A Thought on the Shifting Ideal of Value and Price

I read this piece in the Bookseller today and there were a couple of comments I’d like to address. First, here’s one from everybody’s favorite literary crusader, Doug Preston:

“I think Jeff Bezos is an evangelist as much as he is a businessman. He believes he’s making the world a better place and I think he’s less concerned about making a profit. Now that might sound like a nice thing but if you study history you’ll realize it is the people who believed that they were right, believed it absolutely, who are the ones who do the most damage.”

Can’t disagree with him there. It is very true that people who believe that they’re right even in the face of mounting contradictory evidence, are capable of doing the most harm. All I can say is, as such, Preston himself needs to take a long, hard look in the mirror.

But his relative cluelessness and lack of self-awareness notwithstanding, there’s another quote in the piece that I find far more interesting. It’s from author Germaine Greer:

“Amazon wants to sell e-books at less, so they should. They should cost less because they don’t have to be put together, stitched, printed, designed, blah, blah, blah. If you skip all that and all you have got is a ribbon of text on a Kindle, then it should cost you pennies, frankly.”

Now this is obviously going to set some people on edge. I, for one, am not down with the pennies assessment, but I do agree that the pricing for ebooks should reflect the far lower production costs. As a side note, does anyone else find it kind of ridiculous that many publishers are now openly dismissing production costs as not that big of a deal yet at the same time arguing royalties need to stay low to cover those expensive costs? Which is it? I think it’s pretty obvious that they’d like it to be both, depending on the question they’re answering, and who they’re answering it to. Remember, just a couple of years ago, these same publishers were swearing up one side and down the other that ebooks weren’t cheaper to produce than print, and some even went so far as to suggest they might actually be more expensive. The massive profits publishers are pulling in from ebooks today shut that line of thought right up, exposing it as the lie it always was. Anyway, back to the quote…

Here’s a tweet I found in response to it:

“Ebooks should cost what readers are willing to pay for good writing, editing and design. Many readers value those far more than pennies” — Caleb Woodbridge @calebwoodbridge

Here’s where I have an issue. The word “should” in respect to what readers want to pay is out of place. There is no place for should there. Readers will pay what they want to pay, be it $20 or just the pennies that Greer suggests. There’s no should involved, only what the market will bear. But this got me thinking about the notion of value and how that relates to price. Sure, it would be nice if readers were interested in paying high dollar for concepts and ideas within a story but, and here’s the kicker, they never have. Nobody in the industry had a problem with that, either, up until they lost control of pricing and fell behind the curve on reader expectations.

I’ve found myself comparing newspapers and book publishers a lot lately, mostly because the Amazon/Hachette dispute has exposed more of the underlying strategy of the publishers. It’s a strategy that appears, on its surface, to mirror the strategy that newspapers used to decimate their own business. This is another example of that, I think.

Contrary to what you may have been told, newspaper readers never paid for the content in the paper, they paid for the bundle of services including coupons, circulars, classifieds, etc, etc. The bundle they bought wasn’t even priced to reflect the value of the content. It was done so to maximize the audience to better support the exorbitant ad rates because that, and not selling content to readers, was where most of their revenue came from. But as the value of their bundle declined, the industry decided people should pay for the content. Not only that they should, many believed almost religiously that they would. They were wrong. Some have but most won’t, principally because they were not paying for that content in the first place. Nobody in that industry segment had any problem with it, either, so long as the ad sales kept flowing. Once that dried up, though, their argument switched to one of value and what readers should do.

Books are having the same problem. It’s popular in some circles to claim books aren’t commodities but that’s disingenuous. People have always paid for the container not the content. Pricing for books of similar form have always been eerily consistent based on the form. There was never any kind of premium pricing going on between similar books that I’ve ever seen. In fact, the more popular books were usually subject to more discounting than others. Oddly, ebooks are exhibiting a far greater range of pricing relative to its form than almost any other type of book, yet that’s hardly ever mentioned when folks start discussing the issue of pricing. Funny, that.

Now that the value of those older containers have diminished somewhat, and ebooks have emerged as a potentially very cheap type of container, the discussion is starting to turn to one of the value of the content. Just like newspaper readers never paid for the content but the packaging, book readers have never paid for the content, just the packaging. And that’s leading to suggestions about what readers should do. According to some, they apparently should now pay for something they’ve never paid for in the past. That argument simply doesn’t fly and, unless you’re interested in watching book publishers piss away their business like newspaper publishers did, it’s not one anybody should be interested in pursuing.

The difference here is that should absolutely applies to people producing and selling books. People buying them, however, are under no such requirement, nor will they ever be. The pricing structure for newspapers was to sell to a mass audience to support ad rates. Pricing in books was to sell mass numbers of similarly commoditized books in total to stores and other retailers. There was never any point that the value of the content inside was the principle driver of the price, except to the people buying them. Even then, that value has been established by the practice of commoditizing book prices based on their form. As newspapers learned the hard way, you can’t just shift gears and expect people to pay for something they’ve never paid for when it’s convenient for you to do so. There is no such word as should when dealing with the choices readers will make for themselves.

Dan Meadows is a writer living on the banks of the Chesapeake Bay. Follow him on Twitter @watershedchron

Revisiting Paywalls Revisited

(Note: this is an unfinished piece from April of 2012 that’s been sitting as a draft in my WordPress que of posts since then. I never did get around to answering the question I asked at the end, but it increasingly looks like there’s no real reason to. The answer seems even more clear now than it did then, so much so, that the question itself even seems rhetorical now…)

Earlier this week, I received a message from a friend of mine asking if I’d heard about the latest round of layoffs at our local newspaper.  Since I moved from Cecil County to Chestertown nearly two years ago now (wow, time flies) I’ve found that I’ve lost interest in the comings and goings in that particular neck of the woods.

The state of printed media in my hometown was a popular topic of discussion on this site for the first couple of years, primarily because it was close at hand, their struggles echoed the newspaper industry at large in a lot of ways, and I still had connections with many folks in and out of the company. As I mentioned in the past, I worked there myself on two separate occasions in various capacities.  Before I received that message the other day, however, I hadn’t experienced a stray thought in their direction for months. 

Professionally speaking, I’ve moved on from any hope of getting back into the newsprint business.  It’s not just the derth of jobs (layoffs, buyouts, downsizing still abounds industry-wide as the revenue sinkhole just keeps getting deeper year after year) it’s that I simply don’t see a future in that area as it presently exists and I have yet to find a digital alternative that looks truly sustainable. Better to look in other directions, I figured.

Ebooks have been my focus for the past year, and, to this point, I see all the possibilities for revenue generation and sustainability within that area that are lacking in the digital-alternative newspaper segment. I’ve been writing, publishing, experimenting, expanding my skills and, most encouraging of all, actually selling my work at a level I’m not scoffing at (nor are the folks whose bills I’m paying with that money)*.  The gist of it is that, to my way of thinking, the struggles of newspapers are yesterday’s problems, ones that I’ve left, rather properly, in the past.  They had ample opportunity to innovate and adapt but didn’t, and the slow crawl to oblivion may be irreversible at this point. 

(* Note: Since then, I’ve since rethought my approach to ebooks and digital publishing. I did bring in a decent chunk of change at the time but I grew dissatisfied with my own efforts, so I’ve been cranking out new material, reworking old material and developing a different, much more expansive approach to this that I’ll be kicking off likely early next year, if not sooner. Try doing that when you’re locked into a publishing contract.)

So, when I read this message about further layoffs, it was a bit like hearing that an old girlfriend you were serious about a decade ago just got married. You hadn’t thought about her in years, she played no part in your day to day life for as long as you could remember, and news that would have seemed enormously important not that long ago ends up met with a shrug. It’s not that it doesn’t sadden me a bit to see the continued decline of my hometown newspaper, it does. But at this point, there’s really nothing that can be done about it. The point of no return for many newspapers passed by a while ago.

In today’s atmosphere, resources have eroded to such a level that genuine full-scale innovation really isn’t possible any longer. If it had been undertaken 3 or 4 years ago, it might have made a difference. Even scrapping the enterprise and starting over isn’t really feasible at this point simply because so many skilled people have been let go, particularly on the content side. You can’t really launch a new direction in an increasingly content-driven market when saddled with a money losing print albatross and a sparse skelton crew of leftovers. It saddens me to see it but, again, all of this at least could have been avoided with a bit of vision and foresight a few years ago when it mattered. But you can’t cry over spilt milk now that the carton’s down to the last few dregs of backwash.

