
Why do ebooks cost so much? - barredo
http://dearauthor.com/wordpress/2011/01/16/why-do-ebooks-cost-so-much/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+dearauthor+%28Dear+Author%3A+Romance+Novel+Reviews%2C+Industry+News%2C+and+Commentary%29&utm_content=Google+Reader
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geekfactor
_In April of 2010, 5 of the major publishers (Penguin/Putnam being one of
them) instituted what is now called Agency Pricing._

Can anyone explain how this isn't considered price fixing, collusion or
otherwise anti-competitive?

~~~
wnoise
Or a violation of the First Sale Doctrine[1], for that matter.

[1]: <http://en.wikipedia.org/wiki/First-sale_doctrine>

~~~
wmf
They probably think ebooks are licensed, not sold.

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danilocampos
It used to be that buying a great portable game was $40.

Full stop, you couldn't leave the store with a great, recent portable game for
anything less than $40.

Now, I can get Plants vs. Zombies on my iPad, a game that rivals or even
exceeds the production values, play time and overall fun of these $40 games,
for under $8. At 2 AM. Without leaving my house.

Why aren't we seeing the same pricing evolution with eBooks?

We got to that cost structure in digitally distributed games by eliminating a
bunch of bullshit salaries that exist between the creators and the consumers.
We need to see the same cutting happen in the publishing industry before we
can enjoy decent pricing. By its nature, this is going to be slower – software
and game developers are quicker to try new technologies and distribution
channels than people whose industry began over 500 years ago. But it's going
to happen – there's no reason to be so stingy with publishing when you don't
have to risk physical printing and distribution. Which means a lot of
professional taste makers are going to find themselves obsolete.

~~~
loewenskind
>Why aren't we seeing the same pricing evolution with eBooks?

Because no "pricing evolution" ever took place. Pricing works as it always
has. We, the buyers have decided we're not willing to pay over $8 for Plants
vs. Zombies on the iPad. I still costs $30 or more for the computer. Most
things on the iPad will cost less than their computer equivalent because the
apps are simply not as powerful (unless it's a really simple app).

You seem to be arguing that it costs less to distribute and that's why it
costs less on the iPad. How can that be the case for companies like EA sports
who've had to rewrite their sports apps for a completely new platform? It has
actually cost them _more_ and they've charged less.

EBooks cost more _precisely_ because they are easier to distribute. _For
customers_. If I buy a book on amazon I suddenly have it everywhere. And I
have _all_ my books where ever I go.

Pricing is only confusing when you mistakenly assume price = production cost +
distribution cost + 10% markup.

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forgottenpaswrd
I don't know, but talking to tech professional writers I have responses
similar to this:

<http://jakonrath.blogspot.com/2010/12/bedtime-story.html>

Long story sort: If you get more money with the digital version than with
paper you don't need publishers, or editors at all, you don't need to give
away your copyrights in exchange for access to market by the
gatekeepers(publishers) and a minority of the profits.

You don't even have to ask for permission, just let the market decide, like
web startups.

On digital you just make an alpha version and send to friends for testing,
make a public beta like this book:
<http://iphone-3d-programming.labs.oreilly.com/>

...And just sell your book digital taking 70% of the money and never losing
your copy rights, like you do when you sign with a (paper)publisher.

------
zokier
Because people are ready to pay so much for them?

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GavinB
This article talks about pricing models, but doesn't discuss why an ebook
costs 9.99 and not 0.99.

One reason is simple economics: there's no perfect substitute for a specific
book. If I want the next book by my favorite author, buying another book with
a similar looking cover won't really do it. So price wars aren't as
competitive as they are in, say, the grocery store.

But the bigger reason is that it costs a lot to produce quality books at
scale.

First a publisher has to decide to make the investment. This means an
editorial assistant or intern needs to read hundreds of manuscripts. Agents
will read thousands of queries and hundreds of books to find one that they
will actually publish. The actual editors will ready ten or twenty books for
each one that they want to make an offer on--and then usually not end up with
the winning bid. Which means starting over and looking for another book.

Don't forget that when an editor is trying to acquire a book, she has to
consult with marketing, sales, and other groups in the company who will judge
how well they will be able to support the book. To get a few good books, they
have to run through this process many times. Don't forget that contracts need
legal review and an accountant need to make sure that the author is paid.

Once a book is acquired by a publisher, the editor takes it through several
revisions, which will usually substantially alter it. In this stage a book may
suddenly become very emotionally compelling or gripping--in ways that a casual
reader wouldn't have predicted. Or maybe it will lose a boring introduction
that would have turned readers off before they got to the good parts.

Once a book is edited, it needs to be typeset and copyedited, which means a
lot more reading by a few more people. Also, it needs a cover design, and
possibly interior art, which needs not only to be created but art directed.
And legal may need to review it if there are usages of brand names or other
potential issues.

At this point, we actually have a book. It looks like a book, it reads like a
book, and it could now realistically be tested against a target market.
There's no such thing as a minimum viable product for a book. I'd like to see
a more scientific, testing-based approach in publishing, but often the book
doesn't come together into a hit-worthy package until you've done the work to
take it all the way. You might have ten books with hit potential, but only one
of them comes out of this process having fulfilled its potential.

Now, someone needs to put the book out and actually market it. This means a
publicity person needs to get the word out to the press, and marketers who buy
ads and run campaigns. In the modern world, someone needs to be on facebook
and twitter. Often this is the author, but it's still adding to the amount of
work that went into the book. The author will probably also be touring around
in meatspace, possibly paid for by the publisher and possibly not, but that
money is coming from the consumers no matter what.

The book files will need to be archived and corrected for future editions, and
someone will need to manage the financial relationship with the author as the
book is published across print editions and various ebook retailers, each with
its own quirks and process.

And speaking of ebook retailers, they need to get paid to! Their 30% has to
cover all the costs of running their operation, which may include subsidizing
ereader devices and all the costs of negotiating with both the big publishers
and the hundreds of little ones.

Even after this painstaking process, many books will fail. A bunch will barely
earn back their investment. The regular-sized hits will keep the business
afloat, and the mega-hits will make it worth being in the business in the
first place.

It's really hard to predict whether people will like your final product until
you put that final product out into the marketplace. For entertainment
products this is especially true, because a little bit of polish makes a huge
difference. I'm sure I've missed things, but keep in mind that the cost of
printing and shipping most books is less than $2 for a hardcover, less than $1
for a paperback.

Is there a better way to do this? Of course there is. But it isn't here yet,
and it's a lot harder than you think (but I highly encourage you to try!).
Someday, someone will figure out how to crowdsource a lot of this or turn it
into a scientific numbers-driven process, but early experiments have not made
a lot of progress.

tl;dr Producing good books at scale is expensive and requires creating a lot
of not-so-good books as a side product. The physical manufacture has never
been the main cost driver.

