Publishers Warned On Ebook Prices

An anonymous reader writes "The DoJ says Simon and Schuster, Hachette, Penguin, Macmillan and HarperCollins conspired to raise the prices of ebooks. The report originates from the WSJ, but the BBC adds comments from an analyst bizarrely claiming increased prices are somehow a good thing and thinking otherwise is the result of 'confusion'. I'd like to see an explanation of why the wholesale model, while continuing to work fine (presumably) for physical books, somehow didn't work for ebooks and why the agency model is better despite increasing costs for consumers."

Comments

Market Analysis

[slashgrim]

Sounds like these publishers don't know their market. I only buy ebooks because they are inexpensive. At relatively close prices I'd prefer a physical book (where at least I won't be restricted by the publisher's "loan" policy!).

Re:Market Analysis

[mws1066]

Exactly. Who would pay $18 or more for a book on iTunes that you can't even LOAN to a friend?

Re:Market Analysis

[Cinder6]

Looking at Amazon, too many of the books I would want to buy are priced identically between eBooks and print books. Besides this making absolutely no sense from a cost standpoint, I still view paper books as superior: no batteries required, no DRM, I will always be able to read it if I take decent care of it, and I can do whatever I want with it.

At the very most, eBooks should cost $(price of print book - cost of printing and shipping said book).

Re:Market Analysis

[Anonymous Coward]

Maybe they understand exactly and wish to perpetuate the physical book model since there is a higher barrier to entry for competitors and they have more control. If ebooks become the dominant medium (which they may already be, or are rapidly approaching) then it is much easier for individuals to self publish a work on Amazon and cut out the publishers entirely.

So bad pricing is likely intentional, since they either push you to the physical book (a win for them) or you buy at an inflated price (another win for them).

Re:Market Analysis

[MightyMartian]

And what they'll get is a high level of piracy of eBooks. Fucking idiots.

Re:Market Analysis

[AliasMarlowe]

At relatively close prices I'd prefer a physical book (where at least I won't be restricted by the publisher's "loan" policy!).

Exactly. I don't buy ebooks. Actually, I bought two about 7 years ago, and was rapidly disgusted at both the price and the insane restrictions (especially the "no copy & paste" lunacy, but also the "can't copy to another device" and "can't print more than X pages per month" stupidity).

Amazon gets a lot of business from us, and so do several local bookstores, but only for real books - ink on paper. Real books can be shared with other family members (occurs very often - we have shared interests), loaned to friends (uncommon, but it happens occasionally), and sold on at second-hand stores (also uncommon, but does happen when kids' books are outgrown). We're all bookworms, and none of us really enjoys reading on a screen.

Re:Market Analysis

[clodney]

One time bought I book on my Kindle that I had sitting on my bookshelf, just because I wanted to reread it before starting on the sequel, and didn't want to carry the physical hardcover with me on a trip.

So I paid for the extra copy purely for my convenience. Given a choice between a physical book and an ebook at the same price, in most cases I will buy the ebook, because that is the format I prefer.

Re:Market Analysis

[ColdWetDog]

I actually think that ebooks are more 'robust' than print. Once the DRM is stripped (yeah, that's dumb, guys), you can store them forever in essentially no space at all. You can read them on multiple devices. You can lend them and not worry about getting the original back (I'm looking at you, Terry). You can bend, fold, mutilate and staple.

Of course, the publishers don't want you doing those sort of things so they try to cripple it, but that seems to be the way information publishers of all stripes are going.

Re:Market Analysis

[ColdWetDog]

Oh, and forgot my current major beef. If you're going to charge nearly as much for an eBook as a physical copy, please pay for a copy editor to review the damn thing. I'm tired of gratuitous typos and pagination errors. Yeah, you, Amazon.

Re:Market Analysis

[meerling]

If you reduce the price of an ebook by the cost of the printing and shipping of a dead-tree book, you still have the same profit margin.
Also, a much lower cost for consumers, which will allow them to buy more books, which increases your profit.
Books are a luxury, not a necessity, as such, increasing or decreasing the price has a more drastic effect on sales than it does for a staple like food.

Re:Market Analysis

[clodney]

But then the price of the eBook would be about 1/16th the price of a paperback. Publishers can't have that, because then they'd have no PROFITS! with which to buy more books/publish (read, give to shareholders)

Paperbacks are cheap to produce - this site (http://michaelhyatt.com/why-do-ebooks-cost-so-much.html) says production and distribution accounts for 12% of the price. Even if he is cherrypicking data and it is 25%, you aren't going to see huge price breaks.

And pricing doesn't have to be reflective of costs. I might pay more for an ebook based on the fact that I can start reading it right now, vs. getting it shipped or going to a store. Or I might pay more because I have bad eyesight and like the fact that I can make the type bigger.

The rule for rational actors is that they set the price so as to maximize their total profit - production costs only enter into it as a constraint upon profitability.

Re:Market Analysis

[nedlohs]

Why?

Why should a publisher/author/whatever not be able to charge whatever they want for an eBook? If they want to charge more than the printed copy that's their choice surely? If they want to charge less that's also their choice.

