“The sense of entitlement of the American consumer is absolutely astonishing,” said novelist Douglas Preston in a direct reference to Kindle owners in the New York Times last week, but Preston’s equally astonishing notion that we in Kindle Nation are governed by "the Wal-Mart mentality" misses the mark by plenty.
Much of the reporting about the ebook pricing controversy has strongly suggested that Steve Jobs and the Apple Five (thanks to The Kindle Chronicles podcaster Len Edgerly for this currently apt label for MacMillan, Hachette, Penguin, Simon & Schuster and HarperCollins) will have their way and impose 30% to 50% price increases on Kindle Store bestsellers and new releases by the end of March, so it should not be surprising if Kindle owners’ backs are up.
It’s true that a majority of respondents in the Winter 2010 Kindle Nation Citizen Survey is ready to take a stand against anticipated increases in Kindle Store ebook prices above the $9.99 figure that Amazon has associated with bestsellers and new releases since the Kindle’s launch over two years ago, but inside the numbers are some indications of flexibility:
54% disagreed somewhat or strongly with the statement "I will probably pay $10 to $14.99 for new ebook titles if necessary," but a significant number (37%) agreed with the statement and another 52% disagreed with the statement that "I will never pay more than $9.99 for an ebook."
Given further choices, 75% agreed with the statement "I’ll pay over $9.99, but only rarely when I simply must have an ebook," and 33% said they would pay more for professional or technical books.
With this range of views, there may be significant numbers of Kindle owners who occasionally pay more than $9.99, and indeed there have been many Kindle books that have sold briskly with double-digit prices during the past two years. Kindle owners are by their very nature likely to be too fair-minded and attuned to subtleties to participate in a totally unified boycott based on price or any other single, simple factor.
While it will be fascinating both to me and, perhaps, to the U.S. Department of Justice to study the array of ebook prices in the Kindle Store and in other venues like Apple’s yet-to-be-opened iBooks store on April Fool’s Day, it may be more telling to see where they settle out on May Day, Independence Day, or Thanksgiving Day. In the interim, competition may have its effects in more traditional ways than we have seen so far, and the behavior of Random House, the largest of the Big Six in U.S. operations, may ultimately say the most about how this drama shakes out. As reported here earlier, a key Random House senior executive indicated to a confab of booksellers a few days ago that her company could pursue an independent course on ebook pricing instead of trying to impose its own retail pricing wisdom on a company — Amazon — that knows more about price elasticity and its own customers than anyone else in the world.
Kindle owners now say in large numbers (73%) that they have become more price-conscious as a result of the recent price controversy, and an overwhelming 87% in our survey disagreed with the rather broad statement that "publishers know their costs, so I’m happy to pay the prices they set." If Amazon’s temporary deletion of MacMillan titles was intended to send an implicit message about the extent to which key players should be viewed as benign or malignant, it worked: a remarkable 68% of our respondents agreed with the statement that "Jeff Bezos and Amazon have my back, and I know they price things to sell."
Some may think this perspective is an indication that Kindle owners are bellying up to the Bezos Family Kool-Aid Stand in large numbers, but given the significant and growing role that ebook readers will continue to play in the retail book business, publishers who fail to pay close attention may be risking more than they can afford to risk.
One Kindle Nation citizen commented, on an earlier post here, that "some anti-publisher bias is understandable" in the survey results, give the "kindle specific audience" of Kindle Nation Daily, but the comment itself is commentary on the extent to which important things have changed. The book publishing industry is not Big Oil, Big Pharma, or the Wall Street Bonus Bankers. Not all that long ago it was widely seen by the American reading public as being composed of venerable houses and imprints that were well-deserving of the roles we granted them as gatekeepers and arbiters of taste and quality. The idea that large numbers of voracious readers hold something like an anti-publisher bias represents a stunning fall from grace.
If Random House breaks ranks with the Apple Five, it could do itself and its authors a tremendous amount of good, and a return to more traditional competitive behavior could soon follow. In the long run, or that middle run before we are all dead, we as the increasingly savvy, quality-conscious, price-conscious citizens of Kindle Nation could find ourselves holding more of the cards than we thought we might be holding.
I was in such a bad mood the past couple of weeks. Day job sucks, winter is freezing, we’re broke, I’m a little stuck with getting my book out there, blah blah blah.
[Publetariat Editor’s note: strong language after the jump]
And then I wrote a story. And I fell in love with the characters. And then I became inspired to expand that story into a novel. And all of a sudden I’m not in such a bad mood. I got some interesting feedback, and some random stranger posted her "fandom" of my work as a whole. And I started spending a little less time agonizing over what bookstores need to be carrying 29 Jobs and I started spending more time reading; faves like Klosterman and Eggers and started a new nonfiction book by my main man, John McWhorters on the history of the English language.
And so the whole awful world gets turned on its head and I feel better.
So that’s what it’s about–not agents and publishers, not Amazon and not Apple and not Google, but good stories and excellent feedback.
Of course the context is still there–the ridiculous pricing, the sad-assed writers who are spending their energy querying and banging their heads against the wall rather than enjoying the words they write and interacting with readers, the shitty and clunky technology for e-reading, and the masses and masses of sheep professing someone else’s ideas rather than their own. It gets a little cloudy out there, for sure, and sometimes it’s hard to remember what to focus on when the road keeps changing. And then you write a good story, or read a good story, and it takes all the muck away.
I’ve been doing a lot of editing lately of others’ work. I enjoy doing it and it helps me get a handle of what independent work is out there so that there’s a clear perspective. Some of it I wonder how people haven’t been successful in querying publishers; some of it I realize that although it’s good, it’s just not good enough. But as long as the writer has faith in their writing, and they enjoy doing it, that’s all that counts. What a totally great pastime it is to be able to write stories. Writers are incredibly fortunate that we have this passion.
That’s why I offer my work free online. The whole book, 29 Jobs and a Million Lies, is free. Its .99 on Amazon for the Kindle version, but only because that’s the minimum I could set my pricing there. And if you ask nicely, I’ll probably send you a free print book, too. Breaking even is a feat–and I’ve so far been able to break even with sales to cover the fucking ridiculous cost of the ISBNs. So I’m successful. I’m a successful writer, in my eyes. Just like in Vegas–if you break even, you’re successful. Because you got to drink their drinks and play their games, for free. And that is how I look at my writing "career," a pastime that is totally amazing. [I DO plan to make a film one day, though, so for that you can call me a sellout.]
So if you’re in writing for the money, you are a fool. A total and complete fool.
This post was written by Michael A. Stackpole. It originally appeared on his Stormwolf website on 2/8/10, is reprinted here in its entirety with his permission, and is the seventh installment in his series on common myths and distractions in authorship and publishing. The first installment is here, the second is here, the third is here, the fourth is here, the fifth is here and the sixth is here.
It strikes me that in long essays, certain facts get lost. I wish to break them out here.
1) The purpose of writing for commercial distribution (electronic or print) is to make a profit. This means you have more money coming to you than you have flowing away from you. As with any business, you may have some start-up costs. Create a budget. Set aside an amount of money which you do not need, and use that for your business. Create a business plan, analyze the avenues for generating income. Hit those which have minimal costs and higher payoffs first, and work your way down. If ever you tell yourself, “Well, this won’t cost me that much,” stop. Do not do that thing. Once you start making rationalizations like that, you are being foolish.
Once you are foolish, you will soon be penniless.
2) My support for self-publishing in these discussions has been for digital publishing and digital publishing alone. It is true that I have mentioned services like Blurb.com where one can do a limited run (10 or less) copies of a book. I have used Blurb.com and the like for extremely short runs of books which I can bring to signings. This is so I have an inexpensive item for people to buy when they come up to the table and say, “I don’t have anything for you to sign.” I am fairly confident I can move ten copies of such books over a convention season, so I’ll be making a profit (see point 1). Never print more books than you have pre-sold. Volume discounts for printing don’t mean anything when the excess inventory is sitting in your garage.
3) I do not believe that even digital self-publishing is easy. I believe it is simple, and there is a world of difference between those two things. Establishing your own business is hard work. If you don’t put that work in, you will not reap the benefits of your business, pure and simple. To me, spending twenty hours scanning and preparing a novel for ebook publishing is “negligible,” because it’s only an expenditure of time. In my opinion, time is cheap compared to the money that will be returned by that effort. But then, I don’t own a television, so I may have a bit more time on my hands than others. Everyone will decide whether or not they will spend the time to enter the digital marketplace. I tend to think the cost of not entering is the greatest of all, but I expect others will disagree with me.
4) Publishing in the digital age is about more than files, formats, devices, DRM and shopping-cart software. It is about using new media for locating, building and sustaining an audience. In business, companies gear their publicity expenditures to accomplish one of three things: Customer acquisition, customer retention, and customer re-acquisition. Everything you do when it comes to new media should fulfill one or more of those criteria. All three would be nice.
I heartily recommend the book Crush It! by Gary Vanyerchuk for his discussions of using new media to find and build your audience and brand.
5) There is no get-rich-quick-scheme. You will be working your tail off. (This is the reason most of us get those chairs with the pneumatic lifts in them. As our butts get smaller, we have to raise the seat.) While doing the marketing and file prep and website coding may be tough, it won’t be nearly as tough as the writing itself. But once you’ve done the difficult work, you owe it to yourself and your work to get it out to your audience in a manner that lets them support you in your efforts.
6) Established authors do not have a leg up on new authors in this digital world. My previous post on The Myth of the Established Author makes my feelings very clear on this point. Those who would dismiss everything I’m saying because I have been previously published would do well to read that essay. They might also want to consider the following: it may not be the fact that I’ve got a following that allows me to be successful in the digital age, but that my experience in the pre-digital age is what allows me to see the ways to profit in the post-paper era.
7) One last point, which goes back to the first: money flows to the author, not from the author. Whenever anyone offers you a deal, ask yourself, “What’s in it for me?” If you can’t see a return in one or more areas as affects your career, it’s probably not a deal that works in your favor. People get taken by all sorts of scams simply because the scammer offers you an opportunity that is too good to pass up. One such is publishing a novel which, deep down in your heart, you know is not of professional quality. It might be close, but it isn’t there yet. Don’t let your desire to be published prompt you to open your wallet and give money to someone who promises you the moon, but can’t even deliver a moon-pie.
