I have to admit that reading Hugh Howey has become an increasingly enjoyable experience over the last several months. The blog is now a fascinating mashup of misstatements, invective, valuable insights into indie publishing (though we could certainly use more), Amazon fanboy enthusiasm and pure silliness. You never know what you're going to get.
I've been casting around for a word to describe Hugh when he goes off the rails and crashes into the hard concrete of reality and bounces up, like the super hero Rubber Man, and proceeds to go off the rails in almost precisely the same fashion soon afterwards on exactly the same track. He's not riding Amtrak, he's riding Acme.
Take, for instance, Hugh's latest proclamation on the book business. Books, Hugh proclaims, are "exactly like razors." No qualification, no irony, no self awareness. He means it. Read the article. (I do warn you that the rest of the piece is another mistake-littered mush of pseudo-Marxism, misstatements and misunderstandings of how car distribution works, and pronouncements that demonstrate that he doesn't understand channels and how and why they exist. And yes, I know he worked in B&N. But he didn't learn anything.)
Now, anyone with a bit of understanding knows there's something very very wrong with the claim that books are "exactly like razors." (He means blades.) And no, I'm not making pretentious claims that books are "art" and "culturally" valuable and getting my nose all runny when I think of Shakespeare and Jane Austen and Twain and Conrad and so on. Some books are art and culturally valuable and some are awful and a waste of time and most fall somewhere in between that spectrum. And yes, obviously books must compete with other books and other forms of entertainment. And books do sell both directly and through channels as do other items.
But take a look at a pack of razors and then open up two books and then think about what's different between the two experiences. You're a smart audience so I'm only giving you five seconds.
Times up. Figured it out? Of course you did. You saw immediately that every razor looked, felt, and performed the same function. If any blade didn't, you'd head back to the store and demand a replacement.
But any two books are different and must be, of necessity. (And don't be a wise ass and talk about print runs or copies.) That's because every book ever written is, inherently, a hand crafted item. And while genres and categories of books exist, within them every book strives to bring a unique experience and slice of knowledge to the reader that can't be duplicated by any other book.
Not all books do this well. Not all driftwood lamps are attractive (well, none of them, actually) and not all hand-crafted furniture is well made. But once 1984 or Pride and Prejudice and yes, Wool was written, there could never be another one of them ever written again.
And this reality impacts the economics of book creation, production, and distribution.
So when Hugh says stuff like this, what do you say?
I say it's Howeyish!
SanClare Black (The Prince of Sorrows) by Jenna Waterford
File Size: 4639 KB
Print Length: 362 pages
Simultaneous Device Usage: Unlimited
Sold by: Amazon Digital Services, Inc.
Perhaps the greatest novelist of all time is Charles Dickens. I read Dickens extensively as a boy and recently have come back to him as I realized how archetypal his work is and how much fantasy writers owe him. As a recent example, the last episode of season "five" of the reconstituted Dr. Who was a retelling of A Christmas Carol. This makes perfect sense, as Dickens is the father of all time travel stories.
SanClare Black descends from another great novel of Dickens, Oliver Twist, with Mark Twain sharing progenitor rights via The Prince and the Pauper. Twist was the first major novel featuring a child as the chief protagonist and blends Gothic horror with a fairy tale meme, all of it overlaid with strong homoerotic elements in the relationship between Fagin and the band of pick pockets he both cares for and manipulates. The arc of the novel takes Oliver from poverty and despair to relative comfort and salvation, then plunges him back to the depths. At the end of the story, as befits a fairy tale, Oliver is finally restored to the safety and comfort of his adoptive family while those who have abused and kidnapped him receive their just punishment.
SanClare Black follows the basic template created by Dickens in Oliver Twist, but this is the 21st century and the novel is able to reach into dark corners of the human condition Dickens could only hint at. You may question whether some aspects of the tale are an appropriate fit to the fantasy genre, but the characters author Waterford can create because of her narrative choices are far more complex and varied than those found in most fantasy novels.
