Bubble Bursts for eBooks

[Ed Hansberry]

<a href="http://story.news.yahoo.com/news?tmpl=story&amp;cid=581&amp;e=1&amp;u=/nm/20031010/tc_nm/arts_frankfurt_electronic_dc">http://story.news.yahoo.com/news?tmpl=story&amp;cid=581&amp;e=1&amp;u=/nm/20031010/tc_nm/arts_frankfurt_electronic_dc</a><br /><br />Here is another article on the struggle ebooks have been having to gain acceptance. The paragraph that wraps it up though is "In the technological battle to find the perfect way to read electronic books on your palm-top or personal computer, competing formats have put the consumer off. David Steinberg, president of corporate strategy and international in New York with HarperCollins, said: "There was a format war. They compete and are not compatible. That creates resistance." <br /><br />Much of what else is said was discussed <a href="http://www.pocketpcthoughts.com/articles.php?action=expand,18041">in this article on the future of ebooks</a> last month.

[RedRamage]

I haven't read the whole article yet, but to just respond to the last paragraph there... Different formats for ebooks aren't as much a hinderence as they are in other media.

Let me explain... for DVD, more specifically DVD Re-writables, format isa very big concern. You want to make sure your DVD player and writer is compatible with as much as possible. If it turns out the new standard isn't supported by your device, well, you out a couple of hundred bucks with a hunk of 'useless' hardware.

However, with ebooks... if I want a book and the only format it's available in is .lit, I just download the free MSReader software and I'm good to go. If it's only available as a Palm ebook, I just download any number of free palm reader programs and I'm good to go.

There is no extra cost associated in swapping formats as the reader programs are usually free... and I can have multiple reader programs installed at the same time making it easy to swap programs at the drop of a hat. There are even programs, like microBook (aka, uBook) which can read a great many formats by itself.

Sure, I'd love a standard format. But certainly isn't that big of a hurdle and isn't going to stand in my way of enjoying a good ebook.

[Ed Hansberry]

Sure, I'd love a standard format. But certainly isn't that big of a hurdle and isn't going to stand in my way of enjoying a good ebook.
Sure it can. Palm users are limited to Palm Reader, Mobipocket and a few others. Pocket PCs can do everything a Palm can, plus MS Reader. Neither can use the Adobe ebook reader format that I'm aware of.

Finally, no normal person is going ot install 3-4 readers on their device. Reading an ebook should be effortless. Having to contend with 3-4 apps is a pain only a geek will put up with. Even I only get books in Palm's PalmReader format. I don't bother with MSReader books.

[pcause]

I think the whole format thing is a red herring. You could get stuff in all the formats. To me, I fe;t completely ripped off when they wanted the same for an ebook as a paperbook. I should have been able to save using the electronic format, since the printing, storage and distribution costs are so significantly reduced.

When you know you are being ripped off, you don't buy.

[VanHlebar]

I think the whole format thing is a red herring. You could get stuff in all the formats. To me, I fe;t completely ripped off when they wanted the same for an ebook as a paperbook. I should have been able to save using the electronic format, since the printing, storage and distribution costs are so significantly reduced.

When you know you are being ripped off, you don't buy.

I used to feel this way until I started to think about it a bit more. Yes printing, physical storage, and phyiscal distribution are lower. With the electronic version someone still has to format the e-book. They still have to proof the e-book, make sure that the layout it proper. If you are going to spend any kind of money on an e-book you want the experience to be enjoyable, not page breaks where they shouldn't be, words missing or misspelled words. Yes, I understand that much of that is already done before a book goes to print, but it still needs to be done again in the e-book format. In addition to all that, there still is the bandwidth that needs to be paid for and the web hosting that needs to be paid for. I don't have an issue paying paperback prices for e-books, because for me it is convience, and I expect to pay a bit more for my convience. I do take issue with paying Hardcover prices for e-books. So as a general rule, I just wait until the book is out in paperback before I buy the e-book.

Once e-books finally get accepted in the general public and the publishing industry, you still will not see e-book prices at a going rate of $1 or $2 per book, and I don't think we should expect to see this.

