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Kindle Fans Punish Publisher For Delaying Ebook Releases By Giving Books One-Star Reviews

Failures

from the do-not-mess-with-the-people dept

Fri, Jan 15th 2010 01:52pm -

Last month we pointed out what a bad idea it was for book publishers to go against the market’s wishes and to delay the release of certain ebooks, hoping to drive more people to the (higher margin) hardcover versions of the book. This is incredibly anti-consumer thinking and assumes, incorrectly, that people will happily accept the format the publisher gives them. Not surprisingly, consumers are starting to rebel. Apparently some of the books are getting hit with one-star reviews on Amazon as punishment. For example, HarperCollins — one of the leading supporters of these silly “windowed” releases — is discovering that its well-hyped book Game Change is filling up with one-star reviews. Going against what your consumers want is almost never a good idea.

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Companies: amazon, harpercollins

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Comments on “Kindle Fans Punish Publisher For Delaying Ebook Releases By Giving Books One-Star Reviews”

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55 Comments
Anonymous Coward says:

Re: Re:

Why would Amazon delete them? They’re probably making good money from Kindle and eBooks. Rather than deleting the negative reviews they’ll probably point to them as evidence that consumers want simultaneous releases. If the overall score is dissuading people from buying the book, that would also give Amazon a bit of leverage.

Stephanie Migot (user link) says:

There is some confusion over whether the reviews have been given one star because they’re not on Kindle, or whether not being on Kindle is a convenient excuse motivated by other factors, most especially the criticisms of the McCain-Palin 2008 ticket that are contained within the book. There have been a few blog posts to that effect in the last few days.

I don’t have a dog in the fight either way, not being American, but it would be interesting to see if any other books that are not available on Kindle have come under similar sustained efforts.

Personally, I don’t tend to read the reviews on Amazon, as I generally know whether or not I’m going to buy a book by the time I hunt down its page.

Derek Kerton (profile) says:

Re: Re:

Stephanie, per your interest:

http://www.techdirt.com/articles/20080909/0318592211.shtml

There are a handful of cases not exactly the same, but very similar. Basically, the consumer community sends a message back to the publisher in the form of 1-star reviews. The reviews are not related to the content, but to the distribution choices.

Who says:

TMZ style book

Why is everyone so wrapped up in this tabloid review of the political campaign. This book is the lowest common denominator. We all know these people are shallow, hollow, narcissists who would lie to your face if it meant winning the campaign.

Where is the real journalism about what the hell we are going to do about Medicare and SS going broke??

Michial Thompson (user link) says:

Higher Margins in Printed books?!?!?

Doesn’t that simple statement go against your “virtual goods have no cost” theory mikee?

Or are you trying to just make your normal dramatic overstated and under thought comparison…

Pretty hypocritical really… OH and by the way mikee don’t comment about censorship either as long as you keep deleting my comments that you “don’t approve of.”

Anonymous Coward says:

Re: Higher Margins in Printed books?!?!?

I have to agree with the relevant part of this. How could a hardback book have a higher margin than the e-book?

I honestly don’t know how much it costs to produce a physical book, but its got to be significantly higher than the marginal cost of an ebook (0 or near enough to not matter). An ebook @ $10 is roughly $10 profit (minus fixed costs that would be subtracted from any version of the book at the same rate).

I’d suspect the motivation is the same as it is for the movie business: They want to sell the same product multiple times to the same people. They are hoping that you’ll buy the physical book now and the ebook later. And even if you don’t want to do that, they imagine you’ll buy the physical book now OR the ebook later in the same amounts so they don’t lose anything.

Mike Masnick (profile) says:

Re: Re: Higher Margins in Printed books?!?!?

I have to agree with the relevant part of this. How could a hardback book have a higher margin than the e-book?

Easily.

Avg price of a harcover book these days is about $25. The production costs, mass produced… is somewhere around $3/$4.

So, margin $21.

Margin on an ebook? $10 – $12.

Note that marginal cost is not the same as margin.

Marginal cost is the cost to make one more. Margin is the difference between the price and the cost. Those are two different things.

LostSailor (profile) says:

Re: Re: Re: Higher Margins in Printed books?!?!?

Not necessarily. Depending on the agreement between the publisher and Amazon, the margin on an e-book could be much less than that, or higher.

