Electronic Book Project

Freedom of the press is limited to those who own one."

H. L. Mencken, pre-Internet

Mike Wooldridge
mikew@sims.berkeley.edu
IS 207, Spring 2005

Table of Contents
Executive Summary .... 3
Problem Statement ...... 4
Background .... 5
Mission, Goals, and Objectives .. 6
Description of Existing System .. 7
Requirements .. 9
Evaluation of Alternatives .... 10
Economic Feasibility Analysis ..... 11
Recommendations..13
Implementation ..... 14
Plan for Evaluation ... 15
Appendix A: Content Creation Flowchart 16
Appendix B: Table of Contents 17
Appendix C: Sample Task 18

Executive Summary
The Electronic Book Project aims to publish a downloadable computer book at
Amazon.com during the spring semester of 2005. Titled Google for Grandparents, the
book will target senior citizens who have minimal Internet experience. The project has a
good chance of meeting its objectives if it can:

Take advantage of the time and cost savings that come with publishing in an
electronic format

Deliver a product that addresses the needs of its novice audience

If successful, the project can lay the groundwork for publishing additional electronic
titles.

Problem Statement
Paper-based computer books tend to suffer from problems that their electronic
counterparts do not.
Paper-Based Computer Books

Electronic Computer Books

Printing costs require significant up-front

capital.
Cannot be updated efficiently. This is
especially a problem for books about Web
sites, which are updated often.
Require a trip to a bookstore or a wait for
shipping.
Multimedia content can be expensive to
include. CD-ROMs pose compatibility
issues.
Because of printing costs, often must meet
certain size thresholds to be marketable.

Can be created cheaply on a low-end PC

using consumer-level software.
Can be updated easily, often at little cost.
Can be downloaded immediately,
offering immediate gratification.
Multimedia content (or direct links to
such content) can be integrated into the
book itself.
Lower publishing costs mean publishers
can market titles that are smaller and
target specific niches.

Background
Business Model
The projects business model takes advantage of two important e-commerce concepts:
disintermediation and virtual products.

By self-publishing an electronic book and selling it on Amazon.com, an author

can practice disintermediation. S/he can remove the publisher, printer, and
distributorand their associated costsfrom the business equation.

By creating a digital version of a traditionally physical product, an author can reap

the benefits that come with costless duplication, a lack of physical inventory, and
inexpensive worldwide distribution.

Value Proposition
By cutting out the traditional middlemen in publishing, the author:

realizes a greater profit on each book sold. (At Amazon.com, self-publishers can
receive 45% of the selling price. The standard royalty rates for authors are 1015%.)

has more control over editorial decisions and intellectual property.

can cultivate a closer relationship with readers.

By purchasing an electronic version of a book, the reader:

gets immediate gratification via instant download.

receives a book that can be stored centrally and accessed wherever there is an
Internet connection.

usually spends less money than s/he would have spent for the paper-based
equivalent.

Mission, Goals, and Objectives

Mission:
To provide non-technical computer usersin particular senior citizenswith an
inexpensive, accessible source of information about how to use the Internet search engine
Google.
Goals:

To sell the book through Amazon.com.

To offer the book at a competitive price.

To write the book in an accessible style that is appropriate for its audience.

To cover the basics of using Google in 25 self-contained tasks.

To complete the book using a minimum amount of human capital.

To develop a publishing process that can be applied to future book projects.

Objectives:

To list the book for sale on Amazon.com by May 20, 2005, when the spring
semester ends.

To earn enough money in Amazon.com sales by December 31, 2005, to have paid
for all non-labor expenses.

