The Shatzkin Files


Nine places to look in 2014 to predict the future of publishing


The digital transition of the trade book publishing business, which I would date from the opening of Amazon.com in 1995, enters its 20th year in 2014. Here are some of the ponderables as we close out the first two decades of a process of very rapid change that is far from over.

1. What’s going to happen with retail shelf space for books? The market for the kind of narrative reading that comprises the bestseller lists has gone anywhere from half to three-quarters online, ebooks and print combined. The rate of movement has slowed, but it hasn’t stopped. It has now been two full years since Borders shut. Barnes & Noble continues to close stores as leases expire. Independents are, anecdotally, reported to be holding their own, but they’re definitely challenged to deliver on the online component and, so far, the successes have depended on individual entrepreneurs running good local stores, not any formula that is replicable or scalable. When will we see a stable “floor” for bookstores, a sustainable foundation from which year-to-year fluctuations won’t persistently be down? I don’t think it will be in 2014, but it’s the most important bunch of tea leaves to read for some segments of the business.

2. Illustrated book publishers are likely to be the most attentive of all to the bookstore shelf space question. Six years into mass ebooks (as dated from the Kindle) and three years into good hand-held delivery of graphics (as dated from the iPad), the digital version of illustrated books have not found the market that the digital version of novels have. The illustrated book publishers learned to be global over the past four decades, so many have avenues to market that aren’t changing as fast as the US bookstore network has. But the reduction-in-shelf-space line on the graph or the sales-of-these-books-as-digital-products line, or both, have to start moving in the opposite direction or there’s a major problem brewing in that very large segment of our business. Will 2014 be the year that somebody cracks the code for delivering how-to or art-book material in a digital form that will replace shrinking print revenues?

3. As 2014 dawns, we have a host of ebook retailing models that deviate from what the book business has always done: sell one book at a time for a price for which the starting point of reference is one set by the publisher for that book. Safari, created by O’Reilly and Pearson, showed a subscription model more than a decade ago but it was for professional books. 24symbols, based in Spain, is a sort-of granddaddy of this business in the trade segment, being about three years old. They are joined by Oyster, a new start-up dedicated to ebook subscriptions and Scribd, an old start-up originally dedicated to being YouTube for documents. And Entitle, formerly called EReatah, has a slightly different subscription proposition that is more like a “book-of-the-month-club” in its structure. An even newer start-up called Librify has an offering for reader-organized book clubs in the offing. Amazon already has a lending library for its PRIME subscribers, which amounts to the same thing, and a subscription of content for kids on Kindle Fire. With so many experiments in play, we ought to get a picture by the end of 2014 of the degree to which this model appeals to consumers and whether the economics are enticing enough to get big authors and big publishers to play with more enthusiasm than they have demonstrated so far.

4. It is accurate, but misleading, to describe the Penguin Random House combination as a merger of “two of the big six”. It is actually a merger of the two biggest of the former Big Six, and it creates a publisher that is nearly as big as the four others combined. So we now really have a Big One and a Following Four, rather than a Big Five. The big question is what PRH can do to apply what is a huge difference in size as a scale advantage. The hunch here is that proprietary distribution channels can be created by a company that controls approximately half the most commercial books in the English-language world. Whether that will manifest itself as ebook subscriptions, special retail distribution using vendor-managed inventory, or the creation or purchase of marketing channels for its exclusive use — or all of the above and more — will be one of the most important things to watch in 2014.

5. The financial reports from big publishers in 2013 have been mostly encouraging. It looks like the shift to ebooks has had the impact of improving publisher margins and profitability. But can those good times last? Publishers now face a world where there is a single dominant bricks-and-mortar retailer, a single dominant internet retailer, and, as noted above, a single dominant publisher. Agents want to keep competition alive, so they’re going to be sensitive about pushing the Following Four too hard or allowing too quick a migration of authors to the industry leader, but the retailers won’t be so accommodating. Another pressure point on margins will be ebook pricing. It has been driven down by successful self-publishing and the the court’s elimination of agency as a protection. Now big publishers have discovered “dynamic pricing” — lowering prices on a book temporarily to spike sales and awareness — adding their own activity to the list of forces reducing margins. Both the top line and the bottom line will be harder to maintain in 2014, but how it will turn out is an open question. After all, most of these things were true in 2013 and margins still improved.

