Friday, May 11, 2012

Simon Says

Joe sez: This is a letter I received from a mid-level legacy publishing insider who wishes to remain anonymous. I have his or her permission to post the letter here, and will add some thoughts of my own afterward. Let's call her Guy Fawkes. So here's Guy...

Guy sez: Writers House president Simon Lipskar has posted an open letter in response to the Justice Department’s suit alleging price-fixing among five of the Big Six publishers and Apple (there is also a similar suit brought by the Attorneys General of sixteen states).  In the letter, Lipskar argues that the DOJ is mistaken, and calls for “every one of us — publishers, agents, authors, retailers, wholesalers and device makers — impacted by the DoJ’s quite literally bizarre misunderstanding of the ebook, publishing and bookselling businesses... to stand up and make their voices heard.”  

I hear you, Simon.  And here I am.  I hope other publishing insiders will follow suit, and particularly hope we’ll also hear from readers -- the group we serve; the group most affected by the DOJ’s suit and the publishing practices at the heart of it; and the one group you neglect to mention in your call for greater public involvement.

Lipskar’s argument has two main premises.  First, that whatever publisher collusion might have been behind the simultaneous industry-wide imposition of the agency model on retailers, the collusion caused no harm to consumers because the collusion made only some books more expensive.  Second, and related to the first, consumers can’t be harmed by some books being priced higher because books are essentially fungible.  I’m not an antitrust lawyer, but I think I’m qualified by my position to examine these premises in turn.

1.  Publishing Collusion Caused No Harm.  This line of argument -- that “there has been no discernable [sic] consumer harm from the advent of agency pricing” -- is interesting because it functions as an implicit acknowledgement that collusion did indeed occur.  And unless the DOJ and sixteen states’ Attorneys General are fabricating the extensive allegations of collusion (including admonitions to “double delete” incriminating emails) in their complaints, it seems Lipskar’s lawyers are being tactically astute in steering clear of what would pretty clearly be a losing fight over collusion itself.  Their better bet is to essentially acknowledge collusion, instead arguing, “All right, fine, but nobody got hurt -- so no harm, no foul.”

And how do they argue that nobody got hurt?  Well, because:

2.  One Book Is Pretty Much The Same As Any Other.  Lipskar acknowledges, as he must, that the prices of New York Times bestselling books went up following the simultaneous industry-wide imposition of agency pricing (“prices for a limited number of titles published by these publishers increased, i.e. those ebooks that were digital editions of newly released bestselling hardcover titles.  Amazon had quite explicitly promised its consumers that these titles would be available at $9.99, and with the switch to agency pricing, these titles did indeed increase in price, mostly to $12.99”).  But, he claims, these higher prices couldn’t hurt anyone because the prices of other books decreased (“No Price Increase for Non-Bestselling Titles”).

Now, I want to say that I think Lipskar’s numbers are cherry-picked, and that using only 80 out of 100 titles from a single hour of a single day, with traditionally published titles and self-published titles mixed together, is for many reasons an inappropriate data set.  But for now I'll accept for the sake of argument that Lipskar’s numbers are accurate -- because I think his argument would still be terribly problematic even if his numbers were right.

So let’s just assume Lipskar’s broad argument is correct (“Even if an individual consumer was unhappy with the agency pricing of bestsellers, the existence of other options, including new competitive ones that have thrived since agency, means that harm cannot be ascribed to the decision to buy a $12.99 ebook”).  Let’s accept that alleged publisher collusion on agency pricing made bestsellers more expensive but didn’t affect the prices of non-bestsellers, and examine the premise that therefore readers couldn’t have gotten hurt because they could still find other books cheaper than the newly expensive bestsellers.

Implicit in Lipskar’s argument is the notion that a reader will be as happy with one book as she would be with another.  Because if the notion is untrue -- if, in fact, readers are drawn to certain titles more than they are to others, and if readers find some books are more attractive, more enriching, more life-changing than others -- then it’s impossible to argue a reader would be unharmed if the books she found most worthwhile were made more expensive.

Now, I can’t really prove readers don’t find all books to be of equal attractiveness, equal importance, and equal worth.  It’s possible, as Lipskar suggests, that books are pretty much as fungible a commodity as a bunch of M&M’s in a glass bowl, none of which has any special merit a consumer might weigh in making a selection.  Can’t easily reach that one you want at the bottom?  No problem, there are a bunch of others just like it right at the top.

Still, you’d think that if readers were as indifferent about picking books as they are about picking M&M’s, different books wouldn’t have different titles.  Or different covers.  Or different prices.  You’d think publishers wouldn’t be so fixated on increasing the prices of certain titles -- certain bestselling titles, as Lipskar himself is forced to acknowledge -- that they would allegedly collude, and then allegedly “double delete” the evidence of their collusion, to do it.  You’d think, in fact, that there was barely a reason for publishers to exist at all.  What are we nurturing, and curating, and passionately presenting to the public, if in the end it’s all just a bunch of fungible widgets?

But again, I can’t really prove books aren’t like M&M’s.  I can only say that as a lifelong reader and lover of books, I know there are certain titles that I want more than others, that have added more meaning to and had a more profound impact on my life than others, and that cannot be replaced by others, even if those presumptive others might carry a lower price point.  And I can only solicit readers who share my passion for books to chime in with your own thoughts about Lipskar’s “all books are fungible” theory, and to share your thoughts with the DOJ directly at the address below (even though -- no, make that because -- Lipskar forgot to mention you when he was encouraging all those other people to act).

I have to add, on a personal note, that Lipskar’s argument makes me sad.  Not just because, in suggesting that books are fungible, Lipskar implicitly devalues them.  But also because Lipskar has made me aware of how hollow it is when the leading lights of my industry claim to value rich literary culture, and the special author-editor relationship, and the high-value, carefully vetted, professionally prepared books we curate and produce.  I believe all that -- believe the raison d’etre of publishing is to select, nurture, and collaborate with authors to produce books of lasting value and substantial impact.  And yet here is a top literary agent arguing that one book is pretty much the same as another -- traditionally published, self-published, genre, literary, whatever.  Obviously both these things cannot be true.  And yet publishing’s luminaries claim both, depending on which position suits them at any given moment.  Doing so isn’t just devaluing.  It’s dishonest.

So if you’re a reader, and you feel you’re being harmed when my industry increases the prices of the books you care most about, do something about it.  Post on your blog.  Share a tweet.  Most of all, send your thoughts to John Read at the Justice Department at the address below to let him know that although Simon Lipskar thinks that books are just another fungible commodity and that you don’t count, you beg to differ and you demand to be heard.

Yours sincerely,
Guy Fawkes


Letters should go to:
John R. Read
Chief, Litigation III Section
United States Department of Justice
450 5th St NW
Suite 4000
Washington DC 20530

Joe sez:

First off, I thank Guy Fawkes for her insights, and for contacting me. I did some checking via Google and she indeed appears to work within the publishing industry. But that's not the point. She could be a hobo who emailed me while squatting in her own filth, and she still makes a solid argument. No offense, Guy.

I agree with 100% of what Fawkes said, though she was a lot kinder than I'm gonna be.

I haven’t examined the data Simon claims to have because he didn't provide titles and prices. Maybe it’s correct. Maybe it’s cherry-picked, as Fawkes mentioned. Maybe it’s flat-out wrong. I'd guess the DOJ has ample evidence that prices went up, or they wouldn't have brought the suit. The one who has ALL the numbers, both sales and prices, is Amazon, and if needed they can be subpoenaed, which would be a lot more informative than the tiny sample Lipskar has presented.

But is Simon wrong only because he apparently thinks books are all fungible? Or is he wrong in other ways, too?

Here's what Simon says:

In fact, prior to the change to agency pricing, many ebooks were sold by Amazon for significantly more than $9.99 (the price that is widely and incorrectly perceived by the government and the public to be the highest price for an ebook before agency).  As reported by Publishers Lunch, an industry newsletter, on February 24, 2009, “Using two different methods for checking Kindle price data in Amazon’s system, we find that roughly 30 percent of the 240,000 or so Kindle titles sell for more than $9.99 (and well over 20 percent sell for more than $20).”

Joe sez: Amazon priced ebooks for more than $9.99 because at $9.99 they were losing money. As I have shown in my blog post, The Agency Model Sucks, under the wholesale model publishers were selling ebooks to Amazon for around $12.50. Is it a surprise Amazon sold at least some of them for more than that?

What drove publishers to collude was the fact that Amazon sold many of these titles for less than wholesale. Which, if memory serves, was what their customers wanted, and continue to plead for in the form of negative reviews and boycotts of ebooks priced above $9.99.

But publishers didn't care about readers, or their opinions. Publishers wanted to control price, and they didn't like Amazon discounting below wholesale cost. Hence the collusion, and the Agency model.

So let's be perfectly clear. The reason ebook prices were high under the wholesale model, and are still high under the Agency model, is because that's how publishers want it. But at least under the wholesale model, Amazon could discount some ebooks as they saw fit, even at a loss. And publishers and authors made more money per ebook sold.

