e-Book Prices Go Up. Will Sales Follow?

[Hooch Tan]

<div class='os_post_top_link'><a href='http://www.nytimes.com/2010/02/11/technology/11reader.html' target='_blank'>http://www.nytimes.com/2010/02/11/t...y/11reader.html</a><br /><br /></div><p><em>"When digital editions have cost more, or have been delayed until after the release of hardcover versions, these raucous readers have organized impromptu boycotts and gone to the Web sites of Amazon and Barnes &amp; Noble to leave one-star ratings and negative comments for those books and their authors."</em></p><p><img src="http://images.thoughtsmedia.com/resizer/thumbs/size/600/dht/auto/1265911511.usr20447.jpg" style="border: 1px solid #d2d2bb;" /></p><p>Just how much is a book worth?&nbsp; A thousand pictures?&nbsp; A thousand, thousand pictures?&nbsp; If publishers have any say, e-books will start costing up to $14.99.&nbsp; It is understandable, given the current economic climate, and CES demonstrating that there is a different e-book reader for every person.&nbsp; Readers do not seem to agree.&nbsp; If the music industry is to be any gauge, sales are going to suffer.&nbsp; When prices on iTunes went variable and hot songs started going for $1.29, sales slowed.&nbsp; The music industry claims that the market is maturing.&nbsp; Maybe the e-book market will mature earlier than expected as well!&nbsp; As an aside, there is one thing I need to get off my chest.&nbsp; While I will not dispute that there can be great value in books, I disagree with the concept that since e-books cost next to nothing to produce, they should cost next to nothing to buy.&nbsp; The cost of manufacturing something should only help determine the lowest possible price, not the value or selling price of something.&nbsp; If I were only to be paid the actual cost (in kilocalories?) of sitting at a desk, starting at a computer screen doing my job, it would be a <span style="text-decoration: line-through;">pity</span> pittance.&nbsp; Books are worth more than a few pennies.&nbsp; But are they really worth $14.99?&nbsp; How much would you pay for the latest Harry Potter, Twilight, or one of my favourites, "Where the Sidewalk Ends"?</p>

[egads]

It's got to cost .5 to .75 times the price of a printed book or I won't even think of buying an ebook.

I'd rather have a printed book anyways.

[ptyork]

There are so many disadvantages to ebooks (all of them, including what I've seen of the iPad and the new PlasticLogic thing). DRM's lack of transferability, resale, or lending are crippling. The kludgy highlighting/note taking is pretty terrible. And it is all but impossible to flip back and forth say from text to a table or figure if you are trying to read something other than casual fiction. Maybe the time has come, but I'm just not convinced.

That said, I agree that the price reflects the value to the customer, not the cost. HOWEVER, the cost is well understood by the consumer to be next to nothing, which will greatly reduce their perception of value. The above limitations, once they are better understood, will further reduce the perception of value.

I think early on that the prices could be between 50% and 75% of the current value of the book and still sell. That means that while the hardcover is out, $15-$20 may even be tolerable, though once the paperback is released they need to be under $7. After maturing, though, they'll need to drop from this level, I think. Unfortunately, for a number of years I fear these things are just going to be for those with considerable disposable income since I don't think that publishers are going to "mature" as quickly as they need to. These are the same folks that have raised textbook prices 200% in fifteen years, mostly to make up for lost revenue because more and more professors have been moving away from textbooks because of the price burden on their students. They obviously don't read the economics textbooks that they publish.

[Hooch Tan]

The kludgy highlighting/note taking is pretty terrible. And it is all but impossible to flip back and forth say from text to a table or figure if you are trying to read something other than casual fiction. Maybe the time has come, but I'm just not convinced.

ebooks have certainly come a long way, but you're right that note taking, highlighting, etc. still needs improvement. Like egads, I still favor the printed book. The interface is easy to use, and requires a minimum of infrastructure to work. I don't have to worry about battery life, lighting conditions (indoor vs. outdoor), or how carefully I have to treat it.

The above limitations, once they are better understood, will further reduce the perception of value.

Good point, and being an ebook, it should allow for a much greater flexibility in pricing. I think what many publishers are scared of is that if they start out at a really low price, it will be extremely difficult for them to charge higher prices for it later. I also agree that ebooks should cost less than the traditional formats, largely because of their limitations.

I consider textbooks to be a special case. They're intended for a niche market, and textbooks DO cost a lot to produce. One thing I have always hated about them is their incessant need to publish new editions every year, like EA Sports Games. Much of the material is the same, and "forcing" students to buy new every year could almost be considered a form of exploitation.

