Wednesday, October 6, 2010

Why are some e-book prices higher than hardcover ones?

1.  The Telegraph (UK) - on both UK and U.S. pricing situations
The Telegraph's Shane Richmond asks "What's a fair price for an e-book?"

There's been an uproar over Ken Follett’s Fall of Giants (UK page) and Don’t Blink (UK page) by James Patterson and Howard Roughan, as both are more expensive to buy from Amazon and elsewhere as e-books than in hardcover.

Some blame the author, others the publisher, and Amazon often gets the blame despite its rather public opposition to publishers raising e-book prices, a fight it lost with the Big5, whose new non-competitive pricing policies became a reality with the help of Apple's Agency model (details in this blog's earlier articles linked at the bottom).

Even the Telegraph mentions that Amazon has been in "plenty of rows with publishers recently over its efforts to drive prices down."

In checking Waterstone's in the UK, Richmond found that Lee Child’s Worth Dying For is £8.99 in hardback but £13.58 as an e-book. The same is true of The Fry Chronicles by Stephen Fry, A Journey by Tony Blair and the aforementioned Ken Follett, to name a few.

While e-books carry "Value-Added Tax" in the UK whereas the hardback ones don't, Amazon in the UK (unlike in the U.S.) is free of Big5-publisher and Apple Agency demands and therefore
' Amazon sells the e-books of all of those titles for less than the hardback versions – and both formats are cheaper with Amazon than with Waterstones.  The Lee Child book, for example, is £7.59 from Amazon in hardback and the e-book is £6.64 – less than half the Waterstones price. '
Richmond continues, in connection with the U.S. situation:
' Publishers aren’t keen on having their prices driven down... in this case publishers have used the more favourable terms offered to them by Apple, which wants to establish its iBookstore as a competitor to Amazon, as a lever to force Amazon to re-negotiate.

All publishers can do is slow things down, though.   Customers believe instinctively that e-books should be cheaper than the paper equivalent.  There are no printing costs, packing costs, shipping costs or overheads on shelving.   Whatever the publishers might believe, it won’t be them that decides pricing but the market. '

2.  Laptop Magazine - U.S. pricing situation
Laptop Magazine's Anna Attkisson did their own check in the U.S. where the Big5 and Apple have ensured same-pricing at all online stores for their e-books -- though some stores must 'catch up' with the others -- and here are their findings:
. Fall of Giants by Ken Follet
    $19.99 Kindle (Dutton, an imprint of Penguin Group, a Big5 member)
    $19.39 Hardcover at Amazon
    $19.99 Nook
    $21.06 Hardcover at B&N
    $19.99 Kobo
    $19.39 Hardcover at Borders

. Don’t Blink by James Patterson and Howard Roughan (Little, Brown & Company)
    $14.99 Kindle (set by publisher Hachette, one of Big5)
    $14.00 Hardcover (set by Amazon as not part of Agency agreement)
    $14.99 Nook
    $16.37 Hardcover at B&N
    $14.99 Kobo
    $13.99 Borders

If you're interested in the background of the e-book pricing wars, the earlier stories posted here include:

  . WashPost: State AG probes Apple, Amazon over e-Book prices. What?
  . Amazon removes Macmillan books
  . Amazon surrenders to Macmillan and Steve Jobs
  . Steve Jobs pulls his puppet strings but says too much
  . Amazon plays hardball to keep lower pricing option

Publishers may be seeing lower revenue with the agency plan
Chris Meadows at Teleread.Com reports Publishers complain that agency pricing leads to lower revenue - (Sept 29, 2010).

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  1. What I find so frustrating about e-book pricing is that most of the "logic" behind the publisher-set prices seems to be something along the lines of a Steve Jobs fantasy: "See, in the future, e-books will do this and that and the other thing too, so they're more valuable!"

    Well, they don't do any of that now, at least not the ones I've bought for the Kindle ... and those books appear to the untrained eye to be simple scans of manuscripts that are indexed and have table-of-contents links. In almost every e-book I've purchased, I've seen several errors that can hardly be anything but handwriting that was incorrectly interpreted by a scanning device and never edited. (It's especially bad when the word in question is actually the name of a character in the book.)

