Tuesday, June 03, 2014

Guest Post by Michael J. Sullivan

Joe sez: Does my blog only focus on the bad things about legacy publishing? Here's Michael J. Sullivan, who took a legacy deal with Hachette after successfully self-publishing, to talk about his experience...

Michael: A great deal of ink is being expended on the current dispute between Amazon and Hachette. I have also weighed in with my own posts. The most interesting thing to me is the "camps" that various authors have fallen into. You have people like James Patterson, Charles Stross, and Lilith Saintcrow who are quick to defend traditional publishing and paint Amazon as some evil entity out to destroy literature while crushing authors under their boots. Then there are people like J.A. Konrath, David Gaughran, and Hugh Howey who point out the many positive things Amazon has done for authors (and readers), and any negative actions Amazon is taking against Hachette is merely (a) within their purgative and (b) "standard business" when two giants negotiate. Each perspective is completely understandable considering the source. (Here's a hint, each align with the party that provides them the greatest income.)

What I hope to do here, is present a bit of a balance. Which probably means I'm going to piss off both camps...but here goes. For the record. I'm a HUGE supporter of both models. I had the pleasure of dining with Joe Konrath and Blake Crouch during BEA a few years back, just as I was deciding whether to sign my contract with Orbit (Hachette's fantasy imprint). Joe warned me I would be sorry for the decision...my response was, "Time will tell." Well time has gone by, and I can say that in my particular case, signing with Hachette was the right decision, as doing so greatly improved my career, and in general I've been treated extremely well by my publisher. I would have been worse off if I hadn't traditionally published. What makes me say this? Well first off I've earned significantly more money. Even though there were months when my self-publishing income exceeded $45,000 those were not sustainable numbers...sales go up and sales go down but by going traditional I opened up alternative income paths including foreign translations and subsidiary rights (such as audio). Yes, I had some of this when self-published, but not nearly to the same degree as when traditionally published.

In addition, my audience has grown considerably. This benefits my future work, which can be self or traditionally published. Let's look at my Goodread's numbers to help illustrate this. Before my deal with Orbit, I had 2,650 unique readers who added approximately 5,000 of my books to their shelves. The number of books being added each month was around 300 to 400. Orbit started releasing my books in Nov 2011 and they came out a month apart (so Nov & Dec 2011 and Jan 2012). By the end of January, I had 5,400 unique readers who had added more than 10,250 of my books to their shelves. As of the end of May, I have just under 50,000 unique readers with 120,000 shelved books. The number of books added each month these days runs 5,000 - 9,000...that's a huge jump from the 300 - 400 when I was self-published.

So, yes, I have a lot of reason to support tradition publishing, but I do think that Charles, James, and Lilith are overlooking some of the series transgressions of traditional publishing and ignoring the tremendous advantages that Amazon has brought to our industry.

First let's examine ebook pricing. At the 50,000 foot level Amazon wants prices low and publishers want to keep them higher. I can actually see both points. At lower prices people can afford to buy more. Getting 10 books at $2.99 is significantly better than one book at $29.99. But I do worry that Amazon is driving down prices to the point where authors will suffer. I can only read 12 - 15 books a year and I don't mind paying $6.99 - $12.99 for those books. To me they are a good value, much cheaper than a movie either at the theater or through pay-per view. If $2.99 (or $0.99) becomes the expected price in the minds of readers, less authors will earn a living wage. At those price points the number of sales that are required to earn well rises considerably, and not all authors can pull in those kinds of numbers. One of the reasons the ebook explosion has been so revolutionary is we now have many self-published authors that earn good money even when their books sell only a few thousand copies, which would be considered a failure under a traditionally published model.

All in all, I like the system we have now. Big books by big names are priced higher (at first) and go down in six months (or a year) once the paperback comes out. Self-publishing titles are selling well (as evidenced by Hugh Howey and Data guy's reports) and can provide voracious readers with less expensive alternatives. Plus, the bigger publishers are providing sales where readers can get their hands on top-selling titles from time to time. As I said, a model that seems to be pretty good as it is.

While none of us know for sure which terms are in dispute (although many have reported their speculations), it's pretty safe to say all parties want more when it comes to ebook share. When ebooks were only a few percent of the total book purchases, no one paid much attention. But for me I sell 68% ebooks to 32% print, and while that is higher than most, across the industry we are seeing 35% - 40%. That higher percentage combined the fact that ebooks are so much more profitable than print, makes the share of this format very important. Last year Harper Collins boasted to it's investors that they were earning a 75% margin on ebooks under the agency model and only 41.4% on hardcovers. At the time ebooks were sold under the agency model, and the relative shares were: 52.5% to publishers, 17.5% to authors, and 30% to Amazon. I agree with Evan Hughes, that traditional publishers would have been better off spreading around more of the digital profits to the authors as it would make them less vulnerable to Amazon who publicly states, "Your margin is my opportunity...after all 52.5% is a BIG margin.

