Interview with The Man Monday night

Dungeon Crawlers Radio interviews The Man Monday, March 8th at 10:30 PM MTN. You can listen live or to the archive they’ll post to their site. All brought to you by UtahFM. Malak and Revan are great guys. I had a blast with them.

Cool facts on breaking in, advances, etc. for writers

New page on writing facts & figures in the On Writing section.

Novel update

CURSE OF A DARK GOD is moving along. You should see the progress bar move along quite a bit this week.

Initial Schedule for American Fork Arts Council Conference for Writers

This is a cheap day-long writers conference and looks like it’s going to be another great one.  I’ve highlighted what I’ll be doing in red. I’ll be making adjustments to the HOW TO WRITE A STORY THAT ROCKS presentation for things learned at LTUE.

Here’s their website. That night I’ll probably be attending the Whitney Awards Gala which is also being held down in Happy Valley, Utah.

DATE: Saturday April 24 2010

8-9 a.m. Registration
9-9:10 Welcome (Plenary)

KEYNOTES
9:10-9:40 Keynote #1 Ginger Churchill, “What I Wish I had Known as a Beginning Writer”
9:40-10:10 Keynote #2 Ally Condie, “My Journey to National Publication”
10:10-10:40 John D. Brown, “Aiming for National Publication”

INTRODUCTIONS of editors and authors
10:40-11:05 EDITORS: Derk Koldewyn, Granite NAME
AUTHORS: Caleb Warnock, Linda Jefferies, Shannon Guymon

11:05-11:20 15-minute break

11:20-noon BREAKOUT ONE
Upstairs room “Crafting the Novel” with Shannon Guymon, John D. Brown
Downstairs One “Finding and Working With an Agent” with Ginger Churchill, Ally Condie, Caleb Warnock
Downstairs Two “Taking Your Questions about Publishing” with Deseret Book and Granite Publishing

noon-1 LUNCH “Mix and Mingle with Authors and Editors”

1-1:40 BREAKOUT TWO
Conference One Derk Koldewyn of Deseret Book “What Deseret Book is looking for now”
Conference Two Ginger Churchill “How to Write and Publish Picture Books”
Upstairs room John Brown, “How to Write a Story That Rocks Part 1: First Principles & Story Concept”
Office room Caleb Warnock “10 Things Every Writer Should Know about Copyright”
Downstairs One Granite Publishing “What Granite is looking for now”
Downstairs Two Ally Condie “Writing Young Adult Fiction”

1:40-1:50 Ten-minute break

1:50-2:30 BREAKOUT THREE
Upstairs Room John Brown, “How to Write a Story That Rocks Part 2: Character”
Conference Two Ginger Churchill “Genres of Children’s Books, from Board Books to YA Novels”
Conference One Derk Koldewyn of Deseret Book “National Publication with Shadow Mountain”
Office room Caleb Warnock “How to Write the Query Letter”
Downstairs One Granite Publishing “Publishing Options with Granite”
Downstairs Two Shannon Guymon “How to Write Romance”

2:30-2:40 Ten-minute break

2:40-3:20 BREAKOUT FOUR
Upstairs Room John Brown, “How to Write a Story That Rocks Part 3: Plot”
Conference Two Ginger Churchill “How to be a Writer and a Mother Too”
Conference One Linda Jefferies “Writing Poetry”
Office room Caleb Warnock “Write a Synopsis? I’d Rather Gouge My Eyes Out!”
Downstairs One Ally Condie “Succeeding as an LDS author”
Downstairs Two Shannon Guymon “Writing Nonfiction”

3:20-3:30 Ten-minute break

3:30-4:10 BREAKOUT FIVE
Upstairs Room John Brown, “Writing Scenes: The Basic Units of a Novel”
Conference Two Ginger Churchill “Querying Agents and Publishers”
Conference One Linda Jefferies “Publishing Poetry”
Office room Caleb Warnock “Okay, You Were Rejected – Why, and What to Do Now”
Downstairs One “How to form a critique group that works”
Downstairs Two Shannon Guymon “Succeeding as an LDS Author”

4:10-4:20 PRIZE GIVEAWAYS, GOODBYE

REVISED (MAY CHANGE)

This is J. K. Rowling’s 2008 Harvard commencement speech, “The Fringe Benefits of Failure, and the Importance of Imagination.” It’s one of the best speeches I’ve ever heard. Watch and then watch again. Read the full text here.

Two quotes that in no way can do justice to the whole thing.

And so rock bottom became the solid foundation on which I rebuilt my life.

You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all – in which case, you fail by default.

. . . 

Though I personally will defend the value of bedtime stories to my last gasp, I have learned to value imagination in a much broader sense. Imagination is not only the uniquely human capacity to envision that which is not, and therefore the fount of all invention and innovation. In its arguably most transformative and revelatory capacity, it is the power that enables us to empathise with humans whose experiences we have never shared.

One of the greatest formative experiences of my life preceded Harry Potter, though it informed much of what I subsequently wrote in those books.

Folks, a huge thanks goes to Stephen Nelson for putting all this together. You may kiss his hand when you see him.

This is a recording of “How to Write a Story that Rocks,” a two-hour seminar Larry Correia and I just put on at the annual BYU’s Life, The Universe, & Everything symposium. I think we had 130-140 people attend. This symposium is focused on writing fiction. And while the panels and presentations do include things specific to the science fiction, horror, and fantasy genres (both adult and young adult), a lot of time is also spent on story writing fundamentals that apply to ALL genres. So when I developed this workshop, I made sure I took the fundamental approach.