Description of Existing System

Amazon.com is a leader in the sale of electronic books, offering more than one million
downloadable titles in its E-books and Docs section. Titles include electronic-only
editions, electronic versions of paper-based books, reprints of articles from magazines
and newspapers, and research reports from industry analysts. While some of the
electronic books at Amazon.com are from large, well-known publishers, many are from
individuals and small businesses who may lack the resources to publish in the paperbased format. In some ways, the E-books and Docs section represents a
democratization of the book-publishing genre.
As of May 12, 2005, searching the electronic section at Amazon.com for Google
returned 77 results. Only 11 of these results are electronic books, with most of the others
being reprints of Google-related news articles. None of the electronic books target a
novice audience interested in learning how to use Google. (Most of them target Web
designers who want their pages to rank higher in Google.) Prices for the electronic books
range from $4.99 to $26.39.
Mission, Goals, and Objectives for Amazon.com
Mission:
To provide Web users with a central, easy-to-use portal for browsing and buying books
and other consumer products online.
Goals:

To offer the widest selection of books and other products for sale on the Web.

To offer innovative ways to aid buyers in making purchases, including:

o recommendation systems that tell customers what products were bought
by customers with similar tastes
o preview systems that enable customers to search through book content
online before buying
o review systems that allow customers to post reviews of products and read
reviews of others

To offer an innovative Web-based purchase path that enables customers to buy

products quickly and easily by offering:
o ways for customers to save their personal information such that they only
need to enter it once, during their first purchase
o one-click ordering, which allows registered customers who are logged in
to purchase items by clicking a button once

To offer customers a comprehensive interface for managing their completed

orders.

Objectives:

To meet sales objectives demanded by their shareholders as well as business

analysts on a quarterly basis. To meet such overall sales objectives, Amazon.com
needs to meet:
o objectives related to Web trafficthe number of site visits over a given
period (for example, 10 million customer visits per month)
o objectives related to customer conversion, which is the rate at which a site
visitor ends up making a purchase (for example, 10% of customer visits
result in a purchase)
o dollar-value-per-order objectives, which is the measure of how much a
customer spends on average when he or she completes an order (for
example, each purchase results in an average sale of $25)

Requirements
To be successful, the Electronic Book Project must meet the requirements of the retailer,
reader, and author:
Requirements for the retailer (Amazon.com):

The book must be in a format suitable for digital distribution. Amazon.com

requires either PDF or Adobe e-Book format.

The book needs to have an ISBN number, which is the worldwide standard by
which booksellers track inventory and sales. Amazon.com requires an ISBN for
every book it sells.

The author needs to complete an application to sell the book on Amazon.com.

S/he must also meet the standards required by Amazon.com of sellers.

Requirements for the reader:

The book needs to be set in type that is easy to read (12 point or greater).

The book needs to be written in easy-to-understand language with minimal

jargon.

Tasks in the book need to be accompanied by screen shots that show the reader
exactly what steps to take to accomplish the tasks.

The book needs to be published in a format that is printable on standard 8.5x11

printer paper.

Requirements for the author:

The book needs to be of limited scope, since it must be written while the author is
attending school, working part-time, and raising a family.

The steps in the publishing process need to be such that they can be applied to
other projects in the future, since a long-term goal for the project is to develop a
process that can be replicated for other electronic books.

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Evaluation of Alternatives
Alternatives to selling an electronic book on Amazon.com (Amazon.com/Electronic)
include selling an electronic book on a personal Web site (Web Site/Electronic) or
printing a paper-based book and selling it on Amazon.com (Amazon.com/PaperBased).
Web Site/Electronic
Pros:

Author would make more profit per sale by not paying commission to
Amazon.com.

Author would have more options in terms of format (HTML, .doc, etc.).

Author could make additional money by selling advertisements on the site.

Cons:

Book would have more competition. To attract customers, would need to

distinguish site from the billions of other Web pages online.

Author wouldnt have Amazon.com marketing power to drive sales.

Author would incur costs creating and maintaining the Web site.

Amazon.com/Paper-Based
Pros:

Paper-based format is more familiar to consumers. People might be more willing

to buy.

Author could sell titles in bricks-and-mortar bookstores in addition to

Amazon.com.

Cons:

Paper-based books are more expensive to publish.

Author would have physical inventory to deal with.

Author would have shipping to Amazon.com to deal with.

