* Contrary to popular belief, physical production is NOT the single largest part of a book's cost. In fact, even before ebooks, the cost of paper and ink and shipping was actually a pretty negligible part of the final cost.
Most of the cost of a book is the highly-skilled labor involved (writing, editing, copyediting, proofreading, designing, typesetting, marketing, selling) and these critically don't go away or even get much cheaper in an electronic world. Even ebooks need specialized design and typesetting, and I have some examples which did not get that love which will make your eyes bleed if you don't believe me.
Salaries in publishing have for decades been nosing around the minimum the market will bear---as just one example, freelance proofreaders get paid a penny per word; the good ones get two. Many freelance proofreaders are also editors, copyeditors, and authors in their own right, and hustle their asses off to make incomes that, coming from tech, we wouldn't consider starvation wages.
* Price is an important signalling mechanism, and so---given the costs of book production---it's important to the publishers not to drive the perceived fair cost of books down below, no matter whether Amazon is currently subsidizing that or not.
I think this is the number one reason. The issue is that the prices are too high for perceived value.
I buy a fair number of non-fiction books and loved when ebooks emerged as a viable way to buy a book at what I perceived to be a reasonable price. Now that the agency model has been in force I've just shifted how I buy ... I buy used books from Amazon.
All the books I used to buy as ebooks the publisher was receiving revenue. Now, they don't receive any money from my purchases.
The book publishing industry still has a window of opportunity to transition to ebooks under their own direction, but it's almost closed. See the recording industry.
How much do you value your favorite authors eating or having health insurance?
This is a serious question: just a few days ago I was suggesting that a friend, twenty published books over the last thirty years, books you may have read or heard of, start a Patreon so that he might, for the first time in his life, afford health insurance.
People working full-time in publishing might have health insurance but are working for well below market (by outside of tech standards, which are pretty embarrassing) in some of the most expensive cities on earth. And they can't just move, because then they'd get converted to contract and lose their health insurance.
This is not to shame you for buying used books---that's fine, there's no way I'd have the library I do without them, and I grew up groveling the library and used bookstores because that was all we could afford. Readers are readers. But---and I encounter this again and again---readers' perception of value in books is fundamentally misaligned with the actual economics of the book trade, to the detriment of both.
I must confess to being baffled by all this talk of typesetting, for the following reasons:
1) My ebook readers (Calibre and iBooks, mostly) algorithmically render and reflow the text to arbitrary typefaces, sizes, columnar layouts, etc. Isn't this "typesetting?" And isn't it taking place entirely in software? [0]
2) Latex consumes a plain-text (aka neither designed nor typeset) file as input and produces tolerably-good machine typeset output. Its output is vastly better than plenty of well-regarded periodicals such as [1], which proves by construction that good-enough machine typesetting can be implemented.
[0] I'm not claiming iBooks typesetting is remotely comparable to what's found in a Random House hardcover, but rather that no hand typesetting at all takes place for most (all?) ebooks.
When I'm translating plain text (Markdown-ish) input to LaTeX, I spend a bit of time going through by hand making sure all my formatting has converted correctly, any accents or non-roman characters are correct, the single- and double-quotes are correct, I haven't accidentally copy-pasted any ligatures, I have included hyphenation for nonstandard words, I've included any relevant non-breaking spaces, figures and headings and captions are flowing correctly, etc. etc. And all of these are still necessary when producing an ebook.
It's maddeningly detail-oriented, but the results are really noticeably much better, and in many cases make the difference between the text being readable and not. It's a bit like the cue dots at the movie theater---if you're not looking for them, you don't notice your uninterrupted experience unless the projectionist screws something up.
Yup. For a typical hardback, the physical costs (printing, shipping, and storing) are about $3.25. Here's an article from a few years ago that looked at the money side of paper books and ebooks: [1]
[1] http://www.nytimes.com/2010/03/01/business/media/01ebooks.ht...
The costs of modern day e-books are real, but for many genres markets its possible that buyers are simply willing to tolerate a book that's objectively worse (more errors, worse design, illustration by total unknowns, fonts free sources instead of foundries).
Rather than continuing to participate in the traditional industry, I think a lot of authors will have to self-publish and realize that if they can't give their book the love needed to not "make your eyes bleed" then their work will fail in the marketplace. They can't rely on someone else to take a manuscript and clean it up to a publishable version anymore.
There's just not space for those middlemen and helpers in a lot of genres market, unless you are a best seller.
That said, the market for freelance book production people is actually much better than it was a few years ago, for precisely the reason that there's just more money in the market now.
5000 sales is larger than most first print runs, a minority of books are bestsellers and sell hundreds of thousands, the majority sell just a few thousand and make very little profit if anything, this is why publishers offer an advance set against future royalties.
