Home » Amazon, Big Publishing, Mike Shatzkin, PG's Thoughts (such as they are) » All the Amazon-Hachette coverage doesn’t seem to cover some important causes and implications

All the Amazon-Hachette coverage doesn’t seem to cover some important causes and implications

4 June 2014

From veteran publishing consultant Mike Shatzkin:

My “position” on all this is that it reveals an imbalance that only the government can fix.

. . . .

Even when I’m credited by somebody else with coming up with a suggestion —raising the author split of ebook revenues so that the publishers don’t wave fat ebook margins in front of observant and powerful retailers — that would have made Hachette’s position stronger had they accepted it, I am dubious that the publishers can do much about this. Nothing publishers can do — or could have done in the past — would change the fact that Amazon controls anywhere from 35 to 75 percent of the sales for most trade books. Anybody with that much market inside its corral can charge a considerable toll for getting inside its gates.

. . . .

Amazon used the book business to build an enterprise no longer dependent on books. Although the executives at Amazon I know maintain that they have always had a “profitable” book business (and I don’t doubt them), the company has famously been willing to live with less margin than its retailing competitors. That takes the oxygen out of the room for any retailer competing with them within the four walls of the book business. Amazon has skillfully used books as a customer acquisition tool and focused on the lifetime customer value across product types, not the margin that could be earned from the book business alone. There’s nothing morally, ethically, or legally wrong with that, but it has been steadily demonstrated for the past two decades (and acknowledged on this blog years ago) that it makes it very hard, perhaps impossible, for somebody retailing books alone to compete with them.

. . . .

Amazon, at great expense and with great vision, made the ebook business happen. Before the Kindle, the ebook marketplace was small and unambitious. The biggest player in terms of sales was Palm, which wasn’t really interested. The most interested party was Sony, which repeatedly tried over more than a decade to establish some sort of ebook device and ecosystem. But Amazon made a significant corporate commitment — creating the Kindle device, pressuring the publishers to make much more of their catalog available as ebooks, and investing heavily in discounted sales and screen real estate to build the consumer market. When B&N with Nook in late 2009 and Apple with iPad and iBookstore in early 2010 entered the market, they were attempting to capitalize on a product class that Amazon had pretty much single-handledly created.

. . . .

Amazon is just about every trade publisher’s largest and most profitable account.

. . . .

Because they don’t have to stock tens or hundreds of far-flung stores, their efficiency of sales, as measured by their very low returns, is almost certainly the highest among retailers and probably the highest of all accounts.

. . . .

Amazon has no interest in being anybody’s most profitable account; what the publisher profitability suggests to them is that their efficiencies are responsible for a lot of margin generation and they are inclined to want more of it. From Amazon’s perspective, being equivalently profitable to other large accounts is “generous” enough. From many publishers’ perspective, the enormous marketplace control Amazon has was built on the back of the publishers’ and authors’ intellectual property.

. . . .

Amazon wants lower prices for consumers — at least right now. (They’d say it is a core value and they’ll want it forever; there is room for an honest difference of opinion about how they’ll feel about it when their market share rises further.) Everybody else in the book business (authors, agents, publishers, other retailers) want prices at the very least maintained and probably would prefer they rise. This is the crux of the publishers’ problem with the government and with some quarters of public perception. Lower prices for consumers is catnip for politicians. They simply can’t resist it.

. . . .

Amazon pays amateur authors, often unedited, who upload files not yet ebook-ready to them and don’t know anything about marketing or metadata, as much as 70 percent of retail if they meet certain exclusivity and price stipulations. (Obviously, there are great gems among those, but they are still mostly unproven, unknown, and unsuccessful.) They are apparently fighting hard to avoid giving Hachette — which invests substantially to be consistently superior to a fledgling author on all these counts — the same cut.

. . . .

Amazon has plenty of internal justification for believing that their investment and risk-taking has been a huge benefit to publishers for most of the 20 years of their existence. But that doesn’t change the fact that an imbalance exists that will feed on itself. Amazon will grow at the expense of all other book and ebook retailers and Penguin Random House will grow at the expense of all other trade publishers.

Link to the rest at The Shatzkin Files

Any industry that relies on the government to fix problems with its biggest customer is in perilous shape.

Passive Guy does credit Mike with avoiding the extreme displays of Amazon Derangement Syndrome that have characterized so much of the commentary about Amazon/Hachette.

It’s interesting that a generous right of physical bookstores to return unsold printed books to publishers is one reason that Amazon is the most profitable customer for Big Publishing’s offerings, both print and ebook.

Return rights are one of the many archaic practices that make both publishing and bookselling markets ripe for technology disruption by more efficient competitors.

One of the reasons publishers pay a substantial amount of money to Ingram and Baker & Taylor to distribute print books is the right to return. Essentially, publishing has outsourced the logistics of handling returns to these distributors. An enormous weight of dead trees moves in and out of book distributors’ warehouses every day in support of returns from bookstores.

PG remembers reading a former bookstore employee’s account of a Barnes & Noble store that was moving from one location to another location about a block away. Instead of moving its stock, this store simply returned all its books to the distributor, simultaneously ordering an entire new stock, including many of the books just returned, to be shipped to the new location.

As with almost everyone involved in Big Publishing, Mike has a huge blind spot when it comes to indie authors, or “amateur authors” as he calls them.

Author Earnings and reams of other information clearly demonstrate that indie authors sell a lot of books. A small minority of indie authors sell a majority of indie books, but that is exactly the same phenomenon traditional publisher experience – most new authors don’t earn out their advances and the financial success of a traditional publisher rests upon big sales from a small portion of the books it publishes.

Perhaps it’s because so many in tradpub have looked down on romance (and, to a lesser extent, other genres) for such a long time that they don’t see it, but indies and non-traditional publishers that pay higher royalties are taking over a larger and larger share of big-selling genre markets. PG just checked and only four of the top-ten Kindle romance bestsellers were published by traditional publishers.

Regardless of how Amazon/Hachette resolves, Big Publishing is being crowded into a smaller and smaller portion of the total ebook market. As its authors either leak away into self-publishing or never show up in the first place, tradpub faces increasing pressure to put out at least one huge book every quarter.

Without home runs, it’s going to fail because the players that reliably hit singles and doubles, including some that would have developed into home run hitters, aren’t on the team any more.

