The Shatzkin Files


It’s hard to figure out pricing for ebooks from anecdotal evidence


The Wall Street Journal wrote last week about what we have been concerned about for some time: how hard it will be for publishers to sustain book prices as supply (of books) rises faster than demand because of all the self-publishing being done.

WSJ built their story around John Locke, whose thrillers are 99 cents and who earned well over $100,000 in March selling them on Kindle. Locke himself put the pricing in perspective. If his books are 99 cents and most ebooks from big publishers are $9.99 and up, he doesn’t have to prove he’s as good as they are; they have to prove they’re 10 times better than he is!

I can tell you this. I’ve read one of John Locke’s books. Nobody I can think of is ten times better than he is. By his own criterion, he could readily sell for $2.99 (and be earning a higher percentage royalty) because nobody is three times better than he is, either.

Meanwhile, on a much less signficant level commercially, the ebook of The Shatzkin Files is now out from Kobo for $3.99. How did the price get set? Kobo said, “let’s put it there.” Their first thought was that it should be $4.99 but then they suggested scaling it back because, after all, the entire body of content in the ebook is on this blog, which is available free. (This establishes that anybody who buys the book is paying for the convenience afforded by the container, not for the content itself.)

I don’t know what the dilutive impact on “real” ebook sales is of The Shatzkin Files, but it is, like John Locke’s material, additional competition for books that are issued by legitimate publishing houses. It is more supply competing for the same demand.

Trying to understand the actual impact of price is very difficult. Amazon tells us that books on which they control the prices are seeing share growth over books on which the publishers control the price. That is shorthand for “99 cent and $2.99 books by self-published authors are growing share over $9.99 to $14.99 books published by the big agency publishers.” That would tend (and is certainly meant) to suggest that pricing high (and ignorantly) is hurting the big publishers’ and big authors’ revenues, but we can’t actually draw that conclusion from the data.

Locke makes the point that the $9.99 book needs to be “10 times better” than his to be an equivalent value, but I’d make the point that they need sell only 1/10 as many copies to deliver the same amount of revenue. Penguin is still selling Ken Follett’s “Fall of Giants” for $19.99. Would it sell twenty times as many copies if they priced it at 99 cents? And, if it did, would it do so by stealing sales from the hardcover, which, with a list price of $36, is yielding a margin in the ballpark with that nearly-$20 ebook.

I don’t know if $19.99 is the right price for “Fall of Giants”, but I’m pretty sure 99 cents wouldn’t be.

In other words, the big publishers are not crazy to resist following ebook prices to where the new self-publishers would lead them. To be fair, one should not suggest that Amazon would set their prices at that level, even if they had freedom from agency constraints. For one thing, unless pricing schemes changed completely, Amazon would have “bought” an ebook (wholesale) at a price that would limit their willingness to mark it down. They did scare publishers by taking losses on some ebooks, selling for $9.99 what they bought for $12 or $15. But they never sold those books for 99 cents!

In fact, it would appear that Amazon does not have control of Locke’s book pricing, because the Journal article makes it clear that he will stick with 99 cents even if he can make more money at $2.99. (Amazon pays a 35% royalty for books under $2.99 and 70% royalty for books between $2.99 and $9.99, so Locke would get $2.10 a copy at $2.99 and he gets about 35 cents pricing at 99 cents.) Presumably, Amazon would have priced him where he (and they) get the most revenue, not where they get the most unit sales, which we would assume would rise with every drop in price down to free.

But the fact that publishers aren’t necessarily wrong to try to maintain prices at near $10 and up doesn’t obviate two very cogent truths here that it would be a mistake to ignore.

One is that the downward pressure on price is inexorable, because the number of entreprenurial authors like John Locke will grow and they will be discovered and “branded” so that many readers will find them as substitutes for the more expensive big house authors. And because the number of offerings that come like The Shatzkin Files ebook did — from people who weren’t writing for the profit from the content, but who built an audience and had a book issued anyway — will continue to add supply to meet what is relatively static demand.

And the second — made before here and not long ago — is that publishers don’t know nearly as much as they could and should about how price affects unit sales and total revenues.

