Presses
Leaving money on the table
If you’re related to me, don’t read the rest of this sentence: I got most of the people in my family books this year for Christmas. I don’t usually do that, actually. For a writer, it seems rather hazardous. Because, for one thing, though I love my family and I want them to be happy, I’m not going to intentionally purchase things that I consider truly shitty on their behalf. But on the other hand I’m not going to go out and buy them, say, the FC2 catalogue just because I happen to like it; that would be a Real Dick Move. But even once I’ve negotiated that mess and found the place where my tastes and those of a given family member overlap, there’s still the risk that you’re essentially giving someone homework for Christmas. The fact that I want to read a book someday has nothing at all to do with whether or not I want to read it now. By giving someone a book, you either rob them of that decision or, more likely, give them something that they’re going to feel guilty about for several months (or even years) but likely never actually read. But this post isn’t about giving books for Christmas, really. It’s about ebook pricing.
Because here is the thing: I was reminded by my Christmas shopping that, among major publishers, it is still common practice to charge more for ebooks than for paperback copies. You don’t have to know the particulars of their business models, of their distribution networks and royalty schemes, to understand that this is some bullshit. Whatever it costs to typeset the book and design its cover, to truck it out to Amazon, to give Amazon their cut, that has got to be more than making the ebook (something most publishers are still too cheap to do properly) and uploading it to the Internet, still giving Amazon a cut but keeping the lion’s share.
This is the thing about selling ebooks: every single sale, past those few needed to pay for the ebook’s creation, is basically free money for the publisher. Consumers know that 11.99 is too much to pay for an ebook, especially when the paperback is available for less, and so for the most part we don’t pay these prices. My family actually prefers their Kindles, by and large, to print books (a position I share in some cases, actually), but I went the print route anyway, partly because you can wrap them up like proper gifts and partly because the thought of paying more for something that cost much, much less to produce was simply too much for me to accept. The publishers know that I and many others feel this way, that we won’t actually buy their products at punitive prices. And, weirdly, that’s the point. They’ve actually said as much.
It all goes back to hardcover books. Hardcover books are, of course, hilariously overpriced themselves (as you can work out by observing the way that chain retailers will cheerfully discount the new, say, hardback Harry Potter by 33% or more, laughing all the way to the bank) but major publishing houses have been able to make them a major profit center. Now personally I almost never buy hardback anymore — I find them physically less user friendly, sometimes in the extreme, and their fancy slipcovers just get in my way. (I usually remove them for use as bulky bookmarks until I’m done.) But apparently other people still dig them. Publishers fear that ebook sales will cannibalize their hardback sales, and so they fight against every other stakeholder (Amazon included) to keep prices artificially high. The downward pressure on prices will, I am confident, eventually push them to a more reasonable place. The fact that ebooks have grown so quickly in spite of ridiculous paranoia about piracy and attempts to depress interest through punitive pricing only demonstrates the resilience of the digital revolution in publishing. Under the circumstances, you have to wonder how much money these publishers could make if they actually tried to sell their ebooks.
Small presses seem to have the opposite problem. Observing that the bestsellers on Amazon are often priced between .99 and 2.99, they price their digital offerings too low. I think this reflects a fundamental misunderstanding of how the 99-cent books on Amazon become big sellers: by and large, these are not especially good books. They are usually exceedingly dull, predictable genre exercises (formulaic thrillers, often written by the same people you’ve been ignoring on Wal-Mart’s bargain book rack for a decade, and “urban fantasy” featuring sexy lycanthropic vampires). They’re priced at 99 cents because they’re designed to sell to people who buy indiscriminately from a given genre. There are exceptions, of course, but as a generalization this seems to hold. You price your book at .99 because you want people to buy it more or less by accident, on a whim. There’s nothing wrong with that! For a lot of books, this is an excellent strategy, and many writers benefit from a strategy where their books are temporarily 99 cents (or even free), or where they sell small works at very low prices and large ones at normal prices. But the problem most good small presses have isn’t, in spite of what many seem to believe, convincing people that their products are worth dropping twelve dollars on. The problem they (we) have is that practically no one knows they exist.
