WSJ: High eBook Prices Result in Reduced Revenue

4883498118_79f7f6f688_bThe Wall Street Journal has noticed that one of the classic laws of economics, namely the inverse relationship between price and demand, has been playing out in the US ebook market over the past six months.

It seems the agency contracts that the major publishers struck with Amazon really were as counterproductive as they appeared:

When the world’s largest publishers struck e-book distribution deals with Amazon.com Inc. over the past several months, they seemingly got what they wanted: the right to set the prices of their titles and avoid the steep discounts the online retail giant often applies.

But in the early going, that strategy doesn’t appear to be paying off. Three big publishers that signed new pacts with Amazon— Lagardere SCA’s Hachette Book Group, News Corp’s HarperCollins Publishers and CBS Corp.’s Simon & Schuster—reported declining e-book revenue in their latest reporting periods.

“The new business model for e-books is having a significant impact on what [the big] publishers report,” said one publishing executive. “There’s no question that publishers’ net receipts have gone down.”

A recent snapshot of e-book prices found that titles in the Kindle bookstore from the five biggest publishers cost, on average, $10.81, while all other 2015 e-books on the site had an average price of $4.95, according to industry researcher Codex Group LLC.

The WSJ must have good sources, because while we know that S&S and Hachette both reported declines in ebook revenue, the publicly available data from HarperCollins lacked specifics as to whether ebook sales had increased or declined.

Leaving that aside, it is true that ebook prices are higher, with ebooks gtom the major publishers sometimes costing as much as the hardback:

In some cases e-books cost almost as much as the hardcover. Amazon is selling the hardcover edition of Jonathan Franzen’s new novel “Purity” for $15.10—11 cents more than the $14.99 e-book price set by Macmillan Publishers, a unit of closely held Verlagsgruppe Georg von Holtzbrinck GmbH. The publisher declined to comment.

On Thursday morning, there wasn’t a single title priced at $9.99 among the top 20 titles on the company’s Kindle best-seller list. Last summer, Amazon offered the digital edition of James Patterson’s thriller “Invisible” for the bargain price of $8.99. Mr. Patterson’s newest tale of suspense, “Alert,” went on sale Aug. 3 on Amazon for $14.99, a price set by Hachette, Mr. Patterson’s publisher. The unit sales for Mr. Patterson’s e-books weren’t available.

Those ebook prices are so high that you might almost think that Amazon was engaging in a price war by slashing the prices of hardback books.

But that's just crazy talk.

All we really know at this time is that, Mike Shatzkin put it in the understatement of the year, "unfortunately, it may be that consumers aren’t happy with the higher prices".

image by Jo Jakeman

About Nate Hoffelder (10956 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader: "I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

8 Comments on WSJ: High eBook Prices Result in Reduced Revenue

  1. Authors United, get out your pitch forks, because somehow this is Amazons fault.

  2. Nate, you state :
    “It seems the agency contracts that the major publishers struck with Amazon really were as counterproductive as they appeared”

    But I think BigPublishing will explain that you shouldn’t look at the ebooks revenue only, but ebooks + paperback + hardcover, in which case “lost” revenue on ebooks may be more than compensated on the other formats.

    They sacrifice ebooks in favour of the other formats and the legacy bookselling ecosystem. And that is perhaps not a bad economic/tactical(in the short term) move.

  3. Judging by the comments at WSJ, readers are finding other alternatives, either less expensive ebooks, the library or used books so the publishers (and authors) are losing the revenue altogether. An example of be careful what you wish for.

  4. Of course this is all Amazon’s fault and publishers (and AU too!) must band together to *force* Amazon to sell ebooks using traditional pricing method instead of agency 😛

  5. The BPHs think they will recover their ebook losses through print sales but that is not happening. They have been experiencing print sales decline since before the Kindle launch and continue to do so. In more recent times the ebook revenue made up for the decline as growing sales of the higher margin product covered the losses and provided growth.
    More, the bottom line hit is just starting to bite the gang of five: half their revenue goes to the Randy Penguin which only moved to Agency this week yet was already US sales drops in the 6% range, masked in their recent financials by currency exchange benefits of the falling Euro and merger revenue.
    Once Agency bites them they’ll really have to scramble buying up loose publishers if they want to hide their ongoing losses. And if the China meltdown continues and the world economy takes another 2008-sized hit…
    I expect a lot of golden parachutes to get used.

  6. If an e-book is too expensive or DRM infested I just find a really cheap used hardcover. Now that is just me, but there goes one sale …

  7. Nate, I know that paperbacks are cheaper I just don’t like reading from them. The difference is usually negligible with used books.

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