From The Guardian:

A new report claims that self-published authors have surged to 31% of ebook sales on Amazon.com, and are now earning more ebook royalties than writers published by the “Big five” traditional publishers. Despite research published earlier this month finding professional UK authors’ incomes plunging below minimum standards, self-publishing champion Hugh Howey says the new results, in his third Author Earnings report, prove DIY authors are “here to stay”.

“While it should be a jolt to see that indies are earning nearly 40% of the ebook dollars going to authors,” the report concluded, “we are starting to take this reality for granted. That’s real progress. As it has proven to be in other fields of entertainment, the indie movement in literature is not a blip and not a gold rush. It appears to be here to stay.”

. . . .

According to the Bookseller editor Philip Jones there are “large question marks” about Howey’s data.

“This is a very narrow selection of a particular type of market at a particular time,” he said. “Most people who’ve looked at this in any depth say you can’t extrapolate from bestseller rankings on the Kindle store to a picture of the wider market. Howey sees an ice-cube, and shrieks ‘iceberg’.”

While Howey has sparked an important conversation about author earnings, Jones continued, the report’s positioning and aggressive rhetoric obscures much of its value.

“The fact that we don’t know who this ‘Data Guy’ is or where he’s come from suggest that we should take the Author Earnings report with a large pinch of salt,” Jones said. “I think of it more as part of Amazon’s PR effort, rather than an objective overview of the digital marketplace.”

. . . .

According to Jones, authors and publishers would welcome an “adult debate” about ebook sales and author earnings, but in the absence of sales figures from Amazon that’s just not possible.

“Nobody has a good view of this market, because Amazon holds all the data and doesn’t share it,” he said. “Anyone who claims otherwise is just making it up.”

. . . .

“First, these figures don’t look at sales of print books, which will still be a major part of the earnings from a Big five publisher. Even if you look at ebooks only, these figures don’t take into account the risk and up-front costs which self-published authors take on themselves,” she said, “Nor the impact of advances received by a traditionally-published author.”

Link to the rest at The Guardian

PG says since nobody on the tradpub side seems to act like a rational adult when discussions of self-publishing and Amazon occur, we’re unlikely to be able to schedule an adult debate any time soon.

From Hugh Howey:

SFWA (The Science Fiction and Fantasy Writers of America) is drawing heat in some quarters for endorsing Hachette’s side in the ongoing negotiations with Amazon. The move was made unilaterally and without the consultation of its members (of which I am one). Author Don Sakers posted on his blog that SFWA does not represent him, and I add my voice to Don’s.

On the website ThePassiveVoice, commenters bring up trade and labor disputes and organizations, and I think these and class warfare comments I’ve seen elsewhere are spot-on. Trade fiction and narrative nonfiction authors do not have any meaningful representation. There is no group busting balls on behalf of writers, and there are a lot of balls out there to be busted. Amazon, the Big 5, B&N, Apple, Google … no one is fighting these people for better terms and pay. The Writers’ Guild seems to exist to fight Amazon and stands for the rights of bookstores and major publishers.

. . . .

So what we’re seeing is a protest of a lot of little voices, and they add up. It’s what a union is supposed to do, to unite a bunch of smaller, weaker forces so they can negotiate with a single, larger force. Writers have never had this before. I’m not confident they have it now. There is excitement from some, but also a call from others to get back to work, that this doesn’t affect us. Protests pop up now and then, but they rarely sustain themselves. They fizzle.

Here’s the tricky thing, I’m learning: How can anyone represent so many disparate interests? I sympathize with unions and trade groups like never before, as people are emailing me to ask me what authors stand for. I can’t speak for writers.

. . . .

Our readers are probably the one thing I can say with confidence that we love and adore. Without them, we in this trade are whispering to ourselves. Starting from there, I might be comfortable saying that anyone who serves our readers and facilitates our getting together with them is better than anyone who abuses our readers and works to keep us apart. I would sign that charter, and I think most writers would.

When physical bookstores decided to ban Amazon imprint titles, thinking that attacking a tiny fraction of larger Amazon was worth decimating the individual authors, they fell into the coming-between-us camp. When 5 out of the then-Big-6 got together to raise prices on consumers, they fell into the coming-between-us-camp. When B&N refused to stock Simon & Schuster authors last year, and when they decided to manipulate their online bestseller lists, they fell into the coming-between-us-camp. These middlemen work to blockade. Whatever you think of Amazon’s faults, they have worked to unite storytellers with listeners and readers. They have done this like perhaps no other entity in history.

