The View From The Tree : iPadded Profits?

Digital vs. print publication prices: Even the media are confused.

Consumers keep squawking about electronic publications, such as e-books and tablet versions of magazines, having higher prices than the printed editions. They'd better get used to it.

Digital publications are not necessarily more profitable or even less expensive for publishers to produce than their ink-on-paper counterparts. But don't tell that to the folks who shelled out hundreds of dollars for a tablet or e-reader under the often erroneous assumption that they would end up saving money on publications. Even media experts are confused on the subject.

Consider how Alan D. Mutter, who writes the usually excellent Reflections of a Newsosaur blog, described the drastic decline in sales per issue of Wired magazine's app: "A sale of 22k issues isn't all that bad, since it represents $87,780 in almost pure profit at $3.99 a copy."

Pure profit? Were there no programming or development costs? No marketing costs? No cannibalizing of newsstand sales? Book publishers, who have been at this game longer than their magazine counterparts, have no such illusions about electronic editions.

"We'd rather sell a printed book than an e-book," because the margins on printed books are larger, Jim Robinson of Harlequin Enterprises Ltd. said during a recent panel discussion about the future of publishing.

Philip Ruppel, president of McGraw-Hill Professional (who will be speaking at the Publishing Business Conference, April 4-6, in NYC), provided more insight recently in an article he wrote for Mashable: "For professional and technical publishers like McGraw-Hill, our e-books cannot stand the low, mass-market pricing some consumers think should be applied to every e-book. Our costs are invested in extensive product and editorial development of sophisticated and technical content; the cost of paper, printing and binding are a fraction of the real expense."

Ruppel could just as easily have been talking about consumer magazines. A copy priced at $5.99 on the newsstand often has incremental paper, production and freight costs of only 30 cents. The publisher might actually pay more for retail promotions than for the copies themselves.

As much as industry pundits rail against waste and inefficiency in the newsstand system—and there's certainly plenty of both—the economics of newsstand sales look pretty sensible to consumer magazine publishers. The development cost per issue is only a few hundred bucks to create separate subscriber and newsstand versions of the cover.

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• DIGITAL EDITIONS
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