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Saturday, May 24, 2014

Tears of the major publishers

Amazon is cracking down on the ability of major publishers to rip off authors:
The battle is being waged largely over physical books. In the United States, Amazon has been discouraging customers from buying titles from Hachette, the fourth-largest publisher by market share. Late Thursday, it escalated the dispute by making it impossible to order Hachette titles being issued this summer and fall. It is using some of the same tactics against the Bonnier Media Group in Germany.

But the real prize is control of e-books, the future of publishing.

Publishers tried to rein in Amazon once, and got slapped with a federal antitrust suit for their efforts. Amazon was not directly a party to the case but has reaped the rewards in increased market power. Now it wants to increase its share of the digital proceeds. The publishers, weighing a slide into irrelevance if not nonexistence, are trying to hold the line.

Late Friday afternoon, Hachette made by far its strongest comment on the conflict: “We are determined to protect the value of our authors’ books and our own work in editing, distributing and marketing them,” said Sophie Cottrell, a Hachette senior vice president. “We hope this difficult situation will not last a long time, but we are sparing no effort and exploring all options.”
What is hilarious is the authors and publishers crying about how Amazon is "raising the prices" of their books. It's an absolutely ridiculous charge. What Amazon is actually doing is refusing to continue its extreme discounting on the artificially high retail price of books.

Castalia House has no issue with Amazon, and Amazon doesn't discount its prices on our ebooks much because they are already in the price range that Amazon expects: 2.99 to 4.99. But publishers that price their ebooks at $15.99 are in trouble, because no one wants to pay actual retail price for them on Amazon. Compare the price of two John C. Wright books. We sell AWAKE IN THE NIGHT LAND for a digital list price of $4.99. Tor sells JUDGE OF AGES for a digital list price of $26.99. Tor is counting on Amazon being willing to offer the customer a 45 percent discount, thus allowing Tor to collect $12.15 (assuming the standard 55 percent distribution discount) on an ebook compared to the $3.50 that Castalia receives. But Amazon only makes one dollar more from the 5x more expensive Tor book than it does from the Castalia book, which means a 17 percent operating margin instead of a 30 percent margin.

And Amazon sells more copies of the lower-priced books. At $4.99 AWAKE IN THE NIGHT LAND is #18,816 on Kindle. At $27.99 reduced to $12.99, JUDGE OF AGES is #41,075. Ebook prices are elastic, so if Amazon can sell 2 low-price ebooks for every 1 high price ebook, it not only makes a) about twice the margin, but also b) about fifty cents more.

No wonder Amazon is unwilling to continue the conventional arrangement. Amazon can only successfully sell its books up to a certain price, depending upon the format and length. Due to the distribution discount system, a higher retail price means a higher distribution price, so Amazon makes half the margin on the more expensive, more steeply discounted books from the major publishers. Amazon is not only perfectly within its rights, but logically needs to stop discounting the book from what is, after all, the publisher's suggested retail price; Hatchette's complaint is rooted in the fact that Amazon is now selling its books for the price that Hatchette itself suggests!

By the way, this showdown between Amazon and the major publishers is a development that I predicted would be taking place soon during my campaign for SFWA President. The possibility was pooh-poohed by the business geniuses there, including the eventual winner. Nevertheless, the outcome will likely have a huge effect on authors with major publishers because the reason the publishers are fighting this uphill battle is their inability to support their current overhead structure without the additional revenue they receive from their inflated retail prices on ebooks. If either Amazon or the author were to receive a more equitable share, no major publisher could survive in its current form.

What the publishers should do - what they should have done a long time ago - is to set up a joint online store and then stop distributing books through Amazon. But they didn't have either the nerve or the foresight, so now they're faced with trying to develop some sort of alternative as Amazon begins to dip its toes into its own publishing line. Their best bet, in my opinion, would be to buy the Nook Store from Barnes&Noble, embrace a truly open standard, and go into competition.

However, they won't embrace the open standard, and in doing so, they are giving up one of their two advantages over Amazon.

