From Thought Catalog:
It’s Not Over ‘Til The Big Dog Barks
Indie publishing is still growing and it seems that established publishing is at a standstill.
Mike Shatzkin’s column of August 5 may be the one in which we someday remember hearing a new sermon, the beginning of the endgame.
But Shatzkin is not delivering a benediction yet:
This is not a death-knell for anybody. This is a changing world for everybody.
His essay is The publishing world is changing, but there is one big dog that has not yet barked.
True, that headline sounds like bad Dylan. But this write is one of Shatzkin’s best, replete with even-handed accommodation. It’s an important and different homily. Take this line now and just hold it in your mind. We’ll come back to it more than once: “Publishers might have boxed themselves in with their return to Agency pricing.”
For now, note Shatzkin writing:
Hugh Howey told me this was happening in a private exchange three months ago. I didn’t believe him. I do now.
Told him what was happening?
We’re hearing widespread but totally unofficial reports that big publisher ebook sales are dropping noticeably when their new higher Agency prices are activated.
‘To Keep Ebook Prices Artificially High’
The author and commentator Kristine Kathryn Rusch walks us through her surprise at finding a long-awaited new hardcover at Amazon selling for less than the ebook price on its release date.
In Business Musings: Price Wars and Victims, she writes about pre-ordering Sara Paretsky’s Brush Back, and by the time the release date had arrived, “the Kindle edition was $13.99 and the hardcover was $13.”
Rusch asserts that new-Agency terms create a condition in which publishers’ higher ebook pricing will diminish the level of royalty percentages they get from Amazon on those ebooks.
. . . .
Here is the line in which you read Shatzkin at his most “surprising,” as she puts it, on the subject of Agency (and we’ll return to it yet again in a bit after finishing with Rusch):“Publishers might have boxed themselves in with their return to Agency pricing.”
. . . .
What appears to be happening, writes Shatzkin, is that higher Agency pricing by publishers may be placing the majors’ ebooks right out of the market for many potential buyers. And at a bad time:
Recent data seem to show that, for the publishers, the growth in the retail ebook market has slowed down or stopped (at least for the moment), while Amazon’s ebook sales apparently continue to grow. The share of the market controlled by the publishing establishment — the Big Five publishers and others — is starting to be slowly eroded. This does not yet suggest that an author’s best bet is to go out on his/her own and we may be a very long way from that. But it does suggest that life may get increasingly difficult for publishers.
Something for everybody, right? The gatekeeper-haters will be giddy about “life may get increasingly difficult for publishers.” But note that Shatzkin hasn’t cued up the theme from Exodus outside the front doors of the Big Five. “We may be a long way from that.”
. . . .
And this week, we have Michael Cader at Publishers Lunch on Simon & Schuster (S&S) where CEO Carolyn Reidy tells him:
“We consider ourselves more flat” than down after leaving aside last year’s big releases this time, “and we hope to end the year up a bit.” …Reidy noted, “Obviously our goal is to grow revenues, but there are so many factors to it. Not just the switch from physical to ebooks, but the pricing on ebooks, and the changes in how ebooks are sold; all those things factor in.”
Cader tells us that S&S ebook sales were 20.1 percent in the second quarter, as opposed to 22.3 percent at the same time last year. Reidy denies that this has anything to do with the publisher’s newly negotiated Amazon contract for ebook sales. This is the Agency question, manifested on many sales pages by that famous note from Amazon: “This price set by the publisher.”
Asked whether their new ebook terms have weighed on those sales, Reidy replied, “What we do know is it hasn’t. We’ve done a lot of studies of this and our unit sales are absolutely holding. So we’re very pleased with the new arrangement, and the results of it. There can be effects from pricing changes, but now the pricing changes we’re doing ourselves.”
. . . .
