Amazon (And Consumers) Lose E-Book Pricing War

By Jeralyn, Section Media
Posted on Thu Apr 01, 2010 at 11:59:04 AM EST
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To me, the attraction of the Kindle has been the pricing of books. Instead of paying $30 for a new hardcover, you can pay $9.99.

That price is now going to jump to $15.00 as the result of the top three publishers winning a price war with Amazon and Apple being on the publisher's side.

The e-book agreements, with CBS Corp.'s Simon & Schuster and News Corp.'s HarperCollins Publishers, mirror deals struck this year with Apple for the iPad: Some new best sellers will be priced at $9.99 but most will be priced at $12.99 to $14.99.

[More...]

The new deals ensure that Amazon will have the same array of titles that rival what Apple will offer on its digital bookstore. Apple has forged deals with five of the six major publishers to provide titles on the iPad, which will compete with Amazon's popular Kindle e-reader.

$15.00 for a book you can't thumb through or hold before buying and don't have a hard copy of after you've read it? I think the publishers just shot themselves in the foot. Their greed will come back to haunt them as people will buy way fewer books. I know I will. For $10, I'll take a chance and buy something I don't know much about. For $15, I'm going to ask myself if I really need or want it and decide to think about it. 9 times out of 10, I'll either forget to go back to it or decide I can do without it.

There's a huge market here for publishers. Instead of tapping into it, they are limiting it by over-pricing. Big mistake.

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Amazon (And Consumers) Lose E-Book Pricing War | 65 comments (65 topical)

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The book publishers like news publishers are dying (5.00 / 1) (#8)
by Gerald USN Ret on Thu Apr 01, 2010 at 12:43:08 PM EST

The book publishers like news publishers are dying, and they don't know how to stop the bleeding.

Amazon has most of the "smarts" on their side here. The publishers have good intentions for the most part but they are not facing the truth that the road to "hell" is paved with those kinds of good intentions.

They are trying to protect the store type book seller (especially the smaller ones), and that is a losing proposition for the most part.

It reminds me of the Encyclopedia Britannica's early mistakes at the beginning of the Digital Age.

They had a very close relationship to their sales force, those people that for years had gone out and sold sets of bound encyclopedias to people in their homes, usually in a nice book case with plenty of extras.

Well those sales people looked at the sets of CDs with the Encyclopedia on them and said flatly that we can't charge people many hundreds of dollars for a few discs of plastic, so our "healthy" commissions will disappear.
The company decided to go along with their sales people and ignore the new Digital Age. Big mistake at the time.

I really don't know if the Encyclopedia Britannica ever really recovered from that mistake.

Jeralyn, here is a thought for you.
I buy most of my books from Amazon or Barnes and Noble through their used book resellers like "Goodwill Industries" or others, for one (1) penny plus $3.99 shipping for a total of $4.00, because I still like to hold a book when I am reading it. When I finish it, I return it to the local Goodwill.

: Thanks for mentioning Goodwill (none / 0) (#21)
by MO Blue on Thu Apr 01, 2010 at 01:10:56 PM EST

as a place to recycle used books. It is past time for me to go through mine and reduce their number. Have a local Goodwill store blocks from my house so it will be very convenient.

Fixed costs (5.00 / 7) (#10)
by Spamlet on Thu Apr 01, 2010 at 12:43:54 PM EST

The publisher's fixed costs--for advances, editing, design, marketing, and overhead--exist whether it's an e-book or a printed and bound version, so the publisher saves only about $3-$4 per copy with an e-book. Printing and shipping books are very minor costs in the overall picture.

Then consider the fact that the typical book doesn't even earn out its advance, and the fact that book publishing (thanks to the archaic policy of deep discounts to and returns from retailers) essentially operates on the consignment model. Add in the fact that the e-book competes with print copies in bookstores, and you can see that the $9.99 price is unsustainable.

Rather than cite publishers' greed, you might consider the idea that Amazon's $9.99 price was set artificially low, as one tactic in Amazon's overall strategy--to push sales of the Kindle.

At least that is my perspective, and I've worked in the book publishing for 30+ years.

