Friday 9 September 2011

Apple and major publishers face lawsuit over ebook 'price fixing' | Books | guardian.co.uk

Apple and major publishers face lawsuit over ebook 'price fixing'

Penguin, Macmillan and HarperCollins among firms accused of colluding to scupper Amazon's consumer-friendly $9.99 rate

Bitter fruit ... an Apple store in California
Bitter fruit ... an Apple store in California. A law firm is alleging the company worked with publishers to push ebook prices up. Photograph: Russel A Daniels/AP

A class-action lawsuit has been filed in the US alleging that Apple and five major publishers "colluded ... to illegally fix prices" of ebooks.

The lawsuit, filed by law firm Hagens Berman in California northern district court, claims that HarperCollins, Hachette Book Group, Macmillan, Penguin and Simon & Schuster conspired with Apple to increase ebook prices in order "to boost profits and force ebook rival Amazon to abandon its pro-consumer discount pricing", and that they are "in violation of a variety of federal and state antitrust laws".

The complaint centres on the agency model – used by Apple for iTunes and by most major publishers for ebook sales – in which the publisher, rather than the retailer, sets the retail price of ebooks. The model has already sparked investigations in Europe and the UK, with the Office of Fair Trading investigating whether certain publisher-retailer arrangements "may breach competition law", and the European commission looking into whether companies have colluded to keep ebook prices high.

Naming two plaintiffs, California resident Anthony Petru and Mississippi resident Marcus Mathis – both of whom purchased at least one ebook for over $9.99 after the adoption of the agency pricing model – the lawsuit, once approved, will represent any purchaser of an ebook by a major publisher after the adoption of the agency model and could, according to Hagens Berman, be worth "tens of millions of dollars".

It alleges that the five publishers "feared" Amazon's move to price ebooks at $9.99 – a figure considerably below physical book prices. The pricing "threatened to disrupt the publishers' long-established brick-and-mortar model faster than [they] were willing to accept", and to set low consumer expectations for ebook prices.

Pointing to Macmillan's battle with Amazon over the agency model last year, which ultimately saw the online retailer capitulate to Macmillan's introduction of the model "because Macmillan has a monopoly over their own titles", the lawsuit says the five publishers "forced Amazon to abandon its discount pricing and adhere to a new agency model ... If Amazon attempted to sell ebooks below the publisher-set levels, the publishers would simply deny Amazon access to the title." This has, the suit says, seen the prices of new ebooks increase to an average of $12-15 – a rise of 33 to 50% – and reach a point where they are often more expensive than physical editions.

"As a result of the pricing conspiracy, prices of ebooks have exploded, jumping as much as 50%. When an ebook version of a bestseller costs close to or even more than its hard-copy counterpart, it doesn't take a forensic economist to see that this is evidence of market manipulation," said Steve Berman, founding partner of Hagens Berman, in a press release about the suit. "Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon's popularity and pricing structure, and that was Apple. We intend to prove that Apple needed a way to neutralise Amazon's Kindle before its popularity could challenge the upcoming introduction of the iPad – a device Apple intended to compete as an e-reader."

But while publishers were likely to be "concerned" at the law suit – "it's another force ranging against them, and another example where they look like they are against rather than for the consumer" – The Bookseller's deputy editor Philip Jones said there was "no smoking gun" in the evidence.

"There are lots of accusations of collusion and conspiracy, rather like a John Grisham novel, but I couldn't find a single instance where they had proof, or even hinted that they had proof," he said. "There is a question over how the agency model has been implemented and whether that is illegal in the US and Europe, and that is what the regulatory bodies on both sides of the pond are looking into, but they are insinuating that there was collusion between Apple and these major publishers and I don't believe they can make the case. The lawyers can write that collusion was necessary for agency to occur, and give logic to that argument, but that doesn't prove that collusion actually took place."

Comments in chronological order (Total 71 comments)

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  • tilis

    11 August 2011 4:04PM

    I was going to post a comment about corruption but I can't be arsed they're all bastards

  • FerventPixel

    11 August 2011 4:14PM

    I bought my girlfriend a Kindle for her birthday. Nice device, but the books are far too expensive, and you are locked-in to regional stores, where prices can vary quite significantly.

    Greed is everywhere.

  • tiredofwhiners

    11 August 2011 4:32PM

    altwebid

    11 August 2011 4:09PM

    Apple overcharging?
    I find that very hard to believe...

    Which part of "in which the publisher, rather than the retailer, sets the retail price of ebooks." didn't you understand ? Presumably all of it.

    The publisher chooses the sale price - Apple doesn't get to decide.

