Michael Bolton's Karmic Revenge -- or, How and Why It Costs More Than You Think to Make an E-Book
However, I noticed while reading through some old links that there is a fundamental lack of understanding on the part of some of the people who participated in the discussion(s) about publishers and money. I was pretty flattered that in many of the discussions I read, people brought up my article "Profit & Loss/Profitability & Liability : How Books Make (or Don't Make) Money"*...
If you haven't bought/read it, I suggest you do, even though the numbers are somewhat out of date at this point.
I'm not going to go through a P&L again, especially because when it comes to something like this, an operating contribution P&L (the kind most publishers use) is only useful to a point -- but I think perhaps a refresher course in the cost of making books is in order, yes?
This is pretty basic, and it's been about three years since I've seen production charts for book costs, but the practicalities stand.
For any book, all of the costs per book fluctuate depending on how many copies of the book are going to be printed/shipped; some of the total costs flux, too, but others are quite set.
Flux costs: paper, printing, binding, shipping, warehousing, copyediting, proofreading, cover decoration (foil, emboss, etc.), coop/in-store marketing, author's advance
Set costs: art, in house acquisitions/line editor, other in house people costs, copy writing, publicity, ad/promo, ARCs, typesetting, design
E-books, it is argued, should be cheaper to produce than paper books, because they do not require paper, printing, and binding (this is only partially true), and they also don't require fancy cover decoration (yup, but they still require cover art!), and they don't require warehousing except for the 2 MB the file takes up on a hard drive (okay).
However, they still need to be licensed from the author (that's the advance), which means an editor needs to spend time finding the book, reading the book, determining whether or not the book will sell, involving other people in that determination (the production staff has to give cost estimates; marketing, sales, ad/promo, and publicity will sometimes get involved if the book is going to be A Big Deal; other editors will be asked their opinions and possibly even read the book before it's acquired; depending on the company, there might even be an editorial meeting in which the book is discussed), negotiating the contract with the agent, talking to the contracts department about the terms of the contract, writing an editorial letter, going over the edited version of the book, filling out all production and art paperwork, meeting with marketing and sales and ad/promo and publicity and art to determine various things to do with the book, walking the author through whatever freakout or weird author things are going on, getting reads on the book for quotes from other authors, writing copy of various kinds, making sure the ARCs of the book are going to the correct reviewers, double checking everything to do with the book from the proof pages to the cover text... and anything else that might come up regarding the book before it's published and after.
E-books also still need covers and cover art. They still need to be typeset (albeit it's easier, what with everything being electronic now). They need to be copyedited, proofread, designed, sent out for reviews and quotes...
On an average midlist book, here is the bare minimum of people who will work on it:
- Acquisitions editor/line editor (often the same person)
- The editor's assistant
- Contracts assistant
- Production editor
- Whoever signs off on the deal -- usually an editor in chief or publisher
- Art director
- Cover designer
- Book interior designer
- Ad/promo assistant
- Art assistant who designs advertisements
- Marketing assistant
- Copy writer
- Sales assistant
- Salesperson who literally goes around the country having meetings with booksellers (including e-book sellers)
- Royalties assistant (the person who actually writes the check the agent/author receives)
- CFO (the person who actually signs the check the agent/author receives)
- CFO's assistant (someone has to write out the address on an envelope, and there is no way the CFO will do it!)
...It's pretty likely that more people than this will work on a book, especially if anything at all goes wrong at any time during the process. All of these people need to get paid -- some of them are salaried (which means that in addition to their salaries, the company is also on the hook for things like insurance and payroll tax), and some of them are hourly or have set per book prices.
Plus the company has to front the money for the advance, lay out whatever the in-store marketing and publicity advertisement costs are, and, with an e-book, there are people who are trained in making e-books. You think Macmillan just installs Adobe Acrobat and hits "Print to PDF" in Quark or InDesign once the book is "finished"? HAH. No.
The complexity of getting these people paid is one of the reasons why operating contribution P&Ls are so popular -- they don't take into account the myriad people costs (with the exception of copyediting and proofreading).
