Monday, May 18, 2009

How much is a good read worth these days?

by Clare Langley-Hawthorne






An article in yesterday's New York Time's entitled "Steal this book (for $9.99)" caught my eye, especially the first line: "Just how much is a good read worth?" and the story of how readers were boycotting the Kindle version David Baldacci's latest thriller "First Family' for being priced around $15 (some $5 more than the majority of Kindle e-books were selling for). The article went on to discuss fears in the publishing industry that e-books cannibalize higher-price print sales (rather like the flood of cheap houses onto a real estate market) and that Amazon's low price point sets a precedent in the e-book market that may be unsustainable. Offsetting this is the evidence, however, that e-book purchasers are buying more books now than they ever did as print book buyers. This is because of the ease with which they can download the books and (presumably) by the lower price point.


This all got me thinking - what is a 'good read' worth these days? Should a bestselling author be able to command a premium e-book price? (though I'm guessing Baldacci's publisher may be regretting that decision!) Does Amazon's "loss leader' mentality in which it basically subsidizes the $9.99 Kindle book create the perception that e-books are only worth $10 or less? And what does that mean to consumer perceptions of the cost of trade paperbacks or hardbacks?


I remember talking to an English publisher last year who said the market in the UK had become horrendous because the majority of books were being sold in supermarkets very cheaply or at chain stores as part of "Buy three get one free" and "Buy two for the price of one" kind of deals. Her argument was that in the UK at least this marketing tactic had made many consumers question the original price of books (their reasoning being, well, if I get two for the price of one shouldn't they have been originally half the list price anyway?). It also created the perception that books were over priced (God forbid!). I wonder, in the e-book market, will Amazon's pricing have a similar effect?



So what are you willing to pay for a good read these days? Would you pay more than $9.99 for an author you loved on Kindle? Does the cost of an e-book make you less inclined to plunk down more money for the paper version? As e-books command more and more of the market what effect will their price have on us readers and (poor sods that we are) writers? Is it a slippery slope or just a storm in a teacup???

22 comments:

  1. Hmmm...I think it is indeed a slippery teacup in a storm.

    Market fosters demand
    demand - production
    competition - price drop
    price drop -market questions
    market questions - demand for permanent price drop
    permanent price drop - fiscal withdrawal
    fiscal withdrawal - lower advance
    lower advance - sad writer
    sad writer - depression
    depression - retreat to secluded island and covering ones face with tatoos as part of identity crisis and running around sandy beaches in little more than a leather butt-flap acting like a...like a...

    yeah...definitely a stormy teacup full of slipperiness.

    But then again, on that island you could afford a ton of cheap e-books to keep the slipped mind occupied

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  2. Ha ha ha! That was funny, Basil.

    I think that as long as all involved can make at least some profit, then no price is too low. And with e-books, since you've cut out a lot of the overhead that you have with traditionally-printed books, it seems that you'd be able to slash your product's price and still make a decent profit.

    As for the prices of "real" (i.e., traditional) books, hardcovers are still pretty expensive. But that's a matter of perceived value. Do I want to pay $25 for a book that will entertain me for a couple of hours, and then probably not be read again ... at least, not by me? ('Cause, let's face it, there's too many books out there and not enough time. A book has to be something REALLY special for me to re-read it.) And with my reading tastes, most of those books would not be lent/given to friends or coworkers.

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  3. I wonder if the e-book revolution isn't like the post WWII mass market boom. You had a ton of transient fiction published, and some were able to make a little money at it. A few, like John D. MacDonald, were recognized as fine writers and grew in popularity and critical acclaim. But the price point meant you had to sell a whale of a lot to make a decent chunk of change.

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  4. Basil I fervently hope you don't end up on that island.

    I don't have easy access to e-books in Australia - no Kindle available and many books available for the sony e-reader aren't available here. So I've no idea what I would pay for one.

    But I do know we pay too much here for books. I've travelled extensively in the US and the UK and I know what a new relase trade paperback or mass market paperback sells for and we pay pay way more than what would be accounted for by the exchange rate. $20-$25AUS for a new release trade paberback would be acceptable but these days the big chains (Borders etc) are selling them for $36.95. So I don't buy from here - Book Depository in the UK will ship world wide for free.

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  5. I wouldn't even pay $9.99 for a Kindle edition. It's just a digital file, why does it cost so much? I could understand maybe if there was no print version as well, but if there is a print version already, I don't see why the ebook version should cost so much, given that every print book starts out as an ebook (having been designed in Indesign or Quark or whatever on the computer) before going to press.

