The challenges for Small and Medium publishers needing new digital publishing strategies are a business model, developing or licensing appropriate software and providing the supply service infrastructure.
The alternatives are develop it yourself, take on some Software as a Service option if something appropriate is available, a fully outsourced services to a third party, or license software and do it yourself.
Here at Infogrid Pacific are firmly of the belief that publishers need to retain control of their digital content. This empowers the publisher to exploit all content instantly for new business opportunities as they arise, or are created. All of our products and licenses promote and reinforce that position.
We are aware that there are still many publishers who just want the digital distribution, or digital fulfilment problem to "go away" and are prepared to have the job of looking after their digital assets managed by a service provider. We therefore provide SaaS licenses to other organizations so they can operate these services, but we ourselves do not buy into the publisher's business model so there is no conflict. Our risk management licensing model addresses the software cost issue, so that leaves the final problem, how does an SM publisher deliver the services.
A new option that is now very real, affordable and is really a game changer for SM publishers is cloud hosting. It's a game changer because a relatively small operation can project very large Internet solutions and presence very affordably. "The Cloud" for Small and Medium publishers is the subject of this post. It includes practical implementation examples with real budgets.
Enter "the cloud"
In this post I would like to give an overview on how an SM publisher can project their business from the cloud (using our applications of course), and a brief summary of the costs relating to running your own cloud operation.
We currently operate around 30 servers and four accounts on Amazon Web Services (AWS), for both our own operations and a number of customers. OK, this is small stuff but we only started serious hosting support in October 2010. The cloud hosting option has been a serious tension reliever for each customer for different reasons. This blog uses AWS as the example because that is what we are using and have experience with. Amazon has done a very good job with this service.
In the past we have used a number of ISP services providers. We used SliceHost for a couple of years, evaluated Rackspace and others, used dedicated hosting, but everyone of these options had some combination or performance, flexibility and scaling problems, and inflexible costing. There are other cloud hosting options which may suit specific requirements better, but this post is about using AWS.
While operating AWS is not technically difficult to use there is a learning curve if you want to operate your own account. If a publisher has no in-house Sys Admin resources, or IT resources that are not flexible, even this can be daunting. That is why we provide System Admin support services for AWS.
The advantages of the AWS cloud in particular
Pay as you go
Amazon S3 provides a secure, reliable, scalable and inexpensive, "pay only for what you use" storage service on the internet.
There is no minimum fee and no over usage fee. It costs just 15 cents per Gigabyte (GB) per month to store the data and only 10 to 18 cents per GB for data transfer. There is no minimum monthly fee.
Costs are forecastable, predictable and can be monitored on an hourly basis. There doesn't have to be any pricing shocks.
Multiple data centers
Your servers and data can be located at multiple data centers making Amazon probably the most reliable and affordable cloud service available today. Their storage is particularly cost effective (cheap).
Pictures, videos, audio, music, presentations, supporting documents can be stored and delivered by Amazon S3.Your data is quickly accessible, always available, and secure. It's highly scalable, reliable and low-latency.
Easy data sharing and accessing
You can set access permissions to share data with selected groups of users or make it public. You can control access for each file, and you can even generate a signed URL, which expires after a certain time.
I need to... how can I?
OK, so now that I have finished the promo for AWS (regretfully we don't get a penny) lets do an SM Publisher strategy and budget.
All Infogrid Pacific IGP applications are highly suited for cloud hosting. They were designed that way. However the ones that are of most direct interest to SM publishers are:
IGP:Content Fulfilment Systems with IGP:Offers, Agreements and Rights.
These Web applications can all be run on a single server, or scaled horizontally onto multiple servers to match business requirements. I will use IGP:Distribution Manager as a simple AWS costing exercise as it is the most predictable server, storage and bandwidth resource consumer.
Distributing e-books to retailers
Getting ePubs made is not such a problem at the start of 2011 (getting them made well is a different issue). Distributing them to various retail channels around the world is the bigger challenge addressed by IGP:Distribution Manager.
How much - install it yourself
The first thing to consider is obviously costs and budgets. This is where cloud services shine for small operations. There is no hardware/consultant salesman selling you up to the latest server grade machine, there is no spending money for overhead you may need in 2-3 years... or never.
Typically putting servers into place in-house, if it is an option, requires space, UPS, backup resources, networking, and at least a bit of a person. Using standard hosting servers for applications of this nature starts at around $250 per month, and that is without backup.
This little hardware costing example is currency neutral. It would apply to any decimal based developed country currency unit system so I leave you to put AUD, CAD, EUR, GBP, SGD or USD in front of the numbers. These are CUs - currency units). Use your own figures.
Up-front hardware costs
UPS CU 1,000.00
Server CU 2,000.00
USB backup CU 500.00
Networking CU 500.00
That's a real cheap setup and most real operations could be twice this.
