US eBook Prices Dropped 45%: Understanding the Impact Without Panic

One of the biggest concerns for booksellers, publishers, and authors is certainly the potential price drop in eBooks, which threatens sales and profits. At the same time, many fear eBooks reaching bargain-basement levels. This concern does not seem entirely unfounded at first glance, as prices for digital books in the United States have plummeted drastically in recent years.

While in 2009 an eBook still changed hands for an average of $10.19, according to Bowker Market Research, in 2012 it was only $5.65. This corresponds to a price drop of almost 45 percent. Not only eBooks but also audiobooks have experienced a similar trend. In 2009, an average of $17.87 was due, while in 2012 it was only $11.50.

For printed books, the price trend over the four-year period was mixed, such that paperbacks ultimately cost just 3 cents less last year than in 2009.

Don’t Panic!

The fear that eBooks will become bargain-basement items, however, does not seem justified. Rather, the price drop apparently results from passing on the savings made in eBook distribution. This becomes clear when looking at sales figures in the US book market. In 2012, these reached around $27.1 billion, the same level as in 2009.

The fact that eBook prices now apparently align with the actual market value is also suggested by looking at the years in between. 2010 and 2011, the years in which eBook sales in the USA virtually exploded (and the price per eBook was still higher), saw sales rise briefly to $27.9 billion and $27.4 billion, respectively. With the now fallen eBook prices, this sales growth normalizes and returns to the 2009 level. This, however, is still above that of 2008, where total sales stood at $26.5 billion.

It is difficult to predict whether a similar price drop will occur in the domestic book market. On one hand, fixed book prices prevent a price war like the ones that frequently rage in the USA (or also in Great Britain), causing average prices to tumble. On the other hand, Amazon is also in Germany attracting customers with aggressive eBook pricing starting at 99 cents for exclusive bestsellers. This could, sooner or later, force others to lower eBook prices as well.

As the numbers show, the publishing industry apparently does not need to fear a loss of profit even when eBook prices fall. On the contrary: different publishers repeatedly report that their eBook sales have made up for other losses.

A Look Back at the Development

As the Association of American Publishers (AAP) reported from the land of unlimited possibilities in 2011, eBook sales from January to May 2010 rose by a staggering 160.1% compared to the same period in 2011. This was the strongest growth in the digital book market to date and marked the peak of the development.

In concrete numbers, this means an increase from $149.8 million to $389.7 million. Thus, eBooks climbed from seventh place in the sales ranking to second place, directly behind paperbacks, which generated sales of $473.1 million.

Overall, the US market for printed books shrank in almost all areas during the comparison period.

The German book market did not experience such drastic upheavals in the same period. Only 1% (!) of the total German book market was made up of eBooks in 2010. Compared directly to the USA, the European eBook market was still in its infancy, and particularly the lack of distribution rights for many US providers for the local market, as well as the tentative marketing of eBook readers, hampered growth.

Only the introduction of the Amazon Kindle and Kobo’s announcement of wanting to take off in the German market got the ball rolling here as well. The spell was finally broken with the start of the Tolino Alliance, making eBook readers known even to those less versed in technology.

Below is the aforementioned development of the US market in tabular form: