Home » Amazon, Pricing » Publishers have called on readers to be okay with their high priced ebooks

Publishers have called on readers to be okay with their high priced ebooks

27 February 2012

From Dear Author:

Last week, IPG had all of the buy buttons pulled on the ebooks it sold through Amazon. The two could not come to agreement on terms. IPG wanted to have the same terms and Amazon wanted better terms. IPG took to the internet and sent out an email aka press release denouncing Amazon, encouraging its client publishers to stand firm, and asking that all future retail traffic be diverted from Amazon to other retailers.

Essentially IPG wants the 10 million plus Kindle owners to stop using their Kindles just to read IPG’s books. Do we think that is likely to happen? Oh sure, there is going to be some who will peel away, but not in major numbers. And yes, Amazon might relent.

. . . .

Publishers have called on readers to be okay with their high priced ebooks, forego discounts, struggle with DRM, limit sharing, turned their backs on libraries, reject the money of our reading brethren outside of North America, but they want our help in shunning Amazon? What have you done for me lately?

. . . .

In sum, publishers are jacking readers over in regards to digital books but now we are supposed to act against our own financial interest or our own convenience to help publishers fight against Amazon?

We recognize that an Amazon as the exclusive vendor of books would be bad for us but what are publishers doing about it? Why is it the reader, the only party who does not make money in this equation, have to be the one to take the financial hit in the fight against Amazon? Why aren’t publishers making it easier for readers to move away from Amazon? Why aren’t they trying to appeal to our wallets instead of our morality? And what if we want to stay with Amazon for moral reasons such as that someone needs to compete with Apple and Amazon is the only one that is making an inroads there.

Here are some recommendations to win over readers. Eliminate DRM. Sell direct to Kindle owners using a mobi format. Remove agency pricing.

Link to the rest at Dear Author

Amazon, Pricing

35 Comments to “Publishers have called on readers to be okay with their high priced ebooks”

  1. P.G.

    Two words for the publishers.

    The second is, OFF!

    “Eliminate DRM. Sell direct to Kindle owners using a mobi format. Remove agency pricing.”

    Apprentice Alf deals with the first, and Epub is easier on the eyes.

    The agency pricing is the work of the devil, I will have NOTHING to do with it. I never buy, or read books sold using this pox.

    brendan

    • You never buy indie books? We may or may not deal with companies who say it outright, but the indie terms of service that I’ve seen certainly follow the spirit of agency pricing. So if I sell at 99c, the distributor can’t raise the price without my permission. 😉

    • I love agency pricing. I buy books all the time where the price is set by the publisher or author (as the case may be). If they price it too high, of course, they may lose a sale from me.

      I don’t want some retailer undercutting the value of my work just because they think they can move more units.

      • I would be happy with the old wholesale model. If I set my price at $2.99 on KDP I currently get $2.08 under amazon’s 70% rate.
        If amazon want to sell my book for $0.99 and still give me $2.08 I would be happy with that. 🙂

        • What if they wanted to sell it for $5.99 (because you were awesome popular) and still give you $2.08? The old contract allowed that.

          • If I was awesomely popular and could price my ebooks at $5.99 and sell 1,000 a month (or a day) then I would. I’d also sell them from my own site and keep amazon’s 30%.

            And while it would be theoretically possible under the old wholesale model for a retailer to charge more than list price for a book (remember that price that is printed under the barcode on paper books) I don’t think that ever happened to many books.
            Amazon certainly didn’t get were they are today by being the most expensive place in the world to buy books.

            • Totally agree… competition would keep the price from being jacked up. Of course the argument is that the Agency model keeps the competition from going belly up.

    • The high price of ebooks is a bit of a vicious circle. Publishers need to make money off their books or they can’t stay in business. The more people download illegal copies, the less publishers get in sales and their only option is to up their prices (which results in more downloads). Would people download less if pubs lowered their prices? It would be a very big risk for them to take a chance to find out. Some people might stop downloading, but I know quite a few who download because they just don’t feel they should have to spend money on books. It’s sad, because most authors are barely scraping by. We only get a fraction of the retail price. This is what I see as an author.

      As a buyer, I do think that a lot of ebooks are overpriced, especially when they go for the same price as paperbacks! It’s ridiculous. These seem to be mostly books from big houses (I feel like the smaller houses set their prices a little lower – I have nothing to back this up though). There are no print or storage fees for ebooks. There’s a set-up fee, but it has to be a lot less than doing business with a press, buying paper and ink etc.

      • “The more people download illegal copies, the less publishers get in sales and their only option is to up their prices (which results in more downloads).”