Labels:

63 Comments:

Anonymous Luke May 24, 2014 6:28 AM  

Semi-related: European high Human Rights court deems news sites/blogs responsible for content of anonymous comments:

http://tinyurl.com/oal77ja

OpenID cailcorishev May 24, 2014 7:13 AM  

Vox, I'm having a hard time seeing why operating margin would matter much on ebooks, when there's virtually no overhead on the individual sale. (I realize there's some overhead in the customer service and so on, but nothing like the expense of getting a book from a shelf, putting it in a box, etc.) It seems to me that if they can make $2 from your expensive ebook and only $1 from my cheap one, they'd favor yours even if it was a 90% markdown and mine was full price. The overhead isn't related to our starting prices, so why does the discount matter to them?

OpenID cailcorishev May 24, 2014 7:24 AM  

Ok, my question was unclear even to me. Let me try again:

Awake in the Night Land sells for $4.99. As I understand it, Amazon keeps $1.50 and gives you the other $3.50 to split with the author.

Judge of Ages (currently) sells for $11.04. If Amazon keeps $2.50 ($1 more than ANL) and gives the other $8.54 to Tor, why does Amazon care whether Tor's theoretical list price on the book was $11.04, $25, or $250? They made $2.50 on the sale; it seems like that's the number that would matter to them.

Anonymous Salt May 24, 2014 7:40 AM  

Amazon can only sell its books up to a certain price, depending upon the format and length.

Hatchette's complaint is rooted in the fact that Amazon is now selling its books for the price that Hatchette itself suggests!


Hatchette thinks it's a deal at the discount. What are their sales numbers? What would they be if priced like ~CH with no discount? Hatchette is attempting to treat eBook as if print, holding onto the outdated model eBook is destroying, and Amazon is slapping them for it.

That's my take on it.

Anonymous jack May 24, 2014 7:50 AM  

I wonder if CH would ever 'team' with some other concern, perhaps a desperate, traditional publishing house, with Markku and Vox calling the shots for the new, small, but growing conglomerate? That would be interesting to watch happen.
Were it to happen, with the old timer and the new kid on the block and, if, the existing author stable in the old company started to make more money in the new business model, then the rabbity folks at the likes of SFWA would really get their panties in a bunch. Popcorn anyone?

Blogger IM2L844 May 24, 2014 8:20 AM  

why does Amazon care

I'm guessing volume:price point. The scale has to tip somewhere. They may not be there yet, but preemptive maneuvering in anticipation of the tipping point sounds like a reasonable business decision to me. I know very little about the industry though, so that's pure speculation on my part.

OpenID cailcorishev May 24, 2014 8:35 AM  

I'm guessing volume:price point.

I can see how they'd care about the actual price they charge for that reason; I just can't see why they care about the list price they don't charge. When I search for Judge of Night, I just see 11.04 for the Kindle version. If I click through to the book's page, it tells me the Print List Price is $26.99 and claims I'm getting a $15.95 discount, but it doesn't show me the e-book list price at all.

So I don't see why it would affect sales if the ebook list price were $11.04 in the first place. Considering how silly some people are about buying things on sale, I'm surprised that Amazon doesn't prefer high list prices, so it can claim to be giving big discounts.

I can see why authors, customers, and less-established publishers wouldn't like these inflated price/discount games; I just don't see why Amazon wouldn't like them. Looks to me like they created them in the first place, for the same reason most retailers do. Don't get me wrong: I think what Vox is seeing is a good thing; I'm just curious about the cause.

Anonymous YIH May 24, 2014 8:53 AM  

From another author:
My book, The Little Way Of Ruthie Leming, is now out in paperback. Amazon.com now says “Usually ships within 3 to 5 weeks.“
I imagine that most readers of this blog who are inclined to buy my book have already done so, but if not, you don’t want to get it from Amazon. Consider your local bookstore, Eighth Day Books (for the hardback), or BN.com, which is selling the paperback for four dollars less than Amazon, and will ship it to you right away.

Anonymous Godfrey May 24, 2014 9:03 AM  

"Progressives" are really Luddites. They're regressives determined to prevent human progress.

They simple don't want the poor to be able to afford to read!

They want to maintain their profitable monopoly on the back of the reading public!

Theses racists don't want poor blacks to be able to afford a book!

Books before profit!

