More Konrants

30 June 2014

From Joe Konrath:

I just got back from a wonderful vacation with my family with limited cell phone and Internet access. We had to communicate by doing something called talking, which is a lot like texting or emailing, but without emoticons or abbreviations.

I have now returned, and as I might have guessed, the stupid was strong on the world wide web while I was away.

. . . .

First off, Laura Miller said some ridiculous things in a recent Salon article.

Laura: Anyone who has followed the coverage of the ongoing Amazon-Hachette dispute knows that some of the most impassioned voices on the pro-Amazon side of the argument come from self-published writers. It’s easy to understand their impulse to defend Amazon’s e-book publishing programs, given that many had tried in vain to publish their books with traditional houses before opting for, say, Kindle Direct Publishing.

Joe: Sure, Laura. It’s bitter losers, snubbed by the industry, who despise it because they had to settle for the meager compensation of controlling their own rights and making more money with Amazon.

You’re aware many have also tried to publish with legacy houses and succeeded. Then we discovered that legacy publishers had unconscionable contracts, archaic business practices, and overall behaved badly. But, as they were the only game in town, we lived with it… until Amazon came around.

Many authors are pro Amazon for a simple, easy to understand reason: Amazon treats authors better and pays them more.

. . . .

Laura: The Big Five compete with each other for the books they want to publish.

Joe: Compete how? The size of the advance?

Don’t you find it curious that they don’t compete by offering better contract terms in other areas, such as royalty percentage, rights reversion, length of term of rights, indemnity clauses, non-compete clauses, next options, and many other author-unfriendly provisions?

How about competing like other companies compete for employees? Insurance, bonuses, 401k, pension plans, severance packages, vacation time, paid lunches, travel compensation, expense sheets, etc.?

. . . .

Is it real competition when all the major publishers somehow wound up offering lockstep 25% ebook royalties? Isn’t it odd some publishers didn’t try to attract authors by offering more?

Now perhaps all publishers coincidentally came to this figure independent of one another. But I think it is more likely that everyone secretly agreed that the only terms they’d “compete” on were advance sizes, except in the rare case of mega-bestsellers.

. . . .

Laura: Most readers are not willing to read dozens of sample chapters in order to find something acceptable or to rely on consumer reviews of questionable authenticity.

Joe: Can you show me the poll you took of “most readers”? I assume the sample was at least tens of thousands, right?

Have you ever been in a bookstore, looking for something new to read? Readers browse, whether it is legacy pubbed books, or self-pubbed ebooks. Sorta like you do when you Google something and find the website you want in the search results.

Google doesn’t only list the vetted, curated, sifted websites. It lists them all. And the popularity of a website is based on reader preference, not sifting.

. . . .

Laura: While there’s not much self-publishers can do to influence the outcome of the Hachette-Amazon dispute, this affair should serve as a cautionary tale about placing too much power in the hands of a single retail outlet.

Joe: Hachette authors aren’t at the mercy of Amazon. They’re at the mercy of Hachette.
Self-pubbed authors aren’t at the mercy of Amazon, either. If you’re concerned about Amazon, can you show me their history of squeezing and mistreating writers? Why worry about being eaten by wolves, when there is currently a lion feasting on your legs?

Hachette authors are getting screwed because they signed away their rights to Hachette, trusting that publisher to make business deals that best serve them. If Hachette can’t make a deal with the biggest retailer of books in the world, Hachette is the problem.

I sympathize with Hachette authors, and with all legacy pubbed authors. But they need to accept that they signed the deal. I signed four legacy deals. I felt I had no choice, and no negotiating power. They were the only game in town, and I had to take it or leave it. So I took it, and I accepted full responsibility for my publishers’ many mistakes.

Now that there IS a choice, authors must accept even more responsibility. Signing away your rights, when you’re now able to keep them and self-publish, is a huge gamble. Because if your publisher screws the pooch, you’re stuck. Forever.

Link to the rest at Joe Konrath

Big Publishing, Joe Konrath, Self-Publishing

56 Comments to “More Konrants”

  1. In this post, Konrath points you at an earlier Shatzkin article http://www.idealog.com/blog/much-like-hugh-howey-disagree-just-recent-post/ and in particular at the comments of Paul Draker (you may have to scroll thru lots of comments, but they’re entertaining, I promise you — esp. Mike’s knee-jerk defensiveness).

