Pricing

Amazon’s Latest Volley

30 July 2014

From John Scalzi:

Another day, another volley in the Amazon-Hachette battle, this time from Amazon, in which it explains what it wants (all ebooks to be $9.99 or less, for starters) and lays out some math that it alleges shows that everyone wins when Amazon gets its way.

. . . .

I think Amazon’s math checks out quite well, as long as you have the ground assumption that Amazon is the only distributor of books that publishers or authors (or consumers, for that matter) should ever have to consider. If you entertain the notion that Amazon is just 30% of the market and that publishers have other retailers to consider — and that authors have other income streams than Amazon — then the math falls apart. Amazon’s assumptions don’t include, for example, that publishers and authors might have a legitimate reason for not wanting the gulf between eBook and physical hardcover pricing to be so large that brick and mortar retailers suffer, narrowing the number of venues into which books can sell. Killing off Amazon’s competitors is good for Amazon; there’s rather less of an argument that it’s good for anyone else.

. . . .

Amazon’s math of “you will sell 1.74 times as many books at $9.99 than at $14.99″ is also suspect, because it appears to come with the ground assumption that books are interchangable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to. They’re not, and it’s not. Someone who wants the latest John Ringo novel on the day of release will not likely find the latest Jodi Picoult book a satisfactory replacement, or vice versa; likewise, someone who wants a eBook now may be perfectly happy to pay $14.99 to get it now, in which case the publisher and author should be able to charge what the market will bear, and adjust the prices down (or up! But most likely down) as demand moves about.

Link to the rest at Whatever and thanks to Ben for the tip.

PG will quote himself in a comment he posted last night:

Does Barnes & Noble have a say in the prices it charges for books?

Amazon’s a retailer. Retailers set prices.

If Hachette wants to set prices, it should open its own store.

But, of course, Hachette experimented with price-fixing. Now it’s hooked. Let that be a lesson to all of you young people – just say no to price-fixing.

Amazon Calls for Hachette to Cut E-Book Prices

30 July 2014

From The Wall Street Journal:

Amazon.com Inc. on Tuesday described its dispute with the Hachette Book Group as a battle for lower consumer prices on digital titles and a bigger payday for writers.

In a posting on its website, Amazon said that it would be willing to accept 30% of digital book revenue, the same percentage it currently receives from Hachette, if the publisher agreed to lower digital prices on many of its titles to $9.99 from between $12.99 and $14.99.

. . . .

In the blog post, Amazon said that its internal data showed that when a book is priced at $9.99, it sells nearly twice as many copies as when it is priced at $14.99. It argued that, as a result, total revenue at $9.99 is more than when the book is priced higher. “At $9.99, the total pie is bigger,” stated Amazon.

A spokeswoman for Hachette didn’t respond to requests for comment.

. . . .

In its Tuesday posting, Amazon suggested authors should receive 35% of the e-book retail price. Many authors today receive 25% of net revenue on e-book sales, a point of contention for some who consider it too small.

. . . .

The Authors Guild, at least, didn’t appear to be mollified. It criticized Amazon’s suggestion for lower retail prices. “Lower e-book prices aren’t necessarily the best thing for writers,” said Roxana Robinson, president of the Authors Guild. “We get a percentage of the price as a royalty. You also have to take into consideration the price of the hardcover. Yes, it’s cheap to make a digital book but it’s expensive to present a book in hardcover.”

Link to the rest at The Wall Street Journal (Link may expire)

The Author’s Guild continues its never-ending quest to provide the most bewildered and unhelpful comments on the subject of Hachette/Amazon. PG wonders if they’re consciously trying to retire the Clueless Trophy.

Book Publishing Needs Socialism to Save It

27 July 2014

From Book Marketing Buzz Blog:

Let me just state up front that I love America and wouldn’t live anywhere else but, I also believe there’s room for a blend of socialism and capitalism to exist in a democratic society, and when it comes to how books are sold or treated, I prefer what the French and other advanced nations do.

They protect books and the printed word. I applaud them—and so should you.

Here in the U.S., thanks largely to Amazon, books have become commoditized. You can buy clothes based on price—or a desk or the hotel you vacation at. But books should not be purchased based on price alone.

