Snowflakes Need Not Apply: Publishing is a commodity business and Amazon built a better mousetrap. Get over it, already.

I’ve been anxiously awaiting the judgement in the Apple antitrust case because I knew the tech giant was going to lose (they deserve it) and I knew that, when that happened, there’d be some woe-is-publishing stuff popping up on the web that I could have a little fun eviscerating. Well, imagine my glee as I read this piece by Michael (no relation to Jason, I hope) Bourne on The Millions website. At first, I thought it would be a run of mill twitter link with a handful of argumentative tweets in analysis, but low and behold, this thing got so confoundingly ridiculous that I had little choice but to go all-in blog post on it.

In fact, I started writing this a few hours ago and that morphed into a totally separate blog post bemoaning the stunning lack of logic in believing Amazon’s potential monopoly is so scary we all should run straight back into the arms of the publishers’ old cartel. This one’s juicy enough I got two blog posts out if it. Here we go:

“…it is altogether possible that the government is right that Apple and publishers conspired to set prices higher than Amazon would charge, which would have forced consumers to pay more for e-books in the short term. But to see this case in this narrowly legalistic light is to completely misunderstand how the book business actually works.”

This is a pretty common theme in publisher-defending circles, either outright admit or strongly imply that the charges are accurate and they broke the goddamn law but then claim it’s not important. The simple fact is there’s no legal exception for breaking antitrust law, even if done in response to illegal activity. Amazon’s shipping boxes coulda been made out of corrugated baby skin and it still wouldn’t have given Apple and the publishers license to collude against them. They broke the law and have to be held accountable, regardless of their reasons. To do otherwise sets a dangerous prcedent that would definitely find its way into other industries and that would be extraordinarily bad for consumers of all kinds of stuff, not just books. I don’t know how many times or how many judges have to say there is no such thing as a special snowflake and you don’t get to pick and choose what laws you care to follow that best suit your business purposes. Don’t do the crime if you can’t do the time.

“…books are not bars of soap. When you go online to buy a book, you are not merely paying for a file full of random ones and zeros. You’re buying the original ideas and stories contained
within that book, and frankly nobody has any idea how much those ideas are worth until people start reading them.”

That doesn’t even make sense. I’m pretty sure somebody’s gotta buy the book before they start reading it. And I have a pretty good notion of what that book’s worth without ever seeing it: $27.99 hardcover, $17.99 trade paperback, $12.99 ebook and maybe an $8.99 mass market paperback, give ot take a couple dollars on any of the above. These big publishers collectively crank out tens of thousands of titles each year and they virtually all fall within the neighborhood of these prices. Books have never been priced by the material inside but by the cost structure of the format.

They most certainly are commodities in the purest sense. The newly merged Random Penguin is set to put out 15,000 books alone next year. To them, any one book is meaningless, even the high advance books. The totality of their 15,000 title catalog is their business model. Big name authors get considerably better terms than average writers, meaning the publisher’s margins are slimmer per book. They also get the benefit of marketing and ad dollars, slicing that margin a little more. Yet we’re also told that these big name books are what bank rolls the lesser selling titles, further gobbling up the publisher’s margins, in theory. More likely, the big name books aren’t really the lone profit centers but simply the lure that gets people into the stores where, hopefully, they’ll also pick up a few other books in their catalog on which the publisher is making very sweet margins. It’s a volume game at this level. The cost or success of one lone book isn’t the point, but the collective success of the full catalog taken as one, nearly all resting within a few dollar range of identical pricing regardless of the author. 15,000 similarly priced, interchangeable pieces…sounds a lot like commodities to me.

The part about not knowing what a book is worth until people start reading could be a reference to advances paid by publishers, but let’s glance at how that system works. There are certainly a handful of high advance books, but for each one of those, there are thousands more which get advances that are more like rounding errors on executives’ expense reports than sizable investments. The threshhold to profit for these books is very low and, once met, publishers bank considerably more money per sale than for superstar books that earn out. This advance system isn’t nearly as risky or speculative as it appears. Even if we take the commonly held belief that 80% of books fail to earn out as fact, Random Penguin, for instance, would be left with about 3,000 books next year alone that do, the vast majority of which on publisher-friendly contracts that earn them more per sale.

Books have been commoditized by publishers because they can’t consistently tell which specific books are going to hit ahead of time. So they built up a bulk catalog made up of mostly low risk, low out-of-pocket books as a hedge against those larger risks. They may not be able to tell which books will be the winners but they certainly have confidence that enough of the totality of their catalog will hit to provide profitability. Saying publishers can’t tell what a book is worth until it’s on the market is both true and misleading. It doesn’t matter how any individual book does, only that enough of them do well in totality.

“…like pharmaceutical companies, publishing houses have to charge above-market rates for their successful products to amortize all those failures. If you limit their ability to do this, books will indeed be cheaper, but they also will be lower in quality and variety because publishers will have less ability to finance experimentation.”

You really wanna compare publishers to pharmaceutical companies? What, you couldn’t think of a metaphor for publishers with war-profiteering arms dealers? Or the Indonesian child sex slave industry? I could buy the above-market price argument if not for the fact that essentially all these books are selling for the same damn prices, successes and failures alike. A book’s price doesn’t increase as it sells more copies. I’m also pretty sure books are indeed cheaper and exist in a greater variety than ever before right now. And publishers certainly aren’t the place to look for experimentation. The bulk of the really unique and creative stuff is being done on the independent writer side these days. Publishers may take risks but they’re generally minimal ones within a narrowly established range. They may occasionally venture out of the plastic wrap but rarely do they get all the way outside of the box it’s in.

“…what Amazon really wants to sell is not so much e-books as the delivery system of those e-books, called a Kindle.”

And what Apple really wants to sell is not so much ebooks as the delivery system of those ebooks called an iPad. You got a point here?

“Apple was offering to once again give the publishing industry the freedom to overcharge for all those e-versions of E.L. James’s Fifty Shades of Grey flying out the virtual doors to make up for the risks it is taking on thousands of other titles…”

Yup, because customers enjoy nothing more than happily giving billion dollar corporations the right to over-charge them. That always works out well.

“…at heart, the case asks a fundamental societal question: what, legally speaking, is art?”

No, the fundamental question in the case is did five of the six largest publishers and the largest tech company in the world hatch an illegally collusive conspiracy to fix prices at considerably higher levels and squash competition? The legal definition of art has no bearing here, only the legal definition of collusion.

“…in Article 1, Section 8 of the Constitution, the framers noted how important it is “to promote the Progress of Science and useful Arts” and thus created copyright protection for authors and inventors.”

That copyright protection is the reason there’s any market for artistic works at all. It was granted to give creators limited exclusivity to access to the market. Copyright wasn’t put in place to spare books from market forces, but so the specific creators could take advantage of those market forces. It’s since been perverted, largely by media lobbyists, into an effectively unlimited time frame of control. They didn’t push for life + 70 years to avoid market forces. Just the opposite, in fact, so they could reap the rewards of a century or more worth of access to those market forces. Copyright offers no guarantee that the creators profit from the work, only that they have the access to potentially profit. Publishers themselves have stood for years as a roadblock to that access, demanding those copyrights be turned over as a toll to the marketplace. By usurping the market access for creators provided in copyright law, publishers have undermined the very point of its existence.

“Books and other works of art aren’t widgets, and art does not now nor has it ever flourished in a truly efficient market.”

Bullshit. The publishing industry, at its base, is a multi-billion-dollar enterprise whose main product is creative output, just like any number of other industries. Questions of art are far too subjective to have any meaning in the actual business realities here. If it hasn’t flourished in a truly efficient market in the past, that’s because it hadn’t really had one in a long time, if ever. Publishers gradually monopolized both the supply of books and the distribution. Any inefficiencies in the market exist because publishers’ iron grip lasted basically uncontested for too long and they got complacent. Those inefficiencies shouldn’t be celebrated or vindicated in any way. They are precisely how Amazon managed to earn its position, by appealing to and improving the conditions of the people most squeezed by those inefficiencies, readers and writers. Oh, the irony of a company doing great things for readers and writers yet being pilloried for it by the existing industry who, all the while, claim to be supporters and nurturers of both those groups. And if you don’t like irony, hypocrisy is another term that will work.

