From bestselling author Barry Eisler:
A lot of conversation in and about the publishing world is fixated on fear of Amazon’s purported potential monopoly power—on the possibility that Amazon will eventually enjoy such market dominance as a publisher that it will abuse its position and begin to punish authors, perhaps with extremely low royalties. Which leads to aquestion I’m not sure I can adequately answer, though I find it fascinating:
Why all the fear about what Amazon might do in the future, when legacy publishers are doing those fearful things right now?
Today, Amazon pays self-published authors 70% of the retail price of titles sold on the Kindle Store through Amazon’s Kindle Direct Publishing. Legacy publishers, by contrast, pay their authors 17.5%. Now, certainly 17.5% is appallingly low. But if appallingly low royalties are your concern, why would you expend so much energy speculating about a lower royalty that might eventually come to pass, while caring so little about the extremely low royalties in effect today? It’s like panicking about possibly getting sick in the future while failing to treat the pneumonia killing you right now.
I know from experience that some people will respond to the paragraph above by claiming New York publishers are not a monopoly. After all, don’t the big houses fight with each other over new manuscripts? Aren’t there sometimes bidding wars over a hot new property? And they even poach each other’s employees and authors, too. So of course there’s competition, right?
No. Everything I just described is, relatively speaking, a distraction—Kabuki competition, not the real thing. If the legacy houses actually competed with each other—if they actually strove to attract authors and serve readers and lower costs and improve performance—the publishing world would not be universally characterized by the following:
• An identical, lock-step, onerously low 17.5% digital royalty rate
• The practice of forcing readers who prefer digital to wait, sometimes for over a year, until a title is also ready to ship in paper
• Digital retail prices equivalent to paper ones despite the obvious lower costs of digital distribution
• Byzantine and opaque royalty statements, delivered twice-yearly as much as six months after the end of the applicable reporting period
• Non-compete clauses that attempt to preclude authors from meaningful control over their own professional and artistic destinies
• Morbidly obese contracts delivered months after agreement on high-level deal points, written in unendurable legalese and drawn up in nine-point font on 14-inch legal paper, the only purpose of which is to intimidate authors into not reading the document, and to obscure the meaning of what’s written just in case they do
• Payments tendered months after they’ve come due
• A refusal to share sales data with authors, even though authors have long clamored for such information and the web technology to provide such access was already old a decade ago.We can argue about whether the system I just described is properly known as a monopoly, or as a quasi-monopoly, or as a cartel. What can’t be argued is that such a system is only possible—indeed, is only conceivable—in the absence of meaningful competition.
. . . .
Which brings us back to my original question: why are so many authors afraid of a possible monopoly while sanguine about a real one?
I can think of several possibilities.
First, fear is a powerful emotion, and, as Gavin de Becker observes in his superb The Gift of Fear, is by definition related to something that hasn’t happened yet. Once the feared thing has happened, we’re no longer afraid of it. New York’s quasi-monopoly is a longstanding and accomplished fact; therefore, it can’t be feared (though it can be loathed). By contrast, Amazon is relatively new in publishing. Whether it will attain and abuse monopoly power is currently unknown, and therefore is something people can fear. It may be that because of the nature and survival value of fear, the mind ascribes greater weight to potential threats than it does to actual problems, and this difference might explain the skew between fear toward Amazon and acquiescence to New York.
Second, and perhaps related, is the concept of the devil you know. Sure, New York functions as a cartel, but it always has, and people are accustomed to it. It seems normal. Amazon, by contrast, is unknown.So hey, your husband beats you, but it’s been going on for a long time and you’ve survived. Do you really want to divorce and remarry? Maybe the new guy will beat you, too. Maybe the beatings will be even worse. Better to stick with what’s familiar.
. . . .
Will the New York houses be able to shake off their torpor and rebuild their businesses based on more enlightened practices? It’s hard to say. The same monopoly that protects a company’s profits also withers its strength and adaptability. A company coddled by monopoly is like a fighter who never trains—who never even fights. Will a company like that be able to answer the bell when a real challenger enters the ring? I don’t know.
