Romance, Historical, Contemporary, Paranormal, Young Adult, Book reviews, industry news, and commentary from a reader's point of view

Why Ebook Delays Won’t Save Trade Publishing

Hardcovers are the lifeblood of the trade publishing industry. Without hardcovers, the trade publishing industry will die.

David Young, CEO Hachette Book Group: “I can’t sit back and watch years of building authors sold off at bargain-basement prices. It’s about the future of the business.” (Via WSJ)

Facts. Trade publishing is referred to as such because books are sold to booksellers or wholesale distributors or “the trade”.   According to Association of American Publishers report of 2008 (pdf),  adult hardcovers accounted for $2,436,070 in net sales.   Adult trade paperbacks were $2,435,070.      The total trade net sales were $8,079,423.   Therefore, adult hardcovers were 30% of the overall books considered to be “trade”.   Adult trade paperbacks, however, were 29% of overall net trade sales.   Juvenile book sales round out the remainder of the trade category.

In the tabulated statistics, mass markets accounted for   $1,075,5666 in net sales but isn’t considered part of “trade publishing.”

Adult hardcovers make up a good portion of the big six conglomerates.   One concern is that ebooks at the reduced price of $9.99 won’t be able to replace the revenue generated by hardcover sales.   Problematically, is that hardcover sales have been declining for some time and before Amazon unveiled the $9.99 ebook price point.   Trade paperbacks have become increasingly more profitable.

While Harlequin might not specialize in trade publishing, it was profitable relying primarily on volume sales of mass market and category books.   Harlequin accounted for $418 million in net sales according  to Business of Consumer Publishing 2006.

Hardcovers sell the best and at the highest prices in a physical retail market.   Ebooks push down the price of hardcovers.

Facts. As of 2008, Amazon overtook Barnes & Noble as the largest bookseller in the U.S.   Amazon Media took in $5.35 billion (books, music, DVDs) compared to Barnes&Noble which took in $4.68 billion.    Barnes & Noble points to the backlist as comprising the majority of their business. (same link).

In 2007, Nielson reported that the number one purchase online were books and that   41% of internet users had bought books online.   Bowker reported in May of 2009 that internet is the number 1 retail channel for books at 23% of the market followed by retail chains at 21% of the market.

Further, the majority of big book sales, the ones that are considered the “hits” like Edward Kennedy’s memoir or Dan Brown or Sarah Palin’s books, are sold at discounters like Sam’s, Wal-Mart, Costco, and Target.   Very few hardcovers are purchased by consumers at non discounted prices.   Thus the downward trend of pricing has been occurring for some time now by the publishers’ biggest accounts.

If ebooks are not available for the most popular hardcovers, adoption of ebooks will slow, some ebook readers will buy the physical copy, and those ebook readers that are left over are so statistically small as to not make a difference.

Facts.   Ebook adoption has been rising steadily since the early 2000s.   Because ebook sales are not broken out by category, we don’t know exactly how much of the trade market that ebooks comprise.   5% of Dan Brown’s The Lost Symbol were reportedly in ebook form.   We do know that the ebook market is nearly doubling every month.    The ebook market developed because consumers are becoming larger consumers of digital media.   Every other form of entertainment can be had in digital format from music to movies to games.   Consumers are now expecting every form of entertainment to be “on demand”.   It is consumer demand that is driving adoption of ebooks not the availability of content.   According to Rentrack, video on demand is up 14% this year.

Supposition. Based upon  anecdotal  evidence such as commenters here, it is unlikely that those who prefer to read ebooks will buy a physical copy of a book. Most likely those readers will buy either a different book, not buy a book, or will purchase some other form of on demand entertainment.

Truth.   It is true the ebook readers are statistically small.   Assuming that ebooks account for 5% of the overall sales of one book, ebook readers are only a tiny segment of the overall market.   However, when hardcover sales are down by 15% as the CEO of HarperCollins noted, 5% can be meaningful on the balance sheet.

Print book sales are subsidizing ebook sales.

Facts. Currently this is untrue.   While ebooks are not without expense, the publication costs of a book have largely been absorbed during the print book process.   The editing, copyediting, cover art, and publicity are all part of the print book profit and loss statement.   The production costs of the ebook include formatting and DRM.   If ebooks were so costly as to require subsidies by print sales, it is unlikely that publishers would offer higher royalties for ebooks.

Ebooks are simply another format of book and can be subject to windowing.

Windowing is a term used by the trade to refer to periods of time in which it will sell one particular format.   In movies, the windows are theatre release, DVD release, PPV (sometimes that comes first, premium channels and then regular tv.   The traditional window for hardcover is 6 months followed by a trade paperback or a mass market release. Of course, the mass market doesn’t always come to fruition if the sales of the hardcover are limp.

Three of the big six US publishers are trying to create varying windows for ebook releases depending on the book itself, and I suppose, the success of a particular book.   If a hardcover is selling well, there is no need to push out the ebook. For example, the Edward Kennedy memoir has been selling so well in hardcover that the publisher will not release a paperback until 2011.   The ebook version is delayed indefinitely. According to Publishers Marketplace, the Kennedy book will be available in eform later this month.   (PM, paid link)

Publishers will be experimenting with ebook releases, pushing back ebooks 3 weeks to 4 months on a whole variety of books.   HarperCollins is looking at delayed releases for 5 to 10 books per month. Simon & Schuster will delay ebook releases for 35 books in early 2010.

