If you've been following ebook news over the past 6 months then you've noticed that ebook prices have tended to drop. In fact, the average prices of ebook bestseller lists have shown a fairly consistent downward trend for the past year as more and more titles exit agency price controls and enter the free market.
Indie authors are beginning to notice, and one in particular blogged about it last week. That blog post crossed my desk yesterday, and while it's interesting and factually correct I don't the author reached a valid conclusion.
Toby Neal wrote this over on her blog:
The DOJ price-fixing case with Apple and the Big 5 publishers was settled awhile ago, but September was when Amazon began really discounting big name books. I get several email lists of discounted books daily in my inbox, and I’ve been agog to see big names like Janet Evanovich, Louise Perry, Michael Connelly, Patricia Cornwell and most recently, Donna Tartt’s Goldfinch, one of the Best Books of 2013, going for 2.99 or less.
And in September, my sales went to half of what they’d been. They’ve stayed at half what they’d been in spite of doing active marketing, ads on Kirkus Reviews, giveaways, promos in those same lists I get in my email inbox, and launching two new books.
Toby Neal blames her drop in sales on Amazon heavily discounting agency titles. That could be true, except that such heavy discounts are probably more than Amazon could do on their own. The new post-agency contracts limit Amazon's ability to discount ebooks, so if heavy discounts are dropping prices for titles from legacy publishers enough to affect cheap indie titles then there is probably another cause.
And just to be clear, all signs point to ebook prices dropping and indie ebooks facing more price competition; I just want to offer a more nuanced explanation.
Edit: I'm not sure that this is related, but Dear Author posted in mid-November that free and deep discounting is not as effective of a promotional tool as it used to be:
In the early days of digital publishing, free was one of the most powerful tools that could be used to elevate the profile of a book. In a self publishing world, the price is probably the number one promotional tool of an author. But is it still working?
A few on the Kindleboards have reported more diminished success with Bookbub, a newsletter that broadcasts sales and freebies to an audience of hundreds of thousands of subscribers. I’ve come across a couple of author posts that suggest that free and even 99c promotions aren’t working as well as they might have in the past even though promotional pricing is more popular than ever.
As anyone in publishing can tell you, the Big 5 publishers release most of their Fall titles in a tight window starting in late September and stretching to early December. That's a huge influx of content from popular and best-selling authors, and it's pretty obvious that the major ebookstores are going to push the hot new releases. So of course indie authors might see a noticeable drop in sales as readers spend their limited budget on more expensive ebooks.
But that only accounts for the time since the end of September; Toby Neal saw a drop in sales early in that month, and that was probably due to the major publishers putting their older titles on sale in anticipation of the Fall releases.
That sounds like a good promotional model, but you don't have to take my word for it; check out this best-seller price index from Digital Book World. Note the severe dip extending from late August to late September:
I'm not usually one to put any weight into best-seller lists but this graph, simply as a price index, fits too closely to be ignored.
At this point I'm sure that some are wondering why this year is different. After all, some agency titles were already ex-agency around this time last year so why didn't indie authors see a similar effect?
For one thing, the above chart tells us that there is increasing price competition in the best-seller lists now that the major publishers no longer get to set the price and shove it down consumers' throats. The effect appears to be cumulative over time (so far), and if it continues it could have an interesting effect next Spring and Fall.
The other possible reason why indies didn't see price competition last Fall is that, according to Kristine Rusch, the publishers were still coordinating their release schedules:
Events in traditional publishing are Event Novels. Until 2012/2013, it was common practice for the editors in chief of traditional publishing houses to have a polite, if off-the-record, discussion with cohorts at other publishing houses. The editors would scatter their Event Books throughout the fall season—which is the big season in publishing.
...Book publishers have had that same attitude too, but they don’t announce their lists that early. They announce the fall lists in January, sometimes even in March, of the same year. And all of the book publishers announce at roughly the same time.
So, until last year, they would have “informal” discussions, designating September 24 Stephen King week, and October 22 John Grisham week, and so on. No one would schedule a tent-pole book—a blockbuster, if you will—against another tent-pole. Unless those tent-poles were in radically different genres. Sure, a romance publisher might release a sweet contemporary romance blockbuster on September 24, under the assumption that romance book-buying dollars are different than horror book-buying dollars. In other words, the romance reader wouldn’t be buying the King, and the King reader wouldn’t be buying romance.
I think part of the reason why indies are taking a hit in the wallet is the general uncoordinated nature of the major publishers' sales promotions. They're promoting all the titles heavily due to the more intense competition, and while that does help their sales it also hurts anyone that doesn't have the huge marketing budget.
If that is true, and if book prices continue their downward trend, then the problems that Toby Neal reported last week are only going to get worse. Can you imagine what is going to happen next April, when the major publishers start their Spring release schedule? I think indie authors might want to consider getting a day job just in case.
On a related note, I think we may be looking at practical proof of Mike Shatzkin's argument that high agency prices reduced the amount of direct price competition that indies might face:
But I want to argue here that all authors, including those who self-publish for $0.99 or $2.99, should be applauding the big publishers’ efforts to keep the perception of value for branded books high by keeping prices high and stopping retailer discounting. Authors should be vocally supporting price maintenance and the agency model, even if they are not “in the union”. There are several reasons for this.
3. If big publishers reduced their prices sharply, the key marketing distinction that fostered the discovery of such writers as Amanda Hocking and John Locke would be eliminated. On the comment stream of a blogpost I read on this subject (can’t find it so can’t link it), one person posted a string of suggestions for major publisher survival strategies that included “cut all your prices to $2.99.” Why? Because it would eliminate all the competition from the self-published riff-raff that is using price as a marketing tool. So not only would the publishers and branded authors make less money, the aspirants would find their path to success cut off as well.
That's now going away, and indie publishing might wither with it.
Oh, I don't think that indie publishing is going to die, but I do think we're going to go into a brutal Darwinian period where the weak and the merely unlucky will be slaughtered. The next 6 months to a year could be a major upheaval in indie publishing as indies have to face more direct competition from the majors.
If I were an author, I would follow the advice of Toby Neal and start aggressively developing pursuing new options. I think she's right when she says that it will be necessary.
P.S. I would like to thank Kristine Rusch for sharing the details about the Fall and Spring launch windows and Will Entrekin for pointing me in the right direction.