The two-hour seminar has been broken down into 12 segments. To switch between the segments:

• Hover your mouse pointer over the YouTube below
• Click the forward and back arrows that appear on the right and left sides to move to the next or previous segment, OR 
• Scroll through all 12 segments and select the one you want using the playlist control at the bottom

If you prefer, you can watch all 12 on the How to Write a Story that Rocks YouTube playlist page.

I’ve found whenever I develop any presentation or training that it takes a few iterations and revisions before it’s the best it can be. This is the first iteration of this seminar. And so below this video I’ve provided additional comments on each segment explaining key concepts, principles, and techniques that we might have failed to discuss or convey as clearly as we’d hoped. Enjoy!

Handout

How to Write a Story That Rocks – Handout

Segment 1

It’s documented–right-wing gun nut Larry Correia sang “Kumbaya.” What’s next? The hugging of small trees? Oh, Larry, the disilluion. The disillusion.

The reason why I had Larry sing was not for his mellifluous performance, but to demonstrate the difference in reactions between him and our happy volunteer (“Country Road” by John Denver–this really was a love fest). The volunteer balked because he hadn’t taken any thought to know what to sing before he was commanded to do so. On the other hand, Larry and I had spoken before the seminar. So Larry had something to sing BEFORE he sang it. It’s a simple demonstration, but it illustrates a principle a lot of new writers forget. Writing is a performance. It helps to know what it is you’re going to perform before you perform it.

It’s one thing for you to tell yourself to write. It’s much easier to tell yourself to write the scene where the rancher finds out one of his illegal ranch hands has been kidnapped.

Now this doesn’t mean that you have to know everything. Or that you can’t write exploratory drafts to figure out what it is you want to write. But it does illustrate that whatever techniques you use, you’ll be a lot more effective in your writing when you have something to say first.

But what do you develop? What are the things that bring the story to life? How do you go about getting those things to say? That’s precisely what I wanted to address in the seminar. In the segments that follow, I try to:

1. Explain what I’ve found are the most important things to develop, the things that define the essence of story, that make the story come alive in the writer’s mind–the things that really matter
2. Demonstrate techniques to develop those things so you have something to say

Segment 2

I think this segment went fairly well. What rocks will different from person to person, even though there will often be a huge overlap between people. So it’s important for authors to seek to develop the kinds of stories that rouse their passion. Watch this interview with best seller Debbie Macomber to see what I mean. So I can’t tell you what to write about. Or if whath you think rocks will resonate with a large number of people. However, what I can do is share the techniques I use that have been most productive in helping me develop initial ideas into something that has much more power.

You can use the techniques to juice up any of the four parts of story. However, I will say that I find that the most productive, the most important parts, are character and problem. Plot and setting are important. I love them and work to juice them up. But when I get a good character and problem, that’s when the writing seems to flow the easiest.

And no, I don’t list theme as a part of story. Everyone talks about theme, but when I read what they have to say or press them for examples, it seems that it always either boils down to (1) a story element or topic that’s repeated, (2) a story problem/issue stated in an abstract manner, or (3) some moral situation. Les Miserables is about the “theme” of mercy versus justice. But saying justice versus mercy is just an abstraction of the story problem and dilemmas the story deals with. So, no theme. 

Segment 3

I’ll be adding my comments to the rest of these segments over the next few days.

Segment 4

Segment 5

Segment 6

Segment 7

Segment 8

Segment 9

Segment 10

Segment 11

Segment 12

Dan Wells on Story Structure

Check it out: Dan Wells on How to Build a Story (story structure). I find Dan’s “start with the ending” technique helpful as well as thinking about a worst fears realized moment. Watch the videos and see if there isn’t something there that can help you develop your story idea.

You can get the PowerPoint of How to Build a Story on Dan’s site.

If you find this approach useful, you might want to check out what novelist Larry Brooks has written about the same material on StoryFix.com.

I saw this today and thought of the assignments I give in my workshops. Look at what this hugely popular writer did to learn and focus her craft:

1. Knew what she liked and followed HER passions (she knew what rocked her).
2. Took 4 books she loved and broke them down to look for patterns she could use. This is exactly what Bernard Cornwell did (link at bottom).
3. Identified what it was she wanted to deliver to her readers. I believe her four words were “Provocative,” “Relevant,” “Creative,” and “Honest” (form follows function).
4. Notice also how much she loves plot turns (story cycle–surprise and conflict).

What a delightful interview. I’m going to pick up a Macomber and give her a go. Anyone have a recommendation on a title?

I had an absolute BLAST with Larry and the audience at LTUE. I think the workshop went very well for the first time. Of course, I’m going to make some tweaks. Paul Genesse had some interesting feedback and I’ll have to see if I can’t do more with character. Two hours is such a short period of time.

The good news for those who couldn’t attend is that we have a recording and will be posting probably next week. Everyone should thank Stephen Nelson!

We ran out of handouts. I printed 80. Then Mark Holt generously had 30 more printed. We still didn’t have enough. For those of you who didn’t get one or who want an electronic copy, here it is.

How to Write a Story That Rocks – Handout

Laura Miller at Salon.com has it all wrong when she says promoting books with movie-style trailers is a silly idea.

Here, watch this book trailer.

Yeah, I know you want to–go ahead, watch it again.

Miller looks at book trailers, sees that the vast majority of them are lame, lame, lame (actually, this is the FIRST I’ve seen that’s any good). Sees that they reach no markets and then concludes that all trailers are silly. It’s true: lame trailers ARE a waste of time and money. But ANY advertisement (print, video, audio, whatever) that’s lame is a waste of time and money. Making killer trailers that nobody sees is an even bigger waste of time and money. But that’s true of ANY killer advertisement that nobody sees.  

Look. I’ve never read Westerfield. Don’t know much about him or his books. But I saw that clip and now want to read that book. Hum, trailer worked for me. I AM a reptoid mutant, but I suspect there are others out there like me. I mean, come on. Good gravy, woman–”Do you oil your war machines? Or do you feed them?” Killer!

