How much does it cost to produce ebooks?

[B.R.Stateham]

This piece came out of Publishers Weekly.  I think you'll be interested in the statements made by one of the Big Six publishing houses on how its so costly to produce an ebook.  The question is, does it look like anyone believed him?

http://www.publishersweekly.com/pw/by-topic/digital/content-and-e-b...

[I. J. Parker]

What exactly is that "copyright reversion in 2013"??? I have four titles in Penguin's hands. They pay me only 15 %.

Thank God, I now own all my other e-rights and can set my price. I think all authors would be well served to hold on to electronic rights and handle those themselves. There won't be any big cost to that.

[Pepper Smith]

Ij, for information about the "copyright reversion in 2013", you might check here.

[I. J. Parker]

Thanks, Pepper. Won't help me, I'm afraid.

[Jon Loomis]

I'd guess it costs about the same to produce the first copy of an ebook as it does to produce the first copy of a print book. You have to pay the author's advance, you have to pay the copy-editor and the type-setter, the editor and the editor's assistant, heat and lights, health insurance, 401Ks, etc. After that, though, the relative cost curves diverge wildly. The second copy and every copy thereafter of the print book run has a fixed cost--I have no idea what that is, but let's say with bulk discounts they pay 50 cents a copy for a MM paperback, and another 50 to ship it from the binder to the warehouse to the bookstore--so a buck a piece, say, printed, bound and shipped. There's also the cost of returns to worry about, though of course that comes out of the writer's hide so no big deal. The cost to the publisher of ebook #2-through-infinity is zero.

[I. J. Parker]

Actually, the reality is that advance, editor, copyeditor, cover design, and type-setting have already been covered for the print version. These days, the author's ms. can simply be uploaded (with minor reformatting) by one person in less than 2 hours. So even the initial costs are practically nonexistant.
Marketing and publicity are usually not generous in the first place. For the print version they are already in place. I don't believe that any publisher would mount a separate campaign for the electronic version.

[Jon Loomis]

I was talking about comparative costs, not combined costs. If you were to only do a print book, OR an ebook, the cost of copy #1 would be about the same--figure typesetting costs would be about the same as formatting costs (typesetting is really just formatting for print, after all). Combined, the additional cost of the ebook edition would be negligible, as you say, with zero per-copy cost and zero returns. Publishers will generally pay a higher royalty on ebook sales, starting around the beginning of this year--my next book will pay 25% of retail per ebook sold, compared to the 12.5% I get for the first two. That increased payout to the author represents a shared understanding between publishers, agents and authors that publishers' margins on ebooks are a good bit higher than they are on print books (no manufacturing, shipping or distribution charges and no returns), so it's only fair that the author's share should be higher.

Marketing and publicity? What are those?

[I. J. Parker]

Well, I'm going for the 70% deal and I set the price. Even at 25 %, you're wittling away at the advance at much too slow a rate, and I'm only getting 15 % on the Penguin e-rights. At that rate, I'll never see any royalties. For all my future books, we retain e-rights, audio, and translation. At least, a bit of money is coming in from subsidiary rights.

[Jon Loomis]

Good luck retaining ebook rights with a major publisher. Won't happen.

[I. J. Parker]

Right. That's why I'm very happily dealing with a smaller house now. And I can't begin to tell you how much better life is. Among other things, people are courteous and professional and respect the author's views. That's worth quite a bit of money to me.

[Benjamin Sobieck]

You bring up a good point, Jon. Ebooks are labor intensive at first. Outside of setting bleeds and attaching a spine to the front cover, there isn't much of a different between the first run of an ebook and the first run of a print book.

[John McFetridge]

It's always odd when this comes up from Americans. Using the cost of production to set price is communist. In a free market economy the cost of production is one small factor in price.

[Camille LaGuire]

Technically the cost of production IS a part of the free market, because it affects scarcity - which is a major factor in the price. If it's expensive to produce, fewer people will be able to produce it.

IMHO, the problem is that the big publishers are so used to scarcity, they don't understand how it all works when it's fast and easy for the competition to produce a product too.