Home » Amazon, Big Publishing, Non-US, Pricing » Amazon’s Naggar tells publishers to slash e-book prices

Amazon’s Naggar tells publishers to slash e-book prices

5 September 2017

From The Bookseller:

Amazon’s publishing chief David Naggar has said publishers should slash their e-book prices to 99p to sell more books. However, publishers have retorted that this move would be “economically unwise” and would damage the whole book supply chain.

Speaking to the Daily Mail, David Naggar, v.p. of Kindle Content at Amazon.com, suggested that traditional publishers should follow the lead of self-published authors when setting e-book prices, arguing that a lower price point is a form of marketing which would encourge more people to buy digital books.

“I look at price as a tool for visibility. You can either spend a lot of money on marketing or you can invest it in a super-low price until they get the flywheel going of the recommendation engines – and this is just for Amazon”, Naggar said.

He added: “What self-published authors will do is they will publish a book and sell it for 99p right out of the gate… Publishers [with new authors] could much more afford to do that than self-published authors. If I have two books in front of me and I don’t know either author, and one book costs £9.99 and the other is £2.99, which one am I going to take?”

However, professionals in the industry have pointed out there are big differences between traditional and self-publishing business models, with Nicola Solomon, chief executive of the Society of Authors, branding Naggar’s comments as “naïve”.

“He makes a direct comparison between publishing companies and self-published authors, but conveniently avoids the fact that the economics are completely different”, she said. “Self-published authors on the Kindle Direct Publishing (KDP) platform earn between 35%-70% of the e-book retail price (where traditionally-published authors earn 25% royalty on e-books)– that’s why they can discount to that level and still enjoy a decent income if their book is successful. But I doubt Naggar has considered the likely impact on the incomes of traditionally published authors if their e-books were discounted to 99p as standard. The routine discounting and implied devaluing of printed books – often at the authors’ expense – is already a big problem. The last thing we need is to encourage even more discounting on digital platforms.”

Stephen Lotinga, chief executive of the Publisher’s Association, also noted the difference in business models and added that Amazon thinks they have publishers “over a barrel” because of its high e-book market share – estimated to be around 90% in the UK.

. . . .

According to statistics from the Publishers Association’s Annual Yearbook, sales of trade e-books fell by 17% in 2016 to £204m.

Alessandro Gallenzi, publisher at Alma Books, argued that publishing books and nurturing authors requires long-term investment and that lowering the selling price of titles is “not only economically unwise”, but “damages the whole book supply chain – author-agent-publisher-wholesaler-bookseller-end user”. He added that cheap prices damage authors the most because it “devalues” and “homogenises” their work.

He added: “It is damaging also, in the longer term, for Amazon, because it is devaluing its offer across the board, when in fact it should be looking at encouraging publishers to increase their available e-book range. I think some publishers (and authors) are still reluctant to see their books be digitised, and perhaps Amazon’s drive towards skeleton pricing is one of the deterrents. I know I have already said it, but I’ll say it again: a book is not like a banana!”

. . . .

However, Matthew Lynn, c.e.o. of e-book publisher Endeavour Press, which recently launched a print arm, on the contrary maintained that “the market decides the price, and it’s the job of the publisher to make money at that price”, adding: “If you can’t make money, then lower your costs”.

. . . .

Andrew Franklin, m.d. of Profile Books, added that the self-published 99p Amazon e-book “bears no comparison whatsoever to a real book properly published”, and alluded to Amazon’s unwillingness to share data about the e-book market.

“The self-published 99p Amazon e-book bears no comparison whatsoever to a real book properly published. That is why the successful self-published authors will always move to mainstream publishers when they have a chance,” he said. “And there are almost no examples of people moving the other way. Of course I respect David Naggar’s position.  He has access to an enormous amount of data that nobody else ever sees. But I wholly disagree.”

Link to the rest at The Bookseller

PG says:

  1. Amazon sells more books than anyone else.
  2. Amazon sells more ebooks than anybody else.
  3. Amazon owns the world’s largest cloud computing system, Amazon Web Services.
  4. Among many other things, Amazon uses AWS to track:
    1. the impact of pricing upon the behavior of hundreds of millions of customers
    2. choosing from about 400 million different products (including books)
    3. sold and priced by hundreds of thousands of independent merchants (and Amazon)
    4. on a world-wide basis

But the chief executive of the Society of Authors (who hasn’t performed a math calculation beyond determining the amount of a restaurant tip in dozens of years and who calls tech support to reboot his iPhone several times a week) knows more about the optimum price of a book than Amazon does.

