cranky"This book has been on the shelves for three weeks and is already in the remainder bins," wrote Wayne Fogel of The Villages, Fla., when he left a one-star review of Catherine Coulter's book KnockOut on Amazon. "$14.82 for the Kindle version is unbelievable. Some listings Amazon should refuse when the authors are trying to rip off Amazon's customers."
So let me see if I've got this straight, shall I?
1) The author sets the price, not the publisher.
2) The author is, apparently, getting a huge percentage of the cover price.
3) The right way to object to this is to make people think the book sucks.
4) It doesn't matter if this means the author can't sell another book; they shouldn't have been greedy.
Um, what?
There is this incredible, eye-burning, heart-shattering impression that all authors are rich; that we sign that first contract, receive that first check, and spend the rest of our days lounging on the beach in Bura-Bura while dictating our works of creative genius to a scantily-clad cabana boy named Chad. If this is true, something's wrong with my authorial contract. I've sold six books—by the standards of any beginning author, I'm doing pretty well—but Chad has yet to put in an appearance, and I'm still not sure where Bura-Bura is. Instead, I get up every morning at 5AM to travel an hour and a half to get to work, spend my evenings hammering away at my keyboard and praying for another sale, and all my grocery purchases are heavily influenced by what's currently on sale. I make a weekly trip to Target to stock up on frozen dinners and kitty litter, because I can't actually afford to let my cats crap on silken beds of cedar shavings hand-milled for them on a little organic farm in Minnesota. I buy sweaters at Goodwill, and consider myself blessed by the Great Pumpkin when I find an Ann Taylor top for five dollars, because it saves me a trip to the mall that I really shouldn't be making. And I'm doing well.
The fantastic
rolanni has posted a very realistic view at a working author's finances. This is someone who's been publishing for years, and has actually reached the stage of getting royalty payments (not every book will reach the royalty stage; many books never actually earn back their advances). If anybody deserves their ticket to Bura-Bura, it's her. And she ain't on a plane right now.Look: the $15 price point that some publishers are proposing is for the hardcover edition. The Kindle edition of Rosemary and Rue costs $6.39, which is 20% less than the price of the physical item. Because the physical books are published, at least currently, in bulk, 20% is a fairly valid reflection of the cost of paper and distribution. 80% of the cost of the book goes to the author, the editor, the copyeditor, the layout artist, the cover artist, the marketing department, and the magical mystery adventure we like to call "keeping the lights on at the publisher's office." Saying that an electronic copy of the book costs the publisher "nothing" is like saying that an MP3 of one of my songs costs me "nothing." So wait, I don't have to pay my recording engineer anything if I'm only selling virtual music? It's all free money? Score! Sure, Kristoph won't be able to make his mortgage payments or upgrade his equipment, but what do I care? Free money!
If publishers aren't allowed to charge more for the electronic editions of expensive books, they'll refuse to offer the electronic editions until the mass-market paperbacks come out. Hardcovers cost more for a variety of reasons—including the fact that often, hardcover authors are getting slightly larger advances. So that is, I suppose, a bit of authorial greed, because we're putting our desire to feed the cats (and ourselves) ahead of the consumer's desire to pay six dollars for something we spent two years writing. Sorry.
Also, these reactions are, well, hurtful. By saying that authors are "greedy" for wanting to make a living, people are saying that our time has no value. These are often the same people who will willingly pay ten dollars for a movie ticket (and ten more for popcorn and a soda), knowing that the actors were paid thousands, if not millions, of dollars to speak lines that somebody wrote. Every cool quip you've ever heard in a movie or on TV? Yeah, somebody wrote that. If somebody had been flipping burgers to keep the lights on, maybe somebody wouldn't have had the time to come up with that awesome line. Authors need to eat, and if we can't do that through our art, we'll find another way to do it...and things won't get written. I mean, look:
Time to write a book, six months to three years.
Time to sell a book, six days to eternity.
Time to edit a book, six months.
Time between publication and print, one to three years.
How much money do you make during that time? (Don't actually answer that, I don't want to know. I'm just making a point.) Unless you're Stephen King, writing is never going to make you rich, and saying you'd like to eat doesn't make you greedy, it makes you sane.
I am not saying that publishers should be charging whatever they want for everything—just that e-books cost money, too, and that not all the costs of creating a book are in the physical artifact you can point to and shout "book" about. My publisher wants to make money. My publisher wants me to make money, because when I'm making money, so are they, and more, when I'm making enough money, I can actually get that cabana boy and spend a lot more time writing. Right now, I'm literally working myself sick, spending three days in bed, and then doing it again, because that's the only way to stay on top of all the things I need to do.
Authors, as a class, aren't greedy. We're just tired.
Now where's my damn cabana boy?
February 13 2010, 00:36:36 UTC 7 years ago
No, e-books aren't "free", but to the publisher, they are close enough to being free. The margin on ebooks is HUGE compared to that of hardcopies.
Out of the MSRP, typically 50% goes to the retailer, 25% to the distributor, and 25% to the publisher (on average).
