Will we see the end of “paperback pricing”?

Will we see the end of “paperback pricing”?

Volumes have been written about pricing and e-books.  I’ve written extensively about the Agency Model, and I track prices every month in my Snapshot series

However, there is an important point which I haven’t extensively explored.

For years, there have been two basic tiers for paperbooks.

Books were released first in hardback.  Currently, that might be at about a $25 list price.  Those hardbacks appealed to people who had to have the book first, and wanted to still have it last.  They didn’t want to hear spoilers, they were willing to pay a premium to get it now, first day.  They might have wanted to have the book to pass on to the next generation.  Maybe they wanted to sell it, and hardbacks typically suffer less degradation when read than paperbacks.  If you are buying the book for more than one person, a hardback had some additional value. 

However, if you were willing to wait (typically a year), you could get the book as a mass market paperback.  Nowadays, the list price might commonly be $7.99 for that.  Why hadn’t the buyer bought the hardback?  Maybe the paperback is easier to carry.  Maybe they aren’t concerned about passing it on.  If the hardback and paperback were released at the same time for the same price, I still think a lot of people would have preferred the paperback.  They are easier to carry, store, and move.

E-book prices have been tied to the paper editions.

When the hardback is released, the e-book price is based on that.  In the case of a non-Agency Model book, the publisher commonly sets the list price for the e-book and for the hardback the same.  Amazon then discounts the e-book more.  In Agency Model books, the publisher sets the sale price…$12.99 is a common price for bestsellers.

When the paperback is released, the Kindle price is commonly dropped below that list price.

I believe that e-books will crush (but not necessarily eliminate) paperbacks before they crush hardbacks.

An e-book is a much better parallel to a paperback than to a hardback. 

What happens if mass market paperbacks are marginalized?  What happens to pricing?

My guess?  We won’t see an automatic drop a year after release.

Yes, there is higher demand when a book is first released.  Eventually, you may saturate the market.

But the e-book file has the same value whether you buy it at first release or a year later.  You aren’t getting a more cheaply produced copy, like you are with a mass market paperback.

This is going to be a huge change, for book producers, booksellers…and book buyers.

I think waiting for the price to come down may become a strategy of the past.  Not that the price won’t come down sometimes…but it will go back up sometimes, too.

This is what I picture.  A book will be released at $9.99.  People will see that as a bargain, comparing it to the hardback prices we used to pay (and the recent Agency Model prices)  That book will stay at $9.99…certainly until demand drops off.  So, a book like Harry Potter or a Twilight series book might be $9.99 for years. 

If a book doesn’t do well, the publishers (or retailers) will play with the pricing.  That might not be a year later, though…it could be a month, or even a week after release.  If a book “pops” (maybe due to a movie adaptation), the price might go back up.

That would be a really good situation for the publishers (which is why they might be comfortable with a $9.99 initial price).  You won’t have to have two waves of publicity.  You can put the author in the media again when you find that necessary, but you don’t have to pay for a second mass market paperback campaign. 

The bestselling books will become more valuable, since they can maintain a higher price for longer.  Does that mean that publishers will take fewer risks?  I don’t think so…books that don’t do all that well will still be able to be reduced to sell.  Introduce a book at $9.99, and if it doesn’t do well, drop the price until it does.  When you had the hardback/paperback tiers, you couldn’t just release the paperback because the hardback wasn’t selling.  You would be stuck buying back those hardbacks from the brick and mortar bookstores…and waiting a respectful time or never releasing a paperback (the latter being the most likely).

Now, in the digital age, maintaining a poorly received book in the catalogue costs very little.  Hey, price the book at ninety-nine cents…you’ll sell some copies.  The author’s royalty is based on the sale, or at least, that’s definitely the way it is going in the e-book world (as opposed to based on the list price).  That won’t matter, though…the list price will have changed to ninety-nine cents.  Remember, you can probably sell that book for decades…even a dripping faucet can fill a bucket.

There is going to have to be an effort to educate the book buyer, so they don’t wait around and mess up your best-seller list rankings.  People will have to realize it won’t necessarily be cheaper a year later.

