“Oops, he did it again.” Turow strikes twice.

I am forced to wonder, after reading this latest interview with the noted president of the Author’s Guild, if the man has actually a) bought any books in the last decade, b) listened to any of the writers he is supposed to be supporting about what they’d actually like, or c) thought for fifteen seconds about what spills from his fingers onto a computer screen before pressing “send” on interview questions.

Because frankly, what he wrote “don’t make no sense”. But here’s the article, so you can see the whole bit yourself.

I hate to beat on the guy twice in a row, but really – I don’t understand why someone who so obviously lacks even a basic grasp of the industry is in a position he’s in.

Examples of inanity:

The Guild’s beefs with Amazon became pronounced over the issue of the resale of new titles some years ago. This was something that Amazon pioneered. They would sell you a [just-released] book on Day One, buy it back from you on Day Two, and then resell it to another customer on Day Three. This was legal, but certainly not what anybody ever intended.

Traditionally, in hardcover, that’s been basically a split of the proceeds between the author and publisher. (An aside: That’s something we’re fighting with publishers about in the digital world.) So Amazon decides to go into competition with the publishers by reselling the book they just bought. The publisher gets paid nothing, and neither does the author. It’s a pure profit for Amazon.

Now, the reason you don’t see used bookstores within new bookstores is that the used books compete with the new books and the publishers supplying the new books would object.

OK, wait a sec here. My local B&N has had a HUGE used book section for as long as I can remember. They’ve been doing this longer than Amazon has been around. Not only that, but this is not an uncommon practice at B&N superstores. And yes, Scott, they are quite happy to buy back the hardcover I bought a couple of weeks ago (for a fraction of the price) and resell it at a profit.

This isn’t some new gimmick Amazon came up with. B&N has been doing it since before there was an Amazon.

Oops.

Leaving aside the fact that this sort of buy back for books was not an Amazon innovation, there’s also the bit that this is not unique to books. Video game stores have been doing buybacks for as long as Gamestop and EB Games have been around. And while they’re not doing as well as they once were, that has more to do with game-buying moving online (shipped to your home) than it does any buyback system. Those game stores make a huge profit reselling used games, yet video games as an industry are still a booming business.

Amazon bought a POD service called BookSurge. Then they informed their customers — university presses and some other publishers who the Guild had organized to do POD for Authors Guild members — that they would not list their books on Amazon’s site unless they paid BookSurge more for their services.

True or false, Scott?

FALSE!

Amazon did buy BookSurge, but has consistently LOWERED prices for their services. In fact, Amazon now offers print on demand services through Createspace for less cost than any other POD printer in the US. I know. I’ve looked. Nobody else is even coming close except Lightning Source (an Ingrams company), and they cost more than Createspace.

Amazon taking over BookSurge was a huge boon to the small press industry.

Oops!

So Amazon says, “We’ll pay you the same amount we pay you on a hardcover.” So publishers think that sounds fine, how can they complain about that? They agree and are then stunned when Amazon announces that they’re going to sell every e-book at a loss, for $9.99. That’s an average loss of $4 to $5 a book.

Why would Amazon do that?

I suppose they could argue they were doing it to sell devices and that may well have been one of their intentions. It had the additional benefit of making it much harder for any of their competitors to enter the market.

So, let’s see. Publishers make the same income. Writers make the same income. Amazon offers books at a loss to them, in order to build market share.

Why is this a problem?

First off, the only people losing money on those sales was Amazon.

Second, anyone else was free to copy their model, lose money on sales, and compete. Since we’re talking about ebooks here, the big competitors are B&N (who could have done the same thing – less depth of pockets would have stopped SOME of it, but they could have competed well with some work), Apple, and Google. OK, B&N might have had some rough times. But Google and Apple both have MUCH deeper pockets than Amazon. Trying to say they could not compete with Amazon’s price cuts is a little ridiculous. Of course they could.

The real issue involved was that publishers were afraid hardcover sales would crash; and they had too much invested in the print infrastructure, and could not afford to have that happen. Thus, price protectionism was initiated.

The stunning thing here is that Turow is favoring the publishers’ move to agency pricing, which cost both publishers and the authors he is supposed to be representing tens of millions of dollars. Because when they went to agency, the publishers involved gave up income on books. The publishers earned less; therefore the writers earned less. The publishers were happy to soak that loss to retain print sales. The writers - and the Author’s Guild – ought to have been outraged.

Most writers are.

You couldn’t read all those books you bought from Amazon on a competitor’s device — you can now, if you have an iPad, but you couldn’t then.

Yeah, actually, you could. The Kindle iPhone app appeared in March 2009. The app also worked on the iPad, when it was released a year later. Yes, the iOS Kindle app was around for a year before the iPad existed. No, Scott Turow has no idea what he is talking about. Again.

