Article on ebook profits

[screwballl]

Sorry for the long post... maybe I should release it in mobi format

Being a computer tech, I know how easy it is to create and make "something from nothing" in the computer world.
For paper books, get a text scanner that scans the pages of a book one by one or maybe 2 at a time, which converts it into either picture or text format (usually with existing OCR techniques), and from there a simple program, which even if it does not exist, can easily be programmed and created to convert that text into any format the ebook company wishes to use.
My best explanation for the less technical people: it is the equivalent of using a scanner into photoshop that scans each page with OCR to convert it to text, then use batch scripts to convert the entire deal into a single text file, then converted into whatever format by calibre. At a commercial level, it is much more simplistic than this, the higher end commercial scanners can convert the entire book into a single project with their software as it scans, and then converted once it is done.

From start to finish, the cost per ebook if converted from paper, is around $3-5 per book.
For newer books in the past 15 years, if the original book or author submitted it via digital format like DOC, TXT, RTF, PDF or something from a computer, it would cost less than 25 cents per ebook.
Of course some publishers or authors are requiring some ungodly amount of royalties per copy which is why some ebooks cost $30, and others cost $3.

So what we are seeing is several things here, most of which we have seen before and will see again:

1) Resistance to the ebook formats by various people in the publishing industry. Using scare tactics and generalities to scare people into continuing to purchase paper based books.
They did the same thing when CD music started getting popular and people were creating ripping programs to mp3. They tried to scare people into continued purchases of physical media like CDs or cassettes.
The same thing is happening with movies right now as well. As internet speed and computer speeds increases, it is easier to make personal backups of your collection, which they use scare tactics of pirates, DRM and legal reasoning to fight places like Netflix and Blockbuster and other online streaming sources.

2) They use cherry picked data and numbers to make it appear that they are making little to no money on any ebooks.
One company is showing numbers that just in the first 9 months of 2010, there has been $304.6 Million in sales, compared to the entire year of 2009 saw $164.8 million, there is OBVIOUSLY major profits being seen now.
B&N stated it had seen a 59% increase of sales for the entire company, a majority of that by digital media. Barnes & Noble comparable instore sales decreased by 3.3%. By comparison, print books still make up the vast majority of the industry's revenues--around $23 billion in 2009, but that number is in decline, while ebook sales increase by over 200% per year.
Another company uses different sets of numbers completely which adds to the confusion. Their numbers state US spending on e-books is expected to total $966 million this year, up from $301 million dollars last year.
A Forrester survey of e-book readers found that 35 percent read e-books on a laptop computer, 32 percent on Amazon's Kindle, 15 percent on Apple's iPhone, 12 percent on a Sony e-reader and 10 percent on a netbook computer.

First one I mentioned: International Digital Publishing Forum in conjunction with the Association of American Publishers (AAP). These are insiders using cherry picked numbers.
2009: $164.8 Million in US sales
2010: $204.6 Million in sales through Oct 2010

Second one I mentioned: Forrester Research Inc. that deals with independent and peer verified data.
2009: $301 Mil
2010: predicts $966 Mil. for the year

[Elfwreck]

Originally Posted by screwballl

My best explanation for the less technical people: it is the equivalent of using a scanner into photoshop that scans each page with OCR to convert it to text, then use batch scripts to convert the entire deal into a single text file, then converted into whatever format by calibre. At a commercial level, it is much more simplistic than this, the higher end commercial scanners can convert the entire book into a single project with their software as it scans, and then converted once it is done.

From start to finish, the cost per ebook if converted from paper, is around $3-5 per book.

I'm not a coder; I don't write programs. But I have been dealing professionally with various OCR programs and print-to-etext conversion for over a decade. You vastly overrate the abilities of OCR programs.

They're good. They're not that good. Google's epubs are top of the line for what you can get from automated OCR--and they are riddle with typos, especially on title pages and chapter headings, which often have special fonts, and no automatic OCR program can deal with the weird names & other vocab in science fiction & paranormal stories.

Automated OCR has problems with ends of physical pages; they're guessing whether that's a paragraph break or not. Often, they guess wrong. (Well, not quite true. Often, they assume that a page break is a paragraph break, because they've got no way of knowing otherwise.

For newer books in the past 15 years, if the original book or author submitted it via digital format like DOC, TXT, RTF, PDF or something from a computer, it would cost less than 25 cents per ebook.

