Quote:
Originally Posted by Ralph Sir Edward
Just like old home week...or my first post here.
Here's the problem in a nutshell. Mass production is based on taking a design (in this case an edited book) and amortizing the cost of the design over a long production run. The longer the run the more profitable. Too short of a run, it's a loss. You incur the design cost no matter whether or not you produce the product at all. The cost of production (not design) has to be the major cost of the product, or else somebody else will make it significantly cheaper and undercut you.
This works as long as there are significant costs to produce the product. When the cost approach zero, the whole paradigm fails. And that's what is happening now with digital products.
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I'm afraid this view of business is limited to commodites. It does not apply to books, because it's not possible to make the books "significantly cheaper". The cost of physical production of each book is not large. The skilled labor involved (editing, etc.) cannot be undercut by cheap foreign workers, so it remains relatively fixed. The cost of an ebook is far from zero. The *marginal* cost of an ebook is almost zero, much less than a physical book, but you still have to pay for the up-front overhead.
What makes matters worse is that books traditionally have a tiered pricing structure: more expensive hardbacks come out first, with cheaper paperback and other editions later. This allows one to recoup costs with higher margins on the hardbacks. Making money only via paperback editions can be done, but it's more difficult unless the demand for hardbacks is very low.
With ebooks, people expect paperback prices for new hardback releases. And that's a problem. I personally would be happy if new ebooks came out at $10 - $13 along with the $25 hardback, then reducing to $5 - $8 when the paperback comes out. And I think this sort of structure allows for more profits all parties: publishers, retailer, and author.