Ebooks

This post, by Richard Nash, originally appeared on The Virginia Quarterly Review site.

The following piece by Richard Nash will appear in our Spring 2013 issue, as the lead in a portfolio focused on the business of literature.

ONE OF THE REMARKABLE deficits in contemporary accounts of both book publishing and Internet business is sociohistorical awareness.

That it should be so with the Internet is unsurprising, prone as so many popular tech commentators are to triumphalist or progressive teleologies—one technology replacing another, one company killing another, IBM’s dominance unquestioned, then Microsoft’s unquestionable, followed in turn by AOL, MySpace, Facebook, etc. The implacability of Moore’s law is extrapolated from processing power to the social order. Similarly, most current discussions of the book economy rarely reach back earlier than the Golden Era of American publishing in the 1950s, the British one dating back perhaps a little farther, to the 1930s.

While many histories of the book incorporate serious empirical research—Elizabeth Eisenstein’s The Printing Press as an Agent of Change is an epic example—three have arguably done the best job in applying that rigor to contemporary publishing: J. B. Thompson’s The Merchants of Culture; Ted Striphas’s The Late Age of Print, a series of case studies with particular focus on retail; and Laura Miller’s Reluctant Capitalists, which was almost purely about the retail side. Most other accounts of the contemporary business of literature are autobiographical, hagiographic, or histories of literature, avoiding the business and economics of it all. So why study a business that is sui generis, that isn’t even really a business—that, like America, is exceptional?

It is the Exceptionalists, the ones who claim the mantle of defender of the book, who undermine the book by claiming that it is a world unto itself, in need of special protection, that its fragility in the face of the behemoth or barbarian du jour (Amazon, the Internet, comic books, the novel, the printing press, illiteracy, literacy, to name but a handful of purported sources of cultural decline) requires insulation, like the skinny kid kept away from the schoolyard and its bullies. Who are these Exceptionalists? I think we’ve all read them, so I’ll restrict my strawhorses and offer as an example Sven Birkerts, who, in his introduction to the reissue of The Gutenberg Elegies, writes that “fiction is under assault by nonfiction”—this despite all the data that demonstrates fiction is disproportionately flourishing in the digital format. More problematic, though, is his characterization of the book as “counter-technology.” One may counterpose the book to many things, but technology shouldn’t be one of them. The book is not counter-technology, it is technology, it is the apotheosis of technology—just like the wheel or the chair.

Publishing is a word that, like the book, is almost but not quite a proxy for the “business of literature.” Current accounts of publishing have the industry about as imperiled as the book, and the presumption is that if we lose publishing, we lose good books. Yet what we have right now is a system that produces great literature in spite of itself. We have come to believe that the taste-making, genius-discerning editorial activity attached to the selection, packaging, printing, and distribution of books to retailers is central to the value of literature. We believe it protects us from the shameful indulgence of too many books by insisting on a rigorous, abstemious diet. Critiques of publishing often focus on its corporate or capitalist nature, arguing that the profit motive retards decisions that would otherwise be based on pure literary merit. But capitalism per se and the market forces that both animate and pre-suppose it aren’t the problem. They are, in fact, what brought literature and the author into being.

THE STORY OF THE book as technology—the book as revolutionary, disruptive technology—must be told honestly, without triumphalism or defeatism, without hope, without despair, just as Isak Dinesen admonished us to write. A great challenge in producing such an account is the “availability heuristic.” This is a model of cognitive psychology first proposed in 1973 by Nobel laureate Daniel Kahneman and his colleague Amos Tversky, which describes how humans make decisions based on information that is relatively easy to recall. The things that we easily recall are things that happen frequently, and so making decisions based on a large sample size would seem to make sense. The sun rises every day; we infer from this that the sun rises every day. A turkey is fed every day; it infers that it will be fed every day—until, suddenly, it isn’t. Heuristics are great until they aren’t. A person sees several news stories of cats leaping out of tall trees and surviving, so he believes that cats must be robust to long falls. These kinds of news reports are far more prevalent than ones where a cat falls to its death, which is the more common event. But since it is less reported on, it is not readily available to a person for him to make judgments.

Read the rest of the post on VQR.

I have been VERY vocal in my criticism of the many mainstream publishing outfits who’ve decided to form new, vanity publishing imprints in partnership with Author Services, Inc. (also known as “ASI” and “Author House”, among many other aliases). This begs the question: if those vanity partnerships are so wrong, what should publishers be doing instead?

