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Thanks Steve for driving the price of eBook up for everyone

One of the surprises in the iPad announcement by Apple came for many when the pricing for eBooks was unveiled. Amazon had set a defacto price point in the industry with new releases selling for a bit under $10. Apple single handedly started a transition in the digital book market to a higher price point of around $14.99 for new releases.

Apple conceded to the new $14.99 price point when it agreed to the pricing with publisher Macmillan to get its books on the iPad. The move was seen as a precedent and was expected to be used as leverage by other publishers to force Amazon to allow an increase in pricing of digital books sold on its digital book store. The move was all the more strange because Apple has been so stringent on low pricing for digital tracks on iTunes despite music companies wanting to charge more.

Amazon temporarily stopped selling Macmillan books directly because of pressure to increase pricing. Amazon stated, "Macmillan, one of the 'big six' publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases."

As expected, other publishers are stepping up and using the precedent set by Macmillan to force higher prices for their digital books. Some fear that the pricing change could double the cost of eBooks for consumers. Mediabistro reports that Hachette Book Group has announced that it intends to move to an agency model for its digital books.

David Young, Chairman, and CEO of Hachette Book Group wrote in an email, "There are many advantages to the agency model, for our authors, retailers, consumers, and publishers. It allows Hachette to make pricing decisions that are rational and reflect the value of our authors' works. In the long run this will enable Hachette to continue to invest in and nurture authors' careers--from major blockbusters to new voices. Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer."

Young goes on to state that a price increase will allow the company to open more doors for distribution of eBooks and will allow the simultaneous release of digital versions of a book with the hard cover launch. Young says that this method is preferable to withholding books and is in the author and Hachette's best interests. While Young doesn’t mention pricing, he is certainly eyeing the same $12.99 to $14.99 rate that Macmillan eBooks sell for.

Young claims that the move to an agency model is not to make more money on eBooks. He states, "It's important to note that we are not looking to the agency model as a way to make more money on e-books. In fact, we make less on each e-book sale under the new model; the author will continue to be fairly compensated and our e-book agents will make money on every digital sale. We're willing to accept lower return for e-book sales as we control the value of our product--books, and content in general. We're taking the long view on e-book pricing, and this new model helps protect the long term viability of the book marketplace."

Apple has also cut a deal with HarperCollins Books owner Rupert Murdoch, the media mogul who owns News Corp.  Pricing has not yet been revealed, but it is expected to be "significantly higher" than Amazon's pricing.

Digital books will become even more important for publishers as more digital readers and tablet enter the market. Amazon and Google are working on a competitor to the iPad and other tablet offerings are sure to be coming that will support digital books.

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What?
By bug77 on 2/5/2010 9:00:27 AM , Rating: 2
quote:
In fact, we make less on each e-book sale under the new model


How come? Why does a company fight to make less money?




RE: What?
By theapparition on 2/5/10, Rating: 0
RE: What?
By mcnabney on 2/5/2010 9:38:47 AM , Rating: 5
Trust me, there is nothing to the benefit of authors in this price increase. It actually makes no sense and it is my belief that the publishers are trying to prevent digitial distribution.

Why? Because now new releases will cost about the same as the real hardcover book when sold at discount chains like Wal-Mart. The older generation will still keep buying dead trees, but the younger generations will have fewer and fewer reasons to spend money on anything new due to obviously higher prices. If Americans actually read books this would lead to piracy - just like in music which larger happened because there was no inexpensive digital distributor and media prices were too far out of line. Me, doesn't impact me at all. We have this thing in my town called a library. Would you believe that they can get practically any book for me and they don't charge me a penny?


RE: What?
By Yames on 2/5/2010 12:13:29 PM , Rating: 4
Exactly, I go to my local library and read the books I want for free. If they happen not to have that book, I'll go buy it and then donate it to them when I'm finished. Go stick that in pipe McMillan.


RE: What?
By Solandri on 2/5/2010 2:20:59 PM , Rating: 5
If I really wanted a book for an ebook reader, I would buy a paperback version (which costs less), put that in my bookshelf, then download a pirated DRM-free ebook version and use that on my reader.

