The Superversive - Extruded Books redux: A reply to randwolf

A reader by the moniker of randwolf objects on various grounds to my characterization of publishers in my recent post on Extruded Books. Meaning no disrespect to Mr. or Ms. Wolf, I venture to suspect that he or she has been the recipient of outdated or self-serving information, of the kind very often promulgated by the traditional publishing industry. Now, if anyone is inclined to take my screed with undue seriousness, I would have you all remember that it is satire, and satire against a target that can very well take care of itself. As I said to one commenter, if I am hitting below the belt, it is because I am fighting Goliath and cannot reach any higher.

That said, let us look in detail at Rand’s objections, and see if I can make the position clearer.

Amazon is not a friend of literature, and the invisible hand is not to human scale. Amazon does, however, have its very own PAC, and that seems likely to be the reason for the anti-trust action, when there are so many more egregious abuses of monopoly power in our economy. Amazon itself, after all, is a monopolist.

I have no particular brief for Amazon, except that I have from time to time been very glad of the service they have supplied to me as a reader and a buyer of books. Many’s the time I have been able to find a book at a reasonable price on Amazon that was simply not obtainable from a traditional retailer. If you think the brick-and-mortar booksellers in the U.S. are broken, come on up to Canada and we’ll show you what broken really looks like.

That Amazon has its own PAC is neither here nor there. Every industry, and every large business, lobbies government, if only as a defensive measure against all the other lobbyists out there. For every lobbyist saying, ‘Pass the XYZ Act and put my competitors out of business!’ there is a lobbyist saying, ‘Say no to the XYZ Act, and keep competition free!’ It’s too bad that both kinds of lobbying — rent-seeking and defensive — are lumbered with the same name and, to a great extent, carried on by the same persons. Lobbying is a shark tank, and unfortunately, a necessary one; since the sharks are always among us, it is at least beneficial to force them to register as such. ‘Concealed carry’ for dorsal fins would be a very bad idea.

However, I find no reason to suppose that the DoJ case against the Big Six (minus Random House, plus Apple) is founded solely or even primarily on a complaint by Amazon’s PAC. For one thing, PACs work primarily by delivering campaign funds to legislators; and this initiative came from the executive branch, and from a bureau that is not easily susceptible to bribery. The plain fact is that the Big Six publishers have been acting in a way that appears to fit the legal definition of ‘combination in restraint of trade’; whereas Amazon, as a single market entity, has not been colluding with anyone, merely throwing its own considerable weight around. That there are worse monopolists out there is irrelevant. This is not the only anti-trust action being pursued by the Department of Justice; indeed, it would not surprise me in the slightest to see them begin a concurrent investigation against Amazon.

However, I would take issue with the claim that Amazon is a monopolist. In what area of human endeavour or commerce do they hold a monopoly? Their share of the ebook market peaked a year or so back, at about 90 percent, and has been shrinking ever since. It was not because of monopoly power that they acquired such a large market share, but simply because they were the first major player to take ebooks seriously and make an effort to earn that business. First-mover advantage does not equal monopoly. Based on information from various sources, I gather that Amazon’s share of the ebook market has declined to about 70 percent. In this field, they face competition not only from Barnes & Noble, but from Apple, Sony, Walmart (which, rumour saith, is preparing its own entry in the field, and certainly has the resources to do so), and other huge multinational corporations. It is a peculiar kind of monopoly that has to compete with businesses much larger than itself.

It is also a peculiar kind of monopoly that can be broken by any yokel with a website. Smashwords started, not so very long ago, with tiny capital and insignificant resources compared to Amazon, but has become a very respectable second runner in ebook marketing. Monopoly power consists, not in being the sole seller of a good or service, but in being able to prevent competitors from entering the market. Amazon clearly has not been able to do this. At present I should call them the dominant company in the ebook business, but not so dominant that one cannot do without them. They are, for instance, far less dominant than Microsoft was in the operating-system market fifteen years ago, and the DoJ did not, in the end, find that Microsoft was a monopolist.