I have the answer, and it’s pretty damned simple. You’ll see for yourself when I lay it out below: there’s nothing terribly Earth-shattering or insightful in it, it’s all just plain old common sense. But no plan, no matter how sensible, will ever get any traction with big publishers unless they can accept some attitude adjustment first.

Note that in this post, where I refer to Big Pub, I’m talking about the Big Five mainstream publishing houses.

Partnering With A Vanity Press Will NEVER Work

What you’ve decided to offer via your various partnerships with ASI is such a transparent ripoff of authors, you really ought to have known better. It’s painfully obvious to everyone (other than Big Pub, apparently) that this is a facile money-grab undertaken by outfits that are desperate to get a piece of the growing indie market share, but are so unwilling to invest anything of value or meaning in the endeavor that they’ve outsourced the entire enterprise to a disreputable vanity press.

ASI has been in the business of overcharging would-be authors for “publishing services” while also stripping them of their intellectual property rights for decades. Do you really have so little respect for writers that you thought we wouldn’t realize inserting yourself between us and ASI can only accomplish one thing: to further increase ASI’s already excessive fees to cover Big Pub’s cut?

Readers Are Your Customers

For many decades publishers have viewed booksellers as their customers, not readers. Publishers sold their books to booksellers, who in turn sold them to readers. This business model makes readers the customers of booksellers. It’s a business model that is now failing in the face of so much technological and cultural disruption, yet big, mainstream publishers seem at a loss to shift their focus from booksellers to readers. They’ve made careers of knowing what bookseller purchasing agents want, they’ve never had to give much thought to what readers want. That’s always been the booksellers’ job.

Well guess what? Amazon, the biggest bookseller of them all, is eating your lunch precisely because it has only ever focused on what its customers—in this case, readers—want. Its in-house imprints are informed by reader tastes and wants, and if you want to survive, your imprints must be similarly informed.

Authors Are Your Lifeblood

It’s not just aspiring authors who are going indie in droves. Increasing numbers of well-known, mainstream-published, bestselling authors are jumping their mainstream publishing ships in pursuit of the greater control and profit afforded to indies. When JK Rowling decided to take her ball and go home, it should’ve been a wakeup call to your entire industry.

Popular, established authors don’t need you anymore. There is nothing you can offer the Rowlings of the world that they cannot obtain on their own more cheaply, more efficiently and faster than you can provide any of it.

And this is why continuing with business as usual is a slow suicide march for Big Pub: you turn away from anything you feel appeals to anything less than a NYT bestseller -sized audience for fear such books won’t earn enough to keep you afloat, yet authors who do succeed in scaling such lofty heights are as likely as not to ditch you as soon as they’ve gained a foothold with readers.

And your ill-advised partnerships with ASI have given authors and aspiring authors good cause to look at you with a very jaundiced eye. What more proof do any of us need that you don’t view writers as your partners, but merely as profit centers to be exploited?

When an author or would-be author asks you (as they are starting to do with regularity), “What can you offer me or my career that going indie can’t?” you better have a good answer. Because right now, what you have to offer most first-time authors is ridiculously slow publication schedules, unfair contract terms, laughable efforts at promotion, and advances so small that they may not even cover one month’s expenses for a writer who toiled months or years on the manuscript you hope to profit from.

Either that, or the “opportunity” to have the bones of their dreams picked clean by ASI.

You DO Have Something To Offer, But It’s Not What You Think

Up until recently you’ve done a great job of convincing writers that what you have to offer is an odds-on opportunity for fame and riches, and that without you fame and riches are impossible things for any author to achieve.

When you lost your stranglehold on the distribution piece of the bookselling business, it was time to come out from behind the curtain and dispense with this Great and Powerful Oz shtick. Thanks to several well-publicized instances of indie authors reaching sales figures to match those of your strongest authors, and MANY well-publicized (within indie author circles, at least) instances of indie author earnings FAR exceeding those of authors who’ve signed with Big Pub, the cat’s out of the bag and authors are paying very close attention to the man behind the curtain.

The good news is, enough writers have become self-publishers that as a group, they’re pretty well informed about the harsh realities of publishing and bookselling. They know from firsthand experience what’s involved in producing a book and bringing it to market, both in terms of effort and expense. They know it’s not free and they know it’s not easy.

The bad news is, they’re no longer buying what you’re selling because they also know it’s a myth: signing with Big Pub guarantees nothing in terms of a book’s success or failure. All that it does guarantee is that the book will be mired in Big Pub’s outdated, slow, inefficient production, distribution, sales and marketing processes.

