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E vs. P prices: How heavily to discount e-books?
September 29, 2007 | 9:57 am
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By David Rothman
Um, as a writer, I’ve got an interest in this little matter. How much should publishers charge for e-books compared to the paper editions?
I maintain that E is in many ways a whole new market, and publishers are stunting its development when they go the $25 route. An e-book sale doesn’t necessarily mean the loss of a p-book one, especially when you consider the global nature of E and the scarcity of bookstores in many countries with growing numbers of Netfolks. Perhaps 40-50 percent of the readers of the TeleBlog live outside the States, and incomes are not always at American levels.
Both here and abroad, $5-6 prices for a typical novel will be more like it, and almost surely, TeleBlog regular Rob Preece would agree. Rcently, DearAuthor.com did a price survey, and Simon & Schuster seemed to be among the more sensible of the big publishers when it came to the action at the retail level. While $25 e-books exist, they’re far less common than in the past, especially in certain genres such as romance.
Publisher’s take
It’s an old debate, and for the latest take on it, beyond this one, see Wiley executive Joe Wikert’s blog. Excerpt:
“So what is the right pricing level for an ebook? Should it be 10% less than the print version? 20%? I don’t have the answer but I’m glad we’re testing out some options. The first test was just launched today: Our entire WROX ebook list (150+ titles) is currently available at 50% off the print book list price. It’s a limited time offer and you need to use the promotional code “EWRXN” to get the discount. We’ll see how this test goes and use the results to determine the parameters for future tests.”
Related: Literary Kicks’ discussion of prices of lit fiction (via MobileRead).
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Comments:
More than $10 and you’re out of impulse buy territory–an important thing to consider with online retailing, where the next store is only a click away. More than about $6-7 and I lose interest, since at much more than that you’re into trade paperback pricing–and if I’m going to spend that much rather have the print edition (no backup or portability issues).
Ideally, I’d like to buy a print edition and get an electronic edition for free. Hey, I can dream, right?
Also, no DRM. I have more than one e-reading device right now, and will likely have more in the future as older devices eventually wear out. I have multiple devices because not every one is suited for every environment. For example, I won’t take an e-Ink device to bed (can’t read in the dark). So I move e-books between them as needed. Since some of my devices are not intended as e-readers (like my Nokia N800 tablet, my primary portable e-book device) there’s no supported reader software, making DRM’d books useless to me. I haven’t bought a DRM’d book yet, nor will I ever.
Publishers and authors must radically rethink pricing. Selling a single book for $25, $10, $5, or even $1 is not the right approach. Selling complete access to millions of e-books for a small monthly fee is the key to future success. Also, the e-books should have no restrictive DRM (digital rights management). No publisher or group of publishers is doing this now because of timidity and because of a misguided allegiance to incrementalism. Admittedly, very few people today understand the radical shift in economics that ubiquitous networking and computing enables.
A small step in the right direction is represented by the “Safari Books Online” program of O’Reilly that provides “complete access to thousands of books simultaneously with no limitations” for a fixed fee. This is a start but the library is very limited in scope. In the music domain, Rhapsody “lets consumers stream an unlimited amount of music from its catalogue of over 3.5 million songs”. This is a start but the music should be downloadable without DRM.
Is this an economically viable approach for e-books? Yes. The total per capita spending on all reading material is relatively small (in the United States). A monthly fee can raise the same amount of money if it covers a vast population.
I wouldn’t be surprised if Wiley didn’t see much of a result from their ebook experiment. Doing a trial with only very technical, very expensive ebooks is asking for failure. Also, I suspect that these ebooks are PDF with DRM, which also make them less attractive.
I love to read and hate spending money. So, affordable prices are the way I like to go. I appreciate Garson’s suggestion on the all-you-can-eat bookstore approach. I think, though, that you run into a problem with this. Specifically, what seems a fair monthly price to me, who reads continually, may seem like a huge expense to someone who reads one book a month. That’s why only a few restaurants offer all-you-can-eat, and not many of these provide steak.
While inflation is an ugly thing and prices do go up, for me, Cerebus’s price point of $10 definitely holds true. I can’t remember the last time I bought a new author in hardback (not including college textbooks). Why–more than a paperback price is a gamble. I price all of the books at BooksForABuck.com between $1 and $3.99 because I think those are price points that let readers grab a new author and try her out. If they like her, they’ll come back for more (I am, of course, using the pronoun generically–we have both male and female authors).
