The Two Memes of Destruction

So I’ve reached a point of not being terribly concerned about the people who are still siding with Hachette. Especially after Simon & Schuster has done what’s been touted as the impossible, quickly and painlessly reaching a deal with Amazon. It’s reportedly an Agency-type deal too, and, in my opinion, that makes what Hachette supporters have been saying look even more suspect. I know, I know, we don’t have specifics on the deal. It could be a bad one, S&S could have panicked. Or Amazon could’ve given away the farm to them (the smallest of the Big 5) to put more pressure on Hachette knowing S&S can’t share details without running afoul of Uncle Sam. That’s all possible. But I return to a theory I pointed out a while back. This fight isn’t because Amazon is trying to destroy the world one publisher at a time, Hachette may just have badly overplayed their hand by picking a poor strategy. A strategy, by the way, that needed it’s writers to lose their asses for going on six months now to be effective. Sweethearts, those folks. I’d like to think that what we’re seeing here is evidence that the Big 5 might be diverging a bit. S&S cut this deal quickly and quietly. The same S&S that had a knock down, drag out with Barnes & Noble not long ago. Harper Collins is firing up it’s own sales channel and offering *gasp* to pay writers higher royalties for sales through it. (How much higher and whether it’s sufficient is another discussion entirely.) There’s continued rumbles around various parts of Random House suggesting there’s serious discussions going on about whether to ditch DRM in some way. All these are good signs. The DOJ’s actions may have had the unintended side effect of disrupting the regular cartel-like coordination of these companies far deeper than simply in their dealings with Amazon. We may be entering a period where the Big 5 function as five totally separate entities, and that alone would make what the DOJ did worthwhile, not to mention the tens of millions readers got back after being ripped off by the illegal collusion. That was pretty cool, too. It may truly be a brand new world. Or so I hope, anyway.

But if you’d like to continue to support them, have at it. It’s your funeral. Something Patterson said recently about this being like a religious war rings true. I’m not sure why he thought it was appropriate or anything short of insulting to portray traditional supporters as terrorists. Hey, I disagree with you all quite a bit and I’m not even going there. And he’s on your side! I think many of you are misguided, confused, uninformed, stuck in a past that’s always been more myth than reality, yada, yada, yada…but I don’t think you’re jihadists. No word yet on whether Hachette is promising it’s writers 72 virgin customers for writing an Amazon hit piece, you know, suicide bombing their own credibility. It’s just ridiculous. And now we’ve got a once and future king-maker agent (so he hopes) comparing Amazon’s distribution system to ISIS. That one’s too inexplicable to even criticize. Seriously, could someone give me any clue to what the hell that means? It’s like he just picked the most negative term in the news that day. “The Big 5 offer ebola like contracts!” Two can play at that game.

But one aspect of the religious war narrative does make sense. Those folks are either true believers where facts or logic don’t apply or they’re the leaders pulling the strings of the true believers to serve their own agendas. I’ve seen it said that indies are behaving like zealots but that perceived zeal comes from, you know, actually having options now in an industry where we largely had none. The irrational arguing is mostly from the traditional side. We might be loud and angry but we also tend to have arguments that don’t Involve simply shouting at people who disagree with us “you just don’t know how publishing works” without actually explaining what they mean by that or refuting the point made that led to it. Probably because they themselves don’t really know (or want to publicly admit) how publishing really works, preferring the myth to the reality. That does seem to be an increasingly common response-type. The converse of that is the people who argue with reasons in support for their positions. I won’t always agree but I’ll always respect someone who put some thought behind what they believe, not just trot out more myths, half-truths and nonsense like Paul Krugman.