All of which got me thinking about the last stand of newspapers, the paywall. Much like those famed 300 Spartans fending off the Persians, paywalls may hold off the onslaught for a short time, but in the end, the Spartans all ended up dead. For the Greeks, however, that stand provided the necessary time to execute a larger strategy that ultimately stopped a Persian takeover. Do newspapers even have a larger strategy to survive beyond simply fending off immediate annihilation? Or are paywalls their final stand?

Update

So, here we are two and a half years later, and I think this question answers itself. There was obviously no deeper plan going on at most papers, and the renewed push for paywalls then did little if anything to stem the hemmoraging of revenue. Here’s a piece by Clay Shirky essentially penning the obituary on the print newspaper business. As you can see, not only did this strategy not work to stifle print declines, it may well have instigated digital ad declines for them as well. They killed their future trying to protect a past that, at best, was on life support.

As for the company I mentioned, there have been more layoffs since these and the company was eventually sold to a venture capitalist known for slice and dice acquisitions. Doomed isn’t a strong enough word for their prospects at this point. Book publishers and their writers should take note of this. Following a print protectionist strategy did great harm to their emerging digital business. Ask questions, loudly and in no uncertain terms, anytime someone from the industry tries to tell you that restricting digital to protect print is a sound idea and in your best interest. It didn’t work here and I don’t hesitate to say it won’t work there, either.

Dan Meadows is a writer living on the banks of the Chesapeake Bay. Follow him on Twitter @watershedchron

Breaking the Scale: Bigger is not always better

A couple weeks or so ago, I left a comment on The Passive Voice under an article about Hachette’s CEO and his response to Amazon’s late night call to give him hell…er, politely inform him of your desire that they think critically about their pricing decisions, and seriously consider dropping the push for higher prices. Anyway, I got into a little bit of my experiences in dealing with large consolidated corporate accounting departments and the thinking I’ve run into about higher prices in days gone by. It got me thinking about a couple things and how this might relate to further understanding Hachette’s position and what the possible consequences could be, even if they get what they want.

Here’s the first comment I left:

“It may even be simpler than that. It reminds me of something I called the bean counter effect at a couple of magazines I worked for. They just couldn’t conceive of the notion that a higher price didn’t automatically mean more money. They wouldn’t recognize any kind of multiplier effect of more for less, no matter how many times we showed it to them on paper. It was a risk, unquantifiable (at the time) and all they knew was the difference between what we were selling at and the increase they wanted. We were selling print ads but it’s the same principle.

“Amazon could have said each sale at $9.99 generates a thousand extra sales and they wouldn’t have recognized it. They simply can’t see past “If I sell this for $13, I make $3 more than if I sell it for $10.” What I could never get across is that it’s not the difference between $13 and $10 that’s at issue, it’s the difference between $10 and the $0 that a not-insignificant number of people will choose instead $13. In this case, it’s the difference between $17.50 and $0 with Amazon’s multiplier data, which makes it an even dumber choice, I think. You’re not gaining anything at $13, you’re losing all the people who would have bought at $10. Essentially what you’re doing is making your customer base smaller and milking your best customers for extra money.”

Later on in the thread, I related a second instance of what I considered overly simplistic thinking involving money we paid out in this case. Here’s that second comment:

“At the same time though, you can’t always trust what they’re telling you about marginal cost. I was the managing editor of a free distribution magazine several years ago for a publisher who’s name would be instantly recognizable (not any of these folks). We were strictly ad supported and we operated on a 60/40 ad to editorial ratio, meaning we basically added up paid ad space and that number would represent 60% of our page count.

“Now I was a huge proponent of trading out ad space for various kinds of work we needed whenever possible. These trades were not counted as paid space so that added no cost outside the simple real price of what we paid to produce that space. Say I needed a delivery route run, something that would take a couple hours. I might pay someone $100 to handle it. Or I would offer them an 1/8 page ad for their business or whatever that’s listed at $150. They always took the ad, every time. Our real-world cost for that space across the entire print run was something like $20. And coming from non paid space, that $20 was a total sunk cost. So I traded $20 worth of sunk cost in exchange for not laying out $100 in real cash, effectively adding $80 to our bottom line. (You could argue it was adding the full $100 to the bottom line considering that $20 was being paid no matter what.) I was saving us somewhere between $2,000-$3,000 an issue with this stuff, if not more.

“Well our accounting department threw a fit. They insisted that we were actually losing $50 on this transaction. (Actually, they started out saying we were losing the full $150 price of the ad but I did manage to convince them the $100 was going to be outlayed in any case.) No matter how many times or how simply I laid it out for them, they would not move off the position that we were losing $50. It turns out their accounting systems had no mechanism for quantifying this because there was no revenue coming in but when they audited the paper, they recorded these ads as paid space, so we showed a deficit between the revenue they said we should have and what we actually produced.

“Eventually, they forbid me from making any more trades rather than adjust their accounting systems to record these gains. To make matters worse, our bottom line actually looked better on paper after they banned trades despite the fact that we were now spending a few thousand more per issue than we had been. That’s when the light bulb went fully on for me. If their standard accounting practices can make a real world $80 gain look like a $50 loss, and do it in such a way that it’s actually defensible and looks like it makes sense, can any of the figures they produce be trusted? How many other gains are showing up on the budgets looking like losses?

“Now this is a little simplified. There are tax issues and time a designer spends getting the ad together and such. But generally, we would get about 4 times the value back on a trade than we would paying out for it, and they banned me from doing so.”

I’ve found myself recently re-asking the two part question I wondered about back then, why in the world would you throw away essentially free money (in the instance of trades) and how do they not see that a much broader customer base at lower prices makes a far more stable longer-term revenue stream than a smaller base with higher prices? I also spent a not-inconsiderable amount of time worrying about the fact that I knew absolutely that the budget sheets we were getting from them were showing an artificially better bottom line than what actually existed. The disconnect between reality on the ground and the faux reality of their accounting systems was an insoluble issue simply because they wouldn’t even admit there was a problem.

I’m watching book publishers and their supporters today making arguments that are just as inexplicable to me as those were then. Do they not understand what’s really going on out here? Can they really be deluded enough to believe that readers will be supportive, even in the short term, of a strategy that gives them less choice, more restrictions and a higher price? Were they being taken in by comments from some readers supporting such a position? What I knew, from lots of experience, is that there’s often a hell of a difference between people speaking in high minded pronouncements about paying a premium to support their “culture” or what have you, and the choices they actually make when it comes time to break out the wallet.

I’m starting to believe the problem here is scale. Larger and larger companies require higher and higher outlays of resources just to keep the lights on, meaning the proportion of price needed for simple infrastructure that has nothing to do with actual production expenses grows near exponentially with the size of the entity. We’ve had it drummed into our heads that scale is beneficial because it provides greater negotiating leverage and greater purchasing power at lower prices from larger levels of bulk buying. This may have made sense at some pre-internet point, but does it still make sense in the current atmosphere? Does it even apply to something like ebooks that requires no physical materials to produce or distribute, making the notion of bulk buying power completely irrelevant? Certainly, Amazon is a large and growing company, their scale does have decided advantages, but is there a similar advantage from scale for publishers in dealing with them? It certainly doesn’t appear that Hachette’s size is any kind of advantage. If it were, there’d be no dispute going on.

Penguin Random House is often pointed to as the direction of things to come, but should it be? Consolidation in the periodical sector, looking back now, clearly did considerable harm to those publications siphoned up in it. It looks like efficiency on the surface but in practice turned out to be just the opposite. The question I have now is does the counter effect of increased infrastructure costs of consolidation counteract any bulk savings? I say yes, and then some.

Hachette’s not arguing for profit so much as arguing for maintaining revenue to cover sizable infrastructure costs. The obvious counter of why aren’t you decreasing your infrastructure costs to support those margins doesn’t seem to be a very popular one. It is, however, a needed question to ask and answer. There’s a line of thought going around that the lower production costs for ebooks and POD should have no bearing on the end retail price. I find that as inexplicable as not understanding a multiplier effect from lower prices or the savings from trades based on actual out of pocket expenses. Of course those lower production costs are a factor in price. Not only that, they must be.

Smaller entities are currently taking full advantage of these lessened costs. The problem for large publishers is their sheer size changes the equation. For an independent, the lower costs are directly tied to both lower prices to readers and a higher margins to themselves. For the larger entities, the lower price is threatening because of the sizable portion of the cut must go to the infrastructure costs associated with such scale. They can’t risk the multiplier effect not taking place because they need the raw revenue stream to be somewhat constant to keep meeting payroll and keep the lights on. The conventional wisdom that bigger is better is increasingly looking to be just flat wrong in this atmosphere. And if you’re doing it as a publisher to “compete” with Amazon, you’re making an even bigger mistake, as well as displaying a fundamental misunderstanding of the word compete.

