I think that a lot of the top end executives have a very poor opinion of customers in general. As such they probably don't care too much if the customer thinks that they're 'evil'.

They probably think they're the good guys so they can justify any action they take as being for the good.

Someone who buys books is going to carry on buying books - we're like addicts in that regard. I'm not going to boycott Charlie's next book because it's published by a company that overcharges for ebooks. I'll just not buy the ebooks.

I think that eventually ebooks will replace a large portion of paper books. But I think that it will take something like ten or twenty years to have a big impact. By which team price differences will hopefully have settled out.

Ebooks likely meant the eventually death of retail stores for the large national chains. The national chains (here in the US) have already killed off the weaker small bookstores.

The chains will migrate to online platforms, where they can sell ebooks as well as what's left of the market for printed books (pbooks). Small bookstores will survive the way they have now, but catering to niche customers and offering added value.

There is a path for large bookstore chains to survive as physical retailers, but I don't know if they'll take it. They'd need to expand their merchandise beyond books, even more than they have at present. Things like games, writing paraphernalia, gifts, specialize books that can't be duplicated as ebooks. If they added the ability to print-on-demand they could compete with ebooks by offering pbooks from the same catalog without the cost of stocking them. Another nice feature is if they could sell ebooks in the store -- give customers a chance to preview them in ways they can't at home, and them make the purchase right there in the store. If you could brink your Nook to a B&N, browse through their books while sipping a coffee, and then order the one you like with a touch on the screen then the bookstore has value.

I suspect that ebooks will force Booksellers to ask themselves hard : What are we really selling ? Why do our customers buy from us ?

A bookshop has opened in the last year or so in the small town of 5000 where I live, just 10km from Galway. I didn't think it would have a chance, but its been expanding while the bigger bookshop chains fail (Hughes & Hughes, a large multiple just closed). How ?

It also sells a lot of educational toys, probably keeping the book-end afloat. Its added a small play area for young kids, while parents and older kids browse. They talk a lot with customers, recommending books, etc. They order in a lot. They have a joint deal with the coffee shop for book clubs.

Book clubs are a growing phenomena around here: mostly populated with stay-at-home parents (mothers minding kids), college-educated and wishing to think in a way mass-market entertainment doesn't encourage. They want not only to read, but to discuss. Some could do this online (here!) but also want to socialize.

This can happen even if the book was an ebook. Using paper versions as an 'advertising medium', something for customers to browse, and selling related services : somewhere to talk about books, to provide a 'literary environment', there is scope for "bookstores" yet.

Charlie

I don't know whether you have come across Shiloh Walker's cri de coeur on e-pubbing; the outcome for her is that she has abandoned one series and made the conscious decision to focus on her print stuff because her e-pubbed works are so heavily pirated that the return simply isn't worth the effort.

http://shilohwalker.wordpress.com/readers-piracy/

This is probably not the way most people envisage the Brave New World of e-publishing...

If I am going to buy ebooks with DRM I want at least have a lower price compared to a proper book. If they want to take away my right of sharing or giving away my property I want at least some form of compensation.

The other problem with ebooks is the same as it is with videos and as it used to be with audio: at the moment it is easier to get the products I want in the format I prefer if I look for illegal copies.

This is my current test for the ebook reader & shop I am going to buy, the first shop which can provide me: - this year (2010) - a reader - an ebook of Arthur C Clark 2010 for a price similar or lower than the paperback (Amazon.com $10.17)

bundle the pbook and the ebook. each pbook has a serial number with which you can download an ebook version - best of both worlds. offer the ebook only version for a reasonable price (pbook price - (printing,ink,paper,delivery,etc) + (cost of download service)).

learn to accept that there will always be someone who will steal the book or make an unauthorized copy.

Offer a better product than the pirate, build a customer community (book trailers, free excerpts of new books, typo updated ebooks etc.)

I think specialist booksellers are in trouble anyway. They're getting squeezed from two sides - supermarkets have the bestsellers and online shops offer a broader selection of stock. E-books aren't having much impact yet, but they're not helping.

Alastair @ 3: That sounds a lot like what the more successful independent bookstores around here do. Things like book clubs, things for children, and a ton of author visits: http://www.rjjulia.com/upcoming-events/

Martin @ 6: That's a really good idea. I think Baen has done something like that in the past, or else including back catalog ebooks of a series when you buy the latest volume. It would also reduce the resale value, since people couldn't use the code more than once -- giving people more reason to buy new books.

When we were in Hastings recently we noticed a new Children's bookshop in the Old Town.

I good wide selection all full price. Helped along by a children's craft area (charging for pottery painting and some other crafts) / coffee shop.

for a certain middle class demographic it looked perfect. If it can survive there for a couple of years its probably a business model that would survive anywhere.

Martin: I like that idea, but it has some hideous tax implications here in the UK. (Briefly: we have VAT -- sales tax -- at 17.5% on most things. Books are zero-rated -- they fall in a special category taxed at 0%. But e-books and all electronic soft goods and software in general are taxable at 17.5%. Books with a CDROM included are taxed at 17.5% -- the presence of machine-readable media breaks their zero-rated category.

I suspect HMRC would assert that books with a special download code for an ebook are merely an attempt to evade VAT, and therefore the books should be taxed at 17.5%. Which would be a whole barrel of laughs for the reading public and/or bookstores ...

Aces, Charlie. That Shatzkin quote is priceless. Clearly if you make sure to siphon off bookshops' business slowly enough they, like frogs in a pot, won't notice their own demise. Yeah, right.

Pull off the band-aid, I say! (Easy for me to say, I know.)

Few people realize how little of the retail cost of a book pays for the paper and ink, it's true. However, comparing the price of most ebooks (there are exceptions, like Baen) as they are sold today to the price of paper books is disingenuous, since you don't (other than the exceptions) buy an ebook, you rent it (as Amazon has conclusively proven, when they deleted titles from people's Kindles long after they'd been paid for). And people are simply not going to pay the same for a rental as they do for a purchase.

I'll cheerfully pay paperback prices for an ebook (and wait the same amount of time from the original release date), and hard cover prices for favorite authors (the ones I'd buy in hard cover anyway), but only if I own the book afterwards.

I'm not so sure about eBooks eventual dominance. I mean, if you want that reader to have perfect performance, you've got to depend on, oh, lithium from Bolivia (for the batteries), coltan from the Congo (for the capacitors), and probably neodymium or other rare earths from China.

It's like having a cadillac. It's a great car, wonderful status symbol, let's you do much more than you can on two feet--so long as there's gas and a service infrastructure to keep you going.

Not that I'm saying that the paper industry is environmentally benign, nor are they without chokepoints--for example, most of the clay used to size commercial paper comes from a single mine in that political hotspot, Cornwall!--but dead trees, glue, and ink are pretty widely available, and there are lots of substitutes.

Given the looming crises we have in energy production, and given that eReaders depend on a global supply chain that in turn depends on cheap transportation fueled by cheap energy, I'm not even close to counting books out yet.

As for bookstores, I was going to write a point about DIVERSIFY, but Andrew and Alastair beat me to it. A couple of other thoughts along those lines.

Locally (US), both libraries and big box bookstores are quite busy in the afternoon, because kids go to both to study. This isn't such good news for specialty shops, but having a coffee shop and seating attached to a bookstore is a great way to get some money coming in. Diversifying the product line (new books, used books, associated toys) is something that's been going on for decades.

Another thought is that physical bookstores can also sell eBooks through wi-fi networks. There's something to be said for having someone selling you a clean copy of an eBook, even helping you find one you'll like in a face-to-face interaction. Confining that interaction to a physical space through a wi-fi might be one way to go. If the store also has internet links to say the Gutenberg project so that people can find massively out-of-print books, so much the better.

Depending on how the coming energy crisis shakes out, we may see the rise of local printers and POD-type services. This is a different type of bookstore, but not necessarily a bad one.

I'm perfectly happy to spend money on books: I have a copy of Missle Gap, and quite a few other hardcovers from our host. I'm also happy to spend money on ebooks: I own quite a few from the Pragmatic Press and O'Reilly. But as with several commenters upthread, I like to own my books, because DRMed content is way too much of a hassle to archive properly.

What I'd really like is more Subterranean Press editions of our host's work, bundled with a corresponding DRM-free ebook. (Feel free to watermark the ebook like the technical publishers do.) I would pay above current hardback prices for this combined package, and buy direct from the publisher.

I know this is (of course) a minority position. But still, our host could extract slightly more money out of my pocket than he already does. It's a pity that policy is set so high up in the stratosphere, and that book people don't have much influence over it.

I read the NYT article as well. I was struck by bad math/accounting throughout. They mix per-unit costs, like printing, and fixed costs, like copy-editing. This is basic. Does it cost more to copy-edit "Twilight" than "The Boat"?

On the other and, the comment about the bookstores was just typical. The publishers are faced with a disruptive technology, in the sense used by Clayton Christensen. They are busy listening to their customers, in this case the bookstores and the users (readers) of paper books. They do not know how to make money from e-books.

And agree with Charlie's comments about DRM. Strongly.

It seems to me that the publishing industry (paper and electronic) is still defending an obsolete business model.

I'm old enough to remember when the library was a principal source of reading material. In the UK, bookstores were fairly thin on the ground (at least where I lived in suburban London) and WH Smiths was the largest high street book retailer. Most independent bookstores were used bookstores (or at least partially new, partially used).

In that world, publisher sales and author royalties were more limited, and the library and used book store had huge price advantages to new sales.

[The record industry also had to contend with that environment, although libraries rarely had music apart from classical on their shelves and the music industry bitterly fought the legality of used music stores in the US].

As commerce becomes more frictionless, I cannot see what is to stop the growth of used sales and library models. Even with a 100% perfect copy protection, it should be possible to build an electronic library with concurrent licenses (like enterprise software) to allow few sales to support many more readers. Likewise use eBook stores should also work with this model. And of course, there is the rental market that worked for movies although in the US it is failing against the subscription model (Netflix).

It seems to me that the publishing industry in its various forms just keeps trying to make these alternative channels disappear and force the consumer to buy new copies only. We see that most egregiously in the academic market where textbooks are not just expensive, but regularly revised with minor changes to dissuade the student from buying used from the previous year's students. [In the movie industry trial balloons have been floated about tying a movie to a particular device].

I suspect that the business model has to change, and I hope Charlie is going to touch on that (even if obliquely for safety reasons) in a future post in this series.

My own feeling is that pure bookstores are likely to die off in the physical world. We're going to be seeing the shift to ebooks and print-on-demand books. ebooks will be sold electronically, and POD will be done as a niche in an existing store like Walmart or for that matter, Starbucks. The bookstore with a coffee shop is more likely to turn into a coffee shop with a bookstore in some corner.

