All five of the largest publishing companies in North America and Europe have negotiated new contracts with booksellers such as Amazon, Apple, Barnes and Noble, Google and Kobo. The new pricing strategy is called agency-lite, which mandates these stores sell e-books at a fixed cost. This has directly resulted in e-book prices to increase across the entire board. It is seriously bad for readers and its no small wonder print sales are on the rise.
I recently purchased a book that came out on May 26th, called Losing the Signal. It is a book that tells the tale of RIM and Blackberry, a fairly compelling read. I bought it the day it came out at 40% off the $32.00 cover price from Chapters Indigo. I ended up paying $12.80 for the book and Amazon is selling the e-book for $14.99. The price difference is only a few dollars, but I own the book. If I would have procured the Kindle edition, the book wouldn’t truly be mine, it would simply be licensed.
In the United States and Britain, sales of eBooks represent between a quarter and a third of the consumer book market. According to a recent survey by Nielsen Books, eBook sales made up 23% of unit sales for the first six months of 2014, while hardcover’s accounted for 25% and paperbacks 42%. Overall e-book sales have fallen 6% in the US in all of 2014.
Publishers setting their own prices on e-books has not only alienated North American readers, but is failing to catch on in international markets. Last year, digital books made up 8% of the consumer book market in France, less than 4% in Germany and Italy, and 1% in Sweden and Norway.
Meanwhile over in Asia, Japan led the eBook markets with 15% of the country’s total consumer book revenues; China and India, meanwhile, lagged far behind at 3%. Part of the reason why the adoption is so low is the actual cost of eBooks. If you look at the top 10 bestseller list, the average title in France its $24.99, $20.00 in Germany and $19.02 in Sweden. We have even heard reports that in the Netherlands some e-books cost double the amount as a hardcover.
One of the big problems with book selling in the digital world, is that titles that are older, tend not to depreciate in price. Whenever a hardcover book comes out, it often costs $25 to $35 dollars. Later on when the paperback edition is released it tends to retail for $9.99 to $12.99. Big box retailers such as Walmart and booksellers like Barnes and Noble just want them sold to clear our inventory. Its far more efficent to offer it for %30 to %40 off to get it sold. E-Books on the other hand cost the same amount, whether the book was published 20 years ago or last week.
The chief reason booksellers charge such exorbitant amounts for e-books is because of the huge overhead major publishers have. The largest publishers have glitzy huge rise office towers in Manhattan, lots of staff and bloat. They take gambles on thousands of books in the hopes they will be the next Game of Thrones, 50 Shades of Grey or a Harry Potter. The rent, the staff, the bills and upkeep drive e-book prices sky high, because they can and no one can fight them.
Amazon is certainly not a fan of higher e-book prices. When the company was very publicly battling Hachette over a new contract last year, they made some very critical remarks. “With an e-book there’s no printing, no overprinting, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books,” the company wrote. “E-books can be and should be less expensive.”
“When the price goes up, customers buy much less,” the Amazon Book Team noted. “For every copy an e-book would sell at $14.99, it would sell 1.74 copies if compared at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.”
There are two reasons why e-books are so expensive. One is the sheer size of the publishing companies and their crazy overhead. Their pricing model for digital books is very out of touch with the modern consumer. The second, is the revenue is diverted into other digital initiatives. Recently Harpercollins and Shazam announced a partnership to get author interviews and an e-book selling mechanism going. Random House also spent a boatload of cash in their ill-fated attempt to get an e-book discovery site going, called Book Scout.
The entire reason I started to buy e-books was to save money. I was a huge evangelist on buying digital and paying less than print. Now the opposite is true, its more cost efficent to buy the hardcover or paperback. I can loan it out to friends, showcase it on my bookshelf and I truly own it.