From Hugh Howey:
One of my favorite movies of all-time is The Zero Effect. If you haven’t seen it, you really should. Absolutely brilliant. One of the best scenes has Daryl Zero (played by Bill Pullman) explaining the trick to following someone without getting caught. It’s simple, he says. You just get where they’re going before they do. The obvious joke here is that it’s impossible to know where they’re going, which is why they need to be followed. But Pullman’s character in the film is a Sherlock-Holmes-sort-of-genius, and he expects that everyone ought to know where everyone else is going at all times. Just as a matter of course.
But we’re not all Daryl Zero. We can only guess at the future. We are resigned to follow.
A few years ago, I put forth a zany idea about where we in the book industry were heading: I thought there might come a day when agents and publishers would scour bestselling self-published books to wrangle in new talent. Doing so would allow them to mitigate risk; it would offload the arduous task of managing the slushpile by crowdsourcing it; and it would allow market research and experimentation to take place on someone else’s dime and time (the self-published authors’ and the readers’).
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Authors didn’t have a stage for their own gigs until e-books gained wide adoption. Once that happened, the rest was inevitable. Everything that musicians, photographers, comedians, fine artists and the like had been doing for generations was now open to writers. We could see where literature was heading because of the well-trodden path laid out before them.
By being at the forefront of this transition, Amazon has reaped most of the benefit. And not just monetarily, though that’s worth mentioning before we get to the meat of this rambling blog post. Amazon enjoys higher margins on self-published e-books. Before costs, they make 30% – 65% on every sale of a self-published work. For major publishers, their margin on e-books are likely less than 10%.
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Where Amazon really wins is with the data they collect. When Amazon purchased Goodreads, it seemed to me that they were mostly purchasing the reviewing, buying, and reading habits of its users. Data like that is worth a lot of money. And its value is only going to go up in the future. This data makes it possible to recommend more items that customers will want to purchase. This is the most important trick in retail. It was my job as a bookseller. Keep this in mind, as I’ll get back to it when I posit how someone can win the next revolution in retail.But first, I’d like to digress and point out what might be an equally powerful advantage Amazon wins from their data: Not only are they seeing what customers buy, they’re seeing how authors sell. They see the next big thing before agents and publishers can. In fact, they can often see an author’s career trajectory take an upward turn before the author is even aware of it.
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Employing hindsight (that clever genius), pundits have pointed out that Random House or a collection of publishers should have gotten into the e-reader device and direct e-book sales game early on. Rather than wait on a competitor to disrupt their business, they should have taken a page from Apple’s playbook and been the ones to disrupt. I’ll go one step further and use the power of hindsight to suggest something even more audacious: Publishers should have been the ones creating FREE self-publishing platforms. They should have created WattPad or their own version of Kindle Direct Publishing. Both offer ways to discover and profit from rising talent. Both offer ways to collect sales data from customers rather than relying on the infrequent and imprecise dribs and drabs of data that they get from retailers.
Link to the rest at Hugh Howey and thanks to David and several others for the tip.