Monday, April 23, 2012

eBook Prices Examined

Those who follow these weekly articles know that I have been a big fan of eReaders and eBooks from the very outset of their availability. The benefits of books in digital form are many. From the point of view of an avid reader, having virtually millions of books available on line and accessible in a matter of seconds is wonderful. For the publisher and reseller, not having to print paper and ink copies and store and ship books is a tremendous savings in the cost of doing business. In the end, both reader and publisher save money.

When eBooks first came to market the prices were relatively low. In most cases a best seller purchased in digital form was priced at about one-half the price of a traditional bound volume. The pricing seemed very reasonable as the authors, publishers, and resellers all deserved appropriate compensation but since much of the physical costs of traditional book publishing went away, it was only fair that these saving be passed on to the customer.

Over the past 18 months or so there has been a steady increase in prices with some eBooks now selling close to the prices charged for paper and ink copies. So it was with some interest that I have been following the recent announcement by the US Department of Justice that it filed a suit against Apple and five other publishers over an alleged "illegal conspiracy" involving eBook price fixing. Apple, as well as publishers Macmillan and Penguin, plan to fight the charges, while Hachette, HarperCollins, and Simon & Schuster have agreed to a proposed settlement.

According to Attorney General Eric Holder, publishers and Apple met regularly to discuss competition issues, including Amazon's eBook pricing, "as part of a conspiracy to raise, fix, and stabilize retail prices."

Apple counters by maintaining that the higher prices have provided customers more choice and more interactive and engaging material. They maintain that the eBook pricing policy is the same one that has been used by app developers for setting prices on the App Store.

It will be interesting to see where this ends up. I am a big advocate of making sure that, even in this digital virtual environment, authors, artists and musicians should be fairly compensated for their work. On the other hand, for companies to continue to charge consumers prices based on old models of distribution when their actual costs no longer exist is a rip off.

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