Baen is interesting: they don't just include CD copies of some books, they also make some available for free on the web, in unencumbered html form. Turns out, that improves sales of the physical books. I know I bought a few after finding them there.

Those CDs that Baen ships with first printings of many of their hardbacks? You can actually copy those and give them away, you just can't sell them. Printed on the one I have in front of me is 'NOTICE: This disk and its contents may be copied and shared, but NOT sold. All commercial rights reserved." There are probably a couple of dozen of them that have been released, and you can legally download images of them from a number of places, most prominently The Fifth Imperium.

The god damn singularity is near, people. Things are moving fast. You won't save your butt by trying to keep things from moving, they are moving, period.

And I've got news for Lindy: “The truth about this business is that, with rare exceptions, nobody makes a great deal of money.”

The truth is, Lindy, in general, almost nobody makes a great deal of money, except if your sampling area include NYC or London where you will pick up such parasites as fucking wankers, err I mean bankers. If you wanted to make shitloads of money, you should've picked sociopathy as a major, I mean finance.

Baen's model works well for authors who publish long series, as do many of their authors. It also works for newer and relatively unknown authors trying to build an audience.

Take David Weber, for example. He's been writing his Honor Harrington series since 1992, and still puts out new books. There are currently something like 16 books. That's a big investment for a new reader, either buying older books or tracking down library and used copies. So it makes sense to offer early volumes for free, and then attract new customers for the newest volumes.

I'm in two minds about independent bookstores. I'm old enough to remember independent bookstores in the UK, and most of them sucked. Waterstones was a godsend as it stocked more books, presented them better and was just a friendly place to browse. Its like coffee used to be prior to Starbucks - mostly it sucked.

However in the last few years there has been a resurgence of well run and very focused bookstores. These will do things such as focus on an area, or sell books that the bookseller thinks are good (editing), or create an environment that is pleasant (curating). Other bookstores have focused, quite unapologetically, on elitism. The London Review Bookstore (connected to the unashamedly highbrow London Review of Books) only sells books that it thinks are good. It does very well, and I imagine part of this is that its customers like to browse for books. So there are niches, though how this will extend to ebooks...

The other reason Baen's model works well is that Baen mostly sticks to a few types of (mostly) SF, so there's a really good chance that when they pick up a new author, I'm going to like it. So this makes me much more likely to take a chance on them. Large publishers simply don't have that advantage. So something like Baen's webscriptions probably wouldn't work for Tor/Forge or the other larger publishers, unless they had a particular editor that did a subset of the books and had a consistent style.

comparing the price of most ebooks [...] _as they are sold today_ to the price of paper books is disingenuous, since you don't (other than the exceptions) *buy* an ebook, you rent it (as Amazon has conclusively proven, when they deleted titles from people's Kindles long after they'd been paid for). And people are simply not going to pay the same for a rental as they do for a purchase.

I seriously doubt that this is a major motivator. I'm sure it is for folks here, but, as iTunes demonstrated, people don't give a crap about not really owning their media if the DRM doesn't get in the way. iPods and Macs are enough of a walled garden for it to work; those little single-purpose e-readers are as well.

I'll cheerfully pay paperback prices for an ebook (and wait the same amount of time from the original release date), and hard cover prices for favorite authors (the ones I'd buy in hard cover anyway)

Isn't the problem precisely that people see ebooks as combining the early availability of hardcovers with the low price of paperbacks? The Kindle wouldn't have done nearly so well if there hadn't been new releases cheaply available for it.

I like bookshops. Well, i like good bookshops anyways, the kind that are staffed by people who understand me as a reader, not just a customer. Where else can i drop in on a rainy sunday afternoon and potentially leave with a whole new world in my pocket?

I don't even order fiction from amazon or bookdepository, i pick up the phone, call up my favorite local bookshop (sterling books in brussels - shameless plug), and order from them. It takes longer and it costs me more, but if it helps keep my bookshop alive then it's worth it. I bought one of those sony ereaders last year, i use it to carry a whole technical library around in my bag (those suckers are heavy). But nothing beats the feeling of popping into your bookshop and discovering that some author you like has a new book out, and you didn't even know it was coming - like a surprise christmas. You know, the ones where you don't even think of waiting for the paperback (how could you, now you know it's out you'll never be able to wait so you might as well just buy the sucker now)

Also, all you kids need to get off my lawn.

I like proper books, and I like bookshops. The thought of ebooks just makes me go "ugh". I don't want them destroying bookshops, and I don't want ebooks taking over so that real books become expensive collectors' pieces.

Maybe that's selfish of me, but there it is: accordingly I'll use the only lever I have - refusing, ever, to buy an ebook reader or to buy an ebook. Hopefully they'll just prove to be a fad...

I like horses too, but not enough to buy one and ride it to work.

question is do consumers "like" bookstores enough to pay more then buying things online or vi ebook readers.

UnHolyGuy

I Don't know what other people like. I only know what I like. But I control what I spend!

Certainly there will be, for the foreseeable future, bricks and mortar, or concrete and steel, places where people can buy books, not least because the codex has considerable advantages over the scroll, and bookshops are the best showcase for those advantages.

I think the issue is about the number of such places, not whether they will exist at all...

Tim O'Reilly opined on the loss of [book]stores here: http://radar.oreilly.com/2009/12/why-using-shopsavvy-might-not.html

Some of the commentors made some good points about how stores need to adapt to online shopping which has relevance to the issue of bookstores in this thread.

Your comments on the VAT and eBooks are well-taken. I wonder, what about the opposite case? Purchase an eBook (with VAT applied) and get one-time permission to print a copy on a POD machine. That way I can buy a book to read electronically, and if I like it and want to loan it out, or if I find the digital format too cumbersome for that title, I can go to my local bookstore or coffeehouse print out a copy.

Personally, I think the small-scale POD machines like Espresso are the proverbial Other Shoe waiting to drop in this digital book fight. Right now they're expensive (~$100k per installation for the Espresso) but as that drops they'll become more common in local libraries and bookstores, eventually even coffeeshops. (I have a running bet going, by the way, that in twenty years, Barnes and Noble will be thought of primarily as a coffee chain rather than as a bookseller)

Anne Rice's comment at the end of the article is particularly trenchant:

"The only thing I think is a mistake is people trying to hold back e-books or Kindle and trying to head off this revolution by building a dam. It's not going to work."

The illiterate and innumerate executives who are the people running the media conglomerates are attempting to do a King Canute in the face of a tsunami, and costing their companies an awful lot of the good will and benefit-of-the-doubt that might help them survive the transition.

People will always buy BOTH paper AND eBooks, but the publishers who make pirated products superior to what they are offering, the way the movie and recording companies did, will find their way into the same cesspit.

Nice thought, but I'm not sure that the machine printing out the work would constitute the provision of zero rated goods or services; after all, printers are not exempt from VAT per se.

VAT Notice 701/10 is silent on the issue, which just goes to show that even Homer nods...

A note on the "I have to pirate because cracked books are so much more attractive to use" thing. While I understand that POV[], there is a thriving small press market with a bunch of publishers who do ebooks first and print as a minor concern if at all. They do not use DRM, (unless you insist on buying it in Kindle format, in which case don't blame the publisher, blame Amazon's Kindle licencing contract). And, as Shiloh Walker pointed out in the post linked to @4, their books *still get heavily pirated. People just come up with some other excuse to for it.

[*Personally, I just refuse to read any ebook that's only available in DRM. I can always go buy some other title honestly rather than deal with DRM suckitude.]

Not King Canute.

King Canute's courtiers, yes, but not King Canute.

Also, applauding Anne Rice on the publishing industry suggests that you are interrogating this text from the wrong perspective...

Hmm, either that article was designed to convince readers to pay more for ebooks, or publishers are doomed. Not sure which.

The bookstore thing is clearly bogus, and would in the medium term be suicidal (what better way could a new publisher enter the business than advertise how much cheaper their books were than luddite publishers with their paper books).

The argument about legacy fixed costs (warehousing) is probably not true (I imagine these warehouses are mostly leased, rather than owned), but even if it was would be a cost that a sensible business would write down, rather than try and pass on.

niczar writes:

The god damn singularity is near, people. Things are moving fast. You won't save your butt by trying to keep things from moving, they are moving, period.

Don't get me wrong; there are things I will hate about that. Many writers will stop writing. Musicians have the 'option' to switch to getting most of their income from live performance and merchendise rather than sales of recordings. Not that they necessarily get money from those recordings, but that's a different discussion.

For authors, it's hard. I have a friend who's a NYT bestselling author. You've heard of him, you've probably read him. He's seriously worried about the bite that piracy is taking, and wondering seriously what his revenue model (my phrase) will be twenty years from now. He's got ideas, but none of them look very solid. The musicians shift from recording sales to live performance is probably not an option; it's not at all clear that readers will pay to hear writers the way music fans will pay to hear bands.

There's a lot of bleating that people would buy ebooks if they were cheaper, but I don't believe it. Given a choice between $0.10 and free, people seem to choose free. Love it or hate it, it's how it is out there.

So . . . yeah. Traditional publishing is going to go the way of the buggy whip. Companies will get hurt, authors/musicians/etc will get hurt. The attempts to prevent it are actually exacerbating the problem. Every time DRM bites somebody in the ass, they're that much more likely to get their next book/song/whatever from a torrent.

One ray of hope I see comes from the webcomics world. There are a number of artists out there who are now making a living off their strips. Not getting rich, but making a living. But they're not simply putting their work out there and waiting for users to click their tip jar button (yes, I've read the post here about tip jars). They're interacting with their readers on the forums. They're making blog posts daily with the strips. They go to the conventions and hawk the merchandise you can't get electronically - signed books, tshirts, coffee cups, etc.

All of this, of course, takes away from their business of writing and drawing. They've had to not only take on the role of being publisher, they've also had to take on the role of being retailers. And in some cases, it works. Danielle Corsetto (Girls With Slingshots) had to hire an assistant to do it all. Jeph Jacques (Questionable Content) farms out all his merchandise to a third party, and his wife works as his business manager.

The webcomics folks have a significant advantage over writers of text, musicians, film-makers, etc. They work alone or in pairs, so no there's very small overhead to the production of their material. Their material appears in tiny daily chunks, so readers see that tip jar or buy that merchandise every day. Novelists . . . not so much. Maybe we'll see people moving to Dickens-like episodic stuff, with small chunks appearing weekly.

