437 Comments on “A Quick Note On eBook Pricing and Amazon Hijinx”

1. if i’m going to buy a book for $8 i want to be able to keep it on my bookshelf or sell it again if i feel like it. not just own the ability to read the electrons until i get a new reading device…

2. The real power we authors have is removing links to Amazon from our websites and such. It may not be vast money, but I’ve actually had an online retailer call my publicist at S&S to complain because my website’s BUY THIS BOOK links were biased toward the competition. So they care a little, at least.

   Not that we’re at that stage, I’m just saying . . .

   Plus, most people’s love of the Kindle is not its design, form factor, or reading experience, but the convenience of instant wireless purchases. Imagine those folks firing up their Kindles this weekend and finding out that they can’t buy books from certain publishers, while their Sony/Nook-owning pals can.

   Random blackouts do not make customers happy.

3. No way in hell am I going to pay that kind of money for DRM’d e-books. As for charging a higher price for an e-book in its initial release, then dropping the price later (reprising the model where hardcovers sell for ~$25, trade paperbacks sell for ~$15, and mass-market paperbacks sell for $8)–still no way in hell.

   Publishers could get away with charging more for hardcovers and trades because they cost more to produce, and one could also arguably cite the law of supply and demand (of course, hot titles get extra printings). Neither of these apply to e-books! The $25 e-book is the same chunk of data as the $8 e-book. And the scarcity underpinning the law of supply and demand doesn’t apply when that chunk of data can be copied and transmitted to the purchaser at trivial cost. And why the hell should the purchaser of an e-book have to subsidize all of the paper, printing, binding, shipping and returns of physical books? The price of an e-book should comprise the author’s royalty, editorial costs, and a reasonable profit, and no more. That’s about $4-$5, I’d guess. Not coincidentally, that’s about what webscription.net charges for its DRM-free e-books. It’s the only e-book publisher to which I have given any serious money.

4. A wide content selection will make or break a playback device these days. I work for Qualcomm (who invented the business model and infrastructure for Kindle, as every Kindle has an EV-DO radio from Qualcomm so you can buy ebooks from anywhere in the USA.)

   Kindles cost $299. I am told that a comparably radio’d iPad costs $999. The $699 iPad doesn’t have a cellular radio. It only has 802.11. Granted an iPad can play movies in color, which a kindle can’t do, but the Radio in the kindle that lets you buy a book anywhere in the USA is a pretty special thing.

   Still, I am greatly concerned when Amazon pressures their content providers, as content providers will make or break a product these days, and I hope Amazon realizes this, because Apple certainly does.

5. What I don’t get is why the publisher should have any say over what Amazon sells their books for. As long as Amazon pays them the full wholesale price, Amazon should be able to sell or give them away for however much it wants to.

   If Tor wants $15 for an e-book wholesale, and Amazon wants to sell it for $10, why [i]shouldn’t[/i] Amazon be free to throw $5 away? The Doctrine of First Sale suggests that once Amazon buys it, they can sell it how they like.

6. By the way, kindle has a “friends and family” program (n/c) that allows you & your spouse/kids to get e-dups of all the e-content from your kindle, on their kindle. And, if you upgrade your kindle, Amazon will redownload to the new kindle, if that’s the only way to do the transfer. This caused a row a few years back when a publisher had rescinded the rights to a book and when people wanted to upgrade their kindle, Amazon had lost the rights to re-download the content to their new device.

7. Speaking as someone who makes a living off my writing (non-fiction and columns) the notion of a slightly larger royalty check is not something I oppose vehemently.

   But I’m also a librarian and I spend a great deal of money on books (both mine and that of my library) and ebooks are very rapidly becoming part of my purchasing.

   Right now I read kindle books on my iphone. Generally, I’ve been buying the cheap classics, older titles, some of which go for as little as a buck or two. You can get Robert Silverberg’s “Dying Inside” for about 6 bucks, not bad. It’s about what I’d pay, give or take, to get a copy at a used book store.

   Ten dollars feels about right for an ebook. I’d pay more for something I really wanted right off the presses or a book that was graphic heavy (something the kindle would turn into mucky grey-scale) or a unique monograph. There’s some wiggle room, but I can say that at 10 bucks a book I’d likely be more willing to experiment with an author or subject than at 15 or 20.

8. Chris Meadows:

   You’re making the almost certainly erroneous assumption that Amazon is happy to procure the ebooks at a price higher than that which it will sell them for.

   MG Farrelly:

   Yes, but you’re also discussing your personal preferences. Speaking as someone who has fans who pay $60 or more for limited editions of my work, and $20 for my hardcovers, I don’t imagine some of my readers would object to paying $15 to get my next book right when it comes out. And bless them for it, I say.

9. I am told that a comparably radio’d iPad costs $999.

   You are told incorrectly. The comparable iPad costs $629. That’s not enormously more than a Kindle with a similar size screen.

10. My main reservation about eBooks is that I don’t have confidence that I’ll be able to read them in 20 or 30 years. Yeah yeah, open source formats, no DRM, yadda yadda yadda. I still worry that I’ll be upgrading (sidegrading?) all my eBooks every few years if I want to keep them. That sounds like work, and boring work at that.

    No such worries with paper books. That’s why I’m pretty much entirely outside the whole eBook market.

    (Yes, I still buy most of my music on CDs, too. Although in that case it’s partly inertia and partly that many albums I want aren’t available for download.)

    I guess I could see downloading readables for stuff I considered totally disposable. I’m not sure what would qualify, though. Especially since I’m a slow enough reader that I can buy books far faster than I can read them.

11. I, too, like to own the books i pay for (I have over 1500 currently in my house, which are almost entirely hardcovers and trade paperbacks, many of them signed). The idea of a Kindle/Sony/Nook/whatnot has intrigued me, largely because an eReader weighs only a few pounds, while my current dead tree collection weighs tons. But I can now see that owning a Kindle (or similar product) gives far more control over my collection than I am willing to grant. And as someone in the other thread put it, I don’t much care for getting splattered when giants start pissing on each others cornflakes.

    But don’t worry, John, I’ll still buy your books — if I have to drive to Bradford to do so.

12. John: Well, according to everything I’ve seen in the news media, they have been doing that so far. I see article after article about how Amazon is losing money on every Kindle e-book it sells at the $9.99 price point.

    For example, this piece from Publishers Weekly: http://www.publishersweekly.com/article/CA6657272.html

    And this piece from thinktank/research group TBI Research: http://www.tbiresearch.com/e-readers-should-drive-profits-for-both-distributors-and-book-publishers-2009-11

    Amazon may not be happy about it…but if they don’t want to pay it, they can either raise their prices or stop selling the books.

    Looks like they’re choosing to stop selling the books.

13. systemBuilder, you happen to have a number of way off numbers in your post. The most expensive (64GB with HSDPA) is $829. The base model (16GB, wifi only) is $499.

    Also, the current model Kindle has a HSDPA radio in it, EV-DO is gone. They’re with AT&T now.

14. As a consumer I can only applaud amazon. $15 for an e-book is a rip-off and would harm the growing e-book market.
    $10 feels about right and the publishers and authors make more from it than they would from a paperback. Moreover amazon.com has oversea customers that other companies don’t have.

15. I honestly don’t know enough about publishing to fully understand all the issues here, although I kind of agree that as long as Amazon is paying the full wholesale price it should get to charge what it wants.

    That said, pulling all the books to make some kind of point or play chicken with Macmillan is indeed an asshole move and makes me less than trustful towards the company.

    Now, I own and enjoy owning a Kindle. To be fair, it was a gift. However, I tend to purchase stuff for it that I don’t need to own, if that makes any sense. In other words, for the most part it’s stuff I would likely hand off to someone or bookcross or the like. Stuff I want to be 100% certain I have access to forever I buy in print format. The other thing I use my kindle for is reading is magazines and newspapers when I’m in the mood for them.

    Good luck and I hope Amazon comes to it’s senses and restores the books soon.

16. I’m really new to the purchasing of ebooks. What vendors provide reliably DRM-free ebooks? I would like my library to be as DRM-free as possible.

17. Monika:

    “$15 for an e-book is a rip-off”

    Not if you want the book and are willing to pay that much for it. Just like a $20 or $25 hardcover is not a ripoff if you want the story inside of it or prefer that format. Likewise, there’s nothing to say that a $15 ebook has to stay at $15 forever; its price can drop over time, to something you think is a fair price.

    Let’s try not to assert that our own opinions on what a fair price for an ebook is are some sort of objective fact.

18. Re #1: I was starting to think I was the only one waiting on eBooks until the whole DRM situation shakes out – I also like to own my books. I might be willing to rent some if it was clear to both parties that it was a rental. I keep a few public domain books on my iPhone (bless you, Project Gutenberg) for those times I’m stuck somewhere and want to read.

    I hope it doesn’t take as long as it did with digital music for the DRM craziness to go away.

19. As someone who owns a Kindle, I bought it for several reasons. One, to take with me on vacations, camping, etc. The weight of all the books I wanted to choose from was just getting too much.

    Secondly, I am physically running out of space for books in my house. I am very careful what I buy nowadays. I clean out shelves regularly to give away. And there’s still not enough room. The Kindle helps in that regard.

    Thirdly, I just don’t want to own a physical copy of every single book I’ve ever read. I just can’t do it.

    I do hate that I don’t actually own a physical copy of a book. I love buying books. I love bookstores. I hate it that Amazon can literally rip that book out of my hot little hands (well, out of my Kindle), but I knew that going in, by buying the device. Same with the iPod. And yes, many of my songs on the iPod are not from iTunes also.

    So what do we all do about this? I don’t have the answers. Wish I did.

20. If Macmillan does get the price raised to $15, the joke may well be on them. There are already a number of people who loudly boycott any Kindle e-book that costs more than $9.99. Just google “9.99 boycott” for lots of links.

    Ironically, when Brian Napack, the President of Macmillan, was speaking at a recent publishing-industry conference one of my fellow TeleRead correspondents attended, Napack said (according to my friend’s hasty note-taking—emphasis mine):

    Piracy happens when motivation meets opportunity. Motivation: love of authors, genres; perceived high prices; lack of availability; restrictive formats; distain for media companies. Opportunity: more digital content; more file sharing sites, broad availability of titles, more pirate ready devices.

    So his response to “perceived high prices”? Raise them from $10 to $15. Yeah, right. That works.

21. Chris Meadows:

    One of the articles you link explains publishers’ apprehensions:

    The concern among publishers is that, at some point, when Amazon sells both the bulk of the digital reading devices and the bulk of digital books, it will refuse to pay the same discount on Kindle editions, forcing publishers to a lower price for digital editions.

    Also the large number of books in Amazon’s kindle store are not in hardcover or at a hardcover price point. Certainly mine aren’t. Amazon’s making money off of those.

    “There are already a number of people who loudly boycott any Kindle e-book that costs more than $9.99.”

    So what? There are people who loudly boycott just about everything. People who feel they are entitled to $10 ebooks can get them after the people who are happy to pay $15 (or whatever) get first crack, just as the people who don’t want to pay hardcover prices can pay paperback prices later.

22. @scott westerfeld I disagree on the wireless purchase thing. I’ve had a kindle for about a year now, and I really haven’t bought that many ebooks for it from amazon. I’ve read tons of samples with it and I find that feature very useful. I also sometimes take advantage of the freebies amazon gives away, presumably to hook you on a series or author. But believe me, if they’d offered a cheaper version with wi-fi, or even requiring a USB connection to download books (as was normal for ipods until not that long ago) I’d have gone for that without question. The cell modem is often a nuisance, as left on it results in picking up the kindle only to find a drained battery, and browsing the store is quite frustratingly slow with it. Much easier to browse the normal website, at which point I’m already at the computer and might as well hook up the kindle’s usb port. The biggest advantage of the device, in my opinion, is the ability to carry a large variety of reading material in very little space.

    The big problem is price, both of the reader and the books. $9.99 compared to typical hardcover prices almost seems okay, and I’m occasionally willing to pay that if it’s something I really want to read soon, but don’t think I’ll want to keep, which usually means non-fiction on a topic of momentary interest, but for fiction, if I’m going to pay that much I want a physical object I can keep.
    But after years of telling us the rising prices have been due to the cost of paper going up, to then want to charge 2/3 or more for an impermanent version with no physical manufacturing cost they really shouldn’t expect anyone who seriously cares about books to pay that much and get no actual “thing”. There’s a cold logic to simply subtracting the cost of the physical product and shipping, which might very well come out to around what they actually want to charge, I’m too lazy to try and figure it out right now, and I am not suggesting that the authors, editors and others involved in producing the ebook version should make any less from their work based on the form in which it’s delivered, but from the consumer perspective it sure doesn’t seem like you’re getting your moneys worth at the prices the publishers OR amazon want to charge.

    I don’t really regret buying the kindle, but I don’t expect the reading of purchased content on mine to ever match public domain and sample use. I still do most of my reading from actual books.

23. Personally, I think even $9.99 for an e-book costs too much, after buying lots of books from Baen that don’t ever cost more than $6 each and come without DRM. So I don’t buy them. The most I tend to spend for a book is around $8 for the paperback-priced ones that Fictionwise sells.

    And if Amazon refuses to pay the same discount on Kindle editions, there’s nothing that says the publishers have to continue selling Kindle editions to them.

    That’s what it means when you’re the supplier: you set the wholesale prices. If the retailer doesn’t want to pay them, the retailer doesn’t want to sell the goods.

    It doesn’t mean you get to set your own retail prices, too, and I’m pretty sure there have been court decisions to that opinion; there’s a reason MSRP stands for “manufacturer’s suggested retail price”.

24. (doesn’t GET to sell the goods, not doesn’t “want” to, grr.)

25. Chris Meadows:

    “The most I tend to spend for a book is around $8 for the paperback-priced ones that Fictionwise sells.”

    And I’m fine with that. However, I and my publisher also like to sell to the people who are willing to pay more, first. If Amazon through its actions makes it difficult or impossible to do so, it’s not unreasonable for publishers to push back against that. I’m not really sure why this is actually an issue.

26. I set myself down firmly on the side of those who want to “own” the book, not rent it. I’ve paid all sorts of prices for books over the years, all accepted on the simple basis of my decision as to whether it was worth that price to me. The only e-books I own right now are PDF files downloaded with no DRM or other restrictions. With those at least I know I can still print them out if all else fails. A few years ago I decided that I would only buy hard covers. Because I like them and because the slightly higher prices make me think twice about how much I want that particular book but mostly because I don’t have enough shelf/floor/wherever space for the books I have now. If I still bought paperbacks I’d be living in the garage by now and visiting the house to see the books.

27. …still watching and waiting….

28. You know, it’s not that I want to jeopardize Athena’s college fund or John’s place on the Left4Dead leaderboards, but it’s a little weird to hear people arguing over whether less than a megabyte of text should cost a little less or a little more than the cost of a high-def copy of a movie that took hundreds of people and millions of dollars to make.

    Or to put it another way: back in the pre-iTunes, pre-AmazonMusicStore era, the various “legitimate” music download services and the music labels were engaged in a long tug of war over whether online music should sell for exactly the same price as a CD, or (via convoluted subscription models) a lot more. Say what you will about Apple, but they nailed the price-point: $1/track, and $8-10/album. The big publishing houses are in just as much if not more denial about how much of their profit margin they’re going to be able to keep in the brave new world, and we’re all going to be regularly treated to dust-ups like this until someone comes along and forces this issue. (Ironically, it looks like Apple is emphatically not volunteering: I suspect the issue is that Jobs has some personal interest in the music industry, but could care less if print media goes away.)

29. Sorry for the second post so quickly, but it occurs to me, that there’s a potentially hidden factor. That being that physical books, unlike what I’d guess to be most retail products comes with a predetermined price from the publisher already stamped on the item.

    Now half price, to pick an arbitrary level, for the electronic version might not sound that bad to most people until you factor in that amazon is already undercutting that predetermined price in the trade and hardcover markets at least, by a not insignificant percentage, and the customer is usually going to be comparing the ebook price to the already discounted price rather than the “list” price.

30. John: In that light, I don’t see why it’s an issue for Amazon to stop carrying Macmillan’s books. Just as you’re free not to buy from Amazon if you don’t like what they’re doing, Amazon’s free not to buy from Macmillan if they don’t like what Macmillan’s doing. It’s a free country.

31. 1. I’m with you on that one. I’m not touching any ebooks with DRM. The one exception I make is reasonable priced (max US$8) ebooks with a DRM that I know I can easily strip out right after download which I just can’t buy from anywhere without DRM.

    On the rest, I would like to quote Macaulay through Eric Flint:

    It’s enough to point out that, over a century and a half ago, Macaulay predicted what would happen to the RIAA:

    I will only say this, that if the measure before us should pass, and should produce one-tenth part of the evil which it is calculated to produce, and which I fully expect it to produce, there will soon be a remedy, though of a very objectionable kind. Just as the absurd acts which prohibited the sale of game were virtually repealed by the poacher, just as many absurd revenue acts have been virtually repealed by the smuggler, so will this law be virtually repealed by piratical booksellers. At present the holder of copyright has the public feeling on his side. Those who invade copyright are regarded as knaves who take the bread out of the mouths of deserving men. Everybody is well pleased to see them restrained by the law, and compelled to refund their ill-gotten gains. No tradesman of good repute will have anything to do with such disgraceful transactions. Pass this law: and that feeling is at an end. Men very different from the present race of piratical booksellers will soon infringe this intolerable monopoly. Great masses of capital will be constantly employed in the violation of the law. Every art will be employed to evade legal pursuit; and the whole nation will be in the plot . . .

    Remember too that, when once it ceases to be considered as wrong and discreditable to invade literary property, no person can say where the invasion will stop. The public seldom makes nice distinctions. The wholesome copyright which now exists will share in the disgrace and danger of the new copyright which you are about to create. And you will find that, in attempting to impose unreasonable restraints on the reprinting of the works of the dead, you have, to a great extent, annulled those restraints which now prevent men from pillaging and defrauding the living.

    Yes, I know I’ve quoted this before. It cannot be quoted too often.

    But the publishing industry, thankfully, is still a long way from this situation. It has still—not yet—crossed the social Rubicon that the RIAA crossed many years ago. That Rubicon, of course, being the point at which the public’s perception of a given industry changes from “legitimate folks” to “bunch of greedy gouging bums.”

    Cross that Rubicon and, just as Macaulay predicted, you will find yourself engaged in what amounts to guerrilla warfare with the entire population—or, at least, that segment of it which used to be your customer base

    (quoted from: http://www.baens-universe.com/articles/The_Problem_is_Legal_Scarcity__not_Illegal_Greed )

    From my POV, lots of publishers are getting dangerous close to that “bunch of greedy gouging bums” already. $25-$35 for some DRM encrusted bits locked to a single device? I don’t think so.

    I’m happy to pay for my ebooks. After all, I want the authors to keep writing. And I’ve spend a few thousand dollars for ebooks over the last few years.

    For me that line between reasonable and unreasonable is at about $15 for an open format eARC. And I’ve bought plenty of these from Baen over the years, feeling good about supporting my favorite authors.

    As books get older, that goes down to about $8 for a book that has been in print for 9 months or more already.

    Add DRM into the mix and what I consider a reasonable price very quickly tends towards the negative. I wouldn’t take it if someone gave it to me of free.

    In todays age where it has become impossible to enforce physical scarcity for something as easily duplicable as text, publishers would be well advised not to seriously piss off their customer base, because people that feel that they are being ripped off do not make good customers.

    Even worse I feel is when they outright refuse to sell ebooks at all to someone based on “geographic restrictions”. In todays connected world, that’s simply inexcusable.

    I’m in Australia and for the last half year now I’ve been outright refused the right to buy the large majority (95%+) of ebooks I’m interested in.

    At first on most sites it was still be possible to work around that by loading up some form of micropayment system, then change the address to a random US (or UK for some books) address and then order the books by paying with the micropayments account. But a few months now it’s at the point where e.g. Fictionwise lets you buy books, taking the money out of the micropayment account, and then refuse to let you download what you already paid for until you enter credit card information with a US (or UK) address.

    When they treat their customers like that distributors, publishers, and in the end, unfortunately, authors, shouldn’t be surprised if their potential customers stop playing their games.

32. John:

    Well, not to completely brown my nose, but I’d be one of those fans dropping 15 bucks to get your work right on release. I can think of a few authors I’d do the same for, and I think that’s pretty common.

    What you’re describing sounds a bit like what Radiohead did with their last release. You could name your price for the download, but the CD for 15-20 bucks, get the vinyl for 25 or so, or get this big magilla of a box set for near a 100 bucks.

    Are e-books comparable with digital downloads? You can get the book in a raw, simple, readable form, or get a hard copy or, in some cases, pop for a high-end fancy edition. A step-up system?

33. A point no one has mentioned: one can make an argument that Amazon is engaging in predatory pricing against physical bookstores. Having a subsidized $9.99 option out there while the only physical format is $25 means that bricks and mortar bookstores are artificially losing sales.

    Now, I realize that a physical book and an e-book are different things (in every sense except the text itself), and that most booksellers discount, especially on bestsellers. But when any retailer, physical or electronic, is selling at a loss, that’s a form of predatory pricing. In other words, they’re using their monopoly power to starve their competition of profit.

    All you folks saying, “Yay for Amazon for selling $10 books!” might want to take note. They won’t do this forever, and when they stop, who will be around to compete with them? (Especially given the larger economic downturn that Amazon are making this push during.)

    Readers and authors both want a diverse and healthy bookselling ecology, with bookstores large and small, virtual and real, chain and indie. This is merely enlightened self-interest on all our parts. But I don’t see this strategy of Amazon’s (or CostCo’s similar pricing strategies for physical books) producing healthy ecology that in the long run.

34. Should be: “producing that healthy ecology in the long run.”

35. Doctor Memory:

    “but it’s a little weird to hear people arguing over whether less than a megabyte of text should cost a little less or a little more than the cost of a high-def copy of a movie that took hundreds of people and millions of dollars to make.”

    That’s crazy bad false equivalency, however. That less than a megabyte of text will also keep the average reader entertained for a multiple of time longer than that movie. So one could make a rather cogent argument that given the entertainment value given, the purchaser is getting a hell of a value, and that “entertainment value” is a rather more relevant metric than, say, how big a text file is, or how many millions went into special effects. Or you might not.

    The point is, comparing file sizes and budgets to what the outputted project should go for in the market is not going to give you good results.

36. @Pixelfish: Got an Sony Reader for Christmas, and I’m buying most of my DRM free stuff from Webscriptions (which someone mentioned earlier) –

    http://www.webscription.net/

    It does pretty good for Bean books. It also carries Scalzi’s Hate Mail and Coffee Shop books. The selection isn’t as broad as I would like, but you can download books in half-a-dozen different format, including html and rtf formats. The stop makes no attempt to stop you from downloading more than one format, and carries a nice library of free works to get your feet wet.

37. call it the free market advocate in me.

    Your free market advocate seems to only support the supply-side setting the prices.

    If it’s a free market, then the middleman also gets to decide what price they’ll purchase at, and what price they’ll sell at.

    This is not to say that I side with Amazon here (assuming everything is as it appears to be). But they are indeed trying to use their market power to effect a market change, and that’s all in the “free market” philosophy. And I would not at all be surprised if they’ve done a lot more market research on the price points than the publishers have.

    People who feel they are entitled to $10 ebooks can get them after the people who are happy to pay $15 (or whatever) get first crack

    Do you honestly think it’ll go that way? (Not a rhetorical question — you know more than I do about the publishing world.) My feeling would be that the publishers would set the price at $15, note that certain authors aren’t selling at that price, and drop them. Or pay the authors a lot less money. (Or, worse, go the route of the music labels. Which would very much suck for authors.)

    My bias here is that I don’t like the thought of a $15 ebook. I don’t know why. It’s certainly not because I won’t pay that much money for a book — I usually buy hardcovers, when I can. But that’s not for “first crack,” as you keep saying; it’s because of larger print, more durable copy, and because I know the author gets paid more. But even at $10 for an ebook… I hesitate. And decline to buy far, far more often than I do buy. (This is also part of the “free market,” and you referring to it as me thinking I’m “entitled” to that price is rather ignoring that.)

    Baen’s prices seem to be about $6 per book (some cheaper, some more expensive), and that’s a price-point at which I don’t hesitate so much.

    Someone at Amazon, and I presume someone at Macmillan, has done lovely graphs showing sale and profit rates at various prices. Again assuming all is as it appears to be… I’d have to conclude that the graphs do not match.

38. Chris Meadows:

    “In that light, I don’t see why it’s an issue for Amazon to stop carrying Macmillan’s books.”

    I’m not aware of suggesting that Amazon is not free to do so. But I think your argument here is either naive or disingenuous, since Amazon in fact has no intention of not carrying Macmillan’s books, it’s just playing a game of chicken with them to get its way as regards ebook pricing, and in the process stomping on a bunch of authors, including me. Which makes them today’s assholes in my book.

    Sean Eric Fagan:

    “Do you honestly think it’ll go that way?”

    Sure, because it already does go that way; Books are already sold at different times at different price points. And no, I don’t think all writers will be dropped; I think they’ll find what they already know, which is some writers and books sell better at different price points than others. Which is why some books and writers go direct into MMPB, for example.

39. Scott Westerfeld has it. Note that what Amazon is doing is virtually identical to what WalMart does; set their price and tell the supplier they can let WalMart charge that price or take a hike.

    It amuses me how much overlap there is between the “Yay Amazon, 10 dollars!” set and the “Boo, Walmart, predatory pricing!” set. For some reason it’s different when it’s a book and not a jar of pickles.

40. I’ll ask here the same question I asked at Making Light — is the cost of paper and printing and shipping and warehousing really low enough that 90% or more of the cost of a $30 MSRP hardcover or a $15 MSRP trade paperback or a $9 MSRP mass-market paperback is the royalties to the author, the editing and copy-editing, the marketing, and so on?

    My problem with e-books, as I said elsewhere, is that as sold by Amazon they’re inferior to physical books (Baen gets them right, IMO). If it costs just as much to produce an e-book as a physical book and I can do everything with an e-book I can with a physical book (lend it to friends), I’ll happily pay full price ($30!) for a new release I want, just like I do with new games on Steam. Fie on publishers for insisting on DRM. Amazon’s current strong-arm tactics are dubious at best, but if they can manage to convince the publishers not to hang themselves by charging high prices for inferior goods, maybe they’re worth it.

41. @33 “But I don’t see this strategy of Amazon’s (or CostCo’s similar pricing strategies for physical books) producing [that] healthy ecology that in the long run.”

    I don’t think that’s any different than the general results of corporatism over the last century.

    The only sure thing seems to be that many writers and their readers are in danger of being trampled to death in the battle as the corporations fight to shape whatever industry emerges from this change to suit themselves. :(

42. I spend more time reading a book than the side of a jar of pickles.

    It’s different because we’re commenting on an author’s blog.

    How does Amazon feel about what Baen is doing with some of their hardcovers?

    I bought David Weber’s latest hardcover and it came with a disk with ebook copies of everything he’s written for Baen, ever.

    And I finally got a Nook to put them on. Does Baen handing me thirty books for the price of one bother Amazon?

43. From what I’ve seen with the Baen (darn it, I spelled it Bean earlier), they’ve been expirimenting with $15 electronic-edition ARCs and then dropping the price down into the $6-8 range later on. It looks like they allow multiple downloads for the ARCs to give the readers newer version with more corrections as they work out the bugs.

    Maybe when a reasonable hour rolls around, someone who has actually tried an early ARC can comment on it. (What are you people still doing up? I going to bed myself.)

44. Even worse I feel is when they outright refuse to sell ebooks at all to someone based on “geographic restrictions”.

    Sing it, Thorsten! I’m also in Australia, and it wasn’t long ago that Apple was doing exactly the same thing with music downloads (and to some extent they still are). I really hope that books become more like music – non-DRM, almost always worldwide availability – and not like TV shows and movies on DVD, released in dribs and drabs, leaving off most of the extras in non-US and non-UK markets. It’s ridiculous that people in the originating country can watch a show for free (with ads, so not quite free) but I can’t pay money for it.

45. Anyone who thinks prices are too high is welcome to check out the profit margins in trade book publishing.

46. I can’t help but be amused at David’s dismissal of the notion of dropping ebook prices over time in #3 as if this is a New Thing…because it isn’t.

    The exact same thing has been happening to hardcover books for decades now in other parts of the retail supply chain — the front “bargain books” section of B&N, for instance. Wait long enough, and you can get lots of hardcover fiction in hardcover form for less than the current price of a mass market edition. Same book, same words, same publisher — but now it’s selling for $6.98 instead of $26.95, because it’s been remaindered (or, at that price point, probably remaindered and then moved from the “frontlist” remainder table to the “clearance” remainder table).

    At least that’s the consumer’s perspective on the matter. From the author’s perspective, the equation is a bit different, because in the case of an e-book, the author is (or should be) getting royalties on sales of that e-book at all of the price points along the scale. OTOH, in the print world, the author sees not a penny in royalties from sales of remaindered books.

    So as far as principle is concerned, I therefore don’t have a problem with a diminishing-price model where e-books are concerned; it seems to me that as long as the e-price is competitive with the prevailing print price for the same title (if it’s available in a print edition) or with the average price for similar works (if there is no print edition) then the market is working as it should. I’ll stipulate that there’s room for discussion as to what constitutes “competitive”, but on balance, it seems like a better deal for authors than the parallel dead-tree model.

    All of which is sideways from the merits — or lack thereof — of Amazon’s present behavior. Speaking as an ebook author, I’d rather have my readers buy direct from my publisher because my royalty percentage is bigger that way (you can find my titles on Amazon, but Amazon takes a sizeable cut off the top before my publisher and I split what’s left). But that’s another discussion….

47. About reason 1. If you hate not owning things that you pay for, how do you feel about Steam games? I know that you play L4D and that $60-or-so investment is absolutely worthless if Steam decides it is, even if you bought a physical copy they can terminate your service.

48. David Bilek @39: Thanks for your support, but I will note here that Walmart does a lot of unpleasant things on top of its pricing strategies, while Amazon treats its employees extremely well. And yay for that.

    For the record, I’m actually more concerned about Costco using books as loss-leaders than anything Amazon is doing. Costco sells my latest book ($19.99 list) for $11.49, and it’s the EXACT object as the local bookstore. They sell Stephen King’s new books (no back list!) at a loss. Meanwhile, they do nothing to support the other 99% of the books published in the US. So in a Coscto-wins world, it’s my books sitting next to a vast pile of Stephen King’s and Glenn Beck’s.

    Amazon, to its credit, sells those other 99%.

    I didn’t mean to go wildly off-topic here, but this all ties into the way consumers think about things when they buy my or John’s books. Some are thinking, “Sell me the cheapest book.” Some are apparently thinking, “There are no special effects in this novel, so I’m entitled to a price point of $4.68.”

    But I’d like at least a few to think, “How do my choices affect the future world of book buying, and thus of writing and reading?”

49. My little ereader was purchased specifically for electronic review copies and the occasional must read not available in the UK (or for a decent shipping fee). Since it’s a sony the amazon thing isn’t directly relevant but I agree with the point about DRM. I still prefer my hardcopies though and am unlikely to pay full price for any ebook since I consider them too much of a compromise for me.
    Shooting zombies in the head is a great addiction.

50. @Teresa,

    Profit margins in the retail or for the publishers? I know that at least a few decades ago, the chains were typically paying between 50-60 percent of cover price. Obviously the real risk is on the publisher’s side with sell-through and other factors.

    But ultimately it is whether or not the consumer thinks the price is too high or not that determines whether they buy, and therefore whether the industry is sustainable. There are an infinite number of conceivable products that simply can not be manufactured at a price the market will bear.

    That said, it’s somewhat frightening to think that the turmoil that the industry is likely to go through before it reaches something approaching a sustainable state will potentially hurt a lot of people.

51. OK, take the price of printing, shipping, and warehousing out of the price of the book.

    Then add in the price of data storage, data transfer, and a surcharge for the convenience of being able to carry hundreds of books in less space than one hardcover used to take.

    Is it a wash? I don’t think anyone here knows. But the people making the “eBooks are crazy expensive!” argument seem to apply the first calculation and ignore the second.

52. Kevin #40: I’ll ask here the same question I asked at Making Light — is the cost of paper and printing and shipping and warehousing really low enough that 90% or more of the cost of a $30 MSRP hardcover or a $15 MSRP trade paperback or a $9 MSRP mass-market paperback is the royalties to the author, the editing and copy-editing, the marketing, and so on?

    My understanding is that between 10 and 15% is, indeed, not a bad ballpark estimate of the printing and shipping costs of a hardcover.

53. Marlon:

    Video gaming has been a feculent swamp of DRM nonsense and bullshit for years, alas.

