Monday, April 16, 2012

Of Apple and price-fixing, mainly.

I'm a little punchy today.  I capped a long, busy weekend with a marathon writing session yesterday -- about twelve and a half hours, including a dinner break and a couple of other breaks -- in which I finished the first draft of Fissured.  (It's a long way from being ready to see the light of day, but at least the bare bones are on (virtual) paper now.)  I started writing around 2:00 p.m.  Y'all can do the math.  And if I then tell you my alarm went off this morning at 7:00 a.m., well, you can see what I mean by punchy.

This would also explain why your weekly Sunday blog post (didn't know there was a pattern, did ya?  :D) is happening today.  Which is kind of sad because I have actual news to talk about this week.

If you follow e-publishing news, you've likely heard by now about the U.S. Department of Justice filing suit against Apple and two traditional publishers for allegedly colluding on the prices of e-books.  (Three traditional publishers settled with the DoJ out of court.)  The DoJ says Apple told the publishers they could set whatever prices they wanted for their iPad-compatible e-books, as long as Apple got thirty percent.  In contrast, Amazon was charging $9.99 for most e-books, regardless of the publisher's list price, and eating the difference (as it reportedly does on Kindle sales) in order to grab as much market share as possible.  When Apple gave the publishers the ability to set their own prices, they went to Amazon and demanded the same deal.  And e-book prices shot up pretty much overnight -- to the point where now, e-books by popular authors are going for very close to the hardcover price.  J.K. Rowling is taking pre-orders at her website for her first adult novel, The Casual Vacancy -- $21 for the hardcover and $19.99 for the e-book.  I hear what you're saying:  "But it's J.K. Rowling."  And I get that.  But still -- twenty bucks is a lot of money for an ePub file.  And who knows, she might suck at writing for adults.

Anyway, opinions in the blogosphere abound -- some of the pretty crazy -- on what this will mean for the various players in the publishing business.  Here's my (fairly rational, I hope) take:
  • If Apple and the publishers are found to be guilty of price-fixing, then publishers will certainly be hurt.  It doesn't cost a lot for a publisher to offer an e-book edition.  So it doesn't take a genius to realize that if publishers can charge hardcover prices for a product with minimal per-copy costs, they stand to make huge profits from the e-books they do sell -- and at the same time they've discouraged e-book sales, thereby propping up their dead-tree book business.  But if retailers are allowed to sell e-books at essentially the same price as a mass market paperback, publishers will lose their cash cow.  I don't think it will be the end of paper books...yet.  But young adults already have adjusted to reading just about everything on screen.  Once us old farts die off, the penchant for paper may well die with us.  Then, I expect, dead-tree books will go the way of vinyl records and CDs.
  • Readers will certainly benefit from the lower prices.
  • This won't be the death knell for bookstores.  I mean, eventually there will be a death knell for bookstores, but in my opinion, this ain't it.  I've seen some reports that show people read more books after they get an e-reader than they did before.  If trad-pubbed e-books cost less, I would expect readers to buy more of them -- and bookstores like Barnes & Noble that have skin in the e-reader game can only benefit from that.
  • In the case of us indie authors, I maintain we won't take much of a hit at all.  Most indies price their books around the $3 or $4 mark; I would be very surprised to see Amazon or Apple drop the prices on trad-pubbed e-books to that level as a general rule.  That means indie e-books will still be undercutting trad-pubbed e-books by a significant amount.  And all the other self-pubbing economics still apply:  most people these days will spend $3 or $4 without a second thought; books priced at $1.99 or 99 cents, or free, are still an amazing deal.  I don't think anything short of a drastic restructuring of Amazon's self-pubbing model will impact us.
Call me an optimist, but I'm inclined to let the big boys at the top of the food chain slug it out.  When the dust settles, I expect we indie authors will still be here.

I'd love to hear your comments.  Feel free to post 'em below.


Unknown said...

I've noticed that the prices for Nook books at Barnes & Noble have risen as well. They are charging $16-$19 for new releases. It's ridiculous.

Unknown said...

Interesting article. I agree that indie authors will survive this just fine. I love being and indie author. I feel it is insane to charge outrageous prices for ebooks. Reading an ebook is somewhat of a compromise, and if you're not even benefiting financially from it, why not just buy paperbacks?

Lynne Cantwell said...

Anthea Jane, why do you feel that ebooks are a compromise? I'm getting so that I prefer them to dead-tree books. Less weight to carry around, for one thing...

John Duncan said...

I read recently that Amazon countered Apple and the publishers by offering authors who publish through Amazon a 70% cut on sales - if the title is priced at $9.99 or less. Considering that Apple's cut is 30% with the publishers it looks like a good deal for the authors and an overall downward push on the price point, authors like Rowling excluded.

Lynne Cantwell said...

John, it's always been true, since the inception of Kindle Direct Publishing, that authors can get 70% revenue by publishing their e-books through KDP. (Which is why it makes so much sense to go indie these days. But I digress...) So maybe they're offering a similar deal to trad publishers now, as long as they price their e-books at $9.99 or below. Sounds like an offer that's hard to refuse, huh?