With the Agency model, publishers exchanged a larger percentage of the sale for control over pricing.

So how'd that pricing control work out?

Here's what Simon says:

What this means is that, counter to the endless claims made by the government that agency prices for ebooks raised the consumer price of all ebooks, in fact, by setting most hardcover-period ebooks to $12.99, agency publishers were raising the consumer price of a small set of bestselling titles but simultaneously decreasing the price paid by the consumer on many other hardcover period ebooks.

Joe sez: I'd love to know what the ratio of bestseller sales to midlist sales were.

I could raise the price of a product that sells a million units by 30%, and drop the price of a product that sells ten thousand units by 30%, and that doesn't mean prices overall stayed the same.

Bestsellers are so-called because they (say it with me) sell the best. So if the agency model decreased the price on some titles that weren't popular, while increasing the price on those that were popular, then the AVERAGE price of ebooks would have gone up, based not on titles, but on the number of units sold overall.

But then Simon says something that sounds like it could be persuasive:

the price of the average bestselling ebook has decreased significantly, from approximately $10.20 in Q3 2010 to $8.29 on April 27 – a decrease of 19% in the two years since the introduction of agency pricing – and that, furthermore, the average price today is in fact lower than it was before the introduction of agency pricing.

Joe sez: Wow. That's pretty damning.

But is it correct?

In the graph Simon refers to, included in the DOJ papers, the average ebook bestseller was $8.91 in the first quarter of 2010 under the wholesale model. It then rose to $12.11 by third quarter, 2012, under the Agency model.

According to Simon's info, on April 27th of this year the average price of a Kindle bestseller is $8.29.

Is that right? I decided to check for myself. At 5pm on May 10, 2012, I cataloged every Top 100 Kindle Bestseller. (I managed to do it all in under an hour, so I didn't limit it to 80 like Simon did.)

Here's a link to the spreadsheet.

The sheet shows there were 48 ebooks priced under the Agency model at that specific time on that list. Two of them were short stories priced at 2.99 and .99 cents. Whether or not we average those in with the full length ebooks is a judgment call. I would say it depends on if shorts were included in the DOJ's or Simon's counts, but neither listed titles so it is impossible for me to know. If we do exclude them, what is the average price of an Agency full-length bestseller?

$11.81 per title.

Hmm. That seems to be higher than the $8.91 from first quarter 2010, which was under the wholesale model. It also seems higher than the $8.29 Simon reported. Feel free to check my math. Unlike Simon, I'm posting a spreadsheet with titles, publishers, and prices, rather than just expecting you to take my word for it.

But numbers and facts can be manipulated to prove different points. Of the 48 Agency model bestsellers I listed, two were short stories, two were compilations, and two were obviously sale prices--in other words, the Big 6 publishers behind them had temporarily lowered the price for a small period of time. Hmmm, who was it that predicted that would happen? Hint: me, back in 2010.

So we can easily crunch the data other ways. We can remove the two sale-priced titles and we get $12.21 per Agency bestseller title. Or we can break up the bundled ebooks and average out their sale prices (A Game of Thones set would be $7.50 each, and the Shades Of set is $9.99 each) and put in the sale priced ebooks and the short stories, giving those Agency model ebooks every possible shot at looking cheaper. What's the average then?

$10.33 per title. Still markedly higher than Simon's total. Still two bucks more than the pre-Agency Model total.

So what have we learned?

Depending on how we do the counting, and on what day we count, numbers can fluctuate considerably. Now, I believe I've made a better case that average prices under agency went up than Simon made that average prices under agency went down, but the only one who can accurately gauge the veracity of this is Amazon, who has all the numbers.

And you can bet the DOJ will get those numbers if they need them. And they'll be more accurate than the attempts by Simon and me to figure it out using limited data. What we both did is called cherry picking, and it is a logical fallacy. 
A fallacy, of course, is  "an error in reasoning that renders an argument logically invalid". The Top 100 changes every hour. Simon's data, cherry-picked two years after the Agency model started, was 1 data point out of 17,520. (Two years is 730 days times 24 hours in a day, each hour a different data point.)

In other words, I believe it is entirely reasonable to throw out all of Simon's questionable data, and the conclusions he based on it.

What else can we pick on Simon for?

Plenty.

Simon says:

agency has fostered more competition at every level.  It has increased competition between retailers (the market is no longer dominated by a single retailer with 90% market share, but is now a competitive field with multiple retailers with significant share, and there is reasonable likelihood that we will see more competitors enter the market).

Joe sez: Can someone explain how ebooks being equally priced in every market increases competition? Because under Agency terms, THE PUBLISHER CONTROLS PRICES. This isn't a case of Wal-Mart undercutting Barnes & Noble on the cost of a hardcover, which is indeed competition. If publishers set retail, retailers CANNOT COMPETE on price. That's one of the big reasons price-fixing and collusion and cartels are bad. They inhibit competition, not foster it.

Simon says:

One specific area of competition that benefits from further illustration is the way that agency pricing has fostered aggressive competition in the area of the e-reading devices, leading to extraordinary consumer benefit in the form of fast-paced innovation and dramatically lowered prices for the devices themselves.

Joe sez: Ack. The Sony, Nook, and Kobo ALL EXISTED PRIOR TO THE AGENCY MODEL!

As for innovation and lower prices, there's that magic causality again. Can you say pirates and global warming?

Guess what, Simon? Technology keeps improving, and prices drop, ON EVERYTHING! THAT'S HOW TECHNOLOGY WORKS!

Did the Agency model make 32" LED TVs drop from $1199 a few years ago to $399 today? Did it make DVD players drop from $400 to $29 too? Can the Agency model also help me lower my mortgage payments, and improve my eyesight? Damn, it's like the Superman of pricing structures! Let's collude and force it on everybody!

Again, as I said yesterday, I wonder which is preferable in an agent; a smart man trying to use bullshit to fool people, or a moron who believes the bullshit?

Let's continue, shall we?

Simon says:

Absent demonstrable consumer harm, there is no competitive reason for the United States to punish the alleged collusion in the manner suggested by the settlement; rather, the terms mandated by the settlement should have focused on the collusion itself, not the damages from it, since there are none.

Joe sez: I agree. No damages, except for those readers forced to pay more for ebooks, and your clients, who got paid less. Other than that, a victimless crime.

Speaking of authors, in the post I mentioned earlier I break down, step by step, how authors were financially damaged by the Agency model. In short, under the Agency model, writers sold fewer ebooks, while making less money on each ebook sold. I know they sold fewer because cheaper sells more copies. I've done the math, many times.

Now, it’s natural that publishers didn’t consult with their authors before thrusting the Agency model upon retailers--after all, authors typically have no say regarding where or how publishers exploit the rights they've secured.

But if you’re an agent, tell me: have you ever had an honest discussion with your clients before publicly supporting a pricing system that is costing your clients money? And don’t tell me you honestly believe that yes, although Agency pricing costs authors money today, it’ll make authors more money tomorrow by fostering healthy competition and greater choice and blah blah blah. You can’t ethically make a decision to cost your clients money today because you speculate doing so might make them more tomorrow without even having a conversation about that decision beforehand.

So now we have agents publicly supporting Big Publishing at the expense of their own clients' finances--without even consulting those clients. Think about how insane that is. How widely unquestioned. Whose interests do these agents represent? Those of their authors? Or those of Big Publishing?

Shame on you, Simon. Not only for touting this bullshit, but for forgetting who you really represent. I'm thrilled you're not my agent. And I feel bad for those stuck with you.

Now, please, PLEASE can a few agents stand up and show they have the stones to disagree with Simon and all the AAR garbage? You can't all buy into this. Someone’s got to have some integrity.

Anyone?

73 comments:

Melissa Schroeder said...

What I can't understand is AUTHORS who buy into this crap. Seriously. All you have to do is look at the numbers. There was the little hubbub over the weekend about pricing your ebook 20% less than the print, and of course that translated to making Amazon EVIL, but price fixing, that was okay? It boggles my mind.

Claire Ryan said...

There's still a question of legitimacy for authors, unfortunately. So many places will not review or even consider indie published books.

That and, at some point, the old way of doing business looks pretty good if the new way is strange, terrifying, and requires strong knowledge of the internet.

Barbara Morgenroth said...

People will believe the most unbelievable bs. People believed in Werner Erhardt, Jim Jones, Madame Blavatsky and that's a short list. You can come up with your own examples. Once they've put all their eggs in that basket, psychologically it's very difficult to admit they were wrong. What we see is people desperately defending their incorrect choices. That's why tradpub writers strike out at indies, that's why agents and publishers are circling the wagons and lashing out at everyone who suggests they're now wrong. It's not business, it's personal.

Skip said...

So I am a heavy reader. I buy somewhere between 100 and 150 books a year, and manage to read probably 3/4 of them, so my backlog keeps growing. As to the topic of whether or not books are fungible? For me a certain percentage of them absolutely are. There are probably, on average, 20-25 books a year tops that come out that I'm looking forward to, buy on release day and read immediately. Those books are not fungible.