Ironically, as publishers look to expand the publishing windows, there is a move toward day and date release in the movie industry.   The movie Twilight was released in both DVD and on demand on the same day:

As the entertainment biz inevitably moves toward a day when discs will give way to product delivered directly to TVs and computers, the business is poised somewhat uneasily on a tightrope. Summit and some majors like the day and date VOD and DVD release strategy; others are worried it will cut into DVD sales.

But that didn’t happen with “Twilight”: The March release became — and still is — the year’s top home entertainment title. Almost 8.5 million copies have been sold on disc or via download on sites such as iTunes, while rentals have exceeded 14 million transactions on all formats, with VOD accounting for a healthy portion of that.

My other problem with windowing for ebooks is that publishers do not market books the same way that movies are marketed.   Movies are marketed constantly throughout the various window period, from theatre release to TV showing.   Books are not marketed in this way.   Books are marketed, primarily, by appearing in bookstores and having buzz.   Occasionally, a big book will engender a TV commercial or print ads.   It is rare that a book is marketed both at the time of its hardcover release and its paperback release.

For an ebook, there is no “in store” advertising.   When the ebook shows up in the online store, 3 weeks to 4 months or longer after all the hardcover publicity buzz has been spent, there is nothing to signal that the book is for sale.   It is a forgotten title.   At least with a paperback, it might show up on the new release table.   If you’ve ever browsed a “new release” list at an online retailer, you’ll understand that finding a newly released ebook is very hit or miss.   Those ebooks that are windowed are largely going to be lost sales.

It’s far better to do day and date release with pricing tiers and capture the sale versus windowing releases based on format.   Those readers who are anxious to read can purchase the book in the format (paper v. print) she desires while the publisher maximizes profit through price discrimination.

Hardcovers are to Theatre release what ebooks are to DVD release.

Consumers don’t think like this.   There is an event like quality about attending the movies. It is a shared experience and one that cannot be replicated at home very easily.   Hardcovers provide no additional benefit over ebooks other than possibly being more durable.   The other benefits of a print book such as sharing and resale are elements more akin to those that run with a DVD versus a theatrical experience.

It’s all about Amazon.

Mike Shatkzin posits that these delayed ebooks are really an effort to wrest power away from Amazon.   If this is true, I find it terribly short sighted.   I’m inclined to agree with Mike Cane who believes the book fight will come down to an epic one between Google and Apple. Already Google and Apple are sparring over music and online ad companies.   Google is developing its own phone.   Amazon and Barnes & Noble might have the Kindle and nook respectively but they are also making sure that there is an iPhone, PC, and Mac app.

According to Bowker (see aforementioned link), 48% of people who read ebooks read on their desktop and laptop. In the 2008 RWA reader survey, over half of romance readers read ebooks on multifunction devices including cell phones, laptops, desktops.   Netbook sales are increasing while laptop sales are declining. Next year and in the ensuing years, we will be treated to a number of low cost multifunction devices like tablets and that will provide book reading platforms.   (As a side note, here is an interesting article about how market leaders in the computing industry were able to catch the disruption of netbooks instead of being displaced by insurgents.   It’s interesting because ebooks appear to pose a significant disruption in traditional publishing.).

The Reader As the Customer

I think one of the most fascinating things that I’ve learned in 2009 is that the reader is not the customer of the publisher.   It is the trade.   It is the reseller.   Because we readers are not the customers, publishers don’t make consumer based decisions. They make reseller based decisions.    Because the publisher is geared toward selling to the trade rather than the consumer, we readers are often bemused by their behavior.   Understanding this goes a long way in explaining Carolyn Reidy’s acknowledgment that some people will be disappointed in the delayed release of ebooks while simultaneously recognizing that ebook readers are the most devoted of the reading population.

I have not bought into the idea that in order for there to be a robust publishing market that the big six publishers or the current marketplace has to survive intact.   I do believe that hardcovers are likely on their way out as the dominant force in the industry.   There may very well be a contraction in the market.   I can see at least two of the big six publishing conglomerates sold off or broken up in the next few years.   Random House and Simon & Schuster have had dismal financial news for the past few years.   However, even if large publishing conglomerates reduce their number, publishing as a whole can still be a vibrant and lucrative market.   The question is, of course, who will be the market leaders of this evolving industry.   My opinion? It’s the publishers who start to recognize that in this new market, the customer is the reader and not the trade.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

54 Comments

  1. Amy S
    Dec 13, 2009 @ 06:38:11

    Great article. Very interesting.

  2. library addict
    Dec 13, 2009 @ 07:06:47

    If I actually shelled out the money for an eReader, or even a non-ancient laptop so that I could read e-books more conveniently than on my PC, I would want the ability to buy a book in eformat on the day of release and at a comparable cost. If it's a book I really wanted that day I would be willing to pay closer to the hc price rather than $9.99. But once the book is available in mmpb I would expect the ebook price to come down as well. The e-book release should mirror the hc release rather than being in it's own window.

    It was my understanding (please correct me if I'm wrong) that Amazon is using the $9.99 price point to lure readers to their Kindle and that it was only a temporary thing. And even now that Amazon has opened their eyes and realized they can sell even more of the Kindle books by creating the PC, Mac, and iPhone applications aren't they actually losing money by selling hc releases at that price?