  • PaulBowes01

    11 August 2011 4:35PM

    This is another indication that the real struggle is not over whether ebooks are here to stay, but over who will take the most significant slice of the pie and how fast that change will occur.

    In a typically combative interview with The Bookseller http://www.thebookseller.com/news/publishers-need-stand-firm-against-digital-wylie.html, the agent Andrew Wylie has been robustly critical of publishers for allowing the makers of ebook readers (Amazon, Sony, Apple, Barnes and Noble et al.) to dictate to the suppliers of content (the publishers and, by extension, Wylie's clients - the authors). In fact, attempting to do so might constitute an illegal restraint of trade, as this lawsuit seems to imply.

    I find the idea that either party is the champion of the consumer difficult to sustain. Consumers typically want the lowest prices and the largest choice of product and supplier. Both publishers and online ebook sellers are businesses geared to profit maximisation, which pushes towards monopoly of supply and the highest prices consistent with maximum volume of sales. The only real difference is that Amazon stand to benefit - at least in the short term - from increasing volume of ebook sales, and wishes to set low prices to achieve this, while the publishers are trying to maximise sales value in the short term, because of declining revenues from their paper products, and so want ebook prices comparable to the paper book for as long as possible.

    In time, I expect ebook prices to fall and stabilise at a price probably a little higher than Amazon would like but lower than the publishers would prefer. In the long term Amazon are vulnerable, because as Andrew Wylie says they are dependent on others for the content that people really want, and competing suppliers will also appear. But in the short term, the publishers can dictate online retail prices only if the very largest of them are in effect acting in concert: individually, they don't have the clout. If this concerted action is illegal, then some compromise will have to be reached. the alternative - as Wylie points out - will be capitulation along the lines of the music industry.

  • Chriskiy

    11 August 2011 4:37PM

    Paper-and-print books:
    Chop down trees; Pulp them; Make paper; Transport paper to printing press; Typeset book; Print and bind book; Package book in boxes; Transport them to bookshops (or, more likely, to warehouses and from there to bookshops); Pay wages for staff at all levels of afore-described process, as well as electricity bills, upkeep on premises, etc; Factor in percentage of lost goods or products at stages such as retail.

    E-books:
    Type book (probably done anyway in paper-and-print process); Save it in one or more electronic formats; Upload book to server; Await orders, which will be automatically processed without any need for further human intervention.

    Given the number of costly processes, materials and wages throughout the production and distribution process for paper-and-print books, how can an E-book justifiably cost more than 30% of a physical one? Much less the prices "often more expensive than physical editions" as mentioned in the article.

    I didn't buy an E-book reader for some years, until I saw that prices had come down to a half-way reasonable level. But if prices are forced up again, what moral right will publishers and sellers have to criticise people who copy or peer-share E-books free or cheap? Offer something at a reasonable price and people will buy it. Offer them the same product at sky-high prices, and they will seek some other way to obtain the product.

    I hope the lawsuit prospers and that Apple and the publishers are condemned to a memorable pay-out. I'm afraid I can't entertain any belief in their presumed innocence in this case.

  • Chriskiy

    11 August 2011 4:39PM

    Like PaulBowles01, I find it ridiculous that the publishers are able to dictate retail prices in E-books. Surely this is also open to some sort of action, the sort intended to eliminate cartels in trade.

  • PaulBowes01

    11 August 2011 4:48PM

    @Chriskiy

    Given the number of costly processes, materials and wages throughout the production and distribution process for paper-and-print books, how can an E-book justifiably cost more than 30% of a physical one? Much less the prices "often more expensive than physical editions" as mentioned in the article.

    There has just been an extensive discussion of ebook pricing here: http://www.guardian.co.uk/books/booksblog/2011/aug/04/price-publishing-ebooks?INTCMP=SRCH if you want to understand why ebooks aren't cheaper than the equivalent paper book. It's worth reading through the comments.

  • Kedgeree

    11 August 2011 4:57PM

    I agree with the comments - price too high and the justification for piracy become easier for lots of people.

    What is the point of publishers in an ebook world anyway? That's not a snipe but a genuine question as it seems to me that much of what they provide to get a book from Author to reader is no longer required.

  • blossomnu

    11 August 2011 4:57PM

    @PaulBowes01 Just read that, but it doesn't make any sense. It's not like the author gets much of the profit. The bottom line is savings are made on ebooks compared to physical books, and these savings will continue to increase as ebooks become more widespread...but are never passed to the consumer.

    $9.99 isn't even cheap for a physical book. Most places have deals such as 2 for £7, spend £20 and get a book for £1, half price offers etc. Ebooks are massively overpriced.

