Ex-CEO of Random House on ebook pricing and the future of publishing

[Moejoe]

Originally Posted by rixte

I think most people want to be able to afford to eat.

I can be a bit of a book snob at times (but I've also been a fanfic reader, so it balances out!), but with a few rare exceptions, most people who write because they wish to and for free are awful at it. This isn't counting people who give away promotional copies, of course.

My disclaimer - I did an internship in publishing when I was in college. I opted not to pursue publishing as a field - and that's because you couldn't pay me enough to sit down and keep reading those slush pile manuscripts. Cutting out publishers reduces my whole future reading world to that nightmare!

Why is this same argument brought up all the time about 'people eating', if you want to make a living then writing never was an occupation that would guarantee any kind of comfort. NEVER. Historically it's only been the smallest percentage of published writers who made their living soley on the profit from their works.

The tide has changed, the water is high for the traditional publishing companies. Crowdsourcing, the cloud, blogging, Twitter recommendations, social networks, creative commons licensing -- it's the most exciting time to be a writer, and by extension a reader, since the invention of the Gutenberg press. The power has shifted away from the corporate taste makers and into the hands of the audience and the author. A direct relationship that is unprecedented in publishing.

Of course you can always hold onto the old publishing methods, where everything is neatly packaged and chosen according to projected sales figures and whether that book 'has potential movie written all over it'. You can accept the idea that potential-profitability is a good yardstick to measure quality. You can even equate 'in print' as being a mark of respect, but it's not going to change what's happening around us.

Old ideas are dying and all I can say is 'good riddance'.

[garygibsonsf]

The power has shifted away from the corporate taste makers and into the hands of the audience and the author. A direct relationship that is unprecedented in publishing.

I'm sorry, but that's just plain nonsense. The power has always been in the hands of the audience, and they have always defined what succeeds and what does not. The history of publishing is littered with failed attempts to figure out just what it is people want to read; endless mega-figure book deals by authors you never heard of because, by and large, their books sank without trace.

Do you think the Harry Potter books succeeded because of some cynical corporate strategy? They succeeded because kids read them and loved them enough to recommend them to their friends - and that single, ultimately highly democratic word-of-mouth process is by far the most powerful factor in publishing today or in any other time. Books that do well are almost always ones that get recommended the most by friends of the potential purchaser. Very often the big promotion comes after a book has already succeeded, and the publishers see an opportunity to spread word of it farther. If a book receives early promotion and press, it's because the agent and publisher are skilled enough at what they do to recognise they may have a big property on their hands, but ultimately it's a gamble in the face of a fickle and unpredictable audience.

One or two people here really need to read up a little on how the industry actually works, rather than treating it as some kind of mass conspiracy. I recommend you start with something like Donald Maass's 'Writing the Breakout Novel', which lays out some of the realities of why some books hit big, and other's don't. There's nothing worse than uninformed opinion.

[Moejoe]

Originally Posted by garygibsonsf

I'm sorry, but that's just plain nonsense. The power has always been in the hands of the audience, and they have always defined what succeeds and what does not. The history of publishing is littered with failed attempts to figure out just what it is people want to read; endless mega-figure book deals by authors you never heard of because, by and large, their books sank without trace.

Do you think the Harry Potter books succeeded because of some cynical corporate strategy? They succeeded because kids read them and loved them enough to recommend them to their friends - and that single, ultimately highly democratic word-of-mouth process is by far the most powerful factor in publishing today or in any other time. Books that do well are almost always ones that get recommended the most by friends of the potential purchaser. Very often the big promotion comes after a book has already succeeded, and the publishers see an opportunity to spread word of it farther. If a book receives early promotion and press, it's because the agent and publisher are skilled enough at what they do to recognise they may have a big property on their hands, but ultimately it's a gamble in the face of a fickle and unpredictable audience.

One or two people here really need to read up a little on how the industry actually works, rather than treating it as some kind of mass conspiracy. I recommend you start with something like Donald Maass's 'Writing the Breakout Novel', which lays out some of the realities of why some books hit big, and other's don't. There's nothing worse than uninformed opinion.

And there's nothing worse than someone who assumes that a poster has formed their opinion without being involved intimately with the 'industry' or is uninformed.

