E-book pricing

Jeremy commented on the post Future book printing raising the question of e-book pricing.

I think we pretty much all believe at the moment that e-book revenue is additional to print revenue. Of course customers may stop supporting the printed book, and when they do we will have the problem Jeremy raises of amortizing our origination costs over sales of the e-book only. Even in today’s half-formed e-book world I think the problem is less than Jeremy fears. Most people who comment and agonize about e-book pricing are writing from the perspective of book buyers not book publishers. See for instance this article from Forbes on 14 January. There’s a lot of noise in these sorts of analyses created by self-published books — a boom industry now that it’s so easy to put your book out there in electronic form. The economics of self-publishing and regular publishing are wildly different, and just because self-published books tend to be cheaper doesn’t I think mean that eventually that’s the only way things will be done. The focus on the price paid by the consumer can be misleading. From the publisher’s point of view the interesting number is the price paid by the retailer.

Future Book tells us on 15 January: “For example, Life of Pi, as mentioned below, has shifted 250,000 copies in e-book format since it was priced at 20p. As Canongate is the unwitting partner in this promotion, its revenue from those sales would far exceed the £50,000 consumers have paid.” On Amazon.co.uk today The Life of Pi shows at £3.85 for the paperback, discounted from the publisher’s price of £8.99. This means Canongate are probably getting about £4.50 for the book and Amazon is selling at below cost. Canongate list the e-book at the same price: Amazon won’t tell me the UK pricing for e-books, because they know I’m in America and they don’t want to sell to me because of rights. Too bad — I’ll switch into dollars. In America The Life of Pi e-book costs $8.63, and the paperback book costs $9.56, discounted from the publisher’s price of $15.95 — actually on the Houghton Mifflin Harcourt site the price shows as $15.99: refreshing to see Amazon make an error even if it’s only 4¢.

Future Book‘s implication that Canongate was an unwitting partner in the 20p promotion is possible, but may not be true of all 250,000 sales. These Amazon promotions can sell lots and lots of copies of the e-book, but they are normally (at least in USA) a joint promotion with the publisher, who will have set the retail price at 20p for the duration of the promotion, selling the e-book to Amazon at roughly 10p. But these cheap sales are all additional revenue, coming after many copies have been sold at the full price, and an additional £25,000 is certainly not to be sneezed at, even after the author has had his share. The marginal cost of selling another e-book is tiny, and lots of overhead contribution will have been made by earlier (and subsequent) sales at the higher price. Indeed one of the unexpected benefits of these promotions is that there’s a sort of shadow effect: after the discounted price has elapsed, customers who missed the offer will buy at full price in larger than normal numbers. Retailers indulge in all sorts of crazy discounting. Selling the product at a loss, presumably Amazon is hoping to make up the difference on sales of the Kindle itself. From the publisher’s point of view huge sales numbers are wonderful — word of mouth is what we all aim to generate, and if one and a quarter of a million people buy your e-book you are going to get a lot of word of mouth.

And the sales can by astronomical: here’s a chart from The Bookseller showing the UK e-book bestsellers of 2012.

(I hope you can read that — if you click on it it gets a bit bigger.)

These books are of course all trade books. If the book is an academic monograph, there’s little chance of it’s being available from Amazon in e-book form. E-sales of academic books will tend to be as part of a large collection, licensed to library consortia. Whether the economics of this model are sustainable in a world without any print sales I have no idea, but I suspect that they are, since the licenses are quite expensive. Eventually no doubt this market will develop, and individual title sales will be made. I dare say, as with lots of trade books, the retail price will be set close to the price of a notional paperback edition.

The publishers’ concern with the discounting of e-books has been that the public will “get used to” paying the discounted $9.99 or whatever, and that once Amazon stops selling e-books as a loss leader, book buyers will jib at the “real” price. I suppose there is something to this, but I think discount seekers seek discounts, and if none are available they may regret it, but will still make the purchase. This concern was, ostensibly, one of the main motivators in the recent kerfuffle over agency pricing.

