Well, here you go. It’s called “Publish or Perish: Can the iPad topple the Kindle, and save the book business?”. I read this article in the paper edition of the New Yorker Thursday night, and some of the quotes from publishers made me want to tear my hair out. (Also, the author is woefully misinformed about royalties and other topics, as some other websites have already pointed out, but we’ll get to that).
This is a LONG post, I’m going to put most of it behind a continuation tag…
Some information summarized from the article:
- Digital/e-book sales increased 177% in 2009; the industry forecasts they’ll eventually equal 25-50% of the total market.
- At the end of 2009, Amazon accounted for about 80% of all electronic-book sales, establishing $9.99 as an acceptable e-book price, even though Amazon was taking about a $4 loss on each, buying them from the publishers at about $13. (Don’t forget, too, that buyers had something to say about the prices, staging “tagging boycotts” at Amazon, etc).
- “[Steve Jobs] said that Apple, through its iTunes and Apple stores, had access to a hundred and twenty-five million credit cards, which would make it easy for consumers to buy books on impulse. The iPad was clearly a more versatile device: it would provide color and full audio and video, while the Kindle could display only black-and-white text.”
- Amazon makes it easy for publishers to generate ongoing revenue from their book backlists; this is crucial for smaller publishers in particular.
I’m a big Apple fangirl, and that I have a Kindle as well. The ultimate problem with this article, for me, is not about the format war, it’s about the attitude traditional publishers are taking. If you want to support independent designers who would like to publish COLOR knitting and fiber arts books at a price point we all can afford, buying an iPad, or any other color e-book reader that comes out, would not be a bad idea. (More on that shortly).
Here’s how Auletta summarizes the pricing issues:
Traditionally, publishers have sold books to stores, with the wholesale price for hardcovers set at fifty per cent of the cover price. Authors are paid royalties at a rate of about fifteen per cent of the cover price. A simplified version of a publisher’s costs might run as follows. On a new, twenty-six-dollar hardcover, the publisher typically receives thirteen dollars. Authors are paid royalties at a rate of about fifteen per cent of the cover price; this accounts for $3.90. Perhaps $1.80 goes to the costs of paper, printing, and binding, a dollar to marketing, and $1.70 to distribution. The remaining $4.60 must pay for rent, editors, a sales force, and any write-offs of unearned author advances. Bookstores return about thirty-five per cent of the hardcovers they buy, and publishers write off the cost of producing those books. Profit margins are slim.
(There is a note in the digital version of this article that states, at this point, that the original — i.e. print — piece described publishers’ costs incorrectly. See the link to this article above).
Though this situation is less than ideal, it has persisted, more or less unchanged, for decades. E-books called the whole system into question. If there was no physical book, what would determine the price? Most publishers agreed, with some uncertainty, to give authors a royalty of twenty-five per cent, and began a long series of negotiations with Amazon over pricing.
Ok — but wait — that 25% royalty was not exactly an easy sell to the publishers. For one, it’s double what the midrange royalty rate is (a 10-12-15% royalty agreement, with the author receiving higher rates the more copies of the book are sold, is a lot more typical than the flat-out 15% Auletta presents in his example above). Read this article in Publisher’s Weekly on the position the Author’s Guild took on e-book royalties. It is VERY interesting.
Amazon had a profound effect on publishers’ business, creating a place where customers could reliably find books that were no longer being promoted in stores.
Oh, you mean like most knitting books, always? Take a look at my royalty statements sometime, I’ll tell you just how many people are buying their printed books at full price in a bookstore, and how many are getting them at Amazon or another discounter. You certainly wouldn’t have gotten the impression that electronic book sales would have gone up 177% percent last year judging by my publishers’ overall response to a letter my agent and I sent in 2008 practically begging them to exploit the digital rights.
Publishers’ real concern is that the low price of digital books will destroy bookstores, which are their primary customers.
Seriously. Is the bookstore the customer or is the reader the publishers’ customer? Whose needs are getting met by the status quo? How many of you — come on, ‘fess up — go to Borders or B&N to check out the new books and then promptly go home and order them from Amazon? (This is also why so many yarn stores are stocking fewer books these days. In some instances, LYS owners buy copies ON AMAZON to resell at full price because the Amazon price is better than what they can get from their distributors. Really).
Tim O’Reilly, the founder and C.E.O. of O’Reilly Media, which publishes about two hundred e-books per year, thinks that the old publishers’ model is fundamentally flawed. â€œThey think their customer is the bookstore,â€ he says. â€œPublishers never built the infrastructure to respond to customers.â€ Without bookstores, it would take years for publishers to learn how to sell books directly to consumers. They do no market research, have little data on their customers, and have no experience in direct retailing.
