The Merger Apocalypse

It has been a while since I wrote about ebooks and books in general. For the most part, nothing new or exciting has been happening once you move away from the hardware side of things. But the merger of Random House and Penguin is a comment-worthy event.

In the past, consolidation has been very bad for professional editors. Somehow these mergers and purchases needed to be paid for and with supposedly declining sales in bookworld, the way to pay for the merger was to cut expenses. The primary way to cut expenses has been to cut costs in areas that consumers do not see or notice until too late, thus primarily in editorial and book production.

Past consolidations have resulted in layoff of editorial and production personnel and in lowering of fees paid to freelance editors. In preconsolidation days, there was competition for editorial services, so freelancers could easily raise prices. In postconsolidation days, competition has been greatly reduced, there are fewer publishers to compete with each other for editorial services and thus the (successful) downward pressure on pricing. Freelance editors have little place to turn when where there was once two there is now but one job opportunity (publisher).

The merger of Random House and Penguin, who combined will account for approximately 25% of traditionally published (as opposed to self-published) books, is likely to spur a second merger, that of HarperCollins and Macmillan (or perhaps it will be HarperCollins and Simon and Schuster), who combined will account for at least another 20% of that market. And when pricing for freelancers is set, it will be set companywide — it will make little difference which imprint of the RandomPenguin colossus a freelancer works for, the pricing will be fairly uniform, and increasingly depressed. Or so experience says.

I understand why the merger is occurring: somehow a company has to combat Amazon and Apple and the most logical way is to make it so that Amazon and Apple cannot ignore the publisher’s demands because neither can forego stocking 25% of traditionally published books. (And let us not forget that Amazon is working to build its own publishing behemoth as a foil to these publisher tactics.)

Yet there is another possibility. What if one or both of these megapublishers — RandomPenguin or HarperMacmillan — decides to combat Amazon and Apple directly? It strikes me that the way to do it would be to buy Barnes & Noble. Buying B&N would give them immediate access directly to consumers. They could set terms for distribution with their captive company (bring back agency pricing) and tell Amazon and Apple they, too, can have access to these books but on the same terms as B&N. It would put the publishers back into control quickly, and B&N could be bought cheaply — a couple of billion dollars ought to do it.

Another possibility, although one that would likely have limited success, would be for publishers to start a “first edition” club only for brick-and-mortar stores. B&M stores would be given the exclusive opportunity to sell to consumers collectible first edition-first printing-author signed hardcover books that come with an included ebook copy. If done smartly, it could be an incentive for consumers to enter a b&m bookstore. I think, however, publishers would blow it simply because they seem to blow everything else.

The bottom line is that just as these consolidations are likely to be bad news for editors, they are likely, too, to be bad news for consumers and for sellers like Amazon and Apple.

The consolidation of the publishing industry has been ongoing for 30 years. The problem is that there are fewer large publishers to consolidate today than 30 years ago. It strikes me that if the Justice Department doesn’t think that Amazon dominates the ebook retail market in the United States and that it never did, it would be hard pressed to oppose these consolidations or even the purchase of B&N by a combination of the megapublishers because their market position would be less than that of Amazon.

Are we in for interesting times in publishing? I think more worrisome than interesting. If book quality is noticeably declining preconsolidation, what will it be postconsolidation? If editorial incomes are in decline, how much more rapid will that decline be postconsolidation? If book prices are on the rise, how much faster will they rise postconsolidation?

The question that comes to mind, however, is this: Would RandomPenguin have come about if Amazon were not acting like the Wal-Mart of ebook world? I have no inside information but I suspect that the answer is no, the merger would not have been proposed. I think it is fear of the Amazon vision of the future that is driving this merger, with the final straw being the court’s decision to approve the settlement in the agency pricing case. That settlement gives publishers little leeway against Amazon in the absence of controlling a large enough portion of the market that Amazon cannot do without that portion’s product, which would be the case with RandomPenguin controlling 25% of the traditionally published market.

The more I think about the megapublishers joining to purchase B&N, the more I think it would be a smart move. There are a lot of ways that publisher ownership of the chain could effect cost savings, and with good planning, the physical stores could be made relevant again. More importantly, B&N’s online store is already a well-established and well-known destination for books for consumers, which would relieve publishers of having to create a new online presence and drive traffic to it, a difficult task. And, as noted earlier, it would provide leverage for dealing with Amazon and Apple.

