The Shatzkin Files


The publishing world is changing, but there is one big dog that has not yet barked


Tweet about this on TwitterShare on LinkedInShare on FacebookShare on Google+Share on RedditShare on StumbleUponEmail this to someone

Recent data seem to show that, for the publishers, the growth in the retail ebook market has slowed down or stopped (at least for the moment), while Amazon’s ebook sales apparently continue to grow. The share of the market controlled by the publishing establishment — the Big Five publishers and others — is starting to be slowly eroded. This does not yet suggest that an author’s best bet is to go out on his/her own and we may be a very long way from that. But it does suggest that life may get increasingly difficult for publishers.

The headline data we saw last week is that Hachette’s ebook sales went down last year. All their sales declined, but ebooks fell faster and the percentage of their business in ebooks is diminishing. How much that has to do with their war last year with Amazon over terms is not clear.

What we’re also seeing and hearing is that publishers might have boxed themselves in with their return to agency pricing. When publishers first “raised prices” by instituting agency pricing for ebooks in 2010, they saw no reduction in ebook sales, which continued to grow. Michael Cader’s analysis (can’t find it in print, but he told it to me) was that publishers may have misread the real impact of price increases because they raised them in a growing market. The number of ebook readers was increasing every day, so those who were put off by the high prices were outnumbered by the new entrants who just wanted to read their books digitally on their shiny new devices.

Whatever is the reason, the anecdotal reports I’m getting suggest that the price increases aren’t being so easily swallowed in the current round of Agency pricing. Amazon may not care about ending discounting from those prices because they don’t need to or want to, but it would appear that the new deals won’t let them. They certainly don’t have the flexibility to do so that they did before Agency came to the marketplace. So the sometimes startlingly high publisher-set prices are prevailing. And, aside from the Hachette numbers that were reported, we’re hearing widespread but totally unofficial reports that big publisher ebook sales are dropping noticeably when their new higher agency prices are activated.

Hugh Howey told me this was happening in a private exchange three months ago. I didn’t believe him. I do now.

We continue to see a shift in market share. Amazon’s share continues to grow, as does Apple’s. Nook’s share continues to shrink. Google and Kobo are harder to read, but both are smaller than the others anyway.

But this is not a zero-sum game and it isn’t simple. It’s Rubik’s Cube complicated.

Some of the change in the market could be due to subscription services taking a chunk of ebook consumption out of the by-the-book retail market. Although Scribd and Oyster appear to have very small market shares, Scribd was so “successful” with some readers that they had to cut back their romance offering; it was apparently costing them too much to provide all the books their romance subscribers could read.

Amazon’s Kindle Unlimited may be having a bigger impact on the overall market. In all these cases, it is the public understanding that the subscription services are “purchasing” the ebooks from the established publishers. (Kindle’s own authors are compensated with a “by the page read” division of a pot that Amazon arbitrarily decides.) But the Big Five aren’t participating in KU and they aren’t putting their new books — the biggest sellers with the highest prices — into the subscription services. So all the reader bandwidth and revenue going through those services might be coming out of the big players’ and big books’ share.

Our friends at Ingram told me another piece of anecdata which may also be at play. They keep track of the number of SKUs that sell 100 copies or fewer and those that sell 10,000 copies or more. The aggregate sales of the former group is growing; the aggregate sales of the latter group is not. What that suggests is that the sales of books that are not really commercial are taking share away from those that are, whether those that are come from publishers or indie authors like Hugh Howey. Whether that particular change is yet impactful, it is inexorable.

The reduction in ebook sales of hot new titles could be starting to affect future deals — one agent told me unambiguously that it is visible — which would be the next step in the indie vision of how publishers disappear. Publishers base their advances on revenue expectations, which, for ebooks, might now be diminishing. If authors can’t get the same big advance as they did before, might they prefer to go it alone and take the bigger share of ebook revenues they can (still) get with a do-it-yourself approach? Obviously, for some, as the equation shifts, that could happen.

But, at the same time, we’re seeing print book sales, and — at least for the moment — print book retail shelf space, holding their own. As long as that’s true, publishers still have a vital role to play. As long as the proposition “we put books on shelves” has value, so do publishers.

In fact, Ingram (not Amazon) offers the complete suite of services a publisher needs to provide, as does Perseus, whose distribution business Ingram tried to acquire in the 3-way deal with Hachette that went sour about a year ago. Both of them can get a book printed, offset in a print run or on-demand. They warehouse and bill and collect. They have a sales force. They do business with all the retail outlets that every publisher does. And they offer all those capabilities on a marginal cost basis. (The big publishers offer a similar suite of services, but generally are less interested in smaller players that Ingram and Perseus are happy to serve.) Whether you publish one book, 100 books, or have a long list, all you need is the rights to the book and the cash to pay your costs and you can buy the logistical capability to match any publisher.

But you won’t have two things that really matter:

the capability to coordinate the many marketing activities that go into maximizing a book’s success in the marketplace, and;

the “brand” that tells retailers they should believe your hype and stock your book before they know for sure it will sell.

For big author brands, the “sure to sell” component might well be in place, but the marketing complications, and the risk (because a lot of inventory could be involved) would not be trivial.

What this means for the future of publishers, or for what will constitute the best business decision for authors, is not obvious. Everybody trying to make money in the future from the books they write will suffer from the problem the data Ingram cites points to: the increasing share of the readers’ attention that will be taken by books not published with serious commercial intent. If publishers lower their prices to compete more effectively with indie-published books and the subscription offers, their revenue will go down but so will the indies’, who will lose some of the benefits they now gain from their pricing advantage.

It is sometimes suggested that publishers need to move out of Manhattan to be competitive, but, in fact, there are many ways to reconfigure aside from that. The service offerings from Ingram and Perseus (and others: one example is that Donnelley also offers publishers the ability to convert manufacturing management and warehousing overheads to variable costs) allow publishers to get leaner and more focused on their core missions of identifying, developing, and marketing content.

What is definitely true is that the share of the reading market held by commercially-minded publishers (not just commercial “for profits”, but also university presses) will diminish as both successful self-published authors and hundreds of thousands of others who don’t succeed (and maybe don’t even care) take their content to market on their own.

The university and academic presses, of course, have a defining characteristic that might well protect them. They require certified knowledge to underpin their books. (Whether you’re publishing about accounting or brain surgery, you need validated authority that will be an insuperable barrier for independent publishing.)

This is not a death-knell for anybody. This is a changing world for everybody. Of the current household names, only Amazon and Ingram are structurally positioned to grow quite naturally in a shrinking overall market. (The publishers can grow by acquiring each other, and PRH and HarperCollins would seem to be in the best position to take advantage of that.) Amazon will sell an increasing share of the books; Ingram will provide more and more services to more and more publishers while they remain the biggest supplier to everybody besides Amazon that sells books. (Perseus can also expand its distribution business.) The roster of publishers will continue to consolidate, as it has been doing pretty relentlessly (except for a recent decade of relative stability which seems to have now unleashed a more recent stage of more extreme consolidation) for at least 40 years. But as long as print is sold in stores and, after that, as long as half of the books are sold by somebody other than Amazon, there will be a need for publishers that most authors will be delighted to allow compensation for.

