Category Archives: Things Publishers Fear

Things Publishers Fear: #5 ~ Authors

May 5, 2010 – 9:47 pm

photo credit: alancleaver_2000

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Authors

I wrote the bulk of this article across on my personal blog, but it warrants a full exploration here on Green Lamp Media. You might wonder why publishers could fear authors, the life blood of their business? Let me explain the reasons.

Currently the bulk of authors are in a fairly powerless position relative to publishers. Publishers have money, access and publishing slots. Publishers finance the editorial and production work that goes into a book and have the relationships that ensure distribution, advertising and shelf space. This has been changing rapidly over the last few years.

One way it has been changing is self-inflicted, publishers shedding costs by shedding editors (and, some would argue, quality as they do it). But the other more visible way it is changing is in economic terms as the cost of making a text widely available drops very close to zero via effective digital publishing.

[pullquote]Why should you sell a paper publisher your digital rights when there is no need?[/pullquote]

In 2006 when I was only starting to think clearly about digital change (and had only been writing a blog for some 4 months) I wrote a post called Authors Will Drive Change, it was part of a short series of articles on what was changing the publishing industry.

The point is that publishing is no longer just about books and even more it is no longer about waiting for a publisher to decide your work is good enough for print. Options abound and as more and more writers realise that they will take advantage of it.

E-books will push this change even more. There is no reason why authors’ royalties should be the same on e-books as they are for paper books and in many ways there is no reason why the authors cannot sell e-books themselves rather than through a publisher. Why should you sell a paper publisher your digital rights when there is no need?

What I didn’t address back then and what has become clearer now, is how established authors will also drive change and in doing so, make a much bigger impact. After all, if ebooks begin to account for 20-30% of the market (or more) and of that major authors generate the lions share of sales then their departure from your lists will make a huge dent in revenues.

But even authors with moderate (still impressive but not BLOCKBUSTER) sales can see the benefit of direct sales and cutting the publisher out. The most recent example of this is JA Konrath who writes The Newbies Guide To Publishing blog. He has been posting for some time now about his rather impressive success in selling books via Amazon’s Kindle device:

In short, this market is perfect for a one-person operation.

I’d certainly entertain an offer from a large publisher, if they wanted to buy rights for one of my books. But I’m not going to go out looking for the opportunity. Especially since I’ll make more money in the long run if I keep my rights.

I could even make more money in the short run.

According to my recent royalty statement, my horror novel AFRAID sold about 54,000 copies in all formats, earning me around $27k.

If I released a Jack Kilborn ebook on my own, and it sold like my current ebooks are selling, I’d make $20k in a year.

It’s doubtful I’ll make $17K next year on AFRAID, since it’s no longer getting coop on bookstore shelves. But I’m sure I’d make $20k, or more, on a self-pubbed ebook.

So in two years I can make more money on my own on a self-pubbed ebook than a book released by a major publisher in hardcover, trade paper, paperback, and ebook formats, supported by a tour and advertising.

Unless it’s a big offer, I can’t imagine selling rights to my work ever again…

And There Is More
The IDPF released the figures for February ebook sales. They are pretty stunning. I’ve written elsewhere about my skepticism regarding ebooks and the industry’s obsession with price and a single format, but when one sees figures like this, it is almost understandable that they get excited and distracted by them.

Mike Shatzkin writes about what this seemingly rapid shift towards digital means for the print side of the business and it is an interesting perspective:

If by the end of 2012, 25% of sales for a new book are digital, then about half of new book sales will be made through online purchases if we count the print book sales made through online retailers (mostly Amazon.)

Online print sales can be served through inventory generated on demand. So, if these estimates are right, we are less than three years away from a publisher (or author) being able to reach half the market for a book without inventory risk!

Having half the market reachable without print-run risk or inventory storage; having half the customers connecting with their reading through online paths that make them at least theoretically identifiable; and having a quarter of those customers reading through a medium that enables interactivity will make all the changes we’ve seen so far in trade publishing appear trivial. And if the very perspicacious Carolyn Reidy, her unnamed counterpart, and I are right, that disruption is going to take place before many books now under contract reach their publication date.

