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Penguin Random House Is Building the Perfect Publishing House

14 September 2018

From The New Republic:

When Penguin and Random House announced in the fall of 2012 that they intended to merge, Hurricane Sandy was barreling toward New York City, America’s publishing capital. It was an instant metaphor for headline writers: “As Sandy Loomed, the Publishing Industry Panicked.” People inside both companies worried about their jobs; people outside the companies worried about the market power of a new conglomerate comprised of the country’s two largest trade publishers. Agents and authors, meanwhile, worried that the consolidation would further drive down advances.

Random House’s top brass insisted that there was no need to panic. “The continuity will far outweigh the change,” Markus Dohle, the CEO of what would become Penguin Random House, told The New York Times when the merger was completed the following summer. “We have the luxury to take the time before we make any strategic decisions. There is no need to rush.”

This has been the story of Penguin Random House these past five years. Privately owned, the company has moved deliberately, while publicly traded competitors like HarperCollins (which is owned by News Corp) and Simon & Schuster (CBS) have had to fend off pressures from shareholders. It has not used its gargantuan size—it controls more than half of the traditional literary marketplace according to many estimates—to take back territory from Amazon. Instead, it has focused on building equity and ensuring that it publishes the next generation of bestsellers. In so doing, Penguin Random House has built what may be the perfect corporate publishing house. There’s just one problem: Thanks to Amazon, the age of the imperious corporate publishing house is coming to an end.

. . . .

The point of a Penguin Random House is to create scale. It is larger than its four biggest rivals combined, and its sheer size gives it leverage to promote and sell books. “We are able to leverage scale in direct marketing to consumers and in our supply chain to support our retailers and to get our books into the hands of readers quickly,” Penguin Random House spokesperson Claire Von Schilling told me in an email. “We have the largest book sales force in the world, with unparalleled reach into every different kind of bookseller globally.”

Penguin Random House’s digital marketing and data efforts are the envy of the industry, which in many ways still publishes books way the same way that it did 50 years ago. Penguin Random House uses consumer data and information from Goodreads to help acquire prospective bestsellers, which then get the promotional benefits of Penguin Random House’s size and influence. Corporate publishing in the 21st century is driven by bestsellers—both the backlist (older books) and the midlist (non-bestsellers) have never had less impact, making it all the more important to score big hits.

. . . .

Amazon is the most important subject in the publishing industry in 2018, as it has been for the last fifteen years, but Penguin Random House has consistently downplayed the Amazon threat. Asked if additional size has benefited the publisher in its dealings with retailers, Von Schilling responded, “That was not a purpose of the merger.”

Even before the merger, Random House treated Amazon more conservatively than its rivals. While the other five, for instance, were sued for antitrust violations for joining forces with Apple to fight Amazon’s e-book dominance, Random House kept its hands clean (Penguin settled with the Department of Justice less than two months after the merger was announced). To many, this was a savvy play. Penguin Random House’s remit, after all, is to sell books, not to go to war with its retail partners.

But others have expressed frustration with Penguin Random House’s timidity. The point of market share, they argue, is to exert influence over retailers and there is little evidence that Penguin Random House has done this in a meaningful way (though it’s possible that it does receive slightly better terms than its rivals). Still, Amazon has spent the past several years accruing significant power in the industry. It has further cemented its hold over bookselling. It has feuded with other conglomerate publishers, notably Hachette, while building up its own disruptive publishing arms. These include the Kindle Unlimited e-book subscription service, which has taken over genre publishing, and Audible, which has a stranglehold on audiobooks, the industry’s most important growth sector. When it comes to publishing, Amazon has arguably never been more powerful.

It’s possible that some master plan is afoot in the inner sanctum of Penguin Random House to bend Amazon to its will. In the meantime, Penguin Random House has spent the last five years perfecting the corporate publishing house, shoring up its ability to publish bestsellers. The problem is that in the age of Amazon that may not be enough. In the long term, perhaps the wisest move isn’t to build an organism that blends seamlessly with an aggressive retailer, but one that fights against it.

Link to the rest at The New Republic and thanks to DM for the tip.

