An Open Road to Nowhere

road to nowhere An Open Road to NowhereBacklist e-books are finally finding an audience, Jeffrey Trachtenberg optimistically wrote in The Wall Street Journal. He uses the example of Open Road Integrated Media, an exclusively e-book publishing outfit helmed by former HarperCollins CEO Jane Friedman. But a hard look turns his math fuzzy fast. 

Open Road publishes e-books for different devices that are either in the public domain or the less read books of decently well-known authors like Rafael Yglesias and Susan Minot. The company is also partnering with independent publishers such as Shambhala Press and Kensington– so they have e-book rights to a range of books, from Start Where You Are by “the beloved Buddhist nun” Pema Chödrön to Dying Screaming by New York Times and USA Today bestselling author Mary Burton.

The start-up is funded by Kohlberg Ventures, who initially invested $7 million. James Kohlberg says the company is close to raising another round of funding. According to the article, Open Road had planed to publish 1,000 e-books and make $1 million in revenue their first year. They ended up releasing 420 titles and making “over $1 million.”

By the end of 2011, they are planning to have a total of 2,000 e-books and make $10 million in revenue. They also hope to make a profit. However, that may be hard since the company spends around $400,000 a month on operating expenses.

The Big Picture blog points to a far less rosy reality.

“Open Road claims 400,000 downloads since last May off 420 titles published. That’s fewer than 1,000 copies of each title sold if we’re averaging out the titles. So to get to 10 times the revenue, it would appear that Open Road is going to need 10 times the titles or 4200 new e-books in the next year instead of the 2,000 they project in 2011.

With 400,000 downloads generating $1 million, Open Road is seeing a neat $2.50 per download. Since Open Road receives 70% of the selling price, the average title at Open Road is selling for less than $4.00. That means Open Road’s best sellers aren’t premium titles. The prestigious titles listed in the chart accompanying the story all sell for $7.50 or more.”

The Big Picture blog claims that backlist ebook publishing is still hit driven, just like traditional publishing – something Jane Friedman disputed in The Wall Street Journal:

“We aren’t a hit-driven publishing business. We’ve had more than 400,000 downloads since May. And none were free. Free isn’t a business model.”

Unfortunately, that may not always be true. Just today, BitTorrent announced they would publish their first eBook. And BitTorrent’s business model is free.