PG’s Thoughts


26 April 2016

From time to time, PG is approached by artists who create infographics with an infographic which may be of interest to authors. These artists suggest that PG might like to publish their infographic on TPV.

PG has declined such requests, not because infographics are a bad thing or the particular infographic is inaccurate or poorly designed, but because he has doubts about whether infographics in general would fit into whatever visual vibe exists on TPV and be of interest to lots of visitors.

One of the online rules PG violates is Online Rule 37: Illustrations, photos, animations, Vines, videos, etc., etc., etc. should be inserted in lots of different places so several appear on every screen a visitor sees. TPV is much too text-heavy to comply with this particular best practice.

However, PG could be wrong about infographics. (He’s not going to use Vines no matter what anyone thinks or says.)

If you have an opinion about whether infographics would be a good thing for The Passive Voice, feel free to voice it in a comment.

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Know Your Rights

23 April 2016

From Kristine Kathryn Rusch:

I recently got an email that sent a chill through me. It was a newsletter from a traditional publishing organization. This organization is geared toward publishers and editors, not toward writers.

The newsletter was essentially an ad for an upcoming seminar that will teach publishers to understand intellectual property and expand their rights business.

Why did this send a chill through me? Because the one thing that has protected writers who signed bad contracts is the fact that their traditional publishers have no idea how to exploit the rights they licensed.

. . . .

[I]n short, most publishers ask for more than they have ever used in the past. Publishers have been very short sighted in how they published books.

. . . .

Ten years ago, it was relatively easy to get the rights reverted on a book like that. Essentially both parties agreed that the terms of the contract had been met, that the parties no longer had need of the relationship, and so they severed their business relationship.

It wasn’t easy-peasy, but it wasn’t hard either. It usually took a letter or two.

By 2005, however, most agents refused to write that letter which severed the contract. The reason was simple from the agent’s perspective. Many, many, many agents used a combination of their agency agreement and a clause in the writer’s book contract to define their relationship with the writer, and determine who controlled the marketing and finances of that book.

It wasn’t in the agent’s best interest to cancel the contract. In fact, the longer the contract existed, the better it was for the agent.

Writers with agents would have to write those letters themselves—and then, publishers would often contact the agent to find out why the agent was “letting” the writer do this.

. . . .

In the last year or so, I’ve been hearing from writers who say it’s almost impossible to get their rights reverted. The publishers want to hold onto those rights as long as possible.

The main reason for this has nothing to do with reprinting the book or keeping the book in the marketplace. It has to do with the changes in accounting that have occurred in the big traditional publishing companies.

The Big 5 (4? 3? Whatever. Jeez.) are now part of international conglomerates. Those conglomerates understand that intellectual property has as much value or more value than the buildings and land that the conglomerates use to house their businesses.

Those conglomerates put all of the intellectual property on their account books as an asset. So your novel—even if it’s more or less out of print (or has a $19.99 ebook like my novel Fantasy Life)—has a value assigned to it that reflects not only its earnings right now, but its potential earnings in the future.

The command came down from on high that publishers should retain the assets as best as possible. (I’m pretty sure some of these publishing companies were purchased for their intellectual property assets, not because of their bottom lines. I have no interest in proving that, though.)

So, publishers have kept the assets, doing the minimum to retain the rights to them. But they really haven’t maximized their profits.

. . . .

In practice, publishers have started to claim rights they never had. They’re interpreting the contract terms for something negotiated in 1997 by 2016 standards, and finding ways not to pay for those uses.

Big corporations are all about profit for the corporation. The best way to maximize profit is to lower expenses.

That’s why, after these big companies merge, you see layoffs a year or so later. That gives the new company time to define itself, find employees with overlapping duties, and streamline production.

Once the layoffs are over, once the agreements with the subcontractors (like printers and distributors) end or get renegotiated, the corporations look around for other ways to cut expenses.

The easiest way is to cut the payments to the suppliers—the writers.

. . . .

Just be aware that publishers often cut payments, and they use the contract as their guide. Not necessarily the contract negotiated in good faith with a corporate entity long merged into five other corporate entities, but the corporate entity that exists now.

Link to the rest at Kristine Kathryn Rusch and thanks to Bruce for the tip.

Here’s a link to Kris Rusch’s books. If you like an author’s post, you can show your appreciation by checking out their books.

As usual, Kris does an excellent job of talking about the business/legal aspects of being a successful professional writer.

PG would like to talk a bit about authors making a decision to sign a publishing contract with a particular publisher or editor.

Isn’t that a huge reason why most authors sign a publishing contract? RomancesRUs is the hottest publisher around and some of their authors are New York Times Bestsellers. And Leticia is the best romance editor who ever walked the earth plus she is so nice on the phone. (ditto for SciFiRUs, etc.)

The idea that no one will remember RomancesRUs in ten years and Leticia will be fired in six months doesn’t enter most authors’ calculations.

It is the nature of declining businesses to attempt to consolidate their way to survival. That’s what’s been happening in big and small publishing for awhile and what will continue to happen.

Many authors sign with a publisher because of that publisher’s reputation for quality books and successful authors. Some authors will sign because they’ll be working with an editor with a great reputation for excellence and success, the kind of editor that bestselling writers mention in interviews.

Similar thinking goes into an author’s decision to sign with a star agent, one with many happy authors who say nice things about the agent’s work.

These would be good business reasons to sign a contract that lasted for five years.

