My wife is going nuts (ebook pricing)

GregB · May 4, 2012

Medievalist said:
The book is not the container; the book is the contents.

If we're talking about perceived value now, I agree with that. Print loyalists will rhapsodize about the visual, tactile and olfactory aesthetic qualities of printed books, but DRM-free digital has a higher perceived value for me.

Of course, publishers have spent the modern age training their customers that there's a different price for books in different formats (HB, TPB, MMPB, let alone audio) based on their cost to deliver to the reader. So readers think, okay, so now I'm due a price break for digital, right?

"No, format doesn't matter."

skylark · May 4, 2012

kaitie said:
Now take into account that there are other costs of ebooks that aren't there for paperbacks. For instance, formatting for each file type and server costs. It might not come out to exactly the price of the paper, but it's not like you can just subtract the paper and warehousing costs. You have to also consider that creating an ebook has costs that don't exist for paper books.

I did take it into account, or thought I had. I asked what the difference in costs was, not what the costs you get in hardcopy but not electronic versions are.

It just seems to me that every time anyone says "okay, so what are the numbers here?" and even an approximate
a number's given, someone else comes along and says "but that's wrong, you haven't accounted for this cost." Normally without giving a number.

I'd like to account for this cost. Really. Once you've done all the common things (paying the writer, editing, cover design, marketing and so on) then what is the difference in cost to a publisher between selling a hardcopy version and an electronic version of the same book?

Jonathan Dalar · May 4, 2012

shadowwalker said:
I understand that, and I didn't mean to imply that the print books should be sold at the 'new' cost. I was responding to this idea that ebooks don't cost that much more to produce so shouldn't be priced like print books. So - once the base costs of the print book were covered, if that "don't cost more to produce" argument were used, the print books should be heavily discounted just as they want ebooks to be, because those costs were already paid.

The problem is, you can't just assume ebooks are an "extra" above and beyond a print book. You can't just absorb all costs with the print version and sell the ebook with the assumption of coding and digital sparklization minus all your overhead and creation-based costs.

Well, you could, but it would throw your accounting all off and it would jack up the payment structure.

Also, the issue of "perceived value vs. actual cost" is a very real one. There is a reason that say, some alternate fuels are not mainstream yet. The cost of manufacturing is far greater than the perceived value in the public's eye. The manufacturer would not make any money off the product because it couldn't sell it for a price that would recoup costs.

The perceived value of an ebook is lower than the actual cost a lot of times, but not so far off they can't charge enough to profit from it. In this case, all it costs is a lot of bitching about why they're ripping us off for something intangible, hence the basis for this thread.

shadowwalker · May 4, 2012

Namatu said:
A lot.

Let's look at this another way. A designer designs a lovely pair of jeans. Thousands of copies of these jeans are made. They're marketed, launched, and people buy them at the price offered. When the number of sales have covered the cost it took to create and produce that product, should the price of the jeans be heavily discounted because those costs were already paid? The only time that happens is during a sale. At all other times, the price point remains the same. Books, both print and e, do go on sale. Maybe not as often, and not to the extent that you may want, but it happens.

That's precisely what I'm saying. Just because the costs have been covered by X number of items doesn't mean that the rest should be discounted.

Deleted member 42 · May 4, 2012

skylark said:
It just seems to me that every time anyone says "okay, so what are the numbers here?" and even an approximate
a number's given, someone else comes along and says "but that's wrong, you haven't accounted for this cost." Normally without giving a number.

Maybe because some of us are tired of answering the same question over and over and over, with links. Once more:

http://www.nytimes.com/2010/03/01/business/media/01ebooks.html?src=twt&twt=nytimes

http://theharperstudio.com/2009/02/...f-ebook-publishingthe-conversation-continues/

http://news.cnet.com/8301-1023_3-57412587-93/why-e-books-cost-so-much/?tag=nl.e404

http://www.digitalbookworld.com/2012/consumers-upset-and-confused-over-e-book-pricing/

http://thisisyogic.wordpress.com/2012/04/10/ethical-reading-ethical-publishing/

The difference in price for a commercially published and produced book in ebook and print forms with day-and-day or close to release is about 10% of the cover price. That is, the cost savings are largely in printing and binding, though there may be others depending on the publisher (i.e. print run sizes, warehouse/stock storage, etc.) and of course, the book.