If that’s not enough of a sign for you that the industry has lost its way, I’m not sure what would convince you. The interests of the industry and big publishers diverged over time from the interests of the two most important players in it. That foundation has grown so solid that many just presume what’s good for them is good for everybody. But that’s an extreme oversimplification that ignores the reality that publishers are but middlemen of the longstanding type that eventually shift from providing efficiency by connecting suppliers and buyers to squeezing both sides to the advantage of their own bottom line. That is not an atmosphere that screams for propping up the middlemen when the two parties it supposedly connects find ways to be more efficient without them.

This entire article was an odd combination of musings about the supposedly unique nature of publishing, how the standard rules of business–even the law–shouldn’t apply and some indefinable role of art within it juxtaposed by support for legacy businesses who have shown a history of anticompetitive behavior, cartel-like dominance and a decided lack of concern for the interests of readers and writers. Even the widget point he made multiple times is disingenuous. It’s easy to say books aren’t widgets but you lose a little credibility when you then defend publishers who produce large numbers of similarly priced titles in high volume as part of a business model that treats books suspiciously like widgets.

Publishing is not a special snowflake. It’s a business like any other. Publishers aren’t defenders of art but defenders of profit margins, usually at the expense of readers and writers. The law isn’t something you can willfully ignore just because you don’t care for your competition. It’s also not something that can arbitrarily be waived for the sake of art. The industry is bigger than publishers. It may be hard to see it that way since they’ve been in a position to make it look like they are for longer than most of us have been alive.

Arguing in favor of giant profit-driven conglomerates as the path to art for art’s sake just doesn’t make a lick of coherent sense. Modern publishers were a market response to conditions at the time. Even the most virulent Amazon hater has to admit that the conditions under which publishers thrived have changed. Change is hard, especially when your role is the one being mitigated, but it’s the way life, and the publishing industry at large, works. Putting a veneer of art and culture in defense of price fixing and collusive behavior is naive at best, willfully deceptive at worst.

Whether publishers live or die is immaterial to the matter of whether, and how, the industry on the whole reloads. It will carry on regardless, headlined by readers and writers which to my thinking is a far better development than one dominated by middlemen demanding onerous concessions in rights, control and money if you ever want your work to see the marketplace.

So enough with the high-minded talk about art, literature and culture. Those are great and valuable things, but the old system did little more than pay lip service to those elements while behaving as corporate profit-driven enterprises often do, the bottom line rules all. Amazon may one day become that, as well, but you’ll have to excuse me if I don’t buy in to the argument that we need to prop up the old publisher cartel in the hopes of preventing Amazon from becoming just like them.

If You’re Not Moving Forward, You’re Falling Behind

So, maybe you heard, Apple lost? I wasn’t the least bit surprised given the case was so obviously apparent that it makes Michael Bay movies seem like masterpieces of unpredictability. Hell, even their most vocal supporters would often near or outright concede they colluded, justified, of course, because Amazon, conspiracy, evil, apocalypse, Bezos is a vampire, whatever. I stopped listening once it became apparent these folks wanted the mutually exclusive ends of some fondly mused about artistic utopia of literacy and culture, and wanted it achieved under the colors of the profit-seeking billion-dollar publisher conglomerate gatekeepers. Say what you want about Amazon, but if I’m truly not interested in the commercilized publishing industry, their system and the digital and print on demand publishing environment that’s grown with it, will allow me to carve out a place where I can do whatever I like to my artistic heart’s content and still reach the marketplace. The old publisher system would brook no such quarter. Arguing for artistic merit in literature and backing those who’ve largely been an impediment to it is a logical inconsistency I can’t get past.

From the time the Dept. of Justice first announced the investigation, then the charges, followed by the publisher settlements, the trial and now the decision, I read more than a few opinions in defense of the Agency Pricing scheme at the root of the matter. They all basically boiled down to the same thing: the DOJ doesn’t get how the industry works, books are not widgets and Amazon is a monster that, if we do nothing, will burn the Earth to ashes. The Amazon monopoly concern is founded in some truth. I share it myself, to an extent, mostly of the point when Bezos moves on. The next regime that takes over is my concern.

The difference between their opinions and mine is that I recognize how Amazon achieved their position in the market. They did it by breaking the monopoly publishers had established over several decades. The testimony in the Apple case painted a picture of publishing CEOs not at all unfamiliar with routinely meeting with their fellow executives and exchanging notes on competitive circumstances. The control they had may not have been a traditional monopoly, but it sure as hell looks an awful lot like a cartel. And that says nothing of the virtual monopsony they collectively held, due to their gatekeeper role, over their suppliers (writers). Amazon broke their hold by addressing those most disaffected by the cartel’s established structure, using technology to do it. The same disruptive conditions they used still exist and I am confident can and will be directed at Amazon in the event they change course into genuinely predatory waters. But please don’t ask me to back the old, more restrictive cartel as the better choice.

Often, there’s a “won’t somebody please think about the bookstores!” moment tossed in there, too, to pull on the heartstrings of nostalgia. But, again, there’s that same dichotomy of logic in what they claim to want and what they’re actually advocating for. The health of independent book stores is clearly a concern for many, but when you present the Borders and Barnes & Nobles of the world as victims in the same mold, you’ve lost the path to rationality. Barnes & Noble in its prime was a profit consuming monster that left a wake of boarded up independent stores behind its publisher-enabled bulk-level discounting. What’s good for B&N and what’s good for independent stores are completely divergent. B&N is no ally of the corner book shop.

This argument openly backs extraordinary leeway and support for entities with an established history of actually doing what they fear Amazon might do in the future. The intellectually honest argument would be to advocate for a third path that keeps the publishers’ cartel broken and restrains Amazon’s ability to have an out-sized influence on the market. The relative absence of that third path in the anti-Amazon rhetoric makes me wonder if it’s these people, so vigorously defending both the greatness of a diverse literary culture and the corporate bohemoths who have perverted that to the greatness of their profits, who are the one’s who don’t understand how the publishing industry really works.

Amazon is a corporate bohemoth, too, of course, one that presents some very real risks for the future. But, right now, they provide a ton of benefits to a ton of people who aren’t those guys, namely readers and writers. You can say an Amazon-led industry will turn out badly for those groups in the long run all you want, but that’s not the case today, or in the forseeable future which, admittedly, might be short.

You don’t like Amazon? Fine. Let’s talk about how we move forward from the progress and advantages Amazon’s made. But if you want to talk me into moving backwards into a situation that restrains me as a writer both creatively and financially, and as a reader, both in choice and higher prices, you can take that worn out nag of an argument elsewhere.

Amazon and The Mystery of the Great Used eBooks

I am finding the notion of first sale rights and used ebooks pretty fascinating these days. I wrote a bit yesterday about how I suspect that taking away first sale rights from consumers has damaged the book business. Today, I read this piece by Marcus Wohlsen for Wired, completely wrapped in consternation over Amazon’s patent filing for a digital goods resale scheme. There’s a few points in the article I’d like to discuss. I’m not a lawyer, so these are simply my opinions on how copyright law, particularly first sale, might affect Amazon’s actions with regards to used digital stuff.

“Digital content is infinitely reproducible. No technological limit exists to how many times a single digital original can be copied and resold.”

No technological limit exists because nobody’s bothered to implement an effective one. And maybe I’m wrong, but isn’t all that fancy DRM we’ve had shoved down our throats a technological limitation to copying? Pretty sure that exists. It may not work very well, or might be crazy-easy to circumvent, but it exists. The entire ebook market has grown under the assumption that consumers had no right of resale, therefore no screaming need to invent one. But look, ReDigi is getting sued for its used digital business and they have a method to limit copying. Amazon’s patent here is another. If second hand digital goods becomes a reality, you can bet there’ll be numerous technical methods to deal with this post haste.

As for copying infinitely for resale, that doesn’t even apply in this case. What Amazon’s talking about here seems to be totally in-house. They already know who bought what and how many times. They’re suggesting a scheme to resell the licenses not so much the actual ebooks. There’s no way somebody copying an ebook bought from Amazon is going to be selling it over and over again without Amazon being willfully complicit. They have zero motivation to engage in something so risky and outright stupid. There is no chance anyone will be selling multiple copies of the same ebook in the system Amazon’s trying to patent.