So when this division broke, there was of course a 1% element to this movement not unlike many other protests. A small group of elitists think the universe aligns with their ideals. The system that made them rich is to be preserved, and screw anyone who disagrees. When you gain power, you tend to use it to maintain power, not to empower others. Human history is littered with these stories. But all it takes is a few megaphones in the crowd and gathering bodies to show them the other side.

. . . .

My fear, however, is that nothing will change. Nothing will come of this. I think the power is in the hands of our opponents, because they own the media (actually, the media owns them. Several of the major publishers are owned by companies like CBS). They have the bigger names. They also have the support of a lot of mid-list writers who really want to make the jump up and win the respect of those above them. And there are a lot of readers who haven’t given indie books a chance and see us as ditherers and cranks.

So I don’t have my hopes up, which is rare for me. My unabashed optimism is on hiatus. What I do see is the potential, the response to be had if there’s the right spark. And it highlights for me the need for a trade organization that represents writers, an organization with a focus on those who NEED representation, not those at the very top.

Link to the rest at Hugh Howey and thanks to SFR for the tip.

PG is grateful for Hugh’s kind words about his assistance to authors.

PG believes a strong and articulate association representing the interests of all authors – indie and traditional – would be beneficial. By their nature, authors are scattered and focused on their individual labors. The Internet has done wonderful things to create communities of interest, but that doesn’t always translate into influence in the non-internet world.

The artificial distinction between traditionally-published authors and indie authors does not enhance authors’ overall power and influence. As Hugh suggests, PG believes this distinction includes an elitist attitude on the part of some tradpub authors. Joe Konrath’s Stockholm Syndrome comparison may also apply.

Both indie and traditional authors are involved in the disparate power relationship between themselves as individuals and large corporate organizations.

Some individuals and groups have tried to form associations for indie authors, but PG isn’t certain any have really taken hold yet.

PG isn’t certain exactly how he can help, but he’s happy to contribute to a larger effort to create an effective organization of authors.

From Kobo Writing Life:

At a recent visit to Kobo’s home office in Toronto, Hugh Howey was interviewed by KWL Director Mark Lefebvre in front of an audience of about 150 people (60 of which were local Kobo Writing Lifeauthors) for a Kobo in Conversation video.

Here are some highlights from the discussion.

. . . .

• Hugh talks about how interesting it is that history re-writes itself to fit the model of what people think happened – his first book was actually signed to a small press before he made the decision to try the self-publishing route
• Hugh also reflects on how, in 2009, he was only concentrating on print books and traditional contracts for the first book, but then noticed his eBook sales were overtaking his print book sales
• How Hugh was pressured by friends and family to get his book out to publishers so they could see it in bookstores

. . . .

• How Hugh acquired “sequelitis” after finishing that first novel, and how, when you keep writing sequels you’re left always promoting your first book

. . . .

• The importance to not run from labels, like “self-published author” – Hugh is proud to call himself a self-published author
• How H.M. Ward continues to turn down multiple 7 figure offers from publishers because their marketing plans aren’t offering anything she hasn’t already built for herself

Link to the rest at Kobo Writing Life

From Hugh Howey:

There are a lot of analysts out there whom I admire as people, even as they do a very poor job of covering the publishing world. There are dozens of stories that should be covered heavily right now that are going completely ignored. To name a few:

• The manipulation of bestseller lists, from the NYT list to the online B&N store. In both cases, readers are made to believe that these lists signify actual sales rank, when they do not. The B&N list features co-op spaces paid for by major publishers, and self-published romance authors are artificially shoved down to the #126 position and below. Readers might be interested in knowing this. Some may want to start browsing at position #126 to find some hidden (buried?) gems.

. . . .

• Publishing contracts are becoming more draconian and harming writers’ careers. The most favored nation clause, the increasingly strict non-competes, the rise of high-discount sales and how this lower royalty rate buried in contracts is impacting writers, and the abusive term of copyright in an age when books no longer go out of print.

. . . .

• And I haven’t seen a single analysts link the rise of independent bookstores the past three years with the decline of big-box discount bookstores to show how Amazon is putting the latter out of business and possibly helping save the former.
. . . .

