Thursday, November 17, 2011

News from the Trenches: New Developments in the Publishing Biz by Linda Rohrbough

In September, I was in St. Louis at a fascinating discussion on the publishing business at Bouchercon, a mystery conference. It was a panel discussion with two editors, two writers, and a bookstore owner.
One of the editors was Neil Nyren from Penguin/Putnam. He’s editor to a number of best-selling authors, including Patricia Cornwell. The bookstore owner was Gary Shulze of Once Upon a Crime books in Minneapolis, one of the top independent bookstores in the country. The authors were Eric Stone and Abigail Padgett, and the other editor, Kate Grant, was from a small press. And the discussion was around the future of books and publishing and what’s happening in the industry.
Lots of interesting stuff was said. But two things stood out. The first was a discussion about the expenses behind production of ebooks. A librarian stood up and asked why, if ebooks are so much cheaper than paper books, ebooks don’t cost less than paper books. And Neil and the other editor took exception to the assumption that ebooks are cheaper to produce.
One interesting fact stated by Neil was hard cover books cost about two dollars each to produce. Yep, you’re hearing me right. Two buckaroos. For hard cover. (Imagine how cheap the paperbacks are.)
Now that figure assumes a large quantity, but still it’s a lot lower than most people would assume. Neil said the expense in producing books is in the editing, advertising and promotion, cover art, and royalties. Of course, everyone forgets cover art when it comes to ebooks. I also got the impression from the discussion that readers assume production costs will be borne by the paper version, so the ebook is essentially free. Clearly, it isn’t.
But what was even more interesting were the statistics Neil mentioned. Right now, he said ebooks account for twenty percent of sales. As a consequence, big name authors are facing lower print runs, which used to be the industry standard for the commercial success of an author. The higher your initial print runs, the better you’re doing. My friend Debbie Macomber is up to one million on her initial print runs, last I heard. That number may be higher now.
That initial print run is significant because publishers don’t print more books than they think they can move in about three months. This is because bad things happen to stored books. They get yellow, bugs eat the paper, humidity puffs them up, and all sorts of other unpleasant circumstances can ruin the final product.
Neil said his authors faced a certain amount of dismay about their print runs being lower, until they learn that the ebook sales are higher. And then they’re okay because the industry standard royalty right now on ebook sales is twenty-five percent, which is a lot higher than the royalty on paper books.
The last statistic I heard from the American Association of Publishers was that ebooks accounted for six percent of sales earlier this year. But it takes time to gather those stats, so the numbers are usually behind what’s actually happening. And given the exponential growth in sales of ebook readers, it would stand to reason that ebooks would also experience exponential growth.
As an aside, no one, it appears, trusts Amazon much. Part of the problem is there’s no third party auditing of ebook sales. Another part of the problem is Amazon appears to be encroaching on everyone’s territory.
Which brings me to my second major take away:  that Amazon will be frozen out of the market anywhere it can be, if book retailers have anything to say about it. What brought that topic up was the mention of Barry Eisler.
Earlier this year, best-selling author Barry Eisler started a stir by announcing he turned down a seven figure offer from his publisher to self-publish instead. Partly because he could get to market faster with the book, which was already written, and therefore earn more. But one of my friends close to Eisler said wait, that there was another deal in the works. And sure enough, Barry didn’t self-publish after all. Instead, he and Amazon.com announced a deal where they will publish Barry’s new book on Kindle and on paper through Amazon’s CreateSpace. So CreateSpace has become a publishing house instead of a vanity press.
Here’s where it gets interesting, because it took me by surprise. The bookstore owner Gary Shultz, shook his head, looked down and said, “We miss Barry.” Like Barry died. As the discussion went on, I realized that in a way, Barry had died, because Gary also said they have no intention of carrying any books published by CreateSpace. And I suspect most of the standard retail distribution outlets in the country are going to feel the same way. Amazon is their biggest competitor, so they are not going to share.
Did Barry just knock himself and his books out of the retail distribution channel? And if readers married to hard copy can get what they want from CreateSpace, will they care that they can’t get the titles from their favorite local book distributor? Will it go so far that bookstores will boycott all Barry Eisler’s titles, and not just those published by CreateSpace?
Barry didn’t always have this attitude. His initial book published by Putnam had national distribution so he took several weeks driving the U.S. alone promoting the book. He introduced himself and signed stock in every bookstore he could reasonably get to. He told about it at a writer’s conference I was speaking at in Amarillo in 2002, and the number of bookstores numbered in the hundreds. So he believed in the retail channel, at least at first. But then his books took off, he got a movie deal, spent a year in Japan during the filming, and so on. Clearly, he’s changed his mind.
Debbie Macomber told me she romances bookstores. She learned from watching her father, who made furniture and built relationships with furniture retailers. This isn’t new. Author Jacqueline Susann (Valley of the Dolls) was known for going to the distributor warehouses early in the morning with boxes of fresh donuts for the drivers so they would be more inclined to stock her book on their routes.
Barry’s move begs the question:  Are the days of building relationships with retailers and distributors ending? I don’t think so. But Amazon better watch their step because if the regular distribution channels get the chance to take them out, the carnage won’t be pretty. While Amazon may be too far in the clouds to reach, a single author is much more accessible. My guess is Barry’s move is going to be seen across the retail channels as a bite to the hand that fed him. I think it’s going to hurt him. But, obviously, he doesn’t think so.
Barry is no dummy, though. He is currently offering a short story on his website for free download, with pictures of the locale in Paris where the story is set. Included in the download are the first three chapters of the novel from the Amazon deal. He’s clearly romancing his reader base. Will it work? It’ll be interesting to watch how things shake out. 


