What’s the Value in $9.99?

February 4th, 2010 1 Comment

“Available at booksellers everywhere except Amazon.” This was the controversial addition to a Thursday New York Times ad that Macmillan took out on behalf of author Atul Gawande’s “The Checklist Manifesto.” If you’ve been following the e-book pricing wars, you’ve seen the news that Amazon.com has recently removed all Macmillan titles for new purchase (you can still buy used copies of Macmillan books on Amazon for sale by third-party sellers). The cause of the rift between Amazon and Macmillan? Selling price.

This week’s edition of The Economist estimates that US e-book sales for 2009 are close to $350m, up from just over $100m in 2008. The e-book market’s growth has been phenomenal, and the appearance of Apple’s iPad on the market is sure to contribute to overall sales. The main problem that big publishers are experiencing along with the surge in e-book sales is the decline in the price of books. For large publishing houses equipped to sell numerous hardback books per year at prices in the $20-$30 range, a $9.99 new release is frightening. Hardbacks are a luxury market as it is. One doesn’t need a hardback over a paperback, but it looks and feels nicer. Then come electronic books, which consist merely of text on a screen. Suddenly it’s no longer a story of the thin price difference between a hardback and paperback.

From an economics perspective, this is really all just about value. And value is quite subjective. One can argue that e-books aren’t the first book format that turned hardback and paperback books into a luxury market. There’s a small case for libraries, although there’s no individual ownership in the library books we borrow. There’s another small case for the used inventory of booksellers, although this doesn’t really affect new releases. The e-book is an entirely different animal. An entire market of consumers has risen up, and is in love with the $9.99 price point for an individually-owned new release. Publishers are expected to release not only a physical copy of new releases, but also an e-book, which creates a luxury market for physical copies. In both instances you’re just getting text. So is binding and a glossy cover worth $10 or more for the same words?

Everyone has their own perception of value. For some people, owning the $22 hardcover version of a book is completely worth it. For others, $9.99 seems more efficient, for whatever reason. Maybe frugality, maybe that books take up too much space, or maybe an iPad will be a more efficient companion for frequent travelers than bulky paperbacks or heavy hardbacks.

So are the big publishers right for causing such a stir over the $9.99 e-book price point? Instead of complaining about price, I think that these publishers should be reevaluating ways to give their e-books more value within the Kindle/Nook/iPad market. Macmillan has just done this with author Kristin Hannah’s book, “Winter Garden.” They’ve released the e-book as a special edition, with some fun features that readers normally wouldn’t find in an e-book or a print book. If publishers fear the $9.99 e-book price, then create a dual market! Release a $9.99 bare bones edition for the frugal readers, and a $14.99 (or greater) special edition with exciting features. Not only will this enhance profits, but it will give valuable statistics about consumers: how many people purchase based on frugality, and how many based on convenience.

Book publishing is an odd breed: an interesting dichotomy of business and art. While some lesser-known authors are giving their e-books away for free in hopes of attracting attention and future sales, large publishing houses cringe at $9.99 for their e-book titles. What it all comes down to is value. And value is measured by the consumer’s tastes and preferences, not by how prolific or extraordinary a book’s author is. There are ways to sell e-books for far more than $9.99, and I think Macmillan is catching on. My best advice to publishers: pay attention to other luxury markets, especially the ones that have undergone technological transformations. See how they’ve responded. See how they engage consumers, create value, and take control of markets. And maybe then we’ll see a lot more e-books priced above ten bucks.

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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Because God Said So

February 2nd, 2010 1 Comment

As soon as I saw the article in the New York Times, I shook my head in disbelief. Ten American citizens, Baptist church-goers from two different churches in Idaho, are currently in jail and about to face charges for trying to take 33 Haitian children across the border between Haiti and the Dominican Republic. They claimed that they were merely trying to start an orphanage and give these kids a future. And they probably were. Pre-earthquake, human trafficking was so horrific within Haiti that children could easily be sold for under $100 (U.S.) each. At top dollar, somehow I don’t believe that $3,300 would be enough to draw ten ruthless Americans from Idaho to Haiti. So although I believe they’re innocent of human trafficking, the outrage over this whole mess isn’t about good intentions. It’s about the fact that Haiti’s human trafficking rates have been out of control long before the January earthquake ravaged the capital.

