The dollar store: what price is the right price?

Mike Shatzkin published an interesting blog post on April 25th about the pricing of ebooks and how it differs between self published books and those published by an established publishing house. In it, he brings up an interesting point; self-publishers can set their book prices at any level they want. As an independent, they have fewer overheads and can therefore get away with lower prices.  Add to that that these books are now being printed digitally, and the cost of paper, printing and binding need not be accounted for, the price can be even lower. How do traditional publishing houses compete?

Shatzkin uses the case of self-publishing author John Locke who sells his books on Amazon for $0.99 as an example. He makes a compelling and highly accurate point when he says that Locke doesn’t have to justify his books to match his prices, it is the publishing houses that have to justify their prices and convince people that their books are ten times better than Locke’s, and are therefore worth the $9.99 price (for example). Locke’s books are extremely popular and are considered to be quality products. Can that be said for the majority of self-plublished ebooks? Are they as good as or comparable to those published by a traditional publishing house? Does it matter if people are buying them? Shatzkin then also makes the counter point that the publishing house need only sell 1/10th of the amount of books to reach the same amount of revenue as Locke, which is a true enough statement. I would argue that the high prices (those higher than $9.99) make publishing houses look greedy. They need to recoup their costs somewhere, but 10+ dollars for an electronic file you can’t even hold in your hand seems a bit much.

The aspect that interests me the most about the article is impulse buying, especially from a low-income perspective. If you have a credit card, and most people of age do, it has become incredibly simple to purchase almost any and everything online. A click here, a click there, fill out a form or create an account (and then no more forms, just a username and password) and you’ll be seeing an amount on your credit statement next month. With a lower price range, it increases the propensity for impulse buying. I would be far more likely to purchase something for one dollar than for ten. One dollar, or even three, won’t likely hurt your pocket book. Ten might not either, but you’d think about that purchase longer. When I walk into a dollar store, I usually walk out with more things than I intended because the price is so right. Clicking on that $0.99 book is rather harmless. Unless you are like Sophie Kinsella’s Becky Bloomwood, you probably wouldn’t click with the same abandon on higher priced books from traditional publishing houses.

As an experiment, I went to click on Mr. Locke’s book to purchase but found myself hesitating. Even though Shatzkin claims Locke’s stories are enjoyable, I wondered if something so low in price was going to be cheap and not worth the money. I was having difficulty letting go of that dollar. Have we been trained to think that things that are more expensive are worth more, are of better quality? This penny pincher thinks so. So maybe traditional publishing houses won’t have it so bad after all.

David vs. Goliath: is the best of both worlds possible?

Mike Shatzkin’s unusually long article about Barry Eisler’s decision to turn down a $500,000 contract in order to self publish and his ensuing conversation with Joe Konrath about that decision and the direction publishing houses are trending offers some insightful comments on the publishing industry’s future. It’s a little long to get into the full details, but there were a couple of aspects that really stood out. The one that interested me the most was what Shatzkin explains as the reason why an author would choose to self-publish; of an author’s choice to self publish, Shatzkin writes, “This is not about ego or vanity; it is not about hating the publishing establishment. It is a coldly calculated decision […] that says, in effect, “it would not be smart to take a half-a-million bucks considering what I’d have to give away to get it.”” Shatzkin claims it is not about hating the publishing establishment, but in a way, when you use terms like “what I’d have to give away to get it” (in reference to turning down a large sum to publish through a publisher as opposed to self-publishing), doesn’t that connote some kind of negativity towards a publishing house? Is what you’d have to give away worth $500,000? That hardly seems possible. One could (and would) make the argument that giving away/selling the integrity of your work should be priceless, something that would be akin to selling your soul, but then that suggests that signing a contract with a publishing house will in fact corrupt the integrity of your work (which is most certainly not always the case) and IS akin to selling your soul, which sounds a little bit like hating the publishing establishment if you ask this blogger.

Another interesting aspect of this article was the attempt to include print books in the dialogue. Print books are arguably harder to self-publish and market, as the costs are much higher than just creating a digital file. Then there is the question of where do you sell it out in the real world (as opposed to the virtual)? Shatzkin suggests that booksellers and publishers concern themselves with trying to acquire, in terms of self-published ebooks, print rights instead of grouping them together with print and digital and accepting nothing less. It would be smart of a bookseller or publisher to try to get and market a successful self-published ebook in a print version. There is still a market out there (with a ticking clock, Shatzkin seems to think) for print books. Self-publishing a print book can be very expensive, and expecting it to have the same dividends as one published by a publishing house is unrealistic. They have access to marketing teams (usually, especially the case of larger multinationals) that self-publishers simply don’t. They have connections to retailers. They probably get deals on printing, as their print runs can be larger. It is much cheaper for self-publishers to create a digital file and sell their books that way, but print books still sell and it is another possible revenue stream. Deals with retailers or publishing houses for print rights could be a smart idea. I have known a few people who have self published their own print books, none to much success; they could have saved themselves a lot of money if they had just done so digitally. Maybe then the publishing houses would have come calling.

