Ebooks wars ramp up: Authors/publishers finally push back
Authors have been getting screwed on ebook royalties, and it's likely to get much worse. Publishers fear they are going to get screwed by Amazon once it has a choke hold.
Finally, they are both pushing back. A flurry of activity in the last week:
The Authors Guild released a statement fighting Random House specifically on rights to older ebooks, but also on the royalty rate for all of us. It wrote:
It should also start offering a fair royalty for those rights. Authors and publishers have traditionally split the proceeds from book sales. Most sublicenses, for example, provide for a 50/50 split of proceeds, and the standard trade book royalty of 15% of the hardcover retail price, back in the days that industry standard was established, represented about 50% of the net proceeds of the sale of the book. We're confident that the current practice of paying 25% of net on e-books will not, in the long run, prevail. Savvy agents are well aware of this. The only reason e-book royalty rates are so low right now is that so little attention has been paid to them: sales were simply too low to scrap over. That's beginning to change.
It's very tough to fight the publishers one deal at a time, but we may get some traction from owners of older books (not covered by the 25% deal) getting higher rates. Several high profile authors and estates have announced plans to do just that in the last two weeks. The latest, Steven Covey. His “The 7 Habits of Highly Effective People,” is still selling about 200,000 copies a year (based on Bookscan numbers, grossing up for the 30% they miss). That's better than most bestsellers on their initial big run.
NY Times summary of some of it all here.
Meanwhile, the publishers are finally pushing back with Amazon. Many are now delaying ebook release of their big and medium books by four months (or so).
Good for them. They don't like that cheap eboos at $10 are canibalizing the sales of hardcovers priced at $27, and often selling as low as around $16.
Writers need the publishers to fight and win, because ultimately, authors can't get paid a decent wage without money coming in to the publishers. If they get squeezed, we all do.
Though the delayed release makes some sense--comparable to movies coming out four months later on DVD--I doubt that is the long-term solution. Eventually, publishers will want to capitalize on all readers simultaneously. The problem is Amazon (followed by the others) undercutting the value of their product by selling it so cheaply. No industry can survive something like that. Authors probably can't survive it.
What I think the publishers are doing is playing for leverage. They need some--since they can't control the retail price. Amazon is selling every one of those $10 ebooks at a big loss. They can control handing over the ebooks, and that's what they are doing. Hopefully a good solution can be worked out.
I am all for relatively cheap books, and for instant access to ebooks. And in the long run, the much cheaper production/distribution should allow for everyone to benefit: authors, publishers, online retailers and readers. But not if the whole system gets skewed so badly that any one of those parties gets screwed. We are all in this together, and need a solution that works for everyone.
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1) How to make the pie bigger (the pie being the total revenue coming into publishers, and especially the amount of money left after expenses)
2) How much of that pie should go to authors and how much to publishers.
Authors and publishers are on the same side on #1, opposite sides on #2.
It is definitely not a zero-sum game, though. #1 is highly variable. The sum has been shrinking for at least a decade, and if ebooks grow rapidly and Amazon gets its way, the sum might shrink much faster. On the other hand, the economies of ebooks (especially lack of returns which cost huge sums) could make the sum grow back. Cheaper books could potentially also lead to a bigger sum if more people buy, but we don't really know if that will happen. (That was expected when the UK went to nearly all paperbacks a few years ago, but unit sales stayed the same, and there was just much less money.)
So no one can be sure how big the sum in the game will be, but it definitely is not fixed. It is very much a moving target.
You can't get blood from a stone, and the less money there is, the less authors will be able to get (particularly when we're paid by percentage).
What spin are you getting from these developments?
The advent of electronic readers, coincident with the onslaught of ebooks, and the growth of internet publishing sites like this one are permanently changing the entire book production and distribution system.
For the first time - ever - the producers of intellectual content have the ability to connect directly with the consumers of their production without intermediaries.
The ownership of the means of production - in the case, everything from the printing presses to the brick and mortar stores where books are sold - are under siege and will not survive.
The same fate awaits most daily, weekly and monthly periodicals, all of which are already gearing up to follow publications like the Christian Science Monitor into an electronic-edition-only future.
My son, now 27, is a member of the last generation that will miss the feel of a good book in their hands.
The same flattening of the distribution channels is also going on in the music industry and is beginning to develop in film and television.
The trick, now, of course, is to figure out how to make money in this new virtual environment. And the answer to that question is that we will simply charge admission. That's already happening with ebooks.
