Joe Konrath

No, the Big Five are not a cartel and it really ignores reality to label them as one


One of the best-attended breakout sessions of Digital Book World 2015 was the discussion called “Should Amazon Be Constrained, and Can they Be?” which shared the very last slot on the two day program. That conversation was moderated by veteran New Yorker journalist Ken Auletta, and included Annie Lowrey of New York Magazine, thriller author Barry Eisler, and Barry Lynn of the New America Foundation.

It turns out that the two Barrys, who have pretty much diametrically opposed positions on Amazon (Lynn wants them investigated by the DoJ as a competition-stifling monopoly; Eisler casts them, for the most part, as the heroes of the book business’s digital transition) have a common position on the Big Five publishers. They refer to them as a “cartel”. Eisler is sneeringly dismissive of “New York”, which he refers to the way Republicans of the 1980s referred to “Moscow”, as an obvious pejorative. He appears befuddled by how anybody interested in the well-being of authors and the reading public could take the side of these publishers who maintain high prices for books, contract with authors to pay them smaller percentages of sales than Amazon does (either through Amazon’s own publishing operations or through their self-publishing options), and notoriously reject a very high percentage of the authors who come to them for deals.

Perhaps because the focus was Amazon, perhaps because Eisler was both emphatic and entertaining in his roasting of the publishing establishment, and perhaps because the facts to defend them are not well known, neither moderator Auletta nor panelist Lowrey challenged the big publisher baiting from Eisler with which Lynn mostly agreed.

It was just as well that I wasn’t on the panel. I am not certain that Amazon can or should be constrained, but I am damn sure that the Big Five publishers are not villains, and they are certainly not a cartel. They do seem to be extremely poor defenders of their own virtue but they are doing yeoman work maintaining the value in the old publishing model — for themselves and for authors — while adjusting to changes in their ecosystem that require that they develop strong B2C capabilities while maintaining their traditional B2B model, the death of which has been greatly exaggerated. If I’d been on that stage, the discussion of Amazon would have been diverted when the trashing of the big publishers began.

I took the step of confirming in an email exchange my recollection of the counts in Eisler’s very entertaining, persuasive, and unchallenged indictment of the big publishers.

1. Their basic contract terms are all the same, which it felt at the time he was suggesting demonstrated collusion, but which in our subsequent exchange he clarified he interprets as evidence of “asymmetrical market power and a lack of meaningful competition”;

2. They pay too low royalties on ebooks, which he also attributes to their “asymmetrical power” and “an implicit recognition that publishers come out ahead if they don’t compete on digital royalties”;

3. They only pay royalties twice a year, rather than more frequently or more promptly, which Eisler also attributes to a lack of competition;

4. The term of big publisher contracts is normally “life of copyright”, which Eisler calls “forever terms”, and;

5. They reject a lot of authors. Here Eisler clarifies that this is not an “indictment, just an axiom”. I agree when he applauds self-publishing for creating a better world where “readers have more to choose from”. But we quickly part company again because he characterizes self-publishing as freeing us from a world where “an incestuous cartel” makes “virtually all the decisions about what tiny fraction of books readers will every have a meaningful opportunity to learn of and read”.

In our exchange, Eisler expressed the belief that “the only reason people have been okay with this is that the Big Five are ‘my people'”. So they get a pass which he likens to what conservatives gave George Bush or liberals give Barack Obama. (In another point of disagreement between us, Eisler seems to find very little difference between the Democratic and Republican parties. I guess that is some people’s way of saying “nonpartisan”. What it says to me is “not discerning”.) And Eisler finds it “interesting” that the publishing revolution has “people decry” Amazon for “doing, or often only for potentially one day doing, the very things that are the definition of the Big Five.” (I have problems with this too, because none of the big publishers have a dominant market share selling books online and ebooks. In other words, Amazon and the publishers really aren’t comparable. Check back with me if any of the big publishers builds — or buys — a market-leading retailer.)

I’m going to plead “no contest” to the charge that the Big Five are “my people”, which I hope won’t discredit my arguments any more than the fact that Eisler is an Amazon-published author discredits his. But the cartoon picture of publishing in Eisler’s reviled “New York”, where some small group of extremely like-minded people apply their narrow views to effectively restrict what people read is a massive distortion of reality. Let me try to set the record straight about this world so many of my friends inhabit and with which I’ve been interacting for the better part of five decades.

First of all, the Big Five have plenty of competition: from each other, as well as from smaller niche publishers who may but be “big” but certainly aren’t “small”. (That is why the big ones so often buy the smaller ones — they add scale and simultaneously bring heterogeneous talent in-house). They are all quite aware of the authors housed elsewhere among them who might be wooable. In fact, since we have started doing our Logical Marketing work, we have done several jobs which were big author audits commissioned by publishers who wanted to steal the author, not by the one which presently has them signed. Eisler explicitly resisted accusing the publishers of “collusion”, but he does accuse them of “not competing” with each other. That is an accusation that is simply not supported by the facts. Nobody who has spent any time talking to people who work in big houses could possibly get the impression that they don’t compete.

(In fact, a friend of mine just moved from one big house to another. He is explicitly persona non grata at his prior employer. Now, in this case, I think the house that lost him is behaving childishly, but it certainly underscores the fact that they believe they are in intense competition and now this one-time colleague has gone over to “the other side”.)

But the big flaw in Eisler’s logic is the same one that dooms Hugh Howey’s “Author Earnings” project to irrelevance: the assumption that the per-copy royalty terms and rights splits are the most important element of publishing contracts. In fact, they’re not. Actually, those terms matter in 20 percent or fewer of the agented author contracts with the Big Five. Why? Because the agents get the publishers to pay advances that don’t earn out!

In fact, I have been told by three different big houses what they calculated the percentage of their revenues paid to authors amounted to. We could call that the true royalty rate. The three numbers were 36, 40, and 42 percent. That includes what they paid for sales of paperbacks, all of which carry “stipulated” royalties of well less than 10 percent of the cover price (and therefore below 20 percent of revenue).

Take that on board. Big publishers are paying 40 percent of their revenue to authors! That leaves them 60 percent to pay everything else: overheads, manufacturing, and profits! Compare that to the margin Amazon has even if they pay a 35 percent digital royalty, or compare it to what anybody else has in any other business after paying to acquire the raw material for what they sell. If there were really an “asymmetrical” power equation favoring publishers, you’d think they could acquire the author contracts for a bit less, wouldn’t you?

Not only were the authors’ collective royalty rates much higher than contracts stipulated, the authors got most of that money in advance, eliminating the authors’ risk. The only contracts on which the royalty terms matter are those that do earn out (and, arguably, those that are close). For all the others, most of Eisler’s list of complaints is irrelevant. And, for the record, I have never heard an author complain about that show of confidence, the work that follows in helping him or her reach an audience (which benefits all involved), nor the cash upfront.

More frequent accounting doesn’t matter if you aren’t owed any money. And if the solution to “forever” contracts were that you could buy your way out by paying back what you got in advances that your book didn’t “earn”, how many authors would do that?

But, in fact, agented authors don’t have forever contracts; agents have been negotiating performance clauses for publishers to keep rights for years. And, on top of that, no author in the US can possibly have a “forever” contract because the copyright law of 1978 requires the publisher to revert rights to the copyright holder after 35 years on request. Agents tell me this is has been resulting in additional “advances” for re-upped books for the past couple of years. Note: this is the law. No publisher disputes it. But the “forever contract” argument ignores it.

But, even beyond that, the negative characterization of Big Five New York publishing is terribly unfair.

First of all, the standard terms in big house contracts are almost always more generous than the terms in smaller publisher contracts. Few — if any — of the smaller ones pay a hardcover royalty as high as 15 percent of list. Although higher digital royalties can sometimes be found, usually those are from publishers who have little capacity to deliver print sales, so digital royalties is all you’re going to get. (That might be okay for a romance novel where a big majority of sales could be digital. It would be disaster for the author of just about anything except genre fiction.) And some smaller publishers actually pay less than 25 percent for digital royalties.

So the Big Five terms are generally better and they routinely pay agented authors advances that no other publisher would attempt to match.

But, beyond that, the idea that they are a “cartel” (a characterization enthusiastically seconded by Amazon critic Barry Lynn after it was introduced by Amazon supporter Eisler), is really preposterous. In fact, the Big Five are, to varying degrees, federations of imprints that even compete internally for books, sometimes to the extent that they will bid against each other when an agent conducts an auction. And it would appear from Eisler’s pre-Amazon publishing history that he himself has, in fact, been the beneficiary of bidding competition among major houses.

The internal-to-the-house competition occurs because of the way big publishers are organized. It has been understood for decades that some aspects of a publisher’s operation benefit from scale and size and other functions must remain small. In general, publishers deliver accounting, manufacturing, and sales as centralized functions and editorial acquisition and development, packaging and design, and marketing as localized capabilities housed within the imprints. The power of imprints, which are individual editorial units, varies, but it is generally the case that they have autonomy over their acquisitions and must “compete” internally for the centralized services.

The digital transition is definitely straining that organizational structure. Having the by-title P&L responsibilities distributed makes it more difficult for houses to organize cross-imprint initiatives for everything from direct sales to audience-centric (vertical- or subject-oriented) marketing. Having multiple imprints that all contain “general” lists is probably an anachronism in an age when we want brands (which imprints are) to make sense to consumers. Publishing imprint brands were always B2B, meant more to inform such trading partners as libraries and bookstores and reviewers, not the general public.

But the big houses reap large benefits from the power of their central services. They get rock-bottom prices for printing and lightning-fast service for reprints. They have daily contact with the biggest accounts, which matters for getting reorders onto suddenly-empty shelves or to execute a short-lived price promotion for an ebook. They have teams of people staying abreast of every promotional opportunity at every account or service like BookBub. They are increasingly developing teams and tools to keep their marketing metadata fresh and relevant, to monitor the online world for marketing opportunities, or to build or advise authors on creating effective web presences.

Although authors can certainly be found who felt they were signed and then ignored, most houses sweat all the details: editing the book, packaging it for sale, and following rigorous pre-publication routines to get endorsements. They all have special sales departments that are regularly working catalogs and specialty retailers for the books appropriate to their audiences. Smaller houses don’t have all these capabilities. To suggest to an author with no publishing background that s/he can do all this themselves, even with an unlimited budget to buy outside services, is really setting a novice up for frustration and failure, or at the very least near-certain dissatisfaction.

I asked Eisler about the competition among the big houses that doesn’t seem to enter his calculus. Here’s what he told me:

As for competition among the Big Five, I call it kabuki competition. Competition that results in decades of zero innovation and the same antediluvian lockstep contractual terms is by definition meaningless. It’s managed competition, agreed-upon competition. A lack of industry innovation is like the dog that didn’t bark: the absence is itself evidence, because in the presence of meaningful competitive pressure, industry players innovate. To argue otherwise, you’d have to argue there has never been room for real innovation in publishing practices. I think that would be a hard argument to make.