Who bargainers on behalf of authors (none / 0) (#12)
by oculus on Thu Apr 01, 2010 at 12:47:15 PM EST

as to author's share of e-book sales?


: The agent does (n/t) (none / 0) (#14)
by Spamlet on Thu Apr 01, 2010 at 12:49:30 PM EST

If a regular paperback costs... (none / 0) (#25)
by Julene on Thu Apr 01, 2010 at 02:32:15 PM EST

If a paperback I buy at Borders is $13, how is it undercutting the writer/publisher if I pay $9.99 on my kindle using the savings of $3-$4 that you cite? It's not. Now I have to pay the same price for a paperback that I pay for a paperless book that they can take away from me at any time? Ridiculous. Of course, leave it to Apple to ruin it for everyone. They did this to the music prices, as well.

Waiting for the equivalent of Napster for my ebooks....


: Borders (5.00 / 1) (#31)
by Spamlet on Thu Apr 01, 2010 at 03:27:05 PM EST

bought the $13 book from the publisher for $5.20 (deep discount of 60 percent of retail price to mass retailers), and the publisher's fixed costs per book (of which the $3 to $4 for printing and shipping are only a small portion) still exist. It's also true that if Borders doesn't manage to sell the book within the short period of the book's shelf life, Borders can return the book to the publisher for a refund (the archaic policy of returns, a leftover from when book publishing really was a "gentlemen's profession").
Even when bookstore sales go through, publishers actually lose money on most of their books, so they try to make up for those losses with the blockbusters on their lists (or they simply decide to publish nothing but dumbed-down prefabricated blockbusters, to the detriment of our literary culture). The situation is more analogous to what has happened to American movies than to what has been going on the music industry.
If the publisher is already losing money on the $13 paperback, the $3 to $4 in savings on the e-book won't matter, since the same book that Borders got for $5.20 is a book that Amazon will get for $3.97, but the same fixed expenses (minus the pittance for printing and shipping) still exist for the publisher.
As for the author, his or her royalties are a small percentage of the book's retail price. But when you consider that the author's advance is an advance against royalties, and that most books don't earn out their advances, you can see that the $9.99 e-book is not in the author's economic interest, either.
What is not in authors' and publishers' interests is ultimately not in the interests of serious readers, IMO.
I hope this answers your questions.

: Because the $13.00 price at Borders (none / 0) (#28)
by ruffian on Thu Apr 01, 2010 at 03:02:37 PM EST

is also undercutting the write/publisher, just not as much. If the Kindle version were not $9.99, borders might be able to sell the the paper version for $15.00.

I'm sorry but I disagree (none / 0) (#35)
by Gisleson on Thu Apr 01, 2010 at 03:42:21 PM EST

The vast majority of the publishers' fixed costs is printing and warehousing. Both of those expenses vanish once you go electronic.

With electronic books, why pay advances? Just put the book out as quickly as possible and pay the royalties on time. I can reformat raw text into a polished looking e-book in a matter of minutes. It's really that easy (unless it's illustrated and then it takes a while longer). E-books should be able to go straight from editing to publication within a week or two at tops.

The publishing industry needs to face up to the fact that they are selling very expensive products when very cheap alternatives are available.


As Truman Capote famously said (5.00 / 2) (#39)
by Spamlet on Thu Apr 01, 2010 at 03:52:17 PM EST

of Jack Kerouac's work, "That's not writing, it's typing."

The accuracy of Capote's judgment aside, you are making the same kind of mistake he accused Kerouac of making. You are confusing the handling of what you call "raw text" with writing.

Think (or inform yourself) about where "raw text" comes from. Then maybe you can answer your own question:

why pay advances?

: I'm sorry (none / 0) (#44)
by Gisleson on Thu Apr 01, 2010 at 04:13:18 PM EST

but what does that have to do with cheaper distribution models? E-distribution doesn't impact quality, just the cost of distribution.
Unless you mean that publishers invest in promising authors which seems to speak more of ownership than anything else.

You can disagree (none / 0) (#37)
by Spamlet on Thu Apr 01, 2010 at 03:44:52 PM EST

but you are deeply misinformed.


