Jenny Ruhl
on Apr 15th, 2009
@ 9:04 am: 

Unless publishers confront head on the monopolistic nature of the ebook market–B&N’s Fictionwise vs Amazon and not much else, you’ll have no choice of models. And as Amazon has shown, they can and in the future will determine at their owner’s command what books should be sold and how.

Isn’t it time to fund a nonprofit organization to create a mega site that would provide open access download sales? Open it to all publishers. Put in a better review/rank algorithm than Amazon’s very flawed version to allow readers to find books they’d want to read. Offer multiple discounts to publishers of the type you’ve suggested here.

Right now you have as much ability to negotiate discounts with Amazon as you did with Ma Bell in the 1970s.

[Reply]

Mike Violano
on Apr 15th, 2009
@ 12:40 pm: 

Evan,
I think you’re actually raising the bigger issue of publishing business models. Reseller discounts in the print book world have evolved and increased based on multiple factors such as returns, volume purchasing…and “risk” and have actually contributed to rising cover prices to accommodate both higher discounts and lower net unit sales.

Ebook pricing, reseller discounts, author royalty share and publisher profit is a very perplexing equation; traditional book selling models are not an effective guide. Most trade publishers do not yet embrace ebooks as an intrinsic part of their business…they continue to consider ebook sales as incremental to “core” (hardcover, paperback, audio) formats.
eBook sales are growing but not as fast from trade publishers points of view to cause an extreme makeover of business models, discounts, author agreements or even book production processes. Until ebooks make a greater contribution to revenues most publishers will continue to apply or tweak the old print rules to handle ebook sales, reseller discounts, and authors royalties.

[Reply]

Why Ebooks Must Fail « Black Plastic Glasses
on Apr 18th, 2009
@ 6:09 am: 

[...] inflammatory title, but this article, especially when taken in context with the follow up piece Discounts Must Align to Risks, is about supporting growth in the ebook market, not predicting its demise. Ebooks are the future [...]

Anita Pyke
on Apr 22nd, 2009
@ 6:39 am: 

Evan, how do you see new discount models possibly rolling out in practice? Would publishers band together to negotiate with Amazon and other retailers?
What incentive would there be for ebook retails to renegotiate the current discount structure?
I still feel strongly for revision of advances. Big authors should take their cue from the players in Hollywood – the real money is in profit share.

[Reply]

Evan Reply:
April 22nd, 2009 at 11:47 pm

Thanks for the comment.

Publishers cannot band together to negotiate with resellers as that would be collusion. Each publisher must negotiate on their own and set their own rates.

The big question is why would retailers accept this change? My answer is that it will take some work, some cooperation, and some experimentation. I am not sure the specific plan outlined here will work – though I am convinced that publishers and resellers need to find smarter ways to work out risk management in publishing. Payment terms and discounts are one obvious place to start – but there are others – profit sharing by authors is certainly one route, as you mention.

[Reply]

J.
on May 3rd, 2009
@ 3:48 pm: 

Hey Evan,

First of all, thanks for posting all these interesting perspectives on the publishing industry. As a student I started a project about ebooks and I need to do some research for it. So I contacted several publishers but nobody gave me clear answers or possible solutions on how to (r)evolutionize the industry for the new way of reading. But your blog is very helpfull and I’m really looking forward for your other posts. There’s only one big question that rose when I read all your posts: what about the educational market? In your posts you’re only talking about the trade book market… I guess there is a big difference in the educational segment because of lower risks in that segment.

What do you think?

[Reply]

Evan Reply:
May 5th, 2009 at 8:15 am

J:

Yes, education is quite different as nothing, to date in the world of ebooks or electronic content delivery has come close to being successful. Textbooks still reign as there isn’t a direct to consumer pathway as is found in consumer (trade) oriented publishing. Textbooks are selected (adopted) by faculty and/or administrators who in turn require the purchase by students or local schools. There are too many competing interests for this to work now – but watch Amazon as they will supposedly be announcing a unique experiment in Higher Education for a new Kindle.

[Reply]

Jeroen Reply:
May 5th, 2009 at 3:07 pm

Thanks for replying! So a good way to get the educational market into e-reading would be to team up with universities and decide on which books need to be transformed into e-content? By teaming up with the universities an e-book distributor knows, by estimation how many students are going to buy the books so a model of Advance Purchases should be applicable. I think for the educational market this is the way to go… Or is this just to shortsighted? What about the competing interests? I dont understand that part.

[Reply]

Times Book Review on advances, and related thoughts - The Shatzkin Files
on Apr 11th, 2009
@ 11:45 am: 

[...] have different takes. His is publisher-centric. Hey! He’s a publisher! Enjoy it. Bookmark [...]

