

Of Amazon and eBooks - nikgregory
http://nikgregory.com/2010/02/of-amazon-and-ebooks/

======
FluidDjango
The problem that I have with his analysis is that it assumes that we continue
with the all huge costs of publishing (including marketing).

At some point many of these costs may be significantly wiped out, e.g., by
cutting out much of marketing (as well as shipping, wholesalers, etc.). What
if writing/"publishing"/marketing of "books" (fiction & nonfiction) became a
mutant of current blogging: with the public voting/marketing through the
digital social media.

An ebook _revolution_ is not going to happen IMHO through supporting the
existing overheads of the 20th century publishing model.

~~~
dpapathanasiou
Exactly.

The concept of "publisher as angel investor" only works if you assume the old
publishing model of printing, storing, and distributing physical objects.

Electronic publishing is a completely different cost paradigm.

~~~
jseliger
Not as much as you think: writers still need editors. They still need someone
to help them market their books, since every minute not spent writing is a
minute not spent honing their craft. Merely saying "get a blog" isn't enough.
They still need to be able to eat. And so on. A lot of these analyses have
been busily pointing out physical costs account for a relatively small
proportion of the overall cost of a book.

In addition, you, the reader, still needs someone to help you sort through the
vast amount of stuff out there that you could read. Publishers, for all their
other ills, help do this to some extent, despite all the false positives and
false negatives that get through (or don't).

Electronic publishing might _eventually_ become "a completely different cost
paradigm," but it sure isn't there yet.

~~~
mechanical_fish
What you say is correct but doesn't even go far enough. What authors need is
_an insurance company_.

What risk is being insured against? The risk of spending six months to a year
per book to construct books, and then discovering that the books can't make
enough money to feed you. The scariest cost of producing a book has nothing to
do with paper, or even with marketing or editing. It is _opportunity cost_ :
When you're writing a book, you're not doing anything else, and you may be
very well throwing your time away.

Software startups reduce this kind of risk by taking money from angels or VCs.
(a.k.a. "publishers"). Or they try to gauge product/market fit as quickly as
possible by doing things like shipping early, charging money, listening to
customers, A/B testing, etc. However, this doesn't work well for books. Books
have a smaller market than software, are _harder_ to prototype, are much
harder for customers to try out (it takes a lot of effort to thoroughly
evaluate a novel), are much less valuable if they fail [1], and have a much
more mature, undifferentiated, and well-saturated market: Your software has to
compete against about fifty years' worth of earlier software products, most of
which suck, and 95% of which won't even run on the machines your customers
own. Your book has to compete against _William Shakespeare_. Literally.

How does the insurance work? A publisher reads your first book (or the first
three chapters and an outline, which I'm told is a fairly standard way to
submit a book proposal) and then offers immediate, free feedback: Either they
accept it, which means pledging to stake a bunch of money and reputation to
bring it to market, or they reject it. If your first book doesn't get
accepted, it's a very valuable sign: You need to keep your day job, and you
need to either become a better writer, try writing something different, try a
different hobby, or learn to live without actually selling any of your work.

\---

[1] Everyone on HN knows that having worked at a failed startup is no big
deal. It teaches you a lot. You get a lot of resume-enhancing experience. And
your failed software experiment may have valuable pieces that can be
extracted. But bad novels are literally a dime a dozen, and an unpublished
novelist with three failed novels is not worth any more on the job market than
one with no failed novels.

------
ghshephard
I wish the author had provided citations for his costs, because I know at
least one of his number - book printing cost, is just plain wrong, which
causes me to suspect the rest.

"The Printing process costs, on average, 10% ($4) of the cover price of a
book, "

So, "Printing Process" is not a function of the cover price of the book. It is
a function of what size of book, spine design, what type of binding, what type
of covers, whether there is printing on the inside of the cover, whether there
is color, what type of paper, and how many pages, and how many books you will
be printing.

For example, sitting on my bed right now are two softcover books:

"Maps in a mirror, short fiction of Orson Scott Card", 671 pages, $23.95 list.

"Advanced Unix Programming, Second Edition", 717 pages, $64.99 list.

Both Black and White, perfect Binding, color cover, no printing on inside of
covers.

<http://www.instantpublisher.com/Price-quote.aspx> sugests that the cost of
each should be $4.72 - which is 19% of the Orson Scott Card, and 7.2% of
Advanced Unix Printing.

In addition, this is what it would cost _me_ - I have to believe that large
publishers are able to print their books for less that what I would pay.

