quick sketch on the Amazon vs Macmillan weekend theatre

So…. did something happen over the weekend in publishing? Oh. And. My.

Friday evening, John Scalzi mentioned someone had expressed annoyance that his books weren’t available via Amazon. Sure enough, when he checked, it turned out to be true. In the time it takes to tweet, many other authors of Macmillan imprints discovered the same thing. Another database glitch some wondered? (Like the GLBT one from last year.)

VentureBeat and NYT posted pre-emptive news bites, which made it sound as if the e-book pricing issue was at the root of the whole thing.

Discussion broke out over the blog-verse and the tweet-verse. You can see initial thoughts from my clients Jay Lake and Laura Anne Gilman, who summed it up with “This isn’t about pricing; it’s about control.” The former’s Tor titles were among those pulled and his on-going commentary throughout the weekend looks deeply inside the author perspective. In fact, among my clients there were over a dozen books missing from various imprints of Macmillan including the very recently released Short Squeeze [B&N.com, Powell’s] by Chris Knopf.

On Saturday evening, John Sargent, CEO of Macmillan, released a statement confirming that he had offered Amazon the agency model pricing for e-books in an attempt to look ahead to how publishers would “insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.”

De-listing Macmillan’s titles was Amazon’s definition of fighting back. Among other things, Amazon also remotely yanked preview chapters of Macmillan titles from Kindles. And it wasn’t just e-books they took out of the sandbox. It was print and audio formats too.

Sunday brought Amazon’s response on the Kindle forum, which generated a number of comments in the company’s defense as they were forced to fold on their position.

Here’s some other links to articles to read:

Jay Lake’s thoughts after his weekend-long series of posts on the topic.
This very long post by Tobias Buckell which explains a whole lot
A solid overview of the issues from Scott Westerfeld
John Scalzi’s morning-after post

I have a lot of different thoughts here — as a reader/consumer… as an agent… And, as of this posting — my clients’ titles are still not listed as available. This certainly isn’t helping me see Amazon as a fair player in this scenario. Agents have been struggling with publishers too, advocating for the authors to be fairly compensated. This is still on-going, and, yes, with Macmillan too.

Do I want readers to be able to afford books? Obviously, yes. As a reader, I want to obtain books, and as an agent, I want my authors’ books obtained. And most of all read. What’s a fair price? Everyone seems to have a different opinion about that. What’s yours? How much do you think is fair to charge for an e-book and what share of that do you think the author should get? Any other opinions about all this (from either readers, writers, or those who are both)?

57 responses to “quick sketch on the Amazon vs Macmillan weekend theatre

  1. my .02 (minus your 15%)
    I noted with some amusement that even as Amazon was bleating about “must price ebooks at $9.99!” the ebook editions of the entire Retrievers series at BN.com had been reduced to match the new mass market release prices — $7.99 (and 20% off if you’re a B&N member).
    I see e-book pricing as a sliding scale — the things that people want to buy Right Now Right Away will cost more, with lower prices as an inducement to try new things, etc. IOW, a free market economy. I’d like to think I as writer will be fairly compensated in that economy… *is wishful but not optimistic*
    Me-as-reader is willing to pay $15 for a brand-new book, if I had access to an affordable e-reader that handled ALL formats and could buy from ALL retailers… [and had bookmark and notation capabilities]. That’s what’s holding me, back, not the prices of the books themselves.

  2. Book Pricing
    I’m sorry. I just can’t see paying 15.00 for an e-book. I think it’s ridiculous, especially if the publisher doesn’t have to pay for binding and printing, etc.

    • Re: Book Pricing
      I know eBooks seem like this great, low-cost alternative and yes, the paper costs go away. But the *other* costs don’t and some even go up.
      The author, editors (copy editor, proofreader, main editor) have to be paid. Those who design the cover art and the interior of the book (font, layout) have to be paid. The person who converts it to various formats and makes sure it works on Kindle, Reader, etc has to be paid. The retailer of the eBooks has to be paid their share (whether that’s Amazon, B&N, etc).
      I used to be an intern at a publishing company (B2B, not literary) and I can tell you that even with our content and books being online as well as in print, we still had to pay a lot of people for what seemed like low-cost content. We had to pay the website folks, me (who proofread, researched, fact-checked, took surveys, etc, etc, etc), the writers, etc. So, there is more of a cost to ebooks than you might think. And I was the cheapie, 10 bucks an hour version of other folks who, in a bigger company, might get paid thousands of dollars per project.
      It can cost A LOT to finance one ebook, which means that if ebooks are to be viable, the publisher has to – at the very least – recoup those expenses and turn a profit that is worth their while.
      If a book can be introduced at 15.99 for those who are willing and able to purchase it at that price, the publisher can turn a profit sooner. Which means they can discount those books sooner. Just like with other nifty things that come out with a high price and go down.
      Also, keep in mind that flexible pricing for publishers also means that they can make some books CHEAPER than 9.99 if they can make other books higher. It means they’ll be able to offer discounts, reduced pricing.
      So, yeah, as a consumer I wouldn’t buy an eBook at 15.99, either. But I would buy one discounted to a more acceptable price. And if companies are stuck at the 9.99 mark, they won’t be able to do that.
      So keep that in mind. Also keep in mind that right now the market is still shaping up. If the marketplace can be allowed to function without Amazon throwing weight around, costs may well come down as publishers are able to make more profit without jacking up prices.

      • Re: Book Pricing
        Having spent time in the business myself, I’m not sure this model of yours works. Don’t most of those people you list have to be paid for their work on the print versions as well? And are the digital-only folks that much more expensive than their counterparts down in bindery who also need to get paid?
        In the magazine business, where I put in my time, a ton of good magazines have gone under or gone online-only, solely because paper and printing costs are astronomical. Admittedly magazines can pay more for higher print quality than books (color printing, slightly better grades of paper than paperback pulp), but the sheer cost of dead trees was so high that it alone broke our back.

  3. I’m not convinced it’s over, either. The “capitulation letter” reeks of something waiting to be disavowed (and someone waiting to be disembowled, possibly not figuratively), and the listings have not yet been restored.