To put it another way, what the Big Five cooperate on is far more significant than what they compete on. By it’s [sic] nature, competition is more noticeable than cooperation, so a little bit of competition obscures a lot of cooperation.

Unfortunately, this doesn’t tell me much. I don’t know what the Big Five “cooperate” on. And though the argument that there “has never been room for real innovation in publishing practices” would, indeed, be nonsense, so is the claim that there has been no innovation. A “failure to innovate” doesn’t describe the last five years that I’ve been living through. All the Big Five houses have continuously reorganized, brought in outside-of-publishing digital talent at a high level to up their game, and introduced digital-first operations and contracts, all at the same time that they have had to manage down fixed investments in plant (warehouses) and change manufacturing-and-inventory processes to take advantage of improved digital printing capabilities.

It is now often forgotten that, while it is true that Amazon “made” the ebook market really happen, publishers had for a very long time before Kindle been creating editorially magnificent products and were far ahead of Amazon in seeking to publish in ebook formats, only partly because of better economics. (At the time all costs were additive and the market was tiny.) They published them because readers seemed to want them and big publishers, whatever their bashers might think, feel a responsibility to assure maximum distribution of a writer’s work.

In fact, the big houses all are comprised of competing imprints. Among them they employ hundreds of acquiring editors who are each trying to build their own successful lists (competing with each other). They are shamelessly commercial: a book with the potential to sell only a few thousand copies won’t get their attention. But, beyond that and those things that are far outside prevailing public morals and sensibilities, I can’t see any restrictions on what they’ll publish.

The Big Five houses have negotiated the digital transition that has occurred so far with startling success. The self-publishing business has grown, fueled by investment from Amazon and other big players, but big houses have hardly lost any authors. They are facing down dominant retailers in their two biggest channels — brick bookstores and online — and managing to maintain their margins and profitability. They are all moving on a variety of initiatives to build vertical (audience-centric) capabilities and extend their global marketing and sales reach.

But even if one assumes the “worst” of the big publishers, it is a total canard to say, as Eisler did to me, that “in the absence of meaningful competition, the Big Five has exercised incredible power over what books are published and what people are functionally permitted to read.” In fact, the argument that authors can reach their audiences successfully through self-publishing (which on other days, Eisler and his fellow musketeers Hugh Howey and Joe Konrath make with gusto) explicitly contradicts that contention. But so do Harry Potter, published by Scholastic, and “Fifty Shades of Gray”, picked up by Knopf after a self-published start, to name two sales phenomena of relatively recent times. There are a number of very capable publishers just a bit smaller than the Big Five (Houghton Mifflin Harcourt has the Lord of the Rings books, for example) and there are legions of specialty publishers who do books the Big Five would generally not even consider.

Sometimes the Big Five acquire those publishers to add diverse author and publishing talent to their rosters to compete in niche markets. Harpercollins’s acquisitions of Thomas Nelson and Harlequin fit that description. How much a big house can publish is one thing; what they can publish is also a function of the talent onboard and the audience development that has already taken place.

The Big Five are actually specialists of a different sort: they do the books with the biggest commercial potential. I’d argue that having five very large companies all capable of making a book a mammoth commercial success is a pretty big number, not a small one. If those companies were broken into more of their component parts and we had 15 or 25 large-ish publishers rather than five giant ones, it is not at all obvious that author advances or sales would be higher. There would probably be more manufacturing and sales staff per title (and less investment in tech to support either) than there is now, but those salaries would be subtractions from the company’s margins, and would therefore likely increase book prices. That’s not going to produce more value for either authors or readers. So I actually think author advances — which one must always remember is the metric that matters most in determining how well authors are getting paid — would be lower.

During our on-stage conversation at Digital Book World 2015, Brian Murray, the CEO of HarperCollins, took great pains to express his view that self-publishing capabilities are good for authors and for readers. On the same morning, Judith Curr, who is the President of S&S’s Atria imprint, explained how her house specifically targets successful indie authors to bring them in. Every big house has some respectful variation on those themes. The animus between big publishers and some components of the self-publishing community is really a one-way street. In a prior post of mine about the illogical publisher-bashing, the comment string taught me that the mostly rhetorical and histrionic arguments from the self-publishing side against the big houses constituted an emotional, not a rational, reaction.

A dispassionate examination of the facts and an understanding of how things really work make it clear that big publishers — both goaded and constrained by powerful agents — are very good for authors. That doesn’t mean self-publishing isn’t good for them too but, then, no big publisher I know is saying that it isn’t!

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The motivation of the publisher-bashing commentariat is what I cannot figure out


Once again this morning we wake up to a piece by David Streitfeld in The New York Times about Authors United and their ongoing effort to discredit Amazon. The message coming loud and clear from the legacy publishing establishment is that Amazon doesn’t appreciate, and perhaps doesn’t understand, the value that agents, publishers, and chain and independent bookstores bring to authors and readers and, by extension, to society as a whole. The challenge they face in this ongoing discussion is that many of those values — multiple (agent, publisher, bookseller) levels of curation, investments in quality editing, giving worthy authors the financing to do the creative work that must take place well before the IP will generate any revenue — are pretty esoteric and hard for most people to relate to. And they apply to a small and possibly diminishing number of writers.

The critical services publishers provide are marketing and distribution and those functions, as we all know, are undergoing change and revision as part of the digital disruption. And because they are rapidly changing, there is even greater-than-usual variability to how well these things are done across publishers and, within publishers, across their imprints and lists. Indeed, many authors at legacy houses are not enamored of their publishing experience, but the ones who are defending the publishers are also defending something of their own.

What is equally loud and clear from Amazon’s own statements and those of their supporters (including many authors who would be less well known and less well off today if Amazon hadn’t built the tools and market share they have over the past several years), is that the legacy industry doesn’t appreciate, and perhaps doesn’t understand, that commercial publishing was built on an ecosystem which is rapidly being dismantled and will ultimately be irrelevant. And they point out that what is replacing what came before delivers much lower-priced ebooks (print is another matter) to consumers and a substantially larger portion of the revenue to the authors than published contract splits would give them. (The fact is that those splits are irrelevant more than 80 percent of the time for the most commercial books because big agents get big authors advances larger than what they “earn”, but that’s another story.) The authors that work in the new paradigm also gain unprecedented control of their professional lives: publishing when they want to, pricing and changing prices as they want to, and playing with marketing opportunities (bundling print-and-digital, entering subscription services) or not, as they and they alone decide.

The fact that both options are commercially viable today means we might actually now be living in a golden moment for authors. Publishers are certainly aware that a brand-name author has a truly workable self-publishing option (although, frankly, the biggest surprise to me so far is that basically no major author has taken it, which is objective evidence that the execs running the big houses are navigating at least some aspects of the digital transition very well). And Amazon started paying authors 70% when publishers switched to agency and extracted 70% for themselves, a connection that seems not to have been made by much of the publisher-bashing commentariat.

While there is a symmetry to the two sides’ dismay about what is appreciated or understood, there is a massive asymmetry here that is hardly, if ever, mentioned. And that asymmetry makes the motivation of the legacy defenders very clear — they’re fighting for their lives — but actually suggests that the “side” fighting them (to the extent that it consists of indie authors) is at least sometimes simultaneously fighting against their own interests.

Those who feel well served on the legacy establishment side have much to fear from Amazon’s continued growth and success. The clear self-interest of all the publishers, agents, and those authors fortunate enough to be continuously “employed” through book contracts — which includes many, and certainly the most recognizable, of the authors in the Authors United effort — who are fighting for Hachette to “win” (which means maintaining the publisher’s share of the sales that flow through Amazon) in the current dispute is obvious, if perhaps insufficiently emphasized or acknowledged.

Cynicism about whether it is really the greater societal “goods” that get so much emphasis in their appeals that are really motivating these authors or whether they’re just protecting their own gravy train is not unreasonable.

Assuming that the publisher-bashing commentariat, who could also be characterized as the “pro-Amazon” advocates, has a healthy number of authors whose revenue is as largely dependent on Amazon as James Patterson’s is on Hachette, one can see the emotional motivations to fight for the home team could be similar. But the practical side of it is precisely opposite. It is obvious that Amazon getting stronger weakens Hachette’s (or HarperCollins’s or Bloomsbury’s or Cambridge University Press’s) ability to pay advances and publish more books, which directly affects various stakeholders and particularly steadily-working authors. But if Hachette “wins” — or if Amazon’s margins on transactions with publishers are not improved — how does this injure the self-publishing authors who are working successfully that way now? Simple logic says that Amazon will treat them best when the possibilities offered by publishers are the best.

Do they really think that Amazon will offer them more if Hachette is weaker? History and logic would suggest the opposite.

In other words, publisher-published authors definitely lose if Amazon gains strength in relation to them. But Amazon-published or KDP authors (and the publisher-bashing seems to come from both flavors) lose nothing if legacy publishing remains strong. They are, allegedly, fighting for the “good” of those authors who are signing “exploitive” publishing contracts, but their own interests are not served.

This asymmetry plays out in another way in the Lee Child exchange on the Konrath blog. Child says, again and again, that he thinks it makes complete sense for authors to exploit the opportunities in KDP if it looks like the best commercial choice for them. Maybe I’ve missed it (and I admit that I am disinclined to read most of the publisher-bashing posts and I certainly don’t make a habit of reading the bloggers who specialize in them), but the message I keep getting from Konrath, Eisler, and Howey is not “choose the course that is best for you based on the choices you have in front of you” but is more like “never sign one of those exploitive publishing contracts!” (Howey tells me he blogs about that “all the time” and cites this post of his. You can decide for yourself what you think, but it seems to me that he is saying “only sign with a publisher after you’ve built yourself up by self-publishing first”.)

The motivation of the authors who spend a great deal of time and energy bashing big publishers has puzzled me before. Because “price-shoppers” are a core audience for indie ebooks, indies actually got a shot in the arm when the publishers and Apple put in agency pricing, which in its original form prohibited even the retailer from taking a loss to bring branded ebook prices down.

There’s no way for an outsider to compile the data to prove this, but the chances are very good that indie author breakthroughs were easier to achieve during the years when the price gap between the majors and the indies was greatest. But most of the voices now demonizing Hachette (and the rest of what is being called the Big Five “cartel”) also bashed agency pricing. I see the benefit to Amazon in that position, but I don’t see how crippling agency pricing helped indie authors.

It is not only Judge Cote’s decision which has changed things since, but also the growing awareness of publishers about the value of temporary price drops, or “daily deals” and services — most prominently BookBub — to amplify the effect of promotional pricing in the marketplace. But how did ending agency pricing benefit independent authors?

