Why do ebooks cost so much?

http://dearauthor.com/wordpress/2011/01/16/why-do-ebooks-cost-so-much/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+dearauthor+%28Dear+Author%3A+Romance+Novel+Reviews%2C+Industry+News%2C+and+Commentary%29&utm_content=Google+Reader

by barredo • 16 years ago

66 83 16 years ago

dearauthor.com

zokier• 16 years ago

Because people are ready to pay so much for them?

nodata3• 16 years ago

Because of the higher costs of manufacturing and distribution, plus all the real estate to store the books.

toddh• 16 years ago

Agencies won't be around much longer in any case. Disintermediation strikes again.

robryan• 16 years ago

I can't see them disappearing completely, possibly they will become more streamlined where the author can get a better deal only taking on board services they need.

bl4k• 16 years ago

If I were to write a book, either technical or a novel, I would be tempted to hire a freelance copyrighter, editor and publicist, then list it on Amazon, Safari etc. myself.

You can find these people on Elance and similar sites, but there is an opportunity for a website that is a one-stop-shop to do all of this in one place (ie. find the various people, organize listing, sales etc.).

Anybody know if this already exists?

tommi• 16 years ago

Perhaps because people are willing to pay and without the high price on ebooks, the price of traditional books would not be justified.

All in all, I hate how many books are made too verbose just to sell more pages and therefore have higher price. The same content would be better communicated with less repetition and side content.

nhangen• 16 years ago

This is exactly why I enjoyed Crush It, by Gary Vaynerchuk. Quick and to the point.

So many business books especially read like a collection of blog posts and filler, rather than providing a real and valuable hypothesis.

GavinB• 16 years ago

This article talks about pricing models, but doesn't discuss why an ebook costs 9.99 and not 0.99.

One reason is simple economics: there's no perfect substitute for a specific book. If I want the next book by my favorite author, buying another book with a similar looking cover won't really do it. So price wars aren't as competitive as they are in, say, the grocery store.

But the bigger reason is that it costs a lot to produce quality books at scale.

First a publisher has to decide to make the investment. This means an editorial assistant or intern needs to read hundreds of manuscripts. Agents will read thousands of queries and hundreds of books to find one that they will actually publish. The actual editors will ready ten or twenty books for each one that they want to make an offer on--and then usually not end up with the winning bid. Which means starting over and looking for another book.

Don't forget that when an editor is trying to acquire a book, she has to consult with marketing, sales, and other groups in the company who will judge how well they will be able to support the book. To get a few good books, they have to run through this process many times. Don't forget that contracts need legal review and an accountant need to make sure that the author is paid.

Once a book is acquired by a publisher, the editor takes it through several revisions, which will usually substantially alter it. In this stage a book may suddenly become very emotionally compelling or gripping--in ways that a casual reader wouldn't have predicted. Or maybe it will lose a boring introduction that would have turned readers off before they got to the good parts.

Once a book is edited, it needs to be typeset and copyedited, which means a lot more reading by a few more people. Also, it needs a cover design, and possibly interior art, which needs not only to be created but art directed. And legal may need to review it if there are usages of brand names or other potential issues.

At this point, we actually have a book. It looks like a book, it reads like a book, and it could now realistically be tested against a target market. There's no such thing as a minimum viable product for a book. I'd like to see a more scientific, testing-based approach in publishing, but often the book doesn't come together into a hit-worthy package until you've done the work to take it all the way. You might have ten books with hit potential, but only one of them comes out of this process having fulfilled its potential.

Now, someone needs to put the book out and actually market it. This means a publicity person needs to get the word out to the press, and marketers who buy ads and run campaigns. In the modern world, someone needs to be on facebook and twitter. Often this is the author, but it's still adding to the amount of work that went into the book. The author will probably also be touring around in meatspace, possibly paid for by the publisher and possibly not, but that money is coming from the consumers no matter what.

The book files will need to be archived and corrected for future editions, and someone will need to manage the financial relationship with the author as the book is published across print editions and various ebook retailers, each with its own quirks and process.

And speaking of ebook retailers, they need to get paid to! Their 30% has to cover all the costs of running their operation, which may include subsidizing ereader devices and all the costs of negotiating with both the big publishers and the hundreds of little ones.

Even after this painstaking process, many books will fail. A bunch will barely earn back their investment. The regular-sized hits will keep the business afloat, and the mega-hits will make it worth being in the business in the first place.