Whatever you do, do not trick yourself or allow others to trick you into believing that self-publishing—especially of print books in any quantity beyond a dozen copies—is the way to make you the next J. K. Rowling. Writing is not easy. Getting good at it takes years of hard work. Do the work. Do it on the writing. Do it on the business side, and the promotions side. Learn as much as you can and then, and only then, can you make the correct decisions about when and where to invest your time and (extremely reluctantly and penuriously) a tiny sum of money.
Learn from the mistakes of others. A garage full of books will not pay your mortgage. A solid, profitable business will.
Michael A. Stackpole is a New York times Bestselling author with over forty novels published including I, Jedi and Rogue Squadron. He was the first author to have work available in Apple’s Appstore. He has lectured extensively on writing careers in the Post-paper Era and is working on strategies for authors to profit during the trying time of transition.
This post was written by Michael A. Stackpole. It originally appeared on his Stormwolf website on 2/7/10, is reprinted here in its entirety with his permission, and is the sixth installment in his series on common myths and distractions in authorship and publishing. The first installment is here, the second is here, the third is here, the fourth is here and the fifth is here.
There’s a stigma to self-publishing, and we all know it. Why? Because, in the past, self-published books have sucked. A lot of self-published work today sucks. And when I use that word, it’s a technical term.
Face it, most self-published books are a pig-in-a-poke. Looks good, but you can’t be sure. If it’s a physical book and has been professionally produced, it mimics the legitimacy of a commercially-produced book. It’s an ambush. You snag the book, you get into it, and it sucks. You feel you were cheated, and no one likes to be cheated. (And we won’t even touch on the topic of how many times that’s happened with commercially-produced books. Thank goodness the percentage is lower.)
Self-published work has become synonymous with “violation of trust” and buyers are wise to be wary of tossing money in that direction.
Self-publishing has long been the realm of someone whose belief in their work far exceeds the actual quality of that work, and they back their belief with their own money. The game industry from whence I come has, for the past forty years, has been a bastion of self-publishing. While there are a bunch of larger companies that publish very high quality work, the industry is open to someone whose warehouse is his garage. And the simple fact of the matter is that games by these small companies prove themselves through interaction with the buying audience, either falling to obscurity, or selling well and funding new creations by the game designers.
The same thing can, and should, happen in the realm of fiction.
In an effort to escape the stigma, the new practitioners of self-publishing have ascribed a number of different names to the phenomenon. A lot of folks call it Indie publishing. I actually prefer the term coined by Robert Vardeman: Vertically Integrated Publishing, or Vipub. What vertically integrated publishing allows is for an author to control every aspect of his work and how it is delivered. By putting in the work, he reaps the majority of the profit. It’s the equivalent of being a small winery—notice no one attaches a stigma to a boutique winery or cheese-making operation? Their products are described as “artisanal” and somehow better than massed produced rivals.
How does one get around the stigma—arising from the lack of quality of many self-published works—to attract an audience to your Vipub work? The solution is very simple: sampling. It’s a wine-tasting for your work. You, the author, publish for free or a nominal price, sample chapters from the work. You record a reading of chapters and make them available as an MP3; or using something like Second Life or streaming audio/internet radio, you provide listeners with a sample of your work. You release the entire book to a trusted cadre of reviewers and bloggers, enlisting them to spread the word about your work. You blog about it yourself. You engage the internet community and build an audience from it.
It has been suggested that my assertion that the production costs of preparing an ebook of a work, especially a work that it out of print and for which the author has no electronic copy, was “negligible.” I have had quoted to me a cost of hundreds of dollars for scanning a book, so the cost was considered substantial.
I disagree with this assessment.
I scanned my novel Once a Hero in three baseball games—I was listening to baseball on the radio, and scanned the book at the same time. Seven and a half hours, tops for that. And I spent another ten hours, roughly speaking, correcting scanning errors and formatting the book to be sold as a PDF, on the iPhone and for the Kindle. (Another hour or two will have it in epub shape, probably less.) So, let’s assume I have a whole twenty hours in the conversion process.
Scanners are very inexpensive—I used the one built into my printer. All scanners and printers come with OCR software, so there is no additional layout there. If an author doesn’t own a scanner, he undoubtedly knows someone who does. And if he doesn’t want to do the physical scanning himself, he can find a spouse, a child, an unpaid intern, or a dilligent fan, to do the scanning for him. (A fan or intern would love to have her name mentioned in the acknowledgements of a digital edition of a book she loves. And if the author feels guilty for accepting free labor like that, cut the scanner in for a percentage of the sales.)
Or, he can do what I did for my other books: I went out onto the internet, found pirated copies of my books, and ripped the text out of them for correction and reformatting. (Does that make me a digital privateer? I kind of like that idea.) I get the scanning and initial correction done for free. (Most pirates are very diligent in their production, having fewer typos and scanning errors than Google Books).
While the rescanning argument holds a limited amount of validity for works that were produced prior to the last decade, for anything published since? No. Authors have short stories that will sell in digital form (I sell tons of them) inserting corrections from the printed copy to keep the digital file up to date. And authors can produce new work related to print books that not only will sell to fans of the print books, but will serve as a taste of the world for those who’ve not yet purchased the print books.
For most folks, it’s not a matter of can’t, it’s a matter of “I don’t want to.” As my partner Kat Klaybourne says, “It’s simple. It’s not easy, but it’s simple.” And I have hot flash for any author who thinks doing this is hard—it isn’t nearly as hard as actually writing a story. It’s all clerical work, and you will get paid on that work forever and ever.
Jim also notes that some publishers will charge authors a great deal of money for an electronic copy of their own book file. That shocks me. First, if a publisher doesn’t have it written into the contract that he can do that, I don’t think he can. Second, all contracts require the publisher to give the author copies of his work in any form they appear, ergo, they should turn them over in all the formats for which they are available. And, three, the pirate option mentioned above is available. Four, authors could do what Dennis L. McKiernan and other authors do, which is to input corrections into a file which becomes the final for the publishers, thereby actually having the final in electronic form. (Publishers on several books have actually required that from me.)
In the latest two issues of my writing newsletter, The Secrets, I go into a lot more depth both on market issues and the variety and ways an author can produce work that will generate income as well as build sales of already existing projects. It also goes into ways that an author can use the internet as a means to heighten his visibility with the available audience.
The thing to bear in mind is that it’s all about profit. This very post is an excellent example of how new media can be used to generate income. I don’t mind giving away ideas on how all this works, but I reserve many of the best ideas for publication in my newsletter. The two issues I mentioned above (#134 and #135) are available as part of the current subscription series. The Secrets costs $25 for 25 issues that cover topics like the current publishing situation, provides solutions to same, and shares my insights into the art of writing itself. Hit the link above, subscribe, and you’ll pull down the last fifteen issues immediately.
My store has a number of other publications related to writing. I teach classes in writing at conventions like Origins, Gencon and DragonCon. I’ll be at StellarCon March 5-7, teaching my 21 Days to a Novel workshop. In two hours I teach writers a series of exercises that lays the groundwork for them to successfully finish a novel.
Because of these posts, because of the things I’ve been saying here, there are readers who will hit those links above or will attend my classes. What did it cost for me to mention them here? Nothing. What did the preparation of those files cost? Virtually nothing and long since paid for. Sales of electronic work, once made available, continue to provide income for no additional work. A short story for an anthology these days pays maybe six cents a word (we’ll be generous here.) So, a 6,000 word short story would net the author $360. Sold at $2 per copy off your website, less Paypal fees, an author would have to sell only 216 copies to match the anthology price. Pick a property that’s already popular and has a fan-base, turn out a new story related to it, and 216 copies shouldn’t be much of a problem. (True, with Amazon and Apple taking 30% off the top, the story would net $1.40, so it would take 258 purchases to match the anthology offering.)
The whole stigma connected with self-publishing is akin to the stigma of being gay, or interracial marriage, or being a gamer or a scifi geek. It has outlived its usefulness as a predictor of problems. Sampling eliminates the risk for readers. Negligible production costs for content providers eliminates the risk of production. The only reason not to do it is because you don’t want to do it.
And if, as an author, you don’t want to make a profit, if you don’t want to have money trickling into your pocket, there’s nothing I can say that will convince you otherwise. But if your intention is to make your life better, gain more exposure for your work, and build a career for yourself as the transition takes place, then just remember:
It’s simple. It isn’t easy, but it’s simple. Do the work, make the money. It’s what publishers have been trying to do since the invention of the printing press, and now we can do it better.
Note: This is an edited version of this essay. Jim Lowder pointed out corrections that needed to be made; being quite gracious in dealing with my unintentional attribution of statements that he never made to him. As I had noted in the original, he is a very smart man, and gracious as well.
Michael A. Stackpole is a New York times Bestselling author with over forty novels published including I, Jedi and Rogue Squadron. He was the first author to have work available in Apple’s Appstore. He has lectured extensively on writing careers in the Post-paper Era and is working on strategies for authors to profit during the trying time of transition.
This post, from literary agent Nathan Bransford, originally appeared on his blog on 2/4/10 and is reprinted here in its entirety with his permission.
Read the publishing news these days and there’s so much doom and gloom and anxiety about e-books and print books and booksellers and publishers in trouble and authors getting squeezed and the midlist dropped and it’s enough to make you want to hide under the bed lest a stray Kindle impale you in the forehead. You’d think an infectious disease is sweeping the land, an e-virus that is going to pollute the land with readily available books and increased author entrepreneurship. Run for your liiiiiiiives!
But hey. You can either be scared of the future or excited. I’m pretty excited.
Look, the last few hundred years have been great and everything. Some of my favorite books were written then. We had bound books, novels, bookstores, the smell of the binding, and librarians shushing everything above a whisper. Publishers filtered everything for us, then agents filtered most things for the publishers, and all that resulted in a choice of a few thousand titles in a bookstore. Which sounds like a lot, until you happen to be looking for the Definitive History of the Drunken Monkeys of the Caribbean (in which case, thank goodness for YouTube).