However, current reputations and past successes are a terrible reason to sign a contract that will tie up rights to an author’s books for the full term of the copyright. As a reminder, in the US, copyrights last for as long as the author lives plus 70 years.

In a successful business, management can last for a long time and often the original management hires new managers with similar business acumen and passes down the business principles that lead to that success through the hierarchy. Such businesses can work their way into long-term success.

When a business is declining, especially when it is part of a declining industry, management turnover and ownership changes become near-constants. Yesterday’s management practices are no longer today’s management practices. Some investors make a lot of money by acquiring problem businesses, cutting costs to the bone, then harvesting profits (pulling cash out the business) or finding someone else to buy the business because its financial statements now look better.

Traditional publishing is in decline. How long the decline might last is speculative. However, the words of Ernest Hemingway are instructive. “How did you go bankrupt? Two ways. Gradually, then suddenly.”

The Securities and Exchange Commission requires mutual funds to warn their investors that “Past performance is not a predictor of future results.”

Of course, an investor who bought into a mutual fund can sell his/her shares and have nothing further to do with that fund and its managers. A hedge fund that purchased a publisher can sell the publisher and be done with it. Since no US state permits life-time employment contracts, a publishing executive or editor can either quit immediately or wait a couple of years, then bail out on a failing publisher.

Only the authors who signed contracts that last for the full term of the copyright are tied to whatever corporate entity once called itself a publisher, but now is a hedge fund asset, for the rest of their lives plus 70 years.

(PG will note that a provision in US Copyright Law permits the creator of a copyrighted work or his/her heirs to terminate a contract 35 years after publication or 40 years after the contract was signed, but it doesn’t happen automatically and 35/40 years is also way too long. PG won’t get into the technicalities of this part of the law.)

“But it’s a contract for only one book,” an author might say. PG won’t take more space to discuss unfair non-compete clauses, option clauses, etc., can undercut the excuse that it’s only one book. Such clauses can affect a whole bunch of books.

Under current contract practices, the author is the only person who has to think in the long term while everyone else in the publishing business is focused on the short term.

Publishing contracts need to include provisions that end the contracts after a few years so the author can have the same flexibility as everyone else involved with the author’s books.

Data Guy’s Web of Analysis: DBW Turns Hostility Into a Handshake

10 March 2016

From Publishing Perspectives:

Author Earnings was born amid controversy and rancor around a Digital Book World event two years ago. The 2014 conference had worked with its sister FW Media vertical Writer’s Digest to update a survey of authors that the author Hugh Howey and a host of independent writers said was incorrectly depicting self-publishing as a financially lesser alternative. Howey’s answer was to create a new effort to gauge ebook sales that aren’t counted by typical industry statistical programs. And his partner in was and is an unnamed writer and technologist nicknamed “Data Guy.”

Data Guy made his first appearance Wednesday (March 9) in a 35-minute morning keynote presentation at DBW 2016, and he followed it during the afternoon with a question and answer session with Publishers Marketplace’s/Publishers Lunch’s Michael Cader.

. . . .

Cader had neatly set up Data Guy’s session for DBW’s morning mainstage presentation, going over the three statistical programs traditionally used to try to track a publishing business we can’t see very clearly:  the Association of American Publishers’ reports, Nielsen’s BookScan (print), and the PubTrack Digital (ebooks, also Nielsen). Each source of analysis has strengths and limitations.

None has the thing needed most: the ebook sales data known only to the largest online retailers.

. . . .

Once he’d handed off to Data Guy, the keynote was primarily an explication of the Author Earnings methodology from a man who, it turns out, has his background in data analysis in the video-games industry.

In terms of what his analysis offers to the industry — “I’m trying to solve the [same] problem the Big Five is trying to solve,” he said from the stage — Data Guy focused, in part, on an interpretation of debut-author unit sales, with 22 percent of them in 2014 coming from Big Five publishers, 11 percent in 2015 coming from Big Fives, and only 9 percent coming from Big Fives in the first quarterly report of 2016.

As Cader’s associate at Publishers Lunch, Sarah Weinman, wrote:

“DG [Data Guy] showed how his analysis of Kindle store data can point to ideas across the publishing chain.

“‘There is an opportunity to give debut authors a different price point,’ DG said, pointing to the heavy concentration of sales around ebooks from debut authors priced between $2 and $5.99 versus the very small amount of sales garnered by traditional publishers bringing debuts out priced between $11.99 and $14.99.

“‘They can graduate to higher price point, the same way that mass market paperback titles graduate from trade paperback and on to hardcover. Every debut author is an investment for a publisher and they have time to develop in the market and create a good return. The risk is to become too dependent on movie tie-ins, big-money indie author acquisitions, and other acquisition-driven strategies.’”

. . . .

The potential progress that may eventually set off this iteration of Digital Book World from others was evident later Wednesday, in the last hour of the conference’s breakout sessions. Someone in the audience for the Data Guy Q&A asked if Cader might be able to merge “his” data with that of Data Guy.

Cader, making it clear that the trinity of trade-industry protocols is not his but simply the material with which we’ve had to work until now, showed a lot of interest in the idea— if not of “merging,” exactly, in some way exploring what one approach to quantifying the industry has to offer the other. Data Guy was immediately game, even soliciting data from industry players who’d like to share it.

. . . .

