Publishers in danger of losing hearts and minds of readers

seenoevilI’ve posted a number of stories over the last few days about increasing consumer disillusionment (including my own) with publishers and their e-book strategies. On the Booku blog “The Smell of Books”, writer/editor Joel Blacklock has been noticing some of the same things, and is wondering if they mean that publishers are losing the hearts and minds of readers. Blacklock excerpts a couple of not-terribly-well-thought-out blog posts accusing publishers of profiteering and of intentionally incorporating errors into e-book editions “because they don’t like them.”

He also brings up Amanda Hocking’s comment (which I mentioned the other day) that a remarkable number of her fans seem to be cheering her on for sticking it to the man, comparing her to “Dorothy taking down the Wicked Witch” in regard to publishers.

Setting these clueless people up as a convenient straw man, Blacklock wonders:

Do blog posts like the ones at the top of this post convince you that publishers are doing bad things for the future of reading? Because I worry that they do. Every time I read one of these posts it makes my blood boil. Not just because I work for a major publisher and know what goes on there doesn’t compare to the bad press they’re getting, but because Amazon and Apple – major companies with a lot more sway over the future of reading than publishers – seem to be getting a free pass.

I’m certainly not giving Amazon and Apple a free pass in terms of the way their policies affect the e-book market, but regarding the aforementioned e-book errors, let’s place the blame where it’s due: when e-book vendors are not permitted to modify the e-books they receive from the publishers, who should take the blame for shoddy scanning? I don’t think any sort of conspiracy theory is necessary—as Hanlon’s Razor notes, never attribute to malice that which can be adequately explained by stupidity. Or, in this case, apathy. For whatever reason, they just don’t seem to care about e-book quality—certainly not enough to make sure they get it right.

And as for pricing, well, it’s easy to second-guess the publishers on that matter, especially since there’s a perception (whether justified or not) that e-books should be significantly cheaper to produce than the paper version due to lack of printing and shipping costs. But on the other hand, publishers’ inefficiencies that have built up over time mean that they need to take in more money just to survive. I’m certainly not going to claim they’re bringing in “rivers of gold”, but perhaps if they could do more to streamline their operations they could stand to charge a bit less.

But either way, yes, I think publishers are losing the hearts and minds of readers. After all, readers don’t have to know about the ins and outs of the publishing business—they just have to know how it affects their own pocketbooks, and how many errors the book in front of them has. When they see publishers wrest pricing control away from stores so that they can raise prices, and when they see the e-books they get are riddled with errors, and when the stores, publishers, and authors don’t seem to show any interest in fixing them, what are they supposed to think? As the old saw goes, they don’t know art, but they know what they like—and what they dislike.

And the publishers and authors are not exactly doing a good job connecting with consumers, either. Take the case of writer Douglas Preston, who denounced consumers’ reactions to the increase in pricing as denoting a sense of “entitlement” (and then backpedaled as fast as he could). Or consider that the first few announcements of Macmillan President John Sargent about the agency pricing imposition were aimed not at consumers but at other industry insiders. A number of publishing industry professionals, such as Brett Sandusky, are realizing that the industry needs to do a much better job of focusing on the general public, but this change seems to be slow in coming.

So, if publishers don’t want to see readers turn more and more toward libraries or piracy rather than purchases, they should perhaps start doing a better job of conveying to consumers why their books are worth the prices they’re charging. That includes providing error-free source files to the e-book stores, and fixing errors when consumers bring them to their attention. In this era of e-publishing, “because we say they are” is becoming an increasingly threadbare reason.

32 Comments on Publishers in danger of losing hearts and minds of readers

  1. dave blevins // March 20, 2011 at 8:52 pm //

    Yeah !!! too bad more publishers aren’t like Baen.

  2. You can’t lose something you never had. As a reader, I had not particularly paid attention to which publisher published which book before the infamous Macmillan kerfuffle. I knew the authors I liked to read, and I knew the stores (on and off line) where I liked to buy books. And who could keep track of all the imprints, and which imprint went with which publisher?

