What's a book really worth?

"Dear book industry, I'm so sorry to tell you this, but your books really aren't worth $25. Just like newspapers weren't really worth what people were paying for them and magazines, either. And CDs, and DVDs."

I caused a bit of a fuss last week when I blogged these words here, or in a mirror post on Paidcontent.org. This has been one of the most commented and tweeted posts I've ever offered and much of the feedback centered on this question: was it fair of me to drag the price of books down?

 

My answer: Current book prices are a lie

 

I'm cheating when I say this, of course, because I know full well that most people who buy hardbacks don't pay list price anyway. Even in an airport, you can get 20% off a hardback if you time it right, not to mention the 50% you can get off bestsellers at Barnesandnoble.com (sorry, the sale is over, but yesterday you could get Sue Grafton for $13.97, Ted Kennedy for $17.50, Mitch Albom for $11.99, and the list goes on).

So people pay discount prices, yet bristle when I suggest books should be cheaper. Let’s figure out why. To explain where book prices come from, I must first explain where they do not originate. Books are not priced based on:

  • Time, effort, or passion the author put into it. This is the saddest news to deliver and the hardest one for authors (or would-be authors) to hear. But it's obvious when you consider it honestly. In fact, the masses of unpublished or self-published authors should rise up and protest anytime someone suggests that the author's hard work -- or "blood, sweat, and tears," as one Twitter commenter put it -- should bear on the price of the book that emerges from this personal crucible. Because there is no relationship between the quantity of effort one puts into a work and the quality of the output. Certainly Stephenie Meyer put a great deal of energy into her books, but not 100x more than her friend Shannon Hale, author of a Newbery Honor book and many other teen fantasy novels. Yet Meyer has reaped 100x the financial reward (at least). Not to mention the many of us whose teen fantasy novels languish in the Kindle store. If effort=reward, then something's been rotten Denmark (or Forks, Washington) for some time now.
  • The cost of the author's advance. There is some truth to this one, but it’s temporary, and results in painfully circular logic: "We paid millions for this book, therefore, it's worth millions." Nope. You paid millions for the book, because analog-constrained business practices evolved over decades that led you to model future returns based on print distribution opportunities and retail prices. And those outrageous advances will continue to be paid out as long as publishers forget that their analog assumptions are quickly eroding in the marketplace. Yes, I am suggesting that advances will come down in the next decade. It happened in music, in movies, and it will happen in books.
  • The exclusivity of the work. One commenter chastised me, suggesting that I would devalue a Jackson Pollack work to a handful of dollars because it was "only paint splashes on canvas and wood." Though not a Pollack fan, I wouldn't diminish the value of his original work because it is exclusive. Art is the most extreme example of a monopolistic good. There can only be one original, therefore the original has value that any copy does not. Books are copies. Copies are worth the value people assign to the content, plus the cost of the copy itself. Unless an author wants to hand print a book on homemade hemp paper, bind it with leather harvested from his or her own steer, and offer that book on auction to the highest bidder, a book is just a bundle of ideas plus the physical means required to replicate and distribute it.
  • The personal value a reader places on it. Another argument offered by some was that books - when they change our lives - can give us value that we would pay hundreds for. This is a nice thought, but it's also impossible to achieve. There's a little thing in economics called transparency that prohibits any nonexclusive book from being sold at an extreme value. This is because you don't know whether the book will change your life until it already has. Though Life of Pi elevated me in ways most books cannot, I paid just $15 for it because I didn't know it would have that effect on me until after I read it. Like all books, its value was not transparent, meaning you cannot assign a value to a book without consuming it. And once consumed, there is no economic incentive to pay the author for the overabundance of value delivered. Other than to buy his or her next book (at a discounted price at Costco, most likely, because even then, there's no guarantee that the book will deliver that same value.)