6. Literary agents have been dabbling with publishing for the past several years since ebooks and POD have made it possible to do it without inventory or an organization. Agencies have started publishing operations (E-Reads, Diversion, Rosetta) and many more have brought on the expertise to give authors help with digital services (Curtis Brown, Writer’s House). Publishers have expanded into author services with speaker’s bureaux, but, so far, none has thought to add literary agenting services except for the time-honored practices of selling rights (foreign, paperback, book club), which was part of their publishing process. Might a publisher either create or ally with a literary agency to create a way to “own” an author’s entire career? If one tried this in 2014, it wouldn’t come as a total surprise.

7. Simon & Schuster has made a number of pioneering deals for a publisher of its size. They offered print distribution service to bestselling indie author John Locke. Then they made a print-only deal — which the big houses pretty much said “we will never do” — with another indie with a hit, Hugh Howey. Now they’ve extended an idea they started a few years ago and signed a deal to give Yankee shortstop and icon Derek Jeter an imprint to be a publisher. Jeter has the ability to focus public attention on any book he wants (although certainly more with some topics than others) and he’s an articulate spokesperson with a strong personal following. S&S had done this in 2007 with 50-Cent; Hachette more recently gave an imprint to Chelsea Handler and HarperCollins gave one to Johnny Depp. Will celebrity imprints become a common idea? There will be plenty of attention paid to how Jeter’s initial efforts work. Or it may be that some other athlete or actor, musician or politician, will be the next experiment with this model. In any case, this is something else to watch in 2014.

8. It has been happening quietly but it has been happening: we increasingly have two separately-operating book businesses: Amazon’s and everybody else’s. This starts with the numbering system: Amazon uses its own ASINs, rather than depending on everybody else’s ISBNs. It extends to the titles available: Amazon has an untold number, but certainly hundreds of thousands, that it either publishes exclusively or which authors or small presses publish exclusively through them. And it has service offerings from Kindle Owners Lending Library to its recent Matchbook offer to pair ebook and print sales, which range from “extremely difficult” to “impossible” for any other publisher-retailer combination to match. How far can this go? Can Amazon create a closed world which is more profitable for an author or publisher than the whole world that includes everybody else? Or have they already?

9. And, in that same vein, we have what would seem to be an unsustainable dichotomy in the ebook marketplace as a result (I would say, editorializing here) of the Justice Department’s lack of understanding about where power really lies in the book business. Apple insists on “agency pricing”: publishers set prices, Apple keeps 30%. Amazon — for everybody except the former Big Six — insists on the wholesale model which gives them 50% of the publisher’s set price to divide as customer discount and margin as they choose. This has resulted in all publishers except the biggest being forced to put two prices on their ebooks: a “digital consumer retail” price (intended to be a selling price, for Apple, and lower) as well as a “list” price (intended for the retailer to discount, for Amazon, and higher). When the distinction began, the agency price couldn’t be discounted. Now it can so the only real differences are the margins and the hard-to-explain-or-justify publisher-set prices. Only the biggest publishers have the clout to overcome the marketplace power of Apple and Amazon to dictate how the sales structure will work. Everybody else lives in an Alice in Wonderland world. I’d expect something to give on this in 2014.

Many of these questions will be explicitly discussed at the biggest and best Digital Book World ever, coming up in less than two weeks. It has become the premier global gathering of book publishers talking about the impact of digital change. We’ve counted them up and there are 156 speakers and moderators on the 2-day DBW program, plus dozens more in DBW’s workshop program and the Publishers Launch Kids conference hosted by Michael Cader and me and programmed by Lorraine Shanley of Market Partners International. You can’t spend that week with us without bumping into smart people who are getting great things done.

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  • Peter Turner

    Great post, Mike. Thank you. One thing I’d quibble with (and here my small press background is an admitted bias), I think there is too much emphasis on what is happening with the big six publishers or now 1-4. Penguin/Random may be equivolent in size to the remaing 4 big publishers, what about the thousands of other publishers? These publishers account for an often under valued role. And, unlike major publishers, this vast segment of publishing activity is way ahead of the big 1-4 in terms of being reader/consumer oriented–which I’d argee is central to the publishing value-proposition for authors and readers going forward.

