Keep E-book Prices Affordable

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Re: Keep E-book Prices Affordable

Postby greyorm » Sun May 16, 2010 2:58 am

I'm really hoping this experiment is successful, and I'll be able to tell other authors "Hey, this works!" The downside would be if it fails, and there are lots of downloads but few or no payments, that would only, unfortunately, prove the publishers are maddeningly correct in their high pricing and insistence on DRM to force people to pay up front.


Publishers in the tabletop gaming industry, particularly indie publishers like myself, have been involved in the electronic book market for years longer than traditional publishers. We know a whole lot about it, how it works, what it costs, and the ins-and-outs of it, what the conceptual-traps are for publishers used to thinking in "common sense" terms (ie: traditional brick-and-mortar). You're kind of stumbling along that same path now, so I'm hoping to point out some of the pitfalls and weirdness to you that we've trudged through to come out the other side.

One thing to keep in mind is that your single experiment with just your novels is just that. A single experiment, with just your novels. You can not draw industry-wide conclusions from it. Consider that in a similar vein, Baen has been giving away books for free on-line for years, and called it an unqualified success, states it has driven sales of other books, etc. Other creatives have done similar experiments and received similar results. This is important to keep in mind.

As an example, look at experiments like the Humble Indie Bundle? ( http://www.wolfire.com/humble ) Five pro indie video games for whatever price you want to pay: $.01 to $whatever. It was an unqualified success. Yes, no one paid nearly the $80 the games would have all cost seperately, the average was far, far less (~$10), but the publishers still made over a million dollars (1/3rd of which went to charity); I will bet you my next paycheck this is more than they would have made this quarter otherwise (and the only reason I make that bet is because I know I'm right).

I'm going to come back to this in a moment, but I will note there are numerous similar experiments out there that prove the rule: electronic "piracy" doesn't actually hurt creators or companies.

Part of the issue is how you are planning on measuring "success" with this project -- it appears by basing it on the number of downloads and the payout from such. I hate to be the one to tell you this, but "number of downloads" is an absolutely meaningless metric. It is like counting the number of people who glace at your book in a bookstore -- not even "read the back cover copy", but literally just look at the spine. As such, counting downloads and comparing payments is the equivalent of counting looks in a store and equating each look that doesn't produce a sale to a "lost profit".

Would you do that? No, because that would be silly!

False equivalency is one of those common conceptual traps involved with electronic publishing. You can't assume a download equates to use or ownership, or to anything similar to a sale; in the electronic world, a download is literally nothing more than a "picking up this object to look at it". It is not "walking out the door with it without paying". People will download simply to download and never look at it again (I know I'm guilty of doing this with numerous things on the web -- heck, I still have a bunch of free games I downloaded years ago that I never ended up playing; a ton of books too, a whole directory worth, either offered for free and even things I've paid for). People will download it, take a look, then completely forget about it or delete it.

So why is counting downloads a problem?

To go back to the Humble Indie Bundle above, I will point out that 25% of the downloaders still grabbed the game for free, even though it cost as low as just $.01. One reaction is to say, "What cheapskates! What scum! They can't afford a lousy PENNY?!"

However, we don't know what percentage of those people were: people who downloaded it to try it out before they paid (people are already reporting that is exactly what they did), people who downloaded it onto more than one machine (such as a work machine and home machine, or a desktop and a laptop, etc. -- again, people are reporting that is also exactly what they did), multiple downloaders who were all part of a single joint donation, and people who couldn't utilize the payment processing methods available (not available in their country, too young to have a credit card, etc).

You may notice that a number of these issues exist as problems in your own "pirating my books, please pay for them" experiment. Have you accounted for those issues? Actually, would you even know how to start doing so? (I'm not sure I would!) Regardless, these are all additional issues on top of just trying to account for drive-by downloads.

One important thing to pay attention to is the "how easy is it to pay" bit. The more hoops someone needs to jump through to pay for something, the less chance they will. Unfortunately, throwing something up on Demonoid and saying, "Please pay me!" makes for an extra hoop and thus extra work -- so it is good that you've included links (for those able to use those links at any rate). However, a robust "pay-as-you-like" method would be far easier to implement on an e-book specific platform, one that keeps a list of books you downloaded, notes which you've paid for so far, and provides a convenient centralized payment center. (In fact, I'm thinking of how easily my Android handles this, and the numerous free, pay-if-you-like apps found in the market.)

Another thing to keep in mind is: have you accounted for how many downloads you don't receive a payment for translates into someone ordering your book from Amazon, at their local B&N, at a used bookstore, or picking it up at the library? How many of those downloads don't translate into a current sale of THAT item, but do translate into a sale of a future item? It is interesting that Baen figured this out waaaay before other publishers, and found it translated into increased sales of the free titles in the physical market.

