The 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:
- 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.
- Organize a book tour (at my own expense) to hit several big cities like New York and Chicago.
- Blog and tweet about it on countless occasions.
- 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.