ANOTHER "Why Do Ebooks Cost So Much?" ARTICLE

[DMB]

I nearly had an accident when I read that audiobooks could be produced by proofreaders reading the text aloud. I am not a great fan of audiobooks, but I thought they usually paid some well-known actor to read them. The skills needed for proofreading aren't necessarily going to be those required for reading a book aloud in an interesting. And if you are concentrating on proofreading, aren't there going to be glitches?

"He raced to the end of the street -- shit! doesn't this moron know the first thing about punctuation?"

[Rob87]

Ebooks have no material value once its produced it can be replicated for nothing. Once the infastructure is in place producing ebooks should be much much cheaper than pbooks.

The infastructure shouldn't be too expencive either as hosting should not be a major issue. Commercial PC games companys sell digital downloads with sizes reaching into gigabytes relative to this storing and uploading a book is nothing. DRM software is unnecessary and a pointless expence its their own fault if they choose to squander money on it, all the books are available on the net anyway if people want to pirate it they can and will so why punish the legitimate customers with crippled products.

Frankly all the excuses he makes are BS. They don't want ebooks cutting into the pbook market that is thereal reason the prices are so high if ebooks ever become mainstream the prices will be forced down to a more reasonable price mark my words.

[dkb]

“People would have heart attacks if they knew all the costs associated with digital publishing,” says Maja Thomas, senior vice president of the Hachette Book Group’s digital division.

I think Hachette should fire her and poach someone from Baen Books since Baen Books has figured out how to keep ebook prices at $6. Of course one of the ways Baen Books keeps costs down is not using DRM. The extra lawyers are so they can sue anyone they think is breaking DRM or pirating their books. They're also probably hiring extra legal help to aid in their lobbying efforts to make copy right more restrictive and extend it as close to infinity as they can make it.

All the DRM in the world isn't going to stop pirating. They should worry less about pirates and start acting like they care about the people who actually buy their ebooks. In my opinion, if they put some effort into producing reasonably priced, well formated, DRM free books, they would gain customers. But then the big 5 are afraid that ebooks are cannibalizing hardback sales so I'm not sure they really want to grow the ebook market.

[DMcCunney]

Originally Posted by dkb

“People would have heart attacks if they knew all the costs associated with digital publishing,” says Maja Thomas, senior vice president of the Hachette Book Group’s digital division.

I think Hachette should fire her and poach someone from Baen Books since Baen Books has figured out how to keep ebook prices at $6. Of course one of the ways Baen Books keeps costs down is not using DRM. The extra lawyers are so they can sue anyone they think is breaking DRM or pirating their books. They're also probably hiring extra legal help to aid in their lobbying efforts to make copy right more restrictive and extend it as close to infinity as they can make it.

It wouldn't help them if they did. Baen's model works for Baen. It may not work for another publisher.

For a starter, Baen has lower overhead. They are located in NC, where costs of things like rent are lower. They used to have editorial offices in NYC, but relocated.

For a second, more of their work is done by contractors. The eBook editions, for example, are produced by Arnold Bailey, their webmaster, who also set up and runs the Webscriptions program, and gets a cut of the take. Contractors get fees, but things like insurance are on them. Baen doesn't have the salary and headcount expenses larger publishers have.

Third, and probably most important, Baen is a niche publisher. They publish mid-level action/adventure SF and Fantasy. They understand their market, and what it likes. They aren't likely to have best sellers, save David Weber's "Honor Harrington" books, but they also aren't likely to invest large amounts of money in books they think might be bestsellers, but which bomb, so they don't get buried alive in returns costs.

And last, Baen still does the majority of its business in print editions. The Free Library was originally set up as promotion for the "dead tree" editions, and Jim Baen at the time did not see opportunities for profit in purely electronic publication. The promotion worked, and drove Baen's transition from a struggling mass market PB house to a thriving hardcover publisher with a 70% sell-through rate. A fair number of people buy the paper and the ebook editions.

If paper editions all magically went away tomorrow and only the eBook sales remained, could Baen survive selling only eBooks at their current prices? Frankly, I doubt it.

