Monday, February 01, 2010

Digital Perception

Digitization has really screwed things up.

Whether the screw up is a good thing or a bad thing still remains to be seen. But recent talks of ebooks and piracy brings up two important (and I feel thought-provoking) issues.

First is the perception of ownership.

Second is the perception of value.

Ownership used to be an easy concept to grasp. If something exists tangibly (you can see, hear, taste, smell, and/or touch it) and it is in your possession (you bought it, traded for it, found it, created it, were given it), then you own it.

People get loans in order to own big things, like houses and cars, and until they pay off those loans, the bank is the true owner.

It's a pretty simple concept. Equally simple is the concept that if someone takes something you own without your permission, it is theft.

When we bring multimedia into the picture, things get sort of odd.

If you buy a CD, you own a physical object (the plastic disk) and also have the rights to listen to the music on it. You can legally sell the CD, though it would be considered illegal to make a copy for yourself first, because you're only entitled to listen to that content if you own the CD.

If you buy a song on iTunes, you don't own anything physical. You own a bunch of code that, when played on your iPod or computer, you can listen to the same as you can listen to a CD. You are allowed the rights to listen to that music depending on the terms of the sale. iTunes currently limits the number of computers you can have an iTunes account on (it's 5). If you try to transfer songs you bought to a sixth computer, you can't through iTunes.

If you listen to a song on the radio, you have the rights to hear that song, because the radio station and advertisers paid for it. It is within your rights to make a copy of that song from the radio and listen to it over and over.

It is not within your rights to borrow a CD from the library, make a copy of the CD, and listen to the songs over and over. That is considered theft.

So what constitutes ownership in a digital world?

If you digitally copy a song off the radio, and sync it with iTunes, do you own it?

I don't know the legal answer. I don't really care about the legal answer. I know I can record TV shows and cable movies, put them on a DVD, and keep them legally. I know I can buy used DVDs for dirt cheap and keep them legally. I know I can download pay-per-view movies, and depending on the terms, keep those movies for an extended period of time on my DVR, or forever on Tivo.

Do I own these movies or shows? Do I have the rights to watch these movies and shows?

If you Tivo a TV show, and skip through the commercials, is that stealing? The ads pay for the show. If it is stealing, I don't believe the average consumer cares.

Digitization has changed the perception of ownership in a digital world.

Those who create digital products know that these products are easy to copy and share. Even with the restrictions they put on these products (Macrovision, DRM, proprietary formatting) anyone with a bit of ingenuity can find their way around these copy protections.

In fact, a lot of people believe there should be no copy protection at all. If you legally buy a CD, it is yours to do what you want with. You can sell it, or loan it to your mom, or legally make a back-up copy.

These people wonder why they can't do that with intangible, digital media. They wonder why their rights are restricted.

If I bought a song on iTunes, shouldn't I be able to do the same thing with that song that I could do with a CD I bought?

And what of experiences? What constitutes ownership of an experience, rather than a tangible object?

If you sneak into the movie theater, it's stealing. You didn't pay for that experience.

If you borrow a DVD from the library, or watch it over at your friend's house, it isn't stealing, even though you didn't pay for the experience.

If you borrow a DVD from the library, and copy it to watch later, it is stealing.

If you Tivo the same movie to watch later, it's legal.

The concept of ownership is muddied in a digital world.

I'm sure there are laws that show the dividing line. I'm also sure that most people don't know, or in fact care about these laws. A movie is a movie. A song is a song. You can get them buy paying for them, or for free, through legal and illegal means.

In a digital world, without a tangible object (the plastic disk that is the CD or DVD), perception of ownership is cloudy.

But perception of value is not cloudy.

I don't know a lot of people who go into Best Buy and steal DVDs. They believe that it's wrong to do so. Theft of a tangible object means a monetary loss to the owner of that object. A tangible object has a perceived value beyond what the set price is, simply because it can be seen, heard, tasted, smelled, and touched.

Someone created it. It exists. Therefore, it has a perceived value.

I do know people who download music illegally. They feel it isn't theft, because there is no loss of a tangible object. They aren't paying for the experience the music provides, but there are other ways to experience music without paying for it, so why not download it for free? Downloading doesn't equate to a lost sale.

Now let's bring up books, since you all know I was heading there.

A book has a perceived value. That value varies wildly. You can buy a book for $24.95 new, or get an unread used copy of the same book in perfect condition for $3 at a used bookstore. What is the book truly worth?

What if you got the book from the library? Is the perceived value of a book in the ownership of the tangible product, or is it in the experience of reading the story?

If a book is only read once, the reader who bought it for $24.95, and the one who bought it for $3, and the one who got it from the library, all had the same experience.

In a normal system of supply and demand, goods are worth what consumers are willing to pay for them, dependent on the number of goods and the number of consumers. Those who want a book right away are willing to pay a higher price. Other are willing to wait for it to be sold used, or for the cheaper paperback edition, or they put their name on the library waiting list. While the experience of reading is the same, and the prices varies, there still is a perception of value because the book is a tangible object. Books are loved, treasured, shown respect. Books are our friends. We display them proudly in our homes.

Now along come ebooks.

The perception of ownership is tougher to define with something that exists digitally, as a bunch of ones and zeros in binary code.

But what's really tougher to define, is the perception of value.

A print book exists as a physical object, and has a perceived value based on supply and demand.

With ebooks, the supply is unlimited. They can be reproduced and delivered for free (or for pennies.)

Even though the experience reading an ebook is the same experience as reading the $24.95 hardcover or the library copy (and by experience I mean the act of the words being absorbed by your mind), there is a much lower perceived value in ebooks.

Because ebooks aren't tangible. Everyone believes they cost less to create and distribute than their print counterparts. And they're correct. They do cost less, and they aren't tangible.

And their intangibility makes the perception of ownership sketchy. Do you own an ebook if you buy it? Or do you only own the rights to use it on a specific device? Is that true ownership?

It's easy to price a print hardcover at $24.95, because the market will decide if it can sell at that price. Only so many exist. Supply and demand.

But I believe publishers are making a mistake trying to use a supply and demand model, and its pricing structure, with ebooks.

Because the perception of ownership of ebooks is sketchy.

Because the perception of value of ebooks is lower than with print books.

And because ebooks, like all digital media, are damn easy to copy.

There aren't many bootleg print books. Costs too much to print and bind, and there are no outlets to sell them.

There are a lot of bootleg DVDs. They cost less to produce, and there are markets for them.

But there are a lot more illegal digital movie downloads than there are pirate DVDs.

It's much harder to stop illegal movie downloads. One reason is because they aren't being sold--they're being shared. Another reason is because the people sharing them are numerous, individual users.

In fact, there are over a billion of them.

Downloading illegal movies is a pain in the ass. For a good quality, lessor known movie, let's say something 8gbs, it can take weeks, even with a lot of bandwith and a decent server.

DVDs have come down so much in price, I'd much rather pop over to Best Buy and spend $5 on a new copy of the Bad News Bears than download one. (the original, not the crummy remake)

Still, a lot of people experience movies by pirating them. And they don't find it any more wrong than borrowing a movie from the library or recording it on Tivo. Because perception of ownership and value is different for digital products.

Now publishers want the price of ebooks to be high, for several obvious reasons.

First, they don't want ebooks to cannibalize print sales.

Second, because they make a larger profit on high priced ebooks.

Third, because if ebooks fully take over, their role in the publishing process could become greatly diminished.

But ebooks aren't subject to the rules of supply and demand, because they can be copied and shared by pressing a button. And because the consumers have a lower perception of an ebook's value, but still want the experience, I predict they won't pay what the publishers are asking.

