Why My Books Are No Longer Available on Amazon.com

by Tobias Buckell

This is long.

Like, really long.

And talks about the intimate details of publishing in long and meandering manner.

I tried to make it shorter, I really did, but as Mark Twain once said, I didn’t have the time. So I wrote this instead.

So as of right now, you can’t buy my books via Amazon, as they have stopped selling all Macmillan books (both mailing print books to you, and selling Kindle books).

So, Amazon wants to sell books for $9.99 or less, my publisher wants to sell books for a more dynamic range of $5.99 to $14.99.

Right. So Amazon and Macmillan are in the middle of negotiations about how to sell eBooks. Amazon had, for a while, paid publishers an agreed upon price, and then discounted them to $9.99. Amazon’s reasoning: this would move eBooks, in particular Kindle eBooks (and maybe some Kindles, though I think Amazon’s creating a Kindle was to move more eBooks).

Publishers would like to be able to set eBooks at a higher price, say $15, then degrade the price over time to a much lower price. How much? CEO of Macmillan says “Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99.”

This isn’t unusual. When a jacket first comes out at Macy’s it’s usually a certain price. Over the season it drops, and eventually it becomes bargain.

When a new device comes out, the initial R&D that was invested in it is recouped by an initial higher price point.

Cars sold on launch day are cheaper than cars sold a year later.

In a free market economy, dynamic pricing is not exactly a new and stunning concept. Prices are flexible, they’re something a company sets as it eyes how many units are sold in volume versus how much profit it makes off each item.

Amazon is fighting this. Using its large (pretty dominant) share of both eBooks sold and print books sold online, it has in the past dictated the terms. Amazon says it wants customers to not have to pay more than $9.99 per eBook. Obviously Macmillan has bucked this, as Macmillan eBooks come out for a price higher than $9.99.

Due to the launch of the new Apple iPad, Macmillan seems to be working to strengthen its position on variable pricing. Amazon, after an apparently tense negotiation, has decided to use the nuclear option: yanking all Macmillan books, except for the ones for sale via third parties (used books sales, other companies using Amazon marketplace).

Does Amazon have the right to do this?

I don’t do legalese, but I would assume businesses get to sell what the want to sell. Yes Amazon is a near monopoly online, but this is legal. They have every right to refuse to sell.

Isn’t Amazon just looking out for us, the reader, getting the customer the best deal?

Amazon has made noise that this is all about the customer, but I doubt that.

Here’s why:

1) Amazon still uses Digital Rights Management. This is not a customer-helpful feature. In fact, Apple iTunes has gotten rid of it, as have many other music sellers, and found that sales increase. If Amazon was doing this ‘for the little man’ then where are all their attempts to get rid of proprietary Kindle software and DRM? We know it increases sales to drop DRM, so why aren’t they doing it? Customers would love it. But Amazon would lose control.

It’s their right to use or not use DRM, I’m fairly neutral about it myself, but to cast them as some sort of consumer advocate is off the mark.

2) If Amazon is a marketplace, they would just let a publisher putting out expensive books to shoot themselves in the foot. But what we’re seeing is a very aggressive move, designed to shock and awe the publishers. This really has nothing to with what customers want and everything to do with Amazon using its very large position to leverage itself into remaining number one. They deep discount books, often at a loss, because then once they have a customer, there’s so much more to sell you. Speaking as an Amazon Prime member, I understand. If Amazon loses customers elsewhere, because of books, they lose the ability to leverage the wide of their item selling.

What Amazon wants to do is price fix books to a ceiling.

If Amazon were a smaller retailer, this probably wouldn’t be a big deal. But Amazon pretty much, right now, has a monopoly on online bookselling. They’re huge. As a result, this becomes nearly a form of de facto price fixing.

Yes, we’d all like cheap books. I’d like cheap gas too. And milk has gone up. I’m working in a recession. I know this stuff hits the wallet. But the genius of a market economy is that we let companies try to charge what the market can bear, and let sales and results sort it out.

During the 70s the government tried to put artificial prices on gas, resulting in shortages as hoarding occurred. Most economists that I’ve read demonstrate that while artificially blocking a higher price sounds like a good idea (populism), it’s actually bad economic news.

That’s why your gas, milk, and other items aren’t pegged to a maximum price ceiling.

When a manufactured thing initially comes out, the initial investments to make that thing are still there. As a result, with designed jackets, new cars, new medicine, the price is initially higher. Over time, as those investments are recouped, the unit cost comes down.

It’s not surprising that publishers would like to do this with eBooks.

When price fixing occurs, there are consequences.

In the case of books, Teresa Nielsen Hayden predicts this is what will happen if price fixing is allowed to occur:

My honest estimate is that the result would be fewer and less diverse titles overall, published less well than they are now.

$9.99 is really expensive, you suck. eBooks should never cost this much

As a buyer of eBooks, I agree. Hell, as a buyer of regular books I agree.

Here’s how I, as a reader, go about buying a book.

Is it someone I know will rock my world and I’ll love reading? I’ll buy hardcover. Heck, I’ll spend good money to right away read a favorite author. I’d pay $50 to read Vernor Vinge’s next A Fire Upon the Deep related book he’s working on. Maybe more, to be honest. I can’t. fucking. wait. for that book to come out. Hardcover, paperback, eBook, whatever, I’m a crack addict who’ll pay for this author’s book.

The next level is someone I want to read. I try to read them in paperback or eBook priced at roughly paperback equivalent prices. But sometimes the convenience of reading right away on my iPhone triggers a buy between $9-12. $14.95 is a mental trigger for me, at that price I’ll wait for the book to come down in price (which it always does), or find a cheap print copy.

Of course, I’ve been in some financial hard times in my life. Right after I was laid off the $4 difference between $9 and $14.95 was a bit much. For those times I use the US’s amazing library system, and get the book on loan. I understand if people are hard enough up they can’t afford the $4 difference. It’s mac and cheese time, ramen noodle time.

But if you’re spending more than $4 a day on Starbucks coffee and fast food, I have less sympathy!

And not every writer can be an amazing “OMG I’ll pay anything writer.” As one ‘9.99 fanatic’ got in reply to a very nasty email sent to me, “I apologize for not being a good enough writer than you feel the $12.95 spent on my words is not worth a half a day’s entertainment, compared to the couple of hours you get via a DVD for more money. I will endeavor to try and write better in the future. Thank you for your email.”

But Baen sells books really cheap, never more than $9.99, so shut up.

Well, yes and no. Baen is awesome and shows a way to really get eBooks working well for their readers. I think it should be paid damn close attention to.

But Baen sells books for a wide range of price flexible options.

For example, if you want the book as soon as possible. They sell eArcs for $15, catering to the ‘can’t wait to get it first’ crowd. As time goes by, they bundle books into packages (webscriptions) and sell individual non-DRM books for a very good price. If you buy their bundles, you can get books for mere dollars. They also do 99 cent sales. And they have a Baen Free Library. So the price of a Baen book is anywhere from $0 to $15, just glancing at their sales pages.