Namatu · May 4, 2012

shadowwalker said:
The difference in price for a commercially published and produced book in ebook and print forms with day-and-day or close to release is about 10% of the cover price.

Oh good. That math temporarily messed with my comprehension skills.

Namatu · May 4, 2012

Medievalist said:
The difference in price for a commercially published and produced book in ebook and print forms with day-and-day or close to release is about 10% of the cover price.

This number was also cited previously in this thread.

Perks · May 4, 2012

Hopefully, this isn't too much to quote from the Digital Book World article. It's not something we've covered specifically in this thread. The process for the conversion is not just a push of a button and you've got an ebook.

To be sure, the production costs of e-books vary depending on a number of factors. A simple EPUB conversion can cost as little as $200 and a full-blown book app can cost up to $100,000, according to Andrea Fleck-Nisbet, head of digital publishing at Workman.
At Aptara, a major e-book production company, the cost can range from $0.20 to $0.90 a page for a simple conversion, according to Sriram Panchanathan, senior vice president for digital solutions at Aptara. Due to a large volume of titles to convert, many of Aptara’s clients have hired teams of project management professionals who help manage the process of working with Aptara as part of their job. (These teams also attend to tasks like digital rights acquisition, design and e-book distribution management.)
“Some of the larger publishers have entire teams of ten to fifteen people dedicated to managing this relationship,” said Panchanathan. “Smaller publishers have two or three people managing the process.”
The median salary across the U.S. for a low-level digital project manager is $73,678, according to Salary.com. Counting benefits and taxes to employ such workers, the cost to a small publisher in having a two-person project management team starts at around $200,000 a year.
If a small publisher employed such a team to manage the e-book production process, and that publisher converts, say, 100 books a year, that’s another $2,000 added to the cost of each e-book. More senior project managers often have salaries over $100,000.
At a large publishing company with a dozen or so product managers at various levels, the costs can easily be estimated at over $1 million a year. Of course, larger publishing companies are more likely publish more books and could have a lower cost-per-book.
Another hidden e-book cost is that of distribution. According to Panchanathan, e-book distributors typically take a cut of 2% to 9% of every sale.

Perks · May 4, 2012

GregB said:
It also compares a $26 hardcover to a $12.99 ebook -- but of course, if ebooks always got a 50% discount from the latest print format, there wouldn't be quite so much complaining about ebook prices...

I'm trying to find one, but aren't most, if not all hardcover/ebook list prices for big publisher releases in about this range? I've looked at a dozen new releases and haven't found one that wasn't.

buz · May 4, 2012

Cliffhanger said:
You keep saying this magical 10% but you never back it up, or explain it. You've been called out on this at least twice on the other thread, which you never responded directly to, and now you're here saying the same thing without support.

Actually, if you click on the links Medievalist provided, you will see this:

E-book production “costs 10% less” than print book production, said Molly Barton, Penguin’s global digital director. Hardly the vast savings that many consumers imagine. “But the largest expense is author payment and always has been.”

(From http://www.digitalbookworld.com/2012/consumers-upset-and-confused-over-e-book-pricing/, cited by Medievalist)

So. I'm not saying that this Molly Barton person is exactly right in that statement (and it's not like I would know) or that it's factual or totally valid (because, again, I am ignorant) but it's unfair to say stuff like "you never back it up" when you don't look at the supporting information provided.

Soccer Mom · May 4, 2012

*modly note* I've edited the thread title to reflect the topic of dicussion. As you were.

