Amazon, Crossings, and J. A. Konrath: Is This Week a "Game Changer"?

Sarah Weinman has a good post up at Daily Finance about two announcements this week from Amazon: first that they have made a deal to publish a new, original book by crime author J. A. Konrath in their Amazon Encores program, previously devoted to republishing older and out-of-print titles. Konrath, who has promoted his own work very effectively on the web and has blogged about how successfully he has sold his work at a very low price on Kindle, parted company with the trade house who had published his earlier books and now will sell his work directly through Amazon.  Weinman points out that, alongside the second announcement--that Amazon will start a wholly new publishing program called Crossings that will publish literature in translation (books formerly unavailable in the U.S.)--that the online retailing behemoth will now be competing directly with publishers, in an arena where Amazon has some powerful advantages. 

With an admirable trace of hesitation at trotting out the buzzword of 2010, Sarah calls these developments "game changing" and quotes the ever-brainy Mike Shatzkin in support of the statement. Meanwhile the also-savvy MJ Rose has a great post at her blog making a seemingly contrary statement: she says there are no game changers any more.  So has the game changed, or not? 

At the risk of saying "everybody's right," I have to take a different point of view: I agree with Weinman and Shatzkin that it's a momentous development if Amazon is really going to start competing head to head with publishers. They have already started picking off the backlist of major authors like Stephen Covey and Paulo Coelho, and if they are now going to get into the frontlist business things will get more interesting. But if you look at the larger picture, it's this: EVERYTHING is changing. So many elements of the industry as I've known it are in play that the one thing we can be sure of is, the game is going to be different five or ten years from now. But I think it's way too early to know whether this particular play of Amazon's is going to be decisive in their favor. Here are some things we don't know that will bear on the answer:

The market for books in translation (as Mike S. points out) has historically been pretty small. Can Amazon's retailing power make it much bigger? If not, the Crossings move may be less significant. 

Will Amazon really want to be in the editorial business? It's one thing to find worthy or marketable backlist titles or new books by authors who have proved themselves. Seeking works undervalued in the current marketplace--like translations--is a logical next step. But to truly compete with publishers, Amazon will need editors--people who find new books and attempt to choose ones that will connect with readers. This process is inherently unpredictable and therefore risky and inefficient--very different from their algorithm-driven business of selling existing books, even obscure "long tail" titles. I suspect Amazon Crossings will find, even with the company's unique ability to reach, say, "readers who bought French novels by women in translation," that some titles on their list do much better than others. 

How big a share of the e-book market can Amazon retain as e-readers proliferate? This question is complicated by the fact that you can read Kindle books on devices beside the Kindle, but whether authors are willing to give Amazon exclusivity on their e-books will surely depend on how much of the market they risk giving up.

Or, will Apple decide to compete with Amazon in the same way? The explosive growth of the iBooks store is going to give Apple similar power to Amazon's in presenting authors to readers. So far they have taken a very different approach, dealing only with the biggest publishers and a few aggregators. But they deal directly with thousands of suppliers in the App Store, and may well move in that direction once iBooks are well established.  

How will contract terms shift between authors and publishers in the coming years? Konrath points out that he makes more money self-publishing via Kindle for $2.99 a copy than he might have in a conventional print deal with a major house, Hyperion, at $14.99. If author/publisher deals evolve, as they are likely to, will the marketing and distribution power of a big publisher become less easy to give up? 

How many authors will be able to replicate Konrath's success at marketing himself? Amazon didn't pick Konrath to sign up just because of the quality of his writing. He has been a creative and assiduous promoter of his work, as Jason Pinter observes in a HuffPost piece. In my experience only handful of authors have the marketing savvy and drive Konrath has shown. If you're already a bestselling author, or a celebrity, you may not need Konrath's smarts. But the model that works for Konrath or Covey may not work for a majority of authors. (This of course still leaves the danger for publishers of Amazon creaming off the most profitable books at the top of the sales curve.) 

How will the role of agents affect the way all this unfolds? I'm not the first person to notice that if there's a danger to publishers in disintermediation, there's a real risk of it for agents too. If all an author needs to do to make $400 a day is upload titles to the Kindle store (as Konrath says he's doing), does she need an agent for that? There's a disincentive for agents to move toward a world where they can't auction projects to Random, Hachette et al. Will they push authors in a different direction, and how many authors will value their agents' advice more than the revenue the agents carve off the author's income? 

I realize I'm much better at asking questions on this blog than at giving answers. But my point here is that with the book marketplace in flux in so many different directions (the above are only a few), it's not even totally clear what "game" we're playing, much less whether even big news like this week's has "changed" it. 

Illustration: Matrix Chessboard, via Wikimedia Commons

Should Book Editors Get Royalties?

At Publishing Perspectives this week, the veteran editor and publisher Ann Patty has written a provocative post titled "The Future for Book Editors: Royalties?" Ann, who was a colleague and then my boss at Crown, worked in corporate publishing for decades, acquiring, publishing--and editing--an impressive string of fiction authors. Now a freelance manuscript editor, she wonders aloud whether, in the dawning new world of publishing, what editors do may be valued more highly--perhaps highly enough for an editor to receive a share of royalties. She writes,

enough lamentation! We all know the publishing industry of yore is long gone. What about the future? In the Internet free-for-all book editors may become more, rather than less important. The editor is the author’s interface with the world at large; the other roles in publishing houses, as they are now configured, may become obsolete in the digital future. Publishers may devalue editors, but writers and agents don’t. As business models change, it’s time that book editors reclaim their essential place in the publishing process, and be appropriately compensated for it. 

