The Business of Publishing: The economic case for traditional-format offset printing

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This post was written by Joe Biel, founder and owner of Portland-based independent press Microcosm Publishing (and not incidentally, the publisher of my books Bikenomics and Everyday Bicycling). A couple of years ago, I posted a short guide to how I fund and sell zines; quite a few people since have said that they used it as an actual template for producing books. As they and I have learned, there’s quite a bit more to publishing than just making and marketing something. Most of what I’ve learned, I’ve learned directly from Joe, so I asked him to throw down some knowledge here; luckily, he said yes. This post is the first in a series on the nuts and bolts of the publishing business for beginners, and answers your most burning questions about the economics of different types of publishing. For yet more nitty gritty publishing magic, check out his book, A People’s Guide to Publishing.

Pricing Your Publishing Costs
by Joe Biel

Many of my peers in the publishing community like to say that new technologies like print on demand (a.k.a. POD or digital printing), eBooks, and “self publishing” companies are more economical options than the traditional form of offset publishing where you print several thousand books at once. After many frustrating conversations about this, I became convinced that these professionals are simply not doing the math; or at least not doing the correct math.

I’ve been publishing for a little over eighteen years. While I’ve watched the number of books published each year increase thanks to new technologies, I’ve also found that the old standards are still the most reliable and economical methods.

Let’s take a look at the various options for publishing and what the associated costs are:

Traditional-format offset printing
A standard offset run of a 128-page paperback book with a spine, a full-color cover and a one-color interior (eg, black text) looks like this: 3,000 copies for $2,800, or roughly $1 per book when you include shipping from the printer. This is the way Microcosm publishes books. Traditional-format books look the best, and we can sell them at a price that is attractive to readers while earning a margin that allows us to stay in business and pay our eight employees a fair wage.

I’ll explain more in the comparisons below.

Print on demand (POD) / digital printing
For print on demand, Powell’s Books in Portland offers a digital printing service. It’s similar in technology to a fancy photocopy machine, and will cost about $7.50 per book for a 128 page paperback book. Other POD services charge anywhere from $2-$20 per book, based on various factors like volume, frequency, service, and quality.

Many companies have sprung up to use POD technology paired with “author services,” essentially meaning that you, the author, pay them to do many of the functions normally done by publishers. One of these companies, AuthorHouse, sells packages from $799 to $9,999 for services that authors often think they need, like having your book sold on Amazon, making it available to bookstore buyers, or marketing it for potential TV and radio publicity spots. Buyer beware: often such companies abuse the would-be self-published authors’ trust and lack of knowledge to sell expensive services that do not actually have much value to the author.

Print on demand books are problematic in several ways. First, they are tough to sell, in part because they are typically low-quality and hard to distinguish from each other. Offset printers offer you multiple types of paper and a huge range of finishes, inks, and production values; your finished book can be a beautiful object that stands out on the shelf. By comparison, most POD/digital printers offer roughly two options: coated or uncoated (often this is done by simply changing which side of the cover is printed on) and limited sizes. With very few options, almost all POD books tend to look very similar to each other.

POD is also tough to work into any reasonable business model because of pricing. For convenience, let’s say that your book’s retail price is $10. If you used an offset printer, your costs would be around $1/book. If you used a digital/POD company, you likely paid at least $5, and often much more. I stumbled across a gentleman who was overjoyed to find that Amazon’s CreateSpace program could print his book for “only” $16.40 each. For this reason, many people that publish using POD must pass on the high price of printing to readers, even when they sell directly and still can’t make much money.

If you work with a distributor, the math gets worse. Typically, a distributor takes a 60% cut (leaving you with a $4/copy net revenue on that $10 book). A wholesaler takes a 50% cut (leaving you with $5/copy). A retailer (eg, if you are selling directly to a bookstore) takes a 40-50% cut (leaving you with $5-6/copy). This means that if you use print on demand services, you must either charge $20 or more—that’s more than most readers are willing to pay for a low-quality paperback book—or you just can’t use these “traditional” distribution options without losing money.

If you are creating a keepsake about your life or producing something solely for the enjoyment of your family or friends, POD is a great option. You don’t need thousands of books and you never will. Technology is providing a great service for you.

