I went to the Computers & Internet section and looked up three or four books featured on the front page there, and in all cases, the Kindle version was cheaper than the Amazon price. Although, the Kindle price for all of them was significantly higher than the base $9.99 you tend to find for mainstream fiction and NYT bestsellers, this is true. I looked up Microsoft Exchange Server Inside Out, iPhone 3D Programming, and Beginning C++ Through Game Programming, if you’re curious.
Maybe I’m tired but I’m having a hard time making sense of this. You are convoluting price with cost and publishing with retailing and digital with paper… seems like publisher math.
How is this relevant to paper vs digital pricing?
I guess the real is question is how much do you think the price of an e-book should be?
The price of a book has historically not reflected the contents. A hardcover costs $25-30 today, mostly depending on length, not subject or quality. Virtually all trade paperbacks are published off the same originals as hardbacks but cost $14-16. The difference represents almost purely the perceived value (durability, prestige, whatever) of hard covers. The physical cost difference is small. Few books today that start in hard covers go into the small mass market paperback format; those that do have exactly the same words but now cost only $7.99-9.99. Again, perceived value is the key, although they do physically cost less to produce. (Most mass market paperbacks are originals, i.e. never appear in any larger format.)
What do authors get paid? Anywhere from $1,000 to $1,000,000. As Chuck said, the ones that get paid a million tend to sell so much that they subsidize everybody else. But they are also so few in number that it makes no sense to talk about them, because everything about them is special and individual.
A more typical author may get from $10,000-100,000 for a book in advance of publication. Most authors produce no more than one book a year. What every author hopes for is a book that returns its advance, i.e. makes enough money so that the publisher starts paying royalties, based on a percentage of copies sold. Very generally, royalties run 12% for hardbacks, 10% for trade paperback, and 8% for mass market paperback. (It’s much more complicated; I’m simplifying.) Most books never make back their advance. Some books make authors a small amount of money. Some books make huge amounts. Some do so for a year or two. Some for decades. Nobody can ever tell ahead of time which are which. Nobody knows anything. It’s all guesswork, which is why the numbers are so standardized across the industry. Publishers make bets and hope to come out in the black at the end of the day.
So what does this have to do with electronic books? It throws all the questions of how to price a book, how much to pay as an advance, how much to give as royalties, and how to make any calculations that are necessary to run a business into the air. How many people want an electronic book? How many want one that would have bought a paper copy otherwise? How many would buy one at different price points? Nobody knows.
The author is still there. Time and effort for writing hasn’t changed at all. The editorial, marketing, contracts, ordering, and all the other departments are still there. They haven’t gone away. They may be busier than before. Even if you take away paper and printing costs, it’s not a huge deal because, as everybody has said, those weren’t really important. Other costs have increased. All books come in electronically today, but creating a readable book is still a matter for the professionals in the art department. Those costs increase when you have to produce text that is readable in paper and format it for the dozens of possible electronic formats. Somebody has to translate a book into Kindle. Amazon has software for this, but it’s terrible. People look at one side of the equation - no paper - but never bother to look at the increased complexity of all the different formats, different markets, different readers, different publicity and promotion, and more of everything that has resulted. Somebody has to pay for all that.
You can ask why they should bother. There are people who are uploading their own work to Kindle and charging 99 cents for it. I’m sure that the vast majority of them are worth 99 cents. You really do get something by buying a book from a known publisher. You get the filter that screens out 99% of all submissions as inadequate. You get the readability of good book design. (That’s enormous, even if you don’t realize it.) You get the copy editing and proofreading that publishers supply (and have to pay for). You get the proper conversion into various formats. For paper editions, you get the physical availability at bookstores. No major chain bookstore will stock a book that is self-published or put out by an unknown small press. About 25-50,000 books are published annually by known publishers. The total number of books published annually has gone to over 250,000. That discrepancy all comes out of the 99% of books rejected by editors. Undoubtedly a number of those books were not rejected because of sheer quality. But certainly not 200,000 of them.
