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Showing posts with label publishing. Show all posts
Showing posts with label publishing. Show all posts

Thursday, July 26, 2012

Thoughtful Thursday - Is Big Brother Really Watching?


I read an article in the Wall Street Journal entitled "Your eBook is Reading You."  Okay, that seems ominous.  My Kindle has been getting a lot of use lately, and if anyone is tracking my reading habits, I'm afraid they're going to think I'm a psychopathic eroticist.  Books on poison, murder, police procedures and some less than family-friendly fiction top the list.

According to the article, "In the past, publishers and authors had no way of knowing what happens when a reader sits down with a book. Does the reader quit after three pages, or finish it in a single sitting? Do most readers skip over the introduction, or read it closely, underlining passages and scrawling notes in the margins? Now, e-books are providing a glimpse into the story behind the sales figures, revealing not only how many people buy particular books, but how intensely they read them."

Now, as an author, this information would be very helpful and interesting.  As a reader, not so much.  I'm not a paranoid person, but the notion that someone knows not only what I'm reading, but how intensely or quickly I'm reading the books I purchase, gives me goose bumps.  The article goes on to say, "The major new players in e-book publishing—Amazon, Apple and Google—can easily track how far readers are getting in books, how long they spend reading them and which search terms they use to find books."

Photo credit – William Duke

Usually, I search for books by title on Amazon.  Occasionally, I'll use Google to find a book I want.  I'm fully aware that Amazon keeps track of my digital purchases.  They have to, so I can download a book again if I've removed it from my device.  They also keep track of any paperbacks or hardbacks I purchase in my order history.  But do they have to "watch" me read?  I mean, I don't like someone reading over my shoulder, so why are they peeking into my Kindle?

Don't get me wrong.  I love eBooks.  I'd better love them, because I write them, too.  So, I have no intention of changing my reading habits, but that doesn't mean I'm totally comfortable with an unknown entity taking note of how many times I open my Kindle and how long I spend reading from it.  However, I did feel a little less paranoid when I read this, "But the data—which focuses on groups of readers, not individuals—has already yielded some useful insights into how people read particular genres. Some of the findings confirm what retailers already know by glancing at the best-seller lists. For example, Nook users who buy the first book in a popular series like "Fifty Shades of Grey" or "Divergent," a young-adult series by Veronica Roth, tend to tear through all the books in the series, almost as if they were reading a single novel."

They got me there.  Since I was one of those million or more readers who purchased all three Fifty Shades of Grey books at the same time, I'm in those statistics somewhere.  Another thing I found of interest was, "Science-fiction, romance and crime-fiction fans often read more books more quickly than readers of literary fiction do, and finish most of the books they start. Readers of literary fiction quit books more often and tend skip around between books."


I'm not a speed-reader by any means, but when I'm on a reading kick, it's not unusual for me to read one or two books a day.

EFF (Electronic Frontier Foundation), a non-profit group that advocates for consumer rights and privacy, is pressing for legislation that will limit how a retailer can use the information they gather.  They also want a way for readers to "opt out" of having their reading habits tracked.

What worries me most, no doubt worries other authors as well.  "… that readers may steer clear of digital books on sensitive subjects such as health, sexuality and security—out of fear that their reading is being tracked. "There are a gazillion things that we read that we want to read in private," Mr. Bruce Schneier, a cyber-security expert and author, says."  And even though I don't intend to change how I purchase or read, others may be more sensitive about having their habits tracked than I am.

So, why am I posting this information on my blog?  I find technology fascinating, and I know we're barely scratching the surface of what we'll be able to do in the future.  I don't want anyone to stop purchasing books out of fear, but I felt the topic was worth sharing, so I decided to take the risk.

To read the WSJ article in full, please click the URL below. 

Thursday, April 12, 2012

Thoughtful Thursday - EBook Prices, Will They Change?


Nathan Bransford, author of the Jacob Wonderbar series, wrote an interesting article on his blog back in 2011 regarding why some eBook prices are higher than their hardback cover cousins.  Turns out the fluctuations have to do with pricing models (Wholesale vs. Agency).  I had no idea as to the cause, I just knew that some eBooks appeared terribly over-priced, so I didn't purchase them.


Originally, (Once Upon a Time), there was only one model, the Wholesale model.  For both hardbacks and eBooks sold under the wholesale model, the retailer set the price (which meant Amazon and B&N could have sold the same eBook for different prices) and the publisher would have received 50% of the Hardcover price, regardless of the retailer's selling price.  Say a book sold in hardcover for $24.99.  Publisher was paid 50% ($12.50) for any hardback or eBook sold by the retailer.  The retailer then got to set their own selling price, which could be more or less than $12.50 they paid for the book.
 So, back in the good ole days, Amazon set an eBook price ceiling of $9.99 for its customers.  That meant for any hardcover costing more than $20.00, Amazon took a loss in the sale of their eBook for the Kindle, but the customer got a great deal and the publisher's payment remained the same.

