Letters From The Front Lines of the ebook Wars

Earlier today, I read this piece on paidContent.org about some of the letters sent to the DOJ relating to the proposed settlement for three of the five publishers who, along with Apple, have been placed in the government’s crosshairs for (alleged) collusion and price fixing of the emerging ebook market. The piece contained excerpts from both pro-publisher and pro-DOJ contributors in a pretty balanced manner. However, I would like to take this opportunity to point out one or two things I find disturbing in the letters of support for the accused.

Just to be clear, I’ve made it no secret that I believe they did illegally collude (you don’t order your employees to double delete emails if you honestly believe you’re on firm legal footing) and I do fully support a serious DOJ smackdown. In fact, I believe these major publishers have been colluding on various matters for some time now, and have used their combined cartel-like influence to dominate the industry in a manner that exploits writers, overcharges readers and has created enormous barriers for entry for viable competition.

The emergence of ebooks, particularly spearheaded by Amazon, is the first true encroachment to the publishers’ gated community of competition in my lifetime. To me, that makes it even more crucial that the DOJ does what I believe it should and pursues this case to the fullest. In my opinion, agency pricing served only a few purposes; to raise prices on the digital versions of the largest selling ebooks to protect their preferred print market, to slow ebook growth and stifle the digital transition at a manageable (for them) 20-30% of the book market, and to handicap Amazon, the one company that truly is driving the industry-wide changes that threaten their long-standing dominance. That also says nothing of Apple’s interests in the deal, which had little to do with being a competitve ebook retailer and much more to do with heading off Amazon’s efforts to enter the tablet market and potentially swipe marketshare out from under the infinitely more expensive iPad.

In my mind, this entire enterprise had nothing whatsoever to do with creating and fostering competition in the industry subset of the ebook market and everything to do with stifling genuine competition across the entirety of the book publishing spectrum. The bigger the ebook market gets, and the faster it gets that way, the quicker the house of cards that is the legacy publishers’ cartel-driven dominance of the industry collapses. So to stop it, I believe they colluded to put the price fix in.

Anyway, here are a few excerpts from three of the pro-publisher letters listed in the piece. I’ll start with literary agent Simon Lipskar, whose full letter can be read here.

“The price of the average bestselling ebook has decreased significantly, from approximately $10.20 in Q3 2010 to $8.29 on April 27 – a decrease of 19% in the two years since the introduction of agency pricing – and that, furthermore, the average price today is in fact lower than it was before the introduction of agency pricing. (As a side note, it’s also clear that even agency-priced ebooks themselves are now cheaper than they were shortly after the introduction of agency.)”

These numbers are clearly false. I won’t get into specifics on the figures because Joe Konrath already has here, using Lipskar’s own methodology to show that, particulary, agency released bestsellers have increased in price dramatically since the introduction of the agency pricing scheme. It also strikes me as somewhat disingenuous to include self pubbed or independently pubbed bestsellers in the average price he sites for a couple of reasons. One, the six publishers involved in the agency scheme control something like 85% of the bestselling books in the U.S. To clarify, that’s referring to books that sell more copies than any other books. So the prices of nearly 9 out of 10 books that sell more copies than any other books have gone up significantly, yet Lipskar somehow believes this doesn’t constitute harm to consumers? Secondly, if you take a $14.99 agency book and a $0.99 non agency book and average them, you get $7.98. That might look good on a stat sheet, but it doesn’t change the fact that the agency book is way over priced and could only get that way through collusion of the six companies that control 85% of all bestsellers.

“It is impossible to look at today’s ebook marketplace – from a price perspective alone – and not see that, rather than causing a general increase in prices, instead the agency period has evidenced a remarkable explosion of competition, with new publishers, self-publishers and retailer-owned publishers providing consumers ebooks at lower prices than the agency publishers and taking significant market share from them in the process.”

One more time, these six publishers control 85% of the most frequently purchased titles. Agency pricing specifically stopped price competition on those books. Nothing agency did created the lower priced competition or the growth we’ve seen in the ebook market. In fact, I would argue that the recent slow down we’ve seen in ebooks is more attributable to the effects of agency pricing than any of the growth we’ve seen. That’s because this is specifically what the scheme was designed to do, stifle ebook growth.

