Cheaper E-Books is a Good Thing

“We look forward to being allowed to lower prices on more Kindle books.”

Amazon is really excited about the idea of being able to lower prices on e-books, and I don’t know about you guys, but I’m happy for them. If I had a bookstore, and someone came in and told me I wasn’t allowed to sell my books for whatever price I wanted to sell my books for, I’d be pretty dismayed. I mean, I always scratch my head when I see an e-book selling for more than the list price for the physical book. I actually get pretty annoyed. And I’m sure Amazon, is like, “Oh god, we know, and we’re sorry about that. It makes no sense.” 

And it’s not like Apple is some poor little company that is going to be eaten by Amazon. I mean, right? If Amazon’s plan is to sell e-books at a loss so that it can gain more market share, Apple can do the same. Also, earlier this year, I put together an e-book for Longreads, and Amazon made it really easy for us to sell it. Longreads also tried to get the e-book in Apple’s iBooks store, and on Barnes and Noble’s online site, but it got stuck in some sort of e-book approval limbo, so anyone who wanted to buy the book had to go to Amazon to get it. So! If Amazon’s competitors really want to get more of the e-book marketshare, they really need to get with the program. I do feel bad for the truly, small independent bookstores, though there is one near my apartment that sells used and rare books, and they look like they actually get some decent business. Also, the library, you guys. The library is great!

[Edit: Cheaper e-books is a good thing (i.e. shouldn't cost more than the physical book), but books that are too cheap aren't. Please read Emily's and Kate's comments below.]

[Note: Sometimes, if you click on one of our links to Amazon, and then you end up buying something, we get a tiny bit of money. The Billfold is part of Amazon's affiliates program. Logan and I aren't keeping that money. If we do get any money from those links, we're planning on putting it in a budget to pay our wonderful writers. So click away!]

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27 Comments / Post A Comment

Mike Dang (#2)

Doh. I should also mention the authors, and proofreaders, etc. who will also be affected! But hopefully lower prices will also equal more sales.

“More sales” of books that cost a dollar or two don’t help publishers, authors, etc. stay in business. Publishers want ebook prices to stay around a few bucks less than the list price of a paperback because otherwise the margins of selling books become so tiny the entire enterprise becomes unsustainable. Lower ebook prices are not a good thing. People who care about writing should support sustainainable culture.

Also, Melville House’s blog is a good resource for information about this lawsuit. http://mhpbooks.com/

deepomega (#22)

@Emily Gould@facebook: I’m not sure there’s no middle ground here, though. Amazon’s goal has been the ten dollar ebook – a few bucks chapter than kali regnal – while apple’s goal has been “a much as publishers want,l which trend towards “high enough to not eat into hardcover sales.” Cheaper doesn’t mean driven down to zero dollars

neener (#242)

@Emily Gould@facebook how is a publishing industry built on illegal price-fixing a “sustainable culture”? amazon may engage in predatory, abusive practices–but that does not justify what is alleged to have happened here.

@blahstudent Yeah, I’m just going to leave this here.

This is a huge issue that doesn’t just involve what consumers pay for books. We all like cheap. But when Amazon, which can afford to lose money on what they sell by selling it super cheaply, cuts prices, then everyone cuts prices and then no one can make money on books. If no one can make money on books (and I mean cost-of-production money, not profits-for-CEOs money), then publishers can’t publish books or afford to pay writers to write them. Free market capitalism is a good thing, but when you have a company like Amazon, that can afford to take a loss and actively does to get a larger marketshare and thus become the only player in the game, then something has to change. This is everything you need to know about this whole DOJ lawsuit against publishers: http://goo.gl/1TLyo

meetapossum (#315)

@Kate McKean@twitter I just wanted to second this. Books have always been a loss leader for Amazon. Loss of the agency model affects more than just the Big 6 and Apple.

deepomega (#22)

@Kate McKean@twitter Except it didn’t work. We don’t have a robust ecosystem of places to buy ebooks, with have basically three options. So now we have the worst of all worlds – price fixing used to raise prices at amazon, and amazon still has the majority of ebook sales. (And when the second and third place sellers are Apple and B+N, I’m not sure arguments about nobody else being able to match their sales tactics fly.)

@deepomega There’s also Kobo and Indiebound.org has a (great!) ereader app. I agree, the playing field is limited, but it’s also limited because the booksellers are also the device sellers, for the most part, (except phones, and except there, for Apple.) The agency model wasn’t intended to create more ebook retailers. It was intended to make sure publishers and authors didn’t lose their shirts to Amazon’s loss leading pricing structure. Ebook pricing is a war on many fronts. This is just one of them.

@Kate McKean@twitter If you can’t make more money selling a digital item for 10-20% less than a physical item, then you are a terrible businessperson, period.

@stuffisthings We’re not talking 10%-20% discounts on ebooks. We’re talking 80%-90% discounts.

deepomega (#22)

@Kate McKean@twitter No way. I don’t see how this move can be seen as anything other than booksellers wanting to keep ebooks from undercutting new hardcovers. The entire push of the (“alleged”) price fixing was forcing prices up, not forcing payments to the publishers up. That’s what grates – they’re trying to protect the high margin hardcovers instead of finding a way to make money digitally.

Megano! (#124)

@stuffisthings On physical books, I think Amazon gets like a 60% discount? (I know, it doesn’t make sense to me either). The standard is between 30-40% if I remember right.

As Emily says, it’s not just the “authors and proofreaders etc” who are affected if Amazon can sell their books at a significant loss, thus undercutting all other retailers (who don’t have the luxury of making their profits on Kindle sales) and destroying the profit margins of publishers big and small. I’m the last person to claim I know anything about the economics of, well, anything, but it seems telling that Amazon is literally the only party in the entire publishing industry to think this a good idea. This sums things up pretty clearly, I think: http://www.shelf-awareness.com/issue.html

I have no idea whether the major publishers colluded with each other and violated anti-trust laws. But I do know that right now, there’s reasonably healthy competition in the e-book market, and if Amazon gets its way (with, apparently a nice nudge from the DOJ?) that won’t be the case for long.

