Sunday, March 11, 2012

Jockeying for Position in the Muddy Publishing Future

James Scott Bell
Twitter.com/jamesscottbell


His father was a mudder. He loves the slop. Cosmo Kramer, Seinfeld





The future of the book industry got a little murkier this week. The Department of Justice, no less, thickened the soup with its announced intent to go after five of the "Big Six" publishers -- plus Apple -- on charges of collusion. The alleged nefariousness dates back to the wholesale versus agency controversy at Amazon.

Amazon was setting e-book prices lower than the big publishers desired. The pubs were afraid consumers would get used to lower prices, thus cutting into their margins. Also, there was major concern about undercutting a big cash cow for traditional publishing: hardcover frontlist titles. And, of course, they all worried about the future of brick-and-mortar stores as Amazon gobbled up more of the distribution pie. 

So Steve Jobs comes along (allegedly) with a plan to take major e-book business away from Amazon. With the iPad just getting fired up, Jobs (allegedly) went to the Big Six and proposed going into an e-book agency model agreement with them (Random House didn't join the circle then, so is not part of the DOJ lawsuit). In return, the publishers would agree to keep their books off Amazon if it sold them at a lower price. In effect the five big publishers, as one, told Amazon You give us the agency model or you don't get our books. 

The players, IOW, were jockeying for position with the future in mind. This is what big business does. It's understandable and even desirable in a free market economy so long as the businesses are not running afoul of anti-trust laws.

Amazon, not happy with being forced into agency, decided to take on the publishing industry directly by mimicking it. So they went out and hired industry veteran Larry Kirshbaum to head up the effort. Amazon subsequently made some big name signings – Deepak Chopra and Barry Eisler, for example.

More jockeying.

And now comes a dark cloud dumping rain -- the United States Gummint. The track is suddenly soaked and the mud is kicking up all over everybody.

Who is going to be the best mudder? Who is going to be left behind?

That remains to be seen. But right now it looks like agency pricing will be escorted off the track. If publishers are forced back into wholesale, Amazon will be sitting even prettier than it is now, prices will once again trend downward, and publishers' margins will shrink. There will be renewed howls of "predatory pricing," but the DOJ well knows that's a much harder case to make. So Amazon goes back to selling at loss-leader prices which, in turn, will trickle down to brick-and-mortar stores where margins are razor thin anyway. More stores will probably close. Your local Barnes & Noble, for instance. There is a whole interlocking spiral here that is beyond the scope of this post.

My main interest is in what this all means for writers. For the last couple of years the self-publishing boom has been a net-gain for writers, especially those with a track record. And a backlist. But even new writers who haven't been able to get inside the gates of the Forbidden City are seeing real money as independents.

But in gazing at the horizon in light of the DOJ's action, some are saying that things don't look so rosy. Here is what Mike Shatzkin, the Insightful One, has to say:

Over time, the biggest losers here will be the authors. The independent authors will feel the pain first. Agency pricing creates a zone of pricing they can occupy without much competition from branded merchandise. When the known authors are only available at $9.99 and up, the fledgling at $0.99-$2.99 looks very attractive and worth a try. Ending agency will have the “desired” effect of bringing all ebook prices down. As the big book prices are reduced, the ability of the unknowns to use price as a discovery tool will diminish as well. In the short run, it will be the independent authors who will pay the biggest price of all. But, in the long run, all authors will just get less. They will join the legion of suppliers beholden to a retailer whose mission is to deliver the lowest possible price to the consumer.

I am going to take issue with Mr. Shatzkin on his characterization of writers as the "biggest losers" in all this. Not so. This is simply another development in a long and ever changing contest. Writers who produce, consistently and well, will always have a shot at the rewards of a race well run. 

We didn't create the Big Six or Amazon. But we will use them just like they use us. We will make strategic decisions, as they do. It's called doing business, and writers are better positioned than ever to do it in creative ways.

So get on your horse, writer. Learn to ride in the mud. Don’t trust your fate to anybody else. You are responsible for your future, and you need to grab the reins and get into the thick of it.

For example, if you pursue a traditional contract, take a hand in negotiations. Learn what contract terms mean. Negotiate a way to produce non-competing works on your own dime. Don't just blindly hand the reins of your very life and career to somebody else. Ever again.