Let’s remember that there is a very big dog that has not barked. No major author of recurring bestsellers has stepped up to take charge of his or her own output. It is bound to happen someday, and if you’d asked me five years ago, I would have been sure it would have happened by now. Five years ago I would also have figured that one of the big publishers by 2025 would be a version of United Artists, several major authors organized to share an organization and create their own brand. There have been no signs of that yet either. Indie publishing is still growing and it seems that established publishing is at a standstill. But we’re still many years — most likely a decade or more — from any real changing of the guard.

I don’t see myself as a sophisticated reader or analyst of fiction. But I want to offer the opinion that “Go Set A Watchman”, the controversial new release from “To Kill A Mockingbird” author Harper Lee, is a very worthwhile book. And, by my reading, both the story and the Atticus Finch character fit perfectly well with what we read in “Mockingbird”. What changed most between the two books was the circumstances of the south. “Mockingbird” takes place in a time of unquestioned white dominance. “Watchman” takes place in a time when white dominance is under serious threat. It is a more complex time and deals with more complex issues. It is easy to see why a commercial editor in the late 1950s would find “Watchman” a very uncomfortable book to sell and “Mockingbird” much easier to place in the market.

There are dueling opinions on this. I agree with novelist Ursula Le Guin (you’ll have to click on “newest post” if you go there before she publishes her next one; not sure how you’ll navigate after that), not with the bookseller who thinks the book is so bad that the store is compelled to offer refunds to disappointed readers.

Tweet about this on TwitterShare on LinkedInShare on FacebookShare on Google+Share on RedditShare on StumbleUponEmail this to someone

  Back to blog

  • G

    Hey Mike,

    Great post with a lot of thoughts going on…

    Some of it sounds like I could have written it myself–a scary thought indeed.

    This business is going to get a lot tougher, I think, for everyone. When there is no barrier to content creation, the supply side is always going to dwarf the demand side. From here on out, there will be blood in the streets as everyone competes for a relatively smaller portion of the overall pie.

    Even if ebooks continue to grow, even if there are more adopters, there will be vastly more work then readers.

    Add programs like KU to the mix and you have a recipe for major changes to the industry. I know that KU is relatively small, but I do believe the impact is bigger than it might seem at first glance.

    I’ve said this a bunch of times on various blogs, but KU has changed the playing field on Amazon. It’s making it tougher for indies like me to stay in wide distribution and “incentivizing me” to play exclusively with Amazon.

    As Amazon ramps up the pressure, both indies and big publishers alike are going to feel the squeeze. Amazon’s competition is not up to task (and by that I’m speaking of Nook, Kobo, etc). As their competition falters, Amazon’s stranglehold on the indies tightens.

    Meanwhile, indies are taking marketshare in the ebook market from big publishing and that will continue apace. Big pub can’t compete in pricing and I don’t even think they will continue to compete in terms of sheer quality much longer. Indies, evolving, are getting more sophisticated and slicker in every way.

    The big winner here will likely be Amazon.

    The big losers will likely be authors.

    Big NY publishing will probably fall somewhere in the middle, with a notable implosion or two and then the consolidation you spoke of.

    As for “the big dog that hasn’t barked,” I do think someone of stature will make that leap when they see the time is right. Someone for whom the excitement of the new challenge will outweigh the potential risks and frustrations attendant to going alone.

    I’m not sure your prediction of all of this taking a decade to happen is accurate, though. Things change much more quickly now. A decade ago, what was Google’s stock price? What about Facebook? Where were they a decade ago?

    Things move more quickly now, and I think much of the carnage is going to happen over the next 1-5 years.

    Great, thought-provoking article, Mike!

  • EricWelch

    It was interesting to see how much of what you wrote has been reflected by my own experience as a reader. I don’t read a huge amount — I average about 125-130 books a year — but I buy many more than I can read in a lifetime. I used to buy exclusively print. Now I buy exclusively ebook. I’m not bound to any retailer, and have accounts with B&N and KOBO, but clearly Amazon has developed the best ecosystem. It’s just a lot easier and works better.

    I picked a random book title recently on Hachette’s web site since you mentioned them. (Michael Koryta’s “Last Words.”) If you go to Amazon, the ebook is available right there for pre-order at $13.99, a ridiculous price, btw. when the hard cover is $12.43. Under ebooks on the Hachette site, Amazon is not listed as a choice, but there are 15 other choices. Problem is they are mere links to the home page of each retailer, not directly to the book. This turned out to be true for their audiobooks and print books as well. In some cases the link was to a 404 page, and in others the book wasn’t even available from the retailer. That’s ridiculous. Aside from the erroneous assumption that readers search for books by publisher, that kind of miserable experience will drive people away.

    Now, Scribd, on the other hand has me as a devoted subscriber. I always search there first before even going to Amazon for a book EVEN though I doubt if I read two books there a month so they probably make money off me Mostly Amazon’s readers and apps are just so seamless. But I suspect the subscriber services are indeed cutting into ebook buying.

    • The Hachette practice you uncovered is impossible to defend. It is wrong. They should fix it.

      You say you don’t read much, but at 125 books a year I’m sure you are in the top 1 percent of consumers. You read a LOT. I am intrigued that Scribd can only provide you, by my math, about 20 percent or less of what you want. That says something interesting. I guess you read a lot of new titles that Scribd doesn’t get until they’ve aged a bit.

      I also used Scribd and found their interface and reading environment very good. I agree with all of that. I gave up the subscription because I don’t read as much as you do and also found most of what I wanted was too new to be there. I lean to Amazon. I also use Google and, very occasionally, Kobo, but that’s just to see how they’re doing. I have no real reason to use anything other than the Kindle ecosystem.

      • There are dozens of indefensible and really stupid things publishers do like this. I remember telling you in the past that publishers are dumb, and you insisting that they aren’t. I now agree with you. They aren’t dumb; they are just emotional.

        The fear/hatred of Amazon made them take a really bad deal with Apple, got them free of Amazon’s generous discounting, keeps them out of KU, and has them sabotaging their own business just to hamper the scale of the #1 retailer of their works.

        A nostalgia for bookstores drives much of this, as well as a nostalgia for print (and loyalty to existing business partners). It turns out that you don’t have to be dumb to be irrational. You just have to succumb to emotion rather than do what’s right for your readers and your authors. And this is where the Big 5 are making most of their mistakes: They focus on their fear of what they cannot control rather than their optimism for what value they can add as middlemen to readers and writers.

      • I am not as inclined to psychoanalyze their behavior as you are, but then I’m not as creative a thinker as you are.

