Are Publishers “The Good Guys” or “The Bad Guys”? (Part 1)

Depends on who you ask.

As an editor, I obviously want publishers to succeed for the sake of my future employment and good literature, but I also want to feel like the people I work for are on the right side of things. What’s more, I believe that this reaction isn’t unique or surprising: almost all book lovers have passionate reactions to the book-making process once they get a glimpse behind the curtain, myself included. So when it comes to Amazon, libraries, self-publishing, indie bookstores, and so many other controversial issues, most people tend to come out passionately on one side or the other, oftentimes lambasting my future colleagues.

In the face of criticism from the people who buy our products, publishers should not be afraid to question their business decisions; do we truly know best in terms of our business model, or are we limited by conservative thinking that hurts our authors, distributors, partners, and readers? This post will attempt to lay out and flesh out the controversial issues that the publishing industry faces today, why these issues matter, what the general public thinks about publishing houses under this specific lens, and whether or not we as publishers should feel righteous, defensive, worried, ashamed, or any other feelings about the issue.

This series has a lot to cover, so this post will focus mainly on issues surrounding Amazon and self-publishing.

Amazon vs Hachette

If the continued feud between Hachette and Amazon has taught us anything, it’s that publishing houses’ PR departments will have a major impact on the profitability of publishing in the coming years. As both parties haggle over future pricing of eBooks, Hachette has harnessed the power of bestselling authors like James Patterson and Stephen Colbert to protest Amazon’s purported shady business practices and gain public support for its books. The power of this practice can best be seen in the success of Edan Lepucki’s debut novel California: Stephen Colbert announced on his show that the first-time author would be destroyed by Amazon’s undermining of Hachette titles during negotiations, and suddenly her book became a surprise bestseller.

Meanwhile, Amazon has released a couple of open letters to authors and readers that attempt to show the distributor as looking out for writers and buyers more than the publishers themselves by emphasizing their superior e-royalties for Kindle Select authors. The distributor then argued that everyone wins if Amazon can just price eBooks at bargain prices, since the increased number of sales leads to more money on average for all parties—all of which plays to the idea beloved by self-publishing enthusiasts and unpublished writers that publishers are greedy, uncreative misers who don’t deserve anyone’s support.

Economically, Amazon’s argument isn’t as sound as they’d have you believe. An illuminating New Yorker article quotes literary agent Brian DeFiore, who has in fact criticized publishers for low ebook royalties in the past, as being highly skeptical of Amazon’s plan to lower prices:

Amazon doesn’t quantify what lower e-book prices would mean for sales of physical copies of the same books. Authors who work with traditional publishers like Hachette tend to make more, per copy, from hardcover sales than from e-books. If cheaper e-books draw people away from hardcovers, that could hurt these authors financially…If lower e-book prices were to eventually destroy the market for physical books entirely—or even shrink it enough so that it wouldn’t make financial sense for traditional booksellers to publish them—that would help Amazon consolidate its power, which would ultimately be dangerous for authors.

The article does go on to mention that authors don’t care as much about financial gains if they can increase their readership, and that lowering book prices has been proven to lead to this eventuality. That’s part of the appeal of the self-publishing model—that authors ignored by traditional publishers have garnered huge followings through their own marketing efforts and more reasonable prices for readers. And yet, connected to the earlier point, these authors would have to place all of their hopes on one digital sales channel, whereas traditional publishers offer print sales to many channels (including Amazon) but provide reduced royalties due to costs like overhead.

Verdict: Publishers are always going to put print first in the climate Amazon has created, where its tantalizing digital business model and loss-leader pricing would give them an eventual monopoly that makes print books hard to sell for a profit. Issues like author advances, the advanced marketing and respectability that traditionally published books hold over self-published works, and the need to keep their own ebooks from undermining print sales are valid concerns that Amazon and its supporters ignore too readily.

At the same time, I do find the idea of paying authors more than 25% for ebooks compelling. Various factors have contributed to most authors making less and less on print sales, so it would be a sign of good faith to authors to increase royalties for e-sales after they have resisted the temptation of Amazon’s attempted bribery to stand behind them. But my area of expertise is not economics, so I don’t know if that is viable or naive thinking. Overall, though, my “good guy” award goes to the publishers in this category, and the “bad guy” award goes to Amazon.