    So I became aware of publishers because they suddenly raised prices. I had been pretty tolerant of errors in ebooks before, because I thought it would get better and because the prices were still reasonable. Now, publishers are expecting me to pay hardback prices for a product that has errors and I have fewer rights to? And they’re just now beginning to think that maybe they’re losing my heart and mind? What took them so long to figure this out?

  3. [Cross-posted on the Smell of Books]: I can’t disagree with you about the quality of ebook publishing at the moment. Things need to improve, and I guarantee you they already are. However, I don’t think my choice of quotes is unrepresentative of the majority of voices out there. If people want to be heard, they need to make the debate reasonable (as you have). The people who work for traditional publishers and who are passionate about e-publishing are working their arses off for readers every day. You might argue that publishers should have prioritised digital earlier or higher than they have and do, but that is a difficult argument to make without understanding how thin the margins of traditional publishing already are. Publishers are not fatcats with massive budgets they can slash. Every budget slash will mean dropping authors from a list, or giving less marketing to an existing author. Or that good people who work hard and passionately on behalf of authors and their books will be fired. Nobody involved with the publishing industry wants that to happen, least of all the authors and employees who will be affected.

    Publishing books is a marginal industry – people talk about the massive growth of ebooks as if it will mean publishers suddenly have all this new money to make. In reality, the margins are even lower for ebooks than they are for paper books. Despite the truly exciting rise of ebooks, the publishing industry is still going to shrink. Unlike technology companies, publishers are not flush with investors keen to put money in their pockets and see them gain market share without making a profit for fifteen years (like Amazon and the Book Depository). Publishers have to make a profit, or they will go under.

    My argument isn’t that publishers can’t improve: they patently can and have. It’s that a disproportionate amount of the blame for the state of books is falling on traditional publishers, and the blame is coming from pundits who are mostly writing linkbait instead of trying to inform rational debate.

  4. All you have to do to answer this question is to go to lostbooksales.com and check out the posts there. Here is a random one:

    “A Lot Like Love by Julie James
    Publisher of Lost Sale: Penguin

    Preferred format: Digital
    Attempted place of purchase:
    Reason for Lost Sale: Not available digitally in region
    Price of Lost Sale: 7.99 USD – US Dollar
    Country of Lost Sale: Canada
    What you did instead: Pirated a copy

    Comments: Tried to buy this, but the website said it was regionally restricted from my territory. Too bad, I tried to give the author/etc money, but they just won’t take it. Instead, I spent 30 seconds and pirated a copy for free. The publisher/author is really stupid, seriously, I tried to pay for it and they rejected me – now I have the book and my money in my wallet still.

    Agent: Unknown “

  5. For some reason, publishers and some authors seem to think that the market doesn’t apply to them. What? Because it’s “art” or something?

    A seller must provide a product at a price a customer is willing to pay. The customer decides if the product is worth the sellers price. If not, the customer goes elsewhere.

    With the advent of the agency model, many customers have decided that the price offered is much to high and have taken their money elsewhere, usually to indie authors or small publishers who get it. Others decide to obtain a pirated copy.

    The void is quickly being filled by indie authors and small publishers who understand the market and the product. If the traditional publishers don’t get their act together and provide a product that people want to buy and at a price they’re willing to pay, they will go out of business.

  6. So what you’re saying is that if a publisher doesn’t provide a book at the price any particular customer is willing to pay, they should suck it up and expect piracy? What if that price is unrealistic compared to what it costs to produce that product?

    The only organisation that has been able to provide ebooks at the prices you’re talking about is Amazon – and they were doing so by making no profit whatsoever on ebooks. That is not a sustainable business model, unless the only ebook vendor you wish to buy from for the foreseeable future is Amazon.

