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Book economics – Descriptive elements

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Reading and editing

From the perspective of the economy, editing and reading are respectively the supply and demand in the market of books. Internationally, the situation in this regard are very different.

Meanwhile, time spent for reading is an important indicator to the extent that such activity is in competition with other forms of entertainment (music, film, computers). Thus, in most OECD countries, between 10 and 20% of adults read daily for pleasure, with marked differences between men and women.

Dynamics and composition of the tender

In terms of supply, book economics reasons on two different units, firstly the “title” (characterized by a text) and secondly the “copy”, the book itself. In terms of titles, production has increased in almost all OECD countries since 1975. This trend is related to the increase in revenues and the level of education of the population.

The Book market

In 2000, the European book market accounted for 27 billion euros in sales. The publishing market with a fringed oligopoly structure, a large part of the market is held by a small number of large publishing houses with several hundred titles, while the average house publications varies from 20 to 40 titles, and the majority of the houses have within 10 titles published per year.

In marketing terms, the situation is much more mixed. Unless the United States, most of the book sale is not made directly by the publisher, but through retailers (specialized, bookstores, or more general supermarkets) or book clubs. In some countries, large retailers occupy a very important place (Feltrinelli for 25% of retail sales in Italy, Waterstones and WH Smith 20% and 18% in the UK, Fnac 15% in France), while the distribution is very concentrated in others (Thalia, the largest seller in the German market, itself the largest market in Europe, accounts for only 3% of retail sales).

Book sales

Sale channels

The books are selling through three main channels: retailers, book clubs and direct sales by publishers. The use of these three channels is very mixed across countries, as shown in the income distribution of the publishers depending on the distribution channel.

Data on Internet sales are still partial. They are more common in the UK, with 17% of sales, a figure that appears to have stabilized, 4% to 5% in Germany, 1.5% in France.

The price issue

The sensitivity of the demand for books in book prices is the subject of controversy among economists. Estimation of demand elasticity in relation to prices vary from -0.6 in Flemish Belgium to -1.4  for aggregated price indices, and up to -2 to -3 for an estimate individual securities . The difference between the elasticity with respect to the index and that of the individual securities held more in the highest capacity of substituting one title to another than to substitute another cultural asset to a book. More generally, data, usually in time series, do not allow to separate the specific effect of the price of the books of the effect of price changes of close cultural objects (disks, computers).

Canoy et al. further argue that the purchase price does not constitute the essential component of the economic cost of a book for the agent. Indeed, the opportunity cost of the time spent reading is much more important than the prize itself. A similar position (the price is a key determinant of the demand for books) is also supported by F. Rouet and F. Benhamou.

From editorial data at  title level, Jonathan Beck also notes that the price variation between titles is less than the physical characteristics of books (cover types, iconography, number of pages) could explain. Higher in markets regulated by a single price of the book, such a focus of the price acts as an instrument segmenting the market around types of structures with similar price, and at lower prices willingness to pay revealed by analysis of the request.

Distribution and dissemination of books

Dissemination and distribution are key links in the book chain. These are two complementary activities that allow books to meet their potential audience. This is for publishers to place their publications in relevant childcare. Large publishing houses have representatives to present booksellers publications of their publishing house. Small publishers, lack of resources, outsource most often these activities of dissemination and distribution. There are also book club.

The diffusion-distribution remains by far the most profitable publishing sector where it will make them more comfortable margins. The effects of rationalization can be operative and economies of scale can be taken into consideration. Also it is likely for several years the concentration of this industry .

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