What Does the J.K. Rowling Announcement Mean for Indie Authors?

24 June 2011

Passive Guy follows a few agents’ lists on Twitter and, via Twitter psychoanalysis, hereby diagnoses denial.

He suspects publishers are in slightly less denial and will do some heavy drinking this weekend. To anyone with access to liquor store sales information from the Hamptons, please share your data with PG next week.

Make no mistake about it, the J.K. Rowling Potterworld announcement is a big deal, a big disruptive change deal.

Let’s pull out the disruptive elements from what we know so far:

1. Rowling will sell ebooks direct.

Who gets disrupted? Physical bookstores, yes, but also Amazon and the Nook Store.

Amazon is usually the disruptor, not the disruptee, and is experiencing some unfamiliar emotions. The last time they felt this way in Seattle was when Apple announced its bookstore for the iPad and iPhone.

2.  Rowling is not using her publishers.

In a million blog posts, traditionally-published authors have rained scorn on self-pubbers, claiming that anyone who has real talent will, of course, have a publisher handle their books. Rowling has superb contacts with her publishers and she chose not to use them in this venture. At all.

Rowling, who presciently retained her electronic rights will “share” a portion of her ebook revenues with her British publisher. Various analyses speculate that she will also share with her American publisher, but PG hasn’t heard anybody who knows confirm that.

What an amazing statement of relative power between an author and her publishers. Rowling is paying her publisher a share, not receiving a share from her publisher. PG would love to know how much will be shared and whether such sharing is pure benevolence on Rowling’s part or not.

But the main story is that an author who is #1 on her publishers’ speed dial could have done this ebook deal with her publishers and chose not to do so.

3.  Rowling will be publishing new materials on Pottermore.

The author has lots of backstory, notes, material previously edited out, etc., that she’ll put up on Pottermore. She’ll be addressing an obsessive market segment who is not satisfied with the amount of detail on characters, etc., in the books. PG wonders if Pottermore will have a section for fanfic.

This isn’t the same as the author publishing a new novel. It’s probably easier and it will continue to keep her Potter franchise alive with fanatics who will, in turn, continue to bring new readers into the Potter fold.

4.  Potter’s principal partner in Pottermore is Sony.

She did not user her book publishers, but did use her motion picture distributors in a move which disintermediated her publishers from their traditional role as a go-between with the movie people.

Sony has far more financial resources than Rowling’s British or American publishers and infinitely more creative resources. PG expects tie-ins and cross-merchandising between Pottermore and Sony products. Will a Pottermore trailer show up in theaters? Is there anything for the Sony ereader in this arrangement or has Sony concluded they missed the boat (again) with that product?

UPDATE: I’ve been corrected by a commenter. Warner Bros. (a subsidiary of Time Warner) is the Harry Potter movie distributor, not Sony.

When business histories are written about publishing and self-publishing in future years, the Pottermore announcement will be recognized as a significant milestone in the disruption of traditional book publishing and distribution.

Harry Potter is a major brand among serious young readers and their parents that that brand has firmly linked itself with ebooks. It has done so in a manner that removes publishers, book distributors and bookstores, both physical and online, from the value chain leading from the author to the reader.

How much money Rowling’s publishers would have made if the money had flowed in a traditional manner is something we won’t know for several years. Ditto for how much money Amazon and the Nook store would have made if she had sold ebooks through them.

Disruptive Change

The course of disruptive change is very difficult to predict. Once all the experts think they understand the future, something happens that calls their predictions into question. Is Rowling an outlier, a one-off, or will we see other mega-authors sidestepping Amazon to sell direct to their readers?

The timing of disruptive change is also very difficult to predict. It never runs in a smooth path. Last week, the timing for ebooks and the evolution of self-publishing looked slower than it does this week, after Rowling announced she is self-publishing her ebooks.

