This post is in response to a recent series of Huffington Post editorials about the future of publishing. Each voice in these editorials, like each voice in the larger ongoing conversation, has a valid point of view. Ignoring how we got where we are, however, or the realities of this moment, fails to address the future that is hurtling toward us.
On Thursday, October 7, Mark Coker, CEO of Smashwords, posted an editorial titled, Why We Need $4.00 Books. As the head of a company devoted to servicing the e-book market, it’s not surprising that Coker touted the functional and distribution advantages of e-books over published texts, or that he focused on the crushing costs associated with maintaining the traditional publishing model while ignoring e-book costs and the threat of digital piracy. Coker also took notice of the publishing industry’s recent decision to withhold e-book versions of frontlist titles as a defense against cannibalizing book sales:
Many publishers view ebooks with a skeptical eye. After all, won’t cheap ebooks cannibalize expensive print books?
This is the wrong way to examine the situation. Lower cost ebooks help publishers retain customers who might otherwise abandon books altogether in favor of lower cost alternative media options.
Ebooks also hold the promise to expand the worldwide market for books. Hundreds of millions of new middle class and literate consumers have come online outside the US, especially in developing countries.
In Coker’s view e-books equal a larger market share for an industry facing intense competition for eyeballs. This larger market share would in turn compensate authors and publishers for a lower per-copy price.
On the same day, Friday, October 7, Chip O’Brien, Director of Customer Relations for BookSwim.com and Editor of Thorn Magazine, posted an editorial on The Huffington Post titled, Why New Books Don’t Sell on the Kindle: The Price of the Intangible. O’Brien’s article took a much narrower view of the issues facing publishing by focusing on a single e-reader and comparing it to the traditional book publishing market:
According to publishers, the majority of a book’s ultimate sales price pays for intangible costs as well: preproduction (editing, graphic design, etc.), marketing, and author royalties and advances. Money Magazine found that these three made up about 77% of a hardcover’s production costs. By these numbers, a publisher doesn’t save much on an e-book over a paper book: about 23% of existing costs. So maintaining the same profit means a fair price for a $27.95 hardcover in an e-book format would amount to $21.50.
Taking these numbers at face value, it’s clear there is a significant disparity between Coker’s call for a $4.00 book and the E-book pricing suggested by O’Brien’s calculations. Even if the publishing industry wanted to make a $4.00 book available, O’Brien’s math seems to suggest that it would be impossible without destroying the publishing industry in the process.
In reply to these two articles, on Friday, October 8, Steve Ross, former President of the Collins Division at HarperCollins, posted a “Manifesto of Sorts” on The Huffington Post, titled Can’t We All Just Get Along?
Ross began as follows:
I will define “the industry” as the organization of major book publishing houses based primarily in New York City and owned by a handful of (primarily foreign) media conglomerates, a body of companies that 20 years ago numbered in the dozens and can now be counted on one hand, with maybe a few fingers on loan from the other.
Reflecting his long tenure in the publishing business, Ross complimented the industry for its selflessness and dedication to “the enduring significance of books and their ability to educate, inform and entertain.” He then addressed both Coker and O’Brien, first by demonizing them, then casting the publishing industry as victim:
I have watched the incremental troubles metastasize, while at the same time, I have noticed over the past few years a troubling trend entering the picture, a trend that is encapsulated in the blogs posted by Chip O’Brien and Mark Coker.
Both blogs are, to this reader, rife with fallacious thinking, faulty reasoning, and/or tunneled perspectives that ignore the complex realities that publishers face during this turning point for the industry. But at a time when it is in the best interests of everyone who loves books to help the major houses endure, they’re being scapegoated, demonized and ridiculed for trying to survive with the crippling business model they’ve been handicapped with for decades.
This kind of rhetoric is not going to solve any of the problems in the publishing industry, nor is it the kind of rhetoric one would expect in an editorial titled, Can’t We All Just Get Along? Ross also confuses the book as an object with the knowledge and information a book contains; a distinction O’Brien took pains to highlight. Like flowing water seeking the path of least resistance, knowledge and information are now flowing to an easier and cheaper means of expression and distribution, and that’s true whether you use Coker’s math or O’Brien’s math.
