Is Publishing Doomed? JOHN B. THOMPSON with Williams Cole

[Steven Lake]

http://www.brooklynrail.org/2010/11/...-williams-cole

Found this today and thought you guys would find it interesting.

[greencat]

Now that was an interesting read. I liked the analysis and historical perspective. Less sympathetic to the whole "publishing houses are struggling because we're big publicly owned corporations who have to deliver growth for the boss" stuff. Surely that's true of every publicly owned company? You can, of course, argue that it's madness to expect growth forever (and I'd agree with that) but it isn't unique to publishing.

One thing left out in the comparison between ebook and print book costs was distribution. Somehow I can't quite buy the premise that ebooks aren't a lot cheaper for the publisher than printed ones (the article implies the difference is only 10%) and therefore considerably more profitable.

[Sil_liS]

This is just another person being purposely misleading. They all say the mandatory part about how people just don't understand that the book cost more than just printing.

I think there’s a lot of misunderstanding about the cost of e–books. The question of the printing and paper is a relatively minor part of publisher’s cost, maybe 10 percent of their overall costs.

But then this one actually mentions the other reasons why ebooks should be cheaper.

The significantly cheaper price for an e–book you see online compared to a traditional hardbound book basically reflects cutting out the distribution, real estate, returns, and everything associated with the side of physically moving the books.

Now anyone can argue that the first quote was just about the printing expenses, and that he gets the point that ebooks can in fact be much cheaper, but in between these two he said something that contradicts that conclusion.

But people think, “Well, if you get rid of the book, your costs must be zero, or very little.” But in fact that’s just not the case.

And yes, these were in fact quotes from the beginning, end, and middle of his reply to the question "Aren’t they easier and cheaper to distribute?".

[ppw]

Originally Posted by greencat

Now that was an interesting read. I liked the analysis and historical perspective. Less sympathetic to the whole "publishing houses are struggling because we're big publicly owned corporations who have to deliver growth for the boss" stuff. Surely that's true of every publicly owned company? You can, of course, argue that it's madness to expect growth forever (and I'd agree with that) but it isn't unique to publishing.

One thing left out in the comparison between ebook and print book costs was distribution. Somehow I can't quite buy the premise that ebooks aren't a lot cheaper for the publisher than printed ones (the article implies the difference is only 10%) and therefore considerably more profitable.

Similar sentiment. Nice read, but not on the cost of books. If what claimed in the article is true, then hard cover, paper back, and ebook prices should be all within 10% of each other. An argument kept pointed out by posters on this forum.

[Sil_liS]

Originally Posted by ppw

Similar sentiment. Nice read, but not on the cost of books.

There is one question about the cost. Read the whole article.

[J. Strnad]

If what claimed in the article is true, then hard cover, paper back, and ebook prices should be all within 10% of each other.

I don't think that follows logically.

The price isn't determined by cost, which only sets a bottom below which the price can't fall without losing money. The price will be determined by the market...what people are willing to pay.

Hardbacks have a much greater "perceived value" than paperbacks, even though the printing cost isn't that much more. Also, you're paying for the ability to buy it "now" rather than when the paperback is released in a year or so.

Same with ebooks. We have yet to find out what the actual perceived value is so prices fluctuate wildly. But without the printing and the distribution costs the author mentioned--shipping, warehousing, returns--certainly the price could be lower than for paper books.

[ppw]

Originally Posted by J. Strnad

I don't think that follows logically.

The price isn't determined by cost, which only sets a bottom below which the price can't fall without losing money. The price will be determined by the market...what people are willing to pay.

This is probably what was missing in my thinking. Thanks for pointing it out.

[Steven Lake]

Yeah, it's the old pricing strategy of "What the market will bare". Sadly, that's made some unbelievably underpriced, as well as overpriced items of late.

[Kali Yuga]

This is probably one of the more insightful articles on the changes I've seen in a long time. And here I was expecting some schlocky opinion piece in a no-name blog...

