net out of that, they need to do some serious retooling. Getting rid of the idiotic returns policy when you are already giving book stores a 50% discount would help.

No I am not trying to hurt bookstores, but if you are paying $12.5 on a $25 HC and selling it 30% off you are seling it for 17.50. You $5 profit is 40% gross - the book store has a higher profit margin than the publisher and gets to make returns.

The whole business model is a wreck. The excuse of 'publishing isn't like other businesses' that people like to throw around is crap. Of course it isn't like other businesses. No other business would run so inefficiently and survive.

Now there are other businesses that run on higher and lower gross profit margins. But publishing really doesnt seem to be in a position to play with prices. Cost cutting is the way to go it would seem. They cut cost MAJORLY when they basically turned agents into their slush readers and yet they are still struggling. Too many huge advances and big celeb books are killing them. Kicking authors to the curb before they can establish a readership is turning most authors into 1-3 book losing propositions that the publisher never sees a return on.

Maybe it's time for a look inside the biz instead of pointing fingers at Amazon ( not that I have much love for Ama-monopoly either)

Lisa_Gibson said...

I believe we are definitely moving to this digital transition. Before long, all college texts will be digital, etc.

I think the cost should be less but not markedly so. At this point, the cost needs to be raised.

I also like to think that digital readers may attract a greater number of readers among the younger crowd, particularly males. You know how guys love their gadgets (and no, that's not a euphemism for anything). ;o)

Terry said...

This boggles my mind. But even I can see this is just the start of, what's beginning to look like a cockfight.

Anonymous said...

Oops, I didn't mean to post my email. Any chance you can delete that last post? Sorry.

Terry Towery said...

Nathan wrote: "And yet, underlying all of this nuts and bolts reality for publishers is a cold fact. When it comes to a publishers' fixed costs and margins and legacy business models: consumers don't care. They have their own idea about what an e-book "should" cost. An e-book feels like it should cost a lot less than something tangible like a paper book."


See, this is what has been bothering me lately about this whole e-book thing. I worked in the newspaper business for many years and left because the entire industry was crumbling around me. Newspapers have been trying to move to the online world, and just can't.

Why? Because the Internet has put EVERYTHING at our fingertips for free. Now, no one wants to pay for anything, whether it's information, music or literature.

I honestly don't know how industries such as news organizations, publishing houses or music corporations are going to make it. Someone had better find a way to start charging fairly on the Internet, and soon, or things are going to go bad in a hurry.

Sorry to sound so negative, but I've seen this happen before.

Marilyn Peake said...

I didn’t vote because I’m not sure where prices should be set. I do feel, however, that this is potentially a watershed moment for small press publishers. Amazon actually recommended that customers consider buying small press Kindle eBooks, as those have always been priced lower. (My own small press eBooks have been available on Kindle since the first Kindle became available. They’re also available on Nook and many other places.) The reason why many small press books stop selling is because, once small press books begin to make significant sales, traditional companies buy up the distribution channels that were allowing those sales to happen. That’s happened to me several times: my books started selling hundreds of copies, then suddenly the distribution channel was no longer available to small press books. Amazon is reversing that process by suggesting that their distribution model might work better for small press books. Many, probably most, small publishing houses have very little overhead. Most of their publishers work from home or from small, inexpensive offices. They aren’t beholding to stock holders or the huge salaries of people at the top. They often publish non-mainstream books that have a niche market. However, many small presses cannot afford good editors or advertising. My own belief is that, if small press books were posted on the home page of Amazon, Borders, Barnes & Noble and other such sites where they're already being sold, so that customers could actually discover them, and if they started making enough money for their publishers to afford good editors and advertising, a lot of small publishing houses would suddenly become as popular a source of books as The Huffington Post is for news. I’m wondering if any literary agents have considered representing small press eBook authors during this transition to eBook technology. Many small press authors prefer to work without literary agents, as they like things the way they are; but others would love to have literary agents negotiate for them with small publishing houses, Amazon, and all the other places where eBooks are sold.

Andrew said...

Whatever it takes for the author to make the same $ amount after it all shakes down.

The author is paid to put words down in a way to transport the readers to another world. He is not paid to format, design, offer tactile feel, offer e-ink convenience. Just put words down.

Whatever the format, the author puts the same amount of work in. Thus, his $ shakedown should be the same.

Nathan Bransford said...

anon@12:49-

Easy to say, not so easy to do.

Also, returns are an easy villain, but they also allow bookstores to take a chance on unproven authors that they might not otherwise if they had to be sure they would sell through. Careful what you wish for.

PatriciaW said...

You forgot the costs of warehousing and distributing books, presumedly included in the $25. If the average cost is, let's say, $5, for that as well, then the cost of the ebook is really $12, not $17.

I suspect publishers need to use a finer tooth comb to examine the differences in cost for print vs. ebooks, then set a price that enables them to recoup the shared costs with reasonable profit.

Nathan Bransford said...

anon-

No, (real) libraries on the Internet are not like piracy. They buy their books.

Nathan Bransford said...

PatriciaW (and others)-

I didn't forget warehousing, shipping and returns. That's all part of the $4.

Nathan Bransford said...

Oh, sorry PatriciaW and others!!! I thought I had the shipping/returns mention in there, but that was an earlier draft. I'll put it back in. I was so confused that people were missing it. Well... duh Nathan, it's not in there.

Matilda McCloud said...

I think it depends. If the title is new, the publisher should be able to charge more than $10 in order to make a profit. I have a SONY e-reader--I'm not sure if the SONY store works differently than Amazon, but for some new titles, the price is more than $10, which seems fair enough to me. I personally haven't bought an e- book over $10, and not sure I would. I'm still a die-hard fan of printed books and like getting something tangible for my money.

Marilyn Peake said...

Ink @ 11:59 AM –

One of the curious things about Amazon is their current low prices and what those suggest about Amazon’s economic plans for the future. Over the Christmas holidays, Amazon turned one of their largest profits. But they were practically giving things away for free: books, movies, lots of other things. They ran a program where prices for individual items, including popular movies recently released on DVD, were sold for a few hours at next to nothing until the items they had set aside for the sale were sold out. Amazon now sells practically everything: food, jewelry, clothing, shoes, books, movies. They’re like a Walmart of the Internet. My guess is they just want to stay viable and competitive until the economy improves, then maybe they’ll raise their prices.

Anonymous said...

Print books are different beasts than eBooks. Besides editing and typesetting, I cannot compare the two, so I have a hard time comparing the price of an eBook to the price of a hardcover.

I do think that eBooks with DRM should cost less than paperbacks regardless of when the paperback comes out. So I would price an eBook between $0-5. However, I will pay more for an eBook without DRM.

Liana Brooks said...

Not to put the agents or publishers out of business, but if I buy an e-book I'd rather pay the whole amount to the author. I already paid the publisher: I bought the e-reader. Their money comes from the physical reader.

If I'm going to spend $10-$30 on an e-book I'd rather tuck that money straight into the author's pocket. After all, I'm paying just for their work.

Realistically, other people contributed. Agents and editors helped edit. But the writing? That's all the author.

There were no trees murdered, no trucks to hire for shipping, no warehouse used. The publisher didn't do anything that author couldn't have done alone except produce the e-reader.

Paying a publisher for every e-book is as silly as giving Bill Gates a dollar every time I open a word document. I paid Gates once for the program. I paid for the computer I use. The content belongs to someone else and that someone else gets paid. Whether I'm paying to download a yoga class or a PDF e-zine to read, Bill Gates doesn't get a cut even if I do use his software to read it.

The idea of the publishers not getting a cut is unrealistic. Right now, publishers control marketing. But I could see a point where self-published authors take over because they can market and produce their own e-books. At that point, you're going to have trouble convincing younger authors that they need an agent or a publisher.

Amy said...

Back when you had that poll about whether we would purchase ebooks or not, I voted something along the lines of "Never - you can pry my book out of my cold, dead hands." Since then, I've begun to covet my friends' ereaders and started researching in earnest, just in case I change my mind. On Jan 27th, I began to look forward to the release of the iPad so that I can try out ereading without committing.

But now, I'm with Moira. Team My Head Hurts. This has all begun to convince me that I was right in the first place. You read over and over "an ebook is nowhere near as valuable as a paper book" and I wonder why people want the damn things in the first place. Just not the right time for me to look at ereaders, I guess - I'll have to wait and see how this plays out.

But one thing's for certain. I won't buy a Kindle. Too risky. Amazon could have milked all sorts of goodwill among consumers out of this simply by informing us what was going on and why they were going to cease doing business with Macmillan. Instead, they chose to slap authors and its own customers across the face. No thanks.

K.L. Brady said...

I like the 9.99 and under model. I would not pay more than that.

I think many people would change their minds if they'd actually gone through the process turning a book interior into a Kindle edition. My first thought would be, "$14.99--for THIS???" Nuh uh. Not happenin'.

Even if my own ebook was selling for $14.99 I would not buy it for that amount. No, siree!

And for those who don't think price makes a difference, I sold a Kindle edition for $7.99 and then lowered the price to $5.99 when it was first released and sales were moderate. I ran a January special for 99 cents and sold several hundred more than any other month, sometimes 40 copies per day. And even though the price point was significantly lower, I made a higher royalty than each previous month.

At the end of the day, people love a bargain. To get a 5-star rated book for that price definitely boosts sales and revenue--which is great for the author. People are more price sensitive than you think...they certainly were more price sensitive than I ever thought. It was a lesson for me too.

They are running a thread on Amazon about this issue, and so far reaction seems split about 40/40/20. 40 saying they don't mind the higher price, 40 saying they refuse to pay over 9.99 and abou 20% saying they will boycott MacMillan (rough estimate of course).

Anonymous said...

@Liana

I agree, and I also like the low carbon footprint of ebooks (no shipping, no warehousing).

I'll like it even more when Amazon pays me 70% (starting in June), as I also believe the writer (content provider) should take the largest cut under this business model. I don't mind giving Amazon 35% because they maintain the storefront -- the distribution channel, and that involves some serious overhead (database experts, programmers, systems analysts).

You are correct -- in the future more authors will publish direct to ebooks. They will subcontract editing and graphic art (book covers) services, and perhaps some marketing services, and it will result in lower overhead and larger profits than the present model.

ryan field said...

One factor that no one seems to consider is that serious e-book readers tend to buy in bulk when e-books are priced right. I get many letters from people who buy ten or more e-books a week, on sale, and they read a book at a time in one sitting, over the course of that week.

Anonymous said...

Terry Towery, I don't think you mean "negative"... I think it's "realistic". It has taken a long time for me, as a consumer, to come to terms with the idea of "paying for content", but it's got to happen. And as we move closer & closer to "everything digital", it's more important than ever.

Anonymous said...

I don't buy paperbacks. They're not worth the cost. Why would I pay more than double for some better paper? They take up more room and are harder to handle during a read. Thus, the cost compared to hardback sales is irrelevant. Compare the cost to paperback and you're closer.

$2.99 is the most logical choice based on value and production, and that still isn't a cut in revenue because you'll sell more--something publishers should have realized long before electronic sales were even a question. Book sales could have been up for decades if publishers would have used more reasonable pricing models and put paperbacks out alongside hardbacks--let the consumer choose their format instead of trying to force them into a format that costs more.

Anonymous said...