The Rowling announcement is far from the last of big events that we’ll see. Putting on his prediction hat, Passive Guy says we’ll see:

  • Continuing reduction in the number of physical bookstores (easy to predict)
  • Further consolidation of publishers (also easy)
  • More big author names announcing some version of indie publishing (easy)
  • More Wellesley English majors looking for work outside publishing/agenting (barista training booms)
  • Continuing proliferation of ereaders and/or tablet devices conducive to reading and reductions in ereader and tablet prices (easy)
  • A giant ebook/ereader Christmas season in 2012 (easy)
  • Nastier publishing and agency contracts designed to lock up authors forever (easy)
  • More John Lockes and Amanda Hockings appearing among indie authors
  • Continuing rapid innovation in publicity strategies for indie authors
  • More crowded online bookstores
  • More aggressive talent searches by movie/TV types or new-style agents among indie authors as the publisher/agent pipeline of books begins to dry up
  • On the lawsuit front (after authors work through their battered wife/husband/child codependency syndromes):
    • One or more lawsuits by authors against their publishers and/or agents for underpayment of royalties
    • One or more lawsuits by authors against their agents for misrepresentation of the benefits and consequences of agent-as-publisher agreements
    • Multiple lawsuits by authors trying to break publisher/agent contracts

But what doesn’t change?

People will continue to want stories, new stories, interesting stories, stories that bend their minds and touch their hearts.

Storytellers are always necessary.

People are always willing to pay for good stories.

 

Agents, Books in General, Disruptive Innovation, Ebooks, Legal Stuff, PG's Thoughts (such as they are), Self-Publishing, The Business of Writing

45 Comments to “What Does the J.K. Rowling Announcement Mean for Indie Authors?”

  1. Love the mildly snarky yet on-point articles.

    I think an inevitable result of this sort of disintermediation by big name authors is a re-thinking of margins at companies like Amazon, although the truth is that if a Stephen King or a Grisham wants to sell direct and pocket 100% of the pie, they’ll be able to. That’s just healthy, IMO. BTW, I discuss the death of traditional publishing in a recent blog at RussellBlake.com – and while that may seem like shameless self-promotion (and there’s a little of that) it’s also an attempt to create an ongoing dialog amongst the self-published and the soon-to-be unemployed from the publishing biz.

    Keep up the good work. Always fascinating.

  2. I see this as a huge upset to indie authors, especially those of us still trying to establish our self in the YA market. We don’t have the resources to compete with Rowling. It’s bad enough undercutting each other with 99 cent or free e-books. So I’m not sure about seeing more John Lockes or Amanda Hocking with Rowling clogging up the works.

    • Shawn – The book business isn’t a zero-sum game.

      I think there is an elastic demand for books and ebooks and lower pricing are expanding the market. I think Rowling’s ebooks will significantly expand the 8-14 year old market for ereaders and ebooks.

      • The wonderful Ms. Rowling is going to train TENS if not HUNDREDS OF MILLIONS of fans to read books electronically. I can’t see how this could be anything but a massive boon to the indie author.

        • Christian – The more ereaders, the large the accessible market for indie authors.

    • Which is part of why I think .99 ebooks are a bad idea. It’s a beggar’s move. Price your work like the piece of art it is and then deliver.

      • I agree. Here’s what happens with an author sells a 300-ish page book for .99 via Amazon.

        Books sale = .99

        Amazon’s cut =.76 (65%+aprox Delivery)

        Author’s cut = .23

        The only “person” who wins when a .99 e books sells on Amazon is Amazon

        • Nina – I can understand your math, but have to point out that John Locke loves selling 99-cent books and he’s sold a million of them.

        • The delivery charge (if there is one, but my sales reports have never shown one for a 99 cent title) comes out of Amazon’s portion for 35% cut titles.

          You’d receive 35 cents per sale, not 23 cents.

          They only take out the delivery charge on ebooks that qualify for the 70% (priced $2.99 – $9.99).

          • Scath – You’re right. I’ve never seen anyone report Amazon delivery charges higher than 1-2 cents.

            In some non-US countries, the delivery charge is humongous, however, but I don’t believe it comes out of the author’s share.

            • I have one title that the delivery charge is 3 cents on (44k plus word count). The rest are all 1-2 cents (that I have priced in the 70% royalty rate).

              Checked back through June 2010 to see.

              Larger word counts, larger file, then more of a delivery charge, but even if pricing everything $2.99, it’s not a big bite. 🙂

              • Scath – Those types of charges is in the range I’ve heard about from others.

