An American Editor

April 11, 2012

The Amazon Conundrum: Competition in eBooks

On several forums that I visit, there has been ongoing discussion about Amazon and monopolies and how no one need worry because if Amazon were a monopoly and did raise prices, a new competitor would instantly appear. The discussions often also evolved to criticising anti-Amazon posters for not having a solution to the problem, just whining about the problem.

I think those who do not see a potential problem with an Amazon ebook monopoly for authors, publishers, and consumers are simply fooling themselves. The ebook market is not like the TV market. Unlike TVs which all meet certain standards so that a Sony can be substituted for a Samsung, which can be substituted for a Panasonic, ebooks do not meet a set of standards and a Kindle-compliant ebook cannot be substituted for an ePub-compliant ebook without some finagling and without removing any DRM.

Consequently, should Amazon drive out of the ebook business its primary national competitors, the likelihood of someone coming along and overnight becoming a major competitor is nearly nil. Consider the cost of duplicating Amazon’s already-in-place infrastructure. Plus, how would a new competitor break the Amazon eco system? The only way competition might have a chance at surviving would be with Department of Justice intervention.

Picture the ebook marketplace with Sony, Apple, Kobo, and Barnes & Noble gone, leaving just Amazon. If Amazon raised its pricing to insure profitability (or, alternatively, followed the Walmart practice and instead kept pricing stable but squeezed authors and publishers), what could be done about it? Not much. To say that a new competitor would see an opportunity and exploit it is naive.

The new competitor would have to build a business from the ground up. How likely is it that Amazon would sit back for a few years to give such a company a chance to gain a foothold? How likely is it that venture capitalists would be willing to fund the necessary billions for such a venture? And if the new competitor was ebook focused, for how long do you think they could underprice Amazon? Remember that Amazon has other, well-established divisions that could support a money-losing book division, something that a new competitor wouldn’t have.

To think that with the fall of the current crop of competitors new competitors would rise that could compete with Amazon nationally is simply wishful thinking with no basis in reality. The response is that Walmart didn’t raise prices, but ignores that Walmart has strong national competition in companies like Costco, Kmart, and Target — once you eliminate Sony, Kobo, and B&N, Amazon doesn’t. Apple is currently a weak ebook competitor and no one thinks much of the Google ebookstore’s competitive status.

This problem with Amazon was brought about originally by publishers who didn’t look beyond their noses when giving Amazon significant product discounts in the early years. The problem is being compounded by the same publishers’ inaction and by authors scrambling to join the Amazon exclusivity club. If publishers and authors do not take steps to halt the rise of Amazon, there soon will be no outlet but Amazon for national exposure.

The question is what can publishers and authors do? For authors, the only option is not to give Amazon exclusivity and to actively promote other ebookstores where their books can be found. If you promote Amazon primarily, you are feeding the problem, not starving it.

Publishers really are in the stronger position to halt Amazon’s dominance; they just lack the willpower to do more than whine. Agency pricing (which is legal; the Department of Justice is investigating whether there was collusion to impose agency pricing, not whether agency pricing itself is legal) was a first step but as done by publishers, insufficient.

What really needs to be done is for publishers to decide that their ebooks can only be sold in the ePub format and only with Adobe adept DRM (i.e., essentially social DRM like B&N uses). Once you break the Amazon closed eco system, everyone can compete on the same terms. Combine this with correct agency pricing, and the playing field becomes perfectly level. Now ebooksellers will have to compete on other factors, such as customer service.

If Sony’s ebookstore went under, it would go under because of other factors, factors that were within its control, rather than because of format wars.

The forcing of ePub and one type of DRM doesn’t directly address the exclusivity problem, but it could do so obliquely. If competitors to Amazon began to increase market share, the incentive to be Amazon exclusive would diminish.

One other thing to consider: I see no reason why, now that Amazon is a direct competitor of traditional publishers — it has established its own publishing houses to sign on authors for Amazon exclusives — traditional publishers can’t simply refuse to sell their books — both p and e — to Amazon. It seems to me to be illogical to require them to provide the means to fund their own funerals.

The longer the publishers dawdle in taking action against Amazon, the more power they devolve to Amazon. The point will soon arrive when publishers will be able to take no effective action against Amazon and we will be writing their obituaries.

The same is true of authors who sign up for Amazon exclusivity and who promote Amazon. There will soon come a time when the only game in town will be Amazon and you will be at Amazon’s mercy. You will find that no one will stand beside you should you decide to fight at that late point in time — publishers won’t because they will be powerless; consumers won’t because all they are interested in is lowest available price; other ebooksellers won’t because they will be nonexistent.

The time to fight to prevent monopolization of the ebook marketplace is now. The way to do it is to encourage publishers to only permit the sale of their ebooks in ePub format with a standard DRM and for authors to not give Amazon exclusivity. In the absence of such action, we can wear the lemming label.

April 4, 2012

eBooks: Is Agency Pricing Good or Bad?

Recently, there has been a lot of focus on the “conspiracy” between 5 major publishers and Apple regarding agency pricing and whether these 6 entities have violated antitrust law. The focus is not on whether agency pricing is good or bad, but whether the parties colluded. That question I’ll leave for the US Department of Justice.

I’m more interested in whether agency pricing has been good for me as a consumer. Various forums have been discussing this and Mark Coker, president of Smashwords, has written an excellent piece defending agency pricing (see Does Agency Pricing Lead to Higher Book Prices?) Mark Coker makes several salient points, but they are points from the author and distributor perspective, not the consumer perspective.

(Mark Coker does make, however, one interesting observation: Before agency pricing, there was the wholesale pricing model. A publisher would set a book’s list price at say $30 and wholesale to booksellers for $15. The booksellers were free to sell the book for any price they wanted, be it $5 or $10 or $25 or $30. The reality was, however, that no bookseller could sell all books at less than cost and survive, not even Amazon. At some point, a bookseller has to turn a profit or at least cover costs. Consequently, the wholesale price was, in effect, an agency price; that is, a minimum price at which a book could be sold without putting the bookseller out of business. In other words, there really isn’t much difference in effect between the wholesale scheme and the agency scheme as far as consumers are concerned. For retailers, the agency scheme ensures that the retailer makes a profit on every ebook sold.)

