The IPAD will be introduced this weekend, and we thought it a good time to review the economics of Digital versus print.
The New York Times recently documented an article describing the economics of producing a traditional printed hard cover book and a digital book. They state the typical hardcover retails for $26.00, and the publisher generally is compensated 50% or $13.00 of this price. The publisher than must pay approximately $3.25/book for printing, warehousing, and shipping the book to the store. The publisher also pays a 15% royalty ($$3.90) to the author, $1.00/book for marketing, and about 3% or 0.80/book for design and editing. Accordingly, the publisher is left with about $4.00/book before paying staff and overhead expenses.
The current agreement with Digital distributors is to compensate the publisher 30%, or $9.00/book on a book retailing for $12.99 (or $7.00 for a book retailing for $9.99 – the level most are now looking at). Costs are lower than a printed book, outlined as 0.50 to convert the text to a digital file and .0.78 to market the book. The royalty is still being worked out, but currently most authors are settling in at 25% of the digital price or about $3 for the $12.99 retail or $2.50 for the $9.99 price. Given the math, the author makes slightly less, but hopefully sells more books, meanwhile the publisher makes slightly more.
Currently digital books make up a very small percentage of the market, but the growth potential is large.
Will you be making the switch from hard bound to tablet?
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2 comments:
Will the economics dictate pricing of the book? Cost seldom is an indicator of what the publisher will sell a book for - unfortunately .
Lots of room for further reduction in price of digital book. Not so sure this is healthy for the book world.
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