Robert Kiyosaki is an American businessman and author of a popular personal finance Book titled Rich Dad Poor Dad. He states that a financial asset “can be anything as long as it has value, produces income or appreciates, and has a ready market. Assets put money IN your pocket.”

One of the most controversial statements Robert has made about assets is that your house is not an asset. At least, it’s not your asset. As long as you’re paying a mortgage on it, it is a liability for you. And it is an asset for the bank.

In fact, as long as you’re paying anything for it (e.g., maintenance and repair fees, property taxes) without earning enough income from it to more than cover these expenses (e.g., rental income), it is still a liability. It’s only once that property becomes 100% mortgage free, and is generating consistent cash flow for you, that it becomes your asset.

Digital Books are Assets. Physical Books are Liabilities.

Robert Kiyosaki’s definition of an asset resembles the concept of digital books very well. To clarify, when I refer to “digital books,” I’m not only talking about ebooks. I’m also talking about print-on-demand paperbacks and hardcovers.

There is obviously a higher upfront cost involved in producing a paperback or hardcover book than an ebook. The process not only requires professional editing and proofreading. A skilled graphic designer is also necessary to help you properly format both the interior and cover files to match a printer’s specifications.

But the real cost of paperbacks and hardcovers comes from over-printing books that will never sell. Traditional publishers do this all the time—not just indie authors. They print thousands of copies that lay dormant in warehouses. Even if books are ordered by bookstores, they must pay to ship those books out. Then they must pay to ship back from 20 to 50 percent of unsold books that are returned by bookstores. This all cuts into profits. It’s a vicious cycle.

Why Print-on-Demand (POD) is Better

With the invention of print-on-demand (POD) technology, today’s publishers/authors no longer have to print and store physical books in order to sell physical books. All you have to do is supply the digital files for your book’s cover and interior to the e-commerce site of your choice because most of these online retailers utilize POD technology to sell books rather than stocking those books in warehouses. Then, whenever they receive an order for that book, they simply print, bind, and ship the exact quantity ordered (whether it is one book or ten) all at the same time.

Most of the e-commerce sites take digital files in the form of print-ready .PDF files and simply store them on their servers. But I want to caution you about selling those .PDF files as ebooks. They are far too easy to copy and share with others (unless they are .DRM files … but that’s a whole different post). Instead, it’s pretty easy to have those .PDF files converted into either an .ePUB or a .MOBI and sell them through the proper channels.

As for Ebooks…

Ebooks, in particular, can be highly profitable digital assets. Think about it from a strictly business perspective for a moment. You’ll quickly see that an ebook is a portable business card that can be delivered instantaneously, anywhere in the world, for free or for sale, via email, blog, website, or ecommerce site.

An ebook can be read in the comfort of one’s home or office, during a commute by train or airplane, or even when standing and waiting in line. Ebooks are easily-searchable documents that you can hyperlink to other relevant information sources. Ebooks are updateable which is especially helpful to those who wish to keep their information relevant and stay on top of the dynamic Internet.

With a digital asset like an ebook, you don’t have to pay storage or maintenance fees of any kind. Best of all, there are hundreds of thousands of affiliate marketers out there who are more than happy to help others promote and sell their digital assets all over the world. Pretty much every major ecommerce site has its own affiliate program now, and this is like having a massive sales team at your disposal without having to pay anyone an upfront salary.

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