But what about from the consumer perspective, and even from the indie author perspective?

In the days before ebooks (i.e., my participation in the ebook marketplace), I spent, on average, $5,000 a year on pbooks, mainly hardcover. I am now into my fifth year of ebooking and each of those years has seen a steady decline in the amount of money I am spending on books overall. Combined, my pbook and ebook spending doesn’t exceed $2,000 in a year, and is often quite a bit less.

One reason, if not the major reason, for this is agency pricing. The traditional publishers, namely the Big 6 (Random House, Hachette, Simon & Schuster, Penguin, Macmillan, and HarperCollins), are overpricing their ebooks via the agency pricing. Consequently, I am simply not buying agency ebooks published by the Big 6. The newest James Patterson novel simply isn’t worth $12.99 or higher to me. They are good reads, but let’s face it — classic literature that I would read again and again and savor each phrase they aren’t. They are formulaistic books that provide entertainment but do not evoke a lasting passion.

Consequently, I consider agency pricing to be a positive for the consumer. It helps dissuade ebookers from spending excessive amounts of money on books that in an open marketplace, and without publishers setting a retail price that bears no correlation to the true value of the book, would not command such high pricing in perpetuity. It might command it for weeks or months, but not years.

Agency pricing has had another benefit for the consumer. It has made the rise of the indie ebook distributor, like Smashwords, possible along with the rise of the indie ebook author. It is not that these entities didn’t exist before; they did in the form of vanity presses for the pbook crowd. Rather, they have become legitimized, something the vanity presses never were able to accomplish.

Because the Big 6 agency pricing is so high, readers like me began to explore alternatives. And now I buy primarily indie authored ebooks at places like Smashwords. The competition among indie authors to get noticed and read has been such that ebooks are often priced at $2.99 and less, all the way down to free. Even here, however, agency pricing is beneficial because I can buy those books at Smashwords or Barnes & Noble or Books on Board or any number of outlets and not worry about price — it will be the same at every store.

I’ll grant that if my only interest in reading is today’s popular books by big name authors, what we used to call the New York Times Bestsellers but which name is no longer appropriate, agency pricing is a problem. After all, Amazon demonstrated that it was willing to sell those ebooks at a loss in order to gain market share. (Which raises another interesting observation: When Amazon was able to sell the bestsellers as $9.99 or less ebooks, it cornered nearly 90% of the ebook market. With the advent of a more level playing field, introduced by agency pricing, its market share has dropped to about 60%.) Amazon had the fortune to be able to sell at a loss because other product lines were making a profit and could support the ebook losses; most ebook sellers did not have that option if they wanted to remain in business.

Agency pricing doesn’t ensure the lowest price; the Big 6 demonstrate that daily. But from my perspective as a consumer, the advent of agency pricing has made ebook selling more competitive. Not because the ebooksellers are being price competitive but because the indie authors are being price competitive. Agency pricing has also ensured that there won’t be one supplier of ebooks, which is also important to me as a consumer.

In balancing the scale of good or bad, I think agency pricing is good for me as a consumer. It has saved me scads of money by limiting the number of expensive ebooks that I buy to a handful. It saves me money because I no longer spend as much on pbooks; I have too many ebooks to read in my to-be-read pile, so I buy fewer pbooks. It has broadened my reading. Before agency pricing I did as many readers and bought reasonably priced ebooks by name authors. Since agency pricing, I browse the indie author ebook offerings and buy indie ebooks at very reasonable prices.

One last observation: Even if the Department of Justice pursues the collusion matter, there appears to be nothing inherently wrong with agency pricing. I expect that at worst the 6 parties being investigated will pay large fines but I think agency pricing is here to stay.

What do you think? Is agency pricing good or bad for the consumer?

March 14, 2012

Amazon’s Assault on Intellectual Freedom

Several weeks ago, I wrote Breaking News: Amazon vs. IPG, which was followed by Worth Noting: Amazon is an Author’s Friend — Or Maybe Not. The first article was picked up by other blogs and at one of those blogs, Bryce Milligan, publisher and editor of Wings Press, as well as an award-winning poet and author of books for children and young adults, posted a comment that caught my eye. I asked Bryce to write a guest article expanding on his comment. That article follows.

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Amazon’s Assault on Intellectual Freedom

by Bryce Milligan

There is an undeclared war going on in the United States that threatens the linchpins of American intellectual freedom. In a statement worthy of Cassandra, Noah Davis wrote in a Business Insider post last October, “Amazon is coming for the book publishing industry. And not just the e-book world, either.” When titans battle, it is tempting to think that there will be no local impact. In this case, that’s dead wrong. Amazon’s recent actions have already cut the sales of the small press I run by 40 percent. Jeff Bezos could not care less.

One recent battle in Amazon’s larger war has pitted it against a diverse group of writers, small publishers, university presses, and independent distributors. It is a classic David-and-Goliath encounter. As in that story, however, this is more than just pitting the powerful against the powerless. In this case, the underdogs have the ideas, and ideas are always where the ultimate power lies.

Wings Press (San Antonio, Texas) is one of the several hundred independent publishers and university presses distributed by the Independent Publishers Group (IPG), the second largest book distributor in the country, but still only a medium-sized dolphin in a sea of killer whales. In late February, IPG’s contract with Amazon.com was due to be renegotiated. Terms that had been generally accepted across the industry were suddenly not good enough for Amazon, which demanded discounts and practices that IPG—and all of its client publishers—could only have accepted at a loss. Yes, that does mean what it sounds like: To do business with Amazon would mean reducing the profit margin to the point of often losing money on every book or ebook sold.

