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By Humayun Kabir

Moderator’s note: Welcome to our latest TeleBlog contributor, Dr. Humayun Kabir of Kindle News! Humayun does not own a Kindle but will be getting one—and for the present article, he has much better qualifications, as a Senior Lecturer in Finance, at Massey University in New Zealand). Yes, I’ll be asking Amazon for its side. In fairness to Amazon, I have heard that the Kindle is making publishers more sensitive to geographically related copyright issues. Still, could that be used to justify the higher prices of Mobipocket e-books and fully explain the gap? I doubt it. Please note one other possible factor; publishers, too, not just retailers like Amazon, can influence the prices of p-books. But I still agree with Humayun’s main premise—that Amazon is forcing customers of its Mobi store to subsidize the Kindle. Also, how about independent retailers relying on the Mobi format and having to drop their e-book prices to compete? – D.R.

price-com1 Amazon has no problem selling p-books around the world; does it have one in case of e-books? Not exactly. The company is selling e-books worldwide through its Mobipocket.com store. Then again, Amazon is reluctant to sell Kindle editions to people outside the States. If there were any issue with geographic copyright, that should equally apply to Mobipocket e-books. So what’s the story here, and what is the pricing angle?

In search of answers, I compiled some price records of a few New York Times best-sellers from Amazon and Mobipocket Web sites. You can see in the table that the Kindle-edition price is $9.99 for all 20 books. The print edition prices are the ones at which Amazon selling p-books word-wide.

Let’s first compare the Mobipocket and print prices. The Mobi prices are always higher except one, and the differences go as high as $15.75. For an e-book you’re paying more than for print? When comparing with Kindle-edition prices, the difference goes up as high as $25 more than for a p-book. If you want to buy all 20 books in Mobi format, it costs you $367.48, which is $88.60 higher than the cost of the print editions and $167.68 higher than the cost of the Kindle editions. As a Kindle owner you pay 40 percent less than what you pay for print price-com2edition. For Mobi you expect to pay low as well, though it might not be as low as what you pay for Kindle editions, but you actually end up paying 24 percent higher over the print edition, and 84 percent higher over the Kindle edition.

After knowing this, how do you feel as a Kindle owner or as any other e-book device owner that can read at least nonDRMed Mobipocket format? If you’re an e-book fan and own a Kindle you save 84 percent because you’re not using Mobi format [moderator's note: the Kindle reads only nonDRMed Mobi - D.R.]. For that, you have to live in the States. If you read heavily and buy any other device, just give up, and start saving toward a $399 Kindle. If you’re not in the USA, go to hell!

With the Kindle, Amazon has segmented the e-book market world-wide. It’s unreasonable for U.S. buyers who are heavy readers to buy Mobi format anymore; meanwhile non-U.S, customers still must rely on Amazon-owned Mobipocket.com, which at least has a huge selection of price-com3 e-books. Kindle’s .azw is essentially the Mobi .prc format with different DRM protection. Find any non-DRMed Kindle format, like the Kindle user manual from the Amazon site, change the file extension from .azw to .prc, and you will be able to open the file in Mobipocket desktop reader. So it’s clear Amazon has tried to screw up the readers with a new DRMed format with lower content prices leaving the old one (DRMed Mobi) for the rest of the world.

E-books, when DRMed, destroy the social value of books. Once you own a p-book you can read it without relying on a specific device, somebody can borrow it from you, or you can sell it as an used book. A DRMed book raises issues at the individual level. By paying 40 percent less for Kindle edition, you still can’t mitigate the social cost, but as an individual you’ll be satisfied enough to justify that. Still, how happy will you be with the Mobi format—when you have to pay 24 percent more over p-books, and 84 percent more over the Kindle?

Dear Kindle owners, you’re buying Kindle e-books cheap, but the rest of the world is paying the price.

(Adapted by permission from Kindle News.)

Additional moderator’s note: Here’s more evidence that copyright geography alone probably does not explain the price gap. Newsweek says in its Kindle cover story:

“Publishers are resisting the idea of charging less for e-books. ‘I’m not going along with it,’ says Penguin’s David Shanks of Amazon’s low price for best sellers. (He seemed startled when I told him that the Alan Greenspan book he publishes is for sale at that price, since he offered no special discount.) Amazon is clearly taking a loss on such books. But [Amazon CEO Jeff] Bezos says that he can sustain this scheme indefinitely. ‘We have a lot of experience in low-margin and high-volume sale—you just have to make sure the mix [between discounted and higher-priced items] works.’”

Obviously it’s working a lot better for Amazon and Kindle customers than those using the Mobi format—no small injustice to non-U.S. customers who cannot enjoy the full benefits of the Kindle, even if they do manage to get one. Although publishers do influence prices via what they charge retailers, Amazon must have tried a lot harder to get good deals for Kindle owners than for Mobi users. Either that or publishers felt they could be more flexible toward the Kindle editions since Kindle owners are not as numerous as Mobipocket owners.

Now, what about the future? Will Amazon jack up Kindle-edition prices if/when the Kindle catches on? I’d hope not. But with Amazon, you never know.

One other detail. Beyond other possible reasons for limiting the Kindle to the U.S., keep in mind that its wireless system for downloading books does not work everywhere on earth, including some places in the States. – DR

humayunkabir Humayan’s bio: “I live in New Zealand. I’m a Senior Lecturer in Finance here at Massey University. I moved to New Zealand after finishing my Ph.D. in the U.S.A. in Financial Economics in 2004. I used to own all early-generation e-book devices, like the Rocket eBook, Softbook, eBookman, and Hiebook, when I was in the USA. Currently I have Sony Reader, the iRex iLiad, and an ipodTouch. I’m in the process of getting a Kindle. My e-book interest is in the area of literature, politics, philosophy, sociology, etc. I also hate DRMed e-book. However, my interest in the Kindle is related to having the opportunity to do some research on readers and publishers in relation to e-books. The Amazon Kindle web store is designed uniquely; and that generates some publicly usable information in that direction, although not enough. The Kindle situation might give us some direction regarding the future of e-books. To keep things rolling, I try to post useful information for the current and prospective Kindle owners almost daily.”

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