  7. If the price a customer is willing to pay is less than the cost to produce, then there is no market. Sad, but true.

    However, nobody mentioned a price, so I’m not sure how you concluded that the only organization that has been able to provide ebooks at the prices we’re talking about is Amazon. What price are we talking about? Obviously other organization are providing ebooks at prices other than what the traditional publishers are charging; do they have a sustainable business model? We don’t know yet. I’m sure some don’t. It wouldn’t surprise me if traditional publishing is unable to find a sustainable business model in epublishing; it’s a disruptive technology. There is a market out there, however, and the harder traditional publishing tries to force it into old models, the less likely they are to be successful, in my opinion.

    I’m not interested in attacking publishers. But I do wish they’d stop acting like I’m unreasonable for choosing what price I’m willing to pay for something. Convince me you’re giving me value for the price; don’t tell me I should want to pay more.

  8. I think people need to understand the difference between a threat, and a decision. If I were to say ‘offer me the book for 99 cents or I will pirate it, suckas!’ than that is a threat and deserves to be laughed at. But I say ‘$14.99 is too high given reason X, reason Y and reason Z, I won’t pay it, and I will just not buy the book in question’ than that is a decision based on a reason, and I am perfectly within my rights to make it. If you then want to argue about the validity of reason X or Y or Z, you are welcome to. But As Sherri says, if you truly can’t produce at the price your customer is willing to pay, you won’t have a sale no matter how ‘right’ you are. The only two books I will buy from Big Pub, when they are released, no questions asked are the new Stephen King and the new JD Robb, so that’s two out of the 100 or so books I read in a year. The other 98 of them are up for grabs. And if Big Pub won’t provide them to me under acceptable terms (to me), then I am sure Indie Pub, or the library, or a loan from a friend, will be more than happy to oblige me. And that is not a threat. It’s simply that as a consumer, I have other choices now—legal, valid choices—and I will execute them. I’ll read 100 books a year. They can be these books over here, or those books over there, it’s all the same to me—except for the Stephen King and JD Robb, of course :) But the rest of them—it really IS all the same to me. So, you sell yours or somebody else sells theirs, I don’t really care. If yours have DRM or are restricted or cost too much, there are plenty of other fish in the sea.

  9. Joanna – that’s exactly how publishing still makes any money at all. Twenty per cent of our titles make eighty per cent of our revenue. And it works because people who really want those few titles are willing to pay what they’re actually worth.

    By all means go elsewhere. I’ve never heard an argument from a publisher telling a reader they should buy the books at the prices they’re at if they don’t want to pay that much. All publishers do is justify why the prices are as high as they are.

    If you don’t want to buy the book at the price it’s at then don’t. Publishers have a viable business model (for now), and if you’re convinced that the market will wipe them off the map, then wait for it to happen. But speculating on better business models that just make books cheaper across the board because you want them to be cheaper is pointless and without basis in reality.

  10. Complaining about errors in e-books and also complaining that e-books are priced too high is witless. Errors are common in e-books because the margin and sales volume of e-books doesn’t justify the costs of finding and fixing them. You want quality you have to be willing to pay for quality.

  11. I think the comments above by Joel and Dean sum up my impression of many of the publishers. They just don’t care about their customers. One comment even implied that the customers are “stupid”. You may be successful in the short term with that attitude, but you really are alienating your customers.

  12. “the margin and sales volume of e-books doesn’t justify the costs of finding and fixing them.”

    This sums up the contempt that readers are treated with by some Publishers. The contempt that makes them think we’re are completely stupid to believe this margin crap, and that we should buy something at ANY price, that is sub standard. Margins and profits being earned by the major publishers are higher than they ever earned on paper books. No other industry intentionally sells sub standard product and then whines about their prices being too low. It’s really quite pathetic.

  13. Michael you are so right. It really says it all. Hardly surprising to hear this kind of arrogant nonsense from Mr Blacklock works for a one of the major Publishing houses and has his own nest to feather. His blog is even more appalling in it’s contempt for anyone exposing the greed and idiocy of the bug publishers business model.