After an interview at a conference recently, I had a reporter confide in me about a top-name analysts she approached with some similar questions. The curt response from this analyst to one of her questions about self-publishing was: “I don’t know anything about self-publishing.” This is a pundit paid to know what’s going on in an industry, and that pundit has decided that roughly 10% of the industry (and the fastest growing sector) isn’t even worth looking at or understanding.

. . . .

But it hit me the other day, and I finally saw where these analysts truly go wrong, and that’s this: They focus their reporting on the middlemen. Once you realize this, you’ll see it everywhere. They aren’t covering the book trade; they aren’t even covering the publishing industry (because that would include self-publishers and small presses); they are simply covering five companies and their distributors.

Most of the coverage, of course, revolves around Amazon. And most of it is negative. I even saw one pundit exclaim that he had a brilliant new idea, and that was for authors to publish their works exclusively with Barnes & Noble in exchange for co-op placement. Think about that. Give up distribution diversity for a month on a rack in a dwindling bookstore. The only way this makes sense is through the lens of anti-Amazon bias. There is no other way to make sense of it. It’s one of the worst ideas I’ve ever heard, and it was announced as if bread had finally met with knife.

. . . .

The worst of it is this, and here is what becomes readily apparent and why you won’t see coverage on any of the stories in my bulleted list: The analysts don’t care about readers, and they don’t care about writers. That’s what their coverage tells me, anyway. High prices are not a social injustice, they are a savvy grab for corporate profits. The authors’ share of earnings is never discussed, only the publishers’, even though we now know that self-published authors are out-earning traditionally published authors on the largest e-book platform in the world.

. . . .

Yes, publishers can add value to manuscripts. Maybe they add 10% of that value, if I’m being generous. Manuscripts that need more than that never get to a publisher in the first place (or they are published as-is because of a celebrity’s profile).

Link to the rest at Hugh Howey

Passive Guy says that analysts ultimately tell their paying clients what they think their clients want to hear. They do it skillfully and will certainly “challenge” their clients, but they can only go so far without upsetting the flow of consulting fees.

At some level, publishers know they’re in trouble – the hysteria over Hachette/Amazon negotiations is one indication of that mindset. A healthy, confident industry wouldn’t experience apocalyptic visions every time someone mentions Bezos.

But who’s going to pay a consultant big bucks to come into the board room and tell everyone they’re toast? So, the analyst paints a stormy sea with a light on the horizon. The course to that warm and sunny place is enhanced ebooks or subscription plans or unicorns.

Because what’s warm and sunny about cutting prices and paying authors more?

Working cooperatively with Amazon to figure out new ways of selling more and more books? Where’s the garlic and the cross?!?!!

That’s a fast way for an analyst to get fired. It’s so much nicer to hear about subscription programs and doing the same thing, but better.

From veteran publishing consultant Mike Shatzkin, a response to a post by Hugh Howey discussed here:

I need to say couple of things at the outset here. The first is that I really like and admire Hugh Howey and the fact that I disagree with almost every paragraph of this post of his shouldn’t suggest that I don’t. That’s not snark or irony; it is sincere. I think it is both noble and natural for people to defend the entities and circumstances that make possible their commercial success and it is just human nature that those who have benefited from a paradigm reflexively want to defend it. I only wish that Hugh would exhibit the same respect for that tendency when it is exhibited by authors who have done well with publishers.

. . . .

The other is that I don’t see the “Amazon versus the publishing establishment” battle as a moral choice, just a tug of war between competing business interests.
. . . .

I continue to believe that self-publishing is a useful tool that most authors should employ at one time or another but that, still almost all of the time, an author who is offered a publishing deal from a major house willing to pay an aggressive advance is better off to take it than go it alone. (If you’re not offered a substantial advance, the calculus shifts, but there is a lot of work involved in self-publishing that is not described in much detail in this post, even though Hugh Howey knows much better than I do how much work it is!) And I think that generalized advice to authors to eschew publishers in a world where print still matters and stores still matter remains, as of today, unwise. That may well change in the future, but it hasn’t changed yet.
. . . .

Publishers are trying to keep a print book physical distribution infrastructure alive. That’s not irrational. It is rational. And it is the crux of the difference in objectives between a publisher’s strategy and Amazon’s strategy. The more bookstores fade, the better it is for Amazon and the worse it is for publishers. This is a problem you could have read about on this blog a long time ago.
. . . .

