why are kindle books more expensive than paperbacks? or – the great ebook robbery!

Posted on February 27, 2012


its really been amazing to see how the price of ebooks has gradually increased from the $9,99 to be, in general, more expensive than a paperback novel. seeing as there arent any printing, shipping, shelving costs etc – its quiet fascinating that this has happened, in pure economic terms it really should not. before we all occupy amazon, its important to note why this is happening and who the key players are in the process.

firstly, it seems common knowledge that amazon has a grudging relationship with publishers. in their world the only people that matter are authors (and those involved in making a book – editors, designers) and the readers – the rest (publishers, retailers, a long and complicated supply chain) are pretty much superfluous.This quiet suprisingly doesnt make publishers, their partners at this point, very happy. So when Apple let publishers decide the end price of their ebooks on the ipad, Amazon had to follow suit or lose the battle for the device. Rather than the traditional model, where amazon was buying in bulk and pricing the book how they wanted (often at below cost to win and keep marketshare) they have switched to an agency model where amazon takes a cut from the price charged to consumers.

The bigger publishers have opted to charge a premium to kindle users over paperback books. is it spite? is it to protect their current retail channels and erode amazons power? is it sheer bloody minded price gouging targeting an invested base? lets analyze the elements:

1. strategy of being angry at your committed readers (i.e. customers) – I wouldnt be surprised if there was an element of this. firstly, i am sure many people cannot believe that people prefer a kindle to reading a “real” book. What amazes me here is that they seem to have forgotten that a paper book is just a transmission mechanism for something much more important – the story! i also suspect that they dont want such a rapid change in market dynamics as they still have warehouses, printing presses and other such assets (or now liabilities) that need to be recouped.This leads to point 2, the last thing the publishers want is only two or three big customers for ebooks versus thousands of small customers and some big ones – why, at that point they have no market power and all the power resides in the hands of the ebook distributors. So by charging more for ebooks they keep retailers alive as people opt to buy paperbacks, also, while shelfspace is scarce in a store and so onld stock must be moved to make way for today’s hit – in a digital world a book can be there forever, no impetus to dscount because if you want the book, you will buy it. But this brings us to point three, people who have bought a kindle probably did so for a reason, and would be willing to pay a premium to get an ebook – or else they have purchased a pretty useless internet enables piece of plastic. they might be willing to pay for convenience, for form factor or for just the fact that its actually available (and not in the stores anymore). So the potential that they are just price gouging is pretty high!

so what are the kindle buyers doing about it…. very little. some are boycotting book publishers who are gouging. some write angry blogs (smiliar to this, but with more veiled threats) and some are buying books.