More Thoughts on E-Book Costs

Just how are e-book costs
arrived at?

I guess I'm the eternal idealist because I feel the content (quality of, likability, timeliness, entertainment value, etc.) should drive the cost of books, in whatever format, and not just the manufacturing and distribution costs (or lack of) --- which so many are using to justify why e-books should be cheaper than their  printed counterparts.

I have previously written many times about e-book costs on both this blog and the Publishing/Writing: Insights, News, Intrigue Blog (just refer to the labels on these sites).

Tonight we're presenting some old and new thoughts on this subject:

'E-books don't involve costs like paper, labor, and shipping, so why do they often cost more than their paperback counterparts?'

Some TP's say “The elimination of manufacturing and distribution costs are being offset by retail price reductions and the additional costs I have outlined. The good news is that we are making about the same margins, regardless of whether we sell the book in physical form or digital.”

'E-books cost as much to produce as hardcopy? Hogwash.'

'Anyone who produces anything digital that was formerly physical knows digital is cheaper. A website is cheaper than a newspaper. A digital version of a video costs less to deliver than a tape. An e-book costs less than a physical book. Anyone suggesting otherwise, like this publishing executive, probably has a dog in the fight.'

See these thoughts and others come together in this piece by Stacy Johnson in the Christian Science Monitor:

Why do e-books cost so much?

E-books don't involve costs like paper, labor, and shipping, so why do they often cost more than their paperback counterparts? Here's the answer, and why e-book prices may be falling in the future.

Here’s a question I got on our Facebook page. Maybe you’ve wondered about it too.

Why do your Kindle books cost more than a paperback copy? The Kindle version of Life or Debt on Amazon costs $9.73, but they’re selling the paperback for as little as $6.00. Since e-books should cost much less to produce, why do they cost more to buy? This seems unfair, especially when you’re writing about how to save money to pay off debt.
- Ted
I got a very similar question a little more than a year ago, published in a post called "Why Are E-Books So Expensive?" I’m going to answer it again, however, because since then things have happened that shed more light on this subject.

As I said in my earlier post, I have no control over the price of my books. When you work with a traditional publisher (mine is Simon & Schuster), you have no input – they set the price.

Whoever establishes the price, however, you’ve still got to wonder…

Why are e-books so expensive?

The first time I attempted to answer this question, I quoted an article called "Why Do eBooks Cost So Much? (A Publisher’s Perspective)" by Michael Hyatt, CEO of Thomas Nelson Publishers. Here’s how he justified the high cost of e-books…

Read and learn more

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Amazon Wrangles Publishers as iBookstore Grand Opening Looms

With both Apple and Amazon pressuring publishers for deals on content for their digital devices, what will happen to consumer prices for digital books, magazines, games, etc?...Gee shitski, don't you just LOVE the intrigue? Whatever does happen, this writer can't help but think it will be be good for all concerned!

Kindle looks over after taking a deep drag on his cig, stares deeply into iPaddy's eyes and whispers "Was it good for you, too, you Digital Tiger,you?"

Katherine Noyes of MacNewsWorld writes on this intensifying subject:

Apple's newest charmed pair, the iPad and the iBookstore, will amble onto the publishing scene in just a couple of weeks, and Amazon is justifiably fearful. Its popular Kindle may quickly become a has-been, and it could lose hard-won ground in the e-book marketplace. What's a giant to do? Twist a few arms. If publishers bow to Amazon's latest terms, will e-book prices rise or fall?

With an unwavering focus on Apple's (Nasdaq: AAPL) forthcoming iBookstore, Amazon (Nasdaq: AMZN) has begun pressuring e-book publishers to sign three-year contracts that ensure no competing retailers will get better prices or treatment.

That's according to a recent report in The New York Times, which cites two industry executives with direct knowledge of the discussions.

The new tactics come hard on the heels of Amazon's conflict with Macmillan earlier this year over the publisher's switch to an agency model, whereby retailers such as Amazon act as agents of the publisher and earn a 30 percent commission on publisher-set prices. Those prices, Amazon asserted, were "needlessly high."

Amazon's stock tumbled following that well-publicized conflict, in which the e-tailer even stopped selling Macmillan books temporarily in protest.

The titles were soon restored to Amazon's virtual shelves, but the latest round of pressure tactics raises the question of how far the company would be willing to go to compete with Apple's iBookstore, which will launch in the United States with its iPad device on April 3.

Five of the 'Big Six' for Apple

Apple, in fact, has been applying similar pressure to publishers participating in its iBookstore, The New York Times reported, including five of the "big six": Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.

Only Random House has not yet signed on, The Times said.

Such publishers will use the agency model for iBookstore sales , allowing them to set prices as long as they pay Apple 30 percent. Typical prices under that model are $12.99 to $14.99 for most newly released titles.

Apple does stipulate, however, that publishers must not allow other retailers to sell their e-books for less than their iBookstore prices, according to The Times.

Whereas Amazon ultimately agreed to let Macmillan set its own prices, it has typically tried to keep its titles at $9.99.

"My sense is that consumers have been very happy with the pricing model Amazon has established," Kurt Scherf, vice president and principal analyst with Parks Associates, told MacNewsWorld.

"It's very easy to compare an Amazon digital title with hardback or paperback, and I think that's part of the reason why Amazon has had the success it has had," he added.

'Publishers Will Have More Power'

Amazon's business and reputation both suffered as a result of its conflict with Macmillan, Susan Kevorkian, program director for IDC's mobile media and entertainment service, told MacNewsWorld.

So, if it chooses to limit access to the works of publishers who won't sign its contracts, it will be hurt even more, she predicted.

"As the e-reader market grows, publishers will have more power in the marketplace because they control copyrighted work and can dictate payment terms for it, and because more retailers -- and options for consumers to buy digital books -- will emerge to challenge Amazon and Apple," Kevorkian explained.

Amazon is "still in the content business," she noted, so it "needs to offer as wide and deep a selection of content as it can in terms of physical and digital books -- the latter to keep Kindle competitive."

Going forward, retail price competition in digital books is "more likely to be at the expense of retailers' margins than publishers' revenue and profits," Kevorkian concluded. "The takeaway here is that publishers will set digital book prices, and retailers will need to follow suit with their pricing, rather than dictating retail prices to consumers."

Amazon on Thursday also launched its new Kindle for Mac, a free application for reading Kindle books on Macintosh computers.

Neither Amazon nor Apple responded by press time to MacNewsWorld's requests for comment.

Self-Publishing Question: Print or eBook?

Eldon Sarte, creator of Wordpreneur, has hit upon a subject I have discussed in past posts: self-publishing...but from a little different perspective that made the old lightbulb turn on in my overworked brain (what I have left of it).

His article on using self-published eBooks to test the market first before doing a possible print version is short but thought-provoking:

After observing the consumer ebook market with the seeming success of the Amazon Kindle and the upcoming Barnes & Noble Nook, I think this brings up an interesting question for self-publishers. Namely…

Instead of first doing a “print” edition and then releasing an ebook version as an afterthought (the usual M.O.), why not do a Kindle/Nook edition first, test market the book on the dirt cheap, and then decide whether a print edition is worth the time and expense?

For many scenarios, this seems to make oodles of sense. The market certainly seems ready for this kind of approach, for most niches I care about anyway.

Hmmmm...