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Simon and Schuster Test Waters w/ Stephen King eBook Release

Stephen King

UPDATE: This post has been refreshed from its original state.  That’s what I get for taking Publisher’s Weekly at its word.

Anyway, mid-way through this piece I ask readers to suspend their disbelief – difficult to do when reading a post on book publishing, pricing and digital content, I know – and  follow my argument as I use the information from the Publisher’s Weekly column slightly out of context but not entirely out of the realm of possibility.

Mark Coker from Smashwords.com lends useful insight via this Huffington Post piece. Follow the hashtag #publishersmatter on Twitter.

Please add any comments that you think are helpful.

***

Interesting piece from Publisher’s Weekly about Simon and Schuster’s decision to delay the release of the eBook version of Stephen King’s massive new novel, Under the Dome.dome

Apparently S&S will be releasing the 1000+ page novel on November 10th and then dropping the ebook on the market on December 24th.  Timing is everything, I guess.

The Publisher’s Weekly piece also notes that the S&S will be charging $35 for the eBook, however some further research conducted at StephenKing.com indicates that the ebook will sell for standard Kindle-pricing.

Mr King asks his readers not to “believe the press reports that the e-book reader price for Under the Dome will be $35. This was the result of confusion from a press release from the publisher… It is true that you cannot order the book as an e-download until December 24th, but the physical book, which is a beautiful thing, you can pre-order for less than $9–so who’s better than us?”

So, pricing right?  It’s all up in the air.  Nobody knows what anything is worth whether it’s a brand spankin’ new hardcover or an infinitely replicable digital file.  Are they both worth $9?  Really?  Are publishers seriously asking the public to swallow that crock?

But they’re trapped between the ruthless capitalism of dominant retailers at war with each other and the ruthless efficiency of the digital age.

***

Let’s say for example that the Great Book Pricing War of 2009 wasn’t happening and skewing this argument beyond proportion and let’s say that S&S thought that $35 for a hard cover was a fair price – which it is – and that $35 for an eBook was also a fair price – which is arguable to say the least.

I float this scenario forward for your consideration because I have heard book publishers say the very same thing – that a digital file should be priced at the same level as the physical product.

To me this notion of equal pricing for physical/digital looks more like a series of test balloons designed to reinforce industry fears than skillful marketing strategies for new books by some of English language’s most beloved authors.

Who gave the final OK on that pricing strategy and where is he/she getting their information?

It’s well documented that the last Harry Potter book – itself a hefty tome – was pirated and disseminated almost immediately upon release (in fact, an in-house perp at Scholastic did the job even before the book hit the shelves) and surely the people at Simon and Schuster are aware that this will happen here, too.  I expect that this book will be seeded widely within 24 hours of officially going on sale.

I have documented the bibliographic zeal that Stephen King’s fans show toward his work online in my presentations on DRM and Free Content.  I expect that a great majority will look at the cost of $35 for the hard cover version as a fair price to pay – and indeed many of the people who use P2P/torrent sites to download and share Stephen King’s books are dedicated enough to purchase the physical copy – and will see the same price for a digital file as incomprehensibly expensive.

This will certainly bear watching.  I have to believe that this is some kind of Big Author Test of Current Market Conditions rather than a strategy that S&S expects to trot out for every new hard cover release.

Dan Brown’s The Lost Symbol showed us something about this new digital/print landscape and the new Stephen King promises to yield even more data even if it seems that it will come at the expense of common sense.

But one must keep an open mind.  Hopefully this publishing event will show us something new.



Impact of Piracy and P2P on Book Sales: Frankfurt

Impact Of Piracy And Free ( T O C F F)

View more presentations from bfoleary.
Brian O’Leary of Magellan Media has updated the data for his Impact of P2P and Free Distribution on Book Sales.  He presented this update at the 2009 Frankfurt Book Fair.
Brian’s research and methods have been very influential on my own work.


What I Want When I Want It: Chris Anderson’s Free

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The first time that I read Chris Anderson’s new book “Free” was on a website called Scribd.  The book had just been released and Scribd was (and still is) allowing readers to check out the book’s entire content for free: so long as you’re not trying to read the book for free from Canada.  That kind of cross-border digital experience is strictly forbidden.

Didn’t bother me much. I wasn’t paying for it so I couldn’t really argue but I’ve been following some of the conversations and interviews that Mr Anderson has been doing online over the past month and I thought that I’d share a few links that I think are interesting.

The first link will take you to the lengthy article at Wired.com that forms the basic argument for his book, Free. The article is called “Free! Why $0.00 Is the Future of Business.”

And then there’s a very interesting interview that he did with Der Spiegel Online about the demise of print journalism, traditional media and the inability of old terminology to adequately describe new realities.

The interview is called “Maybe Media Will Be a Hobby Rather Than a Job” which is a mis-quote from something that Anderson said during the interview. It sounds juicier when taken out of context.

