E-books Antitrust Litigation

August 9, 2011 6:51 PM

"Hagens Berman has filed a nationwide class-action lawsuit claiming that Apple Inc. and five of the nation’s top publishers, including HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group Inc. and Simon & Schuster Inc. illegally fix prices of electronic books, also known as e-books.

Filed in the U.S. District Court for the Northern District of California, the lawsuit alleges that the publishers and Apple colluded to increase prices for popular e-book titles to boost profits and force e-book rival Amazon to abandon its pro-consumer discount pricing.

According to the suit, publishers believed that Amazon’s wildly popular Kindle e-reader device and the company’s discounted pricing for e-books would increase the adoption of e-books, and feared Amazon’s discounted pricing structure would permanently set consumer expectations for lower prices, even for other e-reader devices."

posted by joannemullen (109 comments total)

I can only speak for myself, but I've nearly stopped buying ebooks entirely from the Amazon store because most of the books are more expensive in the Kindle edition than the paperback or sale hardback versions...despite having typos, ugly/no book cover, crappy treatment of footnotes, etc. So screw you, publishers.
posted by smirkette at 7:03 PM on August 9, 2011 [13 favorites]

More upsetting to me than price fixing is the way publishers lock up their books with awful DRM that in turn locks you into their service. If you already own a hundred books on a Kindle and then Amazon raises prices, you have to decide whether to abandon your existing library and your Kindle or just accept paying more for ebooks. It's total bullshit. The industry has an example of what not to do by looking at the past decade of the music industry, but few are paying heed to those lessons.
posted by boubelium at 7:10 PM on August 9, 2011 [6 favorites]

Do they also own gas stations?
posted by Bighappyfunhouse at 7:15 PM on August 9, 2011 [1 favorite]

Good. Amazon was paying full price for Kindle editions and pricing the bestsellers as loss-leaders. The publishers just want total control of pricing through the titles' life cycle. There are tens of millions of e-readers and tablets and the publishers can't turn back the clock. They are in the process of getting "Napsterized" and they don't even realize it.
posted by MikeMc at 7:17 PM on August 9, 2011 [2 favorites]

Just to clarify...by "full price" I meant the same wholesale price they were paying for print editions.
posted by MikeMc at 7:19 PM on August 9, 2011

the biggest flaw with ebooks - you don't own them. You can't give it to a friend. You can't sell it to a second hand bookstore. The portability is wonderful - but the removal of options you do have with a physical book - makes it a flawed technology, which is unfortunate. I hope this does get fixed at some point, because I would like to love them.
posted by defcom1 at 7:20 PM on August 9, 2011 [12 favorites]

So screw you, publishers

Not so fast. This is being driven by tech giants like Amazon and Apple. For instance, in the textbook world, Amazon would have you believe that it is saving student's money. That's until one learns that Amazon insists on taking 70% of the advertised price of an eTextbook, and at the same time forbids more competitive pricing in other eCommerce domains. Apple is just as onerous.

Similar shenanigans occur in the trade book sector. That said, educational publishers are greedballs of the first order.
posted by Vibrissae at 7:21 PM on August 9, 2011 [6 favorites]

"You can't give it to a friend. You can't sell it to a second hand bookstore. "

If the price is low enough it wouldn't matter. If I can get an ePub or Kindle edition (I have a Sony & a Kindle) for the price of a paperback I really doesn't matter if I can resell it. Or I can just get it from a torrent site.
posted by MikeMc at 7:24 PM on August 9, 2011 [4 favorites]

This is being driven by tech giants like Amazon and Apple.

I disagree, the "Agency Pricing" model was originally being driven by the publishers and Apple. Amazon had to sign on if they wanted any content for the Kindle from most of the major publishers.
posted by MikeMc at 7:25 PM on August 9, 2011 [2 favorites]

That's just it though - you don't have ownership. Why should I have to buy it when my friend is finished with it - and wants to lend it to me, like we do with paper books? New technology should improve our options, not limit them.
posted by defcom1 at 7:28 PM on August 9, 2011 [3 favorites]

In before post about price fixing becomes derailed by the same tired argument about ebook DRM....

Damnit. Too slow.
posted by eyeballkid at 7:32 PM on August 9, 2011 [6 favorites]

boubelium: More upsetting to me than price fixing is the way publishers lock up their books with awful DRM

Yes. This.

...that in turn locks you into their service.

No, though they'd no doubt like it to, and like you to believe that it does. However, the Emperor has no clothes.[1]

Here's what to do:

1) Buy a legitimate copy of the content. (Please, do not skip this step. Though I'm obligated to point out that if you do, what you get is probably not DRM-infested to begin with so you may as well skip the rest of the steps, too. But please don't.)

2) Get Calibre for your OS of choice (so long as it's one of Linux, OS X or Win32).

3) Get the plugins that defang the DRM.

4) Format-shift until your black little heart, full of poison spiders, is content.

Speaking as someone who has long since passed the point where book storage is a significant problem and is well on the way to being more worried about incipient structural collapse due to the weight of books: I can see some advantages to ebooks. When I travel, I absolutely adore being able to haul a Kindle with a month of reading on it for less space and weight cost than a single paper novel. But: If I can get a physical copy for the same -- or nearly the same -- cost, I'll do that every time.

[1]--Note: In jurisdictions where it is illegal to point out that the Emperor has no clothes. the Emperor is stipulated to be fully clothed.
posted by sourcequench at 7:43 PM on August 9, 2011 [92 favorites]

Seconding MikeMc. And the Calibre recommendation.
posted by sneebler at 7:45 PM on August 9, 2011

Amazon wanted nothing to do with agency and briefly went head-to-head with Macmillan over it.
posted by nev at 7:48 PM on August 9, 2011

Meh. I would dispute the assertion that Amazon's pricing was "pro-consumer." it wasn't; it was merely the price Amazon thought would most efficiently sell Kindles. As I noted back in February of 2002, if publishers were forced to accept a $9.99 electronic price point when they were trying to sell hardcovers, the way they would recoup the lost revenue would be to keep the electronic price at $9.99 when the paperback came out. $9.99 wouldn't be the best price; it would be the only price.

As it is, publishers now price the electronic editions slightly below the price point for their print versions, and it seems to work just fine. When my own books go from hardcover to paperback, the price of the electronic versions drop commensurately.

I suspect it will be harder than Hagens Berman suspects to show collusion, in part because collusion wasn't necessary. It was no secret that publishers were unhappy with Amazon's dominance of the ebook sector and the leverage it had to dictate terms; Apple had a vested interest in making its own bookstore more attractive to publishers by offering them terms they would find more congenial.

After that it was a matter of which publisher was going to try to force Amazon into accepting the agency model. As it happens, there was a good reason Macmillan was the one to do it -- of the major publishers it's the only one that's privately held and therefore couldn't be punished by the market for its confrontation with Amazon (Amazon, however, could be punished by the market for dropping all of its Macmillan titles).

Collusion was not required for this; just an understanding of who the players were in the market.

(Note: Despite being published by Macmillan, I have no inside knowledge of its thinking during its Amazon confrontation -- I'm putting the puzzle pieces together as I see them most logically fitting.)
posted by jscalzi at 7:49 PM on August 9, 2011 [16 favorites]

Er, February of 2010, sorry.
posted by jscalzi at 7:52 PM on August 9, 2011

The portability is wonderful - but the removal of options you do have with a physical book - makes it a flawed technology, which is unfortunate.

This goes to the pricing structure. If I buy a physical book, it has more value because I can lend or resell it. I have rights I don't have with the ebook version, and the printing cost (stipulated to be less than most readers think) doesn't apply to my copy. It's like not getting the physical CD: people feel like they're receiving less value and therefore should pay less money. I understand that the content is most of the cost of an album or book; I'm saying that people perceive, correctly or not, that the electronic-only, data-only versions should cost less.
posted by immlass at 7:52 PM on August 9, 2011

Also: paper books don't run out of batteries.
posted by EatTheWeak at 7:57 PM on August 9, 2011

Also: paper books don't eat your soul.
posted by Justinian at 8:00 PM on August 9, 2011 [2 favorites]

the biggest flaw with ebooks - you don't own them. You can't give it to a friend. You can't sell it to a second hand bookstore.

Sure, it's not the same, but people will just adapt. As a comparison, online video streaming has the same flaws compared to owning a DVD, but people can still watch their movies so they make do. When you have some e-books selling a million copies (like Girl With The Dragon Tattoo), the market has moved on.
posted by smackfu at 8:07 PM on August 9, 2011

If I buy a physical book, it has more value because I can lend or resell it.

Sez you. I think the digital copy is more valuable, because it doesn't take up space in my house and I don't have to remember to bring it with me.
posted by bjrubble at 8:10 PM on August 9, 2011 [7 favorites]

immlass: [With physical books] I have rights I don't have with the ebook version [...]

I respectfully disagree. I would argue that you have the same rights in each case, but for ebooks it may be more difficult and/or dangerous for you to exercise those rights. In practical terms there might be not much difference between a right you don't have and a right you can't exercise.

However, I'd still maintain that it's an enormously important distinction. To lose sight of it is to play into the hands of the perpetrators of DRM. (Even the name is a gigantic, Orwellian lie. Your right aren't being "managed". They're being denied.)
posted by sourcequench at 8:10 PM on August 9, 2011 [1 favorite]

Remove the damn DRM. It ain't rocket science. Get Calibre. eBook is now yours to do as you please.
posted by jgaiser at 8:14 PM on August 9, 2011 [1 favorite]

Just a note...if your reader is pretty much anything not a Kindle it probably supports .epub files which are available from a number of online vendors (Sony, Kobo, B&N, Smashwords, Baen etc...) and is the the format supported by Overdrive library lending so you are not necessarily locked into the device manufacturers ecosystem. You may still have to deal with the Adobe Digital Editions DRM but as sourcequench pointed out above there are ways around that as well.
posted by MikeMc at 8:14 PM on August 9, 2011

I think how much bestsellers cost in the Kindle store is only part of the picture. I've been seeing something of a renaissance in sci-fi in the form of self-published going for ~$5 apiece that's been picking up steam ever since the Kindle was released (I'm on my 4th). Not everything is super high quality, but I have found some real gems. I have had so much reading material from this that I haven't needed to expand to other genres, but I suspect that this isn't isolated to sci-fi.
posted by feloniousmonk at 8:20 PM on August 9, 2011 [1 favorite]

It's like not getting the physical CD: people feel like they're receiving less value and therefore should pay less money. I understand that the content is most of the cost of an album or book; I'm saying that people perceive, correctly or not, that the electronic-only, data-only versions should cost less.