    The very best comments, however, are at the end, when Mike pooh-poohs reading Konrath, capped by a one-line summation by Heywood Jablome (“big boy pants”) that had me in stitches.

    • Konrath brings up a good point though, what happened to Mike? Why did he change all of a sudden? Did Big Publishing start paying him more money to stay on their side or what? It’s seriously stunning how wrong he is about self-publishing these days. I have mostly read his later stuff and I am totally unimpressed. I can’t see how this guy got to be such a big name in the industry based on his severely flawed logic in his articles.

      • Shatzkin is basically the publishing wonk equivalent of 50 Shades/Twilight clones at this point. He knows his audience. He knows what they demand. He knows how to write fast for them, and is not too concerned about quality (whatever “quality” means). He’s handsomely paid and highly regarded among certain circles.

        I’ve stopped reading him (everything broke when, on being asked for a citation, he responded “You can cite me,” as though he doesn’t understand how citations work), but he’s said again and again “I’m not writing for you,” to many of the people who leave comments. And he’s right. He’s writing for a niche indie authors aren’t a part of. That’s why he’s dismissive of the indie movement. He’s too mired in The Way Things Have Been to see the Way Things Are and anticipate the Way They Could and Likely Will Be. He didn’t get to be a big name based on his severely flawed logic; his logic used to be sound for a certain industry and business model, and he’s so good at that particular logic that now, as things have changed, it’s failing him.

      • Oh, it’s also pretty stunning how wrong he is about traditional publishing, too. Virtually none of his pontificating about how the process of publishing works for traditional writers or what our experience is in the industry is a reflection of reality.

        • Doesn’t it kind of make you wonder how much damage his views must be doing to the people who take everything he says as gospel? I wonder how many potential careers Shatzkin will have a part in destroying…

    • Mike Shatzkin’s last couple posts, and especially the comments, are worth a chuckle or two. 🙂

      But buried in all the silliness, Steven Zacharius did offer an interesting opinion in response to my original question about print-only economics.

      The tl;dr version below:

      me: Assuming a publisher is starting from a break-even-or-profitable print business, then [ebooks require] essentially zero manufacturing and distribution cost per e-book unit sold.

      Thus, …three quarters of [the 30% – 35% of big-publisher revenue coming from e-books] should be dropping straight to the publisher’s bottom-line profitability.

      So why are publisher profit margins only 10%?

      Are publishers spending a big chunk of their e-book profit windfall to subsidize a failing print distribution business that has passed the point where it is no longer profitable on its own?

      This seems very likely to be the case.

      Is that why trade publishers are no longer agreeing to print-only deals with successful indie authors?

      Mike: No, because all that missing money is going to traditionally published authors in the form of huge advances that never earn out. True trad-pub ebook royalties are really 48%, because one guy who was close to one big publishing house once told me so.

      me: Even if true trad-pub ebook royalties were 50% across the board, that wouldn’t account for the discrepancy.

      Steven Zacharius: I would tend to agree that print publishing by itself will not allow a publisher to show a profit on a given title. This is because print sales have declined dramatically while digital sales have increased. It now takes both pieces of the pie to make the book profitable and this is why there aren’t that many hybrid deals being made. We need both parts together to make a profit.

      • Of course, Steve’s “we need both parts together to make a profit” doesn’t address the rise of digital-only publishers, or the rise of digital-only imprints at traditional publishing houses.

        Digital-only publishing is clearly quite profitable on its own without print.

        But for most books, it sounds like the print side of the equation has shrunk to at best a marginally-profitable subsidiary income stream… or even a money-losing but strategically important subsidy intended to prop up the dying brick-and-mortar paper business.

      • True trad-pub ebook royalties are really 48%, because one guy who was close to one big publishing house once told me so.

        That’s so Shatzkin.

        • And so much of an unprovable anecdote! Shakes head. I used to like Shatzkin’s marketing mumbo jumbo (when I was studying Marketing) but now it’s thin on the ground and seems to be larded through his commentary using a Peter Principle set of lists.

      • Sounds like they’re pretty inefficient.

  2. I’m going to post what I said there here because my caffeine is wearing off and I have to think about getting dressed for the day job:

    I no longer think this argument is about ‘traditional’ publishing and vetting and nurturing and God and Country. The battlefield against Amazon and its ilk is littered with the bodies of straw-men. This leads me to believe that the Big 5 have cardboard tanks.