Movie trailers, book trailers–any advertisement–isn’t about delivering what the person is going to experience on the spot. If that were the case, then you’d never show a print ad of a meal at Olive Garden because it doesn’t deliver the goods right there on page 10 of Woman’s Day. Nope, all you’d do is go around giving out samples in places with Italian mood.

Miller’s error is not understanding the difference between making an offer and delivering on one. What an ad is supposed to do is make the offer. Let you know this thing is available. Because you’re not delivering the actual experience,  you can make the offer via all sorts of media. Now, if you can give them a taste, that’s great. But you don’t need to deliver the full deal right there.

So what do you need in an offer? You need the offer to say, “Hey, I’ll deliver this type of experience.” It needs to call to some action, either directly or by implication–”buy this” or “be here.” You also need it to say, “You can trust this will be worth it” and make the consumer believe that’s likely to be true. It communicates this last bit by being a quality piece of work.

Making an offer is exactly what book covers do–they make the offer and give the consumer a little taste. And book covers matter. This has been proven over and over. Just like most people, when I see a cool cover, I pick up the book and check it out. When I see a lame one, or one that offers something I’m not interested in, you’re going to have to threaten me to pick that book up. Or it better dang well have some righteous word of mouth. It’s that simple. We all judge books by their covers because the cover is making an offer. And lame offers don’t get very many takers.

Book trailers are nothing more than deluxe book covers. The cool thing about them is the cool thing about movie trailers–you can make the offer by providing a little taste. You do that by giving the audience the story situation, the pitch. You do it by communicating the feel of the experience and raising curiosity. You do it by making it a pro job. The good  ones make you laugh, say cool!, or raise curiosity and expectation.

And that Westerfield trailer does that.

Dang, “Do you oil your machines? Or do you feed them?”

Run that on TV. Run it on the radio. Put it up on sites where people are likely to see and click. Confirm it in print. Make the offer to real people. Get it infront of young readers. I’ll stake my eyebrows that ad can sell as many books as a good movie trailer can sell movie tickets.

Crimeny, now I want to be Scott Westerfield.

Edit, I lied

I have seen another book trailer that’s as good as Westerfield’s. Do you remember this: http://thesecret.tv/movie/trailer.html ?

Very effective advertising for the book. I think the content of the book is crap, but that trailer made me pick it up just to see what it was all about.

Do you notice that this one and the Westerfield one combine extreme professionalism AND they make the pitch in a clear and grabbing way? The pitch for both was what the book was about. For fiction it’s the concept. For non-fiction how to it’s the promise.

So many of the book trailers lack one or more of those things. For example, look at the book award finalist for THE FALLEN: http://www.youtube.com/watch?v=vsLE6bNaIrk. I don’t know what the heck the book is even about after a long 2 minutes. They’re trying to make a movie.

Something else. On both of these you have a voice over PITCHING the book to you just as someone might do it in person or to an editor. It’s a powerful method, I think.

Notice also how short the Westerfield one is. Just over a minute. Westerfield’s really is like a query pitch or cover copy–in just a few lines tell me what your story is about. We get genre, setting, character, and the story problem or concept.

Here’s what this brouhaha is all about

Amazon wants to try to replicate with digital books what Apple has done with digital music. So what has Apple done?

According to Cnet’s “iTunes reps 1 in every 4 songs“:

“iTunes-purchased songs now account for 25 percent of the overall music market–both physical and digital–in the U.S., says an NPD Group report released Tuesday.”

That may not seem like a market leader position, but in the comments one person pointed out the following.

“35% of the music sales are digital (there’s some conversion where 1 CD = 11 or 12 individual digital downloads). Apple owns 70% of the digital market. 70% of the 35% ~ 25%. So Apple has a 25% share of all music sales.”

Whoa, Nellie. That there’s what we call a cash cow. Moo-la, Baby, Moo-LA! And this becomes even more significant when you consider the fact that many think the digital part of music sales is only going to grow and grow.

According to the same set of data, TheStreet.com’s  ”iTunes, Wal-Mart Dominate Music Sales” reports:

Amazon accounts for only 8% of that market .

How did Apple get the head lock on such a huge portion of the digital market? It appears it has to do with the fact that Apple was first to market with a good MP3 player solution, linked that to its iTunes store, and then bundled the software in such a way as to drive and then keep people coming back to iTunes. Here are a couple of articles. I’m sure we could google dozens more.

• “iPod Rules MP3 Player Scene“: suggests it was Apple’s early start.
• PC World “Is Apple the New Microsoft?“: suggests it’s Apple’s bundling of iTunes with its easy-to-use devices.
• Fortune magazine’s “Amazon’s Kindle: Did Steve Jobs Blow It?” suggests that Apple’s focus on devices, versus Amazon’s focus on being a marketplace, is hugely profitable.

Amazon (and many others) are forecasting digital books to become a very large part of book sales. Amazon wants to be the big banana in that space. Well, it can’t be (drum roll) the big Apple now can it?

But what does this have to do with publishers?

Big Banana’s Problem

Amazon cannot become the big banana if nobody buys its stuff because consumers feel it’s priced too high.

So why don’t they just price it low?

Ah, there’s the peel.

In this new proposed arrangement, Amazon cedes a huge portion of its pricing control to the publisher.

But Apple’s doing that with its iPad.