There are numerous reasons to believe that, in the current environment, it’s better to be a smaller entity. One is that your accounting doesn’t have to be so complex and standardized as to be inflexible. Really, the problem I had with trades was that what I was doing didn’t fit into the parameters of their accounting software, so instead of adapting the software they just stopped me from doing it. Admittedly, changing that software is a pain in the ass on a much smaller scale. On a giant corporate one, I can understand why it wouldn’t be your first choice. But that’s stupid! I was one magazine adding an extra $50 grand a year or so to our bottom line doing what I was doing. This company had dozens and dozens of publications. They chose to throw that away because of inertia. It was a big enough amount to be a pain but not a big enough amount to force any accomodations. And they somehow managed to make the budget sheets look better than they had when they were in reality, worse.

Another is that the costs of the bundle of services publishers offer are inflated well beyond what those same (or better) services cost in an open market. That’s why you see some trad writers, when discussing the costs of publishing on their own, will cite numbers anywhere from $15k to as high as $40k for those services. It’s what they’ve been told these things cost. The knowledge of the reality that this work actually can cost at least 10 times less outside the gated publisher world isn’t even available to them. My lower prices/higher margin sales can relatively quickly cover those costs where your lower royalties require many, many times the number of sales just to cover the overly-inflated expense figures. Publishers costs in this regard are inflated for the same reason they want to maintain higher prices on the books themselves, their huge infrastructure costs have to be paid from somewhere.

In the present environment, scale isn’t some kind of competitive panacea for suppliers to retailers. It’s an albatross of expense and inefficiency hanging about their necks that necessarily limit their ability to fully exploit emerging markets and bring costs down in flattening if not outright declining markets. Scale, which may have been useful in the past, is increasingly suffocating now.

It’s really a matter of intetests. Is it in a writer’s interest to sign on with one of these increasingly consolidating publishers? How much does their sheer size, and the need to pay for that, change the dynamic between their interests and yours? How much longer will it be before a critical mass of writers realize that they’re bearing much of the weight of paying for many of elements of the publisher that have nothing whatsoever to do with producing, marketing and selling their books? They’re paying their expenses using you for pennies on the dollar, while pocketing the gains from the diminished to near nonexistent ebook production costs. Just on a simple dollar for dollar examination, the publisher’s interests run almost completely counter to my own and that’s moving more into the publishers favor as each day passes.

When the print ad revenue collapse hit newspapers, the companies with the largest scale responded the only way they could, tens of thousands of people losing jobs in round after round of layoffs. This not only hurt their ability to handle the size they had become, it further handcuffed their digital growth, which is now evident in the fact that their digital revenues are also declining and managing little to no separation in the rate of loss as the decimated print sector. Their scale forced the cutbacks which in turn left them understaffed to handle the essential tasks and woefully short on money for experimentation and growth in digital or keeping forward-thinking folks in their employ. Their scale became a self-defeating necessity to maintain itself rather than the advantage it had initially appeared to be.

What happens if we have a bad holiday season in print books sales this year? Can Barnes & Noble even sustain through another massive hit? Publishers are already squeezing writers both with deep discount clauses on print books and low ebook royalties (not to mention shrinking advances). If a round of layoffs or two end up a reality, the value of their bundle of services declines even more than the over-inflated costs we’re already experiencing. In turn, these companies become even less efficient, and less productive as they become understaffed to handle their sheer size. And raising prices to recoup print declines simply is not going to possible.

In the future, bigger is better may no longer be true, even for Amazon. People seem to be under some impression that it takes a giant to slay a giant. But that’s not altogether accurate. As Amazon continues to grow and expand, it’s own scale is adding massive infrastructure costs by the day. It’s not going to be one big company that gets them (certainly not one big consolidated publisher). They’ll suffer the death of a thousand cuts as many small, nimble entities target various bits and pieces of what they do, undermining the whole by eroding key components of it wherever possible. And Amazon is in a position where it simply cannot raise prices to compensate. Trying to do so will drive customers away in droves which will, in turn, further exacerbate the infrastructure cost problem. It can try to further squeeze suppliers but there are limits to how far that kind of strategy can take you, too. If they get complacent and anything is going to get them, it will be their scale that’s they’re undoing.

Smaller Is Better appears to me to be the approaching mantra of the 21st century. As huge consolidated corporations fall by the wayside under the weight of their own infrastructure, the only question I have left is how long it will take for Wall Street and business schools to catch on. Consolidation and ever larger entities may seem like something beneficial to those businesses today but, ultimately, they might only be serving to break the scale.

Dan Meadows is a writer living on the banks of the Chesapeake Bay. Follow him on Twitter @watershedchron

Was Chesapeake Publishing just bought by a private equity billionaire?

I just found out that my former employer twice over, Chesapeake Publishing, has had yet another sale to yet another new owner. This time, the buyer is an Adams Publishing Group from Minnesota. How do I know this? The press release thinly veiled as a news story says so. Good thing, too, because otherwise, there’s no record of an Adams Publishing Group of Minnesota even existing prior to this acquisition.

Here’s the rundown that appeared on the Cecil Whig website. According to the Whig, APG bought three newspaper divisions from American Consolidated Media, the Chesapeake papers as well as papers in Wisconsin, Minnesota and Ohio. Not knowing anything of them, I was naturally curious about Adams Publishing, and what else they might happen to own, so I read on. Unfortunately, there was no mention of anything Adams owns by name, and no comment from anyone at Adams, other than the heads of the divisions they just purchased. And, boy, are they happy!

After not finding anything to my liking, I did a little googling only to discover zilch anywhere on the internet for an Adams Publishing Group other than the various announcements of this string of buys. There’s not even one listed in any phone book or address database for the entire state of Minnesota. Odd, I thought. Here’s the description the Whig gave of Adams Publishing Group’s resume:

“Adams Publishing Group LLC…has holdings in radio broadcasting, magazines, outdoor advertising, consumer and trades shows, commercial printing and production, and other sectors…”

Holdings? An interesting way of putting that, no? So, a little more digging and I turn up this description from Wikipedia:

“current holdings include…a national publishing, retail stores and member-based direct marketing organization directed toward owners of recreational vehicles…an operator of outdoor advertising structures in the Midwest, Southeast, and Mid-Atlantic regions…previous holdings have included operators of television and radio stations, print publishers, cola bottlers and community banks.”

Pretty similar, huh? The second description belongs to billionaire private equity investor Stephen Adams who was born and raised in, you guessed it, Minnesota. This is the same Stephen Adams whose holding company, The Affinity Group, changed its name a couple years ago to Good Sam Enterprises after losing tens of millions of dollars with its investments and having Standard & Poore’s drop its credit rating to D for “the company’s highly leveraged financial profile, weak operating outlook, and limited liquidity.” One of the more interesting holdings of Adams was Affinity Bank, which Federal regulators shut down in 2009 because of depleted capital reserves. Are we still happy to be a part of this exciting new opportunity? More from the Whig:

““We are thrilled to be joining Adams Publishing Group and to be moving back to a family-owned company,” said David Fike, president and publisher of the Chesapeake group.”

Family owned, right. Just like the Koch Brothers companies are family owned. Just like the Mitt Romney’s very vulturey Bain Capital was family owned. But I guess when you’re in an industry where bad to worse has been the modus operandi for the better part of a decade now, you tell yourself whatever you have to to keep from crying to sleep at night.

Keep in mind, this is pure speculation on my part based on what little information was provided about the buyer, but it makes sense to me. How coincidental would it have to be to just happen to have a filthy-rich private equity investor from the same location with holdings in the identical areas, whose last name is the same as this seeming-previously nonexistent publishing company? I tend not to believe too much in coincidence.

My only question: if this is actually Stephen Adams behind this purchase, why not just say so? It’s not like old, billionaire white guys buying up newspapers is some kinda rarity these days. In fact, it’s increasingly looking like they may be the only people interested in buying newspapers, including the folks who used to read them.

UPDATE: After unsuccessfully looking high and low for any information on Adams Publishing Group and any connection to Stephen Adams, wouldn’t you know a kind soul took the time to email me a link to exactly that. Here’s a piece from Business North, a business news site for northern Minnesota and northwestern Wisconsin, that makes the explicit link between Adams Publishing Group and Stephen Adams.

