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A Final Death Wish to Old-Style Capitalism?

Dear Movers, Shakers and Innovators of Publishing,

Are we digging ourselves an early grave or is it a stroke of marketing genius to give away e-content? Let’s re-frame that question: when a small press launches a new title (fiction or non-fiction), is it counter-intuitively wise or just plain dumb to let consumers download the entire content of the book for free? What’s this say about the value of the content?

Moreover, how do we expect individuals to dedicate their lives to a career in the arts when we have a system that increasingly does not support their efforts? This is not a new challenge for artists, but it is a new paradigm in publishing—and a sad reflection of the current state of our culture and economy—when publishers and writers are made to put fresh work in the public domain and let people read it for free. It sounds open and generous and moral and beneficial to mankind, but do we all have this luxury? Do commercial artists have the financial freedom to offer their paintings to galleries for free?

Does this set up a system where only those who have the means get to be heard? Again, this problem is not new—poetry at one time was (and to some degree, still is) infamous for recognizing and rewarding educated, upper class poets because those were the only members of society who could afford to have their poems published. Poetry is a discipline that has long put the fear of Goethe in many an enterprising trade publisher because of its notoriously poor track record of book sales.

Like poorly written pieces of flash fiction, many literary presses are short-lived. They allow their ideals to get in the way of sound business practices. They are at risk of becoming extinct. If not for a select group of visionaries, the old business model surely would have killed us off by now. But the Business 101 textbook is being rewritten everyday and what once may have been deemed foolhardy now rings profound.

Before diving in to our ancestral graves and pulling out what little remains of Gutenberg’s parts, let’s quickly review the expenses publishers lay out to produce every title.

Forget the time we’ve dedicated to building and implementing a vision for our publishing house. (The sweat equity and sleepless nights are all part of any entrepreneurial venture.)

Forget the day-to-day operational costs and the money we’re laying out for staff we can’t afford to lose. (That too is the price of running a small business.)

Let’s have amnesia and forget too the insult to injury of having Uncle Sam with one administrative boot on our collective throat and one fiscal hand in our pocket. Let’s just focus on the hard costs of producing one 200-page book:

Hard costs on the cheap (using nice round numbers)*
ISBNs/Barcodes – $50 (buying them in quantities of 10)
Copyediting – $800 ($4/page)
Typesetting – $600 ($3/page)
E-enabling (EPUB generation) – $200 ($1/page)
Design (cover) – $1,000
Proofreading – $400 ($2/page)
Advance Reading Copies – $800 (100 units x $5/book plus $3/book mailing to reviewers)
Printing – $2,000 (500-unit first printing at $4/book including title/cover setup fees)
Marketing – $1,000
Publicity – $150
$7,000

*Note: Expenses greatly vary and aren’t all-inclusive. Many publishers spend more or less than the price listed for each service, whether they outsource it or perform it in-house.

Let’s assume you charge $15 list price for the title and receive in return $5 on individual copies sold. This assumes you use a distributor to maximize your chances at exposure, so you need to allow for a combined 65% off list price (55% wholesale discount plus 10% warehouse, distribution & fulfillment fees).

You then share a paltry 10 percent “net” royalty with your author, so you now have received $4.50 per copy sold on a book that cost $4 to print. Right? Well, yeah, but if you EVER want to break even on this title, you really should print 3,500 copies at about three bucks a pop (accounting for economies of scale, we hope), which raises your out-of-pocket investment to $15,500 on one unproven author.

And because you’re a kind indie publisher with a dyslexic heart, you actually have an escalator clause in your publishing agreement which allows for bumps of 2.5 percent when the author hits certain increments of units sold (e.g., 12.5% for 2,500 and 15% for 5,000), so actually the margin that you estimated is even slimmer than you had anticipated and, well, you’ll need to rework your castoff and print more copies of his debut novel in order to hit the break-even point even though no one has ever heard of this guy and wow, maybe, just maybe if you had hit the books harder in college or if your dad had been a tradesman who taught you a useful skill like plumbing…

You get the picture, right? The odds at making money in the print publishing racket are stacked so high against the modern man of letters that Johannes Gutenberg, a hero of capitalism who died poor, is rolling over in a pile of antimony. Publishers lay out wads of dough to produce meaningful, engaging content for readers to consume. And consumption comes at a price, does it not?

Whether it’s printed on 30% post-consumer waste paper or delivered to your handheld reader, it costs a significant amount of money to produce high-quality content and both publisher and author should receive compensation for their work, should they not?

Has the ubiquity of free infotainment flowing on the Internet so warped our understanding of the value of content that we’ve decided to transform business practices to the point of no return on investment (ROI)? Am I the only nauseous capitalist in the room? Are the arts supposed to be run only by non-profits and the deepest of deep pockets?

