Business Model For Publishing And Selling Ebooks

I think I promised a couple weeks ago to write more about ebooks, and it turns out to be a timely subject for me. Ebooks, despite robust growth, have remained the poor relation of print and audio books. For the record, when I talk about ebooks, I really mean any document of length that is published electronically. Whether it's a PDF, an HTML file, a Word file or some special format for a proprietary hardware reader makes no difference. I've seen a lot of ebook publishing efforts founder on the rocks because the publishers tied themselves to a particular format or piece of hardware that never won meaningful market share. I'm going to narrow down today's discussion a little further by limiting it to ebooks that are intended to be read on computers. While I'm aware that five of the top ten bestselling novels in Japan last year were initially published as cell phone texts, the troubleshooting book I'm planning to release as an ebook in a couple weeks is locked into a reasonable display size by the full-page flowcharts.

Having settled on the universal PDF format for publication, the remaining questions are limited to Digital Rights Management (DRM) and the selling platform. Foner Books has sold ebook versions of our paper books since 2004, and during the years they were carried by Amazon, our average net was $500 per month. That sales level, a little less than two copies a day, was enough to keep two of the ebooks pretty steadily in the top 100 on Amazon, which said something about their overall ebook volume. Those ebooks were sold with Adobe DRM that was intended to prevent copying and which limited printing to a few copies a year. However, there were occasional problems with that DRM, and I gave away more than a couple books by way of compensation. These issues were most famously documented by J. Wynia who described the ebook version of my book about Print on Demand as "filet mignon served up on a dirty garbage can lid". I tried to talk him into my point of view as a publisher, but I thought his views were valid then and I'm even more inclined to follow them now.

There's also a world of difference between shovelware ebooks, collections of whatever stuck together and shoveled out by anybody with an efficient sales platform, and ebook versions of printed books. I've noted that proponents of various "free" and "trust" based business models often have a salaried job. When a full-time self publisher commits a year of time and resources to publishing a new book, the gamble of trusting to the good side of human nature carries a potential loss exceeding that of pie-in-the-face. My current inclination is to publish the ebook with no traditional DRM, no copy protection or limitations on printing, but to restrict editing (not that the restriction can't be easily cracked). The editing restriction should at least remind people that that in purchasing or licensing the ebook (I'll have to ask my lawyer about which wording to choose) they aren't buying the right to freely reuse the text. I also plan to create some sort of purchase agreement or EULA describing the rights the purchaser is receiving, namely the rights to read and print the ebook for their personal use. If I find somebody selling my ebook on Ebay in the theory that having paid for it, they can now sell it second hand, I'll pursue them to the gates of Hell. The reason second hand ebooks don't "work" in the publishing sense is that there is no reduction of intrinsic value as they are passed along. They don't wear out, and without DRM, there's nothing to prevent the "prior" owner from retaining a copy.

Selling ebooks is a different challenge. I have the platform in place, my website, but I don't have a delivery mechanism in place, beyond accepting payment with PayPal and emailing a PDF as an attachment. I could do this initially, but I don't work on the Sabbath and don't want to force Friday evening buyers to sit on their hands all Saturday staring at a broken laptop they might have managed to repair, so I plan to set up an instant delivery system. I looked at some of the existing ebook delivery platforms, such as PayLoadz and Clickbank, but the former seemed limited to PayPal and the latter's focus was on building affiliate relationships. While building a bulletproof fulfillment platform would be a major investment, as long as I'm working on the trust system, all I really need is a way to accept payments and deliver the PDF file. If the transaction fails in rare cases (ie, I get the money but they don't get the ebook) it will be easy to remedy by email.

An interesting question, if ebook sales go well, is how that will affect my business model for the future. The intention all along has been to publish the book through the on-demand services of Lightning Source, though I've vacillated on whether to go with the 55% trade discount and try for store shelving, or go with a short discount and maximize the net per copy. If ebook sales go nowhere, I think I'll be inclined to do the trade discount and attempt to get on store shelves, because my investment in this book exceeds anything I've done since spending three years translating my great-grandmother's Hebrew publications. But if ebook sales are strong, I may stick with the short discount, or put the profits into an offset run and hook up with a distributor or wholesaler. I'd also sit down and look at the business model for my current titles, and consider re-releasing ebook versions without DRM and sold directly through my website. I'd be happy to hear from any ebook publishers with recent experience in DRM free business model.


JJ said...

Just three thoughts, Morris:

1. "I'll pursue them to the gates of Hell" - I hope your Chinese is up to scratch.

2. Is an editing restriction sufficient for you to retain your rights under the DMCA? Frankly, I don't know.

3. Is it reasonable to assume that e-books should be cheap? Why not make them more expensive than the physical copy, but with a site license? It's universities and libraries which can make the most of the potential of e-books anyway.

Morris Rosenthal said...


1) Don't know why you're picking on the Chinese. I'd guess that file sharing of unprotected documents is evenly spread around the world, including my backyard. And it's really my backyard that I'm worried about, and all I can legitimately worry about.

2) The DMCA protection includes management information, such as copyright notification. Copyright protection is inherant with creation under international treaty, with or without the DMCA. In any case, there are no police to enforce intellectual property laws, it takes lawyers.

3) Don't get your third question at all. Ebooks are generally cheaper for two reasons. Theres no physical cost in the production after the first one and they have to be cheaper to attract customers. Licensing has nothing to do with cost that I'm aware of, nor does issuing a site license to an individual have any benefit to the individual, or protect the publisher. And I've never heard it asserted that universities and libraries can make the most out of ebooks, I certainly don't share that view.

But you may be publishing in a completely different field, and everybody sees these things in their own context.


topfunky said...

I've published ebooks exclusively as my fulltime employment for the last year (plus 9 months before that part-time). I don't use any DRM and I sell from a website that I built from scratch.

My market is computer programmers, who already see ebooks as being valuable for their portability and searchability.

If you have quality content, people will buy it. I know that some of my content is being distributed on peer-to-peer networks, but many people learn about it through those channels and come to the site to buy a legitimate copy.

I'm thinking about printing short runs on paper (the books are 60-100 pages long), but ebooks are the majority of my business right now.

Morris Rosenthal said...


Thanks for the comment. Belive it or not, I forgot about the whole searchability function, and was trying to figure out if I needed to add an extended index for the ebook verison:-)