Can publishers survive in the electronic book era?


Guy Kawasaki has some interesting advice for publishers to help them move forward in the era of dis-intermediation, self-publishing and electronics books…read it here (10 Strategies for Publishers to Succeed and Survive)

My concern with this advice is that it is the same advice that has been echoed to them for years.

I believe that publishers need to make a fundamental shift in the way they do business in order to survive, it is not about small steps it is only through a drastic a right hand turn, innovation and leadership that publishers will survive the digital era.

There are two basic industry trends that need to be embraced before the publishers can move forward.

 

1. Electronic books are a rapidly growing market segment and people expect to pay less for e-books than paper books…

- I have had this conversation with publishers and authors alike. They are unhappy with the dropping prices of ebooks as they want to maintain their profit margins and, in the case of the authors, be paid for their effort. The problem with this stance is that people don’t believe ebooks should cost as much as they believe there is little or no cost associated with them.

- The reality is that a publisher is going to make less from the ebook on a per unit basis than from a print book, which is a dis-incentive for the publisher to make any moves. Given that manufacturing and distribution costs for a paperback book is in the $2 range the publishers will make $10 on a $25 book after they pay Amazon their 50% and deduct the book costs. On a $10 ebook they only make $7, so why move to ebooks at all?

- The incentive to action should come from the reduced demand for print books and the reduced volumes and thus reduced sales the publisher are seeing. But they are protecting their profit margins and in doing so they are slowly spiralling into lower and lower revenues. This is a death spiral.

- The way out is basic economics 101, reduced price should generate increased sales. Like any market you drive top line revenue by increasing sales even if it means reducing price to do so. People are not happy to pay $10 for an ebook, even if the paperback is $20, and with the price of apps hovering in the $2 range they questions why a book should be any different.

 

2. Self-Publishing is here to stay

- Every ereader vendor has a self publishing channel available to aspiring authors. The ereader vendors goal is to get as many books into the reader as possible. As an author I can try to convince a publisher to take my book to market for me, with a very high rejection rate and then a very low return (10% or 15%), or I can simply take it to market myself and keep 70%. Now…obviously marketing and promotion are my problem now, but my book will be in the market and will be selling copies. Once the book has sold a few copies it might be easier to get the attention of a publisher and get the book promoted.

- Publishers need to figure out how to work with the self-publishing market. It is not going to be as simple as tracking the best selling self-published books and approaching them, because by the time the books are successful the authors will have much less need of the publisher. It is not a matter of turning up their nose and assuming the market will go away. People want to create, people want to write books and the cost of writing and publishing an ebook, real out of pocket costs is rapidly approaching $0, so it will only get bigger.

- The solution here is for the publisher to actually use their contacts and marketing and promotion expertise to promote self published books. Provide it as a service, leverage the work that is already being done for internal books and let the self-publishers pay for it.

 

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One thought on “Can publishers survive in the electronic book era?

  1. Pingback: Are book publishers frozen with indecision in attempting to enter the electronic publishing era? « danlargo Inc.

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