Why Amazon and Some Readers Are Wrong

I suspect by now a good many readers know that, as a result of a disagreement over the pricing of e-books, Amazon has “temporarily” removed all Macmillan titles [which includes Tor titles… and all of my books] from its online sales operation. For some time, Amazon has been listing the majority of its Kindle titles at $9.99. In addition, more recently, it has been making the Kindle titles available, at least in the case of my books, almost simultaneously with the initial hardcovers.

Amazon wanted the price to start at $9.99 and decrease from there. It’s hardly surprising that Amazon wanted a ten dollar list price because Amazon had been losing $4-$5 on all those ten dollar e-books, at least in the case of new releases, in the hopes of establishing what amounted to a market monopoly on e-books, at least until Apple’s latest news. Jeff Bezos, the CEO of Amazon, justified this stand by saying that e-books should be cheaper than hardcovers because they don’t have to be physically printed. But… e-books already are cheaper.At $15.00, an e-book of one of my titles is 46% less than the list price, and more than 10% below the super-discounted hardcover price.

The reader advocates and Bezos have made the point that the incremental or marginal cost of “producing an e-book” is almost nothing. Unhappily, this argument not only misses the point, but is fallacious. Here’s why.

First, the production costs of a book go well beyond the paper and binding. The president of HarperStudio, a division of HarperCollins, noted in the Los Angeles Times that his costs for an e-book were three dollars less than for a hardcover, not the $18 less claimed by Amazon. The reason for this is that the author has to be paid, or he or she isn’t likely to keep writing books. Then there are editors, assistant editors, proofreaders, and copy-editors to be paid. They happen to be there as part of the review and quality control process, and, until you’ve read the first drafts of some authors, you have no idea how critical they are. Then there are artists and illustrators, and even e-books have covers, even if only electronically reproduced. In addition, there are the sales representatives, who have to persuade booksellers to buy books. Why are they necessary? Because the booksellers don’t have enough people and enough time to sort through every single book published each year, among other things. There are also contracts attorneys, publicists, and accountants. Like it or not, publishing is already one of the lowest profit margin industries in the U.S. Last year was so bad that virtually every single fiction publisher either laid off employees or didn’t hire as many as left through normal attrition.

The argument used by some readers and Amazon is that e-books are an “afterthought,” something that can be created electronically after all the other costs are attributed to the hardcover and mass market paperback. Yet… if the devotees of e-books are right, and they are the wave of the future and end up becoming a major fraction of the copies of most fiction titles, how can a publisher not spread the costs across all formats being sold?

Second, what’s been overlooked is the fact that a tremendous number of book titles actually lose money. Depending on the publisher and the year, that can range from as little as 30% of all titles published to more than 60%. That means that successful books not only have to cover their own production costs but the losses from unsuccessful books if the publisher is to remain in business.

Third, hardcover sales of successful books effectively subsidize paperbacks or less successful books. Ten-dollar Kindle books would have created price pressures that would either reduce the sales of hardcovers or replace them with e-books, and as more adaptable e-book reading devices become available, that would reduce overall revenues even more than would $15 e-books. This, in turn, would reduce the ability of publishers to try “new” authors and approaches, and would likely result in more “mass” entertainment and less diversity in a field that is already having trouble publishing books for limited audiences.

What about the small presses? Aren’t they supposed to fill that gap? Some are, and in the F&SF field, they’ve done well… BUT… what most small presses cannot do is offer a national exposure to a range of new authors. Doing that takes the resources of a large publisher, and they’ll do less of that in a marketplace based on the lowest possible price.

Now… is all this just a ploy to “justify” the status quo for my own benefit? No. I already have a defined “brand.” Even over the short time Amazon is boycotting Macmillan I will possibly lose some revenue, and had Amazon prevailed in its demands for ten dollar e-books, I probably would have lost more over time, wherever the e-book pricing point settled, but not enough for the publisher to stop publishing me. But that’s because I’m an established author, even if I’m not rolling in the millions as some are. Had Amazon been successful, it would have hurt beginning and mid-list authors, and it could have destroyed some careers, because what Amazon wants is to sell lots of cheap books, regardless of the effect on authors or discriminating readers.