The thing about "electronic piracy" is that it is weird. Some sectors have spent a great deal of time and money trying to equate it to theft, and as harmful and profit-destroying, but there's a big problem with that: it doesn't bear out.

First, let me relate my personal experience: a number of years ago, I posted one of the RPG supplements I had written for free download to see what the impact of "piracy" was on my work. This was years after the initial sales drive that new products experience, so I was only selling a few copies here and there every quarter. I figured at worst I would gain nothing (well, except maybe a few more readers), but I ended up with a significant bump in sales for just over a month. Pirating my own book led from a couple copies per sales quarter to a spike of, as I recall, 30 sales.

My own experiment was well before bittorrent, in the waning days of Usenet, so I had no particular way to check the actual number of downloaders, but I suspect there were far more than 30 downloads. Likely around a hundred (though maybe significantly more). Were all those "lost sales"? Well, let's see: did at least a few people read the book without paying for it? Probably.

But a not insignificant number of people could read it at the library or as a loan from a friend, too (and regularly do). Are those lost also sales?
So if anyone downloaded and read it and then didn't buy it? What's the chance they would have paid for it anyways?

All I know for certain is that I recieved 30 more sales than I would have otherwise.

This is why I take "piracy" the same way I take someone loaning the book to a friend (except not even that, since I don't know it was even read after it was "lent" ie: downloaded). I didn't lose anything in the transaction, though I did gain the potential for a future sale each time.

But all this is why the indie game industry -- due all the problems inherent in equating a download with a lost sale, and in dealing with the "pirates" (who are, frankly, not some scurrilous underbelly, but our customers in this day-and-age) -- have learned to treat "piracy" as nothing more than advertising (and free advertising at that) which needs to be approached and treated as such. And an interesting anecdote on that note: when I was talking about this on the Word Mill Games mailing list for one of their games, the publisher noted that a few years prior some guy had posted the game to Demonoid with a nasty note about how badly it sucked, how he felt ripped off, so he was giving it away for free, har-har-har. The publisher told me he got steamed as hell about it, but decided to wait and see what would happen: "an instant flood of new sales, all from that site" and he notes "This guy's sitting in a basement somewhere, chuckling about how he cheated me, when he sold about $300 worth of books for me. The world's a strange place."

Others in the indie publishing community, including some very successful folks like Evil Hat Productions, have done similar experiments or come to similar conclusions about the effect of "illegal" availability of their products, or of hurting their customers with draconian policies and pricing structures to "combat" downloads. The problem is, generally, those policies cause MORE piracy and alienate your fan-base. Customers have a nasty habit of noticing when someone is giving them the finger -- like high-priced DRM ebooks -- and feel none-too-ashamed about giving it right back in the most painful manner possible -- by giving and getting them for free, as a form of price-boycotting.

So the point isn't to stop illegal downloading, because you can't (and because that tends to encourage them), and because downloads are negative information as reference points. The point is to get more sales for yourself. It's a proven fact that higher prices and DRM encourage -- not discourage -- piracy while doing absolutely nothing to create sales or endear customers/fans who will give those to you. As many professional authors have come to realize in the last few years, profiting today comes down to a matter of knowing, growing, and leveraging your fan-base (yes, this used to be a function of the publishing houses), not fighting with them.

Anyways, I've rambled on long enough at this point, but I hope all that at least provides some interesting material to think about.
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Re: Keep E-book Prices Affordable

Postby Crone » Mon May 31, 2010 6:47 am

I read books regularly on my computer - I review them for an online review group and get sent the book in electronic form. I don't like it much. I like honest to god books to hold in a hand and read in bed or while I eat lunch or wait in the dentist's office. I suppose those things can be done with a hand held device - my husband has one and he's happy with it. (But I read a couple of novels a day and he reads on airplanes...) (And there are books that give pleasure because they're beautiful objects - Arthur Rackham's illustrations in Wind in the Willows, for example.)

For me to buy E-books, I'd pay about a third or a fourth the cost of a mass paperback.

Regarding piracy, I use the public library. There are books I buy after checking them out and reading them. I discover new writers there. The library increases my book buying as well as book reading. Waterstone's has a three for two policy - my freebie is usually a writer I haven't read. From the writer's point of profit, there's less problem with people stealing books than not being aware of them.
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Re: Keep E-book Prices Affordable

Postby fairyhedgehog » Tue Jul 06, 2010 11:08 am

Greyorm makes some good points, some of which I've also seen made by Cory Doctorow. Incidentally, I bought Little Brother after downloading it in full for free.

Recently I bought an ebook that a friend had got published by Carina Press. Their prices are quite low - I paid $4.79 for a novel - and it felt like good value even though I had to read it on my pc because I don't have an ebook reader.

