How Much Is an eBook Worth?27 October 2003 Well, first off, I suppose it depends on the ebook. Length, popularity of the author and subject matter surely play a part in what customers are willing to pay. But in general, let's look closer at the idea that ebooks are overpriced. The first argument I see on this is that since the publisher doesn't have to deal with the cost of printing, distribution and storage for ebooks, the price should be cheaper than for paper versions. Ignoring that ebooks have costs unique to the medium that print books don't have (server bandwidth, technical support, software development, etc.), this premise ignores the fact that First World nations, where people can afford the hardware to read ebooks at all, are generally capitalist economies. In a capitalist system, the price of goods has very little to do with the cost of production. It's a capitalist's job to make as much profit as possible in the sale of his goods. There is no "cost of production + x%" formula for pricing. Two factors keep prices from skyrocketing. The first is that while publishers may (or may not, in some cases, see below) want to sell as many ebooks as possible, they know that readers have the choice not to buy them if the price is too high. Prices have to be high enough to make a profit, but low enough to be enticing to buyers. The other factor is competition. If Baen is selling ebooks for $4 a piece, Amazon looks silly charging $21 for the same kind of book. So if you were a publisher, and it cost you (and I'm just making this figure up) on average $0.50 per book at your current rate of sales to cover your publishing costs (and provide reasonable assurances that you'll make back the fixed costs of the author's advance, the editor's salary, marketing, etc.), what price would you set for an average novel? We've seen publishers with answers from $1 (a respectable 100% profit margin) all the way up to $25. Which one is right? Whichever one sells, but let's look at why customers would buy each one. In print, the price difference between hardcovers, trade paperbacks and mass market paperbacks has very little to do with the price of production. Mass market paperbacks cost the publisher less than one dollar to produce, hardcovers less than four. Why are hardcovers so much more expensive than mass market paperbacks? Because they can be. Readers buy hardcovers because they want a durable, "mantle-worthy" presentation, because they want to read the book before it comes out in paperback, because they want to carry it around and look important. The reasons vary, but one factor remains constant. People do buy them, even at close to $20 after megabookstore discounting. The biggest reason seems to be impatience, that people want to read the book now. This is why perfectly normal people go out at midnight in New York City to buy the latest Harry Potter book. So let me ask you this. If you're willing to pay $20 for a hardcover so you can read it as soon as possible, why wouldn't you pay $18 to download the book in the comfort of your own home and start reading it even sooner? I've actually done this. When Michael Crichton's Prey was released, I got the email notification on my Pocket PC Phone Edition while I was moving into a new apartment. I really wanted to read this book (while Prey was far from his best, Crichton is one of my favorite authors) and decided to tap on the link in the email, go to Palm Digital Media's website, buy the book and download it directly to my Pocket PC Phone Edition. I paid around $17 for the book even with my Palm Digital discount code, but I was reading five minutes later, giving me a much appreciated break from lugging cardboard boxes around. I could have gotten the book cheaper if I had waited, but I wanted to read it then. How much is immediacy really worth? I don't know, but I'd say from my own experience that publishers are probably on the right track pricing ebooks just below the least expensive print version currently on the market. That way they don't lose out on customers that are willing to pay for the ability to read books now, along with enjoying the benefits of reading electronically. Speaking of benefits, why would someone pay paper prices, or perhaps more, for the ability to read ebooks instead of the dead tree variety? Frankly, I can think of lots of them, but I also know this is well-trod ground in this column. In the interests of regular readers not throttling me, here's just the high points. Portability. This is the Big One for me. I carry over 250 ebooks with me everywhere I go, and my Palm Tungsten E still weighs under five ounces. Maybe this is a reason that only hard-core bibliophiles can understand (I have people ask me why I carry so many ebooks if I can only read at most a few at a time), but there's something comforting about having an entire library with you everywhere you go. I know if I get bored with one book I can quickly switch to another, and I have lots and lots of possibilities. It's also nice being able to carry around books I've been meaning to read for years, just in case I get around to reading them. Typography. Ebooks allow you to change the typeface, size and even the color of a book's text to suit your needs. I have a few favorites (Microsoft's Tahoma, itself a condensed version of Verdana, a font designed for easy on-screen reading, along with a few ITC fonts from Palm Digital) and I tend to switch sizes often. I'll use a relatively small font when reading at home, to get more text on each screen, but I'll increase the size quite a bit for reading while walking around, so I can hold the device further from my eyes and I'm less likely to "jump" from one line of text to the next. Illumination (in both the modern and archaic senses). Not only are ebooks mostly self-lit, making it easy to read in bed, waiting for the movie to start, etc., but most ebook reader programs allow for a wide range of note-taking and annotation, highlighting, etc. of the text. Unlike paper books, scribbling in the margins of an ebook does not alter the book itself and some programs allow you to export your notes en masse for use in word processing programs. So ebooks have a few advantages unique to the format that might make them worth paying a little extra for, or at least worth equal pricing to their print counterparts, under a "different but equal" pricing rationale. Is there anything that would drive down the price of ebooks by making them worth less to the purchaser than a paper book? Well, yes. There are three major factors that make ebooks less valuable than paper. The first, and probably the biggest, is Digital Rights Management, or DRM. DRM exists to attempt to control what you do with copyrighted material. In most cases, the contents of the book are encrypted, requiring the use of a key to unlock them for reading. Some forms of DRM are relatively benign and stay out of your way (Palm Digital's, for example), but many are much more onerous, requiring you to "activate" your reading device to the same account as the book, and granting only a limited number of activations. You can't legally back up your books or convert them to a different format for reading on unsupported devices, making DRMed books useless for archival purposes. The second con is readability. While ebooks give you more control over typography than paper, they're still limited by the devices upon which they're read. Most ebooks are read on PDAs, with resolutions ranging from 80-150 pixels per inch, though they average on the upper end of that scale, 120-150ppi. By contrast, $150 laser printers print at 600-1200 dots per inch. Only recently have color PDA screens become bright enough to rival the contrast of black laser print on paper. On the whole, print is still easier for most people to read, and a certain percentage of the population can't read on screen for long periods without eyestrain, even on high resolution color screens. The last ebook con is a dual-edged sword. While ebooks can be much more convenient than paper books if you're already a technophile with the proper gear, to the average person they can be a pain in the rump. There are many different ebook formats, most requiring their own reading software for display. Ebooks pretty much require ownership of a PC and a credit card in your name for purchase. And to be really useful at all, you have to have a handheld reading system (a PDA, dedicated reader like the Rocket, or a Tablet PC). This makes the convenience of ebooks something of a qualified pro, as you have to have a certain minimum lifestyle to make ebooks a viable reading option. Do print pubs make exaggerate the cons to protect their print business? I'm sure some of them do. In the wake of Napster and the peer to peer networks that followed it, traditional media companies are paranoid about digital anything. I've argued in the past that not supporting legitimate ebooks only fuels the pirate market, but the fact is that many print publishers seem to go out of their way to make ebooks less appealing than their print counterparts. An easy way to do this is to price ebooks higher than print, making print the better deal for the consumer. A fair price is the highest price that provides good value to the buyer. This is a win/win in that the publisher (and hopefully, the writer) makes money and the reader is excited about her purchase.The market has yet to decide on what this price is for ebooks. What do you think? Jeff Kirvin
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