Your Commodities Are Administration, Experience, Expertise And Connections

Your business model is in desperate need of a radical overhaul, to display what you bring to the table in sharp relief for would-be author-clients. Big Pub needs a Public Relations facelift too, to rebuild the trust between yourselves and writers: something it seems you’ve greatly undervalued, judging by how quick you were to squander it on the likes of ASI. Fortunately for you, acting on the former may ensure the latter takes care of itself—but only if you do it right.

I have blogged here before about the necessity for any indie who’s going it alone to have an entrepreneurial spirit and approach, if she hopes to earn a living on her book sales alone. Guy Kawasaki echoes the same opinion in his book APE: Author, Publisher, Entrepreneur-How to Publish a Book. But I’ve also acknowledged here that many, perhaps even most, writers have no desire to be entrepreneurs. There are plenty of exceedingly talented writers out there whose strengths in plotting and characterization far outstrip their skills in bookkeeping, administration, design, production or marketing.

You have people on your payroll right now, as I write this, who are seasoned experts in the very things those authors can’t, or don’t want to, do by themselves. These are the things you have to offer and you’ve come by them honestly, so stop trying to hide them like so much stagecraft.

How To Capitalize On Indie Authorship Without Being Evil

Here are the broad strokes of how, were I in your shoes, I would attempt to turn the Titanic around.

(Any Big Pub representatives reading this who’d like to fly me out to New York for some paid consulting time to have me fill in the details, I can be reached at indieauthor at gmail dot com.)

Up until now, in recent decades your business model has required Big Pub to be interested in only two kinds of books: easy moneymakers, and status symbols. Any book that came your way and didn’t appear to be either a likely bestseller or winner of a major literary award would be rejected, regardless of any other appealing qualities it might have.

This is why you haven’t published a Great American Novel in generations, yet have created a market environment in which the Snookis and Honey Boo Boos of the world will never have much difficulty signing a six- to seven-figure book deal. It’s time to let go of your self-assigned role of gatekeepers and arbiters of taste, because you’ve been exclusively in the business of selling product at a profit far too long to keep denying it. There is no shame in this; you’re businesspeople after all, not philanthropists. So own it.

Writers aren’t bowing and scraping to you anymore. You can no longer afford to sit on high like so many Pontiffs of Publication, reaching down to bestow your magical favor on the select few while brusquely relegating all other supplicants to the nearest exit.

You need to start PARTNERING with authors, forming business relationships that put the parties on more or less equal footing. You can no longer survive merely as book publishers, you must also become book producers.
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Step One: Retool The Factory

If I can find freelancers to provide quality editing, cover design, interior layout and ebook formatting services for under $2500 total, and with turnaround times of 2-3 weeks each (or less), you should be able to acquire these same services at a comparable cost and within comparable timeframes.

If you haven’t got the in-house staffing to do it right now, establish a stable of trusted freelancers to whom you can subcontract the work at the same rates they’re already getting from individual indie authors. Alternatively, pay them higher rates in exchange for the right to keep them as dedicated resources, taking jobs only from you, to ensure they will be available when you need them.

There are PLENTY of skilled editors, designers and ebook conversion experts out there (many of whom were laid off from fulltime positions with magazines, newspapers and other publishers) who would welcome the chance to have a fully-booked work roster, as well as the opportunity to add the business relationship to their resumes.

You also need to keep some social media / web communications experts on staff. Their job would be to engage in social media and web communication on your brands’ behalf, and to train / mentor your author-clients in the most effective uses of social media and web communication. This approach is considerably less expensive—and more effective!—than throwing money at the usual, old-school book promotion methods.
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Step Two: Overhaul Distribution

Re-negotiate your contracts with booksellers to eliminate returns. Indie authors and small, independent imprints aren’t subject to those impossible terms, and now that chain booksellers are no longer the powerful rulers over your domain they once were, you are no longer subject to their unworkable demands.

You should get the same deal producers of every other product known to man get in the world of retail: the seller orders as many units as they think they can sell in advance, and none are returnable. The seller can discount any unsold product as he sees fit, holding monthly or end of season clearance and 2-for-1 sales, if need be. Once the product has left your warehouse, it’s no longer your problem.

Since brick-and-mortar, chain booksellers are an endangered species, MOST of your print book production should be managed with a Print On Demand system, which would eliminate the big chunk of your current overhead expense that goes toward large, upfront print runs.
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Step Three: Overhaul Advances

Establish an acquisitions model that doesn’t require you to essentially sink hundreds of thousands of dollars into lottery tickets in the hopes that just a couple will pay off each year. Instead of acting as treasure hunters, ever on the lookout for the next blockbuster and willing to throw hundreds of thousands of dollars or more at a single title, acquire a wide range of titles that can respectably clear the net profit threshold, and acquire them at lower cost to put that threshold within easy reach.

