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Earlier this month, the UK publisher Bloomsbury (best known for having struck gold with the Harry Potter books, though also a real leader on the use of Creative Commons in publishing) invited me to give a talk to its staff over the lunch hour at its London office. I gave a talk about the theory and practice of book pricing in the age of the Internet, talking about the way that strategies that are focused on maximizing revenue from existing customers can cost you access to new markets. I got into the economics of distribution channels, DRM, lock-in, and talked about what I see as the top priorities for publishers looking to continue with their success in the Internet age. Bloomsbury video’ed the proceedings and have put it up on Vimeo. It’s licensed Creative Commons Attribution-NonCommercial-ShareAlike, so go nuts!

One erratum: I was dead wrong about the German book market: prices there aren’t fixed by the state (I was confusing the German and Norwegian book markets), and Holtzbrinck made most of its fortune from news services, not trade book publishing.

10 Responses to “Talk on publishing economics at Bloomsbury”

  1. Christopher

    Cory, I was likewise under the impression that the German book market had fixed prices for new books. A quick search turned up:

    >>> The German market operates on a fixed price basis, which means that independent book stores, in theory, are not priced out of the market by the large chains. Consumers have it good, because…

    http://www.book-fair.com/en/blog/2009/10/15/german-book-market-offers-plenty-of-oppurtunities/

    Is the qualification that the prices are set not by the state, but rather by the German Booksellers Association (or some other body)?

  2. Cory Doctorow

    I’m not sure. I was at the Leipzig Book Fair last week and I asked my German publisher, and they said that no, they got to price their books however they liked. It may be that stores have to charge whatever the cover price is, or something?

  3. Christopher

    Perhaps this is a rule that applies to »book stores« and not publishers per se. I’ve heard the law paraphrased as “discounting is not allowed.”

  4. Patrick G.

    I am from Germany, and our system for fixing book prices is called ‘Buchpreisbindung’.
    It’s a federal law and it doesn’t regulate the setting of the book price the publisher does, it only ensures the end customer pays the same price for it, regardless where he buys. Airport shop, Amazon or your family book shop, the book costs the same.

    It’s a mixed bag really, for customers and for publishers and authors.
    And I enjoy shooting myself some discount books whenever I am in the UK.

  5. turn.self.off

    your mentions of how reduced prices resulted in overall increased sales are very interesting, as such thought usually gets dismissed as nonsense by suits with BS in economics.

  6. fourcultures

    Really interesting talk. Worth thinking about what publishers could possibly be for in the future. I wonder what you think about the need for curators. As the amount of data gets ever larger, there’s a crying need for people to tell you what’s worthwhile, what’s great. Publishers (& increasingly agents) already do this by working through the slush and only publishing the best. Soon this will surely be one of their main roles. Think of a wine club that sends you a mixed dozen. Sure you could go to the off-license and buy cheaper, but you’d almost certainly end up with inferior or patchy quality. On many occasions people will pay over the odds in order to avoid having to become experts themselves. Customers really need the curators. Incidentally this is true too with the next publishing revolution. Just as the paperless office was a massive mis-prediction, so too is the idea that paper books will disappear and be replaced by ebooks. Ubiquitous small-scale print on demand, like Jacob Epstein’s Book Espresso machine will soon make any and every shop an instant book shop (Epstein seems to assume they’ll only go into existing book shops but he’s wrong, look at the expansion of digital photo machines.) The problem for the customer is that when every text ever written is available at every shop with a glorified photocopier in the corner, how will they know what to read? Curators will tell them. This is what the staff at independent book shops currently do very well and there will be more and more jobs for people like this, not fewer. So publishing and book-selling business models that revolve around the need for expertise will do well. But it has to be able to compete with the crowd-sourced, semi-automated expertise of places like Amazon reviews. Publishers probably can do better than this.

  7. Tomben

    Cory,

    I enjoyed your talk, but the 49 cent vs 99 cent MP3 argument seems off, thought I lack any real details on the specific situation you spoke of.

    Given the ease of purchasing is about equal across online MP3 vendors, any price drop by one vendor may cause it to increase sales temporarily, by cannibalizing those of other vendors, but ultimately, the market would rebalanced to the new equilibrium point, and everyone would be making less money again. Upwardly sticky price points are not a fluke.

    Only by separating the source of the individual vendor’s increased sales could you determine what unit sales would be sustained long term, and I suspect most of those new unit sales would not be sustained because the price changes don’t affect the total disposable income of the purchasers.

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