Learning from Ellora’s Cave

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Tim BrandhorstTim Brandhorst, Deputy Director, Book Publishing, American Bar Association.

I’ve been meaning to write about my single favorite twenty-minute timespan at the 2010 Digital Book World Conference a couple of weeks ago.

Mike Shatzkin brought in one of the editors of a small erotic romance publisher, Ellora’s Cave, for a one-on-one conversation in the morning plenary session on the second day of the conference. There was a bit of nervous laughter at first from the audience, partly because of the genre and partly because Shatzkin did a great job framing the issue (and the interview): how a handful of women far outside the NYC publishing mainstream have managed to do everything completely backwards from the large NYC houses, yet have, in the process, gotten everything exactly right for their niche.

The laughter was gradually replaced by an awed silence as Raelene Gorlinsky, a charming, smart and unassuming woman, described with perfect clarity how Ellora’s Cave has evolved.

Gorlinsky told the tale of EC’s founding a decade ago by Jaid Black, a writer of erotic romance stories who was told repeatedly that there was no market for such a subgenre, but was convinced that there was a market… if only she could reach it. Out of necessity (lack of capital) and a keen understanding of how her readers would want to obtain her stories — mixed with a bit of luck (she had a computer science background) — Black set up a web site and sold her stories as e-books only, direct to consumers, with no print versions and no intermediary distributor.

Year one sales were $43,000.

Business has grown steadily over the past decade, and annual sales this year are expected to be over $5M.

Luke & Jezebel (Ellora's Cave)Ellora’s Cave publishes erotic romance–basically, romance with a much higher proportion of bedroom scenes. Perhaps not surprisingly, the e-book format fits nicely with this genre; purchasers might hesitate to buy printed erotic romance books in a bookstore, but there’s not much danger of embarrassment in downloading an e-book from a web site.

They now publish approximately ten new titles a week, all as e-books, and maintain an extensive backlist (why take an e-book out of print?) of over 2800 titles; and they’ve started offering their bestsellers as print books, too, BUT with a big twist.

Because they don’t want print sales to interfere with their main e-book sales, print editions are released 3-6 months after the initial e-book.

EC also allows various retailers to carry their products, but with a window of at least a couple of weeks, so EC is sure to capture the initial direct-to-consumer sales from their most rabid customers on every new title. And direct-to-consumer purchasers are well-rewarded for buying directly from EC: they receive roughly 50 percent off the retail price. The average price for an EC title on their site is between $5 and $6; on Amazon, the Kindle versions sell for $11 to $12.

In other words, EC has, through disciplined pricing and format decisions, retained its direct to consumer model, and thus retained control and maximized profitability.

Royalties are dramatically different than typical publishing contracts, too. Authors receive 37.5 percent of the cover price of e-books–yes, that’s right, 37.5 percent. They receive a more traditional 7.5 percent on the p-book version; and all royalties are calculated and paid monthly!

Ellora’s Cave experimented with using Lightning Source and other POD providers for a while, but realized the margins just weren’t going to work with POD at their low price point. So EC did something else completely counter-intuitive: they bought their own printing press. They now print their own books, as they receive orders. They do runs as small as 15 books, and have their own warehouse and fulfillment center.  (For Amazon orders of print books, EC simply has loaded all their titles into Amazon’s CreateSpace, and Amazon PODs their titles as ordered.)

Having their own press means they can also profit from custom publishing: they can do custom covers and special promotions with very small print runs, at a nice profit. They have tapped a whole new revenue stream by listening to their customers and offering their customers varying formats at varying price points.

Ellora’s Cave’s staff is roughly 40 people, of which fully 20 are editorial. Just think: a publisher that has its own printing and fulfillment, its own e-commerce web site, and is financially sophisticated enough to pay royalties monthly–yet half its human capital is devoted to editorial staff, most of whom generally work offsite.

Content creation is considered the single most important thing, and is appropriately funded.

It was a fascinating twenty minute conversation–I’ve literally thought more about the questions EC’s model raises than just about anything else at this wonderful conference. Translating their model into a more traditional publishing model is now the challenge.

[This article was originally published on the PubForward blog and has been reprinted here with the permission of Mr. Brandhorst.]

Tim Brandhorst is currently deputy director of book publishing for the American Bar Association.

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9 thoughts on “Learning from Ellora’s Cave

  1. I, too, was in total awe during Raelene’s talk. What a wonderful (and totally perfect) example of someone who didn’t follow the rules yet kicked ass anyway. We all need to be taking a page out of her eBook :)

  2. Ellora’s Cave has two imprints I write for: EC and Cerridwen Press. I couldn’t be prouder of the way they’ve progressed and treat their authors! Their vision for the future is always changing…progressing in the right direction for increased sales and quality work. Digital is the wave of the future…EC just jumped in quicker while “Big NY” houses seem to hesitate. I applaud EC’s gutsy push and smarts to recognize where the future of publishing will lead us.

  3. While EC may indeed be a success for its authors and the publisher itself, please consider the text from this job ad for content and copy editors:

    Ellora’s Cave, the premier publisher of erotic romance novels, seeks professional copy editors and content/development editors. Pay is per word and checks are issued every other week. Content editor rate is USD $0.0075 cents per word and copy editor pay is $0.00175 per word ($0.0015 per word during training). Book lengths range from 10,000 to 120,000 words.

    For copy editors, this equals about $100 for a 60,000 word novel. According to the 2010 Writer’s Market, the lowest acceptable hourly rate for book copy editing is $25/hr. Assuming that you were working 40 hours per week, you would have to get through 10 novel manuscripts per week to make the minimum suggested by Writer’s Market. Even assuming you are able to get through 3 manuscripts per week, you are still getting a (freelance) rate of about $7.50/hr. Once you figure in your self-employment taxes, you’re making well below minimum wage. (The lowest per-page rate recommended by WM is $1/page. Assuming 250 words/page, this is still less than half of the lowest going market rate.)

    Now, I realize that on the surface, grammar, correct word usage and fact-checking might not be as important to an erotic novel as, say, to an encyclopedia. But if I might stand on my soapbox for a moment, devaluing good copy editors is insulting to a reader. It suggests that they are not smart enough to be annoyed by typos, consistency errors, and bad spelling.

  4. Wow, now I’m blushing. Thanks so much. I enjoyed the conference, there were great presentations and a lot of different perspectives on the future of publishing. It gave me a lot to think about, and new ideas to consider.

    Raelene Gorlinsky

  5. Back in 2003 I was in a Publishing Certificate program in New York City. We had several publishers, marketers, editors, etc coming in to talk to us about the market. We had a guest speaker from one of the big publishing houses talking with us about the various rights a book might have, royalties, etc. I was a little surprised when I asked about electronic rights and ebooks that essentially the publishers (at that time) thought very little of the market. When I mentioned that I’d spent over $3000 in ebooks in 4 years (thanks to discovering Ellora’s Cave and other e-publishers) the expert told me that I must be supporting that niche market myself. Ebooks were inconsequential to the big publishing houses. She probably thought I must be insane when I mentioned the over 30% royalty rate. In my mind I immediately crossed that speaker off my expert list. Lack of progressive thinking is what destroys the bastions of old media. I am very proud of Tina Engler and Ellora’s Cave. They are very much ahead of the curve.

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