As feared, Kindle prices appear to be rising

I’ll start this post about Amazon’s fabulous Kindle just like I did the last one: I really, really like my Kindle and I’ve written about it positively here and all over the web (Internet smartie and publisher Rex Hammock says I’m his go-to Kindle fanboy). And, I really want to see the Kindle succeed. That said, just like my weekend post about Kindle DRM junk, this post has negative implications for we the Kindle consumers, customers and readers.

As I’ve feared for a while, Amazon is raising prices in the Kindle store. It’s really, really hard to nail this down exactly since there’s no way to monitor the store comprehensively over time. Some people take big snapshots of the whole database, which show an increasing proportion of books being added above $9.99, but that’s not conclusive. The growing protest against books over $9.99 and my anecdotal experience looking for newly arriving Kindle books provide additional support for the theory.

But two big macro pieces of evidence arrived recently. First, Jeff Bezos declared that Amazon’s Kindle hardware business and Kindle publication business each had to operate profitably on their own. No razors subsidized by the sale of razor blades here. That put a big question mark over Amazon’s $9.99 price point for most new hardcovers, since its been widely reported that Amazon loses money after paying publishing royalties on such titles. And with Amazon already selling Kindle books for Apple’s iPhone and iPod Touch, hardware that generates zero revenue for Amazon, there’s only so long the company could keep selling most titles at a loss.

Ultimately, I think Amazon ends up just where Barnes & Noble did a decade ago. Discounts shrink away for almost all Kindle books except top best sellers and special promotions. Maybe $12.50 becomes the new price point for Kindle books also available as new hardcovers. Now, about that $12.50 figure…

The second piece of evidence was a report by two Wall Street analysts, Claudio Aspesi and Jeffrey Lindsay of Sanford C. Bernstein, that came out on Friday (the piece isn’t publicly available and the best summary of the Bernstein piece I saw was by Joseph Tartakoff at PaidContent). The two analysts theorize that Amazon pays an average of $8.73 to acquire a $9.99 ebook versus $9.38 on a $12.50 ebook. There’s no sourcing back to Amazon but plugged-in analysts like these two have no doubt gotten some guidance from the company and talked to legions of other industry insiders, providing a one-off look at what Amazon is saying to publishers. I couldn’t quite figure out how the analysts had calculated that Amazon pays less than 100% royalties on $9.99 Kindle books, as has been widely reported, unless the analysts’ figure also includes paperbacks with lower print list prices, which it may. But looking to the future, as I explore below, it starts to make sense.

The increasing frequency of higher-priced Kindle editions of new hardcovers at least come at a 15% to 20% discount versus the dead-tree pulp version. The more annoying price hike is on Kindle books that are actually priced well-above the cost of paperback editions. Look at this screen shot of the Kindle edition of Tim Russert’s book about his dad, Big Russ & Me:

kindlepricejpg

The e-book costs $9.56 and there’s no box showing other editions of the book and how much they cost. There’s a good reason for that. Amazon’s also selling a paperback version of the book for…drum roll, please…$5.58 and a hardcover version — brand new, from Amazon — for $9.18. See the screenshot:

cheapricejpg

So what the heck – how is the Kindle edition page showing that you’re “saving” $4.39, or 31% off list price? Because Amazon is now showing a made-up “Digital List Price.” Unsure where a Kindle book is sold at digital list? Me, too. Could be that some publishers and Amazon have struck a new deal to cover Kindle book sales, breaking free of the older print royalty and discount model (that would explain a lot about the Alliance Bernstein report, too). But by hiding the actual price of other editions available from Amazon and showing a “digital” list price that isn’t actually charged anywhere, consumers aren’t getting the best information.

And all of this is happening, of course, as several higher-priced ebook vendors are pushing into the space, giving Amazon some cover. Scrollmotion’s ebook prices for its iPhone app reader are horrendous. And Google says it will let publishers themselves set retail prices for ebooks it plans to sell. It’s a darn shame for consumers, but it looks like the future is arriving with higher Kindle prices.

  • http://www.weberbooks.com/publish.htm SteveWeber

    Good post. “Big Russ” was a huge bestseller, so that's why used copies are selling for a penny. Also, the “Bargain Price” designation on Amazon means the book has been remaindered — returned by bookstores for credit. So even “new” hard-copy books are being sold at a huge discount to the original retail price.

  • http://gravitationalpull.net/wp/ ampressman

    Steve – thanks for the comment and great point. Any sense of whether
    most of the paperback/Kindle pricing anomalies are like that?

  • http://www.weberbooks.com/publish.htm SteveWeber

    Not sure. Someone (Amazon? The publisher?) is probably hoping that Kindle users will pay at least $9 or $10 for the convenience of getting certain content on their Kindle and won't quibble about the price of the pBook.

