Why Amazon should take on the publishing establishment
From Barry Eisler via the Guardian:
As the author of nine novels (the most recent, The Detachment
, published by Amazon) and four self-published works, I’ve long been curious about why so many people are frightened of a potential future Amazon monopoly while simultaneously so sanguine about the real existing monopoly run by New York’s so-called Big Six. And it’s been interesting for me to see people try to explain away the evidence of collusion between the CEOs of the major publishers as set forth in the US Justice Department’s suit against these publishers and in the equivalent suit brought by 16 states. Have a look yourself, if you haven’t already, and imagine the reaction if these sorts of meetings and discussions were happening instead among, say, Jeff Bezos, Tim Cook, and Larry Page, or among the heads of Bank of America, CitiGroup, and Morgan Stanley.
. . . .
We can . . . look to the results of the legacy model: high book prices, most recently enforced via the so-called “agency” model; “windowing”, whereby consumers who want cheaper paperback or digital versions are forced to wait until long after the release of the high-margin hardback; digital rights management regimes that annoy consumers and do little to inhibit piracy; increasingly draconian rights lock-ups in publishing contracts; lockstep digital royalties of only 17.5% for authors.
If you ask legacy publishing’s defenders, “Which is the monopoly: the entity that charges high prices and pays low royalties, or the entity that charges low prices and pays high royalties?”, you’ll be told by those defenders (tortured logic to follow) that of course it’s the latter.
. . . .
I wasn’t around for previous technology-driven disruptions of industries, but I’m confident that as cars displaced horse-drawn carriages, electric lights displaced candles, and digitally distributed music displaced CDs, to name just a few, the establishments of the day decried the newcomers’ methods and aims and predicted that the new way would inevitably cause The Destruction of Civilisation and the End of All That Is Good. And yet the doomsayers’ predictions have never come true. In all these transitions, something was lost, but more was gained. The same dynamic is now playing itself out as a hidebound and moribund publishing industry, notable chiefly for its decades-long failure to involve itself in even a single innovation, is displaced by something more efficient and effective.
. . . .
I also think Amazon has been an enormous boon to readers and authors. Does anyone really believe that, without Amazon’s innovations, readers would be paying less, or authors making more? Or that there would be remotely as big and vibrant a digital and self-publishing market for books if Amazon hadn’t blazed the trail with the Kindle, the Kindle Store, and digital self-publishing?
Now, will Amazon break up the current publishing cartel only to become a monopoly itself? I doubt it. The company’s DNA is all about serving customers, for one thing; for another, unlike in the analogue world, on the internet the competitor who wants to eat your lunch is always just a mouse click away, and with competitors like Apple and Google, I expect Amazon will be forced to stay true to its customer-centric roots rather than attempting to rely on the kind of monopoly rents that have poisoned legacy publishing’s willingness and ability to compete. In the meantime, the publishing establishment wants you to believe that in order to prevent Amazon from possibly one day charging higher book prices, the establishment has to charge you higher prices today. Or, to put it another way, “Hey, you might get robbed if you carry all that cash around, so I’ll just save you the trouble by taking your wallet right here.” This isn’t an argument; it’s a con job. Consumers ought to recognise it as such.
Link to the rest at the Guardian and thanks to Beverly for the tip.
, Amazon will pay Passive Guy a small affiliate commission on any of your purchases.
I wrote something similar the other day at Digital Book World. Instead of viewing Amazon as the enemy, people need to accept reality and see how they can work with it.
Interestingly, the comments on the Guardian blog are running heavily and rather passionately anti-Amazon, pro-publishers, parroting the usual “monopoly” talking points.
All the publishing interns are sending in comments as fast as they can, Bridget.
Yeah, that was sort of my impression, too.
Don’t forget Stockholm Syndrome. The most vocal support I see for trade publishers usually comes from aspiring writers who’ve been collecting years of rejections while trying to get an agent or publisher to look at their books and can’t imagine taking any other route to publication.
…and from veteran writers whose careers are inextricably linked to the success of establishment publishing.
While I agree this probably IS what is happening… I don’t think it’s necessarily that they are doing it under orders or that it’s even a concerted effort:
They would do it anyway. They have dreamed of a job with the big six, and fought for it. Even they are just starting out and could more easily start a career elsewhere, they really don’t want to let go of that fantasy. And that goes for a newbie writers as well. Those who are struggling to break in do NOT want to hear that all their efforts are pointless.
And let’s face it, the people most motivated to speak up are those most threatened — fear is a powerful motivator.
As always, an inteligent perspective to rebut big publishing’s idiocy.
It’s fun reading the comments on Barry’s article. I said this on another comment yesterday, but I’ll say it again. Some people really need to get over the whole “mystique” of publishing. Book publishing whether it be digital or hard copy is first and foremost a business like any other and books are first foremost a product like any other. Whoever makes the best product wins.
Given that the vast majority of pieces on publishing I’ve read in The Guardian lately has been of the anti-Amazon screed variety, it doesn’t surprise me that most of the comments were antagonistic. I wonder if they picked Eisler specifically as a foil for their pro-traditional audience to get all lathered up over?
