UPDATED: E-Book Prices Fuel Consumer Outrage

New Opportunities for Pricing

So what will be the future pricing of e-books? A new wave of publishing, one that doesn’t think of e-book sales in terms of hardcover sales, is proving that high-quality, high-profile content can indeed be priced lower than the $12 to $14 of agency-model-priced books. These companies are smaller, leaner, and taking advantage of the lower costs of digital publishing and the powerful distribution mechanisms of Amazon.

And anyone can take advantage of Amazon’s self-publishing services such as CreateSpace and Kindle Direct Publishing.

“The newest crop of best-selling authors, including Amanda Hocking (Trylle Trilogy),who has published her books through both Kindle and CreateSpace, and Marie Walsh (A Tale of Two Lives--The Susan LeFevre Fugitive Story), who chose CreateSpace to bring her book to market, entered the publishing world via the indie route--and found incredible success and fame,” says Melissa Kirmayer, director of Kindle content at Amazon.

This spells trouble for traditional publishers, who used to control where books were sold. Now that authors can distribute their own work through Amazon, they no longer need big publishers to open those doors.

“Gatekeepers can’t do their job when there is no gate,” says Seth Godin, founder of The Domino Project, of the decreasing relevance of big book publishers for some authors, such as himself.

Godin knows publishing. His book Permission Marketing: Turning Strangers Into Friends and Friends Into Customers was published by publishing giant Simon & Schuster in 1999. He is the author of 13 books and founder of several Internet startups including Squidoo.Godin launched The Domino Project in January 2011 as a publishing company that distributes print and digital books through Amazon. The Domino Project says that it’s a departure from traditional publishing in its lower costs and faster time to market. Most important, it doesn’t see the sale of an e-book as a lost sale of a hardcover, where the publisher needs to make as much money from an e-book as from a hardcover book.

“If you have a mindset of scarcity, it makes perfect sense to charge $20 for a Kindle book,” says Godin about agency-model pricing. “We are choosing to have the mindset of abundance.”

The Domino Project, which publishes books about realizing success, reins in marketing costs by finding books that appeal to the existing reader base.

“I’ve over the years assembled this tribe of people,” says Godin. “I wouldn’t do as well with a cookbook.”

Godin‘s interest in working with Amazon is not only because of its distribution system and the popularity of the Kindle, but because Amazon knows what its users like.

“If you buy six books on woodworking, Amazon knows that, and you [the consumer] want them to know that,” says Godin.

Right now, the Domino Project has released two books, Do the Work by Steven Pressfield (the author of The Legend of Bagger Vance) and Godin’s own Poke the Box. Several more books are in progress. The Kindle edition of Do the Work is free, while Godin’s own Kindle book costs $7.99. This Kindle edition actually costs 48 cents more than its hardcover edition, which is still well below the standard price for new hardcovers. Godin’s goal is to price his books so that they can be an impulse buy.

New Publishing Formats

E-books have not only created more options for pricing, but they have created more options for creating the book itself. Nicholas Croce, a literary agent and president of the Croce Agency, says that some smaller publishers are experimenting with selling chapters of books or smaller-format books digitally, since the digital format is not constrained by standard book sizes or lengths.

John Tayman is one such entrepreneur who found a niche. Tayman was a long-time magazine editor for publications such as Men’s Journal and Outside, and he also authored a book called The Colony: The Harrowing True Story of the Exiles of Molokai. He began to notice that the stories that interested him fell somewhere in between full-length books and magazine feature stories.

John Tayman.

“I began to think about a publishing company that focused on that space between traditional books and magazine articles,” says Tayman, “As a reader and a writer, I knew that there were stories that wanted to be told at their proper length.”

Tayman’s vision predated Amazon’s and Barnes & Noble’s online stores and hardware readers, so initially he lacked a distribution platform, but once technology caught up with him, conditions were right to launch Byliner. Byliner has two components: new content called Byliner Originals as well as the site Byliner.com, which allows people to discover and discuss authors who publish in this content niche. The full site launches in a few weeks.

The first two Byliner Original stories--Three Cups of Deceit: How Greg Mortenson, Humanitarian Hero, Lost His Way by Jon Krakauer (best-selling author of Into Thin Air) and Into the Forbidden Zone: A Trip Through Hell and High Water in Post-Earthquake Japan by William T. Vollmann--enjoyed status as the first and second best-selling nonfiction titles respectively on Amazon. They are priced at $2.99, and the flexibility of the digital platform allowed them to be published fast enough to take advantage of the newsworthiness of these stories. Tayman says that there are more than 20 Byliner Originals in the pipeline right now, and ultimately intends to release a new title every 7 to 10 days.

According to Tayman, Byliner.com will curate and catalog “25,000 of the best feature articles ever written.” Readers will be able to discover, bookmark, and discuss the content on Byliner and will be sent to the article’s source for full content. While this ability to discover and cross-discover books is available on sites like Goodreads and Shelfari, there is no comparable catalog and social network for long-form journalism. As a writer of long-form stories, Tayman was satisfying his own need.

“As a writer, I wanted to direct connection to my audience,” says Tayman.

Pricing Books Like Angry Birds

Independent authors--without agents, publishing deals, or marketing dollars--face radically different pricing concerns than traditional publishers and publishing startups like Byliner and The Domino Project. They are pricing against all the other entertainment that readers want to buy.

“They are competing with $4 film rentals or 99-cent apps such as Angry Birds,” says Brian Felsen, president of BookBaby, the newest indie venture of CD Baby.

Just as CDBaby caters to indie musicians, BookBaby caters to indie writers. Six months out of the gate, BookBaby is digitally distributing about 2000 books by independent authors. BookBaby lets authors set book prices, and makes its money by charging $99 for digital conversion and distribution through Apple iBookstore, Barnes & Noble.com, Sony's Reader Store, and Amazon.com. After the first year, BookBaby charges the author $19 annually for continued distribution and offers other paid services such as cover design ($99 to $199), and, soon, Web hosting. In the end, the author keeps all profits.

The evolution to digital will differ by publisher. Hachette’s Thomas anticipates, “Some print runs will decline, some will expand, and new readers (who were not previously regular physical book buyers) will enter the market because of the digital revolution.”

And only time will tell where in the pricing spectrum--from best-selling $25-plus hardbacks at one end to 99-cent music downloads at the other--e-book prices will settle. Some argue that there’s no incentive for publishers to cut prices. Despite the public protests, people are buying e-books in droves. Others point to the inevitable downward trend of digital content prices.

“It’s still a little bit like the Wild West out there,” says Brian Felsen of the current digital publishing landscape. But who lassos whom--publisher, retailer, or self-made author--remains to be seen.

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