28 February 08 | Chad W. Post

In reference to E.J.‘s post yesterday about Random House giving away a downloadable pdf version of Beautiful Children (for a limited time only, so get yours — oh nevermind, don’t believe the hype, I downloaded it and got through a paragraph before deleting the whole stinking mess), here’s a counterpoint from Kate Pullinger in The Guardian:

While I’m entirely in favour of digitising content – the idea that every book ever written in whatever language could be available at the click of a mouse or tap on a button seems like a grand utopian ideal to me, bigger, better, and more democratic and accessible than anything Gutenberg could have envisioned – the problem is that the royalty terms publishers are offering for digitisation are almost exactly the same as terms offered for publishing books. Figures vary from one publishing house to the next, but most seem to be settling on somewhere between 10% and 20% of the retail price of the book.

Here is a breakdown of the figures: with a book, the author will usually receive a royalty of 10% on hardcover and 7.5% on paperback, that figure rising as sales figures rise. So for the sake of simplicity, let’s put it this way: for a book that costs the customer £10, the writer will receive something in the region of £1 per copy sold. (Though when books are subject to heavy discounting in supermarkets or other promotions this figure will often drop dramatically but that’s too complicated and annoying to go into here.)

The £9 the author does not receive covers the following costs: editing, book design including cover, any advertising including the publisher’s catalogue, printing, paper, shipping and other distribution transport costs, warehousing, and the surprisingly large cut taken by the retailer. Oh yes, and profits. I know that it is said that the way to make a million in publishing is to start with £10m, but somebody out there is making some money out of publishing, trust me.

Before going on, I have to point out that this is quite a gloss on publishing costs . . . “Surprisingly large cut taken by the retailer”?? Try an average of just under 50% of the retail price. So, a more appropriate breakdown for a £10 book includes £5 lost in discounting, £1 to the author, at least £1 for distribution and £3 left for printing, overhead, salaries, advertising, etc. And realistically, printing is at least £1 per copy.

So, spun in favor of publishers, of the £3 left after printing, discounting, and distribution, authors get a third, with the rest going to publishers to offset salaries, overhead, advertising, and profit. (Assuming and assuming, you know?)

I don’t really want to defend the publishing industry—I’m the first to admit that there are a lot of companies in it for the money and the focus on the bottom-line does corrupt the most admirable of businesses—but it’s not the get-rich-quick-by-screwing-authors-scheme that’s being presented here.

That’s not really the point though—I just wanted to clarify before looking at the digital cost model.

Invisible digital content aside, shifting to digital formats dramatically reduces the costs of publishing. No more warehouses, no more lorries full of books trundling up and down the land, no more paper and printing and ink, no more acres of expensive retail space. [. . .]

At the end of the day, the writer herself is a more valuable brand than the publishing house and it’s time for writers to wake up to this fact: why should we sign contracts giving us a paltry 15% royalty in an industry where actual costs are being massively reduced overnight? Why aren’t writers jumping up and down over this?

She’s absolutely right—why wouldn’t authors get a larger piece of the pie? There should be more pie left to go around if there’s no discounting (why? we wouldn’t even need bookstores if the books could be downloaded directly), no distribution costs, and no printing bills to pay.

(There are other issues though—like how much does one pay for a digital version of a book? Still £10? Probably not. And this model changes the game for distribution models, but creates a new marketing burden. I may be naive, but I don’t think anyone has a complete picture of what this sort of ebook business model would look like.)

Theoretically, I agree with E.J. (and others) who think that we should give away digital copies of books (be it for a limited time, or in a particular format), and believe that this could help spark additional interest in the book. (This may not work out financially if this had a major impact on classroom adoptions since textbook retailers traditionally receive a smaller discount.)

That said, the attitude expressed above (which is totally legitimate and reasonable, although any comparison to the Hollywood writers strike is suspect, since that model includes ad sales and is so much different from the book business) will impede a lot of digital advancements since everyone from agents to authors to publishers to retailers will be forced to figure out how to commodify and profit off of e-books. Despite the utopic vision behind most “give it all away” e-models, I could see how this ends up being something in which the rich get richer and take over a larger market share.

But I could be totally wrong—maybe free downloads strengthen the “marginalized, indie, alternative” reading community. Either way, I think these digital issues are something exciting and complicated, and very worthy of discussion.

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