    To answer your question:

    1. I love Steam, because it’s so damn easy. I hate wacky DRM.

    2. If Valve ever pulled that sort of crap on me, I’d be on the phone to them pretty quickly, since I know them. Note I am aware I have an in others don’t have.

54. scott westerfeld @33: A point no one has mentioned: one can make an argument that Amazon is engaging in predatory pricing against physical bookstores. Having a subsidized $9.99 option out there while the only physical format is $25 means that bricks and mortar bookstores are artificially losing sales.

    Have you seen the prices Amazon charges for hardcovers? It’s usually in the $10-20 range for a book with $30 on the cover, and that $30 is what most brick-and-mortar stores will charge you. Given free shipping or a Prime account, I’m stupid (economically speaking) to buy books at the prices my local indies sell for, but I do it out of a desire to support them and a desire to have the book right the fuck now, which is honestly worth a decent price premium. If I don’t care when I get it, I’ll buy from whoever’s most convenient, which is sometimes Amazon and sometimes whichever store I happen to be by.

    But when any retailer, physical or electronic, is selling at a loss, that’s a form of predatory pricing. In other words, they’re using their monopoly power to starve their competition of profit.

    Retailers who aren’t monopolies can sell at a loss, and that’s not “predatory pricing” — loss-leaders are ridiculously common in almost every industry, and the companies are assumed to either make more money because people buy other things at the store while they’re there, or they get name recognition and other intangible benefits. They may be using their cash reserves or their sales in another area to “starve their competition of profit,” but it’s not a monopolistic practice. When a company like Amazon which has a strong market presence does the same thing, I don’t see how that’s more than normally predatory of their competitors. (Notably, I don’t believe that Amazon is a monopoly.)

55. Weasel, the invisible hand of the marketplace is not to human scale. In my experience, it’s particularly hard on authors.

56. Steam does offer a pretty substantial value proposition to many people though: I can access my games on multiple computers, as long as I’m not playing more than one at a time. It also simplifies obtaining the game, and if I wanted to delete and reinstall later, I could do that too.

    Also, I have enough older games I’ve lost the manual to or otherwise am unable to bypass what copy protection they already have. Or they just don’t run on a modern system anymore. :p

57. @55 Teresa, agreed. But then I’m one of those an anti-corporate socialist types. Convert them all to non-profit cooperatives, I say. :)

    When money’s not a problem, I’m quite happy to splurge for hardcovers, or special editions, and make whatever other choices I know help support the authors I like. I frequently weigh purchases against the number of books that money would buy. Unfortunately money is often in short supply and one must buy mass market + food instead of the HC edition, or not buy at all.

58. Kevin @54: I agree it’s not illegal, and if that’s the technical meaning of “predatory pricing,” I stand corrected. I’m just saying that Amazon’s supporters on this thread might want to think about the larger effects of the company’s pricing structure, both for physical and electronic books.

    Contrary to what you say, MOST bookstores don’t charge list price for books. This goes back to the early chains in the US, and the more recent collapse of the Gentlemen’s Book Agreement in the UK. So yeah, this has been happening for a long time, but this is a particularly aggressive example that’s taking place while e-books are in their nascent state. I’m concerned, therefore, that it may be qualitatively different in its long-term effects on the greater world of reading and writing. (Like smoking is worse for you when you’re, say, two years old.)

    I’ll finish with this: If Amazon is burning cash from their book-sale profits to keep e-book prices low, that’s a medium-size problem. If they’re burning cash generated from hyped-up stock prices to do so, that strikes me as a larger problem. Not quite sure why, but it feels like the free market is (ultimately) more subverted by the latter.

59. John: All right, fair’s fair. I’ll admit to playing a little bit of devil’s advocate. (Though I could say that “game of chicken” is the same thing that anyone who organizes a boycott is trying to do. It’s just Amazon’s bigger so they’re better at it…)

    Anyway, I’ve long been irritated by publishers choosing to set their prices for e-books precisely equivalent to hardcovers. It’s ridiculous protectionism—as Kevin said in #40, does manipulating and moving the physical stuff around cost so little as all that? And why should I be expected to pay the same amount for bits that I can hardly do anything with as I could for an artifact I could hand to a friend or resell?

    And it irritates me all the more when I see publishers talking out one side of their mouth about how consumers think e-book prices are too high, oh we must do something about that—but then either not doing anything about that or (as in the link I posted above) actively trying to raise them.

    I think e-book pricing is in a bubble right now, being kept unrealistically high by publishers who have, up to this point, been able to have their way with smaller e-stores such as Fictionwise. The way that Baen is able to sell even the e-books of its brand new hardcovers at $6 or less and still make a profit on the e-books qua e-books, not just on the boost their paper books get from having free/cheap e-books, proves that. Even their E-ARCs, which are sold with the hardcoveresque cachet of “getting to read it early”, are only $15, and that’s without DRM lockdown.

    It’s very well to say that publishers should be able to sell at high prices first, then drop the prices later on. But I remember hearing from Fictionwise that publishers often seemed to be remarkably slow about dropping those prices, frequently still charging hardcover rates for e-versions of books that had been out in paperback for some time. When does that “later on” come, again? (Of course, that was before the Kindle came around and more people started caring about e-books.)

    Anyway, stores like Amazon and, soon, iBooks are forcing those prices down. Where it ends up coming out will probably be a compromise, but I suspect enough consumers are finding they like them at $9.99 that publishers may be in for the same unpleasant surprise as record labels were when they raised iTunes’s prices on some songs from 99 cents to $1.29 per track.

60. My problem here is that the excuse for the higher price of paperback has always been the better quality of the book. That, plus the fact that hardbacks are printed first are the reason that I buy a hardback, when I buy it.

    Time by itself isn’t enough of an argument for me as a consumer (particularly when you’re dropping such a potentially dramatic amount– 15.99 to 9.99).

    It irritates me that such a pricing ignores the lowered cost of production, the lack of risk of producing too many books, and that I get nothing more durable or more DRM free as a result of buying expensive and early. With CDs, we were told for *years* that rising costs of physical production were to blame for rapidly rising prices. But as soon as CDs went digital the labels would have had us believe that production was so negligible that there should be no difference in price with the physical/digital copy.

    I think the industry needs to consider some new models to support the new format, and not try to rely on the old models to inform how it should progress. And frankly, given what I’ve seen of the publishing industry, I trust Amazon/Apple more to understand the economics of digital formats. And that includes the economics of what the consumer will pay to get over the hurdle of using the new tools.

61. I’m a Kindle fan – but this looks like a bad move on Amazon’s part. After all competition is coming – and if Amazon won’t stock at the price Macmillan is happy with then Sony or Apple will.

    Having said that $15 for a book you can’t share, is digital and is DRM’d – sounds kinda pricey to me too. I might spend that on a text book but a best seller – no way.

62. I need to defend Apple a bit here; they never wanted to sell music with DRM but were forced to by the music publishers. They took the DRM off, where they could, before Amazon started to sell MP3s; and now none of the music has DRM.

    I’ve said this on Making Light, but if publishers want to sell an ‘e-hardback’ at a premium price, they should include premium content, rather than trying to sell exactly the same bits for more money. I think Big Fish Games’ Collectors’ Editions are a good example of how they might do this profitably.

63. Chris Meadows: You mentioned fictionwise and publisher-mandated price gouging. Here’s a current example I researched for John’s earlier post on the Amazon War:

    To give a current example:

    “Kushiel’s Avatar” in hardcover was released in 2003, and the mass market edition in 2004.

    The ebook is currently listed at fictionwise for (you ready for this?) $20(non-book club member)/$17 member.

    The paperback is listed at Barnes and Noble. (It’s Macmillan, so it’s gone at AMZN), and it’s listed for $7.99 with a book club membership price of $7.19.

    So, six years after the paperback is out, the price of the eBook is STILL at hardcover-level price, presumably because the publisher doesn’t want the eBook price to cannibalize hardcover sales!

64. Geoffery Kidd:

    Please don’t post exactly the same post in two threads, especially two so closely related. I find it mildly annoying.

65. John: I’m not suggesting that books, movies or anything else should be priced on some exact scale to the cost of their manufacture. I’m merely pointing out that consumers have an intuitive (and occasionally even correct) idea of what costs are built in to the products they buy, and attempting to price a squib of digital text data equivalently to a nice hefty hard-bound printed book is… well, I don’t know for sure that it’s doomed, but we can check back in a few years and find out.

    This is my prediction though: Amazon and Macmillan are feuding over a set of equally untenable price-points, and this is all going to look pretty silly in retrospect. The right price will turn out to be something in the $3-5 range (ie: the same or a little bit less than a mass-market paperback) except for whatever the 2020s equivalent of a new Harry Potter book happens to be.

    (FWIW, I don’t personally have a dog in this fight: I’ve loathed every ebook reader I’ve ever touched, and happily buy 10-20 paperbacks and 5-10 hardcovers per year.)

66. Geoffrey @63: Great example.

    To quote from a post I linked in my previous comment, a Bertelsman (parent of Random House) exec was talking about e-book piracy, and was quoted as saying

    If iTunes started three years earlier, I’m not sure how big Napster and the subsequent piratical environments would have been, because people would have been in the habit of legitimately purchasing at pricing that wasn’t considered pernicious.

    iTunes was noted for charging significantly less than CDs cost. In other words, “pricing that wasn’t considered pernicious.”

    But when I checked with Fictionwise’s advanced search tool, I found that at least 5,400 of the 9,413 Fictionwise items offered by Random House at the time—well over half the books they sold—had a suggested retail price of $12.95 or higher. 1,100 of these were $19.95 or higher. Given that this pricing is dictated by the publisher, I would hate to know what level of pricing Random House would find “pernicious.”

67. Specifically, Apple demanded a $.99 price, music labels demanded DRM. Apple later traded no-DRM for variable pricing, and the results are about even – revenue is approximately the same, but somewhat fewer songs are sold than would have been with the lower fixed price. Apple makes out the same, the music industry has the same revenue but customers who haven’t purchased as much music as they’d like, and consumers own less music than they would otherwise. Some portion of those customers will supplant their collections with illegal downloads as opposed to legitimate ones. But at least we got rid of DRM.

68. My first “paperback” in 60, above, should be “hardback”, naturally. Sigh.

69. attempt to charge $15 (or more) for an ebook for a brand-spankin’ new release to service the folks who just can’t wait, drop it to a lower price point (say, $10) later on in the run, and then drop it again to $8 or so when the paperback hits. That’s how I would do it, in any event.

    As most of us know, Baen Webscriptions sell e-books at sane prices; in part because AIUI their contracts with the authors give the authors a larger percentage royalty of the retail price of e-books than they do for paper books – I think the idea is that the e-book gross margin is the retail price less the cost of running the webscriptions site, where the paper book gross margin is the wholesale price less the physical cost of printing, and that authors’ royalties should be based on the gross margin.

    Baen, the only mature e-book market, sells new e-books for $15 (they call them e-ARCs) – these are ARCs about three months before the hardback comes out, and are replaced by the released version when the book is released; they then drop the books to about $6 when they are released, or you can buy a “webscription month” for $15, which are normally seven books – two new ones and five older ones of varying ages. The webscriptions effectively let you get a book that’s in paperback for about $3.

    I think there are transactional-cost reasons (ie credit card companies kill you on small transactions) for not selling individual books for less than $5-6 outside of the webscriptions model.

    I suspect that some markets would bear a higher price – something like $25 for an ARC, $15 for the released version at the same time as the hardback, drop to about $10 when the paperback comes out and $5-6 for backlist.

    One real advantage of e-books is that they keep backlist available much better. That $5-6 is competing with “not available” or “out of print” or booksearch prices, not with the paperback.

70. When e-readers are the norm rather than a novelty and most people read ebooks rather than the traditional paper ones, most authors are up that proverbial creek.

    Although hardcore of fans will actually pay a premium for a new book. Others who “want it today dammit” aren’t going to pay that premium if there is no DRM and the book is available to them through less legitimate channels.

    Are we hoping that technologically literate future generations are going to wait for the premium ebook price to drop from 20 to 10 bucks after six months, rather than that they’ll simply find their non-DRM protected ebook through less legitimate methods? Which is more likely given human nature?

    The Non-DRM works for some publishers right now because we still have a printed-page centric model. When ebook readers become great enough, that printed-page centric model of recouping losses to piracy goes away. People make sure they support BAEN because they feel personally invested in the company. I’m not sure that one can generalize the BAEN model out to the entire publishing industry though and hope that people are similarly supportive. (this is because BAEN readers genuinely care if BAEN fails – they feel part of a community – the failure of some distant multinational publishing company – not so much)

    For every author that gives up because they can’t make a buck, there are 100 more that will gladly take their place.

    I’d hate to be in your place John because this headlong rush towards digital distribution will probably have the unintended effect of severely wounding the model by which you make your living.

    (Scalzi premium edition physical books will always sell – but enough to keep you in milk and honey? (I hope so, I fear not))

71. Brunswick,

    DRM does **nothing** at all, whatsoever, to prevent ebooks from being available “through less legitimate channels”.

    If you know where to look, you can get pretty much any book for download, no matter if it’s available as ebook, with or without DRM, or even not officially as ebook at all.

    You are completely right about why the Baen model works for them. It works because the readers are happy with the service provided and want to support their authors.

    Short of turning off the Internet, and for good measure, dismantle the power grid and dumping the world back in the dark ages, there is no wait to put the genie back into the bottle. There is not going to be a technical solution to indefinitely continued the enforced physical scarcity upon which the current sales model for books rests.

    There is just no way to make the technology go away anymore. And as I quoted Eric Flint above, the more you try tighten up the thumbscrews, trying to force the issue instead of offering your product at a price and under conditions that your customers consider to be fair, the more you are turning from “legitimate folks” to a “bunch of greedy gouging bums” in the eyes of your customers.

    Yes, distributors, publishers and, as last in the chain, authors, will have to adapt to the changed environment. But that’s no different from any other business where technological change requires changes in how things are done. One thing is for sure, trying to hold on to your old business model in a radically changed environment by force (DRM, the most draconian laws money can buy, …) is not going to work. You just end up pissing off your customers.

    When you come down to it, the large majority of people are honest folk that will stay legal as long as they feel that they are being fairly dealt with.

    In summary, with the technology available today, a business model in the area of information creation and distribution can no longer be based on an absolute enforcement of artificial scarcity.

    If you treat your customers unfairly (and it’s the perceptions of your customers that counts here, not what you may think is fair or not), then your ex-customers will treat you unfairly. But if you interact with your customers fairly, the large majority will treat you fairly in return.

    But if you push too far for too long and get stamped as greedy bastards in the court of public opinion instead of legitimate folks selling something at a fair price and under fair conditions, then there is probably no way to go back anymore.

72. The point I feel you are missing is that when people buy an e-book, the publisher has no warehousing, printing or shipping costs. DTBs can be sold or swapped when the reader has finished it; which can’t be done with an e-book.

    I even agree with your suggestion of a tiered pricing structure. However, before buying a Kindle, I primarily used the library. If I have to pay $15 for a new release, I’ll just go to the library and borrow it, which means you and the publisher have lost a sale you wouldn’t have otherwise had.

    Also, take a look at some of the pricing on Amazon. There are few books I’m interested in that were released within the last few years. The paperback version is in the range of $5-6, but the e-book is selling for $9.99. I’d prefer to read on my Kindle, but I’m not going to pay more than a printed book is selling for in order to do that.

    I respect your need to earn a living. However, I don’t agree with publishers wanting to charge nearly the same amount for an e-book as they do a hardcover when the costs aren’t equal. Seems to me that THEY are the ones who are trying to protect the tidy profit they’d stand to make in the costs they won’t incur in the sale of an e-book that IS incurred with the DTB.

    This isn’t a good situation for any of us – the authors or the Kindle owners. The publishing world is changing and the publishers are clinging to the past.

73. Macmillan, which is owned by the German von Holtzbrinck family, has a history of wanting to bend booksellers to their will.

    In March 2006, Holtzbrinck forced Tor Books to stop Baen Webscriptions from selling their eBooks because of concerns regarding the lack of DRM. This was later resolved.

    I suspect that you, John, would do better financially by having your books sold by Amazon for $10. I’ve bought your eBooks from them even though I already had hardbound copies. While I prefer hardbounds, I have limited shelf space and it’s so much more convenient to have copies on my Kindle. If I can’t get the eBooks from Amazon, I simply won’t get them.

    I don’t care for any DRM, but Amazon’s is a particularly mild and apparently easily removable variety. I haven’t read anything yet about Apple’s DRM plans.

    Let’s hope it’s another tempest in a teapot that will eventually be resolved to readers’, authors’, and booksellers’ benefits.

74. Interesting thing: studies that have come out lately show that the vast majority of pirated e-books are not DRM-stripped commercial e-books. They’re scans from paper books, or pre-release manuscripts. Even though every extant e-book DRM can be trivially removed (except for Kindle’s Topaz, but even that one’s been partially cracked already), most illegitimate e-books still bypass it entirely. What does that say?

    #72 Lyndyb: Funny but there have been a lot of arguments as to just how much of the percentage of a book is made up of by those printing, shipping, warehousing, and over-printing costs. Publishers claim it’s a teeny tiny bit, and consumers are more skeptical.

    But in a way, it doesn’t matter. The expectation has built over time, starting from way back in the day when everybody expected we’d be whizzing around on rocket packs by now, that when the cost of printing is taken out of the equation, zero-marginal-cost e-books could be slung around willy-nilly and great savings would be had by all.

    The publishers are losing sight of the fact that they have to contend with consumers’ expectations, even if those expectations and reality are widely divergent. (Though given how well Baen has been able to do, perhaps they’re not as divergent as most publishers want us to believe.)

75. After browsing the above comments, one missing piece is any mention of the extremely low technical quality of e-books.

    When I pay $9.99 for a fiction bestseller for my Kindle DX, the fact that virtually every page has a half dozen typographic or formatting errors doesn’t bother me as long as it doesn’t interfere with the reading process.

    It is not so nice for a $15 non-fiction e-book in which neither tables nor charts are readable. Nor is the complete practical loss of footnotes a plus, as the page to page navigation is so slow as to be useless, even if the footnotes are contained somewhere.

    Regards, Don

76. Am I the only person who thinks this is an incredibly stupid move on Amazon’s part? Amazon took a huge chunk of the market share in Canada because Chapters’ online ordering turned to utter crap for a few years after Indigo bought them out. (Chapters is Canada’s big book chain.) Most people I know are still in the habit of looking for stuff on Amazon first if they go looking for books online, because… well, that’s just the habit we all developed. But Chapters’ web site is back to being reliable and the online ordering is fine again…

    All this move is going to do is get people to develop the habit of checking non-Amazon sellers first, because Amazon no longer has a complete catalogue.

    (Although here in Canada, it looks like Amazon’s still selling your books, Scalzi. Maybe they’re just running late. Who knows.)

77. I find it both refreshing and compelling that even in the midst of this, you can write about this topic with a clear head and not turn it into a rant. I could tell you were angry, but it was not coming through the writing like I can imagine some posts on the topic might.

    Thank you also for attempting to be impartial in the beginning, and giving the benefit of the doubt until potentially legitimate evidence indicated other wise.

    All of that said, you are involved, and it is your well being at stake. Stand up, talk about it, and by golly, kick Amazon in the cash box. They obviously need it, as the suspected “glitch” the first time really did not seem too glitchy, and this one smacks of the same statement-making coincidence as the last one.

78. Although I’d like to agree that most people are honest, I think a big difference comes down to the perception of dishonesty when it comes to digital media.

    Lessig makes a couple of scarcity/non-rivalous resource arguments in his books. You’re probably aware of them – when you steal my car you deprive me of my car, when you copy one of my files you don’t deprive me of anything because I still have my file.

    This idea carries over into the idea about honesty.

    People who would never shoplift or steal are quite content to download files over the Internet because the idea that downloading content without paying it is not a dishonest act has become deeply embedded in our collective psyche.

    Until people see downloading content without compensating the creator as something unethical (which I doubt will occur) – people’s innate honesty will not serve as a brake to behavior. They certainly don’t feel threatened by the idea that creators will simply give the game away.

    It may be that there is no business model where creators of content distributed digitally can be fairly compensated for their work. It is often argued that “the old business model needs to change” – but, like the “perpetually in the next few years” flying car – a lot of smart people have tried (and failed) to come up with a consistently successful business model for the distribution of digital content. That doesn’t mean it isn’t possible (never say never) – but what if no such model actually exists? (just as there is no model that works if you decided to charge for air).

    [One thing I’ve never been clear on is why Encryption works but DRM does not. Aren’t they the same thing? We can’t crack encryption – but why is it possible to crack DRM? Is it just that people keep implementing DRM in a poor way?]

79. Thanks for sharing this info. I agree with your concept of stepped-down pricing. They do that with hardbacks; why not with ebooks? If I can wait a year for a lower price on a mmpb instead of a hb, I can do that for an ebook, too.

    I’ve dashed off a nastygram to Amazon.com’s customer service department and threatened to move my business elsewhere. If they get a shitstorm of such emails and boycott threats, they’ll likely stop the nonsense.

80. John, I think this entire conversation misses the not-so-obvious crux of the matter. Who should (or who deserves) to make money from ebooks?
    This is NOT the traditional publishing model, where the author basically required a publishing house to invest big bucks to layout and print a real book, to use it’s distribution system and its advertising and marketing dollars.
    We ARE NOT cutting down trees or investing big bucks in producing ebooks. I believe authors have been bamboozled into signing away their ebook rights to publishers, when in fact, in todays world, there’s no reason that the authors themselves shouldn’t retain their ebook rights and sell ebook versions direct to consumers over the internet.
    Had a model like this emerged 5 years ago we would see the party who has actually invested in an ebook (the author) being rewarded, and all the do-nothing-except-get-themselves-in-the-middlemen get what they deserve. But as the model emerged differently it would, unfortunately, take a revolution to get the publishers and distributors out of the position they now occupy, and feel they deserve.
    Stop giving the publishers your erights. They’re being unjustly enriched.

81. Currently, Amazon.com is charging publishers 65% of every e-book sold for the Kindle. While that is changing on June 30th, right now a $9.99 book only earns $3.49 for the publisher.

    If Macmillan is raising its prices, I’m wondering if their (Apple’s) rate is that high as well.

    Haven’t been able to find out what the rate is, but I’m definitely keeping my eyes open. Apple’s developer rate for their apps is 30%.

    The thing that frustrates me the most about this, though, is that there are other places to buy e-books on the web. Any one entity puts themselves at risk if they rely on one retailer. I’d love to see more authors get on “more” e-book sites and spread the world. More retailers, more sales. Everyone wins.

82. As an ex-editor, let me stress that the bulk of the costs of publishing are not in layout or printing. They are in editorial costs (which include not only copyediting and production but also the costs of acquisition) and marketing. These costs do not go away with e-books.

83. My perspective on this comes from my work in the music industry – variable pricing is (as TNH noted elsewhere is not only a mainstay of publishing of all sorts, but it’s how the industry floats it’s trawling for new talent.

    The idea that “all e-book prices need to be set at X rate, where X is less than a physical book” is flawed. Publishers will always charge what the market can bear for a hot item. A Gaiman will probably cost more than a Scalzi which will cost more than a first release by a new author.

    eBook pricing for the Publishers needs to be what the market will bear. If it’s $15 on a new release that drops to $10 later, or even a flat $15 on big name authors until the paperback comes out 2 years later, that’s (a) still less than the hardback, and (b) a sensible pricing strategy.

    With music albums, the company I used to work for, eMusic now has a setup where some tracks are “album only” and can cost the user more “credits” than a normal album might, thus giving the music publisher a chance to make more money per album sale. The result? They just got the back catalog of a bunch of major music publishers.

    Amazon, on the other hand, is fighting variable pricing because it’s not interested in selling ebooks as much as it is in selling kindles, and they figure a $10 ebook price across the board sells more kindles. Fine as far as it goes. And if it had stayed there, that would have been the end of it.

    But in delisting all of MacMillan’s ebooks and physical books, they’ve entered into a punitive fight, with the threat that if anyone disagrees with them, they, the worlds largest bookstore, will cut them off.

    This is not just bad business, it’s ethically shitty, and a dumbass business move. This kenshin person on the previous thread who works for Amazon didn’t even know what was up. He says “The 1984 situation was a mess and will never happen again.“.

    If you think that was a mess, you’ve not seen anything yet. Imagine every MacMillan author deciding to tell their fans not to buy from Amazon, instead to try Barnes and Noble or Powell’s. And this will get twittered, and passed around the blogoshere and facebooked, and so on and so forth.

    Because in screwing with MacMillan, Amazon decided to mess with the incomes of literally thousands of authors. Authors with fans. Lots and lots of authors with fans.

84. “One thing I’ve never been clear on is why Encryption works but DRM does not. Aren’t they the same thing? We can’t crack encryption – but why is it possible to crack DRM? Is it just that people keep implementing DRM in a poor way?”

    Well, DRM obviously uses encryption. But I guess what you are referring to when you say “encryption” is the transfer of some information between 2 parties in a way that prevents any 3rd parties that get hold of the data that is being transfered from being able to get to the contained information.

    That works well because there is a shared secret (the encryption key) between the 2 parties that any 3rd party doesn’t have access to. So using a small amount of secret information (the key) you are able to transmit large amount of information in a public way while still keeping it secret (because only with the key does it become readable).

    But once the receiving party has used the secret key to decrypt the information, it is free to do with that information whatever it wants, including making that information available again to someone else in unencrypted form.

    DRM is a totally different scenario. You want to make information available to a 2nd party, so that second party naturally needs to have the secret key.

    No matter if we are talking music, video or books. The person that is supposed to be able to listen, watch or read the information will have both the encrypted file and the key somewhere on the computer, because at some point along the way from DRM encrypted file to screen/speakers the data must be decrypted. And if nothing else, that’s your guaranteed usable point of attack against any DRM scheme. You are not using encryption to keep the data secret from a 3rd party, you are using encryption to try and keep the data secret from the person that’s supposed to listen, watch or read it.

85. @43 #Patrick Rennie

    As a buyer of $15 eArcs from Bean let me tell you exactly what happens.
    First Bean encourages it’s authors to post snippets of the first 1/4 or so of a book on their forums. http://bar.baen.com/ then when they have us hooked they mention, btw it’s not coming out for 6 months but you can buy the unproofed copy now for $15. What’s an addict supposed to against that type of temptation?

86. Re: Monica @81

    I believe that Apple is charging 30% as it does with its App Store, and that Amazon has recently announced it will match, but NOT for big publishers. The 70% royalty rate is only available for books published through its platform (more for self-publishers).

    I’m not in the publishing industry, though, and I realize that many here may have more or more accurate details.

87. Brunswick:

    The encryption/DRM difference is this:

    Encryption works to hide data from people who you don’t want to see the data. DRM works to hide data from people you want to see the data.

    So if I have, say, a properly encrypted email from Jeff Bezos to the head of Macmillan, I can’t break it because I don’t have the key to decrypt it – the head of Macmillan does. Furthermore, since the key can be (say) a password, it doesn’t have to be kept somewhere physical – it can be memorized.

    If I have a Kindle, and buy a Kindle ebook, I do effectively have the key to decrypt it – because it’s on the Kindle, as the Kindle needs some way to read it. It can’t have something like a separate password because they’d have to give the password to you – at which point you could use to it remove the DRM anyway.

    I am somewhat baffled about why they’re even bothering with DRM – if there’s anything the whole music industry saga has taught us, the way to beat piracy is to offer a better product.

88. Don @75: My guess is that this may vary with the specific format of the e-book. The only e-books I’ve bought up to now are PDFs of role-playing game books, which have numerous tables and illustrations. These days PDFs are generated in a similar fashion to the files used for printing, so the only difference tends to be in the fidelity of the images. Other formats of e-book may well suffer conversion problems.

89. “Once is happenstance, twice is coincidence, but three times is enemy action.” — James D. Macdonald

    I think that about sums it up.

90. I’m not clear on what has been pulled. Tor is part o MacMillan USA and my Tor titles show up fine on Amazon. (If they didn’t I was going to cancell my order for some puppydog supplies I just placed a few minutes ago.) Prehaps they pulled electronic editions? Fifteen bucks for an electronic version of The Hard SF Renaissance would seem to me a very reasonable prince, though truly I could care less if there is one or if Amazon is selling them.

    Scott Westerfeld however raised an important issue: “I’ve actually had an online retailer call my publicist at S&S to complain because my website’s BUY THIS BOOK links were biased toward the competition. So they care a little, at least.” Online retailers are indeed making these calls. While the letter I got form one of my publishers did not say that there had been cmoplaints about my site specifically, I was given specs as to which big box retailers I was to link to. I have grumpily complied, but all this smack of restraint of trade.

    I’m not sure what the right collective action is .My impression is that there are no innocent parties among the big box online booksellers.

91. I have no sympathy for publishers. They’ve turned themselves into leeches and buggy whip makers with high overhead. A typical POD book costs about $4 to make. Trying to sell it for $25 retail and then only giving 5-15% of that to an author means your overhead is 85% or so. That’s insane and asking to get “disintermediated,” which is what Apple and Amazon are going to do to them.

    John T. Reed has a great rant on this here: http://johntreed.com/distribution.html

92. The thing that amazes me here is that Macmillan seems to love easily-defeated DRM more than it does profits. Amazon pulls this stunt, Macmillan could, in a very short order, have their own ebook store up and running and bypass Amazon entirely, and make all the profits on the book.

    Now that doesn’t handle amazon pulling the dead tree editions, but I have no doubt that, in that case, Amazon would shortly have them back up, and in any case if Amazon becomes known as a vendor that doesn’t carry everything they’ll lose a ton of business.

93. There have been several references to Amazon pricing books so as to sell their Kindles.

    I find this to be highly unlikely in the long term. Amazon’s profits will primarily come from the sale of books, not necessarily on a book by book basis, and not from the sale of hardware.

    As of right now, all of the factors lead to the fact that, for a random e-book, Amazon is the first place to look.

    Regards, Don

94. Don Lloyd:

    “Amazon’s profits will primarily come from the sale of books, not necessarily on a book by book basis, and not from the sale of hardware.”

    Yes, and as we all know, Apple is currently making money hand over fist on iTunes sales alone, with hardly any money being made from the hardware they sell for it.

    Piaw Na:

    “A typical POD book costs about $4 to make.”

    Equating the production costs of POD book with the total cost of what a fully-fledged publisher does suggests that you don’t actually know very much about the publishing business. You’re also not correct about the royalty rate re: ebooks.

95. I spend a LOT of money on books every year. I’ll be damned if the lure of any convenient “e-reader” is going to make me hand over NEARLY the same money (I shop well) to LICENSE a book I could own. This idea that bits should nearly approach the cost of atoms is a concept whose time is coming to a close very soon, especially in difficult economic times.

    Tech journalists need to realize that the next big innovation on the horizon is not retinal projection technology, 3d ushering in the new promise of VR or the iMplant… it’s PRICE POINT.

    Most of us are okay with the idea of a 15 dollar e-book. As long as it’s actually OURS to use and share as we please. Licenses should have license prices. If I want a loaner, we still have these things called libraries and well.. gosh.. these book things are still pretty portable.If it gets much worse, I’m going to stop buying books and spend a lot more time and energy at AND supporting my local library. Just as we’ve learned with music, a huge company losing huge amounts of money does not equal the halting of music creation. There’s a GLUT now since the fall of the music middleman industry. Don’t fool yourselves into thinking people will stop writing. Like with music, maybe the change will be good for the quality of writing. And hey, if publishers want to go down with the ship, so be it. I wonder if they know how much money they could be making by pricing according to value presented and how much good will and new readers they would gain by setting aside only a bit of that greed for perhaps a tiny bit of realism.

96. Just wanted to throw in my two cents. I will happily support the writers I love, happily pay $25 for a hardcover, $50 or more for a textbook (and I’m working my way through college, thank you, no free ride for me). People don’t seem to realize that all these ‘low prices’ people are crazy to buy at, have a high cost. If you buy a $15 book at $10, someone somewhere is losing money, that means someone somewhere is losing a job, thus raising unemployment, so on and so forth. If you want to be responsible for that, then fine.
    Me, I’m going to keep supporting my favorite authors so that they keep writing the books I love so much. Or so that they can blow the heads off of zombies on their favorite video game.

97. Wow. Stross wrote about this happening not too long ago. Looks like he was on the money.

98. So much of the conversation surrounding e-book pricing can be described as people talking AT each other, and not TO. Unfortunately, the root of the problem seems to lie in two contrasting, and perhaps irreconciliable points of view.

