Monday, February 8, 2010

What price ebooks?

By Steve Weddle

My pal Lein Shory and I have been chatting for the past, let’s call it 88 years just for a nice round number, about ebooks.

The recent announcement from Apple about its iPad and the kerfluffle between MacMillan and Amazon following that announcement, just offers more examples of this here fancy brave new world we aren’t ready for.

Shory uses the new ebook advances to argue that size no longer matters.

Which makes sense, of course. Reading the paperback of Infinite Jest or Battlefield Earth can be difficult – for many different reasons. But one of those reasons is the binding. Break the spine of a 1,200 paperback and see how well it holds up the next time you take it in the toilet.

Publishers will continue to play with content and delivery as we move further and further away from cave wall drawings towards holographic pages streaming from your sunglasses while you ride along on your jetpack.

Still, one of the problems folks have with ebooks is the lock-down-ability the seller has. Remember when Amazon took 1984 off people's Kindles last year? Now Apple is getting all grumpy about allowing Stanza ebook reader to work via USB connector.

Buying an ebook doesn't give you a copy of the ebook. You are purchasing the permission to look at a certain file on a certain device (or devices, depending) under certain conditions. Sure, some readers allow you to "loan" out a book to a friend for a couple of weeks. But you don't own the book.

And there's really no alternative to the used book store. I can't imagine buying a "used" ebook.

All of that brings us back to the current kerfluffle: what price ebooks? The Atlantic has a nice piece about pricing -- taking a look at fixed costs and the price elasticity of demand.

Like publishers themselves apparently, these wise guys are using the wrong cost figures. To calculate the cost of a copy, they're loading on fixed "pre-production" costs like the editor's salary and the publisher's rent. They're including the marketing budget. But these are fixedcosts. They don't change when you produce another copy. They may be important when deciding whether to publish a book at all, but once the money has been spent they're irrelevant to what you charge for a given copy. Optimal pricing should be based on the marginal cost of that incremental copy. Cover that incremental cost, and selling one more copy is profitable. The common intuition that e-books should be cheap reflects this basic microeconomics: Producing and delivering another e-copy costs next to nothing. (from The Atlantic)

As Lein Shory has pointed out at length, you pay 99 cents for an mp3 of the latest Avett Brothers tune, but you'll listen to that over and over. What price ebooks? What price short stories?

Would you pay $15 for an ebook that you can't loan to someone when you're done? Would you pay $4.99 for a short story you'll only read once or twice?


Steven T. said...

In answer to your last two questions... No and no. But then, I hate reading off a screen, so I don't have one of those devices and don't plan to get one any time soon.

I buy a lot of books, so $15 is nothing, but I've never bought a single short story for $4.99. I can get a whole AHMM for that price and have a half dozen stories. Who sells stories at that price?

pattinase (abbott) said...

I read from a screen all day long with my job and my writing. Why would I want to continue to do this after work? I can't think of a single compelling reason. People talk about vacations and not lugging books. Half the fun of vacations is going into a new bookstore and finding something I didn't expect.
I don't even like downloading music. I like to hold the work in my hands. I also like seeing movies at a theater. Maybe it's an age thing.

John McFetridge said...

Good post. A few things (and please argue with if I'm wrong):

How come no one was upset that Amazon was selling 1984 when they didn't have thr right to? I have a feeling if Macmillan printed up a bunch of copies of your novel (or anyone's here) and shipped them to stores and sold them and kept all the money themselves 'cause they "thought" they had the rights, we'd have a different view of this. Sure, we wouldn't expect Macmillan to go to everyone's house who bought a copy and get it back, but we wouldn't be on their side, would we?

And yes, the key to all of this is price. Well, price and the fact that it's hard to get someone to buy a book in the first place. But if e-books were priced at two or three bucks pretty much all the problems would be eliminated.

In a way it's too bad the value of a novel is so low, but there you go.

Joelle Charbonneau said...

Funny, I'm with Steven. Reading off a screen makes me feel like I should be working. I love the feel of a book in my hand. I have shelves of favorites and don't plan on ditching those for an e-reader any time soon.