Does that mean that prices will never get low enough for lower income people to get the books?  I think there is a risk of that for some books.  Take a look at some older well-known books, and you’ll find they are only available as trade paperbacks now (trade paperbacks are about the size of a hardback, but without the hard back).  That possibly puts them out of the reach of some readers…so if the same thing happens with e-books, that’s no different.

There’s a role there for libraries and for something like the NOOK’s LendMe feature.  Amazon’s not the friendliest is this regard…getting e-books to disadvantaged people, since they currently don’t support public libraries with the azw or Topaz formats.  However, I can certainly see the development of needs-based testing for libraries, and that situation then being fully embraced…by Amazon and publishers.  After all, if they aren’t going to lose a sale (because the borrower couldn’t have afforded the book anyway), it would be well worth it for them in public relations.  Publishers donate a great deal of paperbooks now for the same reason.  They could allow a poorer individual to get a book for free for…say, a month.  Then, it would delete itself.   I’ve also talked previously about libraries lending EBRs…I see that becoming stronger in the future as well.

With the elimination of the limitations imposed by physical book printing and distribution, will we see actual demand driven pricing?  Will more popular books cost more and less popular books cost less…forever, after the book is released?

One other thing worth noting: price notification services should seriously increase in popularity.   They aren’t much of a factor now, but if they can be integrated more into your data interfaces, they will be.  Right now, you can go to Kindle IQ, tell it a book you want to track, and they’ll let you know when the price drops…for free.  The trick on this is going to be to get that to be much more integrated.  You look at something on a shopping site.  You think the price is too high…so you click on a button on a toolbar (or the futuristic equivalent…you might just say it).  You don’t have to go to another site…it just tracks it and lets you know automatically when it drops.  Later on, of course, your data deliverer will just know to alert you to books in your price range…whether it’s a drop or an initially low price.

Is this where we are headed?  Demand driven pricing?  Let me know what you think…

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

10 Responses to “Will we see the end of “paperback pricing”?”

  1. Bernadette Says:

    Yes, this is exactly what is going to happen. I think it’s evolution has already started and there is no going back. I am currently reading the Harry Potter books (required reading before we vacation at Universal:) and can see JK Rowlings publisher keeping the price high for these books for the rest of my natural life. I am on the’ Goblet of Fire’, the first really big book, and my hands are actually getting tired holding it. It is the hardback edition because both of my children had to have their own hardback collection. We lived in Sweden when my youngest started reading them so his is the UK version. I really wish I was reading it on my Kindle. I read ‘The Passage’ by Justin Cronin a couple weeks ago and was so happy to read it on my Kindle. It is the first of a trilogy and for now I am happy to have the e-book version. On the other hand, I just bought the hardback versions of the Millenium trilogy because I loved them so much. I have them on my Kindle but wanted my collection of the ‘real’ hardbacks just like my kids and their Harry Potters:) The Millenium books were sold at a discount in paperback/kindle versions which definitely helped draw in more readers to read the rest of the series. Book prices will forever be changed by the advent of e-readers.

    • bufocalvin Says:

      Thanks for writing, Bernadette!

      I do like theme parks. 🙂 I’d like to see the Wizarding World myself…

      My guess is that we will have the Harry Potter books in e-book form by the end of 2011…and possibly for the holidays this year. There has been some…hinting about that.

      They are a perfect example of books that should be in e-book form. I knew one unfortunate booklover who had to have others tear the Harry Potter books into pieces to get them to be small enough for the person to read comfortably, due to a physical challenge. It was heart-rending, in addition to book-rending…yes, there are options (like audiobooks), but this person would not have been able to certify a print disability easily, due to it being a temporary condition.

      Can you imagine what it would mean if one of the EBR (E-Book Reader) companies got an exclusive on HP for two years? That’s happened with some “modern classics” for the Kindle. Two years would buy an awful lot of marketshare…

  2. draegi Says:

    I think $10 might be a tiny bit expensive for the older books. I agree that ebooks will probably replace paperbacks but even the hardbacks of the first harry potter books have gone down to $2. I dont mind paying $10 for the newest/most talked-about kindle books (although i will not pay any more than that) but I’m more likely to buy a book if it’s cheaper. Thankfully, I think that the flood of independent authors who arrive as the kindle gets more and more mainstream will keep the prices competitive. Ultimately a big problem is that I can’t resell the book, or even pass it on, so I’m only going to pay for the value that I can personally get out of it.