The United States Department of Labor has some eye-opening statistics about child trafficking in pre-earthquake Haiti. Haiti was accustomed to losing 2,500 to 3,000 children annually to illegal trafficking operations that transported children into the Dominican Republic to work as beggars and prostitutes. The Haitian government has been sensitive to this issue for a long time, and has made legislative progress towards fighting child trafficking. Unfortunately, when 80% of Haiti’s people fall below the poverty line, a life of crime can quickly become appealing to the poor. As a result, black markets can operate with less resistance than they’d receive in wealthier countries.

I don’t know what was going through the heads of the ten American Baptists who tried to bring those 33 children across the Haitian-Dominican border. Maybe nothing at all. This was a slap in the face to Haiti, and also to the Christian religion. I’ve long held the belief that too many actions are committed in everyday life that are attributed to God, when they should really be attributed to people. And too many actions are made by people who then blame the same actions on God. Can’t people just take responsibility for their own actions?

Trafficking 33 Haitian children across the border was a dumb idea. Blaming it on God was an even dumber idea. After Muslim extremists, American fundamentalist Christians seem to be the next big religious target of global ridicule. And no matter how many hundreds or thousands of wonderful American Christians hurried down to Haiti to assist in recovery efforts, the sore thumbs are going to stick out. At least for a little while. In the meantime, I hope missionaries and recovery volunteers allow God to simply be the reason they went to Haiti, rather than being the silent decision-maker behind every action.

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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“A Pale Existence” – The Cover

January 25th, 2010 No Comments


"A Pale Existence", originally uploaded by publeconomist.

I’m so excited to share the cover design for our upcoming release, “A Pale Existence,” by author Gillian Paige. Looks creepy! But then again, for Ms. Paige’s modern gothic, I’d expect nothing less.

Keep an eye out for teasers to be posted on The Publeconomist, our Twitter account, and our Scribd.com account. We’re anticipating a February release!

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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Free Books

January 23rd, 2010 No Comments

Technology can lead to scary things! An interesting article was posted yesterday in the New York Times. Author Motoko Rich wrote about how many new and emerging authors are experiencing an enormous boost in sales without making a penny. How are they doing it? By giving away their books for free.

Meanwhile in other industries, movie studios are fighting tooth and nail against bootleg copies of their films in both movie theaters and on new release DVD. Music companies continue to combat the download of free music. Software giants squirm at the idea of their titles being copied and mass-distributed online. So how the hell did the world of book publishing embrace freebies?

One of the answers, cited by the author of the Times article, is that many of the books being given away for free are not new releases. These are older books by authors with numerous books in print. And now that electronic books are becoming more widely downloaded, these authors can put their titles onto a device like Kindle and tweak pricing. The lucky authors not only benefit from wide (and free) distribution of their complimentary e-book, but start to see increased sales for their other books too.

The model makes sense. Reading a novel takes longer than popping in a CD or going to the movie theaters. Unless you’re one of those ultra-speed readers, but who knows how much content (and meaning) they actually retain! Reading books is a time investment, and as you can tell by visiting Amazon.com, there are a whole lot of books to choose from. So for some authors hurting from all the competition, giving away one of their titles for free might not seem like such a bad idea, if it drives sales for other titles.

Unfortunately, the Times article didn’t have much data on how free copies have helped authors, aside from name exposure. I’ve probably downloaded the iTunes “free song of the week” just about every single week, and have only once or twice bought additional songs from that artist. Free is free, and it’s safe to make the argument that some people will download anything if it’s free.

As a publisher and a writer, I don’t know if I’d take the huge leap in offering books for free. If I was the author of a seven-book series and really needed cash, then I might give away book one, and see if that piqued interest for books two-through-seven. But I do think that there are other ways to advertise. Websites like Scribd.com allow authors to post large portions of their books for free download, without giving away the entire thing. A nice chunk of the upcoming book from inGroup Press, “A Pale Existence,” will be featured on Scribd for a free download. In this model, readers can sample anything from one chapter to half of an entire book before deciding whether or not they want to buy it.

Free is free, and economic cost is–well you get the idea. In economics, “economist cost” is essentially your opportunity cost. If I sell a book for $0, and the list price is $9.99, then I’m losing almost $9.99 every time someone downloads that book. Why? Well, if you downloaded an entire copy for free, then why would you go back and pay for it?

