Responding to input both from readers and authors, E-Reads has cut list prices for a wide range of selected e-book titles.  Many novels previously priced at $9.99 have been slashed as low as $2.99.  All nonfiction, previously priced at $12.99, will now list at $9.99 or lower.

“After surveying readers and authors and studying creative pricing strategies developed by independent authors, we felt that a drop in price per unit would be balanced by a rise in volume,” said E-Reads CEO Richard Curtis. “The move seems to have worked, as our volume has already risen 10% in the month since the changes took hold. We will continue reviewing and adjusting prices as the market demands.”

E-Reads, founded in 2000, is a leading independent reprinter of previously published books. Its e-books are sold worldwide in the English language at the Kindle, Nook, Sony, Apple, Diesel, Kobo and other retail and library websites, and trade paperbacks at Amazon and Barnes & Noble.

About once a year I read an article so significant that by the time I finish underlining, highlighting, circling and starring it, there is scarcely anything left to excerpt.  Such is the case with Tim Spalding’s The downward spiral of ownership and value published on the thingology blog of the website LibraryThing. Spalding is founder of the website.

He was prompted to write his piece in response to a posting about ownership in the age of e-books. “I’m sure that there are other possibilities,” his correspondent wrote, “but with the amelioration of ownership and comparable media prices, digital books will come down from their current position and this, in turn, will create new business models and new pricing models. Could publishers resist the downward pressure of ebook pricing by coming up with a business model which would result in increased sense of ownership and thus value to the consumer?”

Spalding is hard pressed to answer in the affirmative.  “The loss of ownership creates a downward spiral in value,” he writes, “and erodes the very notion of paying for books at all.

“We used to own our books,” he writes. “With most ebooks we own them in name, but effectively we lease them….The slide toward more and more attenuated concepts of ownership continues.” The spirit of open access infusing the Internet is eroding the tradition of book ownership, and new, access-based models will eventually achieve dominance.

“The process,” Spalding writes, “is gradual” because psychology and culture always lag behind technology. But a “tethered, metered and monitored product” is inevitable as “each step away from ownership makes the next step more acceptable. Once you realize your Kindle book is not fully yours, you’ll accept it being mostly not yours. Google Ebooks are a further step away from ownership.

“By itself, such changes might be culturally and economically neutral. Ownership of paper books wasn’t so much a consumer preference as a side effect of their physical nature, and law followed and solemnized that state of affairs. Maybe the faucet model will produce more readers, more reading, more good books, more paid authors, etc. Or maybe it will produce less. Who knows?

“The role of piracy. I think we know. And the trends are negative, for both readers and authors. Unfortunately, digitization and the faucet model tends to encourage a third option–piracy. Digitization makes it possible, but the faucet model encourages it. This happens in two ways.

“First, people who love autonomy and personal freedom rebel against metered and monitored access to reading. They don’t want inconvenient DRM, monstrous and opaque licenses, transfer limitations, constant access requirements or icky, opaque monitoring. These people will turn to piracy to avoid it. (Or at least that’s what they’ll say they’re doing.)

“Second, the more ownership is devalued, the less people care about the rights of the seller. When someone sells you something they made, or through a small number of simple intermediaries, it’s easy to see what’s wrong about cheating them. When authors’ work is reduced to a limitless soup, available through shiny digital spigots at cheap, but limited, rates, it’s hard to see where problem with piracy really lies, and easier to rationalize cheating authors.

As devalued ownership feeds piracy, rising piracy in turn devalues ownership. Anyone with an internet connection can rapidly assemble a ‘library’ of books it would have once taken years to build–so why bother building one?”

Well, I’m afraid I’ve come close to crossing the Fair Use boundary.  So do read the rest of this cogent article: The downward spiral of ownership and value. And if you’re still skeptical, read David Carnoy’s masterful article The Rise of the 99-Cent Kindle e-book.

