Home » Big Publishing, Hugh Howey » Hugh Howey on Self-Publishing, Amazon, Indie Authors and Big Five Publishers

Hugh Howey on Self-Publishing, Amazon, Indie Authors and Big Five Publishers

4 April 2016

From Digital Book World:

What do you view as the role of traditional publishers today? And do you see that role changing at all going forward? Put another way, do you believe that the big publishers will slowly go away, or will there always be a place for them, however diminished or different it might be?

The major publishers will always have a role in delivering books to readers, even as that role dwindles. Bookstores and paper books will be around forever in some capacity, and the major publishers have great relationships here. One thing we don’t acknowledge enough in this industry is that there are more reasons for buying books than simply reading them. There’s gift-giving; decorating a home library; as a promise to our hopeful future selves (like gym equipment); for social status (young readers prefer physical books partly because they are a signal to their biblio-tribe); and to own the must-read item that no one actually reads, like Kapital and Goldfinch.

But the market share of the Big Five will continue to shrink. It has already shrunk enormously. What ground has been held has almost entirely come through acquisitions, which is why I expect we’ll get down to three major publishers eventually—much as the music industry winnowed itself from six to three major labels. Profitability has held steady and even increased in areas due to Amazon, which has reduced costly print book returns from over 30 percent to less than 5 percent. And by the digital tools Amazon has unleashed—ebooks, POD—that are more profitable and less wasteful than offset print runs.

The problem is, major publishers are going to have to eventually compete with the 70 percent earnings offered by KDP, so their margins are going to get squeezed on the royalty side. And they are going to have to compete with indies on price, which means getting squeezed on the price side. As middlemen, their role is not only going to get smaller as self-published authors bypass them—their profit margins are going to shrink as readers and authors demand better prices and pay.

There are solutions, but I don’t think any of the major publishers will adopt them. I’ve been saying for years that the smart move would be for a major publisher to get out of New York, stop competing on advance size, invest in original IP, and grow writers’ careers by sticking with them for half a dozen novels before cutting them loose. They should focus on genre works, move to shorter work lengths, and break up non-fiction into salable chapters that readers can “complete” as they might a full music album. They need to pay monthly via direct deposit. And they need to connect authors to readers a lot better than they currently do. Instead, it’s been west coast companies doing the innovating. The center of the publishing world is already along the Pacific coast with the likes of Amazon, Facebook, Google and Twitter.

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

Big Publishing, Hugh Howey

28 Comments to “Hugh Howey on Self-Publishing, Amazon, Indie Authors and Big Five Publishers”

  1. Hugh Hugh Hugh, you didn’t say a single thing that trad-pub likes to hear (other than there’ll soon be less of them to fight over the scraps).

    Why can’t you be more like that Mike guy? He always has something positive to say about where trad-pub is heading — oh wait — you actually have a clue, never mind … 😉

  2. Holy, what a sweeping wish list for traditional publishing. I sort of tend to agree, though. I have no great rancour for traditional publishing.

  3. We need to stop forcing kids to read books they won’t enjoy. Let them graduate to the classics on their own. Don’t force our values on them, but get them hooked on the hobby so many of us value. Trust the process.

    Nice! I know that I became a more discerning reader as the decades went by. As kid, I read some wonderful books that I still enjoy re-reading as an adult. (And that I re-read every few years.) But I also read books that didn’t hold up when I re-visited them 20 or 30 years later. I think that’s okay. Just fine, in fact. Hugh’s advice to trust the process and trust the reader is good advice. 😀

    • ‘Don’t force our values on them, but get them hooked on the hobby so many of us value. Trust the process.’

      That was the bit that really jumped out at me as well. Teachers use books as ‘teaching tools’ rather than allowing kids to value books for their own sake. We have to stop being snobs when it comes to reading. If kids enjoy reading comics then let’s fill school libraries with comics that they’ll /fight/ to read.

  4. Nice.
    Now tell us what you really think, Mr Howey. Don’t be shy.

    I like how he sidestepped the false equivalency of “both sides have pros and cons”.

  5. Publishers aren’t publishers any more, they are elements of multi-media IP acquisition machines. Media is where the big money is. Whatever the next surprise is, they’re going to own it.

  6. Hey DBW, next time you put an interview transcript up, how about differentiating between questions and answers for the readers?

