Ebooks and the Frankfurt Bookfair

Click here to read commentary on digital publishing and ebooks at the Frankfurt bookfair from Publishers Weekly.

Key points:

• The 2010 Frankfurt Book Fair is embracing the digital future in a wide range of events, panels and workshops
• An ebooks panel of industry leaders noted explosive growth in e-book revenues: e-books made up about 9% of HarperCollins' total revenue - when that number was adjusted to filter out materials not easily consumed digitally, closer to 20% of trade title revenue was now derived from e-books. 
• With print revenues flat, nearly all of the industry’s growth can be attributed to e-books, another indicator of e-books' critical role in the publishing market.
• Are e-books adding incremental growth or cannibalizing print sales? Jury is out on this so far.
• Will the industry standard of 25% of net receipts royalty would change? Some thought not, defending the rate as a fair cut.
• Would Frankfurt Bookfair survive? Did it make sense to travel half way round the world to deal and trade in digital content?  Changes are surely on the horizon, but  it was language rights, not geographic rights, that were traded, suggesting the kind of personal exchanges fostered by the rights centre had a future.
• Pace of change is impressive - at last year's fair there was no iPad and no iBookstore, and the dominant digital theme was piracy. Now e-books and digital are looked at more as an opportunity than a threat. By next year Google will have entered the fray with Google Editions.

Ebook Pricing an Unknown Quantity

A survey of 840 international industry representatives conducted at this year’s Frankfurt Book Fair, in cooperation with buchreport and Publishers Weekly, confirms the lack of consensus in the publishing industry as far as ebook pricing is concerned. While most publishers suggested that ebooks should be cheaper than the same (or equivalent) print version, the range of the discount suggested by publishers varies enormously.

The responses reflect, I believe, the wide range of publishing experience, types of book and level of sophistication in pricing calculations (including gut feel favoured by many publishers). The responses raise a number of questions about ebook pricing:

Do publishers start from a position where they strip out print and distribution costs and thereafter price to achieve the same margins as print – or do they see this as an opportunity to squeeze higher margins?

Do they give a little more discount to reflect the absence of returns – ie to take account of books which otherwise would be returned to the publisher from booksellers in exchange for a refund ?

Do they – following any discount to relect zero print and distribution costs – add back in a percentage to reflect the cost associated with piracy risk?

Are the growing number of conusmers who are used to purchasing music, say, off iTunes, more inclined to favour a flat-rate price – like on Amazon front list titles?

Another consideration – linked to the piracy consideration, but from the consumer /reader side – is whether a discount should be factored in to allow for limited usage of an ebook. If a ebook is made difficult to share then can it be considered by the consumer as a less useful product? ....on the other hand if you believe that the sharing of print books leads to increased sales of books, then the restricted sharing opportunities of ebooks should lead to a more shallow discount to maintain margin.

The point I’m illustrating here is that ebook pricing is not so scientific (yet)! Other known unknowns – I believe – could be in the variable cost of sale of using different channels and formats ; how far publishers will consider use of advertising revenue – e.g. like Spotify for music – in exchange for ‘free’ to end-user content; subscription rates buying consumers access to whole /sections of publishers’ catalogues ; whether mobile access to ebook content should in fact be at a premium, rather than discount, to the print.

Here are the results of the survey:

The price for an e-book should be:

More than the printed book: 4% of respondents
Same as the printed book 15% of respondents
10 per cent cheaper than the printed book 11% of respondents
20 per cent cheaper 17% of respondents
30 per cent cheaper 14% of respondents
More than 30 per cent cheaper 16% of respondents
A standard price as with Amazon ($9.99) 15% of respondents
Other price model 6% of respondents