What do you think?

Advertisement

The Value of eBooks: Is $2.99 The New Value

One excuse the big publishers used for going to the agency model of pricing was that Amazon’s $9.99 price for certain bestsellers was undervaluing the books and would establish expectations in ebookers regarding maximum pricing. So, if that is true, how do these very same publishers justify putting certain ebooks on sale for $2.99 or less?

This question popped to mind when Little, Brown, a subsidiary of Hachette, put City of Veils by Zoe Ferraris on sale for $2.99. This is the second mystery book by Ferraris featuring the same Saudi Arabian investigative team. (Although this is not a review of the book, it is worth mentioning that it is a 5-star book that offers both a fascinating insight into Saudi culture and a great mystery.) City of Veils is neither the first nor the last ebook by one of the Agency 6 to be put on sale for $2.99 or less; such a sale seems to be a regular happening. (The first book in the series, Finding Nouf, is listed as discounted to $11.16 from the list price of $13.95, with neither price being a price I would pay for a fiction ebook.)

Which makes me wonder about the “value of ebooks” and whether we are seeing the erosion of price to where, eventually, Agency 6 fiction ebooks will be regularly priced at $7.99 or less and frequently on sale for $2.99 or less.

There has to be something magical about this $2.99 price point. Why $2.99 and not $4.99? Or $3.99? Both prices would be substantial discounts off the list price and even off the standard 20% to 25% discount price. I suspect the answer lies in what experience is rapidly showing as the price point for maximizing volume of sales. I also suspect that publishers are finding that ebookers are unwilling to pay more than $2.99 for an introduction to a previously unknown author. Yet, I don’t see any evidence that after the introduction to a new author, ebookers are running to spend $11+ for other ebooks by the same author — I know I am not.

But regardless of the motivation, isn’t this $2.99 price point setting an expectation among ebookers as to what the correct price for an ebook should be? I find that it cements my belief that ebooks should be both DRM-free (which Tor, a Macmillan subsidiary, will be doing shortly) and list priced at no more than $5.99 and frequently discounted to $2.99 (or less). These Agency 6 discounts are also cementing my belief that I will only rarely pay more than $2.99 for any ebook.

The price point problem is exacerbated by other steps publishers are taking. I recently preordered Spycatcher with a bonus excerpt by Matthew Dunn, published by HarperCollins, one of the Agency 6, for 99¢. (The bonus excerpt is from Dunn’s forthcoming new novel Sentinel, which can be preordered for a whopping $12.99!) At the same time, Spycatcher without the bonus excerpt is available for $9.99. This type of discounting with bonus material included happens regularly. My question to publishers is this: Why would I ever consider buying Sentinel for $12.99 or Spycatcher for $9.99 — neither book nor the author being previously familiar to me — when I expect that at some future date I will be able to buy them for significantly less?  Doesn’t your offering one of the books for 99¢ create an expectation in me, the ebooker? And even if I can’t buy them in the future for $2.99 or less, why would I buy them at all — regardless of how good a read the introductory book is — at a price that has already demonstrated as far too high?

If there is any validity to the complaint of Amazon’s $9.99 price point setting consumer expectations at a price that is unsustainable by the publishing industry, how are publishers fighting that expectation by offering ebooks for $2.99 or less? Why is the publisher’s tactic sustainable but not Amazon’s?

Valuing of ebooks is difficult. Yes, there are costs that can be objectively measured but those per-unit costs diminish with volume sales. I grant that each ebook cannot be looked at in isolation as best-selling ebooks need to subsidize those that do not sell well so that overall there is an industry profit. Yet, where previously the argument was that no ebook should be sold below a price that sustained the industry, which price was somewhere north of $9.99, Agency 6 publishers belie that argument by demonstrating that at least some ebooks can be sold for significantly less without damaging the industry. That action reraises the issue of what is an ebook worth?

The industry has put itself into a straitjacket of its own making. Originally publishers planned to window ebooks. Windowing of ebooks allegedly would let publishers subsequently publish the ebook version of a pbook at much reduced price, more in line with ebooker expectations. But after much protesting from ebookers, publishers ultimately went to simultaneous release. Unfortunately, with simultaneous release, publishers decided they could not price the ebook much lower than the pbook for fear of cannibalizing pbook sales, losing money, and devaluing the book.

