The Wall Street Journal article on e-book sticker shock that we covered a couple of days ago has been drawing a number of reactions. CBS Marketwatch offers a piece noting that the high e-book prices are slowing the growth of the industry. It points out that e-book prices have implications for e-reader prices, too, because consumers won’t want to pay high prices for an e-reader if they’re going to have to pay a lot for the books, too.

The question is who gets hurt worse. According to the Journal, both Amazon and industry executives claim that growing e-book prices have slowed e-book market growth. That’s bad news for Amazon. The company’s move into not only e-readers but tablets with the Kindle Fire is still tied closely to Amazon’s positioning as a media seller. So it’s quite possible that Amazon — and Barnes & Noble with its Nook tablet — could see a drop in sales. But Apple’s iPad wouldn’t suffer, because consumers see it primarily as a tablet, not an e-reader.

Meanwhile, PaidContent points out that at the time New York Times bestsellers’ e-books were $9.99, very few people were around to buy them because e-readers were so expensive. It also reminds us that Amazon was only selling for that price because it was taking a loss to do so. Also, publishers had a lot fewer e-books available to buy. The piece suggests too many people treat $9.99 as a “magic price” and the price point is getting more attention than it merits.

Why did Amazon choose to price NYT e-book bestsellers at $9.99? We don’t know. Probably because $9.99 sounds good and is less than $10. But that is not a good enough reason for all e-books to cost $9.99. And allowing this price (or any other price) to dominate the e-book pricing debate ignores the many changes that have taken place in the world of digital books since the first Kindle was introduced over four years ago.

On GigaOm, Matthew Ingram argues that publishers are still missing the point in the pricing debate. They seem to be talking themselves into believing that consumers are willing to pay higher prices for e-books based on the convenience and other benefits they have to offer.

A senior vice-president at Hachette Digital, a unit of one of the world’s largest publishing firms, tells the Journal that she believes “there has been a change in the understanding of the value of a digital book,” and that readers see the added value and are willing to pay extra for it.

This sounds like a giant case of wishful thinking, and there is mounting evidence to indicate it is just that. While it’s true that e-book sales continue to increase, that’s more likely due to the mainstream adoption of readers like the Kindle and the iPad than it is any acceptance of higher e-book prices.

Meanwhile, Ingram says, self-publishing authors are finding they can sell a lot more e-books at lower prices. If publishers don’t get their act together, he warns, they could find they’ve given Amazon more power in terms of growing its self-publishing market by pushing readers away from their high-priced offerings.

At any rate, the future of agency pricing is up in the air right now as the Justice Department and Europe conduct separate anti-trust investigations into it, and a couple of dozen anti-trust class action suits are pending in court.

Around the time agency pricing was proposed, there was talk of a recent Supreme Court precedent involving ladies’ leather accessories that suggests this form of price fixing will pass legal muster. Still, there’s at least a chance agency pricing might be deemed illegal under the law. I wonder what the publishing industry will do if that happens?

13 COMMENTS

  1. No sure why so many people get locked into just a few authors that demand high prices by their publishers. I have found so many good/great authors that offer the first book in a series or other titles for free to build a following, I’m not sure I will ever catch up. Many times they offer their follow on books at a reasonable price so if I really was drawn into the characters I will buy follow ons. I probably have 400-500 books in my que now and have paid out way less than $100.

    I keep a list of authors/series that I want to keep up on and buy one ever 10 or so free books to support the authors I like but still keep my reading costs very low.

    By the way the name brand authors that demand high prices, I buy their pBooks at the library sales for 50 cents to a dollar each, I read them when portability doesn’t matter.

  2. The linked CBS article said:

    “big costs in book publishing are writing, editing, production and marketing. Printing and warehousing typically represent between $1 to $2.50 per copy of book.”

    If that is the case I would expect classic print books to be offered for $2 to $5. Only Dover offers such books.

    I have never bought an ebook for more then $6. Between the classics and Amazon’s specials there is no shortage of cheap reads for me.

