Epublishing delayed....

Sunday, December 13, 2009

Sometimes I wonder whether large publishers want to fail at epublishing. Or do they think that if they screw up at epublishing, nobody else will do it? We have publishers charging hardback prices and paying paperbck royalty rates on ebooks. And now there seem to be more and more major publisher providing ebooks versions sporadically, and after a significant delay. Simon & Schuster are considering delaying ebook release of a book by four months. The normally slightly more reader-friendly, Harper Collins, jumped on board with this idea and upped the ante to six months.

What exactly is the logic here? Do they really think inpatient readers will run out and buy a hardback, or perhaps go online and pirate a free ebook copy? But even if there is a financial benefit do they place no value whatsoever on giving the customer what they want, in the format they want, with open simultaneous choice? Or maybe selfish people who want or depend on ebooks, like--say--the visually disabled, should just expect to have to wait at the back of the line. It seems that large publishers are only really willing to "experiment" in one area, and that is screwing their customers for every penny.

25 comments:

roslynholcomb 9:34 PM  

I'm still confused as to why this is not just another format. Typically you have to wait a year for a paperback, it seems only reasonable to wait a few months for an e-book. This is especially true as Amazon, the biggest vendor of e-books right now doesn't seem to be interested in making a profit off them. Instead they're using cheap e-books to sell Kindles. And I think it's already been proven that people won't pay hardback price for an e-book. So, I don't understand the problem. You wait a few months and get your preferred format, I wait a year for mine.

Anonymous,  12:35 AM  

I think the difference is that if you're a "paper" format reader (i.e. will wait for the paperback) there ARE options out there for you. The book can be borrowed from the library or the reader can buy the hardcover/trade paperback/whichever paper version came out first.

If someone is a primarily ebook format reader, whether by choice or necessity, or both, then that individual's only option is to either switch formats (which isn't a viable one for the visually disabled, for example), or choose to find an illegal copy. A lose-lose on both fronts, because the publisher/author won't get their money and the reader may receive an inferior product.

Personally, I think the big publisher's delaying of electronic formats will only encourage more piracy, because the publishers are showing that they do not want paying ebook customers. There's a big difference between the person who downloaded the Harry Potter saga "because they can" and the person I know who downloaded it because he needed the "text to speach" functions and couldn't afford audio book prices. (Yes, the library is an option for this person; however, given the popularity of JK Rowling, the library may only have limited copies, which would cause a delay) Either way, a competitively priced electronic version may have made the difference between a sale and an illegal download.

roslynholcomb 1:10 AM  

But what did the visually impaired do before the advent of e-books? There are audiobooks, large format books, heck there are even Braille books. People with vision problems have been reading at least since Helen Keller, presumably longer. I don't think e-books are their only option. It might be their preferred option, but not the only one.

I'm a paperback reader, by choice. I don't choose to spend the extra bucks for the hardback book. That being the case, then I have to wait until it's released. I'm still not understanding why e-books should be any different. Especially since you're also emphatic that you won't spend the hardback price for an e-book (And I don't blame you there), why on earth would a publisher put an e-book out for $10 and a hardback out for $25 at the same time? That's absolutely insane.

roslynholcomb 1:12 AM  

As for this notion that it will encourage piracy, you know what, that's just bunkum to my mind. People who want to steal books are going to do so no matter what format is available. After all, my book was available, as an ebook, and people were asking for it on pirate sites the same day. I find it more than a bit disconcerting that we have actually reached the point as a society that if things aren't exactly to our taste IMMEDIATELY, then we'll simply steal it. Sad commentary, that.

kirstensaell 1:57 AM  

why on earth would a publisher put an e-book out for $10 and a hardback out for $25 at the same time? That's absolutely insane.

Because they're probably making at least as much profit per copy on the ebook as the harback--even if the $10 price on the ebook is list and not a heavily discounted Amazon copy.

Profit margins on mmpb are so narrow they disappear when they turn sideways. Publishers have a vested interest in delaying a much less profitable format in favor or the much more profitable hardback. But when you factor in unit production costs and returns, a reasonably priced ebook is wayyyyy more profitable for publishers than mmpb. Favoring one very profitable format over another similarly profitable format in a way that 1) does not increase sales of the first one and 2) actively decreases sales of the second is one of the dumbest moves they could make.

roslynholcomb 6:17 AM  

But if Amazon is using the ebooks to sell Kindles, that means that people will be buying more Kindles and fewer hardback books. After all, the whole promotion is based on the ability to buy cheaper books. It will in fact be cannibalizing hardback sales. Hardbacks are typically the marquis titles for which they've paid huge advances. I don't care how cheap ebooks are to produce, you're not going to tell me that $5 is as good as $12.50, especially when they still have to pay authors, editors, techs, etc...