Bradley Robb
on Apr 6th, 2009
@ 8:44 am: 

With all due respect to you(r) position, the belief that pirated content is the source of the decline in the music industry is a flawed one, and one that placing DRM on compact discs wouldn’t have helped. While the finger is often pointed towards Napster and the programs which followed as the cause of the decline, they are more accurately described as a harbinger of change.

The rise of the CD represented the start of a bubble for the music industry in which many people rushed to replace their aging LP collection with a medium that captured the same sonic fidelity, or to upgrade their tape collection. This collector’s motivation was one of the key sources of increased sales numbers.

A second noticeable increase was that the compact disc largely killed off a large previous sales leader – the single. Prior to the early 1970s, the concept of a “full album” was indeed a rare one, the multitude of bands recorded 45 RPM singles, while earning their income from touring. With the rise of the compact disc in the middle 1990s, there was no technical difference between a full length CD and a single, and so bands were encourage to put together entire albums consisting of two or three singles, while padding the rest together with filler material. While returning greater profits for the labels, the perceived value of the album was reduced.

Putting together full albums, however, was more expensive for the record labels. Pair that fact with the number of labels shrinking into four global conglomerates, and there was a drastic reduction in risks that the labels were willing to take. This lead to cyclical trends where each label would push out copycat bands, pitting similar bands against each other in the media in order to enhance sales across the board. During the rise of the blond pop tarts in the late 1990s, it was actually common for a single label to have several essentially identical singers competing for sales. This lead to market place confusion for listeners and a further degraded the value of music.

With the onset of a digital music, listeners were able to once again upgrade their music libraries, and had access to extensive back catalogs. However, this time around, music listeners were able to purchase individual songs, which left record labels footing the bill for continuing to churn out LP-length song collections which only contained a handful of songs which the listener actually cared about.

The real harm which was done to the music industry was not downloading, or even the shift to digital, but rather the belief that the compact disc bubble would extend indefinitely, when since the dawn of the wax tube, music format shifts have been happening at an increasingly rapid rate.

If the record labels had put DRM on the compact disc from it’s inception, one could make the argument that customers would have likewise been forced to repurchase all of their favorite music over again in digital format. However, as the real world has shown, music listeners have grown disinterested with the major labels willingness to pad singles into LPs, and given the option, will purchase just the single.

The other major stumbling block for the belief that placing DRM on the compact disc would prevent people from ripping their own CDs is the very real fact that no DRM scheme has ever lasted. True, some require a certain amount of tech-savvy amongst the user, and current law makes the act of removing DRM a criminal one, but that has yet to stop people. Even the flaunted DRM schemes attached to the Blu Ray disc, claimed to be unbreakable, are broken with rapid success each time the format is updated.

[Reply]

Marshall T. Vandegrift
on Apr 6th, 2009
@ 9:33 am: 

I’m afraid I have to disagree with your assertion that the Kindle’s DRM scheme is “smart,” or that a “smart” DRM scheme is possible. Amazon has made it easier to read a book on multiple devices linked to the same account, but this feature is present in various forms in all the existing commercial e-book formats and viewers. The Amazon system is still DRM, and still contains the two fundamental flaws of DRM: (1) it inherently treats the reader like a criminal and attempts to lock the content into a system which prohibits legitimate fair use and uses possible with print books; and (2) it is inherently ineffective, providing no true barrier preventing actual pirates from decrypting the content and distributing it as they wish.

[Reply]

Kirk Biglione
on Apr 6th, 2009
@ 1:30 pm: 

What you’re talking about in this post is transparent DRM. That’s pretty much the holy grail for anyone trying to sell content protected by DRM. The ideal is that DRM should be so unobtrusive that consumers don’t notice it. To achieve this goal content publishers need to minimize friction during the initial purchase and media transfer process, and provide consumers with freedom to use their legally purchased digital media in a variety of ways. For Apple that meant allowing consumers to transfer songs to a certain number of devices and the ability to burn songs to CD. For Amazon that means the ability to transfer ebooks to multiple Kindles, and now to the Kindle iPhone app.

The problem for consumers is that this freedom is illusory. DRM protected songs purchased from iTunes will only play on an Apple brand media player. DRM protected books purchased from Amazon will only play on the Kindle or Kindle iPhone app. Consumers are not only locked into a specific brand of device, they’re also locked into a specific marketplace where content may be purchased.

The real challenge is not so much creating a transparent DRM scheme (Apple and Amazon have both demonstrated it can be done), but rather creating transparent and *interoperable* DRM in an *open* marketplace. The market leaders aren’t about to provide any assistance.

Apple could have licensed Microsoft’s DRM for use on the iPod, but there was no reason to. Why willingly make your device compatibility with rival digital music retailers when you’ve already built the industry leading marketplace for digital music?

Amazon could easily build support for Adobe DRM into the Kindle. They won’t. Again, there’s no reason for them to.

The real reason iTunes went DRM free is because the recording industry eventually realized that the only hope of overcoming Apple’s dominance in the marketplace for digital music was to eliminate the one thing that locked consumers into iTunes — DRM.

