Tag Archives: pricing

Articles I Like: Shatzkin on ebook pricing

The PolyBlog
February 17 2017

I read a lot of different blogs about ebooks, writing, self-publishing, the publishing industry in general, etc. and there are several that are quite popular. Kristine Kathryn Rusch on anything to do with the business side of being an author; Dean Wesley Smith, her husband, on churning out new copy and generating revenue; Konrath et al on the wild west of self-publishing; ThePassiveVoice on an overview of just about everything newsworthy (a curation service); and then people like Mike Shatzkin if you want the view of big publishing. None of those descriptions are entirely fair, they’re not one-trick ponies, but Shatzkin often is on the opening tail of self-publishing as a viable business model. So it was interesting to see him last September talking about pricing with a bit more “indie-cred” than he would normally show (eBook pricing resembles three dimensional chess):

Amazon doesn’t need big publisher books to offer lots of pricing bargains to their Kindle shoppers; they have tens of thousands of indie-published books (many of which are exclusive to them) and a growing number of Amazon-published books, that are offered at prices far below where the big houses price their offerings.

That probably explains why Amazon can see its Kindle sales are rising while publishers are universally reporting that their sales for digital texts, including Kindle, are falling. (Digital audio sales are rising for just about everybody, but that is not an analogous market.)

This is putting agency publishers in a very uncomfortable place. It has been an article of faith for the past few years that there is revenue to unlock from ebook sales if only the pricing could be better understood. […]

High ebook prices — and high means “high relative to lots of other ebooks available in the market” — will only work with the consumer when the book is “highly branded”, meaning already a bestseller or by an author that is well-known. And word-of-mouth, the mysterious phenomenon that every publisher counts on to make books big, is lubricated by low prices and seriously handicapped by high prices. If a friend says “read this” and the price is low, it can be an automatic purchase. Not so much if the price makes you stop and think.

An unpleasant underlying reality seems inescapable: revenues for publishers and authors will be going down on a per-unit basis. This can most simply be attributed to the oldest law there is: the law of supply and demand. Digital change means a lot more book titles are available to any consumer to choose from at any time. Demand can’t possibly rise as fast and, in fact, based on competition from other media through devices people carry with them every day, might even fall (if it hasn’t already).  […]

So what might be worth a try from the big publishers now would be “promotional ebook pricing” on launch. Make the ebook $3.99 until date X, and then raise it to the “normal” level (which for major publishers, when the hardcover is in the marketplace, would be $12.99 and up.) This is a very painful experiment to try because it will compete against the hardcover at launch, when the publisher is trying to pile up sales to make the bestseller list. It will annoy print booksellers as well.

But uncoupling the ebook pricing completely from print pricing, which seems to be where we will inevitably go, may also mean — it certainly can mean —all ebook pricing becomes dynamic. All of this definitely raises the bar for publisher knowledge of how consumers react to prices in different situations. It has been a widespread article of faith that retailers “understand” this behavior and publishers don’t. To the extent that retailers do understand it, they see it through a different lens; they almost never care about the impact of price changes on the overall sales curve for a single title. Titles are interchangeable for retailers and not for publishers. So while it is true that publishers have a lot to learn, it is probably not true that retailers already know it.

There are some really good points in there, and the article is decent overall. I think if he had written it 3 years ago, it would have been considered cutting-edge; after all, indie authors have been doing this for years. Konrath and Smith have written about their experiences playing with price points, as have lots of other authors.

But seeing Shatzkin suggest big publishers do it too is unusual, and worthy of sharing.

2015 – New areas of writing

The PolyBlog
January 4 2015

The seventh item on my vaguebooking list was “07. Seven new topics”. These are new “subject areas” that I want to write about on my blog.

Pop culture is likely one of them, although it might be more narrow than that, maybe “pop culture intersecting with the news”. I didn’t comment on Jian Ghomeshi or Bill Cosby’s news items when they hit, but I loved watching people post and take sides, often looking like internet trolls in comment forums except they were posting the same comments on their own social media feeds. My take is a bit different and is primarily about the law, and the court of public opinion vs. the court of justice or law. I may yet blog about it.

Equally, I love the law. So much so that I couldn’t become a lawyer. I’d like to take a subject area and blog about that, but I haven’t yet found my niche. It may very well harken back to my days at law school when I was working for the Ministry of Education in B.C. and focus on the law, schools, education, and children. I haven’t quite decided yet. But there’s an itch there that I’d like to scratch again.