Again, price flexibility.

Nightshade sells books via this program at a very affordable straight $6.

That rocks.

Okay, but what price should an eBook be?

If you were paying attention to my mini lecture on free market economy, you know that it’s “as much as the market can bear.”

The truth is, the answers range dramatically depending on a lot of variables *which is why publishers want the ability to flex price!*

But isn’t an eBook ‘cheaper?’

Well. Here lets look at…

How books are made:

Let’s take a look at how this particular sausage is made. I understand readers don’t appreciate this much, I didn’t before I was published, but now I understand that a book is a group undertaking.

A book comprises of the following production investments. Just like a pill requires research to bring to market, or a jacket requires artists, designers and invention, professionally published books that look slick and readable use the services of a number of different people.

What are those costs?

An editor: the man who works with the author on the big picture of the book. How are these chapters hanging together? Does this character make sense? What book should we work on next?

A typesetter: makes the inside of the book look professional and easy to read, well put together

Designer: interior art, layout, more look and feel of the inside. The look and feel of the outside of the book and how it incorporates the cover art

Art: someone has to paint, create, or put together the graphics that sell the book

Copy editor: this person goes through and makes sure the book is readable, looks for internal consistency (your character has blue eyes here, but brown here. Suns don’t actually go nova like that).

Proofreader: this final pass looks for any final typos that have slipped through everyone else.

Those are just some of the people involved in making a professional book.

I’m not including marketing/advertising, or the author’s advance in this little mental experiment.

In this article by K.T. Bradford, Jeremy Lassen, who runs a lean, focused, smaller press, says those initial investments for a book run from $7,000 to $20,000.

If you were making an eBook only, to make a professional, slick, proofread and well edited project, let’s take that lower number. Let’s say you farm this all out and pay an up and coming artist $3000 for a painting, a proofreader $1,000 to go over and copy edit, and then later proof the manuscript, a designer $1,000 to design the book’s look and feel all throughout, and a freelance editor to help throughout all this. I have no idea what an editor costs who’s freelance, but let’s lowball this and say that person makes $2,000 a book, like the copy editor (this would mean, for an NYC based editor, that they’d edit 24 books a year to make a freelance living. A lot of hustle). That’s a $7,000 initial investment.

So you can see, even without printing the book, there are upfront ‘development’ costs in good books.

So what price point do you need to cover your costs?

Well, how many eBooks do you think you can sell? See, the question becomes one of volume. In order to cover this back on only eBook sales you have some choices.

At 99 cents it takes 7070 sales to break even.

At $9.99, it takes 701 sales to break even.

At $15 it takes 467 sales.

That’s if you’re selling direct. Amazon takes a cut, so we actually probably need to multiply these by 30% to make them real world.

That looks impressive. Only 467 sales to cover back the initial outlay. The problem is, volume. Can you guarantee 700 sales vs 300, 7070 at 99 cents?

I’ve gotten to talk to other writers, and for all that people are buying books happily on Kindles and iPhones, very few writers other than big sellers (the top tier), are seeing more than triple digit sales a year for eBooks.

The volume is so low that with Amazon taking its cut, and so forth, most people are seeing a couple hundred dollars here and there.

Could pricing be the issue you’re not getting volume?

Well, I have my eBook sales figures of Crystal Rain, a book that has sold in the five figures in print, meaning people who have purchased in print, print online and in bookstores. That’s a nice run, it’s my bestselling book of the 3 Xenowealth books (Crystal Rain, Ragamuffin, Sly Mongoose), but leaves me still a midlist writer. Ragamuffin hasn’t broken five figures yet, it sold in the high thousands of copies (that dip between them is one reason the Xenowealth books are on hiatus now).

In 2008, for a brief while, Crystal Rain was available for free via download. Number of Kindle users who downloaded it: low thousands. Number who’ve purchased it for sale after that: low hundreds.

So five figures in volume compared to three figures. That’s an order of magnitude difference.

This magnitude difference holds steady. I sell hundreds of copies of eBooks, and thousands of paper copies.

So pricing it for free reveals that there’s a very small pool of eBook readers still. In fact, eBook sales as a percent of total sales are just over 1%, up from .47% in 2008.

Again, in economics, there is the law of supply and demand, and demand is still pretty low when compared to print books.

Even assuming eBook adoption follows an exponential takeoff, and map the growth rate of 2002 having .03% of the market to today’s set up, you have eBooks being 10% of the market in 2016. At that point, I’m betting volume will start picking up enough that it gets easier to justify smaller prices per unit. But right now, eBooks sell like limited editions.

But the current volume is still low, although some people (our new superstars) are able to get sales into the thousands and break the curve (every graph has outliers).

But publishing doesn’t publish just eBooks!

Correct! Publishing spends an initial outlay for designing and editing the books (that 7-20K we talked about) plus it has offices, plus advertising, marketing, and it offers the author an advance, and it pays to print the print copies.

Then, there’s usually a person who has to be hired to do the eBook conversion process. What people have found is that even with automated export tools, they still have to create an eBook version. Amazon has software to create their Kindle version, B&N uses ePub, other people use other versions. Someone has to check that even if the automated ‘make a version of this’ works well, that there aren’t any hiccups.

So it has a larger initial investment. And eBooks aren’t the only focus, but one arm of a large initial investment.

So on the first quarter this book is for sale, what the publisher is most likely trying to do is at least not have eBooks cost more than what it took for that extra effort to create it.

And with a few hundred copies, chances are, it’s barely doing that.

So publishers, looking at supply and demand, think that there’s low enough demand that they can up the prices a bit and overall, in that first while, make a little more. There are enough people who are excited about an author no matter what the cost, that they’ll make more. This way they’re covering the cost of the guy who makes sure the books get converted into nice eBook versions. And over time, they’ll drop the price.

Just like people who sell pills. Or jackets.

And here we go back to price fixing versus flexible pricing that falls over time. When you have smaller sales, sometimes reducing price to boost volume can leave you with the margin you want. But sometimes not. Sometimes you need to raise the price.

This is why price fixing is not the answer to the eBook dilemma. Letting volume grow from the single digit percentages it is, while giving publishers the flexibility to experiment and play is not the end of the world some claim it to be.

So Amazon has the right to pull the list. It’s part of the negotiating game. They did this to Hachette UK earlier this year in the same manner to force Hachette to play the game according to Amazon’s rules, as it set them up when Amazon first started selling Kindle books. Hachette folded, Amazon views this as a way to get publishers to do what they want.

The reason Macmillan is asking for a change in the way things are done, is because Apple has released an new program, and it offers publishers a program more in line with what they think will work: including some flexibility in early release prices. This now means Kindle is not the big kid anymore, as many are assuming Apple will pull a repeat iTunes store.

