Kindle Books Outsell Hardcovers

[Elfwreck]

Originally Posted by DMcCunney

Yes and no. Manufacturing, warehousing and distribution add up to a total cost for the title. The total amount varies depending on the press run, as does the amount per book.

These three are per-unit costs: the more units produced, the more manufacturing, warehousing & distribution costs. (Perhaps it's "per crate" rather than "per unit;" shipping differences between 1000 books and 1005 may be nothing, but there are cost differences between shipping 1000 and 2000 books.)

Editing and formatting will vary somewhat depending upon the book.

Yes--but it's *per title*, not per unit. The editing & formatting cost the same whether the publisher sells 1500 copies or 15000. And while costs-per-title vary, they can be averaged by a publisher, at least across individual genres.

I want the cost estimates released by publishers to say what print run they're assuming for the "$.80 per book" editing and formatting costs. Because if they sell three times as many as they expect, those costs are lower.

No. First, you have to assume editing costs will be the same for an ebook as for a paper volume. The same operations must be performed.

However, if the book is being released in both formats, they don't need to be done *twice.* A small bit of formatting is done differently for the two versions (just as it's done differently for hardcover & paperback release), but the main editing & proofreading work is done only once; estimated costs for that shouldn't be duplicated for both pbook and ebook.

And the fact that it's an ebook (or print on demand, for that matter), is irrelevant. You expect the book to sell X number of copies, or you wouldn't publish it to begin with.

But an ebook doesn't have extra production costs if it turns out popular and sells 2X copies. Its cost-per-sale for editing, overhead & advances drop at that point.

Baen can't be used as representative, for several reasons.
....
Bottom line, Baen's model works for them, but doesn't apply to other publishers.

Baen has found a way to cut costs and effectively market ebooks, and these methods are inapplicable to other companies? Other publishers are incapable of finding lower rents, hiring contractors, and cultivating loyal customers?

I'm aware not every publisher can or should copy all of Baen's methods, but saying "Baen is only successful because they found a way to make ebooks cheaper" is not convincing me that the Big 6 are doing things right. What, Random House can't hire independent contractors to do their ebook conversions?

The point I was making is that, according to the "compare ebook to pbook costs" lists given by mainstream publishers, Baen should be bankrupt. They're selling ebooks below the cost the big publishers claim it takes to produce them. So obviously, those aren't anything like absolute costs of ebook production; they're the cost of inefficient ebook production. (Also, I notice they don't directly mention the cost of adding DRM.) I'm not sympathetic to publishers that say "we have to charge this much for ebooks because we can't be bothered to find a better way to make them."

[tompe]

Originally Posted by DMcCunney

Third, they are a specialty publisher, catering to a defined niche market, and they understand who the market is and what it likes. They aren't likely to have best sellers (save David Weber's Honor Harrington series), but they also won't suffer the sort of losses a full line publisher suffers on a book it hoped would be a best seller and paid a huge advance and promotional costs for, but which tanked. Baen doesn't place that sort of bet, and while some of their titles will do better than others, I doubt any of them tank.

This seems to me to be an important point that people forget when comparing to Baen. I want publishers to place risky bets so they can find new briliant authors or books. So if everybody would do as Baen there would be less briliant books easily findable or available,

[SensualPoet]

Another piece of the cost puzzle that is not factored in -- and which benefits ebooks -- is that an ebook is never out of stock or out of print or in transit to the bookstore and not available for sale. It means that every impulse sale of an ebook can be completed provided the consumer has cash/credit in hand.

Bookstores have to have physical stock on hand, on the shelf ... or it's no sale. Ebooks are always available which means more sales, higher profits, and more royalties.

[kjk]

Originally Posted by SensualPoet

Another piece of the cost puzzle that is not factored in -- and which benefits ebooks -- is that an ebook is never out of stock or out of print or in transit to the bookstore and not available for sale. It means that every impulse sale of an ebook can be completed provided the consumer has cash/credit in hand.

Bookstores have to have physical stock on hand, on the shelf ... or it's no sale. Ebooks are always available which means more sales, higher profits, and more royalties.

I think that is (potentially) such a huge benefit to everyone-authors, readers, and society as a whole...but sadly, is probably seen as a negative by some..those that can't profit from that situation..or can't figure out how to do it under the current business model.

[harryE123]

exactly, another reason why the current model is way overpriced and why ebooks and printbooks should come together, and if one wants to avoid the printed book they should do so with a considerably cheaper ebook version.

[DMcCunney]

Originally Posted by SensualPoet

Another piece of the cost puzzle that is not factored in -- and which benefits ebooks -- is that an ebook is never out of stock or out of print or in transit to the bookstore and not available for sale. It means that every impulse sale of an ebook can be completed provided the consumer has cash/credit in hand.

Bookstores have to have physical stock on hand, on the shelf ... or it's no sale. Ebooks are always available which means more sales, higher profits, and more royalties.

Yes, but it creates another issue.

