Amazon /Hachette/Indies Oh My!
Over at KBoards for a while now a lively little debate has been happening on the hostile negotiations between Amazon and Hachette publishing. Now, for those of you who know me well, you know it's been torture for me not to hop up on my blog and express an opinion one way or the other about it. But this week some of the tactics being used have moved beyond the realm of the publishing and into a more mainstream business, that of movies and music. The LA Times had a nice little article on it this past week.
I love a good hot fight, but I might surprise my friends and family by not taking a side. I ran across an interesting little article by Ewan Morrison at the Guardian where he theorizes self publishing is in a bubble. So since I went to business school, I'm going to put my education to work in this blog post.
(By the way if you want to see the two sides of the Hachette/Amazon debate just watch the Colbert link and read through JA Konrath's blog. I think this is his best post on it.)
Now for those of you who don't want read through and watch all of those links I'll attempt to sum up. Amazon wants to break the what's called Agency Pricing Model. Where the publisher sets a price and the books are then sold like anything else that has physical form in the economy. So the publisher takes a risk, has a run of books printed, and then sells them for a profit to a wholesaler or distributor of which Amazon is the largest and has almost 50% of all books sales in the US.
Hachette, understandably, wants to believe their model can last. Now because the entire publishing world got together to collude with Apple so that they could sell books for what they wanted and were stopped by the US government, publishers were put at a disadvantage in negotiations because Amazon can pick of publishers one by one. (The US government has forbidden the companies frm banding together to negotiate.) The negotiations have been tense, because while the terms have been kept under wraps, Amazon has changed it's business practices to target Hachette books by reducing the stock it keeps on hand and removing the convenient pre-order button. Amazon defenders, mostly successful indie authors, say these tactics are legal, fair, sound free market policies set in place by Amazon. Hachette, seeing a huge decline in sales, naturally disagrees. Writers are public figures, so when Amazon plays hardball with Hachette, Hachette writers complain publicly and persuasively because they are losing money. The Hachette authors and Hachette itself, is trying to make the public argument that these turn of events shows Amazon has gained too much power and should be broken up by the government.
Do we really want the US (or any other) government meddling in perfectly legal business contracts? Hachette and many of the other publishers have not garnered any respect among indie authors, first because e-publishing offers such better terms that many indie authors (well the ones putting out good e-books and have a large following) now feel the terms being offered by the Big Five are oppressive. They have a point, even if you use Amazon's WORST deal and price your book below $2.99, you are still getting 5% more than the best terms a legacy publisher will offer you. And unless you are JK Rowling, the legacy publisher isn't going to promote your book. So if you are a mid-lister or below, and putting out quality stuff, you might as well self publish.
But the risk, is the Ewan Morrison piece, which though deeply flawed, at least ASKS the right question. Are we in a self publishing bubble, and if we are how soon until it bursts? So I believe I'm with Mr. Morrison, but for VERY different reasons. Why do I think self publishing is in a bubble? Two words for you: Google Play.
What? Wait? You aren't going to pick on all of those people willing to sell you a book on how to get rich writing your books, or setting up shop selling e-book formatting or covers? No. These are signs of healthy, competitive market place, one that has just come online in both senses of the word. It will still be there when the bubble bursts. Dotcoms didn't go away when the dotcom bubble burst, they just got better and the bad ones were put out of business. They are not symptoms of the problem, they are signs that the market is healthy. But there are beginning to be a plethora of places for e-books to be sold. Amazon, (which controls basically all of it) I-tunes, Smashwords, Kobo, Barnes and Noble, Direct to Digital and finally Google Play. (There are smaller platforms, but scroll through K-Boards and these are the biggies.) They all sell indie e-books. And why shouldn't they? It doesn't hurt their business and server/memory space is cheap. And they are falling all over each other to offer better terms for indies. So now is a good time to be an indie author if you can get the attention of readers.
Ah, the if, the if...
