E-books get pricey. Will customers go paperback?

As e-book sales increase, their prices have inched upward. But will customers pay $10 to $15 for a digital book?

The Amazon Kindle Wi-Fi e-book reader is shown in this file photo photo. E-readers like these have dropped in price in recent months, but the e-book prices are increasing as large publishers set their own prices.

Jeffrey Trachtenberg writes for the Wall Street Journal that consumers buying digital books are experiencing sticker shock. While the price of readers has plummeted, the price of ebooks has increased.

Trachtenberg explains,

The digital price increases are the result of a decision by the six biggest publishers to set their own consumer e-book prices, a move that effectively bars retailers from discounting their e-books without permission. No such agreement exists for printed books—where retailers are free to set their own prices. So while a best-selling e-book price is often less than half of the hardcover price, heavy discounting of the print version closes the gap.

This strategy is already hurting ebook sales according to some.

Mark Weaver, a New Yorker who owns an iPad 2 and used to have a Kindle, says he is “definitely buying fewer” e-books because of higher prices. “It’s hard to justify the purchase of e-books that are priced at $10 to $15 when you can buy the real book on Amazon used for $2 or $3,” he says.

A digital book is every bit as real as a paper and ink book. It is really price that is the issue for Mr. Weaver and and many other consumers. Meanwhile, publishers believe $12.99 is the right price for a bestseller in the digital form.

“What that tells me is that there has been a change in the understanding of the value of a digital book, and that a digital book has advantages over a physical book in some cases,” says Maja Thomas, a senior vice president of Hachette Digital. “It’s instantaneous, it’s portable, it’s minimal in terms of storage, and it can be retrieved from all kinds of places and devices. It’s also searchable, and it’s easy to take notes and retrieve them.”

There is no discussion in this piece comparing the cost of production of physical books vs. digital books, because when considering sales velocity, customer preference, and the book market, it just doesn’t matter. Consumers decide prices, not producers.

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