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Key data from New Yorker article on e-books:
- typical pricing of a hard-cover book:
- bookstore price: $26
- whole-sale price for the bookstore: 50% ($13)
- author royalty: about 15% of the cover price ($3.90)
- bookstores return about 40% of hard-covers, $5.2 per book on average
- $3 is for printing and shipping
- publisher profit: about $1 ($15 - $3.90 - $5.2 - $3)
- e-book royalties for the author: 25%
- before agency model pricing, Amazon was buying e-books for $13 and selling for $9. The assumption is that Amazon is taking short-term loss to set low price expectation for e-books so that in the future they can sell more e-books and kill bookstores (therefore make more money)
- in agency model, publisher is considered the seller. Publisher sets the price and Amazon acts as an “agent”, taking 30% of the price (70% going to the publisher)
- ironically, in agency model, books cost more and publishers get less money (although probably only as long as Amazon is willing to sell at a loss)
- estimated 3 million Kindles
- 450.000 Kindle titles
- 60.000 iBooks titles
- 12 million books digitized by Google
- Open Road Integrated Media, founded by C.E.O. of HarperCollins, plans 50% royalty to authors
- Amazon tried to strike deals directly with authors, offering them 70% royalty, as long as they agree to a $2.99-$9.99 price
- of more than 100.000 published books, 70% doesn’t earn back advance on royalties
- 6 biggest publishers produce 60% of all books sold in the U.S.
Note: some numbers are as of April 2010 and will surely change in the future.