One Thing Hachette Can Do

There isn't much Hachette can do in their protracted negotiations with Amazon. Simply put, Amazon doesn't need Hachette. Whatever loss in profits Amazon sees from lost Hachette sales is a tiny fraction of their overall corporation. For that matter, even if losing Hachette sales did meaningfully affect its profit margins, Amazon has been comfortable with unprofitably for its entire existence, especially when considering potential growth, so I don't see them miraculously changing that pattern. Really it's like negotiating with someone holding a shotgun who also believes he's bullet proof.

Customer retention? A smile and a blow gun, of course.

If I had to guess, Hachette is holding out until whichever publisher is next in the staggered negotiation begins their own contract dispute. Obviously, Amazon is going to offer them the same terms being offered to Hachette and obviously that publisher will reject them. (Unless Amazon plays some very long divide and conquer technique, giving every other publisher but Hachette acceptable terms, then slowly driving Hachette and Hachette alone into some from of non-existence, but that would be some three-level chess stuff and potentially illegal.) The hope would then be a slow moving, 100% collusion-free compromising of more and more of Amazon's book sales with the result that either, Amazon offers better terms or book buyers begin switching to other retailers in significant numbers.

But I think, in the interim, there is at least one action Hachette can take that might give them something in their next round of negotiations, that also inherently strengthens the diversity of the book economy. Remove DRM from their ebooks.

One of the less talked about reasons from Amazon's dominance of the ebook market is the fact that they produced the first satisfactory, widely available, publicized ereader. You could argue that Amazon actually created the contemporary ebook market. Much of their current dominance has less to do with selling ebooks at a loss as it does just maintaining the head start they got with the first Kindle. Maintaining that head start is partially about prices, but it's also about DRM.

I'm illegally downloading the main ideas into my brain.

DRM (Digital Rights Management) is what prevents people from (legally) changing the format of the ebooks they have bought. (And copying them as well, but if you want to pirate a book, DRM is not going to stop you.) One reason why Amazon does not use the .EPUB ebook file, which has become the industry standard, is to lock customers into their content eco-system. Owning a Kindle essentially forces you to shop with Amazon. But those locks only work when customers are unable to convert their ebooks from one file to another. For example, if a Kindle owner, for whatever reason, wanted to switch to a different e-reader it would be almost impossible for them to (legally) move the library of ebooks they purchased to the new device. Likewise, it would also be (legally) impossible for a Kindle owner to take advantage of a sale Kobo might be running.

But once the publisher removes DRM it gets much, much easier for customers to leave Amazon. There might be lots of Kindle owners frustrated or disgusted with any one of Amazon's transgressions, but unless they are so frustrated that they are willing to give up their existing Kindle library, there really isn't a way for them to express their disgust. (As a reader, I don't think I could ever ask someone to give up their library.) Nor is there a way for them to, for whatever reason, buy an ebook elsewhere (like their local independent bookstore) and read it on their Kindle. In short, innovation gave Amazon a head start and predator pricing gave them dominance, but DRM sustains them.

Removing DRM does two things for Hachette. First, it makes it easier for customers to shop elsewhere. Second, given that DRM is important to Amazon it gives Hachette something (anything) to bargain with. I doubt there will be enough market movement for this to have a major impact on negotiations but something is better than nothing and right now, Hachette has nothing.

Life is an empty publicity stunt.

Which leads us, as nearly everything around this conflict will ultimately do, back to the DOJ's successful suit against publishers. DRM removal will really only have a major impact on the ebooks market if ALL publishers do it. A few customers might go through the effort of finding a Hachette book from Porter Square Books that can be read on their Kindle, but most customers want the books they want. Unless I can tell them ALL the books they buy from the store can be read on the Kindle (with a little help from Calibre) there won't be nearly enough cross-platform purchasing to make an impact. But I don't think any publishers have the stomach to risk another round of allegation, even though it doesn't take a backroom meeting somewhere in Manhattan to realize the value of ditching DRM. Even if they just made the change whenever their negotiations started, when seen from a certain perspective any action taken in common (except further consolidation, of course) will be seen as “co-ordination” or “collusion.” You know, like how early humans colluded over the spread of fire and agriculture. One of the many, many ironies of the DOJ case is that so many of traditional publishing's detractors vaguely argue for it's need to “evolve,” and “move into the future,” but fear of further litigation has essentially removed natural selection from traditional publishing; a good idea (still sticking with removing DRM) will have a much harder time driving innovation and evolution of publishing because the DOJ determined that “adopting best practices” is collusion.

At the very least, removing DRM would be a meaningful gesture (as opposed to an empty publicity stunt) to readers. It will enable debate about how we administer the economy of ebooks and it will highlight how Amazon and others seek to capture customers rather than convince them. And, it's doing something, anything, to demonstrate activity. Hachette right now, needs to be patient, but it will be a lot easier with at least one thing to do.

Confessions of a Markup Artist: An Open Letter to Farhood Manjoo

Dear Farhad,

My name is Josh Cook and I am thirty-four years old (fucking hell, I'm 34? Shit. That's still “early-30s” right? It's not “mid-30s” until 35, right? Right?) and I am a markup artist. I work for Porter Square Books and, with a few exceptions (staff discounts for booksellers and baristas at Cafe Zing, discounts on the twenty best new releases of the month as nominated by indie bookstores around the country, non-profits, teachers buying books for their classroom, members of Grub Street, people who buy in bulk, and customers who want to buy a book that shows some shelf-wear or other damage. OH! And we also sell remainders, which end up being like, $5.99 or something.) I sell books for the cover price. I've seen your response when someone points out that the definition of “markup” doesn't mean “selling something at the Manufacturers Suggested Retail Price or MSRP,” (you know the price that the item's manufacturers suggest...never mind.) so I won't spend too much time telling you that you simply refuse to understand what a “cover price,” actually is, or how to distinguish between “markup” and “more expensive for a shit ton of complicated and convoluted reasons some of which have to do with distinct business models and volumes of sales (both of which are legitimate reasons for price difference) and some of which have to do with being a monopoly and acting like it by dodging taxes as much as possible, treating your workers like ACTUAL cogs in ACTUAL machines, and extorting your vendors—what? No, Walmart, I wasn't talking to you, yeah, no, I mean, you fucks have built an empire on Eisenhower highways and foodstamps, but you're not at issue here—for preferential contracts,” nor do I particular want to rehash, yet again, that the most expensive part in the book production process (as it is in pretty much every production process that doesn't involve blood diamonds) is the people involved in the production including the writer, agent, several levels of editors, administrators, executives, IT technicians, and booksellers, all of which are present, with their damn mouths always needing damn feeding, whether the book is a hardcover or an e-book, because I know there really isn't a point; the idea of the “indie markup” and “overpriced ebooks” gives you and everyone who agrees with you conceptual permission to buy books for way less than they are worth and it is very very very very very hard to shake free of a belief that lets you do what you want to do, no matter how much nuance that belief willfully ignores in order to sustain itself. (Unless you think bookstores print the book covers themselves.) (Please, please, tell me you think bookstores print the covers themselves and thus have control over the prices on them.)

Just so you know how blinded by self-interest I am (in way that, obviously, you are not) around the issue of the cost of books, I should point out that I am a writer, wait, hold on—I should point out that I am a PROFESSIONAL writer who has been paid an amount of legal currency for a book that will be published. So, tell me again, why my thousands and thousands of hours of work are worth less than a really good sandwich (not knocking really good sandwiches) or an artisan cocktail (sure as hell not knocking artisan cocktails) or Imax tickets to the new Tom Cruise movie (fuck that guy), why there is something wrong when I ask for an economic system that at least has the potential to let me lead a materially comfortable life or believe that the output of one of the most important actions in human culture should be priced as if it is worth something?

