Candice Hughes

Not long ago I posted a summary of comments on the cost of book production by Lee Child.

Here’s another source showing how little it actually costs to produce a physical paper-based book (just in terms of printing).

“Printing a 9-by-9-inch, 334-page hardcover book in China costs about 44 to 45 cents now, with another 3 cents for shipping, says Goodwin. The same book costs 65 to 68 cents to make in the U.S.” He goes on to explain that US printing obviates the need for an additional 30 days of shipping time- plus the extra 3 cents cost.

http://news.yahoo.com/s/ap/20100708/ap_on_bi_ge/as_china_cheap_no_more

Thus, the cheapest cost for China is 47 cents versus the most expensive cost for the US 68 cents. Will an extra 50 to 70 cents more or less  prevent anyone from buying a paper book (over say an e-book version)? Because that ‘s the real cost difference unless vendors artificially lower e-book prices by cutting pay for writers or publishers or sell at a loss to themselves. In fact, the difference is likely even less because there is still a cost for programming to develop and maintain software allowing e-books to be uploaded and viewed.

These numbers further demonstrate that most of the cost of a book is content development (ie: the writer sitting in the chair fingers to keyboard for months or years and the editor polishing the text up) plus some marketing/sales costs so that readers can find and obtain a copy of a new book and don’t have to hunt the Internet for obscure web sites to buy a poorly or non-promoted book. Thus, most costs do not change regardless of whether the book is delivered in electronic or print format.

E-books are a great option, but keep the price honest.

I just love my local library. Our librarians put together a fantastic slate of authors every year. This year, they wrapped up the lectures with a bang by inviting Lee Child to speak. The substantial auditorium was jam packed, spilling out into the hall, so clearly our librarians made a good choice.

He was witty during his lecture about his publishing career. During the numerous questions, of which I’m sure he’d heard a few many times, he came across as honest and patient, giving thoughtful answers.

One topic that interested me considerably was e-books. The publishing industry has been in an uproar over e-books for the past couple years. Lee Child gave the clearest answer I’ve heard yet about what price e-books should have and why. First, he said consider that his standard hardcover sells for about $28. The cost of printing and shipping the hardcover is about $5. That means the value of the story (content only) is about $23 for those receiving it first (hardcovers come before paperbacks if there are paperbacks).The $23 covers the cost of all the publishing staff (editors, marketers, etc) plus the very important author- everyone who helped create the story and make it visible to it’s audience (I’m adding this bit, Lee Child didn’t go into this detail).

E-books, contrary to popular perception Mr Child said, do have a cost for creation and delivery. After all, someone had to create the computer program used to format and deliver the book. Estimate that cost at $1 per book. That means the e-book cost is $23 + $1= $24 (or the cost of the story plus the electronic formatting and delivery). Obviously at the much bandied price point of $9.99, someone is losing money.

There were many questions about Reacher, but I’m not going to go into all of them here. I do recommend that if you have a chance to hear Lee Child speak, you should take it.

The agency model for e-books is out of the gates and off and running as of yesterday. As many expected, there have been some bumps in the road. Some publishers are still working with Amazon. This is all to be expected given how quickly deals had to be put together.

My main concern is communication with customers. This morning I checked the Amazon Kindle blog and noticed a number of customers complaining about the price changes. Some felt that publishers were price-gouging, getting more because they could, etc. To quote one customer “I’m really tired of these publishers jerking me around. Ebooks are almost pure profit since they don’t have to pay anyone to print or ship…”

Very few customers posting recognized or understood that authors need to be paid fairly for their work. The focus was heavily on publishers and lawyers writing up contracts as well as the low costs of producing an e-book versus printing. The truth is that without authors sitting in a chair, fingers to keyboard for months or even years, pouring their heart and imagination out onto their hard drives, there would be no e-books (or any other form of books). The truth is that like other products (cars, jewelry, clothing) some products may have a higher intrinsic value than others.

I believe most people are willing to pay fairly for what they buy when they understand the value of what they’re buying. Few expect to buy a shiny new BMW car for the same price as a Kia.

Of course, why should readers realize or understand the monumental effort that goes into writing a book unless authors, publishers, agents and others in the community engage them in conversation? We are not explaining our side of the story. We’re letting Amazon and others put their side of the story out leaving readers feeling confused.