    I don't yet buy the bulk of my books in eformat because I don't have an eReader. But I do own many from eHarlequin, Fictionwise, and some various e-only publishers. And I know I am in the minority that I actually love hardcovers, but a lot of the authors I read are not published that way anyway. So even though I prefer hc, most of my books are mmpb. Though I feel it is highly unlikely I will ever become an e only reader/buyer, as storage space is becoming an issue, I am looking more and more at ebooks as a solution.

    So even I know change is coming whether the publishers want it or not. Even though the music and video industries aren't the same, you would think these big publishers would try to learn from the mistakes the other industries made instead of burying the heads in the sand.

    Nice article, Jane.

  3. Cathy
    Dec 13, 2009 @ 07:28:08

    Great article.

  4. Why publishers do stupid things with e-books | TeleRead: Bring the E-Books Home
    Dec 13, 2009 @ 07:56:36

    [...] Why e-book delays won't save trade publishing, Jane at Dear Author raises this issue, and I think she is spot on. [...]

  5. Mark Coker
    Dec 13, 2009 @ 08:00:14

    Well done, Jane. Windowing is a short sighted, anti-customer strategy, and it will only hasten the decline of the publishers who practice it. It’ll also promote piracy, because it creates demand for an unavailable product, and where there is demand someone will step in to fill it.

  6. Keishon
    Dec 13, 2009 @ 08:40:43

    Excellent article. You learn something new everyday. As a consumer, I disagree with their strategy. I like mysteries as you know and most of those tend to be in hardcover. So that means I am forced to buy my favorites in hardcover – like Julia Spencer-Fleming’s stuff but then her publisher doesn’t like ebooks anyway (look at those prices!) so I’m already used to it and was prepared to purchase her hardcover if need be. But for others, uh, no.

  7. Missy Ann
    Dec 13, 2009 @ 09:00:50

    Even though the music and video industries aren't the same, you would think these big publishers would try to learn from the mistakes the other industries made instead of burying the heads in the sand.

    QFT

    I can not remember the last time I bought a cd. In fact I don’t buy music anymore. I get by with the radio and what I have ripped (from cds I own) to mp3. Why? I am so disgusted with the music publishing industry. I am tired of being thought a thief.

    There are a couple of authors that have now made my never buy or even read list because of asinine attitudes towards ebooks and even one particularly stupid comment about buying used books. Right now I have enough print books to keep me reading for well over a year. Probably closer to 3 years. Ebooks? Probably another year’s worth. I will move solely to the public library if I have to. I will not hand my money over to people who spit on me and call me a thief for daring to buy an ebook instead of hard cover.

  8. Bonnie
    Dec 13, 2009 @ 09:09:29

    Great post, Jane.

    It would be nice if publishers would listen.

  9. Castiron
    Dec 13, 2009 @ 09:10:27

    Print book sales are subsidizing ebook sales.

    Facts. Currently this is untrue. While ebooks are not without expense, the publication costs of a book have largely been absorbed during the print book process.

    In other words, the print edition IS subsidizing the ebook edition. The ebook currently doesn’t have to sell enough copies at enough of a profit margin to cover the overhead, editing, etc., because that’s being paid for by print sales — and as the print sales drop, the ebook sales and profits are going to have to cover more of that overhead.

  10. Azure
    Dec 13, 2009 @ 09:38:17

    @Mark Coker:

    It'll also promote piracy, because it creates demand for an unavailable product, and where there is demand someone will step in to fill it.

    Case in point: Stephen King’s newest book. It’s been reported at MobileRead that you can find it on the P2P sites. How many more hardcover sales did the book get because ebook readers can’t get it until December 24? Enough to cover the number of ebook sales lost because it’s already out there in some form or other? Something tells me they’re not going to let us know.

  11. Jane
    Dec 13, 2009 @ 09:41:00

    @Castiron No, subsidizing to me means unnaturally low prices. Ebooks are sold at the same price or a higher price (to the trade) as the paper book. There is no subsidy in ebook pricing. The margin might currently be larger but the price is not subsidized.

  12. Darlynne
    Dec 13, 2009 @ 10:37:04

    … [T]he reader is not the customer of the publisher. It is the trade. It is the reseller. Because we readers are not the costumers, publishers don't make consumer based decisions. They make reseller based decisions.

    Jane, this is the entire problem in a nutshell. The publishers so zealously defend and protect their status quo empires that they never look over their walls at the readers. I never understood how publishing could make such knuckle-headed decisions, but I get it now. Thanks for clearing this up.

  13. Anion
    Dec 13, 2009 @ 11:26:49

    I’m sorry, but I’m confused as to how holding back ebooks is so different from delaying the mmp release. I dislike hardcovers, so I wait however many months for a paperback release; I have to wait for the book to be available in my preferred format. I’m not trying to be a jerk here (and none of my books are released in hardcover, so I don’t really have a dog in this fight) but I’m really confused as to why ebooks should be different, and why ebook readers should be entitled to their preferred format immediately, while those of us without ebook readers (or who dislike reading on our computer screens because we do enough of that as it is, lol)–which is the vast majority of readers–still have to wait.

    Like I said, I’m really, really not trying to be a jerk here. In an ideal world ALL the formats would be available on release day. I guess I just wonder why we’re not pushing for that to happen, instead of focusing on the ebook, when at this time an ebook reader is still something not everyone can afford.

