Future of Ebook Sales - Cost of Ebooks to Amazon

[Hellmark]

Originally Posted by pdurrant

For the new best-selling $26 ebooks, Amazon probably pay the publishers $13. So yes, the $9.99 best-sellers are loss-leaders for Amazon.

Baen get by selling the ebook version of $26 hardbacks for $6. But then, they're not paying silly money to DRM suppliers. And they have a clue about ebooks, unlike most publishers.

Amazon doesn't have to pay out money to use DRM either, since they own the company that created the DRM they use.

[pdurrant]

Amazon doesn't, but you can bet that the publishers are paying for it!

Originally Posted by Hellmark

Amazon doesn't have to pay out money to use DRM either, since they own the company that created the DRM they use.

[GA Russell]

Originally Posted by Alisa

This came up once before here. The article linked from the Times read:



Do we have a verbatim quote from Bezos saying 48 per 100? If so, this is two news outlets who have misquoted him.

Alisa, I believe that my information is from the Wall Street Journal article of Oct. 8. Unfortunately, it looks like you have to be a subscriber to see the sentence I am referring to.

http://online.wsj.com/article/SB1000...ist_smartbrief

[geneven]

The question in a thread that was dumped into this one was, "How sustainable is the Kindle's early success?" The answer is the the Kindle is going to have to stay ahead of the competition, which I think means it's going to have to go color as soon as possible (could be a year but not much longer, I think). Most of us have an incentive to stay with Amazon, because we have invested in a bunch of books that can't (easily) be read on another device.

I think that we are witnessing the birth of a new form-factor, the Kindle-sized device, which is a lot smaller than a laptop but won't fit in a pocket. In the near future, we are going to see a lot of nearly full-scale computers that are Kindle-sized, that play movies and can be used for reading books and communicating via email.

One thing that I find really weird about Kindles right now is that if I want to buy a book that is NOT Kindelized, I really can't do it on my Kindle. Why not -- has Amazon got an objection to making more money? I just bought a copy of a book I am reading on my Kindle for someone who doesn't have a Kindle, so naturally I sent her a physical book.

And I should be able to buy a TV on my Kindle, why not? Amazon needs to use the tremendous power and convenience the Kindle gives Amazon and the user. In a way, with the Kindle, Amazon has created an 'Amazon Fan Club', and I can't be the only one who has started making more purchases from Amazon in addition to e-books.

If Amazon doesn't keep up with the fast pace, Barnes and Nobel will, or someone else...

[Kali Yuga]

Originally Posted by geneven

"How sustainable is the Kindle's early success?" The answer is the the Kindle is going to have to stay ahead of the competition, which I think means it's going to have to go color as soon as possible....

Since eInk is the dominant technology for dedicated readers, all the major players will get color right around the same time.

It's possible that PixelQI might knock something out sooner, but I for one am highly skeptical of new companies with no track record and whose products haven't been released.

Originally Posted by geneven

In the near future, we are going to see a lot of nearly full-scale computers that are Kindle-sized, that play movies and can be used for reading books and communicating via email.

Yeah, I doubt it. It's an awkward size and shape for a keyboard, which will cripple it for real laptop functionality; it's way too big to use as a phone; it's too small to have a good battery to handle video. Plus when you get down to it, do you really want your ereader to vibrate every 5 minutes because you've got an email? What's more likely is that netbooks will (slowly) get better, lighter, and longer battery lives, and some people will use them to read books.

Also, keep in mind that some of the slowest improvements in technology are with battery capacity and battery life. eInk's big advantage right now is that it is downright stingy with power, so you can get away with a very small battery and therefore a light and thin device. As a result, it's going to be very difficult to make a super-thin device with a 6" screen that can show high-quality video, run a constant wifi / wireless Internet connection, and still has a battery life anywhere near what we expect or want from an ebook reader.

[Lemurion]

If Amazon is paying the publishers half of hardcover list for an eBook the publishers are making a killing. That's in the ballpark of what most bookstores pay the distributor!

Most publishers probably only see $6 of that $26.00 hardcover after the distributor and retailer take their cut. Baen's making money on $6 eBooks because they've cut out so many middlemen.

[pdurrant]

Your figures are in error. I've never heard of a supply chain taking more than 65% of the list price, which leaves just over $9 for the publisher from the $26 hardback.

True about Baen and middle men though.

Originally Posted by Lemurion

If Amazon is paying the publishers half of hardcover list for an eBook the publishers are making a killing. That's in the ballpark of what most bookstores pay the distributor!

Most publishers probably only see $6 of that $26.00 hardcover after the distributor and retailer take their cut. Baen's making money on $6 eBooks because they've cut out so many middlemen.