Then to shore up the value of ebooks, agency pricing was instituted. It was touted as necessary for the health of the publishing industry — from author to publisher. Now, within the past year, these same publishers are regularly pricing some ebooks at $2.99 or less, shattering the justification for the higher agency pricing.

In the end, I think publishers will find that $2.99 is the magic price point for ebooks. The combination of the self-publishing phenomenon that ebooks have produced, the use of the $2.99-or-less price point by self-publishers, and the apparent willingness of at least some of the Big 6 publishers to discount ebooks — even if for just a limited time — to that price point, will create an expectation in ebookers that publishers will be unable to combat. We may be a few years away from seeing that magic price point, but I suspect it is coming on fast.

Sarah, Where Are You? Capitalism in eBookville

Sarah (Palin, that is), where are you? America desperately needs you and Michelle (Bachmann) and Glenn (Beck) and Rush (Limbaugh) and all your Tea Party compadres to save it from creeping socialism.

I never thought I’d say it, but you may be America’s first defense against the Murdochian (Rupert, that is) subterfuge to convert America from out right Wild-West-type capitalism to socialism. And, if you don’t take a stand now, how much longer will it be before Rupert starts pushing America down the path to socialized medicine plans sold under the Murdoch brand? Your buddy, Rupert, has taken that first step down the path to destroy capitalism and you are silent. Now is the time to speak up loudly and tell Murdoch you won’t stand for this subterfuge!

We know it all began with talk radio that transformed into talk TV and that became branded as Fox “News.” Murdoch established his credentials as a right-wing conservative who abhors socialism and embraces capitalism. He then suckered you and your colleagues into believing you had found a bully pulpit to protect America from creeping socialism, a mount from which you could castigate the poor for being poor and for needing government assistance. (Interestingly, you never castigated the rich corporations for needing — nay demanding — government assistance, but then no one is perfect.)

But now eBookville desperately needs you to stand tall and protest the socialization of ebooks, a charge being led by Murdochian forces. As you know (and preach), the basis of capitalism is to let the market dictate success or failure, profit or loss, unfettered by either government or private manipulation. Under capitalism, it is the end consumer who is supposed to decide the fate of a business. In contrast, under socialism, the market is hamstrung so there is no truly free market and no market can dictate success or failure, profit or loss — to each according to his want.

And so it was in eBookville until the advent of the agency system, a system put into place with the help of Murdochian forces (HarperCollins ring a bell, Sarah?). The free market was telling Murdoch that his ebooks were overpriced and to cut the prices until the market found its equilibrium. Alas, the dark forces were not satisfied and the Murdochians decided that the free market in ebooks shouldn’t be so free, and the agency system was founded in collusion with other socialist forces.

Where are the protests from you and your conservative colleagues? Is it that you fear having your paycheck cut? Or is it that you believe in a free market only when it benefits you and strangles others? Or is it that stealth anticapitalism from a fellow conservative is OK?

We ebookers need your help to straighten out this stealth attack on what we value most — free market competition. We need you to stand up to the Murdochian forces and lead them back to the path of competition. We need you, Sarah, and your colleagues to demonstrate that you are much more than empty shills for capitalism; that you are not quitters when it is your paycheck on the line; that you really believe in capitalism, in the free market, and in competition; that you are not simply Murdochian puppets in disguise. We ebookers need for you to be that grizzly mom who defends our public libraries from Murdochian overreach.

Come, Sarah, prove America wrong — prove that you really believe in capitalism. Tell your Murdochian compadres to tear down the wall of socialism with which they have surrounded ebooks; to tear down the wall of anticompetition in ebook pricing; to tear down the wall that hems in eBookville’s free market.

Sarah, give those yearning masses of ebooks their freedom.

Waiting for Common Sense — Not: The Agency 6

It used to be the Agency 5, now it’s the Agency 6 as Random House has caved and instituted agency pricing. This further changes my book-buying habits.

Let me start by saying that I am not outright opposed to the agency system. What I am opposed to — and appalled by — is the pricing. Granted that Agency 6 pricing clearly demonstrates lack of competition bordering on price collusion (Isn’t it amazing how similar the Agency 6 ebook pricing is across the board?), but that isn’t the primary problem I have: The primary problem is that the selected price points are extortionate considering the restrictions imposed in the license (and note that it is a changeable, revocable license). Compound this with Rupert Murdoch’s greedy ploy, through his HarperCollins subsidiary, aimed at libraries, the last bastion for education of the poor, and what you have is a devil’s cabal.

