May 5th, 2013 by Mike Fulton

As a general rule, it seems to be the case that publishers have done a relatively poor job of making older catalog titles available in eBook format. Go to Amazon or Barnes & Noble or your other favorite eBook seller and look up some book you remember from 20 years ago.  More likely than not, it’s not available as an eBook unless it’s from a fairly successful author.

Even books that spent time at the top of the bestseller’s lists are often not available.  One great example is the Belgariad/Mallorean fantasy series from David Eddings. A total of twelve books, most of which spent several weeks at or near the top of the bestseller’s lists when they were originally released.  And yet, none of them are available here in the USA as an eBook.  In fact, of Eddings’ twenty-five novels, only seven are available in eBook format here.

In the case of David Eddings, I suspect that there is some issue regarding royalty negotiations with the estate that is the main problem, because some of his books are available in other countries but not here.  However, aside from situations like that, I think the biggest factor is that mass-market eBooks are still a relatively new thing.  It’s still a young market. To whatever degree eBooks existed before Amazon released the first Kindle in late 2007, they were a niche product used mainly by hardcore computer users. For comparison, if you look at the situation with older music catalog releases on CompactDisc 5-6 years after that formats was first introduced, I suspect you would see a similar situation with the availability of older titles.

But “young market” is not a good excuse, for many reasons.  The first reason is that the publishers should know better.  If you look at the availability of older titles on DVD, you’d see that they were released earlier and more quickly than had happened with music on CD. In fact, this helped make DVD one the fastest growing media formats ever.

Why did they release older titles more quickly?  The DVD format was created and introduced in the mid-90’s, about the same time that significant numbers of people started buying music on the Internet.  Tracking sales statistics for online purchases was much easier and more accurate than for brick-and-mortor stores, and it soon became apparent that the sale of older catalog titles, overall, was a much bigger part of the market than had been previously realized. This fact did not escape the notice of the movie studios. While new releases still got the most attention, they also made an effort to make older titles available more quickly as well.

Another reason why the “young market” argument isn’t a good excuse is that, unlike the process of bringing older music titles to CD or older movies to DVD, there’s no potentially expensive restoration or remastering process required.  With music and DVD, the process of bringing out an older title can require a significant investment of time and money. With music, taking an older set of analog master tapes and making a decent digital master could take a serious amount of work. With movies, even more so.  It’s not unusual for it to cost a quarter million dollars to restore a movie for a DVD release.

With books, and we’re talking basic mass-market fiction with minimal illustrations, there’s no such expensive and/or arduous process involved. Even if the text isn’t already available in digital form, it takes no more than a few hours of work to scan and proofread.  Once the text is in digital form, it takes just a few hours of work, at most, to create an eBook.

How Much Should It Cost?

Above all else, any eBook edition should never be any more expensive than the cheapest paper-based edition.

If the book is available as a mass-market paperback, and is still “in-print” (an increasingly archaic concept) and reasonably easy to find on the shelves at bookstores, then I think the same price as the mass-market paperback is reasonable. Although I’m not complaining if it happens to be cheaper.

I am not at all a fan of the idea that an eBook should cost more because there’s a trade paperback or collector’s edition hardcover edition.  I’ve seen prices go up on books that have been available for years because of this sort of foolishness.  It’s especially stupid when there’s a new CE hardcover, because the markets don’t really overlap much. If I were to buy a new hardcover edition of Dune for myself or as a gift, it doesn’t really affect my decision to buy the eBook version, or vice versa.

If the book is no longer easy to find on the shelves, then my thought is that it should be somewhat cheaper than a current mass-market title.  I think pricing it the same as a current title is foolish because you’re just driving away a lot of people that would otherwise make a purchase.

Once upon a time, with paper-based books, it made sense that older titles which were no longer selling very well would be eventually taken down off the shelves at the bookstore. After all, shelf space is a limited commodity and you want it used for books that are going to sell, not just sit there. Anything on those store shelves has to generate a certain level of income or be replaced by something that will.

It’s a long-standing idea of retail that if you’ve got a warehouse full of stock that is no longer really moving at the original price, you knock the price down. And knock it down again, and again until it’s in the bargain bin. The money required to create the product has already been spent, and every day it sits on store shelves or in the warehouse is costing you more.  At some point, you stop worrying about how much it cost to manufacture and start worrying about being able to recover any money from it at all. If you end up selling it at at 10% of the original price, you’re probably still better off than just letting it sit.

