They took a loss on e-book copies to help sell Kindles and to build a huge early lead in the e-book market. This created several pressing concerns for publishers. For one, Amazon was helping devalue consumers' notion of what a new book "should" cost.
And two, publishers badly wanted competition in the marketplace, but they were hearing from other companies that wanted to get into the game that they couldn't compete with Amazon's prices. So along came Steve Jobs and the "agency" model: Publishers set the price of e-books and receive 70 percent. Publishers took that deal and then imposed it on Amazon, as detailed by my colleague Greg Sandoval. But here's the irony of the agency model: It wasn't about making more money in the short term, even though e-book prices went up.
Publishers raised prices and made less money per e-book copy sold. This wasn't a story of money-grubbing publishers trying to stick it to consumers. They actually left money on the table. The result: The e-book marketplace competition that publishers wanted began to take place. And if higher prices slowed down consumers' adoption of e-books and kept people attached to print, publishers were OK with that.
The publisher has since launched 'Flexible eBook Solutions', designed to provide libraries and research institutions with a choice of purchasing options, including full ebook collection and single title models, when accessing digital book content. Chris Bennett, Global Sales Director, Academic Publishing, at Cambridge University Press also believes that his company's pricing models are relatively straightforward, flexible and fair.
In response to the pandemic, CUP developed a higher education website to quickly deliver textbooks. Here, institutions acquire books through an annual lease that allows for an unlimited number of concurrent users. Given the falling librarian budgets and ebook pricing issues, a move towards more flexibility clearly makes sense. Van der Velde says that the pandemic certainly fast-tracked Springer Nature's decision to implement single-title purchases.
However, he also suspects that the pandemic, and sudden surge in ebook demand, may have taken some publishers by surprise, exacerbating issues such as pricing. CUP's Bennett also believes some publishers have yet to truly adapt to both the different world of ebooks and declining budgets. Unsurprisingly, aggregators, as well as publishers, also witnessed rising ebook demand come the pandemic. At the time, ProQuest saw strong demand for its Title matching Fast Service, which aims to swiftly match print holdings with electronic titles.
And the aggregator also partnered with publishers to offer discounts on ebooks to libraries that already owned the print version. But in a similar vein to van der Velde and Bennett, Beit-Arie believes the pandemic-induced surge in demand was a shock to the system for many.
Clearly, University of Gloucestershire's Anderson agrees. However, she also wonders if aggregators could apply more pressure to publishers when it comes to ebook pricing. So what comes next? Given this, solutions to tackle pricing model issues are needed, and fast. Beit-Arie is absolutely certain that now is the time to create pricing models that will work for both publishers and libraries, but cautions that 'there is no single magical solution'.
Right now, ProQuest is considering how its acquisition models can help libraries to support curriculums with scalable, high demand collections and is also looking at workflows that are designed around libraries acquiring for purpose. However, he also reckons that more open access books as well as open educational resources OERs could form part of the answer. As he points out, such freely available online teaching and learning materials are widespread in the US, with UK-based organisations, including University College London and The Open University, also now sharing educational output.
But by , publishers had changed their minds. Printing and binding and shipping — the costs that ebooks eliminated — accounted for only two dollars of the cost of a hardcover, publishers argued.
Before we delve further into the weeds here, a quick primer on how book prices are set. Then it will sell the book to resellers and distributors for a discount off that suggested list price. But once Amazon owns the book, it has the right to set whatever price it would like for consumers. Under the wholesale model, Amazon is free to decide to sell the book to readers for as little as a single dollar if it chooses to.
Until , ebooks were sold through the wholesale model too. Amazon negotiates different discounts for itself at different times from different publishers, sometimes around 40 percent, but at other times higher and at other times lower. But we do know that Amazon was making very, very little money off ebook sales in , and was in fact probably losing money on most of them.
But publishers were terrified of what would happen once Amazon had established itself as the only game in town, ebook-wise. Would Amazon keep pushing prices ever further down? And once publishers had nowhere else to sell their ebooks, would Amazon start demanding lower and lower discounts from them to subsidize those low prices?
In , Apple launched the iPad, and with it, the modern tablet computer. And part of what made the iPad so exciting was that it contained iBooks, an app that publishers were hoping would do for ebooks what iTunes had done for music: be so convenient and easy to use that consumers would flock to it rather than turn to piracy. Apple was offering publishers an incentive to root for it over Amazon. With its App Store, Apple had established a resale model that worked differently from the wholesale model publishers were used to.
It was called the agency model, and it worked like this: publishers would decide on what the list price for their book should be, and then put it up for sale at that price in the iBooks store. Apple would take a 30 percent commission on every sale. It needed some assurance that no one would have a cheaper product than it had. They were preventing Amazon from forming a monopoly, and thus they were promoting a healthier economy for books and for the American book-buying public, too.
According to the Department of Justice, however, publishers were conspiring. This goes for all software. If I ever want a book and the e-book version is more expensive than the paper book version, then I will always buy the paper book. Also, I tend to buy a lot of used paper books. Save a ton of money! I would love to see accurate market research numbers to see if this is the case.
People borrow, buy it used, get it from hand me downs, etc. Not sure why we need publishers anymore. Direct from authors should and may be the way of the future no? Did they not notice anything fishy? The cost of a paper book reflects the fact that more than one person is likely to read that paper book. It will be read, and then passed on in some way, and passed on again. Yes, they should. This has been my beef since I have had an ereader!
That ebooks need to be cheaper in order to entice people to pay for them instead of pirating copies. Especially if the book has been out for several years, it should be cheaper than a book that is new and only now out in hardcover. And they should make collections more affordable.
If a series of books is released by an author, make the series package a whole lot cheaper. Most of the packaged series there is little or no savings if you buy them all together or as individual titles.
Yes, in a truly free market ebooks would cost a lot less than physical books. But from that point on, producing 10, copies — and transporting and selling them — costs only pennies more if that than producing one. Physical books otoh require factories, forests harvested, printing plants, ink, transportation, storage, etc. Often enough a book bombs and the publisher has to eat the excess inventory — not a problem with an ebook.
Even before eBooks existed, I noticed long ago that the big houses would always publish a hardcover of a book first, then wait a year or so to release a paperback version — of fiction books which most readers would read once and sell as used or give away.
So if you wanted to read the book when it came out you had to buy the hardcover; otherwise you had to wait. I would wait. A huge waste of money — and resources, especially since in those days there was no way to recycle books nor is it easily done now. Why did they do this?
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