When the > $9.99 tag and boycott started it was easy to be skeptical (I was). Today, though, its a different story. The fact that, inspite of publishers pushing higher prices, only 6 out of the Top 100 Bestsellers on the Kindle Store are higher than $9.99 says a ton about how successful the boycott has been.
People are still skeptical because they see higher priced books every day. They should look at prices for books that are selling and be encouraged.
Is the >$9.99 boycott really working?
Yes, it is. Just a month ago there were a bunch of > $9.99 bestsellers – the lower number today (just 6 out of 100), in the face of more and more publishers hiking up prices, shows that we’re on the right track.
Take a look at the original $9.99 boycott discussion on Amazon – people are always skeptical that end customers can affect change. Despite being in the Internet Era where consumers have all the power, lots of people are caught up in past times when companies made money off of customer ignorance.
We are in a completely different era and we choose – There are only 6 books above $9.99 in the Top 100 – that’s the strongest sign that the >$9.99 boycott is working.
There are additional success stories -
After communicating with Variance publishing about our boycott a few months ago, they responded back to us and lowered their digital list prices w/in a few days as promised- to 9.99.
Amazon has lowered some of the prices even more -to 7.99.
Is $9.99 reasonable for Kindle Editions?
Publishers will argue (and lie) that they get only 35% of Kindle prices. Actually, they get 35% of the digital list price (which is usually $24). They get 80-90% of the $9.99 Amazon price.
Also, if self-published authors get 35%, its pretty probable that publishers get more like 40-50%. Amaozn is subsidizing lower prices and often losing money. Mr. Bezos admitted (indirectly) that Kindle isn’t making profits yet.
All the greedy Amazon stories are out of place. Amazon’s focus is on changing the industry and inventing the future. That’s why Mr. Bezos has invested in Blue Origin and the Kindle. If money was all on his mind he’d be buying bank assets at pennies on the dollar like Wall Street currently is.
Note: Even if Amazon is only doing it for profits, you have to realize that $9.99 books instead of $25 helps books and helps us. Once $9.99 is set, there’s no turning back – ever.
Here are my posts explaining what book costs are, and what kindle edition books ought to cost - these clearly show $9.99 is a sustainable price point. No publisher is every going to release their numbers. If they had integrity they’d just release the numbers and close the debate – why don’t they?
Will Publishers still release > $9.99 books?
Yes, because its a win-win situation for publishers. They either get even larger profits or they kill off the ebooks market.
As opposed to you and me (the people who read books), and Amazon (who are trying really hard to get Kindle and ebooks to succeed), Publishers have no interest in progress as they are companies optimized for a closed, slow, ancient business model.
This confused article in Slate highlights how publishers etc. are missing COMPLETELY that its about books and the people who read books.
If we keep boycotting books priced over $9.99 Publishers will have no choice but to reduce prices.
The $9.99 Boycott is about the Future of Books
We might despair at times to see more books at ridiculous price points, and there might be times when a book priced higher than $9.99 seems particularly tempting.
However, this is not only a ‘books should be cheaper’ issue, its also about the future of books and bringing books and the book publishing industry into the 21st century. Books have been dying out because television, the internet, music and movies are improving and using newer and newer technology. While books are still being printed on paper we have High Definition TV and movies, music on iPods, and the mobile Internet.
To preserve their profits and what they think is the right way to do things Publishers are trying to kill all advances in book technology. Until the Kindle arrived, they were winning and while this was maintaining the status quo and their profits, it was killing the industry.
Kindle and ebooks are the first significant advance in book technology in a very long time. 35% of sales for books available in print and kindle editions is of the kindle edition. $9.99 books are going to revitalize reading and the books industry. EBooks are growing at 70%-80% rates while the rest of the industry is dying. Publishers, for their own selfish, greedy purposes, are willing to let the industry die.
The Kindle and other ereading technology means that, unlike newspapers, books will not have to face a slow, painful death. Your support of low priced ebooks and ereading technology is saving the future of books - it might kill current publishers, however it will definitely save books for your kids and grandkids.
We are on the cusp of a world where the ability to publish books and read books is truly democratized.
In 10 years, when we live in such a world, we can look back and say – Yes, we helped create this with our > $9.99 boycott.
Filed under: publishing, thoughts Tagged: | $9.99 kindle, future of publishing
Let me ask a few questions about e-books then.
So, in your mind, because it is an e-book, it is going to be cheaper? Not necessarily.
1. E-books still need the same screening and acquisition that regular print books need, they just arrive in a digital format instead of a paper one. That means that someone still has to read the thing and make a decision. The only cost difference here is the storage of and distribution (Fedex anyone?) of the original manuscript for the initial decision. There are still copy editors and proofers that catch things that spellchecker won’t catch, and there are still editing and staff costs. Again the only thing the publisher is not responsible for now is the actual printing.