“Just as with physical books, publishers would only have a say — or get a cut — the first time a customer buys a copy of an e-book. The second, third and fourth sales of that “same” e-book would be purely under Amazon’s control.”

That would totally depend on how this was executed. If a first sale use is exerted to allow the resale, then it’s actually the customer who has control of the resale. Amazon would, theoretically, either expedite a sale between two customers and take a small cut, or create a system where they buy the ebooks from the customers, then they would gain those resale rights. The alternative is if the resale was a product of a licensing agreement with the publisher, in which case, no first sale rights were exerted and Amazon would have as much control as the licensing agreement allows and no more. Publishers would have to be nigh-on-braindead to license resale rights to Amazon, though. They’d be better off just releasing first sale rights to everybody altogether and letting the chips fall where they may than giving Amazon more power to lock customers into their world. In fact, I think they’d be better off doing that than what they’re doing now, even if they maintain the good sense not to license away the second hand market.

Wohlsen then quotes Bill Rosenblatt, who he describes as “a consultant and expert witness in digital content patent cases”:

“If Amazon is allowed to get away with doing resale transactions without compensating publishers, then what they can do is say, ‘hey authors, sign with us and we’ll give you a piece of the resale.’”

If Amazon is allowed to resell without compensating publishers, then that means buyers would have regained first sale rights. That would mean Amazon, or anybody else for that matter, wouldn’t be able to control the resale of these goods. You can’t just say “Kindle owners have first sale rights but Nook owners don’t.” Amazon could certainly cut writers in on the resale of their books on their site, but in this hypothetical, they’d be far from the only place selling second hand digital goods. As a,writer, if would definitely be something I’d listen to, though.

There is no circumstance where Amazon totally controls the resale market and doesn’t pay publishers. Either they license the content for resale, in which case publishers get paid, or they invoke first sale, publishers don’t get paid, but the real control and resale rights would belong to consumers. (Unless, of course, a court somewhere warps copyright law to create such a circumstance. Not exactly an unheard of occurrence.) Amazon might build a nice little business with used ebooks, but it would largely have to do so by offering buyers enough incentive to exert their first sale rights with Amazon. Hardly a dominating position.

“Buried in the patent is language spelling out that the technology Amazon intends to use will have the ability to limit the number of times a digital good could be resold or loaned out. Amazon could use that constraint to strike bargains with publishers and authors to cut them in on used digital sales, which doesn’t happen with used physical media.”

And would only happen here if it were a product of a licensing deal. If they invoke first sale, Amazon couldn’t uninvoke it later. They wouldn’t have the right to put any limits on resale. They could buy the license, then willingly retire it, but they couldn’t prohibit a buyer from selling it. If it were licensed for resale, however, Amazon could do just that, per terms of the licensing agreement. But again, publishers…resale licensing with Amazon…braindead stupid.

I do believe we need to return first sale rights of digital goods to consumers. I believe there will be a technological means developed that is simple enough to make this happen without unduly encouraging piracy. Even so, no matter what you do, somebody somewhere is gonna rip you off. Publishers are just gonna have to accept that reality. Taking away first sale rights devalues the product in a very real monetary sense to the buyer. That is simply bad business.

What Amazon’s patenting here sounds to me like an attempt to strengthen its walled garden. I’m not sure this method would hold up or work in an atmosphere where first sale rights are truly implemented by consumers. So it seems as though licensing resale from publishers is the point of this. But what publisher in their right mind would give Amazon this ability? On second thought, don’t answer that. Like with most things, some idiot(s) will.

Second Hand Blues: First Sale Rights and Used eBooks

That sound you just heard was the collective heads of everyone in the traditional mass media industry exploding as news of Amazon filing a patent for a process to resell digital goods spread. Many of them are having enough trouble keeping their heads above water in the current digital marketplace as it is. Now, suddenly, they might have to deal with competition from an area they thought was locked down, resale rights of customers. Oh shit.

Personally, I’m all for this development, although I would much rather someone other than Amazon be the one to push this possibly emerging market. However, the fact that they’re taking steps to be prepared for it again shows why they have essentially made fools of the traditional industry. They think ahead, they pay attention, they prepare and, most of all, their business model adds value for their customers instead of taking it away.

I’ve long been a proponent of an aftermarket for digital goods. I believe it’s lack is the one key flaw in the ebook market. In fact, I’ve started to develop a little theory about this. Far from being just simply a loss of value for consumers, I’m starting to get behind the notion that the lack of an aftermarket is a primary cause of three of the most troublesome issues with ebooks and other digital media; piracy, discoverability and the downward pressure on prices.

1. Piracy

I usually take issue with even defining the activity of file sharing, even obviously infringing file sharing, as piracy. I just don’t think it is. I also think it clouds the issue by broadening the scope of conduct corporations would like to monetize into a individual crime, which hurts efforts to combat actual, destructive commercial-scale piracy. But for the sake of brevity, I’m just going to use the term piracy here. It’s easier to type than “possibly infringing and much maligned but potentially fair use protected file sharing,” which would be a far more accurate description of the conduct to which the industry objects.

The biggest joke of all from the anti-piracy brigade is the assumption that every download is a full price lost sale, complete with lost royalties for the creator. That’s obviously a skyscraper-high pile of horseshit I’m not going to waste time refuting. But let’s say, for the sake of argument, that it’s somewhat true, who’s to say that lost sale would have even been one that affected the industry or artists at all? It’s easy to suggest that someone downloading an ebook wasn’t going to buy it anyway. But what if they were going to buy it, only a cheaper second hand version? Even if it was a lost sale, it wasn’t one that would have earned the industry a dime anyway. Or any royalties for the artists. Amazon routinely lists used alternatives to new versions right on the product page, always significantly cheaper. Is it really a stretch to think that people who choose downloading for free over buying full price wouldn’t also choose to buy cheaper used than new? Even if every download were a lost sale, if those sales were going to be of the cheaper, used variety, the industry and artists lose nothing. And it’s perfectly legal under the first sale part of copyright.

Ebooks circumvent first sale by being sold as a license for use. When that happens, customers lose the ability to resell those goods (among other things). It’s why I can’t just sell the ebook I bought last week from Amazon to somebody else on eBay. But the book publishing industry has long existed side by side with its used counterpart. There has always been a place to buy books at a significantly discounted price. When eBooks took off, however, there was a vacuum left where that discounted market used to be. Isn’t it possible that piracy grew to fill this very gap that the loss of first sale left in the digitized side of the market? We went from a system where you could get books full price new, heavily discounted used, or free from libraries to a system where it was full price new, extremely limited and inconvenient from libraries or free through piracy. The industry, through the means it chose to sell ebooks, removed the discounted option completely, hamstrung the legal free option and then loudly wondered why people pirated.

I think a lot about rights, I am a writer, after all, and I spend a fair amount of time complaining about rights grabs from publishers. But it just dawned on me that I’ve essentially missed the biggest rights grab of all. The way ebooks are sold protects publishers under copyright law, protects authors under copyright law (although I would argue in too ancillary of a way through publishers but that’s for another day) and takes away almost all the rights of consumers under copyright law. It is pretty egregious when you look at it. The first theft was committed when publishers agreed to the licensing scheme and took away customer rights. Then they turned right around, started pointing fingers and yelling, “Thief!”

Removing first sale rights created a vacuum in the ebook market and piracy was what grew in its place. Nature does, indeed, abhor a vacuum.

2. Discoverability

Here’s another thought that’s been kicking around in my head: what if, instead of causing the drop in sales, piracy actually prevented that drop from being significantly worse? Think about it. When digital music hit the scene, that industry panicked, fought the rudimentary early age file sharing spots like Napster and Limewire tooth and nail, right down to suing their own damn customers. At that point, broadband was slower, not nearly as widespread, and most people didn’t know how or have the capacity to download sometimes large music files. As first sale rights fell away, the secondary markets thinned, discovery was hampered and sales dropped precipitously. When ebooks hit publishing, there were well-established file sharing networks in place, broadband was much faster and more ubiquitous. The discovery hit from loss of first sale was mitigated somewhat by piracy and the drop in sales was much lower. Book publishing, quite possibly, was somewhat protected from itself by the very pirates it so loves to demonize.

