Downloaded books cost how much?

[HeffeD]

Originally Posted by rlauzon

Not true.

Under Fair Use, I may make a copy of my legally purchased media, under certain conditions. It's completely legal for me to create an eBook from my pBook. What's not legal under Fair Use is for me to distribute that copy.

So instead of spending all the time and energy, I simply download the eBook. The end result is the same. Therefore it's legal under Fair Use.

Nope. The end result is not the same. There is a very big difference between making a copy yourself or downloading an illegally distributed product. Acquiring an illegal product is never legal regardless of your justification.

Originally Posted by rlauzon

As soon as you bring a physical object into the argument, your argument becomes invalid.

Nothing is being stolen. The person who bought the book still has the book. The person who wrote the book is still getting paid and still owns the book.

Legally speaking, copyright violation is not stealing.

No, the argument still stands. So you're saying the product you've downloaded doesn't exist? I assure you, the book is taking up physical space on your hard drive. It took you actual wall clock time to download it, and you used bandwidth. It's there, I assure you. You can physically interact with the file. You can open it and read it. You can move it from place to place, such as external media. You are indeed in possession of something of substance. A file is a physical object. Just because you can't hold it in your hands does not mean it isn't a physical object. And yes, it has been stolen. Did the author or publisher put it out for you to download? No? Then it was 'stolen'. Whether or not you've paid the person for your hardcopy is irrelevant. You also have an illegal copy.

Originally Posted by rlauzon

You need to learn more about business. Just because something costs more doesn't mean that the consumer pays more.

But you missed my point: Just because there is a cost doesn't mean that it should be passed on to the customer.

Errrmmm... Yes it does. If something costs more, the consumer pays more. Guaranteed. Otherwise there will be very limited product as the producer soon runs out of money to make the product. Sure, just because there is a cost doesn't mean it should be passed on to the consumer. Then where do you suppose the cost should come from? You're right. I need to learn more about business. I was unaware that something could be produced for nothing, and that actual sales have no relation to being able to produce something.

Originally Posted by rlauzon

As we have pointed out time and time again: eBooks that are priced at the same levels as pBooks simply don't sell well. Suckers only have so much money and when they've spent it, they don't buy more.

We know that eBooks simply do not have the same costs as pBooks. eBooks are significantly cheaper to produce. Therefore the price of eBooks should reflect that.

Oh, absolutely! eBooks are considerably cheaper to produce than a paper book. However pretending that the costs to produce the work don't exists isn't a valid argument. There should definitely be a price reduction as the production costs decrease. Much like the price difference between hardcover and paperback. But is downloading the product illegally the way to go about making this change happen? I don't think so. Simply having the product available to anyone does indeed result in theft. A large percentage of the population seem to believe that if they can get something for free, there is no need to pay for it. Sure, you might have purchased a copy of the book, but how many people downloading the illegal file didn't? That's lost revenue.

I'm in the music business, and I can tell you first hand that illegal downloading does indeed impact the bottom line. Do CD's actually cost that much to produce? No. Mass production costs pennies per disk. However, the gear required to make great sounding music is very expensive, and regardless of what you think, you do indeed have to pay for it. Inferior gear = inferior product. Of course, it's just as easy to make an inferior product on great gear, but as with anything, if you continue to make an inferior product, you don't last long... So yes as with books, downloaded music should cost less than an actual CD due to less cost to produce the end product, but the recording still needs to be paid for. To expect anything less is simply unrealistic.

People put time and money into the product whether you can hold it in your hand or not.

[rlauzon]

Originally Posted by HeffeD

Nope. The end result is not the same.

The result is the same and no amount of moralizing will change that.

Originally Posted by HeffeD

No, the argument still stands. So you're saying the product you've downloaded doesn't exist?

Then tell me where I can legally purchase a copy of the latest Harry Potter book in eBook form. If you can't, then your argument doesn't stand - the product doesn't exist.

Originally Posted by HeffeD

Errrmmm... Yes it does. If something costs more, the consumer pays more. Guaranteed.

You seem to have missed Economics 101.

Books, unlike gas, alcohol and the such, are not considered necessities. As such, they are very sensitive to price increases.

