Macmillan CEO John Sargent on the agency model, availability and price
After the events of the past several weeks, I have been in touch with many of you. It has become clear to me that there is far too little accurate information available in this time of unprecedented change. The issues we all face together are complex, and no news story or 140-character snippet can adequately address them. Therefore, I propose to write you occasionally, when I get a sense that there is a need for direct information.
The first topic is the e-book agency model, and how it will affect our business in the near term. Starting at the end of March, we will move from the “retail model” of selling e-books (publishers sell to retailers, who then sell to readers at a price that the retailer determines) to the “agency model” (publishers set the price, and retailers take a commission on the sale to readers). We will make this change with all our e-book retailers simultaneously.
Rather than address the long-term or author royalty consequences of the change (I’ll save that for next time), I’ll focus on the two major effects at retail. Note that these changes will apply to every e-book retailer with whom we do business:
1. Availability. All the new adult trade books for which we have the rights to publish in e-book format will be available at the first release of the printed book. We will no longer delay the publication of e-books (read: no windowing). Readers were clearly frustrated at the lack of availability of new titles, and the change to the agency model will solve this problem. We are also working hard to make more books available in digital editions. The consumer will have broader choice and much greater availability.
2. Price. We will price our e-books at a wide variety of prices. In the ink-on-paper world we publish new books in different formats (hardcover, trade paperback, and mass market paperback) at prices that generally range from $35.00 to $5.99. In the digital world we will price each book individually as we do today. Generally e-book editions of hardcover new releases will be priced between $14.99 and $12.99; a few books will be priced higher and lower. This is a tremendous discount from the price of the printed hardcover books, which generally range from $28.00 to $24.00. E-book editions of New York Times hardcover bestsellers will be priced at $12.99 or lower while they are on the printed list. E-book editions of paperback new releases will be generally priced between $9.99 and $6.99.
For physical books, the majority of new release hardcovers are published in cheaper paperback versions over time. We will mirror this price reduction in the digital world. It is too early to estimate the timing of the price reductions for those cases in which we do not issue a paperback edition. If we do issue a paperback, we will drop the digital price to $9.99 or lower at publication date (if not before). The price differential between the book and the e-book will become smaller at the lower price points.
There has been a lot of concern from e-book readers that $9.99 books will no longer be available. Most Macmillan e-books will still be priced below ten dollars. Our e-book sales over the last year clearly indicate that only about a third of our e-book business is in the digital versions of new release hardcovers. Unit sales of older books far exceed our new release hardcover sales, so the $9.99 and lower prices will continue to represent the largest portion of our business.
In short, we will continue to do what we have always done: provide the reader with a vast selection of great books over a wide range of prices.
I have not addressed illustrated books or books for young children. That will be a topic for the future as the technology advances beyond e-ink screens. I hope this has been in some way helpful. Please remember that I can’t tell you how other publishers will handle availability and pricing. I can only speak for Macmillan.
Meanwhile, there are millions of you and one of me. So, please feel free to post questions or comments below.
Thanks!
John
I’ll be in touch…
133 Comments to “Macmillan CEO John Sargent on the agency model, availability and price”
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One of the concerns I’ve seen expressed by Macmillan is the idea that ebook sales will cannibalize hardcover sales. Is that backed up with demographic data, or is it a concern of individual divisions in Macmillan worried that their market vector will be marginalized by a higher profit margin ebook vector?
Surely the overhead costs involved with printing physical books, warehousing them, distributing them, and accepting and refunding physical return copies (and disposal) which are now factored into physical book sales will not be a concern for ebooks. This should translate into a much higher profit margin for ebooks, even at lower cost, and as the demand for ebooks grows, the physical book production business segment should be replaced by the electronic segment as your ‘cash cow’ profit center as the paradigms shift.
How then, with a higher profit potential, is cannibalization of hardcover sales a bad thing, even if it is occurring? Surely the directors of those business divisions should be personally concerned for their own empires, but the company as a whole should be set to profit greatly from supporting an electronic paradigm.
Currently Macmillan is pricing digital equivalent of mass market paperbacks at 14.99, nearly twice the cost of the paper version. In your above statement you reference paperback editions and pricing between 9.99 and 6.99. Does paperback refer to trade books or mass market books?
Will you continue to price digital versions at a higher level than their equivalent print versions under your new dynamic pricing/agency model scheme? Or will the digital versions be lower than or equal to the lowest priced print version?
Hi Jane. The high mass market pricing is a legacy of the old model. Under the agency model trade paperbacks will be $9.99 and lower. Mass markets will probably be at the price of the physical book or lower. We may do some experimenting on price here since digtal will be paperback format agnostic. Some books exsist in both formats…
So how much more expensive is hardcover e-ink over paperback e-ink?
Your model is doomed.
Funny indeed. I would get a hard cover copy if it lasted better
This seems pretty well-considered. There’s only one point I’m confused about—can you please explain to me the difference between a “hardcover” and “paperback” e-book?
Because that don’t make a lick of sense. Unless of course your definition of sense is “artificial price stratification of identical content.”
The difference between eBook pricing while a book is hardcover only in a bookstore and the subsequent lowering of an eBook price when the paperback releases reflects the obvious premium placed on reading a book when it’s new. People pay premiums all the time. I paid $599 for an iPhone because it was new. I once paid MSRP for a car, because they manufactured very few that first year (Suburu WRX), and even still I had to wait a few months to get that price since early adopters paid $2000 to $5000 premiums to get one. What John’s announcement means, is that people who are willing to pay a premium price ($12 to $15) no longer have to wait to read it digitally. The rest, can wait (as you would now) until the paperback comes out, and then see the price drop. That’s different than today, when the price never drops. The difference between printing a paperback and a hardcover isn’t $5 to $20 – you were always paying an early access premium.
Will retailers have flexibility to offer ebooks at a discount, or is the actual sale price fixed by Macmillan?
I hope that backlist titles will be sold for significantly less than “new paperback” ebook prices.
I also hope that backlist titles will be brought into the ebook age, rather than ignored. I understand the issues with old contracts, expired or non-existent rights, etc. but I still hope to someday be able to pick up my net-connected reader and buy a science fiction or mystery title that was published in the mid-50’s that catches my eye.
@MarkOwens, the profit differential for e-books vs. hard covers is something you should research before you post. What has been explained on multiple blogs and public forums is the verifiable fact that a book is not the sum of the text. It represents a much larger investment in: editing, promotion, tracking – a whole host of services that, just because you don’t happen to see them, doesn’t mean they don’t exist.
Your comment is somewhat tiresome, akin to a child in a grocery store, pulling at his mother’s coat and pointing to the stacked oranges, asking, “Mommy! Mommy! There are oranges in the store! But we just saw some on trees! Why do they cost money?”
Assuming you like to read books that exceed the generally dreadful level of self-publishing, your statements about profit and your “belief” that publishers should somehow “satisfy” your entitled notions of cheap (or, really free, something Jaron Lanier, the progenitor has recently, & loudly disavowed), you might want to reconsider your notional beliefs in culture as a 99 cent store.
Oh No! Someone asked a question that did not meet with your approval! Quick, post ad hominem attacks in our discourse to make ourselves feel special and smart on the internet!
Honestly, if you find fault with my comment, then by all means direct me to additional material that will be informative. There’s no need to be so acerbic and rude.
