Quote:
Originally Posted by HansTWN
I venture a guess that in 10 years pbooks will be a small niche market. They won't die out, but they will not be a mass product anymore.
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The problem is that the *current* pbook business is built on the economics of large upfront print runs. It won't take much of a drop in sales volume (reducing print run size) to tip the profitability of the model into a classic pricing death-spiral, where trying to preserve even a modest profit margin leads to price hikes which in turn reduce sales, leading to price hikes leading to...
A lot of the BPH business practices (large upfront advances, warehousing of pre-printed content, retailer returns) simply aren't sustainable without high volumes for each title, which is why in recent years they have been dropping mid-list authors and raising the bar for the authors they will take on. This means they are concentrating their new product market share onto less authors so, in gambling terms, they are reducing their side bets and becoming more dependent on a handful of high-profile releases. They are hoping to supplement this with ebook backlist revenue and high ebook prices. But they aren't doing much to cut their overhead and, so far, the only way they make the numbers add up is with low ebook royalty rates which, as a result of the Agency Model Price Fix, is under pressure from the authors. They are using creative accounting to make the authors and ebook buyers subsidize their pbook overhead and sustain artificialy low pbook prices. One could argue they are turning pbooks into loss leaders. Except loss leaders are supposed to be bring in new customers, not your regular customers.
Basically, the BPHs are doing everything *except* what they *should* be doing. Instead of reducing pbook overhead and streamlining operations to accomodate reduced pbook volume and increasing ebook demand, they are raising prices, squeezing their suppliers (especially authors), reducing marketting, and reducing their new product output.
They expect to survive on high-margin/low volume content at a time the business is moving towards low-margin/high volume ebook sales. This is not long-term sustainable.
The issue isn't really ebooks vs pbooks, but rather one of business process and profit margins. Moving forward, for certain publishing segments (not all) the industry is going to *have* to move to an ebook-centric business model in order to meet consumer demand and prosper. This means ebook-first releases. This means higher ebook royalties. It means proper cost allocations and, inevitably, reduced pbook overhead. (Starting with the end of long-term warehousing and retailer returns.) It means some releases won't get batch-printed pbook releases at all.
Either publishers change how they do business or they won't be doing much business at all.
Oh, and 10 years? That's generous. Last I looked, the over/under was more like five.
