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Apple & Publishers Sued for Price Fixing, But How Much Should eBooks Cost?

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By , dealnews Features Director

Apple and five book publishers were slapped with a lawsuit from the U.S. Department of Justice yesterday, with charges that they have conspired to fix prices on eBooks. If you remember, back in late 2007, Amazon refused to sell eBook titles for more than $9.99, and publishers feared that these low retail prices would in turn spark lower wholesale prices for eBooks and potentially print books as well, further down the line.

So when Apple introduced its iPad, the manufacturer and the five book publishers — Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin Group, and Simon & Schuster — pursued an "agency model" of pricing, rather than a more traditional "wholesale model," as a way to combat Amazon's stance. The agency model differs in that, allegedly, the publishers and retailer collectively agreed to set book prices higher than they normally would, and in turn the retailer (Apple) received a 30% commission for sales. The Wall Street Journal even notes that a damning Steve Jobs quote was cited in the DOJ lawsuit in which the Apple creator said, "We'll go to [an] agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway."

Amazon is predictably thrilled about the lawsuit, since it was allegedly forced to accept this new pricing model and charge its customers accordingly. The WSJ states that three publishers have already settled with the DOJ, and have agreed to "refrain from limiting any retailer's ability to set eBook prices for two years," adding that the agreement, "could help Amazon resume deep discounts on new eBooks."

The potential for lower prices is obviously great for the budget-conscious shopper, and we eagerly await such discounts. But this also raises the issue: How much do you think an eBook should actually cost? The suit alleges that the group's new model caused titles to increase to a price range of $12.99 to $16.99. It is often assumed that a digital copy of any media should cost less than the physical counterpart, since there are no manufacturing costs. But this hasn't always been the case with eBooks, perhaps because of the aforementioned agency model. On the other hand, some might argue that the convenience of downloading an eBook immediately puts a premium on the digital version.

So readers, what do you think? Should eBooks ever cost more than the print editions? If Amazon returns to its price model where no eBook is priced over $9.99, would you be more likely to buy more eBooks? Sound off in the comments below.

Front page photo credit: TechCrunch


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20 comments
Bevcat3
eBooks should definitely be less expensive than paperbacks.  after all, you have to buy a machine to use it and you can not mark it up, loan it or re-sell it.  I also prefer a real book most of the time and don't like reading an eBook as much as a real one.  
jia683
I have recently come to appreciate ebooks. but would not pay more than 9.99. but i would admit, i buy a lot of technical books for programming and database design stuff, and if the price difference is like 20 to 30 dollars cheaper for the kindle version even if that is over 9.99, i would still by the ebook version because i hate having to carry around that heavy and thick technical manual.
salemdoc
Our local bookstore sells all books 50% off list and I can do what I want with it when I am finished as many above have noted. For a book only I can read $5 tops since I can buy the paperback for that price locally which i just did for Palmer's the First Patient.There is no cost for paper, ink, shipping (twice -distributor and store), storage, theft or damage. The book is in electronic format prior to printing so there is no additional cost for that. Even $3 would likely yield the same profit since Palmer told me once he only gets 25-50 cents per book anyway. Apple just had its 25 billionth app downloaded and proudly stated that it had paid $4b to developers, which come to about 16 cents per app - who has the money in the bank?!!
bciocco
I might be in favor of released at $9.99 then dropped to $5 or less within a year and less after that.
I like ebooks. My wife has a nook color but uses it mostly for the free books. She still hasn't spent a $50 gift card I gave her a year ago and said she will probably use it in the store for real books.
I don't like the fact that there isn't a secondary market for digital materials. With that limitation, digital should be less than half price of hard copy. I can go to a used bookstore and buy a book for half of cover price. Then, I can sell it back for half of what I paid - effectively paying 1/4 of cover. Thrift stores and yard sales are also great places to find good books.
n2photos
$9.99 should definitely be the max. Let's not forget we all need to buy a device costing from $100 - $500 to join the party. It's ridiculous to think that a paper copy could bear the cost of print, retailer mark up and even shipping to still arrive to you for less than a digital copy. 
weiliwang
I personally would not pay more than $1.99 for an ebook.