-Eric

[sebringal]

Neither can use the Adobe ebook reader format that I'm aware of.
My understanding is that while the Adobe ebook reader is not currently available for Palm or PPC, ebooks can be read with Adobe Acrobat Reader, which is available in both formats.

Finally, no normal person is going ot install 3-4 readers on their device.
I have MS, Palm, and Adobe Readers on my PPC, and I consider myself fairly normal!

If we want various functions, we have various versions of things to accomplish them. Many of us have a conventional oven in our kitchens as well as a microwave oven. Many people have a car for work or everyday use and one for pleasure driving. We have PCs on our desks to accomplish some tasks and our PPCs for others. Is it that different to have multiple reader softwares on those PPCs?

[mr_Ray]

I think the whole format thing is a red herring. You could get stuff in all the formats. To me, I fe;t completely ripped off when they wanted the same for an ebook as a paperbook. I should have been able to save using the electronic format, since the printing, storage and distribution costs are so significantly reduced.

When you know you are being ripped off, you don't buy.

I used to feel this way until I started to think about it a bit more. Yes printing, physical storage, and phyiscal distribution are lower. With the electronic version someone still has to format the e-book. They still have to proof the e-book, make sure that the layout it proper. If you are going to spend any kind of money on an e-book you want the experience to be enjoyable, not page breaks where they shouldn't be, words missing or misspelled words. Yes, I understand that much of that is already done before a book goes to print, but it still needs to be done again in the e-book format. In addition to all that, there still is the bandwidth that needs to be paid for and the web hosting that needs to be paid for. I don't have an issue paying paperback prices for e-books, because for me it is convience, and I expect to pay a bit more for my convience. I do take issue with paying Hardcover prices for e-books. So as a general rule, I just wait until the book is out in paperback before I buy the e-book.

Once e-books finally get accepted in the general public and the publishing industry, you still will not see e-book prices at a going rate of $1 or $2 per book, and I don't think we should expect to see this.

-Eric

Actually, I disagree with most of that.

Traditional book distribution now:

Author -> Publisher -> Printer -> Distributor -> Shop

There are a few other smaller steps along the way but that's the gist of it. Everyone along the road gets their cut of it, too. The most costly ones are towards the customer end, too.

Paper only costs:

- The printer supplies raw materials (paper, bindings, etc.), transports cross country to the distributor. Then they obviously put a little markup on that.
- The distributor stores the books, often repackages, pays people for moving the books throughout the business, packages the books for distribution to the shops, etc. They take a cut of the profit for storage, distribution, billing, other costs.
- Larger store chains often then use their own distribution centres. The books then gets to the store where you haev all your normal retail costs, and a healthy price markup again.
- If you happen to be Amazon or some other non-local retailer, the poor customer pays another delivery fee (directly or indirectly).

I work in the industry myself, and it's not hard to see just how much moolah can be saved for the customer by ebooks. And just think of how much paper could be saved from waste. Billions of tons of wood.

OK, extra expenses incurred by ebooks not there for paper books. Well, you've got the cost of supporting up to 5 or 6 formats. Pretty insignificant since this will be handled en masse.
Bandwidth charges? For novel with perhaps a "cover" image you're looking at less than 1MB for 99% of them. Songs even at today's inflated prices download for $0.70 - $0.99, and they're in the 3-6MB+ range.

IMO there is no excuse for ebooks being more than 75% of paper book prices, and 50% is certainly very profitable for all concerned. It's just a matter if they'll have the guts to do it - they need to learn from the terrible lesson taught to everyone by the RIAA. I hope they will.

[dochall]

In repsonse to Erics points:

- The cost of reformatting an ebook is going to be minimal. I would argue that you don't have to go for misplled words. If I transfer a document to A5 from A4 I would check page breaks & widows and orphans etc. but I wouldn't look for misspellings. Do the right thing and stick the original file in a self describing format and bobs you uncle you write a script to deliver a file for each format in turn.

Anyway the publishers are already used to at least three formats. Hardback, paperback and trade paperback.

