Wednesday, May 13, 2009

Cheap and expensive, profits and losses

I just read this interesting article from Publisher's Weekly (hat tip, Conversational Reading) that, following the new Kindle DX, found that selling Kindle books for the "cheap" price of $9.99 is a loss for Amazon. Among other things:
That Amazon is currently treating the bulk of Kindle editions as loss leaders—items it either breaks even on or loses on to build market share in e-book sales and to fuel the growth of the Kindle—is one of the worrisome aspects of the current system.
Or so some see it. The article goes into some depth regarding the prices of Kindle books as opposed to the publisher's fees. It turns out that those overpriced Kindle books are crazy cheap when the fact that publishers charge as much for them as any hard-cover book is taken into account. However, an article like this, rich in its own right, brings forth a lot of other interesting side points. For instance, a bit of Amazon's long term goal is clear. Even as the Sony Reader tries to steal the British market from the as-of-yet unavailable Kindle, the feeling that Amazon is so invested in this one product is surprising and says quite a bit about the company. Amazon wants the Kindle to become a common, popular product, not unlike, I would guess, an iPod or an iPhone (even the design is vaguely similar). By making books "cheaper" (but still grossly overpriced), Amazon is trying to lure many standard book-readers to the developing world of eReaders.

And then on the other hand, as mentioned in the article, is the issue of publishers. That it costs the same to buy an eBook version of a book (in bulk, obviously) as it does to buy the hardback is absolutely ridiculous. That Amazon cheapens it is noble and nice, but the fact is that an eBook should be much cheaper than even a paperback. And this is not only to fit in with Amazon's publicity goal. The production costs for eBooks are nothing like for print books (this Three Percent summary from a little while ago jumps to mind: fascinating rough calculations that provide a lot of food for thought) and yet the difference is about 1-3 dollars. Strange. The book industry has become such a complex place that selling books at surprisingly high prices (and eBooks, no less) translates into company losses.
That's something to think about.

1 comment:

  1. I think that something people often forget that built into the cost of books is the salary of everyone who has worked on the book from start to finish, which is really a ton of people. Then add in that only one in ten published books turns a profit, even at these high prices. When it comes down to it, the cost of printing books is only a minor cost, it's the cost of producing the book that we're really paying for. If there was some way to cut corners, say drop the writers or the agents or the editors or the marketers or the promoters or the booksellers, I'm sure someone would, simply because cheaper books means selling more books. But the fact of the matter is, without any of those people, we wouldn't have the books at all. My point is simply that the problem of book prices is more complex than greedy corporations.


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