Amazon pays the same price that they always have for books though. Whatever has been happening to midlist authors recently, I don’t think you can blame Amazon. The only thing they’ve done is subsidize book sales out of their own pockets, which should make publishers more profitable, not less.
That appears to be half true. Printing is a small part of the cost of a (physical) book. But the largest portion of the cost isn’t on the publisher’s end, its on the retail end. Half of the cost of a book is getting it to the store, stocking the shelves, manning the cash-registers, etc. Thats why ebooks have been so much cheaper, no brick and motor stores means you can almost half the price. There’s no reason this should effect the publishers, though its certainly a bad thing if you own a physical bookstore. (using the numbers here)
Not if the “loss” is paid by the retailer. Publishers are worried that won’t be true in the future, but its true now.
That’s what they’re worried about, but I don’t think it will ever happen. Distributing ebooks is too easy a market to break into. Publishers can do it themselves if they need to (and apparently they already are). And as I said, Apple has more then enough money lying around to compete on price. If the publishers really feel they’re getting screwed by Amazon, the answer is simply not to sell their books to them and go ahead and sell them directly.
PC games. They used to be sold by retailers, and are now usually either downloaded from the publishers website or from Steam, which itself is owned by a prominent publisher.
I really think of the players here, its Amazon that has to worry. Digital distribution is a pretty common thing to set up and doesn’t take a lot of capital to get started. Everyone that makes a tablet is going to set up one to move units (as Apple has done) and if Amazon tries to screw publishers (which again, they haven’t actually done, they continue to pay the same price to publishers as they always have, something that helps publishers bottom line), the publishers can go open their own digital marketplace site and sell their books there.
Just to add a little more, I think publishers are really thinking about this the wrong way. What ebooks mean is that the retail side of the business is going to be much cheaper: it costs a lot less to run a website then a Borders. This means books will be much cheaper, and so people will buy more books. But since the “savings” will largely come out of the retail side of things, the amount the publisher gets “per-book” will be about the same. So publishers will get more money, not less.
And if tablet makers like Amazon want to subsidize sales, that will only increase sales more at no expense to the publishers.
And when some of your competition (libraries and borrowing books from friends) has a cost to consumers of essential $0, it helps to have as low a price as possible, so ebooks will probably increase sales from that angle as well.
But instead of trying to get this to work for them, publishers seem to just be freaking out over the $9.99 thing (up to and including participating in illegal collusion, apparently). I suspect this is partially due to the fact that the rise of ebooks has coincided with the Great Recession, so bottom lines have been dropping while ebook sales have been growing, and partially just from future shock. But they and consumers would do better if they tried to create a new ebook model of selling books instead of trying to shoe-horn the technology into the old model.
The normal danger of letting a monopoly take over is that they’ll eventually raise prices, or that they’ll use their monopoly power to squeeze their suppliers.
But the barrier to entry in the eBook market is about as low as it can be. All you need to sell an eBook is a website and a merchant account. What are you worried will happen if Amazon’s market share keeps going up?
Count me as another one wondering how Amazon setting their own price and paying the publishers the same royalty as everyone else somehow screws publishers and/or authors. It’d be one thing if they were taking the WalMart route and pressuring publishing houses to give them better deals, but I’ve never heard any mention of that.
From my non-industry perspective, the publishers are being a bit too much like music publishers were ten years or so ago; they aren’t embracing the digital market in ways that create new revenue streams. There’s a couple aspects to e-Books that would create revenue streams to the publisher than nobody seems to be taking advantage of:
the fact that you can’t resell them. Yeah, a lot of people don’t like this. But to the publishers, it’s a great thing. If I tell a friend “you oughta read this book I just bought!” in the old paradigm, I’d lend it to her. Or she’d go to a used book store and buy a copy. Or she’d get it from the library. If an eBook is readily available at a good price, I think more people would opt to buy that book. It’s convenient, you own it, you don’t have to find a place on the bookshelf to store it, AND the publisher gets a cut.
For-profit libraries. Why can’t I subscribe to a service like Netflix is to movies and “rent” books? Heck, the publishers themselves could set something up like this if they wanted. I’d happily give Penguin Books $10 or $15 a month for the pleasure of having one or two of their books to read at a time.