Whether or not that happens, I don’t know. But Amazon seems to find the nuclear option okay, and after years of working to send them a lot of business, this is a reverse blow. Because of my online presence, over half of all my print and eBooks are sold via them. Just as they have the right to do this, I have the right to be pretty friggin’ pissed that they think this is the way to negotiate, or build good will in any way.

So tell us how you feel about all this?

Look, I use Amazon Prime because I live in the boonies. I read books via Amazon Kindle. I’m even moderate about DRM packaging (I’d prefer not to have it on my books, but as long as it doesn’t get in my way too much I’ll tolerate it).

But this looks to be very dickish, and using your size as a prime negotiating tool to play hardball. Again, Amazon has built themselves up to the size, so they have the right to use their size. It’s just business, you know? But so is my then saying, I will now be dropping all Amazon.com links from my website.

I will no longer be doing any business with them. This includes renting from video on demand, buying books both print and Kindle, as well as buying various goods. I will not use them for payments either.

Because I’ve entrusted my traffic and customers with them over the years, I do expect a slight bit of reciprocity. I don’t like to do business with people who, apparently as far as I can tell, think sucker punching you when they disagree, even if they have the right to do it, is the way to go about this.

I know the publishers are far from perfect (believe me, the handling of eBooks over the last X number of years has been frustrating, as a person who loves eBooks), but so far they haven’t behaved like giant kids throwing a temper tantrum during negotiations of anything.

What about when Apple forced everyone to buy songs for 99 cents?

I think it’s useful to compare the two, and realize that music and books are different. For one, volume seems to be different. People play music all the time, it’s electronic adoption *exploded* the moment napster arrived. Millions of downloads.

With books, even heavily pirated ones are not seeing the insane activity you saw with music. Again, that volume question. It’s a vastly different industry we’re comparing.

So even in the early days, the fight Apple was having was different than this one due to magnitudes. Even then, ultimately, in exchange for giving up on DRM, music publishers got the ability to be flexible with Apple store pricing. They actually gave up frigging DRM for it, it was that important.

Large companies, like record companies and book publishers, just wanted to screw the little guys.

Well, they want to make a profit. That’s called capitalism. And you make as much profit as the market can bear. Now what music companies did that got them labeled evil, and was stupid (besides having vastly larger volumes than books), was to become crazy about suing their consumers (crazy) and going after them. That developed bad publicity.

While some authors have done the same, have you seen publishers treating consumers the same way as the RIAA?

Publishing has very small margins, the corporations are large, but I’ve visited their offices. While Goldman Sachs is handing out billions in bonuses, overworked book editors are in small offices and worrying about layoffs.

What do you want me to do about all this?

Nothing. If you’re a reader, it’s not your problem. Buy the books you want where you can.

Listen, in the big scheme of things, this hits me in the pocketbook slightly, most likely, and Macmillan in a big way. It’s not a reader’s problem, in as much as, if you believe price fixing most of the market will lead to what Teresa Nielsen Hayden says is a reduced number of non-bestseller kinds of books/new authors and midlist authors. That may concern you. It may not. I don’t know you.

Some of you will just see that books will be price fixed at $9.99, and be happy. Much like many people would be happy to hear that gas was to be price fixed at $2. I understand that.

But if you do like the authors Macmillan puts out, now is a good time to buy one of their books from a non-Amazon source if anything you saw here made you think differently about price fixing. But I wouldn’t even encourage you to buy books that are too highly priced. Heck no. You are the consumer, you need to send the right pricing signals. This is how the free market works.

Go forth and just be your merry selves.

Then why did you write this

I’m not trying to exhort anyone to do anything, but to explain the situation I’m in, and to educate. I’m seeing a lot of people state things with certainty (points I try to knock down above) who have no involvement in the trade.
A lot of readers are going to take this out on authors, and I wanted to basically show my homework to explain things that people may not be aware of. People toss out prices of what eBooks ’should be’ who’ve never even stopped to understand how the math of something like this works. They demand things they’d never demand of a jacket salesman, just because they think economics and supply and demand and volume don’t apply to eBooks. They do.
Seriously. I’ve thought about these things a lot. Mostly because I have a novel series that has not been renewed, and I keep running the numbers to see if I could write it as an eBook, and when I run these numbers, I come up looking at making a few thousand dollars for half a year’s worth of work based on how eBook sell now. Yes, there are a few J.A. Konrath’s selling well on Amazon, but as I’ve linked, other authors aren’t automagically selling thousands of eBooks there. Most who follow these footsteps sell hundreds. Not everyone becomes JK Rowling.

What do *you* think is a good price for an eBook, then?

It depends on the author. Like I said, some authors I’d pay a lot to read. Some I won’t. I’m flexible.

But my gut instinct is that because eBooks have a slightly lower overhead than print books, I bet having them cheaper than a paperback is most comfortable. I wouldn’t be surprised if $4.99, once volume picks up over the tail end of this decade, becomes a sweet spot (under the $5 psychological breakpoint, just like $9.99 is under the magic $10 mental spot) where you could move a decent number of copies with audiences.

But right now, think of an eBook as being somewhat akin to a limited edition in terms of potential demand, with bestsellers/top sellers excluded.

One reason this focus on $9.99 is somewhat misleading is that it will allow places like Amazon to keep that as a mental target and expectation. When you look at volume, potential sales, and what eBooks sell, $9.99 is just as meaningless as $4.99. It all depends on how many copies are purchased.

Thanks for reading this crazy long ass thing…

Yeah, you think it’s taken a long time to read, here I thought I was just dashing out a quick ‘here are my thoughts on this’ sort of thing, and I’ve written a crazy ass long… thing.

Sorry about that.

Reprinted with permission from Tobias Buckell’s website.

Tobias S. Buckell is a Caribbean-born speculative fiction writer who grew up in Grenada, the US, and the British Virgin Islands. He now lives (through many strange twists of fate) in a small college town in Ohio with his wife, Emily.
Buckell was a first place winner for the Writers of the Future, and has been nominated for the John W. Campbell Award for Best New Writer and the Nebula Award. He is also a graduate of the Clarion Science Fiction Writing Workshop.

52 Responses

  1. Pingback: [publishing] The nuts and bolts of Amazon vs Macmillan | jlake.com

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  3. Zaphon

    There’s a lot of things here that I seem to think you missed.

    1. This was started by Macmillan. In the post made by their CEO yesterday, he explained how he went to Amazon and tried to re-negotiate the contract (to a deal that would let the Publisher control the price (I’m sorry but having the Publisher set the price in the industry is NOT a good idea)), and when Amazon said no, Macmillan basically said than there would be huge wait periods (aka the thing that has really gotten me fired up lately, is books being withheld from the kindle for several months after the hard cover release). So Macmillan threw the first punch IMO, and Amazon had no choice but to take a strong stand, and they did, probably a bit strong, but it was done on the weekend, which is most likely the lower volume days for sales.

