NPR’s Lynn Neary reported last week on the value of e-books (“No Ink, No Paper: What’s The Value Of An E-Book?”), illuminating the nuance about pricing of electronic books. Because books – electronic or otherwise – are still almost entirely issued by old-line publishing houses under the same decades-old operational model, a publisher’s cost of operations still has to be recouped. And for publishers, the sole source of that recoupment remains the consumer purchaser of a book, regardless of the medium of a book’s distribution or purchase or presentation.
From this perspective, a more alarming (from the publishing industry’s perspective) competitive threat on the market today is the low-cost pricing of hardcover books (including current bestsellers) at places like Target, Costco and Walmart. The fact that Amazon agrees to raise the basic Kindle book price helps alleviate publishers’ pain only so long as the electronic book market seriously impacts the book purchase market and – which is nowhere near the case – and only so long as Amazon (and a very few smaller competitors) dominate electronic retail – which they do.
And this is precisely the point book industry veteran Jason Epstein makes in his March 11th essay in The New York Review of Books, “Publishing: The Revolutionary Future.” For the book publishing industry has been reeling since well before the appearance of the Kindle or Sony Reader or, for that matter, since well before the digital migration. Admits Epstein, “This historic shift” of digitalization “will radically transform worldwide book publishing, the cultures it affects and on which it depends.” However, why the shift remains so difficult for traditional book publishers has much to do with decades-old trends:
“Meanwhile, for quite different reasons, the genteel book business that I joined more than a half-century ago is already on edge, suffering from a gambler’s unbreakable addiction to risky, seasonal best sellers, many of which don’t recoup their costs, and the simultaneous deterioration of backlist, the vital annuity on which book publishers had in better days relied for year-to-year stability through bad times and good. … The resistance today by publishers to the onrushing digital future [arises] from the understandable fear of their own obsolescence and the complexity of the digital transformation that awaits them, one in which much of their traditional infrastructure and perhaps they too will be redundant.”
Epstein thoughtfully weighs consumer misperceptions about e-books with the publishers’ dilemma. Consumers, not surprisingly nor unreasonably, might think that electronic book pricing should benefit from the avoidance of the physical costs of publishing, most obviously inventory, manufacturing, paper and distribution. Of course the industry wants to maintain or even increase profits, which includes covering losses from poor sellers in both print and electronic. Whether true or not, it is not the whole story. The reality of publishing still very much involves the huge majority of bookselling in print, via physical retail stores or online sellers. Put another way, one great obstacle to the evolution of publishing is the lack of evolution in the buying market.
As Epstein later told NPR for its story, “One thing that publishers do have to consider in thinking of pricing is that they don’t want to liquidate their existing retail structure by making it so inexpensive to get an e-book that people won’t go to bookstores at all and then publishers will have no place to sell the 90 percent of the books they do create in the physical form.”
On the other hand, Epstein’s own writing on the subject – a much broader futurism on the limitless possibilities of a digital publishing landscape – seems quite a bit more sanguine about publishing’s future than might be gleaned from the quotes in his subsequent interview for NPR’s story.
Nonetheless, his sympathies obviously lie with a stodgy but (in his view) celebrated industry generally apoplectic about both present and future. He doesn’t seem to lack any confidence that the industry can survive and thrive (“The more adaptable of today’s general publishers will survive the redundancy of their traditional infrastructure but digitization has already begun to spawn specialized publishers occupying a variety of niches staffed by small groups of like-minded editors ….”). But he offers compelling economic and cultural arguments for why the market publishers currently resist basement-rate pricing for e-books as well as why, inevitably (if not immediately) the market will absorb and reflect the business reality “with or without the cooperation of [publishing’s] current executives”.