I’ll be interested to see how the giveaway of free books correlates to higher sales volume (if much at all). The thing about electronic books is that there’s no raw cost (aside from time) that goes into publishing them. It’s not like a print book, where you have to pay the printer, warehouse, etc. So, authors and publishing houses will continue to be able to give e-books away for free and not feel like they’re losing money. For me, this seems like a lazy way out of other sources of free online outreach, like Twitter, Scribd, or Facebook, to name a few. But for cash-strapped authors and publishers, the lure of free downloads might be worth the risk.

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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January Progress

January 14th, 2010 No Comments

I announced recently that inGroup Press has won its bid for an upcoming non-fiction title, written by a very well-known and intuitive gay M.D. Today marked an important first step in the progress towards turning this author’s manuscript into a published book! As soon as the holiday rush ended, we got to work on drafting up the contract for the book, and today it was sent to the author’s literary agent for approval.

This is the stage where we, here at inGroup Press, cross our fingers and pray that no sudden contractual disputes or new demands emerge, although I’m confident that all parties involved are thrilled to see this happen. After all, it’s just a book contract… it’s not like we’re trying to buy 51% of a Chinese state-owned enterprise.

More importantly, it’s great to be able to work with a fair contract. Recently, a lawyer friend joked that at the law firm where he was previously employed, one of the partners had a clause in every contract stating that the partner was “not actually expected to show up to court,” for any promised court appearance. Even in the literary world, authors are often so eager to sell a book (especially if it’s their first) that they’ll sign away even the most basic rights to see their masterpiece in a Barnes & Noble bookstore.

So, I take pride in knowing that inGroup Press is extremely pro-author. There’s enough for authors to worry about even after their book has been sold to a publisher, like whether or not consumers will actually purchase it! Having to worry about tricky contract clauses and non-competes is unnecessary.

Early last month I blogged about the January release of our first book. I wanted to start posting teasers in December, but due to the author’s wishes we’re waiting until the book’s final few-and-far-between edits are ironed out. Still, the book is almost ready, and this Saturday I’m meeting with our graphic designer, Shelly Rabuse, who is doing the cover design (and also our website).

Lots more to come. January is turning out to be such an exciting month in terms of all the progress here at the publishing house, and I’m thrilled to share it all with you.

Stay warm,

Anthony DiFiore, Publisher

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Have You Been Reviewed by Fulgencio?

January 3rd, 2010 No Comments

Our world-traveling correspondent, Fulgencio Milano, continues to review the very best restaurants and hotels of the globe. And if you haven’t caught up with his latest reviews, here’s his Yelp page.

Also, in case you’re traveling to Vancouver for the upcoming Winter Olympics, Fulgencio has reviewed four Vancouver hot spots, including the highly-acclaimed West Restaurant.

If you have a favorite restaurant, anywhere in the U.S., that you think Fulgencio Milano should review, send him an email at fulgencio@publeconomist.com. I’m sure if foie gras is on the menu he’ll be there in no time!

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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42.9% Unemployment Rate. And No, It’s Not a Developing Country

January 1st, 2010 No Comments

NYTimes.com ran an article yesterday by Nelson D. Schwartz on the high youth unemployment rate in Spain. If you’ve been following global unemployment rates, then you know that Spain’s is around 20%. However, for Spain’s 16 to 24-year old age group, the rate stands at 42.9%!

Unemployment doesn’t just count the jobless. When economists calculate the unemployment rate in a country, they don’t count people who are in school, people who aren’t looking for a job, and people who aren’t available to work (e.g. someone who has had a recent, debilitating accident, that makes work temporarily impossible). The only people who are counted in an unemployment survey are those who do not have a job, are looking for a job, and are available to have a job.

So, of Spain’s 16 to 24-year old age group, 42.9% of the people who are available and willing to work cannot find jobs. To Americans, who have been spoiled by unemployment rates much lower than those of Western Europe, 42.9% seems insanely high. However, this type of youth unemployment isn’t new to Spain. From the mid-1970s to mid-1980s, as Spain’s economy was changing and jobs were declining in agriculture and manufacturing, youth unemployment was staggeringly high.

