To be fair, Kristen, I don’t think my answer is “factually incorrect”. It simply doesn’t jibe with your own perspective.  You make some very salient points, and the discussion is going to last a while longer: whether bricks-and-mortar publishers ar…

Right now, today, Baen Books releases an e-book of every new volume they print, hardcover or paperback, and they make money on the e-books AND the paper books. And the royalties Baen pays to authors for e-books are significant (typically, Baen pays $0.50 on a paperback, $1.50 on an e-book, and $2.50 on a hardback). Even more importantly, Baen does NOT count the e-book royalties against the author's advance. Every cent is additional cash paid out to the author, even if the paper books don't earn back the author's advance.

And Baen manages to do all that on a price of $6.00 per e-book, and, I repeat, do it at a profit.

I know this post is old, but it bears commenting since it's comes up in Google.

We're talking about a second (and new) revenue stream added in to an existing product. The costs you mention are already factored into the price of the printed book. To justify your assumption that consumers are so ignorant as demonstrated with your post, authors would receive two advances, the work would be edited twice, and so on. No, publishers just assume consumer ignorance as you do. There are minimal additional expenses and large profit potential from ebooks.

You've taken what is merely a new and incredibly cheap distribution mechanism and tried to obfuscate that with your ignorant post.

Fact is, most authors don't make much money from their writing and have to work at a “real job” to earn a living. Luckily, I have been able to earn a decent income in the last few years, in part because I independently publish 3 of my books.

I also believe that a publisher should be adequately compensated for bringing a book to market, whether it is a hardcover, a paperback, or an e-book.

The problem in today's North American society is that the majority of people have a sense of entitlement to getting e-books for free (along with a lot of other stuff that they don't want to work for or pay for). This is another variation of the world-owes-me-a-living syndrome that Robert Ringer talked about in his bestselling book Looking Out for Number.”

Interestingly, people who have this sense of entitlement or suffer from the world-owes-me-a-living syndrome never create anything valuable for society themselves. That is why they have to settle for being imprisoned in corporations working for a paycheck.

I know that I have created something valuable for society because my books have sold over 625,000 copies worldwide. Results don't lie, in other words.

I have 3 books that have sold over 100,000 copies. Keep in mind that over 95 percent of books sell less than 5,000 copies in their lifetime.

But I refuse to let have these international bestsellers come out in e-book format if I don't get adequate compensation.

Sure, a lot of authors will settle for peanuts if they don't think that can get anything more, but I won't.

As an independent publisher, I have not rushed to get my books sold in e-book form.

Perhaps I will eventually release a few e-books for sale but only if I am adequately cwompensated and assured that these e-books will not be acquired for free by the people who suffer from the orld-owes-me-a-living syndrome.

In the same vein, I fully support the stand that Macmillan Publishing took against Amazon in not allowing Amazon to sell its books for less that $9.95 or whatever the price was.

It's too bad that more publishers and writers are not willing to take the same stand and say, “It you are not going to pay adequately for the e-book, then we don't make it available as an e-book.”

Ernie J. Zelinski
Author of “How to Retire Happy, Wild, and Free”
(Over 110,000 copies sold and published in 9 languages)
and “The Joy of Not Working”
(Over 225,000 copies sold and published in 17 languages)

http://www.thejoyofnotworking.com
http://www.how-to-retire-happy.com
http://www.retirement-cafe.com/Retirement-Plann…
http://www.UnrealJob.com

Seriously, publishers had better get it together. Readers simply aren't going for this at all. Nor shoudl they.

Look. Readers don't give a shit about “amortizing.” They view it as this: I'm paying the same price for wood pulp as I am for electrons…except I can loan the wood pulp to my friends and help turn them on to new writers. But I have to keep the electrons to myself on my expensive proprietary software.

And, no, they're not going for it and they're not going to. You have to make them believe they are getting some deeper value for their money. Like it or not, reality or not, they believe the are getting a bigger bang for their buck with wood pulp than they are with electrons.

After you have sold a certain number of books, your publishing costs are recovered, and the portion of the sale that goes to the publisher is pure profit. For physical books, there are still ongoing costs to be recovered with each book (pulping, printing, binding, transportation, storage, etc.). With e-books, none of those ongoing costs exist (or are so small as to be inconsequential).

As a result, your sales on e-books convert to paying royalties and making profit, whereas that never happens in the paper book lifecycle.

