Why e-books will be much bigger than you can imagine

61 Comments

iBookshelfThe e-book business will grow faster than people think. Innovations from Amazon (s AMZN) and Apple (s AAPL) have increased the velocity at which we consume e-books, but there are two emergent behaviors that will increase the rate of overall consumption.

But before I get into those behaviors, I’ll start with a story about my experience with the book business, and how that led me to start a specialty e-book company called FlatBooks. The lessons I’ve learned through these experiences can help you understand why I think that the e-book business can really take off.

How I got into the book business aka Tales of a clueless author

I’m a photographer who’s known for a particular style of photography. I’ve run StuckInCustoms for the past several years and slowly built up a great audience while trying to perfect my craft. I don’t, by any means, feel like I am a fully-formed artist, but I’ve always been open with my struggles, successes and failures.

Several years ago, I was approached by three publishing houses to write a book. I chose to go with Peachpit, primarily because, in my opinion, they are the biggest and best. They usually have seven out of the top 10 books in the photography category on Amazon. They also publish the books of Scott Kelby and Joe McNally, which are regular bestsellers.

I went into this as green as the next guy. No one really talks about the numbers behind this stuff, but I will. It’s not to show off or anything, but these numbers are important when we compare traditional books to e-books later in the story. My advance was north of $20,000 and authors typically get about 15 percent of every sale after the advance has been paid back. So starting off I was pretty excited to write the book that would eventually be A World in HDR.

After many months of hard work, I finish the book and fly out to San Francisco to have dinner with some of the senior execs at Peachpit. I’m excited. I’m about to have a book in Borders and Barnes & Noble (this was before Borders went out of business); my mom and dad can go into a store to see my book and everything. In a way it’s all very personal: New authors can’t help but think about their parents walking into a store to see their child’s book. I can hear my parents talking about it to their friends at the coffee shop. This is a big moment for me.

Anyway, back to dinner. I’m sitting there in a nice restaurant in San Francisco with all these executives of a major publishing house. It’s one of these power dinners of lore. We’re there to discuss the upcoming launch of the book, and I’ll never forget what happened. They asked me, “OK, Trey, what are you going to do to market this book?”  You could have knocked me over with a feather.

My young publishing life flashed in front of my eyes.

I ended up putting together a robust launch campaign. Luckily I already had hundreds of thousands of people who came to the blog every month, a healthy Twitter following (this is before Google+) (s GOOG) and a great network of people to help.

I did everything, including:

  1. Put together a limited-edition print along with a signed copy of the book for early orders. This required me to warehouse the book with a third party, pay for massive shipping, and have a ping-pong table covered in books for two weeks while I signed all of them along with the prints, etc.
  2. Organize a book tour (at my own expense) to hit several big cities like New York and Chicago.
  3. Blog and tweet about it on countless occasions.
  4. Sneak into hundreds of Barnes & Nobles, secretly sign my books, then tweet out the location so a little flash mob would appear to get the special signed version. (BTW, this got me thrown out of at least three bookstores by short-sighted managers.)

The book came out and did amazing. It sold out on Amazon in the US, UK, Canada and Australia. It takes a lot to sell out a book on Amazon! The book was reprinted and moved into the black within the first quarter.

And then I was exhausted. I couldn’t believe how much time and effort all of this required.

Let’s look at the profit margins

Let’s look at Peachpit. Now, I still really like Peachpit. It’s filled with very smart and clever people who are stuck in a dying system. Remember, just because I got only 15 percent of the book sales does not mean that Peachpit makes 85 percent. That money is like the great catch in Hemingway’s The Old Man and the Sea. It’s nibbled away by the book binder, lawyers, the guy that drives the truck to Borders (er, Barnes & Noble) the printing company, the book stores and all the other little people required to physically produce a book and get it into the hands of the reader. No one is getting rich off these things. In fact, everyone involved with the old book business is just barely scraping by with profit margins that’ll make your Adam’s apple shake up and down like Eve’s eyebrows.

So I started FlatBooks and now we operate at an 80 percent profit margin.