It is. However, Apple already has a model and ability to sell. I think Amazon wants to make sure it keeps the low-price position because this is one of the key reasons people go to Amazon. Amazon pulls online book customers in because (listed in what I estimate is importance):

1. The new books are usually cheaper and if you really want a low price you can buy them used
2. Amazon provide long tail stock (what book can’t you get out there?)
3. It’s easy to type in a title and find out more info about the book (first chapters, user ratings, etc.)
4. Completing the sales transaction is a snap 

I’m assuming Amazon is worried that if it allows publishers to price their ebooks higher, then they lose one of their MAIN draws. And therefore their ability to become Big Banana.

The Existing Supply Chain Model

Right now you have these distribution or supply chains:

• Publisher  –> Wholesaler  –> Retailer –> Consumer
• Publisher  –> Retailer –> Consumer
• Publisher  –> Consumer

All of them exist side-by-side. For example, Scholastic will sell books via a Barnes & Noble retailer, but they’ll also sell direct via their school book program. You can get SERVANT at Barnes & Noble or you can get it directly from Macmillan here.

Why have the middlemen?

Because middlemen bring the cost of purchasing a book WAY down. Some people don’t think that. All they see is that the retailer buys the book wholesale and then jacks up the price.

But imagine there were no Wal-Marts, Smith’s grocery, or any other kinds of stores. As a consumer you would have to go to farmer Bill for milk, travel 10 miles to farmer Jane for corn, travel another 10 miles to farmer gill for eggs, and on and on and on for the hundreds and thousands of different products we buy. Furthermore, because middlemen bring the products all together each producer has more incentive to compete on quality, value, and price.

Middlemen SAVE consumers huge amounts of time and money. That’s why we’ll always have them with us even though producers may still sell direct at the same time.  And that’s why we’re willing to pay the little bit they ask for what they do.

Price/Volume/Profit Control

There are two keys to making all of this middlemen business work.

First, usually only the two parties involved in any transaction control the terms of that transaction. So the publisher and wholesaler agree on a price for their transaction. The wholesaler than makes a separate agreement with the retailer. Finally, the retailer is free to make a separate agreement with the consumer. In each transaction the seller gets to control price, cut deals for high volume purchases, and, therefore control its profit.

In all cases you negotiate a price/volume mix that’s good for both parties. Sometimes this includes a flat price. Sometimes it includes price deductions for larger volumes.  But in all cases it gives the producer something to count on. If a customer wants a lot of product, great, we’ll sell it to you for X price and make Z profit. If you want less, fine, we’ll sell it for Y and make Q profit.

Second, wholesalers and retailers want to control costs. They need to be able to turn around and sell your product for some profit. If you sell your stuff to someone else for a humongous discount, then that allows their competitor to charge less and potentially shift volume to them. So buyers will often try to get commitments that you aren’t going to screw them somewhere else. And sellers who value long-term relationships are willing to make such commitments.

So here’s business as it is today. A retail bookseller (Amazon, B&N, etc.) pays a fixed wholesale price for the book to the publisher. The bookseller might negotiate wholesale price breaks at different quantity levels with the publisher, but that’s a wholesale price/volume agreement that ensures certain profit levels for the publisher. As for the retailer, they maintain a different price/volume/profit control on their end with the consumers, fiddling with volume/price mixes that make sense to them. In this situation BOTH the publisher and the retailer maintain price/volume/profit control.

What do you want to be–the Marketplace or the Seller?

But this new percent-of-retail scheme decouples price from volume and forces the publisher or retailer to lose control of profit. Either Amazon or the publisher has to GIVE UP price/volume/profit control with their set of buyers.

If Amazon gets control, then it can set the retail price however it wants REGARDLESS of volume. In this situation, because wholesale price is pegged to retail price via the %, this means Amazon would dictate the wholesale price to the publisher without any regard to volume. This takes price/volume/profit control away from the publishers, putting them at the mercy of the retailer’s whims.

Scary, a total shift in the way they’re doing business. Publishers would have to budget for the worst case scenario–the lowest the retailer might charge.

However, that’s NOT what happened. In this current deal Amazon ceded its control to Macmillan, saying, okay publisher YOU set the price for my customers. This isn’t foreign to Amazon. They do this right now with used book sellers. Those folks set their own price and Amazon acts as the market place. And once Amazon says ”we’re the marketplace, not the seller” then they step right out of the “hey, you’re charging too much” equation. So nobody would yell at Amazon for this move. Well, some folks would, but they’d soon figure it out. For example, nobody yells at Amazon now when used book vendors want to charge $99 for a trashy paperback. Everyone gets that Amazon is just the marketplace just as they get that Ebay is the market place.

However, in this case Amazon did want to retain some control. They said, let’s set a range of prices that are acceptable. You can charge $5.99 to $9.99 but no more or less. This would allow the publisher to sell a book for more money when it’s initially released and gradually drop the price as time goes on until we get the bargain basement price of the remainder tables. The articles I linked to in the original blog discuss this common selling practice.

Macmillan said, the miminum is great, but we actually want to start higher–$14.99.

Amazon said, no way, Dude. And the battle was on.

Magic $9.99?

But why? Why did Amazon insist on that maximum? Why not just do what they already do with used book sellers and step away completely from controlling price? Wouldn’t they WANT to make more money with higher prices anyway?

Again, price directly affects volume sold which affects profit. But in this case, it’s not as much about profit but volume and market share.

The only reason that makes sense to me is what I discussed at the beginning of the article–Amazon wants to dominate the digital book space as Apples does iTunes, and they feel the must keep prices low to continue to get people coming to their Kindle store and growing their customer base.  They’re hoping to spank the competition in this segment by being big first and getting all the volume–it’s the old five yards and a cloud of dust.

Big Banana. Kind of like Wal-Mart is in its segment. Kind of like Microsoft is in theirs. Kind of like Apple is with digital music.

