Ebook economics…
What’s the optimum price for an ebook? Depends on whether you’re a reader or a writer, of course. For readers, the optimum isn’t $0! You might think it is, but it isn’t. Writers are going to stop writing if you expect them to give away their ebooks. Sure, you might find an ebook in promo for $0, and, given the number of ebooks available at that price, you might read for a lifetime without paying for any ebooks. But there are authors you might be missing (I’m one of them) if you’re waiting for their ebook to be $0. And no author is going to give ALL his ebooks away for nothing. Even indies have costs they have to cover.
Promos ($0 or reduced prices) are often only for first books in a series too, no matter the price, so, if you finish that $0 ebook and want to read the next one in the series, you’ll be paying more than $0. Moreover, the meaning of series is changing. I don’t condone this, but authors are writing series now that are really one big story arc—individual ebooks in such a series don’t stand alone; they’re not complete stories, and to complete them the reader has to fork up money to continue. (Yesterday, I reviewed such a book.) If I’m in that situation as a reader, no matter the cost of the first installment, I won’t continue, but many readers will want to do so, and they’ll pay for it.
In a stable economic system (ebook publishing might not qualify as stable, of course), there’s a tug-of-war between producers (authors, in this case) and consumers (readers, in this case). This settles down to some stability point where the consumer is willing to pay what is needed for the producer to keep producing. Unless that stability point is found, one side or the other is going to remain dissatisfied.
The traditional publishers’ agency model isn’t stable in that sense. Many avid readers (my definition of avid reader is one that reads at least one book every two weeks, on the average) won’t pay traditional publishing’s ebook prices, especially when they see hardbounds and trade paperbacks at $14.99 and the corresponding ebook at $12.99, for example. Everyone knows it costs less to produce an ebook—the price should reflect that. Moreover, because most indie ebooks are $2.99 to $4.99, the reader will often prefer foregoing the traditionally published ebook and buy three or four indies. In addition, those traditionally published authors are often formulaic old stallions who should be sent to the glue factory—the smart reader knows he can find new and exciting entertainment at a better price.
It’s interesting that traditional publishers complain that the high prices in their agency model, as spelled out in the agreement with Amazon, lead to diminishing sales. Barry Eisler, in a guest post on Joe Konrath’s blog, points out that they don’t understand that basic Econ 101 principle. Not only that, the Wall Street Journal doesn’t understand it. Because it’s just common sense, I’m guessing most readers and writers understand it. Traditional publishing, and publishing in general, seem to believe that they don’t obey the usual laws of economics. While there’s something to that (see below), the market forces are the same for publishing as in other businesses. How the market reacts to them might have some unusual characteristics (again, see below), but there are still producers and consumers.
There’s another Econ 101 basic principle at work too: supply and demand. There’s a diminishing demand because the number of avid readers is diminishing. There’s an increasing supply because there are more good authors and ebooks every week. The optimum price for an ebook is determined by these two principles and other factors (customer satisfaction, for example). I sure don’t know what it is with certainty (it’s certainly dynamic—at least seasonal), but I know it’s not above $10. I don’t care who you are, you won’t sell more ebooks at $12.99 than $3.99. It might be that optimum price surface in multidimensional space has a very broad peak (or valley, depending how you plot in multiple dimensions), but both $0 and $12.99 clearly aren’t good enough estimates of that optimum point.
People become fans, though. If the reader’s addicted to Lee Child, for example, s/he might even pay $14.99 for the next Jack Reacher ebook, even though s/he thinks it’s a rip-off. There’s some similarity here to buying a Mercedes over an Accord if s/he thinks Lee Child’s recent formulaic output is a reliable choice s/he’s always purchased and has confidence in. There’s always the snooty factor too, but for me “I’m rich enough to buy a Mercedes” is a wee bit stronger statement than “I’m rich enough to spend $14.99 on a Lee Child book.” The first makes some kind of statement about snootiness and/or reliability fandom; the second just says the person is stupid—they should at least wait for that Lee Child book to be on sale!
As time goes on, fewer people will be that dedicated to a traditionally published author—people would rather pay $2.99 and put seven gallons of gas in their tank with the remainder (9/17/15 prices). So, how can traditional publishing sustain these high prices? They can’t. There are diehard readers who won’t touch an ebook, so traditional publishing can still own that pbook niche—many indie writers (I’m one, for many reasons) focus on ebooks. I respect those readers; I used to be one myself until I became addicted to my Kindle. But every day, more readers are discovering the ease-of-use of ebooks—smart buying, easy storage, and portability—making digital the media source on the upswing. Whether you like it or not, everything’s going digital. Readers won’t be the only ones who have to adapt—publishers, retailers, and libraries will have to join the 21st century too. (I also like ebooks for environmental reasons—why kill our remaining forests?).
Traditional publishing is on its deathbed, but it can hang on for a while. It’s going to have to get creative. Both traditional and indie authors will have to adapt to the changing economic landscape. Many of those ebook growing pains, whether traditionally or indie published, are reminiscent of the transition from LPs (that’s long-playing music vinyls, for people born after 1990) to CDs (that’s laser-burned music discs, for people born after iTunes). There are still some LPs sold; there’s a thriving used market too. But the CD has better audio and is more reliable and efficient than any LP (audiophile naysayers don’t understand digital signal processing and the sampling theorem). Pbooks will continue to be sold, especially used ones. But even textbooks are going digital, often published a few chapters at a time, as more people use tablets as their e-readers.
The dynamics of publishing industry economics are complex. Readers might not want to be that concerned about them. They just want quality entertainment at reasonable prices. Writers will ignore these dynamics at their own peril, though. This is always true for producers of a product. Even a traditionally published author, choosing that paradigm because s/he wants to escape all the complexities, is in for a surprise if s/he ignores these dynamics. Newbies should read Konrath’s blog from time to time and participate in discussion threads there and elsewhere. Nerdy, introverted recluses who only want to spin their yarns represent an endangered species just like traditional publishers.
In elibris libertas….