        This is a massively false assumption, in my opinion. It is predicated on a belief that someone who illegally pirates a book would have paid for the book otherwise. This simply cannot be proven. When a physical copy is stolen, the store and the publisher lose the ability to sell that copy. This is not true with a digital download. Do some people pirate books who would have bought them otherwise? I’m sure there are some, but the percentage is much, much smaller than is being bandied about by the industry.

        Please note this is not a justification of piracy. Illegal is illegal. I’m just arguing against the assumption that piracy has significantly affected publishers’ bottom lines. There is simply no way to quantify the effect of piracy on the publishing industry, because we have no way of knowing if the pirate would have purchased the book if the illegal copy wasn’t available. Most eBooks are pirated as a collection. The pirate may read 1 of a thousand books in the download. He/She may or may not have bought that one book, but the definitely wouldn’t have purchased the rest, yet they are still counted as a “lost sale” by the industry. It makes no sense.

        • I’m basing this on the theory that if everyone would pay their taxes, taxes could be lowered, but since a lot of money is going under the table the government has to raise the taxes (which, in turn, pushes people to not report their income). It appears to be a similar cycle and the only way to test this would be to lower the taxes (though of course, like with internet piracy, it’s very hard to see how much goes over the table and how much stays under).

          • I totally get what you’re saying. And it IS possible that people are stealing stuff that they would have paid for if they couldn’t steal it. But the number TradPub are throwing out are massively skewed. They take the number of illegal downloads, multiply it by the list price, and say they lost X-billion dollars in revenue. This is just a gross overestimation of lost revenue.

            With a digital download, which is infinitely replicable, it doesn’t matter how many times the file was downloaded. All that matters is how many times the lost a sale because of the download. That’s not a number anyone can calculate. Which means I could be totally wrong and you could be totally right!

            • Ultimately, its the only practical measure of damages. The copyright gives the owner the exclusive right to make copies. If a copyist is illegally making copies of the work, then the copyist at least owes the owner the list price–otherwise what’s the point in copyright? Whether the copyist is a lost sale or not is immaterial as is whether they read (listen or watch, as the case may be) the copyrighted work.

            • @Josh

              That’s great for a legal battle, but has no basis in reality for a publisher’s bottom line, which was my contention. They didn’t LOSE the money. The industry is claiming that they are losing this money every year. That’s just not true.

            • @Anthony, but I disagree–they did lose the money. The copyist made a copy and the owner didn’t get paid. It was the owner’s exclusive right to make copies. The argument that the copyist wouldn’t have purchased a legal copy in the first place (therefore they can’t be counted as a lost sale) is just a justification for their behavior to do what they want regardless of owner’s rights. We don’t condone theft of physical goods, why does everyone seem to think illegal downloads are different?

            • For reasons stated above, Josh. No one is condoning piracy here. Downloads are different (practically, not legally) than physical goods. If I steal a physical product, I both take the product and deprive the seller of the ability to sell it. There is a finite amount of a product to sell. Every time one is taken, you lose the ability to sell it to a customer who WOULD have paid for it. Actual revenue is lost. This is just not the case with an infinitely copyable download. The only way the publisher loses ACTUAL money is if the pirate would have bought the book if the illegal copy did not exist.

              Lets try it another way: If I have ten apples, and 30 people want apples, apples are worth more than if I have ten apples and 5 people want apples. If someone steals my apple, and 30 people want apples, They have stolen MORE from more than if 5 people want apples. Supply and demand determines the actual value of the apple that was STOLEN.

              Now, I am a magician who can replicate apples at will. Everyone around me can ALSO replicate apples. I do expect to get paid for this service. Buying a replicated apple arbitrarily costs $2.99. If someone (who wasn’t going to buy an apple from me anyway) comes up and steals an apple, I haven’t lost any money, because the apple, on it’s own, is VALUE NEUTRAL. Its my ability to provide the service that is valuable. The apple has no intrinsic value. This is the difference between stocks and commodities. A book is a commodity. An eBook is like a stock.

              Now, someone has stolen from me, and I’m pissed, and I want retribution, and I want them to pay for the apple. And I am in the moral right. But I did not lose money, because the thief had no intention to buy from me, nor did I lose the ability to sell as many apples as I want.

            • @Anthony I’m familiar with your argument, but my counter is that it’s bunk. Your argument is a justification for the thief that because no *real* harm has occurred to the owner it is okay for them to take it. It’s a rationalization. Also, I would say that actual harm has occurred to the owner–the exclusive right to make copies was violated by the thief. Sure, maybe the thief would not have bought a copy, but that is irrelevant–the thief made a copy against the owner’s right of exclusivity.

