Do some publishers have any idea?

[Hitch]

Originally Posted by Timboli

Well, ultimately it could depend on how many books you sold, but are you saying that's all the author gets? What about the publisher?

It's not uncommon that yes, that's the author's share. And the publisher needs the book to "earn out" before they get to pocket any so-called profits.

There are so many factors involved when developing and providing a book, and quite a difference between authors and publishers.

I am quite happy to listen to a well supported argument in support of why things are priced the way they are and even if they should cost more. But what I refuse to believe, is ebooks aren't significantly cheaper to provide than physical books.

May I ask, what is it that you think constitutes the real "cost" of book production? If your thought process is that it's all the paper and ink, then I can see why you would believe this. But if you look at the bigger picture of "costs," then perhaps it would be less confounding.

The real "costs" of producing a book of quality aren't limited to just the printing. And every publisher has to balance those costs, too--for example, surely, fans of poetry aren't deluded enough to think that the books that they buy and love, in the bookstore, are profitable for publishers, do they? What about kids' books, kids' picture books? Does everyone here think that they're kicking ass and taking names, in the profitability department?

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!).

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.

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.

Does paper printing cost MORE? Yes, of course it does. But the real costs involved in creating a book, the bigger drivers, are the intangibles, not the DT costs.

It's not like there aren't many authors and publishers out there, already doing the fair thing.

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.

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.

Offered FWIW. Just my $.02.

Hitch

[pwalker8]

Originally Posted by DiapDealer

I don't pre-order very often, but whenever I have, it has always felt like a mini-surprise-birthday party when the book "magically" appears on my reader.

I might have 10 or so pre-orders a year, usually favored authors coming out with new books. Given that many authors only come out with a book every year or so, it can be hard to remember to check. Authoralerts use to handle a lot of this for me, but Amazon pulled the plug on them.

[ekbell]

Originally Posted by Hitch

It's not uncommon that yes, that's the author's share. And the publisher needs the book to "earn out" before they get to pocket any so-called profits.



May I ask, what is it that you think constitutes the real "cost" of book production? If your thought process is that it's all the paper and ink, then I can see why you would believe this. But if you look at the bigger picture of "costs," then perhaps it would be less confounding.

The real "costs" of producing a book of quality aren't limited to just the printing. And every publisher has to balance those costs, too--for example, surely, fans of poetry aren't deluded enough to think that the books that they buy and love, in the bookstore, are profitable for publishers, do they? ....
...... 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.

Offered FWIW. Just my $.02.

Hitch

My much less knowledgeable prospective is that book publishers are required
to be gamblers. For every successful run they have multiple failures and they need to price their books so that they'll still make a profit. And to make matters worse they have no guaranteed method of determining ahead of time which books will have successful runs.

And yet I've still been able to regularly buy books on sale from main stream publishers for two to four dollars Canadian. Only four of my last fifty books (excluding those for which I paid no money) cost more then five dollars Canadian. While this count includes the twenty volumes of Galaxy's Edge, most of the rest were published by mainstream publishers.

[ FYO these fifty books were purchased between Dec 3, 2018 to Mar 29 of this year or why I'm not keeping up with my TBR list. ]

Complaining that I can't buy every single book I want exactly when I want at the price I want seems churlish given that before ebooks I could never have been able to afford to buy fifty books in three months.

[DuckieTigger]

@Hitch: Hi, could you elaborate on real world print costs for publishers in small, medium, large runs? The only reliable data that I can find is pricing for POD which is about $4-$6 for normalish paperbacks. That is also the surcharge many Indies charge for print books when they offer both ebook and pbook. Naturally I would not expect them to do otherwise as they are just passing on the cost to the (few?) that really really want a pbook. Only thing I remember is that big run of offset mass market paperback is around $1, and hardcover around $4. Is that still accurate today?

Highly interesting what you said about the children's books. Coincidentally I recently bought a really nice one from Goodwill for 50 cents. It looked pretty much brand new. But I wouldn't have paid list price for it, or even what Amazon wants for it (link). To be fair, two of our grandkids really enjoyed the book and read it multiple times by themselves already (a Kindergartner and a Firstgrader). For how long it entertains the value is not there in my mind at new prices.

[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.

[gmw]

Originally Posted by darryl

[...] 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.
[...]
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. [...]