PG says getting into a fight with your largest customer is a less than optimal business strategy especially when several hundred bookstores operated by your second-largest customer are increasingly likely to close.

“Bending Amazon” to Randy Penguin’s will would be an interesting exercise to watch. However, PG wonders if Amazon would even notice what the benders were trying to do.

Simply put, Amazon doesn’t need to sell books. Randy Penguin does.

PG is continually amazed that anyone in the book business thinks Amazon is anything less than the best thing that has ever happened to traditional publishers and authors of all stripes. Despite all the platitudes staggering around physical bookstores and literary bars, there is absolutely nothing inevitable about the traditional publishing business in the digital age.

Amazon, Big Publishing

73 Comments to “Penguin Random House Is Building the Perfect Publishing House”

  1. Privately owned, the company has moved deliberately, while publicly traded competitors like HarperCollins (which is owned by News Corp) and Simon & Schuster (CBS) have had to fend off pressures from shareholders.

    Employees had to fend off pressures from owners?

  2. Industrial suppliers regularly have their employees working on their industrial customer’s factory floor. This ensures the customer gets exactly what he wants when he wants, and to the spec he wants.

    Anyone know how many Random House employees are embedded with Amazon to do the same?

    • Wouldn’t it make an much sense for Amazon to have people working to make sure PRH is getting what they want from Amazon? Amazon is providing a service to PRH, who pays Amazon to sell their goods. Seems like PRH is a big Amazon customer. When we were a service provider to banks and insurance companies, we had folks assigned to holding the hand of any customer above a certain size. I would think that Amazon would do the same thing.

      • No. Amazon buys the books from the publisher, then sells them to consumers. Barnes & Noble does the same thing.

        When Amazon buys a book from the publisher for $5, the publisher books $5 as revenue. When Amazon then sells the book to a consumer for $10, Amazon books the $10 as revenue.

        • Precisely. Amazon makes a profit on sales of PRH products. If I were Amazon I would try to continue those profits. Including holding the PRH hand since they are a big source of profits.

          • I should add that B&N does the same thing, but not as well.

            Profitability spells hardball.

            • I should add that B&N is like Amazon, but not as effective and therefore is likely to find it harder to work with Amazon.

              • PRH tied Amazon’s hands on selling ebooks with overpricing them and agency. As PRH was making the same amount for each sale no matter what Amazon made you’d think they’d want to be a good customer – but it seems they don’t want Amazon making any money on ebooks sales – even when it means they and their writers don’t make sales …

                And because of PRH’s little games, Amazon is making less money selling PRH products, which means PRH isn’t as important to Amazon as they might have been.

                • Agency pricing is an example of PRH treating Amazon as a service provider, not a customer. I imagine Bezos just shrugged his shoulders when PRH did that. As has been observed here often, PRH was cutting its own throat when it priced itself out of the more lucrative digital market.

                • “Agency pricing is an example of PRH treating Amazon as a service provider, not a customer.”

                  So tell us again why you think Bezos should consider PRH and the rest of the qig5 as anything but a pain in the backside – and why he shouldn’t treat them as such?

                  “I imagine Bezos just shrugged his shoulders when PRH did that.”

                  Yeah, I’m sure he didn’t mind them killing the momentum that was his ebook and kindle sales, nope, like you say, he just shrugged – before marking them off as not worth his time and went back to running Amazon.

                  Who knows, the next time he worries about them might be to see if Amazon wants to buy any of their backlist when they get the rest of the way out of the business.

          • Amazon makes a profit on sales of PRH products.

            That is very different from: “Amazon is providing a service to PRH, who pays Amazon to sell their goods. “

      • Uh, all the randy penguin gets from Amazon is cash.
        What else is Amazon supposed to provide and why?
        They are customers of the publishers; they buy a product and resell it.

        As is, Amazon already spends a lot making up for publisher inefficiencies: they send their own people to pick up the books instead of waiting for the publisher (or distributor) to deliver them.

        What else is needed?
        The whole conspiracy came about because the publishers wanted to usurp Amazon’s business decision power and puppet-master them, the way they control other, smaller retailers.
        They have no such right.

