Some of my books - poets' corner
The big publishers price their new e-books too high, doubtless knowing that the fans of the best-seller authors will buy regardless, thus boosting their profits.
The business model quoted in a Sunday paper gives us this example:
40% of cover-price goes to the retailer, such as Amazon, or bookshop.
60% goes to the publisher (two-thirds of which goes on production (paper, printing, pulping unsold books, transport) [doesn’t mention warehousing], with 5-10% of the price going to the author.
30% to Amazon
70% to the publisher with 17.5% of the cover price going to the author.
That’s the simplified model, anyway.
Obviously, some of these percentages will differ, depending on the author and the publisher agreements. But the principle probably holds. Bottom line is that publishers and retailers are in a business and need to make a profit.
Producing a book has a lot of costs attached, though not mentioned specifically in the example above. For instance, editing, page format setting up (should be minimal in the digital age), cover design, marketing (if any).
So, let’s assume the publisher is justified in getting 40% (two-thirds of 60%) for print, which includes paper, printing, etc. That still means 20% is left over for – the author? No, the author gets 5-10%, if he or she is lucky. So some percentage (10-15%) is sort of floating somewhere… Maybe that’s the publisher’s profit? Hmm…
Now, for the e-book, there are no paper, print, delivery, warehousing, pulping, and transport costs. So why does the publisher get 70% of the cover price? If the author gets that 17.5% (many don’t get nearly as much), that means the publisher gets 52.5% and Amazon gets 30%. If the publisher doesn’t spend on print, paper, printing etc for this version, then that 40% is ‘unclaimed’ by any process for the e-book model. Of course, subsumed within though not quoted must be the editing, layout, setting up, cover design, marketing… which is necessary for the print book anyway. So if, as is usual, the majority of books from the publisher are both print and e-book, those costs are already accounted for in the print model so shouldn’t be deducted from any percentage in the e-book model. Yes, setting up an e-book requires additional work, but it’s fairly basic and cannot account for that 40% slice. Whatever way you cut it, the costs of producing an e-book are negligible and don’t warrant the high price.
There is probably something else at work here. If the price of the e-book was lowered to a realistic level, then that might affect print sales. At present a new hardback and e-book are only about $5 apart in pricing (a hasty straw poll on the B&N site). People who prefer print books will be content to pay that extra; but they might baulk if the difference were greater. So it could be argued that the artificially high e-book price is to protect the sales of the hardbacks.
Whatever side of the fence we sit on, I suspect that authors – the originators, the people who effectively create the books – are unlikely to see percentages improve in royalties any time soon.
[This view concentrates on the big publishing conglomerates, not the independent presses who quickly grasped that e-books sell better if priced low. Certain assisted-publishers/vanity publishers tend to price their e-books as high as the big publishers’ model, thus denying their writers a viable outlet.]