Rethink the pricing of ebooks

updated Sep 3, 2011

The big discussion around ebooks is usually:
Should ebooks be cheaper than printed books?
This is the wrong question!

The pricing of printed books and ebooks:
two fundamentally different ways to charge for content

Buying an e-book cannot be compared to buying a printed book:

You buy a paper book. Then you own it, it’s yours. You can give it away or sell it as you like.

But you don’t buy  an ebook, you license it. You don’t own the file that you paid for and downloaded. You cannot give it away and you can certainly not sell it. However, Kindle and Nook allows you to loan your ebooks to friends for 14 days.

This means that the price of a printed book cannot easily be compared to the price of an ebook.

The gut reaction of many is that this difference is negative for ebooks: “If I pay for an ebook I want to own it, to be able to control it…” But in my view the licensing model of ebooks is actually better for us book lovers in several ways.

Frédéric Filloux expresses this difference and its benefits elegantly in the blog Monday Notes: “Buying a right of use instead of an actual file will profoundly change the landscape and the role of the different players.” He also writes about other consequences of this, so read his post!

Also, when you think of it, we are in fact used to this licensing model for other types of media, more on this further down here.

First about the price itself:

Why on earth is the discussion of ebook pricing still based on production and distribution costs?

People seem to think that since the cost to distribute ebooks is very low, they should be very cheap. This is just as silly as the old argument “Why are movie DVDs so expensive when a recordable DVD only costs $0.50?

There are more problems with this reasoning:
The biggest part of the production cost is the authoring and the editing, not the physical printing.

The price of any product has never been set based on production costs only. We pay for the status of the brand, the design, the usability, the convenience of the delivery and packaging, for being first with a new product, for additional features etc. Why should digital media be any different?

For example: the price difference between a hard cover book and the same book as paperback is only slightly based on reduced printing costs, it is about access time and status, even though the content is identical.

It could actually be argued that ebooks should cost more than printed books, since the ebook can have enhanced functionalities that offers increased reader value compared to a printed book, (see my post “Where’s the e in ebooks?“).

Move from ownership to accessibility

I have a feeling that we will let go of this urge to own and possess many types of books (but not coffee table books etc) just like we have already stopped buying CDs with music.

The obvious pricing model then becomes subscriptions. “Subscribe to books? What a silly idea!” you might react. But consider the giant book club industry? And an ever bigger subscription based media business that has been around for 50 years:

The Cable-TV model

We are used to paying for cable-TV packages, such as bundles of channels for sports, feature films, child programs, documentaries etc. And the ownership of these programs are similar to ebooks: you can record them for personal use, but you do not own them and you cannot resell them. We have never seen this as a problem, so why not implement the same model for ebooks?

The subscription model is already growing fast in digital music, with services like Spotify, Grooveshark and Rdio

iPad magazines are moving from selling individual magazine apps towards subscriptions, such as Popular Science,  Wired Magazine and The New Yorker.

And there are a growing number of ebook publishers that are now starting to go this way, for example 24symbols.

Ebbok subscriptions will soon become a very important part of the ebook business, once the publishers learn how to reach out and demonstrate the advantages. But there are several other interesting pricing models that will also be important in the digital transition of the book industry.

I will dive deeper into the subscription model and other ways to monetize ebooks in my upcoming post: “New business models for ebooks”, so stay tuned!

This is post #4 in my series on the ebook market and development.
Coming soon:  “New business models for ebooks”

 

Published by

Henrik Ahlén

I am an eHealth Strategist at Kentor/Sopra Steria in Stockholm, Sweden. I drive eHealth development projects from needs analysis and idea generation to service design and implementation. See my LinkedIn profile: http://www.linkedin.com/in/mrhenrikahlen

One thought on “Rethink the pricing of ebooks”

  1. I think the printing industry is now facing the very same challenges that the music industry did a few years ago.

    It will be interesting to see, if they are ready to use the disruption to propel the book publishing industry into it’s most exciting era since Gutenberg, by using the new opportunities of going from ownership to pay-for-use and low cost of long-tail distribution models.

    There is a real opportunity for books to reach unprecedented levels of accessibility and distribution, and thus the biggest monetary eco-system to support those who are part of creating and publishing books.

    Then, the publishing industry could try to replicate the music industry, and loose this opportunity….

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