Kindlerama

Kindle owners, prepare yourselves. As ebooks grow in market share, you’re going to be hearing a lot of arguments from publishers–all of them deeply suspect–about why they have to price their books higher.

If you were around for the whole mp3 revolution–from its tiny birth pangs in ‘98 and ‘99, through the iPod’s first really disruptive years in ‘03 and ‘04, to the fairly mature market we have now–you’ll have heard all of these arguments before. If you’re not a technophile and don’t even think of your beloved Kindle as a disruptive technology, the arguments might be new to you. But they’re false, and they’re being made by businesses with broken business models, publishers who want to hobble the marketplace via the only technique they have left after letting their distribution network be supplanted by newer technology. They’re going to do it by training customers to pay more for no good reason.

What’s prompted this tirade post? A confluence of two online incidents. The first is a comment I read over the Thanksgiving holiday by a purported publishing insider, and while there’s no way to verify that he’s the real deal, his general attitude reminded me of something I was disappointed to see at a Google publishing conference a year and a half ago. The second is more immediate and distressing to me as a consumer: some books are now being priced above the ten dollar mark on the Amazon Kindle store.

It’s been a while since I’ve started at the top of the list in the Kindle store and checked out the books, because usually the titles on that list aren’t of interest to me. Tonight, curious whether Amazon would adopt any sort of holiday pricing–especially in this economic climate–I decided to check it out. I was impressed to see that the top two sellers, books 1 and 2 of the Twilight series, were going for $6.04 each. It makes sense; the series is enormously popular and there’s a huge amount of Twilight publicity right now, so why not lower the barrier to get new readers involved? (Tellingly, the third bestseller, book 3 of the series, is still priced at $9.99.) Two Obama books are also bargain priced–I may even get around to reading “The Audacity of Hope” this year or next now that it’s under five dollars.

Then I moved past the first twelve titles and saw something I’ve been dreading for months now: titles priced above the magic $10 threshold. At position 13 is current Oprah bestseller The Story of Edgar Sawtelle for $12. At position 27, last season’s bestseller The Host, also going for $12. And then a few more places down is the stunner: The Ascent of Money, just released last month and a hot title for an economic/finance book, is listed for a whopping $17.79. For comparison, you can buy the brand new hardcover version from Amazon for $19.77–less than two dollars more.

I wondered, is The Ascent of Money a massive tome, the equivalent to a multi-disc set from a musician? No, it’s 432 pages. Is it a rare or old title that’s out of print? Well, considering it’s written by a Harvard professor, was published not even a month ago, has enjoyed great reviews, and is being released in probably the most favorable climate possible for an economics book, I’d wager no. Likewise, The Host and Edgar Sawtelle are both popular, recent titles. The most probable reason for these books’ prices is that their publishers are experimenting with variable pricing, and testing whether the market will support higher prices on popular titles.

Seeing these arbitrarily higher prices reminded me of “Mike” and his anti-Kindle sentiment. Over the weekend, I found Mike’s user comment left on an Engadget post about the Kindle. Mike says he works in publishing; whether he does or not, he argues rather stupidly against what he sees as a power play on Amazon’s part to control publishing:

mike @ Nov 30th 2008 11:12AM

As someone who works in Publishing i am concerned. Yes, by not physically printing the book we are saving money, plus the reader can carry as many books as he wants with Kindle.

BUT printing books is not really all that expensive for a publisher and what concerns me the most is that Amazon will have this power to force publishers to sell book to them at a much cheaper price or else the publisher will not be available at all on Kindle.

Right now Publishers sell book at about half the price you see on the book to retailers (Barnes&Noble, Amazon) but with Kindle now there’s no need to print actual book, everything is digital, so Amazon will ask for even lower price.

I have no problems with e-books but i really want to see some heavy competition to Kindle, there’s that Sony E-book which i like more than Kindle, but that is not a real competitor.

I also fear that Kindle will start offering College Books, that will be a real killer, having college books on Kindle will give us a generation of people who for 4 years (while in college) do nothing but read from a screen rather than from an actual book, after that i doubt they will ever go back to a real book.