Perhaps to avoid killing the Hardcover market, e-book prices should reflect a discount off of hard cover until the soft cover is out, then should reduce accordingly to reflect a discount off of soft cover. Early adopters are likely to be willing to pay a premium (as is the case with so many other things).

What would be the reason to make the Ebook reflect the hard cover book price and NOT the soft cover book price. It is ludicrous not to do so in the first place when the increased sales would more then make up for the so called loss in lowering the price point on ebooks. Just like they do with the soft covers. The price will be what the market will bear… this is a statement that is stupid in my opinion. If someone feels ok with 25.00 for an electronic ebook vs a hard cover needs to reevaluate their budgets. hard cover is something substantial, collectible and in some areas if it is a first print becomes valuable later on. An electronic file does not have this longevity. If an Ebook was the same cost discounted for NOT being paperback then that would be MORE then reasonable and the sales would increase considerably and make the ebook a more viable product vs the hard cover price point for an ebook, which is ludicrous!

The fact that the publishing industry takes such a big chunk of price of a book really seems like an argument against it. If so much of the cost of a book pays for execs and marketing campaigns, then why have a publishing industry at all? The model seems very similar to the music, film and newspaper industries – all middlemen and gatekeepers that are being rendered irrelevant by the internet.

Without such high costs, books would be cheaper for readers and writers would make more money. For example, see this blog post by J.A. Konrath detailing what he makes off self-published e-books http://jakonrath.blogspot.com/2009/10/kindle-nu…

I understand where you’re coming from and sympathize. But it sounds like you’re assuming you’re only going to make one sale. I assume that even with a printed book you’re counting on selling at least 1000 copies. If the price is cut in half, and your share correspondingly cut to $1.50, but you sell 2000 copies, your income will be the same. And what if your share is cut to a quarter of that but sales go up tenfold?

No guarantee that this is going to happen, but likewise no guarantee that it won’t.

I understand there is a long involved process, however, the cost difference between a MMP and a Hardcover is obscene as is the cost that some publishers expect people to pay an electronic edition.

I agree that they shouldn’t be free.

Big business thinks about their bottom line, not what represents a value for the consumer. Since I can’t loan, sell, or donate an eBook, it has less value to me than a paperback. The savings, if any, to the publisher don’t concern me at all.

On the other hand, as a micro-publisher, I have discovered that eBooks represent a tremendous opportunity. For several months I have been giving away Book I of a trilogy as a FREE eBook download. Giving away an eBook costs me nothing, and it’s a great way to introduce readers to my work.

I make about $1 less on an eBook than I make on a trade paperback, but I’m convinced that, far from stealing sales, the eBooks increase sales of the paperback.

And I should add that the retail price of all my eBooks is $9.99, $6 less than the retail price of the paperbacks.

Catherine M. Wilson
http://www.whenwomenwerewarriors.com/
http://www.catherine-m-wilson.com/

It may be comfortable to play these games with numbers, but it strikes me as symptomatic of the real problems within your industry. Making it easy for readers to get access to books in whatever form is good for both writers and publishers. It is past time that the publsihers wake up.

yet bob miller runs the publishing company.

ironic, isn’t it? :+)

-bowerbird

With the advent of the kindle, if the publishers want to continue to sell hardbacks over the long term, this kind of thinking would be helpful to them.

Yeah, the music industry used to fear that, too, except now they realize that they have to move on. It takes less than 5 minutes to rip a CD to a computer. When the deed’s done, the owner can certainly sell that CD. It’s fact that it will happen. Music isn’t dying because the mp3 was invented. The record companies are having to restructure. It’s not a bad thing. It’s just different.

If you own a kindle, there’s no option to “rip” your book to the kindle. That makes it much less likely for me to buy a hardcover. I want to be able to read on my kindle also. Given the time that I hang on to my hardcovers, and the number of times I reread them, the industry isn’t losing money on me. What they *are* losing is my patience.

What this move would be is savvy. You’re catering to the newer buyers, the electronic buyers, and AND the die-hard book lovers. The person who bought the hardcover paid 2-3 times the amount of the kindle ebook price. They still only have 2 copies (one hardcover, one kindle), and the money made from that is still more than selling 2 ebooks or 3 paperbacks. Even if the customer does give the hardcover away, where’s the problem? The publisher has made its hardcover profit, and the HC book is out there collecting new fans for the author. Hell, charge me two bucks EXTRA for the special edition hardcover that comes with the download link. I want both!

