Wednesday, December 8, 2010

exploring Google eBook pricing


Updates below (added images in post, link to tweet in middle, new links at bottom)

And more updates! Check out the comments for a generous response from @bookavore with useful context for how pricing works.

So, as you surely know, Google has finally opened their eBook venture, selling e-books (to use a variant spelling that has been dominating) both through their own eBookstore and through partnerships with independent bookstores. One of the big excitements about Google's eBook program is the possibility of generating money for indies, who otherwise lose out the opportunity to generate revenue from digital books. So my first question was to wonder what it meant to go to an independent bookstore to get an electronic book. It's not like you're going to walk around the corner and chat with your local bookseller, right? I suppose you could do that, get their advice, and then go online and buy the book, but that seems odd to me. Are independent bookstores going to set up terminals where folks can login to Google and order their books while in the shop? That might be a way to preserve that seller-customer relationship. That's always been one of the things that I value about independent bookstores, the relationship between seller and customer. Of course, I don't have an independent bookstore around the corner from where I live or work, which is part of the larger problem sellers and buyers are facing.

As I was checking out which independent bookstores were participating, I was happy to see some of semi-locals, and I spent some time clicking around to see what was what. But in taking a quick look around at how Google eBooks have been incorporated into some different indie bookstores, I was soon struck by a much larger question: What is up with the pricing??

Here's what I mean. Take, for a first example, Stieg Larsson's latest, the huge hit and final book in the Millennium trilogy, The Girl Who Kicked the Hornet's Nest. If you go to Google's eBookstore, it's priced at an attractive $9.99. But at their indie partners? It costs much much more, ranging from $22.36 to $17.33. If you wanted to read Lisbeth's latest adventure in codex form, you can buy the hardback at list price of $27.95, or at Amazon's discounted price of $11.90. (That Amazon discounted price is part of what's making life hard for book stores. Even the big chains don't want to sell a hardback at a discount of 57%. Barnes and Noble cuts the price by 44%, Borders by 50%.) Why this range of prices? The indies have obviously pegged their prices for the eBook to the hardback price, either selling it at full price or discounted up to 38%. What's Google's eBook price pegged to? Amazon's Kindle price: $9.99.

So the huge gap is in part based on the pricing problems of hardbacks, which are, as we know, expensive. What happens with paperback? Let's look at the second in the trilogy, The Girl Who Played with Fire. (I don't know anyone who calls it the Millennium trilogy; it's really The Girl Who trilogy.)

  • paperback list price: $15.95 trade; $7.99 mass market
  • digital edition list price: $15.95
  • Google eBookstore: $7.57 (47% discount)
  • WORD: $12.76 (20% discount)
  • Politics and Prose: $11.17 (30% discount)
  • Schuler Books: $9.89 (38% discount)
  • Kindle: $7.57  (47% discount)

(A couple of notes here: I've taken list prices, for codex and digital books, from Amazon. For my independent bookstore examples, I chose WORD because they tweeted that they had huge sales on the first day of their eBook sales; Politics and Prose because they are my most-local independent bookstore; and Schuler because they're my hometown independent bookstore. I also want to point out that these prices are accurate only as of today, of course, and I have no idea what those prices will be when you click on those links in the future. Yesterday, for example, WORD was selling all of their eBooks at full list price; clearly they've gone through and rejiggered their prices since then.)


(UPDATE: I tracked down the tweet about WORD's eBook-selling success. It was posted by @bookavore, a manager at WORD:
As others pointed out, first day sales don't necessarily translate to ongoing sales, but it caught my attention, and that's why I used their prices in my comparison.)


Other books follow different patterns, depending on what sort of book they are and when they were published. David Foster Wallace's Infinite Jest is $9.99 across the board, with a paperback list price of $17.99. Howard Jacobson's recent prize-winning The Finkler Question has a list price of $15.00, with Google eBookstore selling it for $5.69, and the indies selling it at list, except for Schuler: $12.75, a 15% discount, though the funny thing about that price is that Schuler is selling the paperback for $11.25.

Academic books are a bit wackier. Adrian Johns's Piracy, out at the beginning of 2010 from University of Chicago Press, can be bought in hardback at the list price of $35.00 (it's due out in paperback in the spring, listing at $22.50). Google eBookstore sells it for $19.25 and the indies for $35, except for Schuler, who again goes for a 15% discount for a price of $29.75. That doesn't deviate from the pattern that much. It looks like Schuler does a standard 15% discount from the list price, except for those books that might be big sellers, and then they go lower. The other indies stick with list, except for the hits. And Google matches Kindle every time, with Kindle typically selling at a 45% discount from list.

