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Originally Posted by murraypaul
Another thing that struck me is that if I'm an author and I'm getting a straight 25% off the top, before the retailer's cut or any overheads/taxes, I think I'm pretty happy with the concept of eBooks, and would be looking to push them as much as possible.
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Well, here's the thing.
Normally, the author gets 20-25% of the
cover price, no matter how much the retailer charges for it. So let's say the Author puts out a new book, the hardcover list price is $25, royalty is 25%. The retailer normally pays the publisher $12.50 as the wholesale price. It's a popular book, so maybe the retailer decides to sell it at $10 as a loss-leader.
So in that scenario, the author gets $6.25 per sale, no matter how much the consumer paid. But if it's a new ebook, and the cover price is $15, the author's royalty slides to $3.75 per copy. If the ebook price goes to $5, then the royalty is $1.25. Some authors may say "I'll sell more and get more royalties anyway," others will be very unhappy with the cut in royalties. It really depends on the author's attitude, and how the change actually affects sales.
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Originally Posted by murraypaul
But they don't have to deal with limited shelf life any more, each book is available for ever. On that basis, if they took their top 200 backlist titles that were either out of print or had limited print availability, is selling an average of 1000 copies of each book going to be that difficult?
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I agree that these are largely one-time expenses. I have no idea how long it would take a book to earn back those costs, there are just so many variables involved.
Also, publishers do not have infinite resources. I don't know if they have enough capital laying around to put $500k or $1m into converting their backlists; they might also prefer not to use that kind of capital or increase their own staff, so they might contract it out and finance it.
So again, it's far from an insurmountable obstacle. It's just that there are up-front costs that need to be repaid, and the lower the price, the harder it is to recoup those costs, which in turn will delay more conversions or otherwise affect the company's profitability.