Have courage. There is a lot of bumping going on in the turns. Don't be timid. Bump back. Hang tough in the saddle. If somebody tries to hit you with his riding crop, take it from him.

While the overall effect may be greater challenges vis-à-vis "discoverability," so what? Facing and overcoming obstacles has always been the lot of the writer. Nothing's different now. You must produce quality, and a lot of it, for the rest of your life to have a writing career. You must add a long tail to your horse. If you do, you have a chance to cross the finish line and get pelted with flowers.

And why, as a writer, wouldn't you do this anyway? We write. Even if some of the big publishers fall off their horses, we writers will still be in the race. Even if bookstore shelf space continues to dry up, we writers will still be coming at you.

Because we are creating stories, which is what people want and need in this crazy world. We are weaving dreams, getting under your skin, keeping you up at night, making you laugh and cry and maybe sometimes throw our books across the room. 

We are storytellers. 

And we are not going away no matter how hard it rains.

30 comments:

  1. I may not be the brightest bulb in the box, but the argument RE: how terrible it would be to remove agency pricing doesn't make sense to me. I like reading Mr. Shatzkin's posts though I never understand half of what he says *-)but I don't see how the concept of lowering e-book prices reduces discoverability. Competitive pricing in the market place is what the free market is all about. And as you mention in your post, getting noticed in a vast marketplace has ALWAYS been hard for authors.

    And while I'm certainly interested in these debates as an author who desires to be published, I am always first and foremost interested as a consumer.

    And I find "Amazon as the new big evil empire" as tiresome as the "Walmart as evil empire" nonsense.

    This DOJ inquiry also came up when someone forwarded an article from Scott Turow at the Authors Guild where he says "bookstores are critical to modern bookselling."

    This is another aspect of the overall argument I don't understand. As a consumer, I can't remember the last book I bought in a bookstore. There is always more selection online.

    I can understand the nervousness on many sides, but it all boils down to fear of change.

    In any case, I'm willing to put in the work on my writing, and I like my chances better today then I would have had several years ago.

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  2. Excellent post! Glad you left it on a hopeful note, there is too much doom and gloom out there as it is.

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  3. I like mud. Its fun to run and jump in and it makes great pies. I feel a poem coming on...

    Mud, mud, oh muddy muddy mud
    I think you are not a dud
    oh my mud of my heart
    I smile at thee
    cuz thou art mud
    Oh mud muddy mud muddy mud mud mud

    bestseller that, gonna go for a gummint grant and maybe one o'them Know Bell Prizes

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  4. BK, the post you mentioned from Scott Turow, president of the Author's Guild, can be found here. He calls the DOJ action "grim news."

    Mr. Turow's post has created a firestorm of evisceration from the likes of Konrath and Eisler, and digital observer David Gaughran.

    Wear your asbestos vest as you read.

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  5. MikeH, yes, there is often too much gloom and doom. We can't let that stop us. Ever.

    And Basil, you have proved that writers of all kinds of, er, literature will be ever with us.

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  6. James, this one is a keeper. Thank you for the succinct explanation of the "agency" model, economics in general, and the way this particular corner of the world works. I also agree with you with respect to your position that authors will not be the biggest losers, should the agency model be pruned from the publishing vine. I don't see it as a losing proposition at all (at least for authors and consumers). We forget sometimes that our product is purchased with discretionary money; lower pricing is a factor that can attract those bees that we all want and need.

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  7. you're the storytellers.
    we're the readers.
    so weave us some dreams and keep us up all night.
    because we're not going away either.
    o.k...we may need an umbrella and wellies to wade through it all. but we are a resilient lot.

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  8. Basil, I did not know you were a poet. I'm presently about to read a Basil Sands novel and am looking forward to it.

    I am reminded of the world's shortest poem-stop me if you've heard it.

    Fleas
    Adam
    Had'em

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  9. I actually expect lower ebook prices to help those "new traditionally published authors" that Turow laments will not be discovered in bookstores. Discoverability for indie authors certainly is helped by lower prices.