~~~
JimmyL
If HN were to have an official mantra, surely one of the finalists would be
"charge for a product based on the value delivered, not based on the cost to
deliver" - so why wouldn't that apply here? The publishers think that a ebook
delivers ten bucks worth of value to the reader. Seeing as they sell pretty
well, it seems they're right to some degree.

Put another way, if the market is willing to sustain the price (and sales
figures suggest it is), why not charge $9.99 for a ebook?

~~~
schammy
Fair enough, however, $9.99 is no longer the common price point. Most new
releases are $12.99 now, which many people think is too high, and the problem
is the retailers can't do anything about it because of this "agency pricing".

I had no problem paying $9.99 for books on my kindle, but most of them are
$12.99 now and I just feel like that's too much. In some cases, buying the
physical hardcover is actually cheaper than $12.99 too, and that's what REALLY
pisses some people off. The physical nature of the product surely is at least
$1 - $2 of the actual cost of the the book, so buying it digitally gets rid of
this cost.

Also, many books are destroyed if they're not sold (hence the "if you bought
this book without a cover" warning in the front of many books). By moving to
digital, the publishers no longer have to eat these costs.

So basically, eBook pricing is complete bullshit.

~~~
dawgr
I was going to buy a Kindle this week but this article is making me think
twice. I thought it'd definitely be cheaper to buy books. What about PDFs?
There are thousands of PDFs on the internet which you can get for free, is the
quality of PDFs worse than books in kindle format? Do you have to scroll
sideways or something? Or is the font smaller?

~~~
rmc
Yes, The Kindle can read PDFs. (I recently got a Kindle 3). However it's a
second class reading experience. You can't change the font size (you can zoom
in/out) etc. It's easy to convert a normal 'text pdf' to an ebook format
suitable for Kindle (cf. [http://www.technomancy.org/kindle/convert-books-to-
kindle-fo...](http://www.technomancy.org/kindle/convert-books-to-kindle-
format-on-command-line/)). If it's a PDF of scanned images from a book, then
you'll need some OCR stuff.

