I’ve found some good blog responses to John Sargent’s post about Macmillan’s agency pricing model, which we reprinted the other day.

In his Kindle Nation Daily blog, Stephen Windwalker praises Sargent for at last addressing the general public rather than just the industry insiders at whom his earlier entries were pitched—even as he remains critical of Sargent’s message.

I had been critical of Sargent previously for addressing his earlier comments only to authors and literary agents, and consequently trying to position them to speak up on his and his company’s behalf, and this new post is well worth reading. He has not changed my mind, and I doubt he will change the minds of many ebook readers, but we will see. There are dozens of comments that give a good sense of the range of views generally in the ebook pricing controversy, and you may want to add your voice to those of other readers.

Over on GigaOm, Matthew Ingram casts Sargent’s post as an attempt to protect the print publishing model from e-books’ disruption. As an example, he holds up Sargent’s statement that the agency model will allow them to publish e-books simultaneously with the release of the print books, thus “[solving] the problem” of windowing.

Here’s the thing: This “problem,” as Sargent calls it, has been wholly created by publishers like Macmillan, who hold back the release of e-books in order to try and milk traditional hardcover and paperback sales for as long as they can. So now, in response to Amazon and others acceding to their demands on price, Macmillan is going to be good enough to stop doing that. This is the retailing equivalent of the serial killer who scrawls “Stop me before I kill again” on a mirror in lipstick. Could not the publishers themselves have stopped this practice at any time and avoided frustrating readers?

He further points out (as Windwalker did in a later portion of his own blog) that comparing $12-$15 e-books with $24-$28 hardcovers ignores the fact that those hardcovers are frequently discounted considerably when they aren’t moving, or by on-line retailers such as Amazon. A $15 e-book vs. a $25 hardcover is one thing, but what about a $15 e-book vs. a $15 hardcover?

Mike Masnick of TechDirt links to and agrees with Ingram’s post, and adds that Sargent’s segmentation of e-books into hardcover and paperback prices seems to show Sargent’s misunderstanding of market forces.

One of the reasons why economic forces work the way that they do, and the reason why infinite goods with zero marginal cost get pushed in price towards zero, is that buyers implicitly understand the difference between scarce goods and abundant goods. They implicitly recognize the marginal cost of making another good, and they mentally price products accordingly. Pretending that consumers don’t do that is assuming that consumers are stupid. And that’s an even bigger mistake than looking backwards instead of forward.

A Premium on Impatience

There’s just one place where I feel these blog posts are missing the point slightly.

The point of hardcover vs. paperback pricing is not to scale to the expense of production costs. It never has been. Hardcovers only cost a buck or so more per unit to manufacture than paperbacks. But they sell for three times as much. Why is that?

Partly it’s the perception of sturdier construction—reading a hardcover does not cause as much wear on the book as reading a paperback. But largely it’s the impatience factor. In the days before e-books, someone would buy a hardcover instead of waiting for a paperback because he wants to read that book right away. And he pays a premium for that impatience.

E-ARCs: Baen’s Hardcover E-books

It’s the same with Baen’s E-ARCs, the electronic advance copies of a book that Baen sells for $15 for several months prior to publishing the “fully-proofed” e-book version for $6. Nobody accuses Baen of price-gouging on electrons, right?

Well, all right, I have said in the past that E-ARCs were largely a waste of money: why pay two and a half times the cost to buy an unproofed e-book? But a lot of people buy them because not having to wait three more months to read the whole book is worth $15 to them.

I swore I would never buy an E-ARC, and stuck to it—until P.C. Hodgell’s latest Kencyr book, Bound in Blood came out, and like a fool I read the sample chapters. Suddenly, I had to know what happened next, and shortly afterward that E-ARC was mine. It’s a little embarrassing…but in my defense, it was a P.C. Hodgell book!

What’s Sauce for the Goose…

So yes, that is why hardcovers cost so much more to buy when they cost so little more to print: it’s a premium on impatience, and the greater revenue the hardcover version brings in lets the book earn out its fixed costs so that the paperback being cheaper doesn’t hurt so much.

I don’t see why publishers shouldn’t be able to charge the same impatience premium for e-books, if they can be trusted to reduce the price commensurately at the same time they bring out the paperback.

Some e-book fans may have a hard time understanding that time should be a factor, but the average person Ficbot spoke to on the bus didn’t see any problem with it. I suspect a lot of other consumers will feel the same way. If they don’t, then the publishing companies will figure out they need to lower their prices. Either way, as Mike Masnick says, the market will decide.