Tuesday, February 24, 2009

Digital Fallacies

Sharon Wildwind

February has been a good month for the digital debate, generated by the February 9th Amazon announced of its new Kindle 2, and by the fact that the realities of last October’s Google lawsuit settlement are filtering down to individual authors.

True or False:
1. Electronic books cost less to manufacture than paper books.
2. Electronic formats should be released months after the paper format.
3. Electronic books should be sold for less than paper books.
4. Electronic books are greener (more ecologically friendly) than paper books.
5. Electronic books a passing fad.

1. Production Costs

Production costs for electronic books are, to a large extent, dependent on how much the publisher wants to spend up front. In a traditional publishing house, there are costs for author advances, editing, cover design, typesetting, the printing and distribution of Advanced Reading Copies, and for marketing and promotion. Some companies spend a lot on these services, some spend almost nothing, passing those costs on to the author. So the cost to manufacture is variable and may equal the cost of producing a paper book.

Second step costs are for raw materials: paper, ink, covers, printing itself, boxes in which to pack and ship the books, and the salaries of all the people who do these tasks.

Third step costs are for shipping and handling, storage space, returns from book stores and, ultimately, the cost of discarding remainders and destroying the physical books.

Second and third step costs for electronic books are different than for paper books, but they still exist. Someone has to format them into electronic readable documents, and there has to be a staff available to fix the electronic copies if something goes wrong. Electronic books are, after all, only computer files and when was the last time you had to call IT to fix a computer file problem.

Bottom line: There’s no such thing as a free lunch. Paper books cost; electronic books cost but the money is spent in different places.

2. Release Dates

Some of the most heated debate this month has been from people who say that, in all fairness to bookstore owners, an electronic title MUST be held back—some say six months, some say a year—after the date of the paper book’s release. This is the old paradigm of releasing a hard cover first, then waiting a year before releasing the paperback. That paradigm is dead.

Fairness is not the motivating factor in sales. Suppose you were a clothing manufacturer. If you had produced a new version of a coat that was selling like crazy, would you withhold your product from the market for six months in order to give clothing stores a fair chance to sell the coats they already had in stock? Heck no. As soon as enough stock had come off the production lines to fill a truck, that truck would be rolling out of the garment district.

If that’s true, some people say, then let’s set up electronic kiosks in bookstores where people can come to download electronic books. That way the book seller can still make a small commission on each copy of an electronic book.

So, I’ve got two options. I can go out this morning in -9 weather (and it’s snowing) to my favorite local bookstore, where I will pay the cost of the book + a $2.50 kiosk fee to download a book, or I can sit at my computer, pay only the cost of the book, and have it downloaded in under 1 minute. Which option am I more likely to choose?

Bottom line: Electronic releases are more likely to be made BEFORE or at the same time as paper releases, but never afterwards.

3. Price Point

Full disclosure being a big thing these days, I have to admit that there are relationships here to question #1 that, as an author, affects me directly. Will the price point for my book cover ensure me a fair and reasonable author’s advance? Will it cover good editing? Will I be likely to see royalties?

One thing we do know already is that some vendors are already using low book price points as an add on. It’s akin to “Do you want fries with that?” The primary products for electronic readers are newspapers, magazines, and electronic material, such as blogs. There are already advertisements that tout the values of getting your daily newspaper on an electric reader, including cell phones, and as an afterthought say, “You can get books for this reader, too, you know.”

In the current paper market, I have no say-so in the price point unless I’m self-publishing or I’m selling one of those copies I’ve paid for (author’s discount applies) and have in my storage locker. Otherwise, I’m dependent on what my publisher says the book will sell for. Electronic book price points won’t be any different.

Bottom line: what price point will sustain both authors and readers? Will a terribly low price point on electronic versions be offset by a huge increase sales volume? I don’t know. Stay tuned for further developments.

4. The Green Machine
Here’s how paper books affect the environment: cut down trees; replant trees and grow them for 20 years; mill paper; use recycled paper; manufacture and use ink, colored ink for the covers, bindings, and glue; use fuel to ship all the raw materials and ship the finished books, and store books, and return the books, and destroy books; toss books in landfills; recycle some books, keep bookstores open; keep second-hand bookstores open; produce, ship, sell, and recycle book shelves to both businesses and individuals; produce and recycle promotional materials; and use fuel to move books from place to place whenever book owners move.

Here’s how electronic books affect the environment: ship raw materials; produce, market and sell electronic machines; feed the desire for the latest gadgets; deal with obsolescence; deal with the disposal of electronic machines and with components that contain chemicals such as PVCs and mercury; manufacture and use electricity; and manufacture, use, and recycle batteries.