    • http://idealog.com/blog Mike Shatzkin

      Peter, I’ll admit that my thinking runs mostly to the larger publishers. If you extend that beyond the 1 plus 4, that includes a lot of others like Bloomsbury, Houghton Harcourt, Norton, Perseus, and Sourcebooks. However, I think if you parse publishing by number of viable commercial titles, share of sales, or number of employees, I’m talking about the biggest part of the industry. If any of the smaller publishers achieve real orbital velocity, they’ll get bought.

      Mike

      • Peter Turner

        I’m thinking more of publishers like Berrett-Koehler, or New World Library, Gilford Press, New Harbinger, etc. etc. There’s really a broad band of family owned publishers at $10M-$50M annual revenue and of course many more below $10M. They’re profitable (they have to be) and often have a small handful of backlist best-sellers with sales north of 500K, even a million units sold and backlisting. I wonder if the good folks at BISG has ever surveyed units and dollars outside of the 4-1; If I had to guess I’d throw out 40% or more.

        I’m not sure what you mean by “orbital velocity,” though the issue of who gets bought and sold is in my experience more a matter of the benefit to the seller. That is, since publishers tend to get valued 1X to 1-1/2X annual revenue these smaller publishers have little motivation to sell. The annual sales (along with salaries that owner and family members often draw) is more appealing than what happens to the selling price of the house after taxes. I know a number of smaller houses who have had many offers but would only consider selling if the owner wanted to retire and no one in their family wanted to manage the business. Indie publishers–as you likely know–are really a breed apart and like it that way.

      • http://idealog.com/blog Mike Shatzkin

        If you include the mini-majors I enumerated, yes there could be 40% of sales outside the 1 and 4. But at the level you’re suggesting (under $50 million), I’d be surprised if it were more than 25%. And they break into thousands of individual entities, some of which can be grouped for discussion purposes but not all.

        By “orbital velocity” I mean a business that pretty much sustains itself on its own momentum and a big backlist bestseller or two is probably an indispensible component of achieving that.

        Mike

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  • John Andrews

    Re point 3, my experience of Scribd is that they specialise in pirate copies. I have found this a useful service for other people’s books (!), because I like having full-text search, but I was disappointed to find one of my own books on Scribd. It was published in 1996 so they must have known they did not have copyright clearance and they took it down as soon as my publishers asked them to. My Safari is that it is a good and useful service but if you only want to consult a few of their books each year then it is too expensive.

    • http://idealog.com/blog Mike Shatzkin

      I’m not an expert on Scribd, but I believe they pitch publishers on putting the text of their books on file with them, not for display but to “catch” uploads of copyrighted content. Remember, it is like YouTube. Scribd doesn’t go out and gather the content; it is “posted” to their site. They are obviously useful to pirates but my impression is that they have made honest attempts to discourage that kind of use.

      As for Safari, you’re right. They’re for serious professional users. They’re not priced for casual or occasional use.

      Mike

  • christinakatz

    Hi Mike,

    Great post, Mike, as always.

    My only sticking point is on point six, when you say, “Might a publisher either create or ally with a literary agency to create a way to “own” an author’s entire career?”

    How and why is it a good idea for a publisher and agency to “own” an author’s entire career?

    Why isn’t it a good idea for authors to own their own careers and then choose which publishers and agencies to partner with and when?

    I guess my gut feeling is that a house and agency owning an author’s entire career could either be a recipe for huge success or for huge failure, and what author wants to put all her eggs in one basket like that?

    If you were merely an author, Mike, and not who you are, wouldn’t diversification make the most sense to you, in these unstable times?

    • http://idealog.com/blog Mike Shatzkin

      Yeah, I’ll admit that’s the weakest thought of the nine. It just seems to me that agencies becoming publishers (as some are, although they don’t position it that way) calls for some response.