This analysis demonstrates that the interests of writers and publishers are not identical. The publishers are on a sinking ship. The content creators need not go down with the Titanic because they are the ones who own the life preservers.
Talent.
publishers aren't just bookbinders and rolling presses. they are editors, proofers, copy-editors, sales, marketing people and publicsts, etc. they are an army people necessary to get the book into high quality shape and then get it to the the public.
have you tried the self-publishing route? it is fine for people who want to write for friends/relatives and perhaps sell a few hundred copies, if lucky, and lose money on venture. (in just a handful of cases they have broken out.)
the idea that the coming ebooks will overthrow the overlords who will screw this because now everyone has an epress is just fantasy. (i also think it's fantasy that they were evil overloards. for the most part they were screen out literally hundreds of thousands of bad books and finding many gems and getting them to market.)
to me, that's a whole separate discussion for fantasyland. i'd rather discuss what's happening in the actual publishing world which does exist and is almost surely likely to exist when all this is done.
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Robin, if that was directed at me, thanks.
As far as the distribution of ebooks, why couldn't the publishers band together and create their own distribution service? Then they could price the ebooks so as to make a reasonable profit, give the authors a decent cut, and cover the costs of distribution.
I don't know how all of this would work with the Kindle device itself. But to me, there seems to be something monopolistic about Amazon selling the Kindle AND having total control over the sales and distribution of the content that goes into the Kindle. It's like if General Motors had a monopoly on car sales AND owned all the service stations in the country.
If Amazon wants to sell the Kindle, great. But it seems to me that Kindle owners should be able to get Kindle-formatted content from distributors other than Amazon. That way there would be competition all around. You could buy a Kindle, or you could buy a different reader. You could buy content from Amazon, or you could buy it from another source.
I'm sure all of this is more complex than I can imagine, and perhaps I also am talking "fantasyland." But In my fantasy world you could buy whatever reader you wanted. And then you could go to Dave Cullen's Ebook Store (or any other such store) and buy books for Kindle, Sony, Apple, Acme, or any other reader.
I've said this before (and I'll keep harping on it), I work for a small, niche, nonfiction publisher. The cost in producing a book, from where I sit, is NOT the printing/production. The cost is getting the thing from the author's manuscript into a print-ready format (either traditional or ebook).
Most of the authors I work with in this niche nonfiction world are brilliant in their fields, and they are not great writers (with one stellar exception). It take a lot of heavy lifting to get even a decent manuscript ready for print. Do the ideas flow? Do they make sense? Did the author use five-mile-long sentences and lots of passive voice? For many authors, I see the incoming manuscripts like a pile of really great materials. My job is to turn it into a house with floors, walls, and plumbing that works. I have yet to meet a writer who can do this alone. As a reader, you'll know... when a book you just paid $25 for reads like someone's college term paper, you'll be angry you spent the money. Even madder if that term paper got a C.
I would challenge anyone who says the publishers don't "do anything" to have a look at my incoming manuscript pile.
Yes, most of the people I work with (copyeditors, proofreaders, indexers, book designers, graphic designers, printers) are freelance. An enterprising writer could go out and hire all these people, become a "do-it-yourself" project manager, and produce a decent, readable book. (Only if they can back away from their own work enough to be objective about it, but that's another discussion.) But it's a significant outlay of cash. When a publisher takes on a writer, the contract essentially says "I believe this is good work and will sell. I'll front the money to get this thing into shape and print it. When it sells, we'll split the proceeds." If it does well, it's a great deal all around. The writer concentrates on writing, and merrily goes off to write the next book while the publishers do what they do. Edit. Reorganize. Smush. Hack. Slash. Layout. Etc.
When a publisher takes on a book, it's a huge risk. There is a lot of up-front investment, especially with a new author. What if it doesn't sell? What if one editor loves it and believes in it, but is misguided? It happens. Check out any discount remainder bin.
The whole ebook argument assumes that books "ought" to be far cheaper because they're not printed on paper. And there is some amount of the total cost of the book that goes to the printer. The amount varies by a whole lot of different factors, but it's far smaller than you think.
I think that publishers will change over time to adapt to new models. But I also think that "just self publish" for most writers is a fallacy--we'll end up with a whole lot of ebooks, cheaply produced, that read like someone's blog.
I don't get how getting $10 straight up for every download could possibly undercut the process anymore than passing hardcover books from person to person does. We can't share things we download. Period.