But that's only a fraction of what I buy. Most of the rest of my reading is fungible. It's books I got from Baen's webscriptions that weren't the reason I bought that month. It's random things that seem to interest me from my amazon recommendations, or from blogs and things. And you know what? I almost never spend more than $5-6 for them. I read about as much a decade ago, and each trip to the bookstore I'd bring home 10-12 paperbacks, a bunch of them of authors I hadn't read before. But now the original paperback release has gone away, and I'm not going to spend fifteen bucks on an author I haven't read before. I don't have to. I have about the same odds of finding an enjoyable book from a 4-5 star book under five bucks on an amazon genre list.

So bestsellers, or books from my favorite authors or series? Not fungible. Random reading off the mid-list? Absolutely fungible, and I'm pretty much not reading new mid-list authors from the Big Six any more. I can't be the only one doing this.

Mark Terry said...

"But also because Lipskar has made me aware of how hollow it is when the leading lights of my industry claim to value rich literary culture, and the special author-editor relationship, and the high-value, carefully vetted, professionally prepared books we curate and produce. I believe all that -- believe the raison d’etre of publishing is to select, nurture, and collaborate with authors to produce books of lasting value and substantial impact."

I pretty much gave up on this line of thinking back when the publishing industry was throwing money at Howard Stern and Whoopi Goldberg for memoirs, which they have reinforced by having books published by Snooki et al. They might argue about all this wonderful vetting and nurturing they're doing, but it's really about money.

Anonymous said...

Agents do a lot of good things for authors, but the uncomfortable truth is that--despite legal niceties in the form of author/agent contracts--they care more about their relationships with publishers than they do their clients. They can make all the moral or ethical or, yes, legal arguments in favor of their clients, but at that end of the day, that's not how they get paid. There's an old adage in publishing: the publisher pays the agents fee.

What that means is they are essential freelance acquiring agents for the publishers. They might "hold the line" for authors, but they don't have as much clout as they pretend. I can't think of a single issue that agents can claim as a major victory that has had industry wide impact. Even now, something as simple as contractual cover consultation--consultation, not approval--is a contract-by-contract negotiation point and considered a major coup. Really? Getting a publisher to make a simple phone call or email is that impressive?

Remember: when advances stagnated, the agent industry response was not to stage some kind of unified front with publishers to deal fairly, but to raise the standard agent commission from 10% to 15%--and now some want 20%.

Neither this letter or the AAR letter should come as any surprise.

JPK said...

STOP THE FIGHT!

KONRATH v. LEGACY PUB

It's late in the 8th round. Konrath catches Legacy Pub with a thunderous right. Legacy Pub is out on its feet, swinging blindly in an attempt to defend itself. But Konrath stands in and methodically keeps tagging Legacy Pub punch after punch after punch. The ref finally steps in and gives Legacy Pub a standing 8. But Legacy Pub is stubborn. It's been around for a loooong time and knows it can win. "Uh, Friday...10:48am...Uh, Legacy Pub...Yeah, yeah...I'm good. I can still go..." The ref backs away from Legacy Pub, checks with Konrath if he's ready, and signals the combatants to continue.

I think we know the ending...

Dina Silver said...

I can't express how much I learn from every one of your posts, and today is no exception. As a self-pubbed author, I am consistently amazed by the rhetoric used by industry 'insiders' to self-congratulate themselves and their cause...with little or no regard for readers and authors (minor casualties as you mention). I will continue to do my very small part in tweeting and chatting about your insightful, factual, and sensible posts. Keep up the fabulous work.

Adam Pepper said...

Good to know books are fungible. Hungry readers can check out my inexpensive offerings instead of dishing out big bucks for his client's books.

The industry can't fight public perception and expect to survive. The public thinks content should be inexpensive and those who provide good content inexpensively are going to thrive.

Karen Cantwell said...

Guy said: "I hope other publishing insiders will follow suit, and particularly hope we’ll also hear from readers -- the group we serve; the group most affected by the DOJ’s suit and the publishing practices at the heart of it; and the one group you neglect to mention in your call for greater public involvement."

For me, this is the most important point - the publishers only cared about themselves (and evidently the agents only care about the publishers as well), NOT the readers. I've said it once, and I'll keep saying it - for a group that should care about literacy in this country, they're actions prove that they are horrifically elitist and uncaring.

I.J.Parker said...

I have been damaged by agency pricing. My e-books belonging to Penguin are priced too high and hardly sell.
As for agents, yes, they do work for the publisher, though mine did negotiate some contract points, but in the end, I was told "Take it or leave it. Nobody will offer better terms. And I cannot sell your novels if you don't accept this." The terms were ruinous and I withdrew my title. I'm now self-published, that inspite of the fact that libraries love my books and I have had excellent sales in Foreign countries. I paid that price to get out.
As a reader, I buy books by specific authors or on specific subjects. Not fungible. Fungible books I get from the library. Sometimes, though rarely, that leads to purchases.

Lipskar's prose reminds me of those publisher's contracts I've signed. Scary!

Stant Litore said...

I'd gladly leave a comment saying how deeply I enjoyed reading this post, except I'm still too pissed off at Simon's notion of fungible books. I need to spew steam out of my ears for at least another 10 minutes before I can say anything intelligent again.

Thank you, as always, for this incredible blog.

Stant

Todd Trumpet said...

Joe said: "Someone’s got to have some integrity."

OHHH, so close...

...but I think you lost your target audience right there.

Todd
www.ToddTrumpet.com

Kate Madison, YA author said...

Agency was fraught even before they tried to become distributors.

If you sign with an agent, you must know that you are in same boat as all of the other authors in that agents book. And it sucks to be you if you aren't the top rated one that they might actually go to bat for because otherwise there will be no fighting on your behalf since the agent will have to be dealing with the exact same people the next day on behalf of his other clients.

Don't want to burn those bridges.

Joseph Ratliff said...

Joe,

This.

'nuff said.

Math cannot be disputed.

Dave said...

@Skip. You said. As to the topic of whether or not books are fungible? For me a certain percentage of them absolutely are

So. My daughter recently won a complete "Diary of a Wimpy Kid" Collection. She's already read them all. Would you take the first (is it 7?) books off your fungible stack and trade with me? I'll pay shipping.

Kate Madison, YA author said...

Books are fungible?

How is that even possible? I mean that in the theoretical sense, not the romantic one. I am coming at this from the point of view that there is no real way to 'judge' art as good or bad. It literally cannot be labeled as such bc that isn't a factual quality, merely an opinion.

Can someone walk me through the books are fungible thing bc I must be too far on the other side of that one to even understand it.

Thanks.

Anonymous said...

Have you talked to your own agency about this, Joe? It seems like they are also opposed to the settlement.

http://www.dystel.com/2012/04/is-the-department-of-justices-suit-against-publishers-good-for-authors/

http://www.dystel.com/2012/04/what-you-can-do-about-the-doj-lawsuit/

Aric Mitchell said...

I'm kind of taken aback by the stupidity, stubbornness, and lack of good business sense, that is implied in the anti-Amazon tirades, especially after having read some of the comments on the Dystel blog. Everyone seems to be banging the war drum that "if the DOJ determines collusion, BN will go out of business," as if that's a done deal. This highlights the problem with traditional publishing and the old model. Everyone on that side of the fence seems completely opposed to the concept of, wait for it, ADAPTING TO THE TIMES. They're all saying, "Nope, we're going down with the ship, bitches." And THAT'S how Amazon has been allowed to wield the power that it does. Everyone is too damn stupid to take a look at their businesses and see how they might adapt it to the 21st Century.

Amazon figured out a way; hats off to them. Now how about the rest of you geniuses do something novel with your businesses. Something like, I don't know, TRYING TO INNOVATE?

Joe Konrath said...

Have you talked to your own agency about this, Joe?

No. They haven't approached me on it, and I don't normally read their blog.

Having read both the links, I believe my agents state their opinions, but they don't try to back up their opinions with bullshit facts, untruths, or fancy rhetoric.

They are, however, wrong. Here are two reasons:

Ultimately it means that Amazon, which has had a very strong market share in discounting e-books recently with Barnes & Noble starting to catch up under the agency model, will now virtually have a monopoly on selling e-books.

As opposed to the current Big 6 cartel which raised ebook prices en masse as their authors made less? How is that any better than a monopoly?

Amazon has a record of driving prices down. The Big 6 have a record of driving prices up.

The Agency model inhibits competition as stated clearly in my blog post. It doesn't foster competition.

There will be nowhere to display physical books any longer.

I agree that's sad. But it isn't my agents' job to make sure publishers and bookstores survive. It is their job to sell my rights. If it becomes harder to sell my rights without bookstores or publishers, that's a shame, but that's the direction the future is heading. Supporting a system that is bound to fail is a mistake.

Karen Woodward said...