Amazon’s Wild West vs. Publishers’ Literary Canon

Should publishers decide what literature should reach the bookshelves of everyday readers, or should readers’ average score out of 5 stars and bestseller lists decide? In a triumphant critique of traditional publishers in the face of rising self-publishing sales, Smashwords founder Mark Coker mocks the old idea that, “publishers alone possessed the wisdom to determine if a writer deserved passage through the pearly gates of author heaven. Writers were taught that publishers had an inalienable right to this power, and that this power was for the common good of readers.”

Coker’s argument could be that self-published novels are chosen solely on the merit of the storytelling, whereas with publishing houses readers are at the mercy of the tastes and prejudices of their editors. Of course, the most successful self-published novels don’t just succeed due to quality, but also due to skillful marketing, SEO optimization, and Amazon promotions, done either by the author herself or by her hired team. Still, he would likely argue that authors can allow readers to directly validate the enjoyability and skill of their manuscripts, rather than need a stodgy editor or literary agent to act as the solitary judge and gatekeeper.

So should traditional publishers have this power? As I said at the beginning, depends on who you ask. Many might argue that editors have more authority than regular readers to judge which stories have merit and which do not, as it’s their job, and hopefully their passion, to think critically about what people will like in their stories. And the success of certain imprints, specifically ones that generate texts in one genre or format (i.e. poetry), shows that readers have grown to trust the discerning eye of certain editors and the authors they’ve chosen to represent the publishing house. This is essentially the argument for literary canon—that publishers have discovered and nurtured the Hemingways and Fitzgeralds of the past and that they protect posterity by raising books like The Goldfinch over popular bestsellers like Fifty Shades of Gray.

Yet with each self-published bestseller that achieves acclaim after being rejected by publishers, these authors prove that the judgment of publishers and agents aren’t infallible. And the recent controversy at the Book Expo America, where publishers revealed a startling lack of diversity in their acquired children’s books, is a problem that extends far beyond one genre. Literary canon has always been homogenous, primarily dominated by white men and more recently white women, and the publishing scene similarly demonstrates a disparity of representation beyond a token few. Some argue that self-publishing offers the solution to the whitewashed literary sphere that publishing houses have engendered. Others argue that publishers simply need to get past the perception that multicultural books won’t sell or that POC characters can only fit within a certain mold. The fact is, publishing houses lack diversity in hiring and executives, and that engenders a culture that ignores diversity and pretends that narratives with diverse characters are inaccessible to everyday readers.

Verdict: Amazon is an incredible resource for authors, and publishers have to try to offer services and rates to compete with Amazon. I would argue that they do, especially because Amazon has thus far failed to make a major impact in their own attempts to get print books into bookstores and homes. And publishers, teamed with the literary agent barrier, do have a system in place of finding quality literature from the masses of manuscripts published every year. But the lack of diversity is a serious issue that we cannot continue to brush under the rug or place on the shoulders of a few authors of color. I personally love reading about people of different cultures, races, species, and worlds (I’m sure you can guess sci-fi is my favorite genre) and don’t understand why those narratives should ever be excluded for reasons of supposed “inaccessibility.”  So yes, this is one area that will give me no small amount of guilt if my future publishing house perpetuates this problem rather than rectifies it, and publishers will start to lose readers and money to self-publishing if they do not rectify their small-minded acquisition strategy. I unfortunately have to give the good guy rating to Amazon here, though if big publishers get their act together diversity-wise they can easily stop being the bad guy and be a force for good in literature.

Monopoly: Amazon v Apple/Big 5 Edition

I won’t go too far into the details of this case, as there are several articles that describe them for us. But the dilemma of the case is straightforward: Amazon buys books for wholesale prices from publishers and sells them for less than they paid so that no one can possibly compete with their prices, creating a monopoly supposedly in the name of consumer rights. Thus, consumers buy major publishers’ books for cheap and then stay to buy Kindle Select books that make up the profits for Amazon. Apple and the publishers colluded to create an agency model where they determine the price of books and Amazon has no say in changing it, which would drive prices up and allow other distributors like Apple to actually compete in the ebook market, but hurt consumers.

Now, the big publishers and Apple have all settled, essentially admitting guilt for their crimes, and public opinion is falling into two predictable lines: slimy Apple and stupid old publishers finally got what they deserve for sticking it to consumers, and self-publishing will take big publishing’s place; or evil Amazon is sitting laughing on the corpses of its competitors while books lose all cultural value and the industry collapses in the spirit of “competition.”