Until now, Author Earnings’ protocol of harvesting bestselling ebook sales data from and creating a rank-t0-sales comparative curve to interpret that data has reflected its original agenda of demonstrating self-publishing as a potentially viable financial approach to a writing career.

But on Wednesday, with Data Guy’s first public appearance at DBW, this changed. For the first time, Author Earnings spoke directly to the industry. And rather than spinning a web of upbeat numbers on self-publishing’s performance on the Big Platform in Seattle, Data Guy used his time in the mainstage keynote sessions to suggest that his analysis can bring new insights to an industry sorely in need of them — and in a cooperative context: what was agreeably missing was the hostility that many Author Earnings supporters have brought to the discussion.

Weinman describes Data Guy’s message this way:

“At the organization level in particular, knowing more about the missing data gaps will allow for better questions to be asked about competitive market analysis, dynamic pricing, identifying takeover targets, real-time sales projections, and more.”

. . . .

While we saw the guy — he’s witty, engaging. “quite a likeable chap,” as agent Laurie McLean referred to him — his actual name was not revealed. We called him DG. He told us at the press table that he is the author of two books. Both self-published. He mentioned that he finds publishing people nicer than video-game people. And that’s it.

But meeting him was helpful. Even learning this small amount of info was useful because he now is understood to be more Data Guy than Book Guy. Maybe it’s his distance from the center of the indie book crowd that has made him remarkably cordial to media members who emailed him — sometimes with criticism — even as some of his supporters snarled at anyone who dared suggest that Author Earnings may not be holy scripture.

Link to the rest at Publishing Perspectives and thanks to SFR for the tip.

PG congratulates Data Guy on the success of his presentation. It sounds like he was able to accomplish in person what the voluminous statistics and analysis he and Hugh Howey created with Author Earnings could not do – convince an audience oriented toward traditional publishing that AE provides very useful information about ebook sales.

For PG, the history of Author Earnings and its initial reception by Big Publishing is one more piece of evidence of the huge gap between the worlds of technology and traditional publishing.

For PG, who has some history in the tech world, the first AE report was fascinating and revealing. Through a neat (and Amazon-approved) hack, DG and Hugh had provided a deep look at what was going on in Amazon’s part of the ebook world (which is, of course, the most powerful and sophisticated part of the ebook world). Part of the reason the information was so interesting is that it contradicted several narratives about ebook sales from Big Publishing and shone a much brighter light onto what was happening with indie authors.

PG is pretty certain that most tech people who examined the first and subsequent AE reports would approve and admire the project as an innovative method of digging into a somewhat opaque market.

The initial response of the traditional publishing world was, of course, dismissive of AE. Media covering tradpub found no shortage of publishing experts to dismiss AE’s work as inaccurate and unhelpful. Some of the experts’ comments revealed that they didn’t really understand what AE was doing.

Ebooks are a technology product, data files delivered over a digital network to sophisticated devices containing hardware, firmware and software that decodes the ebook file and presents it to an end user in a (hopefully) attractive and useful format.

PG respectfully submits that if you think of an ebook as just another form of paper book to be created, marketed, priced and sold in a paper book sort of way, you don’t really understand the ebook. Barnes & Noble certainly knew how to sell a lot of paper books. We all know how little of this expertise transferred to selling ebooks.

In this post, PG won’t make any predictions about the future of traditional publishing, dire or otherwise, but will suggest that the ability to deeply understand technology and think like a technologist has become a vital and mandatory skill for publishers. Success in the future publishing business will require skillful navigation in a world that is inevitably, inexorably moving towards selling more and more of the software known as ebooks through electronic retailers via a technology known as the internet.

ABA Urges Federal and State Investigation of Amazon’s Business Practices

3 March 2016

From the American Booksellers Association:

This week, the American Booksellers Association launched a national advocacy campaign with letters urging the U.S. Congress, the 50 state attorneys general, and the 50 state governors to investigate Amazon for violations of antitrust laws.

In the letters, ABA CEO Oren Teicher wrote that the association strongly believes that “Amazon’s abuse of its dominance and its growing monopolization have had a negative impact on free expression and the health of America’s book industry, including a chilling effect on the diversity of, and access to, books and information.”

In conjunction with the antitrust campaign, ABA launched its Antitrust Action Kit, which provides booksellers with state-specific letters that they can adapt and send to both their state and federal lawmakers as well as other key officials.

“We strongly encourage booksellers to use the templates in the Action Kit to reach out to their federal and state lawmakers, as well as their attorney general and governor,” said Teicher. “Antitrust laws exist to protect consumers, their communities, and small businesses from the very business practices now being employed by Amazon.”

. . . .

Teicher also pointed out that Amazon’s business model is very similar to the A&P grocery store chain’s business model prior to 1949, when the U.S. Court of Appeals ruled that A&P violated antitrust laws.  “Like A&P,” he wrote, “Amazon is not keeping prices artificially high. Indeed, it is keeping prices artificially low, and extending its reach into production and distribution. This spurs further growth for Amazon, while forcing smaller competitors to do business with it even as it simultaneously competes against them. In the process, Amazon has garnered great influence among policymakers in states and in the federal government, garnering tax subsidies that only increase its market advantage at the cost of tax revenue and millions of jobs.”

Link to the rest at the American Booksellers Association

PG is continually amazed at all the instant experts on antitrust law that keep popping up in the book business these days.

