Sunday, February 13, 2011

Create Space Vs Lightning Source

07/14/2011 - I've completely revised this post based on new information that has come to light since my original post back in February. If you've read this post in the past it might be worth a re-read. What's the new information?
  • Some rebuttals to my original post that pointed out you can get 20% discount with Amazon rather than 40%

  • A recent email that alerted me to Amazon not keeping Lightning Source titles well stocked
We'll get to both of those in due time but lets start off at the beginning...

When it comes to producing paper books there is no better choice, in my opinion, then to use POD (print on demand) technology. This reduces the risks involved in the upfront cash investment of doing a large offset print run. Besides, I've put out for bid various copies of Ridan's books in quantities from 50 - 500 and I've never found a printer to match the per book pricing you can receive through POD.

When it comes to POD the two big players are CreateSpace and LightningSource. From here on out in this post I'll refer to them as CS and LS respectively. I've used both of them quite a bit in the past, and which one you use will depend on what exactly you will be doing with the printed books. If you are printing them for your own use (to sell direct on your website or to use as review copies) the answer will be different then if you want to distribute through channels such as Amazon and bookstores.

A quick note: Neither CS nor LS are publishers. They are vendors (printer/distributors) that require you to provide them with print ready files. Both offer add-on services such as editing, layout, and cover design but you should NEVER purchase these services from either organization (You can get it better and cheaper elsewhere – sigh…another topic for another day). So for the sake of this post we’re going to talk about what you SHOULD use them for.
  • Producing high quality printed books
  • Distributing printing books.
  • Providing books to yourself for selling direct (via your website) or giving away to reviewers

QUALITY
Let’s first talk about the quality. They are nearly indistinguishable. (I suspect they are using the same equipment). The covers and interiors come out as good as any book you’ll find in a bookstore. Yes offset is done with ink, and POD is basically a laser printing (using toner) but unless you put a printer's loop on the page you'll not see the difference. If none of my previous sentence made any sense to you, don’t worry – it just says that the quality is very good for both and you should not be concerned.

NOTE: If you have a lot of black and white photographs - I suggest you proof carefully (and possibly adjust the images) as this is one area where there are differences between toner and ink. But, if your book is largely just black text on a white page - you'll see no differences.

I've printed the same book, from exactly the same files (well adjusting for spine width a bit -- LS uses slightly lighter weight of white paper (I've not used their creme so I can't comment) and so their books are a tad thinner than a CS book) and there are very slight 4-color color differences, but both come out looking very good.

Someone else pointed out to me that one uses white glue (LS on the spine and the other a yellow glue (CS) but that's picking at nits and the important point is that both glues do what they are suppose to which is keep the pages between the covers (something I personally had a bad experience with when using a short-run printer that was neither of the above).

Another point that should be made…especially by people who publish through the likes of iUniverse and Xlibris etc. These companies use CS and LS for their printing. In the past I believe most of the big publishers used LS but I’m sure they “shop this around” frequently and I can’t say for sure who they use now but I’d lay dollars to donuts that it is one or the other of these two companies.

COSTS – A comparison
Okay, so let’s compare the costs. For per book printing, both are priced in a similar way – in that they charge based on # of pages.

Per book print fees:

  • CS is # of pages x .012 + $0.85 for cover (for any book)
  • LS is # of pages x .013 + $0.90 for cover (for books sold through channel)
  • LS is # of pages x .015 + $0.90 for cover (for books sold direct to publisher)

This doesn’t seem like much difference but lets do the comparison for a 300 page book

  • CS = $4.45 (all books)
  • LS = $4.80 (those sold through the channel)
  • LS = $5.40 (those sold to you)
We'll talk more about channel selling - but for now just know this is any book bought through a retailer (either online like Amazon, or in a retail store such as Barnes and Noble).

If you need books yourself (for reviewers or direct selling on your website) there is no question that CS is the better choice and even if you decide LS is going to be your distribution partner I suggest you use both (yes you can use both) for books you buy for yourself.

Now let’s look at “setup fees” they are:

  • CS $39.00 per title (using the PRO plan – which you should ALWAYS use)
  • LS $75.00 per title ($37.50 for interior, $37.50 for cover)

Proof fees?