    The samples you can get for free are sortof like a library – they’re certainly more useful than the glance you might get at a book if buying it from a shop, but that’s one of the nooks best sale features, so kindle could do with the feature at some time in the future.

    • bufocalvin Says:

      Thanks for writing, draegi!

      We’ll see about the price point…the recently introduced Odyssey Editions are doing quite well. The are new to e-books, but they are older books.

      I fully expect my e-books to be available to my descendants…they already are. 🙂 My offspring is on my account, and I expect the next generation to be on it as well. Books are our account are already sometimes read by two people, rarely by three. For me, it’s not just about the value to me. I wasn’t a big redistributor of paperbooks, though, so we may have had different patterns there.

      Indies certainly may drive down tradpub (traditional publisher) books, but they may simply establish that second tier. Wealthy people would continue to buy the well-known names, and people with fewer means would read the lesser-known authors. Interesting possibility…

  3. michelle Says:

    NO, the kindle will not replace books. Not everyone likes gadgets. People like myself who love books will not give into kindles. Having to look at a computer screen is bad enough. I can’t imagine staring at some little screen all day just so I can read a book . NO, they stop making paper books and I will save money because I won’t be wasting money on another gadget. There are still people out there that like the feel of a book in their hands, and like reading at the beach. There is no way I would want to take on of those eletronic gadgets to the beach. I did that with a camcorder and ruined it. I’ll just keep my paperbacks.

    • bufocalvin Says:

      Thanks for writing, michelle!

      I’m an inveterate booklover myself…a former bookstore manager with something like ten thousand paperbooks in my home. I think you may have misunderstood my article…my question was whether we would see the end of a second tier of pricing when a paperback is released, not whether we would we see the end of paper books.

      However, I think you’ll find that many booklovers love their Kindles. The book is what the author writes, not the medium in which it is presented. I love paperbooks: I have some that are over one hundred years old. However, they aren’t to me just objects to admire: I like reading. 🙂 The Kindle enables booklovers to do much more of that much more conveniently. My Significant Other had a great line: somebody said, “I like the feel of a book in my hand.” My SO responded, “I like the feel of a hundred books in mine.” 😉

      There is nothing that says you can’t have both, by the way. Listening to a live concert is a very different experience than listening to recorded music…but the vast majority of music is now enjoyed through recordings. Why? It’s more convenient, for one thing. If I want music in my car, I don’t want to have to have Yo-Yo Ma and a hundred of his co-workers as passengers. 🙂 For those of us who love reading (and I suspect that might be you and me), we want to read…wherever and whenever we can. I’d be willing to stand on my head for the opportunity to read a book. 🙂

      However, reading on a Kindle is not at all like reading on a computer screen…no headstanding required. It’s not backlit…it’s like a book in that respect. The screen on the six-inch Kindle is comparable to a paperback (although a bit smaller than the typical one nowadays…more like an Ace Double). I didn’t think I would like reading e-books at all… I was wrong. Just like a book, you forget about the way you are reading, and just enjoy the story (or information, in the case of non-fiction).

      The Kindle has partially been so successful because it appeals to readers, not gadget-people. Many folks who are not comfortable with technology find it an easy way to read.

      As to the money…I save the cost of my Kindle every year…but I used to buy a lot of paperbooks. It depends on your reading and buying habits as to whether or not it would save you money. I wrote a recent article on that:

      https://ilmk.wordpress.com/2010/08/19/will-a-kindle-save-you-money/

      Beach reading, by the way, is as safe with a Kindle as it would be with a paperbook. Safer, in some senses. The old style camcorders were pretty subject to sand damage…a Kindle is quite well sealed. Some people do read them in Ziploc bags, and there are waterproof cases. Water on a paperback caused irreparable damage. Generally, you can wipe a few drops off a Kindle with no lasting impact. One nice thing with the Kindle…even if the device itself was destroyed (or lost or stolen) you would still have all of your books. You and other people on your account can read them without having to pay to replace them.