The consumer understands fair. Educating them about the process of publishing and the costs CAN go a long way.

Why are we comparing to Hardbacks vs Softcovers? And why aren't the costs of production distributed over both print and e-books? It seems the complaint about the cost of an e-book is the costs are already covered under the print book.

Marilyn Peake said...

Joseph L. Selby @12:09 PM –

I’ve noticed that about recent prices of paperbacks and hardcovers. The prices for those have been astonishingly low: 30% to 50% off brand new hardcover releases by best-selling authors, hardcover versions of some popular books sold for around $10, "buy one/get one free" for paperback versions of classic books, "buy one/get one at significantly reduced prices" for popular books. In addition to all that, a few months after a best-selling book is published, it’s available for a few dollars on a pile of older books in bookstores. It amazes me that books can be sold that low. The same thing is happening with movies on DVD.

Paul Neuhardt said...

As an avowed capitalist, I support the publisher's desire (and right) to make as much profit on an e-book as they do on a print copy. As an aspiring author I also support the author's right to make as much money on such sales, and if there is a distributor involved (such as Amazon) I support their profit as well.

But that's the problem, isn't it? The accounting of the costs, and more importantly the public perception of those costs is where the real rub lies.

I voted in your straw poll in the $10-14 range. My gut tells me that the printing, shipping, handling and distribution costs should take more than $4 per volume off a hardback. My gut could, of course, be wrong but it would take some substantive proof for me to believe I should pay $17-19 for a book that is $25 in hardcover. It just "feels" wrong, and as long as it feels wrong, I won't pay that price.

Next point: Does the price of the e-book drop when the print version moves from hardcover to paperback? It would almost have to, wouldn't it? After all, the collective "gut" of readers says ebooks should be cheaper than the print version, and how can you justify continuing to sell the ebook at $17 when the mass-market paperback is $12? But if you do that, who takes the profit hickey? Nobody involved is likely to be happy suddenly taking a smaller profit on every ecopy sold.

I suspect what we will see is an evolution of the way ebooks are priced. Many things will be tried, and what we see in the next 2 years won't be what we see in 10.

Next: How many people over the years have "waited for it to come out in paperback?" Those people did so because of the reduced price point of the book, and that reduced price point was easily accepted. That same mentality is going to apply to ebooks: they are supposed to be cheaper because they have lower costs to produce.

This presents a real problem for the publishers if ebooks really take off (and they will, we all know that). Release the ebook up front, and you kill your hardcover sales. Hold the ebook until later, relegating it to the status of a trade or mass-market paperback, and you piss off the sellers of the ereaders, including one of your largest sales outlets (Amazon).

I suspect ebooks will, in the short term, become that third option, the medium sized soda if you will. Hardcovers come out, and only when sales there start to lag will ebook versions arrive. Once those sales start to lag, out comes mass market paper (or not, based on the same decision process used today).

My "gut" right now says that if publishers want to equate an ebook to a printed copy in the public's mind, the best place to position it in terms of price is with the trade paperback. The "cool" and convenience of using an ereader gives it more perceived value than a mass-market paperback, but less than a hardcover. What does that make it? A trade paperback.

Just my rambling $.02.

Anonymous said...

Liana, publishers don't make money from ereaders. Amazon makes money off the Kindle. Barnes & Noble makes money off the nook. Sony makes money off of its ereader (what IS that called, anyway??).

Yes, definitely, self-publishing can be great for the people that make it work, but it's not as easy as it looks. Marketing and promotion is really a full time job. A lot of writers just don't have those skills. They take a bigger cut, as they should if they're doing all the work, but if they are unsuccessful and don't sell anything... even 100% of nothing is still nothing.

irvingprime said...

The cost calculations in this post are suspect. They presume the same business models that are clearly failing for paper books apply to ebooks. There are too many middle men in the loop pushing up the prices of paper books far higher than they should be in the first place. This is not an adequate rationale for over pricing ebooks too.

In other words, publishers are going to have to learn to deliver ebooks economically or watch their businesses killed by piracy and their own ineptitude.

Nathan Bransford said...

irvingprime-

I'd love to know where all these "middle men" are making all the money. I want to be one of those guys.

DG said...

Great post Nathan.

Many thoughts racing around in my head.

First of all, who pays $25. (or full price) for a hardcover? Nobody. The price is artificial.

It's like an orthopedic practice who projects annual revenue based on what they charge for surgery instead of what they get reimbursed for surgery. The surgeon says his procedure is worth $2500, even though his best reimbursement might only be $1800.

Publishers can't expect to make the same profit margins as they once did given the changes in technology that have revolutionized every aspect of content creation, distribution, and user experience. Didn't these people watch what happened to the music industry. For decades, we were forced to buy CD's containing all 11-13 songs when all we typically wanted was 1 or 2 songs. Then Apple changed everything when it allowed us to buy single songs conveniently and inexpensively.

Amazon has a tremendous head start on Apple in the book arena, but one would be foolish to think Apple won't be a key player in ebook distribution very soon.

I voted for $5-$10. Again, why would anyone pay $25 when they know the publishers are willing to give Amazon a 50% discount right off the top?

Kristin Laughtin said...

Whew! I've read over all the comments to this post and the economic ramifications still make my head hurt. They're not my strong point, but I have a lot more to think about now. I think it goes without saying that the current model is flawed and needs to be addressed no matter what happens with e-books.

I would be willing to pay more than $9.99 for an e-book. A lot of people *wouldn't* be, but I like books that much. The only thing I'd really want before committing to an e-reader is the ability to lend to friends. If I had that, I'd be willing to pay around the same amount as I would for a trade paperback, or preferably a few bucks less...$10-12 sounds good.

Anonymous said...

I think editors and book designers will have a strong future.
And marketing too.
Beyond that, screeners, who can sort the gold.

But I am also concerned about Internet thievery. After fifteen years,two weeks ago, my debit card number was stolen off the internet by a legal piracy scam.(I ordered a sample herb product.) They cleaned out my bank account and cost me several $34. late fees.

I immediately reported it to the bank, filled out reports in person, filed an Internet Fraud report.The company had No signature from me and no authorization and wasn't even the same name. My bank determined nonetheless that my claim should be denied because they had my debit number and my address. No products received either by the way.

I thought using a debit card was more responsible than a credit card.
Now, I see it has NO protection. I had to close it to protect it from further thievery.

I know Amazon is a BIG GUY, but if my debit card can get lifted this easily, I am worried about Internet commerce. Period.

Be advised: only use a safe account with very little money in it!

Kendra said...

When I first started ordering books from Amazon, I remember they discounted the mass market paperbacks. I don't remember when it changed, but one day I noticed they weren't doing that anymore. Maybe they'll do the same with the Kindle editions at some point?
I voted $10-15, so $17 isn't too much of stretch for the books I don't want to wait for. Of course, most of the books I want come in mass market paperback on initial release anyway.

Kathleen MacIver said...

It seems to me that publishers will eventually have no choice but to totally change how they print books. They're going to have to print in much smaller amounts and recoup ALL of their printing costs through the sale of those print books only. I just don't see how they'll have a choice. The quality and scope of titles that are printed in e-book only is rising. Print publishers are going to find it harder and harder to compete with these unless they can figure out how to lower their costs on ebooks. At least, that's what I think. Who knows if I'm right.

Anonymous said...

I can't remember the last time I read a new release. My 'to read' list is far to long for me to even think about it. I do add many new releases to my 'Goodreads', however. Then I delete them if I learn from a trusted friend that it sucks. Life's too short, and there are too many good books to waste time on a bad one.

Maybe books should be inexpensive at first, to get people to read them and start the word-of-mouth -- then those established by those readers (and maybe critics) to be excellent could get more expensive until they've covered their costs and generated some profit. Then when it moves into 'the long tail' they could be inexpensive again, because every paid copy downloaded would be almost 100% profit.

cawbaw said...

Frankly, as a bookseller in a brick and mortar store, and as a hobbyist scribbler - I think they should be equivalent in price for same day availability.

The Macmillan model (with prices scaling down as paperback comes out etc.) is a fair one.

I know consumers all want the most bang for their buck, but "selling" a book for $0-5 is drastically undercutting the value of the book.

Due to a buying snafu by our head office, we're currently selling some books at 70% off, and people bring them to the till, looking skeptical and asking if they're really bad books. Some of them are, yeah, but many aren't. Deep discounting damages the products worth in prospective customers eyes.

Yes buying a lot of books is expensive, but the same could be said for most anything. I don't see people crying out for baseball players wages to be cut so game tickets would be cheaper - why do so many think books shouldn't cost?

And to whoever said they paid the publisher when they bought their reader - nuh-huh, you paid the company that made the reader, not a publisher. They see no revenue from reader sales. Zip.

Emily Cross said...

I'm with Team 'my head hurts too'.

God when did things get so complicated? Buy book, read book, keep/giveaway book.

As a consumer, i'm going to wait and see - even though i'm not that bothered with e-books/readers.

in regards to cost etc. and e-book plans

perhaps publishers should look at the way academic journals work?

Me2 said...

Ah Nathan - rule number one of pricing as learned in Business School - the cost of good sold is pretty insignificant in pricing the good. You price based on what the market will bear - ie what people are willing to pay. It's my estimation that eBook consumers readers are both more affluent and rabid fans of reading, and are therefore more willing to pay a higher price.

Josef

Anonymous said...

Here's what I don't understand about this whole debate: Nathan, you say "These are fixed costs that exist whether it's a print book or an e-book." And that argument might hold sway if books were being published either/or -- either as an e-book OR as a paper-based, bound book. But they're not. They're being published as both. Therefore, it seems as though the desire by some to price e-books almost equal with paper-based books is pretty greedy. The paper-based books assume much of the overhead of getting the book produced, and really, the e-book is mostly profit.

I'm a huge fan of buying books to support authors I like and admire, and I have no qualms with paying full price for a hardcover now and then. And I own a Kindle. I'm more apt to download a book I'm not 100% sure I'll like on that, b/c it's less of a risk. I wouldn't do that, though, with an e-book that's prices at $12-$15. At that price, I'll just go buy a paper copy because, really, you get more value that way.

Jil said...

I admit to knowing little about these things but isn't buying an e-book more like renting one? When a Kindle etc. dies, does not your whole library disappear into thin air? Can't a book you bought be recalled and snatched from your device by Amazon, or whoever, as those samples were? When I buy something I want to own it forever, otherwise I will rent it and that should be at a much lower price.

Emily White said...

I voted for $10.00-$14.99 and this is why:

1. It seems "obvious" to me as a consumer that the production costs of an ebook are far lower than print books, therefore I would expect the costs to me to be adjusted accordingly.

2. They may not cost as much to produce, but they still cost something and $9.99 and lower for books just doesn't seem sustainable.

3. In my own opinion, the ideal cost for an ebook would be between $10 and $12. This seems like a comfortable price to tempt those of us wasting time perusing the internet to make an impulse buy. $10 doesn't seem like much, but if you make a few of these purchases throughout the week that you wouldn't normally have made because you didn't want to drive to the bookstore or wait a few days for your book to be shipped, the publishing companies stand to make a lot more money. And honestly, $10 tempts me, $20 does not.

Colette said...

I want to put a footnote on my vote, that I am assuming the question was asked before discounting (because we rarely pay $25 for a $25 book anymore). That said, here's what bothers me:

This discussion should not just be about what it costs to produce the book. It should be about value to the consumer.