In the realm of writing, I have three areas that are of interest to me. First and foremost is the changing nature of the business model of publishing. I’m very much in the world where “everyone must choose their own path”, and I may turn my attention again to the world of disrupted publishing. Second, I think there is a lot of general information out there about marketing of books in the modern age, but not a lot that gives a comprehensive list of “here’s everything you COULD do, choose wisely”. I started work on this at one time and would like to go back to it. Finally, I also think there is a ripe area for a different slant on books and publishing, and that’s measuring the performance of libraries. I did some research and even some preliminary writing about three years ago but never brought anything to fruition. I think libraries are going to come under increased fire in the digital age, and while they have a strong role to play, I don’t think many of them are telling the right story or using the right yardsticks. When they tell their story initially, they act as a community centre; when their funding is threatened, they claim critics are burning books and destroying literacy if the library goes the way of the dodo. The balance is off, and maybe I can find something I can contribute to the conversation.

In a similar vein, I’m wondering if I have something to say about charities. I feel that much of the rhetoric out there is a bit one-sided, or at times, diametrically-opposed two-sided. I know, for example, that there is not much out there giving people insights into different types of charities. I also have some questions for myself that I want answered on local basic human needs programming and the most effective means of contributing donor dollars.

Finally, I do reviews for books, movies, TV and music, or at least my website says I do. I’ve been a slacker-doodle for my reviews, and I want to get back into them. I am not yet ready to commit to exactly what the other six categories will look like when I’m done, but I know this one pretty well. So, I commit to:

  • 24 book reviews;
  • 250 reviews of TV episodes (tweets);
  • 24 movie reviews; and,
  • 3 new reviews of Billboard year-end results.

That should keep me busy too.

Articles I Like: DW Smith on publishing, early decisions

The PolyBlog
May 2 2012

Dean Wesley Smith is one of my favorite bloggers. As another blogger described him, Dean is an ex-midlister who has drunk the self-publishing Koolaid, is happy with his success in multiple worlds, and is happy to share his approach and results with others. He has a couple of blog-based ebooks going, where he writes a chapter at a time and posts it for digestion and comment. Then he cobbles them all together into an actual book. His latest endeavour, the second edition of “Think Like a Publisher”, is being “reposted” with updates in close sequential order. Here are some excerpts from Chapter 1:

Some of the earliest decisions a publisher has to make can be changed down the road easily. Some are difficult to change. So, I’m going to break down some of these early decisions into basic groups. And keep in mind, there are no correct answers on any of these decisions. Just what you want to do.

…

Get the business set up, do the chores, look at your start-up inventory, and then look hard and fast at what kind of publisher you want to be.

See the full post at Dean Wesley Smith » Think Like a Publisher 2012. Chapter 1: The Early Decisions.

As I said, Dean’s one of my favorite bloggers but sometimes I think his approach to publishing is a bit, umm, influenced by his past lives. Almost like he’s willing to go self-publishing, but then tries to pull back in some of the things he misses from the traditional world. For example, near the end of the chapter, he talks about High-End publishers vs. Discount Publishers vs. Traditional Publishers. It’s a useful comparison, and he expands on this in more chapters, but it does heavily lean towards a division based on a “paper-based” view of publishing.

For me, and I am not Dean’s direct target audience, that division is a bit skewed to the paper world, and thinks in “paper” terms. Instead, as an aspiring author, I’m more interested in the author’s perspective of “choosing a publisher” than “becoming a publisher” for others. In this case, I think a more likely perspective for aspiring authors is between “Traditional Publishing” (Large press and small press) or “Self-publishing” (through third parties or as a full-fledged DIYer).

The difference, for me, is that some of the “discount” publisher categories are only applicable if you think of it in paper terms. Someone who publishes ebooks only and sells them at 99 cents is not discounting them if they’ve never sold at a different rate. Nor are they choosing to consign themselves to a bargain bin, one of Dean’s frequent suggestions on his blog.

It’s just a price point, and while I have a bunch of upcoming posts regarding “pricing” paradigms, I will satisfy my urge to be a gadfly towards the “discount” label to say that it is a point of view, but not one I share (nor do much more experienced and famous authors than me like Konrath and Eisler).

Good first chapter, though, and I look forward to the future updates…like all published items, you take from it what you can, and mileage may vary!

Articles I Like: Consumers vs. Publishers

The PolyBlog
April 24 2012

Jeremy Greenfield had an interesting post on Digital Book World about e-book pricing — but focused on the costs. The article tries to basically explain both why consumers think costs (and the price) should be a lot less, and publishers saying, “No, wait, costs are not that far off”.