Think about it this way: when was the last time you really wanted a small press book but decided not to buy it, not because you didn’t have any money but because the book itself was just too damn expensive? It’s not uncommon to be too broke for a book, but it’s rare indeed to be just broke enough that you’ll pay seven bucks, but not ten, for a book you actually want. Once a person has decided that he or she wants a given book, it’s in the publisher’s interest (and the author’s) to charge as much as possible for the book without turning the buyer off. Unless you think your book is really bad, you have to figure that the magic number is higher than $2.99. Most of us rightly value the time it will take us to read a book more than we value the money we spend on that book — and most purchased books are never actually finished. The 99-cent book is priced the way it is to stop the buyer from even thinking about how much time is going to be wasted on the book: if, after spending just one buck, the reader decides not to actually read the book, then there will be no guilt in wasting the money. Essentially nothing’s been wasted. Simultaneously, the 99-cent book is priced the way it is because most of the people who read those books don’t really value their own time, in a sense. They read the books they do to get outside of time — to absorb themselves in something that allows them to stop worrying about time’s passage. The 99-cent price point communicates to readers that the publisher has an appropriate disrespect for their time, that they will waste it just as the reader wants them to.
I don’t mean that to sound scornful. Sometimes I want my time wasted too, though I mostly go to bad television for that service. What I’m trying to argue here is that most publishers seem to have bad ebook pricing strategies. You want to go cheap enough that the consumer doesn’t feel bad about buying something that, on the margin, cost you literally nothing to produce. But you want to charge enough to signal to consumers that you have confidence in your product, that it is actually worth their time and (to a lesser extent) money. There’s a sweet spot where the very real risk that the ebook will never be read is not enough to keep them from making a maybe-impulsive purchase anyway, and that’s where I think you want to be. (I think that sweet spot is probably somewhere between $5 and $7 for most full-length books, if you’re wondering.) Dzanc, which has been more forward-looking on ebooks than most of the other players in publishing combined, seems to get the balance about right: they’re not afraid to charge you 8.79 for a long, excellent ebook. And the publishers who have decided to focus on producing more beautiful hardbacks more than on intentionally gimping their own ebooks in order to maintain hardback sales are thinking in the right way too. But I think that as a whole, by pricing our ebooks poorly and otherwise resisting these changes, we’re leaving money on the table and pointlessly slowing what will ultimately be a very beneficial process for reading and writing.
I had some related thoughts about royalty rates for authors, but I think I’ll save those for another post. For now, a question: what ebook pricing strategies do you see working right now? If you’re a publisher or a writer, how do you sell your ebooks?
Tags: dzanc, ebooks, money, pricing, publishing business
Despite having more or less come around to reading certain texts on an e-reader without any qualms whatsoever, the ultimate fact remains that I, personally, will never ever spend money on a purely immaterial object– I have never dropped even a penny on an mp3, a streaming movie, or a pdf. Since people like to get up in arms about this, I’d also like to point out that I have produced all three of those things and offer them for free on the internet.
I am not against, at all, the dematerialization of the “cultural object,” in fact I’m in support of it, but I also maintain a markedly anti-capitalist bent.
I might be an exception here, but there are also a lot of small-press books (and just as many non-small-press books) that I am interested in reading but really won’t actually read unless I can read them for free; whether this be getting a promotional copy, checking out the book through the library, bootlegging a pdf, or reading it in whatever format does not require me to drop any cash. There’s a ton of shit that I am interested in reading, but not interested in spending money on, because I know that I regularly won’t read a book of fiction more than once unless it blows me away on some level.
We are very different people! I would describe myself as basically pro-capitalism (with nuances and exceptions that don’t differentiate me much from your basic social democrat). So it’s hard for me to say much in reply to your comment without just talking past you. I understand wanting to read things for free (I like to get stuff for free too) and I basically understand not wanting to pay for digital products, though I don’t at all agree.
