OK, so I’ve been working on an eBook pricing model that makes more sense to me. I considered forming a nonprofit to run with the model, but I love my job too much to devote the attention this organization needs. I spent a lot of time on this, and talked to several library friends who think it might work. So in keeping with the open source and open access philosophy, I’m posting the model here. Please feel free to email me if you want to know more. I’m look at OCLC or Library Renewal to pick it up and run with it, but really anyone could make a go of it. If you hate the model, please feel free to leave comments.
In essence a library would purchase an eBook one time but would pay the publisher for each “downloaded” rental. The payment would be tiered. Libraries would maintain ownership over the title. They would not have restrictions other than self-imposed restrictions (I would imagine that libraries would impose checkout limits or they could see a very large and unexpected monthly payout). Libraries also don’t pay up front for a bunch of books that people don’t want to read. Publishers will make a killing and capture a revenue stream hereto for they have been unable to capture.
My estimates are that this organization will need about $1,500,000 to start up. It would be self-sufficient fairly quickly. This model would also work for a for-profit company, but I think the publishers would be more likely to work with a nonprofit. I am happy to support anyone who is willing to take up the charge. Much of the sales forecasting that you would need for a business plan are here, and I’m happy to share my Excel files if needed.
A small/midsize library serving around 15,000 patrons could expect to pay around $12,500 a year. They would have about 3,000 titles in the collection year one and it would increase by around 2,000 titles per year. Titles that are more than 16 years old would have no fee to the publisher, and just a nominal fee to Adobe and the organization. The best part is that libraries can incorporate the holdings into whatever system they like. I am still a major proponent of a library system that resembles iTunes to make it easiest on those who use the library.
It’s difficult to explain in its entirety here, so I will just post a bunch of my projections:
| Number of Patrons |
Size |
Infrastructure Fee |
Number Participating |
Total Revenue |
| 0 – 4,999 |
Small |
$500 |
100 |
$50,000 |
| 5,000 – 14,999 |
Midsize |
$1,250 |
1,000 |
$1,250,000 |
| 15,000 – 49,999 |
Medium |
$2,500 |
1,250 |
$3,125,000 |
| 50,000 – 249,999 |
Large |
$5,000 |
75 |
$375,000 |
| 250,000-999,999 |
Urban |
$7,500 |
10 |
$75,000 |
| >1,000,000 |
Metro |
$15,000 |
3 |
$45,000 |
| Royalty Structure |
|
| Current Year |
$0.40 |
| Previous Year |
$0.30 |
| 2-5 Years Prior |
$0.20 |
| 6-10 Years Prior |
$0.10 |
| 11-15 Years |
$0.05 |
| >16 Years |
$- |
| Number of Patrons |
Size |
Infrastructure Fee |
Sales |
Clicks |
Projected Royalty |
Admin Fee |
Adobe Fee |
Total Cost Estimate |
| 0 – 4,999 |
Small |
$500.00 |
$120,000 |
$1,750.00 |
$366.00 |
$60.00 |
$96.00 |
$122,772.00 |
| 5,000 – 14,999 |
Midsize |
$1,250.00 |
$6,000,000 |
$3,500.00 |
$1,830.00 |
$300.00 |
$480.00 |
$6,007,360.00 |
| 15,000 – 49,999 |
Medium |
$2,500.00 |
$15,000,000 |
$7,250.00 |
$3,660.00 |
$600.00 |
$960.00 |
$15,014,970.00 |
| 50,000 – 249,999 |
Large |
$5,000.00 |
$2,025,000 |
$14,500.00 |
$7,930.00 |
$1,300.00 |
$2,080.00 |
$2,055,810.00 |
| 250,000-999,999 |
Urban |
$7,500.00 |
$360,000 |
$72,500.00 |
$12,200.00 |
$2,000.00 |
$3,200.00 |
$457,400.00 |
| >1,000,000 |
Metro |
$15,000.00 |
$144,000 |
$125,000.00 |
$24,400.00 |
$4,000.00 |
$6,400.00 |
$318,800.00 |
| Projected Revenue |
Infrastructure Fee |
Royalty |
Sales |
Clicks |
Adobe Fee |
Admin. Fee |
Total |
| LEC |
$4,920,000 |
|
|
|
|
$1,185,500 |
$6,105,500 |
| Adobe |
|
|
|
|
$1,896,800 |
|
$1,896,800 |
| Publishers |
|
$7,231,550 |
$23,649,000 |
$224,500 |
|
|
$31,105,050 |
| Total Revenue |
|
|
|
|
|
|
$39,107,350 |
| Number of Patrons |
Size |
Number of Title |
Number Participating |
Total Titles |
Average Price |
Total Revenue |
Click Throughs |
Projected Buy Rate |
| 0 – 4,999 |
Small |
100 |
100 |
10000 |
$12 |
$120,000 |
3500 |
$1,200 |
| 5,000 – 14,999 |
Midsize |
500 |
1,000 |
500000 |
$12 |
$6,000,000 |
7000 |
$60,000 |
| 15,000 – 49,999 |
Medium |
1000 |
1,250 |
1250000 |
$12 |
$15,000,000 |
14500 |
$150,000 |
| 50,000 – 249,999 |
Large |
2250 |
75 |
168750 |
$12 |
$2,025,000 |
29000 |
$20,250 |
| 250,000-999,999 |
Urban |
3000 |
10 |
30000 |
$12 |
$360,000 |
145000 |
$3,600 |
| >1,000,000 |
Metro |
4000 |
3 |
12000 |
$12 |
$144,000 |
250000 |
$1,440 |
| President |
1 |
$125,000 |
$125,000 |
$162,500 |
| Dir. Content |
1 |
$80,000 |
$80,000 |
$104,000 |
| Dir. Marketing |
1 |
$80,000 |
$80,000 |
$104,000 |
| Dir. IT |
1 |
$90,000 |
$90,000 |
$117,000 |
| Dir. Business Operations |
1 |
$80,000 |
$80,000 |
$104,000 |
| Accountant/Office Manager |
1 |
$60,000 |
$60,000 |
$78,000 |
| Accounting Clerk |
1 |
$32,000 |
$32,000 |
$41,600 |
| Graphic Designer |
1 |
$55,000 |
$55,000 |
$71,500 |
| Web Developer |
2 |
$55,000 |
$110,000 |
$143,000 |
| Programmer |
3 |
$65,000 |
$195,000 |
$253,500 |
| Metadata Specialists |
2 |
$50,000 |
$100,000 |
$130,000 |
| Network Administrator |
2 |
$45,000 |
$90,000 |
$117,000 |
| Outreach Specialists |
3 |
$50,000 |
$150,000 |
$195,000 |
| Technical Support |
3 |
$40,000 |
$120,000 |
$156,000 |
| Receptionist |
2 |
$32,000 |
$64,000 |
$83,200 |
| Collection Development |
2 |
$50,000 |
$100,000 |
$130,000 |
| Total Staffing Cost |
27 |
|
|
$1,990,300 |
| First Year Total |
|
| Technology |
$65,000 |
| Furniture |
$50,000 |
| Buildout |
$25,000 |
| Lease |
$67,500 |
| Salary & Benefit |
$781,300 |
| Conference Travel |
$65,000 |
| Ambassador Support |
$50,000 |
| Utilities |
$30,000 |
| Supplies |
$20,000 |
| Legal Fees |
$30,000 |
| Reserves |
$59,190 |
| Total Startup |
$1,242,990 |
*Postscript
I believe that publishers add a needed service in the publishing paradigm, however this model would work equally well if someone were crazy enough to buck the system completely and work directly with the authors.
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