Cliffhanger · May 4, 2012

buzhidao said:
Actually, if you click on the links Medievalist provided, you will see this:

(From http://www.digitalbookworld.com/2012/consumers-upset-and-confused-over-e-book-pricing/, cited by Medievalist)

So. I'm not saying that this Molly Barton person is exactly right in that statement (and it's not like I would know) or that it's factual or totally valid (because, again, I am ignorant) but it's unfair to say stuff like "you never back it up" when you don't look at the supporting information provided.

As pointed out by GregB, many / most of those articles completely ignore the actual differences in overhead costs involved in physically printing books when talking about the disparity.

Deleted member 42 · May 4, 2012

Perks said:
I'm trying to find one, but aren't most, if not all hardcover/ebook list prices for big publisher releases in about this range? I've looked at a dozen new releases and haven't found one that wasn't.

Generally day and date releases for hardcover and ebooks are $12.99 or $14.99 for the ebook.

Perks · May 4, 2012

Medievalist said:
Generally day and date releases for hardcover and ebooks are $12.99 or $14.99.

Right. And the print list price is about $26.

GregB said:
It also compares a $26 hardcover to a $12.99 ebook -- but of course, if ebooks always got a 50% discount from the latest print format, there wouldn't be quite so much complaining about ebook prices...

So, since this is the case, what's the problem again?

Ava Glass · May 4, 2012

jjdebenedictis said:
Talented artists, editors, marketers and managers who have to pay rent in New York? Not cheap.

I think this is part of the overhead costs others point out in this thread. Why Manhattan? It looks more and more unnecessary as the years pass. Sourcebooks is based in a suburb of Chicago. Harlequin is in Toronto. Artists and editors can live anywhere.

ETA: I dare anyone to go to Dear Author or SBTB and tell the readers (aka customers) over there that they're acting "entitled" when they complain about ebook prices. Jane and Sarah recently created a website called Support the Settlement where readers can use a form to send a message to the DoJ.

I am a long time consumer of books. I spend close to $100 per month on digital books and we digital readers have been treated poorly by publishers for years. They have been slow to digitize books. When they finally did make digital copies available, they would “window” them, meaning paper books would be released first and digital books would be released later, without any price reduction. The digital copies of their books are often poorly formatted, with serious errors, and often without color covers.

Digital readers are also subjected to paying the same cost for digital books or sometimes even increased costs despite having far fewer rights. We can’t lend the book to a family member or friend. We can’t transfer a book from one device to another. We can’t resell the book. Our own copyright rights as a reader are totally ignored under the ebook model and having to pay increased prices as a result of an improper conspiracy by the publishers is outrageous.

MacAllister · May 4, 2012

Greg B and Cliffhanger, you both need to ease up on the ridiculous amount of snotty condescension you're displaying. It's tiresome.

And I can't help but note that neither of you are offering anything in the way of evidence that contradicts the numbers you're challenging, so you're simply being argumentative and rude.

Stop it.

Here's another article that puts the estimation of producing the physical ink-n-paper artifact at approximately 15% of the total cost of the book, by the way -- and further notes that there are costs associated with producing an eBook that producing a printed book doesn't incur:

“People vastly overestimate how much a publisher saves,” says Erik Sherman, an analyst and author who studies ebook economics. Turns out, the physical aspects of book production can account for as little as 15 percent of the cost of the title. The rest can be divvied up among the author, editor, designer, marketers, publicists, distributors, and resellers. A lot of fingers dip into that $14.99 money pie before the house takes a slice.

“People would have heart attacks if they knew all the costs associated with digital publishing,” says Maja Thomas, senior vice president of the Hachette Book Group’s digital division. Tacking an e onto a book requires antipiracy software, digital warehousing, extra legal support, and programmers to adapt each title for Android, iPhone, Kindle, and all the other formats. That’s on top of the regular costs of turning a manuscript into a finished product.