I agree that ebook royalties should be higher. But, in fact, only authors who sell their books to publishers without competitive bids (which indicates either “no agent” or “limited appeal generated by the proposal”) are living on that 25% royalty. The others negotiated an advance that effectively paid them far more than that. And guaranteed it before the book hit the marketplace. Publishers are making a massive PR error not raising the “standard” royalty since they effectively pay much more than that now, but the authors signing contracts with them know the truth.

Link to the rest at Mike Shatzkin

PG has the impression that Mike and Hugh are looking at two different worlds.

PG’s experience, through people who email him and leave comments on The Passive Voice, as well as via his clients, is a lot closer to Hugh’s world than Mike’s.

If Mike’s world is the one that the management of Big Publishing sees (and PG suspects it is), then, with respect, they really don’t understand the talent drain that’s siphoning off their future income.

Look at Author Earnings which, despite all the rocks that legacy publishing throws at it, is the best picture available (outside of the inner sanctums of Amazon) of  ebook sales on the only ebook market that really counts.

PG suspects that Big Publishing is heavily focused on its own Amazon numbers and the reports that the AAP, Bowker, etc., produce. Those numbers miss the indie ebook sales that AE is able to highlight.

Indie authors are making serious inroads into the ebook fiction bestseller lists. Not only does every indie bestseller bump a tradpub bestseller down lower on the list, every indie bestseller is an author that tradpub missed and (50 Shades notwithstanding) is not likely to get. Ever.

The fantasy that a publisher can always snag a bestselling indie author with a big advance is simply not true any more and becoming more untrue with every passing month.

EL James and Amanda Hocking are old, old news. Perhaps he’s forgetting someone, but PG can’t think of a top-selling indie who has gone exclusive with a trade publisher during the last twelve months. And there have been more than a few gonzo-selling indie authors who have been selling at a seven-figure-per-year pace during the last twelve months. Indie bestsellers are turning down seven figure advances these days.

Many industry publications have promoted the hybrid author – someone who has both indie books and a publishing contract – as evidence that tradpub still has its attractions even for authors who don’t want to go steady.

The unfortunate reality is that a whole lot of hybrid authors are telling their friends that they’re only with their publishers to help build their personal brands with short-term publicity and book store exposure and are still making more money from their indie titles. These authors are also calculating how much more money they would be making if they had self-pubbed the books they sold to publishers and vowing never to make that mistake again.

But that’s the way it looks in PG’s world. Obviously, Mike doesn’t live here.

From Hugh Howey:

It is far too easy to blame people for what are really problems with systems. You see this fallacy everywhere, and it leads to unnecessary heartache and divisions. We like to think that if we take out one enemy leader, we’ll win a war and prevent some future one. We like to think that if we fire one corrupt CEO, we’ll right a ship. Or if we elect a new leader, everything will change.

. . . .

This is why the people in major publishing houses can be awesome, even as their system operates poorly. I have mad respect for the people I’ve worked with at major publishing houses. Most of them are fighting internally for the same things I complain about. I know editors who want to get rid of DRM on all their books right now and offer free e-books with hardbacks, but the system they operate in won’t let them. I’ve had situations where editorial and sales wanted to go forward with a project, but the legal department squashed it. I’ve even had an editor at one of the Big 5 come up and apologize to me for the way the system handled one of my deals. And every publishing house I’ve worked with grumbles about their bean counters getting in the way of innovation.

We have to remember that parent companies own many of the largest publishers. My agent and I have had incredible offers pulled once the details of those offers trickled up one more level, much to the consternation of the editors involved. I have had conversations with my overseas publishers about all they would love to do, but price laws in their countries and relationships with bookstores prevent them from trying. Despite these obstacles, many publishers are pushing boundaries and trying new things.

. . . .

The economic reality for publishers isn’t pretty. They have thin margins, and many of the things they need to do will cost money in the short term. The solutions to these problems require drastic actions, but the systems currently in place make those actions extremely difficult.

. . . .

The only way to finance the changes needed is to drastically cut costs. The best way to do this is to move out of Manhattan, but no publisher wants to take that hit in its perceived respectability (or give up the awesomeness of living in New York).

. . . .

[Hugh suggests Iowa would be a great place for a big publisher to relocate.]

