Are Ebooks on the Decline Again?

From Book Riot:

It’s not news that ebook reading surged during the early days of the COVID-19 pandemic. Library ebook borrowing, in particular, saw an increase in 2020 and 2021. Though ebooks have not eclipsed print for a long time, they still enjoyed an ounce of quiet popularity.

At the start of the year, however, it looks like that’s changing.

In 2020, ebook sales rose by 11%. But in 2021, sales declined by 3.7%. Ebook sales also plummeted from January to March this year, according to the Association of American Publishers. In January, it was a 10.1% fall from last year. In February, sales dropped by 6.9% as that trend continued. In March, it went down again as sales dipped by a whopping 12.2%.

Meanwhile, in the UK, ebook sales are down in 2021, the “lowest point since 2012,” according to The Bookseller. The UK magazine reported that 80 million ebooks were downloaded in 2021, which is a disappointment next to its 95 million in 2020.

. . . .

Ebook reading rose in the late 2010s when Amazon released its Kindle ereaders; ebooks back then were as low as $9.99. During that era, there were even predictions that ebooks would eventually kill print, shutter bookstores, and that ebooks would be the future of reading. But those forecasts missed the mark, obviously.

The interest in ebooks started to plateau when the drama between Amazon and the then Big 6 publishers happened in 2012. The publishers wrestled control of ebook pricing from Amazon, raising it so that people would have reasons to read in print. This led to a collusion with Apple, which got all of them sued by the Department of Justice. Unfortunately, the pricing scheme set by the publishers stayed on.

Since then, ebooks have enjoyed a decent popularity. Sales are down, and sometimes up. But they have never killed print. People moved on from the digital and went back to physical eventually, for the most part.

And then the COVID-19 pandemic froze everything, preventing people from easily buying physical books. This made many readers turned to ebooks once again. But as the world is opened up again in 2022, people are going out and dropping by the bookstores again. And so starts the dipping sales of ebooks.

. . . .

By the looks of it, the future of ebooks looks grim. However, one important thing unbeknown to many is that the AAP’s reports don’t include Kindle sales, “so the data might be skewed,” as Kozlowski put it. Amazon’s Kindle obviously has a larger market share than its competitors such as Kobo and Barnes & Noble, and so it leaves a lot of numbers on the table.

Mark Williams, the editor of the publication The New Publishing Standard that covers publishing news, said that AAP’s 2021 report fails to account for tens of millions of dollars in ebook revenue. “We simply don’t know the true scale of the impact ebooks have on the U.S. and global book markets, either in revenue terms or in consumer engagement, but we can say with absolute certainty that the AAP numbers only paint a partial picture,” he wrote in May 2021.

He also said that many of the uncounted participants do not report to the AAP, including Amazon Publishing, a slew of small presses, and thousands of self-published authors. That definitely leaves a lot of figures, and it suggests that ebooks may not be in a nosedive after all. AAP’s 2021 report, according to Williams, “warps the picture in favor of print.”

. . . .

So are ebooks losing their shine again? Are they in decline thanks to the “disappointing” sales, and maybe, because of the extreme dislike by many?

Data suggests that the ebook market may actually be a lot bigger.

Link to the rest at Book Riot

PG notes this is a near-perfect model of a clickbait title.

The traditional publishers who report ebook sales to the AAP (Association of American PUBLISHERS) say their ebook sales may be falling.

Traditional publishers have always held an irrational prejudice against ebooks even though ebook sales don’t entail a great many expenses that physical books require: printing costs (including set-up costs), warehousing expenses, shipping expenses, the fact the publishers need to sell pbooks at a wholesale price that allows physical bookstores to cover their expenses and persuade customers to pay a lot more than they would if they bought the very same content in ebook form from Amazon. (long sentence, PG acknowledges)

The cost of creating ebooks for traditional publishers includes overpriced real estate, starvation wages (by New York standards), but they don’t include the costs of a bunch of employees that deal with the complexities and inevitable inefficiencies and screw-ups of print publishing.

Once the ebook manuscript is received as a bunch of bits from an author, all that happens to it is digital – reviewing the digital manuscript to see if they want to publish it, editing it on computers, formatting it on computers and shipping those refined bits over the internet to Amazon and other e-tailers for publication. (PG understands that Ingram gets involved with distribution of ebooks and takes its percentage, which is Exhibit 2 demonstrating the overwhelming technology cluelessness of major publishing.)

