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Why J.K. Rowling’s new ebook is $17.99

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The Casual Vacancy, the first and much-buzzed-about book for adults from “Harry Potter” author J.K. Rowling, hits shelves (and the e-readers of those who’ve preordered it) on Thursday. The book, an almost guaranteed bestseller, is likely to be publisher Hachette’s top-selling title this fall or even this year. Many readers will rush to buy it tomorrow — but thanks to the realities of the ebook price fixing settlement, they’ll be paying an unusually high price for it.

That won’t be the case for long. Soon enough, retailers will be able to sell the ebook edition of The Casual Vacancy for $9.99 or whatever price they want. But tomorrow, when the ebook goes on sale, and for several weeks after that, customers will be paying more for it than they would have before the ebook pricing settlement was approved.

Here’s why. The suggested retail price of The Casual Vacancy hardcover is $35. Publishers use wholesale pricing for print books: They set the books’ list price; retailers buy the books at a discount and can then resell them at whatever price they want. That’s why The Casual Vacancy hardcover is $20.90 on Amazon (s AMZN).

For ebooks, things are different. Recall that Hachette is settling with the Department of Justice over allegedly colluding to fix ebook prices. Upon the settlement’s approval, Hachette (and the other two settling publishers, HarperCollins and Simon & Schuster) had seven days to terminate their contracts with Apple (s AAPL). Now Apple’s (s aapl) price bands — which would have stipulated that The Casual Vacancy ebook be priced at a maximum of $16.99, assuming a hardcover price of $35 — are no longer in effect.

The settling publishers have longer to terminate agreements with other retailers, like Amazon: “Starting 30 days after the Court enters the proposed Final Judgment,” they may terminate those contracts “as soon as each contract permits” (i.e., when it expires), or the retailers can terminate the contracts on 30 days’ notice. That adds up to about sixty days of wiggle room. (Thanks to Dear Author blogger and attorney Jane Litte who helped me with some of the math on this.)

The settling publishers can enact new retailer contracts much faster, as HarperCollins did, but they don’t have to if they don’t want to. Hachette CEO David Young told the WSJ on Wednesday that the company hasn’t yet agreed on new contract with retailers.

In the meantime, Hachette’s in a sweet spot where it’s no longer limited by Apple’s price bands, but non-Apple retailers like Amazon also aren’t allowed to discount its books. So if you want The Casual Vacancy tomorrow you’ll be paying $17.99. (A possible caveat: If Apple is now operating under a new contract with Hachette, it seems it could discount The Casual Vacancy if it wants to. At that point, Amazon and other retailers might be able to invoke the most-favored-nation clauses in their own contracts and drop the ebook’s price as well. We’ll see if this happens.)

Note: I’m aware this post is likely to engender a lot of “greedy publishers” comments. The fact is that the ebook pricing settlement incentivizes publishers to set higher ebook list prices. Depending on the new contracts that Hachette works out with retailers, there may be little difference between the money that Hachette gets from Casual Vacancy sales now and the money it gets once those new contracts are enacted.

22 Responses to “Why J.K. Rowling’s new ebook is $17.99”

  1. I hate to say it, but there are far more costs to produce and publish a book than has even been described here. For a 250 page softcover novel, there are editing, copy-writing, cover design, interior design, pre-launch promotion and post-launch promotion (if you ever want to hear of the book anyway), insurance for copyright infringement, libel, and media liability…not to mention the actual production costs – which depend on the run of the print, the book cover, binding, size, paper type and weight, etc., in addition to distribution fees, cost of returned books, and payment to the author, in addition to regular costs of doing business such as staff, legal fees, and other necessary evils. It’s easy to say a book only costs $1.00 per print, but the fact is that’s not true. Is it fair to any author to charge less on a book which would result in them being paid less? Most publishers don’t pay well enough as it is because of the risks they take (and I’m speaking for small publishers). I’m not a fan of over charging for books, but let’s be fair here ok?

  2. Sad to see so many here think piracy is a good thing.

    As for the library ‘free’ book, The library pays the publisher every time a book is ‘loaned out’ – so they are not free. Your local govt/council is paying for you.

    Yes, JK’s publisher is charging too much for an eBook. One file covers the world. It only takes a week to copy and paste then create the digital file. Seems like they are trying to claw back money from the print costs. That is OK but the price is sill too high.

  3. keith bierman

    The authors with the rock bottom prices usually don’t have a publisher to feed. That is, they get nearly all of the price, minus the middle-man fee (amazon|apple|etc). With a publisher in between the author and the “store” there’s a ton of overhead to cover. On the plus side, the author may well get a healthy advance and other benefits. as an example. All three of the authors books published via “normal” channels cost more. From interviews, it seems they made as much (or more) by eliminating the publishers.

  4. The cynicism and gleeful justification of piracy here is disheartening — yes the publishers are able to set higher prices, but again, isn’t that their right to do so, especially on a in demand book that is likely to make or break their bottom line for the year. Good god, if a publisher can’t charge a fair market price for one of the hundreds of books that they publish each year that readers will rush to stores to buy, when can they?

    • The problem is simple: they’re charging prices that would make sense if they were having to print, bind, and ship all these books — when in reality, every sale of the book is pure profit. They should at least do the courtesy of charging a reasonable amount for the digital content. Reasonable here means $8 to $10 per copy. The most profitable authors on Amazon generally charge the least, in the $2 to $3 range. If they want profit — drop the price! but of course, that kind of logic blows the minds of people who are used to having operating overhead such as printing, binding, and shipping.

      • The cost of printing a book is marginal to the cost you are paying for the physical copy. You might think the cost for a file is not worth it but the fact the same amount of work went into the text just the same. For example with a movie, if you download it the costs for the CGI did not some how become less, it still needs to be paid for.

        Most authors doing 2-3 a book are self published and did not have a company working with them to help edit or market a book. You will need to prove they are more profitable than Stephen King. You cannot drop the price below the cost of the product and still make a profit. So it is not practical to have books that low all the time.

      • Having to print, bind, ship, store in a warehouse, store in a store, display on a store shelf, take back returned copies, and all of that ancillary stuff — it costs roughly $2-3 per book for a hardcover, more like $1 for a paperback. People overestimate that all the time.

        Also, running an ebook store like Amazon or Apple or B&N has more overhead than you think. Geocities hosting may be free, but a real website with real servers emphatically isn’t.

  5. So it’s $17.99 tom’w, but will go down in 60 days? I can wait.

    Or, I could just do the same thing I’ve been doing with overpriced Agency books for the past few years…borrow the audiobook from the library and enjoy it free.

  6. Just a small window of time, big deal. Ultimately the pricing will wind up cheaper than it otherwise would have. I wasn’t going to read it in the first 2 months anyway (if ever).

  7. It will be available for free on torrent sites by the end of the year, I’m sure. People don’t just download movies and music, you know. And for 17.99, I hope it does get leaked. What a ripoff

  8. David Thomas

    For all those who cried foul at Agency Plan pricing and cheered the DOJ lawsuit for collusion, welcome to the real world. Don’t blame Hachette, they’re only going after what the market will bear and what their bottom line really needs in the 3rd and 4th quarter. They can price the bound book at $35 fully knowing that the automatic discounted price (such as Amazon’s) is at the limit of what consumers will pay on impulse. The $18 for the e-book represents protection for their physical world retailers and the inventory investment shared by both vendor and dealer. As I’ve commented before, a book is not a market commodity where price will be influenced by demand. Enjoy the victory.