5) Concurrent with the announcement of the move, this publisher could announce a doubling of author royalties on e-books, higher advances, and lower prices to consumers. That is, they could take a page from Amazon’s handbook and pass along every ounce of savings to their customers and their contributors. Why give up all those potential extra profits? To gain market share and prestige. Every agent in the country would scramble to place their work with this publishing house. The quality of the house’s catalog would skyrocket. The goal would be to create a reputation and a lead that could never be surpassed by another publishing house, even as others scrambled to set up offices in Iowa.

Link to the rest at Hugh Howey and thanks to Sandra for the tip.

Passive Guy admits personal prejudice arising from many family connections in Iowa, but he will posit that Iowa is one of the most civilized places in the world.

As a group, the people who live in Iowa are kind, generous and hardworking. The cities are eminently livable and an editor’s salary would allow you to afford a nice house or an apartment at least four times larger than one you would have to suffer to pay for in New York.

For those with children, the state is full of excellent public schools (three of PG’s close relatives have been or are public school teachers in Iowa and another is a principal). Hugh points out the excellent writing program at the University of Iowa. Iowa has a higher literacy rate than New York, Connecticut or New Jersey.

In Iowa, PG has never heard sirens in the middle of the night like he does on almost every occasion when he overnights in New York. There is no Manhattan in Iowa, but there is nothing like The Bronx either.

PG says moving one or more major publishers to Iowa would transform the industry.

From Hugh Howey:

Amazon isn’t the problem. Big publishers are. They are making decisions and adopting philosophies that are damaging to their authors, their customers, and themselves. What exactly are they fighting for? I speculated in a previous blog post that Hachette might be fighting for the power to price e-books where they saw fit.

. . . .

Hachette is strong-arming Amazon and harming its authors because they want to dictate price to a retailer, something not done practically anywhere else in the goods market. It’s something US publishers don’t even do to brick and mortar booksellers. It’s just something they want to be able to do to Amazon.

The biggest problem with Hachette’s strategy is that Hachette knows absolutely nothing about retail pricing. That’s not their job. It’s not their area of expertise. They don’t sell enough product direct to consumers to understand what price will maximize their earnings. Amazon, B&N, Kobo, and Apple have that data, not Hachette.

Beyond their ignorance of pricing strategy, Hachette also has a strong bias toward print books. Their existing relationships with major brick and mortar retailers gets in the way of their e-book pricing. This has been confirmed by my own publishers, who have admitted privately that they would like to experiment with digital pricing but don’t want to upset print book retailers. This puts their pricing strategy at odds with their investors’ needs, their authors’ needs, even their own profitability. In sum, they are making irrational decisions with their pricing philosophy. Hachette is making the same mistake that many publishers make, which is to think that harming Amazon somehow helps themselves.

. . . .

Many consumers aren’t even aware that Amazon isn’t the source of their e-book DRM. Publishers (and self-published authors) opt in or opt out of DRM as they see fit. Those of us who think about the paying customer first and foremost opt out, and we are rewarded with their repeat business and their advocacy. Those of us who don’t fret over piracy invest our time where it can actually achieve something.

. . . .

Publishers are waging a war here for higher prices and lower royalties. $14.99 is their ideal price for an e-book that costs nothing to print, warehouse, or ship. That’s twice what mass market paperbacks used to cost, which is what they are replacing. Reminds you of how cheaper-to-produce CDs suddenly cost twice as much as cassettes simply because they were new, doesn’t it?

Publishers are also colluding with one another to offer lockstep digital e-book royalties of 25%, which is indefensible. Their every actions, when it comes to DRM, to pricing, to selling direct, to offering abusive services like Author Solutions, screams to anyone with ears that they don’t care about the writers and they don’t care about the readers. It doesn’t matter what they say, it matters what they do. And what they do is charge as much as they can get away with and take as much of the split as they possibly can. And they work with their competitors and against their retail partners to pull it off.

. . . .

If the Big 5 had gotten together twenty years ago and DREAMED UP an ideal business partnership, one that would increase their distribution, provide excellent customer service to their readers, improve the livelihood of their authors, keep their backlists viable and books from going out of print, reduce their 50% return rate from bookstores to 4%, provide next-day and even same-day delivery, all while only costing them 30% instead of the 45% they lose to bookstores, they couldn’t have done better than what Amazon did for them.