Yes bandwidth must be paid for and storage but the costs involved are certainly far less and more elastic than a traditional bricks and mortar store. Amazon makes savings compared to Borders as it has a cheap central location. Now take away the costs of the warehouse, the control system, the pickers, the packers, deliveries in, etc. and we don't think that just being able to get the buyer to download the book isn't going to be cheaper?

Yes publishers have to make a profit and yes authors are going to have to make a profit - no we are not going to see books for $1 but they not passing on the savings to either the retailer or the buyers as yet.

I think that this has more to do with the oligopoly operating in the book market. If I'm selling a book which is $15 and I can sell it to Borders at $10 and Palmpress at $5 I am not going to do it as I don't want to upset Borders. The publishers don't control the book market the retailer do. Here in the UK we have recommended books from all the large chains. The recommendation is actually causes not be some girl working through college being captivated by a new book in the stock room but whether the publisher is willing to pay for the privilege. Don't give the retailer the desired discount and you find the book you want to push doesn't appear on the tables at the front of the store but buried on the shelves.

Of course this does mean that the publisher gets to pocket an extra $5 so he isn't going to be complaining and although as price goes down consumption goes up books are only ever going to take up a certain percentage of the average persons leisure time and therefore halving the price isn't going to double the consumption.

[Ed Hansberry]

Neither can use the Adobe ebook reader format that I'm aware of.
My understanding is that while the Adobe ebook reader is not currently available for Palm or PPC, ebooks can be read with Adobe Acrobat Reader, which is available in both formats.No, the Adobe Glassbook Reader is needed for DRM protected ebooks.
Finally, no normal person is going ot install 3-4 readers on their device.
I have MS, Palm, and Adobe Readers on my PPC, and I consider myself fairly normal!Well, I have some shocking news for you.... :wink:

[PlayAgain?]

Well, I am a big fan of e-books, Mobipocket to be precise and the true :scatter: cross-platform compatibility (which always seems to be growing) provided by it means that the gazillions of annotations I put into the books are viewable over a number of devices.

I kind of liked Microsoft Reader, but once I upgraded from my PocketPC, I was lost. I only miss a desktop reader for Mobipocket, but that's Ok because I don't want my eyes burned out of their sockets anyway.

E-Books rule!

:clap:

[dean_shan]

Even I only get books in Palm's PalmReader format. I don't bother with MSReader books.

Same here. I like there DRM a lot.

[PPCRules]

... "In the technological battle to find the perfect way to read electronic books on your palm-top or personal computer, competing formats have put the consumer off." ... "There was a format war. They compete and are not compatible. That creates resistance."
It's the price, Stupid! (&lt;-- just an expression; not to be taken personally by anyone in particular)

We can argue all we want about starving authors, DRM, etc, but until someone gets the pricing right, this market will not succeed (there is plenty previous discussion from myself and others that expand on that).

The bottom line is that the perceived value of an ebook is less (much less?) than that of a print book to the majority of people. At the right price, people will juggle multiple readers. At the right price, people will even put up with invasive, inconvenient and even buggy copy protection schemes. If someone cared to sell this stuff, they would adjust the pricing until it sells.

I have no love for Apple Co., but maybe it will take them getting into ebook distribution to make things work. For years people were saying, "what the consumer wants is to buy individuals songs at a fair price, like $1 a song". Once Apple finally did this, everyone else is willing (and scrambling) to do it to. But I suppose Apple will wait until it readies an e-book reader device (iBook is already taken; maybe iReader?) before they start ebook distribution.

[AndrewLubinus89]

*Sigh* I always liked e-books. I always just used msword format.

[PatrickD]