The thing is, technically, I mean if we're using words and their definitions, if what indie bookstores sell books for is a “markup” then what Amazon does can't be a discount. And yet, all over the place they broadcast how much they “discount” off the cover price, as if the cover price were some kind of MEANINGFUL POINT OF REFERENCE. If Amazon's “low prices” were just “low prices,” they wouldn't be discounts, they would just be “low prices.” Listen if you have evaluated the evidence, done the research and understand the context, and decide to shop at Amazon that's fine. Sure, I don't think you should, but if you do, that doesn't mean I think you're a bad person or that I think you should be ashamed of your decision, it just means we disagree on this one particular issue, in the world of particular issues, that happens to affect my particular life in a world of particular lives. I'd just really like to use real words in our disagreement.

What I don't understand is, where are all these profits I'm making by selling marked up books? I mean we sell Capital in the Twenty-First Century for $40 plus applicable Massachusetts state sales tax, and we have been selling just buckets of them. (Yes, Cambridge, MA is a really, really, really, smart town.) I know the economics of scale ensure all this sweet sweet profit won't be enough for the store's owners to buy a private jet like Bezos or lavish us with exorbitant sales bonuses, but an automobile upgrade, surely, and maybe a really swanky end of the year party. I mean, last year the store sold over 5,000 copies of The Ocean at the End of the Lane in hardcover for $25.99 as marked on the cover; that's gotta be a Lexus right, or at least an Audi. (OK, maybe it would have been a Lexus if we had taken advantage of the fact that the books were all signed by a fucking living legend and charged more for the “added value,” as nearly every other retail industry does, or started raising the price as supply dwindled applying THE BASIC BUILDING BLOCK OF EXCHANGE BASED ECONOMIES, but I guess we were too full of truffle dusted caviar to think clearly.) How can we be marking books ups, selling thousands of them, and still making just a bit more than break even? Something about inefficiency maybe? Or it's not a fucking markup.

Oh, right, I'm confessing. I, Josh Cook, am a markup artist and I love every fucking second of it. I am mark up artist because I read galleys in my spare time so I know about the books you might ask me for. I am a markup artist because I learn about genres and books and authors that I personally don't give a shit about, because a lot of other people give a shit about them. I am a markup artist because my store remits the sale tax needed to keep schools and roads together. I am markup artist because you can duck out of the rain into my store, you can arrange to meet a first date at my store (can and SHOULD), hell, you can even drop your kid off at my store to read in our stacks for a couple hours. I am a markup artist because I love the interactions between books and people and people and people through books, whether its those I sell at the store or those I write at my desk. I mean, if I really wanted more money, which is what you imply by the whole “indie markup” phrase, I sure as fuck wouldn't work in a bookstore and write books, I'd be a banker. And you know what, if you also just wanted more money, you would blow off tech writing and also be a banker. And the thing is, the only reason why our society has readily available books at prices affordable to a wide range of members, is because, at virtually every level of the publishing process, someone decides to work with books instead of make more money.

My name is Josh Cook. This is the end of my confession and open letter to Farhad Manjoo, who is probably an OK guy with the exception of this one inexplicable persistent mistake. I am a writer, a bookseller at an independent bookstore, and therefore, a motherfucking badass markup artist.

A Total Absence of Surprise: On Amazon & Hachette

How do you transfer market share to profit? The most direct way is to charge higher prices for whatever you sell in the regions where you dominate the market. But what if the way you gained that market share was not through the highest quality products and services at fair market prices, but by underselling all of your competition? What if your whole rasison d'etre is low prices? What if your entire public persona is based on the idea of “putting the customer first?”

For it's entire life, Amazon's business model has focused entirely around infinite growth of market share. Relentlessly, obsessively, ruthlessly, using low prices to gain retail market share, first in the book world (because the ISBN metadata of books is perfect for online databases) and then, in every aspect of the retail, and now, media world it can. It has been able to sustain itself on razor thin profit margins through the extra sales generated by blatant but technically legal tax avoidance, low pay and poor treatment of its warehouse workers, and Wall Street confidence in its ability to some day, some how, any-day-now-even-though-we've-been-waiting-for-fifteen-years, start turning a profit. (A compliant Department of Justice and a disturbingly sympathetic federal judge helped too.)

If money were infinite, there would be no poor people.

But now, the tax loophole that was a basic building block of Amazon's business model, is being closed, state by state, with the likelihood of federal tax fairness increasing by the year. In the UK, awareness is being raised and pressure is being put on Amazon over how much tax they DON'T pay, by technically basing their European division in Luxembourg. And people have noticed how awful Amazon treats its workers, including the workers suing Amazon over the lost break time in America, and organizing the hell out of shit in Germany. And Wall Street is finally starting to notice that Amazon isn't making any money. Not enough to do anything meaningful yet, but the Stock Market has the emotional stability of a 13-year-old, so the risk is always there that one day Amazon will wake up no longer allowed to sit with the cool kids.

Wait. That's what "communism" means?

No matter how efficient your business is, there is an overhead floor. There is a cost to doing business and even Amazon must pay it to keep doing business. So if they can't raise their prices how do they meet that floor? The same way Walmart does, by pressuring its vendors for more advantageous contracts. Hachette just happens to be, for whatever reason, the latest vendor to feel Amazon's pressure. To anyone following Amazon's progress to “Walmart of the Internet” this should not be a surprise. To anyone with a basic understanding of retail economics, this should not be a surprise. Really, anyone who takes a second to think about Amazon's discounts, shouldn't be surprised either. If there is anything surprising at all about this most recent conflict its that the public hasn't heard about more of them. This is the natural consequence of a business model based entirely on market share with unsustainably low prices. The result is like milfoil in a pond; Amazon is sucking the money publishing needs to survive out of publishing.

Sorry, today is my day off from crippling cynicism.

But that money goes to the consumer right? And if it's good for the customer, it's good for the economy, right? You'll spend the money you save through cheap books on Amazon, elsewhere, right? When Amazon pays its vendors less, everyone downstream makes less. (Have you heard about the shrinking author advance?) When Amazon pays its employees less, every economy impacted by those employees has less wealth. Though you personally might economically benefit from Amazon's low prices in the short term, and might reinvest those savings in other aspects of your local economy, that money came from somewhere. At best, Amazon's (and Walmart's) cheap prices are a zero sum gain for the economy, but more realistically, they starve states and municipalities of tax dollars, pull money out of the economy into Bezos' space alien death laser compound, and deprive a primary, fundamental, vital mechanism of human expression the resources needed to publicize and distribute that human expression.

Unless something changes, Hachette will not be the last publisher stressed by Amazon. Even if Hachette “wins” this particular conflict, Amazon will just pressure some other publisher when that contract comes up. How would something change? Ideally, Amazon would start acting like it is a member of society, but I don't see that happening any time soon. Even less likely, is the use of existing federal anti-trust regulation to stop Amazon's predatory pricing. So, again, it comes down to readers thinking in the slightly-longer-than-short-term and shopping elsewhere, at least some of the time. Now seems like a pretty good opportunity to start. If Amazon is telling you there is a three-week wait time on a popular book, go to IndieBound and buy it from an independent bookstore. You'll get the book faster, you'll buy it from a company that acts like its a member of human society, and you'll help support the publishing industry as a whole. Of course, the whole success of this strategy is based on readers thinking through the consequences of their actions more than one step removed. Readers are still people, and if our attitude towards human driven climate change is any indication, even just one step removed is apparently too much to ask.

