On e-books, the distribution chain, the Amazonian monster, and all that other fun stuff

Over at Booksquare last week Kassia had an excellent post on what consumers are looking for in the pricing of ebooks, in which she took a devil’s advocate role in saying that perhaps it’s good that Amazon is creating this expectation that an ebook shouldn’t cost more than $9.99. It wasn’t even so much her post as some of the comments that frustrated me, because they have at least a ring of some comments that I’ve seen recently and not-so-recently about how publishing needs a change and how the big bad greedy publishers are trying to take away people’s hard-earned money, and that they deserve what they get during this economic downturn.

I replied rather obliquely to the topic at hand, mostly frustrated at the whole situation we’re in here rather than at Kassia’s post, and conversation ensued. I went back and read several responses and started to respond there, but it turned pretty long, so I made it into a post here instead. My original comment bascially outlined how much Amazon takes as a percentage–usually 55%, but sometimes up to 70%, which seems highway robbery to me, especially when you’re talking about e-books which don’t require the shipping and handling and warehousing that print books do. Publishers are often in a hard spot when it comes to pricing because they make so little money once the distributor gets their cut, the author gets their cut, and PPB (paper, printing, and binding) are accounted for. The 20%-35% of the pie that they’re left with has to cover staff salaries (editors, art directors, marketing people, design, typesetting, admin, etc.), overhead (and even if they’re not in a New York City office, that can run high), marketing, public relations, and any freelance costs like copyediting and proofreading that might come up.

Despite the frustrated tone of my response in the comments, I agree with Kassia that the pricing of ebooks is a sticky situation and that they really should be relatively low-priced, especially on platforms like the Kindle on which your books could go up in a puff of smoke one day simply because Amazon decided you were returning too many physical books. I’m not sure what the solution to that is for the whole industry, though I’m with her on how many small presses are making it work. (There are quite a few things a small press can do more efficiently than a large conglomerate, and I’ve heard from a number of readers of e-books that small presses tend to look to the details of e-books more carefully.) I’ve been reading a lot of opinions across the board on this, and in general, I also agree that the e-book shouldn’t be priced higher than a paperback. I know I’d never pay hardcover price for an ebook.

It’s just that there can be some very frustrating factors going on behind the scenes in the distribution chain that publishers have little control over (at least, maybe the big ones do, but not most medium to small publishers).

As far as the publishing industry needing a complete “redo” as some have said in the comments (and others have said a lot more vehemently and with more rancor elsewhere), I’m not sure that’s really hitting it quite right. Though we are in the midst of a major transition, that’s for sure. I personally think that publishing houses need to no longer be owned by even larger conglomerates that demand financial returns that historically no publisher has ever achieved without compromising and becoming more and more commercial. (I do not use “commercial” as a bad word, but with further commercialization comes the question of whether “quiet” books should be published or marketed.) Bookstores are in a major shift, not only with all the indies closing left and right but also with Borders on the brink and the the bestseller short-sale/loss leader mentality in most chains that loses the long-term midlist. And e-books are shaking things up. And I could rant about Amazon the whole live-long day–especially the way they demand things of small presses who don’t have the negotiating power that the conglomerates have.

Publishing has a history of consolidating and breaking apart. Some of the best small presses (who are now imprints of other publishers or pretty large) came out of contractions in the industry–they were able to adapt and innovate in ways that the bigger behemoths couldn’t. Tor, Greenwillow, Holiday House… perhaps another Greenwillow or Tor might rise from the ashes of all this shaking up. Who’s to say that this isn’t just a natural part of the economic cycle of publishing? Yet it feels bigger than that. Perhaps because I’m living through it rather than reading about it in Ursula Nordstrom’s biography.

