Monthly Archives: May 2014

This Is The Kind Of Competition Publishers Want

31 May 2014

From David Gaughran:

Since the huge shift to online purchasing and e-books, a common meme is that there is some kind of “discoverability” problem in publishing.

The funny thing is readers don’t seem to have any problem finding books they love. Any readers I talk to have a time problem – reading lists a mile long and never enough hours in the day to read all the great books they are discovering.

The real discoverability problem in publishing is that readers are discovering (and enjoying) books that don’t come from the large publishers. What these publishers have is a competition problem not a discoverability problem.

Amazon regularly gets slated for purported anti-competitive actions, but it has done more to create the digital marketplace than any other company. It has also done more to open up that marketplace to vendors of all shapes and sizes than any other company. Small publishers and self-publishers, for the very first time, have a level playing field with large publishers.

In other words, Amazon has fostered huge levels of competition that rarely get spoken about. Because Big Publishing doesn’t want actual competition. It hates actual competition.

What Big Publishing wants is the faux-competition that existed before the digital revolution – when they had a lock on distribution, reviews, chain stores, supermarkets, and airport bookstores. (Seriously, does anyone aside from James Patterson want a return to those days?)

. . . .

Big Publishing might like to think it’s a special snowflake (to which the law doesn’t apply), but its speech and actions follow a very familiar pattern that is witnessed any time a cosy club is being disrupted. By ushering in the digital revolution, then opening the marketplace up to anyone and creating a level playing field, Amazon has poured cold water on this garter snake breeding ball.

Large publishers have proved adept in one area: getting their message out. Sometimes it feels like they spend more on corporate PR than breaking new authors, and you need a bullshit dictionary to parse their statements.

So when large publishers say that the discoverability puzzle hasn’t been solved online, they are really expressing despair at retailers recommending books not published by them.

And when large publishers say that online retailers haven’t matched the experience of buying in physical stores, they mean that they wish there was some way to relegate all that stuff from small publishers and self-publishers to the warehouse, and have tables piled high with James Patterson and Snooki.

. . . .

The fear-mongers always forget Amazon’s core philosophy: recommend the product the customer is most likely to purchase. It’s interesting to note that this is the exact opposite of traditional co-op: recommending the book that the publisher wants purchased.

Link to the rest at Let’s Get Visible and thanks to David (not Gaughran) for the tip.

Bringing Down the Hachette

31 May 2014

From Slate:

Amazon is digging in for a lengthy fight with one of the Big Five publishers, Hachette, and flexing its extraordinary market muscle while the two companies negotiate a new contract. It’s understocking Hachette books so as to create shipping delays, cutting discounts, suggesting alternative titles to buyers, and even refusing to take pre-orders, foreclosing a major sales opportunity. 

. . . .

Neither side is officially discussing exactly what it is they are fighting about. But all indications and industry chatter suggest that Amazon and Hachette are revisiting the pricing and revenue split for e-books—the same contentious issue that prompted the 2012 price-fixing suit against the Big Five publishers, from which Amazon emerged more powerful than ever.

The publishing industry is cheering for Hachette to hold the line and has denounced Amazon’s anti-Hachette tactics almost unanimously.

. . . .

But the publishing world that is speaking as one against Amazon is really made up of two principal factions: publishers and authors. Their interests are not identical, and authors should consider the possibility that the publishers have contributed to the difficult situation they now face. Literature could end up suffering for it.

The crux of the issue is that in recent years, e-books have been more profitable for publishers than print books, despite the substantially lower price tag. But they’re less profitable for authors of new releases. This is not a well-known fact, but one group to have noticed is literary agents, who are in the business of ensuring that authors (and they themselves) get their fair slice of the pie.

So when HarperCollins, another Big Five publisher, boasted about its digital profits in a presentation to investors last year, literary agent Brian DeFiore seized on Harper’s own PowerPoint slide to point out that authors of new releases get the short end of the deal. On the blog of the leading agents’ trade association, DeFiore published a post headlined “e-books and profitability—What we’ve always said and publishers have always denied.” He noted that Harper’s chart neatly demonstrated that for a given title, the e-book is more profitable than the hardcover edition precisely because the author makes less money on it.