    I find it a bit much to expect me to pay more money for something that apparently gets less attention than a physical book and certainly requires fewer materials (practically none, aside from whatever space is taken up by servers for storage for licensing or purchase information or what have you).

    I see it as exactly the same deal that Apple has played out with iTunes, although in that case Apple did it themselves. (The whole thing with their unwanted copy-protection scheme and then trying to pass off removing it as something that justified higher prices for tracks; even now with no copy protection on music tracks, some are priced 30% higher than others for no apparent reason.) Apple wishes prices to be higher and doesn't care what the market has to say about it.

    I suspect (and hope) that Richmond is right; the market will indeed dictate pricing to the publishers, not the other way around. I do whatever I can to avoid buying overpriced books for the Kindle, just as I avoid overpriced tracks in the iTunes store.

  2. zlionsfan,
    I'm with you on the avoidance choice and agree that Richmond is probably right - there are too many of us that won't pay the demanded higher prices (vs the old suggested or recommended list prices) though I pay a bit more for computer books that are normally priced higher in paper form as well and which are more like textbooks.

    Too many things we cannot do with an e-book that we can with a hardback.

  3. The market won't decide on eBook pricing. It's a market the publishers can destroy by simply stopping to supply them.
    If however AUTHORS decide they want to get rid of the agency pricing and start negotiating contracts that either force publishers to abandon it or don't give eBook rights to publishers at all (but rather the authors self-publish those) things might be different.
    But as most authors have strangulation contracts that won't allow them to use their work in any way except under the banner of their publisher that's highly unlikely to happen.
    Authors also won't abandon the big publishers as they're the main force that provides them with marketing, distribution, and production of their paper books which still make up the bulk of their income.
    If they were to take up contracts with other publishers instead (if even allowed under their current contracts, which most likely include termination clauses barring them from writing for others for a number of years) those publishers would become the big ones and soon be forced/coerced by Apple to adopt the same agency models the authors were attempting to flee.

  4. j,
    I actually think that the publishers would destroy their business if they stopped supplying ebooks at this point.

    Agency plan may not be proving that good for the books... Buyers seem very resistant.

    Very true what you say about the authors...

  5. I meant may not be proving that good for the financial books.

  6. I'm not so sure, it would all depend on whether they can do so without loosing their current flock of authors.
    The majority of people currently using eBooks would I think go back to paper publications (and probably now use a combination of the two) were eBooks no longer offered.
    For many the electronic option is one of convenience, but they wouldn't want to do without their favourite author in whichever format (and audiobooks are just not reading, there's no satisfaction there).

    They'd probably loose a small number of customers who'd never read if it weren't for electronic books, but that's at current a minority they can probably afford to loose.
    In 10 years time it may be different, if and when a common distribution format for eBooks and a worldwide distribution model for them evolves that will enable anyone with a reading device to purchase anything they can now purchase on paper (as you know, at current someone would need 3-4 devices at least to be able to shop anywhere, and even then is limited in what he can buy by where he lives, for those outside the US especially the choice is often poor, and choice of books in their native language even poorer).

    As a result, they'd probably not loose a significant volume in overall sales, and with those pesky guys like Amazon who want to control pricing out of the way, there's no reason to not return to charging $30-$40 for a hardback book and pull your entire catalogue from any retailer daring to sell below the list price (which works wonders outside the US, where publishers do just that, driving stores wanting to sell books at discounts out of business deliberately).

  7. I see the Ken Follett book as costing 9.99 here in Canada as of evening Oct 6, Don’t Blink doesn't show a Kindle edition.

    Fall of Giants [Kindle Edition]
    Ken Follett (Author)
    Digital List Price: $19.99 What's this?
    Kindle Price: $9.99 & includes international wireless delivery via Amazon Whispernet
    You Save: $10.00 (50%)

  8. Thanks, Rob -
    The Agency agreement holds the online stores in the U.S. to specific higher pricing when the publishers have decided on that and I guess it's not North America. Maybe Hachette doesn't make the "Don't Blink" book available in Canada -- e-book availability problems due to digital rights is a really irksome thing for many outside the U.S.

