Digital + physical publishing model = Improved profitability for publishers

I am surprised to see that the Kindle versions of regular books cost almost the same as the physical copies. I am really surprised about this because, with Kindle versions, the publishers do not incur any printing, distribution and inventory costs. These books should be selling at a much lower price than their physical counterparts.

The reason I feel this is not happening right now is that the publishers fear that the sale of the physical copies will decline sharply if they make the kindle versions available for much lower prices. This is the classic mentality of clinging on to the past even when you realize what is going to be the future. The publishing industry is again going through the same phase that they went through when paper backs were introduced.

Paulo Coelho had indicated that the sale of his physical copies increased sharply once he made the books available in the digital form on his blog.

What surprises me though is the fact that Amazon is not putting more pressure on these publishing houses to reduce the Kindle prices of these books. The reduced prices will also increase the adoption of Kindle (and the Kindle apps). This could finally prove to be the tipping point for the entire publishing industry.

I am fairly certain that the sales of the physical copies will not lose their charm just because their digital forms are available cheaply. In fact, I believe this will spur a new phase of growth for the physical copies. The increased sales in the digital forms can subsidize the total cost of printing and by freeing up more cash. The publishers will only need to print copies of the books that are doing well in their digital forms. They can avoid printing the in numerous books that get published but do not even sell out their first editions.

This increase cash flow and success ratio can lead to reduced total cost of publishing, which if passed on to the consumers, can start increasing the sales of the physical copies. All this leads to one thing –> Increased profitability.