There’s plenty of waste and fat that could be trimmed in publishing. There’s absolutely zero reason for old techniques, time-wasters, and some of those inflated costs. There’s every reason to try to gain the next generation of customers.

Things are changing. Time for publishing to catch up.

I really wish the current policy of returns didn’t exist, since that would alleviate some of the finance woes. That’s where the bookseller needs to catch up with the times. That type of policy isn’t sustainable (both in terms of our forests and as a business model).

I stand by my suggestion. It’s working for other media moving into the 21st century. Books should give it a go, too.

@project gutenberg – Thanks! So happy now…

http://www.gutenberg.org/etext/1260

As for marketing, most of the marketing was marketing we (the authors – I had a co-author) did ourselves. True, the publisher got the book on the shelf, and that was probably no small feat, but I have trouble seeing this as a substantial outlay. I don’t mean to minimize the work that was done – I know for a fact that the people the publisher employed did more work on the book in terms of hours than I or my co-author. But the main impression I got coming out of the process was how much waste there was.

And of course, after all that, I didn’t get much money for the book, although the fact that I wrote it certainly has been good for my career. But the bottom line is that I am quite sure that the costs involved in producing a book could be reduced substantially with no loss of quality, simply by improving the process. This would also substantially shorten the turn-around time for producing a book once it’s been written – the amount of time we took producing the book was astonishing.

Speaking as a reader, here’s what I value:

- the author getting good compensation for their work
- ready access
- minimal waste
- searchability (for technical books and to a lesser degree fiction)

In the paper world, I don’t get to choose all four of these at once. To get the first, I need to buy the hardcover. But then I have a hardcover, which takes up space, and which I will probably never read again. So it gets tossed, or it sits on a shelf, or it’s given away (which tends to work against the author getting compensation).

And if I buy the hardcover, I’ve used up that much paper for a product that is, from my perspective, essentially ephemeral. Furthermore, a lot of times I buy a technical book hoping it will be useful, then after trying to use it for a while, realize that it’s not suitable, and never finish it. At an average of probably $30 per book, that’s a really expensive mistake, and consequently I don’t buy a lot of technical books, because my presumption is that they are going to suck.

So basically the current book publishing industry is doing nearly everything it can to sabotage its sales to me. The hardcover isn’t what I want, so I have to wait, but by the time the paperback comes out, there’s a good chance I’ll have forgotten about wanting the book. I can’t buy technical books speculatively, because they’re so expensive, so I don’t buy many of them, which means from the publisher’s perspective that they have to charge more to make back their investment.

To give me immediacy without forcing me to take a chance, I’ll get the book out of the library instead of buying it. So now you’ve lost a sale. I would have paid something more than $0 for the book if it’d been available in the form I wanted it, when I wanted it, but because it wasn’t, I paid $0 for it.

Searchability typically just isn’t an option for fiction – nobody bothers to index fiction, for obvious reasons. So if I want to find something in a fictional book, I pretty much have to reread it, or at least skim it very closely hoping to stumble across the passage I’m looking for. This reduces the value of the book to me – there’s no point in keeping a book unless it was truly exceptional.

What all this boils down to is that I don’t buy your argument. First of all, you can produce a book more cheaply than you do. Secondly, if you didn’t put up so many barriers to a successful sale, you’d have more sales, and thus could amortize the cost of producing the book over more customers. If a typical technical book were $5 in its electronic edition, I’d just buy it to see if it was any good. If a typical fiction release came out at hardcover-time for $5 in its electronic edition, I’d buy it instead of going to the library to check it out. I WANT TO PAY for my books. It’s only fair. Make it easy for me, or get used to losing more and more market share to competing products that do.

The price should be what the market should bear — and frankly the market won’t tolerate parity (or anything close) between printed books and ebooks. Having an ebook buyer pay to keep the lights at your warehouse — filled with printed books — is a nice idea from a publishers perspective, but it is a ripoff from a customer’s perspective.

I am not going to pay more for a classified ad to subsidize the printed newspaper.
I am not going to pay more for a yellowpages ad to subsididize the printed phonebook.
I am not going to pay more at Jcrew to subsididize the printed catalog.
I am not going to pay book publishers to have bloated infrastructure, a national sales staff, and an out of date supply-chain.