Look at it this way, when I buy a print book, I can go sell it to someone else. They in turn, can sell it again, the next owner can sell it, then that owner could donate it to the library where it can be checked out over and over again. That one book could pass through numerous hands, all legal and all based on one sale, the first sale, from which publishers and creators reap their proceeds. The rest of that book’s lifespan constitutes exposure, or discovery, if you prefer. Now, if I buy an ebook, other than a limited ability to share with a few people under specific conditions, the life span of that ebook essentially dies immediately after the first sale. All of that exposure and discovery that was present with print books sold with first sale rights is washed away. And again, the industry is perplexed about why people aren’t finding new books as easily as in the past. That kind of thing happens when you destroy the primary mechanisms of discovery by swiping rights from customers.

I’ve seen numerous polls that suggest bookstores are the number one place for discovery of new works but I’ve never seen one differentiate between what kind of bookstores they’re talking about. Is it more likely you’ll try out new authors in Barnes & Noble where you’re paying $10-25 or so on average per book, or in a used bookstore where hardcovers are $2 and paperbacks can be had for 50 cents? I suspect discovery has been done far more at bookstores selling heavily discounted used books (and libraries, where it’s free) than at stores selling only higher priced new books.

Everybody seems to be wondering why online book discovery is struggling so much. Could it be because publishers have hamstrung libraries and blocked the development of discounted used ebook stores by eliminating consumer rights to resale, places where discovery is far more likely to happen than full price, brand new alternatives? Nah, couldn’t be that, must be the pirates, you know, the only place actually emulating the primary means where book discovery was done in the past.

3. Downward Price Pressure

Taking away first sale rights from consumers does one other key thing, it takes away the customer’s ownership stake in the product. If you can resell something, that has value, and when you buy a print book, it retains that value because of first sale rights. But with ebooks, the monetary value drops to zero immediately after you pay for it. Don’t think for a second people don’t understand this basic fact. The loss of an ownership stake, and the instant elimination of any monetary value necessarily degrades a product in the customer’s eyes. By swiping first sale rights, publishers have devalued their own products. It’s the reason why so many people complain so loudly about ebooks priced anywhere near what print versions cost. We’re not stupid out here, we know damn well you’re selling us a product that doesn’t have anywhere near the tangible value of a print book, and that has nothing at all to do with the quality of the book. I can’t sell it and its uses are limited. I possess significantly fewer rights with ebooks. Consequently, it makes no sense to pay print prices for way-less-than-print value.

Then, there’s this. With the aftermarket for ebooks nonexistent, wiping out a highly discounted layer of sales, it created a huge gap between the prices of trad pubbed ebooks and indie books. That, in turn, created a situation where indie books could be priced much cheaper and attract significant sales through super-low prices alone. That, then, set off a race to the bottom fight for those sales, culminating in 99 cent novels, and generally increasing the downward pressure put on all ebook prices. But consider, if there were a used layer there where trad pubbed ebooks could have been picked up for $2-3 or so, the massive gap in prices between indie and trad books never would have happened, the severe price advantage wouldn’t have sparked the uptick in sales that set off the race to the bottom. Indie authors would have been forced to compete on factors beyond simply super-low prices, and the downward pressure they’re experiencing now declines appreciably. Also, if those same customers now bitching about $15 ebooks knew that could get a few bucks back on them through resale, they wouldn’t be so likely to complain about price. They’d retain their ownership stake, and very likely, not balk at paying a few dollars more. There’s two key elements right there driving prices down that go away if customers hadn’t had their first sale rights taken from them.

First sale rights are hugely important. I’m of the mind that swiping them from consumers as ebooks have is responsible for most of the biggest problems in a growing industry segment. An aftermarket isn’t something to be afraid of, it aids discovery, maintains value in the product chain and gives your customers not just a right to resell, but an actual ownership stake in the product, albeit a small one, relatively. It now becomes in their best interest to maintain the value of ebooks because they have some skin in the game. Take them away, and it seriously damages discoverability, drives prices down as the reality of lost value sinks in, and it drives possible customers to alternatives like piracy.

Whatever the technical difficulties in creating a digital goods aftermarket, or giving consumers back the first sale rights that have been swiped by the ebook licensing scheme, the consequences will be far less severe than continuing to treat customers as naive dullards who don’t mind being gouged by higher prices for a lesser product. There’s a good reason first sale exists as part of copyright law, free markets don’t work when one party has too much control over economic activity. If we don’t change course soon, the ebook market will find out exactly how dysfunctional things can get when the playing field gets unfairly slanted. Customers have rights, too, and it’s high time publishing remembers that.

Bookish: New publisher-backed retail site is game-chan…eh, whatever

I was checking out Bookish today, the new Big Six backed trojan horse, supposed to look like some kinda Goodreads/retail store hybrid thing but really is a not-so-subtle attempt to build their own little walled garden only sans the hardware. Yeah, I’m not a fan, what can I say?

Actually, I don’t really see too much to get worked up about anyway. There’s nothing really new here, and it’s pretty clearly an attempt to regain gatekeeper control by imitating various popular book-related internet properties they could have innovated a decade or so ago if they’d have pulled their collective heads from their assess even temporarily. Late to the party doesn’t usually fly. That and this is traditional publishing trying to be forward-thinking, after all. So forward that the debut was about two years after it was supposed to be. I’m not encouraged by the vision or support behind this if things don’t go instantly great and end up even the slightest bit challenging.

The DRM insistance sucks but not at all unexpected. We’re still quite a ways from the biggest of publishers’ conglomerate masters getting the memo that they’re cutting their own throats with it. The part of the terms of service saying they own all rights to any user generated content is troubling, but again, publishers are behind this. Never met a right they didn’t try to grab. There appears to be a pretty stark “no refunds” policy on ebooks, too, enforceable after download, which, I guess, means store-credit-only if something’s messed up? Of course, shit-out-of-luck is a distinct customer service possibility here, too. Wouldn’t surprise me. By comparison, Amazon gives you seven days to “return” an ebook for a no-questions-asked refund. Not exactly a compelling reason to buy through Bookish rather than Amazon.

I would typically link to their site here, but apparently I would be violating their terms of use if I did so, it containing a provision allowing them to block your link if you disparage them. Lord knows I wouldn’t want to run afoul of their terms. So, good job, guys! Here’s at least one less link to you in the world.

At the end of the day, Bookish to me loses points precisely for what it’s trying to do, be a limiting factor in book shopping, and serve in a gatekeeper type capacity. It’s not so much what’s seen or recommended on their site, it’s what’s excluded that’s the problem. It’s allowing material in from sources which meet some sort of standard of approval, apparently dependent entirely on the publisher. It’ll be interesting to see if this ends up with the big boys getting all the prime, algorithm-tweaking real estate. There doesn’t really seem to be much in the way of involvement for authors, either. But, I’m willing to give most things the benefit of the doubt, so I clicked on the “I’m an author” link in their FAQ. Here’s what I got:

How can I have my book(s) added to Bookish?

Authors should ask their publishers to confirm that their respective titles are in the data feeds provided to Bookish.

That’s it? I’m an author. I’m interested in becoming involved with this innovative new method of doing the same thing other people are doing just more self-servingly and the only acknowledgement or words of advice you have for me is “go ask your publisher”? Is it me, or is the tone of their suggestion reminiscient of when you were a kid and annoyed your mother with some question she didn’t care about to the point she’d say, “go ask your father?” Seems a bit dismissive and condescending. I also find myself wondering at what point the lawyers took out the “If you’re a self-published author, go fuck yourself!” line that I’m pretty sure was in the first draft.

It’s not a bad thing for publishers to try to get some sort of more direct retail channel. But they can’t even get all the big players to back it. Hell, Apple talked them all into breaking antitrust law together, but something that could actually be a practical benefit to the industry if done right? No way! This should have been done years ago. Now, it’s just chasing, piggy-backing on other people’s hardware, yet still trying to build that mystical walled garden through DRM. Authors are pretty obviously an afterthought, and they certainly aren’t treated as any kind of business equals, more like underlings to their publisher masters. I’ll withhold judgement on whether this is useful to readers until we actually hear from some, but I’m not optimistic given what I see so far. If I had to guess, Bookish will err too far toward crass commercialism over genuinely social interactions with readers. Basically, I’m seeing a site that’s talking at readers, not with them, and that’s going to be its biggest problem.

