Tuesday, July 08, 2014

Amazon's Latest Proposal

Amazon has broken their silence on the negotiation dispute with Hachette and sent this letter to various Hachette authors, the Authors Guild, and the New York Times and Wall Street Journal.

Here's the letter:

“Dear XX,

I wanted to ask your opinion about an idea we’ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.

Our first choice would be to resolve a dispute like this through discussion only. We tried that already. We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.

We agree that authors are caught in the middle while these negotiations drag on, and we’re particularly sensitive to the effect on debut and midlist authors. But Hachette’s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.

Here’s what we’re thinking of proposing to them:

• If Hachette agrees, for as long as this dispute lasts, Hachette authors would get 100% of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit from the sale of every e-book until an agreement is reached.

• Amazon would also return to normal levels of on-hand print inventory, return to normal pricing in all formats, and for books that haven’t gone on sale yet, reinstate pre-orders.

Here’s an example: if we sell a book at $9.99, the author would get the full $9.99, many multiples of what they would normally get. We can begin implementing this arrangement in 72 hours if Hachette agrees.

We haven’t sent this offer to Hachette yet — we’re sending this to a few authors and agents to get feedback first.

What do you think?  Would this be helpful, especially for midlist and debut authors?

Can we talk on the phone later today or tomorrow once you’ve had a chance to digest?

Thanks and look forward to talking.”

Joe sez: So what have we learned?

1. Amazon reached out to Hachette in January. Hachette didn't respond.

2. As of March, when their contract ended with Hachette, Amazon extended the same terms until April. Hachette still didn't respond.

3. Amazon turned off pre-order buttons and stopped stocking Hachette titles, and then Hachette finally responded--by whining publicly in the media.

4. In May, Amazon offered to monetarily compensate Hachette authors during these negotiations. Hachette rejected the proposal.

5. Now, amid speculation that no one knows who is at fault, Amazon breaks their silence and explains they've been trying to get a deal done with Hachette for the last seven months, and Hachette has been the one dragging its feet. Amazon is also willing to give Hachette authors 100% of all monies from Hachette books, and can do this within 72 hours.

And once again Hachette rejected the proposal.

So why, exactly, is Hachette dragging its heels during these negotiations?

I have a pretty strong idea why. If Hachette can hold out until September, it can try to force the Agency Model back on Amazon. As William Ockham had discovered, last year Hachette told the federal court in their antitrust case that they intended to re-institute non-discount agency pricing as soon as possible. Which is in two months. And Hachette's own presentation to investors said it would retain control over ebook pricing.

Here was Hachette's reply to Amazon:

“Amazon has just sent us a brief proposal.  We invite Amazon to withdraw the sanctions they have unilaterally imposed, and we will continue to negotiate in good faith and with the hope of a swift conclusion. We believe that the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation.  We look forward to resolving this dispute soon and to the benefit of the writers who have trusted their books to us.”

Maybe I'm dense, but what does negotiating in good faith with Amazon have to do with Hachette authors getting 100% royalties right now? The authors are suffering. Let them get paid!

I love the last sentence ending with "the benefit of the writers who have trusted their books to us."

Hey Hachette! You know what would benefit those writers? 100% royalties while you continue to use delaying tactics! They trusted their books to you, and you're using them as pawns so you can control ebook prices. The best outcome for writers is agreeing to Amazon's incredibly generous, unheard of, extraordinary offer.

Certainly Hachette authors feel the same way, right? What does Douglas Preston think?

Mr. Preston said the Amazon proposal would be "devastating" to Hachette while "barely hurting Amazon at all." Mr. Preston also said he objected to the proposal because Hachette has supported him throughout his career. "There's something wrong with this," he said. "My publisher gave me a very large advance for the book they are about to publish. Morally, I would have to turn over that (Amazon) money to them."

Color me amazed. And people actual wonder why I use the term Stockholm Syndrome to describe certain writers.

What did the Authors Guild say?

“If Amazon wants to have a constructive conversation about this, we’re ready to have one at any time,” (AG prez Roxana Robinson) said in an email. “But this seems like a short-term solution that encourages authors to take sides against their publishers. It doesn’t get authors out of the middle of this – we’re still in the middle. Our books are at the center of this struggle.”

Hey, Roxana? Amazon's proposal gives Hachette authors between six times and twelve times the royalties they're currently making with Hachette. I'm betting some authors would LOVE that "short term solution".

Maybe Hachette authors SHOULD be taking sides against their publisher. Their publisher pays them poorly. Their publisher's reluctance to negotiation with Amazon forced Amazon to remove pre-order buttons and stock paper books. Their publisher rejected Amazon's first offer to compensate Hachette authors 50% if Hachette matched it, and now they rejected an off that ANY REASONABLE AUTHOR ON THE PLANET WOULD KILL FOR.

How did Amazon respond to Hachette's response?

“We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn’t be ‘suicide.' They can afford it. What they’re really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. All the while, they are stalling and refusing to negotiate, despite the pain caused to their authors. Our offer is sincere. They should take us up on it.”

Now we can watch the Internet light up with anti-Amazon nonsense. Here's some of what I expect:

This is just a PR stunt!

Amazon is trying to steal Hachette's authors!

Amazon is trying to control the industry!

Amazon is doing this to manipulate public opinion!

Amazon wants authors to turn against their publishers!

I agree with the last one. Authors should turn against their publishers. I hated it when morons were in control of my career. I hated suffering every time they made a mistake--and they made many. And if I were still with Hachette, and then just screwed me out of a chance to earn 100% royalties on Amazon, I'd be on the phone with a lawyer doing whatever it took to void my contract and get my rights back.

The reason I blog about this issue (and the reason I blog at all) is to help writers. I've been through a lot, and done a lot, and learned a lot, and been the victim a lot.

I hate seeing that happen to my peers.

Preston feels so indebted to his publisher he can't even make a rational decision. I get that. And that's okay, when you're making millions of dollars.

But if you're not making millions, you should take a long hard look at this entire situation and decide what is best for your career.

201 comments:

1 – 200 of 201   Newer›   Newest»
Barry Eisler said...

Hah, I've already been engaging on Twitter with every one of the reactions you predicted... :)

Joe Konrath said...

Why aren't I surprised...

You can never go wrong betting against common sense.

Paul said...

Amazon should just proceed with the pool and distribute it evenly to all Hachette authors affected by the negotiations, writing checks monthly as per their business model. Maybe Colbert can show off his Amazon check on air.

Could they even do this?

Kilburn Hall said...

Authors have divided themselves into two camps, the making a living wage by self publishing crowd of which I belong, and the gatekeepers like James Patterson and Scott Turow who have made a shitload of money with traditional publishers who have eleveated them to a position of being "overlords" of the literary world and encouraging greedy publishing houses to bar the door to new aspiring writers who are not represented by agents. Even the litarary agents, if they are good, block the door taking on no new clients while Patterson and Turow continue to make bags of filthy lucre. Not to Patterson and Turow: You do not speak for me and I am betting you do not speak for any of my ebook or indie colleagues. Amazon has tried to begotiate in good faith with a greedy publishers who with their army of high-priced, shifty Wall Street lawyers continue to walk the fine line between legal and illegal. Amazon and Smashwords and others have levelled the playing field and I encourage Amazon to resort to a "scorched Earth" campaign against Hachette which Hachette, and the other greedy traditional publishing houses have used against Apple ibooks and now Amazon. Amazon has new career authors (like myself) interests at heart- Hachette does not and care only about its greed.
Author Kilburn Hall

Megan Haskell said...

Joe - can you explain the bit about waiting until September? Why would that allow Hachette to reinstitute agency pricing?

And thank you for being the megaphone here. I'm not 100% pro Amazon, but I agree that they are more aligned with both readers and writers interests than is Hachette, and I'm tired of hearing them vilified in the media.

Joe Konrath said...

http://www.latimes.com/books/jacketcopy/la-et-jc-amazon-and-hachette-explained-20140602-story.html#page=1

In the Apple e-book case brought by the Department of Justice, publishers were accused of colluding over e-book prices; all settled. The judge's final order in the case, issued in 2013, laid out a schedule for the various publishers involved to renegotiate e-book prices with retailers, Apple and Amazon both. Hachette is up first, in September. And they've stated they will pursue legacy (are you reading this, William Ockham? What's the source again?)

Joe Flynn said...

I sent a copy of Joe's "Fisking Hugh Howey" post to a reporter I know at the Chicago Tribune, suggesting it would add balance to a pro-Hachette column written by Christopher Borrelli and published in that newspaper. I'm keeping my fingers crossed some objective journalism might happen, but reporters don't decide what goes in the paper, editors do. Still, I'm trying to be hopeful.

Alan Spade said...
This comment has been removed by the author.
Alan Spade said...

Lately, Hachette's campaign has been focusing on Amazon hurting authors in these negociations. This is a direct response from Amazon, a logical and smart one.

If that response had come as a government injunction, I think all the authors would have applauded. As it comes from Amazon, most of authors will see that as a tactical move.

I can also understand Douglas Preston talking about his publisher's advance, because those advances have an economic weight for Hachette. What weight exactly? That would be an interesting question to answer.

William Ockham said...

Here is what Arnaud Nourry, CEO of Hachette, said in response to questions at an investor presentation at the end of May:

Nourry was also bullish that the situation could be resolved in a “few weeks”. When questioned about the nature of the deal, Nourry gave a broad hint that agency would continue. He said the Department of Justice had ruled that the agency model was “legal”, and the DOJ mandated deals (agency-lite) that allowed for retailer discounting of agency-priced titles would come to end this year. This “period of discounting ends at the end of 2014”, he said. - See more at: http://www.futurebook.net/content/amazons-dramatic-shift#sthash.jZYn8Wiq.dpuf

[I left in futurebook's annoying link detritus just so they see all the http referrals from this blog.]

Joe has the details of the settlement slightly wrong. The publishers were prohibited from entering into no-discount contracts with retailers for two years after they settled. Hachette, S&S, and HarperCollins settled in August 2012. However, they need to avoid the appearance of collusion, so one of those three has to go first.

We learned some important things today. Mostly the timing of the Amazon-Hachette contracts. I will be back later to expand on that.

Nirmala said...

I also wonder what Hachette's "negotiating in good faith" has to do with never responding in a timely manner to any communications from Amazon, if at all.

Anonymous said...

I'm self publishing like a maniac now days. I love having control over my work. If Hachette wins all this crap, will indie authors eventually suffer? :'(

Anonymous said...

Hachette should be terrified.

Amazon just went all-in with the carrot.

Guess what comes next?

Anonymous said...

Fascinating. So what's going on, timeline-wise, that Hachette is stalling for? Clearly they don't want to negotiate with Amazon until some future date.

I just don't know enough of the details about the DoJ settlement to know if that is part of why they are waiting.

Anonymous said...

Okay further to my post above questioning why they want to wait, note this:

"Complicating the negotiations, Judge Denise Cote's September 2013 final order in the Apple case extended the amount of time during which Apple must retain unlimited discounting power of consumer e-book prices, and, to guard against future collusion, staggered Apple's first post-order publisher negotiations into exclusive six-month windows for each publisher. Under the terms of the order, Hachette is to be the first to be free to renegotiate a straight agency deal with Apple, 24 months after the "Effective Date" of the final judgment—which would be around mid October, 2015."

Surely Hachette can't intend to ignore Amazon for another 15 months? Then again, it's NY publishing and they are all bat-shite crazy so why not.

Source: http://www.publishersweekly.com/pw/by-topic/industry-news/publisher-news/article/62254-much-at-stake-in-amazon-hbg-fight.html

Matt said...

I've just seen an author tweet this: Oh thanks Amazon for thinking I was so selfish I'd want all the other lovely people who work on my books to NOT GET PAID.

I don't know how some people can be so stupid.

Anonymous said...

Poor dumbshit doesn't realize those "lovely people" get a Hachette salary check every month. He or she is the only one getting screwed.

Donna White Glaser said...

You know, when the term Stockholm Syndrome started to get applied to trad pubbed authors I thought it was a bit much. But now? I've been seeing the relevance of it increase day by day. So sad. But also a little Darwinian.

Hairhead said...

To Matt at 6:42 who said he'd just seen an author tweet: Oh thanks Amazon for thinking I was so selfish I'd want all the other lovely people who work on my books to NOT GET PAID.

facepalm
facepalm
headdesk
headdesk
headdesk
(SMASH)
bodyfloor

Is it really possible that an author thinks that:

1)all of the editorial and art and publicity people who work on his book are paid only if the book sells?

2) ebooks sold on Amazon constitute such a huge part of his sales that interrupting the flow of money from those sales to Hachette will actually cause Hachette not to pay their workers?

3) Hachette is such a small company (part of a $10 billion plus conglomerate) that they would have to cut employee wages if money from sales on ONE of their outlets was cut?

There are about five other stupidities there, but I won't list them -- it's far too depressing!

This is not "Stockholm Syndrome", this is "having sex with your captors, carrying their babies and killing you own children."

Christ!

Anonymous said...

I bet all Hachette authors are dying to take Amazon's 100% offer, while pretending to side with Hachette publicly.

Steven Zacharius said...

What happened to all the criticism about Hachette being the party that wasn't shipping on time to Amazon? Now that Amazon has offered to return to normal terms, including ordering the full quantity of books and discounting; there's nobody saying that it was Amazon's fault that the books were delayed one to two months.
And Hachette might be part of a multi billion dollar company but the book operation is under 7% of that. You don't think if Hachette was to give up sales from the largest online retailer that they would have to lay off people? Publishing is not a high profit business despite what you think. If an account is even 10% of your overall business and you stop dealing with them, of course it's going to effect your bottom line and you'd have to cut costs.

Steven Zacharius said...

One last comment....so you think it's fair that Amazon suggests to give 100% of the proceeds to the authors while they both negotiate? Hachette would be losing the revenue on those titles that they would be selling on other sites now when people can't buy their book from Amazon. Remember this is mostly print books we're discussing except for the discounting issue on ebooks. Meanwhile Amazon would be capturing all that sales information and all the data about consumers. This is just an offer to make it look like Amazon isn't being a bad guy; much the same way the letter from Hachette authors makes them look like the good guys. It's all part of the negotiation posturing.

James Michael Larranaga said...

Wow, the plot thickens. Truth really is stranger than fiction. Go Amazon!

Anonymous said...

Steven, nobody disputed amazon wasn't ordering large amounts of books from Hatchette, just that Hatchette was complicit in the delays as well.

Also, yes, it would hurt Hatchette if they didn't get paid. But since they've been screaming that it's really the authors that are getting hurt, it seems now they can't really say that. Now it's turned to Hatchette being the one not getting ebook money. Will that cripple them? No. Especially if negotiations start going quicker. I believe Amazon stated, unless they're lying, that Hatchette hasn't really been negotiating at all. It was meant to speed up the negotiations AND not hurt the authors in the process.

So, cute dog, but you still are lacking substance.

Joe Konrath said...

Now that Amazon has offered to return to normal terms, including ordering the full quantity of books and discounting; there's nobody saying that it was Amazon's fault that the books were delayed one to two months.

Steve, Amazon has been trying to negotiate with Hachette since January and got no response. They even extended their terms a month while waiting to hear form Hachette.

As a CEO, you no doubt know it is important to have a deal in place when working with retailers or distributors. When that deal ends, a new deal must be struck.

If your business partner doesn't respond, what choices do you have? Amazon could have completely stopped selling Hachette's entire catalog. Instead, they took away some of the perks Hachette had in their previous deal, like pre-order buttons, in order to get Hachette to respond.

That's not Amazon delaying orders. That's Amazon trying to come to terms with a company that is ignoring them.

And Hachette might be part of a multi billion dollar company but the book operation is under 7% of that.

And Amazon's margins are so slim it only declared 500 mil in profits last year. What's your point?

You don't think if Hachette was to give up sales from the largest online retailer that they would have to lay off people?

Who says Hachette has to give up sales? We don't know the terms--only that Hachette has publicly stated it wants to control book pricing.

And if Hachette did have to lay off people, I won't weep for them. When the author earns 1/3 of the ebook royalties the publisher does, I'm okay with seeing that publisher go under.

Joe Konrath said...

Hachette would be losing the revenue on those titles that they would be selling on other sites now when people can't buy their book from Amazon

Hachette can't have it both ways. They can't say they care about authors but refuse to pay them (or to let Amazon pay them). They can't complain Amazon is cutting their sales when they have no current agreement in place with Amazon, and no sincere intention to attain one. They can't moan in public about Amazon bullying them, when they've been the ones delaying the negotiation.

This is just an offer to make it look like Amazon isn't being a bad guy; much the same way the letter from Hachette authors makes them look like the good guys.

Amazon isn't being the bad guy. The letter from Hachette authors was nonsense--I fisked the hell out of it. A group of entitled millionaires and Stockholm Syndrome cases don't speak for authors or readers.

But do you know who does? The 6700 people who have signed our petition.

You run a publishing house, Steve. Read a few thousand of the testimonials of readers and writers who signed that petition. They'll tell you who they feel is right in this dispute.

No good can come from not giving your customers what they want. And no good can come from treating authors like replaceable cogs in a giant, uncaring machine.

https://www.change.org/petitions/hachette-stop-fighting-low-prices-and-fair-wages

Anna Erishkigal said...

Honestly ... I rather HOPE Hatchette and the other Big-5 get to keep their overpriced Agency Pricing model a bit longer. It gives us Indies more time to cut their throats by underselling them. And as for the tradi-pub authors who want to 'save literature?' Let them. We'll see how long they stay with their Big-5 publishers as more and more Indies pull in front of them success-wise and start earning a living selling their books.

I have no pity for the fools. It's survival of the fittest, and the leanest, meanest dog always survives.

Hugh Howey said...

Is this really happening?

Is any of this really happening?

I may give up reading if this gets any more ludicrous.

Rob Gregory Browne said...

People are already accusing Amazon of making a PR move. Okay, fine. What if it is? On the Hachette side we've been bombarded with PR from the very beginning.

This is Amazon's... what? Second statement on the matter?

But even if it is a PR move, it's not one they can really back away from now, is it? And, if nothing else, it certainly exposes the b.s. they've been dealing with for months now.