Sooner or later, a big publisher or two will start seriously experimenting with this. They will gain knowledge that will enable them to tell an author or agent, “we know things about pricing that are worth real revenue to you if you publish with us.” When that happens, it will likely be more significant to an author than an increase in the ebook royalty rate would be. Maybe a publisher can even add enough value with pricing savvy to pay for their cut!

So far, only one author we know of has turned down a significant advance from a major house to self-publish. That’s Barry Eisler, and we wrote about him when he made the decision to give up a half-million bucks to self-publish. We’ve just booked Barry to speak at our first Publishers Launch Conference at BEA on May 25. I’ll be interviewing Barry and focusing on questions of interest to our target audience of international visitors to BEA and their trading partners. We’ll be very interested in how much he anticipates in the way of foreign sales and how he’ll handle translation rights, but we’ll also be looking for Barry’s thoughts about how he’ll set prices for his books when the power is entirely in his hands.

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  • kwn2196

    Isn't there one important point missing from your comparison? Traditional publishers aren't trying to maximize revenue from ebooks at all. They would really prefer we all buy hardback books, so if a book is also in hardback they price the ebook in a way that they think “protects” hardcover sales. Of course, the missing variable in the equation is how well does that actually work? What percentage of folks who don't buy the ebook because it's priced at over $9.99 buy the hardcover instead? It's really difficult to know. And when a reader passes on buying the ebook because of price, lowering the price later doesn't help unless you can let him/her know about it. Hence the existence of the new eReaderIQ.com site where you can sign up to be notified of price drops. Publishers should be offering that service themselves. then they could finally find out who their readers are.

    • /blog Mike Shatzkin

      Karen, I think the degree to which ebook pricing is consciously protective

      of hardcover is less than it used to be. But, in fact, the publishers' job

      would be to maximize revenue *across editions*. When the author cashes the

      royalty check, it doesn't matter to the author what percentage of the sales

      came from what edition. They care about the size of the check!

      *IF *publishers had extensive lists of consumers and permission to send them

      emails, then the notification scheme you're suggesting would make a lot of

      sense. But they don't. I don't know if Amazon has such a plan, but I

      remember being told by the Managing Director of The Book Depository, Kieron

      Smith, that his company has a service by which they'll notify you if a price

      comes down to a level you have specified. (That's for print, not ebooks,

      though.)

      I think your allegation would have been more accurate today if you said that

      publishers are trying to maintain ebook prices high enough so they and the

      author don't have to much care whether you bought the print or the ebook. If

      they lower ebook prices too much, they get the worst of both worlds. They

      don't make much on the ebook sales and they pull sales away from print to

      the less-remunerative ebooks.

      Mike

      • kwn2196

        I will give you the wording of making profit the same on ebooks as hard copies, although I think the effect is that they don't sell as many ebooks as they could. But of the notification, I still think I'm right. When I go to this page:

        http://us.macmillan.com/book.a

        I can click a link to buy a paper copy of the latest Robert Jordan/Brandon Sanderson volume. Or I can click a link to go to all the places it's available as an ebook for the $12.99. I don't see why MacMillan couldn't add a link for “Send me email when the price drops to $9.99″ (or fill in the blank price). When the customer fills out his email address, they have his permission to send him email. Publishers are already doing the work of hosting a “bookstore” website, but they don't give anyone much of a reason to go there because Amazon does it better. They really need to work on a substitute for the customer wandering into a store and noticing the book is now on sale.

  • Battz

    I think digital pricing works at its much lower prices. Digital media statistically succeeds in long-tail business models. People are quicker to drop .99 to 3.99 on ebooks with the press of button. I think if publishers or writers could figure out how to monetize fiction better, to accommodate impulse purchases, they can generate much more revenue. Same way Zynga games work (Farmville). Free to play, with monetized features.

    Try tacking on digital autographs, or commentaries, or special editions for additional costs. All people can purchase the reading experience they want. Supplemented materials like: Annotated editions, concept art, short stories etc. Like the director cut of dvds. These features will build upon the e-book, like adding meat to the bones. Now your .99 e-book may have $10.00 of additional features. Adds to the value of digital editions over paper or hardcover.