        The deal with Apple wasn’t “bad”. And they weren’t as much protecting “print” as they were protecting “bookstores”. (It is not the same thing.) When Random House went to agency a year after everybody else, a top exec there called me to explain they were doing it because the indie stores demanded it; indies then thought they could sell ebooks (through Google or Kobo or whatever) but they couldn’t price-compete. It is not short-sighted for publishers to want to keep bookstores alive. Stocking bookstores is one of their core value-adds. Bookstores are the canaries in their coalmine.
        What I find less easy to accept is the “fail” at digital marketing. They’re not working with their authors productively. They’re not using their ability to harness authors together in their mutual interest. They’re doing *some
        *list-building of names with permission, but they don’t have good strategies (or *any *strategies) to interact productively with those people for marketing or to generate sales.

        And I also think you underestimate the power of sheer inertia, particularly in large organizations. Some of the needed changes don’t get made just because changes often don’t get made.

      • I can see that. I’ve also watched Amazon pivot like a startup even though they are bigger than any of the Big 5. They keep innovating. So the lack of change is about culture more than size. Amazon’s attitude is that of much of Silicon Valley: “Fail faster.” The Big 5 keep thinking: “Don’t fail.” That stifles experimentation.

        And to ignore the psychological is to ignore the root cause of things. Business and economics depend on psychology. Consumers and suppliers are all predictably irrational. I believe any one of the Big 5 could break ranks, choose to compete against the others, and come out as a dominant power in publishing five years from now. I think it would be relatively easy to pull off. And I think they still have 2-3 years to consider a complete pivot and a healthy future. Operating in lockstep with one another and treating their readers and retailers like both are the enemy? Not a great idea.

      • There will definitely be a first mover advantage to a Big Five house that wants to make a new mold. I think that’s not an alien thought inside several of them. But it is always harder when you’ve got something to lose. You’re “right” about Amazon being bigger and willing to fail, but that’s partly because they are risking just a small piece of their business with their book experiments these days.

        And I wouldn’t “ignore the psychological”, I’d just approach describing what goes on in some corporate brain with a great deal of humility.

      • G

        That’s such a good and easily overlooked point. Amazon’s book biz is such a tiny fraction of what they have going on, they can definitely afford to experiment and innovate and fail.

        Not so for the strictly publishing businesses competing with Amazon.

        Risking their “still working good enough” way of doing things for a “might work better in the future” is kind of a tough ask…

      • I have made the point repeatedly over the years that people who are ONLY in publishing will have a very hard time competing with people who have a bigger base. That’s not just Amazon; it is also Apple and Google. B&N simply can’t compete. And we’re going to see more and more publishing coming out of companies doing other things as well. In non-fiction niches mostly, but, even so, taking sales away from commercial publishers. Amazon *started
        out *knowing that they were building up customer lists, not just selling books. On that basis, Wall Street financed them to sell at or near cost and take customers away from others and stop anybody else from building a seriously competing online bookstore. Which is now an everything store. Wall Street was right. So was Amazon.

      • These publishers are parts of much larger corporations. AWS is to Amazon what CBS is to Simon & Schuster.

      • Rhetorical point but not a substantive one. Amazon very directly harvests value from the book customers for other purposes. The publishers are part of portfolio plays. Fox looks for ways to have HarperCollins and the Wall Street Journal work together, but it’s not organic. From a functional perspective, what you’re calling equivalent is not.

      • Do what? AWS is B2B. How is that harvesting value from book customers? There’s more integration between CBS and S&S than there is between AWS and books.

        The rest of retail at Amazon is an integration, but AWS is what people credit for giving Amazon room to be creative. CBS is the same thing. Probably the only way AWS applies to their book business is that Data Guy uses AWS to spy on Amazon’s own servers. 🙂

      • I didn’t say that every aspect of Amazon integrated, nor that no aspect of the publishers’ owners’ other businesses did. The point doesn’t lend itself to oversimplification and anything more than that is more than this space will give it. Let’s just say we disagree and I think people reading the exchange can decide who’s right.

      • Amazon, Google and other retailers are more broadly diversified in ways that are more integral to their business models than companies like the ones that own the Big 5 or Ingram could be. It’s not that larger publishers don’t want to diversify.

        The fact is that the processes that produce books (print or ebook) aren’t much like the processes that produce non-IP products. They’re not all that close to music or magazines or whatever, either.

        But being a retailer of books is **very** similar to being a retailer of clothing or music or dog food. Ditto some of the other companies named.

        Comparing Amazon’s operations to those of a publisher, whether Big 5 or an author handling his or her own books, is pretty much apples to oranges, IMNHO.

      • See_Rebel

        “I believe any one of the Big 5 could break ranks, choose to compete against the others, and come out as a dominant power in publishing five years from now.”

        Number 5 should be planning it now.

      • I guess. But actually, numbers one and two could do it much more effectively.

      • William Ash

        But Amazon is just exploiting writers. It is fine for the 1% of indie authors that make out really well, but Amazon is not in it for anyone but themselves. They work off the penny a click model, which is great for large organization or the top selling authors, but does not work for the rest very well. That is the Silicon Valley model of economics. The race to the bottom is going to simply make it harder and harder for creative people to survive.

      • G

        “And I also think you underestimate the power of sheer inertia, particularly in large organizations. Some of the needed changes don’t get made just because changes often don’t get made.”

        This reminds me of that story about the wolf chasing the rabbit. And when the rabbit gets away, someone says “the wolf was running for his dinner. The rabbit was running for its life” or something to that effect.

        I’m quite sure I botched that story…

        My point though, is that with indies, we are competing to survive.

        That makes me work a lot harder and adjust faster than the big publishing outfits who have a lot less to lose if they miss catching that rabbit…

      • No doubt that an indie’s attention is really focused. No other books or authors to distract them and, as you say, running for their lives. I think the trick for publishers is to figure out how to get that same effort and dedication out of authors and *amplify *it.

  • carmen webster buxton

    I totally agree on the pricing thing. There are very few well known authors that I buy when the ebook first comes out because they are just too damned expensive.

    On the Scribd subscription thing, I don’t understand why they just pulled the plug on the most popular books without having a plan to serve that audience..They could have created a romance-only subscription at a higher rate or possibly a multi-tiered approach where you can read up to a limit and then you pay more.

    • And I agree with you about Scribd and the romance reader. I think the successful future of subscription IS niched and verticalized. But maybe they just weren’t ready to go in that direction yet. I assume eventually they’ll have to.

      • Anthony Pero

        I would definitely pay more for a targeted scifi/fantasy subscription that included more traditionally published books. I cancelled KU in a hot minute.

      • I have to believe niched subscription services are the future, although there is precious little evidence of that in the marketplace so far!

