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A CALL TO ACADEMIC AUTHORS

 

FRONTIERS OF PUBLISHING ACADEMIC INTELLECTUAL PROPERTY:  A wake-up call to academic authors

 

I.  TRADITIONAL PUBLISHING:

 

An academic wants to write a book, expressing his understanding of current issues in his area of interest, developing his critical insights in regard to those issues, and expressing directions for productive change.  By most standards, the work constitutes a creative addition to the wealth of ideas that help determine or at least influence human individual and collective behavior.

 

The academic commits roughly 2000 hours to researching and writing his book.  How is he being compensated or subsidized for his labor?  Sometimes the academic is “subsidized” by the university if the university requires him to publish in order to retain his job (i.e. publish or perish).   His “subsidy” is included in his salary.  This might occur at research-oriented universities (i.e. Ph.D. universities).  But otherwise, he is not subsidized for writing and publishing.  In these situations, he is employed at a teaching-university (most B.A or M.A. degree universities) as a lecturer, instructor, or an assistant/associate/full professor.  Writing and publishing are not a part of his job description; he receives no money for this.  Publishing may help him gain status amongst his peers and help him earn tenure, but it does not figure into his job description.  As a lecturer he may earn roughly $36,000 a year for full-time teaching; as an instructor or assistant professor he may earn roughly $45,000 a year.  Salary goes up from there.

 

After spending 2000 hours over the course of seven years or so researching and writing his book, the academic seeks to publish it.  As soon as the academic completes the book, he automatically owns the copyright to his intellectual property.  This is established by current copyright law.  But the academic author has no way personally of publishing or marketing his book.  Therefore, he submits his book (manuscript) to publishers.

 

Publishers assess his work for worth and marketability.  Worth and marketability often run together: publishers have to eat too.  How big is the book’s potential market?  How much will it cost the publishers to create and market the book?  They perform a cost/benefit analysis. 

The academic author finds a publisher interested in publishing his book.  The publisher knows that the market for the book is relatively small (let’s say it’s a philosophy book).  It could be a larger market if the book “strikes a chord” and sells beyond expectation, but the odds of this happening are slim.  If it’s a very creative book, then the odds of selling are even slimmer because people, even those in the academic’s field, won’t tend to appreciate it:  it seems too foreign to them.

 

A publisher determines that the book has limited marketability though some worth, i.e. it won’t make much money but what the author says has value to society.  But the book can provide the publisher with “some” money, and if the publisher publishes many of these books, then, overall, the publisher can make money.  In order to make sure the publisher covers his costs for a short run of a book (i.e. a limited amount of sales), the publisher might offers the academic a contract whereby the academic will receive a 5-10% royalty for each book sold.  Or the publisher might make the same offer with the stipulation that 500 books are sold before the author receives his or her royalties.  Either way, the publisher wants to recuperate its investment and make some profit.

 

Whatever the deal, the academic author signs on so he can get his book published.   He doesn’t know how to sell his book to the public by himself; he has no business or marketing skills to speak of; nor does he have much interest in developing those skills.  He’d rather write books than publish or market them.

 

In offering the author a contract to publish his book, the publisher buys the copyright from the author.  Now the publisher owns the rights to publish and sell the book, exclusively.  Even the author cannot sell the book on his own now. 

 

The publisher creates a concrete (hard back or paperback) version of the book.  It costs $6.00 a copy to do so.  Built into this $6.00 is the cost of materials, the cost of labor, and miscellaneous costs.  The publisher then seeks to market the book.  There are retailers in the business who are willing to buy the book and sell it in their store.  Marketing the book costs money and takes time.  The publisher prices the book to cover the costs of production, the costs of marketing, and to make as much profit as the market (supply and demand) will allow.  The price is set at $30.

 

The publisher sends out marketing information to academic libraries and academic instructors (selective) across the country, announcing a new book.  Since the market is limited, the publisher’s target audience for sales is limited.  They are not going to market the book on television or radio because it will cost them too much to do so given that most of that audience will not want to buy the book anyway.  Instead, the publisher targets academic libraries and instructors at colleges and universities who might adopt the book for use in class.

 

If the author can market the book for the publisher by using it in his own courses, then fine.  In that case, the publisher has a sure source of income.  But now the author has not only written the book but is marketing it too, at least to some degree.  And the publisher is benefiting, as well as the author.

