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What Price E-Books

No, this isn’t a rehash of the agency pricing debate — or should I say debacle? — that is still wending its way through the courts. This is more a warning that there is now someone out there who the legacy publishers will simply adore, if they don’t already. Someone who says two things those same publishers not-so-secretly seem to believe: first, that e-books aren’t priced high enough and, second, that e-books really aren’t books or even “product”.

Last week, Digital Book World published a post that set up the scenario where you are in New England on a cold winter day and you want a book. According to the post, you have several alternatives. You can brave the cold and go to your local Barnes & Noble. Or you can go online and order a physical copy from Amazon. Or, barring that, you can go online and order the e-book of the title you are looking for.

Let’s start first with the problem of the scenario set up by Frank Luby, a pricing consultant and former journalist. First, notice that Luby’s scenario only allows for purchase from B&N. He doesn’t say “bookstore”. Nope. He limits it to B&N. Maybe he is one of those who now uses the big box bookstore as a generic name for all bookstores. Perhaps he doesn’t realize there are other bookstores out there besides B&N. But that sort of simple oversight instantly puts me on guard against anything else he has to say, especially since his scenario also leaves out the local library where a patron could check out either the physical or digital version of the book in question.

Moving on. . . .

“Ebooks are terribly misnamed,” said Luby. “They’re not a product. They’re a reader service.”

Read that again.

“Ebooks are terribly misnamed,” said Luby. “They’re not a product. They’re a reader service.”

That one statement is why I have a feeling we have some publishers sitting in their ivory towers in NYC, rubbing their hands together and trying to figure out how to leverage that statement to their benefit. After all, those same publishers already tell us that, when we buy an e-book, we aren’t really buying the book. After all, an e-book isn’t a “real” book. What we are buying is a license to read the words contained in the e-book. That’s why they load e-books with DRM, limit the number of devices an e-book can be on per license, and why they are fighting any change to copyright laws that would allow us to resell the e-books we’ve bought.

Now we have someone who calls himself a pricing consultant telling everyone that e-books aren’t a product but a service. Yep, those publishers and their bean counters are doing dances of glee. Someone finally understands!

“Ebooks should be more expensive than they are, more than print books — a lot more,” said Luby, adding that ebooks are relatively cheap because publishers and retailers don’t properly explain their benefits, namely, convenience.

And now those same publishers and bean counters are singing as they dance. Hallelujah! Someone is finally saying what we’ve said all along.We should be able to charge the reader more for something that costs us less, much less, because it is convenient for the reader.

Now, as you can guess, I have several problems with this statement. First is the assumption by Luby that readers don’t already know there is a convenience to e-books. Yes, it is easier to simply download a book either directly from browsing the appropriate e-book store on your tablet or smartphone or by looking at their online store via computer and downloading that way. However, the counterpoint to this is that it isn’t really that much more convenient when you are limited to what store you can shop at because of the e-book reader or software you have. If you have a Kindle, you are pretty much limited to Amazon (or sites that sell MOBI files). If you have a Nook, you are limited to those sites that sell EPUB files. Oh, and you can only have that file on so many devices at the same time. And you can’t resell it. Or loan it, unless it is one of a very few marked as loanable by the publisher and, if it is, you can’t read it at the same time your friend is reading it.

And for this we are supposed to pay more, much more, than we would for a print book.

This reminds me of how the head of MacMillan — I think that’s who it was — back at the start of the agency pricing debate tried telling everyone that publishers had double charges on editing, cover design and layout, among others, when it comes to e-books and print books. He was double-dipping in his explanation of what a book costs a publisher and it made me, and a lot of others, wonder if they weren’t double charging their authors on expenses as a result. Now along comes Luby telling us that we should pay much more for a “book” we don’t “own” simply because it exists in digital format instead of print.

In other words, he has put out a plan that aims to curtail, if not kill, the e-book market. The only good side to his plan, should the major publishers put it into effect, is that it would create yet another spike of sales for indie and small press e-books because economics would mean people would try the lower priced books instead of paying double digits, perhaps high double digits, for a single legacy published e-book.