Why does cost of production of some other thing matter to the price of an ebook? Heck what does cost of production of the ebook matter to the price of an ebook? Value pricing isn't exactly a new idea (http://en.wikipedia.org/wiki/Value-based_pricing).

Now collusion amongst the publishers is a different story - that's illegal without even considering the existance of physical books.

Re:Market Analysis

[ultranova]

Given a choice between a physical book and an ebook at the same price, in most cases I will buy the ebook, because that is the format I prefer.

I would too, if that was actually possible. Unfortunately it isn't. Nobody sells e-goods, they're "licensed", which means that I may use them as long as the publisher lets me in ways they like (which they may change at any time they like), or as long as the publisher or some unrelated third party who happens to own them at the time doesn't mismanage its finances and disappear. Assuming, of course, that some other entity doesn't assert that they own the e-good instead, in which case it gets un-published and disappears like it never was.

But yeah, it would sure be nice to be able to buy e-books.

Re:Market Analysis

[NatasRevol]

You probably should have checked your library to see if they loan ebooks.

Re:Market Analysis

[NatasRevol]

Not the same profit margin (percentage), but the same profit. And with a lower cost, it's a much higher margin. Your numbers will actually look better without a huge printing facility in your costs.

Re:Market Analysis

[Obfuscant]

What could more ephemeral than a thin layer of rust with some magnetic fields recorded on it?

A thin layer of organic material with small amounts of organic material deposited on the surface.

I don't see any "thin layer of rust" in the flash chip that is currently storing one copy of Foundation I own, nor the USB stick that has another copy. There might be a "thin layer of rust" in the hard disk that stores a couple more copies, and the backups.

Tried making a backup of a physical book lately? I can back my "ephemeral rust" copies of books up at about 100 per minute (not 100 pages per minute, 100 books per) on a whim and without getting out of my chair.

Paper can last thousands of years if cared for.

"If cared for", when talking about paper, means initial printing on acid-free paper, and then storage of the material in an environmentally controlled facility. It does not include "reading", and certainly not "carry on the train to read while commuting".

Let me know when e-anything looks like it will archive that well.

Every ebook that I carry on a daily basis has survived for the last several years of doing so, while there are few, if any, paper books that have survived that kind of use. I'd say e-anything looks pretty good compared to paper when one is actually using the products and not just trying to keep an archive of comic books for one's great grandchildren to look at through the plastic bags.

Re:Market Analysis

[CastrTroy]

You could probably build the technology right into the kindle. Highlight a word, and have an option to send it for review. Some real person looks over the problem, and corrects as necessary. Fixes are automatically distributed to people who have the book.

Re:Market Analysis

[rtb61]

That is one crappy article, utterly meaningless plucked from the sky 12% value. Lets see some hard data. Cost to prepare digital proof (the electronic copy to be converted to the printed copy). Printing, packing, warehousing, picking, distribution, unpacking, stocking, retail. Lets see the costs, not a make believe percentage. Plus unlike the unreality of the article author, company generate a profit on all their costs.

So total up all cost then add a profit margin. Not take one cost, add profit, then add in all other costs, that's B$.

Basically they are currently trying to maximise profit margin by the good old corporate stand bys lie, cheat and steal and guess who is at the centre of it all 'APPLE'. Nothing but a pure greed play.

Re:Market Analysis

[the eric conspiracy]

You are talking about an economy that has free and open competition.

Obviously that isn't the publishing industry. THAT is an oligarchy with a few large entrenched businesses that have obviously colluded to set prices.

Re:Market Analysis

[Obfuscant]

Nobody sells e-goods, they're "licensed",

Really? So all those DRM-free books I've been buying in multiple formats from Fictionwise are ... ummm. Huh?

which means that I may use them as long as the publisher lets me in ways they like (which they may change at any time they like), or as long as the publisher or some unrelated third party who happens to own them at the time doesn't mismanage its finances and disappear.

Dell Magazines is going to have a real hard time finding all the copies of the magazines I've "licensed" from them should they ever go out of business and want to stop me from reading them, much less just change their mind about my being able to read them.

If you are paying money to people who can take things back from you at their whim, that's your problem.

But yeah, it would sure be nice to be able to buy e-books.

Yes, it is. On the other hand, there are so many free ones available, why do you need to buy any at all?

Re:Market Analysis

[Anonymous Coward]

After your purchase, use Calibre & dedrm plugins to put them into a form where you have control. See http://apprenticealf.wordpress.com/2010/02/11/hello-world/ for dedrm info.
Calibre is a great piece of open source software which makes managing ebooks on multiple devices easy.

Re:Market Analysis

[mcgrew]

Given a choice between a physical book and an ebook at the same price, in most cases I will buy the ebook, because that is the format I prefer.

Not me, I try to avoid being stolen from.

With a physical book they have the cost of materials, printing costs, warehousing costs, shipping costs, retail space costs. An ebook has none of those costs, to charge the same price for something physical that costs money to get into your hands as something that is essentially free once they've paid the editing, proofreading, and other pre-production costs is nothing short of highway robbery.