The novel begins with a warder, Jarlyth Denara, rushing to attend the labor of the Queen of Serathon. He is a "sensitive," (a combination of telepath and empath) and already psychically linked to the baby boy about to be brought into the world, Prince Nylan. After the child is born, Jarlyth and the infant immediately head for Tanara Priory, a place where the very psychically active Prince will be educated and sheltered while he learns to toughen his mind and spirit against the constant bombardment of other people's thoughts and feelings. Up till his eighth year, our hero lives a life of comfort and privilege.
Things can't go on this way, of course, and Nylan is kidnapped by mysterious forces and eventually finds himself abandoned sans memory in the rather grotty kingdom of Camarat. At first, Nylan (now renamed "Michael") seems to have enjoyed the luck of a soft landing, but he is the "Prince of Sorrows" after all and at ten years things go to hell and our hero is thrown into the streets of Camarat with no food, money, or guidance. All the while, in a running subplot his mentor Jarlyth is searching for the child, guilt stricken by his failure to protect him.
At this point in most fantasy novels, a kindly wizard, troll, elf, rogue et al typically shows up and things move along the heroic path trod by so many other stories. SanClare Black goes down a darker, and far more realistic, path. As happens to children worldwide when they are pried out their familial cocoon, Nylan falls victim to child abuse and rape, and eventually must make a living as a boy prostitute. The prose and passages describing his victimization and degradation are not overly explicit, but they do make for some tough reading. You have been warned. (If you're the sort of person who buys the book precisely because of the aforementioned, please keep that to yourself and don't ever contact me.)
In addition to a compelling story, one of the best things about SanClare Black is the writer's smooth, professional writing. The novel is not marred by the cracked prose and clunky descriptions that afflict too many of the indie books that have been submitted to me for review. This is professional wordsmithing and I appreciated the experience. I also enjoyed watching the character of Nylan being created and realizing that his ordeals and traumas will enable the story to explore a persona who will face memories and choices not normally touched by fantasy.
One teeny tiny point. If you're a regular fantasy reader, you're familiar with those little maps many books sport that provide you with a visual guide post of their make believe world. I've always thought those maps were a bit silly, but after reading SanClare Black, I cared enough about the universe it creates to want one. A tribute to the author's imagination.
SanClare Black is a strong, fascinating first release in a projected series. I look forward to reading the next book.
(Breaking News: Message from the future via "Wool" silo received today: "David Streitfeld. Worst. Person. Ever.")
Boy O Boy, is Hugh Howey mad this morning! He thinks New York Times Reporter David Streitfeld is the worstest human being in the entire world. Ever. Since evil was invented.
How bad is David Streitfeld? He's THIS bad:
"David Streitfeld of the New York Times has now cemented himself as the blabbering mouthpiece for the New York publishing cartel, and while he is making a fool of himself for those in the know, he is a dangerous man for the impression he makes on his unsuspecting readers."
"After reading this, I'd be very, very careful. A dishonest man with access to a pulpit is like a poisoner with access to a well. David Streitfeld is a dishonest man."
Boy, that is bad! I kinda expect to next see David Streitfeld nominated for membership in the ISIS drone hit list.
Now, just what has David done to deserve such opprobrium?
Well, he wrote an article that's mildly sympathetic to the Hachette authors who are caught in the cross fire between the publisher and Amazon. Link here. If you've just read Part VI of my series on book channels, you know that the fight is over agency vs. wholesale pricing. Amazon doesn't want to buy any books under the agency model, primarily because it shifts pricing power to the publishers, and the publishers don't want to sell all their books under the wholesale model, primarily because they wish to optimize revenue when they launch new books by well known authors. (For even more reasons on the part of both parties, read the article.)
I also don't quite understand Hugh's carrying on about Hachette and agency because, as I point out, Amazon uses a modified version of that model in regards to indie publishers. If it's sauce for the indie, why shouldn't Amazon baste in the same rub?
Now, when casting thunderbolts at poisonous blabbering mouthpiece Stretifeld, Hugh makes some very specific comments backing up his call for summary execution, but dunno. Some of these seem a bit sketchy to me. For example, this one:
"We obviously have a reporter here in the pocket of monied interests,..."