  4. As a reader… I like my ebooks! But. Most of my ebooks are from Project Gutenberg. So any other ebooks have to compete with vintage Andre Norton, H. Beam Piper, and other classics.
    eBooks have a major flaw — they’re frequently cumbersome to transfer from device to device, and you can’t read it and then share it with your spouse or partner easily. My books are on my phone! I’m not parting with that! (If we get a family iPad, that might change.) And you really can’t loan them to a friend!
    So while they’re convenient, ebooks need to be far cheaper than their paper counterparts for me to think they’re a good deal. I’ve paid $5 for short-stories from an author I know and already love, but I got it direct from the author. If I’m trying out a new author? $3.99 is probably as high as I’ll be willing to spring for. (And the lower the price, the more likely I’ll grab it if it looks at all like I’d be interested in the plot.)
    The “one person, one book” model is just too restrictive for me to be willing to pay more at this time. If we had a family iPad that we could load books onto? Maybe a dollar or two more. The iPad would have enough other uses that taking it out of commission for everyone, to hide it in the bathroom for reading, would be annoying — and getting more iPads puts one back to the “you can’t read it and then easily hand it over to the spouse” issue. (Plus, even the low-end ones are gonna be $500!)
    As a someday author-I-hope… I’d rather make it up in the volume, if possible, than with a high starting price. I’m pondering things like retaining non-exclusive electronic rights, activating X months/year after acceptance of contract. (Where X is a time that gives the publisher good First North American rights; I don’t want to be unreasonable here.) And not being on the Kindle with the current contract or anything much similar to it. It’s a control issue. I don’t like Amazon’s current contract. (Ha, they did fold. Amazon, you are not Apple iTunes. Neener.)

    • Oh, and as for the share the author gets of that $3.99? Most of it. O;D

      • Gah, my HTML skills are going.
        And here, because I realized why I think of that price after I wrote it on some other journals:
        At the moment, ebooks seem like a spin-off from all the work that’s going to be done anyway for a physical book, so the price for them should be commiserate with the minimal different work. They’re not the Finished Product; that’s the physical book, and the physical book is expected to do the lion’s share of paying for it. eBooks are gravy, and people getting gravy shouldn’t be greedy for it.
        It is possible that publishers secretly think ebooks are the way of the future, and thus it behooves them to set price expectations at a level that will pay for an ebook as the Finished Product! (With print books as the quaint spin-off.) But until consumers also see it that way… I don’t think high prices are going to sell as well as lower “impulse buy” ones.

  5. I’m a bad person to ask, since I’m actually willing to buy hard cover books from authors I’ve never heard of before, if the first few pages grab me. I’ll also pick up hard covers of authors I love.
    So I’m generally willing to pay up ~25-30 bucks for instant gratification.
    But I’m also a Luddite when it comes to books and actually like the physical paper versions.

  6. I’m hooked on my Sony e-Reader–and I shop around for the best price. I believe e-book pricing should be close to that of the available print copies or slightly cheaper.
    If the print copy is cheaper, that’s what I’ll buy–which usually means delayed gratification for me. Sometimes that will turn me off buying a book at all–or I’ll “wish list” it and check again in a few months.
    If it’s a new hardback release that I really want, I’ll either pony up the hardback price for the actual print edition or wait for a cheaper release. Usually I buy hardbacks of series that I really enjoy, but not always.
    I read the first two Melusine books (Sarah Monette) on the e-reader. But I don’t want to get the hard copy version when the first 2 books are e-books. And I don’t want to pay $17-$25 for the e-copy of the 3rd book. I’ve elected to wait until the less expensive electronic release that will hopefully coincide with the release of the paperback. The *long* delay before the price dropped has seemed excessive, but that’s my choice. And with all that, I very much want the author to get her cut from my purchase. I just don’t want to pay $15+ for an ebook I can’t loan out.
    What I’ve liked ebooks for best so far is getting into new authors that I’m just trying out and for instant gratification on sequels of old books I’ve just discovered.

  7. Wow. I missed a lot being snowed in this weekend. Thanks for the links to concise reviews of the situation.

  8. Amazon needs to look at what made the iTunes Store successful: the price points there, even for a whole album, are for the most part lower than the pricing of the physical versions. It makes no sense to me to spend more on an eBook than I would for the hard copy.
    If I had an e-reader (which I don’t, and don’t plan to … I’m kind of a Luddite that way), I would only buy e-books that were cheaper than hard copies *unless* the book were difficult or impossible to find in hard copy. If a book were e-released only, or released in the e-version a month or two ahead of the hard copy (which is what is happening more and more with albums, the digital release comes at least a month before the CD release), I would be happy to pay more for instant gratification.
    But mainly, my message to the publishing world is this: Guys, the music industry has been dealing with this digital-vs-physical kerfuffle far longer than you have. Go see how the labels (especially the indies) have dealt with iTunes and e-music and Rhapsody and the like, and learn from their mistakes and best practices, and make note of what open issues remain. It’d really save y’all a LOT of pain.

  9. I think that if it was up to publishers, they’d screw the whole ebook thing up. I really do. Not out of spite, but out of incompetence. I think they’ll price themselves out.
    $7 for a paperback
    $15 for an ebook
    $20 for a hardcover
    What? Here’s the problem, consumers know that ebooks don’t cost anything to create beyond the initial design/layout. It has no physical substance, ergo no manufacturing costs. We KNOW this. So charging more for it than you’d charge for an actual physical copy will make people laugh, and they’re not going to go for it. The only advantage is if it’s easy to get Right Now(tm). Because you also can’t share them or easily transfer them elsewhere. You’re getting a pretty restricted product with less accepted rights than before, for a greater price. What’s the selling point there? Why does the Kindle edition cost $10 to the paperback’s $8? Presumably early access and convenience. You can only charge so much of a convenience fee before it’s no longer convenient.
    Left on their own, I think publishers will try to charge too much, ebooks will fail, and they’ll claim it was just some teenager craze. Like pet rocks and the Intertubes.
    Maybe Amazon’s closed system isn’t ideal, either. But I think at least they understand the pricing issue. And I don’t think consumers have a chance of ever getting lower prices on ebooks unless someone like Amazon or Apple can throw their weight around.
    As for profits… I don’t know what percentage an author currently gets on sales, but I’m sure it’s not enough. And when you remove manufacturing costs from the equation, that means the publishing house it putting even less into making a product, so author cut should be able to go up. The money the house isn’t spending on paper it is presumably now netting as profit for itself and not sharing with the author. That’s bogus. They were already making enough of a share to keep themselves largely in business.
    Let’s say ebooks and paperbacks get the same pricing. So I can pay $7 for a book or $7 for an ebook. Since the ebook costs the publisher nothing to reproduce and the distributor a little harddrive space to store bandwidth to transfer, almost all of that $7 has got to be profit. I would be surprised if they couldn’t split the profits 50/50 on ebooks and still not be making money on the sale. Someone has relevant numbers somewhere. I’d love to see it worked up. Plus, you could make a whole campaign out of how you’re supporting the authors with such a scheme, instead of resigning them to ramen. In and of itself, it would be Feel Good marketing.
    I think, just fundamentally, I don’t trust entrenched Old White Men publishing Management to “get” a new media market. Much like music didn’t get iTunes and didn’t want to adapt. Amazon might be totally mercenary in their tactics and clearly all about making themselves rich, but I think they’re also more likely to understand their market.