And as another poster said, you own a physical book. You don't own an ebook.

Were it not for collusion, the competetion would ensure that ebook prices were far loawer than the price of a physical book.

I think they should give the ebooks away when you buy a copy of the physical book. I mean, a CD might add a nickle to the cost of the physical book. A code on the paper book's index page could lead to a download of the ebook and wouldn't cost them a penny.

Re:Market Analysis

[MickyTheIdiot]

They are allowed to "charge what they want" for ebooks.

What they aren't allowed to do by law is get together with competitors and all agree to the same prices.

Re:Market Analysis

[Caerdwyn]

With a physical book they have the cost of materials, printing costs, warehousing costs, shipping costs, retail space costs. An ebook has none of those costs.

But an e-book still has the costs of editing, marketing, royalties, a legal department to track copyright issues, a business development department to manage relationships with e-publishers, accountants, payroll... and for the e-publisher you can add data center costs, bandwidth bills, IT personnel costs, etc.

The physical part of a book is actually not the majority of the price of a book, and e-books have some costs that physical books do not. However, people tend not to value something they can't physically hold in their hands, regardless of how much the intangibles actually cost.

Re:Market Analysis

[Serious Callers Only]

Nobody sells e-goods, they're "licensed", which means that I may use them as long as the publisher lets me in ways they like

While it plays to the peanut gallery here on slashdot, this is not really true. Lots of good publishers sell their content DRM free - Oreilly, Pragmattic Programmers, Baen, Smashwords, Cool Camping, Pan Macmillan etc.

Your nightmare scenarios might hold true for books bought from ibooks or for kindle for example (particularly for kindle as the whole 1984 episode showed), but they are not true for publishers who publish books in standard formats like PDF with no DRM - you can buy good ebooks today, you just have to be discriminating, and not all books you might want are available. Hopefully more publishers will see the light and stop trying to impose DRM (which is inevitably cracked anyway).

Re:Market Analysis

[Serious Callers Only]

With a physical book they have the cost of materials, printing costs, warehousing costs, shipping costs, retail space costs

These are not the main cost in producing/selling a book, the main cost is the 50-60% retailer cut of the cover price, and then perhaps origination (what goes into making the book), and then printing, then warehousing etc. So most of what you think of as the big costs in selling a physical book actually apply to ebooks too (the retailer in that case being either amazon or some other online store).

Re:Market Analysis

[maxwells_deamon]

The only thing Amazon should be scanning and OCRing for ebooks in the modern age are older books. Everything else SHOULD come in electronicly. Publisher are frequently in the stone ages however.

If you self publish on the kindle you can download an application that shows you the final result before you publish. You can fix things to make them work.

Authors should get a chance to see review copies of books before epublishing . Of course that does not frequently happen. I know of a situation where a paper book went to final press without author review and the name of the author was typoed on the spine.

Re:Market Analysis

[BLKMGK]

This site http://jakonrath.blogspot.com/ has some interesting things to say about eBooks from the stance of an author who has been abused by the big publishing houses and now sells via Amazon and others instead. He farms out cover art, editing, and other things - he also reveals the numbers for all to see. There's no reason why big publishing houses need to be taking more than $50 of the cost of a book sale other than to support top heavy overhead IMO. They are holding onto their position and holding down authors much like the music industry has tried to do. They secured a sweetheart deal using Apple as a lever against Amazon and it is now FINALLY blowing up in their face - but not without eBook piracy having gone rampant and many early adopters such as myself no longer buying overpriced books.

I'm happy to see this finally coming home to roost but I feel it's pretty late in the game having taken YEARS to come about. The big publishers have had it fat for awhile now, their house is about to come tumbling down and I will stand and applaud when it does. Who knows, when prices are finally sane again perhaps I'll consider buying books again much liek I am back to buying music from Amazon....

Re:Market Analysis

[BLKMGK]

Profit is one thing, a monopoly is another. When Amazon resisted agreeing to this Agency model proposed by Apple the book publishers threatened to window titles and not distribute to Amazon.

Re:Market Analysis

[Jessified]

http://diybookscanner.org/

Scan the books yourself. Don't pay for it twice. I can't imagine this being illegal on books you already own. (And they can't exactly put DRM on physical books.)

Re:Market Analysis

[Archangel Michael]

Book and eBook = $X (same price)

I buy eBook(DRMed) from vendor, put it on my device and read it. I'm done. Can't do anything else with it.

I buy Book from same vendor. I read it. I'm done, so I go to local book reseller and sell it for $Y (or credit). Someone else buys the book for $Z($X). Wash rinse repeat. OR I can loan it to my friend who reads it and trades me a book they just finished, and then take it to local store for credit)

Which one is a better value? I don't care, but until eBooks are priced somewhere in the $Y or $Z Range they are going to be a novelty for people who are either too busy to reclaim $Y, or don't trade with others.

