I’ve been talking with several clients about the affect of the economy on their business, and it seems that publishers are in a unique place right now.
The costs of producing books is pretty jaw-dropping no matter what segment of the market you’re in. And of course everybody’s scrambling around looking for places to cut costs. But let’s not forget added revenue opportunities either – wouldn’t that be nice at a time like this?
It’s not magical thinking.
Publishers aren’t going to publish less in this economy – they can’t afford to pare down their lists when they’re trying to add revenue to the bottom line. But they also can’t afford to produce books at the rate at which they have been – the print and distribution costs are prohibitive in some cases; the revenue made from publishing the book will already have been eaten up (and then some) by the costs of publication themselves.
So now what?
This very weird confluence of events is a sign that the horse has left the barn (train–>station, toothpaste–>tube, cat–>bag, genie–>bottle). In other words, the costs of print publishing are so high that pretty much the only area of growth, the only area where new revenue is possible in an economy this tight, is in the digital realm.
(Yeah, you knew I was going to say that.)
Are consumers buying digital books? Let’s not gaze into the "how many e-Ink screens have actually shipped" crystal ball. That’s not the point, and it’s an irritating distraction. Generally speaking, if more digital content is AVAILABLE, people will buy it.
Let’s talk about that a little bit. Digital content is cheaper to produce than print content. Yes, in the educational market you also have to include a lot of interactive exercises, embedded video, etc. But recently I have found that digital textbooks are in fact cheaper to make than print ones…by about 1/3. You can monetize the "digital assets" – the activities, the videos, the sound files – across several titles, which brings down the cost. And the cost of NOT GOING TO PRESS is significantly less. The cost of not shipping the books…yeah, you’re not shipping the books. The cost of not warehousing the books – all this is savings.
So you can charge less. Again, forget about Amazon and the prices on Kindle titles – Amazon’s prices are purely fictive. The only cogent generalization you can make about Amazon is that you cannot make very many cogent generalizations by looking at what Amazon is doing. You’re not going to charge less than 1/2 of what the print title would bring in – that’s a fast road to losing your shirt.
But you can set the prices of your digital products to be about 2/3 that of the print product, and still maintain a healthy margin. And consumers will be more inclined to pay for a cheaper product. Particularly younger consumers who don’t like to pay at all for content, who are not averse to reading on a screen, etc.
Digital books are cheaper all the way around. Cheaper to make, cheaper to buy. Which is quite meaningful to companies and consumers alike, right now. Waiting for "more adoption" is missing the point – and the revenue and the savings.
Posted by Laura Dawson, 10:55 am, Comments (0)