There’s a lot of talk online about what the hard stop price is for ebooks, with people like yours truly saying that my limit is about $10 for any book purchase unless it’s a much-coveted title. Meanwhile, Macmillan has said in the past that the price point for an ebook could and should be nearer to the hardback price, but certainly should be more than paperback.
To which I say, “What?!” Clearly, their sense of value and my sense of value are very, very far apart indeed.
I was passing by a billboard in Weehawken (one of the two jewels of Jersey’s crown) the other day advertising Continental Airlines’ meals at mealtime program. Would I pay more for airfare if I knew that the flight that cost more would include a meal? Not likely.
But would I pay more for a flight if it meant that I could accrue something of value to me, like frequent flyer miles? Yes. Absolutely. I would and I have – but the amount extra I am willing to pay varies depending on the miles I’d earn.
I will pay extra for the ability to fly with a particular airline that has a unique connection to my vacation budget, and I know I can’t get Continental miles flying JetBlue.
So how does my concept of value apply to ebooks?
I will pay more than paperback prices for an ebook if I know that I am getting exclusive content not available in print, or if I were to be rewarded with membership points or rebate dollars for paying the extra dollars. The reason I’m ranting about this now, when it’s obviously been discussed before, is that, since Angela James twittered the variations in price for the eBook of JD Robb’s new book ranged from $10 on the Kindle to $20 on FictionWise, all the way up to $24.93 at Powell’s online.
Digital book devotees should be treated like frequent flyer customers, and FictionWise, with that alluring, sexy, and oh-so-confounding MicroPay rebate system, knows it. But publishers and booksellers don’t seem to get that the only creature as loyal as a romance reader is a digital book reader. If publishers and sellers are going to insist on pricing ebooks between paperback and hardback, or if the prices for digital content will continue to shift and slide so widely, at the very least reward me and my dollar for our stubborn devotion. If a publisher knows that I purchase ebooks, I should be able to subscribe to their digital book program to earn points towards future purchases.
If folks are going to dick around with the pricing until everyone gets on board and sets their price point, at least reward me in the meantime. I’m willing to work for it. You want answers about how consumers use and approach ebooks? Ask me. (And let me earn credit towards future purchases!)
Let me answer the first question: will I pay more for the ease and privilege of reading an ebook that is no different from the paper? Depends on how badly I want the title, but the idea that I should have to pay what Jane calls the “ebook tax” is asinine. The option of having the book title on any ebook reader, which I much enjoy and find tremendously easy on my eyes, should not necessitate an additional fee. If the paper book is cheaper, what’s stopping me from cutting up a paper book, feeding it into a scanner, making a PDF of it for my own personal and exclusive use, and then recycling the pieces? Time and fury, basically.
I’m not the first to ask about the reader/consumer experience in the new publishing dynamic. Hugh McGuire at HuffPo also noticed the same thing I did at the O’Reilly ToC – the reader/consumer was scarcely mentioned, and that absence is evident in a variety of areas in publishing and its marketplace.
What really tees me off is the attitude that ebook readers are in some way stealing revenue from publishers. The recent New York Times review of the Kindle written by David Pogue acknowledges the mistaken idea that ebooks somehow threaten paper sales as it lauds the device as a much-improved ebook reader:
So, for the thousandth time: is this the end of the printed book?
Don’t be silly….
The point everyone is missing is that in Technoland, nothing ever replaces anything. E-book readers won’t replace books. The iPhone won’t replace e-book readers. Everything just splinters. They will all thrive, serving their respective audiences.
It seems ludicrously short-sighted to the point where I’m speechless (ok, not really) that ebooks should detract from paper sales, or vice versa. Pogue, for all the topics upon which we disagree, has a point. Splintering, not stealing, is the foundation here. Ebooks may be only 2 or 3% of a given publisher’s income, but it’s also likely the only revenue stream that’s growing exponentially. Maybe fostering that growth is a better idea if one looks at the issue from the perspective that ebooks are a new form of publishing, not a stealing, replacement form that wants to eradicate paper, and one way to foster growth is to stop penalizing ebook buyers for wanting a particular format, or wanting an ebook at all.
