eBooks should be cheaper than paper ones

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Dan Gillmor had an interesting post on Salon recently where he explained the crazy world of eBook prices. Seems that because of a bizarre negotiations last year between publishers and Amazon, we now have a world in which eBooks are priced almost the same as the hard-cover version. 

How did this happen? According to Gillmor, it involved some heavy negotiations, a bit of hubris from Amazon and a dash of competition from Apple (NASDAQ: AAPL) around the iPad. You can read the post to get all the details, but the end result was much higher prices for eBooks and some very unhappy Amazon customers.

It's understood that there are some fixed costs in book publishing that don't ever go away no matter whether you publish in paper or electronic versions, but let's be real here for a second. When you take printing and distribution out of the equation, it reduces the overall cost of production dramatically. 

Customers expect that savings to be passed along to them, and if it's not, as Gillmor pointed out, you end up with unhappy customers. But worse, you end up with people buying fewer eBooks. You may also end up discouraging people from buying the eBook Reader in the first place. To make up the difference, Amazon has actually been taking a loss on some best sellers to keep the prices down, but you have to wonder how long it can sustain this approach.

This seems to me to be another case of old media failing to understand and take advantage of the new media model. When we switch to electronic versions, we expect a corresponding price drop, and that's only reasonable. While I can understand that publishers want to maintain profit margins--that's their livelihood after all--they need to understand that sometimes charging less can encourage the market, and passing on cost savings to your customers makes them happy.

If the end result is people buy fewer eBooks, then everybody loses in this deal and that just doesn't make sense to me.

For more information:
- see Dan Gillmor's Salon piece

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