The cruelest insult of all was mentioning that self-published authors understand ebook pricing better than the humphing old boys of British publishing.

PG suggests that when someone says Amazon is devaluing books, what they really mean is Amazon is devaluing publishers.

But, nurturing!

It costs money to nurture. The price of nurts has soared over the past several years. Amazon is a mortal threat to nurticulture.

.

.

Save the Nurts!

Amazon, Big Publishing, Non-US, Pricing

61 Comments to “Amazon’s Naggar tells publishers to slash e-book prices”

  1. “He makes a direct comparison between publishing companies and self-published authors, but conveniently avoids the fact that the economics are completely different”

    Not from the readers/buyers point of view. It’s a story some ‘writer’ wrote. Hopefully one worth buying/reading.

    “Andrew Franklin, m.d. of Profile Books, added that the self-published 99p Amazon e-book “bears no comparison whatsoever to a real book properly published”,”

    ‘Real book’? Really? That ‘Guy left on Mars’ wasn’t a ‘real book’? And I’m sorry, but trad-pub have pushed out some rather crappy ‘real books’ over the years.

    Adapt or die time guys. Adapt or die – oh, and kill the lights on your way out.

    • Have I been publishing fake books then? The money in my bank account (mostly from Amazon) seems so real….

      • Yes! Those have to be fake books!

        Not first run through an agent, then a slush pile, then the rights handed away before a random editor changes the whole plot before a random piece of art is picked (they still have some cowboys on horses they need to use) before it is dumped edge out in a bookstore with no advertising at all.

        Yes your book(s) are fake! Sadly the buying public thinks more highly of those fake books than the do the ‘gate-kept, nurtured into an early grave’ books that trad-pub likes to lay claim to.

        I’d suggest anyone that still has their book rights held by a trad-pub do what they can to get them back now, because their next step will be to ‘sell’ those rights to the overseas firms that own them just before they implode. Said overseas firms will list those ebooks at $49.95 each, deep discounted to $0.99. The deep discounting as we all know will mean that they make money while the writer gets zip …

    • If reader’s had their way, all books would be free. If consumers had their way, all products would be free. Business can’t work that way.

      • But there is a middle ground.

        Amazon has discovered for ebooks it’s between 3-10 bucks.

        Trad-pub would rather kill off new/unknown writers by pricing them out of the market than price them where buyers might take a chance on them – and it seems those high prices are even hurting non-unknown writers sales.

        So unless the writer is totally clueless then they should be going indie/self-pub. If there’s enough demand they can always sign a (paper only) contract with a publisher that wants a proven seller. (Though the writer should set it for a few years only and not sign away any of their rights!)

      • “If reader’s had their way, all books would be free.”

        Actually, no. Many readers don’t mind paying for books, particularly from authors they love. And it’s a proven indy model that free books lead to readers paying for other books. Particularly giving the first book in a series free and charging for others.

        The ultimate test in terms of fans being willing to pay has been proven conclusively with the success of many authors (and other artists) being able to get money directly through donations on Patreon and other similar services. People will actually sign up to give money to an artist they like. (Not as much as artist might want, and not to every artist, but it’s been conclusively proven that it’s possible.)

        Moreover, anyone really studying the genre culture will see that fans will happily shell out huge bucks to go to special conventions, buy merchandise, special editions, limited editions, etc.

        There are lots of people that make a lot of money, and enjoy spending it on things that make them happy.

        And again, those who can’t afford to pay, or who just don’t like to pay, can go to libraries for free books. So it isn’t like those who simply won’t pay don’t have options. A writer looking to build a fan base doesn’t hurt the economics of the industry by giving away a few books to promote themselves. Along the way, they may make some fans who still won’t pay, but they will also make some fans that will happily pay. In the long run it’s worth it. That’s been pretty much proven by the last ten years of self-publishing.

        For me personally, there are some books I will happily pay for if they are priced right. There are many I would not pay for, but I might examine if they are free. A few times, I’ve liked an author who gave away a free book and changed my mind about paying for their other work. It’s that simple.

        • Very true. I know this because my stories are out there for free – yet there are those that will go to Amazon to pay for them.