With eBooks, “warehouse space” is virtually infinite and virtually free, so it’s probably easy to decide that if it doesn’t cost you anything to store the product, there’s no compelling reason to drop the price until sales pick up. Just leave the price where it is and sales will still trickle in. As long as the publisher isn’t losing any money, what’s the problem?

The problem with looking at it that way is that it means there’s not a lot of incentive to spend any time or effort on older titles that you’re not convinced will sell very well. Even if the break-even point is really, really low.

Lower prices on older catalog titles would provide incentive to buyers to try out authors and genres they’ve never read before. Why wouldn’t you want a fantasy reader to decide it’s time to check out James Patterson’s Alex Cross mystery series because they can get some of the older books for $3.99 instead of $7.99?  I guarantee you will sell a lot more copies of Along Came A Spider at the lower price, and maybe you also create a new James Patterson fan in the process.

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April 20th, 2011 by Mike Fulton
Posted in eBook Publishing

A sad trend that’s developed recently is for the eBook edition of a new book release to cost a little more than the hardcover edition. For example, the pre-order page on Amazon for the upcoming new release in Charlaine Harris’ Sookie Stackhouse series (aka True Blood), Dead Reckoning, shows a price of $14.99 for the Kindle edition, while the hardcover edition is going for $14.70. Granted, it’s not a big difference, but as we’ve discussed several times before, it just doesn’t make sense for the eBook version to cost more.

On Amazon, when this sort of disparity exists you’ll often see a little notice next to the price, saying “This Price Was Set By The Publisher“. Or, as I like to think of it, “Yes we know it’s stupid but it’s not OUR idea.

The reason for this disparity has to do with a difference between how books are sold wholesale. For physical editions, the publisher typically sells each book to the reseller, such as Barnes & Noble or Amazon, at a wholesale discount from the cover price. The discount percentage may vary depending upon volume, payment terms, or a variety of other factors, but ultimately it typically falls in the area of 50-60% off the cover price. So if a new hardcover edition is priced at $26.99, the wholesale cost to the retailer was probably between $10.79 to $13.50.

This is how most products are sold, although the wholesale discounts involved vary quite a bit depending on the product involved. However, the one thing that’s the same across the board is the fact that once the original manufacturer (like a publisher) has set the wholesale price they’re charging the retailer, their involvement in the pricing process is finished. They often have a “suggested retail price” but the retailer can set whatever price they want. They can offer a 50% discount, a 30% discount, or no discount at all.

The situation with eBooks is different. Some eBooks are sold via the traditional wholesale model, but for certain categories, like new fiction releases or new major non-fiction releases, the market has been shifting to what is known as the Agency Model. This is where the publisher sets the final price for the end customer, and the retailer gets a fixed percentage of each sale. The prices always are the same from one reseller to the next.

Thus: This Price Has Been Set By The Publisher

You may think, isn’t price-fixing illegal? Yes, normally, but they’ve found a loophole. In this scenario, Amazon (or Apple or whomever else) is acting as a sales agent for the publisher, and you’re actually buying the eBook directly from the publisher, not from the retailer. In exchange, the agent/retailer gets a particular percentage of the sale as a commission. That’s why it’s called the “Agency Model”.

Smells a bit fishy to me, but apparently it satisfies the legalities involved.

One has to wonder why the retailers would ever agree to such a system that gives them virtually no control over pricing. My thought is that while this shift was caused by Apple to some degree, the situation that let them do it was caused by Amazon.

I know that many people think Amazon has been backed into a corner and that they’re holding the short end of the stick in the current situation, together with the end customer. I think that’s true to a certain degree, but I think we got here because Amazon was a bit short-sighted with regards to pricing policies in the first place.

Kindle Pricing In The Early Days

When Amazon first introduced the Kindle, instead of the usual wholesale pricing used for physical books, they decided it would be a good selling point if all new releases were priced at $9.99. Amazon would keep 65% and 35% would be split between the author and publisher. Basically it was not that different from the agency model mentioned earlier, but turned on its head, with Amazon setting the prices rather than the publisher.

