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Steve Jobs Legacy: Higher E-Book Prices

By JLP | December 15, 2011

Since posting about e-book prices a couple of times, I have been following the story. Today’s WSJ had a front page article about e-book prices.

For those of you not familiar with what’s going on, e-book prices have been going up over the last year or so. In some cases, e-book prices are higher than the price for a paper version of the same book.

The reason?

Agency pricing. Basically, what that means is that publishers set the prices for e-books and do not allow discounting. There’s no such restrictions on paper books.

Why the change?

This is the interesting part. This all happened due to Steve Jobs. From the article:

It was Mr. Jobs himself who wanted to level the playing field for e-book pricing. Early last year, as Mr. Jobs, then CEO of Apple Inc., planned for the launch of the iPad, the company wanted to start an e-book store so that iPad owners didn’t have to rely on Amazon’s Kindle store to buy e-books.

But Apple didn’t want to have to compete with Amazon’s discounted prices. Under Mr. Jobs’s direction, Apple persuaded five of the biggest publishers to abandon the wholesale model, by which retailers were free to discount the recommended retail price. Under the new pricing arrangement, publishers set the price of e-books.

In March, Random House Inc., a unit of Bertelsmann AG and the country’s largest consumer book publisher, joined its five large rivals in adopting the no-discounting digital pricing model.

Thanks, Steve.

Seriously, it really irks me to have to pay so much for something I know is cheaper to produce than the paper edition. So, I have decided that I’m not buying any more e-books until the prices come down.

Related: The Wall Street Journal Takes a Look at E-Book Pricing

Topics: Books | 17 Comments »


17 Responses to “Steve Jobs Legacy: Higher E-Book Prices”

  1. Money Beagle Says:
    December 15th, 2011 at 10:11 am

    It’s not even logical that the e-book price would be the same as print. Not only are you saving money on the paper but there’s no distribution, overhead, and other logistical costs. There’s obviously a much higher profit margin on e-books which is really not fair to the consumer.

  2. Brad Says:
    December 15th, 2011 at 10:30 am

    Is this an example of Cartel Pricing? If the five largest publishers set a no-discount price floor, isn’t that an anti-competitive business practice?

    If the five largest gasoline retailers set a price floor, the public would be up in arms and the government would intervene.

  3. Balaji Says:
    December 15th, 2011 at 12:19 pm

    I have never founded comfortable to read book in the e-way. I am old style, I believe…read paper editions/version.

    It is sad that everyone wants to stop printing books…

  4. Lindsay Downs Says:
    December 15th, 2011 at 2:30 pm

    That’s not true for every book, though. I recently bought one that was several dollars cheaper than the print copy.

    I think this is just a relatively new thing in the marketplace, and it will take a while for the playing field to level off. Producers will soon start to see what consumers will pay (and what they won’t), and will adjust their prices accordingly.

  5. Jon Says:
    December 15th, 2011 at 3:40 pm

    I agree with Lindsay on this one. The market place will rule the day in the end. Not everyone has publishers either, so there’s will sky rocket in the top sellers, introducing more competition and forcing the major publishers to back off. Also, there’s enough free content out there for old books that it wouldn’t be a big deal. They also have to compete with renters and people that borrow e-books from other e-readers. Can’t last long.

    Places for free old books:
    archive dot org (my favorite)
    amazon
    http://www.gutenberg.org
    etc.

  6. BG Says:
    December 15th, 2011 at 3:57 pm

    I prefer the dead-tree variety. But prices are loosely (if at all correlated) to the actual cost of producing the book. They will charge whatever the consumer is willing to shell out.

    Anyhow, I’m sure the majority of the cost that goes into producing a book is to the author, editors, etc. Not the actual printing part (much like software).

  7. Sam Says:
    December 15th, 2011 at 5:20 pm

    I buy my books on Amazon and always check the price of a used copy first. They are often available for next to nothing – like a penny plus $2.98 shipping. Comparison shop and you can find it for less.

  8. Jack Says:
    December 15th, 2011 at 8:31 pm

    The library is quite inexpensive.

  9. Ed Says:
    December 16th, 2011 at 9:50 am

    Most times the library doesn’t even have the book you want and some aren’t even open on certain days.

  10. Russ Says:
    December 16th, 2011 at 10:17 am

    I guess I am lucky. My town has a really good library system. They actually offer ebooks now too… emailed right to your ipad. All for free.

    Most books are big money losers, so the profit margin is paying for the all the books that get published that sell 500 copies. For every Danielle Steel there are tens of thousands of broke authors whose books don’t sell.

    The prices will come down though. It may take awhile, but as long as there is no price collusion and a free market, prices have to fall.

    The other good thing is that ebooks allow authors to self publish, getting rid of the publishing cartel as well for new and established authors.

  11. Ron Says:
    December 16th, 2011 at 2:24 pm

    It’s really a non sense. it will only increase illegal downloading.

