Why the Sony Reader will be successful

[rlauzon]

Originally Posted by melchioe

Several folks have implied that all (or most, or many) of the costs inherent in pbooks go away with ebooks.

It's not an implication. It's fact.

• author payment - With paper books, that's $1 per book.
• publisher payment (this one might be the one that should go down) - Since publishers no longer have value, this payment goes away.
• bandwidth cost for the connect store (they pay for every byte we download) - Spread out over all the books sold, this cost is small. How much bandwidth does Google take up? And they only make money from Ads.
• backup costs - we want these things available for years, and I would get mad if I suddenly couldn't download books I bought - and the disk storage and backup costs are not negligible - No, but they are extremely small. Disk storage is very cheap today.
• computers to host the site - Small. It's spread out over all the books, plus all the other sites being hosted on those computers. Large data centers keep these costs very low.
• administrators to run the site - Goes with the computer costs.
• programmers to write the software for the site (and the ones who are writing the stuff for the Sony Connect Reader stuff need to be paid less - that software reeks!) - Software is already written. Companies like Fictionwise are already using it. Even if the company wants to have customer software, it's still spread out over all the books sold and is very small.

Originally Posted by melchioe

I'm sure I'm missing some, but this should make the point that the brick-and-mortar costs and the paper/binding costs do not simply go away - they get shifted to other costs so other people can take their cut. Electrons might not cost anything, but the electron support network does.

Facts:

1. Paper costs more than electrons
2. Making a copy of a pBook significantly costs more than making a copy of an eBook.
3. Transporting a pBook to a customer costs far more than transporting an eBook to the customer.
4. The eBook market cuts out the useless middleman of Publisher - who takes a large cut of the profits of pBooks.

[William Moates]

Don't rule out publishers so quickly. Publishers provide editors, illustrators, layout designers, aid in distribution, etc. They help turn an amateurish product into a professional one. Sure, the bookbinder and the shippers (UPS/FedEx) are no longer needed, but almost everyone in the pbook production pipeline has an analogue in the ebook pipeline. I would hate to see the professional aspects of pbook publishing be eliminated. Don't replace my New York Times with the Weekly World News.

[rlauzon]

Originally Posted by William Moates

Don't rule out publishers so quickly. Publishers provide editors, illustrators

True, but I would argue that these services don't bring direct value to the consumer. They bring value to the author - to help him create a product that sells better. Therefore they are part of the cost of doing business. If the author decides to use these services, those costs should come out of the author's pocket.

Yes, ultimately we the consumers will end up paying for those services, but authors who use those services will compete with authors who don't, so the costs will be kept as low as possible.

Originally Posted by William Moates

layout designers, aid in distribution

Since layout is is a detriment in eBooks, a layout designer brings no value.
And distribution for eBooks is simple and cheap, so no aid is needed (not by a publisher anyway).

Today, publishers bring value in that they can get the book from the author's head to the consumer's hands in a cost-efficient way. That value disappears with eBooks.

[Laurens]

Originally Posted by rlauzon

True, but I would argue that these services don't bring direct value to the consumer. They bring value to the author - to help him create a product that sells better. Therefore they are part of the cost of doing business. If the author decides to use these services, those costs should come out of the author's pocket.

Yes, ultimately we the consumers will end up paying for those services, but authors who use those services will compete with authors who don't, so the costs will be kept as low as possible.

So that means only authors who can afford to pay an editor and proofreaders will be able to put out polished material. Authors themselves are the least qualified to judge their own work.

[William Moates]

One of the reasons I appreciate editors (and proofreaders, who I forgot to mention), is that they make text more readible. I do admit to a bit of the grammarian in me, but it's out of a desire for quality. Whenever I read a sentence containing a spelling or grammatical error, it's like driving over a pothole. A truly malformed sentence can derail a train of reasoning. Proofreaders eliminate this garbage, making the text smoother. Editors make corrections, too, but at the conceptual level, to help the author state their ideas more clearly. In the end, they both provide a valuable service.

However, there are other reasons to get rid of the publishers: to let new talent shine through. We all have heard the tales of the musician who couldn't get signed on a major record label, so they tried to distribute CDs (or LPs) on their own, and couldn't get anywhere. Now, the Internet has MySpace, where musicians can post their own music for anyone in the world to listen to, giving them a chance to be heard. One could argue that the popularity of the iPod has helped independent musicians to get noticed, and a similarly popular e-reader could help independent authors get noticed. But to do that, someone would have to create a MySpace for authors, a "MySay". (Ok, I just realized that blogs fit this need.)

Still, budding authors need assistance to move from amateur to professional level, and until there is a web-based resource of proofreaders, editors, and the like, publishers (and magazines and journals), will be the best option for producing quality.

Of course, if you're not interested in quality, why are you buying books? There must be hundreds of amateur authors out on the Internet. Just wander around, and you find someone writing about anything, without regards to quality or standards. Don't like what you read in the standard news? Then read the Drudge Report, where fact-checking is optional. Can't wait for the next Harry Potter book? Then download the Chinese knockoffs--but don't complain to Rowling when her next novel blatantly contradicts what happened in the knockoff.

When will folks realize that you get what you pay for? If what you get is free, then you're lucky if it's good.

I'm going to shut up now, because I'm starting to rant, and I really don't want to get into an ad hominem flame war.

[swerve]

It's probably worth noting that the average cost of a paperback book to produce is about 50p (UK money) or about $1. Distribution costs also have to be taken into consideration

[NatCh]

Originally Posted by William Moates

't replace my New York Times with the Weekly World News.

At least the journalistic integrity would only take a small hit. (sorry, couldn't resist)

Something missing in all that "new costs" list is electricity to run all that equipment. That's got to be a bite. Even spread out over all the books, it's a 24/7 expense, and it never stops adding up.