The interview ends with this nifty little exchange in italics below.  I think it’s a lucid distillation of the issues that journalism, traditional media and the publishing industry are facing now.

SPIEGEL: Conclusion: There is no convincing solution so far — even from provocateurs like yourself?

Anderson: I think we will discover that whatever the business model of the 20th century was, it will be different in the 21st. Maybe we realize that selling ads is not the business we’re in. Maybe we’re into selling online content to audiences, or in creating communities or into selling events — in a similar way to which parts of the music industry is making money from concerts. Maybe companies that were built around the old business model will go away and other companies will come up, in much the same way as old record industry labels may disappear but the Apples of the world, with their iPods and iPhones, will continue to do well.

SPIEGEL: One last thing, why isn’t your book free?

Anderson: You only pay for the hardcover version. The marginal cost for the digital file is zero, so I’ll give the digital text and the audio files away for free. However, if you want to have the abridged audio book in a 3-hour-version, then you’ll have to pay.

SPIEGEL: Because time is money?

Anderson: Exactly.

* I have added this last bit to the conversation that Michael Tamblyn and I had over at the ShortCoversBlog and have updated my earlier post about eBooks pricing.  Note Anderson’s mention of ‘marginal cost’ for a digital file – it would appear that Scribd is still offering Free for free on their site but Amazon US has it for $19.99 ($9.99 for the Kindle edition) and ShortCovers has it on their site for $9.99 ($11.99 CDN).  The devil is in the details as always.

** By the way, I was tipped to a lot of this by Andrew Savikas who wrote about it here.  If you’re not familiar with Andrew’s work please take the time to read through his site especially his piece, Content is a Service Business.  Compulsory reading.



Shortcovers eBook Pricing (Slightly More in Canada)

ShortCoversBanner

Recently, ShortCovers announced that they’d be charging $9.99 US for eBooks from major US publishers on New York Times bestsellers.  Great news, I guess, though Canadians continue to get the standard $2 shaft from publishers on digital content, too.  Hurray for consistency!

ShortCovers front man, Michael Tamblyn, was good enough to respond to a couple of comments that I posted to the pricing announcement on the ShortCovers Blog.  I have posted our exchange below and I think that it’s pretty self-explanatory.  If you’d like to read the entire press release and the comments together please check it out here.

Here’s the exchange…

1 Sean Cranbury 08.06.09 at 11:04 am

Hi Michael

Great news! $9.99 for digital content is excellent.

Can you explain why digital content costs $2.00 more in Canada than in the USA? Is there some sort of warehousing surcharge or across the border electronic tax that justifies the difference in price?

Or is it just an unbreakable industry habit to charge Canadians more for content regardless of how it’s delivered?

2 Michael Tamblyn 08.06.09 at 1:46 pm

Hi Sean,
It’s far less nefarious than that. There are a couple of reasons:
* Canadian rights-holders set the prices for ebooks in Canada. As with print books, the Canada/US exchange rate makes the ebook list price a bit higher and we discount from there*. So yes, the Canadian Shortcovers ebook version of Bourne Deception is _only_ 61% off the hardcover price vs. 64% off the U.S. price, but…
* Did you notice that we include the GST as a part of the ebook price?! So there is 5% federal goodness rolled into the Canadian price, paying for healthcare, Canada Council grants, and Mountie uniforms. That’s another part of the $2. Not bad, eh?

*For now, publishers don’t re-price ebooks daily to reflect currency fluctuations (but wouldn’t it be interesting if they did!?)

3 Marc 08.06.09 at 2:12 pm

I like the new pricing, I always thought about $10 is the sweet spot for me. $11.99 CAD is close enough to start buying. Thanks.

4 Sean Cranbury 08.06.09 at 4:36 pm

Hi Michael

Thanks for the reply. I appreciate it. I did take notice of the GST roll-in and as someone who has worked in the book trade for 20 years I can understand the price difference.

I think that I have refined my question – or maybe it’s more of a statement or opinion, bear with me. I’m only writing this because I care about books, the industry and the people in it.

It’s ingrained in the subconscious of Canadian book buyers that they must pay a premium for content purchased by the loonie. For instance, we all know what happens to publishers when the Canadian dollar is on par with the US dollar: not even tens of thousands of books sold in hard cover and paper back about a certain boy wizard can keep the doors open on a publishing enterprise when that happens. And we certainly wouldn’t want that same plight to ravage the rest of the industry.

So… we can agree that digital files are essentially infinite in terms of their ability to be copied and replicated and have nominal warehousing (server) costs, print and shipping costs associated with them, right? And that Amazon has set the currently agreed upon price at $9.99 USD and that publishers are now grudgingly agreeing that it works for them so that whole argument is settled (for now). And it’s a sign of increasing health for the publishing industry that Shortcovers is providing some much needed competition in the digital marketplace.

