Ebooks high prices - the reasons beyond

[nelsonescorcio]

Hi everyone

I am assuming almost everyone agrees that ebooks are (generally) way too expensive: it is common to find ebooks at the same price of the printed edition - some even hard covers! And it is also very frequent finding e-books more (sometimes even much more) expensive than the same paper books. A good example are the prices you can find at Mobipocket's ebooks and Amazon's paper books (as you know, Amazon owns Mobipocket).

Why is this?!

I have a theory: publishing houses are really not interested in the ebook market; in fact, they are afraid of it.
The reason seems quite simple: they fear that once the ebook market "explodes", the piracy will take over and (as happen with the music industry) their profits - and the industry - will free fall. So they prefer not incentivate it.

(I heard recently a well known publishing house defending - off the record - that they believe ebooks and paper books should have the same price. The SAME price!!! The same price with very diferent costs it should have been said!!! And when asked about those diferent cost, that same house said that ebooks will have bonnus features... - please, do not insult readers inteligence! - with or without "bonnus", the costs are not just little but immenselly diferent!).

I believe they are going the wrong path.

High prices will incentivate piracy - precisely what they want to avoid. It will take much longer that it took in the music industry because ereaders are expensive, a diferent experience not everyone is willing to take and the public is a very diferent one, but it will happen. And then publishnig houses will no longer dictate anything anymore...

I really do hope thinhs change fast: being able to buy any ebbok with a reasonable disconut over the printed edition: the publisher will still be able to take a bigger profit, and literally everyone would benefict.
But quire frequently I believe it won't happen in the next decade or so.

What do you think about this issue?

Regards!
Nelson

[Alfy]

I copy /paste my answer from another thread on exactly the same subject started at about the same time (might be worth putting the two threads together)

I personnally believe editors do not hate eBooks, but they're definitly scared of their books getting copied on the web if they come out. Sevreal ways to control this, they believe, is to put on DRMs and to charge a lot so that only the "good" people will prurchase them (it's a well known idiocy to believe that because you have money you're honest...) and so they can recoup the losses that will be incurred by copying.

I think one thing that might help hugely would be to make editors aware that illegal sharing of their books has started long before the first ebook reader ever came out. I don't think they're aware there are some people out there who will quite happily take the time to entirely scan/OCR/Correct hundreds of volumes. Perhaps once they realise piracy is already there (AND HAS BARELY AFFECTED THEIR SALES, OR THEY WOULD HAVE NOTICED BY NOW!), they'll stop peeing in theit pants every time the "e" word comes out.

[xianfox]

I've been in the publishing industry in some capacity for the last 17 years. You may be surprised to learn that the "immensely different" costs are not that immense.

Following a book through the author's writing, agent, publishing house, to store, the only pieces you remove from the printed equation is the physical paper & ink and physical distribution.

There are other comparable costs added into the equation for ebooks: licensing fees for the owner of the ebook format, fees to distribution companies (ie. Lightning Source), additional cost of reformatting for ebook vs. print.

I'd be startled if the cost difference between paper and digital was more than 5% of the book's total cost to produce at this point in time, even for the large publishing houses. In my case, working for a small publisher, it would actually cost us more per book to follow that route. As such, we release our work in open formats without DRM to minimize cost and we hope our customers respect that and refrain from widely distributing our work.

I'd be interested to hear experiences from others in the publishing field.

[Alisa]

Mobipocket.com isn't really a good comparison. They have a deal with the stores that license their format that they will not compete on price therefore their prices will always be higher than any other place you could buy a book. This is why Amazon uses a format that is only nominally different. Otherwise they would likely have to abide by this agreement. No more $9.99 new releases. Stores like Fictionwise are more realistic. Still, it's the publishers that have the most influence on price. If they charge the ebook sellers a high price, the only choice they have is to take a loss or pass that on to the customer.

