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Why the $14.99 Ebook is a Tragedy for Reading

Edit: Inserted an extra paragraph before the last one, 20 minutes after hitting Publish. Sorry about that.

I couldn’t believe my girlfriend was oblivious to the huge row between Amazon and the publishing houses of Macmillan, HarperCollins, and Hachette. Until I remembered that, unlike me, she has a real job, and that the whole thing only blew up one week ago.

“The iPad was announced only last week? No way, it feels like two weeks at least!” I said, not realizing that the constant reading of similar news stories can cause a retardation of time (amongst other things).

If you haven’t caught up on Amazon’s ebook troubles, this post by John Scalzi will serve as an excellent primer.

Short summary: Amazon used to sell ebooks at a near-standard price of $9.99, reportedly at a loss on what they paid the publishers, to help sell more Kindles.
Monkey wrench: Apple’s iPad bookstore will reportedly let publishers set their own prices, which will be $14.99 for most new books.
Result: Publishers have started to push Amazon to raise its prices, obliterating the Kindle’s price advantage.

There are reasons to be upset about all this, of course. Do I think the publishing industry is being extremely greedy, short-sighted, self-important, and ignorant of how much their situation mirrors the mistakes of the record industry not so long ago? Yes, I do.

According to multiple sources, selling ebooks at $14.99 will net publishers the exact same profit as having Amazon sell them at $9.99, because Amazon sold them at a loss. This price increase to the consumer is being sold as a solution to what Rupert Murdoch has called the ‘devaluation of books’ (at the $9.99 price point), and the competition that ebooks pose to hardcover sales.

Linking price to value is a pretty poor argument when it comes to books. Take anything else, say clothing – if Armani shirts were being sold for what they really cost to make, as opposed to the price commanded by the brand, sure, you’d see those suits being devalued real quick as everyone started wearing them to the supermarket – but books are a special case in media because of the public domain.

Not too many audio recordings or films exist in the public domain, but being an older medium, lots of books do. Great Expectations and Moby Dick are completely free downloads from Project Gutenberg. I wouldn’t call them devoid of ‘value’ in any sense of the word. Their being freely available doesn’t hurt sales of physical printings either. This Penguin Classics edition has a retail price of $15 (discounted to $10.20 by Amazon). These are some of the best books ever written, available free for reading on nearly any digital device, and still millions of copies are moved each year.

One aside: imagine if MacMillan started to dictate the prices at which Amazon and other bookstores could sell their physical books too. It would mean the end of discounts. Also consider that if one wanted to boycott the modern publishing industry completely, it would not be to the detriment of his reading. At last count, over 20,000 books in English reside on Project Gutenberg. Refusing to pay for music and movies, however, would leave one largely at the mercy of free-to-air radio and television programming; quite the inverse experience from book-reading in terms of quality.

Given that they enjoy no increase in profits, it can hardly be argued that these publishers are seeking to cover the increasingly high costs of producing and editing new material, or to subsidize a supposedly shrinking physical books market with ebook sales. My guess is that a sense of wild fear and uncertainty drives these decisions, and artificially pricing these ebooks high is the only way they think they can convince an uninterested public of their worth. But that’s not true at all. People buy books, at the right price.

$14.99 is not the right price.

Apple knew something the music industry didn’t when it launched the iTunes Music Store: the right price. As the store grew more popular than any of the labels expected, their despicable instinct was to milk these new customers. They began to demand variable pricing schemes in place of Apple’s fixed price of 99 cents a track. Variable pricing sounded like a nice idea; new songs would cost more than old songs. What they really wanted was for most desirable songs to cost more than 99 cents, and have a few old crap songs nobody wanted at bargain bin prices. Steve Jobs held them off for six years until the industry agreed to sacrifice DRM in exchange.

