Giant Mega Kaiju Smackdown Retrospective! ZonGhidorah vs.Frogzilla a Year Later: Who Won, Who Lost the (and Who REALLY Lost)! With Special Guest Appearances by Joe Konrath as the Smog Monster and in His World Debut, Hugh Howey as Flackra
A year ago today, the world watched agog as two rampaging giant monsters fought a deadly battle for publishing supremacy in the streets of New York (The Beast from 20,000 Fathoms tried to horn in, but was told absolutely no stop action).
The first monster was ZonGhidorah, King of Online Channels, a fearsome fire spitting dragon from Redmond with three fear striking heads, the first one named "Distribution," the second "Kindle," and the third "Imprints."
The second kaiju was Frogzilla, a giant amphibian from France, less fearsome than ZonGhidorah, but, under the right circumstances, tastier.
The battle began when ZonGhidorah landed in Manhattan right on top of the Publisher's Pricing Model Edifice and began to dismantle it from top to bottom. Unfortunately for Frogzilla, the other publishing kaiju were all having lunch together that day at The Russian Tea Room where they talked about nothing very much at all except on the topic of do Americans make tastier snacks than the Japanese. Frogzilla would have to fight alone.
The battle began with tremendous bellows and much chest pounding, though, oddly enough, not much damage was done. This all changed when King Ghidorah's Channel head spit flaming nuclear radioactive acid onto Frogzilla's Amazon availability and site rankings and toasted them to a crisp. Innocent Hachette authors could be seen fleeing the streets of New York City screaming and crying madly as their book sales plummeted.The horror was indescribable.
At one point in the battle, the Smog Monster, a creature made of toxic gases and slime, rose from the swamps of Secaucus, New Jersey (where else would he live?) to join forces with ZonGhidorah against Frogzilla. His chief weapons were noxious and interminable blog posts that threatened the consciousness of any who came within their range.
The battle reached its crescendo when Flackra rose from the cockroach-infested swamps of Florida and joined the fray. He was guided to conflict by two tiny shobijin wearing mumus. The one on the left is Hoffelder-san, the one on the right, Gauhgran-san. In addition to the mumu, Gauhgran-san always wears a "No Author Solutions" T-shirt.
Flackra is a Giant Moth with a huge woolly body supported by massive wings. When Flackra is on the move, it emits a constant keening cry of KKKDDDPPP FFFOOORRREEEVVVVEEERRR. Such is the buffeting power of its flight that it was able to drive thousands of indie authors who had absolutely no reason to be there towards the great conflagration being generated by the ongoing rampage. New York Times reporter David Streitfeld reportedly wet himself when Flackra's giant bulk filled the New York sky. That's the power of a kaiju!
Once at the battle's epicenter, Flackra flew around Frogzilla spitting out poisonous petitions proclaiming that Amazon was paying authors riches in such quantity that rents in Manhattan might actually start to look affordable.
At this point, everyone was sure that Frogzilla was about to cry "Mon Dieu!" and fold up into a nicely seasoned dish of CUISSES DE GRENOUILLE À LA PROVENÇALE. But, to everyone's amazement, this didn't happen! Instead, channeling his pre-Waterloo inner Napoleon, Frogzilla bellowed "Merde,!" rolled up a bunch of Authors United petitions, and beat the King of Online Channels around its two outer heads with it while simultaneously dropping water balloons filled with the tears of Hachette authors on the middle.
Finally, ZonGhidorah had enough of this and told Frogzilla to just hand over a big extra wad of euros and he'd go away. The deal was struck and the King of Online Channels flew back to Redmond. Once safely home, he proceeded to unleashed his fearsome henchman, FirePhone, on the mobile market where it proceeded to get its ass totally kicked by iPhoneZilla, with help from Samsungasaurus.
The other monsters watched ZonGhidorah's abrupt departure from the scene in dismay and didn't quite know what to make of it. Finally, the Smog Monster oozed away and wrote a long, boring blog post about the entire affair every other sentence of which began with "Smog Monster sez."
Flackra fled back south, his departure hastened by an alert New York Sanitation Police squad that attempted to ticket him for spreading garbage on city streets. The New York Consumer Affairs apartment also tried to sue Flackra for deceptively claiming that charging an operating expense is a royalty, but it's hard to serve a giant bug.
The shobijin have reportedly found work in a gentlemen's club in New York. The precise nature of their duties is unknown at this time.
Wow, that was exciting. Now, let's see a year later how the respective parties are all doing.
How Did ZonGhidorah Do?
He lost. Amazon did succeed in extracting more margin from the book publishers, though how much is unknown. The larger publishers were able to give up the least, the smaller the most. All of the contracts that were signed are private and you'd have to do a lot of digging (and some bribing) to obtain precise details. In terms of a typical channel fight, Amazon did well.
However, as I've noted before, after the publisher's collusion trial, Amazon's goal was to gain control of the E-book pricing model. This attempt was driven by the belief that "He who owns the price of a thing controls the thing." (With apologies to George Herbert and Dune.) Amazon not only failed in this attempt, it failed so significantly that its grip on the market, and its ability to project fear, were weakened in so far as the larger publishers were concerned. (The smaller ones are still terrified.) As proof, look at how HarperCollins kicked sand in Jeff Bezo's face when it was time to go to contract.
But, like King Ghidorah, Amazon is a patient beast. It will be back. It's continuing to put pressure on the publishers by adding a silly line on its listings saying the price on agency books is set by the publisher. Here's a brief note to Amazon. I want my listing to say my price was set by me and I'll take the consequences if I make a mistake. I don't need you price rigging the world to your benefit.
On the other hand, Amazon has innovated and shaken up an industry that badly needed it. For that, they deserve credit. I'll give them more the day they get out of my marketing and pricing shorts.
How Did the Publishers Do?
They won. The primary goal of the publishers during the fight was hold on to agency pricing at all cost. Many people still do not understand why publishers fight so hard for agency.The publishers do not agency all their titles, only the newest and hottest. They do this for the same reason Apple can charge full retail when a new gizmo goes on sale. Amazon buys its Apple products from 1 Infinity Way under high tech's version of agency, MAP. Perhaps Hugh Howey wants to write a petition telling us how Amazon is paying Samsung a living wage?
This takes us to another nonsense claim that AAAG repeated during the battle, that $9.99 is an "optimal" price point for E-books. It was a claim that failed high school statistics. And now the publishers are proving it. Why do publishers charge more for certain E-books?
Because they can. If they were overpricing, they’d be punished at once. It’s an open market and there are plenty of alternative titles But if you have an established rep or brand, you can charge more and people will pay it. That includes indies. And yes, if you're formally published and your house MAPs your book, you make more money.
But I don't think the publishers fully understand the disruption still building and bubbling under them. They been issued a stay of sentence, not a reprieve.
How did AAAG (Aggregated Amazon Ankle Grabbers) Do?
Ugh. Who cares. Collectively, through the entire fight, they were a disgrace. Bad info, unrelenting propaganda. However, I see some signs of embarrassment and remorse (though not from Howey, AAAG's biggest player). Let's hope they'll make up for it in the future.
Who REALLY Lost?
Indies, of course! In respect to Amazon, we look like Tokyo after Godzilla has left after a relaxing day tearing the place apart. We are still:
Let's not even get into the issue of the Kindle subscription program and what you make.
It's a pity. Had AAAG not flacked so relentlessly for Amazon, they were in a position to do the indie community some real good. They could have pointed out the problems with the publishers and asked Amazon to change its policies in respects to indies when media attention was focused on the fight. It might have moved the needle. That chance has passed. It will take another big dust up before it arises again.
I was invited to attend Digital Book World in New York on January 15th as a panelist for a breakout session supposedly focused on authors "facing the market." When I received the invite, it sounded like fun and since I'm from New York and can easily reach mid-town from my home in Connecticut, I agreed to attend and looked forward to the event. I've attended and presented at more high-tech conferences and exhibits than I can remember, but had never been to a book industry expo and was intrigued by the opportunity.