        Just as Amazon has no right to usurp the publishers editorial power, which I haven’t heard anybody credible claim they are doing.

        B&N in their prime, however, did usurp publishers’ prerrogatives: they used to tell publishers how to change their covers if they wanted access to their shelves. And Walmart used to require bawdlerized/censored versions of music CDs.

        Is that the kind of “help” Amazon should provide? An extra layer of content gatekeeping?

        I don’t think that is ever going to happen: Amazon is about reducing “friction”in commerce, not adding hoops to jump through. Their input is purely binary: they either buy it or they don’t. They do not meddle in product content.

        Why should they start now?

        For that matter, since pbook publishing is a flat, stagnant business, why should they help one supplier at the expense of other suppliers? Why make themselves more dependent on the randy Penguin? Amazon’s entire strategy since 2010has been to diversify their business so no supplier can force them to do anything they don’t want to.

        • All depends on your point of view and how Bezos wants to run his business. I would say that Amazon provides a retailing service to suppliers and consumers, publishers and book buyers among them. I come from a service management background, so that colors my view. In service management, it’s good business to tailor your service to your best customers. You offer the same service to all customers and make sure that service is exactly what your best customers will end up paying you the most for. Looking at the milieu from which Amazon arose, I would guess that is how Amazon approaches their business.

          • “… it’s good business to tailor your service to your best customers.”

            You’re assuming Amazon should consider the randy penguin as even a ‘good’ customer. One that deliberately reduced the sales of their ebooks through Amazon (they were getting the same pay for each ebook sale no matter what price Amazon sold it at.)

            I don’t know about Jeff, but a customer that does everything they can to hurt/reduce my business and sales is not a ‘best (or even a good) customer’, and if I could replace them with a better customer I would (which might help explain KU and how easy it is to self publish on Amazon. 😉 )

            MYMV

            • Ordinarily, a provider judges how good a customer is based on how much they make off them, not what they could make. A customer who does not take your advice is difficult, but that should not get in the way of making money off them. As someone who had to deal with some self-defeating large customers, I wish you were right. I imagine Bezos does not like PRH, but he is glad to take his profits from their sales through his service.

              • “I imagine Bezos does not like PRH, but he is glad to take his profits from their sales through his service.”

                Correct, but what’s that got to do with you thinking Amazon should treat PRH like a ‘best customer’ when they obviously are not acting like one by reducing Amazon sales by overpricing ebooks and locking the price with agency?

                With B&N sinking fast, I expect next year to get real interesting for trad-pub. 😉

              • Does PRH send Amazon a check to pay for the service Amazon provides to PRH?

          • Bezos makes it repeatedly clear that his primary allegiance and focus is to the people who give *him* money and not to the people he gives money to. 🙂

            “Consumers are hard to attract and easy to lose.”

            • We are in the 21st century. I am suggesting that Bezos thinks his suppliers are also customers. He certainly seems to think of his SMB suppliers as customers. He is as dependent on suppliers as consumers. Is it a stretch to think of PRH as a customer? Not to me.

              • Is it a stretch to think of PRH as a customer?

                Of course it’s a stretch. Amazon pays PRH for goods. That makes Amazon the customer and PRH the seller.

                Consumers pay Amazon for books. That makes consumers the customer, and Amazon the seller.

                Follow the money.

              • The legal system considers Amazon a customer: First Sale Doctrine.

                Ownership moves from publisher to retailer to consumer; publisher sells to retailer who sell to consumers.

                • We’re pretty deep in the rathole here, and I’m afraid we will have to agree to disagree.

                  I see nothing in First Sale Doctrine that prevents Amazon from managing its business as a service rather than as a classic retailer. When I read Amazon annual reports and Bezos’ letters, I hear the tropes of a service provider. The concept that everyone, both suppliers and consumers, are Amazon’s customers seems to be the essence of the Bezos philosopy.

                  When I look at Amazon’s decisions, they make sense as the decisions of a service provider managing services. In my relationship with Amazon as a minuscule self-publishing author of both digital and physical books, I look at them as providing a retailing service for my publishing establishment and consider myself an Amazon customer.