The content industry so loves to remind us that we're buying a license to view/read, and do not own the actual content. So I will simply use their reasoning against them. Buying the paperback gets me a license to read the content, so it is legal for me to download the pirated ebook (regardless of whether the person distributing it is doing so legally or not) and read it on my ebook reader.


RE: What?
By porkpie on 2/5/10, Rating: -1
RE: What?
By ipay on 2/5/2010 6:31:41 PM , Rating: 5
Whatever you say, Mr. Murdoch.


RE: What?
By splint on 2/6/2010 5:10:14 PM , Rating: 2
It's not fair to mod him down. Sadly, due to the bastardization of fair use, he is absolutely correct.


RE: What?
By porkpie on 2/7/10, Rating: -1
RE: What?
By siuol11 on 2/5/2010 11:45:49 PM , Rating: 1
We have a library too... Too bad one of those dipshit "I'll run it like a business!" politicians got put in charge of it and they now charge you an arm and a leg for everything... Currently I only use the computers because they want me to pay over $100 to replace a torn-up paperback I lost.


RE: What?
By The0ne on 2/5/2010 2:32:17 PM , Rating: 4
At least here in San Diego, libraries were kept up and up to date. If you wanted to just read then you can find books. But if you wanted something newer then it's much more of a problem. And if the book is actually popular you'll be on the waiting list forever. Da Vinci Code for example.

Budget for libraries here have been cut and services are almost non-existent for anyone, particularly kids. How times have changed. My nieces and nephews have yet to step into a library to actually study or read something. At least there are a few kids still making use of them and I'm glad I get to tutor them when I have time to volunteer.


RE: What?
By OCedHrt on 2/5/2010 5:04:42 PM , Rating: 3
1. Decrease sales and force increase eBook piracy
2. Claim there is a problem with copyright infringement
3. Sue everyone for media visibility
4. Lobby for more favorable copyright abuse laws
5. ????
6. PROFIT!


RE: What?
By brandonicus on 2/5/2010 6:48:44 PM , Rating: 2
Lucky you, my town library is full of nothing but cheap romance and action novels :(. The town over from me (thirty minute drive) is full of old romance and action novels. Be grateful for that nice library of yours.


RE: What?
By porkpie on 2/5/10, Rating: -1
RE: What?
By Solandri on 2/5/2010 2:12:13 PM , Rating: 5
quote:
Under the old wholesale model, publishers sold e-Books directly to companies like Amazon, who then turned around and resold them for a profit. Under the agency model, publishers are technically seling the books DIRECTLY to you, and the company in-between (Apple, Amazon, whatever) is just an agent, taking a commission off whatever the publisher chooses to charge.

You know, if you carry that thinking further, you arrive at the book's author selling the book DIRECTLY to you, with the in-between companies just taking a commission. Once upon a time, the publisher's role was to facilitate the printing of the book (paperback or hardcover), and distributing it to retail stores like B&N for sale. With ebooks, publication and distribution is a near-zero-added-value service, and thus the publisher's reason for existing disappears. This is really just an attempt by those companies whose roles have been made obsolescent by technology to try to keep their fingers in the pie.

Apple for its part seems to be taking an iTunes-like approach. If they let individual authors offer their books directly for sale, this could hoist the publishers by their own petard, and accelerate the movement of the industry away from relying on their services.


RE: What?
By porkpie on 2/5/10, Rating: -1
RE: What?
By Keeir on 2/5/2010 6:50:34 PM , Rating: 2
Errr..

quote:
The first is promotion: sales, marketing, and ancillary activities.


When is the last time you personally purchased a book because of an advertisement?

What you are talking about I believe, is struggle for shelf space that a new author would be unable to command at a typical Brick and Mortar bookstore without the assistence of a Publisher. Yet this need disappears if there in an infinate amount of shelf space availible.

quote:
The second is assistance with creating the product itself -- editing, and royalty advances that allow authors to keep writing when many otherwise might have to stick to a day job.


Independent Editing. Venture Capital seems to work in the Business World.... why wouldn't it here?

Fundamentally, I agree that Book Publishers aren't going to disappear, but they need to start making provisions for the future.... where they provide services to Authors rather than directly purchasing/owning works.