Let's say that today, a book costs $5 - $2 of that is profit.
Let's say that the cost of a book goes up to $7. Now the author has a choice: make the book cost $7 - and suffer a large loss of sales - or make the book cost, say $6 and see a smaller loss of sales - but his profit goes down to $1.

In this way, not all the costs are passed on to the consumer. This happens frequently in many, many businesses.

Originally Posted by HeffeD

Oh, absolutely! eBooks are considerably cheaper to produce than a paper book. However pretending that the costs to produce the work don't exists isn't a valid argument.

I claimed no such thing. Please actually read my messages.

I claimed that the costs associated with an eBook did not justify pricing them to even close to what a pBook cost.

Originally Posted by HeffeD

I'm in the music business

Ahhh, now I understand where you are coming from.

Originally Posted by HeffeD

and I can tell you first hand that illegal downloading does indeed impact the bottom line.

I suggest that you stop believing your own propaganda.

[HeffeD]

Originally Posted by rlauzon

I suggest that you stop believing your own propaganda.

Yep, you're right... Much easier to believe what people tell me is happening than to trust the facts. Thanks for straightening that out!

[JSWolf]

Originally Posted by HarryT

How about if there were a commercially available eBook? Would you buy that if you'd previously bought a paperbook version, or would you feel "morally justified" in downloading that without paying for it?

In the case of HP7 there is no ebook available. I did purchase the book. So, if I was to have downloaded it to read electronically, I would not be taking away any profits from anyone.

Lets say there was an ebook edition of HP7, would my downloading it be any different then taking a CD and converting it to MP3 for my use when some online record shops sell an MP3 copy of that CD? So if I found MP3 of that CD online someplace and downloaded it to save myself the hassle of doing the conversion, is that still wrong?

At the risk of repeating myself, it is a completely false analogy to compare borrowing a book from a library to downloading it from the internet. Firstly, every library from which someone borrows a book has bought that book, perhaps several copies of it. This HP eBook was created from photographs of a illegally-obtained manuscript which nobody paid for. It's a totally different situation. Secondly, in the UK at least, authors get paid for library loans on the basis of how many of their books are borrowed by libraries, nationwide, over the course of a year. Not a vast amount, but popular authors get a few thousand $.

Here in the US, I don't think the authors get a cut from borrowing from a library. They do get the standard profits from the library having purchased the book(s).

The photos of HP7 were from a book that some shop released before the release date. The shop allowed this customer to purchase the book before it's time. This said customer then took photos of the book and posted the photos on the net. The second electronic copy was a copy typed in from these photos. I think there is also at least one scanned/ORCed copy out there as well.

[Jack B Nimble]

Originally Posted by rlauzon

You seem to have missed Economics 101.
...
Let's say that today, a book costs $5 - $2 of that is profit.
Let's say that the cost of a book goes up to $7. Now the author has a choice: make the book cost $7 - and suffer a large loss of sales - or make the book cost, say $6 and see a smaller loss of sales - but his profit goes down to $1.

Oh, please don't pretend to use Economics to justify this stance. As a former Econ teacher, it actually hurt to read this. Nevermind Econ, this is a basic word problem from math class.

Profit = Price - Cost

Except when Cost is greater than Price. In that case

Cost - Price = Loss

If it cost $7 to produce the book, and you sell it for $6, profit does not go down to $1 -- you lost a buck. That better be a rare occasion, or you better be making your money elsewhere.

As for...

Originally Posted by rlauzon

In this way, not all the costs are passed on to the consumer. This happens frequently in many, many businesses.

Yes, if they are counting on their income coming from some other source. For instance Sony could sell a game machine (or ebook reader) for cost or even less, if they expect to make their profits from selling (or licensing) the software or content.

If an author is consistently losing money by selling their books, it better be a great hobby, because it is not much a business.

Now, let this be a warning... The next time someone brings up Economics, I'll start discussing monopolistic competition and then I'll toss in a diagram of the GNP cycle (just so we don't forget macro).

[rlauzon]

Originally Posted by Jack B Nimble

Oh, please don't pretend to use Economics to justify this stance. As a former Econ teacher, it actually hurt to read this. Nevermind Econ, this is a basic word problem from math class.

Profit = Price - Cost

Except when Cost is greater than Price. In that case

Cost - Price = Loss

If it cost $7 to produce the book, and you sell it for $6, profit does not go down to $1 -- you lost a buck. That better be a rare occasion, or you better be making your money elsewhere.

