N.Y. Times Article: Steal This Book (for $9.99)

[pdurrant]

Not so. You can buy the whole album at the iTunes store for $9.99 - 22 tracks and a 'digital booklet', whatever that is. That's the same price as the discounted album at Amazon.

The digital form is still more expensive than it should be. The music labels twisted Apple's arm over price because Apple wanted the tracks DRM free. Really the digital prices should be less than the physical form, for the same reason ebooks should be less than the physical form - you can't resell iTunes music or ebooks.

Originally Posted by Sonist

Not true. Most albums are actually a better deal in physical form, than in electronic. For instance, take a look at Eminem's Relapse. The CD has 20 songs, in uncompressed format, without DRM, plus art and packaging. I costs $9.99.

To purchase the same number of tracks in digital format from iTunes, in compressed, lower quality format, at $0.99, would cost you about double.

[kamm]

Originally Posted by HarryT

With mainstream publishers, it's the hardback print run that's priced to repay the production costs. The subsequent paperback release is basically pure profit. That's why the hardback is so much more expensive - it doesn't actually cost that much more to print than the paperback does.

The problem is that this writer assumes that us, readers have to cough up instead of lowering his or, more importantly the publisher's chunk of it.

No paper cost means much lower publisher cost equals lower book price, period.

This is how it must work otherwise they will slowly kill their own market, just super-greedy clueless parasites of the big studios did it with music and doing it with movies.

[sirbruce]

His point wasn't that the costs of publishing ebooks weren't lower; his point was that it didn't make up the $3 difference between what Amazon was paying the publisher now and what they'll have to start paying the publisher in order for Amazon to turn a profit. Furthermore, if ebooks are reduced to the same margins as paperbacks, at pbook prices, then publishers will suffer lower profits if hardback readers switch to ebooks.

[kamm]

Originally Posted by pdurrant

Not so. You can buy the whole album at the iTunes store for $9.99 - 22 tracks and a 'digital booklet', whatever that is. That's the same price as the discounted album at Amazon.

The digital form is still more expensive than it should be. The music labels twisted Apple's arm over price because Apple wanted the tracks DRM free. Really the digital prices should be less than the physical form, for the same reason ebooks should be less than the physical form - you can't resell iTunes music or ebooks.

1. I agree, it's more expensive than it should be. GREED, nothing else.

2. AFAIK Apple didn't want &^%$ DRM-free 0- it was forced by AoMP3/Alltunes/etc and various bigger ones (Amazon, emusic etc).

[Sonist]

Originally Posted by pdurrant

Not so. You can buy the whole album at the iTunes store for $9.99 - 22 tracks and a 'digital booklet', whatever that is. That's the same price as the discounted album at Amazon.

The digital form is still more expensive than it should be. The music labels twisted Apple's arm over price because Apple wanted the tracks DRM free. Really the digital prices should be less than the physical form, for the same reason ebooks should be less than the physical form - you can't resell iTunes music or ebooks.

I think we agree on much.

BTW, I didn't see Relapse available as an album purchase on iTunes, but assume you are right - this is the way most albums are marketed there.

But my point is, you are getting lower quality, and no physical media, for the same price as a CD.

At the same time, the publisher/seller is saving the cost of printing, packaging, packing, storing, shipping, sales help, etc.. It seems that at least some of the saving would be passed to the consumer, in a free market. And not just because the end user can't resell the product.

Instead, if it wasn't for piracy and Apple, the prices for digital content would have been higher.

The same applies to e-books vs. paper books.

[Sonist]

Originally Posted by kamm

... 2. AFAIK Apple didn't want &^%$ DRM-free 0- it was forced by AoMP3/Alltunes/etc and various bigger ones (Amazon, emusic etc).

You should lighten up on Apple a bit in this case. Jobs has been long rumored to be in opposition of DRM. See this statement by EMI's CEO, Eric Nicoli during the Apple/EMI press-conference:

"...
Q: It’s a pretty radical step, Eric. How did you reach the decision to do it? Was it Steve Jobs’ letter that convinced you? Was it the internal surveys you’ve done? What was the moment in which you said, “Damn it, we’re gonna go DRM-free?” And will the extra sales be enough to compensate for the declining physical sales?
A: We’ve always known Steve’s view on the subject, long before his open letter...."