 

In order to maximize sales of the book, the publisher enters into contracts with retailers (booksellers).  Retailers (e.g. university book stores,  Barnes & Nobles, Amazon, etc.) buy the book from the publisher usually at a 40% discount (industry standard).  If the book is priced by the publisher at $30, then the retailer buys it for $18 and then sells it for $30 to the public (i.e. students or general public), making a profit of $12.  If the retailers don’t get the discounted price (for whatever reason), then they will tend to mark up the cost of the book (e.g. a $30 book will now be $42).  Retailers can mark up a book even if they buy it from the publisher at a discount.

 

The upshot of this is:  publishers get between 40-60% of the price of the book (a price that the publisher determines).  If a book is priced at $30 and costs $6 to create (materials plus labor) and $X dollars to market (depends upon marketing methods and effort) and retailers take 40% of the price of each book, then the author is left with the rest: usually between 5% and 10% of the price of the book.  So if a book sells for $30 at a bookstore:  the bookstore gets 40% of that, or $12; the publisher gets (let’s say) 55% of that or $16.50; the author gets 5% of that or $1.50.  So for each copy of the book sold, the publisher makes $16.50, the retailer makes $12 and the author makes $1.50. 

 

For small market academic books, the publisher targets primarily academic libraries and college instructors for sales.  It realizes that large retailers like Barnes & Nobles will not buy the book because of the book’s limited audience.  University booksellers will not buy the book unless they receive orders from instructors to do so.  Instructors will not order the book if they don’t know that the book exists.  So publishers will market the book to academic instructors primarily through mailers of leaflets and bulletins (bulk mailings). 

 

Academic instructors will have to:  1) receive the mailing, 2) buy or order a review copy of the book, 3) read it, 4) assess its worth, 5) assess its appropriateness for use in class, 6) consider its cost, etc.  before they order the book for their courses.

 

If the publisher sells 1,000 copies of the book to libraries (usually at a discount), and the book costing $30 will be sold to a library at a 40% discount (variable) or $18, then the publisher would make (1000 x $18) or $18,000 in library sales.  The author gets $1, 500 of the income.

 

If the publisher sells 1,000 copies of the book to retailers at a 40% discount, and the retailers sell the book for the original price set by the publisher, then the publisher makes (1,000 x $18) or $18,000 and the retailer makes (1,000 x $12) or $12,000 (not including any markups).  The author takes $1,500 of the publisher’s income.

 

In total, in selling 2,000 copies of the author’s book (1,000 to libraries and 1,000 to retailers), the publisher makes (2,000 x $18) or $36,000 - $3,000 in author royalties, or $33,000.  The retailers make (1,000 x $12) or $12,000.  And the author makes (2,000 x $1.50) or $3,000.

 

Then there is the re-sale of the book.  The retailers buy back the book for $5 and re-sell it as a used book at, let’s say, $20.  And does this five times.  So the retailer makes an extra (5000 x $20 = $100,000 – (5000 x $5 or $25,000 in buy back costs) = $75,000.  So now the retailer makes $75,000 on the sale of a used book and the author makes $0.00.

 

Add to that the rental of books.  The retailers buy back the book for $5 and rent it for $15.  This means that the book has to be returned, but this time without the buy back cost.  So the $15 is pure profit.  There is so much business in this area that some retailers will contract with other companies who specialize in buy-back and rental books.

 

So over the course of six sales periods (semesters), the academic author can sell 1,000 copies of his book to academic libraries and 1000 copies to retailers who re-sell it for five more semesters.   In this time, the publisher earns $36,000, the retailer earns $87,000 ($12 + $75), and the author earns $3,000.

 

Now let’s include the growing expanded retailer market.  Students and anyone in the general public can become retailer themselves.   All they have to do is use Amazon.com as their marketplace.  They can re-sell their book to anyone in the world who might want to buy it.  All re-sales of the book will make the re-seller, Amazon, and the delivery company (e.g. post office, fed-ex, etc.) money.  The author and the publisher will make $0.00.

 

Now let’s add the growing pirating market to the mix.   People are finding out how to access an electronic copy of all sorts of books.  They are setting up websites where they can supply a person (student or general public) with an electronic copy of a book for free or for a nominal cost.  Obviously, all of these copies will earn the publisher, retailer (except the nominal costs charged by the pirate), and the author $0.00.