      Mike

      • christinakatz

        Well, I’m glad you are addressing it, Mike. I think that one thing that really galls authors today is feeling like authors are increasingly perceived as commodities for any kind of big publishing operation. I’m sure none of us woke up thinking, “Oh boy, I sure hope I will be treated like a commodity today, because that makes me feel really good about myself.” ;)

      • http://idealog.com/blog Mike Shatzkin

        It may not show as much as authors would like, Christina, but I think all publishers are well aware that their fate depends on being able to recruit authors. My own perception is that the biggest challenge facing the Following Four is to keep their authors from gravitating over time to PRH, the company with the biggest checkbook now and, I suspect, clearly the biggest distribution muscle in a couple of years. Publishers are going to have to figure out how to be author-friendly and to appear that way and I really believe most of them are thinking about that challenge at the highest levels of the business.

        Mike

      • christinakatz

        These are certainly tricky times to be a publisher, to be sure. Thanks, as always, for presenting the big picture as you see it. And Happy New Year!

      • Hugh Howey

        Monthly royalty payments are a must. And higher digital royalties (though escalator clauses with top authors prevents this).

      • http://idealog.com/blog Mike Shatzkin

        It will be interesting to see if any of the Big Houses go to that, particularly for their lower-advance digital-first imprints.

        Mike

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  • http://www.MartinLiteraryManagement.com/ Sharlene Martin

    Hi Mike: Great piece. As far as a publisher teaming with a literary agency to OWN a piece of a clients overall career, that pie will be split many ways….for instance talent at Bravo must sign away up to 20% of their income to Bravo from books that are published during their time as a reality star. Add that to their managers, television agents, book agents, their publisher (as you predict) and Uncle Sam. Not sure it’s worth getting out of bed in the morning :)

    • http://idealog.com/blog Mike Shatzkin

      Publishers are comfortable with pies that are split many ways. They get pieces of a lot of them.

      Mike

      • http://www.MartinLiteraryManagement.com/ Sharlene Martin

        I’m sure the publishers are comfortable…why wouldn’t they be?? It’s the authors I worry about….Hard to make a buck writing a book when there are so many “mouths to feed.” I remember shortly before Judith Regan left HC, she required that she hold “performance rights” to her authors books.

      • http://idealog.com/blog Mike Shatzkin

        Authors have never had a broader array of choices and once an author has built any kind of following, they can exploit it without as much, or maybe any, help from publishers.

        I think a big problem for the self-published author is the end of agency. Publishers were trying to keep a high end to the market with branded books. That left room for the self-published to have a price advantage. Now that’s gone. Dollars to donuts the suffering self-published these days have the Department of Justice to thank for the more difficult environment.

        Mike

      • Passive Guy

        Mike – As someone who has a lot of visibility into the world of self-published authors, I have to say that more indie authors are making more money all the time. I personally know dozens who are making six figure incomes from their writing.

        Joe Konrath has announced on his blog that he made more than $1 million from self-publishing during 2013. In his best year as a conventionally-published author, he says he earned $50,000.

      • http://idealog.com/blog Mike Shatzkin

        All we have is impressions, because data on this would be very hard to gather and it would be changing with time anyway. I definitely agree that Konrath and others who have the advantage of starting with brands at least partly made by real publishers and even some content that is already known that they could reclaim and self-publish are wise to do so and can make lots of money. My suspicion is that the other kind of successful self-publisher — the ones like Amanda Hocking and John Locke and Hugh Howey who start from scratch — will find it increasingly difficult to get traction. And, in fact, already are. I am sure you have MUCH more anecdata than I do, but you also have a platform and position that would tend to call whatever success stories occur to your attention. You know you’re seeing more hits, but you don’t know how many times at-bat they represent.
        But how can it be anything but trouble for the self-publishing start-up when their low prices aren’t lower than branded material anymore. That has to have been an advantage, and it is now very much compromised.

        Mike

      • Passive Guy

        I understand your point, Mike, and price is certainly important for readers.

        However, if lower-priced traditionally-published ebooks were significantly reducing the sale of indie books, you would see a substantial reduction in the number of indie authors appearing on Amazon’s bestseller lists.

        In my observation, this has not taken place. In fact, I think there are more indie bestsellers now than there were prior to the settlements that the big publishers made with the DOJ.

        There is no doubt we do live in interesting times. Thanks for your blog posts.

      • http://idealog.com/blog Mike Shatzkin

        The tally on the bestseller lists is maintained pretty painstakingly by the DBW folks (who are not me; I just program the conference). My impression is that the recent data says the opposite of what you just said, but I haven’t looked at it closely. We have a presentation on this very subject, very data-driven, by Professor Dana Beth Weinberg at DBW. She’s an academic, has been professionally published, but is electing to put out her fiction herself. In other words, a vote for your position.