    The approximately 28% of ebook buyers (from the recent Verso survey) who are adamant that ebook prices should be at the $9.99 price point (or lower) operate from two hypotheses: 1.) that book prices are principally related to their physical cost of manufacture and distribution; and 2.) the ebook buyer is different from the hardcover buyer, thereby representing an incremental sales opportunity to the publisher.

    Publishers (and many authors and agents) on the other hand, are risk averse and must take into account the possibility that ebook buyers and hardcover buyers are one and the same, posing a real risk of cannibalization of their hardcover sales by lower margin ebooks. They also believe that Amazon wields the potential to enforce higher discount terms once its hegemony over ebook sales were to be fully established. Amazon’s behavior in removing Macmillian’s titles last night certainly does nothing to dispel that fear. Publishers also believe that books have an intrinsic value separate from their physical properties, that being the content–the intellectual/entertainment value they represent.

    I have done the numbers and mathematically speaking, the answer is pretty clear. Using the agency model (70/30) split that Apple proposes, the right price for new ebooks should be $12.99 fiction; $14.99 nonfiction. This level reflects the point of indifference for publisers/authors vs. potential hardcover cannibalization. It preserves the value all along the supply chain (athor/agent, publisher, wholesaler/retailer). It even affords the publisher about a $1.00 cushion to cover incremental e-channel marketing costs, and a modest increase in per unit author royalties to achieve parity with prevailing hardcover royalty rates.

    What about value to the consumer? The same Verso survey indicates that 35% of ebook buyers are clustered in price brackets ranging from $10.00 to $25.00, that is in terms of the maximum price they are willing to pay for new release ebooks. The remaining 37% of ebook buyers have no set opinion regarding ebook prices. It seems reasonable and actionable that publishers could convert a substantial part of these two consumer segments, making up 72% of the market, to the $12.99/$14.99 price points and make those stick.

    Unfortunately, the 28% who are adamant at $9.99 probably will never go along. Some of the voices above reflect that sentiment. But that is a tradeoff publishers seem willing to make in order to maintain their profit margins, neutralize the risk of cannibalization, and maintain their fundamental control of their pricing options.

    One would hope that calmer minds at Amazon will see the long term sense in this and moderate their monopolistic ambitions.

99. I’ve actually come across a few ebooks that are MORE expensive than just buying the real thing. I end up buying the real one because I’d rather have something tangible than spend more money on something electronic.

100. I don’t think anyone has touched on this issue from the perspective of a publisher. There is a difference in the cost of goods sold between a physical book and an ebook, much in the way that video games, have different costs depending on the medium that they are delivered.

     Publishers look at distribution costs as well. What Amazon is saying to Macmillan is that the distribution costs to be on kindle are less than selling a physical book. Publishers have not changed their pricing model to adapt to this less costly distribution because the contracts they sign with authors inherently skew the royalties downwards based on all the “costs” publishers claim to incur in producing a book.

     The real issue for authors is not what price point Amazon sells the book at, but that the publishers share of the wholesale price needs to go down because they are not “doing as much work” to get the book produced. I don’t think Publishers are keen to address this.

101. Actually, I think the _real_ consensus among Amazon customers is that e-books should be free.

102. Someone has probably already said this, but I don’t have time to scroll through 100 comments before my late Saturday brekkie. *g*

     I think the latest Amazon strong-arm has to do with their little-publicized 70% royalty option for eBooks which rolls out in June. Blogged about it here a week back, if anyone is interested.

     I knew something was coming. When Amazon speaks softly, watch your back.

103. “Until people see downloading content without compensating the creator as something unethical (which I doubt will occur) – people’s innate honesty will not serve as a brake to behavior.”

     Well, I see it that way; I don’t do bootlegs, though I could easily find them if I wanted to. And I’ve seen from past discussions that I’m not the only one who feels this way.

     Even if you assume that other people will happily bootleg when they won’t steal physical objects (which I admit appears to be true for some people), for DRM to be justified you *also* have to assume that (1) DRM will stop people from bootlegging (2) who would have bought the item otherwise, and (3) doesn’t cause as many lost sales from legitimate customers as lost sales from bootleggers.

     I find each of these assumptions suspect. As has been noted upthread, bootlegs are available for *any* popular title, DRM’d or not, not long after they go on-sale; people either crack the DRM or (as is also very common) just scan the print version. Once one person has done this, any would-be bootlegger can download a DRM-published title just as easily as they can download a non-DRM-published title. Many of these bootleg downloads are titles that the downloaders wouldn’t have bought (studies have shown a fair number of bootlegged files are simply hoarded and never actually consumed).

     Meanwhile, those of us who are happy to pay legitimately for books are only offered defective ebooks from many publishers: books which, unlike print books, we don’t actually have full ownership rights over, and which have limited, arbitrary lifespans and rights of use. That makes some of us much less likely to buy them, because their value is minimal (possibly even less than zero, if the deal also involves unconscionable EULAs).

     I would happily pay print-based prices for ebooks that delivered the same value as print books: books that I actually own, and buy as a straight sale, with no DRM or EULA involved. That includes pricing that starts high for folks who Gotta Have It NOW, and then drops to lower prices for folks willing to wait, as is the case now with print books.

     Right now, though? No sale. If Macmillan, Amazon, Apple, or other publishers and vendors want to sell me ebooks with similar price points to print books, they need to drop DRM and other value-destroying aspects of their wares.

104. I don’t own a Kindle and don’t buy e-books for myself because I am tired of the constant upgrading and changing formats of electronic media. I don’t know how many things I’ve lost over the years because it didn’t transfer easily or properly to the next iteration of software and/or hardware. I am doing my best to get off the gerbil wheel of gadgetry.

     I love “book” the object, although I’ve become much less enamored after having to move a few thousand of them when I moved this past summer. I know it sounds incredibly archaic of me, but I use this thing called a “public library” as my book storage device. It isn’t instant gratification — and I DO understand that and sympathize — but it is nearly infinate, it doesn’t take up space in my house and I won’t have to waste my precious free time figuring out how to use it in the future (Although I may have to waste time finding one and getting there if funding for libraries keeps going the way it’s going.)

105. bookateur@98, I’m one of that 28%, and frankly I think that percentage is probably low, both in absolute percentages if you factor in all the folks who may buy one or two books a year on their iphones, and in percentages of books sold, as I suspect that many of the heavy readers are in that 28%.

     But having said that, I have no problems with the publishers having a tiered price scheme. I’m not going to buy the exact same bits at $15 that I know I’ll be able to get in a year at $7, but some folks might. I’m willing to pay a couple of bucks to get the paperback early, but not much more. And that’s what publishers need to realize – the ebook is the paperback. The only value-add it has over the same bits a year later is just that – getting to read it a year early. Not quality in construction and materials like a hardback. As long as they can figure out some way to notify me when they’ve decided to drop the price on the e-paperback to paperback level, they’ll get my sale. Assuming, of course, that I haven’t managed to read it in the interim, from a physical copy from a library or loaned from a friend.

106. @98 bookateur

     I disagree with your pricing structure. I’m not willing to pay more than 1/3 of the hardcover price for an ebook unless there is something tangibly better about the electronic addition. Considering that Baen Books has been charging $6 or less per book for over 10 years and are still doing it, I will assume that that is a profitable price point.

107. I doubt Amazon is making any significant money on the Kindle. It’s a razors-and-blades thing.

     Amazon is a bookseller. When they look at Apple they don’t envy the iPod, they envy the iTunes store.

     Two things that indicate that: first, their pricing approach; they’re clearly imitating Apple there. Second, the Kindle Reader apps for iPhone, Windows, and MacOS. They’re free. That would be dumb if their goal were to drive hardware sales, but very smart if their main focus is becoming a giant source for ebooks.

108. Okay, my head is spinning a little after all this. Anyone tell me what DRM stands for?

109. Kevin Riggle @40:

     Yes, the actual physical cost of production is really very small. Most of the costs are fixed (proofreading, editing, advertising/promotion, etc) and don’t go away for an ebook.

     The main reason hardcovers cost so much more than paperbacks is because typical hardcovers have 1/10 the print run of typical mass market paperbacks, and thus the cost per copy for all those fixed costs is much higher.

     I don’t know the exact numbers for ebook sales, but I doubt that ebook sales exceed hard copy sales (outside of a few specific categories like computer books), so the cost per ebook copy for the fixed editorial costs are actually higher, which is why publishers want to sell them for more, not less.

     Article providing breakdowns of actual costs for all the various components of a (mass market paperback) book:
     http://www.writersbeat.com/showthread.php?t=1767 (actually a cut and paste of an article originally from http://www.aleuromancy.net/article_series/demyst/index.html which is no longer online).

110. Yes, to all of the above, but especially to No. 5. I pulled away all my buying from amazon (even though as an author, amazon is where I get a lot of my sales) during the search!fail debacle. Even if you’d taken their explanations on face value (which I did not), then the absence of an apology for all those GLT authors they’d removed from their search parameters cemented the deal. Of course, that was when they were promoting the debut of Kindle2 so any space on their web pages were devoted to trumpeting that device.

     I don’t really get why they are strong-arming NOW when Jobs is clearly firing a shot over the bow. Seems like they should be bending over backwards to keep the publishers they have, yes?

111. I prefer books with paper pages whenever I make an appearance. They make imaginary characters, such as myself, feel a lot more real.

     The static that accumulates in an eBook can really be quite annoying.

112. What Amazon just did is make it impossible to buy at least half the books I’d want to buy on the Kindle.

     Which, of course, now means I’d need another ebook reader to read the books that I want to.

     Which, of course, is unacceptable. The reason for an ebook reader is that it takes up less space and weighs less. If I have to carry a dozen of them, that fails.

     So: I will finish the book I’m reading, deregister the Kindle, and simply not use it. I will then watch for similar asshattery on the part of Apple, and if not present, I’ll buy an iPad.

     I thought the Kindle was a pretty cool thing, but if your not going to let me buy the books I want to buy, it becomes a dramatically less cool thing.

     And, of course, as a bonus, YOU ARE FUCKING WITH MY FRIENDS.

     Which is not acceptable.

113. For what it’s worth, I believe Amazon sees the Kindle as a way to move eBooks, not the other way around. As evidence, I offer the Kindle app for iPhone. So Amazon has probably convinced themselves that they’re fighting for lower prices on behalf of readers/consumers, not for their own gain.

     As a reader/consumer, obviously I’m favor of lower prices, so I’m not immediately anti-Amazon on this. In fact, raising prices by 50% does make me happy with Macmillan. They can do as they wish, as can Amazon, but I’m more likely to give up on the company wanting to raise prices than the company wanting to keep them low.

     But then, I must admit that I don’t own a Kindle, and I’ve never paid more than $3 for eBooks for Kindle for iPhone, so perhaps I’m ill-equipped to comment.

114. glaurung_quena@109, while we don’t have any real hard figures, amazon has said that when a book comes out in both kindle and dead tree editions, they sell about 6 ebooks for every 10 dead tree ones. However, they also said that, when the kindle came out initially, that it wasn’t cannibalizing the dead tree sales – they weren’t going down.

     So what publishers have to figure out is how much of that 3/8 that bought the ebook was cannibalizing a hardback sale, and how much is extra sales early. And honestly, the only way they can do that is by raising the price and seeing what the purchase curve does.

     I am really curious though, what the normal percentage breakdown of hardback to paperback on a book prior to the kindle was? 5 to 1? 10 to 1? As someone who, pre-kindle, most years bought 150-200 books, my ratio was probably around the 10 paperbacks per hardback range, with probably a third or so of my purchases coming via a Baen webscription. So call it 50 from Baen, 9 hardbacks, 91 paperbacks as an average. Without the webscription I’d have probably only bought 10-12 of those books, probably 1 or 2 in hardback.

115. I’ll admit to having read the first few posting up front, and the scanning most of the rest…so forgive me if I’m repeating what someone else has already said. But does Amazon realize how their “asshatery” (John’s word) is actually shooting themselves in the foot?

     Amazon is behaving as if they are the only game in town, simply because, at this point in time, they are the biggest. They are behaving a lot like Walmart behaved in the past, by saying to publishers, “If you don’t want to sell at our prices, then you aren’t welcome here.” Walmart played that game with Vlasic pickles in the past, threatening to find other suppliers if Vlasic wasn’t willing to sell pickles at $3 a gallon. The problem is, if I go to Walmart looking for pickles, and Vlasic pickles aren’t there, I’ll just buy a different brand. If I go to Amazon, looking for “Old Man’s War” for my Kindle, and it isn’t there, I’m going to be pissed. This isn’t like finding a different brand, you’re being asked to find a different product. If Walmart stops selling pants, I’m not going to buy a shirt and put it over my legs; I’ll find a different store.

     What’s worse for Amazon is that they aren’t the only game in town on the e-reader front. In fact, they never have been; Sony released theirs first, but Amazon had better marketing. Now, Apple’s in the game with a product that can do ten times what any of these products can do, at a comparable price for the same screen size. (Not to mention, you can probably just download the Kindle app.) Sure, it’s an LCD screen which may cause people problems reading over long periods, but you won’t know that until after you’ve bought the product. And then you can just buy a Sony. Because (as someone who had been considering a Kindle purchase) why on earth would I pay $500 dollars for something that locks me into one company when that company has shown that it will deny my access to a huge portion of the books that I may want to read?

     I won’t. And if word of this gets out in a big way, there are a lot of other people who won’t either. Amazon just shot themselves in the foot big time.

116. As an aside – this isn’t happening in the UK, I can still buy Scalzi’s books on Amazon.co.uk. This, I think, is because the Kindle is not avalible in the UK (or indeed anywhere but north america).

     However more relevant is the fact that here Waterstones is developing it’s own ebook market on the back of the sony e-reader which is avalible in the Waterstones shops. I don’t have an ereader of any kind but a look at the ebook prices on the website compared to some books that I want to buy is showing me that they are setting the RRP (Recommended Retail Price) for ebooks around the same as the physical format it is currently avalible in, thats £17.99-20 hardback and £6.99-8.99 paperback but with an additional (sale) discount of £3-5 for HB and £1-2 for PB. As a consumer, if i got an e reader, i don’t think i would be using it for much more than out of print and classic works, that you can get from £3-free unless i could find somewhere to buy them £4 or less. I like owning my books and it doesn’t really feel like I own them if they are electronic, Same reason I still buy CDs to put on my Ipod.

     PS – there is no distinction between MMPB and TPB in england. TPB sized books practically didn’t exist before this decade, (but are becoming the size of choice for mainstream books recently) and PBs are about 1/2 cm bigger but better quality than the MMPBs i get from the USA.

117. Every single argument I’ve seen from the publication side, including authors, seems to assume that “raise prices” == “more money for us.”

     Economics doesn’t work that way, people, particularly when your competition is your own product in a different form. I’ve cited the example elsewhere of macmillan pricing the eBook at $20 and the paperback at $8. How much money do you make when you set a price that drives sales DOWN?

     bookateur@98: There is about as much chance of a committed eBook purchaser (such as myself) buying a hardcover as there is of Osama Bin Laden taking communion from the Pope.

     There is also zero chance of my buying *any* eBook at hardcover($25) or even AMZN-discount($15) hardcover prices unless it’s some author I simply MUST read. Bujold and Scalzi are the *only* non-Baen authors who fall into that category right now. (And yes, I want eBooks of both “God Engines” and “Judge Sn.”)

     Heinlein once remarked that the author has to provide entertainment value that makes it preferable to buy his works over spending the same money on beer. As far as I can tell, everybody in this fight has forgotten that, and what we’re watching is flocks of seagulls squabbling and shrieking “Mine!” over an audience they’re driving away.

118. This shows why it is critical to not allow one ebook platform to take over the market and why it is critical to demand that ebooks not be published in a format that is tied to the reader hardware/software.

     As a consumer, try to purchase books DRM free first, and epub format second. When you buy an ebook in a proprietary format like azw, you tie yourself to the hardware hardware manufacturer in perpetuity. If you buy “Old Man’s War” in azw, you’ll only be able to read it at Amazon’s pleasure, essentially. If you buy it in epub, there are scores of companies that will provide you with things that can read.

     (And, of course, if you buy a PDF, there are hundreds if not thousands of companies/people who can give you readers, plus you can print the damn thing.)

     I work for Sony, so I’m obviously biased towards a certain product, but I try to tell people that whatever they do, *don’t* buy a Kindle. If you don’t buy ours, buy a Nook or an iPad or a CoolReader or any other device that doesn’t try to lock you into their ecosphere. And if you must buy a Kindle, at least get your books from somewhere other than the Amazon store. Look at this chart and ask yourself “where can I move this ebook I am buying to if the reader I own now breaks?”: http://en.wikipedia.org/wiki/Comparison_of_e-book_formats#Supporting_Hardware

119. How dare Amazon set lower prices than their competitors? I’ll never buy anything again from them if it’s cheaper!

120. Sandra@108,

     Seriously? 107 comments, in the dark?

     http://lmgtfy.com/?q=DRM

121. Ditto. Yeah! What he said. I couldn’t have said it better myself. (As if that isn’t already obvious.)

     And let’s not forget that whole 1984 & Kindle thing.

     Now will I only not buy a Kindle in this lifetime (because of 1984) but I will now not buy a Kindle even if I come back as a farm animal in an after life.

122. Geoffrey Kidd:

     “Economics doesn’t work that way, people,”

     Not to be too blunt about it, Geoffrey, but your bona fides in economics are, what, exactly? Likewise, your bona fides in bookselling either on the publishing or retail end? I know you’re a fan of electronic books, and I celebrate that fact. But being a fan of a format and holding up an anecdote and claiming it as data does not an expert make, and you appear to be asserting expert knowledge.

     So before berating people for not taking your anecdote seriously, please explain a bit why you should be taken so, outside of the realm of your own personal preference and purchases.

     I’m not trying to be a dick, here; I do want to remind people that their own personal thoughts and interests are in fact personal thoughts and interests.

     arkizzle:

     Don’t berate someone for asking for information, man. She wants to know more.

123. @121 Chaim

     That’s what turned me off to the Kindle as well. I’ll just stick with my Cybook Gen3 for now.

124. Scott@115: the key bit is that if you buy and iPad and use it to buy books from Apple, and then decide the iPad sucks, you can transfer what you bought to some other device.

     Not so if you buy books from your Kindle from Amazon.

125. steve burnap@118, a quick question for you. When Amazon, inevitably, pushes out the update that reads epub (I expect it within the next two years) how does that change your view? The reason I say that they will is they’ve said all along that the ebook business and the kindle business are separate, and have to be profitable separately. The Kindle isn’t being sold at a loss to sell more ebooks, like razors and blades.

126. I bought myself a Sony E-reader (after deciding that the Kindle wasn’t going to work for me particularly well in Canada), and have been buying e-books for it quite happily from Sony, and from sites in Europe. I’m perfectly happy with e-prices being the same as paper. The printing portion of a book does not represent that much of the book’s total cost, if I understand the process properly. All the people involved in producing a book (writer, editor, etc., ) still have to be paid. An E-book still gets the same treatment.

127. I haven’t seen any clear evidence here (or elsewhere) that this is Amazon’s decision, rather than Macmillan’s, yet almost all the posts and comments seem to assume that. I’d really like to know which one is behind this; it makes a difference to how I think about it.

128. arkizzle@120 – giggle. I just now had someone twitter back to me “you suck” for sending her a lmgtfy link.
     (she likes me)

129. I wonder how this affects pre-ordered Macmillan titles and pre-order gift list purchases. I happen to know I have several pre-ordered Tor titles, including one which a friend informed me they had purchased for me as a gift without realizing it had not yet been released.

     Amazon has not sent me any sort of email informing me that my pre-order was canceled, but if it was… the gift pre-order would be canceled too, I assume. I would feel very awkward pointing that out to my friend if they didn’t notify her either.

130. *arkizzle:Thank you. Didn’t know you could Google an acronym, not in the google/wiki/what have you habit yet. I’m tech/electronically stupid but otherwise a woman of some intelligence. I understood everything else. I own 2000+ books and am trying to read consumers comments on these new devices. Space and disability have me curious but skeptical. Thanks for the lesson.

131. Here’s the note I just sent to Amazon customer service:

     Well. What’s up w/not selling John Scalzi’s books?

     I’ll thank you to not screw w/customers over a petty dispute.

     As long as you persist in this behaviour, I shall not make any Amazon purchases.

     If you check my history, you’ll see that that will be painful for me, but I’ll do it.

132. Skip@125: My issue is with lock-in not the company. I wouldn’t buy ebooks from my own company’s store when they were in a Sony proprietary format.

133. Steve@132: exactly.

     This just popped up on slashdot:

     “The music industry once feared that going DRM-free would drive a massive explosion of copyright-infringing music availability on P2P networks. Now, a new study seems to suggest otherwise. The answer is obvious: if you can easily get inexpensive DRM-free content that works on your devices through legitimate channels, most people won’t bother with the headache of P2P networks. It appears that users largely turn to P2P to acquire DRM-free versions of content that is distributed with DRM. The MPAA, of course, will not come away from this with the obvious conclusion.”

     http://bit.ly/bVfRB4

134. I am sure that many people don’t mind buying books at higher prices. Or paying higher prices for ebooks.

     I like ebooks because they save on space. I live in a small space which is already overcrowded with books (both paperback and hard cover). I do not have a kindle, nook or sony reader because I can not afford them. I buy ebooks because of the prices and I can read them on my netbook (which was a gift).

     If a book is higher price in ebook or above $15/$20 range then I won’t buy it. There’s a book I want to buy (Scott Westerfield’s Leviathan) that I’m not buying because of the ebook price. I can’t afford to pay $20 for a book or ebook. So I’ll either not buy it or go to the library.

     I’m not buying print books this year because of the price. I lost my job in 08 cause of the economy/recession (and have unsuccessfully thus far been trying to find a job) and my book buying budget went from $50 or $100 a month to $10 or $20 every three months. I probably represent more of the average readers and book buying public.

     Yes there are fans who will pay higher prices but there are a lot more who won’t. And it’s those people who refuse to buy who impact the sales because if they’re not buying then books don’t sale. And I’m glad Mr. Scalzi has people willing to pay higher prices. And I know at least 3 others who don’t buy there fave author anymore because of the prices. And those authors have lost fans. I will also say I’m a fan of Mr. Scalzi’s work. I visit his site and blog regularly but mostly lurk. And as much as I enjoy an author’s writing or past writings, I’m not paying $15 or more for an ebook. Ebooks are supposed to be cheaper in price because they do not have all the overhead.

     And to me, in my simple opinion and outlook on things, it seems to be money grubbing and price gouging. And yes if authors don’t make money then they don’t write. I know of at least one author (I am acquainted with the book world and know many authors) who has stopped writing because of it.

     It seems to me that publishers, industry people, online retailers may be forgetting about the average person.

135. So back to the original topic, what should an ebook cost? Well, we can get some guidance from the dead tree world.

     Take, for example, Dan Brown’s Lost Symbol. Retail is $30, but nobody, anywhere, pays that, so that’s a meaningless number. Barnes and Noble discounts hardback bestsellers 40% every day, and I happen to have one of their discount cards still, so for me to buy it on day one it would have cost me 90% of 60% of $30 or about sixteen bucks.

     If I had done that, and read it over a weekend, and then gone to Half Price Books to sell it they would have given me about $7-8 for it. So on day 1, to me, the value of having access to the words once is about $8-9. Now the resale on the hardback goes down, of course, over time, but not all that much.

     Now fast forward 12-18 months when the paperback comes out. It will be about $8 on day one of the paperback release, and if I read it over a weekend and go back to that used bookstore and sell it, I’ll get about $1.50 to $2 for it.

     So under the old model, the value to me of the words is about $6-7, and the value of getting it on day one is about $2. Add in a little price premium for having access to the words “forever” and you end up, amazingly, at the $10 price point that Amazon and B&N want for ebooks. And with no resale available, the publishers get their cut from all the sales, rather than just the first sales.

     I’m sure things look differently from a publisher’s perspective, though. But this is the view from this reader, and heavy purchaser.

136. As an experienced shopper, I just don’t understand this aversion to tiered pricing as John suggested. It makes complete sense to me.

     If I want a new leather jacket, height of fashion, I buy in the fall. I can get it for less after Christmas, when I’ve lost some of the prime time for wearing it. In the spring, I’ll pay even less, because I’ve decided to forgo getting the most wear for a cheaper price. If I want new shiny when it comes to latest book release, I have to pay the new shiny price.

     As to *how* high that new shiny price is…publishers will have to set the point based on what they think their customers will bear.

     I really don’t understand this thinking that books (in whatever format) are any different than a jacket. The price will come down; buy at the point that’s comfortable for you.

137. Contrary to apparent belief, there is presently no reason whatever to believe that buying e-books from the Apple store will be any less proprietary than buying books from Amazon. The word ‘e-pub’ means nothing without accounting for the form of DRM. Presumably anything you buy from Apple will display on the iPad. At this point anything else is conjecture.

     Regards, Don

138. I somehow think that Amazon has got their whole approach backwards — they’re using ebooks as a loss leader to sell Kindles, rather than vice-versa. I recently bought a new TV set and I notice that electronics retailers are willing to sacrifice their margin on the TV itself, and then charge outrageous prices for the cables (particularly HDMI) needed to connect it to other devices. Likewise, they will practically give you a printer (bundled with say, a new laptop), and then ream you for the ink cartridges.

     Were Amazon to follow this model (which seems to work for electronics; people bitch about the price of cables and cartridges, but pay for them anyway, even though cheaper alternatives exist) they would sell the Kindle device for a small margin, and sell the ebooks needed to use the device for a larger margin.

     I suppose this model might not work for ebooks, given that cables and cartridges are physical objects not easily reproduced, whereas files are very easily copied on a massive scale. But books, in some form or another will be around for a very long time; on the other hand, the Kindle/Nook/Sony you buy today will likely be useless hardware cluttering your closet five years from now.

     What the answer to all this is, I don’t know, but I do know that I’ll be sticking to the dead-tree format for the foreseeable future. No licenses, no EULAs, and neither the publisher or the retailer are going to come into my house to repo the books. And no batteries to worry about.

     And I’ll likely be sticking mostly to brick-and-mortar stores for the time being. Pulling the paper editions from their site because a dispute with a publisher over electronic editions is complete asshattery. Between this and the 1984 fiasco, Amazon is increasingly showing that they cannot be trusted. And if they destroy that trust, they’re not likely to ever get it back, at least from me.

     In fairness, I will wait until Monday for an official explanation of all this from Amazon (I’d like to hear MacMillian’s official take on this too) before doing anything as drastic as canceling my account. But I certainly won’t be placing any new orders until a satisfactory explanation is made. If I need something today, the B&N in my area is open until 11.

139. MacMillan is dead meat and they know it. They are in the same position as the record labels circa 1998. The difference being they are not dealing with a bunch of kids with stars in their eyes that they can trick into signing their content away for a (ahem) song. Authors are older and more savvy than your average garage band (yes, yes, its a low bar)

     In an eBook world with print on demand there is no reason for the whole publisher eco-system. In a wired world there is no reason for a bookseller. Buy it direct from the ‘publisher’, if you want a hard copy, pay the extra money for print on demand and shipping.

     Amazon will be the publisher, as will others. MacMillan could be but this in this kind of disruption usually the old companies die out instead of adapt.

     For people in the biz that can not imagine how in the world the industry will work without a publisher, well, welcome to future shock. This is how new technology creates productivity. It eliminates entire sections out of the supply chain. And with that, it eliminates companies and jobs.

140. Freemarket economy. Suppliers can charge what they want; demanders can decide to buy or not.

     I will stick with my SONY READER. About 70% of my e-content is from either FREE public domain books (Google Books mostly) or articles and content I download from the web and format myself for the Reader. The other 30% I buy from Sony Books or Fictionwise.

     I do have to buy books occasionally, usuall trade paperbacks.

     No Kindle or similar razor/razorblades reader for me.

141. Jib: You hit on the issue at stake here. In the past publishers controlled distribution, so if you wanted to sell your work to the widest audience, you signed over your work to a publisher. Now, new forms of distribution are taking root, and the traditional role of the publisher is being changed, whether they like it or not.

     A publisher should a service to content creators, and adapt to how best to serve its creators. Look at Apple and the App store, which btw, is just a repeat of how Microsoft sold Windows by servicing developers who created content for their new operating system.

142. Sandra, Google everything! (not everything, you’ll be horrified)

143. @139 Jib

     I’m afraid you have it backwards. You can argue there is less need for the printer, but if anything more of the need of a publisher. A publisher/editor does 4 primary things:

     1. Acts a filter between good and bad books. Note that what one publisher considers good another may not. This is what differentiates between publishing houses.
     2. Assists the author, in differing amounts, in finishing up the book.
     3. Promotes the book.
     4. Arranges for the manufacture and distribution of the book.

     Step 4 is the only step that electronic distribution changes.

144. Jib@139 I don’t know that I entirely agree with you. There is one thing that publishers do pretty well that can’t really be outsourced, and that’s PR. Remember when Da Vinci Code came out? Dan Brown was a known author, but by no means a household name, but someone at his publishers read the book and realized that they had a potential blockbuster on their hands. I recall hearing blurbs on it all over the place for several months before it shipped. In a non-publisher world this simply won’t happen.

     Now that’s a rare case, but take what happens with an unknown, first time author. The publisher will be pitching this author, usually as part of a group, to booksellers at trade shows, so the booksellers buy the books. Not all of the first time authors sell well, but they get to average the PR cost over the ones that do and the ones that don’t.

     In a print on demand world, who’s going to cover that cost? Amazon’s not going to do that – they do very little advertising. They rely on the efforts of the publishers. Sure, there are exceptions, but I doubt seriously that we’d be seeing anywhere near the number of new authors break out without publishers handling the PR.

145. John,

     Sorry, it wasn’t meant to be berating.. I was going for inclusive hohos (thought Sandra would find the link as funny as I first did).

     Admittedly, I did think it unusual (and “laughing with”-funny) that someone might get through 107 comments in a discussion relating to DRM before finding out what it was.

     But as Sandra says, she’s just getting used to Google.. And now I look like a meanie :(

146. I buy books at the used bookstore for $4 each. I buy a lot of books. I have two jobs. My concern is not so much for the salaries of the authors or the publishing industry as it is for my own economics. I do not own an iAnything. I do not like proprietary companies and do not patronize them.

     When/if the publishing industry determines how they will settle this, I’ll still be buying my books at the used bookstore for $4 each.

     Carry on.

147. Jib:

     “MacMillan is dead meat and they know it.”

     Small nitpick: Macmillan, not MacMillan.

     Also, speaking as an author, and someone who knows maybe a little about publishing and the online world, I personally don’t suspect publishers are dead meat, since the business of publishing is not, in fact, just about distribution; there are quite a few other factors that go into getting a book to sell, as other folks have noted to you. I think in a general sense what publishers do is liable to change a bit going forward, but that’s a separate conversation entirely.

     So don’t be too fast to push publishers onto the dustbin of history. They may surprise you.

148. Interestingly, not all of Macmillan’s books have been pulled. Palgrave Macmillan books are still available (PM is the academic arm of Macmillan). Not sure what that means, but it is interesting.

149. Late, but chiming in to say that I’m one of those who is just not into the ebook thing yet. Part of that is the whole DRM-restriction thing, part of it is that I don’t feel so inconvenienced by the paperbacks I own and the books I get from the library that getting an e-reader is a compelling idea.

150. I have to say that as a trained (but not practicing) economist, it amuses me greatly to hear some people suggest that price discrimination is anti-consumer. In fact, it’s one of the more pro-consumer elements of the free market…

     Assuming books have a certain fixed cost to produce, and no per-unit costs (which eBooks do), then without price discrimination, for a book that has 10,000 potential readers (ie, at $1 you would sell only a bit over 10,000 copies), you might have a price/quantity curve that looks something like this:
     $15 = 2500 sales = $38
     $10 = 6000 sales = $60k
     $8 = 8000 sales = $64k
     $6 = 10000 sales = $60k

     Looks like we’ll have a $8 price point, 8000 sales for $64k, and 2000 unhappy people who won’t get a book.

     But with price discrimination, you have:
     $15 = 1500 sales = $23k
     … three months later …
     $10 = 3500 sales = $35k
     … six months later …
     $8 = 2000 sales = $16k
     … six months later …
     $6 = 3000 sales = $18k

     (I’m assuming around 500 choose wait for the $10 price point, 1000 people choose to wait for the $8 and $6 pricepoints who would’ve paid the higher price for it)
     Net sales: $92k, and nobody’s unhappy they didn’t get a book.

     (Note: I have no idea what the price/quantity curve looks like for books; but no matter what it looks like, this equation will work out, just that it would end up looking like this, centered somewhere else.)