Re:Market Analysis

[93 Escort Wagon]

I don't use Calibre; but I do deDRM most all my Kindle books as soon as I buy them, then copy them to a backup disk. I expect Amazon will be around a long time, but I want control over my media - and having to jump through hoops to "lend" a book to my wife or daughter is annoying. This way, they can just go grab it off the backup disk and put it on their Kindle or computer without my having to do anything, same as they would with a paper book.

The Topaz books are a problem, though.

Anyway - along with other posters here, I also prefer ebooks for their convenience. I think they should be cheaper, but I will purchase an ebook over a paper book at the same price point.

Re:Market Analysis

[Jumperalex]

Even at 12% ... that means I should see e-books for 12% less (yes not counting your rational actor comment which I will mention later). The problem is, they aren't 12% cheaper, they aren't even cheaper, they are MORE and that is the galling part.

As far as setting the actual price, you are right ... they can and should charge what the market will bear.

I can tell you the market of me, my buddy (as we discuss this topic today on chat), and a goOd friend of mine who reads more in a month than I can fathom, are NOT willing to pay more, or even the same, for a product that we KNOW costs less to produce and has less value (can't be resold, bought used, or loaned out).

The "convenience" of it being electronic is not enough value for me to be willing to pay more. Period End Dot.

So, they are welcome to set the price to what they want, but I will not buy an e-book that costs more than a paper version. I will buy a paper version (retail or used), and then if I want it format-shifted I will find a way to format shift it to my Nook. In the rare case there actually is a price difference between two ebook retailers I feel no qualms about format-shifting to a format my Nook can read (if required).

Which is also part of the problem, there is no price competition allowed and that is just as galling and offensive.

Re:Market Analysis

[Endo13]

And if what you posted is true, it explains exactly why the digital version should be much less expensive. The retailer (which you say is 50-60% of the big cost) has MUCH less overhead involved in selling a digital version rather than a physical copy. There's no shelf space required, no stock-boy required, no "sales associate" required, no delivery costs, and all the various costs associated with a physical copy. The only retailer costs for the digital version are the website, the file server, and the bandwidth. That's pennies a copy for any book worth a shit. Then there's the origination (by which I assume you mean the writing, editing, etc.). If the book is being primarily sold as physical copies, then that cost is already covered as well. The rest of the costs are completely gone for the digital copy.

So what they need to do is find a reasonable price point at a certain percentage below the cost of the physical book, such that people who otherwise wouldn't by either version will buy the digital copy, but not so low that they kill the market for the physical copies. That price point is considerably less than the cost of a paperback, nevermind the cost of a hardcover. For myself, that would be somewhere around 33-50% of the cheapest regular price for the paperback. There have been books I would have liked to buy the e-book version of, but didn't because they cost 40-50% more than the paperback. Since it's a book I'll probably only read once, I also don't want the paperback cluttering my shelves. So instead of buying the ebook for half the cost of the paperback I bought neither, and simply haven't read the book (and won't, until the e-book version is at a reasonable price).

Re:Market Analysis

[Anonymous Coward]

Google (the do no evil folks) offered to sell me a PDF book. I bought it... only to find that I had to install a special version of adobe to read it. It blindsided me. I had been down this road with music from itunes as well. Songs in a format that I could not play on another mp3 player (ie my android phone) and songs that my wife and I shared via home sharing that we could not play on each other's ipods.

So in the end, I downloaded the same songs in mp3 for free due to the frustration of trying to use songs I'd bought (ie licensed) from itunes.

Same for the books.... within an hour of downloading an encrypted pdf from goog books, I had cracked the encryption and could read it on any PC... like the one at work that doesn't allow me admin privs to install the silly reader.

Keep it up publishers... you are pissing off your market!

Re:Market Analysis

[ultramk]

I run a small publishing company. Our printing and shipping costs are about 1/4 of our overall production costs. The rest is in paying researchers, editors, and royalties to the authors. None of those costs change if we go to ebooks, in fact there are some added costs in producing an ebook version because there's no elegant way to export charts and tables to EPUB or MOBI from InDesign (where we do our print layout), at least not without a ton of hand tweaking. Code generators suck.

So, you know. It's anecdotal. But that's why our $35 book will probably sell for $28 or so in ebook.

Re:Market Analysis

[steveha]

But an e-book still has the costs of editing, marketing, royalties, a legal department to track copyright issues, a business development department to manage relationships with e-publishers, accountants, payroll... and for the e-publisher you can add data center costs, bandwidth bills, IT personnel costs, etc.

Absolutely correct. I agree 100%.

The physical part of a book is actually not the majority of the price of a book

I don't think you are correct here, at least not for all cases. This may be true for mass-produced paperbacks, but what about textbooks on non-mainstream subjects, where there may be hundreds of pages with equations and graphs, and not very many copies of the book are ever bought?

Also, what about the cases where a publisher thinks that a book will be a hit, prints ten billion copies, and then the book fails and all those copies get landfilled?