I can’t countenance e-books being even slightly less than the list price of the physical book. I mean, I get that printing, binding, and shipping the book, and paying for a share of the rent and labor costs and profits of the bookstore, may not be the biggest component of the book’s price. But it has got to be a pretty LARGE component.

I think publishers could learn something from the video games industry, which has recently really blossomed thanks to online distribution. One of the amazing things they found is that if you sell a game for like, $5, instead of $30 or $60, *you actually make more money*. Now Steam and other online games retailers are constantly having sales, and I have snapped up many 1-2 year old games for $10 or $15 that I would never have paid full price for in a million years. I think the recent success of a number of long-form articles as eBooks shows that this might be a successful pricing strategy.

Second, why not sell out of print books online for ultra cheap? My understanding is that a majority of books ever published are out of print. Why not slap them up as ebooks and sell them for $1-2 each? It’s a perfect example of a “long tail” sales strategy that Amazon, for one, would be happy to support. Not doing this is leaving money on the table.

@stuffisthings Also, couldn’t authors with some name recognition sell their ebooks directly (again, I see an analogy to the indie portion o the games industry)? I could see a lot of genre authors with nerd appeal and certain comedians making a killing this way.

@stuffisthings: This is a really helpful article on Why Ebooks Cost so Much: http://goo.gl/o8IND

I can’t speak about the video game industry, but my guess would be that video games have wider profit margins than books, and thus that low pricing scheme really does work. And your long tail comment is already happening, and working in some cases. But that isn’t really what’s at stake here. Which also means it can still happen regardless of the DOJ suit.

deepomega (#22)

@Kate McKean@twitter Games are actually not that far from books, in that a small subset of them make any money whatsoever. These megasellers fund the less successful but more critically successful games. Put another way, a small independent game can cost 2 million dollars to make, and yet they can long-tail it and sale it to get that money back. It’s the benefit of digital retail, being able to have an infinite stockpile of products to sell, and it’s so frustrating that books/movies/music isn’t going the same route.

@Kate McKean@twitter Like ebooks, games have a marginal profit of 100% (i.e. each additional copy sold has a cost to you of $0, and a profit of $x), so, like ebooks, it is simply a matter of selling enough to cover your fixed costs. I am interested to hear more about why ebooks are so damned expensive — I suspect intermediary-related shenanigans — but I have yet to hear about a single case in history where price fixing was good for anyone but the price fixers.

@deepomega Yeah the publishers’ logic defies economics — they seem to believe that if you sell 10,000 copies at $24.99, you will still sell 10,000 copies at $9.99. There’s very few cases where demand is that completely inflexible. For instance, while hardcore heroin users are willing to pay almost any price for their fix, if the price of heroin fell by half you’d see a lot more people using it. I don’t see why the same wouldn’t be true of books.

Megano! (#124)

@stuffisthings I don’t think they think that, but they literally have no idea of how well a book is going to sell. It’s a very weird industry in terms of making money, because you basically make as educated a guess as you can and pray that they sell. (I am in publishing)

@Megan Patterson@facebook OK, even if you have no idea how many copies the book might sell, my argument is that you will always sell MORE copies at a lower price point — possibly a lot more. I make decent money and I read a lot, and I would buy a lot more books if I could get them on my Kindle for, say, $5. I would much rather buy three books for $15 than one book for $10. Assuming that all three were from the same publisher, that’s $15 from me, rather than $10 (or $0). Additional cost to them, for the books whose authors they’ve already paid advances to, and whom they have already paid someone to edit, proofread, lay out, and design a cover for? Zero.

I’m just waiting for one publisher to break ranks and give this a try. I guarantee they will make a boatload of money and every other publisher will fall over themselves trying to imitate.

Megano! (#124)

@stuffisthings Most people do not read a lot though. People who read more than a couple of books a year are a minority. BUT people who do have e-readers do tend to be in the group of people that do read a lot, and people with e-readers do buy more books than people without, because it’s so easy to buy them and (usually) cheaper.
The problem with what you’re proposing is that publishers don’t get to offer the deals like that, it’s Amazon and such, it’s out of their hands at that point.
Personally I think that the industry needs to be way more vetically integrated in order to make money, but since amazon has already pretty entrenched in the ebooks game, I don’t think publishers can go “oh, you can only get your ebooks directly from us now”.

@Megan Patterson@facebook If I knew anybody in the money/sales side of the publishing industry, here’s what I’d say to them: “Look at what has happened in the video games industry in the last 5 years. Look at Steam. Look at indie bundles. Look at the crazy sales and the ‘pay what you want’ deals. Look at the direct sales from publishers, and look at Good Old Games. Look with an open mind, and see if you can see any parallels at all to your own industry, and see if you can think of anything you might do differently.”

That’s sincere advice. I love books and I want to see them go the way of the serious PC game (another thing that I love which is flourishing) and not the music CD or the cassingle.

Megano! (#124)

@stuffisthings Well, publishers are very, very hesitant to change. They’re very scared of ebooks. That’s why it’s kind of a mess. But yeah, they do need to think about it.

Megano! (#124)

While I agree that an ebook should never cost more than a physical book (although now that I know why a physical book costs so much, it does KIND OF make sense. Paper man, it is literally like oil), I don’t think Amazon should be able to set their prices at whatever they want, because there have been some issues with them setting it too low (even in one case offering it for free, because the author was giving out free sample chapters somewhere).

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