Almost immediately after launching into the e-book business, we hit six figures in income.  It blows away what I got with my advance from Peachpit. We now have about a dozen authors from all walks of life. Every month we add more and more, and things are really
beginning to snowball.

It turns out that tech companies — especially Apple and Amazon — are the new publishers. And this is, of course, because their technology disintermediates all the component steps required for a physical book. We have all seen the numbers about the growth of e-books and how every category is impinging on the traditional book categories.

These baseline trends will continue, and they will have two other accelerators added to them because of these emergent behaviors:

Emergent behavior 1: E-books are not one-for-one with the traditional book business

Most e-book projections are wrong. They anticipate for every $1 billion lost in the traditional book business that $1 billion will be gained in the e-book business. This ratio is actually closer to 1-to-2 because people are collecting e-books like nuts for the winter. They are easy to buy and download, much like music. And, frankly, it’s fun to fill up your iPad with a colorful, robust set of thumbnails in your library. I don’t know why this is a good feeling, but it is.

E-books are also more efficient in the way they communicate ideas. Our e-books happen to be mostly instructional, and it seems most people prefer an e-book that is about 50 pages long. Here’s a secret: Most authors can tell you all you need to know about a subject in 50 pages. The reason that many instructional books in bookstores are 300+ pages is so they look impressive and thick. Just like those old wonderful computer game manuals, a bit of heft indicates quality.

If you ask many non-fiction authors, they will openly admit that they put a lot of “filler” into these books. For example, if you were in the airport bookstore, no one would think a 50-page book on business to have anything significant inside of it. We’ve all been brainwashed in a way. Thankfully, none of that matters with e-books.

Emergent behavior 2: Social media is a marketing multiplier

For new products and services, old styles of marketing don’t really work anymore. I remember that Peachpit told me they managed to get a two-page spread in LA Weekly, and it did not make a blip in sales. For many of us, that’s not surprising; we spend the majority of our time on the Internet.

The best way to successfully market something is to have true believers with big followings talk about it on the Internet. Since we have many authors who are socially popular, a multiplier effect begins to take place.

Personally, I have over 750,000 Google+ followers, 150,000 daily photo views on the blog, and a good number of Facebook and Twitter followers. So do many of our authors on FlatBooks. We have well-known people writing e-books, such as Lisa Bettany (who wrote an iPhone book) and Ben Willmore (who wrote a photography book). Each of them have tremendous followings, and their followings will affect sales of their e-books, as well as our other e-books. It is a hyper-networking effect.  This kind of behavior just doesn’t happen when people walk into a Barnes & Noble. It’s a completely different way of marketing and selling things.

This is just the beginning for e-books

Traditional books will never die completely. I still have a great library here at home with countless stuffed shelves heaving forth with wonderful books. I expect many people do the same thing I enjoy doing: collecting my favorite books in real life. I like to get first editions, rare copies, signed editions, and this sort of thing. I use Alibris to find signed copies and interesting editions of books to collect.

Many people may think that the e-book market is already a mature market, but I think it is just beginning. It will evolve in many unexpected ways. There will be as many strange business models evolving as we see with music today. The marketing of these e-books will become increasingly social.

The spread of good books has always been a word-of-mouth phenomenon. Now, with social media, e-books are word-of-mouth-on-steroids.

In 2005, Trey Ratcliff started the photography blog StuckInCustoms, where he has posted one photo a day ever since. He specializes in high-definitiondynamic range (HDR) photography and has published one book and many, many tutorials and e-books on the topic. He founded e-book publisher FlatBooks in 2011.  Follow him on Google+, Facebook, or Twitter.

Image courtesy of Flickr user GlennFleishman.

61 Comments

Harris shapiro

Once the book is complete how long does it take to digitize the book for iOS?

Gaia

Good luck with Flatbooks! This is what they teach us in business school. Take a process or a business that the consumers really hate, but doesn’t have a choice in using, and change it up. My only question is what separates the services offered by Flatbooks from another ebook publishing service ? What will prevent the copy cats ? The star power :) ?

