The Irrational World of Mixed-Format Digital Book Pricing

How has the combination of technology and pricing changed how you borrow and purchase books?

February 28, 2017

Can one of you explain to me how digital book pricing works?

The way that I think this works is that publishers, not Amazon or Apple or Google or BN, set the price for digital books. 

This is different from when digital books first came out, as Amazon was taking a loss on e-books in order to build up the Kindle business. Today, frontlist (newly published and heavily promoted) e-books are largely in the $15 range, up from $9.99 when the Kindle first came out.  

From what I’ve read, it is the rising price of digital books that has slowed the growth of this market. 

What happens to book pricing for multi-format digital books? And why are publishers (or is it Amazon) making such seemingly weird digital book pricing choices.

One example of Amazon’s weird digital book pricing is the book that I’m reading (listening to) now: Matchmakers: The New Economics of Multisided Platforms.

I wanted to read this book with Whispersync - meaning that my preference was to buy the synched up e-book (Kindle) with the audiobook (Audible). The problem was the pricing.  

The price for the Kindle version of Matchmakers is $19.79. Adding on Audible narration costs an additional $5.99.  This bring the total cost of the digital/audio book to $25.78.

Instead of paying this amount, I purchased the audiobook from Audible using 1 Audible credit. The cost for the audiobook ended up being $9.56.  

In order to get audiobooks at $9.56 it is necessary to sign up for the Audible Platinum Annual plan. You give Audible $229.50 up-front.  You then get 24 credits (which equals 24 books), 12 credits of which can be rolled over to the next year.  

The cost to me to be able to read Matchmakers as a Whispersync enabled e-books/audiobook would have been $16.22.  A price premium of almost 170 percent over the audiobook only option.

That was too big a price premium for me.  

The problem for the authors and publisher of Matchmakers - and maybe for Amazon - is that this bizarre pricing is causing money to be left on the table. I would have paid a reasonable premium to read the book in the digital format that I wanted, just not an excessive premium.

Since the marginal cost of selling a digital book is close to zero, the authors/publisher and Amazon are forgoing almost pure profit in this case. The publishing world and Amazon has not figured out how to rationally price mixed format digital books.  This failure to price rationally will decrease digital book buying - and ultimately all book buying.

Does this small corner of weird digital book pricing have any impact on the future of book reading?

Are young people forming book reading preferences and habits that are influenced by platforms and pricing?

Does the continued irrationality of digital book pricing degrade the potential positive impact of digital books on book culture?

How has the combination of technology and pricing changed how you borrow as purchase books - as well as how much time you invest in book reading?


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