    • I really can’t see paying more for an e-reader version of any book than I would for a paperback copy of the same book. Not even to have it Right Now. In fact, because I know the incremental costs of an e-book are less for the publisher/distributor, I’d say knock a dollar off the cover price just to start with.
      Also, I’d be willing to pay more for an e-book that I can download onto my hard drive and keep forever and ever than I would for an e-book that Amazon (or Apple, or whoever) will let me read when they feel like it. It’s one of the reasons I buy my music from Amazon rather than Apple — Apple tries to restrict which devices I can use to listen to my music through DRM, while I can play an MP3 file from Amazon on my netbook, my laptop, my desktop, my iPod, whatever.
      And finally, I’d pay more for a device-independent e-book than I would for one that will only work on the Kindle or the iPad or whatever. I’m from the generation that’s already had to re-buy albums I originally owned on vinyl in order to play them on my CD player, and movies that went from VHS to DVD and now to Blu-Ray. I don’t want to have to re-buy all of my favorite books when we shift to whatever comes after the Kindle/iPad.
      So I guess my pricing model would be:
      $7 for a DRM-free, device-independent e-book
      -$2 for device dependent files
      -$2 for files with DRM/files that I don’t own

    • Baen has been selling ebook versions of their print line for years now — at prices reflecting the reduced overhead. http://www.baen.com
      Publishers aren’t stupid. There is a baseline cost for producing a decent book without regard to the material costs, and it would be insane for them to *not* try to recoup those baseline costs.
      At the same time, if consumers are willing to value instant gratification on a par with their fair use rights, it’s the people who under-value their rights that I’m going to have the biggest issue with. I may boycott the publishers who promote that kind of idiocy, but the biggest blame will lie with ignorant consumers.

  10. I suspect there is a lot more at work than simply control and pricing. The fact that cheaper e-books is a boon to the hardware manufacturer is not in dispute. What is at issue is who will have the dominant stats on ownership.
    Historically, the trend has favored the first to establish a standard model in public computing: The PC, TCP/IP, MS Office, Amazon, eBay, payPal, and Google do have competition, but, and this is key: the competition cannot achieve dominance without commoditizing the product. You can’t make a good profit anymore as an ISP or a PC manufacturer, because your product is now a commodity, not a value-added option. AOL is nowhere and IBM dropped PCs years ago.
    Although there is very good reason to believe that there is more than enough market-space for both the iPad and the Kindle, the iPod and the iPhone have established a standard in human interface, with arguably a much more natural interface than comparable devices*. Apple’s Human Interface Guidelines have always been one advantage they have over the competition, possibly their greatest advantage. I would argue that Apple has positioned itself as the de-facto standard for devices, just as Google is the de-facto standard for search services.
    So, it’s definitely not about pricing. From iTunes’ current competition, you can see that price-point isn’t really the customer’s deciding factor. It’s all about the interface, and Apple works very hard to make sure the customer believes that “it just works”. Instead, I think this round of shenanigans is damage control. Since there will be no exclusive deals, all Amazon has to offer now is lower prices. Bezos et al know this and they know they can do nothing about it.
    The real bleeding wound for Amazon in the e-Book arena would be if the iBookstore got the $10 price point and Amazon was stuck with the $13-15 price point OR HIGHER. The history of iTunes shows this is quite possible. Or, more realistically, if the iBookstore got the $13-15 price point without DRM and the $10 price point with DRM. Better to level the playing field NOW, and that means limiting the price point to $15, which I hear in the news is Apple’s negotiating position.
    Amazon has two to three months to offload their Kindle inventory before they can afford to compete with Apple with some kind of Kindle-and-service with new features. They’re looking for any toehold fast, so when the opportunity came to experiment over the weekend with the Tor imprint (and I’ll go out on a limb and say you probably can’t find a more technology-savvy, and consequently DRM-hating audience than the Tor readership), they jumped at it, knowing they would be folding dramatically mid-weekend, and thereby assuaging authors, publishers, and customers while simultaneously fixing the top e-book price at $15 until they can assess the impact of the iPad.
    Personally, I think they’re overreacting, but isn’t everyone?
    *Full disclosure, I bought a small amount of Apple stock in 1998 and, yes, I’m holding on to it.

    • Kindle does still have eInk going for it, for those people who are bothered by backlit screens. Of course, they have to compete with the Nook and the Sony ereader, on that front.

      • True enough. Perhaps the kindle is the “tickle-me-elmo” of its type. Very popular for a while, destined to languish without disappearing.
        What strikes me as interesting, though, is that Amazon is essentially a technology company. You could shave the digital veneer off their distribution network and replace it with some other company’s storage-and-retrieval network.
        But with the Kindle, it tried to pull that distribution into the network where it is in fact, not very well at home, nor particularly distinguished. And with DRM issues, they’re just another proprietary format trap. Macmillan has nothing to lose from holding steady. In the short run, this is a bad situation, but I think it’s pretty obvious that Amazon needs Tor more than Macmillan needs Amazon.
        If Amazon keeps this up with more than one of the major publishers for any length of time, they lose their edge, which is the one-stop-shopping experience.