Verdict: It’s difficult to find a proper answer, despite how biased I am toward publishers. First off, it’s perfectly reasonable to ridicule the “it’s not a monopoly because Amazon did it first” defense as elementary school level, and what they did was illegal, even if Amazon has created a climate where only a united front could win against it. Still, Amazon’s current removal of pre-orders and speedy delivery for Hachette titles, and its more drastic action of removing all of Macmillan’s titles in 2010 for switching to the agency model, shows just how terrible Amazon can be to anyone who dares to ask for fair rates.

 I’m of the personal belief that companies like Wal-Mart and Amazon that destroy all small business competition, terrorize its suppliers, treat their employees like shit, and then offer insanely low prices to boost its popularity are horrible; still, what the publishers did was illegal, and gave moral high ground to the company when they should have colluded to have the DOJ go after Amazon instead. I’m giving the “Bad Guy” rating to both parties here, though the worse one clearly goes to Amazon.

Conclusion

It’s difficult to paint Amazon as the “bad guys” when they are the number one buyer of both print and electronic books for most publishers and universalize the accessibility of titles throughout the U.S. and the world to increase sales, and they have ended the stigma of “vanity publishing” in favor of empowering any entrepreneurial author to pursue his or her dreams. Major publishers are rightfully appealing to the public to make Amazon maintain the value of books and curtail its predatory pricing, but they are also completely dependent upon the distributor at this point and could not abandon it without putting their entire business at risk. In some ways, Amazon’s ruthlessness has forced publishing as an industry to adapt more quickly than it might have to the digital age, while in other ways those adaptations have hurt the publishing industry and the authors it represents by turning books a cheap business commodity. Thus, publishers have abandoned any risk-taking in favor of guaranteed money-makers from celebrity biographies to big name (white) authors’ sequel novels. So the question becomes whether publishers and Amazon will continue to fight or manage to reach an accord, since right now neither side can safely say they are entirely in the right.

Final Score: 1 Good Guy and 2 Bad Guys Each

I threw out a lot of controversial stuff and possibly criticized my future bosses while roasting the “enemy,” so hopefully I succeeded in being fair. But if you think I was too hard or soft on either side, feel free to speak your mind in the comments for some spirited debate!

For the next post on my publishing conscience I’ll talk about publishers’ relationship with independent bookstores and libraries. Spoiler alert: like today, there’s some good and some bad.

Thanks for reading!

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What the Hachette-Perseus Merger Means for the Publishing Industry and You

The Hachette-Perseus Books Group merger is generating more buzz than it might normally—considering the 18-year-old Perseus is not as familiar a household name as Penguin or Random House—because journalists are connecting the merger to Hachette’s contract fight with Amazon. The New York Times article about the deal is titled “Hachette Adds Heft to Battle Amazon,” for instance.

But this deal marks a continued trend in the publishing industry that anyone interested in a publishing or writing career should watch closely, and maybe warily.

The trend I’m speaking of is one of consolidation, the most famous example being the Penguin Random House partnership last summer. Up until that point, most consolidation occurred when big publishers bought smaller pub houses and incorporated them as imprints: examples of this include Hachette buying Little, Brown in 2006 or HarperCollins’s recent purchase of Harlequin. But now the major publishers are reaching the size of giants, with PRH controlling 250 separate imprints and the other Big 4 trying to catch up. For instance, there are long-standing rumors since late 2012 that Simon & Schuster and HarperCollins were considering a similar merger to match PRH, and early this year Forbes reported that the talks may still be ongoing.

Now Hachette has purchased Perseus, which itself is the largest distributor of books in the nation, especially for small and medium-sized publishers. How did it become the largest? Through consolidation. In this interesting piece by the co-founder of indie publisher Melville House, Dennis Johnson describes Perseus’s purchase of Consortium and Publishers Group West, which gave Perseus control over 80% of indie publishers’ book distribution. Johnson describes a period of turmoil where books got lost while transferred between warehouses and many staff and warehouse members were laid off. Some publishers like Melville House ended up taking their business elsewhere, the Johnson claims that those that remained only stayed because they couldn’t afford to leave.

You cannot necessarily trust Johnson’s impartiality on the subject without hearing Perseus’s side of the story, and maybe those who stayed with Perseus would deny any dissatisfaction with their distributor. But you can’t deny that big mergers are a tumultuous time where jobs and livelihoods are put on the line, and things could easily go wrong.

