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To KU or Not to KU, Part 4: Who It Helps

Continuing a series begun in my entry for 1/13/2015:

Judging by the ruckus indie authors have been making for a couple of months, you’d think that Amazon’s Kindle Unlimited (KU) service was universally hated by the author community. Not so: A few vehement dissenting voices have piped up. Christa Lakes blogged that because of KU, October was her best sales month ever. Kathryn Le Veque‘s revenues are up 50% C. L. R. Dougherty writes that although his revenue per unit has declined by 9% for the second half, his total revenue was 46% higher than the first half. Here’s the money quote from his essay:

Borrows increase rankings and make your book more visible, as well as making it less risky to people who don’t know your work.

That may be it, in a nutshell: KU is a mechanism to promote your writing, and like all promotion efforts, it comes at a cost. The downside is that the cost remains even if the promotion won’t make you much more popular. The more popular your work is already, the more damage KU seems to do to your revenues. In the case of an extremely popular author like Holly Ward, it can do a great deal of damage.

Understanding this requires understanding how KU affects author visibility and reader risk-aversion. The risk effect is easily explained: A couple of power readers have already told me that because there is no marginal cost to trying unknown authors, they’re much more willing to do so. If you borrow a book and the first chapter makes you gag, you can return it and borrow another one immediately, having lost nothing more than a little time.

Alas, for readers to try you, they first have to be able to see you, and as you might imagine, the noise level in the Kindle universe is astonishingly high. This is why sales rankings are so important to the KU indie community: They get you above the noise, and if you’re lucky you’ll get noticed. The more borrows you get, the higher your rankings become, and the greater your visibility. It’s precisely the sort of feedback loop you want to kick off, especially if you’re just starting out and don’t have much of an existing fanbase. If you get high enough in the Kindle rankings, KDP Select pays “All-Star” bonuses every month that are not trivial:

  • Top ten KDP Select authors get $25,000.
  • Authors in the 11-20 rank get $10,000.
  • Authors in the 21-30 rank get $5,000.
  • Top ten KDP Select titles get $1,000.

with other, smaller bonuses further down the ranks. So there is more than just visbility at stake: That Christmas tree has a golden angel at the top.

KU is an outgrowth of KDP Select, and KDP Select is basically KDP with two major promotional features: Kindle Coundown Deals, which are limited-time discounts, and “Free Days,” which are limited time periods during which a book may be downloaded free of charge. Quite apart from letting your titles go cheap or free, the cost of KDP Select is exclusivity. If a title is there, it isn’t anywhere else. Beyond the drop in revenues, this is what much of the commotion is about: Since KU revenues are unpredictable, authors would like to have alternate revenue streams outside the Kindle ecosystem. Exclusivity makes that impossible.

Although borrows cannibalize sales to some extent, the effect is complex. You can’t “keep” a KU book, so in those cases where a borrowed book is a big hit with a reader, that reader can turn around and buy the book from KDP. This sounds to me like a subtle push toward quality writing, or at least writing of a quality that exceeds what most other KU authors are producing. I’ve read a lot of books that I will only read once, but when books are spectacularly good, I read them more than once, and keep them close at hand.

There’s a pecular unintended consequence of the way that KU pays: Short works are more lucrative than long ones. All titles pay the same on a borrow, irrespective of length. A short story pays you the same $1.40 (or whatever it is this month) as a 100,000-word novel. So little by little, KU titles are shortening up. This has been a trend in ebook fiction generally; I recall thinking a year or two ago that ebook retailing might herald in a new golden age of the short novel, which since the demise of the pulps has been an almost-forgotten form. Things have gone much farther than that on KU: We may be seeing a whole new publishing venue for short stories.

A related consequence: Authors are cutting up their novels into what amount to serials, and making each installment a separate title. Recall that there is no limit to the number of borrows you can do on KU, as long as you only have ten titles on your shelf at any given time. So if a novel consists of five chunks, you can read one in an hour, return it, borrow the next installment, read it in another hour, return it, and so on until the serial has been consumed. (This reminds me of binge-watching TV series.) It’s a minor nuisance to the reader, since each installment has to be separately borrowed and returned, but a major revenue enhancement to authors. I’ve seen some grumbling from readers about this already. Authors are jumping in with both feet.