Yes, e-books are cheaper to produce. But they are part of the set of products an authors produces. In fact, an ever greater part. The pay (or salary, if you will) that an author receives in exchange for sitting at their computer for months and years is based on what all these products (e-books, hardcover, paperback, etc) earn. Artificially lowering the price of e-books to “one low price fits all” means that no matter how hard an author works, no matter how good they are in crafting a story, they’ll earn the same base amount.

Naturally, Amazon and other companies that make the hardware needed to read e-books want low priced content. They want to sell their hardware (e-book readers) for as much as they can. In order to do that, they need to offer customers a carrot. The carrot is low cost content. Their pitch to customers is, “yes, you’ll pay hundreds of dollars for this reader but after that you’ll hardly pay anything at all for using the device.” Fair valued-content brings up the total cost proposition of owning the e-reader. Some customers may then want to pay less for the reader.

E-readers and e-books need each other. Like any relationship, there are ups and downs as well as power-struggles. I believe the agency model is basically fair to both sides. Readers also win because they will keep getting fantastic stories to read in any format they like (print books or e-books).

A good marketer always wants to know the competition. For aspiring authors, how much competition is there? The numbers are closely held and hard to pin down. However, I decided to take a stab at it.

In 2004, one source gives the number of books published in the U.S. as 190,000. For 2006, another source (citing BEA statistics) gives the number of books published in the U.S. as 172,000. Sounds like stiff competition so far, right? In fact, out of the 172,000 books, 93% sell fewer than 1,000 copies. A successful book should sell at least 5,000 copies to earn out a modest advance.

More recently another source indicates that in 2007, about 62,000 fiction books were published. This seems to suggest that more than half the earlier totals were mostly nonfiction with some other categories.

The numbers suggest that the number of books published by traditional publishers probably hasn’t changed much or has even declined in the past 6 years.

Self-published books count for a large number of total books published. They haven’t been included in the above numbers, but offer some competition. Lulu claims it publishes 4,000 books a week, which comes to an astounding 208,000 books a year! That’s just for one self-publisher. The vast majority of self-published books only sell a hundred or two hundred copies to the author’s friends and family. For fiction, self-publishing is useful if all you want to do is see your name in print. Most people shouldn’t consider it a money making venture since self-publishing costs anywhere from $5,000 to $25,000 and up.

For more on self-publishing challenges, see http://reviews.cnet.com/self-publishing/

For new authors, these are sobering facts. I have seen estimates that between 700 and 1,000 people in the U.S. make their living as novelists. Some will write more than one novel per year. Let’s assume that 1,500 novels each year come from full-time novelists. That leaves 60,500 novels to be written by those not making their living as novelists. This is good news in that it means there’s some chance to break into the field. But not so good in terms of earnings or a long term career.

So where to go from here? I highly recommend any aspiring novelist join a writer’s association to learn about the industry. Also, think deeply on your writing goals.

After reading about the iPad for several weeks and (finally) watching the Apple demo, I can see that it doesn’t quite match my lofty expectations. It is a cool, new twist on a computer or iPhone (or something half-way in between really). As a multi-media device, it would be fun to play with.

My focus though was how is it as an e-book reader.  Here I believe the iPad doesn’t quite make it. The most glaring lack is that the screen is a standard type computer screen. As such, it’s subject to glare and hard on the eyes. It definitely doesn’t replicate reading on paper. The e-ink screen appears to me to better simulate the reading experience. Although of course it doesn’t yet provide color.

The other drawback I see is that the iPad appears delicate. Is this device going to survive being stuffed into a loaded backpack? What if it’s lying on your table and your kid comes home and dumps a pile of books on top of it? Or you’re reading it at the kitchen table when your spouse spills a cup of coffee? For now, my newspaper or paperback can survive all these scenarios (with a few dabs with a towel or blasts with a hair dryer after the coffee) better and it’s much, much cheaper.

Sorry Apple, I’m holding out for now. But thanks for working with the publishing houses to provide realistic pricing models on e-books.

Amazon’s recent anti-author stance is distressing. What they are saying in effect is “we think every author’s book is worth the same low price no matter how good it is.”

