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By JEFFREY A. TRACHTENBERG
Simon & Schuster is delaying by four months the electronic-book editions of about 35 leading titles coming out early next year, taking a dramatic stand against the cut-rate $9.99 pricing of e-book best sellers.
A second publisher, Lagardere SCA's Hachette Book Group, said it has similar plans in the works.
"The right place for the e-book is after the hardcover but before the paperback," said Carolyn Reidy, CEO of Simon & Schuster, which is owned by CBS Corp. "We believe some people will be disappointed. But with new [electronic] readers coming and sales booming, we need to do this now, before the installed base of e-book reading devices gets to a size where doing it would be impossible."
The efforts cap a tumultuous year for publishers as the industry begins a migration from traditional truck-and-bookshelf distribution to nearly simultaneous wireless delivery to consumers. It is also an acknowledgment that book pricing has become the most significant issue on the publishing landscape.
E-book readers from Amazon.com Inc. and Barnes & Noble Inc. have become hot Christmas gifts this year, and a host of new devices are coming in 2010. In addition, many people now read e-books on their iPhones, BlackBerry devices and personal computers.
Albert Greco, a professor at the Fordham University Graduate School of Business who studies the book industry, estimates that e-book retail sales could hit $201 million in 2010, still a fraction of the physical book market but up from an estimated $150 million this year.
David Young, chief executive of the Hachette Book Group, said that Hachette, beginning in January or February, will delay the e-book publication of the vast majority of its titles for three to four months.
"We're doing this to preserve our industry," Mr. Young said. "I can't sit back and watch years of building authors sold off at bargain-basement prices. It's about the future of the business."
Ms. Reidy, who described herself as a strong supporter of digital sales, said only one author had asked not to be included on the list of titles, which are being published in the first four months of 2010.
Simon & Schuster has high expectations for the 35 titles involved, all of which either have large printings or are expensive. The company publishes approximately 2,000 books annually.
Titles affected by Simon & Schuster's stance include Don DeLillo's novel "Point Omega," Karl Rove's memoir "Courage and Consequence" and Jodi Picoult's novel "House Rules."
Rather than making the e-book editions available on the same date as the hardcover editions, Simon & Schuster says it will publish the e-books four months after the official hardcover publication date.
Similarly, DVD sales lag behind theatrical releases of movies, but that industry model is under siege as well.
Those who have witnessed the impact of digital media on the music business warn that e-book consumers will be unhappy.
"In the Internet age you don't enjoy the same degree of control," said Eric Garland, CEO of BigChampagne, LLC, an online media measurement company in Beverly Hills, Calif. "You can't create artificial scarcity by withholding content in one form and making it available later."
An Amazon spokesman said, "Authors get the most publicity at launch and need to strike while the iron is hot. If readers can't get their preferred format at that moment, they may buy a different book or just not buy a book at all."
Even as the retail price of many new hardcover novels creeps above $27, Amazon and Barnes & Noble boast many new best sellers for only $9.99 in the e-book format.
Increasingly, publishers have come to fear that the bargain prices will lead consumers to conclude that books are worth only $10, or less, upsetting the pricing model that has survived for decades.
Ms. Reidy said she is concerned that e-book sales are cannibalizing new best-selling hardcovers, which are the mainstay of the publishing business.
Retailers generally pay publishers half the hardcover list price of each book, which means retailers lose money on current best sellers discounted to $9.99 or lower. Some publishers worry that retailers will eventually insist on paying less.
In an interview, Leonard Riggio, chairman of Barnes & Noble, said that the decision to delay the e-book titles is in keeping with the long-held practice of issuing paperback editions after the initial hardcover.
One observer who has tracked the music business amid the digital upheaval says Simon & Schuster may have made the right decision—for the short term.
"What's been demonstrated is that next quarter results are better if you cling to the existing core business, that it's better to sell physical media than digital media," said BigChampagne's Mr. Garland. "But for how many quarters can you employ those tactics before they become an obvious strategic disadvantage? The digital marketplace today is devastating the traditional music business, regardless of piracy issues."
Mr. Garland suggested that just as consumers now pay 99 cents for a song they want instead of $15 for an album, they may come to feel the same way about $25 hardcover best sellers. Once they become accustomed to paying $9.99 for a book, they won't go back, he said.