    Just a thought.

    • /blog Mike Shatzkin

      Although I don't share your opinion that these add-ons will work, I sure

      thing people should be trying them! Experimentation should be the name of

      the game for the next few years: on price, on product, on features, on

      everything.

      Mike

  • http://profiles.google.com/nathan.henrion nathan henrion

    There are a variety of price points that seem to work in conjunction with other marketing strategies, not just 99 cents, 2.99, 9.99 or 14.99. The power of instant experimentation and dynamic pricing is fantastic for those of us midlist publishers who are doing extreme amounts of dabbling. The winners will be those who actively collect and can make sense of the data and then act upon it. The longer NYC does not want to do this, the better for us. For now, we are reaping some pretty strong benefits and are enjoying this “disruption”.

  • http://profiles.google.com/ctan.circletpress Cecilia Tan, Circlet Press Edi

    Two of the self-published ebook authors I follow in sf/fantasy, MeiLin Miranda and MC.A. Hogarth have both tackled this question recently and come to somewhat opposing conclusions. Hogarth decided 99 cents was the sweet spot–she sells the most copies that way. Miranda settled on $2.99 instead as a way to maximize revenue.

    On my self-pub books as well as with Circlet Press's digital books, I'm playing with the prices, but going on the rationale that a short story is like a single song and a collection or a novel is like an album. So a book of 5 short stories is $4.99, a full-length novel (80K – 100K words) is $9.99, and a single story is 99 cents. But I'll run 'sales' from time to time where I'll drop everything to 99 cents just to build readership.

    Where we have a print book, I price the ebook at half price, so $19.95 in print becomes $9.99 in ebook, and $14.95 becomes $7.49 or $6.99 in ebook (some of the sites REQUIRE that the ebook price end in .99 which baffles me…).

    There is a point to be made about perceived value, though, too. When I was education director for a local nonprofit, we used to offer classes for free (the presenters were compensated from our other fundraising efforts) and the classes were poorly attended. When we raised the price to a “suggested donation” of $5, attendance jumped. And when we raised the price to $10, the rooms were full! With ebooks it's not quite the same, people might “take a chance” on a 99 cent book that they wouldn't for more money, but at the same time if an author is building a following, having a greater “investment” on the part of the reader is possibly as important as sheer quantity of dabblers? We'll see.

  • http://www.robertburtonrobinson.com Robert Burton Robinson

    Another consideration is book size. Most of my mystery books are 35-40K words. I have them priced at $0.99, and one of them, SWEET GINGER POISON, is currently ranked #126 in the Kindle Store. Some people think low price is the ticket to success. But there are thousands, if not hundreds of thousands, of books priced at $0.99, and most of them are selling very few copies, if any at all.

    I do think that novella-sized fiction will become much more popular in the ebook form than it currently is in print form. My paperbacks sell only a handful of copies per month, but as of today (April 25), I have already sold nearly 8,000 Kindle books this month.

    However, if my books were 80-100K words, I doubt I would be content with a $0.99 sales price. Maybe for a brief promotion, but not permanently.

    • /blog Mike Shatzkin

      You raise an interesting point, Robert, which has a follow-on: how does the

      *consumer* know how big is the content chunk they're buying? The

      conventional way to communicate this through metadata is “number of pages”

      (that's how you'd know if you were buying a print book.) But that's a bit

      arbitrary for ebooks. I don't think most people would understand something

      expressed in file size or even number of words. It's tricky.

      Mike

      • Al

        At AKW Books, we calculate 100,000 words to equal 375 pages in a mass market paperback book (so-called “pocket books”). You could try that.

      • /blog Mike Shatzkin

        The problem isn't for you and me to agree on something. That's easy. The

        problem is to find a way to communicate it to other people that they can

        understand and relate to. Your formula is about 270 words a page. That's

        reasonable. So is 225. So is 300.

