So how much money can you make writing an eBook?

[tweetmeme]I noted last week that Books are about to pass games in number of Apple apps after the book publishers placed 27 thousand iPad ready titles in the App Store. It was also last week that GigaOm asked the question could the Kindle and the iPad kill quality content?

“What Amazon and Apple are trying to do is significantly decrease the amount of money that publishers, and specifically authors, can make…. Its standard $9.99-per-title charge for e-books is the same kind of clear and present threat to existing business models in the publishing industry that the music industry faced as low-priced music became available on ubiquitous digital players.”

Articles like these assume the impact of the eReaders will be more evolution than revolution. However history teaches us there is nothing evolutionary about the impact of IT on media.

If eBooks do go mainstream then they will turn the future of book and magazine writing into blogging with a revenue stream. The role of the publishers and retailers will become redundant as authors increasing choose to independently sell their work along side the developers of applications and games in the various mobile App Stores.

Put very simply, if the iPad and/or the Kindle succeed in revolutionising the publishing industry then Amazon and Apple will be the publishers of the future.

In the new model authors become entrepreneurs in an eCottage industry owned and operated by Apple and the other App store vendors while publishers and retailers try to make their proven “idea to market” print model work alongside the digital world. In the future smart publishers will be in the market signing up successful DIY eBook authors and take their eSuccess off line into the retail bookstore.

The eBook platforms clearly represent a win:win opportunity for the authors and a lose:lose opportunity for publishers and retailers. If the eReaders prove popular then Authors will have access to a DIY marketplace where there are negligible barriers to entry for aspiring writers and the authors will be rewarded for their efforts by receiving a significantly greater cut of sale revenue.

A 70:30 split on a $9.99 eBook means Digital Pennies for Analog Dollars for the book publishers but a 70:30 split with the author means the book writer will be significantly better off in a digital world.

As Rachael Gardner explains a typical book royalty for a first time author is somewhere 6.5% -15%. So choosing the 70% DIY model is a no brainer for the aspiring novelist or technical writer.

The catch is ePublishing today represents 1% of the book publishing industry. So the real question is do you want 6.5% -15% of 99% at a RRP of $25 or 70% of 1% at a RRP of $9.99?

Let’s do the calculations: A best selling novel today sells 1 Million Hard Back copies at $25.00 each. Under this scenario the author will receive $3.75 Million in royalties.  In comparison the eBook sales are estimated at 10,000 units at $9.99. So the DIY best selling author receives just under $70,000 in royalties. However, if in the future sales of the best selling eBooks hit the 1 Million mark then the DIY Author’s royalties will be just under $7 Million.

For the moment eBooks are a niche market but I suspect we’ll begin to see stories emerging of DIY eAuthors who have made it rich in the iBookstore without the aid of a publisher emerging within the next 6-12months. After all it’s a lot easier and cheaper to write a book or magazine than to program and support a game or software application published in the App Store.

The question is will DIY publishers be able to maintain the $9.99 price point or will we see prices drop to around $0.99 in line with the App Store pricing model? Either way Authors should make bigger profits from the iBookstore than developers can achieve through the App Store. Simply because their production and support costs are so much lower.

What about magazines and newspapers? How will they fare?

The lesson iTunes has provided is that eMagazine sales will be by article – perhaps even the page – and not by the traditional cover to cover package. So even if you have to set the sell at $0.10 per article the average author/blogger would be better off in the iBookstore than trying to make money out of advertising on the web.

e.g. 1000 CPM at $0.50 equals in $0.0005 per page view per unique. You would have to put 200 ads on the page to achieve the same revenues online today as you would selling a 10 cents magazine article, which may or may not include advertising, through the iBookstore.

The only caveat I would put on all this excitement is the iPad and Kindle represent at least the 3rd attempt over the past 30 years by the IT industry to take eBooks mainstream (think: 1980’s Hypermedia, 1990’s Living Books CD-ROMs and the Encyclopaedia Britannica’s experience online). In each case the user experience wasn’t compelling enough to take them mainstream. This problem is compounded today by the endless inventory of the web where much of the product is either Free or Freemium. If the web goes mobile is there a future for pay per view eBooks? Unfortunately the last 15 years suggests not.

[Updated 2-3-2010]

“At a glance, it appears the e-book is more profitable. But publishers point out that e-books still represent a small sliver of total sales, from 3 to 5 percent. ” – New York Times Math of Publishing Meets the E-Book

Bad News For Book Publishers: More Authors Selling E-Books Direct

[Update 17-11-2010]

“Suddenly, self-publishing is a real alternative for anybody with even a modest Twitter following, especially when Amazon (NSDQ: AMZN) is offering 70% of the retail price of ebooks—paid monthly, not twice annually” –  Why The Digital Book Business Is Going To Be Huge

[Update 22-11-2010]

“eBook sales almost doubled over 2010 and now make up 9% of total consumer book sales, according to the Association of American Publishers.” – Read Write Web: Top Trends of 2010: Growth of eBooks & eReaders

[Update 28-11-2010]

“A quarter of a million new novels are published annually across the globe, 100,000 of them in English. This represents, in turn, a quarter, maybe, of the manuscripts that agents try to hawk. Agents, as all writers know, take only a small proportion of the work they’re sent, perhaps a tenth. Ten million scribes in search of a reader may not be so tall a tale.” – WE TEN MILLION Alix Christie: More Intelligent Life

For the non-fiction writer Mashable also suggest that once you’ve created your book, you can sell it as a PDF download using a service like DPD or PayLoadz. For a more complete, end-to-end solution, try TradeBit, which offers a marketplace, or Lulu, which can also turn your e-book into a printed book.

[Update 14-2-2011]

“I don’t think lowering ebook prices costs anyone money unless and until they drop under that magic point. I think authors and publishers would make more money if they’d understand these principles, experiment to determine the revenue maximizing points and then price accordingly.” – Ebook Pricing vs Revenue

[Updated 2-2-2011] – Highly Recommended

“With self-publishing, in a single month I was able to earn the same amount of money it took me four and a half years to earn through traditional publishing.” – Joe Konrath

[Updated 11-3-2011]


2 thoughts on “So how much money can you make writing an eBook?

  1. Awesome article! I am working on putting together several ebooks now to try to make some extra cash for myself. I love how these things work, generating income as I sleep.

    I think the biggest hurdle though is actually getting things going. I have written 3 books now but, have had a very difficult time actually finding the time to sit down, edit them and realistically brainstorm changes. Thus, I have manuscripts sitting around. Time management is key. Coming up with deadlines and goals is another important element.

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