There is writing on the wall? Let me get my glasses…

The written world is changing. It has changed consistently through the years, but with the recent digitization of the publishing industry and print world, there’s a new word that keeps popping up that’s going to have an effect on traditional publishing houses: “paperless.” Sure, the market for printed works, hard copies, hasn’t died yet, and it may not ever, but some people, like David Carnoy, seem to believe it’s coming. The price of self-published ebooks is what he believes will kill the industry, and he has a point. Traditional publishers can’t keep up with self-published ebook prices, that is a plain and simple fact. Now, they have even further competition from Amazon who is offering other publishing related services along with distribution of their books. Their royalty system encourages affordable prices, and no matter the price chosen, an author will still get a higher royalty rate self-publishing an ebook through Amazon’s Kindle platform than through a traditional publisher. They also allow for fluidity of pricing, allowing authors to manipulate the system to stay on “bestselling” lists longer. And with lower prices come lower expectations, so that edit you’d get at a traditional publishing house? Maybe it’s no longer necessary. Maybe.

So where does this actually leave traditional publishing houses? Not in a good spot, apparently. With authors seeking out their own editors and designers and publishing their ebooks through platforms like Amazon’s Powered by Amazon or Barnes & Noble’s PubIt, traditional houses seem less necessary for ebooks. Then there’s Amazon’s Encore program that notices popular self-published books and gives them an extra marketing boost. Unless an author really desires to have their book in print, or doesn’t have the time seek out their own editors/designers, why go to a traditional publisher? If there’s a larger push for “paperless” operations due to environmental concerns, and writers can publish ebooks without a publishing house, what will happen to them? They still have an argument of offering the highest quality, but that may not last long if publishers continue to get their editorial work done out of house; authors can start or continue to employ freelance editors just as readily as publishing houses provided they have the necessary funds. Now necessary services like marketing are also being offered by outside sources. Taking all of this into account, Carnoy believes that traditional publishing houses are aging, antiquated, outdated, and nearing being replaced. Can they see the writing on the wall? How long can traditional publishing houses sustain operations with competition from self-publishers and outside organizations? How long will they be able to, in effect, defy gravity?

The Price Is Wrong: Will A Lower Price Get Your Ebook Read?

Robin Spano’s blog on goodreads.com conducted an interesting experiment with ECW Press to try to determine if a significantly lower price would increase the sale of ebooks. She used the novel Dead Politician Society from her Clare Vengel series and for one week the sale price was lowered to $1.99. Spano, an author who believes that standard ebook prices are too high, was quite game and not at all surprised at the results that they found. Though there was no change in Kobo sales, there was a huge change in Kindle sales and a significant change in iBook sales as well. On average, she saw a change of 18.33 times more books sold each day of the extended week (nine days) her book was on sale and averaged 3.3 times the regular weekly revenue. Pretty good numbers.

So what does this mean? Well, for one, Spano, who believes that ebooks should be priced around $4.99 instead of the standard $9.99, is not a self-publisher. ECW Press publishes her books and this experiment was conducted with their consent. Once it was over, she claims they were very happy to go back to the regularly scheduled price. ECW Press alleges that the promotion of the experiment was the predominant catalyst behind the sales, not the lower price. That may be true, as when Dead Politician Society was recommended by the CBC Mystery Panel, sales spiked again, for both print and ebook, garnering 5 times the regular sales and revenue, more than during the experiment. Would Spano have gotten the same kind of promotion if she was self-published? Possibly not, but she probably would have undoubtedly gotten a higher royalty rate (Spano did not specify how much she actually received herself in revenue from the experiment), not that that seems to matter to her.

Spano makes a good point when she brings up readership. Some authors aren’t concerned with finances and are just happy to have their books read; this is a sentiment that Spano shares. As a new writer, she cares more about readership than sales, though she admits that good sales are a bonus. Lowering her price and increasing her sales would theoretically increase her readership, so the results of the experiment would be even better news. However, Spano then follows that sentiment with a statement purporting that statistically books bought for under $5 are less likely to ever be read than books priced over $5, so really you shouldn’t (and can’t) assume readership from sales. Lowering the price can also devalue a book. Measuring it against the $9.99 and up ebooks, the book runs the risk of looking cheap. So is it worth it? Pricing your book at a lower price can increase sales but not necessarily readership, it can make your book more affordable but also look like it is of lower quality. This is arguably something that is accepted of self-published works, but where does this leave traditional publishing houses? If they are game to try experiments like Spano’s from time to time, that would help them compete with the uptrend of self-publishers and their lower priced ebooks. ECW Press is a smaller independent publisher with a bit more freedom for experimentation. What about a larger house? They could afford the sales hit if that’s what the results of an experiment like that came to, but could they afford to change their ebook prices across the board. Spano thinks that the high prices aren’t good for the industry, and wishes that they would follow the mantra of Ghandi, “be the change you wish to see in the world,” and lower them. I would be inclined to agree, but I think that traditional publishers would argue that Ghandi never had these kinds of overheads.