There is still a vestigial authority to a printed book (someone other than the author liked this) and a stigma attached to self publishing, so there is some value still to being published on paper, because the main benefit to most authors is reputational, not monetary. It will be interesting to see if that changes with ebooks. However, like print newspapers, mass-market print books are dead, they were always on thin margins but are now unsustainable. This will take a decade or two to work out, but it will happen.
I am not a publishing industry insider, so these numbers are an educated SWAG, but let's see if they shed any light.
Let's say a top editor at a big-5 genre publisher makes $100k a year. That's way high, but we'll roll with it, 'cuz it makes the math work out nicely. Let's say they work on ten books a year, also probably high, but that's $10k/book. If they make $50k and work on five books a year that's still the right ballpark.
The art and production departments are shared across a publisher's whole line, or possibly even multiple imprints. Let's say the department costs $300k total and does thirty books a year, for $10k/book, which includes the cost of soliciting and paying the artist for the cover art, ebook and physical production, copyediting and proofreading.
We're up to $20k now.
Now we get to the fun part. Your big-5 publisher literally pays people to go read your book and then drive to all the bookstores in a geographic area and convince them to buy it. Figure that there are 10 of them in the US, each of them pulls in $50k, and they're repping 25 books a quarter, so 100 a year. That's another $5k on top just for their salaries, not counting their travel and expenses, for which $15k a person a year seems not unreasonable. And this isn't counting ad buys or any marketing, just plain sales. So figure half your book's total budget is sales.
So that's $40k/book for a midlist, 100k-word genre title from a well-regarded editor before we get to the author or the physical production.
(Things I'm leaving out: legal department, some kind of business/management structure, some kind of web site???)
Professional rates in fiction are a princely seven cents a word, so for an author who's worked a year on a book (not unreasonable) that's a whole $7k---but this book was acquired by a well-regarded editor at a good house, so let's say the author is getting a whole twenty cents a word, or $20k, for this year of labor. That's a third of the cost of the book so far. Accounting around authors in publishing gets weird---advances versus residuals, etc.; actually accounting in publishing is just plain weird, period---and a $20k advance is princely, but not unreasonably so.
So then the publisher has spent $60k on your book, and wants to earn its money back and then some.
My sense is that 5k sales is a low number, and certainly you aren't going to get a $20k advance next time, if your next book gets picked up at all. Publishing is a hits business---most sales happen in the first few months---so rates matter more than absolute numbers. 5k sales over ten years might finally earn out your advance, but 5k sales in the first month will get the second book of your trilogy picked up. 100k sales is John Scalzi territory, and my sense is that 30k sales is comfortable midlist territory.
Now, 30k sales on $60k spent out of the gate works out to $2/book, or $8/book profit at $10/book ($13 list with an Amazon/wholesale cut of 30%), but remember that in a hits business not nearly every book will sell even that many copies, but no one can predict ahead of time which ones, so publishers need to invest in many more books which won't sell to find the ones that will. It's anecdotally reported in the publishing industry---and I think it's evident in the financials as well---that breakout, millions-of-copies-sold success 50 Shades of Gray subsidized essentially all of Random House's other books for a year or two.
It depends on your hits business how bad the ratio is, but in genre publishing figure that less than half of books earn out for the author, so at $60k/book that's 6k sales minimum, which not every book makes. (Classic scenario: publisher gives you a big advance on your outline but then decides not to sell or market the book when you turn it in and they don't like it, but they don't want to pay the kill fee, so they rush it through production, ignore it in marketing, print the minimum required copies, and hope nobody buys them. Whoops.)
The key expense self-publishing discussions usually miss is really the sales and marketing one, followed closely by editorial. And freelance editors do exist and are quite good, so if you're self-publishing, consider one. I don't know of any freelance book salespeople, though. For some reason salespeople are very good about getting paid.
I should add that this is not to say that, if you're self-publishing, you should expect to spend $60k on your book. My sense is that even $10k/book is on the high side. Certainly out here in the freelance world I would tell an author expecting to put that much up to self-publish her book that she was being taken for a ride, and not the fun kind.
Remember that you're giving up sales and marketing, and you're not paying yourself an advance, so you're down to $20k already, and then you're working with newer artists and freelance professionals. Depending on how good you are at the various aspects of the work (and don't kid yourself here, he says mostly to himself), figure $3-5k is a decent ballpark for an anthology or a full-length novel. It's not going to sell 6k copies either, but then paying more probably wouldn't help its sales any. Still, do your research, don't shortchange your business partners, pay for quality where it counts, and don't pay for vanity publishers (Author Solutions, etc.)
http://www.theguardian.com/books/2015/dec/23/japanese-booksh...
The the comments about Amazon and publishing, Amazon has a very major publishing operation (called, suprise!, Amazon Publishing). It's grabbing market share very quickly. If you want information about this check authorearnings.com (which provides industry sales estimates that include self-publishing) Of course the big story in the publishing business is that self-publishing is rapidly eclipsing traditional publishers in the ebook space.