But what good books will always need is that sifting that comes from the editorial process. I’ve heard many people (usually people who don’t understand the industry, and certainly not Kassia!) who say that editors deserve to get fired/laid off in all of this (I’ve even seen on a listserv someone comment on MY layoff from my last full-time job, saying that because I said at a conference that I didn’t want picture books or talking animals–we didn’t publish them–that I deserved to be fired). I really don’t think that’s true–in the latter case, even if I do say so myself. I also don’t think that the editors left behind just need to become “more efficient” at their jobs, at which they’re usually already overworked–most of the people left after all the latest layoffs are taking on orphaned books and their workload has increased from an already heavy load.

Publishing simply isn’t an efficient industry. It takes time to edit a book. It takes time to market it, and that marketing is very word-of-mouth oriented due to the nature of books. It’s an art and a business, and by its very nature, tends to take up a lot of input for little financial reward (except outliers like J.K. Rowling).

Perhaps the current crisis and the laying off of all these people involved with the making of the books–not just editors, but marketing and sales staff, art staff, managing editorial staff, production people, and so forth–will lead to fewer books being published, which might be a good thing when looking at the industry as a whole due to the number of books published every year, but that still leaves us with the problem of the further homogenization of the market, given the concurrent bestseller mentality. But I still don’t think that justifies people losing their jobs. I’d go so far as to say that I *like* that there are so many good books published every year (despite the low quality at the long tail, especially with many self-published books)

Sometimes the frustration of the whole distribution chain makes me want to tear my hair out.

I know this post is circular, but so are my thoughts on the issue. How do we fix this chain of frustration? Perhaps taking the power back from Amazon will help. More direct sales to readers? How do you drive traffic so readers even know about your books? etc. etc. So many factors involved, that perhaps I shouldn’t try to tackle at nearly 1 in the morning after a long weekend. Definitely quality–and becoming known for that quality–is one of the most important things, as Kassia mentioned in her comment related to the small presses. But I think there’s still something else, something I feel like I’m missing in all of this. Perhaps it will come to me if I just get to bed like I planned to two hours ago!

2 thoughts on “On e-books, the distribution chain, the Amazonian monster, and all that other fun stuff

  1. It really is a circular problem. And I do think that while Amazon has done wonderful things, it has too much power. But what to do? It’ll be interesting (and probably frustrating) too see how the next several years play out.

  2. Stacy — I appreciate your expanding upon your thoughts here. It’s such a complex subject, and the more you look at the details, the more complex it gets. A few years ago, I felt like I was crying wolf about Amazon (publishers were worried about Google while I was looking at things in my own weird way). Today, there is a lot of worry, but also possibility.

    The things that keep me focused are simple: more people are writing than ever before, more people are reading than ever before, we know that, generally, people will pay for valuable content (defined as valuable by the person), and we know that now, more than ever, curators or concierges — editors — are needed. There is simply too much…stuff for anyone to sort through. While I wanted to agree with Carolyn Reidy about content over format, it is hard to convince the average reader that one format should be valued the same as another when they see that is not true.

    (And all of the arguments simply fall apart when a customer buys a book with a digital price that is the equivalent of a hardcover, only to end up with a poorly formatted file that is hard to read…while it’s near-impossible to figure out how to resolve the problem. I joke that readers should be given extra benefit for sticking with some publishers while they learn how to do this digital thing.)

    I have long argued that trying to force readers to buy into a business that makes no sense to them is the wrong approach. Does it make sense to charge a price I won’t pay in order to maintain an institutional business model, or does it make sense to consider the fact that you will gain a customer earlier in the buying process by revisioning models to reflect current (and future) consumer mores (if we are talking purely about recouping advances, the time value of money argument suggests maximizing sales at the earliest point rather than dragging them out over a year or so)? Or, if you lose the sale entirely, who wins?

    I don’t know the answers either, but I do know ignoring what readers say is dangerous. It’s not that people are going to stop buying (digital) books, it’s more that they’ll make purchasing choices that fit their economic needs (this I think should be more of a worry to publishers — the sheer amount of choice versus the number of “must have” books).

    I am interested to hear your further thoughts as you work through this. I mean, we’ve managed to put a man on the moon; we can solve this pricing dilemma!

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