I’m going to leave the question of whether KU devalues ebooks, or reading itself, for another time. There are different types of reading, each of which engages a different suite of mental machinery. I’ve seen speculation that power readers are creating a new type of reading, in which they skim familiar descriptions and pay greater attention only to what differs from other titles in the same category. I’m going to have to think a little more about that.

But for the moment, I think I have a grip on who is best-served by KU: The new genre fiction writer (especially in romance and mystery) without a fanbase but with some skill and a great deal of determination. In a way, KU is like an online game: You compete with other writers for the attention of readers, and keep score by sales rankings. Money earned is also feedback, but not as immediate as the rankings. If you’re just getting started, playing this game is mandatory. I can’t think of any other way to get noticed faster beyond pure genius or insane luck.

If you’ve got some time in grade and some sort of fanbase, KU is a tougher call. For writers in this category (like me) KU can make the long tail work in your favor. Put your older stuff on KU and use it to keep your flag flying. Put your new stuff on KDP (not KDP Select!) and draw attention to it among your fans any way you can. How well this works I don’t know, and won’t know until later this year, after I get my novelettes out there on KU. I’ll certainly keep you informed. I’m guessing that SF works less well on KU than romance. Since I don’t write romance, it’s a test that I’m unable to run.

If you’re already famous and making a living off your writing alone, KU may not help. It may hurt. The good news is that Amazon’s KU exclusivity runs for 90 days, after which time the title may be pulled from the program. You can run tests. A lot of writers have run those tests, and like dieting, individual differences seem to dominate results. The tests should still be run.

In conclusion, there’s something to remember: Amazon is a force of nature. You may not like it, but it’s not going away. Your challenge is to make the most of it, and not just stand on the sidelines, bitching. If KU benefits enough readers and enough writers, Amazon will keep it alive and feed it. There’s money on that table. Most of the other tables are bare. You can take the money or sit it out.

So…what will it be?

To KU or Not to KU, Part 3: How It Pays

Continuing a series begun in my entry for 1/13/2015:

The benefits of Amazon’s Kindle Unlimited (KU) program are reasonably clear for readers, especially “power readers,” who read over ten books per month. In fact, the program seems to have been designed for power readers, and I’m starting to hear from power readers who use KU and consider it a good deal for the money.

Now let’s look at the flipside: Is it a good deal for authors? That’s a kind of a tangled question.

First of all, my research suggests that Kindle Desktop Publishing (KDP) has been very good for indie authors and publishers. As I mentioned earlier in this series, much depends on what you’re writing and how quickly you can crank it out. Amazon has a program called KDP Select (KDPS) which is mostly about promoting your work, and all titles on KDP Select are also on KU. I’ll explain how KDPS works in a future entry; it’s complicated.

A fair number of authors writing in popular categories have been making their sole living off Amazon’s various Kindle programs for some time now. With KDP, payment is pretty simple: For books with cover prices falling between $2.99 and $9.99, authors get 70%, Amazon gets 30%. For those 99c novels you hear about (or anything with a cover price less than $2.99) authors get 35%, Amazon 65%. Authors are paid after the customer orders the book and pays Amazon for it, whether the book is actually read or not.

Under most author agreements with KU, this all changes. KU books are borrowed, not sold. A borrowed book generates a royalty payment when the customer has read 10% or more of it. (Yes, Amazon knows how much of a KU book you’ve read. It’s a cloud system, and the cloudowner knows everything about what goes on in its cloud.) KU borrows of books published by traditional publishers generate the same royalty payment as a conventional sale, but that’s a much smaller group of authors, and not what I want to talk about in this series.

