Consumers Upset and Confused Over E-Book Pricing

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By Jeremy Greenfield, Editorial Director, Digital Book World, @JDGsaid

Publishers are making a killing on e-books because they cost nothing to produce, distribute and sell and are almost 100% pure profit. At least, that’s what many consumers think.

“E-books cost almost as much as printed books but are phenomenally cheaper to create,” said Trevor Doyle, 39, a teacher from Ione, Calif.

“There’s so much less cost involved – no material, relatively low distribution cost, no inventory costs, transportation,” said Michelle Barrineau, 42, a sales analyst from Ft. Lauderdale, Fla.

While consumers understand the basic costs involved in the bricks-and-mortar retail world, they don’t understand the costs involved in selling something that is, well, much, much smaller than a bread box.

“With today’s pricing, the profit in e-books is crazy,” said Greg Harris, 49, who lives in San Carlos, Calif., and is a vice president of sales and marketing for an electronics company. “Without the need to stock inventory and move paper all around the country, there should be a significant discount in the pricing model.”

“When I saw how much these e-books cost, I was amazed,” said Heidi Barron, 48, a public relations professional from Atlanta. “There is no printing, no shipping, no warehousing, no retailer. There is simply the transmission of the content through the Internet. Someone is making a ton of money.”

On that last point, Barron may be on to something. Publishing companies that publicly reported earnings for 2011 followed a similar pattern: flat sales, increased income. Digital Book World and others have speculated that higher profit margins on e-book sales are the culprit.

With the recent news about the Department of Justice lawsuit against some of the largest U.S. publishers and Apple alleging an e-book a price-fixing scheme, consumers are more aware than ever that there is a price battle going on in the e-book world. They just may not be aware of who is on what side, what each party wants and why, and what is really at stake.

“Why the frick-frack do these major publishers think it’s okay to put out a paperback at half the price of an e-book they can upload and forget?” said Diane Castle, 36, a writer from Dallas. “To me, this defied logic – until I stumbled upon a news article about the Justice Department’s price-fixing law suit yesterday. Now it all makes sense.”

“I do read e-books and am disgusted with the price that is usually charged,” said Sarah McGill, 37, a freelance writer from San Antonio. “I truly believe that the larger companies participated in some sort of price-fixing.”

 

So, How Much Does It Cost to Produce an E-Book?

What many people in publishing know that consumers generally don’t is that most of the cost of a book, even an e-book, comes from the cost of acquiring and developing the content – which, if the book is trade fiction, is mostly words.

“We still pay for the author advance, the editing, the copy-editing, the proofreading, the cover and interior design, the illustrations, the sales kit, the marketing efforts, the publicity, and the staff that needs to coordinate all of the details that make books possible,” said Bob Miller in February 2009 on the HarperStudio blog (which has been defunct since April 2010 when the publishing start-up folded) when he was president and publisher of that company; he is now president and publisher of Workman Publishing. “The costs are primarily in these previous stages; the difference between physical and electronic production is minimal.”

The same holds true today.

“It’s still true that publishers have all those costs whether a book is physical or digital,” Miller said this week. “There is a savings in printing or not but we still have all the costs leading up to and then supporting the book’s publication.”

E-book production “costs 10% less” than print book production, said Molly Barton, Penguin’s global digital director. Hardly the vast savings that many consumers imagine. “But the largest expense is author payment and always has been.”

“You can’t take the e-book in a vacuum,” said Adam Salomone, associate publisher at The Harvard Common Press, a cookbook publisher based in Boston. “If publishers are being honest about the process, it actually doesn’t cost less.”

To be sure, the production costs of e-books vary depending on a number of factors. A simple EPUB conversion can cost as little as $200 and a full-blown book app can cost up to $100,000, according to Andrea Fleck-Nisbet, head of digital publishing at Workman.

At Aptara, a major e-book production company, the cost can range from $0.20 to $0.90 a page for a simple conversion, according to Sriram Panchanathan, senior vice president for digital solutions at Aptara. Due to a large volume of titles to convert, many of Aptara’s clients have hired teams of project management professionals who help manage the process of working with Aptara as part of their job. (These teams also attend to tasks like digital rights acquisition, design and e-book distribution management.)