The consumers will go elsewhere.

One growing option is piracy.

Downloading a 4.7 gigabite DVD movie, at 1mb per second, takes over an hour.

Downloading 30 ebooks in .txt format takes 8 seconds.

Downloading 1300 ebooks in various formats (epub, mobi, pdf, doc) takes 13 minutes.

Is it really in publishers' best interest to price ebooks at $14.99?

Is it in authors' best interests?

Is it in readers' best interests?

One of the headlines in Publisher's Weekly today was "Agent Community Happy With Macmillan Move."

Well-known and respected agent Richard Curtis called it a "terrific thing." Curtis said the move “restores control of book pricing—on both e-books and print—to the publishers,” and that this is the healthiest thing for the industry.

You're free to draw your own conclusions. I've drawn mine. I believe that people won't pay $14.99 for ebooks. It will lead to fewer sales and more piracy. I believe the way to fight piracy is with cost and convenience. I believe a cheap, or free, ebook model is coming in the future, no matter how much the entire industry seems to be hoping otherwise.

But then, who am I?

I'm a writer.

The reason the publishing industry even exists is because of writers.

We create the content. And in most cases, we get paid very little for this.

Now Amazon and Apple are offering writers 70% royalty rates on ebooks, and the ability to set our own prices.

"A terrific thing"?

Indeed it may be. For the writers

But not for the publishers and the agents.

113 comments:

Scott Marlowe said...

"Now Amazon and Apple are offering writers 70% royalty rates on ebooks, and the ability to set our own prices."

I know Amazon is moving to 70% with their DTP/Kindle publishing model, but Apple...? I hadn't heard anything about them allowing self-published authors to sell their work through iBooks/iBookstore/iWhatever they call it.

Jude Hardin said...
This comment has been removed by the author.
Joe Konrath said...

The only way anyone is going to make any money from publishing is if books maintain some sort of reasonable perceived value.

I've found that to be $1.99.

Joe Konrath said...

@ Scott--Right now I use IndiaNIC to get my ebooks on ITunes. They take 35% for the conversion into an app, and I make 35%.

But if Apple has an iBooks store, no app is needed. That means the author gets the full 70%.

Bradley Robb said...

"Downloading 30 ebooks in .txt format takes 8 seconds.

Downloading 1300 ebooks in various formats (epub, mobi, pdf, doc) takes 13 minutes.

Is it really in publishers' best interest to price ebooks at $14.99?"

Stats like these are the ones that Sargeant should have looked over before he tried to push Amazon. Granted, publishers want desperately to control eBook pricing (lest they end up in a corner like the record labels did...with Apple), and with the introduction of the iPad I think they saw their opportunity.

I have a feeling that Macmillan is taking lumps for the team on this one, but they actually believe that they'll be able to force scarcity economics on an abundant marketplace.

I almost feel sorry for them. But, like you, I've been looking at the eBook industry since Wednesday afternoon and saying the same thing over and over again - illicit filesharing is going to explode over this.

Jude Hardin said...
This comment has been removed by the author.
Joe Konrath said...

You're devaluing your own art, Joe, and eventually it will amount to cutting your own throat.

C'mon, Jude. You read my blog. I share my royalty statements.

I earn more royalties selling at $1.99 than I do through my print publisher in all formats combined. There's no advance, but there's a very long tail that doesn't have any foreseeable end to it.

"Devalue" is an interesting term. I can buy used paperbacks for 25 cents. Are they devalued? Or are they for sale at that price because that's what the market dictates due to supply and demand?

There is NO supply and demand with digital content.

There is also no way to police copyright in a digital world.

I can earn $1.96 on a $2.99 ebook. I currently earn 65 cents on a $7.99 paperback.

That's a no-brainer.

Bradley Robb said...

@Jude

$1.99 isn't realistic if a publisher is sticking with the idea that 5000 copies sold makes a book successful.

However, $1.99 is fantastic if the publisher is encouraging as many people to read a book as possible. Anything under $3 effectively places a book in the categories of impulse buys and experimentation and out of the fetishistic realm that hardcover pricing occupies.

When selling in an abundant economy, the cost to scale ratio is inversely proportional rather than dependent. So, each book that enters the market place has a fixed cost, an "earn out" point. Once that point has been passed, every penny further is pure profit.

In such an instance, it behooves publishers to earn out their books as quickly as possible, as those book will continue to turn a profit for eternity. Thus, the larger the selection of profitable books, the more profitable the entire publisher is. A publisher with a thousand books that have earned out is in decent shape. A publisher with ten thousand earned out books is in much better shape.

Of course, the same thing applies to writers, but we don't scale nearly as well.

Jude Hardin said...
This comment has been removed by the author.
Anonymous said...

Joe should choose the price point that results in greatest profit. It appears to be around $1.99.

The reading public equates cheap with bad when it comes to literature? I don't think so. Some of the best literature is now free (anything out of copyright, for example, and that includes many great classics). Take a look at the Kindle bestseller lists -- many free and low-cost books are at the top, and I've found many good reads there.

Also, the review/rating system on Amazon, combined with the free sample feature, gives readers a chance to evaluate the quality of writing before making a purchase decision.

Take a look at the reviews on Konrath's works. They tell the quality story.

Hacks are quickly identified on Kindle store. People are finding gems, even in the 99 cent pile, and in a networked world the buzz gets out quickly.

Thanks for another great post, Joe.

Scott Nicholson said...

Sorry, Jude, I can't agree. Are the Rolling Stones making as much as Jimmy's Cornlikker All-Jug Band?

Legitimate small presses are licking their chops. They have a competitive window right now unparalleled in the history of publishing. The term "vanity publishing" has just disappeared (though I think it's vain that Stephanie Meyer calls herself a writer).

Goodbye, gatekeepers. All they've done is reinforced homogenization. let's see what audiences really want when they have virtually unlimited choices.

I only wish the split would extend to the other publishers and last for a year. I'd sell a ton of books and still read more than I ever have!

I will probably go to $2.99 under the new Amazon structure but most indies agree $1.99 is a fair price for their work.

Scott Nicholson
The Red Church

Scott Nicholson said...

And, Joe, did you trim off your agent's cut in your paperbook royalty? Goodbye, 15 percent.

Errol R. Williams said...

I'm going to buy a few of your books after reading your excellent blog. Definately one of the best written blogs I have read in a very long time.

Scott Nicholson said...

Joe, you made the Huffington Post!
http://www.huffingtonpost.com/penny-c-sansevieri/amazon-vs-the-world-the-n_b_444538.html

this may be your viral time, dude.

Scott Nicholson
The Red Church

Anonymous said...

People can sit aroud all day long and argue, speculate and hypothesize as to whether customers will pay $14.99 for ebook, or $12.99, or $9.99, or $3.99, or whatever.

It's a meaningless discussion because it's the publisher that owns the product and gets to set the price. If they set it in a way that hurts them, that's their problem.

I see a lot of blogs and commenters who dismiss publishers as stupid, ignorant beasts that "don't get it," (even though commentor X, who has never published a thing in his/her life, self-infers that he/she has the wisdom to know everything with crystal clarity, just as a result of having thought about it for 20 minutes and seeing what everyone ele was thinking about it. (I'm not referring to you, JA).

Publishers are forming opinions as to where they want to price particular products at various points in the life of those products. If they're wrong, they'll adjust.

Jude Hardin said...
This comment has been removed by the author.
Joe Konrath said...

@Jude - the readers will be the gatekeepers. Just like YouTube.

Pablo Gully said...