Unfortunately, the panel was an utter fiasco, presided over by the worst moderator I've ever seen at a show (and I've run 14 high-tech conferences on my own, so that's saying something). Instead of four people, seven ended up on the dais, including the moderator, who instead of staying at the podium and doing her job, squeezed in with the panelists and tried moderating while simultaneously mike grabbing. Worse, when I attempted to run through a short slide preso that the event owner had requested I provide, I was prevented from doing so. All in all, the most gruesome show experience I've ever had (other than working the floor of COMDEX five days straight while a bevy of booth babes gyrated to rock music in the exhibit next to me. Those were the days).
A few quick tips in case you ever run your own conference. If you decide to incorporate panels, never have one featuring more than four people (and three is a much better number). This cuts down on mike grabbing. Last minute invites onto a panel are a no no except in the case of a panelist no show. Also, the moderator must understand that they are not a panelist and should never sit with the panelists nor attempt to hog panelist time. Reward moderators for their work by assigning them to another panel or a speaking slot. And, of course, it is absolutely verboten for a moderator to behave rudely to a panelist who has taken their time and spent their money to attend your show. They're doing you the favor, not vice versa.
In all fairness to the show, I attended other moderated sessions and the ones I saw went smoothly; however, these panels were all populated by personnel from various publishing firms. As an author, I suggest you vet DBW and similar events carefully before spending time and money to attend or present. Dedicated speaking slots are probably worth it, but be careful of panels. Also, if you're an independent, there won't be a great deal of info on self publishing, though this may change in the future. My presentation focused on the amount of sales you needed to generate as an independent to recoup your time expenditure (four slides), but, of course, no one at the show saw it.
What prevented DBW from being a complete fiasco was my visit to the exhibit hall. The show sports a very healthy tradeshow component, though if you're an author, not a publisher, only some of the exhibits are relevant to you. One that is relevant to authors is Booktrack, an online system that enables you to add music, ambiance tracks, and sound effects to your book. I've heard of the technology, but when I went over to the demo booth and watched it in action, I was blown away. If you're writing any sort of genre fiction, you should immediately head over to Booktrack.com, open up your account, and play with the system. It's a blast to use and will make you rethink what digital books should be and also possibly change the way you write. And for many of you, it's the closest chance to being the "Great Auteur Behind the Camera " that you'll ever have.
Working with Booktrack
The first thing to note is that as of this writing, opening up a Booktrack account is free. Only a username and a password is required (there is a more extended profile page). Your book can be slotted into two genres, a type (novel, novella, etc.), a rating (G, PG, etc.) a language (currently, only the English character set is supported so no Chinese, Korean or Japanese at this time), and tags assigned. You can also upload your front cover art at publishing time. There are currently 10K titles in the Booktrack library, so while the system has a robust selection, you have a shot of standing out.
The system is very easy to use. First, you will need to import your book's text into the system.This is a cut and paste operation. One point to note is that if your book relies on more elaborate formatting, it will be lost in Booktrack. The editor currently only supports bolding and italics. I wouldn't be surprised if under the hood you can do some HTML formatting, but don't count on it for production work. The system does not currently enable you to embed pictures in with your text, though one picture per page support is planned for later this year.
Once the text is imported (you can do this in stages), you apply sound to your narrative. You can pick from a fairly extensive library of music and effects and paint your text with the sonics of your choice, upload your own personally composed music (your chance to be your own Hans Zimmer!) or use tracks you may have downloaded from sites such as this. Sounds can overlap, loop, and fade in and out (I suggest you become comfortable with the fade control quickly; it's often disconcerting for a sound to abruptly stop.)
You can also adjust the speed at which the text is read while a reader is "experiencing" your book, and this ties back to the fact that Booktrack encourages you to think "cinematically" as well as narratively. It's what I was referring to when I said the system has the potential to change the way you write. To hear what I mean, go to the site and click on a book.
From a creative standpoint, the process of using Booktrack for an author is utterly addictive. Literary crack. Internally, I actually started to call the system "Bookcrack." Once you begin, it's difficult to pull yourself away. And the rush you get as your book come to audible life is hard to describe unless you've experienced it.
Publishing Your Book on Booktrack
This is an area where you should take care. Books produced via the system are released under a series of open source, Creative Commons' licenses. For example, this variant:
This license lets others distribute, remix, tweak, and build upon your work, even commercially, as long as they credit you for the original creation.
You may not want to do that. Perhaps this version may be more to your taste:
This license lets others remix, tweak, and build upon your work non-commercially with credit to you (their new works must also be non-commercial).
I suggest you read up more on Creative Commons here and think through the ramifications of releasing your work via this mechanism carefully before moving ahead.
Booktrack is right now primarily a browser-based experience, though there are reader apps (not editors) for iOS and Android. No Kindle. Booktrack is also available as a Chrome app. I briefly tested it in Chrome, IE (no, I didn't test in IE 6. Don't use IE 6), Safari, Firefox and Opera and it worked fine.
How Does Booktrack Monetize?
Booktrack plans to begin monetization at the end of the first quarter of 2015. Right now, you can read the titles in their library for free. The model is similar to the Apple split, 70/30. The author sets the base price (no Amazon Stalag $7) and Booktrack adds $X (between $1 to $2) on top of that when a book is sold. Initially, the Booktrack store model will be title, not subscription, based. Once the ecommerce component of the store is up and running, promotional capabilities will be added such as bundling and couponing. If the author wants Booktrack to create their book's soundtrack, it will cost under $1K (but I strongly recommend you do this yourself. Who else other than the writer knows how the book sounds in his/her inner ear)?
How Long Does It Take to "Booktrack" a Book?
This of course will depend on the type of book, and its length, but using my own sci/fi fantasy novel Rule-Set as a base (120K words), I'd say about 10 to 14 days, factoring in your initial track creation, review, and music reedits. Plan on spending two to three hours a day working on the project.
Some Booktrack Operating Tips
First, resist the desire to go overboard with the auditory bling. This will be hard to do because using Booktrack is so much fun. My suggestion is to add tracks to the first couple of chapters, stop, and listen to how it all sounds. Perhaps ask a family member to listen to early tracks. If they start to find the music distracting, start paring down the effects.
Second, Booktrack does not currently keep a list of the auditory effects you've applied to your text. Before you start adding sound, create a simple text file and list by section/chapter every sound you apply by its name. This will help you keep track of how often and what kinds of sounds you're using and assist you to adjust and change things up as needed.
Third is take care of your editing fixes before applying sound. When you switch to the Text tab, Booktrack loses its focus on your spot in the text and takes you to the top of the section.
Fourth is don't be afraid to upload third party sound. It's easy and immediately broadens your creative palette.
Fifth is start using the music controls immediately. Layered sound adds another dimension to your book.
What Are the Obstacles Facing Booktrack?
Booktrack is a new technology and introduces yet another E-book platform to publishing. Right now, the market is divided between Kindle, Apple, Android, Kobo and others. This adds complexity to the book buying decision, never a good thing.
But I personally think Booktrack is unstoppable (particularly once they allow you to monetize). Once you've experienced a book in this fashion, it's hard to give it up; I speculate people during the silent film era had very much the same reaction to "talkies." I very much believe that Booktrack will become a technology standard and its use will spread into the mainstream. I have to believe the major players are giving the platform close scrutiny. I think Booktracking at least some of your works is an excellent thing to do and an opportunity to learn about how the book is going to evolve as digital printing subsumes print.
Am I Booktracking Rule-Set: A Novel of a Quantum Future?
Are you kidding? Of course I am! Rule-Set takes place in a 50 mile long giant nuclear particle accelerator located under Waxahachie, Texas which in turn houses a virtual reality lab where samurai sword fights are taking place on a regular basis. The prologue describes a group of 2087 special forces soldiers engaging in close combat with homicidal werewolves. And at the penultimate climax of the book, there's an audible computer countdown to catastrophe. I have to do it!
