How much should ebooks cost?
The NY Times and Gizmodo are attempting to run the math on how much to charge for books purchased on the Kindle and iPad.
Amazon prices Kindle books at $9.99, while Apple will apparently let prices float higher on iPad books, with $12.99 being a frequently-quoted number.
With data drawn from publishing sources, these articles break down costs and profits. Poorly. They don’t differentiate between one-time costs (designing cover artwork) and variable costs (printing each additional copy). And how much of the marketing budget would be identical with or without the ebook version?
The number that sticks out most is the bookseller’s take. A 50% cut makes sense when dealing with a physical book sold through a brick-and-mortar bookstore. A 30% cut is crazy when dealing with atoms pushed out through a virtual retailer. As a reference, I sell pdf and ePub versions of The Variant and only give up 11 cents on the dollar.1
Amazon makes the Kindle to sell books; Apple makes the iPad to sell iPads — selling books is sort of gravy. That gives Apple more price flexibility, and should hopefully avoid absurd situations where the digital version costs much more than the paperback. 2
The publishing industry wants to keep prices up so they can make money. Can’t blame them for that. But you know something’s amiss when Anne Rice is the voice of reason:
The only thing I think is a mistake is people trying to hold back e-books or Kindle and trying to head off this revolution by building a dam. It’s not going to work.
One last point: How soon can we agree to spell ebooks with a lowercase e, and no hyphen?
The Times likes the hyphen, while Gizmodo feels the need to capitalize. I’d suggest that email is the best antecedent. That’s a term that has largely swallowed its hyphen, probably due to its verbification. Can we embrace the future and simply lose the hyphen now?
(Thanks to Quinn for the link.)
- But I give up 65 cents of each dollar earned through the Kindle version, which sells much better. ↩
- I’m not ignoring the Nook or the Sony readers, but they’re not steering the ship. ↩
Articles
March 1st, 2010 at 2:54 pm
I hate to dig up the corpse of the dreaded Music Industry Comparison, but it’s really only going to be a matter of time before the disappearance of the artificial stopgaps constructed by Amazon and others to keep the pricing and distribution models the same as they were in the brick-and-mortar days. They simply aren’t producing or distributing physical goods anymore, so comparisons to The Old Way mean nothing.
Even after iTunes started pumping profits back in, this remains a battle the music industry is still fighting, only recently realizing that the one old-world weapon they have left at their disposal is marketing, and that they need to let the physical production go.
The main drivers these days are the original creative products themselves and the method of consumer consumption. The only reason Beyonce isn’t producing and selling her own albums at this point is because she doesn’t want to (and because her record company pays her huge sums in advance not to).
March 1st, 2010 at 3:00 pm
And then there’s the extra-kicker regarding the price of actually printing the books: don’t many of the many publishers also have a (large) stake in the physical printing presses?
Yes, publishers might save money by not having to print physical copies, but if that takes away income from the printing arm of the same corporate entity, well, said corporate entity probably isn’t too happy about that.
It’s like the incestuous relationship between beverage and bottling companies.
What Apple and Amazon need to do is figure out how to be the fountain drinks of the books world. i.e. how to get the syrupy goodness of literature to the masses without bottles.
And also without watering things down too much.
March 1st, 2010 at 3:24 pm
On the last point I respond with a resounding, “yes!”
It’s the natural progress of the English language that newly formed words are hyphenated (soft-ware), then, after becoming ubiquitous, drop the hyphen (software).
I find it amusing how The Times latches onto the antiquated way of doing things and insists on calling it an “e-book.” On the other hand, they may have just fired all their copy editors.
March 1st, 2010 at 3:30 pm
Smart analogy, Mark.
Unlike music which comes down to the atoms to make sound (regardless of source), books + bookstores add a physical experience not as easily replicated.
Take Kindle, for example. I personally am on the computer SO MUCH that another LCD screen for my pleasure reading is not a tradeoff I’d like to make (at least not yet).
I think books will be around for a good long while, in a nice Old Way.
March 1st, 2010 at 3:35 pm
From the New York TImes article: “Out of that gross revenue, the publisher pays about 50 cents to convert the text to a digital file, typeset it in digital form and copy-edit it.”