    The way Big Pub talks about paper, you’d think dead-tree pages were the cure for high blood pressure (the way a book feels in your hands, the smell of the pages, etc). They push to maintain the current infrastructure in such a collusive manner that I sometimes wonder if the paper companies have some Big Pub family members bound and gagged in a warehouse somewhere…

    …or perhaps it’s a matter of investments. If I worked at a Big 5, I would have invested in the International Paper Company (IP) from day one. I would want to reap profit six-ways from Sunday. Like an arms dealer, I would not be above inciting arguments for profit if stocks took a nose-dive.

    The fact that e-publishing provides the same (more accessible, more convenient… better?) finished product for halfpennies on the dollar would mean overwhelming profits for the company but then my own personal, private portfolio would sink.

    As well, the money I did make would be public knowledge and thus I would be obligated to share with the authors because—unlike labor limited by geography—authors can easily jump from one venue to another in the effort to make a living. Publishers understand this, which may be why they collude, force non-compete clauses, and treat authors like cattle while paying all but the interns a decent wage for managing the herd.

    Dupont was not thrilled when Henry Ford (personal ethics aside) sang about the wonders of bio-plastic and bio-fuel. And we know who come out on top. They both did, when Henry changed his tune.

    Perhaps Big Paper had a seat at the table when agency pricing was discussed.

    I often think the desire to Save Trees is a matter of the Collective Consciousness but then I’m a grunt working for an hourly wage and don’t get year-end dividends from IP.

    • This is about market share. Independents continue to take market share from publishers.

      • True, that. And I still think this could be more than just market share in regards to book sales.

        I don’t know why BP insists on binding authors to paper by making e-books too expensive for impulse buys and yet it then gleefully prints cheap, fall-apart paper books for high discount retailers (Costco, Amazon, etc). Publishers make less on these throw-away items than they would on e-books even if they doubled author royalty. I think they’ve got more than market share on their minds. I could be wrong.

        One of my dad’s books has gone viral and the publisher informed him that, while his sales have sky-rocketed, his royalty payment has been cut in half. They cited high-discount sales to retailers. In the same missive that stated this fact, they asked him to write a new forward so they could release a “new” version of the book.

        I think book/paper and see car/oil. Car manufacturers and retailers are trying to get the government to stop Tesla from selling directly to customers sort of like BP is trying to do to Amazon with agency pricing.

        I think this whole kerfluffle is more than old/new school arguments. Shite, I am late for work now. Darned TPV.

        • How would the BPH justify their existence (and 57% cut) to authors without print and B&M access? Financial services? Nurturing?

          Without print as a lure they might have to actually start marketting midlist titles.

        • The high-discount clauses are pernicious and their influence is growing. While very few talk about this, it drives my agent absolutely nuts.

    • I read a paperback last week. It was heavy (and it was only a mass market), it needed two hands to read (one to keep the pages open, and another to turn the pages), and the print didn’t get bigger as my eyes got tired. The story was good, but I couldn’t wait for it to end to get back to my Kindle.

      The only advantage a paperback has over my Kindle is that a paperback doesn’t die if I drop it in the spa pool.

  3. Based on some comments on Shatzkin’s and Konrath’s blogs, today I did a little rough math, looking at how much money consumers have to spend for the author to make $10,000.

    Even if we look at LOWEST typical publisher pricing these days (a mass market paperback at $7.99 and the ebook priced at $6.99), and even if we require the indie author must earn MORE royalties in order to pay back the sum he spends on self-publishing services (editing, packaging, ads, etc.) before counting $10,000 as his payment for his writing (I estimated $5,000 for this, which I consider quite high, but it’s certainly a figure that assume that book is well-edited, well-packaged, and well-produced)…

    Consumers have to spend (collectively) about four times as much on purchasing the traditionally published book in order for the author to make the same $10,000. (Note, the rough math also assumes the indie will play with pricing, launching the release at $0.99 for a week, then moving it up to $2.99, then $3.99, then running a sale at $2.99, etc.)

    You can play with this math a lot of ways, but in every version…. consumers have to SPEND a LOT more on a book for the AUTHOR of the book to earn $10,000 for it in the traditional publishing model (i.e. earn out a $10K advance and someday start getting royalties), and consumers spend a lot LESS for the self-published writer–even AFTER deducting expenses for self-publishing that would normally be carried by the publisher–to earn $10,000.