I would appreciate it (none / 0) (#38)
by Gisleson on Thu Apr 01, 2010 at 03:50:16 PM EST

if you could be more specific. What percentage of book costs are tied in to printing, binding, warehousing and physical distribution?

I've always understood that to be the majority of the fixed costs. I'd love to see a breakdown of where the money really goes.

And I used to own a bookstore so I do understand that the publisher doesn't get $15 (or more likely $20+) for the book, but I also understand the incredibly low cost of producing ebooks (having created my own in literally minutes) and the cost of electronic distribution.


See my comments #10 and #31 (none / 0) (#40)
by Spamlet on Thu Apr 01, 2010 at 03:53:15 PM EST

I helped make extensive revisions to a book (none / 0) (#42)
by Gisleson on Thu Apr 01, 2010 at 04:10:03 PM EST

back in the early '90s. We were working on Mac Pluses using Word 4.0. It was a grisly experience. Now, thanks to faster computers and more powerful software, what took three of us weeks would take me a day.

A ready to go text file can be formatted in minutes. Proofing is far more time-consuming than the electronic publishing process. I doubt there's a single publishing house whose entire electronic catalog wouldn't fit on one $100 hard drive.

Most of what you reference is the cost of printing and physically distributing a book. How does that impact the cost of publishing an e-book other the fact that hard copy publishers are stuck with overhead that doesn't apply to their e-business?

A bound book is a special thing. Sadly, we degrade that investment of timber and ink into far too many unworthy projects that could as easily be e-distributed for next to nothing. As other commenters have made clear, some people will buy books no matter what. Limit the "publishing" industry to those readers and give everyone else what they really want: more affordable books.

Better yet, don't print any book that can't sell 10,000 e copies. It's a crime to see warehouses full of books pulped because of over-sized press runs and tax laws that make it costly to maintain physical inventories.


: Not true (none / 0) (#45)
by Spamlet on Thu Apr 01, 2010 at 04:13:59 PM EST

Most of what you reference is the cost of printing and physically distributing a book.
I said the exact opposite. You didn't read my comments, or you didn't understand them.
And, sorry, you are misinformed. I've done my best to clear up your misunderstandings but have no more time to devote to that.
Pirate away!

Authors like it (5.00 / 1) (#11)
by trillian on Thu Apr 01, 2010 at 12:47:00 PM EST

Amazon was squeezing them dry...

Charlie Stross explains

I'm not one for re-reading books, (5.00 / 1) (#22)
by Anne on Thu Apr 01, 2010 at 01:15:24 PM EST

and I read a lot, so buying books is not the best use of my money; I have a great public library, though, and that's where I get most of my reading material.

They frequently have books for sale, so if there's anything I'd like to have forever, it's a really cheap way to go.

E-books will never fully replace print imo (5.00 / 5) (#24)
by tworivers on Thu Apr 01, 2010 at 01:54:04 PM EST

Sorry but I just can't imagine saying to my kids, "Hey, let's gather round the Kindle for a bedtime story".

Likewise, who would want to look at an art book on a Kindle or a Nook when you could have a nice coffee-table art monograph?

By saying all this, I don't mean to dismiss e-books altogether. E-books are ideally suited to many types of materials. And to tell the truth, there are many books whose intellectual worth are not commensurate with the destruction of trees entailed by their production. Not to mention the fact that the functionality of e-books is in some senses superior to the functionality of print books (but not in every way, I'd argue).

But I guess I just don't see print books going away altogether. There is something about the experience of holding a print book in your hands, smelling the paper, etc. that I am hard pressed to imagine an e-reader ever matching.

In the interest of full disclosure, I should admit that I work in a library, so am admittedly a bit biased about such matters!

I love real books and will always collect them (none / 0) (#27)
by ruffian on Thu Apr 01, 2010 at 02:52:27 PM EST

Even if I don't re-read them I love to have them around, look at them, page through them from time to time. It relaxes me more than anything else. So I don't use the library much. I feel that I support the publishing of paper books more than most people I know.

That said, I can't wait to read books on my iPad as well. I think it will be a different experience, and very helpful for some types of reading. For example I recently read to Jon Krakaeur's book on Pat Tillman, and frequently consulted maps of Afghanistan on my iPhone. What if that was built into the iBook on my Pad? I think ebooks in the future are going to be much more than just electronic versions of the text.