The most common antitrust case they cite is Standard Oil Co. of New Jersey v. United States, decided in 1911. PG notes that, while Standard Oil still stands for some antitrust principles, it hasn’t been 1911 for a long time and the competitive world has changed a bit since then.

Amazon’s supposed sin is “predatory pricing,” known in some circles as low prices, great prices, wonderful prices, affordable prices, etc.

Here’s the theory about how predatory pricing is supposed to work and why it is dangerous:

  1. Big Bad Company lowers prices.
  2. Competitors wither and die.
  3. After finishing off competitors, Big Bad Company raises prices to ruinous levels.

Bullet Points 1. and 2. simply describe free market capitalism as practiced in many parts of the world.

Bullet Point 3. – raising prices to high levels after putting competitors out of business hasn’t happened, at least in the modern US.

If any company was in a position to jack up prices in recent times, it would have been Walmart which, in many small towns, became the only grocery store, the only clothing store, the only book store, etc., after local competitors selling those products did go out of business. Did Walmart raise prices? Nope. Everyday low prices.

Sam Walton understood there was always some mini Sam Walton lurking around waiting to underprice Walmart if Walmart raised its prices. And people would travel further for low prices in 1990 than they would in 1911.

Plus Sam Walton had good lawyers who told him that if he did raise prices under these circumstances, he would check the box for Bullet Point 3 and be guilty of predatory pricing.

Twentieth century antitrust law was often based on companies gaining monopoly power in one or more geographic areas. With poor transportation options or goods too bulky to ship very far, a competitor one hundred miles distant might still be shut out of a geographical market because customers wouldn’t travel that far to purchase goods.

Of course, Amazon lives on the web where, in most of the world, geography doesn’t matter. PG could set up an ebook store today that competed with Amazon on book prices (for a limited selection of ebooks). Baen, which is way smaller than Amazon, has an ebook store for its own books and offers some products Amazon can’t.

Amazon even enables hundreds of used book stores to directly compete with it on price by including used book listings beside Amazon’s new book listings. PG has no inside information, but he bets that Amazon loses a significant number of new hardcopy book sales to used book stores. Abe Books looks to be well-positioned to compete in in this market should Amazon ever decide to shut out used book stores.

PG says there is nothing noble about the efforts of the ABA or Authors United or any of the other whiners who are trying to prevent Amazon from selling books at low prices. They have no interest in defending the great principles of antitrust law. They are simply trying to use government agencies to protect their right to sell expensive books. This crusade provides no public good and is entirely self-serving.

The future of books is here and there’s not much room for expensive middlepersons.


Where Do Visitors Come From?

3 March 2016

PG has been extremely lax about checking the stats for TPV .

Here’s an interesting tidbit from a visit to Google Analytics last night.

This is the list of the top ten countries where sessions on TPV have originated during the last 30 days:

  1. United States
  2. United Kingdom
  3. Canada
  4. Australia
  5. Germany
  6. India
  7. New Zealand
  8. France
  9. Kenya
  10. Ireland

Sessions are a way of identifying meaningful interactions between a visitor and a website. It’s generally regarded as a better measure of visitor engagement than just the number of visits.

Here’s Google’s definition:

A session is defined as a group of interactions one user takes within a given time frame on your website. Google Analytics defaults that time frame to 30 minutes. Meaning whatever a user does on your website (e.g. browses pages, downloads resources, purchases products) before they leave equals one session.

For PG, the surprise on this list is Kenya. He doesn’t recall seeing any African nation on a top ten list before. He’s excited to have this many active visitors from Kenya.

Why all the news about Amazon?

2 March 2016

On occasion, PG is accused of being some sort of shill for Amazon.

He’s not.

He’s one of the millions of fans (including shareholders bidding up Amazon stock into the stratosphere) who thinks Amazon is a cool company doing cool things in cool ways.

This goes way beyond Amazon’s participation in the book business.

Beginning in the eighties, Wal-Mart (now Walmart) was recognized as an extremely well-run retailer. Among many other innovations (including extraordinarily sophisticated computer systems way ahead of their time) Walmart was notable for putting big box stores in small communities, places other big box retailers thought were not populous enough to support a large store. Virtually all of its early growth was outside of major metropolitan areas.

In addition to substantially improving the lives of the people in those small communities (better prices, better selection, retail jobs that weren’t dead-ends), Walmart made a lot of money for people who bought its stock. Business magazines and newspapers loved writing stories about Walmart and how Sam Walton had built a worldwide empire from a single store in a small town in Northeast Arkansas.

Of course, those who saw Walmart as a business that was challenging legacy retail practices suffered from Walmart Derangement Syndrome. Suppliers complained that Walmart buyers pushed harder than anyone else for low prices and fast delivery which squeezed supplier profit margins. Competitors built fantasies that the world would be better if Walmart stopped offering every day low prices.

Customers voted with their money and made Walmart the largest retailer on the planet. Low prices helped poor people stretch their money to buy food and clothing for their families. To this day, if you want to see where local poor people shop, go to Walmart. For PG, at least some of the anti-Walmart sentiment included an element of disdain for Walmart customers.

Reportedly Jeff Bezos studied Walmart closely before he started Amazon. Every day low prices could be Amazon’s credo as well.

The response of some suppliers to Amazon – traditional publishers most notably – has reminded PG of the response of some suppliers to Amazon Walmart. Amazon is an agent of change at least as much as Walmart was an agent of change. From the viewpoint of some suppliers, change is fine as long as they can continue to run their businesses in the way they always have.

