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January 2012

ebooks more than paperbacks?

More on the sometimes crazy pricing of ebooks:

The great ebook price swindle

Publishers are facing an uncertain time in the digital world – but increasing the prices of their ebooks is a retrograde step

Dan Gillmor | guardian.co.uk | Friday 23 December 2011 15.07 GMT

I want to offer a word of thanks to the American book publishing industry, or at least the traditional big companies that have dominated it in recent decades. They've helped me rediscover my local library and the used book stores in neighboring communities. They've achieved this by exhibiting the qualities that come so naturally to corporate media giants: greed and arrogance – in this case, as applied to the way they've dealt with the digital world.

To understand what they've done, you need to understand a bit about how books are sold in America. Publishers have two major distribution methods. One is traditional wholesaling: sell the book to a middleman, who typically adds a mark-up to customers, but sometimes discounts a book below cost as a "loss leader" to attract more business for items that aren't discounted in this way.

The other model is called the "agency" system. In this case, publishers set the price and the bookstore merely handles the sale to the ultimate customer, for a set fee or percentage of the transaction. The "big six" US publishers all sell their physical books via the wholesale model. After years of wholesaling digital editions as well, they moved to the agency model for ebooks, with Random House becoming the final publisher to switch early last year. The publishers had been increasingly angry about Amazon's selling of new bestsellers at the loss-leading price of $10 (actually, $9.99), worrying that the giant online company was setting customer expectations at a too-low price point and undermining the sales of physical books.

Apple played a role in this switch, by essentially telling the publishers it wanted the agency model for its own online bookstore, which services the iPad and iPhone. And Apple co-operated in what was the inevitable result for e-books everywhere: higher prices to consumers.

Not just higher prices, but vastly higher; many ebook bestsellers on Amazon (and in Barnes & Noble's Nook store) jumped 30% to 50%, from about $10 to $13 or $15 or even higher, as publishers imposed higher list prices for the digital versions. And in case after case, the ebook price for a new book was close to, and sometimes even higher than, the Amazon price for a hardcover. Remember, Amazon still has the right to discount from list price for physical books, as it has always done. Meanwhile, publishers have dictated that ebook prices will be the same as they charge for paperbacks (around $10 these days).

It’s one of those strange cases where competition increases prices (there’s another one here).  Apple offered publishers the chance to charge higher prices, and they were happy to do so.

It’s no surprise that Amazon’s original US$9.99 price for newly-published titles was not to the liking of all publishers, but a simple low price for a large range of titles was a great marketing message for the Kindle. No-one can really know how many sales of hardbacks were lost because the Kindle price was lower, but I’d suspect that they were more than made up for by higher overall sales.

An ebook priced like a physical book is a terrible deal for the customer. Among other drawbacks, you can't resell – or even give away – an ebook in most cases. You don't really own an ebook; you're just renting it, even if the company you rent from says you can keep it, because that depends on the life span of the seller. Maybe Amazon will be around for a long time to come (I hope so, as a holder of a small amount of Amazon stock), but why would anyone count on that?

I’m not so worried about Amazon going out of business. In the unlikely event of this happening I am sure that some alternative devices would appear, but it is completely baffling that an ebook should be the same price (or even more expensive than) a hardback book.  It simply makes no sense.

And yet - although it just seems wrong for a Kindle e-book to cost more than the physical book, the prohibitive shipping charges to Asia ($10 for the first item, $5 for additional books in the same shipment) make a huge difference. Even with the totally arbitrary $2 charge for delivering an Amazon e-book to overseas customers (through Wi-Fi) the KIndle version is usually cheaper.

And plenty of books are much cheaper on the Kindle.  For example, last week's SCMP had a review of a book about Walmart in China.   The publisher’s price is $25 for paperback or $65 for hardback, but I purchased it on the Kindle for $9.99 (plus $2 ripoff charge), and I could download it within seconds.  Hard to argue with that - though, strangely, it is now $16.97.

Another recent purchase was the first volume of Margaret Thatcher's memoirs for $3.99 (plus a very slightly less unreasonable $1.60 ripoff charge).  So it’s not a problem finding books for the Kindle at reasonable prices, and easy enough to avoid buying any that are over-priced.  Plus you can always download a sample to check out a book before purchasing.