~~~
dawgr
Okay thanks, so I can assume that hypothetically if I were to download text
PDF books from certain places, then convert it to Kindle format, I would then
be able to get first class reading experience? Are you happy with your Kindle
3 overall? I'm considering whether to get the one with 3G, but I don't know
how good the webkit browser is, what do you think of it?

------
toddh
Agencies won't be around much longer in any case. Disintermediation strikes
again.

~~~
bl4k
If I were to write a book, either technical or a novel, I would be tempted to
hire a freelance copyrighter, editor and publicist, then list it on Amazon,
Safari etc. myself.

You can find these people on Elance and similar sites, but there is an
opportunity for a website that is a one-stop-shop to do all of this in one
place (ie. find the various people, organize listing, sales etc.).

Anybody know if this already exists?

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tommi
Perhaps because people are willing to pay and without the high price on
ebooks, the price of traditional books would not be justified.

All in all, I hate how many books are made too verbose just to sell more pages
and therefore have higher price. The same content would be better communicated
with less repetition and side content.

~~~
nhangen
This is exactly why I enjoyed Crush It, by Gary Vaynerchuk. Quick and to the
point.

So many business books especially read like a collection of blog posts and
filler, rather than providing a real and valuable hypothesis.

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nodata
Because of the higher costs of manufacturing and distribution, plus all the
real estate to store the books.

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coffeedrinker
It depends on the value of the book, and the author, and the content.

A very famous author is more akin to a best selling band. The can afford to
charge less because they can make up for it through volume.

I've written several books, and they are available in print as well as digital
formats. I think that my books are valuable and that people reading them will
get $10 worth of value out of them (actually I think they will get a lot
more).

The real question for me is, "Why are some people so cheap as to think my work
is worthless and theirs is so valuable?"

Some won't hesitate to plop down $4 at Starbucks for a coffee but then
complain that a book that will bring hours of pleasure or instruction is not
worth two or three times as much.

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ThomPete
For no particular reasoning other than they can get away with it.

~~~
vladok
Another way to say "they can get away with it" is "enough customers still find
the product more valuable than the cash price set for it"

~~~
ThomPete
Sure.

But don't you have to factor in those who download it for free to find the
"real price" then?

~~~
loewenskind
Theft generically pushes prices _up_. Not down.

