Except your blogger is wrong, Sheepie. E-books cost publishers quite a lot of money to produce, particularly because they don't own the means of production, have very complicated licensing issues to resolve, and have to contend with multiple formats. E-books are actually losing publishers money, especially as Amazon insists on lower prices for the Kindle, but they're accepting the loss as a longer term investment in the market getting bigger. Printing and shipping are relatively cheap in bulk in comparison.
And Amazon has lots of costs with the Kindle and Kindle editions. That's why the Kindle was so high in the first place, that and the monopoly they had going. Even with Amazon getting the lion's share of the profits from Kindle sales, their costs are still very high, especially as they are pricing lower. The problem is that everyone in electronics world thinks a 600 page book should cost the same to produce as a three verse song, and expect a print industry with little money and technology to act like the music industry with lots of money and using the technology for years.
But that's not why the authors' royalty is 5%. It's 5% because that's what it's always been. Publishers had all electronic rights for decades as part of their regular print licensing, because nothing much was done with those rights. But then came audio books on tape, and publishers claimed they had the rights automatically because they had before, with agents and author groups arguing that now they'd have to pay extra for them and that they could sell the audio rights to other publishers or audio companies. And eventually they did pay extra, though since it was a small market that initially lost publishers money and never did make a ton, the royalties didn't get very high and the licensing sub-rights remained the standard 50%. Then came rapidly CD-ROM which was supposed to be the big thing, and publishers built all these electronic publishing arms, and it was a huge battle over that, and just when it was getting worked out, the Internet and zip drives, etc. killed the market mostly. But the battle raged on, because everyone knew that eventually we'd be dealing with some form of electronic publishing market.
But we're still on eventually. And publishers can make the argument that the costs of the production of e-books are such that print-equal royalties are not possible. And since the market is small still, most authors aren't going to blow a book deal over it. But I can guess that authors like Stephen King and Kathy Reichs are getting more than a flat 5% royalties. And over time, the next few years, writers' electronics royalties will go up as agents argue for better deals. Not to mention there are a lot of authors whose works went out of print, they got the rights back from the publisher and are now selling them directly to e-publishers. And another battle -- if a book is only available in electronic form, the publisher can argue that the book is not out of print and refuse to give the rights back to the author. So there are going to be a lot of issues coming up over the next ten years.
But the e-book market will have to be cheaper because people are going to pay more for the device and software apps for the device, not the items, and books will be competing with newspapers, magazines and online content for the e-reader and smartphone markets. We're going to be the dress on the Barbie. We can charge a lot for the dress, but the Barbie and Barbie's Dreamhouse are always going to be more. But until there are large enough sales to offset the costs, cheapness is limited to how much profit loss can be sustained and until the e-reader/formatting battle is settled by electronics firms, big sales aren't there yet.
