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Originally Posted by Kali Yuga
Yes, let's.
The cost savings of ebooks is actually a lot smaller than most people think -- it's closer to 15%, especially for the big publishers that can leverage the economies of scale. Distributing the books is cheaper, but it's not free; bandwidth, databases, more IT staff, security, credit card fees, 3g costs all add up, and retailers lose shipping and handling fees (formerly a revenue source). Meanwhile, consumers are demanding price cuts of 60% or more.
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Bandwidth: About 1MB or so per book. Not per copy; per title. 8 million copies of a title are the same as one copy. There are no exorbitant bandwidth costs, because unique copies do not need to be transmitted.
Databases: no extra databases are necessary for ebooks. The existing database infrastructure they have is fine, and is a sunk cost.
IT staff: Likewise a sunk cost.
Security: Again, a sunk cost and none is needed over and above the existing security infrastructure in place.
Credit card fees: huh? We're talking about the publishers, not the retailers.
3g costs: Again, huh? Publishers don't deal with this.
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Most published titles don't break even. And even though ebooks only make up around 5% of the market, it's clear that at least some of the high-margin hardcover sales are cannibalized by ebooks that are 1/3 the list price.
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Which is irrelevant. They get the vast bulk of their money from wholesale purchasing. Amazon was selling ebooks below wholesale cost, which was 50% of hardcover list. The publishers are not harmed in any way by this -- they got their money from the distributor.