  3. Judging from the Hatchette Digital exec, the Agency 6 assume that ebook buyers are price insensitive because the bestsellers and even the backlist is selling after they raised prices substantially (many at least 50% increases). I think this is because there are so many new eReader owners, they are buying new bestsellers and favorite old books to populate their empty eReaders. Many of these consumers used to buy mass market paperbacks, used books, borrowed from the library, and are not going to go on a buying spree forever. Pretty soon, the Agency 6 are going to discover that many of the eReader consumers are going to wait for price drops, borrow from the library (when possible, since 2-3 of the Agency 6 don’t lend), or switch to indie authors (or established authors willing to take their backlist to Amazon, et. al.) whose books cost $5 or less, instead of $15 and up.

  4. ^ I believe your information is out of date. You specifically included backlist (“favourite old books”). I’ve checked for three authors I know. The very latest in a series may be $15 – or a couple of dollars higher – or a couple of dollars lower – or or as low as $10. Backlist, everything I looked at seemed to be $8. I wouldn’t describe either of those cases as “$15 and up”.

    I don’t want to dismiss your feelings. I’m not a buyer myself (drm boycott), so I may have missed something. Even if I haven’t, they’re very understandable:

    If your reaction to seeing the price of brand new releases is “that’s too high; I’ll never pay that”, that’s expected. Why? Because there is a minority who do want that specific release, and are willing to pay for it. The per-sale profit in that segment is much higher; enough to make it significant overall. You can exploit that first, then lower the price later. (Like just about every other consumer product with large fixed costs relative to unit costs).

    The problem is twofold. 1) It’s not been communicated very effectively. Whereas with paper books, you could see this expressed very clearly in hardbacks v.s. paperbacks. If you’re not in the first group, you can wait for the paperback. There’s no equivalent for ebooks, and without that reassurance a lot of people are assuming the worst. 2) A certain retailer decided it was in their interest to temporarily subsidize ebook prices. From the outcry when this stopped, it’s pretty clear it had the desired effect of “devaluing books”. And the across-the-board one-time price rise when the subsidy went away feeds into people assuming the worst.

    Note that the main price for Baen (and Nightshade Books), who always get trotted out as an example for other publishers to follow (thanks to low prices, no DRM, and publishing ebooks since even before the Sony Reader, Kindle, etc) is $6. That’s above your $5 threshold! And that’s not their only price; their “brand new release, get it NOW” price is $15.

  5. The cost of new e-books is not where I see the problem, (the exception being those new e-book titles from A-list authors that are priced at 18.99–those are a bit over the top and won’t see my dollar in their pocket). What really gets me going is raised prices for older e-books.

    One glaring example: The Boys from Santa Cruze by Jonathan Nasau. This book was 9.99 on 3-1-10. Today, Simon and Schuster is charging 16.99!!!!

    Some other older e-books that have been “re-valued” by the greedy A6:

    Without Fail by Lee Child — 6.39 on 7-20-08 — 9.99 today
    Running Blind by Lee Child — 6.39 on 7.20-08 — 9.99 today
    Lost City of Z by David Frann — 9.99 on 3-0-09 — 11.99 today
    Handle with Care by Jodi Piccoult — 9.99 on 2-24-09 — 12.99 today

    These are NOT new books; some are 3+ years old! I bought a paperback copy of Handle with Care at my local grocery store last week for $8.99!

    They are designing a new cover, printing the book, warehousing and distributing the book and buying back the remainders and selling the paperback at a price lower than the price they set for the e-book edition. This is greed, plain and simple. It flies in the face of their “lower e-book prices de-value the book” mantra.

  6. January – I don’t agree. High prices for new books is a major problem, I believe, especially for ordinary everyday new users of eReaders. Most do not immediately know where to get better value and the issues surrounding older titles,and initial impression is such a negative one I am sure it must be having a dampening affect on the changeover to digital.

    “This is greed, plain and simple.” It is, but it’s also dumb greed.

    I remember travelling by airplane 30 years ago. Prices were ridiculously high, controlled by monopoly airlines owned by governments. They insisted that this was the price tickets had to be! After all they were only making small profits ! And of course to some extent it was because they were so incredibly inefficient and bloated with overheads.

    Then airlines like Ryanair arrived and blew the model out of the water. Lower prices, efficient operation. Prices became vastly lower yet profits were up.

    Authors are being extraordinarily ill served by these high prices. I am convinced that they would be earning a lot more if prices were lower. Not that I have much sympathy after reading so many of them complain about the ‘devaluation’ of writing oye ……!! so blinkered.