  14. Where do you get the idea that margins and profits earned by major publishers on ebooks are higher than those earned on paper books? That simply isn’t true.

    And I’ve never expressed contempt for readers. I’ve never implied readers are stupid, either. But I will point out willful negativity on the part of some bloggers, who instead of trying to further the debate on e-reading are baselessly pointing the finger of blame almost exclusively at publishers.

    Publishers have a lot to learn, and they’re far from perfect. But I don’t understand the level of disdain and outright hate lumped on them by regular readers – particularly when the facts of the matter are not straightforward.

    Anyway … must get back to feathering my nest.

  15. @Howard: “No other industry intentionally sells sub standard product and then whines about their prices being too low.”

    You’re obviously living in some parallel dimension that’s not mine…

  16. I’ve known that for some time now Steven ………..

  17. “Where do you get the idea that margins and profits earned by major publishers on ebooks are higher than those earned on paper books? That simply isn’t true.”

    Do the Maths. I’ve been in financial and general management for more than 30 years and the costs and overheads for paper books and eBooks are easy to find out. This ‘myth’ about the margins has been flogged a long time and no one is buying it any more.

  18. Publishing companies should strive for professionalism instead of easy ways out. Also, why not offer a bargain for online books, especially since many readers prefer them to printed books?

    That said, I’m not in too much of a hurry for them to change their ways. Leaves more readers to authors like me who set a decent price for readers in this bad economy.

    Morgan Mandel

  19. I’ve felt the contempt from publishers attitude before. I feel it now, in fact :) Joel, if you are content, as a publisher, to get the two sales from me you’d get from the two name authors I mentioned, and that’s it, and you are happy for me to go elsewhere for the 98 other sales you could make on my hundred books, what does that say about the regard publishing has for their customers? I’m telling you that 98 other sales are up for grabs and you’re saying ‘that’s fine, we got you on the Stephen King, so we made our profit on you.’ That’s what I’m hearing, anyway :)

    I don’t think it’s having a ‘negative attitude’ to point out, as a customer, that a business is not meeting your needs and to make suggestions to them as to how they could. We’re saying we WANT you to succeed and to have sales from us, and all you have to do is fix a few issues for us. And you’re ignoring it. And then, when your business does drop, you’ll blame it on piracy or something and give yourselves a pass? How is that helping readers? How is that helping your authors?

  20. I’m sorry, but it’s not witless for me to expect that if publishers expect me to pay higher prices, I should get a product that is not error-filled. The higher prices have been in effect for almost a year, and the errors are still there.

    If I’m paying less, I have lower expectations, of both errors and rights. If I’m paying the same or higher price as I would for a hardback, but getting more errors and fewer rights (no resale, little or no lending, ephemeral nature), then I’m not very happy, and since the publishers are the ones who created this situation, yes, I’m going to be unhappy with them. Just telling me I’m wrong over and over is likely to make me more unhappy with publishers.

  21. Joel,

    The only example of piracy in this whole thread was an example from lostbooksales.com, and the issue wasn’t the price, $7.99, which is par for a mass market paperback these days, but geo-restriction, where the Canadian customer was unable to buy the ebook because nobody in Canada has a contract to sell the book, and unlike paper books, the customer is not allowed to buy a copy from a foreign bookseller.

    From my conversations with authors and booksellers, the average paper book is going to remain in the bricks and mortar bookstores at most a couple of months. Ebooks stay in print for the entire length of the contract. If there are tighter margins for ebooks, they make up for it with the longer availability. We customers are not that dumb, when we hear the protestations from the publishers, we disbelieve. We know that in this digital age, the cost of creating the (two) digital editions at the same time as the print edition is probably in the hundreds of dollars, certainly no more than one or two thousand dollars (and I’m sure that’s being generous), so the costs of creating the ebook is probably paid off after a couple hundred ebooks are sold, probably fewer.