Increased sales if the price are low. I can’t tell you how many books I’ve purchased from Amazon’s Daily Deals and their $3.99 and under monthly list. For $3, I’ll buy a book even if I have a very minor interest in it. Apparently I’m not the only one because these types of programs seem to be increasing. I can’t help but think it’d be worth exploring the concept of dropping book prices below even the $9.99 range and see if the publishers can make it up with volume. In a way, this idea has already been proven to a point - with the advent of Big Box Book Stores that sold every book at a 30 or 40% discount, didn’t publishers sell more hardcovers?
C Net Article that sheds some light on the issue. Exapno Mapcase & RealityChuck are right about this. The industry needs publishers. The model amazon wants is short-sighted with regards to the creative side of the equation. Discounting e-books that much will cause pubs to go under, or severely cut back. Does anyone think that’s good news for writers? Maybe JK Rowling can self-publish, but most authors will not become successful this way. That means more writers giving up. I envision a market filled with self-published hacks peddling sensational nonsense bordering on fan-fiction, and the breakout quality author becomes rarer & rarer. This says nothing of textbooks & educational materials, which will also take the hits along with every other aspect of publishing.
Also, I’d like to see bookstores actually remain in existence. There’s a reason why I don’t mind skipping the trip to the store to buy a PC game…the experience offered little to me. Going to a bookstore has a value to me, and to young readers, and to a community (and it’s educators.)
Again, why? If Amazon discounts books by subsidizing them with their own money, and pay the publishers the same per book that they’ve always been paid, how will that cause publishers to go under? As your own article points out, the publishers actually make considerably less money under the Apple model. And again, if Amazon subsidizes book sales, then more books are sold and again, the publishers make more money.
And its not like retailers subsidizing books is something specific to ebooks. Big book sellers have been offering 40% off on bestsellers for a long time. If the discounts are so damaging, why haven’t they created the dystopian world you picture already.
Yea, no question traditional bookstores are the real ones getting screwed. But thats true regardless of what model ebook sellers use.
Nice article. But what I got out of it is that the publishers are still betting too much on paper books staying popular. I think they’re wrong. We’ve already seen it in music and it’s happening with newspapers and movies - people increasingly want media electronically. When’s the last time you bought a CD? How many of us rent movies in physical form versus downloads? None of the physical industries are dead yet but they’re going that way.
I think it’s inevitable that books will go that way, too. I resisted it for a while, but now, with the exception of books with lots of diagrams and pictures, I prefer them on the Kindle. I prefer online booksellers to physical bookstores - I think it’s vastly better to be able to read reviews and check out the first chapter than it was to randomly browse physical books. I also like that I don’t have to have a room in my house dedicated to holding all the books I buy.
I think the publishers who embrace the eBook format and the associated paradigm changes in the sales model that are inevitable are the ones who are going to stay in business and prosper. The ones who stick to the old model are going to be left behind.
So the publishers claim. They may have a point, it may be unsustainable for their current business model, but it’s the internet age and their centuries old business model needs an update.
This, I think, is the real issue. As I’ve shown, the publishers stated reasons for the collusion don’t make much sense. What I think is going on is that publishers aren’t really worried about Apple ebooks being competitive with Amazon ebooks, they want physical books to stay competitive with ebooks, probably because they’re scared of the ease of piracy of the latter.
I’m not sure that’s an irrational fear. Once people get used to having ebook readers, book piracy probably will take off. People already have an expectation that they can share books they’ve bought and get them for free at the library, so book piracy feels less like a crime. And of course, book files are small and easy to download. I think this effect will probably be counteracted by increased sales due to ebooks being cheaper and easier to get then physical books, but I can at least see where it would be a real concern for publishers.
But in anycase, ebooks are going to keep increasing their marketshare whether publishers like it or not, and whether ebooks cost 9.99 or 12.99 (and I say this as someone who prefers physical books). By fighting it by trying to keep ebook sales more expensive, they’re just increasing peoples incentive to pirate over purchasing digital books.
Except read the thread, they don’t have a point. The publishers make more money off Amazon’s discounted books then they do otherwise.