“Look at Harper’s own numbers,” DeFiore wrote. “$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author. $14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.”

. . . .

By leaving royalty rates where they are, publishers have left their nice digital margins hanging out there for everyone to see. And when Amazon sees someone else’s healthy profits, it’s like a dog smelling a steak. As Jeff Bezos has said, “Your margin is my opportunity.”

What I suspect is happening right now is that Amazon is telling Hachette that they want some of that margin. If Hachette had spread some of those digital profits to authors in the first place, it would not be vulnerable to this tactic. What’s more, if Hachette had been the first to raise author pay, it no doubt would have snagged some marquee writers.

Link to the rest at Slate and thanks to Randall for the tip.

Malcolm Gladwell ‘Surprised’ to Become an Amazon Bargaining Chip

31 May 2014

From The New York Times Bits blog:

In the dispute between Amazon and Hachette, neither side is blinking.

Amazon has been discouraging sales of books published by Hachette in an effort to make the publisher come to terms on a new contract for e-books. The confrontation has dominated publishing and bookselling circles. Amazon has been heavily criticized for using writers as pawns, although it also has its defenders.

. . . .

Many Hachette authors have weighed in. James Patterson was vehement in his criticism of Amazon, which he repeated at the booksellers’ convention in New York this week.

But there was one voice that was notably absent: that of Malcolm Gladwell, author of “David and Goliath: Underdogs, Misfits and the Art of Battling Giants,” “The Tipping Point: How Little Things Can Make a Big Difference” and other extremely popular social science books. Amazon has trimmed or eliminated the discount on most of his books or added weeks to the shipping time, or both.

. . . .

Mr. Gladwell did not quite say he felt betrayed by Amazon, but said he was “surprised and puzzled” by its actions.

Here’s a lightly edited account of the conversation:

Q.

You’ve been silent since this story broke.

A.

I was initially asked by Hachette to give them some time to negotiate. It’s easier when things are not being hashed out in the press. But several weeks have passed, so maybe it is appropriate for me to say something.

Q.

Let’s hear it.

A.

It’s sort of heartbreaking when your partner turns on you. Over the past 15 years, I have sold millions of dollars’ worth of books on Amazon, which means I have made millions of dollars for Amazon. I would have thought I was one of their best assets. I thought we were partners in a business that has done well. This seems an odd way to treat someone who has made you millions of dollars.

Q.

What is happening to your sales?

A.

They have been profoundly affected. Where Amazon used to sell two copies, now it sells one. It’s a pretty big decline.

Link to the rest at The New York Times and thanks to Meryl for the tip.

PG would note that if Gladwell really wanted to partner with Amazon, he’d use KDP to self-publish his books. Among other things, self-publishing would allow him to know exactly how many books he’s selling on Amazon instead of relying on Hachette to pass on whatever information it wants him to have about his sales.

Perhaps PG is in a particularly cynical mood today, but he wonders if Gladwell is in the company of other bestselling authors in receiving an advance so large that his books are never expected to earn out. If that is the case, it doesn’t make any financial difference to him how many of his books Amazon sells.

The secret of getting ahead

31 May 2014

The secret of getting ahead is getting started.

Agatha Christie

PubMatch Expands into Book Rights Buyer/Seller Transactions

31 May 2014

From Publishing Perspectives:

Since launching some five years ago, PubMatch—the international online platform for rights catalog management—has attracted some 9,000 users from 151 countries and listings covering some 25,000 titles. Next week, the company — a joint venture between The Combined Book Exhibit (CBE) and Publishers Weekly — will take its next big step, when it launches the ability to facilitate direct transactions between book rights buyers and rights sellers.

“It took almost two years of working with Deloitte just to get all the tax implications for foreign rights sales correct,” said Seth Dellon, Director of Product Development for PubMatch.

. . . .

So, you might think of it as an online dating service for publishers — or perhaps, now that it facilitates transactions, more of an escort service, should you choose to use it that way.

The new transaction feature is powered by Copyright Clearance Center, and CCC and PubMatch split a 30% commission on any deals. The feature offers buyers and sellers total flexibility to alter a boilerplate contract, one that allows each to determine such variables as royalties, term length, and format. The transaction fees can be paid via a credit card or an invoice.

