What Price Will the eMarket Bear?

I had a well known fact slap me in the face last night.  I’ve been aware for some time that the ebooks that come from legacy publishers are over-priced. Most of the ebooks I’ve bought up til now have been either self-pubbed or from ebook publishers. But lately I’ve become all too aware of how crowded my bookshelves have become, and last night I thought I’d buy Patricia Briggs most recent Mercy Thompson novel, River Marked as an ebook.  I love these books.  I absolutely ate them up on my recent vacation. But I balked at the $12.99 price.

I really want to read that book, and sooner than next January when the mass market edition is released and the ebook price comes down to $7.99.  I can go to the library, yes.  But the point is, by pricing the ebook so high, Ace has deferred my purchase, and risked losing income.  Do they think that by pricing the ebook unreasonably high at $12.99, that I’ll be more likely to say, “Well heck, I might as well spend three dollars more and get the discounted hardback from Amazon for $16.17?”  Really?  Hardbacks are bulky, heavy, and take up too much space. Or perhaps they believe that getting it now rather than later is worth the $5 premium?

Obviously, that works for some people.  Some people do buy ebooks at that inflated price. But if you’ve been following any of the authors I’ve mentioned here in the past (Konrath, Eisler, Stackpole, Rusch, Smith), they’re all pretty much united in the opinion that lower prices for ebooks result in greater sales and greater income.

J. A Konrath likes the $2.99 price point for his ebooks, Dean Wesley Smith recommends $4.99 for a full length novel. Michael A. Stackpole charges $4.99 for his backlist ebooks. Ebook publishers like Samhain, Loose-Id, and The Wild Rose Press typically charge from $4.50 to $7.00 for full novels.

Much less than what legacy publishers charge.

Some have suggested that self-pubbed books and epublishers have to charge less because the quality of the product is just not up to legacy publishing standards. Legacy publishers edit their books better than self-published authors or small presses do, the argument goes. They spend more on book development and production, they deserve to charge more for their product. However, the amount traditional publishers spend and what they spend it on is pretty much irrelevant to the customer. It’s all about perceived value. Legacy publishers are competing for my entertainment dollars.  If I think spending $12.99 is a rip-off, I’m going to spend that money on something else that I think is fair value, whether it’s another book or renting a movie. As a consumer, I don’t care what happens behind the curtain.  I just want value for my money. And my Scot blood says $12.99 is too much for an ebook when another author’s traditionally published, professionally edited, backlist books are available digitally for $4.99.

This (along with other business practices) is hurting publishers. Ebooks are increasing their market share daily, but traditional publishers aren’t fully taking advantage of the trend. They’re trying to maintain print books as the more attractive product by pricing ebooks unattractively. Instead they should be using ebook profits to keep their companies afloat and their balance sheets healthy (while paying their authors a competitive royalty so they don’t jump ship and scurry over to Amazon’s new imprints).

This follows a well-established historical pattern, however.  In almost every industry, when there’s been a big shift in technology, there have been early adopters and those who want to stay with the familiar old ways. Sometimes early adopters jump on the new train too soon, and fail. But more often it’s the ones who wait until they can’t ignore the fact that the world has changed anymore that get left behind.

26 Comments

Filed under writing

26 responses to “What Price Will the eMarket Bear?

  1. Benita

    As far as the price difference between a hardback today or an ebook today…Hey, see that big film now, in the evening and pay more, or see it now at a matinee and pay less. Wait even longer and see it at the dollar theater. Wait even longer than that and rent it as a DVD for as little as a dollar. You pay a premium for NOW for entertainment.

    As far as the “fair price” for an ebook, time will tell.

    • Benita, I don’t mind paying a premium for now, I’ve done it often enough in the past, but for today $12.99 is too high for me. From what I’ve read, it’s too high for a lot of people. I think Amazon got $9.99 stuck in a lot of people’s heads as a reasonable price before the publishers pressed it into using the agency model of pricing. I think if they lowered their prices, publishers could make more money overall, by selling more books, even if they made less per unit.

      As you say, time will tell.

