Wednesday, May 11, 2011

Braving the New World of E-book Pricing, Part 2 of 2 Parts

By Lori L. Lake

Bransford’s final question in his essay was this:

Are we headed to free for e-book prices or will we find a way to charge as much as people are willing to pay?

Is he kidding? Of course the answer MUST BE the latter! This writing business may be creative/touchy-feely/artsy fartsy and all that, but at the end of the day, the bottom line always ends up being the bottom line. Can we make enough to live on so we can keep on being writers? Joe and Barry can afford to give books away. Evanovich and Patterson and Clancy and Dan Brown and all those other heavy-hitters could afford it. 98.9% of the rest of us would be seriously unwise to do so.

All of these people who are trying to make a name for themselves now by giving away free copies and 99-cent copies aren’t doing themselves or anyone else any favors. They may be capitalizing on the “Tragedy of the Commons,” but only those few who got their foot in the door early on will benefit. The market is flooded more every day. It’s also unfortunate to have to say that, as far as I can tell from a random experiment, far too many of them are giving away crap. (Pardon my "French.") I “bought” a couple dozen free and 99-cent books from unknown authors, and the vast majority were really odorific smelly stinkers!

This $2.99 to $9.99 price scale that Amazon has jammed down everyone’s throats is all well and good at the moment, but that means that $9.99 is being set up as the future top-end cost of a “book” (print or digital). Why are we letting readers get accustomed to that level when actually a hardback (at $25) or trade versions (at $13-16) have been underwriting the e-book process all along?

It’s clear and verified now that as every day goes by, print books are selling fewer copies and yielding smaller revenues while e-books are increasing in sales volume. But, because the price point has been set up arbitrarily, most publishers will have declining revenues – even if they sell more e-books than print books. The cost of producing and distributing a printed hardcover can’t settle at $9.99. It can’t be done that cheaply with the overhead a big press has.

This point cannot be overlooked: E-books from many publishers have been cheap so far because the physical book had already been created and it wasn’t too hard to convert it from the printed book’s digital file.

Some say NY will save money in e-book creation compared to print books because they don’t pay warehousing or for the returns process. I have to argue that all the funds saved from the cost of printing/warehousing will have to be allocated to pay someone to format, upload, and test the e-book product. Instead of paying the printer, publishers are now having to hire whole staffs to set up and administer the e-books.

So where is the big savings that warrants NY charging $9.99? There’s not enough room in the equation to pay for the expenses from initial acquisition through editing/cover/rollout to promotions all the way up to e-book promulgation to the various sales outlets. This is why most presses are trying very hard to pay 8% and 10% or maybe 15% NET INCOME to the author for e-book royalties. How else can they survive if the writer doesn’t take the hit? I’ll spare you the math on Net Income for even 15%. It’s not pretty. (Along with Dean Wesley Smith, Joe and Barry do a great job discussing this: http://jakonrath.blogspot.com/2011/04/ebooks-and-self-publishing-part-2_03.html).

The time is coming where big presses simply will not be able to afford to support the structure as it’s currently set up. Not to mix metaphors, but a lot of what I see happening lately in publishing is the fretful rearranging of deck chairs and book and magazine supplies on the Titanic. The center will not hold, and the iceberg of expectations and ignorance is about to crash into NY – which also includes everyone who is published by the big houses. The financial foundering, bankruptcies, and closings of Big Box stores is just the beginning. Indie stores are feeling it too—even if they do have dedicated readers to whom they cater. The NY publishing houses are next.

What will take the place of NY, which busily anointed numbers of authors and distributed their print books? How will the readers find books without the (seriously inaccurate) NY Times Best-Seller List? What’s this new digital world *really* going to look like when the over one million books published each year are ALL vying for the reader’s attention in the e-book virtual world?

And the big question: how fast is it coming on? In 1983, compact disks and players became available and sales grew steadily as people adopted the new technology. In 1985, David Bowie put his records on CD, kicking off a rush by other music houses to get their “Big Artist” backlists up.

I bought my last record album in April 1987. In 1983, I said I’d *never* give up my LP albums to buy CDs. I now have over 2,000 CDs, some of which duplicate my old LP collection (which is mostly long gone). Once again, new technology is on the rise and now I’ve also got several hundred digital music downloads. I say today I’ll never want to get rid of my CDs….but I suspect the day will come when they’ll all be digitized, and I’ll have moved on to the next technology.

Just like the people who are now adopting e-books and eReaders.

But to answer Nathan’s question: Many early adopters of this new technology (including me) are making enough to live on with the 70% of each $9.99/book sold, but I’m not able to sell any cheaper anytime soon. If the price goes up, I’ll be perfectly happy to go with it.


Lori L. Lake is the author of six novels, two short story collections and is the editor of two anthologies. Her most recent book, Like Lovers Do, was released on May 10. For more information, see www.lorillake.com.


10 comments:

Sassy said...

Lori,

I am answering both posts in one comment.

Writers are good and necessary to a developed society. They fan our curiousty, make us mull the hard questions and help us expand our minds. That being said, any writer that thinks they are going to reap a commercial bonanza has rocks in their heads.

I understand you love writing and want that to be your sole job, but especially in this economy we readers simply cannot support a writer in the manner in which some want to become accustomed.

The only reason I started buying e-books was how cheap they were. I could afford them and have purchased over a hundred at this price. If it wasn't for the lower price point I would still be purhasing my books from a second hand store for a quarter apiece.

That would certainly raise the units you need to sell to get your $30 hr. Not that I think you receive anything from a second had store but I am sure you get my point. I only have so much to give and if the prices are raised, I will simply go back to my old custom.

