The end of hardcovers? Maybe. Bargain books, price wars, loss leaders, and epublishing.
Before I get to Book Gallery (the bargain bookstore I worked at and where a lot of my experience of bargain books and ordering new books comes from), let me direct you towards Horror Mall. I [slightly] picked on their Darkside Digital terms-of-service in my recent post about ebook ownership, so let me [slightly] praise another aspect of their business model. Brian Keene has a recent book out called Urban Gothic. Mild, broke, new, and what have you readers can pick it up, under the Leisure Horror imprint, for $7.99. At the same time, more serious fans and collectors can pick up the limited edition hardcover for $60. You get it signed, with heavy bound paper, and illustrations. Some of the indie horror at Horror Mall comes in a trade paperback (about $15), a trade hardcover (about $25-30), a limited hardcover (maybe $75), and a lettered edition (meaning only 26 copies, about $250). At each level, a reader can buy into the book he wants to have.
Let's swing our big old telescope back around to mainstream publishing. Options are not their friend, or at least they do not want you to realize options are your, the reader's, friend. When a book is released, and I mean "A"-list and "B"-list authors, with "C"-list and below being designated as second-string and skipping the first step, it comes out in hardcover for about $27 dollars. Usually a range from $24.95 to, more and more, somewhere over $30. I should note that this is the MSRP, which is generally ignored at any bookseller you come across, so factor in a savings from 5%-46% depending on where you buy it. Final cost, then, we can say is about $24 in store, about $18 in the bigger online stores. Was. I'll get to the was in a moment. I am no expert, here, but I sold books for years, and have worked with them and watched them (in some capacity) even longer, and I cannot help but notice that your average "A"-list hardcover is about as likely to end up in a bargain bin as not (perhaps ironically, the "B"-list writers get smaller print runs and seem less likely to end up in the bin). The whole point of the hardcover seems to be getting the stacks of books to show up in display fronts, a way to get the book title out there, while picking up marginal sales from those who have to have the book right away (or, like libraries, pretty much need the hardcover). Knowing that many people are uncomfortable with paying $7-$10 for a book, I cannot imagine these same people being okay spending $20+ for the same book. I like hardcovers, and maybe there are enough fans out there who like them to keep up the process, or maybe the publishers are playing the game of pitting "true-fans" versus casual.
True-fans, you see, want to be part of the process as soon as possible. They are the ones who offer thanks to God when they get the utterly miraculous ARC (advanced reader copy). They show up for the rare midnight bookselling. They travel miles for book signings. They tweet about reading a book, or update their Facebook page with such illuminative statuses as "Cup of coffee and a night with JD Robb's new one!" A true-fan wears the book out in public like an article of clothing. If they want to especially flaunt it, they'll go so far as to have their little finger marking a page, book closed around the digit. A fleshy bookmark. For a true-fan, waiting the six months to a year for a soft-cover release just so the price will come down would just kill them. What if someone spoiled the book? They will pay $25 just because they can. It means that much to them. I leave the library out of this process, which is a big part, but there are waiting lits and such. Maybe, just maybe, you find out the plot twist before you come off the waiting list. The horror.
And, well, if maybe you are a not-quite-true-fan, someone who really liked Grisham but not that much, then you get to see the big thick glossy hardcovers in the hands of the true-fans, and you cannot help but notice the book.
Several have tried telling me that publishers release hardcovers first because they make the most money off of them. I have no idea how true that might be (I've heard both second and first hand from the writers involved that they, at least, tend to make a slight bit more from hardcover sales). For the sake of this exercise, I am going to state three types of books: mass-market paperbacks (MMP), trade paperbacks (TPB), and Hardcover (HC). Your average MMP price is about $8, your average TPB price is about $15, and your average HC is about $27. Bookstores are likely to reduce the price of HCs, less likely to reduce the price of TPBs, and unlikely to reduce the price of MMPs. I know from experience that the profit margin off of MMPs is so little that the cost of sending them back to the publisher is considered disruptive to the model. You want proof of this? Go to the store, pick up a mass-market paperback, and open the front cover. Notice the barcode? Notice there is another code, usually different, on the back? That is because publishers accept the torn cover of the MMP as a full return. When bookstores "send them back", they just rip off the front cover and mail those in, with the agreement that they will destroy the bookitself (this is also why you can find stacks of MMPs with no cover in certain less reputable bookshops). From this, we can establish that $8 does not include a heavy profit margin.
What about HC versus TPB profits? I'm not 100% sure, and this isn't information you can get super-easy from anyone. Partially because it is not easy to sum up. The main costs of printing books tends to be set-up. A million print run is more expensive than a 100,000 print run, but the price-per-book can be drasticially different. You factor in paper-weight (meaning the thickness of the paper, not those crappy metal things you bring back from visits to Grand Canyon gift-shops), ink type, stitching (or lack thereof), thickness of cover, size of page, and time of year and you probably have a situation where each and every print run has its own cost.
If TPBs are about 45% of the cost of HCs, then in order for HCs to be profitable (and for the sake of the argument, I am not worrying with bookstore versus publisher versus warehouse versus buyer versus whatever cost brackets right now) then they have to be more profitable per dollar or it is out the window. It does not matter if the HC earns the publisher $7 and the TPB only earns them $5. If the former costs $20 and the latter $10, then you are looking at a respective 33% profit versus a 50% profit. TPB would be the winner. When I was on the ordering end of books, in the sense of reselling them, I got a pretty even 40% off across the board, plus or minus some depending on size of shipment and other factors. In this amount, a HC cost me about $16.20 and a TPB about $9. If we left the price alone (and we rarely did), we ended up with a profit of $10.80 for the HC and $6 for the TPB. This comes out to be the same rough ratio as cost and whatnot. What actually ends up happening is that the HC gets a notch discount of maybe 10% while the TPB may or may not get left alone. Shelf-space wise, final price wise, shipping wise, the HC seems to acrue a higher cost.
