E-books and Pricing

I got an email from a fellow author who is considering raising the price of his Amazon Kindle title. At $2.99, his e-book is so much cheaper than his paperback that people aren’t buying the paperback.

I’ve seen this same phenomenon with my book. The electronic version sells about 10 times as many copies as the paperback. Amazon’s more voracious readers tend to go for e-books, because they consume so many of them. When self-published authors advertise through any of the promo sites that send out email blasts to their subscribers, we’re reaching mostly those voracious Kindle readers.

Unlike self-published indie authors, the big publishers tend to keep their e-book price closer to the paperback price. Often, their e-books are priced at $9.99 or above. Publishers do that on purpose, because they have decades-old relationships with physical bookstores, and they don’t want to damage those relationships or put the bookstores out of business by selling e-books that are drastically cheaper than paper books. Believe it or not, 60% of books are still sold offline, as physical books, mostly in traditional bookstores, but also in places like Costco and grocery stores that offer a limited number of best sellers at a cheap price.

Amazon has numbers proving that publishers will make a higher profit selling their e-books for a lower price. A price-drop of 30%, for example, may result in a sales increase of more than 30%.

After a court ruling in 2014, traditional publishers were forced to renegotiate their e-book contracts with Amazon and Apple. When Amazon started to renegotiate their contract with Hachette, they wanted to force Hachette to drastically lower their e-book prices. This turned into a very public dispute, in which Amazon displayed some exceptionally nasty behavior, including listing a number of Hachette’s top-sellers as out of stock when they weren’t. They basically refused to sell Hachette’s books, and since Amazon controls about 40% of the US book market, the idea was to strangle Hachette financially until they gave in.

Hachette didn’t want to give in because offering cheap e-books would be one more nail in the coffin of physical bookstores throughout the US. And they felt if they gave in, all the other major publishers might be forced to follow. This LA Times article has a brief overview of the story. And the New York Times has a summary as well.

Eventually, Hachette and Amazon settled, with Amazon insisting that the terms of the settlement be disclosed to no one.

The pricing model that Amazon wanted to force on Hachette was one part of its existential threat to the traditional publishing industry because it would have threatened the existence of traditional book stores. The other part of Amazon’s existential threat is its ability to identify and sign new authors. CreateSpace, and Amazon’s whole self-publishing eco-system have turned out to be a very good farm system for minor league writers. Amazon has crowd-sourced the old slush pile. Instead of a handful of interns wading through thousands of unsolicited manuscripts, Amazon has millions of readers checking out millions of new self-published works. This new system is inherently more efficient than the old system. Amazon’s readers process more books more quickly, and the fact that one thousand readers like a book predicts sales more reliably than the hunch of a single editor.

I have to say, I have mixed feelings about Amazon as a publisher and bookseller. On the plus side, they’ve opened up a whole new world to indie authors. Twenty years ago, if you or I wanted to publish, we’d have to go through the traditional submission process, which is a long-shot. Then we’d wait months or years to maybe get a contract, and then if we couldn’t, we’d have to pay a lot of money to a vanity press, leaving us with a big stack of books and no distribution channels.

On the negative side, Amazon has this fanatical desire to stamp out all inefficiencies in the production and distribution of goods. That’s fine for commodity items like soap and socks, but books are not commodity items, and the creative process, when judged by the standards of industry, is inherently inefficient and always will be. Now Amazon has its own publishing imprints, like Montlake Romance and Thomas & Mercer, and it approaches publishing as it approaches all other businesses. It’s strictly a numbers game. They look for indie authors who are selling well, they sign them and promote their books. Amazon has access to all the sales numbers, so they know exactly who’s selling, and what kind of readers an author attracts. They also control the marketing platform, so they can push sales very effectively. And I must say, they offer exceptionally good terms for authors.

But what’s lost in all this is the curation and nurturing that the traditional publishing world provides. Publishers do what they do out of passion and the love of books; and passion and love are inefficient to the point of being contemptible in the eyes of a machine like Amazon. Where a computer algorithm may recognize a promising book by its similarities to what has sold before, a good editor recognizes a promising author by their originality, depth, and uniqueness. A good editor spends a tremendous amount of time cultivating and polishing both a book and an author.

What an editor does for an author is similar to what producers and sound engineers do for a musician: they improve the work by applying their passion, insight, and technical skill to the creative process. Readers don’t typically get to see that process, or the difference between the unedited drafts and the final publication. But you can hear the difference between this earlier, less polished version of Hozier’s From Eden and the final version of the same work.

As editor nurture individual books, so publishers have traditionally nurtured and cultivated careers. That investment of time, and in particular time spent in pursuit of a qualitative goal, rather than a quantitative goal, is entirely at odds with Amazon’s grinding culture of metrics and efficiency. You may have seen the New York Times article describing Amazon’s internal culture.

Having worked at Amazon in the past, I can say that the article is accurate at least in its description of the pressure to work hard and to consistently produce measurable results. (I never saw any back-stabbing there, or people crying at their desks. And I was not one of those people who was ground down by working there. That culture brought out the best in me at the time. I learned a tremendous amount, and when I was ready to move on, the words of encouragement that finally pushed me out the door came from Jeff Bezos himself.)

But again, that culture of metrics and efficiency will never seek out, discover, nurture or even recognize work that is daringly original, challenging, and deep. The machine is designed to recognize what sells, and to promote more of that. Over time, this leads to a homogenization of literature in the same way that computer algorithms have led to a homogenization of web content. Ever wonder why every other article in the web is “7 Secrets of X” or “10 Things You Didn’t Know About Y?” Because the algorithms say people click on those kind of easy-to-consume teasers, so the machine gives us more. Popular music seems to be going the same way.

Some of the smaller presses, like Graywolf, continually impress me with the books they put out. When I read something by Deirdre Madden or Vikram Chandra, I’m always asking, “How did they find this? How did they have the nerve or the vision to publish it? No commodity, by-the-numbers publisher would ever have picked this up.” I’m grateful for those deeper, more challenging works that bring us to a level of thinking that genre fiction doesn’t even attempt to reach. And I’m worried that Amazon’s imprints may suck up all of the talented new genre writers whose best-selling work once financed the unremunerative bets that passionate editors made on authors whose voices enriched the culture by opening our eyes and minds to things we don’t normally see.