My Take on #Amazonfail
Fresh when it gets here from
Julie Barrett
Sunday, January 31, 2010
Amazon is now in a pissing contest with Macmillan. Here's an interesting analysis at Laptop Magazine's blog.
So how does a publisher decide pricing on ebooks? Macmillan would like
to use a sliding scale, sort of like what you see in bookstores. You
want that book now, you pay more, just like you would with a hardcover.
If you wait a few months for the paperback you pay less. They're
looking at a similar scale for ebooks, with the high being around
$15.99, but the lowest point being $5.99. (Read their statement here.)
Edit: Amazon has released a statement.
I had spent a lot of time doing the math, but Tobias Buckell has done it so much better that I'm going to send you to his site for an explanation. Read it, then come back.
The thing is, a publisher still has those fixed costs no matter what
format. And that math didn't appear to include any payment to the
author. Oops. The publisher needs to recoup that cost. This is why I
support a sliding sales price scale along the lines of what Mcmillan
has proposed.
Under the advance arrangement that most commercial publishers use, the
author gets an advance based on what the publisher expects to sell
during the first print run. If the book earns out (recoups costs) then
royalties kick in. So what happens with an e-book?
This is what I'd like to see. A publisher should - just like with a
print book - figure out how many copies they need to sell to make their
costs back. Once they start making a profit, they can lower the cost of
the e-book and pay the author a royalty on each sale. There would still
be a more traditional advance. If they don't offer an advance, there
should be a sliding scale where the percentage to the author goes up
after a certain number of sales. The distribution costs are minimal,
and authors should still make a comparable amount per sale.
Yes, I'm an author. I'm a little biased that way. ;-)
What really muddies the waters is when a publisher has print and e-books. They have go figure out the total
they expect to sell and price both editions accordingly. If, as a
consumer, I can buy a hardback for $25 and an ebook for $10, I may go
for the ebook. However, the publisher still has certain fixed costs to
recoup. There's still a per unit price point that has to be maintained.
With a print book, they publisher has made back all their up-front
costs before he first printing sells out. Further print runs in the
same format means more profit to the publisher. Pre-publication costs
are generally going to be lower for further editions. No one has to
acquire the book or do developmental editing, for example. With ebooks,
once all the initial costs are recouped there's just hosting/commisson
fees. At this point the cost of the book can drop and revenues can be
higher for both the publisher AND the author.
Take a look at the SFWA model contract for hardcover books.
Scroll down to #7 and read about the royalty structure. Note that it
escalates after a certain number of copies are sold. That's in
recognition of the fact that there's more to be made at that point.
I support something similar for ebooks.
Yes, this is a new model, and pricing and royalty scales will be
different. I also believe it's going to take some time for publishers
to find the right price point.
But as long as Amazon and the publishers engage in these pissing
contests, it's going to take longer to find the sweet spot. I lose as
an author. You lose as a reader. Hey, I also lose as a reader.
Because of that I'm taking down my Amazon links. I'm not going to tell
you to boycott Amazon. That's your decision. And I reserve the right to
return the links once they stop acting like the 500 pound gorilla.
I hope this doesn't come across as whining. I promised myself I would
do that, and have tried to be as rational as possible when explaining
how all this works. Still, it's hard not to get emotional when I see
another revenue stream get squeezed.
Thanks for reading.
More updates: Charlie Stoss weighs in. C. E. Petit (he's an attorney) has some good stuff, too. And a very lucid explanation from Scott Westerfeld. (Damn, I have to get Leviathan.)
Tags: Publishing
Filed under: Publishing Writing
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