Re: Economics of dead tree (was: Re: A Radical Thesis)

While electronic publishing may well be economically feasible, especially for small run items, what it actually does is transfer the printing cost to the buyer of the work. While most of us will read or a page or two or maybe more on the screen, I don't of anyone who would choose this method read a long work (say a novel or a scholarly monograph) so we print. This could be considered an other instance of unbundling of benefits and services (like selling software and hardware separately, or pants and jackets, at a price that if both are bought, they cost more than they would have when both were sold together).

Another issue in electronic publishing is bibliographic control. How long will any URL be good for? What about scholarly access? What about indexing? How to know which version or update is cited? Perhaps the Library of Congress will have to provide for electronic deposit of materials and become the site of record. Also, what happens when software changes radically? What happens when over generations of upgrades browers are no longer totally downwardly compatible and older documents can't be read? Even if some provision was made for updating of code, would it still be the original work? Or would the change in code change the expression? Will future scholars first need to get copies of outdated browsers to access works?

Its easy to publish on the Web - but hard to keep a continuity to the literature.

Shelly Warwick
<swarwick[_at_]way.com>

>Karen Coyle <kec[_at_]stubbs.ucop.edu> wrote:
>>
>> However, I want to disagree slightly with another statement of John's -
>> that the cost of printed materials today are primarily production and
>> distribution. I have heard figures (I wish I had hard data, but don't,
>> sorry) that the actual printing/binding cost for a hard-bound book is
>> about $2.50. The majority of the cost is actually editorial. I don't
>> know what proportion is distribution & advertising.
>>
>> Mass production is amazingly efficient. Cheap, mass market paperbacks
>> can apparently be turned out for $.50-$1.00 each. {...}
>
> If you're an independent publisher, you need to use wholesalers
> to distribute your books. You're lucky to get 50% of the cover
> price back from the wholesaler. If you do sell direct to bookstores,
> they need 33% - 40% of cover price on "trade titles" -- and did you
> ever meet a rich independent bookstore owner? For mass-market pulp,
> the retail discount can be as low as 25% (and big chains can
> discount out of that margin as loss-leaders, hurting independent
> bookstores).
>
> You as a publisher also have costs of storage and capital for
> books not yet distributed. Early-1980s technology made it feasible
> to print books in sub-editions of as few as 1500 and reprint when
> necessary -- but then there's the press-startup cost instead
> of storage and the cost of capital.
>
> When I worked for such a publisher in 1986-89, the rule of thumb
> was that, to stand an evens chance of breaking even on a small first
> run (of ca. 2000), you set the cover price for books as follows:
> * Add up direct first-edition costs:
> re-keying manuscript (yes really!)
> line-editing,
> proofreading,
> indexing,
> design,
> original graphics,
> rights clearance for re-used graphics,
> typesetting,
> printing -- note: printing for a run of 2000 is
> about half first-copy cost (plates, machine setup) and
> about half paper, ink, machine-minding.
> direct promotion
>
> * Then you multiply by eight.
> * Then you divide by the size of the run.
> (It's an iterative process, guessing run-sizes, as you can see.)
>
> This works for books assumed to have a shelf-life of ca. 18 months.
> (Said publisher did go bust in 1995, though...)
>
> The royalty available to the author is typically 5% of gross sales.
> Canny unknown authors write in "escalators": say 5% to 5000 copies;
> 7.5% to 10k; 10% thereafter. Joan Collins just writes
> herself a cheque :-)
>
> You can see why bean-counters force publishers' editors to skimp
> on profraeding and to neglect indexing.
>
> The marginal cost of printing one extra copy may be very low --
> certainly of order $1 for a 256-page paperback -- but printing is a
> minuscule proportion of total edition cost, unless you're lucky
> enough to have a million-seller.
>
> For academic volumes with necessarily a longer shelf-life, apply a
> higher multiplier, like 10 or 12, for storage and cost of capital.
>
> If the author has waived royalties AND guarantees a minimum sale,
> you can get away with a multiplier of 6.5 -- but then, read
> Umberto Eco's Foucault's Pendulum :-)
>
> For books with a very short, fixed shelf-life -- law reports,
> notoriously -- use a _much_ higher multiplier, for uncertainty
> over how many you pulp in the absence of a remainder market.
>
> For an on-line publication, you still have the majority of the
> first-copy cost items: add up
> line-editing,
> proofreading,
> "indexing" (largely a sub-function of HTMLing)
> design,
> original graphics,
> rights clearance for re-used graphics,
> HTMLing (largely done by designer & line-editor),
> direct promotion
> The total might be around half that for a paper edition.
> And you still have the cost of this capital invested in the first copy.
>
> BUT: you have no wholesaler's or retailer's cut;
> the cost of storage is negligible;
> there are no first-copy costs for "reprint" sub-editions --
> you never have to gamble on an edition size.
>
> You already know qualitatively that you'll be able to charge
> readers less, so you can assume a larger "run".
>
> As a very rough, one-significant-digit example:
>
> Take a smallish, strictly minority-interest, barely-illustrated
> first-edition paperback publication, with promotion through
> catalog only (no direct promotion costs).
>
> Start with a run of 2000. Printing: $4k. Other first-copy: $4k
> (if you farm out your line-editing to a Third World city like
> London, you can get ca. 20 days' freelance work for that -- just
> about do-able).
> Cover price: $(4k+4k)*8/2k = $32.00 !
> Run of 10k, for comparison -- run-on printing cost is $1 each:
> Cover price: $(4k+4k+8k)*8/10k = $12.80 (publisher gets $6.40)
> BUT loss if it still sells only 2k @ $12.80 >> $4k (+ storage, capital)
>
> Or, hope for a mere 10,000 Web hits. Guess that the "multiplier" is 2;
> you can absolutely justify halving it for the lack of distribution
> or discounts, and _probably_ halve it again for lack of storage, etc.
> Per-download price: $4k*2/10k = $0.80
>
> So, assuming you do get 10k hits, you have $4k to divide between
> the author, cost of doing business and pure profit, for a
> _direct_ (i.e. non-CODB) investment of $4k.
>
> On the _next_ 10k hits, you get $8k in hand, less just a few
> dollars for the work's share of the host facilities.
>
> A "royalty" of 25% of gross to the author(s) seems reasonable...
> with an escalator to 50% after 50k hits, or something.
>
> Iterate to work out what the actual multiplier for Web publication is,
> and to explore the economics of heavier design/illustration and
> associated rights clearances.
>
> I emphasise that these are physicists' order-of-magnitude
> numbers, not accountants' integers. And I am aware of many
> complicating factors which I don't have time to write, and
> you don't have time right now to read.
>
> (C) 1996 Mike Holderness
> X-authors-rights: Licensed for unlimited non-profit use to advance
> the intellectual-property debate. Anyone I find re-selling
> this argument, prepare to meet thy nemesis in the English High Court,
> wigs'n'all... $100 REWARD for first notification of such breach
> of license.
>
> <A HREF="mailto:mch[_at_]cix.compulink.co.uk>Mail me</A> to ask
> about consultancy.
>
> Mike Holderness
> <mch[_at_]cix.compulink.co.uk>
Received on Sat Apr 20 1996 - 22:54:00 GMT