 

II.  A TRANSITIONAL STAGE:  SELF-PUBLISHING

 

In the wake of the electronic revolution comes the business of self-publishing.  Authors can create their books electronically.  They don’t need paper, etc, so costs for them are equivalent to the costs of a computer and its upkeep, plus whatever costs are accrued in their research and writing process.  Costs for selling their book (i.e. securing a publisher) depend right now upon publisher requirements.  If publishers require hard copy submissions, then there’s the cost of materials plus mailing.  If they require or allow electronic submissions, then costs are nothing more than labor. 

 

Publishers can publish books: 1) physically, i.e. using physical materials like hard back, paperback, and binding, etc.) or 2) electronically, i.e. using a computer and software.  Publishing costs for physical books are much less than they used to be.  There’s no need for printing presses or typesetting anymore.  Everything is done electronically.  An electronic copy of a book can be translated into a physical copy simply by “taking a picture.”  Publishers just need the electronic equipment, paper and binding, etc.  These costs are already accounted for in the above analysis (e.g. a $30 book might cost $6 to make).

 

Authors nowadays can write a book electronically for minimal costs.  The problem is marketing.  Self-publishing firms are printers and distributors, not really publishers.  They have the electronic equipment and concrete materials necessary to transfer an electronic book into a paper or hard back book.  They  can refer authors to electronic businesses that will distribute their book electronically or they might be equipped to do electronic “publishing” themselves.  They offer editing services to authors, but the authors pay for those services.  They offer an internet platform or website (i.e. a type of storefront) whereby authors can “advertise” their books, but they do not actively market the books themselves. 

 

For instance, CreateSpace.com, a printing and distributing subsidiary of Amazon.com,  does not invest time, effort and money into reaching out to the public (as a traditional publisher would through bulk mailing, newspaper, radio and television  advertising, etc.), letting the public know that a particular book exists, let alone accruing opinions as to whether or not the book is worth reading.  Their marketing is limited to an electronic “storefront.”  How people come to know about that “storefront” is not their business.  Self-publishing allows the author to earn a larger share of the cost of the book (i.e. a higher royalty than with traditional publishers), but it does very little “outreach” publishing. 

 

For instance, a self-publishing firm will print a book for $6.00 (unit cost) and sell the book for whatever the author wants to sell it for (though not so low as to cost them money).  So let’s say the author wants to sell the book for $30.  It costs the self-publisher $6 to print a copy of the book (i.e. unit price, which includes cost of production and labor plus possibly some profit).  Costs for distributing the book are picked up by the consumer who pays for mailing costs.  The self-publishing firm allows the author to earn 40% of the cost of the book in royalties.  So for a book priced by the author at $30, the author will receive ($30 x 40%) or $12 for each book sold.  In all, an author can sell his book on-line for $30, the self-publishing firm will take $6.00 (unit cost) for printing costs, etc, the author will take $12 in royalties, and the difference is retained by the self-publisher.  That is ($30 – ($12 + $5) = $13).  In effect, for a $30 book, the self-publisher makes ($5 + $13) or $18, and the author makes $12. 

 

Self-publishing is attractive to academic authors because authors can actually make some money selling their books.  But the drawback is a lack of marketing.  Self-publishers will not actively market a book.  The marketing has to be done by the author him or herself.

And then there is the re-sale market.  The entire price of the used book is taken in by the retailer.  So an academic author can sell a book, priced at $30 and earn $12 in royalties, and the book can then be re-sold by retailers at $20, which will earn them $15 ($20 - $5 buy back cost), which, if re-sold five times will earn them $75 (5 x $15).  In all, over a period of six sales, the sale of one book will earn the self-publisher $18, the author $12, and the retailer $12 (for the first sale) and $75 (for the next five sales), or $87.

 

Add to this the expanding re-sale market.   Students and anyone in the public anywhere can sell their book on Amazon.com for whatever price they set, say $10.  Amazon, acting as the market place, will advertise the book for the re-seller on Amazon.com.   A buyer will buy the book for $10 plus $3.99 in shipping costs.  A total of $13.99 is received by Amazon for the sale from the buyer.   Amazon will forward the $13.99 to the re-seller’s account (which is free for individuals and $39.99/mo. for professional re-sellers), but first Amazon will charge a per item fee of $.99, plus a referral fee (15% of price, i.e. $1.50), plus a variable closing cost fee ($1.35).   Amazon makes $3.40 on the sale.  The re-seller gets $10.39 (the balance) forwarded to his or her account.  But the re-seller will assume actual mailing and packing costs (@ $1.50 depending on the weight of the book), thus reducing his or her income to $8.89.  The re-seller makes money on the price of the book and on the mailing costs ($3.99-$1.50 = $2.49).  Amazon makes money on the sale of the used book ($3.40) and the author makes $0.00.