Amazon is not only doing Netflix for books. It's doing Netflix for film and TV. The big competitor to Netflix is not any network or studio -- it's Amazon.
> They actually proved the consumer will buy the cheaper option, but okay
I find it alarming that an indie author does not seem to be concerned with cheap product flooding the market. Amazon's attempts to lower barriers to entry means more aspiring authors competing for a piece of the pie. Look at how the race to the bottom in the App Store is destroying indie iPhone developers.
The flooding already happened. There was a gold rush a few years ago when anyone who had any interest in writing slapped together an ebook and put it online.
Some of those authors did incredibly well for a year or two, then the market became saturated.
So there was a shake out. Authors who understand business - marketing, leads, keeping a mailing list, and running a blog that provides value - are doing somewhere between "ok, I guess" and "still earning well."
The opportunists and not-so-greats and other amateurs have given up and run away.
Now, the market for indies is stronger than it was - because as the post says, trad pub has strangled its own market share. And this is excellent for indies.
I really think they would benefit from asking fans to sign up for an announcements list that is just announcements of new work. Plus it gives them the ability to sell smaller works published via kindle to their fans to pad out the gaps between full books.
Obviously, if you're doing something like that, there's some sort of upside for you. What's the upside? Is it... just speculating here... pushing literally every other serious bookseller out of the market by selling things at a loss, attaining near-monopoly status, and acquiring the ability to make publishers do whatever you want so you can crank your revenues up?
Of course, even if Amazon were doing something like that (how implausible! :-) ), the publishers weren't going to put a stop to it with the kind of antics they got up to...
There are already examples of how bad Amazon's pricing and fees are in areas where they have little competition - for example, the cost to deliver ebook downloads to users.
For example: In Japan, ebook download pricing is extremely low (in no small part due to manga). If it wasn't, nobody would sell their ebooks on amazon.co.jp, because they'd get utterly suffocated by the download fees. In every other country, the download fees are dramatically higher than those in japan. So much higher that it in fact drives independent authors to leave out illustrations and carefully optimize their PDF files to reduce costs.
You can see http://www.mhpbooks.com/what-does-it-cost-to-deliver-an-eboo... for an old article on the subject, but you can check the current rates and see that they haven't improved, and observe the very suspicious carve-out for japanese ebooks.
Sounds good, unless you factor in other Hachette customers that get the shaft, because a company with deep pockets like Amazon uses their cash reserves to undercut them with unhealthy margins (actually negative margins).
This is downright monopoly behavior. Why should they accept it?
And of course those other outlets will complain to Hachette or ask for the same prices.
It's also a good way to screw the customers in the long run, as they get their cheap books from Amazon first, and then when the other stores with lesser means have died (unable to keep up with the negative margins), they can jack the prices again...
Amazon just haven't reached that status in most areas yet.
And where it has, e.g. books, it already used its power to manipulate producers and the market in its favor. Siphoning millions for selling books below what you pay for them is not some kind of marketing trick, it's anti-competitive behavior meant to kill less loaded rivals...
This is sad.
You remove the barrier to entry so that as many people as possible will try your product (free).
You identify those people who really enjoy your book and want to consume more of the same.
You provide them with so much content that they can spend as must as they like.
It's not unreasonable for people to spend 100's of dollars a month enjoying their favorite pastimes.
Why put a $15 cap on it per book.
The jury's still out on how successful it will be, for what kinds of projects, but I think it's clear that the world in which $15 retail packages are the only form factor prose fiction is ever sold in is basically gone, and that's probably for the better.
My favorite early example of this was Shadow Unit (http://shadowunit.org/), an entirely donation-supported serial.
https://en.wikipedia.org/wiki/Amazon_Publishing
And that's just original imprints; it doesn't list things like Audible, which Amazon owns, and which are THE major audiobook publisher, but almost always published secondary to a print publication rather than original.
And that's not including Amazon's multiple self-publishing options, including the Kindle Direct program.
And maybe this will slow Amazon's success for a few profitable years, more profitable than current loses ? And maybe by that time the publishers will find an ebook strategy that will work(hard to believe, but maybe).
Also,let's look on the other side - what happens if ebooks fully kill print ? can publishing even make money in such state of affairs ?
My guess is that it would drive authors into services like Kindle Unlimited, since they would be able to create a long-term income stream unlike physical books or non-transferrable ebooks.
What is really puzzling is the many authors who thought the publishers are fighting for them and stated public support for their publishers. Especially since the publishers blockade apparently cost them a lot of sales.
Why is this insane? An ebook has more value to me than the print one as it's more convenient. Since it has more value to me I'm prepared to pay more.
The physical copy could be free and I'd still pay to get the ebook instead in most cases.
When a physical object that has to be manufactured and shipped costs more than a text file, I feel ripped off. Especially since I can lend a physical book to someone or sell it to a local used book store, neither of which I can do with an ebook.
Textbooks.