I'm not being contrary- I just don't understand.
How much is an "un-printed" book worth anyway? If you cut the cost of the fancy sleeves and the printing and the binding and paper ... what is the value of the product? (nothing to do with quality or the philosophical meaning of "books") If a book retails for $27 and it costs $6 to put it together - is the book worth $21 or $27?
What other costs are associated with publishing a print book that are above and beyond what it costs to publish an e-book that have nothing to do with the writing of the book and it's consequent management? And how does eliminating that cost to the consumer hurt the writer/publisher?
Again ... I don't understand ... I'm not trying to be difficult.
Yes, that bugs me about the Kindle. Amazon controlling the device and the content is just wrong.
I have an iPod, and I can put anything I want on there. I can buy a used CD at a yard sale and put it on. I can get songs from iTunes. I can get songs from my friend Jack's band, recorded in his garage. The source doesn't matter. iTunes is available if I want it, but I can get music from anywhere I want.
The Amazon monopoly on the Kindle bothers me.
I'm curious about the Barnes and Noble "Nook" device... I'm told it has a "borrow" feature. Which opens it up to libraries, and it opens it up to lending books between friends.
I think the technology has a ways to go.
Maybe instead of a delayed release, it should just be a delayed "discount". For example, when a hardback is first released, generally they are offered immediately at those 30% discounts, but then if you wait a couple of months, those discounts are gone and you end up paying full price. (This is manipulation, trying to build momentum and buzz, and is counter to a lot of other standard marketing tactics.) Well, maybe the e-book should be released at the same price as the hardback, when the hardback first comes out, $16. Then later, that's when the price can go down to $10 (more like the traditional model).
Also, I, as a voracious reader, am giving something up for that $10 price, too. That's the ability to share what I just read with someone else. If I really liked something, and I tell someone about it, they have to go buy their own copy, whereas in the past I would have just lent them my copy. So, two $10 books instead of one $16 book.
So, taking the example of the $27 hardcover and $10 ebook. In the old model, the author gets 15% of $27, right? Which is about $4 per book sold. The ebook is 25% of $10, or $2.50 per book. And you're right, that's less money. But, because sharing is not permitted, sometimes two $10 books are sold, equalling $5 for the author. If, like me, you often waited for paperbacks, then the author would have only gotten 15% of $8, or $1.20, and instead got 25% of maybe $7, or $1.75.
While I think that authors and publishers are smart for thinking out possibilities up-front, I think it's also something that should be evaluated with hard numbers of real sales before getting all jacked out of shape. Now I'm off to buy some more ebooks now.
PS, how is it possible for Amazon to be selling those books for a loss? That I don't understand and would appreciate a schoolin' on. Why would they do that? Is it just because it's new and there are a lot of up-front costs, that will be made back as more and more copies are sold?
What I do not love about Amazon and other giant book retailers is that they dictate to publishers what they want to sell and thus influence the medium. It has little to do with what readers want, or even if a product is good, just what makes the most money for the retailer. This causes the industry not to be reader driven. I've heard publishers/editors say they will look at a manuscript and choose not to buy it because they can't sell it to B&N, even if it's a good read.
I think the publishing houses could sell their own ebooks and set their prices and refuse to give Amazon the rights. And they could offer them for specific readers, i.e., Kindle format for Kindle, so that people can't pass them around.
I almost never buy a hardback book - too expensive, too heavy. I'm also a fan of used bookstores (which is usually the only local bookstore in most places) and the library, so my using a Kindle is a bit of a profit for the writer. Where the Kindle does work best for me is on magazines. Which makes me wonder why the magazine industry can keep fair prices and the book industry cannot. The New Yorker in the mail is $40/mo, via Kindle it's $30/mo.
I do hope that ebooks will eventually provide a way to expand the pie, as you talk about in your comment above, and I worry that a 4-month delay might slow down that growth substantially. Right now, the biggest advantage to an ebook is its instantaneousness -- I can have a new book on my computer in a matter of minutes, instead of waiting 3-5 days for its delivery by mail or sometimes longer, if I wait for an open hour to go to the store. I'm with you in hoping a balance can be struck to benefit everyone.
Regarding what traditional publishers do, it really is in the editorial process--something hidden to most consumers, but it does make a difference to the end product. I've worked in the industry for years, both on magazines and freelance, and I've watched the number of editorial employees fall at many houses right along with the quality of what's produced. When it comes to what I call content editing, many presses now require authors to pay freelancers for that. It's good if you're a freelance editor, sort of. Except that nobody understands what editors do.