Today Publishing Perspectives sends us a report from Edward Nawotka, on the Digital Book World conference going on now:

Price Innovation

The best ebook marketing strategy appears to be simple: price manipulation. Generally speaking, the lower the price, the more units you will sell. And prices are heading lower the Book Industry Study Group confirmed when it noted that over the last four years the average price of ebooks has slid from $10 to $6. And a bit of Kitchen Sink wisdom here: cut-price sales work. Kindle Daily Deals drive big buys, but don’t expect a long term impact, as the halo effect of the resulting jump in sales ranking is shrinking, especially as the market becomes saturated with competing titles.

But trade publishers should note that not every ebook buyer is a bargain basement shopper. “Independent bookstore shoppers are different,” noted Michael Tamblyn, Chief Content Officer, Kobo. Looking at data from the first few months of his company’s partnership with the American Booksellers Association, he said that more than 50% of the books sold have been priced at “$9.99 and above,” versus less than “30% for the average US consumer.”

Unfortunately, “we haven’t seen price innovation in physical retail,” said Michael Cader, conference co-organizer and CEO of PublishersMarketplace. “Price innovation has driven digital sales, but where is it at the physical bookstores? Where are the ‘daily deals’ at the retail level that drives people into the store and motivates consumers?” The ultimate question, he added: “Who is going to pay for the bookstores?”

But why, at a digital publishing conference, would someone be talking about bookstores?

One of the really exciting things about the way the e-book market has evolved up to now is this ability to vary the price. Print books with their price printed on the cover are more resistant to price changing. Now when the buzz gets loud you can put the price up, and then drop it again when the must-haves have all bought.

Bookstore closures (and openings)

Dennis Johnson writes a pessimistic piece on the Melville House blog, dated 7 January. There must be any number of places where the old local bookshop had to shut down in the face of competition from a chain, only to see that chain bookseller close down later on. But I’m not sure that he’s right to say that Hoboken is doomed for ever to be without bookshops. The cycle continues. We once had “independent” bookstores only, then we had independents and superstores which killed off many of the old independents. Now that the age of the superstore looks like it may be coming to an end, surely we have an opportunity for all those little mammals to flourish and evolve after the dinosaur crash. Reading his piece I thought (fleetingly) “I should open a bookstore in Hoboken”. I bet someone will.

Today Shelf Awareness tells us “Some 40 independent bookstores opened in 24 states during 2012, the American Booksellers Association reported. Five are branches of existing businesses and seven sell primarily used books. Bookselling This Week featured a complete list of the new indies.” (This compares with 37 new members in 2011.) Almost immediately Publishers Lunch throws a bucket of cold water over all this by tallying closures during the same period. “It’s informal, but since readers often ask us for tallies of stores that closed, in the Publishers Lunch archives we find reports of at least 28 independent bookstores that closed last year — along with accounts of others up for sale, or looking for new space/lease concessions. A few closings are already pending for 2013; the largest is the coming shutdown of United Methodist Publishing’s 57 Cokesbury Stores.” Yet shouldn’t we be surprised that, despite the doldrummy economic conditions, there were more openings than closings last year? Of course, I am assuming that Publishers Lunch captured all the closings, and that their list includes the various branches of Barnes and Noble that have shut.

There’s an almost irresistible urge to leap from statistics like this to lucubrations about e-books and the death of print. But consider: we are just beginning to come out of the worst recession of our lifetimes. The business cycle dictates that some enterprises die off, while new ones start up. And don’t forget: a not insignificant factor is Amazon.com, who although they do sell Kindles, are nevertheless the biggest retail account for many book publishers’ print books. From Digital Book World comes this “According to Codex, bookstores’ share of purchases has declined significantly: 65% in November 2010; in December 2012, 39% of purchases were in physical stores.” [Codex Group surveys about 3000 unique book buyers monthly.] However just as we are experiencing a burst of new publishing houses (especially self-published authors) so I believe we can anticipate small, specialized, customer driven bookshops springing up all over.

Nothing’s black and white: it’s all shades of grey.

A post from Mashable by Josh Catone makes an eloquent defense of the printed book. The piece is valuable too for the many links he provides.

 

Making a book

Mechanicals

I really can’t remember what we called mechanicals (mechs) in Britain. Probably paste-up or artwork boards. Of course the heyday of mechanicals was the 60s and 70s: prior to that they weren’t called for as hot metal type had its own workflow, and later on as typesetting systems became more powerful and could handle page make up themselves, they became redundant.