Bingo. Black Library books are $9 for the paperback or $8 for the e-book. Apparently they think their customers will go wow, a whole dollar off for not having an actual book!, but I sure won't. If they were $5 I would buy three times as many; as it is I get most of mine through PaperbackSwap, and BL doesn't get any money at all.
posted by vorfeed at 8:22 PM on August 9, 2011 [4 favorites]

feloniousmonk: pointers to sources/filters you've used for that? And any recommendations?
posted by louie at 8:31 PM on August 9, 2011 [1 favorite]

I've certainly got no beef with DRM stripping for personal use, but jesus, Calibre? Calibre is unbelievably awful. I am a reasonably sophisticated computer user, but after futzing around with it for a few hours I said fuck it and gave up. I'd rather pay occasionally exorbitant prices and deal with DRM than be constantly wringing my books through that unusable monstrosity of an application.

Unless it's gotten better in the last six months. Which... uh, has it?
posted by pts at 8:46 PM on August 9, 2011 [2 favorites]

Bingo. Black Library books are $9 for the paperback or $8 for the e-book. Apparently they think their customers will go wow, a whole dollar off for not having an actual book!, but I sure won't. If they were $5 I would buy three times as many; as it is I get most of mine through PaperbackSwap, and BL doesn't get any money at all.

Exactly. I perform this process on the Kindle Store regularly. I'll find a book that looks interesting, realize that it's priced at $13.99 when the print version (with free 2-day shipping thanks to Amazon Prime) is the same price or cheaper, and I'll get so disgusted with the whole mess that I close the tab in my browser and don't buy anything at all. It's especially insulting when you see a used copy selling for $0.25 and the Kindle edition for $13.99. Amazon makes the comparison pretty darn obvious, since all the prices are right there next to each other.

I'll happily give up the many advantages of paper books (for those books where I choose to do so) for the convenience of eBooks. I will not pay more for a product that does less and cannot be resold or transferred (most of my paper books that I don't keep wind up at Friends of the Library except for expensive textbooks and such). Repeatedly asking me to do so makes me swear at you and leave your store.
posted by zachlipton at 8:50 PM on August 9, 2011 [6 favorites]

pts: I've certainly got no beef with DRM stripping for personal use, but jesus, Calibre?

If you just want to get your command-line on and can't be bothered with pointy-clicky toys, the "plugins" link in my post upthread has you covered, too. (Scroll down to scroll down...)

Unless it's gotten better in the last six months. Which... uh, has it?

Meh. It has, but probably not along dimensions that'll make you happy. It's still all about the worst excesses of the "angry fruit salad" school of man-machine interface design. A typical desktop app, in other words.
posted by sourcequench at 9:06 PM on August 9, 2011 [1 favorite]

Louie: At this point I'm able to mostly find them via my recommendations. I have however many year's worth of history there that I've pruned fairly aggressively.

That said, if you just look at the sci-fi best sellers, a lot of them are in this price range once you exclude the big names and their newest books. You can see that in action here. This is the first in a series I have really enjoyed. It's pretty pulpy space opera, but I go in for that sort of thing. It also has a fairly interesting history, having evidently begun its life as a series of podcasts.
posted by feloniousmonk at 9:19 PM on August 9, 2011

I've certainly got no beef with DRM stripping for personal use, but jesus, Calibre? Calibre is unbelievably awful.[...]

Unless it's gotten better in the last six months. Which... uh, has it?

Calibre is about the same as iTunes. It tries to do a lot, and if you find your way around it it will fetch the news directly off of websites and turn them into nice little eBooks for you, then mail those automatically to your reader. There are lots of customization options too. Which is not to excuse its interface excesses, though, which seems to have learned all the wrong lessons from iTunes.

However, one thing I will say about Calibre is that it's updated very frequently. Nearly every time I start it up there's a new version.
posted by JHarris at 9:45 PM on August 9, 2011

I've finally bought myself an ebook reader recently, selected the Astak reader, aka Jenke's HanLin V3+. It's slightly less ergonomic than a Kindle or Sony, but no other readers stocked by Fry's natively supported DjVu files. And math, comp.sci., etc. ebooks from gigapedia frequently come as DjVu files.

I've thus far bought the dead tree versions of every book I actually read, and then some, but I'm honestly too cheap to buy books twice, and I like skimming the ebook version first. I might pay an extra couple bucks to get the ebook with the paper, assuming the text reflowed properly, which djvu files never do.

I doubt this reader will replace dead tree versions for me. I suppose a larger faster reader might reduce my book buying by maybe half, but eliminate it, no way.. books ain't like mp3s ya know.
posted by jeffburdges at 9:49 PM on August 9, 2011 [1 favorite]

Metafilter: The "angry fruit salad" school of man-machine interface design.
posted by jeffburdges at 9:51 PM on August 9, 2011 [2 favorites]

Say it with me people: BUY NO DRM.
posted by thewalrus at 10:01 PM on August 9, 2011

Calibre is about the same as iTunes

I've grown to hate iTunes as much as the next person, but this comparison is just ridiculous. iTunes is an overstuffed abomination whose feature bloat makes it slow, clunky, and frustrating for anyone with more than a small collection of files to manage. Calibre is a twisted, UX-less parody of iTunes: a maze of inexplicably nested screens with impenetrable clouds of badly or unlabeled text boxes, "helpful" raw access to developer toggle switches, and endless -- endless! -- options useful only as a GUI front end to people who'd rather be reading the man page. It may have learned feature overreach from iTunes, but there's no team of harried UX pros trying to keep the creep in check: the features spill from Calibre's menus, overwhelming, then deadening the user's ability to figure out, "What the fuck am I doing in this window? And why am I typing SQL into my book library?"

That said, I use it to organize my whole ebook collection.
posted by verb at 10:12 PM on August 9, 2011 [7 favorites]

I'll find a book that looks interesting, realize that it's priced at $13.99 when the print version (with free 2-day shipping thanks to Amazon Prime) is the same price or cheaper, and I'll get so disgusted with the whole mess that I close the tab in my browser and don't buy anything at all.

This.

Except sometimes I'll copy the ISBN, open a new tab, go to my local library's "reserve a book" page, and add it to my ever-growing queue.

I'm not paying more for an ebook than a paper book. Period. But I'd buy LOTS more ebooks if the prices were in the $5 "impulse buy" range.

But with the pricing as it is, I'll get it from the library, thanks.
posted by BitterOldPunk at 10:31 PM on August 9, 2011 [6 favorites]

the biggest flaw with ebooks - you don't own them. You can't give it to a friend. You can't sell it to a second hand bookstore.

If the price is low enough I'll just buy a copy for my friend. If the price is low enough I don't feel compelled to recoup the outlay by selling the book to a second-hand dealer. I dislike DRM chiefly because it can be used to retroactively cancel access to products (publishers would say services) I bought, not because it means I can't transfer ownership of stuff.
posted by Ritchie at 10:56 PM on August 9, 2011

But I'd buy LOTS more ebooks if the prices were in the $5 "impulse buy" range.

I'd buy a lot more hardcovers if they were in the $5 "impulse buy" range, too. In neither case would the publishers recoup their costs.
posted by Justinian at 11:00 PM on August 9, 2011 [2 favorites]

Interesting how an industry that's much more vulnerable to wholesale piracy would utterly fail to learn from by example. It's utterly trivial to download ebooks by the thousand in a matter of minutes, yet instead of responding by pricing their goods appropriately they resort to collusion.
posted by mullingitover at 11:12 PM on August 9, 2011 [5 favorites]

The marginal cost of making a new copy of an ebook is $0. Therefore the price eventually has to go to $0. This isn't sophisticated economics, just the logic of perfect mass production, but it is the challenge of the new digital economy. Publishers can't swim against that logic forever.

You know what's also free? Listening to the radio. Its supported by ads and artists are payed by a central source based on how much their music is played. Books should be the same way. They basically already are, but no one will admit it.

Culture, science, and technology will advance more quickly if all barriers to the spread of knowledge are reduced or eliminated. That rising tide of advancement will more than make up for the doom of the historical publishing model.
posted by Chekhovian at 11:15 PM on August 9, 2011 [2 favorites]

For computer books, the way the cost is split for dead-tree versions of books...

Say the price of the book is $50. The book store gets $25, the publisher gets $25. Of the publisher's $25, the author gets 7.5% to 15%. This usually starts at the lower numbers and increases as the number of copies sold goes up, although an established author can negotiate. Let's suppose that the rate is 15%: the authors get $3.75. If there are multiple authors, they split it. So if there are three authors, each gets $1.25 of the cover price.

The authors typically have to pay the indexer between $500 and $1500, too, out of their royalties (they can do it themselves, but are typically given three days turnaround to finish it, and professional indexers can meet that deadline). The publisher provides the editors (acquisitions, editor, and technical editor), graphic artists, marketing, legal, printing, etc. out of their end.

With e-books, there are no costs for dead-trees and ink. Some of the other costs can't be reduced. However, when you see how little of the cover price the author gets, you see why many authors are self-publishing online.
posted by Xoc at 11:33 PM on August 9, 2011

I'd buy a lot more hardcovers if they were in the $5 "impulse buy" range, too. In neither case would the publishers recoup their costs.

If I buy it for $5 at the used book store, the publisher makes nothing. If I borrow it from the library, the publisher makes nothing.

But a $5 ebook that catches my eye? I might buy that for the convenience of it, and then EVERYONE makes a little something.

Publishers are pricing themselves out of business.
posted by BitterOldPunk at 11:48 PM on August 9, 2011 [9 favorites]

When what you're selling is a glorified text file, it's hard to imagine a viable way to enforce its copyright.
posted by steamynachos at 11:56 PM on August 9, 2011 [2 favorites]

With e-books, there are no costs for dead-trees and ink. Some of the other costs can't be reduced. However, when you see how little of the cover price the author gets, you see why many authors are self-publishing online.

Certainly, and I want the author to get paid as much as possible. That 50% piece of the pie that goes to the retailer is part of the problem: that's not unreasonable when you have to manage inventory and pay rent, but is a huge share for digital distribution.

At the same time, keep in mind that the publisher's share of the profits also goes to pay for all the books that were never all that successful. The publisher paid the author some kind of advance and the author generally gets to keep that money even if the book only sells two copies (as long as they actually deliver the book as promised anyway). The author's overall share is low because, at least traditionally, much of the author's compensation comes up-front as their advance unless the book is a hit.
posted by zachlipton at 12:00 AM on August 10, 2011 [1 favorite]

I'd buy a lot more hardcovers if they were in the $5 "impulse buy" range, too. In neither case would the publishers recoup their costs.