    I would prefer to buy a book from a charity shop and be 'green', save money and help someone else at the same time.

  • ajchm

    11 August 2011 4:57PM

    why would anybody pay $9.99, don't know how much paperbacks cost in the us but best sellers can be bought for about £5 from amazon, cheaper still if they get into the top 50 and tescos etc stocks them. never paid for an ebook anyway, there are many thousands of titles completely legally available, as their authors died over 80 years ago. when i last looked on amazon, most stuff seemed to be under £5, why don't americans just buy from the uk site??? (we do it reverse if itunes is cheaper)

  • catburglar

    11 August 2011 5:00PM

    Chriskly

    Although it seems self-evident that e-books should be cheaper to buy than a printed product, I do not see in your listing of the process that goes into producing either book any mention of paying the author, much less the production editors, copy editors, and proofreaders, and designers, much less marketing, and the general payment of publishing house staff.

    Authors that receive royalties have, in the past , been paid about 10 to 15 percent of the retail price of a book.

    The physical manufacture of a book has typically cost about 12 percent of the retail price.

    This is not to say that some savings isn't incurred by publishing a book electronically, and that those savings shouldn't be passed on to the consumer. I personally think it would be help the industry greatly to lower the price of books in general. But there is less savings there than you might suspect.

  • jago40

    11 August 2011 5:09PM

    I have serious rservations about kindle now after telling everyone how excellent it is. The price of ebooks is too much and it is often better to go to the local charity shop and buy the book in queston becuase it is more eco and a charity benefits, more people get to read the book and large US corporations don t creamn off loads. Actuually there wil come a time when authors wil just upload their books straight to the net and do without publishers I think..

  • jago40

    11 August 2011 5:12PM

    I run reading retreats in Bulgaria and physical copies of books are easier to share and discuss. I can leave them to excite the imagination on shelves...Ebooks don t work like that. A kindle on an eco retreat doesn t really work and I wouldn t ask my readers to pay out all that money for equipment and books.Annoying though bexcause they are great devices just greed is ruining them

  • Chriskiy

    11 August 2011 5:23PM

    @PaulBowles01:
    Thanks for the link. I read the article and some comments - over 200 of them was a bit much to wade through. One thing that struck me was the statement that "publishers only spend $3.50 to print and distribute a hardback". In other words, this cost gets us only as far as the wholesale warehouse, as far as I understand it, or as far as the store-room of the bookshop at best. So this apparent cost of the physical book - if we assume it to be accurate - is not the whole difference that can be attributed to it. We must then add all the expenses involved in keeping open a retail outlet, including staff wages, losses through robbery, etc.

    The question raised in the blog you linked to of Amazon selling E-books at a loss to promote sales of its Kindle was interesting, but it still doesn't justify any possible attempt to force up prices as alleged in the lawsuit.

    @CatBurglar:
    I didn't mention elements like author's rights 'cos they're common to both kinds of book. At least I don't suppose an author is paid more or less according to if it's a physical book or an E-book. I admit, though, that I could have mentioned them as common.
    The physical manufacture of a book may be about 12% of the total cost - but does this cost include distribution, bookshop wages, etc?

    There may be less difference between physical book and E-book costs than I thought, but I'm also sure that there is more difference than publishers and booksellers would like to have us believe.

  • PaulBowes01

    11 August 2011 5:31PM

    @blossomnu

    It's not like the author gets much of the profit. The bottom line is savings are made on ebooks compared to physical books, and these savings will continue to increase as ebooks become more widespread...but are never passed to the consumer.

    $9.99 isn't even cheap for a physical book. Most places have deals such as 2 for Ã'£7, spend Ã'£20 and get a book for Ã'£1, half price offers etc. Ebooks are massively overpriced.

    Taking your points one by one:

    The author is actually likely to get quite a high proportion of the selling cost of an ebook - 50 to 70% is not uncommon. Publishers have to pay big advances to the best-known, highest-selling authors, and that's the case regardless of what format is published.

    The savings that are made by producing ebooks only come at the point in the production process at which the paper book would be manufactured, because everything up to that point is done on computers for both kinds of format. The 'savings' - which are quite small, as the cost of actually printing a book is a low proportion of its cost - is then immediately lost when the retailer demands discounts, etc. If ebooks are not priced relatively high they also cannibalise the sales of the paper book - a significant loss to the publisher.

    The deals and discounts on paper books - which only apply to a small fraction of all books published - are generally the retailer's idea, not the publisher's. The publisher in effect is told that unless he agrees to give up some of his profit to make the discount possible, the retailer won't stock that book. Add to that the online retailer insisting on bringing down the price still further on ebooks and it's not surprising that publishers baulk: they see others - the customers, the author and his agent, the retailers - getting a good deal while they, who do all the work of actually bringing the book to market, get almost nothing.