And they obviously think $9.99 is the magic number to keep the customers pouring into their Kindle e-book world.

ebooks cost nothing and my grandma plays in the NBA

Isn’t $9.99 a good price for the publisher? I mean, heck, ebooks don’t use any paper, so they cost next to nothing to make, right?

Um, no.

The answer’s “no” because paper is only a part of the cost. And I’m not talking about the cost of the person who takes the Word document and converts it into PDF or Kindle or whatever the ebook format is. My kid could do that for twenty bucks.

Every product is a mix of fixed costs that don’t change with the volume you produce and variable costs which do vary. Rent, electricity, buildings, equipment, editorial, art, design, author advances, marketing, etc.–all these things can be fixed costs. It doesn’t matter if you make one book or one million. You still have the same rent, same fixed cost for artwork, same cost for editors.  

So how big are those fixed costs? Based on the blogs I linked to in the original article (and if I read them correctly), the fixed costs are estimated somewhere between $7,000 and $20,000 per book. But those numbers aren’t hard numbers. For example, books that have bigger author royalities and bigger marketing budgets are going to cost more. Furthermore, because those numbers don’t have any details backing them up, I’m leery of trusting them.

But we can look at something that is public knowledge to see how this works. For example, Stephenie Meyer got $750,000 for Twilight. Most authors do NOT get that. Most get a $5,000 – $7,000 advance per book. Still it shows the fixed costs can be quite large. Meyer’s advance was a huge fixed cost that needed to be covered by each book her publisher sold.

If they sold only one book, they’d have to have charged $750,000 for it just to cover that one cost. Do you know anyone willing to pay that for a book? No. So they priced it, hoping to sell thousands. If they were to sell 750,000 copies, then that advance only cost $1 per copy. If they were to sell 1.5 million copies, then it would be .50 cents per book. The more books they sell, the smaller the fixed cost per book. Of course, that’s just one fixed  cost! You need to add all the others in (marketing must have been very large as well). Furthermore, Meyer is THE best seller. The vast majority of authors don’t sell anything that comes close. Yes, they have smaller advances and marketing budgets. But you get the idea–fixed costs matter!

So all these people saying that since no paper is involved ebooks should cost nothing are ignoring fixed costs. In fact, according to some sources, printing, paper, and shipping only account for 10-20% of the cost of most books. I don’t know if that’s an average at all volume levels. Again, there was nothing to back up those claims. But if it’s accurate, you can see the arguments demanding ebooks be sold for next to nothing become silly at best.

The fact is that the publisher needs to cover those fixed costs. If you were the publisher, how would you do it? Would you price hardbacks to cover fixed + variable + profit? And then price paperbacks and ebooks at variable + profit? Probably not. Hardbacks are already pushing the price limits for consumers. I think you’d want to spread those fixed costs around. If anything, you might try to cover a higher portion of the fixed costs with the paperback and ebooks.

My inner accountant is screaming for real data to crunch and display in a spreadsheet, but I don’t have any actual actual price/volume/profit matrices. What I can say is that paper has NEVER been the only cost. For midlist authors I suspect it’s probably the smaller portion of the cost of each indivudal book. Publishers must price the books and move the necessary volume to cover fixed costs + variable costs + some profit. And so it’s only reasonable to expect that ebooks be priced to do that.

What’s the best for you, dear reader?

I don’t know which specific potential leader will end up providing better prices, reading devices, services, etc. in the long run. Is that Amazon, Apple, Barnes & Noble? A whole bunch of retailers? Who knows?

What I do know is that it’s good to have a number of companies competing for the customer’s dollars. My vote is with having lots of retailers. If Amazon can sell a significantly larger number of ebooks with their pricing, then publishers, authors, and readers all win. If they can’t, then it becomes a win-lose.  And the publishers and authors will be on the lookout for a way to improve the situation by seeking out other distribution channels.

Edit for Macmillan Announcement

2/4/2010 4:05 PM

It appears Macmillan and Amazon have come to an agreement.

Notice Macmillan CEO claims this new agreement will result in them making LESS money than they do with ebooks currently. But it provides a reliable and rational market. I think what he’s saying is that this allows publishers more predictability, even if it comes at a price.

From what I understand Amazon currently pays 50% of suggested retail price for an ebook. The publisher sets the SRP (you see it on the book often), but Amazon has full control to charge whatever it wants to the customer. Here are the numbers for SERVANT.

• SRP = $25.99
• Amazon pays the publisher 50% of $25.99 = $13 for each copy of SERVANT they sell
• If they sell it for $9.99 they lose $9.99 – $13 = $(3.01) per book
• If they sell for $14 (about what they’ve been listing it for, the make $14 – $13 = $1 per book

Under the new deal the publiser sets the SRP and the consumer price. On each sale Amazon gets 30%, the publisher 70%. Here are the number for SERVANT under this scenario.

• SRP = $25.99
• Publisher sells ebook for $14
• Amazon pays the publisher nothing until the sale.
• Amazon earns $14 x 30% = $4.2. This is MORE than they are making under the current system.
• Publisher earns $14 x 70% = $9.8. This means the publisher earns $(3.20) less, just as claimed, under the system they WANTED versus the existing method

So why earn less? As Macmillan says in the announcement above, they’re willing to take less to have a more rational and stable market for ebooks

Over the last few years we have been deeply concerned about the pricing of electronic books. That pricing, combined with the traditional business model we were using, was creating a market that we believe was fundamentally unbalanced. In the last three weeks, from a standing start we have moved to a new business model. We will make less money on the sale of e books, but we will have a stable and rational market. To repeat myself from last Sunday’ s letter, we will now have a business model that will ensure our intellectual property will be available digitally through many channels, at a price that is both fair to the consumer and that allows those who create and publish it to be fairly compensated.