Hugh Howey said...

Can we have a hidden vote among Hachette authors?

Please?

And I bet Amazon would pay 50%, to make it fair.

Steven Zacharius said...

I love replying to someone named Anonymous. Cute dog, really? Many many people online here have said that Hachette was responsible for not shipping the books to Amazon. Don't start denying that now.
You're right that giving up the Amazon print business wouldn't cripple them because Amazon is not as important in print as it is in digital. But the other comments about authors being important and the stuff coming out of Amazon are all just part of the leaked negotiations. My point was that many people were blaming Hachette for not shipping books and that's why Amazon didn't have them. This has clearly not been the case.
If they're talking about giving up the ebook revenue as well as the print revenue; you're wrong....that would cripple them. You don't give up that percentage of your business without it having an enormous impact to your bottom line. Why would they give up all their ebook revenue during negotiations when people might be buying the Hachette books from other online retailers now and the authors are getting their royalties from those sales? But the cute dog comment....is really uncalled for.

Nirmala said...

Steven...I don't recall anyone saying that Hachette was not shipping titles. What I recall is that some people pointed out that Amazon was choosing to not stock large numbers of Hachette books that it possibly could not sell if negotiations fell apart completely, so instead they were ordering titles from Hachette as the orders came in. And since Hachette, like most of the large publishers, has an antiquated supply chain that takes weeks to fulfill orders, the books were taking weeks to reach the customer. Again, no one accused Hachette of not shipping books, they just accused them of being ridiculously slow at shipping books.

Even if Amazon decided today to start restocking Hachette books at normal levels, it would still takes week before they could fill orders promptly. What kind of company in this day and age takes weeks to fulfill orders?....especially when you have to assume that Hachette has the books in stock.

Joe Konrath said...

Cute dog, really?

You do have a cute dog, Steve, It's beside the point, but I have three dogs myself.

Many many people online here have said that Hachette was responsible for not shipping the books to Amazon. Don't start denying that now.

Amazon has been fulfilling Hachette orders. They simply haven't been warehousing them. Which means that Hachette was indeed responsible for the delay. Amazon gave Hachette the orders as they received them.

Just like when someone special orders a book in an indie store. It takes a few weeks to deliver. Is that the book store's fault?

Why would they give up all their ebook revenue during negotiations when people might be buying the Hachette books from other online retailers now and the authors are getting their royalties from those sales?

People can still buy Hachette books from those other sites. Amazon doesn't have a monopoly.

But I bet Hachette authors would point readers to Amazon if they were getting 100%.

It doesn't matter, though. Hachette already refused. They don't care about authors, and have shown as much. They just like using authors as a PR tool to influence the media and public opinion.

Now that's been taken away from them. If Hachette cares about its authors, pony up like Amazon is doing.

But then, if Hachette cares about its authors, it would have begun negotiations back in January.

What Hachette cares about is controlling ebook prices.

Julie said...

I F'n LOVE Amazon. Laughed out loud when I read this.

Steven Zacharius said...

Joe, do you really believe that the two sides haven't responded to each other since January? I know in my own negotiations with Amazon that although there could be weeks between our comments to each other, it generally wasn't longer than that. That is just a publicity stunt claiming that there has been no dialog in my opinion. Believe the sales from Hachette are important to Amazon and Amazon is even more important to Hachette. If there wasn't something substantial that is worth fighting for; they wouldn't be having this stalemate. We don't really know what's going on. If a retailer is saying you can't do agency pricing any longer and you're going to go from a 70% cut of the price to a 50% cut of the price; that's a big deal to them....but we don't know if that's the case. It could just be more co-op money....but when you're the size of some of these enormous publishers, every extra percentage you give away comes right off your bottom line.
As far as a deal ending, that is normally the case but that is not the way these negotiations have gone. I'm speaking from our own experience. We have an NDA and I don't disclose terms or negotiating posture but I'm sure there would be delays in this negotiation process that were unforeseen.
The 500 million in profit from Amazon is almost as much as Hachette's entire revenue so I don't think you can compare the two.
The article in the WSJ said that Amazon's offer was for them each to give up their revenue and give all of that money to the authors while they're negotiating. So that's Hachette giving up all of their sales from Amazon. I don't know if they're talking about print or ebook or both though.

As far as you not having sympathy for people being put out of a job; if you don't want to feel bad for them that's up to you. With the industry consolidating more and more, there are less jobs available so I feel bad for every person who loses their job in this industry. Most people are in it because they love books. As for your comment about the publishers making so much more money than the author we could go round and round on that so I won't get it started. There are the issues of advances, sometimes very substantial to take into consideration.

Nirmala said...

Joe, I believe you may have addressed this before, but why shouldn't self-published authors selfishly hope that Hachette (and the rest of the big publishers) gets their way and prices ebooks high so that our lower priced ebooks look more attractive to buyers?

Is it because lower prices all around encourage more ebook buying overall?

Even if this is true, it still seems like this would be counter-balanced somewhat by my ebooks being better able to compete with much lower prices. What am I not seeing here? If you have addressed this before, maybe just give me a link to an earlier post if you don't mind.

Of course, it is totally selfish and would hurt Hachette authors, but as you say, maybe Hachette should be allowed to die a natural death, and then those authors can self-publish and compete with me on an even playing field.

Steven Zacharius said...

Joe, we have no idea who has been stalling the negotiations. Each side may be fighting for something so dramatically different from each other that you can't blame either one for the delays. Don't believe the hype from either side about how long it takes each party to respond. I'm sure they're talking more often than not.

I saw the petition and read some of the comments. Some are worthwhile and some are self-serving. That's to be expected when the people that you are blogging to are primarily indie authors. If you go to other sites like the terribleminds blog, you get a different perspective. It all depends on who your blog audience is. Readers don't care about how much an author or publisher is making or the retailer for that matter. They obviously want the book at the lowest price possible in most cases. There are exceptions when people want to support their local community bookstore which I wholeheartedly support. But in ebooks people are going to buy based on the device they have if they have a dedicated ereader. If they are reading on a tablet or their phone....they'll buy from whomever would probably give them the best price since they can read it using an app.

Jim Thomsen said...

Editors, designers and others who love books don't need to work for publishing houses to make their livings, Steven. There are thousands of people like me — a one-man book-manuscript-editing business — who make a decent, self-sustaining living working directly with authors. I used to take work from publishing houses but they usually pay a lot less than self-publishing authors do.

Klawzie said...

Mr. Zacharius -

The two are not irresolvable concepts. Amazon can change its ordering habits and Hachette can still be responsible for shipping delays.

Instead of ordering 1000 units* at a time, Amazon seems to have been ordering in 100 units* at a time.

* Obviously, I have no idea what their usual order number is or how one would quantify a "unit". I suppose you could more accurately guess based on your history with Amazon.

This means that the units that Amazon purchase sell out more quickly and means they must order from Hachette more often. Hachette may not necessarily intentionally delay shipments to Amazon (though it certainly might - none of us is likely to know since I don't believe anyone working for that area of Hachette comments here).

Is that a strategic move by Amazon? Of course it is. No one's so naive as to believe different.

Is it necessarily a malicious move by Amazon? I don't think so. As has been stated multiple times, they don't know what their business association with Hachette will be in the next five minutes. By having less stock on hand from Hachette, they reduce the headaches that might stem from having books on hand that they're not legally permitted to sell. Sounds like a smart move to me.

Amazon's offer to change their buying habits during negotiation seem to me to be a way to reach an agreement with Hachette that means something in writing that says they're not going to be left holding the bag if negotiations fall through while they still have stock. I'd be surprised if they didn't ask Hachette to sign something saying anything they had on hand and any book they preordered would be honored if negotiations broke down.

As someone up-thread mentioned, they sat a very large pile of carrots down and said, "Look. We're putting this out in the open here. We want to talk terms so stop ignoring us or someone might come and munch on your carrots. Like, maybe, the authors you're holding hostage?"

Steven Zacharius said...

Nimala, I believe it was Tasha something that made comments about her studying just in time inventory while she got her MBA and publishers being antiquated. Nothing could be further from the truth. And there were many comments, I don't know if it was on this site, where people said Hachette should just ship the books faster. Amazon sells over a 95% efficiency....unheard of this business. It's spectacular. They do order smaller books in very small quantities but the big books are ordered in enormous quantities. Hachette would be shipping those books out immediately and to think otherwise would make no sense. Hachette handled our foreign distribution and I know how fast they can ship. There isn't a major publisher or any publisher with a large distributor that wouldn't get the books to Amazon within a few days of an order being shipped. And as I said before, they can get every single book the next day from Baker & Taylor or Ingram which they do all the time to fill in shortages that they might experience.

Steven Zacharius said...

Nimala where are you getting your information that it would take them weeks to fill orders if Amazon started ordering today? Assuming there is inventory, which there would be on any major author, they would ship books the next day after they are ordered. These are the types of statements that people read here and then take as gospel and they are not correct at all.

Steven Zacharius said...

Anonymous, I misunderstood your comment about cute dog....sorry about that....thought you were being sarcastic about me.....but thanks for the comment about the cute dog then.

But I don't lack substance. I'm giving you my opinion as a publisher and my knowledge of how these types of negotiations work from a first-hand perspective....not hype....

Terrence OBrien said...

I love replying to someone named Anonymous. Cute dog, really? Many many people online here have said that Hachette was responsible for not shipping the books to Amazon. Don't start denying that now.

No reason to deny that. Amazon didn't order as many books as Hachette thought they should. Instead of ordering X books, and warehousing X books, Amazon ordered a smaller number. Let's call that number Y.

So Hachette gets to hold onto the X-Y books in their own warehouse.

Amazon then orders books as consumers hit the buy button. Hachette then ships the books.

What's the problem? This happens in all kinds of industries everyday.

Terrence OBrien said...

And I'm not the Anonymous who Zacharius was responding to. I'll let that Anonymous speak for himself.

Nirmala said...

I was basing it on several reports online that most bookstores find it takes weeks to get a special order book from the big publishers. You might be correct that Hachette could be quicker in filling an order from Amazon, but then why are they generally so slow with other booksellers?

I have been wrong before, and probably will be again. But do you really know how quickly Hachette fills orders from Amazon?

Steven Zacharius said...

Joe, thanks for the dog comment. Gotta love the dogs. Hachette would be giving up all their revenue from the Amazon site only I should have said. Obviously they would be getting the revenue from other sales from other retailers. If this was just print books it would be a big hit but not like if it included ebook revenue where Kindle is 60 plus percent of the ebook sales. So it depends what the negotiation is really all about.
Obviously the Hachette authors would be thrilled to be getting their money. I wouldn't blame them but I don't expect this offer to go anywhere other than the newspaper and on here. It doesn't make any sense at all.
As far as indies ordering books....unless it's a real tiny store and doesn't order even mixed full cartons of books every week or every day.... Baker and Ingram ship the indie orders the same day for one or two day delivery. And they stock just about any active title as I'm sure you're aware. You can go into a B&N and they will frequently order from the book jobbers and have books in two days for you for custom orders. But for a big account like Amazon where they're ordering enormous quantities from big publishers....the shipment would probably go from the publisher's warehouse the same or next and arrive very quickly. It's not a week for delivery. One of the focuses of Amazon is that every trade title be available to ship immediately either by inventory or POD. The consumer wouldn't know the difference if they received a POD copy. This doesn't apply to mass market titles. But once again this is only the print side of the business. The entire discounting issue of ebooks is an entirely different subject and no one knows what the negotiations are about. We don't know if the terms for print and digital are exactly the same or different.

Steven Zacharius said...

Jim, so you're saying you'd like to see the Hachette employees lose their jobs? Yes you don't have to work for a publisher to be in the publishing business but most of the people do. There are of course plenty of freelance editors, artists, copy editors and proofreaders that work independently.

Nirmala said...

Thanks for the info about how quickly book orders are filled. Just goes to show how you are correct that untrue statements online can be repeated as if they are true. If your info is correct, then I am guilty as charged.

Dan Meadows said...

Well, I doubt Amazon really thought there was more than 1 or 2% chance Hatchette would take them up on it. If they really wanna stick in the knife, they should just start paying authors their 30% and sit back and watch how quickly Hatchette jumps in to take their cut if it. A crocodile may look like a sleepy lizard but you dangle some raw meat in front of it and it'll take your arm off to get at it. I like Amazon's strategy of giving them enough rope to hang themselves. Don't think the DOJ isn't watching this either. Hope they double deleted their emails

Terrence OBrien said...

Obviously the Hachette authors would be thrilled to be getting their money. I wouldn't blame them but I don't expect this offer to go anywhere other than the newspaper and on here. It doesn't make any sense at all.

It does make sense if one remembers Preston's letter said Amazon was directly targeting Hachette authors. It's hard to say Amazon is targeting those authors if if proposes to give them 100% or revenue and return all functions and displays to their previous state.

Or maybe it doesn't make sense to say Amazon is directly targeting Hachette authors?

Steven Zacharius said...

Klawzie....Amazon watches their inventory on a minute by minute level automatically with their computers. They see how a book is trending and as soon as they see a trend they will place an order electronically by EDI to the distributor or publisher. That will be processed immediately. Whether they're order 1000 or 100 or in the case of a Patterson, probably 100,000....they would ship immediately. Amazon orders enough books from any major publisher that they would be shipped immediately. Hachette never threatened to stop selling Amazon any books.....why would they do that? So Amazon would never be stuck with inventory and even if they were, books are 100% returnable forever until they are declared out of print. So there is zero risk for Amazon to stock these books except for using up capital, which they have plenty of.

Steven Zacharius said...

Terrence it doesn't work that way as I just explained previously. Yes they were ordering less books obviously. But they don't wait until they run out of books before reordering. They look at the pace of ordering every minute of the day....not just on books but on all products that they sell. And then an order gets cut electronically and sent out immediately in a few minutes or seconds. It's not a matter of the publisher waiting to get the order and then waiting to fill it and ship it. And as I said earlier they can get books from jobbers the next day anytime. This is why on every major book on the site you see that it ships immediately or within 24 hours. They watch that inventory like a hawk and publishers are graded on their fulfillment practices. Publishers are given a report card on their performance on a regular basis from Amazon. Believe me when I tell you that this has nothing to do with Hachette being unable to ship books quickly. When Amazon orders a new print book of Patterson for example....don't you think they base the order on the previous sale? They have a very good history on how many copies they're going to sell every day. For them to order only enough copies so that it would take one to two months to ship the books was just their tactics to get Hachette move.....that was their decision to do...it's their store but it definitely hurt those authors if the other retailers weren't making up that money from sales from other retailers.

Steven Zacharius said...

Nimala, yes i do know. I know how fast all the big publishing warehouses work. If you're talking about a custom order from an indie store of some specialized title that might take longer; especially if the indie store doesn't order in carton quantities...and by carton quantities...I'm not saying all one title but a mixture of books to fill one carton....if that were the case the order would take longer to ship because of minimum orders. But this would never happen with any major account who orders thousands and thousands of books every single day. Hachette handles our foreign distribution so I know what order processing time really is. And Foreign shipping is much slower than domestic shipping.

Paul Draker said...

Steve,

Imagine for a moment that you are a new author: legacy published, indie published, hybrid, querying, whatever... it really doesn't matter.

Imagine also that you are an open-minded individual with no preconceived notions about any of the parties in this dispute. They're just potential business partners that you are evaluating based on their public actions and statements. Your only concerns are what benefits your readers, and you, the writer.

Imagine you're ignoring all the heated rhetoric and only judging each party by their actions, today.

How would this look to you, then?

It's pretty eye-opening.

Steven Zacharius said...

Why can't you reply directly to a comment on this site....very frustrating.

Dan, I like your comment about the DOJ. You can be sure they are watching. Publishing news is covered by the media because it's a hot topic. When this battle is mentioned in the WSJ and NYT and all over the place, people take notice. Most people don't care, but they do notice.

Terrence OBrien said...

Steve,

I accept that books can be quickly dispatched. Lots of things can be done. But do we know they actually were?

I'm waiting for Hachette's response to Amazon's statement that Hachette did not respond to Amazon contract renegotiation overtures. That does seem odd. So I want to hear the other side. But if they did not respond for months, as Amazon says, I wouldn't find it unreasonable that they also didn't ship in a timely manner.

Waiting for tomorrow's chapter to see what Hachette has to say about the contract delays.

Nirmala said...

Steven: Thanks for sharing all of your information. I am especially grateful to have an industry insider here providing their knowledge and perspectives.

So again, thanks.

Joe Konrath said...

Joe, do you really believe that the two sides haven't responded to each other since January?

Yes I do. I've found Amazon to be difficult to deal with on certain issues, but I've dealt with a lot of the Kindle team, both KDP and A-Pub. They see no need to lie about anything. They're more upfront than any publisher I ever worked with, and I worked with 12.

Let's say this letter didn't surprise me. And those who composed it did so to get the truth out there.

On the flip side, I've had some legal dealings with Hachette in order to get my rights back. The time it took their lawyers to respond made me want to scratch my eyes out. Something that should have taken a week took six months.

Amazon has never taken more than 24 hours getting back to me. Including their legal department. Including weekends and holidays.

I don't expect this offer to go anywhere other than the newspaper and on here. It doesn't make any sense at all.

I believe it makes a lot of sense. It stops Hachette from using authors as PR pawns, shows Amazon wasn't the one delaying negotiations, and shows Amazon cares more about authors than Hachette does.

That is just a publicity stunt claiming that there has been no dialog in my opinion.

Then why didn't Hachette deny it? It was a perfect opportunity to show Amazon is disingenuous. Instead they ignored it, and went straight for the lame soundbyte.

With the industry consolidating more and more, there are less jobs available so I feel bad for every person who loses their job in this industry.

I can understand that.

Can you understand I feel bad for writers who can't make a living wage because publishers pay them so little? No benefits, no pension, no 401k, no health plan, no job security at all. And they're the ones supporting the publishing houses.

Kensington could survive if it cut back its staff, or its staff's benefits. It couldn't survive if it cut back on the number of books it publishes. Publishers need writers. But writers don't need publishers.

There are the issues of advances, sometimes very substantial to take into consideration.

