Monday, April 16, 2012

If You're Not Ready To Invest, You're Not Ready To Publish

This post is about the alarming sense of entitlement I'm seeing out there among indies and would-be indies now that we've become empowered to publish. I'm sure I sound like a broken record (or damaged MP3) by now, but apparently I need to keep saying this:

The decision to self-publish for profit is a BUSINESS decision. When you decide to self-publish for a profit you are deciding to LAUNCH A BUSINESS. You are going into direct COMPETITION with every other publisher and self-publisher out there, and many of them have a lot more money, time and experience than you do, no matter who you are. No one who goes into business has an inherent right to success or profit, or even the attention of consumers. All of those things must be earned, and are generally hard-won.

Anyone who wants to launch a new business like a restaurant, widget manufacturer, accounting practice or pool service expects to invest a certain amount of start-up capital, both in terms of actual cash and sweat equity. Neither is dispensable. Yet plenty of would-be indie authors seem to think it's unfair for me, and even the book-buying public, to expect them to invest anything more than the sweat equity part of the equation. They expect the public to be able to look past a cut-rate cover, ignore the typos, bad grammar and the many other substantive flaws that can be eliminated by a good editor, and see the excellent story within. These indies are wrong, and they're hurting all of us by lowering the collective bar.

In a recent Facebook exchange, one indie author directed this to me:

Not all self published authors can afford to hire out for pro services. If that were the case, why not go with a vanity publishing company and all their promises.
To which I responded, in part:
...if we self-publishers wish to compete head-to-head with mainstream books, we have to be willing to invest what it takes both in terms of effort and money. Hiring a pro editor and cover designer yourself is a far cry from going with a vanity press, which will usurp your rights and take a cut of your royalties. A pro edit, file conversion and cover design shouldn't cost most self-pubbers more than about $400-$600, if you check the freelancer listings on Smashwords---and many can beat even those prices by shopping around and calling in favors. Yes, it's a lot of money, but compare that to how many thousands of dollars a mainstream publisher invests in every book *it* acquires and releases. If we want a seat at the poker table, we have to be willing to invest at least a small stake.
Another commenter replied:

I work as a handyman. I'm barely making it. $400 to $600 is half a months' wages for me. How would you suggest I scrape together enough to pay someone to edit my book and another someone to design a cover for it?

My response was:

I'm sorry to say this...but the realities of launching and running a business are what they are, and I have often advised would-be indies NOT to publish until they can afford to do it right. The vast majority of authors, mainstream and indie alike, do not earn enough from sales of their books to live on. Virtually all of us still need day jobs.

The fact that the content is gold won't matter if all the reader notices is typos, bad grammar or spelling mistakes, and an amateurish cover. For years us indies have been saying all we want is the opportunity to compete against the mainstream on a level playing field---but that means we have to be willing to do (and spend) what it takes to compete. I'm all for DIY when the person has the skills, and for trading favors and doing whatever else one can to shave costs. But it's unrealistic to think one can go up against multi-million dollar publishers without spending even a few hundred dollars.

Hopeful Olympians pay for quality equipment, coaching and travel. Hopeful artists pay for quality supplies, professional framing and gallery space. Hopeful filmmakers pay for quality cameras and professional editing, or at least time in a professional editing bay to do it themselves. The fact that it's much easier for a rich hopeful to afford the necessities of his craft or sport than it is for a poor one doesn't make those things any less NECESSARY for the poor hopeful.

People DO judge a book by its cover, as I've learned firsthand. The cover for my novel Adelaide Einstein is much less slick than the one for my novel Snow Ball, and Snow Ball outsells Adelaide month in and out despite the fact that Adelaide has nearly three times as many positive reviews. I can complain all I want about how unfair it is that more readers won't give Adelaide a chance, but that won't sell more copies of the book.

And ebook fans DO post negative reviews based solely on bad editing and poor formatting. I've found most ebook fans to be very welcoming to indies, and even willing to cut them some slack to an extent in acknowledgment that we're not backed by a Big 6 publisher. But when poor formatting or bad editing gets in the way of their enjoyment of the content, they stop reading and let others know about it.

Remember: publishing was never meant to be fair. It's a business. Mainstream-published authors have the luxury of a whole staff of businesspeople standing between their delicate, artistic sensibilities and the harsh realities of commerce, but they pay for it pretty dearly in reduced royalties and the loss of control of their work. We indies have to be willing and able to play both sides of the net, art AND commerce, ourselves.

If you're not willing, or you're not able, you're not ready to publish.