~~~
chc
That's because theft generically reduces inventory while leaving the seller
with the need to recoup the marginal cost of the item stolen. This is one of
the many reasons why downloading something without the copyright holder's OK
is not the same thing as theft. (This is not to say it isn't a crime or that
it's morally OK — just that if it is a crime, it's one _other than_ theft.)

~~~
loewenskind
>This is one of the many reasons why downloading something without the
copyright holder's OK is not the same thing as theft.

This is pure nonsense. It's true that no inventory is lost when a product is
downloaded and in some cases no sale as well. But you'll never convince me
(and it's impossible to prove) that every single person who ever downloaded
any software wouldn't have purchased it had they not had the option of
stealing it.

The issue is that software has huge up front costs. If people were to follow
your "morals" there would be no reasonable way to recoup those up front costs,
since it would just be ok to take what you want.

I do tend to think that the fact that the creator continues to get full price
long after they've past production costs and made a healthy profit could use
some scrutiny (i.e. is there a better way to do this), but software is hardly
the only industry where this is the case.

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bhousel
This story is especially timely for me - I'm building a website
<http://www.booklends.com> that will let Kindle and Nook owners lend books to
each other easily. It's kinda my weekend startup right now. I'm hoping to have
the site ready enough in a few days enough to do a "Ask HN: Review my startup"
post...

It is now possible to lend some Kindle and Nook books to other users for 14
days - but only if the publishers allow it. I feel that if the current
craziness in eBook pricing continues, this will only drive people towards
using the lending features of their devices.

This story did also answer another question for me: I never understood why
Amazon removed from their API the ability to get a Kindle book's Offer Price.

(somewhat terse announcement here:
<https://forums.aws.amazon.com/ann.jspa?annID=854> )

You can query the List Price, but this isn't what people would actually pay
for the book. Sounds like they removed this ability because the publishers are
making them play games with the actual price that they can offer to customers.

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andrest
This is my personal opinion of what could be the solution.

1) Ebooks will be kept on publishers' servers

2) A standard which all ebook readers can read will be adapted (during the
crossover period publishers can keep ebooks in multiple formats)

This could be it. Now the retail sellers can sell the book for a lower cost.
Every time a purchase is made, let's say a key is generated by the retailer
(e.g. amazon) that will allow you to download the book from the publisher's
(e.g. penguin) server.

or

3) An umbrella organization for all the publishers is created. The
organization manages the ebook standard and hosts the ebooks themselves.
Publishers pay money to the organization per download basis (to cover the
hosting cost) + a yearly membership fee (to cover the management costs)

4) The umbrella organization can actually sell the ebooks itself (maybe even
use advertising to cancel out the yearly membership fee) and/or resell them to
major retailers.

Everybody could sell their book to the umbrella organization, pay for the
sharing costs and make their book available around the world.

This would allow easier publishing, cut out the 30-40% retailer margin and
make the books more available.

The current model has the retailers to closely tied to the whole system.
Without them, nothing works, so they are the price-makers. Furthermore,
retailers actually make the ereaders so they get to subsidize the reader and
spread the cost on the books, this unfortunately provides disincentives to
support other platforms. Therefore we need to centralize the distribution
system.

The first steps would be creating an open standard that every retailer has to
support, so we wouldn't have to be tied to their devices.

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c0riander
One of the other main reasons ebooks costs so much is because they are sold in
proprietary formats. Yes, some costs associated with producing, distributing,
and selling physical books are diminished, but at the same time, publishers
now have to pay to convert their text to each retailer's ebook format -- both
a set fee and per-copy-sold fee. Publishers are forced to pay-to-play
(essentially) in Amazon's store, or B&N's store, or whatnot, so that their
books are available in their formats, a cost that is then folded into the
production of the ebook. So yes, some costs go down, others go up.

On a side note, the agency pricing model actually is better for most
authors/illustrators as well, not just their publisher. Physical book, the
author gets a set royalty (anywhere between 5-15%) based on the retail price.
Ebook, the author gets 25% of net receipts. The breakdown there is:

$10 physical book at 10% royalty: $1 per book to the author (out of ~$5 to the
publisher)

$10 ebook at 25% net: $1.75 per book to the author (out of ~$7 to publisher)

It's a move toward more fair compensation for the content creators.

------
loewenskind
A lot of people in this thread are going off course due to the red herring
about how much it costs to make an ebook. There are systems where cost is
based on price to make but capitalism isn't one of them.

The real issue here is Agency pricing. Personally I don't understand why a
company like Amazon wouldn't try to do something against them since it
constrains what they can do with ebooks, an otherwise very flexible product.
They could do things like selling a high end camera ebook at a loss provided
the customer also buys that camera from them. With this pricing scheme they
have no flexibility with ebook prices at all. They are essentially providing
an online store for publishers to sell their products directly. Is 30% a fair
price for such a service (personally I might try to get more because their
store might be competing against mine)?

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nickpinkston
I want to know when the BitTorrent market for eBooks becomes as well populated
as the one for MP3s. I hope soon!

~~~
rmc
It's not far off that now. One annoyance at the moment is that loads of books
are just scans of pages in a pdf. So they aren't computer readable text, no
searching, no font size chasing, no reflowable text. It's a pain by eventually
Oct will get good enough.

~~~
nickpinkston
Any good sources or eBook themed trackers you can recommend?

~~~
rmc
I don't know of any specific ones. I just use Demoinoid mostly.

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nod
That is the wrong question. The question should be, "Why are ebooks priced so
high?"

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bugsy
Interesting article on "Agency Pricing". So all the big players in the
industry come together, make a pricing compact that no one can break, and as a
side effect lock out all the smaller players.

How is this not price fixing and collusion?

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barrkel
Ebooks aren't even competitive with actual books, second-hand books in
particular. For almost any popular book published more than a few years ago,
it's a lot cheaper to get it in a second-hand bookshop.

~~~
jonhendry
That doesn't help if you tend not to read the sorts of popular books that are
easy to find in second-hand bookshops.

Nor if you don't want to spend a bunch of time shopping for books that may or
may not be in stock.

In my experience, second-hand bookstores are great for serendipitous finds -
books that look interesting that you weren't looking for and maybe didn't know
existed, not so much for finding a specific book.

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patrickgzill
Expect prices to fall as ebook reader penetration/market share increases.

Already, my (B&N) NookColor shows me variably-priced books as I browse.

Even "Agency Pricing" will fall as the cartel's power decreases in the future.

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rdl
Obviously, value vs. cost pricing is key.

However, ebooks are less functional than physical books in some key ways, at
least with current DRM - you can't easily lend a book (the restricted amazon
form is pretty weak), and you can't resell it. Assuming "like having a nice
physical object" and "convenience of carrying all my books on one device" are
a wash, the lack of lending or resale should definitely make the ebook
cheaper.

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92elements
because people like to make MONIEs and dont care about you

