20 October 2009

New Article Up and Your Opinion Wanted

Well, this whole pricing war with Wallyworld and Amazon and Target and Sears got me thinking. I mean, do you think the average lunkhead on the street realizes what's going on here?

Click here to read the article, then come back.

Good, you're back. So? What did you think? I mean, do YOU realize what's going on? No? Ok, let me help you out here.

See, in my job, I happen to know what discounts each publisher gives for the books. I also know what these big players are getting as far as discounts go. They each on get 50% off the cover price. Why? Because trade book (aka fiction, non-fiction, etc) gets a sliding discount--how many books the retailer buys determines the discount. And since the above mentioned players in this drama buy in huge amounts, they get a huge discount. Trust me, it's 50%.

But the problem is, they're selling these selected soon to be new releases at 60% of the cover price. Now, maybe these four can get away with that--make a loss on a book, make a profit on a fridge, it all works out. But what about the other booksellers that can't match that price. And let's face it, Walmart is very good at that sort of thing--great buying power that drives other businesses out of existence.

And such buying practices can't go on forever. So what happens when the consumer gets accustomed to $9.00 books only to have the pricing go right back up later on.

And how does that affect the publisher who is going to lose money eventually, because they're going to be expected to drop their prices. Will we see the end of the big publishers? That in itself isn't so bad. But what happens to the bigs eventually trickles down to the indies.

And the ones who really get hurt are the authors. Our royalty rate is based on the sales. And if you think the majority of us do well--you are so wrong. I get 12% of sales. Ok? Let's do the math. My book retails for $14.95. Amazon buys it for 50%. So that means they paid $7.48 (or so) for that copy. I get 12% of that. In other words, I get $.88. I'm already in trouble. When the pricing starts getting driven down to the point that an ebook is now more expensive than a hard cover--there's bound to be a problem.

I'm not overly happy about this, but like you, I'm watching along.

What do YOU think about it all?

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