                  However, I certainly respect other views and the broad knowledge that has surfaced in this argument.

                • Ah, but your relationship with Amazon *isn’t* the same as the tradpubs. To *you* Amazon is a distributor and *you* pay them 30% of your gross (sometimes more) for the distribution services they provide to you. Amazon never owns the books. Not even the print books so First Sale doesn’t apply.

                  With tradpub, the books become Amazon’s property the moment Amazon trucks show up at the publisher’s warehouse. They then are transported, warehoused, and *taxed* as Amazon property. (This last is one reason why the publishers don’t even dream of doing pbook agency. Inventory taxes.)

                  Remember, Amazon’s business was ramped up thanks to Net 30 days. They took in orders, *bought* the books on credit, resold them, and waited for the credit card processor to pay them. Out of those payments they paid rent, staff, and bought infrastructure to grow the company.

                  The only change is they now buy the books direct from the publishers. Note that even Shatzkin refers to Amazon as the publishers’ biggest *account*. No supplier, not partner, but account.

                  Now, these days Amazon sells office supplies, office equipment, even advertising, or even some POD, so it may be that some publisher’s office buys some products or services from Amazon, on the side, but the primary relationship on the publishing side is as a customer.

                  Every time you hear the publishers whine about Ama,on as a monopsony, they are whining about Amazon’s purchasing power, not their retail power.

                • I see nothing in First Sale Doctrine that prevents Amazon from managing its business as a service rather than as a classic retailer.

                  Of course it doesn’t prevent them. But observation shows they don’t do it.

                  Tropes tell us nothing about what they are actually doing.

                • To *you* Amazon is a distributor and *you* pay them 30% of your gross (sometimes more) for the distribution services they provide to you.

                  I pay Amazon nothing. They pay me. I have never written a check to Amazon, and have never sent a wire transfer to Amazon. I have never booked any expense relating to a payment to Amazon.

                  When I sell a book for $2.99, I do not report $2.99 as revenue. I report only the money Amazon pays to me. This is the amount on the 1099 Amazon sends to me and the IRS.

                  When it’s not my money, and I have never had the money, I can’t pay it to anyone. It’s not my money until Amazon sends it to me.

                • Oh, you pay Amazon.

                  They just take their cut directly when remitting your accumulated earnings. Part of the services you’re paying for is credit card processing. It’s a multipronged service: storage, (some) marketing (at their discretion), bill processing, etc.

                  While lots of people refer to KDP payments as royalties, the actual process is reversed. They’re forwarding your earned money, not paying you out of their pocket.

                  That is why after accidentally enrolling some Audible audio books in KU without permission they paid full retail. They had no title to those books and were liable for a nasty lawsuit.

                  Again, it’s all a matter of who owns the content at which stage of the supply chain.

                • They’re forwarding your earned money, not paying you out of their pocket.

                  It’s not my money until they give it to me. The $2.99 the consumer pays for the book is not my money. I expense none of the $2.99. Who here does? Who books revenue in excess of the 1099 Amazon sends?

                  It’s not a matter of who owns an eBook. It’s a matter of the contractual terms in my agreement with Amazon.

  3. uh-huh. Contrast this with PG’s post “Pearson to Sell Stake in PRH”,or the one about the change in terms to libraries for e-book, or the refusal to discuss how well they do in the ebook market.
    Color this reader skeptical.

    • Or the new editorial policies that chased Nora Roberts away.
      If that is perfection, the alternatives must be truly awful.

      • I suppose the real question is, “‘Perfect’ from whose point of view?” Nothing in that excerpt there suggests that it’s from the point of view of the authors or the readers.

        • From ‘The New Republic’s’ point of view of course. Penguin Random House’s actions have given them something to blog about.

          It might be total BS, but it filled a space and PG thought it funny enough to place it here for us to poke fun of.

          So in that context it is indeed ‘Perfect’.

      • Felix,
        I’m curious.
        How did Penguin Random House change their editorial policies?