The economics of Amazon as price-setter don't work: the expense of a typical book--design, editing, marketing--is roughly half the hardcover price before any printing.

That, I’m afraid, is a lie put about by the big publishers. To design the interior of a book, once you have a cleanly edited text, requires a few hours’ labour in InDesign or Quark; I have done it myself, and I am no professional. The cover is a more expensive proposition; completely original artwork costs $2000 and up. That is why so many books, professionally published by Big Six imprints, rely on stock art, cover photographs, or text-only designs — all of which are vastly cheaper — and all available to the self-publishing author. I have among my browser bookmarks the website of an artist who specializes in book covers, and will design a front- and back-cover package for ebook and paper to your specifications, for a flat fee of $500; he is much in demand. The only caveat is that he is not an illustrator, and as such doesn’t do original painted artwork.

As for editing, the brutal truth is that a great many books from the Big Six aren’t edited at all. Please bear in mind that acquisition editors are not line editors. Line-editing of manuscripts used to be part of their job description, but nowadays they are so vastly overworked that they simply don’t have time for it. (I have heard of a case where a single editor had an annual workload of one hundred books. It is not uncommon for an editor to be responsible for thirty titles a year.) In consequence, they will reject any work not by a name author unless the copy is clean, virtually error-free, and without any issues of consistency or continuity sufficient to annoy the target audience. With name authors, they sometimes just screw up. Here is a recent shameful example: Giant Mistakes in Raymond Feist Book. The editor sheepishly admitted that she was ‘not reading like an editor’ and simply did not notice that an entire chapter was mistakenly printed from an early draft and not from the finally approved manuscript.

In fact, if you are submitting to a Big Six publisher, you are advised by many experts to pay a professional editor to vet your manuscript before you submit. This is a service that some agents offer to their clients; Donald Maass, for instance, touts this as an important reason why one would sign with his agency. Unagented writers, or those whose agents are not skilled editors themselves, often hire freelance editors to do this work. But in no circumstances can you expect the ‘editor’ at a Big Six house to do it.

Marketing, again, is mostly nonexistent from the Big Six. Their idea of marketing is to throw spaghetti against a wall and see what sticks. Indeed, the average paperback original is in and out of print so fast — 30 to 45 days — that it is difficult to imagine how it could be effectively marketed in the short time it has on the shelves. Most publishers’ marketing efforts are aimed squarely at getting paper books onto brick-and-mortar store shelves. That means pitching the books to chain-store buyers, paying for shelf space via co-op and end-cap placements, and (purely a side consideration) getting capsule reviews in Publishers Weekly and Kirkus, in the fond hopes that the chain buyers will bother to read them. For most books, no attempt is made to market to actual consumers; it’s all about getting books into the distribution channel in quantity. Once they reach the bookshops, they are on their own.

In fact, it is only the list-leaders from each imprint that get even that much marketing effort. Midlist books do not receive co-op or end-cap money; they are generally shipped one to a store, displayed spine-out, and if that one copy doesn’t have the stupendous good luck to sell within 30 days, it is stripped and written off for full credit as a ‘return’. (Most ‘returns’ are nothing of the kind. The books are pulped and recycled, because it is cheaper for the publisher to take a dead loss than to pay return shipping.) Once you have had two or three unsuccessful midlist books, your publisher quietly drops you because you are no longer a hot new author who might put out a bestseller. But there was never any realistic chance that your books would become bestsellers, because they received only minimal distribution and no marketing effort whatsoever. Your publisher decided in advance to let you fail.

The last time I heard an estimate of the total cost to get a book to market from a major imprint, it was in the neighbourhood of $30,000 — higher for very large books. Most of that money represents the cost of plates and printing. To print one hardcover book by traditional methods costs something like $10,000; each additional copy costs $2 or thereabouts. With paperbacks, the ratios are even higher. That is why traditional publishers don’t bother with any book unless they can get five to ten thousand copies into the channel on the date of publication: fewer would not recoup the up-front costs. But these costs do not exist for ebooks.

