Now that the Kindle and the Nook Color have proven the viability of eReaders and Reading Tablets, now that ebooks have eaten up 10% of the market - you would think Publishers would start treating ebooks seriously.
No. They continue to behave like a drunken man on a ship in the midst of a storm.
Things that make you wonder exactly what Publishers are thinking
Here are a few strange things -
- Random House went with the Agency Model 3 days ago. It was doing really well without. In 2010, thanks in part to being the only Big 6 Publisher to not embrace the Agency Model, Random House saw a 250% increase in ebook sales in the US, and a 800% increase in ebook sales in the UK. Deciding to embrace the Agency Model after seeing that sort of meteoric growth is just inexplicable.
- 3 out of the Top 6 books in the Kindle Store are $1 indie novels. The other 3 are $7.99, $12.99, and $6.39. The $7.99 was $1 until 3 days ago. Is this contrast not painfully obvious to Publishers? Do they not notice that 8 out of the top 16 ebooks are at $5 or below? Do they not realize that if the new Patrick Rothfuss was $10 instead of $15, it might have hit #1 and sold 5 times as many copies?
- They have one concentrated source of customers – Kindle owners. Yet, they are not advertising to them at all. Instead of paying for displays at grocery stores, would it not make a lot more sense to find ways to reach Kindle owners?
- They are pricing ebooks higher than paperbacks – regularly. It’s some sort of strange trick psychology – Look, for $5 you can get a physical book you can lend and sell. Wouldn’t you rather have a $10 ebook that you can do neither with?
- At a time when they can get kids back into reading, by supporting things like eReaders and ebooks that make it easier for children to read, they are pushing in the opposite direction. Obviously, you don’t want those kids to get into reading and spend money on books all their lives. That would be so bad for publishing.
In early 2009, when Publishers were trying to kill eReaders, this sort of madness was somewhat understandable - Why take a risk on a new market that you have no control over? At the end of 2009, and in early 2010, when Publishers were trying to destroy eReaders and eBooks, it was even more understandable – eBooks were a definite threat.
eBooks were just 3% to 4% of the market - there was a decent chance that some smart moves and some astute misdirection could kill ebooks, without letting readers realize who was responsible.
However, now that opportunity is gone. Publishers can’t really stop the revolution. Readers have all the power now. Authors are free to go direct to readers - even if they are slow/reluctant/scared to recognize it.
Why would Publishers move to attack ebooks now? How can they win when ebooks are already over 10% of the market?
Are Publishers being greedy?
Could Publishers really think they exist in a vacuum? Could they really think that there is no other source for good books?
Perhaps Publishers think that the books they publish are so special and exalted that readers should pay $15 for them while 4.5 star rated books from indie authors are available for $1. Perhaps they really think they can get away with it.
It’s tiring to hear people use terms like ‘price elasticity of demand’.
How about the ‘butt-kicking capacity of readers’ giant collective boot’?
We don’t care about your attempts to squeeze inordinate amounts of profit out of readers (your best customers). Just be decent human beings and stop being greedy.
How can you be so inept that you can’t make enough profit from a $10 ebook? Are you not saving money on transportation and returns and printing and paper? Why does it have to be $15?
If a Publisher claims the savings are not enough to go to $5 ebooks – perhaps it’s believable. If a Publisher claims the savings are negative, and ebooks have to be more expensive than paperbacks, then it becomes a bit insulting.
It’s almost funny – Publishers treating readers like a sliding switch they can keep amping up as they get more and more inefficient and greedy. We can’t figure out how to save money even though we no longer have shipping or storage or printing or returns – Let’s just pass on our anti-savings to readers.
Could this be an attempt to sabotage ebooks?
Another possibility might be that Publishers think that if they make ebook prices ridiculous enough, users will just go back to buying hardcovers. Perhaps they think the primary aim of ebooks is ‘to not hurt paper book sales’, rather than ‘to make things more convenient and cheaper for users’.
If a new ebook is $1 cheaper than a hardcover, and $5 more expensive than a paperback, then sabotage is the first word that comes to mind. Make ebooks so unappealing, that when they compare ebooks to paper books, readers always choose paper books.
There are some obvious reasons Publishers would want to sabotage ebooks, and direct readers back to paper books -
- Publishers get back the power. They become gatekeepers again.
- Publishers can go back to giving authors 5% to 15% of book sales.
- Publishers destroy the threat of Amazon and B&N.
There are also some obvious things Publishers are missing -
- Lots and lots of smaller publishers and indie authors will continue to sell ebooks.
- The 10 million plus people with eReaders won’t quit ebooks. Neither will the people reading ebooks on phones and PCs.