Of course other publishers (located in much lower-cost locations without New York taxes, etc.) and self-publishers don’t have all those overhead and staff costs. They also don’t “have to” protect their relationships with traditional bookstores by selling at wholesale prices, etc., etc.

PG says the Association of American Publishers is reporting sales problems with overpriced ebooks, not ebooks that are priced intelligently. What does PG mean by overpriced?

The Seven Husbands of Evelyn Hugo, published by Simon & Schuster and a New York Times Bestseller is priced at $14.99 for the ebook.

Per Amazon, used copies of the hardcover can be purchased for less than the ebook.

PG suggests that Simon & Schuster could sell way more ebooks if they dropped the price to $4.99 instead of trying to help Barnes & Noble make money selling hardbacks. If Big Publishing priced ebooks for optimum sales and profits, there wouldn’t be any “decline” in ebook sales to write clickbait stores about.

44 thoughts on “Are Ebooks on the Decline Again?”

  1. One point of disagreement with PG’s analysis. Tradpub’s prejudice against ebooks is entirely rational, if you realize that the core of tradpub’s business model, especially in the 80s, 90s, and early 2000s, was that going through tradpub was the only way one could really get one’s books out to the public, as the cost of self-financing a halfway-decent print run and shipping the books to bookstores (assuming you could even get bookstores to look at a self-published work) was out of reach for the average writer. As a result, the only way to make a living as an author was to go through tradpub, which put the companies in a position to give writers abusive contracts and tell them “take it or leave it, but we’ve got plenty more just like you waiting for the chance.”

    Ebooks meant that you no longer had to pay for print runs and shipping for your books to reach the public, which made it entirely possible to make a living, or at least get a good secondary income, without having to land a contract with tradpub. This threatens tradpub’s business model, and, as people will do, instead of changing their business model in the face of new developments they have chosen to try and stifle the new developments.

    You can imagine how well this is working out for them.

    Reply
    • I’ll respectfully disagree with you on one point, T.

      Acting in a rational manner involves watching for new technology and intelligently assessing the impact of new technology on your business and making intelligent adjustments to maintain sales and profits.

      Ditto for watching new entrants in your market, like Amazon, assessing their business strategies and practices and making appropriate adjustments.

      I think (and thought) back in the day that Amazon’s real threat was to physical bookstores, not to traditional publishers.

      The turning point came when the presidents of all but one of the big New York publishers had a secret meeting and agreed to jointly cut off Amazon’s access to their books.

      (Yes, such behavior is prohibited by US antitrust laws and has been for a very long time, but evidently none of the top executives though they should run their Amazon Dies strategy by the attorneys on staff or outside counsel. And yes, their actions started an antitrust suit by the US Justice Departmant which the big publishers lost really quite rapidly.)

      The problem Big Publishing had was that they couldn’t think outside of the printed books in physical bookstores box. They were dumb about antitrust law and dumb about technology.

      Amazon has been and is, first and foremost, a technology company. In the late 20th and early 21st centuries, tech companies were uprooting long-established business truths left and right. Publishing was stuck with thirty-year-old thinking.

      Reply
      • They are about to be “offered” a final chance to adjust their policies.
        At least to 2010 if not 2025 economics.
        Not holding my breath for a wholehearted adjustment, though. There track records says the least they can do is the most they will do.

        Reply
        • What should the publishers do? We hear about their obsolete thinking. OK. What should their thoughts be? Specifically. I know they should adapt to new technologies, abandon outdated thinking, and embrace greater flexibility. Blah blah blah. Exactly what should they do?

          I suggest they recognize they have no competitive advantage in eBook fiction, and manage a profitable decline while protecting the balance sheet. Set up backlist eBook companies. If we look around, I think we can see that happening. Anyone remember the midlist author?

          Reply
          • What *should* tbey do???
            Let the market decide what format it prefers, like the other content industries have done.