IPG refused to accept the draconian terms and sought to negotiate further. In what can only be seen as a move to punish IPG for its desire to remain relevant and healthy, Amazon refused to negotiate and pulled the plug on all the Kindle ebooks distributed by IPG, marking them as “unavailable.”

Not a big deal? Imagine that Walmart controls everything you eat, and Walmart decides to stop selling fish because it thinks that fishermen are making too much profit. Amazon is the Walmart of online bookselling. The dispute between Amazon and IPG will affect every literate person in America. It is a matter that goes to the heart of what librarians have termed “intellectual freedom.” In other words, the resolution of this dispute, one way or the other, will affect every individual American’s access to certain books. It will affect your ability to choose what you read.

Restrictions on access to literature generally have more politically motivated origins. The banning of certain Native American and Mexican American authors and books in Arizona, for example, is purely political. Attempts in the past to ban literature based on its “moral content” were largely political in nature. This dispute is purely capitalistic, and is much more difficult to fight.

A single practical example. Wings Press had offered up one of its Kindle titles, Vienna Triangle by California novelist Brenda Webster, for the Amazon daily deal— a limited time offer of 99 cents per download. The book zoomed to the top ten of one of Amazon’s several bestseller lists. While it was still listed as a bestseller, Amazon suddenly marked the title as “unavailable.” The trail of loss increases in impact as it descends the food chain: Amazon doesn’t notice the loss at all. IPG sees it as one of its 5,000 Kindle titles that vanished. Wings Press sees it as one of its 100 Kindle titles that vanished. The author sees it as the loss of her book, period.

Lest one think that eliminating a single ebook novel is a loss of little consequence, Wings Press also publishes the works of John Howard Griffin, including Black Like Me, one of the most important works of the civil rights movement and widely considered an American classic. Amazon’s refusal to sell the ebook of Black Like Me should be of serious concern to every American.

Ebook sales have been a highly addictive drug to many smaller publishers. For one thing, there are no “returns.” Traditionally, profit margins for publishers are so low because books that remain on shelves too long can be returned for credit—too often in unsalable condition. No one returns an ebook. Further, ebook sales allowed smaller presses to get a taste of the kind of money that online impulse buying can produce. Already ebook sales were underwriting the publication of paper-and-ink books at Wings Press.

It has been increasingly obvious to independent publishers for the last two years that Amazon intends to put all independents out of business—publishers, distributors, and bookstores. Under the guise of providing greater access, Amazon seemingly wants to kill off the distributors, then kill off the independent publishers and bookstores, and become the only link between the reader and the author. The attack on distributors like IPG and on some larger independent presses is only part of the plan. Amazon has also been going after the ultimate source of literature, the authors.

Having created numerous (seven or more) imprints of its own, Amazon has begun courting authors directly by offering exorbitant royalties if the authors will publish directly with Amazon. Among the financial upper echelon of authors, Amazon is paying huge advances. Among rank-and-file authors, not so. Here they are offering what amounts to glorified self-publication. The effect is to lure authors away from the editors who would have helped them perfect their work, away from the publishers and designers and publicists and booksellers who have dedicated their lives to building the careers of authors, while themselves making a living from the books they love. Even the lowly book reviewer has been replaced by semi-anonymous reader-reviewers. All these are the people who sustain literary culture.

For Amazon to rip ebook sales away from independent publishers now seems a classic bait-and-switch tactic guaranteed to kill small presses by the hundreds. Ah, but predatory business practices are so very American these days. There was a time not so long ago when “competition” was a healthy thing, not a synonym for corporate “murder.” Amazon could have been a bright and shining star, lighting the way to increased literacy and improved access to alternative literatures. Alas, it looks more likely to be a large and deadly asteroid. We, the literary dinosaurs, are watching closely to see if this is a near miss or the beginning of extinction. Fortunately, this generation of dinosaurs is a little better equipped than the last one to take measures to avoid such a fate.

One can choose to buy ebooks from Barnes & Noble (bn.com) or from almost any independent bookstore rather than Amazon. One can buy directly from IPG. A free app will allow one to read those books on a Kindle. The resistance has already begun, and it starts with choice. I invite you to sign the petition at Change.org.

February 22, 2012

The Failure of the Gatekeepers

One of the arguments that many of us have made in support of traditional publishing has been the role that traditional publishers have played as gatekeepers. Gatekeeping means more than just making sure that a manuscript is literate; it includes making sure that it is original.

Increasingly, traditional publishers are failing at this aspect of gatekeeping. They are failing to detect the plagiarized book. A recent article in The New Yorker, “The Plagiarist’s Tale” by Lizzie Widdicombe, explores this problem. If you haven’t read the article, it is well worth reading.

In this case, the publisher failed to recognize that the entire book was made up of takings from numerous books. But not only did the publisher fail, so did numerous others in the chain, including the author’s agent. And in reading the author’s writing history, over the years many persons missed his plagiarizing, including the editors at the Paris Review.

If gatekeepers are failing at this fundamental task, what purpose are they serving that warrants anyone caring about their future survival? I understand missing a plagiarized paragraph here and there, but in the book that is the subject of the article, it appears as if hardly a single paragraph was original to the author.

For me, traditional publishers as gatekeepers served three primary purposes. First, they weeded out those works that really belonged in the slush pile and were not worthy of going further, even though they occasionally missed some gems. Second, they nourished writers who deserved being nourished thus enriching our culture. Third, they weeded out plagiarism. I don’t mean the one-paragraph-in-500-pages-of-manuscript kind; I mean the one-paragraph-on-each-page kind — the blatant plagiarism.

With the advent of ebooks and self-publishing, the first role has pretty much disappeared. There are so many publishing house labels that it is nearly impossible to know whether the publisher is a giant or a mouse. Smart self-publishers are creating their own “publishing houses” to publish their books. The result is that there is no weeding of books in the marketplace because books rejected by an established traditional publisher are now published by a new “publishing house” — and few readers know that they are buying from the slush pile until they buy the book and start reading it, only to discover that the book should never have found its way out of the slush pile and into the retail book market.

