How much should an ebook cost? That’s the question that crossed our mind when we heard that a federal judge ruled that the tech giant broke anti-trust laws by conspiring with book publishers to raise the price of e-books.
At the time of the said collusion — Apple disputes the claim — Amazon was selling e-books for about $9.99, a price that didn’t sit well with many publishers. So Apple proposed $12.99 and $14.99. Whatever price publishers chose, they had to agree to sell the book to other retailers for the same price.
So what should an ebook cost? “The cardinal rule for digital ebooks is that you want to sell them for as much as you can,” says Allen Weiner, an analyst at Gartner.
Weiner says it’s not that much different from selling hard copies. For new blockbusters, publishers generally start by releasing a hardback that can cost up to $30. Fans rush out to buy it, and when that demand ends, the publisher slashes the price. The price depends on how much readers are willing to pay. And that’s where pricing e-books gets tricky, said Ted Hill, a consultant at THA, which focuses on new technologies in publishing.
“Generally, publishers spend much more on developing and creating and finding new authors and marketing titles than they do on printing and shipping them,” Hill said.
He says ebooks aren’t as expensive to produce, but acquiring books from big name authors like John Grisham still requires a cash advance of millions — or tens of millions of dollars. And it doesn’t matter whether it’s published as an ebook or hardcover.
Also complicating the e-book pricing equation is the continued popularity of real books, says Jeremy Greenfield, the editorial director of Digital Book World, which publishes an e-book bestseller list.
“Hardcovers is a very lucrative business,” Greenfield says. That’s why you see e-books that occasionally sell for upwards of $20. That is because the publishers are loathe to cannibalize sales of hardcovers.
But Greenfield says, readers don’t want to pay that much for e-books, and publishers are getting the message. This week the average ebook bestseller was about $7, last year that price was $13.
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