I don't know, maybe it's just me, but if you're going to basically accuse someone of taking bribes, perhaps you should offer some evidence of this? Is Hugh Howey prepared to substantiate this serious charge?
And this seems rather problematic as well:
"Douglas points out that: (Douglas is Hachette author Douglas Preston, also unloved by Hugh):
Anyone contemplating ordering his latest novel, “The Lost Island,” written with Lincoln Child, is warned it might take as long as three weeks to arrive. That, as Amazon and its customers know, might as well be forever."
Hugh points out how utterly foolish this argument is by stating:
"Without mentioning the fact that this delay is due to Hachette’s shipping inefficiencies."
Whu? Huh? But, but, but, Hachette has been shipping books to Amazon for years! Amazon never claimed those damn Frogs don't know how to put books in boxes and ship them to us on time! At least, not until now. And print books are also shipped through distributors and they know how to break bulk. Can't Amazon obtain those books from, say, Baker and Taylor?
Hugh goes on:
"Why should Amazon sell pre-orders for books when it has no lasting contract with Hachette? Why should it stock predictive quantities of their titles in warehouses when it may not be able to sell that stock in the near future?"
Can't this question be asked another way? Like this?:
Why shouldn't Amazon buy some of Hachette's books via the agency model and let the market demonstrate if Hachette is acting foolishly or wisely in terms of maximizing its revenues? Why should Amazon attempt to dictate the pricing structure of E-books when authors, publishers and buyers can find that out for themselves?
And finally, Hugh lets loose a lament designed to pull tears from heaven. He wails that the NYT has empowered a:
"...reporter who sings the praises of a handful of elite authors in exchange for 6-figure ads while dismissing the thousands of authors who disagree."
But wait a second. Hugh himself has told us that 200,000 people signed a petition supporting Hachette and the publishers. Hugh doesn't seem to like these people and calls them "whales." (I don't KNOW why. Maybe he actually thought the signatories were whales, though one look at those flippers and you can guess they'd have problems with a pen. Maybe they used a voting app that responds to ultrasonic squeals.)
Anyway, the whole article goes on like that and all I have to say is that I were a whale, Douglas Preston, or David Streitfeld and I saw Hugh Howey standing near me with a harpoon, I'd respectively dive deep, run away quick or hide myself well until Captain Ahab had cleared the area.
What Hugh Howey Won't Talk About (but Should). The Book Channel, Part VI of Several Parts. The Resellers and Agency vs Wholesale Pricing and MDF, Oh My!
Agency vs. Wholesale Pricing
The crux of the battle between Amazon and the book publishers is over two pricing models and whether Amazon will be forced to purchase some E-books from the major publishers via the agency vs. the wholesale pricing model. Note that the battle revolves mainly around digital properties, not paper. The two sides in the battle are in most cases quite happy to sell and buy print books from each other via traditional wholesaling.
What is Wholesale Pricing?
Wholesale pricing is the most common reseller method of buying and pricing in the world, and is used in thousands of industries other than books. We are all familiar with it. Below is a highly simplified model of a wholesale priced book. Please remember that the retail price of the book is normally assigned by the publisher if you are formally published and serves as the foundation for your royalty payments.
This pricing model is sometimes expressed in terms of a book being sold to the reseller at a 50% wholesale discount. Use whatever terminology you find makes the most sense to you, but the numbers will come out the same.
In the wholesale model, while the publisher may assign a retail price (in the software industry, the typical term was SRP--suggested retail price), the reseller does not have to sell the book at that price. They are free to adjust their resale charge up or down based on their assessment of the market and their promotional strategy.
What is Agency Pricing?
Before we look at the agent model, let's first clear up some misstatements and misconceptions about agency pricing. First, this model is not exclusive to book publishing. It is widely used in other industries as well. In software, the equivalent to agency was called MAP (manufacturer assisted pricing).