(In an interesting aside, Murdoch’s Fox News has been denied access to Canadian TV because of its lack of impartiality. See Regulators Reject Proposal That Would Bring Fox-Style News to Canada. Maybe that is why he feels he needs to bleed American libraries — to make up for lost revenues and bias outlets.)

In the past I have spent significant sums of money building both my hardcover library and my cache of ebooks. It wasn’t so long ago that I could be counted on to spend $5,000 or more in a year on such purchases. The Agency 5 put a big dent in that spending. I felt compelled — if not honor bound — not to buy books, p- or ebooks, published by the Agency 5 (except where necessary because I already had several volumes in an ongoing series). So I focused my purchases on self-published, indie presses, academic presses, and Random House books. The consequence was that my expenditures on new releases dropped by more than 50% last year.

With Random House now part of the Agency cabal, my habits will shift yet again. If I want a new release in hardcover, I will wait to buy it on the remainder or the used book market, when I know that neither one of the Agency 6 nor their author will receive any compensation. But my ebook buying will (and has been) change even more dramatically.

A good example of the change occurred yesterday. Yesterday, the long-awaited second volume in Patrick Rothfuss’ Kingkiller Chronicles (the first volume was The Name of the Wind; the second volume is The Wise Man’s Fear) was released. My previous practice was to buy both the hardcover and the ebook versions; not this time, however. This time I bought just the hardcover because of the agency pricing (the ebook is virtually the same price as the hardcover and no ebookseller can sell it for a price lower than $14.99, which is exorbitant).

That is but one example. Increasingly, I am only “buying” free ebooks and ebooks that cost $2.99 or less, and those I am buying from Smashwords. The reason I buy from Smashwords is that most authors let you sample their work before you buy, some offering up to 75% of the ebook as a free sample. I admit that in the case of the free ebooks I don’t sample them, I simply download those that seem interesting, but for those that do cost some money, I generally read a portion of the sample before buying.

At Smashwords I discovered several self-publishing authors whose works are excellent. Granted they do not have the cachet of a Stephen King, J.D. Robb, or Robin Hobb, but they do know how to write a compelling story. A good example is Safina Desforges’ Sugar & Spice, a 99¢ mystery/thriller that compares well to any P.D. James novel.

The point is that the setting of exorbitant pricing by the Agency 6 has compelled me to look elsewhere for book purchases. Money that I previously spent supporting the traditional publishers is now going elsewhere — and it is costing me less yet giving me comparable enjoyment.

Yet there is one more thing that has to be said about the agency system. Currently, it is limited to ebooks. But that doesn’t make a lot of sense to me over the long run.

Under the more traditional wholesale system, the publisher sets a retail price for a book and the bookseller pays to the publisher approximately 50% of that wholesale price for each copy sold, regardless of the price that the consumer pays. (Yes, there are more wrinkles in the system, but I’m simplifying it for this discussion.) This is how it started with ebooks. The excuse for going to the agency system where the publisher sets the retail price below which no ebook can be sold and which pays the bookseller a fee for each sale was that low ebook pricing devalued the book and its content.

If that is a valid and sustainable argument, how does low pricing of the hardcover not devalue the book and its contents, too? Logically, there can be no difference. After all, a book is bought for its content, not for its package, and supposedly the content of the p- and ebooks are identical.

What this means to me is that we are the road to a major shakeup in the book industry. I think the agency system is only beginning with ebooks and will either have to be abandoned for ebooks or spread to pbooks. Although agency pricing has not been a big win so far, spreading it to pbooks could solve a major problem for publishers — the problem of returns, which would also solve the problem of excessive book print runs and remainders, and minimize the secondary market.

With the Agency 6 controlling more than half the publishing market overall and probably 75% or greater of the nonfiction market, the path they take could well become — and quickly — the path that smaller publishers take. The bulwark against the spread of agency pricing is the self-publishing market, but that market has to find ways of uniformly increasing its standards before it will supplant the traditional publishers.