At the end of the day, I believe the most effective way to drive down the price of ebooks is to simply vote with our wallets. If no one buys ebooks at $9.99 then they will stop selling them at that price.
militarybrat
Very glad to hear them getting their hand slapped on this one.  The amount of cost that goes into printing and distributing paperback books should be substracted from the digital media cost completely and the cost of digital media production should be added to determine market value.  Paperback lovers may hate me for saying that, but this option of buying digital media should also enjoy the less cost of production.  I'm sure they'll continue to offer the ability to have the book printed and shipped to people online and possibly through kiosk for those who still enjoy the feel of holding a real book, but why should the rest of us have carry that extra cost?!?  I believe in all fairness if the cost of paperback production was taken out of the cost of receiving a digital media book our cost would not be $5.99, but more like $2.99 or less.
cindypaul
I love my Kindle. I already shop at Amazon almost exclusivly for physical books and e-books. However I'm very frustrated with the price of e-books and if the price is too high for the e-book i will wait or just by the physical book. I can alway resell the physical back through amazon or ebay and recoop some of my purchase. I think that all ebooks should be 3.00 to 7.00 and no higher becuase of the lost value. You can't resell and you can't loan them out. Why should i pay the same price?
jaoakland1
Currently the ebook edition cost less than the new hardback edition.  They cost more than the paperback, which is usually released about 6 months to a year after the hardback.  Also the price of the hardback drops when the paperback comes out.  The price of ebooks does not drop like the hardback does.  I think that $9.99 for a ebook is a great starting point, and then the price can go down when the hardback does. Hardbacks can start at $23.00, while paperbacks (reg, not the soft back) are about $7.99.  At times the hardback can be on sale for $5.99 while the paperback is $7.99.
So end result - have the price be $9.99 to reflect the savings on printing, paper, distribution,etc.  It also allows people to get the ebook at the same time the hardback comes out.  So having the ebook a little more than the paperback makes sense.
chamas
The U.S. Department of Justice really needs to focus and go after the real culprits and originators of price fixing, the friggin OIL COMPANIES!
Juliez4
They also need to look at textbook publishers. They are a huge rip-off.
Gio In LA
I will not ever buy an eBook that is priced higher than a print version - it should be no more than 1/2. There are no production or distribution costs!  AND - you should own it. This is the old CopyGuard on video tape issues all over again.  Don't they every learn?   

I have already returned 2 Kindles received as gifts because I will not support the ripoff.
dealguy
Given the huge limitations of ebooks — not least of which is that I'm dead certain the ebook I buy today won't be available to me in 10 years, unlike paper — I'm willing to pay $9.99 for a new release ebook, $4.99 for the equivalent of a paperback, and $0.99 for the classics.
donbrubaker
Let's see... no inventory costs, no shipping costs, no print costs... Why would you pay more for an ebook than a print book?  If you subtract all the costs actually associated with producing a physical book and getting it to market where there's usually a 40% markup, why not charge that?  Publishers would maintain the same profit margin with ebooks as regular books and the price of an ebook should always be lower than the lowest print price.
scoppola
people are getting RIPPPED OFF.....5.99 should be the max price......
dealnews-Somogyi
I understand that the publishing industry can't make eBooks dirt cheap, lest they fall into where the music industry is where their product is perceived as devalued. But when I see an eBook cost more than a print edition, I splutter in anger. I feel like the eBook should always be less than the cheapest print edition. 
MetaWolf
There are file sharing networks with tons of ebooks.  I don't download from those sites, but they exist.  I have bought many ebooks, but I only buy an ebook if it is under $10.  I don't see why I should pay the same as a printed version when I can't loan it when I want to.  I'm happy the DOJ slapped them with penalties.  I hope more companies realize that price fixing is illegal.  Without a watchdog agency all consumers would be up the creek.
aaruiz
I believe that some work goes into creating an ebook.  9.99 is my limit. 
cmeyerhbg
agreed high pricing leads to alternative means of acquisition. If they don't adjust it, how long until there is an http://mp3sale.ru type site for ebooks? 
lward
Hey, consumers are getting ripped off and probably will continue to get ripped off by the book industry.  You pay $20 for a hard cover, $7 for a paperback, and $13 for a digital version?  Digital should be siginficantly cheaper than paperback.  AND  with hard cover or paperback, you OWN the book and can do what you want with it.  Loan it, give it away, resell it.  With an ebook you get none of that flexability.  So with fewer features, the ebook should be even cheaper.  With the outrageous prices being charged for ebooks I'm surprised that there aren't free file sharing networks loaded with ebooks.  My pricing model:  Stand alone ebook - $5; ebook/hard copy combined purchase - hard copy price +$2.
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