      • Anthony Pero

        I have a friend whose been a SF/F editor since the 70s. I once asked this person why the publisher s/he worked for didn’t offer a similar service to Harlequin. My wife devours their 200 page paperback subscription every month. The only answer I got was “SF/F isn’t Romance. That doesn’t work for SF/F.” I think the thinking was that what qualifies as good SF/F takes longer to write and edit than your typical romance novel, and therefore costs more to produce.

        But I’d certainly pay for a curated subscription. So would all my friends. But maybe the value isn’t there in genres other than romance and mystery.

      • I think your friend is wrong.

      • Anthony Pero

        To be fair, the conversation I’m referencing occurred in 2012. That was like, a century ago in current publishing time 🙂

      • G

        KU is just in its infancy. Amazon knows how to target niches better than anybody.

      • I don’t know if they know how to target niches “better than anybody”, but they have a deep reservoir of titles they don’t have to overpay for so they have a built-in profitability advantage as they grow compared to Scribd and Oyster.

  • Bob Mayer

    Intriguing post. I just emailed my business partner at Cool Gus and said we were three years too soon– what I meant was that three years ago our focus was to work with bestselling traditionally published authors who wanted to go “hybrid” or even break completely and go indie. But few seemed interested, although Jennifer Probst went with us. Most were quite happy with their trad deals. So we kind of moved on. But lately, the buzz we’re getting from trad authors is different so we’re actually backing up our business plan and dusting that off.

    Things are changing. My anecdotal take is that the smartest bestsellers are seeing publishers reap more profits with less sales– at the cost of their eBook royalties. That mode, less sales, more profit, for publishers, has a timer on it. Authors aren’t stupid (okay, some are), and they see the playing field evolving. They see an opportunity for more profit for themselves, even with less sales, if they get a bigger piece of the pie.

    I’m getting some growling from some big name authors, although none have barked yet. That will take time, given the nature of contracts, who controls backlist, agent involvement, etc. But it is inevitable. When I sit with a bestselling author and do the math, based on their own royalty statement and slices of the market, a light bulb begins to flicker. Soon a lot of lightbulbs will go on.

    As far as pricing, I bow to your analysis. Enjoying your posts. Food for thought.

    • Bob, you’re describing a “gradually, then suddenly” scenario, which is certainly the way many things happen. But the biggest authors literally have to walk away from guaranteed millions — and if you go down to $100,000 you’re talking about hundreds of the biggest authors — to do it themselves. If bookstores collapse, it will happen faster. But publishers will adapt too. On the other hand, if ten big authors do it with you, that’s big for your business. It doesn’t have to be a large-scale trend that brings down big houses for it to be good business for lots of other people, like you or Scott Waxman’s Diversion.

      • I have three very good friends who turned down 7-figure advances and one who turned down an 8-figure advance. And I walked away from several 7-figure advances. Two of these authors were trad-pubbed, went indie, and have refused the offers to go back to trad.

        It is happening. Just quietly. I know of three big-time authors (different from above) who just got their rights back to backlist titles and had to sign very strict NDAs on how they did it. So it doesn’t spread. I know of a talented mid-lister who decided to go indie just last week. And I know authors who have contracts they have to fulfill before they can bolt.

        The biggest names will actually do better as some of these other authors leave. Just as movie stars moved into the $20 million category, a handful of authors in each genre will make out huge to stay put. Maybe they would do better indie, but why risk it? Look at John Scalzi’s deal in my genre. Not a lot of money per book, but more than he needs to live on, and he no longer has to think about what he earns. Can just write. Authors will stick around and take that deal. But many more will leave or not re-up.

      • Just enough information to be tantalizing. Not enough information to make any judgments. Anybody doing that today without also demanding a serious plan for getting books-in-store presence as well is, by definition, an unusual author.

      • I’d tell you more, but I’ve signed my own NDAs.

      • The hazards of doing business.

      • Max Alexander

        I’m certainly not in the bestselling author category, but I do get six-figure advances and my books tend to get reviewed in many of the major U.S. and overseas English newspapers. I have retrieved rights on two of my backlist titles and now sell so many more copies of both than either of my trad publishers managed to sell–and of course I keep most of the money. I don’t begrudge the publishers–Max Alexander is not worth their time and effort to promote old titles. But it IS worth my time and effort, and so I grab those rights whenever I can. I’m amazed how many authors I know don’t do that with their out-of-print titles. They’re just leaving money on the table, not to mention failing to connect with readers who want their older books.

      • Good info. Also important because you’re not really a recognized “brand”. Like a series fiction author would be.

      • Like I said years ago, it starts in the genres and moves out. The economic advantages are genre-blind.

      • William Ash

        Yes, we know about Eisler and Konrath, but that is rather old news and at a specific point in time with the rise of ebooks.

      • Almost certainly NOT about whom Hugh speaks. Neither of them turned down seven figures. Eisler turned down $500k for two books, if I remember right. (And then took an *advance *from Amazon, not self-published!) And I’m not sure what Konrath turned down, but he was very midlist when publishers had him. Not in the 7-figure class or close to it.

  • InklingBooks

    Thanks for putting in some good words for Ingram. There’s too much chatter about Amazon, pro and con, and too little praise for all the benefits Ingram offers publishers without displaying Amazon’s bent to dominate and control.

    I grew up in the 1950s, in Brewton, forty miles from Harper Lee’s Monroeville. I agree with your assessment of the differences between the settings of her two books. In the 1930s, whites helping black people in the South carried no risk of social change. FDR was very careful not to endanger the Democratic party’s Solid South vote.

    In the 1950s, that had changed and the way it changed particularly threatened Southern whites. Integrating workplaces would have gone over a lot better than integrating schools. And starting at the college level would have stirred up less anger than starting with local public schools.

    At times I suspect that many of those in politics who done nothing for black people during their entire lives wanted to stir up poor whites, so they could be blamed. That’s why I sometimes tell people that no one who was far segregation after 1970s was responsible for it. If they weren’t powerful enough to prevent integration, then they weren’t powerful enough to force it onto the political system. The real winners of legalized segregation were well-to-do Southerners, who benefited from the cheap labor supply (black and white) that segregation created.

    –Michael W. Perry, co-author of Lily’s Ride: Rescuing her Father from the Ku Klux Klan

    • Thanks for the validation of my analysis of Harper Lee’s books. I have real humility about my capabilities as a reviewer of fiction, but I had re-read Mockingbird three months ago to prepare, and I felt pretty comfortable with what I saw as a read Watchman.

  • Great post; so much to think about.

    Your commenter who found a $13.99 ebook competing with a $12.43 hardcover is part of a growing cadre who cannot help but think that publishers are not (in far too many cases) particularly interested in selling them an ebook edition. The Kindle edition of Daniel Silva’s The English Spy is more expensive than both the hardcover and the paperback. And on and on.

    I’m not a subscriber to the idea that publishers are dumb. I do think that they -were- very emotional around ebooks when the Kindle started to gain traction. But now ebooks are just a business issue that lines up against other important business issues: author advances, manufacturing & distribution costs, and so on.

