$9.99 Kindle Editions - Are Publishers’ Higher Prices Justifiable?
Posted on February 16, 2009 by switch11
After diving into this, I can tell you where I stand on $9.99 Kindle Edition prices - Publishers asking for higher prices are either taking us for fools, or they’re using extraordinarily inefficient approaches to creating and distributing eBooks.
There is no conceivable way that the cost of creating an add-on eBook for an existing print book is so high that eBooks need to be sold at anywhere close to print edition prices. My advice to you would be -
1. Boycott any Kindle Edition book priced higher than $9.99 (For expensive books, anything priced at 70% or higher of the print edition price (not the list price, the actual price you can buy it) is probably a rip-off).
2. Stop listening to the drivel publishers are spreading - All the eBook costs are one-time creation costs. The cost of hosting and distributing eBooks are small enough to be insignificant. As number of eBooks sold rises, the cost per book sold approaches zero, and profit approaches 100%.
Publishers Arguments are Anti-Common Sense.
The more I think about it, the more counter-intuitive publishers’ current stance seems -
1. Publishers are claiming that selling Kindle Edition Books (or for that matter eBooks) doesn’t really save them enough money to justify the $9.99 price point.
2. Amazon is taking the hit to keep Kindle Editions at $9.99 (as often as they can).
3. Publishers claim that there is a high overhead associated with converting to the different formats.
4. Publishers are claiming that the savings due to not having to print the books, not using paper and ink, no transportation, no warehousing, etc. is only $3-$4 per book.
The best way to actually understand the situation is to dive into actual accounts, discuss arguments for both stances, and then do some guesstimates.
Actual Price Comparisons.
1. At Smart Bitches, Trashy Books, there’s a good account of one user’s costs for Print Books Vs eBooks - Do read the whole argument. The biggest thing that stood out for me was this paragraph -
You cannot calculate the unit cost of the e-book because the unit price will always be as X approaches zero. You can only calculate the cost PER FORMAT (which may or may not include DRM). You have the opportunity for an unlimited number of e-book sales without further cost (not including web and shopping cart, etc.). For every print book I sell, I have to spend another $15.00. For every e-book I sell, I have to spend ZERO.
And anyone who tries to tell me that the cost of hosting, maintaining the website, and shopping cart is high is either deluding themselves or trying to con me. Beyond a certain number of eBook sales, it’s 90%+ profits per eBook sold.
2. There are a lot of good comments in that thread, and they point out the obvious i.e. right from editing to uploading/digitizing the book for printing, the costs are shared. From that point prices change - eBooks are loaded on to a server, protected with DRM, and sold - a one time cost that has to be spread across all eBooks. Print Books on the other hand have per unit costs - printing, paper, transportation, cost of mailing unsold books back to the publisher, shelf space, warehousing, and more. Not to mention bookstores’ profit cut.
Truth is that we don’t have the top 10 book publishers sharing their costs for -
1. Creating Print Editions.
2. Creating Pure eBook editions when no print editions are made.
3. Creating an eBook edition for an existing Print Edition.
The Publishers are trying really, really hard to obfuscate this information because it’ll kill all their arguments. If the cost for creating an eBook edition of an existing print book is really so high then why don’t publishers release detailed break-ups? That would put paid to all price gouging concerns, wouldn’t it?
Arguments that Support Cheap eBooks.
The single biggest argument is that eBooks are a produce one time, sell infinite times product. Ironically, the eBooks that publishers are trying to sell at higher prices because of high demand are the ones that make the most money since as more and more copies are sold, the profits per book sold are higher and higher.
There are several other arguments -
1. Not paying for Shelf Space.
2. Any book sold from the publisher’s or author’s website doesn’t have to pay retail or on-line stores a cut.
3. Economies of scale that apply to creating eBook versions. As publishers get better and better at creating eBooks and making them available in different formats, prices should go down. Do you really think that creating the 8th eBook format costs as much as creating the first?
4. Economies of Scale as publishers start having specialists and divisions that focus on eBooks.
5. There is a large section of one-time costs that are taken into account when you create print books. Those are actually factored in already and should not be counted twice.
6. The savings from numerous costs associated with physical books - paper, ink, printing, warehouse, human labour, store cut, distribution, mailing back unsold copies, store workers, and more.
Arguments that Support Expensive eBooks.
There are actually a few arguments that do support pricing eBooks higher. The biggest strike against them, is that all of these are one-off costs.
1. Editing is still a fixed cost. Although it is only done once across print and eBook versions.
2. It costs money to convert to each different format. Yes, however this factor is being drummed up unrealistically.
3. Shelf Space still costs i.e. Amazon taking 45%-55%-65% of revenues from publishers and self-published authors. This is actually probably a real cost.
4. Publishers are inefficient and we are paying for this inefficiency. This is valid from the publishers’ perspective. They want a bail-out. However, for us, it makes zero sense to support their lack of business finesse.
5. Publishers are new to eBooks and have higher costs. Sadly, this is Darwinian survival - a lot of publishers aren’t going to be able to figure this out and are going to die.
From an end-user perspective, there is no justification for high priced eBooks. This delusionary trend exists across all digital content i.e. people claiming that digital downloads of music, games, etc. should cost the same as physical copies.
Amazon came into MP3 downloads and made things uncomfortable for Apple with DRM free 70 cent downloads, and we’re going to see more and more of this disruption where companies come in and blow away the patently false claims that old media and content companies are making.
Publishers’ Concerted Effort to Delude Readers
I think there are two separate tracks of delusion publishers are trying -
1. The first is that eBooks cost nearly the same to produce and distribute as print books. This is so obviously wrong that people are not buying it.
2. The second, more dangerous approach is pushing the belief that there’s only a 10% price difference, it’s only $3 per book, etc. This is obviously wrong - there are literally hundreds of video websites and file sharing websites that survive off of advertising. If you’re selling eBooks (that are a few MB or so), and in effect, making solid profits off of every book sold, how can you claim higher storage costs than a site that shares 100 MB+ sized files for free.
The more I get into publishers’ arguments, the more ridiculous the arguments are. Prove me wrong, Publishers! All you have to do is Reveal your costs and cost structure.
The recent article that analyzed NY Times’ costs and figured out that NY Times might as well send each of their subscribers 2 Kindles is especially apt when it comes to books since books don’t have advertising. Print is terribly inefficient - the sad part is they’re asking us to pay for their inability to use technology to cut costs.
My Conclusion - Why Publishers are pushing Higher Prices
Publishers are going to try to push prices as high as they can. Its really, really simple - they want to maximize profits and towards that end create the perception that an eBook price point higher than the paperback price and close to the hardback price is justified.
The solution really is for consumers (that’s you and me) to be smart about it, and begin systematically boycotting all books that are higher than the $9.99 price point. Even if it means missing out on an author you really want to read. We don’t really need piracy, just consumer intelligence and action.
Geez,
its like I am telling people that the earth revolves around the sun not the other way around. by the way these words which are not my own can be found at the following website:
http://ireaderreview.com/2009/02/16/...s-justifiable/