    Super-cheap paper copies always surface when a bestseller has run its course. Or a textbook older than three or four semesters. Much less likely to happen with niche, specialized content.

  • Angie

    I've found a number of free or discounted books on the Kindle. A couple are Robin Hobb's Assassin's apprentice and Luthiel's Song by Robert Fanney.

    Links: http://www.amazon.com/Luthiels-Song-Dreams-Ring

    http://www.amazon.com/Assassins-Apprentice-eboo

    Though what you say is disturbing, there does seem to still be a lot of great bargains.

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  • http://sewingwithtom.com/ Tom Farrell

    Actually, I sell my book on the Kindle store, and it's “discounted”. The price it's discounted from is the price I specified (which includes a percentage to amazon). So, if somebody buys my book, I still get paid as if it was sold for the price I specified, and amazon eats any difference.

    So I guess that's what “discount” means on Kindle.

  • http://sewingwithtom.com/ Tom Farrell

    Actually, I sell my book on the Kindle store, and it's “discounted”. The price it's discounted from is the price I specified (which includes a percentage to amazon). So, if somebody buys my book, I still get paid as if it was sold for the price I specified, and amazon eats any difference.

    So I guess that's what “discount” means on Kindle.

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  • nolsc

    This past year I have purchased over 75 books for my Kindle, not counting the free books that I downloaded. I paid $250 for my first Kindle, and when the new Kindle DX came out I purchased that one and passed on the old one, encouraging that person to buy their books at Amazon. So, doing the math, spent approximately $750 on books for my Kindle, purchased two Kindles for approximately $500! I am only one person. My Daughter has done the same thing.

    I know of six different people that are now buying their books from Amazon. My point being is that we were promised that we would be able to purchase best sellers for a certain price point, less than $10.00. Now the price has jumped and I will “not” pay the higher price! I will not read books that are by the publishers that are raising their prices!

    I will go back to “sharing books with friends! So, that means out of seven people, we will purchase one hard back book and share it. These friends are avoracious readers just as I am, so . . . they will not be purchasing as many books also. Multiply that by hundreds, thousands, perhaps more, and I see that the publishing industry is just shooting themselves in the foot!

  • DakotaK

    I have been contemplating buying a Kindle DX. Although the technology seems really impressive, for me the most attractive feature was that books were priced at $9.79 mostly. Now when I check books are priced anywhere from just under $13 to $20. As Steve says, many discounted hard and softcovers are actually cheaper than the Kindle versions. So now I feel that Kindle is less attractive to me. What is to stop Amazon eventually charging just as much as they charge for a regular version of a book so that the only advantage and saving would be the mailing charge? Also once they have a significant captive group who have spent $500+ on the Kindle DX and other versions will they start charging for downloading books and accessing their site? I know that they virtually make no profit with Kindle books sold at under $10, but then why should most of us spend so much to buy a Kindle? Also, won't it be more cost-effective to buy an IPad with its multiple functions in the hope that Apple too will also acquire more book rights in the future? What do you think? Buy a Kindle now or wait to see how things shake out and if Kindle book prices continue to rise? Thanks!

  • http://gravitationalpull.net/wp/ ampressman

    Dakota, thanks for the comment. First of all, I don't think your decision between an iPad and a Kindle Dx should hinge on ebook pricing. The two devices are very different (we have both in our house). And Amazon has an iPad Kindle app so even if you buy the iPad you can still read Kindle ebooks.

    On iPad vs Kindle DX, the Dx is a much better book reader. It's not even close. It is considerably lighter and easier to hold at many angles than the iPad. It has free built-in 3G so you can download books etc anywhere. And it can be used with the incredible Instapaper service to get stuff you want to read from the web. Battery life is measured in weeks. And to my eyes, the e-ink screen is less taxing and easier to read although opinions differ. If you read a lot of books, particularly hefty hardcovers, it's Kindle by a mile.

    The iPad is a do-it-all device — it's got the color screen, movies, TV shows, music, Youtube, weather, all the apps and games. It's much, much more than an ereader.

    As far as prices go, Amazon still seems to have by far the best prices and widest selection of ebooks. The big publishers have colluded with Apple to force up prices industry-wide so things are not where they were when this post was written almost a year ago.

  • DakotaK

    Thanks for the helpful information. I'm so tempted to buy the Kindle DX. I don't really need an IPad with all the additional functions. I'll mull the matter over for a while and your comments will help me reach a decision! Thanks!

  • Timothy

    Yeah, I too am extremely disappointed with the high prices of Kindle ebooks now. I was planning on getting the Kindle Touch but now I am not so sure.

    The highest book I’ve seen is actually $30! That would be “The History of the World in 100 Objects.” I forget the author. But this is absurdly expensive and a major turn off.

    Also, if you look on any ebook page for over $13 or so, you will see that it says “This price was set by the publishers.” There you go: Amazon is selling out to the publishers.

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