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Lakeshore - [publishing] An open letter to Kindle enthusiasts and ebook activists
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Jay Lake
Date: 2010-02-02 05:18
Subject: [publishing] An open letter to Kindle enthusiasts and ebook activists
Security: Public
Tags:amazonfail, books, green, mainspring, personal, publishing, writing
Hello there —

My name is Jay Lake. Many of my novels are published by Tor, a division of Macmillan, including the Mainspring series, and the Green series. Over the past few days, as the controversy between Amazon and Macmillan has unfolded, I've been paying a lot of attention to what the Kindle community is saying about the situation.

Many of you are very, very angry at the prospect of seeing ebook prices rise. Many of you are blaming Macmillan for corporate bullying, and I've seen a number of calls for personal or large scale boycotts of Macmillan titles. I've also seen a number of calls for Macmillan authors to move to another publisher, or accept responsibility for Macmillan's supposed misdeeds.

I'd like to ask you to think about several things as you continue to respond to this situation. Perhaps by the time you read this an agreement will have been reached, and it will all seem moot. Still, this is worth discussion, because the underlying issues behind the dispute of the past few days are not going away.

First, every other one of the big six publishers wants and needs to do what Macmillan has done, simply to have continued viability. They're struggling economically, have been for years. The idea in the Kindle community that Macmillan is playing some unique game here, and therefore should be punished via boycott in favor of the other five publishers among the big six, is almost certainly an error. Macmillan jumped into this issue first, which makes them either the bravest or the most foolish. But every single one of the rest of the big six is watching this very closely, and their own business needs and goals are very similar to Macmillan's. If you as a reader are going to blame Macmillan, perhaps to the point of forgoing their titles, pretty soon you're going to run out of trade fiction to read as the other publishers follow Macmillan, wherever this leads. This strikes me as an unfortunate perspective for a reader to adopt, as the majority of fiction published and the vast majority of 'name' authors published are from the big six.

Second, Amazon in their letter to the Kindle community cited the high end price point of Macmillan's proposal, but didn't cite the low end of $5.99 or talk about the dynamic pricing. This would include older books reaching that much lower pricing point and staying there, which means over time an increasingly large number of ebooks, and eventually most Macmillan titles except the very latest, would be priced well below $9.99.

That second point seems to be an important factor that's being ignored in the outrage by the Kindle community. Many seem to assume that Macmillan is simply lying about lower prices, but why would they? That dynamic pricing model is exactly how print books are priced today, as they go from first release hardback to mass market paperback to backlist. The publisher knows how to manage that, the book buying public knows how it works. And they want your business as a book buyer, whether ebooks or print. Why would they lie about this?

So far as supposed corporate lying goes, note that Amazon was quick to inform you of the high side of the Macmillan proposal, but not of the part of the proposal that benefits you. That's lying by omission, and it certainly fanned the rage of the Kindle community quite effectively. That's a piece if corporate spin which has kept you from seeing the long term advantages to Kindle owners of what's been proposed.

The $9.99 promise was from Amazon, not the publishers. As ebook sales grow in market share, that pricing expectation kills publisher's margins. There's a reason hardbacks aren't priced like paperbacks, and fundamentally it's so publishers can afford to put out the books in the first place. I know from watching your discussion group a lot of Kindle readers will say good riddance to the dead tree dinosaurs, and bring it on, but the big six is where a great deal of the good fiction you read every day comes from. If they gave up, you'd have a lot fewer good books from good authors. The indie press and the self-publishing world are important, but they don't have the financial or administrative resources to publish big name authors, and provide the overall quality of editing and production that the trade press does. Not in sufficient volume to make up for the absence of the big six. Rooted as it is in older business models, the publishing industry simply has not yet produced a viable alternative to the current system. It probably will in time, but that's not the case today.

Third, much of the anger I see is from people who assume that ebook prices are a rip-off because an ebook obviously costs much less than a print book. This is not true on the plain face of the facts. The actual physical costs of a print book — paper, printing, binding, packaging, warehousing, etc. — are less than 10% of the cover price, even in small volumes, and drop to less than a dollar per book for large volume titles such as bestsellers. [ETA: These numbers apply to the trade press. Independents can see physical costs up to the 20-30% range due to lower economies of scale, as well as production quality decisions.] The money that goes into a book is dominated by acquisition costs, editorial costs, production costs, layout and design, art, marketing and business overhead. Ebooks must bear all those same costs as print books.

