The eBook pricing debate attracts fuzzy math

As the saying goes, if you can’t baffle them with brilliance, then befuddle them with math. Actually, that’s not the way the saying goes, but in this case, the math being “composited” (or should that be, “composted”) and the way the saying goes are the same things.

Motoko Rich, in a Monday New York Times article about the pricing of ebooks, admits that “Publishers differ on how they account for various costs” but doesn’t let that stop her from coming up with a “composite” yet “necessarily simplified” cost-model that she says was based on “interviews with executives at several publishers.” So, right off, she admits that her formula is based on information provided by the exact people who seem to believe it’s in the best interests of their business to perpetuate the perception that in book publishing, up is down.

Motoko’s composite formula might be a bit more valid if it included information and insight from others who don’t have, as we say where I’m from, a dog in that hunt.

She should, for instance, follow this link to an article on the same topic that has a formula that didn’t require “composite” and simplified cost-modeling based on information from anonymous “executives.”

That’s because it’s an analysis by Peter Olson, the former CEO of Random House and now senior lecturer at Harvard Business School and Bharat N. Anand, the Henry R. Byers professor of business administration at HBS. I’d put them up against anonymous executives any day.

You can read the analysis for yourself, but, to necessarily simplify it, I’ll quote them: “This analysis suggests that e-books could, as a stand-alone business, be priced far below Amazon’s current $9.99 pricing and dramatically lower than (paper) books.”

My point — and their’s — is that the publishers’ arguments that ebooks “cost more than people think” is ridiculous.

But don’t get me wrong: I believe publishers should be free to charge a retailer whatever they want. And the retailer should have the right to charge the reader whatever they want — even if they lose money on the deal.

I am not in the “ebooks should be $9.99 or nothing” camp. If publishers want to charge the same price as hardback books, I’m all for them doing so. If they want to charge by the chapter, that’s fine too. If they want to charge by the sentence as Stephen King writes them in real-time, that’s totally dandy. I won’t pay it, but I’d defend their right to charge the wholesaler or retailer any price they want.

But please, don’t insult me by trying to convince me that the reason you are charging whatever you are charging is because you think I’ll believe that distributing bits costs the same as distributing atoms.