We have also started discussions with all our other partners in the digital book world. While there is still lots of work to be done, they have all agreed to move to the agency model.

So this is how all ebooks will work with Macmillan going forward. I’m betting most or all the other publishers will follow suit.

I think this is good news for readers, publishers, and retailers. Readers get it for less than hardcover. It will be at the higher end of the range settled with Amazon (I think it was $5.99 – $14.99) unless the publisher decides to run discounts as they do with many blockbusters now in hardback. But the price will drop as time goes on. I imagine when they release the paperback for a book, they’ll have to drop it for certain. And when books go to the remainder tables, they’ll drop again. I can see old ebooks or promotions costing $5.99 – $9.99, new ones $14.00.

BTW, the standard now for many authors is to be paid 15% royalty of the SRP on ebooks up to a maximum of 40-50% of the net amount publishers get from the retailer (btw, contracts stipulate different royalty rates for ebooks, hardback, mass market, etc.). Something the industry is considering, as mentioned in Sargent’s letter, is setting a % rate of the amount received by Macmillan from Amazon. So instead of paying authors 15% royalty on the SRP, new contracts will likely pay authors 20 -25% of the 70% the publisher receives as royalty. You can do the math. It’s very clear this new deal doesn’t earn the author more per book. 

Hopefully, then, we’ll simply sell a heck of a lot more copies. One glitch in all this is the fact that publishers haven’t really been setting prices with consumers. That’s been the retailer’s job. And so they’ll probably have a learning curve trying to get the prices right in the beginning. Or maybe not. We’ll have to see.

Edit to answer Jason_Young @ 2

2/5/2010

Your point is, hey, if they have three products (hardback, paperback, and ebook) to spread the fixed costs across, then should that allow them to drop the price of all three products? $100 / 2 = $50. $100 / 3 = $33.3. Have I got the question right?

FIXED COSTS AND VOLUME

If so, then the answer is it all depends on the relationship between volume and fixed costs. It always depends on that relationship. In fact, that 20% figure may or may not be accurate because . . . it all depends on volume and fixed costs. Both of which can change.

Let’s take a totally FABRICATED and SIMPLIFIED situation to see how it works.

Fixed costs: $10,000
Variable costs hardback (paper, printing, binding, etc.): $3

Cost per book by volume printed.
Printed / Cost per Book / Variable as %
1 / $10,003 / 0.03%
1,000 / $1,003 / 0.3%
5,000 / $5 / 60%
10,000 / $4 / 75%
20,000 / $3.50 / 86%
50,000 / $3.20 / 94%

Now remember: printing has fixed and variable costs as well. But I’m going to say the printing’s all variable to keep this manageable. And that you sell every book you print (something that never happens). The thing to see here is that when you keep fixed costs constant and increase the volume printed, then the fixed cost amount and % per book goes down. Conversely, variable costs become a larger and larger portion of each unit’s cost. Remember, however, that often fixed costs go up when you plan on printing significatly more books (Twilight etc.) But given a set budget for a book, you want to sell as much as you can.

VARIABLES CHANGE

So your argument is that when ebooks come along, the fixed costs have already been covered by the hardbacks and papers, cause they’re all still priced the same and the variable and fixed costs haven’t gone up that much since two or three years ago.

Here’s some of the assumptions you’ve made that might be false:

1. Fixed and variable costs haven’t gone up
2. Publishers are selling the same number of copies per book as they were in the past
3. Ebooks aren’t cannibalizing sales of hardcopies

The truth may be that costs have gone up and that books aren’t selling as many copies in their various formats as they used to. But even if both of things have not happened, why should we suppose that ebooks don’t cannibalize hardcopy sales, dropping the volumes and, therefore, increasing the cost per hardcopy? Or that they won’t cannibalize even more in the future as ebook readers become better and better.

On the revenue end, you’re also assuming publishers are selling books for the same prices they were in the past. SRP may be high, but have you noticed the prices on new books on Amazon and other outlets? My $25.99 SRP book came out and sold for $17. It sold for $15 and change before release! And I’m not a big name they’re trying to drive volume to. This is newbie no-name they’re having to discount.

What I expect has happened over the last five years is this. Costs have risen. Hardbacks are already pushing the limits on price. Furthermore, sellers and consumers are asking for more and more discounts. Paperbacks still haven’t crossed the $9.99, but there’s still pressure to keep them low. Ebooks are adding revenue, but a significant portion of that comes at the expense of hardcopies. So it changes the mix of products sold. It doesn’t simply open up a whole new stream of untapped cash. Because of this, ebooks allow the publisher another method to earn profit that’s getting squeezed away.

PRODUCT MIXES AND CONTRIBUTION MARGINS

The best way to look at this is to look at the cost in two ways. One way is to allocate fixed costs and get a price per unit. But if you look at it only that way, you can make a number of bad judgments on the value or price of a product. This happens because of that relationship between fixed costs and volume. So you also want to look at the contribution margin of each product. And, in fact, this is a better way of judging the profitability of an item.

In this method you lump all the fixed costs together and then examine each unit of the different products (hard, soft, ebook) only by its variable cost versus revenue to see if each unit sold is contributing something above its variable cost towards the fixed costs. Then you estimate the volume you expect (hope) to sell at given prices and try to price them all in a way that will move enough volume of each type of product to cover fixed costs and provide some profit.

So you don’t consider each product type individually. You look at the MIX of product and the MIX of contribution margins. And you work it so that together the MIX of products covers costs and earns you a profit. And gets enough volume to keep your author a going concern, growing his numbers so he becomes more profitable as time goes on.

