The price of Amazon

Slashdot posted a link to a New York Times piece that asserts that the full extent of Amazon’s existence hasn’t been felt yet, but it asserts that book pricing is becoming whimsical.

My experience disagrees with that. The market will stabilize. I think the cost fluctuations are because the market hasn’t stabilized yet.

It’s no secret that I like Lionel and Marx and similar electric trains. The best source of information about them is a series of books that was published by Greenberg Publishing (now a division of Kalmbach), mostly in the 1970s and 1980s. These books had short print runs, and the majority of them are long out of print.

I looked into the cost of reprinting them, because someone was arguing they were too expensive and needed to be reprinted. Wonder of wonders, these Greenberg books that are selling for $100 apiece would cost right about that to print up a small quantity of them through a print-on-demand service.

How is the market behaving so perfectly rationally? Well, probably because that’s slightly less than it would cost to make color copies of the books in their entirety. And then you have a nicely bound book, rather than a bunch of looseleaf sheets. Sell books for less than it would cost to steal them, and people will buy them.

The music industry largely discovered the same thing. Make it easy to buy music at a price that most people deem reasonable, and people will buy them. While illegal file sharing still happens, I don’t hear people talking about it anymore. They talk about buying music on their phone. It’s easier than waiting for someone to pop up sharing what you’re looking for–you can hear a song on the radio, cue it up on your phone and buy it. Instant gratification.

The industry is still adjusting to this, and some artists are definitely struggling, but the music industry is a few years further along than the book publishing industry.

I really don’t think $6-$10 is an unreasonable price for a digital copy of what was once a 200-page bound and printed book. The reason why is that the majority of the price of that printed book is the cost of paper, printing, and distribution, all of which are negligible or non-existent with digital books. When a book sells for $25, the author makes about $2. So, let’s just do the math. Why shouldn’t everyone make the same amount as the author? The author had to create the thing. So, let the author, publisher, and reseller all make $2. Or maybe bump it up to $3. That’s how I arrive at the price of $6-$10.

And most likely what the industry will find, once prices drop to a level that reflects the true economics of electronic distribution, is that people will buy more books when they’re cheaper.

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