As a Macmillian author, I tend to side with them. I'm all for publishers setting their prices and letting the reader decide what works. The very nature of publishing is transforming before our eyes and I think it will be years before a successful e-model will be settled upon. I have to admit that I will be intrigued to watch how it all plays out.

Eric Beetner said...

You bring up two good points, Steve, that haven't gotten enough traction for me. The lack of actual "ownership" of an ebook, a thought that I hate. Once I pay for a product I like to own it and decide what to do with it from there. Keep it on the shelf, loan it out or, the other point you make, donate it so others might share it at a discounted price. Am much as I lament the demise of booksellers the idea that I won't be able to take a chance on an unknown at a used store is crushing to me. I'm reading a book now I bought precisely for the fact that it was a dollar and I LOVE it. I already have plans to buy more of the author's work art full price, something I never would have done otherwise.
As for pricing, I can barely bring myself to pay hardcover prices now and only very rarely do. To spend that amount for a file that can be taken away at a moment's notice? Not on your life. There is a lifetime of reading out there and if I have to spend the rest of mine on ebay buying up musty old paperbacks I've never heard of, fine by me. I only hope somebody digs up my book for cheap a few years from now.

Lamar said...

A lot of people discussing the future of e-books seem to adopt an "either-or" position -- either one is going to stop getting print books and replace one's library or one is not. That's hardly the only option.

There are many publications that we'd all be better off getting in e-book form. Every year, there are forests of dead trees committed to producing books on software and programming languages, for example, that will be completely outdated and mostly useless within a few years at most. Most magazines published today are ephemeral, without any lasting value. And even a lot of fiction really doesn't merit having a hard copy.

That doesn't mean that there aren't books that one may want in print. Favorite novels, reference books, coffee table books, books of fine photography -- what have you.

The introduction of e-books also means the potential return of the mid-list author. Think about that -- there will be little or no reason why any author should ever be "out of print" again.

A smart publisher would offer not only e-books, but also print-on-demand versions of some volumes, while also offering traditional print versions of others.

As for those who don't like reading off a screen, or like holding a book, they will have plenty of options available for the foreseeable future. Personally, I like reading off a screen for a variety of reasons. I'm looking forward to the upcoming iPad because it will allow me to read off a screen but to do so in bed or sitting in my favorite chair -- things that are problematic with a laptop.

As for the actual topic of the post, I imagine that the prices of e-books will be roughly half the cost of print books mostly because consumers will expect the price to be less, but will still be thinking of the product in terms of its print cost. If a hardback book costs $25, an e-book released at the same time for $12.50 will seem like a bargain. Eventually, there will services that offer things electronically that there is currently no market for, such as individual short stories and articles, and the price people are willing to pay for such things will work themselves out.

Personally, I'm quite excited about the future.

Mike Dennis said...

Just like with real books, ebooks are a question of supply and demand. The Atlantic was hinting at this.

To produce one more real book requires out-of-pocket cash from a publisher. To produce one more ebook costs next to nothing. Ergo, near-infinite supply of ebooks. Demand cannot possibly overtake it, so the price has to come down.

To think that a publisher can charge $15 or $20 for an ebook is wishful, to say the very least. The more they charge for their digital product, the more they will drive otherwise paying customers into the arms of pirates. That's an immutable fact. Just look at the record business.

John McFetridge said...

This is a long post, but worth looking at:

Here is what he says about cost and demand:

"Jeremy Lassen, who runs a lean, focused, smaller press, says those initial investments for a book run from $7,000 to $20,000...

At 99 cents it takes 7070 sales to break even.

At $9.99, it takes 701 sales to break even.

At $15 it takes 467 sales.

That’s if you’re selling direct. Amazon takes a cut, so we actually probably need to multiply these by 30% to make them real world."

So, it's a risk for whoever puts up the $7-20 grand but because they're putting it up (and we still have capitalism) I think they should get to decide what the price should be.