More discussion establishing the approximate percentage of cover price for producing the physical book:

In his forthcoming book Free Ride: How Digital Parasites Are Destroying the Culture Business and How the Culture Business Can Fight Back, the American author Robert Levine has an excellent chapter on publishing in which he interrogates the forces driving the pricing of books, in both their paper and digital forms. And some of the explanations he gives are (to me at least) surprising. For example, it turns out that "publishers only spend $3.50 to print and distribute a hardback". (Let's say it's £3 in Britain.) So when, this autumn, you go into your local bookshop and spend £30 on that gorgeous copy of...<snip>

And yet another article, establishing the same thing.

So let's move on, and take it as a given, then, that producing the physical artifact just doesn't cost as much as people like to think, eh?

And if not, then bring some evidence to refute that assertion.

Namatu · May 4, 2012

superluminal said:
I think this is part of the overhead costs others point out in this thread. Why Manhattan? It looks more and more unnecessary as the years pass. Sourcebooks is based in a suburb of Chicago. Harlequin is in Toronto. Artists and editors can live anywhere.

Who says they're all in Manhattan? The managers may be there (or not) and the majority of the work may be outsourced anywhere between Maine and Australia. I don't mean that to sound argumentative (if it does). There is loads of outsourcing going on because the volume is too much to handle completely in-house.

Ava Glass · May 4, 2012

Namatu said:
Who says they're all in Manhattan? The managers may be there (or not) and the majority of the work may be outsourced anywhere between Maine and Australia. I don't mean that to sound argumentative (if it does). There is loads of outsourcing going on because the volume is too much to handle completely in-house.

I was responding to a post from earlier. I should have included more in the quote.

jjdebenedictis said:
Salaries are the big cost to publishers. Paper is pretty cheap; storage is pretty cheap.

Talented artists, editors, marketers and managers who have to pay rent in New York? Not cheap.

But seriously, why are the offices in Manhattan still? And I'm talking about "New York" publishing, as I gave examples of successful publishers that aren't.

Cliffhanger · May 4, 2012

MacAllister said:
Greg B and Cliffhanger, you both need to ease up on the ridiculous amount of snotty condescension you're displaying. It's tiresome.

And I can't help but note that neither of you are offering anything in the way of evidence that contradicts the numbers you're challenging, so you're simply being argumentative and rude.

Stop it.

Here's another article that puts the estimation of producing the physical ink-n-paper artifact at approximately 15% of the total cost of the book, by the way -- and notes that there are costs associated with producing an eBook that producing a printed book doesn't incur:

The articles cited to explain the 10% figure don't actually explain the 10% figure, so we're calling him on it. Read them, they ignore the actual overhead cost differences entailed by physically producing a book. Citing an article that doesn't actually address the issue doesn't count as "backup" where I come from.

I posted all my figures in the other, similar thread. I thought better than to post a wall of text here as well.

The key phrase in the bit you quoted is bolded below:

“People vastly overestimate how much a publisher saves,” says Erik Sherman, an analyst and author who studies ebook economics. Turns out, the physical aspects of book production can account for as little as 15 percent of the cost of the title. The rest can be divvied up among the author, editor, designer, marketers, publicists, distributors, and resellers. A lot of fingers dip into that $14.99 money pie before the house takes a slice.

As little as. Meaning in the best of all possible situations, no more than 15%. Most cases aren't the best of all possible worlds.

If my responses strike you as snooty, I apologize. I've worked in the industry long enough to know this poster is flat-out wrong. And simply repeating the same tired arguments again and again don't turn fiction into fact.

Everyone's entitled to their own opinions, not their own facts.

GregB · May 4, 2012

Perks said:
So, since this is the case, what's the problem again?

Problem, I'm not even sure how it's possible since the cost differential is only 10%.

Prices have been all over the place since the DoJ hammer came down. And of course that 50% ebook discount doesn't translate to other formats than hardcover.

So right now on B&N I can get King's 11/22/63 in hardcover for $19.98, or I can pay $16.99 for ebook. If I want Abercrombie's The Heroes, I can take the paperback for $10.98 or the ebook for $9.99.