Personally I caution about moving from current trends towards future results. I’m unsure if the sales will continue at their current level never mind continue to explode in such an impressive fashion. However, even if we allow that Mike and the trends are half right and we see say 33% or 40% of the market reachable via no-risk required methods by 2012, then the savvy authors like JA Konrath will see little reason to work with a publisher at all. Why, if they don’t require the finance that is one of a publishers strongest assets, would they?
[pullquote]as the market becomes more digitally biased, the greater the risk that lead and mid-list authors see first the advantage of retaining their own digital rights[/pullquote]
This is not to say that publishers don’t offer more than finance, they do and in abundance, but for some authors, the skill set that publishers offer is affordable and at a more reasonable cut than they currently allow publishers to keep.

In my view, as the market becomes more digitally biased, the greater the risk that lead and mid-list authors see first the advantage of retaining their own digital rights, then later the advantage of retaining all rights and exploiting them for themselves.

The future, for all that it offers great promise to authors and thus they WILL drive change, may not offer such great promise for publishers and certainly not as they currently exist and hence why publishers fear Authors!

Tags Amazon.com, Apple, Authors, books, Digital Change, ebooks, JA Konrath, John Markoff, Kindle, Mike Shatzkin, POD, Print on Demand, Publishers, Publishing, What Publishers Fear | Permalink | Comments (3)

Change Digital Publishing Things Publishers Fear

Things Publishers Fear: #4 ~ Price

March 24, 2010 – 11:58 am

photo credit: TheTruthAbout…

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Price

Information Wants To Be Free!

Freemium Model!

$9.99

Agency Model

Right now it seems the whole publishing industry is obsessed with price. The FT carried a piece on Tuesday about how Random House “Fear An iPad Price War“. Macmillan CEO John Sargent has been blogging about it, there is even a FREEMIUM SUMMIT in San Francisco on Friday (Contrary to what you’d expect tickets cost $449.00 rather than $0.00).

And who can blame them. Price is already creating enormous problems for publishers. And it’s not just things like Kindle users punishing authors with non-existent, delayed or expensive Kindle editions by giving them one star reviews (here and here for good discussion).

Price is a problem in the real world as well as the digital one. You only need to look to last winter’s price war in the US to see that. Amazon and Walmart kicked each other (and publishers) in the head to prove they had the best price for some key hardcover titles. The price point flavour of the day was $9.99. Then Target joined the fray.

The problem of course is that these price wars and ebook protests are driving a value perception home in consumers minds. On the one hand it reinforces the idea of ebooks being “worth” less than physical books and on the other, the price of physical books is too high, why else would retailers be selling them at such large discounts.

Bizarrely enough, until the enforced change to an agency model (which is by the by not across the board and is unlikely to become the standard if Amazon has its way), Amazon was selling ebooks at a loss, at least on new releases. And all three companies (Amazon, Target and Walmart) were selling their hardcovers at loss prices.

Free Will Increase Sales
And then there is the giving away stuff will help you sell more stuff argument. There are studies which seem to suggest that there are benefits. But the key point about those studies, is that they are by their nature, short-termist. This is not a criticism, just a reality.

As the aforementioned John Sargent noted about the longer term of “Free” (HT to Mike Cane for pulling this quote):

We had a car guide, Edmund’s Car Guide. That was a distributed line we had at one point.

Edmund’s decided to put a little content up on the web. We said, “Great, it’ll drive the sales.”

He said, “I’m gonna put it all up.” We said, “Don’t do it. You won’t sell books.” He said, “I’m gonna prove you wrong.” He put one-hundred per cent of his content up for free.

First year, sales of the book went up.

Second year, they went up again.

Third year, they dropped by fifty per cent.

Fourth year, we didn’t sell another book. You don’t find them on a bookstore shelf anymore.

So there is that danger of the experimental stage of, “I give it away free and look! — my sales go up.”