The Indie Brand Paradox

The general indie bookstore publicity strategy in our competition with Amazon is pretty straight forward. When you shop at an indie bookstore you get the kind of service only a person can provide; conversation, camaraderie, and community. Handshakes. Dog treats. Safe place for the kiddos. Air conditioning in the summer. A free flip through The New Yorker and/or US Weekly. Like the olde timey general stores, not only do you get the opportunity to buy something you want/need, you also get the opportunity to be a person with other people. (Indie bookstores were also leaders in the Buy Local movement, but that's a different kind of argument.) And for the most part, I think this strategy is, when backed up by smart management, excellent buying, and a knowledgeable and personable staff, pretty successful. The stores that survived the Borders/B&N/Amazon purges add enough value to their books, that customers are willing to pay up to 50% (or more) more for them.

I assure you, that door is not a time machine.

But this strategy has a strange side effect. In many customers' minds the ideas of “community,” “personal service,” and “conversation” are associated with “old fashioned,” while online shopping is associated with “modern,” and, quite often, also “convenience.” The result is that, even though it is 2013 everywhere, customers assume we are unable to provide a lot of services we have been able to provide, roughly as long as there have been bookstores, or as long as bookstores have had computers. My two “favorite” expressions of this assumption are, “Are you able to see if you have a book?” and “Are you able to order books?” They're followed quickly by “Can I order books online from you?” and “Do you sell ebooks?”

A more public example is when Ron Charles, excellent critic and solid indie supporter, said this on his blog “By pre-selling these big-name novels, Amazon removes even the possibility that you might see and buy a copy in your local bookstore in October...Brick-and-mortar bookstores could offer the same advance sales, of course. But how many of them do?” The answer is: nearly all of them. What most of us don't do (and what PSB just started doing) is publicize this capacity. So, even though indie bookstores have pretty much always been able to take pre-orders in some capacity, and have been able to take online pre-orders as long as they have had ecommerce websites, because of the indie brand, customers either flat out assume we can't or don't even think about it as an option.

It was weird. I asked them & they got it for me.

What is strange about these questions and assumptions is that we have computers and people can see them. We have had computers as long as everybody else. Sure, ebooks are newish (2+ years at this point) but we have had the capacity to sell books through our website since we opened almost nine years ago. And bookstores have been able to order books for customers, roughly as long as there have been bookstores, long before there was even an internet, let alone an Amazon. To add a nice extra level of frustration to this whole issue, sometimes we can be even more convenient than Amazon. Sometimes, you can order a book from our website on you lunch break, and pick it up from the store on your way home. I can't guarantee that every book you think of on your lunch break will be ready for by the time the T drops you off by our store, but probably a lot more than you would think.

So what is the source of this dissonance? Why do customers assume that they must sacrifice the conveniences of technology for personal service and community values? My best guess is that, in general, our brains like big, simple concepts and it takes real effort to break those big concepts down into their complicated, nuanced constituent parts. Think about why first impressions are so important. When you meet someone for the first time, you create a big, simple concept about them, something easy to apply in future situations. Not accurate, but applicable. And it takes real work to break through a negative first impression. Often, no matter what else you learn, you just can't shake it.

They said the word I fear most: Yes.

Advertisers have been using this tendency to form and apply big simple concepts to their advantage as long as there have been advertisers. So, rather than, say, spending the time and money it takes to make good tasting beer at a fair price, Budweiser spends the time and money to hammer our brains with ads to create a big concept association in our minds between its horrible, horrible beer, and “fun” or “taste.” Once that big concept is formed, once someone understands Bud Lite as “what I drink when I'm out or at a party,” it is very difficult to break down that big concept. In a similar vein, all the early (and continuing) advertising for online retail options, hammered home the idea that online shopping is convenient (which it is), so people created a big concept “online shopping is convenient.” Simple. Direct. Easy to apply.

When indie bookstores and their allies began to mount a coordinated self-defense effort, they focused, obviously, on what distinguished them and so created the big concept “Indie bookstores provide community,” as their way to do it. And, for the most part, it worked. But because it didn't include convenience and because it was created in opposition to the big concept of convenience, people assumed that community did not include convenience. Furthermore, an idea lost between these two big concepts is “just a little less convenient.” For example, if you stop by the store, call in, or go online on Monday morning and we don't have the book for you, there's a pretty good chance we could get it to the store by roughly Tuesday afternoon. Just slightly less convenient than “definitely Tuesday morning,” but still, pretty goddamn convenient. Sure, sometimes that Monday morning ordered book won't get to the store until Thursday afternoon, but is that really so bad. And the store doesn't get deliveries on weekends, but is a Thursday to Tuesday wait really “inconvenient?” Less convenient, sure, but a truly negative experience? And when you add all the other positives about shopping at an indie bookstore, including the general economic good you do for your community and everything that we already celebrate about indie bookstores, how bad does that wait actually feel? Of course, this really isn't about how we think when we sit down to think, but about the shortcuts our brains and cultures have evolved to streamline decision making. For soulless, myopic corporations, these shortcuts are an advantage, because they can spend a billions of dollars exploiting them, but for small businesses with little money and nuanced arguments, often the best you can hope for is a brand paradox with a preponderance of positives. At least Indie bookstores have that. (And computers for god's sake!)

What Is at Stake?

Reading opinions about the book industry on the Internet is not usually good for my blood pressure. The biggest problem with those opinions is they tend to lack two crucial facts about the book industry before being expressed: the human cost of a well-edited book is fairly high and books are sold to retailers and wholesalers at a discount based on their suggested retail price rather than on a net unit price like nearly everything else. (I've talked about this) (Nobody seems to mind that the exact same bag of Doritos costs more at the convenience store than the grocery store, but well...) Without those two facts it is easy to misunderstand the indie argument against Amazon and hard to see how Amazon's low (read “predatory”) prices are bad for books, and thus, ultimately, for readers.

I'm not going to rehash that argument again, because I think it and the debate in general on the health of publishing industry is missing a pretty important answer to a pretty important question: what is at stake? I've touched on this a little bit (What Readers Owe Themselves) and I know I've argued here, there, and everywhere, about the value of indie bookstores, but I don't think I've ever dug deep to the ultimate stakes in reading, to what, ultimately we will lose if Amazon is allowed to (by both government and consumers) become an absolute monopoly in bookselling. And I think the heart of the “cheap books must be good,” belief and its various interpretations and mitigations, is how people answer or misunderstand the answers to this question. So besides bookstores and the sales they generate, what do we lose if there are no physical bookstores? (Excluding, of course, everything that is great about physical bookstores, which, for some reason, a lot of readers don't buy into.)

I'm going to break my answer into three categories; What We Won't Lose, What We Might Lose, and What We Will Lose if Amazon ends up with a total monopoly in bookselling. From that I hope you (though if you're reading this odds are you're probably already with me) will decide to spend at least some of your book money in indie bookstores, to protect what is at stake.

Cheap & quality? Fine. I'll just have GOD CHANGE THE FUCKING RULES!

What We Won't Lose
No matter what publication and distribution structures survive or don't, writers will write books and readers will read them. The media may change, the processes may change, the delivery method may change, but, even if what I believe is the worst possible outcome happens, there will be books and they will be read. Furthermore, as they have throughout history, brilliant, daring, original voices will be heard, maybe not in their lifetime and with an even lower likelihood of any kind of commercial success (Yes, even lower than now.), but they will write and a few of them (Again, even fewer than now) will find readers.