This doesn't pass the common sense test, I know. Frankly, much of publishing economics doesn't pass the common sense test. I've been a pro for nearly ten years, and I'm constantly baffled by how things work. That doesn't mean it's not true, it just means that if you do care passionately about book pricing, there's a lot to learn before you can understand the ins and outs of it.

People look at the physical object of a print book and see what they're spending money on. But a book is really a story, whether it's being delivered in printed pages, via audio, on a Kindle or other e-reader, or by an author standing up in a bookstore to read. And making those stories available costs money. Just as publishing economics are obscure and nonintuitive, even from the inside, so is the editorial process.

If you don't understand why it costs a lot of money to make a story into a book, go learn about it. You'll be surprised at how many people work very hard to put that story in your hands, whatever your preferred format. And every one of those people has to eat, pay rent, and get through life, just like you do. That means they need to be paid, and that means the book costs money, regardless of the publishing format. Even disintermediation and 21st century publishing models need to account for those processes. Trust me, as an author, the last thing I want to do is deliver my manuscript directly into your hands. What Tor does for my book improves it immeasurably between my keyboarding fingers and your reading eyes.

This is a much more complex issue than Amazon's $9.99 price promise. No one is out to rip you off, or anyone else. Why would I as an author or Macmillan as a publisher want to alienate you as a reader? When we lose you, we lose our audience, and ultimately our ability to make a living telling stories. I don't know who's right and who's wrong about the underlying questions of pricing and distribution. Frankly, neither do Macmillan nor Amazon. Everyone is trying different models, different approaches. This is market innovation in process.

The only way you lose, Kindle readers, is when you turn away from the books and authors you love.

Best,

Jay Lake
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User: barbhendee
Date: 2010-02-02 15:01 (UTC)
Subject: (no subject)
Hi Jay,

I can tell some of this has made you sad. Here's what I've done in the face of all this ickiness . . .

I've had some very kind and supportive people in my life honestly ask me why an e-book costs almost as much to produce a hard copy.

So I've broken it down for them into a few important areas of production (and there are more).

Hopefully, the author receives at least 8% (Yes, folks that's what most of what us receive, and this small amount makes sense when considering other costs).

The publishing house is an actual "building" that requires overhead, power, and upkeep like any other large building or group of buildings.

There is my editor, who labors long over my books and has a salary--and she lives in New York.

There is my cover artist (and e-books still need covers). There is my copy-editor (quite different from the editor). There is an entire Production Department required at a publishing house to handle typesetting and lay out. These people have salaries.

There are proof-readers.

There is an entire (necessary) legal department.

There is an advertising and marketing department.

I could go on . . . but this is the gist. Whether the book is published in hard copy or electronically, these costs and salaries do not change--and trust me, no one is getting rich.
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farmgirl1146
User: farmgirl1146
Date: 2010-02-04 02:37 (UTC)
Subject: (no subject)
Thank you for the breakout of costs.
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e_booklover
User: e_booklover
Date: 2010-02-02 15:03 (UTC)
Subject: (no subject)
Very thoughtful post. I hope people read and think about what you have said. In my opinion the people who have been damaged the most by this latest stink are the readers and authors. While I have am still dabbling in the whole ebook thing I am in favor of whatever technological advances allow books to legally reach the most people. I believe that the more authors the market can support the better chance I have of finding new to me books to read and enjoy and that my regular favorite authors will be able to continue writing. I hope for everyone's sake that the ebook situation becomes stabilized soon.
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Laurel Amberdine: lightning
User: amberdine
Date: 2010-02-02 15:27 (UTC)
Subject: (no subject)
Keyword:lightning
Many seem to assume that Macmillan is simply lying about lower prices, but why would they?


I'm not a Kindle owner, and I'm not on any particular side here. But, I have been paying attention to the prices and availability of ebooks -- particularly Tor ebooks -- for years now. My overwhelming impression, formed wholly prior to this incident, has been that Macmillan is hostile to ebooks. They've had years of opportunity to offer reasonable prices on older releases. They have not done so, and in fact have obstructed imprints which tried to move in that direction.

