Authors, Publishers and Ebooks
Waaah, waaah, waaah! Ebooks are tooo cheeeeep! We big publishers don't make enough money on them, waaaaah! We insisted on DRM because we're sure that all customers are really thieves, but wonder why the customer doesn't want to pay more than $10 for an ebook! It must be all that eeeeeevil Amazon's fault, blame them, waaaah!
Really, that's what I'm hearing, and it's disgusting. In a "free market" that all these publishers say they believe in, price is set by what people are willing to pay, not by what it allegedly costs.
Publishers treat authors and their works like raw material - fungible commodities, of little consequence. They have been tightening the screws on authors more and more over the last thirty years - lower advances, more clawbacks, etc.
Then they apply minimal copy editing and proofreading, often by offshored or "freelance" contract (read "no benefits") labor, before sending it to press, again offshore. They cheese pare at every step, even to the point of having books that fall apart in your hands because of cheap glue in the binding!
Along come ebooks, and publishers at first turned up their noses, and killed the first readers because of limited catalogue. Then Amazon got into it, and the publishers sort of caved - they said "OK, if you put DRM on it because we don't want your skeevy customers stealing our books."
Amazon rolled their eyes, did their focus groups like good retailers do, and found that the price point for ebooks (especially with DRM?) is about $10. DRM was an added burden for Amazon, and a sore point with customers (see the whole "defective by design" thing in the Kindle community).
[How do I know this? That's how Amazon does business - they set pricing by what customers tell them they will buy. They do surveys, that little gold box thing, they watch browsing histories, and they do focus groups. They are a very customer driven retailer - their corporate vision statement is "Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online." Little shit they do without asking the customers, but important stuff like pricing and offering is all customer driven.]
Now, if Apple thinks that its customers will pay $14.99 for an ebook, more power to them. After all, Apple customers generally have more money to spend anyway, because they are always buying more expensive hardware - iPods, iPhones with AT&T service, iMac's. I'm sure they did their focus groups too.
But if Apple's focus groups, and the data they gave to Macmillan, were predicated on Amazon being forced to raise their prices to match Apple's, there's a problem: the real world doesn't work that way.
But back to cost vs price.
If I make a handbag out of fine leather, sewn myself on an ancient treadle machine powered by my own sweat, do you really expect that I will get a premium price for it if I put it out in a yard sale next to a used piece of cheap Chinese junk? Do you think I would get a premium price for it if I stood outside WalMart hawking my handmade goods?
If the market will not pay premium prices for your content, you lower your prices or you don't sell it. It doesn't matter how much it cost to make once it's made. Your only choices after that are to find a new market where you might have better luck, or cut your costs for the next round. You don't demand that your distributors raise their prices.
Now, for the costs of publishing books, I disagree that it is as expensive as they make it out to be to publish books electronically. Not with the way they have been trimming expenses and quality over the last ten years or so. Electrons don't have to be shipped, inventoried, or remaindered, for one. (They do have to be stored - and hard disk is cheap, but not free.) Plus, all I have to do is look at Baen books and see that the concurrent production of electronic and print books is not rocket science. It's just that many publishers are reluctant to merge and improve their workflows.
The basics of publishing (these are from memory, so they may be out of date) are
* acquisitions (finding stuff worth publishing),
* editing (cleaning it up to make it worth reading - edit for both content, style and grammar),
* pre-production (arranging for graphics, cover art, proofreading),
* production (formatting, insertion of graphics, proofreading, printing or digitizing),
* post-production (distribution, promotional tours, review copies sent out, remainders)
* sales and marketing
Then there is the issue of DRM. One big reason that people will not pay as much for an e-book as a print book is that they can't lend it or sell it. (Yes, my household does both, it's not a rhetorical issue.) This is maybe 1/4 to 1/3 of the value of a dead tree book, maybe less for technical titles that can quickly become outdated.
So the perceived value to the customer of the ebook is less than the same work in paper copy. It wouldn't matter if the electronic edition actually cost more (it doesn't), it is still perceived as costing, and being worth, much less.
If you have a suit made of expensive silk that looks like cheap polyester, don't expect to get silk prices for it.
So this is why all the whining about how ebooks really cost so much more than $10 apiece is not impressive to me. If I make something and price it too high, it just wont sell. It's happened before, and it will happen again.