@MarkOwen, although it’s not my responsibility to provide you with a syllabus, you did put forth, in a public forum, speculative comments. In fact, your comments are the first and therefore the most prominent on the blog. It would seem, given your eagerness to hold forth, you might have done even nominal research on a topic about which you seem intent on illustrating your ignorance. It was painful to read your second graph which opens with the ass(ertion), “Surely the overhead costs … ” One would think that a person speaking from such, ah, “sureness” would have a very firm grasp on the topic they’re addressing. Throwing around words such as “vector” and “paradigm” to support your whimsical notions of the publishing business erase whatever credibility you’re hoping to achieve in three, fulsome paragraphs.
You may have heard of this paper – the NYTimes – anyway, there’s a reporter there, Motoko Rich and she recently explained, in painstakingly simple detail, the reality based economics of e-books & the future of a sustainable publishing business. Look it up: Math of Publishing Meets the E-Book. It’s free.
So I’ve read all the comments and the New York Times and I am not sure I follow you. I certainly hope that you are not employed by Macmillan as your tone and approach reflects poorly on them.
The question of printing and paper is very salient as the capital requirement for paper publishing and distribution is one key area that constrains “real” authors from self-publishing. Now you can write about novelists etc, but publishers work across many genres and many authors of technical books could easily self-publish and based upon rating systems, also in effect, self market. If I was a renowned cookery writer or Windows 7 guide writer there would be little to stop me and a friend who is an editor from self-publishing and distributing an e-book. There are many genres where authors could with ebooks self distribute. At the moment publishers control bookshop access and distribution, but anybody can access Amazon to publish.
So let me give an example. There is only one guide book to Kerala in India by Rough Guides. I have written a second based upon my website and large personal knowledge. It is in my opinion more informative and up to date than the Rough Guide one. Previously I would have had to approach a publisher and attempt to get them to distribute and market this, in return for a small royalty. Now I can do this and double my royalty. Furthermore I can update my guide as many times as I want so unlike the paper Rough Guide mine is absolutely up to date. If my guide book is good then the Amazon rating system will effectively market for me. Tell me this does not change everything if all experts start doing this? What is to stop academics for controlling their jorunals and no longer using academic publishers.
Ebooks now outnumber apps on the iphone app store. It is not Amazon that publishers need to fear, it is authors self publishing non-fiction.
@Sholto, for the record, I am not a MacMillan employee. Please reread my post and then yours: we are talking about totally different concepts of publishing.
You reference a self-published “guide book” about Kerala. While I have no doubt this book is important to you, the writer & self-publisher, within the context of the blog’s post (mainstream publishing), your work is irrelevant.
Your use of phrases – not uncommonly heard from unpublished and/or self published writers – such as, “publishing needs to fear” and “double my royalty,” betrays anxiety and eagerness to be published .. by a mainstream publishing house. To wit, the language of your category of writers is driven by an unspoken fantasy that an Amazon, links, rewriting your book, publishing ten thousand books, etc. will all somehow come together and make you very, very rich. Notionally – and, practically – this is completely different from what’s been put forth by MacMillan, in this post.
If you reread the original post, it addresses issues of publishing in an economy of scale.
Which has nothing to do with the POD / self-publishing crowd, many of whom seem to nurse fantasies of gianormous success (and a thinly veiled hatred of mainstream publishing which has, usually, rejected their mediocre manuscript but to whom they’d immediately capitulate were an offer put forth.) The reality is that conglomerates, for better or worse, as still the only viable way towards that sort of large-scale success and visibility.
I am not for or against your book on Kersala. But it’s clear, from your reply, you have no perspective. What is important to you is not axiomatically, because you believe it to be true, true or even relevant to others.
The great myth of “the internet” is that everyone can be a star. Will become rich and famous (off books, no less.) And is an expert.
hello. you seem to forget that as much as 30% of physical books are returned to printer. Thats also factored into the price. People are not stupid, they understand the costs of publishers, editors and marketing. if they didnt, they would suggest all ebooks should be 1.99. Again, to justify an ebook price that is the same as physical paperback books, is not a defensible position. It defies logic and informed opinion.
I think your logic is flawed. It assumes margins should be the same for a given book no matter the format. What assumption is next, that all margins should be the same on all books irrespective of content?
Ultimately an ebook is *worth* whatever people are willing to pay for it. Why should it be standardised? Let publishers play with adjustments in pricing based on popularity and sale rate on a bob by book basis, to maximise the profit on any given book. They and the book author are entitled to this right. You are not entitled to the book at the lowest possible price. It will get to that price when demand warrants it. The two media in question have varying pros and cons. If ebooks are priced too highly people will purchase the printed edition or they will wait. Or they will just avoid buying the work.
I may choose to pay the same for an ebook vs it’s print edition, depending on how much I value it’s content, and it what capacity I wish to read it. I have purchased many ebooks. I like the ability to search text, to make notes as I’m reading, to tap words for definitions, to have backups of my purchases and read them in different locations. I also like quality printed texts, or pulp texts for reading on long flights. They wont run out of batteries and I wont be asked to switch them off.
Ultimately, e-book prices will settle at what the market will bear, not where publishers wish or “need” them to be. While what the market will bear is fundamentally a decision made by consumers, publishers who market their titles better to create higher perceived value will win this game.
I agree completely that prices will end up where the consumers take them.
The publishers have a big problem. Their current infrastructure forces them to attempt to sustain the old model.
This is a good first step by MacMillan but John Sargent must have nightmares every time he walks through a supermarket checkout line and sees older DVDs being sold for $1.99 or less.
Long term my prediction is that books of all stripes will sell for much less: fiction for 99 cents down from $1.99 at publication and reference and technical books for way less than $10.
Free books are not yet mentioned but will be huge!
[...] is the complete text of Sargent’s post on the Macmillan [...]
@MarkOwens — check out “Math of Publishing Meets the E-Book” by MOTOKO RICH (NY Times 2/28/10) for an overview of e-book costs.
OK, now that was helpful. Thank you.
[...] Read on… This entry was written by James Long and posted on at 5:10 pm and filed under Publishing. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Post a comment or leave a trackback: Trackback URL. [...]
@octothorpe: You can chant “Your model is doomed” until the heat-death of the universe. It just makes you look stupid. The model is evolving. Deal with it: it’s the price of being an early adopter of technology. If you don’t like it, go hang out at the library: the books are free there.
This model is clearly the best way to go… for now.
The price differential, in theory, is based on availability: at release, the only print version available may be hardcover. As the less expensive versions become available.
Again, this model makes sense. Whether or not you like it is another question.
Personally, I wish that publishers would start charging the true cost of print production. Either that, or have the government start carbon taxing them for all of the dead trees they pulp, ship, remainder, ship, pulp, repeat, etc.
That would get the publishers off their butts.
>>>Our e-book sales over the last year clearly indicate that only about a third of our e-book business is in the digital versions of new release hardcovers.
And that is because people don’t *want* the newest stuff? Or, ahem, could it be due to inflated pricing?
Andrew: Funny thing—Baen has been selling most of its e-books at $6 each or less (including those of hardcovers) for over ten years now, and according to Eric Flint they’re doing so profitably and paying authors a pretty decent royalty rate.
