Eons ago Crown Books—the retailer, not the publishing group and imprint—made a splash with its slogan, “Books costs too much.” Crown is out of business now. A warning for discounters, among stores or publishers? Not necessarily.
First, Crown may well have survived if it hadn’t been for a family feud between a Harvard MBA son and his crazy father, some nasty fallout from the latter’s divorce. Second, I happen to think that price is a major source of resistance for buyers, who have so many alternatives to new books, including used p-books, which pay writers $0 in royalties.
The best price, of course, is free—one reason I favor a well-stocked national digital library system, with proper compensation for writers and publishers. Not that this should be the only biz model. I want the private sector to thrive, and I was pleased to see Why we need $4 books, a wise essay in the Huffington Post from none other than Mark Coker (photo), founder of Smashwords and a TeleRead contribuor:
I’ll reproduce an excerpt from Mark, then quote a different perspective from another of our valued contributors, Michael Cairns, the former president of Bowker:
The day has come for publishers to offer a $4.00 book.
Most books are too expensive. Compared to lower cost alternative media sources, books are becoming niche consumables like caviar.
The high cost of books jeopardizes not only the future of books, but the future of the book publishing industry.
Unless authors, publishers and booksellers cooperate to bring down the cost of books, book publishing faces a painful decline, much as we’re now witnessing with newspaper and magazine publishing.
Here in the U.S., most consumers already think twice before shelling out $7.50, $15.00 or $30.00 for a good read. If a book at the current prices represents a big purchase for citizens of the world’s most affluent economy, imagine the cost burden for the vast majority of the world’s literate people.
I’m not saying $4 should be the price of every book; for example, how about highly specialized works whose readers would buy them at just about any price? But Mark’s big point, that e-books cost too much, resonates with me. And now—Michael’s viewpoint:
For some reason books seem hold a special spot when it comes to pricing theory – you don’t seem to hear too many people telling Mercedes they should lower their car prices to a $1,000. It is very easy to suggest that books cost too much but there’s little evidence that demand is elastic. I’m all for lower prices but there are only so many readers – to expand the readership requires publishing content they want not lowering the prices on the same stuff that is churned out by today’s publishing companies. If we want to increase demand it is the product that should be addressed not simply the pricing. If a $4.00 book is still as crappy as a $35 book the reader is still not coming back; building reader loyalty through the delivery of products they embrace and aren’t disappointed by is what will support growth. Pricing is an element but it is not at all the panacea.
But Michael, what if people don’t want the frills, just the basic text?
Image: CC-licensed photo from none other than Rochelle Hartman, the librarian of Tinfoil and Raccoon fame, who has contributed to TeleRead.
To my knowledge, not even those companies only publishing ebooks work with plain text as their basic file format. So, to provide text as a low-cost alternative to more polished versions actually requires additional work on the part of the publisher.
Why? Because it’s not as simple as saving to plain text, especially with regard to fiction. Readability is still a factor, which means italics have to be replaced where they’re needed. There are issues of spacing as well, and removing formatting elements that don’t convert but don’t convert, either. It takes me about 20-30 minutes to render my working file to plain text so I can send it to the Library of Congress.
The basic problem with discussions of ebook pricing is that those who do most of the complaining about price see only the finished product. And they say to themselves “I can do this in ten minutes.” They’re probably right, but to assume every reader has that same ability–or even the desire–to set up the book reveals why the issue of ebook price is never going to be resolved.
What’s more, most if not all of those who complain about the price have never taken a writer’s manuscript from draft to final galley. They have no idea how many hours go into editing, copyediting, proofing, correcting, revising and, finally, formatting. Not to mention cover art, meta data creation, copywriting descriptions and cover copy.
I don’t agree with the mainstream publishers that ebooks should be priced at or near the price of the print version. However, to continue to insist that ebooks should be cheap because they “don’t cost anything to produce” reveals an ignorance of the mechanics of publishing.
The Mercedes analogy is an interesting, but ultimately flawed one. Yes,
very few people tell Mercedes that they should sell $1000 cars, but the
fact of the matter is, that the vast majority of car buyers will never
own a Mercedes, at least not a new one. They are cars that are bought,
in large part for their prestige value — yes, some might buy a Mercedes
for its safety features, but for the most part, there is little that the
average driver is going to do in a Mercedes that a Ford of comperable
size can’t too for significantly less money. And here is the thing,
books are generally not prestige items, and most books (except text
books, technical manuals, reference books and the like) are not in any
way shape or form necessary purchases. Most people buy books to pass
the time. In many cases books are impulse purchases; at least they are
when he price is low enough.
