Wow, the iPad announcement really didn’t solve everything! In fact the battle lines over who gets what with ebooks and i-that may just be beginning if this weekend’s skirmish between Amazon and Macmillan is any indication. Johanna Draper Carlson has the back and forth — basically, Macmillan — publisher of such graphic novel imprints as First Second, Hill & Wang and Seven Seas — demanded its ebooks be priced at $14.99 as opposed to $9.99. And Amazon said no way, Jose, and pulled ALL Macmillan books from over the weekend. While literary fires raged, yesterday, Sunday, Amazon gave in and said they would carry Macmillan ebooks for Kindle at the suggested price.

It’s all part of a larger pricing battle — while in general, it’s hard not to be sympathetic with the book publishing’s desire to survive, charging for the cost of a nice trade paperback for a few bits and bytes is kinda ridiculous. The NY Times writes:

For more than a year, publishers have been fretting about the price of digital books, which Amazon, as the dominant player in the fast-growing market, had effectively been able to set.

Last Thursday, Mr. Sargent flew to Seattle to explain the pricing and new sales model to Amazon. He said Amazon could continue to buy e-books on the same terms it does now — allowing the retailer to set consumer prices — but that the publisher would delay the release of all digital editions by several months after the hardcover publication.

Amazon buys and resells e-books in the same way it handles printed books, by paying publishers a wholesale price that is generally equivalent to half the list price of a print edition. Because Amazon has discounted the price of most new and popular e-books on its Kindle e-reader to $9.99, it loses money on most of those sales.

There’s much more commentary on the net about all of this, as one might imagine Tom Spurgeon weighs in here. Cory Doctorow has a long piece at Boing Boing that paints a clear picture of the obvious. The reader is gonna be the biggest loser in all these e-wars:

And if one of the five titans that control almost all of publishing gets into a scrap with one of the four or five titans that control almost all ebook publishing, or the one company that rules the audiobook market, the collateral damage is that you will have to choose to eschew a gigantic slice of all the literature ever made in order to hang on to your library, or abandon your library in order to get access to that publisher’s work. Or fill your shoulderbag with a half-dozen tablets and readers, one for each permutation of which corporate elephant is trying to crush another.


  1. i think e-publishing for comics is going to be more akin to format wars for video — there’s not going to be a clear leader for a time, and to get a digital product people might have to buy a few things in less-than-perfect format first until the best one (or most financially sound one) rises to the top.

  2. I think the better analogy of what’s going to happen with e-publishing (and not necessarily just for comics) is closer to what happened with HD DVD/Blu-ray and is now happening with Blu-ray vs. the many on-line services: consumers will be so confused by the number of formats and devices that they will do absolutely nothing and keep buying what they were buying before until the companies figure out that sharing a little bit with everyone else leads to more profits for everyone.

  3. The “war” is less over prices and more over business model and discounts. Macmillan is replicating Apple’s 70-30 split.

    Otherwise, Amazon could just do what they’ve been doing with the bestsellers, sell them at a ridiculously low price point which means they lose money.

    It’s not unethical (grocery stores promote loss leaders frequently, sometimes with the help of the producers), and it is legal for stores to sell goods at whatever price they wish. (Dart Drug v. Parke, Davis)

    Of course, once you price your competition out of business, you can then charge whatever you wish.

    As for charging for a few bits and bytes… the same thing could be said of almost any commodity. The costs of production and distribution are high and must be amortized, even if the actual package costs pennies to produce. ESPECIALLY when few authors make a living from book royalties.

    I see ebooks replacing mass market paperbacks. Either we will see ebooks released after a trade paperback or hardcover, or we might see bundled packages, where one buys a paper and ebook edition together. (Disney already does this with DVDs, either selling a DVD with a downloadable digital copy, and/or offering a regular DVD with a Blu-ray disc.)

  4. Well… format wars is definitely right. Interestingly, Sony punted their proprietary format and Apple is treading VERY carefully around iBooks format being ePub compatible, though I haven’t had a chance to go looking for a detailed explanation of that.

    The one thing that really _isn’t_ being brought up specifically is that eBooks completely hose the old hardcover/softcover split. We all know that hardcovers are disproportionately priced, in terms of production cost. And we know that unless it’s a really long book, there’s really only $1-2 in printing for a decent sized press run. Pricing an ebook at a discount to the hardcover release means pricing the digital like a tpb (and more than the mass media paperback). Unless you delay the ebook to coincide with softcover, this is going to wreak havoc with hardcover pricing models.