    Amazon was approved for building a physical site in Canada recently so they may be able to have more leeway (I don't know).

    Follett's e-book is still $19.99 in the U.S. Amazon pricing (and all the other online stores here too), and I'm glad things are better for Canadians on something!

    Thanks for that information from Canada.

  9. interesting. When clicking on the link to Fall of Giants I can see the $19.99 price (which is unavailable to me, as I'm not in the US) and a link to a $13.79 version which is available).
    When clicking through to that version, the $19.99 version isn't listed.

    So Amazon can filter things not available to the customer locale, but for some reason don't either do that (recommendations for example generally are 50%+ unavailable) or automatically forward to an alternative that is available (harder to do, but should be possible especially in cases like this one).

  10. Anonymous, you didn't mention where you are, but it's good to know that you also get a link to a lower priced one that's available!.

    I think constant filtering would strain the server processes.

    Thanks for this.

  11. Andrys, this is a brilliant post. You have covered so much of the controversy and confusion and I've learned a lot! I agree with zlionsfan re e-book functionality. I think in some ways publishers are encouraging us to buy into the e-book fantasy potential (whether it be Steve Job's fantasy or someone else's is another question!). But even if e-books incorporated a lot of the functionality we have come to expect and know from physical books (which I anticipate it will at some point), I still find the steep prices excessive as are some tracks on iTunes. I am very interested to see how the pricing wars will pan out in the future. There are a lot of things that are greatly different than they used to be when it comes to business and publishing and I am very interested to see the developments unravel! Thanks for the awesome post!

  12. Melita,
    Thanks for such nice words, especially from someone who is responsible for such an amazing Future of Publishing site.

    Was entertained by your thoughts on book warehouses and real estate moves and agree totally that e-books are supplemental to physical books and the two types will co-exist though not in the same ratio.

    I was surprised to not see a Twitter icon, but I did tweet your BookBotics site and here it is:

    Tweeting BookBotics

  13. Andrys, thank you for your very kind comments in relation to BookBotics. I am so pleased you liked the site! Thank you also for the tweet - as I am unsure of the tweet protocols, I thought I would thank you here :) You are completely right about the Twitter icon. I have been debated for a while about which widget to use for the site. I may stop window-shopping and just pick one! Also, you articulate the point re physical books and e-books supplementing one another perfectly. It really is a matter of obtaining the best "ratio". I think that is the best word to describe it!

  14. Melita,
    Good luck with that decision. Remember that people will know you by your '@' Twitter name and that you can change the representative image often.

    I think you'll enjoy Twitter as long as you follow the tweets of only those whose focus you want to follow on a daily basis - then you'll look forward to your daily streams. Otherwise the amount of incoming recommendations can be overwhelming.

    It's not only the excellent content of your site, it's also the layout. Really impressive.

  15. Melita,
    Just saw that you DO have a Twitter account, but just starting it. You look very upbeat. :-)

  16. Andrys, I know...My poor twitter account is living in the shadows...I have had it for a while, but have kept it very silent. I did however download the twitter app on my blackberry and that has meant easier access to my account. Thank you again for your kind tweet, your twitter advice and for your very lovely comments in relation the site. It makes me glad to know that the site has appeal, both in content and layout. It is a nice thing to hear given how time-consuming it is - even if it is a labour of love! And despite the work, i am indeed rather upbeat! :) Thank you and I must say I am very glad to have found your site. The information you are contributing is absolutely fantastic and a joy to read!

  17. Melita,
    Well, guess which site I'll be watching :-)

    Am getting little shut-eye between this blog and watching 9 hours ahead of me the Chopin International Piano Competition, live. Amazing.

    Thanks again.

  18. Oh, forgot to say it's coming from Poland, live, globally. I never cease to be amazed, and in high definition and good sound too.


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