            Gaming still sells disk based games, Hollywood still sells DVDs and BluRays and the music studios still sell CDs…all to whatever ratio consumers prefer. And in all three digital dominates and actually delivers higher margins. As much as 80% are digital. (Gaming.) And by going digital, the content osners now have the ability to bypsss middlemen and sell direct to consumers. (Video) And all three hsve spawned subscription services that deliver predictable revenues, day in and day out without the boom/bust uncertainty of the blockbuster model.

            Even before covid, tradpub was already facing a paper shortage because the mills can make more money off cardbord and unbleached paper products. Then covid came in. More demand for packaging products, shutdowns (which persist to this day in China).
            Then came inflation the price of everything to go, especially labor.
            And then came the war and the global energy crunch.

            All the elements that go into pbooks are rising in price, forcing a choice: sacrifice margins which are already pretty thin or raise prices. And this isn’t a one-off: double digit inflation is going to stay for at least three and most likely five years. So what does 10% inflation, compounded over five years do to paper prices, salaries, and shipping costs? The latter has literally doubled since the new guy moved in to Pennsylvania avenue.

            So let me ask *you* what the tradpubs are going to do, faced with a 60% cost increase over five years? Keep pretending that “books are special” and immune to price elasticity and raise prices by 60% across the board?

            With every day that passes it’s going to be harder and harder to pretend they are still living under the economics of 1994. Sooner or later the delusion ends and the longer they wait, the harder the transition to the economics of 2025.

            Reply
            • Let the market decide what format it prefers, like the other content industries have done.

              The market will decide that all on its own. My question is what do critics recommend the publishers do after they reduce eBook prices to $4.99.

              Reply
              • The market can’t decide when a plurality player distorts the market. Think of it as dumpling in reverse. The BPHs restrain the high margin formst to favor the low margin one for non-economical and non-competitive reasons.And B&N might collapse anyway because of inflation.

                As for what they can do eith digital: they can do what gaming and video do: time-based pricing. Launch at $10 or even $12, monitor sales rate and slowly drop pricing to tbe $4.99 floor over time. Remember, they don’t just overcharge on best sellers at launch, they overcharge on everything, most eggregiously on 20 year old midlisters and “thud -ers”.
                Dealing with digital doesn’t require genius or magic: the business case was solved 20 years ago. All they have to do is crib the answers off the other content businesses. They jumped in snd found the water was fine and life goes on without record stores video rental chains. In fact, even bix office failures recover their production costs (tens of millions and higher) in the “secondary” channels like pay per view, discrete sales, rental, and streaming. 90% of which are digital. Which keep on coming in for decades.

                The only thing they have to fear is themselves.

                Reply
                • The market decides the preferred format. Competition decides the successful players in that market environment.

                  Consider a thought experiment:
                  All fiction is in eBook format. There is no print fiction. What competitive advantage does a publisher have?

          • Thing is, publishers do theoretically have a competitive advantage–instead of authors having to hunt around for a cover artist, an editor/proofer, a publicist, etc, or do those things themselves, publishers can act as a one-stop shop for all of those services, in addition to lending the prestige of Being Published as opposed to self-publishing, in exchange for a cut of the profits.

            Unfortunately for them, they have grown far too accustomed to doing the bare minimum for new authors–or, really, any authors outside the bestseller list–and it’s not likely that they’re going to actually start doing the job they claim to do again without a major wake-up call.

            Reply
            • Those are good points, T, but once an indie author finds people to handle those tasks, they don’t need to do it all over again for book 2.

              An important point for indies is that, if one of those people aren’t doing a good job, the author can find someone else who is better. TradPub authors don’t have that luxury.

              Reply
              • Plus: the author pays for those services once, with cash, often reasonably. Not by surrendering control of copyright and 90% of tbe gross or 75% of the net.

                Those services, even when actually provided, are not market-priced.

                Custom covers, for one, only run around £400. Often less if you find a suitable ond pre-made. For one example:

                https://www.bonobobookcovers.com

                Or even less, depending on which other source the author/publisher chooses, say FIVERR or DIY. 😉

                Tradpub needs to up their game to meet author needs and they are unlikely to do so.

                Reply
            • I agree bundlers can provide lots of benefit. But, I suspect bundlers can seriously undercut publishers on price.

              Once the eBook is bundled, who need the publisher?

              Reply
          • As PG noted, the time to think is long past. What they should be thinking/doing now depends on their level – e.g., high level execs should be making sure their golden parachute is fully sewn up, while finding a sucker buyer for the house.