Arne K

I agree that eBooks are going to go big, quick. Does it bother anyone that you don’t actually “OWN” these eBooks at all? You get “access” to the book through iBooks and Amazon etc., but you technically don’t own the actual file (book). Its something that has bothered me and I wonder what others feel about this.

Trey Ratcliff

Owning vs. Access is an interesting thing…. I agree with @kk who thinks that access is more important than ownership

jedibeeftrix

“Does it bother anyone that you don’t actually “OWN” these eBooks at all?”

Very much so. So much so in fact, that I would categorically reject buying any ebooks were this a terminal problem.

Fortunately, there are people like TheBlackLibrary who provide DRM-free epubs, among other solutions.

Steve Griffin

So far I’ve found ebooks to be a tough sell. You still need the reader. Amazon, B&N, and Apple haven’t put a device in everyone’s hands yet, so my ebook sell is just that much harder. I agree, its coming though.

Eric Haines

Your 15% royalty is probably not even 15%, it’s more like 8% of list price. Usually the royalty is some percentage of the *wholesale* price, which is like 55% of the full price. I have an old article on book publishing for technical writers, http://bit.ly/authorinfo, much of it still applies today.

Trey Ratcliff

Thanks everyone for your comments – reading through them now.

RussellInToronto

“For example, if you were in the airport bookstore, no one would think a 50-page book on business to have anything significant inside of it.” This sentence, unfortunately, illustrates the potential downside of low-cost e-publishing: the lack of editing (or self-editing) that lets such poorly formed syntax stand.

Thomas

I believe e-books will really take off once they become decoupled from traditional books. I can imagine features that have never been able with traditional books soon to be available in e-book. For example: Alternative endings, interactive story telling, animation in textbooks, embedded source code for programming books and so on.

Kevin Kaiser

I’d add, too, that the speed of ebook adoption is being driven by the same factors that ramped up MP3 player growth: cheap devices (everyone has them, not just the early adopters) and an easy way to get lots of content in a painless way.

The Wikipedia page about the growth of the iPod is really fascinating (http://en.wikipedia.org/wiki/Ipod), especially the sales chart. The iPod did just OK until iTunes was created in 2003. Ever since, prices have come down, making it possible for everyone and their brother to have one. Now, hardly anyone can remember the last time they bought a physical CD.

Same thing is happening in books, only the devices are ereaders and Kindle and Barnes & Noble are the iTunes of books (for now).

Techhamlet

This guy’s a freaking boss. He started out with taking pictures now he owns a publishing company.

Techhamlet

But iBooks’ ePub books look far better than the simpler book layout for Kindle books. Case in point: SitePoint e-books can be downloaded in multiple formats, and both the PDF.

Chuck Lunsford

The key to the success of Kindle-iPad, etc., is portability. I’ve been a POD author over 10 years with the first memoir available as a computer-read e-book and Palm Pilot. In the first 5 years, only 5 e-books were sold, zero Palm Pilot. When my novel was published POD 2005, it was not available as an e-book from the publisher. Now that both books are available on Kindle, they outsell the paperbacks by about 3 to 1. The books are about half the paperback price, but the royalty is just as good. I was skeptical about the success of Kindle because of my early experience with e-books, but not I’m a believer. If the big traditional publishers are hurting–in my experience with them, it couldn’t happen to a nicer bunch of folks.

Joseph Phillips

I’m Joseph Phillips – I’ve written a dozen or so books on project management for McGraw-Hill and AMA. Thanks for sharing your experiences – nice to know I’m not alone! I’ve been flirting with the idea of ebooks. Thanks for the bump (or shove!) in that direction…

David Rowswell

I have only been reading e-books on Kindle for my Android phone for the past 4 months. I used to buy maybe 5-10 printed books per year. I have bought more than that in the past few months alone.

The key reason I am buying more books is because of the trial feature that Amazon have where you can download the first few chapters of a book and start reading – if you like it then “click to buy” to keep reading.

This has seen me try and buy a lot of new authors which I never would have done in the printed book world.