The second function, that of nourishing new writers, has been falling by the wayside in the last decade. Financially, traditional publishers are struggling (at least so they claim; it is hard to give too much credence to such cries when I read that a publisher had nearly a billion dollars in profit in 2011) — the competition has turned fierce. Reading is down as are traditional book sales. Fewer blockbusters are being published so there are fewer blockbusters available to generate the kind of income needed to nourish nonblockbuster authors. And authors are increasingly going their own way because they get to keep more of the money and don’t need to worry about publisher rejection.

That leaves the third function, the weeding out of plagiarists. Alas, publishers are failing in this role as well. I think there are many causes for this failure. The editors that traditional publishers hire are under the gun to publish books that make a profit and increase the publishing conglomerate’s bottom line. The accountants have taken over from the craftsman and the editor’s ability to keep a job and a steady paycheck is dependant on satisfying the accountants.

In the olden days of publishing, a book was rarely published before it was ready to be published. Publication dates were flexible; if an extra round of editing by a professional editor was needed, it was done. The consolidation of the publishing industry into the conglomerates changed that. Now publication dates are fixed in stone, regardless of whether a book is ready or not. The result is increasing numbers of errors that slip by and the inability to gatekeep for plagiarism.

Also in the olden days, editors were trained to recognize possible plagiarism. Perhaps more importantly, editors were widely read themselves and thus suspicious based on their own broad reading. A book editor, in the olden days, was not an entry-level position. One rose to it; it was a position of prestige. It attracted people like former first lady Jacqueline Kennedy Onassis and master writer Bennett Cerf. Today, the editor is closer to, if not, an entry-level position. The glamour of being an editor at a prestigious traditional publisher is gone — gone with the consolidation of the industry into a few international conglomerates whose first interest is the quarterly bottom line.

Consequently, traditional publishers are no longer fulfilling their role as gatekeepers. In the absence of fulfilling that role, what purpose do they serve? Many ebookers today would say traditional publishers serve no role at all and should follow their dinosaur ancestors into oblivion. Perhaps they are right. Perhaps the time has come for the breakup of the conglomerate publisher and the return of the smaller, independent publishers, the ones who made publishing a great profession and brought great literature to the reading public.

February 8, 2012

Amazon vs. Big Publishing: 800 lbs vs. 798 lbs.

Last week’s issue of Bloomberg’s Businessweek included an article titled Amazon’s Hitman. If you haven’t read it, you should. It is enlightening.

The gist of the article is that Amazon is gearing up to challenge the publishing world on its own turf: the signing of and creation of big-name authors who sell hundreds of thousands, if not millions, of books. And this assault worries the Big 6 publishers — Hachette, Macmillan, Simon & Schuster, Penguin, Random House, and Harper-Collins — with good reason: Amazon has more market value and disposable cash than they do combined.

The article discusses the history of the relationship between the Amazon and the publishers, along with what Businessweek thinks is Amazon’s thinking. But with all of their crying the blues, the Big 6 currently are in the driver’s seat; all they have to do is be willing to drive.

There is no reason why the Big 6 can’t offer exclusive deals to Kobo and B&N. Give them a 3-month exclusive selling period for expected ebook best-sellers and do away with the agency pricing during that period. After 3 months, make the ebooks available to everyone and reinstate agency pricing. This would boost competition and play against Amazon’s exclusivity program.

I suspect that this scenario won’t occur because the Big 6 simply do not have the spine. I don’t see any antitrust violation — if Amazon can do it each of the Big 6 can do it, too — but even if there were a possibility of antitrust violation, do it anyway and keep the program going while you hash out with the government the antitrust issues. That hashing out could take years, which would give Amazon’s competitors an opportunity to become real competitors. More importantly, it might well be an effective weapon in the crusade to keep competition in publishing alive.

Instead of wringing their hands and acting as if there is little to nothing they can do, publishers need to creatively fight Amazon’s onslaught while they are in a position to do so. Right now Amazon has no Stephen King-level authors in its stable. Amazon still needs the resources of the Big 6 to fill out its ebookstore. Remember that it was Amazon that caved in the dispute with Macmillan and brought agency pricing to ebooks. But the day isn’t far off when the advantage will shift to Amazon and the Big 6 will be able to spend their days writing their own obituaries.

The difference between Amazon and the publishers is that Amazon is willing to continue to lose money on its book operations for as long as it takes to control the field, relying on its other business to shore up its balance sheet. In contrast, the Big 6 are unwilling to lose money even for one day, even if it means their ultimate survival. Jeff Bezos is capable of thinking years ahead, like a great chess player who can think dozens of moves ahead; in contrast, the Big 6 CEOs are like the starting chess player, unable to think strategically even one move ahead, let alone several. Bezos has the spine to tell shareholders no payout this quarter or next; the Big 6 CEOs do not.

Yet the Big 6 have an opportunity to shakeup the ebook market and turn it, at least temporarily, until Bezos’ next countermove, in their favor while simultaneously shoring up Amazon’s biggest competitors, Barnes & Noble and Kobo.

Right now exclusivity is working a one-way street. Although the Big 6 declined to participate in Amazon’s current experiment, it is worth noting that Bezos had no compunction about asking them to do so. If the Big 6 won’t offer exclusivity to B&N and Kobo, perhaps B&N and Kobo should approach the Big 6. This is the one area in which Amazon is vulnerable. It is one thing to have exclusive rights to a self-published author’s books, but quite another to have them to a Stephen King’s writings.

The ball is now in the court of the Big 6. What will they do to counter Amazon? If I were a gambler, I’d say the odds were that all they will do is complain but do nothing substantive. There wasn’t much at stake in the agency pricing showdown on either side. An exclusivity arrangement with B&N and Kobo, however, puts a lot at stake. It will be interesting to see how this plays out.