Framing the pricing question from the publisher’s point of view, Ross notes that O’Brien’s $21.50 e-book price point is being bludgeoned by Amazon’s attempt to cap e-book prices at $9.99 in order to drive demand for its Kindle e-reader. He also notes that many of the bestselling e-book titles are actually free:
Faced with a $9.99 price tag set by Amazon and cemented by Dan Brown, this leaves a margin of slim to none.
The puzzling financial paradox for publishers is further exacerbated by the fact that, as I write, Brown’s e-book rests comfortably atop the Kindle bestseller list, but the #2 bestseller carries a price tag of $0.00, the same price carried by #3, and #4, all the way to #10. Many of these e-books derive from major publishing companies, like HarperCollins or Random House, where the costs for creating the books were absorbed, and the responsibility for explaining the royalty structure for such e-book “sales” to the authors and agents is a perplexing mystery akin to a Dan Brown narrative, but without the tourism.
Publishers are giving e-books away free to see if they induce demand for book sales of the same (or other) titles. It is an experiment, and a necessary one, and one that follows Coker’s line of reasoning. But Ross makes a fair point: if $21.50 is breaking even, and $4.00 is taking a loss, then FREE is probably not going to save the publishing industry. At least not without significant downsizing.
Turning to Coker’s math, and his idea of a $4.00 book, Ross embraces his “Can’t We All Get Along?” message by smearing Coker with the title of a book on Coker’s site. Sticking to the low road, Ross then attempts to school Coker on a point that seems generally accepted:
But when he states that “many publishers view e-books with a skeptical eye” I know we’re dealing with someone who is operating from hearsay rather than relevant experience in the trenches of a large and established publishing company….
Publishers are withholding e-book sales of frontlist titles because they believe that e-book sales will cannibalize book sales. This is a fact that is not in dispute, and it was this fact-not-in-dispute which Coker was referencing. Here again is Coker’s full quote:
Many publishers view ebooks with a skeptical eye. After all, won’t cheap ebooks cannibalize expensive print books?
However eager to get along Ross may be, brandishing a chainsaw — even if only to shred his own limbs — is counterproductive. But Ross can’t help himself. Taking a second swipe at one of the erotica titles on Coker’s site (a subject worthy of legitimate debate, which I intend to engage), Ross reminds Coker that even the bestselling e-books owe their success to the traditional publishing industry:
While such services [e.g. Smashwords] provide a helpful function for aspiring writers (and Bad Ass Bitches) everywhere, it’s worth noting here that the overwhelming majority of e-book bestsellers, like print bestsellers, are books that were published, usually at great expense and with a concerted cross-departmental effort, by a major publisher.
The publishers have had to pay the agents and authors sometimes usurious rates at auctions for the rights to publish and sell these books. This is so for several reasons — because agents and authors have managed to pit houses against each other in their need to fill inventory pipelines, and because of publishers’ increasingly desperate search for anything that might carry the scent of a Big Or Important Book, and because of the audacious and perpetually unrealistic demands of the parent company for a 12 percent return on investments, and because publishers tend to be staffed by people of great passions serialized from one prospective project to another.
And here we need to stop. Because in bleating about the injustices done to the publishing industry, Ross has achieved the rather neat trick — with the help of his own bloodied chainsaw — of reducing the publishing industry to a handful of well-intentioned people who are the victims of everyone.
At the beginning of his editorial, Ross defined the publishing industry as follows:
….the organization of major book publishing houses based primarily in New York City and owned by a handful of (primarily foreign) media conglomerates….
But now Ross is taking part of that back:
….because of the audacious and perpetually unrealistic demands of the parent company for a 12 percent return on investments….
Ross’s definition of the publishing industry now seems to include only the “major book publishing houses based primarily in New York City,” and not the actual owners of those companies. Meaning the people who own the publishing industry are part of the problem, and specifically part of the pricing problem — which seems to put Ross in Coker’s corner, if not allying him with other voices “rife with fallacious thinking, faulty reasoning, and/or tunneled perspectives.” The non-owner New York executives who are paid by the foreign conglomerate owners and who do what the foreign conglomerate owners tell them and who at some point presumably decided they needed to sell themselves to their foreign conglomerated owners, are helpless victims.
If Ross is correct the remedy is clear. The publishing houses — meaning the real publishing industry, the one in New York City, which cares about books and is routinely abused by agents and authors — need to be freed from their corporate taskmasters. Unfortunately, this has nothing to do with Coker or O’Brien or e-books or e-readers or the internet as a delivery mechanism, and everything with going back in time to a happier place.