I don’t have a problem with “cheap books.” I do have a problem with Amazon claiming lofty arguments for those “cheap books” and rationalizing their predatory scheme with fallacious arguments, supported by what amounted to blackmail, and their low cost to Amazon being subsidized by everyone else.

And from Amazon’s grudging concession to Macmillan, so did a lot of other readers.

27 Responses to “Why Amazon and Some Readers Are Wrong”

  1. Skip says:

    So here's a question for you then. I'm a consumer, I buy lots of books. Some are instant purchases from authors or series that I buy all of them, but most are books that are 'filler', something to read between those instant purchases. Someone links me a book, via a friend's recommendation, or a review, or a blog posting, or twitter, or whatever. I go hit the Kindle store, and go 'ooh, too expensive, maybe later when it's cheaper'.

    My question is, 'how does Macmillan plan on getting my eyeballs back on the link in a year when it drops in price'?

    At the $10 Amazon price point, all of those were sales. Macmillan has now turned them into non-sales, which will require more advertising, which they've never done much of before for paperback-level releases.

    In the past they didn't have to do anything – I'd see the new paperback releases when I made my weekly pilgrimage to B&N, and remember 'oh yeah, I wanted that' and buy it. Now they do have to do something, and I see no evidence that they have any sort of plan. Amazon had a plan – when I went to check out the book it would be a couple of bucks more than the paperback, which was close enough, and I bought it. But that plan has now been shot to hell.

    From the consumer's perspective, I can't possibly see this making more money for them, unless they're willing to spend a lot more on promotion, over a longer period of time. It's not going to hurt the a-list authors. We're buying their books anyways, and will continue to do so. But it's going to absolutely kill the mid-list.

  2. Josh says:

    The economics seem sound to me. There are bills to be paid and the money has to come from somewhere. If there are a set number of books sold, then it figures that the more e-books are sold the less paper books are sold. That trend will reduce revenue, which will ultimately shut down publishers. Unless, of course, the price of e-books is comparable with the price of paper books (across the whole, not particularly hardcover, trade, or paperback). That in itself is the argument and solution.

    It is possible that e-reader companies such as Amazon are looking to offset their development and production costs of the actual device by offering lower priced e-books, but I'm just stabbing in the dark. I have no idea what their financial figures are.

    As it is, I enjoy hardcover books if I plan on collecting the book. I enjoy mass market more for the actual read (and the price), but I'll read either one. I don't have an e-reader (and the investment isn't currently worthwhile to me to buy one), so that format's already out of the question. Ultimately though, here's the way I look at the book market. An author write a story and wants to share it, for presumably both personal and financial gain. I want to read the story for personal gain and entertainment. The publishers and the booksellers are simply facilitators, but they are very necessary ones. Imagine the cost of a single book if the author did all the work for each and every book produced. Most of us could never afford the luxury of entertainment reading in that scenario. So, at least for me, the price of a book today is worthwhile. Would I prefer cheaper prices? On every single item I buy. But will I pay market prices? Well, I currently do without too much thought or debate, so I suppose that answers that.

    Skip, you do bring up an interesting point in terms of remembering a book. I'm probably not the norm in this, but if I see a book I like, I'll add it to my cart on Amazon, "save it for later," and occasionally just check my saved list for any updates. Most of the time I just wait for a period of less bills or more income, since that's how I decide what I can and can't afford (bargain shopping often seems to simply waste my time, but I just might not be very good at it). Sometimes I don't even get the books through Amazon, when the time comes to buy. Even still, some books slip under the radar, but the system in general works pretty well for me.

  3. L.E. Modesitt says:

    There will still be plenty of e-books at cheaper prices. They just won't be the latest releases. Second, as I believe Tobias Buckell pointed out in his blog, even the huge a-list authors only sell hundreds of e-books, as opposed to tens of thousands of paper books. This will doubtless change, but it will take a long time to change, and the Amazon approach would have the publishers losing money in the meantime. You can't sell an e-book that costs $13.00 or so to produce for ten dollars and make money.

