ebooks...the price ascent to 'Everest'....

[BeccaPrice]

I don't mind paying BMW prices for a BMW - what I object to is paying BMW prices for a Yugo.

On a list I follow, someone made reference to a series from the 90s that sounded interesting. The original publication date was 1999 for the book I was interested in, and the price asked was $7.99. I'll pay that for a new book (if it's an author I follow), but not for a 12-year-old book that long ago either made back it's advance money or had that investment written off. Backlist, long-tail books should not be priced at the same price as new releases are.

If I decide to get the book, I'll pay the !.99 price for a used paperback.

[dee_can]

Last spring I donated two big garbage bags full of books in excellent condition - some only read once by me - to the SPCA for their annual book sale. Hopefully they made 2 or 3 dollars a book?, and at probably a hundred books that would make a few hundred dollars for them. Can't say that about used ebooks.

edit: Hmm, I thought about and maybe there wasn't 50 books in each bag, but there was a lot. ha Also the people who bought the books could donate them back, and they'd make money again.

[spellbanisher]

The people appealing to “basic economics” are making assumptions that only hold true in highly abstract models. The notion that “price reflects what the market will bear” is based on many assumptions, including that publishers know the optimal market price (i.e. that they have perfect information and are perfectly rational). But there's no reason to believe these assumptions; when sales fail to meet expectation, publishers are just as likely to assume it is because of piracy or insufficient marketing as they are to assume it is because of mispricing. If they assume that piracy is the problem, they'll respond by developing inane DRM regimes that just alienate legitimate buyers, or by spending more money on congressional lobbying, neither of which does anything about mispricing. If they assume insufficient marketing, they'll end up just increasing cost without increasing revenues (and at that point they'll start blaming piracy).

Originally Posted by HarryT

This is nonsense. Virtually all the work that's involved in the production of a book (editing, layout, advertising, etc) is also there for an eBook. The only thing you don't have are the printing costs, which typically account for around 10-20% of total costs. An eBook that is priced 20% lower than the corresponding paperback is, therefore, reasonably priced.

Printing and production costs are variable depending on the success of the book. If a book sells a million copies, then virtually all of the costs will be printing and storage. If a book sells no copies, then all of the costs will be the fixed production. With digital, you don't have to worry about the cost of unsold copies either.

Originally Posted by nogle

The calculus is much simpler than all this. Let my desire to read a certain book expressed in dollars = D. let the price of the book in dollars = P

If D>P, then I buy the book. If D<P then I do not buy the book.

Production costs, royalties, profitability of the publisher, ability of the author to make a living from his/her writing etc. do not change my desire to read a book.

For a lot of people there are moral and social elements to spending; if there wasn't, corporations wouldn't spend millions on charity and then spend millions more advertising their charity spending to the world.

Anyways, your equation applied to other people would only be valid if it did not falsely assume that D is unaffected by the perceived fairness of the price.

Another factor to consider is consumer pathology caused by perceived unfair pricing. On the flip side there is what is called employee pathology, which means that when employees perceive that their compensation is unfair, they are more willing to steal from the company and slack off when unsupervised. Higher wages dramatically reduce the instances of employee pathology (indeed, the costs of higher wages are usually completely offset by reductions in employee pathology). In the same way, perceived unfair prices leads to higher social acceptance of activities such as copyright infringement.

Originally Posted by MrPLD

You're all missing the crux... It's not what the "real cost" of the book is that determines ebook sale price, it's what the market will tolerate.

But what people consider to be the “real cost” of the book contributes to what “the market will tolerate.” A “market” is just an abstraction to help people think about the millions of transactions that occur everyday between people, people whose buying decisions are influenced by context and a host of factors, including the perceived “real cost” of a book.

