Distributors takes a margin of 5-8% after handling & distribution expenses .

major chunk of money Goes to the ware housing, Marketing, promotion & distribution expenses for the Publisher

the major threats are Old books are normally offered @ 50%-70%,recently developed of the concept “Book Banks” which rent the Book for Six Moths & normally 10%-15% of the cost of the book.photocopying which a major threat for Publishers is not tackled effectively, hence the Publishers,Book Distributors & Book sellers, Are facing a Declining trend in sale of Text Books in last 10 years in India.

I believe the Government needs to be proactive in keeping a sealing for the price of reference book especially after the 10th standard. Although i understand the perils of Government diktats but this step is pertinent in order to prepare a level playing field for the dissemination of education.

Things are totally different after Standard X. The Govt. is only in charge of syllabus, question papers and evaluation. There is an open market and good competition from different textbook publishers with different authors.

There is an interesting project being done by Manish Kumar at Stanford University called “E-books: Books for all” that “will enable the online sharing and transmission of books to schools. He will also partner with the government and non profit organizations to develop a revenue sharing model for textbook printing services in more technologically advanced schools.”
http://rdvp.org/fellows/2006-2007/manish-kumar/

I am also doing a slightly different project - SocialWay http://www.socialway.com - to enable people to share books online. It does not solve the school textbook problem except perhaps to create a more efficient used book market. It does help to create a larger pool of available books for everyone to read. SocialWay enables people to lend, borrow, give things for free in their community and thus create virtual library of real books.
http://rdvp.org/fellows/2005-2006/nita-goyal/

This implies relatively little price competition at the final beneficiary’s end. And consequently higher prices. However the counter-argument may be that he is extracting the true rent in a situation of weak intellectual property rights and the entrepreneurial costs of providing such a non-perishable and replicable product in the first place.

I don’t think my comment addresses your post directly. But just so a bit of a feel for the underlying economics of book publishing may add to the discussion, I am writing this comment.

I would like to look at this matter from, “If you were tasked to identify a money-making opportunity here, what would be your business case?” point of view. Let’s just try to guestimate the economics of this text book publishing. All guess work, I am not a publisher. Reasonable estimates I think.

Regardless of how it is either in U.S. or whatever (because they are all screwy), if we ask ourselves a question: “How would you address this text book problem from a business point of view, so that you are both solving a real problem and making money by doing that?” we should at least see one aspect rightaway: that the printing costs are not really a big issue here. The distribution costs are, on the other hand, a big problem (as expected).

Let’s say the book store charges Rs 50/- for an average new text book. What happens to these 50 rupees? Where does this money go? Let’s say this is a 200 page book; printing+binding costs say 5 paise per page, so the manufacturing costs of each book is Rs 10/-. This is the cost to the publisher per book.

The publisher in turn sells this book to disti, say for Rs 25/- per book. For each book that fetches 25 rupees, the publisher gives the author a royalty of, say, 3 rupees, may be 5 rupees at the most (10%). Remaining are publisher’s profit and marketing costs.

Disti in turn charges the bookstore Rs 30/-. The bookstore pays 30 rupees for the book and displays it with an an “MSRP” tag of Rs 50/-. So even if the bookstore offers a 25% discount, they still make about 8.50 per book. Not a bad margin.

0) Consumer paid Rs 50/-
1) Bookstore price to consumer (per book): 50/- (or less with discounts)
2) Disti price to bookstore (per book): 30/-
3) Publisher price to disti (per book): 25/-
4) Printing costs (per book): 10/-
5) Author royalties (per book): 5/-
6) Book cover design, artwork, layout, graphics, etc. (one time cost): upfront investment from publisher.

These above 6 elements of the supply chain, we cannot avoid. They are essential. If the text book market were to be a “free market” system, this is how it all pans out. But as it is now, it looks more like a pharmaceutical market.

On the business/market sizing, text book market is more or less constant, with only small rate of growth. Number of schools aren’t growing like cell phone adopters, nor are children entering the school system. It appears to me more and more like a sustainable commodities market.

Let’s say a startup, IEB Inc., comes along and says: “No school has to ever again worry about how to provide text books to its students in time. We will take care of that problem. This is how.” What would this message be like, in specific terms?

I think it should like what Teaching Company (www.teach12.com) is today. Something along the lines of: “Each year we pre-select a group of a 1000 or a 2000 (or whatever) respected text book authors (how they are measured is a different issue) and every school season we are ready to ship out all the books for all the courses by each participating school. Oh by the way, if you are school, this is how you participate in this program - no cost to you. If you don’t have a local bookstore, or a distributor willing to stock your text books, just place a bulk order at our website and we’ll ship these books out to your school directly.”

Will something like this work? If yes, then why isn’t there already a company doing it? Alternately, why would something like the above not work?

Regards, Crazyfinger