Quote:
Originally Posted by nbvanyoos
I agree their production costs are probably not a big factor, but their ridiculous business model of 100% return is where they really get hurt. Also, I suspect they come up with an initial production run based on their knowledge of typical sales for hardcovers of a particular best selling author, thus creating a fixed investment in the product. I suspect the eBooks were reducing the numbers for that fixed production run, thus requiring them to "buy back" the excess inventory. If not, then this whole argument is moot since the eBooks were icing above and beyond the initial production run. This "extra" cost due to their bad business model is what eBooks don't have, thus making eBooks a better margin product in the long run.
|
The hundred percent return model has been an industry problem for decades. Everyone knew it, but no one wanted to be the first to attempt to change the terms. They were all afraid they'd lose market share to other publishers that didn't change the terms. We are only now seeing experiments in offering higher discounts to retailers in exchange for not being able to return all unsold goods, placing responsibility on them to make better guesses about what they can sell on the customer.
Meanwhile, one of the decisions made for
any new paper book is the press run. The decision is made in the case of an established author based on historical data: what have their previous books sold? It's a reasonable assumption the new one will sell similar amounts. If it's a hit, and sells more, you break out the champagne and go back to press. If it tanks, you reconsider whether to keep the author under contract.
But in the specific case, it's a bit more than ebook sales forcing the publishers to "buy back" part of the production run. There will always be unsold copies returned for credit. But the manufacturing and distribution costs are a small part of the total cost of the book. Increased returns alone weren't the killer.
The problem from the publisher's viewpoint was that they were effectively competing with themselves. Imagine what would happen if a hardcover and a mass market paperback were released at the same time? How many people who just want to read the book now, and may not even intend to
keep it would buy the higher priced hardcover yielding higher margins? There's a reason why the paperback doesn't get released till a year after the hardcover.
That was what was happening with Kindle editions offered at the same time as the hardcovers. People were buying the lower priced ebook
instead of the hardcover. It wasn't just the cost of returns, but the lost revenue from
not selling the higher priced edition.
eBooks aren't going to magically increase the book market. X number of people will buy any particular book. They may buy the hardcover, the ebook, or the paperback, but they're likely to buy only one. The publishers get the highest revenue and margins on the hardcovers, and
having hardcover bestsellers probably makes the difference between making money and taking a loss for the year.
No surprise the publishers wanted to protect the hardcover sales and force ebooks to be priced to cover the revenue they'd lose if people bought the ebook instead.
______
Dennis