What We Might Lose
One of my favorite things about working in the bookstore is watching total strangers having conversations about some of the most important questions we can ask as human beings, because a random interaction through books lead them to discover they both read and loved a specific work. I'm also a pretty big fan of people vouching for a trashy beach read someone else is holding, declaring they were underwhelmed by a bestseller, offering their own recommendation after overhearing someone talking with a bookseller, or really any kind of interaction between strangers. We filter so much of our lives already (with a fair amount of good reasons) that this fundamental skill of society isn't practiced all that much. Bookstores are one of the places it is, but I don't think this kind of interaction is inherently tied to retail bookselling. This kind of interaction could happen in libraries (not that their funding is particularly strong) and there is a chance online social media sites like Goodreads, LibraryThing, Facebook, and whatever else gets invented next, could find a way to create this kind of randomness. But you have it in bookstores now, and given that it's impossible to show an ROI on “Providing a space for people to learn and practice empathy and community building through the unscripted, unstructured, spontaneous interactions of people who, really, when it comes down to it, don't particularly give a shit about each other,” there's a chance it will disappear if bookstores do.

Much like the random community, author events aren't inherently tied to a retail bookstore environment. Libraries do some already and I actually think publishers should try to send authors into more non-bookstore venues like bars, coffee shops, farmers markets, as opening acts for concerts, etc., anyway. I also don't think we've really explored the potential for online events. The challenge is that, most author events don't make money. For a bookstore, the ones that don't are made up for by general book sales and more successful events, and are part of the overall business model, whereas if a bar hosts a few readings and nobody buys any books and nobody buys any beer, that bar is never going to do another reading. We might find alternatives to the book store reading (honestly, I think book stores should explore alternatives to the book store reading) but, even if we do, odds are, we'll have even fewer events in the world than we do now. I should also argue that author events, in whatever form, are more than just a chance to get your book signed; they are the chance to participate in culture. The actual creation and appreciation of why we're humans and not gorillas. They are one of the very few venues where people who are not artists can participate in the creation of meaning and significance. To get a little sappy, author events can be profoundly inspiring. Like books, they can change your life. And they might find a way even if bookstores do not.

Technically, otherwise, I am a gorilla.

What We Will Lose
I don't see how publishers as we know them could survive. Eventually Amazon would subsume them. The first thing we would lose with publishers is editing. As I've said before, there are types of books that can get by with minimal editing (Shit, some books can sell a gagillion copies without any evidence of being edited whatsoever.) and there are types of books that need an editor, need an extra mind struggling over them to reach their potential. And, I believe we're already seeing the effects of a reduced investment in editing. I've read a number of good books that could have been great books if the publishers had invested in another year of editing. If Amazon reaches its goal of absolute domination, very, very, very few books will reach their potential.

The thing about editing is it has a terrible ROI. A great book will sell as well as a good book. Frankly, the actual quality of the book generally has very little impact on the way it sells. Which brings me to a less discusses role publishers play in society. They sustain themselves commercially and produce works of quality. They are one of the very few cultural businesses. Not only do they produce works of culture and promote works of culture, they inject the fact of culture into our economy. Publishers argue that art, literature, culture, are aspects of society worth spending our money on. It's not just that publishers produce and distribute specific articles of culture, but that they argue for the fact of culture in our commerce. Sure, most publishing is commercial, but MOST is very different from ALL. Furthermore publishers are able to use those barely edited gagillion copy selling dollops of fleeting entertainment to subsidize the art that will eventually define our world and educate people living in it. Without publishers, though plenty of books will reach the public, even less little literature will. (Yes, even less than now.)

Nothing? That's the most important thing to me.

So what is at stake? Well, if you're willing to read just anything that happens to end up in front of your eyes, aren't really concerned whether or not good writers can make a living by their writing or at the very least, can meaningfully augment their lifestyles with writing income, don't feel a responsibility to occasionally help support the reading priorities of others, and don't particularly care how well a book is written, whether or not it has the capacity to change you or the world you live and/or is committed to the idea that writing and reading are profoundly human acts, central both to our understanding of the world and our happiness while living in it as well as being about the most complete and satisfying form of entertainment you can get your hands, then nothing is at stake. Absolutely nothing. No matter what happens, you will get what you want.

For everybody else, everything from the convenience of last minute birthday presents to the strength of American literary culture is at stake. Even if you're not sold on the value of physical bookstores in and of themselves, and even if you believe we'll find a way to continue some of the important acts of bookstores, there just won't be enough money in publishing for the creation, promotion, and distribution of art. In a lot of ways, this idea is similar to the “debate” around human driven climate change. Sure, you can take the chance that we are not driving climate change and the chance that a scientific breakthrough will solve the problems of climate change, but if you're wrong civilization as we know it could end. With books, you can take the chance that Amazon will sustain the most important parts of publishing and selling books, that intrepid entrepreneurs will find ways to fill the gaps created by the demise of bookstores, and that new technology will allow great literature to reach readers, or, you could pay an extra few bucks every now and then to keep those things alive. Seems like no decision at all.

The Good & Bad Possibilities of Random Penguin

If you make another Random Penguin Tumblr I will eat your cat.

Though its been coming for a few months the world now officially has a Random Penguin; a publishing company that will be responsible for about 25% of all English language books. (Here's a handy list of countries whose GDP will be smaller than Random Penguin, compiled by the juggernaut of awesome that is Melville House.) The Big Six have become the Big Five and many expect we'll end up with the Big Four soonish. It's hard to blame these companies for merging. The Department of Justice, whose case against now only Apple has slid from dubious to downright embarrassing (though, apparently not embarrassing enough to lose), essentially legislated against any kind of publisher-lead attempts to rein in Amazon's predatory pricing, dramatically limiting publishers' ability to work towards a stable and sustainable market. Ironically, one of the options still open to publishers, because I guess we misplaced those anti-trust laws that helped save the American economy a hundred years ago, is to create an entity with enough market share to be able to push back against Amazon. To put this another way, Amazon can not afford to take down the Buy Button from all of Random Penguin's books, whether or not Random Penguin kow-tows to Amazon's discounts or negotiates the next ebook contract to look like the agency model.

But a lot of questions and concerns remain about Random Penguin (I know that's not the official name, but it's cuter, and it saves me a word every time I write it, all of which I used for this disclaimer). Here's my take on the good and the bad possibilities in this merger. Let's get the happy shit out of the way first.

Says here "Monopoly" is trademarked, so you can't use it in court.

The Good
They'll say a lot about “the publishing of the future,” and other board room jargon, but this merger, first and foremost is about defending publishing from Amazon. It is a couple of private companies realizing the government would not protect them from unfair business practices defending themselves. This merger was designed to create leverage against Amazon and it will. Anything that limits Amazon's power is good for books. Even though very few, if any, other publishers will be able to negotiate terms with Amazon the way Random Penguin will, Random Penguin will open the doors to new types of contracts and new approaches to contracts for everyone. And, they'll be able to say “no.” Other publishers have successfully said “no” in the past, but 25% of English language books saying “no,” has a much different volume.

