Musings on Publishing in the Digital Age by Evan Schnittman, Vice President Global Business Development & Rights at O.U.P. New York

This is the first posting in his recently opened blog, Black Plastic Glasses.

Why Ebooks Must Fail

This piece is about consumer or “trade” publishing as we call it in the industry.

To begin, let’s review how a book becomes a book. A writer gets an agent who peddles a manuscript to an editor who buys the book. The Publisher then pays an advance against the future royalties. (N. B., trade books advances are often, if not nearly always, greater than the actual royalties earned.) The publisher edits, designs, produces, prints, binds, warehouses, and finally, distributes the book to resellers (retailers and wholesalers).

Concurrently the publisher is out pre-selling in an attempt to get as many units shipped to resellers as possible.Of all the work cited above, there are two, large-scale, out of pocket investments made by the publisher to create a trade book, the advance and the manufacturing.

Advances should be viewed as controllable expenses, but in the competitive world we live in (well, used to anyway), Publishers outbid each other on a regular basis to get the rights to a title. Think of its as sports fans think of free agency (in the US) or transfer fees (in Europe) - everyone thinks they are outrageously high but short of colluding, there seems to be no way to control them.

As to the manufacturing costs, most publishers have spent the last decade focused on systematically driving down costs in manufacturing. However, no matter how much efficiency is achieved, there is only so much that can be driven out of any process that requires skilled people and non-renewable materials. The impact of advances and Manufacturing is frontloaded in the economics of book publishing. In other words, before a single dollar is earned, these costs hit the publisher. This has been the way publishing has worked for more than 100 years.

So how do publishers manage this difficult economic situation? We work extra hard to frontload sales by focusing marketing efforts on front list titles (Front list means this years new titles, as opposed to backlist which means everything publisher prior to this year). Big advances (in this sense meaning lots of orders in advance of the shipping date) drive up the number of copies shipped, which is when publishers “count” the income for a book - when it is shipped from the warehouse. However, savvy readers will notice a chink in the armor - books shipped do not mean books sold.

Read Evan's full posting and the comments it has attracted at Black Plastic Glasses. You will also find links there to the OUP blog where Evan has written other pieces on digital publishing.