Thursday, March 29, 2012

Legacy Publishers Poised to Fight Back: Do Silos Spell the End to Self-Publishing?

Today, Smashwords' founder, Mark Coker, posted his defense of the Agency model. He provided an impressive body of statistical evidence that suggests the Agency-pricing-model is putting downward pressure on ebook pricing. Current reports suggest that ebooks are now priced, on average, around US$3.00 – down over a dollar from just a few years ago. This negative development shows no sign of stopping.

The trend toward reducing book prices to US$.99 or "free" would have been unheard of two years ago. But then, two years before that, self-publishing was an experiment, dismissed as an anomaly. Vanity publishing was the only meaningful way an author could publish without the gatekeepers and hurdles of the traditional publishing landscape. Authors began searching for alternatives when it became obvious that vanity publishers offered eye candy, but their broken pricing, distribution, and delivery models echoed those that exist in the traditional publishing marketplace.

Fast-forward two years. Desperate for a meaningful alternative, self-publishers, and distributors such as Smashwords,  quickly rose in popularity. They provided authors the ability to price and control their books' distribution and longevity. This meant the end for lofty pricing models controlled by the Big 6. Instead of remaining satisfied with meager royalties, and forced to turn brilliance into pablum, a significant number of authors abandoned the traditional publishing hamster wheel.

Now, we're hurling past the dreamy period when authors believed readers would pay US$2.99 for an ebook. Before this, pricing was artificially set by the Big 6. The transfer of power to authors and readers had a heady and profound effect. Wild and wide fluctuations existed, with the understanding that the reader would ultimately dictate the price s/he was willing to pay. The Agency model, courtesy of Apple, came around at the perfect time to offer a framework everyone could wrap their arms around.

Without the regulatory governance and stability the Big 6 brought to the table, authors began competing with each other to attract customers. Unfortunately, instead of beefing up our products to differentiate ourselves, we fell back on the short-term price-slashing tactic.

Additionally, thousands of unemployed professionals swelled the writing and publishing ranks as the global economy worsened, bringing along with them a lack of tolerance for slow and steady growth. These weekend warriors were looking to turn a fast buck while waiting to get hired on by their next employer.

The economic possibility exists that many of these unemployed folks, hoping to hit a homerun from writing one book - akin to hoping to win the lottery – are leaving scars that may never heal. Desperate to earn a buck, these part-time authors did exactly as they were taught in the business world: When competing for market share and sales volume, cut prices when you face stiff competition. This is usually the preferred short-term method instead of investing further to develop unique features to a product that is rapidly becoming a commodity.

Commodity sales are basically straightforward. If the buyer can't get the goods cheaply, s/he will shop around, completely indifferent to trappings. Genres of books are crammed full of "me too" ebooks, varying little from each other. As such, ebooks are becoming a commodity, and as such, readers are driving the prices ever faster toward "free" for everything from meager offerings to amazing works.

Frankly, there's just too much competition in today's landscape. The pricing and marketing problems we authors face will get worse before the pendulum swings back toward anything resembling a seller's market, if it ever will. As is the case with Wal-Mart, the expectation of always having the lowest price puts pressure on Wal-Mart's competitors to reduce their prices to remain in business. This slippery slope begins with the greed of one and then rapidly snowballs.

Out of this economic chaos rose an all-too-familiar business model. A fifteen-year-old internet tactic (one with timeless roots) has resurfaced. Known as portals, thousands of websites vainly attempted to retain customers by being all things to all people. Today, we are experiencing a seductively appealing transformation, a shift in packaging and distribution that cloaks a wolf in sheep's clothing.

Amazon's KDP Select took the next evolutionary step and, first out the gate, rushed to capitalize on the lousy economy. KDP Select tempts authors with the potential to get some money in exchange for exclusivity. Potential money sounds much better than no money, which is what most authors are earning these days. Unfortunately, KDP Select appears to be accelerating an author's ever-diminishing returns. You can read more about this situation within an earlier post of mine - "Amazon's KDP Select is Driving Prices Down."