At the moment ebooks are either slightly inconvenient (being read on a computer) or pricey (because the initial cost of buying an ereader seems huge to me). I think the only way to go is the lowest price that will still give the author and publisher some return.
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Re: Keep E-book Prices Affordable

Postby crit20863 » Sat Nov 06, 2010 10:04 pm

I'm all for the lowest possible price available to get my words to the reader.

Make no mistake, this is a new era we are entering.

Ebay auctions used books as well as Amazon selling used books. I only buy used (paperbacks) currently because I do not have/carry an Ereader with me.

Before I buy a new release I check the Ebay auction site first for that book, and then Amazon, always add the shipping fees, and it's normally cheaper, even if only a dollar or two.

Something tells me in years down the road, paper books sold, will be on their way out. (personally I love paper books so I am biased) :oops:

Take a look at the delivery of music. Most people I know, download from the internet. This will be where our stories are headed.
In this era I believe we must cut costs and offer the lowest available price for (ebooks) in order to compete with the used books market.

I am for getting my work directly to the reader. We must compete with used paperbacks to do this.
I truly believe - that is the bottom line.

The new challenge will be:

The distributor online. The distributors promotional potential (Visibility) and the percentage of the sale that they take.

And of course. is my Ebook even worth promoting? (Critters feedback will help with that)
:)


Sincerely
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Re: Keep E-book Prices Affordable

Postby aburt » Sun Nov 07, 2010 3:41 pm

crit20863 wrote:I'm all for the lowest possible price available to get my words to the reader.


(Of course, that would be "free"... That does make it hard to pay the bills.) :)

Make no mistake, this is a new era we are entering.
...
Something tells me in years down the road, paper books sold, will be on their way out. (personally I love paper books so I am biased) :oops:


Yes, paper is probably on the way out. I've done some curve fitting to the trend to get a handle on when that might be: http://critique.org/ebook-sales-curve.ht -- the projections are a bit amazing.

The new challenge will be:

The distributor online. The distributors promotional potential (Visibility) and the percentage of the sale that they take.

And of course. is my Ebook even worth promoting? (Critters feedback will help with that)
:)


Exactly. I've done some thinking about both those points too, but it's too long to repost here. Have a gander at:
http://critique.org/futurepub.ht : Axioms in the Future of Publishing -- Planning Tools for Science Fiction Writers
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Re: Keep E-book Prices Affordable

Postby DMcCunney » Wed Dec 08, 2010 4:37 am

I didn't even try to fill out the survey that led here. I wish things were that simple.

There's an enormous amount of misunderstanding of the publishing process and what the costs are, and the question isn't really "What do readers thinks is a fair price for ebooks?" The more important question is what a publisher has to charge to make money.

The first thing to realize is that the print/bind/warehouse/distribute stages for print books are perhaps 20% of the total cost for a book, it that. Ebooks drop those costs, but the savings isn't enough to allow the sort of pricing a lot of folks wish for.

Let's stop and consider what happens when a book is acquired by a publisher. (And this just hits some high spots, and ignores some details.)

An author or their agent submits a proposal to a publishing house. (Established authors normally submit an outline of the book(s) and several sample chapters. New authors have to submit a full manuscript, simply to prove they can complete a book.)

An editor reads the proposal, decides it's a book her house can publish and sell, and decides to make an offer. How big the offer is will depends upon the book and the author. A new book from a bestselling author will get a big offer. Books from midlist authors or new authors get smaller ones. Ultimately, it comes down to how well the publisher thinks the book will sell.

An offer is extended, and the author or author's agent sits down with the publisher's contracts department to finalize the deal. The contract will specify what rights the publisher as acquiring: hardcover, trade paperback, mass market paperback, ebook... When the contract is signed, an advance against royalties will be issued to the author. (In the case of a proposal, partial payment will be made on signing, with the rest when a completed manuscript is delivered.

The completed manuscript, in the form of a Word document goes to an editor (often the acquiring editor, though is doesn't have to be) for a line edit. The line edit is intended to improve the overall quality of the books, looking for plot holes and problems, tightening the prose, and generally trying to produce a book that can sell better. There will be back and forth with the author as revisions are made until a final version is agreed upon.

The final version will be copy edited and proofread, to catch errors and produce a clean copy suitable for publication.

While this is going on, a book designer will design the interior, specifying layout and typography, and an art director will design a cover and commission cover art. Cover and interior copy will be created.

The finished version with go to the publisher's DTP department, where it will be imported into Adobe Indesign for markup and typesetting according to the book designer's specifications. The cover will also go into InDesign. The output from InDesign will be a PDF file to be sent to the printer, who will feed to to an imagesetter that will create the plates used on the presses.

All of these steps have costs, with the biggest variable being the size of the advance, and all happen before publication in any format.

In addition, each book gets an allocated share of corporate overhead: rental of office space, electricity and phone service, salaries of folks not directly involved in the production of specific books.