I'll still read paper books too, and buy them. But I'm really excited about the possibilities of electronic books on decent platforms, like the iPad.


I wonder how electronic books (none / 0) (#34)
by Inspector Gadget on Thu Apr 01, 2010 at 03:38:34 PM EST

will impact the reading habits of parent to child. And young readers. Will the families who can now afford to buy the Harry Potter series for 2-3 kids in the house be able to buy all those Kindles and separate downloads so everyone can read when they want?

No more borrowing or swapping books with friends, I guess.

It will be a long, long time before I go the eBook route...I love real books. I love owning them, loaning them, and giving them as gifts.


I think there will still be (none / 0) (#47)
by ruffian on Thu Apr 01, 2010 at 04:48:53 PM EST

all media types, for exactly those reasons.

I think there is place for every sort of activity. I don't see eBooks ever taking over completely.


: Seems that continuing to publish (none / 0) (#49)
by Inspector Gadget on Thu Apr 01, 2010 at 04:54:05 PM EST

hardbound books would be cost prohibitive if the number of consumers gets cut by too much.

Until you have an entire generation... (5.00 / 1) (#33)
by Dadler on Thu Apr 01, 2010 at 03:32:57 PM EST

...of people who have never turned a real page with any regularity, the traditional book will survive. Not as it has previously, but it will remain with us. I have a hunch, as well, like many things, it will go through a resurgence now and then, as clothing styles do, as music does, as other things do. The ability to flip actual pages back and forth is so instinctive, I can't see it vanishing for some time. But catch me when I'm seventy, we'll see how I'm feeling about it then.

It's probably safe to say that (5.00 / 2) (#51)
by Inspector Gadget on Thu Apr 01, 2010 at 05:21:50 PM EST

the relationship between author, book and reader is by far more important than either's relationship with Amazon.com

I sincerely hope that this "marketplace" for literature doesn't suffer at the hands of the corporate distribution chain.

There really is no comparison between holding a book in one's lap and scrolling through an electronic transmission device. Will there be physical results from spending hours looking into yet another screen for hours on end, and the position one must sit in to be comfortable while reading? I can drop a book without worrying that I broke it and lost every book in my library. I think there is a big price to pay for technology becoming the vehicle in control of so many of our relationships with relaxation, and each other.

Me too (5.00 / 1) (#52)
by Spamlet on Thu Apr 01, 2010 at 05:39:29 PM EST

And that the pernicious and deeply ignorant ideology of "content" won't invade every corner of art and thought.

: Bravo (5.00 / 1) (#55)
by shoephone on Thu Apr 01, 2010 at 05:54:24 PM EST

to that, and all your other comments here today.
More than anything, a lot of the "content" on the web proves that professional editors are needed more than ever.

The Greed is all in Amazon's corner (4.00 / 4) (#1)
by shoephone on Thu Apr 01, 2010 at 12:10:48 PM EST

Amazon's HQ's are here in Seattle and I have countless stories of friends and acquaintences that got screwed over working there. As a writer, I applaud the publishers for winning this round. Amazon has been undercutting publishers and writers all along, selling books below cost and forcing a race to the bottom with Walmart and others. If it's choice between stomping a ravenous weasel like Amazon, or watching yet another publishing house have to lay off worker or close altogether, I think I know which one I'd choose.

I Agree (5.00 / 1) (#2)
by squeaky on Thu Apr 01, 2010 at 12:29:30 PM EST

Would rate your comment 15 if I could (n/t) (5.00 / 1) (#20)
by Spamlet on Thu Apr 01, 2010 at 01:08:08 PM EST

What you and Spamlet said (5.00 / 2) (#57)
by otherlisa on Fri Apr 02, 2010 at 12:22:59 AM EST

I'm a newly minted author, about to be published. I'm by no means an expert but the costs involved in producing a book go far beyond the physical materials and warehousing. There is still editing, marketing and promotion.

Amazon has been keeping the cost of eBooks artificially low as an incentive for people to buy Kindles -- it's all about selling devices, not content, and accustoming buyers to expect content at this low price. There is just no way that authors will come out ahead under such an arrangement.

