COMM 150: For Friday ... books and book production costs

Our assignment for today was to find out what people are reading, starting with the Best Seller lists. I like the annual USA Today best-seller list because it has little descriptions of the books. It's not at all what I expected. What surprises do you see as you study the list?

Free-lance journalist Shira Boss had an excellent article "The Greatest Mystery: Making a Best Seller" in The New York Times in 2007 on why book publishing is such a riverboat gamble. She says:

... no editors claim to have a scientific handle on how a book will sell. Instead, they emphasize the role of intuition and say that while big unexpected losses and gains do happen, somehow it all works out.

But results are not spectacular, for an industry that had $34.6 billion in net revenue in 2005. Net profit margins hover in the mid-single digits for the $14 billion trade segment, which covers adult, juvenile and mass market titles, with an estimated 70 percent of titles in the red.

Sales in the trade segment (which includes both fiction and nonfiction) grew 5 percent in 2005 from the previous year, but year-over-year sales growth is expected to decline to less than 2 percent by 2010, according to book industry trade group data. The industry does follow trends to pursue growth, but when it comes to acquisitions, methods have not changed much in hundreds of years, says Al Greco, a professor of marketing at Fordham University.

IT’S the way this business has run since 1640,” he says. That is when 1,700 copies of the Bay Psalm Book were published in the colonies. “It was a gamble, and they guessed right because it sold out of the print run. And ever since then, it has been a crap shoot,” Professor Greco said.

Let's take a hard look at the economics here.

An old investigative reporters' rule: "Follow the money." If you know who gets paid for what, you can predict the future! Because if you know how they make their money, nine times out of 10 you can guess what they're going to do next.

So let's follow the money ...

The Kindle Review website has a breakdown of the Cost of Physical Book Publishing. I like it because it explains a lot of the details that go into creating an ink-on-paper book. But, first, there's something we ought to be aware of.

Who's putting up this page?

Kindle.

What's Kindle?

It's an electronic text delivery system, an elecronic book.

Hmmm. Let's follow the money.

How does Kindle make its money? It sells an electronic alternative to ink-and-paper books.

So what's it going to say about the competition? It's going to point out the down side of its competition. No reason not to believe the figures. They do check out. But we do want to be careful, don't we? We do want to follow the money.

Notice the basic pattern here, of who creates the content, who owns it, who sells it and to whom, etc., etc. The author sells the book to the publisher, and the publisher takes the risk. Then the publisher sells the book to us. With trade books, the publisher sells the book to a bookstore (usually at a discount), and the bookstore sells it to us. So ownership of the product passes from the creator to the publisher to the retailer to the consumer.

We'll be comparing that setup to other media, especially the electronic media. On the Kindle Review Blog, "switch11," who created the content, sums it up like this:

1.Author – Creation. 8-15% Royalties.
2.Publisher – Being the Curator, Polishing, Manufacturing, Marketing. 45-55% (includes Author’s Royalties). Note that Printing accounts for just 10% of the book price.
3.Distributor – 10%.
4.Retailers – 40%.
5.Consumers ...

Compare this to the chart in Vivian on who gets what percentage of your textbook dollar.