Fixing the Pig Book Model

MCMMonday, March 2, 2009

This post somewhat depends on my breakdown of the Pig book, but you can read it independently too. I'll be covering some ideas that should make sense either way.

I realize that many blogs have posts about how to improve your business online with five easy steps or whatnot, but I'm not going to pretend to have the answers here. This is a work-in-progress where I'm trying to find the right balance to make my book-selling business work. I've given myself a tough schedule and a lot of flexibility in terms of goals (breaking even is a bonus). When it's all done, I'll be packaging it up into a free resource for others to use as they build their own companies.

If nothing else, you can learn from the mistakes I've made so far. Maybe you'll even be able to recommend ways to improve my plans. Or maybe you'll just want to make fun of how stupid I am (if so, please be creative).

I apologize in advance for the length of this post. Splitting it into multiple entries seemed silly, but it's over 3,000 words. Yikes!


In the first 30 days of The Pig and the Box, I earned $205.05 in profit through book sales, eBook sales and donations. Considering I also give away the entire story as a PDF for free, that's not a bad take. But I think it could be better.

The Pricing Debate

Midway through my 30 days, Wil Wheaton released his new book, "Sunken Treasure" through Lulu. I talked to him a bit by email about how-and-why he did it (which I won't discuss in detail because I think he wants to do that himself). But one thing I do want to cover is the price issue.

When you sell through Lightning Source (LSI), between the printing costs and the reseller take, on my $8.99 book, I only earn about $1.51. I don't have any solid stats from author/illustrators of comparable books through outlets like Scholastic, but I assume that they probably get more than that (if only by a tiny amount). But at $8.99, I'm already a dollar or two more expensive than comparable books, which almost certain hurts my chances at selling to a wide audience. I can't lower my production costs, and if I reduce the reseller take beyond the 40% I currently use, even Amazon won't carry my titles. I need wide online distribution to make any kind headway, so I'm basically locked into my formula here.

"Sunken Treasure" sells for $12, and is 90 pages. If I were to print that book through LSI using my current formula, it would have a sticker price of $7.99 and net me $1.79 per copy. Since Wil is selling through Lulu, he doesn't have full Amazon and international market access, but he also doesn't give up that 40%. I can't say for sure what his profit is on his books, but let's pretend his production cost is $3.00... the Lulu route gives you $9 profit on each sale. If I sold 69 copies (same as the Pig book) at $9 each, I'd have $621 in profit right now, and would feel a lot better about myself. A lot, lot better.

[I need to mention for a moment that back when I first printed the Pig book in 2006, I used Lulu as well. Their colour book printing quality was/is absolute garbage, and I can't in good conscience sell that to people. So using Lulu is never going to be an option for me, at least as far as colour material goes.]

Now what Wil has going for him is the "famous blogger" effect, which I can't (and shouldn't) use, because it's not a constant that others can replicate when using this model in the future. Wil has his True Fans, which means he has a group of purchasers who will jump through whatever hoops Lulu asks of them, buying regardless of friction. I would guess the majority of my buyers won't do that, because their interest in my book is minimal, and certainly not strong enough to withstand too many obstacles. If they can one-click it at Amazon, all the better. But let's leave that for a moment and just focus on price...

I strongly suspect that the Pig book would not sell at $11.99. I've been told that by bookstores in town here, and I would guess it's because it's a universal truth. A 32-page picture book may be pricey to make, but its intended audience isn't willing to part with much more than $9 to bring it home. So if I want to reach any kind of mass audience, I need to cut my list price and my profit, and hope for volume to save me. It seems like a good theory.

On the other hand, maybe what I need to do is focus on making the most of what I can get. Maybe I should increase the price of the book to something higher... say $14.99. That gives me $5.11 profit per copy, while still maintaining international coverage and all the related perks. Is my audience made up of "regular folk", or is it made up of prototypical True Fans, who are buying from me because they like what I do? Can I increase my price and keep them, or will they run for the hills when they see four digits like that? At that price, I'd have made $352.59 on print orders alone... if I could keep the same customers.

I guess the question boils down to the question: is 1889 Books a boutique publisher, or aiming to be something more mainstream? The answer isn't as easy as it seems, actually. (see below)

Questions for you, the reader. Try this at home: think of a picture book you have at home. Robert Munsch books work for this, but you could choose Goodnight Moon or something. Ask a few people you know if they'd buy that book for $14.99. Would they do it? (I can't ask, myself, because people will always tell me "oh of course I would buy your book at any price!") Maybe ask what they WOULD pay. Is it even lower than the $8.99 I'm using? Or is there something else in between?

Price is a delicate matter with art, because it's governed by things like production and reproduction costs, but there is a limit to what the consumer will accept in terms of "value of this work". For my next book, should I increase the price and hope for fewer, more profitable sales? Or should I stay the course, and hope for some kind of uptick in popularity?