Likewise, lets remember something; in books, the brand is not the
publisher the author is (There are some exceptions, but those will
remain exceptions and not change this basic paradigm). If we surveyed
people about who wrote The Da Vinci Code or the Harry Potter Series, I
suspect, that vast majority of people would give you the correct answer
(even if they never had read the books); ask them who published those
books and I suspect the majority would not know the answer. If an
author switches publishers, the readers will follow. Therefore, there
is little real advantage in the publisher “improving” their product.
Particularly if such enhancements will significantly increase the cost
of the product.
Is there a way to get around this basic fact? I doubt it. Media,
unlike other products, has proven rather resistent to building brand
identities that stretch across more than a narrow range of products (For
example, Star Trek, Star Wars, CSI and Law and Order). People are not
going to be more inclined to buy a book because Putnam published it, or
watch a TV show simply because it is on NBC.
Now lets go back to the price issue for the moment. A DSL connection
costs $20 a month, Cable TV maybe about $70 a month. Both will provide
essentially unlimited distraction during that period for those who want
to spend their time using the internet or watching TV. Books have to
compete against that. Lets say the average dedicated reader can read 2
books a week. Thats going to essentially boil down to 9 books a month.
Even at Amazon’s $10 a book, that makes books one of the more expensive
entertainment propositions.
So why do we need cheaper ebooks? Because so many other forms of
entertainment are cheaper as well.
“why the issue of ebook price is never going to be resolved.” and, “They have no idea how many hours go into editing, copyediting, proofing, correcting, revising and, finally, formatting. Not to mention cover art, meta data creation, copywriting descriptions and cover copy.”. Blah, Blah, Blah, and so forth. Bottom line – we (the readers) don’t care. We simply do not believe that publishers are telling us the truth, and we know many of these “costs” are part of producing the paper copy, so at best, only a portion of the cost should be distributed to the cost of the e-copy. We also heard a lot of the same arguments from the music industry, predicting the end of life as we know it if music was sold by the song for 99 cents, and if they couldn’t continue to gouge us on album prices – and we all know how that turned out. I believe the issue of ebook pricing will be resolved, either the publishing industry comes up with a fair price for ebooks, or they will not be around any more. And by the way, have you read a hard cover book lately? If they are paying for proofing they are getting robbed!
People have too many hangups about prices. I’ll be paying more then $10 for lunch today at the Mongolian Grill, so any book that costs less is probably not horribly overpriced. Hell, a good beer in a restaurant would cost at least $5, so is an ebook worth less then two beers? I guess many people think so.
More important than cheap pricing, books need to be interesting enough to buy. While a lot of major publishing is junk, at least in my opinion, there are still book I want to buy and read. But so far I haven’t purchased from the small publishers like Smashwords because I haven’t seen any title that capture my interest. Sure, there are probably good books independently published (I do plan to buy and read a Steve Jordan science fiction novel someday when the book queue is a bit shorter) but in competition with known authors or even the free classics, the indie titles are a low priority even if they cost less.
So it comes down to I’d more likely pay $9.99 for the new Greg Bear novel than $4.00 from an unknown author.
Bill M is right… though the Mercedes analogy would have worked if other carmakers were selling $800 cars.
The situation created by digital files is akin to automakers selling $20,000 cars suddenly being in competition with small companies selling $1000 cars that did exactly the same job as the expensive cars, but without the burled walnut finishes and Corinthian leather. Even Mercedes would figure out that they’d have to lower their prices to compete (no leather and wood interior is worth another $18,000)… or learn to ditch the “luxury” trappings and start selling $1000 cars.
The choice of the selling price for the ebook should be made by the ebook’s author. And I think that it would be wise for authors to follow Mark Coker’s suggestion: price your ebooks as low as possible. This may increase the number sales, and it may discourage piracy. It will certainly warm the hearts of your readers and prospective readers.
I was thinking that $ 2.00 to $ 5.00 (USD) would be a good price range, depending on the size of the book and the complexity of the production work flow, as described by Elizabeth Burton in a comment below.
Some people people can’t believe that a 2-dollar or 4-dollar ebook can be well written, carefully edited and professionally produced. There are people who judge the quality of anything, and everything, by the price: the higher the price, the better the product.
Now is the perfect time for ebook authors and publishers to dispel this foolish myth.
Michael Pastore
50 Benefits of Ebooks
Price: $ 2.00
As noted, I think price should depend on the book, but my novel The Solomon Scandals comes sort of close to $4, with a $5.95 list price in E. When on sale, it probably will reach $4. And that’s fine with me.
