Big Publishing

Amazon, a Friendly Giant as Long as It’s Fed

13 July 2014

From The New York Times

Vincent Zandri hails from the future. He is a novelist from the day after tomorrow, when Amazon has remade the worlds of writing, printing, selling and reading books so thoroughly that there is hardly anything left besides Amazon.

Mr. Zandri, an author of mystery and suspense tales, is published by Thomas & Mercer, one of Amazon Publishing’s many book imprints. He is edited by Amazon editors and promoted by Amazon publicists to Amazon customers, nearly all of whom read his books in electronic form on Amazon’s e-readers, Amazon’s tablets and, soon, Amazon’s phones, an author of mystery and suspense tales, is published by Thomas & Mercer, one of Amazon Publishing’s many book imprints. He is edited by Amazon editors and promoted by Amazon publicists to Amazon customers, nearly all of whom read his books in electronic form on Amazon’s e-readers, Amazon’s tablets and, soon, Amazon’s phones.

. . . .

A few years ago he was reduced to returning bottles and cans for grocery money. Now his Amazon earnings pay for lengthy stays in Italy and Paris, as well as expeditions to the real Amazon. “I go wherever I want, do whatever I want and live however I want,” he said recently at a bar in Mill Valley, Calif., a San Francisco suburb where he was relaxing after a jaunt to Nepal.

While Mr. Zandri celebrates Amazon as the best thing to happen to storytellers since the invention of movable type, many other writers are denouncing what they see as its bullying tendencies and an inclination toward monopoly.

. . . .

At first, those in the publishing business considered Amazon a cute toy (you could see a book’s exact sales ranking!) and a useful counterweight to Barnes & Noble and Borders, chains willing to throw their weight around. Now Borders is dead, Barnes & Noble is weak and Amazon owns the publishing platform of the digital era.

. . . .

All of this angst and arguing is pushing forward a question: Is the resistance to Amazon a last-ditch bid to keep the future of American literary culture out of the hands of a rapacious corporation that calls books “demand-weighted units,” or an effort by a bunch of dead-enders and snobs to forestall a future that will be much better for most readers and writers?

Mr. Zandri, who 15 years ago had a $235,000 contract with a big New York house that went sour, has an answer.

“Everything Amazon has promised me, it has fulfilled — and more,” he said. “They ask: ‘Are you happy, Vince? We just want to see you writing books.’ That’s the major difference between corporate-driven Big Five publishers, where the writer is not the most important ingredient in the soup, and Amazon Publishing, which places its writers on a pedestal.”

. . . .

Amazon believes that publishers take too much of the money in producing a book and add too little value. In traditional publishing, the highest royalty a writer could get was 15 percent of the book’s price. With e-books, the royalty is 25 percent of net revenue, but Amazon feels that is still not enough. Mr. Zandri gets 35 percent, and self-published writers who use Amazon’s platform get more.

“Amazon believes the value exchange between publishers and authors is fundamentally broken,” said Scott Jacobson, who worked on the Kindle team at Amazon and is now at the Madrona Venture Group. “In a world where authors can hire their own editors, market their books through the web and social media, and get production and distribution through Amazon or other services, publishers will play a lesser role and their share of the economics will be diminished.”

. . . .

“If you charge high e-book prices, ultimately what you’re doing is making a slow, painful slide to irrelevancy,” said Russell Grandinetti, Amazon’s senior vice president for Kindle. “You have to draw the box big. Books don’t just compete against books. Books compete against Candy Crush, Twitter, Facebook, streaming movies, newspapers you can read for free. It’s a new world. It’s so important not to simply build a moat around the industry the way it is now.”

. . . .

“For most books, $9.99 creates more total revenue than $14.99,” Mr. Grandinetti said. “That means $9.99 creates more total dollars to share with authors.”

Amazon also argues that publishers like Hachette are ungrateful. They are generally doing well now, thanks to the fact that e-book income is bolstering their bottom line. And who made that e-book income possible?

“The truth is, Hachette is making dramatically larger profits on digital sales in large part thanks to Kindle, which has led the book business to a very healthy transition to digital, perhaps uniquely among media,” Mr. Grandinetti said.

. . . .

A decade ago, when all books were physical, Amazon would run the numbers on its suppliers and would notice that one publisher was out of line — perhaps not paying the same amount to Amazon to promote its titles as some of its peers.

So Amazon would talk with the publisher, try to make it see reason. Sometimes it did not. Publishers were arrogant back then, said Randy Miller, who worked at Amazon from 1999 to 2006.