Amazon, Big Publishing, Mike Shatzkin, PG's Thoughts (such as they are)

156 Comments to “All the Amazon-Hachette coverage doesn’t seem to cover some important causes and implications”

  1. Amazon pays amateur authors, often unedited, who upload files not yet ebook-ready to them and don’t know anything about marketing or metadata, as much as 70 percent of retail if they meet certain exclusivity and price stipulations.

    No, Mike, Amazon doesn’t pay these authors anything. They take a cut of a sale. If the book is that bad, it won’t sell, dummy.

    I’m so sick of him.

    • Chris Armstrong

      I’m sick of him too. What a priggish snot.

      • This article was less obnoxious than most, which is the only reason why I got through it. However, his constant dismissal of self-pubbers annoys me, and his contention that it’s time for the government to step in and stop Amazon from doing … something, I guess … is asinine.

        • Chris Armstrong

          I think that is why this one put me over the edge. Instead of being bombastic, he’s just mildly and thoughtfully including that quote you highlighted where he gently paints all indie writers with one gigantic brush – as a casual aside.

          Makes me want to kick his a**.

          • Well, a lot of us are probably making more money than he is by being those casually-painted indie authors, so don’t get too bent out of shape about it. 🙂

            • The funny thing is, by the rules of the Olympics, if you earn money for doing something, that makes you a professional. So any self-pubber who makes one single sale just became a “professional” writer.

              • Exactly. Trad pub doesn’t want to admit that though. Elitists never do.

              • OTOH, to the SFWA, you can write a hundred books, sell a million copies of each, and if they weren’t widdled upon by an approved traditional publisher, you are not a real writer. So it takes all sorts.

              • Yep. Doing it for pay -> professional. Doing it for fun -> amateur. Words have meanings.

                The only other common definition for professional refers to licensed professions (doctor, lawyer, engineer, cosmetologist…).

                I don’t recall ever hearing of a licensing board for “publishing consultants”, veteran or otherwise.

                • Of course the ideal situation is to be a professional amateur–to get paid for doing what you love. I think Warren Beatty said something like success comes when you can no longer tell the difference between work and play.

                  And of course there are probably a lot of professionals doing it only because they’re getting paid–people for whom writing stopped being fun books ago.

                  I feel kind of bad for them.

                  But only kind of.

                  (I don’t think I’d mind seeing a governing board that required literary agents to have MBAs or JDs.)

        • A reporter told me about an interaction they had with Mike. They asked him about self-publishing, and he admitted to them that he “didn’t know anything about that.”

          So he’s a publishing expert. But he doesn’t know about roughly 30% of the e-book market.

          And by this article, it sounds like he doesn’t know anything about small publishers either.

          So he focuses on roughly 50% of the total trade market and ignores the other half. Gotcha.

          • And it shows, it really does. That’s what passes for “expert” in traditional publishing.

            I can’t believe authors still want these people to manage their careers. These “experts” know so little about the market when it comes to books that it’s really not a surprise that they can’t adapt to modern business.

          • Kind of like that consultant chick, who was hollering that Amazon was going to f*** us all over, a few days ago on another PG post. *rolls eyes*

            • I know…like trad pub hasn’t been f***ing authors for years. I love the irrationality of these people. If anything, authors are used to getting f***ed. The difference this time would be that at least a lot of authors got a taste of freedom and control first and can take the skills they learned to go market their books elsewhere. What do trad pub authors have when they’re no longer useful to their corporate masters?

          • Well, he knows that 90 percent of us are worthless hacks, although, when I suggested that 87 percent of folks who quote statistics make them up as they go along, he admitted that he made his number up.
            He didn’t challenge my numbers, through… Perhaps folks just assume I’m full of it.
            Not hard to figure out who he writes for. An individual showed up on the thread and tried to chat with Mike. He arrived as a fan of the Shatz but, after several ‘I’m done talking to you’ nudges from Mike, the guy probably won’t be back.
            He wasn’t a publishing company and he dared to contradict Mikes assumptions about the Law (it sounded like the visitor went to law school) so he’s not welcome.

    • In addition to the dumbness already pointed out: Oh, boo hoo, authors who don’t know anything about marketing and metadata are outselling you.

      Guess they either know more than you think, or the things you think are important aren’t so important after all.

      Hurts, don’t it?

      • Well said.

        I remember when I first looked into publishing in the 90s. I have a distinct memory of reading the standard practices and being taken aback.
        They pay an advance, and you may never see another dime.
        The book has a limited amount of time to prove itself.
        They own the rights for the duration.
        They don’t help much unless you’re already a success.
        They pay a miniscule royalty.
        I didn’t like any of that, but figured that was the price of doing business.
        To see the ‘unwashed, unedited and unmarketed’ masses somehow succeed is a real joy.

        • Exactly the same thoughts I had. I’d been writing professionally in other fields for a while, but had my first project ready for the book business about 5 years ago. Just before Kindle happened in a big way.

          I started looking into the business, went to a couple of writers conferences, started reading agent blogs, sent out a handful of queries, even got some requests for manuscripts… But I kept running into the same issues every time I dug deeper to see how it worked.

          In a nutshell, it seemed like a ridiculous industry that made no sense to want to join. It was very, very top heavy. And the most important players in the business were simply middle-men. The process of querying, researching agents’ tastes to write a more personalized letter, mailing partials, etc… it was more than time consuming. It was actually kind of degrading.

          I never went through years of toil trying to crack in, I just kind of jumped straight to the mild despair of “oh my God… is this really what this is all about?” I mean talk about “doing all the unnecessary stuff when writers just want to write…”
          Marketing books to readers is a LOT easier than marketing books to the publishing industry.

          Then I stumbled over Konrath’s blog. Never mailed another query letter.

        • Don’t forget all the steps required to even get to that point. Submit to and find an agent, convince them to shop around to editors, pile up a railroad spike of rejection letters, and eventually, if you’re lucky, land a contract for almost no money.

          Oh yes, and before you can even submit to the agents or publishers you have to figure out who to submit to, their preferred format, and their personal likes and dislikes.

          Publishing was all about how naive you were, how desperate you were, and who you knew. Once I figured that out in my teens I washed my hands of any hopes for a career as an author and it’s only now that I can bypass the gatekeepers that I even bothered to try. I’m sure that’s not an uncommon story.