  • CS = price of book + shipping so about $7.00 - $9.00 depending on shipping method selected
  • LS = $30.00

Yearly fees?

  • LS = $12.00 per title per year
  • CS has one – but it’s been waived every year I’ve been with them so I can’t remember what it is – I think it is $10 - $20 or so but since I’ve never had to pay it I don’t keep track.
So for setup you can expect:
  • LS = $117 per book
  • CS = $46 - $48 per book
Distribution
Okay, now we come to the single biggest part of the CS vs LS equation and that is how these printed books are distributed. For those that don’t know books are not sold from publishers to bookstores they use a distribution channel. (Bookstores don’t want to write 10,000 checks to 10,000 publishers – the publishers will use a few (or just one) distribution partner and write only one check to them. The distribution partner then manages getting the books to the thousands and thousands of various sales outlets (both online and physical).

Lighting Source
LS is a subsidiary of Ingram. For those that don’t know Ingram is the 800-lb gorilla when it comes to brick and mortar bookstores. I would venture to say that almost any bookstore "can" order through Ingram though some probably order from other places as well to get best pricing. Being distributed through Ingram doesn’t mean store shelf space it means the “ability” to buy the book. (More on this in a minute). With LS you can set your discount to anything (as low as 20% though they recommend 55% to get maximum exposure)

Create Space
CS does not get you into Ingram. It puts you into something called the Expanded Distribution Channel which is stated as: “the potential to distribute your book to a larger audience through more outlets including: retailers, bookstores, libraries, academic institutions, wholesalers, and distributors.” Remember what I mentioned about bookstores wanting to write 10,000 checks? Well Amazon is a big enough player that many will add Amazon to their list (like Ingram) but unlike LS, CS does not detail who they are or give you any guarantees. The discount on the EDC is pretty high (60%) but that is pretty standard because the people they distribute to need to have their cut of the pie.

Channels
So what can we say about both companies and distribution….they give “some” opportunity to get the books to “other” outlets.I'm going to break distribution down into several important channels:

  • Amazon (because they are the biggest online retailer)
  • Brick and Mortar Bookstores (because most authors want their books to show up here)
  • Other Online Retailers
As I mentioned in the beginning, most of the books sold by Ridan are actually ebooks. For the print books our sales are:
  • Large majority from Amazon
  • Next highest sold direct through our website
  • A few books sold through other distribution channels
This is because of how we align our business goals. If you've got a model that attempts to maximize bookstore sales (especially those in brick and mortar) you may make different choices than I did.

Amazon Selling
Since this is our biggest dead tree market we want to maximize the income from this channel. In this case, LS is the clear winner as you can set your discount in LS to 20% rather than the 40% that CS will take. So let's revisit our 300 page book ans assume that it is being sold on Amazon for $12.95.
  • LS: $12.95 - $4.80 (print) - $2.59 (distribution) = $5.56 profit per book sold
  • CS: $12.95 - $4.45 (print) - $5.18 (distribution) = $3.32 profit per book sold
That's a HUGE difference. If you compare the difference in setup fees (you are break even after selling 32 books and from that point on will be making $2.24 more if sold through LS.

But there are some catches.
  • With LS you can't choose different discount %'s for different channels. And bookstores generally want a 50% - 60% discount so by offering 20% your chances of selling any in brick and mortar stores is slim at best.
  • When using CS Amazon has 40% margin so they will discount your books - I've seen as much as 32% off offered on books by Ridan sold through CS. Buyers like discounted books so this "sales price" may entice more purchases. At 20% discount I've never seen Amazon put those books on sale (they are already too slim on their margin). Now all this being said - there is no guarantee what books Amazon will discount and which they will not so just because you use CS will not guarantee discounting.

