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Ebook price drops begin — and Apple is discounting, too

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The Department of Justice’s ebook pricing settlement was approved last Thursday, and HarperCollins, one of the three settling publishers, has already entered into new contracts with ebook retailers — including Apple (s AAPL). The retailers can now set their own prices on HarperCollins titles. So what kinds of changes are we seeing? A roundup of select titles (the prices are correct as of Tuesday morning afternoon, but are subject to change. I updated them at 3:36 ET but won’t do so again.)

(Note: The chart is cutting off part of the last column, Sony. You can see my full pricing spreadsheet here.)

HarperCollins ebook prices, 9/11/12
Title Author Pub Date Ebook List Price Amazon Apple B&N Kobo Google Sony
The Cutting
Attica Locke 9/18/2012 $14.99 $10.94 n/a $14.99 $14.99 $10.94 n/a
Telegraph Avenue Michael Chabon 9/11/2012 $17.99 $9.99 $18.99 $12.59 $17.99 $12.99 $13.50
The Rise of Nine Pittacus Lore 8/21/2012 $11.99 $7.99 $7.99 $8.39 $9.59 $9.59 $10.20
Judgment Call J.A. Jance 7/24/2012 $14.99 $9.99 $9.99 $10.94 n/a $10.94 $12.00
The Fallen Angel Daniel Silva 7/17/2012 $17.99 $9.99 $9.99 $12.59 $17.99 $13.13 $13.50
Bloodline James Rollins 6/26/2012 $14.99 $9.99 $9.99 $10.94 $14.99 $10.94 $12.00
The Shoemaker’s
Adriana Trigiani 4/3/2012 $10.99 $7.99 $7.99 $8.02 $10.99 $8.02 $9.35
State of Wonder Ann Patchett 6/7/2011 $10.99 $9.35 $9.99 $9.78 $10.99 $9.78 $9.35
Family Affair Debbie Macomber 1/4/2011 $5.99 $5.69 $5.99 $5.69 n/a $5.69 $5.99
The Happiness
Gretchen Rubin 12/29/2009 $11.99 $3.99 $10.99 $3.99 $3.99 $9.78 $9.35
Act Like a Lady,
Think Like a Man
Steve Harvey 1/27/2009 $9.99 $7.29 $7.99 $7.29 $9.99 $7.29 $9.99
The Art of
Racing in the Rain
Garth Stein 5/13/2008 $10.99 $7.99 $7.99 $9.68 $10.99 $9.78 $9.35

A couple notes:

  • Amazon (s AMZN) doesn’t show the ebooks’ list prices. I had to go to Barnes & Noble (s BKS) for those. I obviously haven’t looked at HarperCollins’ entire list, but you can see that in some cases it’s raised ebooks’ list prices. For example, Michael Chabon’s upcoming Telegraph Avenue, which would have been priced at $12.99 or $14.99 under agency, has a list price of $17.99 in the new world.
  • Apple is now discounting titles too (that wasn’t true yesterday). In some cases, as you’ll see above, Apple is offering lower prices on new bestsellers than Amazon. Amazon dropped prices to match Apple’s this afternoon. More on that here.
  • Amazon is offering the lowest prices. Based just on the titles above, the average price on Amazon Kindle was $8.43; on Apple, $9.81; on Barnes & Noble Nook, $9.57; on Google (s GOOG) Play, $9.91; on Sony (SNE), $10.42; on Kobo, $12.25.

Photo courtesy of Shutterstock / Thomas Bethge

27 Responses to “Ebook price drops begin — and Apple is discounting, too”

  1. Yes, there are fixed costs for ebook production, just like there are fixed costs for print production. If you’re doing both, most, but not all, of the fixed costs are duplicated, so the additional fixed cost for conversion is not as much as doing a new book by any means.

    The variable cost for ebooks is quite close to nil, and so in a free market, one should expect that that variable cost difference would result in a discounted price for the ebook (which is what justifies the purchase of an ebook reader and connectivity charges). In a corrupted market, we’d see pricing similar to what we see now.

    That’s the market question. The ethical question is what the “value added” is of the publishing house, and why they shouldn’t just be eliminated with author-direct options. I would think it’s the editing, the monetary advance for authors (mild financial risk-taking), and the digital production assistance. For most authors, it’s probably not the marketing help, but for some that would apply.

    For most production industries, the OEM (original manufacturer… author in this case), makes about a third of the gross. In publishing, I understand the author makes much less than that, which would again be a sign of a corrupt market.

  2. Michael W. Perry

    This market isn’t what many think it is. If Apple wants, it can bleed Amazon dry with extensive ebook discounting.