Implying that Amazon is some kind of a right wing propaganda arm because Paul Ryan’s book was available but a negative biography of the Koch brothers was restricted? Did it occur to you that Amazon wants to sell books, even during the dispute? That you and I might think he’s a clueless asshole, but Ryan’s book has a virulent tea party audience that will actually pay good money to read his nonsense? And that a Koch brothers biography may be a fantastic book and important subject matter but if the only people likely to buy it are the 12 remaining Michael Moore fans and a small subset of the folks who drive a prius and want to have the book on their coffee table so they can look socially conscious to dinner guests, why would they give it extra attention that other Hachette books aren’t getting during the dispute? Besides, haven’t you heard? Amazon tells the DOJ of a Democrat president what to do and Bezos hangs with Obama. Don’t you recall the hell the President caught for touring an Amazon warehouse and daring to say nice things about them fairly recently? But then, Krugman writes for the New York Times. Maybe he simply had to fulfill his quota of negative articles about Amazon for the quarter, and if he could toss in a little of that liberal/tea party brouhaha, all the better for click bait.

What you often see is people describing publishing as a system so incredibly complex that outsiders can’t possibly understand how it works. More than that, it’s complexity requires special exemptions from even the most basic market forces. In this world, Amazon is a monopolist, indies are simultaneously pawns used to destroy publishers and junk merchants that are devaluing books and destroying literature, and publishers are the ones defending the world from the evils of competition, innovation and progress one overpriced ebook at a time. The problem with this is that the system isn’t really all that complicated, nor difficult to understand. If you dig a little deeper, you’ll find most of that complexity is an invention of the publishers themselves, or some elaborate combination of the arrangements they’ve made with distributors and retailers. Tried and true. Make a simple situation appear impossibly complicated and reinforce your position in the chain because writers and uninitiated outsiders believe they can’t possibly navigate these choppy waters or understand why things are done this way without publishers to handle that for them. That the publishers are the ones creating the chop is often overlooked. In any event, it’s bullshit. Write a book, publish a book, sell a book. It’s not complicated in the slightest. It’s not easy, mind you, but it’s not quantum physics or nuerosurgery, either. In that sense, they’re a bit like credit card service agreements, so much complicated fine print that what really is a simple circumstance becomes shrouded in confusion, which is then used to great effect to obscure the unsavory things going on in the margins.

With that in mind, here are the basic fallacies of the Seven Deadly Sins of anti-Amazon bullshit:

1. No one is “buying” ebooks. They’re licensed, not sold. You probably should understand the difference.

2. Hachette does not have a “right” to force a retailer to price like it wants against that retailers’ will. They have to successfully negotiate for that. Just ask S&S.

3. Amazon does not have a monopoly (or monopsony) on books, ebooks or anything else. They’re big with a lot of influence, no doubt. But a monopoly, they’re not. And no one has been able to point to any kind of statute that says they are.

4. Authors are not being targeted by Amazon, Hachette is. And those authors made themselves part of Hachette when they signed their contracts. Those things are usually binding folks, and they have consequences. That’s why you should read them first.

5. The only people guilty of antitrust violations are the publishers, not Amazon. Just ask the DOJ. But if Doug Preston says so then, hey, what do a bunch of antitrust prosecutors know anyway?

6. Not giving perks to a company you don’t have a contract with is not censorship, boycotting, sanctioning, disappearing or anything else other than hard-nosed business. And it’s not even that hard-nosed. Real hard-nosed business would have them booted out of Amazon’s store entirely. Plus, here’s a point of basic business relationships that no one has mentioned, giving perks to a company you don’t have a contract with just might piss off the ones you do.

7. Publishing is a cut throat industry that runs on hard market principles not fairytales perpetuated by a privileged class paid well enough to look the other way while their author brethren are ground under its wheels.

I understand why the agents, the publishers and the big money writers are fighting this. Their arguments are faulty but their motivations are obvious. They’re trying to stop the gravy train from pulling out of the station. Of course, they could just turn around and see the new high speed rail line that’s bringing in better, more efficient gravy trains every hour on the hour. No one in the industry is in a better position to take advantage of that than they are. But like Plato said, it’s easier to keep watching the shadows on the wall than to turn around and step into the light.

