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Sunday, 1 June 2014

The e-book wars


Some of my books - poets' corner
 
The continuing skirmishing between Amazon and certain book publishers is in the news. There are opinions from those affected – authors, booksellers and publishers, yet there’s an elephant in the room that seems to get ignored.

The big publishers price their new e-books too high, doubtless knowing that the fans of the best-seller authors will buy regardless, thus boosting their profits.

The business model quoted in a Sunday paper gives us this example:

Printed book

40% of cover-price goes to the retailer, such as Amazon, or bookshop.

60% goes to the publisher (two-thirds of which goes on production (paper, printing, pulping unsold books, transport) [doesn’t mention warehousing], with 5-10% of the price going to the author.

E-book

30% to Amazon

70% to the publisher with 17.5% of the cover price going to the author.

That’s the simplified model, anyway.

Obviously, some of these percentages will differ, depending on the author and the publisher agreements. But the principle probably holds. Bottom line is that publishers and retailers are in a business and need to make a profit.

Producing a book has a lot of costs attached, though not mentioned specifically in the example above. For instance, editing, page format setting up (should be minimal in the digital age), cover design, marketing (if any).

So, let’s assume the publisher is justified in getting 40% (two-thirds of 60%) for print, which includes paper, printing, etc. That still means 20% is left over for – the author? No, the author gets 5-10%, if he or she is lucky. So some percentage (10-15%) is sort of floating somewhere… Maybe that’s the publisher’s profit? Hmm…

Now, for the e-book, there are no paper, print, delivery, warehousing, pulping, and transport costs. So why does the publisher get 70% of the cover price?  If the author gets that 17.5% (many don’t get nearly as much), that means the publisher gets 52.5% and Amazon gets 30%. If the publisher doesn’t spend on print, paper, printing etc for this version, then that 40% is ‘unclaimed’ by any process for the e-book model. Of course, subsumed within though not quoted must be the editing, layout, setting up, cover design, marketing… which is necessary for the print book anyway. So if, as is usual, the majority of books from the publisher are both print and e-book, those costs are already accounted for in the print model so shouldn’t be deducted from any percentage in the e-book model. Yes, setting up an e-book requires additional work, but it’s fairly basic and cannot account for that 40% slice. Whatever way you cut it, the costs of producing an e-book are negligible and don’t warrant the high price.
 
There is probably something else at work here. If the price of the e-book was lowered to a realistic level, then that might affect print sales. At present a new hardback and e-book are only about $5 apart in pricing (a hasty straw poll on the B&N site). People who prefer print books will be content to pay that extra; but they might baulk if the difference were greater. So it could be argued that the artificially high e-book price is to protect the sales of the hardbacks.

Whatever side of the fence we sit on, I suspect that authors – the originators, the people who effectively create the books – are unlikely to see percentages improve in royalties any time soon.

[This view concentrates on the big publishing conglomerates, not the independent presses who quickly grasped that e-books sell better if priced low. Certain assisted-publishers/vanity publishers tend to price their e-books as high as the big publishers’ model, thus denying their writers a viable outlet.]
 

10 comments:

Richard Sutton said...

Good insights, Nik. While the market dust settles, this promises to continue to provoke discussion. I know that I recently decided against the eBook version of one of my favorite author's newest release because it actually cost the same, pre-release, as the discounted hardcover. If the writer were getting the lion's share, I'd probably just go ahead, but knowing the industry, it left me with the feeling that the publisher must think their readers are idiots.

Pat Dilloway said...

Yeah $10.99 (or more) for an ebook is ridiculous. The excuses people make for why this is are just as ridiculous.

Chap O'Keefe said...

An illuminating and thought-provoking post, Nik. Ebooks continue to both horrify and fascinate.

As a reader, I now read more on a Kindle simply because shipping paper books to New Zealand has become unaffordable. I more often buy from sources other than Amazon. For no divulged reason, Amazon bump up many ebook prices for their customers in their "Australian region" by 20% more than the converted US price.

I must also confess that I still find reading a paper book a far more satisfying and complete experience than having a file of its words available on a sterile gadget. How can I explain this? To me, it seems ebooks alone would be akin to having to spend your life in a hospital. All the essential needs would be met, but you'd miss the extra comforts, character, and familiarity of home.

As a professional author of many years' standing, I find self-publishing via Amazon's Kindle Direct Publishing scheme daunting. Your work is drowned in the continuous "tsunami of swill" that Amazon allows to flood its websites from indies who haven't bothered to learn that a book is more than a string of words thrown on to a screen without training or preparation. And without a publisher, you are on your own when it comes to the promotion and marketing that would make your book stand out.