It's really hard to predict whether people will like your final product until you put that final product out into the marketplace. For entertainment products this is especially true, because a little bit of polish makes a huge difference. I'm sure I've missed things, but keep in mind that the cost of printing and shipping most books is less than $2 for a hardcover, less than $1 for a paperback.

Is there a better way to do this? Of course there is. But it isn't here yet, and it's a lot harder than you think (but I highly encourage you to try!). Someday, someone will figure out how to crowdsource a lot of this or turn it into a scientific numbers-driven process, but early experiments have not made a lot of progress.

tl;dr Producing good books at scale is expensive and requires creating a lot of not-so-good books as a side product. The physical manufacture has never been the main cost driver.

nodata3• 16 years ago

> The physical manufacture has never been the main cost driver.

Show us the numbers then. The publishers won't.

mikeryan• 16 years ago

Charles Stross, has written pretty publicly about this.

http://www.antipope.org/charlie/blog-static/2010/05/cmap-9-e...

http://www.antipope.org/charlie/blog-static/2007/03/why-the-...

(He's also cstross on HN, and I doubt he's going to miss commenting on this thread)

tptacek2• 16 years ago

The way you wrote this, you make it sound like book pricing is a giant conspiracy to defraud the public. The fact is, very few competantly marketed products are ever sold with cost-based pricing; avoidance of cost-based pricing is literally marketing 101.

The notion that you might be swayed by a true reckoning of the cost basis for a book is thus a little strange. What do you care? If the market price for a popular ebook is $0.50 less than what Amazon is charging, any author capable of writing a popular book could make a mint taking their book directly to market.

stat• 16 years ago

Your comment addresses the issue better than the linked article. Thank you.

geekfactor2• 16 years ago

In comparing the cost drivers of physical vs electonic books, in addition to physical manufacturing the cost of physical distribution must also be considered. The latter includes both labor and fuel costs.

I would have imagined these physical costs to be significant, though not the main or dominant cost drivers.

I would also love to see some numbers.

Update: Clearly ebook distribution has costs that physical book distribution does not. The implication here is that I believe the marginal costs of electronic distribution, on a per-book or even per-title basis, to be minimal relative to physical. But I acknowledge that this too is only in my imagination and not based on empirical fact.

JimmyL2• 16 years ago

If HN were to have an official mantra, surely one of the finalists would be "charge for a product based on the value delivered, not based on the cost to deliver" - so why wouldn't that apply here? The publishers think that a ebook delivers ten bucks worth of value to the reader. Seeing as they sell pretty well, it seems they're right to some degree.

Put another way, if the market is willing to sustain the price (and sales figures suggest it is), why not charge $9.99 for a ebook?

schammy• 16 years ago

Fair enough, however, $9.99 is no longer the common price point. Most new releases are $12.99 now, which many people think is too high, and the problem is the retailers can't do anything about it because of this "agency pricing".

I had no problem paying $9.99 for books on my kindle, but most of them are $12.99 now and I just feel like that's too much. In some cases, buying the physical hardcover is actually cheaper than $12.99 too, and that's what REALLY pisses some people off. The physical nature of the product surely is at least $1 - $2 of the actual cost of the the book, so buying it digitally gets rid of this cost.

Also, many books are destroyed if they're not sold (hence the "if you bought this book without a cover" warning in the front of many books). By moving to digital, the publishers no longer have to eat these costs.

So basically, eBook pricing is complete bullshit.

DennisP4• 16 years ago

I have over a thousand books on my Amazon wishlist, and I'm adding more all the time. I try to keep my purchases below $100/month, so I buy a small percentage of books that I would like to buy, for cost reasons. If I could buy ebooks at 1/10 the price, in an open DRM-free format, I would buy ten times as many books.

They don't really know what volume they would do at a radically lower cost, because they haven't tried...and the reason they haven't tried is that they're terrified of cannibalizing print sales.

(Some individual authors, on the other hand, have tried cheaper prices, bypassing the publishers, and reported significantly enhanced revenue compared to a publishing contract.)

richcollins• 16 years ago

You forgot to add reasonable substitutes. I suppose you could roll that into value but it seems subtly different.

JulianMorrison• 16 years ago

All of that is to get a professionally typeset and edited book with cover art and yadda yadda.

I am less certain than you / the publishers are that the market really gives a damn about all that. For most readers, a plain epub may be good enough.