When new ebooks were $10, I was buying them all the time. In almost all cases, book purchases are impulse buys – something you want to have, right now. I was buying new best-sellers at a rapid rate, and happy to do so. (The books I bought this way tended to be mysteries and thrillers – the kind of book purchases I treated like movie tickets, to be read or seen once and then put aside.)  No more. I still buy some e-books, but only at lower prices.

I think that’s right – at around $10, I would buy new titles that I want to read now, but at $15+ I am likely to wait till the price is reduced (or buy the paperback if it’s cheaper).  And at less than $5 it really is an impulse purchase.  

Sure, I can afford the higher prices. But the greed of the publishers has inspired me to make different plans. Now I reserve bestsellers at my local library – run by people who love books: imagine that! – and read them whenever they are available. What were impulse purchases of books that sent revenue to publishers are now impulse reservations that do not. If I have to wait a few weeks, no big deal. I should have remembered that all along.

I agree that publishers need to think more carefully about pricing.  In the long term it is going to hurt them - piracy is one way, and there are some interesting comments on the Guardian article, such as this one on a radically different approach:

If an author publishes an ebook via a publishing house, of the $9.99 price, they get only $0.60 in royalties at 6%.  If they self-publish the same book and charge just $2.99, they get a royalty of $2.09 - but the customer gets a 70% discount!

And it's not hard to upload - you will find that indie books that have been uploaded by authors are usually formatted correctly - they take the trouble because it's their baby, while the publishing houses do a poor job, but want to take money off the author and customer for the work anyway.

There was a more recent story about how some writers are making a good living through Amazon:

Amanda Hocking, the writer who made millions by self-publishing online

Ed Pilkington | Thursday 12 January 2012 20.00 GMT

When historians come to write about the digital transformation currently engulfing the book-publishing world, they will almost certainly refer to Amanda Hocking, writer of paranormal fiction who in the past 18 months has emerged from obscurity to bestselling status entirely under her own self-published steam. [..]

Over the past 20 months Hocking has sold 1.5m books and made $2.5m. All by her lonesome self. Not a single book agent or publishing house or sales force or marketing manager or bookshop anywhere in sight.

Which is something that ought to make publishers stop and think.


Denial

There have been several letters in the SCMP from expats in response to Sam Wong’s letter last week.  His response is to deny what he wrote and blame it on the sub-editor:

Some deny post-colonial reality of HK

There have been many responses to my letter ("Expats have done little to benefit city", January 3).

The theme of my letter relates to the competitiveness of Hong Kong but your correspondents focused on the contributions of individuals, which is a different matter. This misunderstanding caused an overreaction and harsh language from some letter writers.

I did not suggest a lack of contribution on the part of foreigners and domestic helpers despite the headline (which I did not write). Every citizen contributes to our society one way or another. Even people living on social welfare can claim they contribute to our economy because they are also spenders.

Hong Kong's competitiveness is measured by its infrastructure, modern airport and container port facilities, communications technologies, good social systems, financial services, industries, tourism, medical services, an efficient police force, good governance and a hard- working population, supplemented by the support of the mainland under the "one country, two systems" concept.

Foreigners in Hong Kong share the success of Hong Kong's competitiveness.

As Graham Price pointed out ("Foreigners make a big contribution", January 6) many chose to make Hong Kong their permanent home because of job opportunities and a friendly environment that makes it easy for foreigners to settle.

However, some foreigners who lived through Hong Kong's colonial era still fail to acknowledge that this city has returned to Chinese sovereignty. They suggest that local people's views should be expressed only in the Chinese-language media.

I extend a welcome to all foreigners if they share the view that the competitiveness of this city is not solely due to the presence of a small population of expatriates. And I hope your correspondents will no longer feel offended after my clarification.

Sam Wong, Sha Tin

So what does he really believe?  The headline seems like a fair summary of the following excerpt from his earlier letter:

Expatriates who have come to this city to work do so because they can't get a better job at home.  If these people's talent had anything to do with the competitiveness of Hong Kong, they would have enhanced the competitiveness of their respective home country. The sad state of the economies in the US and Europe is a reflection of the talent of these people.