So, again, how much do you want to pay for electronic books? What is the right figure? Right now, the standard appears to be $9.99. That is far cheaper than hardbacks or trade paperbacks. The standard for books that would only have seen original mass-market paperback publication appears to be $5.99, which is also cheaper. How much lower can those numbers go? In order to maintain today’s quality, I’d argue not much farther. People want to get paid for a year’s worth of work. That drives the entire industry.
You can argue that those prices are in fact far too low. Publishers are trying to standardize 15% royalties for e-books. A book that sells 10,000 copies returns only $15,000 to the author. That’s less than minimum wage, but most books never sell 10,000 copies.
Do you lower the price? Would the book sell 20,000 copies at $4.99? Maybe. Nobody knows. But that changes nothing. It’s like a stock split. Only if the book sells 30,000 copies at $4.99 does lowering the price make more money. Would half the price triple the sales? Maybe. Would doubling the price cut the sales by a third? Maybe. If it’s your livelihood and your paycheck, what call do you make? Based on what?
Most of the discussion about e-books comes down to: I want something of value but I don’t want to pay for it. There are 200,000 books for 99 cents on Kindle. Go read them. Don’t complain to me that they aren’t the books you wanted, though. I won’t be listening.
You’re confusing publisher math with Hollywood math. Publisher accounting is far more straightforward since procedures over the years have developed that prevent cheating. Hollywood uses tricks like a floating breakpoint, but publishers tricks are fewer and less of a cheat. Authors can audit a publisher’s books at any time, and the publisher pays for the audit if any major discrepancies are found. That acts as a big disincentive to cheat, and most issues that come up with audits are minor. Also, there are few places where a publisher can cheat an author – they are required by contract to report the number of books sold and the author gets his cut (in Hollywood terms, all authors get a percentage of the gross). The only area for wiggle room is the reserve against returns, and there are few cases of any deliberate cheating on this (mostly because the author will get the money anyone eventually).
As for the numbers, I was comparing wholesale prices of both types of books. When you buy a $30 book, only $15 of that goes to the publisher. If they save 25% of their costs by using ebooks, then a payment to the publisher to match expenses would be $11.25, and the retail price would be about $22.50. But the publisher only gets about $5 from e-books. The savings to the publisher is nowhere near enough to cover the loss of money.
Because, since a publisher now has $5 a copy for each book instead of $15, they makes less money on the blockbusters and thus can’t publish the up-and-coming authors.
Thudlow Bonk – Thor Power Tools has no direct relevance to ebooks, but it made publishers have get away from nurturing authors by keeping their books in stock until they find an audience. If the ruling were reversed today, there would be no going back. But by not allowing a book to go out of stock, the publisher truly does exploit writers, since they can keep in available as an e-book indefinitely. Normally, rights revert to the author when the book goes out of print; this allows him to sell the book to another publisher, or even self-publish. With e-books, things don’t go out of print, and the author can never get his work back.
I should give some numbers to provide support for my criticism but I’m lazy, sorry. But for context I was excited to join the 21st century and build a digital library because I have little space for more books and dig saving trees. I was even willing to ignore (for the right price) the vendor lock-in, draconian DRM and lack of Linux Kindle support. But when most books I’m interested in are more expensive in Kindle edition or at best 5-10% below paper screw that. I bought nothing from Amazon and I don’t see that changing soon.
I agree with you all saying that e-books can make sense for cheap, mass market fiction that I might read once and chuck away. But for technical and reference books, no way. It’s a racket.
Well, no, there’s more to it than that. True, there are some people who just want something for nothing. (And there are some people who aren’t price conscious and will pay whatever the asking price is for what they want.)
But there are plenty of people who are willing to pay a fair price for e-books, but the phenomenon is so new that it’s not at all clear what a fair price is.
And some of these people are confused because they only look at the unit costs of production and distribution (which are practically zero for electronic media like e-books) but not at the original costs of creating the book.
And some of these people don’t mind paying for something tangible—they don’t rant about “production costs” when they’re paying $1.49 for a soft drink that cost pennies to produce—but somehow believe that they shouldn’t have to pay for “information,” like e-books or digital music.
And there are some people who balk at paying a price, that may or may not be “too high,” for something when they can get it significantly cheaper elsewhere or in another format—hence the OP’s comparison of e-books with used book prices.