There’s no reason for ANY advance to ANY first-time author to EVER exceed six figures, and even six figure advances should be so rare as to be newsworthy. Historically, the great majority of books acquired in bidding wars have not earned out; but acquiring them has prevented publishers from spreading their capital (and risk) across many more titles with potential.

Get out of this downward monetary spiral and let your rivals take a bath on those bidding war gambles; it won’t be long before all of the Big Five stop acting like they’re on a bender in Vegas. A typical advance for a very promising book should be in the mid- five figure range, and many other books could be acquired with far more modest advances. Just think how many more titles you could acquire if you never paid any advances higher than $125k, and the great majority of your advances averaged out at less than $20k.
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Step Four: Pluck The Low-Hanging Fruit

Successful indie books are hiding in plain sight all over Amazon, Apple’s iBookstore, Smashwords, Goodreads and elsewhere. These are authors who’ve already proven they know how to write and they know how to grow a readership all on their own; imagine how much MORE successful they might be with your help. They are a proven quantity too, so your investment in their books is very low-risk, nothing at all like acquiring a previously unpublished title you think may hold promise.

Acquiring previously self-published, successful titles allows readers to tell you in advance which books they want to buy. You should be seeking out the authors of bestselling and best-reviewed indie books and offering them contracts—but not in the way you’ve done it in the past.
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Step Five: Overhaul Acquisitions

For every manuscript or self-published book that comes to you for consideration, rather than the simple math of your current thumbs up, thumbs down system, you should consider one of four possible outcomes.

1. Possible Bestseller / Award Winner – Offer the typical, negotiable contract from one of your flagship imprints, with a sizeable up-front advance and back-end profit split. The book will be published in both print and ebook formats, and the author will receive training and support from your social media expert team.

2. Possibly Respectable Seller, Midlist Type Title – These are manuscripts you’re currently rejecting on a daily basis, because you can’t see a way for these books to recoup the costs you must invest to produce them. Yet countless indie authors are turning modest to impressive profit on books that sell only in the mid-thousands of copies. After you’ve retooled the factory and made the other changes outlined above, your overheads should be considerably less than they are at present, bringing the bar for profitability within reach for far more books.

Offer these authors the typical, negotiable contract from a new, boutique imprint, with a modest up-front advance and the typical back-end profit split. The book will be published in ebook formats only to minimize upfront costs, and the author will receive training and support from your social media expert team. Any book in this track that proves to be a hit could also be offered in print formats later, with terms either negotiated at the same time as the ebook deal or later/separately.

3. Modest Seller, Quality Work, Motivated & Social Media Savvy Author Who Could Grow – Offer these authors a negotiable contract for an ebook only release from a new, boutique imprint with no upfront advance, and a back-end profit split that’s higher than for acquisitions made under items #1 and #2 above. The author will receive the same training and support from your social media expert team as all your other signed authors.

For this type of book, you would essentially be taking what you would’ve paid as an advance and investing it in the production costs of the book. The backend profit split begins with sale #1 since there’s no advance to be repaid. You’re partnering with the author in a way that helps him to cultivate a larger following while minimizing your upfront investment and risk.

4. Unpublishable, For Whatever Reason – Reply with an honest rejection, do not offer to sell any professional services.
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Step Six: Open A Totally Separate Author Services Division

Open a new business, totally separate from your publishing business, to serve indie authors who wish to remain indie. This business would offer paid pro services from the same stable of in-house or freelance / contract experts you employ on all other books. The key is to ensure your service offerings are priced only slightly higher than what those authors would have to pay if they sought out and contracted for the services themselves.

Your slightly higher price points can be justified on two counts. First, you would be offering a one-stop shop of pre-vetted service providers, saving authors the time and trouble of locating and vetting individual service providers themselves. Second, you could provide a certification seal to service division clients, allowing them to place a seal on their book covers certifying the book has been professionally produced by the experts at [insert company name here]. This certification would be buyers’ guarantee that at the minimum, the book they bought has been professionally edited and designed.

Unlike your current ASI clients (if any), these authors are being allowed to remain completely independent and you would merely be offering services they would have to acquire on their own anyway if they intend to stay the course of top-tier indie publication. With this model, the author retains all rights to the work and there’s no backend split – you are offering ‘for hire’ services only.

To eliminate even the appearance of any conflict of interest, anyone to whom you offer ‘for hire’ services cannot resubmit the book for later publication consideration under items #1-4 above. No writer should be led to believe that if he invests in the for-hire services you have to offer, a publication contract will be forthcoming.