Most new laws seem to be about protecting corporate revenue so the time may yet come when recording a movie on your Tivo or skipping ads on it becomes illegal. It'll probably take another format shift like 3D to allow them to wrap this up in some DMCA shenanigans.

Here in the UK the BBC is looking at encryption flags on HD content to stop it being recorded on PVRs, presumably so they can corner the market in Blu-ray discs.

100% agree that the Youtube model will let readers vet ebooks and it'll probably spread the love out a little more equitably. Fewer block-busters and more genre communities. I hope...

Jude Hardin said...
This comment has been removed by the author.
Christy Pinheiro, EA ABA said...

Joe, your time has come. I knew it would happen, I just wasn't so sure it would happen so fast.

Macmillan is putting nails in its own coffin.

I don't need a big publisher anymore. I learned that last year when I found out I could make 8K a month self-publishing.

As soon as other authors discover that they can make great money self-publishing, the industry is going to change. It's already on its way.

I'm so happy for you. Congrats!

Gordon Jerome said...

Okay, I don't know how long Joe's going to allow my post to remain up here, but I'd like to clarify something. You don't own an e-book. It's not a thing. It's a software. You pay for a license to use it. It's not the same thing as a book. We shouldn't even be calling it a book.

Same thing with "Overkill" I'm listening to right now on my iTunes (Men at Work, for you younger folks) I don't "own" anything. I have licensed the software that plays it on my computer and I abide by the license agreements.

However, Konrath is correct, publishers are going to hang themselves with overpricing the software for e-books they sell. The more it costs, the more pirates will steal it.

Now, as to J.A. deleting my posts: come on man, I may have criticized your post, and said I think your work is pulp, but do you disagree? Shoot, I advertised the hell out of "Afraid" on my site. Why the chicken....deleting of my post?

Whatever. Some people talk tough. Some people are tough I guess.

Joe Konrath said...

Now, as to J.A. deleting my posts: come on man, I may have criticized your post, and said I think your work is pulp, but do you disagree?

You misquoted me about piracy, and called my work trash, not pulp.

You're allowed to do that. Doesn't bother me. It's a free country.

But you really think I'm going to drive traffic to your misguided opinions by linking to your post in my comment thread?

If you want to debate in my forum, post your opinions here without the insults, and I'd be happy to poke holes in your argument.

You can even post why you don't like my work. I love dissenting opinion, as long as it's backed up with logic and facts.

But if want to insult me, do it elsewhere.

I don't reply to the hundreds of 1 star Amazon reviews I've gotten. I'm above that. Everyone has an opinion. All opinions are valid.

But I don't invite those people into my house, either.

As for owning vs. licensing, I believe the average consumer doesn't understand, or care, about the difference, as this post reflects. They perceive it to actually be worth less. It isn't in a publisher's best interest to raise prices.

Adam Pepper said...

I disagree with your premise, "There is no way to stop piracy so dont bother trying." Stealing is still stealing. Just because billions of people are doing it, doesnt make it okay. Is the answer just to give up and say, "Sure, steal my work?"

Perhaps that's a naive opinion on my part...

Joe Konrath said...

I disagree with your premise, "There is no way to stop piracy so dont bother trying."

You can disagree. But is your disagreement based on your moral perception, or on an analysis of the facts surrounding the history of piracy?

There's a reason iTunes songs are 99 cents and DRM free. It's because the music industry, with all of its money and power, couldn't stop piracy, and learned to combat it with cost and convenience.

author Scott Nicholson said...

Jude, I have signed up as a gatekeeper, starting a digital enterprise called Haunted Computer Productions (partly inspired by Joe's comments, partly based on my experience of a decade in the industry). I am a freelance editor and edited an international bestseller, and I have edited several books that SHOULD be international bestsellers but the authors can't even get an agent to take a sniff.

I am working with Neil Jackson at Ghostwriter Publications in the UK, seeking backlist of established writers. Neil is a graphic design pro and ebook formatting is not rocket science. In this age, all you need is a computer, experience, and passion.

I have no interest in "taking on NY." I have plenty of interest in mining the cracks and crevices and find readers hungry for more diversity. I think the ebook audience is only now realizing their hunger. Sure, there is schlocky indie press out there. There is schlocky YouTube.

But the good stuff goes viral and gets spread around. The audience creates the audience. I trust that way more than I trust a couple of wealthy New Yorkers having an expense-account lunch together.

Scott Nicholson
The Red Church

Jude Hardin said...
This comment has been removed by the author.
Adam Pepper said...

I admit, my opinion is based on moral perception, not practical application. From a moral standpoint, it just feels wrong. This cavalier attitude for the value of creative property upsets and offends me. I don’t disagree with your premise, publishing needs to evolve. Evolution by definition takes time and whether NY publishing can adapt fast enough is still anyone’s guess. But as authors, do we simply throw up our hands and accept that people are going to steal our work, or do we decry it?

Joe Konrath said...

Is it possible that the entertainment value of an entire novel (again, a new release from a major publisher) is only worth the entertainment value of two or three songs?

I can approach this comparison in several ways.

My favorite novels, I've read, at most, three or four times.

My favorite songs, I've listened to hundreds of times, possibly thousands. I may have indeed spent more hours listening to a single song, over the course of a lifetime, than I have reading a novel.

In a supply and demand situation, the price sets itself.

In a digital situation, the lower the price, the more you'll sell, the less the pirates will matter.

IMHO, $24.95 for a hardcover is too much, especially when the prez of Macmillan admitted printing cost is only $1.60.

I don't really care about the perception of value personally. I only care about in in how the customer feels about the product.

Does a library book has no entertainment value because you read it for free? Is that 25 cent paperback you bought used worthless, worth 25 cents, or worht the fun you had reading it, no matter the cost?

Jude Hardin said...
This comment has been removed by the author.
Joe Konrath said...

But as authors, do we simply throw up our hands and accept that people are going to steal our work, or do we decry it?

Ever hear of the serenity prayer? :)

Jude Hardin said...
This comment has been removed by the author.
Joe Konrath said...

Jude, you know I think that eventually we will reach $0, and be funded by ads.

Jude Hardin said...
This comment has been removed by the author.
Kirsten said...

Amen, Joe.

My only lament is that the affiliated advertising industry is such a mess (particularly the issue around pirating of links, aka parasiteware). If it were a bit more stable, writers could self-publish advertising-supported e-books. How's that for an idea that'll get your gears twirling.

Joe Konrath said...

Gee. I can't wait. ;)

Think of it like magazines. Does the New Yorker publish good fiction? Do the ads bother you?

But I envision a low cost alternative.

No ads novel for $1.99. Novel with ads for free.

Maria said...

It very easy for most authors, agents and publishers to want to stick with the status quo, but I've been kind of surprised at the overall thought that higher prices is automatically a good thing for them. What about more sales? What about reaching a larger audience? No one seems concerned about that.

When a paperbook comes out, it enables more people to read a book. I am one of those people because I was priced out of the hardback market long ago.

I know people who have e-readers who download the cheap and free content to make up for the cost of the reader--and when they like the author they go on to buy more books even if the book is more expensive than the first one.

Why aren't publishers at all interested in this type of model???

I know the authors have no real say in pricing and this battle has them in a position where they can do nothing except what they always do: ask people to buy books. But logically there have to be some authors that wouldn't mind trying some pricing themes that might gain more readers. Or just publishing something on amazon without going through the publisher.

Some besides you, I mean.

:>)

(Note: April Henry has just finished uploading her backlist to Amazon Kindle -- originally published through St Martins, I believe. Charlotte and Aaron Elkins--also getting their backlist uploaded. Guess there area few authors taking matters into their own hands.)

Jude Hardin said...
This comment has been removed by the author.
arachne-0509 said...

