Tuesday, March 20, 2012

The real costs of publishing: paper books vs e-books

Last week John posted an outraged piece about how little authors are being offered in contracts for e-books and how much money e-books are being sold for. We’ve heard about the squeeze Amazon has put on publishers, trying to dictate what they charge. Apple through their iTunes website have also tried throwing their weight around. Taken together, I can imagine how confused the average reader must be. Our staid publishing industry has turned into the Wild West. I have to say I share in John’s outrage.

I’ve been around the book game for a lot of years now – on both sides of the fence: writing and production. For example, I’m currently working on a book cover for a publisher (still haven’t received the spine width or the back cover copy) and I have a novel coming out next fall. I have a brother who was in the printing business for many years and I grew up in a photo engraving plant that my dad owned. In a fit of impatience at the glacial pace of getting a book even looked at by a publisher, I also self-published my first two novels. I’ve been around enough to know the ropes.

First let’s talk about the costs behind traditionally-published paper books. Here’s a list of what has to be paid for:
• acquisition: usually readers are hired (and not paid much) to read manuscripts. Editors also will read agented manuscripts.
• legal: if your book is deemed worthy, a contract has to be made up and shepherded through acceptance. Usually, these are a boilerplate contract the publisher has ready and waiting.
• editing: an editor is assigned to work with the writer. Copyediting is still done at most houses, but not with the thoroughness it once was.
• book design: big houses have staff to do this. Smaller houses farm it out (what I’m currently working on).
• publicity: most authors don’t get much help here. The bucks are reserved to promote the star authors’ works – understandable since the publisher will get the best return for dollars spent. Minimally, the publicity cost for most books is to get out review copies and track the reviews, along with producing a bit of promotional material. A small-time author is lucky if the publisher provides bookmarks.
• sales reps: again, in-house or farmed out?
• printing: this depends on how many and what sort of books are being printed (hardcover, trade paper, mass market).
• fulfillment: paper books must be warehoused and shipped. It’s surprisingly expensive. I’m also lumping in returns in this because, sadly, books do come back to the warehouse.
• accounting: this is where I’ll put publishers’ tracking sales and paying out royalties.

And now the list for producing e-books
• acquisition: the same.
• legal: the same.
• editing: the same.
• book design: the same (all books still need a cover).
• publicity: their are some outlets that will review from e-books. Publishers like this idea because they can just fire them off for literally nothing in cost.
• printing: not applicable.
• fulfillment: nowhere near as expensive or involved. Savvy publishers handle e-book sales themselves, but even if it’s farmed out to another company for “shipping” and receiving of payment, it’s still very inexpensive compared to paper books.
• accounting: the same.

I just looked online with some book printers I’ve dealt with in the past. Cost is relative to the number of books printed. Although I don’t have the time to submit a fake RFQ (request for quote) to get you hard and fast prices, I can tell you that 2000 copies of a 300-page trade paperback (5.5”x8”) will cost between $6-$8 each, all in. If a publisher is printing 5000 or more, the price drops dramatically.

Fulfillment costs depend on how your publisher handles this: with their own warehouse or farming it out. Cost also depends on how many books the author publishes. But the cost can be significant. Returns are usually handled by the warehouse, and those cost additionally.

If you’ve paid attention you’ll see that the major costs of publishing a printed book (printing, shipping, warehousing, returns) are not present in an e-book. The ordering is also very streamlined for e-books. Most importantly, e-books are not returnable, and because sales are final, no money is held back by the vendors.

Now, the final thing to understand is the design of e-books. They also need a cover, and a cover is a cover, regardless whether the book will be print or electronic, the design process is very similar. Additionally, the interior design process is similar. However, there is one big difference: the requirements of each e-reader seems to be different. In time this may be sorted out like VHS and Beta tapes were in the dim past, but for now, a publisher must make an e-book available in at least 3 or 4 different formats. That adds to the cost. But not all that much. If a publisher’s designer (whether in-house or freelance) has set up the design correctly, it’s generally just a matter of pushing a button and then checking carefully through the book to make sure nothing “exciting” has happened. Once you’ve done it a few times, it’s pretty foolproof – and quick.

The bottom line here is that it’s far cheaper to publish an e-book. The up-front investment is light compared to print, as are the ongoing costs of selling an e-book – by a lot. Couple that with the fact that both formats are generally published at the same time now. One cover will fit both. If the print book design was handled correctly with an eye to the long range, transferring it to e-book formats is very simple. So an e-book is almost like free money since much of the cost incurred in producing a print book already pays for most of the production of an e-book.

To pick up where John left off in his Thursday post, publishers should be giving a far larger percentage of the money from e-book sales to their authors, because their financial outlay in producing them is so much less. I’ve heard of publishers who offer percentages as low as 15%, which as you now know is grossly unfair to their authors.

Those publishers, quite frankly, should be ashamed of themselves.


Melodie Campbell said...

Thanks for this breakdown, Rick! It will help me evaluate future contracts. Makes you appreciate even more when you get a tasty advance.

Rick Blechta said...

Yes, but all the tasty advance money will become pretty bitter if your book does very well and you're getting hosed on your percentage of it because the publisher got greedy and you signed on the dotted line.

Charlotte Hinger said...

Rick, I'm printing out this column. It's a really good look at what goes on behind the scenes.

Diana Guess said...

I think it's much cheaper to release a book as an eBook, because we don't need to print it.
Personally, I love to get my favorite titles from All you can books, because some of them are free and it's not necessary to buy them from libraries.