        Mike

      • Hugh Howey

        I see a new indie come out of nowhere every month. Often more than one a month. A.G. Riddle is making six figures a month, and he just burst onto the scene. I hear from these people all the time.

      • http://idealog.com/blog Mike Shatzkin

        Of course, we don’t know if one new big indie author a month is a lot or a little. It’s the numerator of a fraction for which we don’t know the denominator. But the climate is not as favorable for a breakout as it was even as recently as when you did it, Hugh. The 99 cent to $2.99 price range just about always has branded ebooks in it and it didn’t a year and two years ago.

        Mike

      • Hugh Howey

        I agree with all of that.

        I can only compare to what I saw as a bookseller. It felt like we were lucky to see 2 or 3 debut authors break out in a year. Sometimes it was a big goose egg, with only the perennial bestsellers having sustained success. You and I both know that hitting a list like the NYT means nothing for the wealth of the author. A few weeks on that list won’t earn out most advances. Those authors continue to clock in and out of their day jobs.

        Many of the indies I know making 6 figures a year (often 6 figures a month) are doing so without sitting on the lists. They have 12 or 20 titles selling at the same time, where the traditional model is to have a serial conveyor belt. And they are making $2 – $5 per e-book rather than a buck for a paperback. It’s a crazy model for success. You have to hang out in forums where people share their sales data to appreciate this movement. It has not yet been covered by any major media, this rise of the unknown, very wealthy, indie mid-lister. The lead is buried by the extreme outliers such as myself.

        Keep in mind that none of the bestseller lists are to be trusted. I was at #7 on the NYT list with nearly 60,000 units sold in a week. Next week, #7 on the same combined list had 12,000 units sold. This is not because of fluctuations at the top of the scale but by how average rankings are obtained. In my case, pre-order sales were averaged as they were occurring. Most books have them counted in their ranking on release day. DBW’s list relies on data that isn’t accurate. Like Passive Guy, having yourself plugged into this community is the only way to see what’s happening. I’m confident that the story will be told in the next few years and others will get to hear how remarkable all this is.

      • http://idealog.com/blog Mike Shatzkin

        Hugh, it is definitely a remarkable story. But anecdata is still anecdata whether you get it in a trickle or through a firehose. I suspect Amazon publishes far more authors than the Big Five publishers combined. *Most *of them vanish without a trace. Whether the ones that succeed are a statistically significant percentage of not is something you can’t determine by counting just the hits and not being aware of all the at-bats. You’re right that bestseller numbers are often misleading, and would particularly be so in the digital space where, for example, DBW has to triangulate a list based on reported sales rankings. As you point out, the Times often has similar anomalies. What really matters is what path gives the author a better shot at making a living. Once you’re branded (as you now are), the better margins from self-publishing can be a real economic boon. Getting to that point on your own, however, is singularly difficult (even though, like magic, it wasn’t for you!)

        Mike

      • Hugh Howey

        Oh, they are a molecule in a drop in a bucket, but I’m not worried about percentages. I’m worried about raw numbers. There aren’t enough people *reading* to support the number of people writing and publishing (this was true before the e-revolution). What fascinates me is that there are thousands of self-published authors making high 5 figures a year from their writing. There are probably a thousand having 5 figure months. There are hundreds (that I know of, first-hand) who are making 6-figures. I have 20 or so friends making 7-figures. Those are just the people I know personally.

        Is it a tiny fraction of the number of people publishing? Sure. But it’s not a small number in absolute terms, which is all we should care about. If the NBA expanded into twice or quadruple the number of teams, the chances of making it into the NBA wouldn’t appreciably increase. But the number of people making a great living playing basketball would go up by an order of magnitude.

        If there were 1,000 people making a great living off their fiction writing in the US 5 years ago (I doubt it was that many), then self-publishing has tripled or quadrupled the number of people making a living with their fiction. That’s a story. The fact that a huge number of more people are self-publishing is beside the point. That’s a different story. It’s being told ad naseum.