          • It’s good you recognized it early. I felt the same way by the time I got to my early twenties. It was just depressing to realize it was such a messed up industry that relied so much on sheer luck and a**-kissing. But I think back then we all just thought “that’s how it is and it has been this way for a very long time.” Learning that it simply didn’t *have to* be that way was one of the most eye-opening moments of my life. It’s amazing the things you learn to just take for granted, the systems we just accept because they’ve been in place for so long.

      • I’ve been teaching two of the Big 5 about metadata for two years. My own publishers don’t know what they’re doing. I don’t meet many publishing peeps who know as much as the average successful self-published author.

      • Exactly, Libbie.

    • Just posted this comment on his site, we’ll see if he responds:

      “Mike – This was a fairly balanced op-ed, but you really need to quit calling indie authors “amateurs”. There are enough professional indie authors such as Konrath, Howey, Ward, et al, that such terminology is bunk. Are there poorly made $2 indie stories? Yes. I’ve seen some pretty crappy $30 Tradpub ones, too – some from big authors. They may be less frequent, but I can let a $2 story slip on quality a hell of a lot easier than I can a $30 hardcover.”

      • Exactly. How dare he call all self-pubbed authors amateurs. They know more about the business than those signed up by publishers.
        And as for quality: It’s the publishers who look for trash like SHADES OF GRAY etc.

        • Why else would they claim that part of what they have to offer is “nurturing”? Business partners don’t need nurturing. People who are being treated as children often do though.

        • Terrence OBrien

          I encourage him to proclaim a segment that has captured 30% of the market is amateur.

      • Decades ago I kept a small bookshelf in my writing office. On one side – great books that inspired me to keep writing. On the other – books that told me, “If they’ll publish this crap maybe I’ve got a shot.”

        Every one of those crap books was a Big Pub product.

        Dan

    • Charles Engelke

      And I bet Amazon would be willing to use the same terms with Hachette if Hachette agreed to the same exclusivity and price stipulations.

    • I was going to quote this exact thing!

      What’s the problem with Amazon paying someone their cut of a sale? No matter how bad the book may be, how unedited, how untrained the author, if someone bought the book then good on that writer. They’ve made some money, and likely fulfilled a life-long dream. I know I did. I plan on doing it again, as many times as I can before I die, and the naysayers can kiss my butt.

  2. Yeah, this whole commentary jumped the shark at the “amateur authors” line. Some people really can’t get around how there’s more than one way to produce successful work, eh?

  3. They really need to stop with the amateur author elitist b*******. A person writes and sells or writes and doesn’t sell, indie or trad. If people want to buy and read what someone writes, why is an editor’s opinion better than a reader’s? A writer writes for READERS, not for a corporation.

    At least, that’s how it should be.

  4. Shatzkin also doesn’t point out how he’s trying to make money off the Big 5 with his new metadata service. And via his Digital Book World Conference. So when Patterson, Gladwell, etc use their sales numbers to leverage for better deals from their publishers, that’s good business. When a company does that, it required legal intervention?

  5. Mr. Schatzkin, how dare you. I am a hybrid author, with twelve books traditionally published with small houses and two indie. That does not make me an amateur anything.

    I submit, rather, that you may possibly be an amateur pundit. And amateur pundits are sometimes called blowhards.

  6. Why is Shatzkin’s “position” in quotes? Is it his position or not?

  7. “Amateur authors”? Pfft! The Shatz can call me all seven of George Carlin’s words if he wants because it doesn’t matter.

    One more time. IT. DOESN’T. MATTER.

    Joe Konrath has called us indies a fast growing shadow industry. Hugh and Data Guy’s numbers show the shift. And above, PG lists the inefficiencies that are dragging down traditional publishing. The Shatz and all his Big 5 cronies can whine and moan all they want. This isn’t just about Amazon. This is about the entrenched execs, who as many of you pointed out had plenty of warning of the digital tsunami, refusing to acknowledge their business would be disrupted.

    Not could be. WOULD BE.

    There’s a reason both Disney and Warner Bros. sold their book divisions. They saw the writing on the wall and found suckers to take the declining properties off their hands. And yet Hatchette (who bought Warner Books) still can’t see the forest because it’s so damn focused on that one Amazonian tree.

    So for The Shatz to call me names? It means nothing.

    For a reader to e-mail me about an exclusive book that she was supposed to receive, THAT means something. And that’s what I am focusing on today.

  8. It takes a lot to annoy me to the degree I’m annoyed at the moment.

    I have 32 traditionally published novels from two publishers (and 4 more in the pipeline) and 8 novels I’ve published myself (and 4 more of those in the pipeline). I’m neither an amateur nor a fledgling author.

    As Daffy Duck would say, “What a maroon.”

    • Mike would say you’re 20% amateur. 🙂

    • Sorry, I have to be That Person here. It’s Bugs Bunny’s quote. If Daffy used it at all, he stole it from him. 🙂

      And a slightly embarrassing note: I was in my 30s before I realized that “maroon” meant “moron”. I thought it was just Bugs using the word incorrectly.

      • All these years I thought it was Daffy. Alas, poor Daffy, I thought I knew you well.

        • Yep, Meryl’s right. 🙂

          To bring it back to writing and stuff ;-), Daffy did point out, in Rabbit Seasoning, to Bugs about Bugs’ pronoun trouble, and of course Daffy got blasted from Elmer’s gun (“He does SO have to shoot me now.”).

          I could go on for hours, lol!

          • Suburbanbanshee

            Actually, “maroon” in this sense means “person marked for a con, or a gullible person.” It’s 1920’s slang.

  9. Called him out on this line:

    My “position” on all this is that it reveals an imbalance that only the government can fix.

    Errrr, hold up. Wasn’t the DOJ interference over the price collusion something that the industry got very upset about? But the Government should definitely go after Amazon for daring to negotiate the terms it finds agreeable? Like every other business on the planet? Something which is not illegal.

    My head hurts. Am I missing something?

  10. My “position” on all this is that it reveals an imbalance that only the government can fix.

    Because the last thing we elitists want is a free market system.

    Think of all the great things the government has done for…oh, Detroit.

    PS I will scroll past any article by this guy from now on.

    • This is the first one I’ve read in a long time, and now I remember why I stopped.

      • One nice thing about regularly visiting this space is figuring out who to read and who not to:

        Konrath and Gaughran: check.