Data Overload: Reader behavior data lacking in crucial context

I just read this piece on NPR about whether the data collected on reader behavior from ereaders is useful to writers. My gut reaction is, “nope,” but upon further reflection, I can see some circumstances under which some data along those lines could be of use. It’s not a simple, black or white question, however. It all depends on who has the data, and who’s using it and how they overcome the problem of lacking proper context.

I can easily envision a circumstance where a publisher says to a writer, “Our ereader data suggests 63% of your readers were more engaged in the portions of your last book where the hero fought werewolves. We’d like your next book to include more werewolves.” That’s not appreciably different than it is now, only with more data that appears to reinforce their beliefs. Publishing has always been an industry that, when success strikes, beats every ounce of that success into the ground. Fifty shades of erotic romance, anyone? If werewolves are showing signs of being the hot new thing, bring on the werewolves!

But is that interpretation of the data correct? Were those readers more engaged because of the werewolves or because it was a high-tension, exciting sequence that just happened to involve werewolves? That’s a pretty important distinction. The problem is, we can’t say without more data to properly explain this data.

Here’s a point made by author Scott Turow that raises a similar concern in mind:

“I would love to know if 35 percent of my readers were quitting after the first two chapters because that frankly strikes me as, sometimes, a problem I could fix.”

Possibly. But what if that 35% is industry-standard for readers dropping books after the first few chapters? How do we know? I know my reading habits often have me starting books, putting them down for other books, sometimes coming back later, sometimes not. There’s no rhyme or reason related to quality for it, either. Some of my favorite books were started three or four times before I finally followed through. And I’ve read some total tripe cover to cover.

We need a whole lot more information before making any creative decisions based on this. What if we come to discover that 35% is actually better than average? What if 40-45% turns out to be the figure? Would Turow no longer have a problem to fix? He’d still have a third of his readers not getting past chapter two, but he’d also be outperforming the industry. What if we discover this having similarities to baseball, where failing 7 times out of 10 makes you an All Star? We are lacking the frame of reference to make useful decisions based on this data. Finding answers from data lacking adequate context is like reading tea leaves or interpeting ancient religious texts; anybody can do it and find a justification to point to as evidence, even if another person can credibly interpret the proofs you site the exact opposite way.

Turow also said this:

“Would I love to hitch the equivalent of a polygraph to my readers and know how they are responding word by word? That would be quite interesting.”

Frightening might be another word for it. Hell, I sense a dystopian novel where corporations have hitched everyone to a giant monitoring device to record their every impulse and give them back only products that serve their immediate desires, sort of a permanent cultural feedback loop. I don’t see how that much data is even useful. Writers, generally speaking, have varying degrees of OCD. I can easily see the hypochondriac impulse taking over, and some writers getting obsessively lost trying to make sense of this mass of often conflicting information.

He does make a cogent point here, from a publisher’s point of view:

“Why should we publish this book if 11 readers out of 12 can’t make it past page 36?”

It’s hard to argue that. Publishers need to make money to survive. So do writers but on a different scale. If data suggests a book isn’t attracting an audience sizable enough to support publisher overhead, then why should they publish? From the other side, if a book is not showing scale that befits a relationship with a publisher, maybe that’s a way for writers to help determine if a work is better served as an independent release. After all, the term “hybrid authors” is all the rage these days. You have to choose your publishing approach somehow.

But again, this only works if the data means what we think it means. Besides, there’s also the paradox of the fact that the book has to be released in order to collect reader data on it. So, at best, unless we’re talking about turning books into software and releasing beta versions we fix after getting customer feedback, this ereader data is only really useful in a predictive sense for future work. Which means that all we’ve done is pile a lot more data into a decision we’re already making based on an already-existing pile of considerations today. Will it improve end results? Maybe, maybe not. But what it will do is provide justifications to make the initial decision more defensible, regardless of outcome. I’m not certain that’s a good thing because it has the distinct potential to provide pseudo-evidentiary cover for making bad calls on whether or not to publish.

Books will still succeed despite data that suggested beforehand that they wouldn’t. And books will still fail despite having all the indicators of a sure thing. This data is nice, but there are numerous factors at work in a successful novel, reader behavior while reading is a small part of that I can’t definitively say holds much significance. I can’t say it doesn’t, either. We just don’t have enough data. In the future, we’ll fix that, I’m sure, and be awash in all the facts, figures and statistics we can stand on reader behavior. But we’ll still be lacking the context. Without that, I’m not convinced we’ll ever be able to interpret this information properly. Short of Turow’s all-encompassing polygraph or some piece of future tech that reads minds, that context isn’t readily accessible and likely never will be.

More and accurate data is always a good thing, but who wields it and how is crucial. I have a feeling that this will turn out to be little more than echo chamber material. Anyone making an argument will be able to find the numbers somewhere in the increasingly vast data pool to support it, no matter how outlandish.

Will I use this data for something, if available? Absolutely. I can totally see its value from a marketing standpoint. Will I change a character, story or rewrite portions of work based on this information? Absolutely not. I have little confidence that any of this data means what I think it means. I have even less confidence it means what other people think it means. If it only serves to reinforce already existing opinions, then it brings little of value to the table. Maybe I can glean a way to sell more books with this data, and that’s worth a shot, but changing the actual work in response to it is a bridge too far.

2012 Isn’t The End Of The World But It Is A Time Of Transition

For the past few months, I’ve laid back and soaked up the goings on in publishing, and the economy in general. Here are a few things I expect to see as we wrap up 2012 and head into the beyond.

1. Apple is in the process of cutting its own sizably profitable throat

I was once one of Apple’s biggest proponents. This was back when they produced the best computers going, especially when paired head to head with Microsoft’s crap-of-the-month they’ve spent the past 15 years cranking out. But no more. They are far too expensive in an atmosphere with downward pressure on device prices, and are showing far too many issues with signature devices like the iPhone. The iPad Mini is nothing if not a cannibal that has the potential to swallow the market for the full size (and pricier) model whole. Add to that the fact that, fairly or otherwise (I say fairly) Apple is a poster child for exploitative labor practices, offshoring of jobs and stashing large profits out of the country to avoid taxes, and I see a company who has reached its apex and is poised to begin the long decline down.  If Steve Jobs were still alive, I’d give them a shot to pull out of it, but he’s not, and Apple is in the process of becoming just another mega corporation focusing on profit at the expense of all else.

There’s a reason Apple is putting more and more resources towards patent lawsuits. It’s corporate complacency. Live off the value you have today, and do everything you can to stifle competition or progress beyond that point. It might work for a few years, but it’s a long-term loser bet. Much like Microsoft, the world will pass them by and they’ll learn that it’s much harder to play catch up than be the industry leader, especially after your corporate culture shifts from profit through new innovation to profit through exploitation of past innovation.

2. Consolidation amongst the largest publishers is a sign of desperation not forward-thinking strategy

Corporate consolidation and mergers come in many forms. Sometimes, they are aggressive, competitive moves, other times they are backs-to-the-wall defensive maneuvers. The Big Six mergers going on are in the latter group and, as such, are little more than time-buying exercises. The Disney purchase of Lucasfilm is just the opposite. The mouse didn’t snap up Star Wars to squat on the crazy-lucrative rights, they intend to use them. Publishers, on the other hand, are merging not as an aggressive bold move, but as a means of cutting costs and combining assets to add sheer bulk in some kind of misguided dick-measuring contest with the big retailer of the moment, Amazon.

I expect the Big Six will filter down to three, possibly even two within the next two years. The remaining giants aren’t going anywhere, they’ll still be raking in money, still produce bestsellers by the bushel, still be big name players, but while they get individually bigger, the overall share of the market once held by all six separate companies combined will decline.

While this consolidation will very likely appear positive on the accounting ledgers, in the real world, it means less skilled people employed in traditional publishing, less opportunities to get books published traditionally, less competition for authors between traditional houses, lower advances, lower royalties and more stringently pro-publisher contracts with increasing restrictions on writers. If you’re one of those people who still see a traditionally published book as something to aspire to, your work just got a lot more difficult and a lot less potentially lucrative.

