Friday, September 11, 2015

Maybe People Aren't Stupid And Understand That Ebooks Don't Cost As Much?

I was doing some windowshopping for books tonight, waiting for Mr F to fall asleep. I clicked on Infinite Home, by Kathleen Alcott to add to my wishlist on Amazon; my wishlist is where I keep track of the books I want to borrow from the library.

I noticed that the Kindle version was $13.99, which seemed excessively high to me. $9.99 is high to me, so increasing the price by 50% really turned me off. Plus, the hardcover was only $15.68!

That made me feel like a lot of books I'd put on the wish list were actually more than $9.99, the longstanding price for a Kindle book from a major publisher. So I went to the New York Times Best Seller list and checked it out, and only one book in the top 20 was under $9.99, while only two were $9.99.  Most were $13 or more.

By the way: Do you think that prices end in .99 because we instinctively think that number is much less than the number that's just one cent higher? That's only part of it. Tests show that people also associate .99 with something being on sale or discounted, so they think they are getting a deal. Some high-end clothing retailers price their items in whole dollar amounts simply to avoid that effect. The power of a '9' at the end is so valuable that it actually increased sales of a dress.  In a test run, a manufacturer was asked to change the price of a dress from $34 to $39. The sales went up by 33%. 
So I did some Googling around and found this article about a Wall Street Journal report on what's actually happening. Remember Hachette's fight with Amazon? You probably do; almost every author took Hachette's side in a remarkable display of naked greed sated only by soaking their readers out of every last penny for mostly terrible books courage. Hachette and a few other publishers "won" the "right" to set their own prices on Amazon, a model called "Agency Pricing." Those publishers have steadily been raising the prices of their bestsellers.  The major publishers' ebooks now cost an average of $10.81, while all other ebooks average just $4.95.

NOTE: AVERAGES ARE A TERRIBLE WAY TO MEASURE THINGS. The two best measures are the median, and the mode. AVERAGES tell you nothing about individual book prices. Half of hte major publishers' books might be priced at $21.62. The other half might be free. The average would be $10.81.  If we knew the median price, we would know that half of all books were more expensive, and half were less. If we knew the mode price, we would know the most commonly-occurring price. Averages are the lazy man's way of making a (wrong) point.

ANYWAYS, the point is twofold: one, major publishers are trying to stick it to readers even though ebooks cost way way less to produce. Publishers claim that ebooks cost only about 10% less than hardcover books to produce, according to this article, but they're cooking the books on two levels. First, they complain that the upfront cost: acquiring the content, editing, and marketing it, are the same as for a hardcover. That is disingenuous for two reasons. One, they count the 'author advance.' An advance is a payment against future royalties, so that's only a cost if they overpaid the author. Otherwise, the advance does not figure into the cost in the sense they're trying to say it does.

Second, those upfront costs are shared for the hardcover and ebook. No major publisher I'm aware of publishes only ebooks. So the 'upfront' costs are 50% for the ebook and 50% for the hardcover, at best.

Thirdly (? I lost track) publishers have hired special teams to oversee the conversion of books to electronic versions, and include those costs in the cost of an ebook. While that might be a reason that older, backlisted books cost more than a dollar or so, it's no excuse for a new book; when the book is turned in, it's ready to be converted to an upload on digital copy.  My own publisher, Golden Fleece, doesn't have a staff of thousands loading my book onto Barnes & Noble and Amazon, etc.

Fourthly the publishers say people don't account for shared revenues from online retailers -- but again that's a cost that exists for hardcovers, too. Or doesn't the local bookstore make anything when they sell Go Set A Watchman?

The second (? see, I'm really lost in the numbering) big point here is that the increase in pricing is hurting the big publishers: their sales are down on ebooks. So naturally they are accusing Amazon of causing the problem by creating a price war, saying that Amazon is the one discounting the hard copy editions to hurt the authors whose publishers are setting their own ebook prices.

If so, good for Amazon. Lowering hard copy prices will force publishers to continue to eat into their profits by producing paper books, a terrible model for them. Meanwhile, as ereaders become more popular, the major publishers will see their market share slipping. That'll open up room for smaller publishers and indie authors.

There is lots and lots of money to be made in writing. Major publishers are trying to squeeze the money into a few pockets, and major authors are backing it because they benefit. I'd say that if this keeps up, I'd start buying hardcopies to save money, but as I've noted a lot already, I just go to the library. Until everyone wises up and realizes that books cost $9.99 or less, I doubt I'll be buying many books.

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