Call it the last five years; books older than that probably weren't saved. (Five years ago, a 200gb drive was *expensive;* business who weren't in the data retention business purged everything they could, every few months.) The submitted version is not the final-ready-for-print version, which could be in InDesign, Quark, PDF, Pagemaker, or some other program. There's no standardization across the industry, and often, the ready-for-print files contained atrociously useless metadata--sometimes the ISBN is in there, but more often, the document title is "Prisoneroftruth_draft3.doc Microsoft Word" and the author is "admin," or the first name of whichever person did the conversion to the print-ready program.

The text may have been fine-tuned for printing in ways that won't allow easy conversion; if styles weren't used, formatting could be lost on export, and any odd characters might've been manually placed instead of being part of the in-box text.

If they have them in nice sharp print-ready PDFs, converting out of that may wind up putting a hard return at the end of every line of text, depending on what program made the PDFs.

Converting from digital files to ebook formats could be done, but each book would need some manual checking: metadata, basic formatting, chapter headers, copyright page formatting. If it had footnotes, those are likely to be a nightmare; some ebook formats (*cough* epub) have no footnote support.

Of course some publishers or authors are requiring some ungodly amount of royalties per copy which is why some ebooks cost $30, and others cost $3.

They range from $3-30 because some authors are self-published and have no overhead charges (or have decided they can deal with .20 profit per book and hope sell enough of them to make the year they spent writing it worthwhile); publisher-set prices are all over the place because some of them think that every ebook sold is a lost hardcover sale and they've priced for that. And that's for fiction & pop nonfic; textbooks cost more because they've got a smaller market and cost much more to produce.

1) Resistance to the ebook formats by various people in the publishing industry. Using scare tactics and generalities to scare people into continuing to purchase paper based books.

Agreed, yes. Although I'm not sure that "scare tactics" is the right term; it seems they're more trying to say "weird new expensive tech; experiment if you like, but don't forget about what you're familiar with, what you know works."

2) They use cherry picked data and numbers to make it appear that they are making little to no money on any ebooks.

Oh yes, definitely. They're very cagey with any real data. So's Amazon, releasing comparative amounts ("sold more ebooks than new hardcovers!") without saying what prices were involved, and without mentioning numbers.

I'm not particularly concerned about publishers hiding data about ebook sales, because I know the market is such a tangled mess that it really wouldn't matter if we had accurate numbers.

[DMcCunney]

Originally Posted by screwballl

For paper books, get a text scanner that scans the pages of a book one by one or maybe 2 at a time, which converts it into either picture or text format (usually with existing OCR techniques), and from there a simple program, which even if it does not exist, can easily be programmed and created to convert that text into any format the ebook company wishes to use.

Done much of this? OCR is good and getting better, but is not perfect.

Depending on the quality of the source scan, there will be more or less errors, but there will be errors, which will require manual proofing against the source text to correct. (Ligatures are a particularly thorny problem.) That costs money.

And just getting it to text is insufficient. Once it is text, you need to add markup for things like text attributes and ToC links. There are tools to automate this, too, but they make assumptions about the input file that may not be true. (A good example being GutenMark.) Again, more manual work is required. That costs money.

From start to finish, the cost per ebook if converted from paper, is around $3-5 per book.

Don't you just wish. See above.

For newer books in the past 15 years, if the original book or author submitted it via digital format like DOC, TXT, RTF, PDF or something from a computer, it would cost less than 25 cents per ebook.

Dream on. The original source file may not exist. These days, the standard in publishing is to submit a Word document. The Word document is is worked on till an approved final manuscript, copy edited and proofread, is agreed upon. That gets imported to Adobe InDesign for typesetting and markup. The output from InDesign is a PDF file that goes to the printer, who feeds it to the imagesetter that makes the plates the book will be printed from.

In earlier days, submission was hardcopy. (And nobody submits in PDF. Manuscripts are subject to change, and need to be in a format which can be easily changed.)

Of course some publishers or authors are requiring some ungodly amount of royalties per copy which is why some ebooks cost $30, and others cost $3.

Royalties per copy are only one part of the cost of production, and do not account for the price differences you see.

So what we are seeing is several things here, most of which we have seen before and will see again:

1) Resistance to the ebook formats by various people in the publishing industry. Using scare tactics and generalities to scare people into continuing to purchase paper based books.