The costs above will apply to any book, whether it is print or electronic.

If it's an ebook, additional costs apply. While the manuscript is electronic, and the output from InDesign is electronic, more work is needed. For most ebooks, a PDF file is the wrong format. Most dedicated readers can't display them. It the book is intended for sale through Amazon for the Kindl;e or Kindle app, MobiPocket format is required. If the book is intended for the B&N nook, Sony Reader, or some others, ePub is needed. This must be created from the final source manuscript by specialists who know how to do it properly. (Current versions of InDesign can output ePub, but do so badly, so it's not just Save As PDF for printer, Save As PDF for ebook. Would that it were.)

Aside from covering direct costs of the book, the publisher needs to make money if it wants to stay in business, and there will be a minimum amount it has to make to remain a going concern.

Any book is a bet. The publisher is betting the book will find an audience, "earn out" (make enough money to cover the costs and the advance, plus the publisher's required profit), and go on to make more money and provide additional royalties for the author beyond the advance. More often than not, the publisher loses the bet. Most books don't earn out. (And it's in the agent's interest to negotiate advances high enough that the book doesn't.) The initial advance is all the author will ever see.

The publisher is making a bigger bet that while most books won't earn out, enough will, and will make enough money in the process to allow the publisher to remain in business and publish more books.

Given the above, how much do you think a publisher might have to charge, to justify doing the book at all? If your answer is "little", or "very little", let me know where to get what your smoking. It's really good. When the dust settles, I expect the price for an ebook to be roughly equivalent to the mass market paperback price. (Indeed, over time, I expect ebooks to replace the mass market paperback.)

Economics for self published works are completely different, and cannot be meaningfully compared to this. Should an author choose to self-publish? The tools are there... Whether they should depends on what they hope to accomplish. If they simply want to write, and make what they write available for others to read, and are content if they manage to cover their costs and maybe have a beer now and again, self-publishing is a viable option. If they want to make any actual money writing (defined as "more than minimum wage for the number of hours they put in creating the work"), a regular publisher is pretty much required.
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Re: Keep E-book Prices Affordable

Postby aburt » Wed Dec 08, 2010 7:53 pm

DMcCunney wrote:I didn't even try to fill out the survey that led here. I wish things were that simple.


But things are that simple -- from the reader's perspective.

(Note most of the discussion below is only related to the scenario where ebooks are most of sales. If ebooks never become the dominant format, then all this discussion is irrelevant; the same rules as today will continue to apply so long as paper is dominant. However, it's entirely possible that ebooks will become dominant, based on the adoption curve fitting I've done, and statements from the major publishers. So it's worth exploring.)

There's an enormous amount of misunderstanding of the publishing process and what the costs are, and the question isn't really "What do readers thinks is a fair price for ebooks?" The more important question is what a publisher has to charge to make money.


Reader's don't go into a bookstore thinking, "I want to be sure to pay enough so the publisher can earn enough and make a fair profit." Nor do customers go into a restaurant thinking, "I want to be sure to pay enough so the restaurant can earn enough," nor do they buy a car thinking, "I want to be sure to pay enough so the car dealer and auto manufacturer can earn enough."

"What the market will bear" is always the key element of the consumer/producer relationship.

If a producer can't produce a product at a price that enough consumers will pay, then it doesn't matter how much work goes into it, consumers just won't buy.

Thus a survey on what do people feel is a price they'll pay is an entirely reasonable question.

Especially given that some of the points you raise below suggest that publishers aren't doing all they can to control costs. And if publishers can't sustain their business model doing what they do now, they'll inevitably have to either become more efficient, cut their costs, do less, or go out of business. (Or, in theory, offer more, but it's hard to see what they could offer that would raise the value of every book far more than the cost of offering it.) Market forces will ensure this.

The other thing is that most of the functional roles performed by a publisher -- those aspects that add value from a reader's perspective -- can be performed by other entities. More about that below (and also at: http://critique.org/futurepub.ht ).

Another factor is how elastic the demand is. (I.e., how to maximize your profit by adjusting prices. At a higher price you might sell less copies, but make more profit; or vice versa.) The elasticity (and optimum) is easy for publishers to determine by experimentation.

The first thing to realize is that the print/bind/warehouse/distribute stages for print books are perhaps 20% of the total cost for a book, it that. Ebooks drop those costs, but the savings isn't enough to allow the sort of pricing a lot of folks wish for.


I hear this often, but then I also hear contradictory statements, such as from EEric Flint at Baen Books. I'd love to see the actual corporate budgets from the major publishers to see how the various costs line up in aggregate (not a per-book P&L but company-wide).

As for "pricing folks wish for," again, that's demand driven, and lower prices are not without precedent.