Another great post Joe, you're spoiling us.

The topic of this one really got under my skin though, the idea that books - stories - are exchangeable. Honestly! You'd think these folks had never read one.

Anyhow, I ranted on about it on my blog, and I just wanted to say thanks for keeping this topic alive, for bringing it to the attention of writers and readers.

Also, I love your books :)

Cheers

JonathanH said...

By the way, if you don't want to wade through the PDF scan of the DOJ lawsuit (the one that Joe links to in the phrase "double delete"), I've converted it into EPUB and Kindle form with reflowable text. Makes it much more accessible, and there's something nicely ironic about a lawsuit about ebooks being downloadable as an ebook :)

I've posted it to the mobileread.com site on their discussion thread, at http://www.mobileread.com/forums/showthread.php?p=2038774#post2038774

Paul Draker said...

I watched this same cycle play out five years ago in the mobile game industry. Instead of the Big 6 Publishers, it was the Big 4 Mobile Carriers (ATT, Verizon, Sprint, T-Mobile) that were once the gatekeepers and unwanted curators. The carriers would only accept games from a few select game companies who agreed to their terms, and forced onerous and surprisingly consistent revenue share terms industry-wide: I think the percentage numbers would look familiar to legacy-contract writers ;)

Today independent game developers can reach their audiences directly. iTunes, Android store, Amazon, etc. provide self-publishing platforms at scale. Rev shares now are 70% to the content developer, instead of 8% - 15%.

Independent mobile game hits (Angry Birds, anyone?) routinely outsell big-budget, legacy game publisher titles.

We already know how this story ends...

Kristine Kathryn Rusch said...

I think the saddest thing for me in the past two years, as writers gained control of their work, was learning how my friends in the publishing industry--agents, editors, publishers--all of whom I care(d) about and trusted had no integrity at all. A few still do, but learning that they have integrity is what now surprises me.

Stant Litore said...

Paul, that's a remarkable analogy. I didn't even think of that, but you're right.

When the dust settles on this, it is going to be a very different industry.

Stant

Stant Litore said...

It wasn't always this way; at one time, traditional publishers gave more sizable advances, higher royalties, and more frequent editorial attention. That was decades ago. The long sliding decline on royalties is simply not sustainable; the only reason it has persisted so long as that most writers cannot simply stop being writers. Artists don't close up shop because their work doesn't pay the bills; they simply get a day job and work nights.

But this kind of trend demanded innovation. Recent technological advances have just sped up the inevitable. Back before there WAS an Amazon, writers across the country were still bemoaning the mess at the top of the industry. Because e-books were barely in existence, we were all looking to indie publishers and small regional presses for innovation. The desire for finding new ways for writers to work with publishers and to connect with readers was already there. E-books has just accelerated the pace of change dramatically.

I am appalled at the backward-thinking of the larger companies in the industry, and the absolute duplicity of this current propaganda war. The claim that the Big 6 are acting in writers' and readers' best interest is astonishingly deceitful. I can't understand why anyone is actually swallowing this.

Also, SINCE WHEN did the survival of Barnes & Noble and the large chains become critical to the survival of the book industry? Maybe it's critical to the survival of the Big 6; I don't know. But I am the only one who remembers how in the early 90s Barnes & Noble was being cast popularly as the Enemy? Because everyone was worried that the local bookstores would go out of business, thus eliminating distribution options for writers and crushing diversity in literary culture? And suddenly now it's, if B&N goes under, this will eliminate distribution options and crush diversity in literary culture?

Doesn't anyone else see how fundamentally WEIRD it is to hear such vocal rallying behind the "underdogs" of Random House and Barnes & Noble? I ask you!!

The industry doesn't only need a math lesson. It needs a history lesson. And possible a degree in basic business ethics.

Stant Litore

Paul Draker said...

@Stant:

There was also a brief "golden era" of legacy mobile game publishing, when the doors were open to indies, the advances were decent, and the revenue splits fairer. It lasted about a year.

You are spot-on about writers and other artists refusing to quit when the work they love can't pay the bills. I should know. I ran a 30-person indie game developer for four years, and we had our equivalent of a "day job" too. We did a lot of enterprise consulting to subsidize ourselves while the economics of mobile game dev went south and our competitors disappeared. We were one of the last standing, but eventually hung it up. Two years later the iPhone rewrote the mobile game industry's rules ;)

When an industry's technological barriers come down, it takes a little while for its business models to catch up. But it's unstoppable. And every former middleman is forced to prove they have a value proposition, or to take their ball and go home. When the customer and the content creator can engage each other directly, there's usually a lot less room at the table for those in the middle. And that's happening in the publishing space now.

The real winners will be the readers (yay) and the writers who can give them what they want.

And the novel I've been waiting a decade to write is on its second draft now. I hope it will find an audience, but now that's up to me :)

Watching Joe carry the flag for us writers is awe-inspiring.
You rock, man.

Patrice Fitzgerald said...

The last gasps of a dying field. It is sad, and people will lose their livelihoods.

Others will gain livelihoods. More writers will be able to do what they love full-time. Readers will have a greater variety of books to choose from.

That's competition. See?

elf said...

agency has fostered more competition at every level. It has increased competition between retailers...

If you wanted yet another point to add to the collection, you could question whether this "increased competition" has benefited any ebook store that does not partner with a dedicated wifi ereader.

Fictionwise isn't doing better since Agency pricing. AllRomanceEbooks lost a large set of their stock for almost a year, while the new coding and contracts were being worked out. Diesel Ebooks, a powerhouse in the pre-Kindle days, has become a near-unknown; while they still sell both mobi and epub versions, they can no longer offer frequent-buyer incentives and fall behind those that can offer wireless delivery.

Agency pricing guaranteed that a store without a wifi ereader--the digital equivalent of non-chain/mom-and-pop stores--can't compete at all.

Edward G. Talbot said...

"books are fungible"

I am wiping the tears of laughter from my face. It's just. . .how do you even counter such inanity?

Neither of his arguments have the remotest chance of swaying the DOJ. I'm sure the DOJ already has numbers from Amazon and knows the scoop.

I've sort of reached the point where I honestly don't give a crap about the stupidity. They're gonna do what they're gonna do. I have a certain amount of sympathy for how all the turmoil is impacting independent book stores and some traditionally published authors, but the latter should by now be seeing the handwriting on the wall and planning their next moves based on how things are, not how they want them to be.

MJRose said...

I'm both self published (first in 1998 and most recently next month) and traditionally published (12 books with three of the big 6).

I've had great experiences with Amazon and with my publishers. I’ve also bad experiences with all of them.

I'm a friend of Joe’s and have known him since 2004. I’ve blurbed his books, written short stories for his anthologies, hosted him on my blog and been hosted on his.

I'm also a friend of many other authors who have done non-traditional publishing deals including Ann Voss Peterson and Barry Eisler - who I’ve been close friends with for over eight years.

In addition I am a Writers House client. Dan Conaway has been my agent since 2008. And last but not least I’ve known Simon Lipskar since 1999 and consider myself fortunate to be friends with him, too.

So I’m connected in some way to everyone and every side of what’s being discussed here and the parties involved.

I defend Joe’s right - or anyone’s - to disagree with Simon Lipskar’s letter to the DOJ, his math, his points or his position. Disagree and argue away.

But I absolutely can’t sit back and watch anyone – friend or foe – question Simon Lipskar’s ethics and integrity or question that he has forgotten who he represents.

I have seen first hand the lengths he has gone to to fight for the authors he represents. It is not in Simon’s DNA to favor a publisher for fear of reprisals. Agents who have clients like his are in the power seat with publishers – not the other way around. Without authors, publishers would have nothing to publish.

I think any author would be damn lucky to land an agent with Simon’s ethics and his integrity fighting for them and their books.

Steve Berry said...

Simon Lipskar is one of the smartest people in publishing. He's also one of the most straight forward. He always speaks his mind and makes a lot of sense. He's my agent, and I'm proud to say that. Interesting how Guy Fawkes did not have the nerve to identify himself. Yes, I said himself since his identity is pretty easy to decipher. Hey Guy, If you feel that strongly about Simon's arguments, then tell the world who you are. Let's judge your arguments by your identity, which would make a difference. And, Joe, you posting anonymous cheap shots is just as bad. Grow up, guys. I practiced law for 30 years. I served in public office for 14 years. I never hid behind anonymity. I said what I had to say in the sunshine. So does Simon.

Joe Konrath said...

I think any author would be damn lucky to land an agent with Simon’s ethics and his integrity fighting for them and their books.

You're entitled to your opinion, MJ. But based on the bullshit of his letter, I have every reason to question Simon's integrity. I laid it out in a painfully clear way.

If you object to any of the points I made, I welcome open discussion and debate. Please explain how you believe his letter represents his clients' best interests, rather than the best interests of the Big 5 he's defending.

Simon is also welcome to defend himself. I'd happily post any reply from him in as an addendum to the blog.