As publishers consider these issues it’s important to fully understand the many ways that DRM shapes the marketplace for digital content.

[Reply]

Aaron Ardiri
on Apr 6th, 2009
@ 7:58 pm: 

As a swede – i had to say something *g*

I think DRM in its current form is flawed because it doesn’t adapt to the changing environment of the end-user. DRM should be transparent; it should not be an inconvenience. Instead of putting anti-copy measures in place; why not turn DRM into a validation environment – is that a real CD you are extracting that song from? are you person X, trying to use item Y – on devices A, B and C?

In today’s model; we are living in a connected world and digital signatures should rule the DRM scene. if the device isn’t sure your allowed to use it; make a network request and validate/generate a new digital signature. if someone copies the file; they’ll have to revalidate and hence, fail validation.

One of the biggest issues is that the audio/video format’s were designed first; then DRM came into play. what needs to be done by these “giants” if they want to provide a fair-play environment is to re-design the audio/video formats so they include DRM. sony tried this; and failed. does this mean doom for anyone else who tries?

i think the minute someone realizes they can make money of something; it’s just too late – proof of concepts are typically DRM free and they form the foundations of anti-DRM (once free, always free)

every DRM system will eventually be beaten – so, there is no ultimate solution; just a delay.

// Aaron Ardiri

[Reply]

Mark Coker
on Mar 30th, 2009
@ 3:54 pm: 

Great post. With ebooks accounting for under one percent of overall book industry revenues, it’s safe to assume publishers will continue to publish in print for a very long time. And since they’re going to invest the necessary expense to get the book ready for printing, the additional cost to get the ebook ready for distribution will only be incremental.

The opportunity for publishes is to get closer to their customers, and start owning, borrowing or leveraging the data associated with their customers. Imagine, for example, if any publisher had the email addresses of all previous customers? They could pre-sell new books without the overhead associated with guessing how many trees to pulp and package. Or, they could invest effort to market their books to the online communities of those who have already purchased their books.

Borrowing a page from the software industry (ebooks, after all, are software), publishers could begin embedding offers within their books for customers to fill out digital registration cards. Not of the DRM variety, mind you, but of the the “give us your email address so we can email you digital goodies, and notify you of upcoming releases from this author.”

[Reply]

Evan Reply:
March 30th, 2009 at 4:06 pm

Certainly there is a valid start in your comments – but will it come anywhere near changing how the business models work? I don’t know but I sure am interested in trying…

[Reply]

Joscha
on Mar 30th, 2009
@ 5:36 pm: 

There are three important points I would like to remark:

1) You are probably right in remarking that “unless a very different model evolves, ebooks can never become the dominant version of content sold by book publishers.”

This means that traditional publishing is (probably) incompatible with eBooks. But it does not necessarily mean that eBooks will not thrive. It could also mean that traditional publishing will be ruined. That is bad for the publishers, but not neccessarily bad for the product.

2) You are talking about trade books, with advances that can be higher than royalties as an example of general pBook publishing. Well, trade book advances tend to be in the lower four digits, even at a truly and remarkably excellent publisher, with generous treatment of its authors, like OUP. And because the book, which goes at $75 at Amazon, is sold mainly to libraries and at best a few thousand fellow scientists, it is going to make OUP very little money, while romping up huge production costs. Still: advances are lowlowlow!

3) You are looking from the economic position of the publisher. But to understand whether eBooks succeed, you will need to look at the economic position of authors and readers.
The sad fact is: advances and royalties are eating up a lot of the profit of the publishers. But they are still too low to sustain most authors. And they constitute a very small fraction of the final price of the book, as bought by the reader.

eBooks are going to change that. If an author uploads his or her fiction book directly to XYZ.com in five years from now, the eBook will cost only 2.99$, and sell perhaps only 10000 copies in the first year, and even less from thereon. But XYZ.com can afford to give 75% of the revenues to the author, because they only provide webspace and bandwidth and user review functionality and billing. Even though the price of the final product is perhaps 25% of a traditional pBook, the author is likely to earn more than today! And XYZ.com will be very profitable, too. Only the original publisher and the original printer and the original bookstore and the original truck driver will be out of business.

[Reply]

Karel
on Mar 31st, 2009
@ 12:31 am: 

I agree with Joscha. eBooks and traditional publishers are incompatible and it makes little or no sense for publishers to start with eBooks within the current business model.

First of all as you said it will only bring additional costs up front and no short term cash flow. Second, there is the possibility of channel conflicts between online and offline resellers. I am sure a lot of the independent bookstores who have no capabilities to sell books online, aren’t too happy if a publishers starts to market eBooks big time and it might result into channel conflicts and finally it will cannibalize your current pbook sales which they need very badly.

