12 Dec 2011

European Commission to investigate possible collusion among ebook sellers

The European Commission recently launched an investigation into possible collusion and anti-competitive pricing practices among ebook publishers, including HarperCollins, Penguin, and Simon & Schuster. Good news obviously, as such collusion is seldom a good thing in a market economy. However, many may misinterpret this as meaning ‘Great, ebook prices will fall now!’. Many readers still find it difficult to comprehend that ebooks often cost the same as the print book to purchase, believing instead that the cost should be significantly lower. I mean, how much can it cost to put together a pdf, right?

The editing, production and design costs of ebooks are in reality still substantial (think of a book that needs to be heavily edited with a very complex layout for example) – the real cost savings come through having no transportation costs or storage costs for unsold copies, and using channels of distribution with a lower cost base (such as online sellers compared with bricks and mortar stores for printed books).

However, the majority of people still do not seem to place as much (or perhaps any!) value on the content as the physical form. In reality, even with a printed book, you are paying mainly for the ‘finished’ content (including the publishers' services) – this is where the real value lies. Until people shift their thinking in this respect (as has largely already occurred with mp3s for example), they will still expect to be able to download ebooks for a few dollars - or at the very least substantially less than the cost of a paperback. Whilst this change in relative pricing may indeed occur in the future, it will likely be because the cost of print books increases due to lower economies of scale as people go digital, rather than the price of digital content falling. Some ebooks at present are certainly over-priced, but for the mass market typical paperback titles the current pricing at around $10 is not too far off the mark in my opinion.

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