They big guys like Hachette have different cost structures and business models, and what Baen does is only partially adaptable to them, if at all.
______
Dennis

[DMcCunney]

Originally Posted by Rob87

Ebooks have no material value once its produced it can be replicated for nothing. Once the infastructure is in place producing ebooks should be much much cheaper than pbooks.

Dream on.

80% or more of the cost of producing a book happens before the book ever reaches the stage of being published in paper or electronic editions. There is far less savings to be had from electronic publication than most folks would like to believe.
______
Dennis

[DMcCunney]

Originally Posted by DMB

I nearly had an accident when I read that audiobooks could be produced by proofreaders reading the text aloud. I am not a great fan of audiobooks, but I thought they usually paid some well-known actor to read them. The skills needed for proofreading aren't necessarily going to be those required for reading a book aloud in an interesting. And if you are concentrating on proofreading, aren't there going to be glitches?

Could be, but almost certainly aren't.

It doesn't require a well known actor to do the audio edition (though they may be used for special cases like the best seller where the actor's name will be a selling point.) It does require someone who can read aloud effectively, and that's a skill most don't possess. (I've heard authors read their own work in a manner that made me cringe.)

The audio book should be produced from a manuscript that is final copy, and has already been proofread, and no proofreader I know reads aloud when they work.
______
Dennis

[Elfwreck]

Originally Posted by DMcCunney

It wouldn't help them if they did. Baen's model works for Baen. It may not work for another publisher.

For a starter, Baen has lower overhead. They are located in NC, where costs of things like rent are lower. They used to have editorial offices in NYC, but relocated.

So, Baen moved to where it was cheaper, so customers should pay more for non-Baen books because they won't move?

For a second, more of their work is done by contractors.

Other publishers can't hire contractors?

Third, and probably most important, Baen is a niche publisher. They publish mid-level action/adventure SF and Fantasy. They understand their market, and what it likes.

Other publishers can't be bothered to figure out who would actually want to buy their books, and keep their production costs down to encourage those customers to buy more of their books? I should pay more for books because big publishers will publish things nobody wants to buy sometimes? If big publishers were prone to "taking a chance" on experimental or edgy books that might not otherwise see print, I could understand this point. But my experience is that the bigger the company, the *more* mainstream and predictable its offerings. It's the small companies that take chances on books that may not have a large following.

And last, Baen still does the majority of its business in print editions.

Yes, and both the free library & paid ebook collections are supporting that. Other publishers have apparently failed to figure out how to make that work for them.

If paper editions all magically went away tomorrow and only the eBook sales remained, could Baen survive selling only eBooks at their current prices? Frankly, I doubt it.

I agree. And Baen's aware of this. But they're working with *today's* business opportunities, not the ones that might exist in another decade or two. They're selling to customers who want to buy books now, not the ones who will eventually only be buying ebooks.

They big guys like Hachette have different cost structures and business models, and what Baen does is only partially adaptable to them, if at all.

I don't doubt that not all of Baen's practices can scale upward, but every large publisher *should* be looking at Baen and asking themselves, "what parts of their business model can we swipe?"

[MrPLD]

Interesting topic folks... very interesting. Maybe it should be summarised as "What's a reasonable profit for an eBook?"

The OP is generally right - the cost of "making" eBooks post production is effectively zero, maybe 5c/download if you're living in a country where your server hosting charges per MB and you're amortising things like server depreciation and electricity costs into it all.

Personally, I think that an eBook should sell for effectively the profit margin that your printed books should sell for, so if you're working at about $7 USD per printed book, then go for that on the eBook as well.

If you consider it takes 6 months to a year to produce a fairly typical 350~400 page novel at reasonable wages (let's say $30,000/yr), add in the cost of editing, marketing you'll be somewhere between $20,000~$35,000 for a book. At $10 profit that's 2000~3500 books to sell for a break-even, or at $5 it's 4000~7000 copies!

I admire those people who sell their eBooks for $0.99 each, I can only imagine they've done it on the side and are releasing it more as a novelty rather than anything else.

In summary - while it costs nearly nothing to 'produce' a single copy of an eBook, there's all the pre-production work that has to be paid out first.

Paul.

[M. R. Mathias]

I sell one fairly expensive ebook and several .99 enovellas and eshorts. The $9.88 novel sells 30x as much as the others on Amazon and the opposite on Smashwords... Go figure? Its 235,000 words though, easily the size of 3 typical 2.99 reads.