But in business it's all about power, and in the relationship between author and publisher, it's the publishers who wield the upper hand. Because the big-five walk lock-step with a 25% of net royalty rate, authors have only two choices. Take the low cut or walk away. Few have walked so far, although I expect to see it happening more, especially if Amazon secures a bigger piece of the ebook pie. For my latest book, Hollow World, I was offered a nice five-figure advance for a contract that required print, ebook, and audio. I passed. Instead I kept the ebook rights, made a print-only deal for a smaller advance, and sold my audio rights directly. The result...the book was released in mid April and by the end of May I had already earned that full advance amount (and that doesn't include the $30,000 the book brought in through Kickstarter). But I digress...I was speaking about power...and publishers are finding the shoe is on the other foot as Amazon wields an amazing amount of power over them.

I suspect at least one of the points in dispute is that Amazon wants more than the 30% margin they were getting under the agency model. After all, most retailers (of products of any kind) get margins of 50% - 60% with higher margins going to those who sell the most. As a traditionally published author, I hope they aren't successful, because it will significantly erode my cut, which is already too low (imho). If 50% is the new margin I'll go from 17.5% to 12.5%. If 60% I'll go down to 10%. So yes, if Amazon wins my income is lower...but I feel like the publishers are still gouging me more than Amazon.

As to Amazon's tactics during the dispute negotiation, I can't say I'm pleased with what they are doing. It's not just because their actions are impacting my income (although they are), but because they are going against their founding principles...a commitment to doing what is right for the customer. I praise Amazon for their long standing tradition of leveling the playing field where big-five, small press, and self-published titles exist in an egalitarian environment. But eliminating or lowering discounts, removing pre-order buttons, and purposefully not stocking in sufficient quantity (even though there is a demand) is designed to provide a poorer buying experience for Hachette books. In their eco-system, it is typically the readers (through their buying habits), which raise the visibility of books, but during this dispute (and several others in the past) they are artificially manipulating their environment for no other reason than to apply pressure.

There are many jumping on the "Amazon is evil bandwagon," but they either aren't objective or blind to all that Amazon has done that is positive for both authors and readers. At a time when people were reading fewer and fewer books, Amazon innovated and made the first commercially viable ereader. This stemmed the tide of readership decline, and gets people reading more books than they did in a purely paper environment. They sparked the self-publishing revolution providing thousands of authors an opportunity to reach readerships, making it easier than ever for authors to earn a living wage. This has provided new opportunities as traditional publishing just doesn't have enough bandwidth and have had to reject projects (not because they are "unworthy" but), because there are only so many slots in their editorial calendar. Through audible.com another under served platform has exploded. My discoverability has been significantly enhanced due to the popularity of the audio versions of my Riyria books, which have sold more than $1.3 million in just over a year. They have implemented programs such as MatchBook where purchasers of print books get free or discounted ebooks...something that the big-publishers still have not embraced (to the determinant of readers). In short, Amazon has done more for readers, authors, and the health of publishing in general than all the big-five publishers combined.

In today's landscape, publishers are in a tight spot, but they have only themselves to blame. For years their "customer" was the retail channel. They didn't foster a direct relationship with readers and as such ceded that ground to Amazon. Back when Amazon was gaining dominance, why didn't they build a site to sell directly to readers? Oh, I forgot...they did. It's called Bookish and it's been a miserable failure plagued by delays, poor management, a terrible online experience, and rather than discounting books they sell at full price. Is Amazon "evil" for building a really good mousetrap? Similarly, there was a huge outcry when Amazon bought Goodreads. But why didn't any of the publishers pick it up first? A site with millions of readers talking about and sharing books, and no one but Amazon saw the value in such an asset? It's unfair for the publishers to criticize Amazon for their own lack of vision.

So yes, there is an imbalance of power, and Amazon is in a position of strength. It's because Amazon has been smart, forward thinking and innovative while publishers have plodded along with a "business as usual" mentality, leaving them behind the times. Does Amazon have to give publishers special treatment for their poor choices?

I started this article by expressing how signing with Hachette has aided my career, and I don't regret my decision in the slightest. I signed my contract willingly and actually expected that the day would come when my sales woud be affected by a dispute between my publisher and Amazon (I saw what happened with Macmillan in 2010). I saw the writing on the wall but balanced the overall benefit of traditional over the various bumps like the one I'm currently experiencing.