          (I also have a few artist drawn illustrations for the stories that were suggested and paid for by a fan. 😉 )

        • The demand curve is downward sloping, going left to right. For any demand curve there are always people to the left of the price point who are willing to pay more than the market price.

          But, this group is also quite happy to pay less than they are willing to pay. If I am willing to pay $10 for a book, and the price is $6, I am happy to buy it for $6. The seller leaves $4 on the table. If it’s free, I am even happier.

          The task for the seller is to find the price point where he makes the most money. To do this, the seller has to give up lots of money on the left side of the demand curve to max his revenue. Lots of willing dollars are unclaimed.

          This is why the publishers always led off with hard covers, and waited six months for the paper back. They are sliding down the demand curve, trying to capture the willing buyers at higher prices.

          We may have a good example of the same thing with the announcement of the new iPhone in a few days. High initial prices, then a gradual slide down the demand curve to capture as much of the willing money as possible.

          • If I am willing to pay $10 for a book, and the price is $6, I am happy to buy it for $6. The seller leaves $4 on the table.

            And what does the consumer do with that other 4 dollars? Perhaps he/she spends it on another book, maybe even one by the same author?

  2. I am so happy to be able to distinguish PG commentary again. Frequently (especially when it’s YADS) I just scroll down to see what you have to say about it.

    However, you have exceeded my ration of cute for the week with the photograph, and it’s only Tuesday…

  3. I’m only commenting because I’m wondering what the dog breed is — the puppy reminds me of an Ewok 🙂

  4. So many things wrong with this article, that it made me long for a good old-fashioned JA Konrath post pointing out all of the errors. But I think that he, like so many indies, has just decided to let the trad publishers continue in their delusion. The people I am sorry for are the authors who continue to drink the poison.

    Which brings me to dean wesley smiths post today http://www.deanwesleysmith.com/a-matter-of-perspective/ where he expresses his sadness for those young authors who are going to waste years and most likely their chance at being career authors because they read articles like this.

    However, I am getting ready to go to NINC in October (if Tampa is still standing after Hurricane Irma) a yearly convention of career novelists that used to be almost 100% traditional, while last year 3/4 raised their hands to say proudly they were either indies or hybrids.

    (PG was there last year and can testify how empowered this group has become because of indie opportunities). And while I know there will be lots of angst over the future, and whether or not to stay exclusive to Amazon, and talk about foreign translations, etc, at least there will be clear-sighted understanding that doing discounts of books is a marketing tool, not a sign of low-quality books.

    M. Louisa Locke

    • NINC is a good group and runs an excellent convention, Louisa.

      Having worked in Florida several years ago, my understanding is that people in Gulf Coast cities like Tampa worry more about hurricanes that come up the West side of Florida than about storms that hit the Atlantic coast.

      However, not much was customary about Harvey, so I’m not making predictions.

    • The people I am sorry for are the authors who continue to drink the poison.

      I was just looking up the list of an author on Amazon. She’s with Random House and most of her ebooks start at $9.99 and go up to $13.99. Result? Her sales drop, which leaves RH disinclined to publish any more of her books. A mutual friend, who recommended her work to me, says she’s getting steadily more depressed, and no wonder. This kind of thing is happening to too many of my friends, and I find it maddening.

      Actually, what I meant to say was MADDENING. As in ready to RIP AND TEAR.

  5. I first read the headline as “Amazon’s Nagger Tells Publishers to Slash E-book Prices,” and I thought, how appropriate that Amazon established the position of nagger to keep reminding traditional publishers that they’re doing their authors a disservice when they keep prices artificially high.

    Then I put on my glasses.

  6. Some big publishers have been launching debuts at 99p, and running some good periodic offers for otherwise full-price offerings.

    The difference is that publishers can afford to make price-cuts just one arm of a marketing strategy, whereas self-pubbed are far more limited with their options.

    Frankly, it’s high ebook prices from trad publishers that allow room for us self-pubbed to get noticed, and develop our momentum.

    2c.

    • Exactly! If the trad publishers were smarter, indie publishers would find it harder to build businesses. I think indies have other advantages, like being able to do pin-point micro-marketing to their exact audiences, but never underestimate the value of your competition’s mistakes. I count trad publishers’ ebook prices as a blessing.

    • Thanks for the link. That makes a big difference and makes so much more sense.