Step Seven: Lather, Rinse and Repeat. Class Dismissed.

This is a cross-posting from April L. Hamilton’s indie Author Blog. April L. Hamilton is the founder and Editor in Chief of Publetariat.com, founder and Editor in Chief of The Digital Media Mom, and Editor in Chief of Kindle Fire on Kindle Nation Daily.

Publetariat Contributor, attorney and tax expert Julian Block has generously allowed us to reprint this excerpt from the newly updated, 2013 edition of his book, Easy Tax Guide For Writers, Photographers and Other Freelancers.

Thinking of taking a home office as a tax deduction? Not so fast. Just because you can walk 20 feet from your bedroom to your work area and conduct business in your bathrobe doesn’t mean the nook with the computer qualifies as a bona fide office.

Home-office deductions aggravate the IRS. Audits turn up abundant evidence that lots of writers mistakenly claim these deductions. In fact, an aggrieved agency has gone to court repeatedly, winning support for its strict stand in rejecting write-offs for spaces supposedly set aside as home offices. So whether you’re sorting out home-office complexities for the first time or are an old hand at it, don’t go too far.

Internal Revenue Code Section 280A allows work-at-home writers to claim home-office deductions only if they pass a series of tests. You must use a portion of your home exclusively and on a regular basis for work in your business. It has to be your principal place of business.

 

TIP: Arranging things to pass the tests lets you transform otherwise nondeductible personal expenditures (a portion of everything from home-insurance premiums to repairs to utility bills to depreciation if you own your house or a percentage of your rent) into deductible business expenses.

 

“EXCLUSIVELY” MEANS JUST THAT

The IRS is a stickler about what constitutes exclusive use. It insists that you use the entire area—whether a single desk, a room or an entire floor—only for business and nothing else. Use the home office for any personal, family or investment activities, and you forfeit all rights to home-office deductions.

IRS revenue agents and office auditors are at ease when scrutinizing a deduction for an office in a room that is closed off from all non-business activities. They remain at ease when the office is just a small part of a room as long as you clearly separate the business portion from the rest—by a partition, perhaps. The burden is on you to establish that no personal activities take place within the business area, which accounts for why examiners pounce on deductions for offices housed in studio apartments.

 

CAUTION: A television in the office is a surefire way to fail the exclusive test—with a possible exception for someone who shows a business need to keep up with the news. Another no-no is when the office is where you stash your cat’s litter box or your children play video games or do their homework on personal computers. Code Section 280A is fleshed out by detailed administrative regulations. The regulations don’t tell revenue agents and office auditors that all personal activities are verboten. Most IRS staffers are reasonable. They don’t mind that you had personal conversations on office phones or computers. And they don’t insist that you should have rushed outside whenever family members needed to ask questions or Fluffy craved some Meow Mix.

 

TIP: An appropriate standard for your at-home office: Permit personal activities only to the extent they’re permitted for someone who’s an employee in an office building.

 

HOW DOES THE IRS DEFINE “REGULARLY”?

Because gray areas abound, the regulations set no arbitrary standard for how much you must use the office to pass the regular-use test. Examiners base their decisions on the particular circumstances. Usually, working in the office a couple of hours a day, several days a week proves sufficient; a couple of hours a week probably doesn’t pass muster. While the regulations allow some leeway, look forward to a disputed deduction if you use an otherwise empty room infrequently for a purpose that is incidental to your business.

 

TIP: The regulations don’t require your endeavor to be a full-time business. It can be part time, as when you moonlight from your home as a writer and have a full-time job elsewhere. Examiners don’t care that you devote more time to moonlighting than to your job.

 

“PRINCIPAL PLACE OF BUSINESS” HAS ITS OWN MEANING.

You aren’t home free just because you pass the “regularly” and “exclusively” requirements. In IRS-speak, the home office also has to be your “principal place of business.” Without the legalese, that means the place where you personally meet clients or customers (phone calls don’t count) or the only fixed location where you conduct your business’ key administrative or management activities. There can’t be another fixed location outside of your home where you conduct such activities for that business. Some IRS-approved examples of administrative or management activities: arranging appointments; billing clients, customers or patients; ordering supplies; maintaining records; forwarding orders; and preparing reports.

 

TIP: Assuming the other requirements are met, the deduction remains available when you (1) carry out administrative or management activities while traveling (e.g., from a hotel room or car) or (2) do occasional paperwork or administrative tasks at a fixed location other than your home.

Click here to learn more about, or purchase, Julian Block’s Easy Tax Guide For Writers, Photographers and Other Freelancers.