Why Ebooks Must Fail
As to the manufacturing costs, most publishers have spent the last decade focused on systematically driving down costs in manufacturing. However, no matter how much efficiency is achieved, there is only so much that can be driven out of any process that requires skilled people and non-renewable materials. The impact of advances and Manufacturing is frontloaded in the economics of book publishing. In other words, before a single dollar is earned, these costs hit the publisher. This has been the way publishing has worked for more than 100 years.
So how do publishers manage this difficult economic situation? We work extra hard to frontload sales by focusing marketing efforts on front list titles (Front list means this years new titles, as opposed to backlist which means everything publisher prior to this year). Big advances (in this sense meaning lots of orders in advance of the shipping date) drive up the number of copies shipped, which is when publishers “count” the income for a book - when it is shipped from the warehouse. However, savvy readers will notice a chink in the armor - books shipped do not mean books sold.