Publishers, Pricing, and Pretensions

Publishers, Pricing, and Pretensions

(image courtesy CFO Daily News)

Friday afternoon The Consumerist reported on a comment made by Michael Cader on a publishing industry site. Essentially, he said that if you can afford an ebook reader, you can afford higher ebook prices. Needless to say, many of us at Gear Diary vehemently disagreed. Each of us had our own take on the publishing industry, high prices, and our general frustration with publisher’s attitudes towards ebooks.

Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Carly Z
I’ve worked in sales since I graduated from college. In fact, I spent 3 years as a sales manager for Borders, and while that wasn’t exactly yesterday, I do know about what customers buy and why they buy them. I saw people who would happily and without hesitation drop over $100 on paperbacks, but wouldn’t touch a hardcover, no matter how much they loved the author. People are far more conscious of “bang for your buck” than publishers clearly realize. The reason 9.99 became a magic price point in people’s heads was because they could buy MORE BOOKS for their book budget dollars. And when people can get more for the same number of dollars, they’ll keep coming back for more…

And as far as the idea that “they can afford an ebook reader, they can afford pricier books”, well, that’s going to lead to one thing: people buying less books. eBook sales increased 310% in 2009, but clearly, we should seek to slow those down, because the customer base could have afforded more.

Want to know how insane this concept is? Look at it this way. I just spent $110 on an interior car detailing because the seats needed cleaning. (My dog, a bag of chocolate, and a bumpy ride to the emergency vet didn’t mix). Because I could afford to pay someone to make my car smell nicer, should the gas station charge me more?

Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Doug Moran
I found Mike Shatzkin’s notes from the lecture to be, well, pretty unconvincing (if I’m being diplomatic). Or to be more blunt: a whole lot of drivel and rationalization to support a broken model of publishing and pricing. Here’s what I posted on that site:

The implicit, false promise of cheap e-books was made by the people who profit, at very nice margins, from selling the devices, not from publishers.

Um, no. The expectation is created by an observable fact: when you buy a hardcopy book, you’re getting a hardcopy book. When you buy an eBook, you get some DRM-protected content, which (as Amazon demonstrated with 1984) can actually be taken away. Further, that content is generally of poorer quality, and almost always comes without any of the extras-maps, illustrations, photos, etc.-that come with a hardcopy book.

So a buyer looks at this and says, ‘’Huh; why ain’t them thar eBook thingies a whole heck’uva lot cheaper than this here giant book thing, huh?‘’ And other people with a bit of experience say, ’’Now wait; no distribution, printing, warehousing, and other costs; why are you trying to gouge me at the full-cover hardcopy price months (or even years) after the book was published?’’

It has nothing to do with the pricing structure attempted by Amazon or other ‘’device manufacturers’’, and everything to do with observable facts.

I found Chris Walters’ views to be much in line with my own. I’ve said it over and over again: the publishers are doing everything they can to hold on to their broken model. They should not be so indulged, and I’m glad that Amazon and Apple are now pushing them.

Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Michael Anderson

I remember a similar argument around games and game systems. Publishers were arguing about the price of games going up, with their point being that if folks were going to pay ~$400 – 600 for a ‘next gen’ system then they should certainly be able to pay $60 instead of $50. Similarly, PC publishers often use the mantra ‘if you can pay $2000 for a gaming PC then you should be able to pay $50 for a game’. To me those thoughts miss the point. The point shouldn’t be to tie those together as some sort of ‘razor & blade’ system, but rather to find a balance that gets content to as many folks as possible while also being profitable to those involved.

Because, similar to gaming systems, ebooks are more than just ‘blades’, they are the actual content that involves multiple people who need to be paid for their efforts. Unlike games, books do not have an artistic contribution that inherently increases in core costs at an exponential rate due to the increasing complexity of systems and resolution of displays. There are inflationary costs that increase, but those are more than offset by what is saved in terms of manufacturing, warehousing, and so on. Moreover, ebooks are very small files and therefore the bandwidth and storage considerations are small. Heck, most of us could house the entire Library of Congress on our home PC in digital form.