     If the publisher were required to set a single price point to make $92k – let’s say their fixed costs for this book are $80k, for example – they simply wouldn’t commission this book in the first place. There is no single point on the p/q curve that nets $80k in sales.

     And no, the people who paid $15 are not being ripped off; they consider the book worth $15 to them, in exchange for getting it a few months ahead of time. In a sense, they’re subsidizing the $6 price point; the publisher is able to offer it for a lower price than they’d otherwise be able to offer it at, because of the profits they made at the higher price point.

     I definitely agree though that ebooks aren’t currently going through this, and need to. Not sure if Amazon’s causing this trouble or the publishers are – I don’t know whether Amazon gives publishers the ability to lower an eBook’s price or not. Certainly it sounds like Amazon is setting the prices on their own, so perhaps there’s no real way for publishers to allow this?

151. Jib: “For people in the biz that can not imagine how in the world the industry will work without a publisher, well, welcome to future shock. This is how new technology creates productivity. It eliminates entire sections out of the supply chain. And with that, it eliminates companies and jobs.”

     I couldn’t have said it any better, so I won’t bother trying.

     This is capitalism at work, folks. Someone wins, someone loses. It’s the nature of the game. Ultimately someone is going to deliver the product to consumers at the price they’re (we’re) willing to pay. As a result, some publishers and some authors will be eliminated. It’s cold, it’s harsh, but it’s also reality.

152. Reading over at the blog of Charles Stross, it seems that authors get approximately 7% of the price on a paperback and half of that 7% for an ebook. Is that correct? Either way, I wish authors got a higher percentage, and it seems that ebooks should have a lower production and disbursement overhead, which should mean a higher % for the author.

     But, on the other hand, an implied argument in this discussion is that authors deserve to make a decent living. While I hope authors do continue to make a decent living, by no means is this guaranteed. How many jobs, business models no longer exist simply because everything changes, particularly the technology and dynamics of any market?

153. Well, I’m not prepared to say I’m sure I know who pulled the trigger at this point. I can understand why you’re assuming Amazon, but honestly the remarks Apple made about book price equality…well, they’re interesting.

     And I have very little sympathy, as someone who grew up in a UK where we had the Net Book Agreement, with publishers doing anything more than setting a *recomended* retail price.

     I don’t buy DRM’ed books either (or many new books, sorry – if there’s no DRM-free version I tend to buy a second hand print version).

     Also – A lot of what publishers do could be done on a work-for-hire basis. It already does in certain other industries, such as the pen and paper RPG industry (in which I am involved). It’s hardly unthinkable from my perspective.

154. Kindle is $260 just for the record.

     I personally buy all my books (printed) only from Amazon. I like their discounts, nuf said.

     As for digital books, I buy from Amazon and Fictionwise. The prices are a little cheaper on Amazon and fortunately I can read them on my iPhone.

     I support their fight with the publisher. In my opinion $15 for a digital book is a rip-off.

     In the end, if the publishers push their prices higher for no reason (not like publishing costs are a factor now are they?) then eventually people will either stop buying them or get them online for free and no one wins other than the reader who gets the book for free.

     I certainly hate DRM as much as the next guy. This is why I make my own copies of DVDs (my kids have destroyed more than one when they leave them on the floor, also on occasion I have edited the movie for content when the kids where younger) and remove DRM from music I buy (not much a issue any more) and from e-books I buy. But oddly enough I support the thought that people should pay for movies, music, books etc.

155. Frankly, I would not be wholly surprised to see Macmillan fold under this pressure and accede to Amazon’s demands. I don’t like what Amazon has done, but they’ve got the economic power to, at least in their myopic eyes, bring Macmillan to heel.

     And that would be the worst possible outcome because it will make a lot of other publishers skittish when it came to bucking Amazon.

156. #3 – David – “cite the law of supply and demand (of course, hot titles get extra printings). Neither of these apply to e-books! ”

     Supply and demand aren’t bundled together as one entity. Even if the supply is “endless”, there is still demand. And the law of supply and demand isn’t about how supply and demand have to move in lockstep. The two apply independently of each other, and combine for the final price.

     If there’s high demand (ie. when a book is first released), then a higher price can apply, regardless of the supply chain

157. Like anything else in life this is all about power. Publishing is not exempt from that dynamic. Just like life, publishing is also red in tooth and claw.

158. In the end, if the publishers push their prices higher for no reason (not like publishing costs are a factor now are they?)

     As others have pointed out, the actual physical part of printing and binding a book is a small part of it. The rest is editorial and the like and doesn’t change with paper copy versus digital. And if the publishers are making such a killing, I’m sure you can point to a view that are making money hand over fist, now can’t you?

     (short answer: you can’t.)

159. Amazon UK pulled this a couple years back on Warner and other publishers on print books, wanting a deeper wholesale price discount, and when the publishers resisted, listing their books as out of stock. I believe in that incidence the publishers caved because Amazon dominates the online retail print market.

     But it’s probably not going to work for long when combining the threat with e-books. E-books are not cheaper than print books to produce — they are more expensive. Publishers tend to sell e-books at a loss. Amazon sells e-books at a loss because it wanted to encourage people to try an e-reader, theirs, and grow the market. Everybody does this because it’s a tiny market, so it’s a small loss, that they know is growing into a huge market, and at this point will grow very rapidly.

     Amazon no longer has market dominance of the e-market and is trying to further exploit its one remaining advantage — artificially low prices, along with their dominance of online retail print sales for publishers. But if Apple, et. al. have agreed with publishers that $15 (a trade paperback price) is an effective price point for e-books, then Amazon is not going to be able to hold out, even if Macmillan temporarily caves, because techheads won’t buy Kindles — they’ll buy Tablets and other electronic company gadgets that download print material, and the main market for e-readers isn’t books. It will be magazines and newspapers, where Amazon does not have an online lead.

     And even in online retail print, Amazon is losing its dominance to Barnes & Noble and now WalMart is trying to muscle in. Print books have now become a hotter commodity, in part because of e-publishing, despite slumps in sales from the recession. Publishers are losing some money to WalMart on the price wars for now but they are gaining in bulk sales.

     As the e-market develops and as the formatting and production costs get less, e-books will come down in price, and there will be discounts and diminishing pricing. But expecting it to all be in place now is a pipe dream. An average of $15 is probably the more effective solution. People pay $15-25 for a new CD, $25 or more for a new DVD, $50 for a new computer/video game, including online games. It makes more sense to look at the e-book market in terms of the DVD/Blue Ray market than the iTunes market. Amazon will continue to be aggressive about pricing discounts from suppliers, because that’s worked for them, but at this point, relying on their front position as an entertainment search engine to blackmail publishers to give them the price edge is going to be an increasingly losing proposition.

     As soon as Apple agreed to $15 an e-book and made deals with most of the major publishing houses, Amazon lost, even if Apple’s iPad does not become the major player in the e-book market. Apple’s iPad is just a larger iTouch, which itself is a larger iPhone without the phone part. They are trying to effect netbook sales more than e-reader sales, so battling it out with Amazon is of little interest to them.

     As for Costco, twenty-five years ago, a lot of people were afraid that Costco would destroy publishing because of its low prices (and big discounts with publishers and author royalties,) and limit to bestsellers. Instead, the warehouse stores increased sales for bestsellers, getting a lot of people to buy who never go into bookstores, and providing one of the remaining large wholesale venues books had left, which helped publishers fund that other 98%. If you take away the Costcos, those people still don’t go into bookstores and the sales are lost. That’s why I’m not too worried about WalMart either (though I don’t like their employee treatment either.) The U.S. has two retail book chains, one of which is near bankruptcy. And online it has only two big book retailers. The book industry desperately needs to grow the number of vendors beyond bookstores again, in my opinion. Most of that growth with those vendors will be of the top 10% of bestsellers to start with, but it will inject much needed cash and if publishers don’t have that cash, they don’t experiment on new titles as much and they don’t give mid-list titles time to build audiences. The higher profile books have (the more places that books are present,) the hotter books are seen as an offering and more people become willing to shop for books, e-book or print, bookstore or non-bookstore venue. The “buzz” about e-books and electronic readers in the media and on the Net is increasing publicity for books as a whole, especially fiction.

160. I haven’t switched over to doing my pleasure reading electronically. It’s not the prices. Whatever e-books would cost, I’m spending more to get them on paper. It’s simply that the paper books are easier to read (for me). I fully expect that I will switch to e-books as soon as I have a reading device that gives me a better experience than paper. When that happens, I wouldn’t begrudge $15 to get a book that can provide me with hours of entertainment. There is a place for cheap prices, but it is the mass market and generic commodities of adequate quality. When it comes to writing, I’m interested in niche market genres and I want unusual and innovative works of high quality.

161. I own a Kindle. I’ve owned a Kindle for coming on to two years now, and I buy e-books preferentially over non e-books. I’m fairly price-insensitive, though I do find myself annoyed with the concept of an e-book being priced the same as a hardback. I’d prefer to not have DRM, and most of the music on my iPod is DRM-free because I’ve bought it from Amazon. All of Amazon’s actions indicate to me that they want to dominate the e-book selling market more than the ebook reader market, and that they aren’t religiously attached to DRM.

     This fight between publishers and Amazon has been brewing since the Kindle came out and Amazon started selling ebooks at a loss. The iPad has probably been the catalyst to set off the escalation, but this was going to happen. One side or another was going to resort to pulling books eventually, and it’s not clear MacMillan can legally.

     I don’t particularly have a dog in the fight between MacMillan and Amazon. It’s two corporations fighting over what the future of publishing is going to look like. The very fact of ebooks is going to change publishing, whether Amazon existed or not, and I find it unlikely that publishers, like any other old media entity, would make that transition smoothly or easily, since they need to become a radically different company to do so.

     So yes, it’s going to be messy, probably ugly at times, and a lot of fear is going to be involved. Ever does change happen.

162. I’m a bit confused. Why is it “free market” for MacMillan to charge what they want, but it’s “asshattery” for Amazon to decline to sell MacMillan’s product at that price point?

     It’s not like Amazon is the government and is making it illegal to sell a $15 eBook. It’s not even like MacMillan can’t sell an eBook at $15 that you could then read on your Kindle. They just can’t force Amazon to sell their books for $15 through their outlet.

     Sounds like a standard bit of supplier/outlet negotiating to me.

163. I won’t buy anything, book, audio or video with DRM. So, no Kindle, at least for now and no iPad until they drop the DRM. Digital Restrictions Management is a swindle.

164. I think the day is coming when we will buy books directly from the *author*, cutting out both Macmillan and Amazon. They don’t like that, nope, nope, nope. They’re getting what money they can, while they can, but eventually you’ll be selling books off your website. The few books that get printed will be done by micro-printers at book kiosks, the ultimate in on-demand publishing. But really, paper books are dead. Only those of us who are nostalgic (or like to read in the bathtub) will want books on paper.

     It’s a sad view of the future, but that’s my opinion. On the plus side, you’ll get a bigger cut of the sale price.

165. There’s one case where DRM might be generally agreed as ‘proper’ thing – library owned copies. After all, I borrow a book from my local library and I get to read it, even sub-lend it, so long as I return it on time. A form of DRM that supports that would seem fairly acceptable to me even though I’m no fan of DRM as a general principle.

     And that capitalism/invisible hand of the market stuff? Nice idea when you’re naive enough to think that people actually behave as ‘rational consumers’ and businesses behave ethically. The problem with the invisible hand is that it is attached to the long arm of big business which leads across to the other hand – which tends to be pulling the puppet strings of the law.

166. I hate to be the conspiracy theorist here, but does it seem a bit fishy that the Amazon/Macmillan dustup happened right after the iPad announcement? Apple has a brand-new $500–$800 device coming out and they specifically indicated they would be selling books for $13-$16. But they have a problem: Amazon is selling those same books for $10. It’s in Apple’s best interest that Amazon sell books at the same price point as Apple. That removes an Amazon competitive advantage and makes a device that is twice as expensive more appealing to the public.

     Somehow, I think this is more about jockeying for position to sell more devices and not more books. The Kindle is half the price of the low-end iPad (and I bet the Kindle will be $200 by Christmas 2010). It can’t do what an iPad can do. It isn’t as pretty and has fewer functions. But you can buy books cheaper than in the Apple bookstore.

     If publishers want control over their digital content, they should stop selling licenses to Amazon and Barnes & Noble and build their own stores and sell their own product. No one gave a damn about ebooks until Amazon proved they could sell a bunch of them. And I believe this situation is just the first shot in a fight not between publishers and Amazon but between Apple and Amazon.

     Then again, I think there was a second gunman, too.

167. Is it possible that MacMillan pulled the rights from Amazon? It seems odd that this is happening to only one of the iPad launch partners.

168. Sean:

     While allowing for the possibility of error, it does seem to be the general consensus that Amazon is the one responsible for pulling the titles.

169. Here’s what I see when I look at this situation.

     One of the biggest headaches in publishing is figuring out how many copies to order in the first printing (too many and you lose money because they end up being remaindered or pulped, too few and you lose money you could have made because you don’t meet demand). Then you have to plan for warehouse space and distribution (which are even stronger concerns, I think, if you’re a small publisher, who might share warehouse space). Theoretically, e-books and devices like the Kindle ought to be awesome for publishers, because this headache is out of the way – a copy is created when a copy is sold and you don’t have to make all these plans around the physical object of the book.

     But instead, right now publishers are wary, because they don’t have much control over e-book distribution. If the Kindle locks up the e-book market, then Amazon has all the advantage when it comes to dealing with publishers. Publishers are worried about the scenario where Amazon just flat-out dictates whatever (low) price it wants for e-books, to the point the the publishers make a negligible or negative amount of money on every copy. In such a case, you’d have the bookseller dictating the terms of book production. The power would be completely in Amazon’s hands.

     So when Macmillan presses to keep their e-books listed on Amazon at what they consider a profitable price (and a price they themselves set, which is just as key), it’s their way of protecting themselves from this situation and reasserting their power within the e-book market.

     Yanking Macmillan books is Amazon’s way of telling publishers that, in fact, they see themselves as the sort of bookseller who has ultimate leverage over the publisher. It’s a power play.

170. @Steve 124

     I think I wasn’t clear that the $500 price was in reference to the 10″ Kindle, which is comparable in size to the iPad at the same price. Most people quote the $250 Kindle, but that screen is so small you can only read a paragraph and a half at a time, which I think would drive me batty.

171. It should be noted that the model that Amazon is following (sell content at a slight loss to drive device sales) is almost exactly the strategy that made billions for Apple, and that made them the most dominate seller of music ever. (1/4 of all music sales.)

     So while it is right to complain about it being bad for the consumer, you can’t really say it is a dumb idea.

     What *is* dumb, though, is that Amazon is trying to use the sort of hard-ball that Apple uses, even though it isn’t even close to the dominance that Apple has over music.

172. I also believe in free market and will talk about this subject the only way I know how, with my wallet. I will never pay $15 for an ebook. Publishers are welcome to try and get it.

     They had better be careful though because I am fairly covinced piracy of music was influenced by prices. When a price point was found the consumer was willing to pay the iTunes store took off. The problem piracy had already taken control of the market. I have never pirated anything but I would not want my favorite authors to suddenly start suffering because of an explosion in piracy for books.

173. I like the convenience of Amazon, but if they won’t sell me what I want to read by Scalzi or Stross I will get it somewhere else.

     Amazon is replaceable. The individual authors are not.

174. 82. James on 30 Jan 2010 at 9:23 am
     As an ex-editor, let me stress that the bulk of the costs of publishing are not in layout or printing. They are in editorial costs (which include not only copyediting and production but also the costs of acquisition) and marketing. These costs do not go away with e-books.

     That may be true, and a lot of publishers keep claiming it is, but good luck getting most consumers to believe it. It’s counterintuitive to think that a bunch of electrons should cost almost as much as a big, solid, heavy physical object that has to be shipped around—especially given how high gas prices have been the last couple of years.

     And Baen’s success with its price points that are even lower than Amazon’s (with the short-term exception of E-ARCs) reinforces that thinking. If Baen can make a profit selling at $6, and has been doing so for over ten years without cannibalizing its print book business, why can’t the other publishers?

     You see it in Mobileread threads like this one or this one, where people respond to much more detailed claims of publishing costs of printed vs. e-books with comments such as

     The extra types of costs for production and distribution of e-books are comparable to the already existing types of costs of the traditional book business.

     Please accept this posting as formal notice of my intention to sue Mobileread for substantial personal damages. After reading the above line I was unable to stop laughing and my wife had to call an ambulance. I am only able to write this as a result of heavy sedation.

     “Comparable… costs”. Snort. Giggle. Guffaw. Oh no, the pain is starting again!

     The threads go on for page upon page full of people either laughing at or posting lengthy and reasoned explanations why they feel that viewpoint is wrong…and very few people chiming in to agree with the publisher.

     You may be right, but I’m afraid you may already have lost the war of public relations. A lot of people are already assigning publishers the same “greedy b*stards” label they previously assigned to the music industry.

     101. Kathryn Cramer on 30 Jan 2010 at 10:55 am
     Actually, I think the real consensus among Amazon customers is that e-books should be free.

     I don’t think that’s it either. Baen, as I and others have pointed out, is making a profit from its e-book division—a division which sells most of its books at $6 or less, with the exception of E-ARCs whose prices then fall to $6 or less within a couple of months. If e-book customers wanted everything free, they wouldn’t bother paying for them.

     It’s kind of like a koan: treat a customer honestly, and he will be honest. Treat him as a thief who has to be “kept honest” with DRM, and he’ll become a thief.

175. I think you makes some pretty specious arguments — You’re a “free market advocate” for set book prices? Macmillan can try to get more money and Amazon is equally free to stop carrying their works. I’m not sure what the issue here is.

     Why should Amazon feel remotely obligated to think about your economic well-being?

     Shouldn’t established, respected authors be taking advantage of the ease of self-publishing to move away from the Publishing house motto and cut out the middleman?

176. Interesting debate going on here. One question I would like to ask, how much non-DRM content have any of you “loaned”, “given” or otherwise disposed of? It seems a bit much of an argument going on over something that rarely if ever happens in the real world.

     Also, being an author (on the technical side of things, about 20 books as author/co-author in the computer realm) I rarely see more than a dollar or 2 per book sold after discounts, and such. On my journey into epublishing (on my own) I am seeing a much higher return.

     About the only thing I see that publishing houses give you is publicity. You an get good editing and most of the other stuff for a few hundred dollars. Publicity is their baliwick. Once you cut the fluff and services you can get elsewhere publicity is the distinguishing difference.

     I am afraid most large publishing houses will parish unless they realize their true strengths, realign their business to service related activities and move fully into a e-business framework. Royalties have to be realigned to the new reality.

     No online fiction ebook should run more than $10.00 sorry, that’s my opinion. AS to DRM, it will go away. However, without it, who will buy a book when they can download it or get it from a friend for free? Then what royalty do you get?

177. There’s some authority for the proposition that cheaper e-books mean more e-book sales, and therefore more money for us. IOW, we make up the difference in volume, since someone’s more likely to spend 9.99 for a book by someone they’ve never heard of than they are to spend 15.00. My good friend and fellow thriller writer Joe Konrath talks about this a lot on his blog. See, e.g.:

     http://jakonrath.blogspot.com/2010/01/booty-call.html

     I dunno the answer. I do know I don’t like the idea of Amazon telling our publishers what they can charge. They’re already too powerful as it is.

178. Mike @177, by “non-DRM content” are you talking about only e-books? Because if you’re talking about paper books, I’d guess rather a lot of people have lent, donated or gifted these.

     Chris @175, I’m not a big fan of electronic DRM myself, but it’s wishful thinking to believe that people’s honesty varies in direct correlation to how much they are trusted. You may recall the video game World of Goo, which was released DRM-free and which had something like a 90% piracy rate. This despite the fact that there was also a free demo for the game, so you didn’t need to pirate it to decide whether it was the kind of thing you might like to buy.

179. And here’s Cory Doctorow saying that both sides’ positions are “farcical”: consumers “know” e-books should be cheaper than print books, but Amazon’s DRM and license terms are extremely consumer-unfriendly.

     I can get behind that.

180. However, without it, who will buy a book when they can download it or get it from a friend for free?

     Note that it would take me approx. one minute to find all of all of John’s books for free download. I do it to prove the point, but that’d be a bit rude to our host.

181. Am I the only one that’s concerned that an author of science fiction, and one of my favourites, is acting like some old English general, issuing declarations about e-books, when their future is pretty much already written, however bad it looks for authors. Information will be free. Scalzi will need to strip at week-ends and the news goes to the highest bidder.

     Scalzi… start crunching…

     E-books? As if anyone will pay for books…

182. The one most cogent comment I can make is about international rights. It’s not Amazon’s or Fictionwise/eReader’s fault that you can’t buy from their website in Oz (or wherever). International rights are frequently sold separately, and Amazon can’t legally sell into that market without violating a contract held by someone else. It’s a legacy from old models, yes, but until that’s addressed, it’s simply not something they can do without raising thorny contractual issues.

     As regards e-book pricing vs. dead-tree, the “$9.99 or bust” crowd doesn’t seem to have a very good picture of printing/distribution costs as a slice of total production cost. Not surprising, since most people’s experience with printers is getting a couple of hundred invitations printed for their daughter’s wedding or some such thing. As somebody who is peripherally involved with monthly print runs in the millions of copies for 4-color materials, I’ll say that, while it’s not free, bulk printing is really pretty cheap these days.

183. There’s some good (potentially even correct *grin*) explanatory info in the update to the Times article:

     “Macmillan offered Amazon the opportunity to buy Kindle editions on the same “agency” model as it will sell e-books to Apple for the iPad. Under this model, the publisher sets the consumer book price and takes 70 percent of each sale, leaving 30 percent to the retailer. Macmillan said Amazon could continue to buy e-books under its current wholesale model, paying the publisher 50 percent of the hardcover list price while pricing the e-book at any level Amazon chooses, but that Macmillan would delay those e-book editions by seven months after hardcover release. Amazon’s removal of Macmillan titles on Friday appears to be a direct reaction to that.”

     My reaction? Good luck with that, Macmillan. Let me know how that works out you. I waited for paperbacks of most books when I was pre-Kindle, and on the off-chance I wanted to read one of their books, I can wait 7 months. I don’t buy some books now on the Kindle b/c of the crazy desire to price it at $15-20 for the etext. There’s plenty of stuff to read…giving me a reason NOT to choose your work is…well, your option, I suppose.

184. @143 & 144: EXACTLY RIGHT.

     I am not going to buy self-published eBooks for the same reason I don’t buy self-published “dead tree” books. While I know there are some gems out there, for the most part, it reminds me of reading the slush pile, something I’ve done quite a bit of, thanks.

     Also, how much are marketing/PR costs going to go UP with eBooks? If it’s a different way of selling and/or distributing, I would imagine publishers would have to find different ways to let readers know about them…e-mail blasts can only do so much.

     Speaking as a production person for a small press, my job isn’t going away if everyone converts to eBooks. Neither is the proofreader’s, the editor’s, the marketing person, the person in charge of rights…plus let’s not forget other general & administrative costs.

     I’m finding this whole discussion fascinating and extraordinarily helpful.

185. Ken Kennedy:

     Link, please? Can’t find that graph in the NYT pieces I’m reading.

     Beyond that, what this graph seems to be saying is that the two companies were in the middle of standard negotiations and then suddenly Amazon went aggro as a tactical maneuver. I’m not sure I see the value of them not just saying “yeah, that’s not going to work for us,” and continuing negotiations.

186. Try here John. Update at the bottom. Source of it is named, fwiw.

187. Well, sort of named anyways, on a reread. That does put a different sort of spin on it, now.

188. Thanks for the link, Skip.

189. I bet Amazon paid attention to the “Walmart” method of dealing with suppliers…

     “Deliver a product at the price point we want, or else!!!”

190. Eric @ 162: Hopefully this isn’t stating the obvious (because it wasn’t obvious to *me* on first reading the threads), but Amazon aren’t just saying “we won’t sell these e-books at $15”, which I would agree is completely acceptable.

     As I understand it, they’re saying “if you want to sell e-books at $15, we won’t sell *anything* you publish: no paperbacks, no hardbacks, etc.”

     In which case, ‘ass-hattery’ seems a fair way of describing the situation.

191. David @158 “I’m sure you can point to a view that are making money hand over fist, now can’t you?

     (short answer: you can’t.)”

     hard saying actually, quick look at Macmillan and Random House shows them as private companies so they could be losing their shirt or making money hand over fist.
     But seriously, I do not think Macmillan or a Random House will be shutting down anytime soon.

192. Kindle now costs 259 USD and not 400. Besides, I prefer Kindle because I believe the eyes dont strain as much since it does not have a LED, you need some sort of light.

193. John @ 186 – Beyond that, what this graph seems to be saying is that the two companies were in the middle of standard negotiations and then suddenly Amazon went aggro as a tactical maneuver. I’m not sure I see the value of them not just saying “yeah, that’s not going to work for us,” and continuing negotiations.

     Because later on they can use this as a threat to anyone who dares to not accede immediately to whatever demand they make later on.

194. David@158
     “As others have pointed out, the actual physical part of printing and binding a book is a small part of it. The rest is editorial and the like and doesn’t change with paper copy versus digital.”

     But the editorial et al are fixed costs, and do not change with the quantity of books produced. The physical printing and binding is a variable cost. No matter how small this variable cost, when the quantity of books is large enough, it’s a sizable savings.

195. Rohan:

     And this one is $489. The “or so” is in there for a reason.

196. From the article it seems clear that Amazon’s problem is not with the US$15 price. Their problems seems to be with being told to either up the royalties to 70% — without Amazon’s own requirements for that royalty rate being attended to by Macmillan — or to wait 7 months after Apple has released it before being able to.

     Given the this blunt position by Macmillan, it would seem only reasonable for Amazon to push back.

197. Josh Jasper:

     “Because later on they can use this as a threat to anyone who dares to not accede immediately to whatever demand they make later on.”

     If they have the power to back it up. The unstated subtext here is whether Amazon’s current dominant position in online book retailing is unassailable. As noted before, it certainly makes sense for Amazon to try to settle this question before the iPad arrives, but whether this particular tactic will pan out as it hopes is the real issue.

     Dan Sobral:

     “Given the this blunt position by Macmillan, it would seem only reasonable for Amazon to push back.”

     Perhaps. But again, the question is whether this particular maneuver was the smartest way to do it. I sort of doubt it.

198. Hi, hope I’m not being redundant. This has become a pissing contest over who controls distribution. The publishers have a substantial infrastructure to support (physical buildings, etc.) and are fearful that authors (it’s already happening) will be able to contract for editorial services and sell their books directly, for less, while making more money for themselves. Namelos.com run by former Farrar Strauss editor Steven Roxburgh is already experimenting with a different model.

     Another issue is volume. I’m sure every author would rather have 15% of 20,000 copies sold at $10, than 15% of 6000 copies sold at $25.

     I own a Kindle2, a Nook, an iTouch and a Droid and a netbook. I read on all of them, but the best is the iTouch which allows me to read B&N, Kobo, and Kindle ebooks. The best thing about the Kindle software is that it syncs to the last page read across all the platforms. I buy many, many more books now and read almost exclusively in ebook format.

     A personal example of the dangers to publishers (and authors) of over-pricing ebooks. I recently wanted to read a new book about Louis Brandeis. The books was priced for the Kindle at MORE than the paperback, about $25 (remember that it’s only popular titles retailing at $9.95. Had the book been priced at $10-15, I would have bought it immediately. Instead, I bought a used copy for 20 cents. Had there been no used copy I would have got it from the library. In the latter two cases, the author and the publisher received NO revenue. 50% of $10 is much better than 50% of nothing.

     Ironically, publishers will receive LESS revenue per title under the Apple plan since Apple will take a much larger cut even though the price is higher. Amazon subsidizes the amount publishers get when they sell books at $9.95 (and remember this is just popular stuff, not everything.) (http://www.nytimes.com/2010/01/28/business/media/28media.html?ref=technology)
     “In the short term, authors and publishers will most likely earn less from book sales on the iPad. On the Kindle, Amazon subsidizes the $9.99 price by paying publishers a higher wholesale price equivalent to what booksellers typically pay for print editions. But publishers were concerned that Amazon, as the dominant player, would eventually demand lower digital wholesale prices.”

199. Josh Jasper @194: What you said. This is like the time they pulled every POD title off their site because they wanted to force all POD publishers to use Amazon’s CreateSpace to print their books.

200. This whole thing has really gotten out of hand, and needs a page one rewrite, if you’ll pardon the term.

     On one hand there’s Amazon, who wants to sell ebook versions on the same day the hardcover is released for $9.99, which about 1/3 of the list price of most hardcovers these days. On the other hand are publishers, who want to charge roughly the same amount as the hardcover for the ebook version. As a result of not being able to do so, many of them are now delaying ebook releases for months, assuming that those who want the ebook will just go buy the hardcover instead.

     I think both parties are ultimately being harmed by this standoff — Amazon’s ebook customers aren’t getting the books they want at release, and the publishers (especially those of a hot-for-the-moment title like “Game Change”) are, most likely, simply losing sales.

     Give consumers a choice. Let publishers charge more (but, say, no more than 80% of the list hardcover list price at release, which for most is still around $23), but with the understanding that after a reasonable time, say, 90 days, the price will drop to $9.99. The price should then stay at $9.99 until the paperback is released, and from that point forward the ebook and paperback price should be more or less the same, with the ebook not exceeding the paperback price, so you don’t end up with the Kushiel example, with the paperback out at $7.99 but the ebook remaining at 200% of that or more. (If there’s going to be an intermediate trade paperback release, then after 90 days the price could drop to the trade paper price, then after another 60 days to $9.99, etc.)

     This would let publishers have some assurance that ebooks aren’t “cannibalizing” their hardback sales, but would also let the readers be the ones choose when to buy — just like they do now, when one might choose to buy a hardcover knowing perfectly well that in x number of months, a paperback will be out.

     As a Kindle owner, for myself, most of the time I’d be in the group choosing to wait for the $9.99 price, just as when I read paper I waited for book club versions or paperbacks.

     A few other points I wanted to make, as a Kindle owner:

     1) The DRM on nearly all ebook formats is almost trivially easy to remove (so much so that I wonder why the publishers really think this provides any sort of protection), and while I would never “pirate” a book this way, if I could only find Really Good Book in .lit format or whatever, I would consider stripping the DRM so I could read the book on my Kindle. And if Amazon never carries a Tor title again, I’ll almost certainly wind up doing that — again, NOT for “piracy” but for format-shifting.

     2) The best way to prevent piracy is availability and reasonable pricing. There were plenty of people who had, shall we say, “unauthorized” ebook copies of LotR, before it was released, who happily paid for the official version once they could. Readers aren’t evil and most of us aren’t the enemies of writers. It would be nice if we were treated that way.

     3) When Tor was offering free ebooks a couple of years ago, I downloaded all of them. I still haven’t read them all, but of the ones I did read, I went on to buy the rest of the books in the series — the one that comes immediately to mind is “Misborn.” I probably wouldn’t have known about that series if it weren’t for the Tor giveaway.

     4) I really do love reading on the Kindle for a number of reasons, and I don’t plan on going back to print books. If I can’t find one book in ebook format, I’ll probably read something else instead. Just something to consider.

     Sorry this got kind of long, but this is something I feel passionate about. I am a lifelong reader, and I love writers and what they give to us as readers. All of this strife is upsetting, and I hope that all the dust will settle soon and we can all get back to reading some books, e or otherwise.

201. [Deleted because reposting an earlier post word for word is silly, and vaguely obnoxious. Try not to do that again, Jib. — JS]

202. If anyone actually reads this far down into the comments, this is something- Kindle book pricing- that I actually feel really strongly about. I held out for a very long time against buying one, because I like HardCovers. I like artwork and I read a lot of books- a lot. I wanted a business model that would allow me to buy a HC and then add an e-book for a few dollars, so I could have the book on the shelf with its peers, and then take the e-book when travelling, and I didn’t want to settle.
     But then my husband got me a kindle for the holidays (it was a gift for himself- we move a lot and his back hurts) and in the three months since then I have gone from buying an average of 5 physical books a week to purchasing 5 in the entire three months, and that was because three were a series cheaper tw buy physically than in e-book and of the other two (book and sequel) only one was available in e-book. I was trapped in an airport for three days without a book and when my Kindle ran dry (no charger, didn’t know I’d be stuck) I actually didn’t buy books but magazines, because I couldn’t bear to buy a book I’d need to toss when I could have had it forever on e-book instead (I would have had to toss it due to weight constraints- even 1 HC book would have taken my 6 kg carry on over weight).
     But I can tell you that I won’t buy an e-book over 9.99. That’s because, at the end, I don’t have a book that I can loan (if I like it, I want to be able to loan it), or sell, or donate to a library. For me that means no more than 9.99. And I am willing to wait until later to get that price. But I won’t pay more than a PB for an e-book, for the same reasons. So if the dealer (Amazon or whoever) won’t drop the price point of an e-book below that of the PB, than the odds are I won’t buy it at all. At least, I will wait for a really long time to do so, because I no longer want to buy physical books unless: they are for my kids, have illustrations, have graphs, or are non-fiction books that I expect will have me flipping back and forth for reference, or are heavily post it and picture dependent, like travel guides.
     That’s my 2 cents, from someone who buys, on average, 250-350 books per year (depends on what’s coming out and how thick some of them are!).
     By the way, I still want to buy HC with the option of adding an e-book- and I would pay HC plus a few bucks for that option.

