Amazon Caves To Publishers On eBook Pricing

AusPublishingWorker writes "With the iPad arriving on the scene, it seems that Amazon is feeling the pressure on eBook pricing from publishers. ITNews reports that Amazon has agreed to deals with both Harper Collins and Simon and Schuster which would allow the companies to select their own prices rather than the default US$9.99 price tag. Given the recent deal with Macmillan, it seems likely that we'll be seeing eBook prices moving up towards $14.99 in the near future."

Before the anti-ebook posts accumulate,

[aussersterne]

let me just give a preemptive counterperspective.

I buy ebooks and I'll buy them at this price, too.

Yes, I prefer (by far) reading using ebook readers with eink displays. Since the first Kindle emerged I've probably read 10,000 pages or so using ebook readers. Love them.

Also, tools exist to unDRM and convert between just about every ebook format, including Mobi, Azw, Topaz, ePub, PDF, Lit, PDB, and others, so books can in fact travel with you as you upgrade devices in the future, should you choose to go this route.

The Real Issue

[sonicmerlin]

The problem with pricing books at $9.99 is the stickiness of the price tag. What is meant by this is consumer' perception of value. Although you can achieve large sales volume at price "below $10", if you ever try to raise the price by even a tiny amount, say $1, consumers *feel* like the markup was much higher than it really is, and sales subsequently drop off heavily.

The same phenomenon could be observed with iTunes' .99 cents pricing. Attempts to raise the price higher (especially without unilateral price raises across the board of offerings and publishers) resulted in significant sales drops.

It is also one reason we may never see a $99 netbook. That sub-factor of 10 number is quite magical for sales numbers, but kills any hope of raising prices in the future to combat inflation, increased salaries, admittedly raising profits, etc.

Not All Books Will Be Priced Equally

[WrongSizeGlass]

I don't think the predicted $14.99 price will be for all eBooks, though it will probably be the 'release price' when new titles come out by big name authors (and maybe some or all of the textbooks). If the eBook version is more expensive than the paperback version then I think we'll see eBooks sales stall.

I think the shift to the eBook model will affect the publishing industry's current practice of releasing a hardcover first (at a higher price) and then a paperback once the hardcover has run its course. We're not going to get rid of hardcovers all at once but there will probably be more 'straight to paperback' titles than we're used to now.

Re:$14.99 seems way too high for an eBook.

[Zumbs]

It is high. Particularly when you factor in that the DRM on eBooks locks you to read it using certain readers, and may cause you to loose access to the book you paid for if you buy a new computer, or the publisher takes the DRM servers offline (even accidentally). Unfortunately, putting DRM on books are expensive, as noted by Charlie Stross on his blog [antipope.org], and consumers get to pay the bill.

Re:The Real Issue

[TubeSteak]

You sound like a marketing major. They seem to be the only ones who believe that garbage. I don't know anyone who is fooled by pricing at 9.99 and being told "under $10". Just call it $10.

Almost everyone is fooled by 9.99 and "under $10" pricing.
http://en.wikipedia.org/wiki/Psychological_pricing [wikipedia.org]
Endless studies have been done on the matter and it works.

We like to pretend that demand curves are smooth, but they aren't.
They go through all kinds of weird contortions because humans are not 100% rational market actors.

Re:I agree

[TheVelvetFlamebait]

This is why I hate conservatives. I can't get them to understand that a legal document written 200 years ago might, just might, not be 100% relevant any more.

It's not enough to simply show that a law might not be relevant; you have to show that it is not relevant. The law prevents expedient copying from devaluing new artworks, which are both in demand and (unlike the copies thereof) scarce. The faster and cheaper the copying technology, the less likely a person is to support the artist, the less likely the artist will create a new work.

Copying has only become faster and cheaper. Now, more than ever, copyright is relevant.

Now here comes the difficult bit: convincing you that a legal document written 200 years ago might still be relevant. It wouldn't be the first, and I believe certain other documents (e.g. magna carta) break this record.

Re:$9.99 was too high for an ebook to begin with

[Anonymous Coward]

I definitely wouldn't dismiss the cost/portability factor.

I spent 2 weeks bed-ridden in a hospital a few years ago. I'd have died of boredom if it weren't for my kindle giving me instantaneous access to more books than I could ever read (as it was, I must've read like 50 books during my hospital stay).

I Think It's A Bit High

[SplicerNYC]

Considering that they are not manufacturing anything nor paying for shipping, warehouses (including workers), etcetera. If I thought the authors were getting more out of it then I might not bristle as much but I have no illusion that anyone but the publisher is benefiting from the price hike. As long as there are libraries, if won't be a problem. As an aside, I wonder how long it will take before publishers challenge libraries in court?

Penguin and Hachette eBooks Too

[Sounder40]

I'm traveling a lot now, so I'm reading a lot. I picked up the James Patterson "Alex Cross" series on my Kindle. I tried to buy the next book in the series Thursday only to find that no James Patterson books were available. Turns out that Hachette books had blocked all book sales while Amazon switched to the "agency model". Agency model means that Amazon acts as an agent for the publisher instead of a middleman/retailer like they do for paper books.

It was a short-lived outage, and I was able to buy the next book this morning. For a dollar more. Not a big deal, but I see the end of my love affair with the Kindle real soon now. If this is the way they're going to play, I'm just not interested.

Real issue: will Kindle owners feel betrayed?

[dpbsmith]

Hundreds of thousands of people bought Kindles on the basis of their perception of the overall deal. I think most buyers know that the cost of the razor (Kindle) is dominated by the cost of the blades (eBooks). Of course there was no written contract, but those hundreds of thousands of buyers thought they were buying into an ecosystem of $10 eBooks. An eBook delivers less value than a trade paperback, but that was OK because it cost less than a trade paperback.

Now, suddenly, the whole proposition is changed. They're being asked to pay meaningfully more than when they signed on. A big jump. Pretty much all at once. And they're now being asked to pay more than the price of a trade paperback for something that for most readers is less valuable than a trade paperback.

If you don't believe eBooks are less valuable than trade paperbacks, then please name your price for my copy of Bill Bryson's "A Short History of Nearly Everything." It's only six years old, and in mint condition (bits don't rot), and I'll sell it cheap. Oh, did I forget to mention it's a GemStar DRM-protected eBook edition, readable only on one GemStar eBook device in the world--mine--which I'd throw in for free if I hadn't already thrown it out when it crapped out last year. You can't buy a new one because they don't make 'em any more. And if you have a GemStar eBook device, GemStar customer service can't transfer my book to you because they're long since out of business

I believe this price increase, whether it's Amazon's fault or not, and despite the fact that $10 eBooks were merely an expectation set by Amazon, is going to make a lot of Kindle owners angry. Obviously publishers think they hold the balance of power and that it doesn't matter if their customers get angry. Maybe they're right.