So why is youth unemployment bad? After all, one might think that adult unemployment needs to be stabilized before youth unemployment, since most jobs for people ages 16-24 are in unskilled or basic services labor. Development economists struggle with the problem of youth unemployment in developing countries because of its major implications on crime and violence. Youths who are out of school, out of work, and not positively contributing to society, are at a higher risk of committing violent crimes. This is especially true when the youth population is poor. Spain’s 42.9% youth unemployment rate does not reflect a population of unemployed rich kids who stay home with their parents, read, and try to solve the great problems of life. These are real people with real problems, who need a job in order to survive.

Large amounts of youth unemployment can lead to urban violence, vandalism, the formation of gangs, increased theft and robbery, and numerous other social problems. Countries with a large disparity between the rich and the poor have even more to worry about. Look at the crime rate in Rio de Janeiro. With a bustling tourism industry and a booming economy that’s continuing to enrich the middle and upper classes, Rio has had to battle with its high rates of crime and extortion. If you’re an unemployed youth in one of Rio’s slums, and a few miles away are condo buildings with units that start at $750,000 (1.3 million reais), then you may feel your best chance of obtaining a luxurious lifestyle is to engage in gang violence, kidnapping, extortion, and theft. When an unemployment rate is 42.9%, competition for jobs can be so difficult that sometimes crime seems like an easier decision.

And when you think about it: if you’re starving and can’t find a job, do you resign yourself to an uncertain life of government aid, or do you steal food?

I hope that Spain will be able to rebound from this awful unemployment rate. The education system may be a valuable solution to lowering the rate, yet there are always young people who need to work in order to help provide for their family. Also, pushing young people back into schools, and creating incentives that are desirable enough for people to leave the labor force on behalf of an education, will require lots of government aid. And one thing that the Spanish government currently does not have is a lot of spending money.

If the youth unemployment rate gets any higher, I hope that families and unskilled laborers will migrate to other countries with better job access, rather than stick around Spain for too long. A recession is bad enough, but the violent crimes that come with high youth unemployment may leave some deep scars on these difficult years for Spain’s economy.

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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Does Living Overseas Strengthen Creativity?

December 31st, 2009 2 Comments

I’d like to share a piece of information from the December 2009 issue of Harvard Business Review. Jeffrey Dyer, Hal Gregersen, and Clayton Christensen, can all be credited with writing an excellent article entitled “The Innovator’s DNA.” This is the culmination of six years of research, interviews with 25 innovative entrepreneurs, and surveys of over 3,000 executives and 500 individuals involved with corporate innovation (either the creation of new products or of innovative companies).

Basically, the three authors/researchers wanted to know a simple question: “how does a company find innovative employees?” Especially in times like now, where so many companies are facing difficulties as the result of our recent economic downturns. Firms like GM, Chrysler, and Bank of America, who have all received government bail-outs, could use a few lessons in hiring innovative executives!

One of the most fascinating results that came out of the research behind “The Innovator’s DNA” pertains to living abroad. Interestingly enough, the authors found that “the more countries a person has lived in, the more likely he or she is to leverage that experience to deliver innovative products, processes, or businesses.” They even found that companies with CEOs who have had even one international assignment (relocation to a company branch overseas) have performed 7% better in market performance than companies with CEOs who haven’t lived abroad or had an international assignment.

I think that this research reveals the true power of cultural exposure. Much of the hatred between peoples of different color, religion, and sexual orientation, derives from simple ignorance and lack of exposure. The great beauty of travel is that it brings us into contact with different types of people, various lifestyles, and other ways of doing things. And even though the United States is very technologically advanced, there are other ways of doing things.

I’m always thankful of the time I spent living in Beijing and traveling within China. It was such a fascinating experience to see how the Chinese live, think, and communicate. The experience also gave me new perspectives on world problems such as the various uses of energy in developing countries, the contrast between Chinese poor and American poor, and the effects of a burgeoning tourist market on rural subcultures.

I often think about spending some future years of my life in another country, although I do love my own country and would never want to fully abandon the U.S. It’s always difficult to tell what’s around the next corner!

If you get a chance to pick up the December issue of HBR, check out “The Innovator’s DNA.” And if you get the chance to live abroad, whether in college or somewhere down the line, as long as it’s the right decision for you & your family, I hope you the seize the opportunity! Who knows, maybe one day you can bring another golden era back to General Motors.

