Category Archives: eBooks

The eBook Will Die Within 5 Years

I have been asking recently whether a book is still a good container for knowledge.  I recently watched a TEDxMontreal video, that really demonstrated that I was asking the wrong question.  The question is whether the distinction between the Internet and eBooks is arbitrary and false.  To further explain, is an eBook that incorporates video still a book?  Is an eBook with audio still a book?  In library school we debated whether audiobooks were books, but are they?  What about an eBook whose content updates as the world updates?  What is the difference between an eJournal article and an eBook?  Is a YouTube video television? Is email mail?  Should we continue to divide up knowledge based on old formats?

Hugh McGuire in the video I mentioned (which is displayed below) argues that all of these medias are blurring together and that the future will make it virtual impossible to distinguish between the formats.  I certainly am inclined to think he may have a valid point.  What will we use in the future to determine whether something is a book, video, audio?  Will it be percentage?  Will it be intent?  Will it be usage?  Will everything just converge into the Internet?  I don’t really have an answer, but the question is still worth asking.

 

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A New eBook Pricing Model

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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Community Repository and Integrated Discovery

I’ve been plugging away at my dissertation that last several months, so I have not had much time to write here.  However, I’ve been thinking a lot about local content creation.  I have written about community repositories before, but I wanted to share this really rough draft of a new model for library content services.

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Authors and eBooks

I have spent some time considering the eBook publishing issue and its impact on libraries.  One recurring thought is that the publishers are not filling the needs of authors or libraries in many instances.  The HarperCollins proposal clearly indicates that the stakeholders for HC is shareholders only. Authors, libraries, and the general public voiced that this did not suit their needs, desires or wants.

Well, we know that publishers are not looking out for anyone but themselves and their shareholders.  We know that authors often don’t make a living on the publisher-based book model.  We know that the solutions publishers have offered in terms of eBooks, DRM and libraries doesn’t work.

I still cannot help but feel if publishers are not meeting the needs of the consumers (libraries and readers in general) or the creators then what point do they serve?  Moreover, how can libraries offer solutions that actually meet everyone’s needs and wants?  Why most we remain a passive bystander?  Lest we forget that some of the best publishing that has ever taken place happens in university presses that are run by libraries.

I do fear that the model that emerges from the eBook revolution will price libraries out of the book arena entirely.  Seriously, if eBooks are $.99 will people wait for a library copy to become available?  Moreover, if eBooks are free due to advertising, again no need for libraries to provide content.  What if the licensing arrangements from vendors make it too costly for us?

In many ways, I am typically a happy and optimistic person.  I believe in hope.  But this is not boding well for libraries.

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eBooks and the Future of Publishing

More writing on the wall for publishers and libraries.  Author Barry Eisler has turned down a very lucrative publishing contract so that he can self publish directly to eBook format.  The article comes from the Daily Beast.  Eisler states “If The Detachment does as well as I expect it to, and my subsequent books and shorts follow suit, it’s hard for me to imagine what could bring me back to legacy publishing.”

The rationale for Eisler is that he will make a lot more money by selling direct, and retains all control over copyright.  He lays out his plan here:

How much planning went into this decision? And was your family supportive?

A lot, and yes. Being so accustomed to, and dependent on, the legacy model, it took a fair amount of work for what I knew intellectually to start to penetrate at a gut level. The timelines, for example. I’m used to thinking in terms of publishing contracts, so let’s take a hypothetical two-book, $100,000 offer… or, okay, let’s make it real: a two-book, $500,000 offer. My tendency has been to focus too much on that big, seductive number. But to understand what the number really represents, you have to break it down. Start by taking out your agent’s commission: your $500,000 is now $425,000. Then divide that $425,000 over the anticipated life of the contract, which is three years (execution, first hardback publication, second hardback publication, second paperback publication). That’s about $142,000 a year.  This is a more realistic way of looking at that $500,000.

But there’s more. Some people have mistakenly argued that, for my move to make financial sense, I’ll have to earn $142,000 a year for three years. But this is one time when you don’t want to be comparing apples to apples. Because the question isn’t whether I can make $425,000 in three years in self-publishing; the question is what happens regardless of when I hit that number. What happens whenever I hit that point is that I’ll have “beaten” the contract, and then I’ll go on beating it for the rest of my life. If I don’t earn out the legacy contract, the only money I’ll ever see from it is $142,000 per year for three years. Even if I do earn out, I’ll only see 14.9% of each digital sale thereafter. But once I beat the contract in digital, even if it takes longer than three years, I go on earning 70% of each digital sale forever thereafter. And, as my friend Joe Konrath likes to point out, forever is a long time.

Ballantine managed to sell about 10,000 combined digital copies of my last two books at a $9.99 price point (a price point that was earning me $1.49 per unit sold, BTW) in the latest three-month period for which I have data. Call that 5000 of each book for three months, so 1,667 of each book per month. If I cut the Ballantine price in half and still can only move 1,667 units a month, at a $3.50 per unit royalty ($4.99 x 70% = $3.50), that’s about $5,833 per month. But unlike paper books and digital sold at paper prices, low-priced digital books sell steadily, so it seemed to me that I could make about $70,000 per year, per book on my own. Assuming nothing changes and digital doesn’t keep growing (and that would be crazy–Charles Cummings’ critically acclaimed spy thriller The Trinity Six just sold three times as many digital copies as hardback in its first week), I should be able to make $140,000 a year for the two books I could have sold in a $425,000 legacy deal, instead. $70,000 for the first year, then $140,000 for each year thereafter, when I’ll be selling two books instead of just one. So if I’m right about all this, and I’m pretty sure I am, I should be able to beat the contract about halfway through the fourth year. And again, all of that ignores the continued growth of digital, the way low-priced digital books reinforce sales of other such books, etc.

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Starbucks: a Lesson for Libraries

I was recently in Starbucks and this caught my attention:

 

What is most interesting is that customers can read books for free while they are in Starbucks.  These are some pretty good looking books too.  So my question is why don’t libraries explore something like this?

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Publishing, Libraries, Democracy & Convergence

I have been reading more and more colleagues call for a solution to the current publishing problem in our country.  Some have mentioned the organization of Kickstarter as a possibility to raise capital to address the issue.

I guess that I’m feeling like something big is happening.  The more and more I think about how important information is, information policy issues, economics of information and control and restriction of information, I am coming to a singular conclusion.

I believe that the free flow of information is so important that we need to rise up to protect and foster that flow.  Moreover, I believe the virtual end to a public domain or knowledge commons is a threat to democracy.  I believe that the free flow of information is important enough to the very fabric of our society that it needs to be protected from capitalistic control.  To that end, I propose a non-profit digital publishing organization that will protect the interests of the citizen while rewarding the country’s creative output.

My children will enter a world in which nothing from the current century will be in the public domain.  The flow of information to them will be so bogged down by restrictions and DRM garbage that they may as well not have access to that information at all.

I am truly heartbroken that, in terms of access to unrestricted, vetted materials, my children will be worse off than I.  Even worse, this happened on my watch.

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