Second is the fact that agency (MAP) pricing is not illegal. Claims that it is are ignorant. Apple resells books via the agency model. Apple and the major publishers were found guilty of price collusion in their dispute with Amazon, not for attempting to negotiate the use of agency pricing. The current Hachette vs. Amazon dispute focuses around Hachette's insistence on selling some books to Amazon via agency and Amazon's insistence that Hachette sell its books using wholesale pricing (and pay more MDF). The courts are neutral on this topic. If the other publishers also insist on selling books via the agency model, Amazon will face some tough choices and the courts will not assist them in their struggle (unless Amazon can again prove collusion).
As you can see, in the agency model the supplier (publisher) controls the retail price of a product sold to a reseller. The reseller, of course, has the ability to reject this, but normally won't want or be able to.The reason is that only a company with a dominant market position and premium product(s) has enough leverage to negotiate for this type of pricing model. To return to software for a moment, in the early 2000's, companies such as Adobe and Microsoft negotiated MAP pricing with their channel. The reason they could do so was in desktop operating systems and advanced professional graphics tools, both companies had achieved effective monopolies in their respective categories. This is why to this day, in retail channels a copy of the latest version of Windows always costs the same unless the supplier has agreed to sponsor a special promotion.
Why do the Publishers Like Agency Pricing?
For several reasons. They include:
Many publishers have multiple imprints and will not attempt to negoriate for agency purchases for their entire catalog of books, only their top-tier lines. Nor does the agency model have to be in place for the lifespan of a book. The contract between the publisher and reseller may call for the agency model to be in place for only X period of time and then revert back to wholesale. Earlier in the series, I noted the different prices Amazon charges for older Stephen King novels; these are being sold to Amazon via the wholesale model. In an earlier battle, Macmillan told Amazon it could buy new E-books from Amazon seven months after the book's release, but until that time, Amazon would have to purchase the titles via agency pricing. In retaliation, Amazon began to limit the availability of Macmillan titles on its site, but backed off. Macmillan won that fight.
Why Does Amazon (and other Resellers) Like Wholesale Pricing?
The last point deserves some more explication. Walmart is the largest reseller in the world, with revenues close to $500BM in 2013. Amazon's revenues are about $75B.
Amazon was founded upon the premise that because it was an Internet company, it could eventually out-compete WalMart and its brethren by offering the widest possible inventory at the lowest possible price. (I, personally, think that Amazon is right. In my novel, Rule-Set, I describe a world of the future where stores are entertainment centers and serve as a way to run promotional and loss leader programs. The point of these programs is to persuade buyers to integrate your product into their "purchasing manifests," subscribe-to-buy lists that automatically reorder most staples and many optional goods. Day to day delivery of purchases is carried out by 24/7/52 drone delivery fleets and personal and local 3D or "maker" printers.)
Amazon's mission is a difficult one. Its low price strategy shaves margins to the bone. To make money, it must pursue the highest possible operational efficiency. (When the robots eventually take over the world, they'll have held their first steady jobs at Amazon.) How hard this is to do can be seen by the fact that Amazon has never been consistently profitable. Some years it makes money, some years it loses it. Sometimes a lot. In 2014, losses are projected to be in the area of $1B. But, to date, Jeff Bezos had been able to placate his shareholders with promises of future profits and play the long game.
In addition to one day surpassing Walmart in size, Amazon also wants to wield the type of power the world's largest retailer enjoys in its relationships with its suppliers. Trips by vendors to Bentonville, AK to visit Walmart buyers are accompanied by the same level of hope and fervor as exhibited by lepers going to Lourdes. Suppliers will build, package, and price their products according to Walmart's requirements and diktats. A successful launch in Walmart can make a company. Failing to gain access to its shelves can break it.
Amazon likewise enjoys some of the same power over its suppliers. The publishers, however, with their control over the best selling content in the book market, are an anomaly in the eyes of Amazon. It badly wants to bring them to heel.
How Are Writers Impacted by the Wholesale Pricing Model?
There is almost no impact. In the case of published authors, your royalties are calculated off the retail price of the book. And since Amazon and its counterparts have no interest in buying books at wholesale from indies and deciding how to mark them up and promote them (remember, Amazon is a channel, not a publisher), the issue is likewise of little interest to you ink-stained wretches striking out on your own.