So: How much is the payment for a KU borrow? It depends on two things:

  1. How much money Amazon has placed in a payment fund for KU borrows, and
  2. How many borrows actually happen.

Yes, you read that right: All KU borrows share funds from a fixed pool that Amazon “fills” at the beginning of every month. If the pool contains a million dollars and a million borrows happen, each author of a borrowed book gets a dollar for that borrow. That simpleminded example is not far from real-life. Roger Packer published a nice chart of KU payouts from July to October, 2014. In July, payouts were $1.86. Payouts dropped each month, until by October they were $1.33. Then, in November, payouts rose to $1.40.

Why? My guess: All hell was starting to break loose.

On a thread in the KBoards forums, bestselling author Holly Ward reported that since she started with KU, her income from both KU borrows and KDP sales had gone down by 75%. Lesser-known authors complained about the same drop in sales later in the thread. (Read it all; it’s an eye-opener.) It wasn’t just a reduction in the payment per borrow; conventional KDP sales had dropped as well. KU was evidently scavenging sales from KDP, and authors were starting to yell. Amazon allocated more money for KU borrows, hence the November rise. (The December 2014 payout level is not yet known.)

Remember that titles published under KU are exclusive to Amazon. Authors give up sales from B&N, iBooks, Kobo, and every other channel. So if KU and KDPS revenues fall, there’s no other money pipe running.

KU is still pretty new, and author discontent is even newer. Nobody knows if Amazon will respond with a bigger money pot or just ignore the author anguish and ride it out. I’m following the matter closely now and will report here when anything interesting happens.

In the meantime, in the wake of November’s author explosion, the question arises: Why do any authors stay with KDPS/KU at all? There are certainly costs, and as Holly Ward discovered, those costs are significant. Are there benefits? Well. Let me scratch my head a little, and in the next entry in this series I’ll explore that, which is the gnarliest KU question of all.

To KU or Not to KU, Part 2: How It Works

Continuing a series begun in my entry for 1/13/2015:

Amazon’s Kindle Unlimited (KU) is an ebook subscription service currently available to the US market for $9.99/month. KU books aren’t “sold” (the term used is “borrowed”) and you don’t get separate ebook files. The service is totally cloud-based, and (unlike the Kindle Owner’s Lending Library, from which KU evolved) works with the Kindle app as well as Kindle hardware. So you can read KU books on any device for which there’s a Kindle app. However, maintaining your KU account must be done from either a Kindle device or a Web browser.

When you establish a KU account, you’re given a bookshelf on the cloud with slots for ten books. You can borrow books to fill all ten slots without any sort of time limit, but to read an eleventh book, you have to “return” one of the ten on your shelf. Otherwise, the books you place on your shelf stay there until you return them or until you cancel your KU account. Interestingly, your place in the book and any notes and highlights you create are retained, and if you borrow the book again, your place and your notes come back down with it. This is true even if you cancel your KU account and start it up again later on.

Here’s a link to the KU browse screen. The collection is quirky, though what you see initially looks pretty reasonable. Life of Pi is there, along with the Hunger Games books, The Handmaid’s Tale, and a fair number of other things that I recognize. The catch is that power readers have probably already read most of the good stuff.

There is only so much good stuff by that definition. At this time, the vast majority of KU books come from Amazon’s Kindle Desktop Publishing (KDP) Select program. All books published with KDP Select are automatically available through KU. Authors who want to stay out of KU (more on this in my next extry) need to stay out of KDP Select. (Note that KDP Select is not the same as KDP.) Amazon is cutting deals with conventional publishers for ebooks to include in KU, but the larger publishers are holding back. Statistically, a KU title is a KDP Select title. For the vast majority of KDP Select authors, KU requires an exclusive; that is, if you sell a title through KU, you can’t sell it through the B&N store, Kobo, iBooks, etc. (Amazon granted an exclusivity waiver to many larger publishers and a small number of very popular KDP authors to rope them into KU.) I’m getting a little ahead of myself with that; the exclusivity thing is worth further discussion, which I’ll get to in connection with author issues.

