2016/04/02

A Defense of Big Publishing?

Sci Phi Journal editor, 2015 Hugo nominee, and 2016 Hugo contender Jason Rennie raises some valid questions about my previous post on how big NY publishers are killing the traditional publishing industry.

Hi Brian, 
Just a thought (and a defense that might be offered so hopefully worth considering). 
Big 5 publishers make up a small and diminishing number of sales relative to indie publishing. 
Alright, the raw numbers say that. 
But, if big 5 publishers produce 50 books a year, and indies produce 50 bajillion, then all things considered, based on the shelf space occupied you would expect indies to sell better than big 5 and the graphs treat all books sales as "1 sale" without correcting for the price of the book. It is harder to sell a $15 ebook than a 99c one, but at the same time, different people buy them for different reasons. 99c is a throw away price. 
Do people come back to the 99c author and buy the sequels? 
Is the market shrinking, growing or holding steady? If it is growing, then the big 5 could be doing "About the same" while indies are picking up the new authors. 
Are the big 5 authors earning out their advances? That is the real question to find the answer too. 
Also, how do indies do at the higher price range? 
None of this should be considered a defense of the big 5, but there might be explanations for the apparently tanking sales that aren't actually tanking, even though that is the conventional wisdom from the figures. 
And the conventional wisdom might be right, they could be circling the drain and their ideological bias could be a huge part of it. But perhaps there is another explanation. 

Jason, being a philosophical and fair-minded gentleman, poses incisive and pertinent questions about the current status of publishing. I shall do my best to answer in kind.

Jason Rennie: But, if big 5 publishers produce 50 books a year, and indies produce 50 bajillion, then all things considered, based on the shelf space occupied you would expect indies to sell better than big 5...

Brian Niemeier: The concept of  "shelf space" is meaningless in digital sales. Shelf inches are definitely a concern in print publishing, where the amount of bookstore real estate devoted to an author's book is a reliable measure of success.

The eBook market isn't just in a different ballpark. It's a whole different sport. In a world of unlimited shelf space, discoverability is what drives sales. So one could just as validly argue the reverse proposition--that the Big Five's superior marketing money, power, and reach should give them an insurmountable sales lead over the masses of obscure self-published authors with a fraction of the resources and no representation.

And you know what? The Big Five did outsell indie authors until rather recently. See this post I wrote about how the Big Five and indie authors have switched places in terms of Kindle Store market share in the past two years, and check out the Author Earnings figures.


JR: It is harder to sell a $15 ebook than a 99c one...

BN: Yes, exactly. And the Big Five know this. Yet they insist on selling eBooks for $15.00, or even more.

seveneves $1799
Attention, Neal Stephenson fans: you are being had.
I've written about eBook pricing on more than one occasion. For those who are in a hurry, here's the upshot:

  • Optimal eBook pricing (highest profit for authors and publishers) falls between $2.99 and $9.99. That's why Amazon, the folks with the best eBook sales data, reward books priced in this range with double the royalty rate.
  • NY publishers know that pricing eBooks in this range maximizes their earnings, because Amazon told them so during the Hachette dispute.
  • The fact that the Big Five ignore Amazon's advice and knowingly sell eBooks at inflated prices means that they're not interested in maximizing earnings for themselves and their authors.
  • Instead, big publishers are jacking up the prices of their eBooks to artificially slow the eBook market and protect their monopoly on paper distribution.
  • Thus screwing authors and readers. 

JR: ...different people buy them for different reasons. 99c is a throw away price.

BN: According to my research, readers who buy $15.00 eBooks fall into two categories: 1) die hard fans who are willing to pay a premium for their favorite author's work; 2) eBook consumers making uninformed decisions.

Thankfully, the second group is rapidly shrinking.

And "throw away price" is a rather loaded term. Authors price eBooks at $0.99 for many reasons. Sure, it can be a throwaway impulse buy price. But it's also a promotional price or even a regular everyday price that earns some writers decent money.

I've offered Nethereal for $0.99 as an experiment before, and it coincided with a sales boost that continued long after the eBook returned to its regular price.

In my experience, Larry's rule about free applies to $0.99: if you're gonna do it, have a plan.


JR: Do people come back to the 99c author and buy the sequels?

BN: That depends on the book, particularly on whether it's good or not :)

Again, in my own limited experience, the answer is yes.


JR: Is the market shrinking, growing or holding steady?

BN: According to Amazon themselves, the eBook market is growing.


JR: If it is growing, then the big 5 could be doing "About the same" while indies are picking up the new authors.

BN: You're right that such a scenario could be the case. But Publishers Weekly and Nielsen BookScan reports say that the Big Five's eBook sales are slowing.

At the same time, I'm convinced that your theory about indie picking up new authors is correct.


JR: Are the big 5 authors earning out their advances? That is the real question...

BN: It absolutely is! And the answer I've received from every source--in this case I'll cite the New York Times--is a resounding No.

All levity aside, the consensus among authors, editors, agents, and publishers I've researched is that fewer than half of all traditionally published books earn out their advances. (Interesting side note: among the least likely books to earn out are blockbuster titles by big name authors who get seven figure advances. Most A-list writer's careers are supported on the backs of numerous profitable mid-listers.)


JR: Also, how do indies do at the higher price range?

BN: To be honest, I haven't given that question much thought, since my focus is on giving my readers the best value I can.

But it's a just question, so I'll give it my best shot.

The only example I have ready at hand of an indie author who sells at the higher end of the optimal eBook pricing spectrum is Mike Cernovich.

His flagship title, Gorilla Mindset, sells for $9.99 in eBook format. It's an apples and oranges comparison to genre books, though, since Mike writes nonfiction. He does meet the criteria of a self-published author who does well at a higher price point, since so far he's sold around 15,000 copies.

This example relates to my comments on $0.99 vs. $15.00 eBooks. How much readers will pay depends largely on the strength of the author's brand, whether that author is traditionally or self-published, and Mike's brand is incredibly strong.


Conclusion
Thanks to Jason Rennie for taking the time to basically edit my earlier post for free. He brought up some highly relevant questions.

While statistics can certainly lie, the weight of the available evidence convinces me that the traditional publishing model as practiced by the Big Five is dying. There are several reasons for their decline.

  • The paradigm shift in media from print to eBooks has undermined the Big Five's traditional business model, which relied on dominance over paper distribution.
  • This shift is being accelerated by NY publishers' monolithic ideological bias.
  • Artificially inflated eBook pricing intended to protect the Big Five's lock on print is only driving more readers and authors toward indie.
  • Most trad publishers' archaic business practices, including unconscionably low royalties, paying authors only twice a year, lack of accounting transparency, a strange attachment to Manhattan offices with outrageous rents, reliance on brick and mortar stores, etc. are keeping them from adapting to the new market.

I could go on counting the Big Five's sins, like the devolution of editorial responsibility from acquisitions editors to editorial interns to agents, but the point should be clear by now.

NY publishers stand guilty of dereliction of their duty as cultural custodians. They've helped to degrade the quality of popular fiction and have made it fiendishly difficult for all but a few favored outliers to make a decent living as a writer.

Indie offers hope of emerging as an equalizer, but right now the sage advice offered to traditional authors applies to self-publishers as well: don't quit your day job.

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