EBOOK PRICE-FIXING: Who Gets Hurt in the End? By Angela Hoy, Publisher, BookLocker

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price fixing (n.)the establishing of prices at a determined level, either by a government or by mutual consent among producers or sellers of a commodity.
(dictionary.com)

If everybody agrees to list and sell ebooks for $9.99 (or at any other “determined level”), that’s price-fixing, plain and simple. When prices are fixed, who gets hurt in the end? Everybody…except the one mandating the price, of course.

While fighting the price-fixing mandate, big publishers will also (hopefully) realize that delaying the release of ebooks in an attempt to earn higher revenues is unnecessary. If they price their electronic and print products correctly, they can ensure their income, and the quality of their future products, will not suffer.

I do not believe that smart traditional publishers will lose the battle on pricing their own books. And, they will succeed with those prices. If a reader wants a new best-seller and the publisher sets the price, the reader will pay that price, and will buy that book where the publisher makes it available, because most won’t want to wait months to read that much-anticipated new book by their favorite author.

PRICE FIXING IS NOT GOOD FOR MOST, INCLUDING THE BUYER

The problem I have with the entire price-fixing argument is the assumption by some (which, I believe, is being fed to the public by Amazon in their quest for control) is that every ebook is worth $9.99 or less, regardless of the topic, quality, availability of information, author, public demand, etc. Amazon, of course, wants to be able to price books lower than anybody else so all buyers will go to Amazon instead of other bookstores, including the publishers’ own bookstores. This is, naturally, their attempt to squeeze out other sellers. It’s really nothing new in the retail industry but that doesn’t make it a good thing for anyone, including the buyer. More on that later.

LOCAL MARKETS SUFFER WHEN LARGE RETAILERS START CALLING THE SHOTS

Just think about how Walmart has affected local small businesses. Retailers that have existed for years (or generations) may go under, people may lose their jobs and some, who may have been earning more at a local shop, may be forced to work for Walmart at a lower wage than they were earning before. They may not be able to afford insurance, might need to get government assistance, taxpayers must foot the bill, taxes must then be raised, etc., etc. If a supplier is strong-armed into lowering prices, they may also be forced to lay off staff, outsource those jobs overseas, or fold altogether. They may be forced to buy cheaper parts for their products, or may even be forced to strong-arm their own suppliers in the same way they’ve been threatened. This can result in more layoffs, outsourcing, and failed U.S. businesses.

When a large retailer comes to town and starts calling all the shots, the windfall of consequences on the local market and citizens are obvious and proven, and can be devastating. Watch just about any Walmart documentary to see what happens when one retailer takes control of the neighborhood. People have been comparing Amazon to Walmart for years.

BOOKS ARE MADE FROM FAR MORE THAN PAPER, INK AND GLUE

The reason publishers produce the expensive hardcover versions first is because they know people who want the book “now” will pay the higher hardcover prices. This helps ensure the publisher is able to pay for all the people who are working on producing new titles, along with the services/machinery/products needed to produce those titles.

When you go to the hospital for an x-ray, you’re not charged just a few dollars just for the final picture. You’re charged a hundred (or more) for the final picture, the technician who took the picture, the x-ray machine itself, the rent/mortgage on the building, the electricity used to run the machine, and much more. You’re even paying for the technology and labor used to create and produce the x-ray machine because those costs are built into the machine’s price. Book sales are based on the same principal.

The price of just a printed book, even a hardcover edition, is nil compared to the costs associated with bringing that book to market. The publisher has to pay the author (the advance, when applicable, and royalties), the design team (for those awesome covers that scream “read me!”), the editors, the entire secondary support staff (secretaries, marketing department, and more), advertising expenses (when applicable), overhead expenses (office supplies, electricity, Internet connections, warehousing, etc., etc.) and more. The human and physical resources required to produce a traditionally published book are FAR more than just paper, ink, and glue (for a printed book), or bytes (for an ebook).

If Amazon is successful in forcing this Walmart-like, bargain-basement price control on literary works, publishers may (and probably will) be forced to cut their expenses (lower quality editing, design and printing/binding) and lay off employees, and will also be forced to pay authors less. You can bet authors will be the first victims. Advances, which are already becoming rare, will become non-existent. Royalties, which current hover around 8% for print books and 10%-50% for ebooks (in the traditional publishing industry – Print on Demand/POD authors usually earn much higher royalties), will also be slashed.

AUTHORS MUST EARN A LIVABLE WAGE OR THEY WILL STOP BEING AUTHORS

If you stop paying the core producers of literature, the authors, a livable wage, you can guess what will happen. Authors will have to get different jobs. Most authors can’t afford to live on what they earn now. If they are forced to stop writing in order to pay their bills, the quality of literature will suffer greatly, and the person who is then hurt in the end is the reader.

It can take a year (or more) to write a good book. What great writer is going to want to do that for minimum wage, or less?

If Amazon is successful in forcing ebooks into the bargain basement bin, I predict more of the best-selling authors will abandon their traditional publishers and move to a self-publishing model (where they are not bound by Amazon’s price demands) and they will then market and sell their books directly to their readers, at whatever price THEY choose.

