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On Publishers Holding Back E-Books

News about several major publishers delaying e-Book releases in 2010 have been circulating for some time and eventually made it to Wall Street Journal (article about Simon & Schuster and Hachette Book Group, article about HarperCollins). In case you haven’t heard, several major publishers are adopting a policy of publishing digital versions of certain bestsellers (the most frequently mentioned being Sarah Palin’s “Going Rogue”) several months after the hardcovers on which publishers typically made significant chunk of profit.

This move seems to be nothing more than an act of desperation. Several quotes of publishing executives pretty much speak for themselves:

“The right place for the e-book is after the hardcover but before the paperback. We believe some people will be disappointed. But with new readers coming and sales booming, we need to do this now, before the installed base of e-book reading devices gets to a size where doing it would be impossible.

— Carolyn Reidy, CEO of Simon & Schuster

“The future of hardcover publishing is at stake. You don’t have a lot of time left to save it.

— Nat Sobel, a partner at Sobel Weber Associates

Unfortunately for the publishing industry the train may have already left. e-Book readers are probably the most wanted Christmas gift. Nook and Sony readers are sold out. Amazon Kindle not being sold out is a small miracle giving it’s killer sales in November that (I guess) are going to be topped by December sales. Sweet $9.99 price point may be only part of the reason. Let’s not forget that in order to enjoy cheap e-Books you need to make the initial $200 investment in eBook reader device (reading on PC and iPhone may get you hooked but after some time most likely you’ll either go for eInk or drop reading e-Books altogether). For me personally the biggest reason for choosing e-Books over paper books is convenience. I will not go into details here about I find e-Books convenient – just read this blog. While book reading was declining for years now, e-Books have revived it.

So why would publishers so desperately want kill the very thing that seems to be saving the books? Because they don’t control it. They have been comfortable with the old model of chopping trees and making books out of them for authors and then promoting these books because authors didn’t have the resources to do it themselves. The system has worked for centuries until the Internet arrived. With Internet you no longer need to chop trees to get your word out to large number of people. The concept was out there for anyone to see for years but publishers ignored it. It’s hard to blame them – when you have a well-oiled machine that has been generating cash for centuries it’s hard to always stay on your guard and constantly look for ways to improve the machine. After all there is always the risk of the breaking the machine instead of making it better. And this works… until someone else who is a newcomer and has nothing to lose comes by and completely reinvents the machine. That’s just the way everything evolves.

With Amazon Kindle publishers don’t control the final price. Amazon is cutting in their current profits by selling the e-Books for $9.99 to establish a market share. Once the market share becomes big enough, Amazon can then either raise the price or tell publishers to lower their cut because then it will be “digital sales or no sales at all” Publishers understand this all to well but they will not be able to turn the tide. While they may succeed in thwarting Amazon’s attempt at becoming a e-Book monopoly, 10 years from now most of the books will be digital (whether though Amazon, Google, B&N, Sony monopoly or no monopoly at all) – there is no doubt about it. With technology advancing as rapidly as it is, using paper hauled by fuel burning trucks to transfer information seems as outdated using horses to plow the field in the age of tractors. I have no illusions – eInk is not perfect – far from it in fact. We already have Mirasol displays coming in color e-Book readers in 2010. Then there’ll be some other technology. But even today’s imperfect eInk and DRM digital books beat the heck out of paper books in many aspects.

Publisher’s side of the story is similar to the one of music recording industry:

If new hardcover titles continue to be sold as $9.99 e-books, the eventual outcome will be fewer literary choices for customers, because publishers won’t be able to take as many chances on new writers.

— Brian Murray, CEO of HarperCollins Publishers

“The music industry has lost most of their national chains, and the ability to expose a lot of new artists.”

— John Marmaduke, CEO of Hastings Entertainment Inc., a book and music retailer

While fewer new artists may be exposed now, I don’t feel a shortage of music that I like to listen to. In fact I like the fact that major MP3 music retailers like iTunes, Zune and Amazon offer DRM-free music that now plays on my PC, XBOX360 (that I use as media center), iPhone and MP3 car stereo without useless limitations. It may be more correct to say that publishers will get fewer chances with new writers since e-Books open self-publishing possibility to anyone.