So what would I say to the two parties about what is going on? My message to traditional publishing: if I seem critical toward you it's because I want it to learn from past mistakes and start taking corrective actions before its too late. We all want a diverse marketplace. Publishers can, and do, add value and I want you to continue to be relevant. As advantageous as self-publishing is, it's not going to be a good fit for all authors. Many won't be able to navigate all that is involved on their own and their voices would be lost without traditional publishing. I don't want to see the elimination of traditional publishing any more than I want to see a return to the days before self-publishing became a viable option. The market is best served when their are options....many authors...many publishers...many retailers. Yes, Amazon has the upper hand at the moment...and yes publishers, and the authors who are signed with them, are going to suffer because of it. Instead of complaining about how "evil" Amazon is, a better use of time would be devise a way to beat them. Publishers need to focus on providing THE BEST customer experience for READERS imaginable. Take a page from the notebook of J.K. Rowling and Pottermore. Publishers already have access to fantastic content, now you need to step up and match that with an exceptional delivery mechanism...you have the backing of huge multi-national corporations. You have profits to reinvest. You have scores of employees dedicated to the power of the written word. If you don't like what Amazon is doing to "the book business" then push them out of it...they have plenty of other things to sell. The best way to deprive them of power is to make them irrelevant. The current battle is over...and Amazon has won...but it doesn't have to be the end of the war. Build that better mousetrap...eliminate them as a "middleman"...foster and strengthen your relationship with authors (it will be your only point of vulnerability once you control your own distribution).

My message to Amazon: stop the bullying (it is bullying when someone stronger uses its might against someone weaker). You are better than this. You've proven time and again that you succeed when you put the customer first...and what you are doing is going against that ideal. Don't provide the fuel to tarnish your brand. Just as the United States has to walk more softly as the last remaining superpower, you too have to realize that any action you do carries a good amount of additional baggage. Conduct yourself in a manner beyond reproach and prove to all the naysayers that you can be an exceptional conduit between authors and readers. You are certainly entitled to earn well, but you don't have to squeeze every last penny, especially when you know it will harm the content creators, without which neither you nor the publishers have any books to sell. We are indeed living in "interesting times" and the truth is I want all parties (authors, publishers, and retailers) to thrive. At the present time we each depend on each other, let's stop fighting among ourselves and get down to the business of getting more great books in the hands of more readers. That's my take...what is yours?








49 comments:

John Ellsworth said...

If you don't like what Amazon is doing to "the book business" then push them out of it...they have plenty of other things to sell. The best way to deprive them of power is to make them irrelevant. The current battle is over...and Amazon has won...but it doesn't have to be the end of the war. Build that better mousetrap...eliminate them as a "middleman"...foster and strengthen your relationship with authors (it will be your only point of vulnerability once you control your own distribution).

I can only agree and really appreciate this advice to trad pub. They have a ton of money and almost unlimited resources to "build the better mousetrap." Plus they have the resources to advertise their better mousetrap and make it the new kid on the block--which is always smart and attractive. I would only add this in the admonishment to them,

And when you finally have that better mousetrap in place, how about allowing all brands of cheese to bait the thing? Not just your trad pub authors offered for sale, but allow self-pubs to interface with your site and put their books there too, much in the manner of Amazon, same royalty structure, etc. You have only profit to make by making it democratic and only profit to lose if you continue to turn your backs on those who haven't drunk your Kool-Aid..

Thanks.

JKBrown said...

Interesting post, Mr. Sullivan. Sometimes I wonder if going both routes is the best choice. Right now I don't believe it, but things change.

I think your plea to publishers will fall on deaf ears. I always wondered why they never started their own direct site, never knowing about Bookish. I'd say that's a testament to their structure, and their reluctance to improve Bookish shows their ability to change. I'd love to be proven wrong. I'd love to sign a good deal with them, to go on tours with their support behind me. I just cannot see it happening after so many years of status-quo policies.

My message to Amazon: stop the bullying (it is bullying when someone stronger uses its might against someone weaker)

As a Black Belt trained by a traditional Korean school, I cannot disagree more. Bullies steal because they can. Bullies assert their power because they can, and they do it frequently. Bullies don't negotiate deals that are beneficial to both parties. They don't sell product someone else made at prices they make. Bullies don't offer to help the little guy with 50% out-of-pocket donations until the storm blows over.

It'd be one thing if Amazon's tactics just came without reason (aka, because they could). However, Amazon's tactics are a result of negotiations gone wrong. Obviously, the bigger party is going to try and assert power over the little one (I know I would if I had a mutual agreement go bad). If they didn't, they wouldn't remain the bigger party for very long. That's just survival.

You don't have to agree with Amazon, and I can understand you not doing so. But bullies? Not even close.

SM Barrett said...

I'm glad Michael had good experiences in both paths of publishing.

His story feels like the exception to the rule. For every author that defends legacy publishing, dozens who were published have horror stories.

For every indie author that can pay the bills with their writing, there are dozens that have no real sales to speak of.

The difference is which author can control the work after initial publication. That is far more important to me.

Greg Strandberg said...