I’ll often hear from authors and publishers concerned that free books devalue books. They fear readers will be conditioned to demand free and won’t pay. This isn’t the case. – Mark Coker, CEO of Smashwords

Can we really have it both ways in the book business? Can we persevere—and dare we dream, make a honest, albeit meager living—if the e-book becomes our loss leader? Can something even be called a loss leader if you’re handing it to the consumer for nothing, not even the promise of future business?

Which is it, colleagues? Is the e-book here to be our saving grace, helping us mitigate the exorbitant costs of printing, shipping, and returns? Or is the e-book our coup de grace, pushing us off the ROI cliff as we stoically observe the erosion of higher margins once promised by the sale of digital content?

The price of a book is set by the publisher. The value of a book is set by the reader. – Kassia Krozser, Booksquare

Ig Publishing, a Brooklyn-based literary press, is living in the capitalistic land of mega-contrarians this week, while it offers its newest release, Laura Ellen Scott’s quirky novel, Death Wishing, on the Amazon Kindle for free.

This isn’t completely uncharted territory for Ig. Last year the progressive-bending house experimented by giving away one story in Quiet As They Come, a collection of stories written by Angie Chau.

One thing is giving away a gallon of milk freshly delivered by the cow. Another thing is giving away the farm cultivated by the land owner, even if it’s for just a limited time. The gallon of milk (the free digital story download) indirectly produced more than 1,000 Kindle editions sold, a relative success determined in part by stellar reviews of Chau’s work, according to Ig editor-in-chief Robert Lasner. The economic impact of sacrificing the entire farm (the free download of Scott’s debut novel) remains to be seen. And because of the great number of variables that influences a book’s sales performance, it will be next to impossible for the publisher to determine if the free download worked.

Apparently there is such a thing as a free lunch and we’re gambling that the taste of it will drive future sales and not undermine them. What’s next, going the indie rock band route and putting out a jar for tips if the consumer likes it?

“We’re flying blind,” Lasner said on an impromptu phone call I made after I noticed the ploy via a Facebook post by the author. When I first caught wind of the publicity stunt, I was all set to rant on the subject, but I was torn mostly because I respect and admire the author of Death Wishing and I imagine she perceived the gambit as a shrewd way to draw multitudes of eyes to her work.

Death wish (psychiatry) — A desire for self-destruction, often accompanied by feelings of depression, hopelessness, and self-reproach.

So before I called in the death squad on the entire publishing industry for this ongoing egregious sin of giving the consumer the car keys after destroying the driver’s license and classifying the vehicle a wreck for insurance purposes, I thought it responsible to catch my breath, check my preconceived notions at the door, and call the publisher. Lasner welcomed the discussion and said he was pleased with the aggressive marketing tactics of Ig’s distributor (Perseus, which now owns Consortium). Once I realized that Johannes and I were the dinosaurs with the faint pulse and it made no sense to disagree with my colleague, the rest of the conversation mostly consisted of me bumbling, wincing, and wishing him well with the decision, even though the innovative strategy felt like yet another knife to my gut and Mr. Gutenberg’s heart.

The promotional giveaway certainly has garnered a groundswell of notice. On Friday afternoon, Death Wishing was listed No. 1 among The Top 100 Free Best Sellers in Literary Fiction on Amazon. How something can be free and a best “seller” apparently is besides the point. For the time being, Ms. Scott can claim to be more in demand than Mr. Dickens (A Tale of Two Cities) and Mr. Hawthorne (The Scarlet Letter), so kudos to her.

The listing shows just how much the landscape is changing before our very eyes. Alas, you can not call it “bookselling” when you receive no monetary gain from the transaction, but there’s something to be said for publicity in this punishingly tiresome game of grabbing the book-reading consumer by the collar and hurtling him down to the ground for his attention. (OK, publishers and authors may not physically tackle prospective readers when they hand sell their books, but we’re not above wrestling with their intellect and twisting their arms.)

Lasner doesn’t believe that giving away product hurts sales. “It’s a myth,” he says. The idea, he says, is to draw people in and get them talking about books they otherwise would not have discussed.

Think like a fisherman. Fishermen chum: they throw buckets of free bait in the water to attract a lot of fish, and then mix in hooked bait to catch the fish attracted by the freebies. Free or low cost books act like chum in the water for marketing and platform building. – Mark Coker, “Pricing Strategies for Ebooks”

Maybe these guys are on to something and I’m envious because it’s taken me this long to figure out that old-style capitalism is indeed long buried and dead, right alongside the fractured parts of Gutenberg’s movable printing press.

