How are ebooks priced? Not those titles produced from the many Indie Authors, but those from traditional publishing houses--especially the Big Five? It's been a mix of super-high prices (with ebooks costing more than their paperback counterpart) and occasional deep discounts. How is it all determined?
In 2010, a breakdown of costs comparison was done at Gizmodo. It seemed there were a lot of pro-publisher stats. First they took the hard copy edition as the model to work with, then stated the bookseller gets a 50% discount (At Amazon...40% is the standard for other outlets, with 3% to the distributor); and the publisher pays 15% royalty to author (they didn't mention this happens only after the author has sold 10K copies or more)...
Considering the majority of what they call "real" books sold are trade paperbacks, NOT hard copy editions, the information given didn't tell the whole story. Then the ebook distributor they modeled was Apple--which, in 2010, was the most demanding and the hardest for which to format an ebook. They also didn't consider that once the ebook is formatted the costs to produce it for different readers drops off.
Another 2010 article inThe New York Times stated:
"In fact, the industry is based on the understanding that as much as 70 percent of the books published will make little or no money at all for the publisher once costs are paid."
(This begs the question of why the publishers don't go to POD to reduce costs.)
Now, two years later, after all types of back-and-forth, blah-blah-blah in blogs and forums, there seems to be some official follow up. Read about it in this CNET report and the Wall Street Journal. The Justice Department is now involved, and behind-the-scenes Apple information is revealed.
It will be interesting to see how this plays out.
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