    Prints books are overpriced too, but I do still buy them, only less frequently now than I used to. $24.95 for a hardcover is just ridiculous, and if you wait a few months, there's a good chance you'll see the remainders being sold in the discount section of the bookstore for like $5.

    I would gladly pay $24.95 for a book that I will enjoy so much I'll want to read it again, but there's no way to know that in advance, so I generally only buy my favorite authors in hardcover.

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  6. We're on the precipice with something here with e-books, and it's part of the entire "Internet revolution" which ties into so-called social media. (I'm writing an article about Twitter and healthcare so I've been interviewing a lot of people who are knowledgeable on the subject, so excuse me).

    It might even be a generational thing.

    But current Internet-based media users seem to expect everything to be free. Facebook. MySpace. Twitter. Free NYTimes. Free newspapers, magazine content, etc. As a result we seem to have a bunch of companies--like Twitter, like Facebook, etc--that are currently operating at a loss.

    I suspect the biggest challenge for e-publishing isn't going to be adoption, but it's going to be getting past the possibly-generational notion that if it's digital and on the Internet it must be free or low-priced.

    Certainly the beginning of digital music was like that, which made copyright violators out of a generation of music listeners. iTunes in particular and Rhapsody et al. came up with a different model, basically either low-priced or subscription-based, to make it work. I'm suspicious that e-publishing is going to have to do something similar.

    Okay, enough deep thinking for this morning, but I suspect "what the market will bear" is the key issue. Compare, for instance, the prices of downloadable audiobooks from 5 or 7 years ago to what they are now. The price has dropped because no one was willing to pay $45 for a digital download of a book they could buy in paperback for $7.00--and I just downloaded a book and it was still $26.95, which seems ridiculous to me as well.

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  7. From a production POV, e-books cost much less to produce, copy for copy, than hard cover books; those production savings should get passed along to the consumers who are willing to read the works in soft copy format. I don't think an e-book's pricepoint has much to do with its intrinsic worth as a novel--it's a balance of production costs and reader preferences (or tolerance) in the type of reading experience that is desired

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  8. Whoa...The secluded island sounds kind of scary Basil:) I feel that perhaps James is right with the analogy of the post WWII mass market boom and I do feel that things will shake themselves out to reveal the real 'stayers'. I think though production costs are lower with e-books the editorial and marketing components remain the same and the former (at least for me) is what distinguishes the traditional publishing route versus the self publishing realm (and I for one would pay more for e-books having that editorial oversight). Bernadette, as a fellow Aussie I agree that books are way overpriced in Australia - it's very depressing!
    John and Mark, it's interesting isn't it how the digital revolution has changed our perception of price as most of us are used to paying nothing or very little for access to e-files and documents. Kathryn, I certainly agree that price has little to do with the intrinsic value of a book but it does indicate the value our society places on 'literature' versus other forms of entertainment. It will be interesting to see what happens with srib-d as it enters the market place and challenges Amazon.

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  9. You've all made good points. One aspect of e-books is intangible--the fact that trees won't need to be cut down in order for the book to be made available. That's worth a lot, for my money.

    Also, with electronic transmission, we no longer have to transport the printed material, from China where it's printed, to distribution centers, then to various wholesale and retail outlets, and then to the ultimate consumer, the reader. And all those unsold books no longer have to be further transported wherever they go, nor do they have to be destroyed.

    My big issue with the cost is the cost of the reader. It's still too high, as far as I'm concerned, and it limits the number of books that will be purchased at any price.

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  10. The pricing model is too narrow. You should be able to buy in chunks of 50 pages for a couple bucks per chunk. You should also be able to pay a subscription model where you can download whatever you want for $14.99 and read it, but it expires at the end of the month. It works for Rhapsody and Napster, why not for us?

    Also, the money has to come from some place. If I pay less for a book, I should be willing to deal with ads. And if the character drinks a Coke, I should be willing to put up with a link to Coke's website.

    If I'm offended by the idea, I should pony up the money and pay more.

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  11. Karen - the reader cost is a big deterrent to me too but I'm guessing we'll see many more cheaper readers in the near future (at least I hope so!). Chris, I too an intrigued by alternative pricing models including subscriptions and pay per chapter/chunk models. It will be intersting to see if any of the publishers offer these options. I could well imagine a publisher asking people to subscribe to their website online and offering those members cheaper pricing as well as extras. Could be kind of cool but as you say if you want cheap you might have to put up with advertising or promotions in the e-book - again interesting to see how this all pans out!

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  12. So the site that I mentioned last week (but couldn't name, since it was thanks to inside info from a friend) was, indeed, scribd.com. And today my friend's book SOWER launched. He and two other writers are the featured authors, and they set a price point of $2/download for their books. The hope is that by following the itunes model, they'll sell more copies.