I've read Donald Maas's terrible book, and lots of others besides that explain nothing and everything at the same time about an industry controlled by four or five mega-corporations (not a conspiracy, a fact). I've been through the treadmill myself, and I won't go back to the ridiculous system where the author is last in line, not first. Where writers beg for attention to self-appointed intermediary's like agents and publishers, instead of a direct one-on-one with the reader.

I know you have a book deal, and I know you want to protect the industry you belong to, but I do not belong to that industry, nor do I actively seek participation in the treadmill any longer. For one, it's too slow, it moves at a glacial pace and I do not. I write -- a lot -- and there's not a publishing contract on Earth that would accommodate the output. In this Brave New World I can publish immediately on Feedbooks (my personal favourite) or any number of other places. The publishing industry can't offer me that freedom, and it never will be able to as long as its bottom line is selling units instead of nurturing writers.

And you talk of Harry Potter as though it was some grass-roots movement that made it popular. No, it was bought on the premise that it would make money, that it would shift units in the very first instance. Harry Potter is one of the most derivative works of children's fiction produced in the last fifty years, and also, if truth be told, overwritten. Its value was not as work of art, or even work of entertainment, but as 'product'. You're right, of course that nobody can determine 'what' will make it big, but it doesn't stop the publishing companies from trying, does it?

Go look at the shelves of your local bookstore or WH Smiths, wherever the latest and greatest are sold and tell me what you see. How many more detectives have to track how many more serial killers before that tired old genre dies out? How about the billionth rip-off of Tolkien or the latest unedited pablum of post-accident Stephen King? How about another James Patterson factory-thriller, churned out by a committee of dedicated prose murderers? How about some gaudy uninspired chick-lit or novelizations of TV series? You seriously think any of this is there because the publishing companies give a crap about fiction? Come on, who's the one with the uninformed opinion now?

The audience only gets a 'choice' on what the 'publishing companies' deem worthwhile. What the publishing companies think will 'sell'. It's a business, and as a business the publishers are interested in profits and nothing much more. Whereas the writer 2.0 can publish whatever the hell he/she likes, they can offer that work to an audience unbidden by ridiculous contracts and build a 'readership' from the ground up.

Whether the Writer 2.0 gains an audience is another matter altogether. But I know where I stand, and it's firmly on the side of individual freedom and the death of the intermediary corporate taste makers.

[tompe]

Originally Posted by mklynds

If I really want a book when it just came out I do buy it in hardcover and pay the extra. Why shouldn't I do the same for ebooks. That being said if they threw in some extra content or art work to go with the higher "hardebook" price that would make swallowing that pill a little easier.

But for at paper hardcover you get the physical object also and I pay for that also.

[Moejoe]

Back onto the price of books, and I've been thinking a lot about this recently, I reckon a price of £2 - 2.50 is reasonable for a brand new novel, £0.99 for any back-catalogue stuff, and around 10p for a short story.

[tompe]

Originally Posted by Phogg

This is a function performed far better by a forum of readers than by a paid hack.

I do not think a group of people will work at all for this task. First you do not want to read unfinished works so why would a group of people in a forum be willing to read and comment on a book to make it publishable?
Also most people do not seem to require good writing as seen in many of the recommendations of books given on MR.

[tompe]

Originally Posted by Moejoe

Why is this same argument brought up all the time about 'people eating', if you want to make a living then writing never was an occupation that would guarantee any kind of comfort. NEVER. Historically it's only been the smallest percentage of published writers who made their living soley on the profit from their works.

Well said. I am also very tired of this argument. It appears everywhere and it has hidden assumptions in it that steer the debate in the wrong direction.

[garygibsonsf]

I've read Donald Maas's terrible book.

Okay, I think you and I are just bound to see things very differently if you've read Mr Maass's book and regard it as 'terrible'. You're welcome to your opinion, but I feel compelled for the sake of others reading these entries to remind you that it's a book that has a huge amount of respect, written by the head of a major literary agency based in New York. This is a man who knows what he's talking about, and he quotes from a very,very wide variety of work to make his points, not just blockbusters and bestsellers. It's been described as essential by a good few authors with a lot of respect in their respective fields.

And you talk of Harry Potter as though it was some grass-roots movement that made it popular. No, it was bought on the premise that it would make money, that it would shift units in the very first instance.

Ehrr ... no. You're kidding, right? I mean seriously? The first one was sold for two and a half thousand pounds, and nobody had a clue it would do as well as it did until it took off like a rocket. And it was published in the hope it would make money. Because most of the books out there don't. The day publishers can accurately predict where the next Harry Potter is going to come from is the day editors and agents fall to their knees on the streets weeping with joy.