. . . .

[T]he Hatchette-Amazon battle is now being waged and the repercussions of it could dictate the fate of publishing’s long-term viability. However, in other countries, books are a much healthier product.

In France, where Amazon only owns 10-12% of the book market—but 70% of online sales, Amazon is contained because of laws passed to protect and support bookstores and publishers.

The law says online sellers can’t offer free shipping on discounted books. Further, booksellers can’t offer more than a 5% discount off a book’s cover price.

I wish it were that way here.

In Germany, books can’t be discounted. In fact, six of the 10 biggest book-selling countries have versions of fixed book prices—Japan, Italy, Spain, South Korea, Germany, and France.

Link to the rest at Book Marketing Buzz Blog and thanks to Karen for the tip.

Just a reminder that PG doesn’t necessarily agree with everything he posts here. He tries to include a variety of opinions.

Why Amazon Terrifies Publishers: Let’s Look At Royalty Statements

22 July 2014

From Forbes blogs:

Like many authors, I’ve been struggling to decode all the noise coming from Amazon and traditional book publishers, in hopes of figuring out which side is right in this long-running quarrel. The breakthrough moment for me came earlier this month, with the arrival of a new royalty statement from my New York agent.

Clearly, there’s a tug-of-war going on right now about what books should cost — and how the revenue should be divided between authors, publishers and retailers. The immediate battleground involves Amazon’s pricing of e-books published by Hachette, one of the publishing industry’s “Big Five” players. Amazon wants lower prices and leaner terms for Hachette; the publisher prefers the opposite.

While the battle rages on, distribution of Hachette books on Amazon is getting snarled.

. . . .

I’ve been writing books since the early 1990s. That’s provided opportunities along the way to write for three of the Big Five publishers, as well as to see Amazon emerge as an important marketplace for my own books about everything from Wall Street to talent selection. To date, both sides have provided fair terms and good value for what they do. But it’s a fast-changing world, and the message hit home for me when I got a new royalty statement for my very first book, “Merchants of Debt.”

. . . .

The Beard contract wasn’t my favorite, because the $34.95 price to buyers seemed quite steep, and because my royalties per copy were only 15% of the purchase price. But that 15% royalty rate has long been the norm for print-publishing contracts.

. . . .

Then, in 2013, my agents, Inkwell Management, arranged to have Merchants of Debt republished as an e-book. We created two versions: a full-length e-bookpriced at $9.99, and a condensed version, priced at $3.99. In each case, e-tailers such as Amazon or Apple’s iTunes store get 30% of sales revenue; Inkwell gets 21%; I get 49%.

You can probably guess what’s happened to sales trends. Overall sales of the book have more than tripled, and nearly 90% of the sales are coming from e-books. We’re still talking about small amounts of money, but the checks now pay for getaway weekends, rather than an occasional lunch or two. Customers are getting a much better deal. And the e-books’ royalty formula means that I make almost exactly as much on a $9.99 e-book as I would have on a $34.95 paperback.

. . . .

Amazon believes it has figured out how to keep its book business vibrant in such changing times. I’m starting to think that the old guard’s ferocity in the current Hachette-Amazon tussle reflects deep anxieties — perhaps even outright terror — about what to do next.

Link to the rest at Forbes blogs and thanks to Hugh for the tip.

The French Do Buy Books. Real Books.

10 July 2014

From The New York Times:

One of the maddening things about being a foreigner in France is that hardly anyone in the rest of the world knows what’s really happening here. They think Paris is a Socialist museum where people are exceptionally good at eating small bits of chocolate and tying scarves.

In fact, the French have all kinds of worthwhile ideas on larger matters. This occurred to me recently when I was strolling through my museum-like neighborhood in central Paris, and realized there were — I kid you not — seven bookstores within a 10-minute walk of my apartment. Granted, I live in a bookish area. But still: Do the French know something about the book business that we Americans don’t?

I was in a bookstore-counting mood because of the news that Amazon has delayed or stopped delivering some books, over its dispute with the publisher Hachette. This has prompted soul-searching over Amazon’s 41 percent share of new book sales in America and its 65 percent share of new books sold online. For a few bucks off and the pleasure of shopping from bed, have we handed over a precious natural resource — our nation’s books — to an ambitious billionaire with an engineering degree?