    The problem with having traditional publishers do that (although if this experiment succeeds, they might try) is that they still have considerable overhead. Although the production and shipping costs are nonexistent with ebooks, they still need to pay their authors, editors, proofreaders, sales and marketing people, etc. But if it turns out that the volume model works, they'll probably jump on board, at least with some books (they'll gamble that NY Times bestsellers will still command higher margins).

    The Kindle editions of my books are only $5 at the moment; I'd like to see that come down to the $3 range in the future, but we'll see. And I would bet anything that within a year we'll see ereaders in the $100 range.

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  13. Here's a link to a piece on the new scribd program: http://www.latimes.com/business/la-fi-scribd18-2009may18,0,6817936.story

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  14. Ebooks don't magically materialize out of thin air. Just because an ebook is an electronic file as opposed to a printed document doesn't mean there are less costs involved in publishing. Here's a pretty good explanation on addressing the question over at Harper Studio. http://tinyurl.com/b73ekt

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  15. I don't see the price of e-book readers dropping anytime soon. Why should they, when people have shown they are willing to pay $350 for one. The price will come down eventually, but I doubt it will be within a year.

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  16. Joe,

    If your book is only being released as an ebook, then yeah, they will cost about the same. But for an ebook edition of a printed book, there is no additional cost. An ebook is just a print book that didn't go to press.

    A book might cost $2.00 to print, but that's for each book. A 50,000 print run would be $100,000. 50,000 ebooks cost $0.

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  17. John- I think the thing is, publishers realize that soon enough, most books will only be published in ebook format (already 1/3 of Amazon's book sales are Kindle editions, for books available in that format). So those additional costs will have to be included.
    That being said, if the Scribd model of cheap downloads proves successful, they'll be forced to lower the price on the majority of books, hoping to make up the difference in volume.

    And, as Karen said, readers are still expensive (although I actually do know for a fact there will be a cheaper one on the market by Christmas). So publishers are likely assuming that people who can afford to spend $350 on a reader won't balk at paying $10 a book. When the readers go down in price, I'll bet some of the cover prices follow.

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  18. Michelle, there's actually an article in today's NYT business section about Kemble's deal with scribd. I read about it after I'd posted this blog post last night - but I will be watching how this goes with great interest. My concern with the scribd site in the past has been piracy - a friend of mine discovered her nonfiction book (which is in hardback and very expensive) had been uploaded to this site and could be downloaded for free (which upset her as you can well imagine!). Joe, I agree that many of the costs with ebooks still remain even if they aren't printed and, like Michelle, I expect many books in the future will come out in only e-book format.

    Michelle, you wrote that you want the price point for your e-books to be around $3 rather than $5 - I'd just be interested to know why?

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  19. THe idea of selling Rhapsody or NetFlicks style subscriptions is intriguing. What if they offered a subscription of say $14.99 per month and let users download up to five books a month from a certain list of writers. To include the next tier of writers the price goes up to $24.99 and so on. They could also have increases based on the desired number of books per week/month and special individual book / new release downloads at higher prices yet.

    Readers sign up for a monthly or annual membership auto-billed to a credit card and the e-books could be DRM protected to ensure they are not passed around, since users are getting them at a big discount from paper.

    FYI - based on this theory I may forego the face tattoo after all.

    The butt-flap though turns out to be quite comfortable...

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  20. Scribd.com should easily be able to weed out copyrighted material. With a PDF file, all they'd need to do is search for several unique phrases in the book to confirm that it matches a copyrighted work and remove it automatically. If they are allowing copyrighted work to be posted illicitly, they're either lazy, incompetent, or complicit.

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  21. "Does Amazon's "loss leader' mentality in which it basically subsidizes the $9.99 Kindle book create the perception that e-books are only worth $10 or less?"

    Just so the record's clear, it's the publisher, not Amazon, that sets the Kindle price.

    Once the price is set by the publisher, the publisher gets 35% of the sale price. If Amazon reduced the publisher's price, the discount comes out of Amazon's cut.

    Kindle sales, even when greatly reduced from the paper price, largely afford the same profit to the publisher, because there are no production or mailing costs.

    Kindle is indeed eating paper books alive. My sales this month are approximately 10:1 in favor or Kindle, whereas 5 months ago they were the opposite.

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  22. Thanks everyone. Basil - yes, I think you should pass on the face tattoo. Boyd - I think in the latest article scribd is taking steps to stamp out piracy and is in negotiations with a number of publishers. We'll have to see where it takes them - and Anon, it's great to see the Kindle version is doing so well for you - definitely a sign of things to come.

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