As a sidebar to my current publishing shtick, The New York Times runs an article discussing the costs of ebook publication:
In the emerging world of e-books, many consumers assume it is only logical that publishers are saving vast amounts by not having to print or distribute paper books, leaving room to pass along those savings to their customers. ... But publishers also say consumers exaggerate the savings and have developed unrealistic expectations about how low the prices of e-books can go. Yes, they say, printing costs may vanish, but a raft of expenses that apply to all books, like overhead, marketing and royalties, are still in effect. All of which raises the question: Just how much does it actually cost to produce a printed book versus a digital one?
Lots of stuff here, including a few too many over-simplifications for my taste — but as I earn my living from this stuff (books) it's a topic rather closer to my heart than it probably is to yours.
However, here (for my money) is the most screamingly important bit:
"If you want bookstores to stay alive, then you want to slow down this movement to e-books," said Mike Shatzkin, chief executive of the Idea Logical Company, a consultant to publishers. "The simplest way to slow down e-books is not to make them too cheap."What Mr Shatzkin doesn't mention is that this strategy will fail. Keeping the existing distribution chain alive may be desirable, but not at the cost of growing the e-book distribution chain: if it results in e-book prices being kept artificially high, all it will achieve is to encourage e-book users to download unauthorized (pirated) copies. And as the music and film industry have demonstrated, DRM annoys the hell out of honest customers while not impeding dishonest ones — thus making the pirate download more attractive and useful as a product than the legal one.
It's a hideous dilemma for the publishers. What to do? Risk pissing off your existing distribution channel (the booksellers) before the e-book channel is big enough to be commercially viable, or convince your end-customers that you're as evil as the music and film industry?