Why are some eBooks so expensive?

[Brian-M]

I can't let this pass. A free market, at least one in a capitalist society, depends on enforceable ownership of property. Copyright laws - which create that enforceable ownership for intellectual property - are an absolute requirement for books to be worth buying and selling in this age of easy reproduction.

I'm not saying that copyright laws are a bad thing. Much like patent laws, they serve an important function.

Without copyright laws, new books would be in the same position as copyright expired books; so cheap to reproduce that websites give copies out for free. Authors wouldn't be able to earn a living from it.

(Not that authors can earn a living purely from the sale of eBooks yet. But one day eBooks may almost completely replace paperback novels.)

 

[Brian-M]

This isn't necessarily true; printing costs account for such a tiny percentage of a physical book's costs that an ebook isn't really saving the publisher all that much money. An ebook still needs to be commissioned, edited, designed, publicised, and royalties still need to be payed to the author, and that forms the bulk of the cost of any book- electronic or otherwise.

Thinking about this some more, I realize that I'm looking at it from the perspective of successful printed books being re-released as eBooks. This would be a pretty simple setup for the publishers. Find the copy of the printed book that exists on their computers, scan in the cover of the printed book for a frontispiece, use a conversion program like Calibre to convert it to ePub (or whatever), then post it somewhere like the Apple store. Quick, cheap and easy.

But now I'm wondering, what if there were no printed copies? What if we had eBook-only publishing companies, that produce the eBook from scratch? This sort of thing could be done by one guy in a home-office, especially if he only publishes one or two new eBooks a month. And let's say that, much like regular publishing, he only accepts books expected to sell at least 10,000 copies.

First the manuscript would need to be edited and proof-read. Checking Google, professional online editing and proof-reading services like www.scribendi.com charge around 1 to 6 cents per page. So presumably proper editing and proof-reading of a standard 100,000 page manuscript is worth around $5000.

Next he might want to commission an artist (cheaply) to create a front cover or frontispiece to give the finished product a professional appearance, and maybe have him make a few ads from the artwork too. And he might need to pay legal fees (shouldn't be too much, after the first client it'd just be using standard boilerplate). Let's say all this comes up to another $1000.

Then he can place the eBook on a website that sells them, and spend $4000 on publicizing the novel (via internet advertisements and trying to get reviews).

So all up, that's about $10,000 value for professionally publishing an eBook.
Or around $1 per copy if they expect to sell 10,000 copies.

But he'll need to make a profit, so double that to make $2 per book.

If he gives the author $1.80 royalties, about what the author would get per book if sold as a paperback, that brings the cost of an eBook to $3.80.

Add on the 30% commission that Apple and other eBook sellers charge, and that comes to almost $5 per eBook.

$5 seems a fair price for a top quality eBook to me. I think it's reasonable to say that publishing companies charging more than twice this are ripping people off, especially if editing, publicizing, ect, have already been done for the sake of producing the print copy.

(Of course, this is just armchair logic. There could be factors I haven't considered.)

 

[casebro]

They charge it because you will pay it. It's called free market.

The publishers are a built in monopoly for each book, until the author's contract expires. No real need to 'price fix' if they can sell direct either. It's their product, they set the price to the purchasers, whether wholesale or retail. The price fixing only comes into play if they tell a wholesaler what to sell it for. So why even bother with a wholesaler like Amazon?

Now, a college professor who self publishes an e-text book, then requires his students to buy it at an exorbitant price ought to be restricted form participating in the capitalist market at all. I'm talking a capital punishment for abusing the capitalist system. $5 ought to buy any e-textbook. If the prof don't like it, he can go get a job in the real world to earn the big bucks.

 

[JWideman]

Next he might want to commission an artist (cheaply) to create a front cover or frontispiece to give the finished product a professional appearance, and maybe have him make a few ads from the artwork too. And he might need to pay legal fees (shouldn't be too much, after the first client it'd just be using standard boilerplate). Let's say all this comes up to another $1000.

No. You don't hire an artistto design a book cover. You hire a designer.

 

[JoeTheJuggler]

Amazon is charging almost as much for the eBook as it does for the hardcover.

The "bargain hardcover", that is. That hardcover price (like the eBook price) is considerably lower than the paperback price.

I suspect the original hardcover price was quite a bit higher.

 

[jasonpatterson]

To try to figure out what the cost of an ebook ought to be, I'll assume that a publisher wants to get the same return on a physical and electronic copy. It's hard to find good numbers, but most of the ones I'm using come from a NY Times article about this very topic and are in general agreement with what I was able to find elsewhere. I round a bit here and there to keep the numbers nice, but nothing more than a penny or three.

Physical:
Retail sale = $25
Publisher receives 50% = $12.50
Less author's 15% royalty of $3.75 = 8.75
Less printing, storage, shipping costs of $3.25 = $5.50
Less cover design, typesetting, editing costs of $0.80 = $4.70
Less marketing costs of $1 = $3.70
The publisher receives $3.70. This is not a $3.70 profit, but $3.70 income from the sale of the book.