“Some of the larger publishers have entire teams of ten to fifteen people dedicated to managing this relationship,” said Panchanathan. “Smaller publishers have two or three people managing the process.”

The median salary across the U.S. for a low-level digital project manager is $73,678, according to Salary.com. Counting benefits and taxes to employ such workers, the cost to a small publisher in having a two-person project management team starts at around $200,000 a year.

If a small publisher employed such a team to manage the e-book production process, and that publisher converts, say, 100 books a year, that’s another $2,000 added to the cost of each e-book. More senior project managers often have salaries over $100,000.

At a large publishing company with a dozen or so product managers at various levels, the costs can easily be estimated at over $1 million a year. Of course, larger publishing companies are more likely publish more books and could have a lower cost-per-book.

Another hidden e-book cost is that of distribution. According to Panchanathan, e-book distributors typically take a cut of 2% to 9% of every sale.

While it differs from book to book and from company to company, all these costs are a far cry from reader expectations.

“I had expected e-books to cost about 10% of their published counterpart,” said Doyle, the Calif.-based teacher.

Write to Jeremy Greenfield

Profit pie-chart image via Shutterstock

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53 thoughts on “Consumers Upset and Confused Over E-Book Pricing

      • Very true. Although of course Amazon isn’t the only e-book provider.
        And some books only the publishers can sell in e-book form.

        Not to mention the way many people might be constrained as to where they can buy book from in their workplace. I work for a government organisation and we can’t buy from Amazon as their 30 day payment scheme isn’t compliant with our purchasing system. So we’d have to buy ebooks from other companies who ARE based in the UK and so charge 20% VAT.

        • Words fail me. Only a government organization would pay over the odds to suit its book keeping – because they are paying with other people’s money and don’t need to be efficient.

  1. It is the nature of business that consumers complain and sellers defend. That’s how it has always been. Consumers of goods want their goods for a cheaper cost, while sellers argue that they can’t possibly sell the goods for anything less.

    I understand that just because an eBook is digital, doesn’t mean that there are no costs associated with it. While there may not be printing, packaging, warehousing, and transportation costs, there are additional costs that are specific to eBooks. For instance, the conversion of a file to a digital form. And yes, there are still marketing and promotional costs, editing, etc.

    While I understand that eBooks are free to produce and sell, I do agree that the sellers are being ridiculously greedy. Take for instance the new J.K. Rowling novel coming out this year. $19.99 for the eBook, but you can get the hardback for $21.00? How is that justified? I don’t see it at all. Publishers can complain all they want about the costs that they have to get these eBook sold, but the bottom line is that with the amount they’re charging for the eBooks, they’re making quite a pretty penny. It’s supply and demand. They know that people want the content, so they can sell it at the price they want. As long as consumers continue to buy a these prices, they’ll continue to charge them.

    • Just curious, Kevin, but where are you buying the hardback for the new Rowling? It could be that the seller is discounting based on a higher list price.

      Hypothetically, if you knew that the list price of the book was, say $35, and the price of the e-book was $20, would you feel better about it?

      One Twitter commenter pointed out that it’s not the difference between the price that irks him, but it’s that with an e-book, he can’t put it on his shelf. He feels that he’s not getting the same value, almost regardless of the price.

      It’s an interesting issue.

      • Actually most booksellers loose money on theJK Rowling books because they are massively discounted in order to
        compete with the supermarkets and online retailers.
        In the UK, independent booksellers, who can’t get the same terms as large supermarkets, bought the last
        Harry Potter in supermarkets to sell on to their own customers. The supermarkets sell the books cheaply to bring
        customers into their stores – mostly if you go into a supermarket you feel obliged to justify getting there by buying
        other things! As for Amazon etc. they are still going after dominance, not profit.

  2. Consumers recognize that the high price of e-books defies logic. Publishers say the high price is realistic based on cost to produce the book. What’s not being said is how publishers think in terms of “print first,” which raises the cost of e-book production (because you have to convert from a page layout format to a page-flow format). If they thought in terms of “e-book first,” the cost would go WAAAAAAAAAAAY down. The path from Microsoft Word to Adobe InDesign to ePub is circuitous, because you convert from text-flow to page-layout back to text-flow. The path from Microsoft Word to ePub is more of a straight line.