I have some old paperbacks with cigarette ads in them. That was where cigarette companies first flew when they were taken off television.

There is a possibility of ads being attractive and entertaining, especially when color hits ebook readers. There's a difference between paying full price and having ads forced on you and choosing a cheaper option with ads. We are already making that choice with online content and have been doing so for some years.

And Joe, you are doing a service to your fellow authors. I've bought two ebooks that have come to my attention because the authors has posted here, and I am just an occasional reader of your blog.

Joe Konrath said...

Someone on another forum said something wonderful, that's worth repeating here.

"Isn't the value of the work better reflected by total royalties earned than by price per unit?"

Tough to argue against that point. Low price point FTW!

Jude Hardin said...
This comment has been removed by the author.
Joe Konrath said...

Actually, it's pretty easy to prove.

You take an author, price one of his books at $15 and another at $3 and track royalties for a year.

Then you'll see what consumers feel the value of the book is, by which made more in royalties.

Because, according to your thinking Jude, if books truly have a high intrinsic value, the higher priced book should earn more.

Jude Hardin said...

Books have absolutely no intrinsic value. Books are only worth what people are willing to pay for them, based on perceived value.

Let's use Patterson as an example again, since he outsells everyone. Do you really think Hatchette would be selling his new releases for $24.99 if they could make more money selling them for $3.00?

Higher price point FTW!

Actually, the $3.00 book isn't going to make ANY royalties, because that's way below the break-even point/unit for a professionally-produced novel.

Just because you had some good results with your self-published Kindle titles doesn't mean that that price point can sustain the industry at large. It can't, unless everyone in publishing decides to start working for free.

Joe Konrath said...

You need to look at the bigger picture, Jude.

Patterson would sell more books at $3.00 than he does at $24.95. Just like he sells more paperbacks than hardcovers.

But you're correct. A $3 ebook wouldn't be able to support the publishing industry.

Which is why Macmillan went up against Amazon. Self-preservation.

John McFetridge said...

I like the idea of $1.99 e-books an awful lot more than what it would take to stamp out online piracy.

I think of piracy as ARCs. All publishers give away free copies to promote books. I think between Joe here and Corey Doctorow we've got an awful lot of evidence to show how giving away books sells books.

I do like $1.99 more than free because even though supply and demand has been affected here, it's still what we base our economy on. I still think if Joe's books get downloaded a million times and mine get downloaded a hundred times, he should get paid more.

But authors pay has always been a mish-mash of many things. Here in Canada we have arts grants (actually a lot of American literary writers get arts grants, too), teaching jobs, etc.. That's not likely to change any time soon.

I'm one of the Macmillan authors who is affected by this. I got caught in the Harcourt merger a couple years ago, too. This is a funny business.

Thomas Edgar said...

I envision a world in between Mr. Konrath's and Mr. June's. I think publishers as they stand now are dead but split into their useful components which will now work for the digital distributors.

"Editors" will become reviewers that work for the distributors to filter the wheat from the chaff and will provide "good read" lists on top of the customer reviews. Customer reviews can not be the only method because reading a book takes too long. Mr. Konrath uses Youtube as the model for the customer review model. However, the time commitment is the variable that makes the comparison bad. Watching 5 Youtube videos is something that could be done while waiting in line. Reading 5 books takes days or weeks. The risk/reward is different for the two experiences.

I also think the other technical services, like media creation (read graphics or other cool things, like videos or games, allowed by being digital) and editing will be offered for a one time fee or for a reduced royalty rate. I also think ebooks should be $5 or less. I think a little variability is a necessity based on brand. Stephen King's will always come with a premium. I also see higher cost packages, say $10 to $15 dollars, that include a bunch of media extras like DVDs or the new iTunes LP.

As for ad supported books, I am more in the Hardin camp. I think it would destroy a novel to have ads injected into it. However, I agree with Konrath that more than likely a large percentage of people wouldn't care. The hurdle for this model is the advertising model. I think advertisers are already trying to move away from paying per impression towards paying for click through. I don't think they would pay for impressions to support the unknown quantities of the indie model. Only the known quantities would be able to get the advertising dollars.

Liz Kreger said...

Fascinating discussion/debate, Joe and everyone who commented. I'm in the camp that sees piracy as theft, but that's me. I would no more go into a store and shoplift a book than buy an ebook from someone who has pirated it.

As for advertising ... what would be the first? Reading your ebook and suddenly - in the middle of a paragraph - a pop-up comes up for Coca-Cola? I dislike ads on television and radio ... I'm REALLY gonna dislike them in books or ebooks.

Christy Pinheiro, EA ABA said...

I think Joe is right about ads in books. And we can take the argument even further-- publishers can offer an ad-free version of the book, but it will cost you X number of dollars.

There's always going to be cheapskates that don't want to pay for anything, but don't mind ads popping up everywhere. And there will always be people willing to pay for books without ads. What's wrong with catering to both markets?

Mary Stella said...

IMHO, $24.95 for a hardcover is too much, especially when the prez of Macmillan admitted printing cost is only $1.60.

I'm a new Kindle owner. There will always be many books that I continue to buy in print, and pay the going rate. However, there are loads of other books that I'll buy electronically for less.

I will be quicker to purchase a book by an author I've never read before, more apt to continue to buy new "hardcover" releases instead of waiting for paperback, and most likely become more of an impulse buyer.

I think an e-book is too expensive at a trade-similar price of $14.95, but $9.99 for a new hardcover isn't a bad deal.

Even if we factor in the other costs of bringing out a book and add them to the cost of actually printing a book, we know that it is still a lot less expensive to produce an e-book. There really is no reason that a publisher can't lower their e-book prices without cutting the authors' royalty rates and still make a healthy profit.

A friend of mine's debut hardcover was recently released. Prior to this, she sold a series through a small, indie publisher. The books were excellent, award-winners, but distribution and print runs were low so the series did not break her out.

Her new hardcover with another publisher is outstanding and I hope that tens of thousands of readers discover her. I think the less-expensive e-format can also provide a boost by introducing her to new readers. Maybe they're reluctant to plunk down the full price for a hardcover, but are willing to take a chance on her more affordable e-version.

The first book I bought for the Kindle was this hardcover. I live in a town without full service bookstores and didn't want to wait. I want the book on my shelves so I'll definitely buy a print copy anyway.

The second book is one by an author I've not read before. A blogger I read raved about the book online. I downloaded the free sample, got hooked, and bought the book. Not only will I buy more, in the reasonable e-format, but if I'm browsing a bookstore and see one of her titles, I'm as likely to purchase in paper.

I believe that more publishers need to view e-format as not just a sales front, but also marketing.

Joe, maybe they should just hire you as a consultant. :-)

Cam Snow said...

Wow, this is a long and spirited discussion... I'll throw in a couple of bits.

I'm personally surprised that eBooks haven't spawned a type of collective E-only indie publisher yet.
Imagine if a group of authors got together and decided to start an e-pub only press that would do 3 things. (1) The members of the group would not only write, but they would EDIT as well. (2)They would publish the eBook and put on all the major eBook sites -with a fixed price... all books are the same in this system (3) auction off the print rights (which printers could charge whatever they want for).

Why would authors edit? Because, for serving as an editor, you would get a percent of the royalty from subsequent sales. You keep quality high by constantly telling anyone who is peer-editing to be brutally honest. You would have to have a committee to assign duties and to ensure that the level of editing is satisfactory before publishing.

Yes, this sounds a lot like a traditional publisher, but without the print. Except your editors are all working for money on the backside (reduced overhead), you don't deal with any returns or crazy accounting (further reduced overhead), and once you auction off the print rights, the group has no more responsibility (it would all fall on the print publisher to pay out royalties to author/editors).

