Wednesday, August 5, 2009

Is the Publishing Industry Headed for Disaster?

The New York Times informs that Sony is daunted by the success of Amazon's Kindle and has decided to bring down prices for its new releases.
As every Kindle owner knows, one of the most attractive features of the Kindle is Amazon's guarantee that all new releases will be priced at under $10. For those of us who would never consider buying a hardcover because of its impossible price and have to wait for a paperback edition to come out, this is great news.
It turns out, however, that e-book companies do this at a loss since the publishers refuse to acknowledge the new reality of electronic reading devices and demand the same amount of money for a Kindle version than for a hardcover: "Book publishers will still retain their traditional cut of every e-book sale — about half the hardcover retail list price. But they are concerned that as online retailers like Amazon and Sony gain market power, they will eventually tire of losing money on e-book sales and ask publishers for lower wholesale prices, a move that would cut into their profit margins. “We all know that these companies are taking a loss and that’s not going to continue forever,” said Jonathan Karp, publisher and editor in chief at Twelve, an imprint of the Hachette Book Group." The publishers' insistence on getting the same amount of money for a hardcover book as for an e-book makes no sense whatsoever. A digital version requires no investment into paper and printing. If the book publishers were at least marginally environmentally minded, they would see how great the proliferation of e-readers would be for the environment.
This brainlessly greedy attitude on the part of publishing houses will inevitably result in the same disaster as that experienced by the music industry. If the publishers fails to recognize that the times when you could sell a hardcover for about $30 are almost over, they risk alienating their customers altogether. People will turn to more accessible and cheaper ways of gaining information. The invention of the Kindle makes it possible to get people to read a lot more. Instead of using this great opportunity, however, the publishers are hopelessly stuck in the past, trying to preserve a practice that fails to meet today's expectations of the readers.
There are quite a few writers who have seen the amazing potential of Amazon's Kindle. Often, a writer would offer a new book for free in order to get potential interests acquanted with and possibly interested in buying the rest of her books. These smart writers understand that the Kindle can bring them a greater visibility and, ultimately, bigger profits. I wish the publishing houses would finally wake up to the idea that they can't use the same outdated business practices and hope to survive in the new millenium.

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