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E vs. P: Wise words on the revenue risks of e-books to p-book publishers
February 26, 2007 | 7:55 pm
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By David Rothman
“If e-books are marginal, their impact will be small. If they are to be successful, they may have to be much cheaper than printed books. If they are much cheaper, they could well undercut both publisher and author incomes. Only a substantial increase in additional unit sales will pay for what e-books may well do to p-books.” – Ethan Ellenberg, a literary agent.
The TeleRead take: Amen! This may not be what some e-book boosters want to hear, but that’s the reality—and one reason why I’m so keen on global literacy programs, the $100 laptop project, and well-stocked digital national library systems with fair compensation for copyright holders. If indeed paper publishers are using DRM and high prices to hobble e-books or at least aren’t as gung-ho as we’d like—well, we need to look at the entire picture. My own hope is that virtually all modern classics will be available someday as e-books, even while still under copyright, and that means getting access to the back lists of p-publishers.
Some hope: I notice that Norman Mailer’s latest is available as an e-book from Random House.
Photo credit: CC-licensed photograph by V+K
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Comments:
Ethan Ellenberg is on to something. Unfortunately, what stops us from buying more p-books is not their price but the fact that there is only so much we can read every day, so unit-sales will not increase by much. But there is nothing that stops us from wanting to pay less. In fact, the e-book revolution will not only be driven from our desire kill fewer trees, but also from our desire to spend more money on chocolate. Someone is going to get less money from us.
E-books will have to be cheaper than p-books in order to be successful. In fact, on the pleasure reading market, once eBook devices become a decent alternative to paper, they will have to compete with pirated copies, so they will have be much cheaper. Also, unlike dead-tree-books, they do not degrade, which means that used e-books will remain in the market, in pristine condition, setting a boundary on margins for backlists. Eventually, e-books will probably not be sold at 10$, as Ellenberg suggests, but perhaps at 2$ to 4$, thereby undercutting the huge gains in efficiency that publishers might experience if they can drop physical production, storage and distribution.
If electronic reading takes off, the e-book revolution is just as inevitable as the mp3 revolution. It may be good news for lesser-known authors, which have a chance to increase the number of potential readers due to electronic distribution channels. For those which were already able to make a living from their books, and for those publishing and selling them, it may bite a heavy chunk out of their revenues. This is even true if e-books exist in parallel to p-books, because they will cannibalize a part of the market and put pressure on prices.
Ellenberg makes it sound as if publishers should perhaps decide against e-books. I am not sure if, in the long run, they have much more of a choice than the music industry has when deciding about supporting MP3. People want electronic paper devices with cheap e-books on them. Eventually, someone will deliver, and the others will have to adapt or perish. E-books do not mean easier business, they ask for new business models.
Clearly eBooks eliminate a lot of costs. If you don’t think huge costs will remain, though, you’ve never managed an editorial process. Getting books ready to print is work–even if that printing is virtual.
Josha is right that there are a limited number of hours in a day–but expanding the number of readers is key and literacy is critical for that. As an ePublisher, I will say that my sales (and I suspect most ePublisher’s sales) come from all over the world. Literacy is part of the answer.
Saw an interesting article on comic books. According to this article, the comic book market has bifurcated. Collectors buy paper. Those who actually read the comics buy electronic versions. Why? Cheaper and more convenient. Hey–that’s the eBook message. Here’s the URL at over at CNET’s News.com.
Rob Preece
Publisher, http://www.BooksForABuck.com
Joscha and Rob: I think you’re both right, all in all. Some points to consider, however:
1) Publishers can’t decide against e-books, in the end since the barriers to competition are so low, but they can control rights to modern classics, a matter of interest to me.
2) Given the time constraints on existing readers, literacy may even be the biggest part of the answer.
We also need consider what limits time. We can’t take away TV, video games, etc., but it is noteworthy that here in the States, many people are working longer hours they should have to.
Thanks,
David
At What Price?
I’m wondering about whether an ebook should be considered the current version of the cheap paperback book of the 1950s when cheap paperbacks washed over North America.
What was the price back then of a paperback? 10 cents to 25 cents? (I really don’t know but I think that was it.) Those paperback pennies had to be shared also – some going to pulp mills for paper, some to distribution trucks and employees, and finally to the drug store or dime store.