        And, more important, what will go through the mind of a person to whom you

        report this calculation. You'd have to clearly say your page count was “book

        page equivalent”, or something like that or people might think you mean

        “each click”, which on an iPhone would make it sound like a very short book.

        This is a lot more complicated than just applying a sensible formula.

        There's a lot of agreement to standards and education involved.

        Mike

      • http://www.robertburtonrobinson.com Robert Burton Robinson

        I used to list my ebook sizes by “print length,” which is easy to do since I have paperback versions of all my books. However, I prefer listing them by word count. I think it's the most accurate way. Many books only come in ebook form, so word count is all you've got—unless you want to estimate page length. I'm not a fan of that.

        As a book shopper, I hate it when no indication of the size is offered. In the case of Kindle books, if there is no word count or print length count, all you have is the file size, which tells you very little—especially considering that some books include the cover and/or other images which can greatly increase the size of the file.

        I know it's going to take a while for people to get used to seeing word counts rather than page counts. But I believe that's where we're headed. People are doing just fine making the transition from paper to electronic books. I think they'll adjust to a new way of describing book sizes. ;)

      • /blog Mike Shatzkin

        I agree they'll adjust over time. Word counts do make sense. But it isn't

        going to mean much to a lot of people for a while.

        Mike

      • Methadee

        Good points. Is there such a thing as a conversion chart? Some of us still have not gone “metric” and I still have to convert. So a conversion chart–page vs word count could help the transition, perhaps.

        I am just thinking outlaid!

      • Methadee

        Opps! Sorry for the typo.

        I meant thinking outlaid! LOL

      • /blog Mike Shatzkin

        So we need one conversion chart to get from words to pages and another to

        get from “opps” to “oops” and “outlaid” to “out loud.”

        You could use 250 or 300 words per page and be reasonably accurate against

        any word count.

        Mike

  • https://sites.google.com/site/lynskeybooks/ Adrian White

    Pricing my ebook at $9.99? Am I crazy? Maybe so, but here's why:
    I have three novels published as ebooks. Two have been published previously by Penguin but the third is published exclusively as an ebook. When I came to set the prices, I took the opportunity to try out the three different price points of €2.99, $4.99 and $9.99. I'm well aware of the power of $0.99 as an attention-grabbing price, particularly on Amazon, but it seems to me that a lot of that attention is on established writers such as Stephen Leather – writers making the most of an extensive backlist and an established readership to storm the Amazon sales chart. Or writers of serial genre novels, paranormal romance etc. And good luck to Stephen Leather and the others who manage to pull this off but, although my paperbacks have sold reasonably well in Ireland, I don't believe I possess the reach to do the same. Also, there's something in me that says this is my work and if I don't value it correctly then who will?

    Harry Potter and the Half-Price Book
    I've worked extensively as a bookseller over the years and no other industry manages to devalue the potential of their bestselling product quite like the book industry. Whether it was Dan Brown or Harry Potter, booksellers just couldn't wait to give away margin and price premium-selling product as low as they dared. Sure, they point to the price in Tesco or Amazon and there's wailing and gnashing of teeth but boo-hoo, I think. All those sales at a low price represent a complete waste of time, effort and expense when it comes to making money for the retailer. And don't talk to me about loss-leaders – if you need to half-price Harry Potter to get customers in your shop, perhaps it's time you took a long hard look at who you are as a bookseller and what you're trying to do. Those customers won't stay with you once something cheaper comes along whereas your real customers, the customers that you should value and that will value you in return, well, maybe they'd pay a little extra for Harry Potter because shopping n a proper book store makes them feel good about themselves. Half-price Harry Potter books are not your business; your customers are. The fact that millions of ebooks are being bought for $0.99 doesn't necessarily mean those ebooks are being read; some customers are buying them simply because they can, now, at that price. And, if the books are not being read, there's ultimately no future in this market model.