I just read through most of the comments, too. Like many forums, there are a couple of very loud comment makers who come on again and again. I decided I wouldn’t mention my success with indie publishing because opinions seemed quite fixed and there didn’t seem to be any point.
As a consumer, I have little belief that Amazon is going to raise prices in the future, monopoly or not.
As a supplier — which I am, along with everyone else clicking “publish” — I have seen Amazon behave as a monopsony. (Stross talks about this, with a fair amount of scorn for the publishers who helped put themselves in that with their insistence on DRM.) When? Well, what was the first royalty Amazon offered indie authors for their ebooks? Was it 60%-80%, as early “small-press” epublishers were doing? Was it 45%, the flip side of the 55% wholesale discount?
Or was it 35%?
When did Amazon raise this to 70%?
Was it around the time that Apple was about to announce the iBookstore? (And/or around the time the publishers were starting to gang up on Amazon.)
Yes. Yes, it was. It was around the time that there was some very public competition, with a much more attractive royalty-to-authors presumed.
Would Amazon go back to 35% royalties if it could? Or even just 45%?
Now there’s the question. Anyone got any proof that Amazon loves its suppliers the way it loves its customers? Because I’d love to think Amazon’d turned over a new leaf and is all cuddly-wuddly towards Special Snowflake Indie Authors. But then, I’m sure a lot of traditionally-published author would like to think their publishers love them, too.
I’m one of those people who think that Amazon’s got nothing to gain by dropping their royalty in this mythical future world where no competition exists. They use their ebooks to drive sales to every other part of the store, not to turn a massive profit. They want to keep suppliers happy, too.
They know that if they screw around too much, they’ll open the door for someone else. They just don’t seem to be the kind of dumb company that would change the model that got them to the top just because they could.
I could be wrong, so let’s say they do eventually control the cosmos, reverse themselves completely, and lower royalties to 35%.
So what?
It’s still twice as much as an author would get through a traditional publishing house. The author keeps complete control, maintains all of their rights, can publish as fast as they can write, and makes money in perpetuity.
Even if … IF … Amazon goes that route, it’s still a pretty good deal for a writer.
And, at 70%, Amazon is receiving as much as Apple is for its agency sales, app sales, etc.
The only way I can see that Amazon becomes a monopsony is if everyone else keeps not taking ebook sales seriously. Apple could match Amazon on ebook price , its sitting on a giant cash hoard for goodness sake, it so far has chosen not to instead opting for collusion and 30% of the gross. Barns and Noble could decouple their ebook sales from pbook, not worry about canniblising print sales as Amazon wil do that anyway,and focus on their ebook sales, expand ebooks overseas to grow sales. The publishers could sell ebooks directly, they are parts of giant multinationals some that sell online newspapers and magazines they must be able to find the expertise to build an ecommerce website.
None of the publishers distributors or vendors in this game are poor all have the ability to create competitors to Amazon. Instead they are refusing to compete and leaving the entire ebook market to Amazon and then crying monopoly. Strange.
“Even if … IF … Amazon goes that route, it’s still a pretty good deal for a writer.”
Ehhh… I get what you’re saying, but I’ve never been super fond of that argument. There’s this underlying idea that you have to side with either the Big 6 or Amazon, and as long as one is better than the other, then we can lay back and relax. Yes, 35% would be better than Big 6 royalties, but as savvy businesspeople, we should still constantly be thinking about what’s good for writers. And 70% is better than 35%, so let’s not settle for 35.
*waves up and down at what Livia Blackburne is saying*
Yes, exactly. Why should I settle for 35%? I’m already less than pleased with the lack of transparency from Amazon as to why “out of network” sales are at the 35% royalty. Why should I lie back and go, “Oh, well, it’s better than the big six”?
But if Amazon becomes a full monopsony… what alternative will people have, if not to suck it up? Yeah, other competition might try to emerge, but think about this. Who’s the competition for eBay? First thing that pops to your mind! Don’t touch that Google field! How about Paypal? Kickstarter? How about Google itself?
So, say monopsony Amazon treats indie authors like every other supplier we’ve heard about, and squeezes the royalties down. Who’s going to have the pig-headedness to put ideals over “well, they’re the only fish in the pond that matters” and go to those unknown, upstart, would-be competitors and cut off Amazon till the royalties come back up?
Amazon’s a great resource for indie authors right now. The Big Six are well-deserving of their comeuppance. But putting on T-shirts that read TEAM AMAZON is about as long-term sensible as the fangirls who wear their sparkling TEAM EDWARD shirts and swoon over creepy vampires who crawl in people’s windows to watch them sleep, without asking permission first.