  14. Becca
    Dec 13, 2009 @ 11:45:14

    Can someone explain to me how Audible.com can afford for years to sell audiobooks to members for $10 or so per book, with no comment – and that has to pay for the performance too, not just the author’s words – and yet Amazon’s selling of ebooks for about the same price is seen as unrealistically and industry-destroyingly low? And the audio version of a book frequently comes out the same day (or within a few days) of the initial release, and no one screams that it’s taking away sales.

    If I don’t want to download an audiobook, I can get them from places like audiobookstand.com for around $20 for the mp3 cd – again, less than the HB price, so it’s not just Amazon subsidizing Audible.com members.

  15. MB (Leah)
    Dec 13, 2009 @ 11:49:28

    This really isn’t such a big deal to me as an ebook reader. I’ve never bought HC because I hate the huge clonky things and I refuse to pay what will cost a third less in a few months.

    Like Anion, I’ve just waited until the book I want comes out in mmp. No book is a must have as soon as it gets out for me to justify $30 for it. So if a book comes out in ebook straight away or not, not a big deal for me.

    That said, if a book I want doesn’t come ever come out in ebook then I don’t buy it. Simply. I have an ereader and I prefer to read in ebook format. So if it’s not coming in ebook, then too bad for the author and pub cause I have plenty of other thousands of books in ebook form that I also want to read.

    Only reason for me to actually buy a trade or other paper format book, is because I intend to share it with a friend or resell it due to high cost.

  16. Ebooks and traditional publishers | PaperBox Books Publishing
    Dec 13, 2009 @ 11:57:05

    [...] information in the link Why ebook delays won’t save trade publishing is a good explanation of why traditional publishers think they have to resort to DRM and delayed [...]

  17. Bonnie
    Dec 13, 2009 @ 12:37:19

    @Anion:

    I'm sorry, but I'm confused as to how holding back ebooks is so different from delaying the mmp release.

    It’s different because they’ve been available to ebook readers for some time now (two years or more) and it feels like they’re pulling the rug out from under us.

    Imagine if mmp had been available to you on the day the hardcover had been released and suddenly — nope, not anymore. I think it’d piss you off.

    Also, as I’ve said before, I would be willing to pay more for a hardcover ebook. As I’ve been doing all along.

  18. roslynholcomb
    Dec 13, 2009 @ 12:39:40

    It seems to me that the problem here is that publishers are not retailers, and it’s very difficult to profit off an e-book when it’s sold through a third-party vendor who is not in fact trying to profit off e-books. Amazon is following the Apple model, ie they don’t actually make a profit off iTunes. iTunes is merely a vehicle by which to sell iPods. Amazon is doing the same with e-books. That’s well and good for Amazon, but for publishers? Not so much.

    I think it’s pretty clear that people will not pay hardcover prices for e-books. I don’t think hardcovers will last much longer, but since it is reserved for marquee authors anyway, the publisher’s expense is thereby greater. To have the retailer undercut them the way Amazon does by selling the books for sometimes less than a third of what it costs has to in fact cannibalize hardcover costs. Amazon figured out pretty quickly that people will buy Kindles because they can get first-release novels very cheaply. So, some of those people were in fact hardcover buyers.

    To my mind within or so brick and mortar bookstores will cease to exist, most book-buying will be done online. I would think that under that model vendors will send out alerts when your preferred format is available.

  19. DS
    Dec 13, 2009 @ 12:45:37

    @Anion: I know from my personal experience that if I plan to buy a book in certain format and it’s not immediately available I may well forget all about it if something distracts me. Or I may buy another book instead if the first one isn’t available in the format I want. This happens a lot with audible. I think it’s a matter of getting the sales while the interest is there. Especially if the reviews come out and I realize from reading them that there is something about the book that would drive me around the bend.

  20. kirsten saell
    Dec 13, 2009 @ 13:06:38

    @Jane:

    No, subsidizing to me means unnaturally low prices. Ebooks are sold at the same price or a higher price (to the trade) as the paper book. There is no subsidy in ebook pricing. The margin might currently be larger but the price is not subsidized.

    I keep wondering how the print-book-subsidizing-the-ebook thing meshes with some publishers I’ve seen saying that they can’t increase royalties or lower prices on ebooks because they need the ebook to subsidize the print run? Which is it, ffs?

    Look at it this way: if you spread the overhead costs of advances, editing, cover art, etc, over all formats (say, HC, mmpb, digital) so that each format must pay for a full third of those costs, I’d guess that the low production cost/no returns/low distribution cost nature of ebooks would make them profitable at a much lower price than HC, over fewer sales than mmpb. This is the market–one with a wider profit margin that is growing like whoa and like damn despite publishers’ best efforts–they should be trying to court, not stifle.

    Especially considering the fact that readers who’ve purchased a dedicated device, if they’re anything like me, feel almost guilty buying a print book of any kind. I mean, I spent $300 on a Sony. Every book I am forced to buy in print invalidates my decision to spend that money–$300 I could have spent on clothes or toys for my kids, treats for my dog, a couple extra Christmas presents for people I care about. I’m not going to buy a print book because of that–especially not one that costs $25+. YMMV, of course.

  21. Mike Cane
    Dec 13, 2009 @ 14:57:07

    >>>It's the publishers who start to recognize that in this new market, the customer is the reader and not the trade.