    The sweet spot.
    It seems to me, as pointed out by Catherine Ryan Howard and others, that the sweet price for a novel published as an ebook is currently $2.99; sweet as in a decent return for the author, a cheap offer for the customer and not demeaning to the work. It's obvious that customers are prepared to pay a higher price for works of non-fiction because they place a higher value on the information conaind inside. The fiction e-publishing industry is still in its relative infancy as regards persuading a whole new potential market to switch from paper, or at least to get over the hurdle of reading on a screen, so a low price point makes sense. Is there a danger this will affect future price expectations? Yes. Is the print publishing industry all-at-sea in their approach to pricing, author royalty and distribution of ebooks? Yes. Will things change quickly over the next year or so? Most definitely yes, but the beauty of ebook publishing for an author is that we can adapt and respond – we can roll with the changes.

    Going for a song.
    $0.99 is the price you can expect to pay for a single song on iTunes (though in true Apple fashion this isn't always the case). So which is worth more – a novel or a song? Depends on the novel and depends on the song, I hear you say. A song can be written in an afternoon and yet last a lifetime – if you're Lennon and McCartney – and a novel might take a lifetime to write and still be better left unpublished. I priced my first novel, An Accident Waiting to Happen, at $4.99 because readers have told me it's a strong story that they couldn't put down, that they had to find out what happened in the end. (On Smashwords, readers can sample a substantial portion of my books for free so I'm hoping this is true.) Where the Rain Gets In, my second novel, is a harder read in that it deals extensively with self-harm and so wouldn't be to everybody's taste; I priced this at $2.99. But when it comes to my third novel, Dancing to the End of Love, there's just no way I can bring myself to give it away for a song. I value it too highly; it's worth more to me than that.

    Okay, I lied.
    Okay, I lied. I've been giving Dancing to the End of Love away for free for a limited time period because I want to get readers reviewing the book online. I also gave Accident away for free as part of Read an E-Book Week, my reasoning being that if I could hook a few readers with that book then they might move on to the other two. I believe in the power of free but it's a marketing tool and not necessarily a sales tool. When it comes to sales and using price to help create those sales, I'm going to use my common sense and price my first two books at $2.99 from the end of this month. I also think my books are ready-made to run a 3 for 2 offer, perhaps with the added twist of giving the most expensive book away for free. Or I might even run a Buy One Get One Free. But I'm going to keep the price of Dancing to the End of Love at $9.99.

    Why my work is worth more than two pints of Guinness.
    I like drinking Guinness. When I've drunk one pint of Guinness I like to drink another and two pints of Guinness cost about the same as Dancing to the End of Love. So does a single fancy cocktail but my work is not some Cosmopolitan or a Mojito – it's sweet on the tongue but full of body, beautiful to look at and even nicer to savour. My work – like Guinness – is the product of a long gestation period, brewed to a careful recipe and presented with loving care. But here's the thing: although I can remember certain pints of Guinness at certain periods in my life – and there have been many, many beautiful and memorable pints – my work will last longer than any pint of Guinness. And I'm prepared to back this up by having the nerve to price my novel – under price my novel – at $9.99.

    • /blog Mike Shatzkin

      Adrian, I wouldn't exactly say your pricing methods are “scientific”, but

      your thinking on the subject is appreciated. Good luck with your work.

      Mike

  • http://wowgu.ru Marazm Z

    I think digital pricing works at its much lower prices. Digital media statistically succeeds in long-tail business models. People are quicker to drop .99 to 3.99 on ebooks with the press of button. I think if publishers or writers could figure out how to monetize fiction better, to accommodate impulse purchases, they can generate much more revenue. Same way Zynga games work (Farmville). Free to play, with monetized features.

    • /blog Mike Shatzkin

      We still come down to price times units sold equals revenue. No doubt one

      sells more at lower prices. The question is at what prices revenue is

      maximized, and that isn't such an easy answer and it probably isn't one size

      fits all.

      Mike

  • ClaudeNougat

    A very interesting analysis, as always. I do enjoy your posts!

    Only one comment: you (and everyone else it seems) base your arguments on the concept as you put it and I quote: “It is more supply competing for the same demand”. I don't really think that's quite right. With the digital revolution and e-readers being handed out to lots of people who may never have regularly read books before – for example, teen-agers who receive Kindles from their parents at Christmas (that's the spike in e-reader sales, btw). What is happening, I'm pretty sure of it, is that the reading market is actually EXPANDING.