As xianfox says, there are certain costs that must be borne regardless of format and some additional costs that come specifically with electronic format. I do think it's still a bit high considering you don't have to absorb the high return rate you have with paper distribution but I think many publishers are also trying to recoup the capital outlays they had in starting their ebook divisions. Many of them decided to start their own storefronts. I'm no expert but I don't think that's a good move for most publishers. I think it can work well for some genres like it has for Baens. I bet Harlequin's storefront gets good traffic. Publishers have brand recognition in these fields. Most mainstream fiction consumers don't know who publishes their favorite authors. They want to go to one bookstore, not hit five publishers trying to find the title they want. I can't imagine their e-commerce efforts pay for themselves. It's overhead they don't need.

An additional note about DRM: Not only would publishers save money by not paying to license proprietary formats, I think many consumers would regard the DRM-free, open format book as more valuable. Many people who are aware of DRM regard buying such files as not really buying at all. It's renting. You can't guarantee you'll be able to use it for as long as you like so it's hard to justify paying as much for it as you would a paper copy.

[Elfwreck]

Originally Posted by xianfox

I've been in the publishing industry in some capacity for the last 17 years. You may be surprised to learn that the "immensely different" costs are not that immense.

Following a book through the author's writing, agent, publishing house, to store, the only pieces you remove from the printed equation is the physical paper & ink and physical distribution.

The costs for digital setup, licensing, marketing & distribution may be roughly equivalent, or only a bit lower, to start.

But selling 10,000 paper copies costs for a lot of paper, a lot of storage & distribution. Selling 10,000 digital copies costs... negligible per copy. Cost for SETUP is high; cost to actually distribute each copy is almost nil. And once the programming has been arranged for "convert publication-ready Word/InDesign/whatever doc to ebook format" (a sensible publisher would write their own in-house code for that), it can be done in seconds for each new book.

Claiming the cost of infrastructure makes the book costs equal would only make sense if book prices spiked when when gas prices get high, because distribution costs more.

Nobody's saying ebooks should be free. Just that, with equivalent infrastructure costs, actual cost-per-book is so low that it's insane to charge the same as a hardcover book, and not really sensible to charge paperback prices.

We know what paper costs. We know it's cheaper in bulk, but some of us know those prices, too. If 2/3 the book cost goes into layout, infrastructure & marketing... there's still the issue of "no paper, no storage fee." (Hard drive space & server activity don't remotely compare to warehouse and shipping fees.)

There's an interesting logic to, "this is a new market and so we need to create an entire infrastructure for it, and we're not sure how profitable it'll be so we'll make a tiny number of customers pay for the full infrastructure costs."

[xianfox]

Actually, the cost to distribute each copy is not almost nil. Most publishers aren't handling this themselves. Why? The demand simply isn't there to bring on the necessary staff, additional equipment, and write the necessary software themselves.

Instead, they hire out a firm, like Lightning Source, who are charging fees to handle conversion and distribution that are in the same neighborhood as conventional printing and distribution per copy. The publishers, to a large degree, have not realized the savings yet as they haven't even built the infrastructure yet.

The Kindle is far too new to have had an influence on prices yet, but I believe that is coming. And if the fuel crisis was/is prolonged, you will see it influence the price of everything that entails physical distribution, including pbooks; it takes time for the reports to show the real impact and prices to adjust accordingly.

I have no doubt that ebooks will eventually become cheaper than pbooks, but this will take time. The Kindle--love it or hate it--is going to do a lot to speed the process up, but it will still take time. I have my doubts that this will be realized as a price drop of ebooks rather than a price increase of pbooks though due to economic and environmental influences.

[pilotbob]

Originally Posted by nelsonescorcio

I am assuming almost everyone agrees that ebooks are (generally) way too expensive:

Heh.. I think everything I buy is too expensive. Cable TV service, Cell Phone service, electricity, gasoline, food, water, Dr.s bill, Dentist, etc.

If you think it is to expensive... don't buy it. At least you have a choice with eBooks. You don't so much with "some" of the stuff I listed above.