January 25, 2012

The Publisher’s Search for Savings

The current issue of The Atlantic has a very interesting article, “Making It in America,” which asks a very difficult question: The article explores manufacturing jobs and wonders what will be the future for the unskilled laborer. The article is well-worth reading and thinking about, even though the professional editor is skilled labor, because just as manufacturers seek cost savings, so do publishers, especially in the Internet Age.

One problem with publisher attempts to save costs is that much too often the effort is focused on editorial costs, the so-called hidden costs, which generally means reducing the compensation paid to freelance editors. I would be less concerned about taking a cut in my compensation if my compensation had risen over the course of years. However, it hasn’t; the rate being offered by many publishers today is the same rate publishers were offering in 1995. Another way of saying it is that publishers have been the beneficiaries of editorial cost savings since 1995 because they haven’t increased the rate of pay in the past 17 years commensurate with the increases in costs of living.

But advocating that is beating one’s head against a reinforced brick wall. Why? Because editorial costs are hidden costs in the sense that, unlike a book cover that buyers see immediately and that can either improve or lessen chances of a sale, editorial matters are not noted until after the book is already purchased, usually weeks after purchase, when the return period has already expired. We may curse the publisher of a book riddled with editorial errors, but whereas we might “blacklist” an author, we don’t “blacklist” a publisher. Consumers simply do not shop for books by publisher; publisher brands are weak brands. When was the last time you asked a bookseller for the latest book published by Harper & Row?

Regardless, recently, I received a communication from a major publisher with its latest idea for lowering costs. I applaud the publisher for thinking about ways to save costs and for experimenting; this is something that too few publishers do, yet need to do in the ebook age. But I’m not convinced that the approach being taken will result in any significant savings.

The underpinnings of the approach is that there is a difference between editing and reading: the former is time-consuming, the latter less so. I have been thinking about this division and have asked colleagues for their view of whether the reading effort while editing differs from the reading effort when looking only for errors such as misspelling and homonym misuse, but not “copyediting.”

The colleagues I spoke with regarding whether the “copyediting read” differed significantly (or at all) from the “error read,” were similarly minded — amongst themselves and with me. Their was universal agreement that the reading effort remained the same and was equally time- and effort-intensive. Asking an editor to read for errors but not copyedit is like asking a fish to swim in air — the editorial skills are not so easily shunted aside.

In my case, there could be no cost savings even if there was a difference because I charge by the page, not the hour. Fifty pages are still 50 pages, whether thoroughly read or not. Consequently, while I think the publisher has the right idea — look for cost savings — this attempt is unlikely to result in significant savings. The publisher would likely save more by simply switching from an hourly based fee for editing to a per-page rate. Such a move, although many editors cannot see it, also would greatly benefit editors. (For a discussion comparing hourly and per-page rates, see Thinking About Money: What Freelancers Need to Understand. You can also search past articles using the search term per-page rate.)

Let’s begin with human nature. If I am paid by the hour, I have no incentive to do a job either faster or more efficiently. (I assume that the quality of the editing would not differ regardless of how the editor is paid.) If I am happy earning $21/hour, I am as happy earning it for 40 hours as I am earning it for 50 hours; after all, what I am happy with is the $21/hour, which is constant, and having the work in an increasingly competitive environment.

But think about if I am paid by the page. If I am paid $3.50 a page, I can earn my comfortable $21/hour by editing at a rate of 6 pages an hour. Imagine how luxurious it would feel if I could edit at the same level of quality but at 10 pages an hour — I would then earn $35/hour. There is now an incentive for me to increase my efficiency and speed without sacrificing quality.

For the publisher, the per-page rate sets a maximum fee for a project. There is no more budget speculation about what a project will cost because hours are no longer part of the formula; instead, the focus is on saving time by getting the project completed sooner — a shorter turnaround. The costs are controlled because an editor can’t dally over the manuscript in the belief that the longer it takes to edit, the greater the editor’s income.

It also gives the publisher an opportunity to weed out from its stable of editors those who are inefficient and more costly because of their inefficiency. Remember that savings are not only gotten by reducing payout to an editor; even greater and more important savings can be had by shortening the time from manuscript to published book, especially in the eBook Age when faster-than-instant gratification is demanded.

Shifting to a per-page payment also frees a publisher to evaluate ways to increase accuracy, efficiency, and productivity. A colleague who was discussing EditTools with me (trying to find out what enhancements are coming in the near future :)), told me that as a result of using tools like EditTools, she has been able to increase the number of pages she can edit in an hour by as much as 50%, with an even higher level of quality than previously, both of which have resulted in increased work opportunities. Whereas many publishers and editors currently have little incentive to experiment with these types of tools, switching to a per-page rate from an hourly rate would provide that incentive. The ultimate results would be cost savings for the publisher and increased income for the editor.

Unfortunately, in the cost savings game, win-win situations are rare. Neither publishers nor editors are willing to break the traditional path. One of my clients told me that they are unwilling to insist that editors accept a per-page rate; in fact, the client expressed reluctance to use editors who want to work on a per-page rate, saying that they fear editors would make less money and thus exacerbate the problem of finding quality editors. The client went on to say that even after 15 years of my working for them on a per-page rate, they consider me an exception and the per-page rate experimental; additionally, few editors have asked for a per-page rather than an hourly rate. Similarly, no matter how many presentations I have made over the years demonstrating why the per-page rate is better for editors as a general rule (as with anything, whether it is better depends on what you do; there is no universal rule that applies in every circumstance), many editors refuse to try it and of those who do, a goodly number have told me that “they lost their shirt” on project X on a per-page rate and thus refuse to use it ever again.

I am at a loss how to convince publishers of the benefits of the per-page rate for their bottom line; corporate thinking runs in hourly segments, and, as one client noted, there are too many “approvals” required. But those publishers I have talked with who have moved many of their freelance editors to the per-page rate tell me that they can see overall cost savings.