Now Perseus’s warehouses belong to Hachette’s distributor, Ingram. Does this mean another period of turmoil for the indie publishers? Ingram’s CEO denies this—this Publisher’s Weekly article states that Ingram has “no plans to make major changes to the Perseus distribution operations.” It could be that the name on the door is changing, but that the business will remain the same. It could also be that Ingram will bring new policies that will change how these warehouses operate. But I don’t know enough about warehousing to make an informed comment on the likelihood or repercussions of this eventuality.

The small publishers who used Perseus as a client do know, however, and they’re worried. In a Publishing Perspectives article, one publisher at a conference expressed shock at the news, stating, “Well, looks like we just became [a] smaller [priority].” Another worried about having to learn to use a new computer system.

The consensus?

Each of the publishers expressed their concerns about their list and whether or not they would get the attention they deserve within a bigger organization. Some lamented the loss of yet another independent publishing institution to the deep pockets of a conglomerate. Most grieved the likely layoffs.

Doom and gloom from small publishers who simply don’t like their massive counterparts controlling their distribution, or legitimate fears about the compression of the industry and its jobs into a few “too big to fail” entities? It certainly appears from the article that the publishers like both Perseus and Ingram individually, but dislike them as a merged business, simply because it makes it less likely that individual clients will see their needs addressed.

That same principle may apply to the Perseus imprints that Hachette now controls. When a publishing group controls dozens or even hundreds of imprints, it makes any individual imprint more expendable should it become unprofitable. However, this system also allows the most successful imprints to provide financial insurance for the other imprints in the group; thus, arms of a publishing house that are temporarily struggling can have a few years of unprofitability without being forced to close shop. Thus, it is unclear whether the consolidation of major publishers will keep imprints and jobs afloat or make those jobs expendable in a crisis.

Conclusions

What does the consolidation of publishing houses mean for writers? Less traditional publishing options. In a New York Times piece describing the Penguin Random House merger, the author noted that “the persistent gripe of writers and agents” is that “companies either forbid (as at Penguin) or restrict (at Random House) their constituent imprints from bidding against one another for a manuscript.” Literary agents used to have dozens more options to sell their author’s manuscripts, but now have the five (maybe four soon) major publishing houses and some smaller competitors. That means less competition and fewer chances to demand higher advances for manuscripts. Self-publishing and freelance publishing services are becoming highly visible and profitable around the same time that publishers are continuing to grow and coalesce into a few massive entities. Publishers need to make clear that their services will not suffer and that each author matters when they are trying to service thousands of authors at a time, a tough sell to make.

What does this mean for readers? Ostensibly nothing, since Perseus’s imprints should continue to operate as they did before the buyout, which means the same quality of manuscripts and editing. But the above NY Times piece asserts that merged imprints lose their originality and focus and take on the acquisition strategies and mentality of their parent company. That could mean an overall reduction in the breadth and diversity of titles available for readers through traditional publishing avenues. It also means that, for readers, publishing imprints become more interchangeable or indistinguishable from one another. Publishers with 250 imprints may end up diluting their brands, which would hurt readers and publishers alike. With publishers becoming so massive, they need to focus on strengthening their individual imprints’ brands so that they still mean something to readers.

What does this mean for you, the current and future editors, eBook production experts, publicists, etc.? As I stated above, I really can’t be certain if this will lead to greater or fewer jobs in the long run. Nor is it certain if publishers will begin to lose their originality in the face of the overwhelming size and power of the companies they work for. Personally, I believe that the dedicated publishing professionals in these organizations would not let anything happen to sabotage their efforts in creating great books. But these concerns remain valid, and I hope that the publishers who are merging take these concerns seriously, for the sake of their employees, authors, and readers.

Do you think these super-conglomerates are bad for the industry, or just the natural progression in the face of Amazon and self-publishing competition? Feel free to leave your thoughts in the comments, and thanks for reading!

As a disclaimer, I have an upcoming fall internship with Perseus(/Hachette, I guess?), but I tried to remain as objective and analytical as possible without prejudice toward my future employer.