Originally Posted by Sil_liS

This is just another person being purposely misleading.

?!? To what end?

Originally Posted by Sil_liS

Now anyone can argue that the first quote was just about the printing expenses, and that he gets the point that ebooks can in fact be much cheaper, but in between these two he said something that contradicts that conclusion.

Actually he's fairly consistent. You just haven't quite grasped the totality of what he's saying, to wit:

- The printing costs are fairly small (10%), far less than people presume.
- Other cost savings come from cutting out the intermediaries and eliminating brick & mortar costs.

With the latter, a big chunk of that is already shaved off by the online retailers -- e.g. Amazon can nail Borders and everyone else on costs, because they don't need physical stores.

I.e. most people assume that what they're charging for is the paper, when in fact most of it is the costs of bringing the book to market. Advances, royalties, editing, marketing, yadda yadda yadda.

Does that make a bit more sense now?

[HamsterRage]

I've always felt that hardcovers were just a means to charge extra for those people that want a book as soon as possible. Big name books always come out 6-9 months earlier in hardback than they do in paperback. So if you just have to read it now, then you buy the hardcover.

I'm a cheap so-and-so, and I think the only time I've ever bought a hardcover has been months after the paperback came out and the store was dumping them for less than then paperback price. My "To be read" pile has always been big enough to get me through the wait.

[HamsterRage]

Originally Posted by Kali Yuga

- The printing costs are fairly small (10%), far less than people presume.
- Other cost savings come from cutting out the intermediaries and eliminating brick & mortar costs.

With the latter, a big chunk of that is already shaved off by the online retailers -- e.g. Amazon can nail Borders and everyone else on costs, because they don't need physical stores.

I.e. most people assume that what they're charging for is the paper, when in fact most of it is the costs of bringing the book to market. Advances, royalties, editing, marketing, yadda yadda yadda.

Does that make a bit more sense now?

These threads always boil down to this same point don't they?

I think you're on shaky ground when you start tossing out a single percentage like that, because the printing/distribution/warehousing cost varies with the number of units printed. So for a giant run of a book, the printing costs are going to be much higher, and much higher percentage of the total cost than for a smaller run.

For a smaller run, all of the fixed costs are going to be a higher percentage.

So I have a problem with anyone saying "the cost is xx%", because I think it erodes the credibility of the argument because it obviously is only true for a particular print run size (and for a particular book).

But it is interesting in all these arguments that we don't seem to have touched on the fact that the costs for an ebook for the retailer are almost nothing, at least compared to that of a bricks and mortar store.

[Sil_liS]

Originally Posted by Kali Yuga

?!? To what end?

He is printing a book; he wants to be on the good side of the publishers. Plus "Cambridge University professor John Thompson spent five years talking with book editors, publishers, writers, and agents on both sides of the Atlantic.", what side did you think that he was going to take if he spent his time talking to anyone but the readers?

Originally Posted by Kali Yuga

Actually he's fairly consistent. You just haven't quite grasped the totality of what he's saying, to wit:

- The printing costs are fairly small (10%), far less than people presume.
- Other cost savings come from cutting out the intermediaries and eliminating brick & mortar costs.

With the latter, a big chunk of that is already shaved off by the online retailers -- e.g. Amazon can nail Borders and everyone else on costs, because they don't need physical stores.

I.e. most people assume that what they're charging for is the paper, when in fact most of it is the costs of bringing the book to market. Advances, royalties, editing, marketing, yadda yadda yadda.

Does that make a bit more sense now?

Don’t patronize me. What the consumers are saying is that the ebooks should cost less than the pbooks, the difference being the costs that occur only in the case of dealing with a physical object. They are talking about not only the 10% due to printing, but also "cutting out the distribution, real estate, returns, and everything associated with the side of physically moving the books". This is only fair, considering the fact that we need to invest money in a device and/or software to view ebooks.