    What you really gain w/ebooks is losing a couple bucks/book off the printing and ~20% of list price (if you’re giving a 30% discount to the vendor… under Amazon’s current “we keep 70%” plan that’s supposed to go away, you’re losing an extra ~20% to discount). So with really, really rough cocktail napkin math:

    HD price = $30

    so $30 * 0.80 (to reflect lower discount) = $24 – $2 (printing) = $22 for your list price.

    $22 vs. $9.99? Were I a publisher, I’d still be pissed at $15

    now a $15 trade would be

    $15 * .8 = $12 – 2 = $10, which would be what Amazon’s pushing for a price.

    Very rough math, but this is what we’re talking about.

  5. Itunes proves that people will pay the same amount of money for less versatility or control of what they buy because consumers are dumb or just not suspicious enough of retailers.

    Digital was great back when everything was free and easy. I’m not just saying that because I don’t want to pay for anything. Before corporate interest invaded there was a lot more a person could do with digital, but now everything is proprietary and only works in certain ways.

    Things should be simple because they CAN be simple, but all the people who control all the money make it complicated so that they get to keep all the money. My response to that is to not give them my money and if that means I’m not cool for not having an iSomething then I’ll not be cool yet be $X richer.

    I understand the desire to move away from paper I really do. But there’s going to be a time when people realize that you can own a book, but because of hidden codes or stealth programs you can never really own anything digital unless you have your own hidden codes and stealth programs to destroy the ones that came with what you bought. Hackers are going to be in greater demand the more we move into the digital world.

    I try to avoid buying things with DRM and I don’t want DVDs with “free digital copy” included (because it’s a lie) because I want to make my own actually-free digital copy because I paid money for a license and I should be able to do whatever I want with it aside from uploading it onto the internet for anyone to access.

    Digital rocks, but I have a very strong desire to buy and learn how to use a printing press. Now that would be freedom.

  6. I think that people will feel that an electronic copy of a book should cost them less than a printed book.

    By buying the electronic copy, you are also agreeing ( in my opinion) never to “sell” it to a used bookstore, lend it to a friend to read, or dispose of it at a community booksale or yard sale.

    And of course, the retailer will not need to “return” the unsold copies to the publisher, and the author will not need to autograph their “books”, as we used to call them.

  7. I’m just one person, but this is a fact: I will never, NEVER, pay more for an e-book of any content (prose or comics) than I would for the lowest-priced paperback book on the market. I will not pay TPB or hardback price for something that has NO COST of publication. Period.

    The stupidity and greed of the book world is equal to that of the music industry, apparently.

  8. Todd Allen:

    Your napkin math is interesting and is the first thing to make me think the costs of books fall in different places.

    It has always seemed to me that if you take out the printing costs, delivery, warehouse, storage, a lot of the staff who handle the books, etc. that the actual cost of the thing must be pretty low.

    If all the people that need to get paid for making a book get paid fairly (writers,editors,publicity,maintaining the electronic infrastructure, whatever else is entailed), are you saying the actual cost is really $22 per book?

  9. It is an absolute falacy to think that an eBook has no cost of publication. Actual manufacturing of a hardcover book is a very small percentage of the cost of a new hardcover book. Most costs are non tangible – creation of content, editting, promotion, etc etc. For ebooks sold concurrently with a new hardcover release, cost of the ebook must be on par with the portion of nontangible cost of the hardcover counter part. In that regard $15 is not unreasonable.

    McMillans alternative is to delay the release window for the Kindle edition such that a lower price is an acceptable business model. This is not unlike the practice of releasing mass market paperbacks cheaply a year after the Hardcover.

  10. While I totally agree with Todd Allen’s math and reasoning, I say too bad if the publishers are upset over losing money. Why do I say that? Because I’m a consumer and I want to pay less. It’s in my best interest to lobby for the cheapest possible price.

    Torsten’s comment is also a case of too bad:

    “As for charging for a few bits and bytes… the same thing could be said of almost any commodity. The costs of production and distribution are high and must be amortized, even if the actual package costs pennies to produce. ESPECIALLY when few authors make a living from book royalties.”