Anonymous Steveo May 24, 2014 9:04 AM  

The courts must step in and stop this free market nonsense...
/s

Anonymous Ludwig von Homo May 24, 2014 9:04 AM  

Vox... do you have an opinion on this?

The FT Isn't Just Saying Piketty Made A Mistake — They're Saying He Manipulated Data http://t.co/E5dmmpkWp8

Anonymous lozozlo May 24, 2014 9:08 AM  

OT:

I am just a lurker ilk with occasional comments but for those inclined to prayer a close family member was just admitted to the hospital for a possible stroke.

In other medical news does anyone have an update on Beau? Haven't heard from him since he went to the ER a little ways back.

Anonymous Godfrey May 24, 2014 9:12 AM  

You sure hear the "Liberals" bitch when it comes to their wallet.

They're very liberal with other people's money, but not their own.

Lower book prices for the poor black reading public NOW!

Anonymous dh May 24, 2014 9:13 AM  

cailcorishev

Amazon wants to sell the quantity. There are a lot less buyers at $11.04 than at $2.99 to $4.99.

Blogger IM2L844 May 24, 2014 9:22 AM  

I just can't see why they care about the list price they don't charge.

I thought Vox said Amazon, for their sale price, had a standard calculation for all publishers from their stated, however ambiguous, list price. There is nothing inherently wrong with publishers trying to game the system and maximize their profits, but, on the other hand, there is nothing wrong with Amazon doing the same thing. I guess whoever has the biggest hammer wins.

Anonymous zen0 May 24, 2014 9:38 AM  

@ lozozlo In other medical news does anyone have an update on Beau? Haven't heard from him since he went to the ER a little ways back.

I believe he submitted a comment here a couple of days back.

Blogger Iowahine May 24, 2014 9:47 AM  

Beau reported that he had a stent placed and is back out serving.

Anonymous Ged May 24, 2014 9:49 AM  

Amazon are not evil. Misunderstanding what they are is the heart of this problem. http://t.co/hoSdBrsdo9

Anonymous lozozlo May 24, 2014 9:53 AM  

@Zen0 and @lowahine

Thanks for letting me know!

I must have missed that comment.

Glad to hear that Beau is ok...hmmm didn't he have other heart problems a while back?

Time for him to go on the paleo diet. :-)

Anonymous Kyle McGrath May 24, 2014 10:04 AM  

I agree- when I tried to publish my book, all the liberal and elitist publishers wanted too much of a cut and wanted me to water down the conservative message in it. I rejected them and then cut them out- they are just middle men- and had Amazon publish it and sell it, and I couldn't be happier.

See my book at:
http://amzn.com/1483966836

Blogger rcocean May 24, 2014 10:08 AM  

The general point is that Amazon giving the Publishers a share computed on a higher price than it is able to sell the books at. Hence, the publishers get more $$, Amazon less. And of course, lower priced books sell more than higher priced ones.

Blogger rcocean May 24, 2014 10:11 AM  

The even more general point is that the publishers (aka Big Books) have absurdly high overhead and G&A costs, little of which translates into quality fiction/non-fiction. Big offices, big buildings, perks, Corporate staff, useless editors, etc. etc.

Anonymous Blume May 24, 2014 10:11 AM  

cailcorishev May 24, 2014 7:24 AM

Ok, my question was unclear even to me. Let me try again:

Awake in the Night Land sells for $4.99. As I understand it, Amazon keeps $1.50 and gives you the other $3.50 to split with the author.

Judge of Ages (currently) sells for $11.04. If Amazon keeps $2.50 ($1 more than ANL) and gives the other $8.54 to Tor, why does Amazon care whether Tor's theoretical list price on the book was $11.04, $25, or $250? They made $2.50 on the sale; it seems like that's the number that would matter to them.


Cali have you ever paid $11 for an ebook? I know I haven't. I am a voracious reader and generally read 3 books a week. I can buy 3 $3.99 books for almost the same price as that one John C. Wright book. If Amazon keeps a $1.50 a book from the cheaper ebooks then amazon is making $4.50 a week off me. If I buy the $11 book they only make $2.50, that is a loss of $2 dollars.

