The $9.99 eBook

Well, Amazon’s tiff with Macmillan ended in tears (for Amazon). My hunch is the lawyers quickly acted on antitrust concerns. But what should readers think of all this?

The issue is somewhat complicated. The straight out economist in me likes that idea that Amazon is really just a re-seller and delivery mechanism for books and that the price the consumer should see is the one the publisher wants (actually, I’d like it to be what the author wants but let’s not get crazy). The reason is that this avoids the double mark-up problem and ensures that Amazon is paid based on units sold rather than the book’s quality.

But there are other considerations. First, $9.99 for a book may make it a ‘no brainer’ purchase just like those $0.99 iPhone apps. In that case, pricing above that could see a dramatic loss in sales. That is something Amazon is thinking about but if that is really the case, the publishers will come into line anyway and it is unclear why Amazon should care more or less than them about eBook sales. In each case, they have paper book businesses and if anyone thinks that the Kindle as a device is going to earn Amazon money on its own, they’re dreaming.

Second, there is the issue of piracy. What will it take to pirate an eBook? Once you have worked out how and have a device that can accommodate pirated books, then it should be really easy. But that is the issue: you have to work it out. The issue with music and videos is that consumers worked it out prior to content providers getting with the program. Once consumers have sunk those costs, it is all too late.

Now arguably, Apple’s $0.99 price insistence for music stemmed the tide. Not because of the $0.99 itself but of Apple’s commitment to some sort of price. With that knowledge along with an easy to use system, those who hadn’t invested in pirating technology, may well have chosen not to. The move away from DRM has made that so much easier by getting rid of some annoyance.

The problem publishers face is that they now have no similar commitment mechanism. Amazon wants to hand them one and maybe Apple will do so as well at a higher price point. But if they want the free option of being able to set prices ‘at will,’ consumers will be more tempted to expend the costs in working out how to pirate and not pay anything at all. Only a price commitment that, yes, gives consumers a better deal than hard copy books, will be able to accommodate that. And if you think normal trade eBooks are the big game here, think again. Textbooks is where the real threat lies. Let’s hope the $49.99 textbook price commitment comes soon.

3 thoughts on “The $9.99 eBook”

  1. Customers have worked out the piracy angle for books long ago, but the market demand for pirate books has been low (as has the demand for e-books in general) and thus the usability and quality of pirated e-books is relatively low.  But the same sites that let you download music also offer a variety of books that have been painstakingly scanned and OCR’ed by a dedicated pirate.  These books are often offered in decent quality formats with illustrations and cover art and everything you might want.  There are several problems though:

    Many books are not properly proof-read and edited after the OCR process.  Some of them include things like the book or chapter title in the text itself, once for each time it appears on a page.  Many books have spelling mistakes, especially for books which feature odd or made-up words.
    There are a zillion zillion e-book formats and the book you’ve just downloaded is not in the one you want.  You have to somehow convert it to the format your (pre-kindle) reader supports.

    Now that the kindle and iPad are creating their own captive e-book markets, with certain specified formats, you will see the pirate e-books adopt those formats and they will become de-facto standards (if they haven’t already, I admit I’m not familiar with the formats they use).  Once the format is standard it will be as easy for an iPad or a kindle user to download a book and put it on his or her device and use it (unless the device locks out unrecognized/unauthorized content? It’s possible).
    Personally, I wish I could buy the paper book and pay a small fee ($2-$5) to receive an unrestricted electronic copy as well.  But considering a paperback novel costs in the range of $10-$15 I can’t imagine paying $10 for an electronic book that is locked to a specific device, which I can’t share or back-up appropriately.


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