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Wednesday, April 25, 2012

How Much Does It Really Cost to Produce an E-Book ?

Someone is making a ton of money!
How far apart are print book and ebook production costs ?

I ran across an interesting article from a favorite source the other day and encountered some production cost figures that I'm not so sure are telling an accurate story.

Left me a little confused [nothing new about that :)] --- I was dog-tired when I first scanned it and pounded out this post, so I may not have interpreted all as well as I should.

Key excerpt from article:

“We still pay for the author advance, the editing, the copy-editing, the proofreading, the cover and interior design, the illustrations, the sales kit, the marketing efforts, the publicity, and the staff that needs to coordinate all of the details that make books possible,” said Bob Miller in February 2009 on the HarperStudio blog (which has been defunct since April 2010 when the publishing start-up folded) when he was president and publisher of that company; he is now president and publisher of Workman Publishing. “The costs are primarily in these previous stages; the difference between physical and electronic production is minimal.”

That so ? From my initial research I had reached a different conclusion.

Perhaps it's in the way Bob miller is splitting his hairs or framing his parameters.

I do believe that content is king and should drive cost/value, but ...

This from Digital Book World by Jeremy Greenfield

Consumers Upset and Confused Over E-Book Pricing

Publishers are making a killing on e-books because they cost nothing to produce, distribute and sell and are almost 100% pure profit. At least, that’s what many consumers think.

“E-books cost almost as much as printed books but are phenomenally cheaper to create,” said Trevor Doyle, 39, a teacher from Ione, Calif.

“There’s so much less cost involved – no material, relatively low distribution cost, no inventory costs, transportation,” said Michelle Barrineau, 42, a sales analyst from Ft. Lauderdale, Fla.

While consumers understand the basic costs involved in the bricks-and-mortar retail world, they don’t understand the costs involved in selling something that is, well, much, much smaller than a bread box.

“With today’s pricing, the profit in e-books is crazy,” said Greg Harris, 49, who lives in San Carlos, Calif., and is a vice president of sales and marketing for an electronics company. “Without the need to stock inventory and move paper all around the country, there should be a significant discount in the pricing model.”

“When I saw how much these e-books cost, I was amazed,” said Heidi Barron, 48, a public relations professional from Atlanta. “There is no printing, no shipping, no warehousing, no retailer. There is simply the transmission of the content through the Internet. Someone is making a ton of money.”

On that last point, Barron may be on to something. Publishing companies that publicly reported earnings for 2011 followed a similar pattern: flat sales, increased income. Digital Book World and others have speculated that higher profit margins on e-book sales are the culprit.

With the recent news about the Department of Justice lawsuit against some of the largest U.S. publishers and Apple alleging an e-book a price-fixing scheme, consumers are more aware than ever that there is a price battle going on in the e-book world. They just may not be aware of who is on what side, what each party wants and why, and what is really at stake.

“Why the frick-frack do these major publishers think it’s okay to put out a paperback at half the price of an e-book they can upload and forget?” said Diane Castle, 36, a writer from Dallas. “To me, this defied logic – until I stumbled upon a news article about the Justice Department’s price-fixing law suit yesterday. Now it all makes sense.”

“I do read e-books and am disgusted with the price that is usually charged,” said Sarah McGill, 37, a freelance writer from San Antonio. “I truly believe that the larger companies participated in some sort of price-fixing.”

So, How Much Does It Cost to Produce an E-Book?

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