Friday, 5 October 2012

Only a fool doesn’t write for money

By Peter Stuart Smith (AKA Max Adams, James Barrington, James Becker, Tom Kasey, Thomas Payne and Jack Steel)

Obviously I’m not the first person to make a statement like the title of this blog post, but a recent article in another blog site caught my eye and emphasised very clearly just how little money most authors of ebooks actually make as a result of all their hard work.
            The article referred to a report by Bowker which stated that the average price of commercially published ebooks in the United States fell by about 8% from 2010 to 2011, for fiction from around $5.69 to $5.24, with non-fiction dropping even more dramatically from over $9 per book down to around $6.47, a drop of about 25% in price. It’s worth mentioning that non-fiction ebooks were still costing about 20% more than novels in 2011, but the year before the price difference was 65%, so the gap between the two types of book is narrowing, and it’s also clear that prices across all genres are falling steadily.
            And it’s worth emphasising that these prices are for commercially-produced ebooks, not self-published novels, which are typically selling for substantially lower prices, often between 50 pence and £2.99 (roughly 75 cents to $4.50).
            In fact, the blog article pointed out, some ebooks are selling for less than the cost of a monthly magazine, and it suggested that one reason for the uncertain state of the world of publishing was not a lack of good books and decent writers, but simply the huge reduction in profits because ebooks are now so cheap. And all this at a time when hardback coffee-table books are surging in price, some now costing around £50/$75 each.
            Perhaps the most dramatic figure the article came up with was that the ebook price of an average novel of about 100,000 words meant that the author was actually earning about 1 cent for every 200 words written, and that the only recourse for the publishing industry was to immediately and dramatically increase the price charged for every ebook they sell.
            Most of which I completely disagree with, because he’s missing several important points. In fact, I think most people in the industry are missing these same points.
            There is a fundamental difference between an electronic book and a physical book which reports of this kind consistently fail to acknowledge. To produce a hardback or paperback novel requires a conspicuous consumption of resources – paper, card, ink and so on – plus warehouse space to store it, and the inevitable transport costs to distribute it, all overlaid by the staff costs at the publishing house and the company used for typesetting and printing. For a typical novel with a first print run of around 25,000 copies, the total cost is likely to be well in excess of £20,000/$30,000. The royalty paid to the author will be around 7% of the selling price – not the cover price – of the book.
To produce an electronic book, once the manuscript has been prepared, costs almost nothing – certainly well under £500/$750 even if a professional cover is designed – and the finished product can be sold as often and as quickly as the market demands. The author’s royalty will be around 20% of the selling price from a commercial publisher, or 40% or 70% if the book is self-published. Although the content of the two items is identical in terms of the text, in all other respects they are entirely different in every way. Trying to compare one with the other is pointless.
            You cannot assess the earnings of any author on the basis of revenue received per words written. This only works for short stories and magazine articles where the writer is paid a flat sum for his contribution, irrespective of the subsequent sales of the publication. In fact, there’s a very valid argument that ebooks are still far too expensive – not far too cheap – simply because each sale costs the publisher virtually nothing and the reading public knows that.
I’ve mentioned this before, but I genuinely believe that the market will only really take off when the price of a commercially produced ebook drops to the level at which it becomes a genuine impulse purchase, and I normally assess that as the cost of a cup of coffee – certainly under £3/$4.50 – and ideally less than that.
            There’s an old story concerning the invention of the ballpoint pen, which I believe to be true. An English company began marketing the pen at the highest possible price they thought the market could bear, and about the same time an American company started selling the new pen as cheaply as they possibly could. The English company went bankrupt, and the success of the American firm is reflected in the fact that almost everybody these days calls a ballpoint pen a ‘biro’, in most cases without having the slightest idea where the name came from.
            I believe that the most successful publishers of ebooks will be those companies which embrace the ‘pile them high and sell them cheap’ marketing concept which has worked so consistently in the past, and those that go to the wall will be the ones who cling onto old concepts of the value of the written word.
            As always, time will tell.

You can contact me at:
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