The High Cost of Publishing, part 2

02.18.09 | Comment?

Yesterday I described the RPG hobby book publishing business in broad terms and ended with the assurance that today we’d look at real world numbers. Unfortunately, I’m afraid I’m going to have to pull a bait & switch. I had a church event last night and by the time I got home I didn’t have time to finish pulling everything together. I’m working on figuring out how to embed a spreadsheet right in the post using Google Docs. I still need to experiment, but I’m hoping it will allow you, the reader, to interact and change numbers to see how one segment affects everything else.

In the meantime, here’s your reading assignment.

Bob Miller, President of Harper Studio, wrote a blog post called Why E-Books Cost Money to Publish. It’s only two paragraphs, but be sure to read the comments that follow.

This original post has been picked up and discussed in several places. As a rule, the reader comments are the most interesting parts. Overall, most comments come in the form of calling “B.S.” in some form or fashion. One reader thought that Mr. Miller was trying to bamboozle readers because clearly all Harper had to do was eliminate wasteful wholesale pricing and set up their own online store to sell direct to customers. Then prices would be lower and everyone would be happy. I think this is incredibly naive thinking. It’s the equivalent of saying that Nike should stop selling athletic wear in stores and only sell from one mega Nike-owned shop. Please tell me you see how that might be a problem.

What the heck. I’m going to go ahead and ruin the punchline for tomorrow’s post. The problem with trying to set a MSRP on books (or any product, really) is that there’s no way of knowing in advance how many we’re going to sell. With a paper books, at least you can spread out your costs over the finite print run. E-books are an evolutionary step beyond “scarcity economics”. A book can sell an infinite number of copies, so costs can be spread out across a greater number of books. Right?

Theoretically, yes. Realistically, no.

Here’s why. Let’s say I come to you and ask to borrow $100. I promise to make a payment on the loan every single week. However, I’ll only pay whatever I can afford. Maybe it’ll be $10/week, or maybe it’ll be a $0.01/week. I don’t know, and neither do you. Now lets say that someone else comes up to you and wants to borrow $100. You regretfully explain that you don’t have the extra money, but you promise that as soon as Flametoad pays you back then you’ll be glad to loan the money out again. Unfortunately, you have no idea when that’ll be. Now instead of that scenario, let’s say that I agree to pay you at a fixed rate of $10/week. That’s more expensive for me, but at least we can both see the light at the end of the tunnel.

In theory e-book sales are infinite, but publishers can’t wait on infinity to get their investments back. They’ve got other books–really good ones–to publish, but they can’t afford to do so until they’ve recovered their investments in the last ones. That’s why we have to take our most educated guess as to how many books we’ll sell over a window of X months, then spread out all our costs over those number of units. It’s awesome that my e-book may still see a steady trickle of sales five years from now, but that doesn’t help me at all when I’m trying to figure out how to fund the book after this one a few months from now. Even if I were a big publishing house capable of funding 20 books simultaneously, at some point I’m going to need the revenue from book number 1 to fund the development of book number 21.

That’s where tomorrow’s spreadsheet will come in handy. We’ll look at how all of these pieces– time, author pay, wholesale rates, printing rates are interrelated.

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