Instead of worrying about how to raise the price of e-books because they are so much more convenient, publishers — and this so-called pricing expert — ought to be looking at why print books aren’t selling in the numbers they once did. Yes, e-books are part of the reason but they are only a part of the reason. Another part is the high price of print books, especially hard covers. Gone are the days when avid readers who were comfortably middle class could go into a bookstore and buy half a dozen or so hard covers at a time. Now readers collect only a small number of hard covers compared to what they once did. As for soft covers, the prices for them have gone up as well. At the same time, quality of the product has gone down. That is especially apparent with the goat-gagger books that are so thick the spine breaks and pages start falling out, often before you have finished reading the book for the first time. If the product was of high quality, more people would be willing to pay the price for it. They still wouldn’t spend as much as they once did because most folks don’t have as much disposable income as they did. But they would still be buying books.

But to say an e-book should cost considerably more than a print book because it is more convenient is ludicrous. It is especially so when the publisher refuses to admit that a reader buys the book instead of just licensing the right to read the book. As for Luby, well, he needs to quit drinking the kool-aid and realize that the reading public isn’t quite as naive — or foolish — as he seems to think it is. As for the publishers and bean counters still doing their song and dance of joy over what he had to say, they need to adapt t changing times and demands or be left behind. As the song says, “the times, they are a-changing.”

48 Comments
  1. Laura M #

    There’s something creepy about this argument. I’m not sure I can articulate what, but maybe it has something to do with the fact that he believes you can argue your way into higher prices in the face of market forces to the contrary. If prices could be higher, they would be. It’s, like, economics, or something. Supply and demand. Price equilibrium.

    The supply might be greater than this fellow would like to look at in his analysis. Writers who charge $2.99 or $5.99 squirm with worry over all the free books. Doubtless, however much they wouldn’t admit it, traditional publishers are aware that there are good books out there that cost less than $5.00. Do they squirm? No, of course not–not them. But they know about it. It doesn’t look like this fellow is even aware of the price pressure of indie.

    April 8, 2014
    • He may have been looking Europe, where print books have zero or a reduced VAT attached, while e-books get hit with the standard 17-20% VAT. You pay the government for convenience, and they pay to subsidize literature and other “worthy works” by “worthy publishers.”

      April 8, 2014
      • Laura M #

        Lucky them.

        April 8, 2014
    • Dan Lane #

      It violates the law of demand. All other things being equal (desire for the good, finances of the consumer, etc), as price increases demand decreases. Price elasticity then leads me to believe that demand for *both* ebooks and print books would lessen, as consumers found another way to spend their limited entertainment budget.

      It could be that Luby is operating under the false assumption that ebooks will act as a Giffen good (one of two classes that can violate the law of demand), and I have not the slightest clue why he would think that (as substitute goods still exist).

      Of course, it could also be that he is arguing from a command economy standpoint. If they can “fix” prices for *all* ebooks at an arbitrarily heightened rate, given the ready market, the grey and black markets would have a bloody field day. Look at how quickly DRM was gotten around.

      *shakes head* That’s enough mental gymnastics for now. The world, and this country in particular, have survived economic upheavals before. And will again. Somehow I doubt the loss of Big Pub will have as drastic an effect as other technological innovations did…

      April 8, 2014
      • Laura M #

        Intellectually, I’ve always approved of creative destruction in the market. Right now, I’m all engaged emotionally as well.

        My sister, on the other hand, is convinced that bar codes exist to allow the manufacturers to discontinue anything she likes.

        April 8, 2014
        • bearcat #

          Your sister and I must have remarkably similar tastes.

          April 8, 2014
          • I’m convinced, based on multiple series that if I like a show, it is DOOMED.

            April 8, 2014
      • Fixed prices would, oh, let’s say, lead to websites with lists of authors and genres. You click the author or genre, and go to their website. There you get info about the book(s), and an invitation to donate to the author. As a token of gratitude, you could choose which book you thought looked interesting, and a Thank You file would appear in your in-box, or at a drop-box for you to download. Larger donations get the omnibus edition, or a day to rummage the writer’s full back-list to pick up what you are missing (for research and personal use only, of course.)

        April 8, 2014
  2. There is an unspoken assumption behind the fellow’s statements that the big publishing houses own the industry and always will. This sort of thinking leads to the condition Sears is in right now. Dying an ugly slow death.

    Convenience? I am like a lot of people now. I no longer live in a 4,000 square foot home in which I plan to stay forever. What is convenient about owning a half ton of books subject to water damage, pests and mold if you try to store them or move them. Bookshelves cost way more than an e-reader. When you are in an airplane half way across the Pacific and wish you could read a different book a pound and a half book 4,000 miles behind you it is not mere convenient. Labeling this as convenience is trivializing it. It’s a world of difference, like having a horse and buckboard it takes you a half hour to hitch up to travel slowly exposed to the rain and cold, or going to your car and turning a key to go where you wish fast and in comfort.

