[DMcCunney]

Originally Posted by Elfwreck

Good columns; good info... they explain why big publishing hasn't used Baen's model; they don't explain why Baen's methods can't work for them.

What part of Baen's methods do you think they can adopt? See below for constraints.

Can't work as well as their current 90% cut with the several stages between author and reader, sure. But their current system is falling apart--they've gutted it themselves for ebooks by demanding the agency model, insisting that they want to sell directly instead of hiring someone to manage marketing to the customers. The new book market is panicking in competition with Amazon's used book listings; turns out a lot of people will buy a $5-with-shipping book instead of the $14 TPB or the $25 hardcover.

I think you misunderstand the motivations for the Agency Model.

Baen's method is not "give away free ebooks and sell new ones at $6." It's more abstract than that.
Know your market.
Find out what they're willing to pay.
Sell to them at that price.

Not really.

Baen does know its market. That's it's real strength: it is a mid-level action/adventure SF/fantasy publisher. It knows who its readers are, and produces what they want to read. It has extended that to branding. In that sense, Baen is like Harlequin. Harlequin produces romances, with the assumption that if you like one of their titles, you are likely to like the others. Baen is nowhere near as "cookie-cutter" as the Harlequin offerings, but a similar dynamic applies. People know what Baen publishes, and know that if they like a Baen title, they are likely to like others. Baen is this generation's DAW Books. DAW started with the same model - mid-level action/adventure SF/fantasy, where if you liked one DAW title, you were likely to like others. They drifted away from that model when founder Donald A. Wollheim died and his daughter Betsy took over. These days they produce fantasy "bricks".

Baen is unlikely to have best sellers, save for the Honor Harrington books, but Baen is also unlikely to have the "shipped gold, returned platinum" issues common to major houses that have what they think might be a bestseller and guess wrong. Baen has a high sell through rate, and likely has less returns of books than other SF/fantasy lines.

But "Find out what they're willing to pay. Sell to them at that price." isn't as simple as it sounds. What if "What they're willing to pay" is less than it costs to produce the product? Selling to them at that price is just a good way to go belly up fast. (And that question underlies a lot of the posts I've made on such topics at MR, because I think the prices a lot of folks here would like to see for ebooks are less than it would cost to produce the books.)

Baen is making money (though I don't know how much) on ebook sales. But Baen is also a successful print publisher, with a 70% sell-through rate on hardcovers. The costs of making the book to begin with are spread over HC, PB, and ebook editions. If the print books went away, and Baen was only making/selling ebooks, do you think the $6 price would remain? I don't. It would have to go up to cover the costs.

As long as that allows for *any* profit, it's a successful business model.

Absolutely not!

A successful business model doesn't allow for "any" profit: it allows for enough profit to remain in business. Simply being profitable in the sense of showing an excess of revenues over expenses is not sufficient.

The big publishers are flailing because for a long time, that hasn't been their business model. They've been deciding what books will be popular, and promoting those extensively, and selling others as smaller runs/paperback only; they set the price based on what they want to make, on the theory that the market will have to pay whatever price they set; they sell to distributors who sell to stores who sell to readers, so they've got no direct influence on or feedback from the people who, ultimately, are buying their products.

Nope. Publishers will always make the best guess they can at what books will be popular. Their guess as to the popularity of a title will determine all else, from the amount of the advance paid to the author to the press runs for the print edition and the marketing dollars put behind the books.

In that respect, publishing is no different from the film or record industries. Some properties will be perceived as being $100 million grossers or multi-platinum sellers and get treated accordingly. Others will get less attention and support. Back when, Richy Furay, singer/guitarist for country rock band Poco complained that record companies "could break any act they wanted!". An exec from his record company said "No, if we could do that, we'd break everything!". He was right.

Publishers haven't been "deciding what books would be popular". They've been making their best guesses as to what books they think might become popular. They can't all be bestsellers, so guesses have to be made about which have the potential. Sometimes they guess wrong.

And they don't set prices based on what they want to make: they set prices based on what they have to make to remain a going concern.

They've got several more years of being able to decide what the bestsellers are--the literature community moves a lot slower than the music communities, and they've got a lot of inertia built up. But they're going to watch the industry schism into a thousand POD and ebook publishers who *are* willing to find out what people want to read and provide it to them.

Most of whom will fail, and readers will be left with a real challenge in finding anything worth reading. The industry is already schisming into a thousand ebook and POD publishers. How many of those outfits do you think are making money? More important, how many of the authors being published that way are making any money (where "any money" is more than "a couple of beers now and then".)
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Dennis