Anonymous jack May 24, 2014 10:19 AM  

@Kyle: your book looks interesting. I may get it for my granddaughter

@Blume.I happily paided that price for John C. Wright's Judge of Ages. Hes worth the money. Not so much others. I would pay the higher price for Correia, Kratman, and a few others.

Blogger brianscheetz May 24, 2014 10:27 AM  

Amazon cares about its operating margin because companies with high operating margins are treated favorably in our financial markets and companies with low operating margins aren't.

So even if it makes $1 more from the Hachette sale, if that makes its overall operating margin worse, it's not a good deal for Amazon.

Blogger Herb Nowell May 24, 2014 10:34 AM  

Their best bet, in my opinion, would be to buy the Nook Store from Barnes&Noble, embrace a truly open standard, and go into competition.

From your lips...

One of the most frustrating thing is having to have "Kindle for Amazon" installed on my Nook to read certain books. I have a Nook. I'd just as soon get everything native but so many books are Kindle only. Why is it they will bitch up a storm about Amazon but only have eBooks there?

Blogger Herb Nowell May 24, 2014 10:41 AM  

I can see how they'd care about the actual price they charge for that reason; I just can't see why they care about the list price they don't charge.

What they have to pay the publisher is a function of the list price (as VD says, normally 45% of retail) so the price Amazon can charge is floored by this percentage of the list price. If the list price was $10 instead of $26.99 then Amazon's floor drops to $4.50 + their overhead or $7 if they're going to bring in the $2.50. How many more books sell at $7 over $11.

This is why the $1.50 at CH is more valuable than the $2.50 at Tor. CH brings in 60% of the net revenue despite being a little under 50% of the cost. If that price difference increases sales of CH to 167% of Tor it's a wash at Amazon. I suspect $4.99 does more than that increase. If books are anything like RPG pdfs (an area I know a little about) $4.99 is the second strongest price point due to lots of impulse buying.

Blogger Herb Nowell May 24, 2014 10:46 AM  

Correction, CH brings in 60% of the revenue at 18% of the cost to Amazon and 45% the cost to the consumer. Note the consumer costs assume no discount on the CH book but a 59% discount on the Tor book.

Anonymous Susan May 24, 2014 11:07 AM  

The Left won't purchase anything to help their situation. Because doing so would mean they might make a success at it and thereby taking away their entire reason for existence, which is to whine and complain about everything in life.

Mainly though, it is because the evil cruelty artist they purged from their warren had the idea so naturally they won't touch it. Maybe Vox and Markku will be in the position to acquire it themselves someday. Maybe with the help of some silent partner/investors?

I just want to see the whole old system get its just desserts. And if Vox and Markku win the battle, so much the better.

Anonymous SirHamster May 24, 2014 11:08 AM  

Thanks for the explanation on this event.

I was just scratching my head at a Slashdot article on the topic, where various comments complained that Amazon was being a "monopoly". (/facepalm)

Anonymous dh May 24, 2014 11:09 AM  

Brian--

It's true that in general high-margin is favored, however, you can look any number of commodity businesses where the margin is under 10% and investors are quite happy. Exxon is a good example: massively profitable business with excellent investor satisfaction, and a 9-11% operating margin.

Amazon is probably the worst example of a business that would you like to see in this regard. They have essentially no operating margin at all, and yet, have massive investor confidence and performance.

Anonymous dh May 24, 2014 11:10 AM  

Susan let's not be stupid. CH is a small-time operation on purpose.

Anonymous Godfrey May 24, 2014 11:11 AM  

The Left's greatest fear is that someone somewhere is happy.

Anonymous dh May 24, 2014 11:13 AM  

SirHampster--

I also read that article, and just sort of wandered off. Amazon is not a monopoly on any service I can think of, but they do have a large amount of market control - what Amazon does drives the market. I could envision them someday running afoul of anti-trust law, but it would take several large other organizations to fold first.

I note that our slobbering solipsist at Whatever has nothing to say on this, basically, waving the white flag of intellectual surrender. His solution is to promote Good Reads, which although a cute website, is a tiny spec on the windshield of sales.

Anonymous Godfrey May 24, 2014 11:19 AM  

Lower books prices for the masses!

Down with the monopoly publishing class!

