Sunday, April 4, 2010

Don't We Wish It Was April Fools?

This week has been a busy one in the publishing world. Two major events have occurred. The first is the advent of the "agency model" of e-book sales. The second is the release of the much heralded iPad. Being a techie and curious about the iPad even if I don't see it as an e-book reader so much as a mutli-use device, I'd love to get my hands on one to play with. Still, I don't think it will be the kindle-killer as many have suggested. There are still going to be a number of consumers who will want a dedicated e-book reader like the kindle or the nook. But the iPad will, in my opinion, force Amazon to adapt if it wants to continue being the leader in the e-reader field.

A couple of links of interest concerning the iPad came to my attention Saturday. The first, by Cory Doctorow, appeared on Boing Boing. The basic gist of his article is about why he won't be getting an iPad and his reasoning why no one else should either. But one thing he wrote jumped out at me: But the real economics of iPad publishing tell a different story: even a stellar iPad sales performance isn't going to do much to staunch the bleeding from traditional publishing. Wishful thinking and a nostalgia for the good old days of lockdown won't bring customers back through the door.

The link he cites refers to magazine subscriptions and how ad revenue from the new subscriptions generated by the iPad will take years before having an impact. But the same logic applies to traditional publishing. As long as publishers don't recognize that e-books are a growing segment, a viable segment of their sales, no gadget on the market -- no matter how fancy, how easy to use or how much it costs -- will be the savior the industry is looking for. Moreover, even if such a gadget existed, until publishers throw out their old business models and adapt to new technologies and new demands from the buying public, nothing will change.

(For reaction to what Mr. Doctorow had to say, check out The Digital Reader and Gizmodo.)

With the advent of the iPad is the beginning of the "agency model" of e-book sales. Until this week, e-books were bought and sold much like dead tree versions were. For one of the best explanations I've seen about the differences between the old model, or the "wholesale" model, and the agency model, check out I Love My Kindle. Buffo Calvin has written an easily understood piece about what the differences are and how they may affect e-book sales. An over-simplified explanation (my words here, folks) is that the publishers now set the price and Amazon, et al, are merely facilitators for the sale of the e-book.

So, what has this meant so far for owners of a kindle, or nook or Sony e-reader? The first, and most surprising, is that some customers are finding that they now have to pay tax on their purchases from the publishers who have opted for the agency model. Sure, it's not much. Most folks, even, don't seem to mind since this money isn't going to the publisher and might help ease at least a little the financial problems of their state of residence. But this change has been noticed and everyone is looking for more add-ons they weren't expecting.

The second change is that Amazon is identifying those books sold by publishers who have insisted on the agency model. For example, if you look up any of the Series of Unfortunate Events books, you will find the following notation:

Sold by: HarperCollins Publishers
This price was set by the publisher

From what I've been able to tell, this same disclaimer has been placed on all books that fall under the agency model.

The third change that has occurred is the increase in price of some books that had sold prior to the agency model for $9.99 or less. Again, going to I Love My Kindle, there is a breakdown of book price changes. Take a look and see what's happened so far in these early days of the new agency model. The look at the following article on the blog and you will see what my concern has been from the moment the agency model was announced. Some e-books now cost more than their paperback counterparts. Please, someone explain this to me. What reasoning is there for charging more for a DRM'd book that you can only read on a limited number of devices than for a physical book you can loan to your family and friends, resell to a second hand bookstore or in a garage sale, etc? Have the publishers lost their fricking minds?

Now, there has been on interesting by-product of all this. Whether it is an attempt to entice iPad purchasers to buy their books, or an attempt to show they really aren't the bad guys, but HarperCollins issued the largest selection of free books I've seen since I was given my kindle in September. At last count, there were something like 25 e-books being offered for free by HC. These included non-fiction books ranging from self-help to a Mars-Venus book. I believe there are 10 of the Lemony Snicket books available for free. There were a couple of new books. A book by Sheldon Leonard and another by Agatha Christie. In all, it was enough to take some of the sting out of increase in prices -- at least for the day.

So, what can we do about the agency model and the increase in prices for e-books? How do we get e-books released at a reasonable time in relation to the release of the hard cover or trade paperback? First, don't give a book a bad review because of the price -- especially if you haven't read the book. However, you can write the publisher and the author to let them know how you feel about paying as much, or more, for an e-book as you do for a hard copy. Buy books by other authors, those who publish through houses that haven't adopted the agency model.

What do you think? Is the iPad going to revolutionize e-book readers or not? And what about the future of e-book sales under the agency model? What are you going to do to voice your disapproval -- or approval if you think the agency model is a good thing -- to the publishers? The floor is now yours.