The simple reason that PG posts so many items about Amazon is that Amazon is doing far more interesting things than any other organization in the world of books. And, with Amazon’s help, indie authors are doing far more interesting things than non-indie authors are.

How many interesting things does Hachette do in a week? Could you build a blog around the latest developments from Randy Penguin?

While PG appreciates all authors, all too often, he sees talented authors who are traditionally published limited by their publishers.

Indie authors often act like Amazon has set them free.

PG likes posts about freedom and innovation.

The Mouse That Rawr’d

2 March 2016

From The Novel Approach:

Once upon a time, there was a corporate giant called Amazon, who existed in a land inhabited by all manner of creature. This giant was possessed of a vast wealth and bartered myriad goods in exchange for those riches, from textiles to tchotchkes to consumables to a seemingly fathomless collection of media and books. There was little question of this giant’s market prowess, power and influence; nor was there little question that puny humans were lured with a Siren-like ease to its lair, where would be fulfilled every purchasing whim… In the land of Virtual Commerce, let us not be mistaken that Amazon was king.

Alas, this is reality. With a book market presence unrivaled by any other e-tailer, Amazon not only absorbs a hefty portion of the average reader’s book buying budget but its review system also wields the sort of influence that when utilized can increase a book’s visibility on the site. With the Kindle/Kindle app being on top of the e-reader heap, those Amazon reviews can truly matter not only to readers who take the time to peruse them but to authors as well, because of the way a review of their books ties in to Amazon’s algorithms. Simply put, an Amazon review can be beneficial to a book’s overall accessibility on the site.

. . . .

So, now we enter the dark and dangerous fairy tale forest where there lies a murky bog called Ethics. It’s no secret there are review sites out there that sell reviews—I get follows from them on Twitter on occasion. There are also authors out there who buy those reviews—which stands to reason or those sites wouldn’t exist. Now you can see how this has made some reviews and some review sites suspect and, for more than a few people, difficult to trust. The bottom line is that if we consumers stray from the safety of the path to enlightenment, we might get eaten, and this is why Amazon has been forced to tidy its castle.

Beyond suing people for fraudulent reviews, Amazon has also begun swinging the ax on those reviews they merely suspect are bogus. It’s why they’re now policing our Facebook and Goodreads connections with the somewhat ambitious belief that by doing so they can restore legitimacy to and preserve the sanctity of the Amazon review. What’s happening in return for those efforts is that legitimate readers/reviewers are finding their reviews disappearing from Amazon, while the less-than-illuminating “This book was okay” reviews are living on to see another day.

. . . .

When I wrote a letter of inquiry to the Customer Reviews department to ask for specifics, I received a terse reply accusing me of “manipulating” the Amazon review process. When I replied to inquire how I might appeal this decision, all I received was another abrupt email that stated, in essence, they didn’t owe me an explanation and not to bother emailing them back because they would likely not respond.

I, of all people, respect the review process and understand why Amazon is trying to clean up the behemoth that is theirs. The issue that exists, however, is that in doing so they’re throwing out the good with the bad, utilizing IP addresses and star ratings and Facebook and Goodreads connections as their methods of deducing which reviews are originating from reputable sources and which aren’t. It’s a fantastic idea in theory, but in practice, it could use some work because all it’s done for me so far is leave me frustrated.

. . . .

And this is why I took the time to email Jeff Bezos to let him know I didn’t appreciate being lumped in with all the other witchies in the Amazon witch hunt. And then I’m sure he laughed at my insignificant self and went on to counting all the pieces of gold in his coffers, but at least he now knows I’m not some wan and mealy mouthed reader/reviewer who’s too intimidated to stand up to the giant. ::cue his laughter::

What does this mean for Amazon? Zero, zilch, nada. Will I stop shopping at No, they’ll still get all my dollars because they make it easy to spend with them. Does this mean that I agree with their methods of repairing the flaws in their system? No, because it’s indiscriminate and shortsighted. Does it stick in my craw that all those one word/one sentence “reviews” are living on, while every last review we’d posted (and, I might add, had been approved) were disposed of with all disregard for their potential validity? Ooooh, you bet it does.

Link to the rest at The Novel Approach and thanks to P.D. for the tip.

PG wonders if it might be a good idea for Amazon to establish an ombudsman to help resolve KDP issues that may arise with authors and reviewers.

Amazon is notable for its excellent customer service policies for those who purchase goods. Returns are simple and shipping errors are quickly rectified.

Perhaps the most impressive thing PG learned during his early interactions with those responsible for running Kindle Direct Publishing is that they regarded indie authors as customers. This was and is, of course, an extraordinarily different view of authors than is widely-held among employees of traditional publishers.

Every organization utilizing computer algorithms in its business processes knows that those algorithms, particularly when they are first brought online, can be expected to return erroneous results from time to time. Some of the errors will be obvious and others subtle.

Those responsible for programming the algorithms will be focusing on the obvious errors and may not have been given all the information behind the program requirements around which the algorithms were built. Certainly, they’ll pay more attention to fixing the obvious bugs than the subtle ones which may or may not be bugs at all.

The people on the front lines of implementing the results of the algorithms with customers, reviewers, publishers, etc., will almost certainly not be the same people who created the requirements or wrote the algorithms. The front line people will be focused on efficiently doing one thing if the output of the algorithm says red and another if the output says blue.