Ok, but I tend to get insulted when you try tell me with a straight face that you want to sell me well under a megabyte of bits for a higher price than an actual physical hunk of chopped, pulped, and bleached trees that have been shipped thousands of miles to be printed on a state-of-the-art offset litho press, glued together along with a fancy four-color picture printed on even fancier paper, and shipped thousands of miles again to a massive warehouse, received and shelved in said warehouse, picked and boxed by an employee as directed by a highly complex order processing system, and delivered to my door in well under 48 hours by one of the world's largest networks of airplanes, trucks, and delivery personnel.

Every time I do wind up buying a physical book instead of an ebook solely because the physical book is cheaper, I absolutely hate the environmental aspect of what I'm doing, but a small part of me is thinking "Screw you ! Now I'm paying you less and you have to make me a fucking book too!"

I'm not saying that every ebook should cost $5. But when your pricing model makes your customers feel like morons for buying your products, people will start to avoid you.
posted by zachlipton at 12:20 AM on August 10, 2011 [10 favorites]

JeffBurdges, damn, gigapedia, incredible! I wish I'd gotten more memory on my iPad, I need more gigabytes for these damn books.
posted by Chekhovian at 12:25 AM on August 10, 2011

Ha, I don't know whether to laugh or cry: I'm currently in the final stages of writing my master's thesis on ebook pricing, and this little drama comes along. I guess I'll be adding some paragraphs...

Having gone through all the verbiage spilled on this topic with a fine-toothed comb, my ultimate (and not very earth-shattering) conclusion is that ebooks are not print books. Duh, right? But the very marketing of ebooks and their readers, the choice to pitch them as an electronic version of ye olde codex, is a big part of this very problem: if readers are asked expect them to fulfill the same functions, ebooks (especially with DRM) will be found lacking. The pros and cons of ebooks versus print books are very different, but marketing the same content in different formats and basing your price on the content is going to be a loser for most markets. Tech people seem to be farther along the curve in terms of being willing to pay top dollar for ebooks, but that's their sector. Ohio mom on vacation in Cancún looking for a few good beach reads, maybe not so much.

Big publishers are worried about print cannibalization, piracy, and the perceived value of their product, and the costs for ebook production are not insignificant, although yes, in theory over time they do fall significantly...but in the meantime, how do you make enough money to keep the lights on? Selling for $2.99 sounds great, but how many copies do you have to sell in order for the book to pay for itself (the XML, the platform tweaks, the versioning, etc.) before it starts paying for the biscuits in the company kitchen? A year? Ten? You're long out of business by then if you have that trickling tap, compared to print books with much higher - and manageable, hopefully calculable - returns. Something to ponder: in Britain at least, print books are taxed at the attractive rate of 0%, but ebooks are liable for VAT, which at the moment is 20%. Now subtract Amazon or Apple's take...

I'm not sure how badly they're doing at the higher agency price points, but clearly consumers are getting pissed. I can imagine a lot of popular support for this particular lawsuit, but how do you prove collusion? Publishers forcefully rejected Amazon's wholesale model not because they were going to make more money with the agency model, but because they didn't like the fact that Amazon was setting a pricing precedent (and willing to lose money to do so). Publishers don't seem to like Amazon very much, but AFAIK there are no laws against a monosopy, and it's pretty clear that the future of bookselling lies in controlling the distribution, especially now that territoriality is pretty much redundant.

This comment has officially made me late for work.
posted by Chichibio at 1:08 AM on August 10, 2011 [3 favorites]

One more quick thing, if I may: if you want to help out on the thesis, my question on the green about independent ebook publishers is still open for answers. You'll get mentioned in the acknowledgments, of course.
posted by Chichibio at 1:14 AM on August 10, 2011

The marginal cost of making a new copy of an ebook is $0. Therefore the price eventually has to go to $0. This isn't sophisticated economics

If it's not sophisticated how can you be so off base? The marginal cost of making a new pill of the latest wonder drug is a fraction of a penny but I assure you the price isn't going to a fraction of a penny any time soon. Similarly, the marginal cost of making a new copy of Gears of War 3 will be essentially $0, but the price won't be $0.

Prices are not the same as marginal cost. They just aren't. The difference between the marginal cost and the price varies depending on what we're talking about, but the two things do not necessarily converge. Do you think the price of a new iPhone (sans contract) or whatever is the same as its marginal cost?
posted by Justinian at 1:33 AM on August 10, 2011 [1 favorite]

And before you object that you're talking about the marginal cost of the end-user, I submit that we already have evidence as to whether you're correct; software. You can get the latest software by pirating it for free but the price of software is not going to $0.
posted by Justinian at 1:35 AM on August 10, 2011 [1 favorite]

Let's define our terms here. My working definition of price will be a ratio along the line of (real world dollars paid by the customer/real world utility gained by the customer). Adobe can say the price of photoshop is $600 (that's what it was the last time I checked years ago when there was only the full version) or whatever it wants, but how many customers out there actually pay $600? You pirate it because no individual consumer can afford $600 for photoshop. How many MP3's on the average iPod did the customer obtain legally? At $1 a song you would spend $5000 to fill a 20 GB harddrive, assuming 4 MB a song. By my definition then the "price" of photoshop and the price of music are much less than the store price.

You're entirely correct about the price of wonder drugs and new video games, but those examples aren't really relevant to books. The cost of that drug to the manufacturer will be tiny, I agree, but they will the only place that do the chemistry to make the thing. I can't go to a website and download the pill. Gears 3 is just data of course, but there's some sort of scheme that must make it harder to burn your own copy from something you downloaded. I really don't know anything about game piracy.

eBooks don't have those traits. Any file sharing website you go to can effectively "manufacture" a new copy of the book for you for free, instantly. People have of course tried to DRM the books, but that's a losing battle. The worst case scenario is that someone will just have to buy the physical book, scan every page as images, and assemble that file. Such books are usually about 50MB or larger, but that's not a big deal in the modern age of file transmission.
posted by Chekhovian at 2:03 AM on August 10, 2011

I'd buy a lot more hardcovers if they were in the $5 "impulse buy" range, too. In neither case would the publishers recoup their costs.

I see you constantly in this ebook threads posting thoughts roughly similar to that, Justinian, and I have to say, it surprises me to see someone technical enough to be really into websites and such miss this call so very badly.

What online publishers are seeing, when they have a good that people know about and want, is that dropping the price raises the volume enormously. Steam sales are the best example I can think of; if they drop the price to $5 for many games, they sell a HUGE number of copies. And because each copy costs nothing for the manufacturer (well, almost nothing), they end up making a ton more money.

I'm a bit unclear on what's driving all your kvetchy comments, but I suspect you may be confusing creation costs with duplication costs. Once a book or a program is written, it's done. The money invested into it is a sunk cost. The goal is to then maximize the total revenue you can get from your sunk cost. It appears very likely that, for most classes of digital goods, maximum revenue happens at low price points. It doesn't matter to you whether someone is paying $20 or $5 or $2 per book. You don't care, because each copy costs you just about $0 to make. What you're trying to do is generate the maximum possible TOTAL revenue out of the market, without caring in the least what the per-copy price is.

And what publishers are finding is that they make a LOT more money at low price points. It's much better to sell a million copies at $5 each than a hundred thousand copies at $10, because the copies cost you nothing. With physical goods, you've got a hard price per copy that you can't go under without bankrupting yourself, but not with electronic ones.

It's the Miracle of Mass Production, brought into the electronic age. We can produce on a previously unimaginable scale; a hundred million copies of something is only a tiny bit more expensive than ten copies. And pricing models haven't caught up yet.

posted by Malor at 2:07 AM on August 10, 2011 [9 favorites]

Malor:

"It's much better to sell a million copies at $5 each than a hundred thousand copies at $10"

Except that in nearly all cases, book copies sell in the thousands, not the hundreds of thousands or millions, and price is not nearly the controlling factor people appear to imagine it is. The controlling factor is consumer interest, which is to say, whether the consumer is aware of the title and/or the author, or is interested in the subject matter of the work. Pricing issues are secondary to that.

As that is the case, it's rational for publishers to do what they do: Sell a book at the highest price first to the people who are willing to pay for it, and then lower prices as they go along, picking up additional readers later, including newer readers, who are turned onto the work or author by word of mouth or by critical review and who themselves may eventually become the people who are enthusiasts -- the people who buy at the higher price points.

Note this is already what the publishing industry does: It releases books in hardcover first for the enthusiasts of an author/series/genre who are willing to pay more to have the text first, and then later release the book in cheaper versions (trade or mass market paperback) for everyone else. The profit margins for the publisher (and, it should be noted, for the author) are higher in the hardcover release, so depending on several factors, the publisher (and author) may make substantially more money from the hardcover release than the paperback release.

Bear in mind also that as physical sales are still more than 93% of the total book market, they will continue to be the controlling factor in book prices for some time to come, which means that (for publishers with a significant print profile, at least) pricing for electronic titles will continue to tied to the distribution model that's built up around print, which includes an artificial stability in pricing brought about by the returns system in physical book selling.

I should note that I don't think the publishing model as described above is the only rational model for sales; there are others that could work. But this is the model publishers know works, nor is there much evidence that consumers find the model onerous, since publishers are seeing net sales grow. Unauthorized copying is a problem, but as every significant e-reader is tied into a robust and generally easy-to-use retail back-end, book buyers find it easy to buy books legitimately.

The tl;dr version of this is: It might be better to sell a million copies at $5 than a hundred thousand copies at $10, but it's even better to sell a hundred thousand copies at $10 and then sell a million copies at $5 -- which is the pricing model that the industry has now and which is by all indications continuing to work for them.

Bear in mind all of this is -- and most of the comments on the thread -- is largely aside the FPP topic, which is the class action suit. Although in this case, it's worth noting that essentially the case action suit is about the publishers wanting to maintain a business model they know works for them, rather than a business model that worked primarily for Amazon (and which the law firm maintains was interest of the consumer, an assertion that I've noted before I disagree with).
posted by jscalzi at 3:22 AM on August 10, 2011 [6 favorites]

It might be better to sell a million copies at $5 than a hundred thousand copies at $10, but it's even better to sell a hundred thousand copies at $10 and then sell a million copies at $5

Sure, of course. But like it or not, they're competing with the exact same good at $0, within hours of the time they release their $10 copy to market. And books are very simple things; they're not like software, which is hard to crack. A couple of megs of text is not a hard thing to copy. So when they're taking such a fundamentally simple good, and pricing it at nosebleed levels, they are encouraging piracy, almost forcing it into existence.