    The ENORMOUS difference in what consumers have to spend for that titles… is all going to middlemen. It’s all covering overhead. It’s NOT going to the writer, and it’s not staying in the reader’s pocket (for the reader to spend on more books by more writers, thus enriching other writers, too–or maybe paying the reader’s utilities bill or restaurant bill).

    Price competition will not go away. The indie market means it’s here to stay, and publishers face price competition now in the digital/online retail world of books, no matter how much they dislike it. It’s a fact of doing business now. And the more sophisticated the indie market becomes, the more that publisher pricing is simply going to look like THE SAME THING BUT AT A HIGHER PRICE.

    Of course people will still lay out more money for a favorite established author. But how many people are going to spend more money for authors they’ve never heard of, in a market increasingly populated by price competition and lower-priced books which are (no matter how much trad industry mouthpieces deny it in vain) are increasingly indistinguishable in terms of packaging, editing, and writing quality from the higher priced books?

    Many readers actually want to support writers–to buy our books rather than pirate them, to see us get a fair wage for our work so that we can keep on producing, etc. But how many readers care about supporting PUBLISHERS?

    Meanwhile, the more writers see their own titles’ sales skew from paper to digital, and paper sales continue diminishing… the more writers will question what publishers bring to the table that’s worth paying the publisher 75% of the net digital proceeds instead of the writer keeping 100% of the digital net. Publishers STILL haven’t come up with an answer for that. (They’ve come up with a lot of statements about it, but no good answers.) That is a HUGE overhead that writers are paying for in digital format–75% of the net income is going to the publisher! Publishers need an answer that works… and, even WITH an answer that works, they need to reduce that overhead and turn over more of than income to writers, while also reducing that cost to the consumer and competing in what is now and will remain a digital book market with PRICE COMPETITION.

  4. I am going to ask you all to engage in a thought experiment. I want you to imagine that the people who run the Big 5 and the smaller publishers like Steven Zacharius are smart and they know their business. Imagine that they can do math as well as Laura Resnick. You guys know about the “willing suspension of disbelief,” right?

    Let’s see if we can come up with a scenario that explains the known facts about the industry. The Big 5 knowingly engaged in a criminal conspiracy to fix the prices of ebooks. They knew it was against the law and they knew they would get caught. And everyone in the industry cheered for them. They explicitly said that they were doing it to slow the adoption of ebooks, even though they expected the conspiracy to lower their profits.

    Who does that? What corporation breaks the law to make less money and give most of that money to their putative enemy (Amazon, the Great Satan)? And all the CEOs still have their jobs. It was part of a plan. And we are going to assume it was a good plan.

    If you can wrap your head around that, come up with explanation. No vampires, space aliens, or “Jeff Bezos is a lizard person” cop outs. I can only come up with one possible solution. But the smartest people who care about this stuff hang out here. I am hoping someone comes up with an alternative solution to this conundrum.

    My solution is that they know that paper books have a use that ebooks can not substitute for. They have a good reason to believe that their very existence is threatened by the rise of ebooks because the overall size of their market will shrink so much that their business is unsustainable.

    Who can suggest an alternative? Feel free to shoot mine down if you think it is nuts.

    • I come to the same conclusion, but with different words.

      It’s about protecting the moat.

      Printing and distribution is *hard*. It takes a village to do it, and then after that, you have to know the right people in order to sell to the places where *everyone* buys. In the days before Createspace opened the doors to print distribution through the catalogues, the indies were only able to sell print copies through Amazon, which a great number of them have decided is just too hard, even today. Publishing concerns still have a corner on this market (even Author Earnings ignores it). It doesn’t matter how big it is, it’s *theirs* and it has a good, solid-looking moat.

      E-books have no moat. And the Visigoths are on their way. It does make some rational sense for the established publishers to do what they can to make sure that the part of the kingdom of publishing that can be taken by indies and their disruptive nature would be as small as possible, tucking away as much as they can behind their moat.

      I also think that they honestly believe that they add immense value to individual pieces of work, as well as to literature and Culture at large, so protecting more of the writing world behind their moat is as much about self-defense as it is about a literary interest in protecting what is Right and Good about Curated Literature.

    • I think it’s probably a “perfect storm” of beliefs based on past experience (rather than on current conditions or future prospects) combined with, as Kaz describes below, a lack of flexibility.