There are two issues that I have with what the esteemed professor is saying:

1. He mentions these two separated by "But people think, “Well, if you get rid of the book, your costs must be zero, or very little.” But in fact that’s just not the case.", which makes readers sound completely unreasonable, as if they are expecting to get the books for free.

2. He doesn't talk about what percentage is "associated with the side of physically moving the books". This leaves most people who will read this article to think that ebooks cost only 10% less to make.

And this is what I mean by purposely misleading. The question was simple and straight-forward: "Aren't they easier and cheaper to distribute?". The easy answer would have been yes, they are. That would have been the answer of somebody impartial.

[leebase]

Originally Posted by J. Strnad

The price isn't determined by cost, which only sets a bottom below which the price can't fall without losing money. The price will be determined by the market...what people are willing to pay.

Say it again. People won't listen, but keep saying it anyway. The price of a book is not now, nor has it EVER been, about the cost of printing -- nor of storage, nor of returns.

eBooks take out some of the cost of a book -- but not as much as people think. HOWEVER, that's still IRRELEVANT. The price was not EVER a function of the cost of making the book.

I wonder at the anger ebook pricing has generated and I think I've come to a conclusion. Amazon, by subsidizing those cost of ebooks -- got folks into the "first run" market that had NEVER been purchasers of first run books. The mass market paper back book buyer was suddenly buying ebooks during the first run hard back book time frame.

It fit their sensibilities as they NEVER bought a novel for $24 or $30. The publishers who were selling MILLIONS of those hard back books to people who really did pay those prices -- put a stop to Amazon's predatory pricing practice.

And NOW you got a lot of angry paper back book buyers who feel shafted. They got a taste of the good life -- getting new release books -- paying their cheap paper back book price.

Well, back to the year wait for such folks. You never were new book buyers before and you won't be now.

Lee

[leebase]

Originally Posted by Kali Yuga

Does that make a bit more sense now?

It's not about making sense. It's about "I want everything cheap". Amazon subsidized ebooks and people are angry with the cheap-tit being taken away from them.

They want to suckle and they want to suckle NOW.

Lee

[Kali Yuga]

Originally Posted by HamsterRage

These threads always boil down to this same point don't they?

Ehh, there's about 4 points that keep getting restated, yes.

Originally Posted by HamsterRage

I think you're on shaky ground when you start tossing out a single percentage like that....

I think it's pretty clear that these figures are ballpark. It doesn't really matter that much if the paper aspect is 8% for one book, and 15% for another. The key point is that for a variety of reasons, people have a false belief that paper makes up 80-90% of the cost, therefore ebooks ought to be 80-90% lower.

Originally Posted by HamsterRage

But it is interesting in all these arguments that we don't seem to have touched on the fact that the costs for an ebook for the retailer are almost nothing, at least compared to that of a bricks and mortar store.

I may be wrong, but I think that's a more recent focus of MR postings. Before agency pricing, people were eviscerating Amazon every time an ebook cost more than $10, so discussions of "retailer's costs" were more common.

I'd also say that people tend to exaggerate the savings for the retailer. For example: Due to the volume, Amazon is likely paying pennies to ship books, and use high shipping fees either as a profit center (e.g. charging you $18 for overnight shipping, that costs them $3) or as an enticement to buy more ("If you spend $2.95 more, shipping is free!") or to lock you in as a customer (e.g. "spend $70 on Amazon Prime and shipping is free").

Meanwhile, they still have massive costs related to bandwidth, energy, security, servers, databases, taxes, staff, wireless fees, legal, fraud protection, PR, advertising and the lot.

I have no doubt they are spending a lot less to store and transmit ebooks than paper -- especially compared to brick & mortar stores, which carry tons of fixed costs. But I don't think the savings are anywhere near as much as people presume, especially for companies like Amazon or Powell's, which are pure or nearly pure etailers already.