DOJ suing Apple over ebooks.

[rhadin]

Originally Posted by fjtorres

That same content, translated to a low overhead specialty cable network like A&E, LIFETIME, HBO, SYFY, or SHOWTIME can make a ton of money off that "limited" audience.

Of course they can. They are charging each cable operator either a per viewer fee regardless of whether that viewer ever watches their channel or a high subscriber fee in the case of HBO.

I'd like to see them compete in a true free market where I could buy access to just the channels I want to watch. One recent report stated that a la carte pricing, which several cable companies would like to impose, would result in the demise in of 75% of existing cable channels and in the case of things like sports, especially local sports, would require viewers to pay as much as quintuple current monthly fees.

For example, I never watch sports on TV yet I pay ESPN nearly $5 every month for access to channels I do not want.

My wife watches a total of 5 channels; I never watch TV at all. Yet we pay close to $100 a month so that we can be given 220 channels that should be allowed to die. Compared to the cable channels and cable providers, the BPHs are saints, not sinners, with their pricing and business schemes.

[Greg Anos]

Originally Posted by rhadin

Of course they can. They are charging each cable operator either a per viewer fee regardless of whether that viewer ever watches their channel or a high subscriber fee in the case of HBO.

I'd like to see them compete in a true free market where I could buy access to just the channels I want to watch. One recent report stated that a la carte pricing, which several cable companies would like to impose, would result in the demise in of 75% of existing cable channels and in the case of things like sports, especially local sports, would require viewers to pay as much as quintuple current monthly fees.

For example, I never watch sports on TV yet I pay ESPN nearly $5 every month for access to channels I do not want.

My wife watches a total of 5 channels; I never watch TV at all. Yet we pay close to $100 a month so that we can be given 220 channels that should be allowed to die. Compared to the cable channels and cable providers, the BPHs are saints, not sinners, with their pricing and business schemes.

Shrug. I simple dropped cable. however I pay the price. I'm not "current" with the rest of the world. I get news from internet sites, for free, and if I think I want to watch a particular TV show (extremely rare), I wait until it comes out on DVD. Then I have it and it's reruns forever... All at less than the cost of cable.

(My next show acquisition will be the 1st season of Maverick (1957). 6 discs of a comedy/western, with probably 24-26 hour long episodes for $30. I watch the sampler years ago and have been waiting ever since for it to come out. Black and White, but I like B/W movies and shows...)

That's the point of disintermediation, I'm not dependent on mass-market providers who used to dictate when I consumed my media, and only from the limited palette that they chose to offer at any particular time. Same thing with books. I can buy and read an old book just as readily as a new book. I just spent $104 dollars at Jack Vance's website for The Demon Prince series the Tchsai series, the Big Planet series, and 5 volumes of short stories. They all have been out for years in paper. I could have spent the same money with the BPHs, but why? I don't care about being "current".

[DiapDealer]

Originally Posted by stonetools

One interesting fact is people bitch against the BPHs incessantly on the News forum- but buy and recommend their product just as incessantly, if the Recommendations forum is anything to go by. They are doing something right.

I'd say that could just as easily be construed as proof of their overall irrelevance.

[Elfwreck]

Originally Posted by stonetools

Do you have any statistics to support the claim that BPHs do in fact make money in the long run on such books? In real life these books are seen as losses by publishers and investors alike and thats what counts.

The Myth of the Unearned Advance:

The implication then is that a book isn’t profitable if it doesn’t earn out its advance. The publisher overpaid and has lost money. The author is the happy camper who is counting their cash gleefully celebrating the failure of their publisher to project sales correctly.

Let me try to explain why that isn’t always true. And to do so means we have to do math together.
...(snip examples with numbers)
In this comparison it is the book that didn’t earn out the advance that actually makes more money for the publisher!

Why? Because scenario one pays a lower royalty per book sold.

Does the publisher lose money if my book doesn’t earn out?

Let's take some big book the publisher is doing with a celebrity. She's created a $25 hardcover book, and the publisher has paid her a $100,000 advance.
...
So take the $12.50 the publisher received for the book and subtract author royalties ($2.50), hard costs ($3.75) and overhead ($2). Conservatively, the publisher is left with $4.25 per book after paying all the bills. In essence, the publisher is making more money per book than the author is making. (And no, there's nothing wrong with that.)
...
let's say the publisher printed fifty thousand copies and sold half of them. They received $312,500 from bookstores ($12.50 x 25,000 copies sold). They credit the author her royalty of $84,375 ($2.50 x 5000; $3.125 x 5000; $3.75 x 15,000). The author hasn't earned out — she's still in the red $15,625. The publisher is left with $228,125. Out of that they pay $150,000 on printing ($3 x 50,000) and $50,000 in overhead. So the publisher is left with a profit of $28,125. Even if they write off the rest of advance, they're sitting on $12,500. Maybe they remainder the rest of the books for a dollar each , so they just got in another $25,000 (and royalties aren't paid on remaindered books), so now the publisher has $37,500. Did you follow that? The book did NOT earn out, but the publisher still made money.