However with the success of eReaders like the Sony Reader and the Amazon Kindle, there is no doubt in my mind that printed books will face the same fate as the music CD and just like with the music industry new players will take advantage of the inability of the publishers to adept to the digital (r)evolution.

[Reply]

bowerbird
on Mar 31st, 2009
@ 2:32 am: 

e-books and “traditional” publishers _are_ incompatible.

there’s no way e-books can pay _your_ rent!

but it is the _e-books_ which will win this contest, when
authors bypass you publisher middlemen to go directly
to their own readership with whom they will create and
nurture an ongoing bond which supports them long-term.

and the authors and their readers will _all_ be better off…
authors will make more money, and readers will pay less.

publishers were necessary in the past, and we thank you
for your excellent performance delivering hard-copy books.
however, your services are no longer required, so you may
retire with your gold watch and your yacht to the bahamas.

-bowerbird

[Reply]

Robin
on Mar 31st, 2009
@ 6:37 am: 

I suspect we may also see more of the shift that is already happening – rather than publishers hiring authors, I think authors will hire publishers. Thanks to the web, the cost of publishing a basic document is virtually zero. Anyone can post their work on an ecommerce site for a tiny percentage of the sale price.

Where an author may need help is in marketing, editing, graphics, permissions, layout etc. These are services the publisher can provide. If the author hires the publisher it becomes near term profit for the publisher, and shifts the longer payback cycle to the author. This provides cash flow that allows the publisher to make some investments in promising titles where the author cannot pay for costs upfront. Other ways to spread investment risk are enabled by ePub. E.g. publish 1 chapter of a title (lower editing, layout etc. costs) as a sample, and only produce the rest if there is market demand (pre-payment by the audience).

There will always be readers willing to pay something for content.
There will always be authors willing to write for the love of it, or for profit.
There will always be a need for layout, art, editing etc. of manuscript.

There may not always be a need for a “commercial” distribution system. An author could technically run a personal server at home with an ecommerce engine and distribute via a community WiMax network. Thus, distribution may one day be actually free (assuming you piggyback on existing infrastructure you own for other reasons). It’s almost assured that within about 10 years the distribution cost will be effectively free, i.e. the same cost as having a facebook account for example.

There may not always be a need for a bricks and mortar publisher. There probably will be for quite a while, but they will very soon have to scale down in size, and start focusing on the types of books that have more advantages in print form than the typical novel.

eBooks don’t have to die, and certainly won’t die. Too many authors will want to publish just to be read for that to happen, but traditional publishing does have to die, and is already coming down with a fever.

[Reply]

Marie
on Mar 31st, 2009
@ 9:13 am: 

Excellent article! I’ve found that some small publishers I’ve worked for have a mental block regarding the cost of DRM. It gets thrown onto the production department, and publishing, sales, and accounting don’t understand why what they view as “one extra step” could cost so much. They refuse to consider the variety of formats needed, the man-hours to produce these items, and all the little things that go along with making ebooks. Until publishers understand these issues, ebooks are doomed.

[Reply]

James Embry
on Mar 31st, 2009
@ 10:04 am: 

Hi Evan,

Some scattered thoughts from a former OUPer…

The issue of whether authors will find another publisher if they are not paid (or are paid less) as an advance, seems insignificant next to the issue of authors now having, in ebooks, the freedom to self-distribute with near the same efficiency as a traditional publisher. While, for many authors, the most crucial function of the publisher is to find the book’s audience, many established authors have a locked-in audience, and many of the younger, web-savvy set, are actually better than most publicity departments (OUP exempted, natch) at marketing themselves as well as their output.

As soon as third parties will emerge willing to offer format conversion and storage for a flat-rate, true “desktop publishing” will become reality. Amazon is actually sending out enticements to major authors about this possibility right now.

So…the authors who fuel the publishing industry with content may soon (rightly?) be those who plot its course. If they deem royalties to be insufficient, publicity efforts unfocused, or perhaps just consider large-scale printing, with the returns and destruction implicit, to be overly wasteful, they will be able to shift the framework to one of self-digital delivery and freelance or self-publicity.

However…I still believe that most authors are in it to make money, not to get rich. If they can support the industry that has supported them and their forebears, while not sustaining a major blow to standard of living, nor a major decrease in size or quality of audience, they will do so.

For the publishers part, they’ll need to find a way to realize the needs and — most of — the wants of the author community, even if that includes transitioning to a platform of primarily digital content. Finding the right audience for a book will, as always, be key. Publishers also function as a hub, connecting authors to one another, a facility which should be strengthened and emphasized. With digital should come a new ability for authors to profit directly from the sale of their work…at some expense to advances. Give authors a set quantity of eBook licenses to sell through their own websites, at a pure profit.

I agree that, ultimately, some ratio of “e/p” publishing will become the new accepted model…but it may, in fact, be the “p” which is an afterthought. Much as we may be ready to bemoan its absence, the printed book has outlasted centuries and, yes, other technologically superior methods of reproduction. Its resilience can be seen in the very design of the modern e-reader: the iPod may endeavor to reproduce the auditory stimulation of the gramophone, but not its form.