Generally, Amazon can choose at what price to sell the Kindle version. That may or may not be the price the publisher has put on the Kindle version. If it is the same price, then the publisher’s margin is around $7 (less royalty costs, etc.) because Amazon takes their cut in the form of an agreed-up discount in the wholesale price. If the publisher has set the price higher, Amazon must still meet that price (less standard discount), so the publisher may get more and Amazon may be breaking even or taking a loss. I have no idea what Harper’s agreement with Amazon is, but since they’ve priced the e-book at $21.99 (the hardcover is $27.99), if Amazon sells it at $8.61, Harper will get the difference.

You’re also a little off in the margin on the hardcover. The gross margin isn’t the cover price minus the physical production cost, but the discounted wholesale price less manufacturing cost, and the average discount is at least 40%. So, using your numbers, the gross margin is around $11, not $21.

Given the prices Amazon is selling the book for, I suspect the discounts are higher than 40%.

Derek Kerton (profile) says:

Re: Higher Margins in Printed books?!?!?

Michial,

Here are some example figures to illustrate the error in your (not censored) comment:

Hardcover price: $20
Cost of Hardcover production: $8
Margin: $12

Kindle Price: $10
Kindle Margin: $10

Therefore, in this case, hardcover margin exceeds Kindle margin. I’ve invented these numbers, but they serve the point of illustrating that your “gotcha” of Mike is a dud.

No, “higher margins in printed books” does not contradict “virtual goods have no cost”.

With comments that illustrate such anger and poor thought, I would advise you to use the handle “Anonymous Coward” instead of a real name.

Mike Masnick (profile) says:

Re: Higher Margins in Printed books?!?!?

Doesn’t that simple statement go against your “virtual goods have no cost” theory mikee?

*Sigh*

Margin is the amount that the publisher gets on each book.

Maginal cost is an economic term that discusses how much it costs the maker of something to make a new one.

They are different things.

The *margin* for a publisher on a hardcover book is greater than on an ebook.

The marginal cost of an ebook is zero.

So, my statement was correct. Not sure why you went ballistic, but understanding proper definitions might help.

Pretty hypocritical really… OH and by the way mikee don’t comment about censorship either as long as you keep deleting my comments that you “don’t approve of.”

This is simply untrue. We have never deleted any of your comments. I do not know why you would make stuff up. We do have a spam filter that occassionally catches legit comments, but we review those and approve them later. I just checked and none of yours are being held — and we most certainly have not deleted any of your posted comments. I do not know what you are talking about.

:) says:

The Publishing Industry.

On the other hand some take the opposite direction like the keitai shosetsu phenomenon in Japan that is spreading to the U.S.

http://www.cnn.com/2009/TECH/02/25/japan.mobilenovels/index.html

The top stories page from MobaMingle showing stories in the english language writen by people(have to sign up to see the stories).
http://m.mbmgl.com/_novel_top?ses=Y7lqeFuuXQkg

Interesting thing to note, when there was no unlimited plans in mobile Japan people writing were few when it open up it exploded.

Steve says:

Michial Thompson is a douche

I love when people drop the “censorship” bomb. Guess what Michial? It’s his website, if he doesn’t want people littering it with trolling comments, he gets to delete them. That’s what you get to do when you have a website of your own. If there were teenagers hanging out on your lawn being obnoxious, you’d probably kick them off. Neither situation is an example of censorship, so shut up.

Jason Buberel (profile) says:

Douglas Preston and "Impact"

I was recently engaged in a long-winded comment thread on Doug Preston’s new book, “Impact” in which some Amazon customers decided to use the book rating to protest just this problem:

http://www.amazon.com/review/R1G9LV42GCIAEW/ref=cm_cr_rdp_perm

I decided to protest the use of ratings – which are meant to indicate how much you enjoyed the book. Then the author himself got involved:

http://www.amazon.com/review/R1G9LV42GCIAEW/ref=cm_cr_rev_detmd_pl?ie=UTF8&cdMsgNo=11&cdPage=2&cdSort=oldest&cdMsgID=MxLU8JOYU0STNB#MxLU8JOYU0STNB

He says “I just write the books” in his retort, which I take to be truthful (at least until proven otherwise).

I instead directed people to use the discussion forum for the book instead, where several other Amazon.com customers had already voiced their anger over the delay of the Kindle edition.

I still stand by my position – that book ratings should not be used as a form of protest against the book. Unless and until it can be shown that the author does have control over the timing, I do not thing their works should be punished.

Anonymous Coward says:

Re: Higher Margins in Printed books?!?!?

Hardback: ($25*50%)-$5 = $7.50 margin
E-Book: $10 – $0 = $10 margin

You yourself make the mistake that the retailer doesn’t get a portion of the sale price….

