Quote:
Originally Posted by Harmon
From what I've read, publishers depend on the process of distributing pbooks to generate the operating capital for their business. The end sellers, in essence, lend the publishers money against future sales, based on the number of pbooks they take into inventory. This number will usually exceed actual sales at any particular point in time (except for the initial Harry Potter release,) so that the publishers get upfront money for books that are, ultimately, not sold. Basically, the distribution process is also a financing mechanism.
Meanwhile, on the ebook side, there is no equivalent upfront money based on future sales for the publisher. There's no financing angle to the selling of ebooks. So the publisher relies on actual sales for whatever money it gets. It is as if the publisher never got any money for its pbooks except when there was an actual sale.
So it seems to me that there will be circumstances where the publisher charges more for the ebook, simply to get enough money to operate.
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That's pretty much backwards actually. The publisher is loaning money to the distributer in the form of unpaid books. The distributer only pays for them after some period of time. Sometimes as long as or longer than 90 days. It depends on the contract. That's what pushed Borders over the edge. The publishers changed their terms to cash up front before delivery, because Borders had not been paying their bills on time.
Greg Weeks