You could always stop giving advances in exchange for 70% ebook royalties.

Joe Konrath said...

Is it because lower prices all around encourage more ebook buying overall?

Yes. And I don't want to see authors hurt.

When someone is sick, you hope for them to get better, not die.

I don't need to blog about any of this stuff. But I feel it helps writers.

No one helped me when I was a newbie. There were no blogs like mine to explain how the biz worked. No one sharing numbers. No one comparing choices (there were no choices back then).

So I inform, and try to help, and shine light on the things I think writers need to know.

It's my way of giving back.

Steven Zacharius said...

Paul, are you talking about the Amazon offer or the entire battle that's going on?

If I were an author of any kind I would be very concerned about this current battle. It doesn't bode well for the industry. Competition is always good. A writer has a choice as to how they want to be published.....all of those options should be available.

What I think we're going to see happen is that more publishers will begin selling books directly from their own websites. Publishers will begin competing with their retailers. They will be able to sell the books for less because they're not giving a wholesale discount. Of course consumers would have to know to go to the publisher's site but that's an entirely different set of problems. But publishers might start selling ebooks directly....some already do. If most ebook reading is done on a smartphone or a tablet, people can download the book from the publishers site and read it on that device. Again the publisher could sell the book for less money.
I understand the comments here about agency pricing causing higher prices to consumers. Kensington is not on agency nor are any other publishers other than the big 5 that I know of. So the pricing structure is totally different. Publishers obviously want the prices to be higher so it's more profitable to publish the book, including paying the advance. If the prices are lower, yes they might sell more copies. Obviously there's some place where those lines intersect. But what does the industry as a whole do if all books are 3.99? There are a fixed amount of books that are going to be sold. There are only so many hours in the day that people can read. So if you're a consumer how are you going to decide what you're going to buy? There will be a glut of books competing for the same amount of possible unit sales. Without the revenue at higher prices for traditional publishers the entire business model changes. As I've said many of the bigger publishers and other smaller digital publishers have totally different models for digital only lines that pay more to the authors. These are based on wholesale pricing and many of them are 50% splits of the receipts with publishers doing the grunt work that an indie author would normally do themselves. But these lines don't pay an advance normally. Maybe that's the model of the future for ebooks....don't know yet....time will tell.

Steven Zacharius said...

Nimala, my pleasure. Thank you for the kind words.

Terrence OBrien said...

Imagine you're ignoring all the heated rhetoric and only judging each party by their actions, today.


Imagine you are a Hachette author reading Amazon's proposal for 100% and doing the math...

Joe Konrath said...

If you go to other sites like the terribleminds blog, you get a different perspective.

Indeed. A terrible persepctive.

I just fisked Chuck's piece. It was nonsense. No points, no data, just opinion that he doesn't back up or defend.

http://jakonrath.blogspot.com/2014/07/fisking-chuck-wendig.html

He doesn't speak for any writers. He only pleasures himself in public. It's amusing, but not informative.

There are exceptions when people want to support their local community bookstore which I wholeheartedly support.

I agree. But my local community bookstore doesn't carry my books, even though they are available via Ingram. They choose not to, because I publish with Amazon and Createspace. My books are discounted and returnable, but they boycott me and other indie authors.

Do you recall seeing any media attention about that? Neither do I. When self-publishers are boycotted, no one cares. When Amazon removes pre-order buttons, they are a bullying monopoly hurting authors.

http://jakonrath.blogspot.com/2011/05/indie-bookstores-boycott-konrath.html

Nirmala said...

Thank you. I for one have benefited tremendously from your sharing all of the info and perspective that you do.

But as for wanting a sick person to get better, I will say as time goes on and the publishers seem to just dig themselves into the hole they are in deeper and deeper, I start to agree with someone on here who said, " I'm okay with seeing that publisher go under."

Unfortunately, in the meantime it does seem that the big publishers have probably been successful in slowing down the adoption of ebooks, however temporary their success will end up being. So in that way, they are hurting all authors including self-published ones.

Joe Konrath said...

There isn't a major publisher or any publisher with a large distributor that wouldn't get the books to Amazon within a few days of an order being shipped.

Steve, I'm going with my gut here, but I tend to believe the company who has been upfront about the situation, not the one who got caught colluding illegally.

I bet Amazon is bombarding Hachette with book orders. And I bet Hachette and their distributors wait until a certain number accrue before shipping, so they can save on postage.

It isn't cost effective to ship one book at a time. Nor do publishers ship FedEx next day delivery for a single title--that costs more than the book does.

Steven Zacharius said...

Joe, I've negotiated with Amazon and I know there are delays back and forth from both sides. I've negotiated with distributors too. Our recent negotiations with Amazon took a long time and our recent negotiations to move to Penguin Random House Publisher's Client Service group took almost two years. This crap takes a long time to work out, especially when it means one party is going to be giving up more than it was giving before. I obviously know what Amazon wanted from Kensington and I would never discuss that nor am I allowed to, but it took a long time for us to come to an agreement. Since we're not a big 5 publisher it didn't make any news, but there casualties during this negotiation which I won't talk about either. It's all part of business unfortunately.
With our digital lines, eKensington and Lyrical Press, we have two different sets of terms to choose from....Lyrical is a straight 40% of net receipts and eKensington has a break and then goes up to 50% of net receipts. If we were going to pay 70% royalties we wouldn't have a business. We couldn't afford the overhead we have and couldn't afford to offer the services that we did. It's a model that would work for any publisher that I know of. It works for KDP because they are just a vehicle for distribution. You're doing all the legwork yourself. This is a great option for many writers. Believe me I know that writers have expenses and if you take the hours it takes to write a book and divide it by an average advance, the money is low. Nobody ever said publishing is a high stakes business until you become a big star. The elite do very well and the lower list authors truly do struggle. Any publisher can go out and overpay for an author and lose money on the book....and I'm talking about fiction authors now with a track record. We know how many copies are sold within a reasonable range from bookscan and other information we collect from agents. Most of the time it's a lot smarter for a smaller company to find great writers and try to build them. It's much less expensive but much more time consuming. Also much more difficult to do that just buying a star; but hopefully smarter and then you have a loyal author in business with you hopefully for the long haul.

Joe Konrath said...

Hachette never threatened to stop selling Amazon any books.....why would they do that? So Amazon would never be stuck with inventory and even if they were, books are 100% returnable forever until they are declared out of print. So there is zero risk for Amazon to stock these books except for using up capital, which they have plenty of.

Hachette currently has no deal in place with Amazon. Why should Amazon stock their titles?

If they don't reach a compromise, why should Amazon waste labor and shipping costs to return titles?

And remember, Amazon did this to get Hachette's attention, because they wouldn't respond to Amazon's negotiation overtures dating back to January.

I'd guess Hachette hoped Amazon wouldn't mention that little detail. Whoops.

w.adam mandelbaum said...

In any other retail establishment would we demand they carry every brand of every product? Do we complain that the local multiplex won't show a foreign film of the artsy intellectual type? Amazon should be able to sell what it wishes whether it's a TV or an eBook. It should also be allowed to set the terms of its commercial dealings. Government involvement is not needed. Common sense is. Sometimes when you deal with the big dogs you have to share your bowl of Purina.If you don't want to, go somewhere else.

Nirmala said...

What I think we're going to see happen is that more publishers will begin selling books directly from their own websites. Publishers will begin competing with their retailers.

It is happening now:

http://www.digitalbookworld.com/2014/harpercollins-pivots-to-sell-print-and-ebooks-directly-to-readers-through-main-website/

Alan Tucker said...

To those commenting about wanting agency pricing or something akin to it for the Big 5:

It seems like it would be good for Indies (and might well be in the short term), but think about it this way. By and large, power readers (readers who go through 40, 50, or more books a year) have already adopted ebooks. They recognize the convenience and appreciate the deals they can get in lots of cases with Indie authors. People who don't read as often haven't really understood the benefit of ebooks because the big publishers have fought to keep prices high. Those folks are still buying paper copies in bookstores where there are no Indie books on the shelves.

Now, if all ebook prices begin to drop (as they logically should because they aren't as expensive to produce) then more people will adopt readers over paper because it will save them money. Once that happens, Indies will have access to a larger market of readers because virtual bookshelves are limitless and your book can be recommended to buyers just as easily as anyone else's.

Big publishers' prices will always be higher than Indies' because of overhead issues. There's no getting around that, so we'll always look attractive to readers because of price. What we should be wanting is more widespread adoption of ebooks in general and getting away from the agency model and artificially high prices can do that.

Hopefully some of that made sense. It was typed amid multiple pet and children interruptions, which is why I'm not working on my WIP right now, LOL!

Mir Writes said...

I think this Preston person should think Hachette got off easy whatever the advance was for all the rights he signed away. How come he's not thinking, "I worked my butt and brain off to write this work and I'm getting paid for it. They're lucky to have me."

Yeah. Stockholm Syndrome is right.

Not all all surprised that the real stonewaller is Hachette and it's about waiting out the DOJ clock.

Hope they get trounced but good.

Joe Konrath said...

Before I forget, Steve, thanks for dropping by. You get major kudos for sticking it out and answering so many comments.

A writer has a choice as to how they want to be published.....all of those options should be available.

If you believe all options should be available to authors, why take their rights for their lifetime plus 70 years? Why not let them out of contracts if they want to leave?

But what does the industry as a whole do if all books are 3.99? There are a fixed amount of books that are going to be sold. There are only so many hours in the day that people can read.

And yet publishers keep posting record earnings, and indie authors have grabbed a huge share of the market with no end in sight.

Readers tend to hoard when prices are low. To Be Read piles have gotten huge with so much cheap and free digital content. And people still keep buying.

We're also talking about a world market here. Billions of people to reach. That's more than enough readers to support a great deal of authors.

Rex Kusler said...

Hachette reminds me of Digital Equipment Corp. Remember them? They were huge and got bought out by Compaq who got bought by HP, and that didn't turn out to well. Amazon is like a cross between Safeway and Pee-Wee's Big Adventure. A bunch of pimple-faced kids will start something out of a garage--and that will be the future.

Joe Konrath said...

This crap takes a long time to work out, especially when it means one party is going to be giving up more than it was giving before. I obviously know what Amazon wanted from Kensington and I would never discuss that nor am I allowed to, but it took a long time for us to come to an agreement.

Amazon knows how big their ebook market is. They know how much publishers are earning on their Kindle sales. They know how valuable they are to publishers.

Amazon is also not a charity. Why should a wholesaler make more than the retailer who invented the store and platform the wholesaler is using to make record profits?

If you believe Amazon squeezing publishers is tough because they have so much power, why don't you feel for the writers being squeezed by publishers for the last 40 years because publishers had so much power?

Does it hurt now because it's happening to you? Welcome to the club. ;)

Terrence OBrien said...

But what does the industry as a whole do if all books are 3.99? There are a fixed amount of books that are going to be sold. There are only so many hours in the day that people can read.

As a whole the industry does nothing. Individual players will adapt in different ways. Those who succeed will be the industry. Those that don't will go away.

An industry can continue on even if all the players are replaced by new ones.

Steven Zacharius said...

Joe, I enjoyed your comment about terribleminds....at least I know you have a sense of humor.

Believe me...Amazon may be bombarding Hachette with lots of small orders, and if they're doing so it's definitely deliberate as they've already stated when they said they would go back to normal ordering. But a warehouse the size of Hachette's is sending enough books every day or several times a week to Amazon to get them there very quickly. And Amazon would never ever normally wait until a book is out of stock before reordering. They know exactly how much time it takes to get books from each distributor. All of the big retailers know this information.
There's definitely propaganda going on here from both sides but Hachette delivering books late is not due to any problems that they are causing or can't handle. And the software at the distributors accumulates orders by account.....they combine all the titles that the account is ordering into one shipment. The pick and pack lines are very similar to Amazon's warehousing that you see pictures of all the time.

Rob Gregory Browne said...

Most of the time it's a lot smarter for a smaller company to find great writers and try to build them.

Maybe I'm wrong, but it seems there's less and less of this happening today. It's my experience with traditional publishing of late that they aren't looking to nurture authors, but to instead nurture high concept properties. The higher the better.

When major publishers are creating development wings, modeled after Hollywood, you know there has been a shift in emphasis. They want tent poles they can rely on, not risky unproven authors who may one day hit it big.

That's why we're seeing more and more midlisters take co-writing jobs with big names authors, so that the big names will have more books available.

Big publishing has no desire to nurture authors. They do, however, need people to actually write these tent pole books and those authors are nothing more than paid employees.

And there's nothing wrong with that. But it flies in the face of the claims publishers are trying to make about guiding author's careers.

Maybe this isn't true of smaller publishers, but the trend is clear.

Steven Zacharius said...

Terrence, you're talking about a multi billion dollar industry. I don't think it's a matter of the industry changing like you suggest. I'm suggesting that if we agree that recreational time isn't increasing dramatically for books......there's a finite amount of book units that can be sold in a year. If all books were going to be $3.99, the entire publishing business model would change. Publishing would be a total different type of business from we now know. Maybe it would be all like indie publishing. I can't predict that far into the future or imagine it being like though. Consumers still need a way to decide what they're going to read and discoverability through marketing is going to be what drives the business. Today publishers have a lot of advantages offered to them that indie authors don't have. I've mentioned this before...it includes placement of books, more access to promotions, publisher driven promotional sections of discounted books.....let alone the additional vehicles with print books.

Steven Zacharius said...

W. Adam.....yes you are right. It is the retailers choice as to what they're going to sell. The only problem in this case is due to the almost monopolistic aspect of the Amazon ebook business. The print business has plenty of other competition but in the ebook business they are 65% of the market and even higher in some genres probably. I didn't say the DOJ should be involved, but you can be sure that they're paying attention.

Rob Gregory Browne said...

I didn't say the DOJ should be involved, but you can be sure that they're paying attention.

I think you're right. They're undoubtedly paying close attention to what the Big 5 are up to, considering their recent track record anti-trust issues.

I suspect the DOJ is monitoring things very carefully to make sure it doesn't happen again.

Anonymous said...

At 8:23 Steven thought I was being disingenuous when I mentioned his cute dog. I wasn't. Your profile pic has that dog front and center, and I love dogs. I mentioned it... In the context of what was being discussed, maybe it sounded sarcastic. Noted. Not meant to be though (well, maybe a little flippant - we are on Konrath's site after all). But, hey, that's the interwebs for you... unless we get all emoticon happy, it's hard to tell tone.

Anyway, I wasn't attacking you or anything, so I don't see anything wrong with posting anonymously. Just deal with the points brought up and it's all good right?

As many have mentioned, it's nice to have someone vigorously defending another view point. So thanks for that.

Jeff Shelby said...

Most of the time it's a lot smarter for a smaller company to find great writers and try to build them. It's much less expensive but much more time consuming. Also much more difficult to do that just buying a star; but hopefully smarter and then you have a loyal author in business with you hopefully for the long haul.

Steve - I feel like this is something writers hear a lot from publishers, the part about building them, as Rob also mentions above. What exactly does that mean and/or entail for both the house and the writer?

Steven Zacharius said...

Alan, my wife is interrupting me too....can't they just let us blog? :)

I do think ebooks will continue to grow and will dominate publishing sales. Whether it will be on dedicated e-readers or tablets or smartphones is another matter though. There are definitely conveniences when reading on a e-device; but there are still loads of people, me included, that prefer to read hardcovers or trade books. When I'm at the pool on vacation I still see loads of people reading print books. Many people just prefer holding a book in their hand. It will probably change though over time as younger people get older and are used to reading on a device. The price of a book really has very little to do with the price of the ebook. Printing a paperback book only costs up to about $.45 cents yet the books are $7.99. A lot of the higher price is due to the fact that you only sell half the books you distribute and also the special effects of foiling and embossing on print books. And of course the advance is what makes up most of the cost on anything other than a debut author. Also the typesetting process is different for print books than ebooks and is much more expensive.

Mark W. White said...

If self-publishers get into a dispute with Amazon, do you think Amazon will pay them 100% royalties until the dispute is resolved? Just askin'.

Joe Konrath said...

That's why we're seeing more and more midlisters take co-writing jobs with big names authors, so that the big names will have more books available.

Rob, I think you'd write an awesome Jack Daniels novels. :)

Rob Gregory Browne said...

Publishing would be a total different type of business from we now know. Maybe it would be all like indie publishing.

I think that would be a pretty wonderful change. But my own prediction is that more and more authors will abandon traditional publishing—sometimes against their will—and big publishing will consolidate and concentrate on the megastars, just as the music industry does now.

There's a thriving indie music scene happening right now and most of the music companies are investing in big ticket corporate music juggernauts, where they're pretty sure they'll get their money back.

Since publishing has mirrored the music world in so many ways (although ten years later, which, you would think would've given publishers a heads up they completely missed), I'm pretty sure it will continue to do so.

Steven Zacharius said...

Nimala, I don't think publishers have slowed down the growth of ebooks. We'd like to sell more ebooks. It's less expensive to produce. No manufacturing, no warehousing and most importantly.....no returns. If you're saying the higher prices that we want to charge is slowing that down....that may be true. We definitely will sell more books on an author when we drop a price...but not all the time. Some books we can drop the price to $.99 and hardly see any movement at all....just like some indie books don't sell any copies. Who knows why? It could even have good reviews but maybe it's not being discovered. But I'd be happy to see ebooks grow. I would like to see print books level off, like they have now, so that there are bookstores still around. I like going into a bookstore or even looking at the racks in a WalMart or shopping the tables in a Costco....let alone browsing in a B&N.

Jim Thomsen said...

Steven, I don't root for anybody to lose their jobs. But it's not the end of the world if they do. They can easily set up shop on their own and make quite a good living. I'm certainly not the smartest or best editor out there, I'm sure, but I've got all the work I can handle and then some — work that pays well, work with great people, work I enjoy. Change is inevitable, and it's best to embrace it rather than fear it — or fear-monger against it.

And I should know. I started this business after getting laid off as a newspaper copy editor. The parallels between the decline of the traditional structures of two industries are pretty strong, and worth studying.

Steven Zacharius said...

