Instapundit linked yesterday to a fascinating little Slashdot titbit about the price of digital books. Apparently, a crime writer called John Locke has lowered the price of his latest book from around what a book book costs to make and distribute, to a price much nearer to what an eBook costs to write and distribute, that is to say, he has dropped his price by about ninety percent. And he has been doing far better with this new arrangement than he did with the old one.
‘These days the buying public looks at a $9.95 eBook and pauses. It’s not an automatic sale,’ says Locke. ‘And the reason it’s not is because the buyer knows when an eBook is priced ten times higher than it has to be. And so the buyer pauses.
I certainly pause. For as long as eBooks cost the same as books, then I will prefer books, because I am used to books and eBooks are like … well, I don’t know what they’re like exactly, and at ten quid a go or whatever, I can’t be bothered to find out. But when eBooks start costing a tenth of what books cost, that is to say, less even than remaindered or second-hand books, then I’ll probably do a rethink.
Since writing the above, I have discovered that quite a few commenters on the Slashdot piece are of the exact same mind as me about eBooks.
It all reminds me earily of the early price of DVDs, which I recall as one of the oddest episodes in recent techno-biz history. For a fleeting little moment, DVDs were priced according to a “logic” that said that, since DVDs enable you to watch a movie lots of times over, that means that the proper price for a DVD is several times the price of a cinema ticket. Seriously, they thought they could get away with charging about forty quid for the things. Which, by the way, explains the ridiculously elaborate cases that individual DVDs still typically get sold in. When DVDs started out, they thought they were selling something almost unimaginable in its luxuriousness. They thought they were selling an even better version of those enormous metallic discs that they used to sell at about a hundred quid a pop to millionaires of the sort who really did have real home cinemas. Which they sort of were. But that didn’t mean that the rest of us were willing to pay millionaire money to get our hands on a decent DVD collection. We could already guess what DVDs cost to make (not a lot) and until we saw that fact reflected in the prices we were being asked to pay, we sat on our hands.
And that is what has surely been going on during the last year or two with eBooks. They haven’t charged for eBooks like they were hardbacks, but they have looked at what they consider to be the added convenience when deciding about price, rather than looking at the cost to them of making and distributing the product and the consequent opportunity to reach a whole new raft of customers with a dramatically reduced price. A few pioneers willing to pay off the development costs of the new gizmos have paid for these early eBooks. But now, eBooks will surely plummet in price, just as DVDs did.
Occasionally people tell me that I should write a book. I’m pretty sure that will never happen, but the eBook phenomenon, which I sense is about to get truly phenomenal (both in how books are read and in how they are created), may change my mind about that.
While I agree with most of what you said, I expect a lot of this is first-mover advantage. The first guy who sells his ebooks for 95 cents per sells a hell of a lot of copies, if only for novelty value. When that becomes the default rate, I don’t see the total number of book sales going up by a factor of 10 to compensate. Publishers are going to lose money if they go much below $5 for a default ebook, I think, because I can’t think that the demand will remain elastic much below there. Same reason why a blank DVD costs less than a buck and one with a movie on it still costs 15.
When you think about it, the current system, where a book costs about the same whether it’s a best seller or remainder bin fodder, is rather odd. What will probably happen is a low price for most stuff and a premium price for the good stuff.
Smart phone apps seem to be going that way and I think they’re a good indicator.
Alsadius: Same reason why a blank DVD costs less than a buck and one with a movie on it still costs 15.
Unless you buy it from the guy in front of the local Mexican grocery store. I don’t know what his price is, but I guarantee it’s less than $15. (Much less 15 quid.)
I see bins of miscellaneous DVDs of second-tier or old movies selling for $10 or less in supermarkets.
This is bound to work out great.
I kid.
Yes, e-books should be priced less than print books, just as digital downloads of music and video should be priced less than CDs and DVDs. They simply don’t cost as much to make. But get people used to paying next to nothing for content and they will come to expect to pay next to nothing — and will likely value the content less.
Creators have to make money, otherwise many of them will not be able to afford to create. A price point must be found where there’s still enough money to pay them and their editors (in the case of books) or engineers, etc., in the case of music. For movies and TV, the old system still appears to be working… for now.
This is bound to work out great.
I kid.
Yes, e-books should be priced less than print books, just as digital downloads of music and video should be priced less than CDs and DVDs. They simply don’t cost as much to make. But get people used to paying next to nothing for content and they will come to expect to pay next to nothing — and will likely value the content less.
Creators have to make money, otherwise many of them will not be able to afford to create. A price point must be found where there’s still enough money to pay them and their editors (in the case of books) or engineers, etc., in the case of music. For movies and TV, the old system still appears to be working… for now.
