Thursday, June 29, 2006

e-book musings

Just read an interesting article on the e-reader and its potential and I got to thinking on the other side of the argument for a change as to just how would you make money from such a thing?

As I'm not a publisher I've just been plucking figures out of thin air. I'm more than happy to stand corrected if none of the below stacks up...

Let's take a £6.99 mass market paperback thriller, the kind of thing I guess would be used on the reader.

The publisher will sell this to a large retailer for £3.50. The author gets their royalty (and here I must profess my unforgivable ignorance in the matter of how much percentage the author takes but I'll hazard a guess at a pound for a 6.99 book [this only underlines the fundamental differences between authors and retailers - writers, most retailers aren't really your friends no matter how much the big boys go on but that is really a whole other post])

That leaves £2.50 to the publisher. Printing, wharehousing, distribution and admin must amount to atleast £2 (surely?) leaving 50p profit on the book.

So, how do you price an e-book download? Working backwards we have £1 to the author, 50p profit to the publisher, no physical costs but running and managing a vast website of millions of titles out of which only a few thousand or so turn a profit ain't cheap so I reckon, conservatively, another £1.

So, the minimum price for a download would have to be atleast £2.50. But what about the question of value? A 3 minute single from i-tunes is 79p. A book which you may end up spending 2-3 weeks with demands a certain price point to give it the appearance of importance and value in your purchase. Too low and people will dismiss it as cheap and not worthwhile and too expensive and you might as well have the book. Which is why you can see from the article that a publisher would aim to come in at about 20-25% below cover price - between £4 and £4.50 then for a download.

But, a cheap mass market paperback is that price from asda. Anyway, back to value.

The Sony i-reader looks at being priced between £175-£225. If you're saving £2 a book then you have to download 100 books to break even (and the i-reader only holds 80 titles). A serious book reader may still take close to 2 years to get to that point and serious book readers love browsing in book shops so they ain't your market. Your average reader will probably take a good 5 years to break even by which point your machine is close to obsolete. I guess this is why the Sony i-reader can surf the net and play music too. Let's face it, the i-reader is aimed at men of a certain age who read certain magazines and just love gadgets. I'm Sony and this is my market, I'm happy but, if the i-reader is only being used for reading for half of its time then there aren't many books being downloaded and the publishers aren't making any money.

Which brings me to why people love i-pods. Listening to a song tends to remind you of another song. On your i-pod accessability is everything. When you're reading you tend to be lost in that world, accessability is redundant. Collating all your music into one piece tends to make geeks of the best of us - who doesn't compile playlists and top tens for every concievable occasion? This is a fundamental difference to books. Ok people make book lists and can be semi-autistic in their attitudes but there is a question of time and space involved in reading a book that the pop song delivers instantly. (Or, a quiet spliff as opposed to freebasing cocaine but I wouldn't know anything about that) And something not entirely compatible with the convenience of the i-pod. (Even so it's still a darn sight quicker to turn to page 239 rather than clicking on the wheely thing on the i-pod)

So, I'm a publisher now and I'm asking myself where's my market for this e-book thing? Answer: Over 80% of the publishing business is made from academic publishing and text books. All this guff about Waterstone's and high streets and Independents is a mere drop in the ocean compared to where my profits are. What are my costs in academic publishing? - small print runs and distribution. Electronic delivery takes care of that. Printing, paper and again distribution costs for work books - you'll be able to write on the screen. Interactivity. Ok, you've lost those sales but you've more than gained from the other savings. Also, if Bill Gates does get round to giving away his billions and equiping children in developing countries with these things then that is a good thing to do. All of a sudden the e-book makes sense. Cheaper for the people who need the information while still returning profits to publishers. Hooray, everybody's happy.

So, the small part of the publishing industry that we at C&P deal with - the creamy bit (or is it scum that rises to the top?) - just won't be affected at all by this e-book thing. England are going to win the world cup too. (But I will bet my own money on France beating Brazil)

The e-book is dead. Long live the e-book! Time and a place innit?

4 comments:

  1. Go France! I realise that wasn't the entire point of the article but still. Allez les Bleus!

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  2. AnonymousJune 29, 2006

    This all makes a lot of sense -- and particularly for reference texts. In my world (pharmacy) we have a bible published every year - the BNF, a drug reference book. The Department of Health buys it in huge quantities for the NHS and it's considered a world-wide gold-standard. Trouble is, it's out of date as soon as it's written and, for example, hospital doctors really don't like to lug books around with them on their rounds. But these problems have been solved by the advent of the e-BNF -- straight to the hospital doctor's (or anyone else's) PDA, should he so wish. It's always up-to-date and much easier to search than any paper version could be. Hard to fault, no matter how much we may love the printed page.

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  3. ONE POUND !!! I should be so lucky. On a 6.99 paperback when my publisher calculates on price received plus you get less for what they call 'high discounts' of 50% and over but which we al know are NORMAL or even lower discounts for supermarkets... I`ll be lucky to see 50P. very.
    On the other hand, if you are a Long Barn Books author you get 10% of published price, discount immaterial, and 15% on sales above 2,000 copies. I must be mad

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  4. Thanks for the correction Susan. I had a suspicion writers got shafted but I was trying to give the publishers the benefit of my not inconsiderable doubt. Fool!

    Does this mean though that writers may get a better deal from the e-book or will publishers make sure it's their slice first.

    Maybe a case for consumers to download direct from the authors website - something for your webmaster perhaps?

    And just to clarify, authors really do take a hit on discounted titles, don't they? (Though I bet Jamie O, or JK R don't)

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