How Are Writers Impacted by the Agency Pricing Model?
This is a more complex issue and is highly dependent on your brand position in the market. If you are a high selling, well known author, agency is probably a benefit to you because it maximizes your book's revenues during its launch. And agency pricing will help support your premium reputation in the market. As I wrote earlier in the series, the public will pay a premium to obtain access to new works sold by established authors. Price your product at too low a level and the increase in the volume of sales generated by this strategy will not make up the loss of revenue.
Of course, the above is dependent on other factors. How good are your reviews? Does the publisher properly estimate what level of premium pricing you can command in the market? What types of promotions are being run to support your book? Does your publisher know when it's time to shift back to the wholesale model and activate your book's long tail?
If you are a new, published author, the issue is not that important to you. Your publisher will probably sell your book into the channel at wholesale pricing and your book will takes its chances with the market. If you sell well, your next book may earn an agency pricing gold star.
For indie authors, the answer is that you already exist in a modified version of the agency model. (It's very ironic reading Amazon advocates such as Hugh Howey and Joe Konrath damn agency pricing and not realize indie publishers are living it!). First, Amazon's margins are already dialed in at 30% a la typical agency models. The larger publishers, BTW, do not pay retail usage fees. Second, you are locked into Amazon's $7 pricing box (handing over 65 points to a channel is not financially viable). This pricing regime is not in the best interests of indies and claims that it is are financially incoherent. We'll discuss (and show) why in an upcoming article. We'll also finally reach the margin slurping topic of MDF in the next article.
What Hugh Howey Won't Talk About (but Should). The Book Channel Part V of Several Parts. The Resellers
The Resellers (the Second Tier)
We finally come to the most exciting part of this series, the resellers, in particular Amazon.
Resellers are the customer facing side of the book distribution channel. When I was a kid, resellers primarily consisted of independent stores and small regional chains (Bookmasters, for example, in NYC). Over time, national chains such as Crown, Waldenbook and and others spread across the country, usually opening stores in strip and enclosed malls. (Paperbacks were also widely available in drug stores, toy shops, supermarkets and similar outlets.)
In the 1970s, Barnes and Noble pioneered the concept of the big box bookstore and was joined by Borders. These mega stores were usually built in large strip and some indoor malls and provided special in-store sitting areas, served light food, premium coffee, and sold music, gifts, games, magazines and newspapers in addition to books. Over time, the big box stores, in conjunction with Amazon (remember, the company went into business in 1995 as online book reseller), steadily ate away at the mid-sized chains and independent stores and drove many of them out of business.
In the early 2000s, senior executives at both B&N and Borders were positive the future lay in building as many large stores in as many economically viable locations as possible. In their view, independents and regional chains would survive only in areas that were demographically unable to support a big box. In that event, many in the industry predicted that Amazon would pick up most of the independents' business (a prediction that has turned out to be true in many markets).
Then, in 2007 Amazon introduced the Kindle and began to disrupt the sales and business model of the last great analog technology, one whose existence began in the West with Gutenberg.
(As a quick historical note, you should be aware Amazon did not pioneer the concept of the inexpensive E-reader. From 1999 to 2001, several technology companies, including Adobe, Sony, Panasonic and perhaps a dozen others who are gone and buried attempted to kick start the E-pub market to life. They failed because the technology of the time provided a reading experience that was far inferior to that of the book. To read more about the effort, I suggest you pick up a copy of my immortal tome In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters, available in Kindle on Amazon, B&N and other fine retailers everywhere (print too, though if you're in technology, you won't buy a piece of a dead tree).
The impact of the Kindle was profound, comparable in many ways to the introduction of the Apple iPod. The Kindle's reading experience matched that of the printed page in the "eyes" of most of the market and offered portability and flexibility options not possible with printed material. Growth in the print market came to a quick halt, then began to contract. The contraction is continuing and cannot be halted.
