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Inconceivable (Lunacon, Ravencon, and assorted observations)

It’s time for a much-delayed Lunacon report, and since Ravencon happened in the interim, I’ll report on that too. The combination of moving house immediately after the con and a major release at work (our software is like Klingon software – it is not released, it escapes, leaving a trail of battered and bloodied testers in its wake) did interesting things to my ability to focus on anything but what was right in front of me and had to be done NOW.

So. Lunacon. As always, held in the M. C. Escher Memorial Hotel (otherwise known as the Westchester Sheraton), but with a sadly reduced attendance. They don’t know if there’ll be a next year. I hope there will. I had a very leisurely-paced signing (a few people stopped by to chat) and an even more leisurely reading (no-one there at all, so I sat and relaxed for a while). I did have fun at my panels, neither of which was in any danger of needing to invoke the Bar rule (if the panelists outnumber the audience, adjourn to the bar) which was just as well since the Bar was mid-renovations and semi-functional, just like most of the hotel’s public spaces. There were some interesting rumbles to be heard about Amazon, distribution, and the rest of the industry, rumbles which weren’t the kind of thing big publishing would want to hear. Another interesting factor – for a convention within spitting distance of NYC, there was precious little publishing representation. This is a convention that used to be bristling with editors and agents, but had if I recall correctly precisely one editor from one of the big players, and this one of the younger/newer ones. No agents. No panels about agents and how they work, either, and those used to be a staple.

At Ravencon, it was obvious that big publishing in its current form is doomed. Something with the same names might survive, but the current setup is going away. The only things in doubt are when, and how hard it’s going to hit. Not surprisingly, the Department of Justice antitrust suit was big news – so much so that three panels (Amazon vs IPG, Amazon is not Evil, and Myths of Independent and Small Publishing) all turned into discussion of the lawsuit and the future of the industry. The consensus from those panels would give any editorial demon from the big 6 a bad case of heartburn.

First up, no-one is buying the line that this is all Amazon’s fault. No-one. The closest I saw was the entirely understandable concern from those midlisters at greatest risk that if Amazon does become an effective monopoly it will have the power to cause a whole lot of damage. The author whose books are published through IPG was asked why IPG has made no attempt to compete with Amazon on ebooks and do it better.

Worse, people, including authors published through the big 6, are openly describing the big 6 accounting practices as fraud, and advising everyone to spread their risks by using every publishing outlet they can. Self-publishing and small press aren’t stigmatized any more. They’re a blessing because they mean a savvy author can get a whole lot of different channels to sell their stuff – and damn near everyone in the audience knows how to get it without going through the big 6.

Even worse, at least as far as big publishing is concerned, they’ve lost their lock. People aren’t thinking that they must be weird or odd because they walk into Big Box Bookstore and see nothing worth buying. They’ve worked out that the industry has been systematically ignoring the things they want to read, and that they can get it from Amazon. If Amazon ever stops providing what they want, they’re willing and ready to look elsewhere.

Best case, they’re doomed. Worst case, they’re doomed and they bring down a good chunk of everything else with them.

Here’s where I see it. Best case is that all of them – including Apple – settle on the DOJ anti-trust suit. This will prevent DOJ lawyers and accountants inspecting their books for irregularities. I’m pretty sure Apple’s accounting is impeccably laundered, but the publishing industry has yet to bring their accounting practices into the 20th century, much less the 21st. Even being highly optimistic and presuming that there’s no fraud, individual or systemic, no accountant will accept that publishers could possibly have no idea how many copies of any book were printed, sold, or returned. So, given any shred of sanity at the top, they’ll settle. The fact that three of them had already settled within 24 hours of the suit being announced suggested that they knew charges would be laid and weren’t going to take any chances. So… they settle, the ebook market adjusts a bit, and they continue their decline until they hit the tipping point and crash. We won’t even go into what the IRS would think of industry accounting…

Worst case, one or both of the holdouts fights, or the statements authors are sending to the DOJ as supporting evidence trigger another investigation, this on racketeering and fraud charges. Or one or another of the multiple suits filed by the states sets off the same kind of investigation. This is the nuclear option: investigators will quickly move to the two main distributors and from there to the bix box chains to try to trace where the impossible sales figures are coming from. Not one of the entities involved can survive that kind of investigation – and it will drag in smaller publishers that have tried to do the right thing but needed the distribution arm of the larger publishers. If things work out this way, the industry will collapse in a spectacularly nasty round of legal argument, and take entirely too many smaller publishers and authors with them. The DOJ is quite capable of claiming that the winners of the current system should reasonably have been aware that their sales numbers were inflated and chase them on those grounds. They’re also capable of requiring publishers to pay authors what they should have been receiving, plus interest, based on DOJ calculations. It doesn’t take much to see that any decision like this will shatter the industry. Even if they’re able to successfully appeal a decision along those lines, they’ll be effectively out of business until they clean up their accounting, as will the distributors and big box stores. Oh, yes. If things go this way, the IRS gets involved, and I think in those circumstances the publishers would prefer to be dealing with the DOJ.