I do understand the economics behind $25 eBooks. They’re the same economics that mean we can’t get the new Harry Potter in mass market paperback. Publishers generally try to milk those who are willing to pay the most, then go after the more price sensitive market (like the airlines). And those who are most likely to pay $25 for a hardback are also those most likely to have a usable reading device so eBooks can be adequate substitutes. Still, I fear this pricing model gives critics another reason to delay trying eBooks out.
Rob Preece
Publisher, http://www.BooksForABuck.com
Imagine a “universal library” with access to all books, magazines, and journals in electronic form. How much would it cost to compensate all the publishers and authors (in the United States)? One way to estimate this cost is to examine the amount of money that is currently spent on reading material in the U.S. The remarkably small figure of $12 per month per household is given in an Associated Press article dated May 17 2003. Now suppose for simplicity that almost all households paid a $12 per month fee then the amount collected by this fee could be used to compensate all the authors and all the people in the publishing industry without a substantial loss of revenue.
An article in the Canadian newspaper “The Globe and Mail” said that Alberta had the highest per capita cultural spending in 2005. Albertan’s spent $971 dollars per year and 18 per cent of that was allotted to books, magazines and newspapers. Thus Albertan’s spent $14.57 per month per person on reading material according to the article. (This is measured in Canadian dollars which are now about equal to U.S dollars though that was not true in 2005.)
Hence a “universal library” is astonishingly affordable. It is also of inestimable value and should be built immediately. Rob Preece raises a good point about the monthly fee: “Specifically, what seems a fair monthly price to me, who reads continually, may seem like a huge expense to someone who reads one book a month.” I think $12 or $15 is extraordinarily inexpensive for comprehensive access to the codified knowledge of the world. There are many ways to raise money equivalent to this monthly fee – voluntarily or non-voluntarily. The government currently uses coercive taxation to raise sums that dwarf the fee mentioned above in the domain of education alone. For comparison the BBC license fee in the UK is £135.50 annually. I prefer non-coercion, open transactions, and competition, but the decision to move forward with something like a universal library is nearly unavoidable because of “piracy”.
“Piracy” continues to become easier and more convenient. The music industry is in crisis, but old-fashioned paper publishing has not been devastated yet. It is easy to scan an entire book and transmit it worldwide where it can be read on screens that continue to improve. An inexpensive (private, non-profit, or public) or “free” (tax supported) universal library would undermine or even obviate most “piracy”.
The AP article mentioned above was reprinted in USA Today on May 17 2003. Here is a link to the story entitled Poll: San Francisco spends most on booze, books. The Globe and Mail article was entitled “Albertans open up their wallets for arts”. I cannot find an available online version of the article to link to anymore.
Garson–
The rental model hasn’t made a dent in online music, and it won’t succeed in the e-Book market for the same reason: People don’t rent music, nor do they rent books. When you quit paying, you lose access, and that’s not what buyers want.
This is also dangerously close to Stallman’s “Right to Read” dystopia.
Yes, I know libraries are essentially a book rental model, but libraries are *free*–more precisely, library costs are hidden from users, buried in municipal taxes–if people had to pay for their library checkouts, I’ll warrant a near instant demise of the whole system. Your second post comes close to the library model, but here’s the rub: in the US, at least, a pathological fear of taxes has been inculcated in the population–intentionally, I might add–that would make such a scheme impossible to implement. Just ask a librarian how well it went the last time they asked the city gov’t for a budget increase.
Video is different beast altogether. People do rent video, so a monthly fee approach may succeed in that market. While this is accepted in this market, it’s not generally on an all-you-can-eat model, but rather as a pay-as-you-watch model. Yes, Netflix et.al. have been changing user expectations in this area, but Netflix has a built-in usage cap that a true all-you-can-eat model would not have.
User acceptance is the key.
– C
Cerebus is concerned about a “rental model”. I am not proposing a “rental model”. I attempted to make that clear when I included the phrase “the e-books should have no restrictive DRM (digital rights management)”. Note that a typical “rental model” is based on using DRM with a built-in expiration. I tried to rule out that possibility when I said that “the e-books should have no restrictive DRM”. The e-book reader should be able to download the books and read them at any future time. The monthly fee would allow access to new e-books, revised e-books, and e-books that have not been downloaded previously.
When I mentioned Rhapsody (which is a “rental model”) I tried to make clear that I was not proposing a rental model. That is why I stated that Rhapsody “is a start but the music should be downloadable without DRM.” When music is downloaded without DRM then it is available for play without a time limit. It has no built-in expiration. I apologize for not stating this clearly enough. Thanks for the opportunity to state it more explicitly.