Anyways, the market doesn't really determine ebook sale price. In most industries (including ebooks) cost is determined first, and then price is set based on what the actor believes will cover cost plus desired profit. Most of what we think is the “true” market price of a good is determined by the price leader. Competitors compete with the price leader either by undercutting that price, or by innovation.[/quote]

Originally Posted by MrPLD

If people are happy paying 75% of the pBook cost for an eBook in sufficient numbers, then there's no real point in changing. Remember, it's business, and in business you do your best to maximise your margins. Having 50% of the market buying at 75% the pBook pricing is vastly better than 100% at 25%.

It's not about what's "right" ethically/morally - it's about maximising that revenue. Some see it as gouging, but they're in insufficient numbers to actually matter in the math.

Maybe, maybe not. It really depends on whether ebooks are a substitutable or niche good. By substitutable I mean a good that is very sensitive to price. If ebooks are a substitutable good, then even small changes in price would dramatically alter how people spend their entertainment dollars. If so, then publishers may be really hurting themselves with current prices.

If you believe ebooks are a substitutable product, then it is rational to complain about ebook prices, because high prices reduces the number of readers, which in turn could lead to a reduction in the number of books produced and published (although more likely just mean less money for superstars).

If they are a niche product, meaning a product will a loyal and devoted group of loyalist supporters, then gouge away, as that would be the most profitable route. For ebooks, I suspect in general that they resemble a niche product more than a substitutable product. Publishers make most if not all their money from superstar authors, and fans of these authors are usually willing to pay quite a bit for these works. Not 40 or 50 bucks, but I don't think the difference between 7.99 and 12.99 would alter the sales of a James Patterson, Dan Brown, or Stephanie Meyers all that much.

Nevertheless, even if ebooks were a niche product, it still is not crazy for ebook readers to complain about price. It may be profitable to gouge hardcore readers, but in more civilized circles we'd say that is “in bad taste.” People are not textbook abstractions, and in the long-run it is never wise to milk a group of people just because you can, even if they do look like cows.

Originally Posted by ballfresno

I just don't find any need to compare the price of an ebook to a paper book. If I want an ebook, and if D>P as nogle said earlier, then I buy it; if not, I don't. What the paper book costs just doesn't come into the equation.

Simple economics, basically.

Simple economics should also tell you that what influences your buying decisions is different than what influences other buying decisions. Most people have a bias for physical objects that they can hold and possess. Something that can be possessed with your hands is just more “real” than something digital.

And you may not care what a paper book costs, or what anything else costs for that matter, but the vast majority of people have some kind of sense of fairness; if the cost of producing something were somehow 50% less, people would expect to pay less for that something, because that would be “fair.” If factors such as “perceived fairness” didn't matter in people's buying decisions, corporations wouldn't need to have public relations departments.

Originally Posted by latepaul

Thank you. It's basic capitalism. You price your product at what the market will bear in order to maximise your profits.

Um, no, this is not “basic capitalism.” The term capitalism refers to private ownership of means of production; the term is at best an anachronism referring to a very limited number of historical cases, such as the preindustrial northern United States. It is more of an idealistic notion, since there has never been an economy where everything is privately owned and operated. What you might be thinking about is a “market economy,” but in a basic capitalistic market economy, there are no government interventions such as IP. So really, ebook prices reflect the basic workings of a mixed market economy rather than “basic capitalism.”

Supply and Demand analysis only applies when there are no government interventions and the market approximates perfect competition. Considering that copyright is a government intervention, basic supply and demand analysis is not really applicable here. A rent-seeking or welfare analysis would be more appropriate for any industry dependent on copyright.

Originally Posted by nogle

I would like to be driving a Cadillac, but I can only afford a Chevy. Production costs are similar, so pricing should be similar... It is the evil auto industry and their "price fixing" that keeps me from driving the vehicle I want.