Is all hope lost, then? No, the secret to recouping the value of a book is to make sure you multiply the experience of the book’s value as far and wide as possible. An unlikely model emerges here in the form of James Patterson who does this by generating (careful choice of words there) what seems like a book a week. And they're all available in digital format. He evidently understands that reading is an addiction that can be fed quite easily by opening the supply of the drug of choice.

If I were an author or publisher hoping to preserve the value of books -- whether physical or digital -- I would focus on the most convenient book experience possible; make it easy to find, easy to evaluate, easy to consume, and easy to share. The more easily these things can happen, the more people will consume. If we do this right, ten years from now, more people will read books than ten years ago. And they'll each read more titles than they did ten years ago. And though they'll pay less per book, it could actually generate more profit (slightly less revenue against markedly lower costs).

In the process, we'll see a shift in how authors are developed. Yes, authors who have proven themselves in the digital minor leagues, will get picked up by the majors at a handsome price and then they'll have the chance to milk things like exclusives: exclusive interactions with the authors, exclusive content available only to subscribing members, exclusive hardback editions that are printed in limited runs and hand numbered by the author. But the bulk of authors will not achieve this, and instead will find an audience of a few hundred or a few thousand readers they can appeal to and thereby share what caused them to invest so much time, effort, and passion. As an author myself, I’ll admit that while I’d love the former, I’ll at least take the latter – something I can only do in a digital world.

Comments

re: What's a book really worth?

As one of many self-publsihed people trying to get recognized. The print on demand nature of my books has prohibited me from dropping my book prices much more than I have. All less than $14 now, but were as high as $17.99. Yes an ebook is still way cheaper to buy, and can be found in my url above, or at Amazon, Barnes&Noble and several other online stores, but due to my name I am page 17-18 of the John Harvey's book listings thanks to a prolific crime book author as my namesake. I have fans on facebook, just no booksales. Dropping prices of established authors just makes my books less desireable because I cannot drop mine without eliminating all of my revenue made from them, as it would be strictly cost/page value of printing them.I'm hoping my next novel under a pen name fares better, this publisher service (iUniverse) prices differently than Lulu. Most likely it will sell for about $8, even though it is very short, at 128 pages in trade paperback size. It's the title that will grab you.

re: What's a book really worth?

type too fast, published is what publsihed should say

re: What's a book really worth?

Smart post, not that you need any encouragement. I can attest to the opening up the supply method.The truth is that a book isn't worth anything if it's not read by someone. Wait! Unless it's frozen in a block of ice and sold as conceptual art.

re: What's a book really worth?

Thanks for the insightful post! As a new writer trying to parse the market, I appreciate you taking the time to share your take on book pricing. I suspect you are right, and things are going to change before I'll be able to get any books actually into print - or e-ink.

re: What's a book really worth?

Good stuff - both the original post and this! A book is of course worth what someone will pay for it and until it's bought it's worth nought.Books (and music, etc) are just like sausages: few people actually know what goes into making them :) and therefore the perceived value of the good is not in equilibrium with the actual inputs.I am bemused that publishing execs don't appear to have learnt the important lessons from their music industry counterparts.

re: What's a book really worth?

>I am bemused that publishing execs don't appear to have learnt the important lessons from their music industry counterpartsI suspect that they have, but that there's still milk in this particular cow. It's unlikely that we'll see a huge rush on Bittorrent for pirated PDFs anytime soon or a BiblioNapster construct. So there's really very little incentive for them to change the behavior. The early digital adopters are getting screwed on price. The reduced cost of printing and distribution have gone straight into profits. The ease of marketing in a connected world has help lower promotion costs. Authors are getting the same or less money for a digital copy and the publishers are laughing all the way to the bank. I keep waiting for one of the big publishing houses to step up and screw their competitors by charging a reasonable cost-based cover price. Unfortunately, I have far too little time to waste on a bunch of crappy $1.99 "bargain bin" books when there are $30 best sellers on the shelf. After all, if they were good books, they wouldn't be so cheap. :)

re: What's a book really worth?

