The Shatzkin Files

The publishing business as we have known it is not going away anytime soon

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Regular readers, please pardon me for the unusual length of this post, but it covers a lot of ground that I think is necessary to make the point.

A friend who has actually been working fulltime in the book business since I was still in college and who remains active was speculating at BEA about the “next big disruption” in our business. He’s expecting it sometime pretty soon.

I don’t think I am.

Gareth Cuddy is one of the most practical service providers in the industry. His Vearsa ebook distribution company is providing global services to publishers large and small and he is a pioneer in reading and sales analytics. He recently wrote a piece that concludes “whatever emerges from this next phase will surely be a complete departure from what we understand today as an industry” with timetables around it wondering whether 2016 will be too late to respond and whether we’ll have an unrecognizable industry in 2020.

I don’t see it.

One of the disruptor-authors, one who studies the industry trends closely with special attention to indie author growth, told me he “is pegging 2019 as the year that major media outlets cover the collapse of the major publishing houses the same way they started reporting on newspaper declines last decade”.

I wouldn’t be surprised to see a merger or two by then, but “collapse”? I don’t see that either.

The industry has a myriad of sales stats that are not rationalized in any way and don’t talk to each other:

BookScan (print sales, reported by select retailers)

BookScan data is compiled from reports of print sales by most, but not all, retailers. That data includes all the ISBNs (but perhaps not retailer- or indie-published books that don’t have ISBNs), but not all the sales. BookScan covers an estimated 85% of the print retail market in the US and 90% in the UK. (See the “About Nielsen Book” section.)

PubTrack Digital (ebook sales, reported by select publishers)

The PubTrack Digital data, compiled from reports by publishers, doesn’t include all the ISBNs — only those from reporting publishers — but they do include all the sales of those publishers’ ebooks.

AAP (cross-format sales, reported by select publishers)

The AAP tracks sales across all major channels and formats. Like PubTrack, AAP stats are based on reports by participating publishers. (Though all of the Big Five houses report in both cases, other publisher and distributor participation varies.)

Consumer survey data (purchases, attitudes, and behaviors, reported by consumers)

Market research firms and consumer panel surveys (Nielsen Market ResearchCodex Group, and PlayCollective among others) provide another look at how book sales are shifting.

Other survey data

Additional surveys, particularly of authors (e.g. DBW’s author surveyHarry Bingham and Jane Friedman’s author survey) help fill in some of the blanks. But as the survey organizers frequently note, these are not representative samples, so the conclusions that can be drawn from these surveys are limited and primarily directional in nature.

Proprietary data (publisher and retailer-specific)

We also get regular reports from publicly-traded companies and whatever data accounts happen to reveal to the public, which can provide useful benchmarks and comparison points. (The sales data from the accounts themselves includes self-published or retailer-published books that other two sources don’t, but no by-book sales numbers told to the public.)

Bestseller lists and scraped data

Author Earnings tries to translate ebook sales rankings (which are publicly visible at retail, and therefore “scrapeable”) into actual sales numbers. (The now defunct DBW Ebook Bestseller List, powered by Dan Lubart’s Iobyte Solutions, was based on similar principles.) And the major bestsellers lists (like USA Today and NYT) provide at least some context for relative sales performance.

And as a sign of how complicated it all is, the DBW Ebook Bestseller List was discontinued at least partly because the “noise” from Amazon reporting “sales” on ebooks distributed and read through their subscription service was making the bestseller status of many titles a bit contentious.

Despite and because of all the sources, the data is incomplete and scattered. There is inevitable ambiguity in interpretation so that a variety of conclusions can be reasonably drawn. From the big publisher perspective, it would appear that sales are about flat and that the ratio of print and digital sales has become pretty stable. This is true in an environment where publishers have experimented with even higher ebook prices and, for a variety of contractual and commercial reasons, discounting of ebooks has diminished. But that’s been true for a relatively short period of time, and the ebook reporting is routinely delayed by three months, so we don’t have enough evidence to know for sure that higher ebook prices are sustainable in this marketplace. And even if they are sustainable today, that doesn’t prove they will be in three months or a year.

On the print side, Amazon continues to be the largest single customer for almost every publisher. And even though they have managed to increase their discounts and various marketing fees and their returns have creeped up, they are still the most profitable large account for many, if not most, publishers. Since Borders went down several years ago, Amazon has, indeed, grown, but independent stores have also thrived and become more numerous. And although Barnes & Noble still slowly shrinks in sales, it remains the most important account for “breaking” many new titles and still provides more sales to most publishers than all the indie bookstores combined.

While I’ve been working on this piece, the AAP data has been being worked through. Nate Hoffelder (whose blog has been renamed “Ink, Bits, and Pixels”) scoffed at the Nielsen claim that their hard numbers constitute 85 percent of the book market. The AAP, which like Author Earnings, uses modeling and guesstimating to get from the data they have to a bigger industry picture, sees a much bigger trade industry. The point Nate wanted to make, using the AAP data (echoed by an indie author friend of mine who believes that the indies are toppling the establishment and we’d all know that if we knew the “real” numbers that didn’t leave out all the indie success stories) is that the ebook market is not shrinking or flattening.

But if you want to use AAP figures to prove that point you have to use this year’s AAP data. Because last year the AAP said the ebook market had shrunk. By the way, the AAP data was the first to offer some insight on how much ebook subscription offerings are changing the market. The answer, so far, is not very much so far. They account for about 2 million ebook units out of a market of 500 million!

I asked my knowledgeable indie author friend what he thought the consumer dollar volume was for indies last year. He reckoned it at $459 million (I love the presumption of precision: not $450 million or $475 million, but $459 million!) Since the AAP figures adult trade fiction and non-fiction at about $10 billion (and the juvie numbers, another $5 billion, actually have some big “adult” sales in them), he is implicitly acknowledging (but would never say explicitly) that indies are 5 percent of the adult business at retail, using what I’m sure is the most ambitious estimate of indie sales you’ll see anywhere.

