Ebooks part III • 2 July 2010 • The SnowBlog
Ebooks part III
Like most publishers, our two biggest costs are wages and print costs (including returns). Wages are predictable, so they're not likely to suddenly sink the business, but print costs, especially the money that gets wasted when we get an unexpected surge in returns, is our biggest risk. It's a particularly nasty risk too because you can bank the cheque for sales, spend the money, and then many months down the line be told you need to give the money back - and pay a load more besides to your distributors to pulp stock you thought the retailers had already sold. If a publishing business dies suddenly, returns would be the prime suspect. (Granted, retailers are often to blame for this situation, but that doesn't make you any less bankrupt.)
And all that risk largely goes away if we're not maintaining physical inventory. Each additional sale of an ebook is pure profit - there are no incremental print costs - and returns are no longer a factor. Our business - if it dealt entirely with ebooks - would suddenly find that its risk profile had plummeted. And if a book really takes off you wouldn't have to agonise over whether to print a hundred thousand or two hundred thousand copies - knowing that a mistake, even with a blockbuster on your hands, could ruin you. With ebooks you can satisfy every potential sale no matter how unexpected and without betting the business on colossal print runs.
There's still the threat of unexpectedly low sales, but they're more of a risk right now, when fear of crippling returns or a warehouse full of unsold stock stops us pushing a book too hard. You'd still gamble your promotional budget in a world of ebooks, but your losses would never exceed what you spent - which isn't the case when physical returns suddenly spike. Ebooks look like taking a lot of the risk and most of the waste out of the publishing supply chain. Fewer trucks on motorways, fewer felled trees, no pulping - and any book available in seconds whenever you want it. It doesn't sound like a bad future to me.