What a crazy decade it’s been, huh?
Vox has a look back at the big ebook story of the decade: the Apple anti-trust lawsuit around agency pricing. It’s cast as an explanation of why the anticipated “ebook revolution” never precisely came, but per the article, that lawsuit (and its circumstances and consequences) is largely the explanation (along with the surprising fact that gadget-happy millennials by and large prefer paper books to electronic ones). And after reading through it, it’s hard to argue with its conclusions. It’s a pretty good article, including a bit of post-mortem from Andrew Albanese, author of The Battle of $9.99 (which I reviewed here).
The article offers a pretty good recap and explanation of the lawsuit itself—how it grew out of Amazon offering ebooks at bargain prices to push its $400 Kindle device, followed by Apple’s desire to get into the ebook business but not have to compete on price with Amazon. The DOJ filed a lawsuit, the publishers backed down, Apple fought it to the bitter end (and lost at trial and every level of appeal)…but after the several-year consent decrees expired, the Big Five publishers cheerfully jacked their ebook prices right back up again, Amazon just as cheerfully makes them look ridiculous by pricing paper editions lower, and here we are. As I noticed a couple of years back, publishers are selling fewer ebooks, and are openly happy about that fact.
As Vox points out, these high ebook prices tend to drive readers away from the traditional publishers’ ebook offerings and toward the much less expensive self- or indie-published titles. They also serve to hurt debut novelists from traditional publishers, because readers are less likely to take a chance on someone they don’t know at those prices.
And the piece quotes antitrust law professor Christopher Sagers and publishing consultant Jane Friedman, who say the real problem was not so much that Amazon has a monopoly, it’s that more or less all levels of the publishing industry have contracted down to having just a handful of major players at most.
“There used to be hundreds of publishing companies. They’re now mostly owned by five,” Sagers says. (After that Department of Justice lawsuit, Penguin merged with Random House, and the Big Six became the Big Five.) “Why are ebooks expensive? It’s not because Amazon is vicious. It’s because there’s no competition at the wholesale level.”
Amazon is the biggest ebook name; the Big Five Publishers do the lion’s share of traditional publishing; Ingram is effectively the only retail distributor of paper books anymore. Sagers felt that the DOJ should have sued Amazon at the same time it sued the publishers.
It’s an interesting point. I’ve already pointed out that Amazon’s rise can be laid at the feet of the Department of Justice’s “consumer welfare” standard of antitrust enforcement for the last forty years (most recently seen in the decision to allow movie studios and movie theaters to vertically integrate once more). But taking a wider view, this laxity of antitrust enforcement is probably also every bit as responsible for the rise of the multinational publishing conglomerate, and the collapse of what used to be a broad book retail distribution market into just Ingram. Having fewer companies makes things more efficient, which is “better for the consumer.” Or something.
In the end, here we are: stuck with a market that overprices ebooks, or at least lets Amazon cheerfully undercut them on print books which amounts to the same thing. Publishers are starting to put the squeeze on library ebook offerings, as well, because they have sufficient control over how those are offered that they can. And it doesn’t exactly look like things are going to improve any time soon.
Image credit: Photo by Perfecto Capucine on Pexels.com
E-book pricing needs to come down. It needs to be significantly lower than print pricing because e-books deliver less value. They can’t be resold, displayed in my home library for guests to read, or lent out except under very restrictive conditions. They’re also unappealing for books with a lot of visual content; I’m not going to be buying graphic novels in e-book format unless they are really steeply discounted.
Those self-published books that cost anywhere from free to $4.99 on Amazon are likely a much bigger part of the total publishing picture than we know. Amazon doesn’t report sales so we really don’t know how many of them are being downloaded and read.
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The publishing industry is stuck in 1850. A textbook author gets $500-$1000. Theme they sell the text for $399 a copy. How is that fair? To anyone?
Now they sell the ebook for $199 with no expense put into actually publishing it!
When VHS came out it was $50+ a tape. It didn’t take off till tapes dropped to below $20. More than anything pricing killed Betamax. DVDs started in that range too. Now new discs are under $10.
So how does a $200 ebook help anyone other than publishers? Ebooks should have cut book prices. Like every other advance has.
Quote: As I noticed a couple of years back, publishers are selling fewer ebooks, and are openly happy about that fact.
And it’s easy to see why. Just follow the money. Here’s Amazon’s corporate dictate on the matter. I assume the major publishers get the same deal as the independents.
Follow the links to get the whole story, including the odd file size restrictions. Keep in mind that quite a few major publishers will refuse to accept one or more of the requirements for that 70% royalty option. That means they do all the work for creating that book, formatting it, publicizing it, paying the author and so forth, but only pocket 35 cents on every dollar. Amazon does little more than process a financial transaction and a file download and yet pockets the other 65 cents. If that is not robbery, what is?
I’ve grow tired of all those over the years who have whined about the high cost of ebooks from major publishers but who’re apparently too lazy to research the deal that Amazon offers those publishers. They aren’t stupid. They look what Amazon is offering to pay them and make a perfectly rational decision to limit their ebook sales. That means pricing them high. It’s not their fault ebook pricing is so high. It’s Amazon’s.
Actually I fully understand the monetary aspect. A 99c ebook brings the house/distributor 65c. The publisher takes 35 and of that 35 the author get about 3.5 cents.
Such numbers make sense in A physical world when hard backs range from $20-$60. 20 years ago.
Today there is very little in the way of marketing. Snag an LED billboard slot for $20 per week. On a two minute cycle. A bench for $200 per month. A sign on a bus for $50 a month. 6 books have had a national tv spot in the last 5 years. 2 from Steven King. This isn’t 2000, nor 1980.
The largest expense a publishing house faces today is physical distribution. Sending paper to a store. Without considering pre payment to the author and editor:
Ignoring scale of bulk discounts… the biggest heavyweight books cost under $10 to ship. Most are under $5.
So if the publisher spent $1 on a solo print and $10 to ship and $5 in electric (there’s almost zero human labour in printing books today) you got a grossly estimated $16 to make and deliver a book. They make $4 on a $19.99 book.
That $4 is split up almost identical to the digital version. 65% to the publisher. 15% to the editor, 20% to the author.
So selling a book on amazon in digital form that costs a few penny in distribution (once) shows that amazon is exactly in line with the long standing industry practices. It’s not the big book companies getting screwed. It’s the authors. Just as they were screwed with physical books.
Any publisher can open up a store online and sell their own digital books with a reader app. But they would still have to complete. Competition is something big publishers don’t like to do.
Consumers are far smarter today than ever. Services like the Amazon market, eBay, etc have taught people What distribution actually costs. Home printing has been around since the late 80s and many small authors have sold physical books in person. Myself included. Trade shows and conventions today in every industry are always host to booths of self publishers who print paper and bins at home. The average price floating around $10 for those “books”.
So I stand with my original comment. Does anyone expect actual sales on a $100 ebook? That cost nothing to distribute?!?
I think the e-book market is stagnant because of the high prices. Like many people I know, I’m buying less e-books, but I’m borrowing more through overdrive at my county library. My county library has seen a growing demand for e-books. Of course now Macmillan wants to throttle that too even though they already charge libraries triple what they charge individuals. Hopefully the other publishers won’t follow suit, but I wouldn’t bet on it.