      • I disagree: if you sell an e-book at $2.99 and it makes ten sales (I’m keeping the numbers low because I’m not a math person, and by that I mean I’m lazy), then your cut after all is said and done is around $20. If, however, you sell an e-book for 0.99 cents and it sells a hundred copies, then your take home is around $30. I’m not saying that you’re guaranteed to come out ahead by pricing your book for lower than the going price (which seems to be about $4.99 for a novel, $2.99 for a novella, 0.99 cents for a short story); but having “deals” or “bargains” on your book can, in fact, increase your profits.

  3. Warner Bros. (a subsidiary of Time Warner) is the Harry Potter movie distributor, not Sony.

  4. Harry Potter has a wise minder. The stuff of dreams for us indie writers not summering in the Hamptons.

    I wonder how writer conference attendance is faring. Between the economy and their mantra that one must attend to get face time with agents, I would assume it is down. Liquor sales, as you say, are likely rising!

    Another insightful post. Salut!

    • Thanks, Helen. I hadn’t thought of the impact on attendance at writers conferences.

  5. Astounding blog post. Very informative. Thank you for sharing–it really gives me, and I hope other authors and people within the publishing industry, a lot to think about.

  6. Great post. This is all pretty amazing, even more so when you realize Rowling may be the first but probably won’t be the last. And as name brand authors realize they can even leapfrog Amazon and go directly to their reader base, what does that mean for the rest of us. I think one thing that it may mean is the oft spoken fears that Amazon will completely control distribution are exaggerated. Amazon has done (and I believe will continue to do) a great job and has been fair to authors. They have done so because it is and will continue to be in their own best interests. That’s what had driven their success. However, should they ever decide to become more controlling and less equitable, alternatives will emerge, and quickly. The technology genie is out of the bottle, and in my opinion, that’s good news for all writers.

    • Thanks, R.E.

      Leapfrogging publishers and Amazon in one stroke is a cool accomplishment. I generally like Amazon, but everybody stays sharper when they have competition.

  7. Haha! I love it! Thank you for the posts, PG!

  8. PG, you missed a BIG one, it is reported she’ll be using Overdrive to get her content onto eReaders. If true, this is important because Overdrive = ePub file format; which Amazon refuses (so far) to support; new Tablet rumor for Aug. Overdrive watermarks the user’s ID code into the file, much like Apple does with iTunes purchases.

    *IF* JK Rowling can force Amazon to the one OPEN standard that is developing, along with using pieces of ePub 3.0 ahead of the curve & Standard’s adoption, it’s a HOME RUN for everyone. I signed up just to get a handle on what they will be doing!

    What this means is a *standard* we can publish to, instead of the many ill conceived file formats. Indesign could be a big go to App; along with several other upstarts.
    Three cheers, JK Rowling if this is indeed her vision of eBooks. -Steve

  9. I agree with all of it, but we’re still a LONG way from John Locke or Amanda Hocking setting up their own shingles totally from scratch. The only people able to pull this off at Rowling level will be those made successful by traditional publishers. Maybe in five or ten years we’ll see some brand-name indie authors created through Amazon or BN. But to start from “Go” on your own is still incredibly difficult.

    On the other hand, there are plenty of authors champing at the bit to take the A-list slots that will be abandoned. Not that there will be as many.

    Not to hijack your blog (but rather to elasticize it), I made a parallel type of post at Indie Reader: http://indiereader.com/2011/06/rowling-is-the-indiest-of-all/

    Thanks for sharing.

    Scott Nicholson

    • Scott – I saw your post and it was great. I would have blogged about it, but I had just sworn off any more J.K. posts for awhile.

  10. Hugely enormously interesting. Closing words “Storytellers are always necessary. People are always willing to pay for good stories.” almost made me weep quiet tears of joy and affirmation into my water bottle.

    Rowling’s move is being trumpeted as self-pub, but I see it as more like starting her own publishing company (as in, now SHE’S one of the big five/six). The difference in my mind is in terms of scale. Joe Author self-pubbing and J.K. Rowling self-pubbing is very, very different.

    I wonder if we’ll start to see confident small authors setting up shop with venture capital to pay web designers and everybody.

    • Thanks, Scott.

    • Check out WMG Publishing. While I wouldn’t consider Dean Wesley Smith and Kristine Rusch to be “small authors,” they’re not mega-authors either. While the capital they’re putting up is most likely their own, and they’ve run a publishing house before, WMG is an example of exactly what you’re talking about.