        • KKR has several posts at her site on what she calls the hamster wheel of doom.

          https://kriswrites.com/2018/08/15/business-musings-writers-and-the-hamster-wheel-of-doom/

          She has also alluded several times over the past couple of years of how the randy penguin has reduced its output, cutting out a lot of proven sellers.

          One report filtering out through the NDAs and Omerta is that editors want successful writers’ new books to be *exactly* like the older books. No exploring new themes, trying new styles or genres. Zero leeway. Authors are treated as employees under work for hire contracts. Extreme pigeon-holing.

          It’s just gossip but there is some evidence.

          All that, on top of the lower advances.

          • All consistent with a plan to take as much cash out of fiction as possible before withdrawing from the fiction market. Risk is not part of the plan.

            • There you go again with your imaginary plan.

              How many years do they get to go on, never showing any sign of withdrawing from the market, before you admit that they have not been planning to withdraw from the market?

              • I’ll guess you also believe that B&N is actually trying to stay in business and old whats-his-name isn’t trying to ride it into the ground – right?

                • The two cases are not remotely comparable. B&N is going broke, and paying dividends with borrowed money. (Why the lenders agree to this, I cannot imagine, but there you are.) Big Publishing is using its free cash flow, plus, presumably, other money, to continue its M&A activity. That’s the strategy for staying in a shrinking market.

                • That’s the strategy for staying in a shrinking market

                  Staying in a shrinking market means shrinking… and shrinking, and shrinking.

              • If anything, the evidence shows a classic “shrink to survive” strategy, focusing on past products rather than on future growth alternatives.

                Unlike Hachette, they haven’t been buying up small publishers lately, have they?

                They’re not waiting to be as financially stressed as say, SEARS, but it is the same strategy. Reduce operating costs, ditch “marginal” performers, minimize risk, squeeze suppliers.

                Classic downsize strategy.

                There’s more than one way to read the tea leaves.

                • Shrink to survive is a strategy for departing the market. The object is to take as much cash as possible, for as long as possible, without any making new investment.

                  Concentrating on the tried-and-true eliminates investment risk.

                • The best exit strategy is “find a bigger fool”.
                  Which is what Torstar did.

                • That’s an excellent strategy, and I suspect they would jump if it was offered. But, then we just discuss how the same economic pressures will affect the new owner. Same game. Different players.

              • How many years do they get to go on, never showing any sign of withdrawing from the market, before you admit that they have not been planning to withdraw from the market?

                A thousand years? They just keep shrinking, curtailing investment, eliminating authors, and taking as much cash as possible from the market. It’s asymptotic market withdrawal.

                Meanwhile, authors will continue to criticize them for not taking steps in keeping with authors’ chosen objectives for the publishers. Publishers have different objectives, but it’s helpful to have authors think authors know best.

                • Your hypothesis is unfalsifiable and therefore void. No matter what publishers do, you will interpret it as part of their withdrawal from the market. No wonder you have never been able to present any evidence that this is what they are actually doing: there isn’t any, but you don’t need it. You are a True Believer in your own personal religion.

                • You are a True Believer in your own personal religion.

                  Indeed I am, and my followers are shrinking day by day.

  4. “Random House’s top brass insisted that there was no need to panic. “The continuity will far outweigh the change,” Markus Dohle, the CEO of what would become Penguin Random House, told The New York Times when the merger was completed the following summer. “We have the luxury to take the time before we make any strategic decisions. There is no need to rush.””

    Funny, those same words were said by the captain of the Titanic to the passengers and crew after they hit that oversized ice-cube.

    The only people that need fear PRH’s actions are those writers that signed contracts with them, and to a lesser level those working for PRH (you can go finds another job if fired, but those contracts can be sold to other publishers like kids trade playing cards …)

  5. Penguin Random House uses consumer data and information from Goodreads to help acquire prospective bestsellers, which then get the promotional benefits of Penguin Random House’s size and influence

    Unsaid in the article is whether or not PRH is paying to access this data. Anyone know? I can’t imagine GR is giving their data away, but perhaps PRH is scraping it somehow and doing so at no cost.

    Anyway who owns GR, again? Oh, right.