RE: What?
By tim851 on 2/6/2010 6:36:38 AM , Rating: 2
quote:
When is the last time you personally purchased a book because of an advertisement?


Yeah, really, their is no advertising for books, things like Harry Potter and Twilight would've been just as successful if sold through their authors' websites.

quote:
Venture Capital seems to work in the Business World.... why wouldn't it here? Fundamentally, I agree that Book Publishers aren't going to disappear, but they need to start making provisions for the future.... where they provide services to Authors rather than directly purchasing/owning works.


And investments from Venture Capitalists are going to improve the authors' standing dramatically...


RE: What?
By porkpie on 2/7/10, Rating: -1
RE: What?
By theapparition on 2/7/2010 11:39:21 AM , Rating: 3
While I believe you are correct on most of your assertions reguarding the topic, I don't agree with your conclusion on the agency model for distribution. But that's a moot point. Time will tell.

quote:
But all you a**-clowns who are downrating me, keep living in your fantasy world, where best-selling authors and double-platinum mega-bands appear overnight, with no assistance from anything but their blazing talent levels.

Personally, I find this is exactly the reason for the poor state of music and literary choices available now. American Idol and it's "make a quick buck" ilk by "creating" the demand for the next superstar (or best seller) is everything that's wrong with the publishing and entertainment industry. Far few are the titles that are actually worth the investment anymore. I weep for the next generation who will be spoonfed the tripe that the publishing houses deem worthy for print.

Perhaps it's relevant that JD Salinger passed away this week. He saw the publishing worlds exploitation of the authors and removed himself from it.


RE: What?
By Fritzr on 2/5/2010 4:24:25 PM , Rating: 2
Another service that is publisher based is Editor. Many editors in addition to making the initial submission worth publishing also actively encourage writers to continue in their career, throw out ideas, organize anthologies and many other under the radar activities making the world of print a much richer place than it would be without this support group.

The answer to the Amazon pricing model though is already enshrined in the publishing industry. First release in hardcover at premium price with "special" editions for selected titles, a year later release the paperback edition. Occasionally insert a trade paperback edition between the hardback and the paperback. The new model would be Hardback then simultaneous release of paperback and ebook with ebook selling at the current Amazon price of $3 MORE than the one they have to pay to print and distribute.

The agency model though does allow the publisher to fix prices. The publisher can forbid it's licensed agents from selling at any price below the "suggested retail price". That is the price printed on the cover of most books, which many discounters will then sell at 10% to 20% off "cover price".

The used book market for ebooks is going to be a real headache. How do you transfer the license to a book using a 3rd party whose only connection to the original source of the book is by purchase from a former owner of a retail copy? That is the model today for dead tree used book stores, yard sales and rummage sales.

The retailers can forbid transfer of the license, but then they run headfirst into estate transfers. When the purchaser dies does the license die also in a no transfer allowed world? If they allow transfer of the license, how do they confirm that only one personal/public library contains that unique license? If there is a registry that checks up on licenses, who runs the registry? If the publisher polices the licenses for the works it published, what happens when the publisher goes out of business?

In the world of computer games this battle was fought and eventually DRM free software won when people realized they had a very expensive shelf decoration after the DRM key was lost or the server required to use the software disappeared. DRM in software keeps reappearing and the age old problem of how to use a DRM locked program after its publisher has disappeared remains a key to deciding whether it is worth the money you pay for a copy.

The publishers today are looking for higher prices to offset the losses they expect while they work out how to deal with digital distribution of a product that was traditionally protected by the time & cost involved in non-commercial duplication.


RE: What?
By JasonMick (blog) on 2/5/2010 9:30:36 AM , Rating: 3
Yep, that makes no sense. But they will make less overall, certainly, though. No one is going to want to buy e-books at those kinds of prices.

I'm sorry, but I'm never going to read dozens of books in a sitting, so e-book readers' utility is already pretty minimal to me. And the downsides of the iPad (10 hr. battery life, eyestrain-inducing LCD) seem even worse. Couple that with the fact that if e-book formats/devices change, you could lose access to your material, and I see no reason to buy these increasingly expensive devices and media.

IMO e-books merely aren't as good a value as print works. Thus they SHOULD cost less. Considering the industry is headed in the opposite direction, its hardly a wonder that they're going to make less.


