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Good Question: Why Do eBooks Cost So Much?

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(credit: CBS) Jason DeRusha
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MINNEAPOLIS (WCCO) — Millions of Americans now get their books on Kindles, Nooks, or iPads, but there can be a sticker shock. New books can cost $12.99 or $14.99, which got us wondering: Why do eBooks cost so much? Good Question.

Browsing through Apple’s online bookstore, new fiction books are priced at $14.99 or $12.99, in general. The prices are set by the publishers, with Apple and Amazon taking a cut of each sale.

A federal government investigation led to a lawsuit against Apple and five major book publishers, alleging price fixing. The Attorney General said price fixing has led to consumers paying millions of dollars more than they would have.

However, publishers argue that coming up with a “fair” price for eBooks isn’t as clear as many consumers would think.

“Why do eBooks cost so much?” asked WCCO reporter Jason DeRusha.

“I wouldn’t know if they say ‘so much,’” said Chris Fischbach, Publisher at Coffee House Press in Minneapolis.

Coffee House publishes literary fiction and poetry books in traditional paper form and electronic form, according to Fischbach.

He said eBooks have many of the same costs as traditional books.

“You have to edit the book, the book gets marketed, it gets proofread, it gets designed, so there’s a lot of expense that goes into each book — there’s an office space and a publisher,” he said.

Of course, eBooks don’t have to be printed, nor do they have to be shipped and warehoused.

“The book, if it costs $16 retail, it probably costs $2 or $3 in the paper or the printing,” he said.

Fischbach said he still has to pay a distributor with eBooks. That distributor reformats the book into a digital form compatible with the different types of readers, as well as getting that book into those online booksellers’ systems.

“In fact, the majority of the cost is not the object, it’s all the things that go into making it available to you when you want it,” he said.

When Amazon first started selling eBooks, they used the wholesale pricing model: A publisher would sell an eBook to Amazon, and Amazon priced it at whatever they wanted. Because Amazon was trying to build its Kindle business, it often sold the books at a loss, at $9.99.

The government alleges that publishers were concerned that book-buyers would expect all eBooks to be at $9.99, so they colluded with Apple to force an agency pricing model: The publisher sets the price, often at $12.99. Amazon and Apple take a 30 percent cut of that sale, about $3.90.

“You finding out about the book in a book review costs the publisher a lot of money in infrastructure,” he said, pointing out the huge volume of books available online requires investment to help separate the good from the bad.

Even so, critics say like the music and movies businesses, publishing’s overhead is way out of whack with the digital reality.

It’s something Fishcbach acknowledges.

“We need to create our infrastructure around what the public is willing to pay,” he said.

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