            American tradpub houses are in their death rattles. A few will seem to last for a bit longer, as foreign buyers (who, as CEP correctly notes, have different economic pressures) extract the remaining blood from their corpses.

            Reply
  2. However, one important thing unbeknown to many is that the AAP’s reports don’t include Kindle sales, “so the data might be skewed,”

    Why did Book Riot even write this article? Why use the AAP as as source at all, if it purposely leaves out the largest e-book market in its calculations about e-book sales?

    PG says the Association of American Publishers is reporting sales problems with overpriced ebooks, not ebooks that are priced intelligently.

    Yes, that would make sense, given that AAP is demonstrating a steadfast refusal to understand the situation they’re allegedly reporting on.

    Perhaps this was written by an intern. In that case, Book Riot would do well to teach the intern to not just “write from the press release” on a slow day. A moment’s thought would have resulted in a more interesting and useful article. Or maybe this really was only supposed to be clickbait.

    Reply
    • In fairness to Book Riot, the title is a question so they signal from the start that the answer is “no” and they – eventually – explain why the quoted statistics are misleading. Pity they didn’t write a different article riffing off the AAP press release by taking a deep dive into why the trad publishers still cannot cope with the existence of ebooks. It’s a pity that someone who knows what’s really happening won’t/cannot speak about actual unit sales (looking at you Amazon).

      Reply
      • Your suggested article is one of a few possibilities I wish they explored. It would have been more interesting, even the angle concerning Amazon not releasing the data.

        Reply
      • Amazon doesn’t share its sales numbers nor its KU split ratio because it likes the current status quo. People who like ebooks (and ebook pricing) will buy without chest thumping and if tbe BPHs prefer to limit their presence in tbat market, well… As Napoleon Bonaparte said, “Never interrupt your enemy while he’s making a mistake. That’s bad manners.”

        Amazon has been reported as making a bigger cut of BPH ebooks than better priced ones and high-priced ebooks limiting BPH sales means good cash and less power for the BPHs. Remember that back in 2010 the BPHs made up two thirds of Amazon’s ebook sales and by the time Author Earnings went away their were reported as less than a third of Amazon ebook sales. That’s a much safer ratio than pre-Agency Part Deux.

        To be blunt, ebooks are a mature technology and it has moved past the explosive growth of the mainstreaming phase into the steady growth phase of the sigmoid tech adoption curve. Most of the evangelists of the early days have stepped back from actively promoting the growth of the new market to mining it for fun and profit. Because their time is now better used writing than evangelizing.

        Which isn’t to say there isn’t another big save of adoption coming–there is–but what’s coming will be prompted by economics, not promotion.

        The next wave of ebook adoption will come from pbook readers fleeing $20 trade paperbacks and $30 hardcovers. Three years of double digit inflation, unionization of time clock workers, and supply chain restructuring is not being kind to the dead tree pulp business.

        On the latter: depending on the survey, 70-90% of businesses are spending like crazy to restructure their supply chains because they now understand China is no longer a reliable partner nor the low cost bidder on labor or energy intensive materials like pig iron and alumina. Or paper. Because book grade paper is not only energy intensive but also water intensive and pollution heavy. All that comes at a price in currency. This wave of inflation isn’t going away soon. Not until the US is done reindustrializing and automating to account for the new normal post boomer/post China, Inc, post globalization.

        Give it five years max.
        Publishing is going to look very different and not just because of the randy Penguin buying up distressed tradpublishers. Amazon is already positioned for the next phase so tbey don’t need to do anything else in the book arena.

        Keeping quiet is the best policy.
        And good manners.

        Reply
        • Supply chain restructuring isn’t about politics and buzzwords any more. Just one of many reports on what is actually going on:

          https://www.bloomberg.com/news/newsletters/2022-07-06/supply-chain-latest-ceos-start-to-turn-reshoring-talk-into-action

          “The construction of new manufacturing facilities in the US has soared 116% over the past year, dwarfing the 10% gain on all building projects combined, according to Dodge Construction Network.

          “There are massive chip factories going up in Phoenix. Intel is building two just outside the city. Taiwan Semiconductor Manufacturing is constructing one in it.

