Category Archives: price wars

Not only do the French not get fat, understand the subtle arts of seduction, scarf-tying, gastronomy and most recently (per Bringing up Bebe) parenting,  it seems that even the Gallic booksellers are in a better spot than their American colleagues http://www.nytimes.com/2012/06/21/books/french-bookstores-are-still-prospering.html?_r=1.  Although I am skeptical of the many hyperbolic  claims associated with French culture—Americans have a peculiar love hate relationship with the French (remember “freedom fries?”) that often renders the land of Liberté, Égalité, Fraternité in a less than accurate light, it does seem that French booksellers, thanks to  legal price-fixing (no collusion charges here!)  and government subsidies, do enjoy a considerable advantage over our anemic and Amazon-eviscerated ecosystem. Depending on your politics, the French respect for/protection of booksellers epitomizes everything that’s right or wrong with government, but it does mean that the market for books has remained both stable and lively.  From my French clients—who send me photos of reading tours and well attended signings filled with well-dressed people— I get a glimpse of what seems a pre-lapsarian booksellers’ paradise.  Do I romanticize? Mais bien sur.

I’m not sure that given the present climate in the United States that there is really much likelihood that our model will borrow something from the French, but it is, however, interesting to look abroad at a very different literary landscape and indulge in some armchair travel.

7

It’s not a bestseller if no one bought it

by Michael

It seems that Amazon finally caught on to the fact that the top 10 books on the Kindle Bestseller list were all free books—they’re now creating two lists, one for paid books, and one for free books. As the LA Times Jacket Copy blog notes, at the very least, the “bestseller” label won’t be a misnomer any longer.

This is also as it should be. Comparing the downloads of free books to the download of paid books never made much sense—the whole point of making the book free is to entice people who aren’t willing to pay for the work in the first place. Without payment, it’s not a sale, it’s a gift. Including both paid and free books on the list is comparing apples to oranges, and I’m glad they’re making the distinction—as Apple does in their App and iBook stores. With more than half the books on the Kindle Bestseller list being free, it’s going to be interesting to see which books now appear in the paid list.

With more information about the paid books, I’m curious to see how pricing affects sales. We know that free books are frequently downloaded, but is there a big different between $12.99 and $9.99? Or $9.99 and $4.99? A quick look at the iBookstore bestsellers shows only 7 books under $9.99 in the top 50, and those books are not new and priced to move, but rather backlist titles available in mass market formats. But the titles in the iBookstore are much more limited, so it’s hard to really draw conclusions.

So what do you think? Was it a good idea to divide the lists? Or did lumping free and paid ebooks onto the same list tell us something important?

8

Epocalypse now!

by Michael

April 1, 2010, marks not just April Fools’ Day (quite possibly my least favorite day of the year, in close contention with Halloween and New Year’s Eve), but also the day that the “Agency 5” switch to the agency model (see my last post for more on this). I think most of us knew the transition wouldn’t be smooth, as entirely changing your business model in, oh, three months, isn’t exactly easy. And indeed, there are some hiccups along the way, with Hachette Kindle books temporarily missing, and Penguin unable to close a deal with Amazon (we received an email from Peguin regarding the issue this morning). There’s still some tension between Amazon and publishers, as evidenced by the response from Amazon regarding the missing Hachette titles, and there will be more carefully worded missives publicly traded in the days to come.

Amazon can’t be happy with the iPad reviews that rolled in last night, either, because in several of them (great round up here at Gizmodo), the reviewers mentioned that they preferred the iBooks reading experience to that of the Kindle. I am officially excited for Saturday.

Does Random House know something we don’t?

by Michael

April 3 is right around the corner! For those of you who don’t pay attention to, well, any form of media, that’s the day that Apple’s iPad finally hits the stores. And, being the nerd that I am, I have to say I’m pretty excited. I love product launches, and Apple does them like no other. (I was very disappointed by the lack of excitement surrounding the launch of the Palm Pre when I went to purchase it on day one last year, but I digress.) I think our readers know how this relates to books, but in case you don’t, Apple is launching their iBookstore that day, as well. They’ll be offering books from all the major publishers, with one huge exception: Random House. When Steve Jobs announced the iPad back in January, he said that 5 of the 6 biggest publishers were onboard for the iBookstore. The absence of Random House was conspicuous, but they released a statement afterwards saying that they were working on an agreement with Apple. I’d assumed there’d be one in place by this point, but it looks like the iBookstore could very well launch without the largest trade publisher on board, as reported by the Financial Times. Honestly, I was really surprised. Until last week.

