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Rewriting Business Models

E-books are shaking up publishing business models that have remained unchanged since the days of Dickens, much as MP3 compression technology has rocked the music industry. For the moment, even the most forward-looking print publishers are pricing their initial e-book offerings almost identically with paper editions, as if there were no difference in their underlying atoms versus bits economics. At St. Martin’s Press, the first major publisher to simultaneously issue a hardcover and e-book edition of the same title (Monica’s Story in March 1999), senior vice president for finance administration Steve Cohen explains: “Our prices on new titles are at the hardcover level because there’s a high start-up cost for e-book editions.” Kate Tentler, publisher of Simon & Schuster Online, was responsible for Web distribution of Stephen King’s Riding the Bullet (priced at $2.50, the 66 pages of the e-novella averaged out to the retail per-page cost of a King hardcover novel). Says Tentler, “We think of an e-book as just another book.”

As a few traditional publishers defensively convert to digital files for downloads, the independent e-publishing industry has seen countless business models bloom. On the same March day that the Stephen King brand name sold 400,000 paperless copies of Riding the Bullet, Frank Weyer received a grand total of two requests for his serialized e-mystery, MIT Can Be Murder, on his own site (e-bookpress.com). Despite such paltry numbers, efforts by Weyer and other e-book authors are already undermining the influence of blockbuster-minded agents and trend-driven book editors. Weyer, for example, had sent the manuscript for his first murder mystery to 10 literary agents, all of whom declined to submit it to book publishers. “They said the mystery field is difficult for a newcomer,” Weyer recalls. “But how do you become a published mystery author if you can’t get published?”

Self-publishing on paper, a solution for some, seemed prohibitive for this patent and trademark attorney and small-scale Internet entrepreneur (he holds exclusive right to sell Web domain names registered in the nation of Moldova-ending in .md-to doctors in California and New York). Rather than letting his manuscript molder in a drawer, Weyer decided to publish it via e-mail. The first four chapters of the whodunnit, inspired by the year he spent at MIT studying for a PhD in ocean engineering, were offered first to 3,000 MIT alumni, and then to 15,000 names on other university alumni lists. He released the rest of the 210-page book in 12 monthly installments. Some 1,400 readers have downloaded the entire e-novel.

Weyer’s novel-by-subscription might seem like an innovation made possible by the digital era. In fact, it is a throwback to the early days of 19th-century book publishing, when books were sold by subscription before publication, to raise revenue to pay the printing costs up front. With no printing to worry about, the frictionless economy lets Weyer distribute his work for free. Now that he has successfully bypassed print publishers to get his words read, he has begun subscription-publishing the work of other writers. The first addition is The Butcher’s Cleaver, a spy thriller by W. Patrick Lang. Soon Weyer plans to generate income by selling print-on-demand versions of both his and Lang’s books. Nonetheless, he would like MIT Can Be Murder to be picked up by a mainstream publisher. “I just wanted to build word of mouth,” he says of his e-book. “I would like to see it in as many forms as possible.”

Giving away complete works to help an author build a following is still anathema to most traditional publishers, who must absorb the cost to produce, store and ship the physical books. But giving away paperless e-books is a no-brainer, following the time-tested freeware and shareware models in computer software. Independently published e-books may not be as polished or as slick as store-bought commercial offerings, but they can hold their own in user appreciation. And Frank Weyer’s writing is certainly on par with that in much of today’s mass-produced paperback fiction.

Traditional publishers’ understandable fear that e-books may cannibalize sales of print editions seems to be overblown, at least judging from the experience of one of their more adventurous colleagues. Last September, veteran science-fiction publisher Jim Baen initiated what he calls eWebScriptions; for $10 a month, visitors to Baen.com may download quarter-of-a-book-sized installments of four titles about to appear in print. Even after receiving the full text in HTML, “more of our subscribers buy the finished book than don’t buy it,” says Baen. By March, the added promotion had already helped propel one of the earliest eWebScriptions titles, Ashes of Victory by David Weber, onto hardcover best-seller lists.

In addition to alternative marketing strategies, e-publishers can tap into income streams legally denied to traditional publishers. For instance, the U.S. Postal Service disallows low book-mailing rates for printed material that contains advertising. No such restriction inhibits the sales of ads for e-books. Bartleby.com, for example, offers free, ad-supported classics and reference works online. At BiblioBytes.com, books can be read on ad banner-sponsored Web pages, with some popular titles downloadable for a fee; authors get a cut of the ad revenue. Abroad, the alternatives are just as dramatic; in France, pioneer e-publisher Zero Hour is able to offer less-expensive editions of current books because digital files cannot be taxed as print books are.

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