UPDATED TO ADD: having seen comments on this post here and elsewhere, I'm kind of shocked that this is such a controversial stand to take. I mean, if I wanted to go into business making and selling any other product, and openly admitted I had no money for quality control (editing), packaging (cover design) or marketing (author platform) for the product, that I didn't have the skills to do all of those things myself at a level comparable to a professional, and I don't know anyone who'd be willing to offer those services to me for free, everyone would just say, "Well, maybe you need to wait till you've saved up some money, then."

But for some reason, to some people, when the product in question is a book, it's somehow a special case. To those people, suggesting the author delay publication till he can make his product---a book---the best it can be is elitest. I'm not saying that only the rich should be able to publish, not remotely. I strongly encourage controlling costs, acquiring as many skills as possible so you can do a professional job of things yourself, calling in favors and comparison shopping for services. And I'm not saying those who don't do these things should be barred from publishing.

All I'm saying is, if you're going to step into the spotlight and invite the scrutiny of a paying public, doesn't it make sense to put your best foot forward? If "good enough" is inadequate when it comes to the quality of your storytelling and characterization, why is it acceptable when it comes to the quality of your book's presentation?

Thursday, April 12, 2012

Amazon vs. Apple And The Agency 5: Let's Get The Facts Straight

Given that anyone who reads my blog is an author, publisher, or otherwise involved in the book business, I don't think I need to trouble myself with recounting every detail of how the U.S. Department of Justice came to charge Apple, Inc. and publishers Macmillan, Penguin, Hachette Group, Simon and Schuster and HarperCollins with collusion to fix ebook prices. But judging by the many hysterical, righteous articles and editorials I'm reading in the wake of antitrust charges being filed and three of the five named publishers promptly settling out of court, there's plenty of inaccuracy and flawed logic out there that needs to be addressed.

1. Before Apple and the Agency 5 publishers established their Agency Pricing plan, Amazon was hurting publishers' bottom lines by offering their Kindle-format bestsellers at a discount price. Publishers had to do something to stop Amazon from doing this, so they could earn enough money to cover their expenses and still earn a modest profit.


Prior to Agency pricing, publishers sold their Kindle-format books to Amazon under the same basic wholesale terms they used to sell their hard-copy books to Amazon. Publishers set a suggested retail price for the public, but sold each copy to Amazon at a lower, wholesale price that generally constituted 60% of the suggested retail price. That percentage is standard across the industry for all booksellers, and is fixed regardless of the price at which a given book, digital or hardcopy, actually sells.

This means that if the publisher set a suggested retail price of $20 for a given Kindle book, Amazon had to pay the publisher $12 per copy sold. Even if Amazon elected to sell those books at a discounted retail price of say, $9.99, it still had to pay the publisher $12 per copy sold. Most of the mainstream Kindle bestsellers Amazon was selling at $9.99 were being sold at a loss to Amazon, but publishers still earned the same cut as they would if Amazon hadn't discounted.

2. If Amazon is allowed to offer mainstream bestsellers as a "loss leader" product, it will soon have a monopoly over ebook sales in general and will then demand that publishers accept a lower cut on each copy sold---and in fact, they are already starting to do this with their 2012 vendor contracts with publishers.


While it's true that Amazon's 2012 vendor contracts do charge higher prices for on-site promotion than in prior years (though specific details of the new contracts have not been publicly disclosed), no one is claiming Amazon is demanding any decrease in the publishers' usual 60% cut. It's unclear whether publishers can opt out of the on-site promotion, but still offer their books for sale on the site.

3. Amazon has already driven most of its competition out of business through predatory pricing tactics.


While it's true that Amazon operated at an annual, multimillion dollar loss for its first five years in business (as detailed in the documentary film series, Nerds 2.01: A Brief History of the Internet, 1998), during which time it was primarily a bookseller, the primary reason for its losses had to do with the usual business startup expenses, plus Jeff Bezos' very ambitious growth and expansion plans for the burgeoning e-tailer. Amazon spent immense quantities of cash on advertising and setting up a nationwide network of fulfillment centers in those early years.

Amazon also invested heavily in making its customers' buying experience the best it could be. Recall that Amazon launched at a time when online shopping was far from typical, and most consumers viewed online stores with suspicion, fearful that their credit card and other personal information couldn't possibly be kept secure online. A second obstacle to overcome was consumers' habit of instant gratification: why buy online, which is essentially no different from mail-ordering, a product one could buy in any local store? Amazon had an answer to both issues.

First, it could afford to offer products at a lower retail price because its overhead costs were much lower than those of a brick-and-mortar store. Warehouse space is cheaper to buy or rent than retail space, and fewer workers are needed to run a fulfillment center than to staff a retail store; much of its processes could be automated.