So with a $26 hardcover, this means 13 goes to the retailer, 6.50 to the distributor, and 6.50 to the publisher. Royalties and all that jazz come out of the publisher's share. Amazon et al discount the book out of their 50% share, accepting a smaller margin because they have smaller overhead and higher volume.
Now lets compare this to ebooks. You no longer have printing costs OR distributor costs. You eliminate the other expenses associated with hardcover, namely returns and remainders. That saves a BIG chunk of change. It's not uncommon for the actual printing cost to be 10-15% of the list price - half the publisher's share.
While there are processing costs for doing the transaction and delivering the file to the user, these costs are pennies per transaction.
So here was have an article about Google's plans for an eBookstore: http://www.pcworld.com/businesscenter/a
They mention that 63% of the sale price would go to the publisher, or if purchased through a retail partner (Amazon, Barnes&Noble), 45% goes to the publisher. That's a lot more than 25%, especially since there are no publishing costs eating into that 25%.
So now you have your $15 ebook. 63% of that goes to the publisher - $9.45. Or more likely, only 45% under the retail partner share - $6.75.
So here we have the publisher taking in a noticeably larger share of the List Price, while incurring a lot less of the expenses (printing) that are paid for with that share.
If you're getting a 10% of cover royalty on a $26 hardcover, and 10% on the $15 ebook...
You're getting $2.60 out of $6.50, or 40% for hardcover.
Or you're getting $1.50 out of $6.75, which is only 22% of the publisher's share (even less if sold directly through google).
Again, there are no printing costs associated with the ebook sale, so the margin the publisher pulls in is significantly higher.
And THAT is the Big Thing That Pisses Me Off With Ebook Prices.
I'm well aware that ebooks cost money, and it's not all paper and ink. But the massive difference in margins rankles me. It's not like the ebooks are being priced based on the actual costs that go into them... as best I can see, they add up how much less it costs by taking out the distributor and printing, and then only apply half of that as a discount to reach the ebook price.
I want you to get paid. I want you to have 13 cabana boys, all decked out in pumpkin-fucker orange livery, 3 of them tending to your every need, with the other 10 pampering Alice and Lily.
But I can't justify such huge prices on electronic editions.
Even the $1.60 savings for R&R isn't worth it for me. The cost savings is just too little to warrant it. Even though I'd PREFER an electronic edition, you just get so much MORE for that buck and a half that it's silly not to.
So herein I present my solution - this is the scheme that would make me Mr McHappyPants. And I honestly think it would be a very smart move for publishers, which will help retain the print industry while growing ebooks.
In a word: Bundles.
DVDs are already doing this, with "Digital Copy". They've been doing it for some time, because they realized the necessity. They include a portable-device friendly copy of the media with the main DVD, so people can put it on their iPhone or what have you. And this has made consumers very happy.
So do the same thing. Don't sell ebooks through a separate channel. Bundle them with the hardcopy - at a SMALL premium.
That $26 hardcover? Make it $20 with the ebook. Plus $4
Rosemary and Rue? Make it $10 even with the ebook. Plus $2.
And here's a sample of consumer psychology in favor of this.
I won't pay $6 for an ebook of R&R. But I will fall over myself to pay $10 for the bundle just to get the ebook in the bundle. It's all about perceived value.
Aside from this, I also support delayed release for ebooks, to allow a sales lead on hardcopies.
February 13 2010, 03:31:15 UTC 7 years ago
As far as the margins, I agree they're gross - but the problem is that selling that eBook eats into sales of the physical book. So I don't mind seeing high initial eBook prices as long as they drop over time, so that as remaining physical copies of the book drop off and/or are less likely to sell and/or get remaindered, the eBook becomes more affordable because it's not cutting into sales any more. So if you put the eBook out at the same time as the hardcover - it should be priced high then but lower six months later and lower still two years later. (Not suggesting the price be dropped at those points, just that I'd expect different prices at those points.)
In another comment it was noted that the pricing scheme would drop the price over time, perhaps as low as $4. I'd snap up several books in eBook at $4 a pop...when they got there.
February 13 2010, 04:06:11 UTC 7 years ago
Think about it. You will sell, say, 10k copies between paper and pixels. Every ebook sold is one less paper copy - very direct "eating of sales".
If the ebook earns you the publisher the same revenue as the hardcover... then why do you CARE about "cannibalized sales"?
Taking our hardcover, where we determined that $6.50 is going to the publisher. With the 45% scheme, that's $6.75 for the publisher per ebook.
At this point, as a publisher, I would PREFER people buy the ebook over the hardcover, as I'm getting an extra 25 cents each. Please, Kindle, eat my sales, I come out on top!
Over 10k sales, that's an extra $2500 coming in to the publisher over traditional sales. Even if I printed a full run and not a single hardcover sold, I'm still ahead of the game.
That's eating my sales the same way a cow eats grass and turns it into steak.
Even then, delayed releases (as mentioned) can help alleviate this. NetFlix has started it with Warner new releases. Anything new from Warner won't be available on NetFlix for 30 days after DVD release. The purpose of this is to allow a sales window for the DVDs.
I'd love to see prices go down, but so far with ebooks they aren't. As some people have pointed out, in many cases the ebook costs more than the paperback, which is just silly.
