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Authors, Please Keep Telling Readers How eBooks Should be Expensive

11512394244_8e32b68d31_hWhat with the AAP reporting on the decline of publisher ebook revenues, and Big Five publishers either posting falling ebook revenues or refusing to talk about the category at all, I thought today would be a good day to to return to the topic of authors justifying high ebook prices.

Michael J. Sullivan wrote a post for Amazing Stories about a month ago that combines the Joe Konrath method of debate with a collection of straw man and "price of tea in China" arguments to defend high ebook prices.

Here’s an excerpt from his sixteen-hundred word post:

I had lunch at Chipotle after the subject was brought up. A burrito and a soft drink cost me about $10. A movie ticket costs between $8 and $14, but to own a copy it will run from $15 to $30. A pair of jeans cost $30 bucks, a T-shirt $20, a pair of shoes $60. Ebooks tend to range mostly between $0.99 all the way up to as much as $14.99, but most range between $5 and $10. After reading the above question for the second time I had to double check Amazon’s numbers to make certain ebooks hadn’t jumped up substantially —but $5—$15 for many hours (or week’s worth) of entertainment? Sounds like a deal to me.

The idea behind the question, as I understand it, is: since no printing is involved, or any other out of pocket expenses in the form of raw materials, why aren’t ebooks free (or something very close to it) If authors don’t have to invest money to create the product, why charge people to read it? I wonder if these same individuals assume a lawyer, psychologist, home inspector, or tax preparer should also not be paid? After all they don’t invest any money in the services they provide. An argument might be made that these people invested money in their education or in the cost of maintaining an office. But don’t authors do the same?

Perhaps it is the bizarre notion that anyone can sit down at anytime and write a novel—no education, no practice needed, and ignore the costs incurred from rent, mortgages, heating and cooling, books, seminars, software, travel, etc. that those serious about a writing career incur. But what about the editing? What about the cover art? Even ebooks need these, and they aren’t cheap. So, of course, there are investment costs even in an ebook—quite a bit actually by the time you add up the multiple editing, layout work, the art, and then the months or years of promotion and marketing that goes into getting a book noticed.

Authors travel across the country promoting their work, doing signing as bookstores, conventions, and other events. So there is the cost of entering these events, the cost of travel, the cost of hotels, and the time lost from their day jobs, and the cost of ads (if they or their publishers run them), the cost of making swag such as bookmarks, bookplates  and postcards to help prompt the book. Authors can easily invest several thousand dollars in a single book. Given that a great many authors don’t sell more than 5,000 copies (and that’s considered pretty good in the industry even if you’re traditionally published), and that Amazon takes 30-70% off the top, it is very likely the writer will not recoup their out-of-pocket investment.

According to his Amazon profile, Sullivan is a hybrid author; he has published with Hachette and Del Rey, released a couple titles as a self-published author, and in the past he published with his wife’s small press, Ridan Publishing (now defunct).

From what I have seen, all of Sullivan’s ebooks are priced at ten dollars and up (with the exception of the Ridan titles, which were later republished by Hachette).

In the past I have taken the opposing view when authors defended high ebook prices as the cost of doing business. But Sullivan’s arguments were so empty that I merely included his piece in a morning coffee post, noted a few key details, and then dropped it.

I was reminded of  his post over the weekend when Hachette, S&S, and PRH released their various financial reports and demonstrated that readers, as a group, do not agree with Sullivan’s arguments and aren’t swayed by the similar arguments made in the past (assuming the readers saw the arguments; the larger book industry is its own echo chamber).

Hachette’s ebook revenues peaked in the US in 2013, and have dropped precipitously since then both in terms of dollar value and as a percentage of revenues.

Sullivan is defending a pricing policy which has lead to declining ebook revenues at his publisher, and that refutes any bogus arguments and justifications in favor of high prices.

Arguing for higher ebook prices at this point requires that one first ignore all the industry data which is almost uniformly is lined up against the idea.

There’s no need to refute these arguments, or even respond – not when we can simply point to the data and show that the market disagrees.

So authors, by all means keep telling readers that ebooks have to be expensive; it has taken on a "get off my lawn" vibe, but if it works for you then don’t stop.

image by Julian Partridge

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kurt August 2, 2016 um 11:19 am

that was quite entertaining – thanks
on another front

your site is no longer white-listed – the Samsung ad that plays over and over every time when switching from front page to a story and back is very annoying – particularly when you attempt to hit a volume off "button" somewhere the add takes over the entire center of the screen the moment the cursor hits the ad
assuming what is being pushed to your site is not being vetted by you since this is something I’ve seen you complain about on other sites

Nate Hoffelder August 2, 2016 um 2:11 pm

What Samsung ad? I only use Google Adsense, and I didn’t realize ot offered annoying ads like that.

Can you send me a screenshot?

William Ockham August 2, 2016 um 12:01 pm

Declining ebook revenues do NOT refute arguments or justifications for high ebook prices. They only refute the obviously bogus ones. Declining ebook revenues were an anticipated cost of high ebook prices. From the big publisher perspective, it is far more important to limit the increase in ebook unit sales.