Another thing that does not exist for ebooks is the cost of returns. There simply aren’t any, for the excellent reason that each individual book is not ‘manufactured’ until it is sold and paid for. The manufacturing process simply consists of transmitting the EPUB or MOBI file over the Internet. Now, I will stipulate that there are a small number of returns of defective ebooks, as with the Raymond Feist title mentioned above; and Amazon, at least — I don’t know every retailer’s policies — gives customers a certain latitude in bringing back books for refunds if they are dissatisfied with the product. But this is not the same thing as ‘returns’ as a term of art in publishing. That meant simply the bookseller’s ability to return (or destroy) any and all books it has bought from a publisher, and receive a full credit for the wholesale price. In no other industry has there ever been such a wantonly destructive practice. If you are retailing bricks or bread or basketballs, and you buy in more items than you can sell, you have to take the loss yourself and dispose of the surplus at whatever price you can get for it. Not so in books. The return for full wholesale credit was originally offered in the late 1940s, as a special promotion on particular titles that the publishers wanted to push but bookshops were reluctant to take; it soon became standard practice for all trade and mass-market books.

It is not much of an exaggeration to say that all the financial woes of the publishing industry since then have been attributable to this one practice. When you consider that the rate of returns on all printed books in the U.S. is now reported at about 50 percent, and for mass-market paperbacks at 70 percent, you can appreciate the magnitude of the problem. Publishers have to print and ship two or three books for every one that they actually sell; and they have no control over the process. When Borders was going under, it pinched pennies by simply pulping most of its inventory, and buying new books exclusively out of the return credits. Publishers had to keep shipping books to Borders stores without receiving a single dollar. They were actually relieved of a burden when the chain went out of business, because they no longer had an obligation to redeem the credits on those unsold books.

Amazon, of course, doesn't care: so long as people are buying, and writers are willing to work for less, they're OK, but something has to give.

First error: Writers are not working for less. A writer who publishes through Kindle Direct receives 70 percent of the retail price (which he or she sets) on every ebook sold: the same percentage that Amazon pays to traditional publishers. Much noise has been made about the idea that Amazon could, at some unspecified time in the future, arbitrarily reduce that percentage. If they do, however, they will have to lower it for everybody, and writers still under contract to old-style publishers will suffer in the same proportion as self-publishers.

Now, it so happens that all of the Big Six, and all their imprints, have adopted exactly the same royalty for ebooks: 25 percent of net, which, for most retail outlets, equals 17.5 percent of the cover price. (Under the wholesale model that Amazon prefers, the retailer can offer discounts from that cover price; but the wholesale price remains the same, and so the author receives 17.5 percent of cover, not 17.5 percent of the discounted sale price.) This constitutes a major swindle of every writer with a Big Six contract; but the ebook sellers can hardly be blamed for that.

Every Big Six imprint, on every ebook, keeps 52.5 percent of the list price for itself. In exchange, it does no printing, no shipping, no marketing (remember, its marketing efforts were entirely aimed at getting books into the shops, and ebook sellers, having unlimited virtual shelf space, accept everything), no editing worth the name, no plate-making, no accepting returns for credit. All it puts up is the cost of layout and cover art, a minimal degree of editing (which may consist only of ‘Yeah, this looks clean, we’ll send it to press now’), and whatever value the publisher’s brand name has in attracting book reviews.

Quality, certainly: reports of poor copy-editing of eBooks are legion.

This is true; and I have yet to see an independently-published ebook with poorer copy-editing than that professionally-published travesty by Raymond Feist. Stephen R. Donaldson is another writer who has good grounds for complaint: his print publishers simply shoved copies of his backlist through a scanner, OCR’d them, and offered them for sale without any attempt at correcting the errors or formatting the text properly. And they did this without his involvement or consent.