The True Fans Question

There is a theory by Kevin Kelly that if you can find and maintain 1,000 True Fans, you can live off their support quite happily. You need to get them to spend $100 on you every year, but then you're earning $100,000 per year, and all is well. For me, with 12 books coming out in 2009, that would mean I'd need to bank $8.33 in profit on each title. Hard, but not impossible. Finding and keeping those fans is no easy task. But it may be a better way to go, in the long run.

One benefit of the True Fans scenario is that you don't necessarily need to price yourself competitively for the market. Rather than selling the Pig book at $8.99 and trying to hit the Average Joe on Amazon, I could have sold it for $14.99 or $19.99, and earned more per purchase than the $1.51 I currently do. There are still limits to what I could do without alienating my fans, but I'd get a bit more flexibility.

The downside of this approach is that I would almost certainly not create any new fans. They'd have to really like me to start dropping $14.99 on my books, and I'm all but eliminating the chance that someone will randomly stumble upon my book on Amazon and buy it because it looks interesting. Sticker shock will be my enemy. I'll have to draw them in some other way. And I have to assume that I'm starting with NO True Fans, because I suspect I don't have many friends who would be willing to spend $100/year on my stuff (no offence, guys).

The most likely approach would be to turn 1889 Books into a boutique publisher, which doesn't focus as much on mass-market appeal, but tries to please a niche. It might require some modification to my release slate for the year, but with a bit of work, I could cultivate a selection and brand that would entice at least a few fans. They would be getting highly-targeted content, and fans would end up paying a premium for it. I would stop selling through Amazon and possibly switch to Lulu or CreateSpace where my set-up costs are nil and my profits would stay high, and I would direct-ship to each customer on a case-by-case basis. It would be more personal, but I could easily hit that $8.33 profit mark for each title.

It would feel a bit like defeat, it's true, but the objective of this exercise is not to build a certain type of book publishing model, but to build one that is sustainable. Maybe that's the way to go.

One trick to the boutique approach is that the buyers need to feel they're getting value for their money, and I worry that the freely-available-as-a-PDF nature of my work would undermine me. But I'm not sure if I'm comfortable with giving that up, because it's a big part of how I got to where I am right now. I would have to create some extra value in the print versions of my books. Not always easy.

I don't know how I feel about this question yet. 1889 Books isn't much more than a boutique publisher at the moment anyway, but I don't see it staying this size forever. I will have to consider my options here. If you have any thoughts, definitely share them in the comments.

The eBooks Angle One thing I didn't consider when I started this was the impact eBooks would have on my business plans. I'd made the Pig book available as a PDF since the very beginning, but the market for eBooks wasn't mature enough for me to really notice (even Stanza, the most popular iPhone reader, is stunningly limited, meaning the Pig eBook isn't the most pleasant thing to experience). I had a policy of pricing the eBook a few bucks lower than the print book, and counting it as bonus profit.

But last week, two things happened: a service called Shortcovers launched, where my short story The Virus Coder's Girl did pretty well (getting featured on the front page). And then Poke of the Titans was released, and (not to give away next month's postmortem) has sold almost EXCLUSIVELY as eBooks. And suddenly, my perspective has changed on how this market fits.

I have a spreadsheet where I keep track of the production costs and marketing costs and all other details to do with each book launch. As of Friday night, I've changed it dramatically to allow for eBook-only releases. Books aimed at kids will probably continue to be released as paper books, but I think things like the SteamDuck series and my late-May surprise may go completely virtual, because their audiences aren't as beholden to the printed page as I expected.

Let's put it this way: on average, I need to sell 67 print copies of most of my books to break even. I don't have concrete information on how Shortcovers returns profit, but let's assume they take the same 40% as Amazon. (Update: Thanks to Mark Pavlidis for correcting my info: as a publisher, you get 70% of the list price from Shortcovers. Rest of this paragraph is updated to reflect that) If I sold Poke of the Titans there for $3.99, I would make $2.79 on each sale. If I hadn't bothered printing it at all, that would be $2.79 in pure profit, not just going to offset my pre-existing costs. Suddenly, the weak link in my line-up would be my strongest.

(I'm going to go on a brief digression, if you don't mind)

This all reminds me of 1998, back when MP3 players were still an awkward technology, and everyone was trying to figure out how they fit into the music business. Back then, I (like half the world, I'm sure) was working hard on creating some kind of desktop player with an integrated online store ($0.99 per track? maybe?) and was even halfway through developing a physical MP3 player shaped like the Apple puck mouse, which you'd connect via USB to sync your tracks. It was a crazy time with lots of dead-on-arrival ideas from all angles, but the one common thread was that so many people said: "I don't want to listen to those files. They're low quality and I like having the CD jewel cases on my shelves." Digital music was going to be a non-starter.