22 comments:

Darwin said...

The price points set by the agency model are artifacts of socialist wet dreaming (command economy bias) on the part of publishers. They're idiots and dinosaurs, soon to be studied only by overpaid, tenured professors who study their bones by day and drink other people's hooch and nibble cut rate cheese at cocktail parties at night.

Kate said...

Gee, Darwin, tell us what you really think! :-D

Yes, it's yet another attempt to control the market. And like all the others, it will fail in ways the publishers don't expect.

Unfortunately for readers and authors (who are beating devoured alive by the industry's attempts to keep control of the market) it's not going to happen immediately.

Just a few back of the envelope numbers: very few authors earn more than $0.60 per paperback (That's a $10 paperback - $9.99 if you prefer - with the standard 6% royalty). They only get that much if their royalties are based on cover price (some publishers are moving to sale price instead - which is usually less).

Lucky Midlister with a $10k advance and a $10 cover price with the 6% calculated on cover price needs his book to sell nearly 17,000 copies before he sees one penny of royalties.

Unlucky Midlister with a $7.5k advance needs to sell 12,500 copies before she sees a penny.

If the royalty is based off the sale price it gets more interesting - if the books are selling at an average of $8, Lucky Midlister gets $0.48 per book, and has to sell 15,625 copies to earn out the same advance.

Numbers, alas, are not calculated on "We printed X copies, there are Y copies left, so sales are X - Y". From what I understand they use Nielsen Bookscan - which doesn't include Amazon sales, Barnes and Noble sales (whoops, there goes about 2/3 of hardcopy numbers), or independent stores.

eBooks don't count either - so if Unlucky Midlister sells mostly in ebook, she's likely to be dropped because hardly any of her sales are showing up in her publisher's numbers.

This is why, especially in romance (no embarrassing covers if you buy in ebook - you can read on the train with your PDA or your kindle or your nook or ipad or whatever and no-one will look to see what kind of pervy book you're reading) some ebook only authors are making over $3,000 per month on royalties. Their e-only publishers give higher royalties per book, no advance, and sales are easy to calculate.

DISCLAIMER: I do not work in the publishing industry. These are back-of-the-envelope numbers based on standard numbers and publicly available information. I'm not sure if that makes them better or worse, but it certainly suggests that authors - with a small number of exceptions, most of them with names like Stephen King - are getting shafted by the traditional publishers.

Stephen Simmons said...

Gee, such an encouraging topic for those of us who are just trying to get started ... ;)

I have to admit, I've never given much serious thought to e-books, one way or the other. Not that there's any truth to the pernicious rumors circulating around my house about me being resistant to change (just because I considered Windows a self-inflicted virus and refused to have any of my computers boot up in it until about the time 98SE came out), but I just prefer holding the dead tree in my hands.

It sounds to me like something the author needs to make sure his/her agent is throroughly savvy on going in the front door. That's one of the main reasons the agent is part of the process, n'est pas?

Ed Bear said...

The publishers are trying to maintain the old business model and, if they're not counting AMZN or B&N sales for royalty purposes, adding in the music industry's model of "keep the money out of the hands of the creators."

This involves keeping, among other things, "windowed" releases where they charge hardcover prices for eBooks while the HC is the only thing available, and then (maybe) dropping the price to paperback levels later for the exact same pile of bits.

This seems to be all part of the same cunning plan the movie and music industries have followed for dealing with the internet: "Get your best and most loyal customers to hate your guts."

Clay Shirky had a VERY interesting blog post earlier this week which, I think, is relevant here. He spoke of the collapse of complex business models.

Speaking personally, I don't mind paying paperback prices for eBooks. Authors need to be paid for their work, and quality control requires editors, copy editors, proofreaders, etc. for which work (keeping typos and inconsistencies from driving the reader nuts) they deserve compensation.

But some executives, with their "$30 is not too much for an eBook" are living in a dream world.

Sarah A. Hoyt said...

And on that note, kindle versions of both No Other Wish Than His and A French Polished Murder have vanished from Amazon pre-order and the fans are mad at... me.

I wish, just once, JUST once the fans would give publishers hell, instead of me. Like... oh, say, plagging me because musketeers was cancelled. As if it were my decision. And some of them are on the verge of violence, too, sounds like.

I feel like putting on my website "Children, I'm not the one denying you your fix."

This rant brought to you by Extremely Frustrated Writer TM

Amanda Green said...

