Why eBooks cost more than paperbacks

Last night I grabbed the sample of a book that I was debating the purchase of from the iBooks Store on my iPad. When I read through only a few pages of the book I knew I wanted to purchase the entire book. But then I saw the price and it confused me. It wasn’t the cost of the eBook that confused me so much as the cost of the eBook when compared to the paperback and hardcover copies of the same book. The eBook would cost more than the paperback or the hardcover.

I couldn’t understand why. Even someone that is relatively unaware of the inner-workings of book publishing would assume that eBooks cost less to produce and distribute than a paperback or hardcover. So why does it cost more? It turns out, eBook sales are outpacing sales of both paperback and hardcover books (and is still growing rapidly). Supply and demand, or more specifically demand alone since supply is unlimited, is making it easy for book publishers to charge more for eBooks than logic would suggest.

Many people are preaching doom and gloom for the publishing industry but I would say it is entering into a brand new heyday. A time where the costs to create and distribute their goods is rapidly decreasing while the amount they can charge is steadily increasing. A boom, if I may.

I’m a proponent of people being paid, and paid well, for the things that they do. I’m not someone who believes that all things will or should be free. But I also believe in logical pricing. Many things can and should logically dictate the price of something. Supply and demand, cost of goods, overhead, delivery, support. However, when an industry sets price without logic is when it is poised for disruption. And I believe that after an initial boom the prices of eBooks will level-out if not decline rapidly.

The music industry went through this with the advent of the MP3. It turns out Apple is right. Single music tracks from our favorite artists can be only $.99 and both the labels and artist can make bundles of money. For some, like Kid Rock and others, this model is far too strict and confining because the artists aren’t allowed to “package” their products the way that they want. This may change (and I think it should) but no one can argue that the iTunes Music Store is a massive success for everyone involved in spite of its flaws.

I also think that the iTunes Music/App Store revolution has trained people into thinking that everything from a single music track to a complex mobile application should cost $.99. As a consumer I’m delighted with this but as a businessman I’m seeing this as a longterm issue. I’ll save this for another post, however.

I don’t pretend to know when the eBook pricing disruption will occur but I feel it is fast approaching. When it is no longer prudent to print hardcover or paperback versions of books, obviously, the amount that eBooks will sell for should dramatically decrease. But we’ll see. So long as people continue to pay for eBooks and continue to buy them at the pace they are now – the eBook boom could continue to swell for some time to come.