    For instance, imagine a bestselling ebook that wholesales for $14.99 and both Apple and Amazon discount it to $9.99. Assume each retains their current market share–roughly 10% and 70% Both lose $5 on each sale, but the similarity ends there.

    Apple sells 10,000 copies losing $50,000. With about $100 billion in the bank, that’s nothing. Also Apple can write off that loss as a way to increase the highly profitable sales of their iPads. It only needs to sell about 500 additional iPads to recoup the cost of those 10,000 discounted books.

    Amazon sells 70,000 copies, losing $350,000. With its tight profit margins, that hurts. And it can’t write off that loss with profits from sold-at-cost Kindles and given-away-for-free Kindle apps.

    Notice the key difference. While both get the same marketing edge with their competitive discount–“we have the cheapest ebook prices,” only Apple is in a position to make money in this battle.

    There are reasons for that:

    * Apple’s business model has always been to use ebooks to sell their mobile devices. Ebooks from Apple only run on its highly profitable mobile devices. My hunch is that it can easily subsidize below cost ebook sales with addition iPad sales.

    * Amazon’s business model is to subsidize device sales with ebook sales. It doesn’t improve their profits if selling more ebooks means more Kindle sales. It can’t make up losses on ebooks with those profitless Kindle sales.

    * Finally, a savvy reader of many ebooks can easily figure out that the smart move it to pay a bit more and buy an iPad. If Apple’s ebook price is cheaper, buy from it. If Amazon’s price is cheaper, buy from it and use the iPad’s Kindle app. (The reverse isn’t true.) That means that Amazon’s $5/book loss is in many cases subsidizing the sale of iPads.

    I’d wondered why Apple wasn’t creating ebook readers for any other platform, not even Macs. Now I think I know why.

    Amazon may live to regret encouraging the DOJ to go after Apple and the Big Six publishers. As the dominant ebook retailer with the best ereaders and ebook ecosystem,, it already had a major advantage even though agency pricing meant it couldn’t sell for less than its competitors. That 30% markup on most titles was a very good thing, and may be something Amazon execs look back on with longing. But that isn’t all.

    Amazon’s real goal, many believe, was to sell below cost to destroy competitors, Then it would own the market and could set any price it liked, most probably forcing publishers to sell to it at very low prices. Amazon, with only a data download and a financial transaction to pay for, can make money on low prices much easier than publishers.

    If Apple choses to match Amazon’s price cuts, Amazon is in a game it can never win. Longterm, Amazon is likely to find their ebook losses unsustainable, while Apple is likely to find that its losses are more than made up by increased iPad sales.

    And those increase iPad sales mean fewer Kindle and Samsung sales.

  3. Sounds like more publishers whining in these comments than mature adults. There are many very good ebooks that have been published either by small houses or self-published that were priced very low and have become successful. They are not all poorly written, full of errors, poor editing and formatting. The fact Agency Publishers are so far behind others who had the foresight to invest in the technology is no excuse to pass that cost to the consumer.
    You also forgot that with hardcovers and paperbacks, there is the cost of storing books before shipping, and also the cost of books returned and not sold and taking up valuable storage place. You have to ship those books to all your suppliers versus an electronic file that is formatted once for each type of ereader.
    Also with respect to the different types of ebook types required( gee 4 tops) Well if you are having a problem, do like the rest of us and use a library management program. If an 9 year old can take the Amazon book I purchased for him and convert it so it works perfectly on his ePub only device, please don’t try and make the general public believe your argument because you will make laughing stocks of yourselves. The rest of us have had to convert ebook formats in order to battle the Agency pricing to get a better deal. Often that meant having to buy the wrong format. No big deal, we convert. I happen to be a very early ebook user and was a customer of Fictionwise, now bought by B&N, they have an ereader format with a .pdb extension. No new ereader can read that format, even iPad doesn’t read this. With today’s ereaders my 700 original books all need converting if I want to read them. So I have been doing this for 2 years. Please tell me where have you guys been. This is all done within 1 program for crying out loud that is free on top of that. I own over 15,000 ebooks and counting because I’m a quadriplegic and frankly hardcover books are too difficult to manage. I started building my ebook library with BAEN who is the most progressive and proactive publisher anywhere. They offer their entire catalogue of ebooks free to those who are medically qualified. They deserve a place of honor, the rest of you should be ashamed of yourselves.
    The general public aren’t fools. Many of us have worked with computers and frankly if you come out with such foolish answers then maybe your particular firms shouldn’t do books and the authors should work with better publishers. There are many very good new authors that we would never have read had it not been for the new trends. I enjoy a Patterson, Koontz etc.. But I refuse to pay more for an ebook than I would for a paperback, it’s price gouging, plain and simple. Given what I have read and heard about these issues, the general public won’t stand for increased pricing and if you held a public forum on this topic, I would say that most would agree with the points that I have made. If other authors can sell well written books @ 2.99 & 3.99 and make a good income after paying their expenses, then something is wrong with the picture presented in your arguments! Thanks from an avid & intellectual reader & writer!

