Is piracy truly killing publishing?

[rogue_librarian]

Originally Posted by FF2

I would imagine that ultimately publishers will prefer ebooks (with an unbreakable drm).

There's no such thing. That said, the most perfect DRM one would assume was not publishing an electronic version in the first place. This hasn't made much of a difference in the past.

[crossi]

I doubt piracy is a serious problem. Most people are too lazy to bother searching for a pirated book. If it's not on Amazon they don't bother. Why go to a lot of trouble for something the cost of a couple lattes.

[mr ploppy]

Originally Posted by Kali Yuga

However, what people constantly fail to realize is that the paper part of books -- including the costs of returns -- are a very small slice of a book's costs. Advances, royalties, marketing, editing and accounting make up the bulk of a book's costs.

I think the official publisher line is that printing, warehousing and returns amounts to about 10% of cover price. Another major cost is distributor's discount, which is 50% of the cover price. Amazon's cut of an ebook's cover price is 30%, I would guess that other ebook distributors take about the same.

And with print books, of course, there is the cost of shoplifting and people who buy them second hand to take into consideration. Say 5% for shoplifting, 20% for second hand sales (the second hand market is actually a lot larger than 20%, but not everyone will resell them).


So with ebooks they get a 10% saving on not having to print it, plus 20% saving in lower distributor cut, plus 5% because there are no shoplifters, plus 20% because there is no second hand market.

I'm sure all those savings would equal ebook prices that everyone would be happy with.

[BillSmithBooks]

Originally Posted by mr ploppy

I think the official publisher line is that printing, warehousing and returns amounts to about 10% of cover price. Another major cost is distributor's discount, which is 50% of the cover price. Amazon's cut of an ebook's cover price is 30%, I would guess that other ebook distributors take about the same.

And with print books, of course, there is the cost of shoplifting and people who buy them second hand to take into consideration. Say 5% for shoplifting, 20% for second hand sales (the second hand market is actually a lot larger than 20%, but not everyone will resell them).


So with ebooks they get a 10% saving on not having to print it, plus 20% saving in lower distributor cut, plus 5% because there are no shoplifters, plus 20% because there is no second hand market.

I'm sure all those savings would equal ebook prices that everyone would be happy with.

Remember, though (and keying off the main point in my original post): Printing, shipping, warehousing and returns is at least 20% of the cost because you have a 50% return rate -- you have to pay to print, warehouse and ship two books for every one book you sell.

I know from my experience in publishing in the 90s is that printing alone is close to the 10% figure...there is no way that the 10% figure includes returns unless paperbacks are a lot cheaper to print than the 8 x 11 RPG books we used to sell.

Plus the retailer is getting 70% of retail, not 50%.

So, on a $15 mass market paperback (if I recall correctly, most books go straight to trade paperback or mass market paperback). Publisher gets $7.50. Physical production (print, warehouse, shipping, returns), 20%, is $3.

That leaves publisher gross at $4.50, out of which comes author advance/royalties (would be $1.50 at most for a $15 p-book; more likely it's less than $1). So you have $3.50 to cover editing, cover, marketing and of course profit.

Now, an ebook at $6. Publisher gets 70%, which makes it $4.20...so the publisher is losing .30 cents...if he only sells the same exact number of ebooks as pbooks.

But with ebooks, especially if you go DRM free, are available instantly to anyone with an internet connection. The reach of ebook stores is much vaster than physical book stores.

And again, the main point: only 9% of people *admit* to using torrents. So 91% either lie (possible) or actually get the whole "artists gotta eat, too" angle.

[BillSmithBooks]

I forget, all my figures above assume that the status quo is maintained.

They do not take into account the fact that ereaders are going to continue to fall in price -- just saw a video today about a new generation of android powered e-ink readers which will be much cheaper to produce. The executive in the interview said that a survey showed 60% of Americans would buy an ereader once they got below $100. I think that figure is too high, but still.

We're looking at <$100 readers in what, a year? Sub-$50 no-name knock-off readers in two years. Cheapo android tablets. Cheaper and cheaper smart phones.

We're looking at a future not too far from now where everyone is going to have a cheap device that serves as a reader...but if people find that it is too much hassle to deal with DRM, prices far exceeding the customers' perceived value, etc., they will flock to unauthorized copies. Like it or not, that is what they will do.

Customers have proven that they feel 99 cents is a fair price for a music single, which means about $10 for an album...although few people buy albums anymore because we all long ago learned that the music labels use one or two good songs to push a mediocre album...when given a choice, people mostly buy singles now.

What is the perceived value of a book? I think the $2.99-6 range for a novel is more than fair, would not hesitate to buy non-DRMd books for that. That is not the price for an "I have to have this book" price, but the "hey, that looks interesting, I'll give it a shot" book price.

Indy authors have quickly learned that 99 cents is a great "sampler" price, and while they only make 35% royalties from Amazon, the volume increase generally works for them.

I think many customers would be very enthusiastic about this price range.

I really hope the publishing industry learns from the music industry before they get Napstered to death.

