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Interesting Article/Argument on Ebook Pricing(we’ve been paying for polished content all along, NOT production)


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#1 Litgal

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Posted 05 August 2011 - 03:15 PM

“Most people instinctively feel that ebooks should be substantially cheaper than paper books, because an ebook is not physically "made": there are no printing costs. But if. . . the real value of a book resides in the "text itself", then the delivery method shouldn't much matter. The fixed costs – acquiring, editing, marketing – remain unchanged”

http://www.guardian....tm_medium=email

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#2 Rick Spilman

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Posted 05 August 2011 - 08:15 PM

The gentlemen is speaking gibberish. A year or two ago, I would have perhaps been a bit more patient with this mix of innumeracy and nonsense, but haven't we all moved past this by now?

The statement that book printing and distribution makes up a small percentage of book costs is simply a lie. The often quoted $3.5 figure for printing and distribution ignores the effects of book returns which average around 35%. Grossing up the unit cost for returns makes the costs of the physical book the greatest single cost incurred by the publishers. To claim that "the delivery method shouldn't much matter" ignores basic reality.

Comparing costs to the list price is also meaningless. His statement regarding the difference in price between physical and ebooks, "They are more expensive, true, but only slightly more – certainly not nearly enough to account for the £10 or £15 difference that has traditionally existed between the two formats," is equally absurd. He compares the list price of hard cover books to the price of ebooks, ignoring entirely the fact that most hardcover books are themselves deeply discounted. This is why many ebook prices set by publishers can end up being priced higher than hardcover books discounted by Amazon or B&N. The impact on sales of this sort of messed up pricing isn't pretty. By quoting list rather than wholesale prices, Skidelsky artificially inflates the publisher's cost base.

Skidelsky seems to hold the idiotic but not uncommon view that maintaining high book prices is good for publishers and authors. In any other industry, it is understood that lower prices can drive sales and maximize revenues. Given the high price elasticity of demand of books, if the publishers are unwilling to change, it will only hurt both their authors and their stockholders.

#3 Dr Anne

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Posted 11 August 2011 - 01:28 AM

I was speaking to a publisher friend today about e-books, some of her clients are going this way.
She pointed out that illustrations do not come out as well in e-format, and as she publishes all non-fiction, many of her publications are illustrated. I had not thought about this before.

#4 Pete Morin

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Posted 11 August 2011 - 05:50 AM

The gentlemen is speaking gibberish. A year or two ago, I would have perhaps been a bit more patient with this mix of innumeracy and nonsense, but haven't we all moved past this by now?

The statement that book printing and distribution makes up a small percentage of book costs is simply a lie. The often quoted $3.5 figure for printing and distribution ignores the effects of book returns which average around 35%. Grossing up the unit cost for returns makes the costs of the physical book the greatest single cost incurred by the publishers. To claim that "the delivery method shouldn't much matter" ignores basic reality.

Comparing costs to the list price is also meaningless. His statement regarding the difference in price between physical and ebooks, "They are more expensive, true, but only slightly more – certainly not nearly enough to account for the £10 or £15 difference that has traditionally existed between the two formats," is equally absurd. He compares the list price of hard cover books to the price of ebooks, ignoring entirely the fact that most hardcover books are themselves deeply discounted. This is why many ebook prices set by publishers can end up being priced higher than hardcover books discounted by Amazon or B&N. The impact on sales of this sort of messed up pricing isn't pretty. By quoting list rather than wholesale prices, Skidelsky artificially inflates the publisher's cost base.

Skidelsky seems to hold the idiotic but not uncommon view that maintaining high book prices is good for publishers and authors. In any other industry, it is understood that lower prices can drive sales and maximize revenues. Given the high price elasticity of demand of books, if the publishers are unwilling to change, it will only hurt both their authors and their stockholders.


Rick, I buy everything you say - except "the costs of the physical book the greatest single cost incurred by the publishers."

I'll bet the cost of the Manhattan address beats it.
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#5 Rick Spilman

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Posted 11 August 2011 - 12:24 PM

Rick, I buy everything you say - except "the costs of the physical book the greatest single cost incurred by the publishers."

I'll bet the cost of the Manhattan address beats it.


Rent may be less than you think.

There are a range of numbers floating around but the example given in the New Yorker last year is reasonably typical.

A simplified version of a publisher’s costs might run as follows. On a new, twenty-six-dollar hardcover, the publisher typically receives thirteen dollars. Authors are paid royalties at a rate of about fifteen per cent of the cover price; this accounts for $3.90. Perhaps $1.80 goes to the costs of paper, printing, and binding, a dollar to marketing, and $1.70 to distribution. The remaining $4.60 must pay for rent, editors, a sales force, and any write-offs of unearned author advances. Bookstores return about thirty-five per cent of the hardcovers they buy, and publishers write off the cost of producing those books. Profit margins are slim .



So according to this breakdown, all overhead, including Manhattan rent, the underpaid editors, designers, sales staff and other corporate overhead allocations runs around $4.60. Printing and distribution cost $3.5, the same figure used in the Guardian article. The problem is is that returns average 35% overall. So for every 100 books printed, 65 on average are sold. The average cost for printing and distribution for the books adjusted for returns works out to be $5.38 for every book sold or about 42% of what the publisher gets paid for each book.

Which is why the often made claim that the physical costs of production are small is simply not true.

There may be a bigger problem related to corporate overhead than simply rent. The big six are small portions of larger media conglomerates. They are forced to meet increasing sales targets in competitions with other diversions of the corporations. This has increased the focus on short term sales to meet the numbers which has resulted in the increased focus on blockbusters while mid-list authors are being cut. This may not be good publishing practice but when the managers have to meet the targets set by Murdoch (Harper Colllins,) Bertelsman (Random House,) CBS (Simon & Schuster), Pearson PLC (Penguin,) Lagardère (Hachette) or Georg von Holtzbrinck (McMIllan) they may not have much choice.

#6 As the Prop Turns

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Posted 17 August 2011 - 08:09 PM

I was asked what price to place on my book cover which is proving to be a challenge to me. I found this article and it was informative:

http://www.nytimes.c...a/01ebooks.html

I went to BN site pubit! and discovered that if you ask a low price, your cut is very low which means they want you to price an unknown book by an unknown author at a higher price. Very tough.
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