And that's where Booktrack continues to get interesting. I want to bring that countdown to life, and I was thinking about where I could find the right voice for the part. Then I looked at my wife, the radiant Mrs. Chapman. She's worked for years as a hospital floor unit admin and is capable of projecting a Dave-I-think-you-should-sit-down-take-a-stress-pill-and-think-things-over-Hal-9000-tone at will.
I told her I wanted her for the part of Aida the Computer voice and her eyes widened and she said "cool." Then I started to think of a new song by Big Data called "Dangerous" and how it would be a perfect fit for the chase scene I'm writing in the sequel to Rule-Set, Vorpal Sword. And I know that music licensing is a mess, but maybe, just maybe, the music moguls might be interested in opening up a new and untapped micro payment revenue stream?
Technology shakes things up and Booktrack is going to join Kindle in shaking shake up books even more.
(If you find this article of interest, please do me a favor and click here to take the
the Amazon Pricing and Marketing Policies for Independent Authors Survey. It's a quick survey and will provide information and insights in independent publishing you will find very useful. All participants receive the complete summary results.)
Also, before we start, let me inform you that further on in this article you'll be seeing some numbers I've extracted from a spreadsheet analyzing breakeven points on your marketing and time expenditures. I will be happy to email you this full spreadsheet when it's released in a couple of weeks. To receive it, please join the site mailing list and I'll notify you when it's ready. Sign up to your right.)
Now that Amazon vs. Hachette is over, it's time for you indies to start focusing on the issues that are important to you. Mainly, making money from your writing. There are no excuses for you to pay attention to people who tell you that that Amazon is "paying you royalties" when all that's happening is a download fee is being extracted from your bottom line. Amazon and the other online resellers never pay you anything. They are channels and they exist to service demand. They do not exist to create it. For you, they create operating expenses, not royalties.
This is not only true in books. It is true in software, in high-tech hardware, consumer goods, etc.
Before you even start to plan to market your book, hammer this into your brain and keep it close to your thoughts always:
Channels do not create market demand. Only suppliers can create market demand.
And, in this case, who is the supplier?
You. Only you can create the desire for people to read your book. Your business, as an independent author, is to create demand for your book via marketing. Amazon, as a channel, services the demand you create.
Incredibly enough, even Hugh Howey has actually acknowledged this!
But wait, you say, we aren’t just authors. We are publishers! We pay for cover art and editing. We upload a finished product, ready to go. These aren’t royalties we’re earning; they are a cut of proceeds. So comparing our income as authors to other authors isn’t fair. We should compare our income as self-publishers to other publishers.
But don't get too excited. A couple of blog posts later, he's back to telling us all how Amazon is paying us:
But I see people complaining about the 70% payout, the $1.39 KU payout, the reduction of ACX royalties.
Further on in this series, we'll see why you have good reason to complain about Amazon's very large and in some cases predatory service fees.
Amazon's job, as a part of the book channel, is to extract as much money as it can from your hide, which it will and can do. Your job, as a business, is to resist, scream, and fight as loudly as you can against these efforts. When a member of AAAG (Aggregated Amazon Ankle Grabbers) shows up or blogs about how much you owe the book channel or Amazon, throw a ripely dead rat at them.
This, by the way, is not personal. This is how channels have, do, and will operate. They hunger for margin more than Dracula craves blood. You hunger for revenue so you can write and not have to contemplate eating your offspring when times are lean. So it has been, so it will ever be. Do not hate your channel and never bend over for it. Recognize it for what it is. A middleman. Errr..."person." An entity which is both your enemy and your friend.
Do not waste a minute feeling grateful to Amazon for the Kindle infrastructure. They did not invent the ebook concept or take the risks of the pioneers of 1999-2001, who failed abjectly. (You can read about why in the second edition of In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters.) Amazon, to its tremendous credit, took advantage of an industry complacent in the wake of that first failure. They have, and are, profiting greatly from ebooks. The long tale is eternal and it costs them next to nothing to service their storage. You pay the transmission fees on downloads. You are doing them a huge favor by putting your book on their servers. The reason Amazon makes no money on sales of their Kindle readers is that ebook revenues more than make up for their hardware expenditures.
Amazon has done you a huge service by driving interest in ebooks, thus making wideband sefl-publishing practical. It also deserves credit for building a demand service platform that has been widely emulated by other companies. (OTOH, Samsung doesn't feel all that grateful that Amazon has built loading docks to accept and ship TVs.) And while the growth of the ebook market was inevitable, Amazon deserves to profit from excellent market timing and an intelligent investment in hardware/software.
Initial Operational Costs
OK, let's go to the numbers. Let's start with the first round of operational costs an independent/self-published author must deal with. Here's a list of the basic expenses. I know these can vary, so the numbers below are ranges:
There are other potential costs I could include, such as shipping. There are people who print books and fulfill directly, but this is fading. To keep it simple, we'll stick with the above. When you're done, a good median estimate is that you'll need to spend at least $4K to kick things off properly for book one, day one.
Marketing your book can encompass many things. Below is a good starting list:
I'm not going to break out marketing costs for the above activities at this time, but let's figure that during the course of your launch a good median for your expenditures is $1K. You may spend less, but the trade off is spending more of your time. Which brings us to the most crucial overhead component of selling your book, one that you cannot avoid or bypass (unless you want to have sales close to zero).
What Is Your Time Worth?
To market and sell your book, you must spend your time doing so. Yes, I know, you don't "count" your time as money. This means you are a starving artist, not a successful independent publisher. But despite your naivete, time is money and must be assigned a value!
So, what value should we use? For the purposes of this article and spreadsheet, I've picked $25 per hour. Why? Well, the current federal minimum wage is $7.25 an hour and many states are pushing that to a $10 to $12 medium. If you can write a decent book, I'm going to assume you went to college or have college-level skills, which makes you worth at least two to three times minimum wage.
Also, $25 an hour over 52 weeks works out to a gross wage of $52K. That's not a living large salary, but you can get by on it. So, we'll use $25. (It's not my fault you weren't smart enough to choose to be a lawyer.) BTW, the spreadsheet obviously enables you to plug in your own numbers and play "what if." I've used Amazon's pricing schedule as they're the 1200lb gorilla in ebook channel and its competition currently shelters behind the big beast.
With this foundation in place, let's first look at some basic scenarios that show what level of sales you need to generate to cover the cost of your most precious commodity, time. The spreadsheet I'm extracting these number covers more scenarios; the below are highlights. Please note these extracts only calculate how many books you need to sell to cover the costs of your time spent marketing and selling your book at $25 per hour. You then need to sell additional books to cover your production and marketing outlays.
What Is Your Time Worth Break Even Calculations
These number show us some interesting things. First, I picked $2.99 and $7.99 because these currently function as two "gateway" figures. $2.99 is often recommended as a starting point for new and unknown authors. $7.99 tends to be reserved for better known and "name" indies.
The breakout starts with an assumption that you must spend at least 10 hours a week of your time marketing your book. Over a year, your time is worth $13K and you must sell 6.2K titles at $2.09 to make your time back (remember, we're not counting your production/marketing expenses).
Now, 6.2K sales is not a trivial number to hit, especially for a new indie. I don't think it will be long before you realize you need to make the 30 hour per week commitment. And when you do, you're going to have to cook to hit your needed sales volumes. 18.6K is a lot of books. What's that I hear you saying? You can't afford to spend that much time on your book because you're already writing the next one? That, ladies and gentlemen, is why they invented "drugs." Find something legal in the amphetamine family and get back to work.
Now, as we see, if you can price higher, your work gets easier. Of course, the main channel for ebooks, Amazon, has been pushing lower prices as part of its war with the publishers. That hurts. And life would immediately become niftier if you were paying, say, 15% for your downloads, not a hellacious 30 points, which, let me assure you, is channel margin gold.