Edit for Modesitt’s insight

2/6/2010

Please check out this blog by L.E. Modesitt, Jr. “Why Amazon and Some Readers are Wrong”

Second, what’s been overlooked is the fact that a tremendous number of book titles actually lose money. Depending on the publisher and the year, that can range from as little as 30% of all titles published to more than 60%. That means that successful books not only have to cover their own production costs but the losses from unsuccessful books if the publisher is to remain in business.

Third, hardcover sales of successful books effectively subsidize paperbacks or less successful books. Ten-dollar Kindle books would have created price pressures that would either reduce the sales of hardcovers or replace them with e-books, and as more adaptable e-book reading devices become available, that would reduce overall revenues even more than would $15 e-books. This, in turn, would reduce the ability of publishers to try “new” authors and approaches, and would likely result in more “mass” entertainment and less diversity in a field that is already having trouble publishing books for limited audiences.

Just in case you didn’t connect it to the discussion above. A HUGE cost that needs to be covered by the contribution margins of the successful books are the fixed AND variable costs of each book that fails to contribute enough segment margin (the contribution margin of a segment of your business, in this case a book in its various formats) to pay for itself.  Look at Modesitt’s percentages of books that lose the publisher money. Think about that. For the publisher to continue to bring in new authors who might not sell well in the beginning but have great potential in the long run to sell well, they have to cover the “start up” costs of those authors.

He makes a lot of other important points. It’s a good read.  And it all plugs into the fixed costs, volume, price, contribution margin equations.

Folks, the first tentative schedule for Life, The Universe, & Everything (LTUE) has been set. For the past few years I’ve been teaching a 2-3 hour workshop called “The 3 Things You Must Learn To Write Killer Stories.” I think I must have taught it over 15 times in different venues. Hundreds have attended and said they loved it.

However, this year I’m going to be doing something different. I’m developing a new two-hour workshop called “How to Write a Story that Rocks.”

I’ll be teaching it Thursday evening, February 11th from 5 PM – 7 PM at LTUE at BYU. It’s FREE and open to all.

What I found was that a lot of new aspiring authors get lost in mountains of rules. But great storytelling isn’t about rules. They try to form stories with word counts, chapters, and weird plot diagrams. But stories aren’t about those things. They have a hard time knowing what to write next because they don’t understand how story works. In fact, some don’t know how to start at all. They just flounder in their piles of zing. Finally, even if they can get a bullet outline, they have a hard time turning that into a scene.

So what we’re going to do in this workshop is this.

1. I’m going to bring in some ideas for character, setting, and problem. We’re not going to generate from scratch as we’ve done in the past because I want to get to the next steps.
2. Then I’m going to teach you how to go from idea to outline–we’re going to do it together, and you’re going to learn exactly how to know what comes next 
3. Then we’ll go from outline step to scene sketch.
4. Then from scene sketch to draft.
5. At every step I’ll be pointing out key story development concepts and principles

When we finish, you should be able to:

1. Identify the essential story objectives and story development questions–get these right and the rest doesn’t really matter. This will include the HANDFUL of key things you need to worry about and develop with character and plot.
2. Develop more likeable and interesting characters
3. Develop more powerful story concepts (call it premise, problem, situation, whatever). Once you get this the story writes a lot of itself.
4. Explain the real Story Cycle. Not Campbell’s mumbo-jumbo hero’s journey. Not the three, five, seven, nine acts. Not Freytag’s diagram. Story.
5. Explain what it means to “move a story forward,” “increase the stakes and tension,” ”complicate the plot,” “complicate the motive” and how that’s done using surprise, conflict, motive, and problem. Included in this are “turns,” “rugpulls,” and “reversals.”
6. Use the Story Cycle concepts to generate a story bullet outline and take a bullet step idea and turn it into a scene.
7. Explain the creative principles that help you generate stories more easily.

Larry Correia will be there as well. So I’m expecting this to be a very helpful workshop. I’m going to do all I can to make it as good or better than the first.

Here’s the third episode I recorded with the Writing Excuses guys.

In the first podcast we talked about putting and not putting ourselves in our writing and making characters who don’t all sound like the author. In the second, we talked about how to not repeat yourself as an author. In this one, I shared some basics about generating emotion in readers and dealing with negative emotions writers face when they encounter rejection, compare their career with others, hit writer’s block, or hear someone didn’t like their story.

As usual, the guys had some great insights. Check it out: Emotion in Fiction.

Laughs are lovely. I just came across this wonderful parody by novelist Jim C. Hines which will give you a few for free. Enjoy!

Slush I Read
by Jim C. Hines

(Apologies to Seuss)

I read slush.
Slush I read.

That slush I read.
That slush I read!
I do not like that slush I read.

Do you like fanfic with vamps?

I do not like them Mary Sue.
Why do these vamps all worship you?

Here’s a tale from D & D!

I do not want your D & D.
I do not like your elf PC.
I can not stand your purple prose.
I want to punch you in the nose!

Would you like a hot sex scene?
I wrote it for my online ‘zine!

Go to Hines’ site and read the rest right now

Here’s the second episode I recorded with the Writing Excuses guys.

In the first podcast we talked about putting and not putting ourselves in our writing and making characters who don’t all sound like the author. In this one, we talked about how to not repeat ourselves in ways that make the reader feel like they’re getting the same old same old.

As usual, the guys had some great insights. Check it out: How to Not Repeat Yourself.

Back in May I wrote about a Gallup survey that shed some light on how US adults select books to read. That poll revealed that book reviews only play a role 7% of the time with readers. The most important things to readers are prior experience with an author and recommendations from someone they know.

But there’s another important block of buyers that don’t buy the same way. In fact, for them reviews are KING.

Who are these buyers?

Public libraries.

