I missed participating in yesterday’s Futurechat Twitter hashtag chat fest, but the article that formed the basis of the discussion is interesting enough by itself. Porter Anderson poses the question that has been on many publishers’ lips ever since Amazon first started selling e-books: “Are we pricing books too low?”
The article does have more of a basis than the Amazon-is-devaluing-our-books nattering we usually get. Anderson looks (via a Philip Jones piece) at the opening sales of the new Harper Lee book, Go Set a Watchman. It hit record sales in its first week, including in e-book form. Jones observes that the book and e-book are significantly discounted in the UK. Amazon had the hardback for £10.82 and the e-book at £7.47 (at least at the time; checking today I find the prices are instead £9 and £7.45 respectively), whereas the recommended retail price of the hardcover is £18.99 and next year’s paperback is £12.99
In the States, some interesting price points, too:
The hardcover list price is $28.09 and the going price at Amazon.com is $16.07.
The Kindle edition, with a $15.99 list price, is set for now at $13.99 (and here’s that agency-pricing note: “This price was set by the publisher”). That price comes in below the paperbook ask, which is $16.79 on a list of $27.99 — just 10 cents, take note, behind the hardcover list price.
Anderson and Jones briefly discuss UK competition from the Waterstones bookstore, which opened at midnight on its release day to sell copies of the book, but don’t mention where they had the book priced for those sales. They also mention the perception that Amazon is “[driving] down the perceived value of books” and that cheap indie e-books make it hard for traditional authors to sell their titles.
But the interesting thing insofar as Watchman is concerned is that the e-book prices (in the USA, at least) were indeed set by the publisher (complete with the little notation below the price on Amazon’s page.). So Amazon can’t be blamed for the “low” e-book price, at least in the USA—and the UK prices seem to be roughly the same amount as the US (maybe a couple bucks lower) after currency conversion. So Anderson’s question isn’t really whether Amazon is setting the prices too low at this point, but whether publishers are.
Skimming through the scads of Twitter posts with the #futurechat hashtag, I find a lot of discussion but largely anecdotal information. Anderson will probably have a summary up Monday or Tuesday with any particular relevant bits. But to me, the overall question is more interesting.
We’ll leave aside the question of the hardcover prices. Hardcover is still a pure wholesale/retail operation, and publishers have no control over how Amazon (or Wal-Mart, or Waterstones, or Barnes & Noble) sets the retail price apart from where they set the wholesale price. Amazon has always chopped big discounts off of new release hardcovers, preferring to sell by the ton and make a profit on volume.
Now, if publishers are setting their e-book prices “too low” under their agency deals, their hand was basically forced. In a way, by selling so many new release and bestseller e-book titles at $9.99, Amazon did get consumers used to lower prices. The $13.99 price is within the “sensible” range Steve Jobs lured publishers down to when he embroiled them in the agency pricing conspiracy, and it’s where the market has largely stabilized for new releases now that the rigamarole of the settlements and trial is over. And there are still plenty of people who find that too high, given Amazon’s need to notify consumers that they’re not the ones who think they should pay that much.
Customers aren’t stupid. They know with e-books they’re paying for pixels, not solid atoms. There are no physical printing and shipping costs, and no need for returns. The reason Amazon’s $9.99 e-books went over so well was that they played to e-book readers’ pre-existing prejudice. And I’m certainly not going to argue against the idea that a medium with lower physical costs should cost less. That’s just part of how the business works.
But leaving all that aside—for crying out loud, is there nobody else out there who remembers the way things used to be back in the early adopter days of Fictionwise and eReader? Publishers actually couldn’t be bothered to adjust e-book prices downward after the print edition of the book had gone to paperback. They didn’t really care about a market that was less than 1% of the size of their print market. (And to be fair, at the time that probably made sense for them.)
The Pendergrasts who ran Fictionwise related stories of them having to buttonhole publishers to get them to drop prices, and they simply couldn’t do that for every book in their catalogs. The e-book stores were full of $20 to $24 e-books of novels that were currently available in $8 paperback editions. This was true even as late as 2010, when Macmillan made its move to impose agency pricing on Amazon. To prove a point, I went through and checked the prices on Macmillan titles at Fictionwise. Here’s what I wrote about it at the time:
Yesterday, to prove a point, I searched on different price ranges of Macmillan books at Fictionwise. I discovered that only 285 (about 15%) of the 2032 Macmillan titles on Fictionwise are priced at $9.99 or less. 857 (about 40%) are priced at $19.99 and up.
I then surveyed each of the 25 titles on the first page of $19.99+ search results, checking against print editions in on-line bookstores and determined that 7 out of those 25 were available as $7 to $9 mass market paperbacks. (See the link above for specific details.)
If I assume it’s a valid random sample and cross-multiply, 7/25 = 240/857. That would mean 240 of Macmillan’s titles—over 10% of their entire Fictionwise line—would be mispriced—or as I like to put it, “invariably priced”—in relation to their paper versions.
My gut feeling is that’s actually a lowball guess; some of the books on that first search were obviously just-added titles they were trying to push so I suspect there was a higher-than-average number of newer, hardcover books than usual—there’s no way that a publisher is going to keep 30% of its entire back catalog exclusively available in hardcover. And that does not take into account titles priced between $19.99 and paperback range, or ones from other publishers.
There are probably thousands of “invariably” priced books on Fictionwise now. And there always have been.
This apathy helped fertilize the fields for Amazon when they came along, and so it goes.
So, if publishers might be pricing their e-books “too low” now, at least they’re pricing them more reasonably at all. And, more importantly, when the books come out in paperback, the e-book price generally does drop accordingly now. I guess that’s one good thing about having a huge army of angry, “entitled” consumers ready to complain vociferously if they don’t, rather than just a relative handful of Palm Pilot-clutching early adopters.
Regardless, if publishers can’t remain competitive at these lower prices (especially with even-lower-priced indies breathing down their necks), they’ll either go out of business or they’ll figure out a way to get competitive. Or maybe some will do the former and some the latter. Regardless, the market is evolving and changing, and I personally think that’s a good thing. Either way, consumers aren’t going to let publishers get away with backing off on their lower prices now.