Note that life also becomes substantially better if you can price above Amazon's pricing box, which I richly describer in my previous article, Escape from Stalag $7. But of course, you can't. Now, you may argue that you can't realistically price above $9.99 because you're not a brand name such as Stephen King. This may be true. But perhaps you could sell two books as part of a special promotional bundle? That might be just the ticket. But alas. You remain trapped behind the virtual barb wire of Stalag $7.
Now you understand why the channel is both your friend and your enemy.
The final rows make grim reading. They represent the revenue you're (not) generating from your international sales and for books priced out of Amazon's pricing box. Don't overlook there are huge overseas markets for English books in India, Australia, the UK, Europe, China, etc. And don't forget the 60% service fee Amazon charges on your audible book(s).
In part II of this series we'll dig deeper into these numbers and take a look at some early results of our indie survey.
(If you find this article of interest, please do me a favor and click here to take the
the Amazon Pricing and Marketing Policies for Independent Authors Survey. It's a quick survey and will provide information and insights in independent publishing you will find very useful. All participants receive the complete summary results.)
Click Here to Take the Amazon Pricing and Marketing Policies for Independent Authors Survey Today
Over the last 12 months a great many pixels have been generated directed at indie authors and self publishers. I've written fairly extensively about the topic and so have others. A few week ago, I wrote an article entitled Escape from Stalag $7: Why Amazon's Pricing Box Is Bad for Indies. To date, approximately 10K have read it and the piece sparked some vigorous debate, here and elsewhere.
As Escape was commented on, critiqued, and criticized, I began to realize that while lots of people have commented on what indies think and urged them to adopt one position or another, no one's done any primary research asking indies themselves what they feel about industry events and policies and their impact on their writing and income.
This survey is designed to help fill that gap. It represents an opportunity for the indie voice to be heard and counted in the ongoing debates and speculation about the future of publishing. This survey focuses on Amazon's basic pricing policies as they impact indies.The entire survey is 18 questions, including some brief profile questions at the beginning, and will take you less than five minutes to complete.
Please do not take this survey if you are not publishing at least one book independently.
Everyone who participates will receive a copy of the full summary results as well as relevant cross-tabulations. We will also be posting the results on this blog.
Your participation will be kept completely confidential.
Future surveys will focus on the topic of subscription services, including Amazon's KU and similar programs, and other issues of importance to indies. As you may be aware, there's been a great deal of discussion on this topic and several prominent participants have announced they are leaving the program. Take this chance to let the industry hear your voice.
Click Here to Take The Amazon Pricing and Marketing Policies for Independent Authors Survey Today
Thanks in advance to those who choose to participate and to the over 50 authors who have already done so.
As I've previously noted, I'll be appearing on January 15th on a Digital Book World panel in New York entitled "Authors Facing the Industry: Data and Insights From Authors on the Publishing Business, Author-Publisher Relations, and Marketing."
Click here or on the image to view the full DBW agenda. Time is 3:00 to 3:50PM. You can save 5% on your attendance with Speakers Code DBWSPEAKERS; make sure you register today.
(Take the Amazon Pricing and Marketing Policies for Independent Authors Survey Today)
This survey is brief and focuses on indie interest in potentially promoting their books via the programs I describe in my previous article, Escape from Stalag $7: Why Amazon's Pricing Box Is Bad for Indies. Everyone who participates in the survey will receive a copy of the full summary results as well as relevant cross-tabulations. More information at the link above. Your participation and personal information will be kept completely confidential.)
Last week, I posted on this blog an article Escape from Stalag $7: Why Amazon's Pricing Box Is Bad for Indies. The reaction to it was much stronger than I'd anticipated. On the first day after it went up, about four thousand people read it, and I estimate that after a couple of weeks have gone by, the number will rise to well over 10K. Clearly, this is a topic of interest to independent/self-published writers. And certainly one we have a stake in.
Reactions were on the whole very favorable, though the acclaim was by no means universal. Over at The Digital Reader, the site owner wrote a typical AAAG article mixing misstatements with a plea to not think about the issues I raised. A brief example of Nate Hoffelder in action:
+++ one, that people in publishing should not discuss the topic du jour, namely a contract fight which could have had an impact on the entire industry. +++
This, of course, is pure AAAG. Hugh Howey, Joe Konrath, and the rest of AAAG didn't discuss the topic, at least not on any level playing field. They advocated on behalf of a $75B coporation in its fight with a $15B group of large publishers, a battle in which indies had no stake.
+++ two, that indie authors had any obligation to explain Amazon's policies, +++
More AAAG. Hugh Howey, Joe Konrath, Nate Hoffelder et al, who position themselves as indie advocates, certainly had plenty of time to discuss Amazon's position vs. the publishers. Why can't they divert some of that energy to discussing Amazon's policies as they impact indies? After all, aren't they supposed to be our advocates? I'm not impacted by Hachette's agency pricing model, but I am by Amazon grabbing 65% of my international sales revenue.
The rest of the article is typical AAAG dreary, and never even attempts to address the issues raised in Stalag $7. You can read it here.
Over at www.teleread.com, things were more favorable (though they had a gentleman show up and try to claim that Amazon pays you royalties! Where do these people come from)? Michael Perry of Inkling Books provided some interesting Amazon math here:
As he notes, Amazon’s ebook goal is quite obvious and has been for a long time. When you sell an ebook through them, at all price levels they want to take 65% for a mere credit card transaction and file download that costs them mere pennies. Then they want to give you only 35%. Can most authors and publishers make any sort of decent living on that? No, particularly since Amazon intends to do all it can to drive down that price from which your 35% comes.
To get a rough estimate what that would mean, for a $9.99 ebook, Amazon will make $7 less costs that are probably around a dime. And it’ll pay you but $3.50 for all your months of labor. It’s making roughly a 7000% profit, while you can’t afford the rent.
Read the rest here.
Finally, Bowerbird@bbirdman provided a very detailed critique of my article, agreeing with some points and disagreeing with others. For example:
relaxing the box too soon, however, risks the principle (held devoutly by reasonable people) that e-books are cheaper to reproduce and distribute than paper-books, so they _must_ cost less or someone be robbing people. that the major publishers refuse to acknowledge this fact is what has caused extensive damage to e-books thus far. corporate publishers were in love with their big margins, and they knew e-books would eventually threaten them.so they've been doing their best to delay that inevitability.
The "Bird" also provided some suggested workarounds for Stalag $7. I'm not sure they're all practical, but the entire post is well worth your reading.
Read her comments here
As a result of the strong response to the article and reading the many comments made about it, I realized there was one voice absent from the issue and that is yours. I'd like to know the indie community's opinion on the issues I discussed in Stalag $7. Are you interested in greater promotional opportunities on Amazon? Which ones are you most interested in? Do you think the Amazon $7 spread on your pricing is equitable? Do you think that if you were allowed to promote outside the box you could do successfully? Do you price outside the box and if no, why not?
These questions are covered in the survey. It's brief, and should take less than five minutes of your time to complete. Everyone who participates will receive a copy of the full summary results as well as relevant cross-tabulations. More information at the link above. Your participation will be kept completely confidential.
Take the Amazon Pricing and Marketing Policies for Independent Authors Survey Today
My thanks in advance to all who chose to participate. I look forward to hearing what you think!
(Just a quick reminder that I'll be appearing on January 15th on a Digital Book World panel in New York entitled "Authors Facing the Industry: Data and Insights From Authors on the Publishing Business, Author-Publisher Relations, and Marketing."
Click here or on the image to view the full DBW agenda. Time is 3:00 to 3:50PM. You can save 5% on your attendance with Speakers Code DBWSPEAKERS; make sure you register today. The agenda is very broad and provides extensive coverage of issues of interest to both traditional and self-published authors. I intend to ask some Amazon people some hard questions if can get near an audience microphone.)