        Shatzkin and Good EReader: pass.

      • Don’t ignore people like Shatzkin.

        Know thine enemy.

        Dan

        • Don’t ignore people like Shatzkin.

          Know thine enemy.

          I’d agree with that normally, but then I thought that only someone with power to hurt you can be an enemy. I don’t give Shatzkin that much credit. In the words of Glinda, the good witch, I say to Shatzkin, “Begone! You have no power here!”

  11. The only imbalance I see is between the colluding publishers and their hostage authors. Maybe the governtment should look into those industry standard contracts of theirs.

    BTW, I notice that he admits nobody is talking about why Amazon and hachette are at odds and then proceeds to build up a whole construct around his presumption that Amazon wants a bigger cut. Why let the lack of facts get in the way of a good fairy tale?

  12. I refuse to be part of the traffic going to Mike’s website. I do hope some indies are taking him to task there though.

  13. Amazon, at great expense and with great vision, made the ebook business happen. Before the Kindle, the ebook marketplace was small and unambitious. The biggest player in terms of sales was Palm, which wasn’t really interested. The most interested party was Sony, which repeatedly tried over more than a decade to establish some sort of ebook device and ecosystem. But Amazon made a significant corporate commitment — creating the Kindle device, pressuring the publishers to make much more of their catalog available as ebooks, and investing heavily in discounted sales and screen real estate to build the consumer market. When B&N with Nook in late 2009 and Apple with iPad and iBookstore in early 2010 entered the market, they were attempting to capitalize on a product class that Amazon had pretty much single-handledly created.”

    So they want to k!’ll the goose that laid the golden egg. They need to be careful what they wish for.

  14. If Mike Shatzkin is the smartest person in the room, he’s probably in the wrong room.

    (On his own)

    • BWAAA!

    • David, I’m the dumbest person in the Comment section here (except for Special K and Stevie Z.), but I wouldn’t want it any other way. I learn a lot from y’all.

    • Any room with Shatzkin in it is, by default, the wrong room. If he’s the smartest person in the room, he’s likely alone. Of course, Shatzkin and his inflated ego wouldn’t leave space for anyone else. Am I being too rough on him? Nah, I don’t think so. 😀

      • You may be looking at this the wrong way.

        Think of the fun you’re going to have watching him grow older and progressively grumpier and more bitter as Big Publishing’s power dwindles and self-publishing’s power rises. He’s going to be, like, the Andy Rooney of Big Publishing.

        • Well, Andy Rooney was an amusing sort of curmudgeon, Shatzkin is more of an a-holey kind. “Didja ever notice how Amazon was a dangerous monopoly intent on destroying fine literature and replacing it with mass-produced dreck concocted by ‘amateur authors’?” No, my amusement level is definitely lacking. Barraging him with high-velocity rounds of snark is more satisfying.

  15. Wow, I almost fed the troll. I had a comment ready, and almost hit “submit.” I need an intervention.

    He also said that the DOJ suit was wrong because it “strengthened the strong and weakened the weak.” Ummmm …

    • Don’t worry, I think that was meant to be our daily dose of wtfuckery.

    • Patricia Sierra

      Apple weak? Ooookay.

      If indies don’t have a clue about marketing and metadata, how come it’s the bookstore folks who are ordering huge numbers of books that won’t sell, and the big pubs are the ones talking (or misleading?) them into doing so? Seems like both are depending on a roll of the dice, rather than having a handle on marketing and metadata. And just how much marketing do the BPs do, anyway?

      • Of course. Apple has a minuscule $555 billion market cap while Amazon has an enormous $141 billion.

        Oh, wait.

    • It’s okay, Dan. I fed him for you. But never again…. no… never again… *shakes head in shame*

  16. Looks like he put about as much effort into that citation as he did that article…

    Dav

  17. Over and over, the Upton Sinclair quote is apropos;

    “It is difficult to get a man to understand something when his salary depends on his not understanding it.”

    I think Mike knows damn well that some of the things he says are false. He just wants to have his bread buttered by the legacy publishers for now. He doesn’t bother looking into the information about indies because he doesn’t think it benefits him at the moment.
    When the wind shifts, he’ll move with it like a tattered flag.

    • As quotes go, I favor this one:

      There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back.
      —Robert Heinlein

    • It’s not just that. We’re not his audience. BigPub is. And BigPub believes everything he says about those pesky amateurs.

      • Which makes his assertion that the government ought to do something all the scarier. I recall that a bunch of whiney losers in the tech biz got the ear of the Clinton justice department and caused a market crash that dissipated 1/3 of the value of my 401(k). Big business cronies of government care little for the damage their terrified thrashings do to the “little” people.

        But Big Pub will listened to such maroons. And try to do something about what he says — no matter how maroonic his assertions.

        M

  18. Strange. I feel sure there was an Author Earnings report a short while ago, but Mike hasn’t rubbished it yet.
    I do hope Hugh & Data Guy don’t feel too left out.

    • After the first one he declared he wouldn’t read any more of the Author Earnings reports because it isn’t part of his job to read about new trends in publishing. Just advising big publishers on trends in publishing….

    • Mike seems to find the concept of author earnings (as opposed to publisher earnings) extremely confusing.

      • Maybe you guys can simplify it for him. Tell him that Hugh Howey the author made 12.5%, and Howey’s Silo Inc. the publisher made 57.5%. Amazon took a totally unfair middleman cut of 30%, robbing money from both the publisher, and the poor author, and you’re just not sure how Howey’s Silo Inc. will survive.

  19. I don’t personally accept that there was any collusion. You’d have to have been a fool to be running a big company and not see Apple and agency as an opportunity. None of those CEOs are fools. They didn’t need each other to know what was a good idea for their own companies.

    This is immediately after saying he doesn’t know anything about the law, so I guess that he really wanted to drive that point home.

    • You left out the funniest part of his response to me, Dan.

      I know about commerce and I know about ethics.

      Immediately followed by the part you quoted.

      Yes, their good idea was very ethical. Attempting to force high prices on consumers, brilliant.

    • He did it in the comments, too. He said that his remark about ninety percent of “amateur authors” was complete fiction, he made it up, but he won’t be convinced otherwise because he considers any other number or citation preposterous.

      He’s hand-waving. Shatzkin doesn’t give a damn about facts, and he admitted it.

