Tuesday, March 02, 2010

Math of Publishing Meets the E-Book
by Motoko Rich,
Published New York Times: February 28, 2010

In the emerging world of e-books, many consumers assume it is only logical that publishers are saving vast amounts by not having to print or distribute paper books, leaving room to pass along those savings to their customers.

Publishers largely agree, which is why in negotiations with Apple, five of the six largest publishers of trade books have said they would price most digital editions of new fiction and nonfiction books from $12.99 to $14.99 on the forthcoming iPad tablet — significantly lower than the average $26 price for a hardcover book.

But publishers also say consumers exaggerate the savings and have developed unrealistic expectations about how low the prices of e-books can go. Yes, they say, printing costs may vanish, but a raft of expenses that apply to all books, like overhead, marketing and royalties, are still in effect.

All of which raises the question: Just how much does it actually cost to produce a printed book versus a digital one?

Publishers differ on how they account for various costs, but a composite, and necessarily simplified, picture might look like this, according to interviews with executives at several major houses:
On a typical hardcover, the publisher sets a suggested retail price. Let’s say it is $26. The bookseller will generally pay the publisher $13. Out of that gross revenue, the publisher pays about $3.25 to print, store and ship the book, including unsold copies returned to the publisher by booksellers.

For cover design, typesetting and copy-editing, the publisher pays about 80 cents. Marketing costs average around $1 but may go higher or lower depending on the title. Most of these costs will deline on a per-unit basis as a book sells more copies.

Let’s not forget the author, who is generally paid a 15 percent royalty on the hardcover price, which on a $26 book works out to $3.90. For big best-selling authors — and even occasionally first-time writers whose publishers have taken a risk — the author’s advance may be so large that the author effectively gets a higher slice of the gross revenue. Publishers generally assume they will write off a portion of many authors’ advances because they are not earned back in sales.

Without accounting for such write-offs, the publisher is left with $4.05, out of which it must pay overhead for editors, cover art designers, office space and electricity before taking a profit.

Now let’s look at an e-book.

For the rest go to NYT.

1 comment:

Unknown said...

While on ebooks, I think I finally have the answer to when the Kindle will arrive in New Zealand. Probably never :)

My post to Amazon last week

I'm a New Zealand resident angry that I am still waiting for the Kindle and content to get to New Zealand. It's now February 2010, the Kindle has been on the market for something like two years: what on Earth is the problem that the product still has not launched in New Zealand?


As soon as the first e-Ink reader makes landing here I'll be buying it, and I hope it's one of your competitors because this wait has burnt me off, and makes me want to punish Amazon.


Of course, it would further be inane me thinking I'll ever see a reply to this.


Amazon Customer Service response.

Hello,


Thank you for writing to us with your concern.


I do understand your concern, but please note that, at this point of time, Kindle cannot be purchased by residents of New Zealand, due to import/export laws and other restrictions.


I am sorry to inform you that, we don't have any precise information about the specific launch time for international roll out of Kindle to Israel. We do value our international customers and hope to make content available in more locations in the future. I apologize for the inconvenience caused in this regard.


It is always important for us to hear how customers react to all aspects. Your valuable feedback will help us to improve the selection and service we provide and we're glad you took time to write to us.


I will take this as a feedback and will be sure to forward your comments to the Kindle team regarding 'making the Kindle Device available in New Zealand' for consideration. As always, please feel free to contact us should you have future suggestions, questions or comments.


Hope, the above information is clear and helpful.


If you still have any concerns or need further assistance, please contact customer support at 1-866-321-8851. You can also reach us via phone or e-mail through our Help pages here:


http://www.amazon.com/kindlesupport


Thanks for your interest in Amazon Kindle.


Did I solve your problem?



My further response.

No, you did not solve my problem. I don't know which part of your post was the more depressing; either:

a) The fact you realise in your first sentence that yes, New Zealand is an over-regulated, over-governed country and red tape is stopping this - quote, "Kindle cannot be purchased by residents of New Zealand, due to import/export laws and other restrictions".

Or:

b) The fact that from your second paragraph you seem to think New Zealand is a province of Israel.

I won't be holding my breath for the arrival of Kindle in either New Zealand, or Israel.