Monthly Archives: January 2012

The Economics of [Self-Published] e-Books

30 January 2012

From Daniel James Arnzen at Wrightly Done:

A quick Google search on “economics of ebooks” will result in a mix of articles either espousing gloom and doom for the book publishing industry, or discussing the unfairness of e-book pricing. Most of the discussion focuses on comparing e-books to printed books. This is not a valid comparison because the economics are completely different.

The music industry has gone through several transitions in the past. There are two transitions I want to focus on: the transition from cassette (analog) to CD (digital), and the transition from CD (physical) to MP3 (virtual). When music went from being distributed in analog format to digital there was fear that the ability to make perfect copies would kill the industry. This didn’t happen; however, the transition to MP3 and down-loadable music has been very disruptive. This is because the industry had been optimized over many years for the economics of the physical distribution of recorded music. The technology resulted in large changes in the behavior of consumers, which changes everything. Years later, the music industry continues to adapt to these changes.

. . . .

Book publishing is making a bigger transition. Digitization and virtualization are occurring simultaneously. It is more like going from cassettes (or even LP’s) to MP3′s directly. This results in a lot of turmoil. No one knows how this will change the behavior of the consumer, and the existing infrastructure is trying to maintain the status quo on how business is done.

. . . .

At first glance, the law of supply and demand seems to destroy e-book pricing. Most people understand that increasing supply will drive prices down. The supply is infinite, right? There will never be a line out the door to get the first copies of a best seller. Everyone is guaranteed a copy. Shouldn’t this drive prices to zero? This is a misunderstanding of how “supply” is used in economics. Supply isn’t an inventory quantity. Supply is the amount of product the seller is willing to sell at a given price keeping all other factors constant. If something costs me $40 to produce, I’m not willing to sell it for < $40 or I’ll lose money. Normal (physical) products have a cost associated with each unit produced; the cost of making one additional unit is referred to as the marginal cost.

E-books have a distorted supply curve because the marginal cost is very small; however, there is a substantial fixed cost, or cost to produce the first copy. Regardless of how many copies are sold, the production costs stay the same. The fixed cost ends up being amortized (shared) over the number of books sold. So returning to the supply question; if an e-book costs you $1000 to produce, how many copies would you be willing to sell at $1000? That’s easy, as many as you can! After the first copy, every additional sale is pure profit. Ok, but there’s a hitch, it is unlikely you will sell a single e-book at $1000. There’s no demand at that price. The correct way to look at it is what is the minimum number of sales you would be willing to make at a given price. What about $1? In order to make any money, you would have to sell at least 1000 copies to make a profit. E-book pricing is demand limited; which is kind of obvious.

. . . .

When demand is limiting the price, it is considered a buyer’s market. Prices are set based on how much a buyer is willing to pay. How can you know how much someone is willing to pay for an e-book? I think there’s already a lot of history on this looking at the existing book market. People are willing to pay $5-$10 for back-list and $15-$25 for a new release. Notice how I didn’t say “paperback” and “hardcover.” Most people who buy hardcover books are not paying the premium for the big bulky book to sit on a shelf. They are paying for the new content that is unavailable in any other form.

. . . .

As with the music industry, the changing habits of the consumer will have the biggest impact. How do people consume e-books? I know I find e-books to read differently than I did print books. I don’t randomly browse anymore by wandering aisles. I buy new releases from authors I enjoy, I buy recommendations, and I’ll sample material in genres I like from unknown authors. Some people may spend hours sifting through thousands of self-published e-books looking for gold, but I don’t. I use community reviews and the internet hive mind to narrow my search. With no supporting data, I’ll say I’m a typical e-book consumer.

Link to the rest at Wrightly Done

Listen, Dundy

30 January 2012

Listen, Dundy, it’s been a long time since I burst into tears because a policeman didn’t like me.

Dashiell Hammett

How Book Bloggers Sparked the Indie Publishing Revolution

30 January 2012

From author Terry Giuliano Long on Novel Publicity & Co.:

Last May, about a month after I began marketing my novel, In Leah’s Wake, a former agent told me I’d never sell 500 books. A rookie, I had no idea what to expect. When I published my novel, I’d dreamed of selling around 3,000 – 5,000 books, hoping those healthy sales numbers might attract the attention of an agent or traditional publishing house for my next novel.

The agent had left New York, but she’d been in the business for a long time, and her words stung. I hung up the phone, feeling heartbroken, depressed. Had I not been in the midst of my first blog tour, I might have pulled my novel off the market that day.

. . . .

