Why E-Books Won’t Fly

As mentioned before, the biggest impediment to e-books really taking off is economics; more specifically, the pricing model just doesn’t work.

Last weekend’s NYT added some perspective, from the publishers point of view:

Publishers and authors say it is much more complicated than the cost of paper and shipping. The lower e-book price “is not sustainable,” said Mr. Baldacci, whose novels regularly rise to the top of hardcover best seller lists. If readers insist on cut-rate electronic books, he said, “unfortunately there won’t be anyone selling it anymore because you just can’t make any money.”

Publishers are caught between authors who want to be paid high advances and consumers who believe they should pay less for a digital edition, largely because the publishers save on printing and shipping costs. But publishers argue that those costs, which generally run about 12.5 percent of the average hardcover retail list price, do not entirely disappear with e-books. What’s more, the costs of writing, editing and marketing remain the same.

“The concept that because a book is an e-book it should automatically be priced significantly lower than a paper book is one we don’t agree with,” said Carolyn Reidy, chief executive of Simon & Schuster. “What a consumer is buying is the content, not necessarily the format.”

I’m not in the publishing business, so it’s difficult to verify whether or not it’s true that most of the cost of book publishing is outside of the paper-printing and distribution of the product. But there are two problems here.

First, the product is, in the end, digital, and user perceptions are that buying something immaterial should fundamentally cost less. In other words, getting consumers to believe that producing a product that no longer requires you to physically product the product is a very difficult sell. Furthermore, if you look at Amazon’s site, many paperback versions of books cost even less than the Kindle version. For example, Gwen Ifill’s The Breakthrough is 11.99 for Kindle, and 11.20 for the paperback. A small difference, but one that makes it difficult to square the “it costs just as much to make an e-book” argument.

Next, listen to the arrogance in the quote from the exec from Simon & Schuster: “The concept that because a book is an e-book it should automatically be priced significantly lower than a paper book is one we don’t agree with.”

Oh really?

Isn’t that the same condescending tone we heard from newspaper publishers who laughed away blogs, and music executives who ignored the Internet, and Hollywood studio heads who paid no attention to digital video back in the day?

The truth here is digital technologies tear down gatekeepers — that is what is central to the recent history of the newspaper industry, and the music business, and Hollywood, and it’s true for book publishing as well.

It’s the story of the old guard trying to hold off the new.

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