Beyond that; Sometimes you just flat out get what you pay for......

Just my .03 cents

[Elfwreck]

Originally Posted by MrPLD

I admire those people who sell their eBooks for $0.99 each, I can only imagine they've done it on the side and are releasing it more as a novelty rather than anything else.

J.A. Konrath was making his mortgage payments and then some on $1.99 ebooks; he's bumped most of them to $2.99 to take advantage of Amazon's 70% author percentage, and is *raking* in money.

The issue isn't, how much per book do you think you deserve? What you *deserve* is irrelevant. The monetary value of your writing is based on what people are willing to pay for it, not on how much effort you put into it.

The issue is, can you sell 1000 books at $3 ($2.10-for-you; $2100 total) faster than you can sell 429 books at $7 ($4.90-for-you; $2100+ total)? If you're considering going through a publisher, it's, can you sell 1000 books at $3 on your own faster than they can sell 1200 at $7, of which you get 25% instead of 70%?

I will buy a $2 or $3 non-DRM'd novel on a whim, based on a blurb I like, regardless of genre, by an author I've never heard of before. A $7 book? Forget it. I've got a backlist of Baen titles by authors I love that I haven't scrounged up money for. I will *occasionally* take advantage of a sale to buy a novel marked down to $4--but not often.

Paid ebooks are competing with blogs and fanfic for my reading time. The amount of "entertaining material to read" I have access to is *huge.* Since I'm generally told I can't hand off ebooks to a friend -- unlike blogs & fanfic, where I can say, "I loved this! You go read it too!" -- my interest in them is more solitary, more selfish; I'm not willing to spend much on pleasures I can't share.

---
The traditional publishing model is, for the most part, doing well. (Sort of. It's dying, but slowly. It will continue to limp along for quite a while.) However, it doesn't transfer to ebooks; the support systems that allow paper publishing to work don't exist. There are no used ebook stores selling the first three books in a series at bargain prices so someone can decide to buy the new one when it comes out next month. There are no ebook clubs reading new, used, and shared copies of the same novel and discussing them once a week. There are no collectible editions. And now a large cluster of publishers have removed one of the few features it did have: the ability of the store to sell bundled sets at a discount.

PBook profits work as they do because of a *huge* industry supporting their sales. Ebooks don't have the same kind of support, the same kind of buyer options. People are expected to buy them as throwaway items: read and delete; don't expect it to survive your next OS upgrade; don't expect to share it with anyone who doesn't share an address with you.

Some will buy under those terms anyway, but not everyone who'll buy a new pbook will spend the same money on a book they can't give away if they don't care to re-read it.

[MrPLD]

Originally Posted by Elfwreck

The issue isn't, how much per book do you think you deserve? What you *deserve* is irrelevant. The monetary value of your writing is based on what people are willing to pay for it, not on how much effort you put into it.

The issue is, can you sell 1000 books at $3 ($2.10-for-you; $2100 total) faster than you can sell 429 books at $7 ($4.90-for-you; $2100+ total)? If you're considering going through a publisher, it's, can you sell 1000 books at $3 on your own faster than they can sell 1200 at $7, of which you get 25% instead of 70%?

I completely agree - it's all about perceived value. The trick in marketing of course is to find a value that maximises one's profits.

My previous post was more of an example of the fact that even if something costs nothing to replicate there's still a cost with its production somewhere along the chain - sadly something that a lot of people forget.

Paul.

http://elitadaniels.com

[DMcCunney]

Originally Posted by MrPLD

Interesting topic folks... very interesting. Maybe it should be summarised as "What's a reasonable profit for an eBook?"

I think that's the wrong question. The right one is "How much profit do you have to make, to stay in business?"

The OP is generally right - the cost of "making" eBooks post production is effectively zero, maybe 5c/download if you're living in a country where your server hosting charges per MB and you're amortising things like server depreciation and electricity costs into it all.

The problem is that 80% or more of the cost of producing a book is incurred before you ever get to the point of actually issuing an edition, whether print or ebook.

Personally, I think that an eBook should sell for effectively the profit margin that your printed books should sell for, so if you're working at about $7 USD per printed book, then go for that on the eBook as well.