[DMcCunney]

Originally Posted by kindlekitten

substantially more than 1.50 per book then?

Almost certainly.

You have to remember that there are an assortment of costs for a publisher to publish a book that will be incurred regardless of what format the book is issued in. When a publisher gets a manuscript an editor decides to buy, there will be an advance against royalties to the author to get the publication rights. There will be the costs of line editing, copy editing, proofreading, cover design and illustration, typesetting and markup, and legal cots involved with contracts and rights, as well as an allocated share of the corporate overhead of the publishing company, and if the book sells enough to earn out the advance, there will be additional royalty payments. All of these costs are present for ebooks as well as actual paper volumes.

When you issue as an ebook, you save printing, binding, warehousing, and distribution, but those are only part of the total costs of the book. You still have to cover the costs listed above, which will impose a lower limit on how cheap the ebook can be.

In part, the price will depend upon the expected sales volume. The latest international bestseller from John Grisham or the like might have total sales in the millions, and provide a larger base over which to amortize things like corporate overhead, so pricing can be lower. Whether pricing will be lower is another matter. Like anyone else selling a product, the publisher will charge what they think the market will bear. Amazon, for instance, uses tiered pricing, with hot titles starting out priced at full retail and tapering off over time to their normal $9.99 level to take advantage of the fact that some folks will want to read the title as soon as possible and will pay extra to do so.

Books which are more of a niche market item will be another matter. Textbooks, for example, tend to have much higher production costs, smaller markets, and a high obsolescence factor. They can be less expensive as ebooks, but they are unlikely to ever become anything considered "cheap". Technical books, like the computer references O'Reilly and Associates publish are similar cases. They aren't cheap, and probably can't be.

I see a lot of wishful thinking about how cheap ebooks can be, and frankly, it's just that, wishful thinking. The sooner everyone gets realistic about expectations, the better.
______
Dennis

[slm]

Originally Posted by GA Russell

Alisa, I believe that my information is from the Wall Street Journal article of Oct. 8. Unfortunately, it looks like you have to be a subscriber to see the sentence I am referring to.

http://online.wsj.com/article/SB1000...ist_smartbrief

For those without a WSJ subscription the sentence reads:

"Mr. Kessel [Amazon's vice president of Kindle] also declined to say how many Kindles Amazon had sold since launching the product in 2007. He said that today, among books available in both digital and physical editions, the company sells 48 Kindle editions for every 100 physical copies of those books."

[GA Russell]

Thanks slm!

[kindlekitten]

Originally Posted by slm

For those without a WSJ subscription the sentence reads:

"Mr. Kessel [Amazon's vice president of Kindle] also declined to say how many Kindles Amazon had sold since launching the product in 2007. He said that today, among books available in both digital and physical editions, the company sells 48 Kindle editions for every 100 physical copies of those books."

it's nice to know the figure. I honestly don't know if I thought it would be lower or higher

[fugazied]

That 48:100 figure is huge if you consider how new the technology is. That's an outstanding success and means large numbers through Amazon. However in terms of total publishing industry, the ebook % is still tiny.

Large players like B&N and Apple getting into it will see a nice boost though.

[Spectrum]

I am a big google fan. I want google to create author accounts on their books.google.com with google checkout. All the profits from ebooks will go to the author and google will make money out of ads. Who wants Amazon and other online bookstores?

Like it or not it is going to happen...spam me!

[calvin-c]

Originally Posted by AnemicOak

I suppose the $1.50 could be an unrealistic, but accurate, average if taking into account all the really inexpensive self published books in the Kindle catalog.

And let's not forget the books that probably cost Amazon nothing. Of course I don't have a Kindle so haven't examined the Kindle catalog, but in every other ebook catalog I've found books being sold that are available free via Manybooks/Gutenberg. Maybe the seller pays for these books, but I can't see why. (In fact, I can't see why they're charging for them at all-other than greed. I can see them offering the books, both to inflate their catalog & to provide 'everything here' service, but I can't see why they charge for them.)

[calvin-c]

Originally Posted by Hellmark

Amazon doesn't have to pay out money to use DRM either, since they own the company that created the DRM they use.

Depends on how you look at it. If you're trying to figure Amazon's profit on ebooks then better figure in what they pay in DRM. Sure, they're paying it to themselves, but yes-the ebook division still pays it to the DRM division. (Among other things, it hides that portion of the ebook profit by mixing it with DRM profit from other licensing.) If you're going to ignore that expense because "it's all Amazon" then you should allocate a portion of the DRM expenses to ebooks, too.