As I suggested in my previous entry, whether KU makes sense for you as a reader depends entirely on two things:

  1. How many books you read a month; and
  2. Whether the books on KU are what you’re looking for.

If you read at least a dozen 99c novels a month, KU may be just the thing. A lot of power readers (and I know more than a few) read a whole book every day. For those who prefer novels in the higher-priced brackets, breakeven on the $10 monthly hit happens a lot sooner…if the sort of material you like is on KU at all. Right now that’s an imponderable, though I’ll say straight-up that nonfiction is pretty scarce. You won’t know until you go digging.

Well. That’s how it works. Now, what about those unintended consequences? And is it a good deal for authors? Stay tuned, kiddies: The head-scratching gets serious in my next entry.

To KU or Not to KU, Part 1: What Is It?

Back last July, when Amazon announced its Kindle Unlimited (KU) program, I scratched my head and said, “Well.” When I scratch my head and say, “Well,” it generally means that I’m confronting something that appears to be a good idea but will definitely generate unintended consequences. So it was with the ACA, and so it is with KU.

Thankfully, KU lacks the power to bring down an entire industry…or does it? Stay with me; I’ll offer up what insights I can.

KU is a subscription service for ebooks. Pay Amazon $10 a month, and it’s all-you-can-slurp from a 700,000-book collection that includes both Harry Potter and Lord of the Rings. Sounds great! Except…once you get past Harry and Frodo, the slurpins get mighty thin mighty fast. From what I’ve read, not a single one of the Big Five has placed any books with KU. KU is populated by small press, very small press, and (overwhelmingly) self-publishers. The material published on KU leans way toward genre fiction, especially romance, erotica, and mysteries. (Good numbers on KU categories have proven hard to come by. If you have them, please share.)

I compare KU to Netflix, where much of what you find is what nobody wants to pay for as individual titles. It’s not about “Where’s the show I want?” so much as “What’s out there to fill an hour or two of dead time?” In that respect, KU could be considered the mass-market paperback shelf of the ebook world. MM paperbacks were created to be read once, just like the pulp magazines that preceded them. They were a way to kill time. I’m not sure anybody expected that they would remain on reader shelves for decades, as some of mine have. (Most have been given away or tossed in the recycle bin. And I admit that my favorites have been falling apart for decades.) There were power readers back then who would read a book basically every day, picking a library fiction section clean in a couple of months or less, and spending an extraordinary amount of money on new titles at the bookstore. I think we have more power readers now than ever before. KU goes to great lengths to connect power readers with (mostly) new titles. So it’s a Really Good Thing for authors, right?

“Well,” he said, scratching his head.

Next entry: How it works.

The Year of Writing Dangerously

My mother always told us when we were kids that however we behaved on New Year’s Eve, we would behave for the entire year, so for pete’s sake just behave. And so we did, more or less. As 2014 winds down I’m trying not to be too grouchy, lest my outlook get stuck in one unflattering state for the next twelve months. It’s 11 below in Colorado Springs as I write this, which doesn’t help. Maybe if I get it out of my system before midnight, next year will be better.

(Midnight? asks Shrek. Why is it always midnight?)

The worst of it is, I can’t be too specific. But I’ll summarize this way: 2014 was a real lousy year for technical publishing. I’m pretty sure it was a lousy year for publishing generally. This isn’t new news; the last really good year for publishing may have been 2000. The 90s were a spectacular decade for publishing, and although it may not be entirely fair to compare recent years to those in the 90s, the functional difference is that (quality being held constant) publishing is cheaper and easier now than it’s ever been in human history. Less remarked on, but no less important: So is reading.