Apple understood the psychological appeal of a low, fixed price. The music guys couldn’t even understand the meaning of the money that came in from Apple each month. It amazes me that people who essentially failed to sell their own product could presume to meddle with a successful strategy someone else had come up with. Would you know it, that’s exactly what the book industry is doing right now to the people who sold a shitload of ebooks for them. And they’re succeeding.*

Everyone knows the argument: ebooks cost almost nothing to copy and distribute, whereas pulp, ink, and an entire mechanism of printers, transporters, and physical stores exist to put books in our hands. That’s what gives a book value for most people, exchanging $14.99 for a piece of work in front of them, not an artificial price on a digital file they can neither keep forever not share with friends and family. People expect ebooks to cost less, the same way they expect a pizza to cost less if they drive up to the outlet and pick it up themselves instead of having it delivered. Instead, we’re getting a flavor pill that only tastes like pizza, delivered to our homes for the same price as a real pie sold down the street.

That the publishing guys are able to ignore the threat of piracy is even more worrying. Once a book is scanned and processed into raw text (a trivial task these days), it’s even easier to distribute than an MP3 or movie. It literally takes seconds to shoot a novel of a few hundred kilobytes across the net; paste it into the body of an email, and it can’t be stopped. It seems to me that people are more likely to illegally download an overpriced book than a 99c song. Especially since almost half of all books bought are never finished.

Now, it may appear that consumers took to the idea of buying and listening to digital music fairly quickly, which no doubt gives publishers the same hope for switching people over to a higher-profit digital medium. But the transition to digital music didn’t start with MP3s, it happened over a period of 20 years with the audio CD. Hungry to earn repeat sales on records they already sold once or twice, the industry weaned us off turntables, vacuum tubes, and cassettes. They got us used to the idea of digital reproduction, and even convinced most of its superiority. By the time MP3s arrived, an entire generation that never knew the warm sounds of analog reproduction was ready to embrace them, and eventually even pay for quite a lot of it.

The fraction of music lovers who clung onto vinyl will look like nothing compared to the majority who will continue to prefer real paper. A lot of us read off screens every day, but it seems most don’t want the same experience when curling up with a novel. Even if we were to get used to it, there’s still the problem that reading is more prevalent in the older generations, who won’t jump to pay a couple hundred bucks for a fancy reader.

For those reasons, I don’t believe real books face any significant cannibalization from ebooks in the near future. If anything, the number of actual readers will increase with ebook sales. And the more people read, the more they make recommendations to those around them. Invariably, some of those whispers will result in the sale of real books.

Should this hold true, the initial cost of producing the content will continue to be shouldered by the process that creates paper books, as it always has. Real books can continue to be sold at their traditional price points. This leaves the sale of every ebook to be counted as pure profit. The day when major publishers put out new ebooks by noted authors without physical counterparts on store shelves, we’ll reevaluate.

Pricing ebooks prohibitively high does nothing for readers in general. If successful, the industry will associate the numbers $14.99 with the idea of reading a book on a device like a Kindle or iPad, the same way we now think of songs on an iPod as costing 99 cents, only less attractive. When digital music went mainstream, it was with Napster. Legal alternatives came later. Because it’s the opposite for digital books, assuming the whole thing even takes off, how many will know to venture past the virtual display shelves and over to the free public domain section?

Ebooks should be seen as alternatives, for those who don’t need or possess the means to house a large library of battery-free, device-independent books that may someday be passed on. We will buy these digital editions on impulse, out of fleeting interest, on the insistence of friends, from the comfort of our Sunday beds, or in the midst of long journeys, perhaps as other books are closed and some aching gap remains, or when we can no longer wait for a final installment, and consequently we will as a species read more, and our society will be the richer for it. In exchange for acknowledging their impermanence, we will hopefully be charged a fee more like a rental, and less like a scalping.

* As to why Apple would play a curveball with the book guys and give them miles of rope to hang themselves, see Matt Buchanan’s post over at Gizmodo: Why (and How) Apple Killed the $9.99 Ebook.

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