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Wednesday, September 12, 2012

Race to the bottom.....

The news of the DoJ settlements being approved for HarperCollins, Simon and Schuster and Hachette is several days old but ebook prices are falling sharply and quickly.  I have included a couple of links below from Galley Cat and PW providing details on specifics for those that are curious.  

I gravitated to this topic because I am putting the finishing touches on the BEA strategy plan for 2013 and beyond, pouring over all kinds of industry info and data.  One of the stats that jumped out to me was from the BISG/AAP Bookstats 2011report which details that publishing revenue was down -2.5% in 2011 (from 2010) which = $500,000,000.00 - that is a lot of zeros to get to a half a billion dollars.  So while revenue was going down, units sold (books) went up by 100,000,000. Going from 2.7 billion to almost 2.8 billion units sold or a 3.4% increase.  Based on the immediate results from the DoJ the trend of less revenue for more books will persist.  The silver lining is more people are reading in more formats and optimistically that will benefit everyone.  The formula of less revenue for more volume might work on widgets and hamburgers, but I know that it is not a successful business formula, at least in the halls of Reed Exhibitions.  While increased volume can bring efficiencies and supply discounts, it is understandable that prices will fall.  However, that does not yet exist in producing books.  If anything, because books now need to be produced in a greater number of formats the opposite is true.  While an ebook does not have the same cost of print and paper, books are still being printed regardless - only now the cost of that book to be formatted into an ebook has been added to the process.  One other example of the challenges for the industry, also from the 2011 Bookstats report were the stats for Wholesalers, who remained flat in terms of their total revenue from 2010 to 2011, yet their volume was up 17%.  Maybe flat is the the new up in 2009 parlance, but  increasing your level of output by 17% for the same money sounds like a loss to me.  Where does that leave the authors?  There might be more pies, but their slice will dwindle with the revenue.  

I don't have any answers, just concerns that this is a race to the bottom when all the dust settles in the next couple of years.

Publishers Weekly HarperCollins-reaches-new-e-book-agreements.
http://www.mediabistro.com/galleycat/the-most-expensive-agency-priced-ebooks_b57373

2 comments:

  1. The race is not to the bottom. I believe an overhaul of the middle part of the equation will bring a resolve to the increase in revenue to match the increase in volume. The publishers are already lowering advances and eliminating contracts with midlist authors. The numbers don't all show self published author revenue so they leave a large portion of data out of the analysis. The book industry has needed to change its practices for quite some time the new revenue indicators mean the time may be sooner than later. That makes for a race to innovation and from there things are looking up. In my humble optimistic opinion

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  2. Dear Shawneda: I am optimistic by nature and hope you are right, where innovation will be the result instead of a polarizing of publishing with a monopoly of a few players at the top of the market and dilution of quality across the rest.

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