    2. The deal as it is today according to Macmillan is Amazon pays them 50% of the list price, and than they sell it for $9.99 (so assuming the book is $25, Amazon pays $12.50 for it than sells it for $9.99 at a $2.51 loss). So today the publisher gets $12.50 for the book in this model. In the new model that Macmillan offered to Amazon, they would set the price (say at $15.00) and Amazon would get 30% of the sale. So what the CEO said is true, Amazon would make more money (they would make $4.50 instead of a $2.51 loss), but now the publisher is only making $10.50 on the sale. So all those authors out there talking about how Amazon is trying to hurt you, the reality is if Macmillan got their way, you would actually make less. Amazon is NOT dictating a price here, their simply trying to keep control to price the item at whatever price they feel like (even if it’s at a loss)

    So the question is who is really the bad guy? From my perspective it’s Macmillan. They are trying to remove competition in it’s rawest form, which is allowing the seller to sell the item for whatever they want. How can there be true competition when everyone is being FORCED to sell the item for the same price (Apple is the only company that does this successfully, as they don’t allow their resellers to discount their items, and well I don’t know how any Apple reseller stay in business, as I just go to Apple direct, there’s no incentive to go elsewhere)? I’ve had my kindle for a year now, and I’m not about to pay more than $9.99 for a new release, as the amount of limitations put on the format already are discouraging, and a lot of the time, the Hard Cover version from Amazon on release date is the same price or even lower (on very popular books where there is extreme competition from the B&M stores) I’ll happily go back to buying the print format if this continues, no matter how much I like my Kindle. I bought it to reduce the amount of space books in my house we’re taking up, but I’ll find more room.

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  5. Sean

    This is just nitpicking, on my part: I note that for the most part bringing up the costs to releasing an original ebook is simply not valid, and somewhat irrevelant, as for the most part, no publisher currently would just release an original ebook release. (Apart from the erotica field, where millions are currently being made) Based on what I’m seeing right now, if I do a 7500-copy trade paperback run, I sell 1000 to 2000 in ebook, which represents 10% to 20% of a total sales run. Certainly for publishers with much larger print runs, say, in the tens of thousands, the percentage will drop, but you should also have higher ebook sales. (Particularly for erotica, as I indicated before). I also think you have to take into account which distribution channels ebooks are in, before coming to conclusions. For instance if your book is only available in X, but not Y, and Z, then of course you’re going to see fewer sales. I think I’d prefer to see more sample sizes, from authors that have broader distribution in a number of channels, before reaching any conclusions. The reason publishers (and Amazon) are currently freaking out is that ebook sales are indeed significant, and increasingly becoming-so. That’s my two cents, anyway.

  6. Meran

    Very excellent description of the industry; you’ve answered most of my curiosity questions.
    And it’s okay that it’s long :D
    Meran

  7. Nick

    Hello Tobais,

    Thanks for the well written and thoughtful discussion on the Amazon situation. It was very enlightening/thought provoking! = )

    However, I found your Apple comparison point to be on the weak side. Just saying “Different Volume/Can’t Compare”, doesn’t seem to do it for me. Certainly you are right, it is a different volume, but I think very comparable situations. Sure, there are big differences, they probably have a higher up front cost and higher marketing costs, they also sell more #. But on the flip side it is $.99c vs $9.99 as well, so it goes both ways.

    I think it is very comparable in that the end industries are in very similar situations. They are both struggling to figure out how to transition into the digital age, and are also struggling financially.

    On the flip side, it is a bit different in that Apple wasn’t also selling non-digital content already and using that as leverage.

    But in general, I think the battle Apple fought with 99c pricing is *very* applicable to the battle Amazon is fighting for $9.99 pricing.

    Just my initial thoughts! Thanks again for such an insightful article! :)
    -Nick

  8. Roach

    Whlst I agree with most of your text, there are two point on which I beg to disagree.

    You said price fixing was bad for diversity in book business. Please remember that there are countries, Germany foremost in my mind, that not only have price fixing, but have fixed retail prices for books no matter what the store. Whether the book is out new, or has been on the market for two years, whether you go to your neighbourhood book dealer or Amazon, Book X will always cost the same, provided it’s the same issue. A paperback of course will sell at a different price from a hardcover.
    Not only has that hhad no discernible negative effect on diversity – it also helps sales in the initial months, because people know it won’t help waiting for prices to fall. Yet the German book market is strong and healthy.

    Secondly, you asked about publishers treating their customers the way the RIAA does theirs. Well, while they haven’t yet stared dragging them to court, from the sounds they are making, many publishers in Germany seem to be more than willing to follow the music and movie industries down that path. It’s just that there is comparatively little piracy so far, otherwise – considering the way they sound off – they would have fallen in line in Germany a while ago.

    This may be different in the States, but my guess is that it’s mostly the low piracy rate that so far keeps the publisehers from following suit, even in the U.S.

    Of course, this dosn’t mean that there can be savvy publishers who do things right (like MacMillan seems to be) – you also have music that relies on P2P-distribution and networking. Nine Inch Nails come to mind…

    Regards

    The Roach

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  11. tobias buckell

    “Not only has that had no discernible negative effect on diversity – it also helps sales in the initial months, because people know it won’t help waiting for prices to fall. Yet the German book market is strong and healthy.”

    TB: can I get you to post numbers links of title per population and overall size of market? It’d be useful, I don’t normally see examples of where price fixing occurs and works, most economists seem to think otherwise.

    Who sets the prices? The book publishers? Is it just that they agree not to drop prices over time together?

    I need some links to details here before I’ll reform on a quick tossed off assertion, but I’m really curious about learning more if you can get me data.

  12. Al

    I agree, let the market decide the price. And I’m going to avoid using Amazon as I find their attitude distasteful.

    Great insights into the R&D costs of a book. I’d love to know the costs of manufacturing. A publisher has to estimate how many books are going to be sold, physically print those book, store them in a warehouse, process orders and ship them to book stores, and then recover the loses because they overestimated how popular the book was and printed too many. A cost that ebooks do not have.

  13. Lindsey Thomas Martin

    Good piece. I’d add that the cost of producing ebooks can be high when the publication contains anything other than straight text. Complex layouts do not translate automatically into epub.

  14. StormBringer

    I think you missed the one big, ongoing cost for a print run that doesn’t exist for eBooks: Printing a book.

    Once the cost for an editor, proofreader, typesetter and the authour are accounted for in an ebook, there are no further costs to print that book. As in, four copies or four million copies, the cost of selling the eBook are constant.

    Books don’t go ‘out of print’ because they aren’t read anymore, books go out of print because not enough people read them to account for the cost of printing them. The decision isn’t market based, it is publisher based. Imagine an eBook, perpetually free to produce as many copies as could possibly be desired. Every sale after paying those who worked on it is 100% profit, none going to printing costs, the increasing cost of paper, shipping it to a physical location, and so on.

