E-book Price Wars 'Kindle' Firestorm: Greedy Publishers, Bully Amazon or Spoiled Consumers?

Before recently buying a Kindle 2 from Amazon, I did the math and figured I would be dollars ahead buying an affordably-priced refurbished Kindle 2 and paying about ten dollars a pop for all my books. I loved the idea that my books would always be there whenever I wanted to read them, like literate imaginary friends. No more empty moments reading about Brangelina's or TomKat's rocky relationships in People magazine while waiting at the doctor's office.

So when the firestorm erupted last month over publishing company Macmillan wanting to charge more than $9.99 for its new Kindle e-books, I felt disappointed, betrayed and confused. My logic for buying the Kindle was partly based on the appealing just under ten-dollar price of its e-books, and now Macmillan wanted to change the rules of the game on me and my fellow Kindle book buyers. How could that happen?

Amazon's first reaction was to protect its loyal Kindle buyers, making the company look like a knight in shining armor. As purveyor of "the earth's biggest selection of books," Amazon flexed its mighty muscles and stopped selling Macmillan's books altogether, not just the e-books, but the hard copy ones, too. Soon everyone was choosing sides, from Kindle loyalists who have boycotted higher priced e-books in the past, to authors who complained the Walmartian public wants cheap or free content, to big New York publishing execs crying poverty while sipping Stoli martinis at their ocean view mansions in the Hamptons.

More recently, Amazon relented to the higher-priced e-books, especially when some of the other big publishers sided with Macmillan on e-book pricing. The pragmatic Amazon could not continue to claim it had "the earth's biggest selection of books" if it started banning all the major book publishers, an industry chomping at the bit to make sweetheart deals with rival Apple to publish e-books on the company's new iPad.

So Amazon capitulated, the publishers gloated, and the e-book buying public, including myself, was caught in the cross fire. After wading through myriad newspaper articles and blog posts, I am still not sure what to make of this confusing kerfuffle. As a book buyer I want to pay the lowest price for my books, yet as a writer, I want my hard-working colleagues to be fairly compensated for their intellectual property.

It's possible that publishers are using their authors as red herrings in this e-book price war. Why can't authors still get decent royalties with the lower priced e-books? Are publishers being deceptive in downplaying the cost of producing physical books, as if they magically manufacture and ship themselves to bookstores for mere pennies. As Amazon founder and CEO Jeff Bezos pointed out in a Los Angeles Times article, "E-books should be cheaper than physical books. Readers are going to demand that, and they are right because there are so many supply chain efficiencies relative to printing a paper book."

Meanwhile, there is the free market side of me that says, why not let the publishers charge what they want and let the public vote by buying or not buying their e-books at the fifteen-dollar price point. For me the difference between paying ten or fifteen dollars for an e-book is psychologically significant; I am much more likely to make an impulse purchase at the just under ten-dollar price and will end up buying more books for which publishers don't have to pay an extra dime in production costs.

One point publishers fail to mention is that since Kindle e-books are impossible to share--unless you loan out your Kindle e-reader--each person in a household has to purchase his or her own copy of each book instead of passing it around, so more units of each book could be potentially sold (this is not true for Barnes & Noble's rival e-book reader, the Nook, whose digital files can be shared).

It is possible that publishers may turn out to be like the couple who killed the goose that laid the golden egg. E-readers like the Kindle are causing more people to buy books, increasing the popularity of reading as a pasttime and sparking people to purchase a greater number of books. A New York Times article quoted an accountant named John Wagoner of Plano, Tex., who said he would not pay much more than $13 for an e-book and would spend his money on other leisure activities if e-book prices climbed too high. "They're just books," said Wagoner. "I do other things other than reading."

Sources:
http://www.nytimes.com/2010/02/11/technology/11reader.html
http://latimesblogs.latimes.com/jacketcopy/2010/01/amazon-pulls-macmillan-titles-in-first-ebook-skirmish.html
http://www.wired.com/gadgetlab/2009/04/kindle-readers/