  2. By that argument, the standard model of one and two decades ago, when you had to pay a lot to read a story when it was first released or could wait a year to pay less was OUTRAGEOUS! SHOCKING! INSUPPORTABLE! But it wasn’t. It was standard business, and readers (you included) understood that. The only difference now is the container the cheaper story comes in is not a mass-market paperback.

    That’s all an ebook is — yet another container for a story. What’s the story worth? What’s the story worth to you to read right now? What are you willing to pay to wait to read the story?

    The bottle doesn’t matter. It’s all about the story.

    —L.

    • Larry, you make an interesting argument. I agree, the value of the story is the same, regardless of the packaging. But since I know a digital book doesn’t cost as much to produce as a paper book, I want a more substantial discount when I buy one.

      In both the past and in the present publishers were, and are, making a calculated business decision when they price the different formats of their books. The difference now is that there’s greater competition for consumers’ entertainment minutes and dollars. What was a sound decision only a few years ago, is not so much anymore. Part of the problem is degree of desire for any particular book. Because I have more choice today, I’m not willing to pay as big a mark-up for immediacy as I paid before (or at least I’m not today). Another issue is that I know their overhead for digital books isn’t as high as it is for paper books. The expenses of editing and formatting are still there, but there’s no paper to buy, no warehousing or shipping costs, and returns aren’t as high. If they had charged $9.99 instead of $12.99 I doubt I would have balked.

      There’s nothing “OUTRAGEOUS! SHOCKING! INSUPPORTABLE!” about what publishers did before digital books entered the scene, nor about what they’re doing now. It’s just that the prices they’re charging for newly released digital books is too high IMO and bad for business.

      • I think the major issue here is really the market becoming more consumer-driven. What the story is worth is not at all the same thing as what the consumer-majority will ultimately pay for it! Realize that we are talking about the majority driving prices for anything considered entertainment, as Frankie mentions… everyone is competing. If a story is “worth” 2.99 to Konrath, but 7.00 to an ebook publisher, and yet the consumer is willing only (because of recent training in other industries/markets and their financial means) to pay below the 5.00 price point, the ebook publisher will lose money.

        Right now we are in a consumer-driven transition in all industries. It’s not just publishing that is going through this, notably the movie industry, video games and TV are experiencing the same. Arguably, the movie industry is now focused almost solely on sequels, video game-based conversions and comic based conversions in what they put out each year and it’s where they put much of their ad dollars. Why? Because consumers have more inexpensive choices than every… movie streaming, online-TV watching on bigger monitors, cheap theatres and redbox rentals available to them as each day goes by. Take Blockbuster as an example…they are out of business at the measly $2.50-ish rental mark?!…and it arguably cooked their goose to try and “over-price” their rentals against Netflix’s lower rate, counting on their “brand” and loyalty to convince consumers that paying more for the exact same thing was somehow worth it. Bah. Brand perception and advertising isn’t enough in this economy to move a flea to buy anything. Will movies stop being made? Of course not. But the change is toward home-streaming now, and my money is definitely on the movie industry going direct-to-streaming and direct-to-DVD for all their features within 2 years. The high priced theatres will all become “cheap theatres” and be recycled into other types of venues.

        All of this is *not* just about books and publishers. Our industry is missing the bigger picture! It’s about the consumer who has had enough of being told what they want, how they can get it, for how much they can have it, and in what format they can recieve it… that boat left the dock on almost every industry out there long ago. Our younger (and future) consumers were raised with a never before seen level of instant gratification that we would be wise not to dismiss.

        Sure, we can sell to the consumer in our age group and in the older, less-willing to change age groups. But that base will only get smaller, you know? Fact of life. As a group that demographic continues to retire and have *less money* available to them. Meaning? Our earnings base shrinketh! Yet, the growing and spending-able consumer base before us does not give a rat’s patoot how much your story is worth as compared to the next author. What they care about is that one is 2.99 and the other is 7.00 and both look pretty interesting! The choice the average younger consumer will make is not rocket science given that scenario. In this economy more of us oldsters (and I mean me here) are inclined to wait, too, even for our favorite author’s material, until the price becomes sane! I’m with Frankie, and I do also have some Scot in me saying that’s just not affordable in these times, in this economy and with the bills I have right now!