      Although not all publishing executives share all of these beliefs, and they certainly don’t all hold them in identical proportions, I think the decisions we see (including the decisions that led to and have arisen since the antitrust case) include:

      A conviction that print will remain an important part of the book world for the foreseeable future (i.e. not just 5 years), and the only question is HOW important?

      A conviction that writers are replaceable, but that publishers are not. A conviction that the REAL talent in the book world is in the publishing houses, that editors turn rough MSs into good books, that marketing and sales depts make books successful, and that writers cannot achieve success by self-publishing with the help of freelance professionals (whom writers could not possibly be competent at hiring or working with) in editing, art, design, marketing, etc.

      A conviction that any writer with market value (commercial and/or literary) will necessarily always want to work with publishers, which supports the conviction that there is no need to start negotiating with writers or allowing any “industry standard” contract terms to be changed (such as low royalty rates, bad reversion clauses, etc.). Any writer who won’t agree to the publisher’s terms is completely replaceable–and will probably soon be back anyhow, because writers don’t have the talent or business acumen to self-publish successfully.

      A conviction Amazon is the enemy and defeating/beating Amazon is and must be a major priority.

      * * *

      Something I see a lot, and have not yet figured out how to pinpoint, is a general absence of awareness among publishers that writer’s interests are not identical to or in lockstep with publishers interests. Then again, viz the Hachette-Amazon dispute, we see a lot of -writers- blogging statements that demonstrate a belief that their interests -are- in lockstep with their publishers’ interests–so I should be much less puzzled than I am that publishers hold this view, given that they’ve got lots of writers EXPRESSING that view.

      When publishers talk about needing to protect their overhead… well, it’s not MY overhead, and I don’t feel a vested interest in paying for it. When publishers want my moral support in their disputes with Amazon, from my perspective, no one is consulting me, asking for my input, taking my views into account, telling me exactly what terms are in dispute, asking what solution I want, or informing me of precisely how I will be affected by the proposals on the table… So I feel I’m being asked to take sides in a bar fight between two total strangers who are speaking a language I don’t know, in a conflict no one has explained to me, in a country where I have no civil rights.

      • Your last five paragraphs got me thinking. I always thought that ‘self-publishers’ books are crap (except the exceptions that manage to climb onto bestsellers list and which they want to acquire)’ meme was aimed at readers, but after reading your comments, I started to think that maybe they actually believe it and that they are equating all self-published books with the worst of the worst on the fanfiction site, and that they believe that the only good self-published books are the ones which rights were reverted back to authors or the few ones that were submitted to them, but they didn’t have slots for them.

        Zacharius’s comment on Gaughran’s Media Bias and Amazon is quite telling:

        I have no problem competing on a level playing field. I’ve said many times that I support indie publishing. There will be many writers who come to us from indie publishing.

        and in line with the:

        A conviction that any writer with market value (commercial and/or literary) will necessarily always want to work with publishers.

        • Great responses. There is truth in all of those ideas. In January 2010, I would have said you all have explained it completely. And, yet, 4 1/2 years later, I think something is still missing. Maybe the clue is in Howey’s description of Shatzkin’s latest venture. Why would Shatzkin think he could sell publishers on the idea that you don’t need to know what is in a book to sell it? That goes against a lot of the mythology that the industry has created. I think legacy publishing has a dirty little secret that they can’t admit. I am working on demonstrating that through real data.

          • But William, the legacy publishing has demonstrated time and time again that they are not capable of having a dirty little secret.

            Joke aside, I don’t believe that there’s a dirty little secret, but if you believe that there is, I would love to hear your opinion on what you think that little secret is.

            The: “Why would Shatzkin think he could sell publishers on the idea that you don’t need to know what is in a book to sell it?” could be explained that he urges the big five to put more focus on the Author Solutions or on their role of packaging business, because that’s what they really are, a packaging business.

          • “Why would Shatzkin think he could sell publishers on the idea that you don’t need to know what is in a book to sell it? ”

            William, that’s just preaching to the choir. This is nothing new. I’ve had at least two agents and several editors who didn’t read the books I turned over to them for sales and publication. I wrote several books for at least two different publishers where no one in-house ever seemed to have the faintest idea what I wrote for them.

