I wonder how long we're going to see these inflated e-book prices before the publishers drop the prices to what they previously were. If this sales trend continues they'd be dumb to not drop the prices of e-books.
I wonder how long we're going to see these inflated e-book prices before the publishers drop the prices to what they previously were. If this sales trend continues they'd be dumb to not drop the prices of e-books.
If customers "understand" this, they mostly understand incorrectly. While it may make intuitive sense that printing and distributing a book should make up a lot of its cost, that's not actually true. I haven't looked at the details for a few years but this is something I wrote a while back on the topic: http://www.cnet.com/news/why-e-books-arent-cheaper/
(To summarize that post, printing plus the take of wholesalers who handle distribution is only about $5 for a hardcover.)
Prices are not linked to costs but to what the market will bear; in an electronic media market where prices will always be anchored to zero at one end (thanks to piracy and intangible goods), what the market will bear is inevitably less than what it used to be.
Customers understand this more intuitively than media producers who grew up in very different times.
Here's another huge cost you don't include for the publisher with print books -- they are returnable and often get returned. If a publisher gets 25% of the books sold returned, effectively the publisher is getting only about $10 for a list price of $28 / wholesale $14. (Return rates can be higher or lower, but there are always returns.) Using the cost figures you use on your referenced example, the publisher loses money on the print book. And, you omit other costs incurred by traditional print book publishing, including shipping, warehousing books and fulfilling orders.
With ebooks there are no returns (a huge factor in the analysis), no printing, no shipping, no warehousing. Wholesale prices are a higher percentage of the list price. We publish ebooks and get about 65% of list from Amazon, Apple and Barnes and Noble (it's a bit higher or lower depending on which vendor) So it's obvous that our costs are lower for ebooks and the share of revenue we get is higher. In other words, list price of ebooks indeed should be far less than print, and ours are.
In the figures that I quoted, I believe that those are rolled into the wholesalers cut.
Ebooks can certainly be priced so prices are lower to consumers than hardcovers (as well as PoD) while the author/publisher makes at least as much. My point with the figures--which seem to be surprisingly difficult to nail down authoritative sources for--was that printing/distribution isn't the lion's share of what someone is paying for when they buy a hardcover book.
Traditional publishers still have a business model that depends upon bookstore sales. The real problem for traditional publishers is, if ebooks are priced much lower than print books, it's an obvious problem for an important part of their business model. So they struggle mightily to keep ebook prices high and to persuade people that the costs of ebooks and print books are the same. As the article indicates it's not working -- self publishers and non-traditional publishers can produce ebooks at a much lower price point, because the ebooks cost less to produce.
Which is what customers seem to want.
Amazon's last four quarters of sales: $95.71 billion
Walmart's last four quarters: $485.3 billion
Amazon's total profit over 20 years: ~$0
Walmart last four quarters of profit: $16 billion
Facebook, too, has a greater market cap than Walmart, based on trading at 90 times earnings, versus Walmart's 13 PE.