UPDATE PART 2: Here’s a piece from Nancy Schwerzler at the Cecil Times that sheds a bit more light on the subject. She did some legwork through SEC filings to find that APG does, in fact, track back to Stephen Adams. Also, the four LLCs that will house these papers, Minnesota, Wisconsin, Ohio and Chesapeake, were incorporated in Delaware about two weeks ago.

Perhaps most interestingly, according to the Cecil Times, Stephen Adams’ son Mark is set to oversee the operation of these newspapers. Schwerzler also mentions Mark Adams as the head of an EPG Media, a company founded last year to, essentially, spin off the outdoor motorsports magazines then owned by Good Sam Enterprises.

Dan Meadows is a writer living on the banks of the Chesapeake Bay. Follow him on Twitter @watershedchron

Who’s Got The Ether? Publishing, Hugh Howey and the downfall of old assumptions

A little while ago, I ran across this Writing on the Ether article by Porter Anderson. Anderson does a fantastic job of culling together the various viewpoints of whatever outbreaks of argumentativeness spring up around the publishing industry every week. Check him out on Twitter and definitely look for his articles when they come around. Always well worth the read.

Anyway, this particular piece dealt with author Hugh Howey’s suggestions of what would constitute a fair and equitable industry for writers given the new realities of independent publishing. Here’s a brief rundown of his points, all good ones, in my opinion:

“1. No more digital rights until ebook royalties are 50 percent of net.
2. No more “Most Favored Nation” clauses.
3. No more DRM for Guild members.
4. Fair pricing for ebooks.
5. No more non-compete clauses.
6. Stop fighting “free”.
7. The Authors Guild should embrace Amazon as a friend to writers and readers.”

The only thing I would add to that is no more DRM for anybody, but he was specifically referring to a hypothetical writers’ strike led by the Authors Guild, so there’s that. Go read his full piece yourself. Howey is clearly positioning himself not as simply a successful author but a strong advocate for author’s rights and fair treatment, something we seem to be sorely lacking from the old guard (looking at you, Scott Turow). Not surprisingly, his suggestions weren’t very well received by the establishment players, and that was the gist of Anderson’s piece and what led to the comment that caught my eye that I’ll get to further down.

Here’s industry consultant and analyst Mike Shatzkin taking issue with Howey:

“Hugh, your post is so thoroughly from an indie author’s POV that it is really not relevant to anybody else and, frankly, not to all indie authors either…It is doubtful to me that indies have 25% of all ebook unit sales everywhere, but, even if they did, they’d have a much smaller fraction of the ecommerce…let’s just say that my respect for your expertise does not extend to your ideas about how publishers ought to operate.”

To be fair, Shatzkin was very complimentary to Howey for his writing ability and the successful path he’s forged for himself. I like Shatzkin, but I have to wonder about an industry analyst advocating outright ignoring the suggestions of possibly the most successful author to emerge from these technologically challenging times. (I also find myself saying, “I like Shatzkin but…” a lot the past few weeks. I really thought he was turning a corner on this stuff, too.) He has a point of sorts, in that large publishers as they exist today likely can’t continue to function in the environment Howey describes. They’d have to cut a whole lot of fat from the bone and do damn near a complete 180 degree shift on their attitudes toward writers. But, like Howey seems to believe, those kinds of changes may look optional to publishers today (admittedly, a bad option for them) but before much longer, they won’t be. Get ahead of the curve now before it’s too late. And, maybe, paying some attention to a guy who’s already well ahead of that curve might make some sense, but I digress.

This brings me to the comment from Anderson that drove me to save this article. Here goes:

“You know where I’ve heard Shatzkin’s comments before? From myself! From myself and from other news people when “citizen journalists” became a rude, unwanted, upstart presence in “our” network news. We said just these things. Citizen journalists were a minuscule part of the overall picture in media coverage, we said. Citizen journalists, with their silly cell-phone videos, couldn’t hold a camera to our superb camera crews, we said. Citizen journalists, many of them fine folks, of course, knew nothing about how genuine journalism worked, we said.

“What we couldn’t see as we said these things was that the digital disruption of journalism would neutralize most of our traditional models and modalities. The news audience would not rush to “genuine journalism’s” aid. And the ways and means of our industry would be profoundly shifted toward open access and non-expert participation.

“See, we were wrong: every cell phone really was our competition. But we couldn’t see that, not then, not for anything, not even when we tried.”

I have to give a huge thumbs up to Anderson for not only recognizing this but stating his, and others’, mistakenly dismissing major change for a brief inconvenience. I haven’t seen that nearly as much as I should have at this point. When I first shifted over from following the newspaper/periodical segment of publishing (I started out working for newspapers, after all) to the book publishing side, one of the first things I noticed was that many in the established guard were spouting the identical nonsense about the self publishing interlopers that I had seen newspaper execs espouse about independent journalists, bloggers and the like, leading directly to them getting beaten around left, right and sideways by the shifting sands of disruption.

Kudos to Anderson for seeing that and pointing it out. Even more so for recognizing the error in his own dismissals of the past. Book publishers are still following that path, one that will lead to ruin. I’ve said before that the only thing that saved newspapers from completely collapsing in on themselves was, due to the nature of that industry segment, there was no simple, inexpensive means for the talent (writers) to fire up their own directly competing products that could monetize as well as needed. Some did, but it could have been much worse given a little different dynamic.

Ebooks are that different dynamic. There is clearly a simple, inexpensive means for authors to compete directly with publishers, largely thanks to Amazon and others. Howey has shown that it’s the case, both in his own success and now the Author Earnings data collection effort that has, even at a formative stage, shown how the interlopers are increasingly snatching up a larger and larger share of the market and the money that goes with it.

Many traditional defenders have nitpicked Howey’s data and, in some respects, they have a point as Howey himself has said. You don’t release you’re raw data unless you’re trying to invite exactly such nitpicking. But, to me, many of those arguments reek of fear. And they should be very afraid. If publishers don’t wise up, the turmoil the newspaper segment suffered isn’t the worst case scenario here. Given the talent’s ability to reach the market on their own and, more crucially, monetize in more than adequate means to support the low infrastructure costs, it could get a whole lot worse for book publishers than even their newspaper brethren ever dreamed.

Dan Meadows is a writer living on the banks of the Chesapeake Bay. Follow him on Twitter @watershedchron

Dirty Tricks Are For Kids…and people who work in publishing

Lately, I’ve been reading a lot about the sock puppet, review buying scandal “gripping” the ebook world. I used quotes because, frankly, I’m fresh out of shits to give about whatever system-gaming tactics other people are engaging in. Don’t get me wrong, I believe the people using fake accounts to rip other writers and their work are cowardly bastards that deserve our scorn. I also believe faking an account or getting you friends and relatives to write glowing reviews of your stuff comes off as desperate and a little pathetic. As for buying reviews, I’m honestly a little indifferent to that. It’s not something I’d do, and it’s deceptive if you know the reviews are bogus. But marketing itself is far more frequently deceptive than not. We don’t bitch when our favorite athletes or movie stars take fat checks to hock cars, watches, fast food or what have you. That’s obviously fraudulent marketing, too. Why aren’t we railing against that? No, buying reviews doesn’t even register as something I care about in the least.

My primary issue is the self-righteous indignation that has exploded in some circles over this matter. Don’t you people have anything better to do, like writing a book or something? System gaming and pushing the boundaries to get ahead is the American way. Rules exist simply so we know where the lines are when we cross them for personal advantage. Sure, that’s a cynical attitude, but then I’m not the one sitting here spewing morality and lying to myself about human nature.

I am shocked by one thing, though, that there are so many people who seem to have no conception of what the publishing industry really is. It’s a shark tank filled to the brim with lies, deception, trickery and questionable ethics, same as it ever was. Stomping this set of tactics out will only serve to the advantage of whoever’s got the next system-rigging scam ready to put in play. Is it fair or ethical? Hell no! It’s publishing.

Anyway, the whole mess reminds me of a piece I wrote over 2-1/2 years ago when some well-meaning but naive folks tried to start a new daily newspaper in the Detroit area. When their effort failed in all of four days, they proceeded to launch a massive whine-fest about the dirty tricks their competitors played on them. I think many of my points about publishing then are still applicable today, and they’ll still be applicable a decade from now, too. So, here is that piece along with the new intro I wrote in italics for its inclusion in my book, The Decline and Fall of the Publishing Empire.

By the way, see what I did there? I plugged my book, complete with hyperlink. Is that ethical? In fact, is this entire post just an excuse to promote my book on the back of a high profile scandal? It’s not, I genuinely think this is a perfectly valid point that I’ve also made in the past. But can you be sure of that just because I say so? Do you want to spend all your time sussing out who’s being totally legit and who’s being manipulative? Is it even possible to tell with any degree of certainty? If so, good luck with that. I’ve got stories to write.

