There’s Gold In Them Thar E-Readers

One of the things in this picture is changing the industry completely.
Can you guess which one?

E-readers aren't just creating an "e-reader-instead-of-books" niche in the publishing industry.  They literally create a viability where there once was a dead zone.

[I originally wrote this post on LiveJournal while I was taking my Business of Writing class during the Fall 2011 semester.  I’ve revised it a bit for W.A.W. so it’s more edgy. I threw some swear words, full frontal nudity, and an explosion, so it should have mass appeal. I’m no longer in the class, so some of the tenses might be inaccurate now.]

One of the things I’ve been taking from our publishing guests (small and larger press) in my Business of Creative Writing class is that there's a real significant gulf between small press and large press that is widening as the prolonged effects of a sustained recession really start to ravage art industries. Small presses are dropping like clichés. Large presses are all too wary of the bottom line. A number of our guest speakers spoke about developments in publishing that had caveats such as: "I've been coming to this class as a guest lecturer for twenty years, but this is the first year I've talked about this," or "Even last year this wasn't such a big thing, but now I would be remiss to neglect it." E-readers are changing FUCKING EVERYTHING in the industry and a lot of the groups with the most ability to capitalize on the changes—publishing houses and to an even greater degree, small presses—are dragging their feet.

Let me tell you about the gap. One of the problems with the publishing industry is this gap between small press and large press. Even FULL FRONTAL NUDITY can’t overcome this gap. It’s massive, and it’s been growing for decades. Unless you can sell about 20,000, and really more like 30,000 copies of something, a large publishing house won't take a chance on it. The number of "auto-approve" authors (like Stephen King, Anne Rice, and JK Rowling) shrinks every year. It’s getting so bad that authors can hit the New York Times bestseller list with one book and then have trouble even selling their next book. I’m not talking two weeks at the bottom of the list either, but major authors who hit reluctant publishers because they aren’t sure they’re going to hit that 20k-30k mark. It’s just a bad time to take a chance. The recession, which we have languished in for nearly ten years now, has essentially caused a MASSIVE EXPLOSION in the confidences of publishers and the resources they have to mitigate mistakes.

In the small press world, the problem is a little different, but it presents in basically the same way. A run of 1,000 is spectacular for a small press; however, many of the same market forces affect them. In both worlds, the first three months a book is out, it will sell 80-90% of total sales of that book’s lifetime sales. Only authors that are household names ever break out of this pattern. Very few books continue to sell well after those first couple of months of hype and marketing, so small press has to worry about selling all their copies. A large press might say: “Look Fowlks, a mere 500 books didn’t get sold! What a GREAT run. Pop the bubbly!” “Yes...quite.” For a small press eating the cost of 500 copies—possibly about half the run—would put most of them out of business. Instantly. Plus a small press doesn’t have an economy of numbers to offset print costs. A book retailing for $15 might cost $12 to print. That means you don't break even (on print costs alone) unless you sell 80% of the books you order. And that is to say nothing of editing, marketing, and overhead.

So I know what you’re probably thinking: “Well, small presses should do lots of smaller runs to minimize risk!” But they can’t. Because of what I mentioned earlier about timing. You have about THREE months before the sales plummet. You really need that first run to be as accurately estimated as possible. And when a few leftover books could kill you, you tend to undershoot the mark and get really nervous around big numbers.

Now, if you’re paying attention, you noticed a gulf between 1,000 copies and 30,000 copies. (If we’re really generous, that gulf might be more like 1,500 and 20,000.) That is huge. And the worst part is that gulf is widening every year as large presses demand more and more potential sales to justify taking a chance on a book and small presses get more and more gunshy about taking big chances with limited resources. That gulf is a huge, unexploited niche of vast, untapped potential.

E-readers aren’t really helping the large presses very much. What people often don't really understand, when they demand low prices for e-reader versions of books. “I mean, there’s not even an actual book, right? Why is this so expensive, brah?” What they don’t get is just how little of the cost of a book from a major press house is in the physical materials—in fact most of a book’s costs aren’t. They are in marketing, editors, overhead and legal. (Oh my god is there ever a lot of money in a publishing house’s legal department. You would probably be mortified to know how much of your book price is basically going toward paying for an army of lawyers to ensure that one company alone makes all the money off of an artist’s talent.) The reason they require a minimum 20k run is because that's where the cost-per-book starts becoming reasonable. Let me give you an example to illustrate this: Harry Potter 7 was so blessed by the economy of numbers that each individual copy of the HARDCOVER cost the publisher probably about 20-30 cents. That means if they overshot their run (and they actually undershot it from what I understand) each copy they sold would pay for about fifty copies they didn’t.