    • The comments about the cost for converting books to epub didn’t ring true to me–why would a digital word document cost that much to convert to epub? I think Ryan has hit the nail on the head, that publishers think in terms of print books and so are making it more difficult for themselves. I think there are some digital-only publishers out there –are their prices substantially different?

      • I agree with this, that part just sounded a lot like big excuses. I mean, why would you pay so much for a converter when you can use word for that, and you can just leave the program doing it, less than 15 min, and just copy the freaking file. Is not like you are converting the same book every time one is ordered. Besides, unless there is a law, and anyone can clarify this for me, I’ll be happy to know; a law stating that you cannot use MS Word to convert e-pub for resell, then I don’t see this converting “cost” as an issue.

        • Thanks for the comment, Marisabel.

          I’m not a publisher, nor is it my place to defend them or consumers, but if I were a publisher, I might point out to you that EPUB is only one of many file types that a book needs to be converted to to sell in the various leading e-bookstores.

          Further, different books go through different kinds of conversion processes.

          It’s also worth noting, someone has to do the conversion, regardless of which technology tool is used. So, even if it’s MS Word, someone needs to be there to push the button, to copy edit, etc.

          I think the larger message is, it doesn’t cost “nothing” to create an e-book.

          I received a note a few hours ago from a small publisher who was very angry at this article. She said that I completely missed so many of the costs that go into conversion and distribution of e-books for her small company. I’m going to follow up with her to get a better understanding of her costs.

          I got a note earlier in the week from a digital publishing executive at a very large publisher who asked, “why didn’t you include the 30% cut the bookseller takes at the point of sale?” (This was a publisher that operates on the agency model.)

          So, for me, the message was that this is very, very complicated stuff. The one thing I can say with certainty is that it doesn’t cost “nothing.” What it does cost…well…I’m working on it.

        • Microsoft Word? Seriously?
          No, there’s no law.
          But there’s also no law against wearing a business suit that appears to be smeared with vast quantities of poo and vomit.
          Converting Word to ePub is the equivalent of that.
          If you want something of such low quality, perhaps you should stop buying books altogether and write them yourself.

  3. In addition to what Ryan said above, you also have to consider the fact that printing one book is considerably cheaper than printing ten thousand. One ebook turns into ten thousand with a couple of clicks and no real increase in expenditures. There is some sketchy math involved in the 10% more quote. While the average consumer may not fully understand good ebook production, they do understand how digital copies are free. THAT is why the so many readers are frustrated with ebook prices (and Amazonian discounting of the print copies creating different customer expectations).

    • The problem with that logic unfortunately is that most individual books (something like 70%) never turn a profit at all. So for each book that sells digitally or physically for decades and decades (becoming basically pure profit for publishers) there are hundreds more that never earn back their initial investment. So a few books which are successful in the longterm are making up for losses for the rest.

      I see a few alternatives here. The first would be for publishers to forego the author advances (big part of the initial cost) and just have them share in the royalties upon sales. The problem with that is that an advance is traditionally a publisher’s best way of attracting an author. A popular book might have a bidding war around it, driving up the advance. So without advances, an author has less reason to commit to a particular publisher. There’s also the problem that, because the editorial and review process can take such a long time (a bit under 2 years in my case) – the advance is money the author can live off of in the meantime. Editorial is important regardless of a book’s final format, and the process of getting reviews and blurbs is also crucial to marketing the book well (and hopefully getting a return on that investment)… Amazon self-publishing skips all three of these steps, to the detriment of the author and the book and the reader, in my opinion.

      The other solution I can see is for the publishers to simply buy books more smartly. If they could focus on buying only books which are likely to be long-term successes, then they might slowly build up some capital. Short-term, flash-in-the-pan books, like celebrity memoirs and hot-button political issue books could be done faster as eBooks… but they’re still likely to be pretty badly put together without real editorial guidance.

