Successful Amateurization

Posted in think

Publishing through Lulu was a carefully considered choice.

We’re amateurs. What does it mean to be an amateur?

Technically it means that you don’t make any money, and while there’s a way that that’s true (if we calculate the costs to produce Diaspora to include our man-hours at our preferred consulting rates, we will break even in the year 3000), it’s probably more useful to define an amateur as one who takes no risks to produce and sell the artifact. That is, if you can develop, write, and make for sale the product without ever investing money you would not otherwise have spent, you’re an amateur.

So that means no print runs. Any real expenses are after money starts coming in from sales — comped books, postage, promos, and all that don’t start until there’s money to spend. And we never print a stack of books to sit around. That means we also don’t do fulfillment — no one is spending time doing un-hobbyable work like stuffing envelopes and negotiating with shippers. Not interested.

The downside of that (if you can call it a downside) is that we pay for not doing that by listing with a company that takes a fatter margin than most places. But let’s look at that, because it’s deceptive. I’m not going to be coy — these are approximate but real numbers.

A copy of Diaspora costs $19 or so bucks. We mark it up to $34.95. Lulu takes a further percentage of the cover price and we wind up with about $13 in the end per unit sold. We probably could have listed five bucks higher and still got comparable sales but before we listed everyone was complaining about shipping prices from Lulu and so we naively chopped five bucks off to compensate. Made no changes to complaints — the lesson learned is that cover price and shipping price are unrelated. It’s not the final price that anyone cares about — if we sold for $5 and had the same shipping price, there would be more complaints even though the end price would be only $15 or so.

Now I can print a copy of this book elsewhere for $9 no problem. But how do I sell it? I can print a hundred of them if I feel I can put a thousand bucks on the line (no longer an amateur sport), but where do I put those? I can keep them at home, but now I have to stuff them into envelopes and ship them myself (Lulu does this for me). I also need to run a store-front for people to buy from (Lulu does this for me). And I’m shipping from Canada so now 85% of my market (the USA) has something in shipping costs to complain about (15% with Lulu).

I could list with someone like IPR of course. They do a great service — I can print a small run (say ten copies — low risk, but I sell a lot more than that every month, so it might require more risk to be profitable), ship it to IPR (at my expense) and they will warehouse it and list it on their storefront. Hurray! They want 30% of cover by way of compensation. That’s $10.50 to IPR. So I make $35 – $9 – $10.50 = $15.50. Oops, there’s shipping, too, at say $1.50 a unit for a decent run. So $14. I’m up $1.00 over Lulu but I’ve absorbed a bunch of risk. Seems like a meagre return, somehow. Now I would hope to get greater sales out of IPR, but that also entails further risk. Is that worth it? Tough call unless the distributor can show numbers that are convincing or list the services I get beyond just being in the store (and there are some: they drag games out to conventions I don’t go to, for example).

My feeling is that if we paid to build print runs of dozens or hundreds of copies and used someone like IPR to handle storefront and distribution, then we’d qualify as professionals. Now we’re embroiled in a mult-tier process of development, production, marketing, sales, fulfillment, and all that other good stuff, with several interests all looking for their piece of the pie. And we’d be beholden to them for their piece — not just fiscally but also ethically — we become responsible to each other for pulling our respective weight in the process and consequently also responsible for monitoring each other to ensure that. That, at the heart of it, is the professional bit — that network of ethical responsibilities.

Personally, I want a much simpler life than that, and that’s what will (possibly forever) place me in the amateur category for this kind of thing. I don’t want those complex relationships for a 7% gain on the bottom line. It’s not worth a mere 7% to acquire those expectations, even when many are just an expectation that I will ensure that others are meeting theirs. And fortunately the whole sport of publication has been deeply amateurized by services like Lulu — it’s an effective way to reach a large number of people with a high-quality and profitable product without creating a cluster of unwanted responsibilities. My fellow authors are people I’ve known for years (in some cases more than thirty years). They are people I know and love and trust as face-to-face realities, and any burden we share is equally shared no matter what the actual distribution of labour or profit is. No one else can enter that group without becoming a professional relationship and, sadly, forcing my relationship to my friends to also become professional.

Now I’m not dissing IPR — it makes perfect sense in the world of pre-printing professional (and even small run efforts are professional in this sense) publication. And I’m sure that more people that go to IPR are likely to buy something they didn’t go there explicitly for than a buyer at Lulu. And I know they go to some effort to push product, whether at conventions or through contact with retailers. It’s a good service and it’s staffed by excellent people. But I think the technology is creeping past them. It’s now a tough call between them and remaining purely amateur. It’s no longer clear that there need to be that many people involved in this process. And automation is always about removing a few more people from the process, so the direction is necessarily fewer and not more.