Fjtorres August 2, 2016 um 1:30 pm

Fortunately, the only unit sales they are limiting are theirs.
They are no longer important enough to damage the health of the ebook industry.

Nate Hoffelder August 2, 2016 um 2:25 pm


I tweaked the post to refer to only Sullivan’s arguments.

RAD August 2, 2016 um 2:05 pm

It sounds like the eBook royalty rate authors get from the big publishers is bad. Once an author signs a contract, their best income increasing option is to appeal to readers to pay more via higher book prices.

Unless I’m missing something, the incumbent big publishers are thumbing their noses at both their authors (with unfair royalty rates) and their readers (with illogical pricing of eBooks). Readers are voting with their feet, the question is why authors stick with traditional publishers for their new books.

Fjtorres August 2, 2016 um 2:13 pm

No, you’re not missing much.
But there is an added wrinkle: these days when you see a book discounted to (nearly) reasonable levels it is almost a certainty the author is getting very little if any royalty because of deep discount clauses in their contracts that typically kick in around the 50% of list. So by raising list prices and discounting from there the BPHs can stiff the authors even more.

Nat August 2, 2016 um 3:26 pm

There are two things intersecting here. There’s the problems of authors getting too little and publishers too much of the profits, in some cases exacerbated by contract terms (in the case of sales, etc.)

Then there’s the question of how much should an author make for their work, vs how much people are willing to pay for that work. What happens if we reach a point where you literally can’t make a living as an author at less than $10/book, and people literally won’t pay more than $3/book? Does writing become hobby-only and professional authors disappear? At what point is it reasonable to say "look, you can buy the books at this price or not, but if you won’t then there won’t be any books to buy"? At what point is the consumer wrong due to wanting things at an unsustainably low price?

I’m not saying we’re necessarily at that point–too many unknowns to establish a clear cost floor like you can with a material good like a chair. But we’ve arguably reached that point with recorded music, where musicians can’t make a living off of recorded music but must tour or have a day job. People don’t seem to be inclined to pay big money for an author reading in a stadium or theater, however.

Fjtorres August 2, 2016 um 5:00 pm

Writing has long been a "hobby" (in IRS terms) and a part-time second job for most writers. "Don’t quit the day job." isn’t just a putdown. It has long been the day to day reality for the vast majority of writers. If you ever encountered a writer whose work you really liked but who suddenly just disappeared, that is why. Two notable SF&F writers that come to mind for just walking away are Chad Oliver and Robert Don Hughes.

poiboy August 2, 2016 um 3:46 pm

when ebooks cost more than physical paperbacks of the same title.. all i can do it roll my eyes.

Jon Jermey August 2, 2016 um 5:57 pm

It’s ridiculous to include the time and expense of promotional tours and events as a cost to authors. The sole point of them is to sell more books, and thereby make more money. If they’re not bringing in more money than their overall cost, then solution is simple — stop doing them. And then reduce your book prices accordingly.

Hayden August 2, 2016 um 8:36 pm

Economists call it 'supply and demand'. The market will find its own price point in an open market.

J.K. Rowling can sell her books at a really high price because the demand is there at that price point. The cost of making the book, the marketing and any other costs are irrelevant to the price the customer is willing to pay for her books. The same goes for Apple and its ithings. They charge whatever they think their customers will pay for them, which is a lot more than the cost of producing them.

Now if an author is not getting paid enough in royalties while at the same time other authors are making a living, then the author has to look at what they are doing differently. From what I read, if an author is being published by a large publishing company, then most of the revenues stay with the publishing company. Perhaps, the author should look at his contract first, before complaining about what his/her readers should be paying for their books. There are many authors out there selling their books around $5 and happily making a living while authors selling books around $10 earn a pittance.

The problem is not what customers are willing to pay, but for authors who are published by the big publishers, the problem is the middlemen who syphon all the proceeds

RAD August 3, 2016 um 9:28 am

Economic supply and demand assumes that the products are perfect substitutes for one another, that there are only two sides involved (supplier and buyer), and that all the players have full information (e.g. price/profit). The book market is a great deal messier than this and three major disruptions are ongoing:

1. The Web as a new discovery/purchase/promotion channel (Amazon)
2. eBooks as a new digital product format/platform (Kindle, Nook, Kobo, iBooks)
3. Print-on-Demand and Offset-Printing-as-a-Service (Ingram Spark/LightningSource, CreateSpace)

Each of the players has Voice and Exit as an option. When customers don’t like a price they can just walk away or walk over to an alternative/substitute offer. Suppliers also have Voice and Exit and if they think they can get better profit/wages doing something different they can shut their doors and stop selling.

Economists have the concept of Normal Profit, that is the profit for suppliers in an industry at which point an equilibrium is reached where no suppliers exit and no new suppliers enter the market.

It seems to me that traditional publishing houses and authors are scrambling to find a new economic equilibrium where all the players feel like they are getting true value.

When disruptions occur, there is often an unbundling of services. The traditional publishing houses bundle a whole bunch of services. Authors who are not technically savvy nor business savvy are struggling to figure out if/how to adopt a whole new slew of unbundled options.