What I don’t understand are the writers who aren’t amongst those groups, the ones still on the outside looking to get in or the ones on the inside who can’t get out of the muddy, horse-shit coated courtyard and into to castle. Why are they supporting a system that’s feeding off of them as the foundation for everyone else getting paid? I’m thinking there’s a confluence of two memes that have always been destructive but is becoming more apparent just how catastrophic they can be.

One is “I Just Want To Write” which endorses pushing the business side of your career away, delegating it to “professionals” so you can focus on writing and cashing the checks. The other is the “Crucible Of Rejection”, the odd fetishization of struggling through years of being told no to get inside those gates. For some on the outside, it’s always the next query that’ll be the one that works. All they have to do is tweak their book a little and they’re in. Any day! Can’t walk away now! The myth tells us that adapting to this rejection forges us into better writers. The truth is it forges us into writers better suited to their commercial purposes. There’s a huge difference. For the more fortunate, they’ve gotten in, but the business specifics are totally in the hands of their publisher and their agent. They don’t know what’s really going on, and it’s not so easy to burn that bridge after celebrating your persistence and years of work to get there, even if there bears little resemblance to what you thought it was. It’s hard to walk away after you’ve put in that kind of effort. Even harder when you’re not getting accurate information and what you are getting is coming from people who have agendas of their own they’re trying to fulfill irrespective of their contractually obligated responsibilities to you. How many publishing contracts come and go quickly and quietly without the author even knowing what was done for the book, what happened and why?

All I can say to those folks, speaking from my own experiences with publishers, if you think you’re starting to smell some duplicity, look to the people in your own backyard before you start sniffing out the guy across town. It’s far more likely to be coming from nearby. The stench is coming from inside the house!

I suspect these memes, and their blinder-producing results, are why you see the argument made so often that books aren’t like other products, or books aren’t widgets or what have you. You don’t have to defend what you’re advocating as feasible in the market or financially viable if you throw the baseline of actual business sense out with the bath water at the earliest possible convenience. Perhaps the most ridiculous argument I’ve seen springboard lately is the idea that publishing isn’t profitable or profitable enough that anyone outside these current set of publishers would be interested in it. Part of that argument is an implication that these pubs are being altruistic by staying in it themselves. It’s total nonsense. My entire working experience across two decades conflicts that point. You also generally see that argument being made by someone who’s collecting a huge check courtesy of the industry. Publishing is, has been and will continue to be, in various forms, an extraordinarily profitable industry, with or without this particular set of publishers, writers and retailers.

Every time I see that line of thought, I can’t help but automatically assume the person speaking has no real-world argument to make, just more pixie dust and fairy tales. It’s kind of sad, too, that they’re “concern” for culture is coming during what is far and away the best time for communication in the history of civilization (no exaggeration). It’s never, at any point, ever been easier or cheaper (right down to free) to get anything you want to say out to anyone you want to say it to across virtually the entire globe. I think that shows the lie in their argument. It’s all about money to them and nothing else. To be clear, that’s a perfectly fine position to take, just don’t bullshit me with cultural concerns when it’s your paycheck that’s driving the argument. If we remove the commercial aspect altogether, it’s still the greatest time in mankind’s entire history if you’re trying to get your words and ideas out to the world.

That’s what I would offer for writers to take away from this. Open your eyes and take a look around. There are opportunities emerging everywhere every day. What we can do today and the numbers of people we can reach is truly amazing, unprecedented in human history. If you get so wrapped up in worrying about Amazon, you’ll miss it. Don’t get hung up on the whines and howls of folks who are just pissed that the world moved their cheese. You want a career in writing? Go and take one. Dump the bullshit memes of the past and get down to actual business, the kind those memes and the folks who propagate them have blocked writers from pursuing for decades going on a century.