(BTW, $18hr after tax is a figure most of us can't imagine hitting right now when the majority of jobs are paying minimum wage.)

I do hope that you continue writing. Not for what you can get out of it but because you so love what you do.

Lori L. Lake said...

Hi, Sassy,
So what are you going to do when there are no new print books left to be found for 25 cents in secondhand shops? As digital takes over the world, that's where we're heading.

I do love writing, and it *is* my sole job now. I'm not reaping a "commercial bonanza," but with the advent of e-books, I'm actually making ends meet. And I do want to clarify one thing: if a writer "earns" a gross of $30/hour, after s/he pays taxes to federal, state, self-employment, and, in my case, the county and the city, as much as 40% goes out the door in addition to quite a chunk for expenses. The 40% is applied to the net left after paying business expenses. Many years I've earned between $3 and $5/hour for my labor, significantly less than minimum wage.

If readers do not want to support writers - or artists or musicians or other creative endeavors - that's their choice. But the paucity of entertainment and enlightenment will not be the fault of the author/artist. The old adage "You Get What You Pay For" still rings true.
;-) Lori

Sassy said...

Lori,

I completely agree that you get what you pay for. You also reap what you sow.

In general, things that become "priced out" simply go away as you mentioned.

Look at how much we have lost in the way of diversity in the last decade. From the availibility of different types of food to the daily items we buy, we have significantly less choices now.

That is a reality we all face in this economy. Unpleasant but true.

Whatever your expenses, $18hr after taxes is a number most of us can't realize despite what we have earned in the past.

As far as the time it will take for people to run out of old print books and have nothing left...

Let's just say everything in the universe is cyclic and I am sure both money and demand will increase in due time.

The thing is, readers are both loyal and grudge holders. Like children we remember who did what when and we keep score.

I know of a specific instance where an author got about 30 extra sales from one group alone because he was so kind to a new reviewer who didn't quite "get it". Most in the group had never read and weren't really interested in his work, but it was worth the money to support the person behind the book.

On the other hand, we have fiercly boycotted authors we felt had attitude towards the readers or was behaving badly.

I wish we had a society that encouraged art and supported those who add so much to our lives. We don't. The current reality is I must make choices each day of where I spend every cent.

Do you really want to push readers who have to make those choices? In the end, we all lose.

Yes the paucity of future entertainment can be laid to our doorstep, but in an era where we control so little, our little bit of control means everything.

L.D. Harkrader said...

Hi, Sassy. It's wonderful that you're such an avid reader. Writers love hearing that. But your post actually proves Lori's point: The proliferation of 99¢ ebooks is conditioning readers to believe that, no matter how much it actually costs to produce an ebook (of which the writer's cut is only a small part), the price should never go above 99¢.

Lisa Harkrader

Sassy said...

Hi L.D.,

This is one of the frustrating things about communicating via text. It is difficult to get all the intentions correct.

I am NOT trying to say authors don't deserve more or that I wouldn't pay more if I had the money.

I am saying that in this economy I simply don't have the disposable income I have previously enjoyed and if it weren't for inexpensive e-books, I wouldn't be purchasing ANY e-books at all.

To me that means around $6.99 for a NOVEL, whether e-book or print doesn't matter to me. I simply could not afford to read otherwise. Until e-books came along with their lower pricing, my books all came from the library or resale.

Those 20-40 pages bits that are put out are nice little things, but I refuse to pay more than $2.99 for those. Mostly I don't buy them at all. I save my money for the larger reads.

I know this is an author sore spot. It is a reader sore spot also. This is not your fault or mine, we are caught in the crosshairs of political climate.

We all want to make a living doing what we love. For the majority, that is not an viable goal.

We go to jobs we dislike to pay bills and take care of families...and we find our (admittedly cheap) pleasures where we can.

Dana Stabenow said...

The publishing industry has backed itself into this corner, beginning with returns and discounting and moving on to abrogate pricing to Amazon. I'm very much afraid it's going to take authors to get themselves out of it, at least in the short term, until the industry gets itself back up to speed. I hope like hell I'm wrong about that.

elijahjoon said...

Excellent points brought up in your article. I know there are a lot of folks on Kindleboards for one who are sneering at your points, but that's because they have a stake in the e-publishing game and they feel threatened, it seems. It doesn't change the fact that you bring up good points to consider.
Kudos.

juke_20 said...

Another interesting post, Lori. Your reference to record albums and CDs was mentioned in an article I read about things that used to be familiar and are now becoming obselete. Print books were on that list, along with tapes, dial phones and floppy disks. It's crazy to think how fast our world is changing.

http://nancylauzon.blogspot.com/

Nancy Lauzon said...

Sorry I was signed in under my daughter's name by mistake. Guess she was using my computer. Kids!

Lori L. Lake said...

Nancy - there are SO MANY things that are becoming obsolete, not just books. I rue the day that print books aren't as readily available as they are now, but I have a sneaking suspicion that the day will indeed come. Maybe sooner rather than later.

Just think that 10 years ago EVERYBODY had a landline---and now people are just making do with cell phones. The futility of using a cell phone during a disaster was fully apparent in summer 2007 when the I-35 Bridge in Minneapolis collapsed. NO ONE - not even emergency crews - could get through. The cell phone towers couldn't even begin to handle all that traffic.

And just think how as little as five years ago, many households took the daily -- or at least the weekend -- newspaper. Bye-bye to the printed newspaper. They're going the way of the dodo birds.

It just seems like things are happening SO FAST. It's rather dizzy-making!
:-) Lori