eBooks Compared to Cost of Print Publishing

September 14, 2011 · Posted in books, content, ebooks, ereaders, Gadgets, ipad, Kindle, Marketing, new media, Nook, old media, publishing 
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Nook Color ebook ereader now supports Android Apps

As the print industry continues on an inexorable path to extinction, an analysis by the Wall Street Journal reinforces what many of us already knew. Specifically, ebooks are just less expensive to publish.

First off, I’m not a book hater. Actually, quite the opposite. I’ve had a lifelong love affair with print. I spent many years in print publishing. Now that I’ve started writing books, I’m hoping that print sticks around just a bit longer.

Unfortunately, that’s just not going to happen.

The Internet has has led to fewer people buying and reading books. That much we know.

Yet it took the combined impact of the Amazon Kindle, the Nook, and the iPad to make ebooks truly viable. These are devices that offer the features ebook readers want at the right price.

Mainstream publishers have tried to keep the cost of ebooks artificially high, since the perception is that you can’t make money on books 99 cents at a time. Publishers want you to pay $15 or more for a new release, so that they can make a good profit margin on their bestselling authors. And hey, you really can’t blame them. You have to publish a lot of “not-exactly-bestselling-authors” as you look for that golden needle in the author haystack.

The Wall Street Journal estimates that an ebook that sells for $12.99 (that’s $3 higher than the $9.99 Amazon currently charges) makes a publisher $5.92 in profit. A print book that sells for $26.00 makes the publisher $5.85 in profit.

How did they get there? First, they estimated the retail fee for both Amazon (around $3.90) and  a comparable brick and mortar ($13 for Barnes & Nobles by default). Then they  estimated the royalty to the author, which is significantly lower in ebooks ($2.27) than print ($3.90), since royalty is based on percentage of the sale price. A lower retail price means a lower royalty.

After that, they make an estimate of digital rights management (DRM) for the ebook ($.90) and compare that to the estimate for shipping, warehousing, and production ($3.25). This cost for printing and shipping books is actually less than you might imagine, right?

Pull it all down to the bottom line (and hey, that’s what the WSJ is really good at!) and you have a comparable profit for ebooks, at least for the publisher. The author earns a lot less and the retailer is closing up shop, but the publisher is doing okay.

So what does all of this mean to you? Well, if you are a marketer, you’re already aware that content is what people really want. Many people will choose print books because they like the feel of the medium.

But many other people will vote with their wallet and buy an ebook, if the content is the same. For example, if I told you that I would sell you something for either $26 or $12.99, which would you choose?

You can do an honest comparison of all aspects of the decision and you still may be willing to pay $26. Or…you may just look at the prices and go for the cheaper ebook.

It may not be the perfect reading experience, but if you already have a Kindle, Nook, or iPad, you’ll want to justify the cost of the device by saving money on the media. You’re going to take the $12.99 option…and brag about it to your friends.

The Wall Street Journal also waves around big numbers. For example, they say that the 2010 net sales revenue for ebooks was around $878 million. That’s a huge number that’s a little hard to understand. But I can certainly understand the difference between $26 and $12.99. That’s a price difference that I relate to on a personal level.

In the end, I’ll be sad to see my local Barnes & Nobles go, but I won’t be surprised. Actually, I’ll probably read about it on my iPad newsreader before I actually see it in the store.

PS: I actually read this article in the good, ol’ print edition of the Wall Street Journal. Ironic, no?

 

Comments

  • http://www.cullmanndesign.com cullmann

    My local BORDERS closed last month. It was never empty, always well staffed, had coffee and free WiFi. A few years ago, I was reserved about how much I purchased there because Amazon was so much cheaper. As a result, I purchased more, and more frequently from Amazon. Recently, I consume more than half of what I read on my iPad. That percentage is moving closer and closer to “all” and BORDERS was becoming someplace I went to for coffee.

  • Aaron Traas

    I think its shameful that books cost more than paperbacks. I’d personally like to see the publisher cut out of the equation, so both the author and consumer make out better. This is going to happen, slowly, as the tools get better, and brick and mortar presence lessens in importance. We se the start of this with iBooks Author, but that’s way too limiting in distribution.

    Another thing I’d like to get solved is the ecosystem lock in. When I buy an ebook from Amazon, what do I do if Amazon goes out of business in 10 years?

  • http://www.wordspicturesweb.com/ Buddy Scalera

    As an author, I am very happy to be working with a publisher. And I suppose in the future, I am going to have to be happy without a publisher, because many publishers will not be able to survive the new publishing model. 

    You’re right, more authors will publish directly and discover their audience through Amazon. 

    And the digital, ebook assets you buy now from Amazon? There will probably be some newer, hotter technology that will make you want to upgrade certain things anyhow. Don’t worry, they’ll find new and creative ways to help you part with your money, no matter what year it is!

  • Kshay753

    This should not be an either or conversation.  The reading public buys both ebooks and printed books.  The question is can you make money with both?  For many self publishers, ebook is the only financially viable solution because they have not created a large enough reading base.   

  • http://www.wordspicturesweb.com/ Buddy Scalera

    I think that for now, we’re talking an “and” economy. That is, ebooks AND print books. But as an, I make much, much more money with self-published ebooks than I do with publisher-published print books. Nothing beats being in the bookstore, though, so I will continue to publish in print format. 

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