Before you read the below post, please vote in the following poll. For a brand new book that is also available in hardcover at $25.00, what do you think the e-book should cost? (People who subscribe via e-mail will need to click through to see the poll).
Did you vote? Cool.
(and let me pre-empt my not-interested-in-ebook friends: I know. There’s no option for backlighting grayscale look feel smell DRM you’ll go blind bathtub. Just vote for the option you feel sounds about right)
Now. As I’m writing this post, I have no idea how that poll will go and what consumers think a new e-book should cost, but I can confidently guess it’s less than what publishers think they should cost.
As everyone knows, once the first e-book copy is produced it doesn’t really cost much extra for the next million to be shipped electronically. When they sell e-books, publishers save on printing, binding, warehousing, shipping, returns, etc. etc. etc. Therefore, e-books save publishers money and consumers expect that e-books should be cheaper than paper books (and agents and authors expect that their electronic royalties should be higher than with paper book royalties).
So. How much do publishers save with e-books?
According to HarperStudio publisher Bob Miller, the printing/binding cost of most books is about $2.00. Let’s just say for the purposes of this post that the other incidental costs relating to print books (shipping, warehousing, returns) comes to another couple of dollars, so, let’s say, print costs translate to roughly $4.00 on a $25.00 hardcover. (I’m not a publisher and thus this number should be taken with a grain of salt. Also it varies from book to book).
Thus, assuming the discounts to booksellers and e-booksellers are the same, in order to preserve the same profit margin on an e-book for this $25.00 hardcover, an e-book would need to cost roughly $17.00.
(The math: $25 x 50% discount = $12.50 to publisher, minus $4.00 print costs = $8.50; $17.00 x 50% discount = $8.50. Note that the $8.50 is not profit – that is the chunk out of which they have to cover costs and pay authors. Also see this post and this post for more info on how revenue is broken down between bookseller, publisher, agent and author.)
Where do the other costs of producing an e-book go? Paying the author, marketing and publicity, editorial, sales, production, overhead, accounting, etc. These are fixed costs that exist whether it’s a print book or an e-book.
Now, I understand that lower prices result in more sales, and that publishers might need to recalibrate their pricing model to best utilize electronic sales. Margin per copy isn’t everything if publishers are able to make it up in volume. Also bear in mind that for now, as I explained yesterday, major publishers (with the exception now of Macmillan) are being paid for Kindle e-books on the basis of the hardcover list price, not the price Amazon actually charges.
But what we’re seeing from the Macmillan/Amazon spat is great anxiety on the part of the publishers about a (for now completely theoretical) future in which they receive income based on a $9.99 price point. This was never a business with huge profits. If publishers are ever paid on the basis of a $9.99 price point for their blockbuster books rather than $24.95 the pie will have shrunk by over half. And that is striking fear into the heart of publishers. Publishers want to push up from $9.99 so badly some are willing to accept less money per copy sold just to make that happen.
And yet, underlying all of this nuts and bolts reality for publishers is a cold fact. When it comes to a publishers’ fixed costs and margins and legacy business models: consumers don’t care. They have their own idea about what an e-book “should” cost. An e-book feels like it should cost a lot less than something tangible like a paper book. And in a digital era consumers can ruthlessly enforce the perceived value of a digital product with their dollars and with piracy.
You can plainly see the dilemma the publishers are facing, especially if/when e-books grow to be bigger than print book sales. There’s a gap between their margins and the e-book expectations of consumers. Right now Amazon is filling that gap by taking losses on e-books in order to sell Kindles. But publishers worry that can’t last forever. The pressure is building, and someone is likely going to feel the squeeze, as authors already are.
"Victoria" says
As someone who despises hardcovers (because they're harder to read, harder to carry around, *and* more expensive), this is an interesting question. As a consumer, I don't even take hardcover prices into account. What does it cost in *paperback*? Now, is it worth it to get on a Kindle instead?
I'm with all of the low-priced people. Not only does it incentivize me to buy in digital format (by being cheaper than my only real book-buying option), but it also mirrors iTunes. Think about it: everyone has gotten into the habit of buying a lot of small things digitally without regard to what they're buying.
Sure, it means that consumers aren't as mindful of which books they purchase (or TV episodes, or songs), but — coming from a business perspective — they're buying MORE items that cost less to produce.
Does their total cost outweigh the total revenue when it comes to Kindle sales? That's something that only Macmillan can tell us.
AndrewDugas says
Great post. Perceived ideas of cost etc.