    With an expanding demand, prices will play out quite differently. And there will be lots of space at the lower price end especially.

    Remember, teenagers have limited pocket money to upload books on their new e-readers, not to mention older e-reader owners who are filling their “digital shelves” and don't want to “go broke”- sure, they may not read everything right away, but it gives them a secure sense of having a full digital library at hand.

    These are not “bad customers” nor the kind of readers “you would not want”. Indeed, many of them are future readers. Hence any price analysis is bound to be quite difficult to carry out, precisely because this is not a static situation but a fast evolving one, i.e. it's growing!

    (I blogged on this recently rather extensively, you might want to check me out)

    • /blog Mike Shatzkin

      Claude, what you say about an expanding market is probably true but probably

      doesn't change the paradigm. Supply is still increasing much faster than

      demand.

      Still, the point about consumers at the lower price points is one we agree

      on. What will be interesting to see as we go forward is how cleanly

      bifurcated the market is. I'm sure there will be dedicated low-end buyers:

      people who shop the 99 cent and $1.99 offerings and aren't interested in

      anything else. The question will be how loyal the high-priced buyers are. As

      one normally high-price book buyer who has discovered low-priced John Locke,

      I can tell you I'll be buying more of his.

      I don't think I'm that unusual. So I think the inexorable downward pressure

      remains.

      Mike

      • ClaudeNougat

        I agree: the downward pressure is inexorable…all the more so that the market is expanding not across the board, but particularly at the lower-end prices. So publishers will have to keep this in mind when they experiment with prices (which I'm sure they'll do and probably some are already doing it…)

        Another thing: I don't really believe that e-markets and paper markets are in future going to be in direct competition. A digital read is really a very different experience: an e-book can't be easily shared/lent nor can it be resold. So there will always be a market for hardcovers that are actual objects susceptible to be collected, shared, lent and resold. To produce digitally is very cheap and one can expect that over time low prices in relation to paper book prices are their “natural state”.

        The one thing that could disappear out the window are paperbacks!

      • /blog Mike Shatzkin

        Claude, the physical book supply is largely critical-mass sensitive. Not

        enough books for a printing and they cost a lot. Not enough customers for a

        bookstore and it closes. I agree that people who really want paper books

        will always be able to get them, but when the ebook distribution system is

        really built out and the bookstore network has really diminished, I'm not

        sure how much much demand for print there will really be.

        Mike

      • Methadee

        I agree. I find that I will read the eBook and if I want it in my library, I will buy the hardcopy for my bookshelf.

    • http://www.facebook.com/gdilla Gautam Banerjee

      At the same time, ebooks are competing with music, video, email, chat, browsing, sms, and apps for those same teens' (and everyone's) attention. There's only 24 hours in a day; ultimately, there will be less time (and less money) spent on ebooks. There's lots of free alternatives for our entertainment and enjoyment when things go digital.

      • /blog Mike Shatzkin

        I think that ultimately you're right but the stuff that isn't packaged up as

        books has a bit of a disadvantage for immersive reading. I don't think we're

        in immediate danger of fewer books being read — indeed, it would seem from

        the early evidence that ebook reading my increase consumption a little bit

        (but nowhere near as much as supply is increased), but there will definitely

        be the immediate effect that people discover much cheaper books as an

        alternative to higher-price, branded ones.

        I'd say demand expressed in dollars is flat and demand expressed in units

        might be slightly increased, but the supply of real book choices has

        mushroomed.

        Mike

  • http://sorebuttcheeks.blogspot.com/ Anabolic Steroids

    the cheaper the better, personally i wait for hardbacks to be a few years old and then pic em up really cheap.

  • Awilliams

    “Locke makes the point that the $9.99 book needs to be “10 times better” than his to be an equivalent value, but I’d make the point that they need sell only 1/10 as many copies to deliver the same amount of revenue.”

