If publishers cannot control e-book retail prices, how should they set their own?
May 18, 2012 | 12:45 am
On the Columbia Journalism Review, Ryan Chittum has a rebuttal to a number of recent posts about e-book production costs and price, including the post by Mathew Ingram that I covered here. Though the article is replete with quotes and counter-arguments, but the central thrust seems to be that publishers ought to be able to charge what they want to—but they really should be wanting to charge less.
At base, copyright holders have the right to ask what they want to get for their work (which is why they were so concerned about Amazon selling ebooks at a loss). If they set the price too high, nobody will buy the book and they will lose money. If they set the price too low, lots of people might buy it, but they will still lose money.
Though I may be oversimplifying his argument, the problem with this is that it really isn’t how the market works. Copyright holders have the right to ask what they want to be paid wholesale for each copy of the book. What happens to the book after it’s bought and paid for by the distributor shouldn’t be any of their concern. Amazon could sell each e-book for a thousand dollars or pay people $10 to read it. (Or at least that was the case until the Justice Department noted as part of its settlement that they need to be making a profit on a given publisher’s works as a whole.)
On a related note, the ever-interesting Mike Shatzkin’s latest column also has to do with e-book pricing. Shatzkin mentions that, in pre-Amazon days, a lot of publishers would sell copies of their books at full retail price via mail-order to people who wanted them and couldn’t find them anywhere else.
He brings this up to note why the idea that publishers should stop printing cover price on books so bookstores could be free to charge more, brought up by American Booksellers Association president Bernie Rath in the ‘90s wouldn’t have worked—if publishers kept selling books at their own retail price, consumers would soon have found out what stores were “ripping them off” by charging more. (This hasn’t stopped others, such as Ed Handyside of UK publisher Myrmidon Books, from proposing a similar idea more recently, however.)
The point is to note how tricky the question of publishers selling direct to retailers is now. Certainly, they can do it. They can do it even better than they ever could before Amazon, thanks to the Internet, especially if what they’re selling are electronic books. The problem is that the question of pricing backs them into a corner. In an agency-less market, if the publishers sell at full retail price, Amazon can undersell them.
But if the publisher discounts, they face another problem. Amazon (and every other retailer) would say, with ample justification, “the retail price my discount and margin should be based on is the price you sell it for.” If “publisher’s retail price” means anything, it must mean that! Just like when publishers didn’t sell direct in the all-print world before online happened, the price the publisher says is the retail price is what intermediaries would expect to see them sell the book for.
The only way a publisher could get away with discounting their own e-book prices in such a situation, Shatzkin posits, is when, like Baen or for that matter Pottermore, they don’t have to sell through any other stores but their own.