Is there more value in e-books in getting content instantly? Yes.

Is there lesser value in e-books because the data is digital (can't pass on, etc.). I'm not sure.

The basic content (the written word) is the same. What will the market bear for that content?

Amazon's model to take a loss on content to sell Kindle is backwards (in my opinion). They should be giving away Kindles to sell more books.

If the publishing industry has to strap up the technology industry there is something wrong here.

Marilyn Peake said...

Anon @1:44 PM said:
"Marketing and promotion is really a full time job. A lot of writers just don't have those skills. They take a bigger cut, as they should if they're doing all the work, but if they are unsuccessful and don't sell anything... even 100% of nothing is still nothing."

I agree with you. Also, most small publishing houses and authors can’t afford anywhere near the same advertising budget that the large publishing houses can afford. If eBookstores begin offering affordable advertising to small press eBooks, that will level the playing field for authors. I don’t know how many people are aware of this, but a number of best-selling authors are currently publishing books with large, small, and eBook publishers – Orson Scott Card and Piers Anthony, to name just two. Piers Anthony is published by the large publishing houses, and by several different eBook and small press publishers. It will be up to the reader to find the good books, though, if the playing field is leveled. At the present time, Amazon offers more than 420,000 eBooks for Kindle – that’s a lot of eBooks! – but none of their eBooks from small publishing houses are advertised on Amazon’s home page. I know from experience with Fictionwise.com that my Fictionwise eBooks always sell much better when they’re first released and posted on their home page than they do later on when they disappear into Fictionwise’s massive inventory of eBooks. On the other hand, my eBooks for the Kindle and Nook immediately disappear into the huge inventory of Amazon’s and Barnes and Noble’s eBooks, as those companies have so far only posted books from the big publishing houses on their home page.

I find this discussion so incredibly interesting. For years, I’ve purchased lots of books from the big publishing houses, small publishing houses, and eBook publishers, and have purchased in every book format. I’ve purchased books by best-selling authors, and have found it fascinating that some of those same authors have for quite a few years now published non-mainstream books through small and eBook publishing houses. And I’ve seen some really good small press and self-published books get picked up by the big publishing houses after their initial publication.

Victoria said...

I think there is one element to the voting here that should be considered... we're mostly writers. I clicked the $9.99 to $14.99 button because that is what I would like my ebooks to sell for. Not because that is what I want to pay for them. I think we're probably all biased towards a cost system that benefits us as authors.

Myself, I used to be a 'you can pry paper books out of my cold dead hands' voter, but lately I've realised the benefits of being able to download books from authors unavailable in Australia.

So I purchased an audiobook for my Ipod and I'm guessing an ebook won't be too far down the list once I get my Ipad. (Critics be damned, I LOVE the thing.)

Now I paid $22 for my audiobook, but it was by a horse trainer and it was information I wanted in a hurry.

If I have access to the hardcover/paperback that would be my preference for purchase, but I can see I'd pay what I needed to for specialist subject e-books. I do think the business model will probably end up offering discounted ebooks with hardcovers and vice versa.

What I will say is that I won't buy a Kindle or shop from Amazon. I don't like their big brother bullying tactics or their attitude that they can control what we read by controlling our access to it.

Vic K

Jenny said...

This will be an interesting fallout I think. After all, the e-readers are the hardware--they have to be expensive at the outset because people will only buy one of them.

The real money will eventually be made on the 'software'--which, in this case, is the book. After all, the music industry does not make its money off of the iPod or stereo equipment, it makes its money off of the artists and the music they create. Even Amazon will have to adjust eventually.

Anonymous said...

If the library can redistribute copies, why aren't the e-books set up that way? We paid for them, BUT we do not own them like a book.

Digital media is more convenient and will be distributed faster, which is bad for seller of books.

Jenny said...

Liana-

When you buy an e-reader, the money doesn't go to the publisher. If you buy a nook the money goes to Barnes and Noble, you buy an iPad it goes to Apple, you buy a Kindle it goes to Amazon, etc. The money for the e-reader goes to the group distributing the e-reader.

Jenny said...

Anon @ 2:43

Actually, there are a couple e-readers that allow lending of a book. The book goes out to someone else who owns a similar e-reader and the book disappears from your library for that time period. Then, when the time's up, it re-downloads to you. Just like a real book in the library.

In at least one way that's better--you always get your book back! =)

Kait Nolan said...

I think you have to take into account whether you're really looking at the same group of consumers. I know that I buy, on average, MAYBE 1 hardback a year. It's a simple budgetary fact that $24.95 is really freaking expensive for a few hours reading. With the exception of a very select few, I'm going to wait for the paperback because it's more affordable. I see ebooks in the same light. If publishers really see them as competing for hard cover sales, then maybe they should hold the ebook release until the paperback comes out in order to give consumers a price point that's more reasonable.

Amy said...

I've seen that sort of idea put forth so many times, and I like it more & more each time I see it. Could it fly? Could the ebook just be priced at X amount of dollars when the hardcover comes out, and then the price lowered to Y amount when the paperback is released? Could the "hardcover" ebook simply include some extras (don't ask me what kind; I'm just thinking of a way to somehow provide "more value" to this first edition, other than timing) in it, and the cheaper "paperback" ebook is just the text? Do they just not like this because the whole thing is broken and they're trying to start anew?

My head still hurts.

Christine M. said...

I'd say it depends if the $25 book is discounted just about everywhere? If the book is 'worth' $25 but is sold (online and off) at $12-14, then no, the ebook copy is not worth paying $14-15 for. My take would be 50% off the saling price. I know there are costs associated with the production of ebooks, but most of these costs are shared with the making of the paper book.

Anonymous said...

Your poll is bogus. A 'depends on the book' option would win over all others.

For prices do indeed depend on the book. Is the latest and greatest Harry Potter or a tell all by Sarah Palin or Michael Jackson (penned from beyond the grave) priced the same as the bulk of what's on store shelves? Yes, initialy they are, but popularity and demand soon move the pricing.

Books come in all genres, formats (hardcover, trade, and paperback), and popularity, including even textbooks. Prices charged are based more on what the market will bear than on the cost of what's delivered.

E-books should be the same. Neither cheaper nor more expensive than what they are worth. Or what they cost the publisher. Which is virtually nothing after the print version.

Right now worth depends more on publishers, Amazon, Apple, and corporate machismo than on right or reason. All are out for the biggest piece of the new pie.

Paula B. said...

I voted as a consumer, Nathan, rather than an author, even though I am an author.

It seems to me that an ebook should cost the same as a paperback, so I picked the $5 to $10 range. However, as an author, I know that that's a terrible price...unless publishers increase authors' royalties substantially. So it's quite a conundrum.

Of course if bookstores could be eliminated, that price range would work very nicely. (And I say that as a former bookseller as well.)

Nathan Bransford said...

anon@3:24-

YOU'RE bogus Meanie McMeaniepants.

Seriously though, I think we can safely assume that the poll refers to a "$book that is available for $25 that I would actually want to buy right now in e-book form."

"Victoria" said...

As someone who despises hardcovers (because they're harder to read, harder to carry around, *and* more expensive), this is an interesting question. As a consumer, I don't even take hardcover prices into account. What does it cost in *paperback*? Now, is it worth it to get on a Kindle instead?

I'm with all of the low-priced people. Not only does it incentivize me to buy in digital format (by being cheaper than my only real book-buying option), but it also mirrors iTunes. Think about it: everyone has gotten into the habit of buying a lot of small things digitally without regard to what they're buying.

Sure, it means that consumers aren't as mindful of which books they purchase (or TV episodes, or songs), but -- coming from a business perspective -- they're buying MORE items that cost less to produce.

Does their total cost outweigh the total revenue when it comes to Kindle sales? That's something that only Macmillan can tell us.

AndrewDugas said...

Great post. Perceived ideas of cost etc.

However, you didn't factor in the fact that a printed book can be resold by the reader. That is, when I see the price on a book I'm considering, I factor into my calculation the potential resale value. So if I buy a $25 book, I figure I can get $5 for it later.

I'm all about the e-book, but the dirty little secret (you're only really licensing them and can't legally resell them) feels like a burn.

amber polo said...

Isn't this the same argument as an audiobook on CDs or MP3s compared to a download?
Are Apple and Audible stronger than Amazon?

kimberlyloomis said...

I blogged a bit about this yesterday and my only thought was publishers should charge more for the paperback. Package that increase in cost as a reminder to the reader/consumer that they are now paying more for binding/paper/warehousing but the intellectual property and efforts of the author is the predominant cost of the work. We need to shift mindsets away from "but I can't hold it so why should I pay $x for this?" and to a "I'm paying for several months of this person's time and efforts as well as their talents".

Just my thoughts. :)

Scott said...

Publishers = letters

e-books = email

Yeah, they're going to get squeezed, all right. Just like the U.S. Post Office has. And agencies who made money placing space in magazines and producing direct mail. You have to diversity to survive.

Why don't publishers get into printing to reduce their binding costs? Maybe acting like a small press and increasing their online presence will save on marketing costs and allow them to penetrate a wider variety of books. They'd probably crush the small presses, I guess.

Lots to think about, but it's definitely time to run with the wolves. I think about going to an online publisher to buy a book or Amazon; maybe publishers can do a better job of "selling"?

Interesting stuff, Nathan. Thanks.

GhostFolk.com said...

This poll is like asking whether the person buying an ice cream cones thniks it should cost $1, $2.50 or $10. Duh.

I think a new Lexus should cost $10,000. Okay, $10,125 with white walls.

Allison said...

Has anyone, to your (by "your" I mean Nathan's or anyone reading these comments) knowledge, done a reasonable comparison of the environmental impact of paper vs digital? Assuming that the majority of the reading population eventually has one of these devices, will the absence of paper/printing/shipping be a significant (or measurable) boon for the environment? Or are the benefits offset by the inherent toxicity of digital devices and the energy required to power them? (I realize that this is slightly off-the-mark in terms of the pricing discussion, but it is a concern as we move ever-so-much-more-quickly into this world of e-reading. Thank you, Nathan, for breaking this all down for us. You are an incomparable resource (as so many have said before, but it bears repeating).

Kaitlyne said...

I really dislike the idea of ads that has been proposed here, but that comes mostly from reading comic books where every other page is an advertisement. It's incredibly annoying and gets old very fast, and actually makes me less likely to buy something. Heck, I even have ads blocked and disabled online.

Anyway, Nathan, I've got a question. Please correct me if I'm wrong on this, but don't publishers sell many more paperback books than hardcover? I was under the impression hardcover had a much higher return rate and don't sell as well. I know that personally I'm more likely to buy a book when it comes out in paperback instead. I only buy hardcover for authors I tend to really like or books I'm looking forward to and just can't wait. In fact, I'd probably continue to buy those books hardcover even if I had an e-reader because the appeal a book must be special to me to buy it in that format to begin with.

So what I'm wondering is why we can't just treat e-books like paperbacks instead? Or if the concern is that one day real books will no longer be sold and publishers will lose money because all books are sold at paperback prices rather than hardcover ones, why not set a sliding scale? Movies do that. On iTunes it's pretty common to have a new release cost more to rent and buy than one that's been out for a few months, particularly for higher profile titles. I don't see how that would be all that different from the way things are done now. The people who want it immediately would be willing to pay a higher price, and those like me who avoid spending as much would just wait for the lower-priced version to be released at a later date. There could even potentially be incentives, couldn't there? A special note from the author, perhaps, or character sketches, or an excerpt from a later book, that are available for one copy and not another.