The reality is that the business has been actually pretty stable for the past few years, after a period — about 2008 to 2012 — when the shifts away from print and from stores were dizzying and immediately disruptive.

That’s not to say we haven’t seen a lot of change or that change doesn’t continue to be much faster than it was in the period before 2008. But not all of that change is bad for publishers.

More sales at Amazon, less inventory in the physical store supply chain, more ebooks, and the outsized impact of ebooks on the inefficient mass market channel means that returns are lower and less capital is tied up in inventory, which makes publishers more profitable.

The promise that offshore markets can be reached efficiently with ebooks (which, indeed, might be masking a reduction in ebook sales domestically in the overall publisher-reported numbers) is increasingly being realized, partly through the growth in capabilities of the service offerings from old standbys like Ingram and new entrants like Cuddy’s Vearsa.

New tools and workflows are enabling publishers to package their content for both print and digital delivery much more efficiently than they did when ebooks were in their infancy.

Techniques that make it possible for books to be “discovered” through online means — search, social referrals, and growing book- and topic-based communities — are being mastered by publishers.

And a number of factors — consolidation of the accounts, more efficient wholesalers, consolidation of the publishers’ shipping through growing distributors — have reduced costs on the back end for most publishers as well.

So the publishers have, thus far, dealt with massive changes in sales, marketing, and distribution pretty effectively. They’re selling as many books as they used to despite growing competition from both indie authors (a million titles a year or more) and from Amazon itself, whose own publishing operation reportedly intends to issue 2,000 titles in 2016.

Trying to view things from the author perspective requires one to divide them into at least three big “buckets”: successful authors who know where their next totally-acceptable contract that pays them a living wage in advance to write a book is coming from; aspiring authors who either can’t get an agent or a deal or have decided that with self-publishing working as it does that they simply don’t want one; and the ones in the middle, who might have an agent or have had a deal or two, but aren’t really making a commercial success of authorship.

For those authors who find it hard or impossible to get an agent or a deal, self-publishing is a godsend. It gives them a way to really reach the global public at minimal cost and, as we’ve seen repeatedly over the past decade, they can, indeed, break through and achieve commercial success. This is only a good thing for everybody. Even publishers benefit because they get to discover new talent that is surfaced by self-publishing.

For those authors who are working steadily and profitably for publishers, self-publishing has offered the possibility of greater control and bigger margins: more profit if they can achieve the same level of sale. This is not an opportunity very many authors in this category have pursued. That has surprised me a little bit, but probably it shouldn’t have. Being a publisher is a lot of work and no small risk. If an author is making a living doing the writing and letting a publisher handle the rest, that’s damn near nirvana. Very few in that position want to abandon it.

So that leaves the authors “in the middle”: getting deals or capable of getting deals, but not really making the living they want to make with those deals. Among those authors, if they have the skills to manage an enterprise and the personality to put themselves out there for promotion, self-publishing offers a real alternative to the legacy system. Particularly for those authors who have a backlist they can claw back rights to and use as a foundation for their efforts, this new opportunity has real possibilities.

And writing in genres, being able to deliver several books a year, and writing in a way that allows pieces of big books to “work” as self-contained smaller chunks, are all attributes that enhance the likelihood of self-publishing success. It is worth noting that, so far, publishers haven’t developed the techniques to make the most effective use of chunked stories or a voluminous output (unless you’re James Patterson!).

So another source of potential disruption — authors abandoning publishers to do it themselves to make more money per unit and claim greater control of their work and career — has also not really happened. I was among those who expected, during the era of dizzying change we experienced for a few years until a couple of years ago, that publishers could have a big problem holding on to their biggest stars.

Both the supply (authors) and demand (sales channels) sides of the equation appear more stable than they’ve been in recent memory. But there’s no guarantee they’ll stay that way. The number of self-published titles keep growing by a million titles a year or more. They sell a paltry average per title, and a very small percentage sell a measurable amount at all, but cumulatively, their sales add up. Most of the revenue from that growing market segment goes to Amazon and a very small share of it goes to print or brick-and-mortar. Amazon’s growth in any way fuels their ability to be tough on terms, reducing publishers’ margins. (One big potential wild card is Amazon’s pressuring publishers to allow them to manufacture more and more of the inventory; that could be a paradigm-shifter if they succeed in making it widespread.) And more ebooks, particularly indie ebooks, and the subscription services for ebooks also tend to force down retail prices, which puts further pressure on publishers’ margins.

One other source of potential disruption — and this is one that I think many have in mind when they predict real danger for the establishment is around the next bend — would be some sort of disruptive product innovation. What if book readers suddenly demand video in books, or that stories be turned into games, or that books be enhanced by the margin notes made by prior readers? Would today’s publishers be able to compete? What would that do to margins?

There are areas of publishing outside trade where the “book” has either already become obsolete or could well be in a few years. As we have pointed out repeatedly over the years, ebooks have only really “worked” as substitutes for print books that one reads from beginning to end, narrative reading. The additional “functionality” that might be employed, such as those described above, has been pretty consistently and over a long period of time rejected — or, at least, not widely embraced — by the book-reading public.

But that’s not true in professional publishing, where books have often already been replaced by websites, online tutorials, and other uses of digital interactivity. (John Wiley, one of the biggest professional and trade publishers in the world, is largely exiting the business of “books”. O’Reilly Safari demonstrated over a decade ago that a subscription service was a great commercial proposition for professional books, long before it was even tried for consumer.) It is likely not to remain true in school and college textbook publishing, where the value of integrating testing and then adjusting what’s presented in the content delivery has enormous value and where institutions, rather than individual consumers, are in control. Predicting big disruption in these markets over the next few years seems like a much safer bet than in trade. Of course, those parts of the trade markets that look similar to those — cookbooks and travel in particular — have already seen wide-scale disruption.