[Reply]

Bill McHale
on Mar 31st, 2009
@ 10:44 am: 

Yes I agree, the current publishing model is unsustainable… but then again, I believe it would be ultimately unsustainable even if ebooks didn’t exist. No business can exist when a significant amount of its product is never sold. Publishers have survived for decades with this model simply because there was no significant alternative to put pressure on them. Now that ebooks have come on the scene, the flaws in the model are becomming apparent.

Another thought I have is this… if few books earn their advances back, why are publishers trying to hard to get these new authors? Certainly a Stephen King or a J.K. Rowling can demand a huge advance, but new, unproven authors? Yes, one can argue about a bidding war, but lets be honest, there are probably dozens of authors looking to get published for every one that does and while many of those authors have not written something that is publishable, some at least must be borderline cases.

Ultimately, publishing must adapt. Ebooks will ultimate succeed or fail despite the impact it will have on the current mainstream of publishing. If the public demands ebooks (and I think they might well in the next 5-10 years), then the publishers will have to answer regardless of the current business model.

[Reply]

Self-Publishing Review
on Mar 31st, 2009
@ 12:09 pm: 

What am I missing: because publishers are glued to a system that is unprofitable and bleeds money, then ebooks won’t sell? Maybe that makes sense in the next five minutes (or even 20 years) – but down the road, as the price of publishing technology comes down, publishers are going to have to adapt. Imagine a world in which as many people own an e-reader as own a cellphone. This will certainly mean that upfront sales by popular authors will bring in money. Right now, e-readers are a curiosity. We’re at the horseless carriage stage. But given the fact that publishers are struggling with the advance/pre-sale model, why would they stick to it? Why wouldn’t they want a new profit source if thousands of people are migrating to e-readers? Of course they’re going to want to promote e-reading. To not do so would be suicidal.

And this relies on the premise of “Clearly Ebooks aren’t free – they are perhaps as expensive or in some cases more expensive than print.” I don’t buy that for a second, especially as time goes on and technology gets more efficient at managing and disseminating ebooks. I think this essay is based on what the future will look like based on how things ran yesterday – 100 years or not. A hundred years ago, the Internet didn’t exist. Publishers might fight the new system, but a new system is coming.

[Reply]

Desktop publisher
on Mar 31st, 2009
@ 1:24 pm: 

Mike Cane’s right. Once Google starts selling PDFs via Google Book Search, it’s all over. I will never buy a paper book again. (And in about two years, HP and every other computer company will be offering book printers for the homet…)

[Reply]

younged
on Mar 31st, 2009
@ 1:48 pm: 

as a publishing vet, i enjoy these demise of the printed book essays very much – can anyone doubt that our culture would be improved if NO books were printed for a year? sadly, though, schlockmeisters need never fear extinction.

[Reply]

Self-Publishing Review
on Mar 31st, 2009
@ 3:51 pm: 

The animosity is because publishers have bankrupted the publishing industry with an overemphasis on marketing and sales. The money now approach that has bankrupted too many industries. So publishers deserve some mistreatment. But this is not a battle of ebooks vs. printed books, with one of them winning out. They’re both very useful in different ways. It’s been said that ebooks aren’t going to replace printed books any more than escalators replace stairs.

[Reply]

Julien Couvreur
on Mar 31st, 2009
@ 10:25 pm: 

The analysis does not makes sense.
At any point in time, someone is bearing the risk and the cost of the investment. Be it the publisher or the distributor.
If you look at the big picture, you either get upfront investment by the publisher or by the distributors (buying bulk upfront, only to be only to be refunded for leftovers afterwards) to pay the publisher.
There are many such investment businesses, where the return is not immediate and only trickles thru.

It seems that the efficiency gains of the electronic distribution would far outweigh the additional infrastructure and editing costs. No printing, no transportation, no storage, no shelf space.
On the other hand, the devices themselves are still expensive. Give it a few years.
The same goes for marketing costs. Some kind of publicity is needed either way and getting ride of large physical stores does not make matters worse. In reality, it improves the situation, because it is so easy to try electronic samples and the ease of checking the new book out after seeing the author on TV.

That said, you are correct that as e-books replace books, the system will have to change. Aside from bookstores, numerous coffee shops may have to re-evaluate their strategy.