My feeling is that when the dust settles, the price for an ebook will wind up at about the level of the mass market paperback edition. Some will be a lot more expensive, but those will be electronic versions of books that would be a lot more expensive in paper versions, and for the same reasons.

If you consider it takes 6 months to a year to produce a fairly typical 350~400 page novel at reasonable wages (let's say $30,000/yr), add in the cost of editing, marketing you'll be somewhere between $20,000~$35,000 for a book. At $10 profit that's 2000~3500 books to sell for a break-even, or at $5 it's 4000~7000 copies!

Those numbers might work for a self published book. They don't work at all for a traditionally published book. Consider that "$10 profit". It constitutes your margin on the sale. If your margin is $10, what are you charging the customer?

I admire those people who sell their eBooks for $0.99 each, I can only imagine they've done it on the side and are releasing it more as a novelty rather than anything else.

It depends on the individual author's motivations. There are folks on MobileRead going the self-published route. If they are lucky, they cover their costs and make beer money. It's essentially a hobby.

For some folks, simply having the book available in a form others can read is sufficient. Others would like to make some actual money writing. There are a few doing it through self-publishing, but the ones I can think of offhand already have a name established through traditional publishing, and their main challenge is letting their following know about their self-published offerings. For the folks trying to establish themselves as authors, self-publishing is a much harder row to hoe.

In summary - while it costs nearly nothing to 'produce' a single copy of an eBook, there's all the pre-production work that has to be paid out first.

Yes. And there's a of wishing thinking about what those costs are, and even more wishful thinking about what percentage of them are accounted for by printing, binding, warehousing, and distribution, and how much the price of the book can be lowered if those costs aren't there.

Paul.

______
Dennis

[murraypaul]

Originally Posted by DMcCunney

The problem is that 80% or more of the cost of producing a book is incurred before you ever get to the point of actually issuing an edition, whether print or ebook.

We keep going round this circle.
You are talking about the cost prior to printing. These are fixed costs.
That excludes printing, warehousing, distribution and retail. These are variable costs.
The variable costs can be dramatically reduced. That means that there is now no downside to increasing volume. That means greater profit can be made by selling greater volume at a lower cost.
To suggest that you cannot significantly reduce costs in an industry that currently physically destroys about half of the product it produces beggars belief.

Pricing experiments in the gaming industry, which has very large fixed cost of production: http://www.next-gen.biz/features/val...-too-expensive

[martienne]

Meanwhile people in Eastern Europe, South America and Asia are laughing their heads off as they download everything they want and then some, from file sharing sites.

I know Russians who could easily afford to pay for their own eBooks but wouldn't dream of it. However as I understand it there are no real stores and it's taken for granted that people find what they need through sharing sites.

Books in the USSR used to cost 10 cent or something like that... Everyone could read as much as they wanted. I think books were cheaper than loo paper! Popular to popular belief in Western countries, most international literature was available, and what wasn't available to buy was hand copied and photocopied and shared between friends; both music and literature.

Last weekend I found to my surprise that my 14 year old twin cousins (girls) in Finland are totally up to speed on the torrent scene.
That's the future!

Copyright is impossible to enforce in the long run without looking down the whole internet, severely restricting peoples online behaviour and having a massive body of enforcers.

As long as there are people who struggle to pay for content, there will be piracy...

Let the copyright enforcers, Hollywood, record labels and publishers bankrupt themselves trying to fight an unwinnable battle...

[MrPLD]

Just to place my stance clear - I'm no advocate of piracy, I believe in general copyright law (though the US-disney extensions are getting a bit crazy). With that said I also release a lot of stuff into public domain.

I'm going to play devil's advocate here and setup a scenario.

When everything starts just going to the torrent and the world does nothing but get their stuff from the torrent without paying (assuming the copyright holder has decided, for what ever reason to not make it free), then there'll be no more money going into the industry, which will mean that possibly there'll be nothing new left to torrent

I believe that the content creators have a right to choose if their stuff goes for free or not and I do believe that should be respected.

Yes, the world wants access to their content online and with great ease, the world is begging for that - though the want does not justify piracy none the less. At the end of the day, we all want a pay cheque, we all want to be able to live a reasonable life doing what we do.

Paul.