My wife is going nuts (ebook pricing)

Medievalist said:

If people want quality they'll pay for it.

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Not if they can get "quality" elsewhere for less than a particular provider wants to charge for it, or for free. Encyclopedia Britannica is a quality encyclopedia, but people aren't willing to pay for it anymore because they can get the same, quality information for free.

Likewise, if readers (a declining population, to be sure) can't find quality ebooks for less than $12.99 or whatever, then there's no problem and the whistling I hear isn't actually in the vicinity of a graveyard.

I'm fairly certain that the last I heard, book sales have increased over the past several years.

I'm not sure where the rumors that readers are an endangered species comes from, but the sales data doesn't seem to support it.

kaitie said:

But even if the price varies, the point is still (unless you can provide links otherwise) that ebooks don't cost vastly less than print books to produce, which is what many readers seem to think. Thus, if a reader thinks a book should cost no more than $2.00, that price point isn't realistic for the publisher if it doesn't cover costs.

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You're asking me to find a source from a publishing insider, on record as saying that publishers are charging too much for ebooks? I'll get right on that. But, here's a good article that sums things up nicely, including a bit of what we're seeing here already, the claim that the new delivery method (digital) must conform to and cover expenses for their legacy business model.

I've shown the math above. None of the industry people have refuted the numbers I've provided, only sidestepped the issue, and vaguely mentioned other costs as necessary when they aren't. It comes down to three things: Printing costs, royalties, and the distribution cut. All other costs are universal, or near enough for the sake of argument. The numbers speak for themselves.

Amazon has made a concerted effort to sell ebooks cheaply, even at a loss, in order to encourage readers to only buy ebooks from Amazon. They've also done the opposite. When they feel a publisher charges too much, they've lowered the costs of hardcovers to less than the ebook precisely to rile up readers to put pressure on publishers for lower prices--prices that only Amazon can sustain because they have enough money coming in from other sales to avoid losing in the short-run. The goal is to make readers expect ebooks to cost less so that publishers are pushed to cut costs and go under or keep costs higher (at which point Amazon still wins because they get the customers). And it's working.

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A business that will say or do anything to get ahead, weaken its competition, and stay in business? What's the world coming to. I agree, they're asshats in the way they're squeezing people out of business. But don't lay customers expectation of lower prices for digital content squarely at the feet of Amazon.

Customers aren't stupid. Any business who treats their customers like they're idiots deserves to fail. This isn't a hard issue to understand. It costs money to manufacture a product, the same product without those manufacturing costs should cost less. Print vs digital. Yes, there are still manufacturing costs involved (the universal costs I've mentioned), but their are unique costs to printing that digital simply doesn't have a corollary for. And yet publishers want to price digital at the same point as print and are boggled by customers' resistance.

You're talking about the use of a scarcity pricing model applied to a post-scarcity product. It doesn't work. The customers aren't stupid enough to believe it. And publishers are scared shitless.

Nathan Bransford did a couple of surveys only a year apart, and you can see a marked difference in the prices that customers expected. A couple of years ago, readers wouldn't have cared about a 9 or 10 dollar ebook. Now that's viewed as too high by the majority. I'm sure the glut of self-published books that are being sold for a dollar or two have helped. Even if a reader doesn't read those books, it does make you say, "Why should I pay $10? This other book is only $1."

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Welcome to capitalism. This is how you have second hand bookstores, the first-sale doctrine, and customers pissed about no corollary with digital. Why should the customer pay $10 for a $1 book? They shouldn't unless they want to. The market will only bear what customers are willing to pay.

Publishers raise digital prices, sales drop off, but customers still want their digital content so piracy increases. Print prices continue to creep up, sales taper off, and publishers panic and try to find somewhere to make extra revenue. Compared to print books, digital books have a huge profit margin so pubs increase digital prices... sales drop off...

But here's Neil Gaiman on digital piracy and print sales.

GregB said:

I'm sure that's comforting to unemployed newspaper and magazine journalists, film and food critics, and encyclopedia writers.

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Different story altogether. When they started giving away their content (and bargeloads of it) for free on the internet, that's when people started thinking they shouldn't have to pay for information.

Fiction and non-fiction have very different troubles with the internet.

Old Hack said:

Big publishers are often criticised for being slow to adapt to new technology (when often they're no slower than anyone else, because as this thread shows much of what they do isn't understood by people without publishing experience, and it happens behind-scenes); then when they do use it, and use it properly (by which I mean they spend money to put out the best books they can, in the way they think their readers will most enjoy them), they're criticised for overpricing their books I have no doubt they'll adapt and find ways to resolve this, because adapting is what publishing does: change is the only constant I've seen in my years at the coal-face. But I am getting very weary of seeing writers unfairly directing their anger at trade publishing, instead of learning why things are as they are.