Publishers like everyone else who produces for the market can't predict the future. If you have some kind of strategy for predicting what books will be popular next year, please share it.

I'm working with an erotica publisher because I expect those stories will be very popular for at least the next few years. HarperCollins is welcome to jump on the explicit BDSM gay prostitute fiction bandwagon, if they'd like.

Publishers are like major league hitters. They put out the best product they can and hope to get a hit .300 of the time. Its the nature of the business-not a defect in their business strategy.

Small businesses don't have the cushion that allows a 70% failure rate. And what's reasonable to set as a challenge in sports is not necessarily a good plan for business.

That's six names. Count that against the hundreds (if not thousands) of names of authors developed by BPHs. Thanks for making my point. Note all are genre fiction writers- and not the top rank either.

I didn't question that most *current* well-known authors are from BPHs. I'm pointing out that non-BPH authors are selling millions of books, and no longer need BPHs to do so.

Or to go in debt faster. Another downside, as Charles Stross points out, is that writers who are marketing, editing, proof-reading, looking for cover art, etc, are writers who aren't writing.

Writers who aren't doing those things, and don't have a contract with a publishing house, are writers not making money at their craft. I'm not questioning the value of publishers for writers--I am questioning the value of BPHs, and pointing out that the value of other publishers is limited.

There are thousands of authors for whom BPH contracts are not going to happen--and now those authors have access to the public, and if their ideas are good enough and presentation skills solid enough (which may include "find someone to edit & format this for me"), the public gets access to their works. And from the revenue some of them are getting, the public is very happy with this change. Implying this is an irrelevant shift because none of those authors has yet won a Pulitzer or Nobel prize (or similar measure well-known talent recognition) for their writing is a very skewed interpretation.

[Fbone]

Originally Posted by fjtorres

I know that.

The point is that raising prices (thereby reducing total unit sales and reducing their authors' income) to protect their market power in the short term is going to have negative long-term consequences. And among those is the fact that they have effectively legitimized self-publishing among *authors*.

They conspired, sacrificed the author's income, and now face a legal mess.
All for a small short term gain during boom times.

What are they going to do when the boom times end and the market growth levels off? Improvise another magic bullet?

I keep hearing predictions that ebooks will become 80% of the market so we have a very long way to go.

[Greg Anos]

Originally Posted by Fbone

I keep hearing predictions that ebooks will become 80% of the market so we have a very long way to go.

But that doesn't mean the the total market (E + P) is growing like a weed...

[Greg Anos]

Actually Elfwreck, the numbers aren't right. you can't use $3.75 for hard costs in one place and not the other. See attached.

Let's take some big book the publisher is doing with a celebrity. She's created a $25 hardcover book, and the publisher has paid her a $100,000 advance.
...
So take the $12.50 the publisher received for the book and subtract author royalties ($2.50), hard costs ($3.75) and overhead ($2). Conservatively, the publisher is left with $4.25 per book after paying all the bills. In essence, the publisher is making more money per book than the author is making. (And no, there's nothing wrong with that.)
...
let's say the publisher printed fifty thousand copies and sold half of them. They received $312,500 from bookstores ($12.50 x 25,000 copies sold). They credit the author her royalty of $84,375 ($2.50 x 5000; $3.125 x 5000; $3.75 x 15,000). The author hasn't earned out — she's still in the red $15,625. The publisher is left with $228,125. Out of that they pay $150,000 on printing ($3 x 50,000) (should be $187,500 $3.75 x 50,000) and $50,000 in overhead. So the publisher is left with a profit of $28,125 (loss of $9375). Even if they write off the rest of advance, they're sitting on $12,500 (loss of $25,000 ($15,625 + 9375)). Maybe they remainder the rest of the books for a dollar each , so they just got in another $25,000 (and royalties aren't paid on remaindered books), so now the publisher has $37,500 (breakeven $0). Did you follow that? The book did NOT earn out, but the publisher still made money broke even.

I know I'm a math geek, but I want the argument to be right. The breakeven point is 50% of sales in this example....

[InsulinJunkie72]

Originally Posted by fjtorres

The networks would (and still do) sneer at product that is well received, avidly followed by millions, yet doesn't cover *their* high overhead and expectations.

That same content, translated to a low overhead specialty cable network like A&E, LIFETIME, HBO, SYFY, or SHOWTIME can make a ton of money off that "limited" audience.

The networks and the major cable networks are generally the same companies (and that was even more true before CBS and Viacom split up a couple of years back - now CBS only has Showtime and its half of the CW), so they've sort of got all bases covered

While acceptable ratings in the key advertiser demos for a individual channel can be lower - since the same company generally owns many cable channels, and also gets carrier fees on top of advertising - and allow for some more specialized programming, there still is a general "lowest common denominator" mentality at work. Look at the shift in programming on channels such as A&E, BRAVO, History Channel, TLC, Discovery etc. over the last few years.

Even on cable, a "Terriers" that's critically acclaimed, but gets bad ratings in the key demos, met the same cancellation fate it would on a regular network.

[sabredog]

The bubble is beginning to expand further.