There's been a kind of awakening in publishing since the demise of Borders. Publishers have always said they value independent bookstores and those in publishing who work directly with us, like our sales reps, generally do their best to demonstrate that value. Yet, for every lofty moment of quotable praise, there was a collection call, a restriction of credit, a short discount. But that's beginning to change. As indies get better at being 21st century bookstores, as the effect of show-rooming is better understood, as we delineate and discover the paths of, um, “discovery,” it becomes clear that indie bookstores influence book sales far more than is reflected in their market share. Sure it's direct show-rooming and social media and author events and the serendipity in the shelves, but it's also relationships with readers who are influential with their friends and family, leading the buy local movement, and guiding and generating coverage of books in local media (e.g. how many more readers picked up The Ocean at the End of the Lane after seeing the little article in the Globe about the line for tickets to our reading with Neil Gaiman? Impossible to know, but whatever that number is, I bet most of those sales didn't end up with us.) In short, publishers have realized indies are a vital, though indirect, force in book sales and publishers are beginning to find ways to support us for that.

A lot of those ways are back room stuff about dating (when we pay) and discounts (how much we pay) that don't effect things customers see, but make our accountants, maybe not happy, but certainly less crabby. If Random Penguin decides to lead this effort to support indies for all those sales they create the momentum for but lose to Amazon (and they said they would), they could help revitalize indie bookselling in America. If Random Penguin is successful with whatever programs it develops, whatever large publishers remain will likely follow suit. Existing stores will expand. Fewer stores will close. More will open. More bookstores is good for publishers, everybody who works in publishing, authors, and readers. Hooray!

I only read the death parts of Death & the Penguin

The Bad
There's a reason why we have anti-trust laws, even though we don't enforce them anymore. Monopolies are bad for consumers and bad for the economy. I mean, imagine if something went really, really wrong with the parent companies, like what happened to Publishers Group West, and, regardless of the state of books, the company responsible for 25% of English language publishing declares bankruptcy. What if they just make a string of really, really bad publishing decisions and end up having to struggle to make ends meet? What if there's another recession? What if they get sued? What if they get swindled? Too much market concentration makes the industry extremely fragile and publishing just became very concentrated.

Furthermore, though we all hope publishers are different, gigantic corporations tend to be really bad at long term thinking. There is absolutely no guarantee Random Penguin will play the indie long game described above. When those quarterly profit margins start to loom, we could hear talk of “efficiency,” or “streamlining,” or “eliminating redundancy,” or maybe even “modernizing,” which will translate to folding imprints, most likely the more vibrant, more interesting, more literary, and thus, less profitable ones, laying off support staff (both of which are likely to happen at some level anyway), switching to freelance editors and squeezing authors and book stores. In short, they might act like EVERY SINGLE OTHER GIGANTIC CORPORATION IN THE WORLD, with the end result being fewer interesting authors getting published, less support for those that do, and probably zero practical financial acknowledgment of the sales efforts made by indie bookstores. We'd end up in slightly worse world with another juggernaut to worry about.

Conclusion
The results are probably going to be somewhere in the middle. To survive, Random Penguin will have to have some kind of conflict with Amazon, but whether that conflict improves publishing in general remains to be seen. I imagine they will make an effort to support indies and I'm also pretty sure they're going to act like a big stupid soulless corporation. But even with the best of intentions that kind of market concentration causes problems. Power, as literature and reality have been telling as long as there have been both, tends to create far more problems than it solves.

What Readers Owe Themselves

First of all, a big thanks to my friend Nick, who, after listening to me whine about this, came up with the exact phrase I needed to bring my thoughts together.

But first, let's talk about food. Can there be a more noble goal than cheap food? When you think

Wait, are you going to talk about corn?

about it, lowering the cost of food is a major step forward in improving the lives of every member of a society. And so, over a few decades, the United States used agricultural subsidies to lower the cost of food so much that Americans generally spend far less of their income on food than almost anybody else world. But now we're beginning to see some major negative consequences to those subsidies and the cheap food they produced. By focusing the subsidies on corn and wheat, we've created a system of monocultures with a massive carbon footprint that require genetic engineering and an endless supply pesticides to maintain, run by a few massive corporations lobbying Congress for an even more beneficial system, all the while, the cheap corn has filled food with high fructose corn syrup and we have seen massive increases in obesity and Type II Diabetes. Cheap food is a noble goal, but the way we've tried to bring it about has had disastrous negative consequences.

So what do you do? If you want to be healthy, if you want your family and your decedents to be healthy, what do you do? What actions do you owe to your own well being, the well being of your loved ones and the world they will inherit? Obviously, you can lobby for a restructuring agricultural subsidies, you know, because you're made of time. Or, every now and again, you can shop at a farmer's market or buy organic at the grocery store, not because you owe something to the farmers or because you feel guilty, but because you owe it to yourself and your family to contribute what you can to a healthier food system. Sure, food at a farmer's market or organic food at the store is more expensive, but how much is your long term health worth or say, not having the coasts flooded by rising ocean levels. You don't need to buy all of your food from a local farmer's market but any time you can shift some of your spending you improve yourself and your world.

Wow, I've been using the word "metaphor" incorrectly my whole life

Something similar is happening with books. What could be wrong with cheap books? I think everyone who loves books would include free books in their utopia. But we don't live in an utopia and everything costs money. The same way the federal government created artificially low food prices through subsidies, Amazon, and Barnes and Noble and Borders to a lesser extent, through legitimate and illegitimate means has created artificially low book prices. Instead of direct subsidies, Amazon uses volume of sales, margin improving efficiency, and Amazon Prime membership and profit sharing from other industries and contracting with warehouses that pay and treat their workers poorly, not remitting sales tax, bullying publishers for better discounts, and apparently, despite being a publicly traded company never needing to actually turn a profit, to create such low prices. That Amazon price is subsidized just like the price of a bag of Dorritos.

To maintain the metaphor (or strain it, perhaps) what is the obesity epidemic of cheap books? Publishing is running out of the money it needs to publish. As cheap as books are, we're actually selling fewer and fewer of them every year. Even with its low prices, Amazon cannot create book sales the way the physical bookstores it has put out of business can. Even with all their algorithms, most of the time you buy the book you're looking for and not also the book by a totally unrelated author that happened to be a major influence on the book you were looking for or the book you'd been meaning to get but forgot until you saw it on display, or the totally unrelated book that a bookseller just happens to be really jazzed about. Lots of different factors go into book sales, (how reading is taught in schools, new access to entertainment on smartphones and tablets, the presence of actual honesttogod intelligent, quality television) but even with the low prices Amazon offers, book sales have diminished while bookstores have closed.

Corn is the wheat of my ennui.

Of course, you could argue the convenience of ebooks and all those big sales numbers in the book news will result in an overall increase in book sales and re-invigorate the publishing industry. I suppose we might someday reach a volume where ebooks can sustain the industry, but Amazon has made ebooks so cheap, the volume increase would have to be astronomical in order to actually be sustainable for publishing. (Trust me, I've seen actual ebook volume vs profit figures and they do not warm the heart.) You can sell an extra hundred copies of a book, but if you're only making a few cents of profit, you're not really doing that well.

You might argue that has more to do with the inefficiency of publishing than Amazon's prices, that self-published authors are being very successful with those $.99 ebooks. I think, though, it's important to note the kind of self-published books that are successful. With the exception of 50 Shades of Grey, (erotic Twilight fan-fiction, much of whose success came after it was also traditionally published) successful self-published ebooks have been almost exclusively sci-fi/fantasy. I'm not, in any way dismissing sci-fi/fantasy novels, but it's important to note that the success of books in these genres depends mostly on plot and character and, as has been demonstrated by authors like Philip K. Dick, Stephen King, and J. K. Rowling, entertaining plot doesn't require quality prose. To put this another way, you can write a satisfying sci-fi/fantasy book with some questionable grammar and clunky prose. And I think most readers won't be upset by a few typos in a $.99 ebook. In short, the successful self-published ebooks are the types of books that can be satisfyingly produced by a single person.