. . . .

“Our goal isn’t to replace front list negotiations or titles,” said Dellon. “Really, we see the value in the transactional system as being especially valuable for publishers who want to monetize their backlist and for self-published authors who don’t have the in-house resources to figure out things such as their tax exposure or a foreign rights sale or don’t have an agent working to sell rights on their behalf.”

Link to the rest at Publishing Perspectives and thanks to Eric for the tip.

Hitler hates Amazon, too

31 May 2014

Thanks to Milo for the tip.

James Patterson slams Amazon, says it’s hurting literature

31 May 2014

From USA Today:

Best-selling author James Patterson accused online retailer Amazon of hurting the publishing industry in a speech Thursday in front of hundreds of independent booksellers.

He made his remarks while accepting an award for championing small bookstores at BookExpo America, the industry’s annual convention.

Patterson said he believes “the future of our literature is in danger.”

“Amazon wants to control book buying, book selling and even book publishing,” Patterson said, adding that the company “sounds like the beginning of a monopoly.”

Amazon is in the midst of a battle with Patterson’s publisher, Hachette Book Group.

. . . .

The crowd at the awards luncheon gave Patterson a standing ovation.

Link to the rest at USA Today and thanks to Laurie for the tip.

PG wonders if everybody in Big Publishing started cutting their pills in half at the same time.

How Hachette Can Win Its Negotiation With Amazon

31 May 2014

From Digital Book World:

As many of you know, Amazon and Hachette are in the middle of contract negotiations. Part of the process has involved Amazon putting increasing pressure on the publisher in various ways, like encouraging customers to buy books from other publishers and ceasing discounting on some Hachette titles, to name a few.

. . . .

So, how can Hachette as David beat the Goliath of Amazon?

. . . .

The same way the real David beat Goliath: Do something unexpected and bold.

I think that if Hachette wants to have a shot at beating Amazon in this round of fighting, it has to pull its books and ebooks from the retailer. And it has to do so publicly, explaining to its authors, the industry and as many readers as possible why it’s doing what it’s doing.

. . . .

At the same time, Hachette should offer a deal to Barnes & Noble and Nook, giving the retailer slightly better terms than it had before but demand very special treatment in stores and on the Nook. Hachette would make Barnes & Noble its exclusive nationwide retailer.

The publisher would also have to have its authors go on an aggressive public relations campaign, urging readers to abandon Amazon and buy their books at Barnes & Noble and on Nook.

Link to the rest at Digital Book World and thanks to Kris for the tip.

And, of course, Hachette would thus destroy this quarter’s revenues and profits and next quarter’s and its authors would suffer greatly and no author seeking a tradpub deal would do business with Hachette if he/she had any other choice.

One of the advantages that Amazon has over Hachette and other publishers is that Bezos plays a long game and, over many years, Amazon’s shareholders have been very happy with the results of that game.

Publishers, on the other hand, are owned by big conglomerates that play the quarter-to-quarter earnings game. Big problems with Hachette would mean big problems for its corporate parent, Lagardere.

Three days ago, Lagardere released a statement:

French media group Lagardere has targeted organic annual revenue growth of more than 3 percent through to 2018, helped by new markets and online sales, and said a dispute with online retailer Amazon would not affect 2014 sales.

The family-founded company with 10 percent shareholder Arnaud Lagardere at the helm has recently sold off several low-growth businesses as it seeks to address zero or negative organic growth over the past five quarters.

. . . .

Hachette’s chief Arnaud Nourry said he hopes for an early end to the dispute, details of which have not been revealed, adding that it should not affect online sales this year.

“All our energy is dedicated to finding a solution with Amazon, as with any other retailer,” he said at the investor presentation. “I hope it will be off in a few weeks.”

Link to the rest at Reuters

The clear message to investors is that Hachette won’t do anything to lose meaningful sales at its largest customer. Given poor performance over five quarters, it can’t afford more losses.

“A few weeks” vs. the long game. Who wins?

PG puts his money on the long game.

Next Page »