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But Mike Shatzkin says "Trade publishing has historically been one of the least efficient businesses in existence." I'd link to his post, but his site today is setting off my anti-virus. I suspect something happened to it.

This BusinessWeek article supports his statement. It's basically about how Amazon wants publishers to switch to PoD at least for slower-moving titles, but publishing won't do it. The reasons given are pretty much "it will change things."

Publishers worry that a widespread shift to print on demand could, like the advent of e-books, disrupt their century-old business model. Companies such as Random House and Simon & Schuster have spent decades investing in their own supply chains, storing books in giant warehouses and developing the transportation infrastructure to ship those volumes to stores within days. If print on demand became widespread, publishers could cut their fixed costs and solve the perennial problem of stores returning unsold books. But that would throw into doubt almost everything else about the way big publishers conduct business, since they’re compensated based on the range of services they provide, from editorial guidance to storage and distribution. Print-on-demand technology would make it harder for the publishers to justify keeping a large majority of a book’s wholesale price.

One of the New York publishing chiefs says that even allowing titles to be printed on demand by Amazon when shortages occur is a bad idea, since it might encourage the company to order fewer printed books.

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Stuff like this adds to the public's idea that big publishers could charge less for ebooks if they just got with the times and didn't try to preserve their old model.

Smaller publishers that have already made the switch away from printing and storing their own books say it’s well worth it. “Instead of putting all those books in a warehouse, you free up cash flow to invest in R&D,”

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Cliffhanger - I don't think anyone is arguing that ebooks shouldn't be priced slightly less than physical books. Yes, publishers currently aren't doing that, and I think most would agree that isn't wise. But is that all you're trying to say? Because no one is saying otherwise. What people are saying is that ebooks aren't so much cheaper to produce that publishers can afford to sell them at the price readers seem to want (ie: 99cents or heck even free).

In general I think that's what's happening in this thread. You think people here are insisting there isn't enough of a price difference to price ebooks cheaper, but that's not what people are saying. People are however being very very clear that there still are costs for creating ebooks, that there isn't a huge difference in cost to produce them, and thus while yes they should be cheaper, we shouldn't utterly devalue books either. I think what's happening here is people are so afraid of books being totally devalued, they are skipping over the bit where they actually say, "I agree, ebooks are cheaper to produce" because the second they say that the assumption is that they are MUCH cheaper to produce.

kaitie said:

I'm fairly certain that the last I heard, book sales have increased over the past several years.

I'm not sure where the rumors that readers are an endangered species comes from, but the sales data doesn't seem to support it.

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According to a July 2011 Harris Poll, from 2010 to 2011:

* The percentage of U.S. adults who purchased zero books increased from 21% to 32%.

* The percentage of U.S. adults who read zero books increased from 9% to 15% (this includes students, btw).

Year-over-year book sales over the past couple years have shown modest growth because (1) the economy was emerging from the worst recession in seventy years, (2) even modest inflation means that total sales will increase even as purchases remain constant, or decline, and (3) the population grows every year.

If you want further statistics on the decline in the percentage of the population who purchase and read creative literature for entertainment, Google will provide you with an abundance of sources. For a longer view of these trends, this article from The New Yorker is a good place to start.

Perks said:

Different story altogether. When they started giving away their content (and bargeloads of it) for free on the internet, that's when people started thinking they shouldn't have to pay for information.

Fiction and non-fiction have very different troubles with the internet.

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Really? I don't know about you, but all of my commercially published books are available for free on the internet. Beyond that, today there are 50,000+ titles available for free in the Kindle store, not counting the thousands of commercially published titles I have access to through my Prime membership. No doubt, many of them suck, but Amazon is very good at only showing me the good ones.

That's today, and obviously fiction hasn't gone as far down that road as have news and general information. Do we believe it will be harder to find great free books next year, or in five years? Do we really believe that these facts will not exert downward pressure on prices in the meantime?

Toothpaste said:

Cliffhanger - I don't think anyone is arguing that ebooks shouldn't be priced slightly less than physical books. Yes, publishers currently aren't doing that, and I think most would agree that isn't wise. But is that all you're trying to say? Because no one is saying otherwise. What people are saying is that ebooks aren't so much cheaper to produce that publishers can afford to sell them at the price readers seem to want (ie: 99cents or heck even free).

