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Amazon Raises E-Book Prices Above Paper Versions

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By Douglas A. McIntyre Updated Published
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Amazon.com (NYSE: AMZN) has begun to raise the price of some of its e-books above their paper versions. According to The New York Times, “Don’t Blink,” by James Patterson and Howard Roughan, whose publisher, Little, Brown & Company, is priced at $14.99 for the e-book. (Ed. note: A small number of publishers price their ebooks under an agency model, which means they set the price. This is clearly marked on the detail page for a book. According to Amazon “this price was set by the publisher.”) Amazon priced the hardcover at $14. “Fall of Giants” by Ken Follett, was published by Dutton, an imprint of Penguin Group USA, last week. On Amazon.com, the price for the e-book was $19.99; the hardcover edition was $19.39, the paper reports.

Amazon could not prevent customer rants about the actions, but the trend will probably grow.

Amazon has brought down the price of the Kindle twice. One reason was to get mass market adoption of the e-reader which, by some industry estimates, will have sales of 4 million units by the end of the year. The other cause of cost cuts is competition from the Barnes & Noble (NYSE: BKS) Nook and the Apple Inc (NASDAQ: AAPL) iPad. Amazon may not face much competition from multi-purpose iPad now. That will change when Apple drops the price of the device, which it will inevitably do. Consumer electronics prices usually fall as companies try to spur demand and component prices drop.

Amazon priced the Kindle in such a way that it probably loses money on each unit, so it must have a way to get that money back. Its only recourse is to make money on e-books. Those profits may need to be improved because the Kindle is likely to be a drag on Amazon.com earnings.

Amazon customers may be upset, but the price they will have to pay for a low-cost Kindle is more expensive e-books.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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