Monday, July 13, 2009

How do you spell "shortsighted?"

S-o-u-r-c-e-b-o-o-k-s. As in Sourcebooks, Inc., an independent book publisher that recently announced it is thumbing its nose at e-book readers.

In an article titled "Publisher Delays E-Book Amid Debate on Pricing" from the July 13 Wall Street Journal (I'd link to it but WSJ are stingy with their online articles and the link would expire in a week), the chief executive of Sourcebooks says they are delaying the e-book release of the latest in their Brian Hambric series* for as much as six months after the dead-tree version hits shelves.

* I'd never heard of it, but apparently it's pretty popular with the Harry Potter crowd?

"It doesn't make sense for a new book to be valued at $9.99," said Dominique Raccah, CEO of Sourcebooks, which issues 250 to 300 new titles annually. "The argument is that the cheaper the book is, the more people will buy it. But hardcover books have an audience, and we shouldn't cannibalize it." An e-book for "Bran Hambric" will become available in the spring, she said.

Let's break that down a bit, shall we?

First, "It doesn't make sense for a new book to be valued at $9.99." Um, it doesn't make sense to whom? Wiser folk than I have repeatedly done a great job at breaking down the various costs involved with publishing and shipping dead-tree books. Sometimes those costs even include being forced to accept unsold merchandise.

When you take away those costs and replace them with a digital product that by nature is in unlimited supply and costs you nothing to distribute how much larger is your profit margin?

Consumers are savvy. They understand these things. No one, especially Kindle owners who cherish reading, wants to cheat publishers or authors out of hard-earned money. But no one wants to be gouged either. Like it or not, the market has settled on a $9.99 price point for new novels. As a publisher you either embrace it or risk alienating a growing percentage of your readers.

Second, "But hardcover books have an audience, and we shouldn't cannibalize it." Maybe you can help me with this one because it just baffles me. Are the profit margins for publishers that much higher for hardcover books than for e-books? If so you're doing something wrong. And if not, why does it matter in what format your fans read your works?

Is it a sentimental clinging to the venerable printed word? Is it a growing fear that as the e-book market grows and the dead-tree format shrinks there will be less of a need for publishers at all?

After watching the music industry completely fail at accepting and embracing digital technology and seeing the resulting consequences, it's almost unfathomable that any other major media industry would make the same mistakes. But the publishing industry is heading in that direction.

Trachtenberg, Jeffrey A. and Geoffrey A. Fowler. "Publisher Delays E-Book Amid Debate on Pricing". Wall Street Journal. 13 July 2009.


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What I'm reading on my Kindle: Nothing! I'm reading a dead-tree edition of Under Milk Wood by Dylan Thomas.


karen wester newton said...

You nailed it when you said, "Are the profit margins that much higher for hardbacks?" The answer is yes. That's what publishers are reluctant to give up. They will dither about how it really costs "almost as much" to create an ebook as a print book, but what they really mean is, they make a LOT more money on a hardcover that sells at or near its retail price than they do on any other format, trade paper included.

But refusing to issue reasonably priced ebooks (no more than $10) concurrently with hardcover is short-sighted because most ebook readers don't buy hardbacks anyway. They want digital books, not print.

Anonymous said...

An eBook will cannibalize sales...I'm amazed by the blazing idiocy of this remark. The only way this statement makes sense is if he believes Kindle owners won't wait and will buy the DTB but is this realistic? Not likely.

First, I can wait, after all I have over 100 books (more than half in the public domain) so I'm not hurting for something to read. Research shows that we Kindle owners buy a lot of books! Second, I bought a Kindle to avoid purchasing DTB so this just ticks me off. I'm more likely to borrow it from the library and then write a letter to the author letting him/her know the publisher lost a sale by not releasing an eBook in a timely fashion. Third, while I'm not so inclined, I know full well that books wind up online quite quickly at warez sites. The music and movie industry discovered that digital consumers want their content now, not next month. Talk about cannibalizing sales. Looks like book publishers smoke the same weed...and they'll learn the same lessons the same hard way. Sad.

Karen in TN said...

I saw a breakdown last week (sorry, didn't save the link) that showed an 8 times higher profit on ebooks than hardback, simply because (for now) Amazon is paying publishers the same amount as if the book were a hardback. It isn't that hardbacks make more margin (although they do, versus paperbacks), as that I think publishers are afraid that if the market truly "settles" at 9.99, they'll eventually be forced to accept a lower price from Amazon and their ebook profit will be back down to "normal" (actually, down to closer to paperback prices).

What's actually happening, is that ebook purchasers are often the ones that waited until paperbacks or used copies became available; they are now actually paying more (in many cases) for the "hardback ebook" than they would have before, simply because they don't wait for the $10 to $15 paperback (usually in an awful "trade" paperback size). Plus all the readers they never had due to issues with font sizes (few books get large print editions and those are then too big to handle for the target audience).

As for the Hambric book - let them wait 6 months. At that point, I doubt anyone will be willing to pay more than the "standard" $6.39 of paperback prices (meaning they lose even more per sale, plus many will just get a used or library copy for free).

Ebooks are a license to print money - too bad that some publishers don't see the potential.

Books On The Knob

Twitter @paulmikos said...

Dominique Raccah took a very brave and unpopular stand to launch a very necessary and important conversation for the publishing industry. It is interesting that none of the "big guys" seem willing to take a stand, and a shame that the WSJ and NYT zeroed in on the "cannibalization" issue instead of the pricing issue. The real story here is what Amazon has done to establish customer expectations and cement their dominant market share position, not to mention how publishers have just played along. Until now.