[Elfwreck]

I have very strong doubts about that "10%" figure. I could believe that printing is roughly 10% of the cover price (for big publishers; smaller houses pay more than that), but not that printing, inventory, storage, and shipping are 10%. And that's before the returns.

I also have doubts about some of the formatting/editing costs--the numbers they give may be accurate for first-release new books; they're very wrong for backlist or even second printings. I'd really like to see a publisher give out a complete price breakdown with unit numbers as well as "percentage of list price" numbers.

[tomsem]

In the print world, books 'die' or become effectively unavailable when a new print run cannot be justified. Bookstores have physical limits on the number of books they can offer, so older titles naturally get pushed off the shelf in favor of new ones. Thus even assuming a level demand for books of all kinds, new books did not have to compete so strongly against the ones that had gone out of print.

However in the digital world, books effectively never go out of print. Worse (from the creative and production side of things), anything out of copyright is effectively, conveniently, and legally free to anyone that wants it. So each new title has to compete against a larger and larger pool of pre-existing books.

Moreover, demand for books is going down, not up. Everyone has a fixed budget of time, and with the web, social networking, etc., more time is taken up with a variety of non-reading activities.

None of this has to do with piracy of course - it is just the expected result of widely observable trends. DRM is rather consumer unfriendly, as are prices that rival that of hard cover books. Publishers may as well try getting rid of the former, and lowering the latter, and stop deluding themselves about the effects of piracy. Like the music industry, they are in for some big changes, but there is no avoiding that.

[kennyc]

Originally Posted by doreenjoy

I can already see where this is headed...


So, another thread for the Ignore list.

Yep, most likely....but to answer the question. No Piracy is not killing publishing. The business practices of the publishers are killing publishing because they refuse to adapt to the new environment. Darwinism at work.

New publishers will arise or some of the existing ones will change and they will rule the new landscape.

[sabredog]

Kenny has hit the nail on the head.

As per the entertainment (music/movies/TV) the publishing industry is blaming EVERTHING and EVERYONE for their failure to adopt a more modern business system suited to the digital age.

[Giggleton]

Originally Posted by kennyc

Yep, most likely....but to answer the question. No Piracy is not killing publishing. The business practices of the publishers are killing publishing because they refuse to adapt to the new environment. Darwinism at work.

New publishers will arise or some of the existing ones will change and they will rule the new landscape.

Nah, "ruling the landscape" "dominating the economy" That's old school, we are interested in direct connections between author and reader as foretold in the prophecies. No one will dominate because there will be nothing to be dominated. This cycle might end up bombing out on us and ending up in the garbage bin of history like so many others, but I think we got a real shot at sending ourselves into the stratosphere. All thanks to an explosion of awareness brought about by ubiquitous reading devices and unlimited reading material. And publishers are worried about a few dollars and cents!! RIDICULOUS!!!!!!!!!!

[Sweetpea]

It's not piracy that'll kill publishing. It's rigidity. Not wanting to move with the world. Not wanting to innovate. Not listening to your buyers.

Just like rigid buildings, they'll topple with the first real shaking of their ground.

[mr ploppy]

Originally Posted by BillSmithBooks

And again, the main point: only 9% of people *admit* to using torrents. So 91% either lie (possible) or actually get the whole "artists gotta eat, too" angle.

That figure will be for everything — films, music, games, whatever. Most of that 10% probably won't even read books, never mind pirate them. The second hand market is a much bigger threat to publishers than piracy will ever be. And the move to ebooks eliminates the second hand market. Then all they will need to do is sort out the libraries, charge them retail price every time an ebook is borrowed (maybe with a volume discount for the bigger libraries).

[Solicitous]

Originally Posted by crossi

I doubt piracy is a serious problem. Most people are too lazy to bother searching for a pirated book. If it's not on Amazon they don't bother. Why go to a lot of trouble for something the cost of a couple lattes.

Because there are those who are sitting by their PC with the credit card to the side ready to buy the ebook only to get the message of geographic restrictions......so off they go looking for a "copy".

Mind you my impression is this group is getting smaller and smaller. There is a plethora of ebooks out there, and (I for one) wont bother with an ebook if it wont be sold to me. You try and do the right thing and buy it, but plenty of other books and authors to support instead.

[mr ploppy]

Originally Posted by Solicitous

Because there are those who are sitting by their PC with the credit card to the side ready to buy the ebook only to get the message of geographic restrictions......so off they go looking for a "copy".

Mind you my impression is this group is getting smaller and smaller. There is a plethora of ebooks out there, and (I for one) wont bother with an ebook if it wont be sold to me. You try and do the right thing and buy it, but plenty of other books and authors to support instead.

That would depend on whether it was one of your favourite writers or not. If it was just something that looked interesting you would most likely buy something else instead, but if it was something by one of your favourites you would look at other ways of acquiring it.

[sabredog]

Originally Posted by Solicitous

Because there are those who are sitting by their PC with the credit card to the side ready to buy the ebook only to get the message of geographic restrictions......so off they go looking for a "copy".

I believe that is where the majority of "casual" piracy is coming from. It is exceedingly frustrating trying to buy an ebook that is denied to you because you reside in the wrong country.