The day has come for publishers to offer a $4.00 book.
Most books are too expensive. Compared to lower cost alternative media sources, books are becoming niche consumables like caviar.
The high cost of books jeopardizes not only the future of books, but the future of the book publishing industry.
Unless authors, publishers and booksellers cooperate to bring down the cost of books, book publishing faces a painful decline, much as we're now witnessing with newspaper and magazine publishing.
Here in the U.S., most consumers already think twice before shelling out $7.50, $15.00 or $30.00 for a good read. If a book at the current prices represents a big purchase for citizens of the world's most affluent economy, imagine the cost burden for the vast majority of the world's literate people.
The growth in worldwide literacy has created a massive affordability gap between those who want books, and those who can afford them. Therein lies both the threat and the opportunity facing publishers.
The publishing industry has successfully responded to the price issue in the past by releasing lower cost formats such as the mid-sized trade paperback and the small purse-sized mass market paperback. Each lower cost format dropped the price 30-50 percent.
By offering customers a cheaper, smaller and less expensive format, publishers expanded the available market for their books and enabled a larger number of readers to gain access to affordable reads.
Imagine if books were only available in hard cover today. How many current readers would have long ago abandoned print books due to the high price and large size of hardcover?
Ebooks are a lower cost format, and therefore may hold the key to the book industry's salvation.
Many publishers view ebooks with a skeptical eye. After all, won't cheap ebooks cannibalize expensive print books?
This is the wrong way to examine the situation. Lower cost ebooks help publishers retain customers who might otherwise abandon books altogether in favor of lower cost alternative media options.
Ebooks also hold the promise to expand the worldwide market for books. Hundreds of millions of new middle class and literate consumers have come online outside the US, especially in developing countries.
Ebooks offer significant economic advantages to authors and publishers as well.
From a production perspective, publishers can convert print books into digital books at very little cost. Once a book is liberated as digital bits, the production, duplication and distribution of the book requires no ink, paper, fossil fuels, shipping boxes, physical bookstores or cash registers. The entire process becomes one of automated online self-serve transactions.
Since it costs the author or publisher next to nil to "print" each copy of an ebook, ebooks are extremely profitable on a per-unit basis, even at a low selling price.
By offering consumers a low cost digital product, the economics of ebooks create a virtuous, self-reinforcing cycle. The low price expands the available market by making it affordable to more consumers; low production and distribution expenses allow the publisher to earn a healthy margin; and the larger addressable market allows publishers to sell more units at greater profit margins.
The advantages of ebook economics will become more apparent as ebooks grow to comprise a greater percentage of book industry sales.
Some might fear that $4.00 books will eviscerate the earnings of mass market authors and publishers. The likely outcome isn't so simple. For the mass market, if publishers don't quickly satisfy lower price points, they'll continue losing customers.
Customers who prefer ink on paper will continue purchasing more expensive formats.
Not all books should be priced at $4.00. Publishers should segment their markets to ensure they're delivering a range of products and formats that offer the target customer value that exceeds each price point.
Some might argue book publishing isn't in trouble, as evidenced by the industry's continued growth. True, the industry has grown in recent years at 1.6 percent annually between 2002 and 2008, according the Association of American Publishers. Yet this growth is a mirage. Publishers are maintaining the illusion of growth by increasing prices. If we adjust for inflation, unit book sales have been in decline for many years.
What do you think? Would you buy more books if they were only $4.00?
Mark Coker is founder of Smashwords, a publisher and distributor of ebooks. He's also co-author, along with his wife Lesleyann, of Boob Tube, a satire about the daytime television industry.