As an example, look at Warren Ellis and Paul Duffiend's weekly FreakAngels. Yes, it's a graphic novel, but structurally it's much more a novel than a webcomic. Ellis has a whole team that's part of the group - himself as writer, Paul Duffield as primary artist, various folks who help with the coloring and webhosting, Avatar press handling the merchendise and books. And they're using the public readership as a sort of crowd-sourcing for reviewing and correcting the work. They encourage readers to report apparent continuity glitches, artistic fubars, etc. These get corrected in the print editions which, funny thing, never come out electronically. But it's a good reason for me as a reader to pick up those editions and get the smoothed story. Are they making a lot of money? No clue. But it's a bold experiment, and I hope it goes well.

I have been reading ebooks for around two years now, I travel a lot for work, I read a lot. They are a good fit for my life.

I would love to buy more ebooks, unfortunately the online stores make it so difficult that I have on more than one occasion just given up and gone to the torrent sites. It is not that I am trying to avoid paying, it is rather that when it takes far less time and effort to illegally download rather than purchase there is something very wrong with the system.

This cartoon caught my eye today and sums it up better than I ever could. http://www.bradcolbow.com/archive.php/?p=205

I hope that Apple entering the market will mitigate this problem of supply as they did to a large degree in music, but we shall see.

Gollie gee willikers guys, I'm sitting here listening to my totally free public radio that I shell out a minimum of #36.50 per year to hear (when I'm broke--much more when I've got a decent job). Why do I pay so much for a free service? Quality and guilt. They've got stuff I like to listen to, such as higher quality reporting and entertainment at a fraction of the cost of the networks (compare, say, NPR's All Things Considered to the reporting by the commercial companies--twice the quality at 10% of the cost).

The only thing I don't like listening to? Pledge breaks. Pledge breaks suck. (For Brits who don't know what I'm talking about, that's when the station spends have the program time trying to get you to call in a pledge). They usually get me to pay up, too.

So yes, guilt will get a number of people to pay for free product, if it's good. It just won't make people rich the way commercial media does.

That's another model for publishing. Ignore the piracy, and focus on getting what you consider a decent return on your artistic product by guilt-tripping responsible people into paying up. Public radio regularly cans underperforming shows, so it's a competitive market that promotes quality.

Given the innate small file size of books the publishing industry would be wise to exploit this advantage, which was something that the music and movie industries really can't.

For a not insignificant investment the publishers could setup a central hub that all book shops could access with a retailer version of an "iTunes/iBooks" as I could imagine most shops must have a computer and a net connection of some kind, even an old 56k-line would do. (It would be better to have publishers pool in to one book serving hub as the distribution costs should be too low to provide an advantage in going it alone and one hub makes it easy for retailers and [human] readers). Large shops can almost act like a library and allow customers to browse entire ebooks (whilst subtly low-jacking the human/ebook readers for security), and while on-demand print might be okay, I'd happily make an order there and then for a physical copy and walk home with the ebook version for an additional charge (or vice-versa).

Of course I'm biased towards bookshops (having read much in the library as a kid), and not a little worried that (as Apple could do in music) Amazon or Google could diminish a publisher's margin and then move up form middle-man to "the man" by eliminating the publisher. It's never nice to crap where you currently publish/eat so ebooks need to be nice to bookshops too as well as readers.

And finally, one thing the publishers need to consider is pulling out of the practice of supermarket's subsidising discount best sellers. As much as I'm loathed to recommend publishers setting a fixed/universal price nothing hurts arguments over book pricing than someone being able to buy spam and (negative-sum priced) books by the pound; the practice alienates core-customers, dedicated shops, and ensures that they only thing that sells significantly is a small selection of titles. It's like adopting an economic eating disorder.

Given that Brad admits it's a strawman argument, I think you are on a bit of a sticky wicket.

And that's just not cricket...

As much as I'm loathed to recommend publishers setting a fixed/universal price nothing hurts arguments over book pricing than someone being able to buy spam and (negative-sum priced) books by the pound; the practice alienates core-customers, dedicated shops, and ensures that they only thing that sells significantly is a small selection of titles. It's like adopting an economic eating disorder.

The UK used to price-fix books as a matter of course, only to have the agreement collapse in 1995. France stopped price-fixing books and then started again based on the arguments you mention.

The USA never had a Net Book Agreement and arguably any direct, conscious attempt by publishers to create one would make them a direct target of US antitrust laws, though the legal issues are murky (the question of what counts as "price-fixing" or not is a hotly contested one, but note that music labels were successfully sued in a class-action lawsuit for doing basically this with basically the same arguments behind it).

A note on retail price maintenance, such as the Net Book Agreement: we have this in Japan, and it hurts consumers pretty badly. All new domestic album releases on CD cost over USD$30. Every last one of them. Foreign imports sell for half that price. Think about that when you consider allowing an oligopoly of large publishers to set retail prices.

I quite like the idea of getting a coupon for a free POD version when you buy an e-book (#31). I'd save mine until an appropriate moment (probably when I wanted to lend the book to someone). Unfortunately, it seems to me that that might lead to a lot of those PODs appearing in used bookshops very quickly.

And then again, if I'm going to lend a book to someone, I might as well just "lend" the e-book and ask them to delete it when they're done and tell me. If I didn't trust them to do that, I wouldn't trust them with a paper copy of one of my books, either.

Charlie, I mentioned this in a comment on another thread, but perhaps you didn't see it. I'm not entirely clear on this, but didn't publishers used to charge Amazon and other retailers the hardcover wholesale price for the e-book format of new releases? With the new model, as described in the NYT and elsewhere, they charge less: they've gone from $12-$13 to $8-$12, it seems. (I discuss this a bit further here.)

Despite the (current) higher royalty rate on e-books, that publishers are bringing in less money per e-book than they used to, not to mention possibly decreasing sales somewhat with the higher retail price (especially if they maintain it over time), would worry you, I think. Doesn't it?

While I do worry about Amazon building up some sort of iTunes-like near-monopoly, it seems to me not unreasonable to let the publishers keep setting their preferred wholesale price and the retailers keep selling them for whatever retail price they can manage. The publishers can still take advantage of variance in price sensitivity by reducing the wholesale price over time, which will in turn cause retailers to reduce the retail price, just as happens now in the video game industry. Publishers can continue to suggest a retail price and give authors a percentage of that, regardless of the actual retail price at which any particular copy sold.

It's funny you mention webcomics, rather than a ray of hope I see them as a painful demonstration of what happens when artists are turfed out to fend for themselves without an industry to slot into: 99.9% of them starve. Or work a day job.

How will eBooks replace the traditional book reading experience? I believe there are very pragmatic reasons to have a whole technical library in a pocket, but that seems to also lend itself to change over to just-in-time use as well, which are what good websites do.

Regular commercial books do a lot for me. They are fun to look for in nice stores, with the smell of coffee everywhere, or the smell of old paper everywhere. One can be "seen" getting the book, and that is always important. It's more fun to buy a book as a retail experience then it ever was to buy a CD, a Tape, or a record. Perhaps it feels like such a grown up thing to do, while interacting with other grown-ups. However I think all that sexy stuff is now being attributed to the gadget readers, rather than the content a regular book cover would indicate.

It seems that there is this need to sell a book sized electronic device and why not just use the idea of books and the content of books to help rationalize the needs verses wants equation. Digital books are merely a gateway. Software and eBooks are not all that analogous to each other. The reason there is a an iPod is because there was a Walkman/boom-box. The reason there is DVD is because there was VHS and Beta-max. The reason there are eBooks is because there was books on tape?

Any device other than optical lenses seem to interfere with the reading process at worst, and add more steps to reading spontaneously at best.

But good people have to be rewarded financially for creating good products, and the work it takes to find the most responsive consumers is not as easy as it looks. It is very interesting how the publishing world has to justify and is quite ready to illustrate its cost structures and profit margins so publicly, it is fascinating to learn. If only the failed makers of large SUVs had the same scrutiny and the willingness to do the same.

As soon as someone produces an ebook reader that compares favorably to hardcopy books, bookstores are done for. It's sad (I'll miss them terribly), but there's no way to fight the economics of this. Just look at what iTunes (or the CD) did for record shops.

That said, it'll be a while. If you feel like arguing, I dare you to read your ebooks in the tub, attempt to hold your reader in one hand for extended periods of time, read in daylight or benchmark page turning speed. Yes, there are individual readers that aren't bad at each of these tasks, but as a whole, we'll have to go another two generations of technology farther to get satisfyingly close. Never mind searchability and suggestions.

My hope is that libraries will retain hardcopy for much longer and that publishers will clue into the idea of marketing by giving free copies to as many libraries as possible.

You don't need to dare me to use my Sony Reader in the tub: I do it all the time. One-handed, even. (Need the other hand to play with the rubber duckie.)

I far prefer using an e-reader one-handed; holding open a paperback book cramps my hand, and holding up a heavy hardcover with one hand gets tiring quickly.

The slowish page turning speed is annoying, but far more annoying for me is how slow it is to browse the books, even if you have only a few hundred loaded.

As soon as someone produces an ebook reader that compares favourably to hardcopy books, bookstores are done for. This has already happened for me (for anything without diagrams etc). And a significant drop in overall book sales will kill most physical bookstores. The transition is likely to be irritating.

...I dare you to read your ebooks in the tub, attempt to hold your reader in one hand for extended periods of time, read in daylight or benchmark page turning speed. Yes, there are individual readers that aren't bad at each of these tasks, but as a whole, we'll have to go another two generations of technology farther to get satisfyingly close. I've seen multiple reports that bathtub reading isn't an issue with sensible use of a plastic bags, and in any case the sales of books to bathtub readers are hardly significant in themselves. If your point is about the downsides of having a moderately expensive collection of plastic-encased electronics, then say so. I find reading a paperback with one hand irritating for extended periods (and it tends to damage the book). I swap hands for extended reading, reversing the Stanza controls so I can turn pages with my thumb. My iPhone is fine to read in nearly any conditions. Other people would have issue with things like its battery life.

Never mind searchability and suggestions. I'm not sure what your point is here.

If people find various e-solutions such that physical bookstore sales (let alone paper book sales) drop say 40%, we won't have 40% fewer bookstores, the current distribution model won't survive. And you don't need a single e-solution that is as good as paper for every type of reading for every person. For me, I buy very little paper fiction (and would buy less if it was available electronically), but continue to buy paper non-fiction (history , mainly) especially as there is little choice.

My e-solution works for me most of the time. It doesn't have to be at least as good as paper all of the time (and it doesn't have to be the same as other people's book-reading solutions) in order to significantly change my book-buying habits. The tipping point comes when this happens for a critical mass of book-buyers.

