This fight over Ebook pricing between Amazon and publishers

[pm]

As I read this:
http://news.yahoo.com/s/nm/20100203/tc_nm/us_newscorp_amazon

I find myself a little annoyed. I have a Kindle and I've purchased over $100 of ebooks for it and this idea that they are going to raise prices on bestsellers by 50% is not making me a happy customer.

I have to wonder if Rupert Murdoch has paid any attention to what happened to music and movies on the internet and if anyone has explained to him that a large ebook file is about 100k. The only reason no one is pirating books is that no one really owns e-book readers, but as soon as they do, $10/book is going to look like an amazing deal. And what makes ebooks a particularly easy thing to pirate is that it doesn't matter what kind of DRM you have, you can make a perfect copy with OCR software. DRM has been largely ineffective with music and movies and music basically solved the problem by pricing music low and making it convienent to buy it. Movies aren't pirated extensively because you can rent all you want for $15/month and they are massive to download.

You might get the idea that I'm a huge fan of piracy but I'm not. I buy all of my software without exception, and my music collection is almost entirely legit and I have a Kindle and I've bought every book that I have on it. I am most definitely not advocating piracy.

But I am saying that I don't understand this idea that book publishers can price ebooks at whatever price they deem acceptable and thing will work out just fine for them. It seems to completely and irrationally ignore recent history.

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edit:

After a fair amount of discussion/debate with my co-workers in the cafeteria here at Intel, talking to my wife about her experience publishing books (she's authored about 8 books and is a newspaper correspondent), and reading several blogs by authors who I like, I have completely an utterly changed my mind on this issue.

I now take the opposite position - agent pricing and letting the market decide is the only fair way to market e-books. If they price them too high, then they will have to deal with piracy but then it's a business decision. I'm now firmly against the position that Amazon has taken - and if this makes me look indecisive then so be it. I've done research and changed my mind based on more information.

Amazon is using their dominance in online book sales and e-book sales and popularity of the Kindle to cement a new pricing model that favors them, and margins on books sales are very tight and often unprofitable.

In summary, I agree with Capt. Caveman's post now.

Charles Stross's blog (a sci-fi writer that I generally like):
http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html

Tobias Buckell's blog (a sci-fi writer that I've never heard of):
http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-longer-for-sale-via-amazon/

 

[Capt Caveman]

Well, they do want to make a profit. Currently, they take a loss. For some reason, people believe that publishers don't do anything but print a book(which many don't even do as they outsource it).

Google will also be releasing an ebook store this year and plan to follow Apple's model of allowing publishers to set their own prices.

 

[pm]

Yes, they do need to be profitable. But digital books don't need huge expensive presses, paper, ink distribution chains, and shipping fees.

I don't see where these companies are losing money:
MacMillan/McGraw-Hill reported profits of $2.53/share, their gross margin is a respectable 24%.
Newscorp reported profits of $0.25/share today, with gross margins of 38%. Harper Collins - a subsidiary - reported a profit in the most recent quarter as well.
Simon & Schuster reported a profit last summer - the most recent financial news that I could find.
Random House - a subsidiary of Bertelsmann AG - lost money, but Bertelsmann made money last year. Their balance sheet is a bit hard to read since they phrase things a bit differently but they seem to be doing ok - particularly given the economy globally.

Considering 2009 was a rough year for everyone, I don't see that they are having a particularly hard time of it.


From a consumers perspective, you can't lend an ebook to your friends, you can't get one for free from a library (with rare exceptions), you can't buy a used ebook, you can't sell a used ebook, you can't get a first edition and hold it for years and then sell it for a fortune. If a hardcover edition of the "Lost Symbol" is selling for $12, then how must less are they going to charge for the ebook version?

My reason for having a Kindle is that I don't have to carry books on long trips with me overseas where it can be hard to find books in English. But if I have to pay a similar price for an ebook as a regular book a fair bit of the attraction is lost.

Maybe you are right... letting them set their own prices may be the way of the future, and it even may be more fair. But, to me, it still seems naive of them to think that they can hold e-book prices close to hardcover prices. It seems like what the music industry tried to do.

 

[idiotekniQues]

i have a kindle and have bought every book legitimately. but these publishers are going to drive me to pirate them.

e-books costing that much more than a paperback version is absurd.

 

[fatpat268]

i have a kindle and have bought every book legitimately. but these publishers are going to drive me to pirate them.

e-books costing that much more than a paperback version is absurd.

No kidding. The whole e-book piracy scene isn't that large. But if you piss off enough people, it'll grow huge.

Here's the thing, people will pay for things, provided they aren't perceived to be overpriced. $9.99 for a new release in digital form was the perfect price for a book. No printing, no shipping, no storing, and no risk of having a huge stock of books unsold.

No, instead, lets give a big middle finger to the consumer and expect them to take it. A lot of people will give in and pay higher prices, some won't buy anything. But there's a lot of people who have that shiny new e-reader and will start to pirate.

It wouldn't be such a big deal if the author would actually see a healthy portion of that cost increase, but it's unlikely that they will. If this kind of crap continues in the future, digital distribution simply won't work... for any media.

 

[Deeko]

Well, they do want to make a profit. Currently, they take a loss. For some reason, people believe that publishers don't do anything but print a book(which many don't even do as they outsource it).

Google will also be releasing an ebook store this year and plan to follow Apple's model of allowing publishers to set their own prices.

Who takes a loss? Certainly not the publishers, not on eBooks, no. AMAZON takes a loss. Amazon is paying the wholesale price - which is more than the $9.99 they're selling for.

The publishers don't like this because customers will then buy the $10 ebook, not the $30 hardcover. They purposely want to OVERprice ebooks, to make them less viable alternatives to new hardcovers. Which is a bullshit game to play. They don't want you to pay more for an eBook....they want it so expensive that you won't buy it at all.

 

[Bateluer]

Publishers are idiots, their own actions will lead to a massive increase in ebook piracy as people acquire ebook readers. Or, they will kill the ebook industry before it really gets going. Wouldn't surprise me if that was their goal.

 

[boomhower]

Who takes a loss? Certainly not the publishers, not on eBooks, no. AMAZON takes a loss. Amazon is paying the wholesale price - which is more than the $9.99 they're selling for.

The publishers don't like this because customers will then buy the $10 ebook, not the $30 hardcover. They purposely want to OVERprice ebooks, to make them less viable alternatives to new hardcovers. Which is a bullshit game to play. They don't want you to pay more for an eBook....they want it so expensive that you won't buy it at all.

That is my understanding as well. The publishers make the same amount whether amazon is selling the book for $5 or $20. They are just trying to protect their hardcover sales. Greedy bastards are going to drive up piracy.

 

[pm]

Updated my post at the top with some links and a complete reversal of my original post. This proves either that I have an open mind... or that I'm totally wishy-washy.

 

[ChAoTiCpInOy]

It proves you have an open mind.

 

[PhoKingGuy]

I was going to buy that Asus e-reader when it came out, not anymore. I'll just keep downloading them or using amazon marketplace.

 

[fatpat268]

I was going to buy that Asus e-reader when it came out, not anymore. I'll just keep downloading them or using amazon marketplace.

Yea. Publishers don't realize that they have to price things to attract people to a new platform. If they don't have an attractive price point, people will buy used books, or even worse, pirate them on their e-readers.

If you get a consumer hooked on an e-reader, chances are, they'll buy more books than they typically do, especially at a $10 price. Unfortunately, common sense is replaced with greed.