Many public libraries like mine now include e-books in their catalog. It’s easy as pie for me to select a book for the library’s web site, and the next time I boot up my Kindle, voila, it’s there. After two weeks it goes away. So there’s that, but at least for now, my library’s e-book catalog is much smaller than it’s hardbook catalog, and many of the books aren’t in the Kindle format.
I think this is the fundamental issue at stake here. I disagree; the industry doesn’t need publishers. It needs filters. Publishers act as gateways to the market. To make sure that they publish books held to a sufficiently high standard of quality, they don’t let anything pass below that standard. But there’s another way to make sure that you only read quality books: read based on recommendations of people you trust, and based on your own experience.
Today, I (as a reader) don’t need a publisher to tell me whether a work or a writer is good enough for my time and money. I can find dozens of bloggers who will review books I like. I can read the author’s blog, or the articles they’ve written that are freely available. A few keystrokes will tell me vastly more than the fact that a book made it through the standards of some publishing house.
Publishers used to set a minimum standard because there were huge fixed costs in releasing a book. Now there aren’t. There used to be lots of friction and unknowns in the marketplace. Now there are many quick and easy ways to check whether a book is good.
The idea that somehow the old model, where an aspiring writer submitted manuscripts to agents and publishers, hoping that he’d either get approved, or at least get more than a form letter rejection, is better for discovering breakout talent than one where anyone can release a book, anyone can read it and provide feedback, and the best ones spread by word of mouth and social media is completely backward. How is getting lost in some junior reader’s slush pile more nurturing to the young writer than being surrounded by hacks?
Imagine if putting up a web page required convincing a publisher to back you. How much poorer would we all be for it. Sure, there wouldn’t be any total cesspools on the internet. But would that really be better for people who make web pages? For people who read them? The democratization of writing that eBooks represent is going to be just as amazing for creativity and production in long-form writing as the web was for… so many other things. Publishers are dinosaurs.
If you want the landscape of literature to resemble the landscape of web-browsing, that’s one way to look at it. I don’t happen to agree that this is a desirable scenario, or a good analogy. Revenue through successful web pages is driven by advertising. When a site increases it’s views, it’s a live process that can add and/or alter ads, and the prices charged for them. A book is a static object that has to be produced…e-book or not.
To flip it around on you, imagine a place that only hosted ‘published’ (Publisher-backed) web sites. How would the quality of those sites differ from the wild west of the internet now? It doesn’t matter in cyber-space if there are 10,000 crappy web pages to every good one. That level of failure will bankrupt every bookstore in the world, which in turn ends the era of printed book.
Like it or not, books are more than just someone’s summer reading list. Books are needed in schools for students…in Libraries…in research labs…whatever. The difference between what book publishers do for books & what record executives do for music are very, very different things.
I wasn’t terribly clear in my last post. Somewhat unrelated to the article, Amazon’s ultimate business plan is to self-publish through Amazon, onto e-readers made by Amazon, with a format developed by Amazon. Undercutting other booksellers hurts the publishers & the perceived value of an e-book. What the publishers are trying to do is stabilize the price of an e-book so Amazon doesn’t drive every other game in town out of business. Why? Read the article. Borders went down owing Penguin $41 million dollars. Sure, that means Penguin has to lay folks off. More importantly, that’s money they cannot invest in future authors & their projects. A best case scenario here is still a monopoly by Amazon and the end of actual book stores.
Penguin isn’t just a money-grubbing middle man. They provide opportunities for authors. Do they discriminate? Sure. Any idiot can write a book, but there’s a level of quality that must be met to be published. (well, by an actual publisher)
Mets Pitcher R.A. Dickey’s book (not exactly a renowned author) is being published because someone at Penguin thought it could make money. Now, his book gets edited, it gets promoted, the author does the rounds, ect…Without a publisher, he doesn’t write the book. Without publishing, if he does write the book, it’s competing with 10,000 crappy e-books about cats or video games or whatever else is yielded by the power of independent internet-based non-publishing.
I want to live in a world where there is a financial incentive to write a book. The complete independent way will provide way fewer paths to success, while providing more & more bad books to sift through.
And while I like to think I’m tech savy & I love to read e-books, the reality is that physical books aren’t going to die anytime soon. The big business of big bookstores might, and fiction best sellers might, but unlike CDs or DVDs, the world still need physical books. Not for nostalgia’s sake, but for the sake of the population that can’t easily use e-readers. For classrooms & Libraries and whatever else I’m not thinking of right now.