So, I think cost of materials is still a significant factor in the cost of books. In turn, I believe that ebooks ought to cost less than paper books: they shouldn't be free, because as you correctly noted they still have significant costs. But the cost of goods is zero, and the financial risk is greatly reduced, and those things do matter.

Even taking the above into account, obscure textbooks will still be expensive as ebooks, because they are expected to sell only a few copies, so the overhead is paid by fewer sales.

Of course, ebooks based on public domain materials really ought to be very inexpensive: extremely low production costs, no cost of materials, and no risk.

However, people tend not to value something they can't physically hold in their hands, regardless of how much the intangibles actually cost.

Hmm, I'm not sure on this one. iTunes music downloads are very popular, apps downloads are very popular, and ebooks are actually very popular.

If you are saying that people don't want to spend a whole lot on a software good, you are probably correct.

steveha

Re:Market Analysis

[mcgrew]

And what they'll get is a high level of piracy of eBooks. Fucking idiots.

I read a year or two ago about a book publisher who commissioned a study to find out how much piracy was costing him. It takes a couple of weeks for a pirate book to hit the internet, so they watched that, and were amazed to discover that rather than a drop in sales when the pirate version came out, there was actually a sales SPIKE.

So not worrying about piracy is far from idiocy. Piracy sells books.

Re:Market Analysis

[Bieeanda]

I like the cut of your jib. You know, we've got room for people like you down at Minitrue...

Re:Market Analysis

[BLKMGK]

How about back catalog? You know those books that are no longer printed? Big publishers hold onto these "rights" like they're gold and refuse to publish books. When an author wants them back they often refuse and the book is in limbo. Physical stores can only hold so many books and have only so much display space, not so electronic books. Back catalogs is where existing authors have a TON of opportunity, it's also where big publishers screw up and try to charge sky high prices for books that have been paid for multiple times over.

Konrath is just such an author. He has been publishing his catalog of REJECTED books and making more money on that and self published stuff than he has ever gotten from his "big publisher" deals. He has been posting stories by other authors and encouraging authors to go it on their own for a year or three now. His posted numbers and tales of getting screwed ought to open any author's eyes. http://jakonrath.blogspot.com/ My personal favorite is how publishers talk about advertising budgets and then authors end up having to arrange all of the book signings themselves as well pick up the travel expenses. The big publishers are fast on their way out and it can't come soon enough. They are as bad if not worse than the music industry IMO.

Why does an e-book need a publisher?

[TheMathemagician]

Well he got one thing right: "All the costs are the people in the publisher's HQ..." Exactly. So why don't authors just upload their e-books and cut out publishers all together?

Re:Why does an e-book need a publisher?

[Registered Coward v2]

Well he got one thing right: "All the costs are the people in the publisher's HQ..." Exactly. So why don't authors just upload their e-books and cut out publishers all together?

Probably because some of those cost are for editors, proof readers, illustrators, cover designers; all of whom play a crucial role in producing an outstanding or even good, for that matter, book. There may be a lot of extra costs that can be cut, but a writer alone, except in rare cases, can't produce a work nearly as good, or even good, without the help of others. Witness the proliferation of garbage titles now that the cost of entry is nearly zero.

Re:Why does an e-book need a publisher?

[the eric conspiracy]

Knowing the book industry, the people you have listed are paid a pittance. I used to work with Steven Hawking's ghost writer, and for him it was strictly part time pay for a lot of work.

Where the money goes is to management and marketing.

Re:Why does an e-book need a publisher?

[ColdWetDog]

Except that, at least with Amazon eBooks, they appear to have left out the copy editor and the graphics editor. Typos up the wazoo. Horridly compressed jpegs for graphics. Pagination that makes little Johnny cry.

Maybe Amazon could crowd source those problems and give people a discount or something - but it gripes me to pay nearly full paper price for a substandard product.

I won't even mention the DRM since it's conveniently so easy to crack.

Re:Why does an e-book need a publisher?

[Anonymous Coward]

What gets me is there are plenty of books by authors who are DEAD that are priced as if they were new best sellers.

Dashiell Hammet and Raymond Chandler, for instance. I'm sure royalties are still being paid to various parties, but not enough to warrant those prices. Don't get me started on academic books where the "price" involved for "new" editions is simply moving chapters around so that you can't purchase used books. Baen manages to sell NEW e-books for $6, even for its best selling authors. I understand that they may not be doing as much editing and promoting as some publishers, but c'mon, the electronic revolution should be making things less expensive, and has done nothing but, and it has nothing to do with actual costs for things.

Re:Why does an e-book need a publisher?

[nathan s]

This. The writing and editing parts are trivial in comparison with getting people to know your books exist. I can see the appeal of a publisher if you're writing in hopes of actually being read -- not because the publisher does any work for you, but because the fact that your book is associated with a publisher means that more people are willing to risk reading it. If you self-publish, and even if you paid to have your book edited, you're still going to have huge amounts of trouble attracting the first tiny bit of an audience unless you are writing some obscure non-fictional stuff that can be judged at a glance as useful or not, and maybe even then you'll still have trouble. I only have experience with self-publishing fiction, so I can't really say for sure on the latter.