Print books have a lot of retail price points: Hardbacks in the $25-30 range, trade paper in the $12-20 range, MMPB in the ~$8 range.

Those distinctions in digital form aren't relevant. There's no "hardback" vs. "paperback" ebook. That publishers have traditionally played pricing games with the format (which has the same words) to make a profit goes mostly out the window. Other than "This is new, just released, get it now!" vs. "This has been out a while" there aren't a lot of features you can play with to justify huge price ratios like $25 vs. $8. ("Includes bonus material" will be worth a little more, but not triple the price.)



Let's stop and consider what happens when a book is acquired by a publisher. (And this just hits some high spots, and ignores some details.)

An author or their agent submits a proposal to a publishing house. (Established authors normally submit an outline of the book(s) and several sample chapters. New authors have to submit a full manuscript, simply to prove they can complete a book.)

An editor reads the proposal, decides it's a book her house can publish and sell, and decides to make an offer. How big the offer is will depends upon the book and the author. A new book from a bestselling author will get a big offer. Books from midlist authors or new authors get smaller ones. Ultimately, it comes down to how well the publisher thinks the book will sell.

An offer is extended, and the author or author's agent sits down with the publisher's contracts department to finalize the deal. The contract will specify what rights the publisher as acquiring: hardcover, trade paperback, mass market paperback, ebook... When the contract is signed, an advance against royalties will be issued to the author. (In the case of a proposal, partial payment will be made on signing, with the rest when a completed manuscript is delivered.


These are not major cost items in an ebook-only world. Deciding how well a book will sell when you have major constraints like printing and shipping costs takes more effort, because that's one of the largest variable costs. With ebooks you don't have to worry about the per-unit cost items, because there essentially aren't any. (The cost of "server disk space" and "network bandwidth to download" are laughably small. I know: I run an ISP. Even using Amazon's EC2, which is gougingly high for small items like a book, the cost is under a nickel per copy.)

So, not having to worry about any variable cost items means all the costs are fixed costs. That means a publisher doesn't have to put in nearly as much brain power into deciding. It's basically, "Our fixed costs to do a book are $X. Will we recoup > $X if we publish this book?"

Add in that the lifetime of an ebook is significantly longer than a paper product: An ebook sells "forever"; a paper book vanishes from shelf space after a time because shelf space in bookstores is expensive, so they make way for newer titles. No significant "shelf space" cost for ebooks, so they can sit there forever, earning money on each sale. The only question is how long a given ebook will continue to have value. (E.g., science fiction and current-events titles may get outdated.) So it might make sense to say, "Will we make > $X within two years on this title?" (Or 3*$X on three books by this author to account for authors taking a while to build a following.)

That will be a lot more gut reaction than running P&L spreadsheets, since there's not much different for any given ebook on a P&L in a pure-ebook world. There would be a set of different P&L's to choose from, based on e.g. how much marketing they want to put into it, but that would be pretty cookie-cutter. "Do we give this book package #1, #2, or #3?"

Presumably their point in all this is to winnow the wheat from the chaff, the good books from the unsalable slush. In an ebook world this is simpler: ebooks from proven selling authors are likely to get published; slush reading to find the next Tolkien, yes, that takes time, but even today this is done by lower paid slush readers, and/or even automated like Baen and Zoetrope do, with free "workshop" readers recommending the ones that are worth looking at. So not really a large cost item here in an all-ebook world.

More to the point is what other ways can this same winnowing can be done by other entities -- that a "publisher" does the winnowing isn't sacrosanct. Another approach -- essentially taken already by the set of authors as a whole -- is to toss it all out there, the whole long tail, and see what floats. Publishers want to maintain a quality level of their brand, but what I'm saying is that outside of publishers, the same kind of winnowing can still be had. Publishers can't hope to pin their existence, and high prices, on their role as "filters of quality." That is worth something to readers, but not huge amounts. Many other entities can perform that same role as quality filters, e.g. reviewers ("professional" or past readers, like Amazon reviews), crowd-sourced rating systems, recommendations of friends, etc. etc. etc. Being a quality filter isn't enough reason to exist for a publisher, let alone to charge prices higher than readers think fair.


The completed manuscript, in the form of a Word document goes to an editor (often the acquiring editor, though is doesn't have to be) for a line edit. The line edit is intended to improve the overall quality of the books, looking for plot holes and problems, tightening the prose, and generally trying to produce a book that can sell better. There will be back and forth with the author as revisions are made until a final version is agreed upon.


Again, this isn't sufficient reason to exist for a publisher. Critique groups like Critters can serve this purpose also. It isn't a function that belongs solely to publishers, nor can it be used to justify prices higher than readers think fair. Any publisher that think itself indispensable on this account and charges too much for ebooks will find those ebooks "inexplicably" not selling well.