Why should ebooks cost significantly less than print books? With intellectual property (books, recorded music, movies, computer programs, etc.) the physical cost of production is an almost insignificant component of the retail price. You’re not paying for the paper and ink; you’re paying for the content, and the delivery medium is a distinctly secondary matter. The price is a function of supply and demand, not production cost. Right now the ebook market is so new that publishers and the retail public are still wrestling with the appropriate price point, just as they’re wrestling over a market-dominating format. (Remember the VHS versus Betamax battle?) Give it a few more years and the market will shake things out.
Physical books and ebooks each have their own advantages and drawbacks. I’ve had a Kindle for about two years, and I like it a lot. But I don’t buy a whole lot of books on it. Mostly I use it to sample books, to see if I really want to own them. Some I discard, some get added to my “wish list”, some I borrow from the library, and occasionally I push that “order now” button. That last category is for the ones I want to read now, but don’t need to add to my permanent (physical) collection and aren’t in our public library. (I also download a lot of free public domain books.)
So while I agree that $9.99 is more than I’m willing to pay for most ebooks, I think that 95 cents is an unrealistic and unnecessarily low price. It leaves little profit for the author, let alone the publisher and distributor, and I think most people would be willing to pay more. My bet is that the market-clearing price for most ebooks will wind up in the $5 range, with a few extraordinary works commanding a premium to that and (eventually) something akin to “remaindered” books selling for $1 or $2. Give it time; the market will clear.
The reality is that pubishers in the traditional sense are defunct. Much of what they do and the associated costs are now unnecesarry.
ebook will drive paper book sales not vice versa. If I love an ebook i will buy a nice hardback version for the book shelf to peruse at my leisure (even if I have to get it bound myself).
Deflation is a good thing.
Bluntly, if I want to read a new hardcover novel, I expect to pay about £10 from Amazon, and for a new mass market paperback I expect to pay about £5. If the books have not just been published, in most instances I can buy a second hand copy for about £3. If I just want to read something, then I will buy the cheapest of these that are available, probably from Amazon in all cases.
At present, the e-book prices are probably a little more than prices of physical books. Perhaps £12 for a book that has just been published, and perhaps £5 for something that has been out in paperback for a while. (Some of this is the government’s fault – printed books in the UK are not subject to VAT, but there is a 20% tax on e-books). I am finding in a lot of cases that I will pay £5 for an e-book of something I want to read. The Kindle is very light, and I don’t have to carry books around with me to read them. This is particularly useful when I am on the road as I often am. The Kindle weighs hardly anything, contains a lot of books, and I can buy new books on it instantly wherever I am.
So I guess my feeling here is that I am not really expecting e-book prices to fall much below £5 a pop. The bottleneck in how many books I buy is not so much what they cost as how much time I have to read them. I doubt there is that much elasticity of demand. I think in this way books are very unlike music. Drop the price of music and consumers were very likely to buy a lot more of it. (At least, they were in 1998). Book prices, less so.
Brian: On the DVDs, you need to understand that the DVD was quite an unwelcome product to Hollywood when it first came along. Approximately, they saw it as a great danger to them without providing any potential upside. Several studios actually initially refused to release movies on DVD at all.
The danger was that they believed that selling movies on DVD meant that it would be easy for pirates to obtain perfect digital copies of their movies that could then be copied over and over again, unlike the situation with VHS tapes where second and third hand copies got steadily worse. (This fear was largely true, of course).
Secondly, Hollywood also had a lucrative VHS rental business that worked fine for them, and they did not think that DVDs would change the nature of the game. (That is, people might rent DVDs rather than VHS tapes, and would pay roughly the same amount they were paying already, and Hollywood would not make any extra money).
This VHS rental business is where the high prices initially came from, by the way. That business was based on selling VHS tapes to rental libraries at prices many times the cost of a cinema ticket, based on the understanding that the same tape would be rented to many different people. DVD prices started high, and then were reduced a bit, and at that point it was discovered that there was a great deal more demand from consumers who wanted to buy them than was previously realised. DVDs were easy to use, provided excellent quality and were easy to store, so people wanted to collect them. (This shouldn’t have been surprising, given that the same factors sold a lot of music CDs a decade or so earlier, but it was, possibly because music had already been based on a record ownership model before CDs came along). When prices were dropped, revenues rose and in the first half of the 2000s huge and unexpected revenues hit Hollywood. Then, several years after that another wave of revenues came from selling old TV programs on DVD. Then, of course, pretty much the moment Hollywood got used to this, the revenues collapsed, as a mixture of new rental models, better digital TV / video on demand, and internet download systems (both legal and illegal) swamped the DVD business. he new Netflix/through the mail DVD rental business was based on the renter paying much lower prices to buy the DVDs before renting them, and these prices were a consequence of that earlier bubble. The result is at least partly a cautionary tale for the book industry, I fear.
Michael Jennings wrote:
‘At present, the e-book prices are probably a little more than prices of physical books. Perhaps £12 for a book that has just been published, and perhaps £5 for something that has been out in paperback for a while.’
That’s odd. In the US, it’s just exactly the other way about.