Dirty Tricks- December 1, 2009

I was part of a start up publication a little over a decade ago, taking on an established, much bigger entity.  They tried every trick in book to derail us.  They swiped our papers from store racks, they pressured printers to not do business with us, the threatened possible backers, even filed a totally and completely frivolous lawsuit that was designed to get us to spend on legal fees instead of actual competition.  That’s the nature of this business. 

Dirty, low down trickery is second nature in publishing.  Always has been, always will be.  We, however, were prepared for it, didn’t go under in four days like these guys I talk about here, successfully fended off the lawsuit and, in fact, quite completely kicked their ass head-to-head.  The lesson in all this is be prepared.  Just having some money and what you think is a good idea is never enough, especially in a fickle industry like publishing.

If you haven’t heard, today I’m going to address the brief life and quick death of the new daily paper in Detroit, which lasted all of four days.  Now, when I first read about this, my thoughts weren’t particularly optimistic.  This is simply the wrong time in the wrong industry to try something so brazenly risky, but, hey, give ‘em points for effort.  Anyway, today, I read a lament about the paper’s demise, which largely blamed dirty tricks on the part of Detroit’s other two long-standing major newspapers.  You mean publishers actually engaged in dirty tricks against the competition?  Color me shocked.

How can anyone at this point possibly be naive enough to have not expected this?  Publishing is an industry built on dirty tricks.  If there has ever been a manipulative, back-stabbing, sneaky, dirty trick played in the business world anywhere, it likely had its start in publishing.  Just because you have a group of well-meaning people with good intentions and more money than sense doesn’t mean that everyone else will just step aside, congratulate you and say, “welcome to the game.”

Publishing is, and always has been, a screw or be screwed industry.  That doesn’t mean that you have to play dirty, but you do have to be prepared for it.  Expect otherwise and you’ll get eaten alive.  It’s part of what attracted me to publishing in the first place.  You have to constantly be on your toes because the minute you let your guard down, people will be lining up to burn you.  Everyone has an agenda, and part of the fun is in figuring out what that is, while keeping your own close to the vest.  Reading between the lines, figuring out the real motivations behind people’s actions and words; those are essential skills.  These dynamics exist everywhere in publishing; employee on employee within companies; company on company within markets, that’s simply how the game is played.  Whining about dirty tricks after the fact just makes you look even more unprepared than closing up shop in four days does.

When I first heard about the shut down, which has been called temporary (yeah, sorta like death is temporary) it suggested a few things to me.  The first is that they were either ill-prepared or seriously underfunded.  It’s probably both.  But to complain about printers charging you up front, and other competitors putting pressure on vendors to not do business with you?  Exactly what industry did you think you were getting into?  First off, I wouldn’t trust a printer that didn’t try to charge you in advance for a new start-up.  There’s a long-standing tradition in printing, passed down through the generations, of getting small publishers in hock up to their eyeballs in print bills just so they could take them to court and strip them clean of any and all assets.  Never, and I repeat, never allow your print bills to be secured debt and run up out of reach.  You’re much better off paying up front and shutting down before that happens.

Secondly, it seems that these folks were counting on a massive influx of revenue right out of the gate.  Apparently, they took the dissatisfaction of the community with the existing players to mean that just starting a new paper will bring them on board.  It simply doesn’t work that way.  It takes time to establish a solid revenue base, and if you don’t have the money to fund at least a year’s worth of production without earning back a dime, don’t even bother getting started.  It doesn’t matter how pissed people seem, they’re not going to throw money at you until you can prove that you’re a better alternative.  Four whole days isn’t even close to making that happen.  Four months isn’t long enough.

That being said, I appreciate their initiative, misplaced as it was.  The best we can do is learn from their mistakes.  Even a weakened print industry isn’t an easy target, and they will not go quietly into that good night.

The Death Throes of a Small Town Newspaper

Regular readers of my ramblings here will recall that the trials and tribulations of my hometown newspaper, The Cecil Whig, was a regular topic of conversation a couple of years ago, before I moved out of Cecil County and, honestly, I finally lost interest in watching what was a staple of the community I grew up in crash and burn as spectacularly as The Whig was.  It reached the point where I simply had to avert my eyes from the carnage. 

Well, in the time since I last mentioned anything going on with the formerly-distinguished, nearly two century old newspaper, things have actually gotten worse.  The Whig has now dropped from printing five days a week to three, a shift, I’m told, was horribly unpopular with many of their regular subscribers.  More than that, layoffs have continued periodically, including another region-wide purge reportedly shedding somewhere in the neighborhood of 80 people from Chesapeake Publishing’s (The Whig’s immediate parent company) payrolls in the past few weeks.  Their long-standing office in Elkton is up for sale, nearly vacant as it stands after the printing facility that operated from there was shuttered nearly two years ago.  The office itself, where something like 200 full time workers were employed not that long ago, has been pared down, unbelievably, to less than a dozen, reportedly.

With the sorry state of the newspaper industry these days, what’s happened at the Cecil Whig isn’t really surprising.  It is, however, difficult to watch a once-venerable institution be picked to pieces like this.  Sometimes, I almost think bankruptcy and an outright shutdown would’ve been preferable to this death by a thousand cuts.  At least that way, the paper’s legacy would’ve remained relatively intact.  When the doors do finally shut on them now, will anyone really miss the wispy, hollowed out shell that was left during its final days?  I kind of doubt it.

At this point, it serves no purpose to rehash what went wrong.  Like many in the newspaper industry, good decisions in the face of technologically driven change were virtually nonexistent at Chesapeake and The Whig, overwhelmed as they were, and continue to be, by the poor choices of those who never really came to grips with the disruption that shredded their business model.  None of that really matters anymore, with the Whig down to a skeleton crew, soon moving to a smaller office, then, very likely, oblivion sometime later.

No matter how difficult times have become for them, it does seem like the hits just keep on coming, taking away a little more of what was once their sole domain. Earlier Today, I read this piece on the Cecil Times website about a battle going on within the Cecil County government about where its sizeable (for a small town) legal ad business will go in the future.  Legal ads are one of the last bastions of classified revenue still flowing into newspapers’ formerly dominant positions in communication, made so by local laws that generally require publication in a region’s “paper of record.” It’s also one I happen to believe is in dire need of reform. Frankly, in a time of shrinking tax receipts and shriveling municiple budgets, there is very little justification in sending good money after bad by continuing to pay monopoly rents to a fading, formerly only-game-in-town newspaper business. According to the Cecil Times piece, the county government spent upwards of $150,000 on legal ads with the Whig last year, a sum that strikes me as massively wasteful, particularly considering how the newspaper itself has continued to decline in relevance and readership.

A few years ago, when I was publishing Pet Companions Magazine, I put out about 20,000 monthly issues for a year between 32 and 52 pages each, with a full color glossy cover and my print bill for the entire year was less than a third of the county’s legal ad bill. The glossy cover alone accounted for about a quarter of that amount, too. So, what’s stopping the county government from publishing its own legal ad magazine monthly in regular 8 x 10 size or so on newsprint? They could put out 20,000 to 25,000 a month and bulk drop them for free everywhere in the county where the Whig is available. They could also post everything freely on the county’s website, provide a pdf file free for download or, if they’re especially adventurous, put in a little extra effort to format it into an ebook and make that available freely as well. The county could pay someone to compile the info, typeset it, layout the publication, get it to a printer, have the finished print run delivered, bulk drop the entire county and create the pdf and ebook files for, at most, half of what they pay The Whig for position in its rapidly thinning classified pages, if not significantly less.

As many have learned over the past few years, it has become much cheaper and more efficient to communicate directly with the public than to go through the traditional path of an intermediary like newspapers. With the local paper losing its influence, we see more and more advertisers, writers, and even readers circumventing the old ways altogether. With the crush of needed funds in localities all over the country, it really doesn’t track any longer for governments to pay exorbitantly for newspaper advertising. Crucial government information can be passed along to the public in any number of formats, print and digital, without that traditional large expense.

The fight in Cecil County shows another interesting issue with governments supporting those who’s job it is to cover them with advertising revenue, as well. Cecil County Commissioner Diana Broomell obviously has a problem with the content of The Cecil Guardian, a competitor of the Whig who put in a much cheaper bid on the legal ad business and got legal approval as a qualifying newspaper from a judge. She clearly wants no part of shifting that business The Guardian’s way, savings be damned. The Whig’s coverage of county business, on the other hand, has either been pared down to non-existent or is outright positive. Do we really want to have a situation where local newspapers, struggling for revenue, have to softball their coverage of the local government for fear of losing that ad money?

