Friday, February 05, 2010

e-books, e-readers...publishers, Amazon, Apple and more

OK...there have been a lot of posts going around about eReaders and eBooks and the whole price structure and the concept of which eReader is best for the user, for the publisher, for the distributor, etc.

There has been a lot of blame throwing regarding gouging the customers on the eReader or fleecing them on the cost of the eBook.

Especially now that Apple has entered the mix and it looks like "normal" eBook prices will increase by at least a few dollars (from the ~$10 that Amazon has going on), there is a lot of concern about those greedy people at Apple, Amazon, Macmillan, HarperCollins, Penguin or whoever.

I definitely don't claim to know what's really going on, nor do I have all the answers, but here's the way I see it.

The "behind the scenes" reasons that publishers are scared and running to Apple is this...

"So far" they (publishers) are not losing money on eBooks. In fact, publishers are coming off golden on eBook sales because (in most cases) they charge distributors (Amazon, BN, etc) the SAME WHOLESALE PRICE for the eBook as for the hardcover.

So, taking the latest Dan Brown spectacle, The Lost Symbol, as an example....

The publisher sent out physical hard cover copies and ebook license/copies to distributors. In both cases, they got the same price for the book. So Amazon maybe paid $12 for each hardcover copy and $12 for each ebook.

The result? Publishers are making HUGE profits on eBooks...right now.

The risk is notice that Amazon then takes that ebook (that they just paid $12 for) and turns around and sells it for $ A LOSS. Sure, that's great business up front as it drives the sales of their own reader and ties people to Kindle. There are other ebooks that they certainly get cheaper and will (hopefully) recoup their losses on in the long run.

However, the publishers are frightened that Amazon (and barnes & noble and sony as well) will continue to sell their books at a up huge customer demand and expectations (why would a customer want to pay more than $10 for an ebook)...and thus demand publishers to lower the wholesale cost of the ebook so that distributors can make a profit.

Apple is being very strategic in seeing the fears of the publishing industry and playing to those fears. If they can allow publishers to set the price of the ebook, then the publishers come off as the bad guy for higher prices...not Apple (which makes Apple happy). And Apple's bet is that more publishers will do exclusive deals with them (Apple) because they can make the higher margins on sales (assuming the books sells as well). While I'm not a huge fan of Apple condoning the fleecing by the publishers, I can't blame them for a strategic move that could pay off big for them.

The real problem in the model is the same problem that we've dealt with since ebooks came around....the wholesale pricing model. Publishers weren't sure how to handle ebooks. They wanted to release them the same time as the hardbacks, especially since hardback sales were down and e-readers were getting better. At the same time, they need that huge influx of revenue with the launch of a book.

So, they stayed greedy. Even though the cost of goods is relatively small on an e-book (once the hard book is created, it's a smaller step to jump to digital...granted, there is some investment in tech development and making sure it works right and is laid out right...but once that's done, there's no overhead to send out copies). So the real argument is how publishers can honestly justify charging distributors the same price for their ebooks?

I haven't followed any big discussions with authors on this topic, but from what I've seen, this doesn't (yet) affect authors much...though I'm sure if publishers have to charge less for ebooks that they'll gladly pass that revenue drop right over to the authors.

For now, the authors' big concerns about e-books largely have to do with the piracy issue, which is a valid concern. The ebook piracy thing especially bothers me since there is already a FREE venue to get almost any book you want...the LIBRARY! True, some communities have poorly stocked libraries, and checking a book out from a library doesn't give you the digital format...and you don't get to keep it forever. But COME you really need to steal a book you can check out for free from the library? If you really want to read it without paying, hit the library...if you want to keep it forever, buy it. Honestly, if there's a book I love and want to keep forever, I'd much rather have the hardcover version than the e-book.

Wow, what a rambling post. Sorry. :)

So which eReader is hear to stay? I personally don't care. I may eventually get one if the price point becomes right (for the reader) and the market stabalises (I'm not eager to see books go down the path that music did - vinyl, 8 track, cassette, CD, etc. - or that movies did - laserdisc, beta, vhs, dvd, hd-dvd, blu-ray, etc.). But I can see the convenience in having a library at my fingertips for vacations, sitting at the mechanic/doctor/etc or other times. Generally though, I am certain I will always prefer the physical book format that I've grown up with.
I still shell out hundreds of dollars a year, often for hardbacks from favorite authors...sometimes buying up paperbacks from an entire series I've fallen in love with.

I'm a bit worried about the book industry and concerned that they could shoot themselves in the foot through this ebook battle. I'm sure books as a whole will survive...people will continue to clamor for great stories and writers will continue to write (for many it's a compulsion that can't be stopped *grin*)

I just hope that whatever the future brings to books, that I can still afford to relax with a good book.


Phoenix said...

Yay...I can finally leave comments! I've been a follower for months but never could find where I could leave comments...and now here we are :)

Call me paranoid but...the only thing I worry about with ebooks is that it's technology that can get taken away from me...for example, Kindle went into hundreds of people's individual Kindles and deleted their copies of (appropriately enough) Orwell's 1984 because it was licensed correctly. Imagine what might happen if censorship started becoming that easy...


Brii333 said...

gr. Stupid eBooks.

I kind of agree with you. The whole thing is just a way to make more money. Apple is getting greedy. I'm sure that it would be useful enough if you need it when you travel so you don't have to carry dozens of books around with you (that's what I usually do). However, there are a couple downfalls. Firstly, if you get mad at what's going on in the story, you can't throw an eBook thingy the way you would throw your good old-fashioned paperback. You can't drop it, even accidentally. You can't do that thing where you're like, "Oh, where was that one part I wanted to remember?" flip, flip, flip... "Oh, here it is! Wow, that was easy!"

Also, the battery life on the old-fashion style book ROCKS!!! ;)