Know This: E-Books Update: Pricing and Release Date Debates
July 22, 2009
THE Know Something Project article “E-Books: Where Literature and Technology Meet” presented an overview of the state of e-publishing as of June 2009. Within the past month, of course, much has occurred in this burgeoning field. Current hot topics range from e- libraries, e-textbooks, e-standards, e-retailers, and e-readers to every move publishers and distributors of all sizes as well as Amazon, Apple, and Google have made or potentially may make regarding their individual e-book ventures…and how they’ll impact the overall e-publishing landscape. (Up next in another E-Books Update: Amazon’s Disappearing E-Books Debacle.)
While most recent e-book discussions have involved pricing to some extent, some have focused entirely on the bottom line, with publishers’ options regarding hardcover vs. e-book release dates an important part of the equation:
On July 13, The Wall Street Journal ran “Publisher Delays E-Book Amid Debate on Pricing.” This article focused on Illinois independent press Sourcebooks Inc.’s announcement it would “delay by at least half a year the e-book version of Bran Hambric: The Farfield Curse, a young-readers title in the vein of Harry Potter that goes on sale Sept. 9.” According to Sourcebooks, this move will help the company sell many more hardcover copies of the book’s significant initial print run before its digital version is released.
Amazon, however, says its Kindle customers expect access to e-book versions of all hot potential bestsellers and won’t want to wait. But Amazon also promises an under-$10 price point for many such titles—a strategy (now copied by Barnes & Noble’s Fictionwise e-books retailing site) that hardly sits well with most publishers.
One Sony executive quoted in the WSJ article noted that some publishers have begun “increasingly setting the list prices for their digital books at the same level as the e-book’s traditional [i.e., hardcover] counterparts.” While this option may help ensure increased profit margins for publishers, e-book retailers will remain squeezed when they buy titles from publishers at a high price and are pressured by their customers to sell them for much less.
Unless a retailer is Amazon. A July 14 post on Publisher Marketplace’s Publishers Lunch newsletter responded to the question of whether or not e-book sales will eventually “cannibalize” hardcover book sales with a simple “of course” of sorts by stating “this is all about Amazon’s subsidized price points” and “the potential cannibalization strikes hardest at a small set of hardcover fiction releases.”
When The New York Times ran “A New World: Scheduling E-Books,” an article that featured a long list of additional publishing industry dilemmas regarding the timing of upcoming hardback titles and their e-book versions, Publishers Lunch argued again that book publishers are not dolts who fail to see the potential profits of selling digital and print versions of a new title simultaneously:
“As many publishers see it this is about Amazon subsidizing what’s seen as an artificially low price to try to dominate the growing market and potentially impose terms on publishers later on.” PL said Amazon “can afford the subsidies both because of their size (their $35 billion market cap vastly exceeds the value of all the biggest US booksellers and publishers) but also because of the margins built in to manufacturing and selling” their Kindle e-readers. While Amazon has promoted bargain-basement prices to help sell Kindles, PL noted, “about a third of all Kindle books sell for more than $9.99.”
“Most consumers also don’t know that Amazon (and for now most major retailers of ebooks from traditional publishers) buys ebooks at a 50 percent discount, when market-dominating Apple only gets a 30 percent discount on music downloads.”
PL also argued that publishers could make significant short-term profits by working hand-in-hand with Amazon, but instead publishers are “looking out for what they believe to be their long-term interests—and are trying to protect the entire system of physical book retailing which supports the whole industry.”
On July 16, the notable BookSquare blog posted one publisher’s point of view regarding the book timing/pricing issue. Dominique Raccah, Publisher and CEO of Sourcebooks (the publisher that’s opted to delay the e-book release of Bran Hambric) discussed the thinking behind this decision, with a distinct angle toward protecting an author’s interests as well as a publisher’s:
Insisting that “the new music model of low-priced content and sales of concerts and ancillaries is probably not a viable model for book publishing,” Raccah noted that “authors, unlike musicians, don’t typically have paid live performances…. They have words. And we need to have a real conversation about what those words are worth (and that’s what the pricing issue is actually about) and how do we keep them worth enough to support authors, authorship and publishers.”
Raccah also said publishers (and consumers, I’d add) are being told “repeatedly” that “ebooks are inherently less valuable—they are not physical; they are not easily ported; they can disappear at any time; etc.” For this reason, retailers of e-books are pushing the $9.99 price point, a strategy that is undermining publishers’ and authors’ best efforts. “We can’t control what retailers charge for books or ebooks,” she stated, adding, “The fundamental decision we get to make [is]: do we make [a book] available and when?”
Raccah also added that “we should be releasing ebooks when we release the trade paper or mass market of the hardcover and can then price appropriately to that. To me the decision is analogous to a new release in movie theatres; we don’t expect that movie to be immediately available on DVD.”
To those who say digital and print don’t cannibalize and publishers who don’t release both versions at the same time will miss sales, Raccah referred to consumers, herself included, who wait to see a movie after it comes out on DVD—or wait to read a bestseller after it’s published in paperback. While she agreed there is a risk of missed sales to such bargain hunters who may forget their intentions to rent or buy later, Raccah suggested such a risk has “always existed in format choice.”
Raccah concluded that she understands the need to experiment and sees the book industry “beginning to do that,” but added “this pricing and release-date situation doesn’t feel like an experiment. This actually seems more like a dictate that could have enormous ramifications, perhaps not today, perhaps not tomorrow, but certainly long-term on the future of authors and books.”
More recently, on July 20 Barnes & Noble opened its own e-bookstore. Tied to its main website and separate from its Fictionwise online e-book store (which it purchased in March of this year), the new store offers the same free eReader software available for Fictionwise purchases, with downloads available for iPhone and iTouch, Blackberry, other smartphones, and PCs or Macs.
The president of B&N told The New York Times that pricing through the B&N e-bookstore “will not remain static” and that the company is working with publishers “on various pricing models.” In its response, Publishers Lunch reported rumors of the development of a B&N hand-held reader for possible release later this year—as well as the possibility that some B&N e-book pricing models may include the ability for consumers to “lend” e-books.
So it seems current pricing for e-books is hardly set in stone. Also on July 20, Black Plastic Glasses wrapped up a post on e-books and the economics of peak demand pricing with a call for pricing strategies that allow e-books to “start at one price and then settle into a backlist price when peak demand has ebbed.”
“If retailers want best sellers to be priced at $9.99, then they need to create some sort of ‘ebook co-op’ program that effectively swaps in-store marketing for added discount. This only works, of course, if publishers have REASONABLE release prices for new titles and Amazon [or any other e-book retailer] has REASONABLE pricing for content that is in high demand. The quid pro quo only works if it benefits both parties.”
How to motivate both sides to play fair? BPG predicts that pending launches of more reading devices and more e-book retailers—and of Google Editions—will “help level the playing field a bit, and engender a spirit of balanced negotiation into the process.” One can only hope.
—Karen DeGroot Carter
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