Frequently, those who say they’re expecting disruptive change also promote the expectation that there will be some really substantial shift in consumer behavior. Quoting Cuddy:

So what is a book? What is reading? How will the millennials and children of the future consume stories? Will they even want to? I don’t think any of us know.

This is the big bugaboo: the death of long-form reading. That’s a reasonable thing to conjecture about, but not in the next three years or five years or even ten. In 2025, most of the books being read on the planet will be read by people who are reading them now. The most recent serious study about “designing books for millennials” (from Publishing Technology) seemed to conclude that millennials aren’t much different than the generations that preceded them when it comes to their book-reading habits.

Over the long run, things will almost certainly change in very big ways because of the inexorable forces eroding publisher margins described above. I wouldn’t be surprised to see only two or three big trade publishers as soon as ten years from now. I’d expect that the two recent plateaus we’ve reached, with ebook sales stabilizing in relation to print and with bookstores holding their own, will prove temporary. I wouldn’t expect ebook sales or online purchasing to grow by the leaps and bounds they did a few years ago, but it would surprise me if we’ve reached any long-term limit, particularly in ebook use. (The devices keep proliferating and people get increasingly comfortable reading for a long time on screens.)

More and more entities of all kinds will be using books, and particularly ebooks, to further their own missions through education or content marketing. They may not “flood” the market, but they’ll add a lot of product not necessarily priced with commercial intent that will steal sales and reader time from what publishers are trying to peddle.

For some time, I have figured that book reading might grow but that the industry that delivers books for profit might shrink. That would still be my expectation.

The biggest threat to publishers as we have known them would be consolidation among the intermediaries who sell their books. My hunch today would be that Amazon sells more than 40 percent of the books in the US. Indeed, their own publishing operation is growing despite the fact that they face continued resistance from their competing retailers to carrying their books. That suggests that books can be profitable, and authors made happy, on sales made to the Amazon audience alone. The bigger their share gets, the more that presents a real danger to publishers.

The whole point of publishers is “many to many”. They handle the output of multiple authors to give them the scale necessary to provide services to multiple sources of revenue for both books and rights. Amazon consolidated a big enough share of the audience that what they alone could sell constituted a viable market. That, combined with the elimination of inventory investment enabled by ebooks, created a robust indie publishing business. (Yes: iBooks and Nook and Google and Smashwords and others are part of it, but Amazon created it, and it might not be much of anything yet if they hadn’t!) Amazon could afford to pay a higher share of the consumer price than any publisher selling through them could and that created the marketplace in which indie authors could thrive financially and have a logical basis to express incredulity that other authors would take a publisher’s deal. During the days when both Amazon’s share and the ebook market were growing without any obvious limits, predicting that they would one day soon put a bullet in the heart of the publishing business might have been an overambitious projection, but it wasn’t entirely illogical.

But those days have passed. In retrospect, the big threat to publishers probably ended when Larry Kirshbaum’s efforts to get big name mainstream authors to leave legacy publishing in some numbers for Amazon failed, largely (I’d conjecture, we’ll never really know) because the competing retailers refused to play ball. Their outspoken refusal to carry Amazon books escalated the risk to an author’s career if they took any amount of money to be Amazon-published. That was not necessarily a deal-killer to a genre author who could reach a big share of their market with Amazon alone, but it made it just about impossible for Kirshbaum (or anybody else who might have occupied that seat) to use a checkbook to persuade an author already successful with legacy publishers to, essentially, risk their career.

Since then, despite Amazon Publishing’s continued growth (primarily in genres, not general trade) and what appears to be the continued growth in self-publishing have not really threatened the legacy publishing business. As long as the big authors don’t abandon the publishers, they’re safe. And as long as there is a complex demand chain for publishers to manage and service to pull in the revenue, they probably won’t.

So figuring out whether or when the industry turns upside down depends on figuring out whether or when the demand consolidates at Amazon to such an extent that the rest of the market can be lived without.

There will be fewer bookstores. There will be more titles competing from outside the commercial publishers. There will be continued downward pressure on prices. There will be diminishing interest in having a narrative book in printed form. And despite publishers’ efforts to add value by reaching distant markets and learning how to do digital marketing at scale, the publishing industry will, indeed, shrink.

But an apocalypse is probably not around the corner. And the book business as we see it today will still be recognizable in 2020 and even in 2025. I suspect that the business environments for all other media — music, movies, TV, and games — will change more than the business for narrative trade books over the next ten years.

Remember that we are conducting two surveys of industry opinion to inform the programming we’re doing for next March. Click here if you want to express yourself on the topics for Digital Book World 2016 and here if you want to register opinions on the program ideas for Publishers Launch Kids. 

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  • Smart Debut Author

    “Trying to view things from the author perspective requires one to divide them into at least three big “buckets”: successful authors who know where their next totally-acceptable contract that pays them a living wage in advance to write a book is coming from; aspiring authors who either can’t get an agent or a deal or have decided that with self-publishing working as it does that they simply don’t want one; and the ones in the middle, who might have an agent or have had a deal or two, but aren’t really making a commercial success of authorship.”
    Glad to see you’re no longer living in 2005, Mike…

    Welcome to 2009.

  • Publishers Lunch

    Very useful and interesting. A few things to include in your explanation of the various stats:

    1. AAP issues two completely different kinds of stats. The *AAP monthlies* are actual sales data, from about 1,200 publishers (reporting revenues only for now, not unit sales).

    Then there is a second set of annual numbers — previewed earlier this week for 2014 — which is not data, but models, or guesstimates. They call that StatShot Annual. It uses annual data reports from about 1,750 publishers — but then adds a whole lot of multiplication and modeling. It’s important not to conflate the two, and indicate which you mean when. In this post, you are talking about the less reliable StatShot Annual estimates.

