Of Amazon and eBooks(nikgregory.com)
nikgregory.com
Of Amazon and eBooks
http://nikgregory.com/2010/02/of-amazon-and-ebooks/
3 comments
Exactly.
The concept of "publisher as angel investor" only works if you assume the old publishing model of printing, storing, and distributing physical objects.
Electronic publishing is a completely different cost paradigm.
The concept of "publisher as angel investor" only works if you assume the old publishing model of printing, storing, and distributing physical objects.
Electronic publishing is a completely different cost paradigm.
Not as much as you think: writers still need editors. They still need someone to help them market their books, since every minute not spent writing is a minute not spent honing their craft. Merely saying "get a blog" isn't enough. They still need to be able to eat. And so on. A lot of these analyses have been busily pointing out physical costs account for a relatively small proportion of the overall cost of a book.
In addition, you, the reader, still needs someone to help you sort through the vast amount of stuff out there that you could read. Publishers, for all their other ills, help do this to some extent, despite all the false positives and false negatives that get through (or don't).
Electronic publishing might eventually become "a completely different cost paradigm," but it sure isn't there yet.
In addition, you, the reader, still needs someone to help you sort through the vast amount of stuff out there that you could read. Publishers, for all their other ills, help do this to some extent, despite all the false positives and false negatives that get through (or don't).
Electronic publishing might eventually become "a completely different cost paradigm," but it sure isn't there yet.
What you say is correct but doesn't even go far enough. What authors need is an insurance company.
What risk is being insured against? The risk of spending six months to a year per book to construct books, and then discovering that the books can't make enough money to feed you. The scariest cost of producing a book has nothing to do with paper, or even with marketing or editing. It is opportunity cost: When you're writing a book, you're not doing anything else, and you may be very well throwing your time away.
Software startups reduce this kind of risk by taking money from angels or VCs. (a.k.a. "publishers"). Or they try to gauge product/market fit as quickly as possible by doing things like shipping early, charging money, listening to customers, A/B testing, etc. However, this doesn't work well for books. Books have a smaller market than software, are harder to prototype, are much harder for customers to try out (it takes a lot of effort to thoroughly evaluate a novel), are much less valuable if they fail [1], and have a much more mature, undifferentiated, and well-saturated market: Your software has to compete against about fifty years' worth of earlier software products, most of which suck, and 95% of which won't even run on the machines your customers own. Your book has to compete against William Shakespeare. Literally.
How does the insurance work? A publisher reads your first book (or the first three chapters and an outline, which I'm told is a fairly standard way to submit a book proposal) and then offers immediate, free feedback: Either they accept it, which means pledging to stake a bunch of money and reputation to bring it to market, or they reject it. If your first book doesn't get accepted, it's a very valuable sign: You need to keep your day job, and you need to either become a better writer, try writing something different, try a different hobby, or learn to live without actually selling any of your work.
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[1] Everyone on HN knows that having worked at a failed startup is no big deal. It teaches you a lot. You get a lot of resume-enhancing experience. And your failed software experiment may have valuable pieces that can be extracted. But bad novels are literally a dime a dozen, and an unpublished novelist with three failed novels is not worth any more on the job market than one with no failed novels.
What risk is being insured against? The risk of spending six months to a year per book to construct books, and then discovering that the books can't make enough money to feed you. The scariest cost of producing a book has nothing to do with paper, or even with marketing or editing. It is opportunity cost: When you're writing a book, you're not doing anything else, and you may be very well throwing your time away.
Software startups reduce this kind of risk by taking money from angels or VCs. (a.k.a. "publishers"). Or they try to gauge product/market fit as quickly as possible by doing things like shipping early, charging money, listening to customers, A/B testing, etc. However, this doesn't work well for books. Books have a smaller market than software, are harder to prototype, are much harder for customers to try out (it takes a lot of effort to thoroughly evaluate a novel), are much less valuable if they fail [1], and have a much more mature, undifferentiated, and well-saturated market: Your software has to compete against about fifty years' worth of earlier software products, most of which suck, and 95% of which won't even run on the machines your customers own. Your book has to compete against William Shakespeare. Literally.