  • In Stock - if you use CS your books will always show as "in stock". In the deep dark past there was a time when Amazon removed any non CS POD books - which brought outcries from many for obvious reasons. They got into huge trouble for this and restored the titles but it appears that now they may be cutting inventory kind of close when ordering books from other distributors. A recent article (7/7/2011) in Self-Publishing Review alerted me to this. In fact I've been checking my non CS titles daily and sure enough Nathan Lowell's Full Share is constantly teetering on being "unavailable". He currently has 2 copies available but it has been fluctuating between 7 and 9 most days and I've not seen it "fully in stock" since I started watching it when this article came to my attention.
Bookstore Channels
Okay now let's consider bookstores. As previously mentioned Ingram is HUGE in this space so LS has a competitive advantage over CS
  • LS: Is owned by Ingram and uses them to distribute their titles.
  • CS: Will not get you into the Ingram but they have their own Expanded Distribution Network (EDC) but they will take 60% margin instead of 40%
Ingram distribution is HUGE and if you plan on focusing on brick and mortar stores than this is the much preferred distribution partner. Now before you get too excited, it does not mean that your books will be sitting on a bookstore shelf. Bookstores actually work more like consignment shops in that they don't pay for product they put on their shelves. They order books and 60-90 days later when the bill comes due they have the option to ship back books that did not sell and they do this often. Because POD books must be paid for when the order is taken, many bookstores won't buy them even if you've setup in LS for them to be returnable since they have to pay money up front, then get it back later which is much more difficult then just shipping back books that they didn't have to put out any up front cash for.

So the books may not be on the bookstore shelf but it usually means that someone can walk into a store with an ISBN, and special order a book in the Ingram chain. The bookstore may require the person requesting to "pay up front" and some may not have the systems that allow them to order POD so even though you are in Ingram but your chances of special ordering are better if you are with Ingram then if you are not.

And once again there is a catch...remember that I said that you couldn't have different discount rates when using LS? So if you set 20% to maximize your Amazon sales you've probably shot yourself in the foot for any bookstore sales. Generally they want 50%-60% discount rates so when they see you are only offering 20% they may not think that it is worth it. Again, this may be a situation where you do a little hybrid - use CS for Amazon selling (and take 40%) and set your LS discount rate at 55% (and probably specify returns allowed) to be most attractive to bookstore selling.

Other Channels
As far as non Amazon and non bookstore I think that CS and LS are about equal. If I compare my sales from both LS titles and CS titles that I've done through Ridan I sell a bit more in the EDC than LS but the differences in numbers and the differences in discount rates are not enough to make one better than the other.

Using Both
There's no reason why you can't use both CS and LS. And in fact I do this. In the beginning I used LS with a 55% discount and returnables to get Ingram distribution but sold directly through Amazon for 40% discounts (and saved 15%). The problem...LS even with their Ingram channel was not moving many of my books through their channel. In fact the $117 setup fee took me a LONG LONG time to make back and so for awhile I abandoned LS altogether. But...when I found out I could get 20% discount on Amazon I started using LS again (primarily for books sold to Amazon) and purchased any books I sold directly with CS.

If you do both here's what you need to know.
  • You don't need two ISBN's - In both cases they are the same format of book (trade paperback) so only one ISBN is needed
  • The Interior PDFs can be exactly the same file - no formatting changes required
  • The Cover PDFS will have to be adjusted slightly for different spine widths once you know the page count you need to go to each site and look for their "spine calculators" to determine the size of the cover.
Back in the day when I used LS for Ingram distribution I actually priced the Ingram book a bit higher than the Amazon one (because I was doing a 55% discount instead of 40%) I actually had the same ISBN but the barcode on the cover of the LS was slightly different because for instance a book I sold for $12.95 at Amazon I might sell at $13.95 through the Ingram channel.

CONCLUSIONS

So, let’s wrap up this very long post….

  • DTB (dead tree books) are worth while to sell directly (via your website) as there are no distribution fees (just a small credit card processing fee) buy books to be sold this way from CS.

  • Amazon – the “cheapest” way to do this (lowest discount) is to go direct to LS where the discount is 20%.

  • Distribution channel of LS should be better than CS (Ingram is a powerhouse) but you negate this if using 20% discount for Amazon. If you really want to maximize the Ingram channel you should have a discount of 55% and mark your books as returnable.

  • If your sales volume is VERY low on print books it may take you awhile to earn back $117 setup fee for LS.

  • Quality is the same between both

If you read my original post on this subject I said that CS was the clear winner but that was before I knew you could do the 20% discount through LS and that has shifted my thinking. So now it really comes down to which distribution channel you want to maximize and you need to choose your partner and the discount rate carefully.

As always I’d love to hear what you think about this post.

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