At a time when the ebook adoption growth rate was high and fast, price points were less important than those sheer numbers that made so many boats float. That’s a cogent observation from Cader. Now that all our dinghies are lying lower in the water, “the anecdotal reports I’m getting,” Shatzkin writes, “suggest that the price increases aren’t being so easily swallowed in the current round of Agency pricing.”
. . . .
In an interesting comment at Shatzkin’s site echoed by a couple of others, the Canadian publishing consultant Thad McIlroy proposes that “decoy pricing” is the publishers’ game with their comparatively high ebook prices. McIlroy:
Why do this? Because the overall success of any new title is significantly influenced by its presence in retail outlets. Depending on how you define “book retail outlets,” and how popular the title, there are some 5,000 locations in the U.S. that will prominently display proven and potential bestsellers. Within the current publishing business model this exposure is an essential part of the sales ecosystem.
. . . .
There’s now so much content competing for the traditional book customer’s eye — including the self-publishing avalanche of titles, of course — that the plethora could erode the traditional hold on the brass ring. It can also make it impossible for most independents to gain even a modicum of traction.
And for the moment, we can put aside questions of quality and value. Sheer volume is creating a howling cacophony of competition out there.
In a comment suitable for needlepoint, Shatzkin puts it this way:
The modern digital problem is that in this day and age the book (ebook) that I wrote in my spare time and put up on Amazon myself doesn’t look any different than the one by a star author with a big house behind her. Ten years ago, the star author would have been in the bookstore and my self-published book wouldn’t have been, at any price.
Imagine what would happen if self-manufacturers could flood the automobile market with hundreds of thousands of homemade cars that looked as good as Detroit’s models? That’s what’s happening in books. It’s a hobbyists’ heyday, and no market in any business that I can recall has experienced such a sudden and deep influx of amateur material, some of which, as Shatzkin says, “doesn’t look any different” from the professional wares.
Today? The self-published ebook that Shatzkin is describing appears right alongside the big dog’s trade-house ebook.
Link to the rest at Thought Catalog
PG says the Big Dog writers will be among the last to leave Big Publishing.
Why? Because Big Publishing (PG initially mistyped this as Pig Publishing) is designed to provide excellent service to monster best-selling authors. When a Big Dog calls his/her publisher, someone at the publisher will take the call. The contracts Big Dogs sign are worlds away from those given to other authors.
Most importantly, the compensation paid to a Big Dog is much greater, as a percentage of the publisher’s gross, than a Little Dog author receives.
However, for all the paeans sung to the dead-tree book and the traditional bookstore, both of those institutions are sinking, faster in some areas than others, but they’re sinking.
The percentage of Americans living within 15 minutes of a traditional bookstore is notably lower than it was five years ago and will decline further during the next five years. We are never again going to see a five year period that includes an increase in the number of traditional bookstores.
With every smartphone doubling as an ereader and discount bookstore, where are the millions of new young customers for paper books from paper bookstores going to come from? Traditional bookstores will look more and more like AARP recruiting centers (except for the minimum-wage bookstore employees).
Children’s books are often cited as a paper bastion. Those who believe this won’t change have never observed a precocious two-year-old with an iPad. Yes, parents may not trust a toddler with an expensive new iPad, but a lot of parents are on their second or third iPad and don’t much care what the kids might do to the old one.
And ever-helpful Amazon will sell you an armored Fire tablet for kids for $149 that includes a two-year, no questions asked replacement warranty in case the dog eats the tablet.
Of course, Amazon is also happy to sell you a lot of children’s books to read on the Fire. Those children’s ebooks will, of course, always remain pristine with no torn pages or grape-juice stains.
This is a massive disruptive change for the traditional publishing and bookselling business. This change will only move in one direction.
Smart Big Dog authors (and most of them are smart) are often respected leaders in the world of tradpub, but they are not and will not be leaders in the disruptive change that is in process today. Big Dogs will be among the last to leave a publishing system designed to serve their specific wants and needs. The war will be decisively won by the time the Big Dogs move.