    If this is correct that we have to assume that publishers are making a considered, deliberate, decision in their ebook pricing. There are only a small number of reasons why product prices might be higher than a rational market would dictate:

    1. The supply is insufficient for the demand: this is not a possible scenario with a digital product.

    2. Legal considerations/government requirements: the agency agreement does not address price levels, only the enforceability of retail price choices.

    3. Price elasticity: publishers are finding that their overall ebook revenue is higher at current price points that it had been at lower price points: this is clearly a possibility, although common sense seems to suggest ‘nay’.

    4: “Decoy pricing,” where one price is set artificially high, in order to boost sales of a second product (for any of multiple business reasons).

    I believe it is #4. Price ebooks high in order to boost sales of print books.

    Why do this? Because the overall success of any new title is significantly influenced by its presence in retail outlets. Depending on how you define “book retail outlets,” and how popular the title, there are some 5,000 locations in the U.S. that will prominently display proven and potential bestsellers. Within the current publishing business model this exposure is an essential part of the sales ecosystem.

    If ebooks had continued to capture market share at the rate they were doing until a few years ago the book retail structure would now be in tatters. And established (mid- to large-size) U.S. publishers do not have a business model for dominating online sales in the same way that they can dominate total product sales with the existing retail component.

    And I’ll end this long-winded comment right here.

    • agclaymore

      I think #4 is a big part of it. Paper distribution is a major part of what they offer an author so they would definitely want to protect that part of the ecosystem.

      We’re starting to hear stories of authors questioning what the publisher does for it’s cut. This is not to say that there aren’t publishers who earn their percentage, but it varies widely by publisher and by title.

      Steve Hamilton is walking away from SMP over their marketing plans for his october release. That’s not quite a direct comment on eBook pricing, but it does highlight the need for publishers to protect the areas where they can outdo their competitors. Getting the story into a B&N is one of the enticements they want to preserve.

      I don’t think you can do that with pricing, though. If a title is selling at a higher ePrice I tend to skip it rather than buy the paper copy. I’m used to the convenience of eBooks and don’t like the hassle of reading paper. When I browse Amazon for bestsellers in my favourite generes, I find plenty of titles in the top 10 for less than eight dollars.

      • I don’t think protecting print plays as big a role in ebook pricing today as it did a few years ago. We’re in a moment where the bookstore shelf space looks reasonably stable. And what is true that wasn’t so much true four years ago is that publishers see that getting ebook prices “right” can be one of the biggest revenue drivers. If you’re magic price point is $8 ($7.99), it is now possible for a publisher to know what percentage of the sale is lost trying to get $10 or $12. They’d attempt to go for the biggest possible top line (units times price). But they don’t know what that is. There is a LOT of price experimentation going on. I asked the head of sales for one big house whether the higher prices were working and he said “the jury is out”. But other reports say that the sticker shock for higher-priced ebooks is dramatic at the moment.

        If that’s true, we’ll start seeing the big publishers bringing ebook prices down themselves, which they can do. But, apparently, they’ll take 70 percent of the hit for the lower price. And, remember, most big authors already have advances that weren’t intended to earn out, so the 25 percent ebook royalty doesn’t really help them.

        An author walking away over the marketing expertise he perceives being applied to him is a big deal, though. I have been banging the drum for a more proactive marketing collaboration by the publisher with the authors. I think that would speak very directly to this problem.

      • agclaymore

        The stability of bookstore shelf-space is an interesting point. We hear a lot about how many stores B&N plans to close but are they opening any new stores in better locations?

      • Steven Zacharius

        Keep in mind that publishers are not setting the print prices of books. We set the list price and then the retailer sets the retail price. We can’t stop any account from setting the print price wherever they want, whether they are selling it at cost or even below cost. This is why publishers wanted Agency pricing, so that this wouldn’t happen….at least one of the reasons.

      • agclaymore

        Hi, Steven. By print price, do you mean the actual sale price at the vendor or are we talking about the difference between print and electronic?
        I don’t know what sort of agreement Kensington has with Amazon, but don’t most of the big, foreign-owned houses more or less have agency back, or at least, agency light?

      • Steven Zacharius

        I was saying that we do not set the prices of physical books, other than the list price of course. Some retailers discount them heavily and others don’t discount them at all. It’s out of the publisher’s control.
        Kensington is on wholesale terms with all online retailers other than iBooks as are almost all publishers other than the big 5.
        Yes the big 5 are on Agency or Agency lite…I don’t remember when agency lite runs out, but it does soon I believe…I am not an expert on Agency since we’re not on it.
        Anyhow my point was that we can’t control if an account is lowering the price of the hardcover to be lower than the price of the ebook which is fixed due to Agency terms. That’s the retailer that is making that decision to do that. I have bought hundreds of hardcover books at low prices from Amazon and other retailers and I appreciate that opportunity as a consumer. I’m primarily a hardcover reader but I do read digitally when traveling quite often.

      • agclaymore

        Ah, thanks for the clarification.
        I used to be a hardcover fan until I started reading on a kobo. Now I find them unwieldy, but probably because I read eBooks at home as well as on the road. I’ve been able to read novels in eBook format while rocking my kids to sleep, having a coffee etc…

      • Steven Zacharius

        There are some real advantages to reading on an ereader. I tend to read more when I’m on vacation because it’s just so convenient to just open and close. But I guess it’s my background in manufacturing that causes me to still like the feel and smell of hardcovers. There’s plenty of room for both thankfully and at least we all have choices.

    • Steven Zacharius

      Keep in mind that if an ebook is substantially lower priced than the printed book, that print retailers have less motivation to stock books on shelves. Retailers of print books are very sensitive to the pricing differences between digital and print. Most of them have no way to sell digital books and they want to make sure they have a viable business. With print books still being 65% of all sales, publishers have to be very cognizant of their retail partners.

  • Elliot1234

    That dog has been howling about independents taking market share from publishers for the last three years.

  • TheCreativePenn

    Hi Mike,

    On “No major author of recurring bestsellers has stepped up to take charge of his or her own output.”

    What about JK Rowling who took charge of all her own ebook sales and started her own company, Pottermore, to sell ebooks and to start a reader community. Even Amazon backed down to Rowling and every ebook of Harry Potter on Amazon has a link that says ‘buy on Pottermore.’
    Why don’t the publishing companies negotiate for such a button, if one powerful author can do that?

    Thanks, Joanna

    • Since Rowling’s brilliant deal was negotiated by Charlie Redmayne, who is now MD of HarperCollins UK, presumably they’d know how. But to do it, you’d need a website that drew real traffic. Pottermore is a pretty unique situation to provide that!

  • Wrimo14

    If we take ourselves out of the industry, to think purely as a consumer, it is illogical to pay so much for a product that has cost less to produce digitally (or should), is not a physical object, and can not be passed on or shared. There is a worldwide recession; without lower prices, my family would be far less literate. Publishers, like so many other huge companies, are greedy, and people know it. I will simply choose something else.