  11. As a reader and consumer, eBooks are not yet something I buy at all because I don’t have a reader and reading on my computer would make my eyeballs burn out. $15.99 seems really pricey to me now and I definitely wouldn’t buy a book at that cost.
    But I know that it will change when a reader that I can afford and that will last for more than twenty minutes (the technical issues with all the current readers on the markets has kept me away) comes out. When that happens, I’ll probably have a higher set point for what I’m willing to buy, provided I’m not broke.
    I can definitely see someone saying “hey, 24.99 hardcover versus 15.99 ebook!”
    What I don’t understand is why publishing companies don’t sweeten the pot for consumers to take the sting out of what might seem too high a price for an eBook. Do a sort of hardcover/paperback thing. The first release could contain “deleted scenes” (I love reading those the few times authors have posted them on blogs), author interviews, really great cover art, maybe even a peak at a sequel, and would cost more. And then later, release a basic version that’s just the text of the book, but costs less.
    I don’t think the extra content would cost the publisher THAT much more and would probably have a higher profit margin, and the stripped down version would allow for people who are shy about the price to buy as well.

  12. I can’t see paying $15 for an ebook, no matter how desperate I am to read an author’s next book. And for new authors I haven’t tried yet? Forget it. In order for me to make the jump to ebooks, they would have to be significantly, consistently cheaper than mass-market paperbacks. Until then, I’ll stick with my paper books.
    While I know that there are costs associated with producing ebook versions of paper books, they seem to be less significant, and ideally I’d like to see a higher percentage of the sale price going to the author than what they get for paper books. While that wouldn’t be what made me switch to ebooks if I ever did, it would make me feel better about giving up the paper versions.

  13. I’m sorry, Macmillan has zero credibility in this ‘game’.
    Their CEO has clearly stated only a customer who puts on his coat and drives out to the bookstore is one he wants to deal with (so what’s the big whiny shit about Amazon yanking print editions, we aren’t supposed to buy online anyway according to him).
    A company that plays these stupid pricing games (e-versions of mmp at double the price of the print version, etc.) in order to protect an obsolete publishing model is not going to get *any* money from me.
    Everybody loses (well, readers and authors, but who cares about them anyway, certainly not Macmillan).
    I have absolutely no doubt that Amazon is trying to get the best deal for themselves and future market domination and I don’t buy from them at all because I don’t like their business practices (Createspace, etc). and because monopolies are bad for customers.
    Amazon isn’t in this for the readers, but Macmillan is the real problem in this scenario with their insistence on paper and attempts to eradicate e-books.
    Price binding (tying?) is bad for consumers in any industry and I don’t believe for a nano-second that Macmillan has any interest in providing e-content to readers, tiered pricing structure or otherwise.

    • Where is Macmillan insisting on paper?
      They want to sell the ebook of a harcover edition for $15. The hardcover is $26. You’re getting an $11 discount off the cover price, or a $3 discount off the usual “discounted” hardcover price.
      They want to then reduce the price gradually, as the cheaper print editions come out. The plan appears to be that when the $8 paperback is available, the ebook will be less than $8, apparently about $6.
      Where’s the problem? Where’s the ebook hate? Macmillan is passing along the savings of PPB and transport to you, the customer. They’re taking none of it for themselves. NONE. ZERO. NADA.
      That doesn’t read like ebook hate to me. That reads like reader-love, frankly.

      • If I believed that was really what they plan to do, I might consider it ‘reader-love’, but I don’t.
        I look at their public statements and the past behavior to form my opinion of their credibility.
        They refuse to sell e-books to libraries.
        They charge double the cover price for e-books of mmps.
        They pay their authors lower royalties on e-books than other big publishers.
        Their CEO has publicly expressed disdain for e-books.
        Maybe the leopard will change its spots. I don’t believe it for a second.

  14. Good discussion, thanks.
    IMO, people concerned about ebook prices should be more worried about why authors don’t get a bigger royalty on publishers’ electronic sales.
    Didn’t Macmillan rewrite its contracts last October to decrease ebook royalties to 20% of net? Isn’t industry standard 25%? Where’s the outrage over that?
    Here’s an optimistic comment: http://bit.ly/9bmD7a.

  15. I’m not sure I’d pay $15 for many ebooks.
    But? I’d much rather Amazon offer me an ebook for $15, which I can then decide to buy or not, than to not let me buy the book at all because they want to set prices for someone else’s products.
    I’m not pro-Macmillan, I’m anti-Amazon. And what this has showed me very clearly is that I should not under any circumstances get a Kindle. If Amazon is going to refuse to carry books because the price is higher than they think I’ll pay? Sorry, that’s supposed to be my decision. What’s the use of an ebook reader whose storefront automatically excludes books I want because it’s decided I wouldn’t want them anyway?
    I don’t like censorship for “my own good” even if it’s for financial reasons rather than “moral” ones. Screw Amazon. I’ll get an iPad.

  16. My take on what happened?
    Macmillan: Hi, Amazon! We’ve got this new pricing system we want to put into place. We had some success with other distributors, so we’re bringing it to you, too. Here’s our proposal. Let us know how you feel about it.
    Wait, what?
    Negotiations. They’re this useful technique for compromising. Maybe negotiations happened, but from what I saw, this whole thing went from proposal to smash without anything in between.
    It’s not that I’m totally sympathetic with Macmillan’s pricing scheme, or that I don’t understand Amazon’s disgruntlement about being outflanked, esp. with the whole Apple thing adding to the mix. It’s Amazon’s tactics here. Who in the heck thought it was a good idea to throw the equivalent of a temper tantrum over this proposal without any clear showing of negotiations?
    I have no idea what is up with Amazon’s PR department, but man, they’ve made major missteps with the public lately. And whoever wrote that line about Macmillan having a monopoly over their own titles seriously needs to be laughed out of the office.
    Classy gets better PR. Better PR means a better chance at winning the public. So far, Amazon’s not succeeding in that department.