            • Eow @Josh! I’m really struggling to decide how to best reply here. I have no desire to argue with anyone, but I really feel like you are now intentionally misrepresenting me here. Since I always use my real identity while on the Internet, I feel compelled to clarify a few things, then I will leave off, regardless of the response.

              First of all, I have clearly stated, and will again, that piracy is both illegal and immoral. You have chosen to take what I say out of context and label me as somethIng I am not. I have in no way provided this argument as a justification of piracy. If you think that the argument works asnajustification of piracy, then you clearly don’t understand the real issue, which is a moral one.

              Secondly, my whole point was that the publishing industry blames piracy for diminishing margins, lower advances and ebook pricing, when piracy’s effect on these things is negligible at best.

              Piracy is wrong regardless of how it effects the publishing industry. Please don’t take my statements out of context in the future.

            • @Anthony sorry if I offended you–it was not my intention. But I think you are overreacting. You keep saying that the publishing industry is over-inflating its lost sales to piracy and that piracy’s effect is negligible–I disagree with that because the only measure we have is the copies that were made against the owner’s will. Its also the argument that copyists use to justify their theft–I didn’t say you were a thief or immoral. I don’t think that harm negligible–I think its had a pervasive effect on everyone involved at making a living off of content creation and distribution.

            • Sorry if I overreacted to you. I’m glad to know that you were not intending to be offensive. I didn’t think you were accusing me of theft or immorality, I thought you were accusing me of justifying piracy. We will have to disagree on the level of harm that piracy does on the actual creator of content. The post I was responding to was specifically about piracy raising the price of eBooks. All of my comments were directed at that statement. I simply said that a direct correlation cannot be assumed, because that would imply that most piracy resulted in a lost sale.

        • It is predicated on a belief that someone who illegally pirates a book would have paid for the book otherwise. This simply cannot be proven.

          In the small-press universe of role-playing games, I believe the dominant theory is that most pirates are collectors — they don’t actually read and play their material, but use it as a form of social currency, acquiring and making available the material. It’s important to stamp on the ones re-uploading the stuff, if only to keep piracy from being “normalized” in the minds of people who wouldn’t pirate unless “everyone else is doing it,” but in general, pirates don’t seem to be “lost sales”… I know at least one PDF-seller who states, “We’re not going to treat our customers like criminals; no DRM. Further, you can re-download what you buy here (if you have an account so we can keep track), indefinitely. If we get ripped off, we’ll have to shut down.”

          So far, they’ve had their e-store open for years and it’s growing, so I guess people aren’t ripping them off. And, it should be noted, the site prices PDFs cheaper than paper; they don’t have to make small press runs, so they can pass the savings on.

          Meanwhile, there’s iTunes, which started out with DRM (that was not particularly visible) and a cheap price and a really easy way to download it. Don’t have to go to shady sites, don’t have to worry about viruses, don’t have to worry that the song won’t be what it claims to be… Just have to click a button and pay a trivial sum. This model is, clearly, highly successful! It probably captures the fence-sitters via convenience and a low price.

          And then there’s Baen, which also offers e-books, for below-paper prices, without DRM. Piracy doesn’t seem to have caused them to have to change their model, and they’ve been doing it for a while now…

          I think the key is a combination of Respect the Customer, Pass Along Savings (to some extent), and Make It Easy. Get those three, and the evidence suggests you’d only be subject to piracy from the people who really-o, truly-o wouldn’t buy it anyway.

          • I obviously agree whole-heartedly with what you are saying. Requiring DRM on eBooks actually HURTS the publishing houses. DRM is only cost effective when done on the sales end, like Amazon and iTunes, who are dealing in massive quantities. This means that when disputes arise with Amazon, the publishing houses can’t simply sell a .mobi direct to their customers from their own site. Imagine how much leverage that would give them over Amazon? Right now, if Amazon is in a dispute and removes a publisher’s titles, the publisher loses 80% of their eBook sales. What if that could be limited to 40%? That would buy them twice the time during a dispute to negotiate a better deal.

            Speaking of the music industry, the other thing that I read and have to laugh at is the relative value of a music track vs a book. Publishers content that because of costs, $9.99 doesn’t make them enough money. I have to laugh. I was in the music industry for ten years. For an indie artist, $5000 per track is a low end cost. This doesn’t include royalties payable to producers, artwork, promotion… nothing. Just paying the studio. For a big label artist? $1,000,000 per track is not uncommon, at the high end. Not per album. PER TRACK. Of a download that sells for $1.29.