With the current and constantly improving technology, there’s no reason at all why local governments can’t communicate cheaply and effectivly with the people they represent on their own in matters like legal ads. The laws about “paper of record” are becoming more and more costly to follow, and have lost much of the justifications for their existence in the first place. If the paper was donating the space out of a sense of community, that would be one thing, but a $150,000 annual advertising bill seems to me to be a harbinger of a past better left to history.

This illustrates why it’s both sad and inevitable that newspapers will soon meet their demise. Sad because we are leaving a rich and storied element of our past behind us. Inevitable because there is virtually no single element of a newspaper’s role in the community that can’t be done better, cheaper, and more efficiently by any number of alternatives. Newspapers have always been intermediaries between the public and institutions, be it government, private or business interests. The digital shift going on now has very effectively removed the necessity of intermediaries from much of open communication.

I am sorry to see a classic element of society like the newspaper struggle and fall, but, as with all of us in our day-to-day decisions, needs must win out. That means the county government and the people they represent are much better served now and in the future by going directly to the people and using the extra $80,000-$100,000 they save on things like infrastructure, firefighters, teachers, and what have you. To do anything else in this day and age with these present conditions, is a level of wastefulness we can no longer afford. Tradition doesn’t pay the bills.

Bile-Soaked Spite and Vitriol: Why traditional publishing should shut up and adapt already

After reading a week’s worth of steaming recriminations of the antitrust lawsuit brought against Apple and a handful of super large publishers, I thought, in the service of clarity, that I’d like to make a statement:

If the players on the traditional status quo side of the publishing industry had put as much time and effort into figuring our how to adapt and compete in the changing book marketplace as they have in bitching, moaning and complaining about Amazon and the Dept. of Justice lawsuit, maybe the publishers in question wouldn’t have had to (allegedly) illegally colluded to put the price fix in and stay afloat in the new order of things. 

Most times, I take the whinings of the disrupted with a grain of salt but after a few days of reading pronouncement after pronouncement of the end times for literature and the twists, contortions and generally pretzel-shaped reasoning that somehow manages to justify collusion and price fixing as the right and proper path to open competition, I’ve gotten a little tired of it. 

Coming from newspapers, I totally understand how disturbing it can be to have the manner in which you’ve earned your living thoroughly torn asunder by disruptive change.  But in that circumstance, I saw who was to blame and it wasn’t the disrupters.  They found new, unique and innovative ways to do the tasks we always had, and used the new technologies at their disposal to do so ever more efficiently.  That’s called progress.  It’s called innovation.  It’s the very engine that has always run our economy.  No, the blame for the newspaper industry’s catastrophic collapse doesn’t rest with the disrupters, it lies at the feet of those at the helm of the industry itself.  They refused to even acknowledge there was a problem until it was far too late.  They fought innovation every step of the way. They ignored the clear and certain handwriting on the wall screaming for change, and instead laid off everyone not nailed down, clung to a steadily declining revenue base and pissed away pretty much any and all opportunities to successfully transition. 

The reason there aren’t more jobs in newspapers today isn’t because the disruption wiped them out, its because of the pig headed obstinance of those in who’s care the industry resided.  They didn’t want to admit that their business model was fading, and didn’t want to put in the time, effort or resources necessary to save themselves or all of those that depended on their leadership to earn a living.  The problem I have with the insistent rhetoric coming from the traditional book publishing segment is that it contains heaping helpings of the same obstinance, the same refusal to see the cracks developing in their business model, the same tendency to throw blame and vitriol on the disrupters without looking inward at those who should be leading the way but instead choose only to cling to a fading past, reassuring those depending on them with false platitudes about their importance to intangible ideals like culture, heritage or literacy.

I’m not a prophet of Amazon ranting out of blind devotion. They are an enormous corporation who sometimes engages in some pretty hardball business practices. There is a risk, however minor I happen to think it is, that if they consolidate too much of the publishing industry under their banner, they may well exploit that position unfairly. But consider for a moment, the one big, constant complaint about Amazon is that, if and when they gain a dominant monopoly position within the industry, they’ll use that position to jack up prices and squeeze percentages on writers. Well, even before Amazon went to the 70% royalty from 35%, they were still paying nearly double the rate to writers that traditional publishers were. Today, in many cases, they’re paying three or four times the average ebook royalties. What’s the risk here? That Amazon will screw writers by dropping royalties to the level that traditional publishers already pay right now?

As far as hiking prices goes, correct me if I’m wrong, but isn’t the whole point of the DOJ suit that publishers got together to push a model on Amazon that forced them to significantly raise prices? See the hypocrisy here? We’re being told by traditional publishers and their supporters that an Amazon controlled market will be virtual Hell on Earth because they’ll pay pittance royalties and jack prices way up at the same time those very same publishers are, at this moment, paying pittance royalties and openly taking actions intended to jack prices way up.

There are risks involved with a company the size of Amazon, but there are also advantages like the single best online bookstore by a long shot, massively increased selections of books of all stripes, and a platform that has ushered in a new era for writers where we can do an end run around the gatekeepers of old and get our wares into the marketplace quickly, efficiently and affordably. I haven’t seen traditional publishers bring anything remotely as positive as those three changes to the table in my lifetime. Amazon isn’t a saint by any means, but they’re not a devil, either. And they’re certainly not an old-guard cartel throwing propaganda bombs and desperately clinging to a fading business model by any means necessary, legal or otherwise.

I’m probably most disturbed by the lack of understanding of the law used by defenders. If even half of the facts laid out by the DOJ are true, there won’t be much debate, if any, that the publishers in question illegally colluded. And far from creating a fair and open competitive market for ebooks, they were attempting to create a flat, uniform, highly priced ebook market to slow its growth and prop up print sales, which is their bread and butter. The ebook boom, and digital disruption in general, is possibly the best thing that could have happened to this industry. Prior to this, reading for pleasure was a declining activity, looking a lot like yesterday’s news heading for a much smaller level of importance in our society. Today, however, people are reading more than ever, buying books at rates I never thought we’d see. Digital and ebooks have brought reading back from a slow decline to an industry segment that is potentially poised to grow like wildfire over the next few years. And what do we get from traditional publishers as a response to these developments? Nothing but doomsaying and protectionist scams, legal and (apparently) otherwise intended to stifle this coming boom period and prop up a model that was fading before digital reignited widespread consumer interest.

The traditional industry did nothing to reignite interest in reading. They were responsible for precisely zero of the innovations that have come to pass in the last few years. And now that consumer interest, demand and the money that goes with that is growing again, they are trying to shove their way back to the head of the industry table, pretending to be defenders of culture when, truthfully, they are little more than late-comers and former pseudo-monopolists trying to swipe the profits away from the businesses who took all the risks and actually did create an atmosphere of growth around publishing again. Amazon CEO Jeff Bezos says their primary goals are to provide the best possible shopping experience for the consumer. The head of Penguin in the U.S., John Makinson, recently said in his response to the DOJ lawsuit that their primary goal is to make money for their shareholders. See the difference in corporate culture there?

I don’t implicitly trust Amazon to always do the right thing. They are a giant corporation, after all, and we need to watch them closely. But traditional publishers are far, far worse. I find it interesting that the term “predatory pricing” has become almost synonymous with Amazon in some circles, despite the fact that their pricing strategies were anything but. Amazon never lost money on ebooks. They priced some ebooks below cost as loss leaders and recouped those losses and then some on the vast bulk of their catalog of offerings, which weren’t priced below cost. If that conduct is illegal, as so many seem to suggest, then so is the behavior of virtually every store, physical and online, on the planet. When I go to the grocery store later today and pick up some buy-one-get-one-free deals, do you think they’re turning a profit on those? Is the ACME going to wipe out orange juice suppliers because they selectively sell some at a loss to get more customers into their stores? Of course not.

What’s at issue here isn’t a giant company wiping out a long standing industry by behaving unfairly. It’s an industry that simply must adapt, they have no choice, but are extremely reticent about doing so because it would entail an entirely different culture where, more than anything else, even the best, most successful publishers who make the transition will lose a significant amount of the power they’ve grown far too comfortable exerting over writers, readers and retailers. Agency pricing is about keeping that control. It’s about stifling competition from digital retailers they don’t control to the perceived benefit of the print ecosystem they do. The saddest part to me is that, in doing so, they’ve not only damaged themselves and their writers, it wasn’t going to work anyway.

