Have we seen the end of the $9.99 eBook?

I was just looking for Allen Steels’s 4th Coyote book, Coyote Horizon”, which is out in paperback now.
Paperback, $7.99
Kindle, $7.19
ebooks
Fictionwise, $25.95
ereader.com, $25.95
ebookmall, $31.14
Barnes&Noble, hey guess what? $7.19

So the two book sellers that have their own reader have it for $7.19, and everyone else has it for $26+

How… coincidential…

I thought Amazon had previously been gouging publishers by forcing them to accept 30% of selling price while Amazon kept 70%. In their turn, publisher were gouging authors by short-changing them. Amazon reversed these numbers recently in the light of Apple's App Store sharing arrangement offer to publishers, whereby Apple takes only 30%.
Under the old terms, a $20 book would net the publisher only $6 (30%).
Under the new terms a $10 (ten) book would net the publishers $7 (70%).
Go figure, who benefits now.
Give it time but the real winners will be self-publishers.

I think book publishers (and e-reader manufacturers) seriously overestimate consumer desire for electronic books. The demand was iffy at the $9.99 price point, but at $14.99- it's out and out ridiculous. People just won't pay that. There's a tipping point where the ease and convenience of ebooks is overshadowed by the high prices. I agree that creating ebooks isn't free, but the entire idea of "e" anything is that it reduces production costs at least somewhat and that that savings is then passed down to the consumer. The ease and portability of ebooks just aren't enough to get people in the door, the lower cost was what pushed many people over the threshold as well. If you remove that cost (or in some cases, increase it) you're going to see many people jumping ship and heading back to physical books. It's just not worth it. You're paying for intangible media that's laden with "protection" that can be removed at someone else's whim and that may eventually be worthless if the product you're reading it on stops being produced, etc. You take a lot of risks when you choose ebooks and for many consumers, that risk is offset by slightly lower prices. Remove those prices and you effective remove the incentive. Why take the risk?

This recent brouhaha over pricing feels like a result of some book publishers smelling money and thinking they can just charge anything they want and get spectacular results. My hunch is they're wrong. I don't think the audience will be there at these prices. I'm guessing that in 6 months or a year, most ebooks will suddenly drop back down in price and then the demand will increase. I don't care if the device you're using to read your books on is super cool or the latest, greatest thing. There's a price point that consumers simply will not meet. $15.00 will push people towards piracy, or worse- away from books completely.

This smells like simple greed and the consumers are the ones who will lose out.

Also the authors, because fewer people will be reading their books.

It's a shame.

Ah well, we can rage and discuss but the final analysis will come with the sales. I personally will not buy MacMillian ebooks at 15 bucks a pop. I just refuse, they have created 'bad will' with me with this and my 'vote' will come in the absence of sales and actual sales to their competitors, it's discretionary dollars they are vying for after all and there are plenty of competitors selling similar wares. Some few folks will buy a book at the list price who knows where since I don't know anywhere that sells books at list - always at a discount. Some will get the initial sale price plus their ten percent discount at Barnes and Noble, some will wait til that 'really cool book' is sitting over at the discount table at 5 bucks or get it at Goodwill for a buck. We all have our own personal price points where we'll buy something and the 15 dollar ebook is above what I will pay.

I will not pay $14.99 for an ebook when I can pick up the same thing at Costco for $15. The publishers are greed mongers who's only concern is lining their own pockets.

They must think we're incredibly stupid to not realize that with an ebook there is no cost to produce. Almost every dime they get is pure profit.

I have a Kindle and 99% of the books I buy are in paperback. THAT's where I don't care about the price difference (which is about a dime). It saves me a trip to town to the local wallyworld (no where else to shop in this isolated burg), I don't have to stand in line and then drive home again. I don't have paperbacks lining the halls. The only thing that dismays me is the fact I cannot lend my books to friends. Barnes and Noble got THAT part right with their Nook.

Oh and the bulk of the books on my Kindle were free. Amazon has a HUGE inventory of free books.

I took a look at some "typical" best sellers on Amazon.com, and here's what I found:

Retail price: $27.99
"Sale" price: $13.00

From various resources on the internet I found the following approximate break down of costs:

Author: 8%-15% royalties (higher for more established writers, lower for new writers)
Printing: 10% (in the above scenario, one has to ask: "Is 10% $3 or $1.30?")
Publisher: 20%-37% for marketing, editing, etc. (excludes the 18%-25% they pay out above to the author and for manufacturing)
Distributor: 10%
Retailer: 40%

Assuming that Apple has agreed to take "only" 30% for eBooks on the iPad, straight out of the box, publishing on the iPad is a win for Publishers, as they'd normally sacrifice 50% to distributors and retailers.