        Why no one wants to cover this other story is simple: It requires a lot of leg work and research. I’ve put out calls for numbers from writers with thousands of responses and shocking results. I just don’t have the time to put the story together. Someone like DBW should be breaking this. I’m telling you, it’s monumental, this story. And it isn’t about me. It’s about people you’ve never heard of who just made several hundred dollars in the time it took me to write this. :)

      • http://idealog.com/blog Mike Shatzkin

        You make a good case, Hugh. Actually, I think it is The New York Times that should be doing this story! But the research required to get it *past *anecdata is not trivial.

        Mike

      • Hugh Howey

        Agreed. I know you must find it frustrating. If we had those numbers, I could see quite a few of us diving into them like those bins of plastic balls at McDonalds and squealing like little children.

        Okay, maybe that would just be me.

      • http://idealog.com/blog Mike Shatzkin

        No, Hugh. You’d have a lot of company!

        Mike

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  • William Ockham

    Will you ever admit that the DoJ was simply enforcing U.S. antitrust law? This concept is really straightforward. Agreements between competitors to fix prices is illegal per se. You don’t need to be a lawyer to know this. You can even look it up on Wikipedia.

    Any “lack of understanding about where power really lies in the book business” is completely irrelevant. Apple and their partners in collusion broke the law. That’s the reason for the “unsustainable dichotomy in the ebook marketplace” that you describe.

    • http://idealog.com/blog Mike Shatzkin

      The *effect* of the decision was to strengthen the strongest hands in the business. I am not a lawyer so I might not understand why that decision was *required*. And what you claim is “irrelevant” may be as a matter of law, but it sure isn’t as a matter of commerce or practical effect. The practical effect of the DoJ’s action was to increase the concentration of power in what were already the strongest hands. If that was actually required, then the law should be changed. If it wasn’t required, it shouldn’t have been done.

      Mike

      • William Ockham

        No one forced those publishers and Apple to engage in an illegal conspiracy to fix prices. Why do you focus on the *effect* of the DoJ’s action and ignore the *effect* of the publishers’ decision? The prosecution of this case was an obvious and direct result of their blatant disregard for the law.

        I fail to see what the problem is for anyone other than the conspirators. Amazon’s terms for everyone else are the same as before the illegal price-fixing. Apple’s terms are what they have always been. Different retailers having different strategies is a thing that happens in a free market. What is “Alice in Wonderland” about that?

      • http://idealog.com/blog Mike Shatzkin

        I do NOT ignore the “effect” of the publisher’s decision! In fact, I invoke it. It was positive for competition in the marketplace. It resulted in robust growth for Apple and Nook at Kindle’s expense, which was reversed almost immediately when the settlement was imposed!

        And it simply isn’t true that the alleged conspirators have the most difficult row to hoe. The smaller publishers do. THEY are the ones that can’t switch from 50% of the revenue on their stated price to 70% like the Big Boys did, because Amazon won’t let them. So we have this crazy market with two different publisher’s prices on the same ebook. And the other big losers under the DoJ action are the independent and self-publishers. The Big Boys were maintaining a higher-priced market for “branded” authors, which gave room underneath for self-pubs to be a “bargain”. Now that’s gone and, as a result, it is harder for the indie author to get discovered.
        There is one winner here: Amazon. Maybe that’s the way the law works. I think it’s dumb.

        I admit to a publisher-centric point of view. To me, the best marketplace is one with LOTS of competing retailers. That’s what gives a publisher power. It is also a healthier situation for readers and authors and democracy.

        Mike

      • Robotech_Master

        Speaking as a consumer, I find the fact that I can buy a book for $10 instead of having to shell out $5 more just because the publishers thought they were above the law to be a pretty solid win.

        Likewise, I think it’s great for “competition” that individual retailers once again have the power to actually HOLD SALES and knock a few bucks off the price of a book. I used to be a member of Fictionwise’s Buywise club—the discount club they had that got killed by Agency Pricing, before Fictionwise itself got killed by B&N—and I bought a LOT more Big Six ebooks under that program (because I got DISCOUNTS on them) than I have since Agency Pricing went into play.