    It might take longer to recoup the initial costs at a lower price point, but you practically have until the heat death of the universe to do so. There is no publishing window for eBooks like there is for physical books, because there is no shelf-space to fill. Like the music industry, the publishing industry is unwilling to change their models to account for the new media. There is no eight or 12 month window to make almost all the money that book will earn before it falls out of the prime shelf space. When the publishing industry understands that the whole model of book consumption is changing, it will probably be too late, just as it is for the recording industry.

    Imagine how many more books a JK Rowling could have moved at $5 for an eBook as opposed to $25+ for the hardcover. Imagine how many more you could move. You even demonstrate the numbers in your post:

    “In 2008, for a brief while, Crystal Rain was available for free via download. Number of Kindle users who downloaded it: low thousands. Number who’ve purchased it for sale after that: low hundreds.”

    I am not suggesting that authours should offer their work for free. Obviously that is not a sustainable business model. But your experience clearly shows that the lower price point moves more books! In fact, due to the cost of printing a book per unit (something like 15% to 25% of the cover price – correct me if I am wrong), there is a minimum price to any printed book. You can’t compare the cost of a $.99 eBook, because it is simply not possible to sell a printed book for a dollar.

    Publishers don’t want to make things better for their authours, they simply want to keep the control they have over the industry. If you got a freelance editor and typesetter, then sold directly through Amazon, how much more do you think you would make without the publishers taking their cut?

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  16. tobias buckell

    “I think you missed the one big, ongoing cost for a print run that doesn’t exist for eBooks: Printing a book.”

    No I didn’t, where did I miss that? Please to reread article.

    It’s *cheaper* to create an eBook, but it isn’t free.

    You’re saying that eBooks have an infinite recoup of investment. That’s nice. Tell you what, if you quit your dayjob today, I’ll pay you what you normally make in a year over the next 10 years if you make the same effort.

    What kind of economic response would you have to that argument?

    I know mine.

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  18. --E

    Stormbringer@15:
    “Once the cost for an editor, proofreader, typesetter and the authour are accounted for in an ebook, there are no further costs to print that book. As in, four copies or four million copies, the cost of selling the eBook are constant….

    “Every sale after paying those who worked on it is 100% profit, none going to printing costs, the increasing cost of paper, shipping it to a physical location, and so on.”

    –>True. However, what portion of the cover price do you think is PPB and transport?

    Not much. About 10-15%. So if you want to be fair to publishers and let them make the same profit on an ebook that they make on a printed book, while passing along 100% of the savings to the consumer, then they would have to sell a $25 brand-new hardcover for a minimum of $18 as an ebook released concurrently.

    There may be other efficiencies to be gained, but the lack of printing and shipping is not the great savings people outside the industry imagine it is.

    “Imagine how many more books a JK Rowling could have moved at $5 for an eBook as opposed to $25+ for the hardcover. ”

    –>Not many. The Harry Potter books–particularly the last one–had inelasticity of demand. People wanted them NOW NOW NOW, and were willing to pay for it. While a number of people were willing to wait for their turn from the library, I cannot imagine they represent a significant percentage of readers. Cutting the cover price to 20% wouldn’t have moved five times as many.

  19. StormBringer

    “I think you missed the one big, ongoing cost for a print run that doesn’t exist for eBooks: Printing a book.”

    No I didn’t, where did I miss that? Please to reread article.

    It’s *cheaper* to create an eBook, but it isn’t free.
    I didn’t say it is free to create an eBook. In fact, I used your very numbers to make that point. I said it was essentially free to make as many further copies of that eBook as you want. The unit cost of an eBook is approximately zero. Leasing server space for storage of an entire publisher’s line of titles is negligible.

    You’re saying that eBooks have an infinite recoup of investment. That’s nice. Tell you what, if you quit your dayjob today, I’ll pay you what you normally make in a year over the next 10 years if you make the same effort.

    What kind of economic response would you have to that argument?

    I know mine.
    How is that different than how you get paid now? If I understand correctly, you get some amount in advance of the book, say $10,000. Then you make some small percent of the book sales. According to your numbers, for a mid-tier writer like yourself, I would have to assume that isn’t much, if you are pushing a few thousand copies or less in a year. Calculating generously, I would peg that around $15,000 a year per title, which means you can’t put a book out there, then rush out and buy a mansion in Malibu anyway. Hence, you would need to have several titles in the pipeline at any given time to keep up your revenue stream.

    Whereas, you can front $7000 or so (probably much less) for a free-lance editor and typesetter to create an eBook, then approach Amazon, B&N, Baen or even put it out yourself, and you would get 100% of the money after you recoup the $7000. It’s more likely that a freelance editor and typesetter (or a collective of those) would charge a good deal less, however, as they would also be working on several titles at the same time. Say half as much. Sell your eBook for $5, your volume goes up, use half of that to pay off the editor or the loan for hiring the editor, and you would be in the black after 1200 copies sold. That is 100 copies a month over the course of a year. After that, anyone buying your book is pure gravy for you. In perpetuity.

    The problem isn’t necessarily Amazon or the conflict with Macmillan or any other publisher. The problem is the publishers want to maintain their control over the distribution of physical books, and as much as I love physical books, that business model is coming to an end. Like the recording industry, the publishing industry can’t see a world where they aren’t in charge, and refuse to adapt to that.

  20. Jonathan Vos Post

    [reposted from a comment of mine at Jay Lake's facebook thread]

    The SFWA essay by by Tobias Buckell half-makes a crucial point: “Even assuming eBook adoption follows an exponential takeoff, and map the growth rate of 2002 having .03% of the market to today’s set up, you have eBooks being 10% of the market in 2016. At that point, I’m betting volume will start picking up enough that it gets easier to justify smaller prices per unit. But right now, eBooks sell like limited editions.”

    The more sophisticated revenue model (he may know this but left it out because of length) is that ebook sales are on a LOGISTIC CURVE. It starts looking exponential; hits an inflection point of maximum rate of growth; growth levels off towards an asymptotic limit (i.e. ecological carrying capacity). After the inflection point, management does crazy things to try to get growth up, and fails. After a while near the asymptotic limit, some Shiny Newer-than-New medium starts up the next logistic curve. 4-D ebooks, or Haptic Virtual Reality ebooks. Or pr0n-with-teledildonics. Or nano-telepathy. Or whatever.

    I’d say that someone advising Amazon convinced Bezos of that reality, of which he was in denial for whatever reason….

    I could be wrong. That’s just me with my Mathematical Economist hat on.
    *takes off hat, bows, climbs off soap box*

  21. StormBringer

    Ooops, a small miscalculation. Obviously, if you went through an online seller like Amazon, B&N or Baen, you wouldn’t get 100% of the proceeds. More than you get currently from a publisher, I am pretty sure, but you would have to self-distribute to get the profit to yourself.

