E-Book Sales Fall After New Amazon Contracts
wsj.com
wsj.com
In Canada, with a Kobo, buying from Chapters/Indigo, the trade paperback is often cheaper than the ebook. This is my situation, and it means that the only time I buy an ebook is if I'm extremely motivated to read a book right now and I can't get it digitally from the library. If I had a situation where I was travelling and extremely space-constrained I might pay the premium for an ebook, but that hasn't happened to me yet.
All that doesn't mean I don't read ebooks, but that I don't buy them. The ebooks I read come from the library, (I'm a member of two libraries with great ebook selections), or are classics from Project Gutenberg or similar.
I buy a fair number of ebooks, mostly technical, and mostly from O'Reilly. I love that they're DRM-free; in my case I take the PDF version, but they have other formats.
Pakt has a very low-intrusiveness form of "DRM." They print your name on every page of the pdf that you buy, but it's otherwise unrestricted.
I don't think Pakt or O'Reilly is going to come after you for sharing an ebook with a family member, and I've given a few copies of O'Reilly books to colleagues, to evangelize both O'Reilly and the tech in question.
It's a pretty reasonable compromise.
"Buying" an ebook currently is effectively renting it. If/when that changes, if/when I can actually buy an ebook, I will start buying ebooks.
I'm a bit surprised there hasn't been something better - although creating a tool to bypass DRM is probably not a good idea.
And, sorry, I think your argument about legal | not legal is bunk. If someone has bought an eBook, they help themselves to a pirated copy -- in some ways, that's best of both worlds. It would be quite nice if one could just buy a non-DRM from the get-go, but whatever.
Calibre is an ebook library manager. It's clunky in some ways, but I'm not sure what better options exist.
https://apprenticealf.wordpress.com/2015/09/04/dedrm-tools-6...
It's like buying an iphone and then jailbreaking it: I'm all for it, but it does not change the reality that you have just financed apple practices to the tune of hundreds of dollars. For ebooks the sums are much smaller, and clearly compromising if there is no alternative more acceptable, but the problem remains.
Not that complicated. And you get to loan hundreds of books at once.
I understand why people are downvoting my original comment -- it is very easy to dislike Amazon, for many reasons -- but the fact remains that you can lend eBooks.
You just have to put them on a physical device first.
And you're allowed to put each eBook on up to 5 devices. That means you could, theoretically lend up to 5 copies at a time. Not just one.
It's true that you can lend ebooks, there are just a lot more hoops to jump through ;) I can't lend my ebooks, because I don't have a spare device, but that can be changed if I want. If I'm going to pay just as much for the paper book, though, I might as well buy that and skip the extra device management.
It might work for "family sharing" (although Amazon actually supports that already), but for sharing with third parties it is risky in my opinion.
The only downside, as far as I see it, is that you're risking the $60 it costs to buy a Kindle.
I've never done this (probably b/c it just feels weird to loan devices, while loaning books seems perfectly normal).
But you could be right, declining prices of gadgets and aggressive restrictions like DMCA, and in 20 years it might be the opposite, just far easier to trade devices rather than licenses.
That's not all that much more than a single (non-mass market) book nowadays. Most technical books are in the $30+ range. Textbooks can cost hundreds.
Just because it's not one's opinion, does not make a comment downvote-worthy.
Also, it drives me mad that families have to have some weird hacky system to share ebooks - either have all ereaders use the same Amazon/Kobo/Whatever account, thus messing up any recommendations, or DRM stripping, which is a pain.
The times I really want to read a book now the instant delivery is great, but I think there have only been 3 times in the something like 4 years that we've had an ereader in the house that I've wanted a book that badly and the ebook hasn't been available at a library.
Edit: I do wish physical books were searchable, and had a built-in dictionary.