      • Good points, Laura. I especially like this:

        [quote]When publishers want my moral support in their disputes with Amazon, from my perspective, no one is consulting me, asking for my input, taking my views into account, telling me exactly what terms are in dispute, asking what solution I want, or informing me of precisely how I will be affected by the proposals on the table… So I feel I’m being asked to take sides in a bar fight between two total strangers who are speaking a language I don’t know, in a conflict no one has explained to me, in a country where I have no civil rights.[/quote]

    • They controlled paper distribution, William.

      They can’t control ebooks. So they protect paper to protect their jobs.

      I like Kaz’s analogy to Edison and Tesla. One of Edison’s first motion pictures was the electrocution of an elephant, to show how terrible Tesla’s AC was. Even though AC was appreciably cheaper, better, and safer.

      When you can’t win on facts, argue the law. If you can’t win on the law, call your opponent names.

      Publishers believe they are looking at the long game. They are concerned about profits five years from now, even though they aren’t paying attention to the record profits they’re now making because of ebooks. This short-sightedness is understandable to anyone who ever read Who Moved My Cheese?

      Years of success breeds a sense of entitlement. That’s not easily disabused. When you’re at the top of the food chain, and things change, denial is de rigueur. The only other option is changing your entire business strategy. To do so is brave, risky, scary, unpopular, causes stock market drops due to the cattle-like stampeding and herding of investors, and executives get fired.

      Remember that new management is only brought in after a colossal screw-up has been acknowledged. So far in Big Publishing there has been no colossal screw-up. Only record profits.

      For years, I’ve said publishers are selling drinks on the Titanic, and that they’re T-rexes after the asteroid has hit. They have a limited amount of time left to still rule, but that’s ticking away. During that time, there is money to be made. But when the time runs out, Armageddon.

      Expect more mergers. Expect more bookstore closings. Expect bankruptcies. And then expect a bunch of bewildered publishing people, out of jobs, truly clueless about how they suddenly lost everything.

      I’ll bet every dime I’ve made that I’m right.

      • I wonder, spending time with Mike Shatzkin in person, if he doesn’t also know that this is what’s going to happen. But he’s getting paid to say what publishers want to hear today (he urges them to keep e-book prices as high as possible). When the ship goes down, Mike will still have his money in the bank. He’s close to retirement age. What motivation does he have to give publishers good advice?

        In Toronto, he was pitching a new marketing platform with the central premise that you don’t even have to know what’s inside the book in order to sell it. Algorithms do all the bookselling for you. When I asked him about the importance of word-of-mouth, which is only built on readers having enjoyed the contents of the book, he dismissed this. Once the sale is made, your job is done, he told me.

        It’s no wonder publishers make poor decisions. They pay for strange advice.

    • I doubt this has much to do with books or the publishers. The conglomerates that own the publishers want to preserve their capital.

      If one believes in the inevitable decline in fiction revenue due to the increasing dominance of eBooks, it is reasonable to cut costs, build the largest portfolio of rights possible, maintain paper as long as possible, and hold eBook prices up.

      That makes the most money while withdrawing from the fiction market. And it would be really dumb to admit it.

      When people don’t act the way we think they should, it might be because they don’t intend to do what we think they should..

      • I think you’re on to something. Corporate raiders in the 80s and 90s didn’t buy companies to make them profitable; they bought companies because there was capital to wring out of them before they disappeared.

        Yikes.

        • The example I come up with it MGM and RKO Radio aftef the death of the studio system. Sold over and over to ever bigger media companies solely for their movie catalogs. Eventually they shrivelled to nothing and sold for a pittance *without* the IP.
          The endgame for the BPHs is a ten person office managing and licensing a million copyrights until they expire.

          • That endgame makes a lot of sense.

            Much of the work could be farmed out to a contractor with the experience and talent to deal with the eMarket. It would be similar to handing a pile of packages to UPS. Tell them where they goes, and let them do it.

            A single contractor could handle eBooks from multiple rights holders.

    • Here’s one theory.

      With brick and mortar print distribution, a publisher has more *control* over which books sell and which ones don’t.
      This control is critically important to their existing business model.

      As seen in the Hachette presentation, each year’s profitability hinges on producing a Twilight or a Divergent or a Fifty Shades. Big publishers concentrate the vast majority of each year’s marketing dollars and advance dollars in only a tiny handful of predetermined books. Because their success depends so heavily on these hoped-for blockbusters, traditional publishers simply cannot afford to “miss.”