John Sargent: How can we trust Macmillan to carry through on its pricing pledge? You have had ten years in which to implement “variable pricing” but there are still literally hundreds of Macmillan titles on Fictionwise and eReader that are priced at hardcover or trade paperback levels well after the physical books have gone to paperback.
I hope your change to the agency model comes with immediate price revisions so all of these backlist titles get their long-overdue paperback pricing.
By adopting the agency model (yes it’s the correct strategy), the difference between a publisher and a retailer is dissolved. This makes sense as any publisher can easily become its own retailer just through setting up an e-commerce site. With regard to the pricing of e-books, the price that a book’s paperback version would bring in the market is the logical ceiling limit in the pricing of an e-book. The e-book price ought never to be more than that.
Then doesn’t this create greater motivation for Amazon to just bypass the traditional publisher, and get into publishing? Where they could offer known authors deals, therefore minimizing marketing costs, and still be able to underprice traditional publishers.
This only increases the reward for Amazon to become a full fledged publisher.
The reward for author’s signing exclusive deals with Amazon will be not having access to those of us using a nook, or a Sony Reader, or who’ve pre-ordered iPads and intend to use iBook not the Kindle app. If you think I’m going to reward Amazon by combatting the increase in eBook prices by taking away all outlets to purchase the book… save for one, think again!
Pay the same royalty on hardcover per ebook sold, plus cost of living or other such adjustment upward, and account fully and transparently, and you can have all the discretion over e-publishing you want. Otherwise, no.
[Comment edited for flamebait; no need for namecalling, guys—admin]
“we publish new books in different formats (hardcover, trade paperback, and mass market paperback) at prices that generally range from $35.00 to $5.99″….
“E-book editions of paperback new releases will be generally priced between $9.99 and $6.99″
So if a mmpb is priced at 5.99, why would I ever pay between 9.99 and 6.99 for the same e-book with no first sale rights, no lending rights, poor formatting and proofing, and DRM limited devicing?
You may choose to pay that asking price because you value certain ebook features greater than you value re-sale or lending rights. Such as the ability to search text, make backups, carry many volumes while travelling.
All of business is agency and partnership. Publishing is a partnership between the first publisher and the author, and fiduciary duties are owed the author. Book publishers bear 100% of all costs of publishing in exchange for their 50% (never greater, though oftentimes less) share of the publishing partnership. Authors bear 0% of publishing costs, because authors contribute the work. 100% of e-vendor off the tops are the publisher’s sole responsibility.
Agency is a specific construct of the law. The relationship between publisher and author is an arms length contract and the only fiduciary duty, if there even is one, would run with the execution of the contract as it pertains to the accounting of monies.
A fiduciary relationship is quite different than a contractual one. (duty owed from publisher to author and licensee to licensor normally is not a fiduciary duty but a duty of good faith and fair dealing).
[...] months from now I’m going to come back to this and see if he’s kept his word. From the Macmillan blog: 1. Availability. All the new adult trade books for which we have the rights to publish in e-book [...]
I would like some sort of promise from Macmillan to keep ebook prices lower than their paper counter-parts.
The paper book has more value, it exists outside of a device, can be passed to friends, or resold. It’s simply “worth” more. Ebook pricing should reflect the lower value of the medium (not just its lower costs). While you may be on target for your Hardcover pricing, I dare say I can to go Costco or Walmart and beat out your paperback pricing.
And if you really want to win over your audience, ditch the DRM. Readers who dislike it can easily remove it, and the impact it has on your customers is universally negative.
If all you care about is only ever getting the lowest price, then yes, you can buy your books from Wal-mart. I care immensely about the wider implications of my spending, of the value of each dollar spent as it relates to the communities I am a part of, of how my dollars contribute to the environments around me. I do not set foot in wal-mart, I do not buy books from amazon.
If Indiebound or someone else can find a way to make digital publishing viable and usable for indie bookstores, I will be ecstatic.
lol. sorry, but most people consider price a big deal.
Indiebookstores can if they are creative find ways to take advantage of the ebook revolution. I can think of a handful of things. Some are expensive, some are not.
One thing they could do is sell ereaders, offering discounts to their regular customers
Did you even read that comment? It seems you just latched onto the word “price” and ignored the rest of the context.
There is no (none, zero) reason for ebooks to be priced higher than physical books. There is no physical media with an ebook, eliminating the need to cut down trees, process them into paper, buy inks, have giant machines to print the books, have any employees to use and maintain the machines, license and purchase typefaces, design cover art and pay people to do so, buy trucks to ship the books and to pay people to drive them. Indeed, ebooks should be priced significantly lower than physical books in every instance because all of these costs disappear.
Eevry time a book publishes a book and prices the ebook at the same price (or higher! my god, what kind of twisted logic creates this?) than the physical book, they are ultimately shooting themselves in the foot because they are losing sales.
[...] Siracusa drew my attention to an article by Macmillan CEO John Sargent on the agency model, availability and price, in which he says that the company actually plans to keep their hardcover/paperback separation even [...]
Sorry but… what happens when there’s no hardcover edition? Which would be the maximum e-book price? Because some books McMillan has published TODAY, 3/2/2010 cost 7.99 as MMPB and 14.00 as e-book. I think that it doesn’t fit in your model.
[...] Macmillan Blog » Macmillan CEO John Sargent on the agency model, availability and price [...]
If the book comes out in hardcover, then I can understand that the publisher wants to sell an e-book version at a cost than $9.99. It should be a bit cheaper than the paper version to reflect: a) non existent reminders, b) non-existent physical printing cost, c) the fact that an e-book can not bo out of print and does not need to make space on shelf to the new book and d) the fact that it can not be sold second-hand or lent to a friend.
Once all the readers that could not wait for cheaper option are satisfied, unsold physical hardcovers start returning “home” and the mass market paperback comes out the e-book price should be lowered to be again a little bit less that the price of MMPB.
And yet again, when the cheapest paperback hits the shelves the price of the e-book should come down.
I skeptical. There are lots of e-books out there that sell for $20 despite the fact that a paperback edition was published many, many years ago. Perhaps you could start with lowering the prices for those e-books. That would show your commitment.
The publisher should not blame customers that they do not want to pay full hardcover price for an e-book. The public has perception that the hardcover is significantly more expensive to print and bind than the paperback and publishers have been fostering that perception ever since the first paperback was printed to justify the higher cost of the hardcover. We know that the hardcover is priced higher than paperback mainly because the publisher has to recoup the cost of editing, authors advance and other things, but Joe Public does not realize that.
There will be no reminded e-books.
Electronic distributors do not have to make space on shelves.
This is great opportunity. When you publish highly anticipated 12th part of a fantasy series as an e-book, you can sell a special bundle with the entire series. You can give away the first two parts, for example (those are most probably out of print with no plans for reprint).
Please, pretty please, do not complicate our lives with geographical restrictions. There are many people that live in Hungary, Poland, Sri Lanka, South Africa or [insert you favourite non-english-speaking-country here] that would like to read in English. I am one of those people.
Disclaimer: you might have noticed that English is not my mother language
[...]Macmillan have just launched a new blog and it is no surprise that the first three postings there by CEO John Sargent focus entirely on the publisher’s switch from the retail to agency model for e-books. By all accounts, looking at the comments already posted there, the debate will remain sharp and thought-provoking.[...]