- eReaders and eBooks are going to continue to grow because they are much more convenient than paper books.
There’s a point at which you have to balance wishful thinking against reality.
Back when the Kindle first launched - That was the time when Publishers should have just stopped creating ebooks, and should have made sure eReaders died. They had no clue what the harmless little device, lacking the magical touch and smell of physical books, could lead to.
It’s too late for sabotage now.
Are Publishers trying to commit suicide?
Perhaps Publishers feel they cannot live in a world where the bourgeois eReader owners have more power than the noble Publishing overlords.
Perhaps Publishers feel it is better to die an honorable death than struggle in a world where absolutely anyone can publish and compete.
If you think about it, they are doing almost everything right -
- Ridiculously high prices, so that even people who really want to read the book don’t buy it. Check.
- Pricing that’s 5 to 15 times what competitors’ pricing is. Check.
- Providing fewer features than the previous model (physical books) while asking for higher prices. Check.
- Treating customers as if Publishers are doing them a favor by taking their money. Check.
- Handicapping themselves in the fastest growing segment of books (ebooks). Check.
It’s almost as if Amazon and B&N managed to send spies into the Big 6 Publishing Houses and convinced them to chop off the very branches their futures depend on.
Is this an attempt to kill off the reader revolution?
Could Publishers be under the illusion that they are smarter, more powerful, more flexible, and better strategists than readers?
Perhaps they think that this is how the script will play out -
Look, little boys and girls - Ebooks are now much more expensive than paper books. Why don’t we all go back to paper books?
Oh no! You are so right, Mr. Publisher. How generous of you to point out that we’re making a mistake by buying really cheap ebooks when we could buy expensive hardcovers? How considerate of you to artificially inflate the prices of ebooks to make paper books seem a better proposition.
We are totally going to go back to paper books.
And all will be well with the world.
Not really. Readers are like man-eating tigers who’ve tasted human flesh. That previously tasty deer flesh just doesn’t taste the same.
Power is seductive. It’s not just Publishers who love the power of deciding who wins. Readers love it too. There’s a special thrill in finding an author who’s new and unknown and being one of the first few to recognize her greatness. That thrill is magnified if it was you, and not some publisher, who played a key part in her ascent. You were the one who gave her that second 5-star review. It was your purchase, and your word of mouth recommendation, that helped increase her sales rank. You helped in bringing her to the attention of the rest of the world.
How can Publishers erase that feeling? The very thing that makes Publishers reluctant to let go is what readers now feel. A feeling that’s stronger than the longing man-eating tigers have for the taste of human flesh.
Readers have something else – they are the only ones paying any money. Authors and Readers. It’s like Romeo and Juliet with a happy ending. Editors and Platforms and others who want to be the friends passing messages between the lovers will always have a role. Publishers that try to be Gatekeepers and Dictators and set artificial boundaries between the lovers will be torn apart.
What part of ‘Readers decide everything now’ do Publishers not get?
Publishers must have invented time machines.
They sure are behaving as if they spend all their time in the 1980s and only come back to 2011 every few weeks – to do crazy things like adopt the Agency Model, or set outrageous ebook prices.
Readers decide everything now.
Which eReader wins. Which books win. What prices they’ll pay. What feature they want. Literally everything.
Amazon was forced to match Nook’s lending feature and its PDF support. It wasn’t for aesthetic purposes – It’s because readers have all the power. B&N was forced to add wireless support because readers loved the convenience. It did, and it prospered. Sony wouldn’t, and it’s now an afterthought in the US market.
There’s not a single data point from the last two years that suggests readers are gullible or sheep or stupid or impressionable or lack power. Why then do Publishers continue to do everything possible to upset readers? Readers are willing to pay $10 for a good new release – even though $10 for a book that you can’t lend or sell is a bit much. Yet, that isn’t enough for Publishers. They want $15. Next month, they’ll want $20.
It’s just inexplicable. Publishers keep making moves that make zero sense. Perhaps that’s the grand master plan – to confuse readers so much they just give up.
Filed under: publishing Tagged: | future of publishing, publishers large heartedness
Yep, they’re cutting off their noses to spite their faces. Random House is especially frustrating since they were doing so well, why ruin things with the agency model?
There are still people who seem to equate price with quality and won’t buy a $.99 book, but more and more people are discovering indie authors.
The ebook tiger is out of the bag and the publishers won’t be able to put it back in. The longer they hide their heads in the stand, the more business the indie world will take from them.
Publishing company equals slimy bastards!
They feel pike they cornered the market, refusing to look at new talent. See where that got the A holes? Wither and die and rot in he’ll big 6!