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  24. Douglas Cootey

    It really is an excellently reasoned post. Judging by how other authors & editors are reacting on Twitter, the industry sides with you.

    The problem I see in the current eBook pricing war is that for consumers there is a perception in greater value for the physical object. And as you pointed out yourself, many feel $14.99> is too much for an ebook. In fact, many readers that I know feel that $14.99> is too much for a hard cover. The industry can stomp and fuss all they want about the true costs of eBooks, but as long as the public perceives that eBooks are lesser in value due to their ephemeral nature, the inexpensive eBooks will force the market down.

    Look at what has happened over at the iPhone appstore. 99¢ is the pricepoint of choice. We will likely see the same thing begin to happen in iBooks. I know *I* won’t pay more than $9.99 for an eBook. It’s not my impulse buy point. I don’t pay more than 99¢ for single music tracks either. I see $1.29 for a track and I think, “Maybe not today.” I’m not alone.

    With luck for you, I will be in the minority. I still don’t see, though, how Amazon is the bad guy here as it is being painted all over the web. Regardless, I truly enjoyed your long post. Thanks for publishing it.

    @DouglasCootey

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  26. mkay

    Stormbringer:
    How is that different than how you get paid now?

    If I may answer for Tobias, the answer is, quite simply, sales. The average self-published book sells less than 200 copies TOTAL with half those sales going to the author itself. Your numbers are fantasy. Your contention that publishers control the distribution falls absolutely flat when it comes to ebooks because as you, yourself, keep point out, ebook publishing already has the means to cut out the publisher yet self-published authors are seeing zero success financially.

    And, btw, copyediting as a profession is already mostly freelance. Copyeditors are already working full-time. It’s their job. The idea that they would graciously double their workload (to say nothing of time) for half the price is not only fantasy, but pretty insulting.

  27. EachOneHasAnOpinion

    Just some food for thought; and presented as thoughts, not dogma. I’ve been wrong more than once:

    1. The differential cost of an eBook versus a physical book lies mostly in distribution costs. The cost of cover art and editing is insignificant in comparison to the costs of shipping physical books all over the globe is nothing relative to pushing the copy out via 3G,4G, or 128G technology.

    2. Books will be dirt cheap in the near future, in the $5.00 range(WAG)using the eBook model due to cheap distribution costs and cutting out the middleman (see below).

    3. Ebook technology is the beginning of a new day for authors and the beginning of the end for publishing houses. Look at the newspaper business model and that’s where physical book publishers will be in a few years.

    4. Who needs a publisher, to whom every new author has to bow and scrape and sacrifice all dignity for a first contract, when any prospective author can self publish an eBook. Authors should think about new ways to self publish (modern guilds?) and just ditch the stigma associated with self publishing. This is about a new business model, not a vanity press. Stand up straight, for Gods sake!

    5. With traditional publishers out of the way, what’s to prevent established authors from selling their new publication rights to Amazon directly? The authors and Amazon win the might as well win the lottery in that economic model. Traditional publishers are an anachronism.

    6. Of all the publishers on God’s green Earth, Macmillan has about the least moral authority to bitch about pricing. They are huge in the textbook business. Anyone priced a college textbook lately? Ever think about how many low- and middle-income kids can scrape up the bucks for tuition, only to be devastated by exorbitant textbook costs?

    7. Related to the above, Macmillan and their textbook oligarchs usually need government school board approvals before K-12 texts will authorized for purchase by independent school districts. Orwellian or Fascistic? I live in Texas and the most extreme kind of zealots control the state School Board. These nuts dictate what kids in other states get to read, because Macmillan has to placate the school boards in a handful of large states to maintain their market share. I don’t think they are going to publish a special edition textbook for Connecticut.

    8. The last point is a huge immediate vulnerability for ticked off eBook readers to consider in expressing their indignation. Watch and write your state school boards paying particular attention to Macmillan’s crappy texts. If they have the best text in a category, well fine. If not, start writing letters to the board about alternate publishers as being a better choice for taxpayer dollars.

    9. This all doesn’t matter anyway, because the market is all set to steamroll traditional publishers. We are going to see a new Renaissance of literature in which authors are better compensated for their work and readers benefit from an unprecedented diversity of choices and vastly lower prices due to technological innovation.

    Human ingenuity triumphs over power and concentrated economic interests once again…

    Y’all have a great day!

  28. oak

    A lot of good points I guess.

    One thing, Amazon does not force DRM. It’s a publishers choice and if they didn’t offer it as an option none of the big six and many smaller publishers wouldn’t allow their stuff to be sold (even though it doesn’t work).

    Any ‘numbers’ as to sales right now are only somewhat helpful. The ebook market is growing by 100′s of percentage points each year and just keeps getting bigger.

    As a 100% ebook consumer (haven’t bought in paper since ’07 and spend a few thousand a year on books) I don’t have a huge problem with ebooks costing more than $9.99, if I don’t like the price I won’t buy it. I just wish Macmillan in particular wouldn’t try and charge $15 for books that they put out in print at the same time for $8. Especially when they don’t even bother to give the ebook a full editing process (typos, OCR errors, ligature problems) or actual cover art. I mean something like Jordan’s Wheel of Time books have been in print for so long used books stores are overflowing with copies, but I’m expected to pay $15 for each book if I want the electronically. Silly.

  29. Leska Emerald Adams

    A huge exciting change is about to take place: the author will become everything, easily, and will be in charge of how his work is distributed.

    Easy to learn and use apps will make the author ALSO the editor, typesetter, designer, artist, copy editor, and proofreader. All easy in a do-it-yourself developer kit. And then you the author will be in control and will epublish independently, and sell your ebooks at the price you realize the market will bear.

  30. StormBringer

    If I may answer for Tobias, the answer is, quite simply, sales. The average self-published book sells less than 200 copies TOTAL with half those sales going to the author itself. Your numbers are fantasy. Your contention that publishers control the distribution falls absolutely flat when it comes to ebooks because as you, yourself, keep point out, ebook publishing already has the means to cut out the publisher yet self-published authors are seeing zero success financially.
    I will grant, that is the current situation. Nothing says that is the permanent situation. And you aren’t talking about self-publishing, you are talking about vanity publishing. Very different animals. Mr Buckell claimed a few thousands downloads of his book when it was free, I was using that number as a baseline, as it would more accurately reflect the sales volume of an eBook. As the price increases, the sales would fall to zero; basic math, really. It may not be linear, or geometric, or whatever, but there is a curve that correlates price point and sales.

    In fact, there are a good number of success stories in eBooks: the RPG industry. I personally know or have at least a passing acquaintance with many self-publishing RPG company employees, and often the owners. Aside from your complete over-exaggeration that there is “zero success” in slef published eBooks, that exact same argument could have been made ten years ago in the RPG industry. None of them are driving Ferrari’s at the moment, but none of them expected to, either. I defy you to claim they have “zero success”, however.

