eBooks: Less for More?

We all know the benefits of eBooks: we can own them instantly and can carry our entire e-library with us all the time. With those apparent benefits, some prefer eBooks every time, but still there are others who prefer paper books. They reason that “smell and touch of paper” make reading a more joyous experience.

Arguably, value proposition of the two formats in terms of usability, may seem comparable, the cost side does not look so. First, take a look at the chart below, which compares kindle price to that of Hardcover or Paperback for 15 most read books on amazon.com.

As you can see, sometimes kindle books cost more than their paper edition. In this sample, the median difference of price is only (minus)14%, meaning 50% of the time, you would pay 86 cents or more for a kindle book whose paper edition costs a dollar. It may seem like a fair deal at first but kindle books can not be sold, or transferred, unlike paper books. And that makes them much more costly than it seems.

Hopefully, there will be platforms allowing readers to resell kindle books. Since digital assets don’t depreciate, resellers should be able to get all the money back after paying price of acquiring intellectual content and transaction processing fees. The royalty that an author gets on a book, could be a proxy for the price of intellectual content enshrined in the book. The cost of transaction would be determined by the platform providers but one would expect it to be very small in comparison. Mathematically, resell price (RP) could be represented in terms of Original Price paid by the buyer (OP), Royalty (R), and Transaction Cost (TC) as below:

 RP = OP - R - TC

Of Course dynamics of the secondary market for eBooks would be much more complex, but the point is that either there should be a way to resell eBooks or they should sell for a lot lower price.

Paper books deliver higher value also because they can be inadvertently transferred and shared. The key word is “inadvertently”, because it’s about we finding a book, without seeking it; and learning a few bits from it, without any prior planning. At the surface, the above may not seem to be a hugely important value, but I believe we learn a lot in inadvertent way over a long period of time.

As a child, I remember my grandmother opening the family chest (Sandook in Hindi), and I standing by her, would grab thick and colorful books my grandfather had stashed in there. I would flip pages in excitement, read a few, and then put them back. I attribute some of my knowledge of religious scriptures to such readings, that I just stumbled upon at my grandparent’s place.

We all have had many such unplanned encounters with books in libraries, or at a friend's place, or in family chests. Can you imagine how much knowledge we collectively acquire through such encounters? Would we able to do such a thing in the world of eBooks only? And what about the impact such encounters would have on lifespan of old literary works? Would old literary work die/disappear sooner because they won’t be as visible?

These questions certainly diminish long term value of eBooks and to offset that readers should either demand lower cost or should go for paper books, whenever possible. If the single biggest purpose of books is to spread knowledge then it seems that paper books would do better over longer time horizons. That should also mean that paper books would stay longer than some expect, but then, behavioral economics is different from plain economics.