What price should books be?

I’m reading the Cloud Atlas right now.  It’s brilliant.  The author, David Mitchell, has been called a genius by the New York Times. Actually I didn’t mind the movie either – though the critics savaged it.  I bought a paperback copy of the book for $22.95.  On Amazon, the e-book is $14.66.  That’s fairly standard.

Traditional publishers use something called a “wholesale” model when they sell their paper books to retailers.  In essence, they have a suggested list price which is printed on the back of the book – $22.95 in this case – but then sell the book to the retailer at wholesale which is typically about half of the suggested list price.  The retailers sell it at the list price and pocket the profits.  If they want to put it on sale, they can, but they take the loss. The publisher always gets their wholesale price – again, about half of the suggested retail list price.  And the author?  Well, I just went and looked at my contract and I get 8 percent – but at least it’s 8 percent of the full list price and not the wholesale price (something to watch out for in a contract).

All this, I admit, is a bit simplified (I’m not counting returns and a few other peculiarities) but that’s the gist of it.  This has been the model now in traditional publishing for at least a century or so.

E-books have changed everything.  Amazon, of course, is now the largest bookseller in the world.  When things exploded a few years ago, they were selling e-books by well known authors for 9.99 – taking a huge loss.  This is called a loss leader.  It didn’t matter to them.  They made it up in their sales of kindle readers and all the other things they sell on Amazon.  I think what they wanted was a standard $9.99 price for e-books just as there is a standard 99 cent price for songs on itunes. There was a lot of ugly pushing and shoving until Apple came into the picture with a whole now model called the Agency model.   It’s this new model which has pretty much taken over the e-book world.

What the agency model means is that the publisher sets the final retail price.  There is no store any more, not really.  The distributer (Amazon or Apple or Kobo or any of the others) take a cut of that, almost always 30 percent.  The publisher gets the rest.  E-books can therefore be less than the cost of a print book (as the publisher gets a higher percentage). This seems to fit in with consumer perceptions.  An e-book – an ephemeral file sitting somewhere in a cloud – is not worth as much as the tangible paper and ink. Or so it’s assumed.

Fine.

And what about independently published books?  How do they fit in?  Well, I’m writing this blog to compare traditional publishing with indie publishing (having produced books in both camps) and what’s interesting here is that a two tier system is clearly developing.  A quick look at the biggest sellers on Amazon’s kindle reader this week show that a new John Grisham thriller called The Racketeer is in the number one spot.  It sells for $15.79.  Not far down the list (number five this week – it was actually number two last week) is something called All In (The Blackstone Affair, Part 2) by Raine Miller.  It’s an indie book and it’s selling for a mere $2.99.  This seems to be the way things are going.  Buy a known author from a known publisher for three to five times the price or take your chances on something new (and potentially good) for a lowly $2.99.

Smashwords has done an extensive study on the pricing of indie e-books and they ought to know.  They put up 92,000 books in 2011 and even more this year. Their conclusion?  The sweet spot for indie authors is between $2.99 and $5.99.  They don’t sell for less than that because, for one thing, a 99 cent price just doesn’t bode well for a book’s quality.  Even more importantly, Amazon’s agency model says that if you price a book at less than 2.99, the terms reverse.  Amazon then takes 70 percent and the indie author gets 30 percent.  This is perhaps Amazon’s way of stemming the tide of garbage that gets uploaded.

And for me?  Well, my traditionally published book is already up (though it won’t be out until April).  The list price for the paper book is $26.00 for which I will get eight percent. My indie book is out now (only as an e-book) and is listed at $2.99. I get 70 percent of that.

You can do the math.

http://www.teethofthegods.com

Royalties – what should you be getting?

So, here’s the thing.  Traditional publishers offer a pretty paltry royalty rate on e-books. The Writers’ Union of Canada argues for 50 percent in their Writer’s Bill of Rights in the Digital Age. But really, that doesn’t often happen.  An agent I know well (though who’ll I’ll not name because it is her business after all) claims that most publisher’s contracts inevitably come in at 25 percent for e-book royalties.  I spoke to a publisher as well who decried the 50 percent saying that while we may insist there’s no storage or printing or shipping costs for e-books, they still spend a lot of “man-hours” on the upkeep of files – changing the metadata through the life of the e-book for instance, which is all important. And I know for a fact that in my contract with my publisher, I get even less than 20 percent.

In the indie world, those kind of numbers are ludicrous.  The major sites – Amazon, Kobo, Sony, Barnes and Noble and Apple’s ibookstore – typically give you 70 percent, keeping 30 percent for themselves.  Of course, you still have to get your books up there in the first place so let me go back to my own little experiment.  Last week, I looked at three companies who convert word files and place the finished e-book, cover and all, up onto the various sites.

Author Solutions was first.  They’re owned, as I said, by Penguin.  The astute writer, might then assume that, if their e-book does well, there might be a big fat contract from the mighty Penguin – soon to merge and become Random Penguin.  That may be true, though if you have a successful e-book – through any channels – the traditional publishers will come knocking, I can assure you of that.  The problem with Author Solutions and their various imprints is that they are very expensive.  Packages here run from around $349 (US) dollars to an unbelievable $4449.  What are they going to do for 4000 dollars?  For that much money, I want a one on one meeting with Disney or Pixar, maybe a photo of President Obama reading my book and Lady Gaga tweeting about it.  In fairness, even the smaller packages here include editing and cover design – two essential components that I’ll talk about in other posts.