      • Yep, he was responding in part to me. He basically just admitted that he was making up numbers from conjecture, and to take it or leave it. Sucks, since he had some decent things to say in the article otherwise. Oh well…

        • Not really.
          He was cherry picking numbers to prop up the Amazon bogeyman: two-thirds of online sales is all of amazon’s pbook business but not even a third of all pbook sales and really closer to a quarter. And he picked the highest number ever reported without even looking at methodology.
          B&N on the other hand has over half the B&M pbook business and a third of the online which puts them at 40% of all pBooks but pointing that out would be churlish, right?

    • Jeez Louise. Next thing you know Shatzkin will be refuting that the DoJ case even happened. Some article have already migrated to verbiage such as “if you’re one of those who believe that collusion happened”, as if it’s an optional belief. Soon, they’ll sound like the people who believe the Holocaust and moonlanding were faked.

      “None of those CEOs are fools. They didn’t need each other to know what was a good idea for their own companies.”

      Did he SEE the e-mail evidence slides??? How can anyone look at that black and white evidence and then say the above statement with a straight face???

      Seriously, the Shatz is approaching link-bait/troll status as a pub biz commentator. In fact, I read the first line of this t*** piece and then skipped straight to PG comments.

      • Plus I think a lot of publishing CEOs ARE idiots. What sort of idiot would pick a fight with their biggest retailer?

    • Patricia Sierra

      I guess he thinks all the big wigs at the BP firms got the very same idea at the very same time and that was just a coincidence.

    • Only maybe if the publishers hadn’t met over lunch and talked about it and Eddy Cue hadn’t been coordinating the negotiations all at the same time, dripping hints, Shatzkin might have a point, but he overlooks these details.

      If Apple and the publishers hadn’t been so blatantly arrogant, they might have been able to accomplish the same arrangement without violating the law.

  20. This idea that the government needs to dictate how a retailer can run their business is insane. No retailer is required to carry =anything=, nor should they be. If Amazon simply dropped all Hachette books tomorrow, that would be their choice and there’s nothing illegal about that.

    If the publishers are concerned that the retail market is too concentrated and that is harming their business chances, then they need to step up and create some distribution channels of their own. And make them competitive, too. So far they’ve done a p***-poor job of that, and it’s not Amazon’s fault.

    Amazon is not a monopoly. You, me, Hachette, and the mailman are all free to create books and sell them through whatever channel we like. Amazon will not try to stop us. They =will= compete with other retail channels, and they are indeed a fierce and even ruthless competitor. But that’s not illegal.

    • BPH imagine a world, where Amazon no longer carries your books and only carries the “amateur” authors that sign with them. It will be a big boon to the indie stores. Of course they can only carry a small selection of your titles and what percent will be returns? Apple will let you sell your ebooks as high as you like but what kind of marketing will they give you and how many avid readers will pay those prices? Big box stores will carry your best sellers but will probably sell them as loss leaders. They can still sign their authors to abusive contracts and those authors will no longer be able to confirm independently how well their titles will be doing
      Of course BPH will now be responsible for collecting their own data and none of the other retailers will run as efficiently as Amazon so what impact will that have on your sales. And with author sales impacted as well, how much more quickly do you think it will be before they take their business back into their own hands?

  21. Who pays Mike Shatzkin? If he gets paid by Trad-pubs I can see his distorted view of the whole situation. But if he doesn’t get paid by the Big 5 et al, well, I’m sorry, but he’s just distorted. I decided to put in a few bullet points his/Trad-pub view and what Amazon is doing:
    Mike Shatzkin+Trad-Pubs
    -They want to maintain their self-anointed control over book publishing.
    -Anyone else entering the publishing business will destroy the literary culture.
    -Anyone selling cheap books, or lower priced books than their suggested retail prices will destroy the literary culture.
    -Only they have the right to chose, censor, and convert mere writers into authors
    -Only they have the talent, know-how, creativity, vision, editorial-cover-interior-design expertise to publish books
    -Only they have the marketing genius to sell books
    -They have the God or Government given right to make a profit, no matter how high the prices need to be
    -They want high eBook prices to protect their paper books cartel.
    -They want high eBook prices to maintain the profits and the life style they’re accustomed to
    -They want to maintain ownership rights over authors, and how much they pay them, but not to exceed 25% for eBook prices
    -And everything else now, and in the future that they deem beneficial to themselves
    Amazon
    -It wants to satisfy the customer with excellent service and lowest prices
    -It wants to maintain and have repeat customers by satisfying the customers’ needs
    -It wants to sell Kindle devices
    -It needs to sell low priced eBooks to sell more Kindles, and therefore more eBooks, to make a profit on volume
    -It will sell anyone’s eBook and give the author 70% of the sell price
    Therefore Mike Shatzkin,
    -Elitism, Excluionism, Censorship, High Prices, and Cartel is Good?
    -Democracy, and low prices are Bad?
    And it is bad because Amazon in the future might become a monopoly? That’s when you have to call for the Government’s intervention, not while Amazon is not even close to a monopoly.

  22. They are apparently fighting hard to avoid giving Hachette — which invests substantially to be consistently superior to a fledgling author on all these counts …

    I’m trying to parse this one and coming up empty. What are they investing in that justifies the government stepping in to force a customer to acquiesce to their demands in a legal negotiation? They’re not paying the average author more, are they? So who’s getting the dollars dump-trucked onto their heads in the name of quality? Editors? I’m betting that’s not really where the money goes on a per-author basis.

    Can someone please explain why the government should step in to strong-arm their customer into accepting their terms and help them deal with their overhead problem?

    As the great Joe Pesci once said: “[L]et me understand this—’cause, y’know, maybe it’s me. I’m a little f—-d up, maybe.”

    • Nice summary of the issues by Mit!

      Not only does Big Pub hold the high moral ground, they want the government to help them keep their claim to it. James Patterson makes the same argument.

      All of a sudden, it’s OK for profitable companies (generating billions) to ask for government intervention to protect their business model.

      Big Pub can swear up and down that they have the better product, but the market continues to shout them down. On a related note, lots of people still believe that film photography is superior to digital.

    • Unless someone can point out otherwise, I haven’t seen any details about what Patterson, et al, consider “government intervention.”

      Do they want Amazon to be broken up? Do they want the producers to set the price for their products someone else sells? A ban on discounting?