    Selling to the trade …. OK, now I see why all the book companies have been so lousy at using the Internet.

  22. Deb
    Dec 13, 2009 @ 16:12:10

    I wonder how many of the decision making exces in the publishing industry have caved to their kids demand for technology. How many of them use/used technology as a replacement for family time, i.e babysitters? If they answer yes to these questions, I think they have contributed to their own damn problem. The generation raised with technology, will expect to use that technology over the “old” way of doing things. If kids were raised without reading above what is required for school, they won’t bother shelling out $25-$35 for a hard cover book.

    If any of these execs would simply walk through a Best Buy and look at all the toys, they would see where the problem really lies. There are other forms of entertainment preferable to reading. By not capitalizing on a ready made audience who loves their toys, they are wasting time and money.

    How many industries have to go the route of losing tons before they wake up and realize they done a poor job of it and change their business practices?

  23. Ros
    Dec 13, 2009 @ 16:14:42

    Jane, I thought you might be interested in a discussion on BBC Radio 4′s Open Book programme today about the future of bookselling in the UK following the announcement that Borders UK (which is a separate company but following the same model as Borders US) has been declared bankrupt. The discussion includes the CEO of Hachette UK, an independent bookseller, an author, and the editor of The Bookseller. They are somewhat dismissive of ebooks, but there is an interesting discussion about the different roles of different kinds of online and bricks and mortar booksellers and the state of publishing in the UK in general.

    The programme is available to listen again for a week and should be accessible anywhere in the world (it’s only BBC TV that’s limited to the UK, not radio).

  24. Stevie
    Dec 13, 2009 @ 17:04:17

    @Jane:

    No, subsidizing to me means unnaturally low prices. Ebooks are sold at the same price or a higher price (to the trade) as the paper book. There is no subsidy in ebook pricing. The margin might currently be larger but the price is not subsidized.

    Accountants tend to be somewhat staid and conservative types who really don’t care about your personal and somewhat eccentric definition of ‘subsidize’; the costs of publishing the book exist, and no matter how much you wish to claim that they are in some way notional for the purposes of your argument on e-books, publishers are going to listen to their accountants rather than to you.

    Which is just as well since I personally would like to carry on having worthwhile books to read…

  25. liz m
    Dec 13, 2009 @ 19:10:27

    Not only do I completely agree with this post, I can offer two lost sales via pricing and delay. Via pricing – I did not buy the Victoria Alexander’s (reprint!) Believe because the e-book was priced at almost twice that of the mass market. So I won’t be getting that.

    Delay – Janet Mullany (Rules of Gentility) has had a book out for several months that I intended to buy but no e-book was available. Occasionally something will remind me to check – but it’s still not out and it’s unlikely I’ll ever purchase it at this point. It’s fallen way down my list.

    You can model your business on chasing a ship that’s already sailing, or you can rush on board and get a cabin before it leaves the docks. You can’t hold back the tide.

  26. Barbara B.
    Dec 13, 2009 @ 19:18:27

    ” by Stevie December 13th, 2009 at 5:04 pm
    @Jane:

    No, subsidizing to me means unnaturally low prices. Ebooks are sold at the same price or a higher price (to the trade) as the paper book. There is no subsidy in ebook pricing. The margin might currently be larger but the price is not subsidized.

    Accountants tend to be somewhat staid and conservative types who really don't care about your personal and somewhat eccentric definition of 'subsidize'; the costs of publishing the book exist, and no matter how much you wish to claim that they are in some way notional for the purposes of your argument on e-books, publishers are going to listen to their accountants rather than to you.”

    Those same businesses are FAILING. Maybe they should listen to Jane’s eccentric notions.

    It seem counterintuitive to me that producing ebooks costs so much that mass market paperbacks subsidies are the only thing keeping ebook prices at or slightly above mass market prices . Very odd. I will concede , however, that I’m just a reader and know absolutely nothing about the publishing industry.

  27. Bonnie
    Dec 13, 2009 @ 19:26:45

    @Stevie:

    Accountants tend to be somewhat staid and conservative types who really don't care about your personal and somewhat eccentric definition of 'subsidize'; the costs of publishing the book exist, and no matter how much you wish to claim that they are in some way notional for the purposes of your argument on e-books, publishers are going to listen to their accountants rather than to you.

    Wow, that’s harsh.

    Get back to me in a few months, Stevie.

  28. A
    Dec 13, 2009 @ 19:45:02

    I own a Sony Reader and I’m undecided if I’m not crazy about it or if I just haven’t learned to be crazy about it. It doesn’t feel like a book or smell like a book. I appreciate the concept of a virtual library, but it just isn’t “growing on me.” I hope it gets better.

    Pretty much all my ebooks are dupes of what I own in print with the exception of ebooks purchased from epubs. It really doesn’t matter to me what’s available first. If I want it, I buy it.

  29. Moriah Jovan
    Dec 13, 2009 @ 20:08:38

    Jane said:

    [Myth:] Print book sales are subsidizing ebook sales.

    Facts. Currently this is untrue. While ebooks are not without expense, the publication costs of a book have largely been absorbed during the print book process.

    Then Castiron said:

    In other words, the print edition IS subsidizing the ebook edition. The ebook currently doesn't have to sell enough copies at enough of a profit margin to cover the overhead, editing, etc., because that's being paid for by print sales -’ and as the print sales drop, the ebook sales and profits are going to have to cover more of that overhead.

