What's An Ebook Worth?

As every sentient being in the world knows, Apple announced the iPad on Wednesday, complete with shiny book reading features and an ebook store designed to compete with Amazon and the Kindle.  During the iPad unveiling, Steve Jobs indicated that he had agreements with a number of major publishers to sell books for the iPad in the Apple store.  Screenshots in the presentation showed a new release priced at $14.99, $5 higher than Amazon’s general $9.99 price point.  Further, previous stories hinted that publishers would pay a significantly smaller percentage of the sale price on Apple’s iBooks store.

Then last night, the status of all Macmillan books (including SF publisher Tor Books) changed to “unavailable” on Amazon.  A New York Times article indicated that the move was precipitated by conflict over ebook pricing.  Namely, that Macmillan wanted a royalty cut equivalent to that offered by Apple, or would delay ebooks of new releases by months.  As of today, the affected books are still unavailable direct from Amazon.

The ebook price debate is certainly more complicated than it often appears.  Publishers argue that ebooks should not be that much cheaper than hard copy books because printing is only a small percentage of the cost of production.  Purchasers argue that ebooks should be substantially cheaper because, well, you don’t get a book.  (Also, you generally can’t loan it to a friend, unless you have a Nook or a no-DRM copy.)  Amazon wants the price low so that you’ll buy a Kindle instead of another device with higher priced ebooks.

I own a Kindle, and I use it daily.  I’d say I do about half of my reading on it, carrying it on the train to and from the office each day, and often reading with it at night with the nightlight attachment.  The biggest benefit of the Kindle for me is size — I don’t have to carry around a bulky hardcover if I’m reading a new release.  I also enjoy the “try before you buy” feature, and every so often I shop the Kindle store and add the first chapters of five or six books I’m considering reading to browse later.

As a Kindle owner, my book buying decisions generally involve the following questions.

1) Is the ebook available?

2) Is it cheaper than the hard copy?

3) Do I want a copy of the book on my bookshelf when I’m done?

In order to buy the ebook, the answer to the first two questions must be yes, and the answer to the third must be no.  There may be an exception or two where I’ve bought both the ebook and the hard copy, but it certainly doesn’t happen regularly.  Therefore, despite the convenience of the Kindle, there is still a significant bias in my purchasing toward the hard copy.  Change the answer to any of the questions, and the ebook version is out.

I don’t think I’m alone in this analysis, particularly among frequent readers who display their books in their homes.  I believe that your bookshelves are a part of how you identify yourself, and I want my bookshelves to represent what I really like, not just stuff I bought before I switched to Kindle.  That’s why it is imperative for publishers and retailers to keep ebooks cheap if they want my business.  I’m not sure what the magic price point is, but I’m fairly sure it’s less than the $15 some publishers are suggesting new ebooks should cost.  Nearly all of the ebooks I’ve purchased from Amazon have cost $9.99 or less.

Maybe there are ways to get me to pay more for an ebook:  make it available before the hardcover, include some kind of bonus content, or sell me a package of both hard copy and ebook for one price (if printing and distribution costs are a small percentage of publisher cost on new books, then I should be able to get both for not much more than either costs individually).  But in the absence of a carrot, I’m more likely than not to stick with the hard copy book if the ebook is comparable in price to the hard copy.  While the publishers have suggested that Amazon is setting unrealistic user expectations with regard to ebook pricing, I think it can more accurately be framed that Amazon understands what users are willing to pay for ebooks.  That’s why I think that, at the end of the day, it is more likely that the prices at the forthcoming Apple store will reflect current Amazon pricing than that Amazon’s ebook prices will climb over the $10 threshold.

Are you an ebook reader?  What is the right price for you?