Quote:
Originally Posted by Hellmark
There are costs associated with ebooks that paperbooks do not have. Paper doesn't have server fees, DRM licensing fees, bandwidth expense, etc. Explain how your argument makes sense. Also, while you claim that ebooks production cost approaches zero, it will never reach zero, even if you factor out the staffing and utility costs. There are still continual expenses with ebooks, that apply for each copy sold (such as the DRM licensing).
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Exactly. The per-unit cost for eBooks don't approach 0.00$, they approach the cost of bandwidth, licensing, etc. But it gets weird since it isn't the publisher that is footing that cost. The seller is the one required to provide DRM, hosting, and bandwidth. So in the end, the seller is the one carrying the majority of those per unit costs, minus royalties to the author. The royalties alone ensure the book will never approach 0$ per unit. Instead, if there were no other per-unit costs, the per-unit cost would be somewhere in the range of 5-15% of the list price in the form of author's fees.
That said, "fixed" costs can still get expensive quick, and so price can't be based entirely on per-unit costs or you go under quick. The publisher's staff, any marketing they push into the project, the cost of the editor(s) involved, author advance, and so on add up quick. And you have books that don't always earn enough to make back what was spent, due to risks that are inherent in the industry (there is a limit to how much you can predict that a book will sell).
Although what the reduced costs of printing/etc really get the publisher is less up-front risk. If I publish an e-book, I'm out the editing costs/etc same as a printed book. What I do gain is that I don't also have to assume the risk of printing some copies at some cost, and then hoping I can sell all the copies I made. With an e-book, the per unit costs can be paid as the book sells to some extent (as long as your total volume makes the hosting affordable), which is a better arrangement than having to manage stock levels. As long as I handle a large enough total volume, I can reason that books with very limited appeal might be easier to take a chance on, as I don't have to deal with a minimum print run size. This actually is healthier for the publishing industry as a whole, as it means I can take a larger number of smaller risks and more authors get a chance to be published with the help of people who know editing/marketing/etc.
I still have to find a way for these small runs to pay for themselves as much as possible though, and that means higher pricing, offsetting some of the initial printing cost savings I may have had.
Plus, if I'm bleeding red, I need to raise prices, or I offer eBooks at the same price to increase margins a bit. There aren't many business plans where you can cut prices and increase profits without also cutting costs even more deeply than the price.
EDIT: Fun fact... printing accounts for ~10% of list price. So on a book that lists for about 10$, the eBook savings are ~1$ on printing (- cost of a formatter/etc to put manuscript into ePub/etc). Distribution is another 10% (and bandwidth/etc offsets those savings).
In reality, the savings from going to eBooks are less than 20-30% of the list price (note that many retailers already cut off that much from the list price on printed books). How much less, I'm not sure. And the agency model prevents companies like Amazon from effectively cutting into their 30% of the pricing to offer loss-leader deals and the like.