Last month (May), I sold not one download of the westerns I have available through Amazon. RIP Chap O'Keefe? This is the first month that this has happened. Naturally, I'm now paying extra attention to other irons in the fire. I have accepted from a small ebook-only publisher a contract that offers me 30% of of his net receipts rather than the 70% of retail price as offered by Amazon. I will wait to see how this works out in practice. One can only hope that for his 70% of net receipts the publisher will be supplying a first-class cover and formatting, showcasing the book on his own website, and promoting it via his newsletter to dedicated followers of the genre involved. He says, "Rest assured our site is doing very well, and of course we distribute to many more outlets as well."

Nik said...

I agree with you Richard and Pat. No matter how they dress it up, the high e-book prices can't be justified. Granted, the quoted percentage examples are a generalisation I've taken from a newspaper, but they're close to the real thing for the big 5 (or however few are left) publishers. Chap, I sympathise with your frustration - but hope that your new venture will bring dividends. The 'swill' comment really needs another blog, I suspect (at risk of being elitist!)

Brian Clegg said...

I really don't agree that the 'high price of an ebook can't be justified'. Surely it's not that it's high, it's that books are cheap. Compare, say, £7 for a typical ebook with £9 for a typical cinema ticket. Literally all I get for that is two hours of entertainment. If I want to watch it again I have to pay again. The ebook is much better value.

The other thing, I think, is that you have to remember that ebook prices are much more fluid, and the figure you quote is the maximum price. Most of my ebooks sell for around £6-£10, but most have them have been 99p at some point in their life. It's very different from a pbook pricing.

Finally, in the end it's a marketplace. No seller ever has to justify their pricing. Purchasers can choose to take that price or stay away.

John Holt said...

It seems to me that there are (at least) two parts to this argument. The first part is whether the reader wants to remain with the established writer with the mainstream publisher, whatever the price of the ebook; or would they be willing to take a chance on an unknown indie author. Given a vast difference in book price, and the fact that there are many unknown Indie authors who are every bit as good (indeed many are better) that the established author. I am hoping that sooner or later the greed of the mainstream publisher will price themselves out of the market to the advantage of the Indie.

Nik said...

Brian, for a movie you're paying for more than just watching it - the building overheads and staff, for example. An e-book, it's instantly in your e-reader, no middlemen. I can't see UK prices for e-books on Amazon as I live in Spain, but see US $. Your books are non-fiction, and that's a different market entirely, with a different model. Your fiction book Xenostorm: Rising is a very reasonably priced e-book (from a small publisher, not one of the big 5, I suspect) [And it looks interesting as well!] From the very limited sample of comments I have received, that's the problem, readers are 'staying away' simply due to cost. That can't be good. Thanks for commenting.

Nik said...

John, your comments tend to reinforce what I've suggested to Brian - the big 5 (or 4 or...?) may price themselves out of the market, eventually. That can't be good, either.

Chap O'Keefe said...

The phrase "tsunami of swill" was coined by US writer Lee Goldberg. Too many of the hundreds of thousands of ebook offerings suffer from poor spelling, poor punctuation, poor grammar, and poor formatting. And it doesn't end there. Some of the writers fondly imagine they've "got a gift" for telling their stories rather than a yearning, all-important though that might be. They're not prepared to study let alone master technique. So we see ebook fiction that suffers woefully from poor characterization, poor plotting, poor structure, and poor narrative style. But none of these basic elements seem to matter in terms of sales or Amazon ratings (which are not quite the same thing). What does matter is the quality and quantity of the huckstering in which the writer has the inclination, persistence or energy to indulge, usually via social media.

Of course, this unfortunate state of affairs can be partly blamed on what some now call the "legacy" publishing houses. Much of their output in recent decades has been determined not by their founders or editors but by their sales representatives and the buyers for chainstores ... a book must have the name of a celebrity attached to it, if only in the form of an endorsement; a novel must run to a minimum of 300 pages to justify a barcode worth being swiped by a bored assistant at a checkout... Writers who wouldn't or couldn't conform to the requirements were abandoned to their own devices. This has amounted to a band wagon, the ebook, on which virtually anyone can jump straight from the slush pile.

Nik said...

I take all your points, Chap. Every writer should strive to aim above mediocrity. I'd like to think that persistence pays, though that might not be the case. If the reading public isn't discerning enough to turn away from the 'swill', well then we're all on a hiding to nothing. It may take years, but perhaps the cream will rise... My glass is half-full.