    • One thing that the publsher’s apologists forgot to mention is that they have to charge more so that they can pay huge salaries and bonusses to their top executives…

      With respect to their arguments about having to maintain different software for the different publishing formats, there is a simple answer to that. Don’t!. Standardize the format and if a retailer wants their own proprietary format make them do (and pay for) their own conversions. That, by the way, would have the side benefit of taking away some of Amazon’s power in the marketplace.

  4. Many reader may not realized, most ebooks are done by conversion houses. They want cheap and discounted ebooks? Be careful what you ask for. QA is lacking right now across the board. Don’t complaint about funky breaks, drop text, broken links etc. I can assure you no one will care if we move toward this direction. Let’s not forget, publishers also have the option of NOT creating ebooks at all…if they can’t control their pricing then why bother making a few cents that barely covers your cost? (it’s unlikely for any publishers to take this path but it is not impossible if the situation gets worst). I think we are going to see and experiences rapid changes in publishing in a hurry.

    • Well then Ben, Publishers need to find a new line of work if they cant stand not reaping giant profits. Better yet why dont we just publish direct and cut them out all together. ITS not like they offer any value to the ebook process. Perhaps authors would like to sell direct to readers! I know I would.

  5. And all of the above didn’t bother to mention the time it takes to write a book, at least the time that the best authors take to write a book, which can be several years or longer. Factor that in if you would…Also, I’m a little confused as to how Amazon is doing overseas ebook publishing with the larger publishers. With ebook publishing for the smaller publishers (which I am looking at) they are making a land grab for overseas rights…I’m not sure how to view this but it feels highly illegal. After all, suppose you want to sell print rights to, say, France. They will also want the ebooks rights but Amazon is saying up front in their contracts when you sign up to have the carry your ebook that they HAVE those rights as part of you signing on for the English/American rights. Could PaidContent please look at this and cover it…This is very worrisome as it, in essence, is Amazon demanding your foreign ebook pubilcation rights just to be on Amazon…

  6. Does anyone realize that publishing and printing are not the same thing? Publishers don’t just get a manuscript printed, we pay grants, advances, employee salaries, insurance, rent, taxes, design costs, reviewer costs, typesetting costs, marketing and sales costs… the list goes on. These costs are the same, and they have to be recouped or written off if the book doesn’t sell, no matter what the format. Sure, there are some savings with an e-book, but those costs aren’t the big ones.

    • I have to ask, do you need a brick and mortar publishing house if you do ebooks? Similar to not needing brick and mortar retail outlets like Borders? Many of the costs would go away.

  7. Just commenting on the cost discussion. Publishers, aside from paying their staff, rent, utilities, etc., have to pay royalties to the authors, pay for copy editing, proofreading, typesetting, printing, warehousing and shipping for traditional books. For e-books, the printing and shipping may disappear, but now publisher’s now need to invest in new technology. They can’t simply send a Word doc to a typesetter (or page compositor), they have to create XML files and have to either pay new employees to do this or job it out to another company, they need to invest in technology or pay new vendors to create mobi, epub, and all sorts of different files used by different e-book sellers. They need to pay distribution fees to the wholesalers and aggregators who distribute the ebooks on their behalf. Needless to say, it’s not necessarily cheaper, it’s just different. Sue

      • What do you mean? An ebook costs nothing to publish and ship. It’s a digital item. (books have always been overpriced even in the physical realm – with a hardcover with a cost of four dollars in production and shipping selling for four to five times that)

      • @Shawn

        Publishing costs are the same or greater for ebooks. Do you mean it cost nothing to PRINT?

        I’d agree printing and shipping an ebook costs nothing. But that’s an asinine point as ebooks aren’t shipped or printed. It’s like saying that it is cheaper to raise an elephant than a cat because you save on kitty litter. There are still plenty of costs involved.

        At the end of the day, all of these ebooks cost at least a couple bucks less than the paper equivalent.

        Do you really think a couple hundred sheets of paper and a postage stamp costs more than a couple of bucks?

      • It’s true that an e-book doesn’t have the paper costs – but that was always the cheapest part of publishing a book. Most of the price is based on writing, editing, formatting, publicity, and anything else that comes before the actual e-book or printed book.

      • One of the problems with physical books is that you are actually paying for the return of unsold books. The price of the cost of overprinting/returning to publisher is passed on to the customer.