eBooks Could Cost More Than Print If Publishers Get Their Way

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Australians are flocking to eBooks according to Amazon. The only problem is that they are limited to what books are available online in Australia because book publishers are trying to hold up the price of hard-copy books claim analysts. However that could change if publishers get their way with eBooks costing more than print books in the future.

This year thousands of Australians are set to get a Kindle electronic book reader for Xmas according to Amazon, with the online store set to benefit from the device sale as owners go hunting for their favourite books.

According to the US online store Australians purchased double the number of eBooks this year than what they did last year and they anticipate that sales will double in 2012.

Amazon already sells more eBooks than paperbacks. It claims sales of Kindle devices have reached 1m a week, while 13m iPads will find a home this quarter. Juniper Research forecasts 25m e-readers sales globally this year, and 55.2m tablet sales.

Grahame Samuel the former Chairman of the Australian competition & Consumer Commission is an avid Kindle user, however he is concerned that the book industry is still trying to control the availability of books along with the price set to Australians.

The Guardian newspaper claimed recently that regulators, both in Europe and the United States, are worried that shoppers may be overpaying. This month, both the European commission and the US department of justice have announced investigations into ebook sales. They are to lift the lid on a power struggle between the publishing industry and Amazon that could determine the shape of book trading for years to come.

The European commission will probe the “agency” deals signed between Apple and five of the biggest publishers: Hachette Livre, Harper Collins, Simon & Schuster, Penguin and Macmillan, all of them publishers who have major investments in Australia.

The publishers in Australia are desperate to prop up book stores according to several book industry executives. 
“Without their support we would see book stores disappear overnight” said one leading book store executive in Sydney.

Publishers are worried that Amazon’s aggressive discounting and their rampant growth in Australia would devalue their electronic product. The Guardian said that the publishers agreed to a business model proposed by Apple just before the release of the first iPad. It was a move intended to force the world’s largest bookseller to relinquish control over pricing.

 

Currently publishers set the retail prices and bookshops take a 30% cut on each copy sold. The model was designed by Apple, but subsequently forced on Amazon, and has been adopted mainly in the UK and the US. The same model is set to be adopted in Australia.

“The whole point of the agency model is to prevent the emergence of monopolists like Amazon,” says Benedict Evans, a digital media expert at Enders Analysis. “What the publishers have done is stopped Amazon from crushing the independent ebook retail sector.”

The Guardian claimed that Amazon has lobbied furiously against the agency model. European regulators fear consumers may be paying too high a price to keep the American retail superpower at bay. “The commission has concerns the publishers may have colluded to raise the price of ebooks and that Apple may have facilitated this,” says the commission’s competition spokeswoman, Amelia Torres.

US Law firm Hagens Berman is bringing a class action suit in California against Apple and the big five publishers on behalf of book buyers. Founding partner Steve Berman says: “In the US, we believe that the publishers and Apple got together and agreed to fix the prices, and you are not allowed to do that. As a result, prices of e-books have exploded, jumping as much as 50%.”

Publishers are reluctant to speak publicly but deny any collusion.

Read: Apple Under Investigation For Dodgy eBook Deals

In Australia eBooks could soon cost more than the hardback. Walter Isaacson’s biography of Steve Jobs is a contender for the bestseller of the year. It retails on Amazon for $22.77 as a hardback, $42 in Dymocks  and $12.50 in digital format. Ken Follett’s Fall of Giants, another top title and a very thick book, is marked at $12.38 as a paperback and $16.63 for download.

Digital books cost less to produce transport and store, and these savings may not have been passed on to readers. Mass-market paperbacks are usually sold at the same price in paper or e-ink. And yet a $7.99 ebook will generate a profit of around $3.80 for a publisher, under the agency model. The margin shrinks to $2.25 for the physical version.

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