Readers of the world unite!

Blogger Danby May 24, 2014 11:23 AM  

There's an assumption here that Amazon has zero marginal cost per ebook. That's not quite true. It may not seem like much, but the thousands of servers, petabytes of storage and gigaherz of bandwidth do add up to a LOT of money. they also have marginal costs per title that have to be accounted for.

Over its history, Amazon is very close to breaking even, I'm not sure even which side of that line they are on. The only parts of their business with a solid profit margin are digital media (ebooks, music, movies) and digital services (cloud services, online store hosting, payment clearance services), and the only way available to them to increase profitability is to increase the market or increase their margin on the market. Their market share is so high that there is no viable way to increase it without antitrust laws getting involved.

So basically Amazon is saying to the publishers "That price point is ludicrous and we refuse to treat it as a serious thing. Set a price that reflects the market and we'll talk."

They're tired of publishers gaming their system to try to eliminate their profit margin. Why should Amazon co-operate with that?

Anonymous FP May 24, 2014 11:45 AM  

I was in a local bookstore a few weeks ago. One that took over an old Borders store that sells new and used books. They wanted $27 (msrp) for a new copy Flash Boys. Amazon sells it for $16.77. I saw the book at Costco two days later for $16.50.

The main issue holding me back from buying e-books has been the cost. Just like with Steam/downloadable only games, I'm rarely going to be paying full price for something I can be locked out of rather easily DRM wise.

Anonymous Don May 24, 2014 12:02 PM  

So why did Baen's prices go up when they linked with Amazon?

Anonymous VD May 24, 2014 12:04 PM  

I'm having a hard time seeing why operating margin would matter much on ebooks, when there's virtually no overhead on the individual sale.

Two things. First, Amazon doesn't only sell ebooks. They are using their greater leverage on ebooks because that brings more pain to the publishers, but this relates to their print book sales as well. Second, Amazon is allergic to allowing others to benefit egregiously from their own market. That's why they give 70 percent of the revenues to independent publishers, but only 30 percent on public domain books.

It is ridiculous for major publishers to derive extra profit from ebooks by using the print model. Amazon would rather sell more ebooks at a higher profit margin, and unlike the publishers, Amazon would love to see all booksales be ebooks because it would vastly reduce their operational costs. So, they are now telling the major publishers to wake up and smell the 21st century.

Which, obviously, they are very loathe to do because they will have to significantly restructure their businesses. Expect to see at least two major mergers in the next three years; we'll probably go from Big Five to Big Three in short order.

Blogger IM2L844 May 24, 2014 12:04 PM  

Susan let's not be stupid. CH is a small-time operation on purpose.

Well, she did say: "someday." I don't imagine Vox, Markku and whoever else is invested will intentionally inhibit the growth of CH forever. With Vox's tech manufacturing connections, I wouldn't be too surprised to see a CH EPUB reader developed and marketed someday.

Anonymous VD May 24, 2014 12:04 PM  

I note that our slobbering solipsist at Whatever has nothing to say on this, basically, waving the white flag of intellectual surrender. His solution is to promote Good Reads, which although a cute website, is a tiny spec on the windshield of sales.

Which is moronic advice. GoodReads is owned by Amazon.

Anonymous Huh? May 24, 2014 12:25 PM  

"Hachette, the fourth-largest publisher by market share."

Anybody else never heard of them? What the heck do they publish?

Anonymous wikipedia May 24, 2014 12:38 PM  

Hachette publishes James Patterson

Blogger Eric Wilson May 24, 2014 12:48 PM  

Hmm. I see Instapundit has linked this post. Saturday morning prolly isn't the best time for an Instalanche, but I'm curious if that will move the needle much on page views. I don't remember the last time he linked VP.

OpenID cailcorishev May 24, 2014 12:52 PM  

What they have to pay the publisher is a function of the list price (as VD says, normally 45% of retail) so the price Amazon can charge is floored by this percentage of the list price.

Ok, that clears things up a bit. I was assuming the relationship was more flexible than that. In my own former retail business, I got different discounts off list price from different vendors, or on different products, or for buying certain quantities. Maybe Amazon is too big to have that kind of variation? (A lot of the people here are involved in the publishing business, so thanks for explaining the basics to those of us who aren't.)

