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In the era of ebooks, what is a book worth? (III)

Discussion among commenters regarding the prior two installments of this series, In the Era of eBooks, What Is a Book Worth? (I) and In the Era of eBooks, What Is a Book Worth? (II),continue to focus on interchangeability of authors, with some commenters agreeing with the idea and others (the majority) disagreeing.

I don’t intend to rehash this argument in this final installment, but I would refer readers to On Books: Murder Down Under, in which I review the mysteries of Australian author Vicki Tyley, as an example of an indie author who I consider the equivalent or near-equivalent of some well-known traditionally published mystery writers. Similarly, I would refer readers to On Books: The Promises to Keep Quartet, in which I review Shayne Parkinson’s ebooks. Parkinson is another indie author who I consider the equivalent or near-equivalent of some well-known traditionally published historical fiction writers.

I will note, however, that if authors are not interchangeable, then ebookers are buying a unique, potentially scarce, commodity that is not replicable in the marketplace, justifying high pricing. Additionally, as a unique item, there is no reason why pricing shouldn’t be even higher. In fact, it might be worthwhile for publishers to create an artificial scarcity by limiting the number of ebook versions of a particular novel that can be sold, which, when combined with the lack of author interchangeability, could drive pricing even higher.

However, because I do find authors to be interchangeable, in this final installment I will attempt to determine just where in the continuum of book pricing ebooks should fall.

The publishing business, until recently, began with the hardcover. Publishers set a suggested retail price against which they charged booksellers a wholesale price. Until the advent of discounting of books about 50 years ago, booksellers sold the hardcovers at the suggested price. But to publishers, the selling price didn’t — and continues not to — matter much. Regardless of how much a hardcover is discounted, the publisher gets a “fixed” wholesale price. If the wholesale discount is 50%, the bookseller pays the publisher on a suggested retail price of ; the bookseller then retails the hardcover for any price between 1¢ and (or more), either making or losing money on the sale.

The fly in the publisher’s ointment, however, has been and continues to be returns (see, e.g., It’s Raining, It’s Pouring: Returns in an eBook Age and A Modest Proposal: A 21st Century Publishing Model). When setting the price for a hardcover edition, the publisher needs to consider myriad costs, including returns of unsold copies. Although not a perfect science, production and return costs of the hardcover can justify the hardcover’s pricing, at least to a reasonable extent.

In addition to the hardcover production and return costs, it is the hardcover sales — because it is traditionally the first available edition of a book — where the publisher tries to recoup all of its expenses plus make a profit. The publishing of a paperback version, traditionally, was for long-tail profits.

An interesting thing about print book pricing is that publishers recognize — and have recognized for decades — that even though the production and return costs of paperbacks and hardcovers are quite similar, the publisher cannot charge readers who buy the paperback the same price, or even close to the same price, as is charged for the hardcover. The gap, which is better described as a chasm, between hardcover and paperback is enormous, with the paperback often having a suggested retail price as little as 20% to 25% of the hardcover’s suggested price, and selling for about 50% of the discounted hardcover’s real selling price.

Yet with these enormous differentials staring them in the face, publishers are satisfied — until it comes to ebooks. Suddenly, then, the perspective changes and discounted pricing is a bugaboo because it threatens to “devalue” books.

There is no sense in repeating all the things (and the arguments pro and con) that differentiate ebooks from print books, such as restrictive licensing (lease vs. own), DRM, reproduction costs, warehousing costs, no returns, etc. It suffices to say that whereas publishers see no devaluing of print books that we own and can freely disseminate and even resell when print books are discounted, they see devaluing in discounting ebooks, even though we cannot do any of the same things legally.

With interchangeability of authors, a no-returns policy (i.e., no consumer returns and no ebookstore returns), and the DRM-imposed restrictions on ebooks, there is no justification for pricing an ebook above the price set for the lowest suggested retail price for the paperback version. In the era of ebooks, an ebook is not worth more than a paperback; if anything, it is worth less.

It is worth less because the only thing an ebook provides that a paperback or a hardcover version do not is portability convenience. Once that is eliminated from the equation, an ebook provides nothing else that is superior to the print version. In fact, I’d daresay everything else is inferior. Certainly, quality control is inferior and when I buy a print version that is riddled with errors, I can return it to the bookstore, which can return it for credit to the publisher — something that cannot occur with ebooks as there is nothing to return.

If scarcity were a factor, as it can be with print books; if resale value were a factor, as it can be with print books; if the marketplace set the final retail price, as is the case with print books; if authors weren’t interchangeable; if I could lend an ebook as often as I wanted to whomever I wanted, as freely as I can with print books; if quality control for ebooks equalled that of print books, or even came close; if I owned an ebook like I own a print book; if myriad other advantages of print books were at least nearly approached with ebooks, then higher pricing would be justifiable — but they aren’t and it isn’t.

In fact, what has occurred is just what publishers feared: books have become devalued. But the devaluation has come about as a result of the absurd ebook pricing instituted by publishers, notably the Agency 6. Whereas before readers like me would willingly buy print books at relatively high prices, largely because we saw some value in doing so, we have now been converted to ebooks and are shopping for books at the under .99, and often free, price point.

Publishers fought the .99 bestseller price that Amazon tried to impose. But what they failed to recognize was that the .99 price point was applied to a limited number of ebooks and because ebookers were psychologically happy with that price point, they also bought, without much complaint, ebooks at higher price points — ebookers didn’t actively restrict themselves to ebooks that did not exceed a significantly lower price point. The imposition of agency pricing by the Agency 6 altered buying habits. Now instead of being satisfied with a .99 price point, many ebookers, such as myself, have set a significantly lower price point and actively look for ebooks that do not exceed that price point. For us author interchangeability is fact. Whereas before I might have bought a Stephen King novel, now I ignore King and find low-price equivalents, of which there are many. Similarly, I buy Vicki Tyley mysteries rather than mysteries by P.D. James or Martha Grimes, and I buy Shayne Parkinson historical novels rather than those written by Philippa Gregory or Elizabeth Chadwick.

A restricted ebook, such as is published by the Agency 6, is simply not worth more than the lowest suggested retail price for the paperback version, which is usually 25% to 30% of the suggested retail price for the hardcover. It is time for publishers to stop devaluing their books with unrealistic agency pricing for ebooks and let the marketplace determine ebook pricing, as is done for the print versions.

Via Rich Adin’s An American Editor blog