On the Subject of E-Books

There’s been a lot of rhetoric lately regarding e-books and their pricing. After Apple’s announcement of the iPad, their iBook app and the associated e-book deals to support content for the device and the related battle between Amazon and publishers over pricing I’ve thought a lot about e-books, their value and how they are priced.

Basically, it comes down to what am I willing to pay for an e-book? To determine that I had to examine how I consume books.

Currently, I don’t own a dedicated e-book reader (either Kindle, Nook or some other.) but I do read e-books. For me almost exclusively on my iPhone. On my iPhone I use Stanza and both the Kindle and Barnes and Noble readers.

What I’ve realized, is that the majority of my purchases are still dead tree editions, mostly hardcovers and some trade paperbacks. Mostly, because these are books I want to collect. Books I want to read again and again.

I have very few mass-market paperbacks, usually because if I see something I’d like to read I don’t want to wait for the mass-market paperback to come out. Also, because they are usually cheaply made and prone to falling apart after a few years I prefer not to spend any significant amount of money on them.

People also seem to treat paperbacks differently. Where my hardcovers almost always come back in good condition after lending, paperbacks come back with bent covers and pages and broken spines. Who wants that?

This brings me back around to e-books. What I’ve discovered is that for me, the e-book is my equivalent to the paperback. I generally buy e-books when it’s something that I otherwise wouldn’t add to my collection or an older title that isn’t readily available as a hardcover (Though if it’s something I truly enjoy, I’ll  seek out a hardcover and add it to my shelf.).

I read e-books because it’s convenient. I always have my phone on me and whether I’m waiting for my wife to meet me for lunch, or I’m sitting in a doctor’s office I can pull it out, start up an e-reader app and start reading.  Because of that for me I want something that I can pick up easily, read for five or ten minutes and then put down just as easily.

So for me as a consumer the right price for an e-book seems to be under $7.00. But then again, as stated, I’m not buying many new releases which is where the current battleground is. Amazon wants to be able to charge a rate of $9.99 and under for all e-books. Macmillan and other publishers want a more flexible model with new releases between $12.99 and $14.99 and older titles discounted as they sell through.

It’s a tough fight because as a consumer I like the idea of cheap e-books. They’re often laden with DRM that for all intents and purposes ties me to particular device or application, you technically don’t own them, can’t lend them (Not really, no matter what Barnes and Noble says.), can’t easily move them to new devices, etc, etc.

At first glance it appears that publishers and book sellers have put themselves in a tough position regarding the pricing of books in general and e-books in particular. It appears that way because I can walk into a Barnes and Noble tonight, find a significant number of new releases or best sellers and buy them for almost fifty percent off. For a hardcover. So a book that lists $26.95 on the inside of the jacket costs me between $14 and $15 before tax. To buy that same new release as an e-book at essentially $13 to $15 dollars then just doesn’t seem realistic. Especially since I can read, and then lend and then donate the hardcover if I so choose. Something I can’t do with an e-book.

But not all new releases and best sellers are sold at that level of discount in brick and mortar stores, and they don’t always stay at that level either.

I’ll again use Barnes and Noble as an example. I bought Lev Grossman’s The Magicians at twenty percent off. That’s $21.56 before taxes but after discount. Currently, Barnes and Noble has that e-book online for $16.84, an additional seventeen percent off. That seems a pretty reasonable price compared to list and even to the discount I received on the hardcover. Checking Amazon, they’re selling it a $9.99. That’s surely at a loss (B&N is probably at a slight profit.) and I doubt that the $9.99 that Amazon is charging would even cover the author’s royalties and editorial fees.

By selling e-books at $9.99 or lower they force their competitors to sell them at the same rate or risk losing their customers completely. Unlike booksellers who need to make a profit off their books, Amazon can afford to lose money on their books and remain in business because they have all the other items that they sell (Vacuum cleaners, watches, toys, you name it, they sell it.) supporting their business. Estimates are that Amazon sells new releases at a $3 to $5 loss.

The reason that Amazon is willing to sell at a loss and wants to force pricing to the level of $9.99 is not because they want to do a good deed for their customer. It’s because they want to move Kindles,become the dominant format for e-books and they want drive others out of business and ultimately control the market.

And I’m not just talking about controlling the e-book market. I’m talking about the whole book market. If Amazon can force publishers to sell all new releases at $9.99 and force them to release them at the same time as brick and mortar stores who’s going to buy even a $16 hardcover? When that happens forget about even the few remaining independent booksellers, it’s bye-bye Barnes and Noble and Borders stores because they’d be forced into the same model as Amazon; online only and with prices capped at $9.99.

Eventually publishers will need to lower their wholesale prices, authors will earn less money (and trust me, I’ve known a few authors and they’re not making a lot of money. For most writing is a passion and a second source of income.) and likely the quality and amount of content will drop.

So for me, I’ll continue to mostly purchase hardcovers with the occasional lighter fare to supplement my reading on my iPhone and I’ve decided. I won’t be purchasing another book from Amazon, of any type, for the foreseeable future.

***

For more information, and a better explanation than I could ever hope to give, check out Charles Stross’ and Tobias Buckell’s blogs. As published authors of speculative fiction they have a way better understanding of the situation and the impact on the industry than I do.

And here’s Amazon’s statement on the whole thing.

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