I don't think traditional publishers have done a good job of marketing and promoting books for at least a decade, especially for mid-list titles. Often your own promotional abilities (be they goosed by a publicist or an online platform) become a selling point.
As for writers, God help us unless we band together against getting ripped off from ebook royalties and whatever publishers also try to skim.
o) I don't think it's in any way reasonable to charge a reader the same (or similar) amount for an eBook as for a hardcopy, hardcover book. Having a slight premium on a new vs. existing book is fine--iTunes charges $4 more for newly-release movies than for older movies--but asking an eBook reader to pay, say, $20 or more for a book is unworkable. If you buy a hardcover book, for the $25-$30 price you get . . . a hardcover book. If you buy an eBook you get a bunch of bits that can be wiped out in any number of ways, the scariest of which being that Amazon or Barnes and Nobel can simply delete them remotely. Those two things are simply not remotely equitable, and I think it's unrealistic to ask consumers to pretend as if they were.
o) Similarly, delaying the release of eBooks is, in my view, an unworkable tactic. If we want to increase the penetration of eBooks in the market, delaying release is exactly the wrong way to go about it. Further, I don't know what the half-life of publicity is on a book, but I bet it's less than 4 months. How many sales will be lost by a delay?
I don't have a solution, but I think publishers have to offer some creative solutions. Giving people the eBook version when they purchase the hardcover copy, perhaps. Giving an eBook purchaser a number of credits--like frequent flyer miles--each time they buy an eBook, which can then be redeemed at a brick-and-mortar store. Something. But I don't think charging full (or nearly full) freight for an eBook, or delaying its release, is a good idea.
There's a long list of successful authors who began through the self-publishing route. I won't belabor the point by enumerating them. (But I will if you force me.)
There's much more going on here than merely an economic dislocation. Sites like Wikipedia demonstrate that anonymous collective action can accomplish tremendous results. (The Oxford English Dictionary was compiled in much the same manner.)
The way the publishing system works now, it guarantees mediocrity. While there are a few people who can indeed edit themselves (and I'm not one of them unless writing to deadline on assignment, in which case I get very disciplined), it is more important to point out that the funnel filtration system is stifling creativity, not expanding it.
Agreed, most books are the results of a group effort by a wide assortment of people. Read Joyce's correspondence with his editors to get a humorous take on that. However, humility, not hubris is the missing ingredient in the new publishing culture.
There's a great deal more good work being created than ever sees the insides of a bookstore. Barnes and Noble boasts that its new ebook will have more than a million titles available to readers. That's far more than any of their brick and mortar stores can hold, even at one volume per title.
The problem is that, with the tremendous and increasing onslaught of information pouring in on us from all sides, the traditional method for filtering the incoming junk to find the needles in the haystack has completely broken down.
The internet is changing everything in ways we couldn't have begun to imagine ten years ago....and the pace of the changes is accelerating.
I would love to get John Blumenthal's contribution to this discussion and see what he has to say about it.
No, there isn't. It's misinformation disseminated by vanity presses.
http://jimhines.livejournal.com/313073.html
One thing that inflates the price of printed books is the fact that losses from returns are factored into the cover price. Ebooks don't share that problem.
Publishers should be doing everthing possible to speed the adoption of ebooks. Instead, they're behaving like the movie studios who tried strangling the VCR in its crib. Ironically, movie studios now make most of their revenue from DVD sales and rentals.
I suppose I'm being pedantic, but I wanted to provide a bit of history. Not that I disagree with your assessment about how publishers are trying squeeze authors . . .
I've never been able to routinely afford hardcover books. We get them when they are written by friends, or if they are an icon or reference. I love the idea of hardcover, but the reality is that they weigh a ton and I have carpal tunnel. I'm used to waiting to read my fun literature anyway. If I had a feature wish list, it would be to have the ability to put a book in a queue for the future, when it's available in the cheaper format.
I am intrigued by what people have said about self-publishing, about the possibility of there being a type of partnership available with self-publishing ventures where they provide some of the services of traditional publishers. I don't think there is a decisive argument for or against self-publishing when the models are in flux to this extent. While I agree that publishers can provide services, they don't always and they select works based on soulless (and often mistaken) marketing considerations as much as on quality.
1) For a reasonably big commercial publisher, the cost saved in an e-book format is between $1 and $3.