Pricing justification for ebooks is like the pricing justification for $25 CDs circa 1996.
Lower your prices on ebooks or some other company/industry will take your customers’ time, attention, and $$$ away from you.

As Madison noted, I think the real issue is how (or if) publishers will adapt to this emerging market, changing to a proactive strategy to create and seize opportunities, rather than remain mired in a “we can’t” model. Those that continue to say “we can’t” are going to start losing market share, and as the technology revolution continues – with one major effect being a radical increase in available choices for buyers – they’ll likely eventually go out of business.

Speaking as a reader of ebooks (I own a Kindle), I don’t even look at anything priced above what I’d consider reasonable for a paperback. I’ve bought a few novels at $9.99 from my favorite authors, but those are few and far between. There are a lot of good books out there begging to be read for very reasonable prices, and many public domain books – including many classics – are available for free (or a buck). Put out a Kindle book that’s priced $2 or so below the hardcover price, and you definitely won’t be getting any business from me (and I think I’m pretty typical in that regard).

From my perspective as an author, at the end of the day it boils down to the number typed in the royalty payment, and that’s a factor of sales times the percentage of retail you get as royalty. I’d rather have a modestly-priced ebook that I make a small royalty from and that sells lots of copies, than a high-priced ebook that sells hardly any.

For independent authors, ebooks are a boon: even on a modestly priced ebook, the 35% royalty from Amazon and Mobipocket (among others) isn’t bad at all, and certainly better than what most authors at major houses can expect to receive. Unfortunately, as Jon Merz pointed out at the top of this thread, much of what comes out of the self-published world is garbage. But an increasing number of authors and small press publishers are taking the time and making the effort to produce commercial quality work (both for print and electronic distribution) that’s indistinguishable from what you’d find from the major houses, which – I’m sorry to say from my own reading experience – produce their own share of trash (for which they want you to pay a premium).

And that’s one thing that the electronic book revolution is really doing: giving readers unprecedented choices with unheard-of convenience. I can get a free sample of any of the 230,000+ books in the Kindle store, trying out work by different authors totally risk-free, and buying the books I like – and that are in my price comfort zone – without moving off of the couch. Sure, I like going to bookstores and I still love books, but the only ones I’ve actually bought since I got my Kindle a year ago are specialty books that aren’t available on Kindle, or that had graphics that are best seen (today) in print…

If I buy a hardbound book and it includes a download link, then I have TWO copies of the book, for the price of ONE. So maybe I give away or sell the hardbound copy very cheap. It’s brand new! The publisher’s fear is that this cuts into their sales of the same book. That’s why one purchase gets you one copy.

And here’s why e-book readers should care: The choice of novels to download will only be as good as the writers and publishers make them to be. If you want a three dollar book, we’re going to put in the effort that equals that three dollars. You’ll get what you pay for.

I’m having a hard time following your math. To me, since I get no tangible copy of a bare-bones version of a work, as a reader, I feel I am purchasing less than a paperback. Your pricing example is listed as $24 after a $2 savings on printing costs – I disagree. My thought is more of paperback pricing – $7.99 saving $2 brings the price to $5.99. Savings on distribution, lack of returns, etc. makes that much more feasible.

While I know that this is not completely accurate, I agree with the poster who stated that she would feel ripped off if she paid more for the download than for the paperback. I can get a good used paperback at half off cover at a shop near me. I can also get books lent from friends. Those are ways that I can beat e-book prices. However, those have always been there, and will continue to be. And I still buy books. I know how to use a library. My boyfriend is a frigging librarian! (Yes, it’s very sexy, too!) We both still buy a ton of books.

In the current publishing method, we must assume that the $100K (example number from above) is already being spent on the book, and that formatting the same electronic text before print simply does NOT cost that much more to do. Formatting an e-book text and hiring people to work e-book contract issues does cost money, yes, but it is certainly not the biggest tab a publisher pays. Right now, the ebook is just adding functionality to an existing product and answering consumer demand. It is in a publisher’s best interest to have its books available in various ebook formats and position themselves well in the changing marketplace. Since the work is being done already, publishers would be fools not to use it.