As for all the extra competition Lipskar claims came about because of agency, that’s somewhat wishful thinking as well. As much as higher priced agency ebooks have helped Indies find marketshare, and it has, though not nearly as much as he suggests because the books in question were already several times more expensive than indies under the previous wholesale model, let’s remember that the ebook market has only been a major player for about three years now. Agency has been in effect for two of those three. As the ebook market grew, it was inevitable that other competition was going to enter the game whether agency existed or not.

What this actually means is that the agency publishers seriously overestimated the power they wield over the industry. It means that this shift isn’t about reasserting control but changing and adapting. Whatever their intent, agency was doomed to fail from the get go. At best, it’s an historical speedbump in the digital transition. Just because their efforts were an inept failure and steeped in entitled arrogance, that doesn’t mean we should ignore illegal collusion or the damage done to readers who’ve spent tens of millions more than they would have on these ebooks had no collusion taken place, and the damage done to their own writers, who’ve seen the pittance royalties these publishers deign to throw their way shrink even more with agency pricing.

On a somewhat related note, here’s a truly perplexing point made by independent bookstore owner Peter Glassman:

“Publishers have never sold ebooks under the wholesale model. Rather, they have sold them under the consignment model. Amazon and other ebook sellers never purchased or took ownership of the ebooks they resold. Rather,they advertised the product, handled the transaction, and only after they had received payment and concluded the transaction did they pay the publisher for the ebook. That is consignment, not wholesale. Amazon never placed any buy orders or made any commitments to purchase specific quantities of any ebooks.”

What? I’m pretty sure they did buy wholesale because, you know, that’s how the publishers sold the ebooks to them. Not sure I’d call it consignment because part of the transaction includes Amazon electronically delivering a copy to the buyer’s device. I may not be a tech wizard, but I’m pretty sure Amazon would actually have to have a copy of the work in their possession in order to do that. As for the last sentence there, it’s gotta be on my short list of the most absurd, ignorant statements I’ve seen yet. Amazon didn’t make any buy orders? Why would they? They already had what they needed to sell 10 copies or 10 million. And I can’t even come up with a smartass quip for the “specific quantities of ebooks” line. Does this guy even have a rudimentary knowledge of what ebooks are? You don’t suppose he really thinks publishers have bunches of individual copies of each ebook on their servers and every time someone buys one, Amazon gets it from the publisher, then sends it to the reader? He can’t possibly believe that, can he? That would be just silly!

I’m hoping he was just trying to make a point that digital sales resemble consignment more than wholesale, but it wasn’t particularly effective. To me, he just looks like someone far too stuck in the print book ecosystem to see the realities and efficiencies of digital. His comparison makes no logical sense whatsoever. That is the first and only time I’ve ever seen the term “quantities of ebooks” used in that way. I certainly hope he understands that Amazon only needs the one file to sell them to infinity. I also wonder if there’s not a bit of envy in there, being a purveyor of print books, for having to actually buy quantities of books and hope they can resell them or return them later. Of course, being the owner of a small bookshop, he might not want to see the reality. That has to be a bit like standing on the beach watching a 200-foot tsunami heading your way, I suppose.

Finally, here’s a pair of points from industry consultant Mike Shatzkin, whose full letter can be read here:

“My first concern is that there is a failure of recognition of the necessity for price-setting of individual titles across the ebook supply chain. Indeed, only by eliminating price as a basis of competition can we ultimately have
balanced competition in the real world of publishing as digital change has remade it.”

So we can only have competition in ebooks by eliminating the principle means of competition? I’m sorry, I do like Shatzkin’s work generally, even though he’s a little pro-publisher sometimes, but he’s really wrong here. Taking price out of the equation means that publishers themselves would then represent the only truly viable means for competition. Excuse me if I don’t find that a particularly compelling notion, given that the largest and most powerful among them are currently on trial for colluding together to fix prices. That, and the fact that many of them still appear clueless on how to actually compete in ebooks in any way other than trying to cram them into the same molds they’ve always used with print. Given that these same publishers have openly talked about things like windowing and higher ebook prices to protect print sales, increasing friction on the reader in the ebook acquisition process, and steadfastly attempting numerous rights grabs from authors while refusing even modest royalty increases, what reason does Shatzkin have to believe that these old guard publishers will give us anything even remotely like competition? The retail competition should be left right where it is, in the hands of retailers. Unless, of course, these publishers want to become retailers themselves. He also touches on that:

“The publisher of the future must be able to sell direct. With Amazon as their single biggest wholesale customer, that puts publishers in a Catch-22. If they sell direct at full price, Amazon will undercut them and make them look foolish to their customers.”

