Editorial by Chad W. Post, Publisher, Open Letter Books
Last Tuesday, after months of hemming and hawing about the whole e-book thing and Open Letter Books’ place in that world, we announced the launch of our first nine e-titles, and decided, that for the first month, they would sell for $4.99 a piece.
As much as one might hate e-books (and trust me, I’ve in no way incorporated this part of the digital “revolution” into my reading habits), it’s become impossible to ignore. It may be overstating things a bit, but if your book isn’t available as an e-book, it basically doesn’t exist. This is sad; this is true. For many, publishing e-books is simply a foregone conclusion.
For us, the last phrase of that first paragraph that’s been getting all the attention — both good and bad. As a nonprofit publisher of translated works, Open Letter isn’t likely to overthrow any currently accepted best practices, but after all the talk about predatory e-book pricing, retaining revenue streams, and the agency model, we sort of shot off in a different direction from most publishers, selling (at least initially) our e-books for a third of the cost of their print counterparts.
When we started sending out the press release, I figured everyone would be overjoyed: “Great international fiction for cheap! Including the world’s largest collection of Catalan literature in English translation! All for my Kindle/nook/iPad/Sony Reader/etc.!”
Instead, I heard a few cheers about our entry into the e-world, and a few comments about how we were “damaging the sales of our own books” and “helping depress the e-book price for literary fiction.” Some of this was a bit tongue-in-cheek, but for a lot of people — especially at commercial presses — this is serious stuff, especially seeing that our announcement happened to coincide with “this report”: about how Amazon’s Sunshine Deals program — offering 600 Kindle books for $.99, $1.99, and $2.99 — forced the price of the average Kindle best-seller to almost instantaneously plunge from $7.75 to $6.43.
Since e-book pricing is such a hot button topic in the industry, and since we went with a semi-risky strategy, I thought it would be worthwhile to look at some of the e-book pricing policies and issues and try and explain why we’re doing what we’re doing.
Before getting started, I should admit upfront that I’m no pricing expert, or economics expert, or expert of any sort. Most of what follows is my interpretation of events and situations in an attempt to get at the more philosophical and far-reaching effects of e-book pricing on the reading public. This is by necessity a relatively elementary sketch of the situation, and one informed by a subtle (or not-so-subtle) point of view.
When the Kindle first started setting the world on fire (pun intended), Amazon discounted the vast majority of available books — a lot of the e-books for sale on Amazon were discounted to $9.99 or less. This upset a lot of publishing people. At the time, e-books were being sold under the traditional bookselling terms — Amazon gave the publishers 50% of the list price on all e-books sold. Which was totally fine . . . at first.
The problem was that Amazon was selling a lot of books for less than half the retail price, thus capturing the vast majority of the e-book market and set up a potentially difficult situation for publishers. Obviously you can’t last forever by selling all your goods at a loss. The basic fear was that Amazon would amass enough power to successfully depress e-book prices, causing publishers to either lower prices or give Amazon a larger discount — two situations that could cause a huge drop in revenues, especially as e-books sales increase every quarter.
The Big Six publishers are based upon a very standard, very old school revenue model: sell X thousands of $25+ hardcovers, then a year later sell X+ thousands of copies of the $15 paperback. The price differential in printing costs between the two editions is negligible, making those hardcover sales especially important to the bottom line.
To the common reader on the street, the idea of selling $9.99 e-books sounds like a great opportunity for extra cash. Which it would be if there wasn’t the problem of cannibalization. As with almost every product ever produced, the lower the price, the more people who want to buy it. So if everyone rushes headlong into the $9.99 e-book world, not nearly as many people will be buying the $25 (or $35) hardcover, and if e-book retailers strangle their hold, the profit margin on the sale of each book drops from a few dollars to a few pennies, and everyone is screwed.
Thus the agency model. Publishers get to price the books at what they want, and none of the retailers can offer discounts. The same e-book is available at the same price from all vendors — including independent booksellers. Which has a nice spin to it, and more importantly, allows publishers to stick to their current revenue model. Sell X books (e- or print) at $25+, then sell X at $15. Or you can even sell e-books at the “discounted” price of $12.99, and based on the 70% the vendor is giving you on every sale, you could maybe, just maybe, increase your revenues.
Not to put too fine a point on it, but this structure is designed to retain the status quo. The bloated overhead, the trumped up marketing.
But what’s really at the top of the e-book best-seller lists? As of this very moment (10:10 pm on Wednesday, June 8th), here are the top five and their prices: A Little Death in Dixie by Lisa Turner, $0.99; My Horizontal Life by Chelsea Handler, $1.99; The Hunger Games by Suzanne Collins, $5.00; Summer Secrets by Barbara Freethy, $4.99; and The Help by Kathryn Stockett, $9.99.
So aside from The Help, which is the 9th bestselling book in paperback, the top five are all $5 or less. And aside from The Help, none of these books are in the top 10 for Literary Fiction paperback sales. So what does this mean?