  2. The whole IPG thing with Amazon is a bit bizarre. Why a distributor would be insisting on distribution of ebooks is beyond me, but then the battle has nothing to do with pricing really. Publishers and distributors are terrified that the middleman will be cut out of the picture. Authors and agents are already catching on that, especially where ebooks are concerned, they don’t need a distributor and make much more money if they deal with Amazon directly. This whole battle, despite the disingenuous rhetoric is about who will control distribution.

    • Yep, that’s exactly what I was going to say.

    • Agreed, Eric. I think distributors are even less important in the new world than publishers are.

      • To be fair, there are many valuable services that a publisher provides at no upfront cost. The problem is the most important service they provide (access to distribution and sales channels for physical books) is becoming less and less relevant. Everything else they provide can be paid for upfront by an author for a reasonable fee.

  3. The wild spasms of an obsolete dinosaur’s death rattle. Shed a tear for the poor Publishers, finding themselves adrift without purpose, demanding that the world slow down so they can get back on again.

  4. Either you’re in the business of selling books, or you aren’t.
    IPG has evidently decided it isn’t.

  5. While I sympathize with IPGs position that margins are small enough as it is for Publishers and Authors THEY ARE THE REASON THE MARGINS ARE SO SMALL.

    Fact: Readers are not going to pay as much for an eBook as a physical book. It’s not just the content that you buy with a physical book. It’s the right to use that content as a doorstop, to lend it to someone else, to GIVE it to someone else, etc. None of these rights are available in eBooks. So, no, we won’t pay as much.

    Fact: A physical distributor is COMPLETELY UNNECESSARY for a digital product. Don’t try to sell us that you are fighting for the publisher and the author’s share. You’re trying to keep your piece of a smaller pie that, quite frankly, needs to be divided one less time for everyone (else) to be happy.

    • Absolutely. I’ve been wondering for a while why trad pub thinks they need distributors for ebooks. Really? Get those unpaid interns to format and upload. It’s NOT HARD.

      Oh, but wait, publishers have *always* had distributors — it’s how things are done! Middlemen, we needz them!

      Also, I like IPG’s arguments about why ebook prices should be so high… except that the (now over 50%) return rate of physical books isn’t formulated into their cost analysis – at least, not that I could see.

      • I believe (with no links to support at this time) that distributors are insisting on distributing the eBooks, or they will not distribute a publisher’s regular books, either. The middle man appears to be squeezing both ends.

        • That’s not always the case, Anthony. I know some small publishers who use distribution for ebooks as a matter of choice. They are painfully over extended already, and it’s easier for them to outsource the “new thing” (ebook production and distribution) than it is to learn how to do it right, staff it, and bring it in house. That may or may not be the right choice, but it’s one I see them make while looking at the bottom line, not based on pressure from distributors.

          Rich

        • Baen at least seems to’ve dodged the “if we can’t have your ebooks, we don’t want your physbooks, either” bullet. Possibly because they never offered the ebooks, reserving those for themselves, from day one. Expectations were set: you want an ebook published by Baen? Get ye hence and buy it! For $4-$6, usually, and $15 for e-ARCs.

  6. “Why is it the reader, the only party who does not make money in this equation, have to be the one to take the financial hit in the fight against Amazon?”

    Love this.

  7. “For a big label artist? $1,000,000 per track is not uncommon, at the high end. Not per album. PER TRACK. Of a download that sells for $1.29.”

    Anthony,

    I’ve heard kids produce broadcast quality fidelity in their bedrooms with modern Keyboards, a “Maschine,” and a couple of decent mics. I have used a studer 4 and the modern digital stuff is astonishing by comparison. The Beatles would have been in the studio for years. The Beach Boys would never have come out!

    I’m just wondering where the big studios are spending the money these days?

    Lots of A@R fairy-footed folk finding recreational chemicals and ladies/gents of poor moral judgement?

    (Lightly)

    brendan

    • Haha, yeah, I know, it’s insane… part of it is a trend towards retro analog gear. Part of it is that New York and LA’s top engineers cost thousands of dollars an hour instead of hundreds. “Broadcast” quality is achievable. Let’s call “Broadcast” quality 93% of the way there. It’s the other 7% that costs so much. It’s flying musicians in from Europe that costs so much. It’s having the ability to change your mind on something and go back and redo it that costs so much. It’s firing your producer in mid-project and starting over that costs so much. Things that those of us on a reasonable budget would never consider.

Sorry, the comment form is closed at this time.