I understand Amazon is the biggest shop on the proverbial block, but as far as I can tell, there’s no law that says publishers have to sell through them. If they do set up a direct retail mechanism and they don’t like Amazon undercutting them, then don’t sell through them. Or cut a deal with them so that they won’t undercut you. Or offer books with special editions or bundles or what have you that Amazon doesn’t have. You know, actually figure out how to compete and take advantage of the opportunities of the market! Nothing’s stopping them but themselves.

To me, this sounds like the publishers want all the benefits of the retail giant Amazon’s built but only on their terms. Life doesn’t work that way, so sorry. They could have pioneered ebooks, and online retail book sales, but they didn’t. Amazon did. You don’t get to bitch and moan how unfair it is when you dropped the ball. Don’t like it? Too bad! Deal with it or find a better way. That’s how Amazon got where they are right now.

It all comes back to competition. These publishers didn’t have any for the longest time, then Amazon and ebooks came along. Now, they must compete to survive, but the best they can come up with are protectionist schemes like agency pricing that either stifle it or try to control it.

We’re past the point where they can control this industry like they used to, no matter what they believe. Crying to Uncle Sam that a better, more nimble, more efficient competitor is stealing their customers while they were out back napping in the hammock will get them nowhere. The quicker they realize this, and move on with some actual adaptive, genuinely competitive efforts, the better off everyone in the industry will be.

What’s an Indie?

Lately, there’s been some hard talks and consternation floating around the net decrying the chip on some self publishers’ shoulders. The self versus traditional publishing conflict is juvenile, counter productive and mostly pointless, we’ve been told. And you know what? In many ways, those folks are right.

Just as an aside, given that I did it right there in that last sentence, I read an interview with a supposed prominent book reviewer who said one of the things he hates is when writers use conjunctions to start a sentence. I say “supposed” because I’ve never heard of him and, frankly, I care about as much for the pet peeves of critics as I do for the pie in the sky throwback dreams of publishing executives, which is to say, I don’t. I love starting sentences with conjunctions! If used judiciously, they can add pace to a narrative flow. Is it grammatically correct or technically proper? Absolutely not! But you know what? (there, I did it again) About 99.9% of readers aren’t sitting there with your novel in one hand and the little green style book from a college grammar course in the other. Narrative writing is about rhythm and pacing much more than technical perfection and, if the voice is compelling, most readers don’t care if your work would be thrashed with a red pen by an English teacher.  Besides, I don’t see anyone quibbling about the grammar in a Bob Dylan song. This is art, folks, not a technical writing essay. The rules don’t always apply.

Anyway, back to my original point, those people who tell us to knock off the hatin’ war of words between self and traditional publishers are right. There’s no percentage in it, as an old boss of mine used to say. That doesn’t mean we shouldn’t criticize. Traditional publishing and its defenders do an ample job of providing fodder for criticism. And I’m sure self pubbed writers provide ample grounds for the traditional folks to attack. In saying that, however, there’s one point of contention I just can’t get past. (By the way, I could’ve started that sentence “But there’s one point…” Quicker, more concise, makes the same point without the roundabout language and punctuation…sorry, I’m just carping now. Bastard! Disparaging my use of conjunctions! Who does he think he is?)

The reason I can’t simply say enough is enough with the self-trad conflict is that traditional publishers would, by and large, wipe us out if they could, and roll back all the progress, freedom and leverage writers have gained over the past few years. There’s no question that self publishing is a threat to their established business models, which have long been built upon an exploitative relationship with writers. It’s kind of difficult to play nice and polite with someone who you know would kill you and all you stand for if they had their druthers. While many self pubbed writers, myself included on occasion, have voiced opinions to the effect of hoping the traditional dinosaurs die off and quickly, I don’t hesitate to say most of us really only want some modicum of freedom and equitable treatment. I believe most of us would happily work with publishers offering those attributes. They, on the other hand, would sooner see us rot on the vine before they deign to offer more favorable terms to writers. Admittedly, they’re not going to have a choice in the matter before much longer, but that doesn’t mean I have to accept or turn a blind eye to mistreatment. Hopefully, someday soon, these conditions won’t be as they are today, and the giant pissing contest will well and truly be over with. But today, too many publishers still don’t respect writers and would still rather put us back in the cubby holes they’d carved out for us than to welcome us to the table as partners or equals. That’s barely grounds to form a mutually beneficial business relationship, let alone a lasting friendship. Show us some respect, and you’ll have it returned in kind. Keep dissing us, and the battle will rage on unabated.

