The Rachel Shihor Interview
Graphs, Maps, Trees
While I was at Blue Met last week, Chad had some interesting things to say about how Amazon selling ebooks at $9.99 was something that publishers could definitely make a profit off. He was making a lot of sense—basically that at 70% of $9.99, publishers would be earning more per ebook than they’re currently getting per print book.
But now Jason Epstein says this at the NYR Blog. So, would be interested in seeing Chad’s rebuttal.
The problem began when Amazon set out to charge $9.99 per e-book download, considerably less than it was paying publishers for their e-book inventory. Since Amazon’s competitors could not afford such a costly strategy, Amazon hoped to dominate (or even monopolize) the e-book market and dictate future e-book pricing. Should Amazon’s $9.99 price become the industry standard—a reasonable assumption since e-books like iTunes are merely disembodied electronic information—publishers might then be obliged to sell e-book content to Amazon for perhaps as little as $6.00, too little to contribute their share of pre-digital legacy costs for warehousing, inventory and traditional marketing. Publishers, unable to support these residual costs by physical book sales alone, might eventually submit to the digital imperative and market their books directly to the web to be read on digital screens or printed on demand one copy at a time at diverse locations. Though Amazon’s strategy, if successful, might force publishers to shrink or even abandon their old infrastructure, demand for physical books, printed and bound, will not disappear. Publishers might thus find it necessary to subcontract their physical inventory to specialized distributors.
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i work for a turkish publishing company, and in 2011 we have rolled out a new series of books that we publish only in the e-book format, without the printed version. the cost of production for an e-book is as follows: usd 3 per page (covering editing, proofreading, and design) + usd 200 usd for cover design. for an average 250-page book, that makes usd 950. we sell all e-books at usd 3. the turkish version of amazon.com sells our books, and charges 45% for that – also discounting 18% vat, our net revenue is usd 1.4 per copy. 30% of that goes to the author. this puts our break-even point at approximately 950 copies. for printed books, when we print 2000 copies, charge usd 9 and pay the author 10%, we get the same breakeven point – 950 copies. so for us it’s a win-win-win situation – the readers are better off (way cheaper books), authors are better off (because even though the price of the e-book is 3 times cheaper than that of the printed book, this is more than compensated for by the 3 times higher royalty percentage and the greater number of e-books sold compared to printed books), and we as the publishers are also better off by the same token. also, once we start selling our own books, the share of books for which we’ll pay 45% to the distributor will decrease, thus lowering our breakeven point drastically.
this, of course, will be the case in about four or five years, because e-book titles don’t yet sell all that many in turkey. we are footing the bill because we want to have a strong backlist when that time comes.