    And, btw, copyediting as a profession is already mostly freelance. Copyeditors are already working full-time. It’s their job. The idea that they would graciously double their workload (to say nothing of time) for half the price is not only fantasy, but pretty insulting.
    I didn’t say they should work for half their current amounts, I was presuming that more self-publishing would lead to more editor/typesetter work to go around, hence, more editors/typesetters. Natural competition leads to more competitive pricing for services. I was posit that the freelancers would likely get more pay overall, as they can take jobs from anywhere, not just what a publisher sends them.

    That is the basis of a free market, in fact. The worker is free to sell their labour to whomever can pay. Right now, like most corporate workers, they are essentially locked in to one employer. That is the power publishers have over the industry: access to resources. Once that access is democratized, once it is available to authours at large on their own terms, large publishers will go the way of buggy whips.

  31. Becka

    So, it seems McMillan won this one. I will not pay $14.99 for an e-book. If it was a real book, I could later give it to family or friends, but an e-book I’m stuck with. It simply isn’t worth it to me. E-books are only worth it if they cost less than real books. Yes, $14.99 is less than a hardcover, but if it is a book that I would have purchased in hard cover, I’m not going to buy it as an e-book anyway.

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  33. J Metz

    I second the motion. As I am currently writing my first two popular titles (as opposed to academic ones), I definitely appreciate the insight and well-thought positioning. It certainly helps put things into context.

  34. mkay

    stormbringer: you’re moving the goalpost. RPG materials are not novels. They are ancillary materials to a different media. If you want to insist they are, then you have to insist that software manuals count, which arent’ even packaged with software anymore–it’s all online. That’s not what the issue is. This issue is a sole item: books that stand by themselves and are the only source of income for authors. I stand by the statement of zero-success in self-publishing. A simple google will bear it out–once you wade through all the self-promoting self-publisher services and get to real numbers for real books.

    As I said, the pieces of the self-publishing business are already there and have been for years. The services are there and the internet is there and Amazon, lulu, et al. are there and have been. Major publishers are completely skippable already and if the contention that self-publishing will replace them were true, they would have made a major impact long before now.

    Your contention that the copyeditor market–or any production job–will expand to such an extent that their fees will drop in any major way is not reality. It demonstrates a lack of respect and value being attributed to the good, quality work that goes into producing a good book.

    I’m very aware of the difference between vanity publishing and self-publishing, but when it comes to actual sales in either case, the numbers tell the story.

    And I also should point out you have twice made reference to not rolling in money. You are confusing the Stephen Kings and JK Rowlings of the world with the vast majority–and I mean vast–of authors who, right now, make an average of $20K. That’s the average of ALL authors and bear in mind that includes the superstars pulling that average up. The insistence that wages go down, that prices go down and that the window for recoup gets stretched over years means that $20K goes down too. The free market goes both ways. As it is, authors give up because the money isn’t worth it. At a certain point, the labor of love with the possibility of enough money to go on a vacation turns into a labor of love without even that incentive.

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  37. Doctor Science

    I’ve been putting up (almost-)daily book reviews at http://goodbookoftheday.com, and linking each review to Amazon as an Associate. I’m now seriously considering cutting that relationship. I’m prepared to deal with the normal pace of link rot, but the prospect that 20% of my links might go bad at once, without notice, is not acceptable. From my POV, Amazon has demonstrated that it’s not a reliable distributor — that being a reliable distributor is not even a priority for them.

    I’m thinking about linking to Powell’s for hard-copy books. For e-books I’m less sure. Do you of you here have experience (as a writer, buyer, or associate) with http://diesel-ebooks.com/?

  38. XandraG

    Very thorough article. Thank you for posting/mirroring it here. The only part I disagree with is the idea that the ebooks would be priced initially high, then come down once volume begins to show enough muscle. This to me doesn’t make sense when you’re marrying the technology to the model. Pricing ebooks high prevents people from adopting the technology, which prevents them from buying ebooks which keeps the numbers low which prevents the prices from falling, etc. etc. etc. Amazon’s theory seems to be that pricing ebooks low enough (even though 9.99 is more than most mmpbs) will cause more adoption of the tech, and drive sales upward. And it seems to have had some effect.

    I’m not a fan of Amazon’s stranglehold on online sales, or the fact that the Kindle is proprietary and single-format, but they do seem to be barking up the right tree when it comes to inviting people into new technology.

    @mkay and @stormbringer – a big part of self-publishing’s lack of viability on a grand scale is distribution–self-published paper books rarely see many sales because they never make it to publishers’ intended customers, which are not so much readers, but chain-bookstore buyers. Self-published authors are also rarely known outside of a few dozen people who may or may not have a personal relationship with them. RPG publishers have a built-in market that supports the niche idea–they have little mass-market competition, and can better directly reach their audiences. Someone with a self-pubbed fantasy, romance, SF, urban fantasy, mystery, etc is a small voice in a very loud, very large room populated with other people in possession of megaphones and PA sound systems.

  39. Jonathan Vos Post

    “vast majority–and I mean vast–of authors who, right now, make an average of $20K.” This is over a decade out of date, but when I was a repeatedly elected officer in the National Writers Union, one datum was that the average income from writing of the “successful” US authors who had actually had a book published in the past year, was someplace between $15,000 and $20,000. The top 2% earned $100,000 or more. The top 1% earned $200,000 or more. It is a heavily skewed distribution (mathematically); that is, as I’ve said, a Star System (non-Astronomically).

  40. StormBringer

    stormbringer: you’re moving the goalpost. RPG materials are not novels. They are ancillary materials to a different media. If you want to insist they are, then you have to insist that software manuals count, which arent’ even packaged with software anymore–it’s all online.
    False correlation. There are actual games that are self published and doing well, respective to the industry, not just supplemental material. However, supplemental material does quite well, also. Which leads to the idea that a novel perhaps shouldn’t be the be-all end-all goal of an authour. Short stories, anthologies, novellas, there is a vast number of formats that can be written to ‘supplement’ a 400 page book once a year.

    I stand by the statement of zero-success in self-publishing. A simple google will bear it out–once you wade through all the self-promoting self-publisher services and get to real numbers for real books.
    Ok, here is a short list from Wikipedia:

    Self-published works that find large audiences are extremely rare, and are usually the result of self-promotion. However, many works now considered classic were originally self-published, including the original writings of William Blake, Virginia Woolf, Walt Whitman, William Morris, and James Joyce.

