"digital adoption will increase, steadily and relentlessly"

The Globe has published a nicely detailed look at the economics of the book publishing industry and the (impending?) incorporation of electronic delivery of books into the publishing model.  As the piece (by James Adams) notes, publishers and authors (and their reps) are still trying to come to terms with the valeu of digital rights and how authors should be recompensed for them.  Buried in the piece, though, was a comment that I found fascinating - because I think it provides at least a glimmer of insight into quite why the book publishing industry is widely perceived to be in such dire peril (see, e.g., here, here, here, here, here and here); here's the excerpt:

Cooke outlined some of the savings, particularly on printing, binding and paper: “You don't have to print and bind, you don't have to pay for paper. The most expensive part of the traditional publishing process? Eliminated. You do not have to warehouse. Eliminated. You do not have to ship hard copies anywhere. Eliminated. You're not going to get returns from the bookseller. Eliminated.”

Why, he wondered, “should an author be taking less money for a product that, to my mind, has got to be more profitable given that all these costs have been eliminated?”

At the same time, Cooke is critical of the heavy discounting currently defining the electronic realm. It's not uncommon for a hardcover with a publisher's suggested list price of $30 or $35 to sell as a $9.99 e-book, a differential of more than 70 per cent. Sometimes it's even as little as $4.99 if the e-book is part of a bundled sale with two or more titles.

“What kind of discount are the Amazons and Shortcovers of this world negotiating from publishers for this to happen?” Cooke asks. “And why are publishers allowing their product to be devalued in this way?”

I think it's fair to summarize that viewpoint as follows: books currently cost $30, so why should an e-book be any less?  Any "savings" made between the costs of printing a physical book and creating a digital version should be realized not by the consumer, but by the publisher, the author and the wholesale/retail distribution chain.  Which is, if I can be permitted some hyperbole, a recipe for disaster.  A good part of the explanation for the death spiral in which the music industry finds itself is that industry's bizarre quasi-religious belief that it simply could not and should not charge less for its product.  Does anyone else remember when you'd traipse down to the local music store hoping to buy a catalogue title on CD and find it was selling for $25?  And then you didn't buy it?  And now "the local music store" no longer exists?  There's a lesson in there somewhere.

If the book publishing industry is fretting that it can't sell enough copies of books at $30 a shot, instead of imagining that people will suddenly be enamoured of buying an e-book at the same price, perhaps the industry should do what every single other industry on the planet does (and what a quick look at an Economics 101 text will reveal): lower the cost of your product, and make whatever adjustments to your business are required in order to make that lower cost a profitable one.  If people weren't willing to pay $30 for a paper version of a book, they certainly aren't going to be willing to pay $30 for a digital version, when they know full well that the costs of "making" the digital version are far less - they're just going to feel like they're getting ripped off.  Remember back when people would complain about having to spend $15 on a CD which they "knew" cost the record company twenty cents to create?  They might not have been exactly correct on the numbers, but there was a rhetorical power to their argument which lead, in time, to the ongoing collapse of the structure of the music industry which prevailed from the late 1970s until the early part of this decade.  A collapse which could have been, if not prevented, at least blunted by observing a fairly simple business maxim: sell things to people at a price they are happy to pay.

Comments

[Chris Taylor]

Does anyone else remember when you'd traipse down to the local music store hoping to buy a catalogue title on CD and find it was selling for $25? And then you didn't buy it? And now "the local music store" no longer exists? There's a lesson in there somewhere.

You forgot one step in there. After "And then you didn't buy it" there is occasionally "But you found it for a buck ninety-nine on iTunes" or "But you found it on some P2P file sharing system".

There is a place for physical media in music, but they need to re-think the approach. CDs are dead, go look at something else like an audio variant of Blu-Ray, and start selling whole musical compilations. I'd pay a pretty penny for, say, every Iron Maiden song and variant ever recorded crammed into a single disc, but there's got to be a compelling reason to own it on physical media instead of as a digital file easily stored on a network drive.