Books are not perfectly substitutes, as the content (the intellectual property) matters. When you are buying an eBook, you are buying a license to the intellectual property only; there are no physical goods (the paper). It is the value of the intellectual property that drives the price of the book, not the physical good.
Same with cars, the value of the design, prestige, etc. of the Cadillac makes it more valuable than the Chevy, not the cost of the parts and assembly.

the comparison between cars and ebooks is a a little weak . It is not the superior quality of the Cadillac that makes it more expensive; it is more expensive by virtue of the desire of status-seekers to have a more expensive car. This reminds me of a movie, I think it was How To Lose a Guy in Ten Days, where the guy proposes a strategy of"affordable diamonds," to which the women retorts (paraphrasing); "you don't know women at all. Woman want diamonds because they are unaffordable..."

In other words, the reason that more expensive cars exist is because there are people who want more expensive cars so they can say their car is more expensive than your car. Or in other other words, conspicuous consumption.

A comparable example would be people buying books solely for the status they confer. This was true in the 1920s, when considerations such as the cover and smell often trumped the content of the book itself in the buying decision. But People don't display ebooks, thus they are not bought for status-seeking or conspicuous consumption. You can say that the price people are willing to pay is based on the IP content and not the production costs, but you should also consider that people are willing to put up with higher prices if they believe production costs necessitate those prices.

People are willing to pay more for popular books, but that represents more of a market failure than a market virtue; the reason people are willing to pay more for popular books is because there is a popular consensus (and being herd animals we tend to trust the judgment of crowds) that the book is good they can reasonably assume that the book is worth the cost. Books are an unusual kind of good because they are one of the few goods which you buy without knowing what value you are getting, which discourages broad consumption and encourages consumption of a few, trusted authors.

[Elfwreck]

Originally Posted by spellbanisher

The people appealing to “basic economics” are making assumptions that only hold true in highly abstract models. The notion that “price reflects what the market will bear” is based on many assumptions, including that publishers know the optimal market price (i.e. that they have perfect information and are perfectly rational).

Nevermind "perfect;" it assumes they have a reasonable amount of accurate information and are applying that information sensibly to decide how to price things.

None of us expect publishers to be psychic enough to predict the next mega-bestseller, and therefore we expect new releases to be priced a bit high in order to cash in on whatever turns out to be popular. We would like to believe they are clueful enough to recognize the difference between a trendy hot-topic market and a long-tail market, and price accordingly.

For a lot of people there are moral and social elements to spending; if there wasn't, corporations wouldn't spend millions on charity and then spend millions more advertising their charity spending to the world.

No! Nobody ever boycotts authors who were dicks to their friends at conventions! And nobody ever bought a special-edition book because half the profits were going to charity.

Anyways, your equation applied to other people would only be valid if it did not falsely assume that D is unaffected by the perceived fairness of the price.

Next you're going to tell me that college students don't feel guilty for buying secondhand textbooks.

Anyways, the market doesn't really determine ebook sale price. In most industries (including ebooks) cost is determined first, and then price is set based on what the actor believes will cover cost plus desired profit.

Except the ebook market, where "cost" is assumed to be "90% of whatever it cost us to produce the paperback book, which we haven't directly calculated in years but just keep grabbing old numbers and adjusting for inflation," and "desired profit" is "enough to justify having an ebook production department, but not enough to convince the shareholders that they're actually important to our future."

It really depends on whether ebooks are a substitutable or niche good.

Anyone who thinks that books are entirely a niche good is getting stats from people who read less than five books a year. The rest of us read what's available in our budget. We'd like that to include our favorites--but if our tastes run to the Azoetia and we don't have a spare thousand dollars lying around, we buy something else instead. (Are they remotely similar? Only in the sense that people of a certain bent who like one, may like the other; contents are drastically different.) We certainly don't sit around pining until we've saved up $1200 for a used limited-edition copy of the book we'd rather read.

The same principle applies to $15 books... do I buy one book for $15 that I know I'd like, or five books for $3 that I'm less sure I'll like? If I've guessed horribly wrong on all of them, I lose; if I'm right at least 1/5 of the time, I break even; if I can guess my tastes better than that, I'm better off with the multiple cheaper books. Will I miss the $15 book I didn't buy? Sure. I'll just have to drown my sorrows in those other four books.

