An American Editor

September 7, 2011

A Book Is a Book — Or Is It?

If we look back to the beginning of the agency model in ebooks, which began a little more than one year ago, we can find the publishers’ claimed rationale for changing models (which occurred with a mighty push from Apple): to protect ebooks from becoming mere commodities and to prevent consumers from establishing a mindset that $9.99 is the right price point. Okay, that was the rationale, coupled with a fear of Amazon becoming too powerful, that was bandied about. The question is: Were publishers successful in preventing the commoditization of books?

The reports from the Agency 6 indicate that ebooks are rapidly becoming a significant source of revenue for publishers, perhaps even their primary growth area. Latest reports show growth in ebook sales (Barnes & Noble reports 140% rise in digital sales; Hachette reports ebooks as 20% of U.S. sales and 5% of worldwide sales; Penguin and Simon & Schuster report digital as 14% and 15% of revenue, respectively; Bertelsmann/Random House reports digital sales in the first six months of 2011 as exceeding all digital sales in 2010);  and a significant decline in mass market paperbacks (down 14%). Profits are up slightly, even though volume appears to be down somewhat. All of which seems to favor the notion that the publishers did the right thing.

What we don’t know, of course, is how the sales are breaking down by price point. I can relate anecdotal evidence that the agency pricing scheme is a failure on several levels, but no data has been released that enables a careful analysis.

I’ve mentioned it before, yet it is still true: Whereas before agency pricing I bought a lot of hardcover books and ebooks from the Big 6 publishers, my purchases have declined since the institution of agency. Whereas I used to visit my local Barnes & Noble at least once a week and buy a few books each time, it has been nearly five months since I last visited the store and bought an Agency 6-published book.

If the Agency 6 intended by their action to make me accept spending more than $9.99 for an ebook, they have failed — and failed miserably — because I am pretty unwilling to accept even $9.99, let alone a higher price point, as the sweet price point. Instead, I’ve gotten used to the indie author price points of $5 and less, with less being the dominant word.

I still occasionally “buy” an Agency 6 book, when they offer it for less than $5 or offer a bundle, such as three ebooks for $9.99, but more often when they offer an ebook for free. Agency pricing has backfired not only with me but with nearly all of my acquaintances who buy ebooks. The principal hurdle for the Agency 6 to overcome is the lack of physicality of the ebook.

Even though I and my friends have transitioned to ebooks and much prefer reading on our electronic devices to reading the pbook version, we have not made the price transition, and it is that transition that the publishers need (want?) us to make. Yet it is the publishers who have made the problem worse.

Publishers do not accept the idea that a book is a book is a book, regardless of whether it is electronic or print. In contrast, consumers like me have always thought that a book is a book is a book, regardless of form. We understand the difference between a hardcover and a paperback because we can both see and feel those differences; consequently, over decades we have become accustomed to paying more for a hardcover than for a paperback, perceiving — rightly or wrongly — greater value in a hardcover than in a paperback. (In fact, it was this perceived disparity that brought about the rise of the trade paperback. The trade paperback is perceived by consumers as offering less physical quality than a hardcover but more than a mass market paperback, and thus worth a price between the two.) But we continue to have difficulty wrapping our heads around the idea that, even though it lacks physicality, the ebook is worth more than the paperback and the hardcover (ever note how many times the ebook price is higher than the hardcover price or so close to it that there is little price differential?) at worst, and worth more than the paperback and only slightly less than the hardcover at best, or that it is worth the same as the trade paperback.

Because we have difficulty wrapping our heads around the agency pricing continuum, we have spent more time and money buying indie books, which seem to be priced more logically. Thus, I suspect that our experience is the experience of many ebookers; that is, we buy more indie ebooks than agency ebooks (with some exception).

The Agency 6, however, can point to the rise in revenues, and sometimes even in net income, they are experiencing, which is occurring even in the face of declining volume numbers and is attributable to increased ebook sales at the higher agency price. It is mixing, I think, apples and oranges in the sense that I suspect the biggest growth in volume and dollars is occurring in the indie/non-Agency 6 ebook market, not in the Agency 6 market. So the question not being asked or answered is this: What would the Agency 6 ebook sales volume and profits be if they had let the market do the pricing? Would their growth be significantly higher than what is being reported and would their net income be more marginal?

Also not asked and answered is what effect the commoditization has on consumer buying habits. Ultimately, will this cause even hardcover sales to decline significantly? This takes us back to the questions raised earlier in Clashing Perspectives: Coming Home to Roost and leaves us in the same place.