Sarah, it isn't just Amazon. When I checked for No Will But His and on Barnes and Noble, those e-books were also missing. In fact, things are definitely going wild -- and not in a good way -- with e-books from those publishers adopting the agency model. The 20+ books from HarperCollins that were offered for free on Amazon yesterday are now not only no longer free but you get a 404 error when you try their links. Then there are those e-books like David Weber's latest from TOR that have gone from an $8.40 (iirc) pre-order price to one approximately $4 more.

My recommendation re: those fans writing angry letters. Let them know you're as baffled and upset as they are. And tell them to write your publisher. The problem I've seen on the kindle boards is that too many readers think the authors actually have a say in what's happening now. Just like they think authors have a say in setting e-book prices. Sigh.

Amanda Green said...

Ed, publishers aree trying to work with outmoded business plans and are doing everything they can to prevent changing them to adapt to new trends and demands. That resistance is part of what's led them to the trouble they are in now. If they continue to maintain their current positions, we will see a very different industry in a few years.

As for paying the price of a paperback for an e-book, there are some I'd pay that much for. However, paying more for an e-book than for a physical copy of that book -- especially if the e-book is DRM'd -- is not something I am willing to do. Nor is it something I think most e-book purchasers are going to be willing to do.

Amanda Green said...

Stephen, there are a lot of people out there -- readers and writers -- who have yet to jump onto the e-book bandwagon. Heck, there are some books I will buy in electronic format and others I have to have in hard copy. But I will say that electronic publishing, whether it is with one of the traditional publishing houses or an electronic publisher is something that is here to stay. It is a growing section of the market and has to be considered by all. That means the traditional publishers have to figure out a way to use e-books to expand the sales of their other books, instead of thinking of e-books as some sort of virus that is infecting the industry and is bent on destroying it.

As for having an agent that is savvy to all this, that would be wonderful. The problem is that the agency model is something that the publishers dreamed up and that isn't part of their contracts with authors. Just as publishing contracts don't -- and the rest of the MGCers can correct me if I'm wrong here -- spell out how much a book is going to be sold for, most don't say what day the electronic version of the book will be released. Right now, authors are caught in the middle between their readers who aren't happy with what's happening and their publishers who aren't necessarily being real open about what's happening when.

Amanda Green said...

Kate, well said. The one thing I will add is that royalties on e-books published by at least one of the major publishers now following the agency model (McMillan, iirc)cut the percentage paid to authors before this new model was put in place. So, not only are they screwing authors by not counting all books sold - and it boggles the mind that there are publishers that don't count Amazon sales - they are screwing them by paying lower than industry norm on e-book royalties.

Amanda Green said...

Darwin, every time I research one of this posts on e-books and how the major publishers treat them -- and their authors and readers -- I feel the same way. I suspect that if we were to search out their family trees, we'd see that they are related to the ones who felt the printing press was the creation of the devil. Until they come into the modern age, they will never be able to pull the industry out of the trouble it currently finds itself in.

Lin W said...

Amanda, great piece! Just one question. You said: "However, you can write the publisher and the author to let them know how you feel about paying as much, or more, for an e-book as you do for a hard copy."

How will writing to the author accomplish anything? Do authors have any say in the matter? Can authors even 'change publishers'?

But, then, I know next to nothing about publishing, and what I *think* I understand is probably wrong :-)

Lin

Amanda Green said...

Lin, thanks. As for writing the author is actually in exercise in educating them. It is amazing the number of authors out there who do not realize how many of their readers prefer e-books. More than that, they don't realize how many buy electronic and dead tree version.

I have another reason in saying contact the authors. There are some who haven't realized how they are being affected by the new agency model. They don't know that pre-orders of their e-books are being canceled by their publishers and that e-books that have been scheduled now have no "street" date.

Finally, some of these authors are the same who have been hit with lower royalties for e-books. If they see that the publisher(s) is acting in a manner that isn't in their best interest, maybe they and their agents can start figuring out a way to protect the authors' rights better.

Kate said...

Lin,

You write to the author to say you're writing to the publisher to object to their pricing policies and you support the author and understand they don't have a say in the pricing or release schedules of their books.

Then you write to the publisher to tell them you detest their policy and while you'll cheerfully send the author money, you're not paying one lousy penny to the publisher.

Authors *might* have something of an issue with you sending them checks for the books you're not buying, though :)

Sarah A. Hoyt said...

That "plagging" should be plaguing natch. I've felt vaguely nauseous all day and I'm trying to decide whether it's the publishing industry or a virus

AS IF there were a difference!

I apologize to everyone. It's my fault. This is what happens when I enter any field. If I made hats, kids would start being born without heads.

Amanda Green said...