    As I mentioned before, there has just been a very detailed thread about ebook pricing - link in my first post. In the comments you will find posts by actual publishers who explain in some detail how the production of ebooks works, as well as a number of posts - by me and others - that point out that you are paying for the content, not the format, and that the people who produce the content are entitled to get paid.

  • djpray2k

    11 August 2011 5:34PM

    They have an interesting situation here....with the Kindle being locked to Amazon books it pretty much keeps piracy out the picture.

    Sure, the Sony eReader and Ipad etc. allow you to read ePub and so pirate books but Amazon are owning this market and in doing so keeping piracy out the picture (compared to music).

    I'm not saying piracy is right but it plays a part in pricing.

    Wonder how well the iPod would have done if Apple had locked it to iTunes music only.

  • Becks66

    11 August 2011 5:38PM

    "to boost profits and force ebook rival Amazon to abandon its pro-consumer discount pricing"

    Hahaha. Amazon is pro-profit. Not pro-consumer, not pro-anything else. It is a massive company with shareholders. It is pro-profit, end of story.

    E-books:
    Type book (probably done anyway in paper-and-print process); Save it in one or more electronic formats; Upload book to server; Await orders, which will be automatically processed without any need for further human intervention.

    You missed out:

    Hire and pay editor
    Hire and pay typesetter for various ebook formats
    Hire and pay cover designer
    Hire and pay for marketing

    Miss out #1 and your book is likely to be shite, not even worth 99c.

    Miss out #2 and #3 and your book will *look* shite, massively reducing the number of people who will consider buying it.

    Miss out #4 and nobody knows your book exists.

    Congratulations, you too can have a badly written, shoddy book on Amazon that nobody wants to buy!

    Some writers, of course, learn to do all the above themselves to varying degrees of sucess. Being your own editor is doomed to faliure, so unless you can convince a very nice friend who also happens to be in the profession to edit your book for free (yeah, good luck) then your book is probably going to be awful.

    Learning to typeset for yourself can be done by the technologically savvy.

    Learning to do cover art.... hmm. Few can do it well. And believe me, it matters - people really do judge a book by its cover, and an ebook by the little thumbnail next to it. I have seen first hand how a stunning cover can generate hype for a book online before it is even released, through people blogging about it.

    Marketing - well you can spend half your waking hours doing your own marketing online. But that means you have even less time to actually write your next book, which, you know, is your next product. So you rush it and - guess what - it's even worse than the first one! Hallelujah, you have a terrible sequel to go with your terrible book.

    Sadly, this is what many, many ebooks self-published on the Kindle are like. But on the plus side, at least those people are no longer being ripped off by vanity press arseholes.

  • PaulBowes01

    11 August 2011 5:48PM

    @Chrisky

    As far as the linked article goes, some of the best detail comes in late in the comments - it might almost be worth going to the end and reading backwards, as actual publishers etc. chime in with real figures - see my reply to @blossomnu above.

    Note that the publishers are not accused of trying to raise ebook prices above the paper equivalent - the odd case where that has happened is an anomaly - but of not allowing Amazon to drop prices significantly without compensating the publishers for the resultant loss of profit: in other words, they were objecting that the gain from lowering the price would be going to everybody but the publisher, who still has to pay the author, pay his own staff, pay the origination costs for the ebook, etc.

    The point about the Kindle was the other way round - it's the Kindle itself that will be being sold for near cost, or even at a loss for the cheapest model, and the ebooks on which the profit, if any, is made. As a comparison, Sony will have made far more money on the sale of CDs than it ever made on the sale of CD players. Computer inkjet printers and their cartridges are another example.

    The cost of making a book - the actual paper, printing etc. - is quite a low proportion of the total cost. But storage and distribution are very expensive, and retailers also want to keep the sell price down and so tend to ask for discounts. Every time you buy a discounted paper book, someone, somewhere in the chain is paying for it. The ebook represents a chance for publishers to reclaim some of the profit they have lost to booksellers - it's hard to blame them for trying.

    I'll point out as well that the consumer has no right to dictate prices, either. It's a matter of how much do you want the particular book. In a free market, if enough people decide that a price is too high they will not buy the book, and the price will come down - but it can only come down to a certain point, or the people making the book will decide that it isn't worth making. The idea that there is some sort of 'natural' price for ebooks, or that the price should only reflect the costs of materials and labour used in its production, is unworkable.