As for the whole copyright expiration argument, if you can’t make money in 75 years after the death of the writer, you made a bad deal. Face it. Besides, not much is completely available as public domain, otherwise I would be able to find PD books by Charlotte Bronte. Still gotta buy those, and she’s been dead a LOOOONG time!

When I moved cross-country, I had to ditch most of my books, and I had a LOT. Even after two years, damned if I can remember whether or not I still have this certain book or that one. I look for one to read it only to realize that I don’t have it anymore. I buy one thinking I’m replacing my old copy, only to realize that I still have my old copy. It’s demoralizing and I feel like an alien in my own abode. It sucks. An e-book reader would eliminate that.

You know what would REALLY make me happy when I buy a hardback? A one-time-use download code in the book that could be linked to my Amazon account so I can put that ebook on a kindle for free. My new copy of Iron Man has a free mp4 movie download credit. Some of my favorite albums come with mp3 copies. Music has cemented emusic into the purchasing requirements of the buyer. This will only continue. Considering the losses and thefts in my life, I’d feel much better knowing that I can not only re-download my music, but also my books.

Someone commented that they wanted to hear from writers on here. Now you’ve got one. I will say this loud and clear: I am completely willing to give free .pdf copies of my work for people to pass around as samples. Do you know why? Because I think like a dandelion and not a lion (Cory Doctorow). I want to grow out of every crack in the human consciousness and be indelible. To do that, I can’t obsess over every single sale.

I found a blog that had some 50 novels on it in one downloadable chunk. I wasn’t interested in most of them, but I read two – the first two Sookie Stackhouse novels by Charlaine Harris. I read them. I loved them. I went out and bought the first 7 paperbacks and the 8th in hardback. I’ve started working on Harris’ other series. She’s made money off me, and will continue to. And since all her Sookie Stackhouse novels have been on the NYT bestseller list constantly for the past 6 months, I’d say she ain’t being hurt too bad by some jerk posting her work for free on the web. It bought her a new fan. I’ve suggested her to 7 girlfriends in the past 3 months who have gone on to do EXACTLY what I did – buy all 8 novels. That’s 8 women buying 7 paperbacks and 1 hardback each. That’s $45 in paperback royalties (at $.80/paperback, kind of industry standardish for mass-market) and and additional $16 for hardback (at $2/hardback, a bit lowish for someone of her standing). That’s not counting when we rate the books on Virtual bookshelf, post about them on Facebook, or suggest them to other pals. The jerk who had the free .pdf’s available on the blog just made Charlaine Harris $50, her agent $10, the bookstores probably a few hundred dollars, and the publishers didn’t come out so bad, either.

This is not the only example from my life that has led me to believe that “free” isn’t necessarily free, but “free” as bait works like a charm!

Today: Godiva chocolate store sends me emails with voucher for free truffles. I go in to try them, I spend more than the free. Always. It’s Godiva chocolate! Can’t stop!

My favorite restaurant sends me free birthday dinner vouchers. I can go in by myself, but I don’t. I take friends who spend money. And I buy drinks, too, not covered under the voucher.

A certain well-known restaurant sent free dinner cards out for their new menu. There were no restrictions. You could come in, get a free $22 NY Strip and a water, stiff the server for a tip, and not pay a dime. I’m a server there. Know what? I made MORE money in the middle of the economic downturn. We’re the only restaurant locally that isn’t down 40% or more. We’re UP in sales for the year! And no one ever stiffed me. We had a cheapskate or two, sure. But those people are coming back for more in a time when fewer people are eating out.

Free can work when done well. And e-books need to be done well.

If publishers want to gripe about not wanting to give books away for free, then it’s time the publishers’ interns bitched about not getting paid. Fair is fair. You don’t want to give for free? Then don’t expect free. The interns do expect something else for working for free – word of mouth, and maybe a sale in the form of a job. Maybe publishers ought to start thinking like interns again.

The cost of the physical book goes far beyond your $2 paper/printing/binding cost. There is the cost of distribution, warehousing, returns and pulping.

You were the one who pointed out that the industry was strangling on the return system. How you can make an argument now for a $2 difference in price between the physical book and the electronic book astounds me.

I am not so sure you can just banish what you’re calling ‘scarcity economics’ onto the rubbish heap of history.

Let’s look at your assumption again. $100k produce the book. We can stay with you infinite number of customers, but there is still the question of *when* these customers will appear. What if they all wait 12 years, then start buying like mad?

