[...] hardcovers cost more for digital editions than hardcovers. That’s because, after the showdown earlier this year, publishers now set digital prices, while Amazon chooses how much it wants to discount print books. [...]

I’d say that ebooks are still in the “other media” stage. Just as early television was mostly radio shows and vaudeville, eventually becoming something unique, thus are ebooks still stuck in a paper model.

[...] skirmish between Amazon and Macmillan is any indication. Johanna Draper Carlson has the back and forth – basically Macmillan – publisher of such graphic novel imprints as First Second, Hill & Wang [...]

[...] Johanna Draper-Carlson notes, Amazon's move on Friday affected Macmillan graphic-novel imprint First Second Books and publishing [...]

Music sales are down, but is that really all music sales or just music sales by the big 5 companies tracked through traditional retail sales locations? I buy most of my digital music from eMusic and Amie Street (both legal and supposedly paying creators/distributors), but are those sales tracked by Nielsen/etc? and most of that is smaller labels that don’t post their overall sales in quarterly reports. Those sales would have been through record stores and distributors once upon a time to be tabulated in some way. Now, I’m not so sure. and that doesn’t take into account the number of CDs and DVDs that I buy directly from the artist, knowing that more of the profits go to them. When and where are those tabulated in the official sales numbers for the music industry?

I tried to show in the previous response that the “testing” argument was a cover for many people to justify their theft. But it is also true for other people, including myself.

and right or wrong, I do think that digital media with no physical component should be priced less – it’s a visceral thing. I can’t hold it – it doesn’t seem as permanent or real. I understand paying 40some cents to mail a physical letter, but don’t try to charge me a fee to send an email. and so on. I’m not saying it’s logical, I’m just saying it’s the normal perception of value for most folks.

and don’t get me started on DRM. If you’re going to RENT me the media – if I don’t actually own it to do what I wish with it, then there’s long-standing traditions that indicate that you will charge me less for that product. Maybe that’s part of it – maybe people, no matter what, just don’t see digital media as being permanent and thus think of “purchase” as more “rental.” Companies forcing DRM and re-purchasing when systems or OS’s change certainly reinforces that mentality.

Book publishers are in interesting times, but they are also trying to maintain older, traditional price structures and concepts in a different delivery mode. I applaud your experiments with something different, and I wish they’d worked out better for you. But you aren’t going to just give up, I don’t think. I’ve read your blog enough to know that you’re willing to try other different things. But then again, you aren’t a corporation answering to stockholders every quarter, either.

The problem with the testing theory is that it’s not the way it has worked for the music industry, and the print industry shares a similar internal conflict of interest.

Sales of MP3s have grown meteorically, but overall music industry sales is down 50%. Whatever new profit digital music sales are adding, they are not replenishing the number of sales lost. There’s a multitude of factors certainly, but it would be naive at best and bold-faced denial at worst to say that piracy did not play some part in the current numbers.

Thus, print publishers have to consider the same questions… How will legal access to ebooks affect piracy? Will we see positive or negative gains from digital sales? Will pricing ebooks at 9.99 hurt sales of the hardcovers, which have a higher profit margin? Finally, how will rampant piracy affect long-term perception of inherent value for the generation that grows up in a culture of piracy? Just look at this discussion… many here are complaining that ebooks *should* cost less, a perception based on the format, but not on actual costs involved. Or, going back to my own line of work, adult-oriented manga, an embarrassment of riches is freely, illicitly available to online readers, who have either no understanding of how they are created, or simply do not care.

There’s money to be made, for sure. In fact, many are doing it already. But the ones profiting are *service providers* – internet access, websites, community sites – but very few of them actually contribute to the creation of the material. And let’s not even get into how profits can be shared equitably between the rights holders, the individual creators. Publishers are merely working with a license, after all.

Simon – thanks for your insight, but the real question isn’t how much more it’s pirated for free (that’s always going to be higher) but whether the additional sales made a difference. I may be the odd one, but I have pointedly re-purchased some items again when they’ve been made available digitally for a good price to support the publisher/artist using digital distribution. I do think that a certain amount of piracy is “testing” the product to see if it’s worth the cost. I also think that the “testing” argument is stretched and used to justify a lot of theft, but it can be a legitimate form of promotion if enough people like it to become purchasers/patrons.

Ahem… yes, that particular affect of very low pricing was considered, so instead of offering it through our own system, we made it available through several established e-content sellers (some comics, some adult oriented. Some we openly advertise, some we do not, just to get the most conditions possible), most of whom supported popular payment gates like PayPal or Yahoo. Given the results, we simply decided to continue to offer the ebooks officially through our own site, for free.

One of the most personally grating things in the experiment was that a staff reviewer on one of the seller sites actually commented how all of our print books were easily pirate-able over the internet. Yes, there is a perception problem particular to our genre…

I also wonder if porn is more susceptible to piracy because of the embarrassment factor, but you’d likely know more about that than I. It is very complex, although I hope we can all agree that declaring war on your customers (such as assuming they’re all thieves) is generally a bad strategy.

Do you really feel that anecdotal numbers for one particular publisher with no print products can be extrapolated to the greater print publishing industry?