As for the editors who “lost their shirt” on a project, the answer is this: First, you cannot evaluate the profitability of a client based on a single project. Similarly, you cannot evaluate the profitability of a payment method on a single project. You must evaluate both on the basis of at least three completed projects. There are lots of reasons why the shirt could have been lost on the single project, not least of which was the editor’s continuing to approach the project as if it was hourly paying. I can tell you from my own experience that it takes time to learn how to efficiently address a manuscript and that even today, I occasionally get a project on which I lose my shirt. But if I lose my shirt on one out of 100 projects, the other 99 more than makeup for the one’s loss.

Perhaps a discussion of the factors that can cause you to lose your shirt should be another day’s topic. Until then, do you stick with hourly only projects, do a mix, or per-page/project fee only? Why and what is your experience? Why are you reluctant to move from an hourly based fee to a per-page fee? Are you really satisfied with the hourly rate publishers pay?

January 16, 2012

Why Won’t Amazon Compete in the ePub Market?

Since the beginning of the “modern” ebook era, when Amazon entered the marketplace with its Kindle, I’ve wondered why Amazon chose to follow its own path as regards format and DRM rather than adopting the ePub standard and a more benign or universal form of DRM. I’ve wondered because by choosing its own path, Amazon has decided that readers who are not Kindlers (by which I mean consumers who read on dedicated e-ink devices that are incompatible with Amazon and thus cannot buy ebooks at Amazon unless they are willing to strip the DRM and convert the file, which the majority are either unwilling or unable to do) is not a demographic to woo.

What is it about ebooks that makes them different from virtually every other market that Amazon is in? Amazon sells, either directly or indirectly, all kinds of universally usable electronic equipment and entertainment. It does not sell, for example, digital music or movie DVDs that are incompatible with the devices consumers already own or buy at Amazon or elsewhere. Only in ebooks has Amazon struck a different path.

In every other category of goods for sale at Amazon, Amazon tries to woo every consumer it can. Only in ebooks does it deliberately exclude millions of potential customers. Why? What is it about ebooks that warrants this divergence by Amazon from its very successful business plan? Granted that Amazon would prefer to sell you a Kindle and lock you into its eco system, but that, at least on the surface, makes no sense as a reason to exclude millions of other ebook consumers from being able to buy ebooks at Amazon. One would think that Amazon’s priority is to sell ebooks on which it makes a profit, not reading devices on which it is said to lose money.

Try as I might, I see no obvious reason for this discrepancy. Amazon could sell its Kindles and also sell ebooks in a Kindle-specific format alongside an ePub format. Or it could sell its Kindles and simply make Kindles ePub compatible. Yet it does neither. It prefers to exclude millions of ebookers who are using devices that require the ePub format.

So I ask again: What makes the ebook market different from the other entertainment markets in which Amazon competes?

It surely can’t be because Amazon doesn’t think it can have a winning hand. Amazon has competed and continues to compete in the hardcover and paperback market on equal terms with all competitors, yet it is the dominant bookseller in those markets. I would expect Amazon to dominate in the ePub ebook market as well, simply because of its marketing prowess, its reputation for value and low prices, and its willingness to operate at a loss fiscal quarter after fiscal quarter.

Although no one has accurate numbers, I think it is reasonable to speculate that Sony, Kobo, and Barnes & Noble have sold millions of ereading devices, not one of which is compatible with the Amazon ebook store. Yet every B&N-branded device is compatible with the Sony and Kobo ebookstores (and every ePub ebookstore except Apple’s) — buy a book at Sony, download it to your computer, and sideload it onto your Nook. No questions asked. Similarly, Kobo and Sony devices work the same with any ePub ebookstore except B&N and Apple.

Why is Amazon willing to ignore the millions of readers in the ePub market? Strategically, Amazon has always tried to make people want to shop at Amazon because of price, selection, and ease of buying. Isn’t that the rationale behind the patenting of the 1-click system? And this is the strategy Amazon follows in everything it sells — except ebooks. Why?

I wonder about this but have no answer. I’m certainly open to suggestions, but I struggle to see how ebooks are different from movie DVDs, digital music, televisions, baby diapers, or any other commodity within Amazon’s sales world. The rationale for establishing an exclusionary system for ebooks when all else is inclusionary eludes me.

What else also eludes me is why Amazon thinks this is good policy for Amazon. Amazon has always worked on the principle that if a person buys their hardcover or paperback books from Amazon, they will also buy their TV from Amazon. So if a person won’t or can’t buy their ebooks from Amazon, are they likely to buy their TV from Amazon? Does this exclusionary policy on ebooks have a snowball effect on other items Amazon sells and on the other markets in which it competes?

Consider this difference as well: Amazon has gone to great effort to create the Kindle, its own dedicated reading device using a proprietary format and DRM scheme. But it hasn’t gone to that effort for other devices such as a DVD player. Why? What makes ebooks and the ebook market different from every other commodity that Amazon sells and every other market in which Amazon competes?

The only answer I have come up with, and I don’t find it a satisfactory answer, is that of all the industries represented by the goods that Amazon sells, the weakest in every sense of the word is the publishing industry, making it the one industry that is highly vulnerable to a direct attack by Amazon. Amazon can become a major publisher because of the industry’s weakness and thus be a vertically integrated enterprise — something that would be much more difficult and costly if attempted in the movie or TV production industries.

Of course, the same question can be asked about B&N’s choice of a DRM scheme, but at least B&N has made it freely available to all other device makers. That it hasn’t been adopted by Kobo or Sony, for example, does make me wonder if B&N hasn’t made a major error in not changing its DRM scheme to be compatible with Sony and Kobo. I think given a choice between the Sony, Kobo, and B&N ebookstores, most ebookers would shop at B&N, even if they prefer the Sony or Kobo device over the Nook.

What do you think?