Hugh Howey maintains that he is better off if his books and those from the big branded authors are priced the same. Hugh’s a smart guy so maybe I’m just not bright enough to get it, but that makes no sense to me. Except in the luxury goods market, there is virtually no situation where you gain advantage with a higher price than the alternative pitted against you. The bigger the saving you can offer, the more you’ll sell. In fact, Hugh makes that argument himself when he claims that lower ebook prices will raise industry revenue because it makes the ebooks more affordable. It’s fine to argue that the big publishers are dumb not to lower prices and sell more, but, even if it is true and especially if it is true and they pay attention and obey, how does that do him any good? (The answer from Hugh, by the way, is that we’re all better off if all prices are lower.)

I have been persuaded in Howey’s case that he personally rises above self-interest in his industry commentary. Hugh’s a nice guy, a smart guy, and a socially-conscious guy. He and I have had many candid and mutually respectful exchanges. And I read “Wool” and recruited him to speak at Digital Book World long before he was such a celebrity on the anti-publisher side. I believe him when he says “I’ve made more money than I ever imagined I would; I’m grateful; and one benefit of that is I don’t need to be motivated by money in my decisions.”

Howey is a true believer and a crusader who is sincerely convinced that the standard publisher terms for authors are unfair and need to change. He has occasionally expressed skepticism and concern about some of Amazon’s decisions and behavior, particularly around the complex compensation schemes for Kindle authors with their KOLL (lending library) and Kindle Unlimited (subscription) initiatives which buys him a certain amount of credibility. But I still can’t understand why he’s in KU but not Oyster and Scribd and 24Symbols, a set of decisions that strike me as being in Amazon’s commercial interest but not his own. (One possible explanation is that going into additional distributions creates more “work”, but I don’t take that too seriously. Hugh can afford to hire people to do the work, and he does all kinds of other things, like his AuthorEarnings blog, purely to add to industry knowledge. It would add a lot of useful insight if he were in the subscription services and reported on it.)

Perhaps the problem has to do with Amazon’s KDP rules, which apparently require “exclusivity” to be in KU. That is almost certainly not a requirement visited on publishers. If that’s what is stopping Howey, it would be nice if he would say so. Could Amazon be preventing its authors from pursuing revenue opportunities? If that’s true, wouldn’t that belong in any discussion of an author’s choices?

Another persistent Amazon advocate is author Barry Eisler, whom I first encountered during a brief moment when he was going to eschew taking advances and being published by somebody in favor of doing it on his own. (In the end, he became an Amazon-signed author.) When I posed the quandary that is the subject of this piece to Eisler, he referred me to this post of his which I don’t believe addresses the question. You can check out the link and decide for yourself.

Trying really hard to understand this and think imaginatively about it, I can only really come up with two “selfish motivations” that make sense. One — and I think this is the one that is claimed — is that the publisher-bashing is designed to improve life for the victimized authors who choose those deals. Indeed, the content of the anti-publisher rants often includes specific suggestions, or demands: raise the digital royalty, make shorter contracts, pay royalties more often, etc. that are, no doubt, author-friendly. But it does seem a bit weird for people committed to demonizing, weakening, and ridiculing the big publishers to be the ones to tell them what they could do to stay competitive. If publishers accepted the suggestions, of course, perhaps Amazon would be pushed to improve author terms too, but that seems a pretty indirect and distant reward to explain all the time and energy some people expend on this. (Or are they promising to sign with the big publishers if they follow these suggestions? I don’t think so!)

Another conceivable legitimate motivation, of course, is ego. These publisher-bashers have managed to “do it” without them, and continuing a high-profile running criticism of the establishment they outdid and outmaneuvered, particularly when you can get a lot of applause, might be alluring. But even that feels weak to me. If self-aggrandizement were what motivated these people, it would be even more impressive if their frame were “this is hard, but I managed to do it” whereas the message feels much more like “anybody can do this and you’re a bit of a dolt if you don’t.”

None of this constitutes enough of an explanation to satisfy me. I am either missing something in plain sight or I’m not in possession of all the facts. Perhaps the “explanation” that the published authors defending Hachette pursue their selfish interests but that the indie authors who bash Hachette and the others do it out of public-spiritedness, even if their own revenue suffers, does it for you even though it doesn’t for me.

Amazon has a strong case to make for itself. They really made online book retailing work through strategic brilliance and excellence of execution, without being first and against industry entities that should have had competitive advantage. They made ebooks into a thriving business for everybody pretty much singlehandedly, also without being first. They’re entitled to feel that the powerful position they’re in is because of the virtue of their model and execution, and they’re entitled to feel that a different publishing industry than the one they came into is the future they have to work towards, whether or not they want to spell out that vision in full and whether or not the incumbents “get it”.

If every argument being made by the publisher bashing commentariat were coming from Amazon, I’d understand the motivation and factor it in, as I do with Authors United or Hachette when they speak.

But I need to understand a rational motivation to put anybody’s advocacy in context. And it seems to me the very best thing for indie authors is for all the existing publishers to retain their capability to hire authors on that model as much as they can for as long as they can. That’s not the best thing for Amazon, but I really think it is the best thing for authors, and as true for those who do-it-themselves as for those who are published.

A senior Amazon executive, in a meeting we had two or three years ago, complimented me on the fact that I “understand entities acting in their own self-interest.” My response then was, and my feeling now is, “I’m mistrustful when they don’t.”

After I wrote this, I found that blogger Chuck Wendig had asked a similar question, with far less editorial speculation than appears here, in what appears to be an undated, but recent, post. He framed it differently than I do and I’m not sure what I read at his attempt at irony (“why are self-publishers trying to save the Big Five?”) was seen that way by his many respondents. My focus is narrower: this fight is being carried by a handful of very persistent and energetic critics, spending time and energy that one would think takes more motivation than is required simply to  “have an opinion” on this subject one way or the other. “What fuels all this energy and vitriol?” is a different question than “which side are you on in the dispute?” 

Early Bird pricing for Digital Book World 2015 is only open until next Monday. There will be lots of programming that will provide context and insight around all things Amazon. Michael Cader and I will have a half-hour wide-ranging discussion with Amazon’s Russ Grandinetti. Judith Curr, the CEO of Simon & Schuster’s Atria imprint, will present her view of  the “publisher-or-self-publishing” choice authors face. An expert on the school and college market, Matthew Greenfield of Rethink Education, will include an assessment of Amazon’s role in his review of what publishers need to know to compete for those sales as things change. Jonathan Nowell, the CEO of Nielsen Book, will use his company’s historical data to look at how the mix of what sells in print has changed since ebooks took off. Media veterans and authors Walter Isaacson and Ken Auletta will let us see the book business alongside other media undergoing technological change, which is necessary for any valid understanding of Amazon. We have a panel of publishers talking about selling direct. Oh, and of course, Founder/President Josh Schanker of BookBub will be on a panel on price promotion! There’s a lot more that is relevant, which you’ll find if you scan the entire program.

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When an author should self-publish and how that might change


There is a question that every agent and publisher is dealing with, because authors surely are. And that’s this: when should an author self- (or indie-) publish?

The answer is certainly not “never”, and if there is anybody left in a publishing house who thinks it is, they should think a little harder.

For a number of reasons, the belief here is that most of the time for most authors who can get a deal with an established and competent house, their best choice is to take it. It’s good to get an advance that is partially in your pocket before the manuscript is even finished and assured once it is. It’s good to have a team of capable professionals doing marketing work that authors are seldom equipped to do well themselves and which can be expensive to buy freelance, particularly if you don’t know how. It’s good to have a coordinated effort to sell print and ebooks, online and offline, and it’s good to have the supply chain ready for your book, with inventory in place where it can help stimulate sales, when you fire the starting gun for publicity and marketing. And it’s great to have an organization turning your present book into more dollars while you as an author focus on generating the next one, and start pocketing the next advance.

Publishers have heretofore really had only one model for working with authors. They acquire the rights, usually paying an advance-against-royalties, and own and control the entire process of publishing. It is generally understood that all efforts to make the book known can show benefits in all the commercial channels it exploits. So publishers have generally insisted on, and authors have generally accepted, controlling all the rights to a book when they pay that advance. The two pretty standard, time-honored exceptions have been cinematic (Hollywood) rights, which are rarely controlled by the publisher, and foreign territory and language rights, which are only sometimes controlled by the publisher.

Since publishers until very recently effectively monopolized the path to market, they could effectively make the rules about what an author could publish. That usually has meant no more than a book a year. It has also usually eliminated anything that isn’t “book-length” or that needed to reach the market very quickly upon completion of the writing. And in a practice that ultimately has had painful consequences for publishers, it meant backlists went out of circulation when a title wasn’t worth printing in bulk.

And these make up a very good starter list of when even an established author might want to consider an alternative to the conventional publishing arrangement. (It goes without saying that a fledgling author with a completed manuscript might choose self-publishing as a way to start their commercial career in preference to canvassing for an agent and then, if that quest is successful, waiting for the agent to find a publishing deal and the publisher to get the book out. Self-publishing could conceivably speed up the whole process of finding a publisher!)

Although most of the Sturm and Drang around how digital changes the publisher-author relationship have been about the royalty rate — publishers tend to want contracts that specify a royalty of 25 percent of revenue on ebook sales, various upstarts and digital-first publishers pay 50 percent and an author going directly to the retailers can get even more — that is, for most authors, less of a problem than it might first appear. For authors who don’t earn out advances, it isn’t a real number and the effective royalty is higher than what the contract says. And whatever the difference is in dollars, it doesn’t come without the requirement of work and sometimes costs — like a copy-editor or a cover designer or a marketing advisor — that would otherwise be borne by a publisher.

Where royalty rate is most consequential is for authors with a substantial reverted backlist. Since they begin their self-publishing efforts with equity built at least partly on a publisher’s back, they have a decided advantage over a fledgling self-publisher. Several authors have done very well for themselves building out from the platform of personal name recognition and titles somewhat established in the marketplace. The first of the obviously successful self-publishing authors was Joe Konrath several years ago and that’s how he started. Others have followed in his wake. And although the work required to self-publish and market yourself effectively is not trivial even if some readers know you and some of your work, it is also considerably more likely to result in a useful financial reward than trying to self-publish from a standing start. And certain chores, like editorial development and copy-editing, are eliminated by starting with already-published material.

In these cases, the loss of inventory-in-place at stores is less of a handicap to discovery than it would be for a new book and the additional margin on ebook sales could well leave the author making much more money, even without a promotional print sale.

But, for many authors, the frustration with publishing the conventional way might not be about money at all. Writers often write just because they have something to say, or a story to tell, and they want both to express it and have people read and react to it. That’s where the “shorter than a normal printed book” or “must get this published in weeks, if not days” barriers publishers have always presented become mere annoyances that anybody with a modicum of initiative would simply brush aside.

All of these motivations — monetizing previously dead backlist and getting to the public with material even a successful author would have difficulty getting a publisher to do — are behind the fact that the big literary agencies are staffing themselves to help authors navigate the digital world. In different ways, we have seen this emerge at Writers House, Trident, and Curtis Brown, among others. And another way this can work is demonstrated by the Waxman-Leavell Agency, which has spawned a new ebook publisher called Diversion. Diversion followed a path blazed more than a decade before when agent Richard Curtis started EReads (recently sold to Open Road) and lawyer-agent Arthur Klebanoff founded the still-operating Rosetta Books.