I see not a speck of evidence that Macmillan has any intention to offer lower prices. No one ever stopped them from doing it before, and all market trends indicate there was lots of money to be made in offering reasonably-priced old titles as electronic editions. Why aren't they doing it already, if they want to? There are other ebook vendors besides Amazon.

Just now, a quick survey of the Sony ebook store shows Macmillan titles are typically 25%-50% higher than every other publisher's.

There may be a lot of inappropriate ranting and anger going around, but I think the evidence is with the Kindle enthusiasts on this one.
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blue shark of friendliness
User: ckd
Date: 2010-02-02 18:38 (UTC)
Subject: (no subject)
I'm in the "a pox on both their houses, but chicken pox on Macmillan and smallpox on Amazon" camp.

Macmillan has been absolutely terrible on ebooks. A classic example: Michael Flynn's Falling Stars.

That's a 2001 book (long since out in mass-market) being sold at hardcover prices, with DRM, and without the three previous books in the series. I'd be surprised if Fictionwise has sold enough copies to get into the double digits. It's hardly the only Macmillan example there, either.

That said, if Macmillan's corporate masters want to continue "humping the bunk" (in Scalzi's colorful phrasing) with their ebook "marketing", that's their problem. The fact that Baen's been getting significantly more money from me than Tor despite Tor's broader catalog is something Macmillan can fix easily enough if they ever care enough to. Amazon pulling the paper books over a disagreement on ebook pricing...that's bringing in their paper book market power to strong-arm Macmillan on the ebook side, and I don't approve of that any more than I do of Microsoft's "kill QuickTime or the Mac version of Office disappears".
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Elizabeth Coleman
User: criada
Date: 2010-02-02 15:29 (UTC)
Subject: (no subject)
Thank you SO much for this. I finally have something I can link my non-writing friends and family to.
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User: (Anonymous)
Date: 2010-02-02 15:33 (UTC)
Subject: The flaw in the argument:
Jay, the problem with all of this reasoning is that it doesn't recognize the important fact that under the new agreement, Macmillan will be paid LESS money per e-book sold on Amazon, not MORE. Under the old agreement, Amazon paid Macmillan something like $12-$15 per e-book (around half the price of the hardcover edition) and sold it for $10, meaning Amazon was taking a loss. (Hardly out of the goodness of its heart, we all know why it was doing that.) Under the new agreement, although the reader will pay more for the book, Amazon will pay less, and Macmillan will get only $10.

Macmillan is not doing this in order to reap more money per e-book sale, because it WON'T be. (And that's before you even factor in the declining sales that will follow the price jack.) Macmillan is doing this to protect the declining sales of hardcover books through brick-and-mortar bookstores, which is its main business.

My sincere opinion is that the effort is futile. The writing is on the wall, and publishing as we know it is a sinking ship. Big publishers like Macmillan will be able to stay in the game, but only if they adapt to the times, offering both readers and authors better deals. And this will require radically revising its business model. From your own perspective as an author, what this will mean is hugely increased royalties (I'm thinking 50% - 60% on ebooks, somewhat less on print) but probably lower advances. It will mean more control over your own work, more opportunities, more creative freedom. For readers, it will mean higher quality, a decline in mediocrity, and lower prices. Perhaps your current publisher will offer you all that. If not, someone else will, and your current publisher will file bankruptcy within the next five years.
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Shaughn
User: shogunhb
Date: 2010-02-02 15:44 (UTC)
Subject: (no subject)
Thanks for this, I was trying to explain this exact thing to co-workers yesterday.
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When life gives you lemmings...
User: danjite
Date: 2010-02-02 16:03 (UTC)
Subject: (no subject)
Dude- you used the word disintermediation in a public letter.

