Sunday, August 8, 2010

Why More Kindle Sales Over Hardcovers on Amazon Is a Good Thing

by Matt Moore

Amazon announced recently (July 19, 2010):

Over the past three months, for every 100 hardcover books has sold, it has sold 143 Kindle books. Over the past month, for every 100 hardcover books has sold, it has sold 180 Kindle books.

This is good news. Ebooks give readers a quick, easy and (hopefully) inexpensive way to not just read books, but discover and try new authors.

However, I’m wary of how publishers will react. Some publishers fear that ebooks released at the same time as hardcovers take away from sales of the highly profitable hardcovers. As well, there is a belief that demand for ebooks and hardcovers if released at the same time are equal, so the price of ebooks relates to its perceived demand rather than cost.

Now with Kindle sales surpassing hardcovers, publishers might feel justified in delaying ebooks or keeping prices elevated to make up for what they perceive as a shortfall in profits. Yet if publishers want to improve their bottom lines, they should drop the prices of ebooks and release books in ebooks and hardcover formats simultaneously.

Hardcovers Are Money Makers

Hardcovers have higher per unit profits than paperbacks. Publishers know that big name authors have a built-in audience who are willing to pay a premium for the latest book. This is the reason why paperbacks come out a year after the hardcovers—publishers give the audience the choice: buy the expensive hardcover now, or wait a year and save.

I don’t fault publishers for this approach—they are in business to turn a profit. My issue, though, is they’re mistaken impression that releasing an ebook at the same time as hardcover will eat into hardcover sales. What publishers do not understand is they are two different markets.

Readers of Hardcovers vs.Those Who Read  ebooks

Hardcovers are for serious, committed fans. They want to read the story right now, but also want the book—its weight, cover art, and whatever other goodies there might be inside. And later, they want it up on their shelf where they can see it… or allow others to see that they have it.

People who read ebooks want convenience. Bringing a paperback on the bus or to the beach is easy. Bringing the equivalent of many paperbacks in one small device—a device where you can preview and buy new books from anyplace with a wifi signal—is easier. For those who value convenience, a hardcover is a bulky, cumbersome object that gets in the way of trying to read it.

Publishers Don’t Understand These Markets

Yet publishers get this confused. They seem to think a committed fan will now opt for an inexpensive ebook rather than a hardcover. Or, they might think the casual reader will pay for a hardcover if no ebook is available. Neither of these is true, but with this news from Amazon, publishers may think “We can’t risk hardcover sales. We should delay the release of the Kindle version. Or, increase the price so we make up the profit from lost hardcover sales.”

Publishers Have An Opportunity

But the increasing sales of ebooks is actually good news for publishers and should result in good news for readers of ebooks.

Lower eBook Prices

With ebooks growing in popularity, publishers should be lowering ebook prices. There is a large market out there interested in ebooks, but are hesitant to buy a reader and then incur additional costs of buying ebooks that cost as much a paperback—better to just buy the paperback. By lowering the price, readers can make up the cost of the ebook device in the price difference between the ebook and paperback. Though publishers may make a lower per-unit profit, the increase in units sold will increase overall profit.

Further, with more casual readers buying ebooks, publishers can lower the print runs on paperbacks, which have a higher per unit costs than ebooks.

Release eBooks and Hardcovers Simultaneously

Releasing an ebook at the same time as the hardcover might improve hardcover sales. Imagine a new novel you’re interested in comes out in hardcover and ebook. Not willing to spend $25.99 on the hardcover, you buy the ebook for $5.99 (which is lower than the price of the paperback released next year). You read it and love it. You want to go back and re-read it, savouring the experience. Rather than read the book one small screen at a time, you buy the hardcover.

Now imagine if the ebook came out a year after the hardcovers. There might not be any hardcovers left in stock, denying the publisher that additional sale.

Two Audiences—Committed and Casual—Allow Buzz to Grow

By allowing committed fans (who buy the hardcovers) and those who are curious (who buy the ebook) to read a book at the same time, publishers allow for greater buzz to build from those two audiences, who each bring different perspectives. If the buzz is positive and loud enough, it might convince someone who is waiting for the paperback to go out and buy the hardcover.

By day, Matt Moore is a project manager and communication specialist in the information technology field. By night, he is a science fiction and horror writer with work in On Spec and Tesseracts Thirteen and an upcoming e-book published by Damnation Books. By later at night, he is the marketing director for ChiZine Publications, a small Canadian publisher. Raised in small-town New England, a place rich with legends and ghost stories, he lives in Ottawa, Ontario. He blogs at
By Matt Moore

When a prank goes wrong, three teenage boys are locked in the basement of a remote house by a man they know only as "Silverman". Given a gun loaded with one bullet, their captor instructs them to play a game: Before the next morning, one of them must choose which of the other two will shoot and kill the third. Play the game and the two survivors can go free. If they don't, all of them will die. As morning approaches and hope of being found and rescued fades, each boy must decide if he'll work with the others to try to escape and risk being killed, or save himself by playing Silverman's Game.