Joe Konrath said...

@Cam - Your proposed model is a lot like mine.

My peers and I trade manuscripts before out agents see them, to fix them. Then I have a few fans who check for problems and typos.

As for authors banding together, Scott Nicholson is going something just like that.

It's a brave new world out there...

author Scott Nicholson said...

I have direct evidence a lower-priced ebook will sell better. My own backlist The Red Church is selling at least 10 times better at $1.99 than my NY ebook at three times the cost. Same author, similar genre, similar quality and polish, the only major difference being the price.

Joe, I know you're a proponent of advertising in ebooks and I'd like to hear more of your thoughts on the matter. I understand the "excerpt/content" approach instead of traditional ads, and I envision a rapidly evolving content model with better graphics and video. (Right now I am wrestling to fit a print comic on digital screens and it's a nightmare.) We all know the cheapest and most effective way to get advertising is to have your ad turned down for the Super Bowl and then go to YouTube, but what do the little guys do?

Jake said...

After this week, I won't buy another ebook from Amazon at any price, new or indy. From now on, my Kindle is going to be used for free books and classics. All my future ebook purchases will be through iBooks for my iPad, and I have no problem paying $14.99.

I want to support the authors and their publishers and help Apple do as much damage to Amazon as possible.

John McFetridge said...

Scott, have you seen the iPad's Comic app?

It's very cool.

Also, I've been talking up the idea of a "United Artists" for authors for a while. Interesting to see how it goes.

Jude Hardin said...
This comment has been removed by the author.
Anonymous said...

Jude,

We'll still have a publishing industry -- an evolved industry. We're already seeing this new model in ebook-only publishers like Samhain and Carina division of Harlequin. They are offering quality books at lower cost.

Yes, everyone CAN be a rock star and a film maker and an author. They might compete on a slightly different playing field, but minor league players often make it to the majors. There's a place for the thriving farm league in the arts (indeed, there always has been). Got a problem with it? I don't . . .

Jude Hardin said...
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Kathryn Lilley said...

Your experience is illuminating--and inspiring, Joe. In another departure from business-as-usual in the publishing world, the authors of The Kill Zone have published an e-collection of original stories called "Fresh Kills." (Kindle, Smashwords, and Scribd). It's an exciting foray into the brave new world of e-publishing.

John McFetridge said...

It will be a change for upfront capital to not have such a huge influence on an industry.

This column in the Washington Post is pretty good.

For someone like me who almost never reads a book on the bestseller list (I have admittedly odd tastes) the change might be easier than for someone who really enjoys the bestsellers. I understand there are a lot of Stephen King imitators who aren't as good as Stephen King so it might be hard to find the real deal. There aren't as many Scott Phillips imitators, for example.

But maybe the cream will rise to the top, even without mega-promotion budgets to push it there.

Maria said...

Jake there are lots of places to buy books (indie and small publisher) without buying from Amazon:

www.Smashwords.com --the mobi format is kindle compatible (my books and many small publishers and indie books are on there. It's probably the largest site, but there are others.)

Someone mentioned surprise that there were no ebook only companies--there are several, mainly in the romance genre. The books that do well as ebooks, go on to print. There's been readers on Amazon forums complaining that THEY have to wait until a book does well enough to go to print. :>) I got a chuckle out of that.

Jude, there are lots of small publishers, backlist authors and indie authors offering books that range from 99 cents to 10 dollars. Many of us are earning at least what we would earn if we had been picked up by a small publisher. You may think it devalues a book. Me? I'm thrilled to be selling, getting reviews and...selling. Unsold my work was valued at zero. Today, it's worth at least 1.99.

Joe--as always, thanks for sharing the hard, cold facts with your financial sheets. I agree with those that say...you might be on the verge of going viral!!!

:>)

Maria
www.BearMountainBooks.com

Maria said...

Oh--there have been reports that apple will not open their ibookstore to individual authors (in fact some are reporting that the large publishers specifically put a floor in the contracts that "no book will be sold below..." but I think they only control their own prices, not everyone else's.)

Anyway--there is no solid word on whether an author like Joe can upload his book to Apple.

Maria

Jude Hardin said...
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Brad R. Torgersen said...

Assuming a deluge of self-pub temporarily swamps the e-publishing game...

As has already been noted, readers will find an alternative vetting process. Products will still go 'viral' the way they have in traditional tree publishing. Word of mouth will still be the best advertiser.

If I go to a digital book market and see 24,000,000 available titles -- and assuming that the digital marketplace offers a half-decent search engine -- I immediately begin sorting by a) genre and b) a starred or point-scored reader review system.

Now, such systems are not immune from "gaming" by no-names, but there are usually ways to sniff out and destroy the ratings and the comments from the bots and the bullshitters. Sooner or later, valid consumer reviews pile up. And it will be those consumer reviews that will matter most. Just as it is valid consumer views -- and consumer wallets -- that 'run' publishing now.

And no, I don't think the current pool of agents are a very good vetting community. If e-books and libertine e-marketing somehow destroy or radically alter the agent business model, I won't be shedding too many tears. Agents should have never been turned into slush parsers. Agents should have remained as contract negotiators and foreign sales chasers. So sezeth me.

author Scott Nicholson said...

Jude, I've heard the notion that somehow the "death of six major corporations" is the end of literacy as we know it. Good sell job by the Big Six. Can you imagine if Patterson decided to be his own publishing company? As soon as ebooks are half the market, I am sure he will be.

In 1996 you could get rejected by 300 publishers, and I did it. Now you can't even get rejected by six unless you have an agent. How is that an improvement? Is the Twilight franchise, or books by dead authors pretending to be alive, really helping preserve the precious high values of the language? Is a narrow gate through which only those carrying BIG BOOKS can pass really teaching our kids to read? Is artificial manipulation of ebook prices protecting the great unwashed from getting their filthy hands on stuff destined for the elite who have lots of leisure time?

I actually really do want major publishers to thrive. I just don't think they have a God-given right to survive, or that they determine what's good for us, and I don't think they are taking the best path right now. And I think the next few years will bear that out.

John, thanks for the iPad comics link. I am sure it will be great for Marvel and DC but not sure how protectionist Apple is going to be. Seems they, too, have a notion of what's best for us.

Scott

Jude Hardin said...
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Maria said...

Jude, you're right NY does a fine job vetting, but there is no reason the public, bloggers, forums and reviewers can't do a fine job of it ALSO.

Maybe my books do suck--BUT if that is the case, I expect to fail. There have been a number of self-pub'd authors on the forums who have admitting to pulling their work after complaints, getting it edited and putting it back up. Some of them cannot get rid of the bad reviews that were already posted--and the trail does, sadly, follow them. It will be a much harder road to get people to take chances on the story.

The point I think I'm trying to make is: There can be a market for 2 and 3 dollar books--at the same time as a market for 15 and 20 dollar books. Just like a traditionally published book--not all indie books will make it.

And thanks for the good wishes. I am enjoying the heck out my adventure in publishing on Kindle and other e-readers. It's been a lot of work, but it's also been fun--something that was sadly missing.

John McFetridge said...

Well, you know, Scott, once the idea's out there anything can happen.

Here's a Windows based tablet and I'm sure we're going to see a lot more.

If Apple want to stick to only DC and Marvel I guess that's up to them, but I can't imagine walking into a comics store that only stocks those.

Jude Hardin said...
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Anonymous said...

