Submitted by Nick Harkaway on Mon, 06/24/2013 - Futurebook - The Bookseller
I've generally left this topic alone because a) it was well-covered elsewhere and b) I was prepared to accept pro-tem that the digital transition was expensive, that it had arrived rather suddenly (if you allow a definition of "suddenly" which embraces "a lot of people were telling you about it and you chose not to believe them"), and that no one would actually be daft enough to try to deceive the golden goose about the availability of grain. Because sooner or later - especially in an environment where grain sources are becoming less centralised and where the flow of grain is scrutinised rather intensely - the goose was going to find out and might get a bit pissy. Geese are almost as sensitive about grain as they are about unanticipated Gaulish invaders.
So what did I know? As it transpires, not much. Brian DeFiore smartly spotted a rather telling bit of information in Harper Collins' "Investor Day" presentation (thanks to Porter Anderson for the link).
There are lot of different ways of expressing the numbers in the various articles discussed here, but the burden of the whole thing is neatly expressed by DeFiore:
$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author
$14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.
So, in other words, at these average price points, every time a hardcover sale is replaced by an e-book sale, the publisher makes $2.20 more per copy and the author makes $1.58 less. If the author made the same $4.20 royalty on the e-book sale as he/she would have on a hardcover, the publisher would STILL be making an improved profit of $6.28.