    These include the Kindle Unlimited e-book subscription service, which has taken over genre publishing, and Audible, which has a stranglehold on audiobooks, the industry’s most important growth sector.

    This is the first public acknowledgement I’ve seen in legacy media as to how successful KU has been. (Whether this is a good thing, whether it is profitable being entirely separate issues, of course.) Just thought that was kind of interesting. Next they’ll be admitting customers are price sensitive or something equally heretical.

    • “…Penguin Random House uses consumer data and information from Goodreads to help acquire prospective bestsellers…”

      I wonder how much they pay Amazon for this data? Or do they make some poor intern comb through the lists? Or has DataGuy made an app for it? (My money is on un-paid interns.)

      “…the Kindle Unlimited e-book subscription service, which has taken over genre publishing…”

      WOW! I never thought they’d admit it. Never in a million years. But here it is – only a decade or so after the Kindle was introduced – it’s official.

      • “I wonder how much they pay Amazon for this data? Or do they make some poor intern comb through the lists? Or has DataGuy made an app for it? (My money is on un-paid interns.)”

        They use the ‘WAG’ system. (Wild A$$ed Guesses)

        • I agree.

          I haven’t noticed any ‘blockbusters’ since “50 Shades” came out. WAG doesn’t seem to work so well.

          I HAVE noticed that “La Nora” has jumped ship. THAT got my attention. If she’s unhappy enough to leave, they have to be utterly stupid to let her go.

          • Like 50 Shadows and that guy staying on Mars, they (and nobody else) really knows what will take off or why.

            Blockbusters aren’t happening because trad-pub can’t simply ship books to bookstores and claim they’re ‘sold’ – Amazon reports actual ‘best seller’ ranks – which trad-pub and others can’t game.

            As far as those jumping the trad-pub ship, many of them are finally realizing that trad-pub isn’t being nice to them, from low/no royalties to pricing their ebooks to not sell, it’s time to move on.

          • Authors are disposable, haven’t you heard?
            No shortage of dreamers.
            They can do as told or walk.
            Oh, wait…
            …Roberts did walk! 😉

            • And they let her go. That is consistent with a strategy of exiting the market. They could have bent to keep her. They didn’t.

              • It is also consistent with somebody royally screwing up and letting tens of millions walk out the door into a direct competitor’s clutches. Not exactly maximizing returns there.

                And she was so disposable that two years later they have no replacement and they just reported a noticeable profit drop. Bet those extra sales would’ve helped. When a woman with 200 titles and well over 400 million units sold walks, the bottom line notices. Hachette’s certainly did.

                Even by “the wisdom of the BPHs” that was a self-inflicted wound. Sometimes a cigar is just a cigar and a screwup is just a screwup.

                No spin possible.

                • It is also consistent with somebody royally screwing up and letting tens of millions walk out the door into a direct competitor’s clutches.

                  Sure it is. We can also presume a decision of such magnitude was made by a single person, and was not subject of discussion my higher management. We can also presume those who decided knew what the subsequent two years would bring.

                  I’d be interested in a rational explanation for their conduct other than screwing up.

  6. Penguin Random House uses consumer data and information from Goodreads to help acquire prospective bestsellers, which then get the promotional benefits of Penguin Random House’s size and influence

    Unsaid in the article is whether or not PRH is paying to access this data. Anyone know? I can’t imagine GR is giving their data away, but perhaps PRH is scraping it somehow and doing so at no cost.

    Anyway who owns GR, again? Oh, right.

    These include the Kindle Unlimited e-book subscription service, which has taken over genre publishing, and Audible, which has a stranglehold on audiobooks, the industry’s most important growth sector.

    This is the first public acknowledgement I’ve seen in legacy media as to how successful KU has been. (Whether this is a good thing, whether it is profitable being entirely separate issues, of course.) Just thought that was kind of interesting. Next they’ll be admitting customers are price sensitive or something equally heretical.

    • And those of us writing mainstream are ready to follow – it just takes us a little longer.

    • KU being profitable?
      For whom? Authors or Amazon?