Ann's piece has generated a lively, not to say brawling, comment thread, well worth reading. Several editors, and a few authors, have said "right on!" Many other posters have said, more or less, "No way!" A couple of the critics suggest an editor's contribution is unimportant compared to the author's. Some point out quite rightly that while editors may provide invaluable help to a writer, they are salaried employees of the publishing house and don't assume the risk, or make the investment of time, that an author working on her manuscript for months or years does. One author pointedly noted that a writer's royalties are small enough to begin with; peeling them away to pay an editor adds injury to insult. 


My first reaction to Ann's suggestion was knee-jerk disagreement. I do edit manuscripts, and carefully, but that's part of what Bloomsbury pays me for. While many things about publishing have changed in the past century, it still seems to me that working with an author to shape the manuscript is a basic part of the editor's job. I don't necessarily feel that doing so (even for a book that, as Ann hypothesizes, becomes a commercial winner) entitles me to extra compensation. If my titles are successful, presumably that will be reflected in what I get paid next year. 


But on further reflection my reaction was more nuanced. After all, freelance editors like Ann are already receiving, in some cases, royalty shares just as co-writers often do.  Authors accept such arrangements--again, occasionally--without seeing them as an injustice. And in a few cases, as Ann's post notes, editor-publishers who head imprints (myself not included) have some profit participation, though on the basis of imprint results, not individual titles. Furthermore, at some houses a significant share of editors' compensation comes in the form of a bonus, which is almost always related, partly or wholly, to the sales of their books. It's not a share of royalties as such, but it amounts to something similar. (These bonuses usually include other benchmarks including company or division-wide performance.) In textbook publishing this practice is more common, I think, and I know of at least one textbook publisher where as much as a third of an editor's pay came in bonuses. 


There are problems with pegging editors' pay to numerical indices, but it's not wholly unreasonable. As I have written here before, I believe one of the problems of big corporate publishing is that editors' performance is often valued in arbitrary and haphazard ways, which leads to poor decision-making. I'm not ready to advocate Ann Patty's proposal, but if publishers do value editing--and want to tout it as part of their "value added" to authors, her idea would be one way of putting their money where their mouths are.*




* In which case, any editor-royalty should come out of the house's share of revenue (and of course, wouldn't be payable when the author's advance--which the editor negotiated--is unearned). 

Kerfuffle of the Week: E-Book Royalties

One hot topic in publishing this week was Macmillan’s announcement that their new boilerplate contract, across all their trade imprints, will feature a standard royalty of 20 percent of net receipts. This is 5 percent less than the rate offered by some major houses such as Simon & Schuster, Random House (and my own, Bloomsbury). Some houses have paid royalties as high as 50 percent of net.

Here’s an area where, as I've said in an earlier post, we see how our industry has gone from a mature one—where basic contract terms were well established, virtually universal across houses—to what’s almost a state of nature free-for-all as we thrash out how the new, electronic pie is going to be divided.

The 50 percent royalties I just mentioned were blithely agreed to by many publishers back when e-books were mostly hypothetical and e-book receipts were basically zero. For that matter, many agents agreed to rolling them back to 25 for the same reason—it was 25 percent of nothin'.  Now there’s real money flowing in the door and if you’re giving half, or even a quarter of it, to an author, it’s a significant chunk off your bottom line.

Some people make the argument that "e-books don't cost anything to produce," so e-royalties should be correspondingly higher. There are at least two problems with this position:

1. There are many costs that go into creating a book beyond those of printing the physical volume. These might be a lot smaller if we only produced e-books. But as long as we create print books we're paying for jacket designers, typographers, warehouse staff, review copy mailings, etc. None of those costs go away just because you sell a book on Kindle. (For more on this see Bob Miller's post and the comment thread on HarperStudio's blog.) Maybe what publishers should say is, we’ll pay you a 50 percent net royalty as long as you don’t mind that an e-dition is the only one.
2. Publishers are also concerned because we don’t know how much the sales of e-books are cannibalizing p-books. It’s one thing if, as e-vangelists maintain, e-book sales are expanding the market and that revenue is additional to print sales. It’s another if the e-book, quite possibly at a lower price, is replacing the sale of a printed book. Again, in that case, the publisher is probably earning less money on the e-book. Its bottom line will suffer unless it can claw back some of the revenue from the author’s share. And right now publishers are more anxious about their bottom lines than ever. 

I can’t tell whether Macmillan is, as the British say, trying it on, or whether they’re drawing a line in the sand here. They are sure to get intense pushback from agents. But I think the skirmishes around this line will get more intense as e-book revenues grow, which they are doing rapidly.

P.S. Agent and e-publisher Richard Curtis has a typically smart and opinionated post on this at ereads.com. He suggests, and I agree, that maybe the bigger news in the new Macmillan boilerplate is their increased focus (and better royalties) on direct-to-consumer sales. The next frontier for publishers is selling books right to readers instead of being dependent on Amazon and the bookstore chains. How to do this while supporting independent booksellers, which is also vital, is a tricky one, but will have to be a subject for future posts.