When Will eBook Prices Start Going Up?

Amazon did us all a favor.  In late 2007, almost 3 years ago, they introduced the Kindle.  Although it didn't immediately make ebooks a mainstream phenomenon, the Kindle was the first major step towards significant momentum.  More importantly, Amazon looked to set the ebook pricing standard at $9.99.  It's widely known that Amazon lost money on most of those ebooks they sold, but they must have felt it was worthwhile to quickly build a presence, even at a loss (just like Amazon did initially with print books).  They also probably figured they made enough profit on the hardware to justify a loss on the books.

That hardware margin must be looking pretty thin right now.  Not only were they forced by B&N to lower the price of the Kindle, it doesn't take a rocket scientist to see that the iPad is cutting into dedicated reader sales right and left.

So how much longer can Amazon afford to subsidize the $9.99 ebook prices which, as Rupert Murdoch said earlier this year, "devalues books"?  I think the trend towards higher prices has already started but nobody seems to have noticed.

It's far from scientific but as I write this post I see 2 of the top 10 paid titles on Amazon's Kindle bestseller list are priced at $12.99.  The product pages for each, btw, include Amazon's not-so-gentle reminder to customers that "This price was set by the publisher."  I don't recall anything over $9.99 in the top 10 a year ago.  2 out of 10 is interesting, but 6 out of the top 15 and 8 of the top 20 are priced higher than $9.99.

FWIW, even I've become more willing to pay more than $9.99 for a Kindle or iBooks edition.  Two of my most recent purchases were $12.99, so even a tightwad like me is coming around.  And even though I'm no longer locked into $9.99 as a ceiling, I comparison shop to see who's got the best price.  More often than not they prices are identical, but every so often I find a difference and go with the lower one.

Comments

[sean]

Great points, but I wonder if you're being too generous in your assessment of Amazon's intent w/ the artificially low e-book prices - the reason they were losing money on the $9.99 e-book is because they were buying them nearly at cost from the publisher. I think the intent was to build up Amazon's market share to the point where it could dictate to publishers how much Amazon was willing to pay for e-books. With the increased competition for e-readers, though, it seems unlikely that Amazon will be THE dominant player, so I think that new reality is driving up the price of the e-book as well.

[Peter Cooper]

It should be whatever the market will bear which, I believe, is little higher than it is now. Ebook prices should remain dampened as long as they have the disadvantage of not being able to sell or pass them on, a significant part of a paper book's value judging from how many books I've given away, received, and what move around my wife's friends.

[Mary Nelson]

In an ongoing discussion on a Kindle board, one of the major deal-breakers has been the discrepancy between pricing for paperback editions and e-book ones. Several people on the board have expressed the conviction not to pay more for the e-book than the paperback price. And as Peter noted, with an e-book, buyers get less value since they cannot share or pass on their electronic books, which is another factor in the marketplace acceptance of higher pricing. Publishers also need to review the highly erratic methods currently being used for pricing all formats (hardcover, trade paperback, mass market paperback, audio CD, and audio mp3) of their books, not to mention collectibles. If you check Amazon, you will find a wide array of pricing for some volumes which apparently makes no sense whatsoever to a buyer (giving the publisher the benefit of the doubt here).

[Book Calendar]

I think the amount of out of copyright material and creative commons book will affect ebook prices. With so much that is essentially free, it might be hard to push the price above $15 for most titles. This is just a guess.