It seems even with Big Publishing you'll see more and more authors having to do their own marketing work, especially social media.

I'll have to come back and read this one over again later. Lots of good stuff, thanks!

Peter L. Winkler said...

"within their purgative"

A purgative is something you take to induce vomiting. You mean "prerogative".

Anonymous said...

Mr Sullivan's candor and courage is appreciated, but he's awfully selective with his bully label.

I will never understand how 17.5% of ebook sales and 8% paperback (if that) lockstep across all publisher sis not bullying.

You know, the strong using their might to push around the weak...

Just curious as to why Amazon vs Hatchette is bullying but Legacy publishing bending authors over for decades is ok...

Anonymous said...

I applaud Amazon for what they are doing. They have the right and the power.

Shantnu Tiwari said...

My message to Amazon: stop the bullying (it is bullying when someone stronger uses its might against someone weaker).

Yeah, because a multi billion dollar media company (Hachette and its owners) is weak and helpless, and needs the help of random bloggers to protect it.

Dude, you sound like a concern troll (http://en.wikipedia.org/wiki/Troll_%28Internet%29#Concern_troll)

Alixjune said...

I am impressed that you negotiated a "print only" deal! That I think is a good way to get the benefits of a big publisher without losing control of your rights. Wish you'd tell us more about how you negotiated that!

JKBrown said...

It seems even with Big Publishing you'll see more and more authors having to do their own marketing work, especially social media.

That's like saying 10 years ago "Seems like more and more businesses have to build a website".

Much as I believe the big 5 are not contributing enough (especially in marketing), social media is not one of those things. If you aren't doing your own social media, regardless if traditionally published or not, you're missing out on a fun, exciting experience and a huge chance to build your audience.

True, it's a TON of work for one author, and even though I just started I find myself already calling for help. It's still the most enriching experience to engage your readers, fans and colleagues. About the most publishers should contribute is some kind of manager to keep the sites from looking dead, maybe some shout-outs though their official page.

If you don't believe that's true, imagine if your publisher ran your blog for you.

Dan DeWitt said...

I appreciate the attempt, but it really falls apart for one main reason: the criticisms of how Hachette treats its authors are real and quantifiable, whereas applying the "bully" label to Amazon is a clear sign that you can't make the case.

Every person I've seen who calls Amazon a bully seems to believe that the only appropriate way for them to act is to give up all of their leverage and capitulate to Hachette's demands because, hey, the customer. I guarantee you that the customer is exactly who Amazon is thinking of when it comes to them refusing to accept agency pricing, which is designed to screw the customer. If it takes delisting Hachette to make the point, my condolences, but I hope Amazon pulls the trigger. Hachette doesn't have a Constitutional right to both be carried on Amazon and dictate the terms, despite what a lot of people seem to think.

liebjabberings said...

There IS a 'sweet spot' between getting some work published by traditional publishers and getting some of the perceived benefits, and having more control over the rest of the work by self-publishing all or part of it: every aspiring writer hopes to hit that spot.

So does everyone who buys a lottery ticket.

And someone IS going to win the lottery.

Mazel tov to Mr. Sullivan for being the lucky one.

The statistics, however, are horrible.

I don't have what it takes to play with fire. I will self-publish - and take my far-greater chances with readers.

And, comparing the stories coming out of both sides, I want Amazon in my corner. The statistics there are just what I need to hear.

Now, to finish a quality product - the thing that seems to be left out of most discussions - and which is ALSO, in great part, up to the readers. I will take my chances with them. I am a great believer in all things techie. And I don't think the traditional publishers have the pantalones to be able to compete with Amazon.

Alicia

Alan Tucker said...

Michael, I appreciate your more middle of the road viewpoint, as well as Joe's ever-present willingness to allow face time for ideas that aren't in lock step with his own.

If we knew the exact terms of the dispute, it would be much easier to lay blame and choose sides objectively, however, since both parties have remained mum about those terms, we have to make educated guesses as to where to place our feet in the muddy waters.

I will agree with those bringing up the points about the word "bully". It's a flash point these days and we need to have more care how we use it. Both parties are seeking to exert their will over the other to gain the best deal for their company. Neither fits the definition of "bully" any more than two large predators fighting over a carcass on the African plains. The unfortunate fact of life is that authors are the mites living off the carcass that's being torn apart.

John Ellsworth said...

According to HuffPost, Amazon has finally blinked.

http://www.huffingtonpost.com/2014/06/03/amazon-hachette_n_5439313.html

Dan DeWitt said...

How is that "blinking?"

This is a perfect example of how ridiculous the anti- Amazon people are.

J.M. Ney-Grimm said...

As a Black Belt trained by a traditional Korean school, I cannot disagree more. Bullies steal because they can. Bullies assert their power because they can, and they do it frequently. Bullies don't negotiate deals that are beneficial to both parties. They don't sell product someone else made at prices they make. Bullies don't offer to help the little guy with 50% out-of-pocket donations until the storm blows over.