Then, if you would actually read my message, you would see that my logic was correct. My wording may be off, but the logic still stands.

To use your wording:
The cost of producing an eBook is $3. Plus $2 Profit. Making the price of the eBook $5.
The cost goes up $2.

The author has a choice:
Pass the full $2 increase on to the consumer and see a large reduction in sales - meaning that he makes much less.
Or
Pass on only part of the increase, getting less in profit per sale, but seeing a much smaller drop in sales.

Simply put, he must choose between:
$2 Profit = $7 price - $5 cost - but few sales
or
$1 Profit = $6 price - $5 cost - with larger sales.

No where in there is there a loss. Simply less profit per book.

[wgrimm]

Originally Posted by JSWolf

But is it that simple? Remember, the online ebook sellers have to pay for the machine their website is hosted on as well as the bandwidth used by the store. Then there is paying the employees as well. Not to mention that there are employees who have to get the ebook ready once it's gone through the editing and whatnot. The ebook has to be converted into about 5-7 different formats roughly. All that costs money too. Do you think once the book is in electronic form to go to pre-press, it doesn't have any more expenses associated with it?

Okay, consider these aspects of cost- the website used to sell e-books costs far less to maintain than a physical storefront. There are no associated warehousing and transport costs to market the e-book. And conversion to different formats is really a one-time cost for all of the books the publisher produces- the publisher buys the software product(s) to do the job, and his costs for conversion are complete. The book is ALREADY in electronic format before conversion to e-book format.

So, like many others, I ask- where are the reductions in price that should exist given the reductions in costs?

[JSWolf]

Up until the book makes it to electronic or paper, the costs are EXACTLY the same. Now the costs do become lower once the books diverge and one copy becomes paper and the other electronic. Yes, the website costs less to run, but you do have to employ someone to convert the book into the different electronic book formats. And the website has to pay staff. Now, I know these costs for the website and staff are cheaper then the the cost of renting the building and the staff at the book store. But costs are costs. And I agree that the cost of the ebook should be cheaper then the paper edition. I just emailed Sony because Robin Cook's Critical is priced more expensive then I can purchase it in Borders, Amazon, or Barnes & Nobel.

[wgrimm]

Originally Posted by HarryT

At the risk of repeating myself, it is a completely false analogy to compare borrowing a book from a library to downloading it from the internet. Firstly, every library from which someone borrows a book has bought that book, perhaps several copies of it. This HP eBook was created from photographs of a illegally-obtained manuscript which nobody paid for. It's a totally different situation. Secondly, in the UK at least, authors get paid for library loans on the basis of how many of their books are borrowed by libraries, nationwide, over the course of a year. Not a vast amount, but popular authors get a few thousand $.

Well sounds to me that if you buy the argument that ebook piracy causes massive sales losses, then libraries are at least as bad as piracy. In the States, authors don't get a royalty paid when their books are checked out of a library. Even if that is the case in the UK, the publishers are still getting cheated out of profits with library books <G>. Consider- a library buys 10 copies of a popular book, and each copy is checked out 25 times over the course of a year.

250 sales are lost!!!

Bottom line- IMHO, most of the people who borrowed the book wouldn't have bought it anyways, had it not been available at the library. The point I am making is that on cannot logically presume that a sale is lost for every e-book illegally downloaded.

BTW, do the authors in the UK get all their friends and family to check out their books multiple times to increase their payments?

[wgrimm]

Originally Posted by HarryT

But sooner or later the item is going to end up in the hands of someone who would otherwise have bought the product. That's inevitable. There's also the fundamental fact that it's just plain wrong to download musc, books, movies, or whatever, that you haven't paid for. Leaving the law aside, it's just plain morally wrong. Surely you agree with that, don't you?

Not necessarily. How is it wrong if you download the e-book of a paper book you own? In the US, with fair Use, it would appear not to be. What happens if you buy a DRM'ed ebook, the publisher goes out of business, and you download an "illegal" copy of that book? I "own" several ebooks from the 90s whose publishers/distributors are out of business.

Originally Posted by HarryT

[*]If 1000 libraries have a book available for loan, that's 1000 book sales for the author. If 1000 people download a book from the internet, that's ZERO sales for the author.