And guess what: that era isn’t going away, at least in the near term. All of those things will still exist, and thank goodness. Those things are really great.
But as I outlined in a past post, in order for a book to become a bestseller in the current era, so many different publishing people have to agree about it before it reaches readers in big numbers. And if anybody in that chain is wrong, poof, that bestseller may not happen.
In the e-book era, everyone will have a shot. And I refuse to believe that’s a bad thing.
Yes, there’s going to be a lot of dreck out there that we’ll have to find a way to sort through. Yes, publishers will be challenged by lower price points and will have to change and adapt to the digital era. Yes, my job will probably change some too, even if I don’t believe agents will go away, especially as they fight so that authors get their fair share of e-book revenue. And yes, this new era will require more of authors than just writing a book in a cabin in the woods and shipping it out for someone else to do the rest. It will require an entrepreneurial spirit and a whole lot of virtual elbow grease.
But what better time to be an author?! All any writer wants is the chance to reach an audience and see what happens from there. Just a chance. And it’s looking like everyone’s going to get that chance.
To be sure, the vast majority of books will only be read by a few people. Riches and celebrity are not in everyone’s future, I don’t care how many drunken monkey books there are. Established authors and the traditional publishing industry will still have enormous advantages. Eyeballs will be key, and those eyeballs will have a whole lot of shiny objects attempting to distract them.
But soon everyone will have their shot. Books will catch on out of nowhere through word of mouth, probably even books that publishers may not have taken a chance on in the past. Readers will decide what they want to read rather than having those choices constrained in advance. Authors will have more control over their own future than ever before.
This post was written by Michael A. Stackpole. It originally appeared on his Stormwolf website on 2/7/10, is reprinted here in its entirety with his permission, and is the fifth installment in his series on common myths and distractions in authorship and publishing. The first installment is here, the second is here, the third is here and the fourth is here.
One of the things that keeps being bruited about in this discussion over digital books and pricing is a question of how much digital books really cost. The base cost of a book, of course, determines its final price. Repeatedly people have come out and said that the production costs of an ebook are fairly close to that of a paper book, so the prices need to be where they are. I want to break those numbers down.
In conventional publishing authors get a royalty of 10% of the cover price (on average). In the digital world, authors working through a publisher will get 25-50% of the publisher’s cut. Under the new Apple and Amazon models, that is 70% of the book’s cover price. The author, therefore, will get 17.5% to 35% of the cover price of the digital download.
In conventional publishing, the generally accepted cost for physical production of a book is 10% of the cover price. This number is a bit unstable because of volume discounts on printing and because of the returnability of books. For every book sold into a customer’s hands, two are printed. With digital publication, the actual production cost is negligible. The elimination of returns also eliminates the needs for the accounting dodge of reserves against returns.
In conventional publishing, physical books are sold into the market at a 50% discount off the cover price. Under the new digital models, that discount is reduced to 30%, so the publishers will be making an additional 20% of the cover price. (Yes, with an author’s percentage rising to 35% of cover for a digital sale, that increase is devoured, but the 10% physical production cost vanishes, leaving the publisher still 14.2% ahead.) (A $10 book at a 50% discount pays the publisher $5, and the author gets $1. The publishers gets $4, and then loses an additional dollar for the cost of the physical book, so they’re down to $3. A $10 digital book pays the publisher $7. After paying the author, they keep $3.50, so they’re over 14% better off with that digital sale.)
In conventional publishing, the remaining 30% covers everything from editorial, art direction and acquisition, warehousing, transportation, promotion, overhead and profit. If you’ve been following the math above, assuming that this 30% is fixed, the publishers are still 14.2% ahead through digital publication, and roughly 52% ahead if their authors have agreed to one of the shameful 25% of the digital take contracts that have been promoted recently.
The digital model, however, removes costs out of that 30%. Warehousing is no longer a cost. Transportation is no longer a cost. Typesetting is no longer a cost. Art direction is still a cost, but the cost of cover art goes way down. Digital books work well with iconic images, not the sweeping cover illustrations found on books. Even Michael Whelan does not reduce well to an icon. This might seem like an insignificant line item, but in the SF&F field, a cover illustration could cost more than acquiring the book. Going from even $1000 for a painting down to $100 for some graphics makes a significant difference in the profit picture.
Now, here’s the hidden, dirty little secret that the publishers don’t want you to think about. That 30% goes to zero for all of their backlist books. With those books, all the developmental costs have been written off years ago. Because digital books never go out of print, we suddenly have the return of the backlist. If a reader likes a book by an author and goes looking for more, they can find all of those books through a simple search or, if big publishers ever cotton on to this digital thing, through hotlinks at the back of the book.
In a previous post in this series, I’ve noted that the overhead category of charges, which some folks have suggested accounts for half of that 30%, is needlessly high for conventional publishers. Do they really need Manhattan offices? Baen Books and Night Shade Books seem to function perfectly well without them, just to name two publishers off hand. And the authors aren’t all located in New York. The internet is how I get my manuscripts to my publishers. And we have telephones, too. Moving the editorial and production offices out of Manhattan could significantly reduce overhead for any project.
Promotion is a sore point with authors. Publishers claim they do it. Authors find themselves encouraged to do more and more without any compensation. I have had my books solicited to stores including the fact that the author will do signings, but the publishers never set things up. I’ve had publishers refuse to pay $150 for a flight to Denver for a four store signing tour (the store chain manage got in touch with them, not me) because I wasn’t “on tour.” The lack of support and misplacement of advertising dollars is legendary in the industry; and authors are expected to pick up the slack on our own.
In the digital age, those promotion costs drop nearly to zero, consisting mostly of pages on the publisher’s website. If they do choose to do any advertising, at least it can be targeted to hit their audience by putting banners on author websites or online retailer websites.
Another point publishers don’t want anyone to think about is the cost of money. Publisher invoices are paid net 30 or net 60 (in one or two months). Authors are paid net 90 to net 270. A book sold on the last day of June won’t have a royalty sent to the author until, at the very fastest, the first of October. If the store pays the invoice for that copy on the last day of August, the publisher still has the money for thirty days. Often it is for considerably longer, and the interest earned on that money—which belongs to the author—is something the publisher retains. The current rate for a 6 month CD is 1.07%, or just over 2% per year. That goes neatly to the publisher’s bottom line.
Back to the cogent point: If every publisher today were to switch immediately over to the digital publishing model only, they would be 14-52% to the good on every new title they put out. They would be significantly better off with every backlist title they make available. If they just wanted to stay even, they could sell brand new ebooks at a 5% discount over the print price, and backlist books at 35% off. (Since most of the backlist books are currently out of print anyway, this becomes a new revenue stream for them, raising their overall volume, which, in turn, increases their profit because their cost of offering those books is zero.)
Industry insiders point out that there’s one flaw in this analysis: so few people are reading digital books, at this point, that if they were to make this immediate switch, there would not be enough volume to sustain the companies.
If that is true, however, how can traditional publishing’s suggestion that ebook sales are cutting into hardback sales be supported? It can’t and isn’t. They fear that it might, but there is no data to show that it has or will.
Moreover, and here is the trickiest thing, no one is asking them to do one or the other. We want them to do both. Since digital books produce a higher profit margin, increasing the digital offering only makes sense. In short, for every print book sale you don’t make because of a digital sale, you make more money! This is especially true of backlist offerings of the books to which they already own the rights. (I am repeatedly asked by books 3 and 4 of the DragonCrown War series are available as ebooks, but 1 and 2 are not? Beats the hell out of me. And why no omnibus digital edition? Another puzzler.)
Tradition publishing (and apologists for it) note that they want to control the transition because there are a lot of jobs at stake here—namely truckers and warehousemen. Does anyone actually believe that if a mobile robot that could pick books faster, tirelessly, without making mistakes; was available tomorrow, that every warehouseman wouldn’t be out on his ear? In a heartbeat. This isn’t to say that there are not plenty of compassionate people working for publishers—heck, working with authors requires the patience of a saint—but when it comes down to return-on-investment decisions, people become numbers, and numbers can be subtracted with amazing speed and facility.
The very important thing for authors to look at is this: the costs for you to offer your work as digital files is less than that of the publishers. A previously published short story already has the editorial work done. Converting the file for Kindle or epub takes less than an hour. Loading it to Amazon or your own website, less than an hour. Off Amazon you currently make 35% of cover, in July that goes to 70%, same as the big boys. Off your own website, you’ll pull at least 87% of cover.
My point to authors is the same as my point to publishers: I don’t think you should do one or the other, I think you have to do both. Just like the publishers owning rights to out of print, backlist properties that could make them money, authors have the same sort of inventory. Get it out there. Start selling. Establish your presence and encourage readers to buy direct from you.
Why?
The simple fact of the matter is this: traditional publishing has repeatedly evidenced an inability to integrate itself with technology to its benefit. Traditional publishers are fighting to maintain an inherently dysfunctional business model which has been in decline for years. If not for J. K. Rowling, Stephen King, Dan Brown and Stephanie Meyer it and the wasteful consignment-system of book retailing would have suffered a serious and perhaps fatal contraction seven years ago. Traditional publishers have repeatedly showed not only a lack of understanding of its customer base, but a contempt for them (as evidenced most recently by predatory pricing of ebooks). Last year’s attempt to cut author royalties in half on ebook sales, despite claims that the market for ebooks was insignificant, is yet one more indicator of publishers seeking to redress their inefficiencies by pulling more money from authors.
The traditional publishers themselves are going to give authors who do the work the very means with which the publishers can be supplanted. By setting ebook prices artificially high, they allow authors to offer the same quality entertainment at a reasonable price that actually nets us more. As I noted yesterday, I can take out a novel that New York didn’t want, do up in a digital version, and make seven times per book what they would pay me for the print version, and double what I’d get out of the digital version. With no downside for me at all. As I’ve noted before, using the Apple Appstore as an example, there is constant downward pressure on prices, and traditional publishers can easily find themselves competing with authors who offer their own backlists at reasonable prices.