January 11, 2012

eBooks: Are eBooks Commodities? Redux

Followers of An American Editor read the previous post, eBooks: Has Amazon Turned eBooks into Commodities?, and probably groaned at my sacrilegious point of view while frantically shaking their heads “no, neither ebooks nor books are commodities.” The argument regarding the commoditization of books is an “old” one for me. A few years ago, Jack Lyon and I made presentations at a Communication Central conference in Rochester, NY and drove to Poughkeepsie, NY together — a 4.5-hour drive. On that drive, this was one of the weighty matters we discussed. Jack was adamant that books are not commodities

I used to think the same, but books, particularly fiction books, have gone the way of athletes and soda pop and become commodities. (By the way, if you haven’t seen the movie Moneyball, starring Jonah Hill and Brad Pitt, which is the story of a major league baseball team coming to the realization that with free agency, baseball players are now commodities, I highly recommend you see it. A true story that is well done as a movie.) What follows is Jack’s response to my commoditization view.

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Books as Dish Soap
by Jack Lyon

In a previous post, Rich Adin discussed ebooks as commodities [see eBooks: Has Amazon Turned eBooks into Commodities?]. This ties into a discussion Rich and I had a couple of years ago about marketing. The conversation went like this:

Jack: I hate the whole corporate mindset that treats books as “product”—just a homogenous mass of words and pages. It’s like marketing dish soap.

Rich: That’s how books should be marketed.

Jack: What?!

Rich: Yep. Just like dish soap. How else would you do it?

I never did come up with a good answer to that question. Finally, I admitted that Rich was right—but I didn’t like it then, and I still don’t!

Let’s go back about 30 years to my first job as editor at a trade publishing house. I really admired the company president, who held not an MBA but a Ph.D. in English literature. Here was an executive who actually cared about books! In a speech to employees, I heard him say this:

“I love the opportunity we have to share what we do with others, to be able to face a customer and honestly say, ‘I love what I’m doing, and I can share something with you that can change your life forever. I can give you a friend that will never, ever leave you.’…It was at least ten years ago that I heard Charles Scribner say, ‘If books become obsolete, I will make candles.’ He didn’t explain his remark, but I think he had in mind that although the electric light has made candles obsolete, candlemaking today is a $100 million industry—not large, but it casts a lovely light, and, after all, books are candles.”

Shortly after that speech, the chairman of the board assigned the president a new position—as CEO of a department store. This man who loved books so much ended up selling kitchen appliances and underwear.

I see the commoditization of books as being analogous to the commoditization of everything else, including people. We no longer have personnel departments; instead, we have human resources. We no longer have leaders who understand a particular industry; instead, we have MBAs who are cranked out like sausages to manage corporations in any industry. With our narrow focus on the bottom line, we’ve ripped the heart out of our businesses—at least, those that used to have one.

So are books commodities, like dish soap? To some degree, yes. As Rich points out, if I can’t get my horror fix from Stephen King, I can easily turn to Dean Koontz. Their books are what economists call “substitute goods.”

If I can’t get Coca-Cola, I’m happy to drink Pepsi (although that’s not true of dedicated Coke drinkers like Rich). If I can’t use Dawn on my dishes, I’m happy to use Dove. Advertisers are aware of this, which is why they spend so much money promoting Coke over Pepsi (and vice versa). Other than the emotional appeal used in marketing, there’s not a lot of difference between one substitute good and another.

The same is true of many genre books, like romance, westerns, and science fiction. I’m usually just as happy to read Orson Scott Card as I am to read Gene Wolfe. But there are exceptions. To me, Wolfe’s There Are Doors is more than just your everyday science-fiction entertainment. Philip K. Dick’s Do Androids Dream of Electric Sheep speaks to me on a level that few other books attain.

And what do we do when a masterpiece like Moby Dick comes along—or The Adventures of Huckleberry Finn, The Little Prince, The Mouse and His Child? Don’t you have a handful of books that have changed your life? I know I do. Such books truly are candles, and their glow illuminates the world in ways nothing else can. In spite of marketers’ promises, I don’t think that’s something dish soap will ever do.

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Jack’s argument is less that books aren’t commodities than it is that some books rise above the level of being a commodity. But in the case of fiction, especially bestseller fiction of today, I still think books are substitutable. If they weren’t, what would I read in my favorite genres as I wait for the next book by a favorite author to become available? And what happens when that favorite author stops writing? Do I suddenly stop reading?

What do you think?

January 9, 2012

eBooks: Has Amazon Turned eBooks into Commodities?

For a long time, publishers and readers have argued that each book is unique and thus one cannot substitute, say, a book by Dean Koontz for one by Stephen King. For years I accepted that — until ebooks and agency pricing and Amazon exclusivity. Now, in the case of fiction at least, I think the tides have turned and ebooks demonstrate books and authors are substitutable, that is, (fiction) books are commodities.

Until inflated agency pricing of bestsellers and Amazon’s concerted effort to dominate the ebook market, I would not have considered substituting one author for another author — at least not consciously. Yet the more I think about book buying and reading habits, the more convinced I am that between the criteria genre and author, it is genre that dominates.

Before the advent of ebooks on a wide scale, most readers bought (or borrowed) physical books to read. Physical books, except in the secondary market, were (and are) highly priced. A popular hardcover today, averages $25 and climbing. As a consequence, a reader carefully chose the book to buy and placed the emphasis on author and genre. For $25, the reader wants Tom Clancy, not Jack Unknown.

Amazon began to whittle away at that reader preference with its heavy discounts. Selling bestsellers at $9.99 rather than $25 meant that a reader who had already read Clancy’s latest novel could look for something else within the genre and take a chance on Jack Unknown. The investment was not overwhelming.

Today, Amazon has gone further with ebooks. Tom Clancy’s newest release may cost $14.99 in ebook form (and less in hardcover), but readers are increasingly finding ebooks at $2.99 and less in the same genre by unknown authors worth a try as they wait for the Tom Clancy novel to come down in price — or simply move beyond Clancy altogether.

Amazon, by aggressively courting the indie author and by aggressively pricing indie titles, has expanded what readers will search to find a good book to read. And Amazon has gone the further step with its Prime Lending program and Kindle Direct Publishing programs. Amazon has given its stamp of approval to indie books and authors. Although I think Amazon is not a bookseller to patronize because of its desire to monopolize the integrated book market, it deserves a great deal of credit for changing books into commodities.