If we look at Amazon, the top 10 of the NYT best -sellers list, and compare the Kindle price to the hardcover price – in every case, the hardcover is more (sometimes as much as 40% more) than the Kindle version. Even best-sellers that have already gone to mass-market paperback (like the ‘Girl with the . . . ‘) series, the Kindle is prioced within pennies of the mass-market paperback. And there’s no added shipping for the Kindle version.
I wonder why that is?
Even ignoring price differentials, the popular e-book readers are just going to eat the lunch of traditional publishers. Using my Kindle, I can read this blog, see a recommended book that I’d like to read, and be reading it 60 seconds later.
In the sauna.
At 3 in the morning.
No dead-tree media can compete with that. Books will become collectibles.
llater,
llamas
Why should ebooks cost significantly less than print books? With intellectual property (books, recorded music, movies, computer programs, etc.) the physical cost of production is an almost insignificant component of the retail price.
I don’t think you can lump books in with software. Stamping out plastic disks is much cheaper than printing and binding books. Books are incur more cost in shipping and storage.
I read a lot of bulky technical manuals which are only available in paperback and I have been considering buying an ebook reader because it is inconvenient to carry such things around and they are difficult to read on cramped public transport because of the size and weight. The current book I am reading has started to rip its spine apart due to its weight.
I do read the occasional sci fi paperback but those are small and light so not a motivator to go ebook. I would really appreciate Samizdata contributors’ observations on the Kindle, especially Michael as I suspect he reads similar stuff to me. On the Kindle, do ebooks from Amazon render exactly like on the printed page including screenshots, tables and so on or are they just text ? Does the screen have enough real-estate for a comfortable read and are books searcheable?
Wolfie, if you want to read tables and graphs you’ll need to get the large-format Kindle DX (which is the one I have); the smaller ones only handle text. Keep in mind that it’s not in color, though, if that matters to you. And no, it’s not the same as the printed page, because you can vary the font size and it adjusts the display accordingly (it doesn’t even have traditional page numbers). Yes, books are searchable, and you can even highlight passages and make notes. Personally, I find it a comfortable read, and since it’s not backlit you can read in bright sunlight (but you do need an external light source in the dark). Helpful?
Well, I have had a Kindle for six months now. I love it for the ease with which I can acquire, transport and read ‘beach books’ (Stephen King, Tom Clancy et al). I have bought a few new titles online from Amazon but object to the prices. Personally, I find it easier to Bit Torrent a whole slew of titles and read the ones I want to.
But I will always buy and keep hardbacks. I have a lot of tech manuals and encyclopeadias that are 60+ years old and could not be replaced in any pleasurable way with something electronic.
Lots of older books can be downloaded for free from a variety of websites. I really like my Sony Pocket Reader, which does ePub and PDF:
http://mises.org/literature.aspx
(probably already well known round these parts)
http://fee.org/library/
(also good)
http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Fcollection=71&Itemid=29
(a neato selection of highlights from the much larger site)
http://www.gutenberg.org/wiki/Main_Page
(lots of classics, like Zane Grey, Frederick Douglass, Max Brand, Rudyard Kipling…)
http://openlibrary.org/
http://www.archive.org/details/texts
(where I just downloaded this beautiful scan of Cato’s Letters:
http://www.archive.org/details/catosletters01tren
http://www.documentacatholicaomnia.eu/_index.html
(tons of Catholic texts, including the works of Saint Thomas Aquinas, but unfortunately you must speak latin to navigate. Oregon public schools aren’t quite there, yet)
http://gunfacts.info/
(okay, it’s just one book, but everyone should own it)
I think what happened is that publishers took a rather naive view of supply and demand. “They pay $10 for a paperback, they’ll pay $10 for an e-book.”. They completely fail to take into account that they’re entering a completely new model. The end-user loses quite a few benefits of a paper book including right-of-first sale (under current DRM practices), the ability to pick up remaindered or used books cheaply and easy lendability (amongst others). Not to mention the simple reality (whether it be legal or not) that competition comes in the form of pirates willing to provide the content for free (and books don’t take a couple of hours to download as a movie does).
So new model, new pricing. Electronic distribution reduces costs so much (manufacture, distribution, advertising and marketing) that there’s no excuse not to. No moral arguments please, its simple pragmatism. Continued high prices and restrictive DRM will lead to lost sales. Companies like Baen realise this already and are doing well with reasonable prices and no DRM.
For those that resist having an e-reader because “I like my books”, I say “grow up”. There’s no reason not to have both. Dead-tree book production methodology may change but as long as there’s a market for paper books, you will be able to buy them. I have been told of a machine which can print and bind a book on-demand. Imagine no more out-of-print, just go to the local book store/printer or order online and have your book in 10 minutes (plus shipping).
I like books, I’ll never stop buying them (not least because they are harder-wearing and you can read them without electricity) but I’m seriously considering getting a kindle. I’ve downloaded many e books onto my phone but it’s not easy on the eyes. one day I’ll finish the Wealth of Nations, but not on a backlit device, I fear.