Makinson: e-books are the new paperback

09.02.10 | Benedicte Page in The Bookseller

Publishers need to "keep a tight control of rights and a measure of authority over pricing" if they are to ride the tide of the digital revolution, Penguin Group c.e.o. John Makinson has said in an opinion piece for the Wall Street Journal.

Writing in the aftermath of the e-book pricing battle between Macmillan US and Amazon, and following Amazon's acquisition of digital rights for titles by authors including Steven Covey, Ian McEwan and Paolo Coelho, Makinson argued that publishers must have the right to access all channels and platforms for their books, and that there was limited room for flexibility on e-book pricing and author royalties.

Makinson invoked Penguin's past, calling the e-book a "direct descendent of the 1930s paperback" on the back of which Allen Lane began the publishing company in 1935. "Penguin's paperback idea eventually collapsed . . . because hardback publishers decided to publish the paperbacks themselves rather than to sell the rights. Penguin responded by moving into the hardback market and now all of the world's major publishers operate on the same integrated basis," he wrote.

"The integrated model has become universal because it works. The cost of acquiring, editing,
selling and marketing a book doesn't change when one format, a paperback or an e-book for example, gains ground at the expense of another."

Makinson also argued that there was limited scope to play with e-book prices and royalties, saying: "The small cost of producing ebooks is viewed by authors as an opportunity for higher royalties and by consumers as an opportunity for lower prices. Fair enough. Yet the physical cost of a book - manufacturing, transportation and warehousing - is just under 10% of its retail price. Ten per cent is also, as it happens, roughly the average margin of the consumer book publishing industry and what's needed to keep investing in new writing and new ideas. So there's some room for discussion but not much."