But I'd be very surprised if he replied. Because I'm right, and he's full of shit.

Anonymous said...

Mr. Berry, you say Mr. Lipskar always makes a lot of sense. Yet I think Mr. Konrath has shown here that Mr. Lipskar's numbers make no sense at all. And I think Fawkes has shown that the premise of Mr. Lipskar's argument -- if average prices are all that count, it must mean one book is as good as another -- is ridiculous. Yet instead of responding to either of these points, you just natter on about how awesome Mr. Lipskar is. You sound like a child defending a parent from serious, logical, evidence-backed allegations by emoting about how nice the parent is.

You say you want to judge the quality of Fawkes's argument by his (or her) identity? I don't get it. Maybe he has good reasons for keeping his identity out of this. Anyway, in your 30 years of practicing law, did you learn to judge the quality of arguments by the identify of the person making them? How does a person's identify affect his logic and his evidence? Really, 30 years in law, and 14 years in public office (well, the latter is pretty easy to understand, judging from the country's politicians), and this is what you think constitutes effective argument, and is the best you can do?

I gather you like, respect, and feel grateful and loyal to Mr. Lipskar. That's fine, even admirable, up to a point. But here, all those emotions are preventing you from making the kind of reasoned argument any first-year law student could manage. I'm starting to understand why you're more attached to resumes than you are to logic -- your first is superficially impressive, your second nonexistent.

If I'm wrong, please do demonstrate it.

And Ms. Rose, I defend your right to defend Simon's ethics and integrity, and anything else for that matter. But like Mr. Berry, you haven't responded to anything in Mr. Konrath's post or in Fawkes' letter. It's telling that even the people who are highly motivated to defend Mr. Lipskar can't do a thing to defend his argument.

Joe Konrath said...

Simon Lipskar is one of the smartest people in publishing.

Not according to that ridiculous letter he penned, Steve. It's loyal for you and MJ to defend him, but if you want to really defend him you need to address his points. I believe I've made many points that Simon is mistaken. If you disagree, show me how he is correct and I'm wrong.

Interesting how Guy Fawkes did not have the nerve to identify himself.

In this case, the anonymity is necessary, because I can guarantee revealing her name would cause Guy harm, both emotional and financial.

But that's not the issue. The points she made are valid, even if she is a hobo squatting in her own filth. Please address those points.

If I anonymously posted on a blog "2 + 2 = 4" it doesn't invalidate the truth behind the equation.

I like you, and MJ. I like lots of people in this business, many of whom work for Big Publishing. I think it's swell to go to bat for your agent. But if my agent had written that letter, or been one of the 13 AAR board members who sent the letter to the DOJ, I would have taken her to task as well.

Joe Konrath said...

Also, it's prudent to point out that I dislike anonymous comments. I believe everyone should have the guts to stand behind what they're said.

The reason I allow anonymous comments on this blog is that sometimes people who work within the publishing industry chime in but say things that could get them fired.

If Miss Fawkes had sent me an email saying, "I don't like Simon" without anything to back that up, I wouldn't have blogged it. But the essence of her argument is: "Simon is wrong, and here's why."

The argument she presented was clear. It was also something I hadn't thought of. I'm not in the habit of posting other people's words as my own, even if I agree with them, so the solution was to post them anonymously.

It was my call. I stand by it.

Anonymous said...

(I'm not the anonymous who posts here often, I'm just a reader who's been following the debate.)

Steve Berry, I took a look at some of your books on Amazon. I'd love to buy a Kindle copy of one, but they're priced at $9.99 and $8.99, which, frankly, is a bit high. Do you think you and your agent could work with your publisher to lower this price a bit? If not in these books, perhaps in your next contract. As a reader, I'd really appreciate it. Thanks!

Joe Konrath said...

And Ms. Rose, I defend your right to defend Simon's ethics and integrity, and anything else for that matter.

As do I. But why did you post anonymously? Unless you're Fawkes, there was no reason to.

I agree with what Steve said. People need to own what they say. It's cowardly not to, even if it doesn't negate your point.

Joe Konrath said...

(I'm not the anonymous who posts here often, I'm just a reader who's been following the debate.)

Okay, I laughed. But I'm going to turn off anonymous posting if I keep getting anons who post anonymously for no reason.

Lloyd Meeker said...

Books are fungible?

If one book is just like another, all writing programs are superfluous, as it doesn't matter whether a writer has skill or not.

If one book is just like another, Lipskar puts himself out of work as an agent -- whose sole job is to represent books that he judges to have particular commercial and intellectual value.

If one book is just like another, there is no basis for all the justifications by legacy publishers that they alone manage to produce reliably worthwhile books and without them quality control is abrogated.

Such a stupid thing to argue.

Tim Barger said...

Since the last 50 years or more the Big 6 and the major distributors have had a lock on the book market. E-books are the only market to challenge their dominance. Now they claim that in their sole altruistic concern for fairness and free competition they were forced to choose the agency model - and raise prices. Yet throughout this whole dust up the Big 6 have had no problem with Amazon discounting their overpriced hard cover titles. What a bunch of lying hypocrites. Maybe I'm very dense, but it seems obvious that the 6 are trying desperately to protect their legacy investment from the inexorable tide of innovation.

Joe Konrath said...

Since I respect Steve and MJ, I reread my post, paying careful attention to the accusations I leveled at Simon. (It's worth noting that my usual MO is to scrutinize my arguments closely before posting-which I did in this case, and which Simon perhaps would have benefited from doing himself before his misguided letter.)

I did actually edit the post before posting. The original title was "Simon Lipskar Fail". I chose not to use that title, even though I've used "Fail" in many of my blog post titles, because this blog gets many thousands of hits per day, and ranks well on Google. If I'd put Simon's name in the post, I wouldn't doubt that my post would be on the first page of Google results anytime someone searched for his name. I thought that cruel, so I didn't do it.

But after re-reading, I stand by my words. It comes down to this:

1. Agents work for authors. A good agent must always look out for her author's best interest. Since the nature of the business is monetary, a good agent must do her best to protect her authors' monies. A good agent should always consult her authors in matters of money.

2. Agents sell rights to their clients' work to publishers. The nature of the agent/publisher relationship is adversarial, because the agent represents the author.

3. The Agency model is NOT in the author's best interest for reasons I've described in great detail. It financially harms the author.

If these three points are taken as fact, what can be deduced about an agent who supports the publishers when it comes to the Agency model?

I call this a clear conflict of interest, and a breach of ethics. Showing public support for the companies that harm your clients-- companies that you are supposed to negotiate contracts with on your clients' behalf--is not something a good agent does. I believe it is analogous to me hiring a lawyer in a legal dispute, and my lawyer siding with the opposing party or assisting with their case.

I welcome any arguments disagreeing with my position. So far no one has stepped up to the plate.

MJRose said...

Thank you for your respect Joe. You know it's returned.

In answer to your last post.

I wasn’t and can’t argue for or against your opinions or Simon's. I think it would be a disservice to him to debate on his behalf or for that matter on yours if it was on his blog.

I only posted to make one point about Simon’s integrity and ethics.

I've spent many hours talking with Simon about publishing economics from an author's perspective.

I know he has thought about these issues deeply and carefully -- and I believe entirely from the point of view of maximizing his clients' monetary value of their work.

That he disagrees with you that agency is bad for his clients who publish with Big Six houses does not make him unethical.

Joe Konrath said...

I think it would be a disservice to him to debate on his behalf or for that matter on yours if it was on his blog.

Nor should he expect you to. He should do it himself. If my integrity was called into question, I certainly would.

If one of my good friends did something really stupid and then got roasted on a blog, I wouldn't post in the comments about what a good fella he was. I'd call him up and ask why he did something so stupid, then I'd try to convince him to retract it.

That he disagrees with you that agency is bad for his clients who publish with Big Six houses does not make him unethical.

It's a cut and dry conflict of interest, MJ. And this conflict certainly brings Simon's ethics into question. How can you truly defend Simon's ethics without analyzing how he's being unethical?

It's great that you have a relationship with Simon and want be a character witness, but his letter is damning. If Simon is smart, the letter is a willful intent to deceive the DOJ while at the same time harming authors. If he made a mistake (something I have a hard time believing considering the length and breadth of the letter) then he can retract it, saying new information has changed his stance. Or he can defend it.

Instead, the only ones defending him are a few of his author friends, and they aren't even attempting to attack my argument or evidence. Why isn't Simon defending his words? You're aware of how many hits my blog gets, and how many people are reading this and judging Simon.

When I'm wrong (rare, but it happens) I admit it. If I do something stupid in public, I apologize in public.

That you have to vouch for the ethics of your friend is sad. You've disagreed with me many times in public, and ably defended your opinions. Show me why you believe Simon's letter to the DOJ was in his clients' best interests. Because I have shown beyond any reasonable doubt that under the model he is supporting, his clients are earning less.

Anonymous said...

This is another Anonymous. Well, at least I'm not one of the Anonymous's who have posted so far.