Over the next few months, In Leah’s Wake appeared on hundreds of blogs. Bloggers opened their hearts and spread news of this quiet literary novel across their social networks. In August, In Leah’s Wake hit the Barnes & Noble and Amazon charts. Now, seven months after my discouraging conversation with the agent, my book has been in the Amazon top 200 for over five months – and sold over 80,000 copies.

Book bloggers rock! Bloggers are, I believe, the fairy godmothers and godfathers of the literary world. They invest their inestimable talent, their tremendous energy, and their invaluable time into discovering, reviewing and promoting new books – and in keeping dreams alive.

. . . .

Book reviews are big business. The money paid to reviewers at publications like The New York Times is generated, at least in part, from ad sales paid for by traditional publishers. Thus far, traditional media have resisted reviewing indie books, probably at least in part because there is little or no money to be made.

Despite the stigma, indie authors continued to write. With no one to parse the thousands of new books on the market, readers who wanted to try books by indie authors were forced to buy largely at random. Some books were gems; others were not. Recognizing the need – and desire on the part of readers – for reviews, bloggers picked up the slack. Today, bloggers take the guesswork out of book buying, lowering the risk for readers.

. . . .

Unlike traditional media, most bloggers don’t stigmatize indie-published books. Except perhaps in free reads, no one pays bloggers for their reviews. Bloggers don’t answer to corporate publishers, nudging them to read books by their anointed authors, nor do they answer to a marketing team. Bloggers select books freely – their only goal is to share good reads with their readers and followers. Because they’re open-minded, willing to read books by an author they’ve never heard of, they discover new voices. This is what happened with In Leah’s Wake.

. . . .

On their sites, bloggers create a vibrant community of authors and readers. In the past, outside public readings, readers and authors rarely connected. Today, readers and authors often visit book blogs and dynamic conversations ensue. Bloggers also interview authors or invite authors to write guest posts, giving authors a way to share their thoughts with readers and readers the opportunity to learn more about – and connect with – authors.

Link to the rest at Novel Publicity & Co.

How to Get Out of Your Own Way: The Secret to Becoming a Successful Writer

30 January 2012

From author and former editor Anne R. Allen Ruth Harris:

You know what I’m talking about. I know you do. Most of us recognize it as The Enemy Within, the devil with a thousand faces, the ugly, waxy build up of negative forces that stand between you and Writing The Book/Finishing The Book/Editing & Polishing The Book.

Science still hasn’t come up with a cure for the common cold but, as an editor, I’ve worked with lots of writers over the years and I’ve learned that writers, crafty creatures that we are, struggle with the lit version of the common cold.

. . . .

Are you a perfectionist?

Do you suffer the misery of unfinished drafts, half completed novels, computer files so ancient only Methuselah remembers the program that created them? Have you settled into an endless rut of rewriting, revising and second guessing yourself? You’re working hard but getting nowhere—and not fast?

Then, please, stop! Ask yourself what are you afraid of: failure? Or is it success? And what’s the worse thing that can happen if you upload a less-than-”perfect” book? Heavens gonna fall? Earth stop in its orbit?

. . . .

Do more of what comes easily and work on your strengths.

Snappy dialogue? Scorching sex? Elegant descriptions?

Whatever you like to write will likely be a key to developing a style that is uniquely yours.

Whether your style is Tilda Swinton or Lady Gaga, George Clooney or Judd Apatow, work it. Robert M. Parker did. Elmore Leonard did. Style counts, style matters, style lasts.

Raymond Chandler nailed it: “Style is the most valuable investment a writer can make with his time.”

Bottom line: Style is you being you on purpose so embrace it.

Link to the rest at Anne R. Allen’s Blog

The Only Way to Paradise

30 January 2012

Mrs. PG’s ebook, The Only Way to Paradise, is free on Amazon today.

 

The story of the cover is here.

“What’s the book about?” you ask.

PG’s version is:

Four suburban women meet in group therapy.

Their lives are a mess, so they go to Florence to solve their problems.

Art, Vespas, music and cool Italian dudes happen.

To find out the rest, you’ll have to buy download the book free today.

Passive Guy usually doesn’t do book blurbs, but there’s only one Mrs. PG.

With A Little Help: Digital Lysenkoism

30 January 2012

From Cory Doctorow at Publishers Weekly:

Talking with the lower echelon employees of publishing reminds me of a description I once read about the mutual embarrassment of Western and Soviet biologists when they talked about genetics. Soviet-era scientists were required, on pain of imprisonment, to endorse Lysenkoism, a discredited theory of inheritance favored by Stalin for ideological reasons. Lysenko believed, incorrectly, that you could create heritable characteristics by changing a parent organism—that is, if you cut off one of a frog’s legs, a certain number of its offspring would be born with three legs.