  17. I am still using my ten year old orphaned Rocket eBook Pros.
    I did buy some DRMed titles by my favorite authors before Gemstar pulled the plug, but since then I’ve bought titles from Fictionwise and Baen, and lots of free out of copyright books. (Mostly from Munsey’s because they have the Rocket format available and it’s easier than doing the conversion myself.)
    I also use them when I beta read manuscripts for people.
    I would like to find a new ebook reader before my Rockets die, but so far I haven’t liked anything as well.

  18. I’m still waiting for the media (by which, I guess, I mean Brad Stone and Motoko Rich of the NYT) to note that Amazon hasn’t actually put the titles back yet…
    As for pricing, I’m certainly happy to pay $15 for a Baen eARC of a book I really want. So I think it’s emminently reasonable for Macmillan (esp. Tor) to have the flexibility to do the same — $15 for an ebook day-and-date with print release, or even better in advance.
    What I really want, as a print reader, is to be able to pay for both the ebook in advance and the print book wen it comes out, without paying through the nose. Since for some Baen books (if I’ min rabid fanboy mode), I’ll fork over $15 for the ebook, and then another — what-is-it? $20 at a discount? — for the hardcover. So I’d really like to be able to roll that together and pay maybe $30 for both. I don’t really see that as likely to happen, but it is what I want, since you asked…
    How much should the author get? Gawsh, as a reader, I have almost no idea. Probably it needs to be a combination of a fixed value and a percentage, because variable pricing is somewhat of a gamechanger. And a lot depends on volume, too…

  19. As far as I’m concerned, the fair price for an ebook is the price of the currently-available edition, minus the cost of PPB and shipping, where the cost of PPB and transport comes out of the publisher’s share.
    The publisher’s share of a $25.95 hardcover is about $13. Take off the PPB and transport, and the publisher’s share is about $10. That’s pretty close to what Macmillan stands to make on an ebook with a $15 list price and a 70% portion of the income.
    Now, a bookseller might complain that they’re only getting $5 rather than $13 for their share. OTOH, they don’t have the expense of warehousing, fulfillment overhead, and shipping, either.
    An author would complain because their royalty is based on the cover price. They might reasonably ask to be paid $2.50 per unit of the ebook, regardless of price, just as they are paid for the hardcover.
    So…I’d say a truly fair price for a hardcover as an ebook is about $18. That allows everyone–author, publisher, bookseller–to make the same money they’ve been making all along, and passes 100% of savings on to the consumer.
    People who want a lower price are asking for that price at the expense of others.

    • You are missing that hardcovers have a resale value that ebooks don’t. Certain of those books increase in value over time.
      “An unsigned first edition copy of “Harry Potter and the Chamber of Secrets” may be worth between £400 and £600. A signed copy may be worth £1,500 ”
      Granted, this isn’t the case for most books. But when you’re making the original purchase, you don’t know that.

  20. My take is I’m torn.
    Amazon is right that prices on eBooks need to be lower, possibly vastly lower, to give them a real chance to take off. Publishers generally have their heads up their asses on this point.
    But I think Macmillan is right, too, in that the publishers should be free to set their prices. A competitive marketplace is going to reveal the flaw or lack thereof in the prices they choose to set.
    I think most parties are deeply wrongheaded as far as the whole DRM thing goes, but that’s a big kettle of fish and I’m just looking for an appetizer-scale comment here. 🙂
    Someone laid out a price model above as indicative of what (some) publishers are doing right now with books, along the lines of:
    $7 for a paperback
    $15 for an ebook
    $20 for a hardcover
    But that’s an incomplete listing. Here’s what it’s more like:
    $7 for a paperback released one year after the hardcover
    $15 for an ebook released the same time as the hardcover
    $20 for a hardcover released as the earliest available form of the product
    Pricing isn’t just about format. It’s about availability and urgency. If you feel you MUST get your hands on “Changes” by Jim Butcher the first day it’s available, in an eBookless world you’d be spending that hardcover price, period, or you’d have to sit on your thumbs and wait a year for the paperback. It’s as simple as that.
    The fact that there have been explicit statements from a few publishers in this kerfluffle that talk about sliding the ebook pricing scale around as the physical format options of a particular book become available makes sense, honestly, because of the urgency principle. If you want the convenience of first-available access, you pay more, and you pay more because that author’s content is so valuable to you that you cannot wait for it to become available later in a cheaper form. And one hopes that a hardcover/higher-pricing-period-eBook generates a proportionately larger payout for the author, since that’s who you’re (psychologically) supporting when you make an urgency rather than patience oriented purchase.
    YES, some — even many — publishers have completely screwed the pooch on following the logic of this approach, pricing back catalog works at ridiculous levels. But eBooks in this format (kindle/iPad friendly) are still in their infancy. Babies poo outside their diapers all the damn time, I can say from experience. But eventually they grow up and start to get it right more consistently. It’s a matter of time and a matter of market pressures.
    I’m going to be real interested to see what if any independent eBook marketplaces open up, ones oriented on getting good content from “unknown” authors available to voracious readers at a cheap and DRM-free pricepoint. That’s where I think smaller, nimbler mammals are going to outstrip the dino-publisher set. Whether or not the bigger guys will go extinct once something like that really gets rolling is the question. Maybe, maybe not, but either way I’m hoping the environmental changes ahead teach the good ones how to survive — or present our favorite authors with ways to get it done themselves.

  21. I’m glad to see that at least some of the commenters are paying attention to the dynamic pricing aspect of what Macmillan is proposing, rather than focusing entirely on the maximum $14.99 price. As noted, such a pricing scale is similar to that currently used when a book moves from hardcover to paperback.
    It’d be nice though if the writers were getting a better cut, particularly from Macmillan.

  22. As a reader, I see nothing wrong with the sliding scale.
    Some books I buy in hardback. Others I wait until the mass market paperback. Having an ebook available that is always priced below the physical version ($15 ebook < $25 hardback or $5 ebook < $7 paperback) is what most of these screamers are missing.
    As an aside, I’d love to be able to buy a DVD/Blu Ray when a movie is in the theater, and (depending on the movie) would pay a premium to get it. I have kids, so theater night is rare. It’s home theater 90% of the time. Getting to see Sherlock Holmes now versus in 6 months is worth paying more.
    Now, something publishers could do to make the $15 ebook more palpable is add something extra. Yes, like DVD extras. I havven’t seen an iPad yet, but if it’s anything like an iPhone, they could slap in book trailers, author interviews, etc to an ebook to “justify” the higher price point. When the paperback comes out and the ebook price drops, so do the extras.
    Just a thought.

