In the Wall Street Journal yesterday, Jeffrey A. Trachtenberg writes about e-book success in an article headlined Cheapest E-Books Upend the Charts:
The nation’s largest book publishers are facing increasing pricing pressure on the digital front as the number of cheap, self-published digital titles gain popularity with readers seeking budget-minded entertainment.
Amazon.com Inc.’s top 50 digital best-seller list featured 15 books priced at $5 or less on Wednesday afternoon. Louisville businessman John Locke, for example, a part-time thriller writer whose signature series features a former CIA assassin, claimed seven of those titles, all priced at 99 cents.
“They’re training their customers away from brand name authors and are instead creating visibility for self-published titles,” one senior publishing executive who asked not to be identified, says of Amazon.
As digital sales surge, publishers are casting a worried eye towards the previously scorned self-publishing market. Unlike five years ago, when self-published writers rarely saw their works on the same shelf as the industry’s biggest names, the low cost of digital publishing, coupled with Twitter and other social-networking tools, has enabled previously unknown writers to make a splash.
The issue of pricing has been paramount since Amazon launched its Kindle e-reader in November 2007. The device exploded, driven by the wide appeal of $9.99 digital best-sellers that were available on the same day as the hardcover edition. . . .
Books are facing competition from a wide array of cheap digital entertainment—from Netflix Inc’s streaming-video service to Apple’s Inc.’s iTunes store—easily accessed via tablets, options that don’t exist on dedicated e-reading devices.
All of which has helped boost the sales of Mr. Locke, the self-published thriller writer. Mr. Locke, who published his first paperback two years ago at age 58, says he decided to jump into digital publishing in March 2010 after studying e-book pricing.
“When I saw that highly successful authors were charging $9.99 for an e-book, I thought that if I can make a profit at 99 cents, I no longer have to prove I’m as good as them,” says Mr. Lock. “Rather, they have to prove they are ten times better than me.”
Mr. Locke earns 35 cents for every title he sells at 99 cents. Altogether, he says his publishing revenue amounted to $126,000 from Amazon in March alone. It costs him about $1,000 to have his book published digitally, complete with original dust jacket image. He also hires an editor to work with him at additional expense.
In March, he sold 369,000 downloads on Amazon, up from about 75,000 in January and just 1,300 in November. His titles are also sold by digital bookstores operated by Kobo Inc., Barnes & Noble Inc., and Apple.
Mr. Locke has more than 20,000 Twitter followers, uses a blog to promote his books, and personally answers hundreds of emails each week. “It’s all about marketing, but they have to like your stuff,” he says.
Amazon pays all authors who use Kindle Direct Publishing, the retailer’s independent publishing service, a royalty rate of 35% on digital titles priced below $2.99, and 70% on e-books priced between $2.99 and $9.99.