So will they all quit DRM and what will it mean to writers and readers?

I got asked, in an e-mail interview this week, if I thought that Tor’s abandoning of DRM (hailed as daring and groundbreaking by all sorts — and a mere decade after the daring and groundbreaking Baen which everyone in publishing studiously ignored, despite the fact that it’s been a resounding success.) would have other publishers following suite. Of course Tor owns a stake in Baen, and thereby Macmillian could be/ should be party to their finances. Baen is severely hamstrung by various historical deals which damage their distribution and hamper their freedom of movement… which the boards and CEO’s of Tor and Macmillian ought to know.

Whether they do, I have no idea. Whether they’ll follow suite… I think it likely. What will come of this… I don’t know. But logic says…

Most of us tend to think of these things in terms of money and logic, usually the two operating in some kind of tandem. This might often be true in business. The reality is that it’s a lot more complex in publishing. Some people see this as a good thing, and oddly most of those who do are beneficiaries of the disconnects. I believe old STASI agents still mourn the passing of the good old days too. Let’s look at why publishing is different.

Firstly, simply because it could be. A small number of publishers and an even smaller number of wholesalers controlled almost all access to the market. If as a producer (writer) you wanted to sell books, you had to go through them. If you want the technical term for this it’s a oligopsony (which means very few buyers, who restrict the ability of producers to sell). Given a choice of an oligopsony or monopsony, the former is a far worse option. They act as a cartel, and producers gain nothing by breaking with one of the oligopsony. They get the same or worse from the others. A monopsony… you only have to break once. Now there are some people who say better the old devils we know, than the new ones we don’t, and that authors simply cannot succeed without one or another evil large corporate. And the publishing/distribution traditional large evil corporate has to be better than Amazon. Well your milage will probably depend on whether you’re a darling of your big 6 publisher or not, but right now the one is offering 14.5% and no visible accounting and settlement up to 18 months later for e-books. They’re known to be late on their contractual payments. And contracts are written by Beelzebub as an extra. And they offer editorial and cover services which are valued at about 10% by their accounting. And the other offers 76.5% (6.5% of that if you send them the customer – not offered by the former.) Transparent accounting and 3 month settlement. The contract is only written by a junior assistant to Beelzebub. You have to provide your own cover and editorial. Well, you may see this differently of course, but I’d like to see suppliers use this situation to at least force all the big evils – including the traditional ones, to offer around 60%+ 10% worth of editorial and cover, +6.5% referral fees, with 25% as their share from their sales. Logic and money says that’s what a competitive market would be doing right now. And the 25% +10% is more than the publishers take home to do the business with, right now. So why isn’t it happening?

I don’t know. But the other complex factors come into this. The first one is simple. Many of these companies – Baen included, are tied into legacy contracts and legacy costs. Most of these add trivial real value in money terms and certainly add vast costs. They may be hard to get out of for contractual reasons. They may be hard to get out of reasons that have nothing to do logic or money — being based in New York as an example. In the 21st century this makes about as much sense as a coal-fired car. Try suggesting to a publisher (or those working in the industry) they move to Detroit.
The second is of course that some business people have risen to the top of publishing. BUT in a cold-blooded ‘I want to be a successful rich businessman’ application of logic sense, it’s not likely they’d have chosen the book trade. Look, there are a number of reasons for going into publishing. But straight financial selection of the very best motivated by that isn’t one of them. Historically anyway, you would have got a lot richer elsewhere. Which is an important fact to remember when you try to work the future steps of companies in the book world. The people controlling them, unless they transferred in (and in this case, the very best money-driven ones won’t come and stay in publishing) chose to be there for other reasons. They might be there simply because they love reading. They might be there because daddy did it. They might be there because if you live in East Coast literary circles it is something to aspire to. They might be there for ideological reasons (we must use literature to drive our vision). They might be there because with a liberal Arts degree jobs in more lucrative areas are closed to them. They might be there because they love living in New York and that’s one of the possible employers… or any combination of some or all of the above. The important thing is they didn’t go into it make as much money as possible. I don’t have a problem with that. But it means deducing their next steps off logic and money is pretty futile. Logic and money would have dropped DRM years ago and gone into direct online competition with Amazon, and used (and paid commission) to authors for sending them traffic years ago.

