A recent article in the New York Times addressed the somewhat controversial topic of eBook pricing. We covered one recent eBook pricing dispute between publishing giant Macmillan and Amazon.com, and the basic nature of the dispute hasn’t changed – while publishers are charging less for eBooks than they do for traditional printed, bound volumes, there is significant publisher opposition to the $9.99 price point sought by retailers.
However, while this dispute is important, it leaves out one significant affected group – readers. The New York Times article focuses on consumer perceptions regarding eBook pricing, and goes into detail regarding just how much cost-savings a publisher stands to make by producing and selling an eBook vs. a printed volume. The salient point raised by the New York Times is that while eBooks are cheaper to produce, consumers tend to exaggerate how much savings actually exist. This simple graph details the relevant cost implications, and suggests that the $9.99 price point, in some circumstances, actually leads to lower potential profits for sellers and lower royalties for authors.
It is not too much of a stretch (and the article raises the comparison) to be reminded of the troubles now facing the recording industry, which allowed mass retailers such as Wal-Mart to drive CD prices down under $10, before having such pricing cemented ad infinitum by Apple’s iTunes Store. It is a relevant cautionary tale and highlights the danger of allowing consumer perception, retailer pressure and other factors to make unnecessarily steep declines in retail pricing seem ordinary to customers.
The question remains: will publishers successfully be able to keep eBooks priced above $9.99, at their preferred $12.99-$14.99 price point? Early indications were that the iPad’s eBook content would be priced more to publisher’s liking, but while it appears clear that book content will initially be priced at these points, whether content will stay at this price remains to be seen. Either way, the point can be made that publishers can mollify both consumer price sensitivity and retailers itching for a lower price by offering enhanced eBook content – something the iPad and other advanced e-Reader devices will allow.
Beyond that, the war over eBook pricing will likely be determined by neither publishers nor retailers, but by readers. Properly managing their expectations concerning what constitutes a reasonable price is important.