The printing costs would increase per book sold by the total cost associated with unsold copies since they incur this cost regardless of sales. The design and marketing costs would decrease per book sold since they are a fixed value per edition. Marketing costs would vary widely depending on the author/title, and the article I linked cites a lower value for the electronic book's marketing costs.

To get the same income from an ebook:
Publisher receives $3.70
Marketing cost of $0.80 = $4.50
Typesetting, digital conversion, editing costs of $0.50 = $5.00
Author's 25% royalty of $2.78 = $7.78
Online vendor receives 30% = $11.11

Again, marketing would vary widely and marketing and editing costs decrease as the volume of books sold increases.

It looks like ebooks should cost less than they do, from my point of view. However, I also don't know what fraction of hardcover books are actually sold for the cover price these days, or whether the publisher receives their 50% of the cover price regardless of the actual sale price of a book.

The high cost of an ebook relative to a discounted hardcover is the primary reason I haven't bought an ereader myself. I feel no draw toward gadgety stuff, and with the cost of the device itself factored in, buying actual books is more appealing to me at this point, and it certainly costs less with my rate of book purchasing. Also, if I drop a real book, it won't break, it doesn't run out of batteries, and I'm not going to have problems with planned obsolescence in 4 or 5 years.

 

[Careyp74]

Another reason why eBooks should cost less than (undiscounted) printed books. Less financial risk, therefore less profit margin needed as a hedge against the occasional loss from being overstocked.

Ah, I did not think about that. Those are good points. I am leaning towards the unfair practices mentioned earlier. As a protest, I am only reading books that I get really cheap (read as FREE) from Amazon, and the library. Oh, and Project Gutenberg. I am on the 11th book in the Barsoom series now.

 

[Brian-M]

Ah, I did not think about that. Those are good points. I am leaning towards the unfair practices mentioned earlier. As a protest, I am only reading books that I get really cheap (read as FREE) from Amazon, and the library. Oh, and Project Gutenberg. I am on the 11th book in the Barsoom series now.

If you're looking for FREE, I did mention a couple of sites in the OP.

http://www.baen.com/library
http://manybooks.net

 

[Fishstick]

Also, dailylit.com

 

[Careyp74]

If you're looking for FREE, I did mention a couple of sites in the OP.

http://www.baen.com/library
http://manybooks.net

I like the search features of manybooks.net, but I don't see anything I already don't have access to on PG. Amazon gives access to meny recent free books, either from the top 100 free list, or searching genre and sorting by price.

 

[Brian-M]

I like the search features of manybooks.net, but I don't see anything I already don't have access to on PG.

Taking a quick look, I see you're right. I must have been getting it confused with http://www.getfreeebooks.com/

 

[roger]

(Of course, this is just armchair logic. There could be factors I haven't considered.)

One guy in an office? Big houses have 30k books in their backlist. Only 1 in 8 books are profitable. 45% of books ( non fiction) need fact checking. You need to wade through a lot of books to find the big sellers, ans even the big houses can't predict that (unless your name is Clinton or Bush). To make a profit and sell many copies, you need advertising. To keep good writers, you need to sign contracts, promote them, keep them in the spotlight, and hand hold them when they aren't producing. You need legal teams for the inevitable lawsuits and contract negotiations.

A small amount of the total effort goes to printing, shipping, and warehousing.

 

[kungfuhobbit]

I think Goldacre recently tweeted about this issue

 

[fuelair]

Because people are buying them at those prices.

 

[elgarak]

Because people are buying them at those prices.

Errrr... No.

Books are not a commodity. You don't have two offerings of functional identical products where people just buy the more expensive one because they feel to get something better.

Books are very individual products. If you're a fan of an author and want to buy his latest book, you buy it no matter what, at whatever price the publisher sets, because you will not get this particular title any other price.

 

[The Dark Lord]

Errrr... No.

Books are not a commodity. You don't have two offerings of functional identical products where people just buy the more expensive one because they feel to get something better.

Books are very individual products. If you're a fan of an author and want to buy his latest book, you buy it no matter what, at whatever price the publisher sets, because you will not get this particular title any other price.

Under that logic, publishers should set prices far higher than they are.

Of course, they don't do that because far fewer people would buy the books. Instead, they price them at what the market will bear. Which is pretty much what fuelair said.

 

[rjh01]

Under that logic, publishers should set prices far higher than they are.

Of course, they don't do that because far fewer people would buy the books. Instead, they price them at what the market will bear. Which is pretty much what fuelair said.

They set them for what they think would produce the maximum profit.

Late edit. them means the price of books.

 

[The Dark Lord]

They set them for what they think would produce the maximum profit.

Yeah, exactly.

 

[theprestige]

They set them for what they think would produce the maximum profit.

Price them too high, and sales go down, even as the profit on each individual sale goes up.

If sales go down, you get stuck with a lot more unsold inventory. Carrying inventory is a cost. As inventory goes up, costs go up, and profits go down. Raise prices high enough, and increased inventory costs negate increased profits.

Reduce production to reduce inventory, and you start losing the economies of scale, which can also eat into your profits.

ETA: Which suggests that publishers will price ebooks pretty high, since low sales don't actually result in high inventories.