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The manufacturing cost for an ebook clearly should be much less and near-zero per book. Bits are cheaper than paper. However that's just a portion of the cost;
by DougWebb 16y ago
The manufacturing cost for an ebook clearly should be much less and near-zero per book. Bits are cheaper than paper. However that's just a portion of the cost; there are still distribution and royalty costs and I'd bet those make up the bulk of the price.
- tptacek 16y agoIn a non-commodity market, price is determined by value, not cost. Cost is irrelevant. There are e-books worth $100. Harris' _Trading and Exchanges_ is a great example (although it's stupidly priced at roughly half that). It is clearly worth more in Kindle format than it is in giant-ass hardcover format. And yet it costs them $0 marginal dollars to make a new copy.
- cromulent 16y agoI think you are right, but my mind keeps wandering to the person who can drop 6000 USD on a Kindle title. I hope they get the value out of it they need. http://www.amazon.com/2SO4-family-K3BiCl6-KH3F4-ebook/dp/B001H0FX90 http://www.amazon.com/2SO4-family-K3BiCl6-KH3F4-ebook/dp/B00...
- tptacek 16y agoSeriously, I look at this title and have no trouble at all imagining that it generates $6000 worth of value. Look at it, think about why you might need it, and then think about how much it would cost you to generate an alternative to it.
- cromulent 16y agoAgain, I think you are right. In this case, I would want the hardcopy. I don't think I'm alone.
- joehand 16y agoWhy would a digital version NOT be better? This is a 1500 page book that comes with a cd full of data anyways. I guessing something like this would be used as more of a reference. Seems like the ability to search the text would make things a whole lot easier digitally. Obviously paper books have their benefits. But some books are far better suited to be digital.
- cromulent 16y agoI'm not saying it wouldn't be better. I'm thinking of the situation when you would buy something like this. I'm guessing most individuals would not buy one, and any corporation or other institution would have some kind of purchasing policy that would affect a purchase of this size. An institution would probably not want a non-shareable Kindle copy - rather than buy each individual a Kindle copy, they would buy the hardcopy and stick it on the shelf. Institutions that I am familiar with, anyway.
- Confusion 16y agoHaving handled books from that series, I can assure you that a Kindle edition with proper search capabilities is definitely worth more than the physical version.
- ximeng 16y agoThe review for that book is entertaining.
- falldowngoboom 16y agoAnd the one-touch purchase button has never been more terrifying.
- thibaut_barrere 16y agoMy thoughts exactly :)
- Confusion 16y agoIt aren't individuals that purchase such books, but rather universities, companies and research institutions.
- jamesbritt 16y agoAt least one reviewer has an interesting take on it http://www.amazon.com/review/R1WUN3F61QZD5Y/ref=cm_cr_dp_perm?ie=UTF8&ASIN=B001H0FX90&nodeID=133140011&tag=&linkCode= http://www.amazon.com/review/R1WUN3F61QZD5Y/ref=cm_cr_dp_per...
- shasta 16y ago> In a non-commodity market, price is determined by value, not cost. Cost is irrelevant. What is the "value" you're talking about here? Certainly not fair market value, when DRM and device lock-in leave little semblance of a free market. Or maybe you mean utility to the purchaser, but that varies wildly.
- tptacek 16y agoI mean utility to the purchaser.
- shasta 16y agoThat's not a single number, it's a distribution, and it's much more complicated than that since the distribution of prices people are willing to pay for any particular item depends on the prices of the other items in the store.
- tptacek 16y agoYes. Welcome to marketing. Your last sentence is an instance of price points. Yes, price points are part of what goes into perceived value. If you want to break out of a price point, you have many opportunities to change packaging, promotion, or pricing models to do that. Clearly, for example, textbooks don't honor book store price points. Neither do magazines or serialized books. Neither do standards documents or technical books (as graphically illustrated upthread by the $6,000 metals book). Neither do graphic novels. The 250-page bound novel is also an artifact of the book store distribution channel. It may indeed be that to command a $20 price instead of a $9.99 Kindle standard price, authors will need to break out of the straightjacket of 250 page bound novels.
- shasta 16y agoMy point was just that there is no simple "value" that determines the price point. One of the factors that determines the price of things is unit cost, commodity or no.