Printed in The Wall Street Journal, page B1
Simon & Schuster is delaying by four months the electronic-book editions of about 35 leading titles coming out early next year, taking a dramatic stand against the cut-rate $9.99 pricing of e-book best sellers.
A second publisher, Lagardere SCA's Hachette Book Group, said it has similar plans in the works.
"The right place for the e-book is after the hardcover but before the paperback," said Carolyn Reidy, CEO of Simon & Schuster, which is owned by CBS Corp. "We believe some people will be disappointed. But with new [electronic] readers coming and sales booming, we need to do this now, before the installed base of e-book reading devices gets to a size where doing it would be impossible."
The efforts cap a tumultuous year for publishers as the industry begins a migration from traditional truck-and-bookshelf distribution to nearly simultaneous wireless delivery to consumers. It is also an acknowledgment that book pricing has become the most significant issue on the publishing landscape.
E-book readers from Amazon.com Inc. and Barnes & Noble Inc. have become hot Christmas gifts this year, and a host of new devices are coming in 2010. In addition, many people now read e-books on their iPhones, BlackBerry devices and personal computers.
Albert Greco, a professor at the Fordham University Graduate School of Business who studies the book industry, estimates that e-book retail sales could hit $201 million in 2010, still a fraction of the physical book market but up from an estimated $150 million this year.
David Young, chief executive of the Hachette Book Group, said that Hachette, beginning in January or February, will delay the e-book publication of the vast majority of its titles for three to four months.
"We're doing this to preserve our industry," Mr. Young said. "I can't sit back and watch years of building authors sold off at bargain-basement prices. It's about the future of the business."
Ms. Reidy, who described herself as a strong supporter of digital sales, said only one author had asked not to be included on the list of titles, which are being published in the first four months of 2010.
Simon & Schuster has high expectations for the 35 titles involved, all of which either have large printings or are expensive. The company publishes approximately 2,000 books annually.
Titles affected by Simon & Schuster's stance include Don DeLillo's novel "Point Omega," Karl Rove's memoir "Courage and Consequence" and Jodi Picoult's novel "House Rules."
Rather than making the e-book editions available on the same date as the hardcover editions, Simon & Schuster says it will publish the e-books four months after the official hardcover publication date.
Similarly, DVD sales lag behind theatrical releases of movies, but that industry model is under siege as well.
Those who have witnessed the impact of digital media on the music business warn that e-book consumers will be unhappy.
"In the Internet age you don't enjoy the same degree of control," said Eric Garland, CEO of BigChampagne, LLC, an online media measurement company in Beverly Hills, Calif. "You can't create artificial scarcity by withholding content in one form and making it available later."
An Amazon spokesman said, "Authors get the most publicity at launch and need to strike while the iron is hot. If readers can't get their preferred format at that moment, they may buy a different book or just not buy a book at all."
Even as the retail price of many new hardcover novels creeps above $27, Amazon and Barnes & Noble boast many new best sellers for only $9.99 in the e-book format.
Increasingly, publishers have come to fear that the bargain prices will lead consumers to conclude that books are worth only $10, or less, upsetting the pricing model that has survived for decades.
Ms. Reidy said she is concerned that e-book sales are cannibalizing new best-selling hardcovers, which are the mainstay of the publishing business.
Retailers generally pay publishers half the hardcover list price of each book, which means retailers lose money on current best sellers discounted to $9.99 or lower. Some publishers worry that retailers will eventually insist on paying less.
In an interview, Leonard Riggio, chairman of Barnes & Noble, said that the decision to delay the e-book titles is in keeping with the long-held practice of issuing paperback editions after the initial hardcover.
One observer who has tracked the music business amid the digital upheaval says Simon & Schuster may have made the right decision—for the short term.
"What's been demonstrated is that next quarter results are better if you cling to the existing core business, that it's better to sell physical media than digital media," said BigChampagne's Mr. Garland. "But for how many quarters can you employ those tactics before they become an obvious strategic disadvantage? The digital marketplace today is devastating the traditional music business, regardless of piracy issues."
Mr. Garland suggested that just as consumers now pay 99 cents for a song they want instead of $15 for an album, they may come to feel the same way about $25 hardcover best sellers. Once they become accustomed to paying $9.99 for a book, they won't go back, he said.
Printed in The Wall Street Journal, page B1