$4 would be a sweet spot for me as well. Publishers would be making as much on those as they do on paperbacks, and oh boy would there be a buying frenzy. $4 is under the magic $5 line, which makes it a VERY easy impulse buy. It's less than a lot of people's starbucks orders. But $15? Too much, the number is "big" and for that much, you can frequently get a physical product of something with comparable "subjective value" like a DVD.
Amazon's $10 mark was pretty good.
But yeah. $4 is my target. Or, as I said, $10 bundled with a paperback. I swear to the great pumpkin, they will generate an increase in sales if they go the bundle route.
February 13 2010, 14:47:19 UTC 7 years ago
Of course, they can simply print fewer hc or none. However, fewer hc is a smaller print run is a more expensive (to the publisher) book, either increasing the price of the hc or reducing the margins again. And going straight to paperback kicks the publisher back to the lower margins of pb for people who want a physical book.
That may be where the industry ends up going, but I can see why they'd be reluctant to do it. Not everyone wants eBooks or has an eReader, and the publisher is better off selling hardcovers to those people who do want physical books - those who will buy it. If the eBook format eats into the sales, thus forcing them to smaller print runs and higher costs, I can see where that would be a major issue for them.
Which is why I want to see them implement the discussed model (not a single price-point for a product, but a sliding scale over time) that they've proposed. Because yes, I won't buy the eBook until it drops, but I'd like it then. But I also see why they don't want to undercut hardcovers. (I think the delay might be more like 6 months for those, if they wanted to get as many off the shelves as possible...because most of what was left when a cheap eBook option came out would probably be a loss, at a guess.
NetFlix vs. DVD is a slightly different scenario. NetFlix will cut into DVD sales, but it won't kill them - assuming it's not in the on-demand section - because someone who sees and loves a movie may want the convenience of owning it. With an eBook, you have the convenience of owning it, and a physical copy is useful only if you want to be able to loan it. Which is probably a bigger barrier to interest to overcome.
February 13 2010, 18:28:31 UTC 7 years ago
OK, back to my example figures of $6.50 and $6.75.
Lets say the printing costs are half the base margin (a roughly accurate estimation), so $3.25 per.
Our print run is 10k copies.
We will assume that 10k copies are sold in total between HC and ebook. Thus every ebook sold is one less HC sold.
10k units @ $3.25 each is $32,500. This is our fixed expense.
So we sell all 10k copies and no ebooks. That's $65,000 in revenue, minus $32,500 in expenses, for a profit of $32,500.
Now lets say we sell 5k of each. That's 5k times $6.50 is $32,500, plus 5k times $6.75 equals $33,750 for a total revenue of $66,250, making a profit of $33,750.
Wait, did we just make more money, even though half the print run was remaindered? Yes, yes we did.
Now lets assume we sell 10k ebooks and ZERO hardcovers. That's $67,500 in revenue, minus $32,500 in expenses, for a profit of $35,000.
Even though they spent the money printing all those books, and every single one ended up pulped, the publisher still made MORE money on the "cannibalized sales", because the margin on the ebooks was higher.
That's why I don't buy the "cannibalized sales" argument. Plus this scenario is unrealistic, because the lower price point of ebooks will result in higher sales.
For every 1 hardcover not sold, there will be 1.x ebooks sold.
And for the record... smaller print runs would be a high cost per unit, but still a lower total cost overall. If you only print half as many copies of a book, at a 50% higher cost, because you know the other half of the sales will be made through ebooks, then you're actually saving money.
10k units at "1" cost is 10k
5k units at "1.5" cost is 7.5k, a 25% savings.
February 17 2010, 21:29:50 UTC 7 years ago
a) Operating costs of the publisher, most of whom are in New York, aka, "most expensive place known to man."
b) The fact that book costs vary depending on advertising, cover artist, and what that advance is.
Neither a nor b have anything to do with the physical product. They're cash on the barrel head, roll on from there. I'd love to see bundling, but even as I consider my math to be an unrealistically simple summation, I consider pretty much every "here's how much it costs" breakdown I've seen to be unrealistically simple.
February 18 2010, 08:25:56 UTC 7 years ago
What I'm saying is that if an ebook has the same dollar-margin as the print edition, I feel gouged, because there is no printing cost coming out of that margin. It's extra pure profit. Hence irritation.
Profit on print = margin - operations (editing, advertising, advance, etc) - cost of printing.
Profit on ebook = margin - operations.
When profit is equal, I am a happy boy. But when MARGIN is equal, then I get cranky, because profit is higher for no justifiable reason.
I will confess that my basic model of halves (half for the retailer, half what's left for the distributor, half what's left for profit, the rest is cost) is primarily derived from a discussion on the topic by an RPG designer, who did have an inside view of the industry.
http://www.seankreynolds.com/rpgfiles/r
Discussions and things I have seen elsewhere tend to support this "halves" breakdown, usually within 5%. Diamond Comics Distributor, for instance, gives a 30% share to the publisher.
Whatever.
I want bundles.
February 18 2010, 17:13:09 UTC 7 years ago
I think the model is already giving a much larger price break than most people want to admit.
Bundles.