What's on the Horizon?

Leviathans with an Insidious Purpose
In the 1990s, silos such as America Online (AOL) provided customers with a protective and comfortable environment. Not satisfied, AOL's customers clamored for the ability to access the rest of the internet. Free-flowing portals, often created by indie internet-service providers (ISPs) appeared as a result. Silos gave way to portals, as silos aren't constructed to provide access to all types of information, products, and services. Instead, silos can control and restrict activity, suppress pricing trends, and confine distribution. AOL's myopic vision of the future was avoided by the internet-savvy for over a decade. AOL, as it's turning out, was right on track after all.

The world became a much smaller place because of the explosive integration of the internet into our lifestyles. Of late, many folks began dreaming of a quieter and less cluttered playground that supports the pragmatic allure of the cocooning trend. This cocooning phenomenon, where people insulate themselves by creating a narrow band of friends, family, and outside influencers, is a direct outcome of information and stimuli overload. The internet's silos recognize this and market themselves as safe havens and playgrounds.

"But, you ask, "what does all this have to do with ebook pricing?"

Back to Scrambling for Crumbs
The KDP Select silo offers a restrictive environment to authors in exchange for co-op money. Other silos are created around proprietary ereaders. Meanwhile, as all this activity supporting consumers' cocooning is going on, publishing's Big 6 were waking up to realize they were no longer the sole gatekeepers to the writing and reading experience.

Indie publishing's nemesis is scrambling to remain in control of the publishing industry. Leapfrogging KDP Select and going straight for the jugglar, the Big 6 have invested in a hybrid that will rise from the ashes of the legacy and self-publishing models to regain control over the distribution platform. This hybrid makes KDP Select's restrictive environment look like child's play.

Enter Bilbary.com, a silo espousing the reader experience, is built on the backbone and offerings of Ingram Content Group and investments from within the Big 6. From Bilbary's current homepage, the company states its strategic and tactical objectives as:
·        Content: We aim to offer all the ebooks in the world. In the next few months we will add 750,000 titles.
·        Reader: We are developing a cloud reader so you can read your books online.
·        Apps: We are creating apps for your phones, tablets and computers.
·        Rental: We are working with publishers on a system of ebook rental.
·        Languages: We intend to translate the site and include books in many languages.
·        Libraries: Bilbary is working with the public library system to see how we can increase the availability of ebooks to library patrons.

A year ago, Benedicte Page wrote an article entitled, "Coates to Launch Bilbary e-Book Site," which provides a good summary of the company's vision. Then, I took a look at the Bilbary demo on YouTube.

Concerns
·        The role of the author appears purposely downplayed. Bilbary is touted as a reader's ultimate experience. Publishers, which I gathered from the reading will be the Big 6 and their affiliates, will receive their customary (legacy) 80% royalty, but nowhere was I able to find a reference to the indie author's cut.
·        Within the welcome email I received from Bilbary, it states, "If you are a publisher, we offer excellent terms and free access to data and analytics on your titles. You will be able to choose whether to sell books, rent, or both sell and rent." Does Bilbary accept authors as self-publishers?
·        In the very next paragraph, the email appears to downplay the importance of the author in the publishing lifecycle, as there is no mention made of an author's rights to access data and reports about their titles: "If you are an author or an agent with the digital rights to your books we aim to host both new books and an extensive backlist." By its omission, this reads to me like the legacy publishers will be peddling and pushing their same rules and restrictions within the ebook marketplace. I see Bilbary as nothing more than window dressing. They create an interesting and fresh looking interface, but the machine operating behind the fa├žade is the same old nonsense that indie publishing has strived to circumvent.

What about the future of Indie Publishing?
Can fledgling and growing e-distributors such as Smashwords resist the lure of selling their businesses to silos such as Amazon KDP and Bilbary? No doubt, with only 3 years under their belts, indie-book distributors are market leaders, but their grasp is tenuous. For example, might Mark Coker tire of running Smashwords and sell the company? Being a very rich retiree is an extremely attractive position to be in, especially when you consider the volatility of the global economy and the instability of the epub marketplace.