Remember that every $100k production effort requires some speculative capital. Someone puts up the original $100k, whether in sweat or in cold hard cash. Every minute/dollar spent producing the book is a minute/dollar *not* spent persuing other profitable activities. The investor will need to have some sort of repayment schedule. If the book fails to earn out the $100k investment within 3 years, should the investor write it off as a loss? What happens if that book sells $500k in the 4th year? What if it waits 10 years?

We also know that some books will be stinkers – they will NEVER earn back their production costs. How do you divide that by infinity?

Those who would discard scarcity economics never seem to think of these things. They also don’t seem to understand that this is an attention market we’re talking about, and our attention is not infinite. Sure, I could write a book and price it ‘so low it feels like stealing’ – and people would brag about it – but it wouldn’t scale. If all authors priced their works equally low, the amount of attention in the market would not simply expand to infinity. What would really happen is, all authors would be lowering their labor rate. And only the best of the bestselling authors would be able to continue being authors – the rest would have to get other jobs. We’d end up with a book market consisting of only the Steven King, Michael Crichton, and Dan Brown type authors found at the supermarket.

The infinite market concept is flawed in another way was well – the lifespan of the copyright. Once copyright expires, the work is public domain and profits are slashed deeply – to zero in a world of electronic distribution.

To me, those who wish to completely discard ‘scarcity economics’ seem to have divide by zero errors throughout their theories. I don’t mean to be harsh about this. But there are realities to be considered, as long as the people who produce the works still have to pay real money to feed, clothe, and house themselves and their families.

You’re kidding, right? You know what happens to ‘real’ books? They get passed around. My neighbor bought Eat Pray Love and it went through 4 other women before it came to my hands, and I’ve since passed it on. What’s the return on that?

The Kindle book is a convenient buy. And the cheaper the book is, the more likely I am to buy it. Random House did a great service to their readers/authors by offering free Kindle books by best selling authors. I downloaded them all, and now I will buy 3 books by authors I probably wouldn’t have read had it not been for the ‘give aways.’

As one poster on our Kindle Price discussion board mentioned; “It’ like renting a movie @ Block Buster.”

If it’s a great movie, you go out and buy it.

I think Bradley Robb kicked the marketing genius of Kindle out of the publishing park.

Yet editors and publishers are whining ‘we can’t we can’t we can’t’ instead of asking ‘how can we’ and creating massive opportunity for growth.

Publishers are collapsing like Oprah Winfrey’s willpower around red velvet cake.

There is great opportunity to be had for those that care more about finding readers for their authors than lining their pockets with money.

If a publisher truly cares about their author, truly cares about readers (consumers), it will show, and the consumers will respond.

2009/2010 will mark the rising of the consumer. Consumers are fed up with greed and excuses made for the greed. Consumers want to count, and those that compaines that don’t listen to what consumers are asking for, will find themselves putting in resumes at those companies that actually care enough to listen.

Also there is a question of warehousing / distribution as an overhead of a printed copy as well as an additional overhead in the ordering process (i.e. physically going to get a book from inventory, keying in data) as well as bookstore returns and subsequent pulping. All these costs then need to factored based on a finite print run – there are no stock issues in digital (apart from hosting/delivery – but that’s really quite cheap, $0.180 per GB on Amazon AWS).

And one final point, although slightly glib, music albums can cost huge amounts of money to produce but the digital singles are still only 99c each.

Publishers need to start seeing themselves as brands. They need to find efficient ways to filter the slushpiles (and cut out the agents), find new and talented authors, and start acting like the marketers that they really are.

yes there are costs associated with ebook production, but these costs are fixed, whereas the inventory that results is not. So, as Bradley says, the focus needs to be on finding ways to enlarge the audience and serve craploads of books.

However, Bob, you’re still getting hung up on scarcity economics. When the total cost to develop and publish a book is viewed as X, and then X is divided down to equal out the entire first run of the book, then yes, you’re going to get a solid definite number.

For the sake of the argument, let’s assume every book costs $100,000 to produce with all the back-end expenses (save actual printing) factored in. If the first run is a modest 10,000 books, that makes the break even price $10+2, or $12. Using that math to price the eBook at $10 would make some sense.

However, it would be misguided. Why? Because for an eBook, there size of the print run is infinite. There is no sense of scarcity in the supply and demand equation. Any number divided by infinity is the closest number to zero possible.

