Wednesday, March 11, 2009

cheap books, $10 each, excellent for kindling

This morning's Quill blog wrote about the "uprising" of consumers against Amazon. The customers are complaining that Amazon is over-pricing their Ebooks. The cutoff for ripoff, it seems, is $9.99. 

On the one hand I can see why these Kindle users feel resentful: the pricetag for the Kindle alone could make a reader feel that she is entitled to a lifetime of cheap books supplied exclusively by Amazon, as payback for the upfront investment ($350 USD approx). 

But my concern is this: if Amazon responds to their customers and reduces prices of all Ebooks to under $10, how are they going to do it? They operate on slim margins already.  They took on all the R&D costs for the creation and programming of the Kindle, got it to market & paid for the promotion and advertising. They have invested a lot of money in this project and likely need to see a return on that investment. They are certainly not in the position to cut much from the lining of their pockets. So that means, inevitably, that Amazon will put it to the publishers to adjust their pricing.

Publishers can price Ebooks lower than regular books. Publishers save money with EBooks (vs. regular books) on production and distribution: the printing, shipping, handling, sales, distribution, storage, returns and cataloguing costs are non existent or minimal. Around this the advocating consumers are right: publishers should be able to reduce the price significantly on an Ebook over a printed book. But publishers still have a lot of costs built into producing the content of a book, whether electronic or printed: editorial, legal, royalty, book & cover design, office overheads etc. Ebooks are content only.  They compete with regular books, and the more copies that go out as Ebooks, the less copies potentially get sold of regular books. And yet in this sandwich generation of Ebooks and print books, the publisher's costs are the same because they still have to cover all their distribution costs for the regular books. Plus, smaller print runs means a significant increase in the unit cost per printed book. For now, the old distribution system still needs to be in place for the hard copy books.  I think it is probably impossible for publishers right now to set their pricing in such an unproven marketplace, they must be guessing. The other issue is the control of the content: once it is out, it is out. Look at any electronic data and you can see this problem. So E-users need to understand that it is not simply a matter of how much it costs to produce the individual book they are E-reading. It is part of a system of publishing on the brink of a change and these publishers need to make sure they plan good business models now to stay profitable.

Frankly I think these outraged consumers expect a lot. How many hours of pleasure, how much information, how much value in society and culture do books provide? Do we want the book industry to survive? Do we want publishers and editors and real writers to continue to exist?These are the questions we should be asking. It can't be a question of value. I pay $25 for a DVD that only takes 2 hours to watch, that I may it watch two or three times. So what is the problem with paying $25 for an Ebook that gives me far more hours of pleasure, more in-depth ideas and more to take away than a movie? We pay $5 for a latte for goodness sake. 

The biggest argument  I have heard in favour of Ereaders, besides the potential price reduction for consumers, is the environmental benefit.  It is true trees will no longer be cut down for books if books are no longer being printed. But the production of plastics is a horrendously polluting industry, will we be saving the environment from harm if we were manufacturing as many Ebooks as there are readers? Especially because they have a limited shelf life (unlike regular books).  ALL electronics inevitably end their short little lives in landfills, useless and dangerously seeping contaminants into the water supply, in places like China. Just look at the photos by Edward Burtynsky (see my last post for links) to see pictures of these landfills. I doubt the Kindle is going to "save" anything except Amazon and it certainly won't "save" books in my view. In fact it could do more harm than we know to publishers, independent booksellers and the perceived value of books.
An interesting discussion is here
http://news.cnet.com/8301-17938_105-10214054-1.html

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