Apple vs. Amazon, the War on e-Book Pricing and the YA Market

E-books have been around for some time–Michael S. Hart began the Gutenberg Project in 1971 (to put this in perspective, e-books were available eight years before the Pink Floyd classic, Another Brick in the Wall). Selling e-books and e-content, however, is relatively new. The first pay-model e-book sites appeared around 1999. At the same time, science fiction and fantasy publisher Baen opened up the Baen Free Library. Major publishers didn’t hop on the e-wagon until 2002, when Random House and HarperCollins began marketing e-versions of select titles.

Today, there’s a still perception that e-content should be cheap or free. Torrent sites persist, newspaper subscriptions (online and print) are on the decline, and few pay content models are actually making money. Online booksellers Amazon and, later, Barnes & Noble, are perpetuating this view with their $9.99 price cap on e-titles.

Should e-books be cheaper than their print counterparts? For the most part, yes. In the case of most titles, production is cheaper–there is no paper, no cover art, no dust jacket or printing costs. Older titles may require editing–a recent read of an Obernewtyn series title (Isobelle Carmody) appeared to be an early galley, full of typos and other copy problems. Figure-heavy texts may also be more difficult to render well, resulting in higher, specialty production costs.

Apple, however, seems set to challenge the status quo with the iPad (see how I neatly avoided writing “game-changer”? It can be done, people!). Publishers Weekly, the Wall Street Journal, and the New York Times are reporting hardcover sale prices of $12.99 – $14.99. Houses and their authors actually stand to earn less from the increased price point after Apple’s 30% take.

It’s possible the increased price is a reflection of a jump in production costs. Apple’s latest doohickey has color rendering potential and displays covers on a neat little virtual bookshelf. While Amazon currently subsidizes houses to support their $9.99 sales, there’s been some speculation that the capped pricing may encourage the idea that all books are worth less. (Interestingly, many physical paperbacks cost less than Kindle titles–a quick survey of my shelves reveals an average paperback price range of $4.99 – $7.99.)

Will the increased prices affect sales? The iPad uses neither e-ink nor e-paper, making it an only slightly more comfortable option than reading off a monitor. The popularity of the Kindle alone–Amazon reports sales of 6 Kindle books for every 10 physical books over the past year–suggests  long-term on-screen reading is far from popular. But publishers may also appreciate the opportunity to set their own prices. Publishers may also appreciate the opportunity to set their own prices – Macmillan recently changed the terms of their agreement with Amazon (though Amazon has yet to restore Macmillan titles to their store), raising prices to iPad levels. Chatter around the interwebs suggests others houses may soon follow suit.

Although the iPad may not wrest control of the e-book market any time soon, it will likely gain a fair chunk of the YA e-book market. Tech Crunchies, an internet statistics site, suggests the majority of e-reader users are 35-54 years old with an average household income of $100, 000. This isn’t surprising–e-readers are very expensive for a single function piece of technology ($259 for both Kindle and the Nook). Comparatively, a wifi only iPad will be $499–just under twice the price for at least four times the functionality. And, while it’s lower-powered than the traditional laptop, the iPad may prove popular with families who can’t afford a laptop for their teens (it runs iWork, has an almost fully-sized on-screen keyboard, and can bluetooth with a secondary keyboard). The iPad’s portability also makes it ideal for school use. (Technology companies have long marketed to children and teens, with 1 in 5 kids having a cell phone by the time they turn 8.) Many new adults, or twenty-somethings, also buy from the YA pool – twenty-somethings who are also influenced by the status of hi-tech gadgets and have money of their own with which to buy them – meaning the number of YA readers buying books on the iPad may actually be quite high.

What about the iPad’s lack of e-paper and e-ink? YA readers have grown up with much more screen time than the Kindle and Nook’s primary demographic; it’s possible reading on the iPad for long periods will be quite comfortable for readers in their and early twenties.

Is this enough to change how YA readers buy books? It could be, especially if publishers play their cards right. Remember the long lines at bookstores the day Harry Potter and Twilight books hit the shelves? E-readers offer instant gratification–imagine getting the latest hot title at 12:01 the day it’s released. Fanboys and girls everywhere would be willing to pay a premium for the extra 8 hours and 59 minutes reading time. (Of course, this won’t work for all titles–J.K. Rowling has been clear that her books will never be available as e-titles.) And then there’s the potential for new media tie-ins–the iPad offers houses a chance to add optional extras such as author commentary, interviews, even revision drafts for very little effort. Clever houses (Tor and Baen come to mind) could experiment with communities–readers could add their own footnotes, or have discussions in the electronic margins of a text.

The iPad may not replace the Kindle or Nook, but it is poised to change the way we read. With added features and functionality, it could steal the YA market–and keep prices in the $12.99 – $14.99 range if not driving them higher.

What do you think? Would you buy your teen an iPad in lieu of a laptop? Would you use a discussion app, or read/watch author commentary? Would you like to see the galleys of your favorite books?