Publishing industry has my sympathies, they do not have my wallet though. Personally I’m so hooked on e-Books, that waiting for several months for digital version is not a problem for me at all. The book will be as interesting for me to read in a couple of months too and meanwhile there are other books that I haven’t yet read. The situation is similar to DVD and Blu-Ray disks coming out months after theatrical movie releases. The idea is not to cannibalize movie ticket sales by giving people the ability to watch the same movie at home. I might be a non-typical consumer but for the this dilemma is resolved in exactly the same way – I wait for DVD release  while I watch other movies that were already released. Truth being told I’m even to lazy to go to local Blockbuster or even my mailbox for that matter. If I can get the movie via Zune Marketplace or Netflix “Instant Watch” on XBOX360 that’s what I do. It’s not that I’m ultra-greedy and don’t appreciate movie theaters. I do. But my schedule just doesn’t allow me to go to the movies that often. And movies that I really cared about like “Lord Of The Rings” and “Star Wars” I watched in the movie theater regardless because this is the right way to watch them for the first time. Period.

Amazon.com "going rogue kindle" search

Amazon.com "going rogue kindle" search

Getting back to the Sarah Palin book… If you search of “going rogue kindle” on Amazon you get an interesting list of results: the Kindle edition of the book that is currently available for pre-order for $7.99 (I guess this is Amazon’s way of giving customers extra incentive to wait for the digital version) ranks 3rd after 2 books that are available for sale right now that are only remotely related to the original book in question. These books may be ranking higher because they sell while the book customers really want is stuck on pre-order. So while publishers may be gaining some hardcovers sales, they are also loosing sales to different books that aren’t on a several month hold.

PS: Although I find e-Book reading more convenient, there are some places Kindle or any other eBook reader can’t go. I read paper books to my daughter as she goes to sleep and during the day. Even if I had 12″ color e-Reader with LCD-like response time, 3D holographic animated pictures and surround sound, I still don’t envision myself “reading” it to her. Some books will stay on paper for quite some time just as we still have sail-boats in the age of affordable air-travel and combustion engine.

19 comments to On Publishers Holding Back E-Books

  • I actually wrote a very short commentary on this a day or so ago on my site. My argument basically is that there are virtually no costs to e-Books vs. the publishing/shipping/delivery/store shelf fees that are incurred with hard/soft cover books. So theoretically, a Publisher can make MORE money with e-Books; there’s hardly an overhead!

    So they can either make a lot of money with a few customers (hard cover), or make good money with a LOT of customers (e-Books, etc). I’d personally rather have more eyeballs reading my material vs. a few; word of mouth gets spread quicker.

    Hopefully they realize this; $5 should be the price of an e-Book and they would sell so much more and MAKE money if they did.

  • david

    An act of desperation? Yes, and stupidity as well. eBook owners are probably the most avid readers and the most likely purchasers of books; the people who should be catered to by the industry. Instead I’m being told I can wait a few months while our less important customers get first crack at our books or you can pony up for the dead tree version and ignore the fact you spent more than $200 to read ebooks.

    Are these people too dumb to realize that a third and fourth option exists, both of which result in a totally lost sale? Option one: go to the library and borrow it. Option two: find an illegally shared version of the book and read it on the above mentioned ebook reader.

  • Richard H.

    The fact that there is little to no overhead is also what allows the reality of self publishing. New business might pop up, such as independent editors, and e-book formaters that can assist authors to self-publish. This similar to the recording industry and their “fewer new artists” argument, which may or may not be the case. The fact is the independent music business is thriving.

    I know I’d rather pay the lion share to the actual producer of the intellectual property than some corporation that gives the artist a few pennies on the dollar.

  • David Lang

    there is absolutly no reason why amazon, or any other vendor should become a monopoly for e-books.

    it’s just too easy for the publishers to sell the e-books themselves. While amazon and B&N online bookstores make it easy for people to go to one place, it’s also very easy for the publishers themselves to create such superstores, and it doesn’t even need to involve coordination between them. you can make a website where you purchase an e-book, and that website takes your payment, then logs onto another website, purchases the book and delivers it to you.

    this isn’t the optimal way to do things, and I expect that publishers will work out deals where they sell the books at a discount to each other to then sell to consumers, but this is all trivial to do.

    amazon selling a book in no way makes it unavalable to B&N or Joe’s Online Books

  • David Lang

    As to the cost of the books, Lamarr has it right. the cost of printing/shipping/warehousing/etc/ paper copies of things is a HUGE portion of the final cost of a hardcover/paperback book. I’ve spoken with small publishers, and for them it’s over 80% of the final retail cost. Larger publishers probably have economies of scale that give them a little better deal, but even so I expect that the $9.99 that amazon sells a book for (of which only a few cents are eaten by the cost of storage, copying and transportaion) is close to double the money that’s left after a typical hardcover sale.

    that’s _more_ money to the publisher, retailer, and author. how they split it between them is going to be an interesting question to watch over the next several years.