    • What sells or doesn’t is known instantly. Adjustments will come pretty fast. If the price points really don’t work, they’ll be changed a year from now.

      • Anthony Pero

        Didn’t Hatchette report higher revenue, in spite of sales being lower? Do they really care if sales are down if revenue is higher? If they can price books so that revenue on ebook sales is higher, while sales themselves are lower, because people would rather pay an extra dollar to pick up the hardcover…

        That’s seems to be exactly what Hatchette would want. It maximizes revenue and helps sustain the service that they still do better than anyone else (print runs, distribution, warehousing).

      • I think you’re mixing up “revenue” with “profit”. S&S just reported higher profits on lower revenues. And you’d be right to say that publishers don’t care as much about the top line as the bottom line. But I can’t follow the rest of it.

      • Anthony Pero

        Apologize for mixing up the terms. I’m saying, didn’t they report making more money on eBooks over all? Isn’t that, as a business, what they SHOULD be trying to do? Maximize profits for their shareholders?

        In the second part, I made an assumption: at least some of the people who chose not to buy a frontlist ebook because of the high price chose instead to buy the hardcover. In many cases, they are discounted below the price of the ebook. This would also seem to be a win from a publisher’s perspective, wouldn’t it? It would seem that wide-distribution print is the primary advantage that traditional publishers have over everyone else, and why many authors want to be traditionally published.

        So, the correlation I’m making is that decreasing ebook sales while maintaining or increasing profits and increasing frontlist physical sales is a win/win for Hachette, isn’t it?

      • Selling more print is good for publishers, yes. But failing to get good ebook sales because of high prices works against them because authors feel they could do that themselves. I’m not completely sure that it is “good business” to drive hardcover sales on the back of “too-high” ebook prices. It also boosts indie ebook sales and encourages some authors to believe they don’t benefit from publishers.

    • Steven Zacharius

      The cost of the book has little to no bearing to the price of the book. Mass market paperbacks cost $.40 to manufacture but they sell for $6.99 to $9.99. Of course there are other factors like warehousing, returns, etc… But the cost really has little bearing to the retail price. Likewise, the difference in cost between a tradepaper for 15.00 and a hardcover for 28.00 is about $.50 per book, but the retail price difference is $13.00…..again no relationship to the manufacturing cost. With bigger books the most significant factor is the cost of the advance to the author. With declining shelf space for physical books the publishers are getting less dollars. If they were to reduce the price of ebooks even further, they would not make up the difference without selling loads and loads of more copies digitally.

    • Most of the cost of producing most books has nothing to do with paper, printing, binding or warehousing.

      I agree that people THINK that it does, and that publishers are greedy. They’re just wrong.

  • Peter Turner

    “Ingram keeps track of the number of SKUs that sell 100 copies or fewer and those that sell 10,000 copies or more. The aggregate sales of the former group is growing; the aggregate sales of the latter group is not. What that suggests is that the sales of books that are not really commercial are taking share away from those that are.”

    A minior point and perhaps off topic but couldn’t the shift in aggregated sales in these two be a matter of the number of titles in each in these two categories.

    • A major point and very much on topic! It is *entirely *due to the number of titles in the two categories. The point is that the number of titles in the marketplace that are each making trivial sales is growing so fast that in the aggregate their numbers are meaningful.

      • G

        As I said upthread, when supply is limitless demand will not keep up.

        It’s the “tsunami of crap” theory, except the tsunami doesn’t have to be crap. There could be plenty of quality titles.

        In fact, it would be easier if there was more crap and less quality. But instead, what we have is lots of crap and a decent amount of quality work, and more and more entering each day.

        Demand will never keep up. As digital replaces physical, the audience will pay less and less for each “rental” (or whatever it will be called in the future) and the authors will make pennies also.

        Only bestselling authors and those with enormous backlists will thrive in such a scenario.

      • I don’t quarrel with the notion that things are moving in the direction you outline. As more and more stuff is available free or cheap, and *some *of it is worthwhile, then those trying to make money selling competitive content will be increasingly challenged.

      • I hear anecdata that very low priced ebooks aren’t selling as well as they used to do. That the reading public has shifted towards middling-low price points lately, as they become aware that most of the very cheap stuff isn’t very good — by any standard.

      • Interesting and counterintuitive.

      • I agree — but I’ve heard it from many sources.

      • I’ll start doing some asking myself.

      • xist publishing

        I’ve both done and heard the same thing to add to the ancedata. I can’t think of the last time I bought an ebook at $.99 or 14.99 – must have been at least a year for both. But I bought a Kindle book for 5.99 today and one for 9.99 last week– neither of which were readily available on either Scribd or OverDrive– which I checked first.

        On a hard data side, we’ve seen our children’s book customers continue to move to subscription services. Even with Xist’s mid to low-priced children’s ebooks, parents would much rather pay a monthly access fee. From our standpoint, Kindle Unlimited has had a major impact on children’s book sales– turning even BookBub ads nearly impotent.

        – Calee Lee, Xist Publishing

      • Surely some of the flood of new ebooks will slow when the “gold rush”mentality is confronted with reality?

        Every gold rush ends. Sooner or later.

      • I don’t know how much of the flood of ebooks is motivated by commercial intent. I think most of it is NOT. So it might not slow down much at all. It is already down from the peak but still way above where it was before all this started.

      • I hear a lot of “fame and fortune” dreams either explicitly, or as subtext, when I talk to people on the self-publishing and ebook publishing groups I help run. We might not recognize them as seriously commercial, but the motivation is there.

        On the other hand, I also see a lot of people who just want to see the ms in their bottom drawer finally published.

        Sooner or later, the pent up supply of those dusty old ms, too, will run out, and we’ll settle down to a steady state.

      • It’s a reasonable conjecture (as yours always are). But we don’t know what that steady state will be, when it will arrive, or who might be seriously weakened or toppled in the meantime.

      • Peter Turner

        One other side point: it’s important in any discussion of e-books trends (as regards the impact on publishers, at least) is the huge disparity in print / e-book ratio of sales by title as regards genre. So many small- and medium-sized niche publishers sell a ratio of 80% or 90% of their sales volume in print format. While the revenue from e-books is meaningful, it also requires a considerable parallel production process and it reduces the size of print runs, raising per unit cost. The reaction on the part of publishers is to raise their print list prices which often has the effect of raising e-book pricing.

        Like I said, it’s a side point but worth mentioning.

  • William Ash

    It could be that shrinking incomes are being reflected in the book market. I am sure sure a book is anything but a necessity. Then there is different media. When you spend a lot on your cell phone, cable, and food, what is left for books? Maybe the decline that has hit the Japanese book market over a decade ago, is hitting the US market. I put little into your friend Howey. I think you will find the ebook market was slowing before the agency model was reintroduced. Beside, pricing irrespective of costs is not an economic model. Bigger publishers have more room there, but they still cannot profit at a loss.

