eBook Economics: The Missing Manual

This post from Tim O’Reilly is required reading for those who are professionally (or otherwise) interested in understanding the economics of eBooks. Unlike a lot of the current screaming across the table that’s taking place between eBook enthusiasts and those who yawn at them or point out their obvious short-comings, O’Reilly takes a reasoned, rational, insider’s look at both the opportunities and limitations of the business of digital books. Obviously (to many who read this blog, at least) O’Reilly has unique insight into the topic. He’s written on the topic of business-models of digital book distribution since 1995 and, according to his post, the re-seller of digitally-published books, Safari, is now O’Reilly’s third largest customer behind Amazon.com and Barnes & Noble. (I’d like to ask him a clarifying question regarding that fact by wondering aloud where Ingram Book Co. would fall on that list — I’m surprised they aren’t #3.)

Again, O’Rielly’s post is about as crystal clear as it gets, straight from the CEO of a publishing company that caters to tech-professionals and tech-enthusiasts, an audience of gizmo early-adopters — and from someone who can only benefit from a wide-scale adoption of eBooks. Despite such apparent self-interest, he recommends to publishers — and would-be publishers — to stay realistic.

Money quote:

“My advice to publishers and authors is this: figure out what it costs to produce what you sell, estimate what kind of volume you’ll be able to achieve using the best available data, and then set your prices at a level that will deliver a reasonable profit from your efforts. Sound familiar? That’s what you do in business today. Don’t expect any suspension of the law of gravity. Leave that to the subprime folks, who followed on the heels of the dotcommers in coming up with new math that ultimately didn’t make any sense.

Then again, there are some ways to make money because of eBooks rather by from eBooks, but that’s another topic for another day.

  • BoSacks Speaks Out: Bad Math Among eBook Enthusiasts

    My thanks to Rex for pointing me to this interesting article posted by Tim O’Reilly. There is much to digest here as we move forward towards a digital information distribution system. And clearly we won’t go far until we conceive and devise a profitable, working business model. Tim is right – the way is to charge less and make more.

    I have become a big ebook reader in the last few months. I am reading on a two-year-old Palm TX. It is, at least for me, a fabulous and rewarding experience. It is always in my pocket, so I am reading books everywhere I go. Just yesterday I was on the train sitting next to a guy, who was reading, I don’t know, some huge tome of untold pages. My trip was two-hours during which it took him two hands and much exercise to hold up his mammoth volume, while I had literally half a dozen books in the palm of my hand. There I sat flipping pages with ease and grace with one hand on the book and, truth be told, a Fosters beer in the other. The author I’m currently reading has a vocabulary as large as Mount Everest, but my palm has a dictionary. When I get to a word I am unfamiliar with I just have to highlight it and bamo, presto! I have the definition and derivatives displayed, grab the author’s meaning and with a flip of the thumb, back to the book.

    These ebooks are exactly the same transportation devices as paper books. It’s the words that make the mental teleportation possible, not the substrate. So, let’s get over the substrate trauma and begin to devise a business models that will empower our growth and prosperity.

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