Well-intentioned and focused on growth, what if Smashwords were to go public? With its extensive lists of titles, readers and authors, Smashwords would be snapped up by the deep pockets of any of the Big 6 publishers, drained of its value, and then spun off or shut down.

The lure of small money is stronger than that of no money. Will authors sell their souls in the hopes of receiving meager handouts offered by this latest incarnation of the legacy publishing model? Tragically, I believe this could be the outcome if traditional publishing succeeds in going toe-to-toe against indie distributors.

9 comments:

  1. Another extremely well written blog! I had never heard of Bilbary but am going to look into this.

    You're completely right. It has been surprising to me how many authors I come in contact with who are publishing because they "need the money". I have tried to tell them, when i run into them, that this is not the field to go into "for the money" unless they intend to put a LOT of money out for advertising. Most success stories took years or months to achieve and in many cases only did so through lots and lots of work (which the quick buck people tend to want to skip). Self publishing is not a place to look if you want to make money. As with a gold rush, the place to make money is with author services. Editing, formatting, book covers, etc. And people are doing that in droves and charging insane prices. One author I talked to paid over 200$ for a book cover that could not have taken more than thirty minutes to put together. I nearly choked.

    The self publishing bubble is bound to pop, because whenever there is an 'endless horizon' of freedom where anyone can be anything with no degrees, or rules, there is always a "crackdown". human beings, for reasons I do not understand, seem to demand a qualifying system, wherein participants must jump through hoops to "qualify" to do things, such as entertain them. At the moment there are few hoops. If you can work Word and an art program you can publish - and entertain - for free. Instead of seeing this as a GOOD thing (If I can do whatever I want, then that means YOU can, too) people will often see this as "unfair" ("I paid my dues! Why aren't they!?") or as the road to chaos ("If just ANYONE can publish then we will be awash in crap! Oh the horror! If that book is not up to my standards then I will be CHEATED out of my .99!") etc. etc. And so gatekeepers will roll in - slowly. First it will be to protect us. Perhaps from porn, and then it will slowly roll over everyone, next perhaps it will be that manuscripts have to pass certain 'editing standards', which start out loose and tighten up, then it's storylines and plots, then it's writing quality etc etc until the free self publishing has become the same as the traditional where everyone must be vetted by a new gatekeeper in order to make sure that only "quality" is being put out and the consumers are not being "cheated". Needless to say these gatekeepers don't give a damn about the consumers being cheated, this will just be clever packaging, rather they're looking to line their pockets and to control the flow of money they have to control the flow of the books...

    At the same time as the noose is tightened on quality, they will start tightening contracts as well, making it more difficult to publish on your own, taking larger cuts, etc etc. Ensuring that you can't just entertain "for free" anymore.

    My goal from day 1 has simply been to enjoy the ride, because it might take three years or twenty, but it will dissolve into the very thing it is supposed to be 'rebelling' against, as all movements always do - and it will be for the sake of money.

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  2. Joleene, your pragmatic points are deadly accurate. Once on the receiving-end of harsh economic uncertainty, reality is easy to recognize, isn't it?

    As the indie rebellion matures, no doubt it will survive only by defining its niche as a subset within traditional publishing constructs and boundaries, as you so eloquently described. A lifecycle follows a predictable pattern. Sure, there are highlights and bright spots along the way, but before long, the new thing becomes the old thing, which spawns another rebellion, and so on.

    Does this mean indie publishing is doomed? I don't believe "doomed" is the case. Instead, it's a wake-up call to traditional publishers. Soon, we'll see a round of M&As, as Bilbary.com alludes to, followed by a series of galvanizing partnerships and predatory tactics (already present with KDP Select's exclusivity terms). There will be pressures on legacy publishers to bend to accept new ways of doing business (in response to the indie-pub presence). So, the essence of indie publishing will survive, but in the long run, as long as there is a glut of writers and deeply-discounted books, I think indie publishing's "wild west" approach of writing without boundaries will be its Achilles heel. You're absolutely right in saying that for the niche to survive, it will have to implement controls and gatekeeping processes. Without them, I believe books will default to being very generic and poorly crafted.

