Amazon did us all a favor. In late 2007, almost 3 years ago, they introduced the Kindle. Although it didn’t immediately make ebooks a mainstream phenomenon, the Kindle was the first major step towards significant momentum. More importantly, Amazon looked to set the ebook pricing standard at $9.99. It’s widely known that Amazon lost money on most of those ebooks they sold, but they must have felt it was worthwhile to quickly build a presence, even at a loss (just like Amazon did initially with print books). They also probably figured they made enough profit on the hardware to justify a loss on the books.
That hardware margin must be looking pretty thin right now. Not only were they forced by B&N to lower the price of the Kindle, it doesn’t take a rocket scientist to see that the iPad is cutting into dedicated reader sales right and left.
So how much longer can Amazon afford to subsidize the $9.99 ebook prices which, as Rupert Murdoch said earlier this year, “devalues books”? I think the trend towards higher prices has already started but nobody seems to have noticed.
It’s far from scientific but as I write this post I see 2 of the top 10 paid titles on Amazon’s Kindle bestseller list are priced at $12.99. The product pages for each, btw, include Amazon’s not-so-gentle reminder to customers that “This price was set by the publisher.” I don’t recall anything over $9.99 in the top 10 a year ago. 2 out of 10 is interesting, but 6 out of the top 15 and 8 of the top 20 are priced higher than $9.99.
FWIW, even I’ve become more willing to pay more than $9.99 for a Kindle or iBooks edition. Two of my most recent purchases were $12.99, so even a tightwad like me is coming around. And even though I’m no longer locked into $9.99 as a ceiling, I comparison shop to see who’s got the best price. More often than not they prices are identical, but every so often I find a difference and go with the lower one.
reposted with permission from Joe Wikert’s Publishing 2020 blog
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Since I’m buying very little because of the price fixing, if prices go up I will buy even less. I thought that $9.99 for a DRM crippled, I mean protected file was too high. Why would I pay more?
The higher prices are a result of the publishers negotiating an agency model with Amazon.
I wouldn’t call it price fixing, but this does point out a problem. Publishers face a fixed cost per title. Only a couple or three bucks of that $27.95 list price goes for costs associated with print. The rest are fixed costs: Editorial and acquisition, layout and design (still very important with digital. Ever had a badly formatted ebook?), cover, marketing, overhead, and so on. Oh, and there’s that pesky issue of author advances and royalties.
There’s a sweet price point somewhere, and everyone is floundering right now to find it.
If Amazon is subsidizing Kindle ebook pricing, who is subsidizing the paperback pricing and why? More than one of the top ten Kindle ebooks mentioned has a lower paperback price than the Kindle ebook price. This pricing stops me from buying the ebook but doesn’t make me want to buy the paperback edition. I just feels wrong to pay more for what is essentially an ebook rental. I’ll wait for better Kindle ebook pricing and find something else to read until then.
I can never see an ebook price over the paperback price, NEVER EVER. Maybe not even 50% of the paperback seeing all the restrictions on the ebook.
Have the publishers forgotten the Gillette razor/razor blade model ?? They contract with Amazon for the ereader and sell a BUNDLE of ebooks at a price lower than paperback (since all the “admin” costs have been borne by the hardcovers and the ebook really costs them zero, nada).
If they don’t get with it, the astute authors will take the market away from the publishers.
No one is subsidizing paperback sales. Here’s an article that does a pretty good job of explaining the math involved:
http://www.resourceshelf.com/2010/03/01/how-much-does-it-cost-to-produce-an-ebook-vs-a-printed-book/
I’ve seen similar figures published in several places.
The admin costs of an ebook are negligible, but the overhead HAS to be made up somehow.