Anonymous VD May 24, 2014 1:10 PM  

Saturday morning prolly isn't the best time for an Instalanche, but I'm curious if that will move the needle much on page views.

It's usually good for an additional 2k pageviews. Most of my readers are already Instapundit readers, so I tend to benefit a little less than most. Not that the links are not appreciated, of course. And I highly respect the way he is willing to consider other perspectives even after he's staked out an initial position.

And perhaps Amazon will one day turn on the independents and reduce their royalties from 70 percent to 30 percent. I doubt it, though. And we would simply use our own store and attempt to strike deals with Baen and other ebook stores to cross-list.

Anonymous dh May 24, 2014 1:10 PM  

Which is moronic advice. GoodReads is owned by Amazon.

Yeah, well, he may have more to say, but right now he is too busy posting about the harassment policy of a small ComicCon convention in San Deigo, and whether or not he is violating his own, barely year old, anti-harassment notification/words policy. But maybe between the lawn pictures, berating authors with whom he disagrees, posting movie reviews, pictures of his new shoes, selfies, and other important matters he can weigh in on the industry and a matter which has direct impacts for you know, like half the authors in the SFWA and a good chunk of the entire industry. I mean, it's only front page news.

This is why he and his cohort are really just lightweights. He made a bold stand against harassment at conventions and saying mean things about a part-time writer, but he and his other secure mid-list authors can't be bothered to take a position on the important things. That's because he has no clue what to do. They first have to consult with the rest of the warren, and figure out if it directly affects them. And if it doesn't, decide whether to tuck into the shell and hope the laser doesn't zap his huge lawn next, or to make a mild statement or to do nothing.

Meanwhile the SFWA has a 2-week old recap of the irrelevant Nebula awards, and an apology for screwing it up, and nothing about a huge industry battle that affects a huge chunk of it's members. Too busy purging probably. And the current President can't be bothered to speak out about the health of the industry which gives him his paycheck either.

How are these imbeciles being scooped by a european living halfway around the world, who doesn't even have a direct stake in it? How is they are in charge of anything? How is it they aren't broke and living on the streets? I can answer that one actually.. they latched onto those big five publishers and they aren't letting go until they get their fill or the teat rots off first. And for everyone else, still coming up.. bummer for them.

Blogger Danby May 24, 2014 1:18 PM  

The other aspect people aren't taking into account is the view Amazon has of the entire market. The plain fact of the matter is that the total market for new books does not vary a lot from month to month. Most people, even real bibliophiles, have a limit on how much they can spend on books in a month, or in a pay cycle. Amazon has probably found that in aggregate that doesn't change a lot, regardless of the number of items sold. In other words, increasing or decreasing the price doesn't really move the total sales figures, just the number of items sold. Since the marginal cost is low, if the profit margin were the same, Amazon wouldn't care. But since the publishers are forcing the margin lower with their unrealistic list prices, the major publishers are forcing the profit margin lower.

In Amazon's case, any reduction in the margin is a direct loss in net revenue. By forcing the margin higher, they can directly increase net revenue and profit.

As a former part owner of a book store, I can tell you that the artificially inflated list process that the current situation encourages is a major part of the difficulty that independent bookstores have in making a profit. Frequently it would have been almost cheaper to purchase our stock from Amazon than to purchase it from the distributor.

Anonymous Jack Amok May 24, 2014 1:24 PM  

And perhaps Amazon will one day turn on the independents and reduce their royalties from 70 percent to 30 percent. I doubt it, though.

I pretty certain they won't as long as Bezos is calling the shots. He knows where Amazon adds value and knows how to let others add value and get paid for it too. Someday he won't be in charge though. It'll be interesting who takes over. History favors a lunkhead who takes market share for granted (because he doesn't understand how it got there) and screws it up, but by then the landscape may be very different anyway.

Books are hitting the same problem as games these days - too many, no good way for consumers to find the gems, huge challenges for producers to get themselves noticed in the crowd. Amazon taps into the potential solutions to this by allowing themselves to be the processing and fulfillment arm for independent 'storefronts' that offer an editorial take that helps people connect with content. .

