Last week I talked a bit about my contention that shock was not the most reasonable response to the Department of Justice’s investigation into alleged price fixing by Apple and five of the Big Six – the 5/6ths. Recognizing that no one can even predict how the investigation will turn out, much less the exact consequences such a decision will have on the publishing world, the potential implications are pretty interesting. Some would even say worrying.
The Big Six
Without the easy guarantee that they will control the price of their product, these guys are going to struggle for as long is it takes them to realize that ebooks are an opportunity, not a tragedy. Even then, their business plans aren’t exactly going to turn on a dime. It has been observed that because of their established model of selling books to bookstores that retain the right to return as many of those books as they want for a full refund, it will be extremely difficult for them to make that transition.
My sense of this is the big authors probably aren’t going anywhere. I can’t imagine that any writer making enough money from writing that s/he barely even thinks about money anymore jumping ship unless those checks suddenly stop coming. I’ve been watching the midlisters and backlisters and first-timers, though, and those folks are at least willing to experiment. Some of them are getting quite good at it, in fact. If the publishers are willing to woo these folks, those authors are likely to continue using trade publishers as a hedge even if they continue speculating in indie publishing (those advances are nice even if the royalties aren’t guaranteed).
That said publishers have a lot of work to do before I’d say they’ve adapted to the new technology. I could talk about DRM, which didn’t do anything but piss off music customers a decade ago and is turning out to be an anchor around the necks of ebook buyers, binding them to a single ebook platform. Guess what else – the $20+ prices on many ebooks aren’t sustainable, especially when they can’t be loaned, given away, or sold.
Don’t get me wrong. I don’t have some epic loathing for “traditional publishers.” They’re trying valiantly to manage huge technological changes in their industry. That said, the industry insider happy talk (“ebooks are the future we are embracing!!!”) is often undercut by actions taken in fear to protect rights instead of selling books (“libraries are the enemy and must be stopped from lending books!!!”). It’s often like listening to a guy eating a shit sandwich while trying to convince you of the merits of the sandwich he is eating.
Brick-and-Mortar Bookstores
Boy does it gotta suck to be these guys. I read an article just about every day about how some independent bookstore founded by Ben Franklin or Abe Lincoln’s widow has closed down after so many decades of service to the community because they couldn’t compete with e-retailers and their infinite catalogs of ebooks. Those stories are sad, but they’re also nothing new. Ten, fifteen years ago, I constantly read about small bookstores being wiped out by competition with big box retailers like Barnes & Noble and Borders.
Those little guys who survived this long are tough. They’ve mastered their niche and sell an experience, not just books. I don’t doubt they’ll continue to suffer casualties, but if anyone can do for book lovers what the vinyl-selling record stores have done for music lovers, it’s the independent book stores.
The big box stores are in a world of hurt. Contrary to what some seem to think, Borders wasn’t killed by ebooks. Its death was the result of better than a decade of bad management, revolving door executives, and a shortsighted strategy. Borders didn’t even twig to the idea that the Internet was real for several years and actually hired Amazon to run their online bookstore. Ebooks certainly pulled the plug on their life support, though.
Big box booksellers that don’t have Borders’ problems are struggling, though. Books-a-Million has seen better quarters. Even Barnes & Noble, despite the success of the Nook, is feeling its brick-and-mortar stores as an anchor holding them back. In fact, several of their big investors are trying to convince B&N to spin off its Nook business into a separate company unimpeded by those mega bookstores.
And why not? We saw what mp3s did to record stores. Despite all the protests about the magic of a book in your hand, the writing is on the wall for the big chains. The independent bookstores are more likely to fill the niche of “cute little specialty stores” than huge stores with tremendous overhead.
Libraries
These fine folks have gotten caught in the crossfire. Publishers want to keep them from loaning books except under often draconian restrictions. Retailers like Amazon would love to use them to help sell ebooks. Local governments strapped for cash don’t seem to believe we need libraries anymore.
This annoys me because I pretty much grew up in my local library. Libraries provided me with the opportunity to discover books when I didn’t even know what I was looking for. I could dabble in subjects until I found something worthy of obsessing over. Rather than being punished for reading lots of books (as those of us with a reading addiction ultimately are when we have to buy our books), I had an all-you-could-read buffet of content. If I didn’t like what I was reading, I could put it aside and return it with no tears shed or pocket money spent.