No, this isn’t an abstraction! First-hand, I’m aware of the issues here. I’m delighted that my publisher, Twilight Times Books, has been so sensible on the price issue.
David
Interesting debate. I think Coker’s got a point; should I “rent” a $12 ebook version of some mass market novel, or rent a $4 movie? Let’s not kid ourselves you can “buy” a book on the Kindle…
With respect to Ms. Burton and TheRealBillC, how much effort goes into
producing an ebook and how much the public believes the publisher’s
protests is all besides the point. Ultimately what matters is whether
the ebooks authors and publishers produce are able to attract customers
at the prices that the publishers are willing to charge.
I am not sure whether $4 novels are necessary to attract an ebook
audience or not. What I do know is that whether the book costs $4 or
$10, the consumer better believe they are getting value for their money.
I suspect that other than immediately after the release of a novel, $4
is closer to the right price than $10. Publishers have to get their
costs down to a point where they can sell ebooks cheaply and still make
a profit. If they don’t, then I suspect that more and more authors will
have to self publish if we want the novel to remain a viable medium in
the 21st century.
The average mark up for a piece of furniture is 1000% of its manufacturing cost. The average mark up for a book is much, much lower. I don’t have those figures, but most publishers say they have a 3-5% profit margin.
Meanwhile, the distributors take a vast majority of the profit. In ebook distribution, the average cut for a distributor is between 50-66% of the book’s price. That means that the publisher can’t price a book too cheaply if it wants to sell ebooks in the venues where a vast majority of people buy books. The distributor won’t make enough profit so they won’t be interested, and the publisher will go bankrupt.
In comparison to other product creators, publishing has always been crippled because of the cheap price of books. Until the middle to late 20th Century, a book wasn’t considered a manufactured good; it was a precious piece of culture that must be priced cheaply so anyone could buy it. The publishers were rich, cultured folks like the Simons who published books they believed needed publishing, and they weren’t in it for the all mighty buck or for stockholders.
When the conglomerates took over publishing, they didn’t care about the books, they cared about the profit, but they were trapped by the expectations of buyers who expected low-priced books.
The conglomerates began to cut the cost of creation by lower the cost of authors– authors now make smaller royalties and advances than they ever have– and by cutting the cost of editing by paying editors less and making them do more and more.
Meanwhile, the distributors and the book chains and stores have faded away until only a few now control the flow of paper books to consumers so they control much of the profit, and Amazon has the ebook publishers in their grip with their control of both the price of the book, its look, and a large percent of its profits, and the other big distributors are beginning to follow their lead to the detriment of publishing’s financial health and existence.
And you all whine about wanting a $4 book and think it’s all the publishers and authors’ faults that you can’t get one? Obviously, you really don’t understand the publishing business.
It’s true, I don’t understand the publishing business. If distribution is eating up 66% of the cost of a paper book, than surely ebooks (with their potentially low distribution costs) should be cheaper than pbooks. Whatever math the publishing industry is using, it’s not what I learned in school.
The RealBillC says ::It’s true, I don’t understand the publishing business. If distribution is eating up 66% of the cost of a paper book, than surely ebooks (with their potentially low distribution costs) should be cheaper than pbooks. Whatever math the publishing industry is using, it’s not what I learned in school::
That 50-66% quote is about ebooks, not paper books.
Does it make any sense that publishers would agree to sharing 66% of their profit just to have their book on the Kindle?
Personally, I don’t think so. The Kindle wouldn’t exist if it didn’t have high-quality books from the major publishers. The publishers had the power to say “H*ll no,” and they didn’t because they couldn’t get it into their heads that publishing was changing and ebooks were a growing market with major potential. They also hadn’t paid enough attention to the costs involved for the distributors to see that they were being robbed.
These publishers trapped themselves and the small indies into this financial trap, and I doubt this will change.
For a look at how well, ebooks are doing recently, this blog by literary agent Kristin Nelson talking about the last quarter’s royalties from her authors is worth a read.
http://pubrants.blogspot.com/2009/10/tectonic-shift.html
I’ve been selling books at the $4 price point for years ($3.99 in most cases, with $1.00 for the initial month of availability). I do think there is some price elasticity for books. I’m not sure how much there is for best-sellers, though. When Harry Potter books were coming out, did people spend a lot of time thinking about whether they needed to be a few bucks cheaper?
My model is affordable electronic fiction. But I don’t think everyone has to match the BooksForABuck.com model in order for eBooks to continue to gain share in the marketplace.
Rob Preece
Publisher