Doing the math with e-books

This New York Times piece outlines the costs for both traditional paper books and e-books, and helps show, in numbers, what the issues are — and why we’re all better off with e-books priced higher than $9.99.

The article outlines who gets what slices of the hardcover and e-book pies — money goes toward not only paying authors but to copyediting, design, marketing, printing, storage, shipping, and, for e-books, converting to and typesetting in digital format. After all the math is worked out, the e-book emerges as slightly more profitable.

But as the article notes, “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. 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.”

Another worry, of course, is that bookstores will be unable to compete: “As more consumers buy electronic readers and become comfortable with reading digitally, if the e-books are priced much lower than the print editions, no one but the aficionados and collectors will want to buy paper books.”

Mike Shatzkin, chief executive of the Idea Logical Company, a consultant to publishers, believes that publishers need to go into e-books slowly to avoid this happening: “The simplest way to slow down e-books is not to make them too cheap.”

Many authors remain concerned about what e-books will do to the industry, but I like what Anne Rice had to say to the Times about it: “The only thing I think is a mistake is people 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.”