In the days when books were all paper, the paper edition would go out of print. When it did, the author (or author's agent) could formally request that the rights revert, and attempt to resell the property elsewhere. Most books went out of print fairly quickly. They would be distributed to retailers. If the book flew off the shelves, the retailer would reorder, and the publisher would do another print run. Most books never reached that status. The average bookstore had limited shelf space, and had to clear older books to make room for new releases, so stuff that didn't move quickly got remaindered. On things like airport newsstands, the average shelf like for a mass market PB was two weeks.

What does "out of print" mean when you have ebooks and print on demand editions? The last thing an author wants is the rights tied up in the hands of a publisher who has lost interest in the book. Current contracts cover electronic publication and POD as well as standard paper editions, and tend to use a formula factoring in sales in various formats to determine when a book should be considered out of print, with rights returning to the author.

The fact that an ebook edition is available doesn't mean the publisher is making any effort to sell it.
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Dennis

[igorsk]

Originally Posted by DMcCunney

What does "out of print" mean when you have ebooks and print on demand editions?

It just has to be defined in the contract. I've heard about variants such as "the book sells less than N copies in a year".

[DMcCunney]

Originally Posted by Elfwreck

These three are per-unit costs: the more units produced, the more manufacturing, warehousing & distribution costs. (Perhaps it's "per crate" rather than "per unit;" shipping differences between 1000 books and 1005 may be nothing, but there are cost differences between shipping 1000 and 2000 books.)

Not significant ones, in terms of affecting the total cost or what price you charge.

Yes--but it's *per title*, not per unit. The editing & formatting cost the same whether the publisher sells 1500 copies or 15000. And while costs-per-title vary, they can be averaged by a publisher, at least across individual genres.

Can be, yes, but probably aren't.

I very much doubt that Tor, for instance, who published the best selling Wheel of Time fantasy series, averages it's numbers in with all of the other fantasy they publish. If averaging is done, it will likely be done on books with comparable sale volume.

I want the cost estimates released by publishers to say what print run they're assuming for the "$.80 per book" editing and formatting costs. Because if they sell three times as many as they expect, those costs are lower.

"Oh frabjous day, callooh, callay!" if they do, but so what? You run your numbers, figure your costs, and calculate your price and your anticipated revenue and profit based on what you expect to sell. If you do three times as well as expected, you smile happily and maybe break out the champagne, but you can't assume those numbers going in.

However, if the book is being released in both formats, they don't need to be done *twice.* A small bit of formatting is done differently for the two versions (just as it's done differently for hardcover & paperback release), but the main editing & proofreading work is done only once; estimated costs for that shouldn't be duplicated for both pbook and ebook.

No, they won't be duplicated. But the ebook will not be considered to be a free by-product of the work done for the paper edition. It will be expected to generate revenue and bear a share of the total costs and overhead.

And what happens in the case where the ebook is the only edition?

But an ebook doesn't have extra production costs if it turns out popular and sells 2X copies. Its cost-per-sale for editing, overhead & advances drop at that point.

Yes, but the same comments above apply. You're happy if it does, but that doesn't affect your revenue and expense estimates

Baen has found a way to cut costs and effectively market ebooks, and these methods are inapplicable to other companies? Other publishers are incapable of finding lower rents, hiring contractors, and cultivating loyal customers?

Incapable? Maybe. We are certainly seeing wrenching readjustments, as houses merge, imprints are folded, and waves of layoffs occur. Too many books are chasing too few readers, and the number of people needed to produce the number of books that can be effectively sold is rather less than the number currently doing it.

I certainly don't see the publishing industry all picking up and moving out of NYC to lower rent districts.

I'm aware not every publisher can or should copy all of Baen's methods, but saying "Baen is only successful because they found a way to make ebooks cheaper" is not convincing me that the Big 6 are doing things right. What, Random House can't hire independent contractors to do their ebook conversions?

They may well be doing so. But that, alone, will not be significant.

The point I was making is that, according to the "compare ebook to pbook costs" lists given by mainstream publishers, Baen should be bankrupt. They're selling ebooks below the cost the big publishers claim it takes to produce them. So obviously, those aren't anything like absolute costs of ebook production; they're the cost of inefficient ebook production. (Also, I notice they don't directly mention the cost of adding DRM.) I'm not sympathetic to publishers that say "we have to charge this much for ebooks because we can't be bothered to find a better way to make them."

You can't compare Baen to the mainstream publishers. Their business model and cost structure is different. Obviously, they aren't bankrupt. (And the last I knew had a 70% hardcover sell through rate.)

But my underlying point is simple: 80% of the costs of producing a book occur before the book ever reaches the stage of being printed bound and distributed or issued as an ebook, and the savings of not having the print/bind/warehouse/ship steps aren't as great as most folks would like the believe. There will be limits on how cheap you can price an ebook and make any money.

Baen does well on the Webscriptions stuff, but Baen also has healthy hardcover sales and paperback sales good enough to keep doing them. Could Baen survive on only the ebook sales? I very much doubt it.
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Dennis

[DMcCunney]

Originally Posted by igorsk

It just has to be defined in the contract. I've heard about variants such as "the book sells less than N copies in a year".