Certainly I’m already wondering if I can afford a decent book-binding machine. They’re incredibly small these days….

–BMurray

Posted by halfjack   @   26 October 2009

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8 Comments

Comments
Oct 26, 2009
11:49
#1 halfjack :

Missed this little relationship.

Diaspora technology: government -> corporate -> private
Business technology: corporate -> professional network -> amateur network

The core change in technology is always about automation and not gizmos. The way business is changing is the degree to which individuals are empowered by technology to produce as though they were networks of people. Below a certain threshold the risk is reduced or evaporates entirely, and it can become a hobby.

In publishing, there is still a corporate advantage in volume — WotC can dump hundreds of thousands of units on people, but VSCA is only talking hundreds. The place in the middle needs to demonstrate that its volume is also in the middle.

Oct 26, 2009
13:20
#2 Bob :

Brad,

Speaking from my own experiences.. If your friends become your business partners, then you will soon need new friends. If your hobby becomes your profession, you will soon desire a new hobby. In either case, the losses are not worth the potential financial rewards.

Oct 26, 2009
13:24
#3 Bob :

Or, I should’ve said, “the financial rewards are not worth the personal losses”. But, you already figured that out, I’m sure.

Oct 26, 2009
13:36
#4 halfjack :

Given the financial rewards so far I’d say that’s certain. :D

Oct 26, 2009
23:12
#5 d7 :

I was pretty staggered by the shipping rates at Lulu, and it was definitely a matter of the cover price to shipping cost ratio. A lower cover price on the same physical object (and hence, the same shipping cost), definitely leads to greater sticker shock.

The saving grace though is that combined shipping turned out to be very reasonable. A single book order was a full third shipping, but ordering two books only added a couple of dollars to the shipping cost and made for a more palatable ratio.

That’s not a criticism of choosing Lulu at all. What it is, is that it’s interesting to consider how new technologies (and various implementations thereof) impact buyer psychology. From my experience ordering Diaspora, one of the things that I think Lulu could do to improve is provide a shipping cost calculator at the first stage of the checkout—where you can still easily twiddle the quantity ordered to see what you’re buying and for how much—rather than leaving it as a potentially purchase-souring surprise at the very end after payment info has been painstakingly entered. Their current implementation of the checkout process cuts across the grain of how buyers evaluate and commit to a purchase price.

The upshot for Diaspora might be that some people who decide to forgo buying it, while others like myself will resolve to buy it only in pairs or greater.

I wonder if Lulu keeps stats on how many people get to stage 4 of the checkout and then don’t complete the order?

All that said, I’m glad Lulu exists despite its warts. Knowing history and tech, too, I can be confident that this kind of implementation issue will get smoothed out, either by Lulu or whoever usurps their niche.

Oct 27, 2009
09:50
#6 Coelecanth :

The joy of doing it as a hobby is that you don’t have to count every cost that goes into the production. The material costs of development, pens, paper and sundries are absorbed in your daily life almost unnoticed. The big cost, your labour, is also incidental because it is it’s own reward. Hopefully entertainment you got out of the process and the satisfaction of your success is compensation enough for your efforts.

Without those costs you’re making a whopping 68% gross return. In small time retail that’s pretty damn good, the bike store is in that range and our accountant is very happy with us. That gross is also very close to your net return as I don’t imagine you’re incurring a great deal of expenses at this point. Bike stores can be very successful with as little as 30% net profit so I’d say your doing just fine.

Oct 27, 2009
10:18
#7 Jono :

I was in the PoD biz for a while (we were trying to get a market going for on-demand full-colour comic books) and shipping was always the bugbear. A lot of places use it to make up their margins.

Brad pretty much hit the nail on the head – it’s all about the expectation of how many units you think you’ll sell. Put more money up front, print lots of copies and get a better rate per unit or go the on-demand route and make your customers pay more (or the same amount but make less money) but with less work on your end.

Regarding doing it all yourself – yes, you can set yourself up quite inexpensively these days with a decent high-volume laser printer and binding machine (and probably a cutter) but you’ll be wanting to move a lot of units to make it worthwhile. I know someone who does this with medical training materials.

You’re also transferring the risk of stocking finished units printed by someone else with stocking the raw materials to do it yourself. On the plus side it opens up the arena to printing and selling other items easily. On the negative side you have to deal with the shipping, etc.

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