Copy-editing is a highly skilled trade, but you can hire a good copy editor yourself and not pay 52.5 percent of the price of every copy you will ever sell. Conversely, you can give up that 52.5 percent to a publisher who will not bother with copy-editing at all.

It also appears that some of the job of reading the slush has been outsourced to the people who read eBooks, much as, in an earlier generation, the quality of mass-market paperbacks was uncertain.

And yet, mass-market paperbacks wound up selling in far bigger quantities than hardcovers had ever done.

Look, the very concept of ‘reading the slush’ simply has no application to ebooks. When I go on Amazon or Smashwords or iBooks, I do not agree to slog through a thousand manuscripts in the hopes of finding a good one. I don’t have any obligation in the matter. Sometimes I will buy a book because it has been recommended by word of mouth, or by a review from a blogger I trust. Sometimes I buy it because of the author’s name, because I know and trust that author’s work and want to read her latest book.

I find new websites in exactly the same ways, and so does everyone else. The Internet is a giant slush pile, with literally billions of worthless and unreadable pages; but people have no trouble finding more reading-matter there than they have time to keep up with. If it’s good enough for the Internet, it ought to work pretty well for ebooks. And yet ebooks have an advantage that the Internet as a whole hasn’t got; and that advantage is what makes the services of an Amazon, B & N, or iBooks worth paying for.

That extra advantage is the bookseller’s ‘You might also like’ algorithm. The major ebook sellers (not just Amazon) have an amazingly sophisticated system for tracking readers’ habits and tastes; their recommendations are basically crowd-sourced reviews. That algorithm is gold to Amazon, for it is what makes it possible to exploit the ‘long tail’ that is the foundation of their business model. An online store that carries several million books cannot possibly hope to acquaint its customers with all of them; so it recommends them very selectively, based on recognizable patterns in each customer’s buying habits. As I have written before, it is the modern equivalent of the travelling pedlar who, every time he stops at a customer’s house, brings out of his cart exactly the merchandise he thinks the customer will want to buy. By no means is the pedlar always or even generally right; but he is right often enough to keep him in business.

But at no time have I ever bought, or even sampled, a book simply because it was the latest new release to come over my virtual transom. That would be slush.

There are even eBook spammers.

To tell you the truth, I’m not sure what you even mean by ‘ebook spammers’. If someone sends me an unsolicited communication that I do not want, whether it’s an email, a media file, a telephone call or a text message, I simply ignore and delete it. I have never had anyone send me a book, and have never heard of anyone else who has. That is what the phrase ‘ebook spammers’ suggests to my mind. If you mean something different by it, I should truly like to know what it is.

EDITED TO ADD: I have looked into this matter. It appears to be a reference to the practice of some unscrupulous persons of taking public-domain works, Wikipedia articles, or other third-party content, putting the stuff in ebook form, and trying to flog it on Amazon and elsewhere. This practice has a much older name: it is called plagiarism if you pretend to be the author of the work, and publishing a pirate edition if you don’t, and it will get you banned rather quickly from any retail outlet where you try it. —23 April.

The other thing that is giving, just as with Walmart's suppliers, is author's incomes.

This is flatly untrue. I am personally acquainted with a substantial number of writers who have taken up independent publishing through Amazon, Smashwords, and other outlets, and I have yet to discover a single instance in which the author’s income went down. In most cases, it rose dramatically. Now, I will concede that authors with Big Six deals are taking a screwing; but that is their publishers’ fault for unilaterally imposing a lousy split of ebook rights, not the fault of the ebook sellers.

I could cite the obvious cherry-picking example, Amanda Hocking, who went from having 17 unpublished novels and no hope of a publishing deal, to being the self-published seller of a million ebooks and a multimillionaire, in just over one year. Or I could cite a respectable midlist genre writer, Jonathan Moeller, who began an experiment just over a year ago, putting up some of his out-of-print books on Amazon and Smashwords, and has so far sold over 20,000 ebooks and is earning enough to live on. Or I could cite the mystery writer Camille LaGuire, who is only selling a few dozen books a month, but whose books would otherwise be entirely out of print and would be earning no money at all from them.