Amazon knows what its customers will pay. If Macmillan wants to set its own prices, they need to set up as a third party seller on Amazon and they can set their prices that way. Otherwise, they need to STFU.
Really, that's what I'm hearing, and it's disgusting. In a "free market" that all these publishers say they believe in, price is set by what people are willing to pay, not by what it allegedly costs.
Publishers treat authors and their works like raw material - fungible commodities, of little consequence. They have been tightening the screws on authors more and more over the last thirty years - lower advances, more clawbacks, etc.
Then they apply minimal copy editing and proofreading, often by offshored or "freelance" contract (read "no benefits") labor, before sending it to press, again offshore. They cheese pare at every step, even to the point of having books that fall apart in your hands because of cheap glue in the binding!
Along come ebooks, and publishers at first turned up their noses, and killed the first readers because of limited catalogue. Then Amazon got into it, and the publishers sort of caved - they said "OK, if you put DRM on it because we don't want your skeevy customers stealing our books."
Amazon rolled their eyes, did their focus groups like good retailers do, and found that the price point for ebooks (especially with DRM?) is about $10. DRM was an added burden for Amazon, and a sore point with customers (see the whole "defective by design" thing in the Kindle community).
[How do I know this? That's how Amazon does business - they set pricing by what customers tell them they will buy. They do surveys, that little gold box thing, they watch browsing histories, and they do focus groups. They are a very customer driven retailer - their corporate vision statement is "Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online." Little shit they do without asking the customers, but important stuff like pricing and offering is all customer driven.]
Now, if Apple thinks that its customers will pay $14.99 for an ebook, more power to them. After all, Apple customers generally have more money to spend anyway, because they are always buying more expensive hardware - iPods, iPhones with AT&T service, iMac's. I'm sure they did their focus groups too.
But if Apple's focus groups, and the data they gave to Macmillan, were predicated on Amazon being forced to raise their prices to match Apple's, there's a problem: the real world doesn't work that way.
But back to cost vs price.
If I make a handbag out of fine leather, sewn myself on an ancient treadle machine powered by my own sweat, do you really expect that I will get a premium price for it if I put it out in a yard sale next to a used piece of cheap Chinese junk? Do you think I would get a premium price for it if I stood outside WalMart hawking my handmade goods?
If the market will not pay premium prices for your content, you lower your prices or you don't sell it. It doesn't matter how much it cost to make once it's made. Your only choices after that are to find a new market where you might have better luck, or cut your costs for the next round. You don't demand that your distributors raise their prices.
Now, for the costs of publishing books, I disagree that it is as expensive as they make it out to be to publish books electronically. Not with the way they have been trimming expenses and quality over the last ten years or so. Electrons don't have to be shipped, inventoried, or remaindered, for one. (They do have to be stored - and hard disk is cheap, but not free.) Plus, all I have to do is look at Baen books and see that the concurrent production of electronic and print books is not rocket science. It's just that many publishers are reluctant to merge and improve their workflows.
The basics of publishing (these are from memory, so they may be out of date) are
* acquisitions (finding stuff worth publishing),
* editing (cleaning it up to make it worth reading - edit for both content, style and grammar),
* pre-production (arranging for graphics, cover art, proofreading),
* production (formatting, insertion of graphics, proofreading, printing or digitizing),
* post-production (distribution, promotional tours, review copies sent out, remainders)
* sales and marketing
Then there is the issue of DRM. One big reason that people will not pay as much for an e-book as a print book is that they can't lend it or sell it. (Yes, my household does both, it's not a rhetorical issue.) This is maybe 1/4 to 1/3 of the value of a dead tree book, maybe less for technical titles that can quickly become outdated.
So the perceived value to the customer of the ebook is less than the same work in paper copy. It wouldn't matter if the electronic edition actually cost more (it doesn't), it is still perceived as costing, and being worth, much less.
If you have a suit made of expensive silk that looks like cheap polyester, don't expect to get silk prices for it.
So this is why all the whining about how ebooks really cost so much more than $10 apiece is not impressive to me. If I make something and price it too high, it just wont sell. It's happened before, and it will happen again.
Amazon knows what its customers will pay. If Macmillan wants to set its own prices, they need to set up as a third party seller on Amazon and they can set their prices that way. Otherwise, they need to STFU.