        In our quest to preserve quality, let’s not make it about preserving the status quo… let’s make it about the consumer (our Readers) and about what *they* want. I’m paying $15 a month to play an online MMORPG where I can be a toon that plays superhero with real life friends! How cool is that! And, I can spend as much time on it as I want, every day if I like, for that one price. Holy eReader!That trumps both movies and traditional books in the wallet right now, I’m sorry to say. On the other hand, the Irish in me is saying, F-em if they can’t deliver, I’m downloading Catherine Asaro’s backlist to my Kindle for free… and also a few of her other books at an inexpensive price point I can actually afford! Go me! This leaves me money to pay for video games and Redbox rentals, too.

        I’m an author and I love books, and yet I see all too well how easy it is for small changes to move the shopping majority to a level of perception that’s all about the bottom line and not about brand loyalty or what we as authors think of as “quality.” That’s not to say I’m becoming a proponent of bad or sloppy writing. But the availability and variety of the product ensures the movement towards price-point and format as the deciding factors. If a $3 price point works best for me as a reader with a Kindle, I will gravitate toward trying authors at that price point, discarding along the way those authors who have failed to edit their work properly or failed to write the most exciting, engaging story, etc. There are plenty of authors out there though, and more are coming every day.

        Writing is not a finite commodity, and that’s something that long-time authors and publishers have really overlooked.

      • Times have changed – few publishers are doing the “hardback first” then “mass market paperback later” because its not working as it once did. The big publishers just haven’t “figured out” how best to work in a world where digital is becoming the norm. Many are pricting that printed books will be like vinyl records – still around but bought more by collectors – I agree with this. They’ll “figure out” how best to work in this kind of environment but it will take some time for them to catch up.

  3. Here’s another data point to add to the discussion about the effect of price on sales from eBook Market View: http://ebmv.blogspot.com/2011/05/tracking-bestseller-through-price.html

    In particular I find these lines from closing paragraph telling: “It may be that American Assassin could have been successfully priced at $14.99 from its on sale date and traveled the same path through the winter weeks. It may also be that had it be kept at $8.99 it would have remained on the Kindle Bestsellers list far longer than it did and resulting revenues might have been even greater.”

  4. Thanks for sharing these statistics! The romance top 20 and the skew toward Kindle + low pricing is especially meaningful for me. That supports some of my initial marketing plans for the short fic as well as the longer romances. Based on everything I’ve seen so far, I’m not sorry I decided to focus on Kindle first and Nook later. I’m watching closely the Nook lawsuit issues. The competition among eReaders will eventually settle into something more stable, I believe, but the distribution methods and the changing landscape in publishing right now make it worthwhile (IMNSHO) to tread cautiously.

    • Wonderful, statistic-filled blog!! I could have spared time writing my response above regarding price point and the failure of the long-time authors and trad houses to see the forest for the trees if I’d only read Evil Genius’s post beforehand. (I would have just replied with a link to his article) . 🙂 His point about how uncomfortable it is for writers and publishers to admit their product is price-sensitive was spot on.

      You know, it really is amazing how everything is just perception. Hasn’t that been the driving factor of marketing and advertising throughout civilization? In other terms… how else to explain the lemming-like pathology of admiration for a church after many heinous, control-driven events such as the Spanish Inquisition? It’s all about the human condition. And, our industries (publishing and otherwise) always reflect our struggle to to evolve, to let go of our perceived control, and to strive to be larger than we imagined we could.

      • Roxy, even in science, a supposedly rational profession, radically new ideas (like the germ theory of disease) don’t take hold until the old guard dies off. Why should we expect publishing to be any different? 🙂

    • The information on Smith’s relationship with Stephen King in this article raises some good points! I had completely forgotten that King had predicted where the market was going and tried his hand at getting into it all before all the planets had aligned to make it more doable. It will be interesting to keep an eye on both of them, and to see how King will handle price point.

