'- The physical product, or what re \ really pay for publishers' s Ebooks written in the question of what we rekindled \ have?

If you shell out ? 25 or ? 30 for a hardcover, what exactly are you paying? I've always believed - as I think most people - that the high cost of the hardcover on the fact that they are much more expensive than paperbacks are to produce. But in fact this isn 't the case. They are more expensive, true, but only a bit more - certainly not nearly enough for the ? 10 or ? 15 difference, which has traditionally existed between the two formats.

In his forthcoming book Free Ride: How digital parasites destroy the culture of business and strike back as the culture of business can have the American author Robert Levine, an excellent chapter on publication in which he asks the forces that the prices of books, both in their paper and digital form. And some of the explanations he gives are (at least for me) surprising. For example, it turns out that "publishers spend only $ 3.50 to print and distribute a hardcover". ('Say s, \ it' Let \ s ? 3 in the UK.) So, if this fall, you go into your local bookstore and ? spend 30 on this beautiful specimen Claire Tomalin 's long-awaited Dickens biography, which They are really just about a large amount of profits in the hands of her publisher, with some knock off for the retailer. Right?

Well, yes and no. If you think about books as physical objects in the first place, then off course they 'll seems to be a rip off, because printing and distributing them is cheap. But as Levine points out, what you 're really pay when you buy a book is something else. You are buying the "text itself". And why is this so expensive? Because the publisher, in many cases the author pays a considerable sum for the right to sell it. And because the same publisher is also (if they 're all good), significant resources have plowed into the processing and marketing.

In other words, publishing is a business that incurs high fixed costs. And it's this, to return to my initial question, that accounts for the high price of (indeed the very existence of) hardbacks. The publisher needs to maximise revenues in order to defray its outlay. Some people are prepared to pay top dollar to have the premium product – a hardcover copy that comes out, crucially, months before other versions. So it makes sense for the publisher to offer it to them.

Such questions have particular relevance recently, of course, with the arrival of an entirely new publishing format: the ebook. Most people feel instinctively that ebooks should be much cheaper than printed books because an ebook is not physically "made": There are no printing costs. But if, Levine says, the real value of a book lies in the "text itself", then the delivery method shouldn 't much matter. The fixed costs - acquisition, processing, marketing - remain unchanged.

This, in brief, is the argument that publishers were using Amazon over the past few years. When they started to sell ebooks, publishers argued that they cost quite as much as printed books, and tried to set the prices accordingly. Amazon, however, has always been in the business of pushing prices down, and tried to sell them as cheaply as possible, to as large as possible to capture part of the ebook market. In their efforts to reduce the prices, Amazon has already massive support (Levine points out) by the fact that they also manufacture the most popular ebook reader. Because Amazon makes big profits from the Kindle, need it doesn 't to about profiting from selling his ebook to care. In fact, when it sold off ebooks, it may still be better off overall because they drive up sales of its Kindle.

In the past year, Levine suggests that 's exactly what to do Amazon launched in the U.S. - selling e-books at a loss to drive Kindle sales. After a series of high-profile scuffles, publishers again scratched a little ground when they forced the dealer, a sales system, known as the agency model, under which they could adopt set, and not Amazon, the prices for ebooks. But one of the bottom line is that publishers have now firmly accepted in principle that ebooks should be cheaper than their physical counterparts. The "text even" seems to have a different value according to the format provided.

It 's still at the beginning of the ebook in history, and no doubt there' ll be many disputes and problems in this direction in the future. But here 'sa final thought for today. Was it wise, a situation possible in which a single company - Amazon - the market leader both in terms of a digital product (ebook) and the hardware through which it 's delivered?