~~~
mechanical_fish
So, the author's back-of-the-envelope calculation is 10%, yours is 13% (the
average of 19% and 7.2%), and your conclusion is that "the author is just
plain wrong"?

What would the author's rough estimates look like if they were "in excellent
agreement" with yours? Would "11%" be close enough for you, or are you holding
out for "12.8% to 13.3%"?

Can I suggest that you read the Wikipedia article on "orders of
approximation"? Or, better yet, "Fermi problem"?

<http://en.wikipedia.org/wiki/Orders_of_approximation>

<http://en.wikipedia.org/wiki/Fermi_problem>

~~~
nikgregory
Of a few sources for the clearest figures, most appeared to be quoting from
this, and not self-pub figures like the OP of this thread.

Here's the best written I could find:
[http://journal.bookfinder.com/2009/03/breakdown-of-book-
cost...](http://journal.bookfinder.com/2009/03/breakdown-of-book-costs.html)

List price = MSRP/Cover Price.

If John Grisham has 10% printing costs, I think everyone else is likely to.
The problem with extrapolating from self-pub figures is that these companies
make money off of printing. Publishers don't make a penny off of printing,
they make their money once pre-production and marketing has been paid off.

Of course every book is unique, some writers are awful and need more editing,
others are brilliant and need none. Colour pages drive up prices ridiculously
and non-fiction books _are not_ priced like fiction, which is the major debate
piece on the eBook front, discussing non-fiction is rather irrelevant as
prices are based on work regardless of cost, plus they need to pay off
expenses _fast_ due to far lower sale volumes.

~~~
Lazlo_Nibble
But _do_ the publishers really not make a penny off of printing? In the music
business, the labels often own the manufacturing plants as well...is that not
the case in print publishing?

------
thisduck
"Net loss: $10 per eBook."

Why are we equating a published singular book with an ebook? Net loss per
ebook can only be calculated based on the number of ebooks _sold_ , not on the
number of ebooks _produced_. One ebook is equivalent to thousands of ebooks,
there is no difference.

People, it's digital.

~~~
MikeCapone
Indeed. I think people tend to underestimate the cost of actually printing
stuff, as well as shipping it, storing it, returning it when it doesn't sell,
etc. It all adds up, and required a lot of capital machinery, buildings,
employees, etc.

~~~
nikgregory
Printing is 10% of cover price, distribution is 10% of cover price (this I
believe includes the cost of returning too). For a hardcover this can total
$8, for a mass market paperback this can be $1. Amazon, lik

I didn't get into a discussion of benefits of eBooks, especially when colour
e-ink readers arrive. Specifically comics and graphic novels would likely fare
excellently, low editing costs (almost all the work is done by the author art,
inking, and minor amounts of writing), virtually no marketing or advertising
costs make printing (higher than a simple black-ink book) and distribution the
major costs. It could literally be back to $0.99 comic books. Printing in
comics can be up to 40% of cover price, distribution taking 30%, which
compared to a book is killer.

I have no intention to say eBooks aren't going to become huge one day, but
many of the costs in book making are from well before the ink hits paper.
Unless you're willing to sacrifice quality, the prices are going to remain
very close.

~~~
MikeCapone
Could you cite your sources? Are those industry averages, or just for one
publisher you are familiar with?

~~~
nikgregory
Here's the best explained I've found:
[http://journal.bookfinder.com/2009/03/breakdown-of-book-
cost...](http://journal.bookfinder.com/2009/03/breakdown-of-book-costs.html)

Other breakdowns always seem to hit close. All numbers are averages, but
printing generally hit between 8% and 12% for fiction. However all prices
vary, some writers need no editing so figures for printing will be
artificially raised, whilst a poor writer with great ideas will cost a small
fortune to edit and printing will be tiny in comparison.

Colour pages and anything else always cost more (I once read 20 colour pages
in a book can cost as much to print as the other 230 pages), same with non-
colour artwork and everything else.

Non-fiction is always priced differently from fiction due to extra steps in
the editing process. Sources have to be reviewed and evaluated, plus the
author can have an advance before they've finished the second chapter.