Richard Curtis

We feel that a cogent comment made by Anne Marie Gilbert in response to our posting Why E-Sales Dipped in Q2 comes so close to capturing the mood of consumers that we are taking the liberty of reproducing it here in its entirety. Thank you Ms. Gilbert!

RC

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I am still downloading a lot of books, but definitely buying fewer of the overpriced e books, instead of buying 3-5 books a week, I’m buying 6-7 books a month. My book budget has not diminished but I just won’t buy some books I want to read but feel are over priced. My entire family read Jim Butcher’s Changes in a library copy rather than buy it at $12.99 for our Kindles. (We share an account with two of our grown sons, that way they can read my books but I don’t have to raid their homes to get them back.) We have all his other books on Kindle and would still download it to reread but not until the price comes down.

I’m not a $9.99 purist but for most new fiction it feels right. For back list works I would expect the price to be less than the paper version or I won’t buy it. My price points for scholarly and general non fiction works are much more flexible and I will and have paid a great deal more for those works. BUT I still will not pay more for the e version and expect to pay at least 20 per cent less than the print version of any book I buy. When the prices are low enough I am happily replacing my print books with their e versions. Less dust, less book case space needed, and easier on elderly eyes.

I am particularly unhappy with the Penguin price points as I read a lot of their authors and simply will not pay, (not can not but will not) what they are asking. $18 for Black Lamb and Grey Falcon to replace a many year old copy I already own in paper is greedy for them to ask and would be insane for me to spend. If books are priced well I’ll buy, if the price points set by some of the major publisher’s remain inflated, I’m going to be giving some serious thought to self scanning books I might otherwise just re-buy for kindle and spending my reading money on the sensibly priced books that are still out there and worth reading, not to mention downloading the public domain books that I could spend the rest of my life profitably reading and rereading.

Except for Art History books, Museum catalogs, graphic novels and military history that has a lot of maps, I don’t expect to be buying anymore paper books in the foreseeable future and once there is good color e ink those purchases will be made for Kindle as well. I love books, but it’s the content I’m interested in, using them as a decorating statement has long since gotten old. Yes some books are works of art in format as well as content and those books if one is lucky enough to own them are to be treasured but they are the exception not the rule.

I never thought I would come to this point but I’m done buying hard copies of books just done with it and the authors who will be profiting from my spending are the ones whose publishers do not leave me with the feeling that they are the pirates and I’m the one being ripped off. For the works I want from those publishers I’ll just use the very fine library to which I’m lucky enough to have access and feel bad for the author who will be losing a sale.

Anne Marie Gilbert

“We will not only undersell Amazon, but we make this guarantee: if you find a book cheaper on Amazon, we’ll refund the difference plus 10 percent.”

That’s the offer that Borders Australia made to its customers as reported by Neerav Bhatt in ITnews.com.au. The feisty antipodal book chain “announced plans to launch online bookstores powered by e-books download service Kobo and sell its own e-book reader devices,” writes Bhatt.  Kobo expects to launch on May 19th with over 1 million e-books, newspapers and magazines.

Casually mentioned in the story is the projected list price of Kobo’s reading device: AUS $200. That’s $180 in Yankee dollars, about US $80.00 less than the Kindle.

Has anyone noticed that e-book prices are coming down, and royalties going up?

While you ponder, read Borders Australia Lays Down Challenge to Amazon.com

Richard Curtis

Early in March John Sargent, CEO of Macmillan, issued a policy statement setting the course of his company and its component imprints such as St. Martins Press, Picador, Farrar Straus & Giroux, and Tor Books. He promised more such statements from time to time, and last week posted on the Macmillan website the second of them in which he boiled down to four the questions raised by people commenting on his initial blog.

As we approach Passover we wondered if these were the same four questions traditionally asked by children concerning the meaning of the holiday, which celebrates God’s rescue of the Israelites from Egypt. We thus posted this picture of Charlton Heston as Moses before we realized that the four questions raised by Macmillan’s correspondents were different from those posed at the Seder table. We decided to leave the picture up, however, as we are hopeful that “with a mighty arm and outstretched hand” Sargent will lead his company to the promised land and perhaps drag some Big Six publishing colleagues with him.