          “And aluminum and steel plants that are being erected across the south, including in Bay Minette, Alabama (Novelis); Osceola, Arkansas (US Steel); in Brandenburg, Kentucky (Nucor). ”

          (Note the two things those locations have: cheap energy in droves and non-union labor.)

          Reply
          • Not just that, but low taxes, low real estate prices, and low probability of having delivery interrupted by bad weather or bad actors.

            Reply
            • Also other things – such as the ESG idiocy that is working to cripple the ocean shipping industry (more than they are now). Estimates are that a minimum of 10% of capacity is going to disappear over the next few years.

              Reply
          • It’s about time that the jobs come back to America.

            I have watched the nonsense of “outsourcing” of jobs my entire career.

            My brother used to work at Motorola in Albuquerque during the 70s. They manufactured televisions and such, at good paying jobs. Non-union. Those jobs vanished.

            I can see the reasoning, they wanted Asia to move forward, stop being a threat, but they went too far.

            They had seen that they were able to defeat the Soviets economically, even if it was at the expense of the American worker, and decided that the same with Asia was better than a shooting war down the road.

            The pandemic finally showed the nonsense of supply chains being easily disrupted.

            Plus, if I remember, places like Apple have enough cash to literally buy Boeing, so why not start manufacturing locally again.

            It all started with Kissinger when he made a deal with the Saudis. “We will stop producing oil, if you buy our debt.”

            We basically lifted the world out of poverty, but at what cost.

            BTW, That’s why I became a Civil Engineer and worked for the Highway Department, they could not export my job. But it was close.

            We had 20 Design Squads when I started in 1984. We had 20 people when I retired. All the work was given to consultants, at greater expense per mile of paved road than we could do ourselves.

            We set the salaries for engineering in the State. The Consultants had to pay 10% more to keep people from working for the State. When I retired, we were making half what the Consultants paid.

            Basically, the last 17 years of my career we did not get cost-of-living increases.

            Reply
            • Globalization was never an economic policy.
              Rather it was a security policy designed to defang and over time destroy the Soviet Union without ever going to war. Think of it as the First Global Economic War.

              (Go back to its origins at Breton Woods to tease out its rationale.)

              The policy worked beautifully: the soviet closed economy couldn’t keep up with the productivity of the Breton Woods system which substantially raised standards of living in countries allied to the US. Yes, it weakened the American economy somewhat but with the boomer wave of productivity and consumption the US could afford to “uplift” the allied economies. Especially after the Soviet System imploded and China saw the handwriting on the wall.

              The system suffered two failures: the first, domestic, where H.W. Bush’s call for recalibrating the system into a planned “New World Order” was rewarded with a populist electoral rebellion led by Perot and resulted in the outdated system coasting on for another 30 years ending in the current global economic crisis with tbe US actively decoupling from the system it created. For all the griping about Globalization hollowing out the US economy the truth is the US economy moved to the “high ground” of high value products and services. Consider: only 6% of US GDP comes from foreign trade and half of that is from Canada and Mexico. The decoupling will inflict some pain because of the boomers exit and the coming skill imbalance but only short term and a tiny fraction of what awaits most of the countries out there. The US is self sufficient in energy and food and MAD still applies. And the “almighty dollar” is only getting more powerful with the decline of the euro, the war, and China’s withering. Inflation will be the biggest problem and it will likely remain “high” for five years. With “high” peaking in the teens. Watch it hit much higher levels in places dependent on trade to meet food and energy needs.

              The second failing of Breton Woods was in its failure to early address the massive Dumping and theft of IP of China until it became domestically untenable.

              Note that Obama was the first President not to negotiate a single new free trade agreement. His successor renegotiated NAFTA and penned several bilateral pacts, most notably Colombia, setting the stage for the de coupling now under way. And for all the badmouthing of Biden’s precursor, all his economic policies have been institutionalized. Which is why all the companies cited above are actively restructuring their supply chains.

              Finally, note that the new normal is based on economics, not security. The US has been isolationist for 4 presidential terms. Thst is no accident. That is the will of “we the people”. The return to power of economics is the the meaning of “America First”, which BTW is not “America Only”. The US is not yielding its accidental hegemony but the new rules are it will now pick and choose how and when it act and which countries it really cares about. (A short list. UK, JAPAN, AUSTRALIA, POLAND, MEXICO, CANAFA, COLOMBIA, in pretty much that order.)