Also because I have my phone with me all the time, anytime I find myself with a few minutes to spare I can continue reading. This means I concume faster than when reading a printed book – as I didn’t always have it with me.

I still love printed books, but am finding the convenience of e-books more and more appealing.

jedibeeftrix

“This ratio is actually closer to 1-to-2 because people are collecting e-books like nuts for the winter.”

Your listed reasons for why this might be true may all be correct, but I think you neglect a very important one, namely:
The desire to acquire as many books as possible under an easily rippable DRM regime, before a new evolution arrives that knackers your desire to purchase further books from said service!

“Traditional books will never die completely. I still have a great library here at home with countless stuffed shelves heaving forth with wonderful books.”

Agreed, but mine is now limited to one single large bookcase administered under a harsh survival-of-the-fittest regime, with all casualties summarily disposed of.

Todd Langille

Impulse. Can’t tell you how much money I have spent on music and books just because I can do it right NOW! It’s great. As well, the social media side where if you like a book you can follow and interact with the author (like on FB or G+) makes it that much more relevant. Good stuff Trey!

John

Awesome article Trey and I’m trying to devote some time to break into the eBook world myself. I’ve always wanted to be a published author, and now, more than ever, it seems like a possibility!

Steph

I love ebooks and I completely agree that the market is in its infancy but I’d be interested to know what Trey thinks of the perennial piracy issue we hear all publishers moan about. I don’t believe DRM is the answer as it severely cripples buyers and at the risk of stirring a debate, I have not yet seen a good reason why so many ebooks often have a similar price point to their printed counterparts when the cost of production is so much lower.

rick gregory

Because production cost (more specifically the cost of printing and shipping) is only about 20% of the cost of most fiction books. That might be higher for books like Trey’s where there are a lot of color images, but for books that are primarily text, the cost to make the physical thing just isn’t that high.

Don’t forget, too, that books such as Trey’s or other books which aren’t just text need to be laid out and art directed to some degree. Good, well produced ebooks aren’t just a Save As from Word.

Stephen

“the cost to make the physical thing just isn’t that high”

True, but don’t forget the cost of transporting, storing and disposing of left-overs. The fact that we are talking about *physical* things makes a big difference, in a snowballing sense …

Ramon B. Nuez Jr.

I wonder if companies like Peachpit have gotten into the eBook business? It seems like a logical step. Otherwise these traditional companies may face the same fate as a Boarders.

I am just seeing a possible future where more and more business and marketing savvy folks could, also start their own eBook publishing business.

Scott McPherson

I agree with the comments on the generally narrow focus and lower pricing of ebooks vs. traditional books being a large draw. I have 6 -7 (maybe 8) ebooks from FlatBooks on my iPad currently, and am responding to this post on the iPad. Read Treys posts on the economics of web advertising (http://www.stuckincustoms.com/2011/12/10/stop-advertising-in-photo-magazines-head-west-to-the-web/) or future of DSLR’s (http://www.stuckincustoms.com/2012/01/04/dslrs-are-a-dying-breed-3rd-gen-cameras-are-the-future/) to see he is ahead of the curve.

Jesse Warren

ps: ebooks and this new publishing model are cool, but i find myself sticking with physical books (sold off my kindle). its nice being able to pass them on to people knowing they’ll be read, and when i buy something, i KNOW im gonna read it. downloaded 1,000 free e-books at first and hardly touched any of them.

Judith Stone

I partly agree – there’s something about physical books which you don’t get from a digital book. Being able to pass them on, or lend them (yes I know you can “lend” some Kindle books but it’s a little different) then there’s the physicality of the book itself – I have thousands of books and I love my book cases, they are as aesthetically pleasing to me as the art we have on the walls!

Having said all that, I do own and use a Kindle, and I have the Kindle app and also read PDFs on my iPhone, and on a netbook so I think there is room for both. I certainly won’t be giving up buying real books any time soon, but at the same time I won’t be giving up my Kindle!