2. Authors still want their royalties off of book fees, which are probably a greater percentage, since the books are now cheaper and the author expects to make the same. The legal teams or agents behind the authors want this too because they get a cut of the authors royalties in most cases.
The only thing that happens differently is distribution and retailing.
Distribution. You are right, there are no warehousing, returning unsold books, shipping, packing, or cataloging.
Retailing. There is again, no warehousing or inventory. But the other costs of retailing are there in some form or fashion. Internet, electricity, and marketing the store that I can think of offhand.
But there are things that are not listed in those figures that I would like to see analyzed.
Lets start with the Kindle itself. There is a built in cellular card in the kindle. This allows you to download those books from anywhere at anytime. The cost of the kindle doesn’t cover these recurring fees from the cell companies. And we aren’t paying a monthly download fee, so that cost has to be included, even if you only buy one book a month or one book a year. That card is constantly checking in with cell towers, which takes up resources on the cell networks. This is why you have a cellphone bill that isn’t just”You used x number of minutes.” It bills regardless of use.
Then there is the “computer” aspect to it. Being a server admin in a small company with just a few branches (12), we spend an enormous amount on all sorts of costs for IT.
Remember that cell modem in the Kindle? well there is the other end of that connection to worry about. The level of internet available here is not comprehensible by most people. We are talking millions of dollars monthly for internet bandwidth to every server farm that Amazon has. You might say that they already have internet due to their website, but the resources for digital delivery of e-books must be held separate from website. They might come in over the same connection, but that connection now has to be larger or have multiple connections as not to choke their site or distribution streams.
Then there are the server farms to accommodate all of those users. I guarantee you there is not just “one big server” to handle all of this traffic. There are several server facilities(or farms). Each of these has, as I mentioned before, some kind of internet connectivity, along with a ravenous energy consumption need in not only server powering, but networking gear, climate control, etc. This isn’t a warehouse where if the a/c goes out we call a local repairman. These are high capacity specialty cooling with on-site generators and redundant power. State of the art.
So we have internet and cooling covered. Next are the servers themselves. For my 12 branches, we have around 70 servers. Each server costs an average of 7-15 thousand dollars. That’s somewhere between $490,000 to $1,050,00 just for my servers, still in the box. I’m guessing Amazon’s distribution services probably has anywhere from 1,000 to 5,000 servers PER LOCATION. Then you have to worry about storage. Those servers weren’t configured with any hard drives, they boot up from the network and have to have an attached network storage to do so. This can also house all of your e-books. typically this would be done with what is called a SAN (Storage Area Network) and they aren’t cheap either. They typically run anywhere from 100-140 grand for starter units. I expect someone like amazon to be using $1,000,000+ units at their locations just for storage. Within those SAN’s are different levels of storage. Things that need to be accessed more are put on faster drives, which are more expensive. You also need to have network gear. Switches, routers, firewalls and the like don’t come cheap. i would guess a million in networking gear and yearly licensing per data-center alone. Then there is software and licensing. O/S and database enterprise licenses aren’t low cost either. Add another million. Finally the smallest of the hardware requirements is backups. Physical, off-site media, whether that be copying across that internet connection (costs again to have the internet bandwidth available to transmit and receive) or backing up to some kind of tape or robotic library. I’m not even going to guess on that one.
OK, now on to staff. Bookstore employees, managers, drivers, etc. for traditional printed book vs. networking engineers, virtualization specialists, server admins, storage admins, database admins, install crews, repair centers for diagnosing non functional gear, the list goes on and on. Go look up the going rates on most IT jobs. Most of the rates for “xyz” admins for larger companies like that dwarf the majority of other jobs out there, And while they don’t have as many employees as bookstores and distribution centers, they have to pay them a whole lot more.
Now i realize that most of the costs I mention are not and never will be “per book” as in traditional models. But I’m interested to see if Amazons costs are right on, if not a little low as far as e-books go. There are a lot of more expensive and ongoing replacement costs (servers usually last anywhere from 2-5 years, but typically get replaced during an 18 month to 3 year time frame) than traditional publishing.
I have read articles that try and break down traditional printing costs down to every dime. I would like to see the same thing on an e-book side from a major distributor like Amazon or B&N with the Nook, but I don’t think that will happen for a long time. I just hope i have turned a light on in some about the fuzzy line between traditional print costs and e-book costs. I have no problem paying $10, $20, $30 for a book, why not in a digital form as well? I know that people will say that the distribution costs are now equal so why can’t every e-book be the same cost. If someone unknown writes a book and they don’t need as much bandwidth or high availability storage, shouldn’t it be less than if King, Grisham, Prachett, Paterson, or (insert name of famous author) write it? The knowing that a certain caliber of writing is expected and soon to be read is worth a few dollars more?
I’d like to hear anyone elses guesss or thought on costs of digital warehousing and delivery.
thanks for your comment. let me think about it a it and respond. am in the middle of reading the kdk documentation at the moment.