One particular positive thing that could come from this, and one that affects Amazon as well, is the rebuke of the most-favored-nation clause. Without that enforced, we actually all gain more control of our pricing across all platforms. This can only mean that pricing will become even more important in the post MFN world. It also could mean that those who backdoor free books into the Kindle store by listing them free somewhere else and waiting for Amazon to price match them down will have to shift strategies.

That is the nature of business, particularly in a highly disruptive, constantly evolving market like ebooks. Things change, we adapt and make the best use of those changes for as long as we can until they change again. What the publishers have done here is the exact opposite. Things changed, but they didn’t want to adapt. So instead they joined forces in an attempt to undermine those changes and lock in their preferred status quo. That wasn’t good business, as some have said, and it was doomed to failure anyway because these changes can’t be stopped. On top of it all, if the DOJ is right, it wasn’t even legal.

I would like to think that those on the traditional side will take a lesson from this. Don’t ignore the changing landscape around you, find ways to use it to your advantage. If individual writers in large numbers can figure out how to benefit from the new market that’s been established, I find it hard to believe that giant publishers with all the resources at their disposal can’t. The only way that makes sense is if they really don’t want to. So instead, we get illegal collusion, protectionism of fading markets under the guise of literary culture and tradition, and an over-willingness to condemn those truly leading the way to the future, and much more effort put into throwing roadblacks in their path than exploiting the new possibilities on the trails they’re blazing.

As I said, I’d like to think they’d learn something from this, but based on the increasingly dire rhetoric coming from those quarters, I’m not holding my breath.

Reading (In) The Future: Does Clay Shirky have a point when he says publishing is going away?

The future of publishing is and has been a hot topic of discussion ever since the first weblog went live. There are many people lined up on opposite sides of the debate and, as is typical in most things, many more scattered amongst the vast middleground. Over the past few years, I’ve been rather unabashed in expressing my opinions that the legacy institutions that have dominated all sides of publishing for so long are now living on borrowed time. Nothing I have seen or any recent developments have changed my opinions in the slightest. In fact, legacy’s continued resistance to needed change have only further emboldened my beliefs. Unlike some, however, I don’t believe the fall of these long-standing organizations is a bad development. In fact, I’ve come to believe that it is a necessary step in the evolution of communication and will only help to usher in a new era of growth for the written word and, most especially, for those who practice it.

Earlier today, I read an interview with internet scholar Clay Shirky. He detailed many aspects of the emergence and value of social reading that makes it well worth a look, but I was particularly struck by his comments on the publishing industry itself. I had thought my opinions were strong in the matter, but Shirky takes things one step further. While I think some of the formerly great and powerful entities may crumble in the digital upheaval, I never considered that “publishing” itself may cease to exist. But after reading Shirky’s opinions and, specifically, how he defines things, I am starting to see his point.

The word publishing means a cadre of professionals who are taking on the incredible difficulty, complexity and expense of making something public. That’s not a job anymore. That’s a button.

Many people, myself included, have always considered publishing an act. But Shirky paints an interesting portrayal of publishing as the entities that engage in disseminating written works. From that perspective, I can see his point about publishing no longer being a job at all. Perhaps what we need here is a different term for the industry at large. Maybe we’re not simply shifting the players and tasks within the industry, but the entire industry itself. What we may be looking at is, in fact, the death of the publishing industry and, rising from it, the birth of the writing industry. (Actual future industry name may vary.)

The question isn’t what happens to publishing. The question is what are the parent professions needed around writing? Publishing isn’t one of them.

If publishing and publishers are no longer necessary, as Shirky claims, then it really does make little sense to refer to the entire industry by a term of description for a soon-to-be obsolete element of the past. Recently, there has been an increasing number of defenses of publishers springing up all over the place. What I’ve found intriguing is that all of these defenses rest essentially on the same points–editing, marketing and some mythical notion of quality. Editing and marketing are tasks that can easily be farmed out, for much less than the cut a publisher will take of your proceeds.

Quality, on the other hand, I’ve found to be a bit of a disingenuous defense. Publishers and their advocates always spring this one to support the gatekeeper role they’ve occupied for so long. But the physical necessity of limited offerings no longer makes much sense in the online retail environment, and it’s this very gatekeeper position, one that has served to cement publisher’s control and position atop the literary food chain, that has directly led to so much resentment amongst writers and helped expedite the robust environment that new technologies have created to circumvent exactly that practice. It’s always seemed not quite right to me for publishers to use actions that have alienated and, to be blunt, oppressed so many writers to justify their continued existence. If we truly found value in publishers’ narrow windows of opportunity, why would we have ever embraced self publishing in droves, as we have?

Institutions will try to preserve the problem for which they are the solution.

This is, perhaps, one of the clearest and most reasonable points Shirky makes on publishing and publishers’ efforts to retain power over readers and writers. There can be little doubt that practices like overpriced ebooks, windowing of releases, restrictive DRM, resistance to libraries, etc, all display a pattern of publishers’ intentionally hampering ebook growth in favor of print, an area in which they still maintain a modicum of their former control. Some publishers have even openly advocated increasing friction on the customer experience, ostensibly to undermine the advantages of digital over print.

In these instances, publishers are almost certainly trying to protect the problems they have long been the only answer to. Unfortunately for them, by handicapping what we all know is possible and, increasingly, preferred by the customer, they themselves have become more of an obstacle to digital growth and consumer desire than a solution to it. This is not a good place to inhabit if you’re taking the long view of the future.

The more I thought about Shirky’s point, the more I found myself agreeing with it. Remove print books and the physical bookstore chain out of the loop, and publishers bring absolutely nothing to the table for writers that can’t be acquired cheaper and more efficiently on our own. Certainly, print still maintains a majority of the industry, but can anyone honestly claim they believe it’s going to stay that way very much longer? Typically, those that do so fall back on nostalgia and some vague notions of tradition, but those elements play very little role when competing directly with the real, tangible benefits to readers that digital possesses.

I look at book publishers in some of the same ways I look at print newspapers. It is patently obvious that newspapers in their traditional form have little or no future at all if, for no other reason than digital alternatives do every last thing they do better, quicker, cheaper, more efficiently and more conveniently for readers. Newspapers still exist, of course, but who can say for how long? Two years? Five? A decade at the most? Given the advancements of the past 10 years, can we even imagine the means by which we’ll be consuming news by 2022? The only thing I can safely say is that ink on paper will look even more obsolete than it already does. And to an increasing number of people, it looks pretty damned obsolete already.

Book publishers have the same root problem. Digital alternatives are quickly reshaping the environment into one where every last aspect of what they do can be done better, cheaper, more efficiently, etc., etc. Shirky has a strong point, I think; publishing isn’t dying, it’s already dead and just lingering around waiting to be buried.

Which brings me to another point. About a month ago, the New York Times ran this piece on how publishers have begun to sour on multi-purpose tablets over dedicated ereaders because, they believe, tablets provide too many distractions for readers. This, to me, is yet another example of industry people refusing to see the forest for the trees.

Firstly, what leads any of them to believe that distractions for readers are some new development brought about by tablets? I can be distracted while reading a print book every bit as easily as I can a digital version. If I want to read, and what I’m reading is engrossing, I’ll stick with it. And if not, I can always pick up where I left off later, same as I always could. Why else would they have invented book markers in the first place if not to allow readers to easily walk away from what they were reading, for whatever reason, and come back to the same place at a more opportune time?

Secondly, and most importantly, what about our society leads any of these folks to believe readers want to plunk down money on a device that intentionally limits its possible utility? I have a nice HTC smartphone that is capable of all sorts of nifty tasks, from checking email, Twitter, Facebook, web surfing, playing music, games, watching videos and, lo and behold, reading books. Hell, I’m even writing this blog post right now on it. I’m gonna post to the site with it when I’m done, too. All of this utility is the reason I bought it in the first place. It would have been somewhat shortsighted of me to buy a basic cell phone because all these other things might distract me from my phone calls. I wanted all of these capabilities when I went shopping for one, I bought it because of them. On purpose, no less.

I even have the Kindle app, and I frequently read ebooks with it, and am a regular Amazon customer. Sometimes, I do get distracted while reading when a text message comes through, or I get a notification from email or Facebook or Words With Friends. You know what I do then? I either keep reading, ignoring the notification, temporarily stop and check on whatever it was that wanted my attention then go back to reading, or I close it and come back to the exact same place I left off sometime later. Pretty simple. Never once have I thought, “Wow, I need a device just like this one but that’s purposefully limited to only read books so the rest of my life doesn’t intrude.”