Does that mean that Shortcovers pays the publisher per purchase on an electronic file? So Shortcovers has been granted the privilege of selling this electronic file via the website for X price and to make that work in $ CDN it needs to be $2 more per electronic file? I guess that’s obvious now.

I made the mistake of thinking that an essentially infinitely abundant digital file would provide retailers and publishers an opportunity to pass deeper savings along to customers in the electronic marketplace. And I understand the need for publishers to include some kind of marketing/editorial/author payment into their digital pricing – I’m not saying that they should be free.

I guess the pricing structure just seems a little arcane to me and I’m not sure that I see the value even if I do understand the reasons.

I agree with your last statement, too, about publishers allowing their pricing to reflect currency fluctuations. That should happen but what I am more interested in watching is the pricing fluctuations as more competition enters the digital marketplace and as publishers begin to see the actual cost of digital content and how it can affect their P&L positively.

5 Michael Tamblyn 08.09.09 at 10:05 pm

A couple of things worth discussing in your post.
* I wouldn’t say that publishers are completely sanguine about $9.99 as the purchase price. Amazon, Shortcovers, and B&N are all still paying publishers a margin on their *list* price, and those list prices tend to be the same as print prices, so publishers have seen negligible erosion in revenue so far from ebook sales under those terms. Publishers are probably concerned that $9.99 could become embedded in the minds of consumers as “the fair price for a book”, leading to push-back on their paper-copy sales. That said, $9.99 is the competitive price-point that has become accepted by ebook consumers in the U.S. and we’re right there with them, while setting out $11.99 as a reasonable translation of that price for the Canadian market, given exchange rates, GST, etc discussed above.

* ebooks as “infinite” resource. I’ll take this before a publisher leans in. The print-paper-and-ship cost of a book is a relatively small piece of the total expense structure that goes into a book (I’ve heard 5-8%, plus another 10% in supply chain costs, but your mileage may vary – supply chain costs are higher in Canada, to be sure. Publishers, feel free to chime in.) But the bulk of the cost associated with producing the book, be it p- or e-, remain: author royalties, editorial, production, sales, marketing, retailer margin, etc. So there is a theoretical 15-18% of available cost reduction, but not really. It isn’t like a publisher can get rid of their warehouse just because they sell an ebook — all of those costs remain and have to be covered by both p- and e- sales. All that to say, the arrival of ebooks doesn’t radically change the cost structure for publishers*. For now.

* Side note: the publishers who are held up as transitioning so well to the digital space — Harlequin, TOR, a few others — are not surprisingly the ones who were already selling most of their books at the $10 price point. Everything about them — author advances and royalties, editorial and production processes, marketing and sales tactics — are geared to selling a book at <$10. But will an advance/royalty/marketing/sales structure that works for romance work for John Irving or Michael Ondaatje or Michael Chabon or Patricia Cornwell or Alexander McCall Smith? This is where publisher concerns about business models vs. price points start to coalesce.

6 Sean Cranbury 08.10.09 at 4:53 pm

Hi Michael

Great answers!

I realize that we’re still very early in understanding the digital book landscape and that there are probably more questions out there – for publishers, authors, readers, everyone – than answers at this point. But it’s important to voice these questions.

It’s great to know that you’re willing to take the time to answer the questions as best you can so thank you very much.

There’s still so much work to be done in terms of finding the perfect price point for digital content… I’m just not sure that $10 is even remotely the right number, but patience and experimentation will hopefully lead the industry in the right direction.

Of course, it remains to be seen whether digital book content is actually subject to the same kind of commodification as physical books or whether there are better, more strategic and ultimately user-friendly ways to execute digital content in a way that gratifies the consumer and supports of the paper book. i think that there’s so much opportunity there.

Time will tell.

Thanks again for helping me wrap my brain around some of the rationale for current eBook pricing.

Sean Cranbury 08.11.09 at 3:39 am

Further to the point. I was just updating my blog when I came across this quote from Chris Anderson in conversation with Spiegel Online about print journalism and traditional media – and by extension book publishing.

I think that it adds something to this conversation so I’ll paste it here:

Anderson: I think we will discover that whatever the business model of the 20th century was, it will be different in the 21st. Maybe we realize that selling ads is not the business we’re in. Maybe we’re into selling online content to audiences, or in creating communities or into selling events — in a similar way to which parts of the music industry is making money from concerts. Maybe companies that were built around the old business model will go away and other companies will come up, in much the same way as old record industry labels may disappear but the Apples of the world, with their iPods and iPhones, will continue to do well.

SPIEGEL: One last thing, why isn’t your book free?

Anderson: You only pay for the hardcover version. The marginal cost for the digital file is zero, so I’ll give the digital text and the audio files away for free. However, if you want to have the abridged audio book in a 3-hour-version, then you’ll have to pay.

SPIEGEL: Because time is money?

Anderson: Exactly.

The entire interview can be read here: http://www.spiegel.de/international/zeitgeist/0,1518,638172,00.html