    No. The point is that the print edition would exist with or without the ebooks. Ebooks could be considered a gravy product. In other words, since the majority of the costs are already sunk, and the only cost left is conversion to ebook, and the biggest portion of that cost is the DRM (that nobody wants anyway), whatever the ebook earns in profit is gravy. There is no “subsidy” component. It’s just another revenue stream.

    Why I say that is because the publishers don’t seem to want to put out the ebooks AT ALL. The fact that they are pricing them at or above mass market paperback or even hardcover prices is not about subsidy, and it’s not really even about another revenue stream. It’s about wanting to kill ebooks completely.

    If anything, ebooks could and would subsidize print if the publishers let it because of their relatively huge margin—and one way to let it is to increase the margin by not applying DRM.

    Barbara B. #26 said:

    Those same businesses are FAILING. Maybe they should listen to Jane's eccentric notions.

    That.

  30. Heather Massey
    Dec 13, 2009 @ 20:36:35

    Great piece, thank you.

    Three of the big six US publishers are trying to create varying windows for ebook releases depending on the book itself

    Another reason this view is shortsighted is that there are avid online fandoms centered around various genres which can help drive ebook sales regardless of a book’s release date. Instead of worrying about windowing so much, publishers ought to explore courting the members of these communities. That’s one way to connect a product directly to the readers. Much more consumer-centric imho, and a way to tap into sales that might otherwise be lost.

  31. Stevie
    Dec 13, 2009 @ 21:02:16

    Well, it looks like another of my mighty post was eaten by the slushpile…

  32. Russ Reeder
    Dec 13, 2009 @ 21:18:42

    By delaying eBooks, the publishers have successfully stopped the $9.99 book — now you can pre order on Amazon for $7.99! Someday they will learn that readers are the customers, not the book stores.

  33. GrowlyCub
    Dec 13, 2009 @ 21:29:02

    Anion,

    I can’t tell you how many times I’ve forgotten or no longer been interested in a mmpb that came out 6-12 months after a HC release.

    There are lost sales right there and many. I stopped buying J.D. Robb when the books went to HC, partly from the principle of the thing (don’t like HC and refuse to pay that much), but mostly from the fact that with the titles so similar I could never remember which ones I already owned in mm. I faithfully bought all 20 or so that were published in original mm.

    I didn’t buy the last Balogh that was number 4 in a series and the only one that came out in HC. I read it from the library and couldn’t finish it. So, lost sale because I won’t be picking it up when it comes in mm and I figure the same will go for the 5th book in the series that’s coming out next May in HC.

    So, yes, the wait between HC and mm is no different from the wait between HC and e-book and with the same results. Sales lost left and right.

    It may sound like a cliche, but the times they are a-changing! A model that worked in the past is already not working anymore; society and people’s expectations are changing; most folks now have the attention span of a gnat and we are getting fed itty bitty bits of information (think news crawlies) in a kaleidoscope of impressions. Folks don’t want to wait, they are into instant gratification and that means some (or probably most) will be turning to piracy sites if the book they want to buy isn’t available legally.

    If you don’t serve your customers, they’ll go elsewhere. High time publishers learned that.

  34. Caligi
    Dec 13, 2009 @ 21:44:46

    Why don’t pubs just sell direct to consumers? Wouldn’t that be the easiest way to tell Amazon to get fucked, without alienating ebook readers?

  35. roslynholcomb
    Dec 13, 2009 @ 23:24:04

    Why don't pubs just sell direct to consumers? Wouldn't that be the easiest way to tell Amazon to get fucked, without alienating ebook readers?

    Here’s the thing, people like to one-stop shop. Most people would like to buy all their books in one place, plus with Amazon selling newly released books for $10 a pop, it would be darned hard for the publishers to compete. They’d have to sell at that price as well, thus cannibalizing their own sales. Setting up as a retail vendor is not easy, and is quite expensive. Publishers don’t have the experience, market share or even brand recognition. Very few people pay attention to who publishes their books. (Excepting Harlequin and maybe some of the SF/F imprints.)

    Amazon is trying to sell as many Kindles as they possibly can, using cheap books as a selling tool. They know Apple is about to enter this market and their sales will probably go to hell. There are even rumors that publishers are holding their e-books for the big Apple debut. Even if the Apple gizmo is crap they’re liable to sell like crazy just because of the Apple name. Amazon knows this, and they’re willing to cut the throat of publishers to sell as many Kindles as they can.

  36. library addict
    Dec 13, 2009 @ 23:44:07

    Why don't pubs just sell direct to consumers? Wouldn't that be the easiest way to tell Amazon to get fucked, without alienating ebook readers?

    Simon & Schuster/Pocket, Random House/Ballantine, and Penguin (Jove/Berkley/Putnam, etc) already sell both print and ebooks on their websites. But as roslynholcomb points out, how many readers pay attention to which publisher publishes which authors.

    Even though I will go to publishers sites to look for info on upcoming releases, I’ll admit I only recently noticed they sold ebooks directly.

  37. Just Around the Way…(Links) | avidbookreader
    Dec 14, 2009 @ 00:01:59

    [...] wrote an excel­lent post about why delay­ing ebooks will not save trade pub­lish­ing. As a con­sumer, I find this tac­tic by the pub­lish­ers annoy­ing to say the least but who [...]