. . . .

As a writer, the solution is to retain ownership of your rights. This has never been more important than it is today. E-book royalty rates are going to move to 50% of net. I know from some insiders that this is already happening for top-name authors and hot new acquisitions. Selling your manuscript now for half of what it will be worth in the very near future is a bad move. It takes years for books to come to market with a traditional publisher. If that is your publishing goal, exercise a bit more patience. Hold on to that manuscript (or self-publish it) while you write the next. Let the market come to you.

Link to the rest at Hugh Howey and thanks to Elka for the tip.

From Hugh Howey:

Here at BEA, I’m hearing a lot about monopolies. (And monopsonies, for those who prefer to quibble semantically rather than understand what is meant and forge ahead in productive conversation.) Practically everyone here at the book expo believes that Amazon has gotten too big, that they wield a disproportionate amount of power, and that they must be reigned in or defeated.

I am told, without exaggeration and in all seriousness, that Amazon wants to “crush their competition.” I hear that they want to “put everyone else out of business.” Two things are true, both of which make these statements ridiculous: The first is that Amazon most certainly doesn’t want all of their competitors to go out of business, because then they’d be the only game in town and the government would have no choice but to break them up. The second is that of course they are acting as if they want to put their competitors out of business. That’s how you improve your business practices. You try to out-do your competition.

Unless . . . you don’t understand at all what it means to compete. Which I think explains the righteous indignation.

. . . .

In many ways, Amazon has decided to compete with itself. The move toward e-books seems strange for a business founded on shipping the physical product, but it’s the companies who control their obsolescence who thrive. Apple is such a company. Eastman Kodak is of the other sort. Publishers could have realized years ago that they are in the story development and delivery service, but they thought it was all about books. Which pretty much underscores all that has happened since.

While Amazon’s developments and innovations have been lauded by customers, the same maneuverings have been just as vociferously impugned by legacy publishing and its adherents. A single company (often a single man’s name) absorbs the full and illogical blame for what has been an inevitable move toward online shopping and on-time delivery.

Ironically, the biggest losers in this shift have been yesterday’s villains. The massive brick and mortar discounters—who once were blamed for literature’s downfall, who sold “loss leaders,” who roughed up publishers in negotiations—have become the bulwark behind which all legacy hopes now hunker. Little explored is the possibility that Amazon is helping independent bookstores by clearing out these former predators.

. . . .

Best estimates give Amazon roughly half of the book market. With the shutter of Borders, B&N now has a more disproportionate control of brick and mortar shelfspace than Amazon does of online book sales. This is especially powerful as the rest of the smaller bookstores have less leverage for bargaining with publishers. Who is the monopoly?

Similarly, the merger between Penguin and Random House has created a mega conglomerate that accounts for half of the major publishers’ revenue. There was very little outrage at this merger, which will result in lost jobs and fewer places for authors and manuscripts to compete. Instead, we heard how greater efficiency will help these grand institutions compete with that evil company trying to lower prices and raise author pay. Again, who is the monopoly?

. . . .

When you are used to living in a gentlemanly culture of collusion and cartel. When competition appears dirty and unseemly. Why compete when you can agree to offer the same terms to all authors and the same high prices to all customers? If you can milk your suppliers and your customers and get away with it, why bother with the messiness of innovation and efficiency? How dare anyone tip the applecart!

The real monopoly, once you start examining business practices and attitudes, is Big Publishing itself, a group so entrenched with one another and indistinguishable from one another that they simply go by the collective moniker: The Big 5.

Their contracts are functionally identical. Their e-book royalties (and most others terms and clauses) are lockstep and are not negotiable. They have a history of working together in a noncompetitive fashion in order to raise prices for their customers (prices that they would love to set at twice what mass market paperbacks formerly cost). Conferring by phone or email in this culture is considered polite, not illegal. It wasn’t long ago that top editors at the major houses would meet on Wednesdays to discuss the bestseller list, to congratulate one another on acquisitions, and to discuss business plans and practices. All completely normal. Celebrated, even.

When members of the Big 5 do compete (truly compete, not just offer varying marketing promises and sizes of advances), the offender needs to be reigned in quickly. When Simon & Schuster innovated with print-only deals—thereby landing bestselling authors who were otherwise never going to sign with any major publisher—the resulting press on these deals (and likely pressure from other publishers) caused an immediate retreat. The poor publisher who stepped out of line dutifully pulled back into rank. Print-only deals were no longer on the table. Contracts snapped back to their immutable and noncompetitive form.