[Jason Dunn]

Yeah, for me eBooks need to be a fair bit cheaper than normal books for it to be worth it for me - I don't see much point in paying $10 for a book that I can read on a single device, and a book that I don't really own. I appreciate books and keep nearly all the books I buy.

[doogald]

I am not an ebook reader, but I can see the appeal of:

- instant delivery of a book, when I want it, where I want it
- the ability to buy a book when I have finished another without having to carry two. If I finish a book when I am away from home, it has turned into the equivalent of a brick
- the ability to look up word definitions on the fly, and to easily search text for a passage a few chapters back
- the ability to carry even a large epic in a compact, light package

These things all have value. The major cost of publishing a book is not the paper, ink, paperboard and delivery - it's editing, marketing, proofing, and legal costs of getting copyright registrations, etc. Sure, I know, you have the cost of the device to factor in as well, but that doesn't concern the book publisher. They are not getting a cut of Kindle device sales.

And, the one thing that people may be missing is that publishing the paper version of a book is more profitable to the publisher than selling an ebook for $10. Publishers are not all stupid businessmen - they will price their products to maximize the profits of their business, not Amazon's.

And, as it is, for almost every hardcover book sold today at retail, the cost of the $15 ebook will still be less than the sale price of the printed version. This is not the case for bestsellers (which, by definition, sell the most copies), since retailers are competing by pricing below their cost, but for most other books that aren't on the bestseller list, the ebook prices remain lower.

(Just playing devil's advocate for a post.)

[ptyork]

The major cost of publishing a book is not the paper, ink, paperboard and delivery - it's editing, marketing, proofing, and legal costs of getting copyright registrations, etc.

It depends on the volume of books sold, but by and large this is a fallacy. It's paper, ink, press time, warehousing, delivery, inventory, stocking, shelf space, sales staff, writedown of unsold inventory, etc. There are a LOT of costs involved in selling a physical book at retail. For most books, editing/proofing is < $50K and marketing costs are non-existent (mostly only for best-sellers). Legal costs are minimal. Depending on the size of the distribution, the other costs can easily run in the millions. No matter how you slice it, it is pennies vs. dollars in terms of cost to manufacture/sell comparing ebooks vs. physical books for anything but the most low volume tomes.

But, as is the point of this post, that is beside the point. :)

[The Yaz]

I think the publishers have a chance to change their market with ebooks. Like the music industry, the publishers work in a field where there is "legal piracy" (the public library) and a certain portion of the population is viewing their product without compensation to the authors.

The convenience of ebooks on some form of portable media is an opportunity to get another part of the population to pay for the priveledge to read their product. It is foolish of them to price them so high.

Wouldn't it be better for the publishers to move their industry to an electronic format? They should price ebooks substantially below physical book costs to entice people to move into one of the e-reaeders just to increase market penetration.

Obviously they don't think so... :(

Steve

[MerlinAZ]

My wife has a Kindle.
She's willing to pay $10 for a novel, which was the going rate.
Since the prices are going up towards $15, it's not worth it.
She would rather pay the same $15 for the book at Costco, and be able to pass it around to family/friends after she's done.
The portability of the digital version has value, but not at those prices.
Sadly, I think the "brilliance" of the publishers is going to have a negative impact on the digital book form.

[doogald]

Wouldn't it be better for the publishers to move their industry to an electronic format? They should price ebooks substantially below physical book costs to entice people to move into one of the e-reaeders just to increase market penetration.

It could also be a control issue. With concentrated control of the digital music market, Apple has a ton of clout over the record labels. This is the lesso that the publishing houses learned from the explosion of digital music - maintain control of the distribution and pricing of your product; do not let anybody else decide on your revenue for you.

What's not being thought about is what sort of pricing will be available. Say the publishers charge $15/$12 for new books as they are released in hardcover, but also price of the back catalog to $10 for books newly released to trade paper, and $6 for pulp paper type books (or perhaps even less.) Will people like this better than paying $10 for every single book, no matter how popular or desirable?

[alanjrobertson]

I definitely look for eBooks to cost less than physical books - and not just the RRP, but cheaper than the average price you'd pay at Amazon et al.

My main disappointment is the way the publishing industry has followed the example of the film industry with DVDs and come up with some really crippling geographical restrictions. I used to regularly buy eBooks from ereader.com (even way back when they were Peanut Press) as I liked their DRM (the book is encoded to your credit card number so even if the company went bust you'd always be able to unlock your books) - unfortunately there is now almost nothing available to purchase in the UK from them. I see that the iPad is having the same issue with the eBook functionality not even being mentioned on the Apple UK site.

So 66-75% of the average retail cost of the physical book with sensible DRM (such as the credit card number system) with a reader for multiple platforms is what I'd like (and what eReader delivered until their range was cut to near nothing).