Joe we don't know that Hachette doesn't have any terms in place with Amazon. They just don't have new terms. Any publisher can go to KDP if they wanted to. It hasn't gotten to a point that they would resort to that yet because it would be a nightmare for them to operate like that. They're just not agreeing on new terms so they're not getting any of the preferential services that are available to them normally for a company their size.

Rob Gregory Browne said...

Rob, I think you'd write an awesome Jack Daniels novels. :)

LOL. Thanks, Joe, but I'm to busy trying to build my own empire... ;)

My traditional career, by the way, was headed in the direction of being a co-writer or ghost. Most of the work being offered to me involved one or the other—or the high concept situation I described (my book The Paradise Prophecy)—to the point where I felt I was getting lost, not writing what I really wanted to write and needed to bail.

Which part of the reason I took a careful look at you and Barry and Brett and Lee and decided it was time.

Alan Tucker said...

Steve, as Joe said above, I commend you for taking the time to provide some alternate/contrary thinking.

Yes, there will always be people who prefer paper, just as there are people who still prefer to listen to vinyl records. But that crowd is shrinking. I always appreciated the smell and feel of a paper book and never thought I'd use an ereader — that is until I tried one and haven't looked back since.

Those things you mention (foil, embossing, and returns) are not insignificant costs and neither is warehousing and shipping. Ebooks have none of those added costs, which is why they should be less regardless of the advance paid to the author or other expenses the publisher incurs in bringing a book to market. The simple fact of the matter is: ebooks should cost less to the consumer, but the publishing industry wants to prop paper sales up as long as they possibly can because that's where their main advantage lies. The more people that adopt e-reading, the worse things get for traditional publishers.

Rob Gregory Browne said...

but I'm to busy trying to build my own empire...

Learning to spell might be a start.

Steven Zacharius said...

Anonymous.....I finally figured out what you were referring to when Joe said he liked my dog too. Just had surgery last week and fortunately it was nothing serious. He's our second golden. All's good....I enjoy the dialog when it's civil as all of this has been. Different blogs have different types of commentary. This is a good one.

Joe, my pleasure.
Yes the global market is going to be interesting. Most of it other than the UK and Australia are still pretty small. But parts of South America are growing and China could obviously be enormous. There you have to watch for piracy and having a closed format like Kindle or iBooks could be beneficial. India should also explode.

Rob Gregory Browne said...

I always appreciated the smell and feel of a paper book and never thought I'd use an ereader — that is until I tried one and haven't looked back since.

I hear this sentiment expressed every day. And I went through the same thing. I only purchased a Kindle so that I could test my own books before releasing them and I discovered that I loved it. I no longer buy paper books.

Steven Zacharius said...

Rob....big 5 publishers do need to nurture authors. Most of them have digital imprints. Harlequin has Carina, Harper has a bunch...we have two....I don't believe Random has any.... We certainly acquire debut authors all the time. We've had many breakout in the past couple of years in trade paper that have hit the NYT list. We're actually getting ready to announce some exciting new news about some of our digital books going into real trade paper print runs. That will hopefully build them. Smaller publishers probably have to try harder to build these authors because they don't have the rich uncle to fund enormous advances particularly for celebrity non-fiction.

Rob Gregory Browne said...

At the risk of dominating the latter part of this comment section, I'd just like to say that I've had several interactions with Steven and while he and I disagree on some very fundamental things, it has always been a pleasure debating with him.

I don't see any other publishers stepping up to debate, and he's usually very cordial about it all.

Steven Zacharius said...

okay Rob is being sarcastic with the DOJ comment about them watching the big 5. They absolutely are, no doubt about it....although Random House was not part of that issue. But you can be sure that there are eyes watching Amazon too. There are eyes watching the publishing business. I was called by the Canadian Anti-Competition Bureau to discuss the pending sale of Harlequin, which I gave my blessing to.....always people looking at publishing....we're so glamorous an industry I guess.

Steven Zacharius said...

Rex, I think Amazon is way past that stage as is Google and Dell and most of the tech companies. Soon it's going to be time for them to start showing a profit though.

Rob Gregory Browne said...

Steven, the digital imprints strike as more of a kind of farm team that publishers can recruit from if they start to show promise. Digital imprints are a relatively low cost alternative to taking an author to print. Higher royalties, possibly, but little or no advance.

In the meantime, the dominant trend is tent pole and high concept properties (and I say this from my own two-year experience developing one with a major publisher).

Sue T. said...

I definitely don't believe that all ebooks should be $3.99, but I DO believe that they should be at least a few bucks cheaper than paperbacks. Steven mentioned the "the fact that you only sell half the books you distribute and also the special effects of foiling and embossing." However, John Gilstrap's Kensington title "High Treason" costs $8.97 in PB at Amazon and $7.39 for the Kindle edition, despite the fact that there's no foiling or embossing on the ebook version, and once I've read the Kindle copy, I can't give it to my dad, donate it to the Friends of the Library book sale or the local senior center, sell it to my favorite used book store, etc. As a reader, that just doesn't seem fair to me. I've seen examples on Amazon where the ebooks are actually MORE EXPENSIVE than new paper copies (primarily with trade paperbacks). I realize that a lot of investment goes into a book's editing, design, etc., but on a gut level it just seems like an ebook should not be so close in price to a paper copy.

Steven Zacharius said...

Jeff I know this is standard talk from publishing companies about building authors and many formerly traditionally published authors will complain about the lack of support they got. The way it's supposed to work is that the editor likes your book and gets us all behind it.
This then involves pitching the books after they're acquired to the marketing and publicity department....I'm talking about print books now. We talk about marketing plans for the book....what do we think we can afford to do based on what we expect to distribute on the book. Tours pretty much don't work any longer unless the author is a big celebrity in my opinion. Do we spend money on print advertising, radio, social media ads, blogging, bound galleys and ARC's. Do we promote the books at the regional trade shows and Book Expo. Those sorts of marketing things are how we nurture an author. We also have regular meetings with the agent if there is one or the author directly. The publicist and editor are in constant contact with them to work with them on ideas for the editing of the book or new ideas for other books. Normally we buy at least two or three books from an author. Then it's up to sales to get the orders for the book by selling it to the handful of remaining accounts.
With ebooks it's different because every online retailer takes the book. It's a matter of how you're going to promote it online. Different retailers have different options for online promotions. Our relation with the retailer is paramount and we pitch summer beach reads, holiday themed promotions...deep discounted promos, etc...

Steven Zacharius said...

Rob with probably 90% of the business already consolidated into five publishers....there's only room for so much more consolidation. Yes S&S has been rumored to be for sale forever. They deny it. Harlequin is being sold although they're not a big 5. There are still plenty of other areas of publishing that we're not talking about like the educational side which is enormous. Pearson is the world's biggest publisher because of this area. So even if we go from 5 to 3......there's only so much more consolidation that's possible. But traditional publishers will have backlists of thousands and thousands of titles while indie authors obviously have a small quantity of books, unless your Joe or a few others..... this is why the big retailers will continue to try and work closely with the publishers. They are responsible for huge amounts of their revenue because of the long tail economics and big blockbuster hits.

Steven Zacharius said...

Alan, publishers have had great years until last year because of the explosion in ebooks. So we support them 100%. We bought a small digital publisher to expand even further in this area. The costs of manufacturing are not that huge when talking about the price of the book. As I said mass market cost about .45, trade paper about .90 and hardcover about 1.25...depending on the size of the print runs. Those costs really have no bearing on the selling price. If they did....the hardcover wouldn't be selling for 28.00 while the mass market was 7.99. The biggest cost is the advance. If it's a hardcover book, chances are that the author is getting a bigger and possibly very sizable advance. That's the bulk of our costs. Even smaller publishers have well in excess of $20,000,000 tied up in advances on their balance sheets. It's a cash intensive business because we buy three books at a time and sometimes the author isn't delivering the book for a year. Then it's another six months to a year until we publish the first book and at least three years until we've published the last book....sometimes less depending on how fast the writer submits the books. But I'm happy to keep expanding our ebook business but I'd like to see print books stay around. I have every ereader out there and an iPad and obviously a smart phone....but I still read print and ebooks.

Steven Zacharius said...

Rob thanks for the nice words.
I think you were probably one of the guys who yelled at me when I used the term farm team about six months ago ;)

But yes, that is very true sometimes. Other times it's because the author is so prolific that we can't get accounts to buy that many print books from any single author in a year....so we publish them in e. But the farm team concept is generally true. And there have been some pretty big authors that have grown out of these just as there have been huge indie authors who have gotten print deals as well.

Alright, I'm worn out....have a good night everyone...thanks for the dialog.

Steven Zacharius said...

Last comment for Sue. You are absolutely right. I hope you're reading the Gilstrap book by the way. I happened to meet him in the Writer's Den on AOL chat about 15 years ago....and then about five years ago we started publishing him....small world.

We always make sure our ebook prices are less than our print prices But because the sales are now spread between print and digital the costs can't be that dramatically different because otherwise we would end up with much less revenue....unless you want to argue if the book were 4.99 we'd possibly sell a lot more ebooks. But if we did that, then the print retailers wouldn't want to carry the print books.....sort of a catch-22. there's no excuse for the ebook ever being higher. Sometimes it's a mistake in discounting by the retailer. Maybe they're discounting the print version but not the ebook. And then many times the ebook retailers discount the books more than others. I remember we had a Lisa Jackson hardcover that retailed for 25.00 and two etailers decided to sell it for 1.99 for a while. We and the author were paid on the full digital list price. But I understand your feeling about the cost should seemingly be less....but it's because we have to look at both pieces of the pie together in terms of revenue...

goodnight all.

Rob Gregory Browne said...
This comment has been removed by the author.
Rob Gregory Browne said...

LOL. Steven. If I WAS one of the people who took you to task about the farm team concept, I'm sure it must have been in reference to indie authors, not digital imprints for major publishers. Two very different things.

Indie authors aren't a farm team. They're merely an alternate team, working a slightly different playing field with more control over our work than any author signing with a major digital imprint (or print publisher) could ever hope to have.

And that's ultimately what it's all about for us. Control and author empowerment. I've always believed that the people who create the recipes and cook the stew should reap the highest profits from its sale.

We're now finally able to do that.

Paul Draker said...

Steve said: "Paul, are you talking about the Amazon offer or the entire battle that's going on?"

Both, really. But the Amazon offers to help compensate authors now so they don't suffer financially, and Hachette's refusals to do so, are what I referred to as "eye-opening." One party in the dispute offered authors financial relief. The other nixed it. And then a Guild supposed to represent authors took a strong public stance supporting the party that refused to compensate authors now. My point was that to a writer evaluating which of these parties might make a good future business partner, these stances and actions speak for themselves.

"If I were an author of any kind I would be very concerned about this current battle."

Sounds like the ones who are concerned are mostly those whose books and careers are tied to big publishers.
For the rest of us not so much.

"It doesn't bode well for the industry."

Let's agree to disagree. Unless when you say "the industry" you mean traditional publishers with large overheads, the interests of a very small % of their top mega-bestselling authors, and struggling print bookstores whose archaic returns system makes them a financially unattractive venue for indies. In which case we agree. But I tend to think of "the industry" as primarily readers and writers, for both of whom the future has never looked brighter.

"Competition is always good."

On this, we agree completely. (I could throw in a joke about Big-5 collusion and the DOJ here but it would be a cheap shot so I won't ;) It's disenheartening how few sales it takes to hit the overall Top-100 (and even Top-10) on Nook, Apple, and Kobo nowadays. All of these retailers need to do a better job of competing in the retail space and step it up. But if they don't, someone else will. And to your other point about big publishers selling direct, I'm not expecting them to be very effective at it. But we'll see.

"A writer has a choice as to how they want to be published.....all of those options should be available."

Options are good to have. No one path is right for every author. Authors should make informed choices, and the free market will sort out the rest.

"But what does the industry as a whole do if all books are 3.99?"

Won't happen. Some will be $3.99, some will be $0.99, some will be $9.99, some will be free. Each author (or publisher) can find the sweet spot for each book that maximizes its individual earnings... or choose a spread across different books that maximizes their portfolio earnings.

"There are a fixed amount of books that are going to be sold."

Perhaps I'm more optimistic about the reader market than you. I believe the greater diversity of literature now available, and lower prices, are both expanding the pool of readers as well as the number of books each will read. My own experience as a reader has been exactly this the last few years, and the authorearnings.com data that you and I disagree about also seems to support my optimism about the growth of the overall ebook market.

"digital publishers have totally different models for digital only lines that pay more to the authors. These are based on wholesale pricing and many of them are 50% splits of the receipts with publishers doing the grunt work that an indie author would normally do themselves. But these lines don't pay an advance normally. Maybe that's the model of the future for ebooks..."

It's one model, anyway. For some having a publisher do the "grunt work" might be worth giving up 50% and their IP rights. Others would rather hire our own grunts and keep our IP rights and 100% the money we make. But both are good options to have available. As we both agree, choice is good.

Angry_Games said...

Okay... so... I read through this. I'm wondering:

Did I miss the part where Steve explicitly explained why publishers should get the rights to an author's work for lifetime + 70 years? I don't recall that being explained (it got ignored as far as I can tell).

I mean, I could see publishers getting the rights to a book for 3, 5, 7, 10 years and using that time to promote it and generate sales so the author would agree to renew the contract.

But why, and please, Steve, please do answer this question in detail, why does a publisher need the rights to an author's work for the rest of his or her life + 70 more years?

I guess I could see it if the author in question just got a ten million dollar advance on a book.

But 99% of traditionally published authors aren't getting seven figure advances. Guys like Joe Konrath.

So, again I ask you:

Why do publishers need the rights to an author's work for the rest of his or her life plus another 70 years?

If you won't explain why it is publishers need the rights to an author's work for lifetime + 70, then there's really nothing else that you can say that will make me believe a single syllable you ever utter.

Terrence OBrien said...

Terrence, you're talking about a multi billion dollar industry. I don't think it's a matter of the industry changing like you suggest.

Agree. My observation is an industry that big doesn't do anything as a whole. Individual players change.

I'm suggesting that if we agree that recreational time isn't increasing dramatically for books......there's a finite amount of book units that can be sold in a year.

Agree. Eyeball hours are limited.

If all books were going to be $3.99, the entire publishing business model would change. Publishing would be a total different type of business from we now know. Maybe it would be all like indie publishing. I can't predict that far into the future or imagine it being like though.

Sure. The model that has been used for a long time can't be supported at those prices. Books would still be moved from author to consumer, but in different ways. Publishing is already changing. Independent authors are now part of the publishing industry. They already use that different model. The model is changing. Market share is shifting with it.

Consumers still need a way to decide what they're going to read and discoverability through marketing is going to be what drives the business.

I agree they need to find books,and I wouldn't discount marketing. Nor would I discount the power of computer searches, artificial intelligence, or consumer profiles. Maybe we can call all that stuff Amazon offers marketing. Those emails I get from Amazon are right on target for nonfiction. OK. Discovery models will change just like business models will change.

Today publishers have a lot of advantages offered to them that indie authors don't have. I've mentioned this before...it includes placement of books, more access to promotions, publisher driven promotional sections of discounted books.....let alone the additional vehicles with print books.

Agree. Paper books and the bookstore display and marketing have a very strong effect. The marketing of paper in bookstores also gives a huge push to eBooks. This is one reason paper is so valuable to publishers and they don't want eBooks to undercut it on price.

But, as you note, that marketing advantage is today. What happens in a world where "all books were going to be $3.99." In the world of $3.99, where is the paper? Where is that marketing advantage?

Mir Writes said...

There's that m word again. Here, from Investorpedia: "A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products. "

I don't see higher prices at Amazon. I see them from publishers.

Inferior products--well, that's for readers to decide. The reading experience is so subjective.

So, M word: All or nearly all is not sixty-something %. IF I have 65% of a chocolate bar, I would balk at anyone saying I had all of it (or nearly).

All = 100%
Nearly all = maybe 95%+ (don't know what it is legally, but let's say "woman on the street"--think they'd think 2/3 is all or nearly all?)

When Amazon has 95% of the book sales market, let's talk again about the M word.

Meanwhile, if Hachette doesn't want to feed the Amazon beast, they should walk away and emphasize iBooks and Kobo and get cracking on their own ebook sales delivery system. And take the loss from leaving the best ebooks platform around.

I can live without Hachette books (though I wouldn't wanna have to). I don't think I could live without Amazon. I buy too much there --like my spiffy new mattress that arrived today, and my bra, and my tire gauge, and some smoked Paprika. And I LOOOOOOVE my Kindles.

Hachette vs Amazon: easy for me to take sides. The one that most improves my life.

Suzanne Cowles said...

I wish Amazon would offer me 100% of my ebook sales...but alas, indie authors never get the same deal.

When will the playing field be leveled?

Steven Zacharius said...

Joe, I'm not equating the Amazon/Hachette negotiations with author royalties.....that's your platform to vocalize to the rest of the world. One has nothing to do with the other as far as I'm concerned. I would doubt that these terms negotiations would have any bearings at all on royalties that authors earn.

Steven Zacharius said...

Paul you are more optimistic than me. Younger kids are spending more time on video games than they are reading....although on the other hand people are living longer and the older people read more too. I do think if books were all priced similarly to one another it would upset the entire apple cart but time will tell. This is all only ebooks of course.

Steven Zacharius said...

Angry Games....this whole thing about an author signing away rights for life is pure bs. Rights reversions occur in five or seven years in most cases if the books are out of stock. And there are thresholds for minimum sales in ebooks as well so we can't keep a book indefinitely like you're claiming we are. During that time we're getting foreign sales, audio sales, large print...things that most indie authors normally wouldn't get on their own....so we're doing something with these rights. But we don't hold onto them for 70 years unless the book is selling phenomenal amounts of copies. This is one of the most blogged falsehoods I see on indie sites. And the reason there is a period of time where we own the rights is because we've invested in the author with an advance and we need time to recoup that advance or investment we make over three books with that author.

Steven Zacharius said...

You don't think 65% of the ebook market is approaching near monopoly levels....I don't know any power companies that have that percentage of the business or even phone companies any longer....wireless or otherwise. I love Amazon....they're an amazing retailer as I've said before. My only complaint is that they should price books competitively and not below cost to just gain marketshare.