In an organization the size of Amazon, this translates into at least tens of thousands, then hundreds of thousands of red/blue outputs that require processing. While the front line people should be able to properly handle the results of obvious bugs, at least some subtle bugs will fall under Option D – blame the customer.

You might make the same decisions if, every day, you had to deal with thousands of large and small crooks trying to make money from Amazon by improper means.

The tone of the above post from Lynn, the proprietress of The Novel Approach, doesn’t strike PG as the way someone who is gaming Amazon reviews would typically respond.

PG’s hypothetical Amazon ombudsman would provide a second set of eyes (other than Jeff Bezos or his assistants) to consider whether author/reviewer complaints that the algorithms weren’t working the way they were intended, that the posse rounding up the outlaws might have inadvertently arrested an innocent shopkeeper.

If indie authors are customers of KDP, an effective ombudsman (or ombudswoman or flock of ombudspersons) would help increase customer satisfaction among authors and prevent the occasional innocent shopkeeper from being hanged at dawn.

Walking back the assumptions that were the basis of the last post

1 March 2016

From veteran publishing consultant Mike Shatzkin:

In the few days since the last post here about Big Five publishers and agency pricing, I have been challenged on two specific points by comments sent privately. Both of these comments are right and therefore lead to this corrective post.

One powerful literary agent, who is inevitably informed by publishers about negotiations that affect the selling prices of ebooks (which, in turn, affect the author royalty), tells me that I have the whole motivation thing on agency backwards. It may have started six years ago as a way for publishers to control the prices of ebooks across the supply chain, so something they were “imposing” on Amazon. But that turned around. It became a way for Amazon to guarantee that they would get a full margin on all agency publishers’ ebook sales (because publishers could lower the ebook price, but the stipulated agency percentage would not be affected). So, in the recent negotiations, the big publishers had no choice about sticking with agency. Amazon insisted that they stick with agency.

The grapevine, although not this agent, also says that the original 70-30 split of revenues that agency began with has been revised in the recent contracts so that Amazon gets a wee bit more than 30 percent. I can’t verify that although, in time, agents should be able to see that picture clearly.

I have had no conversations with any friends in big houses during the recent agency negotiations. The sensitivity around those negotiations, given that they started because of the DoJ’s involvement, was very high. But now I’m being told by people in a position to know that four of the five big publishers think agency has been a big mistake. As one observer sees it, it has bled 25% out of digital sales that have been replaced by physical, resulting in an increased share for Amazon of the print portion of publishers’ businesses.

As it was put to me by one observer, agency in 2010 was a strategy; by 2015 it was a surrender.

. . . .

It turns out that the real story of “agency pricing today” is that Amazon demonstrated dazzling marketplace power by keeping all the big publishers on agency terms. And all of the changes in the marketplace, including the degree by which the divison sales within Big Five houses between print and digital may have tilted in favor of print, probably work in Amazon’s favor.

Link to the rest at Mike Shatzkin and thanks to Jan for the tip.

PG has no doubt Mike was told the stories he describes, but PG says it would be contrary to the way Amazon does business with everyone else. Mike’s agent friend says, “It became a way for Amazon to guarantee that they would get a full margin on all agency publishers’ ebook sales.”

Since when has Amazon been obsessed with margin? For years, the big knock on Amazon was that it was too focused on revenue growth while sacrificing profits.

In what other vertical market does Amazon impose a pricing regimen that guarantees retail prices will be substantially higher than they were under the previous pricing system?

It’s impossible for anyone, including PG, to know whether Amazon pushes hard for best prices for all its multitudes of products, but for every product PG has ever priced, Amazon prices were almost always better than he found anywhere else online.

PG did a quick check of the prices of the ebook versions of several New York Times hardback bestsellers on Amazon, Kobo and Nook. The ebook prices were identical on each platform. There was no price advantage to buying these big-selling tradpub ebooks on Amazon.

So this is Amazon’s big book business power play: Negotiate pricing that guarantees Amazon will never offer lower ebook prices than readers can find anywhere else on the web? Give up the competitive advantage of low prices?

Perhaps you could concoct a conspiracy theory that Amazon is plotting to drive Big Publishing into bankruptcy by forcing high ebook prices which cause Big Publishing ebook sales to drop through the floor. Conspiracy theories are fun, but PG thinks Amazon has much better things to do with its time, talent and money than plotting the demise of anyone smaller than Walmart.

Books are just not that central to Amazon any more. The revenues Amazon generates from sales of Big Publishing titles becomes less and less important to Amazon every year. The latest estimate PG has seen (2014) says overall book sales represented 7% of Amazon’s revenue.

Given what Author Earnings has shown us, we know that indie ebook sales make up a large portion of that 7%. Small and medium-sized publishers account for a big chunk of the rest. So Big Publishing products (hard cover and ebooks) are 2-3% of Amazon’s total revenues?

And dropping.

Year over year growth in other parts of Amazon is much larger than year over year growth in the book market.

PG is not privy to Amazon’s inside analyses of the future of the book industry, but he would not be surprised if Amazon agreed with him: Trade publishers are toast over the next 3-7 years and Big Publishing is toast burned black. On both sides.

But PG could be wrong. It happens sometimes.