[Reply]

The Elephant
on Apr 1st, 2009
@ 2:19 am: 

‘Ebooks can be a Friend if you know how to befriend it’
I understand the argument about stand alone eBooks, historically. No technology in print history has upended the other completely right away except perhaps manuscript to print (read somewhere Gutenberg etc was a 90% effciency leap forward in time and down in cost) ..Ebooks don’t offer the percentage leap forward in any way to wipe out the print book, but they do provide an alternative that in many areas has helped and will help – education, law, journals. What I don’t understand, and never have, is the panic in trade print over ebooks..Treat it as a friend, bring it on board, it’s no more of a threat than audio, make it part of the overall process..And in my humble opinion if this had been done in 2000 you would have better technology in all areas and a vibrant secondary e-market..I love books but if 50% are returned then the process of selling is in bad shape, perhaps its terminal..The conglomeraterised frontloading principle is wrong, done because of the commidification of books rather than the pursuit of cultural value. Pay more authors less and respect niches. Build readership and support writers in multifarious markets – in fact do that: create ‘the sunday market’ in every ‘parish’. Get your younger staff out talking to readers, off loading books, taking a leaf out of indigenous techniques for renewing the land, start a new grassfire in culture every year to renew it – not chasing the new only or necessarily but reorganising respect for backlists. And as for the ebook and piracy? If you want to pirate a print book, scan it and print and sell it and that happens in Taiwan and India..You have to go after the pirates like all other areas of society go after thieves ..they will be fewer than you think

[Reply]

BR Wright
on Apr 1st, 2009
@ 6:56 am: 

Hello,

e-book author here. I don’t get an advance, so my publisher doesn’t have to worry about up front funds for that. As a royalty, I do get a portion of the profits for each book I sell. The print book royalty is small. The e-book royalty is substantial.

I do 90 % of my own promotion. I make my own materials, schedule my own signings, maintain my own website, set up my own interviews, get myself out there on line in the social networking scene. None of this costs my publisher a dime.

There are thousands of author’s out there who are doing the same thing I do and they have been doing it for years. The market is finally starting to catch up to us. The time is here that if you have any kind of electronic platform you can get hundreds of thousands of books. In mere seconds, you can get almost any e-book. Not only can I read a book on an e-book reader, but on my desktop, my laptop, my PDA and yes, even on my cell phone. And the competition to produce a high quality, relatively inexpensive e-book reader is heating up.

The industry IS changing and the big publishing houses recognize that. At least the smart ones do. I can’t think of one that doesn’t already have or is rapidly in the process of developing an e-book presence.

As an author, yes I would love to have big print sellers that keep me on the NYT Best Seller List for years, but we all know that those authors make up a small minority. Writing for an e-publisher gives me a chance to earn a decent living doing what I love.

[Reply]

John Dishon
on Apr 1st, 2009
@ 8:37 am: 

I don’t buy this notion that ebooks are more expensive to produce than print books. All a print books start out as ebooks anyway. It’s a PDF or an Indesign or Quark or Latex file that is then sent to the printer. An ebook doesn’t require the cost of printing, warehousing, or shipping. Yes, you do have to store the digital files somewhere, but are you telling me publishers don’t already do this? Publishers don’t store digital files of every print book they make? That’s nothing new. They’d have to in order to reprint it.

So I don’t see any way that an ebook can cost more to make than a print book.

[Reply]

Tom Hallock
on Apr 1st, 2009
@ 12:14 pm: 

A brilliant post!

Still, even with Kindle sales rising, I can’t help but see eBooks as primarily an ancillary product right now–a welcome new stream of revenue at a time when we’re all losing revenue on printed books. As ancillary products, our analysis is that they’re more profitable than printed books–and certainly more profitable than something like a book club and, perhaps, than a chain promotion!

[Reply]

kme
on Apr 1st, 2009
@ 3:25 pm: 

This seems to boil down to a simple issue of finance. Publishers need upfront capital in order to pay for the authors advance, editing, design (and for print, manufacturing) costs. At the moment, you get that capital from your distributors/retailers – effectively they’re acting as a cheap bank for you (and presumably, the retailers are having use a real bank overdraft to fund this!).

E-books break this. The solution seems simple – the publishers simply need to go to a real bank to obtain the upfront capital they need, like every other business with large upfront costs does.

[Reply]

Bill Nienhuis
on Apr 1st, 2009
@ 5:14 pm: 

Interesting thoughts, Evan.

Many here have talked about the business model changes that are necessary for publishers to survive the eBook business. What about the culture inside these publishing houses? It seems publishers are their own worst enemies in this regard. The “we’ve always done it this way” thinking is a major contributor to the less than sound decisions book publishers make when it comes to eBook development, marketing and sales. What else explains their habit to instantly apply existing print models to the eBook business? Their entire infrastructure is built upon the print model, so it’s no wonder they struggle.

1. Publishers need to have the will to bring in new people (i.e. new ideas) and avoid the career folks who’s corpus of knowledge is based on the past 3 decades (or more) of the book publishing business.

2. Publishers need an eBook business model that eliminates risks inherent in the print model. There are already a few out there that they can adopt. Once they do, they need to develop a direct relationship with the end-user customer.

