Some Thoughts on the Economic Viability of E-Books

By Daniel Miessler on February 14th, 2009: Tagged as Books | Economics | Technology

A friend of mine (I’ll identify him if he so desires) sent me the following email:

Just a quick thought. With Amazon hyping up the new Kindle so much, and with so many quality e-book readers available, why are Kindle edition books more expensive than the dead tree versions? There is no production cost beyond digitizing the media ( no trees to cut, ink to buy, covers to design, etc.) except for hosting and distribution from the server. I don’t see e-books replacing dead trees until the price can be lowered enough to provide an incentive.

An example, I would gladly buy a Kindle (even though I love my library) if I knew that over time, I would break even on my investment. So, if the books were $1.50 cheaper in e-book edition, my break even point would be around 230 books. This can never happen with the prices being higher. Other than the obvious ecological benefits, there is no real incentive to go with e-books. Also, with licensing, there is a good chance that I can’t share my library with friends. Just a random thought. I figured you might have some insight on this and an interesting opinion. Any thoughts?

I think this is an excellent observation. My first thought on this is that the cost of maintaining the infrastructure for the e-content right now is rather high due to the immaturity of the space. I think it’s many times more expensive than it will be relative to the cost of publishing dead-tree versions.

In other words, dead-tree publishing is currently as cheap as it’ll ever be, and e-publishing is currently as expensive as it’ll ever be. And right now e-publishing is currently a bit higher.

Within a short time (perhaps a year or so) I expect this to equalize, and then within another 1-3 years I expect e-publishing to be far more economical.

So, as a short answer: the solution is currently an early-adopter solution, as it does cost more due to being a new model. But as things mature e-books will become far cheaper than dead-tree versions.

What do you guys think?

  • Maxo

    I would be more willing to buy e-books under the following conditions:
    1. The content is offered in an open standard where I get to pick my reading device.
    2. The price is significantly cheaper to make up for the fact I can't loan it out, and will also subsidize the fact I won't be keeping it permanently.
    I love the idea of cheap disposable digital media. If I could pay 10¢ for a song for a week, or maybe a few buck for a book for a few weeks.

  • http://cooperati.net TIMM

    provide incentives. bundle the kindle with 500 free no-copyright books, including a dictionary, thesaurus, the complete works of Shakespeare, and similar works.

    Also, provide different bundles for various age groups.

    Marketing it would be a cinch. Heck, I'm sure giving them away to school districts of the state capitols would make headway and enhance exposure. There have been programs where giveaways are budgeted annually, so that so many are distributed, with the promise that so many more will be matched if actual sales quotas are met.

    Beyond that, e-books might face a problem with recycling programs that filter old paper into new paper with government money, which artificially drives down paper prices for certain book distributors, especially if they have government contracts. Companies like Houghton Mifflin aren't going to dismantle their so carefully erected empires for the sake of voluntarily competing against other e-book start ups on a fair field.

    -=T=-

  • http://robbycolvin.com Robby Colvin

    I'm basically in the same boat right now. I don't see the need to buy a Kindle when the books cost more than a paper book. Like your friend, I do not see any reason that those e-books should cost more. For now, I'll stick with the library and buy only the books I really need.

  • http://www.stevengharms.com Steven G. Harms

    pro-Kindle: Never have to move your library again. Boxes full of dead wood suck, suck, suck to move.

  • Jon

    There is no reason for e-books to cost more than paper books. Every book in existence starts off as an electronic file that can be saved as a PDF. That being said, when I worked for an educational publisher, I was told that only about 10% of a book's cost was for the printing of the physical book. That percentage is probably much higher for novels, since it doesn't have the enormous editorial overhead of educational titles. I think that Amazon should be giving users an economic incentive to switch to e-books to encourage new users.

    I like the idea of the Kindle, but I probably won't buy one until there is a full color version and until there is a less restrictive. I might make an exception if my local newspaper becomes available in an e-book format, since I read the paper daily.

  • John

    The real payoff in e-books is college textbooks. A typical undergrad book costs around $300 at your college book store. The PDF versions of most textbooks are 50%-60% off the paper book price. Also consider that many professors change books every semester, which means you can't sell your book back so DRM really isn't a concern, and I actually managed to put my Statistics and Accounting books to use in my IT Security job so I'm keeping them anyway. The last time I managed to sell a book was on Facebook and the person I sold it to had to drive from a college 50 miles away. If you were to buy 1 semesters worth of text books on a Kindle you've paid for the kindle. You also get the benefit of not carrying around a backpack full of books. I never loan out books and mass market paperbacks will only fetch you $1 at a used book store, so putting them in the recycle bin is more convenient than making a special trip just for $2-$3. I see e-publishing in the academic space as being very economical TODAY. With the money you save on your college text books the kindle will pay for itself in 1 semester and then any leisure reading is cheaper than buying paper books, doesn't take up room in your house/apt, and has the environmental benefit of not using paper. As far as I'm concerned e-publishing has reached its prime and will only get better.

  • http://dmiessler.com/ Daniel Miessler

    Great comment. But are all textbooks avaliable electronically?

  • John

    That really depends on your school. Our slogan is “The Campus of Tomorrow” (http://www.ggc.usg.edu) and all of the professors are strongly encouraged to choose books that have an e-book component. So far every class I've been in since I decided to go back to school has had an electronic book option. I've had classes where you can buy the paper book, the PDF in its entirety, or pay per chapter for a PDF. My microeconomics class has either a paper book, or you can pay to rent a flash version that is online only for a 6 month subscription. I've only taken one class recently that had a Kindle option, but I'll be sure to suggest that they seek out publishers that do have Kindle textbooks.

  • John

    That really depends on your school. Our slogan is “The Campus of Tomorrow” (http://www.ggc.usg.edu) and all of the professors are strongly encouraged to choose books that have an e-book component. So far every class I've been in since I decided to go back to school has had an electronic book option. I've had classes where you can buy the paper book, the PDF in its entirety, or pay per chapter for a PDF. My microeconomics class has either a paper book, or you can pay to rent a flash version that is online only for a 6 month subscription. I've only taken one class recently that had a Kindle option, but I'll be sure to suggest that they seek out publishers that do have Kindle textbooks.


Top

Popular

Information Security / Technology

Politics

Philosophy & Religion

Technology & Science

Culture & Society

Miscellaneous

Arguments

Projects

Collections

Twitter

What I'm Reading

Favorite Books and Essays

Top Blog Categories

Inputs