However, you didn't factor in the fact that a printed book can be resold by the reader. That is, when I see the price on a book I'm considering, I factor into my calculation the potential resale value. So if I buy a $25 book, I figure I can get $5 for it later.
I'm all about the e-book, but the dirty little secret (you're only really licensing them and can't legally resell them) feels like a burn.
amber polo says
Isn't this the same argument as an audiobook on CDs or MP3s compared to a download?
Are Apple and Audible stronger than Amazon?
kimberlyloomis says
I blogged a bit about this yesterday and my only thought was publishers should charge more for the paperback. Package that increase in cost as a reminder to the reader/consumer that they are now paying more for binding/paper/warehousing but the intellectual property and efforts of the author is the predominant cost of the work. We need to shift mindsets away from "but I can't hold it so why should I pay $x for this?" and to a "I'm paying for several months of this person's time and efforts as well as their talents".
Just my thoughts. 🙂
Scott says
Publishers = letters
e-books = email
Yeah, they're going to get squeezed, all right. Just like the U.S. Post Office has. And agencies who made money placing space in magazines and producing direct mail. You have to diversity to survive.
Why don't publishers get into printing to reduce their binding costs? Maybe acting like a small press and increasing their online presence will save on marketing costs and allow them to penetrate a wider variety of books. They'd probably crush the small presses, I guess.
Lots to think about, but it's definitely time to run with the wolves. I think about going to an online publisher to buy a book or Amazon; maybe publishers can do a better job of "selling"?
Interesting stuff, Nathan. Thanks.
GhostFolk.com says
This poll is like asking whether the person buying an ice cream cones thniks it should cost $1, $2.50 or $10. Duh.
I think a new Lexus should cost $10,000. Okay, $10,125 with white walls.
Allison says
Has anyone, to your (by "your" I mean Nathan's or anyone reading these comments) knowledge, done a reasonable comparison of the environmental impact of paper vs digital? Assuming that the majority of the reading population eventually has one of these devices, will the absence of paper/printing/shipping be a significant (or measurable) boon for the environment? Or are the benefits offset by the inherent toxicity of digital devices and the energy required to power them? (I realize that this is slightly off-the-mark in terms of the pricing discussion, but it is a concern as we move ever-so-much-more-quickly into this world of e-reading. Thank you, Nathan, for breaking this all down for us. You are an incomparable resource (as so many have said before, but it bears repeating).
Kaitlyne says
I really dislike the idea of ads that has been proposed here, but that comes mostly from reading comic books where every other page is an advertisement. It's incredibly annoying and gets old very fast, and actually makes me less likely to buy something. Heck, I even have ads blocked and disabled online.
Anyway, Nathan, I've got a question. Please correct me if I'm wrong on this, but don't publishers sell many more paperback books than hardcover? I was under the impression hardcover had a much higher return rate and don't sell as well. I know that personally I'm more likely to buy a book when it comes out in paperback instead. I only buy hardcover for authors I tend to really like or books I'm looking forward to and just can't wait. In fact, I'd probably continue to buy those books hardcover even if I had an e-reader because the appeal a book must be special to me to buy it in that format to begin with.
So what I'm wondering is why we can't just treat e-books like paperbacks instead? Or if the concern is that one day real books will no longer be sold and publishers will lose money because all books are sold at paperback prices rather than hardcover ones, why not set a sliding scale? Movies do that. On iTunes it's pretty common to have a new release cost more to rent and buy than one that's been out for a few months, particularly for higher profile titles. I don't see how that would be all that different from the way things are done now. The people who want it immediately would be willing to pay a higher price, and those like me who avoid spending as much would just wait for the lower-priced version to be released at a later date. There could even potentially be incentives, couldn't there? A special note from the author, perhaps, or character sketches, or an excerpt from a later book, that are available for one copy and not another.
I guess I'm just not fully understanding why everything *has* to be based around either having a hardcover pricing system or a $9.99 pricing system with those being the only options. Certainly people are clever enough to come up with other options that would be sustainable. Then again, maybe I just don't know enough about how things work to get it.
Anonymous says
I wouldn't pay much for an e-book because it's not something that's tangible and I'd be afraid, if I had a e-reader especially if it was a kindle, of the books I bought going poof. I don't think I'd trust an e-reader. Or the device could break, and the data get lost. So I wouldn't want to pay much for a book that I might lose access to.
Shelby says
Look friend.. an e-book should cost $0.0.
Why? Because you're not buying it. You're renting it.