If anything, I expect consolidation among the industry leaders will drive more writers to control their own destinies. In fact, I would not be the least bit surprised if, eventually, the bulk of the work coming out of the last of the giants winds up as work-for-hire ghost written material. Anonymous author-mills, basically.

3. Any improvement in publishing’s fate depends on a functioning economy

We just had an election that comes at a pivotal time for us and the one obvious problem that’s suffocating us went completely unaddressed. How, exactly, do we convince the corporate world to reinvest in its workforce through better pay and benefits, thereby investing in the market for its own products? Many corporations have become virtual crack-whores to ever-increasing margins, and the du jour move of the moment is to cut everything not nailed down from your employee base to improve the bottom line. We need to convince them to break that addiction, sacrifice some of those profits in the short term for the betterment of everyone, and mostly, their own long term bottom line.

The current system is clearly unsustainable. They need customers, and lots of them, which they’re not going to get if corporations en mass continue to bleed the workforce of any and all disposable income to pad their own criminally undertaxed capital gains. It’s doubly damaging condition because egregiously low wages also add to all of our tax bills. Walmart, for instance, made $15 billion in profit last year. Their employees, however, were paid over $2 billion in government assistance. That means we subsidized billions in Walmart profits with our taxes. But its the poor single mother on food stamps who’s the parasite, right? As things are now, obscene percentages of capital are being sequestered totally out of our economy, with more being drained every day. That has to stop, and it has nothing to do with tax rates. It’s a grab-the-cash-right-now strategy, and it’s sacrificing the future for everybody, rich and poor alike, to support gluttonous profits today.

It’s a common problem. Publishers suffer from it. They invest less and less into the actual productive areas of their business and more into their corporate structure. In doing so, the financial barons on Wall Street reward them for their stats on paper, which always look good right away but don’t reflect the long-term negative consequences of the cuts. Those come later, and inevitably lead to more cuts. It’s a death spiral writ large. Amazon, by contrast, does reinvest large chunks of profit back into its business, and Wall Street punishes them for it routinely. It’s a good thing Jeff Bezos doesn’t seem to care what Wall Street thinks or Amazon might never have been anything more than one of the online retail pack. Our financial system, where nearly all of our resources are controlled, rewards corporate behavior that is destructive to the real-world economy and punishes actions that help it. How a system that was originally intended to allow companies to raise money with which to expand business has been allowed to mutate into this self-sustaining casino game is one of the great disgraces of the late 20th century. Our ends are fundamentally at odds with the ends of the financial sector.

These things have to change, or our very basic social fabric risks being torn asunder. It’s not going to matter what ebooks cost if people can barely afford food. A severe rich/poor class system will rip itself apart in this country. And all it takes to fix it is if our corporate leaders give up a small percentage of profits in favor of better compensation for employees. Stop hoarding your money overseas, pay your damn taxes, and pay your employees a fair, living wage. Actually give something back to the market you’re getting filthy rich on. There’s nothing to harvest if you don’t plant a few seeds. I’m not sure how, or even if we can change our corporate culture from its current parasitical nature back into a sustainable one, but I do know that if we don’t, the changes we’ve seen the past few years are but small scratches on the surface of what’s yet to come.

4. I’m holding to my opinion that the smart money is for people to develop their own skills and use them entrepreneurially

We can no longer count on steady, good paying employment on a wide scale. Companies aren’t going to give up the exploitative profit margins they’ve grown used to without being strong-armed, and any means of forcing them will have immediate, very ugly consequences. So let’s not do that. People everywhere need to cultivate ways to make money outside of traditional employment. The get-a-job thing is becoming a worse and worse deal by the day for workers and unless we are all happy ending up as poverty stricken wage slaves, we need to start creating our own economic opportunities. For writers, this means get off the fence and learn publishing. “I just wanna write,” sounds great and all, but it’s becoming increasingly unrealistic. Not knowing the business side intimately isn’t going to be a matter of choice much longer, either figure it out or get stuck under the boot heel of a giant publisher. It’s not an intriguing little side-light to consider any longer, but a virtual requirement for your long-term survival interests.

And it’s getting to be the same with everyone else. Wide-scale employment is becoming a race to the bottom, creating bottom-rung, benefit-less, minimum wage level jobs in droves while shedding living wage jobs. Figuring out how to generate adequate incomes on our own is the next essential skill we’re all going to need. Getting started sooner than later is probably going to be a very good idea.

The Fraudulent Society: A world of bogus book reviews, statistics & cyclists

We live in a fraudulent world. Everything around us every day is fake. The economy is in the dumps because of financial sector fraud on a scale so large that it can hardly seem possible. This November, we’ll be asked to select which major political party’s dishonest, pandering, self serving pack of lies gets to run the country for the next four years. Hell, even Lance Armstrong has stopped defending himself from doping charges. I know, it doesn’t make him guilty. But it doesn’t make him innocent, either. Given the track record for honesty and integrity I’ve seen around me in my lifetime, you’ll excuse me if I’m a wee bit cynical of the guy who used steroids to return from a virtual cancer death sentence, then goes on to pull off probably the most far fetched athletic feat in my lifetime, going from an also-ran to winning seven Tour de France titles in a row. Sure it’s possible his brush with death motivated him to develop the drive to push himself to never before seen athletic accomplishments. It’s just as likely he discovered the wonders of drugs, or most likely, some combination therein. Either way, the guy who should be the most inspiring athlete in the world doesn’t exactly scream legitimacy. But then, what does anymore?

Certainly not the validity of the customer review system that much of the retail web works under. Read this piece from the New York Times and try not to throw up in your mouth. Now I’m reasonably sure most of us know some kind of questionable practices have been going on in terms of reviews. But the scale this suggests is frightening. This is one guy, subcontracting out “reviewers.” If he made $28,000 a day, as he claimed, that’s a ton of bogus reviews scattered out there. In fact, at that rate, this guy would’ve disseminated a half a million fake, rose-colored reviews in a year’s time. One guy. How many more review services are there out there? How many private groups trading quid pro quo positive reviews amongst their memberships? And what’s the percentage of “sockpuppets” that sellers are using to contribute glowing reviews of their own stuff clandestinely?

The short answer: a royal shitload! Certainly enough that it calls into question the validity of any customer review system. How exactly are reviews weighted in Amazon’s discoverability algorithm? If they’re counted at all, doesn’t this disclosure seem to indicate their removal may be called for? I mean, the information is tainted. Worse yet, so long as reviews directly count toward helping products be seen and possibly drive sales, there’s virtually no reasonable means of stopping it from becoming that way.

So who availed themselves of this “service”? Well, John Locke, for one, reportedly bought 300 reviews from this guy. Somewhat less to Locke’s discredit, he didn’t seem to actually care if the reviews were good, bad or indifferent, just that they existed. Maybe he legitimately thought he was getting people who were going to actually read his book and give an honest critique. Of course, that would mean a man that’s been held up for his business acumen for rising from unknown to self publishing icon would be dangerously naive. What was I saying about cynicism earlier?

But at least Locke didn’t stoop to the level of UK best seller Stephen Leather. Leather, rather incredibly, openly admitted to having a network of fake online identities he used to promote his books, or sockpuppets, as it were. Further, he implied that he also has a group of friends and associates all engaging in the same sham marketing. Here’s a breakdown of his situation.

As appalling as these instances are, really they’re just ham handed attempts to replicate conduct the corporate world has already perfected. Does anyone really think the Big Six don’t have someone posting glowing five star reviews on their books everywhere they’re available? Realistically, they’ve been paying for reviews for a long time, either directly or through back scratching deals with review publishers along the lines of buying ads in said publication with the expectation that your offerings get reviews. At least this new payola actually goes to the people writing the fake reviews and not just the newspaper or magazine printing them. Making the world of review fraud more democratic! That’s something, I suppose. Nauseating, but something.