Obviously, without being either employed by Amazon or a book publisher who deals with Amazon, we’re making up numbers… But some portion of that $10 sales price goes to Amazon for the Kindle sale. For all we know, the margin for either could be exactly the same.

Elizabeth Burton (profile) says:

Re: Re: Higher Margins in Printed books?!?!?

This entire discussion, while interesting, is based on a false premise. Publishers set the “cover” price on their ebooks, not Amazon. And most of the mainstream sets the cover price the same as the hardcover.

So, Amazon pays them the same on each Kindle sale as they do on the print; it’s Amazon that takes the financial hit when they discount those books to $10.

In other words, the majority of the $10 Kindle books from mainstream publishers are loss leaders for Amazon. If the listed cover price of a book is $25, and Amazon applies their standard discount, the numbers would be:

Print: $25*50%=$12.50
Kindle: $25*65% (Standard Amazon discount)=$16.25

The issue mainstream publishing has with $10 ebooks isn’t the money. They’re afraid people will come to expect ebooks to be cheaper (totally oblivious to the point that people already expect ebooks to be cheaper), thus requiring that they offer ebooks at the lower prices across the board. The above figures should explain why they want to avoid that.

And while I appreciate there’s a myth that insists ebooks cost nothing to produce, as someone who produces them I have to stress that just ain’t so. You can’t operate a business with zero cost, and ignoring that with regard to ebooks is disingenuous at best. Print costs are only a small fraction of book production costs, and using them as the basis for a production-cost comparison between ebooks and print books ignores the complexity of the process.

Just getting a manuscript ready for the printer costs me a minimum $4K, and I do everything but the cover myself. That cost would increase by leaps if I had to pay other people to do it. If you don’t factor that into your calculations, the results are useless.

R. Miles (profile) says:

It's just a matter of time before Amazon fights back.

Every single time I see consumers backlashing in a manner like this, I see the website taking actions to prevent it in the future.

I’m going to bet Amazon begins weighting users before their votes get tallied, and the less weight then offers a more accurate result to buyers truly interested in the product, not the rantings of children.

Why do these people put the pressure on Amazon? It’s not their fault the publisher wants to screw consumers. Some of those reviews were completely idiotic with “I guess I’ll buy something else that’s available.”

Do these people not realize that buying a competitor’s product now will be the biggest factor in promoting change?

So, any takers on when Amazon changes its ratings system?

The Anti-Mike (profile) says:

Re: It's just a matter of time before Amazon fights back.

If consumers are using a rating system for protest purposes rather than the purpose it was intended for, then Amazon will likely have to do something about it.

The rating system is about the content of the book, not about the delivery or the windowing of product release. The real protest mechanism is to not buy, to send your kindle back to Amazon and request a refund because of windowing, etc. Screwing with a rating system (those rating will be there pretty much for as long as the book is on Amazon) just leads to misinformation, long after the issue of windowing is long gone from this book.

A tool abused is a tool that will end up getting changed to remove this sort of protest action.

If you want to protest, don’t buy the book.

As for the questions raised about margins, let’s just say that the only ones making out like bandits on ebooks is Amazon, from what I have seen so far.

Francoise Vulpe (profile) says:

Kindle and books and profit margins

Sadly incorrect are these assumptions about book publishing, folks. I work in the business. Here are the real numbers. Does it changes the Kindle picture? With technology R&D and actually building the new technology, what happens to the picture?

Take a standard book that retails for $25.

Publishers lose right off the top the discount to the retailer, who has to make its own money, which is 40% for independent stores and as much as 60% for the blockbuster chains, Wal-mart, etc. We’ll go with 40%. That’s $10. We now have $15.

Pay the author royalty of standard 10% of the retail price ($2.50). We have $12.50.

Pay the printer and production, maybe $6, depending on the paper, the book’s weight, the production values, color, plus costs of shipping from the printer (usually China) plus customs and duty; we’re at $5.60.

Now pay your advertising, staff, commissioned sales reps, capital costs, payroll, taxes, let’s say $5 for all of this, we’re at $0.60, in other words $0.60 profit.

Which is why publishing is known to operate on a 2-3% profit margin. Not a business to go into unless you love it.

martyburns says:

Re: Kindle and books and profit margins

Does no-one know what costs are involved in making an e-book?

Seeing as no-one does thus far, I’ll have a go..

Take $10 as the cover price for the e-book.
Then up to 60% commision for big chains- lets take 50%.
The author royalty of 10% (though its suggested that this might be higher for e-books for some reason- lets take 10% anyway.

