Arnaud Nourry, the CEO of the world's second largest book publisher, Hachette Livre, says that the current pricing trends for eBooks may soon kill the hardcover book as we know it. In an interview with the Financial Times, Nourry says that he worries that the combination of the $9.99 price for bestsellers and the fact that Google now offers millions of out-of-copyright books for free could destroy profits for traditional publishing houses. Nourry is especially worried about the fact that Amazon is currently selling eBooks at a loss and that the company will soon demand that publishers will lower their prices so that it can actually make a profit from selling eBooks in its Kindle store.]]>
Will eBooks Really Kill Profit Margins for Publishers?
Based on this interview, we can't help but think that Nourry doesn't quite get the opportunities (and cost-savings) that electronic books will bring, though there can be no doubt that Amazon has now established $9.99 as the price for bestsellers in the US and all of its competitors like Barnes & Noble and Sony have followed suit (though it is not clear if Amazon's competitors are also currently subsidizing their eBooks).
Publishers obviously incur costs when producing a book and only a small number of bestsellers make up the majority of most publishers' revenue. In the eBook marketplace, however, where distribution costs are negligible and publishers could even cut out middle-men like Amazon and Sony if they wanted to, the profit margins for most publishing houses are more likely to go up than down, even if they have to price the majority of their books between $0.01 and $9.99.
Maybe We Won't Need Traditional Publishing Houses in the Future?
When we talked to Mark Coker from self-publishing house Smashwords last week, he argued that as traditional publishing houses start to reign in cost as the traditional business model in the industry starts to collapse, publishers will start to offload some of their costs to authors (copy-editing, design, etc.). Coker also thinks that publishers will start to look at self-published authors as a sort of farm-league for their big imprints. That could very well be true, and if this happens, then publishers will see even higher profit margins than today.
Or Maybe Books Will Just Hang On For a While Longer?
Of course, there is also still a chance that readers will just hang on to their regular books - after all, they have served us well for hundreds of years now. As GigaOm's Jordan Golson puts it, "There's nothing quite like going into a bookstore and browsing the shelves looking for your next great read, so the electronic revolution won't affect books as much as it has music and movies." There is some truth in this, of course, but every eBook vendor offers free first chapters of almost every book and the same argument was probably made by music aficionados whenever another local record store closed in the last few years.
For ReadWriteWeb's in-depth analysis of the changing face of publishing, read Bernard Lunn's series: Bits Of Destruction Hit the Book Publishing Business.
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