10 July 2013

Bad apples

I was glad to hear about the decision against Apple regarding e-books price-fixing. Digital formats clearly should make books, music, and movies much cheaper to sell for obvious reasons. In particular, there's now no need for individual stores to take on risk when stocking items that may not sell (and thus end up being sent back or sold at a discount). Arcticfoxxx, a commentator on the original news article, makes a number of good points that capture my feelings perfectly:

Let's be honest. Beyond convenience, the allure of digital media was that it was supposed to be CHEAPER for consumers because production expenses would be greatly diminished. After all, there would be no paper and ink to purchase; no printing press or operators to pay; no shipping and much lower distribution costs. In the case of classic books with no or low royalties to be paid, that has held true, but, overall, the price has not been lowered in many cases. I was looking at Kurt Vonnegut books on the iTunes store last night and was amazed they were largely $11.99 for Pete's sake. It MORE expensive than buying it in paperback. Apple has a rack going with all their iTunes media; not just books.

As an avid movie buff and collector, I own between 1200-1300 dvd and blu ray discs. The prices on dvds have fallen dramatically since the introduction of blu rays. A large array of older movies such as Airplane! could be purchased NEW for around $5 in a retail store and even less in used market sites like Amazon. iTunes started selling the SD digital versions of these older movies for $9.99 and it has become the standard baseline for other sites like Amazon. The price has INCREASED despite lower production and marketing costs. 

Every company in the media industry whether it be music, movies, or books should be indicted under the anti-trust laws for collusion and price-fixing. They have been keeping the price of media artificially high for years. It's just more blatant now.


BadTux said...

The reality is that the actual cost of printing a paperback is around 50c and a hardback is around $1. That's it. Furthermore, the average book sells around 3,000 copies, with mid-list writers managing to sell around 20,000 copies, and less than thirty books per year out of roughly 30,000 titles published per year managing to sell more than 100,000 copies.

So for the typical book that sells very little, of your $10, the vast majority goes to pay the author, the editor, the copy editor (different person), the cover artist, and so forth, as well as profit for the book seller. Less than $1 goes to actually print the book.

Given that all those other expenses exist whether you have a paper book or an electronic book, what that suggest is that electronic books should be priced at around $1 less than paper books. Of course, the reality is that the market really won't bear such pricing because paper books have one quality ebooks don't have -- they can be re-sold at used book stores. So while the production costs are the same, market value isn't.

About the only thing that ebooks do make cheaper is keeping books "in print", since you no longer risk warehouses full of unsold books to do a new "print run" if you run out of books for an author. So in the future I expect we'll see books going out of "real" print quicker and available only as e-books past that point. But from the perspective of publishers, eBooks at even 75% of the cost of paper books *lose* them money compared to printing paper books, because the actual printing cost of paper books is less than 10% of the price -- the rest is production costs that are the same whether the book is print or electronic.

- Badtux the Author Penguin

Karlo said...

Thanks for taking the time to provide so much detailed information. I've never been part of the publishing industry, so I wasn't aware of the slim margins. It does seem to me that ebooks would remove a great deal of the adverse risks that publishers face in trying to guess whether a book is worth providing another run.

BadTux said...

The biggest problem with ebooks is that it's hard to find an audience. Nobody wanders into an ebookstore and scans down the rows of books and says "wow, that looks like an interesting title... oh, the cover blurb sounds like it's going to be just what I like... let me read the first couple of pages... yeah, I'll take this one!".

The biggest problem with paper books is that it's hard to hang on to an audience if you do manage to find one, since by the time you managed to scrape together an audience, your prior paperbacks have been pulped due to the short shelf-life of your typical paperback.

eBooks are thus a way to continue receiving nickels and dimes from your backlist, as far as the publishers are concerned. Otherwise the backlist simply wouldn't be kept in print except for the very biggest and popular of authors (but I noticed that even Steven King's backlist was only spottily represented at my local B&N last time I was there, so even big name authors can't keep their titles actually on bookstore shelves). eBooks are thus good for publishers and authors who are interested in building a long-term audience for their product. But they're lousy for getting that audience in the first place... which is what has the publishing industry scratching their head in puzzlement over what the future looks like now that eBooks are starting to make up almost 10% of book sales. And virtually all of those sales are of "bestsellers" at half the price they can get for hardback versions of the same product, and that just isn't enough to continue subsidizing the books that sell 5,000 copies (i.e., the vast majority of books on the market).

So I don't blame the publishers for trying to work a deal with Apple to make it more lucrative for them. Amazon was hurting them, badly, by forcing them to sell "bestsellers" at $9.95. Too bad they apparently went about it in an illegal manner...

Karlo said...

As easy as it is to copy books, it also seems like illegal downloads must be cutting into publishers' profits--much as what happened with the music and video industry. I'm always amazed by what's available in pdf on Google.

BadTux said...

Illegal downloads aren't actually a big problem. eBooks that you buy from B&N or Amazon are DRM-protected and while the DRM for both has been cracked, it seems that the sort of people who would buy a book aren't the same sort of people who would crack the DRM and put it up on PirateBay for the street cred. Books sell much fewer copies than albums and videos to begin with, as my numbers above point out, and are very much a niche industry in today's world. Young people are the primary pirates who put things up on places like PirateBay, and young people don't read.

Karlo said...

That makes sense. Several years ago, after moving so many books far too many times, I pretty much gave up on buying books. Books on a book shelf are nice, but I just can't afford the luxury any more in terms of apartment space. I now do most of my reading online and with library books. Much of the reading public probably does the same. As for reading, I've noticed that just about everyone online who talks about books seems to be over 50, so you're probably right.