      Authors it’ll vary by individual but Amazon we can almost certainly assume is making a profit. It’s been 4 years of steadily increasing monthly payouts. It’s hard to imagine a strategic reason for dishing out $300M a year in author payouts when they own 75-80% of the sales segment.

      As a pure wag, I’d guess KU is running some 3-5M subscribers. With a low probability shot at 8M.

      • If authors didn’t think KU was profiting them they’d get out of it. (I’d try it but my work is elsewhere as well. 😉 )

      • As a pure wag, I’d guess KU is running some 3-5M subscribers. With a low probability shot at 8M.

        That would be $30M-$50M a month in KU subscriber fees (minus free-trialers, of course). With Amazon paying out $23M/month for KU page reads, your wag #’s would imply that KU is already quite profitable for Amazon.

        I’d put my money on Amazon running KU closer to breakeven, so I’d peg it at more like 2-2.5M subscribers or so. But that’s just another wag…

        • I tried to factor in the monthly bonuses. 🙂

          It all hinges on the percentage of subscription revenue going to authors: 70, 50, or 30%. Or even lower.(?)

          Regardless of the actual number it is millions of the most active readers, now committed to the Kindle ecosystem and, for the most part, Indies. It skews the entire market, leaving competitors to fight mostly over casual and social readers. Over time it will drain cashflow away from tradpub making their revenues more volatile and making them more dependent on lottery winners.

          It is a long game play of steady attrition.

          • I’ve always suspected one of Amazon’s book objectives is to pull tomorrow’s best-selling authors out of the KDP pool. They know what nobody else knows. They know the completion index for every author and eBook in their system.

  7. Two snarky notes:

    (1) KU has “taken over” certain kinds of category fiction publishing, in the sense that KU is now the largest player for certain niches. It all depends on how finely one wants to divide things; neither Tor (a Macmillan, umm, entity*) or DAW (a Random Penguin umm, entity*) has been overtaken as a whole in “speculative fiction” as a whole, for example, but KU probably is the largest player in “speculative fiction erotica.” And the sooner people who don’t know what “genre” actually means stop misusing the term, the sooner we can have an actual conversation with communication…

    (2) “Amazon is [nothing] less than the best thing that has ever happened to traditional publishers and authors of all stripes” in the same sense as cod-liver oil. It’s full of vitamins and other nutrients, but the taste… not to mention the rather subtle class distinctions… but it’s still better for commercial publishers and all authors than would be the absence of Amazon. Hey, there’s a thought: Let’s put some cod-liver oil in Mr Dohle’s coffee to make Random Penguin more perfect! Or maybe not.

    * It’s complicated.

    • If you look at Data Guy’s analysis, you will find that the indie share of SFF, most of which is sold through Amazon, account for something like half of total units sold in the genre, and nearly the same share in dollar terms as the Big Five publishers combined.

      Sorry, Tor and DAW were surpassed years ago.

      • Data guy’s talk at the Nebulas didn’t get the same attention here as the one at RWA but it did shine a lot of light on the state of the field in 2017:

        http://authorearnings.com/sfwa2018/

      • There is also the not-insignificant detail of *where* TOR, DAW, etc, get the bulk of their money from: the deep backlst, the genre “classics”, vs new releases from new voices.

        The evidence shows new voices in SF&F are more often than not going straight to Indie, Inc rather than ride the query-go-round. Just look at the ratio of new releases.

      • Let’s just say that I have longstanding disagreements with Data Guy on how material is characterized… and leave it at that. That’s not to say that the data offered is entirely useless; it is to say that it doesn’t support that conclusion, especially when considering (a) noncompeting subcategories, (b) republication of prior works (a not-insignificant portion of the novel-length segment), and (c) the non-internet shares of sales archly not reported anywhere.* Put another way, the claim that “half of the total units” of what is “in the genre” is on Amazon is comparing apples to aardvarks; it’s not my place to take over PG’s blog to be specific.

        * And buried in royalty statements in a fashion almost impossible to verify or analyze. Don’t think I’m blindly defending commercial publishing practices; I’m just objecting that “the opposite extreme must therefore be correct”-style of conclusion-jumping isn’t warranted, either.

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