Breaking Down Book Publishing Costs

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Motoko Rich of The New York Times wrote a two page story yesterday breaking down the costs of publishing both print and electronic books. Her goal in the story is to make clear publishers’ justifications for trying to keep eBook prices above $9.99. She quotes Mike Shatzkin, who points out that publishers are trying to slow the transition to eBooks largely because that transition makes big book retailers unable to compete, cutting off one of publishers’ major revenue sources.

Here’s the most interesting part. After Rich runs down the various costs of publishing and distribution–which basically leave publishers with between $.50 and $1 more per eBook than print books–she says this: “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.”

Ah ha! So therein lies the problem–as long as the publishing business still stands on print sales, it will be in publishers’ interests to slow the adoption of eBooks by keep prices higher. But, as author Anne Rice points out at the end of the article, it’s “a mistake…trying to hold back e-books or Kindle and trying to head off this revolution by building a dam. It’s not going to work.”