These days, I've largely switched to getting books on Kindle, which is instantaneous and dangerously easy. I'm at the beach, reading the New York Times on Kindle when I see a review of a book that sounds interesting; I quickly switch over to the Kindle store and download a sample chapter. Later I'm looking for something new to read, I finish that chapter and in one click I've bought the rest of the book. Lovely, streamlined, a publishers' dream, right?
Wrong. Publishers hate Kindle, and particularly the loss leader pricing Amazon uses to hold bestsellers at $9.99. From what I understand Amazon is still paying the publishers the hardcover wholesale price for these books and absorbing the difference themselves, which seems more than fair to a publisher who has suddenly made a physical copy profit on a DRM-laden electronic copy. The best explanation they've ever given for their opposition to the Amazon scheme is that it somehow devalues their books. That's right, they assume that when I feel like reading something, I expect that $30 will fly out of my pocket, and if that perception changes all hell will break loose. Nevermind paperbacks, used bookstores, libraries, borrowed books from friends.
So I've been waiting for a good analysis of the costs associated with ebook production and some better justification of publishers' resistance to the ebook. The credulous hacks at the New York Times have attempted to do so, but unfortunately they let bad math and stupid assumptions go unchecked.
On a typical hardcover, the publisher sets a suggested retail price. Let’s say it is $26. The bookseller will generally pay the publisher $13. Out of that gross revenue, the publisher pays about $3.25 to print, store and ship the book, including unsold copies returned to the publisher by booksellers.
So, OK, the amount that the publisher needs to make the exact same amount of money per copy is at most $9.75. The article compares the cost of producing print books to ebooks, and the print books are more expensive in nearly every category, from typesetting and cover design to, more surprisingly, author reimbursement, which I'm not sure anyone wants to be the case. I'm going to ignore the part about making up huge book advances awarded to celebrities for those ghost-written political and sports autobiographical turds, since I look forward to their extinctions. So eventually we learn that under the Apple terms (in addition to the Kindle terms) they're still making more money than on hardcovers, but wait, that's not good enough!
At a glance, it appears the e-book is more profitable. But publishers point out that e-books still represent a small sliver of total sales, from 3 to 5 percent. If e-book sales start to replace some hardcover sales, the publishers say, they will still have many of the fixed costs associated with print editions, like warehouse space, but they will be spread among fewer print copies.I'm sorry, what? Ebooks will cost as much as print copies anyway because publishers will still have to keep empty spaces at warehouses for them? Is that kind of like setting the MIA plate at the table? And more bad math:
Moreover, in the current print model, publishers can recoup many of their costs, and start to make higher profits, on paperback editions. If publishers start a new e-book’s life at a price similar to that of a paperback book, and reduce the price later, it may be more difficult to cover costs and support new authors.
No, that's not how it works. See, the reduced-price ebook copies after a few months (which in my experience has been in the $7.99-ish range for Kindle) will also cost less to create and distribute than print paperbacks. But then we learn that there's another reason:
Another reason publishers want to avoid lower e-book prices is that print booksellers like Barnes & Noble, Borders and independents across the country would be unable to compete.
Now, this might come out harsher than I mean it, but here's the thing: Borders and independents already can't compete. Borders has been teetering on bankruptcy for months, maybe years, now, and independent bookstores across the country have gone out of business or been forced to shift towards used books to make money (hint to publishers: you don't get any money from a used book). Barnes & Noble is pinning its hopes on the Nook, but personally I've never understood why they're more popular than the better-organized, easier to find what I want Border's anyway. Good riddance to B&N. Now I sincerely hope that some of my favorite bookstores - Elliott Bay in Seattle, Powell's in Portland - are able to compete well into the future. But shopping at Elliott Bay especially is a fundamentally different experience than going to a Border's or shopping at Amazon. With the big chains, I go in knowing what I want, buy it, and leave. With Elliott Bay or Powell's Technical, I go in to browse and emerge with five or ten books I didn't know I needed. They've still got a niche. Like record stores, they'll need to make a lot of adjustments in the years to come, but I don't see many people crying over the death of the independent record store. And anyway, if publishers really cared about keeping these stores alive, maybe they'd give them the same discounts that the large retailers get.
And then here's the nail in the coffin:
“If you want bookstores to stay alive, then you want to slow down this movement to e-books,” said Mike Shatzkin, chief executive of the Idea Logical Company, a consultant to publishers. “The simplest way to slow down e-books is not to make them too cheap.”
And this kind of thinking is why the large publishers deserves to fail.