In other words, the gap between pure self-publishing and traditional publisher-author deals grew wide enough that the agents saw the need to fill it.

The strength of the traditional publishers and the traditional deals is directly related to the amount of the market that is served by inventory in stores. When that proportion was “nearly all”, the power allocation was “nearly all” to the traditional publishers. During the period when this was shifting quickly and the online share was rapidly depleting the in-store share — a few years ending a year or two ago — there was what felt like a rush to self-publishing combined with the growth of digital-first publishers, the reigning giant among them being Open Road.

The traditional publishers are starting digital-first imprints now that can do deals with different splits and handle both shorter books and faster publishing than the classic model. The upstarts like Open Road, Rosetta, and Diversion have built lists and businesses on the gap — in business jargon, “the delta” — between the traditional deal and pure self-publishing. The hunch here is that gap is going to get progressively smaller. The big guys will figure out commercial models to do shorter books and get to market faster. They’ll raise royalties (or unearned advances, which amounts to the same thing) to keep proven writers in the fold. Eventually, houses will give their acquisition editors the suite of deal templates they need to keep diminishing the incentive for an author to step away from the house to get something done.

And while there will always be an opportunity for a known author to make a bit more per copy if s/he takes on many of the functions of publishing her/himself, the amount of backlist available to be capitalized on in that way will shrink inexorably over time.

Self-publishing and new-style digital-first publishing can grow more to the extent that the book-in-store share of the market shrinks more. But while that’s happening, the big publishers are also adding to their capabilities: building their databases and understanding of individual consumers (something that all the big houses are doing and which the upstarts seem not to believe is happening, or at least not happening effectively), distributing and marketing with increasing effectiveness in offshore markets, and controlling more and more of the global delivery in all languages of the books in which they invest.

It will compound the pressure on the alternative players if Amazon continues to grow its global market share for ebooks. The bigger the percentage of the market that can be reached by self-publishers with one stop at Amazon, the less interest they’ll have in picking up smaller chunks of the market with additional deals and the more powerful will be any incentives Amazon cares to offer for making the title exclusive to them.

There has always been — and will always be — a great diversity of publishers. But the commercial concentration will continue to be in a small number of big English-language houses for many years to come even if the number of self-publishers appears to continue to grow.

We are really excited at the enthusiastic response we’ve been getting to our new Logical Marketing Agency business. If you have anything to do with marketing books (or brands) online, you’ll want to know about what we’re offering.

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Business models are changing; trial and error will ensue


The announcement late last week that Random House is starting three digital-first imprints was just the most recent example showing that publishers are exploring new business models. Just days earlier we got news of the partnership between Simon & Schuster and Author Solutions making S&S the third major publisher — preceded by Christian publishing titan Thomas Nelson and dominant romance publisher Harlequin — to put their name to an offering in the “author services” sector.

One might say that S&S is the first of the Big Six to take such a big step in this direction, except that Pearson, Penguin’s parent company, actually bought Author Solutions a couple of months ago and HarperCollins bought Thomas Nelson last year. So, in fact, three of the Big Six are now involved with author services and it is four out of six if you remember the other recent big news, that Penguin and Random House are merging. (And that’s not counting more modest initiatives like HarperCollins’s “Authonomy” or Penguin’s “Book Country”.)

I remember being on a panel in Canada a few years ago with Carolyn Pittis, the very smart digital pioneer from HarperCollins, who referred to the way most publishers did business — buying the right to exploit copyrights and then monetizing them — as one possible business model for a publisher’s organization. She explicitly mentioned “author services” as another one. That was before her company had launched Authonomy, a couple of years before “Book Country”. In other words, big publishers have been thinking for a while about “author-pays” models (just as the professional publishers have).

This really all follows the lead of Amazon, which has made a practice for years of selling a la carte every component of its own value chain. I was just reading an ebook called “The Amazon Economy” published by The Financial Times (an example of a non-book publisher adjusting its own business model to include being a book publisher, about which more on another day) that suggested that Amazon actually makes more money making its infrastructure available to others than it does using it to sell stuff.

In other words, there is potentially profit in deconstructing one’s value chain and selling access to it in pieces.

In a sense, publishers have known this for a long time. They’ve made the part of their operation that handles things after the books exist: warehousing, distribution, credit and collection, and sales available to other publishers for years. Some publishers, like Random House, have built distribution into a significant business with its own management structure within the corporation. Perseus, which as a publisher is itself a roll-up of a number of smaller houses, has built a distribution service that has more than 300 clients. Ingram, whose core wholesaling operation combined with the Lightning subsidiary they built in the 1990s to provide print-on-demand and later digital services, has a comparable publisher distribution offering.

But what Author Solutions — and a host of less robust (and largely cheaper) competitors — has shown is that there is also very widespread demand for the services that precede the actual delivery of books ready for sale.

I have no way except inference to know how Nelson and Harlequin are doing with their author services offering powered by Author Solutions, but the fact that Penguin parent Pearson bought them and S&S has now done this deal certainly suggests that ASI has a good story to tell. Of course, they are market leaders because they make money, and they make money by having good margins. And the prices announced for the services for the Archway initiative — ASI’s project with S&S — are higher than those services could be purchased for elsewhere. That doesn’t mean they won’t sell lots of aspiring authors on using them.

This is all very logical, but also very tricky. Most publishers — at least until very recently — would have thought about the services they sold in a distribution bundle as “commodities”, widely available and highly comparable. It is true that any of the major publishers, many minor ones, and distributors even beyond Ingram and Perseus can deliver the core capabilities: active accounts with all the major retailers, the ability to transact with them and collect the money, and placement of the messages of availability throughout the supply chain. Obviously, they all strive to do these things better than the next guy and to justify charging a point or two more because they’re better at it.

But further up the value chain the publishers’ pride and belief in a qualitative difference between what they have and what the next guy has is much greater. Publishers generally believe in their editors and marketers more than they believe in their sales forces and warehouses. (Buddies of mine in sales 20 years ago used to say, with conscious irony, that there were two kinds of books: editorial successes and sales and marketing failures.) They see their time and bandwidth as precious. They are far more reluctant to make that time available for rent and, in fact, it would appear that all three of the big publisher deals with Author Solutions rely on ASI to provide those capabilities. They’re not coming from the publishers themselves.

All of this sidesteps another important component of successful publishing: the coordination of all these activities. Successful publishing is the result of a lot of very small decisions: in editing, in presentation (both the book itself and the metadata, like catalog copy and press releases, that support it), and, increasingly, in the SEO tags and signals about “placement” that are included in the book’s digital file or marketing metadata. In the digital age, these things can change over time. Every day’s news — about UN votes or Pentagon sex scandals or anything else — could call for a change in the metadata around a book published a month or a year ago to make it more likely to be shown by the search engine queries being placed today.

(The FT ebook on Amazon, which I recommend, makes it clear that Amazon also sells “coordination” on the retail side as an extremely important, and apparently much-appreciated, value-add.)

Indeed, whether to put more effort into a book or stop paying attention to it is — or should be — based on an analysis of sales and search trends, as well as more old-style measures like the reviews it is getting.

In the old pre-internet days, publishing books was like launching rockets. Most crashed to the earth, some went into orbit. But the publisher’s efforts — most of the time — were limited to the launch. Then the marketing team could move on. This was not a way of doing business that was appealing to authors, but it was consistent with the realities of the marketplace. The big book chains wouldn’t keep a title in stock if its sales appeal wasn’t evident at the cash register within 90 days. Without copies of a title in the stores, there was no point to the publisher pushing it.

That’s something that has changed dramatically in the digital age. With some titles and genres achieving half their sales through ebooks or online bookselling, there is no longer a time limit on marketing effectiveness. In what is a subject we will certainly explore at a future conference, this must be causing traffic jams in publishers’ marketing departments. They can no longer be counting on the older titles making way and clearing marketers’ schedules to work on newer ones.

Open Road is a digital-only publisher that works primarily, but not exclusively, with backlist. (Recently they seem also to be specializing in books brought in from offshore publishers and in helping illustrated book publishers break into ebooks.) What impressed me when I met with them a year ago was that they didn’t distinguish between “frontlist” and “backlist”. They marketed to the calendar and the events and holidays everybody was thinking about, not to the newness of their books. I believe this actually brought increased relevance to their marketing. Obviously, this was also making a virtue of necessity because they didn’t have a flow of “new” books to tout. But it also capitalized on the new situation: that the books don’t suddenly become largely unavailable because retailers throw them off the shelves.

A by-product of the extended sales life of books is that it makes it easier for publishers to cluster them for marketing purposes. Now four books on a similar topic can be pushed in unison, even if they were published months or even years apart. Open Road has made ample use of that reality.

These are challenges and opportunities that compel publishers to rethink the organization of their marketing departments and the deployment of their marketing resources. It is an opportunity for a publisher to extend its value to an author if it pushes an author’s book six months or a year later when a related title hits the marketplace or a news event makes an older book newly relevant. Since authors are increasingly able to do some useful things on their own behalf to capitalize on these opportunities, they will be increasingly impatient with publishers that quit on their books too soon..

There are things the author just can’t do. They can’t adjust the book’s metadata and add tags. They can’t push for or buy promotional screen placement from the retailers when somebody else’s new book makes them suddenly relevant again. Authors also don’t have the benefit of arriving at marketing best practices and rules of thumb by examining performance data across various groupings of titles: large title sets, categorized sets, comparable-selling sets, and others. They’re counting on the publishers to do that.

The publisher’s role in coordinating and managing a myriad of details has always been one of its principal value-adds and it can be even more so in the digital age. But only if they actually do it, and there’s precious little indication that they intend to do it for the titles they’re being paid for.

Jane Friedman (the blogger and expert advisor to writers, not the CEO of Open Road) points out that her alma mater, Writers Digest, and Hay House — the vertical publisher in mind-body-spirit that has done so well interacting with their reading audience — also did ASI deals. She points out that the big successes we all know about among self-published authors — John Locke, Joe Konrath, and Amanda Hocking being the headline names — didn’t go through ASI. Jane takes issue with the ASI promise to help publishers “monetize unpublished manuscripts”. It’s hard to dispute that publishers who are primarily in business to pay authors to publish them could be walking a fine line having a business model right alongside that charges authors for services that are unlikely to lead to them making money.