Oops.

Barnes and Noble developed the nook because they really had no choice but to compete with Amazon.

No, B&N created the Nook because they recognized that ebooks were going to largely supplant print. They realized this belatedly, and were therefore well behind the curve. If B&N had been more on the ball, and launched before Kindle, we might have had a 90% Nook majority in the early market, retaining 65% today, and Kindle in the minority, rather than the other way around. Firstcomer to new tech is a big advantage, and Amazon was the company to first create an outstanding combination of retail platform and decent device.

One way that 25 percent of net became the standard royalty for e-books was because publishers said, “We all know they can’t go on selling e-books at a loss forever and sooner or later this pricing structure has got to change.” They told authors they couldn’t agree to a different royalty because everyone knew that Amazon wouldn’t be paying them $14 to $15 per title indefinitely.

First off, those prices are flat out ridiculous for ebooks. There are no returns by bookstores, which account for nearly half the publisher’s share of hardcovers. There’s no print cost. There’s no shipping costs. The fixed costs all remain: but publishers should be able to produce ebooks for less than hardcovers and still pay authors a respectable amount.

To wit: there are small presses out there producing excellent ebooks and print books, with ebooks selling for about $6 a book, and giving authors 70% of net (50% of cover price). The company I am thinking of has EVERY book they produce hit the top range of the bestseller list for its genre.

If they can do that, why can’t big publishers? Feeling a little bloated, are they? Maybe time to trim some of the fat, get lean, mean, and back in the ring. Publishing was a business able to coast along for far too many decades. Honestly, it’s about time something shook things up a bit.

You’re implying that Amazon planned eventually to use the consumer’s habituation to $9.99 books to force publishers to charge Amazon lower wholesale prices for books. They’ve tried to do that recently with some small presses, removing their titles from Amazon unless the presses agree to sell their books at rock-bottom wholesale prices.

This was actually part of a question from the interviewer. No bias here. Again, false information. NO small press has had this happen. One distributor was recently refused the renewal of a contract with Amazon. They have not disclosed the deal. They have not disclosed the details at all.

But since every small press is free to publish direct to Amazon at 70% royalty on ebooks, it’s hard to see how this loss hurt any small publishers. Did it hurt that distributor? Apparently it did. But all the small presses which used to distribute with them can simply go direct to Amazon instead, cut out the distributor, and make more income – for very little (10 minutes or so per book) additional outlay of time. I feel bad for the people working at the distributor, but that is the nature of disruptive change: some business models will become invalidated. Unless distributors can think of some massive new benefits to add to the chain, or cut their fees to a fraction of what they were for print, they simply aren’t necessary for ebooks.

Oops.

The other thing Amazon could have done once they had the market to themselves — and this is virtually inevitable — is that they would have raised prices to consumers.

That’s part of the less-known history behind anti-trust laws. Once a large company has spent its capital to fund predatory pricing and drive its competitors out of business, there’s no reason to keep selling for cheap. The low prices don’t last.

Right. Look, if what they’re into is maximizing profits, then if they were to have a monopoly there’d be no rationale not to use the monopoly power to increase prices to consumers. Now, if I were on the other side, working for Amazon, I’d say “Show me where I’ve done that.”

Presumably, they haven’t done it yet because they haven’t achieved the monopoly yet. Historically, that’s what monopolies always do.

First off, somehow, Turow is missing that Amazon’s market share has shrunk from over 90% to around 65% or so over the last couple of years.

Second off, can he please name examples of companies with 2/3 or so market share who suddenly raise prices?

Google has gained a 2/3 share of internet searching. Did they begin charging more? Apple has a 2/3 share of the tablet market. Did the iPad suddenly shoot up in price? Microsoft has a big share of the operating system market, but as Konrath already pointed out, they’ve gone down in price, not up (taking into account inflation) since they started selling Windows.

So what companies out there got to a 2/3 market share and then suddenly kicked the prices up?

Wait – what would happen if Amazon suddenly got to a 90% market share and then kicked up prices? Take a guess. Readers would all go someplace else.

Amazon is a market leader because they have excellent prices, excellent service, and arguably the best retail site on the internet. The constantly innovate, and they consistently work to try to bring costs to consumers DOWN. They do this because they know that the very instant they stop doing it, some smart kid is going to start a new company in their garage – just like Amazon started – and eat their lunch.

Amazon is not going to raise prices for consumers. Amazon cannot afford to raise prices for consumers. Amazon wants to keep its customers, so it will do everything in its power to keep their costs to customers as low as possible. Even if it means cutting publishers out of the loop because they are insisting on obscene prices for ebooks, and going direct to writers instead. Why do you think Kindle Direct Publishing is so important to Amazon? It’s a means to get inexpensive ebooks out there, after publishers refused to play ball.