Which, after another paragraph decrying the publishing industry’s self-inflicted wounds, is where Ross heads:
Why do we demonize publishers as greedy, monopolistic and backward when they are peopled by such idealists and lovers of literature trying their best to navigate a ship that was corroding from decades-old rust well before the economic collapse placed icebergs in the water?
The pain in these words is clear, and it is not surprising when Ross reveals, sentences later, that he recently lost his job in the publishing industry. Ross does exhort the industry to “start talking among ourselves about the forces we face,” but even this plea places Ross in a bind. If the industry truly has not engaged these issues until now it is guilty of gross negligence, if not suicide. If it has already engaged these issues it has ultimately proven itself utterly incapable of doing so.
Struggling to regain the aspiration of his own title, Ross closes with the following hope:
There must be a middle road between the old model and Mr. Coker’s $4 book, but to imagine what that road might look like requires brainstorming, community, open conversation.
From the context of his comments, however, it’s not clear that Ross is inviting Coker to the table. It’s also not clear that any amount of brainstorming, community and open conversation will help the publishing industry if Ross’s line of attack is followed. Because despite the arguments Ross makes in his editorial, there is one important — make that critical — word that is nowhere to be found.
It is the internet, and nothing else, which is driving the changes the publishing industry is facing, just as the internet has forever altered the music business. Incredibly, this simple truth seems utterly lost on Ross. Clouded by spreadsheet data, historical trends, legacy titles and romanticized industry propaganda he also seems incapable of recognizing why the internet is changing his business and why there is nothing he can do to stop it.
The heart of the matter has nothing to do with Coker’s $4.00 book or his web site, nothing to do with the Kindle or the price of e-books, and nothing to do with the merits of books, the hallowed history of the book-manufacturing industry or the break-even price of a hardback. It has to do — solely — with the internet as a system of communication and distribution which inherently bypasses Coker and O’Brien and Ross and anyone else who wants to play a part in conveying the words of an author to the eyes of a reader.
Prior to the internet the only writers who could connect with readers were those who met the tests of various gatekeepers (editors, publishers, agents) or who were wealthy enough to self-publish and auto-distribute their works. Now, for the first time in history, writers and readers do not need Mark Coker or Jeff Bezos (CEO of Amazon) or Steve Ross in order to connect because all previously-essential distribution services, including even previously-necessary web sites (think AOL) and hardware configurations (the desktop computer), have been bypassed.
Everyone in the new content pipeline must demonstrate added value in order to be embraced by both authors and readers. As an author, if you are not helping me monetize my content in some way, I have no valid business reason for partnering with you or hiring you. As a reader, if you are not providing me a service I need at a competitive price I will simply go elsewhere.
That this fundamental change presages no clear model by which current authors can monetize and protect their works, or by which publishers can monetize and protect backlist titles, does not deny the truth of the change. It should also not blind us to the immediate threat this poses to many established businesses large and small, and to the many honest, honorable lives that are being affected. The fact that answers will inevitably come in time is no relief to someone who has bills to pay or a child to feed.
But therein lies our common ground. No one is getting a free pass on the internet or making out like a bandit, and that includes writers and readers. Authors, copyright holders and publishers suddenly liberated from distribution headaches now face the constant threat of piracy. Booksellers who may in the future have print-on-demand access to any title ever published have no clear revenue stream that will allow them to survive until that time. Readers who love books (physical books and e-books alike) have access to more titles at cheaper prices than ever before, but no simple and standardized method of accessing those titles.
As an independent author I do not escape the horrifying truth that Ross cannot face. In return for making distribution almost effortless and almost free, the internet promises nothing. No revenue. No readers. Nothing.
As a writer, questions of cost and profit and revenue are of interest to me because I now have a direct pipeline to readers. I know I can reduce my costs to something approaching zero, so the question of most concern to me is how to generate revenue. I know I need help to monetize my content. I need sites that will host it and promote it, readers that will recommend it, and publishers who will do the same if I want to reach the widest possible audience.
I want to make deals with business partners in order to accomplish these goals. I want to have the money to hire professionals like editors and designers to help me produce the best work I can. And I want publishers to help me reach the widest market if that makes sense to both of us.
I want to be successful. And if I’m not good enough by some measure, I want the next independent writer to be successful. And the next. And I want Ross to want them to be successful, too.
That’s our common ground. That’s the future of publishing.
— Mark Barrett