I have a question for Steve Berry. Steve, I've been in publishing long enough to remember when your agent Simon Lipskar's colleague, Dan Conaway, who M.J. Rose also mentions here, was an editor at HarperCollins -- and was also blogging as Mad Max Perkins while concealing his real identity.

http://bookangst.blogspot.com
http://www.mediabistro.com/galleycat/mad-max-perkins-takes-off-his-mask_b1425

Now, I enjoyed the Mad Max Perkins blog and had no problem with a publishing insider assuming an identity to make points he couldn't have comfortably made under his own name. But you do seem to have a problem with such a thing. So I'm curious, and I hope you'll help me understand:

Do your arguments also apply to Dan Conaway? In blogging as Mad Max Perkins, was Dan displaying a failure of nerve? Were his arguments in some way invalidated by his decision to adopt a pen name? Could you not have judged his arguments without knowing his identity? Did he need to "grow up?"

And do these arguments you've made apply to everyone who writes or has ever written under a pen name?

(Careful. My next example is Benjamin Franklin: http://www.pbs.org/benfranklin/l3_wit_name.html )

Thanks in advance for your response. I'm sincerely trying to understand your point.

Joe Konrath said...

I'd like to add that I'm sending this blog post, my response to the AAR, my lengthy and detail explanation of why the Agency model is bad, and Barry's terrific post on how the Big 6 function as a cartel, to the DOJ.

As you know, the Tunney Act states the DOJ will publish my letters alongside Simon's.

If Simon believes he's right, and wants the DOJ to consider his opinions, he'd better defend them against my arguements.

Joe Konrath said...

Dangerously close here to shutting off anonymous comments.

Own your words, people.

Cluelass said...

I cannot tell you how absolutely delightful it is to read a well-thought, well-worded article filled with facts concerning this mess! I am so tired of all the half-truths and lies that are being spouted to support an industry that deliberately and thoughtfully fed their greed on the pocketbooks of readers.

While I can't bring specific facts to bear in my own arguments, I can tell you that I received a Kindle in 2008. I'm an avid reader and in the months and years since then, I've purchased over 3,000 ebooks. My apocryphal evidence is that, over time, I've paid more and more for these books. (This can be supported by the lack of savings in my bank account.)I've had to abandon favorite authors and seek out new authors to read, because I refuse to pay the same price for an ebook as I do for a mass market paperback.

Everyone talks about the bestsellers, and yes, their prices have increased as well, but for readers like me, it's the ordinary mass market paperback books that have broken the bank. Why should I pay $7.99 for an ebook when I can go into a brick and mortar store and buy the paperback version (which has more versatility in terms of lending) for 10% off that price?

Thank you, Joe, for remembering that the industry exists to serve readers, not the other way around! And I firmly believe that authors, not publishers, should reap the lions' share of profits from the books which are a result of their talent and labors.

Hairhead said...

This story is beginning to hit the news. Read the establishment point of view from Canada here: http://www.vancouversun.com/business/Ebooks+Publishers+read+industry+future/6608205/story.html

The crux of the publisher's whole argument is in the following paragraph: "While the lawsuit sounds like good news for consumers, it’s possible it could be detrimental for publishers and authors who could be forced to sell their products for even lower prices to compete with Amazon.

“We hope it doesn’t lower prices, because that would harm revenues for publishers — and by extension authors — and we’re going to end up without any books,” Ballantyne said. “With retail [business] crashing, publishers don’t need the lower prices”

Please note the assumption publishers have a Divine Right to the first and greatest part of dollars spent by readers -- and authors, the ones who, you know, CREATE THE WORK, might get a few dribs and drabs, after overhead, salaries, expenses, bonuses, and greed are covered (all out of the great generosity, I suppose, of the publishers).

The next greatest idiocy and manipulation is the idea the publishers present that "we're going to end up without any books"

OOO!!!! Scary! Give us money! Let us form cartels! Let us overcharge you! Let us continue to rip off authors as well as the public. Or there won't be any of the stuff you love, anymore!

You know what this snivel is like? It's like the snivel that went up from the monasteries when Gutenberg made his printing press. "Oh dear, think of all of the young monks we have, spending their lives, squinting under candlelight, copying manuscripts! This is terrible! If this "printing press" catches on, why, our monks and novices will have to do *productive* work!"

Think of the buggy-whip manufacturers reacting to the automobile. Think of all of the typesetters who lost their jobs when PC-typesetting became the norm. Think of all the newspapers going out of business because Craigslist destroyed their real moneymaker, the Classified Ads section.

Every technological revolution makes changes in the economy. Most of these changes, over time, are beneficial. Hanging on to old ways of doing things and demanding that the government or the public PAY to keep you in business when you no longer provide the goods and services that people want -- that just doesn't work.

This is all taking out the middleman, and allowing artists and creators direct contact and economic interaction with their customers. It's a really basic freedom thing.

And to all of you who say that Simon's take on things is correct: FOR GOD'S SAKE, PROVE IT!! ARGUE! SHOW THE MATH! CONVINCE US!

Don't just blather on about what a nice guy he is. It's insulting that you think we should be swayed by such empty posturing.

Barry Eisler said...

Just a few thoughts.

I think a number of people here are making a fairly common mistake to which we all fall prey from time to time when arguing: focusing on who at the expense of what.

Joe, respectfully, I think to some extent you got this ball rolling with some of your personal asides to Simon and your implication that he lacks integrity. Now, I feel I ought to mention that Simon and (primarily) Dan both represented me for two books while I was with Writers House and I think they did a superb job. Our parting had to do with changes in the publishing landscape and our inability to come up with a new business model that satisfied all parties concerned, and had nothing at all to do with ethics or integrity. In fact, I found Dan, Simon, and everyone else I knew at Writers House to be good people, and I think it's the feeling that you've suggested something contrary to that which understandably moved Steve and MJ to post here.

More importantly, I don't think the question of anyone's integrity is particularly relevant here. I think what's far more important is your argument about numbers, and Fawkes' argument about the implications of Simon's argument. Suggesting that because Simon's numbers are wrong and his argument is faulty he's being unethical created a distraction from your much more important, and, for me, persuasive, other points.

Similarly, Steve, I have to agree with some of the anonymous posters who have argued that the identity of Fawkes is irrelevant. I think in a different way, you're making the same mistake Joe did, which is to focus more on who than on what and to inadvertently create a distraction thereby.

Now, although I suck with numbers, I think Joe has made a persuasive case against Simon's methodology. And I think Fawkes has made a persuasive case that Simon's argument is flawed because it requires as a premise that books are essentially fungible items. Personally, I'd rather discuss those arguments than the identities or integrity of the people behind them. Not that questions of identities and integrity aren't in various ways interesting, but they're just so much less relevant than the very important questions Simon raised in his letter to the DOJ and that Joe and Fawkes raised here.

Barry Eisler said...

Another reason I'm not much interested in focusing on individual integrity is because a focus on individual integrity distracts from the much more important related topic of structural incentives. Here's what I mean.

As a general rule, in publishing and probably in any system, I think most people will be fundamentally honest. Or, at a minimum, they won't look in the mirror and see someone unethical looking back at them. But as the authors of Freakonomics and Superfreakonomics argue, human beings respond to incentives, and there are a lot of structural incentives in the publishing world I think are worth considering. Such as: who, fundamentally, pays an agent? An author, or a publishing house? The author is the client, but who is the customer? Also, which, for an agent, is a scarier proposition: losing a client, or being blackballed by a publishing house? Etc. I don't think anyone can reasonably argue that these questions are unimportant.

If you consider these questions, I think it becomes easier to understand that even the most honest agents can be pulled in different directions by their obligations, on the one hand, and their self-interest, on the other. Not because they lack integrity, but because they're human. The result, as could be the case with Simon, might be an otherwise smart and honest person who fails to realize he's attaching himself to a flawed methodology and an unsound argument.

Look at how many liberals support President Obama's policies on war, secrecy, indefinite imprisonment, and the execution of American citizens without recognizable due process. When President Bush was behind these policies (actually, even Bush didn't claim the execution power), liberals were outraged. Now that a Democrat is behind them, many liberals have decided these policies are good. This phenomenon is unfortunate, but it's also human nature. In my experience, most people judge the goodness of an act not by the act, but by their perception of the goodness of the person behind the act. Simon might be doing this when he honestly believes that the agency model is good for authors and that the current publishing establishment is overall good for everyone. And MJ and Steve, you might be doing it in honestly believing Simon must be making a good argument because he himself is good. I'm not trying to put words in your mouths; just speculating because again, you haven't addressed any of the substantive points Simon, Joe, or Fawkes has made.