  • NeilPeel

    11 August 2011 5:54PM

    Djpray2k

    They have an interesting situation here....with the Kindle being locked to Amazon books it pretty much keeps piracy out the picture.


    Wrongo!
    You obviously don't have a Kindle, do you?

    You can copy any Epub, PDF, Txt file (and others) via USB cable.

    NP

  • Halo572

    11 August 2011 6:00PM

    FerventPixel, totally.

    Like those 150k free books you can get that are out of copyright, pointless.

    How long will 150,000 texts from across the ages including a complete and comprehensive library of acknowledged classics take to read? 2 weeks on a beach?

    Maybe a little bit longer if you need to learn the language they were originally in, give it another week.

    I totally regret buying my Kindle, it has been a complete drain on my finances, why they have taken me for £0.00 so far in 10 months, I just don't know where it is going to stop.

    As for a cartel of ebook publishers, of course, the whole e-distribution racket has their boards creaming themselves at the thought of selling 1s and 0s for the same price as a full life cycle book without any of the costs.

    Put me down for the hardback/paperback of the 1-2 I buy a year.

  • PaulBowes01

    11 August 2011 6:12PM

    The best argument that can be made for cheap ebooks is the same one that can be made for cheap mp3s - that the best way to deter piracy is to lower the price until most people can't be bothered to look for a free copy. But unless there's a compensating increase in the number of ebooks sold, somebody has to lose out. The only question is, who will it be - author and agent, publisher, or retailer?

    Incidentally, @Djpray2k, Amazon's proprietary DRM-secured ebook format is likely to be no more secure than similar software encryption elsewhere. In fact, I believe it has already been hacked and conversion software exists. Totally illegal of course - and we know how much of a difference that has made to the music and film industries.

    For publishers especially, the ebook offers a mixture of heady possibilities and terrifying risks. No wonder they want to slow the process down while they figure out which way to jump.

  • WestHamWilly

    11 August 2011 6:56PM

    Note that the publishers are not accused of trying to raise ebook prices above the paper equivalent - the odd case where that has happened is an anomaly

    As far as I can see, every Penguin e-book available on Amazon UK is priced at £1 more than the equivalent paperback.

    Odd case my bottom!

  • MikeAlx

    11 August 2011 6:57PM

    If the prices continue being unrealistic, it's actually authors (particularly mid-listers) that will walk away from the big publishing houses. Some already have, and are doing much better selling direct. But they have to be good at marketing themselves.

    Regarding the argument that production costs are only a small part of the retail price - very much depends on the volume, doesn't it? Unit prices for printing are relatively low for the massive print-runs of bestsellers, but pretty high for a run of say 5,000.

    Regarding the typesetting side of things - I don't have a Kindle yet, but if Amazon's ads in the Sunday papers are anything to go by, nobody's paying much attention to the typesetting of e-books - the typography in that advert is hideous.

  • FrederickL

    11 August 2011 7:20PM

    "The lawyers can write that collusion was necessary for agency to occur, and give logic to that argument, but that doesn't prove that collusion actually took place."


    Anyone else get the feeling that the guy is saying "we know what we've done and you know what we've done but you can't prove it, nyah nyah".

  • altwebid

    11 August 2011 7:29PM

    @tiredofwhiners

    Which part of "in which the publisher, rather than the retailer, sets the retail price of ebooks." didn't you understand ? Presumably all of it.

    No I understood that, it was the "Apple and major publishers face lawsuit over ebook price fixing" headline along with "...the company worked with publishers to push ebook prices up" and the use of "colluded" and "conspired" that threw me.

  • PaulBowes01

    11 August 2011 7:53PM

    @WestHamWilly

    Penguin is only one publisher, albeit a large one. But - are you ignoring the fact that ebooks are subject to VAT, but printed books aren't?

    With VAT at 17.5%, a Penguin paperback book costing £7.99 retail should sell for £9.39 in ebook format. Penguin may well just be passing on the VAT. Funny that nobody complains when other publishers don't.

    Interesting article on VAT and Agency Pricing here: http://www.mcgrellis.net/2011/01/e-books-agency-pricing-and-vat/ (OK, maybe not interesting, but informative.)

    Huge discussion on the Amazon Kindle Forum at the time of Amazon's initial statement about the iniquities - as they saw it - of Agency Pricing here: http://www.amazon.co.uk/forum/kindle/TxDO7PSRZ3YTZD

  • giveusaclue

    11 August 2011 8:07PM

    0

    11 August 2011 5:09PM

    I have serious rservations about kindle now after telling everyone how excellent it is. The price of ebooks is too much and

    it is often better to go to the local charity shop and buy the book in queston

    becuase it is more eco and a charity benefits, more people get to read the book and large US corporations don t creamn off loads. Actuually there wil come a time when authors wil just upload their books straight to the net and do without publishers I think

    And the author starves?

