It’s going to a disaster for new authors if the bad DoJ actually prosecutes publishers for collusion and makes agency pricing go away… Of course there is no evidence, and anyway, Amazon is the real badguy… According to Mike Shatzkin
Now it is worth pointing out to you that his business is essentially consulting to legacy publishing before you reach any conclusion. He does his best to stay civil but to quote him “This blog is written from the perspective of professionals in the publishing business and intended *primarily* to help them understand the changing world we’re working in.” The blog comments do seem a little short on input from those professionals. I think however I can safely assume (with as much proof that publishers colluded with Apple to institute the agency model) that his view is acceptable in the sight of his principal clients. His views, broadly are theirs, he knows and is friends with them. This not a view which appears to regard either producers or consumers as items of particular value, or to understand either.
To summarize Shatzkin as best as I can: If agency pricing goes it will be bad for everyone except Amazon, especially independent newbies, because they will lose their price advantage. Wicked Amazon will price bestsellers low, as loss leaders, and no one will bother with Dave Freer or Fanny Newgirlonnablock. And Amazon will go on to become a monopoly AND the (BIG BOGY_MAN MUZAK) they’ll stop paying independents such high royalties, and squeeze everyone…
Oh and a little later in his comments he reaches the interesting conclusion that book buying is governed by the number of books readers can/want to read, and not by a budget.
Oh… dearie me. Dearie dearie me.
Let’s play through from a minor author’s point of view these terrible fates. Let’s start with the squeeze… quite plausible. At the moment they’re paying 70% of gross. Publishers are paying… 25% of Net. Or, to take the deceptive terms out and allow comparison of frink-fruit with frink-fruit, a gross (after agent’s commission) of somewhere around 14.5%… That’s a LOT of squeeze before it gets that low. And a lot of gap for competitors.
Shatzkin admits that the the industry is probably paying too little at 25% of net, but then goes on to say that it’s pretty irrelevant as most authors will never earn out their advance. Hmm. Let’s think this one through, as we know that advances are pretty blooming low anyway, and have dropped from 5K to 4K and falling…. (if this reminds you of the improbability drive, that’s because that is what is.) Let me run this one past your logic circuits: If the buyer of your patented new mousetrap offers you a royalty of 5% and advance of $4000… and somehow you never earn back that $4000 in royalties, let alone any additional royalties, and the mousetrap manufacturer has shall we say, opaque accounting practices… But when you offer him your newest mousetrap design, he sighs and says that out of the kindness of his heart he’ll take that off you for $3500… and that he’s bought seven other new mousetraps and none of them ever earned his advance… do little warning lights come up? Does the circuit that alerts you to improbable events say that the chances of someone paying MORE than the item is actually worth, repeatedly, are several million to one, against?
Now, of course, if you have terminal Stockholm syndrome you’ll tell me it’s because they’re supporting literature! And your poor little work was worthy of nourishment and they did it because they LOVE you.
And I will try not to be sick in my mouth.
Please believe me, I hate the taste of my own vomit and that is just too nauseating : The ONLY way all of this happens is if you’re being ripped sixteen ways to breakfast.
I think that puts that one where it belongs, in the paddock being eaten by dung beetles. Pay some small attention to it because it is relevant to the next part of the story.
Agency publishing will be a disaster for the independents because Amazon has deep pockets, and can afford to run bestsellers as loss-leaders thereby destroying independents price advantage. This is called ‘publisher think’ and it’s something like ‘military intelligence’. You see Shatzkin is thinking like a traditional publisher, and assuming independents work work the same way. He’s confusing the world he knows and works in with reality. At $2.99 for Joe Bestseller’s e-book, Amazon (and probably his publisher, and possibly Joe) are eating a vast loss, with every book sold. At $2.99 Dave Freer is taking home $2.08 and that is NEARLY 400% MORE than I made if the traditional publisher sold it as a paperback. I can afford to discount to the point where I take home 64 cents and I’m STILL doing just as well as I was, scraping by with my traditional publisher. I haven’t made a loss yet. I can afford to compete, as an independent, on price. I’m not carrying vast overheads that add nothing at all to the value of the product.
On the other hand, traditional publishers… have a list of books coming out each month. Bestsellers, being discounted get a boost in sales numbers, but the reality is Amazon will demand discounts to cover some of the discount they offer. And their other marketing channels will do the same. So some more sales… but huge advances (and here they REALLY are more than the book may earn, but that’s oK, because they’re cross subsidized by those other ‘ acts of generosity’ and the vast overheads of the NY office and lots of other guff that adds NOTHING to Fred Midlister’s book sales.
Except… They can’t discount Fred Midlister’s e-books… because heaven help them, that is actually paying the bills. SO, Dave Independent and Joe Bestseller can discount. They can slug it out more or less equally priced, although Dave can still cut, and still make a profit, and so he will do it more, until his brand (his name) sells as much Joe’s or at least enough to make him happy and wealthy.
Meanwhile… remember that Fred Midlister was the lucky fellow that was having his advance (that he never earns) cut. Because his publisher LOVES him and values literature, and wants to buy the next one out of the goodness of his heart. This means less sales for him, and probably even less pay. He also happens to be a friend of Dave Independent, who, when his friend is moved to living under a bridge by the overwhelming generosity of his publisher will point out that he could go independent, discount his books and still earn more.
So I’m guessing the loser might be the publisher, because without the newbies and midlisters to be overwhelmed by generosity – and to carry the cost of the stuff they get almost benefit from – they have to rely on the discounted bestsellers… and trust me on this too, I’ve done the math. Short of black swans, they haven’t a hope. Bestsellers are vastly profitable, BECAUSE the cost (including the huge advance) is also carried by the rest of the list. Of course Shatzkin and the trad-publishers don’t quite see it that way, but it is, the way Mount Everest is 🙂
And now for our little surprise test… well, more of a survey. Who here’s book buying habit is governed by the number of books they can/want to read, and not by a budget? If you had $15 to buy books with, and the must-read DOG & DRAGON was $4.99 and not $14.99 would you spend the other 10 bucks on books or something else? and would you be prepared to venture 99 cents on a noob?
Tell me about it.