Equus Information Services

I realized the other day that I mention "Equus" a lot on this blog, but have never officially said anything about it. So, I wanted to go ahead and give a run through of the company and its concepts, both because it's becoming a hugely important part of my life, and also because it's good practice for me to give talk through the current "elevator speech" every so often :).

Equus Information Services is the umbrella name for the sole proprietorship I established in January of this year. It covers anything technical or organization that I get paid for (working with dad on GDI systems, for example). But my primary focus is on a division within EIS, Equus Digital Publishing. (Keep in mind, this is all symantics at this point, but I'm trying to keep the company structure clear now, so that I don't create problems for myself down the road).

What is digital publishing, you ask? What a great question!

Digital publishing is similar to traditional print/media publishing (book houses, movie studios, record labels, etc). We help an author, artist, or euntrepenuer to has material they want to release think through the best format for that material. We help them edit it, and create the final version of the product. Once it is ready for release, we help them form a marketing and distribution plan, and then handle sales of their product, paying them a royalty for every purchase.

The difference is, as the name implies we only publish fully digital content, which is where things get fun because as far as I know, we're the first company to do that. It might not sound that significance, but the difference in format has massive implications. Let me go over a few:

1. Sucess Threshold
This is a term I've coined recently (although I may have picked it up somewhere and forgotten) to describe the "break even" point that justifies publishing a product. Basically, a publisher needs to be relatively confident that a book or movie or what-have-you can sell X number of copies in order recoup the expenses of publishing it and turn a profit. The biggest factor in determining a product's success threshold is the costs involved in getting it published, printed, and out to market so it can be sold. Pretty self explanitory.

Traditional print/media can have very high costs associated with this front end development, and the costs continue to rise. It's the main reason the various media markets have been contracting. It's becoming harder and harder for a publisher like Penguin Books, for example, to justify printing books they know will sell well, but have limited appeal, and it's becoming harder for them to arrange for the few remaining major book retailers to carry it on their shelves. Everyone is looking for the next Harry Potter or Twilight. A decade ago, 5,000 sales meant a book was well worth printing. Today, that almost guarantees that it won't see daylight, even if those 5,000 sales were a total "sure thing" (a small but entheusiastic fan base, e.g.).

A lot of smarter and more experienced people have written about "the death of the midlist" before. Niche genres like poetry volumes, short films, short stories, fringe music genres, etc are languishing. Given that they don't cost significantly less than blockbuster or mainstream products to publish, fewer publishers can justify taking them on, even if they are of exceptional quality.

Enter Digital Publishing! Frankly, it's stunning how inexpensive it is to create, market, and distribute digital material if you avoid having to produce a physical accompanyment. We're talking hundreds - or even just tens! - of dollars in costs, compared to tens of thousands. What this means is that Equus can justify publishing products that we're reasonably confident would sell in the hundreds, not just the tens of thousands. In fact, that's the business plan for the first few years.

2. Digital Marketing and Distribution

You have no idea how many headaches are instantly solved by the fact that our products are all downloaded rather than shipped. Everything from manufacturing agreements, shipping, product placement deals with vendors, and on and on. Aside from being rather complicated, the costs of all of those things add up quickly. In comparisson, a website capable of hosting files and payment gateways costs maybe $40/year....

But the digital environment also simplifies marketing and advertizing. Three words: Google click-through ads (ok the hyphen might make it 3.5). Rather than paying for ad space on TV and in magazines, and hoping you did your research well enough that a significant number of your target market sees your ad (but paying for it regardless), click-through ads allow you to place a short blurb through Google that is displayed in a column on the right of the screen whenever someone searches for keywords that match your ad. Which means that the only people who see it are ones who are already generally interested in the topic or genre of your product. On top of that, you only pay a small premium when people actually follow the link to your site!

There are lots of other options for digital marketing and distribution, but that gives you a pretty good idea of how significant this is.

3. Royalties

The current royalty-based system sucks. Badly. The artist that creates the piece works their ass off and gets 5%, maybe 10%-15% if they're lucky or already famous.

Yes, the publishing process is complicated, expensive, and important. But it's not 90% of the process of taking something from a great idea to a finished product ready to be sold, so why should publishers take 90% of the profits? Basically, they do it because they can. There just aren't any other viable options.

Equus' royalty system is based on effort. The entire 100% profit from a sale is divided between the artist and the publisher on a "who did what" basis. 30% is set aside for Equus, which covers all of the expenses of marketing, distribution, and ongoing support of the product. The remaining 70% is divided based on who handled the various aspects that needed to get done to get that product to market. Content development, formating and design, process development, and other roles all have a percentage of sales assigned to them. Once Equus agrees to publish something, a deal is signed on who is going to take care of the things that need to be done to make sure that the product meets Equus' quality standards (because Equus is also a development house that can help with as much or as little of the actual design and development as needed), and the royalty is determined based on that agreement.

Bottom line, if the artist does most of the work, they make most of the profit. The more work Equus developers have to take on to get the material finished, the more they take from each sale. Makes sense, right?

**EDIT**

This entry got much longer than I had planned, so I'm going to move the second half into a new post tomorrow.