According to a piece from The New York Times this week, “No topic is more hotly debated in book circles at the moment than the timing, pricing and ultimate impact of e-books on the financial health of publishers and retailers.” It goes on to says that publishers are concerned about making e-editions of their trade books available the same time as the print edition.
Amidst the uncertainty of how to treat the e-books is the fear of cannibalization of hardcover sales. “If you as a consumer can look at a book and say: ‘I have two products; one is $27.95, and the other is $9.95. Which should I buy?’,” according to Dominique Raccah, chief executive of Sourcebooks.
I’ve been delving into the nuances of book distribution and marketing since I wrote a book about the subject in 1978. And, typical for anything about the book publishing industry, notably missing form this article, and most such discussions, is an examination of the economics and the retail marketplace.
First, for bestsellers, at least—which is what this article focuses on—the real retail price of a hardcover fiction is not about $25 or $30 but the 40% discount price charged by most major outlets, including Amazon and B&N. Thus, the real price difference for most consumers is roughly $15 to $18 for the hard copy vs. $10 for the e-book.
Second, the article does have one data point—that Amazon is paying the same price for the e-book as the hardcover. Assume that is 50% off list. So that from the publisher’s position, it gets the same revenue no matter which format. And it saves the manufacturing cost. And it gets no returns! What’s not to like?
Third, this discussion would be enhanced by knowing how author royalties are being handled these days. If the author is earning a royalty based on a percentage of the revenue the publisher receives, then it is at worst a wash whether it is a percentage of the physical book or the price the e-book distributors pay. And to the extent that books are price elastic, the $10 e-book price point could potentially increase sales, thus resulting in greater revenue.
Vin Crosbie
Dorian Benkoil
Bob Cauthorn
Ben Compaine
1. Nate Wilson on November 17, 2009 4:00 PM writes...
Great article! This seems like a no-brainer to me and if major publishers don't make these rather simple changes in their business models, they absolutely deserve to lose their business. My opinion is that there will always be demand for the nostalgia of paper print, albeit a smaller niche as the future progresses. For now, I am not impressed enough with the limited capabilities of handheld e-book readers to buy one and commit to digital books. My laptop is an inconvenient way to read e-books (relative to a light-weight, ultra-portable paper book) because of it's awkwardness, battery limitations and cumbersome size. The only limitation keeping my iPhone from being the ideal e-book reader (within the constraints of currently available technology) is its too-small screen size. Apple designers take note.
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