What Should an eBook Cost?

Back to the Amazon/Hachette dispute. Again, I am not an expert here.

Amazon says eBooks should be $9.99. They obviously have a lot of data on this. That’s what they do. And they’ve concluded that a book at $9.99 earns more than the same book at $14.95 because more people buy it. And it’s not like there’s added cost to producing one more eBook.

That’s a really important concept. Each physical book costs at least X, but after the first one, the cost of producing an eBook is just keeping the website up.

As a software developer I’m quite familiar with this concept. Once the software is built, for a subscription web product, additional user licenses are basically all profit. We like license revenue.

It sounds like this dispute is completely over the book price. Hachette apparently wants $14.99 with the extra margin (for them). Amazon says $9.99. It is not about the percentage that Amazon takes. They want 30%, which is pretty standard (see Apple).

I’ve become more and more on Amazon’s side here. Hachette has been getting their authors to publish scathing comments about Amazon and Amazon has largely remained silent. Today they posted a blog explaining their position:

A key objective is lower e-book prices. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market — e-books cannot be resold as used books. E-books can be and should be less expensive.

And they save the Hachette slam for the end:

One more note on our proposal for how the total revenue should be shared. While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.

I translate that as “greedy Hachette bastards”…


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