“A lot of people had been in business for 30 years,” he said. “They said: This is what we’re going to publish, this is the price, you have no leverage, we control the content.”

They had no clue that the world was changing. If a publisher did not give Amazon what it wanted, some of its books might disappear from the site. The writers would go wild.

“There were particular authors — we’d meet with them, have dinner with them — and they’d say, ‘I always check Amazon to see where my book is,’ ” Mr. Miller said. “They’d do it over their morning coffee. So you knew.”

. . . .

Another antitrust suit, this time supporting the publishers rather than going after them, might fill the bill nicely.

“I can see the emotional argument against Amazon, but I have a hard time seeing it prevail in court,” said Geoffrey A. Manne, executive director of the International Center for Law and Economics in Portland, Ore. “The argument that there is an appropriate number of competitors, and one is not it, almost never flies in the United States.”

Link to the rest at The New York Times and thanks to Buffy for the tip.

Amazon Gave Panelists Talking Points to Answer Questions About Hachette

12 July 2014

From Time:

On Saturday, Amazon Studios, Amazon’s original video content production arm, will present its upcoming slate of original programming to the Television Critics Association. That line-up will include Bosch, an adaptation of Michael Connelly’s best-selling series of books about LAPD detective Harry Bosch, which happen to be published by Little, Brown and Company, which is part of Hachette, the media company involved in an ongoing and public dispute with Amazon. The dispute has most noticeably manifested itself in shipping delays for Hachette titles on Amazon, but it looks like the retailer is prepared for Bosch to be another reason for consumers and critics to be curious.

TIME received a copy of the talking points provided by Amazon to the Bosch panelists, with suggested answers for questions about the show as well as about the Hachette dispute.

. . . .

-  For a question about how the dispute has affected the series, the suggested answer is that there has been “zero disruption in Michael [Connelly’s] involvement in the series or our filming schedule.”

- For a question about personal feelings about the dispute, the suggested answer is “I don’t know the particulars on that situation.”

Link to the rest at Time and thanks to Patricia for the tip.

Will Amazon’s Revenues Rise $11.2 Million If Hachette Caves?

11 July 2014

From Forbes:

Amazon is trying to force Hachette to accept a smaller share of the cash Amazon gets when consumers use it to buy e-books written by Hachette authors. Although the war of words is loud, what investors need to know is how much the outcome of that war is likely to affect Amazon’s financial condition.

My guess is that it will be worth $11.2 million in additional revenue for Amazon — .014% of Amazon’s $78 billion in revenue. In other words, from an investment perspective, this wordy dispute is much ado about nothing — unless winning this dispute forces all the other publishers to cave.

Amazon is trying to change the terms of its e-book contract with Hachette — I am guessing for the purpose of putting more of the reader’s money in its pocket — which means Hachette gets less.

. . . .

This situation would make a great business school case.

. . . .

And to analyze the financial impact the outcome of this dispute is likely to have on Amazon, it is helpful to trot out the idea of expected value — where an analyst envisions different possible outcomes of the dispute, estimates the payoff of each outcome, and guesses at the probability of each scenario actually happening.

The expected value is what you get by multiplying the probability of each scenario by its payoff. Of course applying the expected value concept is made difficult by the fact that nobody can predict the future — casting doubt on the realism of the numbers made up to do the analysis.

My conclusion is that the expected value of Amazon’s e-book battle with Hachette is $11.2 million in additional revenue for Amazon. This is based on a 10% probability that Amazon will get Hachette to give it 50% — worth $32 million plus the 50% probability that Hachette will agree to give Amazon 40% — worth $16 million, plus the 40% chance that Hachette will stand firm — worth nothing more to Amazon.

. . . .

According to Amazon.com’s Brittany Turner, “You have to look at the parent company — Lagardère Group — rather than just the Hachette division. Kindle books are only 1% of Lagardère Group’s sales. They can afford it, and should stop using their authors as human shields.”

Link to the rest at Forbes

Konrath and Eisler vs. Richard Russo: The Sequel

11 July 2014

From Joe Konrath:

Think the Authors Guild really has all writers’ best interests in mind?

Richard Russo, who in a previous Authors Guild letter tried to show he was attempting to win a second Pulitzer Prize, this one for Not Knowing What He’s Talking About (I’m sure that’s a category), is adding to his bowl of fail with this new letter, sent to Guild members.

So, contrary to what anyone could have possibly expected, Barry Eisler and I fisked it.

. . . .

Russo: The primary mission of the Authors Guild has always been the defense of the writing life.