On the other hand, Random House has made an emphatic statement about the value legitimate publishers can bring with the success of “Fifty Shades of Gray”, originally a self-published story and now, very much thanks to the biggest publisher, the biggest commercial success of all time. No self-published book has come close and it will be a very long time before one does. I see their digital-first imprints (which they are not the first to launch, but seem to be the first promoting aggressively to the self-publishing diaspora) as a step toward a different business model that recognizes the new commercial realities of publishing. It enables lower-investment publishing — the authors in these digital-first imprints are unlikely to receive advances at levels commensurate with most Random House books — and perhaps they’ll get less editing attention too. Marketing is simplified by the fact that print isn’t involved and therefore retail stores aren’t either. So the threshold for profitability is much lower and, as we have learned, they can still decide to give any book in these new imprints the “full treatment” — print copies stacked up in stores — later on if they want to.

It is too early to judge whether the tie-up between publishing houses and author services offers will produce value on all sides. All these publishers now have or will have, at the very least, a stable of self-published authors that are contributing margin to them and in which they have a financial stake (even if they didn’t have to invest to get it). There is definitely inherent conflict between trying to make the most money one can from an author hiring publishing services and recruiting authors and books that will be commercially successful.

But publishers still know how to make books with commercial potential sell better than mere civilians do. Whether ASI and their partner publishers can find the formula that makes the promise inherent in a publisher’s brand productive for authors that hire services under it is a question that will be answered in the months to come.

Having more companies trying to figure it out certainly improves the odds that somebody will (and ASI has every interest in spreading best practices as they emerge). And more and more cheaper services for those aspects of self-publishing that really are commodities means that ASI and all its partners are going to have to demonstrate convincingly that they can add effective marketing to their offering mix if they’re going to be around ten years from now.

Michael Cader and I are doing our first Authors Launch show, in partnership with our friends at Digital Book World, on Friday, January 18, the day after the 2-day DBW 2013 will end. The question of where the line gets drawn between publisher efforts and author efforts is a major topic. We have a great roster of experts to serve as faculty: the aforementioned Jane Friedman, along with Porter Anderson, Jason Allen Ashlock, Dan Blank, ex-Random House marketer Pete McCarthy, co-authors Randy Susan Meyers and M.J. Rose, Meryl Moss, and David Wilk. Among the publishers speaking will be Matt Baldacci of Macmillan, Rachel Chou of Open Road, Rick Joyce of Perseus, and Matt Schwartz of Random House. This is a conference really intended for published authors rather than self-published, but it will teach skills and insights for any author willing to invest time and effort to sell their book.

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Amazon as a threat to steal big titles from big publishers is still a ways off


When Larry Kirshbaum, the longtime head of TimeWarner Publishing (purchased right after he left in 2007 by Hachette and now the company called Hachette Book Group USA) joined Amazon many people thought — I among them — that Amazon was about to become a threat to take big titles away from the major publishers and, by doing so, also put pressure on competing retailers who would either have to buy from Amazon or do without major books.

An article last week in The Wall Street Journal spells out just how futile have been Amazon’s efforts so far to upend the Big Six. Their two biggest headline acquisitions — a celebrity bio from actress Penny Marshall and the latest from bestselling non-fiction writer Tim Ferriss — are achieving paltry sales outside Amazon as measured by BookScan.

Michael Cader does some deeper digging to suggest that the high-profile books are not the place to be looking for the successes in Amazon’s publishing. They’re publishing lots of genre fiction and buying up some backlists.

Yet, I can’t believe that the high-profile output from the New York office meets Amazon’s original expectations or Kirshbaum’s. If they miscalculated the impact they could make, maybe it was for the same reason I did. An abrupt slowdown in ebook switchover took hold at about the same moment the Kirshbaum era at Amazon began. Big publishers are reporting that ebook sales are now approaching 30% of their revenue, which is about a 50% increase from what they said last year. That follows several years when ebook uptake increased by 100% or more.

(It is important to note here that the reported figures are a percentage of all revenue. Many titles are not “ebookable”: they’re illustrated books or little kids’ books and, if they have ebook equivalents at all, they don’t sell nearly that percentage. So the digital sales of immersive reading would constitute a somewhat higher percentage than that.)

Amazon as a publisher has advantages and disadvantages against more traditional competitors. They have the advantages of direct customer contact, which pay off in two ways. They can send you an email pitching a book as the logical next one to the one you just read; general publishers can’t do that. And, as the publisher, they have more margin to either pay the author more or charge the customer less, which, either way, increases an author’s revenue through online channels.

But their disadvantages are also significant. For most books, and particularly non-fiction (as both of which the high-profile releases the Wall Street Journal wrote about are), more than half of the sales still come from brick-and-mortar stores. Despite their attempt to secure that exposure by a licensing deal with Houghton Harcourt, the resistance to Amazon from Barnes & Noble and many independent stores and mass merchants has curtailed that distribution.

Apparently Amazon led at least some people to believe with their success on the recent Barry Eisler book that they could sell more copies through their own channels than big publishers could through the entire network. The claim that they had outsold all his previous NY Times bestsellers was made to literary agents in a letter that also cited other great successes, all with genre fiction. Without questioning anybody’s numbers, I was skeptical about the significance of the relative Eisler sales because, it seemed to me, whatever they could do for Eisler (whom they published) they could do for any other book they wanted to, whether they published it or not. So it seems illogical to me that they would somehow magically sell more than the whole trade combined on a book because they were publishing it.  It seems apparent that Amazon isn’t succeeding at persuading agents that the Eisler case, even if it is as portrayed, is replicable.

I saw reports of bitter comments from Tim Ferriss, complaining about Barnes & Noble’s apparently-effective boycott of their competitor’s publishing program. Maybe he would be doing that even if Amazon is selling more than his conventional publishers did before. But I doubt it.

This is not a final answer. Amazon’s share of the trade market — ebooks and online print combined — is still growing and shows no sign of abating. Most publishers would still report that Amazon is their fastest-growing account.

But shelf space erosion — a metric with no reliable index anywhere — seems to have slowed down. That means that, at the moment, we have a more stable book trade than we’ve had for at least five years. It is smaller, but it is more stable. In the US at least, our market of three big ebook players (Amazon, B&N, Apple) and two sturdy and persistent upstarts (Kobo and Google) is still welcoming some new entrants. Zola eBooks, promising some interesting merchandising innovations, and Bookish — the repeatedly postponed effort from three major publishers — are expected to join the fray soon. Sony and Copia and Blio are still trying to gain traction, but they’re also still here.

Amazon definitely has the most advantages. Their Kindle ecosystem is still the best-functioning, deepest in title selection, and benefits in numerous ways from having more readers and selling more ebooks (and books, for that matter) than anybody else. The growth in their genre title base that Cader points out increases their market share of dedicated genre readers, who read other things too. They have the most self-published titles and the best ecosystem for self-published authors to make money. And the big title growth enables them to build subscription or subscription-like capabilities like KOLL (Kindle Owners Lending Library) which do take customers out of the game for everybody else.

As their share of the market grows — as long as it continues to grow — their argument to authors to cast their lot with them gets stronger.

But, for now, it would seem that B&N definitely did the right thing for their own good by boycotting Amazon’s titles. And, for now, it would seem that most of the authors Amazon will get for their general list will be those who are annoyed at the publishing establishment like Konrath and Eisler or curious about working with a tech-oriented publisher like Ferriss.

Authors who want bookstore exposure or to maximize their total sales across the US bookselling universe will remain hard to persuade for the forseeable future. But probably a little less so with each passing day.

I note with sadness the passing of Senator George McGovern. I am proud to have worked on all three of his presidential campaigns: 1968 at the Democratic National Convention working for Pierre Salinger, two years on the 1972 campaign, and a weekend in New Hampshire trying to light a fire in 1984.

What motivated us to join Senator McGovern was primarily his opposition to America’s involvement in Vietnam, but his personal and political appeal went far beyond that. He was extraordinarily decent and straightforward. In my stretch of two years working for him in the early 70s, it was remarkable how consistently he took issue positions we young idealists could be proud of. A poorly-vetted choice for vice-president will always be part of the explanation for why he was crushed, but my friend Professor Wade — one of McGovern’s top strategists — told me years ago that it was the assassination attempt that crippled George Wallace that actually was responsible for the defeat. 

Nixon had won the 1968 election with a little over 40% of the vote. Wallace had taken a share in the high teens. The McGovern planning from the beginning assumed a similar race in 1972. When Wallace was eliminated by the assassination attempt, Nixon’s “Southern Strategy” made him the heir to the Wallace vote and a landslide victory.

In the end, of course, it was Nixon’s vice-president, Spiro Agnew, who went to jail and his administration that ended in disgrace. McGovern was always gracious and never bitterBut, as a country, we’ve never spent enough time contemplating how different things could have been if Bobby Kennedy hadn’t been shot in 1968 or if McGovern had won in 1972.

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Amazon’s growth and its lengthening shadow


The DoJ lawsuit and settlement, Amazon’s next giant step of growth in sales,  the Business Week article on Amazon pushing publishers to allow them to print slow-movers on demand, and then this morning’s New York Times story about a book driven down to a price of zero on Amazon (presumably by an algorithm), combine to raise again the questions of whether the traditional legacy publishing model is worth saving and whether it can be saved.

It really isn’t hard to appreciate the modernist, digitalist, Amazonian point of view. Trade publishing has historically been one of the least efficient businesses in existence. Most books don’t sell well; most authors are frustrated; and getting into the game requires jumping numerous hurdles to even get to the starting line.

The ebook model and online print distribution really are much more efficient than store distribution of printed books has been in reaching the part of the market that buys online. Returns really can be eliminated. In many cases, perhaps most cases, you really can just print the book when it is ordered, not on a wing and a prayer weeks or months before it is ordered.

If you start from the point that the manuscript is completed, it is easy to see why many aspiring authors would choose self-publishing, primarly through Amazon (because they reach the most customers), rather than take weeks or months to find an agent who will take weeks or months to put a proposal in shape to then take weeks or months to find a publisher. And the publisher will then take months, at least, to put a book into distribution. And that’s if you succeed. Most attempts even to secure an agent — just the first step — fail.

Failures overwhelmingly outnumber successes at every step. But, of course, they do in self-publishing as well.

You look at what the publisher will contribute, which is often described as making the book better and more saleable by copy-editing, putting on a decent cover, listing it for sale in places the industry and public can find it, and — for a while longer — putting print copies into stores. All of those things can be purchased, so theoretically you don’t have to give them up just because you self-publish, if you think they’re worth paying for.

And, of course, the author who goes the self-publishing route keeps a lot more of the consumer dollar than the one going through a publisher.

If you’ve got the manuscript in hand and you have a choice between going that route and having books to show your friends within days at just about no cost, why wouldn’t you seriously consider it? Why wouldn’t you do it? It seems like a no-brainer. That explains the conviction with which writers who have succeeded through this means, even those who didn’t quite do it themselves but instead just agreed to be published by Amazon, are so unsympathetic to the concern that Amazon’s business practices could cripple the legacy publishing business.

Inefficiency gets its just desserts.

But it isn’t yet that simple and it may never be that simple.