If it weren’t for the toxic environment they’ve been plunged into, I actually trust librarians and libraries to adapt to the new technology far sooner than I expect publishers to.
Online Retailers
Amazon would obviously win big if the Department of Justice rules against Apple and the 5/6ths. They’re a force to be reckoned with and not just because of the predatory practices their competitors accuse them of. They have, hands down, the best selection of ebooks and the best site for finding them. No one else even comes close. Barnes & Noble’s online store is a 1980s-era library card catalog by comparison (it’s all there if you know exactly what you’re looking for), and Apple’s iBookstore is the magazines spread on the table in the waiting room of the dentist’s office (there for the benefit of anyone who has 20 minutes to kill and doesn’t feel like playing Angry Birds).
This, incidentally, brings me to those same non-Amazon retailers. In the short term, this might be a setback for them, but I sincerely hope they’ll regard it as an opportunity to take a hard look at their ebook sales model. Amazon didn’t build its vaunted near-monopoly on ebook sales on underselling the competition. They did it by finding innovative ways to convince people that an ereader was a good idea and encouraging them to buy tons and tons of ebooks. Competing with that is going to take more than “favored nation” and “price matching” clauses. In fact, those shenanigans are really just holding them back from doing something innovative of their own.
Indie Authors
I touched a bit on authors with books published through trade publishers. I’ll admit to some small reservations about how a decision against Apple will impact self-published authors.
I remember all too well that the now fairly standard 70% royalty rate came into being shortly after Apple made its deal with the 5/6ths and forced Amazon to accept the agency model. The immediate effect of that change was a kind of gold rush as tens of thousands of authors flocked to self-publish with Amazon. Other retailers soon matched that rate, and now all those authors – successful, failed, or otherwise – regard it as entirely normal.
This is a huge change from the 10-15% royalty authors earn from sales with trade publishers. It doesn’t help that there have been several high-profile examples of publishers misreporting ebook sales to the disadvantage of the authors. We’ve seen a few authors jump ship, and some of those (*cough* Konrath *cough*) have gone on to preach self-publishing convincingly to the entire Internet. There has been no small amount of speculation about what will happen the first time a big name author decides to self-publish simply because it pays so much better (an argument I don’t entirely agree with, though it isn’t without merit, either).
I wouldn’t be surprised to learn that Amazon was trying to achieve a few things by offering this huge royalty. 1) Bring in a flock of books in the $2.99-9.99 price range to convince readers that this is a reasonable price for an ebook. 2) Lure established authors to self-publish, allowing Amazon to cut out the stubborn middle men (i.e. the publishers). 3) Create their own stable of authors who, having proven themselves at self-publishing, can easily be persuaded to join Amazon’s publishing arms. So far, events seem to lend credence to this.
What happens if Amazon wins in all this? Will they continue to be so generous to indie authors? It’s not like indie authors are in a position to collectively bargain with Amazon. If Amazon says royalty rates are dropping back to 35%, by gum that’s what will happen. Will they put the screws to the publishers, forcing more concessions from them, or will it be largely business as usual?
Readers
In the end, it seems like readers have the most to gain – especially in the short term. If Apple and the 5/6ths lose this battle, the price of ebooks will almost certainly go down. It will make indie authors less attractive to the average reader. A $3 book seems like a bargain when its competition costs $12.99-$14.99, but that is less the case when the gatekeeper-approved and edited book costs only $5 or $7.
In Conclusion
In the early part of 2010, I started telling people the next five years of publishing were going to be extremely interesting. We’re only about halfway through those five years, now, and while this has been an endlessly fascinating 30 months, I don’t think we’ve seen the end of these changes. A few things I expect we’ll see before things stabilize:
End of DRM: Eventually this old media will learn the lessons it took the RIAA ten years to figure out. This stuff locks customers into a single ebook platform, which is bad for everyone except the one who owns that platform.
Subscription Models: Speaking of libraries, the super-readers out there would pay good money for an all-you-can-eat model. All the books I can read for, say, $10-15/month? An end to buyer’s remorse? Yes, please.
A Sane Library Policy: The current state of affairs is silly-broken. Someone needs to meet the libraries on their own terms. Libraries breed future customers – not to mention future authors and employees. Punishing libraries for letting patrons read books is a bit like mandating nationwide sterilization and then wondering why there aren’t any young workers to replace workers who have to retire. An institutional subscription model might go a long way to help with this.
That’s my read of the tea leaves, in any case. There are plenty of people arguing about this stuff, right now.