Saturday, 26 May 2012

What should ebooks cost?

This week, a major publisher released a new novel by a popular and acclaimed science-fiction writer. Although the author is one I admire, and the book is one that I’m certain that I’ll eventually read, the aspect of the release that I found most interesting was the commentary it sparked on social media about the price of its ebook edition. It’s left me with some questions about how people perceive the price of ebooks. I’ll also confine these comments and questions to books as texts, rather than books as collectibles, because I think these are completely different markets. (And yes, I’m a book collector too).

I’m not going to refer to the book in question specifically, because it’s really not important. What’s important here is the price, which was set the same by both Amazon and Barnes & Noble:

hardback (full list price):$25.99
hardback (discount price):$15.63
ebook (for Kindle or Nook):$12.99? $18.14?

There was some uncertainty about the actual price of the Kindle edition, which seemed to display differently to different people on different pages on Amazon. That doesn’t matter. For now, let’s accept that the ebook cost $18.14—that is, $2.51 more expensive than the heavily discounted hardback edition (sans postage, but let’s ignore that too for now).

Two generally supported beliefs seemed to emerge in response to this:
  • $18.00 is unreasonably expensive for an ebook
  • ebooks should never cost more than their equivalent paper editions
Each of these opinions surprised me.

Here in Australia, new-release paperback fiction titles typically retail at between $20 and $30. Clearly, people buy books at these prices (although I don’t know whether anyone participating in the social media discussions is among them). This made me wonder whether there’s something about ebooks specifically that makes them less valuable to some people than paper books.

To me, the reverse is true. An e-ink screen is now my preferred medium for consuming narrative text, and a hard drive is my preferred medium for storing it long-term. So, to me, the ebook is actually more valuable than the paper edition of the book; which in turn means that I’m prepared to pay the same for the ebook, and if anything, even more. 

What I’d like to know:

  • If you think that $18 is too expensive for an ebook, would you pay that amount for the paper edition of the same title? 
  • If so: what’s the biggest gap that you would tolerate between the ebook and paper book? 
  • And what makes the paper edition more valuable to you than the ebook edition?
I suspect that these opinions must be, to some extent, based on the belief that the ebook must cost considerably less to produce and that the publisher is somehow obliged to pass these savings on to the consumer. However, the best figures I’ve been able to find so far suggest that for an American hardback with a list price of around $30, printing, binding and distribution costs account for only something like $3.50.1 In other words, the ebook is only slightly cheaper to produce and distribute, and with gross retail margins in the vicinity of 50%, a hardcover discounted by Amazon from $25.99 to $15.63 looks like a loss leader to me. Is the price structure for this title so surprising then?

Finally, the most disquieting thing about the discussion of this book’s price were the various suggestions that the perceived high price somehow made pirating the title acceptable if you wanted to read it.  

Really? I get that if someone is selling something—anything—at a price greater than you’re willing or able to pay for it, you’re going to walk away and not buy that thing. What I don’t get is how it then becomes acceptable to just help yourself to something to which you’re in no way entitled. Maybe someone can explain that to me.

Comments on any or all of the above are most welcome.

1Levine, Robert. (2011). Free Ride: How Digital Parasites are Destroying the Culture Business, and How the Culture Business Can Fight Back. New York; Doubleday. p.166. I also found a secondary reference to an article in Money magazine from around March 2009 with a breakdown of the publishing costs of a then-current bestseller, with figures that agree well with Levine’s. I haven’t succeeded in tracking down the original article though, so I can't be sure that the sources are independent of each other.


    1. I think you've already nailed the most commonly head belief about why paper books should be priced higher than an ebook: the cost of manufacturing and printing the (at least 1000, I assume) copies and then displaying them in brick and mortal stores. I do not know much about publishing and certainly the news that there is not a lot of difference in the manufacturing cost is certainly news to me, although really it seems obvious now that I think about manufacturing on that scale.

      I have paid upto $15 for an ebook, not even one that was a major release or one that I particularly wanted aside finding it interesting. $18 per ebook might push the edge of what I would pay for a book and I may well wait for the price to go down before purchasing it. The same book in paper, I would most likely purchase.

      This is not rational, but what makes the paper edition "worth more" to me is the smell and feel of paper. The idea of a book with its own unique spine creases and dog ears after several years of loving re-reads becomes more important to me than a digital copy owned for the same time. The latter, of course, I could lose and get an exact replica of and not care, while the former would cause me at least some distress if lost. As I said, not very rational. :)

    2. I agree that what bothers people about e-book prices being close to physical book prices is the idea that e-books have lower production costs than a physical book.

      For myself, $15-20 is probably my upper limit for e-book purchases, unless they a) are extraordinarily lengthy, b) come with other neat stuff (like, idk, a soundtrack or something), or c) some kind of learning material (most e-books that I purchase being novels).

      That's usually my upper limit for physical novels as well, since I remember when a novel cost $15 tops and I kinda resent dropping so much money on a book I may not like, and will finish in a few hours. But that's why I have a library card. ;)

    3. I think you are underestimating the hidden costs of a print book. When a print run of a book is being done, I expect the publishers will print the upper range of the number they expect to sell. However if they actually sell less copies then the average print price per book is higher. There are also additional costs to the retailer of shipping and storage, and additional for "on display" and other damaged books that need to be charged for in the retail price. None of those costs apply to eBooks.