‘Star Trek’ Fans Want Paramount, CBS to Do Better Job Explaining Franchise to Court

24 February 2016

From The Hollywood Reporter:

Later this year, Star Trek will celebrate its 50th birthday. Before that happens, though, Paramount and CBS are being challenged to provide more ownership information about their franchise as well as discuss the nuances of the multiple television series and the many films that have resulted from Captain James T. Kirk’s original five-year mission aboard the U.S.S. Enterprise.

This is happening because Alec Peters and other Star Trek fans put in motion a studio-quality film titled Axanar with money raised from Kickstarter. In reaction, Paramount and CBS brought a lawsuit in December alleging that the producers of this crowdfunded movie were “using innumerable copyrighted elements of Star Trek, including its settings, characters, species, and themes.”

But according to a court filing on Monday by the defendants, that’s nowhere near enough to survive dismissal.

The first thing that the defendants request is more specificity about which of the “thousands” of copyrights relating to Star Trek episodes and films are being infringed — and how.

Taking issue with a complaint that lumps the entire Star Trek universe together, the dismissal motion points out that the original series featured a certain adventure aboard the U.S.S. Enterprise — one involving fictitious species such as the Vulcans and the Klingons — whereas The Next Generation had new captain (Jean-Luc Picard) and “revealed a universe with previously unexplored dimensions.”

The defendants also nod to new characters, sets and plots in Voyager and Deep Space Nine and the various films (including the upcoming series and film) to arrive at the argument that Paramount and CBS aren’t doing an adequate job recognizing the vast differences between the films and television episodes nor meeting minimum pleading standards. Producers of the crowdfunded film argue they shouldn’t be left guessing about what they’ve infringed nor should they be required to sift through each movie and TV episode to determine the claims against them.

“Plaintiffs do not allege that Defendants are engaged in wholesale copying of each Star Trek motion picture and television episode, or even that Defendants lift substantial material from each of Plaintiffs’ alleged works,” states the motion. “Plaintiffs’ conclusory allegations do little to put Defendants on adequate notice of the claims against them.”

. . . .

There are other cases, though, that stand for the proposition that since expression and not ideas are what’s copyrightable, plaintiffs shouldn’t be allowed to sue before a court can actually see the allegedly infringing work in question.

Link to the rest at The Hollywood Reporter and thanks to Chris for the tip.

PG notes that the owners of Hollywood franchises have never hesitated to stretch copyright and trademark laws to sometimes ridiculous dimensions.

This case raises an interesting issue about whether a given tv/movie/literary property can become so sprawling that the boundaries of protection become difficult or impossible to define with specificity. Absent use of specific Star Trek elements, what’s a Star Trek movie and what is just another space opera that uses tropes found in Star Trek as well as dozens of other science fiction books and movies that predate Star Trek?

One Star Reviews Over Book Prices are Dumb.

18 February 2016

From author Larry Correia:

This review was posted for Son of the Black Sword.

1.0 (odljout of 5 starsThis rating has NOTHING to do with the writing!

(Name removed because he probably meant well, and this isn’t personal)

Format: Kindle Edition

I read and absolutely loved, Correia’s monster hunter books. Own each and every one of them. I was so looking forward to reading this one after I saw the blurbs for it. However, I cannot bring myself to allow the publishing company that Correia has his contract with, to take advantage of me. Like many of the ‘main stream’ authors, or rather, those that aren’t taking advantage of self publishing, the cost of the book is inane. The Ebook. Which costs the publishing company NOTHING to create in comparison to hardback, and paperback books. Costs more than the Paperback. That alone, will prevent me from purchasing this book, until the price is fixed to something reasonable.

I know writers aren’t supposed to respond to reviews, but I’m not responding to this as a writer, I’m responding to it as a retired accountant.

I am the author in question. Your review doesn’t hurt anything except my overall average. You aren’t sticking it to the man. You aren’t harming the corporate fat cats. If you think the book sucks, give it one star. That’s awesome. That’s what the stars are for. But you don’t use one star to bitch about the price of eBooks. That just makes you look stupid. We shouldn’t still be having this conversation with anybody who isn’t a Bernie Sanders supporter.

Now, Accountant Hat on. This is pretty basic stuff. This is how basic costing works, not just for books, but quite literally everything. But today, we’ll talk about books, because your ridiculous review has pissed me off.  I’m going to dumb this down and keep it simple as possible.

I produce a product, which I sell to a publisher. Under that contract I am given an advance against royalties (money up front), and then I get royalties based upon a percentage of the sales price. This is good. This is how authors GET PAID.

Now, over on the publisher side they have a bunch of costs associated with the production of my product. Some of these costs apply to both ebooks and print. However, contrary to what most people think printing isn’t the big deal, as much as all the other stuff.

. . . .

Some products are more profitable than others. When you go to a fast food restaurant, the margin on the burgers is slim. If they sold nothing but burgers they’d be in trouble. However, the margin on soda is amazing. That soda you spent a couple bucks on? The most expensive thing involved was probably the cup. When I was selling guns, guns were cut throat, high competition, and on most brands I’d only make 10-15% on the sale of a gun. But then I’d made 40%-50% on accessories. That was how I kept the lights on.

Ebooks are like that. Publishing is an industry with crappy margins. Don’t believe me? Ask Borders. Yes, ebooks have a lower direct cost, but that is all still going into the same company bucket. Some lines are more profitable than others. Duh. It isn’t about “fairness”. Business has nothing to do with fairness. Business is about staying in business.

That’s the basics of how costing works.

But wait, there’s more!