    • I don’t share much of this analysis. We’re not sure the overall book market is shrinking; what is happening is that a lot of the market is moving to indies that we can’t really track and are outside the “industry” as we have known it. It is not true that the ebook market was shrinking before Agency; it grew a LOT during the early years of Agency pricing. You’re right about pricing and costs; that’s part of the issue. Aspiring authors might often figure their “cost” of creating a manuscript is zero. They also don’t highly value the time it takes them to put it up, create a cover, and launch the book. So they don’t mind pricing at levels no commercial entity could consider and survive. The modern digital problem is that in this day and age the “book” (ebook) that I wrote in my spare time and put up on Amazon myself doesn’t “look” any different than the one by a star author with a big house behind her. Ten years ago, the star author would have been in the bookstore and my self-published book wouldn’t have been, at ANY price.

      • William Ash

        I did not say the ebook market was shrinking in the not so distant past, but slowing, at least that has been what is reported. This current state could be the extension of a trend. I doubt agency pricing on one section of the market, ebooks, could be solely responsible for the whole market.

        Certainly the indie section of publishing is growing–how could it not, more people are joining. Given large enough numbers, you will see some large successes, but what is the average–mean or median? Computer technology, both hardware and software, have allowed small companies great opportunities. Indie publishing is simply an extension to that. But I think you will find most indie titles are not selling.

        I think when there is such a large complex system as publishing, ascribing one simple factor, like agency pricing, is a hard argument. How much did ebook prices go up? $3? $5? For a book I want, that is not a barrier. I am sure you are in a much better position to answer this, but does the book industry always go up? When there were contractions, was it simply a case of pricing? And book prices must rise, is a decline in sales always the result? And I would imagine this might be the most volatile time in publishing’s history, not only with the introduction of ebooks, but the way media is consumed generally. I could be reading a book right now, but I find it much more reward talking with you, Mike.

      • When prices go up, sales almost always go down. It is just about inexorable. The trick for publishers is to find the spot where there is maximum revenue. The “problem” was that when publishers raised prices in 2010, sales did NOT go down because the ebook market was rapidly expanding. It could be that publishers misread those events and found it didn’t work so well to raise prices in 2014-15 when, by any measure, growth of the ebook market had been slowing down for quite some time.

  • Max Alexander

    So this is purely anecdotal and I have no idea if it was happening on multiple Hachette titles, but last year my Hachette-owned title suddenly became unavailable as an ebook in any format. I do not believe this had anything to do with the Amazon war as it was also suddenly unavailable from Apple or BN.

    This particular book is very popular in Africa (with both foreign aid workers and African citizens), so e-sales are essential–indeed about the only way readers there can buy the book, as I stressed to Hachette. Despite several promises to “look into it,” they proved either unable or simply uninterested in fixing the glitch. Fortunately I was able to get the rights back and am now selling my own e-copies–lots of them. And I have a new trade paper version through Amazon POD with orders from universities for hundreds of copies this fall.

    Did Hachette somehow torpedo other ebook sales as well as mine through some dysfunctional computer glitch? I’ll never know. Will I continue to publish my books through legacy publishers? Sure. Do I think I have a future in self-publishing? Absolutely.

    • Fascinating, Max. I had not heard of this or anything like it.

    • Steven Zacharius

      I have to say that this seems like an unusual problem or computer glitch. There would be no logical reason for Hachette to take the title down. It doesn’t cost them anything to keep the title up and available for sale. Good to hear you’re selling copies on your own though.
      Steven Zacharius
      Kensington Publishing Corp.

      • Yes, I’ve asked around and have heard of nothing else like this from Hachette or anybody else. It IS a bit troubling that they couldn’t or didn’t manage to just FIX It.

      • Max Alexander

        Yes, I think no doubt it was a glitch and not deliberate. I just don’t know if it also affected (infected?) other titles. Or maybe still is?

      • I think NOT affecting other titles. Certainly not many. I’ve asked around a bit. We’d hear about it.

      • Max Alexander

        That’s probably right, although I do wonder how many authors and agents routinely go on Amazon, Apple and BN to see if their ebooks are properly listed. If there was a systemwide glitch at Hachette, even for just a few months, it could have gone unnoticed by lots of parties but could still have contributed to the drop in their e-biz.

      • When sales drop to zero, people notice.

  • Robotech_Master

    Have you seen Kristine Kathryn Rusch’s latest post? She observes that many Amazon hardcovers (which are still on the standard wholesale model) are priced cheaper than the e-books, and posits that Amazon is intentionally trying to undercut the publishers’ agency e-book prices since they won’t come down to prices Amazon considers reasonable.

    http://kriswrites.com/2015/08/05/business-musings-price-wars-and-victims/

    • Amazon has lots of reasons to cut hardcover prices and I’m sure they’re aware of the opportunity to embarrass the publishers about their ebook prices. The fact that they steal a lot of business from brick-and-mortar stores is probably the biggest motivation.

    • Steven Zacharius

      I just read the article and it is not correct. The discount structure for printed books is not correct. Publishers are not selling to Amazon at those discounts nor do I know of any major publisher that is considering Amazon a “deep discount” account, which would therefore pay the author a lower royalty rate. Kensington is not an Agency publisher so I can’t accurately comment on Agency discounts but I do not believe that publishers get the lower receivable at prices above $9.99 like indie writers do. I may be wrong there but you’d need someone familiar with Agency pricing in traditional publishing to comment. Maybe Mike knows. I sure hope that this article doesn’t get reblogged and considered as gospel on other sites when it is not correct. Amazon has discounted bestselling hardcovers to near cost or below cost, in some cases, forever. Most accounts can’t afford to do the same thing because they have to show a profit. When Amazon does this, it’s great for the consumer. I myself have often bought hardcovers at these extremely low prices. However, it is not a sustainable business model to sell books at or below cost, just like subscription services are not a viable model for voracious readers because they would lose money on any reader who reads more than two books per month. In the interim they gain marketshare and loyal customers but others can’t afford to compete.

      • SLNH

        Is the pricing from Kensington that I see occasionally (and take full advantage of, thank you) your choice then or Amazon’s?

      • Steven Zacharius

        That’s actually a good question. Since we are on wholesale, it can be us doing the promotion or Amazon on their own. When they do it, we are paid based on the list price. When we do the discounts, we so it all accounts and are paid based on the discounted price.

      • SLNH

        Does Amazon do it on your pre-orders as well? I’ve picked up a few of my favorite series that way as well as filling out some of my backlists. It’s more than just a few of your catalog at a time. I thought you might be doing some price testing. HarperCollins seems to do it as well. The others not so much.

