Translating print for digital is a process of reshaping internal structures in order to create a new foundation for external participants to engage with content, contribute to it, and furthermore, fundamentally redefine the end-user experience. Having said that, changing business models to accommodate these structural advances must be understood first by the financial truths of eBooks, and secondly by the consumer trends of readers.
Rich (2010) examines production costs of print and digital, applying average contract agreements and standard industry fees to establish a base for analysis. Hypothetically, if a publisher prices a print book for $26.00––the book is then sold to a retailer at 50 per cent discount leaving the publisher with $13.00 gross revenue. Rich (2010) appropriates an additional $8.95 required to firstly print, store and ship each book, and secondly to cover design, marketing and author royalties––leaving the publisher with $4.05 before making further payments to editors, designers, and miscellaneous fees.
EBooks in comparison––again in a hypothetical context, and with reference to Apple’s agreement with publishers, if priced at $12.99, lose an automatic 30 per cent to Apple’s commission, leaving the publisher with $9.09 (Rich, 2010). Rich (2010) again appropriates $4.53 for the digital conversion, typesetting, copy-editing, marketing and author royalties––leaving the publisher with $4.56 to cover the same additional payments as required for print.
Despite this estimated difference in profit margins, Rich (2010) insinuates that print books will still yield more financial gain for publishers in the long-term, arguing publishers can push print profits with paperback versions and the digitisation of backlists. However, eBooks lack a plan B to sustain decreasing profit margins over time––making it difficult for publishers to grow and support new authors.
The challenge is figuring the pricing dilemma in the digital marketplace. Publishers, if selling directly to the consumer, tend to discount eBooks at 20 percent; however, if selling to retailers (i.e. Amazon), tend to discount at 50 per cent––and if Amazon decide to sell it even cheaper for the Kindle, publishers are then forced to reconsider their pricing models or their readership will naturally migrate to third-parties (Woll, 2010).
The second challenge addresses digital conversion; particularly noticeable in online newspapers and magazines, digital lacks the fluidity print exhibits with its easy-to-skim large format (Stephenson, 2013). Digital profits are therefore, as well dependent on content and how much investment must be made to create an experience that cannot be tangibly replicated.
E-Books, regardless of their virtual format still contain intellectual value––and if publishers give in to Amazon’s pricing trends and consumer demands for cheap eBooks, publishers may as well be cannibalising their own market (Hillesund, 2007; Kreuser, 2010).
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