ADDENDUM: APRIL 11, 2011
Now that Random House has joined the rest of the Big Six commercial publishers in using the agency model for pricing e-books, some of my comments about e-book pricing are completely out of date. Now publishers, not Amazon, set the retail price of e-books. The typical retail price of e-books has gone up, but not by as much as I firmly believe it eventually will, once e-books represent the majority of the market for a typical title.
But many of my comments remain valid: Amazon used the loss-leader price of $9.99 to create monopoly-style market share (for a while), not because it was some kind of natural price. Reviews about prices are irrelevant and harmful. And the value of a book is not in its paper, but in its content, so complaints about e-books being "outrageously overpriced" at $12.99—though downloadable software, for example, sometimes retails at $40 or $150 a title—is just nonsense. Same content for basically half the price of a hardcover? If that's your idea of a rip-off, maybe you should read more.
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No one is touchier or more insecure than a newly published author. I reminded myself of that when I first checked for customer reviews on Amazon.com. Some people will hate your book, so just accept it, I told myself. Some people will hate the length, or your style, and there's nothing you can do about that.
What I didn't expect was a succession of 1-star "reviews" by people who refuse to read the book itself. They give the book 1 star simply because the Kindle version is, in their view, too expensive. It's "outrageous," they complain, to have to pay more than $9.99 for an e-book. "Greedy publishers" are blamed.
I think it's outrageous that a customer should be allowed to rate a product that he or she actually refuses to know anything about. This actually violates Amazon's own policy on customer reviews, which prohibits reviews of the price.
Since Amazon has chosen to allow its policy to be violated in the case of my book, I feel a need to address the substance of these complaints. The factual case against $9.99 e-book pricing needs to be made. Here's my counterblast:
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Frankly, I think that it is wrong to post a review that aims to damage sales of a book that the reviewer actually refuses to know anything about. It hurts other consumers: they can see the price; what they don't know is if it's any good or not. And it hurts me for circumstances totally out of my control.
However, Amazon informs me that these "reviews" fit their guidelines, so I am speaking up. Please consider the following points before you make my book the target of a campaign over Kindle pricing.
First, I welcome all reviews of the book itself. Did you read it and hate it? OK, type away.
But you are misplacing your wrath if you are making me the target of a campaign over Kindle pricing. I am not getting rich off of writing. The opposite, in fact. Nor do I have any influence over pricing. I am not an AIG executive, polishing his gold watch on a pile of taxpayer money. And the "greedy publishers" denounced in the 1-star reviews lose money on at least 70% of the books they publish. They're in trouble.
Perhaps most important, the complaints of Kindle books being too expensive are factually wrong. Trust me, I would love to price my book at $9.99. But then, why not $1.99? Why not free? Because the price must allow everyone involved, from me to my publisher to Amazon, to stay in business.
Can a book like mine be published profitably at $9.99? No way. This is because of two problems: First, most of the costs of producing a book is NOT in printing and distribution. Second, the fixed costs (unrelated to physical production and distribution) must be recovered by being spread out among the units sold. So if you are going to slash the price, the number of units sold must go up. If you slash the list price from $37.50 for a hardover to $9.99 for an e-book, you are going to have to sell vastly larger numbers in e-book form. That's more than unlikely--it's well-nigh impossible.
Let's break it down. Most of the cost of producing a book are located in the author's royalties, editing, copy-editing, design, photo rights and reproduction, marketing, and publisher overhead. They remain the same, e-book or printed book. In our era of highly efficient, globalized production and just-in-time inventory, printing and distribution constitute a small part of the cost of producing a book. In my book, I devoted almost seven years to research and writing (and nearly went bankrupt doing it). It underwent extensive, top-of-the-field editing. Plus copy-editing and proofreading. Great expense went into acquiring and reproducing the 79 illustrations, not to mention the half-dozen original maps. It is comprehensively indexed, and (I think) beautifully designed. In other words, it's not the page count that makes this book much more expensive than a 250-page paperback thriller. (No offense to thriller writers and readers.)
So, not all books are alike. In fact, they vary dramatically, in terms of cost and effort, apart from printing. Why should they all be priced the same? Even before moving on, the idea that all e-books should be $9.99 clearly doesn't make sense. But it makes less sense the farther you go down the rabbit hole of publishing.
So: the next key factor in determining the price of a book is an estimate of the numbers that will sell. The publisher sets the price to distribute the fixed costs across the estimated number of units, so that both publisher and retailer can make a profit. That calculation, not printing and distribution costs, explain why two hardcovers with similar page counts can be priced very differently, one at $20 and one at $40. It's not the price of paper that explains it. It's distribution of fixed costs across the estimated number of units to be sold.
But, you will say, copying and distributing a digital file is almost free. True, but the publisher must still recoup the investment. Therefore, if we are to slash the list price from $37.50 to $9.99, those fixed costs would have to be distributed among hundreds of thousands more units. For an e-book to be that cheap, it would have to sell vastly larger numbers than it would in hardcover. With a big biography like this, there's no one in the publishing industry who believes that the market will multiply many times if only it's in e-book form. We're not talking Harry Potter here. We're talking about a big, serious biography of Cornelius Vanderbilt. (I think it's fun to read, but I don't kid myself that I'll ever be in Da Vinci Code sales territory.)
Studies and market research show that book reading in this country is in decline, or at least flat. Can anyone with a straight face say that a book that will sell, say, 50,000 copies in hardcover will suddenly sell 500,000 in the Kindle edition, if only it is priced at $9.99? (I have no idea what my sales are or will be, by the way, so I'm plucking a figure out of the air.)
Can anyone seriously say that there are 450,000 people out there who will rush out and buy a Kindle reader (which isn't cheap) so they can read my 600-page book (not counting endnotes, photos, maps, and index), if only the Kindle price is cut to $9.99? The idea is ludicrous. And, frankly, I don't believe that 500,000 e-book sales would still allow for a profit at $9.99.
So why is your mammoth online retailer pricing so many Kindle books at $9.99? It is taking a loss to create a market for the Kindle. It is creating the misleading impression that e-books are ever so cheap to write, edit, design, proofread, etc., etc., etc. Take it from a biographer of a robber baron: This is a classic strategy. It will lead eventually either to a drop in the production of books (couldn't produce mine and sell it at $9.99), or eventually prices will jump up again, when the market is sufficiently dominated by one retailer.
Please, read my book and, if you wish, give it a scathing review. And, if you don't buy my argument, write to publishers (they have websites now) and complain. Complain to Amazon. But if you don't like the price, just don't buy it. That, not driving down the customer rating, is a real boycott. Trust your fellow consumers to decide if they can afford it.
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Addendum:
Amazon has since reduced the Kindle price of my book to $9.99. Yet it is leaving up 1-star "reviews" of my book that complain that the Kindle price is above $9.99! But now there are plenty of 4- and 5-star reviews to balance them out. In fact, some of the 5-star reviews complain about the irrelevant 1-star reviews, and a couple of the initial 1-star reviewers changed theirs to 5 stars after reading the book. I guess it goes to prove a point I make above: trust the consumer. And it goes to prove a point I make in a later post: don't get worked up over bad reviews. I should take my own advice.