Such as? The publishers I know of are all well aware of ebooks, and the questions isn't "Should we do it?", it's "How do we make money doing it?"

2) They use cherry picked data and numbers to make it appear that they are making little to no money on any ebooks.
One company is showing numbers that just in the first 9 months of 2010, there has been $304.6 Million in sales, compared to the entire year of 2009 saw $164.8 million, there is OBVIOUSLY major profits being seen now.

There is nothing obvious about it. You quote total revenue. We do not know what the expenses were. It's quite possible to show revenue growth and still lose money.

First one I mentioned: International Digital Publishing Forum in conjunction with the Association of American Publishers (AAP). These are insiders using cherry picked numbers.
2009: $164.8 Million in US sales
2010: $204.6 Million in sales through Oct 2010

Second one I mentioned: Forrester Research Inc. that deals with independent and peer verified data.
2009: $301 Mil
2010: predicts $966 Mil. for the year

I've seen those reports. They are used internally by the industry to try to figure out what it going on. The intent is not to try to delude you.
______
Dennis

[Highroller]

Sorry. I don't buy it. Any publisher selling e-books for as much as hardbacks or in some cases more are money grubbing. I expect an e-book to at MOST to be priced about the same as a mass market paperback. As long as the book is published in paper AND e-book format, the e-book is going to have lower costs. You don't have to proofread and edit the book 2 times, one for the paper release and one for the e-book. No paper cost, no warehousing cost, no extra advertising cost, no shipping cost. A website to sell e-books is rather unlikely to cost more than the distr. and retailer cuts for paper books.

If publishers want to survive they have to stop thinking in horse-and-buggy mode and start thinking in automobile mode. Its adapt or die time.

[Seli]

Originally Posted by Ankh

I am not sure that "the industry", as we know it, can survive the change. It is to big, to slow, to inefficient to deal with the challenges of the digital content delivery. That delivery has opened a possibility, for the first time, to go "samizdat" with the minimal cost. There is no need for big publishing house and the printing plant.

What most of us would like to see is a situation where authors don't sell the rights. Instead, let them use the percentage of proceeds to finance editors, proofreaders, typesetters, cover artists. Grant them percentage of profits, let them share the risk and benefit from success.

Marketing? Easy. Let the accomplished authors use their names to appear either as co-authors (Baen is already experimenting with similar concept) or editors.

I sure would be interested to take a peak at any work that Neil Gaiman, Guy Gavriel Kay or Orson Scott Card decide to edit or co-author. Or to write a foreword for! A guild, a manufacture, a primitive form of ad-hoc project can concentrate the resources needed for high-quality works, and probably deliver them at very reasonable prices. Those reasonable prices are NOT enforced by customer rebellions, they are mandatory anti-piracy measure.

The authors or their works will not disappear as long as there are readers. That much is certain.

Congratulations, if you now just introduce some people that allow the rarest asset in the business to do what they do best (write books) you have just described the publishing industry.

[Ankh]

Originally Posted by Seli

Congratulations, if you now just introduce some people that allow the rarest asset in the business to do what they do best (write books) you have just described the publishing industry.

Oh no, no introductions, please.

You see, the essence of that little exercise in wishful thinking is getting rid of these "helpful people", taking away their cut, control over pricing, profits, and all nice games that they play with author on one side, consumers on the other.

[Seli]

Originally Posted by Ankh

Oh no, no introductions, please.

You see, the essence of that little exercise in wishful thinking is getting rid of these "helpful people", taking away their cut, control over pricing, profits, and all nice games that they play with author on one side, consumers on the other.

But in that way you have the actual writers do a lot of work that they might not be good at. And might not want to do.

Here is a nice quote from Cory Doctorow on his latest self-publishing experiment (admittedly dead-tree) from piece on the PW website here.

With a Little Help has helped me realize something: whatever I do next, I don't want to be in charge of all these moving parts. I can't be both a Zen, let-it-all-happen-at-its-own-pace writer and an aggressive, deadline-pushing publisher. If I were realistically going to keep up this publishing stuff, I would need to outsource every task that requires the virtues inherent in agents, editors, sales, marketing, distribution and retail, especially that willingness to tithe a large portion of my working day to logistics, follow-ups, and calls.

[Ankh]

Originally Posted by Seli

But in that way you have the actual writers do a lot of work that they might not be good at. And might not want to do.