This is what I mean by relative value: for now, I might be inclined to pay more to read an ebook, but not for much longer. Publishers, please examine ebook readers as readers and consumers without comparing us to paper book consumers. Please. And please stop sliding the price up and down like the Dow on crack. Or the Dow not on crack. While I’m aware that the cost is about the same for mass market paperback production as it is for ebook productions, I can see through the idea that an ebook should cost the same as a hardback. It so should not. Get over it. But if the price is going to slide around like wet shoes on linoleum, fine. Reward me while you figure that out.
Because while the price remains a wild and frisky variable, you risk alienating me, and anyone who wants to try ebooks but remains hesitant to do so.
As a further datapoint, I got curious and backtrailed to the post here a couple of weeks ago comparing ebook economics to print economics, and came up with this tidbit:
Applying this to the royalty formula I quoted upstream, the shares for my ebooks look like this:
Bought from Amazon ($2.99):
Amazon $1.95
Publisher: $0.52
Author: $0.52
Bought direct from publisher ($2.99):
Publisher $1.74
Author: $1.25
Two observations here: first, this looks wonderfully profitable for Amazon, who (per Anonymous’s reporting) is making almost four times as much as the publisher on each sale. Second, while my proportionate share of the net actually goes up (to 50% from 42%) on Kindle sales, the publisher’s share of overall revenue on those Kindle sales is almost scarily low—less than one-third of the income received on a direct sale, and a touch under 18% of the retail price.
What will be fascinating is to see what Amazon ebook prices look like for non-Kindle platforms. According to reports, they will be releasing Kindle books for smartphones shortly.
So, if I’m Amazon, do I charge the same for a Kindle book for an iPhone, or do I charge more for the iPhone version since I’m making profit from the Kindle hardware? I would bet money that will undercut their competition in the smartphone market. A) they have the muscle and B) they want to take over the market. But, how much wiggle room is there in the ebook profit margin? Realistically, this is not a big number. There is not that much money in books. If there were, life would be a lot more rosier for Borders.
Also, I think you have to divide the NY publishers from the individual publishers, because while Amazon can charge two arms, a leg, and a brain for Little Joe’s Publisher, they are not charging two arms, a leg and a brain for Harper Collins.
And lastly, I don’t think Amazon is Dr. Evil, waiting to take over the book world so that they can screw everybody on price. This company is as saavy as Apple with regard to pricing, possibly more so. If they want to build and keep their marketshare, they will have to keep the prices low. I would imagine, just like Walmart, they would push down overall ebook prices (the books, not the readers) for Sony, Fictionwise, and the publishers shortly because they will either lower the prices to compete, or else die on the vine.
It will def be interesting to watch, and to be fair to Amazon, I think they will force all the prices down.
@DeeCee-
You mean I can dl songs from amazon to my itunes and put it on my ipod, or even make a cd? really, honestly, I had no effing clue what so ever. Email and tell me more, pretty please???
@Ev
Yup. Its DRM free. Install the Amazon MP3 software, and buy a song. 9 times out of 10 it will go directly into your library, but if not then go into Itunes-File-Add file to library. They’re saved by band name. Once their in your library just drag and drop into your playlist and voila-super cheap music.
Plus, like Apple, Amazon usually has a bunch of freebies, but the new music is usually a lot cheaper than on Itunes. The new Lily Allen cd was $9.99 on itunes and 3.99 on Amazon. And everyday they have a deal that you can get a pre-picked mp3 cd for $1.99 or so.
