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?
Will the economics dictate pricing of the book? Cost seldom is an indicator of what the publisher will sell a book for - unfortunately .
ReplyDeleteLots of room for further reduction in price of digital book. Not so sure this is healthy for the book world.
ReplyDelete