This has come up often enough that I think it's about time we demand e-book readers for the tub.

Thanks for those great examples, the French law in particular is something that should apply particularly to ebooks since there really is little sense in a retailer setting discounts since there is no backlog/stock taking up space or needing shifting: http://en.wikipedia.org/wiki/Lang_Law

The on-going love affair between the US and the metaphorical invisible hand is just one of many doublethink topics resting in the American consciousness. That said the anti-trust concerns are merited only because self-regulation sucks as you class action example illustrates. The US would never go for public scrutiny even without punitive teeth, limited to privileged investigation/oversight, but its invisibility that trumps transparency. Damn.

Hey, if I can't shim my table with my eReader, I ain't buying one. And it better be a pretty good umbrella, too.

"A note on retail price maintenance, such as the Net Book Agreement: we have this in Japan, and it hurts consumers pretty badly. All new domestic album releases on CD cost over USD$30."

Wow! Really. That's cutting edge business thinking from the Bialystock & Bloom business school. It seems here the publishers don't want to compete on price and the Japanese government would do well to recognise that publisher-retailer price controlling is also meant to serve the public good, e.g., a healthy, living, and evolving culture: http://nippop.com/features/Saihan_Seido___Japan_s_Resale_Price_Maintenance_System/

The problem with reselling a POD book to a secondhand bookshop could be solved by only given the ebook buyer a fair-use right to print of a personal copy. A little extra charge might be added to an ebook and POD bundle to police against secondhand POD selling. You would still have the right to sell on a copy of the book bought from the publisher as the secondhand [official] copies did at least see the publish being paid. An official hard copy would also need to factor in its' price the policing of POD as a necessary (and hopefully marginal) cost readers must pay for the convenience of digital formats.

Saneman, it's not a matter of someone having a love affair with the invisible hand or not: the invisible hand described by Adam Smith is always there, just as much in France as in the U.S. The only question is in which way it pushes people.

If retailers get a fixed percentage of the cost of what they sell, there's little incentive to make fulfilment cheaper because the customer doesn't see the difference, and thus is no more likely to shop with you. Whereas if a retailer is allowed to reduce his price when he reduces his costs, he can still make as much money as he used to (or anyone else did), and attract more customers, who receive the benefit of the retailer's work in reducing his costs.

Whether we have this situation or another, there's still an invisible hand working. You'll note that in one case, the invisible hand pushes retailers to try to reduce their fulfilment costs, and in the other it pushes them in other directions.

What you were probably referring to was not the invisible hand, or anything to do with Adam Smith, but a set of rather strange and inconsistent American neo-conservative ideas claiming to want "free" markets without government regulation but in fact encouraging enormous amounts of government interference in order to funnel money to certain elites. Those folks would hate Adam Smith if they ever read him, since Adam Smith himself firmly believed that government regulation was necessary to create well-working markets.

As an example of the inconsistency of the views of these neo-conservatives who claim to hate government interference, they firmly support enormous government interference in the form of copyright and other "intellectual property" laws, and have managed to greatly extend these government-granted monopolies in recent years.

@47 - eh?

Me and my Nokia 5800XM do all these things together (occasionally it's a threesome, though, with a waterproof "skin" that slides over it) and are very happy doing so, although I'm not at all certain what you mean by "benchmark page turning speed".

If you mean how fast do pages turn, in ZXReader it's like this: i tap the area of screen I defined in the options (the far more sensible and comfortable top half), the page turns, I read on. It happens in one of those fraction-of-second units that I can't really measure without some very sensitive equipment. With a paperback held in one hand and a well rehearsed little contortionist dance of "three-fingers-holding-two-fingers turning" it takes about an uncomfortable second or two. And hey - not only is it better at being a book than a book itself is, it also comes in with extra enhancements such as a music player for an even fuller immersive experience when in noisy places such as public transport.

One thing I did notice is that although not everyone I introduced to the world of e-books stopped reading in paper (I have, for the most part, unless there really is no other option), but not one of them decided not to use e-books. In fact, occasions such as Christmastime have become increasingly difficult in that there is a rapidly shrinking base of people for whom you can simply "buy a good book at the shop", and said base mainly consists of moms...

... which in a way seems to indicate that book publishing in general is not reaching a tipping point just yet, but for traditional book publishing targeting youth and/or older nerds the edge of the cliff seems to be in sight.

Having bought a replacement sony reader after leaving my first one on a bus, and having damaged both of them in minor dropping incidents, I think I'm qualified to say: ebook readers suck.

Like democracy, however, ebook readers suck less than the alternatives.

What's terribly sad is the book industry determinedly following the music and film industries into oblivion. It's quite hard to actually buy ebooks (as noted repeatedly above and elsewhere), but very easy to pirate them. FWIW, I'm aware that a pbook also represents a limited license to use copyrighted content rather than an actual purchase, but the paper-vs-content distinction seems to be quite subtle. I'd settle for equivalent rights rather than same rights, but neither seems to be on offer from the major media companies.

One thing I find is that I'm much less annoyed by mistakes in a pirate ebook than in one I've paid for. When I buy, I expect damn near perfection, not a vague approximation to a book featuring every last error the author forgot to remove and a few bonus ones added by the production process. If the pbook came out photocopied onto A4 pages, spiral bound and with some chapters out of order there's be a certain disquiet in the retail chain I expect. But when an ebook comes out with poor text flow, right justification, bizarre font choice and sizes, and with illustrations (even drop caps) bigger than the screen size, apparently that's just fine.

Despite (or perhaps because of) paying $800-odd for my reader, I seem to have spent over $1000/year at Fictionwise alone since buying it.

[ ATTEMPT TO START FLAME WAR DELETED BY IRRITATED BLOG OWNER. ]

I'm in a reading group, reading Moby Dick - the Kindle user is reporting millions of spelling mistakes...

I bought an ebook recently, it was labeled a "PDF ebook". I didn't get a PDF, I got a useless little file intended for one single proprietary buggy intrusively-arrogant reader application from Adobe that fails to operate under Linux and WINE. I paid money, and I got a locked box I can't unlock. Guess where I won't be shopping again.

(Contrast pragprog, when they sell you a PDF, it's a PDF.)

I think no matter where they put the price it will eventually drop to parity with, and then far below paperback prices. A good example is DVD pricing. Because DVD's are incredibly cheap to manufacture, there is almost no point at which the distributor will not make its money back, so prices have gotten ridiculously low, 6 to 10 dollars on average, almost as much as it is to rent. Publishers will soon realize that the lower they put the prices, the more tempted people will be to actually buy ebooks, and they'll find the sweet spot. People will have little incentive to buy ebooks if they are more expensive than their hardcopy counterparts.

I'm always somewhat irritated by the argument that lots of free downloads means lots of lost sales. Prove it. Some lost sales, perhaps, but it's probably the case that most of those downloaders wouldn't have bought the book anyway. They're the people who would borrow it from the library* or a friend, or, to an unmeasurable (but probably large) extent, the people who would flip through a copy, read half a dozen pages and decide it's not for them. People who wouldn't buy the book are not buying it in a slightly different way (and most of them are probably not reading more than a fraction of the book after downloading it). I don't think I've ever seen a set of numbers (for an ongoing series, say) that showed a decrease in sales matching or following the rise of free downloads. (Whereas Baen - and probably others - could provide you with a whole slew of examples where sales have increased with the availability of free downloads.)

• of course, in civilised countries, the author does get paid when that happens, albiet not very much

Moz, you write that you're "aware that a pbook also represents a limited license to use copyrighted content rather than an actual purchase." But I don't think you're correct in this. My understanding is that copyright restricts to a certain degree your ability to copy or do various other things with the content of the book, but the book as a physical object is something you own and can do what you like with, including lend, rent and sell to others. IANAL, of course.

Chris: who's making that argument around here? Do you see me making it? (Hint: in the sidebar at the right, look under "Quick Stuff" for "Bibliography and online fiction".)

Ray: This is common. For something like Moby Dick that is in the public domain, people selling ebooks have every incentive to spend as little money as possible producing the text so that they have less cost to recoup. Fortunately for your friend, the Project Gutenberg versions are pretty scrupulously checked and can be found in ebook format. If your group is not far into the book, I recommend looking for the PG version.

Even with copyrighted and in-print works, however, errors abound. I've read in several blogs (including here, possibly?) that most of these etexts come from OCR'd books, and that those files are not edited in any way. I have no reason to doubt this assertion based on my own experience: Having worked with OCR in the past, I recognize a number of common errors ('n' <-> 'ri', for example). I was recently very unhappy with a copy of Robert Parker's Valediction, which omitted a number of line breaks in ways that seriously broke the flow of dialogue. (That I bought it remembering it as one of my favorites the day after he died made it that much worse)

If I were inclined to paranoia, I would say that poor quality is a tactic by Amazon to reinforce the "ebooks should be cheap" mentality. But I never ascribe to malice what can be adequately explained by incompetence.

There are several significant differences between e-book and movie DVD markets which make predictions of convergence in patterns dubious.

1) Market size. Even under the best of circumstances, the market for books is much smaller than that for movies. Even the biggest bestseller will run into a horde of "I'm waiting for the film to come" reactions from potential buyers, and the number of sales of viewings of a successful movie is different on the order of magnitude level from that of readings of a book.

If decently-selling novels in the upper range of the midlist had a market like that for decently-performing but not blockbuster movies, authors and publishers would be breaking out champagne and caviar. Just releasing novels in a new format is not going to create that sort of a jump in market size.

If you did get that sort of a growth in market size through some sort of fluke (alien mind-control rays? we start living in a Jasper fforde novel?), then, yes, books in general would drop to a price of a tiny margin over costs of production.

2) Time commitment. A DVD of a movie can reasonably be picked up by somebody who has two to three hours on an upcoming evening to fill in. I'm a fast reader by normal standards, and even Iorich -- short by today's standards -- took up more time than that to read in a serious way. How many people happily pick up a copy of Berlin Alexanderplatz on spec? But a novel typically requires a time commitment more like that of B. A. than of Casablanca.

Of course, you can look at this from two perspectives. A Neal Stephenson novel is going to give me far more enjoyment measured in hours than any imaginable DVD purchase. (Maybe an eight-year-old, who is willing to watch the same video over and over and over again, would have a different assessment; but he/she would be as likely to read the same book over and over again as well.) From that point of view, I'm willing to spend more on the novel than on a movie. On the other hand, I have to be willing to have, and invest, that time to make picking up the book worthwhile. And although there have been studies that show that we actually have lots of leisure time but waste it (compared to our forebears) most people's self perception is of having very little leisure time.