I have plenty of other devices so I'm not (yet) locked out of my library, and those Macs can be converted to Windows 10 (which does run the latest Kindle software)... but it reminded me it isn't a forever library. I need to make non-DRM'd archive copies of all my digital books if I want to be able to use them for more than 4 to 5 years.
well, it seems you can't even read them now.
That said, the page turn lag bugs me, too. It's better on tablets/phone.
(Unless maybe you're talking about one from 5 years or more ago?)
"People will read a book either because they like the book or to brag about it." - Bertrand Russel
ps. That said, I've bought few eBooks (for Kindle and iPad), the last one is for MiniTest suit (ruby/rails). Didn't read it yet though.
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Chances are better that if it is out of my price range then (unless it's something I really really want) I'll just say screw it and not bother.
Trouble was before Amazon had that power. Seems fair that publishers should be able to set their own price.
Personally I don't buy an ebook if it isn't in single digit price. Anything more and I might as well buy the hard copy if I need it badly, otherwise I am better off not buying it at all.
You didn't need to be a genius to see that coming. The more I see ebooks I'm vaguely interested in selling for £15 or more, the less I'm going to buy them.
I wonder how long we're going to see these inflated e-book prices before the publishers drop the prices to what they previously were. If this sales trend continues they'd be dumb to not drop the prices of e-books.
If customers "understand" this, they mostly understand incorrectly. While it may make intuitive sense that printing and distributing a book should make up a lot of its cost, that's not actually true. I haven't looked at the details for a few years but this is something I wrote a while back on the topic: http://www.cnet.com/news/why-e-books-arent-cheaper/
(To summarize that post, printing plus the take of wholesalers who handle distribution is only about $5 for a hardcover.)
Prices are not linked to costs but to what the market will bear; in an electronic media market where prices will always be anchored to zero at one end (thanks to piracy and intangible goods), what the market will bear is inevitably less than what it used to be.
Customers understand this more intuitively than media producers who grew up in very different times.
Here's another huge cost you don't include for the publisher with print books -- they are returnable and often get returned. If a publisher gets 25% of the books sold returned, effectively the publisher is getting only about $10 for a list price of $28 / wholesale $14. (Return rates can be higher or lower, but there are always returns.) Using the cost figures you use on your referenced example, the publisher loses money on the print book. And, you omit other costs incurred by traditional print book publishing, including shipping, warehousing books and fulfilling orders.
With ebooks there are no returns (a huge factor in the analysis), no printing, no shipping, no warehousing. Wholesale prices are a higher percentage of the list price. We publish ebooks and get about 65% of list from Amazon, Apple and Barnes and Noble (it's a bit higher or lower depending on which vendor) So it's obvous that our costs are lower for ebooks and the share of revenue we get is higher. In other words, list price of ebooks indeed should be far less than print, and ours are.
In the figures that I quoted, I believe that those are rolled into the wholesalers cut.
Ebooks can certainly be priced so prices are lower to consumers than hardcovers (as well as PoD) while the author/publisher makes at least as much. My point with the figures--which seem to be surprisingly difficult to nail down authoritative sources for--was that printing/distribution isn't the lion's share of what someone is paying for when they buy a hardcover book.
Traditional publishers still have a business model that depends upon bookstore sales. The real problem for traditional publishers is, if ebooks are priced much lower than print books, it's an obvious problem for an important part of their business model. So they struggle mightily to keep ebook prices high and to persuade people that the costs of ebooks and print books are the same. As the article indicates it's not working -- self publishers and non-traditional publishers can produce ebooks at a much lower price point, because the ebooks cost less to produce.
Which is what customers seem to want.
Amazon's last four quarters of sales: $95.71 billion
Walmart's last four quarters: $485.3 billion
Amazon's total profit over 20 years: ~$0
Walmart last four quarters of profit: $16 billion
Facebook, too, has a greater market cap than Walmart, based on trading at 90 times earnings, versus Walmart's 13 PE.