  4. Cost is a hot topic with e-textbooks, too – especially where college students can easily pay over $100 for an e-textbook, which likely comes with an expiration date. The costs are complicated, for sure, but it’s a shame legacy publishers can’t come up with a way to let students read textbooks free online and make print and digital formats more affordable like http://www.flatworldknowledge.com

  5. When the concept of the e-book was still relatively new, we were commonly told that e-books would be quite a bit less expensive than their print counterparts – an example I still recall was something like about 30% of the print price. Like many others, this sounded great to me so I invested in an ereader since I do a lot of reading. Since then it seems that publishers have realized that the concept of e-books has caught on much more readily that they supposed, so no need to reduce those prices. Sales are always going to be based on what the market will bear.

    I believe that authors should receive the bulk of the profit from their work, so why not cut out the publishers altogether?!? Word processors make writing quite easy (yes, the editing and graphics could be contracted out perhaps) and there is software to convert word processor documents into E-Pub format. All the author needs is an on-line presence, and this could be done via a co-op of senior authors where a web site serves to index and act as the purchase and download management for collected works!

    As an academic author I am required to most of the editorial work on my own writing and do not find it particularly onerous. Perhaps what is needed in the general publishing world is a paradigm change where authors produce their own work and benefit the most from it – cut out the publishers, advertisers, book sellers; most of the middle-men; and then we’ll see what an e-book can really be sold for.

    Markets respond to sales. If we refuse to pay high prices for the current e-book products, things will change. Promote change with the way you spend your money.

    • Thanks for the comment, K.

      It seems to me that what you are suggesting is already happening. Thousands of authors have self-published their work through Amazon, Barnes & Noble and many, many others. Several of them have even sold over a million e-books doing it this way.

      Some of them are paying to replicate many of the functions of a publishing company: editing, pr/marketing, distribution, etc.

      That said, the publishers themselves have reported no loss of interest from authors who want to go down the traditional publishing route, to my knowledge.

      • At the risk of appearing sarcastic, I doubt the publishers would report a “loss of interest from authors who
        want to go down the traditional publishing route.” The statement is a tautology.

  6. It’s no longer just fiction either. You’re quite welcome to observe how the world works when writers and readers get together without any hands in between. FictionPress is ad-funded to take care of distribution costs, authors write for free and readers give voluntary payment in reviews. The average quality isn’t as high as the average quality of a book multiple people paid for their work have been brushing up, of course, but the random story ends up wrapped into a book and published on Amazon anyway.

    As a scientist continuously frustrated by a setting where publishers restrict access to my work, I can see no other way to write fiction for myself than giving it away for free (at last, I’m free to do it my way); it’s the only way to ensure that there is no rights-hogging publisher standing between my writing and its audience. (And it’s not like it’s going to lose me any actual money.) It may be I wouldn’t mind buying an advertising service for my magnum opus, but I’m definitely not going to exchange my rights to give it away for that.

    Because there are no DRM-free ebooks available that I could read with my free (as in freedom) software reader in my country, I’ve stopped buying books altogether and sustain myself on FictionPress and its sister site dedicated to FanFiction (and I find a lot of the stuff out there on both sites is downright impressive; the downside of FictionPress is that free-range fiction is much harder to search than \please give me a story mixing stereotypes x and y in setting z\; I bought a random cheapo \we got all the money we can get out of this book now we’re putting it out as a DRM-free epub\ scifi book and was really disappointed – I’ve read better stuff on FictionPress, and the sold book wasn’t any more typo-free). I’ve paid for my entertainment by writing some 500 reviews in 1.5 years.

  7. High prices for first-year frontlist. Okay. 8 dollars for recent backlist (same as mass market paperback price), less okay (subtract the saved costs over print). 8-15 dollars for backlist, often WAYYY back, highway robbery, especially since we’re not buying a possession, we’re buying a DRM-crippled text under license, locked to a specific e-reader ecosystem (though there are publishers who sell direct and don’t DRM their books; they manage to do this at a more tolerable cost (Baen, Phoenix Pick, etc.).

    I have a long list of e-books I haven’t bought because I consider them overpriced. I also have a long list of books I HAVE bought in spite of their price because I wanted them that badly. Also, publishers aren’t doing themselves any favors when they sell e-books full of OCR spell-check errors.