    When Amazon decides to discount paper books (now), they pay full royalties. I don't see how this hurts authors in any way - in fact it's a win: your readers get a better price, but you get full royalties. This should also be the case for trad-pub authors/publishers. So it's more about market share (for the retailers) than price (which I get).

    But your point is (as usual) spot on: authors will continue to create the content and the future for storytellers continues to be brighter than ever. Great post!

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  10. Amazon complaining about monopoly pricing is a hoot.

    I'm not sure what all this means for writers, though I'm pretty sure it won't be good.

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  11. There is so much here to try and grasp, at least for my mind. Thanks for putting this together, Jim. Can you provide an example for your statement: "Negotiate a way to produce non-competing works on your own dime. Don't just blindly hand the reins of your very life and career to somebody else. Ever again."

    This is how I understand it. If I get a contract for 3 more historical romances then I need to negotiate the books I want to write as e-books that are paranormal or from another genre? Am I getting this right?

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  12. Great post as usual, Jim. I will, however, take issue with you on the muddiness of the future of publishing in general and indie authors in particular.

    I think that, instead of mud, we are facing sunshine. "Known" authors, presumably defined by Shatzkin as those whose books can be found at Costco and airport kiosks, will see their income rise from increased digital sales, even at a lower price and even at their collusional 17.5% royalty rate.

    Let's not forget there are plenty of known indie authors whose books are not found in any brick & mortar store. They will thrive.

    But wait. Shatzkin says indie authors will be the first to be hurt by the new arrangement. So how can they thrive?

    Well, Shatzkin's comment sounds very much like wishful thinking on the part of a committed legacy veteran. It also falsely assumes book sales are a zero sum game: if I buy your book because it's suddenly priced at $2.99, then I don't buy John Gilstrap's book which has been $2.99 all along, thereby causing Gilstrap to "lose" a sale. This is pure fantasy.

    KDP Select has increased discoverability for indie authors, and I'm quite sure legacy publishers would die before enrolling any of their books in it. They still don't get the idea that giving a book away can increase it's sales once that book is no longer free. My point being that Select will continue to fling open doors of discoverability to new authors while legacy authors sit on the sidelines sneering at all those idiots giving away their books.

    Shatzkin outlines the dire future if the agency model goes into the scrap heap of history, where it belongs. He bemoans the fate of Barnes & Noble, Kobo, and iBooks. Well, if those entities want to compete in the world of bookselling, they're going to have to shape up. Especially iBooks. Have you ever tried to upload a title to their store? Have you ever tried to get meaningful sales figures? Do you know they were completely closed for a week around the end of December? They don't really want to sell books (right now, anyway), so if they're hurt by it, that's the way it goes.

    Amazon outflanked Apple long ago by offering a free Kindle app for those with iPads. How many people do you know who have an iPad reading app on their Kindle? Is there even such a thing?

    You know, free enterprise has never meant equality of outcome.

    Shatzkin goes on to say: "But, in the long run, all authors will just get less. They will join the legion of suppliers beholden to a retailer whose mission is to deliver the lowest possible price to the consumer." This is legacy publishing's most delusional propaganda.

    He has no basis on which to say "All authors will just get less". What's wrong with Amazon trying to deliver something to the consumer at a low price? What consumer wouldn't want that? And it's certain that book sales will increase once this happens, with an accompanying increase (NOT decrease) in author income.

    It would appear Shatzkin is hanging on tight to the legacy system and doesn't want to let go. It's okay, though. He's in a big, noisy club.

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  13. I join in on the thank yous for the explanation of the agency model. My only awareness of the kerfuffle was when books by the bigs were no longer being discounted and I had a sad.

    I like Shatzkin as well, whether you agree with him or not, he delves into the hard questions.

    As a writer, I, of course, want my golden scribblings to be treasured. As a businessperson, I know it is a commodity. As a reader, I have more choices than I can read in a thousand lifetimes, so I am going to pick and choose what I can afford and am in the mood for.

    I can spend $10 on one book or $2 on five books. As a reader, I've done both. As a writer would you rather make 10 dimes each for one book or one dime each for 10 books? Haven't done it yet, so I dunno the answer.