Lysenkoism was a disaster. When it was applied to food cultivation it led to ghastly famines that killed millions. So, when Soviet scientists met their Western counterparts, everyone knew that Lysenkoism was an awful absurdity. But the Soviet scientists had to pretend it wasn’t. Not unlike some of the discussions inside today’s major publishing houses when it comes to DRM.

I recently solicited several writers for inclusion in the Humble E-book Bundle, for which I’m acting as a volunteer editor. The Humble E-book Bundle is the first foray into e-books by the Humble Indie Bundle project, a nonprofit that has run several insanely successful video-game distribution events in which customers got to name their own prices for a collection of independent, DRM-free games. Each of the Humble Indie Bundle projects so far has grossed around a million dollars and has made hundreds of thousands of dollars for each contributor . And I’ve recruited enthusiastic contributors from all of the big six publishers for the Humble E-Book Bundle—that is, all except one, which has an all-DRM-all-the-time policy and won’t consider publishing anything without DRM in any of its divisions.

Because of its insistence on DRM, this one publisher is going to miss out—along with its authors—on hundreds of thousands of dollars in sales, and some great exposure. Needless to say, every author I’ve approached from that publisher is now trying to figure out how to get out of their contracts for future books. It’s one thing to have your publisher’s bizarre, ideology-driven superstitions erode e-book sales. It’s quite another to learn that you’re going to miss out on a chance to pay off your mortgage because your publisher has bought into a form of digital Lysenkoism.

. . . .

If there is anything that exemplifies the delusional nature in some publishing boardrooms today, however, it is the phrase “social DRM.” For those unfamiliar with the term, social DRM is another name for an unencrypted e-book that has the purchaser’s name (and often contact information) inserted in it, via some kind of digital watermarking. The idea is that e-book customers will be reluctant to share their e-books around if they know that their name and information will travel with the books, either because they don’t want to be shamed for being patient zero in a widespread epidemic of unauthorized copying, or out of fear of legal reprisals from publishers should a copy with their name on it show up on the Pirate Bay.

Those theories of social DRM’s potential effectiveness may or may not hold, though I’m dubious of the second premise, since it seems unlikely that any court would find anyone liable for copyright infringement merely because a third party was found to have copied from your edition. This is hardly proof that you authorized the duplication, or even that the duplication was illegal—is it illegal to copy your e-books for your kid’s use? How about willing your e-books to a local school or lending them to your parents?

The delusion of publishers isn’t in their belief that social DRM will keep people from sharing. The real delusion lies in the use of “social DRM” in connection with the marketing and sale of e-books. Recently, I discovered some publishers actually advertising their use of social DRM.

. . . .

On the other hand, publishers have been worried from the beginning that instantaneous, zero-cost digital copying and sharing would make it impossible for them to earn any return from e-books, as their customers copied them out of house and home. Thus, many publishers were lured into the world of DRM, a kind of magic-beans technology that was supposed to make it hard or impossible to copy e-books without authorization. “Magic-beans” because no could ever explain to publishers how DRM worked, just that it involved “encryption” or the creation of “speed bumps.” And if all those digital security experts and cryptographers in the world (at least those who don’t work for DRM vendors) were dubious about DRM’s ability to work as advertised, it was, publishers assumed, because they didn’t understand the realities of the e-book marketplace.

But all those supposedly naïve cryptographers have been proven right. Every DRM system that is rolled out is broken almost immediately. The reality is that any readers who care to can get any books they want without paying, if they choose to. There will always be someone out there technologically adept enough to break any DRM scheme—and even if one of those wizards can’t be stirred to break it, the cost of a book scanner has dropped to about $300, and there have never been more fast typists alive than there are today.

What’s more, we know that customers hate DRM. They rail against it, they actively seek out non-DRM versions, and they boycott products with DRM platforms. In publishing, there’s the dawning realization that allowing, say, Amazon, to lock up your books with its DRM means that Amazon essentially owns your customers. That is the reality of DRM. This is incredibly bad for publishing’s future.

Link to the rest at Publishers Weekly

Publishers pushing shopping carts down Broadway

30 January 2012

From the New York Times:

In March 2009, an eternity ago in Silicon Valley, a small team of engineers here was in a big hurry to rethink the future of books. Not the paper-and-ink books that have been around since the days of Gutenberg, the ones that the doomsayers proclaim — with glee or dread — will go the way of vinyl records.