    A pox on all these businesses who think they will extract payment from their customers by the courts and copyright laws instead of giving them what they want. You will never really succeed in business by making people despise you. They will eventually find a way around you

    April 8, 2014
    • Labeling this as convenience is trivializing it. It’s a world of difference, like having a horse and buckboard it takes you a half hour to hitch up to travel slowly exposed to the rain and cold, or going to your car and turning a key to go where you wish fast and in comfort.

      It’s more than that: it’s like the difference between having a car and waiting in the rain and cold for a bus that arrives only when someone else sees fit to schedule it, and goes only where someone else sees fit to take you.

      April 8, 2014
  3. Paul (Drak Bibliophile) Howard #

    He’s a moron. [Frown]

    April 8, 2014
  4. Sounds like an apologist– I seriously dislike apologists. And when the institution that needed such a person gets what they want, the apologist who hopes to hang onto the coattails will get shafted.

    April 8, 2014
  5. good luck convincing the many Baen readers, many of its authors and Toni of this plan.. makes me wish Jim was still here so we could enjoy his response.

    April 8, 2014
    • That ultra high frequency whine, is Jim spinning in his grave.

      April 8, 2014
  6. Doug Jones (Chief45) #

    Frank Luby is a marketing and pricing consultant for Simon Kucher & Partners in Cambridge, Mass. Simon-Kucher & Partners is a global consulting firm specializing in strategy, marketing, pricing and sales. Founded in 1985, the company focuses on Smart Profit Growth (SM) by helping clients to boost their top line instead of cutting costs.
    The entire point of the Smart Profit Growth is, strategies that reduce content or volume, which allows them to keep the same price point. But you get slightly less.
    That SK company has a strong global presence, so the comments about the European VAT appear to be spot on as well. interesting that one of his books, on Amazon, sells for less in the Kindle version than the hard copy edition.
    http://www.amazon.com/Frank-Luby/e/B001JP8MAU
    In other words, he’s following a predictable path, unknown if he actually agrees with it or not, that is a standard corporate practice, reduce the content for the same price. We’ve all seen that in the grocery store every time, the package is smaller, yet the price is the same as the previous version or slightly higher. It’s just marketing.

    April 8, 2014
    • bearcat #

      So he’s one of the jackasses responsible for 4 lb. bags of sugar, and 39 oz. cans of coffee? I’ve got a rope, anybody got a lamppost?

      April 8, 2014
      • Alan #

        His recommendations are still subject to competition – they mostly affect his clients’ markets at the edges, where some people will pay for well-presented marketing tropes instead of evaluating for value of content.
        4 lb. bags of sugar, etal, have a long history – as I understand it, there was a law in effect for several medieval centuries requiring that bread be sold at a penny a loaf; needless to say, the sizes of the loaves varied with the harvest and other inflationary factors.

        April 8, 2014
      • Dan Lane #

        Virginia Appalachian Red Oak work? *chuckle*

        I keed, I keed. But that eight hot dogs, six buns things still annoys, too.

        April 8, 2014
      • Doritos slowly working their way down from a pound, to 14 oz, to 13, and now 11.5 ounces per bag. Same price….

        I remember a Mad Magazine parody from the 70’s(?) about shrinking product but fluffier packaging to deceive the customer.

        April 8, 2014
    • Luke #

      So, he’s a consultant making a public statement that just happens to be exactly what the companies he’s pitching his services to want to hear.
      They’ll pay him his fee.
      He’ll blow smoke up their heinies.
      And the market will remain unmoved.

      I don’t often approve of parasites.
      But I’m inclined to believe that any publisher who pays him a consulting fee is deserving of exactly what it’s going to get.

      April 8, 2014
  7. I’m fine with having a “reader service”. But that phrase doesn’t mean what he thinks it means. A “reader service” would consist of paying a monthly fee for access to a library, where your fee determines how many of the books in the library you are allowed to read each month (or whatever timespan you want to limit to). Maybe have tiered levels, where some books require a higher membership level, or else books are listed by how many reading units they charge against your monthly limit.

    If it were possible to create a service like that, I’d be all for it. Of course, it probably would be more expensive than I would be willing to pay, but at least I would support the notion.