RE: What?
By nafhan on 2/5/2010 10:21:25 AM , Rating: 2
Could it have something to do with subsidies? I've read that Amazon was subsidising ebook sales for the Kindle.
Also, part of what publishers are worried about is perceived value. The publishers were worried that by pricing any version of the book so much lower, it would make all versions less valuable.


RE: What?
By theapparition on 2/5/2010 10:28:05 AM , Rating: 3
Which is exactly why the iPad is not a serious competitor to the Kindle (even though every mainstream media outlet claimed such). The screen (e-ink) that mainstream reviewers seem to hate, is exactly why they are in a different class. Last thing I want to do is read off an eye-straining LCD, and have to charge it every couple of hours.

I'm happy with my Kindle, and while not perfect, has enough for me. But once ebooks come closer to the price point for "real" books, it's a no brainer. I'm getting the hardcover. I've enjoyed some of the portability, but some times, there's nothing like a real book. Case in point, when at the beach house, I don't bring my Kindle on the beach. Yet will bring a good paperback or magazine.

While I think the iPad may have some success as a home/portable media tablet, the verdict will not be in for months. There's no question that after all the hype, every single person was let down by the "magical" device. Hope others get a better tablet design in the pipeline, but perhaps there is really no market for the tablet style at all.


RE: What?
By porkpie on 2/5/10, Rating: -1
RE: What?
By JediJeb on 2/8/2010 1:41:38 PM , Rating: 1
I would have to say it would be minimal use for me also. While if I were in your situation it could be useful, but since I may read a book or two a year, I could never pay off the investment by going ebook over regular book. The last time I read multiple books was last winter when I was without electricity for 12 days, and then I would have been out of luck with the ebook reader because I could not have recharged it and the cell towers were down also.


RE: What?
By Keeir on 2/5/2010 3:56:12 PM , Rating: 2
I guess it depends on the e-reader.

But for me, the Wireless/3g connection that allows for the purchase of a book anywhere with immediate reading is definately a plus/feature.

I've lived in places across the US where the closest real library or bookstore was more than 60 minute drive. Or I could wait for 2-3 day shipping.

Either of the above solutions add significant cost to the purchase/enjoyment of a book.

An e-reader I could buy a book with at my hotel room in South Dakota because I ran out of good reading material on boring road trip.... might be priceless.


RE: What?
By streak24 on 2/5/2010 9:31:46 AM , Rating: 2
So if the customers are paying more money and the publishers are making less money, why is this lose-lose proposition a good deal for anyone??

Oh thats right, the publisher is just spewing out a bunch of BS that most people who are idiotic enough to buy an iPad in its current form are stupid enough to believe.


RE: What?
By mcnabney on 2/5/2010 9:44:30 AM , Rating: 2
I am going to guess that they could sell twice as many at $9.99 than at $14.99. So by increasing prices they are decreasing profits considerably. It is all about volume. Who makes more money, Lexus or Toyota? Since there is no production cost in digital media, books are even more profitable when prices are cut and sales ramp-up.


RE: What?
By porkpie on 2/5/10, Rating: -1
RE: What?
By atlmann10 on 2/6/2010 1:45:14 AM , Rating: 2
Rofl; that's what I was saying on a forum the other day. We have 3 full size bookshelves (well 1 is a converted shelf thing it holds about the same amount), and our 3 year old has 2 halfsize book shelves as well.

Also we have books stacked on a table in the den and one in the bedroom (as well as 2 or 3 storage crates full). So if you actually read which both of us and our 3 year old obviously do.

A good e-reader would be nice. The kindle/2 seems decent, but I'm waiting for the kindle 3 from there new E-screen company they just bought.


RE: What?
By MadMan007 on 2/6/2010 8:26:03 PM , Rating: 2
This book storage problem sounds more like a hoarding problem than anything inherently wrong with books. Do you really need to keep every book you have?

The main books worth keeping imo are reference, how-to, or informational books. There may be some favorites worht keeping too but surely every book doesn't have to be kept.


RE: What?
By Skott on 2/5/2010 12:10:08 PM , Rating: 2
I do not believe for one minute that these companies are raising the pricing for the authors. If all the extra money was to go to the author then I wouldn't mind paying more so much. After all, no one deserves the money more than the author but I'm thinking the authors won't get much if any at all.