Traditional publishing companies were gatekeepers because the creation of books was difficult and expensive. I’m old enough to have spent all night helping my art director finish laying out a magazine issue on cardboard sheets, to which strips and blocks of text and even isolated letters were glued with hot wax. (I also remember upending the art department wastebasket on the floor at 2 ayem and digging through typesetting discards because Karen needed a 6-point “q” to complete a spread.) As laser printers replaced typsetters, and then purely digital layout replaced laser printers, smaller and smaller groups could do better and better work for less and less money. Skill still matters. Capital, not so much. With a proven book style template in hand, I can take an 80,000 word .docx file and turn it into a printable book in an afternoon without hurrying, using a six-year-old PC and a ten-year-old release of InDesign. I don’t have to print 10,000 books to make money. I can print them as readers buy them, and recoup the cost of my time with sales of just 25-30. (This is about layout and doesn’t include the cost of writing the book, which is much harder to quantify.) Yes, it takes more ebook sales to recoup layout costs because cover prices are lower, but since it’s easier to sell a $3 ebook than an $18 trade paperback, the time taken to recoup costs is roughly the same, all else being equal, with ebook sales pulling steadily ahead.

What this means is that technology has kicked the gates down, and the gatekeepers are left beside a pile of kindling, blinking and wondering whathehell happened. Conventional wisdom holds that the fall of the gatekeepers means that a flood of worthless, badly written books is turning the public off to reading. I don’t think this is true; more people are reading than ever. The real problems are these:

  • Finding good books amidst the torrent of sludge is difficult. (This is not a new problem!)
  • Sludge aside, the number of worthwhile books is growing faster than the number of reader-hours available to consume them.

These two problems interact in an interesting way: Readers who happen on a good writer tend to stay with that writer as a way of keeping their nostrils above the sludge torrent. If you find a writer who writes a lot of what you enjoy, you don’t have to look as hard for things to read. This selects for writers who are hyperextroverted, tireless self-promoters with the ability to summon ferocious energy and apply it to their writing. Writing three decent novels a year isn’t remarkable anymore. It’s survival. You’re not competing against crappy writing. You’re competing against excellent writing in a market that is approaching saturation.

Traditional publishers are looking for writers with “platforms,” which basically means writers who have already established a following somehow. Creating a solid platform is difficult and energy-intensive, and with self-publishing as easy and inexpensive as it is, writers have begun asking whether signing increasingly dicey contracts with publishers after they’re well-known really makes sense. The platform is the new gatekeeper. The bad news is that a platform takes a great deal of time and work, much of which does not involve writing. The good news is that you don’t have to kiss publisher ass to create a platform. (My agent has written a very good if slightly scary book about creating platforms.)

This, more than anything else, is why self-publishing does make sense, and why traditional publishers are struggling. It’s not all bad news. However, it’s not all good news, especially for careful writers of a certain age who can’t knock it out quickly enough to get a platform up to critical mass.

Hence my grumpiness, which may be fatigue more than nostalgia for my days when selling books to print publishers was easy, and the process–and money–reliable. I could summarize 2014 this way: It was the year that I truly lost my taste for traditional publishing. Again, I can’t yet explain in detail, but my inner circle knows what’s going on. (Note that this is about my core competence in tech writing; fiction is a whole ‘nother world.) Sooner or later the dust will settle, and you’ll get the full story.

Beyond that, the year was actually decent enough: Carol can dance again, we took two tropical vacations, we bought a nice new car, and we’ve begun our search for the Door Into Summer During Winter. 2015 could well be a lot happier than what we’ve just been through. Granted, what I write and how I publish it going forward are still unknown. But man, 2014 has been giving me some hints.

A hearty 73 from Carol and me and the Pack. See you on the flipside.