@DeeCee
I love you……
It’s crazy for print publishers to claim that ebooks cost more than print books. I’ve been a publisher for 15 years. I know what it costs to make a print book, and it’s a lot. Once you factor in returns (which in this genre can average 50%), inventory damage reserve, PP&B, shipping, warehousing, distribution costs (which can be as much as 25%), and retail discount (55%), you’re looking at very slim margins. With ebooks, even when you factor in distribution costs and retail discount, the margins are much better, and there is no waste.
The reason publishers want to price ebooks higher than they deserve to be priced is because the sales are not yet at the levels they need to be to make up the dramatic drop in print book sales. They need to price ebooks higher to try to bridge the gap. They will continue to try to do this until there is enough resistance from consumers and competitors to force the prices to a sustainable level.
At Ravenous, we price all our novels at $4.99 and our short stories at $1.99. It’s a pricing model that we feel enables voracious readers to enjoy great content without going broke.
Sorry, but I won’t pay $10 for an ebook. I will read an ebook because it is CHEAPER than a paperback. To me ebooks are more a money saving thing. I buy whatever format is cheapest. Especially in this economy. I like how most epubs are pricing their ebooks by word count. To me that is smart business.
I won’t pay more than the paperback price for an ebook. I might (only might mind you) pay the same if it’s got some special features) but what I really want is the story.
I understand that producing ebooks in many formats can be expensive – so, publishers – agree on a format already!!! That’s your fault, not mine and I don’t want to/shouldn’t have to/refuse to pay for it.
Other than that, ebooks are cheaper to produce than paperbooks. I love my Sony reader but a real book has more actual value than a digital file. I can:
* sell a real book to a book exchange,
* donate it to a library, or
* display it on a shelf to enhance the decor of my home.
I can’t do those things with an ebook.
That means I want to pay less for the ebook.
If ebooks are cheaper, this means (for me):-
* I will try new authors more frequently
* I will take risks with my buying because it’s not costing me as
much to do so. (I’d be happier to “risk” $5 than $20).
* I am more likely to impulse buy (especially in Australia, given
the limited range and inconvenient locations of bookstores
relative to me).
* I will actually buy more books.
But, I won’t buy an ebook when the paperback is cheaper.
@ Ev:
Aw geee…aw gee. :)) Enjoy!
I cannot fathom paying $300-$400 for a digital book reader PER PERSON IN MY HOUSEHOLD for the “privilege” of then spending more money per book than I would pay for the paper version, and the ebook can’t be loaned out to friends or sold when I finish with it! That’s not value, and no number of rewards points will entice me to buy into that scheme.
Why would I spend $350 on an eReader and then pay more than a paperback price when the costs to manufacture is less?! I won’t be joing this craze until prices come down.
I’m right at this very moment watching the Amazon boss (Jeff Bezos?) talking about the new Kindle on some business news show on PBS (I have no control over the remote), and he said that the major cost of publishing is distribution, which a device like the Kindle would alleviate, which I think logically leads to lower prices for ebooks.
His philosophy: having the lowest price, the biggest selection, and speedy, accurate service.
So if the CEO gets it, why doesn’t the company?
Baen Book’s e-books are $5 for NON-DRM’d sales. Tell me why I would want to pay hardback prices for DRM-locked “book rentals”?
Once you strip the DRM, of course, or get a copy without it, you can loan it to a friend just fine. Just don’t ‘loan’ it to the entire Internet. ;-).
Now i have a Sony ereader I won. And I have eBooks on it that I read. I read print too. All the higher riced eBooks I’ve seen come from NYC publishers. Small press publishers aren’t charing these prices. I write for Phaze Books and my new urban fantasy is $5.00.
I agree—why more than a paperback? The major publishers are out to make a buck, I guess.
And before you put down eBooks, check out small presses, through their websites, fictionwise and in Kindle too. they are not $10 for many good books.
I spent the evening running some numbers. I saved $1.30 on 29 books over the past 6 months by buying “real” books on Amazon vs. Kindle books NOT counting the cost of the Kindle itself!
1) Most of the books I bought weren’t available in Kindle format (17 books, 59%).