In general I think that's what's happening in this thread. You think people here are insisting there isn't enough of a price difference to price ebooks cheaper, but that's not what people are saying. People are however being very very clear that there still are costs for creating ebooks, that there isn't a huge difference in cost to produce them, and thus while yes they should be cheaper, we shouldn't utterly devalue books either. I think what's happening here is people are so afraid of books being totally devalued, they are skipping over the bit where they actually say, "I agree, ebooks are cheaper to produce" because the second they say that the assumption is that they are MUCH cheaper to produce.

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What she said.

GregB said:

Really? I don't know about you, but all of my commercially published books are available for free on the internet.

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How's that?

Oh wait. I think I know what you're talking about. Sorry, brain fade. I don't know if the books I own are available on file-sharing sites.

Perks said:

How's that?

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Here you go -- enjoy! PW says it's "zippy."

GregB said:

Here you go -- enjoy! PW says it's "zippy."

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Oh, you just mean the books you wrote, not the books you own. I see.

Toothpaste said:

People are however being very very clear that there still are costs for creating ebooks, that there isn't a huge difference in cost to produce them...

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One-time, up-front acquisition and development costs are not that much different. Marketing costs are about the same.

But production, storage, and distribution costs--the on-going costs that are a function of in-place facilities and quantities of books produced--are miles apart.

And then there are fixed administrative costs, which will be whatever they have to be. When times are good, you can have a bizjet. But at other times...

It has been argued in the past (not necessarily on AW) that publishers demand higher e-book prices than their costs would justify primarily because they fear that lower prices for essentially the same content would shift consumers in large numbers to the less-expensive product and threaten the publishers' established business model. I don't have links (it was a while back) and, of course, you never hear that argument being made on the record by insiders who would know for sure. Given all that, however, it had a ring of truth.

But savvy corporations, even big ones, adjust to changing times.

One insider, who shall remain unnamed here, an acquisitions editor for a big 6 company, and one with as many years in the business as anyone I know, tells me that the shift to digital and POD is inevitable, and that the big 6 employer is well aware of it, has already made changes, and is bracing for more.

In a market-driven economy, that piece of information bodes well for writers and editors, the first tier of expertise without which this industry could not exist. Because without such recognition and preparation, top-heavy publishers would be in an irreversable death spiral, and small presses with their bare-bones (and sensible) business model would take over.

It also bodes well for readers, because eventually prices will level out.

(IANAP. Take all this with a grain of salt. If only for your blood pressure.)

"miles apart"? Show me, please.

It has been argued in the past (not necessarily on AW) that publishers demand higher e-book prices than their costs would justify primarily because they fear that lower prices for essentially the same content would shift consumers in large numbers to the less-expensive product and threaten the publishers' established business model.

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I can give you an equally plausible example, IMHO. If the value of something is a perceived value, then perhaps the industry is just trying to support the perception of value? (It's a theory, with about as much weight.)

So far, in my life, I've sold radio airtime, electronics, power tools, pizza and Harleys. One statement from the beginning to now still holds its grain of truth.

"A lot of people can tell you the price of something. Doesn't mean the understand the value."

Top 12 titles from Angry Robot, along with their ebook prices. How can they do it? Don't they realize the cost differential between print and digital is only 10%?

Book of Secrets, Chris Roberson, $2.99
Triumff: Her Majesty's Hero, Dan Abnett, $2.99
Infernal Devices, KW Jeter, $4.79
Empire State, Adam Christopher, $3.99
The World House, Guy Adams, $2.99
The Damned Busters, Matthew Hughes, $2.99
The Bookman, Lavie Tidhar, $2.99
Camera Obscura, Lavie Tidhar, $4.79
The Knights of Breton Court, Maurice Broaddus, $8.49 (pre-order)
The Nekropolis Archives, Tim Waggoner, $7.69
Walking the Tree, Kaaron Warren, $2.99
Vegas Knights, Matt Forbeck, $4.99

GregB said:

Top 12 titles from Angry Robot, along with their ebook prices. How can they do it? Don't they realize the cost differential between print and digital is only 10%?

Book of Secrets, Chris Roberson, $2.99
Triumff: Her Majesty's Hero, Dan Abnett, $2.99
Infernal Devices, KW Jeter, $4.79
Empire State, Adam Christopher, $3.99
The World House, Guy Adams, $2.99
The Damned Busters, Matthew Hughes, $2.99
The Bookman, Lavie Tidhar, $2.99
Camera Obscura, Lavie Tidhar, $4.79
The Knights of Breton Court, Maurice Broaddus, $8.49 (pre-order)
The Nekropolis Archives, Tim Waggoner, $7.69
Walking the Tree, Kaaron Warren, $2.99
Vegas Knights, Matt Forbeck, $4.99

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Aren't Angry Robot having a sale atm? Why yes, yes they were, 50% discount.