But I mention all that mostly as an aside. The integrity/incentives angle is interesting to me as a novelist who tries to honestly grapple with the complexities of human nature and human motivations, and is maybe worth noting as a possible explanation for what has caused MJ and Steve on the one hand, and Joe on the other, to so strongly disagree about what could be behind a smart, honest guy making an argument so weak that even MJ and Steve aren't inclined to defend it. But fundamentally, I don't think integrity (or identity) are at all the important issues here. And structural incentives, while an important subject, are probably best addressed in a separate post. For now, I'm most inclined to focus on the heart of the disagreement at hand. So if Fawkes and Joe are wrong about the substance of their arguments, I'd be grateful to anyone (including, most of all, Simon) who could demonstrate why. Even if, in the end, we can't persuade each other, I think the conversation would be useful and educational for everyone following it. Who knows? Maybe even the DOJ is listening, and I doubt they care much about questions of personal integrity and identity. I have a feeling they'll be more interested in, and persuaded by, substance.

jtplayer said...

Can I just say that Barry Eisler is one cool cat?

Thanks for bringing a balanced perspective to the debate. I know for some this is hard to grasp, but you can make your point without being a judgmental hammerhead about it.

Adam Pepper said...

Cluelass, thanks for posting. Yours is a voice that needs to be heard: the reader. Also known as The Customer.

Hairhead, thanks for posting as well. That sentence tells it all. "Publishers dont need lower prices." Guess what: customers do. Prices are going to come down, and not because of Amazon (not solely anyway), it's because that's the price the customer perceives as fair. You can't train your customers to pay higher prices, which is what they are trying to do. People are begrudingly paying high prices but how long can that go on? If you continue to price a product higher than your customer perceives it's worth, it's only a matter of time before someone else does what you can't, or won't.

They need to stop fighting Amazon and the DOJ and get leaner. If they can't provide a product at a price the customer considers fair and still turn a profit, then they will go under, and it won't be Amazon or the DOJ's fault. It will be their own.

Joe Konrath said...

Hi, Barry. I was waiting for you to chime in. (And let's be honest--I called you and asked you to join in because I wanted your take on this.)

I agree with the majority of you've said, so I'll focus on what I disagree with.

While the question of integrity does misdirect from the main issue, which I feel is the validity of Simon's letter, you went on to say:

More importantly, I don't think the question of anyone's integrity is particularly relevant here.

Agents and authors have a business relationship. Integrity is ESSENTIAL in business dealings. If I hire an agent to look out for my best interests, that agent must meet certain ethical standards, the primary of which is: "he works for me, not for the publisher I am negotiating with."

This letter is a valid, irrefutable case of conflict of interest. And questioning the ethics of the person who signed his name to this letter is not only an obvious outcome once the letter is discredited, but it is an essential outcome as well.

Not that questions of identities and integrity aren't in various ways interesting, but they're just so much less relevant

I agree, but you seem to be giving equal weight to identity and integrity.

As a whole, I dislike anonymous posts. I see it as cowardly. But in Ms. Fawkes's case, I recognized the reasons behind her anonymity even if I can't share those reasons. Even more importantly, as you stated, her identity had nothing to do with her points. Anyone could have made those points.

As to integrity, it can be said that Fawkes didn't post under her name because she feared she'd suffer financially. A case could be made that Simon's letter was also to preserve what he feels is a system that benefits him financially, and that he would financially suffer if that system failed.

Both are correct. We could also make the argument that both are forms of betrayal. Fawkes's letter is damaging to the industry she works within, and she didn't have the guts to sign it. Simon's letter is damaging to the finances of his clients. Both are guarding their self-interests.

But there are some major differences. The fact that Fawkes wrote this indicates she knows her corporate masters are wrong. Her betrayal is akin to whistle-blowing. In short, her argument is correct and she's on the side of right.

In Simon's case his argument is bad, and he's harming his clients and siding with the bad guys (in the simplest, broadest terms.)

Integrity and identity, in this instance, aren't fungible. :)

Joe Konrath said...

Such as: who, fundamentally, pays an agent? An author, or a publishing house? The author is the client, but who is the customer? Also, which, for an agent, is a scarier proposition: losing a client, or being blackballed by a publishing house?

I wish I'd brought that up. THis is from the AAR's Canon of Ethics:

While affirming the necessity and desirability of maintaining their full individuality and freedom of action, the members pledge themselves to loyal service to their clients’ business and artistic needs, and will allow no conflicts of interest that would interfere with such service.

That's the FIRST thing they state in their canon. The 13 board members of the AAR who signed the DOJ letter, and Simon Lipskar, have blatantly disregarded that.

Further down in their code:

Members shall not represent both buyer and seller in the same transaction.

Fail. Can anyone say that isn't what's happening here?

Danielle Blanchard said...

Another great post, Joe. I respect every author who chimed in with their opinion but comparing integrity when it comes to people of power...well, it is a sticky issue. Mr. Lipskar might be a man with a strong sense of integrity but we as humans tend to be selfish creatures who look out for number one. No one in legacy publishing wants to see book prices go down or authors make more money. Amazon isn't the problem, good old fashioned greed is.

As an aside and completely OT, Mr. Eisler, my mother is a political junkie. MSNBC is on in her home practically 24/7. Liberals squeal like pigs underneath a gate about every issue Obama does using executive power (& everything having to do with the conflicts in Afghanistan and Iraq). Don't believe me? Watch Hardball with Chris Mathews, The Ed Show, The Last Word with Lawrence or Rachel Maddow. I am an Independent by the way and respect both the present and former presidents so this isn't political, merely a response to your argument.

This isn't the Huffington Post so back to our usual programming!

Anonymous said...

I've been watching this thread finally decided to jump in. I'm a self-published author (and doing very well), so I don't have a horse in this race either way.

But I have to call bullshit on Simon's argument. Books are Fungible? REALLY?

Here's the definition of fungibility: Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution, like crude oil.

HOW are books fungible? I can't exchange one favorite bestselling author for another. With the Harry Potter series, people stood in line overnight for HER BOOKS, not some other bestseller.

For god's sake, people go so far as to get Twilight tattoos! They don't walk into the tattoo partlor and say, "Hey, just give me any vampire-looking thing you've got." No-- they want Edward and Bella. Or that apple. Or whatever. I know, paranormal romance fans are weird, but you get my point.

And don't get me started on nonfiction. You can't just exchange one textbook for another. I write nonfiction for a living, and the whole idea is ludicrous. How are books fungible?

The very basis for his argument is flawed.

Books are NOT FUNGIBLE. And when I buy my favorite bestselling authors, I know that I'm paying more now than before.

And when I bought "Sh*it my Dad Says," I was really, really, really pissed about the price, because the hardcover was less than the ebook.From that point onward, if I saw a new release from a favorite author where the ebook was higher, I just didn't buy it. It pissed me off too much.

So... as a book buyer, I hope the DOJ tears the Big Six a new one. What they did was illegal, unethical, and yes, it DID harm the consumer.

ME.

-Christy

Wahoo Suze said...

Joe, I think the anonymous comments are because it looks as though you need some kind of account in order to comment, or you can be anonymous. That's why my last comment was anonymous.

But it looks like I can choose Name/URL instead, which I didn't realize until this thread.

Becca Mills said...

Joe, your points and "Guy's" are, of course, convincing. But I wonder if there's not another way to consider this situation.

1) You've written convincingly that the agency model is bad for authors. They sell fewer books and make less on each sale.

2) Traditionally published ebooks cost way too much. $12.99 is too much, and $9.99 is too much.

3) Lipskar says:
"it is impossible to look at today's ebook marketplace ... and not see that ... the agency period has evidenced a remarkable explosion of competition, with new publishers, self-publishers and retailer-owned publishers providing consumers ebooks at lower prices than the agency publishers and taking significant market share from them in the process."

Okay, keeping those three things in mind, here's what I'm thinking: by consistently loss-leading bestsellers at $9.99, Amazon was putting a lot of pressure on publishers to lower ebook prices overall because it was establishing the customer expectation that ebooks should be cheaper. In time, this pressure (especially given Amazon's then-massive market share) might've forced publishers to come to terms with the reality of the dawning ebook world. Thus Amazon's tactic might've, in the very long run, actually been good for publishers. In effect, Amazon was the cheetah forcing gazelles to evolve into faster runners. Yeah, it was unpleasant for the slow gazelles, but in the long run, it might've led to a more successful species.

But the agency model, in removing the pressure Amazon was applying, allows publishers to insulate themselves artificially from the growing market pressures of the ebook revolution. They can just keep charging ridiculously high prices for their ebooks. Until ... oooops! ... they go out of business because enough authors have gone indie and enough readers have realized there are tons of great books out there for less than $5.

No, books aren't fungible, but there are really only a few books I feel I *must* read every year. I still read those, even if they cost me a lot. But all the dozens of other books I ready? Indies. It wasn't that way a few years ago for me, as a reader. I suspect a lot of readers are acting like me, and that's a lot of money big publishers aren't getting.

Why have my reading habits changed that way? Maybe at least in part because of the dynamic Lipskar describes in the material I quoted above. The ridiculous over-pricing of the traditionally published ebooks creates a huge window for reasonably priced indies. It's like the Big 6 are standing on the tops of their NYC skyscrapers and hollering, "Please! Take our readers! Take them all!"