By 2011, Borders had liquidated operations and B&N was battling for its life. The company attempted to claim its share of the digital future with the Nook reader, but lacked the infrastructure content, financial pockets, and patient shareholders, to compete with Amazon. B&N backed out of the Nook and sold the rights to Samsung. I don't think the timing was particularly fortuitous for the Korean giant. Dedicated E-readers are being subsumed by smartphones and tablets in the same fashion as the smartphone subsumed the iPod. Amazon's Kindle reader is available on every major hardware platform and works fine on all of them (especially on Amazon's own Fire line of tablets). I suspect Amazon will be happy to vacate the dedicated E-reader market ASAP as at its best, the units were sold on a break-even basis and many more at loss leader prices.
The Reseller Channel Today
The book reseller channel today is broken into two primary components, print and digital. If you are an indie author, you will almost never have any reason to interact with print resellers. Please note that if you as an indie or a publisher sell your books online or perhaps at shows, you are not considered a channel. You are a direct seller. More on this later in the series.
Print resellers can be categorized into:
If you are an indie author, you will almost always be required to interact with online digital resellers based on your book's price point. The digital reseller channel consists of:
What is the Future of Print Reselling?
It has none. Within 10 years, the market will have shifted to digital delivery. The environmental arguments against print alone make the demise of the technology inevitable. (I've worked in print shops and it's a pretty dirty business.) Throw in cost, form factor, flexibility, potential tie-ins to multimedia and games and production issues and the future is clear. Print will survive as a niche technology and occasionally see micro rebounds in the same way that vinyl records enjoyed a small resurgence about six or seven years ago (good for me, as I collect turntables) among some millennials. But that will be it.
What is the Future of Digital Reselling?
Digital publishing will be the dominant means of producing and selling books within 10 years. Within 20, print will be a curiosity within the market.
How Do Resellers Make Money?
Resellers make money by selling books via three primary models.
The battle between the books publishers and Amazon that has captured so much press attention focuses on the desire of larger publishers to price some (not all) of their books via the agency model while Amazon wants to buy and price books via the wholesale model. The best interests of authors are not the primary or secondary concern of either party. The battle is over control of the industry's balance of power.
In the next article, we'll dig into the two models and analyze why the publishers are fighting for agency and Amazon for wholesale and the likely impact on authors depending on who prevails. We'll also be digging further into MDF, an acronym that indies will come to know very well, but perhaps not love very much.
The Far Bank of the Rubicon by Erik Wecks (The Pax Imperium Wars: Volume 1)
Length: 309 pages (Contains Real Page Numbers)
Page Numbers Source ISBN: 1499619820
Sold by: Amazon Digital Services, Inc.
The Father of Space Opera is E.E. "Doc" Smith, a writer who I devoured as a child but is not widely read today. I've often thought that the Skylark and Lensman series were naturals for the big screen (especially the Lensman books), but I also devoured Edgar Rice Burroughs, particularly the John Carter of Mars books. I couldn't understand why no one hadn't made a great movie based on the series when you could work with a hot Martian chick named Deejah Thoris who ran around the surface of the Red Planet planet in a bikini and gave birth by laying eggs. (No, I'm not kidding.)
And then they did do the movie and just look how that turned out. So I'm out of the recommending- media-properties-for-production business. Except for my book, of course.
The modern space opera has evolved in a framework consistent with the rules laid down by E.E. In a space opera, thou shalt have:
So, given these time honored traditions, how does The Far Bank of the Rubicon do?
Very well, thank you. The mark of a good space opera is that if you step into it in the middle, as I did with Rubicon, you want to circle back and pick up the first book in the series to ensure you're caught up. I did and I'm caught up. The space battles are fun, the technology interesting, and the characters get under your skin. By the end of Rubicon, you've developed that pleasing compulsion to immediately buy the next book in the series to find out what happens next.
The plot of Rubicon is as follows. Our hero, Jonas, is the Prince Harry Windsor of Athena, a star state ruled over by the beneficent King Nicholas, who's caught and toasted with his royal trousers down when the evil Unity unleashes a dastardly sneak attack on the Athenan kingdom. Unity is a corporate state that feel like a cross between Stalinism and maybe the boardroom of GM in the 1950s and soon overruns most of Athena. Along the way, Jonas and his friends manage to launch a few good counterpunches, a series of compelling space battles that are an exciting hoot to read.