    Need proof? Look no further than the public-school teaching profession, within which I taught for almost 10 years. Well-intentioned and bright-eyed anarchs leave, discouraged, within the first 2-10 years. Those who stay on are assimilated within the secure confines of tenure, which is an offering that replaces competitive pay. So, we, the public, get what we pay for - the best of the worst all the way down to the worst of the worst.

    If readers demand brilliant entertainment for free or at a heavily discounted price, then, instead, they will get exactly what they pay for. The authors who stick around to write free books will deliver mush, and become the gatekeepers for the next evolution of legacy publishers.

    I'm in this for the long haul, as you said, to see how this whole thing shakes out. Writing is a love and a hobby. I hope readers enjoy what I write, which is a point that I think the economics of the publishing-lifecycle misses. Will my heart remain in the game, though, if down the road, I'm only able to build a platform based on free books? If that is to be the outcome, then I'll bail before becoming one of those authors I described within the previous paragraph.

    Thanks again for your excellent comment, Joleene. It's a lot to think about.

    Good night from Australia.

    LC

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  3. Wow! This is a very thought-provoking post. I hadn't given serious thought to standards being put into place to ensure "quality" indie books at cheap to free prices. I'm opposed to any system that requires people to meet someone else's standards of "quality" work. It's the "who" gets to decide quality that makes me uneasy. I don't think the "who" has our interest at heart.

    What a scary prospect we might be facing. When I started publishing my books, I didn't think anyone else would read them. I wrote them so I could have books I wanted to read. But on the flipside, it is a huge bonus if you can make a living and do what you love, though I do feel a lot more stress when I write now that I know others will read my books. So it's one of those bittersweet things.

    I did have all of my books free at one time, and I was shocked (and depressed) to learn that people complained when a book was free. I had done my best on those books, and while I know they weren't perfect, I assumed that if they were free, people wouldn't be upset if they didn't like the books because they didn't pay for them. So I can see why authors could say "to heck with it" if they are expected to give away all of their books for free and still put up with the complaints. And even if they have some free but others at a price (even one as low as $2.99) and receive complaints for daring to ask for payment for a book, they would say "to heck with it" too. Why strive to be better if you're unappreciated and/or not paid? I can understand why work would turn to crap instead of getting better if authors are expected to do more for less.

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  4. Good points, Ruth. I'd prefer to believe no one would dare impose standards on free & inexpensive books, but they do already exist.

    I hope I'm wrong, but before long, I expect that KDP Select and Bilbary will introduce participatory standards. This is an easy outcome if Bilbary succeeds with its plan of offering "every" book in the world. By default, the self-pub sites I'm familiar with all have standards in place (whether enforced via the book-upload process or its "Terms and Conditions"). It's not a stretch to see, for example, a case where readers stop going to KDP Select because it's full of crap, pushed there by authors dumping product into KDP in the hopes of getting some of that co-op money). To counter this trend, KDP could easily require construction and quality standards for listed titles.

    Then, offering books through libraries (e.g., Smashwords and Bilbary) will put downward pressure on pricing, too, as the expectation of participating readers is to "check out" books and do so for free. I believe the aggragated clout of library systems will put downward pressure on pricing as all books, no matter the quality or author, are free at libraries. Then, library alliances could demand quality standards on ebook distributors, who would then be required to push such standards along to participating authors or risk losing libraries as a distribution medium.

    Don't get me wrong - I'm absolutely thrilled with being an author during these hectic times. It's fun and challenging. I pose these scenarios to provoke thought and discussion; for the reason that the focus of this blog is publishing's new frontiers.