    April 8, 2014
    • bearcat #

      Kind of like Prime? $80 a year to read one book a month? Since I don’t watch movies on my computer I find that price unreasonable, but it sounds like a good idea.

      April 8, 2014
      • Prime has a lot of other stuff along with it, which raises the price. Besides, there aren’t all that many books, in the larger scheme of things, that they are allowed to make available there. If I were setting it up, I’d do something probably in the range of $10/month for 20 book units, and then a tiered price schedule to the point that you would get, say, unlimited books when you hit the $100/month level. I don’t know the exact numbers that would work best, but something in that range.

        April 8, 2014
        • We pay for prime, but not for the book lending — which has never worked well for me — but — because we’re low carb and because our son wears size 17 shoes. That is we order from Amazon groceries/stuff that’s cheaper there — and it saves us a trip to the store, too.

          April 8, 2014
  8. rustypaladin #

    So… the price of books never took into account the paper, binding, and formatting required to actually print a book? The entire expense the consumer paid for was authors and editors and publishers threw in the actual physical object as a bonus. That seems to be what the author believes. Yeah… I’d say eBooks are actually more of a convenience for the publishers than the consumer if they’d actually look. Baen did and they actually turn a profit.

    April 8, 2014
  9. masgramondou #

    It is true that ebooks are worth what people are willing to pay, and that people do sometimes pay more for convenience (e.g valet parking vs finding your own spot), but people also have a very clear idea of “fair” and having ebooks cost more that hard backs, let alone paperbacks, completely violates that sense of “fair”.

    I wrote (many years back) a post abut this called “Harper collins are clueless morons”, so far as I can see this guy is busy encouraging them to remain clueless morons

    http://www.di2.nu/200707/02a.htm

    In fact I just went back to that post, and apart from specific details (e.g. the rant about MS reader (RIP)) it still seems to be pretty accurate,

    April 8, 2014
    • Synova #

      Yes, exactly. The convenience is worth something. It’s worth quite a bit. What that means, though, is that instead of $2 maybe it’s worth paying $6 for a novel. That’s *already* adding the value of that convenience.

      Also, the publisher gets a lot from that convenience, too. It’s that much easier for readers to buy your books on a whim, that means that some of that value of convenience goes *toward* the publisher.

      April 8, 2014
      • I’m picturing a formula something like….

        (Cost of production+delivery cost+ upkeep) x 1.50= what you charge for book.

        Suspecting that the price of ebooks is going to go down a lot more in the long run.

        April 8, 2014
        • Or stay steady in dollar terms despite inflation, which will, in effect, lower their price.

          April 9, 2014
    • Yep, Clueless morons. And worse, ones able to cause vast collateral damage.

      April 9, 2014
  10. Synova #

    “…set up the scenario where you are in New England on a cold winter day [the power goes out] and you want a book.”

    I point this out because, at the moment, my Nook charger is broken and I have to purchase a new one before I can read any books at all on my reader.

    April 8, 2014
    • Laura M #

      If that doesn’t generate a crisis atmosphere, I don’t know what would.

      April 8, 2014
      • Being at 35000 feet, two hours into a 10 hr flight at the start of a two week vacation, and your charger and converter die?

        April 8, 2014
        • Laura M #

          That also qualifies. I assume they turned the aircraft around for you? Once you explained the situation?

          April 8, 2014
          • bearcat #

            You mean once she explained that if they didn’t turn it around, she would turn it around for them?

            April 8, 2014
          • Wasn’t me. I had a backup converter. And three dead-tree books as backup, just in case. I tend to wear a belt with my suspenders. 🙂

            April 8, 2014
    • There are “phone charger” things that pack enough power to fully charge a cellphone via a USB connection.

      The first time I heard of them, about two years ago, they were going for something like $75 on sale. Last week there was some kind of a two for twenty deal.

      Husband got me a nice little Kindle that I have already verified can be charged off of the car, my laptop, the phone charger, my desktop…

      April 8, 2014
      • bearcat #

        A lot of phones have a standard USB connection for their charger, at least my Blackberry will charge completely off a standard USB cord attached to the computer, as well as by the wall charger or cigarette lighter charger. Not sure why anyone would pay $75 for one when you can use a standard cord that costs less than a Big Mac.

        April 9, 2014
        • Not the cable, a sort of back-up battery for if you lose charge and don’t have power.

