Below is Critique de Mr Chompchomp's first guest post. It comes from Andrew Karre, editorial director at Carolrhoda Books, Carolrhoda Lab, and Darby Creek
of the Lerner Publishing Group, who takes issue with my ranting about ebook prices. Being an actual editor for an actual publisher, rather than just a mouthy guy with a blog, Andrew certainly knows more about pricing issues than I do, so I'll now hand the microphone over to him. I think this is an important discussion, so please post comments and questions.
If you want to hear more thoughts from Andrew Karre, you can visit the Lerner Publishing blog where he posts regularly. You can also follow him on Twitter: @andrewkarre.
********************I'd really like to know why specifically people think ebooks are overpriced. Meanwhile, here's my take on why they're not.
First, some useful background so we have a baseline of numbers. Here’s a typical pricing scenario for an adult novel:
HC: 25.99
PB: 15.99
EB: 9.99
Here’s a typical pricing scenario for a YA novel (and I’m mainly talking about novels here):
HC: 16.95-17.95
PB: 8.95-9.95
EB: 9.99
At first glance, there’s something fishy about that ebook price on the YA, as you say. It seems like the ebook ought to be the cheapest. Maybe you think that because MP3 albums are cheaper than CDs. Maybe your reasoning is that the lack of a physical object and the attendant warehousing and shipping ought to translate to a lower price than the same work attached to a physical good. That’s not bad reasoning. But it’s not that simple, unfortunately. And in my opinion it’s more complicated in kidlit than it is in the adult world.
You cannot look at book prices in format isolation because books don’t exist in isolation. Books are a single piece of intellectual property (IP) that exists in several formats in a more or less carefully choreographed sequence. I can’t claim a complete understanding of the economic implications of all this, but maybe if I lay out what I know and believe, the pricing of ebooks will at least be less frustrating and opaque.
It’s not insignificant that ebooks typically come out with hardcovers, at the time of a book’s initial release. If you’re a publisher, this is a problem. Right now, the market is in an uncomfortable transitional place. Ebook sales are growing, but they’re still pretty tiny and not exactly reliable. It’s very difficult to judge print runs under any circumstances, but it’s extraordinarily difficult to do so when you’re not sure how many hardcover sales you’ll lose to ebooks sales. If the ebook transition were sudden, this would be less painful (unless you’re a printer or your skills are entirely tied to print). But it’s not , and so a publisher faces a market that looks like this:
1. He has to pay a lot of money to acquire a manuscript.
2. Then he pays another pile of money to get that manuscript to the traditional market (printing and binding), all on top of overhead (that would be me, writing this now). This was always the case, but here’s the kicker.
3. At the same time, he has to release an electronic version of that product at a much lower price (a price that it is largely out of his control at this point). It’s hard to know how many of those products he’ll sell, and how many of those sales will replace the currently more profitable printed-book sales.
4. Plus, the author is taking an ever-larger portion of the proceeds from those electronic sales (ebook royalties are higher than print).
Like I said, if we could just make the transition instantly, it wouldn’t be so bad. But that’s not how it works (ask the music industry). You have to be in print and digital, and—bonus!--print margins go down as your ebook sales replace printed sales and you print fewer hardcovers, but you’re not necessarily making enough money on the ebooks to replace the print revenue (and did I mention that you had to pay for the print months before you made a single sale in any format?).
This is a problem in any category, but it’s terrible in kidlit, because I believe our print pricing was already structurally out of whack. Why are they so much lower than adult books when none of the costs are meaningfully lower (especially when you’re talking about novels)? Printers don’t charge less if you ask them to print a YA novel as opposed to an adult novel. Advances aren’t proportionally lower, if they’re lower at all. My hunch has always been that this is disparity comes from a perception that adults don’t want to spend as much on kids as themselves. But that’s just a hunch. Whatever the reason, our print pricing makes the ebook situation extra complicated because releasing a 7.99 or 6.99 ebook at the same time as your hardcover is just plain untenable (for lots of reasons that I don’t think I can explain well in a single post). This the “analog dollars for digital dimes” problem that completely reshaped the music industry. In the simplest terms, if you condition the market to believe that your newest, most exciting product is worth 6.99, then you’re going to need to gain many, many more sales as a result of that price drop, or you need to pay the creators much less. And I don’t see any evidence of either happening. If your answer to that is to point to Harry Potter, Twilight, and Hunger Games, then all I can say is if you can be happy with a book world where publishers’ lists look like Apple’s product lineup (a tiny selection beautifully tailored for maximum appeal), then yes, we can trade selection for lower prices (and I’ll go find a new job). If you want selection, though, you cannot price based on the performance of the outliers.