You continue to have no concept of how the publishing business actually works.
That’s true. Given the current environment, don’t know whether knowing how the publishing business actually works is an advantage or a liability.
Because unlike most others, it is run non-scientifically, non-analytically and illogically?
Here’s my guess as to what is going to happen: Publishers will continue their head-in-the-sand approach to ebook pricing (ie., gouging Kindle owners and the like). Meanwhile, more and more enterprising editors will begin to form independent publishing houses dedicated to the ereader market. With low overhead (no need to worry about printing and distribution costs) they’ll be able to offer high-quality (well written and edited) but relatively low-priced ebooks, undercutting the Big 6. Established authors will come on board, knowing they can get a larger cut of the action. Eventually, the Big 6 will get the message or wither and die.
I think what you and Darrel are suggesting is exactly what’s going to happen. There are so many opportunities in ebooks right now it’s insane.
What baffles me about the publishers is that they still have a great part to play in books. Just not in the printing and distribution aspects. It seems to me that editing and promotion are the two most important functions that publishers provide and those will continue with or without physical books.
But when publishers price their books above what seems reasonable it causes people to look for alternatives. I think there will publishers, but perhaps not the ones that exist today.
I think we may see many small publishers crop up that specialize in a particular genre. As these publishers gain a reputation for selecting great books/authors, readers can look toward them for their next selection. Basically giving name recognition that is only applied at the author level now.
The authors benefit by being in a select group, and being provided promotion that they may not have the time or inclination to do themselves.
I think the Random House decision comes down to one thing – the iPad 2. Now that they are on the Agency model, then can be in the iBooks store. It may well be that they waited the first year to see how/if it would take off, but saw that with the second coming of the Jesus Tablet, they needed to be on the bus.
Yup, that’s it. They got a pretty serious mention on the ipad 2 launch presentation out of it. Apple’s produc launch press conferences are watched live and afterwards by millions of people, that’s a lot of free publicity.
I believe the big publishers are comparing ebooks to their hardcover releases and reluctant to devalue the hardcovers by offering the same content for much lower prices.
The struggle within publishers is that the hardcovers are where all the prestige, excitement, etc., etc. are located. The powerful within publishers reside there and have sufficient clout to prevent “devaluing” the hardcovers by putting out an inexpensive ebook of the same content.
Everyone outside the publishers may agree that their attitude and behavior is irrational — after all, why don’t they drop the prices and vastly increase total sales? However, many, many business decisions are irrational on their face, but choices are made for other than rational economic reasons — personal prestige, organizational power struggles, nostalgia for established modes and people associated with them, etc., etc.
A year or two years from now, the price for first-run ebooks will be $5 – $8, with backlist $2 – $6. We’re just watching the death throes of the established publishing order.
A very perceptive description of how & why large corporations often make foolish decisions.
When there is only a hardcover out, and no paperback, you can certainly argue that the book may cost more than a paperback would — $10 isn’t too bad at that point. But when will publishers start to realize that when the MMPB comes out at $7-8, it’s time to drop the price to $5?
I’ve noticed a big change in the Agency Model publishers in the last few months. I track books over $10 using ereader IQ to catch when books drop below the $10 price point. Up until a about 5 months ago you could count on most dropping below $10 when the paperback editions came out.
That is no longer the case. Paperbacks come out now below $10 and the ebooks stay at hardback prices.
Publishers could make a case that books needed to be over $10 for it to be fair when there were only hardbacks. I said “Make a case” I didn’t say I bought their arguments.
Once the publisher has price a paperback book below the cost of the ebook. All of their arguments disappear. There are no cost for ebooks versus a new version, the value of the words is now set lower, my rights as a purchaser are certainly less than if I owned a hard copy and delivery cost are certainly lower for the publisher as these are eaten by the reseller.
At best I would clasify the publishers business model as just chickensh**t. At worst I would classify the model as price fixing and legally actionable.
It is certainly top on the list with the European Union ongoing investigation of the agency model.
As an aside – I wonder what Apple promised Random House on the new Ipad? Maybe it was a promise that the Kindle Ap on the Ipad will be disabled. We all know what a good friend Apple has been to all of its partners.
“Paperbacks come out now below $10 and the ebooks stay at hardback prices.”
As I noted in an earlier thread, all that does is provide an incentive to wait until I (or someone else) can buy the book second-hand or via something like the Amazon Marketplace, in which case they get little or nothing from me. If I waited for paperback prices, I can wait a bit longer for used or remainder prices.
I keep wondering if any of their lawyers have told them “you know, this does look like price-fixing and, even if it’s not, you are going to spend a lot of money defending the practice.”