Well, not many libraries buy 1000 copies of a book. And you might consider that if each book is checked out 25 times per year, that is 25,000 total borrowings, or, by this same faulty logic, 24,000 lost sales.

Originally Posted by HarryT

No, the reason Microsoft succeeded was because IBM licenced their o/s for the IBM PC, which sold in vast numbers to businesses. Before that, Microsoft's primary business had been selling ROM BASIC for personal computers.

Not the case at all. First of all, IBM licensed DOS, not Windows, and there were competitors back in those days like DR-DOS, so M$ did not have anywhere near total market share. What gavce them market dominance in PC OS's was the fact that many, many people pirated Windows 3.1, making it the most popular OS on the desktop.

Originally Posted by HarryT

Sorry, but the fact that it happens doesn't make it "right" or "acceptable". Using someone else's intellectual property without paying for it is just plain WRONG. Perhaps you'd feel differently if that's how you made your living.

I didn't state in any post that it was okay to use intellectual property without paying for it. I did say that I think it is wrong to be charged multiple times for using the same intellectual property- that if I buy a paper book, I do have rights (ethically and under US law) to possess an e-readable copy of that same intellectual property.

[rlauzon]

Originally Posted by JSWolf

Up until the book makes it to electronic or paper, the costs are EXACTLY the same.

But this cost is distributed over all the books (both e and p) that are sold. So if the costs to make the "prototype" eBook was $50,000 and 100,000 books are sold, that cost represents only $0.50 of price of the book.

Originally Posted by JSWolf

Yes, the website costs less to run, but you do have to employ someone to convert the book into the different electronic book formats.

No you don't. This is what software is for. Many sites already have systems set up that store their eBooks in single format and the convert to the customer's requested format when the customer buys the eBook.

Originally Posted by JSWolf

And the website has to pay staff.

The cost of which is, again, distributed over all the eBooks sold, plus whatever other services that web site is running - making that cost very small. Remember that a web site may be only one of many being hosted by the provider. One staff, many sites = low web site staff costs.

Originally Posted by JSWolf

But costs are costs.

Actually, there are costs and there are costs. You seem to be treating all costs as equal. They aren't.

On a per-book basis, one time costs like writing the book itself, represents an insignificant cost when compared to the paper, the warehousing and transportation costs.

If you break up the selling price of a pBook into the costs that price represents, you will find that the highest of those numbers represent the physical attributes of the pBook. Most of those attributes don't exist for eBooks. The other attributes are replaced by much lower cost electronic versions.

[wgrimm]

Originally Posted by HeffeD

Nope. The end result is not the same. There is a very big difference between making a copy yourself or downloading an illegally distributed product. Acquiring an illegal product is never legal regardless of your justification.

No, the end result IS the same- the owner of the paper book now has an electronic version of that paper book, and that is covered under fair use.

Originally Posted by HeffeD

I was unaware that something could be produced for nothing, and that actual sales have no relation to being able to produce something.

Actually, when you are discussing digital products, they CAN be produced for nothing, or almost next to nothing. Once the ebook is written, producing a thousand, or a million copies of it, cost just about the same amount- next to nothing. Same thing is true of software- the relevant costs are in R&D. Once a program is produced, it doesn't cost much more to make a million copies of it as opposed to a thousand. That's why you see some VERY profitable software companies.

Originally Posted by HeffeD

Sure, you might have purchased a copy of the book, but how many people downloading the illegal file didn't? That's lost revenue.

No, this isn't lost revenue UNLESS the people who downloaded the book would have BOUGHT the book if the download wasn't available.

Originally Posted by HeffeD

I'm in the music business, and I can tell you first hand that illegal downloading does indeed impact the bottom line.

And one problem with the music business is that they refuse to adjust to the realities of the new marketplace. The prices charged for cd's are still too high. If music cd's cost, say, $5 apiece, illegal downloading would probably be much diminished. I won't pay $20 for a DVD movie, for example, but I will pay $9. And I won't pay $15 for a music cd either, usually.

Many companies are just greedy, and when they can't sell a product for what they would like, they whine about "piracy." A license for M$ Vista would cost me $399 (Ultimate). Why would I spend $399 on an inferior product when I can use BSD- a much better OS- for free? Or Mac OS X- another superior product- costs about $150 for a 5-user home license?