Odd Lots

Odd Lots

  • Yes, I changed my mind and signed up for Twitter, after pondering somebody else using my name and creating a Fake Jeff Duntemann. (Thanks to Bob Fergert for prompting me to imagine the unimaginable–and I’m a good imaginer.) More on this a little later. I have yet to post anything due to lots of top-priority projects here, but I’ll get to it within the week.
  • Dietary saturated fat is not related to plasma fatty acids. In other words, it doesn’t matter how much saturated fat you eat; your blood levels of fatty acids are controlled by other factors. What other factors? Care to guess? Are you reading this on Contrapositive Diary? Is the Pope from Argentina? Is the atomic weight of ytterbium 173.04? It’s the carbs. Wow. Whodathunkit? (Thanks to Jonathan O’Neal, who was the first of several to put me on the scent.)
  • There is actually a prize for the worst sex scene in literary fiction. It is not a coveted award, and I guess is seen as a sort of booby prize among literary writers. The WSJ recently posted a brief guide on how to avoid writing such scenes. (I avoid writing really bad sex scenes by not writing sex scenes at all. Works amazingly well.)
  • Two people in my circles who don’t know one another have independently recommended Ting as a cell carrier. First impression: Sounds too good to be true, and sheesh, they were created by Tucows. (That said, Tucows is no longer what most of us grayhairs remember it being.) Any other opinions? Getting new phones and a new carrier is my next big tech research project.
  • I’d also like to hear some early impressions of Lollipop, if anybody’s got it or is about to get it.
  • Here’s something you don’t see every day; in fact, I don’t think I’ve seen it even once, ever: A square flat-panel monitor, with a 1920 X 1920 resolution. Assuming these survive their launch (not a sure thing by any means) I’d be sorely tempted. As the story says, “Enough of the ultra wideness already.”
  • I wasn’t sure whether good technical books could be created as reflowable ebooks, but Yury Magda is doing it. He has five self-published Arduino-related titles now, and what I can see in the samples looks damned good. I’m going to buy a couple, less for the Arduino content as for how he does the layout. (Thanks to Jim Strickland for putting me on to this.)
  • Gizmodo/Sploid has a very nice short item on the XB-70 Valkyrie, certainly the most beautiful and possibly the second-scariest military aircraft ever built. Do watch the video of how the second prototype crashed–and if you’re ever within striking distance of Dayton, don’t miss the other Valkyrie at the Air Force museum there. (Thanks to Bruce Baker for the link.)
  • Barðarbunga is emitting over twice as much sufur dioxide every day as all of Europe’s smokestacks put together, and the volcano is still hard at it. SO2 is well-known to be a powerful cooling factor in the atmosphere. Combine that with a quiet Sun, and nobody really knows what might happen.
  • Best video illustration of how tumbler locks work that I’ve ever seen.
  • For that special, short, hairy, ironic someone in your life: You can get a genuine Flying Nun-inspired Weta-made Bofur winter hat, shipped all the way from New Zealand. Not cheap and not sure if it’ll arrive before Christmas, but if this winter keeps going like it’s going, you’ll be all set to face dragons, ice ages, or both.

Odd Lots

Godzilla’s Gumball Machine

This is Part 2 of an entry I began yesterday.

Nine years ago, I called for the creation of a digital content gumball machine; that is, a Web site that would accept payment and send back a file of some sort, whether a song, a video, or an ebook. It was the start of a popular series and I got a lot of good feedback. I’ve since walked back on several of the original essay’s points, primarily the notion that every author should have his or her own ebook gumball machine, but also the notion that DRM needs to be accomodated. At the time, I thought that while DRM might not help much, it wouldn’t hurt. I think the experiences of Baen and Tor (and probably other imprints) have proven me wrong. Lack of DRM helps. Besides, DRM is what gave Amazon its market-lock, and publishers demanded it. Petard, meet hoist.

The really big lesson Amazon taught us is that Size Matters. What we need isn’t a separate gumball machine for every author or publisher, nor even a clever P-P network of individual gumball machines, though that might work to some extent. We need Godzilla’s Gumball Machine, or Amazon will just step on it and keep marching through the ruins. To compete with Amazon, all publisher/author storefronts must be searchable from a single search prompt. Payment must be handled by the gumball machine system as a whole, via Paypal or something like it. Publishers will probably sell direct, and pay a commission to the firm operating the system.

This could be done. It wouldn’t even be hideously difficult. The technology is not only available but mature. Best of all, well…it’s (almost) been done already. There is a second e-commerce titan in the world. Its name is EBay. (Ok, there’s also Alibaba, which I have never used and know little about aside from the fact that it’s bigger than Amazon and eBay combined. Oh, and the fact that their TMall site is already hosting stores for Chinese print-book publishers.)