203. SarahLynn @ 201,

     “…4) I really do love reading on the Kindle for a number of reasons, and I don’t plan on going back to print books. If I can’t find one book in ebook format, I’ll probably read something else instead. Just something to consider….”

     This doesn’t go quite far enough. If I can’t find ALL the books in a series in ebook format, I won’t start the series.

     Regards, Don

204. David @ 191 – Actually my point was more in the line that a) both are exercising their free market rights, and b) it’s also “ass-hattery” for MacMillan to attempt to tell Amazon (or any publisher) what prices to set.

     And while I do think that Amazon’s response is extreme, book selling seems fairly unique in that most booksellers offer all “their” publishers’ entire lines. So it wouldn’t shock me if Amazon (or B&N, or Borders, or iBooks) made their decisions on an all-or-nothing basis per publisher.

205. Don Lloyd @ 204:

     Fair enough, and I basically agree. I’m actually sorry I started Sword of Truth on Kindle (which they made such a big fuss about releasing!) when book 2 wasn’t available and, afaik, still isn’t. I think it picks back up later in the series, but that doesn’t help me.

     I did start Wheel of Time, with the understanding they were going to release one a month — which is now up in the air as well.

206. Amazon and Macmillan are just like the rest of us–trying to figure out what Apple is going to do!

207. I have no problem with sellers/publishers/writers making money, or even more money because they wouldn’t sell/publish/write books if they didn’t. People just do not do something without some kind of return.

     However I have no more money in my budget to purchase books. The question for me is NOT am I willing to pay $15 for something I can read right now, the question is what bill am I not going to pay or pay late to get that book?

     Put another way, it’s either $10 (or less) for a book/e-book or it’s $0 because I”m not going to buy it. Then no one is happy.

208. This NYT post has been updated with a little more information regarding the negotiating context between Amazon and Macmillan. Short version: They’re both playing hardball.

     And there’s nothing wrong with that on either side — but here’s another niggling question. There’s a line between “playing hardball” and an on-line retailer trying to spite-fuck a sizeable chunk of the largest publishing group on the planet. Not really seeing what long-term benefit Amazon gets out of toxic wasting its relationship with Holtzbrinck.

     You think you’ve got a long memory for slights? Don’t think Holtzbrinck got as big as it is by losing at hardball.

209. If the publisher has the right to sell at whatever price they choose, surely Amazon also has the right to choose whether to sell the product or not?

     As it happens, I went to buy a book published by Tor on Friday. I had seen it available for Kindle earlier, and wondered why it wasn’t available now that I was ready to buy.

     Then I shrugged my shoulders, bought a used paperback copy, and deprived the author and publisher of revenue. The way I see it, it was their decision.

     Had Amazon jacked the price up to $15, I’d have done the same thing. I suspect Amazon knows that there isn’t a market for $15 DRM-crippled e-books, and they’d rather cut ties with a publisher than try to sell books at that price and fail, and by failing both encourage other stupid publishers to jack up prices and damage the Kindle’s success.

210. Mathew:

     “Then I shrugged my shoulders, bought a used paperback copy, and deprived the author and publisher of revenue. The way I see it, it was their decision.”

     It certainly wasn’t my decision.

     Amazon is of course free to do whatever it likes within the law; it just looks stupid doing this particular thing.

211. Matthew@110:

     So why should Macmillan, or any other “stupid publisher”, arrange their pricing structures to protect Kindle profits? Hey, if Amazon feels that strongly about it they can deep discount or reduce their cut of these titles.

212. I think the price of an ebook might not be really a fixed thing, since a single purchase can be simultaneously shared across up to 6 kindles, assuming they’re on the same account. In my case, my wife, a friend, and I all share my account. We have similar tastes so this works out to any individual book effectively costing 1/3 the purchase price where compared to a physical book. sorta kinda. obviously, a single purchased book could be loaned about, but then not everyone can read the same book at the same time, and you have to be local to do that. I don’t know that this has anything to do with what the fair price is, whatever that is, but the list price for an ebook isn’t necessarily the price of a single instance of the book.

213. Chris@175 (and seguing into other comments):

     One observation regarding Baen’s price points/profits: remember that the preponderance of Baen e-books — and indeed, the considerable majority of e-books from the major publishing houses — are parallel releases of titles being published in print editions. This means that the editorial, production, marketing & distribution costs are mostly (not entirely, but mostly) of the e-edition are shared with the print edition.

     The corollary to this is that e-books published only in e-format are inherently more expensive to create and publish than e-books published in parallel with counterpart print editions. Where pricing models are concerned, this tends to work against small independent e-presses and/or potential authorial self-publishing efforts.

214. Regardless of where you stand on DRM, this move is unfortunate. Ebooks appear to be doing quite well and also appear to be a viable market – if the sales figures are hard to come by, just take a look at the ton of ebook readers that are about to roll out this next year. Why compete in a market that’s dying?

     So let’s look at the unfortunate aspects of this debacle:

     The publisher wants to charge $15 per ebook. Can they sell ebooks for that much? Let’s say they can’t, and the market bottoms out, and no one buys ebooks and ebooks become extinct. This seems like a very unlikely scenario, so let’s assume they can actually get $15 a book or more. The publisher knows it and so does everyone else, so when Amazon tells them to take a hike, the publisher doesn’t have to do anything. They STILL have sales through the other ereaders, and they still have print sales, so why worry about whether or not Amazon will carry them? In fact, if Amazon isn’t carrying a certain Publisher’s books, and that publisher is fairly large and well-known and produces a lot of books people like to read, wouldn’t that actually drive the Amazon business to those other outlets (especially outlets with proven marketing and technology – like Apple?) Do analysts at Amazon actually consider this an unlikely scenario, or did they not really think about this when they made their move?

     Now, the Amazon angle. Amazon wants to keep sales to $9.99 or lower. But in de-listing a major publisher, Amazon essentially screws the customer, who is forced to demand they bring the publisher back or else suffer the depressing conclusion that the Kindle is a $250 toy that essentially only “works some of the time.” Do I want to pay $15 for an ebook? No. Do I want to keep reading Scalzi on my Kindle? Yes. Now I, as the consumer, am stuck in a difficult spot: I’ve shelled out $250 for a Kindle and instead of getting my favorite books on it, I STILL have to go buy them in the store. That’s not very…convenient, nor is it revolutionary, and if I knew my Kindle was going to end up driving me back to the book store, I would’ve spent my $250 on something more useful. But I guess that’s my fault for being so silly, huh? Now, I could go buy an ipad or a Nook or one of the other ereaders, but why would I want to spend that kind of money just to avoid paying $15? Please sir, give me the $15 book. Don’t hold me hostage to the fact that a book costs more money than your business plan says it should.

     Let the market decide how much an ebook should be! In my opinion, Amazon is trying to act like it’s the Big Daddy of ereaders and can tell everyone what to do, when it should be trying to foster a partnership that will make EVERY book available – and why would we buy it on a Kindle instead of anything else? Because the Kindle is better, faster, cooler, easier – whatever. Because new books are discounted or free for 1 day or 1 week etc, and if I’m a savvy customer I feel like I’m getting a good deal because I pay attention. Because downloads are quick and easy – these are the things Amazon and others need to work on, not whether a book is $10 or $15.

215. Btw- I just ran over to Orb to see if I could buy an e-book directly through their site: not only were the books I was looking for offered in any e-format (SF Hall of Fame Vol1 and 2) but there is no contact info to request that be changed, or for general info- I had to send it to a different and unassociated department at Tor.

216. Again, e-books are not cheap to produce, especially for publishers. They do not have the technical equipment or personnel to do most of it. They have to hire companies or pay booksellers like Amazon to do it and since the e-book market is still small, they don’t get the bulk discounts on production costs that they do with print. They have to produce the e-book in multiple formats, each requiring its own expertise, with DRM and without, with a lot more proofreading and glitch-fixing needed than with print. They have to deal with piracy protection measures and pay for those from companies. They have to pay companies to track the e-books, etc. And they don’t have a lot of negotiating room on the wholesale price discounts from the vendors, like Amazon and split of revenue. (At least, they didn’t until now.) Prices will drop when the system gets better at producing e-books more cheaply, but they aren’t going to drop right now.

     My understanding was that Amazon offered the 70% royalty as a lure for certain deals, not that publishers were demanding it. What I’m sure is going on is that Macmillan is demanding Amazon give them the same terms that Apple is. And Amazon is responding that they have a bigger market share than Apple and Barnes & Noble — Amazon’s biggest competitor on online retail — who is supplying Apple and also have their own Nook reader. And while that’s still true for the moment, I’m not sure that it carries the same weight it did three years ago.

     I think that Macmillan should let Amazon have the $10 price point for Kindle editions only, at least for the next year, so that Amazon can keep building the e-book market. But if Amazon keeps pulling this game where they drop stock to force publishers to comply, it’s going to backfire, because customers who shop on-line (still mostly for print, not e-books,) want bestsellers and if they can’t get them — or any information on them — from Amazon, they’ll go elsewhere. Amazon is running out of time to make these sort of threats. A more effective threat is for them to simply lower the number of books they order from Macmillan, which in turn messes up those lovely Nielsen ratings.

     As for the death of print, there are numerous people who can spend $8 on a paperback once in awhile as a gift, but they can’t afford a computer or monthly Internet service or $500 e-readers. And there are millions of people who don’t like staring at a computer screen, even a pretty e-Ink one, for long time periods, at least not for recreation. And until that changes — and nobody seems to have much interest in changing the electronically disadvantaged part — print books are not going to die. E-books are still part of a privileged class, not the general population.

217. My useless opinion, given my uniformed guesses at how the economics of the hardcover/paperback segmentation thing work:

     Preferring an agency model/’Apple terms’ deal is not a dick move. It seems I lack the disgust at the pricing power being in the hands of giant monosopy publishers rather than giant monosopy retailers that some have.

     As an alternative, offering ebooks on a similar delayed schedule as paperbacks is also not a dick move. However, if true, offering those delayed ebooks at wholesale discount to hardcover list, rather than wholesale discount to paperback list, sure looks like a dick move to me.

     Taking the whole spat public by removing all the other negotiating party’s titles from your store as a bargining strategy — rather than doing it for real because you’ve decided you’re not going to buy from them anymore — is a total utter dick move.

     But then I was never much of a hardball negotiator :)

218. I’m confused by something.

     The NYT link supposedly has McMillan saying that Amazon is welcome to continue the current Kindle practice, which involves a royalty that is 50% of the hardcover price, or they could accept McMillan’s “generous” offer of giving them (McMillan) a 70% royalty of whatever McMillan decides to charge.

     Okay, first–most hardcovers, IME, are around $26 retail, which would make the current royalty around $13, which is actually, if I understand correctly, 30% higher than what Amazon is selling the books for. Somehow I find this … unlikely.

     Second, my understanding is that it’s a lot more complicated than just “Apple will let us sell our books for whatever we want, nyah”.

     Amazon, with hardcopy books, acts as both distributor and retailer, which means that they probably get around 60% (or more) of the cover price, unless they’ve negotiated a discount with the publisher. I’d guess that’s fairly likely.

     When it come to e-books, there are several factors involved.

     –Amazon isn’t just acting as distributor and retailer, they’re also taking on some of the publishing role (encoding the text, which they are paying people to do) so they, rightfully, feel that they should get some of the money that pays production costs.

     –However, production costs for e-editions are significantly lower than they are for hard copy books; you still need to pay the author and editor and layout artist, but after that you pay *once* for having the text turned into e-reader friendly code, as opposed to the relatively high printing costs necessary to produce each and every copy. Then you just pay for server space as opposed to all the costs associated with warehousing and shipping physical copies. So, the publisher and distributor don’t need to charge as much for production as for a physical book, by a fairly large margin. IME, simply printing each copy of a physical book without factoring in paying the author, editor, and layout artist, and depending on type, quality and quantity, can cost as much as $10-15. That’s a lot, compared to the pennies an e-copy costs!

     –My understanding (which may be flawed) is that Amazon normally pays the publisher around a 30% royalty on the selling price of e-books (which is about the same as physical books), not 50% of hardcover price. They have, very recently, raised that to 60%.

     –Something that a lot of people aren’t taking into account is that new books are being pirated pretty much the moment they show up in e-book format. I have at least 2 friends whose books were pirated immediately that way. I don’t know that DRM actually helps with that problem, but it *is* a problem that needs to be addressed, and raising the price of e-books ain’t gonna help.

     –And finally, I want to hear how much of that 70% royalty that McMillan is demanding is going to go to the author. My guess is “not much”.

     Can someone speak to how much authors are generally getting for their e-rights now?

219. Damiana@219, there was an article last year that indicated that while most publishers were trying to set their ebook royalty rates for authors at 25%, Macmillan was trying to squeeze them further, down to 20% in the boilerplate contract. I dunno how successful it was, but figuring that the royalty rate is probably between 20% and 30% for most authors would be safe I think.

220. FYI, the Macmillan’s CEO’s response is here, at the Publishers Lunch blog

221. Ooh, thanks, Josh. Updating now.

222. I think your assumptions about cost of publishing a physical book are overinflated. The reason I say that is because I was doing some research on this recently and found the majority of sources concluded that the cost to physically produce a book is only a small percent of the overall cost.
     Here’s one site where someone has done some of the leg work:

     http://ireaderreview.com/2009/05/03/book-cost-analysis-cost-of-physical-book-publishing/

     caveat emptor

223. Two big fallacies in all of this:

     1. Myth: Publisher are looking out for the authors’ best interests. Reality: Publishers will sell out their authors in a minute if it puts more money into their pockets. Look at what the record industry has done to their artists.
     2. Myth: Apple will “save” them from Amazon. Reality: All one has to do is look at how Apple treated the record industry to know that Apple is only in it for Apple and will drive down the price of eBooks ruthlessly if it will help it sell more iPads.

224. Michael Scott:

     You appear to be rebutting assertions no one seems to have made or even much implied. Why?

225. From the AP :

     “Macmillan and other publishers have criticized Amazon for charging just $9.99 for best-selling e-books on its Kindle e-reader, a price publishers say is too low and could hurt hardcover sales.”

     But not necessarily Amazon hardcover sales.

     In the pre-Kindle days, I would routinely pay more than $25 for a new release of a hardcover from a favorite author in Barnes & Noble or Borders, but a good part of the value of the purchase would be in the ability to begin reading within the hour when I returned home. Even if Amazon discounted the book to $16, they could not compete with the immediacy value.

     In the pre-Kindle days, I would find about about new releases by seeing them displayed on a bookstore table. Usually if there was nothing new, I wouldn’t buy anything except an occasional remainder for $6.98 or less.

     Now things have changed. I rarely go 3 days without checking Amazon for new releases, and I am usually disappointed. In this case, if I am on my last Kindle DX fiction work, I will look for old releases of favorite authors, sometimes having been previously read, sometimes not.

     Things are not going to reverse course. Browsing the book tables in Barnes and Noble is history. I’m already looking at releases scheduled for May.

     Regards, Don

226. A quick note – you said that Amazon had pulled your (and all Tor/MacMillan) books from its “stores”, not just its store. As a Brit, I’ve noticed that’s not the case; whilst Amazon.com may only be carrying third-party sales of your books, the Tor paperback of Old Man’s War is available on Amazon.co.uk (I won’t link it, and I’m sure people can find it… it’s not like it’s a whole different platform or anything).

     So this is a strange game, but it’s not (as a Brit) enough to make me give up buying physical books from Amazon. Why? Because they sell the books, still – Tor included (which makes me think different policies and, therefore, politics apply to the different national Amazon franchises)

227. Daniel F:

     I was discussing Amazon US and Kindle US stores, specifically. My titles are available in other Amazon stores around the world, but note that a) I often have different publishers/distributors in different markets, b) Amazon has different agreements in different territories.

228. GVDub @183
     It’s not Amazon’s or Fictionwise/eReader’s fault that you can’t buy from their website in Oz (or wherever). International rights are frequently sold separately, and Amazon can’t legally sell into that market without violating a contract held by someone else.

     Can someone explain why this is enforced for ebooks, but not dead-tree?

229. Tim @ 223–

     My assumptions are actually based on my experience. :-) Last year at this time, my partner and I accidentally formed a publishing company in order to publish a benefit anthology (Ravens in the Library) to help a friend of ours pay off some huge medical bills. The lowest estimate we got was around $6/copy (after figuring in setup etc.) for a low quality paperback book which would take months to produce. We ended up paying $13/copy for a much higher quality book which we had in our hands 3 weeks after handing the files over to the (local) printer.

     That is fairly average for a small print run from a small press. When you’re talking about a large publisher and a print run in tens or hundreds of thousands, the cost per book will be significantly lower. McMillan may only pay $2.50 per hardcover copy or so, but they only see 30-40% of the cover price, and they pay the author, editor, layout artists etc. out of that. And that doesn’t figure in returns–large booksellers usually order several times the number of copies they know they can sell, and return the rest for a refund. (We didn’t have that problem with Ravens, mostly because we sold almost entirely online and only dealt with 3 stores, all of which bought the books from us directly.)

     Now, prices for printing have gone down significantly in the past year–our costs, had we gone with the lowest bid, would now be around $3-4 per copy instead of $6, and it would be a slightly better quality book, and it would arrive faster. But that’s still paperback, not hardcover–a hardcover book with a color slipcover would still be significantly more expensive for us. We just don’t deal with the huge quantities that a large publisher can, so our costs are going to be higher.

230. Why get upset about raising the price to $15? So many physical books don’t even come in mass market paperback any more, but rather in trade paperback, and I don’t recall amazon getting pissy about that particular fact. And for the record, publishing world, don’t piss on my leg and tell me it’s raining: Where do you get the balls to charge me twice the amount for a paperback that is simply a bit taller and wider.

     My point is, maybe it’s less that the price is going up, and more that the price is going up for something that you don’t actually physically own.
     Solution: don’t buy ebooks…they’re the Antichrist.

231. Isaac – Why get upset about raising the price to $15?

     I think it’s a form of entitlement complex.

232. I can get behind the tiered-pricing model for ebooks (say, $15 for new releases, $10 at about the same interval that a trade paper version would come out, $7 for long-tail stuff). That’s eminently reasonable. Likewise paying a *little* more for popular authors versus relative nobodies.

     I don’t think anyone’s mentioned whether we /trust/ the publishers to go to this model. Will they, or will they demand full price for the entire period the ebook is “in print”?

     If the publishers would post an open letter saying they’d go to this pricing model, I’d feel a lot better about paying extra for the newest Scalzi or Stross right away, because I know I’m getting something for the extra dosh.

233. ErrolC, @229:

     When you buy a paper book from Amazon.com and have it shipped overseas, the point of purchase is considered to be Amazon’s warehouse. The book was sold in America, where it was duly licensed to be sold.

     When you buy an e-book, the point of purchase is considered to be your computer, in your country. Therefore, you’re only permitted to buy e-books from e-book vendors located in your country.

234. Kevin @233 one would presume they would sell it at a higher price point as long as people were still buying it, same as they do in hardcover.

     Davinci Code stayed in hardcover as long as it stayed in the top 10 of the NYT best sellers list.

235. Chris @234
     Thanks. That’s more logical than I was fearing. Doesn’t make sense in the modern world of course, but that applies to so many things.

     Recently fictionwise appear to have least partially closed the loophole we were using to give money to publishers for non-NZ available ebooks. BTW, ‘your country’ is defined in practice as one containing a billing address for a credit card you have.

236. ErrolC @229: It might also be the case, at least in the U.S., that first sale doctrine applies — the publisher who has only U.S. rights can only sell the book to a customer (whether individual or retailer) within the U.S., but the customer can resell the book anywhere they please. I have no clue what the actual law is on this, though.

237. Patrick:

     “Davinci Code stayed in hardcover as long as it stayed in the top 10 of the NYT best sellers list.”

     Same with the Harry Potter books, which if I recall correctly are some of the few (popular) books which sold more in hardcover than in paperback.

238. I’ve bought “E ARCs” from Baen for more than the eventually released book, and then bought the final edited and produced version as well. And the printed book. It’s not like I’m a fan or anything . . .

     I’ve bought specialized scholarly e-books on things like Shakespeare’s first folio, the Hengwrt and Ellesmere Chaucer, and Piers Ploughman for as much as $400.00, and considered it well spent.

     I think day and date release, and sliding prices over time make sense. I think that the fact that at most a publisher saves a couple of dollars on the costs of the average ebook over the same book in printed format is escaping people’s attention. A professionally produced and published ebook is more than a raw text dump. And ebooks require technical support staff as well. You’d be surprised, or maybe you wouldn’t, by how much tech support is required even for a .pdf book.

     The printed codex book is completely debugged. It doesn’t really require tech support, despite funny Swedish comedy routines about monks.

239. For all the talk about tiered pricing, and the few who have mentioned the idea of charging more for big-name authors, yes, this seems quite reasonable.

     However, both amazon and brick bookstores invariably discount the most popular books, and they typically do it immediately. You’re more likely to get a discount on the HC version of a bestseller if you buy right away rather than if you wait until 3 months before the mass market edition is due.

     Obviously, with bestsellers, the reduced cost per copy both to the retailer and the publisher is there, but as physical cost seems to be such a minor part it can’t account for the depth of the discount.

     So the tiered pricing John and others are proposing, while perfectly reasonable, in at least with regards to the deeply discounted bestsellers is not as equivalent to the HC; Trade; MMPB tiers as it might at first appear.

240. After reading through Macmillan’s response. I think the whole battle is not about price per say, but about the sales model. he specifically told Amazon that they are moving to the agency model, no if ands or buts.

241. Has it been confirmed that iBooks is going to be charging 15$ a book for new releases?

     Because if it is, I can understand Amazon’s insistence to not charge that much.

     If the price points are the same, iPad wins, it’s color, it’s interface is more aesthetically pleasing, and it does more than the Kindle does.

     I think Amazon is so determined to keep e-book pricing down because they’re really worried that their going to lose their hold on the e-book market. Sure they’re going about it in a dickish way, but what do you expect, they’ve always done things contrary to Wheaton’s Law.

     E-books don’t effect me, I like to hold a book and turn the pages, but since Amazon is being a load of twats and screwing with you John, I’ll get your books from B&N from now on.

242. Steve @181, exactly. It’s like asking “Why would anyone buy a hardcover copy of Scalzi’s books when they can get it for free from the library/wait for it to show up at a used bookstore?” Some people will do just that, yet new books (including hardbacks) continue to sell.

     I understand that some of the ebook readers have or will implement a ‘lend’ feature, so that I can beam my e-book to a friend and it is then locked down or erased from my reader. In other words, just like lending a real-life book. If this were a common feature and well-implemented I would definitely be interested in reading an e-book.

     For now, though, my interest in e-books is mostly limited to downloading plaintext from Gutenberg onto my blackberry in case I really, REALLY have a delay at the airport and run out of books.

243. Agreed. I’d also prefer hardcopy that I can either give away or sell as desire and need dictate, too. Plus, it’s physically recyclable if need be, as horrific as that rightly sounds.

244. HollywoodBob@242:Jobs has been quoted saying, “The prices will be the same” between Apple iBooks and Amazon Kindle books. Now, if the publishers get to set the prices at the Apple iBooks store, I don’t know how Jobs can be so sure, but that’s what he said.

     http://www.mediabistro.com/galleycat/bookselling/steve_jobs_on_amazon_and_apple_ebook_prices_the_prices_will_be_the_same__150442.asp

     (Also, since Amazon isn’t currently selling dead tree versions of John Scalzi’s books either, you’ll have to go to B&N or some other bookstore to buy them.)

245. Kevin – The Macmillan CEO claims that’s close to what he was proposing.

     Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.

     As I understand it, this dings Amazon more on the revenue share end of things, but opens up the chance for more revenue to come in on books priced higher than $9.99. It also indicates that Macmillan wants to sell under the $9.99 price point where appropriate (probably for books not in print)

246. Josh Jasper@246, it only opens up the chance for more revenues on on higher-priced books if pricing is relatively elastic, IE, enough folks will pay the higher price. I suspect that amazon has much better data on what consumers will actually bear than Macmillan though, as they now have a couple of years of data, so my bet is on Amazon being more accurate here, that, in fact, the Macmillan model will cost them revenues, not gain them. But that’s neither here nor there, if Macmillan can’t make a profit on Amazon’s model, well, they’ll just have to negotiate common ground.

     Dynamic pricing over time only works, though, if the goods aren’t readily replacable. And really, for a heavy reader, they are. I have a handful, probably 10-15 authors, that I buy everything they publish. Most of them put out probably 1 book a year on average. For me, the other hundred-plus books I read a year are largely exchangeable – I look for something that looks reasonably amusing or entertaining, that’s not too expensive, to fill in the time. Baen’s webscriptions fill in a bunch of this, but things like ‘big idea’ segments on the whatever also fill in a good portion of this. But only if the price, at the point they make me notice it, is somewhere around the paperback price. If it’s not, well, unless you make me notice it when it is at that price I’m just not going to buy it.

247. Finally home from my long day on the road. I have written up my thoughts as both a hopeful writer and consumer of eBooks. Hopefully the nyquil didn’t make it ridiculous (Amazon Slap Down http://tinyurl.com/yl3l5cz)

248. The one thing that always shocks me about the publishing industry is the ridiculous privileges the book sellers have gotten from the publishers, like free returns. The massive inefficiencies built into the industry seem to scream for a disruptive player, and it looks like Amazon really wants to play that role.

249. Macmillan, I’m assuming, wants to raise the price because it will make more money that way; Amazon, I’m also assuming, wants to keep the price lower because it has Kindles to sell, and low eBook prices is a fine motivator for convincing people to part with the $400 (or so) that Kindles cost.

     I think Amazon doesn’t really want to sell kindles all that badly. They charge $0 for iPhone, Windows, and other handheld readers. From what I understand folks with Kindles buy a lot more books then folks without kindles (I have friends with kindles, I just use the iPhone version).

     My guess is Amazon wants lower ebook prices because people buy more then twice as many ebooks when you chop the price in half. My guess is Macmillan doesn’t agree with that theory (and hey they might be right, and even if they are wrong, I believe they are honestly trying hard to figure out what gives the best return and do it). Or that Macmillan may think lower prices stimulate more sales, but don’t think it stimulates sales of their books.

250. My guess is Amazon wants lower ebook prices because people buy more then twice as many ebooks when you chop the price in half. My guess is Macmillan doesn’t agree with that theory (and hey they might be right, and even if they are wrong, I believe they are honestly trying hard to figure out what gives the best return and do it). Or that Macmillan may think lower prices stimulate more sales, but don’t think it stimulates sales of their books.

     Actually, Amazon.com makes very little money from $9.99 ebook sales. They’ve cut prices so low their profit margins are razor thing. It’s selling the Kindles that are paying off for them at the moment.

     But once they have a commanding share of the market and their customers expect all books to sell at that price point, Amazon.com will bully publishers into changing their price structure so the publishers (and us authors) get the shaft.

     Amazon.com is undercutting ebook prices to control the market. Once they have control, the bad shit starts to happen.

251. Personally, I would never pay more than 5 dollars for an ebook. Period. Anything more is an absolute and complete rip off. They cost nothing to duplicate, almost nothing to distribute, there is no warehouse/storage/shelf space needed. No paper consumed, no truck to drive it to its destination, no real person cashier to pay, no delivery necessary. It’s PURE profit. At 5 dollars a ebook, I’d be willing to be even more money is made than selling a hardcover in a bookstore.

     Amazon has the right to set their prices how they want. Once they buy it for wholesale, it’s completely out of your hands. That’s life, that’s business, thats the LAW.

252. Yesterday, January 29th, 2010, a day that will live in infamy, all readers of electronic books were suddenly and deliberately attacked by the combined forces of the Macmillan Tyranny.

     Although Kindle users are taking the brunt of the onslaught today, make no mistake that if we were to break under the forces of the enemy, Nook and Sony and iPad users will suffer the same $15.00 fate in the future.

     Let our Nook and Sony and iPad kindred realize that their destiny is tied to our destiny. That their freedom is tied to our freedom. That their price is tied to our price. That none of us can walk alone.

     Let all readers of electronic books declare, that since the unprovoked and dastardly attack by Macmillan, a state of war has existed between all eBook readers and the Macmillan Tyranny. Hostilities exist. War has begun. There is no blinking at the fact that our format, our eBooks and the price we pay for them are in grave danger.

     This is why I make this call to arms, to our Nook and Sony and iPad brothers and sisters, to put aside our petty loyalties and stand together, not for a particular reader or format or platform or store or company, to stand together not for those things that divide us but for those things that unite us.

     To stand and fight together for all ebooks, whether they come from the plains of the Kindle, or the forests of the Nook, or the beaches of the Sony, or the mountains of the iPad, to be priced at a value that not only honors the labor of the author, that not only satisfies the greed of the publisher, that not only covers the burden of the store, but that also respects the dignity, yes the dignity of the reader.

     I call for our Nook and Sony and iPad brothers and sisters to join us in this sacred struggle, to boycott and shun books from the Macmillan Tyranny, not only in their devices but in the retail stores too.

     Let us speak with one voice, let us hope with one heart, let us buy with one wallet, let us all share the bounty of the same dream. A dream where users of the Kindle and the Nook and the Sony and the iPad, will come together and join hands and sing “$9.00 at last! $9.00 at last! Thank eBook Almighty, $9.00 at last!”.

     The Battle of Kindle has begun. Upon this battle depends the very future of the eBook. The whole fury and might of the enemy will fall on us. The Macmillan Tyranny knows that it will have to break us or lose the eBook War. If we can stand up to it, all eBook readers everywhere may be free of the $15.00 chains and share in the $9.99 dream. But if we fail, then the whole world, including our Nook and Sony and iPad kindred, will sink into the abyss of a new Print Age made more expensive by their dominance of the digital format.

     We have before us an ordeal of the most grievous kind. We have before us many, many long days of struggle and of suffering. Neutrals will ask, what is our policy? Let us say: It is to wage war, by store, by author, by publisher with all our might and with all the leftover dollars Uncle Sam has seen fit to leave us; to wage war against a monstrous tyranny, never surpassed in the dark and lamentable catalogue of digital crime. That is our policy.

     The neutral will ask, what is our aim? Let us answer with one word: victory. Victory at all costs over $9.99, victory in spite of all terror, victory, however long and hard the road may be; for without victory, there is no liberty.

     Let that be realized; no liberty for our beloved electronic books, no freedom from the greed of the publisher, no independence for all that eBooks have stood for, no survival for the hope and dream of the ages.

     No matter how long it may take us to overcome this premeditated attack, electronic book readers everywhere, in their righteous might will win through to absolute victory. We will not only defend ourselves to the uttermost, but we will make very certain that this form of treachery shall never endanger us again.

     Let us have full confidence that if we all do our duty, we shall prove ourselves able to defend our eBooks, to ride out this storm, and to outlive the menace of tyranny, if necessary for years, if necessary alone.

     Even though a large number of eBooks and many old and famous works have fallen or may yet fall into the grips of the $15.00 Empire, we shall not flag or fail. We shall go on to the end, we shall fight with growing confidence and growing strength, we shall defend our eBooks, whatever the sacrifice may be, we shall fight on the internet, we shall fight in the stores, we shall fight in the blogs and in the media, we shall fight in the hearts and minds of the readers; we shall never surrender!

     Even if, which we do not for a moment believe, this Kindle or a large part of it were subjugated by the enemy, then our eBook readers brothers and sisters beyond, armed and guarded by the Nook and the Sony and the iPad, would carry on the struggle, until, in God’s good time, the New eBook Readers, with all their power and might, step forth to the rescue and the liberation of the Old.

     So let us therefore brace ourselves to our duties, and so bear ourselves witness that in the future, when readers of electronic books get their Kindle 8s and Nook 6s and Sony 10s and iPad 4s, they will look back to today and say, ‘This was their finest hour.’