The iPod's market share did not depend all that much on FairPlay, but on good design, great UI, and great overall integration. It was a much better, cooler product for most, than any of the competition.

Everyone knows how to remove FairPlay in two clicks, and Amazon and others were/are often a little cheaper, than iTunes. But the overall user-experience of the Apple products, is what made iTunes/iPod/iPhone successful.

[Ceili]

I came to my reader from paperback books. I'm not a fan of hard cover and rarely found a book that I couldn't wait for to come out in pb. With that in mind, 10 bucks for a book is more than I'm willing to pay most of the time. Are there books that I just can't wait for? Maybe... but so far, I think the most I've paid on Amazon has been about $7 and change.

For now at least, I see no reason to pay 10 dollars for a book that I can probably find in paperback in Walmarts for about 5-7... and I have no problem with buying that paperback and passing it on to a friend or trading it at work. Would I rather have it on the reader? Sure, but not at nearly twice the price.

[pdurrant]

Well, we're a bit off topic here, but no, that's not it at all.

Apple persuaded music labels over 2002 and 2003 to sell music through the iTunes Music Store in 2003. There were no legal on-line music stores (that sold tracks, rather than streaming services) before that. Apple were forced to apply DRM by the music studios, even though Apple (& Jobs) knew that DRM wouldn't work. See this interview from December 2003.

http://www.rollingstone.com/news/sto...ne_interview/2

"When we first went to talk to these record companies — you know, it was a while ago. It took us 18 months. And at first we said: None of this technology that you're talking about's gonna work. We have Ph.D.'s here, that know the stuff cold, and we don't believe it's possible to protect digital content."

It was only when the Apple Music Store became dominant that the music labels tried to reduce its dominance by allowing other stores to sell DRM-free music.

Even this year, when Apple finally got the labels to allow them to sell DRM free music, they were forced to agree to differential pricing in order to be allowed DRM free tracks. That wouldn't have happened if Apple were the ones reluctant to have DRM free music. Apple have always liked the simplicity of a fixed price per track.

Originally Posted by kamm

2. AFAIK Apple didn't want &^%$ DRM-free 0- it was forced by AoMP3/Alltunes/etc and various bigger ones (Amazon, emusic etc).

[wgrimm]

Originally Posted by Ralph Sir Edward

Quite correct. What the large publishers fail to realize is that they could "cut out the middleman" themselves if they choose to. But that requires a total marketing shift, with the possibility of a revenue drop in the changeover, which is unacceptable to them. To do it, they'd have to direct market themselves, through their p-books and other internet avenues. It could be done for the cost of one of their ridiculous advances to a no-brain celebrity. Shucks, Baen could market better than they do, but they don't need to because all their competitors are so clueless....

Yeah, that Times article made me chuckle. "Us poor publishers" are barely making ends meet, but we can still afford obscene payments to "celebrity" authors like Obama and Slick Willie and his wife. Spare me. This is the same sort of defensive tripe that the textbook publishers use when defending $100+ textbook prices. I hope Amazon manages to give the textbook publishers a good kick in the pants too.

And since I am buying "content" and not "format," I don't think the publishers shoyuld have any problem with readers changing that content from one format to another.......

[rhadin]

Originally Posted by kamm

1. I agree, it's more expensive than it should be. GREED, nothing else.

I read this repeatedly -- it's just the producer's greed. I'm prepared to face the wrath of MR, but isn't it just as valid a statement to say that it is the consumer's greed to demand lower pricing?

I guess my question boils down to this: What makes our (consumer) desire/demand for lower pricing any more justified than the producer's demand for higher pricing? To say that production costs are lower and therefore pricing should be lower is almost a non sequitor because it assumes that a profit margin can only be x%. The idea of capitalism is to produce a product at the lowest possible price and to sell it at the highest possible price, with both being subject to market factors.