    • Thanks for the link clarifying what he said. The economics in the original article were awful, and I was certain Amazon execs were lots smarter than that.

      If we lower the price of any good, unit sales will increase. But that doesn’t mean the supplier will be able to sustain himself at those lower prices.

      In this case, as initially presented, to break even the publishers would have to sell appx ten times the current number of eBooks (price elasticity), and see no drop in sales of paper (cross elasticity). Sound reasonable?

      • You’re welcome!

      • the thing is, if they’re not currently making back the advance they pay their new authors by pricing debut titles at $9.99, then they may actually sell more at a lower price–enough to get their advance back.

        I mean, Amazon would be giving them the exact same terms they give indies, if not better terms, so they’d get higher royalties from a lower priced book, right?

        • Ah, but they make out their advance and a profit on almost all titles. For the most part they only lose money on the big political influence peddling books.

          The “industry standard” contract is crafted to ensure the publisher makes their money back even if the book never earns out. The BPHs in particular deal in bulk, thousands of titles a year, so they don’t care how much a given midlist title makes. They only hurt if a payola campaign for an expected “bestseller” falls short.

          • I see what you mean. I forgot for a moment that the tradpubs’ boilerplate contracts are so heavily rigged in their favor that few newbie authors will ever succeed according to the conditions outlined in them.

            • They want everybody to forget that. 🙂
              Just as they want to forget ebook tradpub payouts used to be 50% of net, as required by their own standard licensing terms, until ca. 2009 when they changed it to 25% of net once it was clear there was big money in ebooks.

        • On most books, publishers start making a profit before the advance is earned out.

  7. With MacMillan Publishing paying US$50 per sq. ft. per month for the 250,000 feet they’re going to be renting in NYC soon, I’d hazard a guess they simply can’t be profitable with lower priced e-books.

    • Why not? Amazon’s data (confirmed by Data Guy and others) is abundant and clear: total dollar sales are maximized at prices well below what Macmillan usually charges.

      It would be a funny sort of business that can survive on less revenue, but not on more, expenses remaining the same in either case.

      • Why not?

        Cross price elasticity. They look at a firm’s total profit, and consider if a reduction in the price of one good will lead to a drop in sales of another.

        Amazon’s calculations are for eBooks only and presume a flat supply curve (zero marginal cost). They are correct. The eBooks will generate more revenue at the lower prices. However, Amazon’s analysis does not consider anything other than the eBooks, so the effect on a firm’s other goods is not included in their analysis.

        • You underestimate Amazon considerably, and as usual, overestimate publishers. Why should Amazon’s analysis leave printed books out of account, when Amazon is the world’s largest single retailer of printed books, and a publisher as well?

        • You underestimate Amazon considerably, and as usual, overestimate publishers. Why should Amazon’s analysis leave printed books out of account, when Amazon is the world’s largest single retailer of printed books, and a publisher as well?

  8. “And there are almost no examples of people moving the other way.

    Would he like a list? Because I personally can come up with a dozen or so, and I don’t know anybody hardly.

  9. I want a pet nurt! 😀

  10. OMG … the cyootness of Nurts! 😀

  11. Yawn yawn… Same old, same old, Battle Bus rhetoric from the mouths of the conventional publishing industry. Same old, same old insults cast at Indie self-published authors. Same old, same old argument to do with gatekeepers, editors, and yet, in the world of historical romance (Regency) still the greatest selling sub-genre in the the historical categories, editors fail best selling authors who assume great knowledge all things the Regency and commit faux pas after faux pas, whilst the Indie authors of the Regency genre research, research and research again, not least with specialist FB support research help groups. Indies rock! The truth of the matter is not the same old in the Indie world, and not all Indie authors are unpublished authors. Many of us were conventionally published and lost out with mergers, takeovers, and closed doors due to industry cutbacks, Out here in the Indie sector it’s a new and vibrant era of reading where cheap e-books have brought books back to those who could not afford books, yes, the lesser educated, the lesser read, along with the well-read who are on short living expenditure who will gladly read a $/£0.99 book which is cheaper than a Starbucks coffee, and instead brew their own coffee! Book snobs, snob-ridden publishing policy and celebrity crap novels are what has ruined the book industry based on fast-buck returns and celeb names. Hence the public have walked to the Indie bookstore of Amazon, Kobo, Nook, Smashwords, Lulu, and others. Up the Revolution!