253. How many of you who call publishers greedy, and only out to profit, would be pleased if all that was available was a bunch of poorly written, unedited ebooks because you drove the publishers out of business with your unwillingness to pay more? ebooks don’t cost that much less to produce. a few dollars saved on printing, and that’s it. and they are generally a few dollars cheaper. all the formatting, artwork, editing, review copy mailing, promotion/publicity, author’s fees, etc are exactly the same. that is what you are paying for. not the file or hardcopy. but the work to make that book what it is.

254. The process needs to change to keep up with technology. Books, and really any media, should have multiple options for purchase or lease. Video media went in this direction with the advent of video rental stores and later Netflix & competitors. (It used to be possible to rent hardcover bestsellers from bookstores, although I have not seen that since the 1980s and don’t know if that still occurs.)

     Something like the following would be a better business model and would accomodate a wider range of readers’ requirements. (Prices and time periods are direct gluteal extraction and only provided as an example.)

     1. Short term lease

     Pay $3 and download an electronic book with strong DRM that expires two weeks after the download date.

     2. Device lifetime lease

     Pay $5 and lease the book for the lifetime of the device/technology that you use to read it.

     3. Reader lifetime lease

     Pay $10 and lease the book for your lifetime. When you die the lease ends. No transferral to other people permitted, only to a new device.

     4. Purchase (Ownership)

     Pay $15 and own the media. Ownership can be transferred to someone else after 1 year, or upon your death, whichever comes first. Can also be transferred to the next generation device when the technology changes.

     I think many of us buy physical books that we will only read once. Periodically we purge our libraries to make space for new acquisitions. The publishing/distibution industry needs to recognize that fact and change their business model to accomodate it.

     I would gladly lease DRM laden books for vacation or business trip reading, and be a lot more satisfied with the results than I am with grabbing whatever I can find in the airport newsstand or local bookstore when the trip gets extended and I’ve run out of reading material.

255. I torrent all my electronic books and will continue to do so until I can buy them without DRM at a reasonable price.

     $15 is not reasonable, neither is $9.99 honestly.

     $4.99 and you are talking. $1 is better.

     The publishers do not, and never will, be able to stop this, nor will they be able to charge what they feel like for bits that are free to copy.

     There is no market and their is no property here, no artificial scarcity, just a minor convenience factor

     What the publisher wants me to pay is completely irrelevant to me

     I buy drills, not holes.

256. John Scalzi – hey I love your books!

     Ironically, I discovered them because of Amazon. Their ranking system gives you high marks. So I downloaded you on my Kindle. After finishing Old Man’s War at midnight, I bought the sequel and read to 2am and that weekend I finished the series (and left a positive review for you).

     I explain that because it shows that Amazon has developed a bold new service that is making extra money for you. Amazon has created a new channel to sell books that is more efficient (no returns, no stock-outs,instant delivery, etc). More efficient means: more books sold at lower prices yet higher profits, thus expanding the book industry pie and delighting readers. And it is a service that especially favors talented authors – like you. And it did not cost you a dime to develop! So be happy with Kindle.

     To operate this new channel, Amazon spends money many ways. They provide a fleet of novel hardware devices, pull together a critical mass of content, host all the server storage, run the online retail store, give technical support, advertise globally, and pay for wireless downloads. Amazon is giving away almost all of these elements for FREE to drive adoption. The pricing is so simple – $259 plus $9.99 for bestsellers. It is working really well and they attracted millions of people in the past 2 years.

     Now Macmillan wants to raise the Kindle title prices without regard for the rest of the picture. That just cannot work here because Amazon needs to promote the $9.99 price point to sell devices. Amazon must assure anyone who buys a device that title pricing will be rational and predictable. And Amazon must control prices so they can adjust to cover costs in other areas and any changes to the service.

     Macmillan seems to have completely misunderstood the Kindle model – AND HOW. The Macmillan CEO actually says in his open letter that he went to Amazon and threatened to pull his Kindle titles (impose heavy “windowing”) unless Amazon changed its pricing. Since since his business idea was not actually viable (per above) and since Amazon cannot tolerate threats from partners, I am guessing he left Amazon no choice except to call his bluff immediately.

     The letter then says the Macmillan CEO was surprised! If true, that is a businessman’s sin – Amazon is one of his largest customers. He ought to know them cold. And he should never deliver an ultimatum without a clear idea of what happens next.

     Regardless, the Macmillan CEO is now hurting his own business and you. I hope he fixes it fast. And if not, you ought to think hard about whether you need Macmillan. There is no glory in John Scalzi being the Macmillan poster child if this gets ugly. Your goal should be to reach readers, and you can do that best by being on all platforms.

     Tell Macmillan that if they cannot get you channel through Amazon, you want to split your business between them and Amazon. And then tell Amazon you want your 70% royalty!

     In any case, I think you are great and I will look for you again however you are published in future.

257. But none of that matters to me as a customer – because I don’t want a Kindle. I dislike ebooks to a degree I can’t even put into words. I hate them. What I want as a customer is an online bookseller willing to sell me any in-print book I want. Amazon is no longer able to do this. In trying to secure their e-book monopoly they are turning away customers who wanted to buy other products from them. It is deeply disappointing to me as a customer. And since Amazon won’t sell me any in-print book I choose, and B&N still will, and Borders still will, and The Book Depository still will, then there is no reason for me to buy anything from Amazon. Does Amazon love the Kindle so much that they no longer care at all about the desires of their print book purchasing customers?

258. @ resistenc – loved it!

     @rebecca – as an Amazon customer you appreciate their low prices, right? Suppose that all of Amazon’s vendors started coming to them and demanding to change Amazon’s price? That would be the end of Amazon! It is the retailer’s right to control price. They cannot do business with any supplier who demands price control.

259. I myself wouldn’t pay more than $10 for an ebook, and an ebook with DRM, I don’t buy at all. I’ll gladly pay $30 or $40 for a hardcover, but that’s not just the text, it’s also an artifact.

     Having said that, as long as Amazon is paying the wholesale price to the publisher, they should be able to charge whatever they want for the retail, even below that wholesale price. Until I can get it DRM free, I’m not going to buy it, anyway.

     Aside from the DRM issue, my personal thing is that most ebook pricing is a ripoff, as it ends up being way more for the publisher than a hardcopy. If there was a way for me to pay the author directly for an ebook, I’d happily pay 4 or 5 times the usual percentage that they get from a hardcopy sale for an ebook (I already have all the Old Man’s War books in hardcover, John, but if you can hook this up, I’ll take the ebooks, too). I just don’t want to get screwed for covering production costs that are way, way less with an ebook than a hardcopy, which unfortunately seems to be the case with most ebooks.

260. Rebecca @254: You seem to be under the impression that if the big publishers went out of business, there would never be another publisher ever again. “Nope, guess there are no talented editors left in the world, no typesetters, no publicists…they all took poison when the big publishing houses died.”

     If the big publishers did go out of business, the dearth of publishers would last just long enough for clever people to say, “You know what? I bet I could get some editors and typesetters and publicists and people like that together and publish books just as good as they used to, but if I don’t make the same mistakes they did I won’t alienate all my customers like they did.” And they’ll start another business, and lo! there will be more publishers!

     And maybe since they’ll be starting from scratch, they’ll actually leverage the benefits of the new technology in ways that the current publishers are too big and set in their ways to. Maybe they’ll be able to stay small enough to keep costs down.

     Perhaps they could use Baen as their example. Funny how Baen is able to sell even the e-books of its brand new hardcovers for $6 each and turn a profit, isn’t it?

     That’s a heck of a lot more than “a few dollars'” difference from hardcover. And they’ve been doing it for ten years now. Doesn’t that tend to put a strain on the credibility of publishers who insist they have to sell at or near hardcover price if they want to stay in business?

     For all that, I’m no Tyler Durden—I don’t want to see the big publishers implode. But I sure would like to see them stop complaining about how it’s “impossible” to sell e-books cheaply and turn a profit. Baen’s doing it. Maybe they should too.

     Guest @257: You work for Amazon, don’t you?

261. @guest259 – I’m not really that concerned with the prices but the convenience. Personally I consider print book prices reasonable for the enjoyment I get out of them and what they add to my collection. Amazon was convenient when they sold ever in print book. Now they don’t… so they aren’t convienient/useful to me. I’d happily pay more to B&N and Borders, even if they charged more, to be able to get the books I want.

     @Chris Meadows – I don’t feel alienated by the current publishers at all. I am able to find many books I enjoy in the genres I like. I don’t find their prices unreasonable at all. I would be extremely sad to see them gone. I feel they put out a good product that I get much enjoyment out of.

262. And my comments were mainly directed towards those (and I have seen many of them on the Kindle forum) who feel any publisher is useless, that they are just a useless middleman standing between the author and the reader. That ANY publisher at all is an outdated business model. That is something I strongly disagree with. I looked up the publisher you mentioned, it looks like they are a smaller press who publish books to appeal to a niche market devoted to the genre. I am not surprised a smaller press can still make a profit with the cheaper ebooks since they will have to do less marketing, can market mainly within the genre community, etc. However the big NY publishers are publishing books I enjoy reading, I don’t wish to see them out of business, and I will continue to support their existence by buying their books.

263. I would bet that Amazon would trade customers who hate ebooks for more control over the ebook experience.

264. @254 Rebecca

     I see your post and raise you

     this: http://www.baen.com/library
     this: http://www.webscription.net/
     and this: http://baencd.thefifthimperium.com

     All of which counter your assertion that the current price points espoused by Macmillian for ebooks printed alongside dtfbooks are at all necessary. Now, they’re perfectly fine to try and sell at that price point, but that doesn’t mean they aren’t talking out their ass when they say it’s necessary.

     I will also make an exception for ebook only books, especially since they tend to be less popular, which does necessitate the higher price points.

265. It should be noted that though it may seem that Macmillan is proposing a tiered ebook price that goes along with the print books, in actuality what they want is to put ebooks permanently (so long as they’re popular) at a higher price point than paperbacks. One only has to look at Macmillan’s prices at Fictionwise, such as Robert Jordan’s Eye of the World. $15 ebook vs $8 paperback list price. A novel that came out in paperback nearly twenty years ago.

     There are endless similar examples.

266. Rebecca,

     “I looked up the publisher you mentioned, it looks like they are a smaller press who publish books to appeal to a niche market devoted to the genre. I am not surprised a smaller press can still make a profit with the cheaper ebooks since they will have to do less marketing, can market mainly within the genre community, etc.”

     Thanks for making the point for me that the huge megapublishers need to go the way of the dinosaurs and be replaced by smaller, more flexible ones that can successfully operate in the future market conditions created by the technological advances in the last 10-15 years.

     “However the big NY publishers are publishing books I enjoy reading, I don’t wish to see them out of business, and I will continue to support their existence by buying their books.”

     And you think that if these publishers would go bust because they are to ossified and sluggish to adapt to the changing market conditions someone would send around death squads to make sure all the authors, editors, typesetters, … catch a severe case of being dead?

267. Skip @ 247 – it only opens up the chance for more revenues on on higher-priced books if pricing is relatively elastic, IE, enough folks will pay the higher price. I suspect that amazon has much better data on what consumers will actually bear than Macmillan though, as they now have a couple of years of data, so my bet is on Amazon being more accurate here, that, in fact, the Macmillan model will cost them revenues, not gain them. But that’s neither here nor there, if Macmillan can’t make a profit on Amazon’s model, well, they’ll just have to negotiate common ground.

     You’re making the mistake of thinking that anyone can negotiate with Amazon. Amazon just made it clear that if you try to negotiate, they’ll cut out not only the product you’re trying to negotiate about, but much of the rest of your product line as well. They’re acting like thugs.

     Dynamic pricing over time only works, though, if the goods aren’t readily replacable. And really, for a heavy reader, they are.

     And now you’re just assuming that facts about you apply to the entire market, when the history of print publishing proves you dead wrong.

     I have a handful, probably 10-15 authors, that I buy everything they publish. Most of them put out probably 1 book a year on average. For me, the other hundred-plus books I read a year are largely exchangeable –

     Stop assuming you’re the average consumer here. You’re not. Publishers worldwide use variable pricing on bestsellers, and the formula works. In fact, it’s how they make the advances they pay the big time authors, which in turn keeps them writing, which in turn generates money they can use to gamble on new authors – people like John Scalzi, once upon a time.

     In the mythical world of new small nimble publishers where big publishers die off, as Thorsten is rhapsodizing over, no one seems to think about where the new capital is going to come from to keep people who’re currently writing afloat. I happen to know a lot of pro writers. If the large publishing houses vanished, they’d all stop writing. As would editors, marketers and publishers. Because there’d be no one to pay them. They’d get new jobs, or worse, just not be able to make ends meet. And that’d be the end of the majority of books on the market for a good long time.

     I’m also amused by the “greedy publishers” meme that’s going around. Do you people know how well the average job in publishing pays? You think the people on top are rolling in dough? Hardly.

268. Got to love all the people who say “$15 is not a reasonable price for an eBook”.

     After all, $25 is a reasonable price for a pBook for plenty of people, and for a lot of people there’s no more utility in pBooks than in eBooks – and less for some. Seems to me like publishers should charge what people are willing to pay, based on traditional economic factors like “demand” … I certainly am happy to buy $15 eBooks, because I value the ease of carrying around only my phone and no physical book, and value the fact that my apartment doesn’t jam itself full of books, more than the losses from lending and DRM.

     And if the price they actually charge is too high for you, because you have a different utility equation than I do – say, you lend your books frequently or have a huge giant ****ing library in your basement, yeah, you – then either find an eBook that allows lending, or just don’t buy one. That should be the decision you make on EVERY PRODUCT, after all… shouldn’t be any different for eBooks.

     The cost of producing the book affects the publisher’s willingness to produce it at all for any give sale price, but should not factor into the purchaser’s opinion of the price whatsoever. The extent to which people seem to think it does is simply evidence of people being smug, entitled pricks who feel they shouldn’t have to pay for their entertainment, and thus they grasp at any argument they can find to justify their selfishness.

     Seriously, folks. Do you walk into the grocery store and look at an ear of corn and think “hmm, that probably cost them $0.13 to grow. WTF business do they have charging $0.29 for it? 0.09 BOYCOTT!!!!!”

     If you have an objection to what they’re doing in some way – be it pricing, DRM, lending, etc. – then by all means make that in the form of a customer comment [or a blog post or whatever]. But don’t make it as “They’re rat bastards ripping me off”, or, “Publishers shouldn’t charge more than $2 for an eBook”. Make it as “I am only interested in buying eBooks if they have no DRM and are more like $2-$4.” Because that’s the opinion you’re entitled to… if you want to make the other argument, do enough research to actually show how publishers could make money at your suggested price point, and at what time your suggestion would become relevant.

269. As a lifelong avid reader, I love the Kindle model — and I think $9 is a fair price to pay for a digital book, DRM or no. An eBook costs nothing to make except for bandwidth and data storage, and given the typos and other issues they tend to have over their print equivalents, it’s pretty clear the publishers aren’t doing much to copy edit them. $15 for a digital book is asking too much for a file that measures in the half-megabyte range — $10 is the sweet spot. I’ve already bought a ton of ebooks at that price for my Kindle since Christmas. If Macmillan wants to jack up the price and screw their readers — and if authors like Joe Scalzi agree with that and think it’s fair that I pay the same price for a digital book that I currently pay for trade paperbacks — then I’m not that interested in buying their books, “real” or digital. It’s just like the record industry insisting that $18 is a fair price for a new CD — you see where that got them. The problem here is Macmillan’s greed, not Amazon’s. If anything, Amazon is a boon for consumers — offering goods at heavy discounts. I’d take their side in a fight any day.

270. I hate to double post, but Elizabeth Bear linked to Charlie Stross and Toby Buckell‘s reaction to the Amazon/Macmillan mess, and I think they’re pertinent links if you’re trying to figure out what’s going on.

     Charlie’s opinion is particularly enlightening. What the meat of the debate is over isn’t pricing, it’s revenue share. Standard publishers revenue share considers the fact that in book publishing there are 2 or 3 layers of middlemen between the publisher and the book.

     Then the internet came along, a communications medium the main effect of which is to disintermediate indirect relationships, for example by collapsing supply chains with lots of middle-men.

     From the point of view of the public, to whom they sell, Amazon is a bookstore.

     From the point of view of the publishers, from whom they buy, Amazon is a wholesaler.

     From the point of view of Jeff Bezos’ bank account, Amazon is the entire supply chain and should take that share of the cake that formerly went to both wholesalers and booksellers. They do this by buying wholesale and selling retail, taking up to a 70% discount from the publishers and selling for whatever they can get. Their stalking horse for this is the Kindle publishing platform; they’re trying to in-source the publisher by asserting contractual terms that mean the publisher isn’t merely selling them books wholesale, but is sublicencing the works to be republished via the Kindle publishing platform. Publishers sublicensing rights is SOP in the industry, but not normally handled this way — and it allows Amazon to grab another chunk of the supply chain if they get away with it, turning the traditional publishers into vestigial editing/marketing appendages.

     He has some good points.

271. @John Scalzi (#8)

     “Likewise, there’s nothing to say that a $15 ebook has to stay at $15 forever; its price can drop over time, to something you think is a fair price.”

     (I loved OMW, BTW…)

     I haven’t read every comment in this thread due to its length. I come at this from the book-consumer end, not as a writer, producer or distributor.

     While the line of yours I quoted is perfectly true and practical /in theory,/ in practice, I just haven’t seen it happen.

     I was using a Rocket eBook reader for almost ten tears before I finally bought an e-Ink-based Sony unit last summer. I bought the Rocket through Barnes and Nobel back in the day when they had their /other/ ebook sales feature.

     As quoted to me at the time, B&N’s pricing for Rocket Editions was that the electronic version of a book would be priced the same as the least expensive paper version available. In other words, when the paperback version was released, the electronic copy’s sales price would drop to the price of the paperback.

     While I’d still preffer a small discount for the electronic version, I couldn’t complain about the basic policy.

     The problem was that over the years that they sold Rocket Editions, I don’t recall a single instance in which this actually happened in practice.

     The prices stayed at hardcover-level and all they did was whine that no one was buying the electronic versions.

     While I can certainly see the viewpoint of a writer on the pricing issue, the common perception is that since people buy something that has no physical component, they expect at least /some/ discount on the price. As you point out, $15 for a new release that in paper costs $25+ is both a bargain and an incentive to go electronic.

     Once it comes out in paperback, almost all incentive to get the electronic version disappears, if the price on the electronic version stays the same – which is /exactly/ what Barnes and Nobel did with NuvoMedia, back in the day. Worse, the price point they left the soft-copies at had no incentive built in at all.

     $24.95 to download a file /now/ or $24.95 to buy a book that I can get in three days and hold and read any time, or sell, or give away? Many people opted to go with the paper copy.

     Almost none of these arguments are new. They just come & go with each new eBook cycle. The same thing is going through a new cycle with media seeminly recently discovering the shocking ‘new’ concept of ebook piracy.

     As for what started this whole thing? Does Macmillan have the right to set its own sale price? You bet.

     Does Amazon have the right to then turn around and sell it at a steep a discount? You bet.

     Does Amazon have the right to negotiate a better MSRP? You bet.

     The gray area seems to be the incredibly strong-armed tactics they are using against Macmillan. Does Amazon have the /right/ to discontinue paper distribution as a bargaining tool in regard to eBook pricing? That depends on their contracts with the publishers, I’d imagine. I can see it being used as it is, as a tool to bludeon the publisher into submission.

     Personally, I think it will be Yet Another Blunder by Amazon in the public relations field, but they may yet get away with it due to their perceived near monopolistic position in electronic distribution.

272. A purely customer view here. Up to this point, I’ve done enormous amounts of shopping at Amazon — pretty much all of last year’s Christmas, books and otherwise — because they were reliable. If a whole major publisher can suddenly disappear from their offerings because of some marketing hissy fit, I can’t rely on them any more. Now I’m wondering about pre-orders and my Amazon wish list (which is huge) and pretty much everything I trusted Amazon to do for me.

     On a related note, the Firefox browser has a free plug in called “Invisible Hand” which does price comparisons of products on shopping sites. Including Amazon.

273. There’s another aspect of this that I haven’t seen anyone discuss, but we are still talking about books here, and maybe we should be talking about chapters.

     As a reader, I have many books that I’ve started and for whatever reason I’ve never finished. I would likely have been happier to spend per chapter, downloading the parts that I wanted to read, rather than have a whole book.

     The music industry has quickly found out that, songs, not albums, are the driver of digital sales. The first publisher that figures out the business model of packaging chapters for sale, for any digital device, might figure out how to get to $15 faster than they would otherwise.

274. @Joe: “The cost of producing the book affects the publisher’s willingness to produce it at all for any give sale price, but should not factor into the purchaser’s opinion of the price whatsoever. The extent to which people seem to think it does is simply evidence of people being smug, entitled pricks who feel they shouldn’t have to pay for their entertainment, and thus they grasp at any argument they can find to justify their selfishness.

     You’re kidding, yes? The market decides. The market always decides. If the buyers will not buy a product for the desired price, the seller reduces the price or, if profit cannot be made at that price, does not produce the product. That’s pretty much how the market works.

     It’s the seller’s job to convince the public that the price is fair and reasonable. Part of the problem here (from Macmillan’s point of view) is that it doesn’t matter how small a percentage of the book’s actual cost goes to physical production and management; the public will simply never believe that an e-book should be priced comparably to a hardback.

275. interesting to know how e-book reader like kindel, ipad and other stuff changing for reading books and how about writer? that impact must be not good i think… (just my opinion)

276. Keith – “I myself wouldn’t pay more than $10 for an ebook, and an ebook with DRM, I don’t buy at all. I’ll gladly pay $30 or $40 for a hardcover, but that’s not just the text, it’s also an artifact.”

     This interests me, because it seems like everyone has bought into a fiction – that when you pay extra for a hardcover, what you’re buying is paper.

     The amount of money that a book costs to be printed versus delivered as an ebook is only a couple of bucks.

     What people who buy hardcovers are buying is immediacy – the ability to read it now. The paper is the justification.

     And you’re implicitly making the author the low man on the totem pole with this line of reason.

     The entertainment that Mr. Scalzi provides, the unique version that only he provides, is worth a quarter of what a stack of paper is worth?

277. This whole ping pong of comments seems to drop the idea that both Amazon and Apple have created platforms that are an entire ecology of agreements with share holders, partners, writers, authors, consumers and developers / publishers.
     The lack of inclusion for these additional factors invalidates most of these points of view. Frankly, DRM is not wrecking my life, and the Kindle is convenient and… NOT a book. I didn’t buy it because it is a book. I knew exactly what I was getting into. Just as I would if and when I buy an iPad or the Google device that will eventually hit the market.

     Just a quick thanks to Joe, Monika, Kat and Stu Segal seem to extend beyond “I WANT FREE” and back into the original topic from Scalzi.

     Thanks!
     My deeper thoughts on the matter:
     http://arigoldstein.wordpress.com/2010/01/31/amazon-macmillan-shootout/

278. @#261 and Rebecca

     That model is already being tried. Stephen Roxburgh, former publisher of Front Street and a big editor at Farrar Straus, is doing just that at Namelos.com

     I suspect what publishers really hate is Amazon’s linkage of used books to in print titles. Why pay full freight when you can get the used book in pristine condition for as little as one cent. Publishers should be rushing to adopt ebooks because it saves them from the library and used book non-revenue stream.

     John Konrath can make more money selling his books in Kindle form at $2.99 than he can through the publishers. http://jakonrath.blogspot.com/

     Someone made the earlier point about Amazon reviews. Those have been a huge boon to authors.

     The publishers need to pay for huge debt incurred from leveraged buyouts (just look at their financials and debt loads.) The readers are being asked to pay for their financial silliness.

279. Point 1: DRM doesn’t bother me hugely, because it never lasts. There’s already ways to strip the DRM from Kindle mobi files.

     Point 2: Amazon believes that they should be able to price the book whatever they want, once they’ve paid for it from the publisher. From what I understand, it’s standard practice at Amazon to sell popular books at cost and recoup the money on other items. I don’t see either Amazon’s or McMillan’s position as being any more free market.

     Point 3. I wouldn’t complain one bit if publishers were to price ebooks high until the paperback came out, but that’s not what most are doing. They’re pricing them high and keeping them there. It’s really insulting to see that the publisher won’t budge on $14.99, for a book that I can’t resell, when the paperback it out as $7.99, and there are 15 used copies selling for $3.99. I’m sure the publishers are wetting themselves over the prospect of killing the used market through ebooks, but until everyone is buying ebooks, a refusal to acknowledge that it exists is idiotic. I like ebooks for space reasons, but I’m not going to buy one when I could get the same book for $8 less.

280. Kyle – Point 2: Amazon believes that they should be able to price the book whatever they want, once they’ve paid for it from the publisher. From what I understand, it’s standard practice at Amazon to sell popular books at cost and recoup the money on other items. I don’t see either Amazon’s or McMillan’s position as being any more free market.

     ebooks are not something Amazon pays for and purchases a truckload from publisher.

     Point 3. I wouldn’t complain one bit if publishers were to price ebooks high until the paperback came out, but that’s not what most are doing. They’re pricing them high and keeping them there. It’s really insulting to see that the publisher won’t budge on $14.99, for a book that I can’t resell, when the paperback it out as $7.99, and there are 15 used copies selling for $3.99. I’m sure the publishers are wetting themselves over the prospect of killing the used market through ebooks, but until everyone is buying ebooks, a refusal to acknowledge that it exists is idiotic. I like ebooks for space reasons, but I’m not going to buy one when I could get the same book for $8 less.

     This is nothing to do with “killing the used market through ebooks”.

     I get the sense you think you understand how publishing works. Trust me. You don’t. If you don’t like ebook pricing, don’t buy them. Buy them new in MMPB, or buy them used. Publishers don’t actually care how that happens. I have never once in my regular conversations with publishers head any of them decry used book stores.

     If ebook sales aren’t happening at a price point you like, either there are too many people who’ll pay what you won’t, or eventually the price will drop. That’s how the market works Taking it as a personal insult is stupid and egotistical.

281. Sorry to follow up my comment so soon, but I wanted to address the point you made about the royalties of the writers being tied to the actual price the book is sold at in the store. Rather than criticize Amazon for their pricing, why don’t we ask why this is? It doesn’t seem to make a lot of sense. If Amazon is paying the publisher 50% of the hardcover price, why are your royalties as a writer dependant on what Amazon sells the book at? That seems to be the business practice we should be protesting, not Amazon’s pricing.

282. @Josh Jasper Thanks for keeping the conversation pleasant by calling me egotistical and stupid. Way to stay classy.

283. @269

     i marketing they have a saying

     “You aren’t selling the drill, you are selling the hole”

     It means the cost you can charge for the drill is based on the need for the hole, not the manufacturing cost of the drill.

     It’s basically a marketing mindrape.

     Why shouldn’t you pay cost of the drill plus a minor markup?

     Especially when people are GIVING away the drills for free.

     Just google “torrent scifi ebook”.

     THAT is what you are competing against, not hardcopy

     I always try to buy drills, not holes.

     For books, the cost of the drill is (cost of production + cost of delivery) / number sold plus say a 10% markup

     I’m not interested in perpetuating anyone’s outdated business model out of my own pocket and the goodness of my heart.

     The sooner this whole 18th century supply chain either reforms itself or goes under, the better

284. In the technical publishing end, we only get royalties on what the bookstore pays for the book, not the cover price. Wholesale, rather than retail. Not sure about how that works in fiction, I would guess it depends on how good an agent you have, but I can’t image there being any efficient mechanism for tracking how much each and every bookstore sells a particular novel for and thereby derive a royalty amount per sales price. Any publisher that guaranteed royalties based on cover price I would worry about.

285. SomeGuy @ 284–

     You do realize that all those wonderful free torrents are pirated, right? And that, on John Scalzi’s own site you’re recommending that people go out and steal books, including his?

     This is not a business model. This is theft, pure and simple. A business model is based on *paying people for their work*. You are not entitled to just TAKE the results of someone’s hard work–writing a book that is worth reading takes hundreds of hours of skilled labor from not only the author, but also their editors and layout artists. This is no more a business model than mugging John Scalzi on the sidewalk and forcibly taking a thumb drive with his latest book would be.

     Please stop.

     Please do some real research into the publishing business, into what it takes to write a book (John might be willing to share) that is worth reading, worth *paying* to read. Think about the moral value of taking the results of skilled labor (lots of it!) for your own purposes, without the permission of the person who did all that work. Think about what your action and your choices say to that person–and about you.

     And if you want books that you don’t have to pay to read, check the publisher’s sites–many of them have e-books available for free, WITH THE AUTHOR’S PERMISSION. Heck, some authors even have them on their own websites.

     Please be the kind of fan that authors *want*.

286. This may be a good time to mention that a lot of SF specialty publishers are more than happy to sell Tor/Macmillan books to you if Amazon won’t, including:

     DreamHavenBooks

     Borderlands Books

     Mysterious Galaxy

     Adventures in Crime and Space (though Willie badly needs to update that website)

     (I will also mention my own Lame Excuse Books, but I’m not nearly as good at carrying books from major publishers (as opposed to Small Presses and used/rare) as the stores above.)

     Not only can all of them get books for you, as well as tell you about great books you’d enjoy reading you wouldn’t hear about otherwise, but they won’t pull author’s books from their shelves just because they got into a pissing match with another company…

287. Having read through almost all of these comments, I still have no idea what market model makes more sense. And I’m still not convinced that it matters in this particular case. The argument was about ebooks. Any response by Amazon should have stuck to ebooks. Responding with, “Then we’re not going to sell any of your print books either” seems a bit… disproportionate. And also stupid, since the reason most customers use Amazon.com is precisely because of reliability – you know you can order any book in print and get it delivered in a reasonable amount of time.

288. I’m still sitting on the fence on e-books. I keep wondering how much it’ll cost to recharge batteries once electricity is triple or more the price it is now.

     With a print book, it’s just there. You don’t have to push any buttons.

289. Justin – “And you’re implicitly making the author the low man on the totem pole with this line of reason.
     The entertainment that Mr. Scalzi provides, the unique version that only he provides, is worth a quarter of what a stack of paper is worth?”

     You apparently ignored the point where I mentioned that I’d happily pay the author 4 or 5 times his current hardcopy percentage for DRM-free ebooks. That’s the author specifically, not his publisher.

     The creator is at the top of my “totem pole”, my problem is that with the current distribution system, I can’t see a way to pay them directly what I think they deserve, which would be way more than the pittance that they get from a publisher.

290. Ever since Amazon deleted pirated copies of books from innocent consumers who bought them via Amazon, I have been opposed to Amazon’s e-books. I’m like you – I want to OWN the books I own. Yes, I understand they were pirated copies of the books, but if it’s so easy for them to delete illegal copies, what’s to stop them from deleting legal copies (for instance, say they have a dispute with the publisher or author and in a great big Amazon hissy-fit, suddenly thousands of people are out books they already purchased).

     I just don’t trust them.

291. Thank goodness someone else besides me sees publishers setting the price AS free market. To hear people tell it on Amazon, these folks thinks free market is Amazon setting the price for us. Head-desk. You know, publisher A sets a book at $15 and doesn’t sell as much as publisher B with a book set at $8…and publisher A chooses to drop the price to $9 and see what happens… THAT’S the way the system is supposed to work, IMO.

     Like you, I’m inclined to let Macmillan try what they try and figure out what works for them. If it’s anything like what works for indie, it’s not going to fly at $15, and they’ll be lowering the price. But it’s THEIR mistake to make.

     As an author, the last thing I want is Amazon being able to come in and undercut what I sell books for. Right now, I’m under their target line, and that’s good, but what if they changed it to $5 tomorrow? I wouldn’t be, and I’d personally be inclined to tell Amazon to take a flying leap and would be vociferous in telling people where else to get my books in Kindle format for their Kindle, if they own one.

     FWIW, Amazon and Macmillan are both entering the e-market that was established by indies more than a decade and a half ago. It’s worked all this time without either of them fiddling around with it. Amazon would do better to follow their predecessors’ lead, but when has Amazon ever been content to do that? You’d think they’d have learned not to push these things with the whole LSI/BookSurge debacle. Sigh… Unfortunately, not.

     Brenna

292. Rebecca @263:

     I looked up the publisher you mentioned, it looks like they are a smaller press who publish books to appeal to a niche market devoted to the genre. I am not surprised a smaller press can still make a profit with the cheaper ebooks since they will have to do less marketing, can market mainly within the genre community, etc. However the big NY publishers are publishing books I enjoy reading, I don’t wish to see them out of business, and I will continue to support their existence by buying their books.

     You know those bigger publishers you mention? They’re made up of a bunch of smaller genre publishers and imprints. (Yes, “mainstream” is a genre, too, not the absence of all other genres.)

