The publishing industry finally gets bitch-slapped for manipulating the prices of ebooks. We all knew this was going on, but couldn’t do anything about it except not read those high-priced downloads. This suit by the federal government now puts Amazon in the catbird seat to charge lower prices, which is great. The other publishers are crying about it, but they made their own beds on this one. Huzzah!
Let’s just hope this doesn’t end up biting us in the ass. I love Amazon, but Lord Acton stated a Universal Truth.
I’m sure it could in some way, but I haven’t had any coffee yet so brain not work so good. I seriously doubt that Amazon would charge higher prices rather than lower. Amazon almost always undercuts the competition on all their products, and they’ve received withering criticism from all fronts concerning raising the ebook prices above $9.99, even though they had no choice in the matter, since prices were being manipulated by the publishers.
It’s the “almost always” that is the concern. They have been the White Knight on prices for forever, but when they control over 90% of the market, the pressure from stockholders for more profit could undermine that quickly. I love my Kindle, but I’d rather there were a number of competing platforms, just for safety’s sake.
Of course, the smart thing to do for the publishers is to follow the lead of Baen Books. Fat chance of that happening soon.
Tney’re not going back to 90% percent market share. Its not like Apple doesn’t have enough money lying around to compete with Amazon on prices if they have to.
No kidding, and I hope they do. There is no reason whatsoever that back catalog ebooks should cost what publishers are trying to get for them.
Let the price wars begin!
I am perplexed by this quote:
*“My fear is that the major publishers won’t be able to stay in business just selling e-books. You can’t bring in enough money to support the infrastructure. If that happens, there goes the marketing, the editorial, the author tours, the expertise of the book industry.”
*
I’m not sure why they are so sure that the only way to buy books will be in ebook form in the very near future. But even assuming that’s true, I’ve been out of the biz for quite a while but as I recall the ever inflating cost of a paperback has, in the past, been attributed to the ever-rising cost of paper and gasoline (distribution).
ebooks don’t use paper and don’t ship on trucks. The costs to produce them are mainly sunk costs that also apply to paper books (selection, editing, promotion). How can book publishers NOT make money on ebooks sold at the paperback price?
Yea, I don’t really get the publishers concerns either. As you say, ebooks significantly cut down on overhead. And they still control what they sell the books to distributors for just because Amazon wants to sell the book cheaply doesn’t mean the publisher has to sell it to Amazon cheaply. If Amazon wants to sell a book for 9.99 that the publisher sells them for 10.99, that’s a good deal for the publisher, their sales are being subsidized with someone elses money (my understanding is that this already happens for “bestsellers”, Amazon sells them at a loss).
I can see them being worried that some authors will bypass publishers altogether and just create and distribute their own ebooks (though I kind of doubt that will be very common), but as far as books from authors that stay within the system, I don’t really see this hurting them.
(plus, I doubt the average reader is really haunted by the spector of an end to author tours and book marketing)
The publishers are ding dongs. They could sell directly to the public and still use the Adobe DRM that would get them onto all ereaders but kindle. If they forgo DRM they can sell to kindle users also.
It doesn’t affect overhead in the slightest (you still have to hire editors and pay your office expenses). It does affect printing costs, but they’re only about 25% of the cost of the book, something that they have already factored in with their prices.
Amazon has set the prices for ebooks at a level that is unsustainable for publishers. And without publishers, there’s no gatekeeper to determine which books are publishing, and no one to promote them effectively.
Self-publishing is a loser’s game; it rarely works and keeps an author from doing what he should be doing: writing. It ultimately means less money for authors, and less money for authors mean fewer authors.
If you think publishers are unnecessary, take a look at your book collection (e-books included). How many of them are self-published books that you’ve paid money for? If you have more than two, I’d be amazed. So nearly all the books in your collection were put out by publishers. If the publishers go under, the supplier for 99% of the books you read will vanish and you won’t be willing to take a chance on anything that’s not free (especially with fiction).
The suit is misguided. I doubt there would have been any difference in the price of e-books even without collusion. Publishers have expenses and the Amazon price point it bleeding them dry (and book publishing is not a particularly profitable business; one reason that so many US publishers have European management is that the business doesn’t make enough profit to interest US investors).
Hmmm, I’m still not buying it. The entire reason “Trade Paperback” was introduced was because it was becoming prohibitively expensive to produce a hardcover. If your statements are true, Reality, and the cost of production is actually trivial, the cost of a hardover, trade paperback and mm paperback would be within 25% of each other, right?
Which I am sure, they are not.
And publishers are receiving 70% of the list price of a book under the Apple plan! When has that ever happened before??? In the past, publishers received around 50%, sometimes less with shared markdowns, of the list price of a book sold through a bookseller.
That’s what I don’t get. Amazon sets the price at which Amazon sells books to the public, not the price at which publishers sell to distributors. If Amazon offers the publishers too little money, the publishers can not sell to them. What Amazon was doing was buying books from the publishers and selling them at a loss, which is good for the publishers, there sales are being subsidized out of Amazon’s pocket.