There’s gonna come a point in time where I give it away for free and my sales don’t go up and then there’s gonna be a point in time when I give it away for free and I ain’t selling shit anymore.

Pushing For More
From the perspective of a book publisher, price is about the only lever one has to drive revenue. Getting more for the books you sell is going to increase your top and bottom lines results. That is if you can control costs. So it seems like great territory for a fight, it seems like a great place to drag a bigger percentage from the other guys side of the maths to your side.

Apple provided the opportunity to beat Amazon with a stick and to actually enable that clawback. Publishers, by some thinking, would have been fools not to take it.

Besieged
There are many potential retorts to this post, so many “but what about x, or y, or z” but the logic of fighting on price, of resisting free, of pushing for a higher value on content seems inescapable to most publishers who have for so long been on the losing edge of the price war.

As some of the posts in this series have explored (Apple, Google, Amazon) as an industry the ground on which Publishing is built is being undermined.

The smartest heads in the building are seeing that the future is not necessarily rosy, that survival is not guaranteed. That places an awesome responsibility on the heads of managers and executives. No one wants to be the man or the woman who brought X Company down. That leads to defensive thinking.

That is why Publishers Fear Price and when you look at it from their perspective, they are right to.

In an interesting aside, OR Books Co-Publisher Colin Robinson has an interesting post over at HuffPo. I expect to see similar decisions over the next few years. Disintermediation works both ways.

Tags Amazon, Apple, books, ebooks, iPad, John Sargent, Kindle, OR Books, Price, Publishing, Target, Text, Walmart | Permalink | Comment (0)

Digital Publishing Things Publishers Fear

Things Publishers Fear: #3 ~ Apple

March 5, 2010 – 5:28 pm

photo credit: renatomitra

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Apple

On the day the iPad’s availablility in the US was announced (April 3 in case you missed it) I thought it suitable to discuss Apple. What’s to fear I hear you say? Hasn’t Apple provided the fodder to defeat Amazon’s nefarious $9.99 pricing demands and with the creation of the iPad opened a whole world of possibilities for publishers? To which the simple answer is yes but the complicated answer is yes, but.

Yes
You are right, most publisher probably don’t fear Apple. In fact they have welcomed their arrival on the publishing scene, seeing them as useful counterweights to Amazon. But they are wrong. Apple presents a real problem for publishers one worthy of fear.

Yes, but!
Apple has created leverage for publishers that much is true, but is that leverage actually worth anything? Apple seems to have thrown the balance in favour of book publishers in a struggle that is really peripheral to book publishers survival, but in doing so made that struggle look more important than it was. Price, especially the price on specific forms of content (in this case the Kindle edition ebook) is not the sole factor in book publishing’s future, there is much more going on. In fact, the leverage Apple provided has blinded publishers to the larger realities of change and has been, I would argue, detrimental to the industry as a whole.

As for the iPad it is a fine looking device, but the iBooks app which Apple itself describes as:

the best way to browse, buy and read books on a mobile product. The iBookstore will feature books from the New York Times Best Seller list from both major and independent publishers, including Hachette Book Group, HarperCollins Publishers, Macmillan Publishers, Penguin Group and Simon & Schuster.

will not even be native to the product but:

will be available as a free download from the App Store in the US on April 3, with additional countries added later this year.

Competition
So, video will be native to the iPad, so will Photos, Safari, Mail, Notes and a few other applications but not iBooks. Will YouTube I wonder? Think that through folks. iBooks not native, why? Why not build it in if the product is so amazing, so intrinsic to the concept? Because Steve Jobs reckons people don’t read anymore.

I guess what he means is that the people who do read will download that app anyway and that most people simply do not consume vast numbers of books in a given year and in some senses they never did, at least not in the way that they watched television or listened to music. So why go to the bother of including it for a few die-hards who will do the work for themselves?

What he means is that books are not central to the iPad as a device, but they make for good marketing copy. In fact books, as far as Apple is concerned, are probably already fringe media and so are not vital to the success of the iPad or else iBooks would have come pre-loaded sitting there ready to download books.

