Wednesday, June 24, 2015

The Pricing Strategy

Once upon a time, the local public library bought a book and put it on the shelf. The taxpayers who funded the purchase of that book would then go to the library and take the book from the shelf, check it out, and read it.

Big blockbuster books would be in demand, and there would be many taxpayers arriving at the library thinking they would borrow the latest craze in fiction, only to find it was "checked out" and they had to wait. Well-funded libraries might buy additional copies of that sort of book, so that the taxpayers would not have to wait so long to read the blockbuster best-seller.

Publishers priced books so that they made a profit after covering expenses. Authors got their little piece of the paper pie, and so the industry stumbled along for generations.

E-books do not need physical printing, so the perception exists that the book is very cheap to produce. Next to nothing, in fact. Except for paying the author, the editor, the copy-editor, the clerical help, the accountant, the billing clerks, etc. etc. Publishers saw a way to turn a profit through volume selling, and the price of an e-book resembled that of the paperback when paperbacks first appeared. The profit margin could be higher than that of physical books, with the consumer getting only part of the cost-savings.

The local public library saw an advantage in e-books, in part because they were cheaper. There is no shelf space needed to store the digital books. A library could hold thousands of books and not need more space than a small office for the librarian who would be fielding requests from library users for the latest blockbuster best-seller.

However, buying an e-book for a library is not the same as buying a physical book from a publisher. But why is it not?

Not all e-books are overpriced for library use

Sure the digital copy can sit in the library's database forever, never wearing out and never needing replacing. But many of those best-seller books have a short shelf life anyway, and are out of fashion before the covers are falling off.

Digital books can only be viewed by one borrower at a time, just like the hard copy. If a library wants to satisfy demand, it has to buy additional copies of the same book, just like it did when the additional copies came in a box from a distributor.

Canadian librarians are complaining loudly about the pricing strategy that publishers utilize to price digital editions for library use. That $12.99 e-book you can pick up on Amazon? The publisher asks the library to pay $114.00. There are no five or six copies available to users at those prices.

The price reflects the publisher's belief that the perpetual nature of e-books means the library is buying a single copy that will never have to be replaced, as if every hardcover purchased received such rough treatment that three new books would be purchased as replacements over the life of the book.

The price reflects the publisher's belief that the average library user has no idea how much the e-books are actually costing the library, and they can get away with it because the public wants e-books and the libraries are public institutions serving the public demands.

Newcastlewest Books, on the other hand, sells e-books to libraries at a discount, in large part because we realize that the money to pay for those books comes from taxpayers who are hard-pressed to pay the rates as it is. Why should they not get a break somewhere? Libraries link into Overdrive, and their patrons have access to an enormous collection of books that can be downloaded at any time, any place, you might wish to read but can't make it to the library building.

Public libraries serve the public good, which is why Andrew Carnegie was so keen to fund the construction and outfitting of public libraries.

Modern day publishers, apparently, are not quite so philanthropic. Gouging may be a more apt description of their pricing strategy.

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