Uuh, isn’t already IN a digital file? Are they saying that the publishing industry only has hard copies of their books? Not likely.
And I really don’t think this is exactly like the music industry it’s been compared to so often. The big difference is that music was already being widely distributed in a digital format with CDs. It wasn’t difficult to simply rip a CD and grab the music, then put it online. Not so with books. Not many people are going to scan their books in order to digitize them. The ebook industry is creating the digital format, not the other way around.
March 1st, 2010 at 4:10 pm
John- I appreciate your calm tone about this. So many people are out to vilify the publishers, which is so unhelpful for everyone.
Tim W.- People won’t want to read manuscripts that haven’t been formatted for their ereader, trust me. Even the ones that ARE formatted can be a pain if they’re not done well.
I agree with your last paragraph, though. And to your point, there’s a lot more work being done (at the publishing house) to convert from physical to digital books than there is to convert songs. If anything, I think that contributes to the publishers’ case.
Overall publishers are experimenting with prices because ebooks (note: I concur with John’s last point!) are still a small, small percentage of their market. They believe they must price ebooks higher than $9.99 to preserve the larger and thus more important part of their market (i.e., hardcovers and paperbacks). Whether they are right or wrong in their math/rationale, this is why they’re doing it, not b/c they are trying to rip off readers or think they can make a quick buck off ebooks. And not because they’re afraid of change, but because they’re not sure where things are going to net out yet, nor how to make the ebook market work to their advantage.
Instead of getting all riled up about, I suggest people just have some patience and let the market sort itself out. Which it will do, given time. Just buy books that you believe to be “worth it” — whether that’s only 99 cent books, or $9.99 books, or even a really great $14.99 book that you want to devour right away.
March 1st, 2010 at 4:56 pm
Editors at the New York Times resist dropping the hyphens from relatively new words for several reasons, which may appear “old school” to peeps weaned on the Internet. Words need to prove themselves–not just to niche users–but to the masses. They must be headed clearly towards universality, and they need to reach a tipping point described eloquently by Strunk and White. E-books, or rather ebooks, may sound like a foregone conclusion. For those readers ready to roll out the red carpet, what about: enotes, eportfolios, estationary, ecards, ebriefs, ebrochures, enovels, eadverts. E-uw. Let e-books pay their dues for a while longer. Email has earned it.
March 1st, 2010 at 5:19 pm
The big difference between the advents of digital music and digital books is that the former was user-driven, while the latter is company-driven.
If there had been no Napster, and downloadable music had instead been hatched in some Universal Music sales meeting, it’s not hard to imagine a full album costing $20 for the “privilege” of over-the-pipe procurement. Because Plan A in the corporate world is never “accept a little less profit for the sake of technological survival”; it’s “use the new technology to increase profit.” The current landscape of digital music sales isn’t even Plan B or C; it’s probably somewhere around Plan Q.
Somewhere in the ether, there’s a formula for digital book sales that work to the mutual benefit of consumer, publisher, and creator; but it’s probably not going to be found for quite a while. First we’ll have to endure inflated prices (with deflated royalties), author revolts, piracy, and a litany of hand-wringing articles declaring the whole ebook industry dead on arrival.
March 1st, 2010 at 6:22 pm
I’ve been selling ebooks online for about four years now. Novels I sell for $5 to $8, shorter stuff for $1-$4. Some months I sell hundreds of books, some months only a few. But I’m not a big concern, just a small website with a finger in publishing.
Personally, I feel that an ebook should be about the price of a paperback or a little less. You can’t justify charging more for convenience since paperbacks are equally, if differently, convenient. And you certainly can’t justify charging more for production costs without being a bald-faced liar.
New ebooks could be priced like a Trade Paperback, the price falling when the mass market editions come out. Seems reasonable and this is what I think will eventually happen just from market forces.
March 1st, 2010 at 7:45 pm
I’m going for an ebook costing $3 maximum.
There already exists a whole industry that is set to obliterate book publishers unless they get their act together – book packagers.
