Book Publishers: Embrace The E! (or else)
Yesterday The New York Times reported on book publishers’ discomfort with releasing books simultaneously as E-books and through traditional channels. One idea, not supported universally, is to release E-books later than hardcover editions in the same manner that paperbacks are held back for at least a year. The reason proffered is to preserve the initial $20-35 hardcover price versus the $9.99 becoming commonplace for E-book editions.
The ‘hold-back’strategy is ridiculous and totally ignores how most readers actually use their books. While E-Books only represent a small slice of total sales today (but growing fast), there’s little question that somebody willing to shell out $200-300 for a ‘reading device’ is likely to be a passionate reader. As one of those, I would surmise that many of the sales on E-Readers are actually incremental to publishers’ income, keeping people like me away from used book stores and libraries. That’s where the E-Books goldmine is for publishers: not in keeping existing sales but in diverting money away from long-standing secondary and ‘free’ markets. While its true that publishers get a nice arbitrage gain from the de facto DRM of a first-edition hardback (tough to reproduce cheaply, tough to read freely in its reproductive form), that gain can in turn be picked up by the reader upon completing the book by selling it or trading it. An E-Book edition is essentially non-transferable. I pay less – and perhaps the publisher makes less – but its fungibility also destroys its secondary market value.
Take, for example, my current reading: Infinite Jest. It’s been fifteen years since it was first published, so there are plenty of used copies out there for around $10 and libraries consistently stock it, while a new copy runs $16. Because of its ease of delivery and portability, I elected to get the $10 Kindle edition with the publisher getting some profit and no incremental printing costs. Had I purchased a used copy, I would likely have resold it later for half-price – meaning no profit for the publisher, virtual cost of only $5 to me and $10 profit to the used book store (for selling it twice at 50% profit). So where is the advantage to the publisher in holding it back? It’s simply ceded its ability to profit off of its back catalog.
This is one of the central mysteries of Kindle Store availability to date. It features plenty of hot new titles, but the back catalog titles is still mysteriously empty with many major authors most famous works; Roth, Mailer, Pynchon, Heller and Updike just for starters. Wouldn’t a great cut-rate selection be a great source of found profit with barely any incremental cost? I understand there may be unanticipated contractual issues (a la last year’s Writer’s Strike over web royalties), but the longer they wait, the more the price will drive towards Zero (as it did for the music industry and iTunes). Already sites like ebooksbay.org are popping up with ‘free’ back titles. (I found a fully convertible PDF copy of Gravity’s Rainbow last weekend. There goes a lost sale.)
On this very same day by coincidence, Chris Anderson’s Free: The Future Of A Radical Price was released for free on Kindle and immediately shot up to #1 on the Kindle sales chart. I’ll leave his argument for other bloggers, but in Anderson’s eyes, he’s able to do this because he (and presumably his publisher and agent and c.) can use it as a platform to make money other ways: speaking fees, leverage at his job, increased opportunities generally. This is also the direction the music industry has taken with its ‘360-degree’ contracts for its biggest artists; Live Nation taking a cut of all of an artist’s revenue streams, from ticket sales to licensing. The book publishing industry needs to figure out its ‘Freemium’ strategy quickly. As a post on Mashable points out this morning, not all Free business models are created equally. People will pay (as I have done with IJ) for convenience or added value. What can book publishers bring to the table? Figuring this out quickly before E-Readers become commonplace – look for them to spread like wildfire among textbook-toting students – is absolutely urgent for an industry that’s lived off the same industrial-based business model for hundreds of years.