The numbers don’t lie. Ebook prices should be lower than print prices, by a minimum of 5%, and that’s just if publishers wish to maintain the status quo. Operations where the costs of physical production, warehousing, transportation and editorial (in the case a backlist material) are reduced or eliminated, significantly increase their profit profile through reduced costs and the higher discount being offered on digital sales. In my estimation, ebook prices could be 20% below current print prices without causing any hardship, and significantly lower on backlist titles which would now be returned to availability. And they could go even lower if publishers addressed overhead costs and ran their companies more efficiently.
It’s not a matter of change coming. It’s already here. How you decide to deal with it will determine where you and your career are in fifteen months and fifteen years.
[Publetariat Editor’s Note: if you’ve found this piece interesting, you might like to take a look at, and participate in, the discussion going on in the comments thread of the original post on Michael A. Stackpole’s website.]
Michael A. Stackpole is a New York times Bestselling author with over forty novels published including I, Jedi and Rogue Squadron. He was the first author to have work available in Apple’s Appstore. He has lectured extensively on writing careers in the Post-paper Era and is working on strategies for authors to profit during the trying time of transition.
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This post was written by Michael A. Stackpole. It originally appeared on his Stormwolf website on 2/6/10, is reprinted here in its entirety with his permission, and is the fourth installment in his series on common myths and distractions in authorship and publishing. The first installment is here, the second is here and the third is here.
One of the laments that is oft heard concerning the coming changes in the industry is this: “Look, I just want to write.” The whole idea is that the writer in question enjoys writing. All they want to do is just to turn out stories. They don’t want to have to learn HTML. They don’t want to have to learn how to put things in an online store. They don’t want to learn about different ebook formats, or set up accounts with online booksellers or find an artist to create graphics for their work.
I understand the sentiment.
And I understand it’s unrealistic.
Imagine, if you will, a really good cook who decides to open a restaurant because, “All I want to do is cook.” If all you want to do is cook (or write) you don’t open a business. You get a job. There is a significant difference between the two. In a job you have no control over your circumstances, you have bosses telling you what to do and to do it over again, your choice of assignments is not yours and, in short, you have very limited control over your work environment and situation. You are at the whim of others.
When you open a business—and this is what every writer is doing—you have to pay attention to the bottom line. The idea is to be profitable. If you cannot find an advantage in doing things, don’t do them.
Every single day I have to make decisions about what is going to be the best way for me to occupy my time. Sometimes, as when I have an assignment, writing a story that will pay me in a couple of months is a good idea. It may not pay me much, but there is usually another angle that I want to work. Perhaps I’m working with friends. Perhaps the subject is one that I enjoy. Perhaps the story goes into an anthology with a hot theme. I constantly have to measure the angles so that when the work is done, I am getting ahead. I am expanding my audience. I’m providing an entertaining read that will draw more folks to my work. I’m adding another story to a world of mine, which feeds my current audience and encourages new folks to buy the older work.
Sometimes there is zero monetary profit in a project. A number of years ago I was asked to contribute a story to a charity anthology. I immediately agreed. I like the cause. Lots of other, high profile authors were going to be in the book, too. The organizers wanted to try peer-editing, which was a cool concept. The good will and publicity certainly would be a plus.
That could all make me sound like a cold and calculating bastard. Fair enough. But cold and calculating is what has allowed me, since 1987, to be my own boss. As I noted in a previous post, three years ago Bantam dropped me as an author. I spent the next two years without a contract. And yet, in both of those years, my business as a writer showed a profit. How? By finding writing jobs. By finding other ways to make money using my skills. Via digital sales, via teaching classes, via industrial, not-for-external publication jobs. My market had collapsed, and yet I found a way to make my writing pay.
If you have the attitude that you “just want to write,” then just write. But don’t lament the fact that you’re not making any money. That’s like saying you’re hungry, but you don’t want to get up and make yourself a sandwich. It’s playing the victim. Playing the victim won’t get you anywhere.
A number of folks have pointed out the 80/20 rule of business. Eighty percent of your profit comes from twenty percent of your product line. In publishing it’s much worse than that: ninety-five percent of the profit comes from five percent of the line. Two key points here: First, you want the entire line to be making profit. You know a minority of it will make most of the profit, but you have to do the things to see to it that the rest of the line at least breaks even, like advertising and sales support. Publishers don’t do this. They only do sales support and effective advertising for that 5% of the line. It is a model that bets on the “sure thing,” ignoring the fact that there are no “sure things.”
Second, you have to expand the line and change the mix. If you have items that are not profitable, you cut them. And then you open up other markets. You explore new opportunities. You find new ways of having income flow in your direction. You still work from your core strength, but you find new ways to profit from it. In this way the contribution of the 80% of your line is still in the black.
Many authors are resisting or denigrating the idea of digital self-publishing. This is like a farmer saying that the produce sold from his roadside stand just isn’t as good as the stuff you buy in the grocery store. It’s nonsense. If a writer provides samples (free, or low-cost stories), readers will have the means to make informed decisions about where they want to spend their entertainment dollars. Sure, will digital publishing mean that anyone whose ever wanted to write can have a storefront? Absolutely, but if consumers demand samples before they buy, the good writing will be weeded out from the bad very quickly.
And there are other ways to have stories rise to the top. Watch this space for some project announcements very soon.
Here’s the true tragedy of authors who don’t want to attend to the business side: every single one of us has inventory that isn’t doing anything right now. Could be a novel that never sold. Could be a handful of short stories that sold years ago and haven’t been seen since the anthology or magazine went out of print. Could be we get an idea for a story tied to current events, or we want to do a story that we can sell and donate the money to Haiti relief. The current publishing model doesn’t support such things, but digital can and will.
Let me give you two examples of ways that digital publishing works for both the authors and readers by circumventing economic necessities that encumber the current business model.
1) I’m not alone in having one or more novels which are of professional quality, which the large publishers rejected because, in their opinions, the books would not sell enough copies for them to bother with. Setting aside the issue of publishers’ lack of demographic data on reader tastes, the idea is that since the book would not be a huge bestseller, in an editor’s opinion, it goes unbought.
So, I have this book. I will never recover the time I’ve invested in it. If I turn around and publish it in digital form for $5 and I sell three copies a month, the sales of that book alone will cover the cost of my website and more. The cover illustration will cost me $25 or so, maybe as much as $50; so the sales of the first fifteen will cover that cost. After just fifteen books, I’m profitable, and I’m making the money now, not having to wait for a publisher to get around to send me money in six to nine months after a copy is sold. If the current sales figures for digital sales just hold steady, without any push on my part, I can sell a dozen copies a month, putting $50 or more dollars in my pocket a month. May not sound like much, but it is $50 more than I have right now. In ten months, that’s an iPad.
2) Back in 1997 I had a novel come out titled Talion: Revenant. The book sold well over 50,000 copies here, and sold in Germany. I already have the start on a sequel: Talion: Nemesis. Since Bantam has rejected me, they don’t want the sequel. Because they hold the rights to the first book, no other publisher wants to pick up the sequel, despite the strong sales figures and the fact that this is the single most requested volume for a sequel that I’ve got. (And if you want to register your support of my doing the sequel, please feel free to do so in comments.) Why won’t anyone else pick it up? Because sales of the current book would drive sales of the previous one, allowing Bantam to profit off their efforts. Even using current (and crude) models for estimating sales of the next book in a series, Nemesis would be projected to sell a minimum of 30,000 copies, which is a ton in the current environment. And yet, this sort of thing is seldom done under the current model.
If I do it as a digital book, and tap into that 30,000 sales figure, I’d been looking at a gross amount of money running, conservatively, at $100,000 on a $5 digital book. Even if I sell only a fraction of those copies, even if I only sell 10,000, I’d make more than I’d be paid as an advance for the book in the traditional model. Regardless, every dollar that flowed in would be one more dollar than I had before. Low effort, low cost, high profit. Why wouldn’t I do it?
And why on earth would I listen to anyone who denigrates digital self-publishing? I’ll let you in on a big secret here: those same authors are reading these very blog posts, and are the first to pigeonhole me at conventions to learn how they can do what I’ve been doing. They’ll be doing all this very soon, claiming that it’s different for them because of [insert feeble rationalization here]. Smile and nod when you see them.
In either scenario, providing samples for free to entice folks to buy would be part of the package. So folks would not be buying a pig-in-a-poke even if they had no idea who I was or what I’d done.
The simple facts boil down to these:
1) The old system has never treated writers well. Publishers have continued to cut back on services that build author careers, now expecting us to do that for them. This is not to suggest that publishers do not provide services that benefit writers. They do. But they have shifted things that they used to do onto the backs of writers, and they have not increased our cut of the take to compensate us for doing that new work. And if we refrain from doing that work—or even if we do it, but not well enough—it becomes grounds for severing their relationship with us. In essence, they throw a hundred infants into the ocean, and then rescue the five that bob to the top—who then go into the next load of a hundred and go right back into that cold, cruel sea. Lather, rinse, repeat—how long can you tread water?
2) Authors already have work product to which they own the digital rights, which they are not making available. This is akin to a farmer having produce the distributor doesn’t want and his failing to erect a roadside stand to sell it. The effort to get that material out there is minimal, and the reward is immediate.
3) The dark side of the digital world is this: you can never audit a digital royalty statement. There is no way to tell how much end-product has been delivered. A one meg file to which a gig of bandwidth has been devoted does not mean 1,000 sales. It could be one guy has failed to download that file on all but his 2,000th attempt. If an author does not sell his own work, he has no baseline against which to judge the sales statements coming in from others. (Based on my experience, transfer failures affect less than 2% of transactions.) Since publishers will be paying us substantially more for digital copies of our work than they do physical copies, and since the paper trail is a lot more difficult to break down, it behooves authors to be collecting data by which we can verify what’s going on.
4) Authors say they don’t want to learn graphics or HTML or anything else. Great. Have your spouse, child, grandchild, friend, assistant, unpaid intern or willing fan do it. It’s work that needs to be done. If a pipe breaks in your house, you don’t sit around in a flood lamenting the fact that you don’t want to learn how to be a plumber. You find someone who can fix things. HTML, Graphics and the rest are things others can fix. Incorporate them into your success.