    2. So, you can’t compare your indie author friend’s “reckoning” of $459 million consumer dollars for self-published books to the AAP numbers directly. AAP is estimating publisher dollars, not consumer dollars. So the correct indie comp is more like $300 million (using that friend’s estimate) — and you should not put it against only adult sales, since YA is a big portion of the AAP’s children’s number and self-published authors are publishing to that market as well.

    3. Nate is correct to disbelieve Nielsen’s assertion about the percentage of the ebook market that PubTrack Digital covers. Of course 25 publishers in PubTrack Digital are not 85 percent of the market. Nielsen really does not know (and neither does the AAP). But his point mostly stops there. Aside from the headline he does not have a lot to say about a contrary trend or data in ebook sales. What PubTrack Digital and AAP monthlies — and big house public reports and even AAP StatShot annual, all of which are heavily influenced by sales at the larger houses — indicate about ebook sales for the publishers they cover is quite consistent over the past two years or more. Those sales have been roughly flat.

    • Thanks for the clarification about the data sources, the reinforcement of the basic point about the sales trend, and the additional clarity about how big the indie share really is in relation to the total market.

      • Data Guy

        Publisher’s Lunch is correct about what you should have used as the numerator of your comparison: the portion of the indie $459 million consumer sales that is actually going into the pockets of indie authors is $291 million.

        Publisher’s Lunch is also correct that the number you chose to use for your denominator — taken from the recent “StatShot Annual” guesstimate — is highly unreliable.

        In fact, it agrees with none of the industry’s directly measured statistics. It clearly implies that over 1 billion invisible trade print books are somehow being published by very small publishers and selling untracked through some mysterious channel that Nielsen BookScan cannot see, making BookScan’s true visibility into the print market less than 40% rather than the 85% they claim, and making the Big Five’s actual print-book market share less than 35%. None of which is even remotely close to true.

        Thus nobody with any real knowledge about the publishing industry (such as Publishers Lunch, whose analysis and insights I have a great deal of respect for) can possibly take your statistically inflated “AAP StatShot Annual” numbers — which are basically the same as the discredited BISG BookStats — seriously.

        The Big Five and their AAP co-participants sold $6.631 billion in 2014 trade sales. Their print sales were roughly $5 billion, which would correspond to roughly 600-650 million print books. That’s actually in line with what BookScan measures at retail, assuming BookScan sees 80% of the print market and the Big Five and other AAP-reporting publishers also make up roughly 80% of the print market.

        Those are real numbers. I’d stick with those. 🙂

        It’s also worth keeping in mind that the indie dollar share you discuss corresponds to 164 million indie books bought by consumers. That’s 32% of all ebooks bought in 2014 — and 14% of all trade books of any format purchased and enjoyed by consumers.

        For adult fiction, the indie share is even larger: 127 million ebooks, which is 36% of all ebooks bought in 2014 — and 24% of all trade adult fiction of any format, including print, purchased and enjoyed by consumers.

        Don’t forget also that $291 million went directly into authors’ pockets, rather than 80% of it going to middlemen overhead.

        From an author’s perspective, those are the numbers that actually matter.

      • I wouldn’t expect you NOT to cherry-pick your data points.

        You neatly shifted the “share” question from dollars to units. Yup, the share of units for indie ebooks is much higher than the dollar share, whether or not it is as high as you claim. Many of those units are virtually free.

        And you like to quote the indie share of dollars from the sales they make — the “royalty” — but, of course, you don’t account for the costs. And, to be fair, you wouldn’t just count the costs from the — what would you say? — one percent (is it that high?) of indie authors who actually make some money. It isn’t just what THEY spent on editing, covers, and marketing that logically should be considered. How about what was spent by the much BIGGER share of indie authors who don’t sell 100 units but whose total royalties (cumulatively substantial because they are substantial in numbers) are in your total? In other words, the number you like to quote isn’t “profit”, it is “gross revenue” for authors who have real costs (quite aside from the writing) to get that revenue. Those costs are also cumulative and very high.

        The POINT to this piece is that the indie share of the business in dollars is not particularly large and it is flat, and that predictions that a “tipping point” of disruption that will cause the establishment to fail is at hand are not credible. I take it that you got the central point and chose not to argue with it because it is too hard to refute.

        I always appreciate clarification about where numbers come from. Thanks for that.

      • Data Guy

        Sure, Mike.

        I focus on the numbers that are meaningful to authors making business decisions; you focus on the numbers that are meaningful to publishers.

        I get that.

        However, the reason I didn’t address the point you were attempting to make in this piece (i.e. that indie sales are flat and account for a small piece of the overall business), because your observations are almost entirely unsupported and speculative (i.e. the “flatness” you tout in industry metrics neglects to include the fastest-growing sector of the industry: indies without ISBNs).

        And for an author, what dollar percentage of the industry we represent is well and truly irrelevant. We are more interested in which publishing path for a given manuscript is likely to reach the most readers and put the most dollars in our pockets.

        As far as “toppling the establishment” goes, that’s your bugbear, not mine. I have no opinion on it whatsoever… while it may matter to industry middlemen, it’s largely irrelevant to authors.

        Thank you for your thoughtful response, and take care.

      • It may be my bugbear, not yours, but addressing the claim that the establishment is about to topple was the entire point of the post.

        And your royalty construct is entirely misleading *even on your own terms* unless you also account for the costs that need to be subtracted from the revenues! But you can’t do that. Because if the costs for a million self-published books — which are much more evenly distributed than the *revenues*, which overwhelmingly accrue to the top 10,000 of those books — were subtracted, you would have absolutely no story to tell. And if self-published authors understood what the real *odds *of success were, rather than looking at a loaded analysis that makes it seem like the success of 1 percent of the entrants indicates what will happen to the other 99 percent, they’d be much better informed but there’d be a lot less traffic at Author Earnings. And a lot less glory for the self-publishing touts.

