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