The questions are:

1) What is the difference between a “hardcover” and “paperback” e book?

2) Will retailers have flexibility to price books at a discount?

3) How can we trust Macmillan to carry out its pricing pledge?

4) Will we be re-pricing e books that have a $14.00 digital list price while there is a mass market paperback edition available?

For the answers, click here. All together now: “On all other nights…”

Sargent promises more commentary soon, “including author royalties…”

We welcome his outreach, look forward keenly to more of his enlightening clarifications, and thank him for his initiative and leadership.

Richard Curtis

Answers to some questions from the comments

Hi out there. I have been reading through the traffic from my last post on e-book pricing and the agency model. Rather than answer you all individually, I’ll take a shot at answering four questions that encompass the general nature of the responses.

1) What is the difference between a “hardcover” and “paperback” e book? In truth…nothing. It is simply a matter of timing.

In traditional publishing we had three formats, each at a different price. They were targeted at specific channels of distribution and were released at different times. There was some discounting by retailers, but historically not much. Then discounting became more aggressive and the channels of distribution for the formats began to blur. Currently some books never appear in paperback, some books only appear in paperback, and some books are in the market simultaneously in hardcover and both paperback formats (at three different price points). The digital edition (in almost all cases at present) doesn’t change in format over time – there is no difference in what is actually being sold. So, how should the digital edition be priced?

Some argue it should be almost free as there is little physical cost of delivery. But the physical cost of the book has never been the greatest component of cost. The authors who create the work need their rightful compensation, and they need editors. The marketing and publicity are no cheaper. And given that the ink on paper aspects of the business are still here, publishers still need warehouses, infrastructure, and all the other legacy costs of the business. Digital sales as a whole are not incremental (though some of them may be).

Some argue it should be the same price as the hardcover. After all the real value is in the ideas and the words, not in the artifact that sits on the shelf. But certainly that artifact is of some value, and the digital edition is more ephemeral than a printed book.

Some argue the digital edition should be tethered to the physical book and should be priced under whatever the cheapest available format that is currently available for sale.This has a solid feeling logic behind it, but I’m not sure it makes sense in the long run given there is no differential in format (if there are three formats availble, why wouldn’t the right price be a bit cheaper than the wieghted average of the available formats)?

In the end, an e book will be priced to reflect the value consumers put on it. We believe at first release an e book is worth more and people will pay more for it. Over time it will become worth less as demand tapers. However, some digital books will retain their value over time just like print books. Some will increase their value over time (many physical books are now only available as trade paperbacks, after they have been out in the cheaper mass market formats). So our digital pricing will vary to reflect the value of the book at the time. But in general, our plan is to price books below ten dollars after there initial sales demand slows (usually within a year).

A very long way of saying, there is no hardcover or paperback e book, but the digital edition will change in price over time to reflect its value to the reader as best we can determine it.

2) Will retailers have flexibility to price books at a discount? No, the sale price will be fixed by Macmillan. Retailers will promote and market books, but we will control the price for the book.

3) How can we trust Macmillan to carry out its pricing pledge? An interesting question in that we have never made a pricing pledge. Historically, e book pricing has been driven by a number of factors, and it may well have appeared to be inconsistent. We never promised to price books in a certain way and have actually never controlled retail prices before now. And many of our decisions on list prices were driven more by our Amazon relationship than by our relationship with consumers. Looking forward, it will be a very fast moving world. I have told you our intent on e book pricing. I cannot guarantee or pledge what price we will be charging in the future. Personally I doubt that typical prices for general interest digital books will break out over $15.00. I also believe the majority of digital books will be priced below $10.00, as most Macmillan books are now and will be on day one of the agency model.

4) Will we be re-pricing e books that have a $14.00 digital list price while there is a mass market paperback edition available? Yes! To a customer price of $9.99 or below.

John Sargent

More next week, including author royalties…

Thanks for listening and writing in your concerns.