I know that publishers aren't benign cultural overlords but I still believe that they are more likely to care about books and authors than a retailer would be, and I'd rather see some power remaining in their hands.


: Congratulations! (none / 0) (#64)
by shoephone on Sun Apr 04, 2010 at 02:09:45 AM EST

I salute you and hope that your work is well-received -- and sells!

Agreed (none / 0) (#3)
by TeresaInSnow2 on Thu Apr 01, 2010 at 12:30:03 PM EST

My nephew works there now. A 2 year stint at Amazon is considered long-term. Turnover is ridiculous because of the exploitatively long hours.

I watch people say that they don't buy at Walmart, but they proudly buy at Amazon. And I wonder if they really understand Amazon.

I've defended Amazon on somethings, because I'm really defending smaller internet retailers (e.g. sales tax collection, because I think it would hurt smaller niche internet retailers more than it impacts Amazon, but Amazon is big enough to make an impact in the fight). But on this Amazon is in the wrong. Lowballing price because of your pricing power is anti-competitive and it should be stopped.


Agree (none / 0) (#26)
by ruffian on Thu Apr 01, 2010 at 02:43:20 PM EST

Amazon was keeping the price to consumers artificially low for their own purposes, but should have known they could not make Kindle the be-all and end-all of platforms. Now they are cutting the price of Kindles way down and are going to a reasonable price for the content instead.

As far as the price point, I think Apple has proven to be pretty good at figuring out what people will pay for media content. there will be more books sold at $15.99 than there were sold at $9.99, because the platforms and pleasure of reading will be advanced with the iPad and other devices to come.


Me, too, (none / 0) (#32)
by Inspector Gadget on Thu Apr 01, 2010 at 03:28:57 PM EST

countless stories. They seem more like eBay these days in their business model, and definitely more like Wal-Mart in their employer role. I stopped buying through them over a decade ago.


Well (none / 0) (#4)
by squeaky on Thu Apr 01, 2010 at 12:33:37 PM EST

I would not be surprised that this does well and the price increase will be forgotten soon enough. Besides, once you pay for a book, can't you always access it, again for free?

Many younger people will experience reading this way for the rest of their lives, and the next gen as well..

My guess is that paper books will be for collectors and connoisseurs at a much higher price than now and with limited editions.

I hope your prediction is (5.00 / 3) (#6)
by MO Blue on Thu Apr 01, 2010 at 12:40:57 PM EST

takes a long time to become reality.

I love curling up on the couch or in bed with a paper book. Don't think it would be the same with a e-book.


I'm thinking if the Kindle were easier (none / 0) (#9)
by oculus on Thu Apr 01, 2010 at 12:43:23 PM EST

to read in bed than my hardcover library books I might be interested. Sometimes the typeface or contrast is not conducive to reading in bed. Progressive lenses.


Large print books from the library (5.00 / 1) (#13)
by MO Blue on Thu Apr 01, 2010 at 12:48:06 PM EST

are great and wonderfully conducive to reading in bed. Luckily my library has a good selection since I'm a bookaholic.


THey are heavier to hold but lots (5.00 / 1) (#15)
by oculus on Thu Apr 01, 2010 at 12:56:46 PM EST

easier to read.


: I have a lap (5.00 / 1) (#17)
by MO Blue on Thu Apr 01, 2010 at 01:00:12 PM EST

large enough to prop them up on. :-)

I think I'm covered (none / 0) (#48)
by ruffian on Thu Apr 01, 2010 at 04:51:28 PM EST

I have so many unread books in the house now, I probably will need the rest of my life to catch up.


: A Library (none / 0) (#50)
by squeaky on Thu Apr 01, 2010 at 05:08:06 PM EST

There are two basic categories of personal libraries, imo and their owners. One, a small collection of books, each book read and re-read, cherished for what illumination or pleasure their words impart.
The other, a rather large collection of books so vast that they can never all be read in a ones lifetime, yet no less pleasurable to a connoisseur or lover of books. Just to be able to touch and open any volume for a quick browse, is supremely pleasurable and illuminating in its own right.
Unpacking My Library is a nice essay by Walter Benjamin, about his transition from the former category to the latter.

not everyone (5.00 / 1) (#7)
by Jeralyn on Thu Apr 01, 2010 at 12:41:26 PM EST

re-reads books. I know I don't. I also don't re-watch movies, which is why I rent them but don't buy them, unless the price is like $5.00.