For me the closest comparison to an eBook is a second-hand printed book. You don’t buy it for a gift — which is where much of the new book spending seems to come from — and you don’t really care what it looks like, whether the pages hold together or how it smells (within reason) because you only want to read through it once now and maybe again in ten years’ time or so.
At the moment second-hand book prices in Oz range from an average of about $5 for an ordinary used paperback to $12 and up for fairly rare books. Much of the price variation has got nothing to do with the content of the book, but relates to the organisation of the store — stores which take the trouble to group books by author and make them easy to find charge more than those which just throw everything into one big heap and force the user to search through them. I would expect to see a similar variation in eBooks — any eBook store which allows me to find and download ALL the books I want in a uniform, simple way is entitled to charge more than a small store which only has one or two books and requires a cumbersome search and ordering procedure.
One reason I don’t buy eBooks right now is because I know I would have to deal with dozens of different retailers, each with their own requirements, to obtain the books I actually want to read. Centralise the process, as with iTunes or eBay, and it will become a lot more attractive.
I’ve advocated before a scheme similar to Garson’s, where a national government pays a fee to the copyright holder so that the whole country can have access to a book (or other work). This seems to me a highly efficient use of taxes and a good way to minimise the problem of eBook distributors going belly-up. But it’s not going to happen in the current political climate.
To answer the original question – our trade paperback books from L&L Dreamspell sell for around $17 (before being discounted by on-line retailers like Amazon which brings them down to around $12.) Then the ebook versions sell for around $6.
Now I have a question for those who are discussing an ebook system where readers pay a monthly fee for unlimited access. How do the publishers get paid, so they can pay authors? Sorry if I’m not understanding how this would work for me, as a publisher!
Garson, your idea sounds like the blanket licensing scheme once proposed for music. It’s a neat solution to a messy problem; unfortunately, it assumes too much centralized control and consensus about how the profit should be divvied. It also assumes a godlike ability to control gaming of the system. I distrust it as a solution. Also, I think people in the US are inclined to distrust a solution that removes the individual’s ability to set a price for one’s labor (also the current publishing industry would never stand for it). That said, it’s not much worse than what we have now.
If I may jump in here and point out a small problem – it seems to me that the notion of discounting an ebook is tantamount to admitting its not worth as much as a print book. Fine by me – I think that notion is spot on when it comes to many titles, but the drum beat sounded by this blog ad infinitum is that ebooks are the future and will replace sliced bread one day as the worlds greatest invention.
The usual arguments are all here – price to attract impulse buys, price without DRM (my personal favorite argument – no DRM and cheaper too!) price to compete with “free” library content – it goes on and on. Please folks, take no offense – these are mostly serious and reasoned arguments. However, they all lose sight of the fact that your inherent stance is that P should be more valuable than E.
The way I see it is that different products have different value in E vs P. Immersive reading – the kind found in narrative fiction for example, is clearly best done in a P environment. Paper is the best known technology for long reading sessions in every imaginable lighting and setting. That said, does the same hold true for reference or scholarly/scientific publications where discoverability, linkability, and extractive reading is the norm? The answer is a resounding no – and therefore I posit that the E experience is a far more valuable one than P. Think of it this way – scholarly research of any kind is best done across a myriad of publications. If the full text of a publishers list is made discoverable and linked to the body of works that make up the field, the value of those products are wildly enhanced.
With these form factors in mind, do we still think E should b cheaper than P? Immersive reading? Probably. Extractive reading – NO WAY!
Publishing is a big and complicated industry that has a huge variety of product types and pricing matrices to consider. Its simply too reductive a question to ask “how heavily to discount ebooks?”
I have to disagree with the notion that fiction is better when read in paper. With an appropriate e-reader device, I think that E can be as good as, or in some cases, better than P. At the very least, the portability factor weighs heavily in favor of E. Try carrying a copy of “Moby Dick” in P around with you to read
I also think that with the younger crowd, E certainly has an edge over P as far as being more familiar and comfortable.
Evan Schnittman makes an interesting point about the relative value of electronic and paper texts. David Rothman created a separate post entitled “Oxford U. Press exec on E vs. P prices: Depends on the kind of reading” to discuss Evan Schnittman’s comment. Hence I placed my response to his comment in the section associated with the new post. Here is a link to the new post and a link to my comment for those who have not tired of my logorrhea yet.
Regarding my suggestion of a large or “universal library” with a monthly fee several people responded. (I should note of course that the notion of a massive e-book/media library with a periodic fee (or tax support) is not original to me.) Jon Jermey responded by saying “it’s not going to happen in the current political climate.” Linda Houle wonders “how this would work for me, as a publisher!” Robert Nagle said he would “distrust it as a solution.” These are valid responses and questions. Thanks for reading! I have already written more than I expected and a worthwhile treatment of these difficult questions would be rather long. I am trying to finish a post for TeleRead about antedating quotations. So, I hope to come back to this topic but there will probably be a substantial delay.
