All my numbers are about 2-3 times the numbers that the business plan is based on. The sums still work but the total pie is rather less than I thought which also means that the break even number of subscribers is also rather smaller. In other words the 15,000 readers that I suggested was basic break even is actually more than twice the number the business plan anticipates and will make Jim, Eric and co indecently rich.
Here direct from Eric Flint the red bear editor of the eMagazine are his numbers:
The magazine's costs are variable, because most of the operating expenses other than paying for stories -- which is the single most expensive item in the budget -- are set at a percentage of gross income. For instance, Paula and I will split a 20% editors' commission, the exact amount of which will be determined by gross income. In a similar manner, we're setting aside a percentage for Baen -- that's partly repaying of initial costs and (as time goes on and that gets paid back) a profit margin, a percentage for art work, etc.
So the figure of $32,000 I gave people was predicated on a number of assumptions which, in the real world, will obviously vary. The main ones are:
1) It presumes a certain level of sales: 6000 average per issue.
2) It presumes a certain ratio of subscriptions to single copy sales: specifically, 2 to 1. That's the ratio we've averaged for the [Grantville] Gazette, and since we had no other comparable figure we transferred it over as a working hypothesis.
3) It does not include any extra income raised from Universe Club memberships. At least in these early days, however, that has proven to be very significant. We've actually raised more money from Club membership sales than simple subscriptions. That will change, of course, as we get nearer to the publication date. Still, it's a variable factor that works in our favor since I never included it in the original assumptions the budget is based on.
4) It also doesn't include any income derived from sales of individual stories. I didn't include those because this is really terra incognita and there was no way to make any estimate that wouldn't have been pure guesswork. Still, since no sales are assumed, any sales will help.
Assuming an average budget per issue of $32,000, by the way, the cost of the stories will average about 5/8 (62.5%) of the total expense.
My (minor) emphasis and add of a relevant link. Anyway from this we get the following analysis of costs etc. per issue assuming the worst case break even subs Income
6 issue subscriptions of $30 = $5/issue
single issue purchases at $6
Expenses (percentages and totals based on $32000 total income)
Payment to authors
Payment to editors
Remainder (Baen repayment, profit and illstration cost)
One thing that is clear from this is that my estimate of total royalty rates is off - badly. Instead of $60,000 it is $20,000. I think that is because closer examination of the submission guidelines indicates that I fell for the classic "rates of up to $0.25/word". In fact doing the sums it looks like overall rates for most authors are going to be considerably less than that with total payments per author more like $1000-$2000 than the $3500+ I predicted and, on that note, it is also worth noting that the reader bargain is rather less than I thought since the average magazine will have a similar amount of words to a standard paperback, not double as I claimed. However what I also did not mention are the added incentives for authors that mean that the initial $1000-$2000 check is not the only souce or money. From the subs page:
In addition, we will pay royalties. The royalties will be 20% of the gross income of an issue of Universe, if the stories and articles in that issue earn out, divided among the authors in that issue. In the event Baen Books decides to reissue the magazine later in paper format, we will also pay book royalty rates.
This is not a trivial sum. If Baen's universe does get the 15,000 subscribers I figured was fairly easy then the amount of income (ignoring club memberships and going on the same 2:1 ratio) is 10,000x$5 + 5,000x$6 = $80,000. Royalties are paid at a rate of 20% of the amount above the break even which I think means that authors get 20% of the $48,000 excess beyond the $32,000 break even. This is $9,600 and will jump up every author by some $600-$800 depending on how many stories there are in the magazine and it totally ignores the other sources of royalty such as the possibility to purchase individual stories.
Now obviously Baen will not be paying enough (yet) to support a stable of full time short story writers. If a writer somehow got published in all 6 issues of a year (which wouldn't happen) he would be getting between $9000 and $15000 on the readership numbers of 6000-15000 and the length of his stories. But if Baen inspires a couple of other electronic magazines such as Orson Scott Card's Intergalactic Medicine Show and the rates do rise from $2000/story to $5000/story then the addition of short story income is likely to make borderline novelists (who get advances of around $10,000 per novel) able to write full time instead of holding down a job they probably hate.
By the way to put the numbers in perspective. My original Baen analysis article has had (after about 24 hours) almost 4000 hits primarily because of Instapundit. If every one of those readers (this means YOU) forked out the dosh for a 1 year subscription the magazine would have already sold enough to be practically assured of survival because those 4000 readers would imply another 2000 casual one issue readers (and all that ignores the previous word of mouth success about selling those club memberships that one of the minions reports on his livejournal). If every Instapundit reader per day took out a sub (100,000 on average) then each author would be pocketing around $10,000 per short story. To put the numbers in perspective in a different way, the authors guild study of midlist authors in 2000, which is not an F&SF only study, states that midlist author income has apparently stagnated at $5,000-$10,000/year for the last two decades so even a low level of success from the eMagazine would make a dramatic difference to author incomes.
Finally a comment on the previous post will no doubt tickle pinko socialist sypathizers such as Eric:
What I find fascinating is the democratization of what was once the privilege of aristocracy: to patronize the artist and so have your mug (or, in this case, name) immortalized.
That Jim Baen has arrived at a way to cash in on this tickles me to no end.