Why you ask? Because if you buy an e-book, Amazon or whoever the d'jour of the day is of seller of e-things.. can at their 'whim' delete it off your reader. It doesn't ACTUALLY belong to you.
So, if you're paying for something that doesn't ACTUALLY belong to you, you're paying too much even if it's a penny.
So, one cent less than a penny will do.
That way – when whoever comes in to delete it for — oh I don't know–reasons that Amazon gave this week.. you're not out anything.. except the thing they took from you.
Zip.
That's how much.
D. G. Hudson says
The lower price will appeal to more consumers as they can buy more quantity, as some have expressed in the comments. I would like to see the price on the high end of the lower amount — $9.99, for the author's benefit.
I don't want to see paperbacks start to rise in cost as well, as most are over $10 now (at least in Canada). A lot of us are still buying paperbacks, especially if we don't own the ebook device. I already have to buy hardcovers on sale.
Somewhere along the line, the deficit in profits will result in the consumer paying more, whether it is for the ebooks, paperbacks, or hardcovers.
Let's not forget the author in all this haggling over prices. A writer likes to make a living from his work, as we all do.
GhostFolk.com says
Here's the other thing some savvy media watchers have overlooked that didn't get overlooked here. How long ago was it that Macmillan made its claim to controlling e-rights to most of its current and backlist catalog?
It was predicted by some posters (me), that this was the first step in the major publishers taking a decisive interest in eBooks.
Next step, btw: I'll just cite a Peter Kafka Media Memo from, uh, today:
"Murdoch hinted that his book publishing unit is in line to get a new deal on e-books from Amazon (AMZN), just as Macmillan has demanded (and other publishers will as well).
"On the second point, here’s my on-the-fly transcription and paraphrasing of Murdoch’s comments re: Amazon, Apple and e-book pricing.
Murdoch: "We don’t like the Amazon model of $9.99….we think it really devalues books and hurts all the retailers of hardcover books. We’re not against electronic books, on the contrary, we like them very much,” because they cost us less to distribute, “but we want some room to maneuver.” The Apple deal…”does allow some flexibility and higher prices” though they will still be lower than print. And now Amazon is willing to sit down with us again and renegotiate."
Will amazon.com pull all the Harper/Collins titles is negotiations get tough?
This will work out over time, but at least the big publishers are getting into the fray. Agents know that a couple years ago you could wrestle eRights from a major publisher during contract negotiations for a midlist author. Not no more.
P.S. When you "buy" an eBook through amazon.com it's only a lease for one year. I've read some of my Martha Grimes titles seven or eight times over the past ten or fifteen years. If I paid $4.99 every time I read one… well, it would be cheaper to own the book at full orginal coverprice.
GhostFolk.com says
I do have a question for Kindle readers. How many of the titles you buy (or get for free), do you actually read all of?
I tend to dabble in books and read bits and pieces when I get them cheap. When I pay full (okay 30% discount) cover price for a hardcover, I usually have made up my mind to actually read the whole thing.
Is there a tendancy to not actually read all the $1.99 or $2.99 books you buy on Kindle?
It's just a guess. I could be wrong. Often am. 🙂
Anonymous says
"Look friend.. an e-book should cost $0.0.
"Why? Because you're not buying it. You're renting it."
Wow. Are you a writer? And if you are, don't you believe that if you get published your books will in fact become e-books? Or, do you know that most publishers are now taking back-listed books and re-releasing them in digital format?
Lynn says
What should an e-book cost? $25.00, if you're asking writer-Lynn. $10 if I'm the consumer. Oh, what a wicked web we weave.
Marilyn Peake says
amber polo @3:43 PM –
Amazon now owns Audible.com, after purchasing it for $300 million back in 2008. Also, a few minutes ago, I did some research on the relationship between Audible and iTunes. (An audio book for one of my novels used to sell on iTunes, but is now selling on Audible.com, but I was never really clear about the relationship between the two companies.) Apparently, Audible distributes audio books through Apple's iTunes Store, and at some point became Apple's exclusive supplier of spoken-word content. According to an article on PCWorld, Apple modified the software in its iPods to allow "bookmarking" of Audible audio files. As the digital age progresses, I sometimes find it very difficult to keep up with exactly who’s distributing what. 🙂
Nathan Bransford says
ghostfolk-
Not true about the one year license. You get it permanently.
shelby-
If you're worried about your e-book disappearing all you have to do is put it on your computer. They can't delete it from there. How does a file on your computer not actually belong to you?
