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The Office of Fair Trading has confirmed it has opened an investigation into ebook pricing following complaints. The competition regulator said it is investigating "arrangements between certain publishers and retailers for the sale of ebooks". The OFT said it had received a significant number of complaints, but the fact that it …

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Troll

as a resturant owner once said

"you pay for the service, not the food"

if you remove the physical paper cost, wouldn't the difference be the price of the words* in the book.

* although many will argue that it is the price for the "Right to Read" the words in the book.

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Headmaster

What an appropriate avatar

As has been said many, many times by authors and publishers and God knows who else ad sodding nauseam - the actual printing cost is probably the smallest proportion of a book's production cost. E.g., the printing cost of a hardback is less than £1.50 per copy for a small run, and an average-run paperback probably around 50p.

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Boffin

Complete Rubbish

'many times by authors and publishers and God knows who else ad sodding nauseam - the actual printing cost is probably the smallest proportion of a book's production cost'

I would love to know which authors said this. Having worked in the publishing industry and is married to somebody that still works in the publishing industry. Authors usually hate their publishing house and call them among other things blood sucking leeches.

Maybe you are mistaking talented authors with the advances paid to celebrities to allow a ghost writer to string them a book together for the unwashed masses. They are not the same thing

Most talented authors now Write and Publish in electronic formats which are then emailed to the publishing house in a pre-approved format. The publishing houses arrange editing, printing, distribution, PR, Press Releases... blah blah blah.

Editing and sundries are back charged to the author. That is why when an author signs a deal for £100k they end up with a cheque for £20k because of all the back charging which goes on from their benevolent Publishing houses.

Charlie Higson once said the only money to be made in writing books was getting them on telly. And he's written a few best sellers so I would imagine he would know.

So where does all the profit go?

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But the ebook cost as a proportion of the retail cost...

should have one whole level of mark-up removed, as the digital vendor (eg Amazon) equivalant of the wholesaler, sells to the user with no bookshop mark-up.

So - delete the production cost, delete the bookseller mark-up and then we should see the ebook price.

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Gold badge

Re: Complete Rubbish

If you re-read the comment that you were replying to, I think you'll find you are in complete agreement with the OP. Actual printing (ink on paper) and distribution (on lorries to shops) is not a big cost compared to editing, advertising and amortising the losses on all the advances that you paid only to find the author was illiterate.

In any case, anyone who thinks that "price" is determined by "cost" really needs to read a book on economics.

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Stop

Missing the point

The investigation is not about the price of ebooks, it is about ebook pricing, there is a subtle difference. Publishers have been forcing retailers into accepting the agency pricing model, this allows the publisher to dictate the retail price of the book. The retailer is not allowed to discount the price of the book. Publishers have a monopoly in the publication of a title, they are now abusing this monopoly to fix the retail price, that is what the investigation is about.

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Profits?

"So where does all the profit go?"

My wife works in publishing.

The great majority of small to medium publishers barely ever break even, it it wasn't for government grants most would work at a loss.

So don't ask them where "all" the profits go... they don't know either.

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Big Brother

Milk It Destroy Second Hand Market

Its called inflate the prices to milk the NEW format while the "keeping up with the Joneses" crowd race to be fashionable...

what needs to be stopped is the blocking of resale, trading or simply giving away for free, eBook publishers and the media cartels are using this as another platform to destroy second hand sales and force the entire planet to purchase a new copy of everything.

what would the world be like if we worked for the benefit of the people instead of the corporations profits?

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Silver badge

Charge them (almost) full whack

While the material and distribution costs are negligible, the authors still have to be paid. Your typical eBook price complaint completely devalues the months of work represented by a good book (or the days of work represented by a Dan Brown novel).

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Anonymous Coward

Title required

That assumes that the vast majority of the money goes to the author. I think you'll find that the publisher, book shops and possibly others too all want their not insubstantial cut of the money made. Personally I would not be surprised to see authors being treated in a similar way to musicians - i.e. with most of the money being kept out of their hands.

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Unhappy

Author's cut

The retailer gets about 35-50% of the cover price, the publisher 25% and the author 2-3% in royalties. Printing, wharehousing and distribution are about 15%; this is the bit that doesn't apply to eBooks. The rest is for editorial and marketing etc.

The issue is that the publisher sells eBooks to Amazon at hardback prices, whereas they should be about 15% lower than paperback prices. Even by cutting its own margins, Amazon can't get below its (discounted) price for paperbacks.

That's not saying that Amazon might not have its own reasons for keeping the price high.

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Anonymous Coward

The title is required, and must contain letters and/or digits.

But the retailer's workload is reduced. Gone is the need for any physical shop. Gone is the need for anybody behind a counter. Gone is the need for any shelf space to display the books to customers. How on earth can the they continue to demand the sorts of percentages you mention if they do that much less work? And how can the publishers justify charging so much when the likes of Amazon have to do a lot of their work for them by publishing the book in their own formats? In some respects the retailer *is* the publisher.

