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.