I suspect the most likely outcome is somewhere in between, but I do think the whole house of cards is collapsing, no matter what. Personally, I’d prefer not to see it take out authors and smaller presses as well.

8 Comments
  1. ppaulshoward #

    Thanks for the report.

    April 19, 2012
    • Kate Paulk #

      Thanks, Paul

      April 19, 2012
  2. Great post, Kate, and I think you are right on about all this. Add into the equation that while two of the five publishers sued by the DoJ say they, like Apple, want to try the case on the merits, they don’t have Apple’s deep pockets to do so. A long, drawn out case will only add to the damage they are already suffering. Then there is the fact that most of the five are settling (at least that is the last I heard) the antitrust suit in the EU. Now there’s news that a class action suit is being brought against these five publishers and Apple in Canada as well as the possiblity that all 50 states will join the suit begun by Texas and 14 other states or territories. Apple alone has the deep pockets to continue in litigation for years.

    Will this be the end of publishing? No. But it is the end, or at least the beginning of the end, of publishing as it has been. A new phase has begun with e-books, small presses and self-publishing no longer being an anathama. What happens next is anyone’s guess.

    April 19, 2012
    • Kate Paulk #

      Oh, it’s a crapshoot what happens next and how everything pans out. I just don’t see the big 6 surviving in their current form when readers and authors have worked out that there are alternatives.

      April 19, 2012
  3. Hell, Kate… I dunno. I have days where I think ‘settling’ is just cost of doing business for these firms. Yes, they have to part with some cash, but it’s still profitable (because they digitized backlist – often ‘pirate’ -where they had no rights or by screwing the author and getting the property for a handful of glass beads). Settlement as far as I am concerned is opening the wound, letting a little pus out and sewing and taping it closed without cleaning out the cause, and hoping the company’s own immune system will fix it. And it may, but most likely those who know where the bodies are buried are immune to any internal clean-out, because those supposedly doing the clean-out are in it too, up to their fat necks. And the rottenness will continue to poison and hurt the whole of reading and writing. The only way I think it can heal as anything that is not deformed, leaching toxins into the entire system, is for one of these too big to fail publishers to be flayed right open and the whole thing purged. Which would wreck the lives and legacies of a bunch of editors and publishing people… and let the others have what they needed to clean their act up, and get out (which is basically what publishing needs: to get rid of most of the legacy of the last 20 years). But keeping it going by ‘settlement’ is like the South African Motor industry who hiked their prices in response to the exchange rate doubling… and then when the exchange rate went to 1/3… said they could not drop their prices (and colluded with govt to keep imports taxed to be the same price) because they needed to protect the second hand car market. No, I am not kidding. They kept prices at 3 times the international price for models exported from SA to Oz, sold, as a result FAR less, employed less people… to protect used car dealers. And that’s what we’re doing. The damage the rest will take is trivial, compared to our used car dealers. And you know what? I think I could take the pain of watching them drown.

    April 19, 2012
    • Kate Paulk #

      Dave,

      “settling” is indeed part of the cost of doing business – and they can do so on a nice NDA so no-one finds out what they were up to.

      The spoiler here is that we’re fast approaching a critical mass of authors and readers bypassing the whole crooked system, leaving the beast to die in its own pus (that was such a lovely analogy, Dave, I just have to extend it a little). I don’t know where the critical point is, but the forecast at the moment is for 40% of book sales to be ebooks within 5 years, so it’s soon.

      You know how Aussies get around the extortionate book prices there, right? Buy enough books, and the cheapest international shipping rate plus the cost of the books is less than you’d pay in Oz. The more books, the bigger the discount per book. It’s particularly good when the Aussie dollar is as high against the US dollar as it is now.

      It’s another way people route around the road blocks wherever possible.

      I want to see the extortionate and abusive practices laid bare, but I’d prefer not to see that take down authors I like and respect.

      April 19, 2012
  4. masgramondou #

    Living authors are probably OK ish because eventually they’ll be able to get to join some kind of class action lawsuit and get some of their royalties repaid. Then they can get the copyrights back, and either reneogtiate or go indie and be fine. The ones who’ll really suffer are the widow(er)s and orphans who probably won’t be able to do the same sort of thing and who certainly won’t be able to write new material to keep some kind of income going while the existing stuff is in legal limbo

    April 20, 2012
    • Kate Paulk #

      Absolutely – the other potential sufferers are the industry darlings who believed the hype. They’re going to see their sales tank – or worse, be on the hook for royalties they received but should never have had.

      No matter how it falls out, it’s going to be a rapidly-changing and very uncomfortable few years for a lot of people. Possibly a lot longer than a few years, too. It’s worth remembering that while Amazon is the 800lb gorilla NOW, they ran at a loss for their first five years to establish themselves in the market. Newcomers need to be prepared for loss or break-even until they get their foothold secured, too – and once the establishment model collapses, almost everyone becomes a newcomer.

      April 20, 2012

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