It depends which genre you are looking at; the e-book market was kickstarted by romance and erotica publishers who dealt solely with e-only titles.

Those have suffered massive pirating to the point where some authors have abandoned them almost altogether and gone for the print model, with Shiloh Walker being an obvious example.

From the publisher's perspective Angela James, who was the first editor of Samhain Publishing has moved to become executive editor of Carina Press, Harlequin's new digital-first press.

This is not unconnected to the fact that Harlequin has a lot of very good lawyers on retainer...

@ 59 Obviously NOT in the UK then, unless I'm much mistaken. That sort of fraudulent rip-off is specifically forbidden under our (and now European) Consumer Protection legislation, specifically the "Sale of Goods Act" where it would come under the heading of: "Not of Merchantable Quality". And the manufacturers/distibutors will get ridiculous amounts of public flak. Incidentally, a LOT of US ditributors etc STILL don't seem to have woken up to this one, and every year or so, one or another gets publicly shafted (and rightly so) for trying to con the paying customers.

You can guess wh our laws got that way - yup - we got royally pissed-off with precisely that sort of con-trick.......

"Those [e-only romance publishers] have suffered massive pirating to the point where some authors have abandoned them almost altogether and gone for the print model, with Shiloh Walker being an obvious example."

I've still not seen any evidence for the piracy causing a reduction in sales, which is what I was commenting on. Shiloh Walker says in the blog article stevie linked to above that "the deciding factors were money and piracy", but doesn't actually make any attempt to draw a convincing line between the two. (That said, it seems more plausible to me that there would be a problem in that market, where an awful lot of people seem to buy books they intend to read once and then chuck, than with sf/fantasy, where my experience is that most readers aim to buy books they'll re-read.)

[Charlie - sorry for not framing my original comment better; the linked article by Walker and the fact that its implied assertion seemed to be being taken for granted (or at least accepted without question) by some commenters here was what had irritated me on this occasion.]

It's funny you mention webcomics, rather than a ray of hope I see them as a painful demonstration of what happens when artists are turfed out to fend for themselves without an industry to slot into: 99.9% of them starve. Or work a day job.

The percentage of artists/aspiring artists who work a day job in any field is already quite high. I have my doubts that you can say that webcomics really have a much lower success rate in terms of making a living than other media.

It's just that in webcomics someone who fails to make a living is nonetheless visible because they have their webcomic up on the Internet and can be counted as a "webcomic artist", whereas in traditional publishing the vast majority of the people who fail to make a living are the ones who never get published at all and disappear into the slush pile, and whose existence is remembered by no one but themselves.

The arguments about pricing and the fact that ebooks have all the same overheads as pbooks bar printing all make sense and seem obvious to me. What people seem to be missing is that this is not how it works at the moment. How many ebook only projects are currently going through the works at major publishing houses? For the foreseeable future, I would imagine, most major publishing houses are going to want to do pbooks, with ebooks tacked on, as they are now. In this situation, the up front costs have either already been paid and amortized over the original pbook run, or they need to be amortized over the combined run of both the pbook and ebook sales.

So, in this case, you're actually looking at the additional costs for producing an ebook edition of an existing pbook title. So the question then becomes, how much extra does it cost, in both up-front overhead and per-unit costs, for the ebook edition? I would imagine that the additional costs for the ebook edition would be substantially lower that those for an additional pbook edition. The manuscript has already been written, proofed, copy-edited, proofed again and will almost certainly be available in electronic format already. Covers have already been created and have almost certainly been scanned in at some point. In even a badly run publishing operation, turning this polished electronic document into an ebook should be a pretty straightforward, low cost operation. After that, the per-unit costs are vanishingly low, as everyone is aware.

So, I guess, ebooks of titles which have already completed their print runs should be cheaper and ebooks which are released at the same time as the pbook editions should be slightly more expensive - but should reduce the cost of their pbook siblings, as the one-off up-front production costs for the title will be amortized over (hopefully) more sales and more editions, for very little extra outlay.

The on-going love affair between the US and the metaphorical invisible hand is just one of many doublethink topics resting in the American consciousness. That said the anti-trust concerns are merited only because self-regulation sucks as you class action example illustrates. The US would never go for public scrutiny even without punitive teeth, limited to privileged investigation/oversight, but its invisibility that trumps transparency. Damn.

Are you actually going past the idea of allowing industry-wide price-fixing to government-mandated price controls?

We're really dropping down the hard-left-socialist rabbit hole here. Let me only say that by making the voting public responsible for what "real" price books "should" cost, you're basically demanding the sausage-buyer be constantly touring the sausage-factory, closely inspecting the sausage-making and making intelligent sausage-based decisions.

The average sausage-buyer has no ability or desire to do this. Which means that the responsibility to do so gets shuffled quickly off to a bunch of delegated agents -- elected officials who delegate it to a regulatory bureaucracy who delegate it to professional teams generally hired, for lack of any better choices, from the industry they regulate.

Which then gets you the lovely world of regulatory capture, which in essence becomes the same thing as industry-wide price fixing except with an extra layer of middlemen paid for by the taxpayer. It's not a pretty sight. It's hard enough to do this kind of shit well in areas where arguably it's needed, like transport and power generation -- asking people to do it for something that is as orthogonal to the commonweal and as subjective and prone to class division as the arts multiplies the problems a hundredfold. (Example: Are you really going to have the government crack down on people who buy really cheap e-books that are cheap because they're simple OCR'd scans of public-domain sources and tell them they CAN'T buy them because the quality "isn't high enough" to justify their being sold?)

Actually, having looked into it, it seems possible that Fictionwise really is selling, not licensing, e-books. But one probably wants to get an expert on IP and sales to look at that before making any big decisions based on that idea.

Chrisj

I'm not sure why you don't accept Shiloh Walker's

‘I’ve seen the numbers-I know how many books I sell and I’ve seen how many get pirated. Pirates can claim that line all they want, but I’ve seen the numbers. The numbers trump those claims.’

statement.

When an author compares her sales numbers and her pirated downloads and finds the pirated ones far outweigh the legal ones, to the point where she is making very little money, then her options are pretty limited unless, say, she is writing for a publisher with a lot of lawyers.

Hence Shiloh Walker's move to print with an NY publisher, and presumably Angela James' move to executive edit at Carina where she will be editing for a publisher with a lot of lawyers.

And yes; it's a disposable medium which I would argue is one of the drivers for the 'no e-book can be worth more than $9.99' campaign. Unfortunately there is no law which says that perceptions formed around inbuilt-obsolescence models cannot be extrapolated to other models.

Carina is asking for submissions across a wide range of genres including SF and fantasy; I very much doubt that they are simply crossing their fingers and hoping that the levels of piracy common in e-pubbed romance won't extend to the e-pubbed sf.

I also very much doubt that they will be telling themselves that piracy will bring in more sales in the future, not least because this is their future..

I suspect he is just describing a normal Adobe Digital Editions purchase. It is all perfectly legal, even if it sucks big time.

This is one of the reasons why, despite owning a Sony Reader for over a year, I have not bought ANY ebooks.

Well, this probably belongs on the other thread, but....

Duncan, as an IT guy who puts together systems to do things like this, I'm not actually convinced that, if you have electronic source and typeset copy for your paper edition in hand, it's all that cheap to produce the e-book editions.

Note the plural: that's your first problem. The PDF edition is probably pretty easy, but if you're going to produce a quality e-book that's readable on a broad range of readers, you're going to have to produce at the very least MOBI and EPUB editions for Kindle and everything else. And possibly an iPad edition now, as well, unless the PDF works well on that.

The next issue, once you've learned the basics of doing formatting for your various editions and have set up appropriate style sheets, templates, workflows, and so on, is to test it across different devices. Unfortunately, at this point we don't have consistent rendering across all EPUB devices and software readers--in some cases my Sony Reader entirely refuses to display an EPUB file--so a reasonable amount of testing needs to be done. All of the not-bog-normal-ordinary-text bits (e.g., anything that uses characters outside of the ASCII character set, anything with any sort of interesting formatting) is going to have to be proofread again on several different devices, and possibly in different display modes (font sizes, rotations) on each device.

And lord help you if you're trying to handle anything with seriously complex formatting.

I reckon that, once you're all set up and you've done a couple of dozen books, you can get the cost of e-book preparation down to a thousand dollars or so, assuming you've already got proof-read electronic editions that have appropriate and usable typesetting markup in them. But that's still going to eat up all of the publishers net revenue from several hundred copies of the book.

And the publisher is going to have to ammortize the production system setup costs over the next few hundred books (if they are lucky and happen to be that high volume a publishing house). I'd estimate that building that production system could easily be a twenty to fifty thousand dollar investment.

Looking at it more closely, I think that it would take some pretty serious IT skills and experience to be able to bring the wholesale price of e-books down below that of paper books while keeping the profit margin the same. What you save on printing and distribution is just so easily eaten up in the complexities of dealing with computer systems and providing support to end-users.

Curt (#75) - I'm an IT guy too, with lots of corporate experience, although not in publishing. I'm not sure it's as bad as you say, for a couple of reasons:

1) I'm pretty sure that currently none of the big publishers does anywhere near the amount of quality testing that you talk about, if any. Judging by the ebooks I've purchased, it's more like 'Save As..'...done. This will cut their costs right down, as once the one-off 'workflow' setup costs are out of the way, that's where all your human overhead goes.

2) I suspect that O'Reilly probably has a bigger and better IT department than the rest of the publishing business put together (no offence to anyone reading this) - but they've been doing this successfully for many years. I know they're not mass market fiction publishers but they are high volume, commercial publishing house - and their content is mostly more complex (diagrams, code, illustrations, indexes, glossaries, etc) than most novels. They make their ebooks available in all the usual formats (http://my.safaribooksonline.com/home?subpage=hometab2) and also have a sufficiently good workflow to give customers access to it live: http://toc.oreilly.com/2010/03/continuous-publishing-through.html

Yes, I know, higher sales prices, different market, etc... but workflow setup should be done at a the hyper-global megacopr. level, so costs would be amortized over the whole of the corporations output, not at the imprint level, so 50K isn't such a big deal.

When an author compares her sales numbers and her pirated downloads and finds the pirated ones far outweigh the legal ones, to the point where she is making very little money

You need more numbers - chart the change in her level of sales, and the change in the level of piracy. It may be that you can draw a pretty strong relationship between the two, such that every five pirated copies is a lost sale. Or it could be that there are a lot of people who'll download a free copy of a book but wouldn't have bought a copy.