Is that expensive effort necessary? Or does it have the nature of gilt hand-illustrated drop caps: something that the market learns to live without in return for a radical reduction in price.

pbhjpbhj2• 16 years ago

>All of that is to get a professionally typeset and edited book with cover art and yadda yadda.

Give me the text and I'll add a version of Readability (same typesetting for all fiction books would be fine for me, there might be particular text features that need specially treatment occasionally I imagine). Cover art is usually pretty formulaic I can't really see most authors paying [to a graphic artist/designer] more than a days wages for subsequent covers, perhaps a week for the first one.

Presumably with an e-book reader I can set set the kerning/leading/font-size/font-weight/etc. ?

With e-books you could set 2 prices, edited and unedited, call them different names if you like. Then authors can decide how much they want to spend on editors - in some cases I'm sure they add a huge amount, probably define the work, in others not so much.

slashclee• 16 years ago

I think you seriously overestimate the competence of the “professionals” doing the typesetting on ebooks. Most of the ones I've paid for are shockingly awful. This includes ebooks like the Hobbit and the Lord of the Rings, Ender's Game, or more modern titles such as Freakonomics/Superfreakonomics, or even classics like the Count of Monte Cristo or the Adventures of Sherlock Holmes, from a variety of sources, including the Kindle store, B&N's Nook store, and random independent ebook vendors like Books On Board and Fictionwise.

I've seen every error you can imagine, from the wrong table graphic being used to pathetic OCR errors or just plain typos. And the cover art, at least on most of the ebooks I've purchased, is nonexistent or extremely unimpressive. As a consumer, I certainly don't feel like ebooks are worth the prices being charged.

wanderr• 16 years ago

The problem is, since I can do less (with a drm protected ebook), I would expect to to pay a lot less.

loewenskind8• 16 years ago

Ideological cries for "freedom" aside, the main two things you can't do with an ebook that you can with a physical one are reselling it and loaning it to people. But since you can do a lot of things with an ebook that you can't with a physical book I'd call it at least a wash (for me it's advantage ebook).

dominostars2• 16 years ago

Why do we need publishers at all? If all it takes to make an ebook is the story itself, couldn't authors publish their own work directly to ebook distributors, without anyone else needing to get involved?

My iPhone apps could have certainly benefited from marketers and QA ('editors'), but neither were pre-reqs to getting my app on the store.

jinushaun• 16 years ago

As with other similar industries (music, gaming, movies, etc), the publisher provides the content provider with one VERY vital service: marketing. And if you don't think that's a valuable service, go look at the App Store and tell me how many of the top 10 games are made by indie developers not going through a publisher. (http://iphone.ezone.com/?p=984)

Before the internet, when media was physical, you needed a publisher to help you manufacture the book as well as market it. In the internet age, people can produce their own product now. Anyone can make their own ebook and put it on their website for download, but no one is going to download it without substantial marketing efforts. That's why publishers are still needed.

However, I think it's BS that ebooks sometimes cost more than physical books.

maw• 16 years ago

there's no perfect substitute for a specific book

I mostly agree with this, but at the same time I can't help but wonder if the author Dale Brown would get such prominent shelf placement if his name were something else.

ThomPete3• 16 years ago

For no particular reasoning other than they can get away with it.

vladok• 16 years ago

Another way to say "they can get away with it" is "enough customers still find the product more valuable than the cash price set for it"

ThomPete3• 16 years ago

Sure.

But don't you have to factor in those who download it for free to find the "real price" then?

geekfactor2• 16 years ago

In April of 2010, 5 of the major publishers (Penguin/Putnam being one of them) instituted what is now called Agency Pricing.

Can anyone explain how this isn't considered price fixing, collusion or otherwise anti-competitive?

ashconnor• 16 years ago

Because the works are unique?

wnoise• 16 years ago

Or a violation of the First Sale Doctrine[1], for that matter.

[1] http://en.wikipedia.org/wiki/First-sale_doctrine

wmf• 16 years ago

They probably think ebooks are licensed, not sold.

aidenn0• 16 years ago

This is technically a vertical move. They are offering their books to sellers through the store with amazon (et. al.) taking a chunk. So they set the price.

barrkel• 16 years ago

Ebooks aren't even competitive with actual books, second-hand books in particular. For almost any popular book published more than a few years ago, it's a lot cheaper to get it in a second-hand bookshop.

jonhendry2• 16 years ago

That doesn't help if you tend not to read the sorts of popular books that are easy to find in second-hand bookshops.

Nor if you don't want to spend a bunch of time shopping for books that may or may not be in stock.