Well said, JK Brown!

Amazon allowing Hachette's books to keep the price tag set by their publisher seems very reasonable to me.

Amazon refusing to take pre-orders for books when they may not be able to fulfill those orders (if negotiations prove protracted) - again, reasonable.

Amazon refusing to provide Hachette with free warehouse space - again, reasonable.

While I agree that the stronger negotiator can afford to be gracious, I see no reason why the stronger negotiator should not hold a tough line for the points in the agreement that are important to them.

Anonymous said...

Lets say I spend $100 a year on books.

Do you want me to buy 7 books at $14.99 a piece, or 17 books at 5.99.

Would you rather those books be bought under the Agency Model, or the Wholesale model?

Burton said...

Haha. Amazon is "bullying" those poor, poor little underdog publishers in NY. However will they find the strength to continue spending obscene amounts of money on lunch dates and pay the rent for their 50th floor Manhattan skyscraper offices? The horror, the horror!

You totally lost me there, buddy.

w.adam mandelbaum said...

Make your $ when and where you can. 14 years ago trad publishing gave me a lower mid range five figure advance. Now, my only venue is indie.
It's a business decision, and for most of us now, there is only one practical choice-indie. This isn't rocket science.

Patrice Fitzgerald said...

The civil nature of your post is appreciated, but I can't agree with your conclusions about Amazon. From what we know, they are taking the only reasonable stance they can in a negotiation gone bad.

Terrence OBrien said...

My message to Amazon: stop the bullying (it is bullying when someone stronger uses its might against someone weaker). You are better than this. You've proven time and again that you succeed when you put the customer first...and what you are doing is going against that ideal.

Sounds like a casting call for victims. What are specific examples of Aazon bullying?

Joe Konrath said...

Hi Michael. I purposely didn't comment as part of your blog so I didn't influence reader opinion.

Glad to hear you're doing well. I remember that dinner at BEA, and trying to prepare you for taking a legacy deal. I recall telling you to be wary, because things would be out of your control. Congrats on your success, and it's good things have worked out for you.

It's tough to be at the mercy of a corporation. That's the primary reason I got all my rights back--I was tired of publishers making mistakes that cost me money.

Right now Hachette is the one making the mistake, not Amazon. Amazon isn't being a bully by not accepting terms it doesn't find agreeable, anymore than Hachette is being a bully not giving contracts to all authors who submit manuscripts. Each can run their business as they see fit to.

If the issue is indeed Hachette trying to force the Agency model on Amazon, then Amazon should smack the shit out of Hachette. Agency pricing hurt authors, and readers. Retailers should be allowed to discount books and set the price they want to. If Hachette is forcing pricing on Amazon, they're directly stating that they care more about this issue than their authors--a sentiment they repeated when they turned down Amazon's offer to compensate authors 50% during the negotiation time.

And according to Author Earnings, Hachette sales are way down because of this spat.

Coming out strongly and publicly against Hachette is not an easy move for Hachette authors. You want your publisher to love and support you, not be angry with you. But supporting your publisher in straining their business relationship with their #1 retailer makes no sense, which is why I called out Saintcrow and Stross. They had emotional, fear-based arguments that were devoid of facts and logic.

I think your appeal to publishers is smart, but basically you're asking fish to grow lungs so they can walk on land. Publishers won't, and can't, adapt. I once likened them to oil tankers, where it takes a nautical mile to make a turn. They missed the turn a few years ago. So instead of trying to navigate, they're battening down the hatches and preparing for impact, hoping they can sail right through the iceberg they're headed for.

They won't. The iceberg will destroy them. But they won't admit that until bankruptcy.

Then again, I may be wrong.

I'm sorry you, and all Hachette authors, are in this position. Hopefully it will be resolved soon. But even if it is, I encourage you to think about how powerless it feels right now, to have your publisher costing you a lot of money. Appeals for publishers to evolve are egalitarian and harmless. If I were with Hachette (and I was) I'd appeal for them to stop acting like greedy scumbags.

And I'm not sugar coating that. I haven't ever discussed my battle with Hachette publicly, but it was ugly, and I was far from kind. And I won. Sometimes, when you're being wronged, you have to fight back.

If you need a lawyer, email me.

venkyiyer58 said...

If I "read" this post correctly, the present imbroglio is primarily due to the age-old greed and sloth of traditional publishers (readers don't count) and the newly-found greed and forward vision of Amazon (readers count for everything - almost). Michael Sullivan;'s experience - both traditional and digital - is rare. Many deserving authors are suffering, and there seems to be no solution for that.

Anonymous said...

Thanks MJS for a reasoned and evenhanded emoting. It is rare to hear balanced accounts in these times. But edifying. And needed.

