Have E-books gotten more expensive?

Digital Book World conducted a survey of Amazon's top 100 e-books after the Wall Street Journal published an article saying that readers will face "sticker shock" over the price of books.

DBW compared the average price of a bestselling e-book last Christmas to the average price of Amazon's current top 100 e-books, and noted that the average price has declined over the last year, and that the price of bestselling e-books is significantly lower than the average price of the top 100 print books.

But averaging prices is a perfectly useless piece of data.  There is no interpretation or analysis performed to give this number any meaning.  In fact, the way this discourse is framed by both of these outlets is like a case study in how useless and misleading data points such as averages can be.

What is happening with e-book pricing is several separate, distinct phenomena, and by averaging them, you come up with a number that fails to tell you anything about any of them.  It's like mixing up the audiences for HBO premium series, Bravo reality and ESPN sports, and then drawing blanket conclusions.

As a reader, the averaging of e-book prices tells you nothing about what you might expect to pay for books, or how that's changed since last year.  Instead, averaging prices obscures what's actually going on.  The numbers don't show a downward trend in e-book prices, as DBW suggests but, rather, the segregation of two discrete e-book audiences, which are served at two distinct price points.

The important numbers to take out of the DBW survey are these: last year, there were 22 titles in the top 100 priced above $10.  This year, there are 32.  Meanwhile, last year, 17 titles on the Amazon top 100 cost $2.99 or less.  This year, there are 35.

Here's what's going on:

_________________________________________________________________________________

$10 and up: Frontlist fiction

These expensive titles are the e-book versions of the new fiction that publishers are putting out in the hardcover format.  They typically cost $10.99-$12.99, and this is usually a $3-5 savings over the $15-17 price of the Amazon-discounted hardcover edition.  E-books have attracted a lot of the sort of readers who buy a bunch of new fiction every year, because buying e-books is a lot cheaper than buying the same books in hardcover. That might be why hardcover book sales are down 18% in the last year; people who would have bought hardcovers are buying the same books in e-formats instead.

While these e-books cost less than the same titles in hardcover, they're the same price they were last year and more expensive than similar e-titles were two years ago.  Back then, publishers sold e-books to Amazon wholesale, and Amazon sold the books for a loss at $9.99 to subsidize its hardware, which, at that time, cost about $300 for an e-ink device.  The publishers did not like Amazon selling their newest, most exclusive books for such low prices, and that spurred a fight between Amazon and major publishers, resulting in the agency pricing model, wherein the publishers price and sell books through Amazon, which takes a commission.

_________________________________________________________________________________

$3 and Under: Bargain books


Amazon has cultivated a large and active community of readers who hunt for bargains.  These people do the work of sorting and rating the hundreds of thousands of self-published titles, and mainstream publishers court them with flash-sale book discounts and other promotions.


Some romance publishers like Harlequin seem to be generating strong sales by pushing a few e-book titles down into the $2.99 pricing space, where they compete with e-book only imprints and self-publishers.  If established genre publishers start pushing into their prices down to $3, there's a good chance that many bargain-seeking readers will stop reading unknown "indie" authors.

The surge in romance novel sales on Kindle is also a cause for worry among bookstores; in print, Amazon hasn't historically discounted as steeply for paperbacks as it has for hardcovers, and it's tougher to meet Amazon's $25 free-shipping minimum buying $6 paperbacks than it is with $18 hardcovers.  So bookstores had a bit of an edge on e-tailers for selling those books.

But mass-market paperback sales are down 54% in the last year.  This segment of the market is the one that e-books have really crushed, and this is the tier of mainstream publishing whose sales the top self-published novels may actually be eating into.

Famous authors like Amy Tan and Dean Koontz have novellas out in e-formats; short works priced to move at $1.99 to $2.99.  On Amazon, these are called "Kindle Singles," but they're also available on other e-readers.

If you're into self-published books, you may be spending less than last year.  Back in those halcyon days, many bestselling self-published titles, such as Amanda Hocking's bestselling TRYLLE series cost $2.99.  But there are now so many self-published writers competing for attention, and the competition for notice and eyeballs have dragged the prices from the $2.99 level, which is the lowest price eligible for the 70% e-book royalty rate to $0.99, which is the lowest price you can sell a book for and still get a ranking on the paid Kindle list.

With a few exceptions, self-published authors can only break into the top 100 at $0.99, and this means, as I've explained in the past, that almost none of them make any money.  The surge of $0.99 self-published books may be part of why the average for the full list has dropped since last year, when many of those books would have cost $3.

_______________________________________________________________________________

So, if you're looking to read the New York Times' critics top-ten lists, you'll be paying $10-12, same as last year.  Buying frontlist e-books is still cheaper than buying hardcovers in almost every case.

If you're buying a Kindle to take advantage of bargain-books, there are plenty of those, and they have, indeed, gotten very cheap.  


Is there overlap between these audiences? Do any of you regularly read both frontlist $12 e-books and bargain or self-pubbed stuff? Please comment.