    • Many authors already provide trailers, interviews and even new chapters for free on their sites.

      • True.
        What other exclusive extras could you see being offered?
        Just trying to think of something that an eBook can offer that a physical book (or author provided content) can’t.

        • I really can’t, not something truly unique to ebooks.
          I guess for cookbooks and other DIY content, you could have a demo integrated with text instructions. Choose which to consume depending on your need at the time. For travel and history, you could hear and see pertinent things while having the text to refer to for more in-depth info. It would be useful to have all that in a single product without going to the Internet.
          Problem is, watching/listening, gaming-type activity and reading are totally different. They can be integrated only to a point.
          All this is deja vu. Remember “multimedia”? I was around in the late 80’s when the buzz was that the new desktop PCs were going to destroy books by adding audiovisual and interactive content to text. Didn’t happen.
          A different aspect is that I personally grow bored watching and listening because I read so fast. Consuming non-text material wastes my time.
          I doubt whether other fast readers would want to slow down for audiovisual/interactive and also whether audiovisual and gaming-oriented people would want to switch to reading, all within a single media product. The experiences are too different and for all I know the different media types fight for primacy in our brains. They can’t be consumed in a truly simultaneous way.

  23. There is currently nothing on this green Earth that could convince me to pay $200-$300 for an e-reader, especially some DRM-crippled piece of proprietary crap. The pricing of e-books themselves isn’t even on my radar at this point.

  24. Speaking as a micropress ebook writer, I absolutely would like a price point that’s both appealing to readers and one which allows me to make shiny, shiny moneys.
    Speaking as a voracious devourer of ebooks myself, the appealing price point to me is “on par with what I’d be paying for the print edition anyway”. I’m totally willing to put down the same amount of money I would for a paperback or in some cases, even a trade paperback–depends on the author. And if Fictionwise is feeling particularly frisky about grabbing my attention with cleverly timed sales and rebates, I may even put down hardback price for an ebook just so I can then spend the rebate on bunches more ebooks.
    (Did I mention I love me some Fictionwise?)

  25. I don’t care much about whether new release hardcovers are $10 or $15 in e-book. I’ve bought Baen e-arcs and consider $15 a perfectly reasonable price for the “Get it while it’s hot” hardcover equivalent.
    What I’m more concerned about is the price of books currently in mass market paperback. IF Macmillan follows through and drops those books to the $6-8 range then I’m very much in favor of it.
    What really did it for me, though is Amazon’s dickish move of pulling Macmillan paper editions as part of the ebook fight. I disliked it, and will vote with my wallet.

  26. Amazon Versus Macmillan
    OK folks, here is a response from a book writer, and someone who was affected by this, since Macmillan/Tor is one of my publishers. (I’m Mercedes Lackey)
    Amazon’s response was posted on the Amazon Kindle Forum on Amazon’s site, apparently by someone who has absolutely no grasp of how publishing–or anything else–works. OF COURSE Macmillan “has a monopoly on its own titles,” you moron! And Nabisco “has a monopoly on Oreos” and Ford “has a monopoly on Mustangs and Shelby Cobras!”*
    The book business in general is tanking. How bad? Bad enough that almost everyone I know saw their royalty checks plummet to 50% last year, some going down to 10%. Well duh, you can’t buy books when you don’t have a job. (I am often forced to roll my eyes when I tell people that and they look at me bewildered and say “But I see tons of people in the bookstore when I go, how can that be?” I have to explain patiently that “Tons of people in the store does NOT equate to sales.”)
    Amazon has the publishers by the short and curlies. Unlike traditional bookstores, the One Ton Gorilla can demand a discount of 50% on the cover price and get it (as opposed to the chain-store’s 30% and the Indie’s discount of 20%). This is why a new HC, with a cover price of $25 is Amazon Priced at $15. And this is why the price of books has gone up, so publishers can keep their very slim profit margin. (And believe me, it is slim).
    Macmillan’s desired pricing model is not as draconian as it seems. They want $15 for the e-copy of a Hot New Bestseller–same as the heavily-discounted price of the dead tree copy, so that the e-copy does not compete with the same book in dead tree, and Macmillan can recoup their substantial investment in the book. This does NOT mean that MY new book in e-copy would be $15. Mine would likely be, oh, $12. And Joe Schmoe’s would be–you got it–$9.99. Plus, in Macmillan’s model, over time that $15 per e-copy would start going down. In 6 months, say, it would be $9.99. And in two years? Probably $4.99, same as a paperback.
    So if you JUST CAN’T WAIT–you pay a premium. Same as with any other product.
    * Now here is some irony. Amazon is claiming to be a publisher when it comes to obtaining exclusive rights to e-copies of books. Yet not that long ago I actually approached them to write Kindle-exclusive content. I wanted the same terms I would get from any of my other publishers; advance against royalties, half on signing, half on publication. I was told then, in exactly these words, “Amazon is not a publisher.” (But of course I “should feel free to write the content and publish it via the Kindle platform at their generous terms of 30% royalty”**).
    So…..three months ago, they WEREN’T a publisher. Now they suddenly are. Oh, except when it comes to treating an author like a professional.
    ** Lest you wonder why I didn’t take advantage of such GENEROUS TERMS, another author ran the numbers for a series of his that was abandoned and discovered rather quickly that he would be making less money than a first-time writer.
    (Oh, and one more thing. The “Advance against royalties”, often shortened to “Advance” is a essentially a no-interest loan, paid out over time to an author, so that he can write the damn book without worrying about where the mortgage payment is coming from. Most of us (especially now) absolutely require these advances to keep writing. It’s a gamble on the part of the publisher that your book will be profitable, because if it is not, YOU don’t have to pay it back.)

    • Re: Amazon Versus Macmillan
      Probably $4.99, same as a paperback.
      Where are people getting $4.99 paperbacks? All the paperbacks I see are $6.99 at the cheapest, these days. O:( *beth checks her slip from the bookstore* Yup, $6.99 with a 70 cent member card discount, for the cheapest book I bought during this weekend’s bookstore spree.

