Publishing/Writing: Insights, News, Intrigue


Publishers Are Going To Loose Not Only Their Retailers But Their Authors In The Future

"Where have all the authors gone???

How you ask? Let’s get to it.

It’s no secret Amazon has been selling digital books at a loss to gain more sales for its Kindle family. The strategy is simple enough … they need product (books or written content) to sell on their hardware e-readers which is where they make their profit. And they will give the product away, if necessary, to provide the widest selection available on its Kindle r-readers. 

Amazon wants the biggest catalog available to choose from.  And for those who are premium members (own Kindles and not some other product with a Kindle app … plus belong to the $79/yr Amazon Prime service ) they are indeed offering books for free from their library. You can borrow one book free a month and keep it as long as you want. 

Virginia Postrel tells all about it in Bloomberg Businessweek:

Amazon E-Library Is Publishing’s Profit Model

Nov. 14 (Bloomberg) — Inc. is at it again. To the consternation of much of the book industry, the online giant is again offering digital titles for less than major publishers think books are worth. And this time, the price is zero.

If you own an Amazon Kindle, as opposed to just using the Kindle app on another device, and you also belong to the company’s $79-a-year Amazon Prime service, you can now “borrow” one digital book a month from the new Amazon Lending Library for free. You can keep the book as long as you want, but you can have only one at a time.

The new service worries Wall Street, too, because it increases Amazon’s out-of-pocket costs. The company is paying wholesale prices for some of the books in the lending library. For others, such as the titles from Lonely Planet travel guides, it is paying a flat fee for a group of books over a period of time. (It will report sales figures on individual titles back to those publishers.)

Beyond short-term earnings, however, the lending library is just the latest innovation to raise big questions about the whole publishing ecosystem. In an environment where books are increasingly digital, what’s the most effective way to create value for readers, for authors and for intermediaries? And — the biggest question — which intermediaries will survive the transition?

Big Six Balk

The lending library doesn’t include any books from the Big Six U.S. publishers — Random House, Simon & Schuster, HarperCollins, Macmillan Publishers Ltd., Penguin Books Ltd. and Hachette — because Amazon can’t control what it charges for their digital books. They are undoubtedly relieved to be excluded. But the pricing control they value so highly reflects rigid arrangements they may come to regret.

Amazon used to pay publishers a wholesale price for e- books, just as it does for physical copies. It set whatever price it thought best for its overall business, even if that meant losing money on an individual title in order to boost traffic or sell more Kindles. It could adjust prices up or down to reflect new information or offer special promotions. Its standard price was $9.99, which was often less than it paid for each copy. Major publishers thought that was too low, but most couldn’t do anything about it.

Then came the iPad and the accompanying iBooks store. Apple Inc. struck a different deal with publishers, known in the business as the “agency model.” Publishers set the retail prices, with Apple taking a percentage for its services. The Big Six liked that deal and wanted it to be the industry standard.

Amazon resisted, going so far as to remove all the physical books from Macmillan off its site in hopes of forcing the company to continue the wholesale arrangement. But that sales strike alienated Amazon customers, who were angry when they went to the site and couldn’t buy the books they wanted. Amazon blinked.

As a result, most of the big-publisher titles in the Kindle store now sell for $12.99 to $14.99 each — a range Amazon called “needlessly high” when it capitulated.

I should say at this point that I am not an entirely disinterested observer. I’m an author, with two books available in digital form. And I agree with Amazon that, at $14.99, my 1998 book “The Future and Its Enemies” was priced needlessly high when its Kindle edition was released last spring. You have to either love me or your Kindle a lot to pay that much for a 13-year-old book you can get in paperback for $6. But, like Amazon, I have no say over how my e-book is priced.

Publishers, for the most part, don’t believe customers care much about the difference between Amazon’s old price and their new, higher ones. They’re skeptical that consumers respond to small price differences. A former publishing executive recently told me he simply didn’t believe that “if I really want a book for $9.95 I don’t also want it for $10.95 or $12.95.”

Look at Research

People in publishing say things like that all the time. While they admit that charging $100 for the typical hardback would be foolish, they don’t believe that changing the price of a book by a dollar or two will significantly change the number of copies sold.

The economic research suggests the opposite. In a 2009 paper that looked at consumers using computer price-comparison systems, or shopbots, to buy physical books online, economists Erik Brynjolfsson, Astrid Andrea Dick and Michael D. Smith found that a 1 percent drop in price — a mere 25 cents on a $25 book — increased the number of units sold by 7 percent to 10 percent. Shopbot users tend to be more price-sensitive than most consumers, but that’s a huge difference.

Publishers resist such evidence. The standard response is that it’s hard to know anything about pricing because “every book is different.” Every title is a unique good, and every customer values each book a little differently. So you might as well trust your gut.

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Is New York’s Hold on Publishing Smothering It?

Oh, New York, New York!

No denying, New York is the publishing center of America … And, it might even have been a good concept at one time under older business models that were more horizontal and where grouping tangental businesses in close proximity was desirable for expediency.

But, todays publishing landscape is everywhere, instantly … So, why does New York still have such a hold over the publishing industry? 

Good question … Reluctance to change. Old habits are hard to break. Old power brokers don’t want to give up power (although it’s been steadily seeping away), etc., etc.

Anyway, here is a good insight on this subject by Edward Nawotka in

Is Publishing Too New York-centric?

New York’s outsized influence on publishing is felt across the US, but is it good for the other 99%?

The outsized influence New York, and Brooklyn in particular, has on the current literary scene is undeniable.  It is the center of publishing in the United States.

But is it good for the other 99% of the country?