The final version will be copy edited and proofread, to catch errors and produce a clean copy suitable for publication.


Again, this is not something that only publishers can do. Any author or anybody backing a book -- I'm imagining a possible concept of private investors, sort of like a mini-VC model for books -- could have this hired out. And while it's an extremely useful step for a book of the quality, it's not critical (many self-published books that are "close enough" to a copy-edited state can survive without the cost item). Consumers will tolerate a certain amount of imperfection; quite a lot, actually. Witness how many people buy Microsoft products. (zing!) It's sort of sad to say, but many cases have shown that people prefer lower prices and lesser quality over higher prices and higher quality. Witness the airline industry. :)

So again, not a function that publishers can hang their hat on as their reason to exist and charge higher prices than people think fair.


While this is going on, a book designer will design the interior, specifying layout and typography, and an art director will design a cover and commission cover art. Cover and interior copy will be created.


Yeah, this one is a big misnomer as far as I'm concerned. Think how often authors and readers say, Yuck, what a horrible cover! I've designed my own covers for ebooks of my previously published work that I want to release in ebook form since it's out of print on paper. I'm definitely not an artist, but I think the covers have come out decent. They've taken me an hour or two each with photoshop and free photo sources like wiki commons. There are plenty of starving artists who can design covers inexpensively. I've heard of $25-50 being bantered about to have someone do a cover for you. And they're every bit as good -- or bad -- as what the publishers pay thousands of dollars for.

Again, not a reason for publishers to exist or charge a lot.


The finished version with go to the publisher's DTP department, where it will be imported into Adobe Indesign for markup and typesetting according to the book designer's specifications. The cover will also go into InDesign. The output from InDesign will be a PDF file to be sent to the printer, who will feed to to an imagesetter that will create the plates used on the presses.


Ok, no "plates" or PDFs needed for ebooks. The DTP department's job is largely gone in an all-ebook world. (Sorry. No need for blacksmiths shoeing horses in an automobile world either.)

Ebooks can be created automatically, and certainly aren't hard to create manually. I do it for Critters (Word doc -> epub and mobi, all automated.) Smashwords does it automatically. Doing it by hand isn't hard: Word doc, save as HTML, import into Calibre, export as epub, mobi, etc.

Ebooks today don't offer the rich typography and layout that you get with print. Someday they might (and almost certainly will, I think), but it still isn't a reason for publishers to exist and charge high prices. Millions of people already accept "acceptable quality" of ebook formatting that they read on the Kindles and Nooks. See above re: microsoft, airlines.


All of these steps have costs, with the biggest variable being the size of the advance, and all happen before publication in any format.

In addition, each book gets an allocated share of corporate overhead: rental of office space, electricity and phone service, salaries of folks not directly involved in the production of specific books.


Necessary for publishers as corporations, to be sure. But not a reason that readers will pay anything for. It's purely a liability. Ebooks will march on, and those needing to have costly infrastructures that aren't adding value will be bypassed.


If it's an ebook, additional costs apply. While the manuscript is electronic, and the output from InDesign is electronic, more work is needed. For most ebooks, a PDF file is the wrong format. Most dedicated readers can't display them. It the book is intended for sale through Amazon for the Kindl;e or Kindle app, MobiPocket format is required. If the book is intended for the B&N nook, Sony Reader, or some others, ePub is needed. This must be created from the final source manuscript by specialists who know how to do it properly. (Current versions of InDesign can output ePub, but do so badly, so it's not just Save As PDF for printer, Save As PDF for ebook. Would that it were.)


Cry me a river. I, just li'l ol' me, can create epub and mobi files from a Word .DOC file both automatically (see Critters manuscripts page) and by hand (takes a couple minutes) -- and I'm not a ginormous publisher, just one guy. If a publisher feels this is a huge effort for them, then they need to get a little more of a clue; or at least demand better output quality from Adobe. Epub and Mobi file formats are painfully simple in their formatting capabilities, so there isn't rocket science. Smashwords is another example of how simple it is. They're just a small startup and they can convert manuscripts to ebooks automatically.

Again: Not a reason for publishers to exist, or charge much. Readers won't buy into this as an argument for high prices.


Aside from covering direct costs of the book, the publisher needs to make money if it wants to stay in business, and there will be a minimum amount it has to make to remain a going concern.


Of course. But once again, consumers don't buy products with the benefit of the producer in mind. The consumer thinks: The price is either acceptable or too high.


Any book is a bet. The publisher is betting the book will find an audience, "earn out" (make enough money to cover the costs and the advance, plus the publisher's required profit), and go on to make more money and provide additional royalties for the author beyond the advance. More often than not, the publisher loses the bet. Most books don't earn out. (And it's in the agent's interest to negotiate advances high enough that the book doesn't.) The initial advance is all the author will ever see.