As a supplier, I’m gonna keep my eyes open, and my eggs in as many baskets as I can manage. Which reminds me that I gotta check out Xinxii again sometime, and consider formatting some of the novels for DriveThruFiction…
The question to ask is what royalty rate would Amazon set in a future monopsony to maximize their long-term profits? The answer is impossible to know, but easier to estimate. Think about it this way. If they needed to, Amazon could raise their royalty rate and still make money because they already have recouped a lot of their fixed costs. My back of the envelope estimate is that they could go as high as 85% if they had to. How low could they go? That really is dependent on how valuable Amazon’s marketplace is. Remember Amazon wants to be the king of content. They really want all books to be available for the Kindle (and not sideloaded, either). That means they probably can’t go below 50%. Below that and there is a big incentive for people to pull their books from Amazon.
I think there is a very good reason Amazon isn’t likely to lower royalties–it would force authors and small publishers to raise their prices. I know I would. Isn’t Amazon’s whole plan to keep prices low?
That’s an interesting thought. Just thinking out loud here…I do think small publishers and branded indie authors would raise their prices. My instinct is that the other indie authors, especially the less established ones, would just suck it up. Raising prices would mean losing sales to the indies that don’t raise prices.
This is a purely personal perspective. I decided to self-publish because of the poor amount of money that I was offered with the first publishing contract. When I learned about Kindle Direct Publishing and found that Kindles were selling in rural Gloucestershire’s Tesco I decided that was the future. I started putting my books into ebooks and have no regrets.
Now I appreciate my non-fiction work will never be commercial, but the work that I am most proud of “Emotional Health for Emotional Wealth” is designed to inspire people for positive changed based on over 20 years experience as a Psychotherapist and 5years as a Divorce Mediator including being a Professional Practice Consultant for the U K College of Family Mediation.
I am a great fan of Amazon personally because I used to buy paperbacks from them and now download onto my Kindle. It’s an effective system for authors and purchasers.
I firmly believe that the paperback is on it’s way out and that traditional publishers, literary agents, bookshops and printers need to be quaking in their boots.
The world has changed, will change more and it has shrunk.
I have just been involved in helping a group of professional writers, Authors Electric, promote our books in honour of world literacy as declared by UNESCO. We’ve had huge international success all from using social media and the internet.
So personally, I would never want a publisher etc. and will continue to sell on Amazon, http://www.healingebooks.com and the other options that are now open to me as a result of this brave new world.
The thing is, even if Amazon does lower the boom, they don’t hold the distribution system (the Internet) hostage. If Amazon becomes intransigent or lowers the royalties to unacceptable levels, another entity will emerge and simply woo folks away with a better deal.
There are a couple of guys who hang about the Guardian blog waiting to comment on these issues in the most aggressive way possible. It does their cause no good at all – they hardly come across as rational, and many of the points they make seem to hark back to a publishing era which is long gone – if it ever really existed. Eisler’s politeness in the face of these mean spirited responses should make them ashamed of themselves. It makes me feel quite ashamed to read the vitriol. A few of us are weighing in with the counter arguments though!
re: The vehement defenders of the traditional publishing establishment.
My brain just mushed something together and while I’m sure I’m not the first to think of it, it’s the first time I can recall coming across this thought.
There is a lot of talk about publishers trying out and perhaps moving to a model where the ebook is published first and whether or not it ever sees print will be based on the ebook sales. IIRC, a romance publisher is already doing this method.
If other publishers move to this method (which I would assume would likely require either the writer do the formatting themselves or a “conversion fee” of some sort), will that be when these writers take the step back and look at epublishing again from another angle?
I know that a good number of them will still cleave to the traditional publishing market because of needing that validation/veneer of legitimacy and even just the illusion that they are able to “focus on just writing” and so forth.
But I wonder if just having to go through all the trouble to format or pre-format a manuscript for epublishing and seeing their book go up in the same way as a self-published ebook might give them pause. Especially as I can envision traditional publishers making an eImprint where these e-first books go. You know – to separate them from the books the publishers know should get print-first. (Wouldn’t want to upset their real authors by being classed with the throw-aways, would they?)
Hi C.R. — the digital-first imprints at Avon, Grand Central, Harlequin (Carina) and RH *all* provide everything to the author. Formatting, cover, ‘editing’ etc. The thing some of them are not doing is paying an advance (though I hear that some do). Despite no advance, that will still be an attractive model to many authors, who just want to turn in a manuscript and have it magically turn into a book, digital or not.
Lazy, lazy, lazy authors.
I say this as a documented lazy author myself. So, if anything, I should know what I’m talking about.
What is to prevent other ebook converters such as Smashwords and BookBaby to become more competitive in the event that Amazon lowers its royalty rates? Seems to me the competition doesn’t have to come from ‘above’. And what about the indie author organizations that have sprung up? There are those already in place ready to step up should Amazon stumble. But I may be seeing this too naively.
I got tired of reading comments at The Guardian a while back. It seems there are always trolls no matter what the subject is.
“(the most recent, The Detachment, published by Amazon)”
To clarify, as far as I know, Amazon is not a publisher, it’s a retailer and distributor. Presumably you mean the book was self-published, or published by your own publishing house?
I’m all for self-publishing, just wanted to set the record straight.
And if your book is indeed published by Amazon, I’m sorry!
Yes, the publisher is Thomas & Mercer. I’m surprised the Guardian didn’t pick this up.