Stepping aside from the piracy question, the top 10 Kindle bestsellers are all free downloads. I very much doubt the paper - not-free - editions of these books are troubling the bestseller lists.

So, I guess, ebooks of titles which have already completed their print runs should be cheaper and ebooks which are released at the same time as the pbook editions should be slightly more expensive

Yeah, but the big question is, how much should an ebook released at the same time as the hardback cost?

It's funny you mention webcomics, rather than a ray of hope I see them as a painful demonstration of what happens when artists are turfed out to fend for themselves without an industry to slot into: 99.9% of them starve. Or work a day job.

Well, yes and no. I very much think that in the past ten years, far more new artists are making a living off webcomics than new artists making a living via newspaper-based strips.

Similarly, what percentage of published writers actually make a living off of it? Probably more than 0.1%, but conversely, the entry bar for starting a web comic is a lot lower than the one for getting a book or short story published. The proper percentage for comparison is probably how many folks have actually finished something they write but are starving or working a day job. That, I suspect, is probably about the same as webcomics.

duncan.lock,

1) You're correct that right now the publishers aren't producing e-books to anywhere near the same level of quality as their print books. And we're hearing a lot of complaints about it. I expect quality is so bad in part because e-books are so far off most publishers' radar that nobody has noticed yet. Once they do, even were it not for consumer complaints I don't think they would care to release e-books of such obviously inferior quality to their paper books, for cultural reasons if nothing else.

2) O'Reilly is I'm sure considerably better at IT as applied to publishing than almost anybody else out there. But I find your claim that "they've been doing this successfully for years" to be uninformed. Read one of their EPub books that has such complex and rare formatting as--oh, a code sample--in a Sony Reader and then try to work out what the rest of the lines of code that were truncated at the right-hand side of the screen might have been. At least it will distract you from the grey blob that was apparently supposed to be some sort of diagram. Even in the very simplest sort of books that EPub and the Sony Reader was designed for, narrative books like Beautiful Architecture, the table of contents can't take you to the beginning of a section; you need instead to go to the first chapter of the section and page back to read the prefatory material.

I stand by my statement that we're some time, a bunch of money and a very large amount of effort away from getting e-books that are consistently anywhere near as nicely formatted as our current paper books.

True - but a lot of that is the fault of the ebook reader devices and their crappy software. It doesn't matter how good your ebook file is - if the ebook reader is crap, then there's nothing much you can do about it. Hopefully this will get better at a similar pace as publishers getting better at ebook publishing.

Curt@62: yes, the physical part of the book you own, but the content you have a license to. That's the "subtle" part. To a large extent if I buy (say) a table I'm free to use it as I will - copy it, modify it, build a business empire based on selling fragments of it, whatever. But with a book much of that is forbidden becasuse of the licensed content aspect.

I don't see why DRM is a reason not to buy books for a Sony reader. I have a Sony, I buy lots of books, but I don't read DRM-infested books. There's lots of places to buy DRM-free books for a Sony reader. For that matter, I have never signed up to the Sony store and only once installed the Sony software (before promptly uninstalling it).

Aside from the hard numbers, there is the other thing Shiloh refers to in that post -- the experience many of us in romance have had of seeing the pirates talking about how they can't wait for the next book in the series to come out. That really doesn't sound like people who haven't read past the first half dozen pages. I've seen a pirate who'd just posted a copy of one of my books to share with a few hundred of her closest friends saying what a great series it was, and how disappointed she was that I've never written the third. The only reason I haven't written the third is that the sales on the series were so poor that there is no point in continuing it.

Now, the poor sales aren't purely down to piracy. I doubt it's even the dominant factor -- the main problem was that at the time I wrote it I didn't know that most romance fans don't like first person. :-/ But the sales lost to people who choose not to pay for the books they're reading -- that might well have been the margin between the series being viable and not.

Piracy may have been the decisive factor - I don't know. I'm just saying it's hard to tell based on static numbers. It's also hard to tell based on the comments of a couple of pirates, to be honest. People keep bringing up Baen in these discussions* for a reason - sometimes free copies do boost sales of a series book.

Was your series digital only, btw? I suspect it's a lot easier for people to justify to themselves continuing pirating a series they like when there isn't the option of buying a physical book.

(and it gets a bit annoying, because they all seem to think that they're the first and they don't seem to take account of the reasons why the Baen model is not perfectly generalisable)

"If retailers get a fixed percentage of the cost of what they sell, there's little incentive to make fulfillment cheaper because the customer doesn't see the difference, and thus is no more likely to shop with you. [...]" I won't even dare suggest that book shops should compete solely on customer service since I've made enough with the yuk-yuks beating on invisible appendages. You are of course entirely right, both on the dangers of fixed pricing and on hypocritical capitalism, ultimately any system is only as well behaved as the people that engage with it.

Preferably there is a workable compromise between the extremes of "name your own price" and "one price come hell or high water", but what I'm trying to protect is the producers right to control sensible pricing of product because I don't think anything has harmed the public impression of music retailing more than the sight of discounted (almost always the same small set of usual suspects) CDs in the same shop as full-priced new release and prohibitively expensive back-catalog offerings. That said, I hate for competition between bookshops to breakdown under fixed pricing as it either leads to identi-kit shops or books being marginalised within shops in favour of more economically flexible goods.

I think that there is a real divide between the people who have actually been e-publishing,and only e-publishing, for years and the people who started out in print territory and are now extending their range into e-publishing.

Assumptions which worked with dead tree publishing don't necessarily work in the Brave New World, and authors in particular are walking the high wire because they are so visible.

Readers don't want to have DRM because it messes us around. On the other hand readers are, at the very best, ambivalent about authors and publishers who don't seem to be doing much or indeed anything at all about piracy.

There may come a point where the paying reader begins to feel as if s/he is being taken for a mug, the patsy who subsidises the torrenting freeloaders. That trope is more familiar in the 'everybody but the author is a freeloader' scenario that Charlie is dissecting, but these things spread very easily.

Social capital is hard to build but easy to destroy. Worst case scenario for authors, publishers, and all the myriad people involved: the paying reader decides on another hobby...

"Are you actually going past the idea of allowing industry-wide price-fixing to government-mandated price controls? [...]"

Not a such. If it helps I have no trouble siding with any of your concerns, e.g., a door being opened for cronyism between industry and regulator. That said, you might be underestimating the sausage-buying public, especially when those sausages are books, but not when the books are being authored by celebrities who boast complete ignorance of the art of sausages stuffing and eating.

One potentially workable form of regulation is the under fire (in the UK) jury system. There maybe cases where price negotiations are insanely complex, but you can have a regulation prohibiting such agreements because if the business slight-of-hand is unexplainable then something is very wrong, e.g., too many lawyers. Of course I am being quite naive here because this isn't an area I (or likely many people) have much experience with, which is another of the problems with government regulators.

For me regulation is about keeping customers and industries from falling in to terminal paths more than prohibiting specific practices. Businesses should be free to sell low quality product (provided you don't sell Chernobyl sourced paperweights and forget to mention the lethal side-effects) if that is what is suitable, but choice and competition should be maintained were possible or we'd end up with IE6 for all eternity.

The profitability of webcomics, from the horse's mouth

You can count the number of professional webcomickers with the fingers of an incompetent Yakuza's hand, and a good fraction of those are where they are due to early internet inflation (i.e. popular when they were the only ones around, early adopter advantage, etc) or niche association with profitable industries (Videogames)

The fact that there's no barrier to entry (Which is a good thing) does mean the ratio of pro to amateur would be expected to be far more skewed than in traditional publishing but regardless the paltry absolute numbers of pros tell their own tale (Never mind the absolute sea of amateurs)

And in any case, whoever runs mangafox.com and similar sites is clearly raking it in at a far greater rate than any schmoe who has to personally laboriously draw each page.

Hi Stevie,

I'll point out again that public radio and television in the US have been getting people to pay for the pirates for decades, and they're still around. Moreover, they're respected for their quality/nerdiness.

I can't tell if you live in the US, but if you do get content from a public station, do you pay for it? If so, does it annoy you that you're part of the 10 percent or so who are paying for the slackers? It's not clear to me why some variant of this model won't work for eBooks. Imagine Baen holding a biannual pledge drive to support their online library...

More seriously, can we come up with a model that makes the depredations of the pirates largely irrelevant? That's the best way to deal with the problem.

Pricing is irrelevant to piracy. You can't compete with 'free' based on price. Most books are cheap any way you look at it, a pizza costs more and is gone quicker. People who choose to take the book without paying will do it no matter if it costs two dollars or twenty, if it's available right away or in six months, some will always find it cheaper and easier than buying.

Competing on price and trying to make a download an impulse buy to compete with free didn't work for the music business and it won't work in publishing. Just the opposite needs to be done, the prices need to be kept high enough so the industry doesn't radically shrink if ebooks actually do grow to threaten paper book sales.

Pricing is irrelevant to piracy. You can't compete with 'free' based on price. Most books are cheap any way you look at it, a pizza costs more and is gone quicker. People who choose to take the book without paying will do it no matter if it costs two dollars or twenty, if it's available right away or in six months, some will always find it cheaper and easier than buying.

Assuming, as always, that there's a certain genetic "type of person" who chooses to pirate and that people who pirate aren't, like all economic actors, choosing between a list of pros and cons and finding the pros outweigh the cons.

It's not a black-and-white thing. Plenty of people do feel guilt or social pressure about piracy and are willing to pay some money and undergo some inconvenience to offset that -- it's just that the amount they are willing to pay is not unlimited. Finding out what that amount is, given your audience, is the trick. It's the thought process that goes into deciding what the "suggested donation" should be when you try to run something on a donation basis.

The fact that some will always put nothing in the tipjar doesn't mean that all will always put nothing in the tipjar, or that the very act of putting nothing in the tipjar makes you a dyed-in-the-wool "pirate" who would never pay anything at all, no matter what the social context. Persisting in this belief -- that the growth of online piracy is the result of an entirely exogenous rising generation of Horrible Bastard Kids Who Just Don't Care -- is perversely making the situation worse than it is and cutting off several possible venues of salvaging said situation before you start.

Competing on price and trying to make a download an impulse buy to compete with free didn't work for the music business and it won't work in publishing. Just the opposite needs to be done, the prices need to be kept high enough so the industry doesn't radically shrink if ebooks actually do grow to threaten paper book sales.

It should be noted that the music industry only tried Strategy #1, the one you deride and the one that actually is showing growing profits year by year, after many years of the Strategy #2 you champion (try to ignore the Internet and prop up the price of CDs until you get sued).

