The Big Yellow Book

Seeing the World from Both Oculars-- a Bananaslug's Journal


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Praise for Baen, the Free Library, Webscriptions and UNIVERSE!
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Paeans of Praise for Baen-- from The Shadow of the Olive Tree Blog:



It is practically a truism that readers prefer paper to electrons when reading books. At least that is the excuse trotted out in idiotic pieces of research such as this one which wonder about the future of e-books and e-publishing and starts:

Are e-books anything more than an electronic version of the traditional hard copy book? E-book purchasers are principally higher education institutions and business/reference/research institutions and libraries. Individuals’ access to e-books is conducted through these institutions for learning, research and training purposes. More training and learning in higher education are conducted on a so-called distant learning basis. This is stirring the development of e-books. In the UK, government pressures for efficiency, increasing numbers in higher education, combined with so-called learning access, are contributing to the pressure for these developments. At the same time there is, understandably, no demand for e-books for leisure reading purposes and this seems likely to continue. Who wants to read a novel or biography glued to a screen? The concept is appalling.

The author seems unable to use google correctly; a google for "ebook fiction" turns up some 4 million pages and the first page is full of links to sites where fiction can be downloaded. The business model is somewhat confused but publishers such as Baen appear to make good money out of electronic fiction and there is considerable demand for it. Now I suspect the problem the author has is that sales of DRM-crippled ebooks are miniscule and that companies attempting to put DRM on books aren't making any money and hence by default the assumption is that all ebook sales are miniscule.

Of course there is another minor issue - that is the less than robust book market over all, particularly with reference to fiction and paperbacks - but the reaction of the publishers to their loss of sales is telling: attack the people who could help. It is, I think, a sign of depseration that rather than embrace something that could lead to increased sales of the backlist publishers would prefer to try and charge for access by potential customers.

There is one publisher who is bucking the trend, and, as far as I can tell, reaping the profits from so doing. Baen does not publish its numbers since it is a private company but given that it is continuing with and explanding its various electronic publication programs it looks like they are a success. Baen is not a major publisher, since it almost exlcusively publishes Fantasy and Science Fiction and is not even the biggest F&SF publisher, but it is certainly disproportionately influential because it works to build a loyal reader base through internet activities such as its Baen's Bar web forum.

However Baen's Bar is just the tip of the Baen internet presence. It offers all its recently published books in electronic format without any DRM and has a selection of older titles, typically the first one or two of a series, available for free download. From what has been divulged Baen's webscription service where it produces three new books and three older ones in a monthly bundle has a regular subscription base of some 2000 readers each month. This may not sound like much but given that most Baen books get put into webscription twice it means that each Baen book gets around 4000 internet sales. Given that hardback print runs are frequently of the order of 10,000 copies and that 50% sell through rates (i.e. 50% of books printed are sold) are far from uncommon this means that web sales of Baen books are close to the number of hardback copies sold.

To put in a way that authors like, thanks to its eBooks Baen sells between 50% and 100% more than the basic hardcover would on its own. Given that the aforementioned dead paperback market means that books are less likely to be reprinted in paperback or, if they are, that the paperback sales are not much larger than the hardback ones, the 4000 webscription sales makes a big difference in the royalties the author receives, especially for the midlist authors who are the critical rquirement for a diverse fiction market. Eric Flint, who has been a prime driver of the free library, wrote a fascinating article in 2002 showing how the free library and Baen's electronic publishing had apparently increased sales of his paper books and how it had given both him and fellow Baen author David Drake significant cash:

I measure "successful," by the way, using the only criterion that means much to me as an author: Webscriptions, unlike all other electronic outlets I know of, pays me royalties in substantial amounts. As of now, I've received about $2,140 in electronic royalties from Baen Books for the year 2000. (The last period reported.)

That sum is of course much smaller than my paper edition royalties, but it can hardly be called "peanuts." Every other electronic outlet I know of, in contrast, pays royalties-if at all-in two figures. My friend Dave Drake has given me permission to let the public know that his best-earning book published by anyone other than Baen, in one reporting period, earned him $36,000 in royalties for the paper edition-and $28 for the electronic edition. And that's about typical for even a successful book issued electronically.

Baen has published some 360 individual ebook titles and if we assume a somewhat pessimistic 3000 copies sold each that works out at around 1 million total ebooks. In some ways that doesn't sound like a lot but on the other hand it is 1 million more than JK Rowling has sold since she (and/or her publisher) has refused to sell ebooks. More to the point even if my numbers are off by a bit - say total sales are half my estimate at 500,000 - the money made is still significant. 500,000 books sold at mimimum of $2 each works out at $1million and I reckon that this sum is a pessimistic one. Given that the hardware costs of Baen's epublishing empire are trivial (say $50k-$100k including telecom costs total) and that the other costs of making the electronic copy from the copy sent to the printers is also negligable this means that Baen, his authors and his epublishing minion got to share a pot of at least $1 million over the last 5 years or $200,000 per year.