It’s really remarkable that a few pennies could have stretched so far.
So given inflation, would a 10 cent 1950 paperback sell for $2.50 today? Or would it be more like $1.99?
As far as “limited time” is concerned, we have just as many (few) hours in a day in 2007 as they did in 1950. Wider ebook sales will have to come about via the same avenues that cheap paperback sales did – by selling to more people. Cheap paperbacks were undercutting “expensive” ($5.00) hardbacks back then. Did publishers or authors resist releasing works in paperbacks? I’m sure some did … but not for long. By the 1960s when I was a lad and starting to buy books, all the publishers of fiction released in paperbacks.
You are making an excellent point here, pond. (As an aside: we do have fewer hours a day. We work longer hours, and afterwards we do not read pulp novels, but watch TV or surf the internets.)
Re work hours here in the States…
Here’s some information: “Although the 40-hour week is still considered the benchmark in American work culture, most researchers would argue that it is nearly as obsolete as most of the factory jobs to which it was originally applied. According to a recent survey by Expedia.com, 63 percent of Americans work more than 40 hours a week, with some 40 percent exceeding the 50-hour a week mark. More than $21 billion dollars in vacation time goes unused annually (and back to employers!), as we spend 2.5 more weeks and three months more at work than do our Japanese and western European counterparts, respectively.”
Pond and Josch, I’m reflecting an American perspective. I’ve no doubt that people in Europe and other places are much better off in terms of work hours. Of course we have lower unemployment, but then so many people are in MacJobs—slinging hamburgers.
As for vid games, etc., eating into reading time, yes, that is also a factor and one reason why I have mixed feelings at best about Second Life.
Thanks,
David
I don’t remember ten cent paperbacks in the 1950s. I do remember when a James Bond book was 60 cents (in 1966). Using the US Bureau of Labor Statistics inflation calculator, this would work out to be $3.75 today. (http://www.bls.gov/cpi/). The James Bond books are short novels–most novels today are longer, and longer has always been associated with higher prices. So, let’s say somewhere between $3.75 and $6.00 for a book today. Not too far off what paperbacks sell for. I won’t speak for all publishers, but I will suggest that at least some (like BooksForABuck.com) provide eBooks in exactly that price range. (prices range from $1-$3.99).
Paperbacks were once released well after hardbacks, to avoid diluting hardback sales. Many publishers avoid diluting hardback sales now by pricing eBooks at prices comparable to the current best price of paper books. For example, The Da Vinci Code sold for hardback price until the paperback came out, when its price was reduced to the paperback price.
Bottom line–I really don’t think price is the issue in whether eBooks are accepted or not, but I certainly do believe that setting an affordable price point would help us expand literacy throughout the world.
Rob Preece
Publisher, http://www.BooksForABuck.com
Don’t you think some of the cost lost for selling cheaper ebooks would be offset by the consumer being unable – at least legally – to pass them on to friends or sell them at used book stores? Right now, most of the books I buy “new” are ebooks. If a book is only available in print, I tend to look in the used book store.
Because my ebooks are subject to DRM, I can’t share them with my regular reading circle, unless I’m willing to hand over my PDA, too!
An interesting comment, Miki.
I wonder how much value the average customer places on the ability to pass along a book–or to be able to sell it to a used bookstore. I think the used bookstore in Dallas (Half Priced Books) pays about 5% of the cover price for hardbacks but about nothing for mass market paperbacks. This would be the low end, but I wonder how much higher the average reader would put it. What do you guys think? Is the ability to resell or pass along a real value or a red herring in the eBook discussion?
Rob Preece
Publisher, http://www.BooksForABuck.com
Personally, I strongly believe that the ability to pass books along to friends is a crucial feature of books – it is an important way of sharing experiences and ideas, very much like giving music to friends. (Just imagine you could have every idea and bit of knowledge in the world, but were not allowed to tell anyone! Wouldn’t that be a bummer?)
It is imaginable that passing on requires to delete the original or incurs an additional fee (possibly lower than buying a new original). But is in not clear if it can be culturally established. I think that in order to do so, it would have to be legally established (i.e. current consumer friendly laws for instance in Germany would have to be changed), and technically enforced – and of course the customers will not like that at all.