    I suspect that the ‘problem’ is that various contracts have been written giving people a percentage of the final sale price, based on the costs of traditional publishing, so when the sale price goes down without adjusting these percentages some people (probably authors) are loosing a lot of money, but other people who get the same percentage of the sale price, but have _far_ lower costs are making out like a bandit

    There is very defiantly a place for publishers in the world of e-books. they perform _very_ valuable services

    quality control (good editors can make a huge difference to a book)
    talent search (this is part of quality control)
    financing (cash advances for established writers, which is risking the publishers money that the writer is good enough to sell, and gives the writer money to live on while writing)
    publicity/marketing (this will be even more important in the future, but also very different)

    there are probably others, but the gist of what I am saying is that this isn’t a move to eliminate publishers, but it will significantly change how they work and what they should invest in.

  • admin

    Even if publishers did want to go into the e-Book business and open independent e-Book stores, it wouldn’t be easy for them. With Kindle they will not have a way to DRM books, so they’ll have sell DRM-free copies – something they’ll have very hard time doing because of (unjustified) fear of piracy. Sony offers “open” DRM standard but lacks the convenience of Kindle and market share.
    Without having the whole system of store, e-Reader and easy way to connect these two it would be hard for publishers to compete with completely integrated solutions by Amazon, Sony and B&N. And it may be too late for them to come up with such integrated system even if they could form a coalition.
    It’s quite possible that in this confrontation publishers and e-Book/e-Reader industry will beat each other to pulp and then Google will come with their own platform and reap the benefits.

  • Stbalbach

    >there’s hardly an overhead! [for publishing e-books]

    This is a myth. See this New York Times article, the $9.99 is a loss-leader to encourage sales of the Kindle, Amazon is selling most e-books *at a loss*. Those cheap prices can’t go on forever. Here is another article Book Cost Analysis that breaks down the real cost of publishing. “Printing accounts for just 10% of the book price.”

  • tomlinton

    Ah wonderful!
    Thanks to their attitude
    Now we need have no sympathy
    Nor provide a bailout
    as the publishers’ bailiwick
    keeps on fading away

  • Kindle-poo

    I admit it – I downloaded the new hardcover (Wheel of Time) from a torrent site because it wasn’t available as an ebook. I purchased hardback copies of the previous 11 books in this series, but since I now own and adore a Kindle, as well as adore the precious little space left in my apartment, my fandom for WoT could not stretch to the point of buying another hardback to haul around. For the right 18th century manuscript, sure, but not this.

    So I chose to acquire the book in such a way that makes no one any money. Great. I can’t promise that all of the other seeders/leechers on the torrent site would have been happy to pay had the option been there – sometimes people download just because they can – but I know that *my* download was definitely a lost sale.

    Ditto the Harry Potter books. I own the original hardbacks, did the midnight parties and everything, but J. K. Rowling has made it quite clear that her work is too precious for Kindles et al. (But not too precious for half-assed movie interpretations.) If taking a stand is the important part, it’s certainly her right. But her vision of how we must experience those texts didn’t stop me from downloading all seven books in a matter of seconds. She had the chance to sell me the book twice, but my joy as I snuggle up with my e-reader doesn’t count in her world.

    Conclusion: these artificial delays from the publishers aren’t making any friends or changing any minds. In a culture where people don’t think twice about downloading music from unauthorized sites, people will do the same for books. And frankly, I’m miffed enough about the delay that I probably won’t buy the ebook when it officially comes out – I don’t want my dollars to appear to vote for that practice.

    I know illegal downloads are part of what publishers are worried about… but denying me the chance to buy the book is about the LAST way to keep me from downloading it.