When we get down to true marginal costs/savings, assuming that Amazon can make money on the example title at $13, we have

$13.00 - sales price
$ 2.60 - assuming Amazon takes only 20% to distribute and retail
$ 3.00 - printing cost
$ 1.95 - author royalties
$ 5.45 - net to publisher (or roughly 42% of sales, not list price)

Assuming that printing costs go away, but are replaced by (much) lower bandwidth costs and digital prep costs, one could assume that the $3.00 printing costs go down to about $1.00 (no idea how close this is). We can also probably assume that since "handling" a digital book is easier (and drives website traffic and repeat business) that Amazon should be willing to give up a small amount of their margin, we can probably reduce their $2.60 to maybe $1.75-ish. I don't know how much cost there is for a publisher to maintain a warehouse full of books for drop-ship, but I'm assuming they won't want to pass those cost savings along to consumers or retailers.

Net-Net: assuming that the publisher doesn't want to reduce revenue and that the author doesn't want to reduce income, and that Amazon is willing to reduce their margin to support a long-term business model, in total, a digital eBook could sell for about $2.85 less than a physical book, or in this case, right around $10, which is awfully close to Kindle prices of around $9.99.

This move by Apple really only benefits the publisher and Apple. In fact, outside-looking-in, it LOOKS like Apple essentially paid publishers (i.e., gave them the pricing they wanted) to get entry into the market and in the process gave publishers leverage to increase pricing with Amazon. Thanks Steve!

Where do you get this idea that Amazon is losing $4.50 per ebook sold at $9.99?

Is it in their quarterly statement? Some other corporate press release? Or are you just imagining that Amazon's idea is to make a profit on a one time sale of Kindles?

Amazon's goal here isn't to provide an ongoing support structure, at a loss, to encourage a one time sale. If it was, there wouldn't be an iPhone app to allow people to buy what would amount to be a permanent loss leader.

In one area that Amazon beats Apple though, is that your purchases sit on their servers, and can be downloaded at any time in the future. I buy books for my Kindle. The one thing that keeps me from buying music from iTunes though, is the complete lack of being able to redownload if I happen to screw up and lose the songs.

My price point is $4.99 for paperback ebook and $5.99 for hardback. I'd pay the difference to have the book when it is released and like paperbacks pay for something that's been out for a while. For $9.99 I'd just as well buy the real version from Amazon 'lightly used'.

@Todd [http://www.tuaw.com/2010/02/01/have-we-seen-the-end-of-the-9-99-ebook/2#c25170523]:

> You can download thousands of public domain books already for free.

Yes, and...? Remember what was –still is for all I know– the true KillerApp™-function of the iPod/ iTunes combo? Ability to transform physical CDs into iPod-resident mp3s. That's how people once populated their players with the music they already owned. I foresee something similar being in the offing for the iPad, which, as we already know, will permit sharing arbitrary files between desktop and tablet. Perhaps not from the beginning, but, if Apple sees that iBookstore has nowhere near the traffic of the for-profit AppStore, they will open it up, if not than as a shot across the bow of publishers to lower their ebook prices OR ELSE.

> The issue is new books

Perhaps, but remember that of all new titles put out yearly, only a small fraction make any money for their publishers. Most do not recoup their production and initial distribution costs. After that they become at best back-list deadweights, at worst perpetually out-of-print emphemera. Ebooks gives the lot –constituting majority of everything ever published– effectively a second life, an opportunity to bear their original costs, and make some money in the process. Provided the publishers can keep their GREED in check. After all, from Apple-the-bitstream-vendor's point of view, why should books be treated SO MUCH differently than the apps that seem to thrive at their respective low price points?

The sooner publishers realize that it is better to shift mountains of hitherto-barely read bits of their back catalogs FOR PEANUTS EACH, rather than sit on it while insisting on every single book being treated as were it potential bestseller (and thus perhaps deserving prime price), the better for them all.

A year ago John Siracusa of ArsTechnica wrote an essay on social aspects of the ebook medium: "The once and future e-book: on reading in the digital age" [ http://arstechnica.com/gadgets/news/2009/02/the-once-and-future-e-book.ars ]. I wish he'd do it again, only this time concentrate on possible marketing scenarios, methods, and pitfalls.

I've got a great idea. Let's let the market decide! yay.