Not long ago I did a story about how e-book piracy was accelerating and that publishers should be concerned. But while piracy is certainly an issue, there's something else lurking out there that may be a bigger problem: e-book price erosion. Or put another way, the blogification of the book industry.
Now, I know what you're saying: that's great news. These publishers have been gouging us with ridiculous pricing for digital files that cost next to nothing to produce (in terms of material costs) and finally we're starting to see lots of deals out there. But it's a bit more complicated than that.
First, a little history. Just last year, the magic price point for a lot of indie (self-published) authors was $2.99. Why $2.99? Well, if you price your e-book at $2.99 or higher, you get a 70 percent royalty from Amazon when using its Kindle Direct system, or 65 percent from Barnes & Noble when using its PubIt self-publishing platform. That means that if you set your price to $2.99, you make around $2 on each copy you sell, which is damn good, especially if you sell a lot of copies, which certain indie authors do.
But if you drop below $2.99, you end up with a 35 percent royalty. That's a big difference, but it's still better than what you get on an e-book from a traditional publisher (25 percent of the net sale, which comes out to around 17.5 percent of the price of the book). Still, you'd think that most people would choose to go for the 70 percent royalty.
Most of them used to. But then something happened on the the way to the check-out cart. Some authors started saying, "Screw it, I'm not selling that much at $2.99, I'll just go to 99 cents and see what happens." And bam, some of these books took off. And some really took off.