  4. Skip says:

    "You can't sell an e-book that costs $13 or so to produce for ten dollars and make money"

    That's a gross simplification that misleads, of course, because the marginal cost of an ebook is effectively zero. So at it's simplest terms, of course you can sell that ebook for $10 and make money, if you sell enough of them. Same thing if the price is $100. What does the production of a book cost, not per book, but total? I don't know, but there has to be a different pricing curve that will work.

    In dead tree editions the consumer feels he's getting something concrete for paying the $16 that a typical hardback costs at retail. And only a small part of that is the time shift – the majority of it is the quality of the physical good. Publishers are going to have a very hard sell convincing consumers that the time shift is worth half the cost of the words total.

  5. Josh says:

    If the timing of the release is part of the issue, why not draft a new typical release schedule? Blockbuster is not able to rent new box office releases. Mass market books lag behind hardcover. New e-book releases could be scheduled for after an initial period of hardcover sales.

  6. Skip says:

    Here's what I mean, by the way. Take, for example, one of your latest books. Arms Commander of Recluse. List price is $28, bn.com's price is $20 for the dead tree hardback, can't check Amazon right now because everything's not back on yet, but typically Amazon's a buck or two cheaper than bn.com.

    In about a year the paperback will come out, at about $8. For a mid-list author, about a year after that it will be out of print, although the Recluse books won't suffer that.

    So that's two points on the price curve, and the bigger one is more than double the smaller one. Every other point on the curve is taken up by sales that give the author and publisher little or no revenues. Used sales. Remainders.

    When a new hardback comes out, within four to six weeks I can go to Half Price Books and buy a used copy in very good condition for about $12. At that point, why in the world, if I were still buying dead tree editions, would I still pay $20 for a new one? And you and your publisher lose that sale, because the price stays at the $20 price until it abruptly breaks to $8.

    And for that matter, usually for at least half that year, in the local brick and mortar store, the hardback is unavailable, because they've switched to using the shelf space for more recent stuff.

    Publishers simply have no idea how to sell in this environment.

  7. L.E. Modesitt says:

    I probably didn't word that one phrase correctly. To make it more clear… when it costs $13.00 to produce an e-book, and it's sold at $10.00, you don't make money. Second, I'm sorry, but the "marginal cost" issue of $0 is fallacious and misleading. You're saying that, on the one hand, you'll buy the cheaper book. That means you don't buy the more expensive one. If everyone follows your example, then all the costs fall on the e-books. Marginal cost being zero or minimal only works when a few hundred or less are produced. Also, the used book market is fine for bargain-hunters… so long as the books are there,but generally speaking, most of the books on the shelves are either those of million-selling authors or those which don't appeal to most readers.

  8. christoph says:

    Is it just me, or is the sort of person who repeatedly uses phrases like "dead tree edition" the exact same sort who is cutting edge in the area of narcissistic disputation?

  9. Skip says:

    Of course the marginal cost is effectively zero, really small. You create a book, incurring all the costs involved, and create exactly one copy. It costs $n. How much does it cost to create two copies? For a hardback, probably about $n+$4 from some estimates that I've seen, the marginal cost on that hardback is $4. For an ebook? Two copies still costs $n, or $n plus a very small fraction, as the storage space and the bandwith to serve it are very cheap.

    In what way is this not true?

    It simply doesn't ever cost $13 to produce an ebook. The very first one costs some very much larger amount, and each additional one costs so little as to be a non-factor. This is basic economics.

    Say it costs $25k to produce that very first ebook, and you set your price at $25. Under Macmillan's model they'll need to sell 2000 of them to break even, because Macmillan gets 50%, with the retailer getting 30% and the author gettin 20%.

    Now instead of doing an ebook, lets make it a physical edition. Same price. I'm going to assume same split of the proceeds, because I have no concrete information on what the breakdown is for those, on average. Now Macmillan gets the same $12.50, but each one has a cost of goods associated with it of $4. So now they have to sell about 3000 of them to break even. Same book, just different packaging.

    Now drop the price to $15, and the ebook only needs 3333 to break even, but the physical hardback now needs over 7 thousand.

    Now, these are obviously made up figures, but the math won't change when you plug in the real ones I have no access to. The marginal cost of a physical edition is some actual positive amount to pay for the paper, glue, ink, use of the machines, and shipping if you want to include that. And the marginal cost of the ebook to produce one more is zero. If I'm wrong, tell me where I'm wrong.

