Peter Kafka at All Things Digital: MediaMemo reports on an earnings call from Warner Music Group in which Warner revealed it has seen its growth slow significantly since it implemented variable pricing on music back  in April, moving from all-tracks-99-cents to a .69/.99/1.29 tiered scheme.

Warner CEO Edgar Bronfman Jr. argued that the pricing change has been a “net positive” for Warner. But he also suggested that in hindsight, perhaps it wasn’t a great idea to raise prices 30 percent during a recession.

So here’s the question for the book industry, which has been working very hard to boost the price for its digital goods: Which lesson do you learn from this?

Pricing psychology is a funny thing. More people will buy something that costs $9.99 than something that costs $10.00, despite the difference being only a penny. Something in the human psyche just likes nines. If only one penny makes such a difference, how big a difference will five dollars make?

* Driver for the Booq e-book reader

* Allow automatic series increment algorithm to be tweaked by editing the config file tweaks.py

* Various improvements to the catalog generation. Larger thumbnails in EPUB output and better series sorting. Better handling of html markup in the comments.

* MOBI Output: Make font used for generated masthead images user customizable.

Additionally, Wattpad has connected with Bharti Airtel, the largest mobile operator in India with over 100 million mobile subscribers. The Wattpad mobile ebook app will now be available in the Bharti Airtel application store.

More info here.

What brought this to mind was an article in The Economist titled “The Lowdown on Teardowns” (January 23, 2010, pp. 62-63), which was subtitled “Ripping apart smart-phones reveals their true cost.” I tried to rip apart a book to find its true cost but didn’t have any success. Unlike the smartphone, a book is primarily intangibles.

But the article is intriguing. Not because I haven’t read similar items before, but because it hadn’t dawned on me before how differently consumers value smartphones and books and clamor for pricing closer to cost in books but not in smartphones.The Economist gave this figure for the Apple iPhone 3GS 16GB smartphone: $170.07 for parts and $6.50 for assembly costs, a total of $176.57. But you can’t buy the phone for that price, not even for anything close to that price. The article goes on to say that there are other less tangible costs such as research, design, marketing, and patent fees, along with Apple’s profit. But to get the iPhone, you either have to pay a very high price or sign on for telco service at an inflated price.

Where is the hue and cry for a $250 unlocked iPhone that will work on any network? Where is the hue and cry for lower telco costs (after all, the network has already been built and paid for)? Isn’t Apple overcharging by hundreds of dollars for a device that will be outdated within a few years, that breaks easily, and can’t flush a toilet? What is it about Apple that legitimizes the huge spread between actual cost and sales price?

Compare this to the hue and cry over a $12.99 or $24.99 ebook. Supposedly the ebook will last forever, after all it is simply bits and bytes. The iPhone will be outdated in a few years. eBooks have DRM that restrict their use; the iPhone is locked into a specific network. The ebook has design, research, and marketing costs, just as the iPhone. Similarly, the ebook has manufacturing costs just as the iPhone does.

Yet, consumers willingly pay more than $2000 to own and use an iPhone but grumble about paying more than $9.99 for an ebook. The difference must be that authors have little value but Steve Jobs has great value, otherwise the market valuation is irrational.

The argument is that the iPhone can do so much more so it is worth more. Accepting that as true doesn’t validate the irrationality of being willing to pay the iPhone price but being unwilling to pay the ebook price. The disparity in price between an ebook and iPhone already recognizes the single-function utility of the ebook versus the multifunction utility of the iPhone. There is much more at work here.

There is more at work here than meets the eye. I think that ebooks are suffering from two problems. First, although ebookers tend to disparage print books, what they are really doing is comparing the ebook to the pbook in a more wistful way. The iPhone’s comparable was a less functional smartphone/cell phone; the pbook is as functional as the ebook — or is it? On a book-by-book basis it is, but an avid reader usually has multiple books at hand and ebooks are certainly more portable than pbooks. What ebookers are really saying is that there is no cachet in ebooks and thus no value. (Interestingly, consumers continue to spend the asked for price for the ebook reading device, taking their price rage out on the ebook itself, not on the device.)

Second, publishers have assumed that readers will see value in whatever the publisher thrusts on the market. Apple, on the other hand, recognizes that consumers need to be led by the nose and so creates a sense of value that the consumer can grasp. Publishers continue to fail to either demonstrate an ebook’s value or convince consumers that the ebook is at least as valuable as the pbook.

The conundrum is this: Publishers undercut their value argument when they print a paperback version that sells for one-third the price of the hardcover. How can publishers win the value argument when they undercut themselves? Publishers need to address this value perception problem.