Well, here’s how they actually phrase it: “…we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book”

Note the adjective bestselling. So for example if you want a “bestselling” or in other words desirable, luxury or similar descriptive, would you expect to pay the same as for an general, run of the mill car, diamond ring, etc. In other words, should a Tiffany diamond ring cost the same as a Zale’s diamond ring? Should a Mercedes cost the same as a Kia? Should a top brand author’s books be the same price as all other authors?

If Amazon wants to start selling all products for the same price regardless of brand, I’ll be the first one in line for the Apple MacBook Air at the same price as the Dell Inspiron. In fact, I’ll take three.

The one issue I have with the Kindle is that it’s limited to reading black and white text primarily. I’ve been waiting for something to come along that will allow a top-notch reading experience but also provide a thrilling multi-media experience as well. The hints surrounding Apple’s secretive meeting with publishing industry giants has me intrigued. Will we finally see a device where authors can reach out to their audience with every tool at hand?

Imagine the possibilities….(no, don’t burst my bubble yet with reality like slow internet connections or dodgy Wi-Fi or faded colors- for now I’ll just dream…)

“It’s all right. I came back.”

Sorry wrong play. In this one, it’s Anne Writer, in a black shift, moaning and pulling her hair out (while rocking on the floor surrounded by fluttering pages thick with type). Anne Writer turns to her mother (in slinky gold gown with black lacquered cigarette holder causally dangling from her exquisite hand). “Why won’t any one read my 500,000 word epic poem on the atomic bomb?”

“The slush pile passed on in 1991, darling. Stop throwing paper into the coffin. It makes you look mentally deficient.”

“JK Rowling was rejected 12 times. I think I can…I think I can…publish.” Anne glares at her mother with a wild look in her eye.

“She had an agent, darling. Now rub the ink stains off your fingers, we’ve a nice young man coming for dinner.”

And there’s the crux of it…Thank you Wall Street Journal for telling us writers we need an agent. Many more thanks for the lovely interviews with Joshua Ferris and Joyce Carol Oates.

The Wall Street Journal listed 2 thrillers among the top 5 novels for 2009. These were The Lost Symbol (Dan Brown)  and The Associate (John Grisholm). The Lost Symbol was first place. Two of the top 5 have strong romance themes (The Time Traveler’s Wife by Audrey Niffenegger and The Guernsey Literary and Potatoe Peel Pie Society by Mary Ann Shaffer and Annie Barrows).

Both romance and thrillers can get you heart pounding and make you forget the dragging ecomony. Little wonder they’re popular!

Can’t wait to see what 2010 brings!

Bookmarked: The Girl Who Played with Fire by Stieg Larsson

E-books are expected to represent $150 million of this year’s book market, rising to $201 million next year (according to Albert Greco, professor at Fordham University as quoted by the Wall St. Journal). Two major publishers announced e-book delays (Hachette Book Group and Simon & Shuster). Only a couple years ago, e-books seemed like harmless dalliances. A way to look hip, to crest the techie wave. Now the wave is threatening a whole business model.

Fundamentally, e-books and their so far rock bottom prices represent a basic struggle between consumers (readers) who would like to pay as little as possible for a product (books) and producers (publishers and authors) who would like to earn a reasonable profit from their products. How far the model can stretch under these pressures is uncertain. Already consumers have access via the Internet to very low cost, even free, “books”. Frustrated authors post books on their web sites or give podcasts of them. Google has indexed libraries full of free books. But, no one is checking the quality of all this free written entertainment. That’s where the current model benefits consumers. Only an infinitesimally small number of books pass the extremely high hurdle to publication by a major publisher. To pay all the people who ensure this high quality entertainment, create a beautiful package and give consumers easy access to it, publishers need to earn a certain income with profit to keep shareholder’s happy so they can stay in business. If consumers do their part by keeping volume high, prices can be lowered. But low volume and low profit is an unsustainable business model. Are consumers willing to pick through mountains of chaff for gems in “free” Internet entertainment? Or are they willing to pay for quality?

In other words, how low can prices of e-books go before publishers (and authors) call it quits? The e-book medium offers so many enticing opportunities for enhanced content and other benefits that are worth paying for. If the focus can be moved from bargain basement to luxury entertainment, e-books may turn from Trojan horse to gift horse.