As disturbing as it my seem, we live in a world that has more than just publishing and books in it. hence today’s post. A fascinating analysis of where we are in world economics and how we got here (though not always one with which I wholeheartedly agree) can be read at the link below. Perhaps the most interesting idea is around the energy revolution and the coming (if you like) energy crunch, well worth pondering for a while:
The critical equation is the difference between energy extracted and energy consumed in extraction – energy return on energy invested (EROEI). Since the Industrial Revolution, EROEI has been high. Oil discovered in the 1930s provided 100 units of energy for every unit consumed. But EROEI has fallen, as discoveries have become smaller and more costly to extract. The killer factor is the non-linear nature of EROEIs. Once returns ratios fall below 15:1, there is a dramatic “cliff-edge” slump in surplus energy, combined with a sharp escalation in cost. And the global average EROEI may fall to 11:1 by 2020. Energy will be 50 per cent more expensive, in real terms, than today. And this will carry through into the cost of almost everything – including food.
I don’t have much time for this argument, if you lose money on sales through amazon, stop selling through Amazon and develop a new model that doesn’t cost so much! That said, it IS a clear illustration of the tough economics of small publishing!
Here are the scary sums:
Amazon takes 60% of my RRP (in the book trade, the bigger the sales outfit, the bigger the discount they demand from the publisher: Amazon 60%; Waterstones 50%; independent bookshop 35%). On a £11.99 book, Amazon’s takings are￡£7.20. Mine are £4.80.
Out of this comes £2.50 to pack and post the book to Amazon, and the author’s royalties on a heavily discounted book reduced to 50p. My writers lose out on an Amazon sale, too. That leaves 82p for Linen Press, but the book cost £4 to produce. So I lose £2.18 on every sale by Amazon.
Well worth reading this today from Martyn Daniels and an interesting counter point to the previously tweeted video from O’Reilly Radar. To me, this is why capitalism works, because as economies grow and develop they push standard of living higher and increase income across the board, especially as countries play to their competitive advantages. Fascinating to see it impact hugh-tech companies so rapidly.
The most interesting point is that counties such as China and India no longer want the low end assembly and service work. “China doesn’t want to be the workshop of the world anymore,” says Pietra Rivoli, a professor of international business at Georgetown University. India is already maturing as a workforce and aspirations and wages are growing fast. The question is will the West pay more or simply flow to the next cheap source of labour?