  27. I think trying to charge the same price for a print book and an e-book is ridiculous. One has next to no overhead, the other has considerable overhead. If you’re charging $15 for the one that has paper and distribution costs, then charging $15 for the one has none of those costs looks a lot like gouging.
    If I’m going to spend full price, I’ll darn well buy the one which will give me a physical possession that I can lend out however many freaking times I please, to whoever I please, that I can re-sell if my tastes change or my fortunes go south, or that I can donate to places like libraries, schools, thrift stores, etc.
    As for what a fair price would be, I don’t know. Books have already gotten so high – and my salary so low – that I’ve gone from buying several new books a month to only buying new books from a few select authors. I hit the library for all my other reading.
    Over the summer, I received a small bequest from a family member, and considered buying a Kindle (or other e-book reader.) I wound up not buying either because of the issues I’ve touched on here (Amazon’s bullyish behavior for the former, and the hideous price of e-books that come with ridiculous strings attached for the latter.) I’d love to be able to spend a few dollars each on a stack of paperbacks that fit inside a slim reader I could slip into my smallest purse – but paying full price for a file that I’m not supposed to actually own? Hell no.

    • Just for the sake of information, paper and distribution costs are a small fraction of the price of a print book, typically less than 10%. For high-run books, much less than 10%. All the other costs are the same — acquisition, editorial, design, preproduction; plus some additional costs for software and format conversion, and possibly licenses. Ebook pricing really is not an issue of gouging, at least not on the basis of the plain facts of book costing.

      • Granted that there’s a lot more that goes into publishing and distributing a good book than material costs. However, DRM shafts purchasers rights under copyright law, which devalues the work by thoroughly destroying resale value. Charging the same premium for a less valuable medium is gouging.

  28. I don’t want to pay for what I’m not getting. If I’m not getting a paperback book, I want the price to reflect that – so, cost of publishing paperback minus the cost of the print.
    This should not affect the profit margins of anyone involved. Duh.

  29. I’m reluctant to switch to ebooks. I really like having my physical copies, if for no other reason than to lend. Being able to lend books to people with the Nook was definitely a selling point for me, and now I’m wavering about getting one. In the end, if I could get a free ebook with every physical book I purchased, or even just pay an extra dollar or two to get it with my hard copy, I’d be buying an ereader today.
    As for price, I can’t see paying 10-15 for a book available in mmpb. I could see myself paying the 15 for an ebook of something out in hardcover. 10 if it’s in trade paperback. 5-7 if it’s in mass market. Though, at this point about the only thing I’m willing to purchase in ebook form are new-to-me authors I’d like to try with ebooks priced cheaper than the mass market. But after that I’m going to pick up the rest of their books in physical copies.

  30. I’m seeing a lot of people mentioning how there is very little overhead on e-books, which is both true and not true. No, you don’t have to print and ship and store physical copies, but all the lead up work to the book production is the same. There are still good authors and editors and copy editors who are involved and would like to feed their families. There’s formatting work to do and marketing and placement. If ebook prices are dropped into the basement just because there is ‘no physical cost’ than it starts making it really hard, as though it isn’t already, for the authors telling the stories to be able to afford to keep doing so.
    As a reader I don’t mind the sliding scale. Pay more to have it bright and shiny and right now, pay less over time. I’d like to see how that applies as well to book types and lengths. For example I’d be happy to pay $15 for the ebook of Changes by Jim Butcher, the same day the hardback comes out. I’d be less eager to pay the same if he released umm…Harry’s Horrible Hag a 100 page novella. I’d see that as being more of a 8-10$ buy it right now.
    I think there are still a lot of pieces to this puzzle which no one has and in the end it needs to even out to a place where the producers of the book from author to editor to publisher and distributor can get paid, but the consumer isn’t bleeding out the wallet or paying in shoddy quality.

    • The question, I think, is whether people see ebooks as the final product — or a spin-off that is taking advantage of all the stuff that would be happening anyway. If there’s going to be a physical copy, then all that work — at print-copy prices — is paid for normally, presumably. The eBook alone does not — SHOULD not, anyway! — require font selection (size and font control are a feature of my ereader of choice) or much layout. Set the chapter markers, make sure the bold and italic tags are closed, and then let the formatting and layout get out of my way so I can read the thing.
      It also doesn’t require paper, and paper costs — at least for certain small presses I’m aware of — have been touted as a major reason for cost increases (and word-count decreases) since the Golden Age of Wonderful Fat Books.
      Now, it’s possible that publishers are, contrary to a lot of heel-dragging in the past, expecting that eBooks will actually become the major sales figure instead of paper books! If that’s the case, then I can understand them wanting to set a price that is similar to a paper book’s! But as long as consumers feel like “well, they’re going to be doing the work anyway for the physical book,” I think there’s going to be a lot of pushback on the “overhead” argument.
      If publishers were inclined to be more like small-press publishers and be open about how much overhead is required for an eBook (especially above and beyond the print one they’re doing anyway), I (can’t speak for anyone else) would probably be more sympathetic to their prices. If, er, their prices were in line with the overhead they claimed. O:>

      • Right. Some posters talk as though ‘an ebook’ were a whole project, a standalone product with no paper book — and as though the first, prototype copy, or first X copies, had to all by themselves pay the author’s advance, the editors, etc, and all right now this month.
        Whereas readers (me anyway) think of ‘an ebook’ as the e-copy I can download — an umpteenth copy that costs the publisher nothing but miniscule cyber-fees (and as some have pointed out, is a flimsy ‘license’ rather than even a doc file and can cease to function at the publisher’s whim or glitch).
        To me an approach like Macmillan’s makes sense. Traditionally there’s a progression: hardback, remaindered hardback, paperback, second-hand paperback. If the price of the ebook is at each stage a bargain compared to the paper, then some people will buy it. Mr. Gottahaveittoday pays high and (if you like to put it that way) subsidizes Ms Illwaittillthepricecomesdown.
        Imo even $10 is pretty high for an ebook, but the customers will be the judge of that. And $6 is pretty high too, so the pirates can prune it down to whatever lower limit the customers are willing to put up with.
        It’s all early days.