I guess I'm just not fully understanding why everything *has* to be based around either having a hardcover pricing system or a $9.99 pricing system with those being the only options. Certainly people are clever enough to come up with other options that would be sustainable. Then again, maybe I just don't know enough about how things work to get it.

Anonymous said...

I wouldn't pay much for an e-book because it's not something that's tangible and I'd be afraid, if I had a e-reader especially if it was a kindle, of the books I bought going poof. I don't think I'd trust an e-reader. Or the device could break, and the data get lost. So I wouldn't want to pay much for a book that I might lose access to.

Shelby said...

Look friend.. an e-book should cost $0.0.

Why? Because you're not buying it. You're renting it.

Why you ask? Because if you buy an e-book, Amazon or whoever the d'jour of the day is of seller of e-things.. can at their 'whim' delete it off your reader. It doesn't ACTUALLY belong to you.

So, if you're paying for something that doesn't ACTUALLY belong to you, you're paying too much even if it's a penny.

So, one cent less than a penny will do.

That way - when whoever comes in to delete it for -- oh I don't know--reasons that Amazon gave this week.. you're not out anything.. except the thing they took from you.

Zip.

That's how much.

D. G. Hudson said...

The lower price will appeal to more consumers as they can buy more quantity, as some have expressed in the comments. I would like to see the price on the high end of the lower amount -- $9.99, for the author's benefit.

I don't want to see paperbacks start to rise in cost as well, as most are over $10 now (at least in Canada). A lot of us are still buying paperbacks, especially if we don't own the ebook device. I already have to buy hardcovers on sale.

Somewhere along the line, the deficit in profits will result in the consumer paying more, whether it is for the ebooks, paperbacks, or hardcovers.

Let's not forget the author in all this haggling over prices. A writer likes to make a living from his work, as we all do.

GhostFolk.com said...

Here's the other thing some savvy media watchers have overlooked that didn't get overlooked here. How long ago was it that Macmillan made its claim to controlling e-rights to most of its current and backlist catalog?

It was predicted by some posters (me), that this was the first step in the major publishers taking a decisive interest in eBooks.

Next step, btw: I'll just cite a Peter Kafka Media Memo from, uh, today:

"Murdoch hinted that his book publishing unit is in line to get a new deal on e-books from Amazon (AMZN), just as Macmillan has demanded (and other publishers will as well).

"On the second point, here’s my on-the-fly transcription and paraphrasing of Murdoch’s comments re: Amazon, Apple and e-book pricing.

Murdoch: "We don’t like the Amazon model of $9.99….we think it really devalues books and hurts all the retailers of hardcover books. We’re not against electronic books, on the contrary, we like them very much,” because they cost us less to distribute, “but we want some room to maneuver.” The Apple deal…”does allow some flexibility and higher prices” though they will still be lower than print. And now Amazon is willing to sit down with us again and renegotiate."

Will amazon.com pull all the Harper/Collins titles is negotiations get tough?

This will work out over time, but at least the big publishers are getting into the fray. Agents know that a couple years ago you could wrestle eRights from a major publisher during contract negotiations for a midlist author. Not no more.

P.S. When you "buy" an eBook through amazon.com it's only a lease for one year. I've read some of my Martha Grimes titles seven or eight times over the past ten or fifteen years. If I paid $4.99 every time I read one... well, it would be cheaper to own the book at full orginal coverprice.

GhostFolk.com said...

I do have a question for Kindle readers. How many of the titles you buy (or get for free), do you actually read all of?

I tend to dabble in books and read bits and pieces when I get them cheap. When I pay full (okay 30% discount) cover price for a hardcover, I usually have made up my mind to actually read the whole thing.

Is there a tendancy to not actually read all the $1.99 or $2.99 books you buy on Kindle?
It's just a guess. I could be wrong. Often am. :-)

Anonymous said...

"Look friend.. an e-book should cost $0.0.

"Why? Because you're not buying it. You're renting it."

Wow. Are you a writer? And if you are, don't you believe that if you get published your books will in fact become e-books? Or, do you know that most publishers are now taking back-listed books and re-releasing them in digital format?

Lynn said...

What should an e-book cost? $25.00, if you're asking writer-Lynn. $10 if I'm the consumer. Oh, what a wicked web we weave.

Marilyn Peake said...

amber polo @3:43 PM –

Amazon now owns Audible.com, after purchasing it for $300 million back in 2008. Also, a few minutes ago, I did some research on the relationship between Audible and iTunes. (An audio book for one of my novels used to sell on iTunes, but is now selling on Audible.com, but I was never really clear about the relationship between the two companies.) Apparently, Audible distributes audio books through Apple's iTunes Store, and at some point became Apple's exclusive supplier of spoken-word content. According to an article on PCWorld, Apple modified the software in its iPods to allow "bookmarking" of Audible audio files. As the digital age progresses, I sometimes find it very difficult to keep up with exactly who’s distributing what. :)

Nathan Bransford said...

ghostfolk-

Not true about the one year license. You get it permanently.

shelby-

If you're worried about your e-book disappearing all you have to do is put it on your computer. They can't delete it from there. How does a file on your computer not actually belong to you?

M. M. Justus said...

I don't believe the poll is asking the right question. I'm not sure what the right question is, but paper books come at all sorts of prices. Why not ebooks?

Marilyn Peake said...

GhostFolk.com –

Holy camoly. I didn’t know that Rupert Murdoch had entered the fray. Well, of course, that changes everything. Found an interesting article: Next threat to Amazon’s $9.99 books? Rupert Murdoch. Sounds like, for anyone who wants to buy lots of eBooks published by the publishing houses owned by Murdoch for $9.99 and lower, right now would be the time to buy them.

Anonymous said...

I've thought about this at greater length than I can summarize in here, but I wonder why I haven't heard more discussion about moving e-reading to more of an on-demand service model than a product model. i.e. a person isn't buying a permanent copy of a book, they are paying to access the digital file for a period of time on a per-use basis (so they pay, say $4 to read it this month, then another $4 to reread it six months from now). Alternately, the reader could pay the provider, like Amazon, a fixed-month fee for unlimited access to as many books as they want, etc., like Microsoft does with Zune Marketplace.

In either scenario the provider could either pay the publisher/author a higher amount up front or a lesser cut from each time the file is accessed.

I think all media distribution is also moving into a sort of split but blended model - Professional, where there is quality control and upfront cost/payment borne by an investor (like a publisher) and all revenues are split between creator and investor, and amateur, where all upfront costs are borne by the creator and they post their creation on Hulu/iTunes/Amazon/whatever and take their total portion of a smaller pool of revenue.

Wow, I hope that made some semblance of sense...

Marilyn Peake said...

Nathan @4:53 PM –

I also discovered a couple of years ago that, after purchasing eBooks published by small publishing houses or offered by eBookstore sites, it’s a really good idea to download them into your computer, since so many small companies go out of business...and then it’s too late to download the eBooks.

Tambra said...

Hi,
I'm published in ebook and print.

When someone buys one of my books and then sends the file to their friends, I lose sales.
I hope that at least one or two of those readers would love my work enough to legally purchase my other titles.

As any author out there, I need all the sales I can get. It's damn hard trying market yourself and gain a readership, so that when the sharing occurs I'll enough of a fan base the losses won't be so hard.

Having said that, I have gone to a secondhand store if there is an author I want to try. Over 90% I will purchase new if I like the author and recommend it to friends.

I'm on disability so my income is limited. Since I write in more than one genre, my goal is to actually make a living off my writing.

Great discussion here as usual.

Best,
Tambra Kendall

GhostFolk.com said...

>> ghostfolk- Not true about the one year license. You get it permanently.>>

I knew I was wrong abotut something! Sorry if I added to the confusion. :-(

AndrewDugas said...

@Tambra Kendall You think you lose a sale when someone sends an e-book file to a friend. What about when someone lends a print copy to a friend? Or someone buys a used copy from a used book store or garage sale? Aren't those also lost sales?

GhostFolk.com said...
This comment has been removed by the author.
Naya said...

ppAnother thing they should keep in mind when setting prices for ebooks is that there are a lot of people who are not willing to spend money on a book if they are unfamiliar with the author. They're just as likely to go and download a pirate copy before buying.

I know many people who like to get the ebook cheaply before investing in a printed copy (and when I say cheap I mean between $3 and $5). So if they offer the ebook at a low price, they will not only increase their sales because more people would be willing to buy (which I feel will also reduce occurrences of pirating by people who simply just don't have the money to spend on expensive books), but they also increase their chance for double sales with people who want to check the book out before investing in a printed copy.

GhostFolk.com said...

Andrew, or someone buys a used copy from a dealer listed on amazon.com's title page for your book. After they're out a while, novels in hardcover tend to run $1 plus shipping from some very reputable used-book dealers who list 1,000s of titles on amazon.com

In reality, people who buy new books and people who buy used books tend to be spearate markets.
Oh heck, at least the were. Who knows now. :-)

GhostFolk.com said...

Marilyn Peake, I am enjoying your comments and links today. Thanks.
Audible.com connections have me baffled, for sure.

I think the thing Murdoch is correct about is that the trending in low-price ebooks is destorying brick&mortars bookstores (WalMart didn't just move nextdoor to the local Western Auto, they -- amazon.com --moved into the reader's house).

I think writers will get by for a few more (several!) years, but brick&mortar bookstores? It's scary sad.

And Nathan, excellent point about the return system allowing bookstores to stock new and midlist authors. Sadly (for bookstores), amazon.com can do the same thing on-line without the cost of returns.

AndrewDugas said...

@Ghostfolk.com

It's long been a contention of mine that e-books eat into the used book market because there is no such thing as a used "e-book" and therefore e-books sales will get a boost because people will be forced to buy new instead of used. And at $9.99 or other reasonable price point, there's little reason not to.

In other words, losses due to e-piracy will be more than compensated by the gradual elimination of the "old piracy" namely used book sales and friends lending to friends.

JD Salinger died last week and his obit noted that "Catcher" still sells tens of thousands of copies a year. Like, wow. But when you consider how many high schools and colleges have that book on their curricula, tens of thousands suddenly seems low.

Why? Because of all those copies with those little yellow "used" stickers on them.

If everyone were forced to buy new, how many copies of "Catcher" would have been sold?

Dale said...

I put $10 to $14+ in the poll, but I think the answer is a bit more complex than that. At the moment, e-book sales are low enough that the hardback model sort of applies. If they take off, I could see them becoming more of a mass market and having economics more like paperbacks but without the printing/returns/distribution costs.

Ultimately e-books will evolve from being "dumpware"--just books in another medium to their own medium, taking advantage of the electronic nature of more advanced e-readers to do things like customizing the reading experience. I could see a reader being able to choose how in-depth descriptions are through clicking or not clicking hyperlinks.