Personally I think the amount that the price should be reduced by is far more than that 15% you mentioned...

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Grenade

Obviously...

... this will have the same effect as the investigation into CD pricing, i.e it will make no difference at all.

During the last "investigation" the music biz representative admitted during questioning that CD's cost much less to manufacture than C90's or vinyl, and that it was a cash cow for them.

How much did CD's come down by, absolutely nothing. In fact IIRC the prices went up.

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What about the VAT?

The government has its snout in the trough - VAT on ebooks but not paper ones

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Flame

VAT on eBooks

I actually had a, albeit brief, conversion with Duncan Bannatyne (of Dragons Den if you don't know who he is) when the VAT increase happened, which is when I first found out that eBooks include VAT.

I think it's primarily due to being a service, i.e. buy from Amazon and it's a service as it's delivered over the kindle etc.

I'd like to know however what if it's a one-off payment? Then it's not a service? Might be an interesting argument for VAT or no-VAT

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Megaphone

Money grab...

One of the first issues that should perhaps be investigated is, if a real book attracts 0% VAT.. why does an electronic version of the same thing attract 20% VAT ?

Tax the rich?

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Bronze badge

Well, to be fair...

A book is the buyer's property. An eBook is merely a license to use someone else's property (cf lack of resale and lending rights).

Until the eBook industry treat eBooks like books, why the hell should the government?

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Tax the who?

The rich are the ones with space to keep a library of paper books. In the UK, that implies a house most of us will never afford (unless by inheritance). If we were going to tax the rich, we might reverse that VAT situation, in recognition of those whose bedsit lacks space for luxuries like books!

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VAT could be lower

It wouldn't be possible to remove VAT from ebooks completely - you need cross-community agreement for more zero-rated things, apparently - but it could certainly be reduced.

There is already an agreement within the EU that would allow books - in any format - to be rated at a country's lower VAT rate, and some have taken advantage of this.

The UK lower VAT rate is 5%, so it would be possible for the government to move eBooks into that band.

But two things: a) that would be dangerously close to supporting artistic endeavour, and so unlikely under the current government at best of times, let alone when they're dead set on reducing the deficit

b) frankly, it wouldn't surprise me at all if a reduction in the VAT rate was swiftly followed by the publishers increasing their prices for eBooks, in order to maintain what they see as parity with the printed editions (neglecting, as they do, the fact that they allow sellers to discount print versions, but not electronic)

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Anonymous Coward

If it looks like a pig

Just like the overpriced CD argument, it seems rather obvious that if a copy of a book with extremely low production costs beyond server, software and bandwidth weighs in at the same price as a copy that involves the processing of dead trees, expensive presses and transport from China, there's a bit of piss-taking involved.

I'm frankly staggered that anyone would actually pay the same price as a physical book for something that Amazon can take off you at the drop of a hat and you can't lend out more than once. Books are overpriced enough as it is thanks.

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Proofreading

I wouldn't mind so much if they just fucking proof-read the kindle editions of books before releasing them for download. I mean, jeeze louise, there's no excuse for the shonky formatting and spelling errors that are present a lot of the time - especially in new books that will have been typeset electronically in the first place (rather than OCR'd).

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You get blu-ray and DVD dual media films, why not dual media books?

Surely if you buy a physical book, you have also bought the rights to read the material printed in it, so a licence for the ebook should be included with the purchase of the paper book. The vast majority of the cost of a physical book goes on printing, transport and distribution or ends up in the publisher's pocket with very little going to the author, so surely the cost of an ebook should be much less than that of a physical book. If you want to cut down piracy then stop being so greedy and charge a reasonable and representative amount for an ebook; I would suggest £2-£3.

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O'Reilly do this

But you pay extra for the eBooks. You do, however, get them in most formats, not just a specific one.

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Bronze badge

Baen

Not sure how widespread it is with Baen but in a lot of cases, if you buy a hardback it comes with a CD including a lot of eBooks. They regularly update the CDs and you can visit their website to get all the eBooks you could want. They have this strange philosophy that if they give samples away for free with the ability to pass them to your friends they will end up selling more physical books and guess what......they are right.

They treat me like an adult so I reward them by buying both eBooks and Physical books from them since there are time when you just have to have the real thing.

Would I buy eBooks through Amazon/WHSmith/Waterstones? What do you think....

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Eek

Its the usual problem of customers not knowing where the cost is

Charles Stross wrote a serious of Blog entries last year ( http://www.antipope.org/charlie/blog-static/2010/02/common-misconceptions-about-pu.html ) that explain how the industry works and the cost of ink and paper is not a significant factor in the price of a book.