  10. A. Shelton says:

    Skip–EVEN IF publishers ONLY produced e-books, they'd STILL have to be high priced. How else would you expect the publisher to pay all its editors, proofreaders, etc.? THAT is part of what e-books must pay for, not to mention the fact that the WRITERS want their money, too.

    Or, would you rather spend your own time writing your own stories for your entertainment? I promise you, it's not all fun and glory, and it's a lot more work to produce something that's even passable BEFORE the publisher's editors get to it. After they do? It's a lot more work.

    Oh, and never mind that writers right now aren't making a whole hell of a lot to begin with. Writing is not a high-money career for the vast majority of writers, and, right now, the vast majority of new writers you're coming across and perhaps buying books by are being bankrolled by writers like Mr. Modesitt and those making more money than he is–and there are DAMN FEW of them.

    As far as I'm concerned, I'd rather pay the higher prices for e-books (not that I'm buying any of THOSE–I don't do any of my bookbuying directly from Amazon) so that I can be guaranteed the ability to find new authors like Violette Malan and Gail Carriger.

    Just for the record, I prefer the "dead tree" editions of books, and do purchase hardcovers as well as trade paperbacks and mass market paperbacks. New.

  11. L.E. Modesitt says:

    Skip — For the record, on average, the break-even point on hardcovers is 4,000-5,000, not 2,000- 3,000, and I know personally more than a few authors who are no longer selling because they couldn't even sell 2,000 copies. Second…any idiot, and they would be idiots, who limits attributing costs of production to any one edition, whether it be hardcover or paperback, or even both, when they also produce e-books and trade paperbacks, won't be in business long. Other editions COST MONEY. That's why some of the small presses only produce one kind of book. It's just not "running it off." You have to re-edit, check typefaces and fonts, and margins, and Amazon does require what amounts to proprietary DRM systems, among other things. Believe me, if it were as easy as you claim, there wouldn't be this furor. Macmillan isn't anywhere close to selling a thousand copies of any individual e-book out of the vast majority of titles available as e-books. They could double or triple their electronic book sales, and they'd still lose money on them… and it's not because of price, because there are plenty of cheaper e-books out there. E-books may indeed be the wave of the future, but that future is years away. Paraphrasing H.L. Mencken, for every complex and difficult problem, there is a solution which is quick, simple, and wrong… as is yours. You continue to make the assumption that your view of how the marketplace works is correct, even when you don't have either the understanding or the figures. For example, except in extraordinarily rare cases,authors never get more than 15%;and that fifteen percent comes out of Macmillan's share, which is roughly 52% of the list price.

  12. Skip says:

    Sigh.

    I don't know if you're being willfully obtuse or just not getting my point. I suspect the failure comes in my communications skills. I made the assumption that I didn't need to explain the concept of marginal cost.

    Nowhere did I say that there's no cost involved in creating a second edition. Of course there is. But the point is, in economic terms, that cost simply doesn't effect the marginal cost. The marginal cost is what it costs to produce one more than you already have produced.

    You create a hardback edition. Creating that costs $n. making a second copy costs $a more than the $n you've already spent. $a is the marginal cost of the hardback edition. You create a paperback edition. It costs $m. The second copy of the paperback costs you an increment of $b to make. $b is the marginal cost of the paperback edition. Now, you create an e-edition. That costs $l. Now what's the incremental cost to make the second copy of the ebook? So close to be zero as to not be a factor. $l, $m and $n are numbers that are likely to be very large in comparison to $a and $b – you say that the breakeven point is closer to 5k? I could work backwards from that, but it doesn't change the point.

    Look, I'm not saying that ebook prices should be zero. Price does not equal marginal cost unless sales are infinite.

    It's a system of N linear equations where N is the number of editions, to determine overall profitability or loss.

    And FYI, I said I didn't have the figures for physical editions, but here are my sources for the e-editions. It's been widely represented that the offer that Macmillan made Amazon was a 70/30 split. I can go dig up a reference on that if you want, but they're all over the place. Now how much does Macmillan want the author to get? According to this the standard macmillan boilerplate contract is 20% on e-royalties.