The usual concern of a producer is that the retailer will sell their product for too much (hence limiting sales), not too little.
I agree, that’s why I said I doubted it would become a major problem for publishers.
Prices on Amazon went up when the Publishers cut their deal with Apple, and have already fallen since the recent decision. Seems pretty clear that the deal was driving up prices.
And in the past, Publishers have not stepped in to stop massive bestsellers being widely sold at a loss. In fact they didn’t care in the slightest. EVERY hardcover copy of Harry Potter #whatever, sold at 40% off, was sold at a loss.
Sorry, I meant marginal cost, not overhead. But its not just the cost of printing, its the cost of transportation, storage, and then the costs associated with running a brick and motor store to sell the book. I don’t think its unreasonable to expect that without those per-book costs, the price of books should be significantly lower.
I have to take issue with this. The suit is unfortunate (not misguided), but it was brought on by greed and collusion on the part of the publishers. Profits NOW is the motive, instead of the long game. Most of that, as with other public companies, is shareholder driven rather than customer driven. In that regard they are no different from medical insurance companies, who care nothing about the patients, only about the profits.
Since prices went up on Amazon, I have refused to buy a book over $9.99. My support for the local library went way up, while my ebook reading dropped dramatically. Multiply that times what has to be thousands of other disgruntled customers, and profits suffer to some extent. Not to mention, authors take a hit because readers enter negative reviews online, not of the work, but of the cost. While those complaints are aimed at Amazon, it still affects the authors and their sales. Apple’s part in this lowers my estimation of that company substantially, and will affect my future purchases from them.
I think it’s all a bit silly. The publishers/authors should just set the price for their cut, and let the distributers and sellers determine their own markup. All these other shenanigans are needless complications. I do think all ebooks should be readable on all devices though.
Don’t forget Barnes & Noble. They have half the market share of Amazon, 30% compared to 60%, but that is probably enough to keep Amazon from thinking they can simply impose their will and raise prices willy nilly.
I’m not sure why the article says analysts think Barnes & Noble could suffer the same fate as other traditional book sellers. I thought one third of their sales these days were e-books, so they seem to be in a good position to remain competitive.
New releases and bestselling titles are only a part of the revenue that publishers bring in. Historically they have also made a large portion of their profits selling classic titles. I can’t remember the statistics but publishers and books stores have made money year after year selling The Great Gatsby, Sense and Sensibility, To Kill a Mockingbird, etc. Since these books are public domain they are available free online and as eBooks. Taking this revenue away is a blow both to the publishers and print book stores.
Amazon can subsidize losing money on books because books are a segment of their overall profitable company. Barnes & Noble has nothing to subsidize ebooks because print bookstores are dying. It will get crushed by this.
Back catalog, pretty much by definition, is not public domain. Anybody can publish a public domain title. Back catalog is almost always books that were published after 1922, which means that they are still under copyright and therefore only one publisher can publish them and make money from them.
Chuck and I are veterans of the industry and I think that those of you applauding the decision are all on the other side. I apologize if I’m wrong. But it should say something that we both see this as a very bad thing for writers.
There has been a squeeze on the midlist for years. For our purposes I’m defining midlist as the general run of books that are not bestsellers, not interchangeable formula genre, and not specialized titles, like atlases, manuals, almanacs, and the like. The midlist allowed writers to have careers as writers. Increasingly, writers have needed to have another source of income unless they won the lottery of bestsellerdom.
The publishing industry had enormous faults but a few critical virtues. It got books into bookstores. It paid advances. It rewarded writers who specialized in certain arcane subjects. It took chances on new writers. It maintained the enormous and essential overhead of editors, copyeditors, proofreaders, art directors, typesetters, rights managers, lawyers, and anybody else who made books readable and professional. And it subsidized this by bestsellers and to a smaller extent the back catalog.
The costs of print always were a minor percentage of the price of a book. Most of the money in an average book went to the author’s advances and royalties and to overhead, with whatever was left over for taxes and profit. Those costs do not disappear with an ebook. Only a minor printing percentage goes and that is offset by the increase in costs required to make a book look good on twenty different platforms.
Remove the support of overhead and the midlist gets squeezed even more. This move will predominantly reward the publication of bestsellers and self-published books. Those are the only sectors that can survive without support. And both are essentially lotteries. Every aspect of ebooks as loss leaders will exacerbate the already deadly trend. The publishers were totally correct in fighting it, not because they are evil greedy bastards who want to rip off consumers but because that was the only viable way of preserving writing as a profession and publishing as an industry. Not to mention that allowing one company to take over bookselling by subsidizing its books at a loss is even more insane than the notoriously insane publishing industry. Yes, you can buy books anywhere on the Internet. And Amazon will go from 60% market share to 75% in a year. Just watch.
So please go cheer for your ebooks sold below wholesale by a monopoly. Just ask yourself for a second what other industry would survive that. And what you would say if it were your industry.
Exapno, I can’t really argue with you because you are speaking mostly from authority. Can you please explain how Amazon choosing it’s own markup makes any difference to the publisher if the publisher set its own wholesale price?