No, the engineers were instead fixated on the forces that are upending the way books are published, sold, bought and read: e-books and e-readers. Working in secret, behind an unmarked door in a former bread bakery, they rushed to build a device that might capture the imagination of readers and maybe even save the book industry.

They had six months to do it.

Running this sprint was, of all companies, Barnes & Noble, the giant that helped put so many independent booksellers out of business and that now finds itself locked in the fight of its life. What its engineers dreamed up was the Nook, a relative e-reader latecomer that has nonetheless become the great e-hope of Barnes & Noble and, in fact, of many in the book business.

Several iterations later, the Nook and, by extension, Barnes & Noble, at times seem the only things standing between traditional book publishers and oblivion.

Inside the great publishing houses — grand names likeMacmillan, Penguin and Random House — there is a sense of unease about the long-term fate of Barnes & Noble, the last major bookstore chain standing. First, the megastores squeezed out the small players. (Think of Tom Hanks’s Fox & Sons Books to Meg Ryan’s Shop Around the Corner in the 1998 comedy, “You’ve Got Mail”.) Then the chains themselves were gobbled up or driven under, as consumers turned to the Web. B. Dalton Bookseller and Crown Books are long gone. Borders collapsed last year.

No one expects Barnes & Noble to disappear overnight. The worry is that it might slowly wither as more readers embrace e-books. What if all those store shelves vanished, and Barnes & Noble became little more than a cafe and a digital connection point? Such fears came to the fore in early January, when the company projected that it would lose even more money this year than Wall Street had expected. Its share price promptly tumbled 17 percent that day.

. . . .

Barnes & Noble, once viewed as the brutal capitalist of the book trade, now seems so crucial to that industry’s future. Sure, you can buy bestsellers at Walmart and potboilers at the supermarket. But in many locales, Barnes & Noble is the only retailer offering a wide selection of books. If something were to happen to Barnes & Noble, if it were merely to scale back its ambitions, Amazon could become even more powerful and — well, the very thought makes publishers queasy.

“It would be like ‘The Road,’ ” one publishing executive in New York said, half-jokingly, referring to the Cormac McCarthy novel. “The post-apocalyptic world of publishing, with publishers pushing shopping carts down Broadway.”

. . . .

Before Mr. Lynch joined Barnes & Noble in 2009, he had never sold a book in his life. (The last book he read — on the Nook, he said last week — was “The Spy Who Came In From the Cold,” by John le Carré.) Mr. Lynch came to the job from IAC/InterActiveCorp, where he worked for HSN.com, the online outlet of the Home Shopping Network, andGifts.com.

And yet, in three years, he has won a remarkable number of fans in the upper echelons of the book world. Most publishers in New York can’t say enough good things about him: smart, creative, tech-savvy — the list goes on. It helps that he has forged the friendliest relations between publishers and Barnes & Noble in recent memory. They are, after all, in this together.

. . . .

For all the bells and whistles and high-minded talk [at Barnes & Noble's Palo Alto offices], Barnes & Noble doesn’t exactly have the cool factor (or money) of, say, a Google or a Facebook.

Ravi Gopalakrishnan, the first engineer whom Mr. Lynch hired and now the chief technology officer for digital products, said his techie friends were incredulous when he joined Barnes & Noble.

“They were all wondering what I was up to,” Mr. Gopalakrishnan, 46, said. “I’m a technology guy — why I was working for a retail company? They thought I was nuts. There were a lot of e-mails that said, ‘Barnes & Noble?!’ ”

Bill Saperstein, a mild-mannered surfer and a veteran of Apple, said he was persuaded to leave retirement to join Barnes & Noble as vice president for digital products hardware engineering.

“We don’t see a lot of the stock and the free sushi bar and everything else that you find at Google, but there’s a lot of responsibility,” said Mr. Saperstein, 62, who spent seven years working for Steve Jobs. “It was stuff that I strongly believed in, which was reading.”

. . . .

Back in New York, Mr. Lynch has been working to revamp the look of Barnes & Noble stores. Last year, the company expanded sections for toys and games and added shiny new display space for its Nook devices. In another sign of the digital revolution, Mr. Lynch expects to eliminate the dedicated sections for music and DVD’s within two years — while still selling some of them elsewhere in the stores. He also plans to experiment with slightly smaller stores. And, before long, executives will take the Nook overseas — a big switch, given that Barnes & Noble has focused almost exclusively on the American market for decades. The first stop is expected to be Waterstones bookstores in Britain.

. . . .