Whether we are willing to pay the price is one thing, but I have difficulty seeing how producer greed is the beginning and end of the conversation.

[Greg Anos]

Originally Posted by rhadin

I read this repeatedly -- it's just the producer's greed. I'm prepared to face the wrath of MR, but isn't it just as valid a statement to say that it is the consumer's greed to demand lower pricing?

I guess my question boils down to this: What makes our (consumer) desire/demand for lower pricing any more justified than the producer's demand for higher pricing? To say that production costs are lower and therefore pricing should be lower is almost a non sequitor because it assumes that a profit margin can only be x%. The idea of capitalism is to produce a product at the lowest possible price and to sell it at the highest possible price, with both being subject to market factors.

Whether we are willing to pay the price is one thing, but I have difficulty seeing how producer greed is the beginning and end of the conversation.

Hear, Hear! Everybody's greedy in some sense. I have no problem with it. The problem isn't greed, it's the following:

How do you amortize a cost of creation when the cost of production approaches zero? This is the question, and nobody, (and not me!), has the answer.

Nor has this not been thought of in the past. Read Robert Heinlein's Waldo from 1940. The ending about free power and how to control it. That's before the digital age was thought of.

[rhadin]

Originally Posted by Ceili

I came to my reader from paperback books. I'm not a fan of hard cover and rarely found a book that I couldn't wait for to come out in pb. With that in mind, 10 bucks for a book is more than I'm willing to pay most of the time.

I came to my Sony Reader from a love of books and a desire to be able to carry multiple books with me everywhere so I could read as often as possible.

I am a fan of hardcover books for books that I want as permanent members of my library and that I hope to hand down to my grandchildren for their enjoyment. I view ebooks as disposable books, that is, read them and delete them.

I am willing to pay for a hardcover book. In fact, I recently added to my library Abraham Lincoln: A Life by Michael Burlingame (published February 2009 by Johns Hopkins University Press), which is a 2-volume set that has a list price of $125. I wouldn't even consider buying this work as an ebook (assuming it were available as one) because this is an important book that is not a disposable book to my way of thinking.

Conversely, I am unwilling to pay -- as a general rule; there are exceptions -- more than $8 for an ebook because of the limitations imposed on them. If there were a standard format that all devices could read and if I could freely transfer purchases among devices like I can freely transfer my hardcover books, then I would be willing to pay a higher price for an ebook.

I don't insist that publishers lower their pricing for ebooks. Rather, my gripe is less pricing than DRM and no standard format. If I do not like a book's price, I simply do not buy it. I assume that market forces will come to bear and if enough people do not buy a book because the price is too high, then the price ultimately will be lowered. If it isn't lowered, it doesn't matter -- there are lots of books appropriately priced by less-known authors that provide excellent reads.

[Xenophon]

Originally Posted by kamm

The problem is that this writer assumes that us, readers have to cough up instead of lowering his or, more importantly the publisher's chunk of it.

No paper cost means much lower publisher cost equals lower book price, period.

This is how it must work otherwise they will slowly kill their own market, just super-greedy clueless parasites of the big studios did it with music and doing it with movies.

Kamm:

On the one hand, you are correct that producers cannot charge more than the market will bear for very long without going out of business. That's capitalism-101/business-101.

On the other hand, you seem to be assuming that ditching the cost of printing makes a significant difference in the price of books. Sadly, on that front you are misinformed.

The numbers that follow are wrong in detail, but correct in spirit -- I'm writing from memory without performing a careful search first. That said, we've discussed this issue many times here at Mobileread complete with data from authors and trustworthy publishers, so the general thrust of what follows is correct although any particular number may be somewhat off.

The two largest sources of cost (sinks for your money?) between
the author's keyboard and your eyes are retailers and distributors. Typical retail markup on most goods is around 100% -- that is, they charge you double what they pay. I seem to recall that this markup is somewhat smaller in the book world; markups are rumored to be in the 50% to 75% range. Distributors such as Ingram charge an additional markup. I recall numbers in the 30% to 50% range.