The only thing traditional publishing has going for it, in my opinion, is the inertia of the old way of doing things which was widely understood by authors. I can’t see how traditional publishers can survive once the dust settles (may take a generation), they no longer add sufficient value. These are starving animals fighting for survival and they are willing to eat their young/authors in order to live another day.

Nat August 3, 2016 um 10:30 am

Oh, absolutely–the current structure is a huge part of the problem. But I also wonder whether the prices that readers want to pay are sustainable for authors, even once you cut all the middlemen and old cruft out of the system?

In general, I feel like people (as a whole) want to pay rather less than creative content (books, TV, movies, music) are worth, compared to what those same people are willing to pay for physical goods and live performances. Maybe it’s because many of those have been so heavily subsidized and retail prices have been artificially low for decades. Maybe I just value creative content more highly than most (and therefore don’t balk at higher prices). But I don’t see any problem with books and music being more expensive and more people using libraries to access them.

Of course, the publishers are doing everything in their power to make it impossible for us to get ebooks, digital music, and digital video from libraries, so we need to solve that problem if prices are going to be higher than many are willing to pay. Another reason to ditch the publishers and figure out how to connect authors directly to retailers, or even readers.

Fjtorres August 3, 2016 um 10:35 am

For all the talk of the disruption caused by digital publishing, there is a bigger, older disruption (dating to 1995) in play that is affecting the authors: books no longer go "out of print".

It took tradpub over a decade to really take notice but copyrights have become substantially more valuable since 1995 and double so since 2010.

When online bookselling of both new and used books took off, the book market stopped being constrained by shelf-space or bookstore accessibility. And buyers had a broader selection of "known good" material. New releases no longer had to compete just with recent releases but also with earlier works that were now readily available. Since then, publishers' ability to stampede buyers toward annointed "bestsellers" at bookstore front tables and end caps has been steadily declining.

(For those that came in late: authors and publishers were vilifying Amazon long before Kindle. Not just for discounting books but also for selling used books and, worse, listing used books side by side with new copies of the same titles. Try searching online for pre-2007 anti-Amazon screeds over used books. Fun reads.)

Anyway, the value of copyrights went up again, starting in 2010, as publishers saw ebooks become a mainstream product in several markets and they realized it wasn’t just techies and hobbyists buying ebooks but also avid book readers in the genres. (A critical slice of those markets because avid readers are the ones that get bestseller bandwagons rolling.) Worse, 2010 is when Indie ebook sales started adding up to noticeable money. Worst of all, a lot of those Indie sales were going to reverted titles.

Up until 2010, most midlist authors could get their slow-selling or out of print titles reverted relatively easily. Since then it has become well nigh impossible. These days the majority of tradpub contracts are, in practical terms, life of copyright deals. Yet, instead of this raising the payout the authors receive, the publishers have been steadily lowering advances (because the added value is coming from long tail sales over the life of the copyright rather than the traditional 3 month launch window) and reducing ebook retailers royalties from 50% of list to 25% of net and in some recent contracts to 15% of net.

Judging by their public comments, it seems the vast majority of traditionally published authors and those still aspiring to be traditionally published, haven’t internalized the giant increase in value of their intellectual property from the 1995 disruption and only focus on launch window sales. As a result, they continue to settle for terms substantially lower than the true present value of their output.

They blame Amazon, they blame readers who buy cheaper titles, they blame everybody except themselves for failing to notice a twenty-year old sea change in their business.

Some sympathy is due to authors stuck with pre-2010 legacy deals. The game changed on them with limited warning and they missed the signs. It happens.

But any author who is operating under post-2010 deals deserves little sympathy because by them there were giant flashing neon signs telling everybody what the new rules are. Yet they went ahead and signed.

Kinda hard to feel for those folks.

Fjtorres August 3, 2016 um 10:40 am

That should be "reducing ebook royalties" not "ebook retailer royalties".
The BPHs have actually forced retailer margins upwards as they force author payouts down.

RAD August 3, 2016 um 11:02 am

That is a good point and fits with the three disruptions I mentioned: 1. Web, 2. eBooks, 3. Print-on-Demand.

The Web created a more viable/vibrant used paper book market.

Print-on-Demand has also made backlist book sales viable, which is another dimension to your Books-Never-Go-Out-of-Print theme.

Nat August 5, 2016 um 9:02 am

I’ve been wracking my brain: what happened in 1995 that you’re referring to? For that matter, was there some particular event in 2010, or do you just see that as the inflection point?

Stephanie Addams August 11, 2016 um 5:46 pm

I was happy to buy ebooks from Amazon at $9.99, however when publishers raised prices, I decided to to find another way. I have discover some talented indy authors while waiting for "best sellers" to come to my local library. Apparently, I won’t explode if I don’t get the latest John Sanford, David Baldacci, or Steven King novel the moment it is released.

I can afford to buy books, but I feel publishers are taking advantage of ebook buyers.

Whale Math: If Reasonable eBook Prices Devalue Books, Then What About This? | The Digital Reader September 6, 2016 um 6:35 pm

[…] and their authors that ebook prices have to be kept high. The authors will justify prices by making tea in China comparisons or telling us that it just costs more for legacy publishers to publish a book, while publishers […]

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