Amazon is very much so trying to turn those people who would ordinarily be buying hardbacks into Kindle users, and apparently doing a darned good job of it too, so good they're willing to not make a profit on ebooks. I can't imagine why publishers would want to help them do this when it's less profit for htem.

roslynholcomb 6:33 AM  

Oh, and y'all keep saying "I wouldn't have bought the hardback anyway." Of course not. You were the early adopters. Most of you came to the table already familiar with ebooks and ebook readers. Many of you have been reading ebooks for years. Now think about the typical person trying out the Kindle for the first time. What is Amazon luring them with? Cheap first run books. Who would be interested in cheap first run books? Not paperback readers, the e-books are still pricier than a paperback. Nope, they're luring people who would've been buying hardbacks. Most of the people reading these blogs are not the typical Kindle customer, or at least, not now. Y'all bought in early and were already sold. Now they've got to sell them to people who don't know an ebook from their elbow. So they'll take a bath on ebooks, and expect publishers to finance the cannibalization of their most profitable product to sell something that they get no part of. Again, that's crazy.

Ann Bruce,  8:36 AM  

When publishers make me wait, I'll get the book from the library and they lose a sale...which is why I have very, very few books that first come out in hardcover. For instance, I don't have any of Lisa Kleypas's contemporary paperbacks on my shelf.

kirstensaell 10:20 AM  

@roslyn:

1) I don't own a Kindle. I wouldn't own a Kindle. I don't think Amazon needs any more market share.

2) Hardback aficionados will likely remain hardback aficionados. People who buy hardcover want good-looking books on their shelves, and weight in their hands when they read. But I'd imagine many of them are still limited in which books they purchase in hardback, more limited now than ever before. They're certainly not buying every book they read in hardcover--unless they've got unlimited disposable income. Hardcover books have been in decline for years not because of ebooks, but because people simply can't afford to purchase as many as they used to.

3) Ebooks are largely an impulse buy. I can tell you I purchase a LOT more new books now than I ever did before I got a Sony--and I've never purchased a hardcover. In the year I've had my Sony, I've bought 64 ebooks. The year before, I bought 7 paperbacks. That has to do with convenience, no shipping cost, price and instant gratification. So I'm guessing that instead of saying $5 profit on one book is not as good as $12.50 on one book, perhaps publishers should be looking at it like $45 on nine books is better than $12.50 on one. And much better than $1.10 on one--or whatever the profit would be on a mmpb.

4) the profit per copy on ebooks increases the more you sell. The same can be said for larger print runs of hardbacks--but that's also accompanied by greater risk and greater investment by the publisher.

Publishers who embrace this kind of delayed release structure, who put so much effort behind pushing the hardback at the expense of other alternatives, are going to find themselves in the position of a $30/entree restaurant in a working-class town. They see the place down the block running a $12 prime rib special and people lining up outside the door, and instead of realizing they should offer more varied prices on their menu, they do everything they can to stifle the competition. What they don't realize is that eliminating the competition isn't going to get them more business because working class people aren't going to pay $30/plate to eat there--they'll just eat at home.

They've failed to realize it's not just book publishing that's changed--it's the whole economy. I have a friend who used to buy every favorite series book in HC, but her circumstances have changed and it will likely be years before she can afford to do that again. Unless publishers are prepared to get me a better job, there's simply no way they're going to convince ME to buy one of their hardcover books. They might be able to convince me to NOT buy one of their ebooks, though. They're pretty good at that, all things considered...

roslynholcomb 11:21 AM  

2. Amazon is banking on otherwise, and they're probably right. That's the market they're aiming for, otherwise why so drastically slash the prices. I would imagine that publishers know that hb sales are declining, but why help Amazon turn a profit on their loss?

3. I doubt very seriously that publishers are looking at long-term at the moment. It might well be that selling nine books is better than selling one, but not if those nine books are discounted beyond profitability, AND your retailer is using the sell of those books to cut your throat on your most profitable product. Telling publishers at a time when book sales are down that they can make up the difference by selling more books is, well, counterintuitive to say the least. I worked in retail and from where I sit, selling more books for less is a lot harder than selling one book for more.