      But product marketing campaigns, even if done well, are always hit or miss. Actual consumers are fickle. Sometimes they just don’t eat the flavor of dog food you want them to. No matter what industry you look at, a lot of marketing campaigns bomb.

      Consumers don’t buy en masse because of PW reviews, or NYT reviews, or Goodreads flash ad campaigns, or print ads, or TV or radio interviews. They *never* have. That kind of publisher marketing doesn’t really move the needle much. If you doubt that, then just look at the top indies, who are successfully competing head-to-head with traditional publishers, despite having none of those things.

      Here’s why I think print books, despite their worsening economics, are so vitally important to traditional publishers. They are the only reliable means of creating blockbusters. Because the only way to effectively *control* what a large segment of consumers buy is to control what they see offered for sale.

      That’s why publishers wastefully print and ship two times as many copies of this year’s hoped-for blockbuster than they ever realistically expect to sell. It’s deliberate. That’s why they pay bookstores large co-op fees to put huge stacks of that book and only that book at the front of the store, while fully expecting to eat the cost when half of those copies end up returned or destroyed afterward. It’s deliberate. That’s why they print fewer copies of other books. And pull older, competing titles off the shelves, to make room for this year’s blockbuster.

      It’s how the blockbuster model they’ve built their entire business upon actually works. But none of it works with ebooks.

      Regardless of how unprofitable print publishing itself becomes, the big traditional publishers *need* print distribution and bookstores if they are to survive in an ebook world.

      • Hah.

        I hit “submit” on my comment, then scrolled up and saw that Joe basically said the same thing about control… but he said it better, and with much more panache. 🙂

    • I agree with all the above comments, but I would like to add: With ebooks, publishers have two steam of revenue now: pbooks and ebooks. They control the distribution of pbooks while they can’t exercise control over the market of ebooks. They ‘know’ how to market pbooks, they know how to push them and there’s no competition with self-publishers’ lower prices there, while they don’t have an idea how to shove readers toward their ebooks. From where they are standing, it’s quite oblivious which revenue is more important to them and why they would do anything to protect it.

      ETA: The other thing is, they are still raking in profits and they are still getting submissions, that’s probably why self-publishers climbing on best-sellers list are not a threat, just a nuisance, and that’s why authorearings is for them so hard to take seriously. They don’t know how much money is slipping through their fingers and how big part of the market self-publishers are claiming for themselves. And until profits and submissions decrease drastically, they are not going to change their tune.

    • It’s a really weird situation. I think it makes sense though if you accept that the Big Five *know* that authors don’t need them as much to produce ebooks. The only scenario where they remain relevant is the one paper books remain a viable business. They know this, without a doubt. I think that’s the reason why you hear them give such half-assed answers to questions about what they’re doing to change. They know if they change too much, they could fail miserably at it and lose authors (and customers) or become irrelevant. That’s why they mostly avoid it.

  5. Okay, I’ll take a shot at it. 🙂

    Yes, the people heading corporations are smart. Just as the people who head governments are smart. Absolutely no doubt in my mind. But smart doesn’t necessarily mean flexible.

    Take Thomas Edison. North Americans idolise the guy. Inventor of how many hundreds of things. You’d think that if anyone could think out of the box, it’d be Edison the Great Inventor, right? Yet, when Tesla came out with Alternating Current, Edison wanted to bury him. Started a h-u-g-e and deceitful campaign to “prove” that his Direct Current was so much safer than Tesla’s AC. This is despite the fact that Tesla actually approached Edison early on with his ideas.

    That’s the nutshell version. Now, at this point, you’ve got to be thinking to yourself: was Edison nuts? Why did he *deliberately* not want to diversify? Wasn’t he the utter epitome of diversification? It seems obvious to you and me that, since Edison had money, it wouldn’t have cost him much to fold Tesla into his organisation and risk some pennies on the man’s ideas. If Tesla’s ideas worked out, both men would have made a mint. And yet…

    To me, the trad publishers are like Edison. They’re smart and committed and care deeply for their businesses. But they’re not flexible. They have built multi-generational businesses that have been making money for all concerned (except those pesky authors, natch). I’m sure they think that they’ve survived war, pestilence and The Great Pumpkin, so what’s happening now should just be another crisis to overcome, right? It isn’t, but they can’t see that. Doesn’t mean they’re not smart. Just means they’re not flexible.