In the end, it is clear that the Agency 6 lack common sense. At the same time that one or more of the Agency 6 publishers expects ebooks to grow to as much as 20% of all book sales in 2011, they try to thwart the one avenue of growth by imposing extortionate prices and limiting competition. Simultaneously, they allow the wholesale model to continue for pbooks, thereby devaluing their product and its content. Some day they will get it together; unfortunately, when that day comes, I expect it will not be to the consumer’s advantage.

In the meantime, I’ve changed my buying habits significantly and may well represent an unrecoverable customer loss for the Agency 6.

Smashwords is the Real Threat to Agency Pricing of eBooks

Smashwords and ebooksellers like Smashwords (such as Books for a Buck) are the real threat to agency pricing and the Agency 5 (Macmillan, Hachette, Simon & Schuster, Penguin, and HarperCollins). The reason is simple: the combination of quality and low price.

I find it hard to justify paying $14.99 for a fiction ebook unless I am absolutely enthralled with the author, and even then I am more inclined to pass on the ebook than spend that kind of money on a read-once-throwaway ebook. No need to repeat all the reasons; they have been bandied about the Internet and the magazines for months. And if I don’t know the author, I certainly wouldn’t pay the agency price. Amazon may have had it right when it set a top price of $9.99.

But look at Smashwords and similar sites. They sell ebooks in many categories from authors with whom I am not familiar for a reasonable price. I’m much more likely to spend $3.99 on an unknown author than $14.99. Of course, that isn’t enough to be a threat to the Agency 5. The Smashwords threat comes by Smashwords’ authors also being available in the iBookstore and Amazon, but primarily in the iBookstore.

It is in the iBookstore that the Agency 5 are face to face with competing books that cost significantly less. In publishing, it isn’t the publisher who sells an ebook; it is the author, the story synopsis, the ebook itself. No one goes around and says “I bought a great Hachette ebook yesterday.” Publisher branding value among ebookers is nearly nonexistent and I suspect noninfluential in the decision whether or not to buy an ebook.

For agency pricing to succeed, by which I mean the Agency 5 at minimum do not see a decrease in ebook sales from the pre-agency days, ebookers have to equate quality reads with the names of the giant publishers. Otherwise, all that will happen is that the blockbuster bestseller from the Stephen King-/Dan Brown-recognition-level authors will sell at the agency pricing and less-recognized authors down to unrecognized authors without the Oprah kick will have less-than-stellar ebook sales.

It is these second- and third-tier authors who have to compete against the Smashwords authors and for whose readers price is a major component of the decision to buy or not. In a bricks-and-mortar world, the Smashwords authors stand little chance, but in the Internet world they stand an equal chance — the Internet is the great sales leveler.

The playing field is level because all books display a cover, offer a sample read, have similar story blurbs. The differences are price and publisher name, but the latter has little, if any, swaying power, especially when you get down to the subsidiary names with which few readers are familiar. (Can you tell me who owns Ballantine? DAW? Basic? Do you care?)

The advantages that the Agency 5 do retain really relate to the level of professionalism in putting together the ebook — the professional editing, the professional cover design. But that advantage is easily eliminated by Smashwords authors who could hire these services independently [see, e.g., Professional Editors: Publishers and Authors Need Them (Part 1) and Professional Editors: Publishers and Authors Need Them (Part 2)], and with the right pricing, is readily overlooked by ebookers. Even though I am an editor and find amateurish errors annoying (see On Words & eBooks: Give Me a Brake!), I am more forgiving of them in a $1.99 ebook than in a $14.99 ebook, where I won’t forgive them at all. (Perhaps the Agency 5 should rethink offering a warranty of quality; see A Modest Proposal II: Book Warranty.)

The big gamble that the Agency 5 is making is that ebookers will associate quality reading with their brands and be willing to pay an inflated price for that quality. The reality that will strike home eventually is that such thinking is delusional. eBookers do not equate quality with the Agency 5 brands; if anything, the Agency 5 have done such a poor public relations job with every aspect of ebooks that any association of their brands with quality have long disappeared. eBookers, as is true of most readers, look first for an interesting and seemingly well-written story. Then they look for pricing and production quality.