It is probably true that the average of all authors’ incomes from ebooks is lower than the average of published authors’ incomes from traditional books; but that is just because the former group includes many thousands of authors who are not traditionally published and whose income from traditional publishing (zero) is excluded from the latter average.

It may be that the only future for most writers is now as people with day jobs, or self-publishing, which puts authors at financial risk--

Most traditionally published authors have day jobs, and always have had. It is only for a small minority of writers that print publishing has ever been a means to earn a living. As for self-publishing, that can hardly be described as a risk: you can pay a bit of money up front and collect 70 percent of retail, or receive a piffling advance against 17.5 percent. The choice is, as they say, a no-brainer — unless you desperately need that advance. And in that case you might as well give up and die, because it will take years before you receive the entire advance — one-third on signing the contract, one-third on delivery, one-third on publication.

did I mention that the main thing a publisher does, the thing that makes all the other things possible, is assume financial risk?

The chief financial risk that a publisher assumes is the risk of printing and shipping thousands of physical books that may be ‘returned’ and destroyed. That risk simply does not exist with ebooks. In return, the publisher expects 75 percent of the net proceeds from the book, for ever. (Reversion clauses exist, but depend on a meaning of ‘out of print’ that can never be technically fulfilled while a title is available in ebook form.)

--extends the time for authors to produce a book, and often produces an inferior product.

Actually, the time required for a writer to produce a book is not a function of anything done by the publisher. For instance, I (still) have a book on the desk of a New York editor. It took me several months’ hard labour to write it, entirely at my own risk and expense. Most fiction is written on spec, even among fairly well-established authors. The publisher’s commitment, if you can call it that, most often extends only to an option clause on your next book, for which they pay no fee. In every other business on earth, options cost money. But I digress —

I submitted that book just under a year ago, at the publisher’s express request, and it is still sitting there unread. It may sit unread for a year or two longer before the editor makes up her mind; and if she rejects it, I shall have to start all over again with a different house. (To this day, publishers will not look at simultaneous submissions by unagented writers. You have to submit to one house at a time, and wait as long as it takes to receive a response before moving on to the next.) On its last outing, the same manuscript sat on a desk for three solid years before the editor rejected it unread — and that, too, was a solicited submission. Imagine how much worse writers on the slush pile are treated!

But let us suppose that this time the book will be accepted. Huzzah! After a delay of up to three more months, I will finally receive the offered contract; after a further delay, the first third of the advance. If the contract is signed (let us say) a year from today, the book will be scheduled for publication some time in 2015 or even 2016. At that distant date, I will finally collect the last instalment of what will probably be a $5000 advance — if the book is published at all. If it does not receive sufficient interest from the chain buyers, it will simply be ‘skipped’ and I may be obliged to return the entire advance.

None of this can possibly help me write a better book today. In fact, the only way it can affect my output at all is if I let myself be driven by these criminally low payments to become an utter hack — to produce, let us say, eight potboilers per year in a desperate attempt to make a living off those $5000 advances.

The alternative, which did not exist three years ago, is to self-publish. Amanda Hocking, Jonathan Moeller, and Camille LaGuire, though far apart in terms of commercial success, all have this in common: they have earned their money in less time than it would have taken to get a response from a traditional publisher. All those books could be sitting on editors’ desks today, unread, unsold, unpaid-for, if they had tried to publish them by traditional means. Instead, those books are in the hands of the reading public, earning money, much or little, garnering word of mouth; and they will continue to be available, for no one retailer has the exclusive right to sell them. If Amazon changes its terms or (inexplicably) simply drops those authors, they are at perfect liberty to sell their books elsewhere. In fact, they are at liberty to sell their books through multiple booksellers simultaneously, and all of them are doing so.

Hard times.

Only for people who remain wedded to the old way of doing business. For writers who are willing and able to adapt, these are the best times many of them have ever known.