    The Big 6 is heading for a showdown with reality. Yes, it costs a lot to create the book. It also costs a lot to maintain their headquarters and image.

    I used to work for a megacorp that spent like a drunken coed with her father's platinum card. It was fun. Then things turned in the economy and they went into austerity mode.

    No more conventions and junkets. Expense accounts vanished. Offices consolidated and closed. They moved the HQ to digs in a less expensive state . . . etc. etc. etc. And guess what, they are still a megacorp and profits are at record high. And most people would think they are still pretty extravagant. They don't know the old days.

    Also, eBay nearly wiped out the collectibles market. What was once rare became a commodity. Prices cratered. Tradeshows withered and died. Yet, after 15+ years, the market is rebounding. People want to talk to experts and get suggestions or help with hard-to-find items. They want to browse tradeshows and see the merch. They want a personalized experience. The market is smaller, but vibrant. Bookstores aren't going anywhere.

    Big 6 . . . take note . . .

    Terri

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  14. I have always found the agency model to be offensive. I can think of no other industry where the manufacturer of a product gets to set its price. There's always been an MSRP--manufacturer's suggested retail price--but beyond that, the retailer gets to do what it wants.

    To me, the agency model for books is as ridiculous and offensive as having all the clothing manufacturers somehow banding together to tell Macy's that they can't have sales after Christmas.

    I also have a hard time getting past the inherent hypocrisy of the Big 6's laments about unfair practices, when they themselves played a huge part in running the indies out of business by refusing to negotiate terms for the indies that even came close to the terms negotiated with the big box stores. I get that that's business, but what's good for the goose . . .

    The Big Six publishers are living the same cycle as the Big Three automakers. Their sheer size--the result of the consolidation craze of the nineties, which did more to hurt writers than any other event I can think of--makes them incapable of shifting with the market. Because the basic publishing model hadn't changed in 300 years, they foolishly believed that it never would.

    Their collective cluelessness was never demonstrated more clearly than at a ThrillerFest a couple of years ago, when a senior executive with Random House gave a luncheon keynote on the various strategies they're using to inflate eBook prices. I was stunned. They didn't get it then, and I think many of them are not getting it now.

    To be really honest, I think that the mega-buck authors who've come to depend on $5 million per book advances should be scared. They're going to have to dial their lifestyles down to live with $3 million per book. It'll be tough, but I bet they'll muddle through.

    John Gilstrap

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  15. Good comments.

    Jillian, what I mean is that writers with traditional contracts need to be free to supplement their income (since advances are way down) with self published work if they so desire. The publishers rightly do not want authors putting out competing works. In your case, if you self-pubbed a historical that you offered for $2.99, that undercuts and competes with the publisher, who has invested in you.

    But what about shorter works, novellas for example? You can gain new readers that way, which is something publishers should be FOR.

    And what about that paranormal idea? Why not? Again, new readers. Some have even used a pseudonym for going "off brand." (gee, I think I know someone...)

    But with the traditional publishing model where it is now, keeping a writer in exclusive servitude is no longer cricket. Thus, a very clear and specific non-compete clause and option clause must be hammered out. No more one sided deals, which were the result of only one side holding all the cards. Writers hold some aces now, too.

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  16. Jim, I'm confused. Are you suggesting an end to the multi-book contract? As for option clauses, aren't they just first-look clauses? I've never seen one that prohibits an author from going elsewhere with a book that a publisher has refused.

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  17. I really appreciate all the points made in the post and the subsequent comments. I find this whole publishing thing very confusing and this helps a great deal.

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  18. Thanks, Jim.

    I'm writing this before I read all the replies to your post because, as always, your Sunday posts bring life to my writing in ways few others have ever done.

    Yes, it feels like a race at times.
    Yes, somedays alot muddier than others. I'm self-published in a time that is changing for TPI.

    But Yes, I am a storyteller, and when all the chaff separates from the stalks, that's where the ultimate stakes lie for me.

    I tell stories. What THEY do with them remains to be seen. But in the end, that's what matters most to me.

    You guys at TKZ all help me learn how telling my stories can be better. And therein lies the value of what we do. We collaborate in a magical way.

    We tell the best story we can - what moves human beings - what inspires us, helps us, what we're angry about, what makes us smile, what makes us laugh.