All that said, there are still folks who will say, “I just want to write.”
Fine. Do that. Just don’t complain when the business isn’t going the way you want it to. Either you take control of your own destiny, act like an adult and make the business work; or your forfeit the right to wail and gnash your teeth about the vicissitudes of publishing.
Michael A. Stackpole is a New York times Bestselling author with over forty novels published including I, Jedi and Rogue Squadron. He was the first author to have work available in Apple’s Appstore. He has lectured extensively on writing careers in the Post-paper Era and is working on strategies for authors to profit during the trying time of transition.
This post was written by Michael A. Stackpole. It originally appeared on his Stormwolf website on 2/5/10, is reprinted here in its entirety with his permission, and is the third installment in his series on common myths and distractions in authorship and publishing. The first installment is here and the second is here.
My post yesterday, Authors Can Be Stupid: Please Feed The Authors, can seem to have been rather unsympathetic to authors who are caught in the Amazon-Macmillan fight. They could very well be in a difficult position, and panic can be expected. I have no idea what percentage of sales go out through Amazon, but it’s very clear that Amazon is one of the most visible book retailers. Some authors haunt the website, watching a book’s ratings rise and fall with the avidity of a doctor watching a critical patient’s heart monitor.
Any author, however, who believes that his career is going to be ruined by something Amazon does, is just kidding himself. Authors have never been in control of their careers. Here are some realities to consider:
1) The single thing which determines how well your book sells has nothing to do with your prose. Though we are all told from birth “never judge a book by its cover,” this is exactly what book buyers do. And by book buyers I don’t mean just the retail customer, I mean the buyers for the large book chains. If they do not like your cover, they don’t buy your book. And authors, with very few exceptions, have zero input on what will go on the cover. (I have had covers presented to me before a book is finished, requiring me to add a scene to the book so the cover is relevant.)
2) A second huge factor in book sales is promotion. I don’t mean ads and book tours, since most authors in SF&F get neither in any useful sense, but I mean in placement and special discounts for purchasing. In bookstores you’ll see books on wall racks or aisle end-caps. Publishers buy placement in stores (same as shelf space is sold in grocery stores). And a special discount for a particular book can inspire bookstores to stock more of them. Ask yourself which is better: having two books stocked in a store and selling both of them, or having eight stocked in and selling four? Most folks point to the 100% sell-through, but since virtually all mass market books are sold on a returnable basis, selling half the books stocked in, but a larger number, is better. The books that don’t sell are sent back, so it’s just sales volume that counts.
3) Every writer knows that the quality of writing has little to do with sales. There is not a single person reading this who hasn’t wondered why a book of inferior writing quality sells more than a stunningly well-written book. Think about it. Is Dan Brown really the best writer of 2009? (I’m happy for his success, but I could name a dozen writers who are head and shoulders better than he is. Why aren’t they selling so well?)
4) Why did Dan Brown make it? Why are Stephanie Meyer’s books so popular? One huge factor in a writer’s success is luck. You, the writer, catch a break somehow. The right editor gets behind your book. President Reagan says he’s reading it. Teen girls fall in love with your hero. Someone who is in a position to promote your book (*cough* Oprah *cough*) decides she likes your book. You get tapped to write a series of novels in a very popular tie-in line. You can’t script these things, they just happen.
5) You tap a fad. There are more writers than I care to count who have made good money off the supernatural romance fad. Great for them. But many of them have come away with the impression that turning out a financially successful novel is just a matter of writing to a formula.
Fads die. Bubbles pop. I’ve been in the game long enough to watch the Techno-thriller bubble burst. I remember authors who were on top of the world, making big bucks, who suddenly couldn’t sell a word after the cyberpunk and horror bubbles burst. The expressions on their faces resembled those on the faces of disaster victims. Their worlds had collapsed, and they had collapsed because publishers had pumped out so much material to feed the fad, that they glutted the market with lower quality work, and readers revolted. They stopped buying.
6) Calamities can destroy a book. A hurricane rips apart a warehouse. Truckers go on strike. A flood, an earthquake destroys a stock of books. (Publishers will get insurance on all the destroyed books, but the authors won’t get a cent, and the chances of their books being reprinted are zero, since the books never had the sales numbers (due to a lack of distribution) to support reprinting.)
Sometimes the economy crashes.
And some times book chain stores get overextended, can’t afford their stock, and close stores. (Curiously enough, no one has complained that Borders closed so many B. Dalton outlets lately, and yet that action likewise cost authors lots of sales.)
Notice a key point here. The decision to judge books harshly for a lack of sales despite extenuating circumstances has nothing to do with retailers. If a publisher believes in a book, they can push it (see point 2 above). Authors who have had their first book caught in the Amazon-MacMillan fight will be hurt only if their publisher decides to do nothing to spur sales on those books. And while I would like to hope that Macmillan would step up to do that, I don’t think they will. They never promote small books anyway because they expect them to fail.
Two years ago the New York Times printed an article which contained a number of revelations. The one that has stuck with me the most is this: 5% of a publisher’s line makes 100% of its profit. In other words, 19 out of 20 books lose money or break even. So, sales failure is expected, not the anomaly. Books sinking without a trace, regardless of Amazon sales figures, are the norm.
And consider this: what other business expects to lose money on 95% of what they turn out?
Or, to turn it around, if Walmart only made a profit on 5% of its product line, how radically would they shift the mix of things they stock in their stores?
7) You have to remember, authors are adults who have entered into a business agreement with publishers. In theory they go into it with open eyes, but the fact is that most don’t. The joy and excitement of selling a book blinds most authors to the market realities. Most writers buy into the Hollywood image of writers living on easy street, having long walks in the park with their editors, enjoying fancy and elegant meals in New York and otherwise just loving life.
Even though they should know better, they willfully ignore reality. Once your book is out of your hands, its fate is decided by other people. They give you a crappy cover, you’re screwed. They decide that your book will be the second or third book in the list for that month, you’ll never make it into grocery stores, drugstores and airports. They don’t offer a special discount, you have two copies in the chains and maybe a week to get sales traction. Bookstores may want you to come and do a signing, but unless you have a budget for a tour, publishers will tell the store that “the author doesn’t want to go on tour.” (Without ever asking the author…)
The simple fact is that none of us, no writer, is entitled to a career. We are all a single sales disaster away from working with the phrase, “Would you like fries with that?” Whether it is the downturn in the economy, your editor leaving your publisher, your publisher cutting the division that publishes your books, a retailer (for whatever reason) deciding not to carry your book, no writer should ever have the expectation of a career.
We have never been in control of our own fate.
Until now.
Make no mistake about it: the fight over ebooks is a fight by publishers to stay relevant. I’ve already pointed out that they are defending a grossly inefficient business model. Authors now have direct access to their audience and by going direct (even charging less than the publishers) authors can make money faster than the publishers will allow. Authors have plenty of content which they can sell digitally, and can generate more, faster. When you can make more off a $2 short story than you can off an $8 paperback set in the same world, and not have to wait 6-9 months for a publisher to send you your cut, you can take control of your own economy.
Are digital sales to the point where they can supplant traditional publishing income? For some authors they are. Digital readers are proliferating, and the J. K. Rowling demographic is very comfortable with reading off a screen. They’re reading more. And if your work is not available digitally, you don’t exist to them.
It’s time for writers to stop lamenting how the inefficiencies of the old system treat them badly, and to embrace the future. If writers don’t take control of their future, they doom themselves to the obscurity that will swallow the current business model whole.
Michael A. Stackpole is a New York times Bestselling author with over forty novels published including I, Jedi and Rogue Squadron. He was the first author to have work available in Apple’s Appstore. He has lectured extensively on writing careers in the Post-paper Era and is working on strategies for authors to profit during the trying time of transition.
There are some who say you should give away "all" your ebooks for free to make money on the backend from your scarce goods, but I disagree. Giving everything you write away for free in digital monetarily devalues your work and makes it appear that the only true monetary value is in the production costs.
I keep saying "monetary value" instead of just "value" because too many people want to shift the argument to "intrinsic value" you know like sunshine and puppies and love. But in business we’re rarely discussing love and sunshine when we talk about value.
When you give all digital versions of your work away for free you are training customers to NOT pay you, which is not a good idea. People will take advantage of you to the degree that you allow them to take advantage of you. Some people will "still" try to take advantage of you, but that’s a reality of life. You don’t have to invite it by giving "everything" away.
If you walk down the street and come across someone who looks shady, do you pull out your wallet and hand it to him to avoid the "possibility" that he might mug you? No? Then why should you give all digital away to avoid piracy?
Many advocates of the freemium model state that piracy helps both consumers (to get what they want out of companies, which is kind of like saying hostage situations help criminals to get what they want, or guns make rape easier) and the companies/artists themselves by boosting their exposure and increasing the sale of scarce goods. On the surface this sounds okay. But the problem with this is… when you start shouting from the rooftops how great piracy is for everybody then it trains consumers to see piracy as "okay" and to not buy things, just steal them.
While some sales from piracy are due to someone wanting a "scarce good" related to it, I would guess that a lot of it is just from more people hearing about it and the honest people buying it. I know I know, there are those studies that the people who buy the most music also pirate the most music, so? Does that make it okay? I don’t think it does.
Whether or not it helps or hurts everybody isn’t the issue of whether it’s right or wrong, but appealing to consumer morality is about as effective as a woman walking naked through a men’s prison saying "rape is wrong." Either a consumer is honest or they are not. If they are, they don’t need a sermon from you. If they aren’t, your sermon will fall on deaf ears.
Not every pirated copy is a "lost sale" since chances are good the pirate wouldn’t have paid for it anyway. However, when we train a whole generation of consumers to expect everything for free, to not value the time and effort that goes into these types of products, to think "piracy helps" so they can steal and somehow "help the artist," then we’re basically taking someone who otherwise WOULD have paid for something, and giving them permission to sin so they don’t have to feel guilty about it.