If I have a choice betweeen a Macmillan published ebook at $14.99 and a Random House ebook at $9.99 take a guess at which one I will buy — and I buy a lot of books.
Not to mention that you actively harming your authors. They make no royalties on books that us customers now refuse to buy, and when a customer does buy an ebook through the “agency” model the author makes far less than they would have under the “retail” model. Plus you already pay your authors less for ebook royalties than the rest of the industry — I can understand why you didn’t want to talk about it. Why any author capable of switching to another publisher would stay with you is beyond me.
I am a bit concerned over the raise in the price too. The ebook readers represent a nice chunk of change and it is easier to justify if you can spread it over the amounts of books you buy. At the newer prices I have been seeing, it is easier to go to Costco and pick up the book for a dollar or 2 more, go to the library, or buy it from Goodwill stores for 2 bucks. I see myself buying more used books and saving my Kindle for trips I need to take. I will soon be buying used books again and the publishers will make nothing off of them. So instead of making a little off the 10 books a month I buy, they will now be making nothing. I have purchased close to 400 books on my Kindle. When I did not have it I was buying 1 or 2 books a month and the rest I bought used. Looks like the publishers will be making a lot less from me now that they have raised their prices.
absolutely correct! i feel exact same way. I dont have the financial means to pay full price.
What about extending your market publishers? bringing in new readers? maybe the reason there are not many new readers has a LOT to do with price? especially for younger readers.
“If I have a choice betweeen a Macmillan published ebook at $14.99 and a Random House ebook at $9.99 take a guess at which one I will buy — and I buy a lot of books.”
I’m going for the one I want to read the most. Besides, maybe that book would be $12.99, and only $3 more. That’s not really the point. McDonald’s sells cheeseburgers for 59 cents on Wednesday and Sundays where I live. There have been Wednesdays and Sundays in which I probably spent $25 eating a burger, mostly because I didn’t want McDonald’s. I’m not implying that Random House is inferior… I’m implying that I’ll buy the books I want, not the cheaper ones. This argument doesn’t hold true should one publishing house starting charging $10 to $20 more consistantly – but if the bulk of the publishers move the price of new, best selling releases to some $12 to $15, and one holds out at $10, I’ll continue to read whatever I want.
The model might make sense for some, and it is understandable. It leads to alot of control and less competition between the retailers – or so is the theory anyways.
The problem here lies with the fact that some of the MMPB of older titles (as some one have pointed out) are less than 9.99. This model gives u a range of around 9.99 and above.
Yes, if I want free books, I can go to the library. Might I just point out, if people really wanted to, they would just download “free” books off places where publishers would never be able to get their hands on.
However, why people are arguing here is because they do want their favourite authors duely paid for their hardwork. Some of us might not be able to afford it in the entirety that publishers wants us to. So what do we do? where do we go?
and if we head back into the paperback district because of the disparity in prices, then this ebook business will flounder. $4 difference for portability and etc surely adds up over time.
Thanks for the comments. I’ll get back to you as time allows. I’ll also try to gather groups of questions that indicate I have not been clear enough and answer them in my next post.
[...] Books With iPad Random House Says “Game On,” But Its Gamble May Spell Game Over Macmillan CEO John Sargent on the agency model, availability and price Dear Author: Digital Books from the Consumer’s POV The Culture of [...]
[...] Macmillan Blog » Macmillan CEO John Sargent on the agency model, availability and price [...]
[...] analog business model against the disruption that comes from digital, look no further than a blog post today from John Sargent, CEO of book publisher Macmillan. You might remember Macmillan as the company [...]
Those who think that publishers owe no fiduciary duties to authors do not know the law of publishing. Those who think the law of agency or partnership is a mere “construct” do not know law at all.
There is no “model” here, nor rules, except rules of law. There is only individual contract negotiation in a suddenly expanded universe of publishing choices that is very soon to grow even wider. Book publishers will survive only if they bring something more to the table than aggregation and random walk “models.”
Pretty simple solution – I’m never buying another one of your books.
Ebooks cost NOTHING for you to release, yet you still want to milk people for more money. Honestly, $9.99 vs. what you want $15+ is just plain greed.
[...] Macmillan started to announce some details about their new agency model, book available and pricing. While pricing isn’t something [...]
Thanks for your clarifications on this, I’m really looking forward to hearing what else you have to say. I do hope that the pricing is a fair amount less than the *retail* prices for the books. Just because list price for a hardback might be $35 doesn’t mean any book store will charge that.
Also, regarding paperback pricing, releases go as low as $5.99 (to quote you), I’m assuming ebook pricing will as well rather than the $6.99 you stated?
All that said, I do firmly believe that the release date/pricing combo you’re offering (not necessarily the price, we’ll need to see how that shakes out) is the best put forth, so far, by a publisher. eBooks are a different market, not a different medium necessarily, it’s completely fair to release an ebook at the same time as the hardcover and charge a fair price for it (more than the paperback but less then the hardcover–to reflect the money saved in printing, the lower intrinsic value to us as readers, etc). I think most people are still going to realize there are fixed costs associated with books, as long as publishers realize we have other options and price *does* matter.
As a voracious reader and a huge ebook fan I’m encouraged by this. I’m probably one of the more critical people out there when it comes to perceived missteps by the publishing industry, but this at least seems on the right path, unlike many others.
[...] Mr. Sargent just posted a long piece over on the Macmillan blog. In the post he lays out Macmillan’s future plans for ebook pricing and availability. I’m going to quote the key parts here, and then a few months from now I’m going to come back to this and see if he’s kept his word. From the Macmillan blog: [...]
I am looking forward to the ebook continuing to be embraced! No more out-of-print! Thank-you for continuing to evaluate and evolve your digital bookselling process.
I’m going to be purchasing an ebook reader later this year and I’m looking forward to finally being able to purchase as many books as I want, rather than having to juggle available shelf space and sanity in my study!
[...] a rather long article this morning Macmillan CEO John Sargent writes about the agency model and about Macmillan’s ebook [...]
[...] CEO John Sargent, on taking to the blogosphere to press his case for more expensive e-books, Macmillan.com, 2 March [...]
Mr. Sargent,
Can we expect that all of your ebooks will be repriced to be at or below the price of your lowest priced paper edition? Will you be repricing all of the ebooks currently priced at $14 where there is a mass market paperback selling for $7.99? What will happen to the ebook’s price when all paper editions are out of print? Do you intend to price match ebooks when the retailers are heavily discounting hardcover paper editions to below your ebook price?
I think that among ebook consumers you have a large credibility issue when you claim that you will be reducing ebook prices to $6.99-$9.99 to match MMPB prices, when your own website shows a majority of them (when available) are currently priced about at 175% the MMPB price, and many ebooks have been priced at hardcover prices (300% or more above MMPB) since they were released 6-8 years ago.
I hope you realize that if you don’t promptly follow through on your promise to reprice your older releases, you’re liking to see a lot of boycott tags and/or negative comments and recommendations at Amazon and any other ebook retailer with a ratings system. It may not be fair to the authors (except perhaps Doug Preston), but it’s the few ways ebook consumers can express their dissatisfaction with ebook pricing short of sending you a personal letter every time they choose to buy a used paperback or check a book out of the library because your company is overpricing its ebook editions.
