July 14th, 2009
There’s an interesting article in yesterday’s Wall Street Journal called “Publisher Delays E-Book Amid Debate on Pricing.” Upon first read, or for those not immersed in the issues surrounding the retailing of eBooks on Amazon, it sounds like no big deal. The article starts with:
A leading independent publisher is saying no to the e-book format for one of its big September titles, the latest pushback in the fight over electronic-book pricing.
Publishers are concerned that so many successful new titles are sold for $9.99 or less on Amazon.com Inc.’s Kindle electronic book reader and Fictionwise, an e-book retailer owned by Barnes & Noble Inc. In contrast, new hardcover novels typically retail for $25 to $27.
Sadly the article doesn’t go deep.
Publishers are generally setting the retail prices for the eBooks at the same level (or sometmes roughly 10% lower) than the print version of the same book. Yet Amazon persistently retails them for $9.99 (against hardcover prices in the $25-$30 range). By all accounts Amazon pays the publisher based on the established retail price and then takes the loss itself. (I just checked the top ten fiction bestsellers on Amazon from the last New York Timesbestseller list and indeed all are priced at $9.99 in eBook format, with the exception of the one title noted by the WSJas not available as an eBook.)
The scuttlebut I hear surrounding this is that Amazon wants to achieve two goals:
1. By sticking to this loss-making practice, to create a perception amongst eBook buyers that they should not have to pay more than $9.99 for an eBook, and to thereby, over time, force publishers to drop their retail prices for eBooks.
2. To establish Amazon.com as THE place to buy eBooks and read them on Amazon’s Kindle (in a format completely incompatible with othr eBook readers). This is considered as Amazon’s attempt to emulate the near-monopoly Apple has achieved with iTunes.
Publishers are increasingly annoyed because while there are some cost savings involved in eBook production versus print production, they still have the same overhead, including acquisitions, editorial, marketing, sales and production (if not printing). Furthermore, in these days, where eBooks still account for a small percentage of overall book sales (“only 1% to 2% of total book sales, as measured by dollars” according to the WSJ article), publishers maintain essentially the same overhead because the bulk of thir sales are through tradtional bricks-and-mortar channels. eBooks are not adding much to the bottom line.
On top of this Amazon apparently demands a higher discount from retail prices on eBooks than it does on printed books.
Much more investigation to be done on this topic, but in the meantime I can only observe that, like Google, Amazon is now only interested in “doing good” when that means doing good for Amazon.com.
July 15 update: An article in today’s New York Timeslooks at how some other publishers are reacting to this same challenge. Consultant Mike Shatzkin, who I’ve known for years and whose insights I respect is quoted as saying: “People who read e-books don’t buy physical books, and people who buy physical books don’t buy e-books.” That doesn’t make any sense to me…I wonder what is data source is for that claim? What about cookbooks full of color pictures, coffee-table books, kids books…none are well-suited to the Kindle or other eBook reader…so do eBook buyers never buy those books in print?