New York publishers have been accused of publishing books for each other – and the writers, for writing for each other. Has a kind of group-think has set in where people — consciously or not — are perhaps working to impress each other rather than a wider audience?

You often hear publishing personalities and literary journalists on the coasts moan that “the rest of America” doesn’t read books. To this I say, the rest of America does read, they just don’t necessarily want to read the books New York sometimes publishes. How many novels can someone in, say, Chicago or Atlanta, read about a twenty-something Manhattan editorial assistant, junior Wall Street trader, or cupcake shop owner in Cobble Hill looking for love?

But isn’t some of this our own fault. After all, with the end of the year lists, how is it that book critics in Denver, Minneapolis, Kansas City and San Diego all manage to come up with basically the same “top ten” book lists? Shouldn’t they be looking at more worthy regional titles? Nah, cause if they don’t weigh in on the big important books of the year, they won’t be taken seriously by their more-influential colleagues in New York.

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Changing the Way Authors Get Paid

The subject topic is a favorite of mine and has been discussed in many aspects in previous posts.
Today, author M.J. Rose discusses how increased marketing and promotion demands on authors necessitates a change in the way authors get paid.

Tomorrow, publisher Bob Miller, founder of HarperStudio, will responded in a separate article.

Editorial by M.J. Rose:
Shout it from the rooftops, or better yet, hashtag it on Twitter. It’s time to turn the page on how authors get paid.

Times have changed, and with them, every aspect of the publishing landscape is morphing. And from my vantage point, nowhere is it changing more than in marketing. Authors aren’t waiting and watching to see what publishers aren’t doing for their books — they are jumping in feet first and months ahead of their houses to make sure there’s a serious marketing and publicity effort.

And publishers aren’t gnashing their teeth over the author’s involvement anymore — they are encouraging it. Co-op is more costly than ever and eating up marketing dollars. In almost all cases, publishers are making it clear that they expect authors to supplement their marketing/PR effort in various ways and, in some cases, even soliciting the author’s help with both time and yes, money.

As a result, today the author’s marketing/PR effort is often equal to or even greater than what the house is doing.

The good news is it works. No wonder really — people do buy more of something when they know it exists, and in general, book marketing is so low-key that people don’t know what books are even out there. I have dozens of case histories of authors who have pushed their sales into reprints when none were expected, created enough velocity to generate free co-op when none was anticipated, and achieve bestseller listings when none were dreamed of.

But whenever there’s good news…

We now have a situation where publishers are financially benefiting from the author’s efforts but the author is still getting paid the old way, without regard to how much we personally invest.

There’s just no consideration for the checks we’re writing out of our own pockets for marketing or PR services.

Accordingly, it’s blatantly and patently unfair for us to invest in our own books and then wait for our advances to earn out based on the same royalties rates we’ve always gotten.

Be it $2,000 or $20,000, the money we invest should be discounted from the advances we’re paid, allowing us to earn royalties faster based on an honest up-front expenditure by the publisher.

And, it goes without saying, we should be be getting a higher royalty rate. After all, we’re doing more than writing our books, we’re business partners as well.

Times have changed since 1999 when I went to my first marketing meeting as a debut author. I’d been the creative director of a top NYC ad agency, and was startled by the paucity of the marketing budget the publisher presented. I’d known not to expect the millions I worked with at the agency, but I did expect a real ad budget. When I found out it wasn’t there, I offered to give my publisher back my advance if they would spend it on advertising.

The publishing team not only refused… they were horrified.

So was I.

I wanted to supplement their efforts to give my novel a better shot and they were turning down my money?

How times have changed. And how contracts now need to change.

Over the last ten years I’ve spoken out a lot about authors needing to get involved in more than just the writing of the book, and how we can benefit by investing in our books and becoming marketing partners with our publishers.

At first I was a pariah — publishers were aghast. Education can be a dangerous thing when it causes conflict and requires extra conversations and explanations.

By 2005 when I started (to offer authors and publishers viable and affordable marketing solutions) authors were still a little nervous about getting involved in marketing and often asked me how best to broach the subject with their publishers.

By 2007 that trepidation was gone. Publishers were welcoming the help.

And now, in 2009, publishers not only expect the author to do a certain amount of marketing, I now hear weekly from authors approached by their house asking if he or she wants to foot an ad bill or share some costs.

This pendulum has swung a bit further than I ever thought it would.

We should be involved in marketing and PR — in every aspect of our careers. And if we want to pay for extra marketing or publicity, as long as we do it right, it’s a smart investment. But it is not now and should never be our obligation. And if we are going to make these investments, publishers need to acknowledge that commitment. And not just with a nod and smile and a thanks.

“Because so many contracts don’t earn out,” publishers will argue, “the author makes far more than the we do — so why shouldn’t we ask them to invest? It’s their career, after all.”

The answer is: because it’s wrong. The system and the contracts were set up at a different time under different circumstances and set up in the publisher’s favor.

It used to be that the author wrote and the publisher published. Publishing meant everything from editing to distribution to marketing. Now, more and more books are not being published, but instead are merely being printed.

No one walks into a bookstore and says to the clerk — “I’d like to buy a book that I never heard of and that you never heard of.” Someone has to do the marketing and get the word out. And if that’s going to be a shared responsibility, so be it. We all have the same goal in the end.

But our contracts and the way we get paid can’t remain the same. It’s time to start a new chapter.

M.J. Rose is the bestselling author of several novels including, most recently, The Memoirist. She is also the founder of and one of the founding board members of International Thriller Writers (ITW). Her next novel, The Hypnotist, will be published in May 2010.

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