Also I do not believe the companies are not making more money on the new pricing model. They are charging more but not making more? I'm sorry, but this whole excuse thing is just BS in my opinion. They smell the money and are going after more of it for themselves.


RE: What?
By cmdrdredd on 2/5/2010 5:59:29 PM , Rating: 2
Most books have ZERO value and are such crap that I wouldn't pay $1 for them. The 5 I buy a year or less are worth $15 to me. I pay $25 on average for movies and have no problems doing so. The difference is, I usually don't read books more than once.


Thus the fledging market dies
By Bateluer on 2/5/2010 9:29:03 AM , Rating: 2
Good one Apple. Won't be buying an ebook reader now. I have enough people in the government trying to bleed me dry, I don't need to spend money on overpriced digital books when I get the physical book for 1/3rd of that easily.




RE: Thus the fledging market dies
By MozeeToby on 2/5/2010 12:17:58 PM , Rating: 2
You can get a new release hardcover book for $5? Because that is what the price increase is affecting. Seriously, as a Kindle owner the price increase pisses me off but even so it's still significantly less than a physical copy at the same timeframe. Personally, I refuse on principle to pay more than $10 for an ebook, so I will not be buying them until the paperback is released and the prices for the ebook version drop accordingly.

Keep in mind that the production costs of a hardcover aren't all that much higher than a paperback, the only reason they are published in hardcover first is to increase the profit made from the early adopters. They're trying to do the exact same thing here; the problem is that early adopters of the physical books get a superior product, whereas early adopters of the eBook do not.


By brandonicus on 2/5/2010 7:00:40 PM , Rating: 3
Yeah, this really pisses me off as well. The main reason I have a kindle is for new releases. Hardcover books are way to pricey and are awkward to read from imho...if only the publishers didn't make consumers wait for 6 or so months for the paperback...jerks.


Expensive Novelty Item
By ancient46 on 2/5/2010 12:21:11 PM , Rating: 2
Local Library: $0
Paperback book: $7.99 less B&N discount
E-book: $14.99 plus $200+ for reader

E-book = non-essential luxury toy for those who can afford it. Not a product that will find a place in my home, I can see no need or advantage for it.




RE: Expensive Novelty Item
By beerhound on 2/5/2010 4:32:50 PM , Rating: 2
I have no need for one either, but my best friend is still active duty military. He is currently 3 months into a 6 month tour in Baghdad and exhausted the 15 books he took with him in the 1st 5 weeks he was there. He would love to have a kindle or nook right now. His entire library on one device and he saves the weight and space of carrying around the physical books. I can see the appeal to someone who travels a lot and would like to have a large number of books to choose from without having to deal with the weight and space issues.


RE: Expensive Novelty Item
By Fritzr on 2/6/2010 8:05:38 AM , Rating: 2
My paperback library is at 1600+ titles. Add in the magazines I keep and it takes a large bag to take them along on a trip.

While I will normally pack 8 to 10 books for a long trip, that is 8 to 10 books that may never make it home again. 2 of my books, both over 20yrs old, went south on Greyhound never to be seen again. It took a while to replace them.

Replacing a digital memory card ... well it just takes a few minutes to restore the backup.

Recovering a book that your friend "forgot" he borrowed ... whatever is in place to revoke the temporary license you gave him.

Replacing the 200 year old book the dog ate ... Just load a new copy of the scanned PDF.

For non-readers it is just a toy. For people who enjoy reading and have personal libraries that are larger than the town library. E-Readers are priceless.

I will not be purchasing any book that is tied to a vendor or e-reader though. If it is not portable or cannot be rendered DRM free then it won't be in my library. I have no problem with a 1 or 2 year delay in issuing the e-book version after the initial hardcover. The hardcover edition pays most of the cost of producing the book (or at least it should) and the later cheap editions just keep the cash flowing in.

