Here in the U.S., most consumers already think twice before shelling out $7.50, $15.00 or $30.00 for a good read. If a book at the current prices represents a big purchase for citizens of the world's most affluent economy, imagine the cost burden for the vast majority of the world's literate people.
The growth in worldwide literacy has created a massive affordability gap between those who want books, and those who can afford them. Therein lies both the threat and the opportunity facing publishers.
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The publishing industry has successfully responded to the price issue in the past by releasing lower cost formats such as the mid-sized trade paperback and the small purse-sized mass market paperback. Each lower cost format dropped the price 30-50 percent.
By offering customers a cheaper, smaller and less expensive format, publishers expanded the available market for their books and enabled a larger number of readers to gain access to affordable reads.
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Many publishers view ebooks with a skeptical eye. After all, won't cheap ebooks cannibalize expensive print books?
This is the wrong way to examine the situation. Lower cost ebooks help publishers retain customers who might otherwise abandon books altogether in favor of lower cost alternative media options.
Ebooks also hold the promise to expand the worldwide market for books. Hundreds of millions of new middle class and literate consumers have come online outside the US, especially in developing countries.
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By offering consumers a low cost digital product, the economics of ebooks create a virtuous, self-reinforcing cycle. The low price expands the available market by making it affordable to more consumers; low production and distribution expenses allow the publisher to earn a healthy margin; and the larger addressable market allows publishers to sell more units at greater profit margins.
The advantages of ebook economics will become more apparent as ebooks grow to comprise a greater percentage of book industry sales.
[Snip]
By offering consumers a low cost digital product, the economics of ebooks create a virtuous, self-reinforcing cycle. The low price expands the available market by making it affordable to more consumers; low production and distribution expenses allow the publisher to earn a healthy margin; and the larger addressable market allows publishers to sell more units at greater profit margins.
The advantages of ebook economics will become more apparent as ebooks grow to comprise a greater percentage of book industry sales.
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