All About The eBook Price War

The eBook price war refers to the lawsuit that ensued between Amazon, Apple and the big six book publishers. In 2013, Apple was charged with colluding with publishers to fix eBook prices. Laura Miller sums up the situation nicely in her article “Everything you need to know about the great e-book price war.”

Essentially, the problem with eBook pricing lies in the publishers’ failure to see the eBook as separate from the printed book, and subject to its own separate practices and regulations surrounding sales and distribution. The eBook, unlike the print book, is a piece of software, and as software, it cannot be sold in the physical sense like a print book. An eBook’s content is licensed to the purchaser as they gain access to the digital software.

There are two different models through which publishers can sell books to retailers: the wholesale model and the agency model. Using the wholesale model, the publisher sets a retail price for the book and sells it to the retailer at a discounted price. Retailers can then sell the book for whatever price they choose. This is the model that has been employed in publishing companies for years. The agency model differs is that the publisher sets the price of the book and the retailer sells it to consumers, taking a cut of the sales as commission. Apple commonly employs this method to sell music and apps. The publishers’ mistake was to continue to use the wholesale model when selling eBooks to Amazon. They chose to stick with the model they knew, rather than adapting their practices to suit the new technology.

Problems arose when Amazon, perhaps in an attempt to promote the Kindle, or even to gain control of the eBook market, began selling eBooks at a loss, and thus making them available to customers at hugely discounted prices. Amazon’s actions began to devalue books in the eyes of customers, as a book that would usually be sold for $23.95 was sold for $9.99. To fix this problem, publishers teamed up with Apple and proposed selling eBooks using the agency model so as to fix the cost of eBooks. The Department of Justice filed an antitrust suit against Apple and the publishers, arguing that they colluded together to raise the price of eBooks. The publishers lost the case and were forced to reimburse consumers who had been overcharged.

From the perspective of a publisher it is easy to see Amazon as a monster set on world domination (or at least industry domination). But the reader may see it differently.  As a reader, I don’t want to pay full price for an eBook. After all, I’m not getting a book; I’m getting access to a file. I can’t hold it in my hands, or put it on my shelf. The lack of the concrete object makes it worth less to me, and I would argue, to most readers. But, that begs the question, what are you paying for when you buy a book? Are you paying for paper, or are you paying for the content?

Publishers save money on the production cost of the book, paper, binding, etc. But the author advance and royalties, the formatting costs, the editorial and design costs, these all remain.  An eBook is still a book. The same amount of work goes into it, the same amount of time and effort. Most importantly, the reader gets the same level of enjoyment out of it.  The eBook is worth less to the redaer because Amazon’s price cutting has made it worth less, and this is devaluation is threatening the industry that book lovers should be fighting to protect.

Publishers need to differentiate between the cost of a book (binding, print and paper) and the value of the book (content, quality of writing, time invested). If publishers could make readers see the eBook as valuable for what it contains, rather than as a format, then perhaps they could convince them to pay more for it.