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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Are American TSA Employees Equipped to “Find the Bad Guys”?

December 30th, 2009 No Comments

Can our TSA employees be as effective as Israel’s airport security teams? If you need a refresher in Israeli airport security, check out this great article by Cathal Kelly, posted today on the Toronto Star’s website. The article examines how Israel has been effectively dealing with heightened airport security for fifty years.

As I’m sure you’re aware, Israel is a constant hotbed for terrorism, and Israeli airports aren’t any exception. Mr. Kelly’s article explains how Israeli security teams have managed to both make airports safer and reduce long airport lines.

I travel pretty often (14 flights in December and expecting the same for January!), and I detest long airport lines. I also detest airport security checkpoints that are poorly planned. Take Philadelphia Airport’s security checkpoint at the A Terminal (Domestic). The lines are all bunched together, and zig-zag in close proximity until splitting off into a number of x-ray belts. This design could turn out to be a nightmare if some bomber decided to detonate while in line, fearing their chances for passing through security.

Mr. Kelly’s article also explains how Israeli security personnel look for “bad guys” by reading the people who pass through their airports, rather than what’s on the scanner.

And doesn’t that make sense? I don’t know about you, but there are numerous times when I’ve seen an old grandmom who doesn’t even know to put her shoes in the security bin get bothered by TSA agents. One morning, when flying from Boston to New York City, I was even pulled aside by a goon who demanded my carry-on luggage be checked. After ripping apart the contents of my bag and wasting my time, he finally decided that I was cleared to continue. And I knew it was coming, too, after receiving nasty looks from him while I was in line to scan my belongings.

The contrast between the Israeli method and the TSA method is striking, and raises an important dilemma that’s probably more true in race-sensitive America than it is in Israel. If TSA agents are told to stop worrying about belts and 3oz liquids, and instead focus on profiling travelers, will our country explode in a racial debate that will cripple the opportunities for progress?

I can see it now: a single, black Muslim, born abroad but permanently residing in the US, is hassled at a large airport (say, JFK) by two white TSA agents. Maybe he looked suspicious from the moment he entered the airport. Regardless, a lawsuit ensues, and the TSA is suddenly blamed for racial profiling. It’s claimed that they wasted this man’s time, caused him to miss (or nearly miss) his flight, all because of his last name, his beard, his skin color, or all of the above.

How would America handle this?

A creepy terrorist is a creepy terrorist, regardless of color. Timothy McVeigh didn’t look like someone I’d want to have over for dinner. However, the fact that our recent “war on terrorism” has been almost primarily with Muslims must leave an impression on airport security agents.

As airport security tightens within the United States, and airports seek better security methods, I’ll be intrigued to see if we apply some lessons from Isreali airports. And, if the TSA begins to monitor travelers the way that Israeli security personnel do, then I hope it’s done in a way that targets the bad guys, and not just anyone named Mohammed. Success will largely depend on TSA agents themselves, and whether they’re equipped to read people. This sort of work seems more fit for educated people with military experience than for a former mall cop who plays on Facebook while shouting “take your belts off!” to travelers.

I do have faith in our government that they will make air travel safer. I just wonder whose model will be applied, and how America will react to the changes.

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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I Stand Corrected

December 28th, 2009 1 Comment

A couple days ago I blogged about losing our first bid on a non-fiction title by an emerging gay author. I wrote that I visited the author’s Twitter account on Christmas Day to see that he’d just taken a call from his agent to learn that his book was sold. Having not heard anything, I assumed another publisher won the contract.

I wrote to the author’s NY agent, offering my best wishes to them and to the book. You can imagine my surprise when the agent replied this morning to inform me that inGroup Press was the publishing house she had been referring to!

The miscommunication was quite minor. The agent had told the author on Christmas Day that she was about to accept an offer from us, and in his excitement he tweeted that the book was sold. We still have to sign the contract, but as it turns out, they’re going to publish this new piece of non-fiction with inGroup Press!

What a pleasant surprise. I can’t wait to sign the contract and then share this book with all of you. This will be our first non-fiction title, and I’m honored to have such a high-quality work as our first non-fiction publication. As soon as the contract is signed in January, I’ll be able to tell you more about the book and its author.

Happy Holidays!

Anthony DiFiore, Publisher

Follow us on Twitter: @theingroup

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