The PDF edition is probably pretty easy, but if you're going to produce a quality e-book that's readable on a broad range of readers, you're going to have to produce at the very least MOBI and EPUB editions for Kindle and everything else. And possibly an iPad edition now, as well, unless the PDF works well on that.

Arguably this is a cost imposed by the lack of open standards because the e-reader market is dominated by a rent-seeking oligopoly of corporations who'd rather we not be able to read a file on any machine we please once we've got it. And this is arguably something that's a result of the situation at hand in e-publishing but not something intrinsic to the nature of e-books. (An open-standards-based e-reader platform could start to chip away at this, but I'm not holding my breath.)

For me regulation is about keeping customers and industries from falling in to terminal paths more than prohibiting specific practices. Businesses should be free to sell low quality product (provided you don't sell Chernobyl sourced paperweights and forget to mention the lethal side-effects) if that is what is suitable, but choice and competition should be maintained were possible or we'd end up with IE6 for all eternity.

This probably pushes me over into libertard territory for some people here, but I honestly don't like the confidence with which people say that the currently organized publishing industry is the best and only way to produce art that a sane person would judge as being of sufficient quality, and therefore this industry must be defended at all costs. The power to say things like that and then to intervene with the heavy hand of regulation -- to do things like tell people "You're not allowed to offer a book at a lower price than the standard one that has been agreed upon" -- is a power that needs to be used very sparingly because it always has tons of unintended side effects that are hard to predict (but that, once you go through with the policy, become your fault and your responsibility).

I mean, I'm only going to advance this as a very tentative counterpoint to Our Host's thesis, but if the overall speed of transactions in the e-book world and the reduced sense that one is buying an e-book as a self-contained "product" that one has when one picks up a nice shiny hardback combine to make it so that basic copyediting errors are not considered to be as big a deal by e-book customers, become tolerated by publishers and result in a lot of copywriting staff no longer being paid for their services so e-books can be sold at a discount...

Is it anyone's place to say "Fuck you, you mouth-breathing masses, you should care about the copyediting and we will force you to pay more for the book or not buy it at all so that standards don't go down and these editors don't go out of work"?

I would say no. Some people here would very fervently say yes. I think this is a difference of basic values that will probably not be solved by any amount of discussion, but it bears pointing out that the "No" answer has a pretty long history and pretty powerful traction in US political thought.

The fact that there's no barrier to entry (Which is a good thing) does mean the ratio of pro to amateur would be expected to be far more skewed than in traditional publishing but regardless the paltry absolute numbers of pros tell their own tale (Never mind the absolute sea of amateurs)

And see, I still argue this is framing it in the wrong terms. How many "amateur" writers actually are there, who really exist? As in people who put pen to paper and write stories? It's certainly not a number the publishing industry keeps tabs on, because the vast majority of these people never submit anything at all, and the vast majority of people who do get rejection slips.

Whereas the number of people who have drawn a comic and then uploaded it -- a much smaller barrier to visibility -- is a much, much, MUCH higher proportion of the number of people who have drawn a comic at all.

You can argue that the webcomics community has created very few professional creators, sure, but so has the traditional publishing industry. The absolute number of people who make a living writing traditional novels are obviously higher than the absolute number of people who make a living drawing webcomics, sure, but the absolute number of amateurs who have TRIED to write a piece of fiction are, I would argue, IMMENSELY higher than the absolute number of people who even in this day and age even know what a "webcomic" is.

(I'm not saying this in an accusatory way, like "Boo publishing industry you're not paying me to write!" I'm saying that it's always been a kind of basic, hard fact about the world that the vast majority of people who participate in the arts do not make a living doing so. This has always been the case, remains the case today, and will still be the case until the high-tech post-scarcity economy finally and truly does relegate the work of producing food and shelter to our humble mechanical servitors, or whatever.)

I think there may be a bit of a straw man here.

I suspect that if you talked to a random person who thinks prices should be a lot lower for ebooks than physical ones you could quickly find that many of them don't actually think the publishers will save a lot of money on ebooks, they think publishers costs will go down some and retailers and wholesalers costs will go down a lot. They are just a bit vague on the whole book industrial complex.

And that is basically the case according to that NYT article.

Hard back book: $26, $13 goes to publisher, $3 of that spent on the paper, about $4 sent to the author.

Ebook: $13, $9 goes to the publisher, nothing spent on paper, about $3 to the author.

Where did that extra $13 dollars in the consumers pocket come not go? About $1 didn't go to the author, about $3 didn't go to the paper handling/processing part of the publisher, and about $9 didn't go to the parts of the chain after the publisher. So 2/3 of the consumers savings was actually from reducing costs downstream from the publisher, less than 1/3 came out of money that flows through the publisher.

If books are very price insensitive (you sell insignificantly more at $13 than at $26) the ebook price would need to be a bit over $14 to get that buck back for the author. If the ebook replaces a fair number of paperbacks at a higher than paperback price in addition to replacing hardbacks it might well already even out for the author and publishers business is looking just fine once the ebook market is big enough to be covering its fixed costs better (I would guess that is a problem at the moment).

techdirt is a useful blog for a lot of ideas on "how to make money from creativity", and his thing is "connect with fans + reason to buy = profit". Currently many authors do a bit of the CwF and RtB stuff but publishers seem really hung up on Punishing the Fans, which you'll note doesn't come up in the profitability equation.

I know Stephen King had an very different experience from many of the bands who TechDirt lionise, but he also only tried one approach. I'm not sure quite how to manage the authorship happens in single, infrequent lumps problem (from the fan perspective), because frankly I don't really want to see an author or hear them. Nor do I especially want them frittering away their time on the internet when they could be writing me another book.

So I keep coming back to Baen, Tor, Fictionwise and so on. All of whom have their tentacles firmly in my wallet, so obviously it can be done. Perhaps that's the model, or at least the one that's known to work. It's just like publishing, only with books. Wait. Um, it's just like deadwood publishing, only without the deadwood. That makes more sense.

Perhaps more of the old school magazines and serials stuff might work - I cough up my $10/month or so and in return I'm guaranteed 10,000 words of fresh fiction every month in a given genre. Just like a fiction magazine, only online. Like (for example) my sunbcriptions to Asimovs and Analog through fictionwise, or Velovision and AtoB through ExactEditions (the latter being graphic-heavy magazines "issued" as jpg+overlaid links online or downloadable pdfs (with separate single page printable pdfs).

I don't know the hard numbers but it appears that there's profit there, and VeloVision continues to put work in so I assume they're seeing enough profit to justify that.

Perhaps more of the old school magazines and serials stuff might work - I cough up my $10/month or so and in return I'm guaranteed 10,000 words of fresh fiction every month in a given genre

Hmm, but the magazines are pretty much dead, and the bookclubs - which are the same principle, commit to a monthly outlay and get cheap, new fiction in your chosen genre - are also pretty much dead.

Jeff, I'm not 100% sold on the NYTimes figures. For one thing -- and this is one of those things that strikes outsiders as utterly brain-dead -- publishers sell ebooks via retail channels that take roughly the same proportion of the price as profit as a dead-tree book retail channel.

Baen are different: webscription is, I think, an arms-reach subsidiary and their proportion of the take is rather smaller. But B&N or W. H. Smiths aim to take the same percentage of the price of an ebook as they do of a paper book.

(The publishers put up with this because their royalty accounting system expects them to sell this way -- fixing it would entail redesigning their entire sales workflow and accounts, which is painful -- and because they don't want to piss off their retailers. Yet.)

Jeff @95,

I think a big cost difference that isn't being addressed are the costs of the books in a print run that DON'T sell. In the arguement that the fixed cost of a pbook is only $2-3 more than an ebook, the costs of returned paper stock is ignored. There is no returning or unsold stock using ebooks. Once the fixed editing/formatting/publishing costs are recouped, every ebook sale is pure profit. Pbook print runs are always something of a gamble. If the first run sells out (yay!), the publisher gambles on the size of the second, or the third and so on. This gamble does not exsist with ebooks.

Someday publishers are going to realize this.

Hi Heteromeles

I live in England where we have the BBC paid for by license each year and there is considerable and effective enforcement.

So no, no angsting about other people not paying for their tv licenses because the enforcement works.

The system is, for the most part, seen as fair (I'm ignoring Rupert Murdoch) and that is of crucial importance.

The perception that all parties are benefitting is at the heart of the social contract; lose that and you lose it all...

"The PDF edition is probably pretty easy, but if you're going to produce a quality e-book that's readable on a broad range of readers, you're going to have to produce at the very least MOBI and EPUB editions for Kindle and everything else. And possibly an iPad edition now, as well, unless the PDF works well on that."

Now let's just hold the hell on for a moment here and step back from theory-space into the land of actual practice.

I am a web developer (so don't get me started on standards in laying stuff out), but more importantly I am an avid reader and, unfortunately, frequent pirate of more than a decade. I've used readers that work with PDF, PDB, PRC (a close sibling of MOBI) and am currently on FB2, so I've got a bit of experience with shuffling formats back and forth.

When dealing with English language fiction, the hardest format to convert from is PDF simply because it sticks to pages and breaks the clean flow of text. If you have a well formatted Word file (and a book of fiction will, at some point before it goes into InDesign or whatever, most definitely be available as a well-formatted Word file), you can single-click that into almost anything else, and if there is no direct conversion available (such as, for example, Mobipocket Converter) you can always just dump it into HTML from whence you can make just about anything you want using free software. PDF? doPDF ; PRC/Mobi? Mobipocket Creator ; FB2? Any2FB, the list just goes on, and these converters produce readable, well-formatted outputs adapted for the specific devices for something that is essentially pure text with the occasional dash of bold or italic. When dealing with more complex formatting (tables, images) they also do very well (the nastiest issue I encountered in the last couple of years was having to turn off "recognize verse" in Any2FB). So unless you are converting something very, very technical I would have to call bullshit on publisher claims that the costs of production for ebooks are simply wooo-eee. All it takes is 15 minutes with half a dozen free software packages and if that costs thousands of dollars to do, where the hell do I sign up for that job?

Hell, I'd even go a step further, if you ARE publishing something very technical and the formatting really needs to be fiddled with carefully across all these varied formats, the publishing industry can take a note out of the software industry book and think about outsourcing this work eastwards. Where I live, a 1000 euros (gross) a month will buy you a very happy full-time book-fiddler that will be able to handle several "very technical" books per month (or dozens and dozens of books of fiction), and I don't even live that far east (UTC+1 Europe).

I won't even get into outlandish ideas such as crowdsourcing this kind of work, but I will note that pirated books go through versions, from "UC" (unchecked OCRed scans), and up like software - by the time they hit V3.0 or so we are usually dealing with a clean cross-platform HTML file of far superior quality than the official version. Some (I forget the writer in question, was it Rucker?) even suggested taking these pirated versions and using them as the official e-book.