  5. Put me down in the Smith and Stackpole camps. I run a small press (Ridan Publishing) that specializes in genre fiction (fantasy and scifi). We price most of our books at $4.95 and have great success with that price point. We’ve NEVER had a reader complain at that price point and many thank us for keeping the prices low.

    Even with the Amazon Sunshine Deals (over 600 low priced books from mid-sized traditional publishers) Our books are dominating the science fiction kindle #7 Full Share, #8 Soldier of the Legion, #13 March of the Legion, #16 Quarter Share, #20 Slave of the Legion. So lower priced books sell! – Imagine that.

    • Robin, I’ve read about your success. These are still early days for digital publishing and many of us are groping, trying to find the best price for our work. You’ve shown that $4.95 can be a successful price point.

  6. I am in total agreement with you here RE: overpricing. I have been in the same situation where I have chosen to wait a year for the cheaper eBook to come out when the mass paperback edition arrives. In two cases, if the publishers had sold the eBook for less, I would have bought both the eBook (for reading) and the hardcover for my collection.

    Because of the grossly inflated price, I didn’t buy either. Now, if I buy the hardcover at all, it will be from the remainder bin or some other discounted source. Most likely I won’t bother at all.

  7. It’s very important to remain rational and level headed, and not inject emotion into this analysis. Not that I am saying any particular commenter here is doing this, but I am seeing it a lot in other discussions. A lot of people are afraid, or have some portion of their self-esteem on the line, and that is a terrible way to approach business decisions.

    Basically, the fallacy is wrapped up in words like gatekeeper, quality, art, and so on. None of this is relevant. If a consumer is choosing between two products, the one that is best aligned with their needs, and most affordable, wins. Simple. Which of these two variables is more important might tip either way with a particular consumer, but by and large, if a product does more or less what yours does, and is cheaper, you lose the sale.

    Consumers do not care about anything but the product. Fans might, but most of any products consumers are not fans. They are just consumers with a need to fill, and will do it with whatever product works best for them.

    Another quick note – the value of any work is whatever the market will bear. Price point and value (profit) are two very different animals. Being unwilling to price a work at the price point that generates the most profit because of emotional issues (lower the perceived value, race to the bottom, etc.) is counter-productive.

    For those who are really upset about seeing their beloved work go for $2.99, remember that there are authors making tens of thousands, per month, per book, at that price. That’s value vs. price-point.

  8. Michael Slate

    As a little sidebar to this discussion, I was looking the other day to buy the novelization of the upcoming Transformers:Dark Side of the Moon movie.

    Saw the softcover at Walmart for $5.99. http://www.walmart.com/ip/15906774

    But then checked out the Kindle version of it and was shocked to see it listed at $7.99! http://www.amazon.com/Transformers-Dark-Moon-ebook/dp/B004P8JQ1C/ref=sr_1_1?ie=UTF8&m=AG56TWVU5XWC2&s=digital-text&qid=1307887771&sr=1-1 .

    Don’t get me wrong, I so love my Kindle, but the pricing of the ebook above the paperback is insane. I have no clue who did it, or why, but I think I may just wait and go see the movie and be surprised by it, rather than reading it ahead of time.

  9. Warren Lapine

    While you are corect that e-books are less expensive to make that print book, that is actualy a misleading fact. They are only about 10% less expensive as the printing is only about 10% of the cost of a book. Legacy publishers get 45% of a sale for print books and 35% for an e-books from Amazon. Writers are now clamering for higher royalties on e-books even though the publishers aren’t making more per sale. So if they do price the book the way you and other e-book readers want and they convert print sales to e-book sales and pay a higher % to boot to the writers they lose real money. No one wants to hear this but it’s true.

    • Back when legacy publishers didn’t think ebooks were a big deal, they wrote contracts that gave authors 50% royalties on gross sales. Now that there’s real money to be made, they offer 25% of net. Ebooks don’t have paper, printing, storage, or shipping costs. There are no ongoing costs. Once the artwork and formatting are paid for it’s pure profit. If the high pricing was necessary to make a profit, then all the indie authors pricing their work at $2.99 and $4.99 would be losing money. Read J.A. Konrath’s blog. Read Dean Wesley Smith and Kris Rusch. Read Michael A. Stackpole. They’re not losing money.