    Help me out here. By selling an ebook for 99cents, ultimately doesn’t Locke still end up earning more royalties than he would on a $9.99 e-book sold under the agency arrangement of a traditional publisher? And if there’s a agent in the mix wouldn’t he end up earning even less?
    If that’s the case, it seems to me that it’s not enough to merely look at the amount of money delivered. Let's be specific; delivered to whom – the publisher, the author, or both. Unless you do so, you may not get the full picture. Your conclusion could even be misleading.

    • /blog Mike Shatzkin

      If Locke sells for 99 cents, he gets 35 cents. (If he sold for $2.99, he'd

      get $2.10!)

      If an author sells through an agency publisher at $9.99, the publisher gets

      $7, and the author gets 25% of that, or $1.75.

      So the publisher would have to sell about five times as many for it to be

      the same for Locke. On the other hand, if he sold at $2.99, he'd be getting

      more per copy than through a publisher at $9.99.

      Mike

  • http://twitter.com/nancynaigle Nancy Naigle

    I'll be at BEA … can't wait to hear the interview at the Publishers Launch Conference with Barry Eisler. See you there :)
    Nancy Naigle
    Love stories from the crossroad of small town and suspense. :: http://www.NancyNaigle.com
    SWEET TEA and SECRETS, available in e-format and print May 2011
    Award-winning novel, OUT OF FOCUS, November 2011

    • /blog Mike Shatzkin

      Well, thank you for that enthusiastic plug, Nancy. I'm confident you'll

      enjoy the whole day.

      Mike

  • http://www.facebook.com/profile.php?id=745395309 Sean Cranbury

    Here's my simple theory on eBook pricing:

    We live in an age of increasing disintermediation and eBooks are worth something or nothing as the consumer sees fit, depending on all sorts of factors. Writers like Locke understand this and price their work accordingly.

    Consumers do not care about the transitioning book publishing business model, have the tools to access content in their container of choice via their preferred digital means. Some will access Locke's content via Kindle and happily pay for it. Others will access the content via P2P for free.

    Writers and publishers are free to price their content at whatever level they are comfortable with. $19.99 or $9.99 or $4.99 or whatever.

    But the consumer is not obligated to pay for it. Especially when there's a great, cheaper alternative option available.

    Some consumers will also be inclined to support indie writers like Locke or Eisler. Knowing that their money goes directly to the creator and is not caught up with intermediaries.

    • /blog Mike Shatzkin

      Sounds like a pretty good description of the ebook market as anarchy.

      Everybody just does what they want. Maybe that's correct. I tend to think

      fewer and fewer people will make a living as writers if it is, though.

      Mike

      • http://www.facebook.com/profile.php?id=745395309 Sean Cranbury

        Yes, it would seem like anarchy by our current lens and expectations but I believe that there's very little that can be done to prevent it from developing.

        In this kind of an environment relationships will be the key and there'll be new requirements for developing brands and the trust of the reader/consumer.

        It's a long discussion but I think that part of it is about the 'container' preference – that you noted above and that Andrew Savikas discussed in his classic essay 'Content is a Service Business' – and part of it is 'price' preference.

        The other parts are 'awareness' and 'trust'. Is the consumer aware that the book exists (discoverability), does it look interesting/cool enough to buy?

        Does the consumer trust the source?

        Writers will still live and make money in this environment but the business model will not look the same as it does now.

        People will always make the money, regardless of the landscape. But it's a whole new hustle

      • http://www.facebook.com/profile.php?id=745395309 Sean Cranbury

        I'm sure that you've already seen this and are cogitating on its significance but here's a practical example of my 'anarchy model' above.

        As noted by MediaBistro this morning: Debut Novel Exceeds 400,000 Downloads Through Bit Torrent.

        The books is called Captive and it's written by Megan Lisa Jones.

        I downloaded the pdf via Bit Torrent client from about 60 peers in about 3 minutes. The torrent contained a txt file, a pdf of the novel and a quicktime video (also available via author's YouTube channel) of the author introducing the book.

        Paperback is available via Amazon for $11.00. Kindle Edition is available for $4.99. Bot Torrent Edition is free.

        Price dropped this morning on Kindle Edition from $9.99 to $4.99 due to 'success' of Bit Torrent promotion.

