Winning and Losing

Sunday, May 17, 2015

A few months ago, the Big 5 Publishers won. At least they think they did.

After the Department of Justice found them guilty of collusion in setting prices, the agency pricing contracts they had in place were determined to be illegal and they were forced into other terms for a period of time.

For those who have no idea what I’m talking about, I’ll give a short explanation. There are two ways a manufacturer’s goods get into your favorite retail store. The model most of us are familiar with is that Joe’s Widget Factory sells a box of widgets to Big Box Retail Store for fifty cents a widget. Big Box Retail Store figures out how much profit it needs to make on each widget to cover not only the cost of the widget, but salaries, lighting in the store, etc. The retailer prices each widget at 99 cents and puts it on the shelf. Sometimes, in order to get more business, Big Box Retail Store runs a sale and prices the widgets at 89 cents. Humongous Retail Store down the block, seeing all their customers leaving to go buy at the cheaper price, lowers its price to 88 cents. That’s called competition.

This is the way print books have always been sold.

In agency pricing, Joe’s Widget Factory decides that the price of its widgets in the stores should be 99 cents. When a widget is sold, Big Box Retail Store keeps a percentage, say 30 percent, of the selling price and Joe’s Widget Factory gets 70 percent. Big Box Retail Store can’t run a sale on widgets unless the manufacturer decides there should be one.

This is the way ebooks were being sold.

Now, there’s nothing inherently illegal in agency pricing. It’s the model indie authors have in place with all the major book retailers. What was illegal was that the Big 5 Publishers sat down with Apple and decided that they would make all retailers sell widgets — er, ebooks — at the same price for the same percentage split. It appears that this tactic was specifically aimed at Amazon, which had been wildly successful in selling ebooks, which the publishers thought was cutting into sales of print books, and helping Apple, which was launching its nascent iBooks store. What was illegal was the collusion.

 The DOJ pretty much voided the agency agreements and forced the publishers to sell ebooks like print books for a period of time. That time period expired last year and the publishers entered into a negotiating period for new contracts with Amazon. You may have heard something about this when the stalled Hachette negotiations made the news.

To make a long story short, each of the publishers eventually negotiated back to agency pricing with Amazon. This wasn’t illegal because there was no collusion. They handled the negotiations individually. As far as which pricing model they’d operate under, they won.

Or did they?

I know I’ve noticed the higher prices. Heck, yesterday I went looking for a book (an ebook, on Amazon of course) that I was interested in buying. The price was $9.99, with one of those notations Amazon puts underneath prices these days that said “This price has been set by the publisher.” So you know Amazon isn’t the one who decided to charge this much. What made it even more ridiculous is that the paperback version of the same book is only $7.99. Is there any doubt traditional publishing is trying to sell print books rather than ebooks?

The latest Author Earnings Report came out this past week. The is the invention of wildly successful indie author Hugh Howey and the anonymous Data Guy, who does the actual data collection and number crunching. The purpose of the report is to determine how much money traditional authors earn contrasted with authors who have decided to self-publish. It does this by scanning the Amazon ebook bestseller lists for sales. In each quarterly report, the analysis states that it is more financially advantageous for the author to self-publish — go indie — than to have a traditional publishing contract. Unless you’re James Patterson or Stephen King or one of the other mega-successful authors. But most authors are not mega-sellers in that category. They’re what are referred to as mid-list authors, authors who have a loyal following of fans and consistently sell books. A lot of them have day jobs to support themselves because, contrary to the myths perpetrated by shows like Castle, most writers don’t earn a whole lot from their writing. But that’s another post.

What the current Author Earnings Report shows is that there has been a steady shift in percentage of sales from traditionally published books to indie published books. It also shows that, since the Big 5 have been setting retail prices for ebooks again, prices of those books have increased. If you take a look at those two statements, it seems clear that readers are choosing to buy the lower priced indie books over the traditionally published books. It’s common sense. Readers don’t care what entity publishes a book. They don’t go looking for a Hachette book. They buy their favorite authors. If the price is right, they’re willing to try a book by a new author if the cover and the title look interesting.

Based on the Author Earnings Report, did traditional publishing really win?

Of course, as happens each time a new report comes out, those in traditional publishing or aspiring to it try to discredit the findings. There’s one blogger whose arguments have engendered a firestorm of comments on The Passive Voice, a popular blog that aggregates news in publishing from all over the web. He’s not published yet, but he is one of the aspirants.

He reminded me of an author who spoke at our Sisters in Crime meeting several years ago. He’d just won a Best First Novel award at one of the major conferences and his topic was how he got published. After describing the difficulty and the amount of time it took to find an agent, then a publisher, one of our members raised the question of why he had decided on traditional publishing as opposed to self-publishing. This was when indie publishing was just starting to take off and many of us were debating which path to follow, and he seemed like a person who would know.

His answer was, “I want it all.” He then went on to list in glowing terms all the awards he wanted, topping it with the Oscar of our genre. He talked about attending conferences and banquets and book signings and being on the New York Times bestseller list. In other words, he wanted to be Richard Castle. If you want all of that, it’s true that you must go the traditional publishing route. Only this year have a very few writers organizations started to consider including indies in the eligibility for these awards and lists.

Prompted by that memory, it occurred to me that I hadn’t heard anything about him lately. Now, I read that first book and didn’t particularly care for it, so he’s not an author I’ve kept track of, and it was very possible he had established a successful writing career that I didn’t know about. (Remember what I said about mid-list authors?) So I went searching for him on Amazon.

His last novel was published almost two years ago. Even at the glacial pace of traditional publishing, he should have had a book published last year if he was successful. That last book was the third book in his series. Two of the three books had Amazon rankings significantly worse than my books. The second book has as many reviews as my first and the third book has fewer reviews than any of my books. Even more telling was the fact that he’s co-authored a non-fiction book with someone that was published by a company whose website is still largely the Wordpress template, complete with the dummy Latin Wordpress fills in by default on new pages. Huh.

It was obvious to me he’d fallen victim to the three-book death spiral, a well-known phenomenon in traditional publishing. A new author gets a three-book contract (now often down to two books). For whatever reason, (s)he doesn’t build enough of a fan base to sell enough books to be deemed profitable. Each subsequent book sells fewer than the last due to a phenomenon called “ordering to the net.” The publisher opts to drop the author, doesn’t offer him a new contract. Instead they go looking for the next potential superstar.

The author who wanted it all has lost. Oh, if he’s lucky, he may write another book in another series, take a pen name and get another contract with another publisher at some time in the future. But that’s a bunch of ifs. Or, if he really wants to be a writer, he could decide to go indie.

There are times when I get discouraged at the amount of hard work it takes to be an indie author or because of a slump in sales of my books after all that hard work. There are times when I wonder what would have happened had I decided to go the traditional route, get an agent and have my book published by traditional publishers and, possibly, show up on the shelves at Barnes and Noble, be eligible for one of those pretty trophies and bestseller lists. It might have happened. But the odds are it wouldn’t. Odds are the best I would have achieved would be the same fate as that author I described. At least I’m certain my publisher won’t drop me. I think I won.

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A Clash of Kings
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