    So they’re selling a sloppily produced DRM-crippled licensed text for the same price they’re selling the print equivalent, and they wonder why people think their e-books are overpriced.

  8. After listening to the back and forth arguments since “the dawn of ebooks” I’ve concluded that it’s altogether pointless to try to educate “the public” that ebooks cost more than the pixels that portray their content. Look at what’s happened to apps. Software used to be a bargain at $99, then $49, the $29…now apps are overpriced beyond a few bucks, same as ebooks.
    .
    As publishers we need to become extremely imaginative and creative in rebuilding our business models to accommodate the new economics of digital publishing, while continue to explore other complementary revenue opportunities.
    .
    Yep, it’s a painful moment when you read a review of your book that says, “I think it was overpriced at $2.99; it seemed more like a $1.99 book to me.” But, buck up. This is the new face of publishing and we will figure out how to make it work.

    • But I feel this is exactly the point. There are so many things to read out there that the idea of “author” as that segment of the population that produces things for us to read for entertainment is going the way of the Dodo. If the competition is so great that the audience feels that such-and-such book is only a $2.99 read, and if that’s all people are willing to pay, then it’s really only worth $2.99! People today produce all manner of free entertainment that is readily available to the general (connected) population: video, music, games, and reading material. “Publishing” is no longer the sole domain of “Publishers”, and if the publishing industry *wants* to survive, it will need to wake up to this new reality and adapt.

  9. The reason consumers think this is true is because publishers have historically charged more for a book the more “solid” its format. A hardback costs substantially more (to the consumer) than a paperback. Even a new book that comes out in paperback costs less than a hardcover. Trade paperbacks were invented as a way to charge the customer more than a mass market but less than a hardcover. Publishers benefited from the customer perception of value when they were selling new books only as hardcovers, but they are unhappy with it now that ebooks are coming out simultaneously with the higher-profit-margin hardcovers.

  10. Your last paragraph pretty much sums up my feelings. If an e-book is the same price or just slightly lower than a physical book, I buy the physical book or I don’t buy it at all. A good example of that is \The Help.\ I’d seen the movie and was curious about the book, but the e-book was more than the physical book and I decided in the end I wasn’t THAT interested in reading it after all.

    If the ebook is half the price of the physical book and I’m pretty sure I won’t want to keep it, I buy the e-book. I can only think of one author for which I will buy the e-book, at what I consider the inflated price, just so I can have it whenever or wherever I want it (I buy the physical book as well).

    As convenient as the e-book reader is for a New Yorker who is constantly on mass transportation, I just will not pay those prices for a bit of air and some digits. I find it especially insulting when the e-book is the same or more than the paperback version. If a book is out in paperback, I definitely buy the paperback instead of the digital copy.

    • My reply was in reply to an earlier comment, which is why I referenced the “last paragraph!!” It somehow didn’t make it under the comment I was replying to.

  11. Consider the fact that the overhead costs for a self-published ebook or POD are actually higher if the author contracts out for cover design, editing, book design etc., and pays out of pocket. Yes, the publisher must pay a similarly skilled staff to do the same work, for example, but that cost is distributed amongst the number of published titles and the sales numbers for each book published., which reduces the production costs to pennies per actual title. The same could be argued that the more copies sold by the indie author, the overhead goes down, but s/he must start over for each book published and does not have the luxury of spreading publishing costs over all titles, successful or not.

    In addition, traditionally published books are marked up to cover the cost of returns. The average publisher book gets a 3 – 6 month stay on retail shelves, whereas, as mentioned above, ebooks remain ‘in print’ indefinitely (continuing to earn publishers a profit). This means the consumer is expected to absorb the risk when purchasing a conventionally published title.

    I read at least one book per week, mostly in digital form. I refuse to purchase a dedicated digital device that maintains DRM policies, and will not pay over $10.00 for a title, no matter how favoured the book or author. I also make an effort to purchase from indie authors wherever possible.

  12. This is not an easy topic to answer…at least definitively. The whole publishing model is changing and authors need to realize this too. Being paid up front is what they are used to but that may have to change with this new model that includes eBooks.