(You might well ask aren’t adult books overpriced? If they were overpriced, it seems to me that a dramatic price drop would bring greater demand. And it hasn’t. If they were overpriced, it seems like the fairly competitive marketplace with lots of players would push down prices. It hasn’t. Conclusion: adult books aren’t overpriced, at least not in the present book market.)
Historically speaking, I bet books have never been cheaper than they are now. I bet an inflation-adjusted graph of all aggregate book pricing from Guttenberg until today would slant down, steeply.
Footnote: You cannot talk about ebook pricing without mentioning Amazon. Amazon has sold ebooks at a loss to gain market share. It was in their interest to price aggressively so they could own the dominant format. Seems to have worked well. The collateral damage in that move is consumer perception of what an ebook is worth. $9.99 seems to me a whole lot like squeezed toothpaste. I don’t see much room to go up at this point (especially since it correlates so nicely with album pricing in MP3s). But it isn’t a price based on the future well being of publishers or authors. It wasn’t a price publishers consented to. I’m sure this will be the subject of a million MBA papers I’ll never read.
Thanks, Andrew. Sorry about the formatting issues. Things should be better finally.
ReplyDeleteI'll speak on behalf of the readers, first addressing your first question, why readers think eBooks ought to be cheaper than they are. I think you are right that most of us do a little "math" in our heads that considers production and distribution costs and we figure the eBook ought to be a whole lot cheaper to make and distribute than the print book. There is also much less risk in producing an eBook. Publishers don't have to pay for copies up front and don't have to store them and don't have to find some way of getting rid of them if they don't sell. But you also have to consider the reader's investment in a device to read eBooks. Many readers already have $100-$700 invested before they buy their first book and they are hoping to quickly recoup that and more. It's true that there are other advantages to reading electronically besides price, but, from the readers point of view, there are also advantages to the publisher for publishing electronically, mostly involving price, that the publisher ought to be willing to share with the reader.
The other consideration is what consumers pay for other forms of electronic media. Smartphone apps, for instance, sell for $1-$10. It would be hard to come up with the math that shows a book is more expensive to produce than an app. Even movies, delivered electronically from a service like iTunes, run $10-$15 (with a premium attached for HD). There's not too much more to producing a book than having a writer sit in a room until it's done (that is, of course, much much harder than it sounds). The written script, though, is only the very beginning of movie production. Then you have to add actors, directors, production assistants, sets, cinematographers, grips, editors, etc. Why on earth should a book cost about the same to the consumer as a movie?
(continued in next comment)
I know there are complicated answers to these questions and that most publishers ultimately are trying to meet the needs of various groups including readers, authors and their own bottom line. I do think, however, that pricing eBooks based on how a publisher thinks their print sales will be affected is playing a dangerous game. Already there are electronic-only publishing outfits popping up and they don't have print considerations to figure into their costs. Self publishing is another threat. A number of big name writers have already defected with some of their books to eBook and Print-On-Demand models.
ReplyDeleteIn short, it seems, from a naive outsider's point-of-view, that keeping eBook prices as high as they are, specifically to help cover lower print margins, is a form of resistance to new technology not unlike that displayed by the music industry. Surely the publishing industry doesn't want to use THAT as a standard.
Has Lerner, or Carolrhoda, for instance, considered releasing the eBook version of a book ahead of the print version? This might serve as a kind of inexpensive weather balloon to get an idea about the market before going to print. It might also help prompt more thorough conversion to eBooks which would be good for everyone. Or are you considering an eBook only (or eBook and POD) imprint? I would think that the lower risks of such a model could not only keep the costs of the end product low, but could help you produce even more diverse and risky books, working directly against that Apple type model you fear.
Finally, I'm sure you have access to better and more recent data than I do, but I remember reading in the New York Times that the lower prices of eBooks and the low sale price of print books in big box stores has, in fact, driven up sales, suggesting that maybe book cover prices are a bit high.
Also, while I can't say that I approve of Amazon's monopolizing strategies, there is a bit more to the story of their taking a loss on eBook sales. It started, as I understand it, with the publishing industry's practice of selling copies of eBooks to resellers at essentially the same price as the print book. Amazon seems to have understood the public demand for lower cost eBooks long before publishers did. I'm curious as to how you think publishers should have handled Amazon's eBook moves in the first place, to counter their strong arm tactics. Should they have avoided the "deal with the devil"? Negotiated a higher consumer price in exchange for a lower resellers price? Come up with their own distribution systems? Their own eReading devices?
Finally, what should be the typical price of an eBook (adult or kid) if it's in "the best interests of the publishers and authors?" How would you arrive at such a figure?
Again, Andrew, thanks for your comments. Always fascinating to talk with you.
I think that people are reluctant to pay a lot for an e book because they are afraid (and rightly so) that in five years they will not have anything that will access that version of the book. Think floppy disks. I don't buy new books for myself; I read books from the library, but I think that the prices are okay. People are paying for the convenience of having the e book version.
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