And I think a world in which online book selling is driving bookstores out of existence is a pity.

Sad, but true. Physical bookstores can’t compete with online ones. Not just for ebooks, but for print as well. They simply can’t do it. Online bookstores are better for the consumer, or they wouldn’t be showing preference for them over physical bookstores. Like music stores and video stores and camera stores, the brick and mortar bookstore is being phased out by digital change. I feel nostalgic about it, too. But the correct move is to adapt your business model and move on. Nothing Scott, publishers, Amazon, or anyone else can do is going to save brick and mortar bookstores at this point. Books – print and ebook – are moving online. Adapt, move on.

New authors traditionally are nurtured by bookstore personnel, especially in independent bookstores. These people literally hand sell books to their customers, by saying, “I’ve read this. I think you’re going to love it.” Not to mention the fact that a bookstore is a small cultural center in a community. That’s definitely a loss.

I am left again wondering when the last time Turow bought a book was. The average B&N employee seems to be working there because it paid two bucks an hour more than McDonalds, not because of any great love for or knowledge of literature. I’m sure there are some awesome exceptions out there. But frankly? Small bookstores don’t carry enough books to compete. Big bookstores don’t have employees who care. Readers prefer shopping online: preference shown by where the numbers are shifting for sales of books.

The idea that new authors are “nurtured” by a bunch of B&N employees who’ve never heard of them or by a small bookstore owner who refuses to buy copies of non-bestselling books is ridiculous.

The idea that bookstores are an irreplaceable cultural center is only slightly less so. And that’s because some of the good ones really are. But if they ARE cultural centers, they’re likely to survive anyway, because they will have value to people, therefore people will shop there. The stores which people choose not to shop at aren’t having very much cultural value to them.

Again, my concern is for the sake of literary diversity. If the rewards to authors go down, simple economics says there will be fewer authors. It’s not that people won’t burn with the passion to write. The number of people wanting to be novelists is probably not going to decline — but certainly the number of people who are going to be able to make a living as authors is going to dramatically decrease.

Don’t worry, Scott! Right now, thanks to Amazon and their self epublishing initiative, and their lower prices for POD printing, there are more authors earning a living wage than at any previous time in human history. There are thousands of self published books selling over a thousand copies a month right now. Remarkable! Across fiction, the ebook lists are dominated by self published books. It’s thrilling! More authors writing, more diversity than ever, more writers earning a living from their work, instead of the tiny wage paid by the major publishers.

Literature is not in a decline, but a renaissance. Largely thanks to the actions of one company.

Will Amazon always be the writer’s best friend? Perhaps not. But for the last three years, they have been a staunch ally.

As for Scott Turow, I’m going to assume that the bits of libel he had printed in that interview were accidental, the result of ignorance of the industry on his part, and not actual malice. But why does the Author’s Guild continue to have as its president someone who is that ignorant of the business of publishing, and is actively campaigning against the interest of writers?

12 Comments

  1. I think what Turow’s comments reflect is a bifurcation between a very small group of privileged writers like Turow who never have to worry about getting published, get substantial advances, and who can be assured of front-row-table placement, and the hand-selling he seems to admire so much, and all the other writers in the world. Mainstream publishers now cater to that small subset of celebrity authors since they represent a sure income, but as more and more writers realize they can take control of their own distribution and future without the middle-man, the legacy publishers will no longer be needed, especially as bookstores (where, I beg to differ with Turow, newbies were NEVER promoted) fade away. That scenario scares the crap out of those who benefit from the old system because it means much more competition for attention.

    I notice in the AG’s latest bylaws change they are becoming more open to indie writers. Assuming the change passes.

    Reply
    • I tend to agree, Eric. But I have to wonder at his fear a little. I’ve never read one of Turow’s works, but I have to assume he’s a decent writer to have attained the level of acclaim he has. If he’s a good writer, then he should continue to do well, with or without being hand-sold at bookstores. He simply needs to step out and engage his fans a bit, and he should do fine online.

      But yes, there’s a definite sense of “I did fine under the old regime; therefore change is bad”.

      Interesting news about the AG’s bylaws; do you have a link about that? Would like to read what they’re considering. I heard a similar rumor on a podcast last Autumn (“Writing Excuses”) regarding SFWA considering changes that would allow indie productions that made strong sales to count for membership. It IS a bit silly when 2/3 of the top SF ebooks are self published to disallow most of those writers on the basis that they don’t have a contract with a small, select group of publishers.

      In the long run, the assorted writing groups will all go down that road, I think. Either that, or they risk becoming irrelevant as those writers found their own groups instead.