Despite the valiant efforts of our Prince, it becomes apparent that all will soon be lost. Jonas's older brother, King Stephen, will have to surrender his kingdom to Unity and endure a prison regimen of cold tea and soggy scones before the inevitable midnight smothering carried out by masked henchmen holding those convenient wool blankets. In the meantime, Jonas and the last surviving Athenan fleet depart their home stars and head out into the void in search of supplies, allies, and ultimately, revenge.
I do have one bone to pick with Rubicon, and that's an early sex scene between Jonas and his paramour Sophia, the daughter of Athena's treacherous Duke Malek. The writing in this passage is awkward and at points unintentionally funny (Space Opera guys, watch "Gone with the Wind" to learn the best way to handle the naughty scenes. Yeah, I know. But believe me, it works out better nine out of ten times):
"He wrapped his arms around her and ran his hands over her butt, while he kissed her belly."
First of all, that sounds like a difficult position to get into. But worse, did he say "butt?!" Hey, we're talking a space princess here. They don't have "butts." They may have smoldering curves, stormy eyes, mysterious nooks, luscious crannies and shapely bottoms but never a butt!
In New Jersey, they have "butts."
This quibble aside, if you're a fan of Weber's Honor Harriman series, The Uplift Saga, or similar tales of galactic swashbuckling, you'll greatly enjoy The Far Side of the Rubicon.
What Hugh Howey Won't Talk About (but Should). The Book Channel Part IV of Several Parts. The Distributors
In the last part of this series we discussed the traditional writer/publisher relationship. Let's move on to the book distribution channels. If you are an indie publisher you will now be dealing and building relationships with the entities that sell your book. The depth and level of engagement with these entities will vary greatly depending on how many books you sell. In the case of JK Rowling, who as of this writing probably has more clout in the industry than any single writer, she was able to turn Amazon into an affiliate reseller. When you click on a Harry Potter link in Amazon's bookstore, Amazon receives a referral fee from her online store "Pottermore. (I don't know what the fee is, but based on Amazon's own affiliate struecture, 5% to 10% is a safe guess.) If you are a smaller presence, such deals will not be available to you.
If you are formally published, you will normally not deal with the distribution channels unless you are a very successful writer. Your involvement with the channel will be limited to promotional activities such as book signings and sponsored lectures on topics based on your book. In point of fact, the channel does not like to deal with writers and in most cases has discouraged attempts by them to educate themselves on how book distribution channels work. You are expected to take your royalties and pretty much keep quiet. However, as the book distribution system is undergoing disruption, this is changing rapidly.
The Distributors (the First Tier)
I was going to bypass the distributors and move straight to the resellers, but decided it would be useful to briefly cover them. If you are formally print published, your book will often go through two tiers of distribution. (Remember, you have transferred rights to the publisher and they now "own" the book.They, not you, are the supplier in so far as the channel is concerned.) The first tier is a distributor such as Ingram or Baker and Taylor. These are companies that specialize in receiving goods from suppliers and shipping them on to resellers. Looked at as percentage of the total gross revenue of the sale of any particular item, their fees typically comprise 3% to 20%. In books the upper range is around 8%.
The primary function of a distributor is to "break bulk." They do not create or sustain markets. The main reason for their existence in the book channel is that many resellers do not wish to maintain independent accounts with dozens of smaller publishers and use the distributors to aggregate them into a central buying "portal." Also, the large publishers wish to avoid shipping to thousands of smaller resellers and will push or require them to order from the distributors.
Distributors can offer ancillary services in addition to shipping. In some cases, they may provide production services or some forms of drop shipping. These are never a major part of their business model. Their primary function is always to break bulk.