These packagers find the books and authors, edit and design, sometimes write marketing and sales material and then deliver manuscripts to the publisher who does sales, marketing, print and distribution.
If you cut the need for printing and distribution and let the packager take care of marketing then there becomes very little reason to go for print publication.
These packagers are sometimes making as little as 50 cents per book. Often they are making flat fees. The authors are making as little as $1.50 per book in royalties, which by the way will be held back for an enormous amount of time for reasons that make less and less sense.
Smart book packagers already have the skills to edit and design a book. They have the skills to write marketing copy. I think soon they’ll realise that rather than taking $5000 to put a book together, they’re better off selling ebooks for $3 and splitting the payment 50/50 with the author.
When this transition comes about, publishing companies are going to have a hard time of it. Their offer to the author is terrible: we’ll print and distribute your book, take 88% of the money, hold back your money for a long time and we’ll take a big slice of movie adaptation, audiobooks and anything else we can get our claws into. Oh, and you’ll never be free. Your book will always be available print on demand so you can never exit your contract with us.
Why is Harry Potter great? It’s two components: a good writer and a good editor. Past that, the only thing needed is someone to lay out the book into a standard format. The cover illustrations didn’t sell that series. The sales team did but when you have online rating systems, most downloaded, charts, etc, you need them less and less.
I’ve worked as a writer and editor and I can tell you there are plenty of editors out there looking at the ebook trade as a source of 50 cent royalties. Against those market forces, the price of ebooks is going to drop dramatically.
March 1st, 2010 at 7:57 pm
It’s a long comment day on johnaugust.com but I intend to put an end to it.
March 1st, 2010 at 9:11 pm
I don’t think they should cost more than $5. There’s no paper involved. How much does it really cost? They’ll have to split the money– less to publisher, more to writer.
And I would prefer to call it an eBook.
March 1st, 2010 at 9:12 pm
Should read “split the money differently.”
Oops.
March 1st, 2010 at 9:28 pm
Don Knuth always drops the hyphen in common words. He talks about how “soft-ware” and “e-mail” became common single words here:
http://www-cs-faculty.stanford.edu/~uno/email.html
March 1st, 2010 at 11:36 pm
I’m hesitant to remove the hyphen from e-book for the same reason that I still use a hyphen in e-mail: If there’s only one letter added on the front, someone – it doesn’t matter who – could mistake that for a typo.
That typo-that-isn’t might be completely insignificant – who cares if I mailed you something or e-mailed you something? – but that’s my rationalization.
March 2nd, 2010 at 1:52 am
Competitive forces will dictate the price – not what’s fair, or how much it costs.
March 2nd, 2010 at 10:49 am
I’m taking an online class through University of Phoenix and one of my costs is an online textbook which I can’t sell back to the bookstore when I’m done and I can’t buy used – and it’s $150. How on earth does anyone justify charging that much for a book you don’t even have to print? It’s just baffling.
March 2nd, 2010 at 11:23 am
Why everything has to be digital? I prefer REAL books and REAL cd’s, dvd’s and BR’s
March 2nd, 2010 at 11:56 am
Emily,
That’s astounding and obviously a cash grab by the university.
March 2nd, 2010 at 12:40 pm
Thorsmark is right on. I still use “e-mail” and so do a lot of people. Keeping the hyphen is still a specified style rule at my girlfriend’s law school and former job.
I’m not against everybody eventually coalescing around “email” or anything, but the point is, it’s way too soon to start declaring “ebook” Officially Correct. I know a lot of you guys have been living and breathing the Kindle for over a year now, but the majority of folks out there have still never laid eyes on an e-book.
March 2nd, 2010 at 12:43 pm
@Tim W. and Emily Blake — this probably isn’t quite as bad, but when I was at NYU I had to pay $100 for a book consisting completely of badly photocopied essays.
March 2nd, 2010 at 1:37 pm
Wait, we’re not supposed to hyphenate e-mail anymore? Guess I’m living in the past. (I also think “that’s how I roll” is still funny to say.)
March 2nd, 2010 at 2:36 pm
For everyone saying that the reason an ebook should cost less than a hardcopy because “you don’t have to print it,” I’ve actually read statistics that even hardcover books only cost about a couple of dollars each to print, so the difference in production/distribution cost isn’t all that great between the two media.