Most people have at one point or another participated in file sharing. But at the very least, you should feel guilty about it. You should know it’s wrong, you’re wrong, it’s not okay, and you should have waited until you could pay for it.
The issues of piracy and voluntary free content are not the same thing. Piracy is an unfortunate reality of life. However, when you show you don’t consider your writing of monetary value by giving it all away, you’re just hurting yourself.
Also, if/when E becomes the primary delivery method and print is just a subsidiary right, people will need to charge for E to make money. If you’ve been giving it all away, you can’t really switch gears like that without pissing off your consumer.
I think limited amounts of free is okay, even beneficial. My free plan is: KEPT (full novella, first story in the Preternaturals Series), Free excerpts of all future books, and Free podcasts (because audio is such a different experience.) That’s it with the exception of "limited" freebies. Like "two weeks only, get this book free here" sorts of deals. A reader who expects even more free than this, is never going to pay for your work; they’re just going to mooch off you forever. (Unless they are poverty stricken and can’t afford to pay for any entertainment, in which case they might buy your work later if their situation improves, but why would they if they don’t have to?)
A number of authors who have books published by Macmillan have opined on their blogs that the authors whose books are no longer available on Amazon really need our support. We really need to go out to brick-and-mortar stores or to other websites and order their books. We need to do this because these authors are taking a major hit to their income since Amazon has removed Macmillan books from their website.
I certainly have sympathy for the authors whose work is caught in this catfight, but this call for readers to go out and buy their books right now is nonsense.
The appeals make it appear that if we don’t buy now, these authors will starve. If you believe this, you also believe that publishers want to break Amazon’s non-existent monopoly on ebooks to protect choice for readers.
You’d be a lot better off trusting that the tooth fairy will leave you money when you put teeth under your pillow.
This is how the economics of the industry works. If you buy a book today, right this very second, from any retail outlet, the author will get, on average, 10% of that cover price.
In October.
Yep, eight months from now.
And that’s if their advance has been earned out. See, authors work on “advances against royalties.” The publisher fronts us money to work on the book, and then the royalties pay off that debt first, before we see anything. Books can take years to “earn out,” or repay that debt. Plus, since books are sold into stores on a returnable basis (consignment), the publishers always hold back a “reserve against returns.” So, even if your book has earned out, the publisher doesn’t have to pay you money if they believe some of your books will be returned.
In addition to that, we have to factor in pay periods. Royalties are accounted semi-annuallly. So, sales in the January through June period are lumped into one basket, and then the publishers have three months to check their figures, figure out their reserves, and cut a check. Checks should arrive on the first of October. The seldom do. Within my career there have been several periods where publishers—none of them affiliated with Macmillan—have taken until the end of October or into November to cut checks. One even seems to have a penchant for delaying the payment until I call to complain.
So, in reality, a book sold today—a book that came out this month—won’t generate income for the author, at best, until October. And, given the rate at which books earn out, that’s probably October of 2012.
If an author right now is facing so dire a set of economic circumstances that he’s pinning his hopes on money he might get in October, he’s got far bigger problems than Amazon not selling his books.
But I don’t want to be hard-hearted here. What could these authors do to get more income for their writing?
They could take all the stories for which they own the ebook rights, prep them for publication on the Kindle, and set them up for sale on their own websites. Sales of material from their own websites will pay them today. Kindle sales will pay them in sixty days. Between now and October, an author could easily and fairly effortlessly, pull in $1000 to $3000 via such digital sales. If they work at it, even more.
Sure, the tiff between Amazon and Macmillan is going to cost some people some money. But any author who ignores the larger import of this battle—the collapse of the current economic model for publishing—is an author who has already decided he no longer wants to write for money.
Michael A. Stackpole is a New York times Bestselling author with over forty novels published including I, Jedi and Rogue Squadron. He was the first author to have work available in Apple’s Appstore. He has lectured extensively on writing careers in the Post-paper Era and is working on strategies for authors to profit during the trying time of transition.
Over the weekend, a certain woman who shall remain semi-nameless—I’ll call her May—was confronted with the choice between committing piracy and…well, going without. While her story centers on a couple of music files, the larger issues it raises are equally applicable to ebooks. So hang in there, this really does have some bearing on matters of authorship and publishing.
May has been waiting for two specific, favorite old music tracks to become available for sale in digital format for many years. Both songs are from British artists, and the albums on which the tracks were originally included have been out of production for years. Kind of like a book the publisher has allowed to go out of print.
May started by checking iTunes, Amazon’s mp3 store, eMusic, and every other legitimate digital music vendor site she knows of to see if the tracks were available for sale. They weren’t, so she used each site’s contact form to request them. Months and years passed, and the tracks remained unavailable on vendor sites.
So she did periodic internet searches, just in case some new vendor might show up with the tracks on offer. She also checked the artists’ websites for any updated information from time to time. Every time she did these things, she’d spend half an hour or more on the necessary research; she really wanted those tracks, and she wanted to get them legitimately. And every time, she’d come up empty-handed. Except for the many links to pirated mp3s of the files she wanted, of course.
Those links were always there, right at the top of any search results, putting the tracks tantalizingly close. And sometimes, she’d follow one of those links to see if the tracks were really there, in their entirety, and in a high-quality file. They were. And on most of the web pages she found, the tracks were downloadable with a simple right-click/Download As command combo. No need to be a semi-hacker, or subscribe to a bit torrent service, or sign herself up for a file sharing network. Just two mouseclicks, and she’d have those songs she’s wanted so badly for so long. But every time she went on this reconnaissance mission, she’d resist the temptation of those two mouseclicks. Until this past weekend, that is.
This past weekend, she decided she was finished wasting her time and energy on the search. In frustration, she joined the ranks of the many consumers who eventually come to feel it’s the publisher’s or producer’s own fault if she downloads pirated copies, because they failed to offer her a reasonable, legal alternative.
She might’ve gone to a reseller site, like eBay, to purchase the CDs upon which the desired tracks originally appeared, this is true. But is it reasonable to expect her to spend somewhere around $10 each for the CDs, plus shipping costs, when she only wanted one track off of each? And while it may be a simple case of guilty rationalization, was she wrong to conclude that since purchasing a used copy would not benefit the artists or producers of the tracks, doing so was no better for the artists and producers than downloading pirated copies?
Now, imagine if May had been on the hunt for an ebook instead of these two music tracks. Imagine further that the book in question is out of print—though not yet in the public domain—, and neither the publisher nor the author has elected to make it available in electronic formats. May could purchase a used copy of the book from any of a number of resellers, but this won’t put any additional royalties in the author’s pocket, or send any money the publisher’s way. And May really prefers ebooks to hard copy books; she’s bought a Kindle or Sony Reader, and intends to make the most of her investment by limiting her book purchases to e whenever possible. If you were in May’s place and found yourself two clicks away from obtaining the desired book in e format, what reason would you have to resist those two clicks? What reason has the publisher or author (in a case where rights have reverted) given you to resist those two clicks?
Taking this a step further, let’s imagine the book in question is still in print, but only in a hardcover edition. May faces the choice between paying $25-30 for a ‘dead trees’ version, or two mouse clicks to get the book in the format she wants for free. May doesn’t want to cheat the publisher or author out of their due, but she can’t afford to spend that much money on a book. So she simply crosses that book off her wishlist, and while she has every intention of keeping an eye out for an electronic edition, life goes on and in a matter of days she’s forgotten all about the book. In the end, she never buys a copy at all.
In yet another scenario, imagine the ebook is made available, but only at a pricetag of $14.99, and with DRM that will prevent May from moving the ebook among her various devices. Furthermore, if May “purchases” the $14.99 ebook, she won’t really own a copy of the book at all. She’ll own a limited license to view the book’s content on one specific device, only in the format specified by the publisher, and that license is subject to recall under numerous circumstances. If the publisher becomes aware of any copyright irregularities, or if May gets into a dispute with the ebook vendor site on an unrelated matter, for example. Alternatively, she can buy the paperback for $13.99 and have a physical copy that she keeps in perpetuity, or can lend to others, or resell when she’s finished with it.
Or she can click her mouse two times and get the ecopy she wants, with DRM stripped, for free. Could you blame her for feeling the publishers’ excessive pricing and limitations on the ebook edition justify a decision to go the two-clicks route?
Observe and learn: this is how well-meaning, otherwise honest consumers are lured—some might say pushed—into piracy. Most consumers want to do the right thing. They want authors to be rewarded for their hard work. They want publishers to earn a fair profit on their products. But they also want reasonable prices, and the same flexibility and functionality they’d get with a hard copy book.
Publishers and authors who think raising the prices and restrictions on ebooks will work because readers will have no other choice are forgetting about those two mouseclicks. And the many justifications they’re giving consumers for making those two mouseclicks.
No publisher or author would have much to worry about with respect to ebook piracy if they would just give readers what they want, within reason. The criminal element that cares nothing for compensating content creators is a small group that will always find a way to steal content no matter what you do. But that group’s ranks are being joined by guilty, reluctant ‘pirates’ every day. This new type of pirate isn’t out to hurt authors, and in fact would probably be very happy to “pay” a reasonable price for pirated copies through the use of a donation button on authors’ websites. But of course, this would still be illegal and would likely put the author in hot water with his or her publisher.
Publishers: other than complaining about how wrong and unfair it is, what are you doing to address this situation? To make a legitimate, legal option both available, and more attractive, to consumers than a free ebook that’s just two clicks away? Because at the point where your choices with respect to ebook pricing and restrictions look more unethical to the consumer than their own choice to download a free, pirated copy does, you’ve lost the sale.
And Authors: if the only thing standing between you and giving your readers what they want is a publisher, have you considered the possibility of retaining your e-rights and releasing ebook editions of your work yourself? I’ve provided a free guide for publishing to the Kindle on my website, and there are many for-hire services that can do it for you. This is impossible for works already under contract, but is it a move that might make a whole lot of sense for your unpublished works, or works for which rights have reverted back to you?
April L. Hamilton is the founder and Editor in Chief of Publetariat. This is a cross-posting from her Indie Author blog.
This post was written by Michael A. Stackpole. It originally appeared on his Stormwolf website on 2/3/10, is reprinted here in its entirety with his permission, and is the first in a series we’ll be reprinting in the coming days.