Anonymous Feh May 24, 2014 1:41 PM  

The main issue holding me back from buying e-books has been the cost.

With me it is not the cost so much as the differential between the ebook cost and the printed book cost. The gap between them usually isn't large enough for me not to want the printed book.

OpenID cailcorishev May 24, 2014 2:48 PM  

As a former part owner of a book store, I can tell you that the artificially inflated list process that the current situation encourages is a major part of the difficulty that independent bookstores have in making a profit. Frequently it would have been almost cheaper to purchase our stock from Amazon than to purchase it from the distributor.

As a former owner of a store that sold some books, I agree. When the price printed right on the book is $15, and it costs you $9, and the publisher sells it direct at a web-site discount of $12.49, and Amazon has it for $11.29 and will get it to them in a day or two for free shipping if they're a regular customer, it's pretty hard to make a profit on books.

Not complaining; things change and that's just the way it goes. I'd say most remaining brick-and-mortar bookstores are running on fumes, though.

Anonymous CarpeOro May 24, 2014 3:14 PM  

"The main issue holding me back from buying e-books has been the cost. Just like with Steam/downloadable only games, I'm rarely going to be paying full price for something I can be locked out of rather easily DRM wise."

The bulk of the ebooks I get are sold without DRM. Maybe you need to look at different authors since many request their work be sold without it.

Regarding ridiculous prices for ebooks, Baen falls in that category also. $9.99 for David Drake's latest work seems far to pricey considering the last one's quality.

Anonymous Daniel May 24, 2014 3:39 PM  

Not complaining; things change and that's just the way it goes. I'd say most remaining brick-and-mortar bookstores are running on fumes, though.

The ones that haven't thought through things and made bold moves are, sure. But savvy bookstore runners have some interesting business opportunities now.

1) Become a publisher in addition to bookseller and feature your line in-store.
2) Promote high revenue independent books in partnership with authors and publishers.
3) Be a book hound: make sure no one looking for something in your store leaves without getting what it is. I don't care if all they know about it is that its cover is green and that it was written in the 20th century. You hunt it down and you get it to them at the slightest margin if necessary. There's a great big internet out there...don't get stuck hoping that your distributor cares if you live or die.
4) Fold in used books, digitizing the ones that are out of print, and selling them as a premium package in-store. You'll run into copyright questions if you sell the ebooks independently of your stocked paper, but if you simply offer the print and digital together as a paired enhancement, you can turn a 1-dollar profit into a $20-profit exclusive.
5) Join up with Amazon, not just as a partner-seller, but as an active innovator in the reader business.
6) Underscoring all of this: stop thinking of yourself as a bookseller. Start thinking of yourself as reader services. Higher profit, better options, more loyal clients.

Blogger Beau May 24, 2014 4:11 PM  

I am just a lurker ilk with occasional comments but for those inclined to prayer a close family member was just admitted to the hospital for a possible stroke.

Lord Jesus, we pray for a speedy accurate diagnosis. Even better, we ask you give a full recovery. Thank you, amen.

Blogger Eric May 24, 2014 4:28 PM  

What the publishers should do - what they should have done a long time ago - is to set up a joint online store and then stop distributing books through Amazon.

I imagine there would be some anti-trust legal action were they to do that, just as I imagine Amazon is going to get sued for its current behavior. Once the NYT has a breathless article about your company abusing its market position (on the front page, no less), the bureaucrats will swing into action whether or not it makes sense.

Anonymous lozozlo May 24, 2014 4:29 PM  

Thanks Beau and glad to see that you're up and about!

Anonymous emdfl May 24, 2014 4:37 PM  

I'm still trying to figure out why some dude doesn't work an arrangement with one of the smaller independent printers whereby a customer pays dude $15.00/whatever - depending on length - for a book; dude sends the print/ shipping-cost to the printer, splits balance with arthur. Printer ships book directly to customer.
A writer friend pays ~$7.00 for his ~450 page book to be printed. He sells me the book for $15.00. done deal.