    Wow, that page is horribly designed.

  7. I sit corrected. It may just be my browser.

  8. It’s worth reading the entire interview. This was my favorite question and response:

    Q: There are clearly benefits from the author’s perspective to self-publishing. But do you still see benefits for the author in trying the traditional route?

    A: There’s a lot about this question that I find troubling. Rather than gloss over those benefits, as if DBW has been covering them, I think publishers would be well-served to hear all the ways they are deficient compared to self-publishing. There’s no way for them to stem their losses if they don’t understand why they’re losing.

  9. One thing I have to disagree on.

    “major publishers are going to have to eventually compete with the 70 percent earnings offered by KDP”

    They simply can’t. I doubt they can even get close without it becoming a death sentence. Their overhead and cost-to-produce are too high for them to do so even if they were to adopt all of Hugh’s suggestions. The deciding factor will be the rate at which the reading public continues to embrace the ebook format. That number will increase while the profit margins of the Big 5 will decrease. The two numbers will creep toward one another until it reaches a breaking point.

    “Bookstores and paper books will be around forever in some capacity”

    Maybe. But I think they will come from indie authors publishing through CS and LS, rather than through the Big 5 publishers.

    • Felix J. Torres

      That is true if they retain their existing structures and processes. However, there is no law of nature or state that forces them to keep either.

      If they were willing to restructure for productivity they could deliver enough support and revenue to be competitive for midlisters and newcomers. Maybe not at 70% but at the 50% range that the Authors Guild pines for and AmazonPublishing delivers today. But that would require moving out of Manhattan, excessing vice-presidents instead of editors and marketers, and focusing on pleasing readers instead of controlling prices.

      Not going to happen.

    • I disagree. The Big 5 could match KDP terms today and be profitable. For bestselling authors it would mean dropping their advances to match the size of the print run (for most of them that would be cutting their advance in half). For everyone else it would mean no advance and for most fiction, no offset print run unless the ebook/POD sales took off. It would also mean more variability in ebook and print pricing.

      The Manhattan offices don’t matter and layers of management aren’t that bad (although the ratio of doers to managers is out of whack). It is the absurd insistence on pricing print books according to their format rather than their market value that is killing them.

      • I wont argue your numbers as…I know better. 🙂

        But I have to ask for how long? With more and more authors not even bothering to submit to them and the age of most bestselling authors ever increasing, I wonder how long they could remain profitable? Most of them rely on a few key authors. If Hachette were to lose James Patterson alone it would be a huge blow to the company.

        Who would sign without an advance of some kind? Would the established authors accept a cut of 50%? And the building space has to cost something, a two-bedroom in the Flatiron is $18k/month (in 2011) and that’s only 2k sqr ft.

        Either way, I really don’t care. 🙂 I prefer the shiny new boat I’m in as opposed to the leaking tub of the Big 5. But its a fun subject to kick around.

      • If a best-selling author found his current big publisher cut his advance, he would go to another big publisher who would be delighted to pay up.

        If eBooks come out before print, how does the publisher promote the eBook? Now, much of that promotion is carry-over from bookstore promotion. A stand alone eBook from a publisher would lose its competitive advantage over independent eBooks.

        Without the paper, the publisher is less attractive to authors. He can do the same thing clicking the KDP upload button.

  10. “with the likes of Amazon, Facebook, Google and Twitter.”

    There’s also that little company based in Cupertino, Calif. that some of us are finding more profitable than Amazon these days. 🙂

  11. Good questions. Good answers.

    But I’d add one simple question which could be applied to any industry:

    For fiction, what economic value do publishers bring to the market? Stated another way, what can they do better than anyone else that gives them a competitive advantage?

    For the paper fiction market, production and distribution of the paper units is something they do very well, and do better than anyone else. Just look around at all the books that surround us. Publishers did that, and they did a pretty good job. They added immense economic value.

    For eBook fiction, I don’t see anything they do better than anyone else. I don’t see the competitive advantage. They add no economic value that isn’t readily available to the author.

    Amazon adds the economic value to eBook fiction. It provides the platform that distributes it around the world. When we look at all the fiction eBooks that surround us, that’s because Amazon did something better than anyone else.