Now we get into Econ 101! (I love Econ).

So now that you know how much you have to make in order to keep the lights on, you want to maximize your profit. You want to sell it for as much as possible, but not for too much because that will turn some people off and you’ll sell fewer units, so you want to get that sweet spot where the supply and demand curves meet.

Some people are willing to pay more, others are willing to pay less. Go super cheap, make less per unit, and sell more, and at the other end you go super expensive, make more per unit, but sell less. Which is why the Nissan Versa and Aston Martin DB9 can both exist.

. . . .

Books aren’t cars, but they’re basically interchangeable entertainment products. Some authors’ brands can get away with a higher cost because they’ve established that they’re a Honda, and some new guy is going for moped prices because his quality isn’t established and the only way he can hope to attract customers is by low price. The super cheap customer isn’t going to buy the Ferrari, and Ferrari is just fine with that.  But when cheap guy posts a one star review for the Ferrari, we’re all going to laugh at him. For the record, I’m not a Ferrari. I’m more of a Ford Expedition.

Since there isn’t some super easy way to tell you what the perfect sweet spot is, publishers guess. Some guess too high, and others guess too low. Who guesses just right? Well, we don’t know, because it isn’t like you go around showing your competitors your P&L (that’s a Profit and Loss statement for you Bernie fans, for those guys, think of it as magic voodoo).

Oooooh, but there’s even more!

What? Pricing eBooks is even more complex? Unpossible!

Yes, because now lawyers get involved!

Did you know that Amazon is actually a business too? And that it exists to make money? And that it also wants to maximize its profit? Crazy. Bernie should do something about that.

Publishing houses don’t work off the same contract as lone self-published authors. In fact, for a publishing house to set up an ebook distribution deal with Amazon there is a lot of wrangling, and Amazon gets a say in how those books are priced. This involves lawyers (see that line about Overhead, they probably go in that bucket).

. . . .

Once my publisher got that contract hammered out, and Amazon was happy with the minimum prices they agreed to, I was super happy, because now on my personal P&L I was making a whole lot more money by having my eBooks in the biggest marketplace. Yay.

. . . .

Now if you’re self-publishing and trying to decide how to price your book, it is simpler. You don’t have a bunch of lawyers involved, and you don’t have all that G&A and Overhead. Lots of self-published folks go 99 cents, others do the $2.99 to maximize the royalty percentage. Same principle. You’ve got your market and your demand curve, and you’re going to price accordingly. You need to figure out the price that maximizes your return. Whatever you set it at, somebody is going to come along and say it is wrong. ONE STAR!

This all boils down to a question of entertainment dollar value to the customer. If you want it now, and you really like this particular brand, you’ll realize that you spent more than that on your burger combo at lunch today and buy the book. If that isn’t worth your entertainment dollar value, then you won’t purchase.

In pricing, nobody is “taking advantage of you” unless you are stuck in a monopolistic situation. Ruth’s Chris costs more than Sizzler, but Ruth’s Chris isn’t taking advantage of you, they are pricing according to their brand and their product to maximize their position in the marketplace. If they price too high, then they will not make a profit, and will have to adjust or lose market share. Which is kind of funny, because in this tortured analogy, I’m actually priced more like Sizzler, and you just gave a one star review to Sizzler, because I’m not priced like McDonalds.

Link to the rest at Monster Hunter Nation

Here’s a link to Larry Correia’s books. If you like an author’s post, you can show your appreciation by checking out their books.

PG has enjoyed Larry’s books and also several of his blog posts. He has no doubt Larry was a good accountant back in the day.

However, the new reality for ebooks is that authors who use publishers are becoming high-priced options for readers. Indie authors and Amazon are in a continuing process of resetting pricing expectations for readers.

Publishers and authors don’t like to think their books are commodities, but, for some percentage of readers, they are. If I’m at the grocery store and see a bottle of something priced at $7.99 sitting on the shelf next to bottles priced at $2.99 and $0.99, even though I know the $7.99 product is high quality, my mini economic self-interest analysis might conclude that the $2.99 or $0.99 product might suit my needs as well. Maybe I won’t even notice the difference.

Larry is correct that, generally speaking, publishing is an industry with terrible margins. As he points out, publishing is also an industry with lots of costs. PG will observe that most publishers are not paragons of efficiency. When an author uses a publisher, the author is requiring his/her readers to pay for the publisher’s costs, regardless of how expensive or inefficient the publisher may be.

In a typical ebook publishing contract, the publisher receives three times as much as the author receives for each ebook sold. Given a choice, many readers would likely prefer to pay the author three times as much as the publisher because, in such readers’ minds, the true value of a book is created by the author.

Simply put, indie authors are far more cost-efficient producers of ebooks than authors combined with publishers are.

Ebooks sold via ecommerce are technology products. While Walmart is a retailer, Amazon is a technology company. The rules for technology companies and the products they produce were established in the late 20th and early 21st centuries: add features and push prices down. Relentlessly.

Even without adjusting for inflation, computers cost much less today than they did in 1990. Ditto software, particularly software that lives on the web. Ebooks are web-delivered software and pricing has changed accordingly.

Perhaps Larry’s one-star reviewer broke some unwritten rule that prohibits complaining about pricing in an Amazon review, but that reviewer is also the reading market sending a signal to authors and publishers: Your pricing is too high. I can buy perfectly good ebooks for much less. Change or die.

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