Triumff for instance is now £4.49 ($5.99)

Using sale prices as an example doesn't really wash.

Williebee said:

"miles apart"? Show me, please.

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I think the comparisons of the differences, for example, between the costs of building and maintaining a warehouse and a fleet of trucks (or the monthly UPS charges) and the cost of content servers should suffice. I don't have those numbers at hand, which is why I said "miles," but it really should be obvious.

Williebee said:

One statement from the beginning to now still holds its grain of truth.

"A lot of people can tell you the price of something. Doesn't mean the understand the value."

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Yet another pithy maxim: "It's worth what somebody will pay for it."

IdiotsRUs said:

Aren't Angry Robot having a sale atm? Why yes, yes they were, 50% discount.

Triumff for instance is now £4.49 ($5.99)

Using sale prices as an example doesn't really wash.

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Um. They were running a sale from their website, with a coupon code. It ended yesterday. Fortunately, all of the prices I listed were the current ones from Amazon. If you prefer to pay an extra couple bucks for Triumff direct from Angry Robot (sans sale), I support that decision 100%. Alternatively, you could purchase it for your Nook at...$2.99.

RichardGarfinkle said:

I know this is a derail, but there has been another market lately with a massive reduction in prices: Software. High end software is still expensive but people now expect high quality programs at the cost of apps, which are dirt cheap or free.

That change of user perception is cutting down the cost and driving up the production values of just about everything in the software market. Users may pay for quality or they may simply wait for people to lower the costs on quality to match what they are willing to pay.

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There's an interesting dynamic at play here, which separates this market from the consumer book market. High-end software is typically purchased by corporations and government agencies where the purchasing agent is spending money from the organization's coffers and not his own. Apps are bought by individuals.

There are exceptions, of course, but how many freelance writers do you know who own legal copies of the complete professional Adobe or Office suites?

ETA: Probably too much derail. Slapping own wrists. Mod intervention expected.

GregB said:

Um. They were running a sale from their website, with a coupon code. It ended yesterday. Fortunately, all of the prices I listed were the current ones from Amazon. If you prefer to pay an extra couple bucks for Triumff direct from Angry Robot (sans sale), I support that decision 100%. Alternatively, you could purchase it for your Nook at...$2.99.

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Triumff is £4.49 on amazon (uk) too as of right now. Cheaper than the ppb, but only by a couple of quid.

If Barnes and Noble decide to discount/have a sale, up to them. But they are taking the loss (as amazon did/do on the old model, loss leaders to help boost the kindle, creating false expectations of cheap prices.) It is not a normal price. (B&N lists it as discounted)

If a book shop has a sale this is not indicative of usual 'this is how cheap it can be/should be' prices

At least try to report your facts accurately, without trying to handwave over the facts. Thanks.

IdiotsRUs said:

Triumff is £4.49 on amazon (uk) too as of right now. Cheaper than the ppb, but only by a couple of quid.

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Here are the prices we see in the U.S. Because I'm in the U.S., these were the prices I listed. I believe there are additional charges applied to ebooks in the UK and continental Europe (VAT?).

At least try to report your facts accurately, without trying to handwave over the facts. Thanks.

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You're welcome!

And that could not of course be amazon discounting it in a sale? Because that ain't it's usual price - if it was, amazon.uk would be cheaper too, surely? (and amazon are notorious for selling stuff at a loss that is tied to the kindle...) It won't actually let me access the US kindle and show a price or whether it's discounted, so I can't say for sure - but if the pub is offering it at $5.99, then you can be sure this is a dicsounted price. And therefore...not applicable to the point in hand, expect to nail home th eidea that retailers take a loss on book sto get their ereader selling and THAT is (part of)what makes people think ebooks should be cheaper.

So, after changing your tune a time or two, wanna try again?

IdiotsRUs said:

So, after changing your tune a time or two, wanna try again?

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How have I "changed my tune"? I don't know how Angry Robot sets the prices on their website. I know when I was in the business, we didn't discount from list because we didn't want to undercut our retail partners upon whom the majority of our sales depended. Angry Robot doesn't consult me, so I can't say whether or not this is what drives their direct pricing strategy.

It's certainly true that Amazon or B&N might discount ebooks to sell their devices, however. To circumvent such greasy practices, I suggest buying from Diesel and saving a buck.