"The [publishing] industry's great hope was that the iPad would bring electronic books to the masses–and help make them profitable. E-books are booming…. But publishers were concerned that lower prices would decimate their profits." If Amazon gets away with selling e-books for $9.99, Auletta quotes one publishing CEO, "to my mind it's game over for this business." Amazon is depicted as controlling and mercenary:
Many publishers believe that Amazon looks upon books as just another commodity to sell as cheaply as possible, and that it sees publishers as dispensable…. Publishers maintain that digital companies don't understand the creative process of books. A major publisher said of Amazon: 'They don't know how authors think. It's not in their DNA."
Publishers, on the other hand, are remarkably altruistic: "Publishers' real concern is that the low price of digital books will destroy bookstores, which are their primary customers," Auletta writes. But they're equally concerned about the well-being of authors:
Good publishers find and cultivate writers, some of whom do not initially have much commercial promise. They also give advances on royalties, without which most writers of nonfiction could not afford to research new books…. Although critics argue that traditional book publishing takes too much money from authors, in reality the profits earned by the relatively small percentage of authors whose books make money essentially go to subsidizing less commercially successful writers. The system is inefficient, but it supports a class of professional writers, which might not otherwise exist.
It's a good story–but it belongs in the fiction section: The idea that publishers need to break Amazon's $9.99 pricing structure in order to be profitable is self-serving spin. As the New York Times' Motoko Rich reported in a story that bent over backwards to give the publishers' side (FAIR Blog, 3/2/10), publishers make about as much from a $10 e-book as they do from a $26 hardcover: $3.51-$4.26 vs. $4.05, by Rich's estimates. The higher prices that publishers claim are necessary to keep the industry alive will actually give profits a nice boost: to as much as $5.54 for a $12.99 e-book; Rich doesn't give figures for a $14.99 book, but much of that extra price would go to the publisher.
Although Auletta allows publishers to pat themselves on the back for their "author-oriented culture," they give themselves a much better deal than they give writers on e-book sales: While a traditional hardcover sale nets about the same amount of money for author and publisher, with e-books the publisher takes almost twice as much in profits as they give out in royalties.
The publishers' goal is to get an e-price that gives them sharply higher profits per unit with far less investment–and isn't that every capitalist's dream? It's a shame that Auletta feels the need to dress that up as some kind of salvation of literature, though.