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Economic Feasibility Analysis

To determine the economic feasibility of the Electronic Book Project, I compared its
budget with the budgets of the two other publishing options.
All figures are for 1 year.
* Author already pays for these outside of the project
Amazon.com/
Electronic

Web Site/
Electronic

Amazon.com/
Paper-Based

ISBN:

$244.95

$244.95

$244.95

Word Processing Software:*

$200.00

$200.00

$200.00

Image Editing Software: *

$100.00

$100.00

$100.00

PDF Creation Software: *

$150.00

$150.00

$150.00

Office Supplies:

$150.00

$150.00

$150.00

Web Site Hosting:

N/A

$120.00

N/A

Printing (Setup):

N/A

N/A

$900.00

Printing (Books):

N/A

N/A

$5,516.35

Postage:

$0.00

$0.00

$120.00

Amazon.com Fees:

$29.95

N/A

$29.95

Business Mailbox: *

$255.00

$255.00

$255.00

Internet Connectivity: *

$600.00

$600.00

$600.00

$1,729.90

$1,819.95

$8,266.25

Selling Price:

$4.99

$4.99

$9.99

Amazon.com Commission:

55%

N/A

55%

E-Commerce Fees Per Book:

N/A

$0.43

N/A

Net Proceeds Per Book:

$2.25

$4.49

$4.50

770

405

1,839

100%

53%

239%

TOTAL COSTS:

SALES TO BREAK EVEN:

Comparison:

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Amazon.com/Electronic vs. Web Site/Electronic
Selling electronic books on a personal Web site would generate greater profits per book
for the author since Amazon.com would not receive a commission. Additional costs
would be incurred for e-commerce support (PayPal rates are used for estimation
purposes), but those costs would be only 10%. The project would also need to absorb
monthly Web hosting fees, which drives up total costs slightly.
Overall, greater profits but only slightly higher costs means the project would only need
to sell 405 books to break even, about half the number it would need to sell through
Amazon.com (770 books).
Amazon.com/Electronic vs. Amazon.com/Paper-Based
Selling paper-based books at Amazon.com would mean much higher costsmore than
quadruple the costs for publishing an electronic book. These higher costs are attributable
mostly to printing. There would also be some extra shipping costs, since the author would
need to ship books periodically to Amazon.com.
To offset the increased costs, the project would need to sell the book at a higher price.
Otherwise, the printing costs per book would outweigh the net proceeds. For estimation
purposes, Ive assumed paper-based books would sell for twice the price of the electronic
version ($9.99 instead of $4.99).
At twice the price, more than twice as many books would still need to be sold to recoup
costs within a year (1,839 books vs. 770 books).
Conclusion
Although the Web Site/Electronic option offers a better profit margin and a lower breakeven threshold, the dollar figures dont take into account the substantial time required to
maintain an e-commerce Web site. Nor do they take into account the marketing costs
necessary to promote the Web site.
The high costs associated with printing make the Amazon.com/Paper-Based option
unattractive. Having to maintain an inventory of physical books and periodically ship
them to Amazon.com are also negative factors. Raising the cover price to $19.99 could
help recoup costs faster, but that would also mean more price competition.
All things considered, the Amazon.com/Electronic option represents the most
economically feasible option of the three options analyzed.

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Recommendations
Considering the benefits that electronic books offer over paper-based books and the
advantages that the Amazon.com/Electronic strategy has over other business options, I
recommend that the Electronic Book Project be pursued. The following are additional
recommendations:
Learn from the experience. The electronic book market is still in its infancy. This
project should be viewed primarily as an experiment to help guide future endeavors and
secondarily as an opportunity to make money. Lessons learned about the business should
be taken into account when evaluating the projects success.
Keep costs low. A key benefit offered by electronic book publishing is that it cuts out
costs associated with traditional book publishing. These include printing costs, distributor
costs, and shipping costs. During the publishing process, avoid adding to the projects
scope in ways that significantly increase costs.
Set a low price. Given the low costs of electronic publishing, you can afford to sell your
book for a low price. Dont allow price to drive away customers.
Act quickly. The faster the book can be made available on Amazon.com, the sooner it
can offer clues about how to improve your next book project. A short time-to-market also
means the content will stay current for a longer period.
Retain control of the intellectual property. Retaining full ownership of the content and
marketing rights for this book means that you can repurpose it for future titles.

