I think there’s been a certain expectation that the emergence of Apple’s iPad would herald the beginnings of a cross-platform e-Reader war in the vein of the great PC vs. Mac battles of the last several decades or, if you’re especially nerdy, similar to the wars waged between competing video game consoles. Instead, the imminent release of the Apple tablet has stimulated a showdown between Amazon and several of the nation’s most influential publishers that is finally coming to a head. What does this e-Reader Cold War mean for your book-buying habits?
It could mean a lot, as it turns out. The major publishers have signed deals with Apple that say, in essence, that they’re allowed to price their eBook offerings however they like on the iBookstore, provided they don’t allow another retailer (read: Amazon) access to that same content for a lower price. Amazon seems to have backed off their insistence on the $9.99 price point, but want to lock publishers into a three-year contract if they’re going to insist on releasing most of their new titles at $12.99 and above. Publishers are reluctant to do that.
Amazon is not without recourse in this situation. In addition to holding over 90 percent of the eBook market share in their grasp, they’re also a major player in the print world, with some estimates pegging their print sales at something like 19% of the market, including new and used book sales. If they’re sufficiently provoked by the publishers, they could push through a repeat of the stand-off strategy they used against the publisher Macmillan, by removing the “Buy” buttons on the print and digital versions of these delinquent publishers. It would be a blow to Amazon’s reputation as a bookseller and their customers’ ability to purchase the books they want, but they seem confident the lost revenue would make any publisher buckle.
I suppose one’s outlook on this situation depends heavily on where you’re standing. For Amazon, raising the prices of eBooks is a blatant attempt to hold back the switch from print to digital versions, a trend that would slow the sales of their Kindle. For publishers, the whole process is frightening and fraught with danger, and the increase in eBook prices is a comforting hedge for when they have to report to stockholders. Apple, meanwhile, is happy to stand on the sidelines and play the good guy, as it automatically raises their standing in this nascent market in which they’ve just entered.
As a frequent consumer of eBooks, my reflex is to stand in Amazon’s corner. The $9.99 price point represents a value you never really see in other areas of the economy these days. For the same price as a movie ticket on a Saturday night, you get hours of entertainment and intellectual stimulation. Buying a book at $12.99 isn’t much worse, true, but it raises the price of a book just out of “impulse buy” territory into something I’m more inclined to budget. I definitely see Amazon’s logic.
Having said that, it seems clear to me that Amazon has little recourse in this situation but to back down. By the end of the year, Apple will have expanded the potential market for eBook buyers by several orders of magnitude, and Google is still lurking out in the shadows somewhere. Amazon’s ability to bully publishers into submission is still there, but it’s going to wane fairly rapidly. They may soon find themselves not only outmatched but with a sullied reputation.
As customers, we can still vote with our wallets. So if you’d rather not pay $14.99 for books, just have some patience and wait until they drop to a price that seems more reasonable. It’s not much, but what else can we do?
As we’ve often noted, publishers are not big fans of the Amazon Kindle. Amazon’s strident efforts to keep the standard price of a Kindle Book at $9.99 has ruffled a lot of feathers amongst the big publishers, who are reluctant to do away with the existing print dichotomy, where they get to sell hardcover books at $30 a pop for four months until they release an affordable paperback version of average shmoes like you and me. Publishers claim they need that hardcover money to cover their expenses, while e-Reader users have long assumed the lack of printing and distribution costs should make up the difference.
A recent article out of the New York Times sought to illuminate the costs involved in producing a book so we could see which side is closer to the truth. The difference in the take for publishers after distribution and before costs from a hardcover to an eBook is only about $4, but that is made up almost entirely by the difference in printing, storing, shipping, and marketing the hardcover edition. Indeed, eBooks leave publishers with around $5 when all is said and done, where print leaves them with just $4. Oddly enough, eBook seem to somehow result in a lower cut for the author, as they only haul in $2-3 on an eBook but come out with nearly $4 on the hardcover edition.
So what does that really leave publishers to complain about? The next in their list of complaints is that if eBooks start to become too big a share of the market (they’re at less than five percent right now), publishers will have to spread the costs of the print version over fewer copies, making them more expensive per book to get to stores. And those stores will suffer as well, because once people start moving to eReaders in larger numbers, the big box book store is going to go the way of the dodo. I like getting coffee and relaxing with a book at Borders as much as anybody, but I’m not going to be too broken up if their numbers are culled a bit.
If anything, seeing the numbers broken down like this, it becomes apparent that the easiest part of a book’s production cost to remove is the part going to the publisher. Nobody wants to lower the share of the profits going to the author, and the marketing, editing, and typesetting are fixed costs that you can’t get rid of if you want a mainstream success. The money that is there waiting to be reclaimed is that being collected by the owners and shareholders of the major corporations with their tentacles wrapped around the publishing industry.
What’s to stop popular authors from skipping the whole step of talking to the publisher and instead publish independently, or at the very least, talk directly to Amazon, Apple, and Barnes and Noble themselves? All it would take is a big mainstream name like Stephen King to do this before the whole publishing edifice comes crashing down.
And perhaps that’s exactly why the publishers are so keen on keeping the cost of eBooks high. The higher the prices go, the slower the transition to eBooks happens. The slower the transition happens, the more time they have to squeeze a penny out of the system. In short, I’m not falling for it, and neither should you.
What Amazon has created is nothing short of extraordinary and as of yet I have heard virtually nothing about it. The new Digital Text Platform site that they have prepared is astounding in that any individual or organization or company can register and receive assistance in the creation of a Kindle version of their work. Registering is easy and somewhat exciting when you realize you are also registering where for them to send the money when someone has purchased your work. Currently the terms under which you would operate once you have published can be seen here and it would appear that as the author you will receive 35% of the cover price. I am looking into the terms and conditions document and will probably see many things I will initially not like, but on first blush it still seems extremely easy to get a work published and into the largest electronic bookstore around.
If you have access to anyone that knows the print industry and can comment on these conditions please send me an email as I would be very interested in interviewing them perhaps for their thoughts on the agreement. Apparently it is a modification of the self publishing that was available for mobipocket books, but it seems to me having your work available at amazon.com would be a much larger incentive to electronically publish than a site that I head never heard of before the Kindle.
If you Hate the terms or Love them pop over to the discussion forums and leave your feedback. I have been toying with a book for almost a year now and can see myself plunging into it with a bit more enthusiasm now that I can really see it getting published. Self publishing is always an option but it was too expensive and I suspect that getting a self published book onto Barnes and Nobles shelves would be quite hard much less having the funds to front the creation of sufficient copies to get any momentum nationally. This format offers a new hope for people that would love to get their work out there, and if it is any good then it may actually prosper and see physical print publishing. For some reason that still seems like my ultimate goal as I am prejudiced to think that an e-Book is somehow less permanent than a true printed one. What do you think? Will that ever change?