Meanwhile, an “underground” version of the super-library is already being built from the bottom-up. A glimpse of this library is visible in an article about the top five bittorrent trackers. More than 10 million peers (people) are exchanging more than one million categorized electronic objects (torrents). The objects include movies, music, e-books, programs, audiobooks and more. (The number of people and objects were obtained by summing the peers and torrents for just the top five trackers).
Garson, re a large universal library: Here’s what I wrote a some years ago on the main TeleRead site. It’s good to see others thinking similar thoughts! In time the political climate will change in the U.S., via a combination of elections and maybe prison sentences. At the same time the Bush administration has provided a lesson. More than ever, I want private alternatives around to balance out the inevitable interference from Washington. Thanks. David
I like the idea of a universal library in the clouds that is accessible anywhere from a host of devices – cell phones, laptops, desktops, UMPCs, etc. To access this library you would have an account for which you would pay a nominal monthly fee. The library would keep track of books for you: books read, currently being read, to be read. It could also use a recommendation scheme based on your ratings similar to Netflix or Amazon’s suggestions schemes, or the gnooks social networking where it could suggest other authors you might like, if you like author X.
Sometimes however our connections go down. And many are suspicious of the future of such libraries. Google had a video service for example. When Google video went bust, all ‘purchased’ videos were lost. Virgin had a digital music store that recently also went bust, and the Virgin digital music execs advised all their customers to burn their tracks to CD and then re-rip them, if they wanted to continue listening after the online site closed up shop.
So many of us would feel more comfortable with downloaded ebooks. I know I would. Beyond the continued viability of whatever library service we subscribe to, there is the question of the texts’ validity. Remember the case of Gutenberg’s edition of Burroughs’ Tarzan of the Apes, that had apparently been scanned from a bowdlerized 1980s Ballantine edition?
The price of such ‘bought’ ebooks should be low. I agree with Charlie Stross, that ebooks are to be considered like mass-market paperbacks when they were first released. So I would say a good price for an ebook would be 99 cents. That would sell many, many copies. Longer texts could then be split up into a few ebooks for higher total prices. Indeed, it might be good to keep the 99 cent iTunes pricepoint, but break books up into many chunks of (for example) 15,000 words each. Then the typical ebook of fiction might cost $5 – $6 total, but the first ‘taste’ would only cost 99 cents. Curious readers could then risk very little on a new work or unfamiliar author, and then decide whether they want to buy and read the rest of the story. An alternate model to this would be a sliding scale with the first chapter selling for a quarter, and the final chunk selling for $2 (just for instance) so that the total price would come to the $5 or $6.
A hybrid selling concept might include both of these models a la eMusic. One difficulty of selling anything at such small prices online is the credit-card fees that kick in on micropayments.
Recently for example the record labels publicly complained that they were only getting 70% of the price of a track sold on iTunes, and Apple, the retailer, was getting 30%. The record labels considered 30% for the retailer to be far too high. But my understanding is that the credit card transaction fees for a $1 sale are about 25 cents, meaning that Apple really only gets a nickel on each iTunes track sold, out of which they must pay for the servers, bandwidth, and overhead of other kinds.
The eMusic subscribe-to-buy model reduces the total credit card transaction fees while keeping the per-track (or per-book) prices low.
Pond said: “An alternate model to this would be a sliding scale with the first chapter selling for a quarter, and the final chunk selling for $2 (just for instance) so that the total price would come to the $5 or $6.”
Right now our books are for sale on Fictionwise, with multiple formats available (including Sony) and I’ve selected the first chapter (more or less, depending on the book’s length) as a free sample on each book’s page. So a reader can already sample our books before they decide to purchase a download, at prices from $5 to $7 for the ebook. Right now this is a good system and we can pay our authors decent royalties on ebooks. They are also on sale the first week they are available, and Fictionwise offers various discounts to regular customers!
@Publishers
What if:
a) you published ebooks cheaply (less than $5) more in a magazine format ie. include advertising?
b) don’t alter the pbooks
c) Customer decision = low price + advertising or higher price without advertising.
You keep both p- and e- markets and I would argue younger people won’t mind the adverts. Old farts like me will grumble … but accept if the price is right. Caveat: DON”T try to milk profits by serializing. People see right through that and feel cheated.
If this can’t work, could someone explain to me why?