But who does, you ask? Amazon. Amazon, my friends. They know your shoe size and everything you’ve ever ordered, ever. BEHOLD THE UNHOLY POWER OF THE ALGORITHM!
Last year, according to several literary agents, a senior Amazon executive asked for suggestions about whom Amazon might hire as an acquisitions editor. Its Encore program has begun to publish books by self-published authors whose work attracts good reviews on Amazon.com. And in January it offered authors who sold electronic rights directly to Amazon a royalty of seventy per cent, provided they agreed to prices of between $2.99 and $9.99. The offer, one irate publisher said, was meant â€œto pit authors against publishers.â€
Hey Irate Publisher, newsflash — you already pitted yourself against your own authors long ago.
Asked to describe her foremost concern, Carolyn Reidy, of Simon & Schuster, said, â€œIn the digital world, it is possible for authors to publish without publishers. It is therefore incumbent on us to prove our worth to authors every day.â€ But publishers have been slow to take up new technologies that might help authors.
AHEM. See above. I think I proved that point back in 2008.
But here’s the money quote, the one that made me want to throw things, and which did cause me to unleash a Germanic-style series of expletives that wasn’t so much a series of expletives as one big long word…
Madeline McIntosh, who is Random House’s president for sales, operations, and digital, has worked for both Amazon and book publishers, and finds the two strikingly different. â€œI think we, as an industry, do a lot of talking,â€ she said of publishers. â€œWe expect to have open dialogue. It’s a culture of lunches. Amazon doesn’t play in that culture.â€ It has â€œan incredible discipline of answering questions by looking at the math, looking at the numbers, looking at the data. . . . That’s a pretty big culture clash with the word-and-persuasion-driven lunch culture, the author-oriented culture.â€
Madeline McIntosh, I hope your ears were burning Thursday night, because most of my invective got launched at you. Would you like to know why? It’s the proceeds from books like mine that are funding those lunches of yours. (And yet she’s supposed to be The Great Digital Hope at Random House).
The Knitgrrl books (published by Watson Guptill, which has since become a part of Random House) have sold approximately 30,000 copies. Their cover price is $9.95. Judging from information I have at my disposal, I would be shocked if they cost more than $1.50 to produce, and probably far less, as they’re printed overseas. If you’re selling them to bookstores at $5 each, you’ve got $3.50. Theoretically, my share of the royalties should be about a buck. (It’s more like 50 cents). However, I have not seen dime one of royalties, which means you’ve got more money kicking around somewhere from my work than I paid for my first house.
Oh wait. I forgot. Subtract the enormous advance you paid me per book (FYI: that was sarcasm). Now you’ve only got tens of thousands of dollars to spend on lunches at La Grenouille. I know I certainly haven’t seen anything since those advances five years ago, and your royalty department isn’t returning my emails. As for all your nurturing and marketing and author-oriented culture and whatnot (the publicist who chomped gum into the phone when speaking with yarn industry people I know personally was a big favorite), I’m not so sure it’s worth it. If you want an “author-oriented culture,” then it needs to help your authors pay their bills and make money from their work.
Now, multiply this situation times several more books.
This is why I am now publishing through my own company.
The major challenge in our particular book niche (books which are image-intensive as a general rule, and require color, unlike a copy of Twilight), is printing color in a cost-effective way. Even with sizeable print runs, it is difficult for an independent author to procure the kind of pricing a Random House has at its disposal. If you’ve wondered why so many independent authors do pre-orders, it’s usually to fund their initial print runs! This is why I say the iPad, despite its stupid name, and other color e-book readers which will likely follow, will be the ones to truly save the industry from the independent publishers’ perspective.
You, the readers, have the power to make sure that the kinds of books you want to see are actually available for sale at a reasonable price. Let technology help us create new and amazing things for you to read and use! Support independent authors and publishers wherever you can. Break the hold of the ladies who lunch.
One final note: There are exceptions to every rule. I need to go on record and say that Interweave Press is a notable exception when it comes to putting out a book — working with them feels more like a partnership with other talented, creative people and less like you’ve mortgaged your firstborn to Satan. Ten Speed Press was like that, too, before Random House bought them. They allowed me to offer contract terms to my Alt Fiber contributors that would have NEVER been approved post-merger. Most of the publishers referenced in this New Yorker article are not in the craft publishing world: Random House gets to be the target here because they are, and because I have personal experience with them.