But not all books can be satisfyingly produced by a single person. Nearly all works of non-fiction need a fact-checker who, by definition, can't be the author. And every big old history book, for it to be useful for research, needs someone to index it. And if you're trying to make any kind of serious point, you certainly don't want embarrassing typos in your work and, much like fact-checkers, it is impossible for the author to proofread their own book for typos. And it's not just non-fiction that often needs another set of hands. If you've written a police procedural, you probably want someone to make sure police actually use the procedures you've written. Same thing goes for the dresses in your Regency romance, the guns in your Civil War epic, the knots on the ships in your nautical adventure. Maybe you're a thorough enough researcher to get it all right on your own, but wouldn't you rather be sure? And then there are those typos. And there's a reason why pictures books usually have an author AND an illustrator. And this is before talking about actual-change-your-life literature; books that cannot succeed with flawed grammar and clunky prose. If you read any books that require the work of more than one person, or you buy those books as presents for friends or family or want those books to be around for your kids to read in school, you owe it to yourself to occasionally pay full cover price for a book at an independent bookstore. It's basic enlightened self interest. Does that mean you should feel guilty every time you buy from Amazon? No. What about if you use the library most of the time? No. Waiting until a book comes out in paperback? No. Buying it used? No. That's fine too. All it means is that, if you currently only buy books from Amazon, or only used, or only use the library, once or twice a year, or one or two books, buy from an indie. And I'm not letting you off the hook with the “There isn't an indie store near me,” excuse because pretty much all indie book stores ship and hundreds of them sell ebooks in .EPUB. Just find the closest one to you here and once or twice a year have them ship a book to your door. Or make a pilgrimage. If you haven't been to an actual store in a while it might be fun. Probably make a pretty interesting blog post, too. Or, just order books from my store, Porter Square Books, I mean the link is right there.


This post was motivated by one on Bookriot last week, “Readers Don't Owe Authors Shit,” which wasn't nearly as confrontational as the title suggests. The blogger was right, you don't owe the author a good review or any kind of review for a book, even if the author sent it to you or is your best friend since childhood, or is your mom, and there is nothing wrong with getting a book from the library, or buying it used, or borrowing it from your friend or not tweeting, blogging, or talking about it after you've read it, even if you like it. The only thing I disagreed with is her belief that there's nothing wrong with shopping at Amazon. Factually, there is. But a lot of the other responses, including a long and polite twitter debate I had, missed the point. In a money based economy all industries need money, and if you like what an industry does, you owe it to yourself to spend your money in that industry. Not recklessly, not lavishly, not beyond your means. But enough so that you and everybody else can continue to enjoy what you enjoy. How much money you choose to spend on books and where you choose to spend that money has nothing to do with what you owe authors, publishers, or book stores and everything to do with what you owe yourself.

The Fabricated Conflicts in Books: Self-publishing vs. Traditional Publishing

I admit it; sometimes I read the comments sections in articles and blog posts on publishing and books. I know it's not good for me, but, you know, I want to know what people think. In a lot of ways, my job as a bookseller is all about what people think. The result is that stuff builds up in my brain and I've got to get it out or, you know, aneurism. So, in the interest of aneurism prevention I'm going to write a couple of posts about what I see as fabricated conflicts in books, phenomena presented in the media as conflicts, that, well aren't. Or at least don't have to be. Part one, Self-publishing vs. Traditional Publishing.

Why It's Not a Conflict

First of all, I'm not sure there is such a thing as “Traditional Publishing.” Random House, a publishing company with hundreds of imprints, thousands of titles, and is itself a division of a large German media corporation, will have a very different business model from Two Dollar Radio, a small family operation that focuses on innovative literary fiction, which will have a very different business model from Melville House, which publishes lost classics, international mysteries, and experimental fiction, which will be different from a non-profit publisher like Feminist Press, or a radical collectively owned publisher like AK Press, or a publisher like Tupelo Press or Alice James Press that uses contests to finance and select their titles. Really, the only thing that unites all those different publishers is the fact that they can say “no,” to a manuscript. Given the diversity of the industry, the differences in goals, in financial resources, in business models, I don't think all of them are going to all be threatened by a single entity. Sure, some publishers who can say “no” will be negatively effected by changes in the market caused by the rise of self-publishing but others won't.

Publishing and self-publishing have pretty much always co-existed with various degrees of influence on each other. Authors, like Walt Whitman for example, have always published their own works. Others, like Marcel Proust, have funded their own publication. Whether it's radical innovators who can't find an initial market or people self-publishing family histories, self-publishing has always existed along side “traditional” publishing.

The only thing that's changed is the ease with which authors can make their works public. With digital technology authors can publish their books essentially for free. The result is a massive amount of cheap, self-published ebooks. At first glance, that looks like a dramatic change in books, one that threatens the sustainability of publishing, but this is not the first time readers have had inexpensive reading options.

From the turn of the century to the late 50s, pulp fiction flourished along side “traditional” publishing. Cheaply written and cheaply produced, with a price point that matched, pulp fiction was the $.99 ebook of its day. Adding a $.99 ebook to your shopping cart now is exactly like adding a $.10 pulp novel to the top of your shopping cart then. The presence of cheap, other content didn't jeopardize publishing because, even though both were reading materials, they didn't compete for the same type of attention. If you're looking for a really good book, a pulp novel was not an adequate substitute, nor will a really good book sate an appetite for pulp fiction. Which is not to say really good books were not written as pulp or self-published, but that the initial purchase impulse is different.

In short, “traditional” publishing and self-publishing have always co-existed and, even with the cheap and free self-published content now available, there's no reason why the two can't continue to co-exist. So where does this idea of a winner-take-all, battle-to-the-death, Highlander-there-can-be-only-one conflict come from? Well in ascending order:

Media Love Conflict

Let's face it, you will never see this headline anywhere; “Amicable Competition Amongst Content Producers Results in Diverse Market.” Whenever possible, media will present relationships as conflict. And it's not hard to see why; whether it's publishing or politics, conflict is interesting. Debate is more interesting than discussion, argument is more entertaining than debate, and death-feuds are more exciting than argument. Media compete for our attention and since conflict is more likely to draw our attention than non-conflict, whenever possible, media will frame an issue as conflict.

Issue Evangelists

There are writers, bloggers, and commenters who do believe this is a fight to the death and have chosen a side. Though I'd like to say, in the interest of journalistic fairness, there are an equal number of evangelists on both sides of this fabricated divide, I really haven't seen a traditional publishing Konrath. If you read the comments, the skew is even more dramatic. You'll have the occasional person hazarding a suggestion that professional editing is worth something, but you've generally got to weed through a lot of publishing-is-dead comments. And even then, the traditional publishing defenders rarely show up with pitchforks and battle cries. As with media's obsession with conflict, it's not hard to see why there would be so many self-publishing evangelists.

They're writers and writers are narcissists. To be a writer, first you've got to believe others want to hear all that noise in your head. Then you've got to keep believing it while editors, agents, publishers, friends, and family tell you they don't. Arrogance is the phytoplankton of publishing. So it's not hard to see the progress to evangelism. The noise in my head is awesome, traditional publishers rejected the noise in my head, they are obsolete dinosaurs who are going to die and go extinct and die. You have to think at least a version of that just to keep going. But just because some writers who have chosen to self-publish have also chosen to fill comment fields with declarations of the death of other publishing doesn't make it so.

Amazon

You probably saw this coming. How is Amazon the biggest contributor to this fabricated conflict? Amazon creates scarcity in the ecosystem. Over the last two decades or so, Amazon's business model has lead to there being much, much less money in the publishing economy than before. They've done so in two ways.

