BookCamp Vancouver 2009 Wrapup

BookCamp Vancouver 2009The atmosphere at this weekend’s excellent BookCamp Vancouver 2009 was quite different than other unconferences I’ve attended in the past. For one thing, people there were taking notes using pencil and paper. And unlike other unconferences, there was an absence of laptops, cameras, and ubiquitous social media coverage; even the #bcvan09 hashtag traffic on Twitter was attenuated versus other unconferences I’ve attended.

If I were to summarize the tone of the conference in one word, that word would be ‘fear‘. The publishing world is rapidly approaching a crossroads, and it doesn’t seem like its inhabitants are any better prepared for the transition to digital media than their brethren in the music and movie industries. Sean Cranbury‘s session on digital rights management could have been about the music industry if you replaced the word ‘book’ with the word ‘song’ in the discussion. This is somewhat disturbing, since there have been numerous examples of what works and doesn’t work in digital media.

The concerns of publishers boil down to economics. Publishers are struggling to reconcile the costs of book production with consumers’ unwillingness to pay for content. Regardless of whether the content is delivered via the Internet, or as an electronic book, consumers are less and less willing to pay for content, much to publishers’ chagrin. For many attendees, I think the real shock came from comments by publishers on the time and costs associated with producing physical books:

  • Profit margins in the publishing industry are about 4%. For those of us from the software industry, 4% is an amazingly low number (software profitability runs around 30% depending on industry).
  • The timeline on book production, once a complete manuscript has been received from the author? A year and a half on average.
  • Book printing costs only account for about 20% of the cost of a book. This is surprising to many consumers who, judging by audience reactions at the conference, believe that physical production and distribution is a major component of the price of a book.
  • Author royalties comprise only 10% of the cost of a book, another fact that shocked the audience.

The part I found most concerning: a professed lack of willingness on the part of publishers to experiment. Despite widespread agreement that technology publisher O’Reilly is leading the way in revolutionizing the publishing industry, few publishers professed a willingness to take a chance and undertake experiments of their own to determine how to chart a course through these new waters. It’s disappointing, especially when O’Reilly has already created many of the new models publishers might employ to stave off extinction, such as monetizing books through new formats (finely sliced content offered as PDFs, subscription-based reference libraries), and partnering with readers during the production process.

One conversation I had with a publisher highlighted the extent of the tunnel vision: the publisher admitted that they would not only be unwilling to accept any price cut when offering books in electronic form on devices such as the Kindle, but also that they weren’t even willing to try offering books in electronic form at all. If this attitude is widespread in the industry, the publishers’ fates are already sealed. The future of publishing may rely on a new breed of author-entrepreneurs adhering to the tenets of “lean publishing” to continue in their stead.

Don’t Write, Link!

Now that my book‘s done and available for sale on Amazon.com, I’m starting to consider how much (or how little) I might actually make off the book. Writing the book made me realize just how difficult writing a book can be even if it’s a technical book rather than a work of fiction. But for all my hard work, I was shocked to realize this week that I make more money selling my book through an Amazon Associates link than I make in royalties as author of the book! Whaaaaat?

Let’s examine the terms of my agreement with New Riders:

  • New Riders pays me 10% of net receipts from United States sales or licenses of the work, in English, for the first 10,000 copies, and 12% for any amount over 10,000 copies.
  • New Riders pays me 5% of net receipts on sales in foreign languages.
  • New Riders pays me 5% of net receipts on sales of the book offered at a discount of 55% off the Suggested List or Single Copy Price.

Amazon, on the other hand, offers me the following referral fee percentages when someone buys a book via an Amazon Associates link off my web site:

  • 15% of Qualifying Revenues from the sale of each individually linked book that, on the date of order, is listed at 10% to 30% off the publisher’s list price.
  • 5% of Qualifying Revenues for all other Qualifying Products sold by Amazon.com.

Though my book has a retail price of $45.00 (all figures in US Dollars) Amazon.com is currently offering it at a 30% discount ($31.50). This means I make $4.50 on direct sales (10% royalty) as an author, but on sales via Amazon (5% royalty due to discounts offered by New Riders) I make about only $2.25. However, for a copy of my book that I sell via my Amazon Associates link, I make $6.98 ($4.73 referral fee from Amazon + $2.25 royalty from New Riders).

What this means is that I, as an author, make roughly twice as much via a referral link as I make by my royalty from New Riders! Wow. Even if the book isn’t discounted by Amazon, I still make a 5% referral fee…the same amount I make from my royalty! Amazon also has the added advantage that they pay out their referral fees quarterly, whereas New Riders pays royalities biannually in September and March.

The message is clear: if you want to make money in books, stop writing, and start linking!