If you look at the early advertising for the Kindle, it’s clear that Amazon thought that the $9.99 price for new releases was a major selling point. And it does sound pretty good at first, until you noticed that you were spending $400 (the original Kindle price) to save $5 or $8 on a book. Granted, not everybody does the math before they buy, but that sort of thing is pretty obvious. Those who actually did the math would realize they might have to buy 50 or 80 books before they broke even on the hardware.

It should have been obvious to Amazon that the convenience factor of an eReader was really the bigger selling point. And in fact, if you look at later advertising, you’ll see that the focus shifted from the price of new releases to the convenience of having a library you could hold in your hand.

Unfortunately, the $3.49 cut of the $9.99 price that went to publishers & authors was less profit per copy compared to a hardcover edition. I’m sure that Amazon hoped that the sales volume would ultimately grow to the point where the reduced per-copy profit was more palatable. However, early on when the installed base of Kindle users was still fairly small, it was essentially just a sacrifice for the publisher & author.

These pricing issues made many publishers upset, and eventually several of them rebelled against Amazon over pricing issues in early 2010.

At the time, Apple’s release of the iPad was imminent, and they were making deals with publishers for their new iBookstore. Furthermore, Barnes & Noble had just released the Nook and were in the process of making their own deals.

Apple wanted to ensure was that eBooks sold through their new iBookstore setup would not be available at lower prices from other resellers, at least for high profile new releases. However, there’s really no way to guarantee that with a traditional wholesale model, so they started signing agreements with publishers to sell books using the agency model. This allegedly included the provision that the publishers had to set their prices such that nobody else was selling the same book any cheaper than the prices on iBooksstore. Apple may not have been completely happy with the idea of giving up all control over pricing, but they must have figured that as long as nobody else’s prices were lower, it wouldn’t really matter.

Once publishers started signing up with Apple using the agency model, they had leverage to use with Amazon. Since Amazon was no longer the only game in town, the publishers were able to push through new deals based on the Agency Model. Amazon resisted the change for awhile, but eventually they agreed.

I have to wonder if the irony of the situation occurred to anybody at the time. The publishers essentially ended up reversing the same deal Amazon had originally done with the $9.99 pricing.

And that’s basically where we are today. The eBook segment of the market keeps growing, so most of the players are mostly content, but I can’t help thinking it would be even bigger if we had just adopted a regular wholesale model across the board in the first place.

Amazonian Missteps

The Kindle is a great example of a product that was so good, and the marketplace so ready to adopt, that it was able to survive and prosper despite a variety of mistakes and missteps along the way.

To those who followed the Kindle early on, the first big issue was simply availability. Amazon sold out of the first batch of hardware pretty much immediately and the device was perpetually sold out for the next 5-6 months. On the one hand, that makes sound like the device was selling great, and I’m sure it was by most standards. But just imagine if they had been able to meet the demand. Might they have sold twice as many devices? Three times? We’ll never know, but maybe they would have sold enough units that the sales volume for those $9.99 new releases would have been high enough to keep the publishers happy.

When I said Amazon was short-sighted earlier, I meant that they should have planned for the day when there would be some real competition, and they should have realized that publishers would have the option of jumping ship when that day arrived.

Amazon seemed to be relying on the idea that increased sales volumes would ultimately make their $9.99 pricing more acceptable to publishers, but it doesn’t seem they had contingency plans in case that didn’t happen fast enough.

They almost certainly should have given publishers a bigger cut of that $9.99 price early on, as incentive to get with the program and push the platform.

One has to wonder where things would be now if Amazon had went with a more traditional wholesale model for all Kindle eBook pricing from the start. Maybe some people might have missed out on a few good $9.99 deals those first few years, but I think maybe we would have been better off in the long run.

Not All eBooks Are Created (or Priced) Equal

Oddly, or maybe not really so much, these pricing issues seem mostly confined to fiction and or major non-fiction like political commentary. It mostly seems to be books that come from the old, traditional publishing houses.

If you look at other categories of non-fiction books, like computer books, for example, it would appear that eBook versions are sold more or less through the basic wholesale model. And for the most part, the pricing makes sense. Most telling is the fact that you never see an eBook edition that is priced higher than a physical edition.

