eBooks unprofitable at 9.99? I call Shenanigans

I came across this on Tele-Read, and had to voice my irritation.

Not only do I think it’s BS that a $9.99 eBook isn’t profitable I think it’s outrageous that Steve Haber sucks for thinking consumers are a bunch of idiots that don’t understand profit margins.

Perhaps $9.99 isn’t profitable for Sony (Why is sony profiting at all on eBook sales?) because Sony is a huge bloated company with (I’d guess) more middle management than it needs. Profit margins have to be high for bloated inefficient companies to survive. That’s not the consumers fault, or the competition.

It’s an ebook, very little work goes into it’s creation, distribution, etc beyond the initial writing/editing process. Unless publishers are so backwards they’re still mailing manuscripts around in big envelopes, the work is already digital. Translate to ePub, and that’s it.

WTF, you can’t make money on $9.99 when you’re doing nothing more than taking the finished digital work, and converting to ePub? Really? ¬†eBook sales should be icing. You’re already marketing the book (or should be), already pitching it to brick and mortors, etc. the eBook is the “Oh yeah it’s also available on your eReader”

As a side note, i found this quote hilarious.

On Sony’s embrace of ePub, the open format for reading digital books across multiple devices (which Amazon has not adopted):

“My analogy is if you walk into a mall and you’re with a bunch of your friends to go shopping and you can only go in one store and they can go into many stores. It probably makes more sense to shop many stores. That’s our thinking … It frankly makes it more fun for us because we can work with so many different companies. We’re not here trying to put a wall up to block our customers. We don’t get emails complaining about ‘Why did you lock me in?’

My translation is this.

“We tried being pricks and forcing people to use our own proprietary format, much like we did with digital music, (ATRAC) and memory cards for digital cameras, that didn’t work with any other devices or services on the planet. It didn’t work, so we’re doing what we should have done in the first place, but spinning it like we’re cool, and hip, and all about consumer rights.”

7 thoughts on “eBooks unprofitable at 9.99? I call Shenanigans

  1. Doug McCune

    Amazon loses money on most $9.99 e-book sales. They intentionally set the price at $9.99 regardless of what they pay to the publisher, and often the price Amazon pays to the publisher is the same as the paper version. They're setting the price, waiting it out until they become big enough, and then I assume they'll go back and put the squeeze on publishers (kind of like Walmart), but for now they're happily losing money.

    Now, of course, to be fair to publishers, you're estimation of how much work goes into a book is off. The costs that get eliminated for e-books are printing, warehousing, and shipping costs. Those are not the bulk of the cost of a book. Everything else, from editorial to copy-editing to type-setting to marketing, all of that still has to happen. So it's not that Sony or Amazon has to do more than $9.99 worth of work for a copy of a book, it's that the publisher does and the publisher can't sell the book to Sony or Amazon at a loss.

    So if the $9.99 price point is successful and becomes the market standard that consumers expect, publishers are going to have to figure out how to make a profit on that, and simply eliminating printing, warehouse, and shipping costs isn't going to do it.

    It's similar to the market standard of the 99 cent iPhone app, the price has been set regardless of any thought to the cost of production, which is why you can't sell games that are expensive to build on the iPhone, you simply can't make your money back at that price. But that's the price that has been dictated, so you either play ball or don't make apps for the iPhone.

    1. John Wilker Post author

      I completely disagree. Copy-editing, type-setting, marketing, etc don't go into an eBook any more than they do a mass Market paperback, so why does a mass market paperback run 6 bucks? yet the eBook is $10?

      Yes they're factors of book creation, but once paid out, aren't paid out again for each edition. I'll even grant there's some formatting that needs to be done moving from mm paperback to eBook, etc. but that's such a small amount I don't think it's worth the price difference. Not to mention the number of eBooks I've read with crap formatting from simply processing a word doc (or whatever) and not going back to check the formatting.

      I'm sure Amazon will squeeze publishers, as Wal-Mart does. I'm certain they already are on dead tree books. But if $9.99 for a digital good is unprofitable, the model is broken, not the price.

      The only flaw in comparing to iPhone Apps. The app devs made that bed themselves in racing to the bottom. Authors aren't setting the price of eBooks, nor are publishers racing to the bottom.

      1. Doug McCune

        Ah, ok, I was talking about books that retail for more than $9.99, not cheap paperback titles. I know that Amazon sells many books that retail for more than $9.99 and sell the kindle version for $9.99 at a loss. But I agree that it seems silly to take a paperback that retails for $6 and sell it for $10 just because it's in electronic form.

        1. John Wilker Post author

          Yeah I thought we might be talking about 2 different kinds of books. Tech books, which I think is a whole different fucked up ball of wax, definitely area different beast.

          I'm talking fiction, business books, basically anything that normally selling in the 10-20 buck range as paper.

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  3. Nic Boshart

    I would just like to clear up a common misconception that ebooks cost nothing to produce. The conversion cost, while minimal, is a factor. Also, ebooks can't be laid out the same way as paper books, the have to be entirely redesigned. They also have to be assigned ISBNs, go through distribution channels, and have the same amount or more admin than any paper book per title.
    Conversion isn't perfect, either, you need to proofread the final ebook file. Long story short, ebooks are not magic and have additional costs associated with them. I'm not sticking up for Sony, they should be making a profit on 9.99 ebooks, a lot of other companies are, I just want people to know that ebooks are not free to make.

    1. John Wilker Post author

      Having read several dozen eBooks, i'd argue that neither time nor money is currently being spent in layout/conversion.

      My point isn't that eBooks cost nothing to make (though I don't agree that getting an ISBN, going through distro channels, etc are causes for even a slight increase in cost) it's that those costs should not prohibit profit at $9.99. I do not believe that $10 worth of labor is involved in creating an eBook from a print book. Conversion to eBook formats is well documented, even for the Kindle and it's one-off nature.

      But yeah I agree, eBooks don't grow on trees, but they also don't cost as much as a dead tree version.

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