But the bubble? Just where is that at? Well, everybody thinks they can sell e-books. But one day, perhaps even one day soon, one of these distributors is going to think, "hey, we get a LOT of complaints about the quality of indie e-books, so...why don't we offer readers a higher quality of reads?" And then they start restricting the books that are sold on their sights. Perhaps, an enterprising literary agent comes along or perhaps it's a smaller imprint and they start offering a much higher quality e-book than any indie can put out there. What ever it is, this change is coming. It's inevitable, just as Blockbuster put small video rental chains out of business, and Netflix and streaming videos put Blockbuster out of business (or nearly put them out of business). What you have right now is a rapidly expanding e-book universe, and while the money is easy it will continue to grow. But there is an upper limit, I don't know where, but there just is. And at the limit there will be a mature market, where margins are thinner, competition is more fierce, and a few winners will emerge. Amazon is determined to be on top, and they will be unless they get too big for their britches. Think of this, they have gone the pre-order button route not just with Hachette; which is a headache for readers but probably not enough of one to damage Amazon's customer base, but now also with Time-Warner and their video distribution. And Amazon, like other big companies before it, cannot always see the forest for the trees. Time Warner has many more distribution channels than Amazon, including a way to stream content itself. So while Hachette is sure the buckle under sooner rather than later, Amazon hasn't learned how much people HATE their cable/dish company for higher prices and the ongoing periodic blackouts as content providers and content distributors fight for an ever decreasing slice of the pie. If Amazon becomes the next hate company, too bad for them. Because the barrier for entry into Amazon's market is low, really, really low, and someone will figure it out.
One thing is certain though, the novel isn't going anywhere ever. It gained momentum with the invention of the printing press and has withstood the advent of movies, radio, television, and the internet. Though fewer people are reading novels now than in my parent's generation it still remains the best place to explore ideas long form. It is an immersive experience that with combined with a rich imagination provides a better value for it's consumers than any movie could hope. Nor are authors going away, the arguments that indie publishing is leading to fewer writers being able to make a living at it, is ludicrous. E-books have allowed MORE writers to make a living at writing. Unlike when I was in my teens and twenties and just starting to write, today's writers inhabit a world where the barrier of entry is low, success is more in your own hands than ever, and creativity can be rewarded because I write, you read, we're all happy. It may be that the Amanda Hockings of the world owe their success to the Stephanie Meyers and JK Rowlings, but then JA Konrath owes his to Sir Arthur Conan Doyle and Agatha Christie and Stephen King to Edgar Allan Poe. We all stand on the figures who come before us and the creative types who propel our industries forward, changing the model of pay doesn't doom an industry it just changes it. Like the Catholic Church no longer patrons the best artists of the day, big publishers, and with them literary agents, will fade or evolve, that is the nature of things. Inevitable. Hachette lost this fight a long time ago, they just don't realize it yet. The only question that remains is how badly is Amazon going to get bruised in the fight. Mr. Bezos and the Amazon Board of Directors, I would caution you. The bigger you are, the more carefully you have to throw your weight around. Your business can be damaged by this, if you don't believe me, ask Walmart how things are going. Sure Walmart might blame you for disrupting the retail model, but they damaged themselves by their business practices so that many people stopped shopping there regularly. I know, I'm one of them.
I love a good hot fight, but I might surprise my friends and family by not taking a side. I ran across an interesting little article by Ewan Morrison at the Guardian where he theorizes self publishing is in a bubble. So since I went to business school, I'm going to put my education to work in this blog post.
(By the way if you want to see the two sides of the Hachette/Amazon debate just watch the Colbert link and read through JA Konrath's blog. I think this is his best post on it.)
Now for those of you who don't want read through and watch all of those links I'll attempt to sum up. Amazon wants to break the what's called Agency Pricing Model. Where the publisher sets a price and the books are then sold like anything else that has physical form in the economy. So the publisher takes a risk, has a run of books printed, and then sells them for a profit to a wholesaler or distributor of which Amazon is the largest and has almost 50% of all books sales in the US.
Hachette, understandably, wants to believe their model can last. Now because the entire publishing world got together to collude with Apple so that they could sell books for what they wanted and were stopped by the US government, publishers were put at a disadvantage in negotiations because Amazon can pick of publishers one by one. (The US government has forbidden the companies frm banding together to negotiate.) The negotiations have been tense, because while the terms have been kept under wraps, Amazon has changed it's business practices to target Hachette books by reducing the stock it keeps on hand and removing the convenient pre-order button. Amazon defenders, mostly successful indie authors, say these tactics are legal, fair, sound free market policies set in place by Amazon. Hachette, seeing a huge decline in sales, naturally disagrees. Writers are public figures, so when Amazon plays hardball with Hachette, Hachette writers complain publicly and persuasively because they are losing money. The Hachette authors and Hachette itself, is trying to make the public argument that these turn of events shows Amazon has gained too much power and should be broken up by the government.
Do we really want the US (or any other) government meddling in perfectly legal business contracts? Hachette and many of the other publishers have not garnered any respect among indie authors, first because e-publishing offers such better terms that many indie authors (well the ones putting out good e-books and have a large following) now feel the terms being offered by the Big Five are oppressive. They have a point, even if you use Amazon's WORST deal and price your book below $2.99, you are still getting 5% more than the best terms a legacy publisher will offer you. And unless you are JK Rowling, the legacy publisher isn't going to promote your book. So if you are a mid-lister or below, and putting out quality stuff, you might as well self publish.