I guess there is one thing here that I find difficult to understand: you make a distinction between books you want to pay for and those you don’t based on whether or not something “blows [you] away on some level”. It seems like if you’re willing to pay for things that you really like — even in some cases where you don’t strictly have to — then you’ve accepted the premise that we can and should reward and encourage good art by paying for it. And once you accept that premise, it seems like probably you should want to, insofar as it’s affordable, probably pay for more of what you read (so that people will have an incentive to produce/distribute more of it).
tinyurl.com/can5hdg
Well, the issue of “I like this so much I want to pay for it” has more to do with a desire for the materiality of the object to be accessible to me at all times (which is probably the remnant of the instilled sort of desire for “owned property” that “society” has insisted upon that I can’t manage to entirely shake, though anything I do own I am more or less willing to make available to anyone who asks for it while I’m not using it). My utopian desire is for a world rid of currency exchange at all; I do want all art to be free, always, but I can recognize that the way the world currently works precludes that from happened because us artists have to pay rent and buy food (which, not coincidentally, I also want to be free in tangent with Art in general). Capital as the only ‘valid’ reward for Good Art is something I find entirely problematic, and when I pay for a book it’s generally the cheapest used copy available at whatever outlet I’m purchasing it from (I only buy new books if it’s not something I can get an ARC of & I want to read with an urgency that means I’m not willing to wait for it to be available in a library system OR if a “new book” costs the same as a used copy of the same book, or if a used copy of the book is not available). I am probably the publishing industries’ “worst nightmare” while also simultaneously maintaining an interest in publishing books (by other people) myself. So, that’s ultimately the problem– I don’t accept the premise that “we can and should reward and encourage good art by paying for it,” rather, I think we should reward and encourage good art by talking about it, experiencing it, enjoying it, and spreading it.
Okay, cool. As I said, we’re clearly pretty different in our thinking here, but that helps me to understand you better, and it’s interesting to think about. I think there’s a legitimate debate to be had here about whether or not it’s reasonable to behave where possible as if one is living in one’s preferred utopia when one is not, but I think raising the question is really as much of the argument as it’s worth making.
Well, my response to the argument would be we can’t reach the utopia unless we start pretending we’re already there ;)
what paperbacks are you finding on Amazon for less than $11.99 brand new? are you only buying mass-market paperbacks? any vendor who is regularly selling new paperbacks below that price is losing money.
Yes! I figured it would be. Pretty good response.
Kurt Vonnegut, China Mieville, Cherie Priest, some others that I don’t remember for sure right now. David Mitchell I think? Not sure what the specific price point was in each case but I’ve seen a bunch of ebooks that cost more than physical books would.
makes sense, those first three are all available in mass-market editions. (never seen any David Mitchell in mass-market). I had a similar conversation with a friend recently who really only reads sci-fi (most genre titles are available in mm editions, but newer “literary” fiction generally is not)
i think 5-7 is perfect, too. i distrust a 99c book, but i don’t distrust the quality of something that’s 5 at all, yet it’s not so expensive that it falls out of the “oh why not?” impulse purchase category that keeps me buying. even at the 9.99 price point, i’ve bought a lot more books since owning the kindle than i ever would have earlier, and i think amazon has said this is true of most kindle owners.
That’s definitely been my experience. $5 is actually a little cheap for me but I’ve seen it enough that it doesn’t freak me out. And 9.99 is fine! It’s just fine. And yes, I buy more books because of my Kindle, both digital and printed. Amazon is definitely evil sometimes but it’s hard to deny they’ve done a lot for reading, more than most by far.
Cloud Atlas, Thousand Autumns, Black Swan Green, and Number9Dream are $15.00 paperbacks on Amazon that sell for $10.20 currently. The kindle editions are $11.99, which is weird.
I bought a used, first-edition (I think), paperback copy of Salter’s first novel, The Hunters–cover price: “THIRTY FIVE CENTS”–for <$1. Rational political economy, right?
Buy me a Coke.
When one buys a material book, how purely “material” an object is it? One receives paper (loose and, perhaps, some pressed hard), glue/string, and ink, but the ink is stamped in particular shapes–shapes designed to look like words. One is paying for the paper, binding, and ink, but one is also – more?? – paying for the ink to look like those words in that order.
What’s there, in the ‘matter’ of the book, that, eh, curated those words into that order? Labor. In addition to or concert with whatever else it is, making art is work–not less than, say, making trees into paper. Patterning matter is as much labor as changing matter’s composite substantiality.