      Reply
  2. My wife is a member. I didn’t save the explanation sheet, but if I remember correctly instead of just limiting memberships to those published by traditional publishers (my wife writes for children and middle grade readers and has had books published by legacy types) they will now permit members to join who have earned XX number of dollars or more from writing. The amount was to be determined by the board. This assumes the bylaws change is approved by the members. We voted for the change, of course. Interestingly, Sheila’s latest book, Waiting to Forget, was published by Stephen Roxburgh’s (he was a top editor for Farrar Strauss and Giroux for many years, then started Front Street) new venture namelos.com. He has a very different kind of contract and sees ebooks and POD for paper copies as the way of the future. Anyway, his contract is very different, 50% royalty to the author but no advance and when the AG saw it they had a major hissy fit.

    Reply
    • Logical that they’d have an issue. There’s some “most favored nation” clauses on many book contracts which make giving “name” writers higher royalties problematic. So it’s pretty standard to give those writers exceptionally high advances instead. When a writer gets a seven figure advance, it’s probably in excess of what they are expected to earn out in royalties, for instance. This is the way big bestsellers are differentiated out from the pack.

      Put all earnings into royalties, and suddenly every book is on an even keel. Suddenly there’s no advance there to create an impetus for publishers to promote a book, too – advance size is often a good measure of the expected promotion a book will receive.

      Ridan Press offers 70% of net on ebooks. Best of any publisher I know of, and as far as I know ALL their ebooks hit the bestseller list for their respective genres. They promote the heck out of their books. If a tiny shop like Ridan can do that, I don’t think a larger press should have issues (with economy of scale involved) managing to match them.

      If they wanted to.

      Reply
      • All that said, reviewing the Namelos website, the system they use raises some serious questions in my mind. The don’t accept unsolicited submissions – but they WILL consider your work if you enter their grossly overpriced editorial process. Ouch.

        They might be totally on the up and up, but it reads as fishy to me.

        Reply
        • What he’s done is different and it’s caused much confusion. He will accept any manuscript for editorial evaluation. If he decides to publish your work, the review fee is returned. Don’t forget Roxburgh is an extremely well-known editor who is doing nothing different than if you pay several hundred $ not including travel to take your manuscript to an SCBWI (Society of Children’s Book Writers and Illustrators) meeting where editors will evaluate your work and make suggestions except that in that case you don’t get any money back. And at SCBWI conferences you have to pay extra for a 10 sentence review of your work. Now that IS overpriced). For that $250 Roxburgh charges, you are getting a serious critique and evaluation of the work. An agent is either up or down with no editorial suggestions. In my wife’s case, he returned her money and said he wanted to publish the book. He has found other authors through workshops etc. Those people essential paid thousands to get their work reviewed. Little difference except the online process you consider overpriced is much, much cheaper to get the advice of a rather famous editor. (He deals with children’s books exclusively.)

          Unfortunately, the practices of agents like Scott Meredith (as written about by Lawrence Block) have tarnished any idea of paying for editorial advice. Conferences with editors have become a very expensive alternative.

          Reply
          • Sounds pretty reasonable, with that additional information. Thanks! =)

        • The Ridan model is really interesting and bears some similarities to namelos except that Roxburgh gets his authors before they are published. I’m a little uncertain as to why successful self-published authors would feel it necessary to go with Ridan since they would already appear to be doing well. If I understand their model correctly, they chose authors who are already self-published. I notice they currently are not accepting any submissions according to their site.

          Reply
          • The attraction to the Ridan model, I think, is Robin Sullivan’s marketing expertise. Her ability to take a book selling a few hundred copies a month that she sees has promise, and boosting it to sell five thousand copies a month is viewed as valuable, and logically so.

  3. “Again, my concern is for the sake of literary diversity.”

    Not the sake of authors?

    I wonder how he thinks earning higher royalties and a market with less defined genre boundaries is going to hurt literary diversity.

    Funny stuff about how he thinks bookstores are nurturing new writers. If that were true, bookstores would have been unusually receptive of vanity press productions in the past. You know, instead of treating them like plague rats.

    Reply
  4. Thanks for this post. All the ranting and wailing against change drives me nuts. “Adapt. Move on.” <- yes. How hard is this concept?

    I'd also like to point out that the advent and growth of digital-first presses have also opened up huge opportunities for new and midlist writers. With lower overhead, digital-first or digital-only presses can afford to take gambles on cross-genre books or other stories that don't have clear existing marketing niches. This has been a wonderful thing for many authors not of Turow's lofty level.

    Reply

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  1. Top Picks Thursday 03-22-2012 « The Author Chronicles - [...] speaking out against Amazon and the DOJ investigation of agency model pricing. Kevin O. McLaughlin counterpunches Turow’s arguments, and …

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