What’s with $9.99 for an eBook of a paperback that goes for $7.99 before any discounts?
[...] TUAW se hacen eco de un artículo de la editorial Macmillan (grupo que ya está inmerso en el universo de la iBookstore para iPad) [...]
[...] contro Amazon, per abolire il costo degli eBook a $9.99 ed aumentarlo a $14.99, ha pubblicato un post sul blog della casa editrice per spiegare la situazione dal suo punto di vista. Fino ad ora veniva [...]
[...] in his company’s e-book pricing model. Alas, the newest installment, on the company’s blog, doesn’t add much more to the [...]
I’m writing from Italy and I am a reader of SF/Fantasy books. Currently, all the Kindle’s editions of Tor books are not available for Europe, will they became available with your new politics?
[...] CEO and ass-kicking dreamboat John Sargent has started a blog and used its first post to clarify Macmillan’s agency model for ebook sales. Hooray for the free flow of information! After the events of the past several [...]
Perhaps you should talk to Toni Weisskopf and get some hints about a successful business model. At Baen, ebooks at $6.00 peacefully coexist with hardbacks, paperbacks, advanced reader’s copies, CD’s with multiple digital books included with some hardbacks… and profitable authors who make bestseller lists…. and a very loyal customer base.
Perhaps in a few years, you’ll be answering to your Board of Directors why you didn’t at least investigate a profitable effective business model for ebooks?
I would be very interested to find out what percentage of their overall sales Baen’s ebooks represent, and whether they feel this is a sustainable model if the percentage increases dramatically over the next 5-10 years. Current data suggest that ebooks are about 3-5% of the book market, which suggests that Baen might be writing off ebooks as loss leaders to build loyalty among their readers. Their own website suggests that they view their free ebooks as a marketing tool to drive demand for *print* copies, which only works as long as you expect that the bulk of readers will want books in print forms.
[...] laid out their new position on availability, pricing and the (much discussed) agency model yesterday: We will price our e-books at a wide variety of prices. In the ink-on-paper world we publish new [...]
It seems to me that it would be completely reasonable to charge a premium on e-books for an initial period for the advantage of obtaining it as soon as it arrives.
In the gaming industry for example this is the norm, and consumers are happy to either pay a premium, or wait until the price for the same product becomes reduced. Many of the people vehemently opposed to publishers charging anything over $9.99 for e-books are the technocrati, who happily accept this scenario in the above mentioned industry.
I think publishers might even be better of stating it in these terms, rather than in terms reminiscent of the old ‘bits and atoms’ world where the reason for the higher price was due to the higher production cost of hardcovers. I.e. call it a type of early adopter premium to offset the “R&D” of initially creating the book so as not to create the sense of artificial protectionism of an older business model.
The difference is that publishers don’t see print and ebooks as segregated markets, rather different formats of the same book. And despite all the jawing about how much ebooks or print books “really” cost to produce, pricing has more to do with perceived value and creating a sustainable long term business model where both formats coexist (which does seem to be where we’re most likely headed, at this rate ebooks don’t seem like they’re going to take over completely in the foreseeable future). Games exist in electronic isolation, though I agree there are v useful lessons to be learned there. The book market is taking a bigger jump from completely unplugged to digital and I think we’re all still figuring out the best way to talk about it.
[...] spun to various highs and lows, which has apparently prompted Macmillan’s CEO John Sargent to weigh in with his informed opinion, in an attempt to clear up some of the [...]
…you simply don’t get it, do you?…no one cares what you charge…you could just as easily be like the proverbial vacuum cleaner salesman selling them for a million dollars a piece — “I only have to sell just one!”…most books are already available within a week of publication for FREE by any enterprising individual who wants to spend a little time looking through usenet, p2p sites, and “pirate” sites…heck, even Adobe digital editions has been hacked, so anyone can now just go online, check ebooks from the library, and keep them forever…and while the 10-15 dollars is a significant discount to 30-40 dollars, it is STILL a significant premium to FREE…moreover, while most people wouldn’t be motivated to spend time searching to save 2-3 dollars, I suspect a lot would be motivated to save 10-15 dollars…ultimately, publishers will either have to add some value to justify a higher price or else lower the price to where it’s not worth the time spent searching for the same thing for free…
Kudos to Publisher MacMillan for Speaking Up, Even if….
Along with most citizens of Kindle Nation, I happen to believe that some of the big publishers are making a big mistake by trying to control retail ebook prices and raise those prices by 30 to 50 percent. This mistake is compounded, in my view, by the apparent circumstance of its having been arrived at through a collusive, anti-consumer process in which the “Apple 5″ of MacMillan, Simon & Schuster, Hachette, Penguin, and HarperCollins have been lured by Steve Jobs into trying to fix prices and restructure retail relationships all at once.
That being said, congratulations to MacMillan CEO John Sargent for having the guts and transparency to speak up and address readers directly in this post on the company’s blog yesterday:
Macmillan CEO John Sargent on the agency model, availability and price
I had been critical of Sargent previously for addressing his earlier comments only to authors and literary agents, and consequently trying to position them to speak up on his and his company’s behalf, and this new post is well worth reading. He has not changed my mind, and I doubt he will change the minds of many ebook readers, but we will see. There are dozens of comments that give a good sense of the range of views generally in the ebook pricing controversy, and you may want to add your voice to those of other readers.
There are reasons for optimism about the way that this will play out, and I see glimmers of hope both in the fact that Random House has yet to join the Apple 5 and in the fact that Sargent cracks open the door of flexibility an inch or two by acknowledging that some ebooks will be priced lower than $12.99 during their “hardcover new release” period. If readers are in a position where they are able to make buying decisions based on price as well as interest in particular books, it will be easier for publishers to gather information about the importance of competitive pricing.
Credit should be given to Sargent for staying away from two “that dog won’t hunt” arguments, at least for now:
* He doesn’t try to claim that these dramatic increases are based on cost.
* He doesn’t try to justify these dramatic increases by saying they will be good for authors or even lead to higher royalties for authors.
One omission that hurts his case involves the actual price that consumers usual pay for hardcover new releases. It is a classic case of apples and oranges for Sargent to compare the hardcover suggested list prices of $25 to $35 with the $12.99 to $14.99 prices the Apple 5 wants to fix for ebooks. The retailers responsible for most hardcover book sales in the U.S. (Amazon, the chains, and the big box stores) have been discounting most hardcover new releases by 25 to 46% for years, and MacMillan is not taking any steps to limit this discounting. With publishers insisting that no discounting be applied to ebooks, the actual terms of comparison should be between $13-$15 ebooks and $15-$18 hardcovers, which doesn’t quite rise to the level of Sargent’s claim of “a tremendous discount from the price of the printed hardcover books.”