I have a friend – Matthew Waterhouse – who put up his very funny memoir and exposé on i-universe – one of Author Solutions imprints – and he was very happy with it.  I mention this book, Konglish: the ultimate survival guide to teaching English in South Korea, because, if you think about it – that ‘ultimate survival guide’ is very good metadata.  He’s focused on an audience of anyone who’s ever thought of teaching English overseas.  Very Smart.

Anyway, Author Solutions is too steep for my blood.  Next on my list was Bookbaby.  They’re the ones with the vast experience in the digital music world and worth a look.  Unlike, the others, their model is an upfront price of between $99 to $249 (if you want help with a cover or editing). The problem is in the fine print.  There’s a recurrent charge of 19 dollars a year after they put your book up – 19 dollars a year, forever, and I have a big problem with that – so I moved on.

Smashwords doesn’t take any money up front.  They don’t do covers or editing or marketing.  They just put your e-book up and take 10 percent of any sales.  It’s a slightly different model.  So, if you’re getting 70 percent through iBooks (and note that that’s the all important site that will do a book especially for the ipad – including enhanced books and book apps), you’ll actually just get 60 percent.  However, with Smashwords, that’s all.  You don’t pay anything else. It’s pretty good, though, one caveat here is their free ISBN number.  If you go with this, Smashword automatically becomes your publisher.  I’m not sure that means much right now – but it might mean something down the road, something your might not want to relinquish, so I was wary.  Others, like Book Baby, charge 19 dollars for an ISBN.  Well, it turns out that, at least in Canada, you can get an ISBN number for free from our government service.  I did it, and it was relatively easy.  I was also advised that you definitely have to have a separate ISBN for an e-book as opposed to a p-book should you wish to produce those yourself as well.  Moreover, you should probably have a separate ISBN for each e-book format (Amazon is .mobi, most of the rest are .epub).

Smashwords has all kinds of analytics once your book is up and selling which is important.  However, they don’t upload to Amazon – which, right now, is the largest book retailer in the world, by far.  For Amazon, it’s Kindle Direct Publishing.  Here, there is no upfront fee and no scooping of royalties (because they are Amazon and they’re already getting 30 percent).

So, this is what I went with.  A solid 70 percent royalty is mine on Amazon through Kindle Direct and 60 percent on the other sites through Smashwords.  An author friend of mine reminded me that this is something you might want to think of, not only  for a new book, but for a book of yours that has now gone out of print or a book in which the original publisher has gone bankrupt (a worrying and increasing trend these days I’m afraid).  Your book is not lost.  You can still take control of it.

I’ve been noticing that, on all the major sites, e-books from traditional publishers are priced generally about 20 percent below their paper counterparts.  Indie book prices are, generally, a lot lower.  That’s what you have to figure out.  25 percent on $15.99 is a tad under $3.99.  70 percent on a $5.99 indie book is $4.19.

So, the delicate dance of pricing begins (followed quickly by the mad stomp of marketing).  That’s next week’s topic.  Leave me a comment if you want to know more.

http://www.teethofthegods.com

Indie authors who have become millionaires

Okay, yeah, so we’ve all heard about Amanda Hocking, the twenty-something writer who’s become a millionaire on self published books – which is fine if you want to write another series about teenage vampires.  Or, there’s John Locke who made a million, ironically, with a book called How I Sold a Million E-books in Five Months. It’s here if you’re interested.  I’ve got it.  It’s okay, though I think it’s already a bit dated.

Really, it’s the Wild West out there for authors.  All the presumptions we’ve grown up with are gone.

I have a book coming out with a traditional, brick and mortar publisher later this year but I thought I’d try a little experiment in the meantime.  I’m going to put another book of mine up as an indie e-book and then compare the two.  I want to see the benefits of each: what readership they will bring, what real monetary gain, and how they might serve to further my writing career.

So, step one was figuring out how to do it all.  The book manuscript for the traditional publisher has already been submitted.  The contracts are signed and we’re just starting the editing process.  For the e-book, I had to learn how to get it up on sites like Amazon and Kobo and iBooks.  Turns out there’s a myriad of companies that will happily configure your word file into an “epub” and set it up on those sites.  All for a price.

I snooped around for a while and settled on three and half companies to look at more closely.

The first is Author Solutions.  They claim to be the biggest and, in fact, have several different ‘imprints.’  They’re not really imprints.  They’re actually just separate companies that have merged together under the umbrella of Author Solutions.  What’s more is that Penguin – one of the last of the majors (and, as of this writing, about to merge with Random House) – actually bought Author Solutions.  That shows you how afraid they are of this whole indie thing and, also, how astute they are at business.  There’s a lot of money involved here.  Millions.

The second company I looked at was Book Baby.  Dumb name – but they come with a good pedigree.  Their parent company is CD Baby who have been successfully putting Indie musicians onto itunes for almost a decade.  And it’s true, we have lots to learn from the record industry who’ve been down this path ahead of us.

Lastly, I looked at Smashwords and the half I alluded to before is Kindle Direct Publishing because Smashwords does everything except Amazon.  Well, they dabble in it. I think they’re trying to get their foot in the door, but there’s no point, because Amazon has their own series of companies like Kindle Direct to help you along.  The great thing about Smashwords (and Kindle Direct) is that they don’t ask for any money up front.  Or, really, ever.  They are the truly do-it-yourself option and, for that reason, they’ve left behind the last vestiges of ‘vanity publishing.’

So, which one did I choose?  Well, I’ll tell you next week.  More importantly, I’ll tell you why.

Glenn Dixon

www.teethofthegods.com