During the Hachette vs. Amazon struggle, I started to visit some of AAAG's (Aggregated Amazon Ankle Grabbers) most prominent websites and ask some hard questions. As I pointed out in my series on the book channels, independents had no stake in the outcome either way, but AAAG's intense interest in the business practices of the publishers inspired me to spend time investigating Amazon's pricing and operations model as it applied to indies. This was an issue in which I had a stake.
The results were not very informative. I did learn a few things about how AAAG operates. The Passive Voice (a lawyer guy) deals with hard questions on his blog by not allowing them to appear via comment blocking. Ditto Hugh Howey. Joe Konrath was a bit better, but is given to rewriting history. As he squirmed and evaded my straightforward questions about Amazon's pricing and marketing practices model, the inevitable hints about being banned were issued and the history rewrites began. For example, despite copious words to the contrary, he suddenly announced he'd been OK with agency pricing all the while, though he'd have to be suffering from the same brain dysfunction that Guy Pearce exhibited in Memento for anyone to believe that.
David Gaughran was the worst. In two posts on his blog, I asked my hard questions and received the usual blast of blather and evasion. For example, he called my observation that Amazon's pricing model as it applied to indies was a modified form of agency "nonsensical." Apparently, while holing in up in Prague, he'd failed to talk to Hugh Howey about this issue, who referred to the model as "Incentivized Agency." Perhaps it was the different adjectives that confused him.
When I stayed on topic, I was eventually "banned" from the blog after the inevitable, unctuous, weaselly speech about his undying devotion to freedom of speech. Take this to the bank. When a blog owner affirms their commitment to First Amendment principles, you're about to be censored. It's how hypocrisy works.
But after all the fireworks and fun, the one thing I never ever received from AAAG were coherent answers to my questions, particularly the most important one of all. And that is: Why has Amazon placed indies in a $7 dollar pricing box? Why does it grab 65% of your revenue (not counting its transmission fees, which it charges on every transfer and which vary based on book size) if you price under $2.99 and the same if you charge over $9.99? This is an issue of critical importance to indies because it is not financially feasible to hand over that level of margin to a reseller for a download service. (And if you think Amazon is paying you a "royalty" when you fork over that 65% operating expense, please stop reading now. You are incurably ignorant and I cannot help you.)
The most coherent answer I ever received from AAAG acolytes was "because they can." When I'd respond that Hachette was therefore perfectly justified in providing that same answer to Amazon over the issue of agency pricing, AAAG people became very unhappy, though never informative or more coherent.
I'll give one member of AAAG credit for integrity and that is Dan Meadows of The Watershed Chronicle. He runs what I regard as an AAAG-lite site, and most of his articles on H vs. AMZ focused on his amazement that Hachette actually insisted on negotiating in its best interests, not Amazon's.
But to his credit, I've never seen any comment blocking or banning threats. And when he asked in an article how writers had benefited from the whole contretemps, and I told him how, he was honest enough to acknowledge that indies had benefited from the fight as Apple's and the publishers' introduction of the proposed 70%/30% agency split had forced Amazon to compete and offer indies the same deal for books in their pricing box. Prior to that, Amazon charged indies 65 points to use their download service regardless of the book's price.
(What, you never read that fact on the AAAG sites? Hmmm. Fancy that. You indies can make it up to Apple and the publishers by saying a little prayer on their behalf to the God of Book Publishing tonight. But don't go overboard. The publishers still need to rethink their royalty structure in this new era.)
What's Wrong With Amazons's $7 Dollar Pricing Box?
Let's count the ways. Before I begin, let me stipulate for all of the following points the underlying issue is that Amazon's policies are depriving indies of revenue now and in the future.
What Is To Be Done?
How can all the above issues be quickly resolved? The answer is simplicity itself. Amazon should lift all restrictions on book pricing and establish a uniform service fee for the use of its downloading infrastructure. Within this framework, the authors will quickly learn what works for them and their books. Amazon's "assistance" is not needed.
To help speed up the implementation of this logical and intelligent course of action, it's time for Hugh Howey, Joe Konrath, David Gaughran and the rest of AAAG to raise their palms off the pavement, rise up, and ask Amazon, for the benefit of indies, the industry, and ultimately Amazon itself, to burn the price box. It's one way they can atone for the atrocious misreporting they provided us during the Hachette vs. Amazon battle. And in the end, AAAG's bottom lines and book sales will benefit as well.
In the last article of this series, I continue my look at how the publishers can push back against Amazon. If you've not been following this series, I urge you to read it from the beginning as it provides you with a concise but accurate explanation of the fundamentals of distribution in the book ( (and other) channels.
While the publishers have their work cut out for them, there are significant things they can do to remain a force in the industry. The most important factor working in their favor is that they are still the primary managers of content. As a channel entity, Amazon's core expertise is not in producing things, but in selling them. As a distributor/reseller, Amazon wants to sell products that are uniform in structure and whose sales easily scale if/when they catch the public's fancy.
Books meet the above criteria only partially. While both printed and E-books scale easily in terms of sales, their creation is often idiosyncratic and halting. Every book ever written or published by definition is unique. Books that aren't are called "copyright infringements."
A practical example of this is a Sci-Fi series by David Gerrold (famous for his "The Trouble with Tribbles" screenplay for the original Star Trek). I started reading in 1984 his series called the "War Against the Chtorr." The last book in the run was published in 1992 (A Season for Slaughter) and three more have been promised since then. I'm not holding my breath for the next release, don't think he'll ever finish up the tale, and feel a bit cheated.
The problem with a channel attempting to also become a content provider is evident in the struggles Amazon has had in establishing its house imprints. (Click Here for More Info.) Currently, the paper channel won't sell Amazon's house books because they conflict with the interests of the book channel (outside of Amazon). And the thought of dealing with hordes of cranky, emotional authors probably makes the teeth of Amazon's internal management ache. And the whole Hachette dust up may have have excited some bright-eyed, long-nosed legal beagle at the DOJ to start sniffing through the case archives and read up on the fed's successful monopsony case against the film studios decades ago. That thought gives Amazon's attorney the hives.
In high tech, there are examples of suppliers successfully integrating their operations with their channels. Apple is the most notable case. In the late 90s, Apple pulled most of its computer products out of the stores, shut down its OEM and licensing operations, and opened its own retail chain. But Apple is the exception that proves the rule. Apple closely controls its product production scheduling and planning. Apple sells its most popular products via a strict agency pricing regimen. Apple has always attempted to integrate its hardware and software technologies into unified products. And Apple is slowly edging away from the PC market as its focus turns increasingly to smartphones, tablets, and the upcoming new generation of flexible devices.
This is in sharp contrast to Microsoft, which has always relied on channels and third parties to grow and whose attempt to build a retail channel has been far less successful than Apple's.
A final point to keep in mind is that in most markets, channels do not sell. Channels exist to service demand. In software, company after company made the mistake of thinking that because a distributor had ordered X number of boxes of product into their warehouse they had sold something. They were always wrong. It was always the responsibility of the software publisher to create product demand and pull products out of warehouses. In E-books, nothing has changed except the cost of warehousing and shipping has dropped to near zero. Plow those savings back into your marketing.
A Change of Mindset Would Do You Good
Publishers must rethink their relationships with the author community and give up their traditional gatekeeper mentality while repositioning themselves as author facilitators and as writing coaches. The Amazon-Hachette battle uncovered the fact that there was a great deal of pent up resentment towards publishers. Many writers perceive them as an unfriendly blocking force that takes away opportunity from people who are certain they have a book or books in them. Publishers need to understand this and proactively reach out to this community and to the future revenue and profits they represent.
Gatekeeping makes no sense in the age of the electronic shelf. There is no limit to the amount of inventory the system can carry. There is no genre or market segment that cannot be served by the electronic shelf. There are no returns and shipping issues. The long tail is eternal.