MacAllister said:
Greg B and Cliffhanger, you both need to ease up on the ridiculous amount of snotty condescension you're displaying. It's tiresome.

And I can't help but note that neither of you are offering anything in the way of evidence that contradicts the numbers you're challenging, so you're simply being argumentative and rude.

Stop it.

I have offered contradictory evidence, and I've challenged the evidence (i.e. links) provided by others. In return, I get more links to industry sources ignoring the massive overhead costs of putting printed books in readers' hands (or the pulper's).

I truly don't want to be rude or condescending, though, and you're the boss, so I'll stop it.

Deleted member 42 · May 4, 2012

superluminal said:
I think this is part of the overhead costs others point out in this thread. Why Manhattan? It looks more and more unnecessary as the years pass. Sourcebooks is based in a suburb of Chicago. Harlequin is in Toronto. Artists and editors can live anywhere.

Overhead is a cost of doing business; it applies to things like space and electricity and software and hardware, and support staff.

An awful lot of the people who do the actual hands-on-work of publishing aren't in Manhattan, but the accounting and executive folk still are, especially for the very large publishers. For instance, Macmillan and their parent company have offices in the Flatiron building, but increasingly editors are all over--and paid on 1099s.

It's not broken out specifically on P & Ls. Quite often the book uses out of house staff for design, or editorial, so those costs will be listed on a P & L.

But other than the printing and binding costs, I don't see why acquisition, editing, art, proofing etc. aren't considered shared for day-and-date release.

Once the file forks, going to printers or to ebook production staff, the costs differ, but up to that point it is the same file, the same product and shared costs.

Actually, I think looking a P and Ls makes some sense.

Some samples (these are from a variety of publishers, of various kinds):

http://pimpmynovel.blogspot.com/2009/10/p-1-of-4-basics.html

http://gropenassoc.com/blog/2009/11/a-typical-trade-titles-pl/

http://www.stevenpressfield.com/2011/09/a-matter-of-infinite-hope/

http://www.annagenoese.com/article_series/demyst/free_articles/article_p_and_l.html

These days the P and L master spreadsheet is often a closely held trade secret document, but I've seen long-term professionals do a P & L on a napkin.

Note that during the course of a book's lifetime—from proposal before acquisition to release and tracking—the P and L is a living document.

This article has a breakdown as well.

There's potential for some quibbling from some publishers, but it does seem fairly accurate based on my experience in commercial print and epublishing.

Based on everything I know, and I've worked on a lot of books, print and digital in production (not to mention as an author and editor), that 10% of cover price as a fairly reasonable ballpark figure for the difference in production costs for an ebook and a printed book of the same text is pretty accurate.

Keep in mind that the assumption that a publisher will have to keep stock in warehouses is not so much the case these days. Publishers still do this for textbooks, but back in the 1990s Random House had a warehouse just for the Modern Library. Now, they instead do smaller print runs just in time--in part because of much better inventory and shipping data.

You will see a more noticeable disparity between production costs for a printed book with lots of color images and an ebook, but for text-dominant books, not so much.

Deleted member 42 · May 4, 2012

superluminal said:
But seriously, why are the offices in Manhattan still? And I'm talking about "New York" publishing, as I gave examples of successful publishers that aren't.

One reason has to do with shipping (short print runs can be drop-shipped almost anywhere), but honestly, fewer and fewer of the actual hands-on people are in Manhattan. And now, printers are all over.

I mean, sure Macmillan is the Flatiron building, but their owner is a very large international conglomerate, and is the real tenant.

More and more of the production staff are elsewhere, and paid on 1099s.

MacAllister · May 4, 2012

Cliffhanger said:
If my responses strike you as snooty, I apologize. I've worked in the industry long enough to know this poster is flat-out wrong. And simply repeating the same tired arguments again and again don't turn fiction into fact.

