eBook Pricing

Following on from a previous post where I grumbled about digital music, I now have another source of bewilderment regarding digital content: eBook pricing. Looking on Amazon.co.uk for the new James Bond novel (Carte Blanche) and hoping to be able to get a reduced price version for Kindle (Amazon’s eBook reader device), I was frustrated to find that the Kindle price was no lower than the hardback price: £9.99.

I’m a big fan of eBooks – in the year that I’ve owned a Kindle I have bought and read 400% more fiction books than in the same time period over any of the last 5 years. I prefer the experience of reading a book on the device compared to a physical book and I like the convenience of being able to receive a book pretty much instantly, thanks to Web connectivity. Previously, however, the books I’ve purchased on it have been fairly old – at least not brand new releases – and so have been priced fairly reasonably. Carte Blanche was the first time I have looked at buying a book through the service so soon after release, and given the cost-saving nature of eBooks (no printing, binding, distribution, or physical storage are required), I was optimistic about it being a fair amount cheaper than the hardback copy. If the Web is going to be utilised for this kind of business, then in my opinion the price is one of the first things that must be favourable compared to offline sources. With equal prices, I can’t really understand what I would be paying for, given all the reductions in costs on the production side.



Investigating this a bit further, and knowing that (strangely) eBooks are subject to VAT whereas physical copies aren’t, I looked into how much the eBook would cost if VAT were removed. The following graph shows the differing prices:

Prices of Carte Blanche on Amazon.co.uk (18/06/2011)

What this indicates is that even before the increase to 20% VAT, the Kindle version of the book would still be comparable in price to the hardcover equivalent at £9.78. Removing VAT altogether would leave the eBook at £8.33 – still not really much of a difference considering how much less it costs to reproduce an electronic file, but at least it would be a saving. The EU has allowed member countries to remove or reduce the VAT rate on eBooks, but as yet the UK Government has not done so. While the eBook industry is growing quickly, it is still fairly small and the 20% tax that the Government must be making from it cannot be huge. With all the talk of moving to Web-based industry, I feel the time has come for this tax to be removed (or at least lowered to a much smaller percentage) from eBooks, in order to allow these sales to really take off.

 Also displayed on the graph is the price at which the audio download of the book is charged: £10.49 (including VAT). Now this really is crazy – for a 13+ hour recording (for which people will have to have been paid to read aloud for those 13 hours, plus more for editing etc) which will lead to a much larger file size to be stored on a server somewhere (the eBook is only 710 KB), the price increase is a mere 50p! This doesn’t seem right, and I cannot understand how in comparison a glorified text file is being priced so highly.

It is important to note here that unlike a physical book, the price of a Kindle eBook is set by the publisher, not by Amazon themselves – Amazon simply takes a predefined cut of the profits. Publishers should, however, be embracing eBooks as their sales are growing phenomenally, and offer so many opportunities for cost-cutting. Overpricing them, however, will just lead to customers ignoring them, continuing to purchase physical copies instead if they see little benefit to paying such prices for a digital product. It currently seems like a half-hearted attempt by the publishers to move to a Web-based commerce and distribution model, which is at risk of ending in failure and a big waste of money if they continue to price content so high.

I’m sure there must be many others who are put off eBooks because of this kind of pricing. A quick Google search about eBook pricing leads to many other disgruntled opinions on the topic. It would be good to hear from you if this is something which bothers you, or alternatively if it doesn’t. Any theories as to why they’re being charged so highly would also be welcome!