Even without the people and paper costs, the amount of money spent to make a book is pretty staggering. I think it's staggering, anyway, and I spent seven years dealing with it, doing P&Ls and negotiating contracts and working this stuff out. I am still breathless every time I look at the real costs. (Every time an author writes a blog post asking, "How come I can't have a full page, full color ad in the Romantic Times?" I always wonder if that author has gone to the RT website and read their ad rates. A one time ad, in full color, on a full page, is (as of today) $3,475. That is more than many authors get paid as an advance!)
On a $6.99 paperback, in general, the publishing company can expect to make about $2.80 (give or take, depending on their deals with distributors) for every copy sold. Out of that $2.80 comes the author's royalties (usually about $.56). Out of the remaining $2.24, the publisher has to pay for all that stuff listed above. And then, one hopes, the company turns a decent profit so that The Man (damn the man!) can live a glorious jet-set life of glamour, have a beautiful brownstone on Central Park, and eat at Le Bernardin every night.
Here, have some average costs for a 400 page mass market paperback:
Typesetting & Design: $1500
Advertising & promotions: $2000
Just this stuff adds up to $7,600. The publisher has to sell at least 3,393 copies to break even. And that is not counting people costs.
Assistants make anywhere from $20,000 to $30,000 per year. (When I was hired as an editorial assistant in 2001, I got paid $25,000/year.) Full editors make slightly more than that. People in other departments usually make more than editors. (I was embarrassed when I found out that one of the assistants in another department made more than one of the editors in editorial.)
I saw someone on LiveJournal suggest that perhaps people in publishing are paid too much money for the work they do. Really? Think of it like this: the year I made $32,000 was also the year I worked 80 hour weeks every single week and didn't take a vacation. (This is about average for someone trying to hustle in the editorial department of a major publishing company.) That's about 4500 work hours in a year, which means I made $7/hour. Before taxes. After taxes, that comes out to more like $6/hour.
So I'd've made more money working the cash register at a Taco Bell -- in fact, the year after that, I averaged more money per hour working the cash register at a vegan fast food restaurant, and at the restaurant, I got a shift meal.
Personally, I would not pay $15 for an e-book. I also wouldn't pay $9.99 for an e-book -- especially when I could get the paperback for $6.99. I think the whole idea is ridiculous. However, I also think that $7.99 for a paperback is ridiculous.
Truly, I sometimes think paying for anything is pretty awful, and would prefer to live in a world where everyone gets what they need for a happy life -- art included.
However, since we do not live in Zoobilee Zoo, let's at the very least try to be sensical. It is true that not having to pay for paper, printing, and binding can knock anywhere from $2 to $.50 off the cost of making a book -- but:
(1.) paper books still get made and must be paid for; and
(2.) if more people buy e-books, while fewer buy paper books, the cost of making the paper books goes up; and
(3.) even though paper, printing, and binding are a large part of the cost of making books, they are not the only costs, and getting rid of some of those costs doesn't mean that the books don't have to be paid for somehow.
Ultimately, it comes down to this: Is it worth it to you? You are the consumer. Do you think $15 for any particular e-book is worth the money? If not, hie thee to piratebay.org or wherever you pirate your books from. Or, oh, I know! GO TO A STORE OR A LIBRARY. Yeah, that's not practical for some people -- but it is for others. Heck, if you live in a place where you feel e-books are your only option because there are no stores, e-mail your best friend who lives in a metropolitan area, and have that person buy a paper copy and ship it to you. It takes longer than buying an e-book, though, so download a few awesome books from Project Gutenberg to read while you are waiting. Those are DRM free, you know, and available in more formats than just Kindle.
* I was less thrilled that it was copied and pasted in its entirety in several places, but that's only fair, I guess, since sometimes when I want to listen to "How Can We Be Lovers" by Michael Bolton, I will load it on YouTube instead of just buying the MP3 from iTunes. This is just Michael Bolton's karmic revenge -- which, by the way, is probably what I will call my Jem & the Holograms cover band.
This entry is cross-posted from firstname.lastname@example.org, where it has comments.