Barry sez: One of my favorite things about Russo is the way his real priorities leak through no matter how much he tries to mask them in high-minded verbiage. Because yes, what Richard Russo and the “Authors Guild” want more than anything is to preserve a certain lifestyle — the lifestyle that comes with being anointed by a legacy publisher, becoming a member of an exclusive club, and getting to write full-time from the proceeds. The lifestyle that’s theoretically available to everyone but that is in fact doled out to only a tiny fraction. And if that sounds familiar, it’s because it is. We’re talking about a one-percent economy, where the one percent’s lifestyle is achieved at the expense of the other 99%. I’m sure when Lloyd Blankfein argues for the merits of the system that landed him at the head of Goldman Sachs, he makes the same sorts of arguments Russo makes in all his missives to members of the Authors Guild. Because the worldviews are identical.

Russo: While it may be true that there are new opportunities and platforms for writers in the digital age, only the willfully blind refuse to acknowledge that authorship is imperiled on many fronts.

Joe sez: I would have liked it if he said something like, “authorship is sinking”, which would have acknowledged he is indeed winking and nudging about how stupid that comment was.But he isn’t winking. He is, unfortunately, serious.

There is not a single front where authorship is imperiled. Not one. In fact, more people are publishing books than ever before (Bowker noted a 400% increase in the last five years). This is because every single one of those authors now has a chance to reach readers and make some money.

Richard, if you believe “authorship” is “signing your rights away for your lifetime plus seventy years to a legacy house” then use that precise definition. Because if every legacy publisher suddenly disappeared, authorship would still exist.

Last I checked, I wasn’t blind, willfully or otherwise. It’s interesting you use that term, because it perfectly describes your myopic confirmation bias. Barry Eisler justblogged about this very topic, namely the inability for those within an establishment (in this case, the legacy publishing industry) to rationally judge opposing viewpoints from outside that establishment due topsychological projection. You are the one who is willfully blind, Richard, and yet you are saying those who disagree with you are willfully blind. Who else but one blind would even suggest authorship is imperiled when more writers than ever are making money?

Barry sez: I just have to add… “While it may be true that there are new opportunities and platforms for writers in the digital age”…? Russo isn’t sure? This is just a hypothetical possibility he’s heard sing of from seers and psychics? What can you say about a person who thinks this “may” be true? It’s like someone saying the earth “may” be round.

. . . .

 Russo: We believe that ecosystem should be as diverse as possible, containing traditional big publishers, smaller publishers, Amazon, Apple, Barnes & Noble and independent bookstores, as well as both e-books and print books. We believe that such an ecosystem cannot exist while entities within it are committed to the eradication of other entities.

Joe sez: I’ll translate for those who don’t speak Legacy Archaic: We don’t want things to change even though they’re changing, so we’ll fight for the old way of doing things–you know–the way we’re comfortable with that made us wealthy and feel special.

I’m all for diversity. I love having multiple choices as an author. But that’s not up to me. It’s also not up to any author.

It’s up to readers. They are deciding how and what they want to buy.

For over fifty years, publishers have been able to control the situation. They decided which authors to publish. They decided which books would be read. They decided on the price. They released hardcovers a year before paperbacks to make as much money as possible. And they were able to give authors unconscionable contract terms. All because they were the only game in town. An oligopoly.

But since Amazon, an outsider, came along, the shadow industry of self-publishing has given readers, and authors, a choice.

The Authors Guild should be thrilled with this. But instead, they continue to act like the “Legacy Publishing Industry Guild” bravely defending the status quo.

And Richard? For the majority of authors, that status quo kinda sucked.

Link to the rest at Joe Konrath

Amazon/Hachette

11 July 2014

Author’s Guild president to Amazon: No, thanks. We don’t want your money.

11 July 2014

From The Washington Post:

The contract dispute between Amazon.com and Hachette Book Group has delayed the shipment of thousands of titles. The battle took another turn this week as Amazon reached out to Hachette authors with an offer to immediately begin offering the delayed books again and give its share of Hachette digital book sales to the authors for the duration of the dispute — if the publisher would also forgo its share of the revenue.

What do authors think? Authors Guild president Roxana Robinson isn’t buying it, saying the offer is merely a tactic to bully the publisher into conceding to unfavorable terms.

When presented with that argument, Amazon said in a statement late Wednesday that writers against the deal, such as Robinson, are “conflating the long-term structure of the industry with a short-term proposal designed to take authors…out of the line of fire.”

. . . .

Robinson took some time Wednesday to chat by phone with The Washington Post about the guild’s position on the offer from Amazon.

