Sunday, December 13, 2009

Publishers Scramble to Horde e-Book Profits

Sony <span class=Librie eBook Reader" style="border:none;display:block" width="180" height="240">Image by Josh Bancroft via Flickr

The old-school publishing companies have been waging an ongoing battle on multiple fronts these days, all of them with different aspects of the same mortal enemy: the dreaded e-Book.

And they thought self-publishing was becoming a pain in the ass.

There has been a lot of news regarding powerful brick-and-mortar publishers and their constant struggle to catch up with and wrestle into submission the ever-increasing market for electronically formatted books. What didn't seem like a serious threat to them in the past has suddenly become a serious threat to the status quo (much like self-publishing), and the race is now on to head this new threat to the kingdom off at the pass.

Much of the news regarding these recent attempts has covered what appear to be different aspects of the battling formats. You have major publishers like Simon & Schuster announcing a set time delay between hardcover releases and their e-Book versions. Then there are the publishing companies that are desperately attempting to convince authors (and the families of deceased authors) that older publishing rights contracts imply their ownership of electronic versions of books even though they were written before e-Books existed. Beyond these major issues, smaller individual battles rage on with specific agents and authors. And let us not forget the constant wrangling with Amazon's Kindle and Barnes & Nobles' Nook over content and accessibility.

As disparate as these fights might seem, however, they all boil down to one solitary bottom line; the bottom line. You know, money.

It has been a harsh time for publishers. Revenues have dropped drastically for all forms of publishing, from magazines and newspapers to textbooks and literature. The global economic recession has seriously reduced disposable incomes, making printed materials more of a luxury item these days. The rising costs of published materials hasn't made this any easier. When a thirty-two page comic book costs as much as most of us remember paying for a two-hundred page paperback novel, casual reading just doesn't seem so casual anymore.

Then there's the new technology. We're in the Information Age, after all, when information of all kinds is readily obtainable in multiple electronic formats, only a mouse-click away. Reading for research or recreation can be done from wherever you are sitting right now. We've reached a moment in time where people can browse vast collections of documents and written works on
their phone while on a bus. Even going through a tunnel. Now that's impressive.

But this isn't about free information, no matter what some publishers might say. Some might take up the music industry's torch by claiming that sharing of materials online hurts the industry, but that argument never holds water when they still manage to bring in billions of dollars in revenue. Besides, you don't hear any complaints about used bookstores stealing food from the mouths of publishing industry families. And libraries have been giving it away for free for years.

So what's the argument then? For the most part, it comes down to the publishing industry's unwillingness to change their pay model to represent the new technology. We saw the same thing with the massive writer's and actor's strikes a few years back. Now it is time for book publishers to step up and take the heat.

When publishing and selling a book, most of the major costs involve the physical creation and transportation of the actual book. You have to print vast quantities (that's a lot of ink and paper and glue), store them (prime real estate), and ship them (books are heavy). What is left, administrative costs and creative artist compensation, is purely negotiable.

The problem is that when it comes to the new e-Books, even though elimination of the physical costs have left the purely negotiable part of the equation as the bulk of the cost, publishers still aren't negotiating. Many out-of-print books are now being made available in e-Book form, but at prices close or equal to original print-book cover prices. New releases might be offered at more respectable $9.99 price ranges, but after that the costs can almost double for older and not-in-demand (see: non-celebrity authors) titles. Any used bookstore owner will tell you that this pricing model is ass-backwards.

This adherence to the old rules also has authors and agents bothered as well. Author's royalties are remaining at roughly the same percentage for e-Books, despite the considerable lack of publishing overhead. For the e-Books selling at the old prices, this equals a massive increase in profits for the publisher, and the author left with same amount of scraps. Now take that new release selling for $9.99 instead of the $27 (!!!) hardcover price. The author's percentage is down to nearly a third of what it would have been, while the publisher's reduced overhead still has their profit margin comfortably close to what it was before.

As publishers desperately try to rewrite old contracts and keep new releases off of Kindle and Nook eReaders, it can be easy to assume that these are the actions of an industry struggling to survive in a new age. But this one book you definitely can't judge by its cover, as the truth is far simpler. They are greedy. Like the music industry and film industry before them, they are trying to reap the benefits and rewards of a new age of digital entertainment without giving the artists involved with these creative properties their fair share.

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