Each month you are going to be paying half an administrator or some contractor in the order of CU 1,500 to check things out, make changes, fine tune things as the data loads increase, etc. Plus of course since it is located in your premises you have the ISP bandwidth costs to handle as well. Your monthly costs are probably going to be in the order of CU2,500.00.
How much - Cloud hosting
Of course the human never leaves the equation, but with cloud hosting the physical infrastructure maintenance part of the operation disappears and only leaves monitoring and configuration as and when required.
The most cheerful feature of AWS is that it costs absolutely nothing to create an account and get started. You even get a free Micro Instance and bandwidth as a starter kitset.
Because bandwidth is relatively cheap, USD0.15 per GB, even usage such as 1000GB is only USD 150, and a popularity surge to 5000GB is not going to break the bank, and hopefully indicates a lot of new business.
Your IGP:Distribution Manager data requirements.
Down to the AWS costing model. Lets say you publish around a book per week, around 50 books a year to keep the arithmetic simple. Your production team is pretty artistic so the books contain images and the ePub and Kindle files come in at around 5MB each.
You have a backlist of around 250 books which have been converted to ePub and Kindle. Thats a total storage size of 2.5GB. In Amazon terms, thats USD 0.375 per month.
Each year your frontlist is going to add approximately 500MB of storage.
Next you want to send those files to 10 e-book retailers. That means 2.5GB x 10 channels data transfer size at USD 0.10 per GB. That's 25GB of data transferred for US$ 2.50.
Because you are using IGP:Distribution Manager and you can change prices by any combination of channel and currency, you update your prices twice a year as you exploit the new available digital content business models. With a pricing update you are only sending the ONIX data, so that is a mere 10KB per book. That means sending price updates for 300 books twice is only 6MB. It hardly registers on the AWS billing meter.
Each time you add a new channel and send all books to that channel, the data transfer is the full set of 3GB book files. Delivering all the books to the new channel is a grand total of US$ 0.45.
A real world cost example
Starting with a single server using a large Reserved Instance (in AWS talk a server is an "Instance"), means putting USD 910.00 on the table per annum. The per hour usage is then USD 0.12, making a monthly total of around USD163.44 for a pretty good performance server with 8GB RAM.
You can also take an "On Demand" instance at USD 0.35 per hour, for an average monthly fee of USD 255.50.
All of the IGP applications will work on Micro instances except for a few processing modules which are very greedy of CPU and memory resources. That means you can do your testing and trialing at only USD 0.025 per hour. That's US$15.00 per month.
We generally create a 250GB volume which costs $25.00 per month, and then take a Micro reserved instance in another region and back up the volume there.
|Cost heads ||Monthly ||Annual
|Reserved Instance fee
|Reserved instance monthly cost||87.50||1,050.00|
|Monthly Volume storage||25.00
|Backup Volume storage||25.00
Annual operational cost $910.00 + (102.50 x 12) = US$ 2,620, or $218.00 per month.
If we analyse this as deliveries for the year, you have made 300 book deliveries to 10 channels, or 3,000 deliveries.
This is pretty close to $0.90 per delivery. That's for all infrastructure, a fraction of the cost of SaaS models or service models which want you to pay anything from $10 to $50 per book just to register books into their systems.
This particular infrastructure model is strong enough for up to five SM publishers to share. If you can form a cooperative group the per user costs can be reduced even futher.
A real world low cost example
It can still get better. The on demand services of AWS means you only pay for what you use. By being a little cunning it is possible to lower the previous costs significantly.
You install the main server on a Micro instance for around $15 per month. You do a full backup with a replica for an additional $15 per month.
These servers are not really strong enough for distribution events which require a lot of CPU for packaging and manipulation and would fight with the databases. So every time you need to do a distribution event a Large Instance is fired up for just an hour with IGP:Long Running Process Engine doing the heavy lifting work. The files are processed and ftp'ed, and then the Large Instance is closed. That costs US$ 0.35 per hour..
Let's say you distribute once a day, every day of the week. The total monthly large instance cost is $10.85.
Adding all the figures together the monthly cost is around $60 for an annual bill of $720. Your infrastructure cost for 3,000 main distribution events is getting close to US$ 0.25 per delivery.
The world of digital publishing is more than just getting the content into an ePub. This simple costing exercise illustrates that digital infrastructure issues doesn't have to be so frightening and demonstrates how the emerging disruptive technologies of today can bring significant benefits to Small and Medium publishers. Of course the larger publishers can also take advantage of these options if their policies allow.
The "cloud" works. AWS is a strong, reliable and secure service. It works at small scales, and with a little optimization is a serious low cost option delivering no compromise, high performance infrastructure.
Of course cost is not always the only business driver, but with other more bandwidth intensive applications such a bookstores, and online content fulfilment systems, the fact that such strategies can even be considered by SM publishers is remarkable. If you are evaluating serious digital content strategies, take a serious look at the cloud options, AWS in particular.