Also, I am not sure if you want to refer to the real world of authors, but citing Scalzi's money entry series is always... perspectifying. ;)
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ygolonac
User: ygolonac
Date: 2010-02-02 16:03 (UTC)
Subject: (no subject)
Say what you like, but I'm not paying $15 for an ebook. I don't care how much you justify it. I know I can buy paperbacks for 8 bucks now so I should be able to buy the electronic version for even less.
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Rovanda
User: rovanda
Date: 2010-02-02 16:36 (UTC)
Subject: (no subject)
That's the point, though, isn't it? You can wait for the paperback to come out instead of paying hardcover prices, and you can wait for the price to come down instead of paying $15 for a new release in e-book format.
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MG Ellington
User: xjenavivex
Date: 2010-02-02 16:08 (UTC)
Subject: (no subject)
Thank you, Jay. Well done.
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Snuffy LaRue
User: jess_ka
Date: 2010-02-02 16:12 (UTC)
Subject: (no subject)
People look at the physical object of a print book and see what they're spending money on. But a book is really a story, whether it's being delivered in printed pages, via audio, on a Kindle or other e-reader, or by an author standing up in a bookstore to read. And making those stories available costs money.

That's a fairly profound and important truth, if you ask me.
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madrobins
User: madrobins
Date: 2010-02-02 16:32 (UTC)
Subject: (no subject)
Excellent post, Jay. But don't forget that the first, biggest chunk out of a book's price is the wholeseller's or retailer's discount. If Amazon buys a paper n ink book, they're likely paying in the neighborhood of 50% of the cover price, and it's from the remaining 50% that all those other costs must be met.

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Nancy: young reader
User: nancymcc
Date: 2010-02-02 16:35 (UTC)
Subject: Pain now and pain to come
Keyword:young reader
I suspect one of the places where you lose the sympathy of many readers (not including me) is here: "What Tor does for my book improves it immeasurably between my keyboarding fingers and your reading eyes."

It's an important point, but one that many will flat-out refuse to believe. They'll have two reasons: (a) they can fantasize being writers, and in the fantasy they wouldn't want to be edited beyond light copyediting, and (b) so many published books are just plain bad AND have inadequate copyediting. Human nature getting in the way of rational self-interest.

My prediction is that publishing of book-length fiction and non-fiction will end up with a new economic model, just as journalism will. The transition period has begun and will be filled with loss -- not just financial -- for everyone, both producers and consumers. As someone who reads lots of books and more magazines than most people do, I am not looking forward to this.

The one minor consolation for me may come in non-fiction. We get too few things published at a word count between magazine articles and books. Which means I find too many non-fiction books to be padded and/or repetitive.
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Iron Man.: st spock and spock
User: idkmybffironman
Date: 2010-02-02 16:53 (UTC)
Subject: (no subject)
Keyword:st spock and spock
Y'know, I love my Kindle. I even named the thing, for crying out loud. I love the instant gratification and the space it saves. Since buying it in December, I've downloaded 61 books.

With my DTB's, I have hundreds in my to be read pile. I buy books faster than I can read them. My cause of death will probably be 'being crushed by books'. ;)

I'm not boycotting Amazon, and there's no way I'm boycotting Macmillan. The only thing I'm going to do is refuse to buy Macmillan books from Amazon. It's not like they're in any hurry to make them available to me again any time soon.

As for the price issue, I probably wouldn't spend 15$ on an ebook. I'd wait for it to go down in price. But I generally don't buy hardcover books, either. More often than not, I'll either wait for it to go to the bargain bin or wait for the paperback release. But refusing to buy a book altogether because of the ebook price is silly to me. To each their own, I guess.
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Rhonda Parrish
User: rhondaparrish
Date: 2010-02-02 16:56 (UTC)
Subject: (no subject)
Very nicely said, Jay.
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martyn44
User: martyn44
Date: 2010-02-02 17:32 (UTC)
Subject: (no subject)
Thanks for that, Jay, but there was just one thing missing. Numbers to tell the 'its all you filthy rich authors exploiting us' types how far up their own backsides they are. Now you are a reasonably succesful author - neither Dan Brown nor Mr Nobody. From what you say I bet you know exactly how much time you have spent on any piece of work and, equally, how much money you have made out of any piece of work. Take that second figure, divide it by the first, and ask them whether they would be prepared to get out of bed for that scarily small amount per hour.