That’s a tough road to travel though, since book publishing has completely avoided the customer and embraced the retailer. This all made sense before the Internet. Unfortunately, book publishers didn’t grasp the importance of the customer relationship when the web came along, and now they have allowed Amazon, Google and others to own the critical data. Amazon and others not only know where the customer lives, they know his buying habits, and more importantly they know his credit card number. How many publishers have any of this stuff? How many publishers recognize the value in it? How many publishers would know what to do with the data if they had it?

The success of the eBook business for traditional book publishers will depend on the relationship they have with the end-user customer. Every day they willingly give this away, they lose the one sales channel that will matter most.

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bowerbird
on Apr 2nd, 2009
@ 2:07 am: 

joscha said:
> Not so fast!
> While I think that eBooks will thrive,
> and that they will eat out a large chunk
> of traditional publishing, pBooks will probably
> stay with us for the foreseeable future.

i didn’t say p-books would become extinct!
i said _traditional_publishers_ would die off.

we’ll have _more_ p-books in the future than
we had in the past, thanks to print-on-demand.

and the price to print those p-books? cheap.

currently epstein’s espresso machine has a
consumables-cost of one-penny-per-page,
which means $2.00 for that 200-page book.

it’s just that no one will bother to print a book
unless it was so significant to them that they
will crave a physical artifact of the experience.

much like you’ll print out the best of your photos.

-bowerbird

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Bob Pritchett
on Apr 2nd, 2009
@ 1:09 pm: 

Great post, and you’re bringing up what’s always the real issue: cash flow.

We’re attacking this problem at Logos through a pre-publication sales model for eBooks, taking our cue from the “Offered by Subscription” model of 18th century publishers, who faced even more outrageous printing hassles. While eBooks don’t require a frontlist/backlist model, if you can build a relationship with a customer base you can create frontlist urgency, and recoup your investment faster.

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bowerbird
on Apr 3rd, 2009
@ 1:07 pm: 

bob said:
> Great post, and you’re bringing up what’s always the real issue: cash flow.
> We’re attacking this problem at Logos through a pre-publication sales model
> for eBooks, taking our cue from the “Offered by Subscription” model of
> 18th century publishers, who faced even more outrageous printing hassles.

you just stole evan’s thunder. this is what he’s gonna “propose” next.
it’s the only move on the board that a corporate publisher can make…
and it won’t save them anyway, because they still have to support their
whole dinosaur body in the long run, and they just won’t be able to do it.

-bowerbird

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susan
on Apr 6th, 2009
@ 4:05 pm: 

OK, authors need to make money so they can write wonderful books – publishers need to make money to pay to print the books and to pay the authors, bookstores need to sell the books so they can pay the publishers and host the authors so customers will buy & read the books – why not have e-books released when the books go into mass market stage – then the bookstore would have sold the book and paid the publisher – the publisher would have paid for the books promo and printing – and paid the author who would have made the money, and be on vacation writing the next novel. Me, I don’t like e-books – I rather read the printed word – I don’t think ‘e’ is green – the readers are unrecycleable trash – and bad for the eyes – but I will go forward into the light – I think this is a simple solution to the delimma of e books.

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Tim Davis
on Apr 7th, 2009
@ 10:01 am: 

To ee, this sounds like an endorsement for publishing as we know it to adapt or become obsolete. Just because something has always been done one way, does not mean that way is right or the best way. The argument here tells me that publishing as we know it is unnecessary. Editing however seems more necessary on an ebook. I have read some very poorly edited ebooks and I imagine poor publishing has something to do with it.

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tycho garen
on Apr 9th, 2009
@ 6:39 am: 

We (geeks, writers, internet people) have been talking about ebooks,
and how they represent a new way of thinking and how, because
the hard production costs are so much lower than “dead tree”
publication, that they can do amazing things for the publishing
industry.

Except they haven’t. Bad hardware for reading (with high costs, DRM
which makes it reek,) high costs for media, and (ironically)
competition from hard copy publishers all make ebooks look like a
horrible investment.

I enjoy that you point out about the growing efficiency in the
publishing industry, and I think this is a key factor whenever we
think about “the future of publishing.” For the past ten years while
the geeks have been talking about the promise of ebooks, publishers
*have* been able to make their hard copy business more
effective. That’s awesome. I don’t think that it’s sane to say “we’ve
come this far and now we’re going to change horses” to ebooks, but
rather it’s probably likely that increasingly our hard copy books will
be produced locally and on demand. Go to Barnes and Nobel, browse the
shelves, write a title down, go to the counter, order a late, and
before it’s cold you have your *brand new* book. It’s not ebooks, but
it takes advantage of much of the same technology. In hard copy books
become the “ebook” readers we never expected.