Of course paying an artist is alienating: in one way, by transforming being-constituent work into a separable thing, and, in another, by making that work, through the (material) circulation and exchange of its fictively (as well as materially) separable object, a matter of politics, ‘the social struggle for power’. But in a politicized economy, not paying an artist is slavery–like not paying a tree-miller for her or his paper.
get your own cola, deadbeat vs. if you tell me my poems ‘rock’
winner: audience precipitation
deadgod “rocking” vs poking deadgod with a stick
winner: Rihanna in furs
It’s fallacious to compare a physical book to an e-book and decide the latter should automatically be cheaper. You get it instantly, and that has a value to buyers.
Also, there is a strange psychology to pricing. For every buyer like yourself who is turned off that the e-book costs more, there is a buyer who decides to buy the physical book because they see it is cheaper than the e-book and can’t pass up such a great deal.
In short, you can’t assume that buyers are rational when making pricing decisions.
self vs. deprecation
winner: in vs. comprehension
how many small press authors (because, that’s what’s at stake here, right? [Large press author] isn’t going to lose any sleep over me reading her book without paying for it) make any money whatsoever when their book is published? the presses generally make any profit (if there even is any), right?
also, in a somewhat “off-topic” note; do you have a set of solid opinions, an ideology as it is? or do you exist to play the devil’s advocate, not having any solid position of your own to stand behind? dialog is useless if it’s just jerking off without a come-shot.
south vs defecation
winner: comprehension in verse
I don’t know what fraction goes to a small-press author–or if it is a smaller fraction than that that goes to a big shot (who’d make more, though not much, through greater numbers of units moved, and higher unit price, rather than through a greater per-unit-moved share). If the large press is more confident that their even-medium-shot writer will sell more units than a small press thinks its small-shot writer will, that’s reason for the large press to cut that medium-shot writer a larger fraction than the small press can afford, no? It’s a good question: does the smallness of sales require that a small press pay less to the writer per sale than a large press? simply in order even for it to afford the sale?
I was responding to the perspective categorically: is anything humanly organized actually “immaterial”? is art done un-political-economically? I read your qualifications in your conversation with Mike, but responded in terms of the categories.
I have mixed feelings about most things, but I don’t “play the devil’s advocate”–not even to avoid seeming to real devil’s advocates like I do.
poking Veronica with a stick vs. versifying
winner: playing fetch with Veronica
We must assume that the buyer of Centennial (Hardcover, 1974, 909 pages, $0.01) is a large ogre living in a cave in rural Kentucky. He has learned to use the internet and seeks to heat his home with literature bought by the pound.
He is interested in shipping discounts on multiple items.
My understanding of the small press situation is they tend to either A) pay nothing at all, given the (reasonable) assumption that the book will never break even, B) pay a contest prize around $1000 dollars, which is the result of contest fees but is also a good deal more than the author ever would have made on royalties in most cases, or C) split any profits with the author by a generous percentage of, say, 50/50. But you need profits for that to work.
Re: your first point, okay. If you think (as I do) that most ebooks should “naturally” (i.e., due to market fundamentals) be between, say, $5 and $9, then we’re paying an awful lot for the instant gratification, but I totally did do that once (I wanted China MIeville’s Embassytown and paid $12.99 for it on Kindle when I could have had the paperback in a couple days for $10.20). My theory is that enough people choose not to pay that premium enough of the time that the price point is irrational both from the consumer’s perspective and, more importantly, from the publisher’s perspective. (It’s the publisher I’m trying to help out here.)
And re: your second point, that’s fair enough, but it’s exactly what I mean when I say the publishers are leaving money on the table. Selling your print paperback at 10.20 is, as Alex says above, probably selling at a loss, or at most it’s a very small profit. (The loss is probably Amazon’s, the tiny profit probably the publisher’s.) Selling your ebook for as little as four dollars would be pretty much pure profit. It’s insane for any business to prefer the former to the latter. And yet many of them do, in some cases because they think the latter will kill their business model. Maybe so! But the new business model involves *actually making money.*
”
This is the thing about selling ebooks: every single sale, past those few needed to pay for the ebook’s creation, is basically free money for the publisher. ”
Jesus christ this is so fucking dumb. I’m honestly shocked at how devoid of actually intelligent thought this website has become. Get Justin Taylor to come back and post please.