Mark Terry said...

I just want to chime in and thank Steve for his professional perspective and helping keep it civil.

One perspective that I don't see addressed too much is that of the writer as business person. For many writers, that's a significant component of why we went indie, simply because there was more money in indie. If our books had really taken off from traditional publishers, we might feel differently.

There are, of course, other factors, like creative freedom and whatever personality issues might exist between writer-publisher (or writer-any employer).

I do appreciate the discussion here. I also appreciate that it's complicated, that I don't have all the facts, and there clearly seems to be both PR and psychological negotiating tactics involved in Amazon and Hachette's public responses. It's sort of flattering to think either of them are trying to capture the hearts and minds of writers, although the extent to which both sides are playing not to writers so much, but to WSJ, NYT, et al and maybe even the Justice Department, is of interest as well.

As for Doug Preston's response, that strikes me not so much as "Stockholm Syndrome," but as a person indicating that he has concerns about his business relationship, and that in the unlikely event of this 100% deal actually going through, it sets up some ambiguous and complicated issues in terms of his business relationship with his publisher and agent, as well, in his case, some moral issues (and potential legal issues, one would think) concerning the nature of his sales and advances. There are individual contracts in place, so Amazon's offer seems interesting, but would require significant negotiating on the part of agents and Hachette to get addendum's in place (unless Hachette just said, "Sure, you don't have to earn back your 6 or 7-figure advances.").

The point being, it's complicated and there are a lot of different things going on here. Both Hachette and Amazon are making strategic negotiating tactics in public.

daneyul said...

Wow. Anyone else read this and think it was Joe doing a satirical post of what Amazon could do to get the media and authors to see the real picture of who's screwing the authors? But... wow! It's real. Bold move, Amazon!

The FACT (I'll call it a fact since Hachette didn't deny it) that Hachette waited so long to respond to Amazon initially AND continues to drag their feet--while the authors (whom they claim are the victims of Amazon) suffer--and the FACT that they have now rejected TWO offers to compensate those same authors with the intention (evidenced by their own comments) of getting to the first legal opportunity to attempt to negotiate Agency pricing back---isn't just a smoking gun. It's a red hot, molten gun leaving thick furrow's of liquefied flesh down Hachette's leg.

Anonymous said...

Steve,

In your opinion was Agency Pricing an effort on the part of the Big 5 and Apple to "Price Competitively"?

I agree, competition is good, competition is necessary. But if I am a new author, querying and submitting, and I get three offers from three different publishers, and the only difference between those three offers is the letterhead they arrive on, wheres the competition in that?

Andrew

Mark Terry said...

Oh. And let us not forget the other interested parties Amazon and Hachette are undoubtedly playing to -- shareholders. They're both publicly-traded companies and this kind of stuff can affect stock prices.

Rob Gregory Browne said...

and some smoked Paprika

I have never heard of smoke paprika and am intrigued. Is this something I can really get from Amazon or do I need to go to my local dispensary?

Sarah McCabe said...

Poor Steven Zacharius, taking to the comment sections of the indiesphere in defense of publishing using all the old arguments that used to convince all the desperate aspiring writers that publishing is a haven where agents and editors will take care of you and together you will make Culture and be Important. He doesn't even seem to be aware that those arguments won't work anymore because the authors are talking to each other and all too many of them have seen the man behind the curtain and will never believe in Oz the Great and Powerful again.

Anonymous said...

I admire Steve for being willing to engage, I wish more in his position in the industry would be willing to publicly defend their positions with the same passion.

Andrew

James N Cook said...

Four things I've learned from this:

1. Indie is the way to go. I am earning more money than I have ever earned in my life as an independent author. At this point, I just don't see what publishers have to offer that is worth what they ask for.

2. Hachette is racing toward a red light. Amazon is holding all the cards. All they have to do is stop selling Hachette's books. If that happens, Hachette is screwed and they know it. They think they can leverage Amazon with a PR campaign. Here's the problem with that: no one outside the publishing industry cares about the Amazon/Hachette dispute. Do I think Amazon will stop selling Hachette titles? Probably not. But they can keep up their pressure tactics indefinitely. Hachette's bottom line will suffer, and eventually they will cave.

3. If you absolutely cannot conceive of life without an agent and a publisher, I would strongly recommend holding on to your rights until Amazon goes through the rounds with the Big 5. This thing with Hachette is just the beginning.

4. Hachette doesn't care about its authors. They just don't. If they did, they would have accepted one of Amazon's proposals to compensate their authors until Hachette stops being stupid and works out a deal with Amazon. They haven't done that, and their reasoning is thin at best. Personally, I think they are full of crap. They want to force the price of ebooks to be artificially high. I have no sympathy for them or any of the rest of the Big 5. They had it good for a long time. They colluded illegally to lock down the publishing industry. They treated authors like crap. Now they are getting a taste of their own medicine. And I'm betting it tastes like a sh@t sandwich.

Jm Cornwell said...

I believe the offer from Amazon is for ebooks only, so how would a Hachette author accepting Amazon's offer affect the other versions of their book, i.e., hard cover and paperback? Would the other people employed by Hachette still not get their revnues from those sources or do ebooks comprise such a large part of Hachette's income that it would mean employees would have their pay decreased by Amazon's offer?

Sorry, I do tend to look at things logically and Hachette authors are obviously not into logic.

Paolo Amoroso said...

Steven Zacharius: But what does the industry as a whole do if all books are 3.99?

I don't know about the industry. As a reader, I buy many more of those cheap ebooks, mostly by indies. I just don't buy expensive ebooks, period. Neither from indies nor from traditional publishers.

It's unbelievable how much the reading time can expand, and how many more books you can read, if you sneak many short -- even 2-3 minutes -- reading sessions in the free moments of your daily activities. Especially if you realize we are in the 21st century and take advantage of all technology now offers: smartphones, tablets, desktop PCs.

The only downside? When you realize how much more you buy and read, the grin never goes away.

Anonymous said...

I knew as soon as I read the proposal that Hachette would reject it. And not because of the money either. The LAST thing they want is for their authors (especially the lowly mid-listers, whom they despise) to have any taste of success.

It really is a cult-like situation, and Stockholm Syndrome is a spot-on analogy. Cult leaders get a perverse thrill out of keeping their followers down. It's sick. And evil.

Whenever the potential for that kind of environment an extreme imbalance of power is present, it will always be the most perverse people who work the hardest and cut the most throats to get to the top of that particular food chain. Hence many decades of the power imbalance in publishing has resulted in the worst kinds of people dominating the industry. Think the Catholic Church in the 16th century.

Absolute power may or may not corrupt absolutely, but there can be no doubt that absolute power ATTRACTS the absolutely corruptible. Talk about filthy quislings.

Hachette is confirming and even exceeding our worst imaginings about exactly where the legacy publishing industry is at today.

Dale T. Phillips said...

Kudos to Steven Zacharius for hanging in here so long. This blog is not an echo chamber- we come here to discuss, and find new info to chew over. Good points all around.

For the big publishers, the arrival of the Internet was the first toll of the bell for them. People could now share information. Now that writers are sharing so much, the contracts from big publishing do not look as attractive as they used to.

Steven, here's a major issue for many of us. While you and your company may feel you treat your authors fairly, we've heard too many stories about bad deals and poor treatment from big publishing. If even a fraction of those are close to being true, that's more than enough to make us never want to deal with anyone from big publishing. We now have options, and do not have to accept bad deals or poor treatment. And we can do the math, and see we're not getting a fair shake.

Here's an example I used in my discussion: http://daletphillips.blogspot.com/2014/05/amazon-and-hachette-godzilla-vs-mothra.html

Say you walk a route to school, but a bully beats you up every day and takes your lunch money.
One day, someone offers you a different route for a small price, and lets you keep enough for lunch, without the beatings.
But the bully insists that you should stick with the beatings route, because you never know what the other guy might do...
And it's not fair if you take the bully's source of income away...

Bottom line- we provide the content, we want to make a fair profit from it. Dare I say, even a decent living, if we're good enough and productive enough. You plead for us to feel bad for the people at publishing companies and all the others who might lose their jobs because of the outcome of the Hachette-Amazon negotiations. As writers, we're not busting our butts to supply hundreds of other people with a living at our expense. If we make enough, it's nice that others can benefit from it, but our families, careers, and ourselves come first and foremost.

We don't really care if you lost money by giving a huge advance to a superstar. You do NOT have the right to make that up by taking more from us. This happens, so you should not be surprised at the strong emotions of the people being shorted. When you attempt to justify this mode of business, you will get blowback. Your business doesn't make enough profit? Tough noogies- many writers aren't making enough, either. Change your business model or go under, but robbing Peter to pay Paul is not a good strategy.

We want readers to buy our works at a fair price, and with our low overhead, we can provide that. You want bigger profits to benefit many people, so you want to charge more, sometimes a lot more. We get that- and realize, that actually benefits us. The more you charge for an ebook, the more buyers will buy our books at less than half your rate.

If you could provide better terms and benefits to the majority of writers, not just a select few, you'd get a lot more respect- and good business partners. If you don't, your talent pool is going away to greener pastures.

Remus Shepherd said...

The biggest complaint I've seen against Amazon's proposal is that with Amazon in control of pricing, they could give Hachette ebooks away and end up paying nothing.

That's getting into conspiracy theory territory. I'm sure there would be lawsuits if Amazon tried that kind of chess game. Although they are playing the PR game very well so far.

Jennifer Oberth said...

I know this doesn’t matter because Hatchette said no, but people keep wondering how 100% of profits would work with Hatchette authors and their contracts. Perhaps I see this simplistically but Amazon made the offer to Hatchette and if Hatchette had agreed, those sales simple wouldn’t have counted toward paying off the advance and any other of those thorny issues. Just don’t count it. It’d be free money to the author. Yes, there would be a loss on Hatchette’s side but that was the point – put your money where your mouth is and put your author’s first. It also would have shown that Hatchette was invested (literally) in coming to a quick resolution with Amazon. The 100% sales going to authors would have been temporary and limited and from Amazon only – one piece of Hatchette’s sales puzzle.

I like how a huge company fought back with this PR move and the fact that Hatchette simply responded with a ‘no’ sort of tells us that not only do they not care about authors but they also don’t care what authors – or the rest of the world – thinks. Did they even consider how the refusal would make them look? Did they care?

Jennifer Oberth said...

Suzanne said “I wish Amazon would offer me 100% of my ebook sales...but alas, indie authors never get the same deal.
When will the playing field be leveled?”

I thought of that, too! But only for a second or two. Then I remembered I’d rather have my 30% and 75%-85% royalties for however long instead of the pennies I’d get if I were traditionally published. (I think I come out ahead.)

daneyul – Yes! I thought it was Joe, too, and when I realized it was real, my jaw actually dropped. This whole thing has been so highly entertaining – serious subject matter that concerns us all – but still so highly entertaining. “You can’t make this stuff up” comes to mind – and we’re all authors and readers so that takes on a deeper meaning.

Alan Spade said...
This comment has been removed by the author.
Alan Spade said...

Finally someone - Steven Zacharius - have answered my question: "Even smaller publishers have well in excess of $20,000,000 tied up in advances on their balance sheets."

So, if smaller publishers have $20 millions tied up in advances, for a publisher like Hachette, it should be one hundred times more. Say, $2 billions.

So, yes, if Hachette pay $2 billions just in advances each year to the authors it publishes, if you add the overhead, the prospect of losing money on ebook sales is not good.

But... but in ebooks, big publishing makes 52%, while authors make 17,5%. So, even with overhead, big publishing still makes twice more than authors.

Twice more than $2 billions in a year is $4 billions. So I think Hachette, even with its overhead, could manage the extra cost of paying 100% the price of ebooks for the time of negociations - provided Hachette does not want the negociations to last until 2015, as it seems the case.

Joe Konrath said...

I would doubt that these terms negotiations would have any bearings at all on royalties that authors earn.

I hope you read out petition, Steve, because we mentioned author royalties.

I'd also guess that Amazon offering authors 100% royalty will no doubt get some of them thinking how little they're actually making with Hachette.

Alan Spade said...

When I said 100% the price of ebooks, I meant 100% of what Amazon pays to Hachette (Amazon loses its share of 30% if they pay 100% of the ebook price to authors, and Hachette loses 70%).

Anonymous said...

Why are they whining. Am I missing something? It's 100% of ebooks only, right? So print books would still divy up the same old way.

And it's only (hopefully) for a short time. Weird.

Shame on Hachette.

Terrence OBrien said...

You don't think 65% of the ebook market is approaching near monopoly levels....I don't know any power companies that have that percentage of the business or even phone companies any longer....wireless or otherwise.

65% is not a monopoly. You don't have a monopoly when there are other players dealing in the 35%. You don't have monopoly when there are no barriers to entry. You don't have a monopoly when you don't control supply.

Power companies routinely have 100% of the market in a given geographical area. They are natural monopolies, and are regulated as such.

I agree phone companies are not monopolies. They lost the natural monopoly characteristic when they no longer had to string wires all over the place.

Amazon is certainly not a natural monmopoly, and is not in the same class as power companies.

And we don't approach near monopolies. If we are approaching it, we are not there. And if it is a near monopoly, it's not a monopoly.

But I like the idea of wiggle room. I think I am approaching near best-seller status.

Anonymous said...

" Amazon is holding all the cards. All they have to do is stop selling Hachette's books. If that happens, Hachette is screwed and they know it. "

Not really. Amazon has to keep selling Hachette books in order to maintain their reputation as the place you go to get anything, asap. What is more likely to happen, imo, is that Agency will happen, like it or not, and Amazon will become, even more so than it is now, an arena where writers compete on the basis of price.

Then, in a few years, everyone will be shocked when Barnes & Noble goes under. Their current "we're profitable" noises are made because their manager's bonuses depend on that noise. All that will be left are some 'independent' Ingram's outlets and used bookstores who sell for a dollar what they buy for a penny.

Amazon is playing this tone-deaf. They should have just come right out after Colbert's rant and said that Hachette let their co-op contract lapse, then reiterated that Hachette no longer has a contract with Amazon whenever someone put out a whiney "they're hurting the authors" screed. Amazon should consistently put the blame squarely where it belongs, not muddy the waters with offers like this latest one.

Tasha Turner said...

Steven I feel so special you remember my 1st name. The discussion we were having was over on David Gaughran's site. A few people here have already given examples of smaller reorders/restocking rather than the large reorders/restocking Amazon normally places. Over on David's site I provided quotes from both Hatchette & Amazon that the delays were based on those smaller reorders. I'm not going to go through that here.

Amazon is talking about ebook sales going to authors while print book sales would go to Hatchette and if Hatchette had agreed to this - showing they cared about their authors - Amazon would go back to large restocking/reorders on print books, discounting print books instead of selling them at the absurd high prices set by Hatchette which they've been complaining about, and re-enabling pre-order buttons.

Amazon itself has suggested people shop from its competitors if a customer needs a book sooner. Otherwise it has a mechanism in place to allow customers to know when books become available.

As to the just-in-time. I was also referring to your print process. You overprint number of books in order to "make" bestsellers and the retuned books or even worse the stripped covers are a waste of trees, money, and time on multiple stops along the way. Earlier in the discussion I talked about how smart it would have been (still would be) for publishers to invest in companies making POD machines so there would be less waste of money, time, and trees.

Scott said...

I, too, like a good book (as opposed to an ebook) sometimes. I've got one sitting right in front of me (Denise Swanson's DEAD BETWEEN THE LINES) and sitting on top of it is my Kindle Fire, with the Jeff Menapace indie offering that I chose to read before that one. Before that it was Steve Moore's SOLDIERS OF GOD. Before that...I don't remember. I'll get to that paperback at some point, but the Kindle is SO DARNED CONVENIENT!

My kids, on the other hand, are reading on whatever happens to be handy. If I buy them a YA title in paper form, they read it. But they're as apt to read on their own Kindles, on their iPads, on the computer, or on their iPhones. I find my son reading a ton of fan fiction on his phone. Both of them are not affected by this "love" for the "feel" of a paper book like many people of my own generation are. And when those folks try the Kindle, in many cases, they like it just as much! Or a ton more, because they can get a lot more good reading material for their money...

Angry_Games said...

Steve,

Again, I ask you:

WHY do you need the rights to an author's work for lifetime + 70 years?

You think you answered, but you didn't. I want to know why you need the rights to an author's work for lifetime + 70 years.

I don't want to hear an explanation about how rights sometimes revert back to an author. I don't want to hear about how this is a big falsehood (it isn't, I know at least fifteen authors, personally, not just internet pals, that have these contracts, and all are midlist at best). If this is a falsehood, Joe and my author friends wouldn't keep harping on the fact you publishers demand lifetime + 70 years in the contract.

It doesn't matter that three of my friends, and Joe (who isn't my friend, which is good for him haha), have had to get attorneys involved to get rights reverted. Two other authors are currently in that same fight with their publishers. The others... they simply don't have the money to get lawyers involved to get their rights reverted.

So... you think that because you provide some editing (which the author has little control over), some cover art (again, author has little control over it unless with a small / indie publisher), distribution... that you should be allowed to control that author's IP for lifetime + 70 years?

But we don't hold onto them for 70 years unless the book is selling phenomenal amounts of copies.

This, my friend, is the question you haven't answered. WHY do you need to hold on to the author's rights for lifetime + 70 years if it is selling phenomenal amounts of copies? The first fifty thousand dollars in sales more than pays for any editing you provide, unless the editor is constantly updating and working on that author's book for ten, fifteen years. Do your editors work on an author's book for ten years after the book is published? No. They do not.

So then it must be cover art? Does your cover artist continually update the art for the covers of a book that has been published? No. They do not.

Okay, so distribution, right? Except distribution is a fixed cost that is part of the price of the book. You can't seriously tell me with a straight face that because you publishers provide some UPS/FedEx delivery of bulk books to bookstores and online retailers, that you publishers should get to hold the rights to an author's work for lifetime + 70 years. Can you? (you seem to be)

Okay, then promotion, right? You get the rights to an author's work for lifetime + 70 years because you provide promotion in an ongoing manner, for the life of the term. I mean, if this is true, you should still be promoting the hell out of books written in the 20's and 30's. Except you aren't. You stop promoting a book once it has hit the shelves for 90% or more of authors. Before you open your mouth and say something ignorant about this, remember that Joe Konrath is just ONE author that was a midlister who got zero support/promotion once a book was published.