Most disturbingly, there was a poll of publishers referenced in the article stating that only 31% believed tablets are the future. Well, tablets, smartphones and other similar multipurpose devices are the future. Anyone who’s really ever used one for an extended time can tell you that. It’s disturbing that almost 70% of publishers surveyed don’t believe that. But again, this is an opinion rooted more in what they want to believe rather than what is the reality.

If publishers are so afraid of competing for readers’ attention that they think widespread adoption of intentionally limited devices is a viable possibility, then they should just close up shop now. Besides, even if every customer had a dedicated ereader; hell, even if they only read print books; distractions in our lives would still abound. That’s the nature of the world we live in, and it’s the reality of the marketplace we have to compete in. I can buy one device that does many things, including reading ebooks or I can buy numerous task-specific devices to avoid distractions. Which option do you think most people will choose?

Of course, if Shirky is correct in his assessments, what publishers believe really isn’t going to matter in the long run, anyway. The publishing industry is dead! Long live the writing industry!

The Defenders of Literature and Cultural Heritage? Ha!

In the past week, there’s been several long-winded screeds written about the end of days for publishing at the hands of the exploding supernova that is Amazon.  This isn’t altogether a rarity, but I’ve noticed, as print sales continue to decline, ebook sales continue to pick up, and the traditional ways of doing business continue looking more and more like a quaint remnant of a past soon to be forgotten, the bile and vitriol thrown around at those who are at the vanguard of this vast cultural shift have gotten more pressing and severe.  First there was Scott Turow’s “Grim News” letter defending big publishing’s (alleged) collusion and price fixing.  He followed that up with a somewhat more tempered but still massively slanted and misdirected interview on Salon a few days later.  I myself, along with several others, took a swing at the hanging sliders Turow threw into all of our wheelhouses here.  After that, there was Harper’s Magazine publisher John MacArthur’s rant on what he calls the “internet con-men who have ravaged publishing”.   I fully intend to expound upon his comments a little later, as I did find myself agreeing with bits and pieces of what he had to say about the newspaper business’ futile  addiction to elusive web ads, but his overall missive was still very much misplaced.  Finally, I ran across this piece by Bryce Milligan, publisher of Wings Press, on what he calls Amazon’s assault on intellectual freedom.  It’s been a pretty busy week for the dinosaurs of the publishing industry.

None of this is particularly surprising to me.  I’ve seen a lot of this before, watching the legacy newspaper industry’s response when the internet first started to really take a bite out of their once whole-ly locked down apple.  The newcomers were usurpers, illegitimate, doing nothing but stealing their hard-earned positions and work.  The folks heading the industry at that time were so caught up in the belief that the mechanisms they had been in charge of were the pinnacle of their business, and virtually omnipotent, that they failed to see the handwriting on the wall.  It was much easier to lash out and demonize the agents of change than to actually admit to themselves that they had to change as well, or be left on the scrap-heap of history.  So bitch, moan and complain they did.  For years while their revenues shrank, their marketshare plummeted and their customers–both advertisers and readers–moved on to bigger and better things.  The newspaper industry today is roughly 40% the size it was only a half-dozen years ago and still contracting.  Their big plans for the future are website paywalls, an argument that really should have been settled somewhere around 1998.  They slipped, ignored the reality of change by spending too much attention to the quirks of those bringing it right to their doorsteps and, in the process, doomed themselves to a slow, wasting death.  Look closely and you can see the same thing happening to parts of the book publishing segment.

So this isn’t exactly an unheard of development, the disrupted lashing out at the disrupters, and it is more than predictable to see their points of view on the precise business aspects of the issue.  Obviously, they will violently defend the status quo mechanisms while disparaging the strange, new and different ways others have found to achieve the same ends, that being to put written works in the hands of readers.  That, I expected.  It still strikes me as living life with blinders on, but at least it makes sense from a business perspective.  After all, the new digital revolution is barely a few years old.  The legacy bookselling model has existed, pretty much as is, for decades, if not centuries.  You don’t make money that well for that long without developing a nearly-religious belief in your business model.  That faith won’t save them, but it is understandable.

One thing, however, that has begun to emerge in these anti-Amazon (truthfully, more anti-future and anti-change) rants is the notion that legacy publishers, editors, distributors, agents bookstores and the authors entwined with them aren’t simply defending a means of doing business; they are beginning to position their plight on a higher plane.  They aren’t simply disrupted business people, they are pious defenders of literature, heritage and the very culture itself.  Every time I see one of these comments, I can’t help but snort.  I’ve even taken to putting down my drink whenever I get the slightest hint I’m reading one of these for fear of shooting some of said drink out of my nose, a fate I’d like to avoid if at all possible.  It’s one thing to defend your business and how it operates, even if you do so in absence of facts, reason and rationality.  It is quite another to pretend to be martyrs on the cross of literary heritage.  Of course, it’s entirely possible they’re not pretending and that would be telling in and of itself.  I’ve always approached these types of backwards defenses as willful blindness by those so worried about losing their meal tickets that they refuse to acknowledge the validity of the opposing arguments.  But, perhaps, what we are dealing with here are actually “true believers” so indoctrinated by legacy publishing’s dogma that anything challenging its preeminence is immediately treated as heresy.

When a Konrath, an Eisler or any of the other outspoken proponents of the changes that have torn through the industry advocate their positions, is it possible that these true believers don’t see a reasoned argument supported by observation, statistics and facts?  Does Turow look at Konrath the way the Pope looked at Galileo when he challenged the notion that the Earth was the center of the universe?  Did he consider the matter at hand, looking at all the available evidence and make a reasoned judgement or does he simply launch into an inquisition-style defensive assault that twists logic like a Philly soft pretzel to suit his preconceived beliefs?  I sincerely hope it’s the former because, even though I believe he’s wrong, at least he would still retain the possibility that further evidence and reason could have a positive effect.  If it’s the latter, no amount of reason will have any effect, except to make the vitriol even stronger because if there’s any one trait that defines true believers of any stripe, it’s that they almost always double down against things that challenge their faith, no matter how logical or reality-based they are.

Read each of the four pieces I linked to above and look for the similarities in their arguments.  Far from simply a discussion about the difficulties of transitioning from a print-centric business model to a digital-centric one, they each pine for the glory days of yore, nostalgia for the way things have always been done literally drips from their words.  And they each, at various points, make the proclamation that, as the new digital frontier continues to spread over the old physical one, our culture and even literacy itself will suffer for it.  The literacy point is somewhat inexplicable to me.  How, exactly, can literacy decline through the act of more people reading more than ever?  It’s seems a lot like Barry Eisler excellently pointed out on Turow’s allegation that Amazon is trying to destroy bookselling, apparently, by selling lots of books.  I guess when logic, reason and facts fail to produce a convincing argument, scare tactics are a consistently easy fallback.

“The end is near!  If our business fails, the world will be consumed by hellfire!  The people will become illiterate slugs if we’re no longer around to tell them what’s worthy of reading and spending their money on!  Without us, our culture will collapse into an horrific hodgepodge of things regular people actually enjoy, without having a gatekeeper like us to tell them it’s okay to like it!  What about our heritage?  Won’t somebody think about the children and how they’ll be able to learn of their heritage on their own, god forbid, without the facts they’re exposed to being vetted and approved by we professional keepers of what’s right and just!  It’ll be the end of days!  The horror…the horror…”

Publishing is a business, folks, not a religion.  They operate, as they always have, on a business model that allowed them to make money on the written word.  Technology has changed the ways in which people can access those words, undermining publishing’s long-standing business model.  Now, if they want to survive, they must transition to a model that fits today’s (and tomorrow’s) readers.  That’s all this is.  The world won’t end.  Great masses of people won’t suddenly lose the ability to read.  The written word will continue on as it always has, only now with the means of reaching more people more inexpensively and efficiently than ever before.  Our culture will not suffer.  Our heritage will not evaporate.  In fact, they may well be greatly enhanced by what’s coming.  The fact that a relatively small number of people who used to make a living putting words in ink on blank sheets of paper and selling them could possibly be out of work isn’t going to doom civilization as we know it.

Print publishing has had a good run.  They’ve existed as an industry largely undisturbed for numerous generations, far more fortunate than many, much more successful industries before or after them.  Change in life is inevitable.  How we deal with that change is what separates the people who keep moving forward, whatever the obstacles and the people who just whine about how much better things were back in their day.  Some of these old-guard folks sound to me like they’re desperately in need of a rocking chair, a tall glass of lemonade, a quilt to keep the evening chill away and a nice front porch to retire to.  Put enough of them together, and they should have plenty of tales to share amongst themselves about how great things were back in the good ol’ days.

As for the rest of us?  We’ve got things to do.  There’s a disruption going on, don’t you know?

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