      • Data Guy

        …or perhaps the 248,000 unique visitors that come to think being “better informed” means looking at transparently shared real data about the industry, rather than listening to the unsupported opinions of “expert” publishing consultants who don’t have their interests at heart.

        Imagine that. 🙂

      • I think a lot of those 248,000 are MUCH better served by the data on Author Earnings.

        Since you’ve got all those folks, I think it would be both useful and ethical for you to poll them a bit. Here’s what I’d like to know:

        1. How much did you (each one) spend to self-publish your book, aside from the cost of writing it?

        2. Did you sell more than 100 copies? 1000 copies?

        Then you’ll be able to do two VERY important things you’re not doing now, but they’re what we all need the most.

        1. You’ll be able to make your royalties versus the publishers a much more honest picture. Because you’ll subtract the *costs *that the publisher incurs from the revenue (NOT royalty) the self-publishers get.

        2. You’ll stop the seductive logical fallacy for which the best illustration is “then Bill Gates came into the bar and, on average, everybody there was a millionaire.”

        What are the real *profits*, not *revenues*, of self-publishing? And what are the real *odds*, not averages or isolated success stories, that each indie publishing author faces when they do it?

        I know published authors spend money and I know that many waste a lot of time pursuing deals they never get. I’m not saying that self-publishing doesn’t have totally valid applications. But I think you present a one-sided picture and you could present a balanced one if you chose to.
        I won’t hold my breath.

      • G

        Self-publishing is not a very expensive business, Mike.

        Sorry, it just isn’t.

        Sure, there are authors who spend upwards of $1,000 for every cover design and thousands more on editing, etc.

        But for every one of those self-publishers spending an arm and a leg to publish a book, there are people like me.

        My wife makes my covers–we spend about 10-15 bucks for some stock image and then she does a beautiful and tasteful job applying a nice font. It can take her as little as half an hour to do this.

        I edit my own work or have the wife look it over.

        Total cost to put out a book: Perhaps, conservatively 15-30 dollars if you count electricity and WiFi.

        I’ve been doing the self-publishing thing since 2011 and the last few we’ve pulled in over seven figures a year.

        I’m not anyone you’ve likely ever heard of. Just another indie writer doing it low-cost, staying nimble and kicking the crap out of the slow, plodding and archaic legacy publishers every single day.


        Just another anecdote to file away…

      • Don’t doubt you and I congratulate you.

        But adding up what a million indie authors EARN without even attempting to tally what a million authors spend — which is, cumulatively, a lot — is just dishonest accounting.

      • G

        You may have a point that the costs need to be examined or at least mentioned. For some, they can be substantial (although that’s typically a mistaken approach, imo).

        But I do think you’re far too quick to dismiss the numbers, Mike.

        I’m not a data guy, and I don’t do math all that well.

        But I do know this business (the ebook business that is) from deep inside every day, trying to watch and make sense of things.

        It’s very clear to me that there are a substantial number of indies making lots of money doing what I’m doing. And the game IS changing rapidly.

        Kindle Unlimited is most certainly going to hurt anyone who doesn’t find a way to be competitive in the subscription model reality.

        The idea that ebooks have flattened is ludicrous to me. Every year I make more and more money and every year indies compete and take away more marketshare.

        Its just fact from where I sit. Thanks for chatting and keeping an open mind.

      • The only numbers we’ve seen on subscription tell us the sales are really trivial. Hardly a rounding error. And the subscription *purveyors *(including Amazon) may or may not have sustainable business models so even the little they’re getting has no guarantee of sticking beyond the periods they’re funded for.

        As you say, the indie efforts have expanded the market and resuscitated some authors’ backlists. That’s great. But to go from those facts to suggest that the establishment is somehow being rocked, or that indies are about to take over, or that any author who does it with a publisher is doing themselves financial damage — all of which one hears, and hears *repeatedly* from what I call the indie author militia — is really hogwash and not supported by any broad consideration of the facts.

        And I’m not really interested in even adding in the numbers of the authors who do stupid stuff spending silly money to self-publish. Even if authors spend an average of 50 dollars a title, times a million authors a year, that’s a sum that needs to be accounted. And I suspect it is higher than that. I repeat: reporting on indie author *revenue *without accounting for what is being *spent *is intellectually dishonest.

        And the other thing nobody totes up is what the *odds are *that an indie author will achieve any level of success. Of the million indie published ebook authors, how many sell 100 copies? 1000 copies? Anybody going into it ought to know that, but I’m not aware of any indie author touts who are even asking that question, let alone trying to provide an answer.

      • G

        I suspect part of the problem is we’re, in effect, talking about two almost entirely separate industries now.

        Yes, there is overlap and competition, but I’m working in a fundamentally different way than a “traditional” novelist.

        For one thing, I haven’t written a full-length novel in YEARS. Not since 2011.

        So it’s difficult to compare numbers. It’s much more a volume game for me and my ilk. I put out episodic fiction and I don’t need to sell a million copies per “book” because I can churn out multiple books per month.

        This likely is not something that matters to you, because, as you say–my numbers aren’t even putting a dent in anything compared to the whole.

        All the other indies doing what I’m doing in terms of working in a shorter, digital only medium, making use of Kindle Unlimited among other avenues…it’s not enough to concern the greater publishing powerhouses.

        But I do believe I’m on the cutting edge, and I think it is a game changer. Just look at what’s going on with TV as compared to film and movies. Distribution becomes diffuse, anyone can do it. The big studios put out less films, become more formulaic and shoot for the mega blockbusters.

        The little guys make their little films but now the A-list actors and directors have gone over to Netflix and Amazon and AMC and HBO.