The publisher is making a bigger bet that while most books won't earn out, enough will, and will make enough money in the process to allow the publisher to remain in business and publish more books.


This is their real business model: Essentially a sort of venture capital model. They're providing up-front funding in the hopes that overall they'll fund winners worth more than the losers lose.

But the pricing is not really based on what tasks they perform. Perhaps they want to try to make it sound all complicated as an educational gambit, in the hopes that it tricks consumers into thinking there's value there beyond what they already see, but I'm skeptical that will have any significant impact. Readers will pay what they feel is fair.

That was the whole basis of the survey, which you were saying was unreasonable; and thus this reply that no, readers really don't have to, and won't, base their valuation on what work a publisher does and how much they need to make a profit. It's the other way around: It's the publisher's job to find ways to do their work efficiently and cost-effectively so they can stay in business.

If they can't, the world doesn't end. There are lots of other ways for writers to get their work to readers.

Publishers are a middleman, and as such need to provide a useful service, as determined by the players on either side of them, the authors and the readers. If they can't serve those two constituencies, they will be replaced.

So publishers need to focus on how they can best serve readers, keeping their costs down; and how they can best serve authors.

I'm not saying publishers have no role -- but they are losing the one thing that in the past was their primary service, that neither side could easily do themselves: Getting books from author to reader. With paper, that's not easy at all. In fact, it's quite costly. It's very expensive for an author to create paper copies and get them distributed to the thousands of bookstores. (Noting that bookstores themselves want to maximize profit of their limited shelfspace and thus won't take just any book from any author. Unlike a digital bookshelf where there's almost zero cost to having every book available, e.g. Amazon, Google, etc.)

So the placement of physical books on physical shelves is the one thing that gave publishers a virtual monopoly over the process, and locked authors and readers into having to rely on publishers. That was their monopoly power.

And with ebooks it's gone.

Publishers thus go from kingpin with paper books ("I decide which books readers can see from which authors in what quantity") to almost unnecessary grunt worker with ebooks. With a "most ebook" marketplace publishers thus have to change in a dramatic way: They have to start thinking about how they can entice authors to work with them instead of some other way of reaching readers, now that there are other viable ways. They basically will have to reverse their gears: Rather than focusing on pushing authors away from them ("We only review agented works," "Oh, the stuff in the slush pile is so horrific," "No simultaneous submissions," holding manuscripts for years without deciding, etc.), they'll work to convince authors they provide a valuable service. It will be about how much money they can make for authors, or provide whatever it is that authors seek: More money than the competitor, money up front rather than via over time, more marketing, not having to do the ebook production/uploading work themselves, recognition from a prestigious source, and so on. So they do have roles they can fill. But no more copping an attitude. The snobby anti-author approach will have to go, since the publisher no longer will hold the key to reaching readers; or publishers will have to demonstrate their worth via e.g. success at marketing if the want to remain snooty. ("Snooty" still probably isn't a winning strategy anyway once you've lost the monopoly power.)

Since it doesn't require a "publisher" to provide these services, it will likely be more competitive. The monopoly hold over the author-to-reader channel will be gone, and that's the only monopoly hold they've had. Marketing via up-front risked money seems likely their next most valuable service: But "service" is the operative word.

Likewise for readers, publishers will no longer hold the keys. They'll have to scramble more to earn readers' business with so many more reading choices.

Publishers in a mostly-ebook world will have to be much more oriented toward service to both authors and readers.


Given the above, how much do you think a publisher might have to charge, to justify doing the book at all? If your answer is "little", or "very little", let me know where to get what your smoking. It's really good. When the dust settles, I expect the price for an ebook to be roughly equivalent to the mass market paperback price. (Indeed, over time, I expect ebooks to replace the mass market paperback.)


See, there's that attitude I was talking about. Publishers can dream that they'll remain indispensable in a mostly-ebook world, but they'll have lost their golden goose (monopoly over cost-effective printing/shipping/placement). They can offer valuable services, to be sure (VC-like up-front funding for marketing probably being the biggest), but it doesn't take as much specialized knowledge or economies of scale such as underpin their monopoly role now.

I don't think ebooks should cost "very little"; I tend to agree that MMPB prices is where ebooks will settle. It's consistent with the survey results you probably didn't look at. :)


Economics for self published works are completely different, and cannot be meaningfully compared to this. Should an author choose to self-publish? The tools are there... Whether they should depends on what they hope to accomplish. If they simply want to write, and make what they write available for others to read, and are content if they manage to cover their costs and maybe have a beer now and again, self-publishing is a viable option. If they want to make any actual money writing (defined as "more than minimum wage for the number of hours they put in creating the work"), a regular publisher is pretty much required.
______
Dennis


Ah, now here's a place we disagree. Your statement still cops that attitude that publishers will remain indispensable to earning equivalent money.