    I am trying to understand how production of an eBook is just as labor intensive as a print book. If a print book is produced an eBook is just a few more steps but not starting from scratch. Editing and proofing would be pretty much done after a print book is produced. Layout for eBook would be necessary but extensive proofing and editing would be non-existent.

    Publishers and authors have to make money and the consumer must keep this in mind but I disagree that eBooks should cost only 10% less than the print version. That is more a publisher’s wish than what is reality or should be reality. The model has to change and it will change whether we like it or not.

  13. All this misinformation, not to mention whining, being thrown out by large publishers. I’m a very small publisher of illustrated children’s books. Converting my books to fixed layout for the iPad is twice or three times the cost of a all text book. Yet, even I can afford to significantly discount our e books in relation to hardcover. When you take into account no returns, no warehousing, the fact that you keep 70% of the list price rather than 45%, as well as printing, sales costs, etc, etc. It’s a good deal.
    We have to remember most large publishing companies are no longer what they were and haven’t been for many years. They are branches of multi-national corporations who are under pressure to show quarterly profits to hedge fund managers as other corporations. That, plus the human tendency to fear the new, makes everybody huddle behind the barricades.
    I don’t know, but I imagine it must have been like this when paperbacks came out. I believe the price differential was far greater between the early paperbacks and the hardcover books than between hardcover an e books now. The result was the creation of a larger market of readers which ultimately benefitted publishers as well as authors.
    I think the same thing can happen here if publishers would price their e books realistically and figure on a profit not a killing.

  14. I don’t believe the traditional publishers you quote. I believe they are lying about their costs. They do this to justify their efforts to prop up the cost of their printed product.

    • Thanks for the comment, Laer. I respect that point of view as someone whose job it is to talk to people and decide if what they’re saying is true or not.

      For the record, I did believe them and that’s why I quoted them. If I didn’t believe them, I wouldn’t have quoted them.

      • Sounds like you got a really good sales job by those big “fat cat” publishers. Very few others believe what they are saying; me included. Common sense has to be considered and there have been some very compelling arguments in this forum alone. The prices for eBooks will be less expensive whether these big publishing companies like it or not. They have to change their paradigm, quite telling half truths and expecting people to believe them, and create a new model or they will end up like a lot of record companies did when they fought against digital music.

        • IMO, It’s been a long time since any book publisher could be described as a “fat cat.” It’s an industry in decline, and every company is doing the best it can to make the numbers add up without laying off their workers. They have mindfully avoided many of the missteps made by the recording industry, and most are fully committed to “changing the paradigm.” It just takes time, and the bigger the company (esp. the big 6, who are mostly owned by international conglomerates), the slower the change.

  15. This is the same whitewash publisher keep putting out to justifty ridiculous ebook prices from the majors.

    In fact they DON’T pay all those costs to produce ebooks. They have already paide the advances and editing and all that jazz. All they have to do is format and upload. You can get that done for $45 in real life, so let’s saying they’re paying their inhouse people $500 in wages.

    They aren’t producing original ebooks… like the indie authors and publishers who DO create them from scratch and sell them for three buck.

    They continue to think people are stupid and will buy any BS they put out. Who do they think they are, presidential candidates?

  16. I believe the 10% figure. Publishing houses are entrenched, top-heavy institutions. The executive bonuses, don’t go down with e-book publishing. The management layers don’t flatten. The New York high rise offices don’t get moved to Omaha.

    The stuff about editing and formatting are just distraction. They are not the main cost of publishing. It’s the ponderous structure of near monopolies that cost so much. The evidence of good editing and proof reading in too many books is simply lacking

  17. Also, consider what the consumer is actually buying when the purchase a print book versus an ebook.

    With a print book, the consumer is purchasing the book itself, essentially the right to own that copy of the book. They can resell it, give it away, loan it out, whatever. With the ebook, the consumer only purchases a right of use, which is why publishers/booksellers want to constrain your use –limited (if any) ability to loan, resell, transfer to another (un-approved) device, etc.

    For the diminished rights alone, the cost to the consumer should be less.

    • That’s a great point, Melissa.

      As a consumer myself, I try to focus on value when I buy something: What I am getting for what I paid.