        To me, our publishing industry is going through a similar kind of transformation and I have to think that subscription models will become prevalent, as will shorter, episodic work.

        Perhaps right now I’m in a different world than yours, but someday my world will become the current model and yours will be truly archaic. And then the next wave will be coming to wash me out to sea, and I’ll likely never see it coming.

        I think its the way of the world. I do think it’s happening within the next 5 years, with bigger changes in 10 than we could ever imagine.

      • You make some pretty ambitious predictions with what I think is pretty scanty evidence. All of the elements you suggest are there are actually there, but the leap that what is really quite small (and quite confined to niches for the most part) will become dominant is, to my way of thinking, a flight of fancy.

        In 50 or 100 years, a lot of things will be very different. In the next five or ten years (which is really all an author should be worrying about , the shape of things is not going to change drastically. Even if subscription becomes three times as big as it is and, and Barnes & Noble becomes 80 percent other things not books, sooner or later, and some REALLY BIG authors move to indie — which hasn’t happened yet — you’re a long way from toppling Penguin Random House and HarperCollins.

        I think you should just keep doing what you’re doing and not worry about it because it doesn’t really matter, but the publishing establishment isn’t going away any time soon.

        Which is really my only point in this piece.

      • G

        I admit that my predictions are just that, and I very well might be wrong. I’m basing them on general changes that seem to have come about in all media industries.

        Newspapers have gone mostly away and moved to online content. That doesn’t mean the NYT doesn’t still report news and that it’s not held in high regard.

        But who can argue how drastically the Internet has changed virtually every form of media consumption in very drastic ways–in a very short amount of time?

        So I am saying I think that the Internet, and digital consumption of the written word, is changing as drastically as music, television, the news, etc. has changed in terms of the way its consumed.

        I do not think that big publishing will maintain the stranglehold it has on the way readers buy stories in the next 5-10 years. Just a prediction based on some small evidence of what’s happening now and what has transpired in other media.

      • Seems like the audacity of the predictions about Big5 demise is being dialed back. Good idea. That will get you closer to reality.

      • Steven Zacharius

        Seven figures a year? The numbers just keep getting bigger and bigger it seems. If a writer can make $1,000,000 per year while spending 50 bucks to get the book out there would be no traditional publishing business at all. One day hopefully Amazon will share real ebook numbers and put an end to all of the speculation and lunacy that is spread online.

      • Smart Debut Author

        Yeah, Mike, you’re right.

        It makes a hell of a lot more sense to ignore the millions of “aspiring” authors in the slush pile and leave them out of the traditionally-published side of the equation.

        It makes total logical sense to compare a writer’s “chances” of success along each publishing path by comparing the top 0.1% of the traditional submitters who make it through agents and acquiring editors against 100% of the authors who ever put any half-baked file on Amazon, hit publish, and then forgot about it and moved on.

        That’s PhD-level whale math.

      • SDA, get on line behind DG — two cowards who won’t sign their names to their own opinions — and deal with the question I just posed to him/her.
        And I’m not going to apologize for the fact that my business is publishers, not authors. I am not an agent. I defer to people who know more than I, like Jane Friedman or a competent agent, when advising authors what to do.
        You indie author experts are geniuses at EVERYTHING, so you can tell authors what to do with authority and critique publishers to the nth degree as well. Or at least you think you can. I don’t nurse that pretension.

      • Smart Debut Author

        “I defer to people who know more than I…”

        …or to people who might sign future consulting checks. 😉

        But hey, you’re in good company, my friend.

        Mindless, unquestioning deference to middlemen is what your legacy publishing industry was built on.

        “…deal with the question I just posed…”

        Your question is dumb, Mike.

        Every single published author — whether self-published or legacy published — makes their own choices about how much or how little they will spend. What possible relevance do you imagine the fact that some other “self-published” author got ripped off by vanity scam Penguin Random House Author Solutions for $25,000 has upon the profitability of *my* personal publishing business? Does that make “self publishing” expensive for *me*? By what bizarre twist of logic do you think their mistake would impact *my* profitability or affect my decision whether to go legacy or indie?

        I know what publishing a book costs *me* — and how quickly I can turn a profit on that cost. That’s all that matters to me. What some other authors are spending is irrelevant. And most indies spend far less on their books than I do, because I pay a hell of a lot for the kind of top-tier editing and cover art than 99% of the Big 5’s authors will never receive. And I make it back in weeks. But other indies who make more money than I do spend $500 – $1,500 per book for editing, cover art, ebook formatting and print layout.

        “…cowards who won’t sign their names to their own opinions…”

        That’s why I love you, Mike; when challenged on the facts, you respond with all the grace and dignity of a feces-throwing monkey.

        But I stay anonymous because I prefer to sign my name on hardbacks and paperbacks for my fans… not on some gossipy industry trade blog that nobody cares about outside of the little self-referential bubble that is legacy publishing.

      • When you’re entirely unconstrained by either logic or personal responsibility, insulting people is easy. You can ask Jane Friedman. She isn’t writing me any consulting checks.
        But your last point seems to be that if you were associated with what you say here people would like you less. That seems almost certain to be correct.

      • Smart Debut Author

        Funny, and even a bit clever… but wrong.

        I meant that fiction authors are entertainers. No fan wants to see Cinderella and Snow White backstage with their wigs off, comparing their paychecks and gossiping about Disney’s benefits package versus Universal’s… it kills the magic.

      • Oh boy. Great rationalization. Maybe you even believe it. But it’s BS. Long lists of celebrity authors with public personnae prove that.

      • Nirmala

        Just curious Mike, if you ever have criticized Authorearnings for not removing the 15% that most traditionally published authors pay to their agents from their figures? You have pointed out all of the omissions or errors that could shift the balance in favor of traditionally published authors (advances that never earn out and now expenses not accounted for on the indie side), but have you ever considered how all of Authorearnings’ calculations do not account for agents’ fees? 15% off the top is a pretty big drop in the amount that authors actually receive. Perhaps that balances out some of your factors that would shift the results in the favor of traditional authors, or at least the 1% or less of authors who pursue a publishing contract who actually get one.

