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Discussion: Business Musings – Price Wars and Victims | Kristine Kathryn Rusch

I had an interesting experience this week: I just bought a brand-new hardcover novel for less than I would have paid for the ebook. I wouldn’t have noticed except that I’ve been doing a lot of stuff online this week, and Amazon, good marketers that they are, sent me an e-mail to let me know that I had received a preorder discount of 90 cents.

I prefer to read paper books, although I do read ebooks, especially when I’m binging on a series.

The thing is, I’d ordered the book six months ago from Amazon. The book, Sara Paretsky’s Brush Back (which I’m enjoying, thank you very much), has a publisher’s list price of $27.95 for the hardcover. Amazon never listed the book at full price. I believe I initially ordered a $17.95 hardcover. I kept getting notices of discounting from Amazon, until this last, which arrived after the book was shipped.

Caveat here: I preorder because it makes some random day feel like Christmas. Suddenly, a book I really, really want shows up in the mail, almost like a surprise gift from a special friend.

I had forgotten that the Paretsky was coming out in August. If you’d asked me, I would have said September, because that used to be her release date. So when I received the most recent notice of the preorder discount—one that sounded final, final—I went to Amazon and looked up the publication date for the book.

Top Comments

C.E. Petit

This issue is about time. Our Gracious Hostess has nicely described a data slice… that implicates a lot more, older data slices.

The excessive duration of publishing contracts — especially “older” works from 2005 and before — fossilizes cost and compensation structures as of the date of the contract, without regard to later changes. If you have a medium-term publishing memory, you might recall a dispute a few years ago over whether an e-book is a “book,” as described in pre-1994 Random House publishing contracts.* Let’s assume, for the moment, that commercial publishers suddenly change their contracting patterns to be simultaneously fairer to the authors and more flexible in their own pricing by redefining “deep discount” to mean “sold at a price less than 200% of the actual per-copy production cost established by printer invoice.” That might have an effect… in about six years. That’s the best available profit-equalization estimate for multiline commercial publishers — half of such a publisher’s profits come from works published more than six years ago. (Not revenues — profits. Under realaccounting rules like the ones that a publicly traded media conglomerate must use in making SEC reports.) All of those contracts “for the life of the copyright” without reasonable reversion (aka “out of print”) clauses force the ossification: The publisher can’t adopt a “nimble” pricing policy because its backlist will continue to dominate the actual results, and nobody wants to take a risk on changing the ways things are without any chance of having enough data to even adjust things for half a decade.

Worse, the internal decisionmaking systems at publishers are stuck in the 1960s. You may have heard of a “profit and loss projection” (more properly called a “cost-sales projection,” because actual “profit” depends on factors unrelated to individual-copy sales) used in determining whether to acquire rights to a book. The real problem is that these projections are based upon memes that, umm, ossified in the 1960s and 1970s: “List price needs to be six times fully-extended cost or ten times printing cost,” and similar assumptions built into the models. Leaving aside that these memes haven’t a bloody thing to do with pure-sunk-cost “print runs” like e-books, they also grievously misrepresent the relationship between labor costs and materials costs even within printing; for example, they distort historical comparisons with today’s shorter print runs. (The less said about the failure of these models to account for either contemporary distribution systems or data perturbations in the inputs,** the better.)

brokenyogi

I think you have the margins publishers get from Amazon on ebooks wrong. While self-published authors only gross 70% on ebooks priced from 2.99-9.99, significant publishers have no such restrictions. They get their full 70% regardless of the ebook price. The Big Five even get more than 70% in some cases if they price below 9.99.

Hrafn

The problem seems to be that, whilst Publishers should have an incentive to maximise their revenues from Amazon, and thus maximise royalties to authors, they appear to be screwing both themselves, and their authors, over by settings prices at levels that ensure that they both get less money out of Amazon than they might otherwise do.

Amazon appears to be simply ‘giving publishers more rope to hang themselves’ by further accentuating these absurd price differentials. Their message to publishers would seem to be ‘your prices are stupid, and will bankrupt you eventually.’ It is however not clear what the publishers message to Amazon is, other than ‘we want things back the way they were (even if that’s now impossible)’.

danceswithlife

Another thing traditional publishers don’t seem to realize is that some of us don’t want paper books anymore. I usually read 3-5 books per week, and I re-read. As I moved into ebooks I was ecstatic that my library could be contained in an e-device. No carrying hardbacks, no book cases to buy or dust, no wondering which bookshelf a book I wanted to re-read was in. If I can’t get an ebook for something I want to read, I reserve it at the library and wait for an ebook edition with a sensible price (under $8.00, most of the time). I don’t want paper books in my life, and am slowly replacing my favorites as ebooks. I spend a lot of time on Kindle hitting the “Tell the publisher you want this in Kindle” on my old favs that aren’t in ebook format yet.

In the olden days before ebooks I had a very short list of authors whose new books I would buy new in hardback. So when I started buying ebooks I decided that I would pay a reasonable hardback price for new ebooks from those authors. For me “reasonable” is usually less than $20.00 depending on the length of the book. I resent it, but I will do it. It dramatically helps trad authors to buy their books in the first week, and I want my favorite authors to keep publishing.

For quite a while I avoided Kindle ebooks. I don’t like the closed garden mentality, and know that Amazon doesn’t treat its employees well a lot of the time. But then many authors I follow mentioned that they get the best royalties on their Kindle books, so I gave up and began to switch from epubs to mobi. I know there are people who don’t want, or who can’t afford, ebooks, and I want them to continue to have access to reading. It’s likely multiple formats are more expensive to produce. Nonetheless, I’m a reader and have been all my life, so publishers as well as indie authors get a lot of my fun money. But I won’t pay more for an ebook than for a hardback, and I won’t buy hardbacks anymore. Publishers beware.

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Business Musings: Price Wars and Victims | Kristine Kathryn Rusch.