I've said many times, I don't have a problem paying the same price for an ebook as I do for a paperback. Give any extra to the authors. Or, why not get a free ebook when you buy a pbook?

BOb

[Alfy]

It does not matter that distribution is handled by an outside firm, it is still reflected in the cost for the end user. All the distribution fees off, the - small - website cost on, and you have what an eBook should REALLY cost.

[Alfy]

Originally Posted by pilotbob

Give any extra to the authors.

BOb

If that actually happened, I might not complain. Guess what, though, it never does!

[Elfwreck]

Originally Posted by xianfox

Instead, they hire out a firm, like Lightning Source, who are charging fees to handle conversion and distribution that are in the same neighborhood as conventional printing and distribution per copy.

So, they are being charged:
Conversion costs equal to printing costs--even though short books cost less to produce than long ones because they use less paper? Where books with fancy covers cost more than plain ones?

Webhosting/marketing costs equivalent to physical distribution--

• size of books affects storage costs,
• size & weight of the books affects the cost of getting it to market,
• inventory clerk has to log the receipt of the books in the store or warehouse,
• cashier has to be on-hand to ring up every sale (or in cases like Amazon, shipper on-hand to package every sale),
• packaging includes a printed receipt and a bag to carry the book,
• poor sellers are returned to be warehoused at additional cost?

What's the digital equivalent of these costs? The digital equivalent of the difference between a hardcover and a paperback and a special collector's edition? Between glue binding and sewn bindings? Between pulp paper and glossy paper?

The high cost of ebooks has very little to do with the cost of arranging ebooks to be sold, and a lot to do with publishers knowing there's a market and not knowing what to do with it or even how to understand it.

They're terrified that offering books "too cheaply" will lose them the opportunity for millions of dollars. They're *not* terrified that offering them too expensively will drive away customers... they don't know how to acknowledge those people as potential customers in the first place.

And their business model doesn't have a slot for what happens when they make the "legit" version so expensive that the potential customers make a bootleg version for themselves, or give up on that line of books and seek out something else to read. Technology has surpassed them--amateur publications of ebooks are no less elegant and useful than professional ones, and their business plans assume that amateur-made "books" are just not as desirable as professional ones.

They don't know how to compete with amateurs. Nothing in their models requires it. They're trying to pretend that the public will *of course* prefer mainstream publishing house versions of ebooks, and therefore will just accept whatever protocols they decide on.

[saoir]

Hi guys from a new arrival...

I too am astonished at the short term attitude of these publishers and this is what I posted on this topic to Teleread last week:

I am the new owner of an iPhone and have been searching for ebooks over the last two weeks to read on it. I am completely flummoxed at the pricing of ebooks and to add to that I am repeatedly coming across current newly published books where the ebook is significantly MORE EXPENSIVE than the paperback version !

What on earth is going on ? I am a capitalist and a commercial director of a hitec business. I believe in profit and as a wanna-be writer I also believe that writers must earn a fair shake.

Let’s get real guys. The retail price of a book includes a significant percentage that goes to the shop owner, to cover his profits, his staff wages, his light and heat and his rent, and also to the distributor(s) in the chain between publisher and seller. This percentage is usually in excess of 60%.

I see parallels here with the ‘head in the sand’ music industry that has been and will, deservedly, continue to bleed income to copiers. I see the same blind effort to screw as much money out of the readers before the inevitable explosion of e-reading occurs and before the parallel explosion of hackers who will start distributing these books free on torrent sites happens.

Is there no one in the publishing industry who can lift their head up and see the big picture ? High prices are suppressing the whole development of market. One might almost think that the publishers are PURPOSELY trying to suppress the ebook market because they feel they are making bigger profits from paper books - and it is supporting the millions of corners books shops. This would be fine - if it were not for the fact that there is an inevitable momentum in the progression from paper to ebooks. It is as strong a momentum as from Vinyl to CDs to MP3s. It cannot be stopped. It CANNOT be stopped.