    The cost of production and distribution of ebooks certainly isn’t high. And if an author can’t make a living from book royalties – that’s their problem.

  11. The real question is surely whether a publisher can recoup the same money from an ebook as it can from a hardcover. Given that a whole chunk of the distribution chain — that typically buys books at a 40-50% discount — is gone, that means anything more than half the price of a hardcover (i.e. $12.50) is a gouge. And that’s without subtracting printing, warehousing, and transportation costs.

    Which puts ten bucks at an extremely fair price for premium content (which should halve to trade/mass price after six months), so MacMillan are big fat liars; and Amazon is spot on.

    Except, of course, that Amazon is also being a bit gougy, and shouldn’t be taking more than a wholesaler/distributor’s cut, since that’s what it is.

  12. As a consumer, and editor, and creator, I have to wonder why anyone wouldn’t want the people making the things we all presumably enjoy to be able to eek out a living from them. If they don’t, we get no stories or books of any kind in any format. So the “too bad” school of consumerism seems shortsighted to me. If we’d like things like comics and novels to continue, then fair pricing for the work that goes into creating them should matter. Otherwise we’ll end up with fanfic and not a whole lot else. People create things because they want to share them, but it’s kind of strange to say “too bad” if they don’t make a living. I think we can accommodate both consumers desire not to be gauged, and creators and publishers ability to give people quality content.

    I mean, we all expect to get paid for the work we do, yes? I don’t see how that suddenly becomes “too bad” because it’s publishing.

    While there isn’t the actual cost of printing in digital, there’s plenty of work that goes into e-publishing. It’s not the same format and it requires a ton of adjustments, especially when images are involved. A digital comic has to deal with different formats and screen sizes, for instance. It’s not as simple as making it smaller or whatever.

  13. Nate Horn says that ‘And if an author can’t make a living from book royalties – that’s their problem.’

    Actually it’s the reader’s problem as well. Royalties come from all formats including digital books and pricing digital books really cheap means no meaningful royalties fro the author, nor any meaningful profit for the publisher? The result? Most likely no more books from that author for you to read.

  14. Rich:

    The quickie math isn’t costs, but a rough estimate of what the price ought to be adjusted for lack of materials and increased discount. Another relevant question is whether having techies involved costs more than shipping/warehousing.

    Now if the publishers were selling directly to consumers, the equation changes again…

  15. Let’s not forget that (a) trade book publishing is a notoriously unprofitable field and (b) Amazon was trying to establish a de facto monopoly with the Kindle, which has now effectively been broken by Apple. Publishers, Macmillan definitely included, have been afraid that with the rise of ebooks, Amazon will find themselves in a position to dictate far lower payments for ebooks. Now they’re feeling that’s not the case.

    New material costs money to produce. That’s the real reason hardcover books cost more than trade paperbacks, and new comics cost more than Essentials or Showcase Presents volumes. I see nothing unreasonable in publishers trying to figure out how to pay for their costs (which are largely creative) and make a bit of profit. We’re in for some misleading ups and downs as everyone experiments with the market, but I think Charlie Stross has it right: this is going to shake down with higher prices for brand-new material and lower ones for older material. Just like the old hardcover/softcover model, but with greater flexibility.

  16. Well, I guess the author could sell ad space in the stories… kind of like product placement… you turn the page and a pop-up ad appears. The author can balance the lack of royalties with ad revenue. Perhaps even change the locale of a story if a town or business sponsors the book. People could bid on ebay to have a character named after them in the story. Look up a word in the dictionary and see more ads keyed to each definition.
    Think this is far-fetched? Amazon filed for a patent a few months ago regarding advertising on the Kindle.
    Don’t want ads? Buy a paper copy, which does pay a royalty.
    I can see it now… Winston-Salem’s Lot… The Catcher in the Rice Krispies… Google Cid… Flatland’s End… The Burger King And I… Gone With The Windex…

  17. It’s not about royalties for authors. It’s about the amount of money that the publishers make. Dressing it up as anything else makes it Marketing in disguise. Unfortunately, it works incredibly well.

  18. What are we really paying for? Paper? Binding? Bytes?

    I’d like to think that the real value is in the content. Cable television, and satellite radio proved that consumers will pay for content they want even if it is delivered in a medium they were used to getting for free.