“This mistake is compounded, in my view, by the apparent circumstance of its having been arrived at through a collusive, anti-consumer process in which the “Apple 5″ of MacMillan, Simon & Schuster, Hachette, Penguin, and HarperCollins have been lured by Steve Jobs into trying to fix prices and restructure retail relationships all at once”
I’m not sure that telling publisher’s it’s okay not to fix prices at $9.99, and to “set them wherever you want” is a great example of price fixing. On many levels, it strikes me as the exact opposite. The closest piece of the deal, was the part where no other seller can offer the books cheaper than Apple can – but that’s not even precedent setting (Amazon does this already with self-published authors taking the 70/30 deal), nor unexpected. If I were the CEO of Wal-Mart, I would not want to hear that Joe’s Discount Books got access to a title cheaper than I… I’m Wal-Mart (or Apple), and I’m the #1 seller of widgets…
Thank you so much for posting this! I really appreciate you making a public statement, and inviting people to comment. I have a few questions:
1. Why does the agency model make windowing less attractive?
2. When you compare retail prices (versus list prices), won’t a $12.99 or $14.99 price point make the prices for bestselling e-books very close to the retail prices for hardbacks?
3. If two thirds of the e-book sales are from backlist titles, why does the agency model make it any more likely that those will be available? Wouldn’t you be making those available under the traditional model as well?
Thanks again!
Bufo Calvin
ILMK blog
Mr. Sargent,
As a recent purchaser of a Barnes & Noble nook device I would liek to thank you for your clarification of eBook procing.
I for one am happy to pay a premium price for eBooks published simultaneously with the first hardcover release and feel your pricing for new releases is a more than adequate discount from the hardcover price.
What I am concerned with however is the effect the agency model will have on the ability of retailers to run sales and offer membership discounts. Will the retailer still be able to do this following adoption of agency book pricing/selling?
[...] Books CEO John Sargent has put out a press statement talking about how Macmillan will be changing its pricing model in the near [...]
Go John! Thanks for weighing in AND joining the comments section. Wish other CEOs cared enough about their readers to connect on these key issues…
I have no issue with marginally more expensive editions. really, people spending $300 on a device won’t care if they’re paying $12 or $10 on software anymore than they care if they’re paying $16 or $18 on a discounted hardcover. My question is where do we see the royalty rates going from here? It does seem now that author’s risk losing a percentage of their income from lower digital royalty rates. John, in a theoretical world where first $12-14 e-editions make 20-25% of hardcover sales, will authors still earn equivalent royalties of that significant percentage?
Just wanted to say thank you for engaging the book reading community. I think it’s a great step.
[...] becomes obvious after reading Sargent’s blog post is that Macmillan wants to retain flexible pricing for e-books for one simple reason: to protect [...]
I’d like to know what you have to say about the buyers limited rights in relation to the ebook – we can’t sell them after we read them or loan them to others (in most cases) or give them away, all because of DRM. Why should we pay prices for ebooks that in many cases will equal or exceed the hardcover price (when purchased from a discount retailer like Amazon) when our rights are limited by DRM?
a piece of digital media costs less to produce, distribute, weighs close to nothing, has 0 shipping costs…. the royalty construct in the ‘media’ domain needs vast readjusting, it isn’t the retail price that is wrong, it is the presumption that there is some baseline intrinsic minimum that the company, the agents etc are entitled to…. this simply isn’t true… like the entertainment business, you can’t justify a 30.00 USD Blu-ray in china or most of SouthEast asia.. if you want global distribution, then pricing needs to adjust. I think 10.00 for a book download might be fair if it’s a good book, if it’s lousy, its worth much less, regardless of the commissions, agents and distributors claim… if you produce crap, then you should be paid much less and improve your quality, the agency model will lead the book industry towards the same fate the music labels resisted and ultimately succumbed to….
[...] Macmillian CEO is a bit slow [...]
Well, Mr. Sargent, right now I check a newly-released hardcover book out of the library to satisfy my urge to read it quickly and see if it is worth an eventual purchase. If I like the book I buy it when the cheaper paperback comes out. Soon, I’ll be downloading your “hardcover e-books” wherever I can find them for free online and then buying the “paperback e-books” when they come out (assuming I liked them, of course). I am not willing to pay a severe premium for the *exact same file* just because of an earlier release date. I think you will find a large number of folks who will do the same thing, and you’d better hope they are even willing to come back and buy the e-book when it hits a paperback price. Just as when the music industry found that there is a price point that makes most pirates switch back to buying, so too with e-books. $13-15 isn’t it.
[...] analog business model against the disruption that comes from digital, look no further than a blog post today from John Sargent, CEO of book publisher [...]
Mr. Sargent, I find it sad to observe that you appear to have gotten your divorce papers from reality.
If you don’t cannibalize your existing paper-based business model, others will be happy to do it for you. I speak as one who buys everything from science fiction and technical books to romance novels. All eBook, all paperback-level prices, all the time, all in my trusty Palm.
[...] been sending over the blog post by the CEO of book publisher Macmillian, John Sargent, trying to explain the company’s ebook plans, following all the hubbub over its fight with Amazon. I was going to write up a long blog post [...]
[...] ebooks, that’s going to lead to frustration and confusion. As someone named CM Harrington noted in a comment on Sargent’s own blog post: So how much more expensive is hardcover e-ink over paperback [...]
Hi, and thanks for listening.
First, I’d like to point out that some of your price comparisons are – from the consumer perspective – skewed. For instance, If ebooks are $14.99 and hardbacks are $28, then yes, that is a significant savings. However, so many retailers use new hardcover books as loss leaders (Walmart, Target, sometimes Amazon) that the $28 hardback does not really exist from where the customer is sitting. I haven’t paid full price for a book in YEARS. B&N and Borders have their coupon clubs with routine issuings of 30% off or more, and Walmart had that lovely bout of $9 new releases around Christmas (so much so that libraries and independent booksellers purchased their wholesale stock from Walmart). For the last ebook I bought for $9.99, I saw the hardback at Target for $14. Pop the price of the eBook up a little bit, and well, you see what happens. Honestly, the savings of ebooks over the ACTUAL purchase price of a hardback wasn’t huge, and now, you’ve narrowed it. Perhaps not the best move, but perhaps you’re planning something to address this.
And for damn sure, the author royalty needs to improve.
I’m glad to see you destroy the idea of windowing. It will have to go sooner or later, so best to just take care of it now. I understand the dynamic pricing, and don’t mind that so much. Windowing PISSES ME OFF!!
Don’t cheap out on eBooks, please. Yes, include the cover art in the file. Yes, PROOFREAD IT please. When errors pop up in the file, correct the file and reupload so consumers can access a corrected copy.
I really would like to address DRM and file types: If you’re putting your muscle behind ebook pricing, then for heaven’s sake, start requiring lack of DRM and a standard format. Everyone can read a .doc or .pdf, everyone can read a paper book, everyone can listen to a CD, all radios work the same – proprietary formats are just lame/sucky and do not produce a universally accessible product. Every retailer should use ePub or something similar so that a customer is not tied to a particular ereader. That way, customers can pick a reader they like and a retailer they like without getting screwed. ( I keep envisioning Stephen King signing exclusively to B&N for eBooks, and his work only being available if I buy a second ereader.) In fact, I think the publishers should actually create all the files themselves, and tell retailers to put up with it – it’s what the customers want: flexibilty and freedom to choose.
Also, as a library lover, please come up with a way for libraries to buy subscriptions to ecatalogs and check the books out to patrons. Standardizing ebook formats would go a LONG way to helping this. Just saying.
Again, thanks for listening.
It may take a little time, but soon enough Macmillan will be schooled in basic economics (prices are set based on what the market will bear, not what you *want* prices to be) and also on Internet economics (and the painful repercussions that a failure to obey those economics can have on a company).