[Blue Tyson]

Originally Posted by MrPLD

There's the massive influx of independents swamping the market now. The Big6 are losing their holding power. Sure, the independents have a lot of noise in their ranks, but it does appear to be the way the future is trending (likewise with the music scene as well it would seem).

Yes, and if the prices for the competition are heading towards double what they were, more and more people interested in price - and the big readers who can't afford to pay double for books compared to what they were - will head that way. Even if only partially.

[MrPLD]

It's interesting Blue Tyson, we're seeing a lot of independents moving away from the 99/free books and going more towards $2.99~$5.99. There was a bit of a mad gold-rush to the bottom of the barrel there for a bit and a lot of casualties in the process (a few winners of course, which will be enshrined )

I wonder if the Big6 will find themselves conversely having to go from $9.99~$14.99 down to $5.99~$9.99.

[Blue Tyson]

Appears in Australia lots of them are trying to be 15.00-30.00. Which means they may find out about that old adage about a woman scorned (main fiction buyers).

Or FIVE TIMES as expensive as your alternative range.

[SteveEisenberg]

Originally Posted by Elfwreck

Next you're going to tell me that college students don't feel guilty for buying secondhand textbooks.

Yes, I am going to tell you that. Some like to have clean new copies. Some with mild mental issues may feel ashamed of not having the perfect books richer students do. That's hardly guilt.

When you buy used, you push up the price of used books, which gives publishers room to raise the price of new books. Are you saying that they feel guilty about that? And this in the same generation in which music darknet use is so popular?

Originally Posted by Elfwreck

Anyone who thinks that books are entirely a niche good is getting stats from people who read less than five books a year. The rest of us read what's available in our budget.

I read maybe 25-60 books a year, and what I read in terms of books has nothing to do with budget. Budget does affect form factor and buy vs. library vs. interlibrary loan. Also, budget affects my periodical reading.

[Elfwreck]

Originally Posted by SteveEisenberg

Yes, I am going to tell you that. Some like to have clean new copies. Some with mild mental issues may feel ashamed of not having the perfect books richer students do. That's hardly guilt.

When you buy used, you push up the price of used books, which gives publishers room to raise the price of new books. Are you saying that they feel guilty about that? And this in the same generation in which music darknet use is so popular?

I'm sorry; the sarcasm tags in my comment seem to have been stripped out by the board software. Maybe the next update will support them.

I read maybe 25-60 books a year, and what I read in terms of books has nothing to do with budget. Budget does affect form factor and buy vs. library vs. interlibrary loan. Also, budget affects my periodical reading.

I read probably between 30 and 80 novels a year, and literally hundreds of short stories, ranging from 100 words to, well, novel-length and above. (I am thrilled that one of my favorite fanfic authors thinks of "short snippets" as 15,000-25,000 words, and regularly posts 150k stories.) I read a handful of nonfic books per year; recently, most of those relate to intellectual property law, although I'm also fond of books about communication and religion.

Budget strongly affects what nonfic I read. I'd read more Xaonon and Ixaaxar press releases if they didn't often cost a couple hundred dollars each. (Pbook only, of course. Limited print runs.) Obviously, I'm not their target demographic.

Budget doesn't affect my fic purchases as much as DRM does; most things outside of my comfortable price zone are DRM'd. I refuse to buy books from someone who's insisting I'm probably a thief, or that they're so incompetent at catching the thieves who are costing them profits that they have to annoy and inconvenience all their honest customers. (I wouldn't buy from a store that insisted on strip-searching me as I left, either, nor one that had me followed home to see what kind of shelves I store my books on.)

Neither budget nor DRM affects how much I read, which is almost constantly.

