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By David Rothman

lowpricescreativecommonsssronaldreaganFor eons I’ve seen e-books as potentially a mass phenomenon, aided by low prices. So when the pros at MarketIntellNow (yep, the guys advertising in the upper right) showed up with a market survey saying as much, I was delighted.

The company’s Marie Campell told our Robert Nagle in a Q&A: “We believe that the Publishing Industry will very quickly discover that they’re blessed with ELASTICITY. That is, the lower the prices of e-books up to a point, the more net revenue they drive (thus the cannibalization effect on traditional book sales will be overcome). E-books may start around $10.00 each, but come down in the 2008-09 timeframe and approach $5.00.”

And now it looks as if real life could well be backing up Marie’s conclusion if you go by statistics from Amazon’s Kindle editions, where just 27 of the 1,000 top bestsellers sell for more than $10 or more. In fact, $5 e-books on Amazon are already rather common.

Tim O’Reilly vs. MarketIntellNow

That said, publishers of academic or technical books, traditionally priced higher than typical trade books, may feel a tad threatened by the new business model. In a rebuttal to MarketIntell, Tim O’Reilly, deservedly one of the tech world’s favorite publishers, says the real constraint in the end, after an e-book shakeout, will be readers’ time—not simply the prices they’re willing to pay.

And you know? In many cases he could be right for the kind of book he publishes. But as Jane and friends at Dear Author can tell you, some fan of romance fiction can easily go through dozens of titles in a month. That could mean lower prices and maybe even ad-supported “free” in the cases of books where the numbers are high enough—something that improved displays and the ease of online distribution could make possible.

Granted, Tim observes that after “paperbacks became the dominant format, outselling hardbacks, prices rose substantially for both paperbacks AND hardbacks. They didn’t keep falling. So if prices fall to $5 or less, as predicted, you can equally bet that they will rise if and when the electronic format becomes dominant.” But remember, that happened within the P world where barriers of entry are much higher than with E and where distribution is endlessly costlier.

The special case of academic and technical books

As for academic and technical books, I’m hoping fervently that Tim and other publishers in that area can thrive—my bet is that O’Reilly will be among the survivors. But he’ll face his challenges. Publishers may not always be able to price a book just according to costs and what they hope, and I hope, will be a fair profit. Knowledge-based books in certain technical specialties will ultimately face stiff competition from Wikis and other crowd-sourced efforts, not to mention content put online for free by institutions for promotional, charitable and other purposes—or maybe even by academics who in the past might have turned to traditional publishers.

Frustratingly for publishers, the information in tech books is often in bits and pieces—meaning that much of it may end up on the Web, maybe even through techies’ own discoveries, without any publishers or authors involved. If nothing else, Robert Nagle notes how tech books lend themselves to “modularization.” As for information developed from the grassroots, it won’t come with the pedigrees from O’Reilly—yes, reputation counts—but user ratings online will help address that issue somewhat.

Bottom line

Ultimately , prices of books and other texts, of all kinds, will be determined not by what publishers and authors want but by what consumers are willing to pay. Tim, I wish it weren’t so. Like you, I’m a fan of subscription plans, letting readers graze on the exact information they need; and I am highly appreciative of the wonderful work that O’Reilly is doing in that area. But even subscription prices may be influenced by competition from “free.”

In the end, I’m hoping, like Tim, that people will experiment with all kinds of business models and see which works best for which kinds of books. So far, however, the sellers and buyers in the Kindle Store have voted for books at prices far lower than many would have expected (I just hope that Amazon doesn’t spoil the party by jacking up various transaction-related prices).

One solution

One way to help keep publishers in the game would be a well-stocked national digital library system in the TeleRead vein, or a nonprofit equivalent, that would pay fair compensation to content creators. It would cost a speck of the price of Iraq War, with effects just as long lasting and infinitely more positive.

Update, 2:25 Eastern: One critic of the IntellNow poll notes that respondents self-selected themselves. I agree that’s a flaw. But the poll is consistent with sentiments repeatedly expressed by TeleBloggers, who, even if they are not impoverished, want their e-books cheap. I see many e-book readers—lots of our visitors, for example—as a whole new audience for publishers. I don’t think that brick-and-mortar bookstore customers, either, would be representative of the potential market.

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