February 11, 2010
What's a Book (or E-Book) Worth?
Posted by Christine Hurt

I hadn't expected to update my Kindle/iPad e-reading post from yesterday, but an article in the NYT today speculated as to whether readers will remain loyal to the e-book format as prices increase to a price resembling a paperback version.  Apparently, Amazon readers have shown vocal opposition before (in reviews, ratings, comments) to higher-priced e-books and delayed electronic versions (to allow hardcover sales to proceed without competition).  If Apple succeeds in giving publishers the power to set higher e-book prices (more than the Amazon $9.99 standard), will readers find substitutes?  These substitutes could be libraries, paperbook books, older books, which are cheaper, or even other forms of entertainment.

What jarred me in the article was this quote, from (a best-selling fiction author that I candidly am not familiar with Douglas Preston), who received angry emails from consumers after delaying the electronic version of his book for four months to protect hardcover sales:

“The sense of entitlement of the American consumer is absolutely astonishing,” said Douglas Preston, whose novel “Impact” reached as high as No. 4 on The New York Times’s hardcover fiction best-seller list earlier this month. “It’s the Wal-Mart mentality, which in my view is very unhealthy for our country. It’s this notion of not wanting to pay the real price of something.”
OK, Mr. Preston, but how do we know what something is worth? This isn't the case of people digitally sharing music, movies or books without payment in violation of law, this is just the case of consumers saying that paying $15 for an electronic version of a book, which you can't loan someone or put on a bookshelf, isn't worth it to them. And even if $15 is cheaper than a hardcover version, it's not worth it if you have to wait four months to purchase it. Hardover prices have always been a form of price discrimination for people who just like to read books when they come out or who like to have a durable book for their bookshelf. Eventually, consumers will demand a price for an electronic book be less than a price for a non-electronic version. Whether or not publishers say that the difference in production costs is nominal, the value to a consumer is different.  I disagree with Mr. Preston and think that consumers are willing to pay the real price of something, but consumers get to decide what the real price is.

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