    The venues we use to work that magic may change, may even be legislated for-or-against, but telling stories won't ever change.

    Three readers just this past week told me my novel kept them up late - indeed, ruined their day because of lack of sleep. To me, that pretty much sums it all up. There is no greater compliment to a storyteller.

    Thanks for bringing this important development to light. I wonder what will happen?

    Paula

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  19. This post brings to mind a conversation I had in 2006 with my newly appointed editor. During a conversation about sales and marketing, I asked her about Amazon sales. "Oh, we don't count Amazon," she said. Right. Six years later, Amazon is cleaning the Big 6's clock.

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  20. On the contrary, Brother Gilstrap. A multi-book contract is perfectly fine if the parties find it of mutual benefit. The publisher invests in the author and deserves the protection of a non-compete clause for a book length work of similar genre. The easiest way to do this with a series is to limit the clause to book length works featuring the same series character. Self-published shorter works featuring the character work for both author and publisher (though for some reason many publishers are not getting this). They can be a great way to make tons of new readers and guide them to the books.

    The option clause needs to be carefully worded, too. Let's say you have a 3 book contract, book 1 comes out. You then seek to self-publish. Certain option clauses can be read to limit your "going elsewhere" with a "next work" until after book 3 is published. Again, the safer way is to make sure the option is limited to the next book length work in the series.

    Those two clauses, worded well, can protect both author and publisher, which is the whole purpose of a contract. (In the past, it's been too easy to weight everything toward one party, the one with the deep pockets and sole means of distribution).

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  21. Thanks for the clarification, Jim.

    JG

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  22. James, you are my hero. Amen to your final sentiment. Not only do I feel like the horse, but the jockey as well. I'm glad to see I'm on track with all your excellent advice.

    For the record, I have never had a problem with mud. I hear its great for the skin.

    While all this shaking down is going on in the publishing industry I also believe an author must, must, must become innovative and constant in marketing themselves and their work, especially if they are running independently in e-pubbing. Coupled with excellent writing, marketing is the second required tool in today's author arsenal. It's more important now than ever.

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  23. Indeed, Kathleen. Those two things go together like never before. Great writing and consistent marketing, over the long haul.

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  24. And that is exactly why I've been warning against Amazon for months now. The only one to lose in this whole mess is the authors. And handing over the reigns to Amazon will be the worst thing to have every happened to the book industry. Now I know why no one is suing them for selling at a loss in order to force out the competition, even though it's illegal and Amazon has been doing it for years, it's harder to prove than publishers desperately trying to defend themselves from Amazon's vicious attacks.

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  25. Reading the comments make me laugh. I can't believe how many people don't understand what you're trying to say about the danger of what the DoJ may do to the major publishers.

    Open your eyes people. When everyone is forced to sell their books at deep discount, even the big names, do you realistically think anyone is going to read books by no-names when you can get proven authors at the same price?

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  26. Elizabeth says: "do you realistically think anyone is going to read books by no-names when you can get proven authors at the same price?"

    I do not know whether what you say is statistically true, but for myself, this is a fallacy regardless of pricing model used. I have never chased after the big name authors, even before there was such a thing as digital books or online stores.

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  27. Kind of scary and inpsiring at the same time. Thanks for the info/pep talk.

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  28. I think "proven authors" will keep their prices relatively high, even with the demise of the agency model. Why should Patterson sell a book for $3.99 when he can get much more? Whether it's the publisher setting the prices, or the authors themselves, authors at every level will still get paid. Publishing will become like the music industry--there will be fewer overall deals, but more indie artists will make a living. People will sample newbie writers at low prices, and pay higher prices for tried-and-true authors.

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  29. Elizabeth, even if this turns out to be a "worst case scenario" (and I'm not yet convinced of that), my point is that writers will still write, and as Kathryn says, indies will still have a shot at making some bank at this thing.

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  30. And the "name" authors can only turn out so much. There's never enough King or Clancy to make me happy and there's too much Patterson (5 new ones at the library right now). Discounting is what makes me sample new writers. Lower prices means I buy more books.

    The only ones who will be hurt are the middlemen.

    Terri

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