M. M. Justus says
I don't believe the poll is asking the right question. I'm not sure what the right question is, but paper books come at all sorts of prices. Why not ebooks?
Marilyn Peake says
GhostFolk.com –
Holy camoly. I didn’t know that Rupert Murdoch had entered the fray. Well, of course, that changes everything. Found an interesting article: Next threat to Amazon’s $9.99 books? Rupert Murdoch. Sounds like, for anyone who wants to buy lots of eBooks published by the publishing houses owned by Murdoch for $9.99 and lower, right now would be the time to buy them.
Anonymous says
I've thought about this at greater length than I can summarize in here, but I wonder why I haven't heard more discussion about moving e-reading to more of an on-demand service model than a product model. i.e. a person isn't buying a permanent copy of a book, they are paying to access the digital file for a period of time on a per-use basis (so they pay, say $4 to read it this month, then another $4 to reread it six months from now). Alternately, the reader could pay the provider, like Amazon, a fixed-month fee for unlimited access to as many books as they want, etc., like Microsoft does with Zune Marketplace.
In either scenario the provider could either pay the publisher/author a higher amount up front or a lesser cut from each time the file is accessed.
I think all media distribution is also moving into a sort of split but blended model – Professional, where there is quality control and upfront cost/payment borne by an investor (like a publisher) and all revenues are split between creator and investor, and amateur, where all upfront costs are borne by the creator and they post their creation on Hulu/iTunes/Amazon/whatever and take their total portion of a smaller pool of revenue.
Wow, I hope that made some semblance of sense…
Marilyn Peake says
Nathan @4:53 PM –
I also discovered a couple of years ago that, after purchasing eBooks published by small publishing houses or offered by eBookstore sites, it’s a really good idea to download them into your computer, since so many small companies go out of business…and then it’s too late to download the eBooks.
Tambra says
Hi,
I'm published in ebook and print.
When someone buys one of my books and then sends the file to their friends, I lose sales.
I hope that at least one or two of those readers would love my work enough to legally purchase my other titles.
As any author out there, I need all the sales I can get. It's damn hard trying market yourself and gain a readership, so that when the sharing occurs I'll enough of a fan base the losses won't be so hard.
Having said that, I have gone to a secondhand store if there is an author I want to try. Over 90% I will purchase new if I like the author and recommend it to friends.
I'm on disability so my income is limited. Since I write in more than one genre, my goal is to actually make a living off my writing.
Great discussion here as usual.
Best,
Tambra Kendall
GhostFolk.com says
>> ghostfolk- Not true about the one year license. You get it permanently.>>
I knew I was wrong abotut something! Sorry if I added to the confusion. 🙁
AndrewDugas says
@Tambra Kendall You think you lose a sale when someone sends an e-book file to a friend. What about when someone lends a print copy to a friend? Or someone buys a used copy from a used book store or garage sale? Aren't those also lost sales?
Naya says
ppAnother thing they should keep in mind when setting prices for ebooks is that there are a lot of people who are not willing to spend money on a book if they are unfamiliar with the author. They're just as likely to go and download a pirate copy before buying.
I know many people who like to get the ebook cheaply before investing in a printed copy (and when I say cheap I mean between $3 and $5). So if they offer the ebook at a low price, they will not only increase their sales because more people would be willing to buy (which I feel will also reduce occurrences of pirating by people who simply just don't have the money to spend on expensive books), but they also increase their chance for double sales with people who want to check the book out before investing in a printed copy.
GhostFolk.com says
Andrew, or someone buys a used copy from a dealer listed on amazon.com's title page for your book. After they're out a while, novels in hardcover tend to run $1 plus shipping from some very reputable used-book dealers who list 1,000s of titles on amazon.com
In reality, people who buy new books and people who buy used books tend to be spearate markets.
Oh heck, at least the were. Who knows now. 🙂
GhostFolk.com says
Marilyn Peake, I am enjoying your comments and links today. Thanks.
Audible.com connections have me baffled, for sure.
I think the thing Murdoch is correct about is that the trending in low-price ebooks is destorying brick&mortars bookstores (WalMart didn't just move nextdoor to the local Western Auto, they — amazon.com –moved into the reader's house).
I think writers will get by for a few more (several!) years, but brick&mortar bookstores? It's scary sad.
And Nathan, excellent point about the return system allowing bookstores to stock new and midlist authors. Sadly (for bookstores), amazon.com can do the same thing on-line without the cost of returns.