Seriously, can Meginnis go a single paragraph without recycling some publishing cliche or canard that he read elsewhere and is pretending is an original thought?
Anyway, you might as well say that after paying for printing an distribution–which is a small part of the cost of a paperback book–every sale is “free money”!
I’m confused. My guess is that you don’t want to be engaged, but I’ll try once. Is your claim that everything I’m saying is obvious (I would more or less agree; that’s why it’s so weird that publishers are pricing the way that they are; most of what I’m saying is applied econ 101) or that what I’m saying is false? Or is there something else?
It is obviously false, or so hilariously simplified as to be useless. Perhaps you should reread your “applied econ 101” textbook.
Okay. Honest question: which part? School me. My understanding is that, when it comes to the sorts of volume major presses do, the cost of making an ebook is trivial — and you only pay it once. Whereas distribution and printing cut into ever physical book sale and you never stop paying them. I think this would make ebook sales more profitable — usually much more profitable. What am I missing?
The cost of the printing of a paperback book is only a small part of its cost too. Free money!
But actually, you are still paying for marketing (yes, ebooks get marketed), publicity, as well as all the costs that went into both books: editing, proofing, cover art, advances, whatever. It is completely brainless to just lump all the costs that go to all versions of the book as print costs merely because it would benefit your argument to pretend that this is the case.
Ebooks are a version of THE book. Very few people are going out there buying both of those versions, just like few people go out and buy the hardback and also the paperback. So if you are selling ebooks for, say, a dollar you are likely losing a lot of money.
It isn’t entirely this simple, since some people will buy a cheap ebook and not the full priced paper, just as some buy a cheap paper and not the hardback, or the used hardback and not the audiobook, etc. But these things are all interrelated and have overlapping costs as well as customers. And as ebooks become more and more popular and take over more and more of the market, they overlapping costs do not go away. To say ebooks are “free money” is just as dumb as saying paperbacks are free money since the cost of printing is so much cheaper than it is with hardcovers. No, that isn’t how economics works. Not even on the most basic level.
that is weird. someone struck a deal somewheres.
Alright, fair enough. I don’t think we disagree as much as you think we do. Sure, “free money” is over-simplifying. Marketing ebooks and etc. cost money. Try it this way, because this is the nut of the argument: ebooks probably have a higher profit margin by far than paperbacks, and pushing paperbacks over ebooks is ridiculous.
Note that we agree selling ebooks for a dollar (except during brief promotional periods) is probably a mistake for anyone who is simultaneously pushing a print book. Self-published authors and pulp publishers will benefit most from a 99-cent strategy. But major presses won’t.
Ebooks may cannibalize hardback sales to some extent (though my understanding is that so far they’ve mostly just grown the pie, leading to more sales overall — i.e., you don’t buy one ebook instead of one hardback, you buy one ebook AND THEN a different hardback, usually from publishers in the same cluster) but as a rule in entertainment, finding a way to sell your content to people the way they want to buy it is preferable to trying to bully them into buying it the way you want them to. And I’m fairly convinced an equilibrium with more emphasis on digital sales will be far more profitable in the long term, with hardback books serving as high-quality positional goods, given as gifts and bought for the pleasure of buying. Certainly small presses have strong incentives to move toward this mixture due to the lower financial risks.
In both cases here we’re speculating from a position of not having seen numbers, but I don’t think our speculations are wildly discordant, and I’m not sure what you’re feeling so hostile about. You can feel hostile! That’s okay with me. I just was hoping to be a little more productive.
“by far” is overreaching as well. A paperback book has about 2-3 bucks wrapped up in printing/distro costs. I certainly think ebooks should be at least 2-3 bucks lower.
However, we really have to do away with the myth that electronic media is “free” either that it should be free to download or it is “free money” if someone pays for it.
