Ebooks are going to change the economics of the publishing industry, and change them faster than anyone imagined. The main driver of this change will be the sudden proliferation of devices that display electronic books. Until very recently, ereading was limited to a few early reading devices and reading documents on the computer. Then smart phones like the Apple iPhone, mainstream readers like the Amazon Kindle, and tablet computing devices like the Apple iPad became popular. These devices are easy to read, easy to carry, and hold libraries of books.
Very soon, most people you know will have at least one and probably two convenient ways to read electronic books. They will take them on the plane or vacation to save space. They will read books in waiting rooms and the DMV because they can buy the book while they wait. They will read the books friends email them. As a result, the demand for electronic reading will soar.
The prices for eBooks will also fall. The cost of distributing electronically is trivial compared to the cost of printing, storing, shipping, displaying, and ringing up a physical book. So when a book is sold electronically instead of as a physical book, publishers and distributors make much larger margins. This won’t last.
Publishers will of course try to keep the prices for electronic version in line with prices for print versions, but they will ultimately fail. Publishing is a competitive business, and someone will start to lower prices to grab market share. Eventually the prices on most titles will fall. This is already happening now. I regularly pick up free electronic books by new authors and deeply discounted electronic versions of best sellers from just a couple of years ago. Eventually, if you want to sell a new book, you will discount the electronic version.
The new economics of publishing will not necessarily bad for authors. Authors typically make between 10-15% on a sale, depending on their royalty rate and the effects of discounting. So on a $20 physical book an author makes $2-3.
If that same author wants to make $3 for an electronic version of the same book, what could she price it at? Perhaps $3.05 is she distributes herself. Or $4.50 if a distributor takes a 33% cut. Regardless of the price that electronic books ultimately fall to, I suspect authors will make about the same per sale.
More books will be sold too. When a book costs as much as a latte and is easy to buy, carry, and store, it will be a much easier impulse buy. I already buy eBooks and several times the rate I bought printed books. It is hard to resist when they are so cheap and I can buy while I am waiting for a meeting to start. So look for an revolution in publishing.
Continued here: The New Economics of PDF ebook publishing