    • On the other hand, the evidence that came to light in the Great Collusion Caper suggests that they can’t be very smart, either. Except for Random House, which showed a kind of weaselly instinct for self-preservation, the price fixers conducted themselves with the cunning and sagacity one finds in a cow. And I don’t mean a live cow, I mean a cow after it has been hit with the stunning hammer, had its insides scooped out, and been turned into a leather couch.

      • I used to think that, too. Yet, the CEOs still have their jobs and they are in the process of bringing the DoJ down on themselves again. Their corporate masters believe in them. Why? Partly because they still raking in 10% profit margin that appears impervious to economic turmoil. But it is easy to see they appear to be leaving money on the table. We are missing something.

  6. “…the stupid was strong on the world wide web while I was away.”

    Doing the Danny Thomas spit take here.

    The stupid is strong in this one, Obi-Wan Konrath

    Dan

  7. I think Hugh brought up a good point in reference to Mike. I have a few questions;

    Who is the real leader of the cartel? You would think the head of Randy Penguin, the one with the biggest share of the pie, but it may be someone over their head? How much decision-making power do they hold? What is their age? How much influence do they have over the other members? How ingrained is their business viewpoint? Do they only listen to a select group of yes-men or do they really see what is happening on the ground?

    I think the answer may just be found in your pen name William.

    We talk of how big these publishers are but it may boil down to just a few key people who are only digesting the information they want to eat. Information that is being fed to them by a few select sources such as Mike S. When I was in the military it was not hard to find a General who was totally clueless as to what the situation was on the ground. Think Hitler ordering battalions into battle that no longer existed.

    The simplest answer is that they’re ignorant of what the situation really is. They don’t know what they don’t know. There’s nobody around them willing to tell them the truth and if they do they are dismissed as the information simply doesn’t match their mindset.

    I think Joe’s right. I think this disruption will soon be apparent to their corporate overlords despite what they are being told by the cartel heads. One will fall, followed by an avalanche of mergers and buyouts until there is a skeleton of what once was left. Then, once the bones have been picked over by the vultures for every last asset, we’ll have the ten guys that Felix described, sitting in a room managing a stack of copyrights for the next 70 years.

  8. William, I didn’t think I had the type of knowledge to have insight into your thought experiment, but I’ve been sitting here listening to the Amazon: Business as Usual panel and had a thought I felt worthwhile to voice.

    I wonder if the discrepancy isn’t profoundly emotional.

    Writers are well aware of the phenomenon of writers blindly seeking validation from Traditional Publishing because they are the Gatekeepers, the Arbiters of Culture, the only people who can tell you whether you are a Really Useful Author. Authors who need validation from some type of authority and cannot accept anything less. Are businesspeople and corporations immune to that same type of need? The need to be Officially Important and Culturally Significant?

    I’m listening to these people talk. Some of them are supposed to be business people. One guys is, I guess, a politician. Another is one of the most (the most?) lucrative writers alive today. All of them are making emotional, sentimental arguments. They’re appealing to culture and historical significance. They’re comparing books to the constitution. They’re talking about how much they personally love books and literature and want it to be saved from the ravages of Amazon who only cares about money. They’re appealing to the public’s love of books.

    Do business people in publishing have some sort of prestige in the eyes of the culture simply for their connection to books? Does owning a large, well known book publisher give prestige to conglomerates? Could that be part of it?

    And could it also just be that our culture is so steeped in a centuries long reliance on and worship of the paper book that even business people are prey to that sentimental attachment? Are they really making such poor decisions, at least in part, because they love print books and think civilization will actually go into decline without them?

    The only other option is that all of them, all of the pundits and consultants and experts and people who work in the industry and writers who cling to the industry, are lying constantly in lock step with each other. I can’t quite read and listen to their words and believe that. I think perhaps they really do love the book so much that their emotions are blinding them to the truth: that the book is not in danger.

    • My second thought while listening to these strange people talk is that publishers really do believe strongly that the publishing company creates the book. I think in their minds the manuscripts that the authors write are only a raw material, like iron that needs to be turned into steel. And that the finished product really wouldn’t and shouldn’t exist without everything they do to it in between getting the manuscript and publishing it. I think they have a conviction that the book belongs to them and not the author. Once it’s out of print, of course, it no longer exists.

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