Blogger Dave Freer May 24, 2014 5:14 PM  

"What the publishers should do - what they should have done a long time ago - is to set up a joint online store and then stop distributing books through Amazon. But they didn't have either the nerve or the foresight, so now they're faced with trying to develop some sort of alternative as Amazon begins to dip its toes into its own publishing line. Their best bet, in my opinion, would be to buy the Nook Store from Barnes&Noble, embrace a truly open standard, and go into competition."

I have been saying the first half of this for years. What's more the publishers need to pay authors a higher royalty for books sold through their own site/s, and, as they have effectively outsourced marketing to authors ('they do it for free. Okay just because they write good books doesn't necessarily make them good bloggers or self-promoters, but hey, there are always more meatheads to sucker.' - which means the marketing skills of the publishing houses are tiny now compared to those of the surviving authors) they need to motivate those authors not only to sell their own books through that site, but also the publisher's other books, via a similar program to Amazon Associates, paying a percentage for referrals. However that takes foresight, and accepting that 'meatheads' have value and need to be paid for that, not just replaced with more suckers.

On the second part - 'dips its toes into publishing' - I do gather principally because of bookstores (including obviously B&N) refusal to carry those, that this has not been that successful.

Blogger Brad Andrews May 24, 2014 9:29 PM  

It is far too late for the publishers. They may change, but their past model is broken and corrupt. It is far too late to make an alternate to the Kindle and its related software.

I have finally been collecting many books in electronic form and is is very convenient, especially with my 12.2 inch Galaxy Note Pro to read them on. I have bought a few tech books, though their horrid prices limits that significantly. The idiots in those areas don't realize that I would probably buy far more at $4.99 each than I could ever read just to have them for possible reference. $20-60 or more means I am much more selective.

John Wright's Count to a Trillion trilogy is a bit of a scam (not his fault I assume) as it starts somewhat affordable and ramps to the higher price for the third book in the trilogy. I finally bought and read it due to the picture here on the left and the fact I enjoyed the golden age one before, but it was not cheerfully given the price.

(It also seems to end mid story, which is annoying. What really happens at the end?)

I have noticed many older science fiction books are far too expensive, though Amazon is catching some wisdom in making the audio version, via Audible, bundled for a cheap price in some cases. I rarely purchase those that are $10 or more, but I tend to buy them if they are $2.99 or less just to have both.

They have to realize a great market exists for collectors who want to have plenty available when the whim strikes us!

Blogger John Wright May 26, 2014 10:30 PM  

"It also seems to end mid story, which is annoying. What really happens at the end?"

THAT IS NOT THE END OF THE STORY. I clearly and honestly write the words 'to be continued' at the end of every manuscript, and the editor removes it because they fear readers will not buy an uncompleted story. So I end up looking like a dishonest writer who cannot write a workmanlike and competent ending to the tale. I have complained many times, and the publisher will not budge.

You have my apologies, but there is nothing I can do. I will send you a free copy of the next book if you like, so you can read more of the story. By the third volume is only when the interesting part of the story is beginning.

Blogger Akulkis May 27, 2014 1:34 AM  

This is something that has pissed me off for years...seeing ebooks listed at a HIGHER PRICE (for ethereal data) than for actual physical books which need to be paper and ink, and then have to be printed, bound, and shipped.

Glad to see Amazon telling the publishers to stop trying to pretend that DRM'ed data is anywhere nearly as costly (or valuable) as a printed book

Blogger Brad Andrews May 27, 2014 4:28 AM  

That makes more sense John. I look forward to the follow-on books. It did seem like a really odd place to end.

I did think the "new humans" were quite the arrogant ones. The hero certainly wasn't perfect, but they only existed because of what he had done. Engaging book, though I hate knowing I can't read the follow-on for a while.

It is kind of like reading the later books in the Mote in God's Eye series. I never could get into the 3rd one since it was so long since the previous two. Hopefully it isn't as bad here. I also wish they had an Audible deal where I could get the audio book for really cheap to go with the Kindle version.

====

Speaking of not wanting to note too many books, isn't this from the publisher who is pushing the Wheel of Time as a single book for that award?

Blogger Brad Andrews May 27, 2014 4:29 AM  

I want the ebook anyway as well, so don't worry about the free book. I do hope they don't keep with the escalating price trend though. The final one could be MUCH too pricey if so.

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