AndrewDugas says
@Ghostfolk.com
It's long been a contention of mine that e-books eat into the used book market because there is no such thing as a used "e-book" and therefore e-books sales will get a boost because people will be forced to buy new instead of used. And at $9.99 or other reasonable price point, there's little reason not to.
In other words, losses due to e-piracy will be more than compensated by the gradual elimination of the "old piracy" namely used book sales and friends lending to friends.
JD Salinger died last week and his obit noted that "Catcher" still sells tens of thousands of copies a year. Like, wow. But when you consider how many high schools and colleges have that book on their curricula, tens of thousands suddenly seems low.
Why? Because of all those copies with those little yellow "used" stickers on them.
If everyone were forced to buy new, how many copies of "Catcher" would have been sold?
Dale says
I put $10 to $14+ in the poll, but I think the answer is a bit more complex than that. At the moment, e-book sales are low enough that the hardback model sort of applies. If they take off, I could see them becoming more of a mass market and having economics more like paperbacks but without the printing/returns/distribution costs.
Ultimately e-books will evolve from being "dumpware"–just books in another medium to their own medium, taking advantage of the electronic nature of more advanced e-readers to do things like customizing the reading experience. I could see a reader being able to choose how in-depth descriptions are through clicking or not clicking hyperlinks.
In science fiction, the e-book version could include world-building material that isn't necessary for the story but is kind of cool but putting it in hyperlinks rather than eliminating it entirely or trying to stuff it in. For example, Steve Stirling's Conquistadore has a wonderful thirty to forty page travelogue on his alternate California. It's a lot of fun, but the book stops for those thirty to forty pages. That would be a perfect place for a hyperlink. Explore it if you want to. Ignore it if you don't. I could even see e-books with Easter eggs, author commentary, etc–in other words borrowing from the DVD model. In that case, you might see e-books being priced higher than hardbacks.
Linda Adams says
I was reading a book on marketing, and it commented that price objectors are often actually complaining about balance. Charging a hardcover price for an eBook gives the impression of being way out of balance for what we're getting. If I buy a hard cover, I'm getting a physical book with a high quality cover and good quality paper. An eBook is a computer file. Technically, they are both the same thing–a book to be read–but it's hard looking at an eBook that costs $15 and it's a computer file that I could probably make if I had the software.
One of the things that doesn't get mentioned in the conversation about books is that buying them is a risk to the reader. He may spend $30 for a novel from a best selling author, and this time the book doesn't work. I finally stopped buying hardbacks altogether because the risk was too high that I would waste my money. Instead, I check them out from the library (usually after being 60-200 in the hold line). If the book was also available in eBook format at a reasonable price for me to take a risk–$5–than I actually might buy the book.
Laurel Amberdine says
Personally, my confusion over the print vs. ebook pricing issue stems from what I was told by editors and publishers in the past.
In, IIRC, the late 90s prices of books and magazines both spiked. When questioned, the explanation was that the paper was so expensive, and the shipping, and then the returns! It was simply impossible to lower the sale price (or pay writers any more.)
Maybe that was true then? I don't know, but the story has certainly changed. Now (apparently) the costs of printing, shipping, and taking returns are actually negligible, and it's the per-unit gross that matters.
GhostFolk.com says
>>It's long been a contention of mine that e-books eat into the used book market because there is no such thing as a used "e-book" and therefore e-books sales will get a boost because people will be forced to buy new instead of used. And at $9.99 or other reasonable price point, there's little reason not to.>>
I'll go with that, Andrew Dugas.
As a writer, I would rather an eBook sale for $4.99 and I get some small bit of it, than have the book sold used with no royalty.
BTW, most authors today will give away their first book to promote their name (brand) and eventual second, third, fourth books. Writing in an effort to make a living is a long-term thing for everyone but the big splash book.
Mira says
Wow – this is quite a debate, and to be honest, I really only understood about half of it.
But that never, ever stops me from putting in my two cents. 🙂
First, I don't think Amazon is keeping e-book prices low in order to sell Kindles. I think their motivation is much more devious and long-range than that.
Second, I would not go higher on an e-book than a paperback. I spend about 6.99 on a paperback, that's about as high as I'll go on an e-book.
However, if books were even cheaper, I would buy ALOT more of them. I mean ALOT.
Especially if they were instantly accessible by download.
Finally, I don't care if the price is low, if my royalty rate is higher. I can make more – right now – on an e-book than a hardcover because of the royalty rate.