. . . .

So the question is this: Is Amazon a disruptor because of its size? Or is its size a result of previously stifled innovation? The culture of the Big 5, which was built by gobbling up successful small presses and rolling them into imprints, left the door wide open for Amazon, a company that dared to sell direct to consumers, innovate the way we read, and pay authors a living wage. You know, the first company to actually compete.

The response to this new competitor has been to blacklist Amazon-published books from brick and mortar stores and to collusion within the publishing monoculture. Where is the outcry for Amazon-published authors who are blocked from sale by practically every brick and mortar store? It doesn’t exist. The response is simply: That’s what those authors get for signing with Amazon. Imagine an observer today saying “That’s what those authors get for signing with Hachette.” The hypocrisy astounds.

Link to the rest at Hugh Howey and thanks to Sandra and others for the tip.

A lot of traditional publishing and its authors have had fainting spells over negotiations between Amazon and Hachette concerning a new ebook contract now that Hachette is out of the court-ordered lockdown on its price-fixing conspiracy. (Or maybe, as David Gaughran and others have suggested, it’s just a Hachette negotiating tactic in the form of a PR campaign.)

The anguished cries have torn at everyone’s hearts:

- Amazon has been selling Hachette ebooks at Hachette’s list price! 

- Amazon has stopped allowing preorders on Hachette books! (Something indie authors don’t have.)

- Hachette good, Amazon bad!

On the other hand, Hugh Howey and Data Guy have released a new analysis showing that indie authors are making more than tradpub authors selling ebooks on Amazon (a PG simplification of the analysis). And that an author who writes well enough to receive a contract offer from traditional publishing will probably make much, much more money if he/she goes indie than than traditional.

If PG were an author who had just signed a traditional contract instead of self-publishing, the Author Earnings report might elicit some anguished cries from him.

So, here’s PG’s rhetorical question: Which is more dangerous to Big Publishing – pricing negotiations with Amazon or the direction the dollars are blowing for indie authors on Amazon?

PG says it’s the indie author and the dollars they’re earning on Amazon.  While this kind of information has been passed from author to author for some time, the Author Earnings reports demonstrate that it’s not anecdotal data – it’s happening to a large number of authors on Amazon.

The simple fact is that Big Publishing relies on big authors for its profits and its survival. Imagine traditional publishing as an inverted pyramid balanced on a small percentage of its authors and their books. A handful of authors make the difference between a good year and a bad year, between people keeping their jobs or losing their jobs.

Look what E.L. James did for Random House in 2012. With E.L. James, record profits. Without E.L. James, a decline in revenues and maybe a loss on the year. RH will probably receive another great sales bump when the movie comes out. All from one author.

The E.L. James experience isn’t a one-off. It’s pretty much what passes for business strategy in New York. “Find me the next E.L. James!” “Find me the next James Patterson!”

But what happens if the next E.L. James doesn’t answer the email? Or the phone call? What happens if the next E.L. James believes she has a better life and is making more money as an indie author?

In another month or two, Hachette will be old news because it will make a deal with Amazon. It has to. While the agreement will be confidential, PG predicts that Hachette will win Publishers Weekly and Amazon will win the contract negotiation.

The Author Earnings reports, on the other hand, are each another tick of a financial time bomb that Big Publishing really, really, really wants to ignore.

Big Publishing is already missing some big authors and, as time passes, it will miss more and more big authors. A missed author is a missed backlist. As the latest Author Earnings report demonstrates, Big Publishing makes a whole lot of money from the backlist sales of a relative handful of bestselling authors.

When those authors signed contracts for those big books, self-publishing was not a realistic option, so there wasn’t really a choice. Now it is an option. A good one.

Author Earnings is not only pointing out that there is a choice today, they’re saying, to quote a comment from Hugh Howey:

1) For the 1% who can choose [to take a traditional contract because they are offered one], the majority of them should be choosing to self-publish. From everything and everyone we know, these authors would be happier, more productive, and far wealthier if they struck out on their own. They are paying middlemen a fortune to perform a service that is no longer needed. Instead of being saddled with cover art they don’t really like and an editor they didn’t choose, they could have complete control over both for a fraction of the price. (I know I’m singing to the choir here. It’s the agnostics in the pews we’re running these numbers for).