  12. Lon Nickles Says:
    December 16th, 2011 at 5:42 pm

    As a library director I was excited to see Jack’s comment, but felt bad for Ed. Ed, go in and talk to a librarian sometime and let them know what titles you would like to see in your library.

    In response to JLP’s post, with a library discount I can often times actually purchase a physical book cheaper than its electronic counterpart. That is just crazy.

    There has been no appropriate business model developed for “selling” eBooks to libraries. I put selling in quotation marks because you can’t really own an eBook. With digital rights management issues you are essentially only leasing the book. Leasing might even be too weak of a word… After a limited number of checkouts, that eBook might disappear and you have to repurchase it. Or a publisher might pull the eBook at anytime, and it just disappears from your collection. Of course, consumers can have an eBook disappear from their eReaders, too. Think this sounds like a crazy rant, just research it a bit :)

    Libraries generally use a service provider (OverDrive is the major player in the eBook industry at this time) that provides a variety of eBook choices. Although you pay a fee for each individual eBook, you also have to pay yearly maintenance fees to the company to maintain your collection of eBooks and provide the hosting service for your patrons. These fees are based on the size of your collection and how many of the eBooks your patrons read. These fees are considerable, and if you cannot afford to pay maintenance fees in the future due to budgetary cuts, etc. then you lose your eBook collection- even though you have paid thousands and thousands of dollars for these books over the time you have built up your collection. I simply can’t give in to such a model.

    I know all of the above information isn’t exactly on topic, but thought it might provide a different perspective on eBooks and pricing models.

  13. Jack Says:
    December 16th, 2011 at 6:46 pm

    > some aren’t even open on certain days

    Oh, the humanity!

  14. Craig Says:
    December 16th, 2011 at 7:13 pm

    Normal market mechanisms will solve this ebook ‘problem’ … prices will eventually bring Supply & Demand into balance.

    Nobody here (or anywhere) knows what an ebook “should” cost, or that they are ‘over-priced’. A dynamic market determines that.

    If ebook prices are too high in the Supply/Demand market — people will buy fewer of them. Millions of individual buyers will make their own choices… adding up to a large-scale market direction/pricing.

    Book publishers can “set” whatever prices they like with the retailers who contract with them — but only the market will determine the proper retail price. Unsold ebooks make no profit. Retailers & Authors will learn not to contract with big book publishers who misprice the products… and lose profits.

    Even the Big 6 book publishers must bend to the market and economic reality. “Agency Prices” carry little weight in the long run (> 1 year).

    Overpriced ebooks and publisher cartels also create strong incentive for independent retailers (like AMAZON) to bypass the Big 6 publishers entirely and contract directly with authors. Amazon is already experimenting with that approach in their ‘Select KDL’ program.

    The whole business model of New York dinosaur book-publishers (like Random House) is starting to collapse. Newspapers are ahead of them… but the tar pits await.

    ______

    Steve Jobs/Apple are fond of mandating retail prices… but they have had several market disasters
    (e.g., the grossly overpriced LISA pc)… and Apple almost went bankrupt. Great products today (iPhone, iPad) sell well because consumers luv’em — not because of Apple arbitrarily dictating retailer prices.

  15. BG Says:
    December 19th, 2011 at 1:16 pm

    Actually, Lon, I think the DRM-saddled eBooks only make sense in a library setting. For example, you ‘rent’ an eBook from the library and it auto-expires after 7 days, at which point (if you haven’t finished reading the thing), you need to go back to the library to ‘check it out’ again. If you are done reading it, then after the 7 days you do nothing, and you no longer have access to the book (akin to returning the book), and that ‘copy’ is available for another library patron.

    Anyhow, it is unfortunate that your system is setup in such a way as that the library has to ‘purchase’ the ebooks that are lent out. Is there a mechanism for readers to ‘donate’ eBooks to the library?

  16. Grace Says:
    December 19th, 2011 at 3:00 pm

    But isn’t this a perfect example of capitalism at work? If people are foolish enough to pay more for the e-book, then, ergo, it IS worth more.

    I’m with you in that my first preference is for ‘real’ books though reading on my kindle is easier than I thought it would be, and, cheapskate that I am, I find myself downloading (and READING!) many classics since they are free.

    Maybe enough people will refuse to pay more–but I wouldn’t count on it.

    As for public libraries, I do feel bad for those in communities like Ed’s where the libraries are taking hits along with the economy. My city has a spectacular and well-funded system whose use has greatly increased during these recessive times. I use it all the time (and, I think, I’ve funded at least one small branch with my fines for overdue books!)

  17. Lon Nickles Says:
    December 21st, 2011 at 4:06 pm

    @ BG: There is no mechanism that I am aware of that allows patrons to donate eBooks to libraries. The system that allows the eBooks to be “returned” automatically is a great thing. That is not the problem that I have with DRM control of eBooks.

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