Don’t make the mistake of previous generations of writers and think any of these people are your friends. Amazon’s not, nor is Barnes & Noble, nor any of the 2,000 small bookstores. They offer opportunities in various forms and shapes and sizes. But just like the opportunities publishers offer, they come with a cost. If you don’t know that cost, one day, a hefty bill may come due. And don’t weep for the agents and publishers, either. They were never your friends, though they liked to imply as much while they kept you ignorant of everything except the one act you do that directly makes them money. All they want is your book and the less you are involved past that, the better for them. Don’t wait for one of those assholes, whether they hail from a publishing house, an agency or a retailer, to come down from on high and grant you the keys to the kingdom. Odds are, you’ll be dust in your grave long before that ever happens. Requiescat in pace.

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

Bass Ackwards: NYT’s David Carr somehow manages to get everything wrong

Ever since the U.S. Dept. of Justice first dropped hints of taking antitrust actions against Apple and several publishers over what is quickly becoming the agency pricing debacle, there has been a noted increase in hit job articles ripping Amazon flooding the net. After the much-rumored lawsuit was actually filed last week, those efforts ramped up considerably. But perhaps the single worst, most misguided one of these missives came yesterday from David Carr in the New York Times. I thought I’d seen everything in this regard but when I read his piece yesterday, I was absolutely dumbfounded how someone with the skills to be a regular contributor to one of the most prestigious newspapers on the planet could get, quite literally, everything so completely wrong. About the only accurate thing in his article was the spelling of his name in the byline. Here goes:

That’s the modern equivalent of taking on Standard Oil but breaking up Ed’s Gas ‘N’ Groceries on Route 19 instead.

What? Five of the six largest publishers in the country (all six after Random House allegedly was threatened and coerced into jumping in) plus the largest tech company on the planet, one several orders of magnitude bigger than Amazon, colluding together to price fix is the equivalent of Ed’s Gas & Groceries? This is so completely absurd a statement that it almost doesn’t need to be refuted. Almost. Wow, what an amazingly disingenuous thing to say! Six companies with combined resources that far outstrips Amazon joining up to, openly and admittedly, stifle competition from the online retailer is no small thing to sneeze at.

Let’s stipulate that there may have been some manner of price-fixing here, perhaps even arranged in “private rooms for dinner in upscale Manhattan restaurants.”

Oh, okay, let’s do that. Let’s stipulate that there may have been some collusion and price fixing going on. Hate to break it to you, but those actions are illegal! What are we supposed to do, simply ignore it? Look the other way while a genuine innovator from outside the traditional industry gets attacked illegally (maybe if we keep pointing that out, it will sink in eventually) by companies who have largely sat on their hands, fat and happy with their “chummy little business” as Carr calls it? Sorry that it’s inconvenient to your worldview, but the entire point of the Sherman antitrust act was to prevent competitors within an industry from combining their market power to hamper competition. That is precisely what seems to have happened in this case, and the primary reason the DOJ got involved is because the publishers in question were too arrogant to keep their damn mouths shut about it!

(Amazon) leaned on the Independent Publishers Group in recent months for better terms and when those negotiations didn’t work out, Amazon simply removed the company’s almost 5,000 e-books from its virtual shelves.

No, Amazon was in negotiations for a new contract when the old one was up. They failed to reach an agreement, so they had to pull the books because, I repeat, the contract was up! If Amazon had continued selling their books with no contract, that would have been illegal. Besides, IPG isn’t a publisher, they’re a distributor. Distributors are still somewhat useful in the print market, but in ebooks, they represent an unnecessary and inefficient expense that increases prices and little else, something Amazon didn’t want because, you know, they seem to actually give a shit about not gouging their customers. How useful is IPG in the ebook market? Well, combined, the publishers in their membership earn, on average, about 10% of their revenue from ebooks. The rest of the industry is more than double that and growing. Did Carr ever consider that maybe Amazon wanted better terms because they actually wanted to sell some damn books!

The Seattle Times just published a series with examples of how Amazon uses its scale not only to keep its prices low, but also to keep its competitors at bay.