I want authors NOT to sell their rights, to be in control and in direct link with their readers.

A good admin definitely costs less than mentioned "helpful people" under the current system, and who authors decide to bring on board, and how they decide to run their business and spend the money is up to them. A sticker from big name of the publishing industry, especially the "big five" behind the agency pricing scam is undesirable ballast, a dinosaur destined for extinction. I prefer to support art, not "the industry".

[DMcCunney]

Originally Posted by Ankh

I want authors NOT to sell their rights, to be in control and in direct link with their readers.

In the current model, authors do not sell their rights. They license a particular set of rights for a defined period.

A book contract is a license. The publisher licenses the rights to issue a book, in forms specified by the contract, for a period specified by the contract. The form may be hardcover, trade paperback, mass market paperback, print-on-demand edition, ebook, or some combination of the above. The period is governed by sales. If the book is allowed to go out of print (and the contract will define levels of ebook and print-on-demand sales that qualify as still in print), the author may ask that the rights revert, and attempt to resell the book to another publisher or self-publish.

The authors retain any rights not specifically covered in the contract, like foreign rights (sales to a foreign publisher) and movie and TV adaptation rights.

A good admin definitely costs less than mentioned "helpful people" under the current system, and who authors decide to bring on board, and how they decide to run their business and spend the money is up to them. A sticker from big name of the publishing industry, especially the "big five" behind the agency pricing scam is undesirable ballast, a dinosaur destined for extinction. I prefer to support art, not "the industry".

If you want art to be created, an industry around it is almost inevitable.

Artists want to create art, and get paid enough to make a living doing it. A writer simply wants to write books, and hopefully make enough to earn a living doing it. Most don't want to do all of the other things needed to get the book to a form others can read, and may be no good at them if they try.

It's why we have an industry: agents to represent their work to publishers interested in try to sell what they do, editors to work with them to make the finished product as good as possible, artists to create covers with compelling images to get people to look at (and possibly buy) the book, people to prepare the final manuscript for publication in print or electronic format, printers to print and bind the printed version and bookstores to sell it, as well as web vendors to provide the electronic versions.

All of those "helpful people" you denigrate are helpful - if they weren't there, the book would never reach you.

Assuming all authors can take the kind of control you posit is wildly optimistic. Assuming they should want to is profoundly silly. Most writers would rather spend their time and effort writing.
______
Dennis

[DMcCunney]

Originally Posted by Highroller

Sorry. I don't buy it. Any publisher selling e-books for as much as hardbacks or in some cases more are money grubbing.

Where "money grubbing" is defined as "Charging more than I want to pay"?

I expect an e-book to at MOST to be priced about the same as a mass market paperback. As long as the book is published in paper AND e-book format, the e-book is going to have lower costs. You don't have to proofread and edit the book 2 times, one for the paper release and one for the e-book. No paper cost, no warehousing cost, no extra advertising cost, no shipping cost. A website to sell e-books is rather unlikely to cost more than the distr. and retailer cuts for paper books.

A noble desire, and if all that existed were mass market paperbacks and ebooks, one that might be possible. The problem is hardcovers.

Most of this sort of discussion is colored by them. The hardcover makes the most revenue and carries the highest margins. The presence of hardcover bestsellers may make the difference between a publisher showing a profit for the year or taking a loss.

Let's say a new book is out in both hardcover and ebook format. What do you think the price should be for the ebook? If you say "No more than the mass market paperback", expect people involved in the process to point at you and laugh.

It's reasonable to expect no more than MMPB prices for an ebook of a book that is out in MMPB format. Expecting it for a book out in hardcover, competing with the hardcover is going some, even for wishful thinking.

For pure print books, people who don't want to pay the higher price for the hardcover wait for the MMPB. Expect the same with ebooks. Want it cheap? Expect to wait for it. Want it now? Expect to pay a premium for early access.
______
Dennis

[elcreative]

DMcCunney, nicely put, a refreshing touch of reality... be careful the "idealists" will be out to get you...

[Ankh]

Originally Posted by DMcCunney

It's why we have an industry: agents to represent their work to publishers interested in try to sell what they do, editors to work with them to make the finished product as good as possible, artists to create covers with compelling images to get people to look at (and possibly buy) the book, people to prepare the final manuscript for publication in print or electronic format, printers to print and bind the printed version and bookstores to sell it, as well as web vendors to provide the electronic versions.