DO YOU KNOW HOW HARD I’M ROLLING MY EYES RIGHT NOW
ADDENDUM: CAN YOU GUESS WHICH PART OF THIS COMMENT MADE ME ROLL MY EYES THE HARDEST
I think your argument is that, given that the marginal cost of an e-book is effectively zero, publishers should want to sell as many as possible. But that’s not true. They want to maximize revenue (which is the same as profit if we take marginal cost to be zero). So, let’s say a publisher can sell 100 copies of an e-book at $10. If they drop the cost to $5, as you suggest, they have to sell 200 copies to make the same profit. Is that reasonable? I have no idea. I don’t really know anything about the price sensitivity of e-book buyers, especially in the non-mass-market segment.
Of course, that’s why there is such a thing as dynamic pricing, too. Perhaps a good model is to release an e-book at the $10 price point, and then later drop the price to $5, under the assumption that everyone who will pay $10 has already done so, and now is your chance to grab more sales.
And finally, do you know if anyone has released an e-book in a pay-what-you-feel-it’s-worth kind of experiment? That would fill in a lot of the unknowns for me.
goo.gl/tX8v0
Right, I understand what you’re talking about — my feeling is that they clearly aren’t pricing to maximize revenue from ebooks. I’m basing this on three things: 1) They’ve priced their ebooks higher than paperbacks, which have a higher marginal cost, and that information is right up-front in Amazon’s interface. My family would prefer ebooks and I bought them print books anyway. This is anecdotal but it’s hard to imagine most people don’t come to a similar conclusion, or at least enough to reduce revenue. 2) I’ve read accounts saying that publishers want to keep their ebook prices unreasonably high in order to protect hardback sales. 3) If you look at the Kindle bestsellers list, the majority of the books there are in the .99-$9 range. Not everyone can or should price for the bestsellers list, but this does seem very suggestive.
Dynamic pricing is definitely a good idea, and a lot of self-publishing writers are using it especially well. I think Robert Swartwood generally has one 99-cent book and then several at higher price points available, so people can try him out as an impulse buy and then invest in his whole catalogue. That seems common. Some also do the opposite of what you’re suggesting — start out cheap or even free as part of a promotional period, then go full-price later. That strategy has a lot to recommend it, I think, but there’s not enough information to say which does best.
As for the pay-what-you-feel-it’s-worth thing, I know of presses that have done this with print books (Sator, for instance) but I’m not sure if it’s been done with ebooks. I don’t think it’s actually a good method for price discovery, though, because the price I feel comfortable making up is probably pretty different from the price I feel comfortable paying if someone asks me to. It could be higher or lower — I imagine it’s both, depending on the person and the book — but the stress of having to name a price not only stops most people from participating in what was designed to be a frictionless transaction, but also probably ruins the potential for price discovery. (Remember that Radiohead’s pioneering effort in pay-what-you-want got much smaller donations, on average, than the $12-$16 retail price of a record, when we know for a fact that $12 is a very reasonable price that people will gladly pay for a Radiohead record. That’s how they got rich enough to try the other way.)
goo.gl/tX8v0
goo.gl/tX8v0
goo.gl/tX8v0
[…] my Nook — it never occurred to me I could get them for free.At HTMLGiant, Mike Meginnis wrote a really interesting and well-reasoned post about publishers who price eBooks higher than paperbacks. The NYTimes takes up a different question […]
[…] AmazonKindle eBook sales outpace print books on AmazonDo independent bookstores deserve to be savedLeaving money on the table #mm-link-gen { width: 99%; margin: 20px auto 0px auto; text-align: center; } #mm-link-gen […]
[…] Leaving money on the table | HTMLGIANTDec 21, 2011 Leaving money on the table there's still the risk that you're essentially giving someone homework for […]
[…] Leaving money on the table | HTMLGIANTDec 21, 2011 Leaving money on the table. If you're related to me, don't read the rest of this sentence: I got most of […]
[…] Leaving money on the table | HTMLGIANTDec 21, 2011 Leaving money on the table. If you're related to me, don't read the rest of this sentence: I got most of […]
[…] Leaving money on the table | HTMLGIANTDec 21, 2011 Leaving money on the table. If you're related to me, don't read the rest of this sentence: I got most of […]