  • WestHamWilly

    11 August 2011 8:16PM

    @PaulBowes01

    So the cost of the VAT approximates to the money saved by not having to print a physical book?

    I fancied a copy of "Goodbye to all That" for my Kindle:

    Kindle 6.99

    paperback 5.19

    No chance!

    Penguin's choice to price how they please, of course, but I'm not paying premium price for a book by an author who has been dead for 25 years, a book, furthermore, that Penguin certainly don't spend a penny on marketing etc.

  • sharkfinn

    11 August 2011 8:17PM

    $9.99 isn't even cheap for a physical book. Most places have deals such as 2 for Ã'£7, spend Ã'£20 and get a book for Ã'£1, half price offers etc. Ebooks are massively overpriced.

    Wow. If you think that is expensive, you should go into the printing business and start touting your company to publishers. They would love to know how to cut their printing costs.

  • sharkfinn

    11 August 2011 8:18PM

    Kindle 6.99

    paperback 5.19

    No chance!

    How much a week do you spend on alcohol and entertainment? £2??

  • giveusaclue

    11 August 2011 8:19PM

    Willy

    11 August 2011 8:16PM

    @PaulBowes01

    So the cost of the VAT approximates to the money saved by not having to print a physical book?

    I fancied a copy of "Goodbye to all That" for my Kindle:

    Kindle 6.99

    paperback 5.19

    No chance!

    Penguin's choice to price how they please, of course, but I'm not paying premium price for a book by an author who has been dead for 25 years, a book, furthermore, that Penguin certainly don't spend a penny on marketing etc.


    Or 62p plus £1.99:

  • artpunx

    11 August 2011 8:23PM

    This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.

  • WestHamWilly

    11 August 2011 8:28PM

    Regarding the agency principle, BTW, I suspect Amazon are playing a long game (I would if I were them).

    Currently e-books are fairly new, and certainly don't dominate the market - Amazon need the big publishers more than the publishers need the Kindle. So Amazon smile politely and submit to the publishers' cartel.

    Once e-books become the dominant (or at least majority) format, which they will, the publishers will need Amazon more than vice versa.

    In a competition between Amazon (and Apple etc) and book publishers over e-books, I know who my money would be on.

    (Disclaimer: I have no preference for or against book publishers {or indeed Amazon}, but equally if current publishers are sidelined or even disappear because of the e-book revolution I won't be shedding a tear).

  • WestHamWilly

    11 August 2011 8:31PM

    How much a week do you spend on alcohol and entertainment? Ã'£2??

    Your point is what exactly?

    I'm comparing the price of an e-book and the equivalent paperback, not the price of a cinema ticket, a DVD, a theatre ticket, a Sky subscription, a pint of beer, a bottle of vintage champagne etc.

  • QuoVadis

    11 August 2011 9:16PM

    Same thing they did to the CD, with probably the same result. Take a good idea and price it into oblivion. Idiots.

  • PaulBowes01

    11 August 2011 9:47PM

    @WestHamWilly

    So the cost of the VAT approximates to the money saved by not having to print a physical book?

    Um, yes, in this instance, but that isn't my point. From the publisher's point of view there is little money 'saved' on the production of an ebook, and no obligation to pass it on to anybody - it's just an improvement in efficiency of production, which would normally be retained by the producer. By insisting on a lower price for the ebook, they would argue that the retailer is in effect demanding that any saving made by the publisher be passed on to the retailer, who has done nothing to earn it.

    Also: the price you quote on the Robert Graves is not a fair comparison.

    The actual Penguin price for the paperback is £8.99, and no doubt Penguin would prefer to sell it at that price. It's Amazon who have chosen to discount it to £5.19. Had they discounted it to £6.99 instead, you would have still have saved £2.00 on the paperback, but the ebook would have been the same price and you could have had it instantly, plus all the reformatting features of the Kindle version etc. You notice that no discount is quoted for the Kindle version - it's the full RRP, including VAT. Take the VAT away and it would be £5.95.

    It may even be the case that Amazon are deliberately pricing selected paperbacks down to below the ebook cost to embarrass publishers who won't go along with Amazon's pricing preferences - just as printed books which don't have a Kindle equivalent now have an 'I would like to read this book on my Kindle' button beside them so that customers can harass the publisher on Amazon's behalf at the click of a button. As a number of posters here show, customers are often very hazy on why books are priced and formatted as they are and who is responsible for that price - or who benefits. They are also very inclined to believe anybody who tells them that they are paying too much - Amazon, in this case - without really investigating the evidence.