Does he really believe that he didn’t “suggest a lack of contribution on the part of foreigners and domestic helpers”?

Of course what this is really about (as with many similar letters published by the SCMP) is the section I have highlighted above:  “this city has returned to Chinese sovereignty” and “some foreigners who lived through Hong Kong's colonial era still fail to acknowledge that”.  So, we foreigners should keep quiet and learn Chinese.


Foreigners go home

More enlightened views brought to us by the letters page of the SCMP:

Expats have done little to benefit city

Recently the concept of Hong Kong's competitiveness or the competitive edge of Hong Kong has again been quoted in your editorials, for example ("ESF  debate merits a conclusion soon", December 28).

In all these cases, the South China Morning Post related the concept to the presence of expatriates in this city. Is our competitiveness due to the presence of expatriate businesspeople or individuals?

I am sure most local people know the answer. Expatriates who have come to this city to work do so because they can't get a better job at home.

If these people's talent had anything to do with the competitiveness of Hong Kong, they would have enhanced the competitiveness of their respective home country.

The sad state of the economies in the US and Europe is a reflection of the talent of these people.

Expatriates who are making a living in Hong Kong are no different from domestic helpers earning their livelihood here, except that no domestic helper is claiming that he or she has enhanced the competitiveness of this city.

Hong Kong returned to Chinese sovereignty on July 1, 1997. Misleading statements which were never challenged during the colonial era will no longer enjoy the same privilege.

Sam Wong, Sha Tin

What a load of old nonsense.  I won’t even dignify this with a response.

Gotta love that last sentence, though:  “Misleading statements which were never challenged during the colonial era will no longer enjoy the same privilege.”  Eh?


Illegitimate expectations based on false memories

Oh dear.  The SCMP is still publishing these ridiculous Pierce Lam letters:

Migrants in HK need a wake-up call

Thasbeeh Mohamed's letter ("Cantonese-medium local system is unsuitable for expatriate students", December 19) is rife with errors and biased generalisations.

Cantonese has always been most local schools' medium of instruction. If there has been any change since our reunion with China, there are now more English-medium schools. Expatriates who choose to come to work in Hong Kong should not entertain illegitimate expectations based on false memories of what it was like in the colonial age.

This is marvellous stuff: “illegitimate expectations based on false memories of what it was like in the colonial age”.  Yes indeed.

When Hong Kong people take up jobs in Beijing or Berlin, they won't expect the host city's government to provide Cantonese or English-medium education. Those who send their children to public schools accept that they have to study in the host city's local language.

There is the inconvenient fact that English is an official language of Hong Kong, which is not the case in Beijing or Berlin, but do carry on.

To overcome the language problem and assimilate into schools abroad, migrant students from Hong Kong attend language tutorials after public school classes. Expatriate students who have problems assimilating into Hong Kong's local schools should do the same.

Those who find local schools unsuitable for their children should either pay for private education or find work in places where their children could adapt.

Getting admission to a good school is never easy anywhere in the world. Students not of the right calibre for good schools shouldn't expect special admission simply because their parents are migrant workers.

It is naive to ask for special treatment.

It is ridiculous that expatriates who find neither good jobs nor good schools back home should demand privileges as migrant workers in Hong Kong.

Contrary to your correspondent's claim, Hong Kong parents tend to over-schedule out-of-classroom activities for their children. My own children's outstanding academic results alone won't have won them admission to the world's top universities without their achievements in various co-curricular activities.

Every body politic must give first priority to its own people. Hong Kong's education priorities are to further improve the quality of local schools, to popularise the indisputable fact of its schools' high standard for international recognition, and to abolish the remnant of a colonial arrangement whereby our public education is segregated into local and expatriate schools.

Pierce Lam, Central

Ho hum.  He starts by complaining about “errors and biased generalisations” and then gives us all this nonsense about “colonial arrangement[s]”.  Has he been anywhere near an ESF school in the last few years?  Or perhaps he doesn’t want to see an example of local and expat children studying happily together.