E-books do not ‘cost nothing to produce’

Via Teleread, By Chris Meadows

We’ve all heard the argument that e-books should be cheaper because they don’t have printing, shipping, and warehousing costs. Blogger Deanna McFadden, who works in digital publishing, takes exception to writer Michael Chabon’s recent statement that it’s unfair publishers should get the same royalty as paper books for “an e-book that costs them nothing to produce.”

McFadden attributes this sort of statement to ignorance of all the costs and hard work that go into readying a book for digital publication, and grumbles that “Chabon essentially thinks my role, that of e-book person, is essentially worthless”.

Let’s take again the idea that for those two earlier books that essentially cost a publisher “nothing” to produce and actually look at what’s involved. Because the books are older, and let’s assume they are a fair bit older, no digital files exist. That means a gross, labour-intensive few days of scanning the text into a file. Then there’s the time it takes to clean up that file, to strip out all the gunk that scanning creates and make sure the e-text is as accurate as it can be to the p-text, again, more time. And sure, there are companies all over the developing world that will do this terrible work for a low cost (and my thoughts on that are, well, far too long to include in this already too long post). In the end, you’ve got the work into a digital format and it’s ready to be converted to epub, more buttons are pushed, coders come in and clean everything up, and you’ve got an ebook that’s ready to go. It’s proofed and checked and proofed again. Metadata is built, ONIX is created, files are FTP’d to the vendors, Amazon’s mobis are created, various different formatting things are checked, and then the book is for sale — but, hey, apparently, this costs all of us nothing to produce, right? There’s no time or energy or effort or anything put into pushing a button and magically having an ebook show up around the world, naw, it’s nothing compared to boxes and gasoline and shipping and warehouses, right? And I’m even simplifying things here for the sake of making a point — not a week goes by where all of our books end up in the right place, where none of them have some sort of technical issue, where there’s not a problem with data that needs to be solved — it’s complex, time consuming, and, at times, really frustrating.

McFadden does admit she may not be putting Chabon’s words into the right context. And I think that’s right. She’s kind of comparing apples and oranges. Yes, e-books have fixed costs of production, of the sort she describes. So do paper books. And they share many of the same costs, and (as McFadden notes) since e-book publishing and print publishing are often treated as two separate things instead of one thing with two separate products, they often duplicate those costs.

But what Chabon is talking about when he says they “cost nothing to produce” is the marginalcost. It costs a certain amount of money to run off each paper book, to ship it, to store it, and possibly to ship it back and destroy it. But e-books have such a miniscule production cost per unit—a few watts of electricity, a few kilobytes of bandwidth—that they effectively cost nothing to run off each digital copy. So if we assume that fixed costs are equal, e-books will earn those costs out much faster while not adding any marginal ones.

That doesn’t mean that the work of someone preparing those e-books doesn’t have value. It just means that when you start selling a lot of them, there’s a lot more room to cut price and/or raise royalty payments on the electronic version. Or so the perception goes, at least. There’s still considerable argument over whether that is actually true.

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