But to place blame on any of the above is to really miss the point.  The publishing industry is struggling because it is losing control of the process at both ends.  The distribution channels, led by Amazon, perhaps to be joined by Apple, are taking bits of the process.  They have said, “you need us as much as we need you, and it’s time to start negotiating with that in mind”.  And on the other side, the quality and availability of tools to self-publish have risen dramatically, and are continuing to rise.  That’s not to say that an author with a blog and an account at Lulu is on equal footing with a best-selling author with the backing of an entire publishing company.  But the gap has closed enough that the author, too, has a bargaining chip.

At the end of the day, the price paid by readers and distributors is dropping and the price paid to authors is rising.  This makes it easy to think that price is the root of the problem rather than merely the most visible effect.

Publishers need to step back and think about what they can provide that has real value.  They have editors on staff, and authors need editors.  They have marketers on staff, and authors need marketers.  What authors no longer need is someone dictating the terms of everything.

This does mean that publishers will make less money.  But this is a reflection of the natural economic process rather than something that must be stopped with new laws and regulations.  It is easier now to produce a book and get it into the hands of readers.  There are cheaper substitutes for the services provided by publishers (again, not necessarily of the same quality, but increasingly good enough).

In a free market, this means that profits for publishers will fall.  This is progress.  It is only tragic for those unwilling or unable to adapt.

No, I don’t mean that marketing is bad or that it doesn’t exist or that you shouldn’t pay for it.  Good marketing is a very valuable tool.

However, when you say, “I have to charge this much for my product to cover marketing costs”, you are doing it wrong.  If you aren’t making back the money spent on marketing in extra profits, you should find someone else to do your marketing, or stop doing it altogether.

If you spend $10 on marketing, your profits (not your total sales) should increase by at least $11.  Otherwise you were better off to just keep your $10.

So what “I have to charge this much for my product to cover marketing costs” really means is “I am charging you more so I can make more money”.  Good work if you can get it, but you’d better make sure your customers never find out what’s going on.  They aren’t likely to be happy about it.

See part 1

The myth of devaluation

If anyone ever tells you that low prices for ebooks are devaluing books, you can be sure of one thing – what you are about to hear is not a logical argument on ebook pricing.  Either this person is lying to you, or this person is making an emotional or psychological appeal to you to pay more.  You can not “devalue” an ebook by lowering the price.  You can undermine the leverage the seller has to charge a higher price, but you can’t make a potential buyer value the book less.  People like to confuse value and price.  They are related, to be sure, but are very different concepts.

Let’s look at an example.  Let’s say you and I have each written a book.  We have an imaginary consumer who likes your book twice as much as he likes mine.  If both books are priced at $10, he will certainly buy yours.  If I drop the price to $9, he’ll still buy yours because he likes you that much better.

But what if I drop the price to $1?  Have I devalued your book?  No, absolutely not.  He still values it twice as much as he values mine.  But my price is 10% of yours.  He’s probably going to buy my book, and he’ll do it because he’ll get half the enjoyment of your book at 10% of the price.  This is, for most people, a good deal.

Now, if we pretend that collusion and price fixing aren’t illegal (and let’s do that, just for the sake of argument), you could call me and we could agree to both charge $10.  This would work if we were the only two games in town.  But we aren’t.  We have to compete with not only all the other authors out there, but all the other things that people might possibly do with their free time.

And there will always be cheaper alternatives to your book (well, there’s maybe a case or two where that’s not exactly true, but we’ll get to that another day).  Movies, music, walks in the park, the internet, the list is endless.  Blaming me for “devaluing” your book is just silly.  You might as well blame the beach for all the nice sand there is to walk on, and the cool breeze coming in off the water.

So what can you do?  First of all, the only reason that what I’m doing matters to you is that I might be doing something you hadn’t thought of, and you can learn from me.  Beyond that, don’t worry about me.  Worry about making your book the best it can possibly be, and worry about how to get more people aware of it.  There are a million ways to do this, and none of them start with accusing your fellow authors and publishers of “devaluing” your work.

See part 2