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Are ebooks overpriced or not?

August 22nd, 2011 | 6 Comments

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The recent lawsuit filed against Apple and five of the six largest publishing houses by the Seattle-based law firm Hagens Berman for illegally fixing prices of e-books raises the question of what does e-book prices include.

Some are arguing that the overhead of paper, printing, packaging, shipping, storage, and retail display effectively disappearing for ebooks, this significant lowering of the costs should be reflected in the price of the e-books.

Publishers answer that ebooks incur new costs for publishers that paper books don’t. Digital preparation, quality assurance on each of the digital formats, and digital distribution require workers and time in their own right and that Digital rights management (DRM) software and credit card payments take a chunk out of the book price can account for between 6% and 11% of the price of an ebook.

The other costs, such as choosing books, editing them, creating a book cover, marketing them etc. remain the same and publishers are also using benefits deriving from successful books to finances the loss incurred with their books for which sales figure do not even cover the overheads.

Yet, that does not explain why the prices of e-books have gone up to as much as 50% since the interview between Apple CEO Steve Jobs and Wall Street Journal technology journalist Walt Mossberg. In that interview, which appeared online, in print, and in video from the January 2010 iPad launch event, Jobs told Mossberg “The prices will be the same … Publishers are actually withholding their books from Amazon, because they’re not happy with it.”

Ebooks from major publishers have undoubtedly gone up in price. Even Amazon’s Kindle bookstore that initially sold many bestsellers at prices of $7.99 to $9.99 has substantially upped its prices. A quick visit to the Kindle store’s New York Times Bestsellers list shows typical prices of $12.99 to $14.99 today, with a precious few falling costing less than $10.

Though consumers, now expecting free content from the Net as a matter of course, undoubtedly think that the price of e-books is too high, some, like business journalist Robert Levine in his <iframe src=”http://rcm.amazon.com/e/cm?t=howtopublaboo-20&o=1&p=8&l=as4&ref=ss_til&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr” style=”width:120px;height:240px;” scrolling=”no” marginwidth=”0″ marginheight=”0″ frameborder=”0″></iframe>, take the opposite position. He estimates the cost of paper, printing, packaging, shipping, storage, and retail display as having an impact on the book price as low as $3.50.

Now that a lawsuit has been filed, we will see what the courts have to say about the price of ebooks. All bets are open. What do you think? Please, feel free to comment and launch the debate.

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6 comments on “Are ebooks overpriced or not?”

  1. James on said:

    “…by the Seattle-based law firm Hagens Berman”

    It’s not only based in Seattle–the firm is located in the *same building* as Amazon, and has done work for them:

    http://www.nebraskadigital.com/2012/04/13/interesting-law-firm-leading-the-antitrust-charge-against-apple-shares-a-seattle-address-with-amazon/

  2. Lironah on said:

    The publishers do need to make revenue somehow. Costs of advertising can be just plain ridiculous nowadays, too. On the other hand, I have to wonder how long this revenue model will last. We’re already seeing free media, free data storage, and collaborative (and free) software. I think it’s only a matter of time before somebody suggests a better way of doing things. Until then … well if you still can’t afford the e-book, there’s always the library.

  3. Jaton' West on said:

    Retraining definitely takes more than ‘one or two hours.’ I’m not in the e-book publishers’ corner, but I’ve definitely been involved in training and I can assert that ‘one or two hours’ wouldn’t cover so much as the scheduling needed for re-training.

  4. Jerilyn on said:

    When the publishing industry changes, then the price of E books will reflect it. Right now, I believe, E books are over priced in order to cover the publishing houses overhead for hardbound books etc. Very flew books these days have an advertising budget. It is up to the author to promote the book. I hope this changes because right now it is the author who is on the short end of the stick.

  5. Perry Gamsby on said:

    Publishing houses are in business to make money. If they can’t do that selling paper and ink they will do it with digital downloads. They will find any excuse to make more margin, that is the nature of business. If they were in it for the love of literature, as many of their employees no doubt are, then they would publish more work and lower prices. The reality is eBooks have shaken their monopoly and control over writers and they don’t like it. As a publisher and writer I love this new era of the author no longer being ‘dead’ (but not in the way Barthes meant)but once again having some real say in their books. The book still needs to be promoted and this does take money but the bottom line is they now have much lower overhead than before. As for the rubbish about needing staff for this or that, they always needed staff so I see no increase in payroll needed, just an hour or two retraining.

  6. Don Ford on said:

    I will touch on one of the many points brought up or argued here. I believe that in court I would not use the excuse that it cost more for e-book publishers to produce an offering due to cover prices. This cost is usually provided by the writing participant or they do their own. My cover for “Royal Ferdinand” was my own creation and no money went out of anyone’s pocket. In other words, if I need a cover, it’s not free to me, I must front the money or pay an independent artist or pay the publisher separate from any fees.. So this argument needn’t figure into the equation. LOL :-} Don

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