    Personally I don’t get the value of the Kindle or the iPad. The internet can put the power of digital control in the hands of the creator of the work as it does for all webcomics. Digital books, comics, video and music can all be read and enjoyed portably and with less limitation on a laptop.

    Don’t get suckered into a trendy overpriced device.

    As for Comics, there is so much incredible work on the web that is free, we should be encouraging consumers to support those efforts by buying related merchandise, supporting advertisers, and sharing the works with friends.

    Comics at its best is a medium of freedom. Let’s not allow it to fall into another dark pit of format and packaging control led by digital providers like iTunes and Amazon.

  19. I agree that I simply cannot imagine myself paying as much for an ebook as for a real book. I can’t put it on my bookshelves. I can’t read it in the bath. I can’t lend it to friends. It has less value to me. In fact, it has only one discernible advantage: I can get it immediately. But I have a pile of books waiting to be read, so that’s no advantage at all.

    I would – and do – pay for online legal textbooks. But that’s because they’re perpetually updated, the footnotes are turned into hyperlinks to cases, and so forth. It’s a whole different model, and more akin to a database subscription.

  20. Paul: With respect, I suspect that’s a generational preference, and one that may change. In the past ten years, the way we buy and share music has completely altered — and DRM has largely gone by the wayside along the way, which means you can “lend” electronically-bought songs to friends.

    Ebook readers, including the iPad, are still in the expensive early-adopter phase. I haven’t seen the need for one yet, but when my wife was having eye problems, the Kindle was a godsend for her. It really is an amazing device, and it’s still a primitive prototype. It’s much easier on the eyes — especially for long blocks of type — than on any computer screen I’ve used.

    “It’s not about royalties for authors. It’s about the amount of money that the publishers make.”

    Army: Well, yes and no. It’s also about the amount of money Amazon makes. And on high-discount sales, the amount the publisher takes in directly affects the author’s royalty, once an advance has earned back. I’m more on the publisher’s side here, because I don’t like any company — even one I’ve had good experiences with, like Amazon — trying to set themselves up as a monopoly. But essentially this is a struggle for control of pricing in a low-profit industry.

  21. The real value of books is the content. Collectors can gush about the creamy texture of the paper or the Corinthian leather binding, and those are all lovely qualities. However, without the words on the page, a book simply isn’t a book (and by extension isn’t all that valuable).

    Stuart’s right in that this is a tug-of-war over the pricing of that content and effectively molding the mindset that’s to come out of the post-free-content era. Sure, there’s gonna be plenty of free content out there yet, some of it sponsored and some of it just costing you your time but it won’t always be the wild west free-for-all torrent all you can buffet, either. This is about formation of the market that will be populated by *every single kid* that grows up not reading books or comics on paper, which will be a lot of them. They’ll still read books, just electronic ones instead.

  22. “I don’t like any company — even one I’ve had good experiences with, like Amazon — trying to set themselves up as a monopoly.”

    Neither do I, and I don’t think Amazon should have that power. And I realize that right now e-books are additional revenue which isn’t taking the place of anything else at a publishing house to cause a reduction in cost. If anything, there’s an increase in cost because publishers have to support the already established system and this new e-system as well. Even if it was replacing something at the publisher level, I don’t see those people taking pay cuts because e-books don’t bring in as much money as the old paper versions used to. They’ll make the creators suffer the loss, which is where the argument probably comes from. It’s still a marketing tactic, though, because they’re playing “look at the poor creator” as they go swimming in their money vaults a la Scrooge McDuck. From a consumer standpoint, I’m just encouraging others to not accept a higher price as if it were justified because of misdirection of marketing or some other bleeding heart excuse. These companies have one function–protect their profits, and that’s what they’re trying to do. As a consumer, we have similar functions–get what you pay for and get the most out of your dollar (which isn’t much and will only get worse). I’m just saying…think before you buy. I would have never supported iTunes, but it is doing very well without me due to its clever tactics. Just like the government with our civil liberties, we’re allowing corporate interest to take away or limit our rights to fair use, and that’s bad. But most people don’t listen to me, so maybe I’m wrong.

    “*every single kid* that grows up not reading books or comics ”

    that’s a large population already.

    “They’ll still read books, just electronic ones instead. ”

    ah, an optimist.

  23. Econ 101 tells us that, in a competitive marketplace, such as the ebook business is becoming, the price of goods will fall towards the total cost of production and distribution.