Opinion: What the Amazon/Hachette Battle Means for Future Publishing Professionals

Many people have already read about the circumstances of the Amazon/Hachette feud, and other articles have summarized the issues better than I could in a blog. Read this NY Times opinion piece for a succinct summary of monopsony—”when a buyer of goods has the power to unlawfully lower the prices of what it buys“—Amazon’s predatory business practices, publishers’ legal woes with Apple, and an argument for a new distribution system for all publishers. If you want to read about how publishers’ refusal to raise royalties for authors for ebooks left them vulnerable to Amazon’s aggressive negotiations, peruse this Slate article. And if you have a lot of time on your hands to truly understand Amazon’s corporate attitude and to see more of its attacks on unprepared publishers, read this excellent New Yorker article by George Packer. Finally, you should check out this PW summary of the Apple legal case, where Judge Denise Cote decided in favor of the government (and Amazon in effect) by stating Apple and publishers had attempted to create a monopoly.

Finished doing your reading? I’ll wait!

Now that you’re an expert on Amazon’s relationship with publishers, it should be clear why publishers have become dependent on Amazon as their primary sales channel, and how any steps they might take to rectify that can cripple their business. So, what could this mean for your future career? Here’s some possibilities, and their likelihood:

A. Publishers band together to create a new digital platform for ebooks (not likely)— Imagine if you were put on a task force to help design a new commercial platform for books from the Big 5 publishers, and possibly some smaller publishers. Each publisher has so many books that this new site would need a system of curation and recommendations that shows the products from each publisher. Would Penguin-Random House get prime placement because they sell the most books, and would they accept anything less? Similarly, would smaller publishers demand equal placement in order to compete against their larger counterparts, and would the Big 5 allow this to happen? And who would decide which books are put on sale (by genre or publisher or authors); would there be a committee of staffers from each publisher, or a third party company trusted with making fair choices?

In either case, if publishers set up this site with this level of collaboration and withdrew their books from Amazon, Denise Cote and the Department of Justice might leap to Amazon’s defense again, declaring this action another monopoly that gives one site power over pricing of goods. If they merely created the site and continued to put their books on Amazon, then publishers would have the continued problem of competing against Amazon’s business model of selling for a loss. Ultimately, if you can figure out a solution to the Amazon problem, you can guarantee yourself a promotion and a raise at your company, so the problem is worth tackling, but I don’t agree with the NY Times that this is the solution.

B. Publishers create more dynamic individual websites (likely to happen, not to succeed)—It’s weird to think that publishers used to warehouse and distribute their own books, even own their own bookstores. Now, publishers can take a leaf out of the books of self-published authors who distribute their own books. Marketing their own books and bringing readers to their actual website (not just job-seekers), publishers can make huge profits by cutting out the middleman. A lot of smaller publishers have revamped their website to try and make their books more accessible, while others have tried making it a site of social media. Editorial or marketing assistants who find a way to bring more traffic to the site, or business employees who manage to improve sales on the actual site, would greatly raise their stock in the company. Unfortunately, the problem of Amazon’s predatory pricing won’t disappear anytime soon. If consumers are going into bookstores only to buy them on Amazon, you can bet that they will find it even easier to open Amazon in a second tab from the comfort of one’s home.

C. Publishers drop all risky, diverse, and mid-list titles in favor of guaranteed moneymakers (Already happening)–Publishers sell the majority of their books at a major discount to retailers: usually 60% discount to big box stores like Walmart and 47-50% to B&N and Amazon. Combine that with the fact that about 600,000 to 1 million books are published per year in the US including self-published books, publishers are struggling to make enough profit on books to even make back their royalty advances to authors. Partially a sign that publishers need to step up their marketing and publicity schemes to support their authors, these statistics also show why publishers are becoming risk-averse. If you plan on becoming an acquisitions editor trying to pitch a book to your peers, you have to prepare for the eventuality that books will become so unprofitable that you can only acquire titles that are “guaranteed” to sell. That means more celebrity titles, more books by the same authors with strong fan bases, and more derivative knock-offs of whatever sells (i.e. the influx of supernatural romance and dystopias after Twilight and Hunger Games); by logical extension, that means driving away new authors toward self-publishing or not writing at all, as well as a continued exclusion of writers and characters of color (see the recent BEA controversy for a sign of how publishing remains overly homogenized).

 

There are certainly other eventualities that could arise from this feud. Amazon and Hachette could end up maintaining the status quo for a few more years. Or authors could Kickstart their own website to sell their books, which could actually end up helping publishers and authors while avoiding any claim of monopoly. Or Amazon could drive more publishers to merge together in order to survive. But what this means for you depends on whether or not you are willing and able to help your future employer separate itself from Amazon and create a new system of bookselling.

Thanks for reading!