Quote:
Originally Posted by Richard Herley
The crux of the matter is this -- what does the publisher actually do for his money? Whether he's selling a pbook or an ebook, he has to invest in the following:
1. Sourcing the "manuscript"
2. Editing it
3. Converting it into some form which can be mass produced
4. Selling it to middlemen
5. Distribution to middlemen
6. Promotion
Stages 1, 2, 4 and 6 probably require the much same sort of investment whether or not the finished product is electronic.
Stages 3 and 5 will of course be much cheaper with ebooks.
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Don't forget
7. Share of overhead.
I remember now why I try to stay out of these discussions.
I hope after this one winds down I can stay away for another year or two.
Look, let me try to make a couple of simple points, and please, let everyone let me know if I've made any unsupportable assumptions.
All titles have fixed costs, related to stage 1, 2, 3, 4, 6, and 7 above. The fixed costs of producing a digital only product will be less than a paper only. Producing both will cost more the producing a paper only but not as much as digital only plus paper only.
All titles have marginal costs for each copy sold. Marginal costs include royalties, wholesale discount, as well as production and distribution.
When an ebook copy is sold to a customer, it decreases the likelihood that the same customer will run out and buy a hardcover.
When an ebook version is available, especially in a non-drm or easy to disable format, it increases the likelihood the good quality pirated copies will make there way to the internet.
When a good quality of an ebook is available in a pirated version on the internet, it decreases the likelihood that a person who downloads it will run out and buy the hardcover version.
Ergo, ebook availability will cannibalize to some extent pBook sales of the same title.
Therefor the marginal costs of an eBook must include a prorated share of the total title fixed costs, the same as hardcovers.
Ergo, the main cost savings for ebooks, when produced in concert with pbooks, is the cost of printing and distribution which amounts to less than $1-2 per hardcover.
Ebooks are often at least $1-2 less than hardcovers.
Therefore, ebooks are not overpriced.