About the Writer:  Linda Rohrbough has been writing since 1989, and has more than 5,000 articles and seven books to her credit along with national awards for her fiction and non-fiction. New York Times #1 bestselling author Debbie Macomber said about Linda’s new novel: "This is fast-paced, thrilling, edge-of-the-seat reading. The Prophetess One: At Risk had me flipping the pages and holding my breath." She recently won the 2011 Global eBook Award and the 2011 Millennium Star Publishing Award for her new novel. An iPhone App of her popular “Pitch Your Book” workshop is available in the Apple iTunes store. Visit her website: www.LindaRohrbough.com.

11 comments:

  1. Ok, I really have to comment here. I don't usually and I'm not trying to stir anything but a lot of this actually goes with some things I've been researching recently.

    First, the production costs of an ebook. I went through the whole process, beginning to end, a few days ago just to see if it was as easy as I'd heard it was. Good news! It was stupid simple. All of the software I needed was free. For cover art, I could have paid $19 for the rights to an image but I found one that offered a commercial license as long as the photographer was mentioned and a link to their site was given. I threw it into GIMP to play with the colors and there you go, cover art. The whole thing, start to finish, took an hour. Maybe. If you're using the same cover art for the ebook as you are for the paperback, all you really have to pay for are the additional rights for the image.

    Maybe traditional publishers have something more to worry about? I wouldn't think so, though.

    And onto the second point. Ebook royalties until about 6 years ago were 50% of sales. Yes, that's right, 50% of sales. That 25% that's standard now? That's 25% of the 70% of cover the publisher gets from Amazon, which works out to be about 17.5% of the cover price.

    Here's a link that explains about the profits a bit better: http://kriswrites.com/2011/11/16/the-business-rusch-how-traditional-publishers-are-making-money/

    And as for Amazon . . .

    Amazon doesn't give a crap about being a publisher. They're really trying to set themselves up as a rival to Google and Youtube. If you want it, they want to make sure they've got it. If they can get new authors that other publishers won't touch because they don't fit into a niche by offering them a 70% royalty, why not? And how better to get those authors than to get the bigger names to sign on as well?

    I really think the independent book stores are missing out on some profits to be made by refusing to work with CreateSpace, I really do. People want to support their local indie book stores but if they refuse to carry an author that they can find on Amazon, they're sending that person to Amazon.

    Ok, rant off. Feel free to ignore everything I've said if it doesn't fit in with what you want to believe about the publishing business as it stands.

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  2. Bartholomew ThockmortonNovember 18, 2011 at 4:40 PM

    Nice info...but one thing that constantly amazes me is how everyone points to covers as any kind of an expense.
    There are numerous sites where art and photo rights can be secured for a few dollars.
    Slap on some words with a nice font with some effects, tweak colors for contrast and you have a beautiful cover!
    At least, that's my opinion...

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  3. "And then they’re okay because the industry standard royalty right now on ebook sales is twenty-five percent, which is a lot higher than the royalty on paper books."

    Okay, all the math & # tweaking that's done in these publishing conversations gives me a headache, but if I recall correctly, regular publishers are only paying writers 17.5% for print books, so 25% on e-books does not equate, to me, "a lot higher"--that's not even a 10% increase.

    Even if I'm all wet on the math, I find it rather silly that a bookstore would refuse to place books from CreateSpace. They're just cutting down their available inventory. To a one-stop shopper like me, that means I can't depend on a bookstore to carry the books I need.