Here are some excerpts from Greenfield’s post:

Publishers are making a killing on e-books because they cost nothing to produce, distribute and sell and are almost 100% pure profit. At least, that’s what many consumers think.

…

While consumers understand the basic costs involved in the bricks-and-mortar retail world, they don’t understand the costs involved in selling something that is, well, much, much smaller than a bread box.

…

“We still pay for the author advance, the editing, the copy-editing, the proofreading, the cover and interior design, the illustrations, the sales kit, the marketing efforts, the publicity, and the staff that needs to coordinate all of the details that make books possible,” said Bob Miller in February 2009 on the HarperStudio blog (which has been defunct since April 2010 when the publishing start-up folded) when he was president and publisher of that company; he is now president and publisher of Workman Publishing. “The costs are primarily in these previous stages; the difference between physical and electronic production is minimal.”

E-book production “costs 10% less” than print book production, said Molly Barton, Penguin’s global digital director. Hardly the vast savings that many consumers imagine. “But the largest expense is author payment and always has been.”

You can find the full post at Consumers Upset and Confused Over E-Book Pricing. [Edit: The original page has been removed]

Kris Rusch summed it up pretty well — she described it as all bullshit. But as I love to be a gadfly (not in the simple irritating sense, but rather the provocative sense for discussion), let me pull apart the original article. Because there is a hidden truth behind it, or rather, two versions of the truth.

Let’s start in reverse order, and begin with the publisher. They approach books in the modern world, at least from an accounting perspective, as “essentially” one entity. So all the costs that the publisher quoted above is charged to both items — it’s all overhead that has to be paid — regardless of the format of the final book. So they charge front-end editing costs, regardless of format out the back-end. They charge the combined formatting. They charge all marketing costs, etc. etc. etc. to the cost. All of these are considered a “book’s cost”, regardless of the final two sets of costs that diverge — when it is all ready at the end, you press “PRINT” in one business model or “UPLOAD” in the other. Except the publisher adds all those costs in both business models back into the original costs and amortizes it over both. Following that model, it wouldn’t matter whether you went Print or Ebook, the costs would come out the same. In fact, if you compare it to the old process where they only had print costs, the book costs are actually higher now — because they are doing an extra version that they charge to the total as well. It’s a completely wonky way to price what are essentially two separate products, but if your business model doesn’t like ebook transformation, it’s a good way to hide costs and embed them in your ebook world so that the transformation goes slow.

By contrast, let’s look at the consumer perspective. Editing? They know you already did that for the print book. Formatting? Already done. A cover? They don’t care, reuse the same one. Dozens of people to “manage the relationship”? Also don’t care. Nope, they know you already paid those costs which is why publishers are charging so high for print books (hard cover and paperback). Sooooo, ebooks aren’t incurring all those costs again — they are only incurring a small amount of “incidental” additional costs. In other words, once you have the “content”, ebooks only incur marginal costs. And like any good business model, you sell the ebook for the marginal cost of producing that extra format, plus a small profit.

In one vein, the publishers are saying, “Oh, you want an eformat TOO? That raises the overall price of everything” and consumers are responding, “No, unless you’re giving me both formats, I’m only willing to pay the incremental cost for doing an ebook”. And like all other industries where the internet is reducing production costs of virtual goods, publishers can continue to block innovation at their own peril.

The most laughable part is the argument that the biggest expense is for the author. Considering an author gets less than 25% of overall price (and often much less), that’s a pretty good argument for consumers to say “Hey, big publisher? I don’t think you add enough value. I prefer to give more money to authors and so I’ll buy the self-published books they do. And you’ll get zip on the deal.”

After all, in the end, consumers vote with their wallets, and if it puts more money in the hands of the content creator, that starts to look a lot like another economic movement.

Any one want to try labelling their self-pubbed books as “Fair Trade Reading”?

Articles I Like: E-book lawsuit in Canada

The PolyBlog
April 24 2012

Marsha Lederman had an interesting article in the Globe and Mail on April 18th trying to put a Canadian spin on the charges in the U.S. of collusion and price-fixing by the Big Six publishers (Harper Collins, MacMillan, Penguin, Random House, Hachette, and Simon & Schuster) with Apple. Just to be clear, there are TWO lawsuits in the U.S. — a class-action civil suit launched by “consumers” against this group for trying to raise ebook prices above Amazon’s preferred ceiling of $9.99 (targeting all six plus Apple) and a completely separate Department of Justice civil suit that targets everyone in that list except Random House. I’m not including separate state plans in that list.