Editor’s Note: Rich Adin is an editor and owner of Freelance Editorial Services, a provider of editorial and production services to publishers and authors. This is reprinted, with permission, from his An American Editor blog. PB

I recently noticed there seems to be a trend toward “blaming” publishers for poor ebook quality. As a publisher I wanted to bring something interesting to your attention, with the idea you might want to explore it as a possible blog topic.
I mentioned “apps” and formatting in my subject line because I found out something about our L&L Dreamspell ebooks. An ebook that I had formatted perfectly in Mobipocket .prc came out either beautiful, or awful, depending on which “app” that was being used to view it on a smart phone.

My experience is only with my son’s “Droid” phone from Verizon. I’m not sure if this same thing happens with the IPhone and other smart phones. When I asked my son to download one of our books into his Droid phone so I could look at it, first he had to find an application. He found two apps and downloaded them.  One of them held all the formatting, and even showed the black and white illustrations in the ebook as crisp and clear. The other application totally stripped out all the formatting, including headers and indents (no indents makes it a bad reading experience!) and it also stripped out all the illustrations. Anyone trying to read this particular ebook with the “second” app he used would have said L&L Dreamspell’s ebooks are crap, and would have put us on someone’s “Hall of Shame” list.
I understand the Teleread blog post that mentions a “Hall of Shame” refers to editing and typos. Our books are very well edited and we try to catch all the typos. To me the formatting issue is a huge problem that we have less control over than I’d like.

And to address the other part of the formatting problems we face, as a small press: the book distributor “meat grinder” system of converting the files we send into other formats. The Fictionwise site requires a pre-tagged Word RTF file, which they then turn into many different formats. What comes out the other end of that meat grinder may be truly awful, and we can’t do anything about it!  Our files at Fictionwise also get transferred over by Barnes and Noble for their Nook reader. That’s double trouble!

Our books on Amazon for the Kindle are converted from our Mobipocket files. The files we publish at Mobipocket are checked and double-checked for quality. But what happens when Mobipocket turns them into Kindle? I had one author receive a lot of complaints about how her book looked on her friend’s Kindle. All I could do was apologize, show her our nice Mobi file, and tell her the process we have to go through. Perhaps when Amazon changes to their 70/30 split in June, favoring authors/publishers, they’ll have us go directly through the Kindle DTP and not use Mobipocket any more, where we currently get a 50/50 split. I wanted to keep 50% for us and our authors and not take only 35% that Amazon offered when they opened up the Kindle DTP for authors and publishers.

These are interesting times for publishing, and I’m glad that we are already established with ebooks, and we’re about to expand into other ebook markets. Now that we have the current Adobe InDesign CS4 we can convert directly to epub. But that isn’t as easy as it may sound. The InDesign file must be formatted carefully or the epub that comes out the other end is awful.

I don’t think the average reader has any idea how much work goes into book production, whether it’s for trade paperback, or multiple ebook formats.

Thank you for your time – keep up the great work on the Teleread blog!

Linda Houle
L&L Dreamspell

He calls the ebook the direct descendent of the paperback, an idea which Penguin invented.

Makinson also argued that there was limited scope to play with e-book prices and royalties, saying: “The small cost of producing ebooks is viewed by authors as an opportunity for higher royalties and by consumers as an opportunity for lower prices. Fair enough. Yet the physical cost of a book – manufacturing, transportation and warehousing – is just under 10% of its retail price. Ten per cent is also, as it happens, roughly the average margin of the consumer book publishing industry and what’s needed to keep investing in new writing and new ideas. So there’s some room for discussion but not much.”

Now, Google has appealed the verdict on copyright infringement and is claiming that their use of short excerpts in their index is fair use under French law. There is no indication in the article about how long it will take to decide the appeal.

The Kindle store is linked to the reading management software running on the ereader. I tested deleting my purchased content — the program restored it, apparently synchronizing with my account at the bookstore; nice. Still, I get an unnerving feeling from most proprietary software. Where the proprietor giveth will it also taketh? It is a complicated feeling. Consider digital rights management (DRM), the software Amazon uses to try to protect its content. On the one hand, I respect the right of authors, publishers and distributors to protect and profit from their work. I genuinely prefer to pay for my books. On the other hand, DRM often seems at least silly. It is easy to hack, and it filters out authors who would prefer to be DRM-free for self-promotion. Quick to protect its own rights, when it comes to ebooks, Amazon has been slow to respect book-sharing practices traditional in libraries and among friends, and negligent of author compensation for text-to-speech derivations. Not that all authors are worried about it. Some authors get the idea that protectionism can be detrimental to book discovery.