There are (at least) four serious qualifiers to the logic advocating self- or Amazon-centric-publishing. One is in these words: “if you start from the point that the manuscript is completed.” A second is the assumption, never explicitly stated but tacit in the recurring arguments from Barry Eisler and Joe Konrath (who are the proud poster boys for Amazon-instead-of-a-publisher), that the print-in-store component already doesn’t matter.

Third is that legacy publishing delivers an integrated business model that bundles all the services an author needs together and also includes a shift in risk from the author to the publisher. Self-publishing shifts the risk back.

And fourth, and not trivial, is that legacy publishers sell ebooks for higher prices than the self-published authors do. Expressing things in percentages might elide realities in dollars.

Requiring the whole manuscript before you start doesn’t change things for most unpublished novelists because most publishers won’t buy a first novel on an outline. And it might change little for the most established novelists because they’ll presumably make money on whatever they do, so they just keep writing.

But most other books published by the existing publishing establishment are financed from a point long before completion, unlike the situation for every self-published author. And that financing model is a risk-shifter that any author who can get it should be reluctant to relinquish.

(Yes, I know that Amazon is now publishing books and paying advances, including a substantial one to Eisler. But, remember, when they do that the royalty differential isn’t four times the legacy publisher ebook royalty rate [70% to 17.5%], it’s double, because Amazon pays 35% to the authors they sign, not 70% as they do for self-published. And there’s still no store distribution, which reduces revenue and marketing. The Amazon retail price will be lower. That may drive up units, but it also confounds the straight percentage comparison of the author’s take. A meaningful comparison between the marketing Amazon can do that nobody else can to the publisher-like marketing Amazon might do but hasn’t demonstrated yet is simply not possible until they publish a lot more books.)

Publishers actually weaken their own case when they articulate their value as “curators”. That makes it sound like they’re squeezing our cantaloupes for us. Who needs that, right? We can be our own judge of what’s ripe and what’s not!

They’re doing much more than that. Publishers aren’t squeezing the cantaloupes. They’re deciding which cantaloupes to invest in before the seeds are in the ground. They’re deciding based on the farmer and the climate and the soil and the weather forecast which cantaloupe growers get to participate in the market. And, if they don’t invest, those cantaloupes don’t get grown and they don’t get squeezed by anybody.

And although I’ve been as Cassandra-like as anyone fearing the creeping trivialization of the bookstore channel, it is definitely not dead yet. In-store sales of printed books still constitute most of the sales for most of them (although, admittedly perhaps less than half for a lot of fiction.) And experts like Peter Hildick-Smith of Codex believe that in-store discovery is still a critical driver of online sales, print and digital.

There is no doubt that a lot of what legacy publishing spends its money on will no longer be necessary in a few years. If the stores are mostly gone, or aren’t critical to discovery or sales, then printing expertise, warehouse and distribution capabilities, and all the investments and workflows required to maintain them won’t be necessary either. However, that day certainly hasn’t come yet (even if the digerati think it has!)

But, even more important, and so frequently elided in the discussions of the value of legacy publishing and whether it is worth an effort to preserve it, are the investments publishers make in books that would simply not be written if they didn’t.

If legacy publishing had been run by modern business principles, much would have changed years ago. For example, the trade would get smaller discounts on the biggest titles. After all, if part of the margin given to retailers is for “marketing” (i.e. “discovery”), they need a lot less of it for Harry Potter or the latest Patterson than they do for a first novel. With today’s computers and business acumen to work with, it would seem silly to offer the same margin across all titles on a list, when some clearly need less than others to get placed and sold.

It is partly the standard treatment across all books that is coming back to bite publishers now. Amazon doesn’t discount all titles equally; nor does any other bookseller. They give back the margin on those where it benefits them to do that, selectively. The publishers could have pre-empted that opportunity, or at least made it much more difficult, by varying the margin they offered by the sales appeal of the book. They adjust margins on the royalty side of the equation by paying advances that don’t earn out to big established names, effectively delivering them a higher percentage of the take. But they give the same margin on every title, regardless of cost or appeal, to the trade.

Sharing media attenton with the accounts of Amazon and DoJ recently have been stories about Robert Caro, who wrote The Power Broker about master builder Robert Moses 40 years ago and leveraged that success into a life’s work series of books about Lyndon Johnson. Caro was working on negative cash flow — selling his house and with his family being fed on his wife’s paycheck — until Knopf took over supporting him. If they’re printing 300,000 copies of his next book (which they say they are), that’s probably five million in billing on the first printing, plus ebook revenue, in the immediate offing. They’ll get their money back.

But they had to decide to risk it. Publishers do that every day. Sometimes they don’t get that money back.

Yes, there is Kickstarter as the new spec funding source. But how many publishers would fund projects if they couldn’t manage the creative process or understand and control the marketing and distribution that would take place when the project is finished? Even “finished’ is a complicated concept in the world of publishing. It brings to mind the saying I heard once, but can’t attribute, that “works of art are never completed; they are only abandoned.” Deciding when a manuscript is “ready for publication” is a judgment call that is essentially commercial: when will more work no longer lead to more sales?

Since Kickstarter funders won’t have that kind of control, believers in a rational market would also have to believe that projects that many publishers would fund won’t attract the investment they require through Kickstarter. Perhaps a private equity fund tied to authors would work better, but that would require margins to pay authors and acquiring editors and repay the investors. Even then, you wouldn’t necessarily have the integration of services combined with assumption of risk that makes the current system, which is so beneficial to so many authors, also work for the publisher/investor.

Publishers may never have unbundled the big books from the others in how they treat them commercially, but an Amazon-led marketplace is now doing that for them. The less help an author needs from a publisher, the more appealing the fatter margins of self-publishing look. The less value there is in the retail channel for print, the less lost by giving up the retail distribution in favor of an online-only sales outlet.

Despite that, few big authors  have gone for Amazon’s money. Tell the truth: wouldn’t you have expected that with Amazon’s power, deep pockets, and an experienced book acquirer at the helm, they’d have attracted some bigger “gets” by now? I’ll admit that I did.

Besides delivering widespread print distribution and funding projects speculatively within a system that bundles services and accepts risk, there is one other thing that separates publishers from Amazon as a route to the marketplace for authors. It might be the most important thing.

Amazon ultimately only cares about sales made through Amazon and, if they were candid, would admit that any sale not made through them or an affiliate is a target for future growth. Publishers want as diverse a distribution network as possible; it maximizes sales and exposure for the books they’re charged with and, not at all incidentally, gives them a reason to exist.

This difference in perspective has big implications. USA Today, for example, considers the breadth of a title’s sales across retailers as a component of its bestseller calculations. A book that sells through only one retailer (and that would mean Amazon) doesn’t get the same consideration as one that sells the same number in multiple channels. Similarly, how would the New York Times feel about reviewing a book that isn’t available in stores or in all ebook formats? They might legitimately balk at reviewing something that many, if not most, of its readers won’t encounter commercially.

The divergence in point-of-view is illustrated in the conflict over print-on-demand that is discussed in the WSJ piece. From where Amazon sits, it is simply more efficient to print what they need of slow-movers when they need them. They can probably make an offer to publishers that looks “margin-neutral” or even more favorable. But publishers know they have to print for everybody else, and taking the Amazon demand out of the print equation — particularly for slow-movers — would really disrupt the overall economics for any title that weren’t already printing on demand. These overall marketplace economics aren’t Amazon’s concern.

So as Amazon continues, as any commercial entity would, to set prices, seek margins, and adjust practices and workflows in ways that work for its own business, it drives the industry to “efficiencies” that take the margin that finances all publishing activities — those that will fade away like print distribution and those that are indispensible like funding and developing new projects — out of the commercial equation.

That can only really improve things for authors that don’t need or want those functions. Since the most reliable big authors with savvy and competent agents are already getting 60 to 80 percent of the revenue their books produce guaranteed to them, it is not clear that even the notionally higher ebook royalties deliver a better deal than the publishers do now for that group. But  the scads of authors who can’t get, or don’t think it is worth the effort to find, an advance-against-royalties publishing deal will be happy with Amazon. Indeed, they’re probably happy now.

As bookstores continue to diminish, though, it will get harder for the publishers to continue to compete for the big authors, particularly if Amazon is the one picking up the share the bookstores relinquish. That could change the status quo and Amazon might start to get big authors then. If and when enough of the big authors move on, the legacy model will break and we’ll be in a different world.

When that day comes, I’m sure Amazon will recognize it and change their margins and practices to suit. Perhaps the Department of Justice will want to reconsider its thinking then as well.

Remember, the DoJ wants to hear from us about the settlement unfortunately (in my opinion) agreed to by three major publishers. We still have several weeks to get those in. I hope this post contains useful thoughts for some people formulating their response, which I am still doing. Whenever you’re ready, send your letter to:

John Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, NW, Suite 4000, Washington, DC 20530

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True “do-it-yourself” publishing success stories will probably become rare


Getting ready for our eBooks for Everyone Else conferences, I discovered an author named Bob Mayer who impressed me with his self-publishing zeal and apparent success. Bob has written lots of military fiction, science fiction, even a romance novel, and some non-fiction: dozens of books over the years for major publishers. Most of it was mass-market, most of it reverted relatively easily and Bob systematically secured those rights reversions for years.

He caught my attention with the bare bones of his story. He started putting his work up as ebooks in January, when he sold a few hundred books. By July he had more than 40 titles available and was selling a total of over 100,000 units a month. I had long wanted to put an author before my conference audiences who had achieved self-publishing success to talk about how s/he’d done it.

Joe Konrath and, more recently, John Locke had politely turned me down. I booked a 1-on-1 conversation with Barry Eisler at our Publishers Launch Conference at BEA right after he announced his decision to turn down a 6-figure advance to self-publish. Alas (for this objective of mine), the morning of the event Barry signed a contract with Amazon to do his next book with them. Although he has self-published some short fiction. Eisler’s story became that he is an Amazon-published author, not a self-published author. That’s a good story and we had a good session on-stage that the conference audience benefited from, but it was not a a self-publishing report from an author who truly did it on his or her own.

(Eisler’s wife, the literary agent Laura Rennert, reported at eBEE in San Francisco that Amazon is succeeding very well with Eisler’s current book, The Detachment — which I read and enjoyed — and that his substantial advance has already been earned out.)

So I was pleased to learn with a phone call that, not only was Mayer an enagaging talker, but that he was willing to make the journey from his home in Seattle to San Francisco to discuss his success with a conference audience.

But what became clear when I had a further conversation with Mayer the day before our conference, buttressed by what was said by many other participants at the event, is that the Hocking-Konrath-Locke story — an author managing all the pieces of their publishing program and and achieving a totally private success — is a Dodo bird. Unless we consolidate down to an only-Amazon ebook world, which, despite Amazon’s best efforts, doesn’t seem likely anytime soon but would undoubtedly create a whole new rule book if it ever arrived, the work and expertise required for successful publishing will lead inexorably to one of two results.