On the other hand, maybe you shouldn't, because I'm sure it is a really scarily small amount per hour.
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Jay Lake
User: jaylake
Date: 2010-02-02 17:34 (UTC)
Subject: (no subject)
Oh hell yes.
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They Didn't Ask Me
User: dr_phil_physics
Date: 2010-02-02 17:49 (UTC)
Subject: (no subject)
What gets me is the false sense of entitlement some of the e-book crowd has to demand pricing in their favor, at the expense of the p-book people. Not sure that you spending $300 for an appliance justifies that. (And yes, I do own a pair of Sony eReaders)

Dr. Phil
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Kenneth Mark Hoover
User: kmarkhoover
Date: 2010-02-02 18:56 (UTC)
Subject: (no subject)
No matter how this shakes out writers are once again caught in the middle. :(
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Sylvia: bookpile2
User: sylvia_rachel
Date: 2010-02-02 19:18 (UTC)
Subject: (no subject)
Keyword:bookpile2
Extremely well said. Thank you.

(I am here via makoiyi's LJ.)
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Doctor Pipe
User: dr_pipe
Date: 2010-02-02 20:23 (UTC)
Subject: (no subject)
Hi Jay,

just wanted to assure you that even people who kind of like the ideas behind Google's efforts, like me, know that blaming authors for the amazon/macmillan foolishness is ridiculous.

Personally, I think Kindles are pretty dumb anyway; the value of an e-book, to me, would be the fact that I could read it on my computer, my iPhone, or whatever other thing I might want to read it on. I kind of think that physical books should come with free e-books; if I buy a CD I can easily rip the songs to use with my mp3 players, and if I buy a book I should be able to do the same with my ebook readers, but scanning books is a bit more cumbersome than ripping CDs.

But anyway, that's a preference. I would never argue that any business has anything like an obligation to do that, nor do they have an obligation to set their prices any other way than how they want to.

People who don't want to pay more than $10 for an ebook shouldn't buy ebooks that cost more than $10. They can buy the physical books for those titles if they want. Or they can go home and sulk. Prices are not set by how much it costs to make something, they are set by how much people are willing to pay. Personally I wouldn't buy an ebook for a price similar to the physical book, but that's because I like physical books, and an ebook would only be worth it to me if they were discounted. Someone else who prefers ebooks, well they just need to deal with the prices the sellers want to set, in my view. They've got no right to complain, because they've got no obligation to buy.
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mcjulie
User: mcjulie
Date: 2010-02-02 20:47 (UTC)
Subject: (no subject)
Personally, I think Kindles are pretty dumb anyway; the value of an e-book, to me, would be the fact that I could read it on my computer, my iPhone, or whatever other thing I might want to read it on

I lost interest in the Kindle when I found out it wouldn't easily allow me to read in-progress electronic word-type files. So I can't download the latest from my crit group and read it on the bus. Then when I found out all the DRM stuff... man. I see people reading Kindles on the bus sometimes and they look so clever and handy, but I think I need to sit out a few more iterations of technology/rights/turf wars/whatever.

I kind of think that physical books should come with free e-books

That does seem to make sense under the principle of paying for content, not format. I also think it would make sense for a physical book *without* electronic access to be a couple of bucks cheaper than with, or an electronic book *without* a physical book to also be a couple of bucks cheaper. Even if the cost of delivery is exactly the same, it seems like the kind of price break that intuitively makes sense to people.
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Scott Marlowe
User: scottmarlowe
Date: 2010-02-03 14:43 (UTC)
Subject: (no subject)
Thanks for the thoughtful, informative, and, most important, professional post. Too many writers out there reacting quite emotionally to this debacle and forgetting that they are still representatives of their product. This should be a good opportunity to provide insight like the above instead of tossing us a diatribe about Amazon, Macmillan, etc.

As far as pricing, I'm 100% against an eBook costing more than a paperback and will not be buying any eBooks priced over that amount. Yeah, there are associated costs with producing hardcovers, etc., but those costs existed before eBooks ever came onto the scene. Macmillan (and other pub's, if they follow suit) are really blowing it here. Too bad that their current production model doesn't allow them to survive long term--maybe they need to re-think the model, streamline, and cut costs. Every other industry in the world is faced with those decisions all the time. I'm a software engineer working in corporate America, so I know all about cost-cutting and the repercussions (from the perspective of someone who has no power over the process or the outcome). Yeah, working for "the man" sucks (whether it's a software company or a book publisher), but that's life.
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farmgirl1146
User: farmgirl1146
Date: 2010-02-04 02:37 (UTC)
Subject: (no subject)
Thanks Jay. I have finally read your letter and it is brilliant.
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