Fortunately there appears to be a growing number of options for getting other books on a Kindle. For example, people can convert books in ePub format from Google, Open Library and other sources to the Kindle-readable MOBI format. My test with the open source Calibre software worked quite well. The more I think about it, the nuttier it seems that a reading device would be hard-wired to a single vendor. After all, reading is about opening our minds to divergent sources. What is needed is a vendor-neutral, open source reader that can access multiple book sources.

Editor’s Note: This article, the third in a series, is reprinted, with permission, from John Miedema’s blog. John is a graduate of the Master of Library and Information Science program at the University of Western Ontario. In October, he presented at the Library of Congress on his recently published book, Slow Reading. He also developed open source software which links bibliographic data from Open Library to web pages and library catalogues. Articles on the software were published in Information Standards Quarterly and the Code4Lib journal. PB

Wiley books to be offered will be educational and consumer titles, including cookbooks and travel books. Blio is a software platform developed by Ray Kurzweil that is platform neutral. I saw a demo at Digital Book World and it was very impressive. You could easily integrate “how to” videos into cookbooks or interactive maps into travel books. Blio will also provide print-to-speech if it is enabled by the publisher.

The full press release is here.

The iPhone app consists of the “Internet Tendency” section which pulls content from McSweeney’s Website (which offers daily pieces of short, humorous fiction), while “Small Chair” contains a larger, weekly feature pulled from the McSweeney’s network.

The app costs $6. Anyone use it? Let us know.

All-in-all she thinks that the price is high for what you get and, while loving the hardware, can find no compelling reason to pay the asking price.

From the release:

“Over the years, there have been about 25 different editions of ‘The Gift of Fear,’ and I am very excited that Kindle can free my books from the bonds of paper and glue and warehousing and shipping,” said de Becker. “These special Kindle editions of my books can efficiently and instantly be available to readers around the world, and offer many benefits unavailable in conventional paper books. For example, while readers of the physical edition may or may not have had access to a nearby dictionary, Kindle readers can now see the definition of a word at the moment it’s encountered. Now readers can also easily search for any reference, name, passage, topic or even individual word throughout the entire text.”

I’m a little late noticing this, but on January 31st TidBITS posted a detailed head-to-head comparison of the Kindle versus the iPad as e-book reading platforms. There is also some discussion of the Amazon/Macmillan dispute, though the outcome was unknown at that point.

TidBITS‘s Glenn Fleishman concludes:

In the end, Amazon is a bookseller, and its foray into hardware shows that it’s better at moving media than making machines. The Kindle has evolved into a nice piece of hardware that gets great reviews from those who keep it.

But, put bluntly, the Kindle DX just doesn’t compare favorably with the iPad in any way other than battery life and screen visibility in sunlight; the Kindle 2 benefits from being smaller and cheaper. And the Kindle ebook library may offer titles at a lower price, though Amazon may be forced to capitulate on that.

The article includes plenty of comparison photos and charts, and makes very interesting reading. As Fleishman, like me, has no difficulty reading from a lit LCD screen, his conclusions may not be valid for everyone, but I think he makes some very good points.

Robert Brunner, founder of the design company Ammunition, worked with Barnes & Noble to create the Nook e-reader and says he believes that the Kindle will actually become two Kindles. “I think they are going to have to split their line. They can’t abandon E Ink screens, but they will need to create a color device too,” said Mr. Brunner. “Where it gets interesting is, do they just do a device that’s a color Kindle or is it a full computer?”

By scrutinizing Amazon’s job listings board, “Bits” suggests, it is possible to see what kinds of technical specialties Amazon wants to add to its Kindle team. Those specialties include understandings of LCD technology, wi-fi, and application development.

The article quotes several industry executives’ pontifications on what Amazon should do to compete with the iPad on a more equal basis. The consensus seemed to be that Amazon should move beyond just putting books on the device as-is, and instead offer a richer, more compelling experience.

I would be inclined to suggest that Amazon should first concentrate on improving how they put e-books on the device as-is until they get it right. If you have trouble walking, you shouldn’t be trying to run a marathon.

Nonetheless, this hints at some interesting possibilities. For example, about a wi-fi-only Kindle that would be cheaper because it did not have to subsidize a life-long 3G connection, with LCD (or similar technology) for faster screen refresh and apps to use for more than just e-book reading?

Convergence, here we come.

Journal literature has long played a prominent role in the scholarly communication chain. In recent decades, however, the scholarly communication system has been facing a crisis due to the ever-escalating costs of journals. This paper examines the reasons for the high costs of scholarly journals. … Two of the features of the journal publishing industry cited a decade ago and still valid today are a “lack of competition” and “perverse incentives.” The “first-copy cost” is reported to be the main reason for high journal prices both in print and electronic publishing

For more information take a look here at Resource Shelf.