      You are welcome to stay with paperbacks, of course…your call. That could make sense for more casual readers (let’s say people who buy fewer than ten books a year). For people who read a hundred books in a year or more, the ready availability of the world’s great literature for free is another attraction. If you read Dostoevsky, Doyle, and/or Dickens, you can read them all whenever you want at no cost. That’s nice.

      I appreciate you taking the time and making the effort to write the comment. I don’t want to dissuade you from paperbooks…as I said, I love those. While I do expect the cost of hardbacks to rise considerably as they become more of a luxury item, I don’t expect them to disappear. Some people really looked down on paperbacks when they were introduced as a way to reach a broader audience of readers. E-books do the same thing…especially for people who have print challenges (such as vision issues and debilitating conditions). The primary audience for the Kindle has been, I think, people who read much more than the average person…but I do think they’ll become more mainstream over time. However, just as hardbacks survived the introduction of the paperback format, I think paperbooks will survive e-books.

      Enjoy reading, however you choose to do it! 🙂

  4. Lisa Maddox Says:

    I really enjoyed your post about two tier releases of books. I hadn’t realized (though it makes sense now) that publishers basically rerelease a book (re advertise) when it comes out in paperback. I agree with you that as Kindle and e-readers become more commonplace the marketing and publishing of paperbacks will go down considerably. Why wait for the book to be released in paperback when you can have it right away on Kindle for basically the same price as a paperback? One point you did not mention though, is that e-books are much, much cheaper to produce then traditional hardbacks and paperbacks and virtually free to store. A publisher can literally sell thousands of copies of an e-book for the same price it costs to manufacture and sell just one copy of that same e-book. Physical space is expensive and traditional books also need to be physically mailed to bookstores. All of these add to the cost of a book. It will be interesting to see whether Amazon, Apple, and Barnes and Noble will continue to dominate the e-book market or will other companies open for publishers to distribute their books?

    • bufocalvin Says:

      Thanks for writing, Lisa!

      We’re already seeing the impact on mass market paperbacks. Recently, Dorchester Publishing announced they were dropping mass markets and going just to e-books and trade paperbacks (those are the larger ones).

      I think centralized purchasing of e-books will tend to continue. Heavy book buyers are a tiny part of the population, and my guess is that a lot of them aren’t heavy internet users (although obviously, some are both). They may not want to bounce around to a separate site for each publisher to buy books. Amazon, in particular, gives you a lot of services with your e-books, including backing them up for you for easy re-download. That’s appealing. Even if the publishers offered a similar service, would you want to go back to twenty-five sites to re-download your library if your device was lost/stolen/destroyed? I’m not saying it can’t be done, but it’s a challenge.

      As to the costs, you are right on manufacturing and distribution…but there are a lot of other costs that stay basically the same. Author royalties are one of the big ones…8 to 12 percent of the list price was common for p-books (paperbooks), 20-25% of receipts is a common rate for e-books. Legal costs, editing, proof-reading, and so on still exist (hopefully). 😉 You have lay-out on paper, formatting on e-books. You still have cover artists and advertising. My guess is that Customer Service (which is quite expensive) tends to be much higher on e-books than on p-books.

      I do think e-books are cheaper to produce and distribute and sell and service than p-books overall. The original number I saw floating around was 12.5 percent lower. That one was assuming development from scratch, I believe…but that is what would be happening if e-books were the first release format.

      There are a lot of ways to think about this, though, and costs are a moving target. Over time, things based on natural resources (p-books) tend to become more expensive, and things based on technology (e-books) tend to become less expensive…

  5. jane Says:

    your blog has lots of useful information.
    I just started blogging a while ago and it feels great.

    • bufocalvin Says:

      Thanks for writing, jane!

      Thanks for the kind words! I’ve always had some kind of creative outlet, and blogging is its own animal. It’s different from writing long form, and (for me) it’s longer than writing, say, e-mails.

      Good luck with your blog…you enjoying it is part of what makes it appeal to readers.

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