I find the debate over ebook pricing interesting. While I agree the cost of distributing an ebook has got to be much lower, I don’t believe you will see the price of ebooks drop much. If every product were priced based strictly on the cost to produce and distribute it, prices sure would be different. If I bought 24 cans of coke from a vending machine it would cost a lot more than if I bought a case of 24 from the grocery store. Did it cost Coca Cola more to produce each can? In the book industry new releases come out in hardcover first. Does it really cost that much more to produce a hardcover versus a paperback? While I’m sure a hardcover may be a little more expensive to produce, I don’t believe it justifies the price difference. The real reason for the price difference is because the marketers know that a certain percentage of the population will pay a “premium” price to get the book right away. As sales taper off they release it in paperback and pick up additional sales from the budget minded. The cost of production and distribution while a factor is not the main consideration in determining the price of a book. The price is determined by what the market will pay. That is why an ebook that is not out in paperback still carries the hardcover price. The publishers do not want to undercut their current pricing and distribution model. I think the publishers are still in an experimental phase with ebooks. They recognize the potential but are moving slowly and cautiously. I think the real reason ebook sales haven’t taken off is simply the number of PDAs out there. I know millions have been sold, but when I look around at family, friends, and co-workers not many have a PDA. Even if every PDA owner bought and read ebooks on a regular basis, it would still be a relatively small market compared to overall book sales. Luckily the cost of producing and distributing ebooks is much lower making this market segment still worthwhile and potentially lucrative. Therefore if it weren’t for the fact ebooks are cheaper to produce we might not have any ebooks at all because publishers would have little incentive to invest in this new technology if their costs were the same as paper books.

[KH]

Acceptable price is directly related to perceived value.

I buy eBooks for:
- satisfaction - I prefer the experience of reading on my IPAQ
- convenience and portability
- freedom from managing the physical books

The last is a HUGE benefit. The sooner I can replace the boxes and boxes of books in my garage, the sooner I can replace the piles of books on bookcases in my family room (Hardback books can look neat, Paperbacks always look messy), the sooner I can reclaim all that space - the happier I will be. Moreover, I believe there are enough platforms capable of reading the Palm Digital Media format that I no longer worry about my books aging-out; I don't have that comfort level with Microsoft Reader, so I just don't purchase encrypted .lit books (although I don't dislike the reader etc.)

Because I value the oportunity to buy a given book in electronic format, AND I want the rewards for producing such books to be sufficient incentive for everyone that needs a part of it to continue doing so, I really do not mind paying close to full physical price.

I will re-evaluate if the market becomes adequately established.

I used to spend a fortune buying books, and would think nothing of buying the hardback if that would allow me to read it sooner. How things have changed. With very few exceptions (and those can wait for my birthday) I pass up books from even my favorite authors. I just don't want to buy another 'thing' that has to be stored.

[RedRamage]

Two comments on the two different issues:

Format Wars: I suppose I should clarify things a tad... I want and desire a standard format for ebooks, perferably an open one. However, the lack of a single standard will not stop me from reading ebooks because: In many cases my default reader (MicroBook) can likely handle the format the ebook is in. I only need my one reader for 95% of the books I read.
There are many conversion programs out there... give me a format MicroBook doesn't read and I can probably get it to a format that MicroBook can read in 5-10 minutes.
Assuming that the format is unreadable and I can't convert it, I can likely download a free version of a program that will read my book. 10-20 minutes later I've got the program installed and away I go.
The effort and expense is not that great, and I don't think non-geek will be that adverse to having multiple readers if it gets them the ebooks they want. That's an opinion of course, but I think people will tolerate having multiple free programs installed MUCH MORE than shelling out $200 for a different piece of hardware for multiple formats of DVDs.

In short, format is an issue, but it's a much smaller issue than for something like Videos or DVDs. Much smaller.

Price of Ebooks: The fact of the matter is that I'm sure 99.9% of the publishers these days already have their books in some electronic format. Converting from this format to on that is ebook friendly is very simple. The added cost involved is no where NEAR the cost of paper, printing, storage, and shipping. Producing an ebook is far, far cheaper than producing a pbook.

Does this mean ebook pricing should be lower? Yes and no. As many have stated here a item, whether it be a service or product, is based on what a company feels it can ask and what the consumer is willing to pay. Do you think it costs the Movie Theaters in New York $10 or more per person to show you a movie? If so, why is it $8 or less in part of Michigan? Do the theathers in Michigan get the films cheaper from the studios? What about those theaters that offer cheaper prices during the afternoon hours? Is it cheaper to show a movie then? Given am unbiased market, the prices will eventually settle somewhere between what a publisher feels they should be getting and what a consumer feels he or she should be paying.