Ebook piracy will put a dent in publishing revenues, though I'd venture that it won't be to the extent of the music industry. Most readers are from a different camp. Sure, if you're trying to grab some hot bestseller maybe you'd pirate it, but I think the "Grapes of Wrath" and other classics crowd is going to do the legal thing and purchase it. Maybe not all, but most. That's what the publishers are banking on, honest readers with a wealth of disposable income.

Like you said, I've never known someone who shoplifted say, "The Canterbury Tales"...

n s

DCS said...

I see publishing in the midst of a paradigm shift or tipping point, or whatever term you wish to use. It's a revolution. The establishment in this case are the book publishers and the gatekeeper/agents. Until now they have been able to filter the supply of books.With the advent of e-books they are losing that power and the wealth that goes with it. In the past, energetic self published authors--Vince Flynn is a good example--could do an end run around the system and go on to have a successful series of books. Some self-published books went viral, through word of mouth, and became big hits. There will always need to be filters for the buying public. But the power will diffuse into other hands. Agents, for example, could become publishers of ebooks. There are probably some right now figuring that out. Paper books are never going to disappear, but the power to exclude writing from view has already vanished. It just remains for digital entrepeneurs to help market material that is good but somehow couldn't get past the self-proclaimed arbiters of good writing.

author Scott Nicholson said...

Yes, someone pointed out on another thread that it must really burn the Big Six under the collar when some snot-nosed indie brat cracks the Kindle top 20 with a 99 cent ebook that advertising and co-op didn't create.

There's also a widespread notion that making an ebook is somehow an arcane secret on the level of turning lead into gold.

Morgan Ives said...

Jude, I think you make some great points. Everyone in the publishing industry is so focused on themselves right now and how the e-revolution will affect them (publishers and writers alike), that they are forgetting their customers: the readers.

As a reader, I don't care what crap costs. I'll be slightly less annoyed if I pay $1.99 for crap than if I pay $14.99 for crap, but I'll still feel ripped off.

Whether we as authors would like to see gatekeepers disappear or not is irrelevant. Readers need the gatekeepers, and the customer is always right. I wrote an article on my blog about a model I think would work: e-publishers exist, but they must bring a level of trust with them. Readers will start buying based on publisher as much as reader, if they know that publisher produced quality work.

However, I do agree with Joe that pricing high is going to lead to piracy. A balance needs to be found between cost and quality, and the reader will be the one driving this decision.

Anonymous said...

JA, contrats on the growing ebook sales. Do you have DRM "enabled" or not enabled on your books? Does it make a difference to sales that you're aware of?

Does your publisher have DRM "enabled" for the Jack books sold on Kindle?

Dave said...

Joe, I think you make so much sense in these posts that I went to the Amazon store and bought Whiskey Sour for my Kindle. If I dig it, I'll buy the rest. There's some hard data - I wasn't a fan 2 days ago but the Kindle made it so easy to impulse buy and you priced it low enough that it was a no brainer to just purchase and sort it out later.

People can be skeptical all day, but I actually did this right now. This is what gets dropped out of this debate is that Kindles/Nook et al are designed to encourage impulse buys and jacking the price up to $15 kills what they are great at.

Jude Hardin said...
This comment has been removed by the author.
Dave said...

Because I'm more interested in the series and because it is the first book.

Jude Hardin said...
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Dave said...

Jude, don't use me to support your argument because I think you are dead wrong. Impulse buys are threshold driven, and I wouldn't have done the same thing at $8. That I didn't scour for the lowest priced book on the site doesn't support your argument that I'm insensitive to price. Lower the price, the higher the probability that it is under the impulse buy threshold for any given shopper, leading to the statistics that Joe posts.

I think Joe makes a lot of sense and you do not. When you post your own statistics of your own books that sell independent of price, I'll give you a fair listen. Until then, I think you can't anecdotally and theoretically argue with actual data.

Jude Hardin said...
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John Dishon said...

I think you're taking Dave's numbers too literally, Jude. The point I think he's making is very obvious one: make books dirt cheap and people are more likely to try something new. Getting a book for $1.99 when you're used to getting it for $24.95 almost feels like getting it for free. For sure I would give a book I was interested a shot at $1.99. At $24.95, well it's much less likely. As the price drops, the more likely it is for someone to take a chance on a new book. What's so hard to understand about that?

This blog post is the most level-headed take on the subject I've seen yet. Good to see there are some people still interested in finding the facts instead of succumbing to panic and hyperbole.

Brad R. Torgersen said...

Here's a theoretical possibility, for the libertine everyone-pulishes-their-own-book, post-NYC, e-publishing era.

If the public finds that it can't navigate the swamp of self-pub, editors and agents -- who have all now lost their jobs -- could simply go into business as vetters. A name editor or agent could "brand" themselves, and suddenly it could be worth a lot of money for an author to be able to say, "Joe Big Shot read and loves my book, see here, he vetted me!"

But then again, perhaps not. Authors could game the system by trying to buy vetting from the jobless agents and editors, and since the agents and editors would take whatever money was coming to them, we'd see a hit-and-miss as people of financial ability -- but not necessarily writing talent -- suddenly found it easy to "buy" vetting for any given manuscript.

Hmmm, what to do, what to do....

Jude Hardin said...
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Anonymous said...

Agents, for example, could become publishers of ebooks. There are probably some right now figuring that out.

I had to comment on this because a publisher called *ahem* Ravenous Romance was started by an agent and a couple of book packagers.

Ravenous offerings get sporked regularly on Romance boards, but they are offered on their own web site, Amazon and I even sighted some on Audible. There was one that involved a time traveling bathroom stall that I almost bought after reading the review on Dear Author.

I think it's a mistake to assume that "good" and "literate" are what everyone is looking for in a book.ionse

Dave said...

Jude, I came here to tell Joe he sold me a book, not have you misinterpret me for your flawed arguments nor make a career out of trying to straighten you out. I can tell you are a time and energy vampire so I'm done with you.

I read the first 6 or so chapters of Whiskey Sour in the gym just now. I'm liking it so far!

Joe Konrath said...

Do you have DRM "enabled" or not enabled on your books? Does it make a difference to sales that you're aware of?

On the ebooks I upload, I don't use DRM. Not sure what my publisher does, but I have been able to find pirate versions of those ebooks, so either it is no DRM, or the DRM was hacked.

I hate DRM.

Joe Konrath said...

I read the first 6 or so chapters of Whiskey Sour in the gym just now. I'm liking it so far!

Thanks, Dave!

Anonymous said...

"I hate DRM."

What are the pros and cons of having DRM enabled or not enabled? I'm wondering if I'd sell more books if I took the DRM off. Opinions?

Jude Hardin said...
This comment has been removed by the author.
sex scenes at starbucks said...

With all respect, there's absolutely no difference between a $2 book and a $5 book, Jude, and my family is even currently unemployed.

Free books sell books. Free chapters sell books. (As long as the books are good.) This has been proven over and over. I bought every single book from Charlie Huston, in paper, after reading two of his books online for free. I'm hardly the only one.


I'm torn. Amazon clearly fucked up. They acted like children with a broken shovel in a sandbox. But I gotta say, I have a hell of a time finding stuff to read at the bookstore sometimes. I know a lot of writers and I can't find their actual books at the Borders. Annoying. Frankly, I'd rather spend some time (in a YouTube-style world) shopping and find something I really want rather than choose from the four books NY says I should buy (Currently TWILGHT 1-4).

But then, I'm a girl. I like shopping.

Oh, and books already are chock full of advertising. What do you think those "Bonus chapters" and "publisher new release ads, complete with order forms" (snort) are in the back of the book. Wonder how many of those paper order forms they get back, with a check, even?