Unless you are calling Joe Konrath (and many other authors who have posted here with the same experiences) a liar.

Okay, so then you provide the printing service itself. This is why you demand the rights to an author's work for lifetime + 70 years, right? Because the ongoing cost of printing the actual book? What about ebooks? I suppose it costs an arm and a leg every time an ebook has to be produced when a customer buys it, right? No. Ebooks cost minimal time and effort to produce, and once you produce a master version, you simply copy it. Zero cost. So authors are giving up the rights to their work for lifetime + 70 years because you publishers provide a print service that actually costs less than it does for me to use a POD printer like CreateSpace?

Angry_Games said...

Oh, wait. Because you gave authors advances, you need the rights to their work for lifetime + 70 years to recoup that, right? What about authors (again, personal friends) who received $5,000? $50,000? Does it take 100-ish years to recoup the $5000 or $50,000? And if it does, isn't that indicative of a publisher not doing what they are supposed to, which is to publish AND promote a book so that it sells well?

And there are thresholds for minimum sales in ebooks as well so we can't keep a book indefinitely like you're claiming we are.

No offense, Steven, but this is utter bullshit. Why not read back through Joe's site and find out how many times publishers like you have purchased just enough of an author's books to make sure that reversion clause never kicks in. If it was true that you don't keep books indefinitely, then people like Joe and my friends wouldn't have to hire lawyers to fight those clauses and truly get rights reverted.

So, again, Steven, please answer the question:

Why do you need the rights to an author's work for LIFETIME PLUS SEVENTY YEARS?

Don't give me any nonsense answers like you have (nice condescending tone, by the way). Give me the true reason why you need the rights to an author's work for lifetime + 70 years. Or at least tell me why the contract doesn't start out at 10 years with an option to renew. Why do ALL contracts I've ever seen say lifetime + 70?

The longer you avoid telling authors why you publishers NEED the rights to our work for lifetime + 70 years, the longer we'll believe you are nothing but a mouthpiece, a shill, and honestly, a kind of pseudo-criminal.

I do appreciate you showing up, at least you have a sack and aren't afraid to engage, but that doesn't mean you can give me an offhand, flowery answer about how you invest in an author (the same as I invest in myself and spent $1000-$3000 per book to get it edited, cover art, etc.) and it will satisfy authors who want to know why your contracts demand lifetime + 70 years.

And again, don't tell me it's a big internet falsehood. I've seen the contracts with my own eyes. Joe has signed them before. So has any other traditionally published author. You can try to spin it, but we're authors. We're pretty smart (other than being stupid enough to sign one of these terrible contracts, but most of us reading are not that stupid). You can't just wave a hand and give us a glib answer.

So. One last time:

Tell me why you publishers NEED the rights to our work for lifetime + 70 years.

Joe Konrath said...

I don't want to put words in Angry Games's mouth, but I think he might be asking why publishers take an author's rights for their lifetime plus seventy years.

:)

Angry_Games said...

Hah, I apologize, Mr. Konrath. I guess what I'm still waiting for is an answer to the question that you've been asking since before I started reading your blog.

I don't feel like I've received a real answer. I'll quit asking though. I don't want to ruin the discussion on your blog (thanks for all the info and advice, btw).

Thx to Barry and Hugh and everyone else who comments here and at TPV (and even Kboards). Without you guys, I'd be lawyering up trying to get my rights back from a publisher.

Nirmala said...

As to the just-in-time. I was also referring to your print process. You overprint number of books in order to "make" bestsellers and the retuned books or even worse the stripped covers are a waste of trees, money, and time on multiple stops along the way. Earlier in the discussion I talked about how smart it would have been (still would be) for publishers to invest in companies making POD machines so there would be less waste of money, time, and trees.

Oh my god! Are you suggesting that publishers should innovate? That they should change the way they are doing things? Gasp!

What are you thinking? This is not the 21st century after all....oh wait, yes it is....

Terrence OBrien said...

WHY do you need the rights to an author's work for lifetime + 70 years?

Nobody needs them. But if more is available, people tend to take more.

In general terms, the remuneration an author gets is equal to advance plus royalties paid less contract concessions.

Life plus 70 is a contract concession that lowers author remuneration. That happens because book supply to publishers is so high. It's a buyer's market. It's normal econ stuff.

Joe Konrath said...

I'll quit asking though.

Don't. I'm just being funny.

It should be asked and answered.

Jeff Shelby said...

Steve - I'm late in responding (and not sure if you'll be back - I'm sure you've got plenty to do), but I asked the question about how a house builds an author last night. I appreciate the response. I've heard most of those things before and I certainly understand how they can help an author grow a readership which would benefit both the house and the writer.

What you didn't mention, though, is the part that's maybe most disheartening to me and probably most other writers. You didn't mention paying the author more. I understand that increasing royalties are probably out of the question, but if a book performs well, shouldn't the author expect to be compensated accordingly? If you sign an author for three books and Kensington is pleased with the performance of those books, shouldn't the author expect to see an increase in his or her advance when you offer the next contract? (Again - I'm working under the assumption that the initial contract has worked out well for both sides.) I'm not talking monumental increases, but rather an increase that demonstrates the house is invested in the writer's career and committed to working together. Isn't that also part of the equation that helps build the writer's career and, in turn, might forge some loyalty between the writer and the house?

Angry_Games said...

Heh, I was just kidding as well. I'll never stop asking. Not until I get a real answer.

Terrence: no offense, but I want a publisher to answer this question, not a fellow author. You and I already know the answer. I just want to hear a publisher either admit it, or try to talk in circles without actually answering it (so authors who either might not know, or are on the fence, will be able to see the truth about which side publisher execs are on).

Terrence OBrien said...

Sure. But I'd love to hear a publisher just say, "We grab as much as we can because we can."

Anonymous said...

" And when those folks try the Kindle, in many cases, they like it just as much! Or a ton more, because they can get a lot more good reading material for their money..."

Actually, it's more than just that. Reading a book on a tablet is far superior to reading a paper book in a number of ways that paper book apologists refuse to acknowledge. You can adjust the layout to your liking, a simple tap or thumb-roll flips the 'page', many are self-lit, and it is much easier to hold one in a variety of orientations. If you've never used your tablet with an 'easel-style' cover, seek one out. The tablet (like my kindle fire) just stands on it's own, something a paper book won't do. "That wonderful smell and feel of paper" is such BS.

Steven Zacharius said...

In response to comments from this morning.....

Anonymous...I don't know that I would call agency pricing something that is leading to competition, but what it does do is level the playing field; especially if the retailers can still discount the prices. I'd like to see all publishers either on agency or on wholesale but make it uniform so it's fair.
As far as three offers being received for a book...I think there is a lot more to it than just coming on different letterhead. You develop a relationship with your editor and the marketing and publicity team as well.

Sarah you don't have to worry about me or other publishers. We still have more authors submitting to us every day than we could ever possibly hope to publish. Many of them are indies, some are debut, some are hybrids but most are established. I don't have any problem with the mixture. But thank you for worrying about me :)
I doubt you'll see many other CEO's of publishing houses out here in the blogosphere because unless it's a smaller firm, they all report to a Board or someone else. Having a family owned business gives me that advantage and I'm sure I'm saying a lot of things that other CEO's would like to say, but can't or won't.

James Cook....believe me that Hachette cares about their authors. The offer from Amazon is a pure publicity move and I think everybody realizes it. Today I heard some information that many accounts have had a nice surge in their Hachette sales so people are obviously going to other sources to get these books. So perhaps isn't hurting as much as most people think they are and the authors might still be getting their fair share of money while all of these negotiations go on. If this is true and Hachette holds out.....and then the same thing happens with another big 5 publisher...suddenly you don't have 25% of all the available trade books available on Amazon. That would surely hurt and not be good for business. Someone pointed out yesterday that Harper has redone their website and they're selling ebooks and print books now as are several other publishers. If you think that most ebook reading is taking place on smartphones or tablets rather than an e-reader....this can indeed be a long battle.

Steven Zacharius said...

Dale our talent pool is not drying up. All of the indies seem to think it is but that's not the case. We get so many submissions from indies that we can't even process them.
In traditional publishing, not just ebook publishing, those people who I said you should feel bad for if they lose jobs, are responsible for helping you make money. Digital only publishing is a different animal. And our digital lines and other publishers pay higher royalties when we don't have to pay an advance. And by the way, you don't only lose money on megastars sometimes.....you can lose money on authors that are very low paid as well. We still have to sell enough books to cover all of the costs and overhead associated with manufacturing books.
With digital lines if you're getting 40% of net receipts, why isn't that a fair split? We still have the costs of editorial, art, promotion and publicity and overhead. Some of the same expenses that you do on your own but on a bigger scale. We spend huge amounts on digital warehousing, anti-piracy, typesetting for print editions, etc.....

Steven Zacharius said...

Angry Games you're much too angry. How many authors do you think we've held onto for 70 years? If we don't have inventory on a book and if sales digital sales are low; we have always reverted books at the agreed upon reversion period. Many of your indie authors will confirm that we've reverted their rights. But you're incorrect in saying that we wouldn't continue to repromote backlist titles. We do that all the time. We also repackage and reissue books all the time with new art. But the 70 year control of your content is a better talking point than reality.

Steven Zacharius said...

Angry....you had to give me time to respond. I do work during the daytime and it's now 1:00AM and I'm here blogging....so give me a little break. As I said this 70 year talking point doesn't mean crap. I don't know of one author that we haven't reverted when the license was up, assuming we were out or low on stock and only selling minimal amounts of ebooks. Keep in mind with print books it's totally different than just ebooks.

Steven Zacharius said...

Nirmala, we print based on what accounts order. We don't print until we have firm orders. It's the selling process that's inefficient, not the manufacturing process. If we only put one copy in a store, no one would see the book....you need floor displays, end caps, facing out books, etc... Print On Demand is not a viable replacement yet. It might be one day. Amazon and Ingram using it to fill in when the publisher is out of stock for short periods but the cost differential is enormous. To normally print a trade paper book would cost us about $.90. To do it by print on demand could be $4.00. That high cost makes the margins impossible to work with unless the book is non-returnable. We are in the 21st century and we do utilize the latest technology. We do POD for short runs of mass market books when necessary. But we still end up with huge quantities of books in inventory.....big publishers have in excess of 10,000,000 in inventory. That's a big investment.

Steven Zacharius said...

Jeff....absolutely 100%. If an author has done well in three books there is no doubt they will get an increase. Sometimes depending on how many copies have sold....it could be a huge increase. That's only fair and any agent would insist on it besides that or possibly take that author to another house. But there are almost always escalations in the next contract unless the books didn't perform and we lost money on them.

Steven Zacharius said...

And a pleasant goodnight to all.

Steven Zacharius said...

Tasha, I just answered that question about POD not being a viable replacement for traditional printing. The costs are way too excessive. It's great for one or to or 100 copies but not for a print run. We don't print copies to make it a big seller....the accounts give us orders....we can't force an account to take more copies than they think they will sell. It costs them money to handle the returns, strip the covers, etc...

The Amazon offer is a pure publicity stunt. They know it, Hachette knows it and everybody else knows it. Hachette would never take it. It has nothing to do with not supporting their authors. It would have to do with them giving up the profit their making on the increased sales that are being made at other retailers because of Amazon's not wanting to stock the books. I heard today from a major account that their Hachette sales are up 20%. That's very significant and would tell me that this could go on for quite some time yet.

Terrence OBrien said...

Nirmala, we print based on what accounts order. We don't print until we have firm orders.

If that is the case, how can Hachette be quickly sending books to Amazon? Wouldn't the delay be on the Hachette end while they fire up the printing presses?

Nirmala, we print based on what accounts order. We don't print until we have firm orders.

I don't know. How many contracts have provision that allow you to keep the rights for life plus 70?

Terrence OBrien said...

Let's try that again

How many authors do you think we've held onto for 70 years?

I don't know. How many contracts have provision that allow you to keep the rights for life plus 70?

Angry_Games said...

How many authors do you think we've held onto for 70 years?

The question remains:
Why do you need the rights to an author's work for lifetime + 70 years?

What exactly do you provide for an author that you believe you, a publisher, should control the rights to an author's work for the rest of his natural life + 70 more years?

The question isn't "how many authors have we ever kept for life + 70 years?" The answer to that question is "I have no idea, but I, and any other author paying attention, know that clause is in publishing contracts."



Angry_Games said...

By the way, I'm not "too angry." I'm just angry enough to demand to know what it is that publishers think they provide to an author that is so very excellent that publishers should keep the rights to an author's work for lifetime + 70 years (and/or make them pay an attorney to crawl through the contract to wrest control back from publishers like Joe did).

If you want to make it out that I don't like you (or anyone in particular), I'll tell you that it most certainly isn't personal at all. I'm trying to get an answer that you and all other publishing executives refuse to answer (mostly because I believe that you don't want authors to hear it, as they'll start to question exactly why you need to control the hard work they've created for an extremely unreasonable amount of time).

Personally, I believe you have some pretty ^%#@$%@^ big brass ones for being one of the only ones on the publishing side of the fence to engage in direct conversation with those who pushing for publishers to change their contract terms. I've got much respect for you, and aside from the fact we agree on very different things when it comes to publishers and authors, I would definitely buy you a beer (and a call girl, if we were in Vegas).

It's also a bit amusing to see you, aka publishers, bleeding from hundreds, maybe thousands of little cuts that self-pub authors have inflicted, and one pretty big one from Amazon (so Hachette claims), still wading right into the shark pool.



Tasha Turner said...

Steven if you only printed what you had orders for you wouldn't have inventory to ship when more is ordered. The problem is you guesstimate how many books will sell based on pre-orders and your own expectations/hype done for a book. In many cases this leads to severely overprinting or under printing of books. B&N and whatever other big brick and mortar stores still in existence make pre-order decisions partially based on your announcement of print size.

Yes POD for refilling orders or handling smaller orders is very expensive at this point in time. If the big 6/5 had invested in companies creating this technology and showed an interest the cost would go down and who knows it might be cheaper than the current model.

One of the problems I keep seeing with big publishing is you guys stick to current models and don't look at down the road or how something could help smaller bookstores (think a POD in an indie bookstore) or with books that aren't ordered as frequently.

As to the reversion of rights. Kensington might be great about reverting rights. You are not one of the big 5 and many of us commenting on Joes blog have trad author friends. Friends trying to go hybrid or get rights back for thier backlist or books that are out-of-print that they don't want to take a 25% net ebook deal on and the big 5 is not letting them out.

You really need to stop buying into the indie versus trad author war. It doesn't exist the way it's portrayed or even the way you think it's happening based on your own reading of blogs. Many indies and trad authors are friends.

You also need to stop assuming that because you do things one way as a CEO of a good size publishing firm that means the big 5 are doing things the same way. If you have actually talked to higher ups at at the big 5 about reversion of rights speak about those discussions but don't assume they do things like you do.

Sorry Joe for the long comment. Being called out on one blog for a comment I made on another and having my points misinterpreted or responded to with "we've always done it this way so any other way would cost more even if we'd invested 15-20 years ago" seems to have really annoyed me.

Dale T. Phillips said...

Steven, thanks for responding. Overall, you're still in the game, despite taking on some sticky issues and multiple viewpoints. A percentage of the time, you have a fair point. It seems you think that most people don't have much of an understanding of what your company offers, or how you do business. Okay, that happens. Sometimes you'll say something that makes us wonder where you get your information. That's why we need the dialogue. When your statements contradict what writers have experienced, you get challenged. If we offer a question or make a point that seems to glide by, we may want to reiterate, because we think it's important. We do want to understand.

Much of the conversation conflates print and digital, so the communication can get muddied. Numbers get thrown around and are taken out of context. You're saying that you give your authors (some? most? all?) 40% of net on the digital? With or without advance?

You said that you offer reversion rights "when the license was up"- any numbers (ballpark is fine) on when that is? For example, if someone new signed with your company today, earned out, and then wasn't selling 8 years from now, would they get their rights back? Have authors had to fight to get reversion clauses enacted?

Again, if the author is the ONLY one in the publishing process that isn't making a living, please stop asking us to muster sympathy for others who are "helping you make money"- if that money isn't even enough to live on. You can't seem to get around the fact that WE want to live, too. We do not exist merely to provide other people with a living- we're not The Ragged Trousered Philanthropists (a great book). When you bring up this meme, it makes it seem like you care more for everyone else but the author- while this may not be the case, that's how it comes across- so you may want to drop this talking point from your discussions.

Yes, we know you lose money on more than just megastars. I brought that up because we hear that one a lot from publishers- that our profits must be sacrificed to cover your bad bets. We know that publishing a book costs money. We keep offering better ways for publishing to sell more copies and make more money, and it seems to go unheard. We could all do better- why not listen to the proven author voices once in awhile? Call Joe or Hugh Howey or Barry Eisler or David Gaughran or Dean Wesley Smith or The Passive Guy or Laura Resnick in for a week, and really listen to them. If you do even 10% of what they say, you'd make at least 10% more net profit the following year.

For example, you say you spend huge amounts of money on... digital warehousing? Steven, if that's the case, you are woefully uninformed about technology, and you're getting screwed. There's a savings you can make right there.

And you spend huge amounts on... anti-piracy? No wonder your business can't make enough profit. Oh, man, please, please, please do some reading on this- Joe and others will gladly supply you as many links as you want. You publishers cling to this meme like drowning men, no matter how many times it's disproven that piracy costs you money. The more people who read a work, the more overall sales it will have, even if some do not pay for the work. A pirated copy is NOT a lost sale. When you bring this up, your argument is invalid.

And sure, you have more than enough submissions now, but more people are getting the knowledge they need to make better business decisions. I'd point you to the works of Nassim Taleb and the parable of the turkey, who thinks life is great- right up until the day before Thanksgiving. Five years from now you may not have that flood of good submissions. But if you want to believe that things won't change, or you don't need to, your call.