    Fiction publishers can move from New York to Salt Lake, and do all the things Howey suggests. But how does that give them a competitive advantage? It lets them cut prices, but the independents then click in KDP a few times and restore the independents’ price advantage. How does a revamped Salt Lake operation provide the market economic value that isn’t already available?

    The fate of fiction publishers is tied to paper. That’s what they are good at. As paper unit market share continues to decline, dollar market share will follow, and the market that needs the publishers will decline.

    Without the economic fundamentals, I don’t see how fiction publishers can maintain any significant market share. W might not be able to predict exactly how they will do it, but in afree market, the economic fundamentals always triumph.

    • Felix J. Torres

      They could do a lot of things they used to do in decades past: engage readers with newsletters, direct sales of backlist, promote midlist/backlist titles, drop their opposition to TTS and libraries, bulk license backlist titles to subscription services and book clubs, do true digital-first and discounted bundles.

      What they can’t do is keep on exploiting authors with predatory contracts and trying to exploit readers with non-competitive prices and practices.

      • As long as authors keep coming to them, they can exploit them all they want. The authors choose that. Publishers don’t seem to have a supply problem.

        But they do face a demand problem. And we see the results of the pricing difference between independents and publishers in the continually increasing independent market share.

        Sales will determine the fiction publishers’ fate. Consumers don’t care how much the publisher pays for his supplies, but the do care how much he askss them to pay for his product.

      • “They could do a lot of things they used to do in decades past: engage readers with newsletters, direct sales of backlist, promote midlist/backlist titles, drop their opposition to TTS and libraries, bulk license backlist titles to subscription services and book clubs, do true digital-first and discounted bundles.”

        Yes, they could do that. Maybe. BUT, the self-published author can already do all of this and more. Even if the Trade-pubs offered this can they do it cheaper than a freelancer, one that answers to the author?

        Terrance hit it on the head: “For fiction, what economic value do publishers bring to the market?” I’ve been asking myself and others that for a few years now and I’m still waiting for an answer.

        • Felix J. Torres

          As long as they don’t even try, their market position will keep eroding. Not that it breaks my heart or anything…

          • My personal speculation is fiction publishers are trying very hard to back out of fiction with a strong balance sheet, and as much cash as possible.

            They are not doing what authors think they should do because their objective is not the one authors think they should have.

  12. Personally I’m excited by the prospect that every cent I make will be mine. And if that turns out to be 10cents then its down to me.

    One thing I’ve learned – the hard way – is that during this transitional period, indie authors must be the accountant, designer, marketing, PR, sales and promotion as well the writer. The only leverage I can see that traditional publishers offer is taking that away so the author can concentrate on writing. At a great cost to the writer.

    The future of publishing will simply lose traditional publishing entirely, it doesn’t fit in the digital world. Just like Uber will make Taxis completely redundant.

    • Felix J. Torres

      Uber is making taxis redundant but Uber itself will be redundant soon enough. They’re just another kind of middleman so they face the same challenge as the BPHs and, yes, Amazon.

      Middlemen only remain relevant as long as they are useful.

  13. “And by the digital tools Amazon has unleashed—ebooks, POD—that are more profitable and less wasteful than offset print runs.”

    I totally agree … but the trouble with POD (currently) is durability. A POD book’s pages are not gathered into signatures (8, 16, 32+ pages) and then Smythe sewn before being glued onto the spine. Crack open a POD book to try and try to make it lie flat, and (1) the glue gives out, and (2) pages eventually fall loose.

    POD is great for books that are read once, maybe twice, and then only if you treat them with kid gloves. Once you open a POD book, it will never lie flat again. Its front cover will always curl slightly upward.

    Given how tech changes, this will change, too. Printing has come a long way, but it hasn’t kept up with digital because printing is mechanical, and mechanical changes take more time than do digital changes.

    (Caveat: I’m a book designer and typesetter with 3+ decades in the industry; I’m also a writer with POD books as well as ebooks.)

    • hmm, I can’t remember the last paperback that I read that had pages sewn together before being glued into the book

    • the Other Diana

      I’ve had many traditionally published books fall apart.

      So far, I haven’t had any of my POD books fall apart.

      (I probably have 10,000 physical trad published books vs a half dozen POD books.)

  14. Sounds a lot like Baen.

Sorry, the comment form is closed at this time.