And the library market isn’t small. According to  a fascinating Library Journal article, “there are more than 9,000 in the US, and that’s not counting branches.” Furthermore, “library purchases account for over ten percent of the $27 billion industry (excluding print textbooks for K–12 and higher ed). In contrast to consumer buying, which relies on discretionary dollars, the library market remains a consistent sales channel for publishers.”

When looking at how many books average authors sell and what it takes to make a living writing, it becomes very apparent that libraries can have a huge effect on a midlist writer’s career.

Of course, we all know there’s more to it than sales. The article points out:

Libraries are far more than a market, however. Libraries create readers. They are the test bed, the petri dish for books, a place where people can discover a passion for reading as children and indulge it as adults and where passionate readers can sample new authors. Librarians are the ultimate handsellers of books (though they call it readers’ advisory), and increasingly they put their considerable technical skills into making library web sites rich interactive social networks for book lovers.

I love libraries for this very reason. And because there’s no way I could purchase all the books I read. No way in heck. So how do they find the books for their collections? I mentioned above that they used reviews. But I didn’t know how much until I saw the data. Holy schnitzel (click on the graphic to see it full size).

.

This only makes sense. Study after study has shown that buyers don’t want unlimited choice. Readers use prior experience and recommendations from people they know to manage the chaos. Libraries use reviews and then patron recommendations. Of course, this use of reviews has other implications as shown below.

I get a lot of requests from self-published authors asking me to buy their books, and I have to explain that with limited resources and only so much space on the shelves, we have to go with books that are reviewed, that have been professionally edited. With nearly half a million books published each year—maybe half of them self-published, and most of those pretty awful—I just don’t have time to go beyond trusted sources. This usually doesn’t go over well.

About 9 months ago I wrote about how cumulative advantage can drive product popularity–products that get early positive notice tend to get more notice. It appears that cumulative advantage is at work again. It’s just that with libraries the method isn’t a download counter. The article’s author concludes, “the best way to reach the library market is indirectly: by publishing books that people want to read and having them assessed objectively in reviews.”

So what are the major sources for pre-publication book reviews? The article lists five big ones:

• Booklist
• Kirkus Reviews
• Library Journal
• Publishers Weekly
• School Library Journal

But what can an author do with this information? Authors can’t control reviews. Heck, according to the article the Library Journal itself only reviews about 10% of the books they receive.

We all know the answer. Authors can control one thing: they can strive to write the best holy freaking heck book in their power. After all, what’s a review but a recommendation? Besides, patron recommendations were #3 on the librians’ list anyway. Nevertheless, it DOES help to have a publisher who sends your book out to the reviewers and their catalogs out to libraries. It helps to have a team that’s connected with librarians.

The article ends by saying publishers and libraries are actually working together. I liked how the author summed it up.

What publishers offer:

• Discovery of talent
• Shaping and refining books
• Design, distribution, marketing, and promotion

 What librarians offer:

• Discovery of books
• Nurturing of diverse reading communities
• Selection, distribution, marketing, and promotion

Here’s to libraries! (And good reviews. And grandmas. And the little house trolls that give writers fabulous ideas.)

Luc Reid is the author of, among other things, Talk the Talk: The Slang of 65 American Subcultures.  He is also the lizard king of Codex, which he started and of which I’m so happy to be a member. He’s always starting provocative threads on Codex, making us all think and reexamine the principles of story and the whole writing business. He recently posted some insights about what makes memorable stories. A lot of other fellow Codexians joined in the discussion. Happily, he asked me to share some of my thoughts on his site, ReidWrite. They begin as follows:

YOU’RE MINE, DEAR READER

 Mwuhahaha.

 Okay, maybe not. But you are wired to be mine. And you wouldn’t have it any other way.

Let’s back up. Luc wrote about writing memorable. I agree with the idea that the stories that produce a strong emotional reaction are the most memorable. In fact, I believe that triggering of emotion is THE reason why linear narrative that puts us into the trance has lasted so long in so many forms and makes so much money.

But can writers guide reader emotions? Or is it all just by accident?

Read the rest here: http://reidwrite.livejournal.com/8331.html.

BTW, when you’ve finished that, you might want to check out Luc’s new site, WillpowerEngine.com. It’s a place where he shares what he’s found in his research for his current book project, The Willpower Engine, on how self-motivation works. I think you’ll find a number of the posts there very interesting.

A while ago the Writing Excuses team asked me to record with them, and last Friday I got to do it and had a blast.

We recorded three episodes. In the first podcast we talk about putting and not putting ourselves in our writing and making characters who don’t all sound like the author. As usual, the guys had some great insights. Check it out: The Anti-Mary Sue Episode.

I posted earlier about the sales number for best-selling authors. What about the average author?

Here’s Patrick Nielsen Hayden, an editor at Tor Books, in an interview on io9.com about the future effects of e-text on publishing:

io9: Does it make a difference to you if an author has an online reputation? Does that go into your decisions to acquire books?

PNH: Obviously it makes a difference if an author has a public online profile of some sort, even just down to the level of having a moderately popular blog. Most books sell 5, 10, or 15 thousand copies. Most are midlist books. With those people, even a modest online presence can make a difference in sales.

The whole interview is interesting. In fact, he says something that I think is important to note about what today’s novelists and, to a lesser degree, short story writers are actually providing:

One thing I’m sure of is that we’re [Tor Books] going to be in linear immersive narratives that produce the reading trance. We won’t be moving towards a “choose your own adventure” thing. People will do those things, but those are different art forms. There’s something about immersive text that you can read in order – it’s persisted through many technological changes. This fiction stuff works pretty well. It’s been around a long time

I think he’s right. The EXPERIENCE you get in the reader’s trance, similar to the one you get in a movie, is a strong experience. The media used to convey that experience doesn’t really matter as long as it makes it easy to get into the trance.

Check out the whole interview.