Here’s an excerpt from Lederman:

A proposed class-action lawsuit filed in B.C. Supreme Court by the Vancouver firm Camp Fiorante Matthews Mogerman alleges that Apple Inc. and a number of publishers engaged in a “conspiracy” to lessen competition and “fix, maintain, increase or control the prices of e-books.” It is the most recent of at least five such suits filed recently in courts in Ontario, Quebec and B.C.

It also alleges that the defendants or their representatives communicated secretly, in person and by phone, to discuss and fix e-book prices, in the lead-up to the introduction of Apple’s iPad, which can function as an eReader, in April of 2010.In addition it alleges that the growing Canadian eBook market is highly concentrated, making it more susceptible to collusion.

“The U.S. case isn’t going to cover Canadian consumers. So it’s the same underlying facts, it’s the same consumer protection agenda, but it is for different consumers in a different country,” said lawyer Reidar Mogerman, who filed the suit in B.C. Supreme Court last week on behalf of plaintiff Denise E. McCabe, a non-practising Kamloops lawyer who has purchased a “significant” number of e-books.

See the whole article at Allegations of e-book price fixing hit Canada (link at Globe and Mail has expired).

So, you’ve seen the U.S. case, this “seems” like a simple matching by Canadian lawyers, should have same outcome, right? Not so fast. There is an underlying premise in law that one act can’t result in two actions for damages — even if Canadian consumers are not included in a U.S. judgement, a Canadian judge is going to look to see if Canadian consumers were either explicitly targeted by U.S. actions (i.e. the American individuals involved in the decision were negotiating in ways that were inherently or explicitly including the Canadian market rather than simply a knock-on effect of American actions) and/or there were additional negotiations / decisions by Canadian actors that create an additional claim of action. In other words, where’s the “Canadian content”-equivalent component of the decision-making? If there isn’t any, and to date there has been no proof offered in any court-room or media story, then the Canadian lawsuits are going to have to fight a much bigger uphill battle. Particularly as there is no “Amazon.CA” ebook store — we all buy from the U.S. site. Which means publishers could get punished “twice” for sale adjustments in one store. I’m a bit skeptical of the outcome, partly as Canada doesn’t have the same class-action lawsuit mentality of our American cousins, including less of a “reward” culture when it comes to judgements, often limiting outcomes to “actual damages” (a couple of dollars if you can prove you bought a book at a price higher than $9.99).

I do, however, find the notation that the Canadian market is more prone to collusion since it is more highly concentrated of interest. It could mean that certain companies might take a larger hit than the others, and with completely different dynamics than in the U.S.

Personally, I think the lawyers missed the boat on the filing. They should have included a NAFTA element where they could show that Canadian consumers writ large were being squeezed by the Canadian publishers as a larger pattern of behaviour. I’ll confess upfront that I have a really strong aversion to HarperCollinsCanada. They don’t price match HarperCollins (U.S.) and invariably when I find a book that is priced way higher in Canada, the publisher is HarperCollins. I’ve even reduced myself to arguing with them on their Facebook page about their prices…I don’t know why I’m even still getting their feeds as it only raises my bloodpressure.

Awhile back, I got very excited about Lawrence Block’s ebooks being available, went to get one of the Scudder series and thought, “What the ????”. It was $13. For a book that had been out for 10 years. Since I’m on his FB feed, I mentioned it to him…to which he replied, “Huh? They’re $7,99 in ebook form”. Of course, if you’re in the U.S., Harper Collins (U.S) was selling it for $7.99. But the Canadian price was $13.99 or so on Amazon. I could find it for $12 something on Kobo and I think I could find it for slightly less than that on Nook (or vica versa). But bottom-line was that Canadians would have to pay more than $11 to get the ebook, a greater than 35% markup. Oh, and just to add insult to injury, the paperback version was available for less than the U.S. Kindle version.

While I normally see this with HCC, it isn’t unique to them. There’s something wonky in the state of publishing when (a) the ebook version is more expensive than the paperback (I don’t care how many times a publisher dances on the head of the pin arguing that ebook costs are not much lower than paper production, nowhere could you ever convince me it was MORE expensive!) and (b) the price you set to sell to a consumer virtually (across the internet, from the same store, with the same process, with the same technology, and the exact same E-version original!) depends on which country they are in and, ignoring currency exchanges particularly when dollars are trading almost equally, there’s a 35% markup!

If that isn’t a pattern of behaviour that gets you slapped by a Canadian court for price-gouging and collusion, it certainly does at least colour your evidence a bit more strongly in your favour in your court filing. Ah, it will be fun to be a spectator.