The pricing of a book is the same as any other item with a limited shelf life (expensive to begin with, getting cheaper of time). The only thing unique about the book industry is that the format changes as the book gets cheaper.

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Anonymous Coward

The title is required, and must contain letters and/or digits.

And yet we're not just talking about printing, warehousing and ink & paper. Surely neither publisher nor retailer can claim as much as they used to as neither have the same costs as before?

The blog post you pointed to also seems to give the clear impression that the industry could do with a shakeup. the needless levels of management and the other challenges that face both author and reader as a result of this setup seem to harm the interests of both groups.

Perhaps a little scrutiny and action here would actually be a good thing, as it does seem there are similarities between the publishing and music industries: both have business models that they are trying to protect even though the online world is making them obsolete, or at the very least shining a light on the costs that actually exist when doing business online compared to doing it in the real world.

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Anonymous Coward

The title is required, and must contain letters and/or digits.

Even Stross says on his blog that the e-book market is broken...

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Whilst they're at it..

Aside from the fact that unlike a "real" book, I can't lend an ebook, give it to anyone else or even donate it to charity, you are to an extent paying for the convenience I suppose. But like the record industry with CD prices, you do get the feeling joe public is once again being bent over and shafted.

What should be investigated if it comes to pass, or maybe do it anyway, is investigate how Apple can force anyone wanting to sell e-books via the iOS App Store to pay Apple's 30% tax! Apple's servers only hold the applications. If the likes of Amazon and Sony want to sell ebook from their own servers, why should Apple get a cut?

This from a Mac/iPhone user who won't be buying an iPad as an e-book reader!

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Yes

Because Amazon allows Kindle users to buy books from Apple's iBook store and Sony's eBook store.

And Sony allows you to buy books from the Kindle store or the iBook store.

Oh wait, no they don't.

Actually, at the moment they've only stopped Sony because of the way the app works, there are a number of other eBook readers and shops that are still available (including the Kindle one) - although there is no guarantee that they will remain there. As the others all use a web store to make the purchase and just download the content to the app, I can't see how Apple could easily push them out without ending up under a pile of lawsuits from both Amazon and p*ssed off customers.

TBH, if you were thinking about buying an iPad just to use as an eBook reader, then that was probably a bad choice anyway - you're better off with an actual eBook reader.

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WTF?

Odd pricing

I'm not a zealot on eBook pricing, but do draw the line a paying 50% more for the eBook - £6.65 for the hardback and £9.99 for the eBook in one case just meant that I did not buy the author's work at this time...

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FAIL

Don't buy a Amazon Swindle them

If you are smart enough to buy a EPUB based reader, you can simply rent e-books for free from your local library on a 2 week lease.

I bet Amazon "forgot" to tell you that....

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FAIL

Not as clear cut as you make out

I actually looked in to this.

The ONLY libraries doing this are about a half dozen in London and a few in Yorkshire (can't remember where). You have to be a member of the library to register to be able to get an eBook from THE specific library. Oh and there's very few books there.

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Yes, for now

You can, indeed. Though given the massive cuts to the library services, it will be interesting to see which way that goes.

And don't forget the lunatic fringe of the publishing industry, which thinks that borrowing books from libraries is, well, only going to lead to piracy if you let people do it at home, so best if it's restricted so that you have to take your ePub reader to the library to fill it with books. I wrote about this as a companion to the WTF on ebook pricing last year, see http://gonedigital.net/2010/11/23/libraries-and-ebooks/

If that does happen, in tandem with library closures, then borrowing eBooks from libraries will be a lot more difficult than it is now.

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Alert

Re Don't buy a Amazon Swindle them...

No Amazon didn't "forget", Amazon know all about libraries DRM-ebooks and prevents their use on Kindle devices.

Amazon specifically prevents installation or use on their Kindle devices of Adobe Digital Editions (ADE) reader software, that the majority of local libraries use (Overdrive software system)

The Amazon Kindle ereader DRM is a walled garden no better than Apple's.

Contrast that with B&N Nook, Sony and other ereaders that have their own proprietary EPUB DRM but do allow use of ADE-DRM on their ereaders.

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@ AC 15:41

The ePub DRM used by Sony et al. is also an Adobe product and is related to ADE-DRM. Oh and they are just another walled garden except in the UK Amazon are cheaper for their eBooks where the publishers aren't forcing the price

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Anonymous Coward

Thats utter bollocks

Every council does ebooks and audio books.

I live in a rural area and I can rent thousands of epubs (4 at a time, for 2 weeks) from my library.

With physical libraries on the way out, EPUB libraries are clearly the way forward, even if there is a nominal fee to rent them.

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Silver badge
FAIL

No, you didn't

I don't know if every council does as has elsewhere been claimed, but I know for a fact that Aberdeenshire and Aberdeen City Councils both offer ePub book rental services.