  • Kimbery

    It is crazy of publishing companies to hold back on digital editions. Once a book is digital that is all it takes to get it to the readers is the book being delivered via the internet. The same edition is resent over and over. Almost no overhead!!!No printing, delivery, etc. The day Going Rogue was released I was on Amazon to buy it. Little did I realize that the digital edition would not be available until the end of December. But guess what, the purchase has been lost. While I prefer to read on my Kindle, my sister-in-law bought the hardback and so I am borrowing her copy instead of buying the digital edition. This is not the first book that I have ended up borrowing or even going to library to check out and I am sure it will not be the last. I am sure I am not the only person who ended up not buying the book at all. The book industries loss not mine.

  • David Lang

    @Stbalbach

    sorry, your numbers don’t compute.

    if amazon selling a e-book for $9.99 is selling below cost what it costs to produce the book then every paperback for $6.99 is loosing the publisher even more money. it’s the same content, but with the added cost of physical printing, shipping, retail, etc.

  • Bill B

    E-book readers unite. Money talks. Join me in my pledge to only purchase books on the used market if they are not offered as an e-book at the time of initial publication.

  • chris c

    So…..I only read on my Kindle now….Know what happens when I want to buy an e-book and I find the publisher does not sell it in this format? 90% of the time I find it for free via Bittorrent…. Either sell it to me or I will get it for free… your choice….

  • Loopy

    I know illegal downloads are part of what publishers are worried about… but denying me the chance to buy the book is about the LAST way to keep me from downloading it.
    Very well put!

    Now I suppose (from reading comments here and from various forums) that I am in the minority as someone who “cannot” wait for 4 months to read new releases. I love books from my favourite authors and want to read them right away.

    I also bought a Sony Reader and then a Kindle DX (for more sexy screen) because I love reading books on those devices. WHY AM I BEING PUNISHED?

    I made a suggestion that people on MobileRead found so outrageous, so insane, that they wanted me committed into an asylum. I suggested that rather than delaying entirely an e-book release, release it at the same time and same cost (and same optional sale price) of the hardcover. So on release day, for the same price, you have a choice of buying the hardcover or the e-book version.

    Then, in 4 months, the “for those who waited” reduced pricing (~$9.99) for the e-book starts.

    I think that’s better than entirely delaying the book. If you’re so into the author/book, you can buy it at “hardcover” pricing on release day, or, you can wait 4 months for cheaper.

    I buy books so I can get all the words in them into my head. I’m paying for the words, not the ink. Here’s my money, now give me the words the way I want them.

  • Mark

    We should convince the rabid environmentalists to support our cause. Trees, after all, are vitally important for soil erosion and the water cycle, among others. Paper mills pollute water with harmful chemicals and are energy intensive. Publishing requires needless energy resources for transportation.

  • Joe

    There’s no doubt that e-reading is “greener”, but most e-readers still are not good enough (or perhaps large enough) to help those requiring large-print editions (see for example these large print fiction titles). It’s unfortunate that these large print titles are usually even more expensive than the regular-size titles (and of course the e-titles).

  • David Lang

    Joe, while I agree that most readers don’t have a large enough screen for large fonts, that just means that people who need large print need to select what device they buy. If you buy the right device you then get large print access to the full range of e-books, not just those printed in large print.

    I don’t understand about your comment on large print titles being more expensive.

    if you are talking about in print form, they will be more expensive as they take more paper, which takes more space, costs more to ship, etc.

    if you are talking about e-books, what is a ‘large print’ e-book?

  • David Lang

    Loopy,
    Baen books makes the e-book available the same time as the hard copy (or sometimes a little sooner, just before Christmas I was able to load books onto a gift kindle that have a ‘first published’ date of Jan 2010), and they have the e-book priced at $6 as opposed to the normal hardcover price.

    for paperback releases the e-book is usually $4

    they’ve been doing tis for several years

  • Neil Lubin

    Folks,

    First, let me say that I love my Kindle 2. I bought it because I only want to read books with it. I don’t have a need to use it for any other reason, thus no iPad for me.

    Re: Pricing. There is one big consideration that has to be taken into account. Amazon is a “store” just like Radio Shack, Best Buy or Target, etc. My point is, since when can a manufacturer (or publisher) tell businesses how much they can sell their products for? Yes, they can dictate how much their goods will cost for Amazon (or the others) to purchase, but no way should they be able to dictate a resellers price to the public.

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