I hope your publisher is able to provide venue for your sales equal to what you were enjoying and more. And for the other Hachette authors too. It's weird enough to be paid only twice a year, given whatever might come up suddenly in household or health expenses... but to be missing one of your markets, is just beyond the beyond.

Hang in there.

AnonymousWriter said...

http://www.theguardian.com/books/2014/jun/04/ebooks-outsell-printed-editions-books-2018 uk e book market with some nice comments from the publisher of harry potter

Kit Power said...

Joe sez: " Agency pricing hurt authors, and readers. "

That's kind of the entirety of the argument right there, isn't it? That just seems like an unsustainable position to take.

MJRose said...

Very interesting post Michael. As a fellow hybrid, who went through the S&S/B&N debacle for 9 months last year I know how complicated all this is for those of us who see benefits to being traditionally published as well as shelf publishing come works. You did a great job laying it out thanks for taking the effort and thanks Joe for giving Michael the platform.

Anonymous said...

I'm glad your publishing deal is working out for you, Mr. Sullivan. I personally first saw your books in the library after Hachette publication, so thats one reader you got through them.
Regarding the correct price for books, I think that it shouldn't be standardized. Why doesn't Hachette price the Silkworm hardback at $35 and your new book at $10 - why does the list price have to be the same for all books?

Dr. Debra Holland said...

I was enjoying your middle of the road blog, especially about your personal experience.

Then we came to the Amazon "bullying" comment, and you lost me.

We might not like negotiations where one party exercises their clout to win their points, but it's normal business tactics.

As a psychotherapist as well as an author, I have to point out that bullying is where an individual, group, or perhaps a business is singled out and attacked for being weaker or for some other perceived differences. Bullying can cause great pain, harm, and perhaps death by murder or suicide. NOT a label to apply lightly or to such circumstances.

I'm only sorry other authors are going to suffer because of these negotiations.

Alan Spade said...

"Amazon allowing Hachette's books to keep the price tag set by their publisher seems very reasonable to me.

Amazon refusing to take pre-orders for books when they may not be able to fulfill those orders (if negotiations prove protracted) - again, reasonable.

Amazon refusing to provide Hachette with free warehouse space - again, reasonable.

While I agree that the stronger negotiator can afford to be gracious, I see no reason why the stronger negotiator should not hold a tough line for the points in the agreement that are important to them."

That. Definitely that.

While I was glad Michael Sullivan had the chance to make his points, and he made great points about trad publishing needing to improve, let's not forget preorders buttons and discounting ebooks are privileges Amazon gives to trad pub.

Legacy publishing is not entitled to its privileges, especially if big publishing acts too greedily toward customers (agency model, windowing, etc.).

I liked very much the part when Michael said he knew, signing with Hachette, these issues with Amazon could rise. That were the words of an intelligent and far-sighted author.

If big publishing was not acting so greedily and unfairly in his contracts with authors, if its model of sales velocity wasn't weighing so heavily, the suppression of sales buttons wouldn't have been such a big deal for Hachette authors.

Alan Spade said...

I meant, preorder sales buttons.

Terrence OBrien said...

There is an odd contradiction flowing through many of the articles I read from authors.

First, they state that Amazon's goal should be consumer satisfaction. Then they say Amazon is failing in that area because it is not making Hachette books available to consumers.Therefore, Amazon should stop being a bully and give Hachette what it wants.

So what is Amazon to do when giving Hachette what it wants is contrary to providing consumer satisfaction? Increased retail prices are not in the consumer's interest.

Tom Maddox said...

Michael,

Thanks for the post. It is always interesting to read the viewpoints of others.

But like others have mentioned, you lost me at the bullying comment. As far as I know, nobody has publically stated what the dispute is about so we don't know who is trying to do the bullying here.

You assume it is amazon who is wanting a bigger cut of the publishers pie, but many others wonder if Hachette is wanting to return to the Agency model.

If it was strictly about Amazon wanting more money then they would not hesitate to accept the agency model. The model that paid them more money per book while, if I remember correctly, earning both the publisher and the author less money, while simultaneously raising prices for readers.

As a reader and not an author, I find that I like knowing that when I purchase a book by Joe or Blake (or any other self-published author) that they are getting the majority of my hard earned money. It bothers me that if I buy one of your $9.99 Hachette books that you get so little of that money and most of my money is going to some multinational conglomerate that is making billions per year.

Readers want to support authors, not publishing executives.

William Ockham said...

If $2.99 (or $0.99) becomes the expected price in the minds of readers, less authors will earn a living wage. At those price points the number of sales that are required to earn well rises considerably, and not all authors can pull in those kinds of numbers.

