A dispute has broken out—not surprisingly—between Apple, Amazon and the U.S. government. In squabbles like this (and the publishing industry is no exception) you can be sure that the final resolution will 1) take years and years to resolve and 2) the resolution will satisfy no one.
The dispute has to do with the pricing of e-books. For Amazon’s Kindle, success is based on having lots of book titles available and at cheap prices. A device without loads of inexpensive content is not going to sell very well. For publishers, as e-book sales continue to increase and become a growing share of the book market, the price inequality between the printed book and its electronic form has the potential to dampen author royalties and depress the company’s bottom-line. And more, publishers are actively undermining the sales of printed books by allowing for simultaneous releases of e-versions which, in most cases, are cheaper.
Currently, there is a pricing scenario that amounts to price-fixing; whereby the end-user is getting a great price on content for their reader because the makers of e-readers demand that publishers and authors establish the same low pricing strategy. If publishers or authors balk, than their books will not be available on either the Kindle or on the iPad.
While e-books are a relatively recent development, the battle over what is a fair price for books goes back to the early days of Bobby Haft’s Crown Bookstores (remember the “You Pay Too Much for Books” proclamation?)
Selling consumers on the idea that books cost too much was, to me at the time, rather radical. But publishers, rather than answer the initial assertion that the prices they set for books were akin to price gouging, went along with the premise by setting terms and prices that were more advantageous for those who discounted. For publishers, they could continue to set retail prices based on their own costs and bottom-line objectives while knowing that the bookseller would have to discount to be competitive; even though such ‘hits’ to a retailers’ margin would put these businesses in financial peril: Crown went out of business in the 90s.
Enter the world of e-books. Content, which drives the sales of the device, is being treated as a supporting player in the new electronic content world; and worse, it appears to be viewed as expendable. And yes, this does mirror – in part – the music industry, but these similarities (and there are important dissimilarities) don’t require publishers and their authors to sing-along.
Clearly Apple and Amazon are demanding terms for e-content that will, in large measure, serve to make their devices more ubiquitous. For volume sellers with a device, this price-fix model may work well, but for book retailers, large or small, the fix is a terrible deal since no matter how many e-readers there are in the world, retailing downloads at $10.00 (the average consumer price for an e-book) is not going to promote a healthy, sustainable business. Especially with Amazon’s Kindle dominating.
But as a bookseller, I sit here and wonder why books must be cheap, electronic or otherwise. We honor books, we respect authors, we deliver sermons on the power of the printed (or electronic) word; yet we still insist through our pricing models that “you pay too much for books.” We have taken our product—books—and demonstrated day after day that they have a diminishing dollar value, while Apple ably manages to increase both the cost and market share of its products while refusing to allow their products to be discounted—anywhere by anyone. Why is that? Because Apple values their product; and insists that their retailers do the same.
It would be just as wise for publishers to demand a pricing model for e-books that reflects the value of the content; only in this way can publishers secure for themselves and their authors a financially viable model for the future. Amazon has led the way in providing e-readers; and Apple continues to lead the way in personal computing; but there is no reason that either company should set the terms for the publishing industry now, or in the future. For no matter how wonderful e-readers are, they are just 12oz of nothing without authors and publishers.