Wednesday, January 30, 2013
The Great E-Book Rip-Off
I've been an active reader for most of my life. I love the entertainment and education value that a book provides. For roughly the same price of a two-hour movie ticket a good book provides days of pleasure.
So four years ago I bought the Kindle 2 E-Reader from Amazon. I had no problem embracing the new technology. While I have always enjoyed the tactile satisfaction of holding a book in my hand, I found the convenience of loading a thousand books into one little 5x8 electronic device quite pleasing. One can quite easily sweep a thousand dust gathering books off of the bookshelf and carry them with you anywhere.
However, unlike other product consumers, book readers seem to be insanely stupid. While music lovers, through file-sharing and other means, have forced the music content providers to lower the costs of music, book lovers seem all too willing to jump in and pay fifteen dollars for an e-book whose cost structure is ridiculously low.
To fully understand this consider the old book retail business model. The big publishing houses make a decision to publish a book. They run through a series of editing and proof reading of the physical script. They hire illustrators to design a cover, then test the marketability of various designs, then send the final manuscript to a printer and, depending on the marketability of the author, run off 100,000 copies of a hard cover book.
Now anyone in publishing will tell you that the costs to print a book are enormous. Once they have paid the author his/her advance, they incur the costs of printing and promoting the book. Once the orders start to come in they must ship that physical book to distribution centers which must be built to house a huge inventory of marketable books. Eventually the book will enter the retail market, either through a internet distributor like Amazon or one of the big box stores like Barnes and Noble, who will take their cut of the books sales.
So, let's say we've got a marketable author like a Stephen King, or a James Patterson. The book is priced at $25.95 but both Amazon and Barnes and Noble will price the book at $15.95. And at that price the author, the publisher and the book seller all make a healthy profit. Yes, a profit, even after all the printing and distribution and retail costs are factored in.
Now, let's look at how an E-book is processed. Once the publisher and author have settled on the final proof, an electronic version of the book is prepared and electronically transmitted to Amazon or Barnes and Noble for online E-book sales. Notice that the publisher just side stepped the costs of printing those 100,000 copies. No gas or trucking costs were expensed in hauling those tons of books to a warehouse distribution center. The distributor does not have to build a 200,000 square feet warehouse to house those books. No labor costs are incurred in pulling that physical book from the shelf. No shipping costs are incurred in getting that E-book to the consumer.
And yet, these greedy publishers are still retailing an E-book at Apple or Amazon or Barnes and Noble for $14.99! How the hell do they get away with this? It seems to be because E-book readers are extremely stupid! Go to Amazon's Top 100 books at any time of the day and see how many of these new books are being priced at the same price point that the same physical book is priced at Amazon or Apple or Barnes and Noble!
Less than two years ago the courts found that publishers were guilty of collusion in book pricing, maintaining an artificially high price for books by each agreeing not to undercut the other. Somehow this has not stopped publishers from selling E-books at "robber baron" price points, thus enjoying huge profits.
While it is true that, by the time a book is ready to go into paperback the e-book's price will decline to the $9.99 price point, the question that consumers should be asking is "why in hell am I paying $15 bucks for an E-book that costs far less to produce than a hardback book?"
The obvious answer is "you don't". If you've entered the world of E-books, simply join those of us who refuse to pay more than $9.99 for an E-book. There is no justification for charging more; but as long as E-book readers continue to participate in this scam the scam will go on.
Oh, by the way, when I'm really pissed about these rip-offs I "go paper" and just go to my local thrift ship and buy a book for .35 cents.