How does the insurance work? A publisher reads your first book (or the first three chapters and an outline, which I'm told is a fairly standard way to submit a book proposal) and then offers immediate, free feedback: Either they accept it, which means pledging to stake a bunch of money and reputation to bring it to market, or they reject it. If your first book doesn't get accepted, it's a very valuable sign: You need to keep your day job, and you need to either become a better writer, try writing something different, try a different hobby, or learn to live without actually selling any of your work.
---
[1] Everyone on HN knows that having worked at a failed startup is no big deal. It teaches you a lot. You get a lot of resume-enhancing experience. And your failed software experiment may have valuable pieces that can be extracted. But bad novels are literally a dime a dozen, and an unpublished novelist with three failed novels is not worth any more on the job market than one with no failed novels.
Those are valid points, but the publishing company's value add is not as significant as you might think.
My startup is working specifically in this area, and the results might surprise you.
My startup is working specifically in this area, and the results might surprise you.
I wish the author had provided citations for his costs, because I know at least one of his number - book printing cost, is just plain wrong, which causes me to suspect the rest.
"The Printing process costs, on average, 10% ($4) of the cover price of a book, "
So, "Printing Process" is not a function of the cover price of the book. It is a function of what size of book, spine design, what type of binding, what type of covers, whether there is printing on the inside of the cover, whether there is color, what type of paper, and how many pages, and how many books you will be printing.
For example, sitting on my bed right now are two softcover books:
"Maps in a mirror, short fiction of Orson Scott Card", 671 pages, $23.95 list.
"Advanced Unix Programming, Second Edition", 717 pages, $64.99 list.
Both Black and White, perfect Binding, color cover, no printing on inside of covers.
http://www.instantpublisher.com/Price-quote.aspx sugests that the cost of each should be $4.72 - which is 19% of the Orson Scott Card, and 7.2% of Advanced Unix Printing.
In addition, this is what it would cost _me_ - I have to believe that large publishers are able to print their books for less that what I would pay.
"The Printing process costs, on average, 10% ($4) of the cover price of a book, "
So, "Printing Process" is not a function of the cover price of the book. It is a function of what size of book, spine design, what type of binding, what type of covers, whether there is printing on the inside of the cover, whether there is color, what type of paper, and how many pages, and how many books you will be printing.
For example, sitting on my bed right now are two softcover books:
"Maps in a mirror, short fiction of Orson Scott Card", 671 pages, $23.95 list.
"Advanced Unix Programming, Second Edition", 717 pages, $64.99 list.
Both Black and White, perfect Binding, color cover, no printing on inside of covers.
http://www.instantpublisher.com/Price-quote.aspx sugests that the cost of each should be $4.72 - which is 19% of the Orson Scott Card, and 7.2% of Advanced Unix Printing.
In addition, this is what it would cost _me_ - I have to believe that large publishers are able to print their books for less that what I would pay.
So, the author's back-of-the-envelope calculation is 10%, yours is 13% (the average of 19% and 7.2%), and your conclusion is that "the author is just plain wrong"?
What would the author's rough estimates look like if they were "in excellent agreement" with yours? Would "11%" be close enough for you, or are you holding out for "12.8% to 13.3%"?
Can I suggest that you read the Wikipedia article on "orders of approximation"? Or, better yet, "Fermi problem"?
http://en.wikipedia.org/wiki/Orders_of_approximation
http://en.wikipedia.org/wiki/Fermi_problem
What would the author's rough estimates look like if they were "in excellent agreement" with yours? Would "11%" be close enough for you, or are you holding out for "12.8% to 13.3%"?