Combine an interesting and seemingly well-written story with a reasonable price and you have an ebook sale. The ebooker doesn’t care if the ebook is from Smashwords or Hachette. Consequently, Smashwords-type ebooksellers are the real threat to agency pricing and the Agency 5. The more Smashwords and its companion ebooksellers, like Books for a Buck, do to increase quality of the books they offer and the lower the prices they offer those books for, the more in trouble agency pricing and the Agency 5 are. I’ve yet to meet an ebooker who only buys Simon & Schuster ebooks. And we haven’t even touched upon the all the places that offer free ebooks, such as Feedbooks.

Smashwords, Books for a Buck, Feedbooks, and other smaller, independent publishers or ebook outlets are squeezing ebook pricing. eBookers want a good read at a reasonable price, which is what they get from these alternatives. The Agency 5’s plan to force ebookers to “value” ebooks by keeping pricing artificially high will not withstand the assault. Yes, the very top authors — the most popular authors — will probably be able to command the Agency 5 ebook prices, but they are not enough to sustain traditional publishers. There are too few Stephen Kings and JK Rowlings to build a business around the popularity of their books.

If iBookstore sales aren’t significant for the Agency 5 at the higher end of the agency pricing scheme, and if iBookstore sales for the Smashwords-type publishers/sellers show growth, the Agency 5 are doomed. Of course, it doesn’t help the Agency 5 that Random House is sitting on the sidelines. Imagine if its ebook sales continue to grow while the Agency 5’s sales decline.

The eBook Wars: The Price Battle (II) — Starbucks 1, Publishers 0

On January 23, 2010 The New York Times had a front-page article titled, “On Kindle’s List, the Best Sellers Don’t Necessarily Need to Sell.” The article went on to discuss the phenomenon with which most savvy ebookers are familiar: many of the “bestsellers” on any ebook bestseller list are free titles. More important to publishers is that many of those bestsellers are always-free public domain books, not paid-for ebooks being given away temporarily as promotions.

The article went on to discuss publisher approaches to freebies, how freebies are promotional, and other good reasons why giving away an ebook is good and/or bad. (Sadly, the article neglects to mention some of the best sources for free ebooks such as MobileRead and Feedbooks. Free ebooks at these two sources are well-formatted and generally well-edited by a caring community.)

Let me say upfront that I like free ebooks–afterall, who doesn’t like free. Free ebooks have introduced me to authors whose work I never would have read otherwise. But let me also say that with rare exception, I have not proceeded to buy other books of the new authors I have liked. (I do, however, buy a lot of ebooks and hardcovers — more than 100 of each type in 2009.)

Free ebooks are a two-edged sword for publishers and authors. On the positive side, it introduces readers to authors they might not otherwise have read. In my case, it introduced me to David Weber, author of the Honor Harrington Series, and now I buy all of his books in hardcover. On the other hand, it also introduced me to Fiona McIntosh, author of the Quickening Series. I liked her writing but have not bought either of her newest two books (books 1 and 2 of her Valisar Trilogy) because the publisher set the ebook prices higher than the paperback prices.

So, problem #1 is that many publishers still have no clue about what differentiates an ebooker from a print copy buyer. In the case of David Weber, Tor/Baen gave away older Weber ebooks and reasonably priced new ebooks, thereby gaining a new reader, whereas for Fiona McIntosh HarperCollins/Eos gave away the ebook then threw away the reader with excessive pricing.

Problem #2 is that publishers are creating reader pricing expectations. Readers expect that sometime down the road an author’s newer books will become freebies too, so why buy now, especially at exorbitant pricing. Once the impulse buy is lost, readers tend to forget the author and move on. Yes, the Times article quoted some success stories, but remember this: It is still very early in the ebook revolution (ebooks account for only 5% of the current book market) and what happens today doesn’t indicate what will happen tomorrow. Let me repeat: The ebook bestseller lists are stacked with freebies, not paid-for ebooks.

Let’s consider consumer thinking for a moment. Many people rush to their Starbucks and plop down $4 for a coffee. Within minutes the coffee and the $4 have disappeared, neither to ever be seen nor savored again. This is the Starbucks law: Make the product a one-time consumable and require new payment for the next one-time consumable.

Contrast consumers’ willingness to buy the coffee with their willingness to pay for ebooks. An ebook, unlike the coffee, can be savored over many hours and can be resavored 2 years later. Read that $5 ebook 5 times, and each reading has cost $1; try drinking that same cup of coffee twice let alone 5 times — it simply can’t be done. The coffee is $4 for a one-time thrill whereas an ebook is multiple thrills that cost less each time. This is the anti-Starbucks law: Make the product consumable multiple times  with each consumption costing less. Yet, consumers balk at paying for an ebook and publishers feed the freebie frenzy.