      • Steven Zacharius

        It could be either or but it’s generally us on discounting preorders. Test, test, test. Very important. Just having lower prices don’t necessarily equate to higher sales though. It has to be done properly. Such as the lowering the price on the first in the series or if we are trying to launch an author in a big way.

  • robertgottlieb

    The analysis of publishing has often relied on anecdotal information.

    In the case of Hacettte as an example the downturn in their business has much to do with the books they are choosing publish and the way they are publishing. They have not published anything recently that is a “tent pole” work.

    Pricing is a factor. As prices rise consumers will be impacted.

    Subscription services are a positive as long as each sale is calculated as a full retail sale of an eBook.

    Here is the crux of the problem publishers face. Amazon for many years paid full retail freight for each sale of an eBook while substantially discounting eBooks to consumers because they believed it would be an engine for the sale of Amazon’s Kindle. Kindle sales have slowed substantially because consumers want multi-functional devices. Additionally Wall Street expects Amazon to make a profit now as opposed to no profit and only gaining market share.

    The difference in eBook income to publishers under the old Amazon strategy will no longer be part of the equation for publishers to factor into their bottom line.

    What publishers must do is make up the difference by selling more books. Each eBook sale to the consumer represents a higher profit margin for the publishers as they factor in lower costs of production and distribution.

    The key for authors is working with companies that have assets, agencies that bring modern skill sets to the table and authors developing platforms upon which to work off of.

    Robert Gottlieb
    Chairman
    Trident Media Group, LLC
    Literary Agent
    http://www.tridentmediagroup.com
    Like us on Facebook and follow us on Twitter

    • The analysis of why it made sense for Amazon to discount Kindle books in the past and doesn’t really anymore is astute, although it wasn’t just about “devices”, it was about the Kindle ecosystem. Now that the expansion of ereading has slowed, people have already picked their ecosystem (or device). Not as much value in price competition anymore, as you say.

  • William Ash

    I think it might be good to clear up a few things that are a little misleading.

    First, Amazon is a publisher. A very large publisher.

    When some claim that an author turned down a large contract with the Big 5 to be “independent,” there needs to be some clarification. Barry Eisler turned down a large contract with the Big 5 for a bigger contract to be published by Amazon. He is not an independent author, he is being published by a very large publisher.

    Howey is published by one of the Big 5. He understands, and rightly so, that the large publishing houses have something to offer him. So authors are being savvy and using the system that best supports them. The Big 5 are still doing some things well.

    Self publishing is not new in the industry. It is just now that technology has enabled authors communication and distribution systems to be able to make it, to a certain extent, lucrative. That will naturally impact the makeup of the industry.

    With the exception of hugely successful authors, the income for most authors have been dropping, which is why authors are looking for revenue streams. Our economic system works against the small player. Reclaiming out of print works makes sense for a writer. For those starting out, the hurdles are even greater. And this is a real problem. The high-volume, low-price model just narrows the opportunity for authors.

    One thing should be clear, when a genre fiction author takes about authors and books, he is only talking about genre fiction authors and genre books–he has no idea about other authors and the area they publish in. These people are not spokespersons for all independent authors and should not be regarded as such.

    This is somewhat two conversations. The economics of industries and large companies, and the economics of authors. Those two dynamics are very different, even though they are intwined.

    • Steven Zacharius

      We should also clarify that Amazon is a digital publisher only and not really a traditional publisher.

      • Michelle Lovi

        Amazon has several traditional publishing imprints: https://www.apub.com — not just ebooks. Having said that, I’m sure you won’t see many books published under these imprints in bookstores.

      • Steven Zacharius

        The only place you’ll see them is in the author’s local area possibly unless a store orders from Ingram. If you publish with Amazon you are basically saying you only want to be published digitally.

  • Joseph Sanchez

    I have one minor quibble. In the last paragraph you state the no major author has gone solo yet. But isn’t Pottermore just that?Rowling took as much of her IP as she could and went off on her own. Even Amazon had to link out to Pottermore in order to sell digital copies of Harry Potter. Or am I misinformed about the business model behind Pottermore?

    • Pottermore really is NOT “just that”. Bloomsbury and Scholastic still sell the printed books. Because of her power, Rowling got the ability to do the ebook herself and she did it very smartly. But she is not committed to doing all her future publishing that way. There’s no ongoing program of books coming out, particularly Harry Potter books. At best, it is a total outlier.

      • Smart Debut Author
      • Eh. And, frankly, I don’t really care what you think.

      • Good response to Smart Debut Author: These words of wisdom apply:

        “A tiger doesn’t lose sleep over the opinion of sheep.”
        — Unknown wise person

        “My courage always rises at every attempt to intimidate me.”
        — Jane Austin

        “Great spirits have always encountered violent opposition from mediocre minds.”
        — Albert Einstein

  • I just want to say that I am in full agreement with your assessment of Harper Lee’s “Watchman,” Mike. I grew up in a weirdly racist part of America in the 1960s. Also want to thank you for the Ursula Le Guin post. Spot on.

    What I’m waiting for in the indie self-pub equation is a number of serious lit writers going it alone. The next Toni Morrison or Thomas Pynchon. (Actually, a whole group of them…).

  • Paul Cameron

    Once again Mike a great article on the REAL state of the publishing biz. I liked your United Artists/Authors thought – a surprise it has not happened yet.
    Paul

  • Bill Gleason

    While there is certainly a market ceiling for every product and service (including ebooks & eReaders) I strongly feel publishers have created a false ceiling in ebook usage. If I can buy a discounted PRINT edition of a best-seller for just over $ 19.00 (hard cover) why should the same book in “e” format cost me 1 penny less than $ 15? And paperbacks are priced the same as their ebook versions. Defensive pricing by publishers and gouging e-readers is the real cause of the market ceiling, not the market themselves. And are now (as reports of market slowdown come in…) are paradoxically congratulating themselves for being able to forecast the very future they created. It is a very good thing that publishers do not actually write books… there would be nothing to read.

    • It would definitely seem that choices in the market — lots of books available at cheaper prices than publisher-set agency prices — are part of what is causing the “slowdown” of sales. But there is also the fact that people newly loading an ereader (unique device or app) tend to buy a bunch of stuff faster than they’re reading it. At some point, most of us slow down to a pace no faster than we’re reading. And the number of newbies to ebooks is much fewer than it used to be for obvious reasons. In short, there are a combination of factors working. Amazon always wanted to embarrass the agency publishers by making their print books (where Amazon controls the selling price) highlight the high agency ebook prices. As you know (but didn’t say), often those pricing differentials are based on the retailer giving back some margin on the print that they don’t give back on the ebook.

  • PaulWilkinson

    By dumping retailers who failed to purchase $5K in 2014, and not telling them this would happen until mid July 2015, Ingram did the small indy publishers a huge disservice. As a retailer that fell only $400 short, I can still make purchases, but everything is now a short-discount item, effectively ending Ingram as a source for us.

  • Smart Debut Author