What this means to the price of paper books is that out of each dollar you pay for a book, the publisher gets something in the vicinity of 30-40 cents. Note that the very large book-sellers (Amazon, B&N, Borders etc.) provide some savings to you by purchasing popular books directly from the publishers (thus getting rid of the distributor and his %age). They appear to pass on about half the savings to the customer (based on my very unscientific "study" of pricing on a good solid half-dozen books).

The above applies to pretty much all non-textbook publishing. What follows is specific to fiction -- I don't know enough about the non-fiction market and standard practices there to comment.

Authors royalties vary wildly, but even on the lousy end they represent something around a quarter of what the publisher grosses on a book (ballpark 5%-10% of retail list price). Further, the publisher assumes the market risk by paying the author a non-refundable advance against royalties. The advance is usually paid long before the publisher sees any income from the book.

So all remaining expenses of publication are funded out of the remaining 20-25 cents from your original dollar of retail expense.

This tells us that at the limit, an insane publisher who took no profit and whose employees worked for free and whose suppliers donated their products and services could charge you... 20-25% less than you pay now for a paper book. Another way of saying that: If all the publisher's costs went away, the price of ebooks would only go down about 20%!!!!!

So yeah, no paper cost means lower publisher cost which means savings to you the buyer. Really. But we've established here that all the publisher cost savings that there are -- ALL THE COSTS -- would only save you 20% at retail.

Unless, of course, we change the business model instead.

Baen's done that by cutting the retailer and the distributor out of the eBook value chain. They offer their books through Webscriptions (with whom they have a financial deal whose details are not known to me) only*. No distributors, no retailers, only there. They price the books reasonably, they don't impose DRM, they treat their customers with respect.

And the books sell like hotcakes! And sell, and sell, and sell, and...

Meanwhile Amazon wants 70% (I think) of list price for your eBook. I don't know what the terms are at Fictionwise, but I suspect that they are similar. And that percentage makes it really hard to cut the prices enough for a publisher to offer the kind of savings that you're looking for. So if you want to push sane eBook pricing, you need to poke Amazon and Fictionwise to discount more while also poking the publishers to sell directly at more reasonable prices.

But you're not going to get any leverage by repeating the mantra "no paper makes it cheaper" because paper alone is not where the money goes.

Xenophon

* When you see Baen books elsewhere electronically, they are probably being offered by a retailer who has negotiated directly with the author or their agent. Baen takes a non-exclusive universal license for eSales; their authors are free to cut their own deals with other retailers. Jim Baen made this choice because he believed that he'd found a good business model for selling eBooks and was prepared to out-compete the rest of the market. But note that Jim died before Amazon entered the eBook business...

[DixieGal]

Ouch! Industry growing pangs hurt!

Like RSE, the marketplace will eventually determine the "average" for new releases. Right now, anything goes.

I'm thrifty to the point of being a penny-pinching tightwad. I like free and very cheap. It is, therefore, easy to find things I want because the only new releases lately are long repetitive series of vampire stories. (How many times can they tell the same tired tales?) Those are blowing out the virtual doors of ebooksellers at $11 to $17 like they are golden.

But I digress. What I started out to say is that the price of ebooks is still in flux. The same book that is $9.99 at Amazon might be $7.59 at Fictionwise or vice versa. Maybe in three years after much analysis of this blossoming of ebooks, maybe a sense of where the market is going will emerge. However, there will always be bargains out there and it will always be easy to comparison shop.

Sorry about the rambling post, it is still early and I left my coffee in the car, but we finally got to the point: Comparison shop for bargains.

I'm gonna go get some coffee. Maybe a piece of cheesecake, is it too early for that? I sure would've loved to sleep in this morning. Yawn.

[Ankh]

The problem with customer boycotts is that it can easily trigger delayed ebook releases, at the same time when a paperback edition is launched. Publishers get the time to "milk" the hardback release, we eventually get the cheap paperback/ebook...