Thursday, April 12, 2012

DOJ Decides e-Book Price Fixing is a Top Priority

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The Justice Department is pouncing on statements by Apple like “aikido move” and “trounce Amazon” to prove its case that Apple was the hub of a illegal conspiracy to fix the price of e-books.
While the statements sounds serious, the government’s overall explanation of Apple’s role in the conspiracy is far from convincing.  Read more HERE.

Another article, slightly different perspective is "Why e-books cost so much." The average person has no idea about how LITTLE the cost of printing is when it comes to pricing a book. It is probably 15%, give or take, of the cost of a title. Everything else is acquisition, editing, design, indexing (in some cases), marketing, wages, overhead, etc. Read more HERE. The comments, for the most part, are pathetically ignorant.

Curious as to your thoughts.

-- tps

5 comments:

BillP said...

I' m not in the publishing business so I'll take your word that cost of printing is only 15% of the total package.

But what possible justification can publishers have for pricing eBooks more than the cost of paperbacks?

I see this all the time on Amazon.com.

TPS said...

Hi Bill

It depends on a variety of factors. Mass market or trade paper? Popular mass fiction or trade niche? Naturally demand also plays a role. Amazon, however, maintains the ability to discount any print book to any level (they can sell at a loss, and have in the past and do so now across many categories), and often undercuts e-books in doing so. So if you are talking about purchase price, especially, all of these factors (and likely others) can account for it.

Anonymous said...

After WW II, when paper again became plentiful, experts claimed that the new, much cheaper 'paperback book' would be the 'deathknell of the industry.'

How'd that work out?

'He who demands the future, COMMANDS the future!'

TMW MAN

ByronH said...

Setting aside the raw material differences between print books and e-books, I wonder about the labor cost differences. How different are the cost between a print editor and formatting needs as opposed to those of an e-book?

I would imagine that publishing an e-book would require added cost in the form of engineers able to format the e-books into the various formats used by distributors (ibook,epub, mobi...) which is not offset by the savings in raw materials by switching from print.

A question I have, not being in industry, is who bears the shipping cost with print? The publisher or the distributor?

Comparing the profit sharing ratios between the wholesale and the agency e-book model I would assume that in the print model the distributor bears shipping cost. This being true would make Amazon's actions of taking a loss in e-books and likely hardware (I would love to see the production cost of the Kindle Fire) in an attempt to corner the market hoping to phase out the importance of publishers by connecting directly to authors and consumers and thus renegotiation the terms of the agency model more in their favor. Amazon was trying to hit two birds with one stone it seems, renegotiate terms with publishers, and gain market share from Apple who must dominate in the agency model (I may not like Apple's ethics at times, but I have to respect their customer retention strategies).

If my premises are right, then Amazon must be extremely concerned that they are going to lose their position in the market, and in my opinion, they should.

Amazon filled a niche role as an online bookstore when it first arose in 1995. It connected literary markets at a time when book shopping was limited to brick and mortar stores and there were no major online competitors which allowed them to rise into the shopping hub they are today. Their crown is now threatened by lessened importance on physical distribution, focused on savings and network size (wholesale model), which had been Amazon's modus operandi, to intangible distribution (agency model), which focuses on user experience. User experience was the role of the publisher in the wholesale model and is under joint custodianship in the agency model as both the publisher and the distributor benefit from and work together to create a better user experience, with the publisher bear the brunt of the cost in creating the experience, and the distributor bringing the dedicated market as well as framework to bring the product to as many potential customers as possible.

ByronH said...

Amazon is losing its ability to provide that dedicated market by failing to change and using dated tactics. Google dominates the search engine world removing Amazon's advantage of offering the lowest price, as well as the rise of secondary market sites (CraigsList,eBay). Apple's control over their OS across all of their forms of hardware has given them a powerful distribution network with dedicated consumers. Google's Android OS allows it to counter Apple's network, while Apple's consolidation makes it a monolith of corporation to compete against balancing Google's far reaching grasp.

Amazon resorted to price manipulation to train and maintain its competitive advantage in the online market, which of course would bother publishers as well as other distributors because it skewed the perception of prices as the article or retail experience will tell you. Constantly running sales can burn a company in the long run by giving customers the expectation of cheaper prices making them less likely to buy at regular price.

Apple and Google couldn't care less about the actual profit from book sales, as long as their devices provides the user with the optimum experience, meaning providing for their literary lives at the tap of a finger. So Amazon's market place must be like a spit in the eye to Google and Apple who would rather their markets be used (that sweet, sweet data mining.)Amazon is not going to win a battle of customer experience against Apple or Google.

Personally, I feel e-books will usher in a new age of literary production, and it is forming right now. Publishers who are hoping that e-books will just go away are either naive or foolish. E-books won't replace print, I think the smart move is to make make e-books a supplement to print. Think of a partnership between a publisher and say Barnes and Nobles in which a customer can purchase the print book at a brick and mortar store and receive an e-book download from BN.com, or purchase the print book online and download the e-book immediately while waiting on the print copy. The key to this would be the quality of the e-book.

Take for example your book Never for the Want of Powder. The plates within the book almost demand that it be owned in print copy. Yet its over sized nature makes it cumbersome to lug around when doing research, as well as making it tricky for quick references. Imagine the formatting an e-book copy could have. This is especially useful in historical literature.

Sorry for the length of this post, but I have been working on my thesis for the past couple months and the future of publishing and electronic tools has been on my mind quite a bit.

I would love to hear more of your thoughts on this as both an author and a publisher you have a interesting viewpoint on these changes.

Pardon any formatting issues, I don't post on boards to often but I was doing some research on you and came across this interesting post.