This statement could be correct, but it is probably incorrect. The reason has everything to do with the shape of the demand curve for stories. Sullivan is reasoning from his own experience (he buys 12-15 books a year and he is relatively price insensitive). However, the new breed of full-time indie authors are supported by the few million readers who read 50+ books a year. These readers can be very lucrative customers and are much more price-sensitive, especially when trying a new-to-them-author. Low prices encourage more of these readers to spend more money that goes to authors.

The real losers as the expected price of stories comes down are legacy publishers, big name authors, and sellers of physical books. James Patterson is unlikely to sell his stories for 0.99, but the coming collapse of the hardback novel priced at $29.99 will seriously impact his income.

authoranitacox said...

I should have listened to Joe..

Being frustrated trying to figure out how to effectively market my books, I relented and signed on with a publisher.

A publisher who doesn't nothing after pressing the pub button. I'm left with less of my royalty, selling the same amount of books I did when I was on my own getting the full 70%.

I wasn't unhappy with Amazon. Their interface is pretty user friendly. I just wanted to make a decent living. (I know Joe - WRITE MORE BOOKS.)

With to the publishers and Amazon... the pissing match needs to end. If the big guys don't like the way Amazon does business, then take your business elsewhere. But they won't because they need them.

Le sigh. I'm hanging my head and going back to my writing dungeon.

Anonymous said...

"I applaud Amazon for what they are doing. They have the right and the power."-- Anon.

That is until they start removing the 'buy/order' buttons from your book and negotiate terms that don't benefit you--which ultimately they will.

Do I think that Hachette is completely innocent in this situation? No. But I do know AMAZON likes to play dirty and this time Hachette didn't blink and I'm glad they didn't.

Also reading from a lot of posts, it seems that there are a lot of authors who have sour grapes b/c their manuscript didn't make the cut a one of the 'big 5.' Just a thought.

Kilburn Hall said...

Michael- Your entire comments on Orbit are an argument for why new authors should self publish with a reputable ebook retailer like Amazon and KDP Select. Orbit has closed their doors to new authors except through literary agents and good luck getting a literary agent with any years experience if you are an unknown. Traditional book selling has one good round of royalties before your book is relegated to the dustbin of history and forgotten about but with ebook and self published works- you can market over and over and the royalties can come in for decades. Ebooks unlike traditional published works never go out of print. Traditional publishing is going the way of the dodo which is why Hachette and Amazon are fighting over discounts. If you are a new author and want some modicum of success at being published, Amazon KDP Select is your best bet. Or Smashwords created by Mark Coker. But don;t waste your time trying to get a literary agent, go through Orbit or other traditional publishers. The process takes up to three years for a book that may or may not sell all that well. KDP Select will have you up and running in as little as 12 weeks.

Kilburn Hall said...

Michael- Your entire comments on Orbit are an argument for why new authors should self publish with a reputable ebook retailer like Amazon and KDP Select. Orbit has closed their doors to new authors except through literary agents and good luck getting a literary agent with any years experience if you are an unknown. Traditional book selling has one good round of royalties before your book is relegated to the dustbin of history and forgotten about but with ebook and self published works- you can market over and over and the royalties can come in for decades. Ebooks unlike traditional published works never go out of print. Traditional publishing is going the way of the dodo which is why Hachette and Amazon are fighting over discounts. If you are a new author and want some modicum of success at being published, Amazon KDP Select is your best bet. Or Smashwords created by Mark Coker. But don;t waste your time trying to get a literary agent, go through Orbit or other traditional publishers. The process takes up to three years for a book that may or may not sell all that well. KDP Select will have you up and running in as little as 12 weeks.

Michael J. Sullivan said...

Thanks Joe for posting, I don't have time to read/respond to all the comments just now, but I will in the future. I just wanted to make two things clear because I obviously didn't.

Publishers ARE bullying authors with their 25% of net terms...and yes I condemn them about this often.

Second, none of us know exactly what the terms are that are in dispute. It could be a desire to return to an agency model, it could be Amazon wants higher co-op fees. It could be Amazon is asking for bigger margins (personally that is what I think it is).

Perhaps bullying is the wrong word. I guess what I was trying to say is that during the negotiations I wish each party would be "business as usual." They each know what is at stake, and artificially manipulating certain books for no reason other than they are with a certain publisher is not the way Amazon usually operates...and I like the way they usually operate.

If the date for contract renewal comes due and no agreement has been reached...then Hachette books should be pulled...after all they aren't under contract. Sure this is a more drastic step...similar to shutting down the government rather than raising the debut ceiling. I just think if that was what was lingering over their heads they would come to agreement right away.

Terrence OBrien said...

Parties cannot negotiate for a margin unless the supplier controls retail price. That is what happens with agency pricing. The supplier sets the price he sells to the retailer, and he sets the price the retailer sells to consumers. The difference it the retailer's margin. The supplier sets the retail margin.

