How limited supply may (not) relate to e-book pricing

Alexander Turcic · 04-28-2006, 04:48 AM

Adobe general manager Bill McCoy writes in his latest blog entry about the current issue of e-book pricing.

While I agree that lower eBook prices are both feasible and would stimulate adoption, which publishers may not have been overly eager to have happen, I believe the key way publishers have hamstrung eBook adoption is by limiting supply. Any new format needs a critical mass of content to succeed, and that's not a paltry 5% of annual new titles. Certainly during the last eBook hype boom (circa 1998-2002) publishers weren't rushing to make all their content available. However, a sea-change is clearly under way.

The microeconomist in you knows that the price of a product in a competitive (!) market depends on supply and demand. In theory, the main determinants of supply will be the market price of the product and the cost of producing it. The more the producer will get for his product, the more he is going to produce. Meanwhile demand depends on one's willingness to purchase at a given price level; generally a greater quantity will be demanded when the price is lower. Unforuntately this standard economic model fails in a situation where a market is dominated by a small number of sellers who can adjust the supply and price of a good at will.

I suspect the high prices of e-books are deliberate. Publishers are afraid that they cannibalize sales of paper books if e-books became ready for mainstream. So they are going to keep their artificially inflated prices, and I am afraid adding supply, as Bill McCoy suggested, won't make a difference here.

Snappy! · 04-28-2006, 12:06 PM

Simply put, nobody wants to shake the boat.

It's like that throughout the industry. Whether its mp3, video, books ... even the PC industry itself. The incumbent players would rather maintain the status quo than have change ... unless they are the ones who change it. They are afraid the change means new rules which may change their present status.

I believe there are some ebooks believer amongst the pbook publishing houses and they may be trying hard to beat the status quo and make ebooks more mainstream. But there are more at stake to all the other players than not. So unless one of these guys get a break and succeed, forcing the other major players to follow suit, it would be hard for ebooks to make a dent in the US pbook arena.

Either that or an existing ebook house manage to pull an "stevie" on the industry and convince enough players to use their distro model or something.

hey, on hindsight, this sounds like a good material for an ebook novel huh?

04-28-2006, 04:48 AM	#1
Alexander Turcic Fully Converged Posts: 18,163 Karma: 14021202 Join Date: Oct 2002 Location: Switzerland Device: Too many to count here.	How limited supply may (not) relate to e-book pricing Adobe general manager Bill McCoy writes in his latest blog entry about the current issue of e-book pricing. While I agree that lower eBook prices are both feasible and would stimulate adoption, which publishers may not have been overly eager to have happen, I believe the key way publishers have hamstrung eBook adoption is by limiting supply. Any new format needs a critical mass of content to succeed, and that's not a paltry 5% of annual new titles. Certainly during the last eBook hype boom (circa 1998-2002) publishers weren't rushing to make all their content available. However, a sea-change is clearly under way. The microeconomist in you knows that the price of a product in a competitive (!) market depends on supply and demand. In theory, the main determinants of supply will be the market price of the product and the cost of producing it. The more the producer will get for his product, the more he is going to produce. Meanwhile demand depends on one's willingness to purchase at a given price level; generally a greater quantity will be demanded when the price is lower. Unforuntately this standard economic model fails in a situation where a market is dominated by a small number of sellers who can adjust the supply and price of a good at will. I suspect the high prices of e-books are deliberate. Publishers are afraid that they cannibalize sales of paper books if e-books became ready for mainstream. So they are going to keep their artificially inflated prices, and I am afraid adding supply, as Bill McCoy suggested, won't make a difference here.

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04-28-2006, 12:06 PM	#2
Snappy! Addict Posts: 260 Karma: 4256 Join Date: Feb 2006 Device: SHARP Zaurus C1000	Simply put, nobody wants to shake the boat. It's like that throughout the industry. Whether its mp3, video, books ... even the PC industry itself. The incumbent players would rather maintain the status quo than have change ... unless they are the ones who change it. They are afraid the change means new rules which may change their present status. I believe there are some ebooks believer amongst the pbook publishing houses and they may be trying hard to beat the status quo and make ebooks more mainstream. But there are more at stake to all the other players than not. So unless one of these guys get a break and succeed, forcing the other major players to follow suit, it would be hard for ebooks to make a dent in the US pbook arena. Either that or an existing ebook house manage to pull an "stevie" on the industry and convince enough players to use their distro model or something. hey, on hindsight, this sounds like a good material for an ebook novel huh?

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