In this milieu, rethink publishing as an analog to the baseball system, where different levels of talent are segmented into different circles and encouraged to improve their skills until they’re ready for the big leagues. With this model in mind, start to learn how to market into niches and genres, and build new imprints and product lines to service them. Leverage community to help manage these minor leagues and promote talent to the first rank. Both authors and publisher will benefit. This model also has the benefit of helping publishers break away from the blockbuster mentality that dominates their thinking. You may never find another World War Z zombie apocalypse best seller, but lots of people love the genre and you can probably make money by serving up a steady stream of well-written E-titles to people who like to settle down to a quiet afternoon reading about the rotting undead and mall massacres.
I also strongly recommend publishers turn away from the types of services packages offered by such groups as Author Solutions. They have been tainted by their use of tactics traditionally associated with exploitative "vanity press" businesses and are a growing sore on your business.
Mentor the Market and the Next Generation
One of the most powerful arrows in the publisher's quiver is their relationship with existing,well-known authors. For example, in this blog post, Hugh Howey is verklempt over a few nice words of affirmation from Stephen King (yes, that S. King) towards Wool. I find this a bit ironic as Stephen King was one of the "one percent" who signed that awful, awful, awful petition from Authors United criticizing brave, plucky, $75B Amazon for screwing around with the Hachette authors in its search for more margins on books and MDF (expenses ultimately paid for by the writers). Heck, King's wife signed the damn thing. How awful is that? But, nice words from the master of horror and suspense are very bankable and I guess all is forgiven from the self-publishing pioneer who introduced the concept of "incentivized agency" and author punishment if you want to price your book above $9.99 on Amazon.
My suggestion is that if Stephen King's ready to make Hugh Howey's day, perhaps he and his compatriots might want to help make some self-published authors' days as well? How about a reach out program sponsored by the publishers that encourages their authors to:
There are more ideas you can develop along these lines, but you get the idea.
Explore the New Venues Open to You
In the previous article I mentioned that paper is a trap for publishers. I stand by that statement, but I'm not only talking about the inevitable demise of print at the hands of digital. I'm talking about missing and experimenting with new venues and ways to sell books while focusing too deeply on managing a legacy business model (which the major publisher do need to do).
Here's an example of what I mean. I went to see Edge of Tomorrow this summer and loved it. The movie is based on a well-written manga, All You Need is Kill. I wondered on Mke Shatzkin's blog the other day why you shouldn't offer the manga, or perhaps a novelization of the book, to people who went to see the movie. I call this "Point of Event" distribution. Walk in the theater, download the publication to your smartphone and read the book after seeing the movie. This adds more value to your movie ticket and potentially offers new marketing awareness for both the book and the movie derivative. Or perhaps when you visit William Sonoma, offer a copy of a hot new recipe tome when you buy that latest, can't resist rubbing sauce? How about an art book during a major touring exhibit at your local museum?
These are just some ideas. There are more opportunities out there. But, of course, this concept can only be executed if you're thinking digitally. Won't work with paper. Too much risk.
Provide Your Own Service Layers to the Authors and Writers
In the last article in this series, I described the various service layers Amazon is controlling within the world of E-books. Experts such as Mike Shatzkin think it's beyond the grasp of the publishers to create a competing E-commerce platform for their own use a la the airline industry's SABRE system and he's probably right. But there are services the publishers can provide to existing and aspiring authors. These include:
I'm not saying that publishers shouldn't charge for the above services where appropriate, but pricing should be reasonable and not predatory. Publishers should remember that the above ideas and suggestions will ultimately provide them with far more information about their readers, writers, and markets than they currently possess and help them compete against the Amazon data juggernaut.
This brings this series to an end. My next article will take a closer look at the Amazon $7 roach motel and why's it's bad for indies. After that, I'm going to post up an article entitled "What Is Your Time Worth," along with a spreadsheet, that helps you compare the value of your time against the sales needed to ensure you don't end up working at Home Depot during the holiday season to make ends meet.
Hugh Howey is feeling some heat these days and you can tell from reading his blog. The tone has shifted from a righteous clarion call to battle on behalf of Amazon and its adorable King Jeff Bezos to Slay the Evil Publishers and the Minions of Agency Pricing to a sort of abashed and befuddled "Wh jus happn'd?" vibe. This is because Amazon has cut a deal with Simon and Shuster that enables the Evil Publishers to continue Evil Agency Pricing in return for more margins and MDF. IOW, it was a typical supplier/channel battle over money and control that we've seen before and will see again and again and again till our Sun goes nova.
In the meantime, as I've pointed out (and now Hugh has jumped on the bandwagon), Amazon continues to impose agency pricing on indies via its $7 roach motel pricing box and locked in margins. (Hugh calls this model "Incentivized Agency" and it's to be thought of as a sort of whip to punish evil indies who want to make more money than Hugh thinks is seemly. And yes, if you actually were one of the 8.5K or so who signed that ridiculous petition at Change.org and are feeling duped, well, you were.
As a result, Hugh needs to begin the process of walking back some of the silly things he's said to maintain credibility, but this is not an easy thing to do. As exemplified by his latest post, "Who is David?" which is littered with cracked logic, more misstatements of basic facts, and internal breakdowns of language and common sense. It's a sign of a mind that's lost track of itself.
The problem begins with the post's opening lines. Here's one example:
The negotiations between Amazon and the Big 5 publishers is often framed as a war between David and Goliath. What’s strange is that who gets to play David depends on who you’re talking to. Both sides claim him. The rare moments when people equivocate between the two parties, they state that this is really a case of Goliath vs. Goliath, which is far closer to the truth. We’re talking about multi-billion dollar corporations on either side.
Wait a second. When you equivocate between two parties, you're attempting to hide the truth. But Howey now tell us that a battle between two "Goliaths" is closer to the truth. Which isn't equivocating.
And is also true. The revenues of all five major publishers together are about $15B. Amazon's yearly revenues are currently estimated to come in at $75B+. Amazon's book business is currently estimated at between $5 to $5.5B, about 7% of Amazon's overall business.
Of course, leaving aside the issue of Amazon's house imprints, the two entities do different things. Publishers create (well, aggregate) content, Amazon is a channel for content. In the channel, Amazon is a heavyweight, though in sheer number of dollars, smaller than B&N, with 2013 revenues of $6.8B. But we all know what's happening to B&N.
The post continues, and quickly descends into the swirling, obfuscating clouds of Planet Howey as logic and reason are discarded in favor of rhetoric and dizzying departures from the truth.
In practically every way, Amazon is the clear underdog here. The upstart. The newcomer.
Amazon is not an upstart. The company was founded in 1994 to sell books. Twenty years ago. On what planet is a company that's been in business for twenty years considered an "upstart.?" A "newcomer." Only on Planet Howey.
They’ve published roughly 5,000 titles across their imprints to date, which is the number that the Big 5 might publish in a year.
Yes? Twenty years ago, Amazon went into business to sell books, not be a publisher. Now, Amazon has a right to also try to be a publisher, though this opens the company up to conflict of interest and monopsony issues. But that's really off the point. Amazon's core book business is to be a channel giant and it is.
Meanwhile, the Big 5 have banded together to establish price floors with other retailers in what the DOJ found to be illegal collusion.
Yes? And they were spanked by Uncle Sam. But the good news is that agency pricing still survives! The big publishers retain it and so does Amazon in respects to indies. Planet Howey is where the whips are stored to punish the indies.
And bookstores have refused to carry Amazon’s works, banning these titles from a large sector of the marketplace. For many of us, this is bullying far more severe than removing pre-order buttons.
Of course they are! Amazon has created a major conflict of interest by moving into the publishing business. Amazon's direct sales model wiped out Borders, all the mid-sized book chains, and thousands of independent bookstores. Only on Planet Howey would you expect anyone to hand over a gun to an entity that's already cutting your throat.
When it comes to size, the publishing divisions at Amazon represent a tiny sliver of Amazon’s overall revenue.
It’s quite possible that all of these divisions combined earn less than each of the Big 5 publishers do individually. The David from this point of view — not only in earnings but also in marketplace challenges that are either illegal or a result of book banning at retail — would seem obvious.