I mean, look at the relative complexity levels of books versus software. A book only takes a few people to write, and in some cases, only one. You've got the author, the editor, possibly a research assistant, and for paper books, people to do the physical layout and typesetting; some books (like The Raw Shark Texts) would be expensive and difficult to typeset, but most really aren't that involved. And then with paper books, you've got all the people in the physical plants to actually print and ship, but that's not necessary for an e-book. And then you've got your marketing team, but if they're doing their jobs, they'll way more than pay for their salaries by helping to shift more copies, so you can kind of ignore them as overhead, in a sense.

Book are very simple things. There's just not that much to them. Creating software can take thousands of people in some cases, and the norm is dozens to hundreds of very highly trained and expensive professionals. But publishers are trying to price books at, very frequently, higher levels than software, for a good that's roughly two orders of magnitude less complex.

Like it or not, they need volume to survive. They're selling a trivial good in the digital economy, which means they can't price it at luxury levels. They need to go big, or go home.

(and yes, I'm aware that you're in the field yourself, and this doesn't change my opinion at all. I enjoy your books very much, but I think pricing your work product at such a substantial fraction of goods that take hundreds to thousands of people to make is a temporary glitch that's going to be corrected, one way or another.)
posted by Malor at 3:50 AM on August 10, 2011 [4 favorites]

Sigh. %s/Book are/Books are/
posted by Malor at 3:55 AM on August 10, 2011

The kindle doesn't handle epub alas, and but the mobile format it does use is based on the old mobipocket reader format which was very popular in the old palm days, and that amazon bought outright. The award format is just mobile with drm added; but it's easy enough to convert epub or html to mobi format with calibre or a whole ton of other applications.

I've just bought a second kindle for my wife, so I get mine back. I've bought a grand total of 2 books from the amazon store; the rest are from Baen who sell drm free books (they also have a bunch of free ones in the baen free library), converted public domain works from the guttenberg project, and a bunch of free books in the amazon store which are either public domain or loss leaders for the author.

I would also have no problem morally with getting electronic copies of books I already have paperbacks/hardbacks of from other sources, if I were so inclined.

Collusion on pricing, ie the agency model, harms consumers and ultimately harms publishers and authors. While I fully understand that the cost of printing is a small fraction of a book, and typesetting a digital edition adds costs, forcing market place sellers to artificially raise prices above that of the paperback edition - which seems common whenever I look at the UK prices, even excluding VAT - damages the market for your books. When you factor in the DRM as well that tries to restrict my right of resale, region blocks etc, the prices in the UK at least are simply too high in a post torrent world.

You'd think they'd try to learn from the mistakes of the record industry, not immediately repeat them.
posted by ArkhanJG at 4:21 AM on August 10, 2011

Excuse autocorrect on the above, am on phone. The award format should be the azw format, and mobile is mobi.
posted by ArkhanJG at 4:24 AM on August 10, 2011

If it's not sophisticated how can you be so off base? The marginal cost of making a new pill of the latest wonder drug is a fraction of a penny but I assure you the price isn't going to a fraction of a penny any time soon.

Drug companies aren't competing with hundreds of millions of tiny pill factories. Book publishers are.
posted by Malor at 4:30 AM on August 10, 2011

Most of my "treasured" books are not novels but are what amount to "picture books"; that is, books where large photographs are an important part of the narrative. These books are also typically expensive, at least $40 and often $60 or more. What makes them valuable to me is the artwork; I would need full color and a screen the size of my lap to reproduce the experience. I can't really see books like this being replaced by an ebook unless the reader was larger than an ipad--which isn't why most people have readers.

I could use the same reader to subscribe to the lovely magazines I get, too. I would ditch my paper magazines in a second if I could get them electronically, even at the same price or close to it, with the artwork and beautiful design preserved.
posted by maxwelton at 4:39 AM on August 10, 2011 [1 favorite]

Audible finally rooked me with their "One audio book a month" plan. For bookstop fantasy series I want to listen to at the gym or walking or driving (when my podcast stable is lacking), that suits me fine. The convenience of downloading straight to my phone/listening device via their app is a huge bonus. Without this plan, I would not be giving Audible any money, no matter how many of my podcasts they sponsor.

Now, I'm aware I read more than Joe Average, so I wonder if there is some version of Audible's scheme that would work for folks who don't go through multiple books a month? You pay a flat fee, you get two downloads a month. If you want more books, you're welcome to purchase them normally. Looking at the red Netflix envelope I've been paying 10 bucks a month to look at, I'm thinking there might be some cash in there for the publishers from people who sign up but don't take full advantage of the service.

How author's shares work would be tricky, though.
posted by robocop is bleeding at 5:48 AM on August 10, 2011 [1 favorite]

You're entirely correct about the price of wonder drugs and new video games, but those examples aren't really relevant to books.

How did we go from "the economics aren't that sophisticated" to "I'll throw economics out the window to make my point"?

Drug companies aren't competing with hundreds of millions of tiny pill factories. Book publishers are.

Right, which just changes the price elasticity of the product. It doesn't fundamentally change how you price things. In fact, it makes the marginal cost completely irrelevant to the discussion because that only matters if the producer is a monopoly. Items are priced at a number the seller thinks will maximize revenue, not at the price they think will enable them to barely survive or what price nerds think is morally justifiable.
posted by yerfatma at 6:31 AM on August 10, 2011 [1 favorite]

Malor:

"But like it or not, they're competing with the exact same good at $0"

Well, no. Books aren't widgets, and one book is not "the exact same good" as any other book. If you want a China Mieville book, you're not going to buy a John Ringo book instead, even if it's cheaper (and vice-versa). The immediate response to this is that perhaps there's someone out there who writes like China Mieville, and a reader will just go to that person instead, but that's also not the case. They may read that person too, but it doesn't change their interest in China's work, and it doesn't mean that other writer is perceived as equal to (in interest/entertainment value) to China. The way China -- or any other author -- loses an audience is to be boring. As long as he avoids that, he's going to have a significant readership who will be happy to get his latest work at a higher price point in order to have it now.

Because of this, there's a fine economic argument against initially pricing one's work at a very low price -- whatever price one debuts a work to in the market is likely the upper bound of what one will ever be able to price that work. If one debuts a work at too high a price, fine, lower it. However, if one prices the work too low, if it takes off, you'll have a much tougher consumer response to raising the price -- especially when, as has been noted, the assumed duplication costs are relatively trivial.

"Like it or not, they need volume to survive."

Again: Well, no. I can point you to at least publisher I work with whose business model is predicated on scarcity, i.e., signed, limited editions which are then sold for quite a lot of money. With trade publishers, volume is key but not in the manner you appear to think it is. Publishing at the moment works fine on the model of "publish a lot, sell a little of each" -- which is to say (again) that the average book sells less than 5,000 copies across all formats. Established publishers make money on this because (among other things) they don't pay much to acquire the books and they understand the dynamics of the market. Which is to say a publisher can sell a mere 5,000 copies of a book and make a profit, and if they sell more, then that's gravy for everyone involved.

Likewise, volume does nothing for an author if there is not adequate compensation for the work. Some writer might price his e-book at 99 cents on Amazon whereas my latest e-book is available for $11.99, but he'll have to sell a significant multiple of what I have to in order to get close to what I'm making, per unit. And he's unlikely to, because again, price is not the controlling factor you seem to think it is -- reader interest and engagement is.

The problem with the publishing discussion as it generally runs here is that people want to make an analog between it and the music industry, or it and the video game industry, and a lot of the reason for that is because on the consumer end it looks the same -- there's the product, formerly generally presented physically in box-like shapes but now moving to digital, that's easy to copy illegally and which some people feel is arbitrarily priced. In point of fact, however, each of these industries has an entirely different back end, not only in how the product is marketed and distributed but also in how it is acquired and how the business model works, and who their audiences are (they all overlap, but are also largely distinct, even in how the same person buys each kind of thing).

There's also the matter that each industry has faced its electronic crisis point at different times and in different ways. The music industry's first mass encounter with the digital world -- trying to kill Napster and having no control over the tech that played the music files -- is substantially different than publishing's mass encounter, in which (again) all the major eReaders are robustly tied to retail outlets. It's also why (to again return to the FPP) the legal case here is not the producers of content going after individual consumers on copyright violation, but rather an allegation regarding market collusion by content producers against a retailer. In short, these things are not like each other, even if there are superficial resemblances.

Now, Malor, this may or may not change your opinion re: the inevitable whatever-you-think-is-going-to-happenation of publishing, but on the flip side, speaking as someone who spends rather a lot of time dealing with the publishing industry, both on a personal level and as an officer of a major writer's group, it does seem that a fair number of your baseline assumptions regarding how publishing works don't jibe with my own experience and knowledge of the field. I certainly expect publishing to go through a substantial amount of change in the next several years, and, yes, that will include the rise of do-it-all authors who write, produce and market their own work. But I don't think you're ultimately on the right path regarding your assumptions about the industry.
posted by jscalzi at 6:39 AM on August 10, 2011 [5 favorites]

After thinking about it a little more, I realized something else. Oh, and jscalzi, I'm using "you" here, but I really mean the publishing industry in general, not you specifically.

For the first time, books are now in direct head-to-head competition with video, music, and games. I don't mean in the old sense of competition, where you were choosing between watching TV or reading a book. In those cases, what device you had available pretty much determined what you were going to do. With a TV, you were going to watch video. With a book, you were going to read. With a stereo, you were going to listen to music. You had to make the choice about which device to use, and when, and paper books had a powerful advantage of needing no additional infrastructure. They worked (and still do) anywhere there's adequate light.

But now, with the advent of the iPad, for the first time people have one small, convenient device that can handle any of these formats. They can read, watch video, listen to music, and play games, all on the same device. Anywhere that an ebook can go, so can TV.

So the iPad customer no longer has the device differentiator driving his or her consumption preferences. That one gizmo can do it all. Suddenly, reading is head-to-head with other media formats in a way it's never been before. And it strikes me that thinking you can price ebooks like a hardcover, or the same as an entire season of video, is slightly insane.

If ebooks, and book publishing in general, is going to survive, I think they're either going to need to retreat to high-end niches, where they will slowly die, or they need to get cheap and ubiquitous. For the very first time, people are now choosing, on a moment by moment basis, between video and the written word. And I think the written word is going to need to get a lot cheaper if it's going to sell in any kind of volume.

