Book Publishers Must Learn the Same Lessons Music Publishers Did Discussion

[Ed Hardy]

Last week, the U.S. Justice Dept. sued some of the world's largest publishers as well as Apple, accusing them of eBook price fixing. This lawsuit wouldn't be necessary if eBook publishers would learn the lessons that music publishers did a decade ago.

Read the full content of this Article: Book Publishers Must Learn the Same Lessons Music Publishers Did

Related Articles:

• BLOG: Pump the Brakes on New iPad Hype
• BLOG: Coming This Summer, The iPad Killers

[Jamison Cush]

I think a case can be made for the agency model from a small business perspective. If the publishers set the prices, then independent bookstores can keep up with Amazon and Apple on book pricing.

Amazon is the bane of many small businesses, particularly bookstores as it uses it's market muscle to undercut other retailers. Amazon can afford to take a hit on a book because it will just make up the money with additional purchases, or perhaps a Prime Membership. True, consumers pay more in the end, but is that a good thing from a big picture perspective? How is Amazon any different from Walmart in this regard? And this is to say nothing of how Amazon avoids charging sales tax...

[thatcomicsguy]

Sorry, but Amazon is just shy of being a criminal organization. This has nothing to do with greed on the publisher side.

Here's the math on any given eBook sale for a Canadian author like yours truly. . .

• Amazon takes a 30% cut off the top.
  
• The IRS takes another 30%, (if you don't get a Tax Identification Number) -Getting a TIN involves a fair about of hoop jumping, and a letter (non-photocopied, inked signature) from Amazon, which surprisingly enough, Amazon doesn't give you any way to obtain. At least none that I've found.
  
• $0.15 per megabyte per download. For a 200 page graphic novel, that's about 20Mb, or $3 in bandwidth fees, (which is actually a lot more than it would cost to host it yourself, but Amazon is in the handy position of being able to force their pricing on you. Great.)

The end result?

Assuming you can't get an IRS number, pricing an eBook at $5.00, would end up losing you $1.00 on every sale.

The break even point, where you don't actually lose any money? That would be $7.50

-Mind, you haven't actually made a penny on that sale. You simply haven't lost anything. Except time and effort.

Priced at $9.99 the author of a 200 page graphic novel makes a grand total of $0.99 That is, Amazon and the IRS split up nine dollars between them, and you get a penny shy of a buck.

Now IF you manage to get your paperwork in order and get an IRS number, the pie division gets better. For Canadians, the tax treaty in place can cut the IRS take down to a maximum of 10%. I happen to be in the fortunate position of working with a U.S. publisher on an entirely different project, who will be much more helpful in providing the right documents, and once obtained, the TIN can be applied everywhere, so Amazon's stone-wall tactics can be circumvented. (It's anybody's guess if Amazon is even really submitting the tax they collect to the government and not simply tucking it away, but given their history. . .)

So anyway, the improved numbers on a 20Mb eBook, assuming a 10% IRS cut are:

• $5.00 cover price - Break even (make $0.00) per copy.
• $9.99 cover price - Make $2.99 per copy.

The only problem with that is, the cover price on the physical paper version of my little Graphic Novel is $10.00, and Amazon will not work with you unless you price the digital version a minimum of 20% less than that. So in the case of a digital edition of the first Stardrop graphic novel, the most I can ask for is $8.00 per copy.

After Amazon, the IRS and bandwidth fees, on an $8.00 digital edition of Stardrop, I would make a grand total of $1.80, or 22.5% On my own book.

By contrast, Amazon after taking their 30% plus the profit from force-selling me $3 worth of over-priced bandwidth, gets $5.40, or 67.5%

And that's the BEST possibility I could hope for.

So is it worth publishing a graphic novel on the Kindle?

In a word, No. Not if I have any self respect.

In this way, Apple actually works out better than Amazon, though their deal is similarly rotten and the creator, as per usual, is on the losing end of the transaction.

Luckily, there are other ways of going about this. . .

[doobiedoobiedum]

-- Luckily, there are other ways of going about this. . .

Strangely, I agreed most of your post above.

A lot of the students I work with have an interest in ebooks and self-publishing and we have looked at the amazon model. If you remember the discussion we had a while ago - I spoke about personal choices and one of them is how you self market or publicise your work.

Regarding Amazon however, I am struggling to work out their aim in destroying the suppliers who produce content for them to sell unless the end game for Amazon is to launch into publishing though I haven't heard of them buying up printing facilities for physical books.

-- In this way, Apple actually works out better than Amazon, though their deal is similarly rotten and the creator, as per usual, is on the losing end of the transaction.

I hesitate to derail the thread but I have to defend (yet again) self or small scale publishers who use Apple. Here's an ex student of ours from a few years ago who ended up producing the very successful Jamie Oliver Cookbook. Ian has earned himself a good lifestyle and can live comfortably through the efforts of his own labours - earned via selling from the Apple Store.

In my 10 year experience with our (ex)students producing work for places like the App Store - very few have ever spoken of Apple trying to destroy its own content producers in the same way Amazon recently seems to be destroying the livelihoods of publishers, agents and authors.