The iPad is about the things that people do a lot of, watch tv and video, listen to music and surf the web. People don’t read books very much on average and so books fail the mass market test. Publishers have been so eager for an ally in the battle with Amazon they’ve ignored the fact that their ally might not really care about their industry much at all.

Binding us more
And then there is the issue that by keeping publishers obsessed with the iBookstore and app creation Apple keeps publishers locked into a closed development system of Apple OS. Which suits Apple and blinds the publishers to the real opportunity they have, and have had for some time now, and which few of them have been embracing, web based content accessible over any device with the use of a browser.

If publishers had pursued web access for the last five years it wouldn’t matter if iBooks was native, Safari would be their Trojan horse allowing readers to buy access online, bypassing Apples 30% tax. Of course the more visionary have done something like this. The O’Reilly/Pearson created Safari Books Online now has some 40 publishers and I would expect to see that kind of platform thrive in a mobile multi-media device environment. At the very least it is in a position to take advantage of web broswers as well as iPad Apps something most publishers will not.

To sum up
Apple is making mobile computing cool, easy and non-geeky. Apple is making it easy to put video, games, music, photographs and just about any form of entertainment in the hands of everyone, everywhere in a cheap and attractive package. In fact, if Google represents the reality of competition with every book ever published then Apple represents the reality of competition for every second of attention with EVERY form of entertainment imaginable. As a publisher and knowing that reading has consistently lost in a straight attention fight with video, music and mass forms of entertainment, that would create quite a bit of fear. As Laocoön might have out it: “Do not trust the Horse, Trojans. Whatever it is, I fear the Greeks even bearing gifts.”

Tags Amazon.com, Apple, books, Change, Competition, ebooks, iBooks, iPad, iPod, Mobile | Permalink | Comments (2)

Change Digital Publishing Things Publishers Fear

Things Publishers Fear: #2 ~ Google

February 18, 2010 – 3:16 pm

photo credit: Max Braun

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Google

Where to start with the fear of Google. The 12 million scanned books. Yes that will do for now!

It is not just that publishers are rightly pissed at the fact of Google’s actions (and the gall they have shown in continuing with them throughout the process of first suing and then reaching a complex and variously hated/despised/grudgingly accepted settlement) they fear the implications of Google’s actions.

Fearing the fact

When I say the fact I mean that Google has, at the very least, stretched the idea of fair use to the limit and in doing so created a tool of great value. A searchable database of all the works they can. Nothing will now put the genie BACK in the bottle. The database exists the power of publishers as possessors of that POTENTIAL database is gone, broken forever by the reality of Google Books. Search there and you’ll see its amazing capacities even if only partly, and in a hampered way, realised.

You may not think that this is important but it has created a database that publishers do not:

If publishers had been involved in the creation of such a database they might have built in any number of changes, made any number of demands and would in any case have had different interests from each other, so much so that they probably would never have made this a reality (and why should they if does not benefit them?). But now they are presented with a fait accompli and one that, even with a settlement, leaves them disadvantaged and with a database that hardly favours them.

Maybe these things are their just deserts, perhaps you feel they have created this situation by failing to move with the times and invest in technology and rights databases, but this series is designed to take the publishers viewpoint and from that perspective, those three things are very worrisome indeed and justify some fear, regardless of the historical reasons for their existence.

Fearing the potential

Any sensible publisher, though, reserves their real fear for the potential of Google and its database. Google are very well placed to benefit from every digital trend you can envisage. The massive textual database they have built compliments this in innumerable ways. Mobile results can be enriched with tourist info from books, history texts and restaurant reviews, not to mention news stories from newspaper and magazine publishers (as if any content producer will escape). What is more so much of the database will contain books that singly have little of value but as a whole collection and cross-referenced are worth considerable sums (public domain works, government publications and the like).

