Public libraries should root for Amazon in publisher ebook pricing war

Amazon and one of the largest independent books publishers, IPG, are currently battling to the death over ebook pricing.  In a nutshell, Amazon wants ebook prices to be much lower.  IPG wants ebook prices to be just a little less than print books.

Both parties seem unwilling to budge.  Last week negotiations came to a halt and Amazon stopped selling all 4414 ebooks published by IPG over the pricing dispute.

The CEO of IPG, Curt Matthews, decided to draft a response titled “What Should an E-book Cost?“.  Matthews provided specific details on IPG’s royalty, cost, and pricing structure for both print books and ebooks.  This was his genuine effort to try to justify why ebooks should cost only a little less than print books.  We’ve put the results of his response into the chart below.

Self-publish vs Traditional

A brief glance at the chart above shows why Amazon and IPG are unable to come to terms on ebook pricing.  Amazon wants IPG to cease to exist.  They want authors to self-publish their ebooks at Amazon instead.

If an author self-publishes and prices their ebook at $2.99 at Amazon, they will earn $2.09 (70 percent).  To earn that same $2.09 going through a publisher, the author would have to price their ebook at $13.93!

That is so utterly inconceivable.  The publishers want to charge 365 percent more than Amazon wants to charge.  The author will get the same amount of money but the publisher will end up earning 50-70 percent of the total price.  It’s ironic that you can spell PIG with the name of the publisher that’s fighting to take home the vast majority of the profit from the sale of an ebook.  How can a publisher take home $7-$10 and pay the author $2 when Amazon is willing to take home $1 and pay the author $2?  It’s amazing that anyone would choose to go through a traditional book publisher anymore.

Matthews claims that a lot that money goes to “the cost of editing, designing, page makeup, and proofreading” as well as the “office, and the warehouse, and the staff”.  These services do cost money, but authors choosing to self-publish can now hire independent editors and book creation services at very low cost.  The services offered are often superior to those provided by the traditional book publishers too.  When was the last time you read a book without a bunch of grammar and spelling errors?

Matthews points out that the larger publishers earn 70 percent on their ebook deals and that his firm is small and only makes 50 percent.  He then states “Now Amazon is insisting on terms for both print books and e-books that are even less favorable for independent presses. How will such presses be able to afford to publish good books when they receive so little of the sales price? They won’t be able to.”.

And that’s exactly the idea.  Amazon wants to put the book publishers out of business.  Ebooks will cost about 79 percent less if they are successful.  This is why public libaries and pretty much everyone else should be rooting for Amazon to win the ebook price war against the book publishers.

Comments

  1. MM says

    Not only is the eradication of an industry (along with the sheer number of jobs that would be lost) a bit foolhardy in today’s economic climate, the pricing of e-books is a complicated issue, and this article seems to be taking not only a fairly superficial look at it, but an enormously biased one as well. Cheap books are a wonderful thing–if they’re of the same quality as the ones we’re paying more for, and there can be substantial issues in quality with self-published books, and in much more important ways than simply proofreading. Professional publishers and editors require a book to meet certain standards of originality, skill and interest (granted this isn’t perfect, but it’s more of a vetting process than the self-published can claim). The simple truth is that you get what you pay for, and when we’re talking about something that people love as much as books, cheap and plentiful isn’t as good as it may sound.

    • Public Libraries says

      I agree that you would need a drastic improvement in the discovery/review/rating services out there if everyone were to suddenly switch to self-publishing. But ultimately, the authors are the ones that are creating the content. Books are not like movies where you need $25-50 million to make an acceptable movie. Books are also not like songs, where you need a quality studio with high quality song writers and music editors to produce acceptable songs. Books are uniquely crafted by an author that usually has very limited outside input or requirements to produce their books. The Harry Potter series would have still been written had it been self-published. As would Twilight and everything else. The challenge would have been making sure that those books stood out from the rest. That would definitely occur now that we have a world where just about everyone has internet access. Now we just need a strong social review site that focuses solely on books. There is no clear winner there yet, but as ebooks grow in popularity you can bet that the social review sites will too. This is why Amazon bought Shelfari in 2008.

      I agree that you (usually) get what you pay for. The point of the post is that the only person that matters in books (the author) is getting paid the same amount while the consumer will end up paying less than a quarter of the price. The net result is that high quality authors will still get paid the same per copy through a publisher or not. I’d argue they would even make more money since more people would buy an ebook if they were all 79 percent less expensive. This would ensure that great authors continue to publish great books.

  2. DK says

    While there are some authors that need that constant push back from a publisher or editor to make a good book outstanding, I’m sure there are just as many authors that stray from what they really want to write to appease the guy paying the bills. Authors are artists, could you imagine if painters and sculptural artists had to go through a publishing company to release their work? In the end, the true critics are the readers. Authors that have well established career with many fans still produce duds with the support of a publishing team. They come back to write great books, not for the publisher, but for the readers and themselves.

    I doubt we need that much of an improvement in the review process to make this work. I know Amazon has a great review system in place already, as it is my first stop for a review on almost any item. Besides that you will always have book clubs, friend referrals and blogging sites that provide reviews. As far as the job market. Even in these economic times, I think it is more foolhardy to continue to prop up businesses that are bound to fail. Smart savvy people in the industry will be able to move with the trend and adapt just as people always have. And there will always be good publishing companies because some people will always want a certain level of quality and are willing to pay for it, we still have turn tables and tube stereos. They just won’t be as prevalent. I’m personally excited for the change. Authors will get paid more, I’ll get to read more, readers and libraries will have to pay less, and we’ll have a more people contributing their art.