      • I think what no one really wants to hear is that the dinosaur business models that legacy publishers (those left standing) are still using in a desperate attempt to control their environment no longer apply. The IT industry experienced that phenomenon. Many perished. Change or die, it’s the only constant you can count on. Human beings don’t like being told we have to change though, and so we tend to continue beating our heads against the wall just hoping the wall will go away. “If we just work “harder” at the model we have, we’ll prevail!” Mostly, we perish before the wall does or we invent a model that works.

        Having no numbers of my own yet to use for number-crunching around this subject, I can only comment as I did above… I’m a reader who simply doesn’t give a rat’s patoot, to repeat myself, what anyone’s perceived “value” is of the fiction I’m thinking of buying! Like I said, Konrath can pick a $3 price point, an ebook publisher select $7 for the same type of material, and it’s not hard to imagine the latter will lose money. The consumer does not care. Both look interesting and they would be insane to choose the higher price because of brand or loyalty (both matter very little to the current consumer). What is amazing is that it took readers this long to drive what I have referred to previously as “give me what I want, when and how I want it, and give it to me for the price I can afford.” It all comes down to this. We’re no longer in an economy where we can ignore this as the primary driver for all entertainment. Again, this is not just about books.

  10. Zombo

    It is a race to the bottom on price and you’re pumping the accelerator pedal. Today 12 bucks is too much. In five years people will be complaining that 1 buck is too much. As someone wise said – it looks as though people are willing to pay less for ebooks than they are for a snickers bar.

    Whatever the price is – people will complain that it is too high.

    How much do you pay to see a movie? How much do you pay for a meal at a nice restaurant? A book lasts much longer than a nice meal – but good luck finding a great meal for 12 bucks.

    In 5 years time when the only ebooks you can get are 25cent cheapies written by rank amateurs, remember how you whined about getting a good hours long experience for 12 bucks.

    • Thanks for sharing your opinions on the subject of pricing, Zombo. Unfortunately, they’re fallacious, IMO. You can’t persuade people to value something more highly by fear-mongering.

      Your comparison of movies to books is an excellent one. I don’t go to the movies either, for the very reason that I believe the price is too high and the environment less pleasant than my living room with its 52″ flat screen T.V. And speaking of technology, are you complaining that the prices on flat screens and monitors are less than half of what they were only five years ago?

      I seriously doubt that artists of skill will stop writing because consumers would rather buy a Snickers than a book. Writers such as J.A.Konrath and Amanda Hocking are showing us that appropriate pricing can lead to MORE sales and MORE income, not less. When it’s possible to make $100 K a year writing good work, the only ones who will be suffering will be the publishers that priced themselves out of the market.

      All glibness aside, the prices on ebooks will come down, even those from legacy publishers, until they find a new “normal” just as housing prices have fallen. We’re in the middle of a huge change in technology, and everyone is groping their way toward an indistinct future. No one is “racing toward the bottom.” We’re all in this together. The problem for big publishing is that they can’t respond to the changes as nimbly as individuals can, and that’s going to hurt them.

  11. I came across this post http://ebmv.blogspot.com/2011/06/premium-price-ebooks-rebound-from.html which seems to contradict the idea that we’re racing to the bottom. Amazon has been conducting an experiment for the last two weeks, called Sunshine Deals, by lowering the prices of a large number of ebooks. At first buyers abandoned their usual patterns of consumption to take advantage of those books with lower prices. Then a curious thing happened. The purchases of the higher priced books rebounded, while the purchases of lower priced books continued to decline. People apparently wanted the premium priced books by certain authors, regardless of price.

    This may indicate that the legacy publishers aren’t so foolish in their pricing strategy. Obviously some people are willing to pay a premium to get a certain book NOW, rather than later. We knew that. It could still be true that they would sell more books if they were offered at a lower price. Only experimentation will answer the question. of whether a lower price point will generate enough more sales to make up for the narrower profit margin.

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