      • Nice try.

        Sure, agents fees should be deducted. But ALL Author Earnings calculations of published authors’ earnings are fabricated projections, not reality. More than 80% of agented books are overpaid royalties because there are unearned advances which AE knows nothing about and doesn’t calculate.

      • Nirmala

        I mentioned unearned advances in my comment. I was just trying to offer some balance to your ongoing criticisms of AuthorEarnings. And DataGuy did once recalculate the results using your figures for what authors receive on average based on unearned advances. The graphs did of course shift a little, but the conclusions were still pretty much the same (which is of course a judgment call you might not agree with).

        My guess is that Authorearnings does not try to calculate what it cannot know for certain since there is no actual data: amount of agent fees (not all authors use an agent), the amount of and % of advances that do not earn out, and the out of pocket costs paid by authors themselves (which as you mentioned can apply to both indie authors and traditional authors even if indies pay more). They clearly use only data they can actually collect to make their reports, and then each author has to evaluate how that report would apply to their own situation.

      • I don’t really have “ongoing criticisms” except that AE is mostly not relevant for at least one thing it tries or purports to do: compare the economics of self-publishing to the economics of being published. Publishing the “earnings” of authors without the “costs” is bogus. Ignoring the value of a *guaranteed *payment with no risk — the advance — is bogus. Ignoring both the merchandising and revenue importance of books in the stores is bogus. And, as I pointed out previously, talking about the revenue to self-publishers and not accounting in ANY way for the *costs*, which are as impressive as the revenue *in aggregate*, is bogus. But if all these other things were taken into account, certainly agents fees being deducted from published author earnings would also be the right way to calculate. But mostly I think the whole exercise is unhelpful and really can’t be because the numbers aren’t there for anything but a very partial and biased picture.

      • Nirmala

        I would say that as far as I can tell, Authorearnings does not claim to be anything other than what it is: a series of reports of relative ebook sales and rankings of self-published and traditionally published authors on Amazon. When they are projecting other conclusions they always clearly state the basis for their conclusions, as in the report that does make a reasoned calculation of the effect of print sales on the overall picture. It does not claim to have all of the answers or all of the relevant data, but to say that it’s data is therefore irrelevant seems to be way overstating the case. I would say their data is very relevant for any author who is making business decisions about the direction of their writing career. It may not be as important to the publishers you consult with, although it seems quite relevant to them also if a new player comes along and in a few short years captures a huge share of the ebook sales on Amazon, especially when little of the Authorearnings findings show up on other industry standard measures because the majority of those new ebooks have no ISBNs. Any and all data about the trends in publishing seems like it would be useful to publishers, and even if you question some of their assumptions and conclusions, the raw data is startling in itself. Every three months for the last year and a half, the proportion of self-published ebooks on Amazon best-seller lists has been increasing, and you think that information is unhelpful? Gosh, that seems to be some form of denial. It may not be as earth-shattering as some in the self-publishing crowd think it is, but it is still quite a transformation that does not seem to be flattening as you keep claiming. After all, you state how sales at the big publishers are steady, but steady sales in a clearly growing market are not really a good sign, especially when those steady sales are propped up some by mergers and acquisitions.

        Please understand, I do not claim to have a clear idea of how this will all play out across the entire industry, but I am somewhat mystified by your discounting of the basic data that Authorearnings collects. Yes it does not include costs borne by self-published authors, but it does not claim to include that data. That does not in any way negate their conclusions about the relative percentage of ebook sales being taken over by indies. Those are dollars that in the absence of indie publishing would most likely have been going into the pockets of traditional publishers the last several years.

      • I’ll accept the possibility — perhaps a likelihood — that my early conclusions about AE and the way it has been *used *in arguments that suggest that self-publishing is a “superior” or “preferable” form for most authors have led to my not spending much time with it. It is actually on my agenda to get some education about it from a resource I trust. Most of my interactions so far have been with propagandists. So therefore my emphasis on what it can’t and doesn’t do, rather than the value that can be extracted from it. I’ll also plead guilty to being much more attuned to extracting value for a publishing *organization*, rather than helping to guide a single title effort.

        But, unless I’m missing something large, I really don’t think AE is worth much time or effort from an overall industry analyst. The “fact” you cite that seems to excite you: that the proportion of “bestsellers” at Amazon that are indie has been growing — is not really so helpful when we know that Kindle Unlimited activity — in which the biggest books don’t even compete — is a thumb on the scales. I have heard Data Guy is really brilliant from sources I trust, but he’s still trying to interpret rank data — which changes all the time with some hours needing to much more heavily weighted than others — into sales unit data. And the segment of the industry being covered at all is limited. Sure, Kensington and Sourcebooks should care. But should Oxford University Press or Norton?
        The data is — necessarily — sketchy, incompete, biased, approximated, intuited. I am very happy for people who feel informed by it or have fun playing with it. But, believe me, big publishers know how many slots on Amazon bestseller lists are being lost to them without AE having to tell them.

      • Nirmala

        Thanks Mike, I always enjoy hearing other perspectives than my own. I would only add that even a Kindle Unlimited read that affects the bestseller lists is still a book someone is reading instead of a book by a big publisher.

      • Of course. And there’s no doubt that the intrusion of literally millions of low- or no-cost reading choices has been a disruption in the market and will continue to be. But I think, given the realities of how simple and cheap publishing competitively has become and the vast number of people who have taken advantage of it, that what is most remarkable is the *resilience* of the publishers. I think that’s easily as much of a story — and as legitimate a “surprise” — as the successes of indie authors and the Amazon-only ecosystem.

