[darryl]

Hitch. An excellent post as usual from someone who actually has some real current experience in the industry. A couple of things I would like to mention:

Originally Posted by Hitch

And the publisher needs the book to "earn out" before they get to pocket any so-called profits.

Is this actually correct? My understanding is that there may at least sometimes be a point where the book has become profitable but has still not "earned out". To take a simple imaginary example:

Assume a $15,000 advance on a book selling for $15 a copy, with a royalty rate of 15% of the gross revenue. An author will be entitled to a royalty of $2.25 per book. 6.667 books must be sold for the author to earn out. The gross sales of the book at this point will be $100,005. At this point the publisher will have pocketed $100,005 less $15,000 advanced being $75,005. From this of course the publishers costs must also be deducted. If the whole of the $75,005 was absorbed in costs it would equate to about $11.25 per book. Depending of course on the size of the advance and the costs I expect a publisher may well be in profit at some stage before the book earns out. This does not of course allow for any cross-subsidies. Also, I imagine that the level of overheads for a Big 5 publisher in particular would be horrendous.

Originally Posted by Hitch

The real costs of producing a book are incurred long before the book hits the printing press. Whether it's being output in digital or paper, the acquisition and purchase of the rights, if the author is represented and being trade pubbed, the editing, layout and design, cover design, etc., are all incurred whether a book is being printed or not. (Yes, layout even for eBooks!).

I totally agree. Such expenses are necessary to produce a professional book of whatever type. Some Indie authors skimp on such costs, especially when they are starting out, and it usually shows. Fortunately many of the better ones have learnt the value of these various services and are paying for them. I understand that many publishers offered these services in-house through employees, which minimised the costs of such services to them, though I am not aware of the extent to which such services have now been outsourced. Anecdotally costs of acquisition have declined in recent times as the amount of advances has decreased for many authors. It is worth noting that once these initial costs have been recouped the marginal cost of an e-book is just about zero.

Originally Posted by Hitch

And more importantly, those few books that do knock it out of the park, that do sell well, are supporting their other brethren books, those that don't knock it out of the park. The Dr. Suesses of the kids' book world support the hundreds and thousands of kids' books that don't earn out. (Most--vastly, most. Even a successful kids' book sells a whopping 500 copies in its published lifetime.) The Dan Browns of the world pay for poetry and "literature."

Without the profits from Book A being used to support other works--and yes, that includes eBook sales--you'd have a vastly different world of published books.

We are once again in full agreement. Over time we may well see that vastly different world of published books. It will be interesting to see whether the Dan Browns of the future will choose to take 25% e-book royalties from a traditional publisher or 75% from Amazon. Whatever happens, it seems very likely that Authors will be demanding and receiving a much greater share from traditional publishers in the future. This will of course leave far less room for such cross-subsidies.

Originally Posted by Hitch

If publishers--and this includes indies, trade-publishers, etc.--were somehow magically required to make pricing "fair" so that, for example, they could only earn costs plus $0.50/book, all those other books--poetry, chapbooks, literary fiction, kids' books, art books, coffee-table books--all those hundreds of thousands of specialty books, etc.--would never be published, period.

Those art books, coffee-table books and omg, kids' books, are horribly expensive to produce. A kids' book will typically run $3500 in layout, before the illustrations are paid for. Add in another $2500-$5000 in illos (illustrations), to be conservative. That doesn't include editing or cover design. Now, assume that it's a successful kids' book, and it sells a whopping 500 copies, in its publishing lifetime. if you've got $8500 into it, (with no overhead, personnel costs and the like), you have to sell each book at $17.00, just to recover costs. Forget profit!

That doesn't include, again, any editing, any marketing, printing costs, etc. Add in between $5-$7.50 copy for printing costs (color, 32 pages), plus whatever the hardcover will cost to produce--let's say another dollar--and now you need to sell the book for between $23.00 and $26.00--just to break even. Forget producing the eBooks and anything like that. Do we think that most folks want to pay $30 for a kids' book? No? Well..then, how's that book being published?

It's being published because the money that's produced when you buy the eBook copy of another successful book goes to pay for it.

Once again we agree. As authors demand and receive a greater share those 500 childrens books will not be published. Likewise unprofitable literary fiction, coffee table books etc. Indies have driven the price to readers down and the share of Authors up, partly by not engaging in such cross-subsidisation.[/QUOTE]

Originally Posted by Hitch

Well, if they're Indies, and they're only paying for the costs associated with their own book(s), sure, they can afford to be "fair." Is that the publishing world that you want? Only producing the books that will ALWAYS pay for themselves and make a profit? Darwinian publishing?

Because that's what "fair" pricing would mean, the way you describe it. Publishers are already on the hairy edge, profit-wise. They ahve always used the profits from more-successful books to produce those books that they consider "worthy" or worthwhile, books that are brilliant but that probably won't sell the way that Dan Brown will. That has ever been the Tao of publishing, really--using the bigger-selling books to publish those that won't sell that way, and yes, of course, eBook profits, in terms of sales price versus production costs, are part of that.

You should be an author yourself, Hitch. Darwinian publishing? Excellent turn of phrase. As I set out above, I think we are going to get Darwinian publishing anyway. No one bothered to ask consumers if they wanted to pay more so other books which they are not interested in can be published, nor were authors asked whether they were prepared to accept paltry royalties so other authors could publish books which hardly anyone wants to read. Unless of course you regard Amazon as having finally asked those questions? As a reader I'd choose not to pay one extra cent to subsidise these other items. If I was an author I would much rather have the money and choose my own charities to support if I was so inclined.

I also question the extent to which large publishers are now prepared to use profits to subsidise what they consider worthwhile but unprofitable books. Even if I accept that this has been a common practice in the past, the large publishers are now in the hands of large corporate groups with profit and returns to shareholders very much the major focus.

Originally Posted by Hitch

If your perception of the value of a book is tied to how it's produced--whether it's printed on paper or produced in bytes, then I guess I can see your argument. To me, the value is the value of the read. Would I expect my next John Sandford to be $15 in paper, but $1.50 in digital, because it's not printed on paper? No, I wouldn't. I want the book to be available to me, for digital reading, and I don't expect his publisher to throw themselves on their swords, to reduce their profits, just so that I can read it on my Kindle or Droid. Nor do I want them to only produce those books that hit the front table at B&N. I want them to have the ability to discover and produce new authors, to produce and publish those "small" books that will never sell like Sandford or Brown, et al. Without the profits--from all types of production--they won't be able to do that.

I love John Sandford. He is the one traditionally published author I still read religiously, though I tend to recommend his upcoming books to my Library for purchase rather than pay $15 for them. The value of a book has no real correlation at all with its price. Nor is the world fair. It is, as I have outlined in my previous posts, ridiculous to expect the Big 5 in particular to price their e-books with no regard whatsoever to their print books. It is also ridiculous to expect that publishers will adopt cost plus pricing in accordance with some vague and mutable idea of "fairness". Just as it is to ignore the fact that there are certain significant expenses in producing a book of whatever type. Even services such as your own which are peculiar to ebooks but essential for producing e-books of professional quality. But as far as I'm concerned, the way for most new authors to be discovered is to Indie publish. If authors want to publish books no one wants to read perhaps they can head over to Indiegogo or Patreon. I don't want to subsidise them, and I suspect most authors don't either.