  31. Hi! I read your blog a lot, though I don’t comment often. My first instinct in this was “yay, Amazon, for not giving in to Macmillan.” I like the prices as they are. I also actually will buy a new release on my Kindle where I will not buy a hard back.
    But, as a reader who wants to support authors and as someone who “one day” wants to be a writer, I want to make sure they’re paid for the work they do.
    What I don’t understand in all this, is aren’t ebooks so much cheaper to produce? With no printing costs and no shipping costs, (and one sometimes thinks no proofreading costs 😉 how can MacMillan justify wanting higher prices charged? I do need to read the links you’ve provided – maybe that question and those issues are answered.
    I do think that this is another example of companies hurting themselves and all involved by duking it out in public.

  32. My take on it is that if you are going to charge less for an eBook than for a paperback/hardcover, that cost cut should come out of the publisher’s cut, not the author’s. I don’t buy the overhead argument with regard to eBooks, at least not from the publisher’s standpoint. The distribution service (Amazon, B&N, etc. . .) has costs that expand with increases in downloads, and their bandwidth/hosting/maintenance can be compared to a print publisher’s cost in paper, ink, and distribution in hardcover and paperback. However, a print publisher’s role in eBooks is a different animal. Sorry, but intellectual property custodian isn’t a role that adds anything of value to the process.
    Authors should get a substantially larger cut of eBooks, since without the physical printing of it, proportionally more of the end result is purely their work. The editing, formatting, marketing(when present), and similar costs that exist in both print and digital represent the remaining cut the publisher receives. Some of the recent contract developments call into serious question the involvement of print publishers in new authors’ eBook rights in the first place. The idea that the question can even be reasonably asked should be motivation enough for publishers to offer authors a larger piece of the pie to avoid being cut out of the eBook process entirely.

  33. ereaders
    My husband gave me a Kindle for Christmas (and a Wii fit plus so I don’t spend all my time sitting around reading). Given I often have five or more books going at once, the Kindle is quite wonderful. With that said, I’ve yet to pay more than 4.99 for any of the downloads. I have freebies, samples and 4.99 downloads of my favorites. That is my price point. Anything more than that – I’ll buy a paperback or hardcover. I consider the Kindle a great way to have my favs on hand for car trips, the gym and relaxing coffee shop visits. It’s also a great way to browse/sample/encourage to buy the printed book of new (to me) authors.
    So 9.99, 14.99 – doesn’t matter to me. For other target audiences – it could make a difference. My stepson is not a big reader (I know, it literally pains me to admit that)…books aren’t cool or something from what he tells me. I wonder if ebooks will beckon his ‘kind’? Maybe reading something on an ereader is different enough/cool enough to encourage him to give it a try? If so, I think he’d be much more willing and able to spend 9.99 than a higher amount.
    The more I think about this, the more I must admit that it may be a matter of how some of us approach ebooks. I hate to admit this, but I almost don’t give ebooks the same due as printed books. Obviously the same amount of inspiration, work and dedication are put into any form of a book….but something about not having a printed, hefty book in my hands does take away from the reading experience. But, I’m not that young. 🙂 It may be a generational thing for me – I feel a printed book has more value in some ways, it provides a more complete reading experience.
    Younger generations – those who are growing up with digital readers – probably do not see as much of a difference. And for those readers – they may not have a problem paying a price closer to those of printed books.

  34. What A Puzzle…
    I honestly think that people who buy eBooks will probably care as much as people who read paper books about the price, so the lower the better probably. Anything under $15 is cool with me. But then again, I’m not an eBook reader. I only buy paper copies. As an aspiring published author and a reader, I think that pricing should be fair. Because authors and agents and even publishers need some fairness too, the eBooks are going to be hard to price because sellers are going to want to make them dirt cheap. Its not right, but people will think that because its electronic, it won’t be worth as much. I think it’s worth the same. It just doesn’t take as much to put out.

  35. Thank you for the excellent summary! This one’s been hard to follow if you came in late.
    Something few people mention about e-books is that, in an ideal world (that is, assuming an e-book reader hardware that doesn’t suck), it’ll be like the Web: the reader can control *how* they read it. For folks with bad eyesight, being able to read that book at their own damn font size is a dream come true. (Very few books ever make it into large print editions, and those cost a lot of money. Slightly more may make it to Braille editions.) There has been a kerfuffle over the Kindle’s “read to you” function, which many visually impaired folks were also having high hopes for. It seems a bit hard to me, to finally make some of these books available in a form that can be read by most of the disabled folks, but be charging higher prices because what is to us a need is to everyone else a “convenience” or “extra feature”. (See Disney’s decision to make closed-captioning an “extra feature” not available on rental DVDs.) Most disabled folks aren’t rich; otherwise we’d be a market worth publishing for. And many visually impaired folks *cannot* use the hardback or paperback versions.
    I’m all in favor of the “high price at first” method. I am certainly willing to consider paying hardback prices for an e-copy while the hardback is out and the paperback is not yet in. (My arthritis dislikes hardbacks. E-copies are easier to life even with a reader’s weight.)
    But this also reminds me of music. Do I have to buy the tape and the CD and the digital file, or can I just buy one and make different versions? I don’t expect an e-reader I can take into the bathtub any time soon, so I want some things in paper. (…okay, I have put my phone in a plastic baggie and used it to read in the tub, but this is Not Smart.) I would like to see some way to offer people who buy one version – ideally the expensive paper one – a discount on the e-version. Use-once download codes included in a book, maybe?

  36. eBook Pricing
    Until there’s a decent way** to transfer first sale rights with ebooks, they are not as valuable as pulp-wood books, and that needs to be reflected in their value. Does the convenience of getting them *right now* from any place with an internet connection provide a decent compensation? IMO, only when pricing against mass market paperbacks. Most of the value of a hardback edition lies in the durability, collectability, and show-off-ability of the format, so when publishers try to force people to pay hardback prices for ebooks, it just pisses me off and makes me less likely to purchase from that publisher.
    **Decent as in respects both the rights of the author not to have their work copied and distributed without their permission or due compensation paid and the rights of the consumer to recoup some of the value they invested when purchasing the book by selling their sole copy.

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