[JSWolf]

[QUOTE=rlauzon;86756]But this cost is distributed over all the books (both e and p) that are sold. So if the costs to make the "prototype" eBook was $50,000 and 100,000 books are sold, that cost represents only $0.50 of price of the book.[quote]
But, you don't know how many ebook copies will sell ahead of time. So you have to factor that in.

Originally Posted by rlauzon

No you don't. This is what software is for. Many sites already have systems set up that store their eBooks in single format and the convert to the customer's requested format when the customer buys the eBook.

What sites that sell ebooks are setup to generate your ebook on the fly?

Originally Posted by rlauzon

The cost of which is, again, distributed over all the eBooks sold, plus whatever other services that web site is running - making that cost very small. Remember that a web site may be only one of many being hosted by the provider. One staff, many sites = low web site staff costs.

We are not talking about the cost of the site to the hosting company. We are talking about the cost of the website to the shop selling the ebooks.

Originally Posted by rlauzon

Actually, there are costs and there are costs. You seem to be treating all costs as equal. They aren't.

The costs for the ebook are equal to the dead tree version up to the point of printing/making the ebooks. The rest of the costs are now going to be different. But they are still expenses that need to be taken into account. And yes, I do expect the rest of the expenses to be lower for the ebook version.

Originally Posted by rlauzon

On a per-book basis, one time costs like writing the book itself, represents an insignificant cost when compared to the paper, the warehousing and transportation costs.

There are also costs such as editing, paying the agent, proofreading, meetings, etc. all go into getting the book to the final stage where it can be print and made into an ebook.

Originally Posted by rlauzon

If you break up the selling price of a pBook into the costs that price represents, you will find that the highest of those numbers represent the physical attributes of the pBook. Most of those attributes don't exist for eBooks. The other attributes are replaced by much lower cost electronic versions.

I would love to see how much of the price of a dead tree edition is going to the materials used to print the book. Now if we take that away, what's left should be the retail price for the ebook before any discounts.

But what I don't get is how some book stores can sell a book at a lower cost then the ebook. I've email Ficitonwise about a book that was more expenisve the Amazon's price and got a reply that the price was set by the publisher. Well why not go and talk to the publisher and try to get the price reduced so it might actually sell?

[rlauzon]

Originally Posted by JSWolf

What sites that sell ebooks are setup to generate your ebook on the fly?

Fictionwise (I think), Manybooks, Munsey's. That's all I can think of off the top of my head.

Remember that many commercial sites (Like Connect) are enamored of DRM and, so, don't support multiple formats.

Of course, if we would settle on a standard, open format for eBooks, this point becomes moot.

Originally Posted by JSWolf

We are not talking about the cost of the site to the hosting company. We are talking about the cost of the website to the shop selling the ebooks.

Then we are, again, talking about a 1 time fee that is spread over all the books sold - and represents an insignificant part of the selling price.

Originally Posted by JSWolf

There are also costs such as editing, paying the agent, proofreading, meetings, etc. all go into getting the book to the final stage where it can be print and made into an ebook.

This was already done in creating the pBook and should not be a cost of an eBook.

From my point of view, creating the pBook generates 99% of what is needed to do the eBook. The only thing left to do is click-Save As-Upload to someplace like Fictionwise.

Originally Posted by JSWolf

I would love to see how much of the price of a dead tree edition is going to the materials used to print the book. Now if we take that away, what's left should be the retail price for the ebook before any discounts.

We got a glimpse of this when a publisher-person posted some information to Slashdot earlier this year. The numbers said that upwards of 75% of the selling price represented the physical-ness of the book.

Originally Posted by JSWolf

But what I don't get is how some book stores can sell a book at a lower cost then the ebook.

Business wheeling-and-dealing.

If Amazon can promise "we'll buy 100,000 and you get no damaged books back from us" they can probably work out a good deal with the publisher.

[DeGodefroi]

75% of the p books are the physical part? I would not be surprised. Besides the material like paper and ink and glue, costs are also in transporting the books to storage sites, book sellers etc.
I agree that an ebook should be 25% of the pbook price and add then the editing, formatting, optimizing and license costs for using DRM and the website operation etc.

Maybe 75% is too high, but an ebook should at at LEAST 30% off paperback price.