 

And now because of electronics, the number of re-sellers has exploded.  For instance, Amazon.com will contract with anyone who wishes to re-sell a book.  The re-seller can either re-sell a book for no cost to them through Amazon.com or they can start a re-selling business with Amazon.com for a price.  All re-sales of a book exclude the author from earning royalties.

The upshot of this is:  for a book priced at $30, selling 2,000 copies (1,000 to libraries and 1,000 to retailers), the publisher will make $0.00 because there is no publisher; the printer (Amazon. com, etc.) will make $36,000 and the author will make $24,000.  This will amount to a salary for the author of $12/hr ($24,000/2000 hrs.)  But when the book is resold, either on-line or on-campus, to students, then the book’s income amount will transfer to the resellers and be nullified to the printer and the author.

 

Self-publishing has definite advantages for the academic author over traditional publishing, unless a traditional publisher can sell the book to a wide audience and if reselling the book is prevented by law.  If either of those two options are nullified, then the author’s chances of making any money on his book are slim.

 

III.  ELECTRONIC PUBLISHING AND SELF-PUBLISHING

 

The foregoing only applies to selling and re-selling paperback and hardback copies of books.  What if an author writes a book electronically and submits it to a publisher who publishes hard-back, paper-back and electronic books (ebooks)?  Or what if he submits his book to a publisher or self-publisher who publishes only electronic books?

 

How much does it cost to publish an ebook?  There are no material costs that involve paper or binding,   etc.  There are only the costs of the equipment necessary to convert the electronic manuscript to an ebook format (computer plus software).  There are no mailing costs unless the company chooses to advertise using paper mailers, etc.  Otherwise, “mailing costs” are equivalent to “emailing costs.”  But what does it cost to email an advertisement?   Nothing.   An ebook can be distributed by a “publisher” for very little cost. 

 

The problem lies not with the cost of creating and distributing an ebook but in marketing that ebook.  Distributing  an ebook is one thing; marketing it is another.  Distributing the ebook occurs electronically (i.e. a few key strokes), but accessing the market requires “outreach.”  How does an ebook “publisher” let people know that there is a book for sale, let alone that the book is worth reading?

 

Now we enter the realm of pure electronic “publishing”.  I put quotation marks around the word “publishing” because electronic “publishers” don’t really publish anything.  Rather, they offer ways to convert an electronic manuscript into an ebook format and ways to distribute the ebook to the public. 

 

For instance, Lulu.com will offer an author guidelines on how to create an electronic book and to convert that book to an ebook format for free (if the author can figure out all the electronic details him or herself) or for a $799 membership fee if the author needs help.  But then how does the author market his or her ebook?

 

The drawback to all this is marketing.  There now exists a growing market for book marketing on-line, whether the market includes printed books or ebooks or both.   How can an ebook “publisher” let people know about a book?  They usually don’t.   How can an author who chooses to convert his or her electronic manuscript into an ebook format let people know that his or her book exists and that it is worth their time and money to read?  He or she usually doesn’t know how to do this.

 

So herein lies the problem for authors:  marketing.  There exist some established on-line markets, like Amazon.com who will offer a “storefront” to authors (as mentioned above) and some advertising of certain books that achieve a lot of on-line traffic and merit an ad like:  “books also ordered by….”  But that’s about it.  Authors or a “publisher” has to generate on-line traffic or pay a growing number of on-line marketing companies to try to generate the traffic for them. 

 

On-line marketers develop strategies by which authors (or any business) can improve their marketability on-line by providing blogging and social media tracking and analytics, email marketing, and search engine optimization.    The author has to create a website.  The more hits or clicks the website receives, the more traffic it creates.  The more traffic it creates, the more people know that it (and the contents therein) exists.  The more people know about the website, the better chances of selling one’s wares. 

 

For example, HubSpot.com will charge $200/mo. for its basic marketing package targeting 100 contacts, $800/mo. for its professional package targeting 1,000 contacts, and $ 2,400/mo. for its advanced professional package targeting 10,000 contacts.  How much these contacts covert into actual sales is a big question mark.

 

And then there are the pirates out there waiting to see what books are generating on-line traffic, so they can steal it and offer it for free or for a membership fee to anyone who wants to download a copy.

 

So now that I’ve outlined the problem….I invite create solutions.

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