Whether is be reading on the Kindle, the Sony ebook reader or on mobile phones such as my iPhone. This is the future (no not 100%, there will always be a market for paper books, but I see an 80:20 mix 20 years down the road). So the sooner the publishers get their head around this future marketing model the better.

Average decent people do not want to waste their precious and valuable time searching for illegal copies of books any more than they want to do it for their music. They have a natural tendency to want to pay a fair price. The music industry are still driving ordinary people in their millions to illegal download sites because of their crazy prices and complete lack of awareness of the ‘added value’ principle.

If the publishing business goes the same route then they will find that the same thing will happen to them. Ordinary people are not stupid and if the publishers fail to wake up in time they discover a huge portion of their readers will be subscribing to torrent sites, and they will be fighting a rear guard action they will inevitably lose.

Publishers need to start now - drop prices to a sensible level, promote their writers and their own names. If they do this and pay attention to the principles of added value - they will develop a solid readership base that is happy and willing to pay reasonable prices. If they do this they will keep the torrent sites and the hackers in the shallows and will generate the maximum earnings for themselves and their writers.

I don’t mind one bit paying a FAIR price. But I am not a complete fool and willing to pay 20 dollars for a book that is available on the high street for 10 dollars.

Most ebooks of leading ‘quality’ writers should in my view be priced at between 5 to 7 dollars, with recent publishings of best sellers at 10 dollars. That is my absolutely upper limit and I believe it is MORE than fair considering there is NO PRINTING, NO DISTRIBUTING ! and very limited web based distribution. Only marketing remains and that is quite small spread over a decent readership. Non best sellers should be prices at approx. 5 dollars. Of course this is only my broad-brush view. Specialty sectors must be priced differently.

Am I holding my breath ? nope . . .

Saoir

[Phogg]

Originally Posted by xianfox

Actually, the cost to distribute each copy is not almost nil. Most publishers aren't handling this themselves. Why? The demand simply isn't there to bring on the necessary staff, additional equipment, and write the necessary software themselves.

If it isn't you have some people who need to be fired yesterday.
Internet Texoma (in north Texas) is not far from me. They design and host Ecommerce sites for all sorts of mom and pop web businesses.

If your company can't find someone of their quality and pricing to handle distribution - then I will submit outright that there is likely embezzlement going on and you need a top to bottom outside audit right now.

[nelsonescorcio]

Welcome to this forum, saoir - I am a "junior member" myself.

I completly agree with you.
It is a shame such a big mistake is being made in this industry.
In the end, if publishing houses do not change their attitude, I will not feel much sorry for their fate.

Let's hope things can change in the near future. But, as you, I am not holding my breath...

Meanwhile, we'll just have to really dig in the web to find the best possible price - one that is not completly insulting.

Regards
Nelson

[jj2me]

Originally Posted by xianfox

Instead, they hire out a firm, like Lightning Source, who are charging fees to handle conversion and distribution that are in the same neighborhood as conventional printing and distribution per copy. The publishers, to a large degree, have not realized the savings yet as they haven't even built the infrastructure yet.

I defer to your industry knowledge. But paying to "handle conversion and distribution?" Authors submit manuscripts in ASCII, right? Conversion, absent DRM, takes what, a few days? And "distribution," after establishing initial contracts with on-line booksellers, thereafter consists of an attachment to an e-mail, no?

This makes me think you're right about "haven't even built the infrastructure yet." Perhaps haven't even thought about it.

I'm sure I'm missing something, but I'm not about to buy stock in Lightning Source.

[Shaggy]

Originally Posted by xianfox

Actually, the cost to distribute each copy is not almost nil. Most publishers aren't handling this themselves. Why? The demand simply isn't there to bring on the necessary staff, additional equipment, and write the necessary software themselves.

Instead, they hire out a firm, like Lightning Source, who are charging fees to handle conversion and distribution that are in the same neighborhood as conventional printing and distribution per copy.

Then they're being ripped off by these firms.