But part of it is probably just the same that is happening with music and TV. There are now very diverse sources to fuel media consumption, you are not bound to a specific "curated" collection. Hence the success of US series in Europe, where most of the time you can't even see them legally.
Big publishers did not object to Amazon selling for below list because it would impact Apple. They objected because they thought selling books at a discount would cause consumers to expect a lower price and they would no longer be able to sell higher-priced books. This is just what's happening right now. Amazon prices books very effectively and even more signficantly, Amazon has opened the marketplace for book sales to self=published authors and to independent publishers who are trying new models. For example I'm CEO of Booktrope which has a new model that produces ebooks that can be sold in the range of $2.99 to $9.99. (We pay a higher percentage royalty of authors in view of the lower prices.)
Amazon primarily but also Apple and Nook have opened up huge markets to us and our books are available broadly to readers. It means that big publishers will face competition from us, publishers like us, and self-published authors, and it's not going away.
The only way for the big publishers to avoid that would be to somehow block out competition including self-published authors and smaller, more efficient publishers who can produce ebooks at a lower price point. It's not going to happen so big publishers are at a crossroads and we should expect them to adjust or they will face continuing decline in sales.
Because if it's that good, it will show up on the various pirating sites quickly.
There is a new ceiling on media prices, books included, and these companies are just going to keep loosing money until they adjust their pricing to the new reality.
Pirates are only a certain percent of the population.
The optimal revenue generation probably occurs when you just ignore pirates. If they dash prices 75% and double the number of sales, they still lose revenue. You'd need to quadroople sales to just break even.
Music is DRM-free these days, no reason for books to still come with horrible restrictions.
> Before 2010, book publishers operated with a “wholesale” model for e-books in which they sold titles to retailers, which could discount as they saw fit. Amazon was willing to buy a title for $14.99 and sell it for $9.99, taking a loss to grab market share and encourage adoption of its Kindle e-reader.
> Publishers worried that such discounting kept Apple Inc. and Google Inc. from emerging as competitors, as those companies might not want to lose money on e-books.
Seems reasonable to me.
> [Amazon] accounted for 64% of the U.S. e-book market, by units sold
That's actually lower than I thought, but higher than publishers should be comfortable with.
Speaking as an author published by the major houses (Penguin Random House and Macmillan in the USA; Macmillan and Hachette in the UK) I'm not seeing my books hitting the ebook bestseller charts much -- but I'm not seeing my sales decline relative to where they were a few years ago, either. What seems to be happening is that the bestseller charts are being dogpiled by self-published titles on deep discount -- 99 cents to $2.99 seems to be typical. And the old joke "sell it at a loss, we'll make it up on volume" seems apposite at this point.
Nonsense. You could maybe argue that they were a monopsony, but even that is a stretch.
"What seems to be happening is that the bestseller charts are being dogpiled by self-published titles on deep discount -- 99 cents to $2.99 seems to be typical."
Someone selling a product for less than your antiquated publisher sells it for is not "predatory". Those authors are almost certainly making more per copy than you are.
The consumers are paying less. The authors are making more. What is the problem with this?
Nope, not seeing it. (Seriously. You're telling my the sky in my work is green with pink polka-dots. Hint: I do this for a living. Yes, some self-pub authors make out like bandits. But you might want to look up what the average revenue is, and how big the gap between mean and median looks.)
I've noticed that there is an awful lot of very-high-quality content being produced for free, Worm and Shadows of Limelight are better than most published fiction, but are free and the authors seem uninterested in anything more than Patreon donations. As making art is something people enjoy and there are no bottlenecks to distribution, maybe we should expect there to be fewer professional artists and vast entertainment niches filled by popular amateur or part-time artists.
I sort of imagine a world where one can have millions of readers and still can't be a pro - but probably Patreon would pay a living wage after that point.
It's also not someone just doing it as a hobby, but someone really trying to make a living as an author. And it's not at all clear that it's been very successful. The $2200/month from Patreon is still a fairly pitiful wage for such highly creative work. And I think it's pretty sad if we end up with a world where that's how things work.