On the other hand, it’s actually in the interest of publishers to deny or obfuscate this information, because even if people don’t complain about paying $12-15 for ebooks, they might start to wonder why in the world they should be paying $30 for a brand new hardcover if it only costs a few dollars more to distribute.
March 2nd, 2010 at 5:55 pm
My company’s chief editor has a rule about hyphenating e-mail. Over time, though, hyphens disappear in English. For instance, most people would not write electro-magnetic these days, and back at the turn of the century people wrote good-bye, not goodbye.
I think hyphenating new words that have non-traditional non-word prefixes and suffixes is good. To me, email still looks as if it is meant to sound “m ale.”
March 2nd, 2010 at 5:57 pm
Whoops, I meant turn of the twentieth century.
March 2nd, 2010 at 6:02 pm
Nick@23: Right on the money. Physical costs for a hard cover are usually around $1. A mass market paperback is < 25 cents. Except for super-bestsellers, you can treat the cost of “paper” as effectively zero, so people can fuss and complain about “but it’s not even on paper!” all they want: it has almost nothing to do with the cost of a book.
Thorsmark@7: I agree. While I think it’s ok to use ‘ebook,’ I don’t think it’s been around long enough to categorically dismiss the hyphen. I’m rather allergic to gratuitous capitals embedded in words, though.
Mathew@10: Publishers taking 88%? Ha ha ha! They get 20-ish%. Retailer takes 50-60%, distributor gets 10-15%, author gets 15% (depending on hard/soft, copies sold, and other stuff). And yea, 50% for the retailer is obscene when it’s online sales of an ebook. It should be 10-20%.
Emily@17: $150 for a textbook seems like preposterous greed. Sadly, it’s not. It is freakin expensive to publish a textbook. An incredible amount of very meticulous fact-checking, for example, and (esp. for science books) really tricky typesetting. Plus, publishers can’t count on selling all that many copies, depending on which other publishers bring out competing textbooks, maybe just two or three years later. If (optimistically) 100 colleges each have (optimistically) a 50-person class buying a $100 textbook, that’s retail sales of $500,000 = $250,000 to the publisher, minus the royalties. Production costs for a major textbook can easily be more than $1 million. If they can’t sell that textbook for at least five years, they lose. If it’s a textbook for a more specialized course, then it’s more like 75 schools with 20 students per class. A $150 textbook means gross revenue of <$100,000 to the publisher per year.
If anybody's wondering how I happen to know all this, feed "Alexandria Digital Literature" into your favorite search engine.
March 2nd, 2010 at 6:30 pm
In days gone by the general public purchased an album from the record store, took it home and put in on the stereo and enjoyed the music there. Portability of music wasn’t an option. Eventually music was distributed on magnetic tape and people slowly began sharing music. This was very limited and did not change the old method of distribution. Everyone still understood that music had to be purchased and you had to get the music from the recording companies. Now – The new generation has never known this. To them, music has always been portable, easily copied and is now thought of as a free service. Even with the legal tactics of the recording industry, you can still get music off from a P2P network. You may have to deal with files that are the wrong song, poor quality, pulled from a radio station and poorly edited. Technology and pirates have changed the average person’s method of obtaining music. Eventually, as a person gets older, has less personal time and has more disposable income, they will prefer buying the official version (either a CD or purchasing an iTunes download) rather than searching a P2P. Value will be in finding the right version of a song, with good quality that can be instantly accessed. The songs are still available but the artists and the recording industry have to change their method of making money. The music industry was never steering the ship, the change in technology was.
Books on the other hand have always been portable, world’s first portable entertainment format. Even when the new generation thinks of a book, it’s the actual object in your hand with pages to flip through. It will be a long time before the idea of an ebook replaces an actual book. In the meantime the process to format an ebook will become cheap and automatic. Technology and pirates will find a way to unlock the ebook file and share it on P2P networks. The next generation will eventually believe stories should be free. Do you believe stories from the newspaper websites should be free? Like the iPod, the iPad and Kindle will earn money as the new method to experience a story, not by selling stories. Prices for ebook files will drop. Hardcover books will drop in price to stay competitive with the electronic files.