              The Crisis of the 20’s is already recasting the entire global order. And the real space race has yet to start. Wait until that gets going.

              Reply
            • Note the opposition to Trump ditching the post WWII Marshall Plan tariff system. Seventy years after the end of the war he was condemned for displeasing the Europeans.

              Reply
            • All the work was given to consultants, at greater expense per mile of paved road than we could do ourselves.

              Can you get rid of a poor performing state employee?

              Reply
              • When I started in 1984, it was amazing to work for the Design Bureau. The techs were all high paid. Each had to have been through the system moving up from Survey Tech, through Field Tech, before they could work in a Design Squad as a Design Tech. They had to know how to build a road before they could design a road.

                We were an Engineering Department that worked for the State. All of the other State agencies hated us because we set our own salaries and actually required skilled people to work for us.

                The old guys in charge would tell kids, “Settle down, do your job. You’re being paid good money to work here.”

                Most of the Designers were High School graduates making more money than the Engineers that came in to the system. That was the beginning of the problem. The old Engineers knew that they had to fight for Tech salaries. Then they could say, look at what we are paying the Techs, we need to be paid more. The “Kiddy Core” that took over when the older Engineers retired were only in it for themselves and stopped fighting for the Techs, and thus would not fight for themselves.

                That was when the Department was paying salaries from the Gas Tax. The paycheck would say that the money came from the Highway Fund. Then the Legislature stole the Highway Fund and started using it to pay for Health and Human services, forcing us to be paid from the General Fund. That was the end of the Highway Department and we became a DOT.

                We built the Interstate and then we became a DOT.

                In the beginning, those people that could not pull their weight were moved to Buildings and Grounds. They still had a job, but they were doing maintenance or landscaping. We had the best lawns, gardens, buildings.

                As the salaries failed to match the real world, we had fewer and fewer qualified people as the older guys retired. New people went to work for the consultants.

                At one point I considered doing a class action on State Government, but by then it was too late. We would not be able to rebuild what we had lost, so I bought a year of “air time” so that I could get out early, and walked away. Once I left, the bureau that I worked for was dissolved because I wasn’t there to carry them any more.

                When I started, we got the best because we paid for the best. Now, not so much, you get what you pay for.

                Reply
          • Not to mention “major rail hubs within 25km”. All the manufacturing capacity in the world is meaningless without turning things into, ya know, a chain all the way to the end-user. (And then maintaining it once it has arrived and is placed in use… but nobody is looking at that problem at all; just stop and think for a moment about how much effort we’re actually putting into training and equipping mechanics to work on the CVS transmissions common in electric cars.)

            Reply
            • And navigable water.

              https://www.trenchlesspedia.com/definition/3095/navigable-water#:~:text=What%20Does%20Navigable%20Water%20Mean%3F%20Navigable%20waters%20are,U.S.%20Corps%20of%20Engineers%20under%2033%20CFR%20329.

              With all the tech advancements, the cheapest for of mass transport is still the first, by water. Rail is second and, in places that have already invested in quality roads, trucking, all in proportion to their effective range. As in rail for continental cargo, trucks for regional, but for global nothing beats water.

              The Mississipi system still rules.

              A point forgotten over the Breton Wood era: there are only three nations with truly global navies – US, UK, and Japan. With France and China as wannabes. That may become relevant in years to come as the US finishes giving up the Global Policeman role.

              Piracy too.
              (Serious story potential there.)

              Reply
              • Felix, with rare exceptions the end-user isn’t on navigable waters. That intermediate users and/or distributors are isn’t all that helpful, especially to (say) Denver, let alone northern Idaho. The ends of the chain need to connect with as few intermodal links as possible.

                Reply
                • Wasn’t talking about end users but about the links in tbe supply chain. The last mile to the end user is always trucks. But the coming crisis is in the middle.

                  Because the intermediate links are in fact the most cost sensitive and critical. You might move ipods by plane or rail but not iron ore from australia to china or pig iron from Russia to India. Those move by water because over tbose distances and geographies even rail can’t do the job efficiently. Or at all. Never mind trucks.

