At every conference I go to publishers are saying that ebook costs are high because of all the work that goes into them and that publishers don’t save any money when they produce ebooks. Well, Simon & Schuster seems to have been hoisted by its own petard.
Aside from giving specific figures on how much ebook sales have increased, the article also mentions something interesting. I’ve never heard one of the large publishing houses say this (emphasis mine):
“We got out of the gate faster than usual,” said S&S CEO Carolyn Reidy led by sales of e-books that doubled in the quarter and accounted for 17% of revenue with digital audio adding the other one percent (about $28 million). The steep increase in profits was attributed to lower shipping, production and returns costs as well as the “painful” belt-tightening that S&S has implemented over the last 18 months plus the higher sales, Reidy said.
In other words, they are admitting that because ebooks have low production costs, and low shipping and non-existant return costs, ebooks are very profitable.
As Chris Meadows points out “… this makes publishers’ refusal to increase royalty rates on e-books look even more transparent.”