What I do know is that a vigorous new player just kicked open the locked door of a dark and moribund fortress and is finally letting in some sunlight. If you see a better way than Amazon to reform New York’s previously unassailable quasi-monopoly and all the suboptimal business practices that monopoly has enabled, I’d like to know what it is. In the meantime, I welcome Amazon and any other new entrant that can continue to loosen the legacy houses’ monopolistic grip,and force them to rely on practices beneficial to authors and readers rather than on monopoly rents beneficial only to themselves.
Link to the rest at Joe Konrath’s Blog
Hmm, publishing houses having a monopoly? I think they are more of a cartel. Aside from that I agree that a lot of fuss is made over Amazon’s monopoly. Amazon cannot monopolize the Internet because the Internet has no borders. (no pun intended) To survive on the Internet, you must be the fastest, the cheapest, and the easiest.
Good points, DG. It’s hard (perhaps impossible) for anyone to build a permanent monopoly on the internet. Everyone who has more than 10-11 years’ experience with the net can name former dominant players that are also-rans today.
I read this too on Joe’s blog and Barry is so right. The analogy of worrying about getting sick in the future instead of treating the pneumonia you have right now is dead on.
Little of which discussion actually addresses what I see as Eisler’s point, and much that illustrates it. Battered Writer’s Syndrome is alive, well, and pervasive.
Is it possible that, some time in the future, Amazon might become as abusive as the present-day legacy publishers? Damn straight it is. Business models can and do change — we are, after all, one and all indignant that the Big Six haven’t changed theirs — and companies grow and shrink and change their practices, especially when their founders go elsewhere (whether or not the “elsewhere” includes angels and/or devils).
But they haven’t done it yet. The other polarity of “The Devil You Know…” is “Strike While The Iron Is Hot.” Right now, the fruit is ripe for the picking; right now, the opportunities are enormous. Might things change, might the opportunities go away, might the next crop of fruit be sour? Of course. That doesn’t change Right Now.
Thanks to Amazon’s policies as they are right now, when my car died far away from home I bought another, better one. Thanks to Amazon’s policies right now, I was able to fill my 500-gallon propane tank for the first time in over a decade. Thanks to Amazon’s policies as they are at this moment, I have a fatter bank account and more luxuries of life than I’ve had in years.
Yeah, the next deal might be worse. So what? Carpe diem.
Regards,
Ric
Quote from Eisler: Which brings us back to my original question: why are so many authors afraid of a possible monopoly [on Amazon’s part] while sanguine about a real one?
Eisler’s “point” is obviously that a lot of writers are needlessly spooking themselves, fretting about what Amazon might or might not do when it achieves some kind of monopoly position. Eisler is entirely correct about that; there’s an awful lot of pointless Chicken Little behavior on writers’ forums, with all sorts of hand-wringing about what will happen when Amazon bestrides the publishing world like an all-conquering colossus.
My only disagreement with Eisler in this regard is whether Amazon will possibly achieve an effective monopoly position or whether it already has. I don’t think it has anything to do with “Battered Writer’s Syndrome” or anything else, to point out the simple reality that Amazon has already achieved a strong enough position in the ebook marketplace that whatever it chooses to do, it’s not based on “competition” from B&N or spunky little Kobo or anybody else. Does anyone believe that Amazon is keeping the indie writers’ percentage at 70% because it’s afraid that if it doesn’t, we’ll all pick up our toys and go over to B&N instead?
My contention is that it’s not some fantasized “competition” that keeps Amazon offering writers such an advantageous rate, it’s Amazon’s business model that recognizes the company’s own best interests lie in motivating writers and e-publishers to generate as much inventory as possible for it to sell online. Could Amazon abandon that business model and do something else, that wouldn’t be as advantageous both to us and itself? Sure, anything’s possible; the poster child for bone-headed corporate moves right now is Netflix. But if Amazon does or doesn’t go down another route, its decisions won’t be based on some imagined “competition” that simply doesn’t exist now.
In the meantime, I’m in agreement with Eisler that it’s pointless for writers to work themselves into a lather, running around screaming, “The Amazon monopoly is coming! The Amazon monopoly is coming!” It’s already here and we know what it looks like, up until some hypothetical moment when it decides to change the fundamental nature of its business model. So certainly, carpe diem; no disagreement about that.
But if the big 6 collapses (and they do distribute hardcopy books published by scores if not hundreds of smaller presses) and Amazon becomes the dominant force in content they will act accordingly.
