3 ms·

The manufacturing cost for a paper book is near-zero; a mass market paperback costs on the order of 50 cents to print. On the other hand, as long as publishers

by cstross 16y ago

The manufacturing cost for a paper book is near-zero; a mass market paperback costs on the order of 50 cents to print. On the other hand, as long as publishers insist on DRM, the cost of setup for the encryption software and serialization of a new encrypted file for download -- including payments to the company that produced the DRM server -- may exceed the cost of that paperback. For contractual reasons book pricing is set on the basis of the current edition in print (royalty percentages aren't static but vary with the paper edition's binding, the number sold, the discount channel, and so on), and publishers are required to provide transparent accounting to authors if challenged. So their accounting workflow for shipping ebook units has to shadow the workflow for shipping SKUs. Hachette spent roughly 20M euros building a "digital warehouse" for ebook serialization and accounting a few years ago; I'm sure the other big six did likewise. They can't do anything else, unless they renegotiate their contract boilerplate with the authors. Meanwhile, fixed costs for editing, typesetting, design, proofreading, and marketing are identical for paper books and ebooks.

tptacek 16y ago
The fixed costs for creating a software title are identical whether you sell the product as a CD or as a download, but in neither case do those costs have anything to do with the price of the title. The title is priced based on perceived value (usually, as perceived by the most lucrative segment of the market it addresses). This is the second comment here that brought up editing, typesetting, &c. Is it the view of people in the publishing industry that books should be priced at a % markup over total costs? Because that seems crazy.
- cstross 16y ago
  The actual model for book prices is a reverse-auction: prices start high, then drop over time. However, thanks to the evolution of printing technology, the auction only hits a few (typically 2-3) price points, and they're geared against physical format -- hardcover, A format paperback, C format, and so on. So consumers confuse the reverse auction process with the cost of a physical product. To make matters worse, between 45% and 75% of the cover price of a physical book in a bookstore goes to the distribution chain -- bookshops and wholesalers (not the publisher or author). The chains do deep discounting for commercial reasons of their own, e.g. price wars with each other, special promotions, need to get rid of old stock to make room for new, and so on. Thus, the actual price the publisher and author get for a book may bear little or no relationship to the price the consumers are charged for it in the shops or from Amazon. (EDIT) People in this thread are making the common mistake of assuming the publishing industry is structured this way for some reason. It isn't. Things just happen this way because they're the sum intersecting set of business practices that didn't result in someone going bust at some point in the past 200 years. And they're locked in by contracts, established processes, and custom. This isn't a modern industry like software development: it's an ancient set of practices that have evolved over time, and many of its patterns reflect obsolete constraints that no longer exist.
  - tptacek 16y ago
    So, Charlie, let's stipulate that the current market for books does a lot of stupid things based on the historical entry costs for new publishers. Putting that aside, in the brave new future where StrossCorp publishes all Stross-approved titles: do you envision pricing according to a small industrywide set of price points, and, in particular, adhering to a fixed "ebooks cost $9.99" price?
    - cstross 16y ago
      What I'd like to see tried is to debut ebooks at $20. Then, every month, depreciate them by 5%, down to a floor of $5 or thereabouts. (Maybe even lower.) Unfortunately for a publisher to try this would require (a) all new contractual boilerplate (which will be a whole barrel of laughs as they try to get the authors and their agents to accept it) and (b) new accounting procedures to calculate royalties based not on the net volume of sales but on the time from publication date of those sales. And even then, this is only going to work out if customers are willing to wait until the book meets their criteria for affordability rather than going in search of a pirate copy of the text.
      - stevenbedrick 16y ago
        Personally, this would be just about perfect for me- it sort of emulates the way that I already buy books (i.e., a small number of hardcovers [usually bought at their time of release], a larger number of paperbacks, and an even larger number of used books).
patrickgzill 16y ago
I would encourage you to share even a back of the envelope explanation showing how the costs to distribute even 20,000 copies of an ebook would cost $10,000, given that publishers that are doing this are distributing their fixed costs of hardware and software over some large number of ebooks.

by cstross 16y ago

tptacek 16y ago

The fixed costs for creating a software title are identical whether you sell the product as a CD or as a download, but in neither case do those costs have anything to do with the price of the title. The title is priced based on perceived value (usually, as perceived by the most lucrative segment of the market it addresses). This is the second comment here that brought up editing, typesetting, &c. Is it the view of people in the publishing industry that books should be priced at a % markup over total costs? Because that seems crazy.

cstross 16y ago
The actual model for book prices is a reverse-auction: prices start high, then drop over time. However, thanks to the evolution of printing technology, the auction only hits a few (typically 2-3) price points, and they're geared against physical format -- hardcover, A format paperback, C format, and so on. So consumers confuse the reverse auction process with the cost of a physical product. To make matters worse, between 45% and 75% of the cover price of a physical book in a bookstore goes to the distribution chain -- bookshops and wholesalers (not the publisher or author). The chains do deep discounting for commercial reasons of their own, e.g. price wars with each other, special promotions, need to get rid of old stock to make room for new, and so on. Thus, the actual price the publisher and author get for a book may bear little or no relationship to the price the consumers are charged for it in the shops or from Amazon. (EDIT) People in this thread are making the common mistake of assuming the publishing industry is structured this way for some reason. It isn't. Things just happen this way because they're the sum intersecting set of business practices that didn't result in someone going bust at some point in the past 200 years. And they're locked in by contracts, established processes, and custom. This isn't a modern industry like software development: it's an ancient set of practices that have evolved over time, and many of its patterns reflect obsolete constraints that no longer exist.
- tptacek 16y ago
  So, Charlie, let's stipulate that the current market for books does a lot of stupid things based on the historical entry costs for new publishers. Putting that aside, in the brave new future where StrossCorp publishes all Stross-approved titles: do you envision pricing according to a small industrywide set of price points, and, in particular, adhering to a fixed "ebooks cost $9.99" price?
  - cstross 16y ago
    What I'd like to see tried is to debut ebooks at $20. Then, every month, depreciate them by 5%, down to a floor of $5 or thereabouts. (Maybe even lower.) Unfortunately for a publisher to try this would require (a) all new contractual boilerplate (which will be a whole barrel of laughs as they try to get the authors and their agents to accept it) and (b) new accounting procedures to calculate royalties based not on the net volume of sales but on the time from publication date of those sales. And even then, this is only going to work out if customers are willing to wait until the book meets their criteria for affordability rather than going in search of a pirate copy of the text.
    - stevenbedrick 16y ago
      Personally, this would be just about perfect for me- it sort of emulates the way that I already buy books (i.e., a small number of hardcovers [usually bought at their time of release], a larger number of paperbacks, and an even larger number of used books).

patrickgzill 16y ago

I would encourage you to share even a back of the envelope explanation showing how the costs to distribute even 20,000 copies of an ebook would cost $10,000, given that publishers that are doing this are distributing their fixed costs of hardware and software over some large number of ebooks.