This is a fascinating article from Galleycat. GalleyCat has an ongoing discussion here. What do our own experts think of the numbers below? We have several readers who should be able to throw some light on this.
Here’s our expert’s breakdown of the average book’s cost to distribute and sell online: “The large publishing houses’ cut is generally 45-55% of the book’s list price (this is split with the author whose cut is 15% of list price). Distributors are generally taking 10% or more of list price. Amazingly, the less expensive the book, the distributor cut can grow pretty dramatically because almost all distributors include a minimum charge. DRM providers are generally taking 3-5% (and in the case of less expensive books even more) of list price. The credit card processors, even with micropayments, take 3-6% of the sales price.”
Taking those numbers into account, our expert concluded that these overhead costs will keep driving e-book prices higher and hurting e-book retailers:
“When 65% of list price is already spoken for by the publisher, the distributor, and the DRM provider, there is not a whole lot of room left. I’ve heard that the average discount on eBooks is 15%. The only person who feels the pain of that 15% is the retailer. So when you add in (lets use a round number) 5% for credit card processing, you are talking about a best case 15% margin on eBooks. Add in the costs of support personnel and a general staff, you’ve got to sell a lot of books to even break even as an eBook retailer
Here I thought publishers only getting 45-55%, with which they have to pay acquisitions and line editors, artists, handle layout, and pay authors was a steal for distributors. Who knew that it was our greedy fault that eBooks are so expensive.
Bottom line–it does cost money to produce quality fiction–whether that fiction is sold embedded in paper or in electrons/photons. Quality non-fiction probably costs a lot as well although it’s something I don’t deal with. Distributors also have costs, which someone has to pay if they’re going to stay in business. I’m not completely sure that blaming greedy publishers and their authors is especially helpful. Certainly I don’t know very many authors who are overpaid.
Rob Preece
Publisher, http://www.BooksForABuck.com
I just checked amazon.com for a book and the ebook version is 20 cents less than a printed version. I understand many of the costs are the same from reading above but it boggles my mind that printing a book only costs 20 cents more than to publish pixels do. Is this an isolated case i saw or is that the norm?
The problem with the price of ebooks will be solved by consumers asking questions, for example “Why can I only buy ebooks for my reader from certain stores?” I am frequently surprised, when you consider the production cost of the printed word, that some ebooks are so expensive. If you go to some of the POD sites and see that an average paperback book costs about £6.00 to produce, a simple calculation and it is no wonder that some paperbacks are for sale at over £9.00 and this sets POD by small publishers and individuals apart from the larger publishing houses. Some large paperback publishers are able to sell books for as little as £2.99, due to their large scale, in-house, mass production that massively reduces the production cost.
The production and sale of ebooks would seem to provide an alternative. Some ebook publishers, who distribute their own books, can and do charge as little as £1.99 for novellas. However, if you wish your ebook formatted for some devices and stores, they can take a large percentage of the book price, leaving the publisher and/or author a smaller income from each sale. When we looked at publishing with the largest online bookstore’s in-house format, they required you to supply complete files, already ebook formatted, including all artwork. They convert to their own format and pay you just over one third of the retail price. This then drives the price of the ebook up, as the publisher or author is forced to ask a higher price to maintain their profit margins and incomes. If the publisher and author expect to realise a very reasonable £3.00 per sale, the retail price would have to be set at £8.57. Whilst ebook sales are dominated by certain readers and/or formats, the only people profiting from the ebook revolution will be the producers and sellers of device restricted formats and the associated readers.
This is a critical period in the future of publishing. The printed word will never and should never become extinct, but the undoubted environmental, practical and functional benefits of e-publishing make electronic books the future for literary mass production. Some big, traditional publishing houses have started dipping their toes into e-publishing, but consumers have a key role to play in directing the future marketplace. If restricted format readers come to dominate, a small number of large companies will control the industry, making it difficult for new authors to get published, stopping small publishers from competing and fixing the retail price to consumers. Alternatively, if consumers choose open format ebook readers, such as epub or pdf, the future could be very different. Large publishing houses would still have the high profile best selling authors on their lists, with their high profile internet shop generating the huge sales. However, small publishers bringing new talent to a worldwide marketplace would have the opportunity to sell competitively. It would remain to be seen whether the large publishing houses would be willing to tolerate this competition.
I would like to know why you can go to a library and read books for free and can’t get that same deal on your reader?
@Lisa Holton: Many public libraries in the US provide free check-out of e-books. The format is usually Adobe EPUB, which is usable on most e-readers except Kindle.
What with the economy and budget cut-backs, the selection currently tends to be limited and most e-books have waiting lists.
Go here to see what libraries in your area use OverDrive, the most popular system for e-book checkout: http://search.overdrive.com/ (pay attention, though: some only have e-audiobooks and not e-books).