Anonymous says
There are plenty of free and cheap books available out there. MacMillan et al competes with these choices.
A few great indies I've recently discovered include Tiger's Curse and Tiger's Quest (Colleen Houck), A Scattered Life (Karen McQuestion – recently optioned for film), Faking it (Elisa Lorello – ranked #16 on Amazon Kindle Store), Ordinary World (Lorello), and When Angels Cry (Hooley).
These books sell for 99 cents on Kindle Store. Look them up — check the reviews on these books. They are fabulous reads at bargain prices. Houck is the next Stephanie Meyers.
The point is that many good writers are choosing to publish straight to Kindle, and they are pricing their works low to build an audience. At the rate they're producing I'll never have to pay 9.99 for a book again.
orthor says
The McMillan move is a good one and I believe heralds a change in how this industry is going to manage digital books.
Look at it this way, Publishers control the product, Amazon are saying they control the consumer (yes that is what they are saying); so why shouldn't Publishers go to say… Facebook, make a deal and then tell leave Amazon up a large river without a paddle. Just a thought.
Natasha Fondren says
I understand that this post compares hardcovers to ebooks. Isn't that a little unfair? At the least, I would compare an ebook to a paperback.
What confuses me, is people around the internet keep saying that it's impossible for publishers to make a profit on ebooks priced at $9.99.
Okay, if that's true, how do publishers make a profit on paperbacks priced at $4.99-7.99?
Mark says
My vote was lower than the poll leader at $9.99 to 14.99. Fair enough. If Amazon thinks that Kindle will compete with the iPad they're in a for a jolt. Publishers can't give the first editions away as ebooks, and this is the contention. I'm not one to announce the slaying of the printed book yet. Premium content has to have worthy and competitive price as with audiobooks. Readers will pay more for early releases.
Readers do care who the publisher is. All of those unfiltered ebooks from digital only instant houses that don't have the option of a print run, unless it's a POD, will continue to be worth less than the big name publications regardless of delivery system. That's the key. You can't have the art cheaper when it first comes out. This isn't peddling backlist or out of print stuff. It's the real deal.
Tambra says
Andrew,
I have print titles out, too. So yes, you're right.
Tambra
Madara says
This is a tough one. There are so many variables an unknowns to this debate.
I agree with many ebooks should cost less based on the Nathan's observations and the fact you are buying a product that cannot be shared or given away when finished like traditional books. There is also the theory that folks with eReaders actually buy more books because it's quicker and easier.
My main concern is for the author who seems to have the most to lose. Publishers may be able to recoup much of their costs by being able to publish more more ebooks with less financial risk that publishing traditional books.
We must avoid the mistakes of the music and newspaper industries as we venture into this new forum.
Ishta Mercurio says
Nathan, you are the awesomest of the awesome, and your response to Anon @3:24 made me smile. Is this discussion getting to you a teensy bit?
This whole discussion has been very interesting for me. When Bradley Robb and other posters talk about lower price points leading to the sale of exponentially more copies, they fail to take into consideration that there are not, nor will there ever be, an infinite number of eReaders out there. The eReading public is a finite market within the general reading public.
This discussion has revolved around comparing print prices to eprices, but what I haven't seen anyone mention is that the people who buy eBooks and the people who buy printed matter are two completely different markets. I will never buy an eReader. Nev-er. There are others like me. My husband can't wait for all books to come out in digital format; he's with the eReader camp. We see books differently: I see them as content, yes, but also as a physical entity that I can hold, smell, pass around and then get back, look at on my shelf, etc. For him, it's just information. So, to compare the prices of eBooks to the prices of hardcovers and paperbacks isn't a fair comparison, because the people who buy books in these different formats are literally buying different products.
Yes, publishers have to consider what the market will bear. But there is also the reality of what it costs to produce a thing, and charging less than that will put publishers out of business. I don't think our society is so far into the consumerist, buy-it-now-because-I-want-it-now mentality that we can't learn how to buy fewer higher quality goods for a fair price.
And I disagree with Bradley Robb's (and others; I don't mean to pick on you, Bradley, but your post is near the top) idea that eBooks should be priced in "impulse buy" territory. Nothing – not eReaders, not flashy marketing, not anything – should ever be designed to make consumers buy something that they soon realize they didn't even want or need. This diminishes the value of my work as a creator, diminishes the work of the distributors and investors, and diminishes the value of the product itself, be it a book or a painting or a sweater. Additionally, it leaves a bad taste in the mouth of the consumer, and makes them hesitant to buy another of my products (in this case, I hope one day, books) or another of my investor's (in this case, the publisher's) products again. No. No, no, no.