4. Again, they're not trying to convince you to buy their hardcover books. You're already an ebook reader, but you're not the customer they're targeting. They're trying to keep Amazon from poaching even more of their hardback buyers.

Teddy Pig 7:54 PM  

Basically the publishers will only end up hurting authors. Yes, piracy will increase due to this because without available product people will do that.

Publishers learned nothing from what happened to the music industry so now they will learn the hard way. Authors unfortunately are going to be trapped in the middle of a huge insane marketing battle.

With publishers still not addressing piracy intelligently, not really doing anything to handle it besides forcing authors to go around playing eBook police and now with this windowing the publishers are making it even more enticing to eBook oriented consumers than ever before to simply Google up a pirate copy.

Once you start forcing that type of behavior on eBook customers have fun changing it.

Hell meet handbasket.

kirstensaell 8:39 PM  

Amazon is banking on otherwise, and they're probably right. That's the market they're aiming for, otherwise why so drastically slash the prices. I would imagine that publishers know that hb sales are declining, but why help Amazon turn a profit on their loss?

Not so sure about that. Perhaps Amazon simply realizes something that publishers don't--that no one in their right mind would pay a HB price for an ebook. Pubs distribute those ebooks to Amazon and other retailers with HB list prices. Amazon marks them down to a price the market can bear, and at $15-20 less than list, the consumer thinks they're getting a deal. That sells Kindles, but I'm not convinced it cannibalizes hardcovers. And even if it did, the publisher is still making a bundle--because they're remunerated by the retailer based on a HB price.

I still don't see what the panic is. I really really don't. I've been in enough discussions with technologically resistant readers to know that people who read ebooks--people who would buy a Kindle or a Sony--have no attachment whatsoever to paper and ink. Hardback buyers tend to have an almost sentimental affection for the format. They're probably the least likely readers to make the switch to digital. If they're buying fewer hardcovers, I'm betting it's because they have less disposable income.

roslynholcomb 6:18 AM  

"And even if it did, the publisher is still making a bundle--because they're remunerated by the retailer based on a HB price."

Are you sure about that? From what I'm reading they get their cut from the retail price, and that's what they're complaining about. I think what Amazon is doing is clear. Fictionwise is doing the same. They've always discounted, but it seems since the emergence of the Nook they're doing it more and for longer periods. That's why epubs wait before placing books with them, if they do so at all. And I know that my cut from Fictionwise is off whatever price they sell the book for, which puts a hurting on my royalties.

Teddy Pig 9:10 AM  

Right, but people are not going to all those individual ePublishers webpages to spend money, they go to the retailer that gives discounts for making purchases and being a consistent customer.

Omnilit and Fictionwise also provide a short term library service too which attracts buyers because they know they can login and re-download that book they bought again if they need to. Many ePubs do not provide that service.

If your ePublisher does not provide your books on Fictionwise or Omnilit then a lot of buyers probably will never purchase your eBook.

kirstensaell 10:25 AM  

That's why epubs wait before placing books with them, if they do so at all. And I know that my cut from Fictionwise is off whatever price they sell the book for, which puts a hurting on my royalties.

If that were the case, Amazon wouldn't be taking a loss on those books. Isn't that what the deal is? Amazon is actually paying readers to buy discounted ebooks with hardback list prices, but it's worth it to sell Kindles? That's why Sony is pissed at them, too.

I'd find it very strange if retailers remunerated all publishers based on their discounted prices. I'd certainly wonder how my own publisher is making any money at all paying me 30% on list price for second party sales. I can't vouch for other publishers' contracts with retailers, but if Samhain was paid based on the $3.75 Fictionwise or ARe charge for my $4.50 list price book, they'd be losing money to pay me.

Something smells fishy in publisher/retailer land...

roslynholcomb 12:16 PM  

If you read the primer that Moira Rogers gives below on third-party reimbursement rates you'll see what I'm talking about.

http://moirarogers.livejournal.com/128262.html#cutid1

Yes, you get more exposure at Fictionwise, but you have to sell a helluva lot more books to make the same amount of money. Right now they've got all my books at 50-60% off, and they've been that way for more than 10 days. I literally have to sell twice as many books to make the same money.

I doubt very seriously that Amazon is reimbursing on the retail price the publisher sets, if they did the publisher would have no beef. I know Fictionwise reimburses based on the price they sell it for and that's what my royalty is based on.

kirstensaell 2:58 PM  

I doubt very seriously that Amazon is reimbursing on the retail price the publisher sets, if they did the publisher would have no beef. I know Fictionwise reimburses based on the price they sell it for and that's what my royalty is based on.