That’s when this article popped up on an iPhone fansite. It purported to show the working iBookstore, along with the prices. And the price for 27 of the 32 listed bestsellers that day? $9.99. The same price that publishers have been fighting against in the Kindle bookstore. I was thrown for a loop. The reasoning behind the to switch to the agency model was to take control of pricing and get rid of the expectation that ebooks cost $9.99. But here we were at that price again. Then, only two days later, a new screenshot showing most (but not all) of the bestsellers at $12.99. Color me confused. This pricing kerfuffle brought to mind this New York Times piece about publisher agreements with Apple. The piece suggests that Apple wanted the flexibility to drop prices for hot books that would be majorly discounted in print. As of today, it’s not at all clear what iBookstore pricing will be on April 3.

Thinking about the possibility of an ebook sold at $9.99 is troubling. In the agency model, retailers act as an “agent,” selling books at prices determined by publishers and collecting a percentage of each sale (30% in most cases). Authors are generally being offered a percentage of the net income from these sales—publishers are pushing for this to be 25%, so we’ll roll with that number for the purposes of this argument. In the agency model, with a book priced at $9.99, authors will earn $2.50 per book or less. Compared to the $3.75 they currently earn on a $25 hardcover (15% of list price), this is a dramatic reduction. Comparing this amount to what authors would earn under the current ebook market conditions is nearly as depressing. In the current sales scheme (the consignment model), a retailer is buying the book for about a 50% discount, then selling it at whatever price they like. Assuming the same $25 price list price for the ebook (which is pretty standard) and same 25% royalty for electronic books, the author receives a royalty of $3.13. (The question of why they would receive less than they do on the hardcover in this situation could be a blog post in itself.) If ebooks eventually make up 50% of the market (a number I believe is possible), that royalty arrangement will radically alter author compensation. That, obviously, concerns me. I’d really like to hear more directly and transparently from publishers on this issue. What effect will these arrangements with Apple and Amazon have on authors? It seems, from the Financial Times piece, that Random House may soon be having these conversations. But what about the other 5? Is it wrong of me to expect a little more openness? This makes me all the more impressed with John Sargent at Macmillan and his willingness to blog about their plans, admitting what they do and don’t know.

So, is there something in the Apple agreement that we don’t know about that Random House does? Or is it just, as Mike Shatzkin thinks, that Random House is trying to maximize their profits in the short term with the idea that they can jump on the bandwagon if the iBookstore takes off? We’re going to learn a lot more about all of this in the coming days.

On April 3, I’ll be picking up an iPad for myself (no willpower!), downloading the iBookstore, and most definitely tweeting about the experience. If I have important publishing observations, I’ll post them here, too. Looking forward to hearing what you all think about this.

Jane’s dream

The Wall Street Journal on Friday the 6th reported that Borders was going to close 200 of its Waldenbooks stores. True these are mall stores only, but it seems to me it was only yesterday that the chains were springing up every where. It appears that one of the reasons this is happening is that internet sales of books have greatly increased over the last several years taking buyers from the mall bookstores. The Journal also postulates that another reason for the move is the deep discounting of the bestselling books that has been announced.

My dream is that the closing of these mall stores might encourage one or two–or hopefully many more–entrepreneurial souls to open new independent bookstores. With the new readers that I hope are being created by books available electronically and by this deep discounting, perhaps there can be a big enough market to once again support these wonderful outlets for reading.

Do any of you have a favorite independent bookstore?

-Jane

2

Rationing discounted books

Now, the Wall Street Journal and others are reporting that the big three retailers–Walmart, Target and Amazon–are rationing those selected bestsellers they have been deep discounting. This is ostensibly to prevent other retailers from buying from them in quantity and reselling these titles.

I believe that the only ones who are going to get hurt by the deep discounting and the rationing are those retailers who are doing it. First of all, they cannot continue to sell these books at these prices for a long period of time as they are losing a substantial amount of money by doing so; and limiting the number of copies per customer during the holiday season, especially, should discourage potential consumers and send them elsewhere.

In this poor economic climate for publishers and booksellers alike it would seem to me that working together to help our industry rather than undercutting each other would be far more constructive and productive.

What do you think?

-Jane