That said, people severely underestimate the gatekeeper effect that these traditional publishers play, not just for books but for music as well. It's not that I think that publishers are actually _good_ arbiters of taste or quality, but I can't deny that people would prefer to take a chance on a crappy song that is getting radio play after being pushed by labels than they are to waste 5 minutes listening to random MP3s on some guy's website. Truthfully, it's hard to blame them. I'm a writer and I make electronica, and I still find myself hesitant to waste time on random stuff I find online, simply because of a few bad early experiences doing that. So I'm sure that I'm missing great content in the same way that some people would probably really enjoy the things I create but skip it rather than take the risk.

The short of it is, human nature is to blame here. People usually (and fairly rationally, I think) prefer the guaranteed payout in entertainment that they expect from a curated source, one that they are familiar with, to the real risk of wasting their time listening to or reading horribly flawed creations that they randomly stumble across online. The only way around this, from a creator's point of view, is to either delegate the marketing jobs to a publisher or to spend a lot of time doing it yourself. For the average writer/artist/programmer/musician/etc, I think that's something that is not really much fun when you'd rather just be making more stuff.

Re:Why does an e-book need a publisher?

[Anonymous Coward]

Knowing the book industry, the people you have listed are paid a pittance. I used to work with Steven Hawking's ghost writer, and for him it was strictly part time pay for a lot of work.

Where the money goes is to management and marketing.

Then I suspect you don't know the book industry very well.

I'm a published author. Getting my first novel to the stores at B&N involved my agent, an editor, two copyeditors, two graphic designers, a publicist, and an entire sales team to shop it to booksellers--twelve people, none of whom were being paid "a pittance" because 1) they all live in New York City where the cost of living is so ridiculous that they couldn't afford to live there and work at Rockefeller Center on a meager salary; and 2) they're all very, very good at their jobs. And I don't begrudge them one dime--nothing would kill my career as an author faster than publishing a book riddled through with typographical and grammatical errors, a lousy cover, and poor promotion. And Amazon isn't going to help me with any of that.

Would I like a bigger cut of the profits on my books? Sure. Is it worth it to jump ship and publish through Amazon, knowing that I'm going to have to hire my own production team to keep the quality of my finished books at a high level? No. Unless you're a mega-author, that extra percentage Amazon is promising won't return enough profit to cover the cost of hiring that production team. As a result, most authors going through Amazon won't bother and Amazon will end up publishing a tremendous amount of mediocre crap.

More misinformation from the publishers

[Anonymous Coward]

From TFA:

"The perception is that publishers are saving a fortune because they are not physically printing a book," he said. Actually, said Mr Evans, printing costs were a small fraction of the total outlay required to produce a book.

"All the costs are the people in the publisher's HQ and the writer's mortgage," he said, adding that these had not changed significantly with the rise of ebooks.

The move to agency pricing could mean that publishers made less from each book because of the percentage they handed over to the agents selling their titles, he said.

The DoJ dictating lower ebook prices might have unforeseen consequences, said Mr Evans.

How are the DoJ dictating lower ebook prices? Aren't they just investigating whether there is price fixing going on in a collusion between publishers? Is this admitting that they are artificially inflating prices?

And I've gotten it that there are more costs than printing a book. But, how does that translate into forcing ebook sellers to use the Agency model? I used to buy all my ebooks from Fictionwise but have had to switch to Amazon because Fictionwise was unable to agree to the Agency model. They have definitely hurt competition with this.

ahhh, that's why...

[lsolano]

eBooks prices are too high.

I've never understood why eBooks prices are too high, sometimes almost the same price of a paper book, bearing in mind all the manufacture, paper, ink etc. that the eBook does not have at all.

Publishers Shot Themselves in the Foot

[sehlat]

That was even before the so-called "agency" model. There were ebooks available at Fictionwise for $20 years after the paperback had been released at $6.99.

Then they opened up on their feet with a fully automatic weapon, "agency," which attempted to raise eBook prices, banned things like discounts and rebates, and generally attempted to kill eBooks by overpricing them.

They also canceled existing pre-orders at the lower prices. I had a book on order at Fictionwise I had pre-ordered at $8. They forced FW to cancel the deal and refund my money, removed the book and a lot of other ones from fictionwise, and "generously" offered me the book at $12 at either Amazon or Barnes and Noble. My eBook buying, which included buying books at ridiculous prices but getting store credit as a rebate, dropped from over $2000/year to less than $200.

When publishers start acting sane (I'm NOT counting on it) I may go back to them. In the meantime, I've never stopped buying everything Baen brings out, and loving it and them.

Send the publishers a message

[ed1park]

Why not paypal the author a few bucks and torrent the ebooks? No trees getting cut nor used books getting shipped around and the author makes money. Keep doing this until publishers realize their short sighted stupidity and change their ways.

Re:Send the publishers a message

[Anonymous Coward]

You do realize more goes into make a book then just the author typing it up. Assuming it's just a novel, you have the editor, proofreader, designer. Then there is the marketing of the book which requires more people still.