What about an academic book that is oh-so-smart but not recent and not a big seller? Shakespeare and Feminist Performance (ahem) lists in paperback at $36.95, a steal compared to the $120 price for a hardback. If you want to read it in Kindle format, you can buy it for $29.56. Want to read it as an eBook? Buy it at list at any of the indies, or at Google eBookstore for $29.19. (If you do buy it, please tell me whether the photos are in the electronic editions or if they got dropped!)

And how about some very smart recent academic books that you should all be reading already? Bill Sherman's Used Books (Penn Press, 2007, 2009 pbk) lists at $19.95. You can buy it as an eBook for $9.99 from Google, at list from the non-Schuler indies, at $16.96 from Schuler, and not at all as a Kindle. Robert Darnton's The Case for Books (Public Affairs, 2009, 2010 pbk) lists at $13.95 and can be bought as a Kindle book for $9.79, but cannot be had for love or money as an eBook (ok, that might be an exaggeration; I have not tried offering love or endless amounts of money for this as an eBook, but you can rest assured that it's not listed on the eBookstore as of today). Anne Trubek's recently released A Skeptic's Guide to Writers' Houses (Penn Press, 2010) cannot be read as an eBook or on Kindle (but you should read it in codex because it's great--and only $16.47 on Amazon!); Andrew Pettegree's The Book in the Renaissance (Yale 2010) isn't either eBooked or Kindled (I'm sure you already own this because I keep talking about how great it is, but if not: $26.40); and Matthew Battles's great Library: An Unquiet History (Norton 2003, 2004 pbk) can also only be read in good old ink-on-paper form ($10.17).

(By the way, yes, I realize that I've linked to the discounted Amazon prices for these books, and that in so doing I might be preventing you from walking around the corner to your local bookstore and supporting them with the purchase of these books there. But, on the other hand, by sharing with you the fabulous prices at which you can buy these wonderful books, I might be encouraging and enabling you to buy books that it might otherwise seem out of reach.)

What's the upshot of all this? I'm not sure. I'm left with a lot of questions. Given that Google has chosen to seriously discount their eBook prices within their own eBookstore, how much are they actually supporting independent bookstores? How many eBook buyers are going to surf to their local store's site to pay full price when they could be downloading the exact same book for much, much cheaper? I do find the interface on the independent bookstores' sites much friendlier to use, since they provide clearer, and easier-to-find, information about what edition of what book you're looking at. And sometimes you can have more device-reading options if you buy from an indie: if you buy directly from the eBookstore, you don't always get the software that would enable you to read your eBook on your Nook or Sony eReader. Buy Infinite Jest from Google eBookstore and you get an eBook without any downloadable files, which their help page says means you can read in the cloud and on devices with supported apps; buy it from Politics and Prose, and you get an Adobe Digital Edition that will let you transfer it to your Nook or Sony eReader.

Google's official advice on pricing is as follows:

Lowest list price
The lowest list price will be determined by Google using metadata and other sources. If you prefer not to set a potentially variable price, you can set the price of your Google eBooks to a fixed amount instead.
Recommended price
The suggested default price set for your Google eBooks is 80% of the lowest print list price. You're also welcome to set a price manually.
We encourage you to consider the perceived value of the Google eBooks of your titles for users and set prices accordingly. Typically, publishers have chosen to set the list price for digital formats at a lower list price than that of their print editions. If you use a percentage, we don't allow you to set the Google eBook price to higher than 100%.
Google reserves the right to sell a book at a price discounted from its Google eBooks list price. If Google decides to offer the book at a discounted price to consumers, your share of the revenue will be based on the Google eBooks list price.



Your local bookstore can benefit from you buying your eBook through them instead of through Google. They'll get their share based on what they sell the book for; in theory, that should mean more money from a $15.99 book than from a $7.99 one. I suspect that some of the pricing I've been seeing yesterday and today are still being worked out. As I mentioned above, WORD's prices yesterday were all at list for their eBooks; today they are reflecting some discounts. As customers come and go and stores analyze buying patterns and familiarize themselves with Google's system, we'll see lower prices, I think. But will there be enough people willing to spend extra money for a digital book to support their local store that it will translate into money going into their coffers, as opposed to Google taking money away from them? Only time will tell.

In the meantime, if your local bookstore isn't on the list and you want one to support, consider Schuler Books, a great mid-Michigan bookseller that offers good prices, too.



UPDATED:

There's a nice explanation at Tattered Cover Book Store about what Google eBooks are and how they work. They don't talk about pricing, however, and when I just checked their prices of The Girl Who eBooks, they were all offered at list.

Also, there are countless links out there discussing eBooks. Among them, one that I read after I posted this: Laura Miller's piece in Salon. She doesn't discuss pricing, and I think she's a bit optimistic about what the implications are for independent bookstores, but she does have a good discussion of the eBookstore interface that I mention but don't go into here.