In the early days of offset printing we were all fixated on the image we would use to set in front of the camera so it could be shot, converted to a negative, stripped up into flats and used to make plates. Straightforward books might come from the hot metal composing room already paginated, but as we sought to save money by using other equipment (e.g. Selectric typewriters) to create the type, the services of a compositor had to be replaced by you, the paste-up artist. Mechs were basically a paste-up of the type and images to appear on each page — lots of little bits of paper stuck to a board. Designers would get out their scissors, X-acto knives, tweezers and paste pots and assemble the pages. The text for the book would come from a typesetting machine as repros (reproduction proofs) and would be cut up and pasted down onto illustration board. In making up a page you might have one bit of paper carrying the running head which you pasted down at the top of the page. If you were lucky the boards would be preprinted in non-reproducing blue showing a grid where all the elements would go. If you were less lucky, you’d get to draw this up for yourself. Apply paste the back of the running head and position it centered at the top, then press it down, viewing it through one of these plastic rulers with a grid pattern so you could get it straight, then move on to the text. If there was a mathematical equation in the middle of the page, you’d probably have to position by eye 10-20 little bits of paper, making sure they were all properly stuck down, as well as aligned correctly. A piece of line art would be pasted down in position. A halftone would be left as a blank, to be shot and cut in at the printers in negative. Another few lines of text, and then you could paste up the folio at the bottom, then on to page 2. In some old books you can see the tell-tale signs of a hurried paste-up artist — a crooked folio, or even a missing one where the paste gave up and the folio fell off before the mech got to the camera.

The Oxford English Dictionary defines mechanical (after all the more obvious definitions) as

 3. Printing. A completed assembly of artwork and copy. Also in extended use.

1967   V. Strauss Printing Industry xi. 744/2   At its simplest, the mechanical is a piece of artists’ illustration board, somewhat larger than the final size of the printed piece. To this board are attached, by cementing or pasting.., a number of line images, all in the same focus and, of course, of inspected quality. This board bears, furthermore, all notations that will enable it to serve as the blueprint of the job.

1967   Britannica Bk. of Year (U.S.) 66   Many regulations, particularly in relation to TV, prevented advertisers from using international campaigns if the basic mechanicals—artwork, films, and so on—were not produced in Italy by Italians.

1973   Publishers Weekly 12 Mar. 38   The layout [of an advertisement] was changed at the last minute, and the mechanical bearing [the publisher] Quadrangle’s name either was not replaced, or it fell off.

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I’ve found one earlier reference, from The Bookman’s Glossary, 4th edition 1961 R.R.Bowker Co.

“Meticulously prepared layout for engraver or printer, showing exact placement of every element, and carrying actual or simulated type and artwork”.

Notice that the 1961 definition makes the mechanical something used for preparing art for the engraver, as well as preparatory work for printing. I think that gives us the origin of the word mechanical as applied to book manufacturing. It was probably a term used by engraving companies, and was extended to cover the thing described above.

It’s a jungle out there

From The Onion 7 January 2013

4 Copy Editors Killed In Ongoing AP Style, Chicago Manual Gang Violence

NEWS IN BRIEF • News Media • News • ISSUE 49•01 • Jan 7, 2013

NEW YORK—Law enforcement officials confirmed Friday that four more copy editors were killed this week amid ongoing violence between two rival gangs divided by their loyalties to the The Associated Press Stylebook and The Chicago Manual Of Style. “At this time we have reason to believe the killings were gang-related and carried out by adherents of both the AP and Chicago styles, part of a vicious, bloody feud to establish control over the grammar and usage guidelines governing American English,” said FBI spokesman Paul Holstein, showing reporters graffiti tags in which the word “anti-social” had been corrected to read “antisocial.” “The deadly territory dispute between these two organizations, as well as the notorious MLA Handbook gang, has claimed the lives of more than 63 publishing professionals this year alone.” Officials also stated that an innocent 35-year-old passerby who found himself caught up in a long-winded dispute over use of the serial, or Oxford, comma had died of a self-inflicted gunshot wound.