In science fiction, the e-book version could include world-building material that isn't necessary for the story but is kind of cool but putting it in hyperlinks rather than eliminating it entirely or trying to stuff it in. For example, Steve Stirling's Conquistadore has a wonderful thirty to forty page travelogue on his alternate California. It's a lot of fun, but the book stops for those thirty to forty pages. That would be a perfect place for a hyperlink. Explore it if you want to. Ignore it if you don't. I could even see e-books with Easter eggs, author commentary, etc--in other words borrowing from the DVD model. In that case, you might see e-books being priced higher than hardbacks.

Linda Adams said...

I was reading a book on marketing, and it commented that price objectors are often actually complaining about balance. Charging a hardcover price for an eBook gives the impression of being way out of balance for what we're getting. If I buy a hard cover, I'm getting a physical book with a high quality cover and good quality paper. An eBook is a computer file. Technically, they are both the same thing--a book to be read--but it's hard looking at an eBook that costs $15 and it's a computer file that I could probably make if I had the software.

One of the things that doesn't get mentioned in the conversation about books is that buying them is a risk to the reader. He may spend $30 for a novel from a best selling author, and this time the book doesn't work. I finally stopped buying hardbacks altogether because the risk was too high that I would waste my money. Instead, I check them out from the library (usually after being 60-200 in the hold line). If the book was also available in eBook format at a reasonable price for me to take a risk--$5--than I actually might buy the book.

Laurel Amberdine said...

Personally, my confusion over the print vs. ebook pricing issue stems from what I was told by editors and publishers in the past.

In, IIRC, the late 90s prices of books and magazines both spiked. When questioned, the explanation was that the paper was so expensive, and the shipping, and then the returns! It was simply impossible to lower the sale price (or pay writers any more.)

Maybe that was true then? I don't know, but the story has certainly changed. Now (apparently) the costs of printing, shipping, and taking returns are actually negligible, and it's the per-unit gross that matters.

GhostFolk.com said...

>>It's long been a contention of mine that e-books eat into the used book market because there is no such thing as a used "e-book" and therefore e-books sales will get a boost because people will be forced to buy new instead of used. And at $9.99 or other reasonable price point, there's little reason not to.>>

I'll go with that, Andrew Dugas.

As a writer, I would rather an eBook sale for $4.99 and I get some small bit of it, than have the book sold used with no royalty.

BTW, most authors today will give away their first book to promote their name (brand) and eventual second, third, fourth books. Writing in an effort to make a living is a long-term thing for everyone but the big splash book.

Mira said...

Wow - this is quite a debate, and to be honest, I really only understood about half of it.

But that never, ever stops me from putting in my two cents. :)

First, I don't think Amazon is keeping e-book prices low in order to sell Kindles. I think their motivation is much more devious and long-range than that.

Second, I would not go higher on an e-book than a paperback. I spend about 6.99 on a paperback, that's about as high as I'll go on an e-book.

However, if books were even cheaper, I would buy ALOT more of them. I mean ALOT.

Especially if they were instantly accessible by download.

Finally, I don't care if the price is low, if my royalty rate is higher. I can make more - right now - on an e-book than a hardcover because of the royalty rate.

Anonymous said...

There are plenty of free and cheap books available out there. MacMillan et al competes with these choices.

A few great indies I've recently discovered include Tiger's Curse and Tiger's Quest (Colleen Houck), A Scattered Life (Karen McQuestion - recently optioned for film), Faking it (Elisa Lorello - ranked #16 on Amazon Kindle Store), Ordinary World (Lorello), and When Angels Cry (Hooley).

These books sell for 99 cents on Kindle Store. Look them up -- check the reviews on these books. They are fabulous reads at bargain prices. Houck is the next Stephanie Meyers.

The point is that many good writers are choosing to publish straight to Kindle, and they are pricing their works low to build an audience. At the rate they're producing I'll never have to pay 9.99 for a book again.

orthor said...

The McMillan move is a good one and I believe heralds a change in how this industry is going to manage digital books.
Look at it this way, Publishers control the product, Amazon are saying they control the consumer (yes that is what they are saying); so why shouldn't Publishers go to say... Facebook, make a deal and then tell leave Amazon up a large river without a paddle. Just a thought.

Natasha Fondren said...

I understand that this post compares hardcovers to ebooks. Isn't that a little unfair? At the least, I would compare an ebook to a paperback.

What confuses me, is people around the internet keep saying that it's impossible for publishers to make a profit on ebooks priced at $9.99.

Okay, if that's true, how do publishers make a profit on paperbacks priced at $4.99-7.99?

Mark said...
This comment has been removed by the author.
Mark said...

My vote was lower than the poll leader at $9.99 to 14.99. Fair enough. If Amazon thinks that Kindle will compete with the iPad they're in a for a jolt. Publishers can't give the first editions away as ebooks, and this is the contention. I'm not one to announce the slaying of the printed book yet. Premium content has to have worthy and competitive price as with audiobooks. Readers will pay more for early releases.

Readers do care who the publisher is. All of those unfiltered ebooks from digital only instant houses that don't have the option of a print run, unless it's a POD, will continue to be worth less than the big name publications regardless of delivery system. That's the key. You can't have the art cheaper when it first comes out. This isn't peddling backlist or out of print stuff. It's the real deal.

Tambra said...

Andrew,
I have print titles out, too. So yes, you're right.

Tambra

Madara said...

This is a tough one. There are so many variables an unknowns to this debate.

I agree with many ebooks should cost less based on the Nathan's observations and the fact you are buying a product that cannot be shared or given away when finished like traditional books. There is also the theory that folks with eReaders actually buy more books because it's quicker and easier.

My main concern is for the author who seems to have the most to lose. Publishers may be able to recoup much of their costs by being able to publish more more ebooks with less financial risk that publishing traditional books.

We must avoid the mistakes of the music and newspaper industries as we venture into this new forum.

Ishta Mercurio said...

Nathan, you are the awesomest of the awesome, and your response to Anon @3:24 made me smile. Is this discussion getting to you a teensy bit?

This whole discussion has been very interesting for me. When Bradley Robb and other posters talk about lower price points leading to the sale of exponentially more copies, they fail to take into consideration that there are not, nor will there ever be, an infinite number of eReaders out there. The eReading public is a finite market within the general reading public.

This discussion has revolved around comparing print prices to eprices, but what I haven't seen anyone mention is that the people who buy eBooks and the people who buy printed matter are two completely different markets. I will never buy an eReader. Nev-er. There are others like me. My husband can't wait for all books to come out in digital format; he's with the eReader camp. We see books differently: I see them as content, yes, but also as a physical entity that I can hold, smell, pass around and then get back, look at on my shelf, etc. For him, it's just information. So, to compare the prices of eBooks to the prices of hardcovers and paperbacks isn't a fair comparison, because the people who buy books in these different formats are literally buying different products.

Yes, publishers have to consider what the market will bear. But there is also the reality of what it costs to produce a thing, and charging less than that will put publishers out of business. I don't think our society is so far into the consumerist, buy-it-now-because-I-want-it-now mentality that we can't learn how to buy fewer higher quality goods for a fair price.

And I disagree with Bradley Robb's (and others; I don't mean to pick on you, Bradley, but your post is near the top) idea that eBooks should be priced in "impulse buy" territory. Nothing - not eReaders, not flashy marketing, not anything - should ever be designed to make consumers buy something that they soon realize they didn't even want or need. This diminishes the value of my work as a creator, diminishes the work of the distributors and investors, and diminishes the value of the product itself, be it a book or a painting or a sweater. Additionally, it leaves a bad taste in the mouth of the consumer, and makes them hesitant to buy another of my products (in this case, I hope one day, books) or another of my investor's (in this case, the publisher's) products again. No. No, no, no.

Moses said...

My favorite part:

"(and let me pre-empt my not-interested-in-ebook friends: I know. There's no option for backlighting grayscale look feel smell DRM you'll go blind bathtub. Just vote for the option you feel sounds about right)"

Hahaha!

JTShea said...

Nathan, in your necessarily brief analysis you do not directly mention windowing. So please excuse me if I point out the obvious and echo earlier commenters. I voted for $10 to $15 for an E-book issued at the same time as the hardcover. I cannot see the general price of an E-book exceeding that of a mass market paperback. But mass market paperbacks are usually not the first incarnation of a book. New products are often more expansive then older ones, and their prices gradually decline. Books are unlike, say, DVDs in that their physical format changes through windowing, from hardcover to trade paperback and maybe to mass market paperback. The extra cost of a hardcover is more related to its earlier release date than to the cost of the hardcovers and dust jacket. Some commentators elsewhere have even, rather awkwardly, referred to 'Hardcover E-books'!

Nareshe said...

As an avid ebook reader who buys books from people not Amazon (my favorite retailer is Fictionwise), I tend to find that most of my purchases fall in the $8-12 range. Much more than $12 and I put it on my wishlist, much as I will stick a book that's just come out in hardcover on my Amazon wish list and come back in six months to see if it's come out in paperback yet.

I only buy certian very special books in paper these days, and a book has to be *very* special for me to buy it in hardback. (I bought exactly two books in hardback last year: one a reference volume, and one a book by a friend of a friend.) I just don't have the bookshelf space I once had, and my Sony Reader fits perfectly into my purse, where my paper books often do not.

If I recall correctly, didn't we have a couple of the big book distributors collapse in the last few years? I would think that the publishing companies would be *very* eager to establish the market for ebooks in order to protect themselves from the failure of more of their distribution channels. Part of establishing that market is positioning prices in line with the perceived value of the books--not too high, not too low.

With paper books, consumers often play a game of pricing chicken. On Day 1 after release of a hardcover, the price might be too high unless you know for sure that you are going to love the book based on prior experience with the author. If you can wait for a bit, the book will eventually come out in a less expensive format. And if you wait a bit longer, it'll be available used for even less. (Or if you're me and you've just been unemployed for several months, you put it on your hold list at your fabulous local library and a few weeks later it's in your hands for free.)

The thing about ebooks is that consumers assume that what they see is what they get. Ebooks, as far as we know, are *never* going to get any cheaper. (Macmillan claims they are going to a graduated pricing model...but will they really?) It's going to take some time for everyone, consumers included, to figure this whole thing out.

Cam Snow said...

Nathan,

I think the final price of the eBook should be between $5-9/book...

BUT

This is with a caveat. I think they should have a timeline. During the first 6 months when the eBook is selling alongside the hardcover, it should be priced so that the profit margin is the same as a hardcover (maybe $15?)

Then when the trade paperback comes out, you drop the price (maybe $9.99), and then when mass market paperback comes out, you drop the price again (maybe $3.99)

Why would I pay $9.99 for an eBook when I can buy the physical paperback for $7.99?

eBooks can be instantly re-priced, and booksellers and publishers should take advantage of it.

Then when the book goes out of print, the author can keep it alive and drop the price to $1.99 if he wants to try and milk it for a bit more - and all that extra money would be gravy.

publishers just need to make sure that eBooks don't cannibalize sales, and there are a number of options to ensure that doesn't happen.

Cam Snow said...

one more thought, and this is a HUGE idea.

Publishers should give in on the $9.99 price that Amazon wants...

but they should only do so with the requirement that there are NO MORE RETURNS from the stores that offer that pricepoint.

So, small booksellers could do returns, but your Amazon, B&N, Borders, etc - anyone offering eBooks, could not.

Booya! Crisis solved!

beth said...

Here's what I think.

1) An ebook should cost $10 less than a hardcover

...until the paper back release. Then:

2) The ebook should cost between $1-$3 less than the paperback.

