The reasons behind high prices of e-books – Part 3

The new model is not a money maker, neither in the short term nor in the long term. As the previous price of the book was set at $7, the original price at any e-book store, $20, is out of question. So the publisher will set the price at let’s say $10. According to the model, the publisher takes $7 and the store takes $3 for putting it on the website. Though prices are high, the publisher is actually loosing money as compared to previous model. But in the name of a competition, this is inevitable.

Therefore, the only viable resort is the print media. This after all is a print-oriented world that sees more value in tangible products than the intangible ones.

Not only are publishers’ margins better on higher-priced print books, but when bookstores close it has enormous ramifications for the industry. When Borders went bankrupt, for instance, Penguin Group was its single largest creditor, with $41.1 million outstanding.

Publishers have a massive problem with perception of value. When you can’t hold it in your hands and easily pass it along to a friend, $10-plus just feels too expensive to many people.

And because publishers have been selling print books via the wholesale model and e-books via the agency model, this results in the confusing situation of e-books sometimes costing more than their print counterparts. With print, Amazon and other booksellers are allowed to charge whatever they want. With e-books, the publishers set the price and e-booksellers aren’t allowed to discount. So Amazon, for instance, might discount the print books under the e-book price and publishers have little control over that.

The publishers have filed a law suit at the Department of Justice in the US. Three of publishers have agreed to the terms of mutual agreement with sellers (online) on variable prices so that a fair competition can be built. However, the total domination of e-books at lower and lower prices seems unstoppable. The law suit might buy some time to the publishers in future to plant their feet firmly in the ground but they might only be able to the line to the extent.

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Posted by Usman Khalid on Apr 16 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.