    I’m not advocating piracy here. In 2009, I spent close to $2,000 on ebooks. In 2010, I spent less, but certainly over $1,000. Of that amount in 2010, I spent less than $100 on agency books. Before switching to ebooks, I was one of those book buyers who mostly bought used books. Before agency pricing, I was mostly waiting for sales, and buying ebooks that were at a substantial discount to the list price, and happy to do so. I don’t expect the publishers to price ebooks at used book prices when the hardcover comes out, but I think they’re making a huge mistake to not add another pricing tier at used book prices and dropping the price to it some time after the mass market paperback has been out and possibly out of print. This is why we consumers look at the publishers protesting that agency pricing of ebooks is the only way to save books and publishing. It drives me crazy that I can join B&N’s loyalty program, and get a 10% price reduction on MMPBs, but have to pay the full MMPB price (or more) on an DRMd ebook. So I just don’t buy them. If I can get them from the library, OK. If not, I don’t read those authors anymore.

  22. Bruce: “If there are tighter margins for ebooks, they make up for it with the longer availability.”

    Great, so you admit that the margins for ebooks are tighter than those for printed books.

    “It drives me crazy that I can join B&N’s loyalty program, and get a 10% price reduction on MMPBs…”

    That’s because B&N’s loyalty program is an example of B&N taking a hit on profits for one product (books) in a hope to sell you a secondary product (coffee and snacks) which gives them more profit.

    ****

    “We’re saying we WANT you to succeed and to have sales from us, and all you have to do is fix a few issues for us.”

    One of those issues, apparently, being “waaaaah books cooooost too muuuuuuuch”.

    “[I]f you truly can’t produce at the price your customer is willing to pay, you won’t have a sale no matter how ‘right’ you are.”

    And if you truly can’t afford to buy at the price the seller sets, then you won’t get the book no matter how right you are.

    There seems to be this attitude that “the right price is whatever the customer wants, no matter what that is”. As though there were nobody in this transaction except the customer, as though only the publishers were the greedy ones here. Why isn’t it greedy to say “you should set your prices lower because I wanna have lots of books“?

    ****

    “Do the Maths. I’ve been in financial and general management for more than 30 years and the costs and overheads for paper books and eBooks are easy to find out. ”

    …he says to a publisher. :rolleyes:

  23. Density Duck, I didn’t say there were lower margins, I said “If there are lower margins”. Don’t forget, when a publisher sells a paper book, they’re typically getting 50% or so of the MSRP, whereas with the ebook, they’re getting 70% of the MSRP. I’d argue that the publisher might be operating on lower margins for a ebook when there’s only a hardcover edition, but probably has better margins with ebooks than for trade or mass market paperbacks.

    My point about the loyalty programs and sales is that if some retailer wants to accept a lower margin to gain market share, why shouldn’t they be able to do it? If the publisher is getting the amount that they deem necessary for their survival, why should they care what profit or loss the retail gets on that sale?

    And yes, it is all about cost to the consumer. In the print world, I have a choice of buying immediately after release a hardcover, which everyone knows has the greatest margins for the publisher, or wait for the trade or mass market PB, or wait until I find it marked down at a bookstore or at a used bookstore, or get it from the library. The publishers are basically cutting out all of those price points except slightly discounted hardcover, slightly discounted TPB, and fully priced MMPB. As a consumer, I have to say, I know how much I want to pay for your product, and I’m walking away from the Agency publishers because I think they’re too expensive. I still bought about $1,000 in ebooks last year, and $950 was not from the Agency publishers, and the $50 that was, was using discounted gift cards.

  24. “In the print world, I have a choice of buying immediately after release a hardcover…or wait for the trade or mass market PB, or wait until I find it marked down at a bookstore or at a used bookstore, or get it from the library.”

    Great!

    And this state of affairs should transfer directly to ebooks because…?