First, their predatory pricing put a lot of bookstores out of business, and Amazon does not create sales the way physical stores do. One might be inclined to argue that Amazon's low prices increased the volume of sales, but they didn't. Over the last twenty years or so, book sales have been declining. There are a lot of reasons why, but one of them is that Amazon simply cannot create sales the way a bookseller can. Much like some of the other points I've made, I think it's easy to see why book sales decline when book stores close. Though Amazon is great at selling books readers already want, it is terrible at selling books that readers don't know they want.

I don't care how sophisticated, objective, or data-driven Amazon's “also bought” algorithm is, I am way better at creating book sales than it is. I can recommend a book I've never read, to a person I've never met, based on the band on their t-shirt and a 10-second conversation, and I can be right. (Hold Steady, kinda up for something dark, Nightmare Alley.) In short, algorithms don't understand body language. You can't tell Amazon where you had lunch, what your favorite Saturday morning cartoon was, or why you really like tennis and get a book recommendation (though I'm sure it would like to know all of those things). To put this another way, I can gather way more information about a person in a few minute conversation than Amazon can ever gather in a life-time of purchases, and I can make intuitive and emotional connections between people and books that Amazon can't make. So because of Amazon, there are fewer people like me making those connections, fewer book sales, and thus, less money in the publishing ecosystem.

To make matters worse, because of its dominance in the market, Amazon also demands increasingly better discounts from publishers. Whether through perfectly legitimate discounts based on buying non-returnable and good old fashioned bulk purchasing or the well-documented but somehow not documented enough for the DOJ to care about, bullying of publishers into more advantageous discount structures, Amazon now pays less per book to publishers than they did ten years ago, and much less than most other bookstores. This means that publishers now get less per book for every Amazon sale. For producing the same product, bearing roughly the same overhead and roughly the same initial financial risk, publishers now make less money per sale than they used to.

The cumulative result is that, shockingly, books aren't making as much money as they used to. To an economy, money is food, and just like in nature, when food is scarce animals fight over it. So you have situations like the one from awhile ago, where a “traditional” publisher canceled a novel contract because the author self-published a few titles from her backlist. Though the contract isn't public, once you're thinking in terms of scarcity, the publisher's decision makes a fair amount of sense. They were going to invest money in this book and did not want to compete for the scarce resource of money with the author's other books. Pretty simple.

Conclusion or Jesus, He's Finally Done Talking

Great books will slip through the cracks of “traditional” publishing and only reach the reading public after being self-published by the author, as they always have. “Traditional” publishers will nurture and guide authors to long and successful writing careers, as they always have. The only question about publishing and the relationship between self-publishing and “traditional publishing” is whether forces (Amazon, the DOJ) eventually force so much money out of the market the whole ecosystem collapses. The conflict, then, is not between self-publishing and traditional publishing, but between those who value books and those who value market share.

The Brave New World of Ebooks, Especially the Basic Arithmetic No Journalists Seem to Feel Like Doing When Reporting on the Collusion Lawsuit

So I guess I've got another entirely too long blog post about the book industry in me, or perhaps more accurately, stuff has happened in the book world and if I try to keep all of this inside, you'll find me dead in a bathtub from an aneurism several days from now.

I'll get to ebooks prices in general and the role of self-published ebooks in publishing, but first the big news is that the Department of Justice, who I guess had finished up with all the bankers responsible for the crash of 2008, the possible gouging of the US government by the no-bid contractors in the wars in Iraq and Afghanistan (hey, you guys remember when Haliburton did such a bad job installing the showers, a soldier actually died taking one), and well, everything else going on in the world, has filed an anti-trust lawsuit alleging collusion to fix ebook prices by Apple and five major publishers. There has been a lot of reporting on this, but most of that reporting has left out some basic, well, arithmetic that explains the publishers actions, while also continuing to ignore the fact that ebooks are NOT substantially less to produce than print books. (At least, not at first, but more on that later.) So, here we go.

The Lawsuit and the Simple Arithmetic

The thrust of this lawsuit is that those five publisher decided together on what's called the “agency model” of ebooks pricing and decided together on what to price their ebooks in that model. In an “agency model” for ebooks sales the retailer, Amazon, Apple, Google (and through them Porter Square Books), Barnes & Noble, etc, acts as an “agent” for the publisher and receives a commission, usually 30% of the price of the ebook as set by the publisher. This is different from the traditional model, in which the publisher receives about 50% of the cover price and the retailer is able to sell the ebook for whatever price they choose.

When MacMillan and Apple first explored the agency option, Amazon was selling ebooks at dramatically low prices, often at $9.99-$4.99 for books that were retailing around $24.95. The result is that in the first few years of ebooks, Amazon represented about 90% of the ebooks market. (Hmmm, naw, it can't be a monopoly.) There were acceptable reasons for their early market dominance; they were the first to really push digital retail, while having the first successful dedicated digital reading device, but that doesn't account for 90%. Amazon was using the price flexibility of the traditional model to use predatory pricing to gain complete control of the ebooks market, and they were damn close to doing it.

It's usually about here, articles drop the ball. Some will point out that the publishers actually LOST money on the agency model (as with the traditional model they were still getting their 50% of $24.95 no matter what Amazon was selling them for) in order to foster a more competitive retail environment, but they never show the numbers behind the agency model's pricing that explains the existential risk to the publishing industry posed by an Amazon monopoly able to dictate ebooks discount terms. So, let's get ready to Math!

MATH!

Let's take your average new hardcover. Priced at $25.99, publisher on average get 50% of the cover price of a print book, or $12.99 for every print book sold. (And from that pay the janitors, the utility bills, the secretaries, the editors, the publicists, the cover designers, and, if there's any left, the writers, who dedicated whatever free time they could scrounge from however they paid their bills, to pour the very substance of their humanity onto notebook pages and hard-drives, for years and sometimes for decades, until finally they were able to participate in one of the most important cultural actions humanity has ever had; the reading of a book, but you, know, they're not as important as investment bankers who...Sorry. Back to the math.) Right now, agency ebooks of hardcover editions are generally priced at $12.99. With agency titles publishers receive 70% of every copy sold, $9.09. So, every time an agency ebook sale replaces a hardcover sale, meaning every time someone who would have bought the hardcover buys the ebook, the publisher loses $3.90. That is a little bit more than the saved overhead ebooks provide, but given that ebooks at about this price also create sales, meaning people who were not planning on buying the hardcover at all end up buying the ebook, this is a sustainable and perhaps even profitable price point. Really a win-win. Customers who want a cheaper option have it and the industry in general is sustained for those customers who want the more expensive print version. Just like with the prices of print books, which are all pretty much the same across publishers, the arithmetic of publishing generated this number. Nobody needed to collude to come up with it.

And right now, agency paperbacks are also sustainable. For a $14.99 paperback, the publisher gets $7.70 for every print copy sold. Most agency titles in paperback are sold at $9.99 as ebooks, netting the publisher $6.99 for every ebook sold. Again an initial loss, but one that is likely canceled out by new sales and saved overhead.

But the ebooks market could get unsustainable real fast. For example, if that $12.99 price point is shifted by market pressure to $9.99, (and by market pressure I mean, Amazon pressure) publishers will lose $6.00 for every hardcover replacement, meaning the ebooks would have to create about two new sales for every replacement. It's possible, but an awfully risky business model.