So you’ve got this huge zone between 1000 and 30k where basically nothing is getting published. Commercial books become increasingly homogeneous as formulas that sell are used over and over and over and over again. Like Hollywood and their fear of anything that isn’t “Aliens invade [insert place here]” they just go with what they know is going to make money. It becomes more and more fiscally dangerous to take a risk when consumers won't pay for expensive books or take a chance on new authors. It's a problem, and it's really killing that mid-range. And the thing is that mid range has always just been considered a necessary evil and part of the cost of doing business. When you’re talking about physical books that gulf makes perfect sense because you can’t get around the realities of your printing costs.

Enter the e-reader.

This is what e-readers are doing to the traditional publishing industry.

It can’t help the large presses because their costs are tied up things that aren’t the cost of physical materials. In fact big copy houses have mostly hit on e-versions of their books from the point of view of their own pocketbooks, trying to exploit the fact that they can't easily be lent or sold to used book stores. However, e-readers could blow the lid off of the ability for a small press to use only e-versions of books to reach way up from a 1000-1500 copy ceiling into that mid-range. See, when big copy houses look DOWN at that gulf, they don’t look at it from the vantage of saved print costs. They see accountants and lawyers and publicists and all the things they would have to pay for anyway. No wonder they're just happy to get a version that someone can't pick up next month at Half Price Books. Saving a few cents on a physical object doesn’t really help them. But a small press looking UP would see a vast open field of opportunity. Think about it. You don't have to estimate that first run. You just instantly issue e-versions with their ISBN's when someone buys one. You'll never have an extra book again. Ever.

You want to know what the biggest obstacle to small presses exploiting this opportunity is? Those people who are going on about the damned smell of books. (Let’s be clear, I like the smell of books, but I’m willing to hold a paperback under my nose while I carry the ENTIRE FUCKING CANON in my other hand on a device smaller than a Reader’s Digest. ) However, this just isn’t hitting home in the small presses. Most of these curmudgeons (and please understand I love them to bits) are hardcore bibliophiles. They shake their head at Kindles and iPads and are kicking and screaming already, before the real dragging has even begun.

Pictured: Hottest Full Frontal Nudity EVAH!!!

So one of the things I've honestly been thinking about is how much money someone could make running a publishing company that worked exclusively through e-readers (with a much more expensive print-on-demand, physical book option for those willing to pay the difference.) Perhaps each year such a press could have a modest print run of its best sellers to market to brick and mortar stores, but the whole thing would be mostly electronic. I'm not talking about vanity press here--this would be ISBN's and everything--just an almost exclusively e-medium publishing. All that technology exists already—right now. Someone would just need to put it all in the same place and make it work for a new kind of model. Such a business wouldn’t even have many startup costs given the potential lack of overhead. Without print costs, that niche between 1001-29,999 is open ground.

The real beauty of it would be its potential to create an entirely new dynamic within the industry. For decades publishing has been big houses and small presses. What if a third seat were added to the table? With no print costs, books could be offered on an e-reader for super cheap. I'm talking half, or even less of the current price of a paperback. That means more readers would take a chance on new authors or unknown territory. But even more than that, it means the authors could actually make some royalty money—something that rarely happens in small presses or is a pittance if it does. Imagine publishing in that niche where you could attract authors with some real money while still selling the cheapest product in the industry. It would basically be an entirely new game. Everyone I talk to about this who knows the industry kind of gets a wide eyed look like I’ve just mentioned that peanut butter and chocolate might go well together. My professor’s jaw hit the ground when she realized I’d tied together things from four or five different classes worth of guest speakers together to come up with the idea. (Seriously? What do people getting C’s in this class actually even DO?) She told me she thought what I suggested really might work, and that I’d probably hit on a way to make a good living, and possibly really create something big and make an obscenely good living.

Nah. Not for me. I’m too addicted to writing. The problem is, as spectacular as I think this idea could be with the right execution, I've met some people who run small presses, and it's a huge time commitment, and often for years not much more than a labor of love. One woman, who made just enough from her very-well-known small press to pay herself a modest salary and do just that full time, was the envy of the rest of the panel. So, I don't think so. Not for me, anyway. It might be less insane without some of the logistics of printing, but I'm sure converting files and electronic logistics (and Amazon’s proclivity to be outright buttheads) would cause their own time sinks. After doing the managing editor thing for Transfer, I'm really wary of time I spend not writing and creativity saps.

[But if any of you out there are toying with the idea of going into publishing, and want to walk into a vast untapped market, you heard it here first on Writing About Writing. You might want to move quickly, though. Since I first wrote this in Livejournal about five months ago, I’ve run into a couple of startup publishing companies that are doing EXACTLY this, so I was neither the first nor the only one to think of it.]