Yep. That's about what I said in my post. The key fact is that it is now defined in the contract.
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Dennis

[tompe]

Originally Posted by SensualPoet

Another piece of the cost puzzle that is not factored in -- and which benefits ebooks -- is that an ebook is never out of stock or out of print or in transit to the bookstore and not available for sale. It means that every impulse sale of an ebook can be completed provided the consumer has cash/credit in hand.

Bookstores have to have physical stock on hand, on the shelf ... or it's no sale. Ebooks are always available which means more sales, higher profits, and more royalties.

I would just put the book on my wish list and just buy it when I was going to start reading it. So I would buy less books if I know that they were always available. Now I buy paper books I might read sometime in the future just because if I wait to buy it it will be hard to find the book.

[DMcCunney]

Originally Posted by harryE123

exactly, another reason why the current model is way overpriced and why ebooks and printbooks should come together, and if one wants to avoid the printed book they should do so with a considerably cheaper ebook version.

Just how "considerably cheaper" do you think an ebook can be?
______
Dennis

[SensualPoet]

Originally Posted by DMcCunney

The average bookstore had limited shelf space, and had to clear older books to make room for new releases, so stuff that didn't move quickly got remaindered.

Remaindered books don't put a nickel of royalty into the author's pocket ... but the consumer gets the book anyway. There's much greater benefit to keeping the title always in stock -- for the length of time the contract runs. It's up to the author, agent and publisher to come to terms which create win-win.

For author's with a backlist, keeping those in print at virtually no cost enahnces the profits of everyone -- and benefits the consumer who, having read the latest title, can now buy one or more of the older ones. As you point out, this concept doesn't even apply to certain points of the distribution chain.

Right at the moment, not a single Perry Mason novel is in e-print and almost all are out of print in paper as well. Yet Perry Mason is one of the most recognised characters in 20th century English fiction. That's just silliness and ebooks would correct it with profits generated on every single copy sold -- and no waste.

I fail to see how this can be considered "creating a new problem".

[DMcCunney]

Originally Posted by tompe

This seems to me to be an important point that people forget when comparing to Baen. I want publishers to place risky bets so they can find new brilliant authors or books. So if everybody would do as Baen there would be less brilliant books easily findable or available,

Baen takes the occasional chance - there is variation in their line.

But Baen is a small shop, who can less afford to make risky bets. Many of the small specialty publishers are in a similar position. They are under-capitalized and living more or less hand-to-mouth.

Baen and other publishers make risky bets all the time - whenever they publish a first novel by a new author. But the size of the bet will be smaller. It won't be like the major trade houses when a manuscript that has generated buzz comes to auction, and a feeding frenzy takes place as interested bidders sense a potential best seller and offer deals accordingly. They may place bets that would kill a smaller house if the bet doesn't pay off.

Baen minimizes risk by carefully defining what game they are playing and not placing bets they cant afford to lose.
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Dennis

[DMcCunney]

Originally Posted by SensualPoet

Remaindered books don't put a nickel of royalty into the author's pocket ... but the consumer gets the book anyway. There's much greater benefit to keeping the title always in stock -- for the length of time the contract runs. It's up to the author, agent and publisher to come to terms which create win-win.

And those contracts are changing because of ebooks and print on demand.

For author's with a backlist, keeping those in print at virtually no cost enahnces the profits of everyone -- and benefits the consumer who, having read the latest title, can now buy one or more of the older ones. As you point out, this concept doesn't even apply to certain points of the distribution chain.

One of the major changes in publishing happened back in 1979, when a tax ruling in an unrelated industry affected publishing. A lot of stuff went out of print very suddenly. (See http://www.sfwa.org/bulletin/articles/thor.htm for details.) It's one of the reasons why paper editions aren't kept in print they way they once were. eBooks and POD have changed that landscape, but the industry is still catching up.

Right at the moment, not a single Perry Mason novel is in e-print and almost all are out of print in paper as well. Yet Perry Mason is one of the most recognised characters in 20th century English fiction. That's just silliness and ebooks would correct it with profits generated on every single copy sold -- and no waste.

Tell that to whoever holds the rights. It's a little mystifying to me, too. (I read mysteries, but while I was never a Perry Mason fan, I understand the popularity of the character.)

If I had to guess, I'd bet whoever controls the rights has a higher idea of what the series is worth than publishers are willing to pay.

I fail to see how this can be considered "creating a new problem".

It's a problem addressable by changes in contract language, which is occurring. But the changes had to occur to address the issue.
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Dennis

[GA Russell]

I understand the argument that the accountants should assign the eBook edition its fair share of the burden of the publisher's creating the book. And I don't disagree.

Yet as I understand it, there is a huge number of books available for free on the darknet.

So if the pirate can create the eBook for next to nothing, I think that the publishers are out of line to suggest that the creation of the eBook is a large expense.

I think this goes back to the debate about the Labor Theory of Value. The Austrians showed that just as beauty is in the eye of the beholder, value is in the eye of the purchaser.

So I think that the publishers are justified to charge a high price for an eBook best seller just off the press that is in the news. But I see little justification for the setting of the price of a backlist fiction eBook near that of the paperback version. That's just price gouging.