And I personally find the dichotomy stated in point 1 and point 2 funny:
1) “no longer delay the publication of e-books (read: no windowing).”
2) “For physical books, the majority of new release hardcovers are published in cheaper paperback versions over time. We will mirror this price reduction in the digital world.”
Umm…when there is no difference in the electronic world between a “hardcover” ebook and a “paperback” ebook, what you are doing is windowing…matching a dying model.
Why oh why is it so difficult to change your thinking? Are you so embedded in how things “used to be” that you just can’t see where you are missing an opportunity here?
I do not fully know nor claim to know your business. But I can at least see the writing on the wall and how parallels can be drawn to other businesses and how their old models are either being abandoned for new and prospering or clung to tightly as the ship makes its way to the depths of the ocean.
The comet strike is coming and only you can decide if you will evolve or remain a dinosaur. Roaring at the comet as it enters the atmosphere does you no good.
EPIC WIN or EPIC FAIL? In the end, the new market will decide, Macmillan, not you.
[...] Posted March 4, 2010 Filed under: ebooks, print | Meanwhile, MacMillan CEO has a widely cited blog post explaining his companies ebook pricing model. Basically it boils down to modelling the new on [...]
I don’t have a problem with the price increase because the market will decide what the price will be. I have a problem with the agency model.
You have managed to come up with a model that delivers all of the disadvantages of retail competition (incompatible formats, vendor lock in, exclusive deals, DRM) and absolutely none of the benefits. The retailers are simply performing an electronic sales transaction and can not add value via service.
Macmillan authors have lost me as a customer because of your new agency model.
It’s almost like you don’t want to sell a lot of ebooks. Like the commenter above me noted, the parallel between you and the music business is eerie.
One thing publishers don’t realize is that people will read more if books are easy and cheap to acquire. Anyone who has a Kindle knows this.
[...] found some good blog responses to John Sargent’s post about Macmillan’s agency pricing model, which we reprinted the other [...]
You should really look at what has gone on with the record labels. If you dont learn from their mistakes you are pretty much S.O.L.
One that the record labels still dont get is that the perceived fair value price of anything digital is much lower that of the physical item.
People get fed up with DRM very quickly. If it prevents them from doing what they want to they tend to find infringing (pirate) versions of the same item.
Hephaestus is right: until publishers realize that with DRM on their product the best they can do is lease a book to us; we will never own it until DRM is gone, and thus we don’t want to pay the ownership price for a DRM’d book.
[...] Sargeant wrote a blog post about pricing. I asked a question and he answered. The high mass market pricing is a legacy of the old model. [...]
[...] fame), will begin to publish e-books as a simultaneous release to newly published titles, says CEO John Sargent in a press release on the publisher’s website. Sargent states that the e-books will be available at a variety of [...]
[...] each other for patent infringement as everyone scrambles to get the technological market edge. Macmillan CEO John Sargent on the agency model, availability and price (3/2/10 via Macmillan [...]
[...] to talk to and in what setting. What I do want to know is that they are listening. John Sargent posted about pricing on the Macmillan blog entitled “Macmillan Speaks” and he responded to one comment that [...]
[...] in his company’s e-book pricing model. Alas, the newest installment, on the company’s blog, doesn’t add much more to the [...]
I also think that Macmillan is afraid of the coming change and tries to grab more than neccessary by introducing agency model.
Big changes are coming. We’ll see some new forces take over the publishing market.
I have a Sony ebook reader and purchased By Heresies Distressed but was unable to read it as it was DRM format so I watsed NZ$50.00 on a book I will never be able to read. I would apprecaite books being in PDF or EPub formats so I can read it. I realise that Baen Books are no longer an option but I think the list of reading formats they offer leades the industry
[...] same discount model for both ebooks and print books, Macmillan wanted Amazon to change to a “agency model” where pricing would be controlled by Macmillan and Amazon would take a percentage. Amazon [...]
[...] EBOOKS Apple Add comments John Siracusa drew my courtesy to an essay by Macmillan CEO John Sargent upon the group model, accessibility as well as price, in which he says which the association essentially skeleton to keep their hardcover/paperback [...]
I want you to release your books as ebooks so that I can buy them.
Unlike some I don’t care what price you put on the ebooks. In each case I will decide how much I want the book, and how that compares with the price. If the price is too high, I won’t buy it. If the price is acceptable, I will buy it. Charge what the market will bear.
In your blog, you say that “1. Availability. All the new adult trade books for which we have the rights to publish in e-book format will be available at the first release of the printed book. We will no longer delay the publication of e-books (read: no windowing).” Thank you. When, however, will this policy come into effect?
Today, Tor books, which is associated in some way with MacMillan, released a new book called “Trade of Queens Charles Stross. This is the 6th (and final) book in a series written by Charles Stross. It was released in hardcover, but not as an ebook.
The first three books in this series are available as ebooks. The 4th book (October 07), the 5th book (April 09), and now the 6th book (March 10) have not been released as ebooks.
So, please let me know. Is “Trade of Queens” a “new adult trade books for which we have the rights to publish in e-book format” and if so, when can I expect to see it offered for sale as an ebook?
Gary
This is just old fashioned price fixing under a new name. In the good old days producers would set the prices and the retailers and consumers would have to lump it. Unfortunately for publishers, consumers have gotten used to book discounts. Even our local, small town bookstore has markdowns and a rebate discount club. Let’s face it, discounting are awful for publisher profit margins, so I can’t blame publishers for trying to eliminate competitive pricing.
As a consumer, it looks like Napster revisited. It is much easier to ignore consumer demand and expectations than restructure one’s business. The music industry didn’t have to sue Napster. They could have just sold their music online as they do now. Scary, isn’t it. As a rule, media executives make the wrong long run decision whenever they can. You can bet the store on it. Sometimes you have to.
Pricing e-books higher than hardcovers will slow down e-book adoption for a bit, but the course of technology is set. We’ve seen the comic book business crash by an order of magnitude after Marvel’s attempt to take over distribution. I’d rather not see the same thing happen to the book business, but there are well paid executives hard at work on it.(NB, I made out quite well on the Marvel deal.)
If history is the guide, Macmillan is blowing it, but everyone involved on the inside will do very well.
All I ask is that you don’t make the same mistakes that the movie and tv industry has made… price your product accordingly and people will buy it.
I agree with other commenters that the e-book pricing needs to use the ACTUAL RETAIL PRICING of the physical books as a baseline and then discount from there. NOBODY sells books at MSRP and therefore your hardback pricing is not applicable when it comes to comparing ebook pricing.
If the hardback is selling at Wal-Mart, Target or Amazon for $12.99 then the e-book damn sure better not be more expensive AND frankly needs to be a few bucks cheaper.
If you aren’t careful with pricing, and people expect e-books to be cheaper (frankly Amazon’s $9.99 model was dead on), you are going to open yourself up to mass piracy of your product… and you can’t stop piracy. All you can do is price your product at an appropriate price point and market to honest consumers.
Embrace the medium, or go down in flames.
I’m not going to flame you. Charge whatever you like.
However, I’m going to let you inside my head so you can understand my thinking as I evaluate ebook prices. I’m an avid reader, so you should listen to me because I buy and read hundreds of books a year. As Amazon has found, e-books appeal most strongly to the avid reader market.