At the end of the day, buying decisions are all made one at a time, by individual people. And if paying for the "printed" word isn't a compelling choice, over and over, millions of times a day, then book publishing is going to die. You people in the publishing industry need to figure this out. You need to be looking at it from the customers' perspective, not from your own. You need to be giving them something that's not just better than video and the other entertainment choices on offer, you need to be giving them something better than the free version of your own product. I'd argue that known provenance, convenience, and the knowledge of supporting the author are the only things you really offer.

What you are now selling is convenience. Customers can get a book for free as soon as you release it in any format. Writing books is now the overhead required to sell convenience and little 'attaboys' for people's consciences. You still need to create good books to keep people coming back, but in the digital domain, books are no longer your product.

Eskimos are surrounded by ice. They can just bend over and scoop some up. But if you've got ice that's nicely clean, cubed, prepackaged, and cheap.... better than the ice that's all around them.... they'll still line up to buy it. They're not buying the ice, they're buying the time it would take to clean and cube it themselves.
posted by Malor at 6:41 AM on August 10, 2011 [2 favorites]

I mean, look at the relative complexity levels of books versus software. A book only takes a few people to write, and in some cases, only one. You've got the author, the editor, possibly a research assistant, and for paper books, people to do the physical layout and typesetting; some books (like The Raw Shark Texts) would be expensive and difficult to typeset, but most really aren't that involved. And then with paper books, you've got all the people in the physical plants to actually print and ship, but that's not necessary for an e-book. And then you've got your marketing team, but if they're doing their jobs, they'll way more than pay for their salaries by helping to shift more copies, so you can kind of ignore them as overhead, in a sense.

A book may only take one person to write, but you're on crack if you think that's how few people are working on the production side. I have:

• My editor
• Assistant (who writes jacket copy, catalog copy, back flap copy, etc..)
• First copyeditor
• Interior designer
• Typesetter(s)
• Second copy editor (to catch the things the first copyeditor, the editor and I missed, to also find the mistakes the typesetter may have made.)
• Third copyeditor to verify after pass pages. (Catching mistakes all of the above made while trying to fix things in the first pass pages.)

And those are the people strictly relegated to working on the words in the book. To actually create the physical object I also have:

• Exterior designer (Sometimes this is the same person as the interior designer; sometimes it's not.)
• Photographer & model or stock photography liaison
• First printer, to print the paperback review copies which go out six months before the final book is printed.
• Technology compositor & designer (the people who turn my print book into an e-book.)
• Marketing team (usually 2 people.)
• Publicist
• School & Library team (selling into those markets; they also set up school and library events for authors.)
• Subrights team
• Second printer, to print the finished copies that go out for sale (and all necessary personnel)
• Distributor (and all necessary personnel)
• Accountant
• Their lawyer(s)
• Account auditor

I don't think e-books should cost as much as their physical counterparts either, but the cost of the book is NOT primarily in its binding. It's in all the people that go to editing the text, creating the ancillary text, designing the pages, and then selling the book to its markets.

The only two people you can mark out of this list for e-publishing only are the printers.
posted by headspace at 6:54 AM on August 10, 2011 [2 favorites]

(And even e-pub only will still occasionally do a short print run of review copies because many reviewers just won't accept digital ARCs.)
posted by headspace at 7:01 AM on August 10, 2011

I just can't read these discussions anymore without wanting to punch something or someone.

I wrote 12 books for big publishers under the oldskool system. I remember asking them to please put my book on Kindle when it came out (a chorus of yawns, one of which was in my actual face at a tradeshow). Fast forward and now, as I'm about to get the rights back to one of my books the publishers finally figure out what ebooks are good for (to them), and that's trying to grapple on and keep a hold on the book rights even without a paper edition being available. (I told them to fuck right off, for the record).

So I went and started my own publishing company. Our print copies are typically $26.95 because print costs are high at lower volumes like this. Our PDF or ebooks are typically priced at $16.95. But you know what? Our customers happily preorder and buy from us because they know we more or less 50/50 split our revenues (it's 60/40, author's favor, on digital) with our authors after production costs are covered.

The price of an ebook isn't the problem. The problem is who's making what portion of the proceeds. (I recently told off a distributor who was demanding a higher percentage off cover price without being willing to back it up with a large enough order. I'm going to sell these books either way, bub, don't think you're something special just because you're a distro -- you pay late, and your competition doesn't, so who do you think is getting the better price from me?)

Our customers believe our authors deserve to earn a living from their talent and efforts, and we in return don't subject them to DRM or other nonsense. There's a level of trust and respect there. Contrast this to my own big-publisher books, which get pirated all the time (and which I've just stopped reporting to the publisher, because they don't actually care).

I don't know. You can call what we do and what we publish "niche," but I prefer to think of it as meeting the needs and wants of a smaller audience much better than a large publisher who likes to throw a bunch of crap at a wall and see what sticks.
posted by bitter-girl.com at 7:03 AM on August 10, 2011 [3 favorites]

And meanwhile, I don't own anything other than a PC that's capable of reading e-books and don't plan to, also because of the price point. I'm supposed to make a three-digit investment in a piece of technology that enables me to...*drumroll*...read books - and pay a somewhere between a substantial premium and a negligible discount on the cost of each book, so I can (a) bring all the books I want with me when I travel (I already have a backpack, that's covered) and (b) store all the books I want when I'm at home (I have bookshelves).

I'm good, thanks.
posted by Holy Zarquon's Singing Fish at 7:06 AM on August 10, 2011

Malor:

"And it strikes me that thinking you can price ebooks like a hardcover, or the same as an entire season of video, is slightly insane."

And yet (since you are using "me" as an example), I sold enough of the hardcover edition of Fuzzy Nation in the first week to pop onto the NYT hardcover bestseller list -- and also in the same week, I sold roughly 120% in electronic editions as I did in hardcover, when the electronic edition was priced competitively with the hardcover edition

Likewise, if you look at Amazon's top ten kindle sellers at the moment, seven of the top ten are priced in line with their printed editions, between $5 and $12.

The point here is that you're assuming a level of price sensitivity that is simply not in evidence. It's true there are a lot of people who make a lot of noise about how they feel a reasonable price for an electronic copy of a book is [insert amount here]; it's equally true that publishers are selling a lot of electronic books at price points in line with their hardcover price point (and then later, at their paperback price point). Publishers are quite sensibly paying attention more to actual consumer behavior.

Once again, for lots of people who buy books, the limiting factor isn't money: book buyers as a class can afford hardcovers, and to be blunt, $16 - $20 for several hours of entertainment (which is what a hardcover costs after discounting at the bookseller) is a pretty reasonable return on one's entertainment investment. The limiting factors are interest, and also time.

Again, you're making assumptions not in evidence, because of what appear to be your own biases. You seem to be thinking that changing the delivery system of books has to mean a sweeping change in how books are priced. The question the industry has to ask is: What is that assumption based on? Is that assumption reflected in actual consumer behavior? If it's not, what impetus is there to change what's not broken? People can proclaim its brokenness all they like, but at the end of the day, you know if it's working by how your business is. And as noted upthread, at the moment, business is fine.
posted by jscalzi at 7:07 AM on August 10, 2011 [2 favorites]

The only two people you can mark out of this list for e-publishing only are the printers.

For text-heavy works without illustrations, I think everyone you've mentioned on the publisher's side is in for a rude awakening, perhaps sooner rather than later. The reality is that consumers are, beyond anyone's wildest expectations, extremely tolerant of badly-formatted, badly laid-out and unedited work. They'll even pay (minimal) amounts for it.

The market for books that have gone through the traditional process you describe is going to whither, regardless of how nice a product that process creates.

This can work out one of two ways, legal and market pressures are created to force consumers to buy products they don't really want, or consumers leave the existing publishers behind and work directly with authors.

After all, it's a bit silly to even have "ebook" formats in the first place if, as an author, I can dump HTML on a server somewhere and instantly connect with my customers directly.
posted by odinsdream at 7:14 AM on August 10, 2011

I both self pub and have a traditional publisher, odinsdream, and you know what? My self-pub books, I've sold a couple hundred copies. My traditionally pubbed books, the ones with the marketing and publicity team? Tens of thousands.

E-publishing is changing the landscape for writers, but it's not obliterating it.
posted by headspace at 7:19 AM on August 10, 2011 [1 favorite]

It does strike a discordant note however, when the price of the electronic copy exceeds that of the paperback (eg Name of the Wind by Pat Rothfuss: ebook $13.99 mass-market paperback $9.49, from Chapters.ca---Amazon.ca isn't allowed to sell it in Canada).

Amazon at least seems to be doing this right from a consumer perspective (ebook less than real book), when it's allowed to by the publishers. All too often, however, the publishers appear to use sales restrictions to jack-up prices. I realize that this is a US-only suit, but the problem is international in scope.

It's enough to drive me to piracy just in pique.
posted by bonehead at 7:21 AM on August 10, 2011

I hasten to add, in this instance, I bought the paperback.
posted by bonehead at 7:23 AM on August 10, 2011

It looks like jscalzi and Malor are talking about different kinds of competition here. (Purely as I'm reading you guys) Scalzi's claim is that books by one author are not in direct competition with books by another, and people will pay more to get books by an author they like, regardless of format. Malor's claim is that books for sale by an author are in competition with the same book by the same author, freely and illegally available online; it is inevitable and unpreventable that illegal copying will be easy and acceptable, so in order to compete book publishers have to offer prices near zero, which they can make up on volume.

So the real dispute is, will paying a publisher's asking price become essentially a personal moral decision for most consumers, the way it currently is for techies? And if so, will enough people choose to pay the current prices so the existing business model remains viable, or will publishers have to lower prices?

Scalzi, I'd be interested to hear you take on the argument as presented that way, if you care to.
posted by jhc at 7:29 AM on August 10, 2011 [1 favorite]

It does strike a discordant note however, when the price of the electronic copy exceeds that of the paperback (eg Name of the Wind by Pat Rothfuss: ebook $13.99 mass-market paperback $9.49, from Chapters.ca---Amazon.ca isn't allowed to sell it in Canada).

To be fair, searching Chapters for the ebook shows me a copy for $9.99. A very negligable difference. I have a kobo and buy books off kobobooks all the time and have almost always found the ebook cheaper. If I hadn't, I would never have invested in an ereader.
posted by aclevername at 7:53 AM on August 10, 2011

They changed prices recently then. I checked about a month ago prior to a vacation and decided against buying it for the plane just that reason.
posted by bonehead at 8:10 AM on August 10, 2011

jhc:

I don't know that the quandary you posit is a particularly new one: Readers have never had to personally buy a book they wanted to read. Pre-digital, they could have gotten it from the library, borrowed it from a friend, stolen it from somewhere, participated in a book exchange circle, or simply gone into the bookstore and read it while standing by the shelves.