In my experience, second-hand bookstores are great for serendipitous finds - books that look interesting that you weren't looking for and maybe didn't know existed, not so much for finding a specific book.

bugsy• 16 years ago

Interesting article on "Agency Pricing". So all the big players in the industry come together, make a pricing compact that no one can break, and as a side effect lock out all the smaller players.

How is this not price fixing and collusion?

andrest• 16 years ago

This is my personal opinion of what could be the solution.

1) Ebooks will be kept on publishers' servers

2) A standard which all ebook readers can read will be adapted (during the crossover period publishers can keep ebooks in multiple formats)

This could be it. Now the retail sellers can sell the book for a lower cost. Every time a purchase is made, let's say a key is generated by the retailer (e.g. amazon) that will allow you to download the book from the publisher's (e.g. penguin) server.

3) An umbrella organization for all the publishers is created. The organization manages the ebook standard and hosts the ebooks themselves. Publishers pay money to the organization per download basis (to cover the hosting cost) + a yearly membership fee (to cover the management costs)

4) The umbrella organization can actually sell the ebooks itself (maybe even use advertising to cancel out the yearly membership fee) and/or resell them to major retailers.

Everybody could sell their book to the umbrella organization, pay for the sharing costs and make their book available around the world.

This would allow easier publishing, cut out the 30-40% retailer margin and make the books more available.

The current model has the retailers to closely tied to the whole system. Without them, nothing works, so they are the price-makers. Furthermore, retailers actually make the ereaders so they get to subsidize the reader and spread the cost on the books, this unfortunately provides disincentives to support other platforms. Therefore we need to centralize the distribution system.

The first steps would be creating an open standard that every retailer has to support, so we wouldn't have to be tied to their devices.

danilocampos• 16 years ago

It used to be that buying a great portable game was $40.

Full stop, you couldn't leave the store with a great, recent portable game for anything less than $40.

Now, I can get Plants vs. Zombies on my iPad, a game that rivals or even exceeds the production values, play time and overall fun of these $40 games, for under $8. At 2 AM. Without leaving my house.

Why aren't we seeing the same pricing evolution with eBooks?

We got to that cost structure in digitally distributed games by eliminating a bunch of bullshit salaries that exist between the creators and the consumers. We need to see the same cutting happen in the publishing industry before we can enjoy decent pricing. By its nature, this is going to be slower – software and game developers are quicker to try new technologies and distribution channels than people whose industry began over 500 years ago. But it's going to happen – there's no reason to be so stingy with publishing when you don't have to risk physical printing and distribution. Which means a lot of professional taste makers are going to find themselves obsolete.

jkahn• 16 years ago

I think you're right - this is exactly what will happen, but it will take time. Games have been mainstream in a downloadable format for a very long time, eBooks are only just becoming popular, despite the fact that books are ancient.

I'm looking at Amazon to do this - they're best placed to right now. But when, is hard to say. I imagine it will start slowly, with independent authors publishing their own books, until a critical mass is reached where a large number of authors will switch over to self-publishing.

loewenskind8• 16 years ago

>Why aren't we seeing the same pricing evolution with eBooks?

Because no "pricing evolution" ever took place. Pricing works as it always has. We, the buyers have decided we're not willing to pay over $8 for Plants vs. Zombies on the iPad. I still costs $30 or more for the computer. Most things on the iPad will cost less than their computer equivalent because the apps are simply not as powerful (unless it's a really simple app).

You seem to be arguing that it costs less to distribute and that's why it costs less on the iPad. How can that be the case for companies like EA sports who've had to rewrite their sports apps for a completely new platform? It has actually cost them more and they've charged less.

EBooks cost more precisely because they are easier to distribute. For customers. If I buy a book on amazon I suddenly have it everywhere. And I have all my books where ever I go.

Pricing is only confusing when you mistakenly assume price = production cost + distribution cost + 10% markup.

nod• 16 years ago

That is the wrong question. The question should be, "Why are ebooks priced so high?"

coffeedrinker• 16 years ago

It depends on the value of the book, and the author, and the content.

A very famous author is more akin to a best selling band. The can afford to charge less because they can make up for it through volume.

I've written several books, and they are available in print as well as digital formats. I think that my books are valuable and that people reading them will get $10 worth of value out of them (actually I think they will get a lot more).

The real question for me is, "Why are some people so cheap as to think my work is worthless and theirs is so valuable?"