The database brings the reality of competition with EVERY SINGLE BOOK EVER PUBLISHED into sharp focus for publishers as new books face increased real challenges from books published 10, 20, 300 years ago and in every conceivable context, on a phone, laptop, desk computer, iPad, iPod, wi-fi enable device, anything that connects to the cloud and has a screen (not to mention an increase in POD). So if the web enabled a flood of amateur (and let’s face it not always terribly good) content, Google’s books database enables a flood of real professional content that rings true with quality and which at a time when being published was harder than it is now has the stamp of publishers approval. This onslaught threatens directly the lifeblood of all publishing, the new book trade, in ways that all publishers rightly fear.

The potential of Google Books is that by supplying information from a vast accessible anywhere database you reduce the overall demand for new or fresh paid content. What’s even more frightening is that Google is a private company and access to that enormous database will be, for all intents and purposes, at their whim.

How do you like them apples? Well, as a publisher, I don’t like them much, but as William James said: “acceptance of what has happened is the first step to overcoming the consequences of any misfortune.”

Tags archive, Authors, Competition, Content, Database, Digital Change, Fear, Google, Google Books, POD, Print on Demand, Publishers, The Google Book Settlement | Permalink | Comments (7)

Change Digital Publishing Things Publishers Fear

Things Publishers Fear: # 1 ~ Amazon

February 8, 2010 – 12:27 pm

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

photo credit: dsearls

No 1 ~ AMAZON

Despite the seeming victory of Macmillan in its battle to force Amazon to accept the new “agency model” publishers have a sensible fear of Amazon. Like all businesses that sell their goods to consumers through intermediaries, publishers are forced to subject themselves and their products to the requests and “suggestions” of the retailer.

Amazon controls a large portion of the online consumer connection to books. They may not be the best at this, but they are surely the biggest. They have been on top of pretty much every trend in publishing for some time:

distribution

sales

Whispernet

They are organised by category and could easily spin out niche based sales sites (and could afford to pay for content to go with that and attract attention) if they chose. If this doesn’t concern you ask yourself if Tor.com is viable if Amazon spins out a sales site with masses of author or for hire content built around the Sci-fi & Fantasy genres?

They have a powerful presence in Print on Demand and Self Publishing. You think that’s not that amazing witness the small scale gold rush that has been emerging over the last six months as established publishers see future profit and less authorial and consumer concern in Self Publishing. Mick Rooney has an interesting Guest column addressing some of these points over at Irish Publishing News.

With the launch in 2009 of Amazon Encore, Amazon is officially and finally a publisher. That Encore is currently modest hardly matters, they could easily scale that effort very rapidly if they chose and because it need not support the massive legacy costs that the bigger publishers need to, they require much more modest sales results per title and much less working capital per title. Oh and in 2010 they have already announced 9 titles all of which will be out by April 2010. I expect to see many more before the year is out.

So while a victory on the ebook pricing model seems like a step forward for publishers in may ways it represents a funny one. The “Agency Model” actually means Amazon will now profit from each sale whereas up until now, for new releases, it was losing money. So Amazon stands to make more money per unit of a new release sold, but less for backlist titles and non-new releases. But it moves the goal posts by removing the key selling point for the Kindle, the $9.99 new release price point.

This makes it much less attractive for Amazon to deal with publishers rather than cutting them out of the equation and dealing directly with authors or even with agents. After all, they were using ebooks to sell high priced devices and even if they make more money per ebook sold it won’t compensate them for selling fewer units of the Kindle. The battle for publishers now is to retain control of that crucial relationship, the author-publisher relationship. Having already surrendered the publisher-reader relationship and knowing how difficult it will be to regain traction in that arena, to allow Amazon to insert itself between the author and the publisher would be fatal.

So, from their perspective, publishers’ fears of amazon are rational and justified. Amazon threatens to disintermediate the publishing industry using the talent the industry has nurtured and the content the industry has edited, developed, marketed and grown. That hardly seems fair does it? But then “Deserve got nuthin’ to do with it.” – Snoop

Tags Agency Model, Amazon.com, Authors, Digital Change, Macmillan, Publishers | Permalink | Comments (3)