2) I got 4 books free through Amazon’s buy 3 get one free thing.
That’s just books I got through Amazon, and I even included a cookbook and another book that I wouldn’t have bought in Kindle format, even if I had one. Also, most of these books are books that I will loan to at least one other person. Like I said, I’m not really seeing the “value” in ebooks.
Whether a physical book or an ebook, the costs shown so far leave out fixed production costs, i.e., editors, copyeditors, art, overhead, sales and marketing, publicity, etc. Plus the royalty on a m/m is at most, 6%—if and when the advance paid the writer is recouped.
Transition from text format to digital is also not a ziggety-bang keystroke. Any more than a digital format original can be reformatted to print in a ziggety-bang keystroke.
But yes, Amazon is artificially and non-profitably supplying Kindle-formatted versions at $9.99, but paying full and higher hardcover wholesale price to the publishers. Amazon wants to be the one and only “content provider,” be it print, POD, self-published, or electronic format. If successful, anyone care to guess how much downloads will cost then?
I, for one, would love to have as many of these small publisher’s links as people could provide.
Someone want to start a list? Please?? Pretty Please?? I am more than happy to spread my money around if you can point me in the right direction!
Ev: stay tuned. I am working on an article about a NON-DRM publisher and will include references to other publishers who do not use DRMs and charge pretty reasonable (imo) prices for their content.
@Sarah
i love mind readers. thanks!!
The $9.99 price point on Amazon by the way is for bestselling books in hard cover. A friend was disappointed yesterday to find out that the new Kim Harrison book—hardcover $25.99/Amazon discount $15.99—was $14 for Kindle. If it reaches best seller status then the price will drop to $9.99. When it goes into paperback (in November 09) the price will drop again.
I’m waiting for the Audible download because I heard Marguerite Gavin
is going to be back on board with this one and I enjoy her reading of the series.
If Amazon has to charge more than 10 bucks for a Kindle book, again, that comes down to stupid publisher decisions. Because Amazon takes a loss on those ebooks, whose list price is often the same as hardback or more (which, OMGWTFBBQ, I don’t even know what they’re smoking, but could I have some?).
How long do they figure they can get away with subsidizing their print run with the freaking insane profit margins they’re demanding for ebooks? All they’re doing is trying to prop up a declining format by handicapping the one they ought to be actively building up.
I was going to describe on this forum the whole cost of an e-book – cost of bandwidth, cost of servers, cost of colocation / datacenter space, cost of technical support for your front end customer downloading the e-book, cost of managing the servers, cost of the web page creation, cost of the clearinghouse to be able to purchase the book online, the cost of the multiple types of e-book formats and their typeset (PDF, mobi, html, cbr…there are at least 10 more), the cost of…
…And my significant other pointed out to me that all that really doesn’t matter at this point. E-books are less than 1% of the market right now. If you have an e-reader like a Kindle, then Amazon and the book publishers know that you have quite a bit of disposable income ($350 is a lot to spend on something that you don’t need), therefore it’s a value added resource to sell you an e-book for just as much or more than the cost of the (paper/trade/hard)back. Therefore, yes, the publisher can make the price anything they want at this point in time. When more e-book readers come out on the market and it goes from a $350 Kindle to a $50 knock off device, then you should see a better price point for e-books.
The las comment can be true for a Kindle, but it’s not realistic. I don’t have a reader and I buy e-books (PDA exist, Smartphone exist). One of the bigger reasons, in my case, to buy e-books is space (my shelves cry). But, perhaps, if it has the same price (or bigger) than paperback, I simply buy paperback and, later, I donate it. And the technical costs you’re talking, well, I think that they don’t justify the price.
You prove my disposable income point, though. PDA’s and Smartphones aren’t cheap. Neither is a Kindle.
I used to think the same way until I started figuring out the numbers. I’d be more than happy to put up numbers in great detail if anyone is interested. 🙂