By Brenna Lyons, guest blogger from EPIC (Electronic Publishing Internet Coalition)
A lot of readers state that e-books should be sold for pennies, “because the money preparing the book was already spent on the print release and there is no physical printing and shipping involved.” In their mindset, that means there are no additional costs to preparing the e-book for sale, and therefore, a book should cost little or nothing in e-book.
There are a lot of holes in this theory.
For one thing, not all publishing ventures produce the print version first. Most indie presses either produce the e-book version first or the two concurrently. Even in NY conglomerate, lines like Carina Press and Spice Briefs (both Harlequin ventures) produce only the e-book version. If there is print, it will come later. That means the costs of producing the book fall solely or primarily on the -ebook version.
Assuming the print version was indeed produced first, this line of thought disregards the fact that there are expenses unique to the e-book version. They would include reformatting and layout (since they are not the same for print and e-book), possibly a new cover (or at least altering the old cover for an e-book edition), conversions (which do not exist in print), DRM (for the companies that use it), and the distribution channel cut.
Both print and e-book have a distribution channel cut, and neither is much better than the other. While Smashwords takes only 15%, they are ineffective for more than free reads, from my experience. The effective distribution channels are taking between 36% and 65% of the sale cost of the e-book version and sometimes have a lower limit for sale price. Amazon, for instance, does not take books below $.99 in price, save a few free reads it accepts...from conglomerates only. That’s assuming the distribution channels aren’t setting sales and socking the publisher and author for the reduction in price, which many (though thankfully not all) of the distribution channels do.
Unlike many indie presses, NY conglomerate pays their editors and other staff salaries, which is an overhead expense. NY conglomerate went into e-books to shore up the print system. The e-book versions have as much an expectation of underwriting the overhead expenses (utilities, office space, maintaining and replacing assets, salaries, taxes, licensing and IP issues, etc.) as the print versions do, since the overhead applies to all products of the company. One of the fallacies of the idea that there are no more expenses is that print covers all the overhead expenses, and one cannot assume that. Simple accounting theory in action.
Beyond that, indie press often works on a royalty system. In addition to the royalties authors make, and that is the only money authors make, since even advances are advances against future royalties. In addition to author royalties, many indie presses also pay support staff (editors, formatters, administration, and marketing staff) on royalties. Pricing e-books at pennies means these people are not being compensated for their work. Though NY conglomerate e-book royalties are often anemic compared to those in indie (Carina Press excepted there), they exist, and most readers want the authors paid. The authors and royalty-based staff won’t make a dime when selling the e-books for pennies.
Remember, that most of the price of a book is not printing the book and shipping it. Most of the price is handling other expenses, including compensating authors for their work.
In addition to the costs of making any print book into an e-book, there are special expenses associated with turning an older print book into one. If the book was created before the industry switched to digital files, the book must be OCR scanned, have a new edit to look for scan errors, and then launch it into the preparations for an e-book release. This book, already available in print, has incurred a whole new level of expenses that are typically associated with the initial release of a book. You cannot disregard this eventuality as conglomerates try to bring their entire backlists into e-book formats.
While I agree that there is no reason the e-book should cost more than the print version or be priced at the same level as the hard bound edition, there very definitely are legitimate expenses involved in creating and distributing an e-book version of a book.
Brenna Lyons is an award-winning author in indie press, with more than 85 releases in fiction alone in the last 8 years. She's the former president of EPIC (originally the Electronically Published Internet Connection, which has recently changed its name after 13 years to the Electronic Publishing Industry Coalition) and a plank member of Authors Without a Yacht. She teaches classes in everything from writing the novel to contracts, IP law, and the realities of being an author.