Wednesday, April 07, 2010

Publishers + Ebooks = Epic Fail

The ebook world is changing fast.

A year ago, we had the Kindle and the Sony Reader as the two main platforms for ebooks. Now we've got Kindle, Sony, Nook, and iPad. Apple sold 300k iPads on its launch day. And this technology hasn't come close to reaching a saturation point with the general population.

New ereaders are going to continue to come out. They'll be better, less expensive, and more widely available. And people will adopt them.

Our society is moving toward a digital future, and the concept of ownership in regard to media is changing rapidly. We don't need to own a tangible object, because we recognize that the content, not the object, is all we care about.

We've actually known this for hundreds of years. The endurance of libraries proves a lot of people are happy to experience media without owning it.

Now we have Netflix and On Demand, and we can watch movies with the press of a button. We have iTunes, and can access the store directly using our mp3 players. We're no longer slaves to the television schedule. Indeed, TV schedules, and TV seasons for that matter, are things of the past. We Tivo, we Hula, we YouTube, we Roku.

And if we don't want to pay, we pirate. Millions of people share billions of files.

If we want it, we can get it instantly, without leaving the comfort of home.

Of course ebooks are going to continue to gobble up greater and greater shares of the publishing market. It's inevitable. Media has become fast food.

So why don't publishers act accordingly?

From July through December 2009, I sold 4840 Kindle ebooks of my Jack Daniels series, earning me $9130.

If I had the rights back from my publisher and priced them at $2.99 each, and they sold an average of 800 copies per month (which is what the average of my five top self-pubbed Kindle titles sell), then I would make $58,752 in a six month period.

By my count, I'm going to lose almost $100,000 per year. Probably more.

You may have noticed that ebook prices are going up. That's because publishers have switched to the agency model, allowing them to control the price. Though no publisher has come out and said it, the reason they're raising the prices of ebooks is twofold.

First, they want to stave off the inevitable dominance of ebooks, and make as much money as they can on print while print is still around.

Second, they believe they need high-priced ebooks to cover the cost of doing business, and that customers will adapt to higher prices.

They're wrong, on all counts.

I sold about 8000 paperbacks that same period. Which is not a lot. Keeping my ebook prices high didn't result in people buying more print books. And as bookstores stock fewer of my titles, those print numbers will go down.

Compare that to roughly 20,000 ebooks I sold by self-pubbing on Kindle during the same period.

On one end, we have a large NY publisher, with distribution muscle to get books into thousands of stores. They're a giant machine that employs a lot of professionals to acquire, edit, print, and sell books.

On the other end, we have a single guy uploading his self-pubbed ebooks to Amazon.

You'd think the NY publisher would cream the single guy in terms of sales. But they didn't. Not only did I double the sales of my publisher, but I made more money per book. Hell, I sold more ebooks than they sold print books and ebooks combined.

Don't you think there's something amiss in the universe when a midlist author can make more money on his own than he can with a big publisher?

Publishers talk about devaluing an ebook by pricing it low. I've said before that the value of a book is what it earns, not what the cover price is. Low-priced ebooks--which are what customers want--earn more than high priced ebooks. My own sales hammer this very simple point home.

People don't care about ownership. They care about price.

People want their media instantly. They don't want to go out and physically shop for it (or order it and wait for the mail to come.)

People want their media without restrictions.

In simpler terms, people want ebooks fast, easy, and cheap, and I can fulfill their needs better than a large company can.

I don't have overhead. I don't have meetings. I can make a decision without answering to my boss. I can turn on a dime. I can publish a book a few days after I write it.

In short, this market is perfect for a one-person operation.

I'd certainly entertain an offer from a large publisher, if they wanted to buy rights for one of my books. But I'm not going to go out looking for the opportunity. Especially since I'll make more money in the long run if I keep my rights.

I could even make more money in the short run.

According to my recent royalty statement, my horror novel AFRAID sold about 54,000 copies in all formats, earning me around $27k.

If I released a Jack Kilborn ebook on my own, and it sold like my current ebooks are selling, I'd make $20k in a year.

It's doubtful I'll make $17K next year on AFRAID, since it's no longer getting coop on bookstore shelves. But I'm sure I'd make $20k, or more, on a self-pubbed ebook.

So in two years I can make more money on my own on a self-pubbed ebook than a book released by a major publisher in hardcover, trade paper, paperback, and ebook formats, supported by a tour and advertising.

Unless it's a big offer, I can't imagine selling rights to my work ever again...