      See, once a proposal is floated, then it can be debated, picked apart and argued.

      By not suggesting anything, they’re making an appeal to your emotions. They want you to feel angry rather than think.

      This is what demagogues do.

  23. Mikesplaining: /mikˈ-splāning/
    gerund

    Mikesplaining is a portmanteau of the words “Mike” and “explaining” that describes the act of a disgraced legacy-publishing groupie bloviating in an oblivious manner that exposes his total lack of understanding about the current state of the publishing industry.

  24. Yet again Mike exposes his deep bias caused by his long life in the publishing business. Yes he often has sensible things to say about the publishing revolution but imho he cannot escape his nature.

    What I object to in this tome are these:

    1. Amazon built a shop and became incredibly successful. That’s not Amazon’s fault.

    2. The Publishers did nothing to compete with Amazon in selling their product. They could have but they chose not to.

    3. Amazon is perfectly entitled to decide what it sells in it’s shop, and Hachette is perfectly entitled to not do business with Amazon if it doesn’t like it’s terms.

    4. There is absolutely no evidence that there is any need for the Government to interfere with the market. Amazon has no control over the product. It simply sells it. The publishers can turn off the tap whenever they chose.

    5. Mr Shatzkin’s insulting side swipe at self publishers is embarrassing and shameful in it’s ignorance.

    6. Mr Shatzkin’s swipe at Amazon for wanting lower prices and politicians to agree with them, inferring some kind of sleazy nature to their support, is naive and disingenuous. The fact is that Publishers want to retain high prices for no other reason than to profit themselves, while paying authors less.

    7. If Mr Shatzkin wants his supposed imbalance to be corrected, what he should be doing is urging the publishers to open competing retail outlets to the public. What he should be doing is encouraging others to be more competitive and offer the public an alternative. It is far from being a difficult task. Yahoo was the top dog once, as was Sony.

    The truth is that writers are moving way from the big publishing houses in a steady and growing flow. They are using their own editors and their other skills by publishing directly through Amazon and other sites like Smashwords. It is a dishonest and disingenuous claim to make that self publishers are delivering any lower quality than the big publishers, who’s publishing decisions have always been based not on quality but on pure marketability and profit.

    The big publishers have screwed writers over for too long and will not be able to get away with it for much longer. They are thrashing around like fish caught in a trawler net and they know their death knell is sounding.

  25. Terrence OBrien

    Amazon pays amateur authors, often unedited, who upload files not yet ebook-ready to them and don’t know anything about marketing or metadata, as much as 70 percent of retail if they meet certain exclusivity and price stipulations.

    Consumers don’t give a hoot about metadata and marketing. Nor do they care about how much authors make.

    And lacking professional knowledge of metadata and marketing, those amateurs have taken a huge market share away from the professional authors and their publishing houses. If they hadn’t, publishers wouldn’t be as weak in their negotiating position with Amazon.

    • About the only way I can see that the Big Five actually do marketing better than indies is their wall-to-wall marketing on their bestsellers, like The Fault in Our Stars, for example. So far I don’t think any indie can match that. But that’s because the Big Five are huge media conglomerates who steal from their other authors to push out that kind of marketing on *certain* projects. As the authors who *don’t* get that kind of marketing start to walk away from the Big Five, it will eventually become harder and harder to justify that kind of expenditure and they won’t even have that advantage.

      • About the only way I can see that the Big Five actually do marketing better than indies is their wall-to-wall marketing on their bestsellers, like The Fault in Our Stars, for example.

        Since I’ve never even heard of that book, I’m guessing they’re not doing wall-to-wall marketing too well either.

        • Terrence OBrien

          Except for bookstores, where can we look to see the consumer marketing the big publishers do?

        • I see ads across websites, on television, on my Kindle…where have you been? Maybe you’re just ignoring it. But it’s clearing a pretty big marketing campaign.

  26. I went for the bait and went back to the article and the comments. I think the low traffic the Shatz has gotten with his last several “non” posts (meaning he hasn’t said anything at all in his most recent long winded screeds) prompted him to up the vitriol with this outing.

    Taking a page from the trolls at Good E-reader to pimp up the traffic, I guess. Evil Zon. Amateur indies producing 99% crap, schlock peddler Bezos. It’s so…yawn. So much for being a publishing thought leader. Reads like a 2011 Salon article. And I can’t express how hilarious it is that he talked so much s*** about Konrath in the comments.

    Just…hysterically funny, considering how many times he’s dodged and avoided Joe’s debate the last few weeks. Joe isn’t Barry, you don’t need to stop every paragraph and look up stuff to get his point. He argues with very simple facts and logic. If the Shatz is soooooo right and Indie world is so wrong, then fisking Joe should be laughably easy. Apparently not.

    But now he flaps his gums. I don’t even know what derogative to affix to that.

  27. Two thoughts– first, Shatzkin shows that the idea of raising author royalties is just crazy to the publishers. It’s weird.

    Also, “amateur authors” is silly when authors are making money selling their books (which makes them professional). Also he never seems to acknowledge that many of the authors are previously published by the traditional publishers (and can be assumed to know why they choose indie). And that many of the other authors are good enough to be traditionally published, but there weren’t enough slots, or the lack of actual editors these days meant that they weren’t brought to contract or didn’t want to wait any longer.

  28. Although I thought Shatzkin actually came off better than usual in this article, I agree that it’s ridiculous that he calls indie authors amateurs, especially since people are making a living off self-publishing.

    Also, I saw Mike’s partner, Pete McCarthy, speak at the self-publishing seminar at BEA. He flat-out said that he won’t read your book, even though he’s being hired to do marketing. (He seemed to think this was a selling point, although I have no idea why.) I have a marketing background, and would NEVER market something I wasn’t familiar with. Not impressed with him at all.

  29. Holy crap…nothing more to say.

  30. If the relationship between Amazon and Big Publishing is something “only the government can fix,” then it would also be the only thing the government COULD fixed.

    The U.S. government doesn’t “fix” anything.

  31. I think Shatzkin gets a bit of a raw deal sometimes. For one thing, he’s clearly not writing for this audience, as such that colors the tone of his work. If you want to communicate with someone, it’s easier to do it speaking to them on their terms. I also don’t really see him as a publisher apologist. In fact, I think he’s often quite critical of publishers, in ways both direct and subtle.