5 comments:

Bookavore said...

Hi! I'm Stephanie, the manager of WORD, aka @bookavore. I think Tattered Cover has covered some of this pretty nicely, but here's the nitty-gritty on pricing, since you're interested: what you're seeing is the difference between ebooks sold under the agency model and those sold under the wholesaler model. Currently both are in use by many publishers. Hachette uses the agency model, so INFINITE JEST is an example of that. Under the agency model, all books must, as a matter of the contract, be sold at the same price in all places. So that's why they're all the same.

Under the wholesaler model, we buy the books for the list price less a specific discount, just like we buy physical books. This is where the pricing goes all over the place, because there aren't any contractual restrictions on it. Without going into actual numbers, I can tell you that many of the super-low ebook prices, especially on brand-new hardcover books where the publisher usually sets the list price of the ebook to be equal to that of the hardcover book, are several dollars below the wholesale cost of the book. Amazon is choosing to sell them and lose money on each book to gain market share, and Google is doing the same thing for the same reason. We simply can't afford to do so. But, as you noted, we're playing around with discounts to figure out how we can offer a more customer-friendly price without losing our shirts. You'll notice it particularly on Random House titles (Larsson, for example), as they're one of the only big houses not using the agency model, but other houses as well.

Anyway, I don't want to bore you with all the details--in fact that's probably why most bookstores aren't talking about this, it's all very boring and business-oriented and I can't imagine most book buyers want to know. But I hope it answers some of your questions.

Oh, and as for competition with Google: Google may be supplying us with books, but we always knew that they were going to sell them, too, at their own prices in some cases, so it's not too surprising. Not much we can do about it. For now we're focusing on how to provide the same level of curation and customer service with ebooks as we do with physical books within the system we've got in front of us, and make pricing a part of that where we can. All suggestions welcome!

(ps: we also love Anne Trubek! She's doing an event here at 7:30 on 1/11, you should come.)

Sarah Werner said...

Stephanie,

This is just incredibly helpful--thank you for taking the time to post and answer some of my questions! I think you're right, lots of buyers probably aren't interested in the pricing minutiae, but for those of us who are, this level of detail is great.

I'd forgotten about the Random House decision not to go with an agency model for ebooks, and now that you've reminded me, those prices make more sense. I certainly appreciate that Amazon and Google both have the ability to sell books at a loss to draw buyers in because they can make up profits elsewhere. That ebook prices are following this model that Amazon has used to such powerful effect for codices makes sense. It will certainly always leave independents at a disadvantage. Who can sustain that sort of loss leader?

In terms of the relationship between Google and independent bookstores, I'm struck by both the practicalities of it and the rhetoric of it. I have been curious about the touting of Google as the answer to Amazon's domination of the market and of their independent store friendliness. It's interesting that Google sees this as an advantage. I can see the advantage from a bookstore's perspective: as your tweet suggests, you've made it much easier for your patrons to buy ebooks from you. Even if it's only a small fraction, that's more than would have otherwise.

The question of what you can offer to counter Google's cheap prices is, as you point out, the huge question! Maybe some folks will chip in with suggestions here.

Again, many thanks for sharing these details! (I'd love to come see Anne at WORD, but am stuck down in DC, so I'll have to wait until she comes to Politics and Prose!)

bookcarnivore1 said...

Some ideas to get the ball rolling:

1) Discounted ebook and pbook combos. Here the idea is to link the ebook to an authors backlist, or an author in a similar genre. Cheap used paperbooks could come in especially handy here. Or how about that Espresso POD machine of Schuler's? Many an ebook only author might love to see a limited print run, perhaps special, autographed editions?

2)A buyers club. Buy Y number of books to accumulate X number of points. Could be ebook only perhaps? Enough points and you could get a non agency title at a massive discount. Some details to work out and investigating the way Fictionwise used their Buywise club and micropay system in the past.

3) Appeal to people's generous impulses. Create a club where a percentage of proceeds go to a charity, perhaps a different one every month month. (Choose non agency titles).

Anybody else game?

(The trick will be to build online communities which will not be geographically based unlike their physical stores. This is because a one-to-one conversion rate from pbook to ebook customer will simply not succeed since the margin is likely to be much lower on ebooks.New customers must come from those who don't go to stores regularly).

P. J. Grath said...

You amaze me with the depth and breadth of your analysis of e-book pricing. It certainly is complicated. The bottom line, however, looks simple to me, an independent bookseller: the Big Boys are selling below cost, and I can't afford to do that, with print books or anything else, so I'll sit tight for now and wait to see where the chips fall.

Dawn said...

Very interesting. Having graduated from "library school" in 2008, when ebooks and the Google "book project" were beginning to be big discussions, I can tell this would be a great classroom debate...