ANOTHER "Why Do Ebooks Cost So Much?" ARTICLE

[Fbone]

From the examples posted it would seem that an $8 MMP could have an ebook sell for $6 and cost/profit is maintained. Now, if the publisher is losing money then they need to lower the price to encourage new sales in new markets.

[DMcCunney]

Originally Posted by Fbone

From the examples posted it would seem that an $8 MMP could have an ebook sell for $6 and cost/profit is maintained. Now, if the publisher is losing money then they need to lower the price to encourage new sales in new markets.

Maybe, maybe not. $8 is pretty much the standard retail price for an MMPB, but what that MMPB costs to produce may be another matter. The PB version of the hardcover bestseller that the publisher prints hundreds of thousands of copies to blanket every airport newsstand and convenience store book rack will have a different cost than the genre title going mainly to brick and mortar bookstores where the hopes to sell perhaps 50,000, but that genre title will carry the same list price.

It's possible an ebook could be priced a couple of dollars lower, but why should it be? Publishers won't think that way: if they see an opportunity to reduce costs, they'll try to have that cost savings fall through to the bottom line, and leave the MSRP where it is.

One question is whether price is a determining factor. If you want to read the book, and the ebook and the MMBP are the same price, which way will you jump? Obviously, if the ebook is cheaper, I'd expect folks to go for the lower priced option. If the ebook is priced higher than the pbook, do you buy the pbook? If they're both at the $8 level, and you think that's too high for an ebook, do you refuse to buy either?

Personally, my scarce resource is time to read the books I buy. Lower cost isn't likely to increase my purchases. I already tell people the nice thing about ebooks is that you don't have to call the paramedics is my To Be Read stack of ebooks topples over on me.
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Dennis

[Elfwreck]

The discussions don't mention that the major up-front costs for editing & formatting happen once per title, with minor touchups per format (hcover, pback, ebook). And while those costs shouldn't be "absorbed into the hardcover," they're also not repeated for the ebook edition. I suspect publishers released estimates of how much it costs to produce a book assume starting from scratch, as if producing that format only.

For any backlist edition, the editing & formatting has already been done. The ebook needs OCR correction, but that's not anywhere near as time-consuming as formatting the original book, and there's no editing at all.

For ebooks released alongside (or a bit later than) print editions, the editing costs, again, have already been done. That doesn't mean they're "free" in the ebook edition--but it means the publisher should be spreading those costs among several formats, thus bringing down the cost-per-book for production. I'm not seeing any signs publishers admit that it costs less per book to make hardcover-plus-ebook releases.

[Elfwreck]

Originally Posted by DMcCunney

It's possible an ebook could be priced a couple of dollars lower, but why should it be? Publishers won't think that way: if they see an opportunity to reduce costs, they'll try to have that cost savings fall through to the bottom line, and leave the MSRP where it is.

Konrath Ebooks Sales Top 100k

Currently, I'm selling an average of 7000 self-pubbed ebooks a month on Kindle. Those numbers are for 19 self-pubbed titles, though the top 6 account for more than 75% of my sales, roughly 5000 per month.
That means those six are averaging 833 sales, or $1700, per month, each. That equals $20,400 per year, per ebook, for my top sellers.
...
My best selling Hyperion ebook, Whiskey Sour, has sold 2631 ebooks since 2004. That's earned me about $2200, or $34 a month since it was released.
...
Why are my self-pubbed ebooks earning more than Whiskey Sour, which remains my bestselling print title with over 80,000 books sold in various formats?

Because Hyperion has priced Whiskey Sour at $4.69 on Amazon, and I price my ebooks at $2.99.

They should reduce costs because cheaper books sell more--a *lot* more. Lower cost; make it up in volume. Ebooks, unlike pbooks, don't have marginal & administrative costs that eat into minor bits of profit per book; there's no shrinkage, no boxes accidentally destroyed by rain, no shipments sent to the wrong place & re-routed at the publisher's expense. Every book produced is a sale.

[Fbone]

Originally Posted by DMcCunney

One question is whether price is a determining factor. If you want to read the book, and the ebook and the MMBP are the same price, which way will you jump? Obviously, if the ebook is cheaper, I'd expect folks to go for the lower priced option. If the ebook is priced higher than the pbook, do you buy the pbook? If they're both at the $8 level, and you think that's too high for an ebook, do you refuse to buy either?
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Dennis

I know you asked rhetorically, however, personally I dont buy books now and that will most likely continue if/when I purchase an ebook reader. As I said earlier I pay a lot in property taxes and use the public library 95% of the time. I refuse to pay twice for the same book.

[GA Russell]

I come at this from a different perspective. The price of books has risen for years. The only explanation I ever saw was that the price of paper keeps rising.