They were wrong, and I think if you asked people who were involved in the online scene back in those days, they'd probably say they feel the same vibe about books in 2009. The movement is there, and the technology is starting to catch up with expectations. My kids don't have this prejudice against reading off a screen, and probably don't have any special attachment to the feel of pages beneath their fingers. The next generation will prefer convenience to heritage, and physical books will begin to trend into a niche market the way vinyl has for music. Still made, still appreciated, but largely irrelevant.

I don't say this because I want it to happen, but I think it's probably inevitable. Sometime in the last 11 years, the world went from openly disparaging my dreams of a no-CD future to having an iPhone at every ear. Thinking the future is impossible isn't going to stop it from happening, and if we've learned anything from the Napster era, it's that you'd better start adapting to this new reality NOW, because the first ones on the field make the rules.

Listen, I loved getting that 5x8 copy of Poke of the Titans in my hands, getting that "I wrote a BOOK" feeling all over again... but I may be the only one. The style and target audience dictates something different, and if I want to survive, I need to listen. In the future, my plans will depend on finding the right delivery method for each title, and cracking the Shortcovers pricing nut. There lies the future, one segment of my catalogue at a time.

Marketing, Marketing, Marketing

Finally, the hardest part of the model: marketing. Obviously, a press release didn't help me at all (and cost $99). The most effective marketing was from the story on Boing Boing, but I can't count that because it's highly variable (I probably wouldn't get another book announced there if I tried) and not exactly reproducible by the average person (this entire exercise is meant to provide a framework for others to do what I do, once the kinks are worked out). Even still, once the initial flood of Boingers had passed, I still had a decent flow of visits based on word-of-mouth, which I think is my best bet for future success.

But word of mouth is a tough nut to crack. You need to find your early adopters and get them talking, and hope that momentum gets on your side (and fast). Unless you know someone with a strong following (and they're willing to promote you), you have to do a lot of legwork, and it's not as easy as it sounds. And it doesn't even sound easy.

I've read a lot about Blog Tours, where an author will guest-blog on various sites to help promote themselves and their book. That's a great idea, but I can't find a good way to get into that circle unless you're already in it. I could write to the various blogs I enjoy and ask to take a crack at it, but I bet (and have found) that nobody's interested. I might just be doing it wrong, but I'm uncertain about this angle. It feels a bit too hit-and-miss in the planning stages. If anyone has any advice, let me know.

The next idea is interviews. Luckily, I've had some practice in this area because of my day job with RollBots, so I felt comfortable yakking about my books at length to anyone who would listen. But nobody would. Put in perspective: I contacted a publication about a potential interview about the re-release of the Pig book (with over a million readers in its first edition), and was told "no". I contacted the same place about RollBots, which had not even launched yet, and was booked for an interview and photo shoot within the hour. They're not UNWILLING to do interviews, but they pick and choose. So from a practical standpoint, the majority of interviews are not going to work. At least not in a mainstream sense. And on blogs or other sites, it pretty much comes back to the Blog Tour point, where you need to have an "in" to get anywhere.

Strangely, I think one of my biggest successes is Twitter. I can't directly relate any sales to my followers, but since I started using the service more (and chatting with the various people I see there), I've found my sales have increased in small waves. I've been told by a few people to try and increase my follower count to increase the size of those waves, but I suspect the key is not the number of followers, but the quality of the ones you attract. You want someone who actually cares about what you're doing, not someone that followed you because of a dare. I'm uncertain how much I want to push the blind social networking angle, but there are times I think I should give it a shot, just to see if it works. A click-through-rate of 2% is a victory for banner ads... maybe I shouldn't be so choosy?

Lastly, we have the Google ads. I had $10 free to use on ads with Google, so I threw them into the great toilet that is the internet. Maybe I'm just doing it wrong, but nothing happened because of my ads. The only reaction I got was one marketer contacting me, telling me they could optimize my campaign to increase results... I guess that means I'd have more marketers emailing me, then. Or something. Really, I don't think picture books are the kinds of things you sell via Google anyway, but I wanted to see. It was a fun experiment.

In Conclusion

I have a few places I know I can improve in regards to how I sell my books, but I think until I figure out the marketing side of things, I'm spinning my wheels. Over the next few months, I'll try tweaking the elements outlined above (either on the Pig book or for other titles) and report back on my progress. I'm much closer to running a smart operation than I have been before, but there's a lot of ground to cover yet.

If you have any ideas about how to fix my book-selling model, feel free to mention them in the comments or email me directly. These can be things you think are possibly stupid and wouldn't try yourself... I'll give anything a go. It's my new motto, actually: "Beta testing life for you." Have fun with it!

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