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:


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:


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.

Apple gives stage to overpriced ebook developer Scrollmotion


Fans of electronic books got a little bit of exciting news today at Apple’s World Wide Developer Conference. Showing off how the new iPhone OS 3.0 will allow purchasing transactions from within apps, Apple brought out on stage an ebook app developer called Scrollmotion. The company’s co-founder, Josh Koppel, showed off how his Iceberg reader app on an iPhone will let you browse an ebook store directly without needing to jump to a web browser. And purchased ebooks immediately download into the app so you can read them right away. Pretty cool. You can’t quite do that with current ebook readers like Stanza, Kindle or eReader.

Funny thing about Koppel’s presentation of his new ebook store, though: there weren’t any prices visible. Well, not totally true — he did demonstrate the purchase of one book, the 2nd volume in Stephanie Meyer’s Twilight Saga, New Moon. How much was this book, which came out in 2006 and can be purchased as a paperback on for $5.50? The ebook on Scrollmotion was $9.99.

Not only is the price a terrible, terrible value for customers, but I think it may even have been purposely chosen at the $9.99 level to mislead. Many people might assume it’s a more recent best-seller being offered at the Amazon Kindle store’s typical ebook price for best-sellers of $9.99. No way Jose. And p.s. the book is $5.50 for the Kindle version.

Turns out Scrollmotion isn’t new to the iPhone app store either. Turns out they’re the folks selling all those one-off, mainstream ebooks. You know the ones where each ebook is a completely separate app taking up space on your home screens? And what are the prices like? Absolutely insane. I mean wack. I mean more than you would pay for a brand new hardcover. Bob Barker’s recent memoir, Priceless Memories, is $25 from Scrollmotion versus $9.99 in the Kindle ebook store or $16.49 for a hardcover version.

You read that right — Scrollmotion is charging you a 34% PREMIUM over the hardcover for an itty bitty electronic version that is locked down with DRM and can only be read on an iPhone or iPod Touch. There’s far less value in the ebook edition, which can’t be shared or resold and remains tied forever to a particular device platform. But they want more. I won’t even get into the fact that no matter how you measure a publisher’s costs, it is cheaper to sell an ebook than a print book (debate rages over how much cheaper, a lot or a little).

And Barker’s Scrollmotion ebook price is typical. Infinite Jest by David Foster Wallace is $9.99 on Kindle and $17 on Scrollmotion. Testimony by Anita Shreve is $16 for a hardcover or $9.99 for Kindle but as a Scrollmotion ebook app it’s $26. Outrageous.

Koppel says Scrollmotion will have 170 newspapers, 50 magazines and 1 million (you know, use your best Mini Me voice for that: one meeeelion) ebooks available for its new in-app purchase store. No surprise that publishers are jumping on board at these prices. The question is why would anyone pay these prices? Lately on some of the ebook blogs, people from the publishing industry have been whining about Amazon’s low ebook prices and claiming that if only they were given more leeway to set prices things would be much better. I think Scrollmotion is Exhibit A, B and C in why that would be a disaster for the entire field.

By the way, although Apple is making the in-app purchase feature available to all apps in theory, don’t expect many of the other existing ebook reader apps to offer it. Apple is, first of all, prohibiting any free app from offering in-app sales. And further, Apple is demanding 30% of the revenue from any sales through in-app purchases. But with Kindle and other ebook vendors selling ebooks at big discounts, even at a loss in some cases, there is no margin to hand 30% of every sale over to Apple.

The high profile Apple gave to Scrollmotion, which is ripping off its customers daily, marks yet another sad episode of Apple caving in to the interests of big publishing and broadcasting corporations over the interests of its customers. In April, Apple caved to the music labels and raised prices on popular songs by 30%. And its video store has never taken off in part because it never offered good value, charging as much or more for low-quality downloads as the same shows cost on DVD. Seems like they’re running the same self-defeating game plan for ebooks.

(This post started as a comment I left on the excellent Teleread blog. UPDATE: now David Rothman is adding his voice and documenting some more of the crazy prices.)