Ideally? You could get a free ebook version of a book when you buy the hardcover, or pay a few dollar less than the paperback for the ebook.

I really really really think that's a good plan, but...

Katya said...

I can resell a regular book.
I can lend a regular book to all my friends and relatives.
My regular book will work on any bookshelf I own.
5 years from now I will still be able to pick up my regular book from my shelf and read it.

Until e-books can promise me the same flexibility and longevity they should be considerably cheaper.

Peter Dudley said...

Paying the author, marketing and publicity, editorial, sales, production, overhead, accounting, etc. These are fixed costs that exist whether it's a print book or an e-book.

Not sure I entirely buy into that. I'm fuzzy on the nuances of this business, but in general I understand these functions.

Paying the author: that one I can support.

Sales: In a culture driven by user ratings and brand strength, sales becomes marginalized.

Production: OK, ebooks require some design work, particularly when we incorporate mixed media. But with sophisticated templates there will be little need for layout and design, no need at all for production planners and press checks, logistics and shipping, or warehousing. While the printing/binding cost of the book may be $2, the cost of "production" is, I would bet, much higher than your $4 estimate.

Overhead: A ha! Here's a squishy area. What about all the administrative people that are in the production planning, returns processing, sales support, etc. jobs? I guarantee they're not part of the $2/$4 noted above. And as a retailer or author, I'd want to know exactly what constitutes "overhead." And for ebooks, is it really that critical to locate the publishing office in thesecond most expensive office space market in the country?

Accounting: While the cost of accounting does go down with the complexity of production and overhead, this one is pretty fixed.

Editorial: Probably the only actual value added to the product by publishers. As an author, though, I've had it drilled into me that the editors won't even consider a book unless it's so polished that it shines brighter than the sun. Does a book REALLY sell better because of the editorial process? Or is the editorial process only one factor among many? A nice rhetorical position for publishers to be in because no one will ever know.

Marketing and publicity: Publishers think their value is in design, editorial, and production. But really their value is in marketing, sales, and brand strength. Sales, I argue, becomes moot. Brand strength--uh oh. Publishers don't have consumer brands; they have wholesale brands known by the distributors and retailers. Retailers have the consumer brands. Marketing and publicity--for the past several years publishers have been pushing the responsibility of publicity onto the author. In fact, the authors themselves have become the main consumer brands; check out airport bookstore shelves. Whose name is printed biggest? Not the publisher.

Fast forward a few years: Authors can easily drop their work into templates and get a reasonable quality product into e-distribution for next to nothing. But so can every Jose and Jannike from here to Minsk. So consumers rely on trusted brands to put what they want in front of them: word of mouth and consumer ratings; their favorite celebrities and media--Oprah, NYT, FOX, Amazon; non-traditional outlets (Starbucks).

Publishers think that they find, make, and sell books. That e-books are just a new format and the right pricing model will solve everything. They're wrong. They are in the business of filtering art so only the most worthy product reaches the masses. The internet has already changed everything. Every consumer worth selling to is now in direct economic contact with every author, and both payment and product are electronic.

Consumers have more choice, but they also have more crap to sift through. Authors have direct access to markets, but it may be harder to rise above the noise than it was to rise above the slush pile. Bookmakers will go out of business. Content filterers, publicists, and consumer brand outlets are positioned to become the new distribution model. But instead of distributing products to consumers, they're distributing consumers to creators. The balance of power stays with the middleman; it's just a redefinition of the middleman's job.

Anonymous said...

eBook pricing should be mutually exclusive of hardcover and paperback pricing. The products are very different.

An eBook should all ways cost less than a paperback book. The eBook is crippled with DRM, cannot be resold, and cannot be shared with others.

The resale aspect is huge. If I buy a discounted hardcover book for $13, and I can later resell the book for $5, then I'm out of pocket only $8. And this is for a hardcover book. I would expect to get less back for paperback.

I think publishers are really trying to maintain a dying business model. These publishers have excessive overhead due to: being located in New York City, owning or leasing warehouse facilities for books, and having high payrolls due to location. I don't see how these overheads can be maintained into the future. And as a customer of eBooks, I don't think I should have to pay for the upkeep of an outdated business model.

If you take into consideration resale, DRM, and the inability to lend, then the price of an eBook should be around $2-3 dollars. If you remove DRM, then the price could fall around $5. Publishers need to figure out how to reduce prices or be faced with piracy and market forces. The future is going to get nasty really fast.

All because publishers want to raise prices doesn't mean consumers will pay for them. I think, the skew toward higher prices here is due to the audience being authors who have their fingers crossed as to their previously negotiated contracts.

Now here's a big question:

* can authors re-negotiate their contracts post this pricing war mess? Or do they just get screwed when demand drops due to a 30-50% price hike?

Anonymous said...

You should've used a continuous variable. You lose information categorizing.

Wildheit said...

No e-reader, and no e-book experience, but if I would own the copy I would easily pay half the HC price, or I might wait until the book is not so new anymore and pay less (I'm patient enough to let the hardcover pass me by). If I'm just sort of loaning the e-copy, then even $10 is way too much.

I used to work for a small scale, Belgian distributor, so I have some experience in the book-selling world. We either bought stock or worked on commission, mostly non-fiction titles. Depending on the publisher and contract, we had a discount of somewhere between 35% and 60% on the list price (after VAT deduction). Bookstores got somewhere between 10% to 50% from us, depending on their profile (large surface stores got around 35% for default), history, return options, special actions...

All the discussions I've seen on the pricing issues thus far concentrate on the publisher's right or wrong.
But I wonder why so many people find it abnormal for a publisher to ask $14 for a so-called easy, click-of-a-mouse-button e-book, and nobody finds it strange that Amazon should get $4,2 of that for managing virtual, just as easy click-of-a-mouse-button sales.
Of course there are costs to e-sales, but digital storage and bandwidth a month is still a hell of a lot cheaper that physical storage and the manual labor involved in getting a book in a box and to a store.

Cam Snow said...

I just had another quick thought:

One thing that publishers could start doing is hyping their own websites to bring readers to them. This would allow them to not only cut out the e-tailers (and retailers), but it would allow them better price control.

Right now Penguin USA has ebookson sale for $2.99 to $27.95 - but why charge that high price? Since they have cut out the retailers 50%, the could charge 1/2 that, and still turn the same profit!

Personally, I don't see why the publishers don't team up, and start a new internet site, and then stop selling books to Amazon!

CherryRed said...

Businesses evolve inline with society (or the other way around). If huge publishing houses are doomed, they will die a natural death. Regardless of them stamping their feet at this point in time.

Upping the price of e-books and at the same time lowering their own profit on individual books... that is a short term business strategy. It ultimately only insures that, for the meantime, consumers pay more.

Books are creative art - and should get priced accordingly. No flat rate will ever work.

E-books will never have the same value as an actual printed book. Printed books won't disappear in some rights debate (can you imagine a book shop owner comming to your house "Terribly sorry looks like I didn't have full rights to sell you that book, can I have it back?"). The answer is no.

You can loan out a printed book to friends and family, you can prop up a table leg, throw them at your spouse during an arguement and use them as fuel for fires during Apocalyptic events.

jongibbs said...

$5-$10 for me, though I don't know much about E-Books.

Anonymous said...

Nathan-

I wish you'd also talk about this side of it because it's maybe the most dangerous part for big publishing if you ask me:

All this bickering is over how big publishers need to raise prices to cover their costs and keep profits-esp on new releases. Costs we know are bloated. Sorry, but they are.

Common sense says publishers should be focused on lowering costs instead, right? To keep prices at a consumer-friendly level.

Sure. And you already have people like Jane Friedman/Open Road thinking about just that. In the wings. Buying up backlist titles. Planning to outsource many of those costs. Because that's how you keep costs down and increase profits-letting others eat them so you don't have to.

That's how Konrath does so well on his titles. They're either his originals or the rights have reverted. Those costs-already eaten. He, the author, keeps all the profit. No splits with editor or agent.

And what happens when a huge author-pretend a Patterson-makes a deal with Amazon or B&N to publish directly through them? Because it's just a matter of time.

All the attention and bickering seems to be on the wrong issues here. There's people on the sidelines waiting for the giants to fall. Shouldn't publishing be considering that too? Shouldn't we be talking about that?

Kathryn Magendie said...

Those poll numbers, so far, are interesting. 50% in the 10- $14.99 range (isn't that the Macm range?) but 4% thought e-books should cost near as much as the hardcover.

Will be interested to see where this informal poll goes.

Just thinking - those electronic readers aren't cheap - so you buy an expensive reader but expect the books to be really cheap - just a flash of a thought I haven't really thought thru too much, but anyway, maybe it's already been pointed out and talked about and I'm way behind.

Kathryn Magendie said...

Those poll numbers, so far, are interesting. 50% in the 10- $14.99 range (isn't that the Macm range?) but 4% thought e-books should cost near as much as the hardcover.

Will be interested to see where this informal poll goes.

Just thinking - those electronic readers aren't cheap - so you buy an expensive reader but expect the books to be really cheap - just a flash of a thought I haven't really thought thru too much, but anyway, maybe it's already been pointed out and talked about and I'm way behind.

Anonymous said...

If it only costs publishers $2.00 to provide me with a brick of bleached tree pulp, smothered in glue and ink, then we have deeper problems than are currently being discussed. Apparently publishers have already been busy externalizing their costs.

Anonymous said...

So I spent part of the morning perusing e-publishers, Samhain, Bookstrand, etc. and I was surprised. Most ebooks were 5.99 or lower.

Now, I didn't click every title on every site. But it's fascinating. They're in business and seem to be doing well (if the boards are to be believed).

Their costs are lower, obviously-no major league authors, they seem to outsource editing, etc, most are no advance, yes? But they're doing it and seem to be doing it well.

Joe Konrath said...

Voting on a poll is one thing. Voting with your wallet is another.

I was discussing this on another thread, and someone said something that resonated with me.

"Shouldn't the value of a book be the royalties it earns?"

I've shown that profit is higher with lower cost ebooks. My royalty for trunk novels I've put up without NY Publishing behind them have earned more than the average advance a new print author gets.

Ebooks will go down in price, just like digital music did. Publishers can get in on the action, or get cut out of the action.

It shocks me how many authors are rejoicing Macmillan's victory, when they're going to sell fewer books as a result.

Crunch the numbers. A $14.99 Macmillan book ($10.50 cost to Amazon, the retailer) will earn an author 20% of that wholesale cost: $2.10.

A self published author, using the new Amazon royalty scheme, will earn $1.94 for each $2.99 ebook sold.

Paperbacks outsell hardcovers. Consumers want cheaper.

I bet I sell more $2.99 books than Macmillan authors sell $14.99 books.

And here's the funny thing. Publishers DO experiment with cheaper ebooks. My publisher, Grand Central, debuted my horror novel AFRAID on Kindle and Sony at $1.99. I sold 10,000 copies in a month.

You're an agent, Nathan. You read royalty statements. How many of your clients have sold 10,000 ebooks in a month?

Right now, NY Publishing is fighting to protect print, and pricing ebooks high to preserve the status quo.

But change will come. Ebooks will take off, in a big way.

And both publishers, and agents, need to figure out how to be relevant when this happens...

Joe Konrath said...