I disagree. I think it’s obvious that Amazon is already so dominant in the ebook market, that if they wanted to put the squeeze on authors and slash their percentages, Amazon could do it right now. What would indie writers and e-publishers do now, if Amazon slashed the current 70% share for writers to 35% or less? Pick up their titles and leave? To go where? As Konrath and others have already pointed out, the vast majority of indie writers and e-publishers would stay right where they are with Amazon, and still be making more money than if they left for some other marketplace.
My analysis is that Amazon is going to keep its percentages right where they are, because Amazon wants to motivate writers to continue providing inventory for it to sell. Amazon is a volume dealer that wants to have lots and lots of inventory to sell; that’s how it makes its money. At a 70% rate going to writers, X amount of inventory is created; at any rate below 70%, something less than X amount of inventory will be created. It’s Amazon’s business model that is keeping the rates where they are, not some “competition” that simply doesn’t exist.
PG —
I don’t believe the physical versions of these Amazon published books are hardcovers. In the case of *Stirred*, anyway, the product page says paperback.
I’m dubious that the additional 3 months is needed for printing and warehousing. That kind of lead time may have been de rigueur back in the ’70s; I don’t believe anything like it is needed now. Frankly I think a more plausible explanation is that Amazon wants to expense the printing and warehousing in a different fiscal quarter, especially one that doesn’t include the frantic holiday season. It’s icing on the cake that Amazon’s analog customers will just have to wait — it’s the perfect incentive to get them off the dime and committing to a Kindle.
Tori —
Yes, mass market paperbacks are a vanishing breed. The people who devoured them were the people most likely to migrate to ereaders when they started to become attractively priced. And trade paperbacks are obviously more expensive to print than mass markets for the reasons you cite. I’m just pointing out that Amazon is capable of acting like a traditional publisher when it suits them, e.g., maintaining the fiction that the “list” price for this book is $14.95 and they’ve discounted it 40% the way they do other publishers’ paperbacks. But it goes without saying that since Amazon is the publisher its margins are far more generous than they would be if they’d bought the same book from, say, Random House @ 50% off list — in which case that 40% discount would leave them with a skinny 10% margin.
Bottom line: Amazon may be embracing the future of publishing and distribution — and they may be treating authors better than the Big 6 back east — but that doesn’t mean they’re saints.
Dick – I said hardcopy, not hardcovers.
You may be right about Amazon. I do know that ebook publishing happens almost instantly once the manuscript is finished. While I’m sure Amazon works to make certain both the ebook and the printed printed book are error-free, it’s dead-simple to fix an error in the ebook, so if they want to move extra-fast, they can finish quality control after the ebook is up.
I don’t think anybody, including Barry, is saying Amazon is a saint. Barry’s point is that Amazon, including Amazon Publishing, treats its authors much better than Big 6 publishers do, financially and otherwise. From my experience with Big 6 and Amazon publishing contracts, I absolutely agree with him.
As far as Amazon’s list price for its hardcopy books, I would expect any author would be overjoyed if Amazon listed the book for $14.95 and sold it for 40% off if the royalty were calculated on the list price.
Oops … you’re right about hardcopy. I failed to make that distinction. I stand corrected.
Actually, to be honest, I don’t think the delay has anything to do with expensing. I thought about it after posting and realized that Amazon has been delaying its *hardcopy* eds on an ad hoc basis for months. They don’t do it with all their titles, so I’d imagine they delay the physical editions of the books they expect to be the biggest — and biggest here almost always means biggest in e-sales, not hardcopy sales.
I’m anything but an expert on rights, but don’t authors’ contracts typically base the royalty on the list price and not on the sale price? I was under the impression that the sleaze move was to base the royalty on *net* sales instead of *gross* sales, since very few titles aren’t going to experience returns down the road. (As Alfred Knopf supposedly once said about book shipments, “Gone today … here tomorrow.”)
Yes, you’re right: Eisler’s complaint is specifically with respect to the way publishers treat authors, not bookbuyers. So my quibbles, which focus on the reality that the big 6 are living what’s become known as the innovator’s dilemma (a huge machine geared up for publishing, distributing, and promoting physical things to a rapidly shrinking market, where the only alternative is to fire most of your employees and start over), are mostly irrelevant.