Let me remind you that we are talking the very same industry, the system if you wish, that is struggling with the transition to the digital content delivery. Those friends of yours that you are concerned about? Something is not right, or you would not be concerned, I think.

The essential services that are involved in ePub production are very light, and the lion's share of the end product goes to the authors and those who deal with the story itself. First author, editors, proof-readers. Add to that formatting, cover art.

Come hell or high water these costs will be recognized by the market and the price of the end good MUST cover for them, or there will be no ebooks. The printing part of the business might easily go the Lulu route, print on demand.

All of those "helpful people" you denigrate are helpful - if they weren't there, the book would never reach you.

I did not denigrate the work of professionals needed for the process. I have a very low opinion of usefulness and need for the bulky infrastructure of a full blown corporation where small indie shops are cranking out the goods of the comparable technical quality (NOT comparable quality of the story and authors). Those various suited marketing types (who obviously have no clue how to deal with ebooks), "movers and shakers", agents, human resources personnel, building security costs, janitorial services and myriad of other small costs that tend to accumulate for a bulky, big corporation... I don't think that market is ready to pay for.

BTW, I am not writing these posts out of some abstract idealism. This is a straight application of similar predictions for my very own profession, where we might easily end up in "contractor economy". We might easily lose the permanency of our jobs and be employed on per product, or project, basis. It is more cost-effective model, and long-term planning has long time ago been thrown out, to make space for any possible optimization and quick profit in return.

[GA Russell]

Originally Posted by DMcCunney

Where "money grubbing" is defined as "Charging more than I want to pay"?

I have noticed in these threads about the big publishers that those who defend the publishers deny the concepts of price gouging and now money grubbing.

This I think is a moral argument.

[Andrew H.]

Originally Posted by Ankh

I did not denigrate the work of professionals needed for the process. I have a very low opinion of usefulness and need for the bulky infrastructure of a full blown corporation where small indie shops are cranking out the goods of the comparable technical quality (NOT comparable quality of the story and authors). Those various suited marketing types (who obviously have no clue how to deal with ebooks), "movers and shakers", agents, human resources personnel, building security costs, janitorial services and myriad of other small costs that tend to accumulate for a bulky, big corporation... I don't think that market is ready to pay for.

See, this is just nonsense. (And somewhat arrogant, too). Despite your assertions concerning "bulky" infrastructure, and your unwarranted claims that "suited marketing types" "obviously have no clue how to deal with ebooks," big publisher have *tripled* their sales of e-books in the past year, and they have done so while (mostly) adopting the agency model and substantially raising prices on the most popular books.

I'm not thrilled with this approach, but it has obviously been very successful so far.

Someone actually does know what they are doing.

BTW, I am not writing these posts out of some abstract idealism. This is a straight application of similar predictions for my very own profession, where we might easily end up in "contractor economy". We might easily lose the permanency of our jobs and be employed on per product, or project, basis. It is more cost-effective model, and long-term planning has long time ago been thrown out, to make space for any possible optimization and quick profit in return.

I don't know whether this will happen in your profession, but claims like this have been made before - specifically, that iTunes and similar mp3 providers would allow musicians to bypass expensive publishers and sell directly to consumers. But by and large these claims haven't panned out - a very small number of already established musicians (i.e., Radiohead) have sold directly to their consumers...but it seems that the vast majority of people still want music put out by traditionally published musicians. (They may want them for free...but they still want those groups and not "Jimmy and the Self-Producers".)

Some indie authors will undoubtedly find success self-publishing, and some established authors who have lost their publishing deals may go this way as well. But just as podiobooks.com has not hurt audible.com at all (if anything, it has probably driven people to audible), indie books aren't going to drive people away from traditionally published books. What people want, and will pay for, are high quality well-edited books. Traditional publishers are and will remain the source of these books because there's not really another option. (As even Cory Doctorow's experiment seems to have shown.)

[Ankh]

Originally Posted by Andrew H.

Despite your assertions concerning "bulky" infrastructure, and your unwarranted claims that "suited marketing types" "obviously have no clue how to deal with ebooks," big publisher have *tripled* their sales of e-books in the past year, and they have done so while (mostly) adopting the agency model and substantially raising prices on the most popular books.

Do you consider claims that ebook sales have tripled year-over-year a success, considering the rate of proliferation of ebook readers (and generic tablet platforms that can be used as readers, like iPods)?