The only thing I’m going to say about this is of course he referenced the Seattle Times. Over the past few weeks, they’ve made one-sided hit pieces on Amazon a virtual art form. At this point, I’m almost curious to find out if the Times has gotten any large donations or influxes of cash from any particular Manhattan addresses recently.

Remember that it was only after agency pricing went into effect that Barnes & Noble was able to gain an impressive 27 percent of the ebook market.

No, Barnes & Noble earned that marketshare once they actually decided to genuinely compete in the ebook segment. The Nook device was generally well received, they smartly leveraged their physical stores to push devices and ebook sales to customers, and generally made a real effort. Funny how much easier it is to gain marketshare when you actually try!

If the decision to charge the publishers was good for competition, why has the stock price of Barnes & Noble dropped more than 10 percent since Wednesday?

This is another easy one. B&N is still inextricably linked to the print ecosystem. Agency pricing, at its core, a point Carr has apparently missed entirely, was a protectionist racket to slow digital growth and artificially prop up print. So B&N stood to benefit from the illegal collusion. This model goes away, and there’s nothing to stop ebooks from quickly jumping up to 50%, and very likely much more, of the industry’s revenues.

B&N is still saddled with a ton of physical stores that can quickly become an albatross around their neck when (not if) print sales continue to decline. That’s why there’s been rumors floating around that they will soon be spinning the Nook portion of their business off, so it doesn’t get dragged down with the stores. There’s also the little matter of B&N allegedly taking retaliatory action at the behest of Penguin against Random House to pressure them into joining agency as well. At this point, they’re lucky they aren’t named as a co-conspirator. Any of these are perfectly understandable reasons for their stock to decline.

Amazon views e-books as cheap software sold to animate device sales, in this case, the Kindle.

Here’s my favorite piece of pretzel logic making the rounds of Amazon haters these days. Apparently, they don’t care about losing money on ebooks because it drives kindle device sales. But wait, I’m pretty sure I’ve read somewhere that Amazon is taking a loss on device sales. So, apparently, Amazon is selling ebooks at a consistent loss in order to drive device sales at a consistent loss. And conversely, depending on who you ask, they’re selling devices at a loss to drive further ebook sales at a loss. At some point, you’d think someone would realize how absurd this logic is. I don’t care how much money Amazon has, they have to make a profit on something!

The problem is they aren’t really selling ebooks at a loss, only select ones (NYT bestsellers in the pre agency days, for instance) as loss leaders to get customers into their system and buy any of the hundreds of thousands if not millions of other books that aren’t discounted below cost. They might be selling devices slightly below cost today, but the tech is only going to get cheaper. Besides, some of the cheaper Kindles are ad supported which mitigates some if not all of those supposed losses. And that’s not to mention the profits on all those books that aren’t priced below cost they sell on those devices.

Publishers are pissed because, while they sat on their hands and had fancy dinners discussing ways to undermine ebooks, Amazon identified and executed a rather impressive retail plan to attract tons of customers, sell lots of devices and boatloads of books, all while keeping prices low and raking in the cash. Sorry for your luck, but I’m pretty sure this qualifies as “you snooze, you lose.”

The counterargument to the publishers’ position runs like this: why should consumers be saddled with paying an extra few dollars just to keep competition alive?

I’ve made bunches of counterarguments to the publishers’ positions over the past couple years, and read bunches more. Never once have I seen that one. If he changes the wording to read “to keep certain competitors alive” then he has a point. Why should we, as readers be saddled with artificially high prices so Macmillan’s outdated and inefficient business model can survive, for instance? We shouldn’t. In reality, the agency deal was all about stifling competition by forcing all ebook retailers to homogenize pricing at high levels across the board and protect print sales from erosion at the hands of ebooks. It’s all about picking winners and losers on the retail side, and on the product side. In the end, customers get to pay extra to have a cartel of publishers decide for them what they’re allowed to buy and from whom. Agency has stopped untold numbers of retail pricing models and experiments from happening, from package deal, group offerings, subscription services, and who knows what else could have been developed?

