Why are eBooks So Expensive?

For those of us who have embraced eBooks, the US district court’s ruling last week was read with more than a passing interest.  The court ruled that Apple played a "central role" in a conspiracy with the biggest book publishers in the United States to fix prices in violation of antitrust law.

To understand this ruling a bit of history might be in order.  When the sales of eBooks first began to take off, Amazon was in the catbird seat.  They sold most books at $9.95 or less.  Best sellers, classics, even special interest publications were sold below10 bucks. Then, all of a sudden when the iPad was introduced and Apple wanted into the eBook market, publishers raised their prices.  Apparently the Federal Judge took notice and ruled that this was not a coincidence and those meetings between Apple and some of the publishers were not as benign as Apple’s top brass maintained.

The publishers are not happy, insisting that they need higher prices to make a decent profit.  This is something that I just don’t understand.

Before the advent of eBooks and the Internet, the publishing business was much more complex.  It required the manufacturing, i.e. printing, of books, warehousing, transportation and agreements with affiliate books stores.  All was very expensive.  Even the decision of the number of copies to print was a big gamble.  Too many copies sitting in a warehouse of a less than stellar title was expensive.   Too few copies made available of a gang buster best seller could cost even more money.

Today, with the advent of eBooks publishers have no printing cost, no warehouse fees and no transportation costs.  They don’t have to have any product on the shelf waiting for a buyer.  In short, most of the risk and hard costs have vanished.  Nevertheless they lament that lower prices for the consumer will render their business unprofitable.

If they could make a profit selling traditional books at 15 bucks each, why can’t they make even more profit selling eBooks at $9.95?  Perhaps bits and bytes are more expensive than paper and ink but I think not.