The Ebook Price War: Where the book do we go from here?

The ‘print versus ebooks’ debate is irrelevant. The real war is between traditional publishers and self-publishers.

Standing on the sidelines, it seems like Amazon, Apple – on behalf of self-publishers – and the Big Five publishing houses are too busy nuking it out with each other to become the top dogs to realise the damage that is being done to the literary landscape. The only path to victory appears to be the complete annihilation of the opposition. If Amazon and Apple win, are we destined to see ebook stores full of novels, described by Andrew Franklin, founder of Profile Books, as being ‘unutterable rubbish?’ If the traditional publishing houses win, are these same ebook stores going to be stocked with good quality books which fail to find their audiences because their price points are too high? Are these two extremes the only paths available?

The Problematic Price War

In the late nineties Esther Dyson, a technology investor, predicted that as Internet access increased, traditional content creators would struggle to get paid in an ‘increasingly competitive marketplace where much of the intellectual property is distributed free and suppliers explode in number.’ Advances in computer and software development over the past decade have largely proved Dyson to be correct. Technological advances halve the costs of digital based businesses every twelve months. As Chris Anderson, author of Free: The Future of a Radical Price, puts it: ‘whatever it costs YouTube to stream a video today will cost half as much in a year.’ This means that companies such as Amazon and Apple can provide cheap hosting so anybody can self-publish a manuscript, and because these author-publishers don’t have the same overheads as large publishing houses. They can therefore afford to sell their books at a lower price point in an attempt to generate interest and compete with other self-published works.

Historically, publishers sold books to distributors and retailers who would then sell to the consumer. However, the rise of self-publishing and ebook sales in this digital age has forced publishers to sell directly to individuals. Gone are the days when carefully curated book shops and libraries are our only source of reading material – now publishers are forced to sell side-by-side with unknown ebook novelists. Author Chuck Wendig irreverently refers to this as a ‘self-publishing volcano’.

The problem facing publishers such as Penguin Random House is that the cost of producing the content has remained the same. Money must still be invested into sourcing content, editing manuscripts and producing digital copies. In 2012, Penguin’s Global Digital Director Molly Barton said ebook production was only 10% cheaper than physical book production. Publishing houses can’t afford to sell these ebooks at significantly cheaper price than print editions, which, when then sold alongside self-published novels, appear over-priced.

Where next?

So, if traditional business models aren’t working for major publishing houses, could the adaptations of one or more of the following prove a better choice?

Pay-Per-View

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Credit: Total Boox

 

Yoav Lorch founded Total Boox, an e-reader application, to challenge what he described as the ‘buy first, read later’ business model, describing it as ‘a burdensome remnant from the world of printed books.’ This platform – and others such as Valobox – allow users to create bookshelves and populate them with as many ebooks from the catalogue as they want, for free. Users are only charged for what they actually read. Books have a set price, but if a reader only reads 10% of the content, they only get charged 10% of the price. According to Lorch, publishers can use analytical tools to ‘understand what’s engaging for readers, and how the books are consumed’ rather than merely monitoring book sales.

Valobox could have been particularly attractive to publishers as it incentivised readers to share books that they’d enjoyed. Readers used widgets to share their favourite books on social media, blogs or websites and received a twenty-five percent discount. Co-founder Ann Lewis pointed out that ‘if users take over marketing, publishers are happy for them to get a reward,’ particularly as this discount didn’t affect the royalties paid to the author and publisher.

Freemium/Premium

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Credit: 24symbols

 

Spanish company 24symbols have build their e-reader application around this model more famously used by Spotify. By providing a quality free service with limited access to the platform’s catalogue – with embedded advertisements – readers will find the premium content attractive enough to pay for access the entire catalogue ad-free. Founder Justo Hidalgo argues that publishers need to start thinking of books as a service and find ways to meet readers needs in how they access, read and share content. The challenge for this business model is that studies suggest that only between 5-15% of users are willing to pay for content on these platforms.

Dynamic Pricing

In 2012 Karol Gajda founded OnlyIndie, an independent online book store which used a dynamic pricing structure to generate interest and create demand for the platforms catalogue of books. Having successfully tested this model on his own self-published travel book, he concluded that it could work for other authors too. The price for every ebook on the site started at $0 for the first fifteen downloads. After that the price rose by a cent with each download up to a maximum price of $7.98. Feedback from buyers suggested they ‘loved the idea’ because it was a ‘fun way to buy from indie authors and support indie work.’

Whilst the venture failed, Gajda highlights that ‘something is only worth what someone will pay for it’ and that rather than focusing on finding the perfect ebook price, more concern needs to be given to building and engaging audiences.

Crowdfunding

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Credit: Unbound

 

Launched in 2011, Unbound has brought readers into the conversation about what books should be published. Authors pitch ideas on the website and readers are encouraged to support the ideas they like by pledging money. If a book reaches its funding goal, the company uses the money to edit, print and market it. Profits are split equally between the author and site. Co-founder John Mitchinson believes that the Internet is a wonderful piece of technology but ‘until now, the publishing industry has treated it like a threat – when actually the web can facilitate incredible communication with the most important person in the whole process – the reader.’

As bizarre as this method sounds several of these crowdfunded novels have achieved critical acclaim, with Paul Kingsworth’s debut novel The Wake long-listed for The Man Booker Prize.

Subscription

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Credit: Safari Books Online

 

Safari Books Online is one of the first companies to adapt this approach for books. By focusing on niche markets such as design, IT and technology, users pay a set amount each month to access an unlimited catalogue of ebooks, conferences, videos, and unfinished manuscripts. Andrew Savikas, the company’s former CEO, commented that this model creates an ongoing relationship with readers rather than securing a one-off sale. A wide selection of content, he argues, ‘encourages consumers to sample content they may not know about, much like Netflix’ without cannibalising the sales of print books.

With the success of subscription services like Netflix and Apple Music, it seems unsurprising that experts predict that this business model is likely to dominate digital publishing in the future. The 2014 Digital Books and the New Subscription Economy report by the Book Industry Study Group (BISG) found that 80% of publishers believe that the ebook market will ‘inevitably’ shift toward subscription models. As for the report’s publication, only 7% of publishers surveyed had found that this model contributed significantly to their overall revenues but over half expected that this would increase over the following five years.

Unlike with television subscriptions, publishers will face some challenges in adopting this method. Last year, subscription service Scribd withdrew access to a selection of romance novels after discovering that certain genre audiences read more ‘voraciously’ than others, causing the company to make a loss. Tailoring subscription or top-up packages for specific genres may help services combat this.

The Future

At present few of the Big Five appear to be supporting this model, partially because the industry has such a diverse range of content. Not all areas would be profitable in an ‘all-you-can-eat’ subscription model. HarperCollins and Simon & Schuster made parts of their back catalogue available on the subscription platform Oyster in 2014, whilst Macmillan placed 1,500 ebooks with the German subscription service, Skoobe. Oyster has since closed due to a limited catalogue and insufficient subscriber numbers to remain profitable, and with print books appearing to hold their own against ebooks in recent years, there is limited stimulus as yet for publishers to seriously engage with this business model.

However, change must come to the industry. Engaging in a price race to the bottom will only hurt the literary landscape by removing quality in the face of quantity. As Fergus McNeill, author and app developer points out, this means finding a way for the the industry to be sustainable for readers, authors, and publishers which doesn’t include selling content for free or at the lowest possible price. ‘Because,’ as he puts it, ‘in the long-term, free is just too high a price to pay.’

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