In AlterNet‘s article “Is Amazon Evil?” (12/8/10)–reprinted from the Boston Review (11-12/10)–the description of the economics of e-books is seriously dubious. Reporter Onnesha Roychoudhuri writes:
If Amazon had asked publishers what they thought about locking in e-book prices at $9.99, it would have been subjected to a chorus of outrage. That’s because the math behind publishing is seldom in a publishers’ favor. The sale of a $20 hardcover nets a large publisher about $10. Royalties run the publisher about $3, and the costs of printing, binding, and paper are a further $2 (more for low-volume titles). Take $1.20 for distribution, $2 for marketing, and that leaves a publisher with roughly $1.80 to cover rent, editing, and any other costs. A smaller publisher might keep closer to a dollar per book.
The New York Times (3/1/10) did a similar exercise, basing its analysis on a $26 hardcover rather than $20–out of which the publisher keeps $13 instead of $10. (The Times‘ reporter, Motoko Rich, sources these figures to “interviews with executives at several major houses”; she’s by no means anti-publisher–see FAIR Blog, 3/2/10, 3/18/10.) The costs cited by the Times are similar–$3.90 for the author’s royalty, $3.25 for printing, storage and shipping (vs. the Review‘s $3.20 for printing plus distribution), $1 (rather than $2) for marketing. The Times breaks out editing, design and typesetting as its own item, listing it as 80 cents. This leaves $4.05 for the publisher as profit before overhead–math that is considerably more in the publisher’s favor.
When it comes to contrasting the hardcover economics with ebooks, the Review piece becomes very vague:
E-books reduce the cost of printing, binding and paper, but royalties tend to run higher, and all other costs are largely unchanged. Publishers account for these costs when they slap a price tag on a book, so Amazon’s decision to set the price irrespective of them set off a wave of anxiety.
Actually, according to the Times, royalties run lower in electronic publishing–$1.75-2.50 on a $9.99 ebook. Books published electronically, of course, eliminate rather than “reduce” the costs of printing. Other costs go down, because your sales volume goes up when you reduce the price to the consumer by more than 60 percent. And the retailer–the evil Amazon–gets less of a take from each sale, so the publisher winds up–according to the Times, which, again, is quite sympathetic to the publishing industry–with about as much profit on each copy sold: $3.51 to $4.26, depending on how the author’s royalty is calculated.
What actually set the big publishers off was not worry that they could not make as much money selling electronic books at Amazon’s price, but worry that they would lose out on the opportunity for windfall profits that comes with a new technology (FAIR Blog, 7/23/10). Is that evil? No, that’s capitalism. Or, if you prefer, “Yes, that’s capitalism.” There’s certainly not a lot to prefer about the publishers’ business model, either from the reader’s or the writer’s point of view.
The Review‘s website blurbs the piece, “What happens when an industry concerned with the production of culture is beholden to a company with the sole goal of underselling competitors?” That’s what’s most misleading about the article: the suggestion that corporate publishers are not profit-maximizing enterprises in the same way that Amazon is. This would surely come as news to News Corporation (i.e., HarperCollins), CBS (Simon & Schuster), Bertelsmann (Random House), Reed Elsevier (Houghton Mifflin) et al.
P.S. Daniel Ellsberg makes a stronger case for the evil of Amazon here.
I welcome a close reading of the article I wrote for the Boston Review. Please keep in mind that nowhere in the article do I imply that Amazon is “evil.” That word was introduced in the headline AlterNet penned when they reprinted the story. Secondly, to assume that the economics of book publishing are the same across the spectrum of corporate and small publishers is hugely flawed. If the economics seem “dubious” that’s merely because there are no consistent breakdowns of percentages — it varies widely based on size of publisher, print run, etc. The best any reporter can do is to take the averages of numbers cited from publishing sources to give readers a general picture.
While the Boston Review article takes an in-depth look at the past thirty years of the publishing landscape, Naureckas only seems interested in the profit-seeking of a handful of corporate publishers. That’s certainly a relevant topic of discussion, but not particularly relevant to the article I wrote which spends far more time quoting the heads of small and medium-sized publishers who are struggling to stay in business. I’m very familiar with FAIR’s work, and I find it troubling (and, hugely disappointing) to see such oversimplification of a nuanced topic from an organization committed to fairness and accuracy in the media. If Naureckas is interested in an open discussion, I’d be happy to have a conversation, either in a published roundtable format or on air. There is simply too much at stake here for unqualified dismissals.
Onnesha Roychoudhuri
Thank you for calling Alternet to account. I would very much like to see an open discussion with Naureckas.
I, too, agree that Amazon is not inherently “evil,” and your comments about the smaller publishing houses and their intrinsic problems deserve an open response.
In a transparent journalism, no one can afford to make a point by failing to respond to legitimate questions. Where truth is sought there can be no hiding from the light.
Again I thank you.
David Lisle
Well, Amazon on Wikileaks should settle this deate!
Hey Onnesha…Here is an off topic question.Why are certain college books soooo expensive?Good lord what is the profit on that?And every year a new math book.Did they change math?Hundreds for some science ….med books.OK jag over…..
AS far as the termination of wiki leaks web sight…Any company has the right to terminate business with a company they consider untrustworthy,dishonest or in ca-hoots with illegality. Aside from any judgement on content wiki leaks is definitely under suspicion as to HOW they acquire their info.Respect the right and freedom of a company to run their enterprise as they see fit.I see nothing in Wikis conduct- to earn them the benefit of the doubt. Today even Obama called them reprehensible.