Just who do you think marketed these books so the bloggers know that the book even exists? As others have asked, how many self-published books do you have in your library? That’s the best answer to whether or not publishers provide a service. I want to read a book, not a slush pile.
Simply put, Amazon sells e-books at a loss, to promote their site & the sale of Kindles. This makes it difficult for other e-book sellers (B&N, Apple…) to compete. If they can’t compete, they go away.
Publishers are screwed if the only way to sell an e-book is through Amazon, since Amazon would then hold all the cards and can decide to no longer pay the same royalty. Amazon could then choose to deal with whatever publisher it wants.
Publishers are even more screwed if the only publisher Amazon wishes to deal with is Amazon.
That hardly even makes sense, because Amazon does not sell all ebooks at a loss, and the devices themselves though initially sold at a loss are now reaping a tiny profit.
Many posters in this thread are conflating the fates of bookstores and publishers. I’m pretty sure ebooks are not good for physical retailers unless they really do some sharp thinking*, but I still see no logic in the premise that ebooks are bad for publishers.
[ul]
[li] There is no physical printing cost. Even if the physical cost of printing is 10-12% of a print book, an additional 10-12% profit is ENORMOUS in the publishing industry. That this savings is brushed off is to me, incomprehensible.[/li][li]Ebooks cannot be loaned or resold on the used book market. Publishers who allow libraries to purchase ebooks, limit the number of times they can be circulated.[/li][li]It’s impossible to have print overrun and the publisher never has to absorb the cost of returned, unsold ebooks.[/li][li] Ebooks do not need to be shipped, distributed, or stored. They cannot be damaged by water or nibbled on by varmints or stolen by warehouse workers or suffer any physical hazard as a result of being printed, stored, or shipped.[/li][li]There is never any lost profit due to shortages; there are always enough ebooks for every buyer. [/li][li]If an ebook contains a significant mistake, the cost of reprint and replacement is negligible (Deathly Hallows had a minor misprint, a couple hundred copies were missing 33 pages, and I recall at least one Harry Potter novel previous to that had a serious misprint identified before the laydown date) [/li][li]The format ebooks arrive at the publisher in, is the same format they arrive for print publication in. Microsoft Word. Adobe Acrobat. [/li][li]Ebooks don’t participate in shared markdowns. (do they ever not!) [/li][li]When promoting an ebook, there are no pay-for-placement (“co-op”) fees to bookstores.[/li][li]contrasted to the savings above, ebooks do not create any new costs that were not already present in the cost of publishing print books.[/li][/ul]
I don’t agree with those that post that Publishers are unnecessary. Publishers despite their many flaws are the #1 expert in identifying quality prose and delivering it to readers. The idea that most people who really enjoy reading are going to sift through the Amazon $1 slushpile to find something worth reading is absurd. I have like 200 (print) books in my to-read pile; I’m not going to mess with that bullshit. I don’t personally know anyone else who would.
However I also don’t agree that ebooks are obviously inherently unprofitable. To me they appear to be more inherently profitable than hardcovers. And I also don’t agree that profit-killing discounts by retailers are in any way a new phenomenon nor that they are isolated to e-books nor that they are something the publisher has ever tried to control in the past.
The NYT did the math and found that the profit on a $9.99 ebook is roughly the same as that on a $26 hardcover - in real dollars, not in percentage. Profit before overhead on a hardcover: $4.05. Profit before overhead on an ebook at the 9.99 price point: 3.51-4.26. At $12.99 minus apple’s 30% commission, they were making MORE profit on an ebook than a hardcover. You’ll also note that, contrary to the implications in this thread, the cost of printing and shipping a physical book is just about as significant as the cost of author royalties.
*And before anyone says so, ebooks did not kill Borders. Borders was killed by its own unbelievable and unshakable stupidity over a 10-13 year period beginning roughly in 1999. My cite: I worked for 7 years at Borders HQ, between 1998 and 2005.
Maybe the approach of EL James in writing that fanfic that preceded “50 Shades of Gray” points to a way for authors to self-publish via the Web successfully … tie into an existing online community and let them boost the sales of your work.
Hmmmmm …
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