Resources

Carr, David, At Media Companies, a Nation of Serfs, The New York Times, Feb. 13, 2011

Coker, Mark, “Pricing Strategies for Ebooks,” The Savvy Book Marketer, Sept. 22, 2011

Gonzalez, Guy LeCharles, Have Publishers Helped Devalue “Content”?, Digital Book World, Feb. 22, 2010

Harris, Marlene, “Why I’m willing to pay for ebooks,” Reading Reality, April 19, 2011

Krozser, Kassia, A Question of Value,” Booksquare, Aug. 31, 2010

Pfanner, Eric, Internet pushes concept of ‘free’ content,” International Herald Tribune, Jan. 17, 2007

 
 

Source: Stormer-Brooks Illustration

 
 

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About Dan Cafaro

Dan Cafaro is the founder and publisher of Atticus Books, a small press based in Madison, N.J. When Dan is not following his wife around the country, he is known to sit for long periods of time pondering how to live off the grid. Atticus Review is his first literary journal.

4 Awesome Comments So Far

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  1. Steve Himmer
    October 16, 2011 at 7:53 am #

    Full disclosure, I have conflicts of interest in both directions here. Atticus being my publisher, I want them to profit. But Laura Ellen Scott is a friend, and I blurbed Death Wishing, so consider those things as you will.

    I agree with Lasner that getting a book in front of readers who otherwise wouldn’t know about it is crucial. That echoes Cory Doctorow’s remark — and he knows a bit about giving away books — that the problem for authors isn’t preventing people from stealing your book (or reading it free), but rather getting them to know your book exists at all. If ten people read it for free, those aren’t necessarily lost sales because those folks wouldn’t have read it otherwise; it may even be that they only and always read what’s free in the Kindle store. But those giveaways could lead to other sales via word of mouth, and certainly will lead to wider awareness of the book. Especially, and most importantly, awareness among those elusive “general readers” who aren’t writers or reviewers or publishers themselves and aren’t otherwise aware of what’s happening in the small presses.

    At the same time, I worry about devaluing the work of authors and publishers. People who want to read new books, and especially people who want to write new books, should be willing to pay if they’re able. Period. If too many people read only what’s free (see the awkward transition of newspapers onto the web), production becomes unsustainable. So I do worry that in some way these giveaways are more helpful to Amazon than anyone else, and push authors toward reliance on self-publishing (perhaps via Amazon) while pushing publishers out of the picture. Not in a grand conspiracy sort of way, but through a slow cultural creep.

    • Dan Cafaro
      October 16, 2011 at 8:22 am #

      Thanks for commenting, Steve. I remain so torn on the issue that I continue to revise this piece even as I write this remark. I started off thinking that the promotion was an outrage to all we in the profession do to put content in front of people. And I am now doing a complete 360 and wondering whether the two-week giveaway gimmick will prove to be the true blow-up of the business model that we all know needs blowing up. Given the evolving state of the music and film industries, I’m afraid this direction was inevitable and perhaps I shouldn’t be afraid, but relieved. My real concern is for the future artist. How do we encourage our youth to pursue a profession if there is not one to pursue?

  2. Laura Ellen Scott
    October 17, 2011 at 1:11 pm #

    Thanks for the attention you are giving this matter. Let’s hope this is the beginning of a productive conversation. I’ll attempt to reconstitute my comment from yesterday–I suspect my IT director friend of zapping your original post, but he won’t notice today because he’s busy doing battle with the Amazon commenters who are posting 1 star reviews. That way is madness . . .

    Anyway, I don’t want to say much now until the experiment is over, but I did want to ask you to consider more explicitly the notion of a novel as a special commodity–which is, I feel, at the root of these anxieties (not just yours).

    • Dan Cafaro
      October 17, 2011 at 4:02 pm #

      Thanks for joining in, Laura, and offering your perspective. And congratulations on the publication of your first novel.

      I may not always be on the “right” side of the issue, but I’m hoping that by raising the questions I did in the article, we might consider the long-term ramifications of short-term marketing successes – and how we define those successes.

      I think you’re spot on to bring up the subject of the novel as a special commodity. I certainly hold high its stature among a creative writer’s accomplishments, given the amount of time, energy, and skill it requires to complete. It seems we’re at risk of diminishing the novel’s value next to say, a hot dog or matinee, on an interminably long list of consumer choices. None of these consumables is typically offered for free, so it’s hard for me to wrap my head around the concept of a novel–for some authors, their magnum opus–being made to feel less valuable than a McDonald’s happy meal.

      Of course it may seem silly to compare the consumption of literature to food–and I support the right of every citizen to check out reading material at a library that is funded by tax dollars… and I support the access we now all have to numerous works of literature through the archiving efforts of Google and Project Gutenberg… but it remains unclear to me how this type of publishing free-for-all will be sustainable if the artist, agent, and stakeholder are not being compensated for their diligence.

      Naturally this is an over-reaction on my part since your book’s only available for free for a certain length of time (two weeks, is it?)…