     For instance, Macmillan contains the fantasy and SF imprint Tor, which once tried to dip its toe into the same publishing model as Webscriptions—through Webscriptions itself, in fact. It lasted about two days, then someone from the big boss company—one of Macmillan’s superiors in Holzbrinck—shut it down.

     Since then, Tor has been pledging to come up with an e-book store, but hasn’t managed it yet. (See my interview with Pablo Defendini, who is in charge of implementing such a store, for more details on that.) Given Tor’s current trend toward pricing e-books at hardcover rates and never dropping the price at all, even years after the book is in paperback, most genre fans aren’t too hopeful on the outcome.

     But Tor is in exactly the same genres as Baen. It’s even managed to build a community through the Tor.com blog. Why shouldn’t it be able to use the same publishing and pricing model as Baen has done so successfully?

     Because it’s being run as part of one of those inefficient big publishers, where every genre and imprint has to be equally hobbled. If small publishers are able to make a profit on $6 e-books, why should we continue to support these inefficient dinosaurs that insist they have to charge a fortune to stay in business?

     There’s a heck of a lot of difference between a $6 e-book of a $26 hardcover that Baen charges and a $24 e-book of a $26 hardcover that the other publishers insist they would have to charge if ink and paper costs were taken out of the equation. If being smaller means they can give consumers a better deal without having to support their own bloated superstructure, maybe it’s time to demand the publishers shrink.

     Now granted, Baen sells direct from its own website, without a middleman like Amazon or Fictionwise needing to take a cut. But Tor could do that, too. (In theory, at least. They haven’t been able to do so yet.) So could all the other little sub-genres of the giant publishers. There’s no reason communities and small e-presses couldn’t be built by romance, horror, mystery, or other imprints just as Baen and Tor are doing.

     If small companies are able to do what’s impossible for large companies, large companies should start trying to find out how they can act more like small companies.

293. Lawrence @287: Willie’s hasn’t updated his site because Crime & Space closed several years ago. And Austin is far, far poorer for it.

294. @286

     Wrong on many counts

     1: it is not theft.

     “File sharing is not theft. Unlike shoplifting, to which it often is compared, file sharing deprives no party of property. It does not involve piracy — no party assumes profits that rightfully belong to another because there are no profits to speak of.”

     http://www.washingtonpost.com/wp-dyn/articles/A38734-2005Apr8.html

     “[T]here’s a fundamental difference between intellectual property (copyrights, patents, trademarks) and real property (houses, cars, plasma TVs): The latter is tangible and limited in supply, the former is not. “Copyright infringement is not ‘theft’ in the same way that taking a CD from a store is theft,” said Mark Lemley, a copyright expert at Stanford University Law School. “If I take your physical property, I have it and you no longer do. If I copy your song, I have it, but so do you.””

     http://www.hitsville.org/2008/02/22/is-file-sharing-theft/

     2: I am not advocating anyone to do anything. I am stating my own opinions and practices in the matter and summarizing the competitive landscape, and what would ahve to happen for the publishing industry to realize any revenue from myself as a consumer. YMMV

     3: I think we can safely say, based on the experiences of the record labels, that asking people nicely not to pirate is not a viable savior for an outdated business model.

     Again, based on the experience of the record labels, the solution is to price the product more in line with the realities of the cost to produce and distribute

     How much does a book cost:

     To pay for a $9.99 book you need

     $100K for an author
     $10K for an editor

     to produce one book in one year.

     and the book sells 10,000 copies

     The rest is fat cats and useless middlemen.

     If you can write two books in one year, or sell 20,000 copies, $4.99

     There are all sorts of other creative ways to change that equation in both the author and consumers favor, sponsorship programs, limited/special releases, etc etc

     I see no reason to pay any of the fat cats and middlemen that continue to cost by useless on other people’s work and genius. Let them get real jobs.

295. “The rest is fat cats and useless middlemen.”

     You know, it’s stuff like this that makes me want to ask for a show of hands of everyone making pronouncements about the economics of the book industry who is either in in the book industry or whose job it is to follow the book industry in some relevant way. My expectation is that it’s relatively few.

     In the course of the production of my book, it is touched and receives positive benefit from (in no particular order): A writer, an agent, an editor, a copy editor, an art director, an artist, a book designer, a marketer, a publicist, a distributor and a bookseller. As an author, if I lose one of those people, the final product — a saleable book — suffers in one way or another.

     Contrary to apparent popular belief, none of those people involved are fat cats; there are very few rich people walking around a publishing house, and I speak from experience there. Nor are they inessential “middlemen” — the services they provide offer value to the final product, and allow the author to do what an author is actually competent to do: Write . I speak from experience there as well.

     Is it possible to put out a book with only a writer and an editor? If by “book” you mean “a text document offered up on a Web site or Lulu,” sure. But — and again, I think I have knowledge on this subject — the fate of most text documents offered up on a Web site or Lulu is not a desired outcome for most hopeful writers. The advent of the electronic medium for books will not save the majority of such documents from that sort of fate.

     SomeGuy, if you do indeed have some publishing industry experience, by all means do detail it in some verifiable way (an anonymous commenter saying “yes, I have publishing experience!” will not do). But given the numbers you’re throwing out and your general comments, I don’t think you do. And speaking as someone who does, I feel qualified to tell you that you don’t know what you’re talking about.

296. Hah, it’ll be $15 ‘cover price’ for the Ebook then a 20, 30, 40% discount to try and convince people they’re getting a bargain.

297. No I don’t have any direct experience John.

     I did do some research though

     According to this article:

     http://syndicated.livejournal.com/feedtobiasbucke/37723.html

     The roles you describe pass on $7000-$20,000 to the price of a book.

     That does not materially effect the math in my post.

     is that a correct assessment?

     However I agree, I was overly general. I should rephrase as

     “The vast majority of the markup is consumed by fat cats and useless middlemen.”

     note that I consider bookstores and all the distribution chain as falling into that category.

     Also, it really feels like about half of them are not even relevant to the ebook discussion?

298. Mmm, now having read up a bit more on the costs I retract my previous comment — I was being flippant.

299. SomeGuy:

     “That does not materially effect the math in my post.”

     The math in your post appears to assume things not in evidence, among them the assumption that books as a matter of course sell 10,000 copies:

     950,000 titles out of the 1.2 million tracked by Nielsen Bookscan sold fewer than 99 copies. Another 200,000 sold fewer than 1,000 copies. Only 25,000 sold more than 5,000 copies. The average book in America sells about 500 copies.
     — Publisher’s Weekly, July 17, 2006

     Again, the existence of eBook as a format is not likely to budge that number much.

300. Arr. I look forward to five or ten years in the future when e-readers have standardized and I don’t need to worry about all this crap.

     ‘Cuz, honestly? Why should Macmillan dictate Amazon’s business model? Amazon should be free to set whatever prices it wants, not have the publisher hobble it. And Macmillan should be able to set whatever prices it likes for its ebooks. If MacMillan wants to sell a book for $10, and Amazon sells it for $8, then Amazon can swallow the two dollar loss and I’d be happy about it.

     What I hope is that ten years from now, ebooks will be like mp3s. I have numerous (legal!) ways to procure mp3s, I can do whatever I want to with the data, and they work on every single mp3 player. I want to be able to do the exact same thing with ebooks. No vendor tie-in, no device restrictions.

301. To be specific, according to a couple of groups that track e-book sales (including the one run by Emily Veinglory), your average e-book will sell between 100 and 1000 copies in the first year. Some will sell more…just as your blockbuster authors (like Dan Brown, Nora Roberts, and Stephen King) will make more than your average NY Times bestseller, midlist author or lower. That’s not counting the self/subsidy/vanity books that sell less than 100, as a matter of course. The numbers John are giving are not far off mark, no matter if the book is available in print and tracked by Neilen or in e-book and tracked (as closely as it can be) by other sources…or both.

     Brenna

302. I guess my biggest reaction to this whole thing is that I feel for the authors who are suffering directly and immediately from this.

     I have trouble summoning many strong feelings one way or the other for Amazon or Macmillan. Amazon has been quite obviously trying to corner the market on ebooks, which is fine in one sense, that’s what “for-profit” entities do (until they get too blatant or contribute to the wrong politicians and the DoJ gets involved). I would hope no one actually believes they are trying to keep e-book prices low to protect consumers.

     By the same token, large publishers have not handled the profit squeezes of the past decade very effectively. I don’t want to get into the whole “what is wrong with publishers today” topic, but I certainly believe that a conflict like this one was inevitable and will be far from the last. Forces far beyond “ebooks: how and how much” have contributed to arriving at this point.

     From a purely objective standpoint, Amazon has by the worse bargaining position. If one or two more major publishers follow Macmillan’s lead, Amazon will have to back off. That may or may not happen, and it may depend on where the other publishers are in the negotiation/contract process with Amazon.

     A lot of discussion of ebooks has centered around prices and costs. One school of thought is convinced that ebooks need to be far, far cheaper than hardcovers. Another points to actual costs involved with producing a book and suggests that the physical costs are only $2-$4 less. Neither position seems to be the whole story, though.

     As John points out, the correct price of an ebook is what people will pay for it. That is going to vary from book to book. At this point, anyone who claims they “know” what people will pay is at best deluding themselves – no one knows yet. Certainly not a company that has put a ceiling on prices almost from day one and certainly not the fractional percentage of people who already buy ebooks. And certainly not publishers.

     I think the publishers are correct to focus on their costs, given that what people will pay is unknown. However, trying to use those costs to justify ebooks being only a small bit cheaper is pretty idiotic. That is trying to use the supply side of the equation to define the demand side. When I download an ebook, what I will pay for it has nothing to do with what it costs publishers, other than how that cost ends up defining what’s available. Instead I consider what I am getting and what the alternatives are.

     And the not-so-secret factor that is going to keep getting bigger is the increased availability of quality free or cheap work. If I love Scalzi’s work, then I will definitely pay a premium for it. If I only like an author’s work, though, I might choose a free or 99 cent option rather than $9.99 or more.

     The very valid argument is that no author can make a living off free or very cheap work (even forgetting agents,publishers,distributors and retailers). So the model is not sustainable. As true as that is, it’s not all that relevant to the market reality. The reality is that a small percentage of the 99% of writers who have their work rejected have stuff many people will like a lot, even without the polishing agents and publishers provide. The free hand of the market (agents and publishers) has decreed that the work is worth nothing. As long as that situation persists, more and more writers will give their work away for little or nothing.

     To my way of thinking THAT is the big threat to publishers and authors that is posed by ebooks, not the current battle or arguments of over DRM, etc. I’ve downloaded half a dozen ebooks for $1.98 or less in the past month. Most of them were good reads. That dozen mean I won’t pay a higher price when my favorite authors come out with something new, but when the almost inevitable worsening of writing quality happens somewhere between 5 and 10 books in, I’ll be quicker to try out alternatives.

     I’m not sure anything in the current publishing model has an answer for this. But whatever the outcome of the current battle, the problem is not going away.

303. nfg:

     “If MacMillan wants to sell a book for $10, and Amazon sells it for $8, then Amazon can swallow the two dollar loss and I’d be happy about it.”

     Macmillan’s concern, as noted several times in the thread, is that Amazon’s willingness to take a loss now will allow it to corner the market in electronic books, thus allowing it to dictate terms to publishers for access to the Kindle, thus setting prices and dictating Macmillan’s business model more than Macmillan would prefer.

     Basically Amazon and Macmillan are looking more than one step ahead in this argument, whereas most folks are focused on the current step of the game. Saying things like “Why should Macmillan dictate Amazon’s business model?” is in some sense a null statement, because of how much each entity’s business model is already dictated by the other.

304. @scalzi And that’s why I want open formats, so that Amazon can’t dictate terms to publishers for access to the Kindle, or any other device. I guess I forgot to properly connect that paragraph to the following, so let me amend it:

     “If MacMillan wants to sell a book for $10, and Amazon sells it for $8, then Amazon can swallow the two dollar loss and I’d be happy about it.” Because what really matters is that I should be able to get the ebook from whomever I choose, and open it on any e-reader I want.

     And then cue the bit about ebooks hopefully becoming like mp3s.

     This current conflagration just makes me want to avoid ebooks altogether. And yeah, Amazon pulling all Macmillan books from its site seems extreme to me, but I don’t believe / seriously hope it doesn’t go on much longer.

305. nfg @ #301 – ‘Cuz, honestly? Why should Macmillan dictate Amazon’s business model? Amazon should be free to set whatever prices it wants, not have the publisher hobble it. And Macmillan should be able to set whatever prices it likes for its ebooks. If MacMillan wants to sell a book for $10, and Amazon sells it for $8, then Amazon can swallow the two dollar loss and I’d be happy about it.

     Your core assumptions about how prices can be set for ebooks are flawed. They’re not physical items, so the revenue share and flat price are paramount. If Amazon lowers the price, it decreases the amount they pay Macmillan in revenue share. What Macmillan gets out of an ebook sale is a percentage based on the sale price, not on a price that Amazon “buys” it from them for.

     I expect that, if Amazon had said that they’d pay the revenue share on a $15 download for a book they’re charging $9.99 for, Macmillan would have thanked them for the magic money machine and gone their merry way.

306. Someguy, I assume that (before John told you what he did just now) for every book you downloaded and read, you immediately sent $10.60 to the paypal account of the author (the extra $0.61 is to cover paypal fees).

307. A couple of quick things…

     One is that I am personally anti-DRM. I agree that readers should be able to access books they purchased legally, however they wish to access them for personal use. And that’s not even getting into the fact that DRM doesn’t work.

     At the same time, Amazon cannot dictate all Kindle book sales now. You see, you can put most unsecured e-book types on the Kindle, which you purchase elsewhere. And you can purchase e-books in Kindle format from places other than Amazon and load them on a Kindle. So, Amazon doesn’t have quite the choke hold they believe they do. Thank goodness.

     The other? There’s another reason, beyond what Josh mentioned and the ones John mentioned, that you don’t let Amazon set the prices. Some of the other distribution channels (and Amazon is that for e-books) have portions in their contacts (as Amazon does themselves, actually) that say you cannot sell the book for less other places than you do with them. I was around when Fictionwise first instituted theirs, and they were very specific that “discounts given every day on list price” equates legally to a lower price, in response to publishers that were trying that on their own sites to undercut the price they set at FW. So, Amazon’s actions do not just affect what happens on Amazon. This affects contracts publishers have with other distribution channels. And since Amazon has that clause in their own contracts, it should come as no surprise to them.

     Oh, and I feel badly for the authors as well, especially considering the misguided people who are calling to boycott authors with Macmillan, as if authors have any control over this whole thing.

     Brenna

308. Peter @307: Cory Doctorow actually told people he’d rather they not pay him for the free e-books he gives away because the publisher doesn’t get their cut like that. He’d rather they buy a paper book from him and donate it to a library.

     Josh @306:

     If Amazon lowers the price, it decreases the amount they pay Macmillan in revenue share.

     Does it? Does Amazon work on revenue share? The analysis I’ve read seem to suggest they’re currently paying a fixed wholesale price for each e-book the same way that other e-book vendors are right now, and selling them at a loss as loss leaders.

309. 1: it is not theft.

     “File sharing is not theft. Unlike shoplifting, to which it often is compared, file sharing deprives no party of property. It does not involve piracy — no party assumes profits that rightfully belong to another because there are no profits to speak of.”

     Oh great. It’s lawyer ball. In an attempt to evade the wrongness of what you’re talking about, you retreat into the safety of semantics.

     Theft is a general term for taking something for which you didn’t pay. In the law, there’s many different types of theft, and physically depriving someone of their property is just one type. Copying copyrighted materials is a type of Theft of Services.

     You strike me as one of those people who thinks their so clever that they end up spilling everything to the cops while wearing a retarded grin. Tell me. Did you work on the Hans Reiser defense team?

310. The numbers John quoted are amusing in a scary way.

     http://www.bkpextranet.com/AuthorMaterials/10AwfulTruths.htm

     How does such a messed up industry even function at all?

     Are the numbers totally skewed by vanity publishing and special markets maybe?

     The second set of numbers, ebooks between 100 and 1000 sounds more realistic considering that ebook sales are still < 1% of total.

     I think a lot of the weirdness that is going on right now is the effect of a very efficient medium with a relatively high buy in cost, that is still in it's infancy from a penetration perspective. The efficient medium is still subsidizing the inefficient one.

     Once ebooks hit around 20% of market or so, it'll likely start to shake out. The end state will be cheaper books, less middlemen, probably more authors but fewer profitable ones. Eventually physical books become a rarity or a collectible.

     Getting there from here, though, that is the rub. where is the tipping point where publishers start driving people off physical books instead of trying to save them?

     I certainly agree that in the future there will be some intersection of cost to produce and units sold, and anyone falling below that minimum will not turn a profit.

     The converse is also true, the more units you can expect to sell, the lower the book price can become, and/or the more money you will make.

     Boy, that sure sounds like functioning capitilism

     The most likely result is a complete washout of most authors and all the publishers that are not good at picking hits.

     @303, you have to take piracy into account. What the record labels learned is that very quickly "the correct price of an ebook is what people will pay for it." becomes

     "how much can I afford to charge before people pirate it". Bookstore sales peaking in 2005 is indicative of something

     My guess, and I admit it is only a guess, is somewhere between $1-5. Which means authors that cannot sell 10,000 books probably should not be writing them. Which is fine by me, honestly.

311. Other e-book vendors are selling at loss leaders and giving a solid amount per book? Really? That’s news and certainly not what my royalty statements show. If it was, I would make the same amount per book every month, no matter what sales the distribution channels do with prices. They pay a percentage of sale price. In some cases, the publishers and authors get less, when the distribution channel decides to have a sale. In some cases, if the distribution channel has a sale, like the current one at ARe, they still allow the publishers and authors their full share of cover price, as set by the publisher. But that’s a big difference between Amazon and the others. They allow the publisher to set the cover price…not the channel.

     Brenna

312. Chris @ 309 – Does it? Does Amazon work on revenue share? The analysis I’ve read seem to suggest they’re currently paying a fixed wholesale price for each e-book the same way that other e-book vendors are right now, and selling them at a loss as loss leaders.

     The revenue share model is certainly what Macmillan was proposing, as it’s tied in to an insistence on variable pricing for ebooks. If Amazon is paying a fixed amount on each sale of a $9.99 book, that’s more of a revenue share than a wholesale price, because the ebooks aren’t physical objects.

     Having worked in the digital music business, that’s how it usually operates as well. Perhaps I’m using the phrase “revenue share” in a way that’s different than you’re used to using it.

313. SomeGuy:

     “Which means authors that cannot sell 10,000 books probably should not be writing them.”

     You’re rather cavalierly suggesting an end to the careers of nearly every writer in the business, based on nothing more than an arbitrary number. And I suspect you would be surprised at how poor the reading experience would be if the only people you could read were the one who sold more than 10,000 of their work, each time.

     In any event “how much can I afford to charge before people pirate it” is not a set cost; some authors could charge $50 a copy and make money, some authors could charge a penny and lose big. Books are not widgets; one is not interchangeable with another.

314. Josh @313: You’re confusing me. If I make something available to you at a lower price per unit and you sell it at a higher price per unit (or, optionally, a lower price per unit as a loss leader), that’s not wholesale/retail because the “something” isn’t a physical object? I think that’s semantics.

     I’m deeply suspicious of Macmillan’s sudden call for variable pricing. They’ve had the option of doing variable pricing for years, just by varying the wholesale rate they charge other e-book dealers such as Fictionwise. But I’ve seen a number of examples where they have not done that, and e-book prices remain at the hardcover level months or years after the print books have gone to paperback.

     Why should the leopard suddenly have changed its spots now?

     If they truly want variable pricing, they ought to get their (publishing) house in order with the e-book titles that are out there already.

315. Chris @ # 315 – I’m deeply suspicious of Macmillan’s sudden call for variable pricing. They’ve had the option of doing variable pricing for years, just by varying the wholesale rate they charge other e-book dealers such as Fictionwise. But I’ve seen a number of examples where they have not done that, and e-book prices remain at the hardcover level months or years after the print books have gone to paperback.

     We can certainly wait and see how things pan out. It’s possible that John Sargent is lying through his teeth. And we ought to hold him to the promise he’s making here.

     But that’s not really relevant to how Amazon is paying publishers per download. What’s also relevant is if stopping selling even print books is an appropriate response to a decision from a publisher on how they ought to price ebooks.

     If they truly want variable pricing, they ought to get their (publishing) house in order with the e-book titles that are out there already.

     Again, that’s only partly relevant here. If Macmillan ebooks are too expensive, people won’t buy them. But if they’re too cheap, Macmillan looses money.

316. Josh @316:

     What’s also relevant is if stopping selling even print books is an appropriate response to a decision from a publisher on how they ought to price ebooks.

     Well, playing Devil’s Advocate for Amazon, why should they continue to do any business at all with a company that has announced it wants to blackmail them? “Play ball our way, or we delay your e-books for seven months.” (Yes, I’m aware that “blackmail” is an emotionally-charged word, but I’m stepping into their point of view for a moment here.)

     If Macmillan ebooks are too expensive, people won’t buy them. But if they’re too cheap, Macmillan looses money.

     Under the current Amazon model, it’s Amazon that’s losing the money: they’re paying the publishers the same wholesale rate that they pay for hardcovers, then selling the e-books cheaper.

     Yes, as John said, they’re trying to corner the market on e-books so they can dictate terms to the publishers. But sooner or later they’ll have to stop selling at a loss, and if Amazon does try to dictate pricing terms for e-books, publishers are free to sell their e-books by other means (as Baen is). Since you can still put un-DRM’d e-books on the Kindle it might set up something similar to the way Amazon itself started selling DRM-free MP3s to compete with the DRM’d iTunes.

     And how can “the same price as the paperback” be “too cheap”? If it’s too cheap to sell the e-book for, it should darned sure be too cheap to sell a physical object with printing and shipping and so on for.

317. Chris @ 317 – Well, playing Devil’s Advocate for Amazon, why should they continue to do any business at all with a company that has announced it wants to blackmail them? “Play ball our way, or we delay your e-books for seven months.”

     Because it’s not blackmail. Amazon would make more money on the sales if it wasn’t insisting on passing a loss leader for them they’re using to sell kindles on to the actual supplier of those ebooks.

     Under the current Amazon model, it’s Amazon that’s losing the money: they’re paying the publishers the same wholesale rate that they pay for hardcovers, then selling the e-books cheaper.

     And as far as Macmillan (and other publishers, I’m sure) are concerned, that’s a bad plan because it shorts them. What works better for publishers is a variable price, some books at under $9.99, others at up for $14.99, and a 70/30 split, publishers/Amazon. Amazon wants to set pricing for all downloads, and set the revenue share as well.

     And also I think you’re missing what this really was – a message from Amazon to the entire publishing world – play ball our way, or we’ll f*****g kneecap you. Because that’s what getting cut from Amazon will do to Macmillan long term.

     And that’s what this whole thing has really been about all along. It’s the business equivalent of leaving a severed hose head in your rival’s bed, and then broadcasting it to the news.

318. Alert: Amazon surrenders to Macmillan: http://tinyurl.com/yd3hezf

     This announcement was posted on Amazon Kindle community:

     Dear Customers:

     Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

     We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

     Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

     Thank you for being a customer.

319. Chris@309: That’s a great idea of Cory’s, but SomeGuy doesn’t want to line the pockets of the fat cats. I want to see if he’s putting his money where his mouth is, but I expect I’m not the only one who thinks this is just his excuse to not pay anything for books.

     Backing up John@314, the publishing company I worked four years for (#2 in its category nationwide) was thrilled if any ($10) book sold 10,000. Most books sold less than 5,000. There were books toward the end of series that had a print run of only 1,500 and some people still complained bitterly if the series got canceled.

     You say authors who can’t sell 10,000 books shouldn’t be writing. SomeGuy, I say if you can’t bring yourself to pay for books you shouldn’t be reading—or if you want to read books for free, use the library. Libraries at least buy their books and only one person can read them at a time. Don’t give us crap about how you’ll start paying for books when your no-middleman conditions are met.

320. Guess what, Steve Jobs was just quoted on CNN as saying he would charge THE SAME AS AMAZON for ebooks. End of argument me thinks…

321. dominique@319 That’s good news. I can’t imagine it was always meant to be a temporary measure to communicate disappointment, as that suggest a level of childishness that even Amazon can’t manage (even though their response is quite amazing in its pique – Macmillan has a *monopoly* on their titles? Yeah! Bastards! And authors have monopolies on the books they write! Get ’em!). So I hope it was at least partly as a result of pressure from readers and writers, as in the past. What with this and the Le Guin response to GBS, I’m thinking it’s not always good business to take on people who are articulate for a living.

322. Let me weight in here as someone who is both an author and a publisher and has been publishing e-books since 2004. To be effective you have to deal with the world as it is, not as you think it should be. That means you discount 55 cents of every dollar of your suggested retail price going in to get distribution. E-books are subject to the same discounts as print except at Amazon and Smashwords.com (I haven’t looked at Apple’s deal yet.) Either way, to make an appealing product you have certain up-front costs associated with publishing such as edition design, cover art (and e-books need covers, too) and all those free copies you send out to get reviews and other publicity. The hard truth is that you have no real control over what the consumer pays. That is set by the retailer. So Amazon.com and Costco are free to do as they please on price. It’s a free country. Costco belongs to a class of retailers that deals in books as a commodity. It’s brute force distribution; print more than needed to meet all possible demand and accept half of them back to be remaindered or pulped. Airport book stores account for thirty percent of all book sales by volume. For about a hundred titles at any one time. Costco and other warehouse stores is about another ten percent. Mostly the same titles. The big chains pretend to sell a hundred thousand titles, but they are also brute force distributors and concentrate on the same best sellers (and the remainders on which they get higher margins than new books). Most of the stock moves so slowly that it is known as “wallpaper” in the trade. Everything is on consignment and is returned if not sold. Amazon and other online retailers have about ten to fifteen percent of the business, which is why Amazon encourages used book stores and competitors to use their “Marketplace” feature and also sells everything else they can, from foot powder to big screen televisions. The one thing you can do as an author is to control what gets sold when. You own the work and can determine, by contract, when the hardbound, trade paper, audiobook and e-book rights are released. If you sign with a big publisher, they will try to take that control away from you, but it has to be in writing and you have to sign it for them to do that. The big bookstore chains expanded into a lot of smaller markets when times were flush and are now abandoning them, having driven most of the independents out. This is great for Amazon.com, which has become the defacto bookstore of choice in many areas, because these same chains also don’t stock anything that won’t produce volume sales. You can usually find any book on Amazon.com, if not from them, then from another vendor. As for Kindle, I had a Kindle version of my book, “The Shenandoah Spy” and took it down. Sales were minimal and they would not disable text-to-speech, which impinges on audiobook rights and which I never agreed to let them do. Low e-book prices can only be justified if you have no print edition. At the very least they should not be released at the same time as hardbound and trade paperback editions.

     Finally e-books, despite all the hype, are not going to replace printed books entirely. They are simply another layer in the distribution scheme for that content. I do this for a living which means I want to get paid. To make my cut I have to maintain price integrity. And I found out the hard way that retailers can also inflated final prices as well as discount them. If I don’t charge a market price, they will. I have soem short fiction at 49 cents out there, but I don’t think the price really drives sales.

323. 1. Amazon can still make money selling Macmillan books even though they don’t sell them directly. They get a commission when a third-party seller makes a sale. I looked at Hillary Mantel’s new book which retails at $27, but was being sold HC for $17 by several vendors. $10 for the ebook or paper version seems reasonable.

     2. Amazon is being much more free market oriented because it’s not suppressing sale of the MacMillan books, just how it chooses to sell them and it still makes money.

     3. It’s extremely expensive to set up your own estore as Tor has discovered.

     4. If Macmillan doesn’t like what Amazon sells its books for, they have every right to raise the price they sell them to Amazon for. And Amazon has very right to charge whatever it wants. Loss leaders are a long-standing marketing strategy in all businesses.

     5. Everyone is acting as if there are only two players. Nonsense. When I buy an ebook (and I have bought about 500 in the last year) I check prices at B&N and Kobobooks and other places to find the cheapest price. That’s called competition which is good for the consumer. It’s also a long-standing tradition. The presence of the Nook (I have one of those too) and iTouch (I also have one which is a great reader, btw, permitting downloading of Kindle, B&N and Kobo books) and soon the IPad (although personally I don’t think it appears portable enough to be a viable ereader — the DX is too big too) will have an effect on the market.

     6. There are a couple of other truisms: open systems ALWAYS win over closed systems and businesses always try to obtain a monopoly but ALWAYS fail (except maybe in football but they get antitrust exemption.)

     7. We are witnessing a transition to a very different model of distribution. The switch to automobiles was painful for the buggy industry, too.

324. Josh @318:

     Because it’s not blackmail. Amazon would make more money on the sales if it wasn’t insisting on passing a loss leader for them they’re using to sell kindles on to the actual supplier of those ebooks.

     Oh, come on, Josh. Just because (Sargent claims) Amazon would make more money doesn’t make it not blackmail (or I suppose I should call it “coercion” since that’s less emotionally-charged), anymore than me punching you in the face would not be assault if I paid you for it afterward.

     Macmillan is trying to force Amazon to change the way it does business by changing the terms under which it will supply Amazon. Macmillan has every right to try to change those terms; they’re the one offering the terms.

     Likewise, Amazon has every right not to accept those terms, and to respond to the attempted imposition of those terms by refusing to do business with the imposer. (Just like I could choose to stop doing business entirely with a grocery store that was going to start charging extra for processing debit cards, rather than just stop using debit cards there.)

     Nobody is forcing Amazon to carry Macmillan’s books, or anybody else’s. They could stop carrying Macmillan’s books because of changes to terms Macmillan offers, or even just because a black cat carrying a Macmillan book in its mouth walked across Jeff Bezos’s path that day.

     If this were a small e-book vendor, say Fictionwise electing to stop carrying all Macmillan’s e-books because Macmillan wanted to delay all Tor’s science-fiction titles, it wouldn’t even be a story. People would say, “It’s their loss,” and go buy somewhere else.

     But because Amazon is so big, somehow they lose the right to make their own commercial decisions? If one of their suppliers wants to change the terms unfavorably, they have to roll over and take it because the supplier thinks they’d “make more money” that way?

     And as far as Macmillan (and other publishers, I’m sure) are concerned, that’s a bad plan because it shorts them.

     It’s a free market. Amazon is paying out of its own pocket to “short” them, and they’re still getting exactly as much money as they would be getting if Amazon were selling at a profit.

     Loss leaders are an accepted part of retail. Just look at Black Friday. Heck, big-box stores are selling some actual real physical hardcovers for less than Amazon is selling e-books.

     If variable pricing works so well for publishers, it’s surprising they haven’t done it by adjusting wholesale prices to the bookstores such as Fictionwise that they sold through for ten years before Amazon’s e-books even came on the scene. They’ve had plenty of opportunity.

     Now consumers are fed up after years of seeing the e-books they want being priced unrealistically high (such as those hardcover price while the books are in paperback examples cited above), and Amazon is the one giving them their bread and circuses in the form of $9.99 e-books. Most consumer discussion I’ve seen of this elsewhere has tended to favor Amazon.

     And also I think you’re missing what this really was – a message from Amazon to the entire publishing world – play ball our way, or we’ll f*****g kneecap you. Because that’s what getting cut from Amazon will do to Macmillan long term.

     Sure, it was exactly that. That’s how business works, at all levels of size. Businesses play hardball with each other to try to get what they want all the time, whether it’s a single grocery store and its supplier or a major chain store and its suppliers.

     It even works that way on the consumer level. If I don’t like a grocery store’s decision, I’ll stop doing business with that store. (As some people have announced their decision to stop doing business with Amazon over this.) If enough people do that, it’s a boycott and will hit the store where it hurts and might force the store to change its decision. Conversely, the store might simply decide to attract other customers instead.

     If the publishers don’t like what Amazon is doing, they can simply pull their books from Amazon en masse and shift their patronage to Barnes & Noble or some other seller. (This is what some movie studios are trying to do to DVD rental kiosk vendor Redbox, who they feel is predatorily pricing rentals and used movie sales much as Amazon is doing for e-books.)

     As a number of people here and elsewhere have pointed out, Amazon is hurting themselves, too, by not carrying some of the books consumers want to buy. If all the other publishers decide to boycott Amazon all at once, then Amazon will look pretty silly without any books to sell.

     It’ll hurt at first, but make no mistake: the publishers have the power to “f*****g kneecap” Amazon right back, if they’re willing to go to the wall. That’s how the market works.