  7. I think that, too, it behooves vendors of ALL media to consider what other options the customer has available to them at similar price points. A customer’s money is limited. Their time is limited too. There is only so much to spend for entertainment, and unfortunately for the vendor, they are not the only game in town. I subscribe to a certain blog by a cookbook author who wanted to charge $5-10 per WEEK for meal plans based on the cookbooks. Why on earth would I pay that for a two-page handout when I can buy a whole book for only a little more? And why would I pay $15.99 for a new-release book when I can buy a slightly older one for half that—or, if the older one is by a author republishing their own backlist, that same money could get a whole series? Or a year’s worth of my favourite magazine at Zinio? Or two MONTHS worth of unlimited streaming movies at Netflix? That’s who they are competing with—not just other versions of their own books, but with the entirety of available media the customer might partake in…

  8. I won’t pay more for ebooks than I do for paper books–ever. The publishers who claim that users will pay more for ebooks for convenience sake are very much engaging in wishful thinking.

    I even did a blog post last week about the factors that should drive ebook prices down (DRM, ownership, quality, and physicality issues). The comments on that post have been very enlightening. People said they would be willing to pay over $6.99 for their favorites or if they have very strong recommendations. That’s not going to help most books.

    People see ebooks as worth about 75% of paperback. Period. Wishful thinking isn’t going to change that.

  9. Several famous dead authors:

    Neville Shute: $12-14
    William Faulkner: $12
    John Steinbeck: $12-14
    Iris Murdoch: $10-18
    Ernest Hemingway: $10-15
    John Updike: $12-15
    Philip Roth: $10-17

    I agree, it’s more common for live, currently published authors to have backlist in the $8-10 range, but I still think that’s too high when you can get most of these works for $3-5 used, and their mass market paperback print run is done.

  10. I believe that consumer’s inertia is to do the same thing they’ve always done and preserving that is that the most important. People that never bought books will not starting buying when they go electronic. People that did buy books will continue to buy and read the same authors.

    What the A6 price fixing cartel has done is force a lot of their paying customer to change their inertia. Some will continue to buy the same as they did before but a lot will reluctantly explore other options and some will get upset enough to not buy from them at all. Once they explore the other options their inertia will be to keep doing the same thing. I haven’t bought an A6 book since the price fixing started and I don’t miss them. Even if they drop the price fixing I doubt I’ll change back. I know that I’m not the only one.

    I believe that the number of customer’s they are losing is being masked by the honeymoon purchases of new ereader and tablet sales. I saw a graph showing the declining percentage of the A6 books in the B&N and Amazon bestseller lists. It would be interesting to see this back to before the agency pricing started.

  11. /me deliberately missing the point
    Even the named dead authors sounds less like “$15 and up” and more like “$15 or less”.

    At a guess, the dead authors aren’t as good sellers. But I don’t expect us commenters have the evidence either way. (I.e., would they have the same sales if sold at the same price? Like Howard says elsewhere, you have to run the experiment; and any results are no doubt “commercially sensitive”).

    I don’t want to defend oligarchy. Still, my current reaction to this is about the same as Stephen’s to the idea of more restrained copyright durations. I.e. it’s a good populist argument, but I have difficulty accepting the principles.

    My one absolute would be that publishers should try a number of different pricing levels. Which is what we observed. $8 – $15.

    I agree with Howard’s point about the negative impression you get from expensive new releases. That’s exactly what I tried criticizing as being “not communicated very effectively”. But I don’t automatically accept that means high-margin ebooks are impossible.

    (And criticizing this as a “dampening affect [sic] on the changeover to digital” – do I care? Note that at the moment I’m committed to my current e-reader, & the availability of ebooks is already as good as can be expected. From my POV, mass adoption of one DRM system would be a net negative for me. My interest is in a fragmented market that allows DRM-free to thrive. And particularly one where Amazon doesn’t succeed [any further], because at the moment they’re refusing to deal with either Baen or Smashwords – the most notorious sources of commercial DRM-free. If the justification for low prices is “look at Amazon pre-agency”… I understand why people say that, but it’s not an argument for me).

    While I’m missing the point – there’s no chance that agency pricing itself is illegal, as suggested in the original article. It’s already used for print magazines. What could be illegal is the process that established the agency pricing agreements — if there was collusion.

The TeleRead community values your civil and thoughtful comments. We use a cache, so expect a delay. Problems? E-mail newteleread@gmail.com.