What does this have to do with anything? Why is Howey flacking Amazon's publishing imprints? After all, just like Evil Hachette, they don't accept unagented submissions.
Compound this with the fact that Amazon pays authors more than publishers (anywhere from double at their imprints to nearly six times as much with their self-publishing platforms).
At this point, you realize that Hugh has breathed in the noxious fumes of Planet Howey and his brain, like Halston in "Wool," is dying from the toxins being released into his system.
Amazon does not "pay" indies anything. Amazon takes a fat fee from indies in return for the use of its downloading system. It takes a ruinous fee if you attempt to escape the $7 roach motel. (Don't forget that 65% margin grab on international sales.) If you enroll in its Select program, it takes a fee via exclusivity.
Or perhaps you're the type of person who believes that after the taxman has removed X% of your salary to fund government operations, it's "paid" you? You do believe that? Really? Before that high speed power drill reamed out your frontal lobes, how did you lose your grip on the tool?
Or the fact that they charge less to the consumer, where publishers have banded together to artificially raise prices, and the David is not only clear, but so is the side who is fighting for the little people. At least, from one perspective.
Earth to Planet Howey. Amazon just signed a deal with the publishers that preserves agency pricing for publishers. Which, BTW, is perfectly legal in the US. And Amazon is attempting to price rig the market via the $7 roach motel. And who are the "little people?" Are leprechauns being under served in today's society? Time to bring in some diversity councilors!
Publishers, meanwhile, are fighting for the health of large bookstore chains and for the top 1% of writers who benefit from massive distribution. They also benefit from a system that bars 99% of applicants from even entering. Again, this is the way those who support Amazon and other digital disruptors see these parties as David and the combined might of the Big 5 as Goliath.
A new transmission has just been sent to Planet Howey. Will it be received as the EM waves traverse the toxic smog covering the place? Who knows? Message below:
Wow. So I go to Barnes & Noble, our local branch, to ask them about what process they have for local authors to be featured in their local author section. With in 10 minutes, it was 'OK, you're in our system, let's order a few copies of all your books, here's the e-mail and phone for our community rep and he can help you set up a book signing'. THAT is service.
James Garner, author, Indomitable (reviewed on this site).
But this view is just as wrong as the view that sees Amazon as Goliath and the publishing division of NewsCorp as David. Simon & Schuster proved this view to be false last month, when they agreed to a multi-year distribution deal with Amazon for both ebooks and print works. The major publishers have operated lockstep in some ways (from boilerplate contracts to digital royalties), but they aren’t the cartel we accuse them of. They enter subscription services variably. Some of them work out terms with their distributors while others don’t. Some have dabbled in print-only deals and have embraced genre publishing and lower ebook prices to a greater degree.
And at this point, we see Hugh attempting to walk back dozens of misstatements of fact, importuning indies to ride to Amazon's rescue in its battle with the publishers, and saying nothing when indies were thrown under the bus while simultaneously repeating again multiple ridiculous and just plain wrong assertions.
If you read his blog in an attempt to understand what goes on in the endless struggle between suppliers and channels, I have one piece of advice for you.
Escape from Planet Howey.
What Hugh Howey Won't Talk About (but Should). The Publishers and Amazon, Part VIII (the Next to Last Part. No Really)
What is Happening to the Publishers?
I've worked extensively in software and high technology since the mid-70s and have become comfortable with disruption. In high tech, nothing is stable and tried and true business models, empires, and technologies are constantly being overthrown. Here are just a few choice examples:
By contrast, the book publishing has seen one major technology disruption in the last 100 years. The introduction of the Kindle, in 2008. As I've written before, an earlier effort to kickstart E-book adoption in the 1999-2001 timeframe failed. (I document the attempt in the second edition of In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters and predicted the effort would restart in 2010. It's not the first instance I've misjudged the speed of change.) At the time, the publishers relaxed and assured themselves all was well. The book industry seemed to be immune to all the bits and bytes whizzing around and reshaping other businesses.
Yes, Amazon had disrupted book distribution via its online purchasing and delivery model. Borders had collapsed and the independent bookstores massacred and this was disturbing. Still, this was primarily a channel problem. The publishers still controlled the critical part of the industry, content creation. And there was an upside to all this channel fuss! The less places you needed to ship books to, the more you saved on that aspect of the business. But paper books would never die.
But those of us in high tech knew they were wrong. Technology doesn't give up. Technology keeps coming at you. In 2008, it arrived.
The success of the Kindle shook the publisher's control over content. As the device took off and a massive infrastructure began to form around the system, more and more people took advantage of its downloading service to independently sell their books directly to readers. Competitors to Kindle appeared and more outlets for independent publishing appeared. The success of authors such as Hugh Howey helped remove the traditional stigmata associated with self-publishing.
The publishers were caught flat footed.
While all this was taking place, the publishers also found out something.They were hated by large numbers of writers. It's almost a cliche to note that the publishers have served as the industry's gate keepers. In this article, I'm not going to get into issues of authors being screwed out of royalties a la Harlequin's sleazy ploy or the unending complaints by mid-list authors that the publishers never marketed their books. The reality is that there were and are major physical limitations on how many million pounds of paper the book business can haul around the world. The industry's publishing structure came into existence to manage this reality.
But part of this reality was to reject many books that were indeed very good but couldn't fit into paper's limited carrying capacity, refuse to market others because of a limited ability to address niches and genres, and create a royalty structure that left every writer scratching their head wondering how they ended up with 15% of a book's proceeds. Sometimes.
Now this reality is changed. Permanently. Paper book publishing is being supplanted by digital distribution and about the only thing that will change this is if a big meteor splats down on Earth and civilization collapses. And if that happen, I'm shutting down this blog and won't be following the industry any further.
And another part of this reality is that every writer who feels he or she was snubbed, neglected, or robbed now feels free to express their feelings. It's not a pretty sight to read some of the nastiness I've seen on some AAAG (Aggregated Amazon Ankle Grabbers) sites directed towards people from the publishers who attempt to explain their side of things (Hugh Howey's site has been particularly egregious in this regard). No one is afraid of the publishers anymore. After all, indies have Amazon.
In the initial euphoria that comes with any liberation, a lot of facts are being ignored. Such as while you may be able to write and distribute a book, you just may not be a very good writer. And that marketing and selling a book to the point that you can eat and pay the rent is hard. And that Amazon's deal is not amazingly great for indies.
What matters most is that if you feel you have a book in you, now you can finally take your shot. The hell with anyone who thinks you don't have what it takes (and that means you, publishers). And that's better than never being able to take your shot at all.
What Amazon is Doing to the Publishers
Amazon is innovating and changing the book industry at a rapid pace. It will not stop this process and nothing the publishers do will stop it either.This is fine. The current book publishing model is about two centuries old and that's long enough to keep doing the same thing. If the publishers will not innovate and change, then Amazon will do it for them and the publishers will be disintermediated from book readers and they will have no reason to exist.
In the software industry, SaaS (Software as a Service) permanently disrupted the on-premise software model. Instead of accessing programs on local machines owned by yourself or your business, you subscribed to software and used it via (for the most part) in your browser. (The mobile app market is a somewhat different beast and I won't discuss it now.)
To support this new model, SaaS systems rely on a series of service layers and models that are often invisible to the customer. These can include data integration, privacy and security, and analytics and community management. (And more.) Companies that manage key service layers can exercise a great deal of power and make a great deal of money in SaaS.
Amazon is in the process of creating a similar model in book publishing. It is creating new service layers for book reading and consumption and in the process stripping control of these layers away from the publishers (I tend to think of the process as a form of virtual "delamination.") Layers already stripped away or in the process of being peeled off include:
This is just the start. As Amazon identifies new service layers in E-book publishing, it will attempt to co-opt them and further disintermediate the publishers.
What Can the Publishers Do to Resist Amazon?