As you probably already know, Amazon sold many, many eBooks that way.  Consumers were happy, but publishers weren't, since consumers were flocking to buy all their eBooks from Amazon.  Then Apple's iPad came on the market, and everything changed.  Why?  Because Steve Jobs came up with a brand new pricing model—the Agency Model.  Under the agency model, the publisher sets the price for the eBook, not the retailer.  In return, the retailer receives 30% of the publisher's eBook selling price, but they have to sell the eBook at the publisher's listed price--no discounts.

One publisher alone couldn't force Amazon to follow this new model, so all the large, NY publishers agreed to follow Steve Jobs' new Agency model, leaving Amazon to either join in, or not sell any eBook published by a major New York publisher.  Since refusing to play would mean consumers would have to go elsewhere to purchase their eBooks, Amazon reluctantly fell in line with the other retailers.

Below Nathan provides an example of the two models laid out in what he calls "napkin math."  I love it.

Napkin math for a $24.99 hardcover/$14.99 eBook.  The e-book would have sold for $9.99 at Amazon in the old days (under the wholesale model), but under the new agency model the publisher wants to charge $14.99 (with no discounts allowed):



Wholesale model e-book: (retailer sets price - no longer available)
Amazon paid publisher: $12.50 (publisher got roughly 50% of $24.99 hardcover RRP from retailer)

Amazon customer paid: $9.99
Amazon loses:
- $2.50 (paid publisher $12.50 for an eBook they sold for $9.99)



Agency model e-book: (Steve Job's brainchild put in place when Apple introduced the iPad)

This is where the publisher sets the price for the eBook, irrespective of its hardcover price and no discounts allowed.*
Customer pays: $14.99
E-Bookseller pays publisher: $10.49 (70% of $14.99)
E-bookseller (including Amazon) keeps: $4.50 (30% of $14.99)

In order to have more control over pricing and allow more e-booksellers to compete with Amazon, publishers were willing to take less money for eBook sales. ($12.50 under wholesale, $10.49 under agency)

*Steve Jobs reportedly said to the publishers, "the customer pays a little more, but that's what you want anyway."

Publishing executives were desperate to get Amazon to raise its $9.99 price point for eBooks, and with the release of the iPad they were able to achieve their goal.

 So now, hardcover books sell under the Wholesale model, and eBooks sell under the Agency model.  And the reason eBooks can be more expensive than the hardcover on Amazon is because Amazon is treating the hardcover as a loss leader (meaning they lose money on the sale of the hardcover book, but potentially keep their customers happy even though they can no longer discount the eBook).


 Below is the example Nathan gave for:

THE GIRL WHO KICKED THE HORNET'S NEST:

Publisher's selling price:
E-Book: $11.99
Hardcover: $27.95

Amazon's selling price:
E-book: $11.99
Hardcover: $11.89

Breakdown between publisher and Amazon:

E-book sells for: $11.99 (price set by publisher)
Publisher receives: $8.39 (70% of e-book price from retailer)
Amazon receives: $3.60 (30% of e-book price from sale to customer)

Hardcover sells for: $11.89
Publisher receives: $13.98 (50% of $27.95 list price)
Amazon receives:
- $2.09 (customer price minus $13.98 paid to publisher—a loss)

Since retailers can still set their own prices for hardbacks, the publisher has no control over what Amazon charges their customers.  As it is, publishers make more money on the hardcover sale.  By setting the list price for the hardcover at $27.95, and the e-book at $11.99, they don't have much incentive to discount the e-book any further than it already is.

Interesting, right?


Well now, boys and girls, the US Government has gotten involved and they are suing Apple and the publishers, who haven't already settled, for "raising eBook prices via the agency model."

"The government alleges Apple and the publishers of having a conspiracy (collusion) to raise the price of electronic books that cost the consumer over $100 million over the past two years by adding $2 to $5.00 to the price of each eBook."

Wow.  So, what does this mean for the consumer (us)?  15 (possibly 16) states have filed a separate complaint with the publishers, and of those states Connecticut and Texas reached agreements with Hachette and Harper Collins to provide $52 million to consumers in restitution.  According to Pete Yost in the Associated Press, "this dollar amount was set using a formula based on the number of states and the number of eBooks sold in each state, so other states may sign into the agreement.  The federal government has reached an agreement with three of the publishers (Hachette, HarperCollins and Simon & Shuster), but will proceed with its lawsuit in federal court against Apple, Holtzbrinck Publishers (doing business as Macmillan) and The Penguin Publishing Co. Ltd. (doing business as Penguin Group)"

 Macmillian's Chief Executive Officer, John Sargent, said in a letter to authors, illustrators and agents that the company has not settled because it is "hard to settle a lawsuit when you know you have done no wrong.  Macmillan did not act illegally, Macmillian did not collude."

According to the Wall Street Journal, "Despite settling, HarperCollins and Hachette both denied violating antitrust laws and defended the agency model. HarperCollins said it made a "business decision" to avoid a legal battle. Simon & Schuster confirmed settling but declined to comment."

Since this potentially affects millions of readers' purses, it should be an interesting case to follow.  Not sure if the case will affect authors, illustrators or their agents, but I don't believe it will.

Below are additional links regarding the situation, including Nathan Bransford's original article posted back in March of 2011.