  11. This move scares me on the one hand, opens doors on the other. Only an author like Rowling has the money to go this route. An entire ocean (sorry, couldn’t resist) of us don’t. I don’t want to see Indie publishing fall into the hands of the monied few, leaving the rest of us on the outside looking in – just as we’ve been doing for years with the very closed world of NY pubs.

    I agree readers will want good stories, good writing, but big names have almost always trumped little names regardless of quality. Big names bring big money and big press to bear on the medium. Us little folk can’t compete at that level. So where does that leave us? I’m serious about this question.

    I’m totally supportive of indie publishing and this announcement is giving me a major stomachache. I feel like once again it will be all J.K. Rowling and Stephanie Meyers and Horton Hears a Who and whomever…and the rest of us get shoved out into the snow again. Am I making sense?

    • Julia – With all of this publicity, it’s easy to forget that J.K. started her first Potter book when she was a single mom living on welfare.

      And Dave Farland remembers when Stephenie Meyer was just another student sitting in his creative writing class.

      Everybody starts as a small fish.

      • yeah but then they get co-opted. makes me nervous. I must go play German shepherd basketball to chill out. He beats me every time. I can shoot, but he can dribble and rebound like Michael Jordan. Major hang time.
        I think I have to chew on the Stephanie Meyers/Dave Farland first degree of separation for a while.

  12. Great post. Another thing we don’t know anything about at the moment (or I missed it) is Pottermore’s pricing strategy. Nevertheless, I think this will be highly influential: they will set standards the rest of traditional publishers will have to adapt do, be it above, around or below the $9.99 mark.

    But, as you wrote elsewhere, enough of Pottermore speculation (for the moment).

    • Thanks, Stefan. I agree pricing on Pottermore will be very interesting to see. If Rowling prices lower than traditional publishers, we’ll know she’s a closet revolutionary.

  13. I think the Rowlings announcement is great and I can’t wait to see what Pottermore looks like. Many people are looking at this announcement with tunnel vision and don’t see the wider implications of what is going on here. Glad to see Passive Guy does.

    I’ll add one other little thing that I’ve been thinking about. I thinkt that the ebook rights for HP were probably in limbo. They weren’t part of the original contract (because after all ebooks weren’t even a twinkle in anyone eyes back then) but I suspect a non-complete clause prevented Rowlings from exercising those rights herself or thorugh others.

    My guess is the reason Scholastic is getting a “royalty” from her is this was a way for her to buy-back the restrictions of the non-compete.

    Just my little theory.

    • Robin – I think you may be correct about the ebook rights and non-compete. In this case, the publishers know the author has plenty of money for a court fight if necessary and Rowling’s reputation is so good, a lot of bad press would hit the publishers if there were a fight.

  14. Very funny opening followed by a very insightful analysis. Loved it and tweeted it!

    For us small indies, it’s a little frightening to watch as some of your commeters remarked. But I think we shouldn’t worry too much: this is a FAST expanding market (indeed, explosive) and there’ll be space for everybody…particularly if Rowling keeps her prices somewhat on the high side (which, given her reputation and millions of fans, she’d be a fool not to…)

  15. I wasn’t planning on working on any YA this year, but with Rowling’s announcement, I may very well go ahead and try it. I think lots of teens are going to be clamoring for their own e-reading device in order to get Harry Potter, and I’d like to have a book available when they do!

    • Sariah – Make sure all your friends call you “the next J.K. Rowling” in their reviews. 🙂

  16. Sony has had a rather miserable track record lately regarding the security of their online and web sites. (Without belaboring the point, I’m not sure there’s a Sony site which hasn’t been hacked into in the last couple of months; the Playstation online fiasco just got the most publicity.)

    I hope they do better by Rowling and Pottermore, especially considering that most of the visitors to the latter are likely to be kids.

    Other than that possible lapse in judgement on Rowling’s part, good for her.

  17. Brilliant. Where were you last week when we were discussing e-publishing and indie authors. @LitChat is now following you.

  18. I believe Pottermore will be good for the rest of us selling ebooks, and I’m not just talking about her ebook sales. Rowling would sell Potter books in any format, but where we can benefit here is by creating our own websites with interactive features that add to the overall reading experience, just like she is doing.
    I am trying to do something similar with my own book blog, and posted my own thoughts regarding my similarity to about Pottermore here: http://anabarauthor.blogspot.com/

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