The European Commission (and the Department of Justice over in the US) has been investigating ebook price fixing by Apple, Hachette, Simon & Schuster, HarperCollins and Macmillan. You remember that ‘agency model’ that went into operation a while back, and wasn’t supposed to increase ebook prices (but did anyway)? Well, this appears to be – hopefully – the end of it. If the EC gets its way, retailers will once more be able to set the prices of the books (published by these guys) they sell.
Authors naturally don’t want prices to go too low, since of course they get paid on a share-of-the-profits basis, but hopefully they realise that prices that are maintained artificially high are doing them no favours either.
I learned it in Economics at school. If you have a commodity, then you can draw a graph of how the demand works in relation to price. There is a line where you maximise your profit – if you increase your price you will reduce your demand, but the two factors balance out and your profit remains the same. If you move off the line in either direction, you will reduce your profits, either because you’re working like stink but selling too cheaply, or you’re so expensive that nobody wants your product.
You’re pretty much OK if what you’re selling is essential and nobody can do without it – like petrol. Prices have gone up over 30% since I started driving, and have I stopped buying petrol in protest? Unfortunately not. Even if I leave the car parked outside, it will still not run on sunlight.
But ebooks are not only not essential (no, they really aren’t. You can get by without books if you have to, it’s just difficult) but they’re easily pirated – as we all know. So if you price your books too high, people don’t even have to do without – they just go and get a pirate copy for free!
Let’s watch this space. Will ebook prices fall significantly? Will we see less piracy with the reduction in incentive? I hope so. While writers undoubtedly write because they want to write, being able to devote lots of time to it (and therefore produce lots of good stuff) depends on making it financially viable. You probably can’t get much creative writing done if you’re doing a 40-hour-a-week-plus-commute office job to pay the mortgage.