Lunch Weighs In On E-Book Pricing Controversy
NYT On eBook Release Timing--Ditto
The NYT follows-up the WSJ piece on Sourcebooks' decision to postpone the ebook release of their new hardcover YA novel Bran Hambric. As we noted in our write-up on Monday, the Times reiterates that every house with a major frontlist fiction release is debating whether to delay publication in ebook form (and some are contemplating much broader shifts in the timing of their ebook releases).
Since no one is talking about it on the record, the Times story doesn't add much that you don't already know. Interesting, in a quirky way, is this paragraph: "For now, Amazon is taking a loss on each e-book it sells because it generally pays publishers half of the hardcover list price on new releases. So publishers who delay releasing e-books run the risk of losing sales, for which they are now getting higher margins than they are on print books." The innocent reader could come away thinking, 'publishers are being petty idiots giving away profits and annoying e-book readers at the same time while Amazon's willing to lose money on customers' behalf' rather than, say, Amazon wants to use their gigantic scale to dominate the emerging ebook business at any cost, including another blow to my local bookstore, while publishers are willing to give up some quick profit to protect a functioning industry for authors, booksellers, and publishers.
Because most publishers aren't saying much for record--and even when they do, they hide behind veiled discussions of price and even piracy (honestly, Doubleday is claiming that they are "primarily worried about the security of Mr. Brown's book rather than particular vendors")--readers and consumers may wind up getting the wrong message.
As many publishers see it this is about Amazon subsidizing what's seen as an artificially low price to try to dominate the growing market and potentially impose terms on publishers later on. They can afford the subsidies both because of their size (their $35 billion market cap vastly exceeds the value of all the biggest US booksellers and publishers) but also because of the margins built in to manufacturing and selling their own reading devices. And Amazon has used the lure of cheap bestsellers to help sell their devices, while consumers remain mostly unaware that about a third of all Kindle books sell for more than $9.99.
Most consumers also don't know that Amazon (and for now most major retailers of ebooks from traditional publishers) buys ebooks at a 50 percent discount, when market-dominating Apple only gets a 30 percent discount on music downloads.
Publishers' concerns stem primarily from the steep upturn in Amazon's Kindle sales as of March and the even more dramatic shift in the ratio between electronic and print sales at Amazon on a small subset subsidized new fiction hardcover releases in particular, with Kindle many times comprising 50 to 70 percent of Amazon's sales on those titles.
As the Times notes publishers could make the same (or better) short-term profits by encouraging Amazon's behavior, but they're looking out for what they believe to be their long-term interests--and are trying to protect the entire system of physical book retailing which supports the whole industry. Those aren't bad things for your customers and readers to hear--but if no one says them, then the message doesn't get transmitted. It doesn't do much good to fulminate in private but then avoid the problem in public and make tangential claims of piracy concerns and other issues. To be clear, I do not subscribe to the idea that producers can ever "educate" consumers about value--the smart companies (and the survivors) learn from their consumers about value and make it part of their business. But explaining can help.
The NYT follows-up the WSJ piece on Sourcebooks' decision to postpone the ebook release of their new hardcover YA novel Bran Hambric. As we noted in our write-up on Monday, the Times reiterates that every house with a major frontlist fiction release is debating whether to delay publication in ebook form (and some are contemplating much broader shifts in the timing of their ebook releases).
Since no one is talking about it on the record, the Times story doesn't add much that you don't already know. Interesting, in a quirky way, is this paragraph: "For now, Amazon is taking a loss on each e-book it sells because it generally pays publishers half of the hardcover list price on new releases. So publishers who delay releasing e-books run the risk of losing sales, for which they are now getting higher margins than they are on print books." The innocent reader could come away thinking, 'publishers are being petty idiots giving away profits and annoying e-book readers at the same time while Amazon's willing to lose money on customers' behalf' rather than, say, Amazon wants to use their gigantic scale to dominate the emerging ebook business at any cost, including another blow to my local bookstore, while publishers are willing to give up some quick profit to protect a functioning industry for authors, booksellers, and publishers.
Because most publishers aren't saying much for record--and even when they do, they hide behind veiled discussions of price and even piracy (honestly, Doubleday is claiming that they are "primarily worried about the security of Mr. Brown's book rather than particular vendors")--readers and consumers may wind up getting the wrong message.
As many publishers see it this is about Amazon subsidizing what's seen as an artificially low price to try to dominate the growing market and potentially impose terms on publishers later on. They can afford the subsidies both because of their size (their $35 billion market cap vastly exceeds the value of all the biggest US booksellers and publishers) but also because of the margins built in to manufacturing and selling their own reading devices. And Amazon has used the lure of cheap bestsellers to help sell their devices, while consumers remain mostly unaware that about a third of all Kindle books sell for more than $9.99.
Most consumers also don't know that Amazon (and for now most major retailers of ebooks from traditional publishers) buys ebooks at a 50 percent discount, when market-dominating Apple only gets a 30 percent discount on music downloads.
Publishers' concerns stem primarily from the steep upturn in Amazon's Kindle sales as of March and the even more dramatic shift in the ratio between electronic and print sales at Amazon on a small subset subsidized new fiction hardcover releases in particular, with Kindle many times comprising 50 to 70 percent of Amazon's sales on those titles.
As the Times notes publishers could make the same (or better) short-term profits by encouraging Amazon's behavior, but they're looking out for what they believe to be their long-term interests--and are trying to protect the entire system of physical book retailing which supports the whole industry. Those aren't bad things for your customers and readers to hear--but if no one says them, then the message doesn't get transmitted. It doesn't do much good to fulminate in private but then avoid the problem in public and make tangential claims of piracy concerns and other issues. To be clear, I do not subscribe to the idea that producers can ever "educate" consumers about value--the smart companies (and the survivors) learn from their consumers about value and make it part of their business. But explaining can help.
Labels: E-books, Publishing Industry