And of course you have to be a member of the library to take books out. But as this is free, you'd be hard pressed to find a good and sane reason to want to take e-books out without joining.

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Anonymous Coward

The title is required, and must contain letters and/or digits.

Surrey libraries too. As do Berkshire libraries, Essex libraries and West Sussex libraries to name a few. Perhaps you didn't look in the right place?

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Flame

Net Book Agreement back from the dead?

When you look at the eBooks on Amazon that have high prices (such as book 13 of the Wheel of Time which costs more than the hardback!) you'll see that Amazon clearly state "This price was set by the publisher".

So yes, the publisher is setting the price, just like the old Net Book Agreement.

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Anonymous Coward

Regional Book Agreement

re Net Book Agreement back from the dead?

The situation is even worse in respect of the Regional Book Agreement - that never went away.

The publisher setting the price for books regionally, left retailers with a choice of either accepting the publishers' prices, or being denied the book.

Compare Amazon-USA ebook prices with Amazon-UK ebook prices - and the USA price is often half the price, even though customers in both countries are probably downloading from the same physical server., but because of the Regional Book Agreement, I cannot download from the USA. For the same reason I cannot buy from B&N, often cheaper than Amazon-USA.

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Happy

Unreasonable pricing will encourage hacking

If a product is perceived by customers to be unreasonably high hackers will likely render any security software mute and then the e-book industry will really be in trouble - no market and mass piracy.

Hopefully the UK government will produce sufficient information to reduce sale prices to a reasonable level allowing reasonable returns for all the players involved..

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ARRRRR!

In the same way that the people who can't afford to purchase films/ games/ music from legal retailers find cheaper ways to source their entertainment, it's only a matter of time before there is a rebellion against high eBook prices via piracy.

Unfortunately, I don't think the publishers will get the message. It's very sad.

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Anonymous Coward

Plenty available already

You don't need to look far to be able to download hundreds (several hundreds, a couple of thousand or more at last count of just sci-fi, horror etc.) of ebooks amounting to several GB's, complete zips, A-Z by author filled with their works in drm less epub, lit, pdf etc. just fine for uploading to your e-reader of choice that allows you to upload your own files.

If you read the ebook, then buy the paperback. Everyone's happy.

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Happy

"it's only a matter of time before there is a rebellion against high eBook prices via piracy"

Have you seen how many posts there are on alt.binaries.ebook

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Anonymous Coward

re: alt.binaries.ebook

I've often wondered if Usenet groups were one of the reasons publishers were so wary of ebooks in the first place. alt.binaries.ebooks has been around for a long time, and unlike many/most newsgroups is well organised and usable, with most titles fairly meticulously OCR'd and proof read and available in a variety of formats. The collective effort to digitise books is far less scattergun than it was with music, and of course, once it's out there, it's out for good.

Ten or fifteen years ago the driver was reading on the Palm/Handspring/Compaq handhelds, but with the arrival of proper readers I would imagine participation will snowball. While it's still dominated by SF, horror books, textbooks and manuals, there is a great deal more mainstream content appearing. REQs are responded to very quickly if works are available.

If OCRing books it does pick up in a big way and spread beyond Usenet (and there are plenty of Russian based ebook sites already), I think ebook publishers and retailers are going to have an even harder time justifying high prices than the music industry has had with CDs/downloads, particularly if they remain so anal about 'lending' books out or passing them on; these are things so ingrained in the book culture that they will be very hard to erase.

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Silver badge

Why so much?

Because publishers are greedy scum who have no idea what happened to record companies?

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Boffin

I had this issue...

And the most annoying thing is not that they cost the same as a paperback book from Amazon, in the case of the price set by a publisher they cost more.

Then to really twist the knife, when the paperback comes out because the price is set by the publisher on the eBook it wont drop in price until they update it manually. I find an email to said publisher usually does the trick.

I still object to paying MORE than a physical copy costs though.

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Pirate

Simple explanation

The publishing industry contains many suicidal muppets that have not learnt from the record industry. Those of us of a more mature age remember how we were scalped into paying a premium for cd over vinyl. I'm certainly not going to let that happen again. I do buy ebooks but only if they are cheaper than the paperback. I'll let the market decide this.

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Astonishingly ...

When I was writing the 'WTF' piece about eBook prices, I spoke to some pretty senior people in the publishing industry who, when I asked them if the industry was making the same mistakes as the music industry when it comes to digital media, responded by saying they they didn't accept that the music industry had made mistakes!

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I'll pass on ebooks for now.

I don't mind a publisher setting a price for a book. I do mind not being able to legally transfer that book to someone else, nor having someone being able to legally transfer their book to me. Until that happens, I will not buy an ebook nor a reader. I can, and do, still buy plenty of paperbacks at garage sales and the like for a fraction of a "new" ebook issued.

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