Great analysis as usual.
The one thing we don’t know is whether Random House is already in on some huge development in which they need to be in line with everyone else. Say, a Netflix-type subscription model that’s bound to be only a year or two away, if that.
Scott
That’s a good point. Mark Cuban had a very good post on this. Will write about it later when I get the chance.
Apparently, the big publishers feel bad about keeping their smaller competition from being noticed in book stores. They’re pricing strategy is to ensure the little guy is noticed.
No wonder the majority of my reading is ‘self-published’ now. Oh, I still read from the AAP14… Its as if they didn’t realize readers have a choice of books they would like to read. $2.99 vs. $7.99… hmmmm….
Neil
that’s beautiful.
They’re circling the bowl, so they’re climbing the walls.
switch11
Here is an interesting tidbit for you – I’m sure I would have at least enjoyed reading the article had you wrote it. http://www.chicagotribune.com/news/local/ct-met-library-e-books-20110306,0,1684454.story.
Would love to hear your take on this.
Whenever I see ebooks priced above the paperback version I often don’t buy either – frankly it irritates me and I’m not giving in. I do wonder though if it’s worth sending an e-mail or a quick letter to the publishers to let them know they just lost a sale. I wonder if this would have any impact or if I’d just be wasting my time.
You don’t understand the agency model. It’s not about keeping prices high, it’s about the publisher controlling prices instead of the retailer – who uses prices as a weapon to become a monopoly.
There isn’t going to be any monopoly.
You do have a point – Amazon was using low prices to get a huge lead. However, it can’t really be a monopoly because customers would pick the best option for themselves and that would usually not be a monopoly.
Customers do not pick the best option for themselves. A particular customer will at a given time pick the best option for himself. And for any given particular customer, the best option can be to buy into an oligopoly or monopoly. The fact that it might be beneficial for *some* people to buy into a less successful, less good platform doesn’t mean it’s good for him at that time.
See also prisoner’s dilemma.
Not sure how it works in the rest of the world but here in the UK we have an Office of Fair Trading who’s job is to prevent monopolies and restrictive trading trading practices. It’s not Amazon or B&N that the OFT are looking at but the publishers themselves and the agency model.
When publishers cry about Amazon’s monopoly what they’re really crying about is that Amazon are just a very well run business with people in the boardroom who living in the modern age and know what they’re doing… Something that seems to be painfully lacking in the publishinig industry. They also bemoan Amazon’s power and try everything to bring them to heel like some little lap dog, completely ignoring the fact that before Amazon came on the scene, and started generating millions of dollars worth of book sales for them, their little publishing industry was in the doldrums.
“It’s not Amazon or B&N that the OFT are looking at but the publishers themselves and the agency model.”
Because of Amazons complaints. Publishers will control pricing. When retailers dictate pricing to suppliers, you get a wal-mart situation and the stuff we buy gets worse and worse.
As a rule, I don’t buy $10 ebooks… unless that file is a bundle comprised of no less than 4 books. I certainly won’t pay $15 or $20 for a single ebook, but might pay that much if I could get a bundle of 6 or 8 (or more) books for my money.
Publishers don’t seem to be following that idea though…
I buy lots of ebooks at less than $5 per book…but the higher the price, the fewer books I buy at the price set; up to about none over $7.00.
You seem to be completely ignoring the elephant in the room — as we’ve seen with music and movies, if there is no good way to get things legally (and by good, consumers mean cheap and easy), they will download them for free. The other day I spotted a torrent containing 1000 free kindle books, which is still not enough data to tie up your broadband for more than a few hours, even if your band is not that broad. Most of them seem to be cracked DRM books, and others are quite readable “old” style releases, ie. guillotined-and-scanned wares with occasional OCR errors. With or without breakable DRM — and with is nearly inevitable — there will be gigantic quantities of pirated books available, and if publishers attempt to push readers away too badly — like music and video did — with high prices in any format and restrictive policies or unavailability in electronic format, they will flourish.
This is not a particularly desirable situation, necessarily, but nevertheless piracy is a very real competitor to the legal options, and as more and more reader devices/apps start making their way into the general population (not just the high end fanatical readers as it still somewhat is) and as it becomes accepted (not to mention true) that reading books on an ereader is just as good as holding an MMPB, publishers will need to try very hard to make sure that they don’t push readers away hard enough for a real “scene” to emerge in pirate ebooks, or for the existing wares scene to start releasing.
As we’ve seen in the movie and music industries, certaiun people will download it for free wether or not it’s available legally. Because they want it for free.
that’s very true.
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