  38. Deb
    Dec 14, 2009 @ 08:03:06

    I agree with the speculation that this is intended as a direct hit to Amazon and it’s Kindle sales.

    After viewing an on-line video of a cable am news report, I learn that Sarah Palin has been squired about her book tour by a private jet. That famous bus was used to close venues but much of the time was used to get her from airport to venue and back to airport. That had to cost a bundle. The loss of the $25 per copy sale is a big loss. I understand that. That book was most likely intended to be a ticket back into business as usual. Instead with the Wal-Mart-Amazon price war, the publisher lost big time. Big. Time.

    Why invest that kind of money in a one hit wonder? Especially when your business is on the downslide. Why spend what has to be a couple mill for 1 author to get around her book tour on a private jet? Is that good business? What comes next, a publishing industry bail-out? Amazon can take the hit, the publishers can’t.

    Amazon already has an app available in iTunes for the Kindle books as well as B&N and other bookstores. The ebook sales on smartphones have rapidly gone up. I don’t think Amazon is too worried; the Kindle is not a competitive device. It’s an e-reader.

  39. RStewie
    Dec 14, 2009 @ 10:51:11

    Thank you for this article, Jane, it really does clear up the question I had about publisher motivation.

    the reader is not the customer of the publisher. It is the trade. It is the reseller. Because we readers are not the customers, publishers don't make consumer based decisions. They make reseller based decisions.

    That is the problem, right there. Until publishers see a direct profit from selling ebooks, they will continue to think of them as expendable products. This is one of the reasons we need a robust epublisher industry, whose goal and profit is direct sales of ebooks. When paper publishers see the sales dollars and profit margins of epublishers, maybe we will see a shift in the industry.

    @roslynholcomb: This is it, exactly. I buy all my ebooks from BoB…I know they are available at several other ebook seller sites, but I have a bookshelf there with all my purchases, and I’m not interested in maintaining a bookshelf with more than one ebook seller.

    Since I’ve converted to ebook, I have purchased well over 20 books in the last 3 months. The 3 months before that: 0. With ebooks I have no clutter, no need for storage space, and I can use my bookshelf to display by box collection instead of a bunch of paperbacks.

  40. Janie H Harrison
    Dec 14, 2009 @ 11:13:01

    @Stevie:

    I read it and I’m sure a lot of others did. Smiling. In this discussion, there is no talk of non-fiction vs. fiction. Or what accounts for libraries, schools, scholars, and so forth. Print books are important for publishing. I think e-books are fine and have no gripe against the format, but it should be up to the publisher how they want to sell their books and when.

    Why publishers are failing, well, that’s a subject far more complex than what readers desire and the importance of e-books.

    This site promotes e-books. That’s great. But e-books aren’t the big answer to publishing woes.

    Good discussion.

  41. A
    Dec 14, 2009 @ 13:30:29

    @GrowlyCub:

    Folks don't want to wait, they are into instant gratification and that means some (or probably most) will be turning to piracy sites if the book they want to buy isn't available legally.

    Most criminals suffer from an instant gratification complex as well as an illogical sense of entitlement. You’re not telling rational people anything they don’t already know.

  42. Mark
    Dec 14, 2009 @ 23:08:29

    For once I’m reading a post about publishers and ebooks that doesn’t make me want to pull my hair out. And yet…some commenters above still don’t seem to understand the dynamics of the industry.

    What I find surprising is that no one seems to notice that Amazon is convincing people that they have to pay for the privilege of reading. You can’t read an ebook on a Kindle without plunking down $300 before you even buy a book. Imagine if a bookstore charged a cover charge to enter, but you can buy any book once inside. People would scream. But that’s exactly what Amazon is doing and it is loving this misperception that the publishers are to blame for high prices. It would take over two years to recoup the cost of a Kindle for the average reader—and by then they will have been told they need to upgrade to a new device. Look at Apple. But at least with music, you always did have to buy a device of some kind in order to access the goods.

  43. can we get a hall monitor here? « Collection Developments @ Sno-Isle
    Dec 16, 2009 @ 13:35:35

    [...] * for a thorough take on ebook sales vs. hardcovers and more (with interesting comments), check out Dear Author’s “Why Ebook Delays Won’t Save Trade Publishing.” [...]

  44. Stumbling Over Chaos :: O noes! I’m running out of ideas for overly exuberant bookity linkity post titles!
    Dec 17, 2009 @ 02:08:14

    [...] Author posted about how delaying ebook releases isn’t going to save the trade publishing industry. BitsBlog also had a really good post about how book publishers are fighting the future. And now [...]

  45. Alex
    Dec 25, 2009 @ 16:13:47

    Slightly off-topic, but I want to add that while many of my readers appreciate that they can download my book directly from the publisher’s (Smashwords) website, it’s a minuscule number. The rest want Amazon. Example: My boss wanted to buy a dozen copies of my novel (!) for his family for Christmas (they all got Kindles this year); but he will only buy the book through Amazon–even though it will mean a smaller royalty for me.

    My point is, Amazon is credible; it’s the place people trust to get their ebooks. That will likely remain unchanged for quite a long time.

  46. Sabrina Sumsion
    Feb 01, 2010 @ 12:03:34

    I think some of you have really seen the true problem publishers face. They invest millions of dollars into a product that others sell for them. I know many publishers who would be delighted to see even 10% of book sales come through their own eStore. If customers go to them, that means they can recoup costs faster.