Kate, well said. Thanks!

Amanda Green said...

Sarah, I'm sure you're not the problem. I am...this is what happens when I try to get into a field.

Seriously, though, this is a problem of long standing within the industry. It's just that each year it gets worse and worse and the internet, for all its sins, also lets us see more about what's happening in the industry. Now all we can do is get our net and figure out how to last until the industry settles down again.

Dave Freer said...

"Sold by: HarperCollins Publishers
This price was set by the publisher"

- i see this as a bad sign that Amazon is learning, and echoes of the large Retail(AKA 'coalition for cheaper books or something like that - you know like "People's democratic Liberation movement" - a slight misnomer shall we say, that sounds good) /publishers fight here in Australia. Basically retail recruited readers who feel that they're ripped by astronomical book prices (prices driven and exploited in no small part by the same retailers) as proxies to attack publishers, and publishers retaliated by co-opting their authors (who faced an enviable choice - crusade for us or die.)In this case the publishers won at least the battle, but may still lose the war. The casualty has been the Australian author who is now widely assumed to be a gouging greedy bastard who wants to screw readers. If australian writers got anything more than a stay of execution as an expression of gratitiude for saving publishers butts I have yet to hear of it. And that's what this is shaping up to be - a proxy fought war between publishing and retail with readers and writers as foot-soldiers - for the benifit of neither readers nor writers but for the bunch of... charming fellows in the middle. And really, it's a lose/lose/lose/lose for EVERYONE. Big publishing and big book retail are killing readers and writers (for short term gain) without whom they too are going to be extinct.

That's why it is VITAL that authors tell the readers that they connect with (and as many people as possible) what they earn from a book and just how much influence they have over pricing.

Kate said...

Amanda, Sarah,

No, it's me. I kill entire fields every time I try to make a career in them, although I may have outdone myself this time.

Let's see... I finished my geology degree in the aftermath of the 1987 stock market crash, when no-one was hiring geologists. I retrained for teaching and finished that degree in time for the one and only teacher glut ever to strike. After recovering from the breakdown teaching gave me, I did a software engineering degree and graduated - you guessed it - at the end of 2000, right as the tech wreck was destroying programming jobs.

I start seriously trying to get published after 20+ years of writing for just me, and the publishing industry starts the full-on implosion. And when I'm finally doing well on the job front, the whole damn world economy goes to hell.

Midas touch inverted, I tell you. Everything I try to do turns to shit.

Amanda Green said...

Dave, you may be right. But it is also an attempt by Amazon to deflect that same anger from themselves since they are no longer setting the price for books from HC, McMillan, Penguin, Hatchette and one other I believe. I'm not sure I totally approve of it, but I do understand their way of thinking. This is especially true since this price change happened almost to the day that the iPad was released.

As for letting readers know exactly how much an author makes, I totally agree. I don't mean, however, the twaddle McMillan put out when it first announced the agency model. That was, at best, creative bookkeeping. At worse, it was a knowing attempt to pull the wool over the eyes of the reading public and authors as well. Call me cynical, but I see it as the latter, especially in view of the removal of e-book pre-orders for a number of books this past weekend, a removal that happened not just at Amazon but at B&N as well.

Amanda Green said...

Kate, I finally figured out who is really to blame -- skippy is. It's all his fault. (And for those of you who aren't familiar with skippy -- never capped -- visit Baen's Bar and ask. Folks there will be more than glad to explain.)

Lin W said...

Amanda and Kate - thanks for the clarification :-) Telling the author you stand beside them and then writing the publisher makes sense.

Obviously I misnunderstood. In the immortal words: "Never mind."

::grin::

Lin

Bufo Calvin said...

Thanks for the kind words, Amanda!

I think the suggestion by Dave Freer that authors tell their readers what they make is a good one. Many readers seem to think that authors make a lot of money...while that's a rare situation indeed. I believe many readers would be surprised that an author might make $2 per copy on a book that sells 10,000 copies and took a year to write. Not exactly limousine and swimming pool money.

I think the traditional publishers (tradpubs) are trying to stem a short term loss rather than make a short term gain. When they feel like they are losing too much marketshare to independents, they'll lower their prices to retain it. They want to slow the adoption of e-books because it is easier to dominate in paperbooks for them, where they have the production and distribution advantages over smaller publishers and independents.

What authors need to consider is whether or not they can publish independently. If you are well-known and can afford your own editor, you have less need for the tradpubs than someone who needs the services they provide.

However, I know many authors are loyal to their pubishers, and certainly don't want to burn bridges.

Challenging times...with tremendous possibilities.