The Future of Distributors in Book Selling
They have none. Recently, there's been some excited talk about this publisher or that allying with this distributor or that. All such arrangements will over the next several years become irrelevant. Inevitably, as the book market shifts over to digital delivery, the distributors will be disintermediated from the publishing industry. Their fate can be predicted by looking at the retail software industry. From the late 70s to the early 2000s, distributors were major players in this business. Millions of boxes of WordStar, Lotus 123, Microsoft Windows, Norton Utilities, and so on were shipped through Ingram, TechData and entities that have disappeared or been forgotten. In the early years of the software industry, distributors were major players in the market. Today, they play almost no part in software. The process of disintermediation began in the 2003/2004 time frame and is almost complete today.
The process of abandonment of printed books is occurring rapidly, though it's reasonable to assume that printed material will hold on to market share longer than physical software. Whereas people never interacted with software on floppies or CDs but simply used them as a means to transmit bytes into a PC, we have several hundred years of interacting with books directly. Certain form factors, such as large size children's books, aren't a good fit to the current generation of E-readers. Industry watchers also like to point out that in 2013, E-growth rate slowed, though in terms of unit sales, E-books now account for 30% of the market and about 20% of its revenue and no one projects the growth of E-books will stop. It took a little under a decade for software to move to digital delivery, so give print an additional 10 years.
Don't be fooled by periodic slowdowns. New technology, such as 3D-printers, which can provide a bound form factor on demand for those who truly crave it, and flexible displays, which can be produced (and one day 3D-printed), will enable E-books to reach into market spaces currently unreachable by E-pubs. File format issues are close to being decided, with mobi the likely winner, with PDF and perhaps epub sticking around to keep Amazon honest.
I frequently hear people say that printed books will survive in the future because "they" won't give them up. You can safely ignore that argument because "they" are going to die and their kids won't buy printed books. The demise of print is a demographic certainty.
The death of the distributors in book selling is a good thing for both writers and resellers in the long run (though the distributors will of course disagree. Don't worry, they'll replace books with other physical things they can ship. It will take Star Trek-style transporters before they disappear from business. Or maybe locally distributed medium and large scale 3D-printers.) Other than breaking bulk, they never supplied any vital services.
This will be important to writers and indies whose books will be acquired by traditional publishers over the next several years. Your royalties on your E-book sales should reflect the margin recaptured from the disappearance of the distributors in the reselling equation. Claims by publishers that it will "cost the same" to not ship E-books to distributors (and expect the publishers to make this claim, even though it's ridiculous) should be ignored and your royalties should be higher on your E-books if only for this reason alone. While most publishing contracts to date do not break out the revenue overhead generated by transshipping boxes of books to distributor warehouses, you can believe the cost was factored into your royalty split. Some quick time spent with a spreadsheet and some minimal research will uncover to within a point the costs. These should be subtracted out of the royalty structure and returned to you and the publisher (you'll fight with them over the split. Fight for all of it). If your contract with the publisher includes selling dead tree formats, you can use that as a baseline for your calculations.
Of course, this means your E-pub royalties should be calculated on a different schedule than your paper ones. Don't sign contracts that lump them all into one pot.
In the next article, we'll take a look at the resellers (B&N, Amazon, and their counterparts) and analyze why the publishers are locked in a death struggle with Jeff Bezos and his merry band of disruptors.
Review Submission Guidellines
Want me to review your book? You must join the Rule-Set mailing list and contact me at firstname.lastname@example.org. Do NOT use the contact form for a review request; for press and publishers only. Your book can be a proof but ready for sale within 60 days.
Scifi/-fantasy only at this time. Make sure it's been professionally copyedited. If it's not, I'll know in about five pages and will reject the book. I don't mean to be a hump about it, but approximately 40% to 50% of the books I've received have had far too many typos, comma splices, misuse of dependent clauses, etc. (No, it doesn't have to be perfect. Most books have a few typos, including ones coming out of "traditional" publishing.) Your book cannot succeed in the market with such flaws and it's not fair to ask reviewers to read it in such a state.
I'll take a look at YA, but I'm not the best fit to that audience. PDF, Mobi, print all fine. If you have an author website you wish me to link to, please provide the URL. I don't charge and I also don't guarantee a good review!
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