I read that Moira Rogers article. I have to say that if the info in it is accurate, publishers are shooting themselves in the foot--especially if there's any language in the pub/retailer contract specifying the pub can't offer direct sales of those books for less than the retailer. So you have retailers demanding huge discounts on prices THEY THEMSELVES set, so they can undersell the most profitable revenue stream for publishers. It's like living in a cage with a tiger cub and feeding it your own food. You just get weaker and weaker until you either starve to death, or the tiger eats you.

I think specific terms likely depend on individual contracts between publishers and retailers. And unless I'm mistaken, for print books, the retailer pays based on cover price the publisher sets--that's why they demand deep discounts, so they can provide consumer rewards like sales, free shipping, and points programs.

If Samhain is paid based on sale price and not list price (and frankly, I don't know if they are or not), they'd be losing money on every copy sold at a second party retailer, because they pay me a very respectable percentage on list. Why would they do that when they have their own multipublisher bookstore and a solid rep in the online market? I've sold way more copies of my books through MBaM than through any other retailer--although I can't speak for other authors. The extra exposure at Fictionwise, ARe and BoB isn't earning me or my publisher a whole lot on my books, all things considered.

And if Amazon is remunerating publishers based on their posted sale price, explain to me how they're taking a loss on those sales? I've heard all over the place that they're in the hole on every book discounted that way, and that simply wouldn't be the case if they were paying pubs 35% on $10 and selling for $10. They'd still be profiting to the tune of $6.50 per book. If, however, they're paying 35% on $30, they're losing $.50 for every copy they move. Which would explain why Sony and other retailers are so pissed at them for setting the $10 standard.

If the latter is the case, I think it's a bit of panicking on the part of traditional publishers who predict that a $10 digital copy of a $30 hardback book will put enough pressure on the market to force them to bring hardback prices down.

Whichever is the case with specific pubs and stores--deep retailer discounts allowing retailers to undersell publishers, retailers dictating prices on pubs' sites, or retailers paying not based on wholesale price but on a percentage of their own retail price (which could, frankly, be $0 if they choose)--publishers have let the whole market got to shit and given retailers so much power it will only be a matter of time before they don't have the strength to fight when the tiger pounces on them.

roslynholcomb 4:27 PM  

"Why would they do that when they have their own multipublisher bookstore and a solid rep in the online market?"

Uh, because they're trying to do what people keep beseeching publishers to do, cater to the market. People like to one-stop shop, there are people who won't buy directly from the publisher. The convenience factor and all that. I remember reading people complaining about EC not being at Fictionwise and ARe and bemoaning the inconvenience of having to buy at the publisher's site.

See, here's the problem, people want what they want when they want it, that's what all this is about. From where I sit publishers are damned if they do, damned if they don't. It's the same dilemma manufacturer's face when they deal with Wal-Mart. Wal-Mart is so big and dominates the market to such a degree that they set the price. Given that they're more or less the only show in town when it comes to e-books, Amazon is doing pretty much the same.
The only solution would be for publishers to become retailers and they would still face the same problem, people wanting to shop at one vendor, lack of name recognition. And of course, the big one, Amazon would cut their prices so low they wouldn't be able to compete.

Teddy Pig 5:40 PM  

Right but people who use the Kindle Whispernet are not gonna see your competing price over at ePublisher whatever.

So you still lose not having your eBook listed through Amazon.

The Kindle is a bestselling device that has basically through Amazon's use of the Whispernet shut you out if you don't play their game.

kirstensaell 6:07 PM  

Yes, the Walmartization of ebooks (and print books) is a problem. The beast is so big now the only effective way to keep it from getting bigger and meaner is to not allow any food in the cage at all--and if publishers do that, well, frankly they'll either starve first or get mauled. But they've got no one but themselves to blame for the situation, really. No one is forcing anyone to deal with Amazon or Walmart--and certainly no one is forcing them to bend over and take it up the backside from them. Amazon is willing to suffer short term losses for a stronger place in the market. Publishers have been running their businesses into the ground so long, they don't have the stability to do the same.

But I'm still not convinced that Amazon selling those books at $10 is hurting publishers--especially if publishers are getting paid on list price. Which no one seems to be able to definitively state, because I imagine terms vary by publisher and retailer.

Given that they're more or less the only show in town when it comes to e-books, Amazon is doing pretty much the same.