Set the price high enough though and I'll just look for the e-book version of Pirate Bay. I prefer to buy the cheap edition as I buy so many, but if the only option for e-books prices me out of that market and a second hand market isn't developed, then the Pirate Bay library would be awfully tempting.


bit of whoring going on
By Suntan on 2/5/2010 1:20:30 PM , Rating: 2
It is interesting to see such a clear cut case of a technology company whoring out their future for the sake of making their current product successful. Jobs must really want his pad to succeed in the present with this “I’ll make them pay whatever you want, just make the content available on my new toy so people will think it is full featured” attitude.

10 years from now, when digital readers are a dime a dozen and Apple has moved on such that nothing even remotely resembling the “pad” is in there product line, this price increase precedent will still be stifling the move from print books to electronic media.

I thought way back when, that lady in the track shorts threw that anvil to free people from big corporation shortsightedness and self-narcissism?

-Suntan




RE: bit of whoring going on
By MadMan007 on 2/6/2010 8:30:13 PM , Rating: 2
It was a hammer :p But yeah Ive thought of that ad too over the past few years with Apple's re-emergence as a locked-down CE device vendor.


Price Increase
By Beemain on 2/5/2010 5:05:12 PM , Rating: 2
I guess I am considered one of the older dead tree buying members of the public. I had actually been looking forward to buying one of the electronic books, so that I wouldn't have so many paper books lying around in my house. However if the price of the book is going to be the same, I guess I would save money by not having to pay for the new electronic book of whatever make. I'll just continue to by paper books and give them to my friends when I finish reading it. In my humble opinion, they would sell a lot more books if they were so expensive.




RE: Price Increase
By MadMan007 on 2/6/2010 8:33:40 PM , Rating: 2
It is kind of irnoic that it seems as if publishers would make moves that hurt ebook sales, especially DRMd ebooks, since they ought to see more revenue from books that can't be handed around. Your comment about 'giving away' your books, or sharing them or whatever made me think of this.


Think different
By axias41 on 2/5/2010 10:37:15 AM , Rating: 2
Think different!...think more expensive!




digital world is big and scary
By invidious on 2/5/2010 11:56:10 AM , Rating: 2
I think their master plan to save their printed text industry is to drive their customers to start practicing piracy so that they can sue them like the music industry does. Thus subsadizing their horrendous business model.




Sticking with "real" books
By sandhuatdt on 2/5/2010 2:18:05 PM , Rating: 2
Bought a Kindle DX in 2009. At the time, it looked like a good idea to read books on an ereader. With the iPad launch, I sold the Kindle because I thought the tablet market will get interesting. Obviously, now I am forced to read the books, I paid for, on a regular computer. Hard lesson but well learnt. I am sticking to physical books till they can sort out RIAA-sque pricing issues and ensure that once I buy a book, I can read it on any platform and it's going to be either the same price or cheaper than the print version.




have they learnt nothing?
By iamezza on 2/5/2010 3:04:53 PM , Rating: 2
Haven't they learnt anything from the RIAA and it's attempts to screw their customers? When you push customers too far they turn to other means to get what they want and your industry goes down the toilet.




Here We go Again
By grampaw on 2/5/2010 4:20:12 PM , Rating: 2
I'm perfectly happy to pay $10 for a new release title ebook. However, if the price suddenly increases 50% to $15, then I'm apt to just go find an underground pirate site direct download site (not bit-torrent) and pay $3 or $4 for the title with, no DRM to boot.

Guess the Book content owners haven't paid much attention to the history of the transition of analog formats to digital formats, as in music and movies, where if the consumer doesn't like the price, he/she doesn't pay. And this just helps proliferate Piracy Sites.

The argument that eBook readers are fad doesn't hold water. The eBook future is happening now - it's just another form of analog to digital conversion like everything else. I'm on the far side of 60 yrs old, and reluctantly tried the Nook - now I wouldn't ever go back to paper type books I'm so enamored. And B&W e-ink is a whole lot easier on the eyes for book reading than a LCD screen...




By jonperez on 2/5/2010 11:05:32 PM , Rating: 2
One of the reasons for the stunning success of the iPhone App Store I believe is the surprisingly low pricing of Apps. The same goes for iTunes.

Apple is NOT ensuring that the same thing for ebooks. I'm wondering here if they intend to shoot themselves in the foot for this market.

A great opportunity for MS to put its foot into the ebook delivery market.




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