Also i hate to sound like a guy who opposes progress, but most books are printed here in USA, and those binderies provide a lot of good paying jobs, all the way from blue color to finance and most are good paying. Also right now Publishers hire people who oversee the production of books and people who track the inventory and warehouses, if the book is digital there’s no need for all that. Plus Publishers hire Design Artists to make beautiful covers, that job will also be eliminated.

Let’s break Mike’s argument into its parts:

1. A publisher’s expenses aren’t derived from physically publishing titles;
2. If the Kindle proves popular, Amazon will be able to demand low pricing from publishers;
3. Young readers may turn entirely to ebooks;
4. Ebooks will kill existing industries such as book printers, warehouses, and cover design artists.

#1 begs the question: just what does keep the price of books at their current levels, if it’s not linked to the cost of paper, ink, warehousing, and subsequent pulping? For years all I’ve read about publishing links the rising cost of books to the rising cost of materials for printing physical copies. Now Mike–who granted may be a fraud, but more about that later–is saying no, no, it’s other hidden costs that keep books at their current price levels. So which is it? Is physical printing expensive, or is it a nominal part of the publishing industry’s fixed costs? And what are the other costs?

Argument #2 is the record label argument: if this takes off, we’ll lose control of pricing. Record labels began saying this back when they saw Apple come along to launch a new distribution model that they’d been keeping at arm’s length. And sadly, they were right; they had to take steep losses as they adjusted their business models in order to work within the new system. But remember, just as with the music industry, book publishers have deliberately avoided the digital marketplace, almost solely out of concerns about IP infringement. Much like the recording industry, they’ve intentionally dragged their collective feet on digital distribution, or tried to shut down or minimize business models (e.g. Google’s book scanning project) that threatened with too much innovation. They have in fact been anti-innovation, and almost solely to protect existing business models. This is never a good reason to support a company or an industry.

Argument #3: meh, who cares? It won’t happen, says I. And even if it does, I have no patience for conservative viewpoints about things as far out on the perimeter as how one reads a book. It’s a bit like complaining that Coca-Cola doesn’t come in glass bottles anymore.

Which brings us to the final argument, and the only one that actually angers me, because it’s an intentionally manipulative appeal to human sympathy for fellow citizens and simultaneously an implied threat to one’s patriotism. If you become an ebook consumer, Mike suggests, you will be killing part of the American Way of Life–withdrawing your financial support from existing industries that have been built up around legacy technologies. Mike’s shortsightedness, and almost certain selfishness (for I imagine his biggest concern is his own paycheck), holds far more risk for American success than pushing for increased competition and a more efficient marketplace. For a perfect example of where this leads, please take a look at U.S. automakers in 2008, who after years of denial woke up to a world in which they can no longer compete.

(The one thing Mike didn’t say was that authors would suffer, which is an argument I fully expect to start hearing in the coming year or two as a sort of last-resort bit of propaganda. When they start saying this, please note that recording artists have managed to survive the mp3 transition just fine–it’s the record industry execs who have suffered.)

As I wrote above, Mike may not really be in publishing, but the tone and sentiments in his comment immediately reminded me of the irritated, accusatory tones of publishing representatives at a conference hosted by Google 18 months ago in NYC. I attended mostly out of pure curiosity (considering I was then working as a business copywriter in a completely unrelated field), and I was taken aback by the hostility of the crowd. This was at the peak of the Long Tail frenzy, and Google presented a couple of forward-thinking publishers who had taken advantage of Google’s digitization initiative in order to sell more titles from their back catalogues; in each presentation, the numbers clearly showed that the Google effect had led to more sales. Men and women in the audience didn’t care; they asked “Why should I do this, what’s in it for me?” and said things like, “You’re just trying to take content you don’t own the copyright for.” The tone of the Q&A felt more like a town hall meeting between angry villagers and the resident benevolent-but-misunderstood mad scientist than a meeting of minds between business leaders about the future of publishing.

So that’s where many in publishing stand today, I fear: somewhere between Mike and those angry townsfolk at the Google conference. And that’s why they’ll continue to find reasons to hate on ebooks, and why they’ll do everything in their power to disregard the advantages of ebook distribution while they try to keep the books priced at the same level as before. Don’t let them fool you, Kindle reader! Refuse to buy a non-physical copy unless it’s priced fairly.

(Photo: Gaetan Lee)