    • “[they] commit faux pas after faux pas”

      Entertain me with a few?

      • Modern Americanisms within Regency novels set in England drag the reader out of the supposedly depicted era.

        Regency cant that isn’t…

        Quoting the “Regent” purportedly in conversation with characters when he was crowned king two years beforehand.

        Simple mistakes of stating persons were in specific places when the building had yet to be built, or had been razed to the ground by fire several years prior to the plot.

        I could go on…

        • Ah yes. One of the criticisms of Wendig’s star wars books was that he would use modern figures of speech, something that jars you out of the star wars universe. Same thing, different genre.

  12. One of my publishers has the ebook version of one of mine at 35$. It obviously sells horribly. The last round of asking them to lower the price has been going for two months, with my mails mostly being ignored…
    Three weeks ago I indie published my latest one. Started at 2.99 and gradually increased to the final price of 4.99 over a 24h period. Sold very well and outperformed that other book’s sales of he last five years in one day.
    But what do I know..

  13. Slightly off topic here, but last month of my 40 titles I kept half at $3.99 and half at $4.99, split as evenly as I could between series. Result: the $4.99 sold an avg of 56 copies per title, and the $3.99 sold 62ea on average.

    So the profit was greater at $4.99. Curiously, I noticed the KU reads were greater on these higher priced titles, but I assumed it was coincidence.

    So on Sept 1 I bumped all to $4.99 and shortly thereafter my daily KU reads went from 35k a day to 60k a day and are holding. Maybe a fluke, maybe not. Sales are steady too.

    Perhaps KU is full of the bargain shoppers who balk at higher prices, and everyone else in the market who is buying more regularly is not as price sensitive.

    FWIW, I gave away 127,314 freebies last month as well as several $0.99 sales. Big Pub would never do any of this work.

    • It depends on genre but quite a few publishers find *their* sweetspot is $4.99 rather than $2.99.

      Amazon’s pricing tool tends to suggest higher prices more oftrn than lower.

    • I’m moving the same direction. For the last few years, I’ve had half a dozen titles on perma-free (series beginners) and the rest moderately priced, generally peaking at $2.99. I had a huge sales drop over the winter and when I started climbing out of that hole, I found half of my income had moved to borrows (before this year I had almost zero borrows in any given month). I’m convinced Amazon changed their system to punish freebies and low-priced titles, and to reward titles in the library. How else can I explain moving from zero page reads to 100,000 in the span of a month or two?

      At this point, the freebies and lower prices just seem to attract trolls and do very little for rank. I pulled all but one perma-free titles, and I’ve been raising my prices for about a month. The result? Income’s going up, sales remain steady, and the lousy reviews are all but gone. Doing better in rankings, too. The depressing part is that fewer people are reading my books. That’s not what I wanted, but it’s what I’ve been forced into.

  14. That is why the successful self-published authors will always move to mainstream publishers when they have a chance.

    Presuming I’m ever able to publish anything for money, why would I turn to someone who’s going to rip every right they can out from under me while setting me up to fail to meet their sales expectations by overpricing my brand new tradpubbed novel that I had to rewrite to a shadow of itself because it wasn’t already bland enough for their market?

    • I had a huge laugh at this one. I know a ton authors running/already ran from trad pubs and going indie. I know a few who tried the other direction and none have been huge successes. I would never say never because we have no idea what the future holds, but I have a number it would take to tempt me and trad pubs would have a heart attack. But I know what my tax returns say and I’m not interested in propping up their NY real estate and a bunch of salaries to take the smallest cut of the profit. With indie, the artist is finally making the biggest cut and that’s the way it should be.

      • Haha, I think I’d be more concerned about the words than the numbers. The numbers, to me, are entirely negotiable. The terms (such as what rights are on the table and how long the contract will last) are probably what would cause any such publisher to simply stop responding to me.

    • ” that I had to rewrite to a shadow of itself because it wasn’t already bland enough for their market”

      Does anyone know of a website/blog that has compared the self-pubbed version of books to the tradpub version in cases like this? I don’t think I’ve ever read both versions of a book. But I did read the tradpub version of a book that was originally self-pubbed, and I can only assume it didn’t go through very much revision during the process, because it needed a *lot* of editing. (There was at least one full chapter that did nothing and should have been excised entirely.)

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