    The napkin math we’ve seen here overlooks two very large costs of the current book-trade model: returns, and unsold print runs. Big publishers like MacMillan can sometimes strong-arm retailers into limiting the portion of returns to something like 10 percent, but small publishers can’t. But even big publishers face the unhappy fact that an average of 75 percent of copies printed wind up getting pulped because they aren’t sold.

    These costs don’t apply to e-books. Exactly as many copies are made as are sold or given away. No returns, no warehouses full of un-sold stock to deal with, no shipping costs (which are disproportionately higher for smaller publishers).

    Authors of prose books typically get only 8 percent of retail price, assuming they don’t get ripped off by publishers, which happens all too often. Creators of graphic novels generally get a higher royalty, but there is still plenty left to cover publishers’ costs, in most cases, even at the $10 price-point.

    I think MacMillan is going to find that they’ll have a hard time maintaining $14-15/copy e-book rates, and competition will bring their prices on most books down to $10 and lower (discounting inflation, which I expect to pick up to late-’70s levels next year, but that’s a whole ‘nother topic.)

    That’s why I agree with Doctorow that this fight is really about pricing models rather than pricing levels — and as a small publisher, I’m okay with MacMillan “winning” this round. As a reader, I don’t think it will matter much in the long run.

  24. As a self-published author and comic book reader (and possibly future comic book producer) I am always concerned with price. That is one of the reasons I decided to self-publish in the first place. I do not like the idea that it’s “too bad” that people want to make money off their work; that the consumer is not in tune with the way business works or how products are produced. The fact is that the cost of a book is taken into account when figuring price, but the only way to lower the price is to reduce the costs. That is why POD is becoming so popular, since it effectively eliminates the wasted costs of warehousing, returns and remainder sales, and other costs associated with producing a book like catalog fees and distribution discounts, which can go as high as 60%, for more books than you sell. Once you factor that in, the $22 book is actually very cheap. Booksellers cannot keystone the price of the books or that $22 book would retail for as mch as $40, so you are very lucky they don’t. But since it costs virtually nothing to produce an ebook, the price can come down. But don’t expect me or any self-respecting author to sell the books for free. We have to pay the costs of maintaining our shopping carts, publicity and other ti-ins to marketing (they are NOT free), so there will be a price. But an ebook can be way less than $15.

    The only concern I have is that comic books do not go well with Kindle, so it’s not likely I will be producing one for that. Do you really want to read a color comic book on a device which only reads in black & white? I wouldn’t. It would be easy to produce a color comic book in other formats, though, as long as people are willing to endure the eyestrain associated with reading on a tiny screen. Otherwise, my graphic novels will mostly be in print.

  25. @Mariah: as an editor, you should know it’s “eke”–not “eek”! Although, given the attempted gouging which *doesn’t* benefit authors, you’re right, it should be “eek”!

    Amazon and MacMillan are both trying to maintain an artificially high price. An entirely new model will come into being, because for one thing, no book distributors will be needed as in the current model (my wife works for one), no warehouses (maintained by both publishers and distributors) and returns will, as has been said, be a thing of the past.

    The Espresso Book machine (POD) is a forerunner of things to come. Maybe people will pay $15.99 for a TPB printed while you wait, but IMO, only an idiot would pay that amount for an ebook with DRM. You can, right this minute, obtain an e-copy of almost any book in print for free, if you know where to look. So people will probably buy one hardcopy book and either buy one ecopy in whatever format, or scan it themselves for an ecopy, or download it from the literally thousands of places on the internet they can be found.

    As for multiple platforms for ebooks, see above. There are legal converters right now, for free, that can easily change an ebook from any format (except, maybe, Kindle) to any other format. Why would that change?

    Information doesn’t want to be free, as has been alleged, but people want stuff for free. We who buy and collect and trade books are in the minority. Most people don’t read above a “See Dick and Jane” (or People magazine) level anyhow; they certainly won’t want to pay $16 or more for an ebook they can’t understand, because they’re not going to pay $300-$400-$500 for whatever reader is the flavor of the moment.

    All the discussion so far is simplified; that’s all right. I think someone like Cory Doctorow will probably do something more in-depth than has been done so far; I’d like to read that. In the meantime, book lovers, keep watching the tubes–the interweb has a lot of fascinating discussions about the real world!

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