I don't know the ins and outs of the publishing business, and in fact I don't care about those details. It looks to me like the publishers have not controlled costs for decades.

I remember when I was a boy in 1958, paperbacks such as Perry Mason novels cost 35 cents. (I'm speaking of what are today called mass market paperbacks.)

Well, we've had a lot of inflation in fifty years. A candy bar that cost a nickel then costs 50 cents today. (Today's candy bars are a little bit bigger, but I think they have less chocolate. But that's another issue!). So let's assume we have had inflation of ten times.

Of course, in every book some of the value is the content, and some of it is the physical package. I'm willing to allocate most of the 1958 35 cents to the content.

And to keep it simple, I am willing to say that an eBook file is 100% content.

So the paperback of today should cost $3.50. If a paperback costs $7.99 today, that difference should be allocated entirely to the cost of paper and delivery, not the content.

Furthermore, just as the 35 cent paperback's value was not entirely content, neither should all of the $3.50 in 2010 dollars be allocated to content.

This is all to say that I feel that a price of about $3.00 for a backlist eBook is reasonable, and is consistent with the price of books fifty years ago. A price higher than that reflects price gouging in my opinion.

I understand that the Austrians consider price gouging to be merely the market at work, but publishers are making a moral claim that it is wrong for people to download eBooks without paying for them. It is my view, however, that a price gouger cannot rely upon a call for others to act morally.

US and British Commonwealth law have what is called The Court of Equity. There is an old saying, He who comes to The Court of Equity must have clean hands.

So in sum, I say that publishers that charge what they are charging ($6-10) for eBooks of backlist titles have unclean hands. The public has no moral duty to price gougers.

[pdurrant]

Originally Posted by DMcCunney

There is a unit cost in ebooks, though it's vanishingly small. But that simply reinforces my point.

For ADE DRMed ebooks there's a $0.22 unit cost for ebooks. Hardly vanishingly small, and a very good argument against DRM.

Quite astonishing that publishers would take something that has a near-zero unit cost and voluntarily pay a third-party one third to one fifth the cost of a mass-market paperback!

[murraypaul]

Originally Posted by DMcCunney

No, and I'm not trying to leave them out. I'm simply giving an example of one set of costs that isn't as high as normally believed. Paper/print/bind and warehousing/distribution make up at most about 20% of the book's cost.

But this definition of cost is not the one that most of the world would use, which is what people pay for it at the counter.

[HamsterRage]

Originally Posted by DMcCunney

I get my numbers from people in the industry who deal with this every day. If you aren't willing to take my word for it because it doesn't fit what you want to be true, whose word will you take?

8<----------------------------------------

For that matter, what do you think an ebook should cost? Let's assume you're only doing an ebook edition, and paper/print/bond/warehouse/distribute costs don't come into it. (Some folks here seem to think the ebook can piggy back on the work done for the pbook, and the pbook covers the costs. Unfortunately, the accounting doesn't work that way...)

What do you think the non-paper/print/bond/warehouse/distribute costs are, and why?
______
Dennis

Let's take one more swing at the math then; on a PB run of 50K units, sold at $10 a copy and with an author royalty of 10% of the gross and $1.50/unit for the PPBWD part. Let's also assume that the author gets an advance of $25K, which I'm led to believe is generous, and would be half of the royalty from the sales. That leaves $25K in royalties to be paid after the books have been sold. So the total post-printing cost is 50,000 x 1.5 + 25,000 = $100K.

So your "people in the industry" are stating that this $100K is only 20% of the total cost to produce the book. Which makes %100 of the cost $500K, of which $400K is spent "before the book is even printed". The total gross for the book is $10 x 50,000 = $500K. If the publisher nets 50%, which I also believe is generous, then they lose $250K on the book.

And it gets worse the bigger the print run gets, because the 80/20 ration your people in the industry are telling you demands that the upfront cost go up way faster than the profits from the sales. With production & distributions costs of $1.50 a unit, which doesn't count the author's royalty after the advance has been chewed up, means that they need to spend an additional $6.00 in up front costs - which is more than their net on the sale. Even with production and distribution at $1 and no author royalty at all, the total costs still come up to $5 a unit.

Which is why I did examples with tiny little print runs in my earlier post. It's the ONLY way that the 80% doesn't look completely silly.

Note that I'm not making any value judgments on how the company spends that up-front money. I'm not expressing an opinion. I'm just doing math. And the math simply does not support the 80% claim, not at any realistic print run size. Hell, not even at unrealistically tiny print run sizes. Even counting the advance as an up-front cost.

So even when I'm super generous with the conditions, the math doesn't work. The myth remains "Busted".