Money only starts to talk to them when desperation sets in. And even there, the other motivations may trump it. Take for example Charlie Stross’s post on DRM and Amazon. Charlie is no fool, and is definitely interested in making a good living out of his writing… but inserted a diatribe about Libertarians into his post. Now, bluntly, it added no large value to the post. You might agree with it, or not. But cut that paragraph, and the post would not have not made sense. So: it might have gained him some support from those who hate Libertarians, probably delighted a few people in legacy publishing… but it certainly lost him a percentage of readers forever. His choice and he seemed happy with the outcome. If he needed every last reader… would he still have done it? I don’t know and it doesn’t matter. But that adequately describes the situation in Legacy publishing and what they’re going to do with DRM, and more particularly what that means for the future. Because I’m willing to bet they’re NOT prepared to sacrifice or even compromise on those motivations. They want to continue to live in NY and have the NY office, they want to continue to flavor their selection of books with their ideology, and push ones which they think the public ought to read. They will do almost anything but admit they’re following Baen’s lead, because, prior to Amazon, Baen was the Bete Noire.

So: yes, I think they will follow Baen… because they can follow Tor, and pretend they’re not. And only desperation forces this. BUT… I think that most of them will fail to successfully capitalize on this change (which would allow them to sell directly from their sites disintermediating Amazon) simply because, like it or not, Amazon operates on money and logic, which will trump the other motivations when it comes to making money. They won’t be prepared to pay authors referral fees, and they won’t offer nearly as good royalties, they’ll continue to play favorites and not let the market decide what is a favorite. They will try to continue doing business the way they could when they controlled 98% of access to retail space, and authors were cheap fungible widgets. Which means the dahlings will stay with them. So will the insecure… or some of them. And reality, logic and money might just knock them acock. It’s a bit like Syria, right now. A small group controlled the works, about 10% benefited, about 10% were only mildly persecuted and fear worse, and the rest had no voice and no access to power… the challenge isn’t likeable or better, and while the entrenched lot have the tanks and brutality they might go on clinging to power. If they can hold on long enough, they can do an Iran… they hope.

Do I want to see all of them fall? Wouldn’t mind a few, to provide stark lessons, and perhaps serious investigative accounting. But what I’d like to see, really, is following the money and the logic — and serious competition for the best producers. ‘Best’ defined ‘that what the public — or at least a worthwhile segment of it want (and if you get the right book to the right reader, there are a lot of segments. But you’re selling them what they want, not telling them what they must have. That’s a leap too far for many).

6 comments

  1. Great post!

    I think that the publishers are going to be dragged, kicking and screaming, into the 19th Century. Where they have to become a *business* and not an old-chum network. Pity that they probably won’t survive the transition. I’m surprised they’ve given up quills, clerks who spend all day whittling nibs, and whatnot.

    1. The trouble with Charlie’s saying the big 6 are not about maximum profit and how can we squeeze a few more dollars… which evil Amazon is, is what actually happens is that doing it for other reasons doesn’t pay the bills or the rent or the wages. And so as the utility company, landlord and indeed the ‘idealistic’ editors etc… have to take it from somewhere. That somewhere is authors and readers. I have no problem subsidizing my own idiocy, but I resent paying for theirs. If NY publishing wants to live in NY and have NY offices, and publish what is ‘good for the hoi polloi’, let them take salary cuts and subsidize the cost of living there with dumpster diving. Don’t expect me to do it when I have alternatives.

  2. I lean towards the Tor version, in that certain genres (sci-fi/ fantasy, maybe computer books, some academic works) will become available without DRM, but the cash cows will remain behind a code wall. And the publishers will argue that the “important works” need to be protected, but the cheap trash can run free.

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