        Price drop because of success of free content. Anarchy or does this landscape require a different POV to see the opportunities?

  • E Jennings

    STATIC DEMAND — that's where you are wrong. the demand is not static. more and more people are buying ebook readers and they are now coming to Europe, which has a population of 360 million dedicated readers, many of whom read in English. And don't forget — there are almost 2 billion English readers in the world. once they get their hands on a Kindle or a Kobo they will start downloading. The demand is not static.

    • /blog Mike Shatzkin

      The global demand for *English* is not static. But the overall demand for

      books has been pretty close to static for 10 years in the United States. The

      most recent (2011) data says that ebook rises aren't compensating for print

      book falls.

      Mike

  • http://claude.nougat.blogspot.com Claude Nougat

    Well said, Mike! What is confusing here is the demand expressed in value terms ($) and in quantitative terms (no. titles). And to come to a definitive conclusion about which way the market is going, we are missing reliable data.

    We have to work on “impressions”. And my impression is yes, in a fully digital world, there is a tendency to go for the free stuff, as Gautam Banerjee says. But this is not a static world, as E Jennings points out.

    Not only is the market expanding in terms of numbers and for the first time the US book market will go global, since English is a global language, BUT (I know that’s a big but!) innovation is on the go and ebooks will become “extended” (with music, video and what not).

    Really a new product compared to a print book or even an ebook the way they now look on Kindle, or Kobo or whatever. And here is where it is really difficult to predict where it will go: innovations are a bit like fireworks. Some of them shoot up to the sky, others flop to the ground. Which will it be?

  • Al

    We diddled with price options a while back at AKW Books. The most definitive was The Fighter King by John Bowers. It's the first book in his “Fighter Queen” saga and we figured that if we could get people to read it at a low price, that would “hook” them on the series. It was, at that time, the best novel he'd written (and he's VERY good), so it would be an excellent “loss leader”.

    John was, at that time, relatively unknown. No big fan base to draw from.

    So, we priced this rather large book at $2 even. Not $1.99, but $2.

    Much to our surprise, it sold almost nothing.

    After a month, we priced it where it “should” be, based upon the market, $6.50.

    Sales picked up and it's now one of our best sellers. And it brings a lot of new customers for the entire series.

    The only thing we can deduce from this is that the public assumes that if you don't value your work, it's probably not worth their time. If the price is cheap, the story must be poor.

    Human nature at work. So, we don't fight it, we just go along for the ride (while occasionally experimenting to make sure that human nature hasn't changed).

    • /blog Mike Shatzkin

      This is a very interesting piece of experience but my own hunch is that it

      wouldn't turn out to be typical. Nonetheless, what it says to me is that it

      takes constant experimentation to learn in a dynamic market.

      Mike

    • Daver18

      This experience you had makes absolute sense. Ever since the American Industrial Revolution manufacturers have found that there comes a price piont where consumers feel that something is too good to be true and won't buy it. Study after study has been done in the manufacturing industry over the years and it has always proved out that pricing too low will hurt sales. Why should books be any different?

      • /blog Mike Shatzkin

        This idea of “pricing too low hurting sales” is new to me. It makes some

        sense, but not total sense. It will be great when there is enough pricing

        experimentation and tracking of results going on to be able to discuss these

        things in a data-driven way.

        Mike

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  • Max Alexander

    Reading this post a month late, Mike, but it reminded me of an issue I've been pondering. I wonder if publishers could sell more ebooks at higher price points if they made the free samples larger–especially in fiction. Instead of just giving readers a taste of the first chapter, why not give them half, or even 3/4, of the whole book for free, then make them pay once they're really hooked. In other words, it's the Perils of Pauline model. Hell, why not give them everything but the last chapter for free?

    • /blog Mike Shatzkin

      Max, this really should be the subject of a LOT of experimentation. It would

      be cumbersome but possible for publishers and retailers to offer different

      size preview chunks and measure the conversion against each. It might well

      be different for different books. I did read about an author who followed

      your theory and offered about 3/4 of a book as the sample. It seems

      reasonable…

      Mike

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