At lunch today, I was discussing with a friend the current pricing model behind eBooks. It doesn’t make sense when you look at it on the surface, and it makes even less sense when you dig deeper – at least if you apply any sense of rationality. It’s important, however, to understand that rationality does not underly the model. Note, that I’m not going to deal with the ongoing lawsuits over the agency model, which actually has little to do with “fairness” in any real sense, and would not, in my opinion, result in a long term reduction in eBook prices.
First, let’s take a look at some of the top books right now on Amazon that are available both in paper and eBook format:
| Book | Paper | eBook | Savings | Discount | Pages | Per Page |
|---|---|---|---|---|---|---|
| The President’s Club | $19.36 | $16.99 | $2.37 | 12.24% | 656 | $0.0295 |
| The Land of Decoration | $14.85 | $11.99 | $2.86 | 19.26% | 320 | $0.0474 |
| The Coldest Night | $14.37 | $11.99 | $2.38 | 16.56% | 304 | $0.047 |
| Afterwards: A Novel | $15.00 | $12.99 | $2.01 | 13.4% | 400 | $0.0375 |
| Truth Like Sun | $15.41 | $12.99 | $2.42 | 15.7% | 272 | $0.0566 |
| Bird Sense | $15.00 | $13.75 | $1.25 | 8.33% | 288 | $0.052 |
| Magic Hours | $8.40 | $7.69 | $0.71 | 8.45% | 256 | $0.033 |
| Fifty Shades of Grey | $9.57 | $9.99 | -$0.42 | -4.4% | 528 | $0.018 |
Lots of people will look at the cost and think “wow, you don’t save any money” buying an eBook, but they misunderstand the economics. The cost of producing a paperback book is trivial to the overall cost. If you’re producing 50,000 copies, you’re talking $2-3 in total cost to print and distribute. That’s not the problem. The idiosyncrasy of Fifty Shades of Grey is an artifact of the agency model.
The problem is that the value of an eBook is lower. Not only does the publisher not have to produce the physical book, but they also take from you all your rights by implementing DRM. With a physical book I can loan it without restraint to anyone I wish. I can give it to anyone. I can do anything I want. With an eBook, though, I’m limited to what the publisher wants to allow, and many publishers do not allow anything at all.
If, instead, you offered me an eBook for the current 8-15% discount, but gave it to me in an unrestricted ePub format, then I’d say you have a good value. Until then, I’ll find it difficult to stomach the pricing model for DRM-protected eBooks.