2) Earnings show market potential. If we discovered that only 5 indie authors are earning a decent living, the legacy publishing pundits would be screaming our findings from the mountaintops. Remember when the dialog was all about how 95% of self-published authors don’t sell more than 100 books in their lifetimes? That’s the sort of thing we set out to check. What we are finding instead is that the chances of making a living from writing fiction is likely greater for self-published authors than traditionally published authors. Those findings include enough of a variety of books on both sides to be a meaningful conclusion. If you are weighing how to publish, the numbers from Amazon’s bestseller lists should tempt you into self-publishing.

PG says this is much, much, much bigger news than Hachette/Amazon.

From Author Earnings:

Three months ago, we released our first full report on Amazon e-book sales and author earnings. Our goal was to look at unit sales and earnings by various publishing paths in order to help authors make informed decisions in this rapidly changing publishing environment. The results were eye-opening, but it was merely our first data point. Our long term goal has been to pull data every quarter to see if we can spot developing trends.

. . . .

The exciting thing about pulling this data is that we have no idea what we’re going to find. Our conclusions since the last report might need rethinking. Our advice on what an author might want to do with a manuscript today could very well change as the publishing industry takes another swerve. My partner and I debated what we expected to see from this second round of data. We both predicted no more than a 2%-3% swing from any one publishing path to the other over such a short period of time. I wagered we’d see a 2% drop in self-publishing titles, offset by an increase in Amazon imprints, as the latter continues to snatch up high performing e-books and put more marketing muscle behind their own authors. My partner thought we’d see a 2% hike in self-publishing at the expense of traditional publishing. We bet a dollar on the outcome.

. . . .

This first graph shows the number of titles on Amazon’s e-book bestseller lists by publishing type:

 

Of note with this chart: The vast number of small and medium publisher e-books reflects their dominance in obscure categories. The overall ranking of most of these books is extremely low, which is why the number of titles on Amazon bestseller charts does not correlate to daily unit sales volume.

. . . .

Next we have the estimated daily unit sales, based on the overall ranking of each e-book:

 

This is what my partner (affectionately known as Data Guy) predicted.Yes, I mailed him a dollar. What we see here is that self-published e-books and those from small/medium publishers have captured sales lost by the Big 5 and Amazon’s own imprints.

. . . .

Using list price, we get the daily gross sales revenue:

 

Despite the lower number of daily unit sales, Big 5 revenue has gone up 1%. Investigating this, we found the average price of a Big 5 e-book went up nearly 3% between reports, while self-published e-book prices went up 1%.

. . . .

Finally, the estimated daily author earnings report:

 

Here we see self-published authors earning 2% more while Big 5 authors hold steady. Again, with fewer daily sales but a higher price, the Big 5 publishers increased their own revenue while their authors stayed pat. Amazon Imprint authors saw a 3% decline, which might be due to the volatility they have as a small number of titles can see a large number of sales. What we can’t tell with these two data sets is if we are seeing real trends or just random fluctuations, but we can say that our findings from February have now been corroborated by this second data set. Self-published authors are clearly earning as much as traditionally published authors on the largest e-book sales platform in the world.A few months ago, this seemed impossible. It is already beginning to feel like old hat.

. . . .

Major publishers aren’t just reliant on these rare blockbuster bestsellers, they are also heavily reliant on their backlist, which the above chart also captures. Look at that massive bar on the far left of the graph, which shows all books published before 2011. Ignoring pre-orders, the author revenue for Big 5 books published prior to this date is equal to 31% of the earnings on all books published since then. This backlist dates to before the self-publishing revolution gained steam, which suggests that the share of pie earned by self-published authors has a lot of room to grow as these writers establish backlists of their own. It also means that the parity we see in our author earnings charts between self-publishing and Big 5 publishing has a lot to do with the latter’s existing titles and not their new releases. How you decide to publish your manuscript today means looking at the difference in earnings due to recent works. Self-published authors are not just holding their ground with Big 5 authors when it comes to releases after 2011, they are out-earning Big 5 authors by a 27% margin.

Link to the rest at Author Earnings

UPDATE: PG forgot to mention that if you follow the link, you can compare February with April numbers by rolling over each pie chart.