So maybe the question is: How much do you charge for a story, whether it’s on the printed page or on a screen? Maybe it depends on how many copies you expect to sell.
I’m sure everyone can tell I’m not a writer, just someone who enjoys the blog. Besides I’ll still buy the hardcover to read on the beach. I don’t want sand in my Kindle.
March 3rd, 2010 at 5:52 pm
Dave: Does that $0.25/book for physical costs just include the cost of production, or does it also include things like shipping, inventory control, warehousing, costs for destruction of unsold copies, and so on? I know that ebooks have costs associated with server space, database maintenance, and so on, but I have a difficult time believing that publishers face equivalent physical costs for ebooks versus hard copy. I also suspect that the costs for electronic books will fall over time while costs for physical inventory will stay the same or even increase.
March 3rd, 2010 at 8:12 pm
I have not purchased an ebook reader. Yet. Likely I will, because I like the idea of being able to carry ten novels, a few reference titles and a collection of magazines in the space of a composition book.
But the big question I will continue to ask myself whenever I think about purchasing the digital version of anything is “what exactly am I buying here?” Am I actually purchasing a copy of the book? Do I own it? Or have I simply leased the privilege of reading it on the device through which it was purchased, for as long as the publisher or distributor decides to keep it on their servers.
When I ask about ownership, I’m thinking, “could I sell my license to a friend?”
I don’t think it’s a deal-breaker if the answer is always going to be “No”, but it does affect how I feel about pricing. Why would I want to pay $12.99 for an effectively temporary, digital copy when I could pay $14.99 or less for a hard copy that is mine for as long as I choose to keep it? I don’t anticipate wanting a digital copy bad enough to forgo total ownership in favor of portability or geek-factor.
But what if I were to buy a printed book, and included is a coupon for a severely discounted digital copy? I might spend the extra couple bucks in that case.
I’m curious to hear what those of you in or near the publishing industry think of this.
Incidentally, follow this link to a transcript of Cory Doctorow’s visit to the National Reading Summit. It’s the reason I started thinking about this whole business in the first place. “Do I own it?” came from this speech. http://thevarsity.ca/articles/23855
March 4th, 2010 at 8:00 pm
These are all of the issues that I and my partners have been experiencing as we prepare for our 1st book release tomorrow. I became a publisher because many of the classic pulps and paperbacks of my youth and beforehand have fallen out of print. Upon searching through various websites I discovered that it would have cost me several hundred dollars to read the books I wanted.
There had to be a better solution.
So I tracked down the author – Donald F. Glut (THE EMPIRE STRIKES BACK novelization, TV’s TRANSFORMERS, HE-MAN, SHAZAM, and Comics’ OCCULT FILES OF DR. SPEKTOR)- and licensed the rights. He saw, as I hope other authors who fit within our genre scope will, that we could keep his books earning him money, and rebuild his audience in this digital era.
We’re using Createspace for our printing and distribution and have been very pleased with the results. We will soon be converting our digital files for Kindle and other epub formats.
I have taken the position that our print editions are the definitive “collectors items” for fans. With that in mind, we have gone out of our way to add content to our print editions in the form analogous to “DVD Extras.” Essays, articles, pictures, sketch cover concepts, etc… Print editions are for the fan.
We’re doing none of that for the digital versions. Digital books are for casual readers and will be priced accordingly. Eventually I hope that we’re at a point where we can actually add advertisements to our ebooks and drive the price down even further…
The reason(s)?
It’s part of the reason we call our company Pulp 2.0 Press.
I’ll let you know how we’re doing through one of the following sources:
http://www.pulp2ohpress.com http://www.facebook.com/pulp2ohpress http://www.Twitter.com/madpulpbastard
Thanks for listening.
Bill
March 4th, 2010 at 8:05 pm
Oh and this post by author JA Konrath sheds some light on his success with ebooks:
http://jakonrath.blogspot.com/2010/03/ja-konrath-kindle-sales-30k-ebooks-in.html