The Crook in the Nook: Barnes & Noble ebooks are overpriced compared to Amazon

Yesterday, I excitedly preordered Barnes & Noble's "Nook" ebook reader. Today, I cancelled the order -- and I'm none to happy about it. Why can't Barnes & Noble learn from its past mistakes? The bookseller's digital titles are way overpriced -- at least compared to Amazon (Sony charges even more than both booksellers for many titles).

Quick examples -- and more will come later in this post: Twilight by Stephanie Meyer: $6.59 from Amazon; $8.79 from B&N. Philip K Dick's Do Androids Dream of Electric Sleep?: $8.38 from Amazon; $11.20 from B&N. (Sony charges $9.89 for the first and $9 for the second.)

Barnes & Noble has been down this sordid path before. Ten years ago, B&N was an early ebook pioneer, opening a store using Microsoft Reader technology. But the bookseller had the pricing all wrong, asking the same price for digital -- for which there was no printing or distribution costs -- as hardcover books. That's right, and the ebooks came with onerous DRM that made sharing titles nearly impossible.

For years, I criticized B&N and other ebook sellers for overpricing that stalled adoption. Eventually, Barnes & Noble closed its ebook store. Here's the epitaph I wrote in September 2003 on the now defunct Microsoft Monitor Weblog once run by JupiterResearch (Forrester Research has absorbed the analyst firm):

This morning I received a notice from Barnes & Noble.com informing that as of today, the company would no longer offer ebooks online. Customers like me have 90 days to retrieve titles from their online Microsoft Library; 90 days from purchase for Adobe ebook customers.

I purchased my first Microsoft Reader ebook about four years ago, and, unless I am mistaken, from Barnes & Noble.com. The company offered an excellent ebook library and facilities for downloading titles. I will sorely miss the service. The larger question is what Barnes & Noble.com's exit means for the larger ebook market. Maybe I'm a nut, but I find reading an ebook on my HP iPaq handheld to be quite enjoyable.

Still, publishers could have done more to make the price of titles more appealing. Who wants to pay 25 bucks for a new ebook, the same as the hardcover price? That hardcover book has associated printing and distribution costs that shouldn't affect ebook pricing. The hardcover can be passed around among family members or borrowed by the neighbor across the street. The ebook version is much less portable, so why charge so much?

I don't see the ebook market as dead, but Barnes & Noble.com's bowing out of the market isn't a good sign. I remember when the bookseller championed for good writers without big-name publishers or offered print-on-demand services that could revive out-of-print editions. Maybe we're just not a nation of leisure readers anymore, which would be the sadest commentary on this development yet.

Four years would pass before Amazon showed enough cunning and courage to release the Kindle reader and reasonably priced ebooks. Kindle has got to be the ugliest ebook reader on the planet. It's styling matches what I imagine an Amazon warehouse to look like. But the ebooks are priced to sell, and that's the appeal. Price matters -- a principle Amazon has long and successfully practiced. Apple applied the principle to iTunes Music Store in 2003, by offering 99-cent singles. Kindle reader isn't the revolution so much as Kindle book pricing. Why doesn't Barnes & Noble get that?

Pricing turned me away from an ebook reader that is really exciting (more on the device in a few paragraphs). Some more comparisons:

In my searches, I only found a few a newer or popular titles were Amazon and B&N matched prices, such as Dan Brown's The Lost Symbol or The Sisterhood of the Traveling Pants by Ann Brashares. But the for majority of my searches, Amazon titles cost considerably less than those from Barnes & Noble. My searches were random, and some I abandoned because Amazon had many ebook titles not available from Barnes & Noble.

I'm not quibbling pennies here. Barnes & Noble pricing is as much as 50 percent more than Amazon. I found few instances where the difference was less than 10 percent. Barnes & Noble may not be asking as much as it did during its 1999-2003 foray into ebooks, but pricing is way too high -- particularly for a bookseller playing catchup. Amazon has got an early mass-market ebook lead. Competitive ebook pricing would be crucial to winning over people to Nook.

Barnes & Noble appears to be betting on the device as the bigger draw. No question, Nook is cool. It's well designed, competitively priced and likely more extensible because of the Android operating system. From the broadest strategy perspective, Barnes & Noble is preparing an ebook and content publishing platform as much as a simple digital book reader. That's impressive.

But can the device be enough when ebook pricing is so much higher? For me, the answer is no. I suspect that many other potential buyers will balk at higher pricing, too. I ask you, Betanews readers, to offer your opinions in comments. Is Barnes & Noble asking too much? Are you even interested in ebooks (I ask mainly because of DRM)?

In fairness, Barnes & Noble learned a few lessons from its past ebook selling mistakes, and these are worth observing. The first effort came from the Barnes & Noble.com Website, at a time when fewer people were online. The new strategy looks to leverage the physical stores, which makes sense. For example, Nook will be sold at Barnes & Noble stores. Something else: The bookseller is addressing longstanding criticisms of onerous DRM by allowing customers to lend their ebooks for as long as 14 days.

The difference between Kindle and Nook is the difference between the approach of a real bookseller versus a warehouser. Barnes & Noble is trying to anticipate the needs of the reading customer. Use of physical stores and ebook lending are great examples of Barnes & Noble leveraging its strengths and anticipating what its customers want. But do those needs include paying as much as 50 percent more for ebooks than Amazon? You tell me. That's what comments are for.

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