Baen is clearly not suffering from its internet experiments since it is following up its success with an electronic F&SF magazine - Baen's Universe - in attempt to grow the market where others seem to prefer to cut costs and shrink. As Eric says in his launch announcement at Baen's Bar (full text here):

In essence, as a business model, our strategy is to use the free entry and accessibility of the internet to substitute for the ready availability of paper editions of SF magazines in times past. This will be a big challenge, of course, because the electronic fiction market is still small. But, by combining a very aggressive promotional campaign with Baen’s longstanding policies with regard to electronic publishing – which you can summarize as WE SELL CHEAP AND UNENCRYPTED STUFF, AND THAZZIT – we think we’ve got a good shot at pulling it off.

Now the interesting thing here is that despite paying top rates of US$0.25/word or so because of electronic delivery the magazine is liable to be profitable at relatively low subscription rates (although of course we'd all like to see it grow). By my sums a circulation of around 15,000/issue should bring in between $75,000 and $90,000 (the variance is because some people will buy discounted subscriptions of 6 issues for $30 instead of paying the full $6/issue). Assuming that $15,000 of that sum is required for the payment of the various minions that do the editing, web set up etc. we are left with somewhere between $60,000 and $75,000 as payment for content and possible profit. Now short stories are typically around 15,000 words long so at $0.25/word that means each author will pocket $3750. If there are 16 stories per issue then 16*$3750 = $60,000 so we have break even if we have 15,000 subsription readers. Any more readers and any who pay full whack instead of the subscription discount turn up in the profit column (although it should be noted that Baen intends to pay authors royalties as well). 15,000 readers is not in my opinion a stretch goal.

Let's have a look at the addressable market: If we limit ourselves to the native English speaking and internet connected world our addressable market is between 300 and 400 million (less the illiterate non internet connected etc). If we round down to 300 million, 15,000/300 million is some trivial percentage (0.005%) so whether the actual number of English literate internet connected people is 100 million or 350 million is effectively irrelevant. We can even assume that only one person in 1000 of our addressable market is interested in F&SF (so 300 million drops to 300,000) and still have plenty of coverage (115,000/300,000 = 5% or 1 in 20). If there are only 300,000 internet connected F&SF fans then I would be very very surprised but assuming that is the case then break even merely requires that one in 20 of this market decides to buy.

However the attractiveness of the offer to its customer base could well drive those numbers up. Because the internet allows such a light business model the readers get what can only be considered a bargain. $6 will buy them something like 240,000 words of F&SF. To put this in perspective the average novel these days is about half that count - or 120,000 words - so for $6 the purchaser is paying the price of one paperback novel to buy some 16 short stories which combine to be the equivalent in length of two paperback novels.

So all in all this is a Win-Win-Win play the only losers are those who depend on paper to make their money all that needs to happen is that the word is got out.

Update Wow two Instalanches in two days - either I'm suddenly interesting or there is no other news! anyway be sure to buy Baen's Universe

Corrections My numbers are slightly off - according to a Barfly commentator the magazine costs $30,000 to produce (including Author payments?) and the average number of monthly webscriptions is 1500 not 2000. Minor adjustments of some sums may be required but given the large number of SWAGs in the calculations I don't think the basic conclusions are altered.

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An Update

(Anonymous)
Additional follow on analysis at my blog today - http://www.di2.nu/blog.htm?20051229

Internet publishing as an entry point

(Anonymous)
One other use of the internet is to go around the publishing industry all together. It's a tougher and tougher market to break into, and the process is very time-consuming. The internet gives you the option of making your work widely available. (Of course, that doesn't mean it's any good, or that anyone will read it.) In my own case, placing my insider novel of nuclear power online (with a PDF version available as well) has brought me word from a number of very satisfied readers (see the comments at the site). Of course, there's no additional income to speak of. But after years of effort, any personal feedback is welcome.

James Aach

Author of "Rad Decision", the first insider techno-thriller of nuclear power. http://RadDecision.blogspot.com jimaach@comcast.net

"I'd like to see Rad Decision widely read." - Stewart Brand, founder of The Whole Earth Catalog.

Re: Internet publishing as an entry point

Well, the object of the Baen's Universe project is to prove that an Internet publishing outlet will work, by making Jim Baen a lot of money. That's the only yardstick that is real, in my opinion.

The way you tell if you are a writer is if you write. The way to tell if you are a professional writer is, you get paid pro rates. The way to tell if you are a successful publisher is that you make more money publishing than you did at your day job.

The publishing industry is going to have to abide by the vote of the customer.

We're more than 10 years along in this Internet experiment, now. It isn't enough to have the option of making your work widely available. It is now necessary to apply the same filters to the work as if it were being published in paper. Sturgeon's law applies here too.

Bananaslug.



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