Many blogs argue that eBooks are “free” to produce.

Many people think it’s great to cut out every middleman and that Amazon is the only distributor they need. After all, they do control 30-40% of the market.

But ebooks are not actually free. For proper formatting and book design alone, you often are going to spend hundreds of hours perfecting a skill that is not transferable to print design. This is why most publishers find it easier to pay a “conversion” fee to an author services company for their eBook creation. Then there’s an attractive cover—if you can’t design one yourself, you’ll likely need to pay someone else to. Prices vary widely—from desperate beginners touting their $5 services to brilliant hucksters charging $5,000+ on authorpreneurial packages.

Still, this can seem like a good gamble. Amazon pays a 70% royalty on eBook sales for books $2.99 or higher—so for each three buck eBook you sell, you could earn $2.09. This sounds great on the surface—but to make money, you need to sell quite a few books, and to sell books you need to direct people to find your books there, in the most crowded marketplace the world has ever seen. If you work economically and do much of the work yourself, you might end up paying $200 for good-quality conversion; this means you need to sell nearly 100 books just to break even. In 2012, the average eBook earned its author less than $300 by one estimate (and that means many eBooks sold far less than that).

In a recent interview with Elly on this topic, the interviewer made the case that once you reach certain sales echelons, as some authors do, eBooks just make more economic sense. But here’s the thing: Successful eBooks immediately become print books, because the profit always works out worse for the publisher of an eBook than a print book. Because eBooks have a lower perceived value (30-50% less than paperbacks), your $10 paperback is likely only worth $5.99 or so in eBook. You likely paid something in setup and formatting when you receive roughly $4.20 per copy sold. But your offset paperback nets you $9 per copy sold. Even if you get to the point that you have to hire someone to package and fulfill your mailorders, you are still making more than twice as much money on a traditional-format offset paperback.

Many people are led to believe that the marketplace is changing rapidly, and think that eBooks eliminate production expenses and offer a level playing field against the majors. But in 2011, eBooks only constituted 8% of book industry sales. In 2012, that number went down to 6% of industry sales and stayed roughly the same in 2013. It is getting harder and harder to find reputable numbers about eBook sales, but what we know does not bode well. The only clear trend is that they are paving the way for market dominance for monopolies like Amazon.

Some genres are, of course, exceptions to this. If you write science fiction, fantasy, “erotica,” or vampire slash fiction, your odds of having much higher eBook sales figures are improved, as these genres constitute the vast majority of eBook sales. But if you write nonfiction, there’s almost no point in releasing an eBook at all in 2014. For reference, most Microcosm titles sell 99% in paperback and 1% in eBook, if they sell any eBooks at all during a given month. This will likely change as paper becomes more expensive and the technology becomes more widespread, but how much and how quickly will it change? Even if our eBook sales double in the next year, they would still only make up 2% of our sales. The numbers aren’t looking good.

Traditional-format publishing is just good business
I often hear the argument that someone doesn’t know if they can sell more than a few hundred copies of something. They are hedging their bets by using small print runs from a digital printer or making only an eBook available.

But you are ostensibly publishing this book to find readers, right? And to find readers, you need to believe in it.

If you don’t have a way to find an audience or don’t have the belief that you are producing a book that would sell at least 1,000 copies, I would give a cold, hard evaluation of why you want to publish this book in the first place. What does it offer a very crowded book marketplace that doesn’t already exist? Do extensive searching on comparable titles and figure out if you actually have something unique and clear to offer or if you are just creating more static on the shelf.

Competitive evaluation, market research, and title development—deciding whether or not it makes sense to publish a book, and if so how to go about pricing, producing, and selling it—are the most valuable roles of traditional-format publishers, and are ignored by author services providers. No matter what format you choose to publish in, you are in effect becoming a publisher, and this will in turn become one of the most vital parts of your job. Being informed about the math is half the battle.

This post was written by Joe Biel of Microcosm Publishing. Joe is the co-author of Make A Zine, which for a cool seven bucks will answer all the practical small-scale, traditional-format publishing questions you didn’t even know you needed to ask. This article is one in a series about the Business of Publishing