Either an author will get help to publish their own material — a distributor like Constellation or Ingram or a publisher — or they’ll find what they built to serve themselves would be better and less-expensively maintained with the work of additional authors to go along with their own. There’s enough work and expertise involved in what had first seemed to many such a simple process that it requires building a bit of a machine to do it. And once a machine is built, it is just wasteful to leave it idling between the works generated by any one writer.

This point was made by Mayer when he told me that he is now recruiting other authors to publish. He started out by finding a partner to handle the technology component and mechanics of his efforts. In his already-substantial experience in less than a year, he has learned that proper editing is essential, as are eye-catching covers, as is the right metadata. He told me and our audience that a single complaint from a reader to Amazon about a typo in one’s book can result in the ebook being taken down for a required correction. He has learned, as others have, that maximizing revenue requires changing and re-changing your prices, which is more work.

Bob says he has even fixed plot errors that were pointed out by Kindle readers.

(Another view of this aggressiveness to satisfy customers was offered to me by a Big Six executive a few months ago when he related the story of a book published by his house that had been taken down. There the “culprit” was vernacular language that was interpreted by a reader as poorly copy-edited grammar. There was nothing wrong with the ebook, but one reader thinking there was resulted in a takedown that cost everybody sales for several days until the ebook could be put back up!)

Bob says books can disappear from major retail sites for no apparent reason as well. He says that anybody who believes that ebook publishing is like “sending the book to a printer, after which you can forget about working on it” is mistaken.

And he believes that any author whose work is good and wants to take a self-publishing route would be wise to cede a percentage of sales to him, or somebody else, who has learned what he has and equipped themselves to prepare books properly for sale and manage them after they’re launched.

This is establishing ever so much more clearly that publishers are right when they say there’s a role for them in an ebook world. Amazon itself makes that clear by the difference in the deals it offers self-published authors and authors it signs for its imprints. Although authors will continue to self-publish, the debate that matters in the future is what the basket of services will be that authors require and what will be the right price for them. The lines are drawn for that discussion and the opinions are really all over the lot.

There are ebook publishers — the granddaddies eReads and Rosetta, Scott Waxman’s Diversion Books, and the giant in the space: Open Road — who are saying the “right” ebook division between author and publisher is 50-50. (We should make clear that this is the division of the revenue obtained from the retailer or “sales agent”, which would normally be 65-70% of the selling price or 50% of a publishers suggested list which could be discounted, depending on what kind of sales arrangement is in place.) Smashwords, an entirely automated service, and BookMasters, a service provider, provide distribution for 15% of the take. Two agents speaking on our panel in San Francisco, Deidre Knight and Laura Rennert, are capping their agency’s take at 15% of the revenue as well, as they walk the ethical line that is perceived by some to require that they make no more money self-publishing an author than they would selling the rights to a publisher.

Then there are many other service offerings with prices that fall in between 15% and 50%.

Amazon’s rules offer some insight on this. If you work with them through their KDP service, you get 70% (if you set your price within their accepted bands). But, as Mayer and others at our conference made clear, through KDP you can’t even purchase any special merchandising or promotion. But if you are published by Amazon’s imprints, the take is cut in half and the author gets 35% of retail, but you get lots of promotion by positioning. (Deals are private, and the details of Eisler’s deal have not been revealed, but the presumption would be that he earned out his rumored six-figure advance from Amazon at the 35% rate.) Thirty-five percent matches what a 50-50 publisher could deliver if they had an agency-like deal with the retailer.

Amazon agreements also come with the requirement that you participate in their other programs, including library lending in cooperation with OverDrive and, presumably, the new subscription program they have just announed. (It appears they chose not to include all KDP titles in the subscription program; there are only 5,000 titles announced for that initiative and since we know that Smashwords has nearly 100,000 titles, it is likely that KDP has more than that. On the other hand, late reporting by Publishers Lunch on Thursday spells out that Amazon will simply “buy” copies of any non-agency titles it wants to lend. That means they make one purchase for each loan, so it is expensive for them, but it demonstrates again that only publishers with agency arrangements have control of their distribution and how their books might be used to strengthen any one distributor’s ecosystem.)

The comparisons get complicated, but, if a conventional publisher is providing the full range of services that our speakers said is needed to maximize sales: good covers, changing covers, dynamic pricing, constantly improved metadata, monitoring to catch glitch take-downs, as well as developmental editing, line-editing, copy-editing, and proofreading, the author wouldn’t be doing badly at all to get 35% of the consumer’s dollar for an ebook. Throw in real print book distribution and sales and the royalties and marketing from that, plus a publisher’s core marketing effort (being part of a “legitimate” list gets attention from reviewers, bloggers, library collection development, and other places that matter), and, perhaps, some dedicated marketing as well, and it can be a relatively profitable exercise for an author to be with a publisher for even less than that.

When agency publishers pay 25% royalties, they are giving the author 17.5% of the paying customer’s dollar. Everybody will draw their own lines, deal by deal, but that doesn’t strike me as totally crazy as long as print sales remain more than half the total and the publisher is paying an advance that carries with it some risk that the actual royalty paid will be higher than what the contract stipulates.

That’s a moving target, of course, I personally don’t expect print sales to remain at half the total very much longer. But if major publishers were paying 50% royalty on a 70% agency sale, they’d be matching the 35% Amazon pays the authors it publishes. Amazon can do much more to promote on Amazon (which panelists at eBEE said is what really moves the needle); but publishers make noise in a lot of other places Amazon (yet) doesn’t. Presumably Open Road and Diversion and eReads and other 50-50 ebook publishers can’t match the agency terms with Amazon (they can get 70% through KDP, but that comes with pricing restraints and required agreement to those other deals we discussed earlier), so only the Big Six, who can apply agency across all accounts, can offer a comparable deal with a manageable percentage payout.

Amazon is demonstrating what they see as the value of securing the loyalty of digital book consumers for its ecosystem by their willingness to pay full wholesale price for an ebook that will then get lent once, as well as their penchant for pricing for sale well below their cost. The evidence that agency pricing is the only wall between a multi-channel ebook business and a single-retailer monopoly continues to grow. But as long as print in stores matters, and it will for a while longer, the Big Six have a legitimate commercial argument to defend ebook royalties between 25 and 50 percent. After that, everybody except Amazon will be hoping that that the Nook, Kobo, Google, and Sony market share is enough to keep it essential to an author to cover them all. And that means of discovery and merchandising will emerge that are a meaningful alternative to what is provided by the world’s biggest virtual retailer.

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Would million ebook-selling author John Locke be better off with a publisher? I think he very well might…


The experience of the most successful self-published author I know of, just described in his newest book, makes a powerful but unintended case that authors who want to really make money are still better off with a publisher.

I discovered the author John Locke a few months ago when I was learning a bit about the self-publishing world from Joe Konrath and Barry Eisler. I tried one of his 99 cent books and loved it. Now I’ve read four. He strikes me as a cross between the long-dead Jim Thompson and the very current Carl Hiaasen. More sophisticated readers than I have told me his plots are derivative. None of the books struck me that way, but it could well be that savvy acquiring editors would have dismissed him if had no track record of commercial appeal.

Locke has just published a new book explaining (and titled) “How I Sold One Million eBooks in Five Months”. It reveals a hard-working, tightly-focused, very sophisticated marketer with a clear plan and the discipline to follow it. Every self-publishing author should read it, of course, which is the market Locke identifies. One of his key tenets is to really understand whom a book is intended for so that the content itself and the marketing approach are always aimed at precise targets.

One of the problems Locke sees with publishers is that he thinks that they will always push to broaden the appeal of a book, which he thinks would diminish its appeal to the core niche audience that he sees as the key to successful author brand-building. I’m about to reinforce that stereotype because it is obvious to me that he really missed identifying a key target audience with his new book. Editors and marketers in publishing houses ought to read it. They have a lot to learn from John Locke’s insights and techniques.

His book will help them make better publishing decisions and marketing decisions. His book will help them make more money.

But if John Locke’s also interested in making the most money, he ought to rethink whether issuing his books at 99 cents without a publisher is really the best commercial strategy.

Let’s do the math. Locke has sold 1 million ebooks at 99 cents each. He gets 35% of the revenue, so that amounts to something less than $350,000 (credit card fees are deducted from the net). There are some production costs involved (he hires a cover designer and he gets help formatting his books), so knock off another ten or fifteen grand. That means his net for nine novels averages out to about $35,000 each. He’s getting no apparent revenue from print and he’s getting no print exposure in stores which would further stimulate online sales. At 35 cents per copy, he’s earning less than the per unit royalty he’d get from a publisher selling his books for about $2.99, the point at which the 70% payment from agency re-sellers would kick in, even if the publisher didn’t yield at all on the now-prevailing 25% royalty standard. And if his books were $9.99, he’d be getting $1.75 a copy from a publisher, or about five times what he’s getting now.

Of course, if Locke himself sold the ebooks at $2.99, he’d be taking in six times more per book, or about $2.10 a copy.

But, either way, he seems to be leaving a lot of money on the table. Without a publisher’s efforts, he’s certainly leaving a lot of marketing on the table too. And the print in stores is only the single most important part of it. Selling even a modest 10,000 hardcovers would net him in excess of $20,000 in royalties, or more than half of what he’s averaged so far from each of his ebooks.

It would be facile, and I think it would be mistaken, to attribute Locke’s success primarily to the fact that his books sell for 99 cents. In fact, Locke himself bristles at that notion. He points out in his new “how-to” book that there are a lot of authors selling for 99 cents that haven’t achieved the sales that he’s achieved. He downplays the degree to which that would be due to the appeal of his writing but instead attributes his sales to his thoughtful and systematic marketing efforts.

I agree that his thoughtful and systematic marketing efforts are more important than his 99 cent price. (That’s sort of the point to this whole post!) But there is nothing about what he’s done that couldn’t be just as well done to support a book from a publisher that is in hardback at $20 or more and is a $9.99 ebook. Would he sell as many as the 100,000 or so units he’s averaging per title that way?

Nobody knows for sure, but with the same effort on his part and the additional marketing, exposure, and accessibility he’d gain with a publisher, my own hunch would be that he’d sell more. I’ve read four of the books featuring his major character Donovan Creed and I’m nowhere near sick of him yet. I’m as cautious as anyone about generalizing from my own experience, but I know that if the next one were ten bucks instead of one, it wouldn’t deter me. I pay ten bucks or more for most of the ebooks I read, as do a lot of people.

One of the things that the ebook retailers know for sure but that publishers can only guess about is the degree to which the purchasers of 99 cent books are a market separate from the purchasers of “branded” books at $9.99 and up. Many believe, and I’m among them, that there are distinctly separate groups of buyers here and that people like me, who mix it up, are the exception. If that’s true, there would be some risk for Locke (and to an acquiring publisher) in switching him over to a model which requires that he get his success from a different pool of customers and makes it hard for his existing readership to come along.