I’ll cut the dramatics and get right to the point: The Big Five need to partner with eBay and possibly Alibaba to produce a digital content gumball machine (or two) as efficient and seamless as Amazon’s. EBay’s affiliate store model is a good one, and I’ve bought an awful lot of physical goods on eBay, both new and used, outside the auction model. In fact, in the last few years I’ve bought only collectable kites at auction. Everything else was a fixed-price “buy it now” affiliate sale.

Admittedly, eBay has some work to do to make their purchasing experience as good as Amazon’s. However, they are already providing digital storefronts to physical goods retailers. I haven’t seen any plans for them to offer digital content so far, but man, are they so dense that they haven’t thought of it? Unlikely. If eBay isn’t considering a content gumball machine, it can only be because the Brittles won’t touch it. That’s a shame, though I think there’s an explanation. (Stay tuned.)

A large and thriving eBay media store would provide several benefits to publishers:

  • Print books could be sold side-by-side with ebooks. Publishers could sell signed first editions to people who like signed print books (and will pay a premium for them) and ebooks to everybody else.
  • Selling direct means you don’t lose 55% to the retail channel. Sure, there would be costs associated with selling on such a system, but they wouldn’t be over half the price of the goods.
  • Cash flow is immediate from direct sales. It’s not net 30, nor net 60. It’s net right-the-hell-now.
  • Publishers could price the goods however they wanted, at whatever points they prefer.

So what’s not to like?

Readers who have any history at all with the publishing industry know exactly what’s not to like: channel conflict. In our early Coriolis years, we sold books through ads in the back of our magazine. They weren’t always books we had published; in fact, we were selling other publishers’ books a year or two before we began publishing books at all. The Bookstream arm of the company generated a fair bit of cash flow, and it was immediate cash flow, not the net-180 terms we later received from our retailers. Cash flow is a very serious constraint in print book publishing. Cash flow from Bookstream helped us grow more quickly than we otherwise might have.

However, we caught a whole lot of hell from our retailers for selling our own products direct. That’s really what’s at stake here, and it’s an issue that hasn’t come up much in discussion of the Amazon vs. Hachette fistfight: Publishers can’t compete with Amazon without a strong online retail presence, and any such presence will pull sales away from traditional retailers, making those retailers less viable. If the Big Five partner with somebody to create Godzilla’s Gumball Machine to compete with Amazon, we may lose B&M bookstores as collateral damage.

Then again, the last time I was at B&N, they’d pulled out another several book bays and replaced them with toys and knicknacks and other stuff that I simply wasn’t interested in. The slow death of the B&M retail book channel has been happening for years, and will continue to happen whether or not the Big Five create their own Amazon-class gumball machine.

Alas, the Amazon-Hachette thing cooks down to this: Do we want Amazon to have competition in the ebook market? Or do we want B&M bookstores? We may not be able to have both, not on the terms that publishers (especially large publishers) are demanding.

And beneath that question lies another, even darker one: If eBay/Alibaba/whoever can provide an e-commerce site with centrally searchable ebook gumball machine for anybody…do we really need publishers in their current form? Publisher services can be unbundled, and increasingly are. Editing, layout, artwork, indexing, and promotion can all be had for a price. What’s left may be thought of as a sort of online bookie service placing money bets against the future whims of public taste. People are already funding books with kickstarter. B&M bookstores may not be the only things dying a slow death.

So what’s my point?

  • Amazon works because it’s a single system through which customers can order damned near any book that ever existed. Any system that competes with Amazon must do the same.
  • Digital and physical goods may not be sellable by the same firm, through the same retail channels. How many record stores have you been to lately? We may not like it, but it’s real.
  • Neither B&M bookstores nor conventional publishers are essential to keep the book business alive and vibrant. We may not like that either, but it’s true.
  • Publishing will probably become a basket of unbundled services. Big basket, big price. Smaller basket (if you can do some of the work yourself) smaller price. (I have an unfinished entry on this very subject.)
  • The real problem in bookselling is discovery. This is not a new insight, and however the book publishing industry rearranges itself, discovery will remain the core challenge. You need to learn something about this, and although I’ll have more to say about it here in the future, this is an interesting and pertinent book.