    You talk about them selling to trade outlets instead of consumers as a bad thing but they have no other choice. They do because they have to. All their decisions have to benefit the sales channels or the sales channels cut them off. They are desperate to control some sort of aspect to the pricing structure because of the reduced cut of profits they see from every sale. Publishers get 45% (or less) of the cover price from sales to retailers.

    Also, Amazon has a clause in all of their contracts that no other online sales outlet can list a book for less. Publishers aren’t even allowed to give a better deal for online sales.

    You all, as the consumer do have control. If you purchased books from the publisher instead of Amazon, B&N, Walmart etc, the authors and publisher would meet their bottom line faster. If you want new content to be developed and new authors introduced, throw the publishers a bone and skip the middle man.

  47. Hardcovers & expensive ebooks won't save publishing either
    Aug 22, 2011 @ 05:54:56

    “Also, as I’ve said before, I would be willing to pay more for a hardcover ebook. As I’ve been doing all along.”
    -Bonnie

    I really kind of hope you don’t buy ebooks for $25 or 30 like you would a hardcover. All this does in encourage publishers to charge these prices for digital files. Personally, I won’t buy expensive ebooks to send a message. Publishers won’t get my $.

    Also, publishers are not understanding something. They need to stop comparing their hardcover books and ebook files to MOVIES & DVD’s. Whether critics accept this or not, movies are a social experience. Books are not. They’re just not. People go to a theater to sit with other people, have popcorn/cokes and enjoy that social experience.

    Hardcover books are just not the same thing. And plus these stupid HC’s are upwards of $20 competing with a $7 matinee film with Zac Efron in it (or whoever). Why are HC’s more than movies? Then you can turn around and grab the DVD for less than you can a new release HC book but you can watch the DVD over and over & the have packed bonus features.

    Or people can get video games for less than the price of a HC book (or a St. Martin’s Press high priced ebook). I can play Angry Birds or Plants vs Zombies cheaply, then go to a movie and grab popcorn, all for less than price of a new release Hardcover book for $25 or $30. You see where I’m going? People have other options for entertainment. CHEAPER options. Plus if they want to resell the DVD, it’ll go for a hell of a lot more than that $30 HC book. That $30 HC is worth 50 cents at a used bookstore. You couldn’t “give” it away.

  48. Hardcovers & expensive ebooks won't save publishing either
    Aug 22, 2011 @ 06:16:42

    “If you want new content to be developed and new authors introduced, throw the publishers a bone and skip the middle man.”
    -Sabrina

    No offense intended, Sabrina, but you ARE the middlemen. Authors can cut YOU out and actually earn some money to live on. I’m not trying to sound mean or rude, so if it sounds like that it’s not my intention. I just mean, okay if consumers go directly to the publisher’s site to buy, do the content creators (WRITERS) see any of that?

    Will their royalties increase after publishers will be able to meet their bottom lines faster? Will the prices of the books they are selling from their own site be less expensive (with the middlemen cut loose) or will they be the same price? Something tells me they’ll be the same and authors will still get the same low royalties.

    And when the influx of money DOES come in, what “new authors” will you introduce & promote? Because frankly, okay…consumers obviously know that Twilight and Harry Potter have carried the publishing industry for the last years. So what NEW AUTHORS have you been introducing with this influx of $? Where’s the new Kurt Vonnegut or the new Chuck Pahluniuk, or the new Phillip K. Dick? Consumers haven’t born witness to this new “talent introduction”.

    What they’ve seen you introduce is: The Situation from Jersey Shore, Snooki (you knew that name was coming), Casey Anthony (who “allegedly killed her own daughter), ect. These are the new authors you’ve introduced and promoted. Personally, I’m not going to your publisher’s website to “throw a bone”. No. No way in hell. This is not a charity.

  49. Jane
    Aug 22, 2011 @ 07:26:52

    @Hardcovers & expensive ebooks won’t save publishing either what? Yes, of course they do. If you buy from Samhain, for example, authors get a larger percentage of the royalty.

  50. Hardcovers n paperbacks
    Aug 24, 2011 @ 13:42:20

    @Jane: Okay, how much is the royalty? I’m just curious.

  51. Jane
    Aug 24, 2011 @ 13:50:52

    @Hardcovers n paperbacks: My understanding is that an author gets 40% v. 35% if a book is purchased at Samhain.

  52. Jane
    Aug 24, 2011 @ 13:57:42

    @Hardcovers n paperbacks: I believe this is true for Carina Press, the digital imprint of Harlequin, and many other digital first publishers who also sell direct from their site.

  53. Sunita
    Aug 24, 2011 @ 14:17:00

    @Jane: Yes. Also for LooseId, for sure. And I think quite a few others as well.

  54. Hardbacks & paperbacks
    Aug 26, 2011 @ 11:04:10

    @Jane: @Sunita:

    M’kay, thank you for both answers. I was talking about the Big 6 (or Big 5, however many are left these days). Of course new start-up “digital publishers” are going to offer higher royalties, otherwise there’s no point in starting up IMO. New digit publishers seem to know what’s up. I was talking about MAJOR PUBLISHERS. I can’t speak for small startups just yet.

    Ha ha, anyway,I might be mistaken because I’m not good in math but I thought 40% was still less than 70%:D The 40% you just mentioned vs. The 70% for self-published writers.

%d bloggers like this: