Gizmodo: How Much It Actually Costs to Publish an Ebook vs. a Real Book

[Daithi]

Originally Posted by DawnFalcon

Not quite true. Webrights Inc. who run Webscriptions are a separate company.

From here:

"Webscriptions is Arnold Bailey's company. He has a contract with Baen to provide web services to Baen, to provide the production process for webscriptions, to take the money for webscriptions and pays baen their cut of the take. Arnold keeps a percentage, which I know, but don't think I'm authorized to share, off the top of the webscriptions sales. In exchange for that, he runs the bar, runs and develops Baen's other web sites, and runs the free library stuff.""

Thanks for info DawnFalcon. I wasn't aware that Baen had contracted with an outside company to provide their web services, however it doesn't surprise me. The article you quoted didn't say how much Arnold Bailey takes in commission but I'd be surprised if it was anywhere near a traditional retailers cut (but this conclusion is based on nothing but an educated guess).

[JoeD]

Originally Posted by Elfwreck

The table of costs is fascinating:



So, how does Baen stay in business? They must be going bankrupt. Or only making pennies per book. Which would put them close to going bankrupt, right? (And does anyone really believe publishers pay more than 3/4 the marketing cost of a hardcover on each of their ebooks?)

That's fine for justifying ebook prices whilst the hardcover is out, but how about they justify not dropping the cost significantly when the mass paperback is out? Rework the percentages for a mass paperback at $7.99 to get the ebook cost and wonder if we'll ever really see that happen.

[Dumas]

Originally Posted by DawnFalcon

A per-sale model really doesn't display the realities. It's a mixture of fixed and per-sale costs..a large percentage of fixed cost is for printing books that get returned. Also, the cost for ebook "design, typesetting, copysetting" is far too high even on their model.

While I'm not sure we can know if figures shown are too low or too high, we can certainly know that their model incorrectly mixes fixed and variable costs and is therefore fundamentally flawed.

My take-aways/translations from the article:

1. "consumers ... have developed unrealistic expectations about how low the prices of e-books can go" means we (the publishers) must change this expectation and Matoko Rich has tried to help us with this article.

2. "printing costs may vanish" means the marginal costs of eBook production is zero.

3. "a raft of expenses that apply to all books, like overhead, marketing and royalties, are still in effect" means there are fixed costs (except for royalties, a variable cost) which would be incurred whether or not an eBook is offered/sold.

4. "Under the agreements with Apple, the publishers will set the consumer price and the retailer will act as an agent" means that publishers are somehow able to engage in what I understand by definition to be the practice of price fixing.

5. "At a glance, it appears the e-book is more profitable. But, ..." means it either is or it isn't. Since it is and e-books are bad for the status quo, the profitability of e-books must be shown to be a bad thing. Should "out of print" even be part of our lexicon in this day and age?

hence,

6. "e-books still represent a small sliver of total sales, from 3 to 5 percent." means they are not selling enough which would have nothing to do with publishers making e-books available or delaying their release in conjunction with the publication of new titles.

7. "publishers want to avoid lower e-book prices (because) print booksellers would be unable to compete means we (publishers) intend to push the price of a product as high as possible, leading to profits for all sellers, another component of price fixing.

In summary, e-books = change for the publishing industry and that is bad, bad, bad.

Shatzkin said, "The simplest way to slow down e-books is not to make them too cheap." I think he really wanted to say, "The simplest way to slow down e-books is not to make them."

[dmaul1114]

Originally Posted by JoeD

That's fine for justifying ebook prices whilst the hardcover is out, but how about they justify not dropping the cost significantly when the mass paperback is out? Rework the percentages for a mass paperback at $7.99 to get the ebook cost and wonder if we'll ever really see that happen.

Hardcover and paper back printing and shipping costs aren't all that drastically different--certainly not enough to explain the price of hardcovers vs. paperbacks. Probably $1-2 tops per copy more to print and ship a hard cover.

They just use the higher cost of hard covers to help make back the author's advance and other expenses etc., and thus up their long run profits vs. just putting out a cheap paper back from the start.

But I do agree that e-books should follow the same pricing scheme. Cost more when the print version is just the hardback, and then drop in price when the paperback comes out.

[Dumas]

Originally Posted by lilac_jive

I think we're all forgetting the extra cost of medication for the bigwigs in publishing to deal with all the change that comes with ebooks. That can't come cheap.

Ahhh ... perhaps therein lies the reason for why ebooks must be priced so.

[fugazied]

Originally Posted by lilac_jive

I think we're all forgetting the extra cost of medication for the bigwigs in publishing to deal with all the change that comes with ebooks. That can't come cheap.

lol brilliant.
However I wonder if they have skipped some e-book costs in this calculation. There might be some cost involved in creating the various e-book formats. Sure it's probably not much, but there may be cost there.

The re-sale issue is a big deal because those print copies often flow around the marketplace after their initial sale, perhaps getting sold another 20 times at second hand bookstores and lent to people. Publishers might not appreciate that enough - e-books with their current restrictions actually push people into buying new copies. As long as they price them very cheap that is no problem!

[mcl]

Marketing? I've never seen any marketing specifically for an ebook version of a book that's out in physical form.

Furthermore, I sincerely doubt the proofing costs, as ebook variants of DTBs are often rife with errors that should have been caught. And editing? I've yet to see any ebook variant of a DTB that's been re-edited specifically for the format. Layout, sure. But editing? No.


Still, the bottom line, even with the chart as it stands: The authors make less per sale, and the publishers make more per sale, as compared to the same DTB.

And this assumes the agency model (note the $12.99 retail price, and the retailer payout amount). Yet another reason to oppose it.

[rhadin]

Originally Posted by Elfwreck

I suspect there's no "typesetting" for ebooks; they don't arrange how much fits on a page for .mobi or .epub, and there's no kerning/leading/orphan control.

There is a typesetting cost for ebooks, even if the book will only be released as an ebook. Granted there is less of a cost for fiction than for a book replete with illustrations and tables, but there is still a typesetting cost.

Originally Posted by Elfwreck

I want to know what they're basing the rest of that number on--how many books are assumed in the print run, that it's $.50 each for the copyediting & layout of a book?

That's the problem with the numbers. If editing costs $1,000 and only 1 ebook is sold, then the cost for that ebook is $1,000. If 1,000 copies are sold, then the cost is $1 per ebook. So I don't understand how they get the $.50 figure or why that figure is different between ebooks and pbooks.

Originally Posted by Elfwreck

But copyediting isn't a per-unit cost, and it's not a percent-of-sale cost like the author's cut. And neither is marketing. I'd like to know what they're basing those numbers on. Ebooks don't cost $.50 each to edit; they have an up-front editing cost that's hoping to be spread out over expected sales--which numbers they aren't telling us.

Absolutely correct. When I edit a book, I am not told whether it will be a pbook, an ebook, or both. It doesn't matter to the editing process and my fee is the same regardless.

However, my fee can change significantly depending on the type and extent of coding that is expected as part of the editing process. Some coding is more difficult and less automated than other types; some forms are simply more time-consuming; and some command a higher price because they are not a common skillset for editors.

At least for editing, these figures have to be taken with a shipload of salt.

[rhadin]

Originally Posted by Daithi

Baen has a great business model. They have embraced ebooks in a big way, but they also stay in business by cutting out the middleman and selling direct to the consumer, so they're getting both the publishers cut and the retailers cut.

Baen hasn't cut out the middleman except for ebooks, and not even then. You can buy Baen ebooks at places other than Baen. What Baen has done is convince a core group of readers to buy directly from Baen, thereby maximizing Baen's take. But I doubt Baen's core group is sufficiently large for Baen to shut off access to its products via other channels. It would be nice to see a breakdown of sales and sales channels from Baen before concluding that Baen's model is a great business model.

I also find it interesting that Baen's model is touted as the model to follow for pricing but without mentioning that Baen's pricing is only reasonable for ebooks. Once you decide to buy a pbook, buying from Baen is significantly higher than from other channels.

[karenr_nz]

I would like to know what sales volume these figures are based on. As others have indicated here many of the fees involved are for the overall print run, and are not calculated on a 'per sale' basis.

This article also doesn't address the issue of paperback releases. Presumably, if the 'per sale' costs for a hard back are as high as quoted, and paperback costs are similar (as many have stated), then paperbacks would be sold at a loss...? Oh, wait! I forgot! Because publishers sell many more paperbacks than hardbacks, the costs per copy must be lower.

Further, all the editing of the actual content (not copyediting, proof-reading etc) only needs to be done once, regardless of whether the book is released as HB, TPB, PB or EB. And most of the marketing is done for the first release of the book into whatever territory.

As a final point (perhaps slightly off topic), has anyone checked out Penguin's website? They sell all DTB and ebooks at the same price as retailers sell for (7.99 for a PB etc), presumably so they don't undercut their customers (the distributors and booksellers). So for every copy they sell, they take both the publisher's cut and the booksellers cut. I wonder how many books they sell off their website ....?

[lilac_jive]

Originally Posted by mcl

Marketing? I've never seen any marketing specifically for an ebook version of a book that's out in physical form.

Furthermore, I sincerely doubt the proofing costs, as ebook variants of DTBs are often rife with errors that should have been caught. And editing? I've yet to see any ebook variant of a DTB that's been re-edited specifically for the format. Layout, sure. But editing? No.


Still, the bottom line, even with the chart as it stands: The authors make less per sale, and the publishers make more per sale, as compared to the same DTB.

And this assumes the agency model (note the $12.99 retail price, and the retailer payout amount). Yet another reason to oppose it.

Just on your note about marketing ebooks, if you take a look at Sony's ebookstore you'll see lots of books spotlighted. I'm sure the publisher pays for that placement (and it works).

[mcl]

Originally Posted by lilac_jive

Just on your note about marketing ebooks, if you take a look at Sony's ebookstore you'll see lots of books spotlighted. I'm sure the publisher pays for that placement (and it works).

Implying that banner placement on a single (or multiple) website even remotely approaches the outlay for marketing for a DTB (newspaper and trade ads, online ads, endcaps, posters, book tours, signings, appearances, radio commercials, etc. etc. etc.) is ridiculous.

[DawnFalcon]

Originally Posted by rhadin

Absolutely correct. When I edit a book, I am not told whether it will be a pbook, an ebook, or both. It doesn't matter to the editing process and my fee is the same regardless.

Exactly. Usually, anyway

There are a few times I've made up editions designed only for screen-viewing with lower dpi illustrations (usually 100), but that's because the files in question had to be (don't ask) as small as possible.

[lilac_jive]

Originally Posted by mcl

Implying that banner placement on a single (or multiple) website even remotely approaches the outlay for marketing for a DTB (newspaper and trade ads, online ads, endcaps, posters, book tours, signings, appearances, radio commercials, etc. etc. etc.) is ridiculous.

I'm not implying that at all. From your comment I thought you meant they don't market the ebook at all, which I was just pointing out isn't true. I think I misread it though.

If I were a publisher, I would consider marketing for a title to be a cost under all formats of the book. That's probably what they were doing.

I can't argue at all with the proofing though *sigh*. Sometimes it's really atrocious.

[ficbot]

I guess for me this whole issue goes to the same vibe I get from authors sometimes, that they don't really care what customers think because writing/publishing is Special. I love my books and I love reading, but it *is* a business too, and in any other business, if you had customers prepared to pay X and you wanted to charge Not-X, you would work to bring your costs down and streamline your operation to retain the customers you have and attract new ones. Exhibit A, our school was offering a hot lunch program that parents felt was too expensive for what it was. They got an offer from someone else who would do it better and cheaper. They went to the existing provider and said here is what we want to pay, here is what we want, can you do it? And when she said no, they fired her and went with the shiny new upstart