    I think there’s a way to look at that specific quote about “amateur authors” that isn’t necessarily an insult to indies. For one, it’s listed as an important point to consider about present conditions. The general perception of self publishing in the audience he’s speaking to is exactly the stereotype he presented, rank amateurs who don’t even edit. At the same time, the perception of someone like Hatchette also matches the stereotype he uses, an entity that goes to considerable effort and expense to produce a superior product. So when he says Amazon’s willing to give these “amateurs” better terms than these “professionals”, he’s making no direct implication in any direction about why this is happening, just that it’s important. And it is, especially so for an audience that’s increasingly on the short end yet perceives themselves as superior to the other group. He doesn’t even say Amazon’s wrong for doing so. I’ve read enough Shatzkin to know he often talks about publishers needing to add value to what they do. I don’t believe in any way he thinks they presently bring enough value to be long-term survivable. This piece seems to state that pretty bluntly. He’s not insulting indies so much as hitting publishers over the head with the fact that these people they consider amateurs are out-classing them and their value and superior books right down to the terms they’re getting from Amazon. Especially in a piece that, several times, goes on at length about Amazon’s innovations and the value they’ve created, and mentions, in a noncommittal way (consider the audience again) that maybe if publishers paid writers better instead of gloating about ebook profits, they wouldn’t have Amazon breathing down their neck right now. And, oh by the way, Amazon pays nobodys better than you pay bestsellers.

    Somebody like Konrath can say anything he wants, and the more outrageous he gets, there are some who just cheer louder. I’m one of them. Shatzkin doesn’t have anywhere near that kind of freedom with who he’s speaking to. But sometimes I think, in a very Inside Baseball sort of way, Shatzkin can be every bit as critical of publishers as Konrath. The difference is he’s invested in publishers survival, Konrath isn’t. This particular piece reads almost as an indictment of publishers and their lack of action (their absence juxtaposed neatly with multiple positive descriptions of Amazon’s actions in building it’s business) has now led to a place where only the Hand of God (govt intervention) can save them. Notice, too, when he states that, the word “position” is in quotation marks.

    • I sometimes get that feeling from his posts. But, then again, if he really wanted to drive home the theme of, “Amazon is paying nobodies better than you’re paying bestsellers and that’s going to catch up to you sooner or later.” he’d do a lot better learning more about how the “nobodies” operate. Then, at least, he’d be able to better explain what the publishers will need to do to attract the fish who are small, but with the potential to be big before they grow big enough to be too difficult to net.

    • It’s nice to see a nuanced argument. But can you fault Indies cheering for the home team and booing the rivals?

      Plus, it also keeps the rivals honest and prevents them from stealing second base. (making silly arguments and not seeing the bigger picture)

    • I think you’re giving him too much credit for making a thoughtful argument. Have you read his comments?

      An “analyst” who writes for a particular audience and makes up statistics is no longer an analyst, but an evangelist.

      • I haven’t yet and you’re quite possibly right. I’ve thought about defending him before and then I’d see some comment that made me cringe. He clearly doesn’t respect self publishers as he should, but I do think he understands the long term implications of self publishing. I quite frequently disagree with specific things he says, but as far as pundits of traditional go, he’s one of the more frequent internally critical voices. I just think there are things to be gleaned from his work whether we agree with him on the specifics or not. I always try to at least see things from points of view not my own, and his definitely is that in many ways. I saw a quote from someone a while back that kind of fits my approach, to the effect of “I’ll walk a mile in your shoes but now I’m a mile away and I have your shoes.” There’s a lot of black or white thinking in publishing, this person’s all wrong, that person’s totally right. But I tend to think the truth is more like a giant puzzle with bits and pieces scattered throughout many different points of view.

    • I think you’re far nicer to him than he would be to you…and most indies. The guy makes his living by pedaling his BS theories to trad pub. He’s telling them what they want to hear so they will keep paying him even as they go bankrupt. He’s just another industry analyst who, it turns out, really isn’t all that clever or good at what he does for a living.

    • What has Konrath said that is outrageous? He puts a lot of humor in his work but I mostly see him make pretty good points.

      • That’s the thing. I can see how Konrath’s delivery could be very off-putting for someone who’s unfamiliar with him, but he rarely speaks BS.

        I’d rather have that than someone who speaks with an air of sophistication and makes stuff up.

      • Well, outrageous in the sense that even 10 years ago, very few if any would be as outspoken as Konrath has been. Don’t get me wrong, I’m glad he’s out there and I enjoy his work very much. I don’t mean to imply there’s bs involved. I read a piece of his a while back where he said, basically, he wants people to engage and argue with him. I thought, “I’d love to, when are you going to say something I disagree with?” From the perspective of a very stodgy industry slow to change, or even see the need for change, many of the things Konrath says can come off as outrageous, I think.

    • “This particular piece reads almost as an indictment of publishers and their lack of action (their absence juxtaposed neatly with multiple positive descriptions of Amazon’s actions in building it’s business) has now led to a place where only the Hand of God (govt intervention) can save them. ”

      I only wish to point out that publishers are enjoying record profits. Hard to build a case for govt intervention on that.

      A good, nuanced response. Thanks for sharing.

  32. Meadows does have a point, Shatzkin’s clearly writing for trade-publishers, but the publishing industry is changing so fast, and even though the trade-publishers profits are up, he might consider being more respectable to self-publishers, since one never knows how the things are going to play out and his disrespect might cost him some serious money some day.

    Regarding that majority of traditionally published authors have to have day jobs or their livelihood is too dependent of their publisher’s good will (just remember SaintCrow’s rant), and more and more self-published authors are able to quit their job and writer full time, you can guess which group I would like to belong, and somebody calling me amateur author won’t change that.

    I hear rants about self-published crap all the time. It’s true, there are many books on Amazon that are “often unedited,” and authors “who upload files not yet ebook-ready to them and don’t know anything about marketing or metadata”or books that are just slapped together and tossed on Amazon, but I let my work to speak for itself. I don’t have time and will to try to pursue people like Shatzkin otherwise. Although, the calls that ‘professional’ self-publishers should do something about that crap and regulate other self-publishers, because the unedited books reflect badly on them, does bother me, especially when a self-publisher makes it. Less and less thought. Now my reply to them is, if we as individuals should regulate other individuals who share with us the label self-published author to appear more professional as s group, how come that we never hear about demands that ‘professional’ literary (good) agents should regulate the bad ones, or that good freelance editors should regulate the bad scamming ones, etc.?