                  Take all those new foundries in tbe US (both metal and silicon): none will start with ore (or semiconductor grade sand) and none will output finished goods. The metal ones produce pig iron or metal ingots that then move to the next player in the chain before going to the car maker or rocket builder.

                  Semiconductors? The sand starts out in the US, the only source on earth of semiconductor grade silicon, btw. It gets smelted into silicon bars in one facility, cut into fine wafers in another, gets circuits etched in another, cut into individual chips thst get mounted into carriers in another and snapped on circuit boards in yet anotber before being (finally) “assembled” into a finished product that gets shipped to a distribution hub (LA or Marseiles, Rotterdam, or Liverpool) before going on a train or truck convoy. And that step is by water 99% of the time because consumer grade products don’t usually justify air shipment.

                  Each product is its own distinct case but the term supply chain is literally a chain of dozens to hundreds of steps that, under globalization, involves dozens of countries and up to thousands of factories. You have heard that there are hundreds of thousands of cars sitting on factofy lots, unsalezble because they are missing a part or ten because cars use over a thousand distinct parts from screws and springs to wiring harnesses.Each coming from a different place the world over.

                  The reworking of supply chains is about reworking the middle steps. Five years from now, american sand will make american silicon ingots and american wafers used to make chips in the US. But modt of those steps will be automated. Yes, manufacturing is coming back but not 60’s, 70’s manufacturing. Some stuff will remain offshore in Mexico, Colombia, maybe Vietnam.

                  Take wiring harnesses: Chile sells the ore that gets smelted in China and gets rolled into wire spools. Different location, maybe Malaysia, wraps the bare wires with plastic and the new spools go to the Philipines to be cut and mounted to make the wiring harnesses. That then go to Mexico to go into the dash of a car “Made in the USA”. And that’s a short chain. Some products cross a dozen borders before ever seeing an end user. And China can’t be counted on. Replacements need to be found. And will be. Automation in the US, nearshoring for tbe rest. The Americas and the “Anglosphere” will survive. Other regions? TBD.

                  That ultra specialization is what made globalization work. (It hinged on cheap oil and cheap minerals and cheap food. On hordes of young working age and consuming age people the world over. The boomers mostly. Because every country had its post WWII boom (or boomlet). That is an entire story all its own. A story that said globalization came with an expiration date. A date that got moved forward by Covid. And the war. And what comes next. Because the new date is 2022.

                  Companies that saw it coming made their move early. They will prosper. Those that didn’t move are now scrambling for the few remaining options. They may or not survive. And some (notably Apple but also the BPHs) are still thinking about it. If tbey have money to burn they’ll burn it and survive. Maybe. If not…The new age of inflation is an age of scarcity. Scarcity of food, industrial inputs (paper!), and above all else: labor, both skilled and unskilled.

                  Not everybody sees that tbe old era is done and the new one not yet in place. Chaos is upon us. Inflation is just the beginning.

                  And yes, long range transport is at innevitable risk.

              • Just for fun…

                In 1400, China had the most powerful navy in the world. The European naval architecture and technology didn’t meet that standard for another 200 years.

                The great question is why they gave it up.

                Reply
                • That’s easy.
                  Because it was china.
                  The navy was tbe effort of one Mandarin who saw trade as way to boost the economy and his power.
                  Which meant tbe other mandarins turned on him.

                  China goes tbrough cycles: it looks outwards, prospers for a while, and then turns inwards as the demands of holding their multiethnic empire together took everything they had and civil wsr broke out again.

                  That famous map of tbe discoveries of seafaring China? You know how long it mattered? One year. The next year blue water ceased to matter.ea

                  That’s why China didn’t matter to the outside world.

                  BTW, don’t diss the euros. 😉
                  The viking were in north america before the Chinese found Indonesia. Anc they never made it to Australia.

                  The only reason the romans and those that followed didn’t have better navies is they didn’t need them. the Silk Road was good enough for their limited long range trade needs. When the Ottomans became a problem, then they needed long range ships and they built them.

                  Remember, Europe carved up and colonized Asia, not China.

                  (This is fun!)

                • And then the day came when the Chinese really needed the navy.

                  Needs are a function of objectives. Sometimes the objective is survival. Other times it comes from imagination.

                  Is the objective the moon, Mars, or beyond?

