Quote:
Originally Posted by ottdmk
I'm saying I can understand the reluctance of an industry that is based on substantial profit margins to not fully trust a company that has a model of using much smaller margins to chase continual growth.
|
Actually, publishing itself is a low margin business.
Their net profit runs in the single digits *despite* the high margins of ebooks.
The aggregate net for the Five BPHs (which BTW are *not* representative of the industry as a whole--most other publishers are happy selling wholesale) has been flat for seven years despite massive growth in ebook revenue and mergers up the wazoo. And that is without factoring in inflation.
Just consider that the typical ebook--no warehousing or shipping costs, no returns, infinite shelf life, has a 50% gross margin vs a maybe 20% gross margin for print. Then add in the facy Manhattan digs for companies that choose to house their *data center* in places like the Flat Iron building.
Print is *at best* a break even business.
That is why they pray for (or should it be prey upon?) lottery winners, because without them they *need* to publish tens of thousands of titles to equal the profits of one 50-Shades.
NYC publishing is inherently a low margin business, sprinkled with occasional high margin accidents. And by seeking to reduce sales of their high-margin product to increase sales of the low margin version they are making it a lower margin business for *them*. They are also making themselves less representative of the industry.
There is a whole lot of publishing going on outside their little shrinking domain.