Now imagine if Amazon gets control of enough of the ebooks market that they can dictate discount terms to publishers. They were once at 90% of the market and if they are able to sell at dramatic losses again, they might regain that level. I don't think they will raise their ebook prices to consumers, because low prices (sustained by terrible working conditions at their warehouses, not paying state sales tax, and a few ethical and innovative business practices just to spice things up) are kind of their thing. However, they will pressure publishers into giving them profitable discounts based on those price points. Instead of selling those ebooks for a loss or for a 30% commission, they will demand a traditional discount, around 50% of the price they have decided on. Here's what the math says about that.

In that scenario publishers would get $6.50 for every ebook sold at $12.99, meaning they would lose $6.49 for every ebook that replaces a hardcover sale. If Amazon decides that price is $9.99, the publisher would get $5.00 and lose $7.99. For producing the exact same quality product, making the exact same investments and putting in the exact same amount of labor, because a big box store wanted control of everything, the publisher loses $7.99 per unit.

Yes, ebooks buyers buy lots of print and ebooks and yes the cheaper ebooks prices do create sales, but given that most publishers are barely getting by anyway, those loses would put many if not most out of business. (Just to get this out of my head, where are all these filthy rich greedy publishing professionals buying yachts on the backs of downtrodden ebooks buyers? I mean, the best editor in the world makes tons less than a shitty investment bank executive, but it's ebook prices that are the problem. Aneurism prevention) Of course, there's no guarantee Amazon will pursue this particular doomsday model, but at every step on the range of possibility towards that, publishers (mostly the small publishers that make sure books stay interesting) will be left behind, either by going out of business, or by not being sold on Amazon. And nothing Amazon can do, no matter how big it gets, will be able to replace the diversity of voices, ideas, and books, coming out of traditional publishing large and small.

The agency model, was not about profit. It was about survival. It was about monopoly prevention, something the Department of Justice is supposed to deal with. By creating price parity, those publishers diversified the ebooks retail market so that now Amazon only controls about 60% of it. Still pretty monopolostic if you ask me, but it is not so powerful that it can dictate the terms as above. This means that ebooks can find a sustainable market price, one that funds all of the work that goes into producing a book and is a rational reflection of buyers' desire to save money. It also allowed independent bookstores to get in the game, which meant that customers who wanted ebooks and to shop local, now can.

But, Wait, There's More, and It's Math-Free

However, for all of you price-centric buyers, I think there is a possibility of seeing the $4.99 ebook if publishing is stabilized and if you are patient. Here's how.

Think of publishers as taking out a loan on every book they publish; a loan that consists of the advance to the writers, the salaries for everyone else who works on the book like the various editors, graphic designers, publicists, etc, and the general upkeep of the business. Essentially, every book, print or e, puts the publisher in debt a certain amount. When the hardcover edition is released at $25.99, 100% of that debt remains. That's one of the reasons why hardcovers are about $10 more than paperbacks. Yes, their materials cost more, but not $10 more. They are $10 more because they represent the publishers' first chance to pay off that debt. The hardcover edition is responsible for 100% of that book's debt. Readers who want the book NOW, for whatever reason are willing to pay for the value of NOW, but many others will decide to wait.

When the publisher decides the hardcover is no longer selling, they will release the cheaper paperback. At this point, some (very, very rarely all) of that book's debt will be paid off. The paperback is cheaper to make, but not $10 cheaper. It's cost is lowered to encourage sales to readers and because it bears less of that initial debt. Same thing if the book goes to Mass Market.

Theoretically once that debt is fully repaid, which, by the way, ALMOST NEVER HAPPENS, the price of print books could drop even lower, but there are some real logistical hassles to changing the price of a print book and they do have constant overhead in the cost of printing and shipping. Logistical hassles and overhead ebooks do not have. Once that debt is paid, which, might I remind you ALMOST NEVER HAPPENS, ebooks do represent almost total profit. It is at that point that I could see the price of in-print ebooks dropping to $4.99-$7.99, with the publishers and authors splitting the profit.

In short, nearly all ebooks should stay in that $9.99-$14.99 range, but could be allowed to naturally drop in price to that $4.99-$7.99 some people believe the fruit of another human being's years of lost sleep, constant rejection, strained personal relationships, poor performance at work, declining health, flirtations with substance abuse, and other near constant side effects and risks of writing a fucking book, is worth.

Self-Published Ebooks

Another “proof of obsolescence” writers and commenters will often point to in their condemnation of traditional publishing are the $.99 self-published ebooks on offer, mostly at Amazon, however, this is really comparing kiwis and bananas.

The way I see it, self-published ebooks are like the pulp fiction of the 30s, 40s, and 50s; cheaply produced, cheaply available, offering cheap entertainment. And you know what; that's fine. The pulp industry didn't put the rest of publishing out of business because it served different needs. You wanted to read trash, you bought trash at trash prices. You wanted to read something with quality, you paid quality prices. In a perfect world, where Amazon charges sustainable prices for its wares with sustainable discounts for the producers, I don't have a problem with them being the exclusive source for thousands or even millions of self-published “pulp” fiction. It's an entirely different market from traditional publishing and bookselling.

And just like the old pulp fiction, I'm sure there is great writing in the self-published ebooks market, but I certainly don't want to wade through the crap to find it, and that is the primary value-added of traditional publishing and bookselling. Publishers wade through the crap so you don't have to.  (Just say the word "slush" around an acquisitions editor and see what happens.) Many of you will probably point out that traditional publishers still publish crap and you'd be right, but if you came into my store, or just about any independent bookstore in the country, and talked to a bookseller, you'd never end up reading any of it.

The point is digital publishing, self-publishing, traditional publishing, and print publishing can co-exist. We can have an Amazon and a Barnes & Noble, and boutique ebooks stores, and thousands of indie bookstores across the country. There are enough readers. Books are that important. But books aren't important to Amazon. The future power and profitability of market share is the only thing that is.

One Final Word About Cheap Books

After all that I'd hate to give out an insider secret to the writers, bloggers and commenters who believe the only factor that matters is price, but, well, in the interest of journalistic integrity, I feel it is my duty to do so. Here we go.

If price is so goddamn important to you, you never have to pay money for a book. Ever. Just borrow it from your local library. It's the big new book and the waiting list at the library is hundreds of people long? Wait. No waiting list is infinite. Just put your name on it and borrow another book FOR FREE. Your library doesn't currently have it? Ask your local librarian to get it for you. The only known copy of the book is locked in an adamantium box at the North Pole, surrounded by landmines and guarded by Pullman Polar Bears? Ask your local librarian to get it for you, and wait an extra few days for transportation. Librarians are librarians because they want to give books to people. Your librarian will get the book for you. You want it as an ebook? Sure, libraries haven't quite figured out ebook lending yet, but just about every book ever published before 1922 or so is available for FREE as e-book. Just go to Project Gutenberg. You will never run out of great books to read and you will never have to spend a single penny on books.

But you want the newest, hottest book, that everybody is talking about so you don't feel lame at the office holiday party? Well, fucking pay for it. In a currency-based economy, that's what you do when you want something; you pay for it.

Think about it this way. Doing push-ups and sit-ups in your living room is free. So is jogging. Once you know how to do it, so is yoga. Really, you can stay fit and healthy for free if you want to. But if you want access to a range of machines and an occasional professional opinion on how best to use them, you're going to have to pay for a gym membership. Want to take a class because you're interested in something specific? You'll have to pay a little bit more. Want a personal trainer to design a fitness regimen that works best for you, while providing motivation and guidance as you execute it? Well, you'll have to pay even more for that. You can be fit for free, or you can choose to pay for the added-value of a gym. Everybody accepts that.

If we accept that for gyms, why can't we accept that for books.