List 2 looks shorter than list 1, but each activity probably has a greater impact on the environment. A paper book in a landfill will eventually degrade; an electronic reader in the same landfill degrades over a longer time—possibly not at all—and releases more toxic chemicals as it does degrade.

Bottom line: we’re back to that no free lunch thing. Paper books cost the environment; electronic books cost the environment.

5. Faddishness in the age of electronics

If you’re reading this blog, chances are you’re already part of my tribe. There are six bookshelves in my office alone, another two in the bedroom, a stack of books beside the bedroom door, and we won’t even discuss my husband’s office. Now go for a ride on your local public transit, or attend the major sporting event of your choice (Hey, the Briar is coming to Calgary next month and I can’t wait. If you don’t know what the Briar is, that won’t matter to you. Oh, okay, it’s a championship curling event.)

How many of those people on the bus or in the sports arena have a houseful of books? Not many.

The cut line is about at age 40. More people over 40 love and want to always have in their lives paper books. They love the look, the feel, the smell, the tangible reality of a book. More people under 40 consider paper books an unnecessary physical encumbrance. Read it and toss it.

The other thing that people under 40 want is for the book reading experience to be a public, tribal event. A rainy afternoon, a cup of tea, and a good book is so 20th century. Read the book, visit the web site, discuss the book on a social web site, produce and post a multi-media collage that encapsulates your reaction to the book, add a soundtrack, and maybe do a little fan writing because you didn't exactly like the way the book ended. It's not about the book anymore; it's about the book brought to a public stage.

In line with that idea, the used book business has reversed in the past five years. Before about 2004, the majority of books being brought to used book stores were discards, multiple copies, and clean-outs of Great-Aunt Violet’s house after she passed on. Today, a large part of used bookstores’ inventories is first run books, which hit the shelves as little as 3 days ago. Read it and take it to the used bookstore for some ready cash.

The edge of the wedge is textbooks. University publishing companies and university bookstores saw a revolution of very angry students and parents last fall. Why put up with huge textbook cost increases? Why buy this honking fat book, which I won’t need next semester, when I should be able to download relevant chapters, as I need them. Read it, take the test, and delete it from my hard drive.

Bottom line: According to the Association of American Publishers, in 2008,
E-book sales increased 68.4%
Adult hardcover book sales decreased 13%
Adult paperback sales decreased 3.6%
University press book sales decreased 7.9% for hardbacks and 8.2% for paperbacks.

So to go back to our original quiz:

1. Electronic books cost less to manufacture than paper books. (False, they cost differently.)
2. Electronic formats should be released months after the paper format. (False, electronic books are likely going to be released on the same day as paper formats.)
3. Electronic books should be sold for less than paper books. (Don’t know if they should be, but they certainly will be.)
4. Electronic books are greener (more ecologically friendly) than paper books. (False, they both cost the environment.)
5. Electronic books a passing fad. (False, they are here to stay, particularly for the people under 40.)
Quote for the week:

In the fall of 2008, the University of Michigan at Ann Arbor allowed professors to list their texts online. The university’s bookstore's textbook sales fell $510,000 over the next 5 months. Students went to the Internet to buy their books.
~Karl Pohrt, bookstore owner, February 2009


Lonnie Cruse said...

Wow, I'm waaay over forty but living like an under forty, at least in the book area. After hemming and hawing for months, and staring at the ever-buldging tote bag full of books I'd read and didn't want to keep (or didn't have room to keep) I decided to get a Kindle. Being still of sound mind, I asked for gift certificates for my birthday and Christmas and that paid the lion's share of the expensive gizmo. And I prudently refused to use anything but the free shipping, even though it meant waiting up to ten days longer for the coveted gizmo to arrive. I figured I could buy a couple of books with the money I saved on shipping.

A Kindle is indeed expensive, but so is that totebag full of books to discard every December. As for letting it wind up in a landfill someday? Not a chance. At this price, I'll give it a decent burial with full honors, likely somewhere in my closet. And it won't take up nearly as much room as that hateful tote.

Great post, Sharon, and VERY timely as Kindle was released for shipping Sunday. Mine is somewhere between here and Indiana. Sigh.

Laura Benedict said...

Very enlightening, Sharon. Thanks!

Sandra Parshall said...

I haven't bought a Kindle and I remain cool to the idea of digital print books for myself, but if these devices make it easier for more people to read, I'm glad they exist. I think all the internet book chatter is a wonderful thing. The more a book is talked up online, the more likely people are to read it. A whole world of people sharing their opinions of books -- what could be better?

Anonymous said...

Okay, Lonnie, I'm very jealous. One day they will be available in Canada.

Thanks, Laura.

I agree, Sandra. The more books are talked about, the better for all of us.