I agree e-books are the future, but I think $15.00 as a price point for new books is too high and will result in far fewer books being sold.


: Losses (none / 0) (#16)
by squeaky on Thu Apr 01, 2010 at 12:59:39 PM EST

If they lose 1/3 of subscribers they make the same money. My guess is that all the new e-readers joining the kindle crowd, because of the iPad, will more than offset any losses.
Many of the new hoards of soon to be e-readers who bought an iPad, do not know anything about kindle or its price structure.
I am also sure that the pricing will change to suit the market, many big sellers, and super slow sellers, may wind up back at the $10.00 price.

: Audible's audio books (none / 0) (#56)
by Natal on Thu Apr 01, 2010 at 09:25:00 PM EST

are a bit more expensive than e-books. Comparatively speaking $15 e-books is an okay price.

Well, here's a different take (none / 0) (#5)
by Jeralyn on Thu Apr 01, 2010 at 12:38:48 PM EST

I have never loved my Kindle because the screen is too gray. It's not ash, but gray. I always feel like I'm reading in the dark. And the Kindle does not have screen color adjustments.

A few minutes ago I found the customer service phone number for Amazon and waited less than 1 minute for a real person. He was as nice as could be, did not sound harried and listened to my not too articulate attempt to describe the shade of gray.

Even though my Kindle is 10 months old and this was my first complaint, and I don't know for sure there's something wrong with the screen (only that other people's kindles I've looked at seem way less gray) he's sending a new one at no charge. It will be here tomorrow.

I love Amazon. I'm only sorry they canceled my associate account because I live in Colorado which now charges sales tax on internet purchases.

I also don't see how you can complain they wanted to keep prices lower for the consumer.

You can't complain (5.00 / 3) (#23)
by Spamlet on Thu Apr 01, 2010 at 01:21:23 PM EST

if low prices for consumers are the be-all and end-all.

But if the issue is literary "biodiversity"--with highly individual authors, midlist authors, and small/midsize literary publishers as its lifeblood--then Amazon takes its place as the latest aggressor in the economic cleansing of our literary culture (a form of de facto censorship) that has been going on now for several decades. (I thought things were bad even before Bertelsmann acquired Random House.)

: Authors will disappear (5.00 / 1) (#29)
by Inspector Gadget on Thu Apr 01, 2010 at 03:21:33 PM EST

if they are only writing to keep Jeff Bezos rich.

: And I'd give THIS comment a 10 if I could! (none / 0) (#59)
by otherlisa on Fri Apr 02, 2010 at 12:32:42 AM EST

Jeralyn, I agree with you on most issues, but I really think you're wrong on this one.

And another Kudo for Amazon. (none / 0) (#18)
by Gerald USN Ret on Thu Apr 01, 2010 at 01:03:41 PM EST

And another Kudo for Amazon.

I have a relative in prison.

There isn't a lot we can do for him because he will be there a long time, but we do send him a couple of magazines and an occasional book (used from Amazon and B&N.)

Anyway, one book (actually $3.99 used from a Amazon reseller plus their shipping fee $3.99) he wanted, seemed to be taking a long time to arrive. (We have a phone account so he can call us from prison.) Then we got a email from Amazon saying that the reseller had never shipped the book, and they were refunding our money (unasked) to the credit card. The supply of that book on used Amazon had decreased and there were only "collector" editions seemingly, so my wife went over to B&N and actually found it for a dollar less at $2.99 + $3.99 shipping. It is now on the way to my relative.

Anyway, the ability to buy used books at Amazon and B&N is just plain amazing and wonderful.

I could carry on all day about the deals I have gotten at Amazon, but just recently in the last year a Garmin 855, a Sony Blue Ray player, an Epson Scanner, a couple dozen Christmas presents, etc., etc.

"Long Live Amazon!!"

: And Wal-Mart, I guess (n/t) (none / 0)