You seriously think any of this is there because the publishing companies give a crap about fiction? Come on, who's the one with the uninformed opinion now?

The multinationals who own the publishing companies may not give a crap, I grant you that, except insofar as they regard the publishers they bought in the Eighties as providers of income. The publishers on the other hand very much do care, because publishing is not a business most people get into with the idea of making a lot of money in mind.

How about another James Patterson factory-thriller, churned out by a committee of dedicated prose murderers?

None of us are arbiters of the reading tastes of the majority, and I might remind you those mass-market King and Rowling novels bring in the money that allows publishers to seek out the more rare talents who may sell considerably less, but nonetheless make editors and agents feel like their lives are worthwhile when they do find them.

What the publishing companies think will 'sell'. It's a business, and as a business the publishers are interested in profits and nothing much more.

That's a pretty subjective statement. And publishers don't know what'll sell, but they do know what they hope will sell. Publishers by and large are not solely interested in profits, like I said, or they really, really wouldn't be in this game. Nonetheless, every business needs to make money.

Whereas the writer 2.0 can publish whatever the hell he/she likes, they can offer that work to an audience unbidden by ridiculous contracts and build a 'readership' from the ground up.

Absolutely! Though I may disagree with you over 'ridiculous' contracts. And more power to them if they can pull it off.

However, the sheer intimidating size of most slush piles indicate that for the very, very vast majority, this will almost certainly prove to be an exercise in futility. If someone manages it, great. But in my experience to date, most novels that don't get published (note I say 'most') aren't published for a very good reason.

My first novel has never been published and, let me tell you, from my perspective of ten years on, I'm very glad it never was. I had a lot to learn. Anyone who feels they may disagree with me is invited to sign up at www.authonomy.com and read some of the slushpile manuscripts to be found there. Or, alternatively, got to www.theswivet.blogspot.com for some realistic insight from the point of view of a working agent.

[Greg Anos]

Originally Posted by sirbruce

I'm afraid this view of business is limited to commodites. It does not apply to books, because it's not possible to make the books "significantly cheaper". The cost of physical production of each book is not large. The skilled labor involved (editing, etc.) cannot be undercut by cheap foreign workers, so it remains relatively fixed. The cost of an ebook is far from zero. The *marginal* cost of an ebook is almost zero, much less than a physical book, but you still have to pay for the up-front overhead.

What makes matters worse is that books traditionally have a tiered pricing structure: more expensive hardbacks come out first, with cheaper paperback and other editions later. This allows one to recoup costs with higher margins on the hardbacks. Making money only via paperback editions can be done, but it's more difficult unless the demand for hardbacks is very low.

With ebooks, people expect paperback prices for new hardback releases. And that's a problem. I personally would be happy if new ebooks came out at $10 - $13 along with the $25 hardback, then reducing to $5 - $8 when the paperback comes out. And I think this sort of structure allows for more profits all parties: publishers, retailer, and author.

Sirbruce, all business is commodity business. The only time there are exceptions are when: 1. there are legal restrictions creating monopolies, - patents, copyrights, legally protected guilds, ect. and 2. there is such a high economic barrier of entry that there are few producers controlling a oligopoly.

As to e-books. All the costs you described are design costs, not production costs. They have to be spent before you produce unit one, and therefore are fixed for that particular product. The goal is to sell enough units of the product to pay for those fixed cost of design at a price low enough to attract many customers, assuming there are many customers interested in your product at all.

Yes, books are protected by copyright. But copyright is no longer self enforcing (and there have been many posts at various times explaining why, I don't want to repeat), which is converting a monopoly-like business to a commodity business.

In the digital world, the marginal cost of producing another unit of product approaches zero. Therefore, the whole mass production paradigm fails.

Let me describe a relevant example. Robert A. Heinlein write a juvenile book Red Planet. The editors requires modifications, disliked by the author, before printing. The book sell a lot of copies, starting in 1949. OK, how much editing does an e-book of Red Planet require today? Answer - none! It will need OCR proofing, just like a new set of plates would need galley proofing, but editing? None. Why? Because the expense was incurred in 1948, before the book was ever produced. It's not an ongoing production expense.