    I agree with the point you make about Amazon's policy on Agency Pricing. These are very canny people, and they've outplayed the rest of the industry at every turn.

  • Cloudyday

    11 August 2011 9:53PM

    Hooray that should keep the sale of paper books going so I can pick them up for next to nothing from friends charity shops etc..

  • DoktorRovindi

    11 August 2011 9:59PM

    I download wadges of Public Domain eBooks, quite a few also with Creative Commons License. You´d be suprised at how much good stuff is out there. Free.

  • N9BRBYahoo

    11 August 2011 10:05PM

    Here in the USA, the Kindle price of a new book is more often than not, higher than the Hardback. When the book goes to paperback, the Kindle price is held at a price equal or greater than the discounted hardback price but much more than the paperback price.

  • Timvincible

    11 August 2011 10:11PM

    Apparently Apple have now overtaken Exxon as the world's most evil, sorry, valuable company.

  • PaulBowes01

    11 August 2011 10:27PM

    @N9BRBYahoo

    I can think of two reasons for this. One is similar to the reason I give to WestHamWilly, above - you're comparing the RRP of the ebook with the retailer discounted price for the hardback. So, for example, James Patterson's Kill Me If You Can, Kindle ebook $23.46, hardback RRP $27.99.

    But Amazon will discount the hardback to $14.73. Why? This is the second reason. On the paper book, Amazon are still competing with the bricks-and-mortar bookshop, which discounts deeply on bestsellers. But the bricks-and-mortar bookshop can't sell ebooks, and in particular can't sell Kindle-formatted ebooks - only Amazon can do that. So on the ebook, Amazon has far less incentive to discount - there is no directly competing product.

    When the paperback appears, the Kindle price comes down as you say - but the ebook is now positioned as a premium product - comparable to the hardback, not the paperback - commanding a premium price.

    Whether the public will accept premium pricing for ebooks in the long term is anybody's guess. At the moment, pricing models are subject to experiment as the various players jockey for position.

  • pallazetto

    11 August 2011 11:23PM

    Publishers, like the record companies, are now just trying to wring the last few quid out of us punters, not caring what we think of them, because they know that their days are numbered. About half of the music I'm buying I'm buying direct from the musician(s) (a much nicer experience too) and I can see books going that way too. Let's hope.

  • mistercrayon

    11 August 2011 11:32PM

    Surely if Amazon get their way then it'll only be a matter of time till they're the only online retailer and then they can really do what the fuck they want.

    Short sighted imo, just to save a couple of bucks.

  • LyndonApGwynfryn

    11 August 2011 11:47PM

    Publishers, like the record companies, are now just trying to wring the last few quid out of us punters, not caring what we think of them, because they know that their days are numbered. About half of the music I'm buying I'm buying direct from the musician(s) (a much nicer experience too) and I can see books going that way too. Let's hope.

    The continued need for publishers is apparent within five minutes of visiting the Kindle store and attempting to wade through the metric shedloads of unreadable, self-published crap on there.

  • eyebrow

    11 August 2011 11:48PM

    @PaulBowes01

    The best argument that can be made for cheap ebooks is the same one that can be made for cheap mp3s - that the best way to deter piracy is to lower the price until most people can't be bothered to look for a free copy. But unless there's a compensating increase in the number of ebooks sold, somebody has to lose out. The only question is, who will it be - author and agent, publisher, or retailer?

    Why should anyone lose out if prices are set correctly by competitive processes?

    The only reason why publishers currently have the power they have to set prices is the copyright law.

    As I'm sure you know, it provides a state protected monopoly, for a limited period, to allow authors and publishers to recover a limited profit from producing what, historically, has been a very high cost and risk product, i.e. a physical book. In the past, if you printed 100,000 copies of a flop, you lost millions; if you only printed 100,000 copies of a hit, you lost millions.

    Our society sees fit to protect an originator's copyright rather than allow people to rip them off, to allow novel and imaginative content to be generated by those prepared to take some risk. But there is a quid pro quo for this protection. The US Congress allowing, a publisher's copyright eventually expires, and society ultimately gains access to the content free of charge.

    Protected by copyright, publishers set prices relatively high, because they have to generate enough 'gross profit margin' to cover the cost of all the flops they have printed, marketed, stocked and then pulped. In the old, paper, world, this profit margin was typically just enough to keep publishers solvent, and even then it had to be spread over multiple titles to avoid bankruptcy; authors were typically paid tiny royalties (unless they were already successful) and no-one was rushing to publish books - it was usually a career of passion, rather than wealth.