Nor is the quandary particularly a moral question -- there are still lots of ways to read a book without personally paying for it that would not be considered "stealing" in any normal context. So I would hesitate to frame it that way as a general posit.

The question is rather an economic one: Does the consumer feel she should support the providers of her entertainment (the provider in this case being the author and publisher, and to some extent the retailer)? If so, what is the price point this consumer finds reasonable?

Note that this has always been the question, to the extent that publishing has been consumer-oriented industry. The change in the technology changes the details of the question, but not the question itself.

A related question is whether the number of people willing to pay more than a negligible sum for such entertainment is large enough to support an industry, and I suppose this is where Malor and I part ways. I suspect it is; I suspect he feels eventually there won't be.
posted by jscalzi at 8:12 AM on August 10, 2011 [1 favorite]

Oh, geeze, we're crossposting. I put that last reply up before I saw you'd replied again, sorry.

Well, no. Books aren't widgets, and one book is not "the exact same good" as any other book.

They ARE widgets. It's not that a Mieville book substitutes for a Scalzi book, it's that the pirated Mieville book is a nearly perfect substitute for the legit one. Not quite, but almost.

Once you release a book in electronic format, it's out there. The DRM is stripped, and people can get copies. Whether or not this is legal, whether or not you like it, this happens, and it will continue to happen. As long as prices stay high, it will continue to accelerate. You are competing with your own product for free.

You can rail about this all you like. Legal or not, ethical or not, it IS. You are trying to sell a good that has zero cost to duplicate into an environment with hundreds of millions of tiny networked printing presses.

You are NOT selling books anymore. As long as you keep thinking you are, you sabotage yourself. An e-book is not a book. It is something new. Considering your chosen field, I'd expect you to be one of the few authors to, dare I say, really grok this concept, and it surprises me very much that you don't seem to.

The way China -- or any other author -- loses an audience is to be boring. As long as he avoids that, he's going to have a significant readership who will be happy to get his latest work at a higher price point in order to have it now.

True, but if that price is too high, then they'll copy it instead, and then he gets zero, which I think everyone would agree is the worst outcome, probably even the pirate. Or, MUCH worse from your perspective, maybe our pirate is ethical, and just buys Mad Men instead. This is so, so, SO much worse for you. If they pirate it, you've lost a sale. If they go to video, you've lost a customer.

The way around the perception problem is to keep the hardbacks around in limited production runs, for the collectors and slow adopters, and keep THOSE prices high, while you price the e-books to move. The hardbacks become your 'barometer of value', while the digital customers convince themselves they're getting a hell of a deal at $9.99. And they will buy and buy and buy. And when you get down into the cheap seats? Those Steam games on big sales are moving HUGE volume. Terraria has shifted more than 650,000 copies, and I think about 80% of those were on sale. Little indie game out of nowhere, did reasonably well, nothing too extraordinary, and then they cut the price in half. From my understanding, they added four times as many sales, increasing their total installed base to about five times what it was before the sale. And all those customers are very interested to see what they do with this game and what their next game will be.

I think Amazon had the overall pricing about right... $10 for new releases, $5 once the softcover is out. If there's one thing Amazon knows better than almost anyone, it's pricing, and you guys should be listening to them.

And he's unlikely to, because again, price is not the controlling factor you seem to think it is -- reader interest and engagement is.

You're right that price alone is not the controlling factor, but I am here to tell you, after the price-gouging started on ebooks, I stopped buying them. Price them cheap and I'll buy them, almost literally like popcorn. Keep them expensive and I might or I might not. Price the ebook higher than the softcover, and I'll never ever ever buy it. Never in a million years.

I don't particularly care if it costs you more to produce. That's not relevant to me or my interests. What I'm doing when I'm buying is comparing available products and their relative features and price points. I regard ebooks as inferior to paperbacks, and I find myself actively offended when they try to sell me a lower quality product for more money.

Likewise, volume does nothing for an author if there is not adequate compensation for the work.

I disagree. If you move a million copies of book X, and only make a nickel each in your pocket after everything, that sucks, right? Except that now you have a million readers you didn't have before. And at least some of those new readers are going to pony up more money for your next book.

You're doing pretty well by SF standards, I believe, but I bet about 99.5% of the English-speaking population of the planet has never read a Scalzi book. THAT'S your biggest problem, right there. And I'd argue that high book prices are one of the major reasons why authors in general just don't sell that many books. Part of it is lack of interest, but a lot of it is that books are really expensive. I dunno, maybe you guys are right, and you're doomed to being a tiny niche forever, but if I could actually write and was in your shoes, I'd be looking at that 99.5% and drooling.

It seems to me that you guys need to grow the market, and many of your strategies seem hell-bent on shrinking it. You are, as you point out, collectively being less stupid than the record companies were, so at least there's that.

And your subtext is "you just don't understand the book business", but I very strongly believe you are no longer in the same business you started in. If you guys figure that out in time, you may all start to get wealthy again.

You. Are. Not. Selling. Books. Online. Ebooks are not books. To the degree that you insist on thinking of them as books, to that degree you damage your own ability to think about and solve the problems inherent in a world where everything can be copied.

All of your customers are now also potential competitors. So you need to make it not worth the bother to compete with you. You can't do that through draconian police powers. You can do it through convenience.

If you keep using book thinking with digital text, you not only accept your niche, you cement yourself into it, where you'll eventually starve and die. Books will never completely go away, but they will shrink, year after year after year. If you try to stick with this model, you and Mieville and Stross may be in the last generation of SF authors to make much of a living writing books, at least through the normal publishing houses, and I imagine even the mainstream genres will eventually dry up and blow away. There are some authors doing quite well, now, by self-publishing, and maybe that'll be how things work in the future... the people that get it just do an end run around the people that don't.

You know, of ALL the people I'd not expect to be arguing with about this, it's an SF author, especially of such outstanding books. I'd really have expected you to get this, to realize that the publishing business models need to be radically rethought.

You're supposed to be seeing the future! I demand more future, less past. :-)
posted by Malor at 8:20 AM on August 10, 2011 [5 favorites]

Yesterday, I saw the Meowmorphosis first on a list of books recently added to the pirate sites. I went to amazon, and the paperback goes for $10. The kindle went for $.99.

I bought the .99 legit version. If the e-price had been anything higher, I would have gone without. Many people will get it for free.


When I see a cool book on ask.me, I generally head first to the Seattle Public Library site, and then to amazon. 99.99% of the time, the book is available for free or priced used at 0.01 +2.98 s&h.
posted by nomisxid at 8:45 AM on August 10, 2011

A few things worth mentioning:

1. eBook buyers can afford eBook readers, which makes them generally less price sensitive than the population as a whole.
2. The cost of producing a book has nothing to do with the pricing. You price to maximize revenue. If you think you're going to earn more overall by lowering the price, then you do it.
3. However, the publishers don't want to completely screw the brick and mortar retailers, and so they're being careful to price things in a way that won't completely decimate them overnight.
posted by pjdoland at 8:45 AM on August 10, 2011

"And it strikes me that thinking you can price ebooks like a hardcover, or the same as an entire season of video, is slightly insane."

And yet (since you are using "me" as an example), I sold enough of the hardcover edition of Fuzzy Nation in the first week to pop onto the NYT hardcover bestseller list -- and also in the same week, I sold roughly 120% in electronic editions as I did in hardcover, when the electronic edition was priced competitively with the hardcover edition

That's because iPads don't yet dominate the market. But they will. iPad-like devices are, I believe, going to become the dominant method of media delivery. People will still use TVs for shared experiences, but most solo media will eventually move to something of roughly that type. I'm just looking further ahead than you are; you're on a collision course with video. You are just beginning to hit it now.

But you're pointing at the stern of the ship, looking proudly at your propulsion system, and ignoring the screeching sounds from that iceberg under the bow.

Come on, SF author. Look forward, not back. :)


Once again, for lots of people who buy books, the limiting factor isn't money: book buyers as a class can afford hardcovers, and to be blunt, $16 - $20 for several hours of entertainment (which is what a hardcover costs after discounting at the bookseller) is a pretty reasonable return on one's entertainment investment. The limiting factors are interest, and also time.

And that, right there, is the sound of doom. Folks, you should remember that paragraph. Add a little haughty sniff at the end. "Our customers", says Mr. Scalzi, "are far too wealthy to be discomfited by silly things like price. How absolutely gauche."

Titanic, meet iceberg.
posted by Malor at 8:52 AM on August 10, 2011 [1 favorite]

Add a little haughty sniff at the end. "Our customers", says Mr. Scalzi, "are far too wealthy to be discomfited by silly things like price.

Hmm.

Every day I wake up,
Hummin' a song.
But I don't need to run around,
I just stay home.

And sing a little love song,
My love, to myself.
If there's something that you want to hear,
You can sing it yourself.

Gillian Welch -- "Everything is Free."

It doesn't matter if the books are free if authors aren't going to write them. If people can't make a living writing, then almost all of them won't write, and the few who do won't get published, because there won't be any publishers for them.

You can just assume that they'll just post them, and you can just find them. Good luck with that.

The whole point of publishing is finding *good* works to sell, *buying the rights* to sell them from the creators, and selling them. They're both editorial and distributional. The latter function has changed dramatically. The former, none at all. There's a reason that "self-published" is a fast signifier of crap.

I do also love the idea that distributing ebooks is free. Cheaper than hardbacks, yes. Free? Not on your life.
posted by eriko at 9:21 AM on August 10, 2011 [4 favorites]

As a tangential note, this is the same wall that the big American comics publishers are in the process of smashing into. They've only just made the decision to release individual issues in an electronic format on the same day as in print - and at the same price as the physical copies (a price that has recently gone up to $3-$4 an issue). Marvel has taken the additional step of only releasing its issues through an iPhone/Pad app - if you want to read their new releases on an Android device or an actual computer, they don't want your money.

This despite the fact that for years, anyone who wants to read a digital version of more or less any comic on the day of release has been able to simply Google the title and find a DRMless version for free that works on any platform.

There's no such thing as monopolistic competition on the Web. If you're selling media in a digital format, somebody else can give your customers the exact same product for free. Period. It's not fair or legal, but it's the truth. Brave new world.
posted by Holy Zarquon's Singing Fish at 9:23 AM on August 10, 2011

I do also love the idea that distributing ebooks is free. Cheaper than hardbacks, yes. Free? Not on your life.

I think there's a lack of understanding of scale at work here. Distributing eBooks is not like distributing MP3s, which are orders of magnitude larger, requiring extensive storage networks.