      But it’s hard not to think about what I could have or should have paid. I believe that I’m not alone in this. Who likes the feeling of being “ripped off”?

      That said, every one of the consumers I spoke with felt that e-books should be cheaper because they cost “nothing” to produce. Not because of value.

      So, you bring up a great point, but I suspect in the psyche of the consumer, it’s secondary to assessing whether one has been “ripped off.”

  18. While I’m skeptical of the publishers’ 10% figure, it misses the point regarding the battle over agency pricing. Amazon sells things at a discount. The issue is whether or not Amazon has a right to set it’s own pricing, including possibly selling some e-books at a loss in order to get a bigger market share. Books like other items aren’t priced solely on the manufacturing costs, but on what consumers will pay for them. Books generally cost more when they are new and are discounted later. That’s how it works and publishers can charge Amazon whatever they’d like, but if Amazon wants to discount its prices in order to sell more volume to savvy consumers, or encourage more people to shop in their store, that’s Amazon’s business. (If they are selling books at a loss in order to grab a bigger market share and this violates regulations, that’s another matter.) The DOJ is suing the publishers for price fixing and trying to force Amazon to adopt the agency pricing model. It’s alleging that they knew what they were doing was wrong and took steps to conceal it.

  19. Putting the main issue (the price of e-books) aside here, I was shocked by the following sentence:

    “The median salary across the U.S. for a low-level digital project manager is $73,678, according to Salary.com.”

    This must be for digital project managers across the board, regardless of industry. There is no way that publishers are paying this much to a “low-level” employee. Publishing is a notoriously low-paying industry.

  20. IMO, It’s been a long time since any book publisher could be described as a \fat cat.\ It’s an industry in decline, and every company is doing the best it can to make the numbers add up without laying off their workers. They have mindfully avoided many of the missteps made by the recording industry, and most are fully committed to \changing the paradigm.\ It just takes time, and the bigger the company (esp. the big 6, who are mostly owned by international conglomerates), the slower the change.

    • This was supposed to be a reply to Rick Guilfoil’s post above. I’ve put it in the right place now, but moderators should feel free to delete this post!

    • You obviously haven’t been around offices (or parties) of publishers and the corps that own them.
      Fat cats don’t cut their fat when it hits the fire. Remember industry people flying to Washington on private jets to beg for bailouts?

      The idea that their struggle is not to lay people off is bizarre, frankly. But layoffs will be “foot soldiers”, as they always have been. Not mid management, and not the people at the top, who’d rather go down with the band playing “Nearer My God To Thee” than shave anything off their coupons.

      The idea that the book industry has “avoided misteps” made by ANYBODY is amazing. What other industry has the equivalent of advances? What other industry gives retailers 100% return on unsold goods?

      • PS
        Many have noted the way trad published books have been getting sloppier about editing lately. More typos, more simple mess-ups. If there are layoffs, that might be where they are happening. Same as newspapers: the writers and proofers get the ax, not the execs.
        They already laid outsoursed their entire “R&D” to agents, making the “gatekeepers” people who they have no oversight of.

  21. I work for a small independent publisher (Bunker Hill Publishing) and we are currently working on getting our books also published as ebooks. While those of us who work for the company prefer print books the demand for ebooks remains. Here are some things I’ve learned. First we create a book for print, which give us costs of: author, illustrator (as necessary), copy-editor, book designer, plus internal costs for people who do the work of copy editing, editing, sales, marketing, review solicitation (which means contacting newspapers, magazines, blogs, etc), and internet. All of these things can be also applied to the ebook. Then we have to go out and pay for the ebook to be converted from our book designers file. Now the cost regarding ebook conversion for a TEXT book (we also do children’s books and the pricing there is a lot higher), I have received quotes from .15 cents per page to 2.00 dollars per page. Obviously as a publisher we want the best quality for the lowest price. Then we also have to pay a percentage of the book price to the ebook distributor, each distributor has it’s own pricing structure plus we have to pay a percentage to Amazon or what we call the ‘ebook store’ (ebook stores also have their own pricing structure). At least for us, ebooks cost about equal to create as a print book. The difference is print books we pay the printing cost and a percentage to the distributor but NOT to the store that sells our books. I personally have a Kindle and an iPad and I read books on both as well as enjoy printed books. Each way has their own costs, questions and possibilities. Currently we are working on pricing for our ebooks and I know we are trying to give the best cost while still be able to make a reasonable profit. In all honesty, as a publisher if we can’t make a profit we are in trouble and will cease to exist. I want to know when I buy a book I get a quality book and I have noticed that many of print books have typos or spelling errors – I have also found typo’s and spelling errors on ebooks. Everyone makes mistakes. I’m not a fan of fan fiction or other such sites because I know there are many publishers who welcome any and all submissions from any genre of authors. Bunker Hill Publishing does.