And with consumers, you have to meet their value, not ask them to meet ours.

@Bradley - Stop it! You're making too much sense! I'm the only Cassandra allowed in this biz. ;)

Marla Taviano said...

I'm selfishly torn. As an author, I want them to cost more. As a consumer, less.

Speaking of e-books, here's something fun--my husband @GodsMac "invented" an iPad that will please even the oldest-school book-lovers. http://bit.ly/aTNeZ2

Karen said...

I agree with those who say the e-books are here to stay, but I also agree that consumers will drive the cost. Consumers always want to pay less -- they don't care about being "educated" on the costs of production, what the author makes, etc. If someone figures out how to get e-books to the consumer for less, the consumers will move in that direction. Meanwhile, I STILL haven't plunked down the bucks for an e-reader myself, because of all of this volatility.

Anonymous said...

Just out of curiosity, how much money can you really get by selling a book to a used bookstore?

Anonymous said...

"Just out of curiosity, how much money can you really get by selling a book to a used bookstore?"

Not enough for me to pay for the gas to get to the used bookstore and back.

Anonymous said...

@Anon 7:09 a.m.:

My thoughts exactly.

I've just seen so much foot-stomping from folks who are all outraged that they can't re-sell their ebooks to used bookstores that I was convinced we must be talking about zillions upon zillions of dollars.

Madara said...

I am really looking forward to getting a real ebook reader. I have an iPod Touch, but the screen is rather small.

Most of the fiction my wife and I read are one offs and then sell for a quarter in a garage sale.

To me $9.99-$14.99 is a very reasonable price for a consumer, but maybe not for an author.

To avoid clutter I would love to read novels and even comic books and graphic novels on the iPad. Comics are not a collectible anymore. I have a closet full of comics I accumulated over the years. I hope Marvel and DC are smart enough to get on the iPad bandwagon early.

Anonymous said...

I guess I just don't get all the angst over the pricing of an ebook versus a hardcover.

I buy the books I want to read because I'm interested in the content and the writing, not the price or the packaging. To me, the advantage of my Kindle is that I can get pretty much any book I want, whenever I want it, and consume it at my leisure wherever I happen to be (if I'm traveling and decide on a whim to re-read "The Stand" I don't have to fly home and grab it off my bookshelf). Convenience and accessibility more than offset any of the "downsides" of ebooks I've seen debated here and elsewhere - in fact, to me, convenience and accessibility are worth a premium.

I don't care about the feel of the paper, the smell of the ink, reading in the bathtub, or any of that crap. I'm not worried about "losing" my ebooks because I back them up on my computer and on an external hard drive. If I want a friend or family member to read something I like, I say, "Hey, this was a really good book; you should go buy it" or else, if I'm feeling benevolent, I'll buy it for them, either in hardcover or via an online gift card. And, as noted above, whatever small sum I might be able to get for re-selling a book would not, in my experience anyway, be worth the hassle involved.

Anonymous said...

So I spent part of the morning perusing e-publishers, Samhain, Bookstrand, etc. and I was surprised. Most ebooks were 5.99 or lower.

Now, I didn't click every title on every site. But it's fascinating. They're in business and seem to be doing well (if the boards are to be believed).

Their costs are lower, obviously-no major league authors, they seem to outsource editing, etc, most are no advance, yes? But they're doing it and seem to be doing it well.

February 3, 2010 5:57 AM

It's genre fiction. The writers work faster, producing up to a dozen novels a year, and the readers and fans are voracious and serious, reading five or six books a week. It comes in volume, repeatedly.

And, many of the authors are career writers with credits that include NYT best sellers. They use pen names for this, and create completely different online identities to promote their other books. It's also very aggressive and competitive.

The publishing world is layered, and e-publishers like the ones you've mentioned are working hard to build inventory that's going to be around for a long time. And, the numbers continue to increase.

Scath said...

Haven't read through all the comments yet, but Amazon does allow publishers to make ebooks DRM free.

Seems to be a very recent development. I just noticed it last week while making a change to one of my ebooks distributed there.

Mira said...

J. Konrath - great post, thanks.

I agree.

I also think that publishing and bookselling functions will be combined.

At base, what you really need is an author, a reader and a way to get the book to the reader.

Amazon is a publisher/bookseller at this point. If traditional publishing doesn't find a way to become a bookseller, they'll most likely end up merging with Amazon or something like Amazon at some point. Which might look like monopoly, except the upcoming model may make it easier for independents to enter the market more seriously.

Including independent authors. It may actually become possible, especially if piracy software is improved, for an author to e-mail thier work directly to a reader.

Malia Sutton said...

"If you're worried about your e-book disappearing all you have to do is put it on your computer. They can't delete it from there. How does a file on your computer not actually belong to you?"

Thank you, Nathan. I didn't have the energy last night.

Selestial said...

Too many comments for me to read through them all (I have writing to do). I want to use the music comparison for a minute. In general, if I go to the store, I can pick up a CD at $15.00 regular price. There may be sales that knock it lower on occasion, but that is the base price until said CD hits the bargain bin. If I go to iTunes, I'm paying $1.29 per track. Grabbing a handful of CDs, I checked the number of tracks: 10-16 grabbed at random. On average probably 12. 12 X $1.29 = $15.48.

That means music (which is a common comp tool) costs, at best, the same digitally as it does on CD. People don't balk at those prices.

Yes, books are different. Unless we start selling books by the chapter, you can't buy part of a book to "test" a new author. But that isn't the issue here, the issue is cost.

Publishers need to make back the money they spend on making a book. If they don't do that AND earn more, they can't produce more books. When they produce a book in hardcover, they expect to make back a big chunk of change selling those at $25.00 each. Sure, there are sometimes discounts, but I've never seen a best seller go below 40% off (and non-bestsellers don't even go that cheap). So at 40% off, it's still a $15.00 book. The same as the proposed price of an e-book released at the same time as a hardcover (bestseller or not).

People don't want windowing. They want to be able to buy the book the day it comes out. Peachy. Then pay for what it's worth.

As far as I understand it, the proposed model lowers the cost of the e-book over time until (probably coinciding with MMPB release) the price drops below that of a MMPB.

For those of us who are aspiring authors, and those who want to keep seeing debut authors, publishers need to keep making money on books or they will cut down (even more) on the risky acquisitions. That means debut authors.

I'm willing to pay to keep my reading options open.

Donna said...

An ebook should cost what a traditionally published book costs, within a few dollars. (And sure, take into account the common discounts being offered. If a new title is being sold in B&N and Borders at 30% off, then the ebook should be discounted, too.) The price should follow the change in price from hardcover to paperback.

To have a huge price difference between the two will only cannibalize the print book business, similar to what happened to Levi Strauss Co. when it started a new low-priced line for sale in WalMart. Its line of quality (and higher priced) jeans died -- killed by competition from its own company! When that happens, you no longer have a choice between two products; you're just left with the cheaper and inferior product. Macmillan's stand was correct and far-sighted (to take Ink's wording).

Lest anyone take offense at the idea that ebooks are inferior, well, for a book that you value and want to keep, it IS inferior. If you just want to read something, and you don't want to store it afterward, then an ebook is great -- a valuable option. But if you value the book itself as well, as a physical work of art, then an ebook is nothing. And I do value some books as attractive physical works of art, as well as literature.

Anonymous said...

Selestial said: Yes, books are different. Unless we start selling books by the chapter, you can't buy part of a book to "test" a new author.

You don't need to buy chapters. Excerpts are already offered for free. For example,Amazon allows you to download samples (chapters) of a book for free. Then you can decide whether you enjoyed it enough to purchase the remainder.

Natasha Fondren said...

Just in case it's possible we might be a little biased in our poll, here's one from what strikes me as more likely our target market:

How Much Would You Pay For an Ebook?

Selestial said...

Re: Anon 2:55

I know and agree, but that's part of what I find so infuriating about people not just wanting but expecting super cheap e-books. You have the option to test-drive the book. I don't understand the logic that spending the money on an e-reader (which I have) means you somehow deserve to pay markedly less than the person buying the book at a brick and mortar store.

Edward G. Talbot said...

I couldn't read all 179 comments, so someone may have pointed this out, but I have one quibble. I think you're suggesting that the cover price should be $17.00 if you are using $25 as a comparison price. Given the recent trigger for this discussion, I'd say that is a key point. It doesn't seem unreasonable to me for the first 3 months or so of an e-book's life. That means that most buyers will probably get the book for somewhere between $10 and $15.

As much as some readers and publishers are making this about how much people "will pay" for ebooks (as if they or anyone knows), the Macmillan/Amazon squabble is really all about two entities trying to use market share to gain an advantage. Both Amazon and Macmillan are saying "throw away the model we use for hardcover." Which is fine, but it makes discussions based on the existing model less relevant.

FWIW, I suspect that most readers don't care about DRM and the fact that they are essentially renting the book not owning it. I actually think the biggest perceived loss of value for the average buyer will be the inability to share the book as they can with a physical one. And I don't see one company forcing a standard as happened with Itunes. All this tells me that we are far, far from having any idea what "people will pay" for an ebook.

Beryl Hall Bray said...

I appreciate Karen Wester Newton's comment regarding authors. If author's aren't adequately compensated, where are the 'cheaper' books going to come from? Uh, let's aim that comment at quality writing. Why don't we add editors and agents to this consideration?

Authors, agents, and freelance editors are much like the key, ignition, and gas pedal in a vehicle. Without them, not much point in having that shiny vehicle in the driveway.

Anonymous said...

Great link to other poll, Natasha. Fascinating (not really, sorry Nathan) that the $5-10 range is way ahead-the flip of Nathan's poll results.

It's rather what I feared when actual consumers were asked.

Anon 2:55 said...

Selestial said:

I know and agree, but that's part of what I find so infuriating about people not just wanting but expecting super cheap e-books. You have the option to test-drive the book. I don't understand the logic that spending the money on an e-reader (which I have) means you somehow deserve to pay markedly less than the person buying the book at a brick and mortar store.

I don't agree that's why they think e-books aren't worth more than $9.99, though. It's irrelevant what price they paid for their e-reader or if they enjoyed the sample.

I think consumers place a value on e-books based on their own personal beliefs, not what e-reader they use and its price tag. And most consumers just don't place a high value on them. There not physical objects, they can't lend or handle them, etc. In their mind, it's just not worth the same amt. Regardless of what device they load it on.

Trust me. Consumers will still balk at the prices even after e-reader prices drop to $100 and below.

Anon 2:55 said...

And remember, Selestial. Those book prices are what they are because of bloated costs-in-house editors, etc. E-pubs offer lower prices because they've reduced those costs.

Consumers don't care about Big Publishing's costs. They don't want to cover them through higher price tags. They want cheap.

Look at Walmart. Consumers are more than willing to look away from the how of how they keep costs low just so they can have the cheap.

Nathan Bransford said...

anon-

I don't really agree that "big publishing" has bloated in house costs. There have been some pretty ruthless cutbacks and everyone is doing more with less. In-house editors are not simply a luxury, they're project managers that oversee the entire projects.

That said, I completely agree that consumers don't care about all that. And if the average reader can't tell the difference between a Random House book and a self-published book and if readers don't continue to gravitate to the established brands, publishers are going to have a serious problem on their hands.

Anonymous said...