  1. Great article. The only point I disagree with is price. As I've mentioned many times -- I'm an e-reader convert. I think $5.95 lowers the value of the product significantly (why should a book be any cheaper than an album?).

    I still think that $9.95 for all books is a great price. It's a nothing price. A lower price might get people to buy hardware (as opposed to more books -- but that's a different argument) but I doubt that $5.95 would get more people reading than $9.95. For my personal standpoint, $5.95 versus $9.95 -- nope, doesn't matter.

    In the near future, I'm sure they'll be doing careful analysis of the magic number. But I suspect that it'll hover around $9.95 (iBooks and their $15.00 is too much).

  2. If you figure that a mass market paperback is about $7.99 US, I think it's in the consumer's mind that $9.99 is too much for an eBook, since you don't get a physical product, whereas $5.95 is two bucks less than a mass-market paperback, which sits better with folks—especially those who are trying out new authors, as Matt points out.

    You say that to you there's no difference between paying $9.95 and $5.95, but you say $15 is too much. SO where's the exact cut-off point for you? And why is that number the cut-off point? I mean, $15 for a trade paperback is quite reasonable, and if you'll happily pay $9.95 for an eBook, which is about $2 more than your average MMP, why wouldn't you pay $15, which is a decent TPB price? In both cases, you're still not getting a physical product, you know?

    I think it comes down to individual ideas of what a particular book is worth to someone, regardless of the format it comes in. There are many variables that come into play, so it's very difficult to pinpoint a price point that appeals to everyone across the board.

  3. Also, Ryan: You're coding EPUBs and MOBIs for CZP, which we sell for $5.95 (and $3.95 for novellas!), so remember where your bread is buttered, son! Heh.

    Seriously, though, we charge $9.95 at Amazon (because of the crazy 65% they take off the top!) and that's where the majority of our eBook sales have been made, so you're right to a certain degree: people will pay that price. But I do think that if we could lower the price to $5.95 and make it financially viable on our end, the amount of CZP eBooks sold would be even higher. The only reason our sales are greater through Amazon is sheer visibility.

  4. @Ryan: The price is just an example. I'm not advocating one price over another and market demand should determine a reasonable one, but it should be a *reasonable* price considering its unit cost, and not the same as a trade paperback or even the mass market.

  5. My guess is that the $9.99 'good-price' number for me came from Amazon. Those were the first ebooks I bought, probably setting that price in my mind of what is a fair value. $15 then became too much.

    It's weird, but since I've become an e-book convert, I've stopped caring what the prices are on physical books: hardcover, PP, TPB. Strange but true. I now buy in this format only. I wonder if anyone else has had that experience? I don't know any other converts (though I know a bunch of people who are about to make the jump) to ask.

  6. It's interesting reading these comments, and how the hardcover and eBook sales could complement one another, and particularly about the pricing issue.

    I haven't invested in an eReader/Kindle and have no intention of doing so in the short-term as I really have a huge objection to paying anything near the retail price of a paper-back, as too my mind this is just a publisher's cash cow, where they have stripped out the printing costs, distribution & transportation costs, and in many cases 3rd party retailers. I can certainly appreciate that they have incurred investments in the internet sites and Kindle technology, but would be surprised if that was a fraction of the traditional costs of bringing a print volume to the shelf.

    The only thing that would convince me to pay the same price level would be if there was much greater transparency in the pricing, and I knew that the creative talent, the author, was getting the bulk of this saving that the publisher is gaining. I'm more than happy to pay extra for new talent or genre authors that don't have the million-level circulation of King and Koontz, knowing that it might let them give up that dreary day job and let their talent loose on the world.

    Perhaps the above paints too much of a one-sided picture of the poor author and the uncaring publisher, and maybe smaller and more boutique publishing houses will actually use this premium to invest more in aspiring talent. And on the other hand there is also a segment of the population who will probably pay a large premium for the convenience factor (particularly if they're stuck, say, at an airport to find their plane's been delayed 2 hours!) But on the whole, sites like can get me a new book, sans delivery costs, within 2 days, and that's convenient enough for me.

  7. I am a technology junkie and that is why I bought my e-book a few years ago now. I have read maybe a dozen books on it.

    I felt I need to prefernce my comments with that because I am one on the few who seemed to have tried e-books and still like hardcovers (or trade paperbacks) better. I use my e-book on planes and subways and love its versatility. Hardcovers and trade paperbacks fill out most of my reading - it just seems to be a better experience for me. (And they still work better in bright sunlight and I don't have to remember to charge it!) I think the book will still have a long life but, no doubt, e-books will gain a healthy share of the market.

    I must admit I don't follow the arguments about releasing e-books at the same time as hardcovers. Hardcovers are a premium product that cost more and provide an advantage to the purchaser (to read it first and, perhaps, as a collectible). Why not sell e-books in a similiar way as paperback. A mass market alternative to the premium value hardcover? (I have purchased e-books as cheaper versions of hardcovers.)

    Finally, we should not forget the cost of the hardware. One can purchases quite of few paperbacks for the price of a good e-reader. (Can you really read a novel on an i-phone?)

    I'm sure the debate will rage on but the purchaser will be the one who ultimately decides.