325. On Amazon.com’s perceived “near monopoly” on e-book distribution. Not true at all. Ingram, through Lightining Source and Ingram Digital distributed to all the other bookstores with web sites, chain or independent, and the Expresso Book Machine. This is where you can find my non fiction e-books at $4.99. They are low-demand items which sell a few copies a year. But they sell. Amazon sed to sell them, too, and then picked another one of their tiresome figths with Ingram. My sales did not go down, because if you want those titles, they are easy to find elsewhere and to download. If you don’t want them you wouldn’t download them if they were free.

     Most of Amazon.com’s Kindle best sellers are free titles; classics from the public domain given away to promote sales of the very expensive and limited use readers. It’s actually a hard place for new authors to compete. Pay me ten bucks for my book or read Charles Dickens and Jane Austin for free? Honestly, even I know which way that one is going to go most of the time. I’d rather have you buy the print version anyway. It looks better and provides most satisfactions than an e-book version. (I actually made more net money per copy on the Kindle version, but given the low sales volume, so what?)

326. Monopoly is defined not by access but by control. The data I’ve seen has Amazon with a 70 share of the e-books market right now.

327. “As an ex-editor, let me stress that the bulk of the costs of publishing are not in layout or printing. They are in editorial costs (which include not only copyediting and production but also the costs of acquisition) and marketing. These costs do not go away with e-books.” – Jameson

     If a Publishing house produces only eBooks, this is true.

     If a publishing house produces treeBooks, then every one of these costs has already been paid to assemble the treeBook. The eBook can be siphoned off from the electronic galley at some stage at almost NO additional cost. Electronic storage? I own a MyBook, a one terabyte external drive. That’s a rather huge boatload of books, even in multiple formats. I have an 8 gig thumbdrive currently holding 1200 books in multiple formats – with color art – that just reached half full, and I don’t use ZipFiles. Shipping? Bandwidth is relatively cheap.

     Someday, we’ll usher in a total digital age. We are not there yet. Any of the authors posting here should be able to tell you what percentage of their royalties came from treeBooks and what from eBooks. Have eBooks risen to 10% yet? Not for most authors.

     Lois Bujold, Hugo and Nebula winner on a Heinlein scale, says that her income from eBooks is “pizza money.” TreeBooks pay the rent, buy that BigScreen on the wall, and pay for those video games. By the way, she’s a past and future Baen author, but Harper-Collins has published her last seven books, and they belong to the almost-never-lower-eBook-prices model.

328. I see a lot of comments here and to be honest I have not read them all. At the moment I just want to give one reader’s take on, you know … reading and ebooks.

     I like my Kindle. I realize there are a number of people who distrust them, because to them, DRM = bad. They feel as though they have lost something. And, ok – I don’t want to marginalize their feelings, which are no less legit than my own, but I do want to voice my own feelings on the matter.

     I don’t mind DRM. It really doesn’t change anything from my selfish point of view. When books were only physical, I had stopped loaning them out anyway, because they pretty much never came back. If I had an awesome book recommendation for a friend, I’d give her the ISBN and recommend that my friend choose between the library or the bookseller, both easily accessible.

     Selling books? Unless you have something really rare, you’re unlikely to get more than a buck or so for it, on a good day. Eight or nine books taken back to the used book store recoup enough money to buy *one* book I have not read yet, if that. It’s hardly worth the effort (in my income bracket anyway) and it assumes I’m reading trash I can easily part with.

     For most of the Kindle books I’ve read (including yours, John, which I highly enjoyed, and thank you!) I paid what felt like a decent price and I got the book instantly. Very handy when that purchase was a sequel to something I’d just read and really enjoyed.

     And I keep the ebook forever. It’s always available for me in my Kindle library, whether I store it on my Kindle device or not. I can read it on the Kindle itself, or on Kindle for PC or Mac or iPhone (I don’t have these last two Apple devices, but I know if I get them I can read on them). And I am fairly certain Amazon will make more reading choices available as time goes by. So I do not feel locked to a $260 reading device at all. I know the reader software is available – at no or low cost – on other devices I already have, or may have in the future.

     That’s handy, because I often *do* re-read books. I often do miss books I lent, or lost, or sold because I had run out of room in my home. Kindle, and Kindle-like devices, to me, mean that won’t happen anymore.

     Someone will inevitably bring up the Amazon/1984 thing. I understand what that was: some unscrupulous person sold Huxley books he had to right to sell, using Amazon’s storefront. Some mid-level manager at Amazon panicked and did the wrong thing. Bezos cleaned up the mess by paying out more than the ebook had cost, to everyone who was harmed by this, and promised it would never happen again. End of story.

     I sincerely hope every author I have ever enjoyed is getting paid a decent cut out of what I hand over to booksellers. This hope arises out of an enlightened self-interest: if the author is getting paid well, there’s a greater chance he’ll write more and I will get to enjoy it.

     Does DRM hurt authors? I don’t know. I don’t want them to be hurt. I’d prefer not to see an author’s work pirated, I do know that. I have two reasons for this hope: first, the enlightened self interest previously mentioned. The author needs to be paid so he’ll continue writing. Second, a simple sense of fair play: if I am paying for the author’s works, why should others get them for nothing?

     This thing with MacMillan and Amazon confuses me – and apparently a number of other people. I see some mightily different renderings of the story, and what they are *really* fighting over, coming from different places. I’d like to know the real truth of how these things affect the paychecks of all the people who credibly add value to the books I hold in my hands, whether they are e-books or p-books. In a perfect world I’d like my prices to go down, and creator paychecks to go up (if that’s possible!). Who is more likely to make that happen? MacMillan or Amazon? From the news so far, I just can’t tell.

     But at the end of the day, those business dealings are … not my forte and not my business and to a large extent, not my problem. Publishing is a very complex world, as I’ve learned helping my wife herd her own book through the process. Authors should be pursuing the best deals for themselves, just as we readers should be pursuing the best deals for ourselves, and somehow we should then meet in the middle at a deal that’s palatable to us all.

     Are the middlemen mucking it up? I understand a need for middlemen (without them, the author has a *lot* more work to do, if he wants to get his book into my hands).

     I don’t know what should happen next. I know that lately, Amazon and Kindle have been good to me. MacMillan appears to want to raise the price *I* pay, regardless of the price *MacMillan* gets. (I’m told that often Amazon pays more for the book than it charges me!)

     So on the face of it, it looks like MacMillan are the people reaching into my pocket. But I’ll wait for more news on this – the story is far from clear.

     Thanks, John – for the books, and for this forum.

329. Oh, boy. Wish I could edit my post!

     In the paragraph about the 1984 incident, I meant to say: “some unscrupulous person sold Huxley books he had NO right to sell, using Amazon’s storefront.”

330. There’s a few authors commenting here, other than John, and I’m curious, how much of have ebooks effected your print sales? Do you sell similar numbers of print books, with eBooks as additional sales or, have eBooks taken away from your print sales?

     If they are not replacing print sales, couldn’t they be considered bonus sales? And correct me if I’m wrong, isn’t it safe to say that the print side of publishing covers the majority of the cost of production, aside from minor bandwidth costs and creation of the digital edition, of an ebook edition? So that the relative publishing cost of each eBook is only a few pennies?

     Now if print sales are being replaced by ebook sales I can understand the need for higher pricing on ebooks, lower costs and a percentage royalties model is quite literally taking money from your pockets. And I think we’re all in agreement that no one wants that.

     The way I see it, if the sales are extra, the costs being minimal, the investment for the retailer and the publisher is also minimal, as should their returns be, then the sale of an ebook is almost entirely profit, the vast majority of which should be going directly to the author, them being the key link in the entire chain. So a 9$ ebook should allow for all parties involved to make a profit in accordance to their investments. Let the print editions take care of the publishers and retailers as they always have, and give the artists a greater share of their rightly deserved sales.

     Mind you all of what I just blathered on about relies solely on eBooks being addition sales and not replacing print sales. If that’s the case, just ignore my naive ramblings. I’ll still say that as long as the publishing and retail links continue to fight over the amount of profit they each make the ones that get really screwed are the creators, who for the most part, are already seriously undervalued.

331. @331, I don’t think there is any reason to believe ebook purchases do not take the place of paper book purchases, however there might well be evidence that ebooks stimulate demand. It’s true for electronic music.

     @309, make no mistake, I want the lowest cost, highest quality item I can get, fat cat suffering is just icing. Also, to clarify, some one who adds value to the product is not a middleman to me (editor’s, proof readers, designers, etc). What I hate is all the people taking their cut that sit in between the value-adders and the consumers.

     I am also still mindboggled by the idea there are people in this business that spend a year producing something that has an aggregate demand of less 10,000 units. something that is entirely free to copy, and then expect to make a living off it.

     Boy, regardless of whether it is right or wrong, those people are really in trouble and need to get seriously creative.

     Honestly, I had a hard time finding any solid “books sold” stats and figred 10,000 was really low.

332. SomeGuy:

     “Honestly, I had a hard time finding any solid ‘books sold’ stats and figred 10,000 was really low.”

     Heh. I wish it was!

333. john, how many volumes did say Old Man’s war sell in the first three years? If you don’t mind sharing…

334. SomeGuy:

     OMW was weirdly platformed for various reasons and I don’t have the exact numbers with me, but it was well over 100K overall in that timeframe and it continues to sell strongly. I’ve been fortunate.

335. heh…at this point, all I really want to know is “am i actually going to get the copy of God Engines I ordered last week?”

     Because aside from that, Amazon probably wasn’t going to get any money from me for e-books anyway due to the DRM…

     bah. I think this’ll hurt Amazon more than they think it will. which is good. maybe they’ll learn some humility.

     On the other hand, I’m not looking forward to Apple gaining any more power than they already have.

336. Chris Sanner:

     “am i actually going to get the copy of God Engines I ordered last week?”

     TGE is published with Subterranean, not Tor, and was never taken down, so yeah, probably.

337. ah. appears that Amazon has “given in” – http://news.cnet.com/8301-1023_3-10444878-93.html

338. and, re: your comment – “whew” – I didn’t think there was a problem, but reading this thread made me initially concerned.

339. also, not that you need my validation here, but reading the post and your comments on this thread really validates *my* decision to pick up a copy of God Engines…
     suddenly really looking forward to reading that one. (it’ll be my first)

340. John,

     Am I missing something, but it appears that none of your books is available in a kindle edition?

     Regards, Don

341. @Don:

     Scalzi’s Kindle editions are just MIA this weekend due to the Amazon/Macmillan fuss. They will be back, hopefully by tomorrow.

342. The salient point with Amazon’s position to me is that it is taking an extremely large cut of the selling price of those $10 ebooks. There’s no storage issues for those ebooks for Amazon either, and Amazon appears to be replacing the “cost of printing and shipping” which brings about the cost of a physical book with a huge Amazon markup. So the Kindle edition for a publisher/author is $3-$4 and the rest goes to Amazon. [Baen definitely seems to have the right idea by setting up its own ebook distribution with that kind of cream going to Amazon.]

     While I like ebooks for “disposable books” – the ones I buy to read but not keep – DRM keeps me away from a good portion of the market. Amazon’s $10 listing is of no interest to me whatsoever because I am not willing to tie my book to the ownership of a specific piece of hardware. If I buy a huge library of Kindle books, then drop my Kindle under a bus, only to have a friend give me an iPad as a ‘replacement ereader’, I am suddenly out of the entire library.

343. @ illukar 343

     Kindle books are not tied to Kindles because of the free programs that Amazon provides for many (most) alternate platforms.

     Regards, Don

344. To be honest, I’ll stop reading Macmillan books before I stop buying from Amazon. I get almost everything I buy from them, except perishable groceries and gasoline, including my daughter’s Christmas presents. And I get it with free shipping, for the most part, because I stick to ordering things available through Amazon Prime.

     I was tinkering with the idea of breaking down and getting a Kindle this Christmas, but held off when I heard the Apple iPad rumors.

     That said. I won’t pay even $10 for an ebook so $15 is right out. I wanted the Kindle to read PDFs of my ever growing collection of freely avaiable fan fiction. Hell, I just finished a 671 page (tahoma, 12 pt, 1″ margins on 8.5X11 “paper”) epic set in the Buffy the Vampire Slayer universe that was phenomenal. Better writing and editing than many commercial books I’ve read in the past few years.

     I spend several hours a day reading. The more expensive books get the more time I spend reading blogs, humor and free fiction on the internet. There are a few published authors I am faithful to, but I get their books in physical form either from the library or by purchasing them and selling or trading them in when I am finished with them. Usually it is by buying and selling because it’s far easier for me to buy a book from Amazon than it is for me to get to the library.

     I think publishers are seriously underestimating the effect free, nonpirated, internet reading is going to have on their sales if they raise prices too high. Sure, publishing houses will weed the good from the bad *for* us, but in the age of the internet, so will a good recommendation BB.

345. @Don Lloyd – what free programs does Amazon provide for reading kindle books on other dedicated readers like Sony or Nook (I realize that is new)? I confess I am not all that familiar with it, but I was under the impression that you could not read kindle books on those.

     I have no problem with those who swear by reading on their IPhone or PC, but for many (most) of us, those are non-starters. If I want to read my books with a similar experience to kindle, I’m out of luck, aren’t I?

346. @ illukar 343

     It’s interesting that you see ebooks on Kindle as throwaways, while in my earlier post (#329) I see them as the real keepers! Clearly the new medium is still hazy for many viewers, still coming into focus.

     You should note, though, that since iPad has the entire spectrum of iPhone apps, and Kindle is a free iPhone app , the minute you replaced your Kindle with iPad, you would have full access to your entire Kindle library. So the final statement in your post was exactly opposite the truth of the current situation.

347. @ Bryan / Don – thanks – that’s what I get making statements relating to devices I don’t own. Not that this current Amazon debacle inspires me with confidence or anything. [Being in Aus, which has only just opened up to Kindle, I’ve sought alternate ereaders and won’t be pursuing Kindle any time soon.]

     Having worked for a while dealing with old file formats (files a mere ten years old!) I regard ebooks as disposable primarily because I am very used to electronic formats drifting out of readability. The paper versions, while they have their own ‘use by’ date of fragility, don’t abruptly become unreadable or require conversion programs that turn all the spaces into little boxes on the screen, etc.

     I suppose it would be truer to say that the physical books are harder to shift and need dusting, but the ebooks seem to me to require potentially more critical maintenance.

     I’m still waiting for an e-reader I’d be willing to use in the bath.

348. I use my iPod Touch in the bath from time to time. Just requires a simple ziplock baggie.

349. Scott Westerfeld provides more analysis

     The big take away –

     So to the “a pox on both your houses, Macmillan and Amazon” crowd, I must say that I think your analysis is lazy. This is not a case of two corporations pissing down on us mere mortals with equal disdain; it’s a case of complex negotiations in an ancient industry with many arcane traditions that’s in a state of technological flux, being conducted at a level which the overwhelming majority of readers do not understand (nor should they have to), and which were going along in a way that made, frankly, perfect sense to those of us who understand this industry a little, when suddenly, out of the blue, one of the sides in this negotiation spat their pacifier across the room in a very public and embarrassing display of petulance. And that corporation was Amazon.

     Yes, Amazon gets to set whatever prices it wants. (Free market!) But guess what, Macmillan also gets to release its electronic editions later if it feels simultaneous release is not in its best interests and those of its allies. (Free market again, sir!) And yes, Amazon gets to de-list an entire publisher if it wants to, even on a whim. But that’s a massive free market fail, because authors, customers, and publishers start to hate them, and they have to back down two days later. And that’s really the end of it: their strategy failed, because the rest of us can call shenanigans and take our business elsewhere.

     Makes sense to me.

350. Okay, like our friend upthread who got through over 100 comments before asking what this DRM thing is, I have been poring over all these comments with great fascination, while burning with a baffling question:

     The discussion of the 1984 fiasco (this is the first I heard about that) says, or implies, that people bought an electronic version of the book for their Kindles and somehow lost it or had it taken back or taken away from them. I have seen people here using phrases like “deleted” and “taken back” and whatnot. Not having a Kindle and knowing nothing about how they work, I cannot understand how I could get a copy of a book, download it to my Kindle and then have Amazon somehow take it back. Please note that I am not talking legality or morality but the sheer practical aspect of how it could be done. Presumably they don’t come to my house, break in, lay hands on my Kindle and delete the file? Or do they?

351. John,

     Since you’re anti-DRM, am I correct in thinking you have no control over DRM set in kindle books? I own OMW/TGB/TLC in DTB but was disappointed to find TGB for kindle in Topaz format (not possible to strip last I checked). Not only that but Topaz books are of poorer quality (fonts, etc) in my experience.

     Brian

352. Lyle @ #351

     Kindle connects back to Amazon through its wireless radio (however this can be switched off). Amazon also have a 7-day return policy on all Kindle ebooks sold. When you return an ebook for your money back, the system deletes it from your Kindle library.

     In the 1984 case, someone was selling that and a few other George Orwell* books through the Amazon store. Then it came to light: the people selling those books actually had no right to do so. (Remember that in many cases Amazon/Kindle are not the publisher; they act as retailer for other publishers.)

     On learning this, someone at Amazon apparently got a little overzealous and used the ebook return function to delete all improperly (and likely illegally) sold Kindle copies of Orwell’s works. This caused a hell of a stink.

     Amazon ended up refunding $30 for each Orwell book deleted in this way, and promising never to do such a thing again. The ‘return the book within 7 days for full credit’ program remains.

     As a result of this, many feel that Amazon should have no remote-delete function of any kind, for any reason, period. Personally, I like the book return function. Personally I’ve only used it once so far (the book STUNK) and I still consider it a feature.

     —
     *In a prior post I said ‘Huxley’ books and even corrected myself using the same name. I don’t know what came over me!

353. @Brian I believe it is possible to DRM strip Topaz books. I tried to do it the other day. The problem isn’t stripping the DRM; it’s that the Topaz format isn’t simple text. So you have to run a program that extracts all the glyphs from the Topaz file. Then you have to use another program to convert it to whatever format you are interested in. The tools I found could convert it either to html or svg. That’s where I got hung up, but I do know that the DRM stripping worked, because I was able to open up the generated xml files and read a little bit.

354. The only price that makes sense from the consumer’s point of view is the marginal price compared to the currently-available paper copy: I can get 25% of the cover price back when I resell a paper book to a used book store, thus from my perspective, since ebooks do not allow reselling my copy to a used book store, they must have a marginal price that is 25% less than the currently available paper copy, or I simply will not buy the eBook because it does not make financial sense. Yes, there are the issues of book storage and such, but I resell most of the books I buy, I don’t keep them, for exactly that reason — most books are being bought as simple mindless entertainment, not something all serious and stuff. I do like having the *option* of keeping a book — but I don’t keep most of them. Sorry, writers. I know you love your prose and hope we have placed it upon the mantelpiece above the fireplace to bow to your genius every time we enter the living room, but the majority of us are buying them for simple entertainment, not because we are Serious Collectors Of Your Great Literature.

     Now, from the publishing end of things, I am utterly disinterested in hearing publishers whine about how their business model can’t survive contact with actual real-life capitalism. I am not on this planet to be a charity for publishers who can’t figure out how to operate in a capitalist environment. The market is what the market is. You can’t sell people an eBook for the same $7.95 as the paperback when the consumer’s marginal price for a paperback copy of the book is $5.96 (after they resell the paperback to the used book store). It simply doesn’t work, and can’t work in a capitalist economy because it makes no financial sense from the consumer’s point of view. That’s capitalism. Thus the low uptake of ebooks outside of maybe a couple of million early adopters who flunked high school consumer math and, of course, readers of Baen Books, who have had access to reasonably priced DRM-free ebooks for years.

     So does that mean that I agree with Amazon’s actions? Well, not really. The prices they want to impose make no sense either. If the hardback is the only version of the book currently out and is currently $19.95, that implies the ebook should be $14.95 if you wish to actually sell large numbers of ebooks. But Amazon is trying to force that to $9.99. From a standpoint of maximizing income that’s ridiculous. And don’t assume it’s to make a profit selling Kindles — I’ve been involved in the computer manufacturing business for over ten years now, and my estimate is that Amazon is basically at break-even (no profit at all) on the Kindle. Clearly they’re trying for the brute force method of “grab market dominance, and *then* worry about profit” that they used when starting out in order to drive most of the competing book e-tailers out of business. Also clearly, this is not in the best interests of authors attempting to maximize their own income.

355. I’m not John, but I’m also anti-DRM and no… We have no control over whether there is DRM on Kindle books. It’s there. It’s part of the package. If you want to be available in Kindle format, you deal with it. I know other formats can be placed on a Kindle reader, but to sell on Amazon, you sell in Kindle format and you sell largely their way. Even if you don’t use DRM anywhere else (which is the norm for my books), you have it imposed on you at Amazon.

     To whoever asked earlier… I’m from the other side of the writing pond than John is. He’s NY conglomerate. I’m indie. So, most of my sales come from e-books, not print.

     Brenna

356. Finally found the original question from Hollywood,

     Do e-book sales replace print sales? To an extent. Since there is no single entity that tracks all e-book sales, there’s no way to accurately calculate this. But the idea that e-books are intended to replace print entirely is a fallacy and a reactionary statement some people use. People still go to movies in the time of DVD. People will continue to purchase print in the time of e-books. Personally, I like it that way. There are ups and downs to both formats.

     I read primarily e-book, and I own print books…a lot of them. I have autobuy authors in both formats. I even own some books in both. Why? Usually because I purchased the e-book and bought the print later to get it signed by the author or to share it with friends or something similar.

     Now, because I’m indie and most of my sales come from e-book and not print (Heck, not all of my books are AVAILABLE in print…or in e-book, which is backward for me, but it happens.)… Because of these factors, no…e-books are not simply an add-on for me. My e-books have their own production costs, not just distribution costs and conversion costs in addition to the cover art and edits and such already attached to the primary print product. For four of my six publishers, print is secondary and not the primary production mode.

     As for royalties… I don’t know what John is making on royalties, and I’ll admit that up front. Indie authors typically make a higher percentage than NY conglomerate authors make on e-books, because of a few factors. We rely on the e-book royalties. We expect to sell less e-book copies in the first year than a NY author does in print, in general. Now, having a higher royalty rate means that some indie authors make as much or more than a midlist NY author would. Many don’t. But the higher royalty rate makes that possible.

     Brenna

357. One more major difference between indie and conglomerate press to keep in mind… While some indies operate like conglomerates (save that they are sole-proprietorship or partnerships–LLC at best–instead of publicly-traded corporations with BoD and shareholders), many don’t.

     Some costs of putting a book out for sale will always come before the book comes out (per book and overhead)…ISBN, listing costs, software and hardware costs, servers, web site, and so forth. But, while NY conglomerate tends to pay for editing, formatting, cover art, etc. up front or as part of overhead, many indies pay at least a portion in percentage of net sales. IOW, the only way the editors, formatters, cover artists, etc. get paid is from sales of the book. Everyone has a vested interest in making sure the book sells, and cover artists and editors try to hook the deal of being the primary (or only) one to work with bestselling authors with the house.

     So, when you look at an indie press, you may see something like: The distribution channel takes 50% of sale price. Of the net that gets remitted to the publisher, the author will get 30-50% of that amount (depending on the contract), the EIC may get 5% or so, the editor that worked on the book a percentage, the cover artist their percentage, the formatter a percentage, the proofreader a percentage…

     As you can see, no one is getting rich here. The only “fat cat” in the system is the distribution channel, but that’s a necessary evil for most indie presses. I don’t know a single one that has no outside distribution, no matter how big they are, though they can be pickier about which they use or don’t.

     Brenna

358. I’m an Baen Webscription customer (since 2001?), my take on it:

     If it doesnt has the same price/benefit margin (Preis-Leistungsverhältnis?), I won’t bother with it (that includes Amazon eBooks).

     I would only wish that that Holzbrink(?) company would keep their messing-fingers out of Tor’s business (even if they own them).

359. On the technical side I make more on ebook sales than I do on the paperback versions. The jury is still out on my fiction works although to date, I have made more on the paperbacks.

     I think it is funny that many of the above posts are longer than the original blog post….

360. Nice post…^_^…V D3pd

361. It is indeed now possible to remove DRM from Topaz books – a recent develop in the last month or so. Rejoice!

362. This lady is making sense in my opinion.

     http://news.cnet.com/8301-31322_3-10438385-256.html?part=rss&subj=news&tag=2547-1_3-0-20

     “Amazon is, finally, doing the right thing (albeit passive-aggressively in the extreme) by getting out of the way of publisher pricing and letting consumers decide what they’ll pay for e-books. What Macmillan is asking for is the same thing the music industry eventually demanded from both Apple and Amazon: variable pricing for digital goods. Yes, Macmillan wants to price new and major titles between $12.99 and $14.99, but they’re also talking about a pricing floor of $5.99. They’re trying to maximize revenue on the top sellers, but also retain the flexibility to drop the prices as the market demands. That’s actually how it should work.”

363. @294 “Andrew Hackardon: “Willie’s hasn’t updated his site because Crime & Space closed several years ago. And Austin is far, far poorer for it.”

     The physical store itself has been closed since early last decade, yes, but Willie continues to deal as Adventures in Crime & Space out of his house, online, and at conventions up to this very day. He just sucks at updating his website

364. I will not buy eBooks until they are DRM-free, reasonably-priced, and convenient. Convenient means being able to read them on any platform I desire – I can listen to a CD on the player in my car, on my computer, or rip it to MP3 format and listen on an MP3 player – eBooks generally don’t allow that. That said, I don’t buy tracks from iTunes because I don’t like merely “licensing” the things I buy.

365. The library has free books…

     When will they release an e-library? Haha.

366. is this just another way of advertisement?
     who would wanna pay $15 for an e-book? Not me.

367. Queen,

     There already ARE e-book libraries…ones the industry has helped establish. Some are public libraries; NY is known for this, and I did a signing at one in CA several years ago. Some are set up by distribution channels. Some are inherent in the hardware, like the Kindle and Nook “sharing” functions.

     Typically, they are limited to X number of shares for Y length of time or something similar to work in the idea of wear and tear into the e-book system.

     Brenna

368. @368 Brenna
     There already ARE e-book libraries…ones the industry has helped establish.

     But so far as I know, only the Sony ereader works with the public e-book libraries. Am I wrong?

369. oops — that wasn’t really JS’s conscience

370. No kidding!

371. John’s…Conscience? I like it.

     It depends on how the library is set up.

     Some libraries are lending the hardware, so they are loading books on that and charging big-time, if you are late turning it back in. That’s an older model of the library though.

     Some are dependent on the hardware you’re using. Kindle and Nook both have built in “sharing” of X times for Y time period. I believe Nook is something like 6 times and a couple of weeks each? It’s been a while since I’ve read up on it.

     Kindle’s is up to 10 times, and dependent on the number of iPhone and Kindle units you’ve “tied into” your account there. Remember the huge dust-up when publishers found out that Amazon misrepresented how that would be used to publishers? Oy! What a day that was! Publishers were led to believe this would be units in the same household…Mom reads the book on both her iPhone and Kindle, Dad reads it on his Kindle, Daughter reads it on her iPhone, and Mom’s sister reads it on her Kindle. That’s what it was billed as to publishers, but then we found that completely unrelated “friends” across town from each other were able to band their units together and share books in what amounted to book clubs. Not quite what it was presented to the publishers as.

     I’ve seen the mock-ups of software-based systems, like the one (Libwise) Fictionwise was working on back in 2004. They wanted to have a fully-download system where you could read the book on whatever platform (desktop, laptop, PDA, reader), but the DRM would be time-coded to make the book stop working at the end of the borrow period. Now, we all know how DRM can be broken, but that was the proposed plan there.

     I know the NY system was reported to be all online. You browse online, download, read… I would imagine they have something akin to the Libwise idea going to handle time limits.

     Brenna

372. So, I’m sure you and your publishers like to sell to people who will “pay more” for your books than what Amazon charges. Well, you won’t sell to me. Ever. Never. And I mean it.

     I don’t know what the beef is between you and Macmillan and Amazon, but for me, a digital book is just that. No paper. No cover. No nothing. If I buy a book I’m OK with paying for all that material stuff. If I buy a digital book, I’m not, just so you and your publisher can put a few more bucks in your pocket.

     I’ll go back to the public library before I will ever by a digital book for more than $10. Especially one of yours.

373. Julie:

     Oh, well.

374. @Julie

     a digital book is just that. No paper. No cover. No nothing.

     If a digital book is truly nothing, then it should cost nothing. But in that case, reading a digital book should be the same as looking at a blank screen.

     We’d all do well to remember Heinlein. TANSTAAFL

375. Mr Scalzi – could you please clarify something for me?

     You say, “And to be blunt about it, it’s in my interest as an author as well, because, you know what? My royalty is a percentage of the sale price.” Could you please confirm whether “sale price” means the price at which Amazon sell, or the LIST price at which your publisher sells to Amazon.

     If it is the former, when Amazon discounts to, say, $9.99, your royalty would be a percentage of that $9.99. This argument is put forward by this post in the Kindle forum:
     http://www.amazon.com/tag/kindle/forum/ref=cm_cd_search_res_ti?_encoding=UTF8&cdMsgNo=1020&cdPage=41&cdSort=oldest&cdThread=Tx2MEGQWTNGIMHV&cdMsgID=Mx8L4N4S905OO1#Mx8L4N4S905OO1

     If it is the latter, then your royalty will actually be *less* under the Macmillan agency model, as espoused in this post:
     http://www.amazon.com/tag/kindle/forum/ref=cm_cd_search_res_ti?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdMsgNo=1022&cdPage=41&cdSort=oldest&cdThread=Tx2MEGQWTNGIMHV&cdMsgID=Mx8N7E3JINAWD7#Mx8N7E3JINAWD7

     I am not of the school that believes books over $9.99 should be boycotted; in fact, I think $14.99 is perfectly reasonable for a new release ebook. However, if you are getting *less* under the agency model, then I don’t think that is at all reasonable.

     Thank you.

376. Julie…

     Mine are already less than $10. Most of mine are less than $7, but it’s a matter of ethics for me to support Macmillan’s side in this…NOT so Macmillan can charge $15, because I won’t pay that for an e-book either, unless it’s a resource or non-fiction text I need on hand; I’ll wait for the mass market or a drop in e-book price and tell Macmillan that $15 is too much.

     Rather, I support Macmillan’s side because Amazon would be upsetting an established e-market of more than 15 years by demanding to set prices, when other distribution channels allow publishers to. The contracts are written so that we don’t undercut one sales outlet with another. Right or wrong, the free market in e-books is based on reader feed-back to keep prices in check. Amazon knows this, since its “shall not sell for less elsewhere” came from what the other distribution channels do.

     Brenna

377. Kejia! One of my favorite quotes. Is it a bad sign that my husband has that inscribed on the inside of his wedding band?

     B

378. Dianne:

     “However, if you are getting *less* under the agency model, then I don’t think that is at all reasonable.”

     My agent is very handy at overturning contractual boilerplate, and aside from that I sell pretty well, so I don’t want any of you to worry about how much I will make. I’m doing fine and will be doing fine in the future. But I appreciate the concern.

379. Unless something very weird is going on with Amazon…wait, this is Amazon I’m talking about… No, my publishers seem to be supporting what I’m about to say…

     A lot of people over on the Amazon forums are sadly misinformed about how e-books work. The publisher doesn’t “sell” the books to Amazon, like the running tab print books have with resellers, working against returns and balancing what the print bookstore remits to the publisher and so forth. The publisher places the e-book for sale and is given a percentage of the sale price for the book, when it sells. Though I HATE the term commission for e-books, think of it that way for a simple mindset. No money changes hands until the book sells, so there is no “stock the shelves” outlay for Amazon here…no up-front payment to the publisher.

     As for sale price… Many distribution sites will hit the publishers on sales the distribution site chooses to have. If they offer 10% off cover price, the publisher/author split of the sale suffers for it. Others will allow publishers to set sales where that occurs, but if the distribution channel sets a sale, they agree to still give the publisher the full “cover” percentage, as if it sold at full price. Obviously, we prefer the latter.

     Brenna

380. LOL! John, your agent probably bypassed all of this mess with percentage of cover or something. Wish I could some days, but others… Nah. I do well enough, I guess. To be honest, I like indie press. I’d love to try my hand in NY someday, but right now…I’m too out of the box for them.

     Brenna

381. Thanks for the rapid response John. As you mention “overturning contractual boilerplate”, can I take that as implying that your royalty (whatever it is – and that isn’t the point) is based on the digital list price, not on any discounted retail price?

     Thanks again in advance – I’m in Australia, it’s the middle of the afternoon, and have to be at the dentist in less than 10 minutes!

382. Interesting comment on the Amazon forum:

     “If they want higher prices then it is time for them to provide quality formatting. Not just quickly scanned with no effort to fix the OCR errors. The frequent formatting errors would no longer be acceptable.”

383. I have no objection to that comment.