Stacey Cochran said...

Where do I sign up for the 100% royalties? I need that.

Steven Zacharius said...

That clause has never had any relevant significance to a reversion request. The reasoning behind the origination of this is because publishers were making an investment in an author; sometimes a very significant one. You can argue about the length of copyright but as I said it has never had any bearing upon any reversion request.

Steven Zacharius said...

Tasha you are misinformed as to how the print run process works. The print run is based on actual orders, not estimates, from accounts. We then add in a factor for inventory based on past sales history where possible. So in most cases we don't run out of books.
Publishers don't invest in printing technologies, printers do. Ingram is an enormous company and has invested huge sums of money in pod technology as has kodak and other firms. The technology has not allowed the costs to come anywhere near the cost yet of traditional printing and there's no way to do special effects on covers. One day it will get better. The espresso book machine has been put into stores and it has not made any significant sales volume possible.
I do know all the ceo's but we do not talk about items like this very often. This would be a more common workshop discussion. I can't speak for other firms, you are correct. As far as the indie war I can't help but think like that when most of the blogs are of this nature. There is constant traditional publishing bashing but I don't see traditional publishers bashing indies. I'm happy with both options and I enjoy the open exchange of ideas. We are not a big 5 publisher but we are a top 10 eBook seller.

Steven Zacharius said...

Dale, we offer two options on our digital lines which generally not have an advance unless it was for an established author already. One is a 30% to 10,000 units and them 50% thereafter. The other is a straight 40% of net receipts. Typical reversion times are five to seven years. I have read all of those people you mentioned but generally the bias is all totally one sided and sometimes sarcastic and nasty. It's their blog and that's fine.
In terms of digital warehousing why wouldn't we be spending huge amounts of money? Do you know what it entails? We store metadata on 5000 books and send it out to 25 retailers and pod vendors. Files have to be formatted and verified. And they're updated quite often. It's not like adding ten titles on KDP. You don't thing amazon has spent hundreds of millions on software? I've already talked about anti piracy and the money we spend to protect author's royalties. That's a business decision that I'm still in favor of but might change. I would never have any problem sitting down with those indie stars and having an open dialog. We learn by talking when it's really talking and not just bashing or publicity mumbo jumbo.

I'm all for authors making money. If they're making money from royalties, chances are we are too. I know you want to make a living and I as the owner of a company would like my company to earn a profit as well. Obviously there is some place where are paths intersect and we hopefully both make money. Publishers making single digit profits are not cash cow businesses just like most authors are not getting filthy rich. We're both trying to make a living.

Angry_Games said...

Look, no offense, Steve, but now you're in my area of expertise (tech).

If you are spending tons of money to house and deliver digital files, you are either completely ignorant of technology, or are being scammed by your IT guys or whomever you've contracted.

Please, do me a favor, and never say anything so misinformed, so ignorant again such as it costs you a ton of money to store and deliver digital books. It does not. I've worked for video game dev teams who create, store, and deliver multiple gigabyte files, which DOES take a lot of money.

Sending out 1MB or less digital book files does not cost but a fraction of a fraction of a cent. Period. You can deny or argue, but you are 100% completely wrong if you do. There is no argument about this. Unless your company is ignorant or being scammed.

Storing digital files, regardless of metadata tags, costs even less than delivery. The cost per MB is so miniscule now that if you are spending a lot of money to house multiple terabytes of data, you are, again, either ignorant, or being scammed.

See, this is the problem. You guys are on a completely different level than reality in far too many areas. You show up claiming nonsense like it costs you a lot of money to do something that costs the rest of us (and our businesses) almost nothing. You show up claiming that the lifetime + 70 years is nothing to be concerned with, no one has ever been held to it, blah blah blah, but yet there are far too many of us who know that you are lying.

That's right. Now I believe you are edging into the territory of flat out lying. Because that's what it sounds like to me, and while I'm not an expert in the publishing industry like Joe or Barry (or even you, though that expertise is really suspect to most of us), I am considered an expert in the areas of high technology, especially in digital storage and delivery, piracy, and development.

So please, before you talk out of your ass anymore about things you obviously know nothing about, do yourself a favor and just refuse to answer the question, exactly as you have when it comes to:

Why do publishers need the rights to an author's work for LIFETIME PLUS SEVENTY YEARS.

Tasha Turner said...

Steven, Your company may be smart and not end up with 40% returns but that is not unusual for the big 5 from my understanding in talking to bookstores and people who work for the big 5. And 40% returns is wasteful. Go talk to the CEOs of the big 5 and get back to me. Until then you have your opinion and I have real people and continuing this discussion is a waste of time.

Most of the indie blogs I read are about craft or promotion so maybe you are hanging out on the wrong blogs. I'm going to take a stab and guess which blogs you've been hanging out at. David Graughan's blog is on industry news, helpful post in book promotion, and frequently about avoiding vanity presses that don't offer a good value for your money like the one owned and used by a number of the big 5 (author solutions). Joe's blog is usually something controversial or it's a guest post full of useful information. Hugh's posts run the gamut of helpful to what you might consider bashing.

Too many of us know how the big 5 handle reversion clauses and request so if you haven't discussed this with the CEOs of the big 5 you look foolish every time you "hand wave" it away. Same with "out-of-print" clauses, cancelled books, non-compete clauses. We actually talk to authors - you see a few blog posts and articles and believe we are at war but the reality is many of us know trad published authors - some are happy, some are becoming unhappy, some are in the middle of lawsuits, some are no longer writing because they couldn't afford to sue and gave up.

As others have asked, and you don't want to answer, but hey try something new, why do publishers need the rights to an author's work for LIFETIME PLUS SEVENTY YEARS on books that in most cases w/in 5 years they aren't promoting, have removed from shelves, and aren't allowing the authors to continue the series/write competing work?

Steven Zacharius said...

Angry....I really don't know why I waste my time replying to messages where people say I'm lying but really....do you not think I know what I'm talking about when I run a large company? Or do you think the information that you read online is more accurate?

A ton of money is all relative. Digital warehousing is an expense for storing an distributing our files. I do know something about this area as well. So please don't tell me I'm being scammed or whatever other bull you threw my way. We use one of the largest companies in the business which was partially owned by Harper Collins for some time. We store over 5000 files and it's not just a matter of storing....it's the process of distributing the files to different retailers that all want the files submitted in different manners....not just like putting up one file on kdp. This costs in excess of $13,000 per month. Is that a ton of money to you? I think it's considerable...so don't tell me I'm scamming you or I'm misinformed or ignorant....because I can assure you that I'm not. These are the types of rude ignorant comments that keep other publishing people off these blogs.
So since you think I'm lying please don't bother asking me to reply to any more of your questions. I replied to the question about the copyright already but I will reply again.
Publishers acquire books for the full copyright period. That's the way it is; that's the way it's always been. Maybe it will change one day, I don't know. However that has nothing to do with reversion requests. A publisher has to revert the rights upon request per the terms of their contract. Our contract and most others from legitimate publishers state that when the book is out of stock and the license terms of let's say seven years is up.....the author can get the rights back. If it's a book where we also sell ebooks, there is also a minimum threshold that we have to meet otherwise we have to revert the rights. Nice and simple enough for you?

I hope you don't think I'm talking out of my ass as you put it because I do know what I'm talking about. It's been a real pleasure talking to someone who has such a great knowledge of tech as it relates to publishing.
I don't lie, I have no reason to. If you think I'm trying to convince any of you to go to traditional publishing, I'm not. I was here to engage in intelligent conversation which apparently is not possible with you. If most of you think I'm lying, I'm happy not to be here any longer but even Joe thanked me for coming in here. If I were him, I would have deleted your comments because there was no need for the tone you gave me.

Steven Zacharius said...

Tasha you are one step away from Angry in terms of your tone towards me and your attitude that you know so much about publishing. I never said anything about what the returns percentage was. All publishers run return rates of higher than 40% that are in the mass market field particularly. That's the basis on which mass market books were started. They were cheap to produce and distribute and it didn't make a difference if the sell thru was great because of the low costs involved.

40% returns is wasteful and inefficient. Did I say somewhere that it wasn't or did I say that POD is not a viable business model when you're distributing books to the print marketplace? With POD books costing over $4.00 to produce, how can you compare that to trade paper books costing $1.00 to produce...and then if you want to have special effects on covers, how are you going to do that on POD? Any answers for me there?
I have my opinion and you have real people? How arrogant can you be? Actually apparently a lot. I do talk to the CEO's of the biggest publishers but I can assure you that when we happen to see each other at charity functions or industry functions the people who run publishing companies don't sit around taking about how long their company takes to revert rights to authors. There are far greater concerns facing the industry now than this. And as I said, in reality it doesn't make the slightest bit of difference....at least with my firm....because we have to revert the books at the end of the agreed upon term...5-7 years as of recently in most cases, if we don't have stock and if we're not selling an agreed upon amount of ebooks. But apparently you know better.

Since you apparently didn't read my previous message about the 70 year term.....let me try it again since this is one of those issues that all the people you mentioned like to focus on as to why traditional publishing is so awful.
The 70 year term or lifetime plus 70 years is copyright law. That's why publishers ask for that when we acquire a book. We, and I'm talking for my company, have restrictions on you writing competing books to the one we're publishing, at the time we're publishing. Once your contract is up with us we can't stop you from publishing with anybody else or continuing the series or anything like you describe above.
And as I've said now at least four times....regardless of this copyright law, when we are out of stock per the term of our contract, we have to revert the rights when requested...no ifs ands or buts......unless we are still selling an agreed upon threshold of ebooks. Clear enough now? Have I answered the question that you said I wouldn't answer? And when they asked me and I didn't answer, maybe it's because I had already spent three hours answering questions here and I had other things to do. I haven't hidden behind any questions that were asked to me here or told any lies as Angry accused me. I have no reason to.
Now if you'd like to know why non compete clauses exist that's an easy answer. Why would we want to pay an advance to an author and then have them compete with us by selling another book in the same genre at the same time we're publishing ours? Not only that, many times they or their agent don't spend the time to make sure that the two competing books aren't being published at the same time which would just cannibalize each other. When we acquire an author we are making an investment in that author and we're taking a risk using our money. Many times we're not publishing the first book in a three book contract for over two years and the last book could be five years down the road. If you were investing hundreds of thousands of dollars on a bigger author....would you invest your money if they might be competing with the books you just paid for?
ebook only publishing is a totally different matter and that's what most of you do here.

Steven Zacharius said...

If I'm nasty in my replies tonight it's because I don't like being told I'm lying or ignorant. If Joe doesn't want me here that's fine. There've been several bloggers here who have thanked me for coming and we've shared intelligent conversation. Apparently there are a handful of tradition publishing hate mongers out there who insist on being rude all the time.

Angry_Games said...

I'm sorry, but you are either talking to make people think you know wtf you are talking about, or you've been scammed when it comes to setting up your own site to sell direct to the customer.

So which is it? You are clueless about digital storage and delivery but want to sound like you aren't? Or you got scammed by a crew of programmers and/or web hosts that charged you an extreme amount (or at least just quoted you an extreme amount) to build a commerce site that sells and delivers digital goods and decided it cost too much?

Or is it you publishers are just too cheap to invest some of that money you've scammed from authors over the years to build some infrastructure to sell direct to customers because you know that without a middleman such as Amazon and Apple, you will no longer be able to shield exactly how much you've scammed from authors by claiming the middleman took a big chunk of it?

While we're at it, are you ever going to tell us exactly what publishers provide that makes them believe they should keep the rights to an author's work for lifetime + 70 years? Or will you simply continue to avoid the question by either waving your hands as if it isn't important, or talk in circles without actually answering the question?

Tasha Turner said...

Thanks Steven. You've shown that the current print publishing is inefficient which was a point I tried to and kept getting sidetracked. Somehow it morphed into a discussion solely on POD.

The "it's always been that way" is a really bad answer to a question IMHO. If you'd change your mindset you might find all sorts of ways to save money and time/labor.

I'm not an author. I'm not a publisher. I help authors use their online time more effeciently so they have more time to write and spend time with family and friends.

I know there is a difference between ebooks and paper books. I hate waste and inefficiency. Always have. Worked myself out of several jobs by streamlining the departments workflow saving the companies money and time. And I left happy. So the idea that 40% returns is normal and good just doesn't work for me. It's wasted labor and material. One would think over 50 years a better system could've been developed.

I hope you get a good nights sleep.

Tasha Turner said...

Steven I just have to say wow $13,000/month to store and distribute 5,000 files? How many terabytes are we talking? Are you selling books on your website in addition to distributing to multiple retailers?

Smashwords does distribution of >250k of books a week to multiple retailers in multiple formats. I guess I should drop a note to Mark Coker and ask him to drop by and weigh in.

BTW most indies distribute to multiple sites requiring multiple formats. Few totally rely on Amazon KDP today. Believe it or not indies diversify. A number even sell books on their website in addition to multiple retailers.

My husband just came home from a conference where they were talking about perabytes and how cheap they are. He works for a security firm.

Steven Zacharius said...

Angry is apparently doesn't read my replies since I've answered the question about copyright five times now. Although he says he's in tech he obviously knows nothing about what digital warehousing is all about. It's much more than just storing files but I'm not going to waste my time replying to him any longer.

Steven Zacharius said...

Tasha, I never claimed that print publishing is an efficient process. But the cost structure and price of books takes all this into account. Hardcover and trade paper is certainly much more efficient than mass market....probably around 65% sale overall. It's mass market that is inefficient but still this is where the bulk of the sales take place because of the widespread distribution into WalMart, Target, Costco, Sams, BJ's, supermarkets, drugstores, etc.....

Smashwords delivers files to a handful of sites. I'm assuming he uses a major digital warehouse but maybe they do it themselves. it's not just about terabytes of storage....the storage is obviously cheap...it's the formatting of metadata and the way each account requires the data to be sent to them. Every account has different requirements. Indie authors sell to a relatively small number of accounts. As a traditional publisher and large ebook publisher we probably deliver to over 25 different accounts including all the majors and now many county and state library systems.

Dale T. Phillips said...

Steven, thanks for the response. There's an interpretation problem if you've read all those folks I mentioned and think they're "totally one-sided." These are professional people who worked with companies like yours, and have talked with thousands of others who have, so their experience and viewpoint are something to check out. Every one would want to help you save money and make your business run better for everyone. But you seem to want to view all of them as the enemy- that's a big part of the problem.

Let's say there's a repair shop, and I ask for a recommendation from 1000 people who have done business with them. Who do I believe? Hundreds who have had problems with them, or 50 people who love the place and think they're great? I'll listen to both sides, but make my choice carefully.

And if the conversation sometimes gets "sarcastic and nasty," well, sometimes they have a point- like when they, and others, were screwed by publishing companies and had to hire lawyers to fight back. As not all publishers are bad, not all writers who comment are, either. If you lump extremely nice, overly polite people in with your sweeping negative generalization, you risk being dissed. You did so there. Bad commenter, no cookie.

For the record, we've rarely seen a sarcastic and nasty comment like publishing figure/agent Don Maass publicly referring to writers as cattle. He does not seem to be alone among publishers in his viewpoint. And we have no respect for a major publisher that brings in a ripoff company like Author Solutions, who are nothing but predators. Against that, a little fist-shaking and name-calling may indeed be warranted at times. And our tiny voices seem dwarfed when major media outlets (with the approval or backing of publishers) trumpet their one-sided screeds against Indie and self-pubbers.

As for digital storage and warehousing costs, we're calling bullsh** on that one. I've worked in high-tech for over 25 years, much of that in storage and data companies. At the price you quote, you're being severely overcharged for the services you're getting. When you assert those are legitimate costs, some think you're not being truthful- because it's just not true! Your choice to keep overpaying, but no longer a discussion point. Kind of like paying 6K for a cover, then complaining about the high cost- no sympathy, and no excuse.

"Publishers acquire books for the full copyright period." Yeah, that's not necessary, and why you get bashed. Why not adopt Hugh Howey's suggestion of just "licensing distribution" in certain areas for a set time frame? A slight reframing, and everyone wins.

What would it take for you to rethink your "anti-piracy" stance? What evidence, what numbers would sway you? If enough of the authors themselves told you they didn't care for it, would that work? There are other publishers who have led the way in this, and they seem to have no problem. How much a year do you spend on this? Wouldn't that money be better spent elsewhere? See, the thing for us is when you say your business costs are too high, and you spend money on something you don't need, it makes us throw up our hands.

Tasha Turner said...

Steven, I've got experience in a company that made wireless self price tags and we were moving 35k price & new product changes every night to over 100 grocery stores in multiple states (each one got different changes & products) who were not on the same operating system/using identical databases over 10 years ago and storage, transmission, etc. wasn't that expensive and cost have come down and sped has gone up,since then.

No books are not identical. But that's up to 350,000 changes made a night. Multiple brands, double-checking data, and if the tag prices were different from what rang up in some states that could be a hefty fine due to consumer laws. Due you have any clue how many brands your average super market carries and the information on a shelf tag? That would be meta data - some hidden/behind the scenes and some on the shelf.

When we ask a question and get a "it's always been that way" we don't consider that an answer. It's what I call a "hand wave".

I'm done. I'm not angry. I'm frustrated in trying to talk to you but not angry. As Dale said you talk about the high cost of business but to us you seem to spend money in ways that aren't efficient "because we've always done it that way" and "the price of the books takes our inefficiencies into account". As business people - in our day jobs (well before I got sick & hit by a truck I did) and those who are authors think about cost, efficiency, and customer satisfaction. Have a good weekend.

Steven Zacharius said...

Dale,
I didn't mean to imply they're all nasty because they are all professional and they're all attracting people to their blog based on what they write. But most of the comments are definitely anti traditional publishing. Fine....terribleminds seemed to go the other way and be very supportive of traditional publishing, but I've only read the one recent blog. The people there also seemed more supportive.