I know that many of you will clamor to say that I am wrong, but I ask you to consider this: Once you have bought and read the latest release from your favorite author, do you stop buying and reading books until that author’s next release in 2 or 3 years or do you continue to buy and read books within that genre? And if you do continue to buy and read books, do you continue to be entertained by them or are you only entertained by books written by your favorite author? Finally, do you rush out to buy your favorite author’s newest release or do you wait for a less expensive edition to appear?

If you answer yes to the latter parts of each question (at least the first two questions), then books are commodities and substitutable. And this is the revolution that Amazon has wrought aided by the Agency 6 — the change in how readers view books, especially ebooks. What the Agency 6 claimed they wanted to prevent by instituting agency pricing, they have instead brought about by encouraging, through their actions, Amazon to legitimize the indie marketplace.

Prior to this legitimization, indie books and vanity books were synonymous. That is no longer true. Amazon has made it possible for known and respected authors to go indie and not be negatively viewed by readers. What vanity presses sought for decades, the Agency 6 gave them in months.

The commoditization of books is both good and bad. It is good because a wider range of authors are discovered. The Shayne Parkinsons, Vicki Tyleys, L.J. Sellers, and Richard Tuttles of the indie world — authors who write very well and excellent stories but who were unable (or unwilling) to break into the traditional publishing world — now have a chance to be discovered and claim the large and broad readership their writings deserve. I admit that prior to the commoditization of books, I would not have tried any of these authors. But once indie books were legitimized and books commoditized, I began to explore the indie world and found numerous gems, with some authors and books being better than what I could find in the traditional book world.

Commoditization is, however, also bad — bad for publishing, for authors, and readers — because in coming years the writers who currently make grand incomes from writing — the Stephen Kings and Tom Clancys of publishing — may well find themselves unable to attract an audience for their higher priced efforts. Granted that this is just the marketplace at work, but the pendulum can swing too far in either direction. As the market settles on a low price ceiling, that ceiling will become crowded and with the ease of entry into ebook publishing, it will become increasingly difficult to find the King and Clancy of the 2020s.

A balance is needed, but I have no idea how to bring it about or what that balance should be. Amazon deserves praise and scorn for commoditizing books, but more praise than scorn. In this, Amazon has done well.

November 14, 2011

Does the Future of Editing Lie in Tiers?

One of the things that struck me about the “saving” of the American auto industry was the new union contracts that created two wage tiers. The idea of tiers is also invading public employee contracts.

Then a new project came to me that was conditioned on my accepting a lower per-page rate than I customarily charge. The tradeoff was the size of the project and the extra long schedule. Yet that made me wonder: Does the future of editing lie in tiers?

We have already seen the changes in pay that were brought about by globalization of the editor’s job. Whereas when I first started in editing, 28 years ago, I had to overcome publishers wanting editors who were very local, that is, editors who could pick up and deliver the hard copy manuscripts, today I have to overcome publishers who are price focused and globally oriented. That global orientation has already caused a depression in rates that publishers will pay.

I thought that the rate pressure had hit bottom until this project was offered. Now I see it hasn’t and that it may be taking a more insidious form — the form of tiering.

I called the client to discuss the pricing and discovered that the rate they were offering was their new top-tier rate given only to very experienced editors and only for the most problematic projects. I was informed that most of the freelance professional editors who worked for this client were in one of two even lower-paying tiers.

I understand the pressure that publishers are under. Competition is getting keener with agents starting their own presses and with booksellers venturing into the publishing end of the book process. Yet the race to the bottom means everyone loses.

Right now the bulk of the competition for American editors lies in India-based editors and in newly minted American editors, both of whom are willing to work for low wages (i.e., low based on the American lifestyle). Newly minted American editors think that taking a job at any price is better than not having any work at all and also that it gives a foot in the door. That was reasonable thinking a few decades ago, but not today with globalization and with publishers viewing editorial services as being of questionable value for their bottom lines.

Alas, although such thinking is no longer reasonable, I am unsure what reasonable thinking is when it comes to pay. I am also wondering what the effect would be should I decide to accept this project at the proffered price. I am weighing multiple factors as I consider the effects.

First, even at the proffered price, the project would be profitable to me. Because of efficiencies in how I run my business, the proffered price is not a breakeven or worse price, yet it is not as good a price as I expect for a project with the problems this one has.

Second, I wonder if acceptance would set a precedent. Would I be more willing to accept lower-paying projects in the future? Will this client expect to pay even less next time?

Third, I wonder how this will impact other facets of my business. Will I be able to accept projects from other clients or higher-paying projects while working on this one? How will it interfere with work over the next few months (the proffered project is expected to last 6 or 7 months of near full-time editing).

There are other concerns but perhaps the most important concern is this: Is this project a portent of the future of editing in which low and tiered pay will become the norm, with editors having no control over the tier to which they are assigned? This may seem farfetched now, but the future is not so far away that we can ignore what is or may be coming. The time to plan counterstrategies to these possibilities is now; waiting until they are universal is too late.

It is at times like these that I lament the lack of a useful, viable, forceful national association for professional editors that is something more than a social club. The one lesson that publishers have absorbed, and that freelance editors shore up by their actions, is the divide-and-conquer lesson. American editors stubbornly refuse (generally speaking) to coalesce into anything that smacks of giving up some independence. Ultimately, that reluctance to give up any of our freedom will be our downfall.

Sadly, I think tier pricing for editors will be the norm in a few years, not a few decades. I think when that occurs, it will be too late for editors to join together to fight it. The ease of entering the field — all one need do is hang out a shingle that proclaims he or she is ready for work — and the very minimal financial investment needed to do so, works against us in this time of globalization, just as it worked for us when we started our own careers.

How many of us would choose this career path today should we be given the opportunity to restart our career lives? I know I would have to think carefully about my choice.

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