But the risk, is the Ewan Morrison piece, which though deeply flawed, at least ASKS the right question. Are we in a self publishing bubble, and if we are how soon until it bursts? So I believe I'm with Mr. Morrison, but for VERY different reasons. Why do I think self publishing is in a bubble? Two words for you: Google Play.
What? Wait? You aren't going to pick on all of those people willing to sell you a book on how to get rich writing your books, or setting up shop selling e-book formatting or covers? No. These are signs of healthy, competitive market place, one that has just come online in both senses of the word. It will still be there when the bubble bursts. Dotcoms didn't go away when the dotcom bubble burst, they just got better and the bad ones were put out of business. They are not symptoms of the problem, they are signs that the market is healthy. But there are beginning to be a plethora of places for e-books to be sold. Amazon, (which controls basically all of it) I-tunes, Smashwords, Kobo, Barnes and Noble, Direct to Digital and finally Google Play. (There are smaller platforms, but scroll through K-Boards and these are the biggies.) They all sell indie e-books. And why shouldn't they? It doesn't hurt their business and server/memory space is cheap. And they are falling all over each other to offer better terms for indies. So now is a good time to be an indie author if you can get the attention of readers.
Ah, the if, the if...
But the bubble? Just where is that at? Well, everybody thinks they can sell e-books. But one day, perhaps even one day soon, one of these distributors is going to think, "hey, we get a LOT of complaints about the quality of indie e-books, so...why don't we offer readers a higher quality of reads?" And then they start restricting the books that are sold on their sights. Perhaps, an enterprising literary agent comes along or perhaps it's a smaller imprint and they start offering a much higher quality e-book than any indie can put out there. What ever it is, this change is coming. It's inevitable, just as Blockbuster put small video rental chains out of business, and Netflix and streaming videos put Blockbuster out of business (or nearly put them out of business). What you have right now is a rapidly expanding e-book universe, and while the money is easy it will continue to grow. But there is an upper limit, I don't know where, but there just is. And at the limit there will be a mature market, where margins are thinner, competition is more fierce, and a few winners will emerge. Amazon is determined to be on top, and they will be unless they get too big for their britches. Think of this, they have gone the pre-order button route not just with Hachette; which is a headache for readers but probably not enough of one to damage Amazon's customer base, but now also with Time-Warner and their video distribution. And Amazon, like other big companies before it, cannot always see the forest for the trees. Time Warner has many more distribution channels than Amazon, including a way to stream content itself. So while Hachette is sure the buckle under sooner rather than later, Amazon hasn't learned how much people HATE their cable/dish company for higher prices and the ongoing periodic blackouts as content providers and content distributors fight for an ever decreasing slice of the pie. If Amazon becomes the next hate company, too bad for them. Because the barrier for entry into Amazon's market is low, really, really low, and someone will figure it out.
One thing is certain though, the novel isn't going anywhere ever. It gained momentum with the invention of the printing press and has withstood the advent of movies, radio, television, and the internet. Though fewer people are reading novels now than in my parent's generation it still remains the best place to explore ideas long form. It is an immersive experience that with combined with a rich imagination provides a better value for it's consumers than any movie could hope. Nor are authors going away, the arguments that indie publishing is leading to fewer writers being able to make a living at it, is ludicrous. E-books have allowed MORE writers to make a living at writing. Unlike when I was in my teens and twenties and just starting to write, today's writers inhabit a world where the barrier of entry is low, success is more in your own hands than ever, and creativity can be rewarded because I write, you read, we're all happy. It may be that the Amanda Hockings of the world owe their success to the Stephanie Meyers and JK Rowlings, but then JA Konrath owes his to Sir Arthur Conan Doyle and Agatha Christie and Stephen King to Edgar Allan Poe. We all stand on the figures who come before us and the creative types who propel our industries forward, changing the model of pay doesn't doom an industry it just changes it. Like the Catholic Church no longer patrons the best artists of the day, big publishers, and with them literary agents, will fade or evolve, that is the nature of things. Inevitable. Hachette lost this fight a long time ago, they just don't realize it yet. The only question that remains is how badly is Amazon going to get bruised in the fight. Mr. Bezos and the Amazon Board of Directors, I would caution you. The bigger you are, the more carefully you have to throw your weight around. Your business can be damaged by this, if you don't believe me, ask Walmart how things are going. Sure Walmart might blame you for disrupting the retail model, but they damaged themselves by their business practices so that many people stopped shopping there regularly. I know, I'm one of them.
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