Then there’s the simple case of the Digital Book World ebook bestseller list. Purported to be an accurate depiction of ebook sales, closer inspection reveals something that smells worse than a suddenly-abandoned fish market three days after the ice has melted. Is it a fraud? I don’t know for sure but my internal bullshit detector goes haywire whenever something produces generally surprising results that would be exactly what you’d expect if the fix was in. First, the somewhat contemptuous tone toward the lower price points in the promotional material for the new list seemed prejudicial to indies and immediately set me to awares. Then, the initial list had publishers prominently displayed but no authors. Hmmm…who would put a greater priority on the publishers being referenced rather than the actual authors? I wonder…Third, the results came out not only unpredictably but almost irrationally anti-indie and pro Big Six. One of the big tells in statistical fraud is when they overreach and results come out far stronger on one side than is actually reasonable. Last, the guy who developed the secret algorithm we know nothing about turned out to be employed as a VP at a Big Six publisher. Not only that, it was kept hidden from all materials until he was outed by a blogger and had to fess up. Hiding possibly pertinent information is usually a big tell in fraud, too. So is it a fraud? If it walks like a duck and quacks like a duck, well, sometimes it turns out to be a goose, but mostly, it’ll be a duck. And I’m sure you’ll excuse me if I’m fresh outta benefit of the doubt these days.

So, with all this obvious review fraud going on everywhere, will Amazon or someone else yank review data from any meaningful purpose? Nope. One other thing about our fraudulent society is that, far more often than not, the perpetrators of the fraud suffer no consequences from it. No bankers have been called to task, lying politicians are such a cliche now that we don’t even bother to call them on their bullshit anymore, lest we get buried by an even bigger pile of bullshit defending the first load. This review-pimping guy will be back to slinging bogus five-stars before you know it, and in the meantime, the ones who haven’t been outed yet will keep plying along unfazed. John Locke and Stephen Leather will be momentary blips, and very likely won’t suffer a bit from their questionable ethics (or naivete, if you’re feeling the Locke apologist vibe).

Lance Armstrong is getting his Tour de France titles stripped, though. That’s something, right? It would be if it weren’t being done by an agency that 1) has pretty questionable authority to strip them in the first place and 2) has no real evidence of doping at all and the somewhat inconvenient fact that Lance never once failed a drug test. See, when someone does get even the slightest comuppance, it, too, ends up done fraudulently.

But, oh well. I hear Roger Clemens is making a comeback.

Moaning and Groaning: Publishers’ supporters get more hard line after being shot down by the DOJ

So I’m catching up on my reading of industry news and I noticed that, since the DOJ pretty much laughed off the anti-settlement brigade’s rhetoric, the tone in some circles has gotten even sharper, more filled with doomsaying than it was before, and it was already pretty severe. Personally, I found a lot to like about the DOJ’s response to comments, which is something I very rarely say about any government agency. I especially appreciate that they weren’t swayed by the 10 to 1 ratio against that the traditional publishing backers’ letter writing campaigns generated.

I still believe there was a fatal flaw in their logic. In encouraging people to parrot the anti-Amazon party line, it created a raft of letters that failed to address the principle matter of law in the case, worse yet, it may have vindicated it. Very few, if any, of the letters substantively refuted the claims of collusion, instead using unsubstantiated claims of Amazon’s predatory pricing as justification for the publishers’ actions. In this way, many of the comments, while attempting to defend the publishers, essentially admitted collusion took place. It’s like saying, “Yes, your honor, we did it, but we’ve got a really good excuse.”

It doesn’t surprise me in the least that this kind of approach carried no water with a group of prosecutors. If anything, the arrogance of it seems to have further emboldened and entrenched the DOJ in its beliefs. This could end up being extraordinarily bad news for Penguin, MacMillan and Apple if they actually force an annoyed DOJ into court.

But that’s an issue for a later date if the holdouts don’t come to their senses and settle before they end up spending absurd amounts of money defending a pricing scheme likely to be obsolete before the first witness is ever called.

I’ve got two articles I read this week that, I think, illustrates both the attitude of superiority and the over-the-top, end of days hyperbole that’s making the rounds now that the industry seems to be realizing Uncle Sam isn’t going to do their bidding, no matter how many campaign contributions they make to Chuck Schumer. It’s a sad commentary on the state of things these days when buying a congressman is an easier accomplishment than competing in the market.

I’ve taken five points from each of these two articles to discuss. The first is a particularly single-minded post by Dennis Johnson, co-founder of the publisher Melville House, a staunch traditionalist.

Before I begin, let me say that I find it odd that such a virulent supporter of publishers founded a company named after Herman Melville, a man who largely had a tenuous if not outright bad relationship with publishers. Most of his books had to be published in London initially because American publishers wouldn’t touch them, and even then, they were never able to generate significant sales despite the fact he wrote some of the greatest works in the English language.  Rather infamously, Melville was paid a grand total of less than $600 for his masterpiece Moby Dick. I’m sure if he were to rise from the grave today, Melville would have more than a few choice words for publishers, particularly considering his actually burnt the unsold copies of an epic poem he wrote after he couldn’t pay for them. Comforting to see some things never change, like publishers’ contempt for writers.

1. “At the start of agency, for example, Amazon controlled 90 percent of ebook sales. There’s nothing “highly speculative” about calling that a monopoly.”

Except for the fact that Amazon’s large share came about because they took a then-under utilized ebook market and drug it into the mainstream essentially by themselves. No major publishers paid much heed to it at the time, very few competitors showed any interest in jumping in before Amazon charted a course, and certainly none on their scale. Once Amazon started making real money, though, that 90% share dropped significantly, just as you’d expect a trendsetter would when a previously empty playing field started filling up. It wasn’t like Amazon entered a thriving ebook market and swiped that giant share of business from others. They essentially created the market when almost no one else had the interest, desire or the balls to do it. He’s right, though, partly. It’s not “highly speculative” to call Amazon a monopoly in that instance, it’s outright bullshit to do so.

2. “The Sherman Antitrust Act, and its descendent the Robinson-Patman Act, clearly define loss-leader under-pricing as a predatory tactic rather obviously intended to “drive out competition and obtain monopoly pricing power.”

So when does the DOJ actions start up against every retail business in this country? Loss Leader pricing is so commonplace we barely even notice it any more. Its use is far from being “rather obviously” about driving out competition, either, far more commonly used on a day to day basis virtually everywhere things are sold, as a means of bringing customers into your store.

On the other hand, what the publishers did with the agency scheme was retail price maintenance, which up until 2007, was illegal in essentially all its forms. A Supreme Court decision (which overturned damn near a century of precedent, by the way) granted a limited allowance for the behavior under the “rule of reason” which Apple and the publishers flaunted by colluding pretty much in public and gloating about how their plans were going to screw Amazon, inhibit the ebook market and raise prices on ebooks. The publishers are only in legal trouble today because of their egos, stupidity and total lack of discretion. That and, unlike Amazon, they actually broke the law.

3. “The DOJ cited arguments from David Gaughran, writing on behalf of 186 self-published authors who thanked Amazon for ‘creating, for the first time, real competition in publishing by charting a viable path for self-published books. But when was it, exactly, that publishers prevented authors from self-publishing?

Is he kidding? Certainly, anyone with the money could publish a book, but getting that in book stores or retail outlets dominated by traditional publishing was an entirely different story. Publishers’ entire business model was one of dominating the channels of distribution. What good was publishing a book if you were essentially locked out of the principle sales channels?

Preventing writers from having any access to the market was their stock in trade, creating a ready supply of material they could pay as little as possible for, which is why writers get such a low portion of revenues today when they are principally responsible for the product. And, really, anyone who thinks there was anything close to a viable path to self publish pre-Amazon is either dangerously ignorant of reality or purposely being disingenuous.

4. “The process of public involvement was, apparently, meaningless. But there are better things to remember right now. For one, take this for what it is: The DOJ has found its own case sound. The good guys, meanwhile, have yet to have their day in court.”

So the DOJ was supposed to take a vote and ignore the law because a large number of traditional publishing’s disciples said so? The truest thing in the DOJ’s response was that the overwhelming majority of anti-settlement comments came from people and businesses profiting directly from the price fixing scheme. Like I said, I’m actually impressed they saw through it.

In truth, I think the public involvement stage was very useful. It illustrated the biases of those supporting the publishers who, despite their numbers, produced no compelling arguments for a lessening of terms. It also showed that the truly independent voices who, not coincidentally, are finding success without the need to break the law, were heard even though they could have been swamped by traditional publishing’s comment generating machine. If anything, unlike many other areas of life these days, this looks like the powerful corporations flaunting the law will be held to task while consumers, innovators and legitimate competitors in the market will win the day.