                • Here’s good summary of how far the Romans roamed. Those boys got around by land and sea, as far as Vietnam and even China under Marcus Aurelius (of course). It didn’t stick because China again had a civil war. Nasty habit they can’t seem to break. 😉

                  https://www.youtube.com/watch?v=Y_6aYGfUkdc

                  And yes, the time came relatively quick when the Navy would’ve been useful.

                  As to modern times: The answer is all of tbe above, at least as far as asteroid Psyche.

                  But for all of Musk proclaiming “Mars, Mars, Mars”, the realm where Starship will earn its keep is in Cis Lunar Space, mostly High LEO and GEO. And in cleaning up the orbitals.

                  Less probable but possible: lofting solar power satellites. 100Tons at a time for low tens of millions. Say, circa 2030.

      • Hold on to advertisers. Tell them what they want readers to hear.

        Readers, they’re trying to convince that “inflation is transitory” and covid didn’t come from a chinese lab, and the sun revolves around the earth. With equal success as the guy with 30% (and dropping) approval.

        Reply
  3. This is what you get when the primary — and, often, the sole — criterion for promotion in the management layer rests upon minimizing numerically-stated cost factors and maximizing already-realized revenues (as distinct from, and often opposed to, either asset-base expansion or necessary groundwork for future profitable activities). Since the performance evaluations in Big Media, which includes but is not limited to Big Publishing, never include evaluation of the “First Amendment rent,” which is definitely a cost factor, this would be invalid even if those esteemed (and historically incompetent) entities even tried.

    OK, perhaps too theoretical. But say, emperors of that land east of the Hudson, aren’t those new threads faaaaaaaabulous (leaving aside the irony that the fashion industry is arguably worse…)? And exactly how many sales-and-marketing managers can dance on the tip of these earbuds?

    tl;dr When you choose the wrong people to be in charge, the self-justifications expressed by those wrong people in charge trickle down to those seeking promotion and become self-perpetuating. Consider, say, “promotion to regimental command in English-speaking nations prior to 1940” if you want this with a body count.

    Reply
    • Post 2010 doesn’t sound much better than pre 42.

      Oh, and the SiliValley gang also fits that mold.
      I recently ran into this scathing indictment and prognosis for the Tech Media companies:

      https://www.youtube.com/watch?v=SfSg0wbTZTscompanies

      Most it’s head nodding material, old stuff, but all together it paints a damning portrait.

      And it doesn’t even address the migration of companies out of California.

      Reply
  4. PG suggests that Simon & Schuster could sell way more ebooks if they dropped the price to $4.99 instead of trying to help Barnes & Noble make money selling hardbacks.

    Of course they could. But, what then happens to print sales? What happens to publishers’ print revenue? That is at least as important as B&N.

    If way more eBooks sold, would print sales rise, fall, or remain steady? I’ll take a chance and suggest sales of print that also have a $4.99 eBook fall. I’ll even suggest those $4.99 books become close substitutes for print books that have no eBook.

    If eBooks drive out print, what is the publishers competitive advantage? What advantage does a publisher have over an independent? What happens to the cross promotion of eBooks that comes from print?

    Exactly how does $4.99 increase total profits for publishers? Not eBook sales alone, but total sales and profit?

    Reply
    • What happens to net revenue?
      Do you deny that ebooks have a higher margin than pbooks? Especially in the age of $6 diesel? And with no returns warehousing, or pulping costs? (Yes, they’ve improved those but still far from zero.)

      Trying to protect legacy channels is why Britannica passed on the billions that ENCARTA took in over a decade. And why Britannica is now a business school object lesson.
      The BPHs seem hellbent on joining them.

      The business world is darwinian: timds change, you adapt or you die.

      Reply
      • For fiction, net revenue falls over time as publishers attempt to compete in a market where they have no competitive advantage.

        I agree marginal costs for eBooks are less than for print.

        Given that, what is the publishers’ competitive advantage in a market where $4.99 eBooks compete with all books. What can the publishers do better than anyone else?

        In the past, publishers did a great job of creating the print distribution product and making it widely available. Just look around. See all those books? That was a real competitive advantage.

        With eBooks at 4.99 what is their competitive advantage?

        I agree the business world is Darwinian. What’s the place of publishers in a Darwinian world with $4.99 eBook fiction?

        Reply

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