No way will you ever convince me of that. One glance at my royalty statement tells me otherwise--both ARe and FW sell more of my books than Amazon does. And MBaM tops them all--possibly because MBaM, which is one of those one-stop-shop places for romance, offers a Kindle compatible format (as well as a Sony compatible one). In addition, the Kindle is not the only device or the only app out there.

Now this move to sell ebooks for $10 or less IS a ploy on their part to corner the market, and they're willing to have other departments subsidize the Kindle Store while they do it because they're a solid enough corporation to do it. But to be honest, publishers would do better to push for more reasonable retailer discounts and fairer contract terms than to punish readers by delaying the release of ebooks--because the former would benefit them (while blunting Amazon's teeth) and the latter will only cost them even more sales.

roslynholcomb 7:23 PM  

"No way will you ever convince me of that. One glance at my royalty statement tells me otherwise--both ARe and FW sell more of my books than Amazon does."

Yeah, but do they sell more Dan Brown and Nora Roberts books? I'm thinking not. I don't know about Samhain, but LI just recently started listing with Amazon, can't wait to see my royalty statements, I'm thinking I won't get much of a bump, but at least they don't discount them.

Xandra Gregory 9:23 AM  

This isn't actually about the consumer at all. This is an epic battle royale between Amazon--the biggest kid on the block--duking it out with publishers--the people whose front yards are the big kid's stomping grounds--over wholesale discounts.

Everybody gets why the widget distributor gets a 40% discount off retail price of widgets--that widget distributor buys an assload of widgets, possibly pays to have them physically shipped to a warehouse somewhere on the map which they have to pay for, then pays their movers to move the widgets to Widget World retail stores where people hungry for widgets can buy them at prices marked up to ensure profit for the retailer, the distributor, and the manufacturer.

Ebooks are not widgets. The middleman has a lot less tangible expense. Amazon takes a 55% cut of physical books because it needs a warehouse to hold those books and pays to ship those books. There is no warehouse, no physical stock to manage, no shipping expeses, no employees needed to pull, pick, and pack, and no returns to handle.

This is about Amazon being a piggy (sorry, Teddy!) and taking more than is fair, because who's gonna stop them.

The publishers are actually in a pretty unenviable position right now and I feel for them. Authors at traditional houses need to pay attention to their ebook royalty rates now, even though their ebook sales might be pennies compared to thousands of dollars, the smart ones know that it won't always be pennies, and they take a "meh" attitude now at their future peril. So, too, do the big trad commercial publishers know that they could pull in a bit of easy money off kindle editions right now, but do so at their peril later on. Right now, publishers are still stuck with a returns system implemented in the Great Depression--if they don't fight their distribution battles over the internet now, they'll be stuck with another crappy deal for the next 80 years.

Unfortunately, the reader gets screwed on this pooch. And so does the author. The best way to fight piracy is to make the legal way cheap and easy enough so that the average customer can't be arsed to go through the hassle of seeking out the illegal stuff, so while the publishers are having a stare-down with Amazon, the authors and customers are losing.

kirstensaell 10:44 AM  

@Xandra:

The status quo over discounts has been going on so long the only way I think publishers will be able to change it is if they do what Amazon is doing: face short term losses (perhaps near catastrophic) in hope of long term gains.

You can't negotiate terms when your nose is wedged up the enemy's bottom. The more publishers insist they NEEEEEED Amazon, the more they'll have to put up with whatever shit Amazon pulls. I can't imagine Amazon taking a publisher seriously unless said publisher were willing to...oh, I don't know...pull their entire catalogue from the retail site? And one of those huge parent companies with 20 imprints and a catalogue of thousands of books might actually have a hope of surviving something like that, because when customers go looking for the latest Dan Brown or Laurel K Hamilton and can't find it on Amazon, they WILL go somewhere else to get it. And they will buy other publishers' books while they're there, because they like to one stop shop.

Something like that would actually get Amazon's attention and weaken both their market share and their bargaining position--especially if other publishers followed suit. Delaying the ebook? Not so much.

Anonymous,  12:07 PM  

The time is right for a one stop shop ebook retailer that takes a fairer percentage of the cut from publishers. I'm fed up of reading interviews about how well distributors are doing off the publishers. How great their turnovers are, etc. If sales are that good, then what need is there for such high percentages?

Anonymous,  12:10 PM  

Meant to add that the discounts are for the purposes of promoting the distributor business, but publishers and authors end up paying for that. It's like the friendly supermarket advertising the buy one get one free. The supermarket gets the kudos and the extra business, the supplier gets squeezed to give their products away.

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