5. “The ludicrous charges, the fact of such paltry and pitiful support for them, the wide variety of opponents — the entire industry and then some — roused to speak out — all provide reason for hope.”

Yeah, reason to hope you guys hurry up and go bankrupt. Seriously? Ludicrous charges? Pitiful and paltry support? No and no. The charges look pretty damn sound to me. And evidently, those of us who choose to disagree don’t matter. Hell, we’re not even in the industry, apparently, despite selling books professionally. For money. To actual readers. See, it’s not that public input didn’t matter, it’s that public input he disagreed with didn’t matter, and it certainly shouldn’t have mattered enough to beat back their superior numbers and unsubstantiated inflamatory rhetoric. How dare the DOJ side with the law and actually aggreived parties who have paid tens of millions more for ebooks than would have been possible without collusion! They sent 800 carbon copy, Amazon-is-evil letters, didn’t the DOJ get the memo? Won’t somebody please think about the culture?

Shortly after reading that piece, I read this one by John Barber of the Globe and Mail. The hits just keep on coming in this one, including cameos by everbody’s favorite bitchy traditional writers, Ewan Morrison and Scott Turow, proving that even the Atlantic Ocean can’t keep arrogance and stupidity apart.

1. “Authors are losing income as sales shift to heavily discounted, royalty-poor and easily pirated ebooks. Journalists are suffering pay cuts and job losses as advertising revenue withers. Floods of amateurs willing to work for nothing are chasing freelance writers out of the trade. And all are scrambling to salvage their livelihoods as the revolutionary doctrine of “free culture” obliterates old definitions of copyright.”

Being as he made several points here, I’ll address each in order. First, ebooks are only royalty-poor because publishers want them that way. And, to be fair, print books are pretty damn royalty poor in most instances, too. Next, do you know who’s not seeing pay cuts and job losses as advertising flees newspapers? The CEOs, who are “suffering” with giant bonuses and golden parachutes for all those job losses they’ve instituted while simultaneously playing the fiddle on any kind of digital transition as their industry segment burns to the ground.

Third, as conglomerates bought up any and every publication they could find during the acquisition rush years ago, many publishers began getting tight with freelance budgets. Even at the height of profitability before the bottom fell out, prices paid to freelancers were stagnant or negative. Once the advertising revenue started to fall, they used it as a convenient excuse to put the screws to writers even more than usual. The flood of free content he refers to was largely spurred on by publishers looking for ways to spend as little as humanly possible on content, quality be damned. The issue isn’t that there’s work out there available for free, it’s that publishers refuse to pay even modest wages for quality writing despite the fact that content is the only reason they have the ability to attract any advertising at all.

And, finally, who’s perverted the concept of copyright more, the “free culture” people, as he calls them, who advocate sharing and the rights of consumers or the media companies, who lobby for laws like DMCA and SOPA, and push through things like the Mickey Mouse rule that now has copyright extended to life of the creator plus 70 years?

The extensions and increasingly stringent punishments for even minor infringement has created an atmosphere where it makes a lot of sense to argue that copyright needs to be looked at anew. The parts of copyright law that support derivative works and allow creators to build off of the progress of those before, fair use and the first sale doctrine, and the public domain and furtherance of culture have all been imperiled by the steady rights grabs of media companies who have been engaging in a systematic effort at maintaining copyright in perpetuity for decades now. If you’re going to cry about copyright being broken, don’t do so while advocating for those who actually broke it.

2. “(According to best-selling UK author Ewan Morrison) The result will be the destruction of vital institutions that have supported “the highest achievements in culture in the past 60 years.” In short, he predicts, “There will be no more professional writers in the future.”

I’m sure when Morrison uses the term “professional writers”, he’s referring to people like himself. We can only hope for a future with as few of those kinds of “professionals” as possible. It’s not his writing talents I have issue with, I’ve never actually read any of his work, it’s that he has some ridiculously backwards, elitist ideas along with a generous helping of contempt for anyone who circumvents the traditional getekeepers.

Morrison has said some pretty crazy stuff, for instance, this piece in the Guardian where he argues against social media but makes some larger points about traditional and self publishing. Be sure to read the comments because he has numerous additional points there, including a rather entertaining discussion with Joe Konrath. My favorite part is when he excoriates Konrath for daring to encourage others to eschew traditional and embark in self publishing by saying, “It is unfair and cruel to propagate a model for others which can only ever work for the few.” After I stopped laughing and wiped the tears from my eyes, the full audaciousness of that comment really sunk in. After all, Konrath has a long, long way to go to rate with traditional publishers in propagating models that only work for the few. The sad part is that it seems Morrison doesn’t even get the rich, creamy irony.

These statements are what I’m talking about when I say the rhetoric has gotten more severe. The highest institutions of culture will crumble and working writers will totally vanish. Talk about self-important! Publishers largely gave up their mantle of cultural protectors, if they ever had one in the first place, when they became little more than profit engines for larger conglomerates. It’s pretty obvious, too, yet Morrison seems to believe that writers should willingly accept lousy royalties so these publishers can keep exploiting them to the benefit of their parent company’s bottom line. Being self published and actually keeping a fair share of what your work earns is selfish, according to Morrison. Of course, he just might see it that way because more and more writers earning outside of traditional may jeopardize his next advance. Besides, if publishers weren’t portrayed as purveyors of culture, then there’d be no moral argument for their survival, and that would make for even more specious rants, if that’s possible.

3. “(Author Scott Turow) has drawn heavy criticism from digital partisans for defending the diminishing rights of “legacy publishers” currently under U.S. Justice Department investigation for allegedly fixing ebook prices.”

Diminishing rights? I wasn’t aware publishers had the right to colluded and fix prices. Didn’t know they had the right to rip off authors through shady corporate finanglings like Harlequin just got sued for. Wasn’t aware they had the right to snatch digital rights from contracts signed 30 years before anyone had ever heard of an ebook. Most of all, I didn’t know they had the right to operate largely free of genuine competition.

If publishers are diminishing, it’s likely for two reasons; writers have other choices now and are sick of being treated like chattel and paid slightly worse; and they’re clinging to a business model that is servicing a shrinking percentage of their customer base. But that’s the common denominator in the anti-Amazon camp, the stark refusal to admit publisher’s culpability for their own problems because it’s so much easier to make excuses for your own failings when you can pretend to be a victim.

4. “Nor is self-publishing profitable for the majority of authors, according to a recent British survey. It found that half of the writers – many no doubt lured by well-publicized tales of spectacular success achieved by a handful of fellow novices – made less than $500 a year for their efforts.”

No one was ever lured into traditional publishing by the tales of success of other writers, right? I’m sure that’s never happened. And let me just reiterate an earlier point: Herman Melville made less than $600 in total on Moby Dick. Using dollar figures in this way, especially with no context in comparison with traditionally published writers, makes for compelling soundbites while providing very little actual insight. Besides, there are a whole lot of self published writers. That survey means half of them made more than $500 a year. I’d be willing to bet that percentage isn’t far removed from traditional but I’m sure we’ll never hear about it.

5. “The livelihoods of serious writers will continue to depend directly on the health of traditional publishers, “the venture capitalists of the intellectual world,” according to Turow.”

So only writers with traditional contracts are serious? The rest of us are just dicking around out here then, huh? Writers like Turow and Morrison may have their livelihoods depend on the health of traditional publishers, but there seems to be a large and growing infrastructure that’s circumventing their control. That means the health of said publishers isn’t really a major concern in that segment. In fact, it may be just the opposite.

With fewer market obstructions from the traditional end, and less product from that side, it could well increase opportunities for success amongst those who aren’t dependant on them. But that doesn’t matter because those people won’t be serious, of course. Everyone knows you can’t be a serious writer unless you give up most of the proceeds, all creative control and any conceivable rights to your work until your great, great grandchildren are old and gray. It’s just crazy talk to say otherwise.

Free Books on Independence Day!

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In honor of July 4th, I’m offering five full-length ebooks absolutely free from Amazon.  Follow any of the links here to get your free copies. Happy Independence Day!

Bad Timing

Devil’s Dozen

The Valentine’s Day Massacre

The 13 Days of Halloween

Decline & Fall of the Publishing Empire

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