Can I suggest that you read the Wikipedia article on "orders of approximation"? Or, better yet, "Fermi problem"?
http://en.wikipedia.org/wiki/Orders_of_approximation
http://en.wikipedia.org/wiki/Fermi_problem
You miss my point entirely. When calculating the cost to manufacture a book, you don't do it as a percentage of the list price. In fact, for a $40 best seller, I'm betting it's the inverse, as the volume for those go up, the printing price drops down to the order of $1.50 - $2.
What I was trying to emphasize, is that unlike most goods and products, that have their final cost as a markup to the physical cost, Books are more like software - the actual manufacturing cost doesn't play much of a role in the list price.
So, to say that "Average cost of manufacturing a book is 10% of list" is to imply that there is a relationship between list price and manufacturing cost of a book.
Whether, in the end, it turns out be 10% or 15% or 5% as an "average" is mostly irrelevant to the core of our discussion, which is "eBook Pricing versus Physical Book Pricing".
This is _particularly_ important with regards to the conversation at hand, as the Publishers are mostly focused on the final retail price being charged to the customer, and probably aren't that excited about whether it comes from an eBook or Hardcover. This is counter-intuitive to most people who thing _OF COURSE_ a publisher would rather get $10 for an eBook (With DRM, non copyable, non-lendable, close to zero manufacturing /shipping costs, fewer returns) versus a HardCover book, and all the costs associated with it.
What I'm trying to highlight is that, at the end of the day, the List Price <-> Manufacturing Cost relationship is not as straightforward as "Printing Cost is 10% of list price"
What I was trying to emphasize, is that unlike most goods and products, that have their final cost as a markup to the physical cost, Books are more like software - the actual manufacturing cost doesn't play much of a role in the list price.
So, to say that "Average cost of manufacturing a book is 10% of list" is to imply that there is a relationship between list price and manufacturing cost of a book.
Whether, in the end, it turns out be 10% or 15% or 5% as an "average" is mostly irrelevant to the core of our discussion, which is "eBook Pricing versus Physical Book Pricing".
This is _particularly_ important with regards to the conversation at hand, as the Publishers are mostly focused on the final retail price being charged to the customer, and probably aren't that excited about whether it comes from an eBook or Hardcover. This is counter-intuitive to most people who thing _OF COURSE_ a publisher would rather get $10 for an eBook (With DRM, non copyable, non-lendable, close to zero manufacturing /shipping costs, fewer returns) versus a HardCover book, and all the costs associated with it.
What I'm trying to highlight is that, at the end of the day, the List Price <-> Manufacturing Cost relationship is not as straightforward as "Printing Cost is 10% of list price"
Of a few sources for the clearest figures, most appeared to be quoting from this, and not self-pub figures like the OP of this thread.
Here's the best written I could find: http://journal.bookfinder.com/2009/03/breakdown-of-book-cost...
List price = MSRP/Cover Price.
If John Grisham has 10% printing costs, I think everyone else is likely to. The problem with extrapolating from self-pub figures is that these companies make money off of printing. Publishers don't make a penny off of printing, they make their money once pre-production and marketing has been paid off.
Of course every book is unique, some writers are awful and need more editing, others are brilliant and need none. Colour pages drive up prices ridiculously and non-fiction books are not priced like fiction, which is the major debate piece on the eBook front, discussing non-fiction is rather irrelevant as prices are based on work regardless of cost, plus they need to pay off expenses fast due to far lower sale volumes.
Here's the best written I could find: http://journal.bookfinder.com/2009/03/breakdown-of-book-cost...
List price = MSRP/Cover Price.
If John Grisham has 10% printing costs, I think everyone else is likely to. The problem with extrapolating from self-pub figures is that these companies make money off of printing. Publishers don't make a penny off of printing, they make their money once pre-production and marketing has been paid off.
Of course every book is unique, some writers are awful and need more editing, others are brilliant and need none. Colour pages drive up prices ridiculously and non-fiction books are not priced like fiction, which is the major debate piece on the eBook front, discussing non-fiction is rather irrelevant as prices are based on work regardless of cost, plus they need to pay off expenses fast due to far lower sale volumes.
