Rich Mintz is someone who understands the Internet. As a Vice President of Blue State Digital (the team who handled Obama’s now-famous online campaign strategy), he’s a good person to talk to about how new technology is forcing the book industry to evolve. Yesterday, we asked Rich what he thought about the recent New York Times story on the Kindle and here’s what he had to say:
Why should e-books cost the same as physical books, just because some publishing company’s profit model would be disrupted otherwise?
As a heavy consumer of books (and a former independent bookstore owner), I’m not particularly interested in what publishing executives tell me books should cost — what matters to me is what the market tells me they actually do cost.
If the market as a whole can produce and distribute printed books profitably for $27.99, it seems to follow that it can produce and distribute e-books (which are logistically much simpler) profitably for $9.99. Empirically, the market is doing so now — and, over time, the prices of e-books will fall further, as book distributors figure out (as Apple did) that lower prices will result in higher volumes, revenues, and profits. Simon & Schuster, and everybody else, will either get with the program or be left behind.
I’m afraid that the publishing industry is at just about the point where the music industry found itself in 2004: insisting on an old pricing model, even as the rest of the world routed around them and created a new one. There’s nothing magical or eternal about the old economics of book publishing, any more than there was anything magical or eternal about horse-and-buggy transportation, or the telegraph. When a new model came along that the market decided was better, the new model won.
None of this is to say that the coming adjustment won’t be difficult or disruptive or painful. But, on principle, I have no sympathy for business executives who tell me that the price of something “should” be higher than the market says it is. Amazon is already selling enough e-books at $9.99 (presumably without losing money either for itself or for the publishers) to demonstrate that e-books can be sold for less than hardcover retail; ergo, they will be. End of story.
In the traditional questioning model of HarperStudio, Bob doesn’t entirely agree:
I agree that e-books should be priced lower than physical books. But I don’t agree that being profitable at $27.99 translates to being profitable at $9.99. It only costs us about $2.50-$3.00 less for us to publish the e-book, not $18.00 less. The right price is certainly one that a consumer will pay, but we won’t have books for them to buy if authors and publishers can’t make any money. So we need to find the right pricing somewhere between the hardcover list price and the money-losing $9.99 that Amazon is teaching consumers to expect.