In terms of the warehousing you guys can say bullshit and I'll say you guys have no idea what you're talking about. You're talking about storage being cheap, which it is. That's not the point. It's much more than that just storing files...but you guys think you know about this stuff and you don't. You have no idea what's involved in manipulating the metadata to fit 25 different retailers requirements and update the files every couple of days when necessary. This is more than storage. There are a handful of companies that do this type of storage and every one of them is in the same price range. You have LibreDigital, Ingram, InScribe and a few others....they're all within 1000 per month of each other so we do know what we're talking about.

And I don't view the blog "owners" as the enemy....I'm in here for the conversation and to learn something. However some of them are just over the top at times. Things like calling me a liar, ignorant....things like that are unprofessional and rude. I've answered every question posed to me and yet some of you just don't believe the answers even when I answer them, like on digital warehousing. What do you think Amazon paid to develop KDP?

Steven Zacharius said...

Dale, I do believe we still need DRM. One or two publishers have done it and only on a few imprints. Tor does it but why doesn't all of St. Martin's Press do it? Every major author we publish would complain when they saw their files available illegally. They do now when they see them on bit torrent sites which won't take them down. I don't know why you wouldn't want us to protect your content. I would think you'd be arguing the other way. I do absolutely agree that it's much easier without it. How about you indies work on getting Kindle not to require a proprietary format instead? Use Adobe for DRM and that would solve the problem. Everybody could use the same standard DRM and ebooks would be much easier to transport between devices I believe. BTW, I am not an expert in DRM technology.
I actually don't know or remember what Hugh's calling was for in terms of copyright...but why would we change it if we and all the other publishers don't have an issue with it? Authors are signing up with us and agreeing to these standards as are the biggest agents. As I've said, and the agents know it, we revert rights when the books are out of stock after the term of license. In essence the 70 years means nothing to our contract. But it is the standard in the industry. If we are continuing to hold the copyright it means the author is making money on royalties btw. We are going back and lowering ebook prices to 3.99 or 4.99 on older titles that have gone out of stock to price them where indie pricing is to keep movement of the book going.

Steven Zacharius said...

Tasha I don't know what you actually do for a living....you mentioned something about keeping authors offline and writing or helping them managing their writing time...sorry, I don't recall.

I and my 90 employees know how to run a business. We are probably the most efficient publisher out there in terms of revenue per employee. We don't have a rich billion dollar parent company to loan us money if we need it. We watch all of our costs carefully. We get competitive bids on every part of our business and I'd be willing to bet that our mass market printing prices are as low as any of the big 5 publishers. My background was in printing and distribution by the way. I came by way of the magazine business into printing and then into book publishing. We've reviewed our contracts for digital storage every two years. As I said, I believe in DRM still. I know indie authors and many readers would like us publishers to get rid of them so you could transfer files between devices....I get that...I'd like it to. But I'd have every major author complaining to me that they see their books on a cd of 1000 titles on ebay for 19.99. We already get this. I don't understand why you're against us protecting author's royalties when I'm happy to spend the money to do this.
You run your business and we will run our business. I listen and talk to other people in publishing houses every day of the week and we compare notes and trends. We do know what we're doing.

Steven Zacharius said...

And by the way the high cost of business is the infrastructure in publishing. If I just wanted to run a digital publishing house I could do it with four or five employees and freelance all the services out of house. But we have 15 editors, 12 marketing and publicity people, sales people, IT people, contracts and subsidiary rights people, accounting, etc..... this is the high cost of running a business. Indie authors put up their title on KDP and KDP is paying for that infrastructure for them. I left out art department of six people as well. And as for Dale's comment to something I said four or five months ago about $6000 for cover art from Pino..that was the cost to do an original oil painting for one time use for a cover. Those same paintings now are worth $50,000 each since Pino passed away. There were very few artists like him at the time. I wasn't talking about stock art for $100.00. And a lot of our covers use photo shoots, that too is several thousand dollars by the time you're done. For the digital lines we do it just like the indies do....we use stock art and manipulate for $150 tops. If you and Dale think our covers weren't worth $6000 back then...and this was a long time ago....so be it. Those covers sold an awful lot of books though.

Drew Gideon said...

Steve Z said:
"Angry Games....this whole thing about an author signing away rights for life is pure bs," and "This is one of the most blogged falsehoods I see on indie sites."

Then he said:
"But we don't hold onto them for 70 years unless the book is selling phenomenal amounts of copies."

Translation:
It's not BS. It's not a falsehood. It actually exists. We take advantage of it when it benefits us.
But you should completely ignore that, because it's a very inconvenient truth.

Anonymous said...

Drew, if that's what you took away from probably my four comments about copyright law you didn't understand me. Every major publisher signs an author for the full term of the copyright law. If it weren't the law publishers wouldn't or couldn't do this.
I said four times that in reality it doesn't have any real bearing on termination of a contract. Contract terms vary by publisher and let's use five to seven years as an example. If we are out of stock at the end of that period of time the author can request rights to be reverted. We then have six months to reprint the book to make it available in print again. And we have to print a specified amount of copies. If not, the author gets the rights back and this 70 year law has no bearing.
If we also publish the title as an eBook we have to be selling a specified minimum number of copies in every royalty period or again the rights will revert. Nice and simple. Not complicated at all.
My comment about selling a lot of copies was to make the example that if the book hadn't reverted in this seven year period and we were still selling to book 25 years from now; for that to happen we would either have to still have the book in print or be meeting that eBook threshold so we would still be selling a lot of copies. It doesn't ever become an issue of any significance with us and in all practicality the rights could revert at the end of the seven year period.
I don't know how this can be a major issue at all. It's more of a talking point to say how legacy publishers are evil.

Angry_Games said...

So then you finally admit you take lifetime + 70 years of an author's rights to his own work because it's a rights grab. Because you can.

Is that why you posted as anonymous? So no one can attribute that quote to you?

Daniel said...

Steve Z said, "I actually don't know or remember what Hugh's calling was for in terms of copyright...but why would we change it if we and all the other publishers don't have an issue with it? Authors are signing up with us and agreeing to these standards as are the biggest agents."

Of course authors are signing these contracts when the only other alternative is the door. You can't really use that as justification.

Taking the copyright is good for publishers, and that's why publishers do it.

Steven Zacharius said...

Angry...no I didn't post as anonymous....somehow that happened when I posted from my phone that way. I think it was pretty clear it was from me. And I never denied about the 70 year copyright. I said in practicality it meant nothing and is meaningless. Why don't you take up with the copyright department about the copyright law if you'd like to see that changed?

Steven Zacharius said...

Daniel,I wouldn't say it's a rights grab. It's the copyright law. As I replied to Angry....why not bring it up with congress to change the copyright law? I have no idea how many publishers have been in business for 70 years or how often this even comes into play. I know at Kensington it has never ever been an issue. I can't speak for other publishers. And if an author were a big enough author and a publisher wanted them badly enough and they felt it was an issue, it would be negotiation point....but I have to tell you in the 23 years I've been at Kensington I've never heard of an agent even bringing this point up once. I don't have any idea which of the indie authors on here have had problems with this clause but I know it wasn't any Kensington authors. I also don't know what other terms are in other publisher's contracts but as I've said now many times, rights would revert if we were out of stock on the book or not meeting the agreed upon threshold of ebook sales. So how is it even an issue if the rights revert then? Where has this been an issue with any of the indie authors here?
And despite what Angry said....I wasn't hiding behind any claim that we did or didn't have 70 year copyright...it has never ever come into play. Any indie author that I've run into on a blog here who has wanted rights back from Kensington was granted them if they wrote to us. If they had an issue and wrote to me, I made sure the issue was taken care of immediately. My other comment was obviously posted as anonymous because I I hit publish your comment on my phone and I hit the wrong button. I have to say this software is the worst....those of you who were talking about us spending too much on digital stuff. How are you not able to reply directly to a comment and have to post it at the very end...you can't even tell which comment you're replying to. And then the comment box is at the top.

Daniel said...

Steve, what is or isn't copyright law is separate from the issue at hand. It isn't law that publishers have to take the copyright.

Hugh Howey's licensing suggestion provides a perfectly viable alternative in which the balance of power between publishers and authors wouldn't be nearly so lopsided.

I can't speak about Kensington, only the overall precedent and the many testimonials I've heard.

There's a reply button underneath each post as I see it--maybe it depends on the device you're using? I don't hit reply because then it throws the posts out of chronological order, and it's easy to miss a response.

Steven Zacharius said...

Daniel, I don't have that reply button under each message on my mac....will have to try on the pc side and see what happens in a different browser.

I'm actually not familiar with Hugh's recommendation. By the way, I posted somewhere asking if Hugh's contract with KDP was any different than everyone else's and I haven't gotten a reply yet from him.

I would actually like to hear some real life experiences of authors and what companies they had problems with. That's a worthwhile discussion.

Dale T. Phillips said...

Steven, the discussion clashes when people say things that others believe are not true. Let's agree on the things that won't be changed in each other's belief systems, and move on to areas we can change.

In the last 5 years, the world of publishing, writing and selling has undergone a revolution. Businesses must change or they will suffer, and possibly perish. Big publishers seem resistant to any change, and yet complain about how hard publishing is in today's market.
Of course it is- writers and many others would like to help- but when we hear "we do know what we're doing," "we've always done it like that," and "everybody does it like that," that's rather a brick wall.
Yet those saying that are screaming that they're under fire. We on the outside are not surprised, but object when you blame the wrong reasons.

I mentioned people who could help-you dismissed them ALL with a hand wave and a comment about how nasty the comments are. Another shutdown, no dialogue possible with that attitude.
Okay, how about Seth Godin? Hire him to tell you how your business can improve. If you don't believe someone like him could help, well, there's not much hope for any change.

Whenever a book goes out in print or in ebook form, it can be copied and distributed. Trying to stop that with DRM and anti-piracy money is like trying to stop the tide from coming in. Put out quality works and make them easy to get at a fair price, and you can ignore the rest. You don't believe that, though most people outside of your companies do.
So your mind is made up, and we should just drop that as a discussion point.

Warehousing and data manipulation-some of us do this for a living, and know it's not rocket science or hideously expensive. You say it is, no room for discussion. So another item we need not mention again.

Contracts- You said "In essence the 70 years means nothing to our contract. But it is the standard in the industry."
As The Passive Guy or any contract lawyer will tell you, wording in a contract matters a great deal. When you say it doesn't, you are wrong.
While you want to cling to an outdated standard, it's the kind of thing that make people give your biz the fisheye. You've been clubbed with this repeatedly in this discussion, and you wave it away again, because people keep signing your contracts. If their choice is to sign or not get published, sure, many will grind their teeth and sign away. Doesn't make it right. Others will not even consider signing contracts like that, because we're getting educated in the business side of writing and publishing. Rather than the rude dismissal of telling us to change copyright law, strike a meaningless clause from your contracts.
So we all know where Steven stands on this.

Costs- The mention of the 6K cover was because you used it as another justification for not paying authors more (high costs of publishing, you know)- so yes, we remember stuff like that. Good that you feel it worked out in increased sales, as long as THE AUTHOR made more money from it. But don't tell authors they can't get paid more because you splurged on someone else- this is a big sin you guys don't get. You think you're scoring a point, when you're just pouring gas on the fire.
And if I was the guy that got a $150 cover after giving up 70% of my digital sales, I'd be a wee bit put out...

So we keep hearing from big publishers that they're struggling. We keep seeing rescue ropes get thrown, which get ignored. We keep hearing insults, distortions and outright lies from some big publishers. We keep seeing authors get a screwing with bad contract terms. And we keep hearing that publishers don't want to make changes that matter to those who might otherwise consider doing business with them.
So what can we agree on, Steven, What can we help each other with?

Steven Zacharius said...

Dale, I said I do read many of the people's blogs that you mentioned. I've been part of Konrath's blogs many times and on the Passive Guy as well. I've also commented on most of the others that I see. So I do see what people are talking about and try to learn something from the discussion. As far as I know, I'm the only publisher from a larger publishing house out here reading these blogs. I'm on Mike Shatzkin's blogs all the time too. So although I do say many of the comments on the blogs you mentioned are nasty, that doesn't mean I don't read them.
Publishing is not and has never been a high profit business for the companies, authors or employees.
I don't think I've ever said that indie authors don't know what they're doing. Obviously there are quite a few that have been very successful at it.
I said the question about DRM was an interesting question; in fact, I'm the one who brought it up. I still don't personally believe in getting rid of it but I do have people who work with me who are in favor of eliminating it. Things may change down the road. I mentioned that we wanted to have our digital only lines DRM free but the software at the accounts wouldn't allow to have one imprint with DRM and the others without.
I don't think I've paid much attention to Seth Godin, I will look him up.
I said I do know and we do have quite a few people in our company who are IT experts and do know about digital warehousing. I also mentioned that the three firms that do this for many publishers are all priced fairly similarly.

Steven Zacharius said...

Dale...part 2...didn't want the message to go on too long. I know a fair amount about contracts. I'm not a lawyer, thankfully, but we deal with them every day and we have a General Counsel who is a contract's expert at Kensington. We have standard boilerplate language that has been refined over our 40 years but there are always parts of a contract that are up for negotiation and parts that aren't. I don't think we've ever had the copyright issue even brought up one time in 40 years so I think it might be a bigger issue to you guys than it is to the authors that are traditionally published. I didn't think it was a rude comment to suggest having the copyright law changed; I thought it was a good practical recommendation for you. I assume some of you are members of the Author Guild and other organizations that would probably support this type of change. They should lobby on your behalf if you think it's a major issue.
You mentioned about the AUTHOR making money. You have to realize when I'm running a business my priority is for US to make money. The advance we pay and terms of the contract are part of those costs that effect what we make....as well as all the other costs in manufacturing, promotion, overhead, etc.... We hope we build the author and that they make money on the way with us. It's a partnership. We need the authors to work with us to promote their books online and if we're increasing sales they're making more money in royalties.
I don't believe I would have said that we paid for $6000 for art so we couldn't pay the author more money. I was probably just stating some of the costs that took place in publishing the book. We do a profit and loss calculation when we buy a book. We have to estimate sales and costs and see what we think the earned royalties will be. That's how we calculate what we're going to offer an author as an advance.
I haven't been following your blogs for that long so I don't know what you're referring to when you say you've been lied to by big publishers. I can only comment on Kensington.
I wouldn't spend the time here answering questions and giving my opinion if there weren't something to learn. We do hybrid publishing and we're doing more and more of it. We publish many authors in print that continue to indie publish as well, and we work together well. So we have changed. Our business has gone through monumental changes in the last five or ten years. From there being 750 wholesalers down to 10 now with one major one. We've gone down to 10 major book accounts. We've seen the advent of ebooks. Yet although you don't think we've changed; even a medium sized company like Kensington is still around after 40 years. We do that by being creative, innovative and attracting good authors. It all starts with the book and we say that over and over.

Dale T. Phillips said...

Yup, we've said a number of times that you're to be lauded for continuing the discussion. It's rather telling that your peers don't bother, even when their bottom line is affected. Perhaps if they were a little more informed and engaging, it could be more profitable.

Now you say you read the mentioned blogs. If you had read a bit more, you wouldn't bring up Mike Shatzkin, or the "Author's Guild," or not knowing about writers being lied to by publishers- these blogs and many others have thousands of examples of that last part. Thousands. Easy to find.

Mike Shatzkin's blog has devolved into a joke. He's posing as an industry pundit and consultant, yet avowing he doesn't know much about the Indie and self-pubbed worlds. Wow- willfully remaining ignorant of the most sweeping revolution in an industry, yet claiming to speak to- and for- that industry? It's like he took a peek, got scared, and is now hiding under the covers, wishing it would all go away. Take for example, the Author Earnings Report. He attacks it and denies its findings, yet has no accurate or supportable data to refute it. He just doesn't like what it says, so of course it can't be true.

The "Author's Guild" does not represent authors, it does most of its work and bully pulpit speeches for publishers, and a handful of super-rich lucky ones at the top, who are anxious to protect their position of privilege. Numerous posts abound- on this very site and others. You can find them with even a cursory search. So please don't ever say that we should go to them for help.

One more time, hopefully the last- it's fine that publishing companies make money from author works- as long as the author isn't the one NOT making money from it. If a company makes a living for a bunch of people while giving most writers little but scraps, many of us have no interest in the health of that company. We want a partnership where the author gets a fair shake, and those who help make that happen also make a living.

Great that you're listening and making some changes for the better. Keep up the good work.

Steven Zacharius said...

Dale, I obviously didn't read every blog, I don't have that kind of time. But I've read most of the recent entries.

Mike Shatzkin has been in the business for a long time and knows a lot about this business. I can't say how much he knows or doesn't know about indie publishing but he does know a lot about the business. He's also the one that is responsible for DBW which does cover quite a bit out the industry.

I have read the author earnings report blogs and I don't think you can rely on it or refute it. There isn't enough data available for either. Taking a snapshot of a short period of time isn't accurate but I don't know that it even pays to agree with it or refute it either. Why do you think that Amazon doesn't release any sales info about ebook sales? No one has answered that question. They release print book sales but not ebooks.

I never would have considered the Author's Guild as being supportive of publishers. Maybe the big authors but not publishers.

Anyhow, hopefully we all make money in the business; I agree with you there.

Jane Doe said...

Why do you think that Amazon doesn't release any sales info about ebook sales?

For the exact same reasons that Barnes & Noble doesn't and Apple doesn't and Kobo doesn't and Penguin Random House doesn't and Hachette doesn't and Kensington doesn't.

Why volunteer competitive intelligence on your business to your competitors, suppliers, and channels?

Now, in my perfect world all of these retailers would publicly release title-level ebook and print sales data. Daily. And so would Penguin Random House and Hachette and the rest of the Big-5 and Kensington and Open Road Media and H. M. Ward and Hugh Howey and Bella Andre and A. G. Riddle, etc, etc... But that isn't going to happen.

Luckily, we happen to live in the age of the Internet. So by applying a little technology know-how, we can grab the top-selling 100,000+ titles, combine them with crowdsourced rank-to-daily-sales info, and end up with a scary-accurate estimate.

- Data Guy

Angry_Games said...

And they would have gotten away with it, too, if it wasn't for you meddling self-published nerds.

«Oldest ‹Older   1 – 200 of 201   Newer› Newest»