My time in the bargain bookstore also let me on to one key fact. The more popular an author is, the more likely some of his/her books will end up in bargain prices (I've mentioned this above, but it is worth repeating). Nearly every "A"-list author had nearly every book come through bargain. While this is true of the trade-paper as much as the hardcover, the discounts are much deeper on the hardcover (at Book Gallery we would sell HC for about 1/3 of the original price, or less, and trade-paper for half). Now you have to factor in the shipping of hardcovers back to the publisher/distributor and the reselling at a lower profit (again with shelf- and box-space coming into play). I am surprised to see how essential to the whole field hardcovers still are. Surprised, except for two facts: 1) HC books are their own display (both due to size and the quality of the dust jacket) and 2) HC books are what book-news is usually focused on. People are more likely to read/hear about a HC book, if they are seeing a review on TV or in a local paper. Entire sections are dedicated to "new in paperback" but they are always shorter, less fulfilling sorts of media attention.
Part of the reason this old attitude of "Let the hardcover sell, first" is becoming a problem, if not the actual death of the industry; is because ebooks are game changers of the highest order. With their limited rights, problems of formatting, and lack of tactile appeal, ebook prices work best when they do not exceed, at least not greatly so, about $10. More and more ebook loving true-fans are showing up, people who want to brag about reading some new Stephen King or James Patterson, and they want it for $10. I know, it makes us greedy. We want to eat cake and then have it. We want book companies to make books convenient and cheap, instead of playing those terms against each other.
Just yesterday, UPS brought me my copy of Stephen King's Under the Dome. Whopper of a book. Guess how much I paid for it? $9. That comes out to be something like 90 cents per 100 pages, or less. For a hardcover. Brand new hardcover. First run. As a bargain book, it is likely to sell for $8.99. Man. Think about that. The brand new version is selling for the same price as the seconds are going to sell in a few months time. For those not in the know, this is only true if you buy it through places like Target, Amazon, Wal-mart, and maybe a couple of others, who have entered into a pricing war. To top it off, Stephen King and his people have went on to say that they are holding back the $9.99 ebook version because they want to give indie booksellers a chance. I imagine the sentiment started up before the price bottomed out in the bidding-for-customers battle, but still. Good luck, local bookstore, with selling a $35 book for full price when other places are offering a 70% discount. The only ones that will be glad of that book will be those indie bookstores with their own true-fans, the ones who are ok with spending more to support their local bookseller.
King's book is the first salvo in this whole war. Who knows what the end will be? I have no idea. I do know that once you convince people that $9 is the right price to pay for books, you are not going to sell them for more than $10. I also know that people are notable "grass-is-greener" folk. They are not going to recognize that a hardcover should be more than a eBook, or that any bookseller taking a loss (as Amazon did) on selling a hardcover to keep the price below $10 is not going to keep it up. Once we demonstrate that pasture, people are going to demand it. What's more, it's so artificial. Had they just released Under the Dome as a trade paperback first run, the price would be legitamately $10-$15 dollars and no one would lose. Not customers, not sellers, not publishers. Save the hardcover for the Stephen King true-fans (of which, kind of, I am one). When I pre-ordered it, it was $23 dollars. I was cool with that price. I ended up saving another $14. I'm almost cool with that, but come on. The book industry cannot lose its best-sellers into profit-draining attempts for attention. Imagine if Harry Potter books were used as loss-leaders instead of profit makers. That's the kind of scenario we seem to be creating. The only ways this feels like it could be profitable are a) hardcovers are much cheaper to make than they let on, b) insurance, or c) there is some mythical assumption that we will become addicted to hardcovers, at which time the price swells to its full note.
Part of me refuses to believe the HC book actually beats out the TPB on pure profit, especially now that people are refusing to pay full price for a HC (the rapidly increasing price of HC books is probably a counter-action against rapidly increasing discounts). I also cannot help but to think that HC books are around because they are the ones that get talked about, the ones that go to libraries and window displays. If this is the case, though, isn't that, to re-use the word, artificial? Couldn't you just make a limited number of hardcover books for true-fans, libraries, window displays, and so forth and then sell mostly TPB? Let the freaks like me snatch up the hardcovers, and go ahead and make the other types more accessible. Maybe you don't use the HCs as window displays. Maybe you send big posters along, that sort of thing (by the way, there was an article I read that had that exact same point but I cannot find it, apologies if it sounds like I am ripping it off). Just like Horror Mall and it's various publishing groups, make the hardcover for special occasions, for those people who need the hardcover or prefer the hardcover, but let the average buyer have at the book right away. Both Twilight and Harry Potter are proof that you can have more than one version selling side-by-side and working (and without killing the hardcover price to try and trick people into buying it). Any publishing insiders (or, heck, outsiders) want to correct my thoughts on this?
Before I go, though, I want to leave you with a series of links on these various topics: death of the hardcover, rise of the ebooks, the price wars, loss-leaders, the problem with having prices reset in the buyer's mind. I'll try and contact a few people "in the know" and see if I can get some harder figures.
Si Vales, Valeo
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