  25. Sandy Thatcher // March 22, 2011 at 8:44 pm //

    Howard should do his math again. What he may not realize, having never worked for a publishing house, is that costs associated with printing amount to about 20-25% of overall costs of publishing a book, and the costs associated with publishing electronically easily add up to that amount, if they do not exceed it in some cases. Bruce also should redo his mat because he assumes that royalties paid to authors on paperbacks and e-books are at the same level: wrong! A paperback royalty might typically be 10% of net (or less) while e-book royalties are often 20% or higher. Thus the margin for the publisher is NOT greater.—Sandy Thatcher, Director Emeritus, Penn State University Press

  26. Because the publishers say it should (except when they think that it’s better for them when it doesn’t).

    The publishers keep telling us that what they’re selling us is the content of the book, and they’ve acknowledged that ebooks are in competition with the print books, and the prices of the ebooks have been set in stone by the agency publishers so as to not cannibalize the print book sales. This may work for blockbuster authors, but I think that ultimately this is going to hurt mid-list authors, who are increasingly in competition with self-published authors. From what I’ve seen of the agency publishers and their pricing policies, it’s a take it or leave it policy, whereas retailers are willing do to things like trade profit margin for increased revenue and total net income. And whether you like it or not, consumers are often price conscious, and will take their entertainment dollars elsewhere for trivial reasons, including a 50 cent difference in price between the ebook and the cheapest print edition.

  27. Sandy wrote:
    “Howard should do his math again. What he may not realize, having never worked for a publishing house, is that costs associated with printing amount to about 20-25% of overall costs of publishing a book, and the costs associated with publishing electronically easily add up to that amount, if they do not exceed it in some cases.”

    I don’t have to stick my finger in the fire to know it’ll get burned. Your numbers are unconvincing in the extreme, and I don’t believe what you say is true at all. My knowledge of the cost base and how they are incurred tells me with no doubt whatsoever that margins on eBooks being sold by the major publishers are significantly higher than on paper, and the public simply won’t buy the smoke and mirrors you offer. Your senior position only makes your view more biased and unreliable I am afraid.

  28. If it is true that ebook costs for the Big 6 publishers equals or exceeds that of print books, then I think the big publishers need to seriously look at their business processes and procedures. (they could cut off .50 from the cost of each book by not using DRM, I understand.) Nobody is answering why Baen and other small publishers can be so successful where HC and the others cannot.

  29. becca:

    “Nobody is answering why Baen and other small publishers can be so successful where HC and the others cannot.”

    Because Baen has successful authors with dedicated fan followings, and those fans will buy whatever their favorite authors write. Baen has recognized that the publisher is an important facilitator in the creative process, but is not vital to the process. Most publishers seem to have the idea that since they play such a large role, they are therefore the reason anything happens at all…

    *****

    Howard:
    “Your numbers are unconvincing in the extreme, and I don’t believe what you say is true at all.”

    A surprisingly Republican method of thinking. “don’t confuse me with your lying FACTS, I know what the TRUTH is!”

    *****

    Bruce:
    “whether you like it or not, consumers are often price conscious, and will take their entertainment dollars elsewhere for trivial reasons, including a 50 cent difference in price between the ebook and the cheapest print edition.”

    This is astoundingly petty. If you’re making decisions about entertainment purchases because a product which you were never going to buy is less expensive, then maybe you don’t need to be buying books.

  30. Sandy,

    I admit that, not working for a publisher, I have no idea what the total costs for print and ebooks are. However, assuming that publishers get approximately 50% of the print book price, and 70% of an ebook, and author royalties are 10% of publisher net for print and 20% for ebook you get:

    $25 hardback: Publisher gross $12.50, author gets $1.25, so publisher nets $11.25
    $15 ebook, Publisher gross $10.50, author gets $2.50, publisher nets $8
    Publisher margin is $3.25 less for ebook