I am not sure what to make of this at this stage. Could be greedy law firms trying to make a quick buck. But I see that the evil empire has been mentioned yet again by tin hatted haters of Amazon, believing that their favourite hate object might be behind the whole thing, who knows...

http://www.teleread.com/paul-biba/pu...-price-fixing/

[Fbone]

Originally Posted by Ralph Sir Edward

...
So take the $12.50 the publisher received for the book and subtract author royalties ($2.50), hard costs ($3.75) and overhead ($2). Conservatively, the publisher is left with $4.25 per book after paying all the bills. In essence, the publisher is making more money per book than the author is making. (And no, there's nothing wrong with that.)
...
let's say the publisher printed fifty thousand copies and sold half of them. They received $312,500 from bookstores ($12.50 x 25,000 copies sold). They credit the author her royalty of $84,375 ($2.50 x 5000; $3.125 x 5000; $3.75 x 15,000). The author hasn't earned out — she's still in the red $15,625. The publisher is left with $228,125. Out of that they pay $150,000 on printing ($3 x 50,000) (should be $187,500 $3.75 x 50,000) and $50,000 in overhead. So the publisher is left with a profit of $28,125 (loss of $9375). Even if they write off the rest of advance, they're sitting on $12,500 (loss of $25,000 ($15,625 + 9375)). Maybe they remainder the rest of the books for a dollar each , so they just got in another $25,000 (and royalties aren't paid on remaindered books), so now the publisher has $37,500 (breakeven $0). Did you follow that? The book did NOT earn out, but the publisher still made money broke even.

I know I'm a math geek, but I want the argument to be right. The breakeven point is 50% of sales in this example....

Also, the average royalty is $3.375 not $2.50. Subtracting from $12.50 - $3.37 - $3.75 - $2.00 = $3.375. The publisher and author receive the exact same amount on an individual basis. This is why Ralph Sir Richard broke even. Any further books sold above the initial 25,000 would be profitable to the publisher and after about 4200 additional books profitable to the author if the royalty rate is constant. Any little change in the assumed costs and this fails.

[stonetools]

All this arithmetic is edifying, I guess, but all it proves is that in certain circumstances the publisher can make money if the book doesn't earn out it advance. The issue is whether in most cases the publisher makes or loses money where the book doesn't earn out in advance. If you look at the wording it appears that the usual case is that the publisher loses money but it is not necessarily so. It depends on the size of the advances and how well the book sells.It seems clear that the publisher is in fact risking capital in paying advances to authors , and therefore continues to play a crucial role in bringing a book to market.

[Greg Anos]

Originally Posted by stonetools

All this arithmetic is edifying, I guess, but all it proves is that in certain circumstances the publisher can make money if the book doesn't earn out it advance. The issue is whether in most cases the publisher makes or loses money where the book doesn't earn out in advance. If you look at the wording it appears that the usual case is that the publisher loses money but it is not necessarily so. It depends on the size of the advances and how well the book sells.It seems clear that the publisher is in fact risking capital in paying advances to authors , and therefore continues to play a crucial role in bringing a book to market.

Only for such books that wouldn't be written without an advance. Which we see today is not the only way books are written.

(Actually in the past, some authors didn't get advances to write. Heinlein, for example, was notorious for not getting an advance for any book until he turned in a completed manuscript. He thought doing so was unprofessional.)

[kennyc]

Originally Posted by Ralph Sir Edward

Only for such books that wouldn't be written without an advance. Which we see today is not the only way books are written.

(Actually in the past, some authors didn't get advances to write. Heinlein, for example, was notorious for not getting an advance for any book until he turned in a completed manuscript. He thought doing so was unprofessional.)

Good for him!

[fjtorres]

Originally Posted by kennyc

Good for him!

Heinlein got his start in the magazines, where most work was only paid for after acceptance or after publication.
(Or upon lawsuit in some cases.)
Established writers did interact with the editor so not all work was "on spec" but to ask for an advance was indeed considered somewhat "tacky".
(Or that one was in bad financial situation; which many were but hardly wished to advertise. It was an age where personal dignity actually mattered.)

[ScotiaBurrell]

wall street journo http://www.google.com/url?sa=t&rct=j...YDsZJr75EFa76w

'I don't think you understand. We can't treat newspapers or magazines any differently than we treat FarmVille."

With those words, senior Apple executive Eddy Cue stuck to his take-it-or-leave-it business model of a 30% revenue share payable for transactions through the iTunes service. Despite my arguments to Mr. Cue in Apple's Cupertino, Calif., offices last year on behalf of news publishers seeking different terms, to him there was no difference between a newspaper and an online game.

It was a sobering reminder that traditional media brands have no preferred place in the new digital world. It also should be the defense's Exhibit A in the Justice Department's antitrust case against Apple and book publishers: The 30% revenue-share model is Apple's standard practice, not, as alleged by the government, the product of a conspiracy.

Whether it's news, games, apps or books, Apple's position is the same. The market determines the price, and Apple gets 30%. The Justice Department fails to acknowledge anywhere in its 36-page complaint against Apple and book publishers that this is the standard approach.