Moses says
My favorite part:
"(and let me pre-empt my not-interested-in-ebook friends: I know. There's no option for backlighting grayscale look feel smell DRM you'll go blind bathtub. Just vote for the option you feel sounds about right)"
Hahaha!
JTShea says
Nathan, in your necessarily brief analysis you do not directly mention windowing. So please excuse me if I point out the obvious and echo earlier commenters. I voted for $10 to $15 for an E-book issued at the same time as the hardcover. I cannot see the general price of an E-book exceeding that of a mass market paperback. But mass market paperbacks are usually not the first incarnation of a book. New products are often more expansive then older ones, and their prices gradually decline. Books are unlike, say, DVDs in that their physical format changes through windowing, from hardcover to trade paperback and maybe to mass market paperback. The extra cost of a hardcover is more related to its earlier release date than to the cost of the hardcovers and dust jacket. Some commentators elsewhere have even, rather awkwardly, referred to 'Hardcover E-books'!
Nareshe says
As an avid ebook reader who buys books from people not Amazon (my favorite retailer is Fictionwise), I tend to find that most of my purchases fall in the $8-12 range. Much more than $12 and I put it on my wishlist, much as I will stick a book that's just come out in hardcover on my Amazon wish list and come back in six months to see if it's come out in paperback yet.
I only buy certian very special books in paper these days, and a book has to be *very* special for me to buy it in hardback. (I bought exactly two books in hardback last year: one a reference volume, and one a book by a friend of a friend.) I just don't have the bookshelf space I once had, and my Sony Reader fits perfectly into my purse, where my paper books often do not.
If I recall correctly, didn't we have a couple of the big book distributors collapse in the last few years? I would think that the publishing companies would be *very* eager to establish the market for ebooks in order to protect themselves from the failure of more of their distribution channels. Part of establishing that market is positioning prices in line with the perceived value of the books–not too high, not too low.
With paper books, consumers often play a game of pricing chicken. On Day 1 after release of a hardcover, the price might be too high unless you know for sure that you are going to love the book based on prior experience with the author. If you can wait for a bit, the book will eventually come out in a less expensive format. And if you wait a bit longer, it'll be available used for even less. (Or if you're me and you've just been unemployed for several months, you put it on your hold list at your fabulous local library and a few weeks later it's in your hands for free.)
The thing about ebooks is that consumers assume that what they see is what they get. Ebooks, as far as we know, are *never* going to get any cheaper. (Macmillan claims they are going to a graduated pricing model…but will they really?) It's going to take some time for everyone, consumers included, to figure this whole thing out.
Cam Snow says
Nathan,
I think the final price of the eBook should be between $5-9/book…
BUT
This is with a caveat. I think they should have a timeline. During the first 6 months when the eBook is selling alongside the hardcover, it should be priced so that the profit margin is the same as a hardcover (maybe $15?)
Then when the trade paperback comes out, you drop the price (maybe $9.99), and then when mass market paperback comes out, you drop the price again (maybe $3.99)
Why would I pay $9.99 for an eBook when I can buy the physical paperback for $7.99?
eBooks can be instantly re-priced, and booksellers and publishers should take advantage of it.
Then when the book goes out of print, the author can keep it alive and drop the price to $1.99 if he wants to try and milk it for a bit more – and all that extra money would be gravy.
publishers just need to make sure that eBooks don't cannibalize sales, and there are a number of options to ensure that doesn't happen.
Cam Snow says
one more thought, and this is a HUGE idea.
Publishers should give in on the $9.99 price that Amazon wants…
but they should only do so with the requirement that there are NO MORE RETURNS from the stores that offer that pricepoint.
So, small booksellers could do returns, but your Amazon, B&N, Borders, etc – anyone offering eBooks, could not.
Booya! Crisis solved!
beth says
Here's what I think.
1) An ebook should cost $10 less than a hardcover
…until the paper back release. Then:
2) The ebook should cost between $1-$3 less than the paperback.
Ideally? You could get a free ebook version of a book when you buy the hardcover, or pay a few dollar less than the paperback for the ebook.
I really really really think that's a good plan, but…
Katya says
I can resell a regular book.
I can lend a regular book to all my friends and relatives.
My regular book will work on any bookshelf I own.
5 years from now I will still be able to pick up my regular book from my shelf and read it.