We now have:
10-5-1=$4

There must be other costs too though- surely it still has to be advertised (well, some of the advertising budget must relate to e-books..) and someone must run the computers that convert/format for the e-reader. There is also surely tax involved.. What about that shitty tax that gets charged for ipods and the like – dunno if thats relevant.. anyway.. Lets presume these add up to $3.40.

4-3.4=$0.60

Wow, they are the same. Job done. Its easy when you specualte and make stuff up.

Francoise Vulpe (profile) says:

Kindle and books and profit margins

Sadly incorrect are these assumptions about book publishing, folks. I work in the business. Here are the real numbers. Does it changes the Kindle picture? With technology R&D and actually building the new technology, what happens to the picture?

Take a standard book that retails for $25.

Publishers lose right off the top the discount to the retailer, who has to make its own money, which is 40% for independent stores and as much as 60% for the blockbuster chains, Wal-mart, etc. We’ll go with 40%. That’s $10. We now have $15.

Pay the author royalty of standard 10% of the retail price ($2.50). We have $12.50.

Pay the printer and production, maybe $6, depending on the paper, the book’s weight, the production values, color, plus costs of shipping from the printer (usually China) plus customs and duty; we’re at $5.60.

Now pay your advertising, staff, commissioned sales reps, capital costs, payroll, taxes, let’s say $5 for all of this, we’re at $0.60, in other words $0.60 profit.

Which is why publishing is known to operate on a 2-3% profit margin. Not a business to go into unless you love it.

Ed says:

re: Douglas Preston and "Impact"

@Jason Buberel

Jason, the reviews are about the experience with the book, not just the content as you state.

If the book comes in an 8 point font that you can’t read, it’s acceptable to lower your rating of the book.

If the book has nude women on the cover, you might want to rate the book up or down based on your opinion.

Neither of those has anything to do with the author’s words and everything to do with the overall experience with the book and all of the people involved in the chain of delivery.

The rating is your opinion and if part of your opinion includes the decisions over delivery of the content, it’s perfectly reasonable to rate it that way.

If the author cares, he should take those opinions into account when planning his next product.

ChrisRS says:

Relative costs-margin

The publisher can set prices that will assure a simlar or better margin on ebooks relative to hard cover or paperback.

Hard cover price (List – to reatiler) =
1 Author Royalty
2 + Production cost (printing)
3 + Shipping wharehousing, etc.
4 + Retailer discount
5 + Overhead (Advertizing/accouunting)
6 + Allowance for waste (retailer returns)
7 + Retailer shipping (Amazon, etc.)
8 + MARGIN (Profit)

eBook Price (List – to retailer) =
1 Author Royalty
2 + Production cost (minimal, much lower than hard cover)
3 + Shipping wharehousing, etc. (minimal, much lower that hard cover)
4 + Retailer discount
5 + Overhead (Advertizing/accouunting, may be higher!)
6 + Allowance for waste (0)
7 + Retailer Shipping (minimal,
8 + MARGIN (Profit)

Since all of this is controlable by the publisher, they can set list prices to create the same margin for ebook and hardcover. The market might even support ebook pricing that includes higher royalties and margins on ebooks. Thus there is little reason for publishers to delay ebook distribution.

There are however reasons for publishers to look at other otions. There could certainly (and justifiably) be a higher ebook cost for “new releases” that are only available in hard cover and a lower ebook price when a paperback is released.

For some books, a Hardcover/ebook discounted combination might be an attractive option to some consumers, especially an option to download now and receive by mail later.

Distribution of a unversal format at Kiosks in small bookstores/retailers or locations. Small books storews could stock a smaller number of of copies of a larger number of titles if they could participate in the ebook sales. (It would be nice to keep small independent book store alive.)

Scott says:

Impact Book Delay

I noticed that alot of people are bashing Amazon about the delay of Douglas Preston’s ebook version of “Impact”. That is totally the publishers decision. Barnes and Noble has the same release date as Amazon. I doubt they are plotting together to decide to not sell something until later. But they are competing with each other as they have the same price for the ebook (down to the cent).

Alan Thomas (profile) says:

e-publishing crime fiction

An e-publisher that does not delay digital versions. In fact the digital version comes out first. Noir Nation, a new international e-journal of crime fiction is looking for submissions, and support by pledge of subscription price. If you like to keep up on the newest authors and latest movements in crime from around the world, give Noir Nation a try.

http://www.kickstarter.com/projects/1925429247/noir-nation-international-journal-of-crime-fiction?ref=live

Also join the community on http://www.facebook.com/noirnation

Noir Nation will be glad to post links to your crime blog.

Alan, European Editor
alan@noirnation.com

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