The book vs. ebook discussion reminds me more of the PC debate between physical and digital sales … and in those cases digital distributors have been forced to maintain the same price as normal retail – that’s right, I paid the same $65 for my ‘deluxe digital’ versions of Mass Effect 2 and Dragon Age that folks paid at retail to get metal cases, cloth maps and so on. That is how the retail pressure has worked on publishers. But I also see the ability of places like Steam and Direct2Drive to keep games available for long after they disappear from retail and also to offer amazing sales. So in that way there is a differentiation being made already, which is sure to increase as time progresses.

Ebooks need to figure out their own business model, and for a decade or more it has felt like publishers have been able to keep the market small by keeping prices high. That was what music publishers did, and in effect helped grow the MP3 piracy market by their arrogance and hubris. The ebook market is growing fast now, and high prices are a thing of the past. I just hope that publishers realize that they have a choice to make between owning their own destiny and trading it away to pirates in an effort for a short term money grab.

Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Publishers, Pricing, and Pretensions  Judie Lipsett

I have been buying eBooks for many years, and from the beginning I’ve wondered how publishers could possibly justify charging the same amount for a digital edition as for dead tree. Purely for the convenience factor, many times I would purchase the digital version, but it would aggravate me to see the same title in paperback for much less on Amazon.

When Wayne, Ellen and I reviewed the Kindle 1, I didn’t like the form factor much at all, but the idea of paying $9.99 or less for bestselling and current hardcover titles was so completely attractive that I was tempted. Once the Kindle 2 came out, with its improved form factor, I had to have one. Since then, I have been extremely happy with the device, as well as the Amazon pricing model.

Finally, I feel like I am getting a fair trade for not receiving a physical product. In return for the convenience of being able to carry my entire Kindle library with me on both the Kindle DX and iPhone, and in recognition of the competitive Amazon eBook prices, I have purchased 60 books so far. In contrast, I have not purchased any more eReader books because they are priced too high and they have a weird rewards system, nor have I purchased any more B&N nook books because many of them are not competitive with Amazon’s prices.

I want to get value for my money relative to what I am receiving. The materials used to make a physical book should not be part of the pricing structure when purchasing digital; in other words, a significant discount should be offered to compensate for the lack of a physical product. In my opinion, the money I spend on a good eReading device should be offset by what I save on eBooks by forgoing the materials and energy required to produce a physical book. I feel that Amazon takes that into consideration and prices accordingly.

To be told that because I had the money to purchase an eReader I should have the money to pay dead tree edition prices for digital, is arrogant. If a publisher wants to ensure their authors’ success, now and in the future, they should do everything in their power to get the books into consumers hands at a fair price for the materials received. Expecting more is greedy and short-sighted.

Your Take:

What do you think about ebook pricing? Share your thoughts below!

About the Author

Carly Z
Carly has been a gadget fiend for a long time, going back to her first PDA (a Palm M100). She quickly went from researching what PDA to buy to following tech news closely and keeping up with the latest and greatest stuff. She loves writing about ebooks because they combine her two favorite activities; reading anything and everything, and talking about fun new tech toys. What could be better?
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  • Haesslich

    Of course, the higher prices may also reduce people buying ebooks… which gives the publishers all the excuse they need to delay ebook releases, citing low sales (which may have been created due to high prices and long delays before ebook release after hardcover ones), or piracy due to high prices.

    It’s like saying that, because you can afford to buy an iPod, that you should ALWAYS pay higher prices per song than a person buying a CD at the store… as the publisher gets to make more profit off the lower per-unit distribution cost due to the lack of physical media. And the music labels may be seeing how well that argument’s flying, given that the variable pricing for iTunes music JUST happened to coincide with a slowdown in sales. Whether there’s a correlation here or not, they may want to take notice of this.

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  • Amy Zunk

    I am still new to the whole e-book idea. I only have maybe 10 books, half on my iPod touch and half in MS reader format on my PC. I am enjoying the idea of being about to buy a book and read in within a few seconds. I even got to play with a nook finally and think I am probably going to buy one.

    But, I am in agreement with everyone else here. Just because I can afford to buy a nook doesnt mean that you can jack up the prices of the books themselves. They are just being greedy and insensitive to the market space and the current economy. What about those folks who were making the big bucks, bought an ereader, then got laid off? They have an ereader but cant afford the high dollar amounts for books. There are more of them than the “well off” folks these days.

    Someone needs to figure out how to transition the brick and mortar booksellers into the 21st century Web 2.x e-commerce businesses they need to be to survive.

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