Until e-books can promise me the same flexibility and longevity they should be considerably cheaper.
Peter Dudley says
Paying the author, marketing and publicity, editorial, sales, production, overhead, accounting, etc. These are fixed costs that exist whether it's a print book or an e-book.
Not sure I entirely buy into that. I'm fuzzy on the nuances of this business, but in general I understand these functions.
Paying the author: that one I can support.
Sales: In a culture driven by user ratings and brand strength, sales becomes marginalized.
Production: OK, ebooks require some design work, particularly when we incorporate mixed media. But with sophisticated templates there will be little need for layout and design, no need at all for production planners and press checks, logistics and shipping, or warehousing. While the printing/binding cost of the book may be $2, the cost of "production" is, I would bet, much higher than your $4 estimate.
Overhead: A ha! Here's a squishy area. What about all the administrative people that are in the production planning, returns processing, sales support, etc. jobs? I guarantee they're not part of the $2/$4 noted above. And as a retailer or author, I'd want to know exactly what constitutes "overhead." And for ebooks, is it really that critical to locate the publishing office in thesecond most expensive office space market in the country?
Accounting: While the cost of accounting does go down with the complexity of production and overhead, this one is pretty fixed.
Editorial: Probably the only actual value added to the product by publishers. As an author, though, I've had it drilled into me that the editors won't even consider a book unless it's so polished that it shines brighter than the sun. Does a book REALLY sell better because of the editorial process? Or is the editorial process only one factor among many? A nice rhetorical position for publishers to be in because no one will ever know.
Marketing and publicity: Publishers think their value is in design, editorial, and production. But really their value is in marketing, sales, and brand strength. Sales, I argue, becomes moot. Brand strength–uh oh. Publishers don't have consumer brands; they have wholesale brands known by the distributors and retailers. Retailers have the consumer brands. Marketing and publicity–for the past several years publishers have been pushing the responsibility of publicity onto the author. In fact, the authors themselves have become the main consumer brands; check out airport bookstore shelves. Whose name is printed biggest? Not the publisher.
Fast forward a few years: Authors can easily drop their work into templates and get a reasonable quality product into e-distribution for next to nothing. But so can every Jose and Jannike from here to Minsk. So consumers rely on trusted brands to put what they want in front of them: word of mouth and consumer ratings; their favorite celebrities and media–Oprah, NYT, FOX, Amazon; non-traditional outlets (Starbucks).
Publishers think that they find, make, and sell books. That e-books are just a new format and the right pricing model will solve everything. They're wrong. They are in the business of filtering art so only the most worthy product reaches the masses. The internet has already changed everything. Every consumer worth selling to is now in direct economic contact with every author, and both payment and product are electronic.
Consumers have more choice, but they also have more crap to sift through. Authors have direct access to markets, but it may be harder to rise above the noise than it was to rise above the slush pile. Bookmakers will go out of business. Content filterers, publicists, and consumer brand outlets are positioned to become the new distribution model. But instead of distributing products to consumers, they're distributing consumers to creators. The balance of power stays with the middleman; it's just a redefinition of the middleman's job.
Anonymous says
eBook pricing should be mutually exclusive of hardcover and paperback pricing. The products are very different.
An eBook should all ways cost less than a paperback book. The eBook is crippled with DRM, cannot be resold, and cannot be shared with others.
The resale aspect is huge. If I buy a discounted hardcover book for $13, and I can later resell the book for $5, then I'm out of pocket only $8. And this is for a hardcover book. I would expect to get less back for paperback.
I think publishers are really trying to maintain a dying business model. These publishers have excessive overhead due to: being located in New York City, owning or leasing warehouse facilities for books, and having high payrolls due to location. I don't see how these overheads can be maintained into the future. And as a customer of eBooks, I don't think I should have to pay for the upkeep of an outdated business model.
If you take into consideration resale, DRM, and the inability to lend, then the price of an eBook should be around $2-3 dollars. If you remove DRM, then the price could fall around $5. Publishers need to figure out how to reduce prices or be faced with piracy and market forces. The future is going to get nasty really fast.
All because publishers want to raise prices doesn't mean consumers will pay for them. I think, the skew toward higher prices here is due to the audience being authors who have their fingers crossed as to their previously negotiated contracts.
Now here's a big question:
* can authors re-negotiate their contracts post this pricing war mess? Or do they just get screwed when demand drops due to a 30-50% price hike?
Anonymous says
You should've used a continuous variable. You lose information categorizing.