    So that's exactly where I got my math. 30% retailer, 70% macmillan, of which 20% goes to the author, leaving 50%. If you really want, I can go back and do the math with your figures for the physical books, it doesn't change the basic argument, it just changes the exact numbers for where the breakeven cost is.

    You seem to think it's going to take "years" for ebooks to become more than a niche – but consider – how long from the first reasonably priced mass market CD player until CDs were the dominant method of selling music? 10 years? By 15 cassettes were gone. CDs would be gone now if there wasn't a convenient mechanism for getting them into MP3s, the dominant form now, and as it is, they've been mostly replaced.

    The clock is ticking, it won't be that long before electronic editions are the dominant version.

  13. L.E. Modesitt says:

    Skip — I understand marginal cost. I was an economist for 20 years. Marginal cost applies to more units of the SAME production schedule and process. E-books are not the same. Yes, some of the work doesn't have to be duplicated, but there's additional work that is required for a separate production and distribution system. You're right about the split on e-book royalties, but frankly, at this point it's almost irrelevant because they compose so little of the revenue stream. IF… as you say, e-books are the future, the majority of costs of production of the hardcover will be shifted to the e-book… and that no longer becomes, as you term it, marginal cost, but base cost, and a larger share of a list price of even $15.00 will be required to cover the cost structure. I'm certain you can do the math, but since you're ignoring it, I'll point out that at present, from a $28.00 hardcover, Macmillan's 37% [52% less 15% for the author, although it's often only ten percent for low-selling books] amounts to $10.36, while 50% [70% less 20% for the author] of a $15.00 e-book amounts to $7.50. Taking the cost of paper into account, that means that at $15.00, with the 70/30 model, Macmillan will make just about as much as on an e-book as a hardcover. At Amazon's proposed $10.00 price, Macmillan would lose a great deal of money. That's why, just to break even, Macmillan needs to increase its share from 52% to 70%. Even so, as a result, as I pointed out in the original blog, this is going to force out more "marginal" authors. Now… you can't have it both ways. Marginal cost can still be low, but only so long as e-books are a tiny fraction of the market. Once they displace a significant fraction of the hardcovers, assuming as you do that they will, the costs have to be shifted to e-book production, and the cost structure that Amazon proposed won't cover production costs.

  14. Sorwen says:

    My only problem with all of this was that a lot of places had/have/still sell new book at $10 for the eBook. Checking again I found some seem to have now raised the costs while others have not. I've not checked every book I've read so I can't say some books where not always higher with each of these companies selling eBooks, but it has been the case with the few I've seen. For the moment I'll assume it is one battle at a time (http://search.barnesandnoble.com/Imagers-Challenge/L-E-Modesitt-Jr/e/9781429971997/?itm=1&USRI=le+modesitt+jr)? Simply an example of a newer book still sold not as any indication of whether that is always normal or not.

    My question is at what point is the cut off? You said "They just won't be the latest releases." so when is that a year? About the time a paperback might be released after a hardback? I'm not saying that exactly 12 months just a year as frame of reference to work from. When is the price cut off as well? The 13-15$ dollars you've mentioned? It isn't that I'm totally opposed to the need to pay more (though who would want to pay more if they didn't have to) it is the question what is the actual more in both cases? Also while it is understandable that other costs have to be factored into the sale of eBooks at the same time if eBooks have to offset the cost of nominal sales in other formats then how still necessary are as many of those formats? Should one of them go the way side for eBook format when dealing with some authors? Or the approach some movie companies have taken where a digital copy is available with the purchase of a hard copy? Which may not be as easy with eBooks since the varying formats, but then some type of agreement could be made with the individual Book and eBook sellers to supply with purchase.