The DVDs I get all come with more movie ads. Sometimes they have other commercials.

Every. Single. Last. One.

The ads are outdated in a matter of months. But an eBook, or in a digital film, not so. The ads can be constantly updated, guaranteeing a revenue stream for the publisher and the writer for years. It's not a bad model, as long as the ads are skip-able or of good quality, as many movie trailers.

Thx Joe for an insightful post. I don't agree with every single last thing you said, but it gave me a lot to think about.

Portuguese cunt said...

Dave is right, Jude is an energy vampire. If Jude, or any other author wants to suck the big 6's balls in order to make the same amount of money as a high school secretary, then they can be my guest. More power to 'em, and good luck with that shit.

Fuck Macmillian, seriously. I hope the small presses and indie start-ups kick the big publisher's asses. Seeing Rupert Murdoch eat a pile of shit would make my whole fucking year.

Competition is GOOD. And if authors can make it on their own by selling e-books, Kindle books, or even pictures of their genitals, then they should FUCKING DO IT.

Joe is a fucking PIMP because he has the balls to say what's on his mind about all the dumb shit that big publishers are doing. He's right about almost everything, and he's smart enough to know how to make money on his own.

GET YOURS, because the big publishers don't give a rat's ass about mid-list authors right now.

SO GET YOURS, any way you can.

Joe is like Bear Grylls in the concrete jungle.

Go get 'em tiger.

author Scott Nicholson said...

Man, I just came in to praise Jude for wading in and respectfully expressing his opinion, even though it was unpopular...

Guess this is what happens when "Big Publishing" squashes the minority voice...

Maybe I'll become the devil's advocate now. Joe, you've influenced a ton of indie authors to price their books at $1.99. Yet nobody in the world was in your position to do so...an established platform and a stack of original books to flow out all at once. Your success, though admirable, is not reproducible for everyone (and I am quite aware that you tell everyone they are their own industry and make their own career). Indies are already kicking around when to make the move to $2.99 and it's going to look like Macmillan has forced up prices for everyone. Luckily it's easy to move prices around and each person can make a test for themselves.

I am pretty sure the new royalty rate had nothing to do with indies, but was a lure to drag more big-name authors to Kindle exclusives, which I fully expect to happen this summer. You think the war is hot now...when publishers start losing control of content producers, that's when things get interesting and jobs get lost or change.

Scott Nicholson
The Red Church

Joe Konrath said...

@ Scott - I dig Jude. We may not agree all the time, but he usually attacks the argument, not the person, and he's a good writer. Dissenting opinion makes any thread interesting. And it does take some brass balls to speak your mind when outnumbered. On other forums, I get pummeled for my thoughts on this subject--a lot of authors back Macmillan.

The times are a'changin.

I'm not the devil, though, Scott. I'm Cassandra. Have been for years.

Though apparently Apollo's curse isn't holding, because some people do seem to listen...

Jude Hardin said...

Thanks, Joe.

author Scott Nicholson said...

Joe, one totally overlooked aspect of this is that the Big Six are actively nailing down authors for the Long Tail. I am intimately aware of several contracts that give the publisher eternal ebook rights as long as a laughable minimum royalty is achieved...$50 in some cases, $200 or so seeming to become a new standard. Authors should be outraged. I have suspicion part of this high ebook pricing is to get more time to rope authors into these eternal deals and build up a huge catalog of ebooks while only paying authors 10-20 percent forever.

And it's one authors really don't want to talk about, and publishers certainly won't. Authors are getting screwed worse than anyone, however this goes. I understand many authors are reluctant to reveal contract details. But I can say with Kensington I simply licensed my work in the US for seven years, getting a shifting percentage for various formats. For ebooks, it's a 50/50 split of proceeds, which actually is fair if the publisher is backing you in print. It was fair to me at the time. I would certainly think differently now, especially about the seven years, and especially for some mind-boggling reason they only have one title available as an ebook.

We're taught to be so grateful when we get a book deal, and that we are so lucky, we shouldn't question anything. And, I know the delirium of getting accepted can leave one not worried about the fine print. Things I was concerned about my former agent thought were nothing HAVE turned out to be something. It was the first time I ever realized I might be smarter than an agent. Not all of them, for sure, but some. Of course, they have different motives, too, but they should be scrambling to protect their authors' longterm streams, not grabbing the quick kill.

Authors who are signing pttance royalty deals on their ebooks are really going to regret this, and I think it's going to be a factor in the Great Kindle Wars of 2010 when a few megasellers break ranks.

Scott Nicholson
The Red Church

John McFetridge said...

A word about DRM - it makes no difference to me at all. I don't think it's necessary to have DRM, but it's being there does't bother me.

For music I use the same player with headphones, in my car and through my home stereo. I buy music online and sync it with this player.

If e-books are priced at $1.99 (as I think they should be) then I think that eliminates all the problems associated with DRM - I'm not going to lend someone something that costs two bucks and they can simply buy themselves. At that price I'm going to treat the e-book as quite disposable.

If I really, really like a book I found that way, I'll buy a hard copy - probably a hardcover or trade paperback.

BillSmithBooks said...

Joe: First, I really commend you for being so open about your sales results. Your information has greatly improved the quality of the overall ebook debate.

It's also very encouraging--it shows that authors can potentially build a nice little business, especially if they live someplace affordable where they can stretch their $$$.

We know the old distribution methods are in deep trouble. We know that digital books appears to be the future.

But how to make that transition and still allow creators to make a living?

(As imposed to the "information must be free" extremists who refuse to pay for anything and take whatever isn't given to them, suggesting that authors should feel "special" because their work has been deemed to be worthy of being taken. Personally, I think those folks would be offended if I broke into their home and drank the milk out of their fridge, but somehow I'm supposed to feel honored that they are doing the same to me by taking without permission.)

I believe one path is for authors to encourage the Busker "social contract," a request from creator to reader:

1) We offer our works for sale in some venues (Amazon) and sometimes those works are offered for free (author websites, etc.). Please respect the pricing I, as the creator, have established.

2) We know you can take our works without paying. We know you can circumvent DRM, copy your little hearts out, and there is precious little we can do to stop it.

3) We hate DRM, too. It sucks. We prefer open formats and no DRM so that way readers can use their books they way they want to on the devices they want to use them on.

4) If you enjoy something we have created, please consider a contribution. $1-5 for a novel is quite nice, thank you, and greatly appreciated. (Each author will have their own perceived "price point." Some will be in line with the market, others won't.)

Your contribution helps the creator pay the bills--you know, food, a roof over our heads, health care, perhaps lardng away a few extra packets of Ramen noodles for the imminent Zombie apocalypse.

Supporting your favorite creators (and encouraging your friends to check out their work and contribute) will enable creators to keep on creating new stuff for you to enjoy. Otherwise, it's back to flipping burgers or massaging spreadsheet data and writing nights and weekends--if we have time to write at all.

Your support counts--please help your favorite authors, musicians and creators by contributing directly to them.

Bill Smith
Author of the Outlaw Galaxy novels.

Bob Fleck said...

Hey Joe,

Another good and thoughtful post. Over on my own blog (http://robertlfleck.livejournal.com/942.html - where you really won't find anything as interesting) I point out why I think people are getting the whole fight wrong. See, you sell your books through Amazon.com's Kindle store for a price that YOU set, and Amazon takes 30%. But they're telling Macmillan that it can't get that same arrangement.

Imagine if Amazon.com came to you and said, "Hey, Joe, we think e-books should be priced at $9.99. We know you want to offer yours for less, but we're the seller, so we'll set the price and it's $9.99." Would you say to Amazon, "Okay"?

Joe Konrath said...