Everyone's entitled to their own opinions, not their own facts. [emphasis added]

Yet here you are, demanding that people currently working in the publishing industry accept your opinion as fact, no matter how many times across various threads you've been carefully and courteously refuted by publishing professionals, with sources cited. Strange.

The poster you're asserting is "flat out wrong" has worked in the industry for around thirty years, for example, and still does.

And pretty much everyone else I know currently working in the industry agrees with what Medievalist has posted.

That includes people currently working at St. Martin's, Tor, Hatchette, Baen, and a pretty good handful of non-fiction small presses, as well -- in the US, Canada, and the UK.

Cliffhanger: What IS your industry background, precisely, if you're going to cite yourself as an authority?

Which publishers have you worked for, and in what capacity, for how long, please? I'd be happy to make a couple of discreet phone calls to my own publishing contacts, to vouch for your experience and expertise -- it's a pretty small world, after all.

GregB · May 4, 2012

MacAllister said:
Strange. The poster you're asserting is "flat out wrong" has worked in the industry for around thirty years, and still does.

FWIW, I don't think Med or anyone else is wrong about print production costs being an incremental 10-15%. I also agree with Med that overhead costs associated only with print production, distribution, retail and inventory management won't show up (generally speaking) on a individual book's P&L.

They're real costs, though. And they will show up on the publisher's P&L. So as digital continues to gain increased share of sales at the expense of print, the publisher (or its corporate parent) will downsize those cost centers even though they don't show up on an individual book's P&L. That's because they're still real costs of print, and, for example, the sales team or the print buyer can't do much to sell digital books.

I don't have Med's experience, though I did co-own and operate a small press for four years, then went to work for a larger publisher first as a managing editor and later as the executive in charge of product development.

I think readers have a sense of that vast commercial infrastructure that's developed over the decades to put printed books into readers' hands, even if they can't break it down, and they believe publishers are setting the price of digital books, in part, to continue supporting that infrastructure. And they're right.

Cliffhanger · May 4, 2012

MacAllister said:
Yet here you are, demanding that people currently working in the publishing industry accept your opinion as fact, no matter how many times across various threads you've been carefully and courteously refuted by publishing professionals, with sources cited. Strange.

For the third time, those sources completely ignore the crux of the matter, printing costs (and the other associated costs of physical products I've mentioned repeatedly). The articles linked are not "support" for the position.

The poster you're asserting is "flat out wrong" has worked in the industry for around thirty years, for example, and still does.

And pretty much everyone else I know currently working in the industry agrees with what Medievalist has posted.

Strange that people in the industry are arguing for higher ebook costs (self-serving), and someone formerly in the industry is calling them on it (no stake either way).

Cliffhanger: What IS your industry background, precisely, if you're going to cite yourself as an authority?

Which publishers have you worked for, and in what capacity, for how long, please? I'd be happy to make a couple of discreet phone calls to my own publishing contacts, to vouch for your experience and expertise -- it's a pretty small world, after all.

All I have is your word of her credentials. This is an internet forum. She could be the former head of every publishing company ever. That still doesn't change the numbers. Not that it's worth anything given that, but sure, I'll bite. I've been an acquisitions editor, editor, book designer (print and digital), and spent about half my career as a production & design manager. I know the costs involved in printing books, and I know the costs involved in digital books. The claim that digital books are nearly as expensive as print is simply wrong.

Look over the numbers I provided in the other thread. None of those were ever refuted, because they're accurate. Going digital you don't have the cost of physical printing, you have less of a distribution cut taken out (30% from the highest digital distro, Apple; 65% from most print distros), you have no shipping & warehousing costs, and you have no taxes on stock. Yet, ebooks "cost" nearly the same as print books, and people still in the industry will say it's anything except what it is, grabbing for more profit. Again, I think the industry needs to earn more. They more than deserve it. But the math doesn't lie.

My wife is going nuts (ebook pricing)

practical experience, FTW

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