It isn't as simple as that; not all eBooks are created equal. Offerings from some companies will have richer fonts, some truetype fonts, etc. Some give you the book open to the first page (Kindle) some give you the book with the cover showing. All in all, I would say an eBook should be between 5 and 10 dollars, depending on the richness of the reading experience. I suppose fonts are big part of this for me.

Anonymous said...

@Nathan:

Having the big publishers located in NYC has to increase their facility expenses and their payrolls. I'm sure if they were located in an area with a lower cost of living, their expense base would be lower.

My girlfriend rarely looks at who the publisher is for any book she buys, so I'm not sure how much brand value exists today. If I were to randomly ask people about who the publisher is for any book they were reading, I doubt most people would answer correctly. One exception would be Harlequin. This is definitely a problem that is being overlooked.

John C said...

I'm an IT guy so I'm naturally inclined to go with high-tech stuff. But in all my research into e-readers, none of them have all of what I want. Kindle seems to be one of the best except for the DRM and format restrictions. Sony's readers seem to have very basic yet fatal flaws such as screen glare.

The iPad (all hygiene jokes aside) seems interesting if not too large for the purpose.

So I've found myself researched out and e-reader-less.

For the e-reader-philes out there, any suggestions? If you're a fanboi, please state that in advance so I can discount your opinion by 12.3%.

It would be rather interesting for other big names to enter the book publishing biz, perhaps in a bid to streamline things. Apple would not be unwelcome in my book although I've never purchased a thing from iTunes.

I do, however, have an iPhone (which I never use) and a Motorola Droid (which I DO use).

Nathan Bransford said...

anon-

Trust me, the payrolls are not inflated just because they're in NYC. They're not paying NYC salaries.

I don't know about the rent, but I'm willing to bet that the benefit of drawing upon a pool of local talent far outweighs the expense of having office space in NYC.

Susan Quinn said...

If Stephen King is right, the price is not in $$ but in our very souls! :)

Now available on Kindle: UR, by Stephen King

Thank you for the irony dose, Mr. King!

Claudia said...

Look. People are either readers or they're not. E-readers and e-books are not going to invent a market for books out of thin air. And people who read either spend money on books or they don't. Some people say they would only buy one-off reads (ie trash) with an e-reader, but others would want print for that, because those kinds of books ARE the ones you're going to take in the tub, to the beach, etc. Whatever. The point is not what consumers WANT to pay, or SAY they will pay, but what they DO pay. If they wouldn't buy an e-book at x price but would buy a paperback at that price, who cares? The market will figure itself out. In the meantime, publishers should try to get as much as they can for ebooks and see what the market will actually bear before they decide in a vacuum what consumers will or will not pay. The only feedback that matters is the feedback at the cash register.

Meanwhile, it's good to remember that this format was not driven by consumer demand in the first place. Technology providers created ereaders, then marketed them. Readers didn't say, hey we want this. Readers are nonetheless seeing benefits in the e-format, but I'd say it's still a pretty wide gap and if Amazon et al force publishers to an all-e model, many consumers will be severely bummed. It's kind of like the switch to CDs...consumers were mostly going HUH? We were all fine with records and tapes. CDs had some benefits, but we lost some benefits, too, and we probably didn't need the hassle of switching over. It was a forced switch, not something consumers demanded. I think there's a little more organic interest in e-readers, but it's still an industry-driven change and it's kind of funny that it's likely to bite the industry on the ass (via piracy etc).

But in the end, I'm not buying ANY of the arguments that readers are that influenced by price. Well, I guess there's probably an upper limit, and that's why textbooks are suffering. But what's afflicting reading as a pasttime is not price.

Nathan Bransford said...

claudia-

Wait, consumers didn't drive the switch to CD? How was that forced on anyone?

And I don't know what industry is driving people to switch to e-books. No consumer is being forced to do anything. People are making the switch because they like e-books. It's not as if anyone lacks for access to paper books.

Claudia said...

Hi Nathan,

Please don't take me too literally. No one held a gun to anyone's head with CDs (you might be too young to remember all this :) ) but it wasn't as if people were sitting around thinking, hey albums and tapes suck, we want a different way to consume music. We'd like to get rid of all this really cool artwork, and these great liner notes, and the holistic experience of the album (go hear Sherman Alexie speak on this if you get a chance :)--he interrupts midway to speak to say to GenY "you don't have any idea what the HELL I'm talking about, do you?"), and instead we want to have gross little squares of plastic that are always falling apart scattered all over our houses. The industry found CDs more cost effective and it *phased out* CDs. You didn't have the chance to vote with your dollar because there were no more records to buy. Which is what will happen with books.

Anyway, point being that it becomes less about what consumers want and offering them choices as about the margins. If there are books on one hand and e-books on the other, and the analystis think they can make more money on e-books, that's where they will go, no matter what the consumers want to buy. Perhaps there will be limited-edition print runs, just as there are some albums still released on vinyl, but it won't be a choice in the way it is today.

I think you're right, people do like e-readers, and for right now it's great to have the option. But for most people the reading experience wasn't broken in the first place. We probably all would have been fine if this had never come up. When we no longer have a choice, taking a bath WILL be pretty boring. I guess we'll just have to get a lot more Zen about it. And if the New Yorker is delivered only digitally, I'll be constipated for life. :D

Though maybe there is still hope. For all the hype on this topic, I must say that when I fly I see NO ONE using an e-reader and TONS of people reading actual books, and a friend who flies to Asia every month says the same thing.

Oh, and to answer your question about what I'd pay, the point of the e-reader it seems to me is instant gratification and convenience, rather than book price. CDs aren't cheaper than albums were, and as someone pointed out already, neither are single-song downloads. People are, I guess, into iPods because of the convenience and the shuffle thing and the uninterrupted listening (it sure isn't the sound quality--the actual *music* part is apparently irrelevant). So, being contrarian once again, I *think* I might actually be most likely to use an e-reader for new-release books that I didn't feel like waiting for but were not what I'd want to keep around. For example, I just bought and hated Barbara Kingsolver's The Lacuna. I donated it to the library a week after I bought it because it wasn't worth the shelf space, which I'm running out of. Perfect e-reader candidate, and why shouldn't I pay as much as I was going to anyway? So, full hardcover price.

But doesn't this all seem as though it's all part of a trend toward an overall cheapening of experience? Ipods are for people who aren't really very serious about the listening experience (because if you hook them up to a good stereo, you realize how bad they sound), e-readers for those not very serious about serious reading, digital cameras, ditto, and that's all fine except that this technology ends up *supplanting* the good stuff. So those of us who do care are just left outside of it all unless we're rich enough to pay for what we want... oh shit, I sound like Salinger.

But my fear is that if an e-book became the ONLY choice, I actually won't be *able* to read, because the only time in my day just isn't suited to the e-reader format. And THAT means I won't be able to fall asleep at all, so I'll just be lying in there in the dark...

Speaking of which, time to get to it.

Claudia said...

PS (still working) I don't mean to suggest that "the industry" is this monolithic thing that thinks and makes decisions. Still, people come up with ideas and then create demand for them, rather than the other way around, more often than not, no matter what myths we were taught about the marketplace and capitalism in school. I've spent years developing marketing strategy and content for technology companies...

Anonymous said...

Our 26 year old daughter is a voracious reader connected to a huge social network of readers. She (they) also shops around for book prices.
When she can get the paperback version of The Lightning Thief for $7.99 at Target, THAT is what she wants to pay for the paperback. She would only consider an e-reader if it was free and if she could get the book for half the price of the paperback or less.
The only person I personally know with an e-reader is a fairly well off professional software designer in his forties. He loves it. And he is a voracious reader too. But he reads more quirky stuff. My daughter and her age group are STRONG YA readers.

Anonymous said...

I just looked it up and the Lightning Thief on Kindle is $6.39 currently.

Anonymous said...

If someone bought thirty books a year and a Kindle lasts 2 years, (assuming by then it will be obsolete, if not dropped in the bathtub or stolen or something) they would be paying $4.17 extra, per title, to cover the cost of the Kindle. That puts an average 9.99 book up to $14.10 on Kindle.
Even the 6.39 versions + 4.17 = 10.56 each.

It makes a young person on a budget who wants books, go to the library, borrow and trade, or shop Target.
The books that sell between 2.00 and 4.00 as e-books and/or a free reader and e-books no higher than $5.00 might get that (VERY Important target group of YA readers) to cross over.

Anonymous said...

Just an observation I thought I'd add -though not scientific:

In high school, with parents who buy books, a boy/girl (who can devour a book in a sitting) gets 4 books a month (3 at 12.99 and 1 at 25.00).


Over two years, the parents spend approx $1,536. on 96 current books.
--

After High School, on a meager student budget (i.e. their parents aren't buying the books anymore) the same kid goes on to buy 2 books a month at 7.99 each and borrow/trade for the other 2 books a month.

Over two years they spend approx. $384. on 48 books they had to wait to buy until the price came down.

--

If they buy an e-reader, they can buy 2 books a month at 2.99 and 2 books a month at 5.00 and go back to buying 4 books a month.

They are spending 360. over two years on books. They are buying 96 books again and probably considering new/less known/unknown authors in the cheaper ranges as well as favorites that have finally hit e-book affordability.

But with the e-reader (250.00 model) they are spending
$610. over two years.

--

I would think the goal of authors and publishers would be to keep the reader reading books that they can afford and will pay for. Authors don't make money on the e-readers unless their books sell.

Terry S said...

I don't know how much I would pay for an ebook, because I've never bought one. The only ebooks on my hard drive have been free. And I don't have a Kindle either -- for about $100 more, I got a full-color netbook that has Windows XP Home and is not a one-trick pony.

As far as paper books are concerned, the local libraries have a nice stock of those, and the only cost is the annual membership fee (if any) and the gas to drive there and back. The only hardbacks I buy, I get at used-book stores or garage sales, or by swapping them at my book club. Ditto for paperbacks.

But then, I've never been one who was addicted to having the "latest and greatest" of anything. I can wait until prices go down or the book shows up at the used-book stores or garage sales.

Now, I'm talking about mind candy - books for recreation.

When it comes to art books or reference works, it's a different story, and I've been known to pay quite high prices for those. And if those were available as ebooks, I'd probably be willing to pay quite a hefty amount too, especially for reference works, but that's because in this case the electronic edition would actually have benefits that aren’t available with a paper edition, such as being able to instantly search the text and surf from one hit to another, annotate the text and then export those notes, do non-destructive highlighting and bookmarking (i.e., dog-earing)... With this type of book, I do feel I get value by buying the electronic edition.

Granted, with mind candy I also get some value, as far as portability and easy storage that doesn’t clutter up my living space, but so far I haven’t seen any prices that were attractive enough for me to actually shell out money for them. They’d have to cost less than what I pay for paperbacks at used-book stores and garage sales - that’s the real yardstick, not the price of the just-released hard back!

sonia said...

I disagree with whoever said that mass market paperbacks are not the usual format. They are; the only books published in hardcover are the books publisher expects will do well, ones that are already bestsellers at publication (through pre-orders, I assume) or ones they think will become bestsellers. New writers and plenty of middle list are never published in hardcover first. Those are priced at 7.99. Quite often, they are cheaper. The Kindle version (Nook version as well) of those books are 6.39. It's not a huge difference, not really enough to explain the difference in production/warehouse/return costs, I don't think.

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