The key is the mainstream publishers’ worry that e-books will cannibalize the sales of physical books. Mainstream book publishers, along with mainstream music publishers and the legacy media newspapers, are actually primarily manufacturers. The costs of the content, in royalties to the authors, are only about 10 percent of the cover price of the book, and less than that for the record. It’s the costs of setting type or mastering, printing the books or pressing the disks, shipping, cataloging, and selling them that dominates the costs of publishing.Where have I heard this sort of story before. Oh yeah! Record companies have been fighting this war with iTunes, Rhapsody, Amazon and the Zune store for a while now. How's that going for them?
Now, along come e-books and readers, like the Kindle and the iPad. Suddenly the whole business of publishing has changed. You can sell a physical book or an e-book — but each copy of the e-book costs literally one one-millionth as much to produce.
What Apple and MacMillan and the others are doing is trying to preserve their existing business model by forcing the price of e-books to be high enough to not cut too badly into the physical book market. What Bezos and Amazon are doing is trying to cut the price of e-books to encourage adoption.
It looks like book publishers are hellbent on repeating the mistakes of the record industry. By fighting to preserve a business model that ignores advances in the technology and the evolving preferences of its customer base, they are setting themselves up for years of pain. The death of the traditional paper book is coming. It might not seem as inevitable as the death of CDs, but it's coming.
Book publishers should do the same thing record companies should have done when the writing first appeared on the wall: open up their own online stores to sell eBook versions of their materials. Let the buyers decide what they're willing to pay for an electronic copy of a book. Gradually (as is practical) move more and more of their offerings to electronic form. Cut back on traditional printing runs. When eBook technology becomes ubiquitous (and thus cheap), the publishers would be well positioned to function in the new market landscape.
Instead, they're willing to let third parties like Amazon and now Apple set themselves up as middlemen. It's going to cost them in the long run.