        But then, publishers have never understood e-books. They never wanted to. Read what John Siracusa wrote about them in Ars Technica, “The Once and Future E-Book”. (For that matter, a Penguin exec, quoted in “The Battle of $9.99,” even outright admitted that Penguin just hadn’t been focused on e-books.) I remember a conversation in an e-book forum with one of Fictionwise’s Pendergrasts in which he said that, after a Big Six hardcover book went to paperback format, FICTIONWISE had to pester THE PUBLISHER to get them to drop the e-book price on it. That’s the OPPOSITE of how it’s supposed to work!

        Even as late as 2011, when Agency Pricing went into play, a significant percentage of all e-books on Fictionwise were still priced at hardcover levels after their paperback print release. And none of the little e-book companies with their little audiences had enough power to shake the publishers out of their complacency. It’s like they were Pierre in that Mercer Mayer book who always said “I don’t care” until he got eaten by a lion. Well, Amazon was that lion.

        Did the publishers ever try to develop their own e-book expertise, try to duplicate Baen’s success? (Tor tried, in cooperation with Baen, and the attempt lasted about two days before a panicked Holtzbrinck executive shut it down.) Did they even pay attention to what Amazon was doing? (Why would a man smart enough to build a mail-order corporation big enough to threaten traditional bookstores out of NOTHING decide to sell a $400 device only to let people buy e-books more expensively than it already sold discounted print ones?) Nope, they were too busy jumping at the Google Books shadow. (And we just found out how well THAT one has turned out for them, too.)

        So, like the little red hen, Amazon baked the bread, and then it got to eat the bread all by itself. It created a whole new market for e-books where none had ever existed before. And this scared the publishers, so when Apple gave them the chance, they BROKE THE LAW. If they honestly thought Amazon was pricing predatorily in an illegal way, they should have filed complaints. (The way Amazon did when THEY broke the law.) Or they should have bit the bullet and pulled their books from Amazon altogether. Amazon only has the power it does because it has what consumers want. Sure, it would have hurt them to pull their books, but it would have been completely legal, and people who REALLY wanted them could have gotten them some other way.

        It’s the same old story that we’ve seen play out across how many other industries in the Internet age. Kodak and Polaroid weren’t ready for digital photography to get good. Blockbuster wasn’t ready for Redbox and Netflix. Publishers weren’t ready for e-books. They did everything they could to smash the eggs before they could hatch, so there wouldn’t be more chickens…then they got so busy with the Google fox raiding their other henhouse that…well, okay, I think that metaphor just stretched to the breaking point, but you get the idea.

        I’m hopeful that something good will come out of all of this—that the publishers will finally be convinced to modernize their operation, get rid of the wasteful and polluting system of returns, trim the fat, and survive in this new post-e-book world. If they fail…well, people won’t suddenly stop wanting to write, and other people won’t suddenly stop wanting to read. Other mechanisms will arise to put the two kinds of people together. The world goes on without carriages and buggy whips.

      • http://idealog.com/blog Mike Shatzkin

        This rant has far too much distortion and signal-exceeding-noise and misunderstanding baked into it for me to begin to unravel. I am not going to try, at least not with the time and bandwidth I can allot to the comment stream. But you should take on board that, as smart as Amazon is (and they are — they’re a brilliant company and what they do is definitely in the best interests of their shareholders, which is their primary responsibility), they didn’t do very well when they tried to compete with the major trade publishers. They shut that part of things down.

        The DoJ action strengthened the strongest player in the market and diminished competition in the retailing of books. Period. You can dance around that and cite other effects or say it is all a good thing. But I don’t think it is. Even if you save five bucks once in a while.

        Mike

      • Robotech_Master

        Fair enough. Our points of view are different and there’s no point arguing over it.

        It’s just that I’ve been frustrated with the publishing industry’s treatment of e-books since about 1998; I feel the industry is out of touch with consumers, and it doesn’t seem to be getting any better.

      • http://idealog.com/blog Mike Shatzkin

        I go back to the late 90s reading ebooks too. With that long a perspective. you should be less grumpy. Prices have come down considerably since then. I remember paying $28 for the ebook of a biography of Grover Cleveland around the turn of the century. At that time, retail prices at or near print prices were normal and the ebook retailers didn’t do much, if any, discounting. All ebooks have done since then is get cheaper, except for the brief period when agency was allowed and, even then, there were so many self-published ebooks in the market at $2.99 and below that no bargain reader needed to be left out.

        Mike

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