Now I have a new manuscript from modern author XYZ. Does it need editing? Answer - yes. Same author beef. But all of this is done before copy one is either printed or released as an e-book. Once the editing is done, it becomes a fixed cost to be amortized. But in the digital world, amortization of fixed costs is dying because the marginal cost of production is about zero.

Now as long as you can get people to pay a non-zero price for a product that has a marginal cost of zero, you have a profit margin to work with. And that margin can be used for fixed costs as well. But the limit of what you can charge for product is set by the commodity price limitations. In other words, does it cost more or less that other similar products. People seem to be willing to pay $4 to $6 dollars for an e-book. So that sets the marketplace price, which you as a publisher must meet. You have to adjust your cost to meet the marketplace price, not the other way around. This is a hard reality for the publishing industry to accept...

[Moejoe]

@garygibsonsf

With everything you just said, you actually prove that the publishing industry (when it comes to digital at least) is absolutely useless. They can't predict a hit, they can only take guesses, they pray for word of mouth successes, so why exactly do we need them if they work on hunches and wishes in the first instance? And what of the truly talented writers, is it, as you propose, a trickle down effect, that for every James Patterson success there's three worthy authors somehow buoyed by the money brought in by one? If so, I'd love to see these authors as they're not being promoted in my direction.

What I don't get, and this seems to be a pattern I've observed, is why so many Sci-Fi authors and readers are so resistant to change in the publishing industry? I would have thought that the majority of Sci-Fi writers would be all for a shift away from the old hierarchy and toward a digital democratization of fiction.

[rixte]

Originally Posted by tompe

Well said. I am also very tired of this argument. It appears everywhere and it has hidden assumptions in it that steer the debate in the wrong direction.

See, I'm tired of the assumption that the world is full of these amazing writers that live and breath writing, who can't wait to work for free just for the joy of it, and who are only held back by the publishing industry.

[Penforhire]

I am a believer that writing is a calling. Those of us who write will do so whether paid or not.

[Crowl]

The thing that strikes me about some ebook pricing is that it does seem like they are actively trying to discourage people from buying them, it is completely demented for the publishers to try and charge hardback prices for ebooks as it just encourages people to look elsewhere for them.

I don't expect prices to be as low as some people are mentioning in this thread, I think I would consider prices to be reasonably fair if they were below paperback prices for books in paperback and somewhere just above paperback prices for books that were still in hardback.

As far as drm and ebooks, while I would obvioudly prefer my books to be without drm, I don't actually mind the idea of drm if the publishers go about it in a reasonable manner e.g. I would be happy to have an ebook locked to my current reader if at a later date I could lock it to a different reader even if that one used a different format i.e. I am buying an ebook not just the right to use one for as long as that first reader lasted.

[Phogg]

Originally Posted by rixte

I think most people want to be able to afford to eat.

I can be a bit of a book snob at times (but I've also been a fanfic reader, so it balances out!), but with a few rare exceptions, most people who write because they wish to and for free are awful at it. This isn't counting people who give away promotional copies, of course.

My disclaimer - I did an internship in publishing when I was in college. I opted not to pursue publishing as a field - and that's because you couldn't pay me enough to sit down and keep reading those slush pile manuscripts. Cutting out publishers reduces my whole future reading world to that nightmare!

If you wish to eat, you might consider a job that pays.

I hate to bring evil reality into the picture but skill and talent are not the primary determinants of what ANY job pays.
The determinants are how much some one wants it done, and how many people will/can do it. Will is a more dificult obstacle in the west than can.

The will/can do it thing means that unpleasant jobs often pay more than jobs requiring intellect or talent.

The high cost of printing and distributing propped writing jobs up for a longtime as publishers formed a barrier to many writers. This was true with fiction, and with reporting. Authors can not escape the paradigm shift any more than newspapers can.

Now there are a hell of a lot more writers competing for consumer dollars. And many of them have a day job. No amount of words will change that.

[Phogg]

Originally Posted by rixte

See, I'm tired of the assumption that the world is full of these amazing writers that live and breath writing, who can't wait to work for free just for the joy of it, and who are only held back by the publishing industry.

If you are asserting that this is only an assumption, it might behoove you to read those things at the beginning of books called prefaces. In them the authors describe how they came to write and publish the work.

You are making an assertion that DIRECTLY denies things writers have been saying since the 19th century. On what evidence do you make this ludicrous claim?