So yeah, pay the writer, sure, pay the editor, sure, proofreaders, okay, pay whomever you have to up to the point you have a clean, publishable Word-like file, but that's when, in reality, the chain of reasoning for expensive e-books kinda starts cracking and we start catching slight whiffs of BS that makes people suspicious of the rest of the publisher e-book woe claims as well.

Sebastian, you missed the elephant in the living room: DRM.

Let's pretend to be a publisher who insists on DRM'ing their ebooks. What happens when a customer hits on, say, Fictionwise.com, adds the book to their shopping cart, and clicks "buy"?

What happens is: firstly, Fictionwise take the money off their credit card or paypal account. (Which is a marathon and a half of web transactions under the hood, but let's not go into that here.) Then they send an encrypted http request to the publisher's server. This basically says "hi! We're Fictionwise, and our wholesale rate applies. A customer has given us money for a copy of book ISBN (blah) and their reader-widget's PID is (foo)."

The publisher's server then takes the unencrypted master copy of the ebook with ISBN (blah), encrypts it using (foo) as a key, and sends it to Fictionwise. Who then add it to the customer's bookshelf for download.

Here's an annoying wheeze: encryption isn't computationally cheap, and encryption using a non-standard algorithm is likely to be more expensive (and I'm fairly certain most DRM schemes don't use RSA or DSA, for which hardware accelerators are available).

While the ebook market is small, this isn't going to be a problem. But let's imagine it grows until ebooks replace 50% of mass-market paperbacks currently sold and they still haven't gotten over the DRM hang-up. Back-of-envelope chops suggest that, say, Tor will be shifting 15,000 x 300 ebooks/year, so the encryption server needs to be able to wrap up a book every five seconds, 24x7. Not impossible by any means, but this also assumes Fictionwise's cache doesn't expire. In practice, I'm 99% certain that each time a reader who's purchased a book downloads a new copy it's going to be re-encrypted by the publisher; so the workload could be an order of magnitude heavier.

If you are a large corporate IT manager and you go to the usual culprits -- CAP-Gemini or Accenture or EDS -- and say "we need a server that can run bespoke encryption algorithms with five-nines uptime and it needs to be able to do at least one transaction per second on megabyte-sized files" they will, of course, quote you a setup cost in seven digits and a maintenance contract in six.

And this is where a lot of the fixed costs for ebooks come from; it's the "digital printing press" (which you only need if you've got a fetish about DRM).

You can draw a curve of lost-sales-due-to-piracy against cost-of-maintaining-DRM-systems and I'm fairly sure -- although I don't have the data to prove it -- that DRM works out more expensive in the end than the losses it purports to prevent. But this is inevitable; after all the pressure to adopt DRM doesn't come out of nowhere -- there are software industry sales-sharks pushing it at frightened business folk who don't understand computers or the changing nature of their business. (Much like the climate change denialists ... with six lobbyists per US Representative, each taking their paycheck from the oil and coal industries, it's not hard to see whose wallet is being fattened by feeding a diet of FUD to certain people.)

Well, I was aiming my response solely at the "format-shifting is hard and expensive" argument, but now that DRM is involved in the dance as well...

... I'd say e-book publishing is screwed and there is very little to do. Get used to the east-European model (writers write to become popular and make money elsewhere - as journalists or what have you) or brush up on the skills to find a day job by the time e-books start to dominate, since piracy is not going to get harder. I use IRC to find books out of habit, but there are places like Gigapedia that even the lowliest secretaries at a college I worked at knew how to handle - two years ago.

On a side note, I was unaware that in a "must-have-DRM" scenario the publisher is the one encrypting the books? Wouldn't it be far saner to have the shop doing this instead of pinging the publisher's servers? In any case, you presented this as a steep-upgrade issue (an instant leap from current "neglectable" levels to a Mb-encrypt/sec), but I'd guess that if DRM remains an issue, the cost of creating encryption farms would, presumably, move in lockstep with the increasing demand for DRMed books?

Anyway, yeah, the buyers would still be paying a DRM tax, but my point that the "oh it's so hard and expensive to make those dang .epub files!" argument is BS remains standing, making all claims of incredible expenses by publishers somewhat suspicious, especially since they seem to have made such false claims on several things - for a while, book prices were going up "because the price of paper was increasing" - now it turns out that the cost of paper is insignificant in making a book. In fact, Michael Stackpole wrote a rather elaborate post on this very subject today: http://www.michaelastackpole.com/?p=1287 , including thoughts on office rental costs, returned/destroyed books, the "run-size gamble", etc. as they figure in the total price of a book and how they introduce the smell of baloney into the current claims of "publishing ebooks is simply soooo expensive".

Sebastian: On a side note, I was unaware that in a "must-have-DRM" scenario the publisher is the one encrypting the books? Wouldn't it be far saner to have the shop doing this instead of pinging the publisher's servers?

Yes, but that assumes the publisher trusts the shops to inform them reliably of how many copies they're selling -- or to keep the unencrypted master copy under lock and key.

Any discussion of DRM which assumes that the parties involved are sane, well-informed, and mean well is doomed to inanity. The reality is that DRM is a plague upon the content industries which has been promoted the snake-oil salesmen as a universal panacea to the plague of boils changing business conditions that cause grown executives to hide under the bed, gibbering at night in fear of any threat to their performance related bonuses.

(I've also heard rumours of some publishers billing the cost of ebook conversion internally at $20,000 per title, but that's arrant lunacy which probably conceals some other cost centre that's in full-on meltdown. Or it's an attempt to politically castrate the nascent ebook sales channel. Or something like that. If it's happening at all, and not hogwash and moonshine.)

A publisher friend produced his first Kindle version this week actually, so I asked him how difficult it was. He said it was very easy, he basically just took out everything that wasn't words.

Stevie@100,

It's fatal to ignore Rupert Murdoch over the matter of the licence fee. His press consistently snipe about how this unfair poll tax on everyone in the UK funds a cabal of socialist scum who hate everything good about their country and deserve to be taken out and shot. The rest of the press isn't any better: you've only got to look at the current articles and comments therein about the proposed BBC cutbacks (warning: memetic prophylactic may be required).

My only complaint about the way the licence fee is set up is that you can get sent to prison for not paying it. Not directly, but if you are fined in court for not paying it and can't pay the fine, you still end up in jail. At least if I stop paying Uncle Rupert all that happens is that the kids will scream at me because they're not getting their Spongebob fix.

I think the problem IS the existing distribution and delivery chain. I'm sensing a classic market clearance failure here.

Yes, I'm familiar with the usual "let them eat cake" arguments, they should be grateful for having an audience at all, etc.. but the original comment I was responding to was the one that characterized webcomics as a "ray of hope" in self publishing online.

And it's not. Going on 15 years of webcomics has produced literally a dozen, maybe 2 dozen full time webcomics creators. If that's a ray of hope I'd hate to see the worst case scenario.

@ 100 & 106 BBC Licence fee

There is almost more BS talked about this than all the other subjects in this discussion. For a start, according to it's detractors: "It's a tax, and we all have to pay it, even if we don't watch/like the Beeb" Bollocks. I DON'T pay any licence fee - it is quite simple. Don't have a TV. People regard TV's as some sort of essential. they are not. The unspeakable trash spewed over the public by all channels is of such low-grade that I gave up over 25 years ago. Now, of course we have the Intertubes, so who needs TV for information? Especially, if you live in the UK and have BBC Radios 4 & 3, which are REALLY free, and of superb quality. In the UK, with a population of approx 60 million, 1% don't have TV's - 600,000 people. Most of whom, incidentally will be social classifications A or B, and well-educated (at least a degree) as well. Which is, of itself, a give-away.

Simiularly, don't have anything to do with DRM'd e-books, because they are (as our host points out) an obvious trap .....

I don't see publishers wanting to be responsible for DRM in the long run in any technical or financial sense because DRM's only function is to tie the books (and therefore, customers) to a specific platform - and every commercial ebook distribution scheme has it's own way of doing that, and it's got little to do with the publishers. Executives must be aware that DRM serves as little more than a digital keep-off-the-grass sign to file junkies, so there's got to be secondary gain somewhere for publishers, maybe in their relationship with retailers. Or maybe I'm too optimistic about people.

One future cost of DRM locked to the device is that you need a bunch of support people available 24/7 to deal with customers who have changed devices. It's the flip side of continuous engagement with the customer - instead of having a fan trying to give you money every month, you have a pissed off customer demanding immediate re-issue of their whole book collection.

Well, you don't need that, but the alternative is saying to people who have given you money in the past that they shouldn't do that ever again.

I used to donate to the local public TV station, but then they sent me more requests for more money every couple of weeks. I don't want that, so I stopped donating.

Well, Amazon can change DRM schemes quickly and in bulk and have the resources and people to manage their own back end. They already have a support structure in their web services division. It's when you want to migrate all your books to another company altogether you'll have trouble, and that company isn't going to be able to help you circumvent the DRM because it's technically illegal.

The only way for a company to address the issue and keep their customers happy with a 'migration wizard' or whatever is to make deals with other platform providers. I don't know if the big retailers would be in a legal position to make deals with one another about compatibility unless they go to pains not to lock other companies out of the deal. Because then, if deals are made, the only use for the DRM is to lock little companies out of the market. Once you get to the point where it's got to be inclusive or you'll be hauled in for antitrust violations, there is no purpose for DRM at all.

The only argument for ebook DRM that could be made at this point, I think, is that it helps Amazon and right now Amazon is the driving force behind ebooks. I do think it helps Amazon and I do think they are the driving force behind ebooks. I don't know that Amazon needs to be bigger, and ebooks have both advantages over hard copy and some disadvantages as well, so I don't see why anyone should cling to DRM when it's basically a solution that didn't work.

I'm an avid reader, and since I live in Japan and need to get most of my English books shipped at some expense and cost to the environment, I'm looking forward to an all-ebook future. I'm also very sympathetic to the need of authors to make a living from their work.

I can't help feeling, however, that the publishers have brought these unrealistic expectations about ebook pricing on themselves with the hardcover/paperback pricing distinction. The publishers seem to have implied by omission that hardcovers cost more than paperbacks because they're more costly to produce.

It's only natural that customers would then conclude that if paperbacks are cheaper than hardcovers, ebooks must be even cheaper. And it's only natural that they would then be outraged to see ebooks priced at or above paperbacks.

So it would seem that the publishers' past strategy to segment the market is coming back to bite them now.