No wonder that some New York publishers have gone so far as to sketch out what the industry might look like without Barnes & Noble. It’s not a happy thought for them: Certainly, there would be fewer places to sell books. Independents account for less than 10 percent of business, and Target, Walmart and the like carry far smaller selections than traditional bookstores.

Without Barnes & Noble, the publishers’ marketing proposition crumbles. The idea that publishers can spot, mold and publicize new talent, then get someone to buy books at prices that actually makes economic sense, suddenly seems a reach. Marketing books via Twitter, and relying on reviews, advertising and perhaps an appearance on the “Today” show doesn’t sound like a winning plan.

What publishers count on from bookstores is the browsing effect. Surveys indicate that only a third of the people who step into a bookstore and walk out with a book actually arrived with the specific desire to buy one.

“That display space they have in the store is really one of the most valuable places that exists in this country for communicating to the consumer that a book is a big deal,” said Madeline McIntosh, president of sales, operations and digital for Random House.

What’s more, sales of older books — the so-called backlist, which has traditionally accounted for anywhere from 30 to 50 percent of the average big publisher’s sales — would suffer terribly.

“For all publishers, it’s really important that brick-and-mortar retailers survive,” said David Shanks, the chief executive of  the Penguin Group USA. “Not only are they key to keeping our physical book business thriving, there is also the carry-on effect of the display of a book that contributes to selling e-books and audio books. The more visibility a book has, the more inclined a reader is to make a purchase.”

Link to the rest at the New York Times and thanks to Mary for the tip.

Please Don’t Read Reviews

30 January 2012

From author Alice Bradley:

[First-time author] Jenny and I had a conversation the other day about reader reviews, during which I implored her not to read them. She’s going to anyway, because she is perverse. “Oh, I’m definitely going to read them,” she told me, “and then I will call you and cry.” No amount of pleading on my part would change that. At least she’s honest?

Sigh.

No matter where you are in your career, it’s painful to read a negative review. Painful, and counterproductive. The problem is, they’re inevitable, if you’re writing the way you should be. You must be fully yourself in your writing if you want to reach the people you’re meant to reach. So: someone’s going to disike you. It’s a fact. An unpleasant, painful fact. And the wider an audience your book (or article, blog, etc.) reaches, the more people are going to read it who don’t get you at all. Or who begrudge you your popularity, or who think you might be anti-Irish because you said the color green doesn’t work with your skin tone. Sometimes people are just unhappy, or having a bad day, or nuts. You can’t control who reads your work, or how they’ll react.

The reaction of the world to your work is not your responsibility. You don’t need to be concerned with who does or does not like your writing. You also do not need to know about it. You do not need to read their reviews like it’s some form of penance. You don’t need to punish yourself because other people don’t think you are as wonderful as you are. All that reading these reviews will bring you is a bad day. Your productivity will suffer. Are you looking for excuses to not work?

. . . .

Once you’ve published something, you’re done. You can’t defend it. You can’t make someone like you. There is nothing you can do once a reader has reached his or her own conclusions. All you will feel from those reviews is awful. You may even feel bad about the five-star reviews, if you think they’re misinterpreting you. All it takes is one review that reads “I hate the Irish, too! Thumbs up, Jenny!” and you’re re-reading your entire book and wondering where you went wrong.

In conclusion: reader reviews are poison for the author. Once you’re done, you’re done. Don’t look back. Move on to your next project.

Link to the rest at babble

Ten Questions for Publishing CEO’s

29 January 2012

From Don Linn at Bait ‘n’ Beer regarding a panel of publishing CEO’s at the Digital Book World conference:

As I was reading through the program, I began to think about what I’d like to ask publishing CEO’s (not just this group) in January 2012…not in a combative or “gotcha” way, but because I’m genuinely interested in what our industry’s leaders think about some of the issues facing all of them (and all of us).

. . . .

So here’s some of what I’d like to know:

1. What do you think is the appropriate length of life for copyright on an author’s work?

2. What do you think is the appropriate length for the rights an author grants in a publishing contract?

3. What are your thoughts on agents acting as publishers?  Is it appropriate in any circumstances? How does it affect your relationships with agents, if at all?

. . . .

7. Do you believe library lending (or for-profit ebook lending or subscription businesses) represent lost sales to your business?

8. Do you believe libraries are a source of discovery that lead to some number of book sales for your business? If so, why? If not, why not?

Link to the rest at Bait ‘n’ Beer

You always have a very smooth explanation

29 January 2012
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“You always have a very smooth explanation ready.”

“What do you want me to do, learn to stutter?”

Dashiell Hammett

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