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Originally Posted by Steven Lake
I don't know why they can't figure out profits. It's just simple math across the top, and this comes from someone who's not a math wiz.
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Because they don't have a simple, obvious way to calculate costs.
They know how many dollars they've gotten from sales of ebooks, and how much was left in the hands of retailers. They know how much of that money is due to the authors. They don't know how much it's cost them to produce & sell those ebooks, counted separately from the costs of producing the pbooks.
The workflow for ebooks is so erratic and changing that they haven't figured out what it costs them to make ebooks. (Every few months, new software or new methodology comes out, and the system changes. Do they count retraining time against the profits of ebooks? Or do they lump that cost under "general business overhead?")
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I think though that they don't understand how to do a simple expense breakdown for an individual product since they've been working at it for so long and are so big.
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I think it's partially that (I'm not seeing any signs that the big publishers actually understand ebook production; I have suspicions that some of them believe that retailers have stockpiled hard drives with hundreds of copies of the ebooks, which they sell one by one), and partially that the whole system of production is new, and doesn't mesh with their previous methods. They don't know what to count--there's no column in the established spreadsheets for "export to epub and mobi; confirm files are workable," much less "check contract to find out if we have rights for ebook release of Book 3 of series now that book 5 is in print, and if so, get the OCR team on that." And which marketing costs count as ebook marketing costs?
If a book accidentally goes out botched--corrupt file, scrambled text, whatever--and they offer free replacement with a new version--how much do they count that as? It's not like "return pbook; get new one" with the same production-and-shipping cost as the original book.
And every six to eight months, the industry goes through radical changes, and whatever methods they'd figured out for accounting don't work anymore.