The thing that is not obvious in what Hitch was saying is that the big publishers are not choosing to lose money on children's books (and poetry and so on) for purely philanthropic reasons. There is a lot going on for which the financial details must be fairly ... interesting to analyse.

Partly there is a reputation aspect to this. A publisher is one of the big 5 because they publish as widely as they do.

Part is how scaling works. Printing presses and the people to run them cost money even when sitting idle, so printing books that merely break even can still be a positive. Some loss may be acceptable.

The same sorts of justifications exist for other infrastructure items. If you already own/employ them then you should keep them busy. If/As the industry evolves to more outsourcing this factor will change.

So even books that don't make significant money for the publisher contribute to keeping the publisher's resources in place for those books that do make significant money (and allow them to be produced at an overall lower cost).

There are probably other reasons too. Sometimes increasing scale changes things that are not obvious at smaller scales (and vice versa for that matter). It's why I get a bit frustrated with threads like this. If you're not in the middle of it, you're only seeing part of the picture.

[darryl]

@gmw. I don't doubt that you are correct on this. However, If Hitch is correct about cross-subsidies, and I think she is, it seems to make little difference to the discussion. If such cross-subsidies cease, then Publishers are faced with the decision of whether the advantages you refer to are sufficient to justify their continuation of these practices. Are they prepared to lose more money on printing loss making books, or will they no longer do so? Is producing loss making books both necessary and worthwhile to keep the resources in place for profitable books? Is the increased scale achieved by printing unprofitable books sufficiently cost effective to justify printing non-profitable ones? These are questions that they need to deal with. They will be competing with Indies who not only do not engage in such cross-subsidisation, but pay authors more and charge readers less.

[pwalker8]

I do get the impression that some here have no idea how things work in the world of holding companies and large corporations, especially large privately held corporations that are not driven by stock prices.

Here is a link that describes exactly how complex it all is.

https://www.bookbusinessmag.com/post...ok-publishing/

For all of the big 5, they are a small part of a much larger holding company. Try tracing the ownership of say, Penguin Books.

It's an interesting article, though I would treat the actual numbers used with a lot of skepticism. As he mentions at the start of the article, there are very few numbers actually reported by the companies themselves.

[DuckieTigger]

@darryl: I think that the Big5 have to continue to cross subsidize. Why? Because they cannot know in advance which books are going to be hits. If they slim down and only go after the most promising and profitable genres and books, then two things will likely happen. First they will have the same problem as before except with a lot less books. Now the giant superstars are subsidizing the mini stars. And second the far more fatal thing for the Big5: Who do you think is going to fill the void that is left by cutting loose all the "undesirable" genres and books?

[DuckieTigger]

Originally Posted by pwalker8

I do get the impression that some here have no idea how things work in the world of holding companies and large corporations, especially large privately held corporations that are not driven by stock prices.

Here is a link that describes exactly how complex it all is.

https://www.bookbusinessmag.com/post...ok-publishing/

For all of the big 5, they are a small part of a much larger holding company. Try tracing the ownership of say, Penguin Books.

It's an interesting article, though I would treat the actual numbers used with a lot of skepticism. As he mentions at the start of the article, there are very few numbers actually reported by the companies themselves.

How exactly is that relevant to the threat of who owns who and who controls who? Don't get me wrong, it is interesting. It is also interesting that all of Amazon's book department (all book sales, reading devices, imprints) is just a small drop in the bucket of all of Amazon. Nothing different there than with the owners of the Big5. At least from a business standpoint, moral issues completely ignored.

[darryl]

@Duckie. They're already doing it to a large extent. Anecdotally they've cut most of their mid-list and are insisting on even harsher terms. The cross subsidies that Hitch was referring to were for works never likely to be profitable which she referred to as specialty books. She wrote:

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.

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."

ekbell expanded this to refer to cross-subsidies in a more general sense than Hitch's specialty books, basically the flops in a sense being subsidised by the successes, which is inherent in their business model:

book publishers are required to be gamblers. For every successful run they have multiple failures and they need to price their books so that they'll still make a profit. And to make matters worse they have no guaranteed method of determining ahead of time which books will have successful runs

.