    One thing that has had me a little stumped too was why there wasn't a bigger push to release older titles. I can understand some may not be in an easy format to convert, but still it boggles my mind though. It seems it would be worth the cost of having some type of conversion accessible. For example I have some of your older books and still bought them in eBook format (those that I could buy) to have them easily available. What about those readers learning about you or other authors for the first time though? Those that read a more current book and then want the older books (often out of print)? That seems a lot of untapped potential that doesn't have the costs of the other formats weighing it down (though has the initial cost of that conversion.) Often it seems there is very little attempt to do so. Some companies on the other hand seem to have made that major push to get the older books out. I understand there could be some concern in recouping the costs, but with the fact eBooks are becoming more and more the way things are rather than just "a new fad" it seems only a marginal risk at best. One of the reasons I buy so many of the old ones are because I can buy the newer for cheaper. My booking buying in a year has more than doubled. When older books of new series I've tried have been available I've easily spent more than what the cost of those new hard back costs (I know others have as well). It is also the reason I'm more likely to take the risk on an author I don't know. The reason Kindle won out for me as choice is because I can buy them anywhere I can get the cellular access.

    I know some of these questions you likely cannot answer, and may have no answer as of yet, but still they have to be taken into account rather than just saying eBooks need to cost X because hard/paper backs cost Y to make.

  15. L.E. Modesitt says:

    I'm a little troubled by your last comment. The majority of costs in producing a book for publication don't lie in the paper. It doesn't matter whether the initial format is e-book, trade paper, hardcover, or original paperback [mass market]. The underlying production costs are the same,i.e., paying writer and illustrator, paying editors, publicists, attorneys, marketers, publicity, etc. I used the figures for hardcovers, but except for substituting electronic marketing and formating for printing and binding [a cost-savings of around $3 per book], the underlying cost structure will not change that much.

    I've certainly pushed for older titles of mine to be in both mass market and e-book, but frankly, which titles go to Kindle is as much a decision by Amazon as by Macmillan.

    The other problem with conversion is that, for older titles,the cost, even if smaller than reprinting, is an additional cost, and unless a fair number of titles are sold, far more than are currently selling, Macmillan loses money. What keeps getting overlooked in all this is, and I'll say it again, that publishing is already a low-margin business. Amazon can afford to sell loss-leaders for years. Publishing's loss-leaders come in the form of books that don't earn out, and as I've noted earlier, those numbers are high, because books are sufficiently varied that, even after 200 years of publishing novels, the very best minds in the business are fortunate to get two-thirds of their releases to be profitable.

  16. Midwest says:

    I've been reading this ongoing discussion with interest — apparently, the general publishing business model has changed little over the many years I've been reading, though "creation" has gone from hand-written, to typewriter, and computer-generated. Digital media should have lowered overhead costs, as many of the process can be automated..

    My question would be with Baen's "websubcription" model — $15.00 for an advance readers copy and $6.00 after publication. No doubt they cover a sizeable percentage of costs from hardcover sales, but the $6.00 digital download would seem to leave little room for author compensation unless their percentage is higher on digitally dispersed media…
    What is Baen's business model — it seems to work, as they're maintaining their "stable" of authors, and they seem to be a profit-making enterprise?

  17. Sorwen says:

    Sorry, I wasn't clear on the last maybe I should have said support rather than make (support and make?). While you do have things (such as people) that still have to be in place to support the book there are a lot of other cost involved that are not which don't get mentioned. Some of these costs are ones that may or may not be generally paid directly by the Publisher, but things like Production, Storage, Distribution, Presentation, Store Placement (such as end cap/best seller space has been known to sometimes be part of the deal on price per unit to the seller), and so on. There are a lot of costs in dealing with a physical object that are not involved. Some of these may not pertain directly to the Publisher's costs depending on the situation and so some may not be a factor in Macmillan's stance on higher cost per eBook. For instance a publisher may not print and store directly though cost back to them includes such service and thus a part of the overall cost required of a physical book. It is low per book because of the sheer number of books published and as you said may need to be offset by other books that do sell well. I was considering those parts that may pertain to the Publisher, with those you mentioned, as all part of the Y cost to make a book.

    On conversion though you are offsetting that cost across possibly how many years and number of titles? All dependent on which had a common format. I could see when this whole eBook thing was new the risk may not have seemed worth the possible gain, but now with eBook sales still growing it seems it would be worth it. If done right. I know some copies of books give the impression they were scanned in by an interns. Maybe I'm wrong. I don't keep up exactly with book vs. eBook sales numbers. I'm looking at the potential from a Data/Format conversion perspective. Though I don't do books, that is half of what I do every day converting data from one format to another. I know what has been involved for me to setup/create what is needed to get the job done and the cost in time alone have been worth it. Sadly it was hard to convince others of that.