    That's why I've made the transition to online retailer. Amazon is the cheapest place for me to get books AND they have a humungous variety. The only times I can think of when I DON'T use Amazon to buy books is if:

    1. It's a used non-fiction title (usually out of print). I can generally find them cheaper via AbeBooks.

    2. It's a specialty item only marketed through a local historical society or some other unique place.

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  4. What if Amazon boycotted the traditional publishers?
    I think articles like this one do a disservice to the whole industry.
    Traditional publishers need Amazon and vice versa. They can and are working together. Let's not be divisive.

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  5. Boy, such hostility. Why all the hate just because some people choose to go a different publishing route than you do?

    In fact, it is now a CHOICE. You don't like having a choice much do you? That's really too bad. As far as losing Barry Eisner, you might notice that he is chuckling all the way to the bank. And bookstore owners who refuse to stock him or say, Ed McBain, whose novels are also owned by an Amazon publishing company are hurting themselves much more than they ever hurt Amazon. Do they REALLY think that customers won't pull out their phone to place an Amazon order when they find out the store doesn't carry the book they want? If they think that, they're deluding themselves.

    The idea of B&M stores "taking out" Amazon is just laughable. It is obviously what you wish would happen and it would hurt a lot of writers, probably including yourself. But your hatred is enough that you'd cut off your nose to spite your face.

    Rather sad commentary on the state of mind of "traditional" writers.

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  6. I think a lot of conventional publishers, authors and booksellers are whistling past the graveyard. The publishing world is changing at the speed of light and those who don't keep up are going to be left coughing in the dust.

    First of all indie authors "romance" their fan-base which can be in the thousands (or even millions) through blogs and discussion groups without the time and expense of driving around from bookstore to bookstore with all those donuts. Second, indie authors can keep their books in circulation for as long as they care to and do not have to fear the threat of being "remaindered" if their book doesn't perform in the allotted 3 months.

    My books are edited, proofed, beautifully designed, and have attractive covers and, so far, I've made back the costs involved in 2 months on average.

    Even if authors publishing through Amazon only have the Amazon customer base to rely on (and they don't but that's another story) that's a massive customer base. Amazon is shipping 4 MILLION of their new e-readers for Christmas. Four million is just the beginning. As an indie author with 14 books (some in paperback, too) available through Amazon, B&N, other online markets and brick and mortar stores, I can keep my prices reasonable, get a much higher royalty, and keep my books available as long as I like. So far in November close to 4,600 of my books have been sold. I'm keeping my fingers crossed for an even better December. Maybe the big name authors are doing better but most of my friends who are trad-published mid-listers are not doing anywhere near as well.

    Digital is the future and indie authors are benefiting from the change.

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  7. Your blog info is highly inaccurate and dated. Grisham stated last week that over 40% of his sales are ebooks--not paper.

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  8. I'm a traditionally published author and also publish my own ebooks.
    In my opinion Neil Nyren is like King Canute trying to hold back the tide.
    The heyday of the big publishing houses is over. Smart operators (publishers and booksellers)will embrace the ebook advancement in publishing and embrace it.
    Those that don't will surely perish.

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  9. As an author who has had some modest success this year publishing my own books, I'll chime in:

    1.Covers. You can play around with GIMP for an hour or two and indeed create...something. You will not create a professional-looking cover unless you know what you're doing. That said, if you're willing to put in some time (measured in double-digits of hours), you can learn how to do a decent job. Many authors do have photoshop skills already to some extent. But a certain level of design sense is also required. All that aside, you can get a really good looking cover done professionally for $100 or less by any number of people, so the cover should not be either a sticking point or identified as a major cost by the Big 6.

    2.As Kort noted, it's really 17.5% of list price, which is $12.99-$14.99 for most Big 6 novels during their first few months. That compares reasonably well to net royalties on hardcovers, so I don't imagine authors will complain too much that ebooks are eating into their income. However, the big question mark is how many authors will decide that what publishers are offering them is not worth the difference between 17.5% royalties from the publishers and 70% royalties if they publish directly? No one really knows the answer, but with distribution far less important with ebooks and with publishers not putting much marketing behind any but the biggest authors, basically authors are accepting 75% less per book in exchange for editing, covers, formatting/upload and whatever other intangibles publishers provide. Since they can pay $1000 up front and get top quality editing, covers, and formatting, the intangibles have to be the reason they're staying. Because even a low mid-tier author will make that $1000 back in the first week or two.