I think the Big 5 has the option to choose not to publish the type of books Hitch referred to. These are books where they don't even expect to make a profit. However, the type of books ekbell referred to, the ones they intend to make a profit on but don't, are part and parcel of their business model. In some ways publishers are like venture capitalists or professional gamblers or real estate agents. Successes and failures are part of their business model, and the successes in a sense subsidise the failures. Even an e-book, though it has effectively no marginal costs, does as Hitch pointed out have substantial initial costs. At least the better ones do. In the case of an author self publishing through KDP, they themselves bear their own costs. Indie publishers, in fact any publishers who bear costs or pay advances must bear this risk as part of their business.

[crossi]

You haven't mentioned the life plus 70 years of copyright. The publishers don't need get their investment back the first year it's published. They've got another 100 or more years with no further expenses to offset profit on ebooks. And don't tell me about the cost of the servers and people to run it. They can use the same one they use for payroll and other admin uses. The additional cost per each ebook is nothing. They can easily store all the ebooks they've ever published on a desktop, or more probably on Amazons server business.

[Timboli]

Originally Posted by janrey

I have gotten around the breaking the rules in loaning. I had purchased my mom a kindle years ago and set it up on my account so she could read whatever I purchased. Occasionally she would accidentally order a book since she had the kindle with ads which was quite ok with me but I would just call her and ask if she meant to order it and since she didn't I just returned it. Amazon was quite good about it. I also bought a friend a kindle and set her up with it using my account. She would never order a book. She has also drifted back to real books as she preferred them but she will sometimes take the kindle on a long trip rather than cart books around. The nice thing is that they don't see your password at all on the device so there is no issue with someone who proves untrustworthy getting into your account and ordering a room full of furniture ;-). It is also easy to go online and remove the device from your account if things don't work out.

True, and I have contemplated such at various times.
Until my wife got her Tablet, she sometimes used whatever Kindle of mine I wasn't using. With the Family option that we've had for a while, but not available if we swapped to the Amazon AUS store, she also has access to all my ebooks (and vice-a-versa), and she has actually read more of the ones I got via BookBub, than I have. Of course, when I check the BookBub email every day, I keep in mind books that she and my mum might be interested in and grab them. My wife did also join BookBub, but quickly got fed up with all the emails, preferring to leave it to me. She's been enjoying the odd Cozy Mystery ebook.

If I was rolling in the money, I would buy an ereader for each member of my family, plus my mum and maybe one or two others. But a big part of me also says, "Why should I have to?" Removing DRM is another option I guess.

[DuckieTigger]

Originally Posted by Timboli

If I was rolling in the money, I would buy an ereader for each member of my family, plus my mum and maybe one or two others. But a big part of me also says, "Why should I have to?" Removing DRM is another option I guess.

Doing both is not mutually exclusive (unless you have moral and or legal issues with DRM removal). You need some kind of device anyway to read. Buying devices for others, even if they are family, should not be a decision for you alone to make. I would at least wait for some hint of: I wish I had my own reader for outside reading instead of the tablet. Worth considering is the DRM removal option anyway. It opens the choice of reading device and ebook store (well limited to those that can be DRM freed).

[Timboli]

Originally Posted by DuckieTigger

Why don't you then instead of complaining? Your solution to your problem is so obvious that nobody else dared mention it. Simply stop buying books altogether right now. Problem solved, no more worries about unfair book prices. Consider buying your next book after reading what you got.

Call it complaining if you want, but I see it as a discussion about what is both fair and unfair.

The rest of what you say is nonsensical, but I will answer it anyway, just in case you were serious and not exactly the smartest kid on the block.

Like many, I buy a book, that interests me, when I see it usually, if a fair price or less, just in case I never see it again or forget about it. One could of course make huge lists of such books instead, but not very practical.

I haven't been someone who buys a book then instantly reads it, since I was a teen. Sure that might still happen on rare occasions, but it is far from the norm.

Part of the problem is I love so many authors at this point in time, that it is impossible to keep up with their releases. Then there is the matter of reading what I am in the mood for, then there is other aspects of life that impact your reading.

Inevitably, if you are any kind of decent bookworm, you fall behind.

While I lament that I will never read all I have left to read in my remaining lifetime, not to mention the many I want to re-read, I am not unhappy overall with my situation. In fact I feel like a King, because I can almost guarantee, that I have a brilliant book for many moods, that I can instantly get access to and start reading ... and I'm not just a reader, I am also a collector.

And the way I figure it, publishers should be very grateful to collectors of my calibre, for they have received a ton of my money over the decades.

Here's just a snapshot of my Booklist. It does not include the majority of free ebooks I have gotten from Amazon in the last couple of years.