Jesse Warren

lol at being kicked out of barnes & noble for signing your own books…

Tor Iver Wilhelmsen

Well, they are not his, they are the store’s. He’s just the author. But I am sure if he asked nicely he would be allowed…

JimFeeley

In the old days (and perhaps now) many (and probably all) publishers wouldn’t take returns on books signed by authors. So that could be behind the bookstores’ reaction.

whoops

here we go again. e-books are about the learn the same lesson the music industry learned years ago and the movie industry is learning now: drm is not a feature people like. e-books are like web pages with down’s syndrome. everything an e-book can do, html5 can do better. most books i read on the kindle aren’t even technologically equivalent to NCSA mosaic and html 1.0.

gregorylent

a new generation grows up on them, ok. and profit margins increase, ok … but god, i hate to read ebooks.

tim jones

Apple’s e-book effort, iBooks, has fallen way too short compared to Amazon’s Kindle, since the Kindle is available in many, many devices compared to iBooks, that’s only for Apple devices.

Jon Feldman

iBooks may have fallen short, but what can be done with iPad applications, when thought of as books, goes far beyond the Kindle (even the Fire). Like this introductory DSLR Photography one from Open Air Publishing: http://openairpub.com/dslr

Tor Iver Wilhelmsen

But iBooks’ ePub books look far better than the simpler book layout for Kindle books. Case in point: SitePoint e-books can be downloaded in multiple formats, and both the PDF (which admittedly the Kindle can use) and ePub versions look better than the .mobi (Kindle) ones.

Dani

I am sooo happy to hear this. I love ebooks ( although I love the library just the same ). Ebooks are just an evolved way to pass along information. You can be so creative and I am finding a wider range of content now that people can afford to bundle their writing. I am in full support!

Stephen Sham

This guy’s a freaking boss. He started out with taking pictures now he owns a publishing company.

Tim Cowley

Well put Trey. I haven’t researched it myself, but completely agree with you. As an expat living overseas, I find that most of my expat friends are already on the e-book bandwagon just for the simple fact that we can get books instantly without having to wait for weeks or months and having the possibility of the book never making it here.

Jennier Serles

Couldn’t agree more. I love ebooks. I can take a countless number of books with me everywhere I go. They save trees but more importantly they don’t kill my back. It’s just the initial purchase of an ipad, kindle etc. that might throw buyers off for the moment. Once companies learn to make them less expensive customers should buy them out.

JohnS

Saving trees is counterproductive. Trees are grown for paper, just a corn is grown for food. “Saving trees” puts hard-working Americans out of work…

Peter Glassman

Actually, you probably aren’t saving trees — and you’re definitely adding to landfill. The vast majority of US electronic devices — from cell phones to flat screens, end up in landfill either here or overseas in places like India. Even if they were recycled, the amount of energy that is needed to recycle electronics adds far more to your carbon footprint than any book ever will.

paul

Nice article – thanks. A follow-up, with data, on why people may buy more e-books than they would paper ones, would also be interesting.

William Beem

Paul,

One reason may simply be that eBooks are priced low enough to be an impulse buy. $1, $5, $10 are common price points. Some authors even provide a money-back guarantee, which is not something the average book store wants to put out there.

Another reason may be that eBooks tend to be tightly focused on their subject matter. They concentrate on one niche topic rather than trying to be a general purpose book. That’s why they have fewer pages and less fluff. As Trey mentioned, they don’t have to fill up pages to look impressive on a bookshelf in a store.

Isabel Storey

Watching a discussion on TV; liking the author and the sound of the book, reach out for tablet, log into Amazon and download immediately – and at a cost lower than hard copy.

Peter Ralston

Is this Isabel from Maine? If so, I’d love to catch up. Pls contact me thru my site, http://www.ralstongallery.com
Re this article, I find it fascinating. Yes, I love “real” books, but I am a zealous convert to reading – I mean really reading – on my iPad. It’s a comfortable and rich experience. I have begun work on a major book and am thinking of all the ways I can use new and emerging technology on the upcoming book as well as on my two existing books. Exciting times! Checking out Flatbooks ASAP.

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