I’m not going to name any names, but as we move into the digital era, there is a spurious argument that gets brought up from time to time by authors who really ought to know better. It pretty much points out that a) most of us are not good dollars & cents kinds of folks and b) why publishers have been able to convince a lot of authors that the digital age will be an apocalypse that will destroy them and their standard of living.
The discussion centers around epub, the ebook format that all major readers, including the forthcoming iPad, use (the exception being the Kindle). Supporters of epub and publishing in it maintain that if they buy a book once, they should be allowed to transfer it onto any new devices they get. So, a story purchased now, will still be readable on a device manufactured twenty years from now, assuming epub survives that long.
A number of authors have stood up and announced that having an eternal format is a bad thing. Their rationale runs like this: if a reader buys a physical book he loves so much that he reads it until it falls apart, and buys another, they get paid again. With epub books, it’s buy once and never have to rebuy. Therefore, epub sales are going to cut into their income. And they get lots of other authors nodding in agreement.
So let’s break this little myth down.
1) While some authors do have books that does get read so many times that they fall apart, this is not a common phenomenon. We’d all love to think it is, and we cherish readers who tell us they had to buy another copy of a book because they read the previous to death, but the ratio of repurchase to one-shot readings is pretty darned low as nearly as I can tell.
2) A repurchased book, right now, nets the author 10% of the cover price. Let’s say that’s 80 cents on an $8.00 paperback.
3) Under the current agency model, that same $8 epub book will net the author $5.60. (And even with the publishers taking half the electronic money if they’re selling the book, It’s still $2.80 due the author.)
4) Now, since I wasn’t a math major, someone might want to check my ciphering here, but it looks like the purchase of any epub would cover 3.5 to 7 purchases of a physical book. So epub and digital publication, even though it’s only going to be a one-shot, will make the author substantially more money unless this author is someone who, with everything he turns out, has people buying four or more copies of each book. (Doesn’t happen, unless you have a PAC that purchases your books in bulk for contributors.)
Some folks, who want to get absurd, could point out that if we forced repurchase of ebooks (through proprietary software choices and device-linked DRM) we could make that huge cut each time an ebook is bought. But this is assuming your book is worth repurchasing. Since most books are read-once and shelved, loaned, discarded or resold, this just isn’t a realistic argument by any stretch of the imagination.
Authors can, when hoping they have a winning lottery ticket, miss the fact that there’s plenty of money right at their feet. They’d do better to scoop it up steadily, than waiting for that jackpot that just ain’t going to come their way.
Michael A. Stackpole is a New York times Bestselling author with over forty novels published including I, Jedi and rogue Squadron. He was the first author to have work available in Apple’s Appstore. He has lectured extensively on writing careers in the Post-paper Era and is working on strategies for authors to profit during the trying time of transition.
When the Big Six publishers and Apple’s Steve Jobs began conspiring recently to raise ebook prices by 30 to 50 percent from the Kindle Store standard of $9.99 for bestsellers and many new releases, it may have looked at first like curtains for Amazon’s powerful hold on the fast-growing ebook market.
Amazon’s first move — referenced on the blog as its "Delete You" tactic against MacMillan titles — even seemed a bit petulant to some observers, especially when the retailer turned around a few days later and said that it would have to capitulate to MacMillan’s pricing demands.
The publishers are in a powerful position, and it may indeed hurt sales of the Kindle — and of the publishers’ own bestsellers — if in a few weeks we find that few ebook bestsellers are available any longer at that $9.99 price that has become so popular in the Kindle Store.
But it turns out Amazon has some arrows left in its quiver.
First, it is clear now that, whatever its intentions, Amazon’s "Delete You" play was very effective in educating Kindle owners about the pricing controversy that was going on behind the scenes. Among the first 1,032 respondents in the current Winter 2010 Kindle Nation Citizen Survey, 71 percent agree with this statement: "By dropping MacMillan books, Amazon took stand vs. high-priced ebooks."11 percent disagreed with the statement, and 18 percent didn’t know or didn’t have an opinion.
The importance of this customer education, with its obvious subtext that "it is the publishers, not Amazon, who are behind the price increases in the Kindle Store" is that it helps to preserve a special relationship between Amazon and those of its customers who are Kindle owners. Most Kindle owners are extremely loyal customers, and we buy a lot of books. You don’t just have to take my word on these matters, because they are quite evident from other data provided by respondents in our current survey:
88 percent have positive or very positive feelings about Amazon, but only 19 percent have positive or very positive feelings about the Big Six publishers.
70 percent agreed (and only 13 percent disagreed) with the statement that "Jeff Bezos & Amazon have my back, & I know they price things to sell."
33 percent said that since acquiring a Kindle they annually buy more than 30 Kindle ebooks that are priced between 99 cents and $9.99, while another 30% said they buy 15 to 30 such books.
What will Kindle owners do if the prices of bestsellers priced previous at $9.99 increase by the 30 to 50 percent threatened by the Big Six publishers? Currently, according to our respondents, only 3 percent buy 15 or more ebooks a year in the $10-and-up price range. For some customers, that will change: 37 percent agreed with the statement that "I will probably pay $10 to $14.99 for new ebook titles if necessary," while 54 percent disagreed.
But there are also some strong indications that this group of very active readers may be ready to make an interesting pivot in consumer behavior, one that may be reminiscent of changes in behavior in the audience for music and film in the past few decades. As these forms of entertainment became accessible in different formats and at different prices, and the costs of production and distribution declined, audience grew dramatically for music and movies with various forms of "indie" branding. In the current Kindle Nation survey, we found strong identification with the following statements:
With recent ebook price wars, I’ve become more price-conscious. 72 percent agreed, 22 per cent disagreed.
With higher bestseller prices, I’ll buy more backlist or indie titles. 60 percent agreed, 21 per cent disagreed.
I’ll look to buy ebooks by authors who provide Kindle exclusives. 48 percent agreed, 28 per cent disagreed.
It should come as no surprise, of course, that Amazon — and some other forward thinkers — are racing to keep up with, or in some cases help create a market for, changes in what we read and what is published. While Amazon is certainly not about to turn its back for long on bestsellers at whatever prices they are made available, there are some exciting channels opening up which will lead to expanded selection of unique content in the Kindle Store, including:
Authors, meanwhile, are beginning to organize to protect and advance their independent publishing interests through initiatives like the fledgling Association of Independent Authors that may inspire more and more creative work for direct publication through the Kindle platform and other new technologies.
New publishing ventures such as Rosetta Stone and Jane Friedman’s Open Road Integrated Media are making a major investment in helping both established and emerging authors and their representatives to protect and assert their ownership of their digital publishing rights so that they can bring their own work to the Kindle and other platforms under more favorable terms than the 17.5% of retail list price being offered by the Big Six publishers for ebook royalties.
Recent deals by Amazon to publish a growing number of Kindle backlist exclusives or new short fiction by prominent authors such as Paulo Coelho, Stephen Covey, Ian McEwan and, through the auspices of the Atlantic Shorts program for the Kindle, Curtis Sittenfeld, Edna O’Brien, Paul Theroux, Jennifer Haigh, Patricia Engel and Christopher Buckley and others.
The announcement this weekend by the British Library, courtesy Andrys Basten’s A Kindle World post, of a joint venture involving Amazon and Microsoft that will bring 65,000 works of 19th century literature to the Kindle, free of charge for Kindle users (although it is unclear if duties and wireless charges will be added for U.K. customers.)
Through initiatives such as Amazon Encore, the Amazon Breakthrough Novel Award, and its direct publication of public domain works for the Kindle, Amazon is beginning to venture beyond merely dipping its toes in the water of ebook publishing, so that within another year or two I will not be surprised to see hundreds or even thousands of new titles published directly by Amazon in the Kindle Store.
And last but not least, Amazon’s announcement on job boards this week that it is "seeking a uniquely-qualified individual to help drive selection of unique content for Kindle:
The position of Kindle Unique Content Specialist blends vendor management with creative and technical aspects of product development, and requires enthusiastic dedication to delivering to our customers unique, engaging, and multidimensional content designed especially for Kindle. To this end, the Kindle Unique Content Specialist will: Use customer feedback, industry news/trends, and Amazon data to identify categories and genres in which unique content will add key selection, amplify Kindle’s distinctive functionally, and further enhance/add value to the Kindle customer experience.
Where will it all lead?
We’ll see. We’ve just witnessed a strange and upside-down economic event where, in the hands of Steve Jobs and the Big Six publishers, "competition" has somehow led to higher rather than lower prices for the consumer.
What’s clear is that Amazon has no intention of biding its time while the publishers and Jobs do their dirty work. As often happens when the dinosaur sector of any industry goes head-to-head with cutting-edge, forward-thinking elements, the dinosaurs may convince themselves they are winning the battles only to discover later that the outcome of the war depended on other battles about which they never heard a word until it was too late.
Publishers and authors may be trying to convince each other that they are at war with Amazon, but they have been acting like they were at war with their own readers. Readers won’t stand for it, and Amazon is likely to do plenty to empower us by giving us more choices at better prices.
The recent e-book dispute between Amazon and Macmillan is far from over.
Macmillan books, both e-book and traditional paper, are still unavailable at time of this writing on Amazon.com, except through Amazon’s third-party sellers. And Macmillan e-books, and the iPad, are not yet available for sale from Apple, Inc.
Who will prevail? Will e-book prices go up? Will book pricing be controlled by a few publishers? Will consumers buy fewer e-books? Will this help authors? Is this even legal?
First, some e-books background
I’ve been watching the media coverage, blog postings, and comments over the past week, and it seems there’s a lot of noise and confusion among the facts of this issue. Even before the problem blew up and Amazon pulled Macmillan books from its inventory, authors and readers were weighing in on the question of fairness with recent e-book pricing and availability.
I’m just trying to write good books, earn a living and support my family like everyone else in this crazy world. Please give me a break.