If first novel advances are in the realm of $5,000 for new authors (which might well represent minimum wage!) :), and a self-published author earns around 70% on a $9.99 ebook (70% is Amazon's model; about 97% for sales via one's own web site, 85% via Smashwords, and so on), they only have to sell 714 copies over the life of the book to earn $5,000. (Ignoring time value of money since it's basically countered by the price of the ebook rising with inflation.) They don't get that $5k up front, but they still have a not unreasonable shot at earning it.

Now if you're talking $50,000 advances, yes, a self-published author would have to sell 7100 copies, which is much more unlikely. But what percent of manuscripts land $50k advances? Very few. Most go unsold, so the author earns $0. If it's a really awesome book, and the author gets lucky on word of mouth publicity, it could sell 7000 copies. I'm not sure what the (low) odds are on either happening, but I have a gut feeling that the odds of selling one's book for $50k to a publisher vs. self-selling 7000 copies might be similarly low.

Which is not a trivial consideration: If your book isn't going to sell at all, whether because it isn't written well or because it's too niche for a publisher, etc., then they can make more money self-publishing. (More than $0.) They still have the shot of going viral.

Unless you already have a large reader base. Stephen King doesn't need a publisher in a mostly-ebook world. He can put out his book himself, send out a press release, and bam, millions of sales.

Midlist authors who have a medium sized reader base are perhaps are tricky to analyze. Time and experimenting will tell. Can they reach those readers if they self-publish?

Those who have a more visible presence certainly have a better shot. Those who have active blogs, etc. and bring in readers, interact with them, etc. will have more success. Those who want to sit quietly and just write and never interact with readers, they'll want publishers to do the work for them since they'll have no channel to the readers.

I'm NOT talking about today, I want to make that clear. Ebooks are 9% of sales today. It's still 90% paper. I'm talking only about a hypothetical world where most sales are ebooks, say 70% or more. Whatever the point is where the revenue from paper isn't that critical. In that world, self-publishing will be a much more viable option for all authors.

There will also likely be other avenues available than just publishers. Direct VC-like investment via investors who front money mostly used for marketing may be viable. They wouldn't be a "publisher" in the usual sense of it. (Publishers today do have that quality of risking money up front, but their "marketing" often consists of nothing more than putting copies on store shelves. And that works -- with paper. Shelf space is limited so a copy there is a valuable thing. But that model falls apart with ebooks, and it doesn't take a company with experience in producing a book to be the ones fronting money for marketing.)

So, we may agree that $5-10 is a fair price for an ebook in an ebook-dominant world, but I don't think we get there through anything like the same process. I think the pricing is consumer-demand-driven (not "but-it-costs-this-much!" driven), and doesn't require publishers in the traditional sense of what they do.

It will sure be interesting to look back ten years from now to see!
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Re: Keep E-book Prices Affordable

Postby crit24486 » Thu Dec 09, 2010 3:45 am

If a story is published (as opposed to self-published), that implies a certain quality, and that it will be of interest to a particular audience.

Therefore, even if self-publishing took zero effort, having that 'stamp of approval' would bring in sales.

So maybe that's what publishers will sell in the future. Yes, you can lay out, publish, advertise and sell your own books - but we can put the stamp on it that brings in a lot more sales.

That raises some bad possibilities though - situations like with the Better Business Bureau, where they're alleged to just give good ratings to anyone who pays.
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Re: Keep E-book Prices Affordable

Postby aburt » Thu Dec 09, 2010 5:49 am

crit24486 wrote:If a story is published (as opposed to self-published), that implies a certain quality, and that it will be of interest to a particular audience.

Therefore, even if self-publishing took zero effort, having that 'stamp of approval' would bring in sales.

So maybe that's what publishers will sell in the future. Yes, you can lay out, publish, advertise and sell your own books - but we can put the stamp on it that brings in a lot more sales.


Agreed, stamps of quality are always good -- but publishers have no monopoly on that function. See my earlier bloggy post, http://critique.org/futurepub.ht , about how other entities could fill that role. Reviewers, crowd-sourced ratings, etc.

Publishers hold one monopolistic card: Because of economies of scale, they and they alone have the ability to inexpensively print and ship a lot of paper copies to store shelves. Everything else they do can fairly easily be done by others. But that's the one thing you don't need with ebooks. That's going to scare them to death at some point, if it hasn't already. :)
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Re: Keep E-book Prices Affordable

Postby rowenacherry » Sun Jan 16, 2011 4:09 pm

The second part of the poll baffled me. Please forgive me if I've grasped the wrong end of a stick.
Unless all authors are to be reduced to the status of buskers who are paid for their work (or not) at the whim of those they entertain (or fail to entertain), and all books are free to read before purchase, how would you implement the pricing model according to how much the work was enjoyed?
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