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. Individualsâ€™ 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.
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.
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.
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 - confirmed see new post) 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.