Storage is very, very cheap. I, as an individual proprietor, could pay to store, literally, a million ebooks for less than a dollar a year, on a network replicated across the globe. Add about $5 per year to cover the bandwidth transfer charges for, again, millions of purchases.

With maybe $3k worth of a web developer's time, I could have a payment processing front-end attached to this storage space in under a month.

Distribution of small files is astoundingly cheap on the internet.

This is why Malor, and those commenters in his camp (myself included) are often incredulous at the claims that eBook distribution is somehow expensive.
posted by odinsdream at 9:31 AM on August 10, 2011 [1 favorite]

Hell, some of the longer Mefi FPPs are larger files than typical eBooks.
posted by odinsdream at 9:33 AM on August 10, 2011

Malor:

"You are NOT selling books anymore."

Yeah, you're completely and entirely wrong. In point of fact, I am selling books, and not only am I selling books, in aggregate I am selling more books, because by and large my digital sales have not cannibalized my physical sales, they have been added on top of it. This is despite the fact that my entire backlist can be found online on torrents. And this is because a) generally speaking, the retail experience for purchasing books online is easier for the average book consumer than finding books on torrents, b) book buyer demographics place them in the "I can pay for that" category. You appear to have a problem with that latter point, given your snark about it, but I don't make up the sales demographics; I note that they exist.

On the personal anecdotal level, I have a copy of my first novel, Agent to the Stars, up on my website and entirely free for the reading. It's on my site and yet it sells a perfectly healthy number of copies a week, both in print and electronically. Having it for free on my site hasn't hurt sales a bit because essentially it doesn't compete with my sales -- or more to the point, it helps sales, because people read it for free, decide they like me as an author and then pay for the next book. It's one reason I keep a large chunk of free reading available on my site.

Unlike you, Malor, I know what my sales have been for every single one of my novels, all of which are torrentable. Not only do I know what my sales are, I also know the trend lines for what I sell. I also have a pretty good idea how everyone else is selling and what their trendlines are as well. You can put periods behind as many words as you like to emphasize your point, Malor, but your point is wrong, and you don't appear to know what you're talking about in the larger context of thing, since even your primary assertion -- that I am competing with pirated versions of my own work -- is as a practical matter incorrect. In my rather ample experience the pirated versions of my work serve as advertisements, and over the last several years have converted enough free readers into paying customers that I simply don't see it as a threat.

What you appear to be doing, Malor, is trying to universalize your own point of view, to wit: "I have decided that I won't pay for something above [insert sum here] and also believe [insert belief here] therefore it is universally true." But it's not; basically what you've got going here here is a bunch of assertions that are either untrue in my experience as a commercial writer or are unprovable because they assume conditions which either (may or may not) exist in the future or at the very least don't exist in the present. And that's fine -- have fun with that -- but unless you can lay something on the table that convinces me that your opinion is based on something other than your own opinion, then I'm afraid I'm not going to give it much credence. Because I actually do know this particular field, you see, and have access to a fair amount of data.

As for this:

"I'd really have expected you to get this, to realize that the publishing business models need to be radically rethought."

I expect you mean to say "I have no idea why you don't agree that everything I say is correct." Well, the reason I don't is because it isn't, and you haven't actually given any indication that you know what you're talking about, in terms of business publishing models. Perhaps publishing models will need to be rethought; However, I'm not seeing any evidence that they will need to be rethought along the lines you propose.
posted by jscalzi at 9:34 AM on August 10, 2011 [12 favorites]

The steam model applicable, but you can't forget that games on steam start out at a 'normal' retail price and only after time and sales slowing do they do the discounted sales that push volume. They've already realized the high dollar transactions and now they're going for the impulse buys and the cheapskates.

What I've just realized is that the publishers have already been running on a marginal cost to reproduce model. Yes ebooks are cheaper to reproduce. But the publishers already basically ignore the cost of printing the books anyway. The hardback/paperback formats are just a convenient way to separate the initial full price purchasers and the later discount purchasers.
posted by TheJoven at 11:01 AM on August 10, 2011

Here's an interesting piece on the costs involved in ebook publishing posted recently to the Guardian's Book Blog.

And I would ask the folks who think ebooks should be $5 if they think that's true for all books. If so, I would then ask if that assumes that the potential market for all books is the same if all prices are the same? Is the potential market for one of John S's books the same as say this title the non-profit publisher I work for recently published. I would argue that they are not. I also think that our book took a lot more work and investment from the publisher to publish than a novel would. Should I still release it as an ebook and only charge $5? Would enough people who didn't need it buy it on impulse because it was only $5? Because the market is too small to sell enough $5 copies to re-coup its costs, should it not be published? Is it fair to subsidize good books with small markets with the revenue from popular books? More importantly, is the traditional publishing practice of using the bestselling 20% of a publisher's list to support the publication of the other 80% of good, but not particularly popular books, still sustainable? These are the kinds of questions that the digital book landscape, or more accurately the consumers of digital books, are forcing publishers to grapple with. I'm not sure the $5 ebook is appropriate for all books. And I worry about a market that thinks books should follow the pricing models of music simply because they are both digital media. Or that pirating is a useful and fair "invisible hand" in the book market. Yes, there are some really exploitive publishers, I believe textbook publishers have already been mentioned, but publishers aren't all the same, and the reasons people make books are very different than the reasons people make music. If an ebook is not $5, there may be legitimate reasons beyond greed or collusion.
posted by Toekneesan at 11:03 AM on August 10, 2011 [1 favorite]

However, I'm not seeing any evidence that they will need to be rethought along the lines you propose

So what do you see as the long term future for books and publishers? More of the same, adiabatic evolution toward some hybrid state, or truly radical change?
posted by Chekhovian at 11:12 AM on August 10, 2011

I don't think we're talking about first week sales of kindle or hardbacks here; clearly the people prepared to buy right then are dedicated fans, and and are not particularly price sensitive.

However, I look on amazon at a random scalzi book; old man's war, a 4 year old paperback. £5.31 for the kindle edition, £2.40 for a new paperback, mybe 50p for a decent 2nd hand copy, or 0p from an illegal service. I'll tell you straight; despite being heavily into sci fi, and it looks an interesting book - i'm not paying more than DOUBLE the price for a kindle verson. Since however I find the kindle much more convenient, I won't be buying a paperback edition either. I won't be pirating it, but hey, it wouldn't atually matter because clearly I'm not the target audience because I object on principle to being gouged and getting something I can't legally resell/gift to boot.

15 years ago, mp3 players were rare, and expensive. Only officionados had them. Now they're in everything. Everyone in the west has at least one. Yet digital sales make up only a fraction of what cd and record sales once were, and the market as a whole has shrunk in massive proportion. Record shops have virtually disappeared.

Yes, ebook readers that compete with the quality of printed books are recent, and still fairly expensive. But the pace of change is such that that won't be the case for long - a few years, at best. Just witness the death of film camera to how fast tech advances.

Relying on early adopters being relatively wealthy and prepared to pay a price premium for digital may well work fine for now, but as good ebook readers become common and cheap?

It hasn't worked for the record industry, it hasn't worked for the game industry, it's in the process of not working for the film and tv industry. Why will books be any different, 5 or 10 years from now?
posted by ArkhanJG at 11:31 AM on August 10, 2011 [1 favorite]

Chekhovian:

I wish I knew! That said, I don't expect radical change because there will continue to be money to made from the existing publishing model, including its in-process incorporation of electronic editions into its distribution practice.

I do expect:

1. The electronic book market will continue to expand rapidly and has a pretty good chance of largely supplanting the mass market paperback in the long run (with one exception which I will note below);

2. Hardcovers and limited editions will continue to exist for collectors/completists/gift-givers and so on;

3. More authors will choose to release their own works, and we'll also likely see a rise in service organizations who can do the production/distribution the authors themselves don't want to do (for a fee);

4. Traditionally structured publishers will still likely continue to exist, however, for the writers who are both commercial enough to sell well and who want to focus on writing;

5. The mass market paperbacks that will continue to exist will be the "vacation reads" targeted at the people who read one or two books a year, at the beach. Which is to say there will always be Dan Brown paperbacks.

To Malor's point, it will be possible for anyone who doesn't want to pay for work not to pay for it, but as I noted elsewhere in the thread, it's always been possible to read without paying for it. There are likely to continue to be enough people who will be willing to pay for their entertainment to keep people wanting to write.
posted by jscalzi at 11:31 AM on August 10, 2011 [2 favorites]

The reality is that consumers are, beyond anyone's wildest expectations, extremely tolerant of badly-formatted, badly laid-out and unedited work.

Perhaps as a group they will. I can tell you that I will not. When I first started playing with my Kindle, I grabbed a dozen or so (pirated) programming books that were straight from the author's PDF as best I could tell. They're almost impossible to read because the formatting errors take you out of the flow of reading. I'd happily pay for better copies.

I also bought one of the books off my Amazon wishlist (now I wish I remembered who recommended The Iron Dream to me in the first place). That was ostensibly put together by a professional publisher looking to capitalize on digital delivery of their back catalog. The book had enough obvious OCR errors that it almost made the book worth slogging through to see where the OCR program could be improved.
posted by yerfatma at 12:08 PM on August 10, 2011

programming books...almost impossible to read

In its current state eInk sucks for technical literature. Buy an iPad or similar LCD slate device and you can natively view the pdfs with ease, quickly flip back and forth, smoothly zoom in and out, easily annotate, etc. Reading papers is exponentially better with an LCD display for the same reasons. Its harder on your eyes admittedly, but I've found that technical reading means one spends less time in a fugue state lost in the book, so its easier to take breaks.

Technical literature is where eBooks represent a truely qualitative change away from old book publishing schemes, at least for the end user. Perhaps there's some thing I don't understand, so I search for it in google books, find the best few references, find the pdfs, and read what I need.

I could go to the library and look for those books, but many times all the copies are already checked out, or the library doesn't have it. I could do some sort of interlibrary loan thing and maybe get the book in a few days, but dammit I need that answer now. And maybe that book I just waited several days for isn't quite the miracle I thought it would be and I need a different book.

eBooks speed up the cycle, and make it much cheaper. This is a good thing for society.
posted by Chekhovian at 12:23 PM on August 10, 2011

Malor, as an interested observer who has put in very little time thinking about this topic, I'm much more convinced by Scalzi's arguments than by yours. Not only does his real-world experience lend a weight to his opinion that's missing from your (admittedly very rhetorically convincing) posts, but I think you make a couple of fundamental mistakes in how people think about reading. Your concern that reading is now competing, on the same device, with games and TV doesn't really seem applicable to me. People who read read, even when there are other things to do without any difficulty. Sure, sometimes reading loses out to those other things, but I don't think that someone who likes reading will abandon that because they can now easily play a video game or watch TV on the device that they also use for reading. I can’t even really fathom your example in which someone abandons buying or reading a book because the price on the first season of Mad Men is “better.” Sure, someone might pass up the book for the nonce, but people who like to read are already making those kinds of choices all the time.

