The new “economy of free” continues to push content creators of all types to providing free goods and services, and web 2.0 companies are challenged in trying to figue out how to not just live on VC money and actually turn a profit.

Matt Maroon thinks that the free economy will eat itself, and has posted a very insightful post entitled Bubble 2.0 that deserves a read.  Specifically, Matt is talking about software and related web 2.0 companies, but regardless of what you are selling (or giving away for free) I think Matt’s alternative view deserves consideration as well.

I think that at the end of the day, much of our new free culture is going to turn out to be just plain unsustainable. I’m predicting that we’re going to see a large number of high-flying startups crash, just like we did before. They aren’t currently flying as high or as conspicuously as last time, so the crashes will be much more graceful, but crash they will. This time they won’t depress the public markets, at least not directly, just hedge funds and private equity.

I have my own opinion, and think free definitely has a place in the business model, but I want to know what you think.  Can companies turn a profit on “free?”

How did Another Sky get started?

Friends who had read Click and were familiar with my ideas for Another Sky Press helped me make the press a reality. It had existed as a theory of mine for years (I’m a bit of a media theory geek) – the only thing I was missing was something to release. Fortunately, I’m an author. It seemed appropriate, even necessary, for the first release to be my book given the radical nature of the paradigm – ‘walk the walk’ and all that. Theories are great but they don’t compare to the real thing.

Another Sky Press was and is the result of unfettered idealism. I wanted to create a publishing paradigm that was as ‘pure’ as possible. For example, I believe art should be accessible to all, regardless of income. That is one of the reasons that Another Sky Press makes all  of its books available for free online. A more complete explanation can be ound here: http://www.anothersky.org/main/our-beliefs/

Anyway, a web developer friend of mine, Michael Fields (mfields.org), helped me put together the site. I taught myself InDesign and put together the layout for Click, and asked my friend Jesse Reno (jessereno.com) if he’d do the cover. Jesse is an internationally known outsider artist – a perfect fit for both Click and the project as a whole. Others helped out when and where they could, such as with the more business/financial side of things that made my head spin.

We’ve released four other books since then – a coloring book, an anthology, and two art books. We’ve got a busy lineup next year – if all goes as planned there will be a few more novels, two more anthologies, several children’s books, and a couple more art books.

What percentage of readers buy the book after reading it online?

We intentionally don’t track this, although we know it happens on a regular basis due to reader/fan email. Even if they don’t buy a copy it’s no different than someone reading a friend’s copy or reading a copy at a store or library. We don’t consider someone who does this a ‘lost sale’ but rather as a ‘new fan’, knowing there is a good chance they will tell their friends. The same goes for the occasional person who buys a hard copy at cost with no contribution. Of course, it’s always great when someone does contribute – authors and artists need to eat, too.

What is the average contribution?

It depends somewhat on the release, but the overall average is just under $5.

How do you track readership online?

We don’t, nor do we plan to.

Are you using a POD model to created the printed books?

For the majority of our books, yes. Print On Demand is one of the best thing to happen to publishing since the printing press. Nowadays, the print quality is top-notch. It’s opened up publishing and literature in the same way that blank tapes and cd opened up the music industry to independent labels and bands.

Offset printing is a massive barrier of entry – only a well funded press can afford to release multiple books knowing not everything will sell. This can stifle even major publishers – a wonderful book that doesn’t have an easily defined market may never see the light of day if offset printing is the only option. While the per-copy cost for POD is slightly more than offset printing there is no large outlay of cash, and more importantly, no risk. This is a good thing. I realize there is still a stigma about Print On Demand, but that will go away.

Traditional publishers are already beginning to turn to POD for their backstock, and it’s only a matter of time before they experiment with it for newer releases as well. Technology – be it MP3s or Print On Demand, allows for new business paradigms to take root and evolve. It’s much easier (and even beneficial) to flow with technology than fight it.

How are you generating revenue for both the author and publisher?

We sell our books direct from our website at exact cost (printing + shipping, zero profit built in), through online stores (e.g. Amazon.com), and have distribution at select bookstores around the country. With any book sold direct, the only profit is a reader’s contribution. Bookstores sell our books at a traditional fixed retail price with some built in revenue.

100% of these profits are distributed as royalties to the individuals that made the book happen – i.e., author, layout, artist, etc. based on mutually agreed upon terms. Another Sky Press doesn’t take a cut upfront, but the individuals involved in a project can (and often do) ‘tip back’ some of their royalties to Another Sky Press to help cover our operating expenses and fund new projects.

What do you hope traditional publishers will learn from your work?

Readers are more important than sales! Not everyone that might want to read a given book has the disposable income to buy it. However, it’s in a publisher’s best interest for that person to read the book regardless, since those people tend to be vocal fans. Sales then come as a result of quality books rather than hype. Put out books that you love!

(Thanks to Kristopher Young for taking the time to answer my questions, and to Andrew Barnett for the suggestion.)