. . . .

What’s your reaction to this Amazon proposal?

Generally speaking, I think that authors are still stuck in the middle of this, which is disheartening because we supply the product. We supply the books, which both Amazon and the publishing houses need.

The Amazon letter didn’t really take us out of the middle; it asked us to take sides against our publishers. It also seems to assume that what we really want is a short-term windfall, which is what we get if Amazon asked Hachette to give up revenues from e-books. But we want a healthy publishing ecosystem, a system of commerce in which we’re not trying to kill each other or drive each other out of business.

What would that system look like?

I think, at the moment, that because Amazon has such a huge share of the market, it would be great if there was some other force brought to bear on it to break it up.

. . . .

I’ve been in touch with other people at the Authors Guild. We’re trying to represent everyone, which includes those authors who are self-published and trying to protect them as well. And we’re looking toward the long-term; we want the best arrangement possible for writers in the future.

Link to the rest at The Washington Post and thanks to Daniel for the tip.

Indie authors to Author’s Guild president: No, thanks. We don’t want your help.

To NYU Publishing Students: A Shifting Publishing Landscape

10 July 2014

From Digital Book World:

A few weeks ago I was lucky enough to participate in New York University’s Summer Publishing Institute. I put together a panel about new business models in book publishing with folks from Diversion Books, Scribd and Librify.  But before we had a panel discussion, I spoke for a few minutes about the topic at hand to set the stage.

. . . .

We’re here today to talk about business models for book publishing, something that would have perhaps been absurd to have a panel discussion about as recently as ten years ago. The book publishing industry today, however, is vastly different than it was then.

Let me give you just one data point to start off. According to a new report that came out just yesterday, the U.S. trade publishing industry was just under $15 billion last year – and $3 billion of that was ebooks.

It’s astounding if you think about it. I’m not sure what amazes me more about that: that in a few short years from the launch of the Kindle in 2007 until now that a stable, $3 billion business has arisen; or, that unlike that newspaper, magazine and music industries, the big companies that create most of the content didn’t get decimated in the process.

Big book publishers – and even some of the smaller ones – are more profitable today than they’ve ever been, in fact. Ebooks cost less to produce and distribute than print books and so companies that have invested in ebooks and seen ebook sales grow have seen their profit margins grow as well.

. . . .

[B]ook publishing today is an incubator of new ways of doing things and there are dozens, maybe even hundreds, of new companies that have sprung up to with that in mind.

. . . .

After you leave this room this morning, each and every one of you could publish and distribute a book – your own book, one you’ve written – to millions of potential readers, with just a few clicks.

And if you’re good and you’re lucky, you could make a lot of money doing it.

. . . .

This is another trend that has given rise to new business models in book publishing. For those of you in this class hoping to go on to a career at a big publisher like Penguin Random House or HarperCollins, you might not think this has anything to do with you. Well, Penguin Random House owns Author Solutions, the largest self-publishing services provider in the world. And for those aspiring acquiring editors, the next time you bid on a book, know that you’re bidding against other publishers as well as the ability for the author to publish it herself.

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

PG recalls that NYU undergraduate tuition and living expenses run around $40,000 per year. He hopes not a lot of student loan payments are going to depend upon an income from traditional publishing.

Did Judge Denise Cote accidentally screw Amazon?

10 July 2014

From Melville House:

Well, hell, no sooner do I chide big publishing for not speaking out about what’s really behind the war between Hachette and Amazon, and for issuing a series of “no comments” just like Amazon notoriously does, than suddenly everyone’s talking! Of course, my point remains as valid as ever — they’re just hurling “baloney!” at each other, as another of today’s MobyLives reports details more closely. Neither party is making honest, substantive statements about what they each stand for, and what’s really at the heart of their dispute. It’s all so much positioning to win a publicity war.

. . . .

The general speculation — and it is speculation — is that Hachette wants to return to agency pricing, and that Amazon is adamantly opposed to that, because agency pricing would prevent the kind of discounting that Amazon has used to gain overwhelming domination of the marketplace. Agency pricing, see, is the pricing model whereby publishers can set the price of their own books, which would thus allow them to stop the drastic loss-leader price reductions employed by Amazon, which publishers feel are not only in violation of fundamental antitrust laws, but are also driving prices below production costs, not to mention devaluing books in general.

. . . .

Most people in the book industry — as well as most people with opposable thumbs — consider Judge Denise Cote‘s bizarre decision against Apple and the publishers in that case as a kind of government sanctification of Amazon’s monopoly over the book business. But could it be that, in the end, her judgement is actually giving Apple a huge competitive pricing advantage over Amazon?