    * Spartacus by Howard Fast (during the McCarthy era when he was rejected by previous large scale publishers)
    * The Celestine Prophecy by James Redfield
    * A Choice, Not An Echo by Phyllis Schlafly [8]
    * The Joy of Cooking by Irma Rombauer
    * What Color is Your Parachute? by Richard Nelson Bolles
    * Poems by Oscar Wilde
    * In Search of Excellence by Tom Peters
    * Chicken Soup for the Soul by Jack Canfield and Mark Victor Hansen
    * The Christmas Box by Richard Paul Evans
    * Invisible Life by E. Lynn Harris
    * The Visual Display of Quantitative Information by Edward Tufte
    * Contest by Matthew Reilly
    * Eragon by Christopher Paolini [9] (The book was later published by Knopf)

    Other well-known self-publishers include: Stephen Crane, E. E. Cummings, Deepak Chopra, Benjamin Franklin, Zane Grey, Rudyard Kipling, D. H. Lawrence, Thomas Paine, Edgar Allan Poe, Ezra Pound, Carl Sandburg, George Bernard Shaw, Upton Sinclair, Gertrude Stein, Henry David Thoreau, Walt Whitman and Mark Twain.

    I would hardly call that ‘zero-success’.

    I think the part I highlighted in the first sentence is the sticking point. If seeking a large audience is the goal, it is also not being served by publishers now. Barnes and Nobles has shelves full of books by current publishers that don’t find a wide audience. Your assertion as to the low volume of sales currently with the backing of a publisher demonstrates that.

    As I said, the pieces of the self-publishing business are already there and have been for years. …Major publishers are completely skippable already and if the contention that self-publishing will replace them were true, they would have made a major impact long before now.
    You must be aware that technology does not immediately alter the landscape the instant it is introduced, right? The internet was ‘invented’ in 1961, the first steps towards that weren’t taken until 1966, the protocol for data transmission wasn’t created until 1972, the algorithms for networking weren’t around until the 80s, and the World Wide Web was ‘created’ in 1989. Almost thirty years from conception to execution, and you think eight years of Lulu should have transformed a media that has existed for six hundred years is enough time?

    Your contention that the copyeditor market–or any production job–will expand to such an extent that their fees will drop in any major way is not reality. It demonstrates a lack of respect and value being attributed to the good, quality work that goes into producing a good book.
    It demonstrates no such thing. It certainly doesn’t demonstrate any lack of respect on my part. I know people that do copy-editing, I have no illusions about the work. It is basic economics that greater competition leads to more stable pricing. If five people can do a certain task, they can charge just about whatever they want. When that number grows to five hundred, they have to offer more competitive pricing, and the workload is distributed more evenly, meaning more input from suppliers (authours) and those suppliers have a more reasonable expectation of fast, efficient and overall higher quality work.

    I’m very aware of the difference between vanity publishing and self-publishing, but when it comes to actual sales in either case, the numbers tell the story.
    It appeared you weren’t, as self-publishers are not encouraged to purchase half of a print run, as vanity publishers are. You seemed to assert they were.

    And I also should point out you have twice made reference to not rolling in money. You are confusing the Stephen Kings and JK Rowlings of the world with the vast majority–and I mean vast–of authors who, right now, make an average of $20K.
    Which is slightly higher than the amount I based my previous calculation on, $15k. Hence, I am not confusing anything.

    So, two novels a year for $30k, and some ancillary work, like short stories or collections of short stories for another $10k. In the physical book market, it is entirely possible that half of that could be eaten up by the unit cost of a book. In the eBook world, however, Lulu charges significantly less:
    $ 1.49 Base Fee
    + 2.00 Royalty
    + 0.50 Lulu commission (25% of your Creator Revenue)
    ======
    $ 3.99 Price

    So, $1.50 per unit. $10 eBook has a commission of $2.50, plus the base cost is $4 per unit, profit of $6 per unit. Lulu offers editing for $200 and copy editing based on the length of the book, so another $300 (estimate) on a novel. Just over 80 books sold, and that is paid off. Every sale thereafter is $6 in the authour’s pocket. Sales will naturally fall off over time, but unless the authour pulls the book on their own recognizance, it will always be available for sale. No dropping the title by a publisher because the sales numbers don’t justify keeping it in print.

    1200 copies is $18k, right about what you claim they are making now. 100 copies a month. Where is the benefit, then, in staying with a publisher?

    And that is using Lulu. The costs for self-hosting an eCommerce site would drop even the $1.50 by quite a bit. However, an authour would then need to procure the services of a copyeditor on their own, among other things.

  41. StormBringer

    @Johnathon:
    …was someplace between $15,000 and $20,000. The top 2% earned $100,000 or more. The top 1% earned $200,000 or more. It is a heavily skewed distribution (mathematically); that is, as I’ve said, a Star System (non-Astronomically).
    One of the analysis I read was that publishing houses are almost entirely concerned with that very Star System you mention. Mid-Tier writers pay the publisher’s bills, but Stephen King and JK Rowling make the publisher’s profits.

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  43. Annie B

    Here is the sad truth about ePub. You are competing with free. Maybe not on an even field. (I will do you the justice of granting you are a far better writer than the self-pub average.) Still – it is competition. Free is out there. Free is a very attractive price.

    As you say, some writing is worth more than other writing. Are you sure you are worth $15 more than the best of the ‘free’?

    Maybe – but these days I find myself reading a lot of free.

    PS: Including a lot of public domain works that were prev. ‘published’. Free isn’t just dredging the bottom, it’s also reviving the past.

  44. mkay

    Stormbringer, you are definitely posting in the right forum. Like science fiction, your math is perfect, yet, like fantasy, your story has no basis in reality.

  45. StormBringer

    @Mkay:
    You have yet to show that. XandraG made a good point, but again, it was in relation to physical books. Of which I have no doubts they are correct; self-publishing a physical book in a world saturated by big-name publishers is likely a fool’s errand.

    So, we have some numbers that seem to agree, and Jonathon at least backs up the income numbers, between $15k and $20k. We have Lulu paying $6 per eBook. How much do authours make per physical book? My understanding is something like 15% cover price. For a $25 hardcover, that is $3.75. For the $8 paperback, it is $1.20. And that is only after a certain number have been sold, perhaps several thousand or more. Even worse is if they get paid by publisher’s wholesale instead of cover price, as that cuts the royalty in half or more.

    And we have seen that Lulu will edit for about $200 and copyedit based on the length of the work. I was generous and called it $300 more, for a total of $500. While their editorial staff is likely subsidized by the other business centers, freelance copyeditors charge anywhere between $15 and $40 an hour, or a good deal more in the academic world. Of course, this cost is part of what a publisher provides, but you can be certain it is part of the calculation for the royalties to the authour. If a copy editor spends a full week on a novel, that would be $1600 at the top rate. Half of the royalty by Lulu would have that paid off after 530 eBooks sold. Find a less expensive copyeditor, and you can shave $1000 off the cost, meaning 200 eBooks to pay them off.

    In any case, you can assert anything you want, but unfounded assertions are the very definition of fantasy.

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