Re:Send the publishers a message

[Cinder6]

Problem is, that doesn't pay the editors, copy editors, typesetters, etc. that all played a part in getting that book in your hands (or on your device). The author doesn't live in a vacuum.

Re:Send the publishers a message

[Richard_at_work]

Boy oh boy, it really shows that you haven't seen a book in its raw, straight-from-the-author form. Even with digital goods, there's still plenty of requirement for editing and other things that a publisher currently does.

I know Slashdotters like to go on about buggy whip makers trying to force their extinct product on a society that no longer needs it, but this really isn't one of those cases - a publisher does more than take the final product from the author, slap a markup on it, and sell it to you.

Duh

[Daetrin]

This is why at least three quarters of my ebook purchases are from Baen. They price their regular books fairly reasonably, "hardback" books are about $10 than list price, and when they come out in paperback they're about $2-3 off the list price. And for a lot of books if you're willing to pay a small premium they'll let you get the ARC version ("Advance Reader Copy") before the publication date. They also do monthly bundles of books, five or more books packaged together for the price of two or three books, well worth it if you know you really want at least two of the books in the bundle. Plus they have a free library that will let you try out a large number of books for free (in the hopes that you'll buy more books from that author later of course) and their books are DRM free, because they understand that piracy isn't a real problem.

Hopefully if Baen continues to do well eventually the big publishers will learn from their example.

Re:Duh

[jandrese]

Baen has been doing well with that model for over a decade now, the other publishers don't care. Even when Baen was literally the only company making any money on ebooks none of the other publishers would even give that model a second look. If it's not loaded down with DRM and badly overpriced, they just don't see the advantage.

Publisher Fools

[retroworks]

Just dramatically increased the value of "rip" and "burn" software development, same as they did with CD prices creating the MP3 market. Invest in "Writers" and "Burners", the Chinese will be happy to make the hardware.

Advertising

[mx b]

You can have the best book in existence, but if no one hears about it, no one will ever buy it. It's entirely possible to publish on your own, on a personal website, with a paypal or visa shopping cart or something attached to take orders. What publishers do is get exposure. Even just on amazon.com, maybe they don't directly advertise you, but if someone searches for books, yours will pop up in there somewhere. How do people know to go to your personal website if you are a new unknown author?

It is feasible to do entirely on your own when you are a popular author, but someone starting out new still needs an advertising boost of some sort, or at least listed in a catalog most people know about to make it somewhat easier to discover. However, ebooks should be incredibly cheaper, given that as you pointed out, "publishers" don't really have to publish (or even edit, in some cases) anything. They simply add you to the catalog and handle the sales, and send you royalties. Their cut for something that is essentially automatic (handled by servers) should be much lower than the companies seem to think they deserve.

Apple gets off scot free, as usual

[Pinky's Brain]

Conspiring to break the law is legal for Apple ... they are like Microsoft++, just as evil but without any trouble from government.

The publishers would appear to have fucked up...

[fuzzyfuzzyfungus]

According to TFA, the publishers went 'agency' in order to try to stop Amazon from 'cornering the market' by selling books cheaply. Now they are under DoJ fire for what was essentially an attempt to set an artificial price floor across the industry.

Squeeze. Crunch.

Y'know what might have been a better plan? Not Insisting on the DRM that makes it possible, and easy, for an incumbent seller to lock in large numbers of buyers and obtain the market power needed to then put the publishers on the rack... It's not as though the story of iTunes went exactly that way with team RIAA or anything...

If DRM actually magically worked, there might be some business case for accepting a smaller slice of an impregnable walled garden; but the present state of it is trivially weak for all the common book formats. Good work on stopping no pirates and giving large retailers the power to cut your throat, guys...

If I'm typical...

[Oswald McWeany]

If I'm typical, (and I probaly am not) Amazon, et al, would get more money from me by LOWERING the price.

90% of the ebooks I "buy" are free- either from Amazon, or Gutenberg, or elsewhere. The other 10% I will only buy if they are cheap. If eBooks were in the $2.99/3.99 range (for books I wanted) - I wouldn't hesitate- and the vast majority of books I read would be eBooks.

Instead of making $7 profit on me once or twice a year- they could be getting $1 profit from me 20 or so times a year. Multiply me by a few hundred thousand and that profit margain goes up.

I don't know that I am typical though- in fact I probably am not- because I actually enjoy reading HG Wells, Oscar Wilde, etc- and I don't consider it too much a hassel to not be buying the latest-pop ficiton mega-release.

Re:If I'm typical...

[AnonyMouseCowWard]

This is typical, and not even anecdotal. There's a certain price point at which people don't care Just look at Steam.

"We do a 75 percent price reduction, our Counter-Strike experience tells us that our gross revenue would remain constant. Instead what we saw was our gross revenue increased by a factor of 40. Not 40 percent, but a factor of 40."
http://www.rockpapershotgun.com/2011/10/24/less-is-more-gabe-newell-on-game-pricing/

That means, selling your product at 25% of your original price increases total sales 40 times over, or in other words you sell 160 times what you would have sold.

