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What a book is worth used to be fairly simple to calculate. There's the author's fee, printing, shipping, marketing. Calculating the right price for an electronic book is a little different, and consumers think ebooks should be cheaper because they cost less to produce. But publishers are afraid that if the price goes too low, it will put them out of business.

NPR's Lynn Neary reports.

LYNN NEARY: Ebooks, says Jason Epstein, are on the verge of utterly transforming publishing - a business he has worked in for more than half a century.

Mr. JASON EPSTEIN (Editor, Publisher, Author): It is the most exciting event, as far as books are concerned, in 500 years.

NEARY: Epstein - a well-known editor, publisher and author - is a fixture in the book business. Writing about the future of publishing in the New York Review of Books, Epstein noted that many publishers fear ebooks will make them obsolete.

Mr. EPSTEIN: There will be no inventory. There will simply be digital files, and they'll be available worldwide at the click of a mouse. This makes much of what publishers now do irrelevant: creating inventory, putting it in the warehouse, keeping track of it, selling it, shipping it. All that's going to go.

NEARY: But, Epstein says, even given all those changes, it's a mistake to assume that at this point, an ebook should necessarily cost less than the printed version of a book.

Mr. EPSTEIN: This is a serious misunderstanding there, because the publishing companies do today exist, and they do have all that overhead and they have to pay for it. And so that has to be figured into the cost of an electronic book. It's not just the cost of transmitting a file. So it's misleading to think that just because there's no physical book that the costs all disappear. They don't.

NEARY: Ebooks may be getting all of the attention in publishing these days, but that belies the fact that they remain a small fraction of the market. And that, says James McQuivey, an analyst with Forrester Research, is why publishing is in such a tough place right now. A revolution may be underway, but it's by no means complete.

Mr. JAMES MCQUIVEY (Analyst, Forrester Research): The problem publishers face is that they're organized around analog economics, you know, that are decades, if not centuries, old. And so from their perspective, cheaper books threaten that.

NEARY: McQuivey says publishers know they can't stop the revolution, but they do want to slow it down, and maintaining a higher price for digital books is one way of doing that. They were frustrated when Amazon set the price for ebooks at $9.99. So when Apple unveiled the iPad, with its ebook reader, they seized the opportunity to make prices more competitive.

Now, most of the major publishing houses have negotiated a higher price for newly released ebooks. McQuivey says publishers are trying to inhibit the sale of ebooks by artificially inflating prices, which he believes is a mistake.

Mr. MCQUIVEY: The pricing genie is already out of that bottle, because if you go to Costco, you go to Wal-Mart or Amazon.com, you're going to find hardback books that have been available for two weeks that are on sale for 12 and $14 in hardback. How can you explain to a customer that they should pay the same price for a digital edition? It just doesn't make sense.

NEARY: One person who certainly doesn't see the sense in higher ebook prices is 25-year-old Chris Dannen. A freelance writer who specializes in technology, Dannen makes the argument that ebooks should be dirt cheap. Dannen believes publishers can trim a lot of fat from their budgets right now, cutting back on expenses like marketing, for example.

Dannen is sympathetic to publishing's dilemma, but he says they need to leave their old business model behind.

Mr. CHRIS DANNEN (Freelance Writer): They should be pushing for people to convert to the new medium. They can do whatever they want to support the old medium, the printed medium, but they have to get people used to the idea of buying and reading electronically, simply because that's more profitable.

NEARY: Dannen says publishers should be finding ways to make it easier, not harder, to buy electronic books.

Mr. DANNEN: If you're able to get your books in front of more people - which you can when they're electronically distributed, right? If you have iTunes selling your books, you have this entire store right on everyone's desktop and you can expose them to a lot more. You can just get them into the habit of buying books. And more importantly, you make the process of buying completely frictionless. I mean, when you buy something on Amazon, you have that one-click purchase power.

NEARY: But Jason Epstein warns the old and the new ways of getting a book to market will be competing with each other for the foreseeable future, and publishers are not yet in a position to abandon their old ways of doing business altogether.

Mr. EPSTEIN: One thing that publishers do have to consider in thinking of pricing is that they don't want to liquidate their existing retail structure by making it so inexpensive to get an ebook that people won't go to bookstores at all. And then publishers will have no place to sell the 90 percent of the books that they do create in the physical form.

NEARY: It's too soon for questions like pricing to settle down, says Epstein, but they will eventually. And once things do settle down, Epstein predicts a future for publishing that looks not unlike the past, when a small team of editors helped shepherd a writer's book to market with relatively little interference from management. And that, says Chris Dannen, is the promise of digital publishing for young writers like himself.

Lynn Neary, NPR News, Washington.

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