  18. L.E. Modesitt says:

    There's another aspect of all of this that I probably should have made clear from the beginning, and that's the distinction between direct and indirect costs. From his discussion, I get the impression that Skip is applying his marginal cost of production argument to the direct costs of production. The problem here is that publishing has extraordinarily high indirect costs of production, and those costs are essentially fixed in the short-to-mid term.

    Now… despite all the cries about e-books being the wave of the future, sales numbers remain minuscule by comparison to hardcovers and paperbacks. This means that while "conversion costs" are lower than direct production costs of old-style books, the cost per e-book remains comparatively high, and it will until e-book numbers increase.

    The "Baen" experiment was hugely successful in familiarizing readers with Baen authors, but from what I've heard,far less successful in shifting Baen's output toward significantly greater e-book sales.

  19. hob says:

    Mr Modesitt, in what exact format/formats does your publisher market one of your novels. Correct me if I'm wrong, but the only advertising I've come across regarding an upcoming novel is on the net. Is there other methods that your publisher employs–maybe radio or television?
    Do you feel your efforts at self prommotion(your blog, website) play a bigger role in getting your name to a broader audience than your publisher–or additionally do you feel that without the publisher maintaining this site, instead of yourself, it would be harder to write books and the blog?

  20. Nathan Perry says:

    Note that Mr. Modesitt uses the word "marketing" rather than "advertising". I'm assuming that's indicating that rather than attempting to advertise books directly to consumers, Tor/MacMillan will generally try to contact retailers and distributors and sell them on the books.

  21. L.E. Modesitt says:

    Generally, the only publicity Tor does is limited print advertising in some SF-related magazines, in addition to the seasonal Tor catalogue, plus send me on tours, and to trade book shows… and, of course, maintain the structure of this site. That, however, is more than it does for most other authors, except for those with sales close to the level of the Wheel of Time.

    Studies have shown that radio and television ads, per se, do little for sales. Now… an appearance on Oprah… that's another thing, but those can't be bought.

  22. jamesschmitt says:

    It's interesting that we make the assumption that the traditional methods of publishing are the logical and "best" way to do things. I've always found the publishing world strange, where there is the initial expensive release of a hard back, and then at some future point the cheap paperback is released. Not to mention the odd trade-paper versions that sometimes appear.

    I know it's simplistic to say, but what I've gathered from reading blogs this past weekend is that selling hard backs is purely a marketing tool for frontloading cost recovery to the "early adopters" of any new book. That essentially, the cost for producing a hard-back, paperback and e-book are essentially the same, with printing, inventory, distribution being so small a portion of that as to be insignificant. If this is the case, then wouldn't it make much more sense to sell all versions for the same price? In other versions of entertainment you don't see this model. There's essentially one DVD relased of a movie or one album released at any given time. Sure there are director's cuts, but you're getting new content, and not required to wait until all the people who might possibly want the director's cut buy one before the standard version of a DVD comes out.

    Let's face it… in the grand scheme of things, the hard-back is a small niche market for relatively few readers and libraries. Why not set one true standard price for a book (paperback or e-book), release them all at the same time and get out of the hard-back market all together. From what I can see, the higher cost of paperbacks and the deep-discount cost of hard-backs are getting within about $8-$10 dollars anyway.

  23. Joshua Blonski says:

    Different releases of a movie in one format's not exactly the same as different editions of a book. If you compare a DVD to BluRay or VHS, that might be more accurate in terms of a quality-to-price comparison. You pay more for a BluRay disc than a DVD, but you get better quality.

    Mass market books are the cheapest quality. Trade's typically better but not always, and hardcover books are the most enduring. Like with most products, you pay more for things that last. To do a simple comparison yourself, grab a 15 year old hardcover book of yours and a 15 year old mass market book. All other things aside (that is, so long as they were taken care of in similar ways) the mass market pages are more brittle and are considerably more aged. Their bindings are also noticeably weaker than their hardcover counterparts, too. These effects of aging are even more noticeable in books that are read repeatedly.