IT’S EASY FOR AUTHORS TO BYPASS TRADITIONAL PUBLISHERS

Let’s say Stephen King’s publisher stops paying him those grand advances (because they can no longer afford to do so), and tells him he’ll only be earning a fraction of his former income because their hands have been tied by a large, demanding retailer. He knows he has legions of fans who will buy from him directly. If he self-publishes his own books, he can sell far fewer books but earn more money on each sale (because he sets his own price and he gets to keep 100% of his profits). He knows he can get the media to cover his new releases and we all how great he is at creating buzz about himself! Why should he agree to write for a traditional publisher who is bowing to a bargain-basement price threat when he can just print and sell his own books (via print on demand), and sell his own ebooks (at a price of his choosing), through his own website? This is where some enterprising authors have already gone and this is where the good ones will ultimately go if they see their incomes slashed by their publishers because a large retailer is devaluing their hard work through price-fixing.

HOW TRADITIONAL PUBLISHER CAN SAVE THEMSELVES

In order to keep the author in-house and producing quality content, traditional publishers MUST look out for their core producers RIGHT NOW, the authors. If they can’t feed their authors, their businesses will fail. If they allow the world’s largest retailer to control their product prices, their businesses will fail. If they allow a retailer’s press releases to control the public’s current perception of ebooks, their businesses will fail.

The only way to protect authors and the integrity of literature itself is for publishers to continue to control their own list prices, which allows them to continue to control their own production costs and, in the end, the quality of the literature they are current delivering to readers.

Any traditional publisher that stands by, with their knees quaking, and refuses to stand up to the world’s largest retailer, is living on borrowed time. If you allow any other business to control your prices, and ultimately, your expenses, you will fail.

Almost two years ago, Amazon came after us, trying to force us to pay them to print our books (with prices they controlled and could change at any time). We fought and we won and we are still in business today, and selling books at the same prices we have been for a decade. That’s right. We have not raised our list prices.

Some of our competitors who didn’t fight Amazon were forced to raise their list prices and the prices authors must pay for their own books. Who paid and is paying in the end? The readers of those books, of course, and the authors themselves. Who’s profiting? Amazon, of course.

THE MARKET (THE READER) SHOULD DETERMINE BOOK PRICES; NOT THE WORLD’S LARGEST RETAILER

Many say the reader will ultimately decide what they will or won’t pay for an ebook. I absolutely agree. At Booklocker.com, we’ve published more than 2,500 titles. We sell both print and ebooks and we’ve been selling ebooks at an average price of $8.95 for over 10 years now. Our ebooks are plain and simple pdf files, readable by pretty much anyone with a computer, printable, and even accessible by people with ebook readers that read pdf files, including iPhones. There’s nothing confusing about them and you don’t have to buy a special $300 ebook reading device just to read one of our ebooks. We would never do anything that would require book lovers to spend tons of money and jump over hoops just to read our ebooks. We also plan to convert our books to epub format (the most popular one for dedicated reading devices, of course) so readers will have another choice as well.

EBOOKS WERE IN DEMAND AND VIABLE LONG BEFORE AMAZON TRIED TO GRAB THE REINS

It’s interesting how the media is portraying ebooks as this “new thing” that will continue to grow and grow. We’ve been selling ebooks for more than a decade now. In fact, I sold one of the very first ebooks, back in 1997, before “ebook” was even a word, even before Stephen King published his infamous ebook, The Plant, in 2000. I got an idea one day that selling my books as electronic files (they were MSWord files back then) would enable my readers to get my books instantly, and for less money, with no shipping costs. Two years later, on the first day I put a new book of mine, How to Write, Publish and Sell Ebooks, online, I processed all the sales myself and I earned more than $700 IN ONE DAY. Not too bad for an unemployed single mother of three. I then started publishing ebooks for other authors, which led to publishing print books as well. I got remarried, “hired” my new husband away from his “real job” (as an Internet marketing expert), and the business grew at startling speed after that.

During that time, a self-published book I co-authored with another writer landed a traditional publishing contract through one of the largest publishing houses. Let me tell you….unless I’m offered a six-figure advance, I will NEVER do that again. They took far too much control, and hindered sales greatly in the process.

About half the books we sell at BookLocker.com are ebooks. We’ve known for a decade that giving readers a choice of formats (print or electronic – and not delaying the release of the ebook version), and not forcing them to jump through hoops (or to buy a dedicated reader) to buy, download, or read one of our books, keeps the reader happy, and also keeps expenses down.

Our rock-bottom minimum price for an ebook is $5.95. Anything lower makes it not even worth selling the book for us. Our authors, who choose their own list prices, earn 70% royalties on ebooks priced $8.95 or higher, and 50% on those priced under $8.95. We pay royalties monthly to authors whose unpaid royalties are $20 or more, we don’t take any rights, and authors can list/sell their books/ebooks anywhere else they choose. The readers are happy, the authors are happy, and we’re happy, too! Despite the economy, our business has grown every single year.

It’s amazing how happy the world can be when nobody is trying to control everybody else.


Angela Hoy is the co-owner of WritersWeekly.com and BookLocker. WritersWeekly.com is the free marketing ezine for writers, featuring new paying markets and freelance job listings every Wednesday. Attorney Mark Levine, author of The Fine Print, rates Booklocker.com as “Outstanding.” He says, “As close to perfection as you’re going to find in the world of ebook and POD publishing.”




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This article can be reprinted/redistributed freely, as long as the entire article and bio are included.
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