    I'd love to make money doing what I love to do, which is to write novels. In my microbial slice of reality, I sold more copies of my first novel when I pub'd it 2 years ago than the total sales of all 4 of my books in the last year. Is this a statement about the economy or do my books just suck? Hmmm ... since this is my Petri dish I'm talking about, to protect my feelings, I'm gonna blame the economy. :)

    Goodnight from Los Angeles.

    LC

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    1. Out of curiosity, did you raise your prices when the slow down in sales happened? When I upped the price of my old books, sales dropped like a rock.

      Already on the Amazon boards, there's a huge outcry for quality self-published books, and I don't think the authors arguing with those posters are helping the situation.

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  5. I'm a lemming and, I suppose, a hypocrite, Ruth. Instead of nobly holding out for the pendulum to swing back toward higher pricing, I immediately caved and dropped my books to "free" and 99-cents. For the short-run, I don't believe authors have a choice, newbies in particular, if we want to attract readers and build a platform.

    I stumbled across a series of posts where readers were arguing that authors should give away all our product for free, and only make money off of click-through ads. Since I don't believe its ethical or good business to distract readers with ads, I guess, under that model, I'd be screwed. Compounding the problem with this scenario is that instead of focusing on writing well, we authors (those who want to make a buck or grow our base) will be forced to create blurbs and promo pieces that entice readers to click on the ads attached to our works. I'm a writer. I know absolutely nothing about ads (just ask Joleene Naylor). So, I'd have to hire (pay for) someone to create or select ads (or ad-sponsors' sites) that would net me the most click-throughs possible so folks will read my free books. The pressure this scenario puts on authors is not much differnt than the self-promotion model that traditionally-published authors are forced to follow today - except that in this scenario, writers aren't getting paid at all to be authors. Ugh, this is nauseating.

    I bet, if the current economic reality continues to thrive, truckloads of writers will soon quit in disgust. Eventually, a shortage of quality writers will push demand up for quality books, with or without legacy publishing's crushing presence and restrictive controls. Maybe the reason Bilbary's being built by Big-6 funding is to exist as a nurturing silo - a benevolent dictator for all those no longer willing to weather the storm, fight the good fight, jump through the hoops, play the game - among other cliches.

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    1. I didn't hold out for the tide to turn when I tried to price my old books at $2.99 (instead of $0.99), so don't feel bad. I even caved and gave another book away for free. That turned into a lucky gamble because demand for the next book in the series which was $2.99 finally saw decent sales. But I can't say it worked for all of my books or that the low price attracts everyone. My contemporary sci-fish romance doesn't seem to sell well no matter if it's $0.99 or $2.99, and I don't want to give that one away for free until book 2 in that series is out. There are no easy answers, and as much as I'd love to be a $4.99 author, I'm just not.

      The idea of ads makes me want to barf. I buy a website to avoid ads on it. I find ads to be disruptive, and I would rather buy something than see ads on it. I don't get these people who would rather have ads. I guess they figure they can ignore them. I can't. I watch Netflix to avoid commerials. LOL

      I don't understand the full extent of Bilbary, but I'm overwhelmed by how fast the publishing industry is changing. I feel like I'm running behind and can't catch up.

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    2. Replying to an old post here ;) I have had my prices on B&N/Smashwords etc. higher for some time now (I probably shouldn't say this because I don't think anyone has noticed) not hugely higher, but a little bit. When I finally decided to up the price on Amazon (Shades of Gray has been .99 for forever because I could list it on bargain sites that way ;) ) i saw an instant drop in sales. I won't lie either, i ran and knocked it back to .99. However, I left it at the higher price on the other sites and when I published my last two books (Ashes of deceit & Vampire Morsels) I also priced them the same as B&N/Smashwords etc. I find Amazon customers are far more likely to complain about free reads and demand cheap prices than B&N etc. And this KDP select is not helping at all....

      and the ad thing is just weird... why would we want to have a bunch of advertisements!?!?

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  6. Awesome!!!amazon KDP role is great.

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Thank you for your comment! As my gift to you, please click link below
for your free copy of my ebook "Legacy".
https://www.smashwords.com/books/view/17743

Take care,
LC Cooper