    3.The printing cost of a hardcover is completely inadequate to describe the differences in costs between ebooks and hardcover. How about shipping? How about the cost of returns, which means on average they print 1.5-2x the number of books they get paid for? That $2 probably is actually $4+. And if a publisher tries to tell you that the extra expense of formatting a novel (non-fiction with graphics can sometimes be more challenging) specifically for ebooks is of any significance, you know they are either ignorant or blowing smoke. Take a manuscript you've already prepared for hardcover, and as long as you did said preparation knowing you also had to do an ebook, you're talking a couple extra hours to get the ebook formatted. You can hire someone who really, really knows what they're doing for a hundred bucks.

    4.Finally, backlash against Amazon and its authors. Really? I think that's wishful thinking on the part of both bookstores and publishers. First, if there really is a demand for a book, a store that doesn't carry it will lose profit. Second - in some fiction genres, ebooks already represent 50% of gross sales. It's likely higher, but the only hard numbers we have are from publishers, and doesn't not include the sales from independent authors and small presses. The point is that five years from now, it's likely that paper sales will be subsidiary sales for most fiction genres and ebooks will be the lion's share. Given that fact, any bookstore that believes that boycotting Amazon authors is a winning business strategy is hallucinating.

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  10. First, thanks to all of you for taking the time to comment on this piece. I know your time is valuable and I appreciate the expendature of your effort here.

    I do believe the numbers I heard and reported. For example, my experience is its a lot cheaper for individuals to publish because no one is paying for the time involved. And self-published authors are not counting the cost of the computing power they used, the internet access they have and the time it took them to get up to speed because that's stuff they already have. The corporate world provides all that stuff to their employees, which they count in their costs. So my contention is it's not as cheap as some folks would like to paint it to self-publish a book. However, it costs more to do almost anything in the corporate world than it does in the private sector. I listened to a Microsoft Developer tell how he in one evening with the expendature of $5 did something online that the corporate folks at Microsoft said would take weeks and $40K to accomplish. (And he didn't get the credit for it. He's being billed as stand-up comedy and he is funny. You can see for yourself here: http://channel9.msdn.com/Events/DevDays/DevDays-2011-Netherlands/Devdays054)

    Also, the numbers I reported line up with growth in industry numbers being reported by the American Publisher's Association and other industry groups. So I was comfortable reporting them. If a single author is saying differently, like John Grisham, that's interesting. But it's not what was reported at this meeting.

    But I think the gist here is this is scary news for self-publishers. Because I think they are hoping to hop around the barriers the traditional publishing world has put up and they see Amazon as their ticket.

    I like Amazon as much as the next guy and I buy from Amazon. I was one of the first to sign up for a Kindle Fire and it's sitting down on my night stand. But I didn't understand why I heard so much grumbling from the actual publishers until I realized Amazon is not accountable to anyone. I think I said that in this piece. There's no third party, like a distributor, reporting Amazon's sales numbers to BookScan, which is where everyone goes to see numbers for sales. In fact, even though Amazon provides BookScan services to authors in their Author Central service, they do not provide their own sales numbers to BookScan or to authors who are part of Author Central. And I know that first hand because I am an Author Central author. Folks, my experience is if someone is not accountable to a third party for numbers when it comes to money, that's a danger zone.

    Also, if self-publishing is that lucrative, then why did Amanda Hocking jump ship by signing with a traditional publishing house this year? (Just to refresh your memory, she was lauded this year as among the first Kindle millionaires.) She answers that question on her blog. Three reasons. One is ebook demand created paper demand and getting paper books into distribution was extremely hard. Two, professional editing was a continual problem even though she hird editors. And three, she saw James Patterson had made like 70 million in a single year and she figured she could make many more million by going to a traditional house.

    But this isn't new either. People have started self-publishing and moved to traditional publishing for a very long time. For example, Jack Canfield's first book was self-published, so was "What Color Is Your Parachute," and "Swim With The Sharks Without Being Eaten Alive." But as I was telling someone at a recent writers conference dinner, the only book I know of that's still in print and still being self-published is the "Complete Guide to Self-Publishing" by Marilyn Ross, et al. (Evidently her coauthor and husband Tom is deceased and I was sorry to hear that.)

    But yes, as you've all astutely observed, the game is changing. And it's fascinating.

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  11. A lot of this information I did not know. This has been tremendously helpful. I am in the process of self publishing a book , it is definitely not as easy as I thought it was going to be, but once it is published it will be worth it.

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