Clearly, publishers aren’t making their case about value very well. Isn’t there something amiss when Starbucks can convince someone to part with $4 for a one-time, short-lived thrill but publishers can’t convince anyone that their product has greater value because it is a long-lived thrill. Perhaps the time has come for publishers to demote the bean counters and promote those who give value to their product. There is no financial future in free books for any publisher or author.

The eBook Wars: The Gatekeeper Role

A constant point of discussion and contention on ebook forums is publisher pricing. The discussion almost always devolves into a firm statement that publishers contribute little to the value of an author’s work and that the wave of the future is for authors to do everything that the publisher does themselves.

I don’t know if that is the wave of the future, but I do know that there is a definite misperception about what goes into the making of a successful book.

The argument against publishers goes along many threads, all fueled by objections to publisher release delays of an ebook, the ebook’s quality, and the price of the ebook, among others. (I offered a suggestion addressing the quality issue in an earlier post: A Modest Proposal II: Book Warranty.)

The do-away-with-publishers solution rests on the assumptions that authors can establish their own websites to sell their books, are willing to sell those ebooks at a lower price, and will provide the good book quality readers want, and that readers will find them, making both the reader and the author winners. Supporters of this solution cite already well-known authors who are doing this, but fail to indicate how currently unknown authors would become known. Finding a good book to read is the crux of the problem.

Publishers, for better or worse, serve at least as initial gatekeepers, helping separate some of the wheat manuscripts from most of the chaff manuscripts. Publishers have an incentive for doing so: the need to make a return on investment. Contrast this with an author. Yes, authors hope to make money from their endeavors, or at least not embarrass themselves, but it is the rare author who can objectively look at his or her 2-year-long writing effort and proclaim it garbage not worth publishing. Besides, what does the author lose by putting it up on the Internet for 99 cents? Even if the book is good, how does the author go about selling 20,000 copies? Can the author afford to spend money to market the book? Will an author hesitate, thinking about what happens if he or she does invest his or her life savings but only sells 250 copies at 99 cents?

If a publisher thinks an author’s writing has potential, the publisher invests in the manuscript and the author, maybe not hundreds of thousands of dollars, but certainly thousands of dollars.

This effort and a publisher’s imprimatur is not equatable with great writing or storytelling. Rather, it is equatable with better writing and storytelling. And that is just what publishers do — gamble their money on the commercial viability of an author’s writing.

Publishers gamble that the time spent reviewing the manuscript initially and the money spent on editing (Editor, Editor, Everywhere an Editor, an earlier post discusses editing), typesetting, design, marketing, and distribution will result in a profit for both the author and the publisher. (Disclosure: I am an editor and owner of Freelance Editorial Services, which provides editorial and production services to publishers and authors.)

What about the unknown author who goes directly to the reader? Granted that the self-publishing author’s job has gotten easier and cheaper with print on demand and the Internet, but easier and cheaper isn’t the same as manageable or successful, especially if the author wants more than to be able to say, “I am a published author.” Traditional publishers spend thousands of dollars on editorial and production related to a manuscript and on marketing. How many authors will reach into their own pocket to spend money that might not be recouped?

Publishers are selective. I agree that they do not always make a wise decision, but their screening makes my job as consumer infinitely easier. The Wall Street Journal recently reported on Authonomy.com, a slushpile website established by HarperCollins in 2008 where authors can upload their manuscripts and readers read and rate the manuscripts. HarperCollins editors then read the top 5 rated manuscripts each month. Since its start, about 10,000 manuscripts have been uploaded of which HarperCollins bought 4 (a rate of 0.0004%); everyone wants to be a great writer but not everyone is a great writer. I look at it as having saved me from at least 9,000 buying mistakes as a consumer. 

Publishers play a very important role as gatekeeper for most consumers. The notion that publishers should simply go away and authors should sell direct to consumer through their website is a great idea that isn’t viable, except, perhaps, for the already well-known author (who, it is worth noting, became well-known with the help of a publisher).

If you think a book you bought was bad and should not have been published, think about those manuscripts that didn’t pass the gatekeeper. Publishers save readers from the having to deal with the worst writing, not from dealing with bad writing.