This may not seem like a large point, but I think it highlights your fundamental logical mistake, which is to treat books as commodities. You're right, of course, that reproducing books is much less trouble than it once was, and that it’s trivial to pirate books, but I’m not sure you’ve addressed Scalzi’s very cogent point that people tend to read things that they’re interested in reading, and that that interest isn’t determined by price. While I might take a flyer on a cheap book, I won’t switch from a book I want to one I don’t because the price is right. I may choose to find a way to read the book I like for cheaper, but I’m not sure that really cuts book purchases in a fundamental way, since the ways I’d go about doing that have existed for much longer than electronic books. In other words, the price of electronic books does not obviate my already established calculus for how and when to acquire books, it only adds to it. I can’t see that that addition upends all other considerations.

The other thing is, and I think this is fairly significant, books are not like movies or music in that the majority of them take a longer time to complete, or even start. One of the things that has driven music piracy, for instance, is that one can listen to a song in a few minutes, and an album in an hour. This drives down the non-monetary cost of these things to consumers such that acquiring and using these things can be close the same thing. Books are different in that they take a lot of time to consume (even for a fast reader), and so monetary cost is only part of the equation. I already know, for instance, that were I to read a book a day for the rest of my life it would take me years (10-20) just to get through everything I now I want to read as of this minute. That knowledge really affects my book buying in a way that it does not affect my music or movie buying.

In short, while you’ve chosen to focus on price and price psychology in your argument, I’m much more convinced by Scalzi’s argument that reader psychology is the important variable.
posted by OmieWise at 12:26 PM on August 10, 2011

And I would ask the folks who think ebooks should be $5 if they think that's true for all books.

No. It is not necessarily true for all books. However, I'd say it is true for all mass-market paperbacks sold new at mass-market prices ($6.99 through $10.99). Most of these books are going to be less than $2 used on Amazon -- pricing the digital version at $5 or less will capture a significant portion of those sales (since the price competes with ~$2 + $3 shipping), and it also opens up a sales volume/impulse buy opportunity which just doesn't exist at $8-10 per e-book.

I'd say "half the cover price or less" is a good rule of thumb for expensive, technical, and/or short-run books, even if that means charging $30 for an e-book. There's much less of a used market for these books, and as bitter-girl.com points out above, people are generally not only used to, but quite willing to pay a premium for them. No one pays a premium for mass market paperbacks; they are (quite rightly) viewed as being nearly worthless.
posted by vorfeed at 12:30 PM on August 10, 2011

I see you constantly in this ebook threads posting thoughts roughly similar to that, Justinian, and I have to say, it surprises me to see someone technical enough to be really into websites and such miss this call so very badly.

I have to say that I am glad that jscalzi has taken up your gauntlet while I was sleeping because it allows me to simply point at his contributions to this thread, wave my hands, and bask in his glory without having to put in the actual time and effort. That is the best way to engage in an argument; let someone else do it for you. The fact that he is a well-known published author who knows of what he speaks is an added bonus!

So I'll just say that you keep repeating things such as it being better to sell a million copies at $5 than a hundred thousand copies at $5. But what you're missing is that the vast, vast majority of books are not going to sell a million copies if you price them at $1. Or fifty cents. You know enough about economics (obviously) to know what price inelasticity is. Reducing the price of books and ebooks does not correspond as strongly to an increase in sales as you think it does. Cutting the price in half does not sell enough additional copies to maximize revenue.

You're arguing "I think this is what should happen when you cut prices" and jscalzi is arguing "this is what actually happens".
posted by Justinian at 12:31 PM on August 10, 2011

million copies at $5 than a hundred thousand copies at $5

This should be "a hundred thousand copies at $10", obviously.
posted by Justinian at 12:33 PM on August 10, 2011

In its current state eInk sucks for technical literature. Buy an iPad or similar LCD slate device and you can natively view the pdfs with ease

No. That's why I mentioned that I'd also bought a (theoretically) properly-formatted book. And I do own an iPad— know which tech books look good on it? Dive into Python and Dive into HTML5, but Mark Pilgrim's a bit of a wild card in that he gives those books away. I don't know that putting the PDFs on another device would make much difference, even if I could (or cared to). That's not really the point I was responding to, and "Buy a $500 device to alleviate your issues with pirated books" kind of misses the point in a wonderfully nerd-solution sort of way.
posted by yerfatma at 1:26 PM on August 10, 2011

As for the jscalzi/Malor argument -- I think both of you are correct, in that both reader psychology and price psychology are a factor. The problem is that reader psychology is not likely to change, whereas the price pressure is likely to go up significantly, and the former is not necessarily more powerful than the latter.

I've seen this happen personally with regards to underground music. People who are into underground stuff tend to be collectors. Compared to mainstream listeners, they are more likely to purchase instead of or addition to listening free. They also have a very strong preference toward certain bands, meaning that there is no effect where people "substitute" lower-priced items for full-priced items. In other words, they're a lot like readers. The widespread availability of free and easy downloads via rapidshare and the like has hurt CD sales over the last five years, though, and it has driven the "base" price of a CD down (to $5, actually). Vinyl sales have also started to outpace CD sales, precisely because CDs are viewed as being functionally equivalent to mp3s.

I could have told you "this is what actually happens" regarding CD sales five years ago, much less ten, but that would have had little or nothing to do with what "actually happened" (and very quickly, even among "I can and will pay for that" customers) once mp3s became the default way most people interact with their music. I see little reason to believe that the market won't also change for books, once e-reading becomes the norm rather than the exception. Right now almost everyone (including me) views "real" books as being intrinsically more valuable than e-books, just as people in 2003 tended to view CDs as intrinsically more valuable than mp3s. This establishes the perceived value of an e-book as some percentage of the perceived value of a real book... but this effect won't last. Once most people read books via digital files rather than paper, the perceived value of a real book is likely to be set by the perceived value of an e-book. Combine that with widespread piracy -- by that time, "the retail experience for purchasing books online is easier for the average book consumer than finding books on torrents" may no longer be true, just as rapidshare blogs made it no-longer-true for underground music -- and you've got trouble.

There are three obvious ways to do brisk business after this happens, two of which have become de rigueur in the underground metal scene: you can drop the price of physical media ($5 CDs), and/or you can raise it significantly and then pack a bunch of shiny collectors' gewgaws into the product (die-hard vinyl). The other obvious method would be to sell digital product at a price and convenience level which makes it preferable to widespread, dead-easy piracy, preferably long before widespread, dead-easy piracy drives the perceived value of digital product among most of your customers to zero.

The music industry missed the boat on that one, and now the publishing industry appears to have kicked Amazon right off the pier. Good for them... today. We'll see about five or ten years from now.
posted by vorfeed at 2:20 PM on August 10, 2011 [1 favorite]

I buy my books by the pound.

That is all.
posted by blue_beetle at 3:04 PM on August 10, 2011

I buy them by the dollar.
posted by grouse at 3:19 PM on August 10, 2011

"Buy a $500 device to alleviate your issues with pirated books" kind of misses the point in a wonderfully nerd-solution sort of way.

The point I was trying to make was that having a platform that allows for easy consumption of eBooks (technical books) makes you use a lot more eBooks than you otherwise would. How many CDs did the average person have when CDs were $20 a pop? Now how many CDs of music does the average person when it is effectively free.

I download probably 10 technical books a month, so probably over 100 in a year. That's the cost of an iPad right there. That's sort of a false comparison there, because there is no way I would consume 100 books a year at $50 a book if I were paying for it, but because I can do it, I do it.

To be able to process that much literature so easily is a huge leap forward.
posted by Chekhovian at 3:25 PM on August 10, 2011

oops, lost a decimal place there, but the point remains...
posted by Chekhovian at 3:26 PM on August 10, 2011

Imho, there isn't any way for ebooks to eliminate paper books right now, Chekhovian. eInk displays are simply too slow. Tablet displays aren't any better than computer screens for your eyes. etc.

I'd imagine that pirated reflowable textbooks or fiction books could cut into some publishers profits, but I'd usually want both the printed copy and the pirated ebook for math books, and any technical book I referenced.

You know, I actually have read a few programming books entirely in ebook format on a laptop screen, including Effective C++ and Effective STL, but programming language books read faster than anything else, even fiction.
posted by jeffburdges at 4:40 PM on August 10, 2011

Imho, there isn't any way for ebooks to eliminate paper books right now, Chekhovian. eInk displays are simply too slow.

I don't know that it takes any longer for my K3 to redraw the page than it would to physically turn a page. Unless you're a speed reader page redraw times just aren't an issue. As for reflowing, most e-readers support that feature.
posted by MikeMc at 7:52 PM on August 10, 2011

I don't know that it takes any longer for my K3 to redraw the page than it would to physically turn a page. Unless you're a speed reader page redraw times just aren't an issue.

It matters if you're trying to flip through a book to find a specific page. The worst thing about the Kindle is that random access is very clunky. You can't flip to the middle of a book, you have to go to a "location" roughly in the middle of the range in the document, which requires entering numbers, which aren't even printed on the keyboard on the Kindle 3: you have to hold Alt and press letters, and hope you're hitting the right ones. That's ludicrous.
posted by JHarris at 7:21 PM on August 11, 2011 [1 favorite]

It matters if you're trying to flip through a book to find a specific page

Or if you're flipping back and forth between two things eg the equation for a function and a plot of it or data points and the discussion of the data.
posted by Chekhovian at 9:42 PM on August 11, 2011 [1 favorite]

You cannot meditate on theorems, differential equations, etc. displayed on two different pages by holding both pages open simultaneously. You cannot easily maintain 'mental bookmarks' that function by proximity. etc.

There is of course the full search functionality on laptops and true tables, but not pure ebook readers. Reference books benefit enormously form search, but educational books you actually read require incredibly fast & flexible bookmarking.

Ideally, you'd want some hybrid display that offers tablet speed refreshes, but uses refraction rather than emission, and does some power-save-lock-in once the screen hasn't changed for a second or so. You'd then need an incredible user interface for flexibly handling bookmarks.
posted by jeffburdges at 9:58 PM on August 11, 2011

There are however waterproof cases for eBook readers. :)
posted by jeffburdges at 10:04 PM on August 11, 2011