Lastly, I’m convinced that even 3 USD is too expensive for an
ebook. I’m pretty convinced that subscription models or sub 1
dollar/unit are going to be ebooks that finally succeed. This of
course means that the publishing industry is going to have to move
away from accounting sales and royalties/per copy based on “units
sold” and to some other metric…

In this world, publishers do a couple of things: first they provide
readers with curated lists and suggestions, and publishers more than
ever provide reputation and authenticity to the books that they
publish. Readers should be able to know and trust the editors and the
editorial tastes of particular publishing houses/editors
names. Secondly, publishers provide authors with services. Editing,
copy editing, cover art, layout, etc. These are still incredibly
relevant in the digital age, but it’s possible that these businesses
will start looking more like adhoc service providers, or writer’s
trade groups rather than “book publishers.”

In any case, it’s an exciting time to be alive.

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scott
on Apr 15th, 2009
@ 1:45 pm: 

I’ve been saying similar things inside O’Reilly as you are here Evan. There seems to be another problem here looming in the dark. Traditional publishers position in the value chain is exactly those services that you mention plus the relationships with the distributors.

If ebooks become the dominant format for reading trade books then the need for traditional publishers is threatened. Authors can choose to publish directly or use Amazon’s or Sony’s services instead and reap a higher share of the retail price of their work.

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Brian Rush
on Feb 7th, 2010
@ 12:40 pm: 

“What this means is that unless a very different model evolves, ebooks can never become the dominant version of content sold by book publishers.”

Indeed. As others have pointed out, new models are already emerging, they’re just not being adopted by the Big 6 dinosaurs. You identified very well what the essential economic differences are between print books in brick-and-mortar stores and ebooks sold on line: essentially zero production and distribution costs, no front-loaded revenues. That suggests changes to the current model in terms of production, marketing, payment to authors, and relationships with vendors.

For production, ebooks demand the same as print books in terms of writing, editing, and proofing, but nowhere near the same in terms of other things that go into making an attractive printed book. Fonts aren’t important (the reader can change the font anyway). Copy style isn’t important. Page layout isn’t important. Book cover is still important but not AS important as it is in print, because the book isn’t going to serve a decorative purpose; all the cover does is attract reader interest to start with. So while some of the core up-front costs to the publisher will be the same, the publisher can and should cut a lot of the other costs down or even out entirely.

For marketing, ebooks remind us who the end customer really is: the reader. Publishers are used to seeing bookstores as their markets, and that creates problems for authors when combined with return policies. Because no matter how well a book is marketed to bookstores, they don’t succeed unless readers buy them. Since ebooks don’t have to be marketed to vendors (all ebook outlets will accept any old ebook you want to toss their way as long as it’s formatted properly), the ad budget needs to go where it should have been going all along: to introduce the book to prospective readers.

For payment to authors, the change should be in the form of lower (or no) advances, but much, MUCH higher royalties. Lower advances arise because of the loss of front-loaded revenues for ebooks. When I say MUCH higher royalties, I’m thinking along the lines of about 50% of retail price. Publishers will find they have no choice but to offer this. After all, the author could epublish the book himself and get 70% royalties (or more). That means the publisher isn’t saying to the author, “This is what we’ll pay you to publish your book. If you don’t accept it, then your book won’t be published.” Instead, the publisher is saying to the author, “We will publish your book instead of you publishing it. We’ll provide you with several services, including editying, proofreading, a professional book cover, and marketing. Since you won’t have to do any of that stuff yourself, we will take a share of YOUR proceeds in payment for our services.” Note the change? The book and proceeds for it essentially belong to the AUTHOR, not the publisher. The publisher is providing the author a service and taking a share in payment for it.

As for relationships with vendors, well, the big publishers have the right idea that it should be an agency model, even though they’re pricing their ebooks absurdly high. An agency model in which the vendor sells the book for the publisher and keeps a 30% commission on any sales is exactly what Amazon offers to self-published writers. There is no reason at all not to offer the exact same deal to publishers. Probably down the road, when publishers stop trying to price ebooks so as NOT to sell and so not to compete with hardcovers, and instead see them as the core of their business, the better and more successful ones (or maybe even all publishing houses) can probably demand a smaller commission paid to the vendor than a self-published author. It’s quite predictable that 20-25% will become the standard.

We are also going to see a proliferation of smaller publishers, the serious downsizing of the Big 6 (those of them that stay in the game at all), and an increase in self-publishing. For the commenter above who deplored overpriced, poor-quality self-published books at the Kindle Store, all I can say is adapt to it. Self-publishing will allow very GOOD books to be published that would not have been publishable in the old days, but it also allows the equivalent of an entire slush pile to see daylight. It’s not hard to eliminate a bad book from consideration. Usually the paragraph of description will be as bad as the book itself. If not, all ebook vendors allow you to read a portion of the book for free. View it and do it. If it’s rough-draft crappola written by a no-talent wannabe, you’ll know it in the first paragraph or so. That’s just how it’s going to be, and it’s the price we readers pay for being the ones to decide whether a book should succeed or not, rather than some gatekeeper doing it.

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