It has very effectively stifled competition in the retail market. Don’t believe me? Look at Google. They were gung ho to get into ebook retailing in a big way before the agency debacle. Now, they’ve dropped out of the market altogether very likely because of the restraints agency placed on real retail competition. When everyone uniformly has the same products at the same prices, it becomes an enormous barrier for entry to anyone who doesn’t already have an established ebook store and associated device. So agency really only served to lock online ebook retail to a select handful of players already in the game–Amazon, Barnes & Noble, Apple, and to a lesser extent, Kobo and Sony. Agency didn’t increase competition in ebooks, it hindered it.

Richard Epstein, a professor at the New York University School of Law, pointed out, “It is not clear that lower prices are necessarily in the long-term interests of the public at large.” He said that lower prices work both ways, spelling “low costs to consumers and low royalties to authors.”

No, it is clear that low prices aren’t in the long term interests of publishers who still insist on expensive, outdated and inefficient products. It is also clear that lower prices are in consumers’ interests, both now and in the future. And as to his second point, here’s a slight illustration to how wrong he is. In strictly the current traditional model, he may be right that lower prices lead to lower royalties for authors, but that’s only because publishers want it that way. On a $15 agency ebook where the author gets a standard 25% net, that author makes $2.62 per sale. On a $4.99 ebook sold directly through Amazon, the author gets $3.49 of each sale. That is a rate $0.82 more than the traditional author on a book 1/3 of the price. My math skills may be a little rusty, but that kinda looks 67% lower price to the reader and a 25% higher royalty at the same time per sale.

Robert F. Levine, a lawyer with an extensive practice in publishing, said, “There is not a drop of new capital coming into this business. The margins are low and there is almost no growth, so you end up with a rather small industry, with a handful of companies and a handful of players.”

Is this guy looking at the same industry everybody else is? Ebook sales have been growing in triple digit percentages the past few years. Sales of devices have exploded. The whole DOJ lawsuit stems from the manner in which Apple brought its weight and resources into the market. There are hundreds if not thousands of independent authors selling their wares now that never could have before, and many more of them than the mainstream industry and its defenders will ever admit are making money doing it that’s nothing to sneeze at. Publishing is a growth industry again, for the first time in a long time. If anything, the agency model actually slowed that growth slightly, but that’s pretty finished now, however the suit ends up. The only way it worked in the first place was if all those publishers colluded to make it happen. They’ve already fragmented with three settling, and will stay that way for at a minimum two years. But by then, it may be irrelevant what any of these companies wants to do. Besides Apple, Penguin and Macmillan could all still be tied up in court at that point, too.

The problem with this line of thinking is that, prior to digital, publishing already was an industry dominated by a small handful of players; the so called Big Six, the few big box retailers, and two or three distributors pretty much called the shots. There’s more diversity in book publishing right now than there’s been in a long time and, despite all the hand-wringing over a theoretical Amazon monopoly, that diversity seems poised to continue expanding.

I’d be lying if I said I didn’t get a little thrill when I found out on Amazon that I could get an e-book version of “Fifty Shades of Grey,” the No. 1 book on the New York Times best-seller list, for just $9.99. But after a week of watching the Justice Department and Amazon team up, I’ve learned that low prices come with a big cost. Maybe I’ll order it at my local bookstore instead.

Interesting example. An essentially self published ebook and POD paperback that grew out of fan fiction that traditional publishing never would have touched in a million years before the DIY way spearheaded by Amazon produced a bestseller. In addition, in the past, you’d have had to order it specially because, being DIY, the local bookstore almost certainly would never have considered stocking it. And even if they did, it would have ended up spine-out on a back shelf somewhere, virtually out of sight, out of mind.

So what was all that Carr was saying earlier about Amazon wiping out competition and the publishers championing it? Seems to me, he’s got that all ass backwards.

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