2) Amazon pays more to publishers than the cut on the actual price because right now it needs the publishers. It eventually wants the publishers to absolutely need it.
3) Don't forget that Amazon makes a significant amount of money on the Kindle. I've argued on BNET, where I cover the tech industry, that this is one case where hardware sales subsidize service/content (the opposite of the cell phone industry).
4) People go to retail locations, whether physical or electronic, because they don't want to wander from one publisher to the next. They want most everything they might like to find in one place.
5) Authors and publishers are often on opposing sides. Look at the number of authors over the years who have complained bitterly about being screwed in royalty calculations.
6) Selling content for cheap is good for Amazon because of the effective Kindle subsidy. But it continues the expectation on the part of consumers that there is no real value in content, and that all prices should go to zero. This is not good news for those who create the content.
I could, by the way, make a case that the First Folio was a self-publishing project, but Shakespeare was already dead by the time it came out (which raises the question of where those profit went) , but I can assert without fear of contradiction that Walt Whitman certainly published Leaves of Grass himself. He even set the type himself, if I recall correctly. The list goes on, but that's off the topic.
More to the point, editors, proof-readers, designers, and marketing specialists are necessary. Publishers are not because, in this fantasy world of mine, you don't need to print 50,000 copies upfront, nor do you need to absorb warehousing, distribution, and retrieval costs because there won't be any.
According to Bowker, the most authoritative source for information about book publishing in the United States, the number of printed titles published in the United States fell to 275,232 titles in 2008, down from 284,370 titles that were published the previous year, a 3% decline.
During the same period, on-demand and short-run books increased from 123,276 in 2007 to 285,394 titles in 2008 which, according to Bowker, is a "staggering" 132% increase.
Note please that 10,000 MORE on-demand and short-run (code for self-published) books were published in 2008 than there were regular hard cover and soft cover books published by mainstream publishers.
The number of publishing houses decreases each year, the number of mainstream titles goes down each year, while the remaining publishing houses cut back on staff. The ownership and therefore the control over the publishing industry is being vested in fewer and fewer hands through conglomeration and, increasing, the people who own the publishing houses are foreign nationals, a situation that does not bode well for us. The quality of the work being published often leaves much to be desired and, while there are the occasional rags to riches success stories, the fact remains that it is virtually impossible for an unconnected unknown to get published.
I'm very thankful that I don't have any interest in writing novels and, when it happens, I am very embarrassed by it. I'm a short story writer, pure and simple, and if you think it's hard to get a book published....try getting short fiction published in America today. (Here's a hint: being independently wealthy helps.)
I agree with you that the current self publishing mania is a fantasy - that the POD providers are cashing in on. It costs money to get a good editor and designer and using them effectively often means the author has to give up control, because sometimes the author is least able to see where their own work needs help. The idea of cutting out 'middle men' is an illusion.
But if publishers don't get these pricing issues sorted out, the future of quality writing is looking very bleak. When a publisher can no longer get a good return on investing in a book, they will be forced to be ever more ruthlessly commercial in what they publish.
Hopefully the various print media that are having discussions about how to keep electronic control of their distribution and pricing will bear fruit and be taken up by book publishers.
I am an old-timer when it comes to The Way Books Ought To Work, and these damn electronic kids need to get off my lawn.
The delivery method has always informed price for the printed word. Newspapers cost 50 cents or a dollar or whatever, and are printed on newsprint and are highly ephemeral. Paperbacks can cost $10-20, are usually printed on somewhat higher quality stock, and last longer than newspapers. Hardcover books are even less perishable. How perishable are books made of nothing but bits? We don't know really, not yet, but Amazon has shown that they can be extremely perishable.
I'm on jury duty on a trial but will come back tonight to respond when I have a keyboard.
we should be done tomorrow and i hope to post then, if anyone is still interested.
This is no different than buying something from a storefront and then finding out that the item is stolen and the police are taking it back. The item doesn't belong to you because the store owner didn't have permission to sell it to you.
When Amazon starts deleting titles randomly, or has a change in terms of service saying that you can only keep a title for a certain length of time and they won't be giving back any of the money you've already paid, then I'll revolt - along with all the other Kindle owners, I'm sure. But until then, I'm not letting one PERFECTLY UNDERSTANDABLE incident sour me on the concept of ebooks.
catnmus, i agree. that amazon incident was an unpleasant birthing pain, but in the grand scheme, a minor incident. i wouldn't base the whole ebook future around it.