    $15 trade PB: Publisher gross $7.50, author gets $.75, publisher nets $6.75
    $10 ebook, Publisher gross $7, author gets $1.40, publisher nets $5.60
    Publisher gets $1.15 less for ebook

    $8 MMPB: publisher gross $4, author gets $0.40, publisher nets $3.60
    $8 ebook, Publisher gross 5.60, author gets $1.12, publisher nets $4.48
    Publisher gets $0.88 more for ebook

    So, here I am making more assumptions. I’m assuming that there are fixed costs of creating the print and ebooks, and it’s comparable for both, so I’ll ignore that. From another TeleRead post, it looks like Adobe changes $.22/book for DRM, and I’m making the assumption that B&N, Amazon and Apple take a similar amount for their DRM, and I’m assuming that the DRM fee comes out of the publisher’s take. Let’s be generous an say that the full cost of ebook distribution is $.50. The rest of the content server costs are really amortized over all of the ebooks sold, so it might be more for a small university press, but likely less for the big 6. So what’s the cost of a print book distribution chain? If it costs more than about $1.50 to get a trade paperback out to the bookstores (including returns), the ebook is a better deal for the publisher than either MMPB or TPB even with 20% net author royalties.

    And once the print book is out of print, any ebook price is a win for ebooks.

  31. Bruce, you have a determined interest in the breakdown … but I feel your numbers are not the ones that matter so much, with respect and imho of course.

    In the production of paper books there are fixed costs and variable costs. Fixed costs are incurred irrespective of how many books are produced/sold. Variable costs are incurred in direct proportion to each paper book.

    In the paper publishing business the fixed costs are editing/some marketing/pre production. The variable costs are printing, distribution, retail/wholesale margins, returns, reprints, restocking etc.

    In the eBook business the Fixed Costs are essentially the same as in the paper business, and there is only one material variable cost; In Amazon’s case it is their 30% commission. The fixed costs are more or less the same, though it is clear that copy editing has been cut back considerably considering the errors that are appearing throughout so many titles.

    Historically most paperback titles resulted in something in order of 15% profit, after variable costs, to the Publisher toward their fixed costs. On a $15 paperback this will be something like $2.25. Let’s round it up to $2.50.

    On an eBook selling for $15 on Amazon the Publisher takes ca 70% clear, which gives him $10.50 toward his fixed costs. Thus on a $15 eBook price tag, the Publisher makes $10.50 toward the same fixed costs compared with $2.50 from the paperback.

    The price for an eBook that would produce that same contribution toward fixed costs as a paperback, would be $8.30.

    So based on the business model and overhead burdens of most big publishers they could sell their eBooks for ca $8.30 to make the same contribution toward fixed costs that they would have made on their $15 paperbacks.

    However as many others here have demonstrated, eBooks produce several distinct advantages that produce higher sales in the long run. They are available on the shelf for a hugely longer period producing far higher sales in the medium/long term. Repeated print runs incur additional overheads not incurred in eBooks. Returns, restocking etc all require administration not incurred in eBooks.
    So even under the higher cost burdens of big publishers, they could sell their eBooks at significantly lower than $8.30 and earn the same contribution toward fixed costs.

    The new breed of publisher is operating a far leaner business model with far lower fixed overheads. This is what allows them to make workable profits on $4 – $6 eBooks. Self publishing authors have only their living expenditure and some pre-production costs to incur, so they can make good money on their $1.99 and even lower eBooks.

  32. I think the reason indie publishers have been so successful at this lower end of the market is that they are generally publishing smaller or unknown authors who don’t require the massive advances that big name authors do. Publishers compete with each other for big authors, and even the biggest authors sometimes don’t earn back their advances – so the profits are slimmer than you might think.

    I also think it’s worth keeping in mind that the vast majority of books – ebooks as well – sell through 80% of what they will *ever* sell in the first three months of sale. So the fact that they are “available on the shelf longer” (so to speak) as ebooks, doesn’t have as big an effect as you might think. Don’t try and add value where none actually exists.

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