I used to “revere” books that I purchased. After all, I paid a lot of money for a hardcover and I treated it reverently. Take one off my library shelf and it appears in virtually the same condition as when I bought it. I wouldn’t let my children borrow one of the books until they learned how to handle them gently and carefully. None of this matters with my ebooks. Even if an ebook is accidentally deleted and the bits and bytes written over, I can replace it for free from my backup and have it in the same condition as when I bought it. There is no need to be reverent. Thus, the ebook is viewed as a commodity — a book is a book is a book.

9 Comments »

  1. I have purchased only one book over $9.99 and that was a very specialized heavy duty math textbook. I use a watch service, http://www.ereaderiq.com/ , to track books over $9.99 that I would like to read but are over that price point.

    My ereader has a backlog of over 15 unread books on it and another 35 samples ready to be purchased that are below my price point. I am not in a rush to buy any one book. The interesting thing I have found is when the price of a book I want drops below my price point is how often that book I wanted just winds up on the wish list unpurchased.

    Any given book can be a treasure but when you have so many treasures to choose from, they do in fact become just a commodity. It has been interesting to see which of the houses actually do price movements to sell books and which houses set their prices in stone and forget about the purchaser.

    Comment by Joe J. — September 7, 2011 @ 8:13 am | Reply

  2. [...] to the rest at An American Editor Click to Tweet/Email/Share This [...]

    Pingback by How Agency Pricing Has Backfired | The Passive Voice — September 7, 2011 @ 1:20 pm | Reply

  3. Recently I bought nine paper books by Terry Goodkind. I would have preferred to buy them as eBooks on my Kindle. The paper books were cheaper than the eBooks. Books are just a commodity. Lowest price trumps everything else.

    Comment by DG sandru — September 7, 2011 @ 2:52 pm | Reply

  4. I just bought my first e-reader (a Kindle), and I love it. I was shocked that many of the e-books cost more than the p-books! I think that eventually the pricing will right itself, but right now, it’s just crazy

    Books have truly moved from treasures (my mother always insisted that books were our “friends” and deserved to be cherished accordingly) to commodities. When books were written by hand and typeset by hand and printed by large cantankerous machines operated by hand, there was enough labor in them to make them unique and worthy of reverence.

    Today, anybody can crank out a novel on a computer using software designed to make it easy, and then publish the story for free on a number of websites. Those e-books are (and should be) very inexpensive. At this point my price point for e-books is under $5. I price my own e-books at $1.19 or less. I think that’s fair for an indie author. I’m making it a point to buy e-books from others similarly situated.

    The market will right itself one way or the other. I’m betting that the big winners will be the indie authors and not the Agency 6 folks. Maybe that’s just wishful thinking.

    Comment by Meredith Morgan — September 7, 2011 @ 7:11 pm | Reply

  5. [...] An American Editor on how the Agency 6 changed his book buying habits… and definitely not in the way they intended. [...]

    Pingback by Stumbling Over Chaos :: Linkity and a new tattoo! — September 9, 2011 @ 2:02 am | Reply

  6. I’m with you. I rarely ever buy an e-book that is priced higher than $5-7. I make exceptions only when I want to read something for a book club discussion and can’t get the book from the library. I haven’t bought a print book in six months either. But as an author, I’m resisting the race to the bottom to sell all digital books for 99 cents. I can’t make a living on that. The $2.99 sweet spot seems to work for readers and writers.

    Comment by ljsellers — September 9, 2011 @ 1:36 pm | Reply

  7. I still do revere my pbooks. And there is no way I am going to pay as much for an ebook as for a pbook. As a writer myself, I know there are many people who need to be paid out of the purchase price. But if I can’t touch it, lend it, do what I want with it–if I can’t actually own it, but am only really licensing it, I expect to be able to save money.

    Comment by Ben Lukoff — September 9, 2011 @ 5:09 pm | Reply

  8. Books *aren’t* just a commodity. The definition of a commodity is that the produced pieces be interchangeable. You can commingle wheat, orange juice, gold, etc., from multiple sources. It doesn’t really matter so much who the producer is. (I’m oversimplifying a bit, of course.) But a Charles Dickens novel is not equivalent to one by George Orwell, let alone to a romance novel. That’s just one example.

    Comment by Ben Lukoff — September 9, 2011 @ 5:11 pm | Reply

  9. Ebooks sales are increasing now as well-off readers make the switch. But I think ebooks will level off at about 20% of all books purchased and remain there, because prices will keep them from becoming the mainstream method of book consumption. Just as most folks don’t buy Mercedes, Lexus or BMW automobiles, most folks won’t buy ebooks. Ebooks will fill a high-end niche, the big 6 publishers will make enough profits on them to make up for their loss of physical book sales, none of those main publishers will go out of business, and there will be room for small publishers and self-publishers to make a living selling low cost ebooks.

    Comment by Stacey — September 13, 2011 @ 11:46 pm | Reply


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