(I wrote a bit more on both the merits of Worm as a piece of fiction and on the business model last year here https://www.snellman.net/blog/archive/2014-05-24-book-review... . It's interesting to note that the Patreon campaign has not really made that much progress in 15 months, it was $1200/month then).
Amazon pays 70% of retail. How much is your publisher paying you, assuming you earn out?
"But you might want to look up what the average revenue is"
The average revenue for traditional publishing is close to zero, because 90% or so of the writers never get a publishing deal.
"Hint: I do this for a living."
Yes, I understand that you dislike the prospect of competition. That's not actually my problem.
If authors get more money for ebooks that would be an argument for buying ebooks despite their drawbacks.
The cost of printing is a very small component of the cover price of a book; for paperbacks you're talking around $0.5, and for hardbacks around $2-3.
The author and publisher get roughly equal shares of the profit from a traditional trade book sale; the lion's share of the profit goes to the retail distribution chain, i.e. Amazon. (And when I say "lion's share" I mean 30-70%, depending.)
The author's cut is a royalty percentage of net receipts. And yes, I get a much larger percentage cut of ebook sales than paper sales -- it comes from what would otherwise be the physical dead-tree printing costs.
Wrong, market share was less than 80%, Nook eat a lot of market before iPad
> Amazon were clearly operating a predatory monopoly
Citation needed
The problem is that the publishers aren't the only people who can produce ebooks, just as Kodak wasn't the only company that could produce digital cameras.
This is going to bite them in the butt in the long run.
The headline of the article is that they have lost revenue because of their business decisions. I just wanted to emphasize that there's more to business than maximizing sales revenue of your product: The way you sell your product shapes the market downstream, and it is reasonable for publishers to think that Amazon's market share grabs were anti-competitive and that a lack of competition is worse for them.
Demand curves are not the only thing that go into pricing decisions.
Are you unconvinced that allowing Amazon to absorb losses in order to dominate their distribution market is possibly bad for them? Or are you satisfied with treating them with contempt because it's so "obvious" to you that they're being boneheaded?
That is absolutely not true.
The marginal cost of delivering an ebook is so close to zero that it's hardly worth calculating.
Amazon (or anyone else) can easily deliver ebooks for $0.99 and still make a profit on every single sale.
Of course, the quality of paper books is also horrible nowadays. Crap paper, crap printing, crap binding.
Discounting is an especially good retailer strategy with overpriced ebooks. A retailer only pays list price for an ebook after it receives payment from the consumer, so the optimal price for a product like this is the one that generates the most gross profit basically (sales times margin). Amazon optimized. Apple and Google could certainly follow suit, and in fact, Google also aggressively discounted ebooks like Amazon during the time period in question. Apple's strategy seems to be to keep prices and margins very high on all products it sells, in my view, because most of those products are physical things that do have marginal cost.
In any event, it is completely unreasonable to say, publishers were concerned about Apple and Google losing money, because publishers knew that Amazon was making money on each sale, not losing money. Publishers wanted to keep retail prices high out of a short-sighted belief that this would protect print book sales and that it would keep their own margins high. They're now paying the price in lost sales, and it's their own outrageous pricing that's the problem.
I have a whishlist of over 1000 books on Amazon. I can just go through that list and wait with the newer ebook titles until they drop down in prices. This will be my "customer buying pattern" from now on.
Winners: 2 to 3 year old books and Amazon. Loosers: New books and the publishers.
I live in the US now. I don't have cable TV but I do pay for Netflix and HBO Now and will probably pay for the ad-free Hulu Plus now that it exists (I'd never pay for an ad-supported streaming service) and, what the hell, probably Showtime too. In part because I watch them but I don't really need all of them. I really want to put my money where my mouth is here and support such services.
I often now see novels on Amazon where the paperback is $8 for a book that's been out for years. The ebook is... $10.