France, meanwhile, has just unanimously passed a so-called anti-Amazonlaw, which says online sellers can’t offer free shipping on discounted books.

. . . .

The French secret is deeply un-American: fixed book prices. Its 1981 “Lang law,” named after former Culture Minister Jack Lang, says that no seller can offer more than 5 percent off the cover price of new books. That means a book costs more or less the same wherever you buy it in France, even online. The Lang law was designed to make sure France continues to have lots of different books, publishers and booksellers.

Fixing book prices may sound shocking to Americans, but it’s common around the world, for the same reason. In Germany, retailers aren’t allowed to discount most books at all. Six of the world’s 10 biggest book-selling countries — Germany, Japan, France, Italy, Spain and South Korea — have versions of fixed book prices.

Even with the state’s help, French bookstores are struggling.

Link to the rest at The New York Times and thanks to James for the tip.

Let’s see. 1. The French “secret” is that publishers set book prices. 2. No discounting is allowed. 3. Bookstores are struggling.

Could it be that many French readers can’t afford high prices? Or that, in the face of high-priced books, more and more French people are choosing alternative low-priced entertainment options?

PG says you can’t trust traditional publishers with a nation’s literary legacy. Only authors are worthy of that trust.

Smashwords CEO on Why He as an Indie Author Supports Hachette Against Amazon

10 July 2014

From Digital Book World:

Mark Coker, the CEO of self-publishing distribution business Smashwords and an indie author himself, is rooting for Hachette in its current business dispute with Amazon.

Unlike many indie authors, Coker is rooting for Hachette to prevail against Amazon because he believes that a Hachette loss now would make it harder for big publishers to eventually switch to the old “agency” model of selling ebooks (where the publisher sets the price and takes 70% of the proceeds) and that the agency model is good for indie authors.

. . . .

Coker believes that the agency model:

1. Has allowed indie authors to price ebooks lower to consumers, creating a favorable price comparison with traditionally published ebooks, while still earning a large royalty.

. . . .

3. Benefits authors (giving them more sales channels to pursue), publishers (same as authors) and readers (who get more choice when it comes to how and where they purchase ebooks).

Link to the rest at Digital Book World and thanks to Loretta for the tip.

Amazon Finally Defends Itself Against Accusations That It’s A Bully Pushing Around Hachette

3 July 2014

From Business Insider:

Amazon has finally delivered a full defense of its actions against book publisher Hachette.

Russ Grandinetti, Amazon’s SVP of Kindle content, told the Wall Street Journal that Amazon is acting “in the long-term interest of our customers.”

. . . .

Farhad Manjoo, who is typically reserved and level headed, wrote at the New York Times, “Amazon is confirming its critics’ worst fears and it is an ugly spectacle to behold.” Manjoo espoused the conventional viewpoint that Amazon was being a bully against Hachette.

The Journal says the dispute between the two companies comes down to revenue sharing and promotion. Amazon wants more revenue from e-books. Hachette doesn’t want to give up more money because it will cut in to its profits.

. . . .

“This discussion is all about e-book pricing,” Grandinetti tells the Journal. “The terms under which we trade will determine how good the prices are that we can offer consumers.”

Link to the rest at Business Insider

French Parliament Passes “Anti-Amazon Law” for Online Book Sales

1 July 2014

From The French Embassy in The United States:

On June 26th, French parliament members passed a law forbidding a combined 5% discount and free shipping on books.

After a final unanimous vote by the senate, the Parliament adopted the so-called “Anti-Amazon Law,” that will abolish free shipping for books purchased online and shipped to France.

. . . .

The “Anti-Amazon Law,” pushed for by the UMP, was created to prevent ecommerce sites like Amazon from stamping out the iconic network of independent French bookshops that currently struggle to compete.

“As we have just seen again, laws pertaining to the book economy always generate consensus, if not unanimity,” said French Minister of Culture Aurélie Filippetti. “This is a sign of our deep attachment to books in this nation, and it demonstrates the belief that France builds itself through its past and its future.”

Link to the rest at The French Embassy in The United States

PG’s headline would have been “French Parliament Passes a Law to Make Books More Expensive and Discourage People from Buying Them.”

