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Publisher Advantages

Contemporary publishing is risky business. Because of the economics of paper printing and distribution, titles have to be produced in large print runs to make it profitable to sell them. But there is no guarantee that a book will sell its print run.

Large print runs mean that much capital is tied up in product for a long time. So less capital is available to buy new titles or to promote current ones. It further means large transportation, warehousing, security, insurance, and distribution costs. And all the people who do this have to be paid salaries, workers compensation, and pensions.

But small print runs mean risking running out of stock and losing customers to competing titles because of delay. Further, because printing costs drop sharply with volume, many small print runs are unprofitable.

Even if demand could be predicted exactly and even if titles could reach readers as soon as they are printed, printing alone adds 4 to 6 weeks to product delivery. And unless product is mailed express at greater cost, the post office adds a further 2 to 3 weeks. Finally, even if warehousing and capital costs are zero, product cannot be kept awaiting demand indefinitely since it is bulky and it physically decays in a few years.

Because of these constraints imposed by committing books to a fixed medium (here paper, but similar things would be true of discs), publishing proceeds by guess and by gosh.

Publishers let retailers return unsold copies to increase the chance that retailers can afford to carry their titles. Sometimes as much as half of a mass-market fiction print run of 500,000 copies is returned. But with electronic distribution, outlets will not have to keep as many copies of each title as they think they can sell; they need only one for promotional use. And that will increase the diversity of titles outlets can offer. Eventually, distribution costs to publishers could drop to zero since readers could acquire product rather than publishers supplying it.

Further, when distribution is electronic used-textbook stores go out of business. Currently, a textbook may sell 10,000 copies in the first year, 5,000 copies in the second year, then 2,000 in the third year. The original 10,000 market is still there, but it is being serviced by used copies. The used bookstores are piggybacking on the publisher's and author's investment of time, capital, and creativity. Electronic distribution eliminates that opportunity since the most recent version can be available instantly and cheaply.

Going to electronic books and electronic distribution of them on demand means no printing and its costly consequences: warehousing, transportation, delay, backordering; competing for scarce outlet shelf space; overestimating demand and having to remainder or destroy books; underestimating demand and having to lose business or annoy customers; and sinking large amounts of capital into paper copies that take time to sell, that take up shelf space, that decay on the shelf, that may be returned after sale, and that if sold then fuel the used book market.

Production would become editing, reviewing, and developing acceptable projects. Printing and distribution will cost little. And there will be more resources available for acquisition and marketing. Finally, in the subscription scheme publishers will have large stable incomes over a period of years, thereby making it easier to attract venture capital for startup or expansion, making planning easier, and reducing risk.

next up previous contents
Next: Retailing Schemes Up: Electronic Book Advantages Previous: Library Advantages
Gregory J. E. Rawlins