But if the markets are distinct, there is also some great potential reward. If there are people who only choose from the cheap books, there are also people who want to choose from the professionally validated books, the ones from the major publishers. The more you believe the markets are distinct, the more opportunity there could be for Locke in using what he’s done to launch himself independently as the springboard to a career as a published author with a major player.

Amanda Hocking succeeded with an independent effort but then signed with a major house. Barry Eisler intended to leave publishers behind and do it himself, but quickly found that Amazon’s publishing program — how long before we start referring to the Big Seven? — actually suited him more than doing-it-himself. Now we do the quick math on Locke and find that it constitutes a weak argument for the economic benefits of self-publishing.

It is important to for us all to remember that we’re still in a world where most of the books are sold in print and in stores; that this is more true outside the US than it is here; and that it will remain true outside the US for quite a while longer than it will here. The challenges of the digital age for publishers are very real and the self-publishing option is much more viable than it was a decade ago, or even three years ago. But there’s still plenty of life in the legacy model. I’d be surprised if some big publishers aren’t preparing offers for Mr. Locke that he’d be obliged to consider seriously if his goal is to make the most money from his writing that he possibly can. If Amanda Hocking could get $2 million for four books, how well is John Locke really doing financially getting less than 20% of that for nine?

The most frequently persuasive argument I can think of for self-publishing is speed to market, particularly for an outsider who doesn’t even yet have an agent. Finding an agent takes time. Getting a proposal up to an agent’s professional standards takes time. Publisher consideration and contract negotiating following offers take time. All of this can often take a year or more; it is rare to accomplish it in six months. And then the publisher will need persuasion to deliver it to the market in less than six months. (This is not irrational on the publishers’ part; maximizing sales in print still requires a long runway because the planning in mass merchant outlets requires assigning specific titles to slots many months in advance. That’s a marketplace reality, not an invention of publishers.)

I think self-publishing as a path to publisher discovery may become a new standard and, if it does, the ebook operations being set up by literary agencies may ultimately be viewed in a different light.

My prediction with Locke is that he will end up getting an offer he can’t refuse from a publisher to create a new character. The Donovan Creed series and his westerns will continue to be issued for 99 cents, but something new will be done the conventional way. And, unless my hunch is way wide of the mark, for the next several years the ones done the conventional way will make Locke a lot more money.

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Amazon’s news of hiring Kirshbaum is a helluva start for BEA


Amazon dropped a shoe last week when they announced their new mystery imprint, Thomas & Mercer Books, and started signing authors, including self-publishing evangelist, Joe Konrath.

Last night they dropped the other shoe, which turned out to be a very heavy boot. They signed former Time Warner Publishing (the company that is now Hachette Book Group) CEO Larry Kirshbaum to head up a new general trade imprint for them.

The next thing to drop will be a few pennies as the industry wakes up to a very new day.

Konrath complained in a blog post over the weekend that independent bookstores planned to boycott the Thomas & Mercer imprint. It would appear Konrath (who, in his pre-ebook-evangelist days worked hard to promote through independents) took very personally what was meant to be resistance to Amazon.

One would suspect that the books Kirshbaum is going to acquire will be very hard for any bookseller that wants to serve and keep her customers to avoid stocking. In other words, the Kirshbaum signing might have cured Konrath’s concern.

Where did this arise before? Many times, many places. Borders stopped buying Sterling books when the independent publishers was acquired by B&N. The relationship between Sterling and Amazon is more complicated, but it would be safe to say that sales of Sterling books were not Amazon’s highest priority and sales through B&N’s biggest competitor were not Sterling’s.

Amazon briefly (for a couple of days) turned off Macmillan’s buy buttons in January 2010 in an fleeting and unsuccessful attempt to persuade the big houses not to go to agency pricing.

When Barnes & Noble bought Sterling, they stated clearly that they did not intend to publish precisely the kind of books Kirshbaum is now going after: “non-fiction and literary fiction.” Although things have changed in what has been nearly a decade since that acquisition, Sterling was a “category” publisher when B&N acquired them and have never stepped aggressively into the high-advance, agented arena that is Kirshbaum’s natural milieu.

I’d say one of the pennies dropping might be at B&N, where they are probably reconsidering their title acquisition strategy. If their biggest retail competitor is going after the biggest authors directly, can they afford not to?

Five years ago we lived in a world where every book that mattered sold more copies at brick stores than it did online. Five years from now every book that matters will sell more copies online than it does in a brick store. The Amazon decision may mark the commercial turning point of that massive shift.

The edge in maximizing online sales revenues will go to the publisher that can manage online pricing and marketing most effectively. That not only means raising and lowering prices dynamically to get the most possible revenue, it might also mean experimenting with free sample sizes to see what delivers the best rate of conversion to a sale. It certainly also means having the best list of potential readers to alert to a book’s publication.

Publishers have a steep hill to climb to develop skills in that regard that Amazon has been honing for years. The announcement of Bookish, a community and information site for readers, seems like a weak counterweight to this Amazon announcement. I would imagine Kirshbaum will have signed away a few books the Big Six publishers wanted before Bookish even opens its doors.

Agents, who have just gotten a big new bidder to drive up the prices of everything valuable they have to sell, are having a very good day. Publishers, as they say: not so much.

I hope I’ll see you at either the memorial celebration of Ruth Cavin’s life tomorrow (Tuesday) afternoon at 5:30 at the Salmagundi Club at 5th Avenue and 11th Street or at our “eBooks Go Global” conference at Javits all day on Wednesday, where the topic of this blogpost will surely arise!

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Do ebook consumers love bestsellers, or does it just look that way?


In theory, the more books are sold online the more sales should move to the long tail. Online bookstores have the advantage of “unlimited shelf space”. Nothing has to be left out of the assortment because of constraints on capital to stock inventory or room to hold it. Furthermore, as Konrath and Eisler pointed out in their extensive discussion of online versus print within the larger conversation about self- or publisher-issued, the differential impact of display when one title has a stack and another has a single spine-out copy is eliminated in the digital world.

But it doesn’t seem to be working out that way. While overall ebook sales in the US are still calculated in the 8-10% range of publishers’ revenues, so we’d reckon perhaps 10-12% of unit sales (ebooks generally, though not always, yield slightly less revenue per copy than print) or maybe even 15% for a publisher still drawing big print sales on books not available as or suitable for ebooks for whatever reason, we’re hearing frequent reports of big books selling 50% or more of their units as ebooks, particularly in the early weeks of their life.

So it would appear that ebook sales are even more concentrated across a smaller title band than print.

Furthermore, the occasional reports of enormous unit sales by the new crop of online author-stars like Amanda Hocking (coming next year to the bookstore that remains open nearest you) and John Locke also tend to support the idea that ebook sales are more concentrated, not less, than print sales. Unlimited shelf space and more uniform “display” don’t seem to be having the expected affect.

I recall a recent stat I believe came from Bowker, which tracks a large panel of book consumers, suggesting that bookstores still account for the largest single share, by far, of “book discovery.” What I recall hearing was that thirty percent of people report having learned about a book they bought from a bookstore display, much more than from any online source.

Of course, that’s certainly not true for Locke and Hocking and the books by Joe Konrath that aren’t in bookstores (although, as Joe points out, he does sell in print through Amazon’s CreateSpace print-on-demand program.) I haven’t seen anybody else talk about this subject, but Konrath also says that he gets a wildly disproportionate share of his overall sales from Kindle, much  more than the 50-60% market share one hears anecdotally attributed to them by publishers. I know from private exchanges that Amazon themselves believe they do a better job than the other ebook formats for the self-published author in proportion to their size. We’d certainly want that confirmed by more authors than just Konrath, but if they’re doing that as a strategy, it’s a good one. A self-publishing author won’t need a lot of persuasion to not bother with other outlets if s/he can get 90% of the expected sale from one (which is what Konrath leads me to believe is the case for him, even though he is widely set up among the other platforms.)

Be that as it may, the fact is that none of the online retailers have figured out how to come close to what a bookstore can do in giving a consumer real choices-per-second. And the principal tool that online booksellers could be using to overcome the disadvantage of 2-dimensional presentation — customized choices for each online customer — is very little in evidence (except as top-of-the-page suggestions) in my personal shopping experience (which extends on a regular basis to Kindle, Nook, and Kobo and on an occasional basis to iBookstore and Google).

The impact of presence and display was understood by all in the bricks world. A book that is in the store in which a customer shops has a nearly infinitely larger chance of being purchased than a book not in the store. Sophisticated merchants like Barnes & Noble know how much sales lift to expect from a front table display. We all expect the book that it is faced-out on a shoulder-level shelf to sell better than the spined book you have to bend down to see.

For years, aggressive sales reps would move their books around. In the years before computerized inventory record keeping, it was incumbent on reps to count the books that were on the shelf to coax out a backlist reorder; that gave them ample opportunity to face books out, move books up, and point it out when a book was displayed in something less than the optimal subject section.

Now the paradigm has changed. The default front table is the choice of titles on the screen that comes up first when a store’s program is opened. That’s almost always that retailer’s bestsellers (and, as far as I can tell, it isn’t customized for me at any of these retailers; you or my wife would see the same default screen that I would.)

Then there are a bunch of pre-packaged choices — think of them as “tables” too — for NY Times bestsellers or (at Nook I noticed) “ebooks under $5″ or under menu-driven choices of subject (they’re like “store sections.”) Of course, the earlier and more often a book is presented to a consumer in their online shopping experience, the more likely it is to sell.

The standard technique is that there are a set and limited number of titles a customer sees “at a click.” If you want to see more, you have to click again and (depending on connection speed) perhaps wait for more titles to load, which will usually be another 10 or 12 or maybe 25. If you shop the same sections repeatedly (and who doesn’t), most of what you see will be titles you’ve seen before and either bought or rejected. If you shop often, trying to find something new can be exhausting and ridiculously time-consuming.

Even the simplest assistance that would help avoid this duplication — such as displaying books in reverse order of publication (most recent first) instead of “by title” or “by author” — is not (or seldom) available.

Online shopping is great if you know exactly what you want (by title or author.) The online book shops can find you the most obscure book much more quickly than the average clerk in a brick store, and certainly faster than you’d find it yourself. Searching by title or author also almost always works extremely well.

But when it gets more complicated than that — perhaps you’re searching for “baseball history” or “Civil War economics” — the combination of inadequate publisher-provided metadata and insufficiently-mediated retailer choices will deliver you a menu of options that contains some titles so off base that a clerk would be fired for suggesting them.

The Lockes and Hockings of the world benefit from the same effect. They’re betsellers and every retailer has a button to deliver those, by genre and sometimes by pricing band. Getting bestseller status is so valuable that self-published authors seem to frequently employ the technique of  lowering their price to 99 cents to get bestseller status and then popping back up to a more profitable price like $2.99 until the effect wears off.

So ebook purchasers make their choices from what is presented to them, which is a limited number of titles. Let’s not ever leap to the conclusion that there is something about ebooks or about ebook consumers that is biased to the most popular. It is merchandising practices which create that result, not consumer taste.

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