The Future of the Book

Follow the Money: The ebook Pricing Wars

By posted at 3:46 am on May 28, 2009 3

Last week, self-published author Bryan Gilmer struck a chord with his guest post about using discount pricing to generate ebook sales. By dropping the price of his book to $1.99, Gilmer was able to tempt many new readers to buy his book, which, in the process, catapulted it up Amazon’s rankings, generating even more visibility. Gilmer’s experiment is compelling, but it’s also just the story of one book by one self-published author who happens to be creative about marketing. Even as smaller players make headway with creative pricing, the data indicate that major publishers still hold the upper hand.

coverGilmer’s post also threw into sharp relief how much ebook pricing is an issue for Kindle owners. You’ve likely heard about Kindle owners who have balked at the idea of spending more than $9.99 for an ebook. With the Kindle going for $359, many Kindle owners have decided that their willingness to pony up the big bucks for the device was their side of an implicit bargain. In return, there is an expectation that ebooks will come at a discount to their physical counterparts, allowing Kindle owners to recoup their investment in the device over time. Any sign that this bargain is falling apart has been met with resistance by Kindle owners (and likely helps account for their receptiveness to experiments like Gilmer’s)

Beyond the Kindle, there is the notion that ebooks should cost less because they are intrinsically worth less. There are no materials, printing, and distribution costs to worry about, and furthermore, an ebook offers less utility than a real book. As an anonymous commenter on Gilmer’s post pointed out, and I’m paraphrasing here, If I have ten books, I and nine of my friends can read all them at the same time, passing them around (and I can give them away or sell them to a second-hand bookstore when I am tired of reading them). Buying ten ebooks acquires them for me to read. No one else can read them without having my device, which deprives me of its use for the other books stored on it, and I am unable to pass the copy onto anyone else. An ebook is therefore of much lesser utility as part of a library of books than printed editions of those books are, so being expected to pay the same (or, in some cases, a higher) price for the ebook is perceived as price gouging.

Publishers appear to have gotten this message as nearly all ebooks cost less than their physical editions. Meanwhile, Gilmer’s experiment offered some insight into buying habits, but by looking at The Millions’ data we can see what a wider group of readers are paying for a diverse array of titles.

As I pointed out recently, Millions readers have bought a surprising number of Kindle ebooks after visiting The Millions, and while the total number isn’t large enough to provide the basis for any iron-clad assumptions, we can observe some pricing trends.

For starters, the single most expensive ebook purchased by a Millions reader during the 18-month existence of the Kindle was a technical book, Dojo: Using the Dojo JavaScript Library to Build Ajax Applications, coming in at $17.49. The cheapest, meanwhile, was The Adventures of Huckleberry Finn. The mean price for all ebooks sold was just $7.45 and the median $9.33. By far the most common price point is $9.99. There has also clearly been some pricing experimentation going on, as many prices have changed and there have been ebooks sold for $1 that now go for $9.99.

It also seemed useful to break the books down our list into some categories to see how pricing trends might be different. We looked at ebook pricing for major publishers, independent publishers, genre books, classic (public domain) books, and self-published books. The results reflect the unique economics facing each of these market segments:

Major Publishers:
Mean:
$9.39
Median: $9.99
Most Expensive: $14.30 (Jewish Pirates of the Caribbean)
Least Expensive: $1.75 (Revolutionary Road)

Independent Publishers:
Mean:
$9.26
Median: $9.40
Most Expensive: $14.27 (My Father’s Paradise)
Least Expensive: $8.76 (two titles)

Genre Books:
Mean:
$7.51
Median: $7.98
Most Expensive: $9.99 (seven titles)
Least Expensive: $1.00 (Use of Weapons)

Self-Published:
Mean:
$2.56
Median: $2.49
Most Expensive: $4.99 (Felonious Jazz)
Least Expensive: $0.80 (Chloe’s ABCs in B&W)

Classics (public domain):
Mean:
$2.25
Median: $1.29
Most Expensive: $6.40 (Heart of Darkness and The Congo Diary)
Least Expensive: $0.50 (The Adventures of Huckleberry Finn)

For now, at least, it appears pricing power remains with the big players. The self-published, meanwhile, must offer big discounts to level the playing field. The question is whether the success of the latter will cause the prices demanded by the two groups to edge closer to one another over time.





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3 Responses to “Follow the Money: The ebook Pricing Wars”

  1. Mark
    at 5:00 am on May 30, 2009

    nice post

  2. bobmust
    at 7:07 am on May 30, 2009

    What seems left out is the effect of bargain-priced eboooks on the authors. Anyone who researches, writes, and edits a published manuscript, perhaps over years, has a lot of intellectual property value invested. I would hope writers' groups, authors, and agents will lobby hard to get a higher percentage of the pie on works published as ebooks.

  3. Anonymous
    at 8:26 am on June 26, 2009

    There is a false assumption that book publishers are "driving the bus" on ebook pricing, which just isn't the case. In fact, taking a snapshot of kindle purchases only gives one a window into what Amazon is charging buyers, not what the publishers are asking. In many cases, Amazon is selling ebooks at a loss in an effort to build market share. The other common (and mistaken) assumption is that the bulk of a book's cost is in paper, manufacturing, shipping, and storage. A book doesn't suddenly become easy money for a publisher once it is in electronic form. Indeed, the pricing struggle for publishers is that many real costs remain in creating a book, while the ebook format (and the early adopters who use it) seeks to deeply devalue a book's worth by simply viewing it as content. The real concern in ebook pricing is that market price thresholds might be lower than the publishing industry can manage and still stay in business…especially for small, independent publishers.

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