- cstross 16y agoThe manufacturing cost for a paper book is near-zero; a mass market paperback costs on the order of 50 cents to print. On the other hand, as long as publishers insist on DRM, the cost of setup for the encryption software and serialization of a new encrypted file for download -- including payments to the company that produced the DRM server -- may exceed the cost of that paperback. For contractual reasons book pricing is set on the basis of the current edition in print (royalty percentages aren't static but vary with the paper edition's binding, the number sold, the discount channel, and so on), and publishers are required to provide transparent accounting to authors if challenged. So their accounting workflow for shipping ebook units has to shadow the workflow for shipping SKUs. Hachette spent roughly 20M euros building a "digital warehouse" for ebook serialization and accounting a few years ago; I'm sure the other big six did likewise. They can't do anything else, unless they renegotiate their contract boilerplate with the authors. Meanwhile, fixed costs for editing, typesetting, design, proofreading, and marketing are identical for paper books and ebooks.
- tptacek 16y agoThe fixed costs for creating a software title are identical whether you sell the product as a CD or as a download, but in neither case do those costs have anything to do with the price of the title. The title is priced based on perceived value (usually, as perceived by the most lucrative segment of the market it addresses). This is the second comment here that brought up editing, typesetting, &c. Is it the view of people in the publishing industry that books should be priced at a % markup over total costs? Because that seems crazy.
- cstross 16y agoThe actual model for book prices is a reverse-auction: prices start high, then drop over time. However, thanks to the evolution of printing technology, the auction only hits a few (typically 2-3) price points, and they're geared against physical format -- hardcover, A format paperback, C format, and so on. So consumers confuse the reverse auction process with the cost of a physical product. To make matters worse, between 45% and 75% of the cover price of a physical book in a bookstore goes to the distribution chain -- bookshops and wholesalers (not the publisher or author). The chains do deep discounting for commercial reasons of their own, e.g. price wars with each other, special promotions, need to get rid of old stock to make room for new, and so on. Thus, the actual price the publisher and author get for a book may bear little or no relationship to the price the consumers are charged for it in the shops or from Amazon. (EDIT) People in this thread are making the common mistake of assuming the publishing industry is structured this way for some reason. It isn't. Things just happen this way because they're the sum intersecting set of business practices that didn't result in someone going bust at some point in the past 200 years. And they're locked in by contracts, established processes, and custom. This isn't a modern industry like software development: it's an ancient set of practices that have evolved over time, and many of its patterns reflect obsolete constraints that no longer exist.
- semanticist 16y agoAnd the costs of producing the text haven't changed - you still need to pay editors, proofreaders, technical editors and reviewers when necessary, people to read the slush pile to decide what to commission next. That's all beside the point that utility determines price, not cost, although I'm not sure that's strictly true: I think that the perception of utility determines price. Because the perceived utility of an ebook is less for many people, party for practical reasons and partly because they perceive that the cost is less, they perceive that the price should be lower. It's a beguiling idea. Even realising that production costs for ebooks aren't any lower, I still baulk at ebook pricing.
- tptacek 16y agoEditors, proofreaders, and reviewers aren't really COGS, anyways, for the same reason that software development is accounted for in SG&A or R&D, and not "cost of sales": it's a sunk cost.
- semanticist 16y agoThat's true, but in an all-ebook model you'd need to price your product to cover those costs too. My point was that those costs don't change, but they're frequently not considered when consumers are thinking about the 'cost' of what they're buying and the perceived cost impacts on people's perceived value for some items. Arguing that pricing your product based on its cost is mad doesn't really change that consumers feel that digital downloads should be priced less than physical media versions, even if the digital download has greater utility.
- mentat 16y agoThere's a pretty interesting blog about eBooks and publishing and the link. This entry http://jakonrath.blogspot.com/2010/09/acquisitions-editor.html http://jakonrath.blogspot.com/2010/09/acquisitions-editor.ht... is a more humorous approach to the question of eBook costs.
- tptacek 16y agoThis is a great critique of the publisher/author model, but it makes me sad that this writer also believes that his book price should have something to do with the cost of paper.
- tzs 16y agoBits are cheaper to manufacture than paper. However, their upkeep can be more. When I put a book on a shelf and ignore it for 20 years, and then try to use it, it works. When I put bits on a shelf and ignore them for 20 years, and then try to use them, it is much more of a crapshoot. It takes a lot more effort to keep my bits working for 20 years.
- tptacek 16y agoOffsetting that is the fact that bits can be hypertextual, can be marked up without damaging the book, weigh nothing, can be backed up over the short run, support full-text search, can automatically remember your place, can be downloaded instantly instead of shipped, and support skip-to-chapter. There clearly are ways in which bits are less valuable than ink, but my gut sense is that for most people, that's more than made up for by the ways bits are more valuable.