I believe consumers as a whole have an innate sense of fairness and it's this that drives a lot of piracy. Australia has had historically high amounts of TV piracy because Australia tends to get treated poorly. One of the country's largest ISPs admitted over half of traffic was BitTorrent [1].
I live in the US now. I don't have cable TV but I do pay for Netflix and HBO Now and will probably pay for the ad-free Hulu Plus now that it exists (I'd never pay for an ad-supported streaming service) and, what the hell, probably Showtime too. In part because I watch them but I don't really need all of them. I really want to put my money where my mouth is here and support such services.
I often now see novels on Amazon where the paperback is $8 for a book that's been out for years. The ebook is... $10.
Now in the case of print media like the NY Times and the WSJ, I get why they prefer the physical copy: it comes down to advertising. Advertisers will still pay more for print ads and certain advertisers will only buy print ads so they have to print physical copies a bunch of people won't read. It's why, just now in going to this page, you see the WSJ advertising print + online access and why print + online is usually cheaper than just online.
But I don't get this at all with ebooks. Paper books need to be typeset and printed, supplies for that bought and the physical products need to be boxed and shipped to various distributors and so on. The distributor, printer and retailer all need to take cuts.
The ebook is essentially direct to market with zero distribution costs.
Now ebooks offer a lot of advantages to the consumer: immediate access, searchability, more portable. But they also come with negatives: you can't as a general rule resell or even give away an ebook so it can only generally be read by the buyer and their immediate family.
Publishers should be loving this because publishers hate the preowned book market. It's why textbooks are often changed from year to year: just to devalue used previous editions and force students to buy new books.
Yet publishers are acting in a way that strongly suggests they just want to kill the ebook market. Could that be it? They just know how to print and sell paper books and want to keep on doing it? Could it be fear of piracy and the inability to adapt to this new business model?
My own sense of fairness kicks in here: when I see a $10 ebook for an $8 paper book I just don't buy either.
I'm reminded here of the cable TV industry. Cable TV is dying. It's why cable companies will essentially give you free Internet if you subscribe to TV services (and charge you $50-80/month if you don't). This artificially props up the number of TV subscribers, which is important because the price of content is driven by the number of consumers. The more consumers a provider has, the lower the pre-consumer cost of channels. This is also why Comcast was so desperate to merge with TWC and has since merged with Dish: to reduce content costs and increase their negotiating power with content providers.
But all of this is just seeking higher land in a flood: eventually you run out of land anyway so you're just delaying the inevitable.
We see the same thing in the music, TV and movie industries where direct-to-market versions are often more expensive than, say, buying a CD or DVD and having it shipped to your house.
Perhaps this really is the long game of setting price expectations.
Piracy seems to be the response of the market to "unfair" pricing and licensing practices and it does seem to eventually force change. The problem is that once you've taught a whole market to be pirates, only some of them will switch back to more legitimate channels.
It still astounds me that you can be forced to watch FBI disclaimers and the like on movies you legitimately buy and have incompatibilities that won't allow you to watch HD content (HDCP versions and the like) yet what has none of those problems is pirated content. It's a wholly better user experience.
I really wish these old world industries would just accept we live in a digital world and get over their anachronistic business models.
This idea that ebooks are dramatically cheaper for publishers to produce is the single biggest problem they have. Because the actual production and distribution of the paper books is not a huge cost component of the price of a book. With the deals they were previously getting with amazon the distribution channel of ebooks could frequently be more expensive than their traditional book distribution channels, which have had many years to become more efficient.
The vast majority of the cost of the book is not in the production of the paper product, but in the production of the content of the book and the marketing of it. This remains static regardless of the delivery vehicle, but is non-obvious to the consumer.
My big concern is that the consumers attitude about the price of books is going to lead to a world where it is impossible to maintain the current standards around content creation, and that the drive to the bottom in prices will mean much fewer opportunities for professional writers, editors and booksellers. I believe that will be worse for me as a book consumer.