    • Your second paragraph really says it all. Most writers want to make decent money from their writing. Self-publishing offers a way to do that and trad pub, increasingly, does not. It’s not hard to see how this will go.

      And as far as books on Amazon being unedited, yeah, there are plenty of them. But what does Mike think is going to happen as trad pub starts cutting costs just to survive? It’s already happening. They’re letting more and more crap out the door (I think much of James Patterson’s later stuff is absolutely crap–more like outlines that clearly have not been edited since the plots aren’t even consistent by the time you reach the end of the books). It’s simply economics. How long is trad pub going to be able to justify keeping the appropriate amount of editors while they’re struggling? How many editors are going to sit by taking lower pay for higher stress when they could go work for successful indies instead?

      I don’t think there is any scenario where trad pub won’t have to shrink considerably, at the very least. They’ve gotten too bloated and the profits too unevenly distributed. Businesses like that don’t last forever. Eventually the people on the lowest run of the ladder look for better opportunities elsewhere the minute they become available.

      • I agree.
        The thing that gets me is: thanks to ebooks all but one of big five had raked in large profits, they are not struggling at all, and yet they have been reducing not just authors’ advances, but their staff too, and started to outsource more and more tasks. As I hear it (and you mentioned it) they are also reducing editing inputs. And we have all this rants against self-publishers and cries that we need to save literature. If that’s a result of them doing well – because they are doing well – then I would hate to think what they will do when their profit starts to decrease. It’s not going to be pretty, that’s for sure.

      • It should also be noted that, thanks to Amazon’s “look inside the book” feature, it’s possible for readers to judge for themselves if a book is worth reading. Plus they can be returned.

        • I don’t understand why so many readers would rather complain about the book and not return it. I have rarely been disappointed by the ebooks I’ve picked, but on the rare occasion I am, I just return them. Is it really that hard or do people just love to complain? Amazon makes returns pretty easy for most of their products.

      • I think, just my opinion, that he thinks a similar thing to what people over here do, that the conditions of the industry have irrevocably changed and they need to dramatically alter their approach or they’ll go belly up. His reasoning may be different and his biases may come from a different place, but the conclusion is the same: adapt and change or you’re toast. In the past, I’ve been in a different set of publishing execs offices discussing matters of digital change and what we should try, and until someone is actually sitting across a desk from one of these people, it’s hard to describe exactly how intractable some of these beliefs are. It’s even worse than what we can glean online, I believe. I often found myself feeling like if I had any hope at all of winning one of these folks over to my point of view, I had to structure my arguments to come from a place they could relate to. The reason I eventually bailed on that, and publishers in general, is that I realized one day that I could no longer relate to them. And that gap has only widened. I’m rather unapologetically anti-publisher at this point, sometimes severely so. I don’t think it hurts me any to try and stay grounded by keeping up on opinions different from my own.

    • “how come that we never hear about demands that ‘professional’ literary (good) agents should regulate the bad ones, or that good freelance editors should regulate the bad scamming ones, etc.?”

      Well, if you’re determined to spoil things by applying logic and consistency to the argument…

      • It’s such a good point. One that I think indies need to throw out there far more often.

        • Uh, uh, I know even a better one:
          “I don’t hear any demands that Randy Penguin should regulate the crap coming from Author Solutions and they own them.”

  33. I admit, I hadn’t thought about it before in terms of Amazon takes 30% from both indie authors/publishers and trad publishers, putting them in essentially similar positions/standing. That does make me more concerned that if Amazon is successful in securing a larger discount from trad publishers (a shift to a 50/50 split), they might attempt the same thing down the road from indies.

    • Yup. The direct comparison isn’t really the 70% cut from Amazon for self publishers to the (say) 15% cut from Hatchette to its authors, it’s the Amazon self publisher cut compared to the Amazon Hatchette cut. Not really much effective difference as the publisher you is inherently going to pay the writer you whatever you get, but it is reflective of the fact the nature of your relationship with Amazon is more akin to Hatchette themselves than to an author who’s under contract to Hatchette. I think part of the reason contracts got the way they did, slanted heavily in favor of publishers, is that writers thought their relationship with publishers was one thing when it was really something else entirely. I’d like to not make that mistake again, whatever Amazon’s intentions.

  34. Shatzkin has a Kindle book

    http://www.amazon.com/The-Shatzkin-Files-Mike-ebook/dp/B0057CXB48#

    Published by: The Idea Logical Company

    The founder and CEO of the The Idea Logical Company is Mike Shatzkin.

    Doesn’t that make him a self-published author? So by his definition he is an amatuer and most likely falls within the 90% that is crap?

  35. Dear Mr. Patterson… I mean, Mr. Turow… wait, I mean — who are you again?

    Oh, right. Mr. Shatzkin. Sorry, you and your fellow Big 5 shills sound so much alike as you keep bleating the same talking points, I’m starting to forget that you’re individuals.

    Okay, so here’s the thing, Mr. Shatzkin. Feel free to call us “amateurs” and “fledglings.” It’s a natural human impulse to mock and dismiss something that frightens you. Hope it makes you feel better and helps you get some sleep at night.

    Because the truth is, you have every reason to stay wide-eyed all night long, worrying about the future. Because you and everyone in the Big 5 know who we indie authors really are.

    We’re the people who are going to put you out of business. Much sooner than you think.

  36. I just had a delicious idea. What if Amazon offered Hachette the same terms as indie authors and that’s what they’re fighting about? Not that I really think that, but oh that would be fun.

    Hachette would get 70% of the list price… IF the ebooks were priced between $2.99 and $9.99.

  37. Yeah. The bizarre repeating chorus of indies needing gatekeepers to control quality. Astounding because the big five have done such an amazing job of choosing lofty works of art to publish.

    Lets see, John Norman’s Gor series comes to mind. The high-minded saga of a planet where women are sex slaves.

    Or the serial rejection of JK Rowling because the gatekeepers couldn’t spot a great storyteller.

    Writers are storytellers, plain and simple. We existed before editors or publishers or written language. The listener and the reader decide who storytellers are, not the self appointed gatekeepers of publishing.

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