Some won't hesitate to plop down $4 at Starbucks for a coffee but then complain that a book that will bring hours of pleasure or instruction is not worth two or three times as much.

nickpinkston2• 16 years ago

I want to know when the BitTorrent market for eBooks becomes as well populated as the one for MP3s. I hope soon!

rmc4• 16 years ago

It's not far off that now. One annoyance at the moment is that loads of books are just scans of pages in a pdf. So they aren't computer readable text, no searching, no font size chasing, no reflowable text. It's a pain by eventually Oct will get good enough.

nickpinkston2• 16 years ago

Any good sources or eBook themed trackers you can recommend?

bhousel• 16 years ago

This story is especially timely for me - I'm building a website http://www.booklends.com that will let Kindle and Nook owners lend books to each other easily. It's kinda my weekend startup right now. I'm hoping to have the site ready enough in a few days enough to do a "Ask HN: Review my startup" post...

It is now possible to lend some Kindle and Nook books to other users for 14 days - but only if the publishers allow it. I feel that if the current craziness in eBook pricing continues, this will only drive people towards using the lending features of their devices.

This story did also answer another question for me: I never understood why Amazon removed from their API the ability to get a Kindle book's Offer Price.

(somewhat terse announcement here: https://forums.aws.amazon.com/ann.jspa?annID=854 )

You can query the List Price, but this isn't what people would actually pay for the book. Sounds like they removed this ability because the publishers are making them play games with the actual price that they can offer to customers.

c0riander2• 16 years ago

One of the other main reasons ebooks costs so much is because they are sold in proprietary formats. Yes, some costs associated with producing, distributing, and selling physical books are diminished, but at the same time, publishers now have to pay to convert their text to each retailer's ebook format -- both a set fee and per-copy-sold fee. Publishers are forced to pay-to-play (essentially) in Amazon's store, or B&N's store, or whatnot, so that their books are available in their formats, a cost that is then folded into the production of the ebook. So yes, some costs go down, others go up.

On a side note, the agency pricing model actually is better for most authors/illustrators as well, not just their publisher. Physical book, the author gets a set royalty (anywhere between 5-15%) based on the retail price. Ebook, the author gets 25% of net receipts. The breakdown there is:

$10 physical book at 10% royalty: $1 per book to the author (out of ~$5 to the publisher)

$10 ebook at 25% net: $1.75 per book to the author (out of ~$7 to publisher)

It's a move toward more fair compensation for the content creators.

92elements• 16 years ago

because people like to make MONIEs and dont care about you

forgottenpaswrd• 16 years ago

I don't know, but talking to tech professional writers I have responses similar to this:

http://jakonrath.blogspot.com/2010/12/bedtime-story.html

Long story sort: If you get more money with the digital version than with paper you don't need publishers, or editors at all, you don't need to give away your copyrights in exchange for access to market by the gatekeepers(publishers) and a minority of the profits.

You don't even have to ask for permission, just let the market decide, like web startups.

On digital you just make an alpha version and send to friends for testing, make a public beta like this book: http://iphone-3d-programming.labs.oreilly.com/

...And just sell your book digital taking 70% of the money and never losing your copy rights, like you do when you sign with a (paper)publisher.

patrickgzill• 16 years ago

Expect prices to fall as ebook reader penetration/market share increases.

Already, my (B&N) NookColor shows me variably-priced books as I browse.

Even "Agency Pricing" will fall as the cartel's power decreases in the future.

loewenskind8• 16 years ago

A lot of people in this thread are going off course due to the red herring about how much it costs to make an ebook. There are systems where cost is based on price to make but capitalism isn't one of them.

The real issue here is Agency pricing. Personally I don't understand why a company like Amazon wouldn't try to do something against them since it constrains what they can do with ebooks, an otherwise very flexible product. They could do things like selling a high end camera ebook at a loss provided the customer also buys that camera from them. With this pricing scheme they have no flexibility with ebook prices at all. They are essentially providing an online store for publishers to sell their products directly. Is 30% a fair price for such a service (personally I might try to get more because their store might be competing against mine)?

rdl• 16 years ago

Obviously, value vs. cost pricing is key.

However, ebooks are less functional than physical books in some key ways, at least with current DRM - you can't easily lend a book (the restricted amazon form is pretty weak), and you can't resell it. Assuming "like having a nice physical object" and "convenience of carrying all my books on one device" are a wash, the lack of lending or resale should definitely make the ebook cheaper.

Why do ebooks cost so much?

Related Stories