The argument might seem academic, but it’s not. True, there are not an infinite number of potential shoppers for any single eBook. The actual number is one which is conservatively measured in the millions. Think, for instance, the number of people with a smart phone in their pocket right now.

Thus, the question isn’t how much to discount the price from the physical and scarce commodity, but how low to price the book to encourage the potential audience of millions to make the purchase. In this respect, you want to set a price that’s low enough where it almost feels like the customer is stealing – something so low that they’ll brag about it. The iphone’s App Store is a prime example of how to create a paid-viral success story.

And eBook’s have the ultimate potential to become viral products. They can exist indefinitely on a server, and with a low price-barrier, they can be had instantly. If I see an author on the Daily Show, and he mentions I can grab his book for something like $3 (or better yet, $2.99) without having to get off the couch, guess who’s reaching for his iphone?

Or to put it another way – a low price on an eBook, one which is easy to purchase – turns a book into an impulse buy.

Reading ebooks is a habit forming act. You start with just one, catching up on it in the elevator, while out at a restaurant, in the subway. Before you know it, you’re reading killing a book a week or more. When the spending bar is set low enough, you’re suddenly buying more, not less. When your potential audience is measured in millions, and not thousands, the numbers are favorable for both consumer and publisher.

Stop thinking of eBooks as a digital version of a physical and scarce produce, and instead think of them as potentially viral creations. Create the eBook market before someone else does it for you.

Look at it from a consumer scenario –

“Whatcha looking at on your phone?”

“Reading this book about Mark Twain.”

“Any good?”

“Yeah, it’s pretty good, you should check it out.”

“Great, let me borrow your phone when you’re done.”

“Dude, get your own copy, it’s just three bucks.”

On the other hand, true, you create a new share for Amazon or whoever the ebook seller is. But whatever that amount is, it is far, far, far smaller than all the other stuff above *beyond* manufacturing costs.

And Joan: Amazon sells their products through affiliate commission. I have a few friends who are super affiliates and they can literally take you product (book, diaper, tire iron, whatever) and put it on the computers of EVERY SINGLE PERSON on the internet without spamming. They do a LOT of work to make that happen and they spend a lot of money to set up each campaign. An affiliate commission is usually around 50%. Amazon may be less, maybe more. But it’s worth it to sell more of your product and get it out in front of more people. So if Amazon is selling an ebook for $9.99, assume that the publisher or creator is only receiving around $5 for it. Factor that into your equation and start the deductions.

Bottom line: Amazon and other affiliates want to make at least a fiver on their sales because that helps process their transactions.

So everyone is getting less in this process. It’s just a matter of making the adjustment to the digital world. Maybe books that have already been in (analog) print could be cheaper because the format has already been paid for by hard sales of the physical product. But new books, especially those ONLY released in digital format, will cost more. That’s just the way it is. Start charging nothing for a digital book and you can say you lived to see the death of the Great American Novel.

Either way, good information or entertainment is worth paying for, imo.

Robert Wahl

Haste yee back

But let’s get real for a moment. Consider the price difference between a hardback and a trade paperback. The content is the same, the editing, formatting, etc. is the same. And the cost of the binding is maybe another buck or two. Clearly hardback pricing is designed to segment the market, attracting those who are willing to pay extra to get the book early, as well as librariies who buy mostly hardbacks and those for whom a larger font size is important. eBook pricing in the range of the hardback price can’t be justified as recovering costs, it’s simply a matter of not wanting to compete with hardback prices before the paperback version comes out. I don’t have a problem with publishers charging what they have to to recover their costs–and a pricing model that segments the market can be beneficial for everyone. Still, $20 for an eBook needs to be seen as protection for the hardback, not a cost recovery for the eBook.

Rob Preece
Publisher, http://www.BooksForABuck.com

Mark G–I’m a writer, and I’ve spent a few years penning a few novels, still unpubbed as of yet, but when/if it happens, I’d love to say, “yeah, but I spent __ years penning these novels, doesn’t that count for something?

Well, in my head I’d say yes. BUT, a writer goes through all that blood, sweat, and tears to get to publication, to hone their craft…yadda yadda. It’s just all part of the process. If all is done well, then he/she will get compensated through sales. If not…..well, I don’t wanna go there quite yet. **smile**

Great post, very helpful.