But do the publishers really not make a penny off of printing? In the music business, the labels often own the manufacturing plants as well...is that not the case in print publishing?
"Net loss: $10 per eBook."
Why are we equating a published singular book with an ebook? Net loss per ebook can only be calculated based on the number of ebooks sold, not on the number of ebooks produced. One ebook is equivalent to thousands of ebooks, there is no difference.
People, it's digital.
Why are we equating a published singular book with an ebook? Net loss per ebook can only be calculated based on the number of ebooks sold, not on the number of ebooks produced. One ebook is equivalent to thousands of ebooks, there is no difference.
People, it's digital.
Indeed. I think people tend to underestimate the cost of actually printing stuff, as well as shipping it, storing it, returning it when it doesn't sell, etc. It all adds up, and required a lot of capital machinery, buildings, employees, etc.
Printing is 10% of cover price, distribution is 10% of cover price (this I believe includes the cost of returning too). For a hardcover this can total $8, for a mass market paperback this can be $1. Amazon, lik
I didn't get into a discussion of benefits of eBooks, especially when colour e-ink readers arrive. Specifically comics and graphic novels would likely fare excellently, low editing costs (almost all the work is done by the author art, inking, and minor amounts of writing), virtually no marketing or advertising costs make printing (higher than a simple black-ink book) and distribution the major costs. It could literally be back to $0.99 comic books. Printing in comics can be up to 40% of cover price, distribution taking 30%, which compared to a book is killer.
I have no intention to say eBooks aren't going to become huge one day, but many of the costs in book making are from well before the ink hits paper. Unless you're willing to sacrifice quality, the prices are going to remain very close.
I didn't get into a discussion of benefits of eBooks, especially when colour e-ink readers arrive. Specifically comics and graphic novels would likely fare excellently, low editing costs (almost all the work is done by the author art, inking, and minor amounts of writing), virtually no marketing or advertising costs make printing (higher than a simple black-ink book) and distribution the major costs. It could literally be back to $0.99 comic books. Printing in comics can be up to 40% of cover price, distribution taking 30%, which compared to a book is killer.
I have no intention to say eBooks aren't going to become huge one day, but many of the costs in book making are from well before the ink hits paper. Unless you're willing to sacrifice quality, the prices are going to remain very close.
Could you cite your sources? Are those industry averages, or just for one publisher you are familiar with?
Here's the best explained I've found: http://journal.bookfinder.com/2009/03/breakdown-of-book-cost...
Other breakdowns always seem to hit close. All numbers are averages, but printing generally hit between 8% and 12% for fiction. However all prices vary, some writers need no editing so figures for printing will be artificially raised, whilst a poor writer with great ideas will cost a small fortune to edit and printing will be tiny in comparison.
Colour pages and anything else always cost more (I once read 20 colour pages in a book can cost as much to print as the other 230 pages), same with non-colour artwork and everything else.
Non-fiction is always priced differently from fiction due to extra steps in the editing process. Sources have to be reviewed and evaluated, plus the author can have an advance before they've finished the second chapter.
Other breakdowns always seem to hit close. All numbers are averages, but printing generally hit between 8% and 12% for fiction. However all prices vary, some writers need no editing so figures for printing will be artificially raised, whilst a poor writer with great ideas will cost a small fortune to edit and printing will be tiny in comparison.
Colour pages and anything else always cost more (I once read 20 colour pages in a book can cost as much to print as the other 230 pages), same with non-colour artwork and everything else.
Non-fiction is always priced differently from fiction due to extra steps in the editing process. Sources have to be reviewed and evaluated, plus the author can have an advance before they've finished the second chapter.
At some point many of these costs may be significantly wiped out, e.g., by cutting out much of marketing (as well as shipping, wholesalers, etc.). What if writing/"publishing"/marketing of "books" (fiction & nonfiction) became a mutant of current blogging: with the public voting/marketing through the digital social media.
An ebook revolution is not going to happen IMHO through supporting the existing overheads of the 20th century publishing model.