See, you sell your books through Amazon.com's Kindle store for a price that YOU set, and Amazon takes 30%. But they're telling Macmillan that it can't get that same arrangement.

That's because Amazon is acting like a publisher with my books, not a retailer. It's a direct link from the author to the customer, no middle men to share the profit.

With a print book, it goes from the author, to the publisher, to the retailer. Same with an ebook that a publisher has the rights to. In both cases, the author loses out.

Amazon is making it attractive for authors to upload directly.

Anonymous said...

Excellent piece on price elasticity and why the publishers will win the battle, but lose the war:

http://dpakman.wordpress.com/2010/02/03/wading-in-on-amazonmacmillan-pricing-debate/

Thomas Edgar said...

I saw a survey over at Lifehacker that I thought everyone on this thread would find relevant to this discussion.

http://lifehacker.com/5463270/how-much-would-you-pay-for-an-e+book

For context of the survey, Lifehacker is a technical productivity site. So these are more of the leading edge market that would probably have e-Readers.

walt said...

@ author Scott Nicholson -

I came here to ask pretty much the same thing. With out of print books, can the publishers hold the print rights hostage by only publishing the ebooks? I suppose it would depend on the original contracts, but I had always thought the contracts were worded at one point to infer that the publisher had to expend some sort of resources (i.e.: the cost of making a print run and distributing) in order to show they were doing due diligence to help the author make money.

If the author can show that the $20 or $200 a year could be dwarfed by getting the rights back after the original length of the contract, I could see the contract being held as null in a court case, should it come to that.

Why else have the original length of time in the contract if all the publisher has to do is make the book available on some obscure page somewhere without a single ad or a dime spent in promotion of the author? I would imagine the time length clause in a contract implies some initial logic or purpose, one that the publisher has to abide by -- not find a loophole around by means of technology.

Jenyfer Matthews said...

Maybe I'm missing something - or maybe you negotiated a better deal - but looking at the Kindle agreement that is currently up on Amazon the royalties section specifies that they will pay 35% of the list price. That's a big difference from the 70% you mention!

Jenyfer Matthews said...

The agreement does say that their agreement was recently updated as of Jan 15, 2010

http://forums.digitaltextplatform.com/dtpforums/entry.jspa?externalID=2&categoryID=12

bwaldron said...

As a reader, and first-time site visitor, it is nice to see an author with this perspective, as opposed to many others I have seen lately.

I've purchased the first few books of the Jack Daniels series.

I've decided to spend my money rewarding authors who aren't celebrating Macmillan;s moves.

Xenophon said...

An interesting perspective! Now compare with Baen Books publishing model:
* Early access to eARCs at $15 (up to 6 months ahead of publication)
* Regular access to ebooks at $6 each, or as part of bundles priced at $15 for 6-8 books (at least 4 of which are never-before-in-bits) -- 2 weeks before publication, and available ever-after.
* Free, via either the Baen Free Library or on CDs bound into hardcovers. These books are typically either deep back-list or first-and-second books in well regarded series. Think of it as marketing book-crack: "Pssst. Hey! Hey Kid! Wanna try some eBooks? First hit's free..."

All books in multiple formats, with NO DRM EVER! All available for repeated download after your purchase. And they've been doing it for over ten years now.

Their electronic sales growth has outpaced paper sales growth for the last decade. At this point, eSales are larger than all non-US sales combined. Estimated at ~20% of gross (and more than that of profit). With author royalties that are "not quite as good as hardcover, but waaay better than paperback" (paraphrasing statements by various Baen authors, and by the publisher). And with strong evidence that free eBooks drive increased purchases of both eBooks and paper books by the same authors.

I've been mystified for YEARS as to why larger publishers persist in ignoring Baen's success in this market.

Maria said...

Bill, there are already sites that support your idea--www.smashwords.com. You can even do a "pay what you think it's worth" model.

A couple of Joe's books are on Smashwords and a lot of authors who control rights (myself included) have books there.

Scott Nicholson said...

@ walt

Depends on how the contract is written, I know agents who were trying to fight to get that lower level of ebook royalties bumped up to a reasonable amount, because "in print" doesn't have the same meaning anymore. Several years ago, you could sign a contract and not even care much about ebook rights because few were in a position to exploit them. I think currently the clout of a paper offer overwhelms the ebook argument (and the repeated reasoning by some authors that "I don't earn anything on ebooks anyway," not recognizing the artifically high price, usually at the same price as a paperback, is a chicken-and-egg reasoning).

Xenophon, Baen has definitely been forward thinking, and it's no surprise the science fiction publishers, authors, and audience moved way ahead of the game in most instances. Heck, they were envisioning this day coming more than 80 years ago!

John McFetridge said...

Yes, there are a lot of things Baen is doin that I expect will be copied by other publishers soon.

e-books as the new paperbacks change just about everything.

I expect more publishers to go the subscription route. e-books change distribution so much. More than just where a customer goes looking for a book, but how they look. The connection between publisher (and writer) and customer is quite different this way.

In some ways it could simply be a much more efficient "Book of the Month Club." But really, that's just the beginning.

Morgan Ives said...

Hi Joe,

I ran across this article and wanted to get your take on it. It scares me a little that some countries are cracking down so hard on file sharing. What do you think?

http://www.publishingtalk.eu/blog/digital/if-the-digital-economy-bill-fails-well-all-pay/

Errol R. Williams said...

Here is an interesting link about Random House siding with Amazon and customers about keeping e-book prices low:

http://www.geardiary.com/2010/02/07/random-house-stands-alone-with-amazon/

Amber Scott said...

I think we are moving toward electronic readers that create the emotional value a book offers. You can get a Kate Spade Cover for your Nook. You can listen to music on it, too. When we can personalize it and share stories with friends, we can have that attachment. I remember seeing iPod commercials and going, huh? I didn't get it. Until I owned one. Now, I can't imagine not having it. The same will happen with readers. Eventually.

Martyn van Halm said...

JAK, you wrote:
"It is not within your rights to borrow a CD from the library, make a copy of the CD, and listen to the songs over and over. That is considered theft."

What if you borrow a CD from the library, pay a 1 euro lenders fee [standard here in the Netherlands] and rip the CD like most of your CDs in iTunes? Is that theft? You pay for library membership [24 euro per year] and 1 euro per CD/DVD for having it in your possession for 1 week.
I guess most library members would consider ripping a borrowed and paid for CD to iTunes to listen to those songs over and over again on their iPod to be legal...

Martyn van Halm said...

As for the Ads in free e-books, I foresee this happening: Where are the breaks in a novel? With every chapter. So, what will happen? Much like with YouTube, you will be forced to watch a 10 second advertisement before you can read each new chapter. Don't want to be bothered by 10 second commercials intersecting your book experience? Buy a non-ad version for 2.99.

Derek A Benner said...

I consider an e-book novel to be worth between $5 and $10. An e-book technical book I may consider to be worth more solely because it adds to my ability to complete a task - so I rate those books to be worth between $16 and $35.

I realize that publishers prefer that the e-books not be given away - and I agree with that desire - and I'm willing to comply because I believe the ability to have the book at hand without requiring more physical storage to be a benefit of equal value to the loss of giving the book away or selling it as used.

However, a publisher putting DRM onto the e-book, in my view, DECREASES the value of the e-book as it makes it much harder to use the e-book on future devices. And with the current laws in most countries, removing this DRM to make the e-book more accessible across the spectrum of my reading devices puts me in jeopardy of being judged a 'criminal'. Thus, I am willing to buy any novel or non-fiction work in non-DRM e-book format but am more discriminating when it comes to DRM-laden e-books.