    The aging of books is predominately why I decide to buy some books in their hardcover edition. If I want to keep hold of a book for a considerable period of time, I don't leave it to chance with a mass market book. If I want to keep a book around long enough to read it for a few decades, the higher price of the hardcover is insignificant to me. I've had to buy multiple copies of paperback books before within 5 years, and I take very good care of my books. In the end, it's a wash. I might even end up spending more on a given mass market title if I want to keep it around for the same amount of time as the hardcover edition. It's a bit like Kharl and his view on his barrels. You spend more now, but you save in the long run.

  24. Delvie says:

    Actually my question is will a Kindle version be available any time soon? Or some other electronic format? I've slowly been replacing all my paperbacks (especially your's as they are disintegrating from reading them over and over).

    As far as price considerations why in the world does Amazon care what you charge? As long as someone is buying them don't they get a cut?

    One solution might be to wait to publish Electronic (Kindle et al) until the paperback version comes out. Or better yet add a level – hardback comes out, year later electronic comes out, year later paperback comes out.

    Whatever the solution the quality control portion of the publishing business cannot be skimped on. There are many authors who've suffered recently from having poor editors (not you). I mean in some cases no one has run a spell checker. And yes I know running a spell checker for a piece of fiction can be painful (all the names come up as problems) but nothing drives me more nuts than to have page after page of common errors jump out at you.

    Not to mention the additional quality issues when converting to ebook. I don't know what the process is but I have several Kindle books (again not yours) with duplicated pages, missing pages, repeated paragraghs, and the one that makes me foam at the mouth – out of order sentences.

    So in short I don't mind what the price is but I do love my Kindle – it's just so much easier to carry around and read, especially the nice thick books:) And since you are one of my five favorite authors I would like to be able to purchase more of your books for my Kindle.

  25. Brian says:

    James, I think that the phased release helps preserve the existence of a hard-back edition as well as the possibility of profit for any book. With a heterogeneous release, it would be more difficult to recover the fixed costs of a hard-back printing and for the book itself. With the phased release, the publisher stands a far better chance of recouping costs due to the increased target audience for that initial hard-back release.

    As with any organically evolved system, we have settled into local minima which are not necessarily the global minima (the "perfect" results). However, it is hard to beat the results more than two hundred years of highly competitive capitalism. In other words, it's stable because it works better than any of the other easily implemented alternatives. Parameters must change before another system such as ebooks or simultaneous releases will make economic sense to the producer.

    What is preferred by the customer is not always best.

    Besides, I'm confused as to how the "one true" price could ever be calculated. The current system seems to serve people quite well, as those who have money pay more and receive more (quality, timeliness, and ease-of-purchase). Those who spend less receive less.

    P.S. Thank you, Mr. Modesitt. Some aspects of this dialog clearly seem irritating, but your answers have been fascinating as they shed light on the internals of book publishing. It's not wasted effort.

  26. L.E. Modesitt says:

    Thank you.

    Part of the problem is that book publishing is anything but as simple as some people think it is or want to make it. Another part is that often those of us who are familiar with it don't realize how opaque that process can be, and another part is, as I've tried to point out, that economic models based on either "unvarnished" entertainment models or industrial models don't work, because publishing is truly a "mixed" business.

  27. John Brown says:

    Skip, it's true that fixed costs per book decline with the more volume you produce and the more products you can piggy-back. However, focusing on the marginal cost per unit actually misses the point.

    What you have to do is look at fixed costs versus the contribution margins possible with the product MIX (hardback, paperback, and ebook), just as Lee has been talking about.

    If you're interested I've written a lengthy blog on this. Look in the comments as well. This is coming from the perspective of someone who has a Masters degree in accounting. Fixed costs, whether the be direct or indirect (commonly called "overhead), contribution margin, segment margin, and the factors of product mix are the key things that need to be understood to see why ebooks "cost" much more than people imagine. If a business gets these things wrong, it will kill them dead.

    http://johndbrown.com/2010/02/amazon-vs-macmillan-the-heart-of-the-issue/