-Our print books have no DRM, obviously, and we’re getting our asses kicked by pirates.

-In an ongoing experiment, we offered up both pay ebooks at extremely low prices ($0.50), then leaked the book through bittorrent, to see whether people would even pay two quarters when free alternative is available. Total download according to bittorrent tracker info (not including the number of scan sites that reposted it, after removing copyright info) versus paid downloads was roughly 30 to 1.

Yes, it ain’t 2004, but these online models are still foreign to most big publishers. And you can’t predict the results or make broad claims because *audiences are different.* Younger readers may be more likely to pirate then older readers. People who work in a certain profession may be more willing to download books. Income brackets may have an effect. You’re simplifying an awfully complex question.

Author John Scalzi (published by Tor, a Macmillan imprint) advocates free-market pricing

I’m tempted to say – “Let them have it!” Remove that pesky government granted monopoly known as ‘copyright protection’ and we’ll see just how much the ‘free market’ values the work in question. Making any kind of “free market” argument in any publishing industry – whether we’re talking books, music, television, movies, plays, anything – makes me want to hit the person in question over the head with a few of my old Econ textbooks and ask them to describe to me, exactly, how the market for Dan Brown’s latest potboiler resembles anything remotely like a “free market”.

If this sort of thing could be solved by an “easy” call to “free market economics” it wouldn’t be a problem. You don’t see corn producers struggling with this kind of stuff precisely because the market for corn can be reasonably approximated with a fairly textbook free market model (hell when I was taking my econ classes it WAS the textbook free market model. AFAIK it probably still is). The market for books, on the other hand, is much more complex. Mostly due to copyright laws created because we have this “strange” desire for people to get paid for their work, rather than just taking what the market would bear. The “free market” has spoken in this instance – the price of these books would be $0 in a truly “free” market model. And we knew this well before the current bout of “IP piracy” started scaring the pants off of publishers – the effects of “free market” pricing is the reason that copyright laws were created in the first place.

This is not an easy question to answer. And the standard jump on a soapbox and scream about “free markets” response is not helpful. As much as I’m worried about Amazon becoming too dominant a player in the field, I am also worried that the publishers – who have a monopoly on their products – already have too much control over pricing anyway. Having iTunes has actually been really good for consumers because for the first time in a very long time there’s been someone with enough clout to force a decent deal for consumers onto the music industry. And it’s been good for the music industry whether they like it or not. The publishing industry could use a similar shake-up, and I think they’re going to get it. Because if they insist on overpricing their works people will just do what they did when the music industry was overpricing their works – ignore them and find the works for free somewhere else. That’s the true “free market” at work – it’s brutal and ugly, but that’s how it goes.

“Amazon.com [...] pays publishers $12 to $13 for Kindle editions of books on the New York Times best-seller list, and typically sells them for $9.99″

Amazon is taking a loss to do this, but the publishers are afraid that this pricing will cannabalize sales of the hardcover (the most profitable format) and lead to an overall expectation of lower book prices.

Amazon wants e-books to be cheap, to promote Kindle sales. Publishers want e-books to be not-as-cheap, to recoup the cost of the print edition and preserve profits.

Macmillian is currently offering Amazon a deal whereby they will get *more* for each sale than it currently does, and Macmillian will get *less*, but the cost to consumers will be higher, at least for new books. See their ad in Publishers Lunch:

“Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.”

(Link probably not permanent)

[...] Draper Carlson posts about it at Comics Worth Reading.  Check out the comments for interesting information on the breakdown of [...]

My gut says that they will sell more than twice as many e-books at half the price – once the infrastructure is in place! – but I can see why everyone should have a problem with Amazon. If 20% of the pie is now unclaimed, let’s share it evenly. And here is the really radical thought, maybe a third of it with the Author!

As for piracy, I can already download printed books. That’s not going to change with digital.

Of course, I think this is all hogwash. Digital can never replace print, but the two can help fill each other’s voids. I think this may be evident of how so many are being so fastly into the digital game, not realizing that the buckets of cash waiting to be picked up do not exist.

Printing & distribution [shipping and warehousing] are fixed, known costs — for a $25 hardcover, about $5 bucks.

Subtracted from an e-book version, that means a $20 book, not a $5-10 book.

Overhead–that can and should be eliminated–are things like the CEO and VP maze-cum-org-chart that most publishers (as part of major media conglomerates) are forced to tolerate and support.

Overhead that can’t be eliminated include proofreading, fact-checking, and editorial support — and yes, most authors need an editor, and the editor does more than just proofread; at the very least an editor acts as a whetstone to sharpen an already taut script, and often an editor is also an active collaborator — and editorial duties require someone with a lot of education and experience, if it is to be done well.

This editorial component is the aspect most often overlooked by casual commenters, and obviously discounted entirely by Amazon. A publisher (with it’s editorial staff) isn’t just a printer — there is a lot of work and a lot of payroll invested in bringing a manuscript to market.

If one chooses to discount *all* quote-publishing-unquote costs as merely the printing & distribution, then it might be said that you know little to nothing of the publishing business, when it it done well.