          April 9, 2014
    • RE: Nook Charger

      Unless you have the Nook HD/+, you should be able to your Nook with any standard micro-USB charger. The NC and NT would prefer higher output chargers, but will work with standard in a pinch. I use my phone charger to charge my NST all the time.

      April 9, 2014
  11. Well, in one way he’s right. A book is only licensed content if the eBook service can reach out and delete it from your reader.

    April 8, 2014
  12. If ebooks are a service, we should pay more because we get more. But if ebooks are a service, we can’t lend them to friends, sell them at yard sales, or other things we’re accustomed to in dead-tree format–so we should pay less because we can do less. I don’t think this has been completely thought through. Nice try, Mr. Luby

    April 8, 2014
  13. SBP #

    By this “reasoning” the photos I take with my phone should cost more than buying film and having it developed, which in turn should cost more than hiring an artist to come over and draw a picture by hand

    Yeah…no.

    April 9, 2014
  14. Just be aware of context. First, Frank Luby was speaking at the Copy Right Clearance Center’s OnCopyright conference in New York. The author of the piece is DBW, apparently, which is Digital Book World. The about indicates that DBW is a “year-round platform offering education and networking resources for consumer publishing professionals and their partners — including agents, booksellers and technology vendors — online and in person.” Scanning down the page, they mention their conference for trade publishers. Owned and operated by F+W Media, Inc. “a leading multimedia company.” Ah, wait — Writer’s Digest and Writer’s Market…

    So basically, yes, this appears to be a post about a speech aimed squarely at publishers. Authors need not apply. But let me do a little poking around the web.

    Hum… over here http://www.ustream.tv/recorded/45680705 you can hear Frank’s actual talk! Interesting, he starts off with a description of what he says are the four basic pricing models in use everywhere. Oooo… and he wants to point out that these FAIL for content, because content is not nails, it is not interchangeable? I don’t have time right now, but that might actually be an interesting talk! Value and benefits instead of prices and products? Stop talking about products, talk about how you are helping people, how you are entertaining people. Providing pleasure, laughs, thoughts. All right, I took the time.

    It’s an interesting talk! The bits that got pulled out for the DBW piece are actually mostly from an example, where he’s talking about why we shouldn’t be focusing on prices and products. There’s a lot more there than DBW suggested.

    Thanks!

    April 9, 2014
  15. While I certainly appreciate the convenience of my eBooks, I still read DTBs (Dead Tree Books) as well (I doubt I’m unique). I like to call myself frugal, some people call me cheap. If the eBook is the same price as the DTB, or just slightly higher, I’ll likely buy the eBook for the convenience factor. But, if the DTB is significantly cheaper, or packaged in a way that I find to be of more value (leather bound, library binding, etc.) I’ll get the DTB. I’m patient and can wait for things to go on sale.

    If my budget was more robust, I would have dropped an easy $100 at B&N the other day for some discounted leather bound hardcovers even though I’ve already got some of the stories in paperback and/or eBook. Value for the product is what drives most of my purchasing. Though, with really cheap or free eBooks I make quite a few impulse purchases. If the eBook version starts creeping up in price to the point I no longer find it a value I’ll simply go back to DTBs full time, especially since there’s no question as to whether I own the DTB versus just having a license to use an eBook.

    April 9, 2014
  16. Book #

    I personally have a $4 rule for ebooks. If it costs more than that, I’m not likely to buy it. Especially if it’s an author I’ve never read or tried before.

    Interestingly enough, it turns out that $3.99 is the “magic price” for ebooks- according to Smashwords. –> http://paidcontent.org/2013/05/09/whats-the-best-price-for-a-self-published-ebook-3-99-smashwords-research-suggests/

    The only time I ever break my four-buck rule is if it’s one of the few authors of whom I’m an uber-fan. And if I REALLY like the book, then I will get a physical copy to put on my bookshelf. I don’t really do this for me to read, I do it so that when I have people over, I have a book to recommend and hand over to someone as a gift.

    But mostly I prefer ebooks. It’s just too convenient to carry around, it’s nice that my Kindle paperwhite has a light up screen so I can read in the dark without a light on, and I like that I can read whatever I want without other people knowing. Plus turning pages is SO DAMN HARD. Ehn!

    True story: the other day I was reading one of my husband’s magazines (remember those??) and I tapped it to turn the page.

    Took me a moment to figure out why that didn’t work.

    April 9, 2014

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