So maybe the agency model isn't "bad for authors" in general. Maybe
it's bad for traditionally published authors, but good for indie authors. Specifically, it's good for us at their expense.

If that's the case, maybe we should be happy to let the Big 6 shoot themselves in the foot with the agency model.

Possible?

Alan Spade said...

Blogged. Title : Agents littéraires : un mythe s'effondre (litterary agents : a myth is collapsing).

I shouldn't translate so much of what happen here on my blog rather than writing, but these are tremendous changes.

Joe Konrath said...

In effect, Amazon was the cheetah forcing gazelles to evolve into faster runners.

But the gazelles didn't evolve to run faster. They simply hogtied the cheetah.

That won't work. Cheetah gonna get free and keep killing. Cheetah don't give a shit.

JonathanH said...

"Cheetah don't give a shit" is a great line that deserves to have a book written around it :)

I also suggest that we can't ascribe all of the legacy publishing industry's actions to wilful ignorance or stupidity. Anyone who's done an MBA course, or just read the books, knows that there are a couple of options for a dying buggywhip company:
1) Innovate your way into some new niche (what we think they should be doing)
or
2) Ride your bloated business into the ground, extracting as much value as possible on the way down (what they might be doing).

#2 seems scandalous and horrible and wrong to many people, but makes perfectly sane business sense, given that most business models are basically psychopathic. You relentlessly exploit any remaining advantages, you invest as little as possible, and you deny what you're doing for as long as possible (so that more idealistic employees don't jump ship too soon).

The only remaining advantages of the publishing industry are marketing/brand power, a long history of easy access to the media, and a large employee base. If I were an executive tasked with implementing option #2, I'd be mobilizing everyone under me to write letters and I'd be calling all my friends in the media to get nice sympathetic articles written. Sure, I'd also know that it wouldn't change the final result, but a win against the DOJ could push back the inevitable by 5-10 years, and that's another 5-10 years extracting profits from a cratering company.

Note that since they both say the same things, you can't easily tell which executives are actually deluded/stupid, and which are really implementing #2. Looking at their current and former actions is a far better hint.

(When's someone going to write a really good novel/thriller about this, anyway? Hint, hint)

thip said...

With all due respect to Barry Eisler (and I have immense respect for ya!), in this case the "who" IS actually worth focusing on. A "mid-level legacy publishing insider" is losing patience with trad pub is something I've been waiting/hoping for. Trad pub houses are - presumably from "mid-level" down - full of talented people with experience and skills in the areas of spotting trends and genres that will sell, formatting and optimizing books, handling finances and PR, and probably many other storyselling-related things I can't even think of.

Judging from this "mid-level legacy publishing insider's" story, all these people with such real, worthwhile skills may be beginning to realize that working for a trad pub corp might not be the best way for them to earn a living doing what they do well in storytelling and -selling. Perhaps the next exodus from trad pub will be all these editors, designers et al. who begin to do precisely what authors have done : go indie consultants on the web.

That will leave the suits to bemoan - as I have no doubt they will - that Amazon's predatory biz practices have driven their staff out of work; their ex-staff might respond that they are doing more work than ever, and more of their passion-work than ever - anyone who has worked in a corporation knows how much time is eaten up by meeting with, reporting to, and reading buzzshit memos from the suits. But that remains to be seen. Will be real fun when it happens, though ;o) We might realize in a year that this posting of Joe's was the day the dam cracked...

Jill James said...

I love this blog. I feel like I'm more informed than I've been since I started this 'getting published' journey in 2004.

T.A.K. said...

Joe said, "Now, please, PLEASE can a few agents stand up and show they have the stones to disagree with Simon and all the AAR garbage? You can't all buy into this. Someone’s got to have some integrity."

They do have integrity.

HOWEVER, as Dean Wesley Smith brilliantly pointed out here:

http://www.deanwesleysmith.com/?p=5997

agents have largely become outsourced slush readers for publishers. Their livelihood depends on maintaining good relationships with editors. They work for publishers, but are paid by the writers.

Also for reasons Smith explains, most writers don't understand it. Most writers think it's okay for an agent to tell them what to write, how to revise, and when to trunk a book. They think its normal to wait 2 months for a return phone call from their agent. They think it's okay for an agent to take 4 months to get around to submitting a novel. They think it's fine for an agent to sign a book, submit it to a half dozen publishers, then drop the writer cold when the book doesn't sell well. If you don't think these things are routine, hang out on the writers boards.

They think it's okay for an agent to tell an editor, "This writer will be so grateful to have a contract with your publishing house, she'll accept whatever terms you want to give." (True story). They think it's okay to lie to writers about submissions. (Happened to me)

There are exceptions (including you -- you are Joe Konrath and you have clout, so you agent treats you well), but most agents have long ago sold out their writers.


.

Kelley said...

Now, please, PLEASE can a few agents stand up and show they have the stones to disagree with Simon and all the AAR garbage? You can't all buy into this. Someone’s got to have some integrity.

Anyone?


*whistling*

*twiddling thumbs*

*sighing*

*checking watch*

No one? Not a single agent? At all?

Joe Konrath said...

No one? Not a single agent? At all?

An agent couldn't agree with me in public if she ever hoped to sell a book to publishers again.

But this blog does allow anonymous posts.

I'm disappointed, too.

Peter Dudley said...

It all basically comes down to a failure of imagination on the part of people entrenched in traditional publishing. They see Amazon as the wrecking ball that will tear down their industry. Publishers have drawn a bright line and said, "Either you're with us, or you're with Amazon."

When those are the only two options, you're going to see people making decisions and statements that seem strange or even self-destructive.

I was actually told by an independent bookseller, "Amazon is against everything we stand for. So we can't stock the book you self-published through Amazon."

I am still trying to puzzle out what it is they stand for.

T.A.K. said...

Joe said, "An agent couldn't agree with me in public if she ever hoped to tell a book to publishers again."

If this is true, how can any writer possibly believe an agent can effectively negotiate on her behalf?

I fired my last agent when (among other things) he misrepresented the terms of my contract. His idea of "negotiating" on my behalf was to nicely asked my editor for what I wanted, then report back, "He said no." If you hang around the writers boards, you'll see my last agent is gushed over and considered "good."

I am continuing to traditionally publish because I write children's books marketed mostly to libraries, but I refuse to work with another agent ever again, so I've queried on my own, and intend to hire a literary attorney to help with contracts.

I have found that when editors say, "agented submissions only" they either mean (1) I say that because I don't want my in box flooded, but I do read my queries and request the manuscripts which look interesting or (2) I will only work with a writer willing to be led by the nose.

Steve Laube's letter confirms (2) for me.

After getting burned by several agents, I am enjoying the fact that they are now blundering in public for everyone to see.

I hope the era of agent worship is finally over.

Anonymous said...

Maybe the agents are all too busy working on behalf of their clients. Why would they want to waste time commenting on yet another post slagging them off? Y'all hate agents and want to see them make like the dodo, so any agent commenting here is on a hiding to nothing.

T.A.K. said...

Hey, anonymous.

Joe doesn't hate agents. He has an agent who he speaks highly of.

I don't hate agents. One of my good friends is a New York literary agent -- but I wouldn't trust her with one of my contracts.

I simply don't trust agents after the last few I hired screwed me over. My last agent (considered highly respectable by the AW members who fawn over him) misrepresented the terms of my last contract and lied about a submission.

If you read the AAR letter and you don't understand the inherent conflict of interests between agents and authors, well, I have a bridge for sale which you might be interested in.

About agents working on behalf of their authors? The agents I've worked with always put their own interests first.

Cheri Schmidt said...

Thank you, Joe, for standing up for something good! I used to covet getting signed by Writers House. Now I’m soooo glad I found your blog before it was too late and dodged that bullet!!! And thank you to the many agents who rejected me. I still cringe when I think about the close calls I had to getting a contract now.... To me it sure seems pretty cocky of them to think they can take on the DOJ...um, wow.

Anonymous said...

"But, he claims, these higher prices couldn’t hurt anyone because the prices of other books decreased"

I cry BS!

When Random House implemented the agency model, I saw every single title of theirs on my wishlist increase in price, disregarding age or bestseller status.

When the agency model was first implemented, I was quite dismayed that I could no longer get even ebook versions of paperbacks at the grocery store discounted price. They all went up to $7.99 instead of the $5.99 or so that they had been before. This led me to discovering indie books and I never went back. The only traditionally published ebooks I read now are either in Amazon's monthly sale for less than #3.99 or checked out for free from the library.

I now have over 7,000 ebooks in my account at Amazon, plus several hundred more from other sellers. I think my average price is something like $.49. 10 years ago, if you told me I could get thousands of books for free or for $2.99 or less, I would have jumped for joy!

The problem for the traditional publishers with me is that, regardless of the outcome of the lawsuit, I will never go back to their books. They've lost my business forever. Way to build good will with customers. Oh sorry, they never considered readers their customers, only bookstores.