I don’t think there’s much doubt, though, that Amazon’s decency toward authors is provisional and subject to change. Before ebooks came into their own Amazon bought a print-on-demand (POD) company, BookSurge, and announced that authors who were using its CreateSpace self-publishing services would henceforce have to use BookSurge exclusively to produce POD copies of their books. This decision touched off a dispute with Ingram, whose Lightning Source POD unit (and distribution mechanism for placing copies in bookstores) had previously been an attractive option for CreateSpace authors, and another POD publisher, Book Locker, filed suit against Amazon challenging the legality of its move. I believe Amazon ultimately backed down.
I realize The Passive Voice’s readership consists mostly of authors whose primary interest is unintermediated access to readers — always a good thing. Amazon has provided a venue for such access, technology has streamlined ebook prep and made it cheap, and those are good things too. But if the big 6 collapses (and they do distribute hardcopy books published by scores if not hundreds of smaller presses) and Amazon becomes the dominant force in content they will act accordingly.
Cartels are bad. Monopolies are worse.
Didn’t Churchill write a book called “Two Cheers for Democracy”? Two cheers for the big 6.
I don’t know about Stirred, but I can say that a lot of self-publishers and small presses are releasing paper editions as trade paperbacks, which cost more to produce at least in part because of the much higher quality paper (as opposed to a mass market paperback). In fact, I don’t know another way for a self-pubber to release a paper edition unless you have enough money to pay for an old-fashioned print run (and a place to store the resulting mountain of books). So the trade paperback factor probably accounts for some of those high paperback prices.
As a guy who’s devoted his life to working for the publishing and bookselling cartel in New York, I’m not going to bother defending the way it does business. Since I never worked as an author — except for a year in the early ’80s spent writing a column for the long-defunct *Wilson Library Bulletin* (and paid the pittance of $200 for each piece I wrote) — I can’t address most of Eisler’s complaints and assume they’re brutally true.
However, two items on Eisler’s checklist can be verified with respect to Amazon:
• The practice of forcing readers who prefer digital to wait, sometimes for over a year, until a title is also ready to ship in paper
• Digital retail prices equivalent to paper ones despite the obvious lower costs of digital distribution
About the first: I’ve noticed that when Amazon publishes an author under one of its many imprints (Thomas & Mercer, for instance) it sometimes decides to publish the Kindle edition *before* the paper edition. Example: J.A. Konrath & Black Crouch’s thriller *Stirred* will be released as a Kindle edition on November 22 of this year, but won’t be released in paper until February 21 of *next* year.
About the second: Let’s take the same book — Konrath & Crouch’s *Stirred*. True, the Kindle edition is currently priced at a mere $2.99, but the paper edition has the old-fashioned publishing cartel mythical list price of $14.95, which Amazon has magnanimously reduced 40% to $8.97.
Which suggests that insofar as Amazon is eating the New York publishing cartel’s digital lunch it’s doing so at the expense of its own analog readers. Indeed, I’d say that its publishing and pricing tactics are designed to convince its analog readers to stop buying paper books and start buying Kindles instead.
You could say they’re just trying to move their customers along into the future of reading. But this strategy has the fringe benefit of hitting the soft underbelly of old-line publishers, whose costly (and Amazon would say outmoded) infrastructure is predicated on designing, printing, distributing, and processing the returns of (and crediting brick-and-mortar booksellers for) physical books.
The poor saps.
Dick – Thanks for your comment.
I can’t say for certain, but one reason for releasing the ebook first might be the time necessary to get the hardcopy books printed and distributed to warehouses.
Additionally, if a Kindle book is not priced lower than its printed counterpart, quite a number of Amazon readers will give the book poor ratings because they feel they’re being ripped off by the ebook price.
Joe and Barry are at it again. Those rabble-rousers! 😀
Seriously, good points, all. I’m so there.
As usual, Barry makes his points, and I agree with them. There are plenty of people out there still trying to make him wrong with “Yeah, but…” arguments. Fortunately, all the yeahbuts on the Internet can’t argue intelligently with what he says here, and has said so many times before.
Barry, you might be getting sick of repeating yourself by now, but I’m guessing every time you post something like this, lightbulbs come on all over the world of writers. You convinced me, long ago. Keep it up.