. . . .

In a report for Goodereader Mercy Pilkington proposes exactly that, by noting that Judge Cote’s decision actually prohibited Apple from using the agency pricing model with publishers for two years, meaning that in the interim it could indeed go ahead and do the kind of discounting that agency prevents — and that Amazon would be blocked from doing under the agency model deal now supposedly being demanded by Hachette.

According to Pilkington,

Hachette wants Amazon to have to submit to the no-discount policy of agency model pricing, knowing full well that Apple is legally bound to not enter into that agreement and can therefore discount ebooks all it wants to. Amazon will be held to whatever price Hachette decides to charge, while Apple can set its own prices, including selling titles at a loss.

Link to the rest at Melville House and thanks to William for the tip.

PG would note that Apple has given the Second Circuit Court of Appeals a couple of opportunities to reverse or modify Judge Cote’s decision and the Second Circuit has declined to do so. Perhaps the judges there do not have opposable thumbs.

UK author income survey: Another publishing bombshell

9 July 2014

From Futurebook:

The key survey revelations commissioned by the UK’s Authors’ Licensing & Collection Society (ALCS) — with full details to come in the autumn — can be expected to ratchet up an already acute sense of tension between the US-UK creative corps and the corporate entities that publish it.

And while it’s easy to criticise a base of authors squabbling amongst themselves as their leadership explores the potential for labour organisation — just two days ago, the growingly influential Hugh Howey asked Do Writers Need a Union? — a look at the ALCS figures being debated at the House of Commons this evening in Westminster should wipe the smirk off the face of anyone who wants us to believe he or she cares about literature and its artists.

Here, in professionally gathered and analyzed clarity, is what a fast-rising force of newly empowered authors will be quick to slam as the shameful gap between the publishing industry’s avowed reverence for fine writing and its willingness to pay a living wage for it.

As we hear in first comments from the Society of Authors’ Nicola Solomon to The Bookseller, we are coming face-to-face with a remarkable contradiction in concepts of corporate responsibility. Here is an industry which, as Solomon puts it, knows authors to be “100% necessary to the process” — and yet, many will say, views those authors as not worth the job security provided to day labourers and nannies.

. . . .

My colleague Sarah Shaffi has the full story on the new ALCS study, commissioned from Queen Mary, University of London, and her report is here: Typical author earnings ‘dropped to £11,000 in 2013′.

Her report includes an interesting point made by the ALCS about self-publishing. She writes: “A quarter of those who took part in the research had self-published, ‘with a typical return on their investment of 40%.’ The ALCS said the mean investment recorded by this group was £2,470 ($4,230) £500 ($856) median. Nevertheless, of those who self-published, 86% said they would do so again.

. . . .

[T]he novelist Joanne Harris — who joined us Friday in our #FutureChat live discussion — is quoted by the society as saying, “It’s good to see that finally we’re becoming aware of just how little the average author earns.”

Yes, it is.

When seen as one in a series of major industry jolts this year, the importance of such surveys as this new one commissioned by the UK’s ALCS becomes all the clearer. So do the raw nerves and hair-trigger reactions we’ve seen in recent days around assertions and counter-assertions relative to the Amazon-Hachette negotiations.

We may never have been this close to actually seeing just how badly a writing career can pay.

Even the recent angry in-fighting among authors, themselves, takes on new context when you consider how truly hard their path may be. However unhappy the news from the ALCS surely seems, if we are to claim an authentic commitment to the arts and letters of our culture, we cannot turn a blind eye to either the difficulty we have in understanding how our authors are paid — or not paid — or to the dreadful evidence coming in anew of almost preposterously bad remuneration.

Link to the rest at Futurebook and thanks to Ben for the tip.

HarperCollins Pivots to Sell Print and Ebooks Directly to Readers Through Main Website

9 July 2014

From Digital Book World:

HarperCollins has relaunched its website and, in a way, its business.

The company is now selling all its book, ebooks and audiobooks directly to consumers through HarperCollins.com.

“We are excited to be able to offer an e-commerce solution to our authors, ensuring their books are always available to their fans,” said chief digital officer Chantal Restivo-Alessi in a statement. “As a publisher, we want to offer as many paths to the consumer as possible.”

Link to the rest at Digital Book World

PG says in the old days, this sort of action would receive a swift order from Barnes & Noble to stop competing with HC’s retailers. It shows that Barnes & Noble doesn’t carry much swat any more plus a lame attempt to gear up for a battle with Amazon in the future.

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