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Implementation
Implementation will involve an administrative phase, which includes ordering the ISBN
and signing up as a seller at Amazon.com, and a book-creation phase, which includes
writing and editing the book.
Tasks in the administrative phase should be initiated as soon as possible, since they
involve less work on the part of the author and also arent fully under his/her control.
Writing and editing of the book should proceed as described in the content development
flowchart (Appendix A). To save time, tasks such as writing instructional steps and
capturing screen shots can be performed in parallel.
Time permitting, members of the target audience (senior citizens) should review the book
before it is uploaded to Amazon.com.
The author could also distribute free copies of the book to relevant online and offline
publications for review. These might include the magazine and Web site of AARP and
other publications aimed at senior citizens.
As this is the first electronic book published by the author, he should make use of the
resources for electronic-book publishers available on the Web, including:

Planet eBook: http://www.planetebook.com

KnowBetter.com: http://www.knowbetter.com
eBooks Central at Adobe: http://www.adobe.com/epaper/ebooks/main.html

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Plan for Evaluation

Monitoring Sales
The obvious way to measure the success of the project is by numbers of books sold at
Amazon.com. Sellers can track product sales through their account on the Amazon.com
Web site. To judge performance relative to competitors, you can compare the
Amazon.com Sales Rank number, which is displayed on each product page. The topselling electronic book about Google currently has a ranking of 96,280.
If sales are unimpressive, the author can consider lowering the price of the book.
(However, at a selling price of $4.99, its already near the low end of the price range for
books at Amazon.com. Amazon.coms minimum price is $2.99.) To increase marketing
attention on the product page, publishers can submit Editorial Reviews, which appear
above the Customer Reviews. They can also submit Look Inside the Book sample
content, which potential buyers can view prior to buying.
Learning From Customer Reviews
You can get a subjective measure of the books success by checking the customer reviews
at the bottom of the Amazon.com product page. Customers can submit comments about a
book and include a star rating from 1 to 5. The average star rating for all reviews is
displayed above a books Sales Rank. Customer reviews offer a valuable way to obtain
honest feedback from readers about your book.
Improving the Publishing Process
You will also want to evaluate the publishing process. Are there areas in the publishing
pipeline that can be made more efficient?
You can assess the role that labor played in creating the book. Future projects might be
improved by subcontracting tasks that were especially time consuming or difficult.
You can also look at the role played by software. For instance, using higher-end word
processing or layout software could improve the aesthetics and readability of the book.
Creating screen shots could be streamlined with better screen-capture tools.

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Appendix A: Content Creation Flowchart

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Appendix B: Table of Contents

Google for Grandparents covers the following tasks:

Search for Keywords

Search for a Person
Restrict a Search
Include Synonyms in a Search
Search for Keyword Alternatives
Limit a Search by File Format
Limit a Search by Web Site
Limit a Search by Country
Search in a Language
Translate Text
Translate a Web Page
Use Google as a Calculator
Calculate Measurements With Google
Search Within a Number Range
Search for a Definition
Filter Adult Content
Search for Shipping Information
Search for Weather
Search for Stock Quotes
Search for Movie Show Times
Map a Location
Get Driving Directions
Search Current News
Search for Local Results
Search for Images
Set Google Preferences
Set Your Homepage to Google

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Appendix C: Example Task

Search for a Definition
Google stores word definitions from a variety of online sources in its
database. You can search specifically for a definition by typing define:
before a keyword.

Type the text define: in the search box (be sure to include a :).

2
Type the word for which you want a definition. Example:
define:technology
3

Click Google Search.

Google displays definitions for the word. You can click a green hyperlink for
more information about a definition.