Questions of this sort have become especially pertinent recently, of course, with the arrival of an entirely new publishing format: the ebook. Most people instinctively feel that ebooks should be substantially cheaper than paper books, because an ebook is not physically “made”: there are no printing costs. But if, says Levine, the real value of a book resides in the “text itself”, then the delivery method shouldn’t much matter. The fixed costs – acquiring, editing, marketing – remain unchanged.
This, in a nutshell, is the argument that publishers have been having with Amazon for the last couple of years. When they first started selling ebooks, publishers argued that they should cost pretty much the same as physical books, and tried to set prices accordingly. Amazon, though, has always been in the business of driving prices down, and sought to sell them as cheaply as possible in order to gain as large as possible a share of the ebook market. In their efforts to drive prices down, Amazon has been hugely assisted (Levine points out) by the fact that they also manufacture the most popular ebook reader. Because Amazon makes big profits from its Kindle, it doesn’t need to bother about making profits from its ebook sales. Indeed, if it sells ebooks at a loss, it may still be better off overall, because this will drive up sales of its Kindle.
Last year, Levine suggests, that’s exactly what Amazon started doing in the US - selling e-books at a loss to drive up Kindle sales. Following a series of high-profile wrangles, publishers clawed back a bit of ground when they forced the retailer to adopt a selling system, known as the agency model, under which they, and not Amazon, could set the prices for ebooks. But one of the upshots is that publishers have now firmly accepted the principle that ebooks should be cheaper than their physical counterparts. The “text itself” does seem to have a different value according to the format it is delivered on.
Another part of this article I found key was the “physical object” price of a hardback book compared to its “true” price. The “physical” price is something like $3.50 for a hardback book (to print and distribute), but it’s “real” cost is much higher because of fixed cost publishers pay to market a book, pay the author, and edit it.