Finding the Future of Digital Book Publishing by Jeremy Greenfield

Author:Jeremy Greenfield [Greenfield, Jeremy]
Language: eng
Format: epub, mobi
Tags: BUSINESS & ECONOMICS / Industries / Media & Communications, COMPUTERS / Digital Media / General
ISBN: 9781440332203
Publisher: F+W Media
Published: 2012-12-31T16:00:00+00:00

When I look at the future of publishing, we all become service providers for authors. The authors are in control. The power has shifted from publishers to authors. Anyone who doesn’t believe that and honor that is going to go out of business.

You talked a little about price and you’ve written on the Smashwords blog about how agency pricing actually keeps ebook prices down for the entire bookselling ecosystem. With the Department of Justice ebook price-fixing lawsuit and Microsoft hooking up with Barnes & Noble, things are set to change in a big way. Do you see any of the recent developments hurting or helping indie authors?

If large publishers start dropping their prices aggressively and precipitously, then that would increase competition for indie authors, but I don’t see that happening.

The large publishers are trying to maintain prices of $9.99 and up for their ebooks but I know there are some exceptions to that. Indie authors have already moved down to $2.99. So, in the marketplace, that creates an incredible pricing advantage for the indie author. If they can offer a book that’s equal or better quality content, the $2.99 book wins.

If publishers start dropping their books to $2.99, it means readers will have more of a choice of quality content and indie authors won’t have as much of a pricing advantage.

Why won’t they just do that?

I don’t see that happening because it doesn’t work with the expenses and balance sheets of bigger publishers. If they were to lower prices precipitously, they’d have to change their compensation model for authors, they would reduce their margins and reduce their profitability. Ultimately, there is a limit to how many books consumers can read and there are already too many books out there.

When you look at the economics here, the indies have an incredible advantage. Many of the best authors from the biggest publishers are fighting strong financial incentives to leave their publishers.

Publishers are paying between 12.5% and 17% of list price to authors for ebooks.

Contrast that with what self-published authors are earning. They’re earning 60% of list if they’re working with a distributor like Smashwords and 70% of list if they’re working directly with the retailer.

Because the indie author is earning 60% to 70% or more of the list price, it allows them to compete on price but still earn more per unit sold than they would if they were working with a publisher.

The other economic driver that works to the disadvantage of large publishers, because they’re trying to maintain higher prices, many of their authors are selling fewer units than they would if their books were priced at $2.99 or $3.99.

AUTHOR’S NOTE: We did not discuss print titles during our interview. It should go without saying that print distribution can play a part in authors’ decisions on how to publish.

It looks like soon retailers will have that control over pricing. Do you think that the Department of Justice is making a mistake with its lawsuit against publishers?

Yes. I think their lawsuit is well-intentioned but ill-conceived and ill-executed.

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