Why has no one discussed the overwhelming financial bonuses of e-books? It's not about distribution costs at all. It's about taxes and returns.

The famous Thor Power Tools case in the 1970s had the unintended effect of making "reserve" goods taxable. Thor used to keep parts from old, discontinued models around, so that its customers could call them up 40 years after the fact and still get an old tool fixed. These were not actively being sold, but were still taxable. Unfortunately, this also applied to books, making it doubly expensive (storage costs and taxes) to keep books in print, or even to warehouse old books. Having an ebook file circumvents these costs, as there is no physical inventory to tax.

Secondly, since the 19th century the book trade has worked on returns. A bookstore buys 50 books, say, and tries to sell them. Let's say it sells 22. The other 28 can be returned to the publisher in six months for full (wholesale) credit. Some of these books are later sent back as "remainders." Most are pulped.
Returns make an unattractive business almost unworkable. The effort of pulling and shipping returns, or the costs incurred by keeping old books nobody wants, makes the whole thing a nightmare. With ebooks, there are NO returns. EVERY sale of an ebook is a REAL sale, which is a holy Grail for the publishing industry.
Book publishers are beyond clueless. Most of us who read seriously have accepted this and forgiven them for it. But I'd like the full deets of the publishing business model on the table. It's not about the warehousing and shipping, but the no taxes and no returns. $10 an ebook is starting to look pretty expensive to me.

re: What's a book really worth?

TD, I am really interested in your comments -- I am well aware of the returns issue but the tax issue is new to me. I will pursue that with my publishing clients. I'm betting the marketing and strategy people (who are largely in charge of digital distribution decisions) are not aware of that aspect of their model and what it does to their financials. Thanks for the tip.

re: What's a book really worth?

And as a quick followup: Thor devastated the publishing industry because it ruined the midlist, or the portion of the curve after the short head and before the long tail. Many books used to find an audience over time, or would eventually sell out if you gave them a few years. This is no longer workable given the low margins of the biz. In turn, this forced a "blockbuster" business model that essentially removed all but plankton (genre romance and licensed-property science fiction) and apex predators (Stephen King, Dan Brown) from the literary ecosystem. Ebooks could restore the midlist, which would probably end up spurring overall consumption. You could also start pricing experimentation if you had a midlist: another weapon in the arsenal.
Secondly, the real elephant in the room is that publishing revolves around estimating demand, and publishers routinely get this wrong. There are a few overprinting flops--overpuffed celeb bios--but mostly I think it's a matter of regularly leaving money on the table by conservative print runs. Not having to deal with physical costs (returns and taxes, again), would free up money for promotion, which in turn would spur sales and allow titles to find their "legs."

re: What's a book really worth?

Another Indie author here -- publishing under my own name and also as Sierra Philpin when I work with my co-author, John Philpin. My/our Indie titles go for 99-cents in the Kindle Store and I/we would give them away free if Amazon would permit it. I suspect they don't because of the Whispernet costs.

Philpin and I also have a couple of Random House books in the Kindle Store. Unaccountably, they're priced the same as best sellers at $9.99. Corporate minds deciding that $9.99 is an acceptable price for ebooks written by unknowns leaves me with nothing to say but "Huh?" But at least that's better than the twenty-some dollars they're charging for our trade paperbacks.

I haven't yet seen any royalties for the digital versions of our Random House books, but I guarantee you the royalties from the paltry sales of our Indie titles will be higher.

Dr. McQuivey, I enjoyed this article and others you've written. Thanks for your thoughtful analysis.

re: What's a book really worth?

Very sobering comments, Patricia. You show a weakness in the model that publishers are applying: they're only thinking about Grisham, Gilbert, and everyone else who has a guaranteed spot on the NYTimes bestseller list. Yet there are thousands of other writers who could have an impact in digital without the top-down micromanagement the publishers are tempted to exert. Thanks for adding your voice.