Of course, a lower retail price is meaningless if the difference is made up in shipping expense, and the customer has to wait for his purchase to arrive in the mail to boot. Amazon's answer to these two problems was to frequently offer free shipping, and (for its first couple of years in business) to ship every domestic order out via Federal Express, regardless of whether or not the customer opted to pay for expedited shipping, as a standard practice. Remember that?

These were strategic moves aimed at establishing the internet as a safe place to shop, and Amazon as a trusted retailer in the minds of consumers. Of course Amazon also wanted to become a preferred retailer in the minds of consumers, but that's true of any retailer. If its mail-order business model is simply more financially efficient and convenient for customers than brick-and-mortar shopping, that's more the natural outcome of a major technological and cultural shift than the result of any targeted, purposeful attempt to drive all competitors out of the marketplace. As plenty of others have observed, I'm sure the buggy whip manufacturers were pretty angry when automobiles became the standard mode of transportation, too.

4. Amazon is now in a position where it can strong-arm publishers into whatever pricing and sales terms it wants, slowly bleeding those publishers to the point where they can no longer survive.

Publishers are no more dependent on Amazon for their survival than computer manufacturers are dependent on Best Buy for theirs. Publishers are free to enter into direct competition with Amazon by pulling all their titles from the site and selling them exclusively through their own online stores and selected brick and mortar outlets, such as Barnes and Noble, Target and airport stores. Computer and other manufacturers have long offered direct sales to consumers through their websites, and there's nothing stopping publishers from following suit, other than a reluctance to alter their failing, bricks-and-mortar-centric business model.

Certainly, a considerable amount of effort and capital investment would be required to set up an online sales outlet where none exists today for most publishers, but the realities of remaining competitive in a changing marketplace are what they are. The fact that publishers dragged their feet and dug in their heels rather than adapt to changing market forces can hardly be blamed on Amazon. The internet moved their cheese, not Amazon.

As to slowly killing off publishers, it behooves Amazon NOT to bleed its primary suppliers dry. Amazon has been launching its own publishing initiatives, but unless it succeeds in luring most major authors away from every major publisher, unless it starts buying up competing presses (a mistake the major publishers have made in spades and have probably now come to regret), it will always be one among numerous publishers.

Finally, consider the digital music example set by Apple with its iPod and iTunes. Apple undoubtedly dominates the digital music market, but it has not bled any labels dry or begun gouging the music-loving public. Tower Records, Licorice Pizza and The Wherehouse have disappeared from the music retail landscape, but I don't recall anyone accusing Apple of any kind of orchestrated campaign to cause their demise. Again, it's a simple case of consumers voting with their wallets.

5. Publishers have to play ball with Amazon if they want to offer their books in digital form, because the Kindle is the dominant e-reader platform.


The Kindle is the dominant e-reader platform, but it can read formats other than Amazon's own proprietary .azw file type. It can read .mobi files natively, for example. Publishers are free to sell non-.azw format ebooks directly through their own websites, and Kindle owners would still be able to read those books on their Kindle devices. It wouldn't be as convenient for customers as downloading books directly to their Kindles from Amazon, but this is the same situation as loading digital music files that weren't purchased from iTunes onto an iPod: it can be done pretty easily, though it does require transferring files to the device.

Furthermore, if publishers really wanted to ensure the Kindle couldn't dominate the e-reader landscape they could do so, by offering customers the one thing the ebook reading public has most wanted from the beginning that they aren't already getting from Amazon: a cross-platform, DRM-free ebook format that can be read across multiple devices. They could invest in the development of cross-platform e-reader software users could run on devices they already own rather than having to buy a Kindle, Kobo Reader, Sony Reader or Nook, but here again, there's a reluctance on the part of publishers to take risks, expand their business model, innovate and compete.

BOTTOM LINE: Amazon has achieved a dominant position in bookselling and e-tailing through aggressive, risky and costly startup efforts. Unlike most CEOs who hold the title today, Jeff Bezos took and held the long view through some very lean and nerve-wracking years. If his ultimate goal for Amazon is to become and remain the #1 company in its sector, then all he's guilty of is the same thing that can be said of ALL CEOs.

Perhaps if publishers and competing retailers had been a little more forward-thinking, and willing to take the same risks, they would now be reaping similar rewards. Since they weren't, they are reaping a bitter harvest of resentment and fading market share instead. It's still not too late for publishers to turn the situation around, but their time, money and effort would be better spent on R&D than M&C*.

*(moaning and complaining)