That said, I'm not entirely sure the ebook market is an unbiased market. Here's what I mean: Some publisher DON'T WANT ebooks to succed! They view ebooks as dangerous to their trade...piracy, independant authors who can publish their own works... If a company does not want to produce a product that the public is "demanding" what do you do? Well, you either ignore the public, or produce a 'faulty' or overpriced product in the hopes that it will convience the public that what they want isn't any good and they'll stop asking for it. I believe that this is a little of whats happening in the publishing industry. They are demanding high prices for ebooks. If people buy them, okay great, we'll make some cash. If they give up on them, well, to big loss. We didn't really want to make ebooks common anyway.

[michie]

I find ebook pricing fascinating. So many people think that it should be significantly lower because there's no physical form and that freight and warehousing costs are avoided. Others are aware of the reality that prices are usually independent of cost.

However, looking at the cost side, it already seems like people are underestimating the cost involved. People have already mentioned the cost of maintaining an ebook online. Peter Fry from Palm Digital Media has stated that an ebook costs $500 to convert from the text used to produce pbooks to the different ebook formats. And that was the cost for new books; older books without digital copies need to be OCRed and scanned and would be much more costly. $500 may not seem like a lot, especially for bestsellers, but I can think of a lot of ebooks that will never recoup their conversion costs.

On the savings from being a digital format rather than a physical book, is it really a savings from the publisher's point of view? Some people have mentioned avoidance of printing, distribution, and warehousing costs. The assumption is that if I buy 1 ebook instead of a pbook, the publisher did not have to pay any of those costs and should pass on the savings to me. However, the current ebook market is so small that it's more likely that the publisher prints, ships and stores the same number of pbooks as if there were no ebook market. In other words, at this point, publishers are not getting savings from ebooks. Of course, that will change as the market share of ebooks grows and has a significant effect on the production planning of pbooks.

Given that ebooks may or may not be costlier to produce than ebooks, in the end, cost is only a starting point for pricing -- it would not be profitable to price something below it's cost. The final price depends on so many other factors -- a few I can think of for publishers in relation to ebooks are: perceived value by consumer, influence of large retailers, competition, and pricing and profitability of paper formats.

Finally, if cost is such a big factor for pricing, why is it that so many e-publishers price their books at roughly the same price as publishers that produce both pbooks and ebooks? There are some that are much cheaper, but most seem to be similarly priced.

[Kati Compton]

If I bought 24 cans of coke from a vending machine it would cost a lot more than if I bought a case of 24 from the grocery store.
But that's a difference of "buy in bulk". If they let me buy 24 eBooks for that type of discount, I might be willing to deal with the DRM.

[juni]

Even I only get books in Palm's PalmReader format. I don't bother with MSReader books.

Not me, I love the ability to make my own books with the Word-plugin. :)

[maikii]

I don't think the compatibility issue is a problem, as Microsoft Reader and Adobe Acrobat Reader are free programs. So, at least with those two platforms, there is no extra cost (just extra storage space) to have both capabilities on your device.

One thing that I think could be hindering sales is the price of e-books. I'm surprised when I look at the prices of e-books on ebooks.com, amazon.com, etc. They usually cost the same price as the paper book!

Of course in either case the author, etc., should be paid, intellectual property, etc. However, the physical cost of producing e-books compared to paper book is much lower--in fact just about zero! Compared to a paper book that must be printed with paper and ink, bound, etc., the physical cost of producing an e-book is about zero. The price should be much lower than a paper book, yet they often sell for the same price.

[sylvangale]

"Not me, I love the ability to make my own books with the Word-plugin."

You can always just leave the text in a text format and use an ebook reader that can handle text. Especially handy with Gutenberg texts which are all usually in text format.

[FYI - Project Gutenberg is an attempt to put every book that has fallen out of copyright into electronic form for everyone to access freely. You can get such titles such as Dracula and the Sherlock Holmes series for free... not to mention great authors such as Oscar Wilde, Charles Dickens, Thomas Hardy, Voltaire, Plato, etc.]

[ctmagnus]

However, the physical cost of producing e-books compared to paper book is much lower

In many cases, the original is already in an electronic format. It's just a matter of the author typing it up on a computer vs on a typewriter. In those cases, the text just has to be run through a converter.