Amazon to E-Book Publishers: Change or Die

The publishing industry cannot survive in its present form. Just as the recording industry was forced to adjust to digitally altered selling environments, the publishing industry will have do the same.

Amazon recently suspended sales of Macmillan books over a pricing dispute. Amazon wants to sell e-books at a $9.99 price point. Publishers want to sell them closer to the price of a discounted hardback, around $15. Both sides have ugly ulterior motives: Amazon wants to corner the market for e-books via Kindle; publishers want to prop up their bloated and grossly inefficient distribution/retail/brick-and-mortar model by selling e-books, (which essentially cost nothing to produce), at a price point closer to that of hardcovers. However, in this case, Amazon is right. E-books should sell for $10 or less -- mostly less.

Manned printing presses, manned distribution warehouses and manned retail stores place high fixed costs on the publishing industry. E-books eliminate almost all of those costs. But instead of reflecting the savings in reasonably priced e-books, the industry contorts itself to maintain its bloated distribution model and the attendant high prices. They fear that, threatened by cheap e-books, retailers will demand lower payments to publishers so that they can lower prices to compete.

That is what should happen. Currently, with list prices hitting $27, hardback books are grossly overpriced. I read 30 to 50 books a year and cannot remember having paid list price for a hardcover book. Only twice in the past year have I purchased a book at a first-run retail outlet, and those were paperbacks. I buy books at Alibris or other second-hand retailers, even brick-and-mortar ones. I never pay more than $10 for a book. I won't. To do so is to be robbed. Since I can buy any book I want for $7 to $10, why should I pay more than $10 for an e-book?

The entire publishing pricing model is insane. I published a slim, 169-page noir thriller on which the publisher stamped a $24.95 list price. Such pricing contravened every conceivable business and marketing principle. You don't sell tickets to a 30-minute film at the price folks pay to see "Avatar." You don't sell a 1,200-square-foot house for the same price as a 3,000-square-foot house. But the publishing industry will sell a 170-page book for the same price it sells a 400-page book. It will sell a first novel from an unknown for the same price as a sequel in the Harry Potter franchise.

A new generation is reaching adulthood with little adherence to first-run brick-and-mortar buying patterns and accustomed to the savings that electronic downloads offer. They pay $9.99 for an album full of music that they can enjoy anywhere and anytime, forever. It costs much more to produce that album of music than it does for an author to produce 270 pages of text. Yet, the publishing industry wants to charge almost twice the price for a product that is much cheaper to produce. This makes no sense. The audience will not stand for it. They will not buy.

Authors and book consumers should applaud the changes on the horizon. Authors should demand reasonable, affordable prices on their products in order to sell more of them. E-books could help engage a new generation of readers. The benefit to consumers is obvious.

Publishing industry practices are famously antediluvian. Only recently have the majority of publishers accepted electronic submissions. That's right. They insisted on five pounds of paper being schlepped around Manhattan. Only in the past few years have agents routinely responded to e-mail queries. They insisted on snail mail. The industry has a very narrow comfort zone, and is desperately fortifying its walls to maintain its insularity. Unfortunately the forces at work are far stronger. The publishing industry can remove the barricades, or see their house implode. The choice is theirs.