The Good And Bad In Chaotic eBook Pricing

Business Models

from the ups-and-downs dept

For years we’ve discussed the ridiculousness of ebook pricing, where some publishers seem to think that sky high prices for ebooks (often higher than physical copies) makes sense, despite the lack of printing, packaging, shipping and inventory costs. And, of course, we won’t even get into the question of the price fixing debacle. Art Brodsky recently wrote a fascinating piece over at Wired about how ebook pricing is an “abomination,” because it’s designed to price people out of reading. He points out that we should think more about ebooks like we think about apps, since that’s a much more direct comparison than “books.” And then he gets into a discussion of how publishers are going crazy with their library pricing:

Take the example of J.K. Rowling’s pseudonymous book, Cuckoo’s Calling. For the physical book, libraries would pay $14.40 from book distributor Baker & Taylor — close to the consumer price of $15.49 from Barnes & Noble and of $15.19 from Amazon. But even though the ebook will cost consumers $6.50 on Amazon and Barnes & Noble, libraries would pay $78 (through library ebook distributors Overdrive and 3M) for the same thing.

Somehow the “e” in ebooks changes the pricing game, and drastically. How else does one explain libraries paying a $0.79 to $1.09 difference for a physical book to paying a difference of $71.50 just because it’s the electronic version? It’s not like being digital makes a difference for when and how they can lend it out.

In another wrinkle: Random House jacked up its ebook prices to libraries 300 percent last year, and HarperCollins limits the number of check-outs per ebook. This means libraries have to lease another “copy” when they reach a certain threshold … as if the ebook had died or something. In fact, that’s the problem some authors have with ebooks — not just that they earn less money on them, but that “They never degrade. They are perpetual. That harms writers directly,” as historian and novelist David O. Stewart has observed.

As Brodsky notes, this whole situation is ridiculous, and it harms pretty much everyone. Also, it seems to be in direct contrast with others, even within those very same publishers, who realize that crazy high prices for ebooks are a really bad idea. You may recall Rob Reid, the author of the comic sci-fi novel Year Zero. If you don’t remember, it’s the story of a world in which aliens want to destroy the earth to avoid having to pay all the money in the universe for a prolonged bout of copyright infringement, thanks to their love of Earth music, which they listened to without realizing the copyright implications. Last year, we published an excerpt of the book along with a fun video conversation between Rob and myself.

This week, Rob has a really interesting blog post about how his publisher, Random House, (yes the same one mentioned above for jacking up its library rates) is running an experiment by offering the ebook for his novel at $0.99, and he rightly applauds this decision to embrace and experiment with prices like that, rather than screaming about how low prices “devalue” the book. After saying “hats off to Random House for testing out pricing tactics that some would view as kamikaze lunacy,” he compares how publishers are willing to do this with how the record labels acted back when Rob ran one of the earliest online music services (which became Rhapsody):

For years, we pleaded with the major labels to at least experiment with selling downloads for 99¢ a song. We were always told that this would “devalue” music. As if the only way to properly honor that one Chumbawumba song (yes, it was that long ago…) was to charge $15.99 to get it glued to eleven other songs in a full-length CD. Wrong. What truly devalued music was requiring the downloading public to pirate it rather than purchase it for five long years.

He further notes that while some wish to blame “piracy” for the problems the industry faces, the real problem is the industry responding incorrectly to that new digital world:

A convenient fiction that still makes the rounds blames music’s gruesome decade on Napster-abetted piracy. This is like saying that the outsiders commonly called Barbarians caused Rome’s collapse. Rome conquered the Samnites, Carthage, Hellenist empires, and countless other well-oiled foes. But Rome ultimately fell because it reacted to the Barbarian threat in wholly self-destructive ways – not because the mere existence of Barbarians magically doomed history’s greatest empire.

So, indeed, it’s great to see Random House willing to experiment with $1 ebooks — and it could be quite a successful experiment. Last year, we wrote about how Paulo Coelho had tremendous success when his publisher, Harper Collins, agreed to sell his ebooks for $0.99 as well, leading to a massive jump in sales. This isn’t a guarantee that people will pay that amount, obviously, or that such an experiment is a sure-fire success. But it is at least somewhat encouraging that these publishers are willing to experiment on that front. Now, if they weren’t so damn afraid of those crazy “public libraries”….

Filed Under: business models, ebook pricing, ebooks, economics, libraries, pricing, rob reid
Companies: random house