Indeed, if you earn a buck instead of 10 per book, your net profit is still up. Your profit margin, _per book "copy"_, is lower, but if you consider the fact that an eBook is zero marginal cost, it means that on a company-basis your entire profitability still goes up.

Re-make the publisher then

[Ollabelle]

So let's start up eBook only publisher, containing only the staff needed to assist the Ebook author. No typesetting, warehouses, printers, or distribution chains to the mortar shops. Then we can price the book to cover our costs and profits for both us and the author.

The author can then negotiate two separate publication deals, one for the ebook version and one for the paper version.

Most likely, a third person will be required, who will be paid to shill the book and get the book tour going.

Re:Re-make the publisher then

[0123456]

And the best part is that you can set it up in a small town somewhere with a low cost of living rather than a fancy New York office where you have to pay high wages so those employees can afford to eat...

Selling vs. Licensing

[Anonymous Coward]

Try Baen Books or Smashwords. They sell DRM free titles.

Baen has mostly top notch, mainstream authors, albeit only SciFi and Fantasy. Smashwords is a little more of a mixed bag, but some well established authors (like Kristine Kathryn Rusch) are publishing on Smashwords.

Re:What is "agency model"?

[Zerth]

The agency model is where publishers set the price of books and retailers get a percentage. This isn't MSRP, the publisher actually gets to set the price the book is sold for.

As opposed to the wholesale model print books use, where publishers sell books to retailers, give them a MSRP, and then the retailers get to set their own prices.

When Amazon started selling ebooks, they used the wholesale model and would frequently set the price to just over whatever the publisher charged them, or even for a loss. As this frequently put the cost of an ebook below the price of a paperback when the book was only available in hardback, publishers got worried that Amazon would get too dominant. When Apple offered to use the agency model, publishers used that to force Amazon to switch.

The thing that really annoys me is that some publishers are lazy about updating their pricelists, so you'll often see the ebook still listed at hardback prices months after the paperback version is available. That sort of crap makes me buy the paperback, use the IRC scanner, and then stuff the book in the attic. The publisher actually makes less money, but at least they kept their precious paper sales.

Oh HELL NO!!

[pablo_max]

"Fixes are automatically distributed to people who have the book."

Absolutely NOT! That is a terrible idea. Can you not see how that would be just ripe for abuse and censorship?

Typos and all, when I buy a book, I can read what the author had intended for me to read. Not something which was later changed because someone didnt like the message.
Yes, I know you are only talking about corrections, but my point is, who gets to decide what a "correction" is?

Re:The publishers would appear to have fucked up..

[Anonymous Coward]

According to TFA, the publishers went 'agency' in order to try to stop Amazon from 'cornering the market' by selling books cheaply. Now they are under DoJ fire for what was essentially an attempt to set an artificial price floor across the industry.

Not just "cheaply." Amazon was selling books at a loss to corner the market and Jeff Bezos didn't care if it bankrupted most of the publishers in the process. He wanted total control over the book market and, until Apple stepped in, he had it for all practical purposes. So the publishers weren't trying to set an artificial price floor to sustain high profits. They were trying to force Bezos to sell books for something approaching fair market value so they wouldn't go bankrupt. The fact that Amazon had to raise prices so quickly once the publishers had another outlet ought to tell you something about how anti-competitive Jeff Bezos's practices and pricing were in the first place.

I'm always amazed that so many of the same crowd that decried Microsoft's monopolistic practices has no problem cheering on Bezos and his attempts to achieve a stranglehold over the US book market. But I guess they're not afraid to cheer for a ruthless monopolist as long as it saves them a few bucks.

Why do you hate free speech?

[Uberbah]

Why should a publisher/author/whatever not be able to charge whatever they want for an eBook?

Putting the issue of collusion aside, who, exactly, is saying that publishers can't charge what they want? Is someone proposing a law capping ebook prices at an arbitrary level? No?

Then what are you going on about?

People are simply pointing out that pricing an ebook at the same price as a physical copy from a store is a ripoff for the person buying the ebook. With a book you have actual physical costs: printing, shipping, storage, labor at B&N, etc. Whereas ebooks are nearly pure profit for the publisher.

And with physical books, you can resell them or give them away when you've finished reading them - something you can't do with commercial ebooks.

So, what are you gong on about again?

Except that's not true.

[sgtrock]

Take a look at Baen's ebook website. There are a dozen other publishers listed these days.

I'm not a lawyer

[ZombieBraintrust]

The button you click says "Buy" therefor it is sale regardless of what the publisher thinks they did. The Clayton Act makes these EULAs illegal anyways.

Re:What is "agency model"?

[ZombieBraintrust]

The deal the publishers made with Apple includes a requirement that none of the publishers sell e-books to any other company at a price lower than the publishers charged Apple. This is where the focus of the Anti-Trust will be. Having an Agency model between a publisher and Apple by itself would not be a anti trust violation. The fact that the deal forced other companies into that model is the Anti Trust issue.