At BEA, Keith Gessen introduced me to the works of John Locke (probably not the one you’re thinking of), a best-selling Kindle author whose books are all sold for $0.99. He made over a hundred thousand of dollars in royalties last year — far exceeding the wildest dreams of most every mid-list (if John Locke is even midlist) author in the country. Having read the opening of one of his “Donovan Creed” novels, I can assure you that he’s not selling all these books due to his talent. No offense intended, but let’s be real about this — it leads to a much more interesting conundrum.
Two of my longstanding issues with e-books are: a) how your brain processes texts read on a screen, and b) e-books make books feel like disposable entertainment. I’m going to leave the first for a separate article and/or book, but I think the second objection is valuable here.
As announced by Bowker a few weeks back, more than three million books were published last year: 300,000 from “traditional” publishers, and 2.9 million from nontraditional publishing outlets, such as self-publishing.
So, you have an e-reader, you’re bored with TV and all your video games, ain’t feeling the Facebook, and want a book. Why pay $12.99 for “entertainment” when you could buy a John Locke thriller for $0.99? I have no answer to that question. Seriously. And this has always been my problem with e-books: they emphasize immediate entertainment — and gratification — over real “reading,” which takes more commitment, patience, attention and time.
Now, you pay what you would pay for an app and dump it after you’re done. And why not? Those “expensive” books are a lot of work.
As someone devoted to literary culture, this scares the crap out of me. Sure, John O’Brien and a few others will claim that this has “always been the case,” that there has always been only 10,000 “serious readers” in the U.S., and that’s the same today as it was 50 years ago, but I don’t know if these people are actually in touch with the world around us. It’s all $0.99 e-books and instant movies and Angry Birds.
But to pull back from the misanthropy, the point is this: self-published authors game the system. You set your e-book price at $0.99, get a hundred friends to buy it in a short window of time, and shoot into the best-seller list where sales breed sales, and Terry Gross has only a momentary impact.
My gut reaction is that this is BS. That it cheapens the art of writing. That . . . and I’m probably old and out of touch with pop culture. And for those reasons I never wanted to get involved in this whole e-book thing. Not. At. All.
At the same time, I work for a nonprofit publishing house whose mission is to promote international “pure literature” to as wide an audience as possible. There were fewer than 300 translated works of fiction published in the U.S. last year. And aside from that Swedish crime writer, the other 299 sold way less than 50,000 copies. The reasons for this are diverse and complicated and occasionally xenophobic. But the point is: the 10 authors we publish a year are sort of lucky to have their books available to English readers. And they’re damn good books! Books praised by the New York Times, books that influential tastemakers gravitate towards, books that sell a few thousand copies.
And as a nonprofit, our goal is more focused on readers than sales. We couldn’t survive without donations (and yes, we can always use your support — anything is great, a million dollars is better), in part because we can’t sell enough books to survive without them. We could quit publishing this “pure literature” stuff and go all in on Donovan Creed & Co., or we can continue to raise money with the belief that what we’re doing is important to culture — as long as people read it.
And there are a lot of people who like e-books. And even more who like the $0.99 variety.
If our goal is to reach as many readers as possible, and knowing that the vast majority of the independent stores can’t/won’t carry our titles (we sell to about 100 indies a year), and knowing that the chains (or is it chain?) don’t stock us in all stores, the vast majority of readers out there will never run into an Open Letter book “out in the wild.” Sure, they can order it online from anyone and anywhere, but they’re unlikely to stumble upon A Thousand Peaceful Cities by Jerzy Pilch in the physical world. And if they did, would they really drop $13 on an author/book they’re completely unfamiliar with?
I’ll end here with the joys of being small: A Big Six press can never do what we do. They have shareholders and restrictions and people to employ at (occasionally) decent salaries. They have buildings and holdings. I get why they consider the e-book price war to be a serious business. As a small press we can operate outside of the box at times. And if our goal is getting people to read our books, a great first step is making them aware. And if the world loves the $0.99 price point, we’ll meet them halfway.
By pricing our e-books at $4.99 for the month of June, we hope to do two things: make people aware that we have e-books, and get that fringe reader — the one who’s intrigued but for whom even $9.99 is a maybe a bit too much for something they don’t know enough about — to take a chance. Catalonia isn’t that scary.
And in terms of that revenue thing? Here’s a concept: We can’t survive by selling all our books at $4.99 unless someone drops a million-dollar check in the mail right now, or we sell 4 or 5 times the number of copies we typically sell. But we can survive if every fifth person who buys a $4.99 Open Letter e-book raves about it to friends and convinces a few people to buy either the $14 paperback or a $9.99 e-book. Which fits in with our mission of generating genuine excitement about our books and may help expand the audience for works in translation in general, which is good for everyone.
And I stand by our content. It’s not John Locke — it’s at least five times better.