I’m going to tell you, it may not be your _hardcover_ prices that are too high, but rather your paperback.
E-Book Pros:
1. Portability: When I go on a business trip, I can bring 5 books along (about what I can read in a week in my spare time, including the plane flight). This can also be a big win for technical books, though pre-iPad I found most technical e-books unusable in an e-book format. I’m hoping the iPad can change that.
2. Price: I read enough that buying a hardcover is reserved only for a very few authors. So getting early access to a book I’m interested in at a good price is very tempting.
3. Convenience: all e-books are available everywhere I don’t have to worry about whether a book is in stock.
E-Book Cons:
1. No resale value: I take approximately 80% of my books to a used bookstore in return for credit.
2. Format issues: On my Kindle, some things just don’t translate, because the Kindle is text-mostly.
3. Harder for wife to read.
Inside my head:
So when I look at the price for the e-book, all this gets factored in.
Harry Potter Book 7: Won’t buy in e-book format, because then wife couldn’t read it.
Saturn’s Children by Charles Stross: Came out in hardcover at $25. Was originally $15 on Kindle. Didn’t buy, just waited. Bought it in e-book format for $6.39. Current price: $5.70, which is $2.29 under the paperback price. At that price, I would buy it again.
Ground Zero by F. Paul Wilson: $9.99. Hardcover is $17.15 on Amazon. Won’t buy, because I can wait.
Bullet (next Laurell Hamilton novel): Will buy in hardcover.
Live Free or Die by John Ringo: $6 on Baen, $17.16 in hardcover. Will buy early from Baen.
So for me, the decision is:
Do I pay $10 for the right to read the book once?
Do I pay $17 for a hard cover, which I can turn into the used bookstore for 50% of cover price, or $12.50? So my net cost to read the book is $4.50?
Do I pay $6.00 for the right to read the book once or do I pay $7.99 for the paperback which I can exchange for $4?
My point here is basically that while you’re looking at a $9.99 price for an e-book as _diminishing_ the value of a hardcover book, a hardcover book has more intrinsic value, and more practical value because I can turn it into the used bookstore. For an ebook, I’m paying for the right to read the book, generally once. That’s a different value proposition.
So, I like $9.99 for a “hardcover ebook”. $12,99 or $14.99 isn’t necessarily unreasonable, it depends on the cost of the physical book. But it should be less then half of the retail price. Say, 40%. So $16 for a $40 book seems like a good deal.
Similarly, I’d like to see 40% of the paperback price. So that’s $3.20 for a $7.99 paperback.
Because, I’m not buying a book, I’m buying a _read_.
my biggest complaint is this comment:
“Generally e-book editions of hardcover new releases will be priced between $14.99 and $12.99; a few books will be priced higher and lower. This is a tremendous discount from the price of the printed hardcover books, which generally range from $28.00 to $24.00.”
This is a general misunderstanding you have of the digital world. Of course its a huge discount. A book costs you money to print, and distribute. An e-book effectively costs you nothing.
It’s shameful to me that you haven’t figured that out. Shameful to your media, your publishing house etc…
9.99 was too much to pay for digital. Thats why people are terrified to see it go. You’re turning into the music industry. Don’t.
(1) For the most part, books aren’t a commodity, and they aren’t a necessity. Each publisher sells something slightly different – depending on which authors they’ve signed – and customers can choose to buy or not buy. The publisher wants to get you to pay as much per item as it can, and you want to pay as little as you can. That’s exactly what you’d expect in a capitalist system.
(Yes, I understand that ‘can’ varies massively with supply, demand, and price. Just pointing out that the publisher doesn’t OWE anyone low prices, except as modifying price affects sales)
(2) It strikes me that this is about publishers seeing a way to “cut out the middle-man” as far as pricing control is concerned. I can’t see any inherent benefit to (say) MacMillan in having a bunch of resellers competing over what price a given title is sold at. But I can see a lot of benefit to them in being able to implement a unified pricing strategy across all forms of a product, and react directly to the actions of competitors.
Booksellers used to provide publishers with an invaluable service as far as distribution and retailing was concerned. The digital age drives the “value add” of distribution and retailing way down, so it doesn’t surprise me that MacMillan (for example) wants to pull back some control in exchange for the reduced value that resellers provide to it.
(3) “Price fixing” would be the big publishers all getting together and setting a pricing schedule for all books. MacMillan has every right to price its books however it likes. It’s only anti-competitive when the price control is applied directly either by or to competitors.
Hi John,
There are two areas I can’t see have been addressed – please correct me if I’m wrong:
1) How will this impact territories other than the US? Will MacMillan be providing a sell price in every currency for which it will be available? Will MacMillan ebooks become less accessible on a global scale as a result?
2) I haven’t seen any reference to fulfillment and delivery in this whole discussion. Will MacMillan be providing this now, or are other parties going to have to do this at the prices / margins which you are effectively setting for them?
Amazon’s new 70/30 royalties agreement with publishers seema to directly aimed at the Apple agreement & the work persontage is almoat same. only under the Amazon’s upcoming new agreement, The retail price of the ebook must fall in the $2.99-9.99 range. As per the price of apps and games in Apple’s App Store, there is a very strong pressure come from the side of users & games for standalone consoles can cost $30 or more. The average price for games on the iPhone are $3. I don’t think we need any boycotts. The Fact is the publishers will make more money selling a lot of ebooks at lower prices.
@FMC – The Fact is the publishers will make more money selling a lot of ebooks at lower prices.
Corect, just like the Chinese, they become rich because of the businesses they have, though small in size, but huge in number of units
Someone asked a question that did not meet with your approval! Quick, post ad hominem attacks in our discourse to make ourselves feel special and smart on the internet!
[...] print run, and should stay available for a long time, decreasing in price. And, contrary to Macmillan’s new Pricing/Agency Model, e-books should NEVER be the same price or more expensive than their print counterparts. Over time, [...]
would there be any differences in e-book pricing between territories?
[...] Books CEO John Sargent has put out a press statement talking about how Macmillan will be changing its pricing model in the near future. Share var [...]
As an individual seller of e-books I can attest to the convenience and high profit margins. I’d much rather a piece of the pie than just a bite. Keep fighting the good fight John.
Thank you, John Sargent, for having the courage to stand up, speak out, and talk back.
When the major publishers got together with amazon to set a 9.99 price on e-books (formerly known as price fixing) and MacMillan did not go along, amazon, the former entrepreneuial darling now monopolist bully, retaliated by removing the buy button from all Macmillan books. No one seemed to care much that amazon was soiling the first amendment. Do you think people would be so silent if independent bookstores removed Wylie’s authors’ books from their shelves?
In making that pricing arrangement, publishers saw that their revenue share remained whole on digital book sales, while author revenues were cut in HALF. Since Wylie’s share was cut in the process, maybe he isn’t to be blamed, as he’s looking out for number one — himself.
In making himself a publisher — and this is exactly what he’s done — he should keep in mind that he has moved to next in line for obsolescence.
When you talk about the ‘Agency’ model, does that mean you will also consider selling your ebooks directly through affiliate sites such as Packabook, bypassing the likes of Amazon?
Are you starting to do ebooks for the iPad now? I’m just wondering if the process is different for different ebook reading platforms.