There’s one issue I’d specifically like to address because its been on my mind since I read this missive by literary agent Sarah LaPolla. In it, she does seem very supportive of self publishing in some ways, although a bit condescending in places. Then again, that could be my biases showing, reading a slight where none was intended. Like this line, for instance:

Now, self-publishing really can be the way toward a career in writing, albeit a modest one.

Did she have to toss that “albeit” qualifier in there? I read that and felt like a little kid being patted on the head by his kindergarten teacher. “Sure you can be anything you want. You might even grow up to be a baseball star. Or President of the United States.” Really felt dismissive. Like I said, though, her piece read much more supportive of self publishers than most coming from that side, so I’m willing to accept my biases as my own and not take offense.

However, I will take on one particular statement she made:

AND STOP CALLING YOURSELVES INDIE. You’re not that either. Using “indie” interchangeably with “self” only confuses people who want to self-publish and pisses off actual independent publishers. There is a clear difference between publishing with a small press (“indie”) and using a vendor (“self”). Misusing/stealing pre-existing terms doesn’t give you credibility; it makes you look unprofessional.

To begin, she started her sentence with a conjunction. Some people hate that, so I hear. Plus, ALL CAPS? Really? Why are you yelling? Let’s use our inside voices, please. My problem with this is that, just like the traditional publisher side no longer gets to tell us how high to jump unless we allow it, they also don’t get to tell us what we can call ourselves.

“Real” indie publishers are pissed? Aw, now I feel bad. Some self publishers are confused? “I want to self publish. But wait, that guy there said it was indie publishing. But this guy over here calls it self publishing. I’m so confused! I give up!” The way I look at it, when small presses started co-opting the term indie, self publishing wasn’t a viable or realistic path. Hell, it wasn’t even called self publishing, it was given the dismissive moniker of “vanity publishing.” In that environment, the small presses unaffiliated with the giant conglomerates were the independents.

Today, however, that dynamic has changed. The giants still roam the Earth. The small presses are still small presses but the independents have changed. The individual self published authors have become that. The problem isn’t that self publishers have stolen a label from someone else, it’s that the circumstances where it made sense to call a small press “indie” have changed. Logically, it makes much more sense to label the independently published author indie than a small publisher. One is clearly more “independent” than the other.

Ultimately, I don’t care for labels on the whole. I’m a writer. I’m also a publisher. I’ve worked for small publishers, large publishers and myself through self publishing. If you put a gun to my head and forced me to label one of those “indie” it would have to be self publishing. This opinion comes not from pre-existing terms, but from genuine first hand experience. And maybe some of us wouldn’t try so hard to escape stigmas if there weren’t people out there equating self publishing with a giant steaming pile of unreadable crap.

Ultimately, labels, whatever they happen to be, are limiting. We’re not self publishers or indie, we’re just publishers. The end process is the same: produce work, refine work, sell work. That’s what publishers do. Traditional, small press, indie, self, what have you, all are publishers. A label, even one as seemingly cool or edgy like indie, eventually becomes a defined ceiling for what you are. Personally, I much prefer not having that ceiling, certainly not giving it to myself. So, if I were to re-word her point, I’d do it thusly:

AND STOP CALLING YOURSELVES ANYTHING. Labels are meaningless and self-limiting. The work is what’s important. After all, what’s to be gained by having to listen to a bitter rep from some small press somewhere bitching and moaning about you stealing their term “indie”? Nothing, I tell you, nothing at all.

And stop using all caps. Using all caps doesn’t provide added emphasis to get your point across. It make you look screechy, angry and unprofessional. Conjunctions to start a sentence, however? I’m totally cool with that.

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