The first thing the publishers can do is realize that paper is now a trap. Yes, they still make good money selling print books and I calculate that they can do so for perhaps another ten years. But in the US and other main first world markets, societies are divesting themselves of paper. Fax, physical mail, bill paying, newspapers, magazines, post cards and decks, etc. are examples we are all familiar with. Large business were early adopters of digital reading technology and this trend continues. Every state government has pilot projects to shift from paper to digital storage of records. The green movement dislikes paper mills and printing presses. Schools are wondering how they can save money by replacing paper text books.
As paper consumption decreases, the print industry will descale and need to raise paper and printing prices to make up the revenue lost in volume. This will further drive the abandonment of print books. Eventually, quality book printing will survive primarily as a craft, a means of artistic expression serving small niche and collectibles markets.
But the tide sweeping paper away as a mainstream means of consuming the written word is irresistible. New 3D print on demand (POD) systems that will enable book readers to create paper volumes if they want them and flexible display technology are two additional technologies that will help seal paper's fate. One by one, the major publishers will begin to wind down print operations, possibly by spinning off their E-divisions from their paper counterparts. That is, they will if they hope to survive into the future.
In the last entry in this series, I'll examine what types of services and programs publishers need to consider implementing if they wish to survive the Amazon challenge.
Amazon vs. Hachette: It's Over and What Really Happened (and AAAG Owes Indies and Authors an Apology)
A web collective I've come to think of as the Aggregated Amazon Ankle Grabbers (AAAG for short) is in a bit of shock. The problem can summed up by this plaintive post on The Digital Reader, a site I rate as being an AAAG member.
+++ One has to ask what happened to the demand for ebook prices to be below $9.99, that was apparently so important to Amazon that we indies were asked to write to Hachette on Amazon’s behalf? +++
Yes, that is an interesting question, isn't it. Here Hugh Howey and David Gauhgran and Joe Konrath and Passive Lawyer and others have spent so much time telling us how awful agency pricing was. Awful, awful, awful. And that $9.99 was a golden number. Of course, anyone who actually believed that nonsense either A) failed math in high school or B) buys bridges crossing the East River in New York.
But, apparently, agency’s not so bad after all if Amazon gets more margin and more MDF. Which it did. Which is what channels always want.
And if you, as an indie, suspect you were being used, you were. Yes, those are bus tracks all over your clothing.The publishers used their writers and Amazon used you. And nothing about the outcome of the fight benefited indies in the least. In fact, you never had a real stake in the fight in the first place. Evil agency pricing is alive and well and will be in the future. Amazon is not going to talk anymore about optimal price points and 1.7 more readers and all the rest of that junk. That’s in the past. Until the new contracts are up.
What Just Happened?
After the major publishers lost the collusion case, Amazon had the whip hand in the negotiations. It decided to swing for the fences. Why not? They had nothing to lose. By forcing the publishers to abandon agency pricing, they would gain control of the E-book publishing pricing model. Channels always like being in charge of that.
Part of their strategy was to proclaim the wonders of $9.99. It’s a price calculated to put pressure on the publishers. THAT’s why they put indies in their $7 pricing box and are keeping us/you in it. If indies are allowed out of the box, some of you are going to find out why that box is bad for you and you’ll talk about it. And once you do, Amazon loses an arrow in its quiver to fire at the publishers.
Amazon overplayed its hand. Hachette failed to break (Hachette, BTW, will get the same basic deal as Simon and Shuster, as will all the other publishers. All that will differ in the deals will be squabbles at the edges about margins and MDF). Playing games with product availability didn't play well in the press. Having highly visible writers dabbing their eyes while muttering about censorship didn't help. I don’t think Paul Ryan noting his book had disappeared off Amazon played well either.
Amazon started to hear rumblings from the Feds about being a monopsony. That’s why they put in that odd phrase about “legitimate” reasons for pricing books above $9.99, which I covered in the article Amazonium Codexorum. And I can assure you that every time the Feds wanted to talk about the ramifications of the collusion case, the publishers jumped up and down pointing to movie theaters, threw around .pptx files loaded with slides on famous monopsony cases and flashed sock puppets who asked why no one could find possible presidential candidate Paul Ryan’s book in the Amazon search engine.
This was all becoming a bit noisy and complicated so Amazon decided to grab the extra MDF and margin that was always on the table.
New books from hot authors will be priced at $X for Y period of time, then drop back to $Z based on wholesale pricing and promotional patterns. IOW, the long tail will be activated. Publishers will also do things like release big fat art books with lots of illustrations and not have to apply for the Amazon pricing codex to wholesale them out to Amazon over $9.99. They are happy boys and girls!
Amazon gets fatter discounts (more margin) and more MDF from publishers. (BTW, did you, the writer, ever stop to consider where some of that extra margin and MDF is going to come from?) They are happy boys and girls!
Established publishers such as Doug Preston and pols like Paul Ryan will see their books shine in the Amazon search engine.They are happy boys and girls!
Indies are in exactly the same place. Stuck in a $7 roach motel paying 30 points for a download service. (And don't forget those international margins.) If you (I use the collective you here) are happy about this, I think you definitely need to pick up 50 Shades of Grey as you squirm in the happy sadistic grip of Hugh Howey's “Incentivized Agency.” The hour and the book are met.
AAAG Doubles Down on Stupid
Now you would think that AAAG would have learned something. Unfortunately, in too many cases, they haven't. Exhibit A is Joe Konrath, who has spent many pixels preaching the evils of agency. Apparently, he failed to finally persuade Amazon of this. Nor does he seem to be able to tell us if agency is so bad, why does Amazon impose it on indies? Maybe he and Hugh Howey can punish each other.
To see what I mean, please read his October 23rd post. This is supposedly helpful advice to Authors United. If anyone takes any of it seriously, take a quill, stick it into your eye and end it all. Your stupidity is terminal.
Here are some of his trenchant observations:
Write an open letter to Hachette. You've stated, repeatedly, that you aren't taking sides. Prove it. Let Hachette know how unhappy you are with their negotiating tactics..."
This is remarkable. Everyone knows what the negotiations where about. Agency pricing, margins and MDF. If Amazon had gotten everything it wanted, just who does Konrath think would have paid for the loss of revenue? And will pay for the loss of revenue the Simon and Schuster deal, which will be extended to the entire industry, represents? Remember, more money to the channel, less money for publishers and authors. Care to hazard a guess, oh content provider?
Openly ask Hachette why they can't reach an agreement.
Uh, they have. Konrath didn't know that this battle was over agency pricing? Really? Once Amazon conceded it would remain, the fighting was over. The S&S deal is the template for the industry.
Ask Hachette and Amazon to retroactively compensate all effected Hachette authors once an agreement has been reached.
Wait a second. Is Konrath claiming that Hachette stopped paying royalties to its authors? No? Well, how were the authors hurt?. Oh, by Amazon deprecating their search results, playing games with pre-orders, recommending competing books during searches and launching a ridiculous PR campaign proclaiming $9.99 was the one true pricing.
And this was the second time Amazon had done this. Macmillan was the first. And if you actually believe that Hachette's Amazon web problems were a coincidence, you also believe in Santa and that Elvis directs him from his UFO to the homes of all the good little boys and girls on Christmas Eve.
Now, you may say that Amazon has a perfect right to hurt a publisher's authors as part of hardball negotiating tactics. But Amazon didn't say that. It spewed a lot of nonsense about "optimal" pricing and how awful agency pricing was, and gosh darn it, books were too expensive and all the rest of it.
There was also a lot of blather from AAAG about how Amazon, without a contract, wasn't required to carry Hachette authors. And AAAG is right! Amazon was perfectly within its rights to tell all those Robin Roberts, Dan Simmons, David Baldacci, James Patterson et al fans to just head over to Smashwords or Kobo to buy those author's hot new releases because those books weren't going to be available on Amazon going forward.
Wonder why that didn't happen?
Here's what AAAG can do for indies.
Review Submission Guidellines
Want me to review your book? You must join the Rule-Set mailing list and contact me at email@example.com. 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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