When we do not have agency, retailers don't ask anyone for bigger margins. The supplier has no idea what the retailer intends as a selling price. So the negotiation is over the price the supplier sells to the retailer. Margin is not a factor.

We don't know what Amazon intends. They may plan to reduce prices and take a smaller margin. They may intend to raise retail prices and take a larger margin. We don't know. Nobody knows but Amazon. Hence, there is no negotiation over margin.

The publishers did get together in an attempt to control Amazon's margins with agency pricing. They failed. That was a benefit to consumers.

Andy Jennsen said...

Regardless of my opinion on the situation, thank you Mr. Sullivan for writing a basically even handed breakdown that helps understand how the other side feels.

I find it hard to read when someone from the other side of an argument starts invoking flaming puppies and the end of Western civilization. You managed to avoid both of those and I appreciate it.

Liz said...

I find myself wanting Amazon to just pull Hachette books and be done with it. As an indie author, I really want Amazon to spend more energy promoting their own authors and let the publishers haggle out the issues among themselves. They're big boys, after all (though they rarely act like it). Let them go figure out how to create actual incentives to get authors to stay (something besides author desperation, which they've relied on for far too many decades) instead of the constant whining about Amazon's methods when they're doing far worse to their own authors. Besides, who knows if publishers like Hachette will even be relevant in 5 years? I'm betting they won't be. Many of these publishers were in decline before Amazon became a threat and will probably go back into decline regardless of what Amazon does. They're, ironically, just not run by very creative people.

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Anonymous said...

Can the publishers even sell direct to readers? I know individually they could, but that would be a difficult model to find success with. It would mean a reader knowing which house publishes which author in order to go search their site. So the best model would be one that included all publishers, but if they worked together on that, wouldn't it be considered collusion and against the DOJ terms?

James said...

I do think Michael overlooks one thing when it comes to eBook pricing...

He says there is a rush to the $2.99 price point and everything is being driven down to that number.

I disagree with his assessment. He's forgetting perception. For whatever reason, us humans, see things that cost more as "better."

Where he shows the traditional sales route is to start high with prices and drop them later, eBooks are somewhat the opposite.

When a reader goes shopping, and maybe they want something different and new, maybe they're looking at a choice between a 2.99 book and a 3.99 book -- the more expensive book will seem "better." That's human nature (or maybe just how we've been programmed since the 80s).

Need evidence?

Hugh Howey's books sell for $5.99. His prices went UP, not down as his popularity rose.

A.G. Riddle who is a hot name in SciFi sells for 4.99.

It's not a race to the bottom. There's bounce back caused by perception of quality that is associated with price -- people expect BWMs to cost more than a Honda -- if they don't, if the BMW costs the same, they'll think something is wrong with the BMW (rather than they are getting a great deal on a BMW).

The thing that's happening with indie publishing is that while $5.99 is more than a lot of other eBooks -- it's still a helluva discount off traditional eBook prices. These price ranges get the luxury of seeming like the "luxury" model, while also being a "great deal."

That combination almost NEVER happens. We can thank our Big 5 pub overlords for the ability to do this. Seriously, it's a great time to be pricing your own books.

David Medearis said...
This comment has been removed by the author.
Anonymous said...

I still don't see the bullying. Any retailer is legally permitted to sell, or not sell, any item(s) they please.

If Hachette wants too much money or demands egregious terms, then Amazon is perfectly within their rights to decide to no longer sell Hachette's products.

Seriously. I'm outright amazed at the number of people who think that the capitalist, corporatist society we live in is great until a corporation threatens them personally. If you want a capitalist system, you must expect to live with the consequences of it.

Hire a lawyer and get your rights back.

Anonymous said...

The bookstores can be a major headache for publishers, especially if you're an indie. It's like we get pushed to the bottom of the pile in favour of the bigger houses, and the discount rates required to sell on a level playing field/be taken seriously are so high as to be almost prohibitive for the small press to operate. I'm having a headache right now with a big store that cancelled orders, and then took the book off the system. Meanwhile other stores are doing great with it, so that is who we're going to focus on ;) .
Certain stores play games with title availability, I have found, and then blame 'the supplier' (us) when the book takes two months to arrive even if I sent it to their wholesaler within two days. Then authors and customers think the book has somehow been made unavailable by me when this is simply not true.
I started off publishing my own book and then began to publish other people. If publishing my own required a hell of a lot of faith and dedication, my word publishing other people feels like it requires about ten times more! Sometimes it can get so heavy being pulled so many ways by so many people and their needs, since I'm on my own at the moment and do everything in-house, I feel like disappearing off to a small Caribbean island for an indefinite period :)

Benni said...

I really appreciated reading this middle-of-the-ground article by an author who went from self-pubbing to traditional. It really adds to the credibility of this site (not that it needed any more) to present this point of view.