  22. It’s not the cost of the book that should be the contention, it’s the end use of the book. Why would I spend $10 on an eBook that, once read, has $0 value when I could spend $12 on a paper book, read it and then sell it? eBooks are essentially \book rentals\ and therefore they should be priced accordingly.

    Twenty years from now, what’s a First Edition J.K. Rowling eBook worth? Zip! Because you can’t sell it. On the other hand, what’s a First Edition Harry Potter print book worth right now? Exactly.

  23. I’m STILL not able to opt out of this damned discussion! All I get when I try is “You may not access this page without a valid key.” PLEASE fix this!!!!

  24. It seems to me some of these alleged costs are quite bizarre. I have self-published 7 ebooks – quite long novels over 150,000 words. I did all the copyediting myself which cost nothing but a great deal of time and meticulous attention to detail. I paid a professional cover artist to create covers at $60 per book. I paid a professional formatter to format each book at about $90 per book; for that money he formatted each book into 3 different formats – Mobi, Epub, and Smashwords. And that’s it; no other production costs apart from maintaining a home computer and printer. All the other costs are marketing.

    If you think these ebooks aren’t produced to a very high standard I disagree; take a look. By contrast I read and reviewed a book last week which was produced by a very well-known traditional publisher, and the ebook was littered with hundreds of errors. The formatter and editor may have been drawing these inflated salaries, but, unfortunately for the poor author, they didn’t know their jobs.

    • Hey Tim–

      Great comment and thanks for the breakdown.

      While one could argue over the quality of copy editors, etc, etc, I think you’re leaving out one huge cost: Cost of content acquisition. And as the publishers stated above, that’s the largest cost in producing a book.

      How many hours did you spend writing that 150,000 word book? And what could you have been spending your time doing otherwise that could have made you money? What do you think you deserve to be compensated for that time?

      Let’s say it took you four months of writing 8-hours a day, every weekday to create the draft that you then sent off to the copy editor. That’s about 680 hours of work. If we just look at other things you could be doing at that time and assume a $50/hour pre-tax run rate, that’s $34,000 that you should add to the cost of production of your book. Most consultants get closer to $100/hour or much more. Lawyers can get anywhere from hundreds to thousands for an hour of billable work. Obviously, the time of a proven hit-maker like James Patterson (if you do the math of time spent writing versus net sales revenue) would be higher than a less-proven author.

      So, it depends on how you look at it, but the cost of content acquisition is the No. 1 cost — even if you don’t actually “pay” anyone for it.

      Thanks for the comment and thanks for reading!

      • You’re assuming that publishing houses will pay top dollar to every author under their label. No offense to Mr. Vicary, but an author with 3 self-published titles likely isn’t going to get a $34,000 advance for a title. The vast majority of authors are relatively unknown and low sellers. For those authors, the cost of acquisition, marketing and publicity are going to be as low as the publisher can get them, to maximize profits. After all, they’re about making money, not developing new talent.

  25. There may be some upfront costs, but let’s face it, unless the author is well known, the author advance, publicity and marketing are minimal, and the majority of a publisher’s library are books by authors most people have never heard of. A Stephen King book may be very expensive, with a huge advance and lots of marketing, and can justify a higher price even for an ebook, but $12.99 for an ebook by an author that might not even be found in your public library is ridiculous.

    • Also, why do articles on this topic compare ebook prices to hardcover when claiming they’re “roughly half” the cost of a typical book. I have NEVER seen a paperback book that cost more than $8.99 at a brick and mortar store, and to sell an ebook for more than that is downright insulting.

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