    With an ebook, however, the marginal cost of producing one extra copy is, to a reasonable margin of error, just pennies. And there is no risk of producing too many copies; no cost of holding stock; no costly maintenance of bricks and mortar stores.

    So why should society protect the copyright of someone wanting to make gross profit margins of 99.9% on a product produced just once and then replicated for 70 years after the death of the author? Why should we allow someone to charge roughly 1000 times the cost of a product, and give them the full protection of the law to do so?

    Would our society allow Walmart to claim a monopoly on a physical product and protect their right to sell it at 1000 times its cost?

    I don't think so - typical retail gross margin is around 100-1000%, not 100,000%

    The truth is that the copyright law is utterly not fit for purpose in an era where the marginal production cost of a 'unit of culture' is approaching nil.

    We need something closer to patent law, where the rewards for a hit are utterly phenomenal, but the protection that society provides are much more limited (20 years maximum, and paid for; rather than 70 years after the author's death, and free).

    That way, we would pay a few pence for a 'hit', directly to the producer, just as we do for a physical product , protected by patents; and the quantities sold would be measured in billions (think how many Lego bricks have been sold before their patent ran out).

    So you are right, PaulBowes01, the answer is to lower the price of products that cost nothing to produce, but that's not just to deter piracy - it's to restore the original purpose of copyright, which is to maximise the benefits to society, and not just to the copyright holder. We pay for the protection that the authors of easily reproduced content enjoy, and we should therefore enjoy some benefit in return.

    The only losers from a reduction in price are those that seek to gain excessive monopoly profits that are far beyond what are justified by the underlying economics. We don't stand it if we are gouged by monopolists in other industries, why should we stand it from publishers?

  • LyndonApGwynfryn

    12 August 2011 12:14AM

    The only reason why publishers currently have the power they have to set prices is the copyright law.

    Er.......no. The writer owns the book copyright, not the publisher. Penguin Classics, which everybody is complaing about above, are all out of copyright anyway.

    Authors deserve to be rewarded for their work, for their lifetime. Life plus 70 years is a bit much in my opinion, but is now the international standard and it would be a bugger to change it.

  • persnickety

    12 August 2011 2:16AM

    I suspect that it is possible to read pirated books on a Kindle- it does accept PDF. There are multiple ebooks stores on the web, and while none sell Knodle format ( Amazon limiting this I think) some sell in a format that can converted to read on the Kindle ( depends on the publisher required DRM- some publishers REALLY don't like Amazon). If that fformat is available to download...
    It's interesting to watch the publishing world shoot itself in the foot after having the music and film industry provide object lessons in how not to approch the internet.

    A lot of authors are working out the impact of e-books on their back catalogue and are actively taking control of this. For example- in the romance genre books are only in print for a short time, authors with a hefty backlist and fans can make quitre a bit by self publishing their back catalogue when rights revert. Many times the author may have written a string of novels that interconnect and new fans have a hard time tracking down the early books.

    One older book (very popular) by Loretta Chase was recently dropped to 99 cents for a 2 weeks and it landed back on the NY Times bestseller list as a result. This is not the only back catalogue book at significantly lower prices. I am utilising the Kindle as an opportnity to accumulate back catalogues and older books. New books- well it depends on how much the publisher pisses me off. I have already written one off as a waste of time- I won't be buying ANY books from them in the future whether hard copy or e copy.

  • ericpenner

    12 August 2011 3:48AM

    The publishers hate Amazon because of how they undercut the sale of physical books as well. I saw a really well-done photograph-based history book at my local major bookstore chain, and it was on sale for 29.95 USD - the price on the back of the book, determined by the last four digits above the barcode. I pulled out my iPhone, opened up the Amazon app - whilst using the store's free WiFi - and searched for the book. Turns out it was available BRAND NEW from Amazon for just 4.99 USD. This book didn't contain any original content, most were photographs that no longer have copyrights, and I simply couldn't justify paying that much for it. That's what the publishers wanted - and expected - though.

    As for ebooks, I just download them from torrent sites, or from Project Gutenberg, or from the Apple iBooks app. So many books are free now that one used to have to spend 8.99 USD to acquire. The publishers are reeling from the thought of whole schools just downloading classics for free rather than buying them from them, even though the author is long dead.

    The publishing industry is changing. The profits are not going to be as high as they once were, and they ought to just deal with that. If books are cheap enough, loads of people will buy them. If they're good enough, loads of people will buy them. If they're overpriced crap that's been marketed really well, nobody will buy them.

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