Justice Department Investigating e-book Industry

[Christopher Valen]

If you missed it, the LA Times reported that the Justice Department is looking into e-book pricing practices. What do you think?

http://latimesblogs.latimes.com/technology/2011/12/justice-departme...

[Dana King]

The article is a little short on details. I assumed this would be an attack on the agency model of pricing, and I guess it might be, though that's not how the article lays it out.

Christopher, you're better informed on this kind of thing than I am. Am I missing the boat here, or is this basically a look into the agency model?

[Christopher Valen]

I don't know if I'm better informed than you, Dana, but if by "agency model" you mean the "big six" publishers, than yes.  The key line is , "Investigators said they were trying to determine whether the companies (major publishers, plus Amazon and Apple) had engaged in illegal agreements or practices that would have the object or the effect of restricting competition." Basically, the Justice Department is looking into "price fixing." There's no question that the big six want to keep e-book prices high. The question is, Are they doing it legally? It will be interesting to see what comes of this investigation.

[I. J. Parker]

I have always felt that Amazon would sooner or later stop paying the big six the high prices they charge for electronic books that cost them practically nothing.  The entire electronic book situation with traditional publisher demonstrates their greed.  I have books with Penguin.  They pay me 15 % for each electronic sale. That is 15 % of the net left after Amazon gets its share. The books are listed at 12.99.  Needless to say, they don't sell well. Result: I have no chance to earn out the advances paid on the books.  The reason, some say, is that publishers want e-books to go away, so they can go back to selling paper books.  Amazon, however, is motivated to deal with them because they are promoting e-books and Kindle.

 

As for me:  at the present time and in this publishing climate, I will not sell my electronic rights.  As a result, my agent tells me, I will not get any book deals.  So be it!  Independent authors set their own prices, paying Amazon et al. their 30 %.  And we undersell the publishers.  Where Penguin prices my titles at 12.99, I set the price at 4.99.

 

The LA Times takes a narrow view, looking only at the situation between publishers and electronic merchandisers like Amazon. They should look at the extortionate contractual agreements between publisher and author that force authors to decide between publication and being robbed and no publication at all.

[Christopher Valen]

I.J.

The LA Times could look at the contractual agreements, but it's the Justice Department that wields the stick. If they can prove "price fixing," it may force the big six to bring down their prices. I just got the e-book rights back for my second Santana novel, and now own the e-book rights to all three. Like you, I don't plan on selling them again.

I think it's going to be more difficult in the future for publishers, large and small, to demand e-book rights from authors who sign "print" contracts. Either that, or publishers are going to be forced to pay a much higher percentage of sales to authors for e-book rights. 

[I. J. Parker]

That's the optimistic view, Christopher.  Meanwhile, midlist authors do not get any more contracts.  The publishers will deal only with proven bestselling authors. (Plus pick up a few new ones who've hit the million sales mark with e-books).  I have to consider that I am losing my print-loving fans and library sales.  This has already affected my latest novel in the series.  Along with that comes also losing audio-, large print-, and foreign contracts. I will make more money from electronic sales than in the past, but ultimately the future is by no means clear.

[Christopher Valen]

Mine may well be an optimistic view, I.J. If you look at the bestseller lists, it's the same names week after week, month after month, year after year.

I still believe in print copies of books. But having just finished a three-month tour for my last Santana novel, I can't tell you how many times I heard from frustrated B&N employees about how much shelf space has been lost to toys and games. Most said they had half the shelf space for books they had a few years ago. So if customers have to order more and more books online, why drive to a bookstore that probably doesn't carry the book you want anyway?

What does all this mean for all the mid-list and small print authors? Those who are unwilling or can't afford to fund tours and book signings, will not have their books on the shelves. If that's the case, where's the incentive to sign with a mid-list or small print publisher and give away most of your rights and profits?

One option, of course, is to sign with Amazon, like Barry Eisler, and they'll print copies of your books. But your books won't be in B&N or most independent stores. Readers will have to order them online.

Another option is to form a cooperative with other authors and create your own imprint and national distribution deal. Your books go through the same channels, Ingram, Baker & Taylor, B&N, so there's no problem getting them into libraries and bookstores––as long as you're willing to promote and build connections with independent stores and CRMs in B&N. The risk is, you have to put money up front. But if you're willing to do the work and have a good book, the pay off can be well worth it. Together with your e-books, you have a chance to build a name, keep more of the profits, and control your own destiny.  

[EDWARD C MORGAN]

For years while I was in the newspaper industry, I would hear - I'll just go out and start my own newspaper, and run it the way I think it should be run.

I can't think of a single one of these that is still in existence. Most lasted only a couple months. Why? It wasn't just money - sometimes the money was there. But many simple did not understand the industry or what was truly involved in running a profitable newspaper (and don't let the headlines fool ya - those things still make a bloody fortune).

That's what I fear about authors forming their own imprints. Do they really know how to publish a book, get it out there, distribute it, promote it, and all the other steps that are involved in being successful and profitable in publishing?

Here and elsewhere, it is way oversimplified. If you have a good book cover, OR good Amazon reviews, OR the higher Amazon commission, you are better off.

There's so much more to it. I spent 20 years in publishing and it's not just an easy couple of steps, unfortunately.

Authors, I'll argue, still must learn that whether they are using a legacy publisher or self-publshing, like it or not, it is a business. The ones who are succeeding at self-publishing do indeed treat their writing exactly that way.

[I. J. Parker]

And I agree with Clay.  On the whole, midlist authors are better off with Amazon. They get a fair share, and they don't waste their time helping the publisher make more money.  Yes, it's a business, but the writing pleasure lasts longer and is more satisfying.  I used to be angry all the time, because I had no control.  Now I'm mostly content.

 

Still, I could do better as a business woman.  I have yet to master twitter, facebook, kindle boards, and live links/images.  I'll work at that in the new year.

[Christopher Valen]

Clay,

I agree that most authors don't know what they're doing and shouldn't consider starting their own imprint. Having said that, if you do have a clear idea and good business sense, then I say give it a shot. The key is the distribution deal. If you don't have that, you're wasting your time and money.

[I. J. Parker]

@ Christopher:  The promotion part of that is absolutely not part of the plan. Personal promotion via tours does not work.  And it takes away valuable time that should be spent on the next book.  I'm afraid stores are out for me.  I have a potentially good library market. Any print publisher who's interested in mining that will have to do without e-rights.

[Christopher Valen]

Well, I.J. I have to respectfully disagree about tours. As I said previously, with ever shrinking shelf space for mid-list and small press publishers, the only way you're going to get your books on the shelves––and often on employee recommend lists––is through personal relationships with book store owners and the CRMs in B&N stores. Of course, once you have an event set up, you'd better be able to sell books. I hear many tales of authors sitting silently at a table waiting for customers to come over and buy their book. It only works that way if your a famous author. The rest of us have to "sell." Yes, it takes considerable time, effort, and some money, but the payoff is in increased sales and name recognition. It's much easier for me now to pick up the phone, call a CRM, and set up an event, because I have a "history" in the store. I'm certainly not discounting e-book sales. They're important, and I'm glad you're refusing to compromise on your e-book rights. But for now, I'll stick with both print promotion and e-books sales.

Have a Happy New Year, and I hope you do well in 2012:)

[I. J. Parker]

Best wishes to you also!