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    What's with E-Publishing?

    By Rob Preece, Publisher, BooksForABuck.Com

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    Introduction

    E-books and e-publishers have generated a lot of excitement in the publishing world. E-Book Readers (the equipment, not the customers), special formats for reading E-books, and web sites have sprung up to bring this supposedly wonderful new capability to the average reader. For the most part, the reading public has yawned. With the exception of Stephen King (who is an exception to most rules in publishing), e-publishing has landed with a thump raising the issue of why anyone should bother. Is E-publishing dead? More to the point, when, if ever, should an author turn to E-publishing rather than to traditional paper-based formats?

    In this article, I describe the advantages of E-publishing--to the author and to the reader (the customer, not the equipment). I propose a business model of E-publishing that makes sense, providing benefits to both readers and authors. I also recognize the special advantages held by paper-based publications. For some amount of time (measured in years rather than months or weeks), paper-based publishing will remain dominant. It will take a compelling advantage to displace the cost-effective paper-publishing model. Few E-publishers have addressed this fundamental fact and, therefore, few offer significant advantages to the publisher or reader.

    Creating an E-publishing Value Proposition

    Paper-based publishing has a lot going for it. Paper books are portable, attractive, inexpensive to produce, fairly lightweight, accepted, and plentiful with adequate distribution. In contrast, E-publications must be read on the computer or in specialized E-readers, may not be easy to exchange with others, and are not generally understood. Worse, paper publishers have a virtual monopoly on big-name authors. If you buy an E-published novel, you are taking a chance on a less-known author. So why would the reader bother? And if readers don't bother, why should an author sell through E-publishers?

    In general, one technology supplants another only by offering a compelling value. It can't be slightly better, it must be dramatically better. Let's look at E-publishing's advantages. Fundamentally, E-publishing has two advantages over paper publishing: (1) it's cheaper; and (2) it is not limited by the need to appeal to the mass audience.

    E-publication is dramatically cheaper than paper publishing. To publish an E-book, an electronic manuscript is reformatted into an E-publishing format such as Adobe Acrobat (PDF) or Microsoft Reader (LIT). It is then made available through a CD-ROM (cost: approximately 79 cents), a floppy disk (cost: approximately 35 cents), or on-line (cost--pennies per megabyte). In contrast, paper books need to be typeset, scheduled with a printer, printed onto paper (which isn't terribly expensive no matter what New York would like you to believe, but does have some cost), warehoused, shipped to retail outlets, warehoused in retail outlets, damaged by pawing fingers, stripped (approximately half of printed paper books fail to sell), shipped back (with paperback books, only the covers are sent back), remaindered (for hardbacks), and eventually trashed. Despite the cost savings available for E-books vs. paper books, E-books typically sell for more than a paperback (as one example, Amazon.com charges approximately $7 for an E-book which is available for free from Gutenberg (see our Free Books pages.) Consider the logic--E-books are less convenient, less accepted, less portable and transferable, have a lower resale value (if they can be resold at all), and cost more than paper books. This despite the fact that it is cheaper to produce an E-book. No wonder nobody is buying these things.

    I believe that E-publishing will only take off when E-books are offered at a fraction of the cost of paper-based books. Affordable books, together with the wide variety available through E-publishing, makes the compelling case for E-books.

    If E-books are cheap, how do authors make any money?

    E-publishers typically pay higher royalties than do paper publishers (for example, many paperback publishers pay only 6% royalties to their authors while many E-publishers pay 40%). Of course with the high volumes available from paper-base publishers, the total payment received by paper-published authors is typically higher than for E-published authors. If E-books are offered at lower prices, will authors make any money at all?

    BooksForABuck.com (this site) has developed a model for E-publishing which it believes can address this problem. It charges only $1-$3.99 for a novel, yet pays the author 50% royalties. At 50%, the payment per book is actually higher than for a typical paperback (e.g., 50 cents even for our cheapest $1 eBooks, vs. 6% times $6 or 36 cents for a paperback). Low prices generate volume. The BooksForABuck affordable pricing model lets readers take a chance with books they might not otherwise read.

    What's Next in E-books

    Traditional paper-based publishers have begun to enter the E-book market and many established E-publishers are concerned for their survival. It would take a brave publisher (many authors would term this an oxymoron) to risk canibalizing their existing and highly profitable business by offering quality books at affordable prices. These publishers, therefore, are likely to see E-publishing as an extension of their paper business and a chance to put up existing authors' backlists (books which are out of print and for which rights have reverted to the author).

    The BooksForABuck model offers considerable potential (and not just for this site). Affordable software, with a similar business model, has carved out a significant market share in the software industry without the compelling economic case that e-books offer (software is virtually free to manufacture no matter how it is produced).

    Will People Pay

    This is the fundamental question in any voluntary payment system. Stephen King found that the percentage of readers who actually paid for his E-novel THE PLANT declined with each chapter. Although this may be because being asked to pay $1 for each section of a multi-section book ended up costing readers as much or more than a paper-based novel), it may also be that people are fundamentally dishonest and will steal authors' work if given half a chance.

    BooksForABuck.com chose the $1-$3.99 pricing level partly because it reflects a significant advantage over paper-based novels which cost between $6 and $25 (or more), but also because it believed that readers would rather feel good about themselves than steal if they could feel good about themselves so cheap. Whether this logic holds true remains to be seen. BooksForABuck, like other E-publishers, will experiment with various payment options to ensure that its authors receive a fair return on their huge contributions.

    Note: BooksForABuck.com launched, in 2000, with a 'shareware' pricing model that allowed readers to download eNovels and pay only if they enjoyed them. This model failed--despite positive reviews and feedback, fewer than 1% of our readers actually sent in their shareware fees. We believe this was because the inconvenience of having to write checks and address envelopes hindered responsiveness.

    In response to reader rejection of the shareware model, we migrated to a $1 pricing model where-in all of our eNovels were priced at $1. This pricing model resulted in a significant increase in sales and royalty payments. However, this price point was inadequate to provide the type of margin we required to grow our business through distributors, such as Fictionwise.com. When Fictionwise changed its policy to require publishers set list pricing no higher than the pricing we charge on their site, BooksForABuck.com was forced to raise our pricing to match the level we set on Fictionwise. We continue, however, to believe that eBooks can offer a significant cost and price advantage and have now sell eNovels at prices ranging from $1-$3.99. We also have an introductory pricing model that sells all of our newly published eNovels at the price of $1 for the first month after publication.

    Conclusions

    E-publication makes sense. It is dramatically cheaper than standard paper-publishing, allows a virtually unlimited number of authors to publish quality novels (many novels are rejected by paper publishers simply because their novels appeal to a too-small demographic rather than because of any lack in the novel themselves), and it allows instant gratification. Passing some of these cost advantages on to the customer allows the reader to make an informed choice--and begin buying E-books. Another fraction of the cost savings is passed back to the author reflecting the value created by the author.

    Readers should expect a wide selection of affordable E-books. Some will be free (in particular, books in the public domain are free and available). Others will be inexpensive but not free. Authors need to eat and they make their money from book-buying readers.

    We would appreciate your opinions on E-publications and on the arguments presented in this paper. Please participate in the BooksForABuck.com community discussion at BooksForABuck.com Community

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