And to conclude, some odd thoughts:

  • The future of print-media bookselling may lie in used bookselling. Used bookstores seem to be doing OK, and it’s no great leap to imagine them taking a certain number of new books. Expect it to be a small number, and expect them to be sold without return privileges.
  • The book publishing business may fragment into segments that bear little business model resemblance to one another. Genre books work very well as ebooks. Technical books, not so much.
  • Change is not only inevitable, it’s underway. Brittle will be fatal.

Any questions?

Brittle Publishers

I spent a couple of hours yesterday catching up on posts I hadn’t seen before concerning the Amazon vs. Hachette conflict. Most of it was what I call “nyahh-nyahh” stuff, which is easy to spot and click past. My eyes rolled so hard I could see my own pineal gland. I mean, really, is a ten billion dollar corporation “the little guy”?

In truth, the conflict is and will remain a standoff, for two major reasons:

  • Amazon is doing nothing illegal. I’ve covered this in some detail before.
  • Hachette (and the rest of the Big Five) can’t get what they want (in essence, to form an ebook cartel) without running afoul (again) of US antitrust law. (See the above link.)

So there’s nothing left to do but wage a PR war. This was The Latest Thing for awhile, though I think everybody is rapidly losing interest, probably because it’s really hard to make people feel sorry for James Patterson or Steven King. Calls for compromise will fail, as long as “compromise” remains what it is in today’s political sphere:

  • Unconditional surrender of the Wholly Evil Other (WEO) to My Tribe;
  • Self-humiliation of the WEO on national media, with apologies for existing;
  • A pledge by the WEO to do everything My Tribe tells it to do while quietly dismantling itself and vanishing.

What I found fascinating about yesterday’s session is that nobody is talking about what the Big Five should be doing, which is competing with Amazon. Duuhh. In wondering why, I was reminded of a phenomenon I read about twenty or thirty years ago: brittle thinking. In a business context, brittle thinking appears when an organization has been doing things its own way for so long that it literally can’t imagine any change that wouldn’t destroy it. My theory is that brittle thinking is a consequence of narratives that we tell and repeat to ourselves until they become a sort of Holy Writ that cannot be challenged, lest the world end. The older a business is, the more vulnerable it is to brittle thinking. This may be why so many successful companies eventually fail. A narrative, like a habit, is a cable. The Big Five are all tied up in their own cables, and have become what I call brittle publishers.

The Big Five could take on Amazon. They could even win. They probably won’t, because they may be too brittle to imagine the changes that will be necessary. I’ve refined my thinking on this, and will offer a few points, aimed squarely at the foreheads of the Brittles:

  • Break the Snowflake Mindset. Publishing is just a business. It has its quirks, like any other business. There is nothing magical or inherently special about it.
  • Get out of Manhattan and San Francisco. The Brittles’ mantra that nobody outside Manhattan knows anything about publishing is hooey. I used to run Arizona’s largest book publishing company from a dodgy industrial park in North Scottsdale. My fixed costs were probably a third (or less) of what they would have been in Manhattan. My staffers, furthermore, were nothing short of brilliant. If it can be done in Scottsdale, it can be done in Omaha, Denver, Des Moines, or any other mid-sized heartland city. Hell, I bet I could do it in Cozad, Nebraska.
  • Eliminate DRM completely. Many have commented that DRM was what caused the platform lock-in that gave control of the ebook market to Amazon. Yup. And it was the publishers that demanded that DRM. The only way to reduce piracy to manageable levels is to make the product cheap, good, and easily purchased. Oh–and don’t try to claw back what the honest customers have paid for, or you’ll just be giving them a full ride to Pirate University.
  • And now, the biggie: Create an electronic retailer to rival Amazon.

Huh? What? Am I crazy?

Of course. I’m an SF writer. Tune in tomorrow, boys and girls, for our next exciting episode!