This article comes from CNET News.
Here’s something that tends to get lost in the debate over e-book prices: Paper doesn’t cost very much. There’s a perception among consumers that an e-book should cost very little or next to nothing because there is no paper, printing, and shipping involved. But in fact, for a new best-selling hardcover, all of the costs associated with print, from the printing to the shipping to the distribution to the warehousing to returns, amount to a mere few dollars per copy, depending on the size of the print run.
The vast majority of a publisher’s costs come from expenses that still exist in an e-book world: Author advances, design, marketing, publicity, office space, and staff. You can therefore imagine the fear that e-book prices instill in publishing executives’ hearts. They’re only saving a few dollars per copy in the switch to the e-book world, but the prices of books were slashed more than half: from $24.99 to $9.99 and even lower.
That begins to explain why publishers are trying to keep e-book prices high. But it doesn’t tell the whole story.
It’s still a print world
Not only are publishers’ margins better on higher-priced print books, but when bookstores close it has enormous ramifications for the industry. When Borders went bankrupt, for instance, Penguin Group was its single largest creditor, with $41.1 million outstanding.
And even aside from financial considerations, publishers’ entire reason for existence is bound up in print. The major publishers are, quite simply, the best companies in the world at getting print books from authors to readers. Most of the tools at their disposal for making a book a hit are tied to a print world, from buying front-of-the-bookstore placement (yes, publishers pay for that) to book tours.
As the exponential growth of e-books has slowed, some publishers are even whispering their hopes that perhaps the rate of e-book adoption will slow further and print will be viable well into the future.
But meanwhile, on the other side of the e-book price divide are consumers. Whatever the cost of paper, $10-plus e-books look mighty expensive when they’re undercut by 99-cent Kindle best sellers sold by authors who don’t have a publisher’s overhead.
Publishers have a massive problem with perception of value. When you can’t hold it in your hands and easily pass it along to a friend, $10-plus just feels too expensive to many people.