I tend to agree more with William about the value of Publishers than with rlauzon -- I think they do add (quite a lot of) value, both intext quality, and in being able to have some sort of expectation as a starting place. For example, I read a number of Baen's offerrings, I know what sort of quality that publisher generally turns out, I know what sorts of genre's they carry. When I see a Baen logo on a book, I know that there's a better than average possibility that I might be interested in that book, even if I've never heard of the author. It makes me more likely to take a look at the thing.

There are, of course, other ways to do the same thing, the ranking/reccomender system discussed elsewhere on M.R. for instance, but this is one we have now, and it is a help.

I do think that the present arrangement has concentrated too much control/power into the hands of the Pubs. Baen isn't a good example here, because they seem to be more enlightened in this regard than other pubs, but just the same. I'd like to see a system that provides the services that Pubs provide, without giving them such a strangle-hold on the industry.

Compared to the readers and the authors, the Pubs are the minority, why should they have most of the power in the equation, even with the value they add? In the paper world, it makes more sense, with the investment needed to publish a book there, but in the e world, the costs aren't significantly different to publish 10 copies than they are for 1000. With a reduction in assumed risk, it seems to me that they should see a reduction in control.

[BuddyBoy]

Originally Posted by melchioe

Several folks have implied that all (or most, or many) of the costs inherent in pbooks go away with ebooks. I would dispute that. Don't get me wrong, I think ebooks should be less expensive than they are now. But costs don't go away.

When you realize that the cost of manufacturing and shipping the physical book is one of the smallest parts of the total price, ebook pricing begins to seem almost in line. A paperback typically costs less than $1 to print and ship, a hardcover around $2. Some of the larger marginal costs - author royalities and retailer discount - are the same for both pbooks and ebooks. Ebooks also have certain fixed costs which need to be distributed over what is current as much smaller run, as ebooks do not sell nearly as well as pbooks. Additionally they have to share the amortization of some larger fixed cost with their pbook bretheren - such as publicity and advertising.

All totalled, the marginal cost for ebooks is perhaps a couple of dollars less than pbook, so it should balance out if the ebooks are sold for a dollar or two less - and, surprise!, a lot of them are.

[Cthulhu]

To add my two cents, I believe that both William & RLauzon are correct.

The distinction I see is that RLauzon is arguing that the...post production services of a publisher are unnecessary in the e-book world, and so those costs should go away. We close the binderies, lay off or transfer the workers who set type, load paper, and actually *make* the physical book. No big factories creating physical content, less payroll, less overhead.

William Moates is concerned that the...pre-production services of a publisher are not lost. Publishing house gets lots of unsolicited stuff, and I wager that a good number of bidding authors need help to hone their skill, and the rest mostly stink.

An editor, a proofreader, and a fact checker need not, I think, work just for the big scary 800 pound publishing company. They could incorporate as a small consulting group, working free lance for authors. Hire an IT manager, and they can start getting content out.

I think that the latter is a perfectly cromulent business model, and I believe that there is a link of this forum to a situation like that happening. A software company here in Chicago became their own online publisher.

There are any number of professionals who were faced with obsolesence(sp), and had to adapt or more elsewhere. This is a fact of life, especially in business. Unless people acquire new skills or try new methods, they fail.

Getting back to the debate, it seems that every one agrees that e-books are cheaper to produce. If this is the case, it is quite infuriating to be saddled with the cost of another product when I want to buy something, and to receive less of a product or less quality because of the form I want it in.

If I buy a Ferrari, mine should not cost $19,000 more because I want it in white, not red.

[rlauzon]

Originally Posted by Laurens

So that means only authors who can afford to pay an editor and proofreaders will be able to put out polished material. Authors themselves are the least qualified to judge their own work.

I'm saying that authors will cope in a cost effective way.

[rlauzon]

Originally Posted by BuddyBoy

When you realize that the cost of manufacturing and shipping the physical book is one of the smallest parts of the total price, ebook pricing begins to seem almost in line.

Huh?

That's not what the people in the publishing industry are telling us.

They are saying that of that $7.95 paperback, the author gets about $0.70.

So, if it only costs $1 to print a paperback, costs for the publishers are up to $1.70. That means that the retailer and the publisher are splitting $6.25 per book.

That doesn't seem correct.

[Laurens]

Originally Posted by rlauzon

I'm saying that authors will cope in a cost effective way.

...assuming they have any money at all.

[Laurens]

Originally Posted by rlauzon

Huh?

That's not what the people in the publishing industry are telling us.

They are saying that of that $7.95 paperback, the author gets about $0.70.

So, if it only costs $1 to print a paperback, costs for the publishers are up to $1.70. That means that the retailer and the publisher are splitting $6.25 per book.

That doesn't seem correct.

What isn't correct is your assumption here that every book published actually gets sold, which obviously isn't the case. Aside from that, there are also marketing and publicity costs.

[slayda]

A few things to remember;

1. With pbooks there is a constant, sunk, setup cost whether the production run is large or small. Ebooks don't require this setup printing cost & could allow smaller runs of speciality books at a cheaper price, thus allowing a greater range of books to reach the market.
2. With pbooks there is the cost of the retailer, his facility & employee paychecks and his profit (as well as his losses due to not selling his inventory - said losses may be born by the publisher). These costs do not apply to ebooks.
3. Some (maybe most) of the computer resources that ebooks require are already in place with the publishers. He just will need a new paradigm on computer usage.
4. The shift towards ebooks & away from pbooks would be gradual. This may mean that ebooks start out at a higher cost due to new, untried methods but should eventually drop significantly.

[tcv]

Do any of us really understand the economies here? I certainly don't. I'm not even sure _they_ know!