> With the deals they were previously getting with amazon the distribution channel of ebooks could frequently be more expensive than their traditional book distribution channels
Not actually so. The canard that print books are not more expensive than ebooks comes from traditional publishers trying to justify high prices for ebooks, but it's not so. Costs for print books that are higher than ebooks: printing, shipping, warehousing, capital costs (sunk costs of a large print run meaning investment in books that might take years to sell or never sell). Another huge factor in the print book business is returns -- nearly all bookstores are consignment shops and regularly return up to 30% or more of the books shipped to them. It's the custom in the book business (to avoid shipping costs) that "return" means, the retailer actually destroys the books that aren't sold and gets a refund for them from the publisher. (Really!) Returns can add another 30% or more to the effective cost of print books sold in bookstores. (Returns are a smaller factor for bestsellers, one reason why traditional publishers are so focused on that corner of the business.) Remarkably, Amazon is one of the few retailers that tries to minimize returns -- they try to get smaller shipments from publishers so that they can avoid overstock.
So why do traditional publishers say that ebooks cost as much as print books? (Booktrope is an online publisher focused on ebooks and print-on-demand paper books, and we certainly do not say that ebooks cost as much as print!) For traditional publishers, low ebook prices can undermine print sales. A big part of their business model is selling print books at high prices through bookstores. Lower ebook prices obviously are a problem for that model. Also, traditional publishers are used to a world where they have great connections with tastemakers and can persuade people their product is "better" than the competition. If you can do that, you can keep your retail price high -- like Apple does in the phone/tablet/computer world. But it's not working -- there are lots of great books being self-published and coming from non-traditional publishers these days, so, as the article says, big publishers are really starting to suffer from their own pricing policy of trying to keep ebook prices artificially high.
I live in the US now. I don't have cable TV but I do pay for Netflix and HBO Now and will probably pay for the ad-free Hulu Plus now that it exists (I'd never pay for an ad-supported streaming service) and, what the hell, probably Showtime too. In part because I watch them but I don't really need all of them. I really want to put my money where my mouth is here and support such services.
I often now see novels on Amazon where the paperback is $8 for a book that's been out for years. The ebook is... $10.
Now in the case of print media like the NY Times and the WSJ, I get why they prefer the physical copy: it comes down to advertising. Advertisers will still pay more for print ads and certain advertisers will only buy print ads so they have to print physical copies a bunch of people won't read. It's why, just now in going to this page, you see the WSJ advertising print + online access and why print + online is usually cheaper than just online.
But I don't get this at all with ebooks. Paper books need to be typeset and printed, supplies for that bought and the physical products need to be boxed and shipped to various distributors and so on. The distributor, printer and retailer all need to take cuts.
The ebook is essentially direct to market with zero distribution costs.
Now ebooks offer a lot of advantages to the consumer: immediate access, searchability, more portable. But they also come with negatives: you can't as a general rule resell or even give away an ebook so it can only generally be read by the buyer and their immediate family.
Publishers should be loving this because publishers hate the preowned book market. It's why textbooks are often changed from year to year: just to devalue used previous editions and force students to buy new books.
Yet publishers are acting in a way that strongly suggests they just want to kill the ebook market. Could that be it? They just know how to print and sell paper books and want to keep on doing it? Could it be fear of piracy and the inability to adapt to this new business model?
My own sense of fairness kicks in here: when I see a $10 ebook for an $8 paper book I just don't buy either.
I'm reminded here of the cable TV industry. Cable TV is dying. It's why cable companies will essentially give you free Internet if you subscribe to TV services (and charge you $50-80/month if you don't). This artificially props up the number of TV subscribers, which is important because the price of content is driven by the number of consumers. The more consumers a provider has, the lower the pre-consumer cost of channels. This is also why Comcast was so desperate to merge with TWC and has since merged with Dish: to reduce content costs and increase their negotiating power with content providers.
But all of this is just seeking higher land in a flood: eventually you run out of land anyway so you're just delaying the inevitable.
We see the same thing in the music, TV and movie industries where direct-to-market versions are often more expensive than, say, buying a CD or DVD and having it shipped to your house.
Perhaps this really is the long game of setting price expectations.
Piracy seems to be the response of the market to "unfair" pricing and licensing practices and it does seem to eventually force change. The problem is that once you've taught a whole market to be pirates, only some of them will switch back to more legitimate channels.
It still astounds me that you can be forced to watch FBI disclaimers and the like on movies you legitimately buy and have incompatibilities that won't allow you to watch HD content (HDCP versions and the like) yet what has none of those problems is pirated content. It's a wholly better user experience.
I really wish these old world industries would just accept we live in a digital world and get over their anachronistic business models.
[1]: http://www.itnews.com.au/news/day-13-iinet-ceo-says-bittorre...