Why they can’t manage to do the same thing for other categories of book escapes me, except that I can’t help noticing that we have mostly old traditional publishers on one side of the equation, and mostly newer, more tech-savvy publishers on the other side. Hmm…

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October 19th, 2010 by Mike Fulton
Posted in eBook Publishing

One of this year’s biggest new releases in the Fantasy genre is Towers of Midnight, the penultimate entry in the long-running Wheel Of Time series by Robert Jordan, due out in about two weeks. I first heard about this new release a month or so ago when I saw it listed on Amazon’s Kindle Books page. The Kindle version was shown as being available the same day as the release of the hardcover edition. Skip ahead to now, and it’s gone. It’s been pulled from Amazon’s site. I took a look over at Barnes & Noble’s site, and the Nook version has been pulled there too. The release date hasn’t just been pushed back… it now looks like there is no eBook edition coming at all.

Towers Of Midnight book is being published by Tor, which is a division of Macmillan. If you’ve been following this blog, you might start getting the idea that I’ve got some sort of thing for the Macmillan publishing company, because their name keeps coming up. Well, I don’t. At least, not on purpose. But the thing is, it seems like every single time I find out about some weird thing going on with a publisher and eBooks, it comes back to Macmillan.

Despite having originally announced the release date on their own website in addition to doing it through various retailers, I’ve yet to see any explanation from Tor about why the eBook version has been delayed or cancelled. Creating an eBook is not really that difficult, so it’s hard to imagine there could be any technical issue. In fact, the only reason that comes to mind for delaying an eBook version that’s already been announced as coming out the same day as the hardcover version is because Tor/Macmillan thinks that the sales of the eBook version will cut into the sales of the hardcover version.

Of course, they’re absolutely right about that. No question about it, sales of the eBook version would definitely cut into the sales of the hardcover version.

The REAL question is, since eBooks are more profitable than paper editions, why would Tor/Macmillan want to hold back the more profitable version in favor of the less profitable version?

The X factor is how many people will buy both versions, and how does that number change depending on which version is available first? But even here, it seems like there’s no good argument for holding back the eBook version. It may be true that some people who buy the eBook version will want a nice hardcover edition for their bookshelves, but I honestly can’t imagine that too many people who buy the hardcover edition and read it that way will be interested in getting an eBook version later. Once you’ve read the book, what’s the point? Sure, there are some people who will be interested in re-reading it over and over, and some of those will be willing to buy the eBook version for that purpose, but I’d have to think that they’re a pretty small percentage of the total.

I hate to repeat myself, but as long as Macmillan keeps repeating their goofiness it seems necessary. My guess is that Macmillan has taken the whole eBook side of the business and just kinda tacked it onto the side of how they normally do things — including their accounting practices. I would bet they’ve failed to correctly gauge how profitable eBooks really are because they’re factoring in various costs into the eBook profit equation that don’t really belong there.

The obvious example is the idea that they might factor in production costs of the paper edition and average them across other versions like eBooks. However, there’s less-obvious examples. Like marketing costs… a big percentage of marketing costs for a book like this are used for various point-of-sale displays that get setup in book stores. It’s hard to imagine these help sales of eBooks as much as they do sales of paper books, but if they’re averaging all the marketing costs across all editions, then it makes the paper version look MORE profitable and the eBook LESS.

The bad news is, it will probably take awhile for most publishers to figure out how to do these things correctly. Especially old-school publishers like Macmillan.

The good news is that writers are generally not stupid. As their existing publishing contracts expire, more and more of them will either start publishing eBooks directly or at least start insisting on publishers being more intelligent about it. Old-school publishers like Macmillan will either be forced to change how they do things, or they’ll fall behind newer publishers who aren’t stuck in the 19th century.

Addendum

I just got an email from Amazon telling me that my pre-order of the Kindle version of Towers of Midnight has been delayed by 11 months to October 1, 2011. No reason is provided… they just say “an unexpected delay has occurred in delivering the Kindle version of the book listed below“.

Frankly, it’s not all that unexpected to anybody who’s been following all the various crap that Macmillan has been pulling with regards to eBooks. Unfortunate. Ridiculous. But ultimately not really that unexpected, sadly.

We need to let Tor/Macmillan know that we’re not happy about this. Their website is http://us.macmillan.com. There are various email links there if you want to email them. You can also write them a real paper letter at:

Macmillan
175 Fifth Avenue
New York, NY 10010
(646) 307-5151

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