Perceptions of value

The conventional wisdom is that eBooks are going to take over and destroy traditional publishing and physical books. Perhaps, but here is something to consider:

  • A Memory of Light: Hardcover – $19.99   eBook – $14.99
  • The Casual Vacancy: HC – $21.00   eB – $8.99
  • Alex Cross, Run: HC – $15.99   eB – $11.99
  • Ender’s Game: Paperback – $6.99   eB – $6.99
  • Chasing the Prophecy: HB – $11.10   eB – $8.99
  • A World Without Heroes: HB – $13.59  PB – $3.99   eB – $7.99

In that list there are only two cases where the eBook version of a novel is worth the same or more than the physical copy, and in both cases it’s the paperback version.

In Economics the value of something is determined by the demand for it. The higher the demand, the more that can be charged for something. When the eBooks above are not higher in price than the hard copy the cost varies greatly, so obviously the value of an eBook is not just the cost of the hard copy less the printing costs. And why would an eBook ever cost more than the paperback copy? Obviously Amazon and B&N are not pricing eBooks based on a flat “cover price minus printing costs” model. They’re trying to gauge the perception of value to readers.

So wouldn’t it be that if everyone preferred reading electronic copies of books to buying the hard copies the eBooks would cost more than the hard copies? Obviously people do not yet perceive eBooks as having the same value as hardcover books. And they only consider them as being as or more valuable that paperbacks when it’s a either a lesser-known title or one that’s been around so long that everyone who wants a hard copy should have one already. Getting an electronic copy would be the novelty in the latter case.

Now, part of that perception of value is simply due to the inertia of traditional hard copies. People would usually have a hard time believing that an electronic copy of anything should cost the same as a physical copy, regardless of demand. It’s easy to conceive a shortage of hard copies. It’s hard to believe a shortage of infinitely duplicatable electronic copies. But if everyone adopts the e-reader, and especially if hard copies go out of style and are no longer offered, you would think that eBooks should match or even exceed the value of print copies.

Witness also the plethora of self-published titles available in eBook. Most of those are priced between $2.99 and $4.99, and often they are given away free for at least a time. These same books in hard copy sell for $9.99 and up. The difference is most definitely not just the cost of printing.

I feel the evidence suggests that people simply do not perceive the value of eBooks to be equal to that of hard copies. All the advantages of electronic copies just aren’t yet enough to convince people otherwise. On the other hand, look at the cost of audio books:

  • A Memory of Light: Hardcover – $19.99  Audio – $47.95
  • The Casual Vacancy: HC – $21.00   Audio – $26.95
  • Alex Cross, Run: HC – $15.99  Audio – $20.95
  • Ender’s Game: Paperback – $6.99   Audio – $18.35
  • Chasing the Prophecy: HB – $11.10   Audio – $23.95
  • A World Without Heroes: HB – $13.59  Audio – $23.95

In every case the audio book on mp3 costs more than the hardcover edition–sometimes a lot more! Why is that? Yes, the initial production costs are possibly higher than printing, but with the advent of the mp3, once produced, the audio books are infinitely duplicatable as well. What’s more, in most of the cases above the mp3 edition was within pennies of the cost of the CD edition of the audio book.

So why would one format of an electronic copy cost less than the physical edition, while another format costs more? It’s partly because books on tape or CD used to cost multiple times more than the hard copy and the paradigm is slow to die, but it’s also because of the perception of value.

Anyone can listen to an audio book. They don’t need their hands. It truly is a more convenient way to consume a book. EBooks, on the other hand, aren’t really a change in how the book is consumed. It’s merely a digital representation of an analog paradigm.

So is the mp3 itself (actually, it’s a digital transformation from one digital format to another). The first mass-produced mp3 player came out in 1997. For awhile it was predicted that mp3 would kill off CDs and the concept of albums. It still may, but it hasn’t yet. What mp3 killed off was the already failing idea of singles.

The eBook may yet overtake and destroy the hard copy book. But it doesn’t seem to have happened yet. I humbly submit that if it ever does happen, the first sign will be when eBooks sell for more than the hard copy on new release hardcovers. Until then it will simply be an alternative format, not the end of traditional publishing.