[Barty]

Normally I just wait for the library, but oops, publishers aren't selling to libraries. I routinely check the new ebook arrivals, and the selection looks decidedly B-list. Lots of romance and supernatural stuff, lots of stuff with Book xx of yy series. General fiction far and few in between.

[hpulley]

Apple price fixing recently came up for ebooks:
http://www.mobiledia.com/news/121646.html

[p_a_smith]

Originally Posted by Elfwreck

No! Nobody ever boycotts authors who were dicks to their friends at conventions! And nobody ever bought a special-edition book because half the profits were going to charity.

Actually people do.

I have a couple of fiction authors I will never read again for what they have said at conventions/on blogs.

I also have a number of special edition books whose profits were going to charity. It is something that is actually not uncommon. I've seen both fiction and non-fiction books from small presses and large publishing houses sold that way with good results.

[Reader Paradice]

Originally Posted by xg4bx

not to be flippant but how many people actually resell their paperbacks? is the dime you'd get for it (if you're lucky) really worth the headache of lugging books to a store or selling on the interwebs? most used bookstores give store credit at best and its not worth the cost of materials to sell online. the best most people are able to do is wait for a library sale to box them up and donate. net gain:$0.00.

i've just heard that a lot and it befuddles me. unless you've got collectible editions secondhand books are almost literally worthless.

---------------------------------------------

It has been my experience, that a well maintained pBook, usually goes to my credit for 25 percent of the price upon the back cover. The dealer then pockets another 25 percent, and the customer gets the read for 50 percent off the published, back cover price. So...with that in mind, I would get a completely free read every fifth book I sold to the dealer....and has been most enjoyable to date.

[spellbanisher]

Originally Posted by Elfwreck

Anyone who thinks that books are entirely a niche good is getting stats from people who read less than five books a year.

I'm not talking about the number of books read, but the amount of money spent on books. From a publishers perspective, it'd be more profitable if you spent your 50$ ebook budget on five 10 dollar books than on 10 five dollar books.

Originally Posted by Elfwreck

The rest of us read what's available in our budget.

The issue is whether the price of ebooks changes the total amount you spend on them. I'll use ticket prices as an example. Suppose that movies started charging 20$ a ticket instead of 10$. Suppose you were spending 20$ a month on tickets (two movies per month). There are three things you could do in response to this price change. You could
1. Still spend 20$ a month on movies, but only see one instead of two movies a month. For the movie industry this outcome is a wash.

2. Still see 2 movies a month, but cut 20$ in a month in savings or in spending on other parts of your budget. From the perspective of the movie industry this is a gain.

3. Say f*ck that and spend your 20$ on booze and pizza instead. From the perspective of the movie industry this is a big loss.

Another scenario would be that they raise prices to 15$ a month. In that scenario, you could spend 15$ and save 5$, seeing one movie a month every three months and two movies in month four. But considering that your desire to spend will likely remain the same, you'll likely just spend see one movie every month and spend the 5$ elsewhere, which means the price increase would result in reduced revenues.

I frequently come across books that I would like to buy but are out of the range that I am willing to spend. Since I am not looking to spend on books just for the sake of spending on books, those higher prices simply mean lost sales from me (although that is probably compensated for by other people willing to spend the 20+ dollars on an individual ebook).

[HarryT]

Originally Posted by Elfwreck

Anyone who thinks that books are entirely a niche good is getting stats from people who read less than five books a year. The rest of us read what's available in our budget.

I'm not sure how true that actually is. I probably read something of the order of 100 books in an average year (10 so far this month). For me, the time I have available to read is more valuable than the price of the book and, although my tastes fortunately don't run to $1000 limited editions, I am price-insensitive in as much as I'm not really bothered whether a book costs me £3 or £10. I buy what I know that I'll enjoy reading; I don't base my buying choice on price. I'm sure that I'm not alone in that - many people are probably in a similar position to me: reasonable amount of disposible income, limited time to read, reading choice based on quality, not price.