eBook pricing may force an eBook Napster soon

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If you’ve read much of this blog, then you know that I’m very interested in the book publishing and especially eBooks. In the mid-90s, before I moved into public relations, I worked in the book publishing industry. I worked for a literary agency in NYC.

This morning, I read a blog post Some eBook Observations by Mike Shatzkin at his Idea Logical blog. I left a comment on his blog. I think his comments are moderated, because I haven’t seen my comment appear yet. But, I also thought my comment would be of interest to people reading this blog too. So here it is.

“Mike,

I have to respectfully disagree with you. I would wager that if you walked into a bookstore today and asked 100 random people to name three specific publishers, you’d be hardpressed to find 10 who could give the names of three. Sure, bibliophiles know the names of HarperCollins, Penguin, or Random House. However, the vast majority of the buying public don’t buy books based on publishers. Instead, they’re interested in buying the new Stephen King, the new Dan Brown, etc. Consumers buy specific authors – or titles – not publishers.

Re: pricing, I also disagree. Many technology pundits have started warning publishers, “Rethink, rethink, rethink, rethink your pricing for books, and if you can’t bring yourself to radically examine your pricing, then you’re headed down the same, sad road as the music industry.” As smartphones continue to multiply, as netbook sales increase, and as the eBook industry continues to grow, the book publishers’ Napster is not far off. Hackers love cracking code, and if eBook prices don’t dramatically decrease, hackers will gleefully crack the eBook DRM out there, and distribute the latest bestsellers via an eBook Napster service.

Sure, there’s printing costs, and sure there’s fixed costs for publishers, but we all know that distributing a digital eBook file costs less than a penny. That’s a concept that someone with zero knowledge of the book industry can grasp, because just about everyone sends attached files via email these days.

Why can’t publishers follow the instincts of the master retailer himself – Sam Walton? I’m paraphrasing, but Walton often said, “I’d rather sell a million pairs of socks, and make a nickel from each pair, than sell 100 pairs of socks and make $100 per pair.” Publishers could dramatically lower the price of eBooks and make up the difference in volume.

Why not sell backlist paperback titles for $1.00 a piece in eBook format – and split the net profit 50/50 with the author? The $1.00, $2.00, $3.00 price point is such an affront to publishers, they won’t even seriously consider it, and they try to justify – with a straight face – charging a trade paperback price for a digital file that cost them basically nothing to distribute.

Realistically though, I don’t see that type of adventurous pricing happening. Amazon is taking a loss on just about every hardcover title they sell on the Kindle for $9.99. Publishers aren’t budging on prices. And, as publishers try to justify their eBook pricing with elaborate explanations and justifications, the hackers are eating pizza, sleeping under their desks, coding around the clock, and the eBook Napster gets closer and closer.”