Preston later posted a mocking take on the “shrill, angry posts by Kindle users here and elsewhere”:
I am the American consumer. I am entitled. I want it now. I want it at the cheapest possible price. And if I don’t get it I’m going to lash out in protest and I don’t care who I hurt just as long as those greedy publishers and authors take notice!
Perhaps some were shrill, but most seemed quite polite, while making their point:
Mr Preston,
I feel you are missing the point here. You are losing many more sales of your book because of your publishers decision to delay the Kindle version release date than because of a negative customer review on amazon.com.
These complaints and negative reviews and discussions stemmed from several publishers’ decisions late in 2009 to delay the release of the e-book by one or more months, as the Guardian reported:
HarperCollins is not the only publisher delaying release of its ebooks. Last year, leading publishers Simon & Schuster and Hachette Book Group both told the Wall Street Journal that they would delay ebook editions – which are generally priced significantly lower than the hardback – by up to four months for some titles in 2010. “We believe some people will be disappointed. But with new [electronic] readers coming and sales booming, we need to do this now, before the installed base of ebook reading devices gets to a size where doing it would be impossible,” Simon & Schuster chief executive Carolyn Reidy told the WSJ.
Amazon.com pointed out at the time that “authors get the most publicity at launch and need to strike while the iron is hot. If readers can’t get their preferred format at that moment, they may buy a different book or just not buy a book at all.”
Impact’s Kindle version was delayed by 4 months. While paperback readers are used to waiting for a smaller, economical version of the hard cover book, for the past 2 years most e-book releases have been simultaneous with the hardcover version. And many e-books have been priced by Amazon at $9.99, while discounted hardcovers sell for about $15 at Amazon, Costco, and Walmart. In December, several new hardcover releases were even sold for $9.00. So Kindle owners have been used to being able to read their favorite author’s new book at release time for under $10. Many refuse to pay more, and say that their alternative is the library or a used bookstore. When e-books are priced close to the price of a paper book, they can’t comprehend the logic:
The $9.99 price point made it so – for the first time EVER – I bought new releases with some regularity. I won’t spend more than that on ANY book, let alone one that I can’t re-sell/trade/donate for secondary benefit.
Raising the e-book price to $13 or $15, as reportedly contemplated in Apple’s discussions with publishers, isn’t the way to embrace the digital future. A price of $15, for instance, is close to the hardcover book price charged by discounters like Costco.
Publishers not happy
It seems the publishers have not been happy with this. In 2009, the “publisher’s list price” or “cover price” of e-books generally rose to match that of the hardcover, squeezing Amazon’s profit margins on e-books. Some speculate that Amazon is losing money on some e-book sales. But in retail, loss leaders are a competitive strategy, and price adjustments help move inventory and generate profits. Under a traditional contract, publishers still receive an average of 50% of the cover price. So increased sales should be a boon to publishers.
But publishers seem to be concerned with a loss of “apparent value” in their product. And they seem to have convinced authors that retail discounting will be the beginning of the end. Some have resorted to accusing Amazon of bullying:
This isn’t good for those who care about books. Without a healthy ecosystem in publishing, one in which authors and publishers are fairly compensated for their work, the quality and variety of books available to readers will inevitably suffer.
[…]
Amazon, it appears, overreached. Macmillan was a bit too big a foe, and Amazon’s bullying tactics were a bit too blatant.
True – but what is “healthy”? And who bullied who?
Some authors claim that publishers are not the good guys. They state that authors receive a small fraction of the selling price of a new book, publishers need to change their business practices, and that book authors should remember that the publisher is only trying to maximize their own profits, and not those of authors.
I’ll earn almost as much on a $2.99 download than I earn on a $24.95 hardcover.
Konrath has the e-book rights to some of his back-list titles, and sells them directly, without a publisher.
Writer Carolyn Jewel puts the pricing logic in further perspective:
There are several things wrong with this. The first is the assumption that but for the availability of the Kindle version, book buyers would buy the hardback. This appears to be an egregiously wrong assumption. There is, to my knowledge, no evidence that a Kindle owner would be a hardback buyer if she didn’t own a Kindle.
I think it’s much more likely that a Kindle owner, if she didn’t have the device, would wait for the MMP rather than buy the hardback. The MMP would be priced at $7-8. But the Kindle owner, instead of waiting for the MMP, pays a bit more for the book right now. Instead of waiting. By the time the MMP comes out, she’s not going to want to pay $9.99. So what’s actually happening is the Kindle buyers represent BRAND NEW customers with respect to this release. MORE people buy this brand new book because there are two formats. And the cheaper one comes with some well known and much hated limitations.
Twisted facts
But for every Joe Konrath, there seem to be dozens of authors with a contrasting viewpoint. Fast Company, a magazine I subscribe to and generally love, surprised me with this blog post by writer/author Kit Eaton titled Amazon Revealed: It Hates You, and It Hates Publishers that sticks up for authors and publishers while revealing scant business sense:
Amazon, of course, operates something like a supermarket giant does in the food industry–leveraging its huge size to force suppliers to sell to it at wholesale prices. This tactic has caused issues in the food market, and now its doing the same in the books market: Amazon refused, and without warning pulled all Macmillan books from its store.
Mr Eaton must have stayed with the J-school curriculum and missed the econ 101 class where kids learn that retailers indeed do buy stuff from wholesalers at wholesale prices, and then set their own retail prices. He confirms it with this gem:
Firstly it refused to see eye to eye with a key publisher–one of its major suppliers–and preferred to stick to its bullying tactic that eats into the revenue of the publisher, and subsequently authors themselves, by basically insisting that it decide how much to pay them for their product. (emphasis mine)
Wow! Such blatant disregard for basic business sense in a business magazine. Reading both Macmillan and Amazon’s public statements, Amazon never “insisted that it decide how much to pay” publishers. What seems to have happened was, Macmillan told Amazon, a retailer with a huge investment in online and warehouse infrastructure, customer base, and staff to keep it running, that it should act as a cashier, and leave the pricing to Macmillan.
I gave them our proposal for new terms of sale for e books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles.
[…]
Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digtal media businesses). The price will be set for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.
Agency means retailers simply sell the products as an agent of the publisher, with no say on pricing, discounts, etc.
Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.
We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.
Perhaps worst of all, Amazon clearly doesn’t care what its customers think (despite thanking them in the blog post) because it acted to axe Macmillan’s texts without explaining why or giving any warning. And though it tries to portray itself as championing customer rights, what its actually doing is trying to manipulate an entire industry to working how it wants everything to work, squeezing everybody from authors to other booksellers.
And the final, most fascinating twist of all this, is that there’s likely to be one main beneficiary of Amazon’s shenanigans, and it’s one Amazon will deeply resent over the next year or so: Apple, with its new iPad.
I’m glad he mentioned Apple, because I was about to. But first, what DO Amazon’s customers think? Fortunately, Amazon’s discussion threads shed some light, with thousands of posts in the past few days:
J.P. = Reader: To me the issue is the Publishers price controlling across the board at the expense of the consumer. I will also vote with my dollars in protest of their tactics. Sadly, I have to believe the other Publishers probably aren’t far behind.
nabrum: So let’s say the list price of the print edition is $26. Under the old model Amazon paid the publisher $13 and sold the ebook for $9.99. Amazon takes a loss of $3.01. Under the new model the publisher sets the price of the ebook at $15 and gives Amazon a 30% commission. 30% of $15 is $4.50. So the publisher gets $10.50 and Amazon gets $4.50. Under the old model the publisher/author et. al. get $13 to split between them. Under the new model they get $10.50, or $2.50 less. How does the new model allow the publisher and author to profit more from their work than the old model did?
What got this started?
Interestingly, the mention of Apple and the $12.99 to $14.99 prices remind me of Apple’s iPad launch, where Apple announced iBooks would sell for – you got it – $12.99 to $14.99. And that was just a few days before all this kerfuffle.
Some speculate that there’s no coincidence here. And a telling video exchange between Apple CEO Steven P. Jobs and Wall Street Journal columnist Walt Mossberger suggests Jobs knew something about this before it happened.
Walt asks Steve, “Why should she buy a book for $14.99 on your device when she can buy one for $9.99 from Amazon or Barnes & Noble?”
Steve responds somewhat knowingly, “That won’t be the case.”
Walt says, “You won’t be $14.99 or they won’t be $9.99?”
Steve says knowingly, “The prices will be the same.”
Then the video cuts, then Steve says, “Publishers are actually withholding their books from Amazon because they’re not happy.”
How can Steve Jobs know something that’s happening between Amazon and publishers?
Apparently the agency concept was developed in discussions that Apple had with a number of publishers in January. And Macmillan seems to like it so much, they are asking Amazon to follow suit.
But if publishers control the retail price of e-books, is it legal? Under US laws, such as the Sherman Antitrust Act, some forms of retail price fixing, or collusion to fix or control prices, is illegal. This issue hasn’t been raised in reporting, but perhaps it should be explored.*
In fact, what the FTC should be looking into is the potential collusion among all the publishers to “set” the price of e-books at $15. They didn’t get in a room and collude but they colluded through their new “agent”, Apple, with one following the lead of the other. It’s an old story that we’ve seen many times over the years in many industries. But at the least the FTC should put these folks on notice that any attempt to fix the retail price (as opposed to setting a standard agency percentage fee) would be suspect if it appeared they were acting in concert.
Between them, it looks like Apple and the big publishers are keen to screw as much money out of the reading public as they can, even while they’re driving their own costs down by switching to electronic rather than paper books.
I’d bet that little, if any, of their increased profit will be going to authors; I know from one friend that he gets 5% extra royalties on an eBook that costs 20% more than the paperback.
And finally (although this isn’t anywhere near over yet) an apt prediction from the Washington Post:
My guess is that in the not-so-distant future, best-selling authors such as John Grisham and Malcolm Gladwell — along with unknown authors peddling their first books — will publish their own works, contracting with independent editors and marketers and selling directly to consumers as much as possible.
Other authors will turn to smaller, more specialized publishing houses that will offer smaller advances but bigger royalties and will be built, as they once were, around great editors.
In the short term, though, it looks like consumers are being asked to pay more, and Macmillan’s authors are seeing their sales plummet. It will be interesting to see how this falls out.
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