Now in the case of print media like the NY Times and the WSJ, I get why they prefer the physical copy: it comes down to advertising. Advertisers will still pay more for print ads and certain advertisers will only buy print ads so they have to print physical copies a bunch of people won't read. It's why, just now in going to this page, you see the WSJ advertising print + online access and why print + online is usually cheaper than just online.
But I don't get this at all with ebooks. Paper books need to be typeset and printed, supplies for that bought and the physical products need to be boxed and shipped to various distributors and so on. The distributor, printer and retailer all need to take cuts.
The ebook is essentially direct to market with zero distribution costs.
Now ebooks offer a lot of advantages to the consumer: immediate access, searchability, more portable. But they also come with negatives: you can't as a general rule resell or even give away an ebook so it can only generally be read by the buyer and their immediate family.
Publishers should be loving this because publishers hate the preowned book market. It's why textbooks are often changed from year to year: just to devalue used previous editions and force students to buy new books.
Yet publishers are acting in a way that strongly suggests they just want to kill the ebook market. Could that be it? They just know how to print and sell paper books and want to keep on doing it? Could it be fear of piracy and the inability to adapt to this new business model?
My own sense of fairness kicks in here: when I see a $10 ebook for an $8 paper book I just don't buy either.
I'm reminded here of the cable TV industry. Cable TV is dying. It's why cable companies will essentially give you free Internet if you subscribe to TV services (and charge you $50-80/month if you don't). This artificially props up the number of TV subscribers, which is important because the price of content is driven by the number of consumers. The more consumers a provider has, the lower the pre-consumer cost of channels. This is also why Comcast was so desperate to merge with TWC and has since merged with Dish: to reduce content costs and increase their negotiating power with content providers.
But all of this is just seeking higher land in a flood: eventually you run out of land anyway so you're just delaying the inevitable.
We see the same thing in the music, TV and movie industries where direct-to-market versions are often more expensive than, say, buying a CD or DVD and having it shipped to your house.
Perhaps this really is the long game of setting price expectations.
Piracy seems to be the response of the market to "unfair" pricing and licensing practices and it does seem to eventually force change. The problem is that once you've taught a whole market to be pirates, only some of them will switch back to more legitimate channels.
It still astounds me that you can be forced to watch FBI disclaimers and the like on movies you legitimately buy and have incompatibilities that won't allow you to watch HD content (HDCP versions and the like) yet what has none of those problems is pirated content. It's a wholly better user experience.
I really wish these old world industries would just accept we live in a digital world and get over their anachronistic business models.
[1]: http://www.itnews.com.au/news/day-13-iinet-ceo-says-bittorre...
The vast majority of the cost of the book is not in the production of the paper product, but in the production of the content of the book and the marketing of it. This remains static regardless of the delivery vehicle, but is non-obvious to the consumer.
My big concern is that the consumers attitude about the price of books is going to lead to a world where it is impossible to maintain the current standards around content creation, and that the drive to the bottom in prices will mean much fewer opportunities for professional writers, editors and booksellers. I believe that will be worse for me as a book consumer.
How so?
So why do traditional publishers say that ebooks cost as much as print books? (Booktrope is an online publisher focused on ebooks and print-on-demand paper books, and we certainly do not say that ebooks cost as much as print!) For traditional publishers, low ebook prices can undermine print sales. A big part of their business model is selling print books at high prices through bookstores. Lower ebook prices obviously are a problem for that model. Also, traditional publishers are used to a world where they have great connections with tastemakers and can persuade people their product is "better" than the competition. If you can do that, you can keep your retail price high -- like Apple does in the phone/tablet/computer world. But it's not working -- there are lots of great books being self-published and coming from non-traditional publishers these days, so, as the article says, big publishers are really starting to suffer from their own pricing policy of trying to keep ebook prices artificially high.
I own a Kobo too and hope Chapters / Indigo offers the same service.