But PG is not French, so what does he know.

Who’s Afraid of Very Cheap Books?

10 June 2014

From David Gaughran:

A common meme in publishing is that cheap books are destroying the world or literature, and that low prices are undermining the viability of publishing or writers’ ability to make a living.

I’ve long thought this position is nonsense – a narrative which plays on misplaced fears of change and a confusion of price and value, which is also based on flawed assumptions and analog, zero-sum thinking.

. . . .

Self-publishers are fond of 99c pricing for a number of reasons. It’s the lowest price you can set at Amazon, Apple, Barnes & Noble, and Kobo without making your book free, and it has an obvious impulse buy appeal to readers. This price point is particularly popular for the first in a series or a limited-time sale in conjunction with an ad spot, but some have used it more aggressively.

I launched my latest novel Mercenary at 99c (logic here) but plan to raise it to $4.99 this week.

. . . .

1. 99c doesn’t devalue books. How could it? Readers love cheap books! Do libraries devalue books? What about cheap paperback classics? Second-hand bookstores? Friends sharing books? All of these things encourage reading. Books reducing in price is a wonderful phenomenon that should be encouraged and celebrated. Unless you want reading to be a minority sport for the (shrinking) middle class.

2. A writer has a duty to herself and no one else. She shouldn’t have to make decisions for the good of the “industry.” What does Penguin Random House care for the average writer? Does it care if its decisions impact upon the ability of self-publishers to earn a living? Hell, no. Cheap pricing is a wonderful tool when used correctly and can greatly expand an author’s readership (and income).

3. Cheap books expand the pool of readers which safeguards the industry’s long-term health and makes writing as a profession more viable as a result. Self-publishers don’t have to pay for office blocks, printers, binding, storage, distribution. In a digital world, there are fewer up-front costs and far less ongoing costs. Why shouldn’t we pass on some of those savings? Let’s not forget that readers have been screwed by higher prices from large publishers since the consolidation wave of the 1990s.

Link to the rest at Let’s Get Visible and thanks to SFR for the tip.

Breaking Free – What Happened when I left KDP Select

7 June 2014

From author Nick Stephenson:

“KDP Select is evil”. “Free promotions are pointless”. “Nick, you’re an idiot”. These are things I hear on a daily basis, the latter usually being something I say to myself when I’m looking in the mirror. As for the first two, I talk to a lot of authors who have a strong opinion on the relative merits of signing up for 90 days of exclusivity with Amazon, and the words “shackled” and “dungeon” come up a lot. It’s the same for free days – half of authors think they’re a God-send, the other half would rather cut off their own limbs with a rusty spatula than offer their work gratis.

. . . .

The two main strategies for free books I see most often are:

A variety of titles signed up to KDP Select, with rotating free promotions on each book. This is pretty easy to do with the 5 free days you get to play with under the KDP Select contract.
Titles NOT in KDP select, and up on other vendors, with the first book in the series permanently free. This is also pretty easy to do.
There are pros and cons for both approaches, but last month was the first time I’d tried option number (2).

. . . .

[T]his was another month where I had a free promotion with Bookbub. You can see clearly that, while immediate results were lower than before, the residual effect is lasting much longer (and has carried over so far into June). Overall, the total income from the promotion is about the same, but the sales increase is far more consistent. And this is a good thing – I’d rather have a bunch of sales spread across a month, rather than just a couple of days. It helps with boosting visibility with Amazon’s algorithms (which largely discount anomalous spikes in favour of consistent performance) and helps keep things going when I’m not actively promoting or advertising.

Next month’s figures will be more illuminating – I’ll be able to see just how long the sales boost lasts. I’m expecting things to drop off pretty quick, but, so far, things are looking good. More importantly, this strategy has really opened up the UK market for me, as well as Nook and iTunes (Kobo is a bit of a graveyard). I’m looking forward to my other 3 titles dropping out of Select, so I can get them up on the other sites too. The non-Amazon-US avenues are now accounting for roughly 50% of revenue, which is cool, as I’m less vulnerable to sales fluctuations in one market – I’ve got others to back me up.

Link to the rest, including sales graphs, at Nick Stephenson

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