      • jloome

        No they’re not. I sometimes sell 3,000 a month as an indie and never sell under 1,500 units, and my total budget per book is what it costs to advertise it, $400. I design my own covers, sometimes badly, sometimes not, and then I give away about 10% of my total as loss leaders. It’s not rocket science and it makes me more in a year than the deal I was offered would have paid in advance six times over. And I’m not even in the top half of selling indie authors on Amazon. With respect, Mike, as I read your blog and am fascinated by your take on the developing changes in the book world, you don’t know anything about Amazon indie publishing.

      • Your remarks are not responsive to my points. They’re simple. Number one: the publishers aren’t going away. But also, the aggregate “author earnings” mean nothing unless you also aggregate the “author investment”. And that would include the investment from authors that don’t sell squat as well as authors like you. And we have no friggin CLUE how the number of authors making money compares to the number of authors who make nothing. In other words, we don’t know what the odds of success are. The indie author advocates like to tell us lots of data that all constitutes “numerators”. They scrupulously avoid denominators. Your comment adds more anecdata, which we tend to get from those who are successful. There are certainly THOUSANDS of successful indie authors. Nobody denies or doubts that. But the publishers aren’t disappearing. And there are LOTS of disappointed indie authors.

      • jloome

        You’re making a logical leap that doesn’t make sense. The cost of failure to the indie industry is irrelevant, because each failure is born by one writer, not a company. Indie failures in real economic terms are equivalent to the people who send in manuscripts and never get published, as there is no cost to any other player in the industry other than the writer for that failure. The industry as a whole (mainly Amazon) is the one paying out, not the content producers who don’t ever make money. And production costs are stratospherically lower than what you’re estimating. You’re trying to compare apples to oranges, profit and loss to companies with profit and loss to individuals. THe indie industry has no effective cost base compared to a pro house, which has editors, proofers, designers, marketers, etc. Instead, the indie either contracts that out cheaper or takes his chances with not bothering at all and does it himself. The indie also has no capital overhead, no long-term structured debt, no investors to please, no long-term employee retirement and health costs to consider….. Mike, I get that you’re a stat wonk, and that’s cool. But it’s irrational to look at these two side by side and say “compare relevant costs!” Because there aren’t any. Even when it comes to distribution, the same applies, as Amazon has little-to-no cost implied in books losing money, as long as it has floods of others coming in that make it. It can play the failure vs. success game on much finer margins than a traditional retailer, because it can stock millions at a time and make them searchable, so customers can still find things. So eventually — whether it’s soon is, you’re correct, another matter — it will win and the trads will go down or be relegated to a small niche. It’s pure economics: ask mainstreet USA how it worked out when Wall Mart effected the same strategy via centralized distribution. The only thing keeping trad publishers alive even now is CULTURE. Most people WANT to read a book still, not an iPad or reader. But if you look at the percentages of readers switching to pads and where their demographic base is, I hate to tell you, but it ain’t old people.

      • If you’d spend just a MINUTE absorbing my point instead of reflexively trying to remake yours, perhaps we could get somewhere. Hugh Howey and Data Guy and anybody who “makes the case” for indie publishing aggressively make the point that indies can live with lower prices because they keep so much more of the revenue. That case is sometimes (often) made with an aggregate “earnings” number. But what it ignores, of course, is that ANY costs in the published model are borne by the publisher. So it is not comparing apples to apples. If you DID compare apples to apples, you’d get a shockingly high cost number because there are SO MANY who attempt to be indie authors. And then all the things you’re saying would make sense to say as explanations. The costs are borne one author at a time, so even if it is only fifty or a hundred bucks a book (which it isn’t, by the way, even ignoring that those who say “it costs nothing” won’t even account their time at minimum wage). The whole argument, starting from the AuthorEarnings side, is rhetorical. I get that. And it impacts one aspect of what we’re discussing here: what’s best for the author.

        But there’s another point you make in this comment, which is more responsive to what I was really trying to get at: whether the indie model is any real threat to the publishers which you characterize as having all sorts of bloated costs that are not justified by a commercial benefit. The logical conclusion from that would be that indies will just grow, publishers will just shrink, and sooner or later the publishers with their bloated costs will just collapse. This, it is claimed by some, will accelerate because the millennials won’t want paper books. All I can tell you is that all the data is against you. The indie surge hasn’t “stopped”, but it has slowed down substantially. (It is no accident that Hugh Howey is still the Poster Boy Success Story, and I put him on the Digital Book World stage three or four years ago!) The migration away from print hasn’t stopped, but IT has slowed down substantially. All the data we can get on the Millennials, including a recently published in-depth report financed by Publishing Technology, says they are NOT abandoning paper books. And I can tell you for SURE that the publishing establishment, in general, regards the threat of indie publishing to their business model with considerably less fear or concern than they did three years ago. They’re responding to their day to day realities: finding and signing authors and selling books profitably and in enough volume to support their overheads. And I’m talking about agents AND publishers.

        So if you’re thinking about a world where the power of publishers is gone and you’re saying 2035, I’d say “I don’t think so, but I don’t care, because I’m not making any business decisions that relate to 2035.” If you’re saying it will happen by 2025, I’d say “re-read the post” because that’s precisely the window I tried to tackle. And if you’re saying sooner than that, I just think you’re living in an insular world that doesn’t really understand how big the book publishing BUSINESS really is, both in terms of the number of titles it handles or how much capital it circulates to subsidize the creation of books before they’re even written.

  • pixiedust8

    I feel like this could be the title of every Mike Shatzkin article ever.

  • Steven Zacharius

    It takes the patience of a saint to get involved in the back and forth on so many blogs without getting all worked up. One day hopefully Amazon will submit their ebook sales to PubTrack or an ebook Bookscan type system to end the speculation that exists about actual ebook sales.