Monday, November 15, 2010

The future of publishing

Meghan's post last week about the Barnes & Noble color Nook drew some great discussion. I think everyone in the publishing industry has been someone holding their breaths to see just how this whole digital publishing thing shakes out. Well, not holding our breaths, exactly. We're all doing things, hiring more people, creating new divisions, but we're all kind of stumbling around in the dark a bit. Some of us are excited about all of the changes going on, and some of us are worried if we'll all survive. And some of us are both (me).

In terms of the question "Why do eBooks cost so much," I thought I'd link to this publisher's perspective. In it, the CEO of Thomas Nelson Publishers states that there are three new costs associated with eBooks: digital preparation, quality assurance, and digital distribution. He also states that:
physical manufacturing and distribution expenses cost less than you think. Some people assume that these two items represent the bulk of a book’s costs. They don’t. Together, they account for about 12% of a physical book’s retail price. So eliminating these costs doesn’t do much to reduce the overall cost structure.
As I mentioned in the comments, another new cost associated with eBooks is fighting piracy--Hachette Book Group has partnered with a company that monitors the internet and send take down notices when necessary. Incidentally, if you ever see an illegal download available for one of our books, you can report it here, and someone will look into it.

I'm not crazy about eBooks myself. I have yet to actually read a published book on my Sony Reader, although I do LOVE LOVE LOVE my Sony Reader for reading manuscript submissions, and am so happy I don't have to lug heavy manuscripts around with me wherever I go. But for published books, I still prefer paper books, and I probably always will. I especially love paper picture books. Although I will say, the color Nook and the iPad are more appealing to me for published books than the Kindle or Sony Reader, because the design of the book stays more true to the paper book, and that's important to me. And some of the picture book apps I've seen on the iPad are pretty darn cool. But I see eBooks as another format of the book, just like a paperback, hardcover, or audio edition. It's another opportunity to reach consumers.

The change isn't really being initiated from the publishers or authors. Just as with the music industry, the change did not come from the record labels or musical artists. It came first from the technology sector. A product was created that consumers embraced. And I suspect that's what's happening with the publishing industry. Some feel that there will be a demand for electronic readers. They never really stuck before, but it's starting to stick now--although to what extent remains a mystery. Will eBooks replace paper books completely in the future? Or will they plateau and coexist with the other formats? Either way, we have to work to adapt, and we're all finding our way. I think a case in point is this article about a e-Books rights panel in September. Publishers and agents argued about the royalty rate and the costs of making eBooks:

Inevitably, though, the conversation looped back to that digital royalty issue. Moderator Jim Milliot’s question about what the costs for publishers actually are in creating digital books not only led to Aiken’s aforementioned math but, again, to a back-and-forth between the panelists. While DeYoung said profitability needs to be measured across all publishing formats and that a publisher’s costs can’t be measured “in a vacuum,” Aiken pressed the notion that the current digital royalty rates cannot stand.

I don't know the right answer to Meghan's question of how authors and illustrators will get paid fairly. Right now, I do feel that publishers are incurring all of these new costs, and who knows what will work and what won't. But eventually the market will settle into a model that works for both the publishers and the authors and illustrators. Well, that's the hope. Because all of the players involved--the publishers, the authors, the illustrators, the agents--want to make sure that we all stay in business and stay profitable, and that all parties can earn a living,

Just this morning I read this fascinating interview of Cambridge University professor John Thompson, who wrote the book Merchants of Culture on the book publishing industry, spending five years researching  the industry in the US and UK. He claims that the changes the publishing industry are going through right now are not mainly due to the rise of eBooks:

It’s at a bit of a critical juncture but it’s not necessarily because of the rise of electronic books. It’s the outcome of two interwoven processes—one that is social and economic and one that is technological, each of which has its own history. On the social-economic side is a process that began in the 1960s and led to a gradual transformation in the field of trade publishing. This process was shaped by three factors: One was the growth of the retail chains and the revolution of retailing, the second was the rise of the literary agent, and the third was the consolidation of publishing houses under the umbrella of large corporations. And those three processes led to a social and economic transformation in the field of trade publishing that’s effects are felt today.

He also mentioned the rise of the agent as a factor in forcing the consolidation of the publishing houses, forcing smaller houses like FSG to Knopf to be swallowed up by the big corporations:

But once the agents became significant players they demanded high advances at a time when retail chains were growing and houses like Simon & Schuster and Random House were coming under the umbrella of large corporations and were able to afford the large advances. Farrar Straus and other publishing houses could therefore no longer play the game—they couldn’t keep their authors and they were out-maneuvered by the larger houses. So they had to decide to sell to corporate owners and it was no longer possible for those once-independent publishing houses to remain independent. So the field became polarized where you have a small number of large, corporate groups that now own the former independents because they have deep pockets and then small presses.

It was a quite enlightening interview to read--I think I may have to read his book! And I was happy that he ended the interview on a hopeful note. I do love the hopeful endings, could be why I'm editing books for kids and teens.

I think it’s important not to take an apocalyptic view of the future of the book and the future of publishing. You have to counter that with the fact that books really matter to people. There are many people who just love books and they love the ideas that are expressed in books; they love the stories that are told through books and all of it. They’re very attached to it. You only have to go to a book festival, of which there are more and more these days, like the Brooklyn Book Festival, and see the hundreds and thousands of people who flock to these book festivals—more than ever before—pack the audiences, pack the halls, to hear their favorite authors, or even an author they don’t really know very well but want to get to know, and listen to them talk, hear them read from their books, buy their books, get them signed by the author. They cherish the book. And they believe that this is an artifact that they want in their lives. And some of the technological commentators in this industry just completely miss this point. They fail to see that books have this cultural value in the lives of ordinary people which is very deep and very profound and which is not likely to go away very quickly.

Cherish the book!


Anna Alter said...

Super interesting post Alvina! Especially the part about the factors that have contributed to the big changes in publishing over the last ten years... I had never heard the argument that literary agents contributed to the consolidation of independent publishing houses. Did author's advances really spike so high that it forced independent houses to sell out? I wonder if he meant overall, or just the huge names getting zillions?

Agents have been around for a long time, I had always thought that things happened kind of the opposite of what he is suggesting- that agents have come on the rise in recent past because publishing houses are more corporate and competitive and authors needed an advocate in a way they didn't before, not vice versa.

Anonymous said...

Good point to add the mention children's book festivals as a measure of people's interest in books, because people really do show up to these events with a lot of excitement.

Courtney Pippin-Mathur said...

Thank you for this post. I (like many others) am excited and a bit terrified by the digital publishing revolution. It's great to hear things from your perspective. The hopeful bit always helps too.

Anonymous said...

Ebook royalty rates are not being considered carefully enough by authors and illustrators as far as I can tell. Here are a few factors for starters:

1) Is "ebook" defined in the contract? An ebook "app" with animation/interactivity etc. costs much more than a straightforward conversion such as most iBooks/Kindle books. Yet does the author get the same royalty amount for both? Why?

2) Is there an advance for the ebook? A publication date? What if the publisher never gets around to releasing an ebook version?

3) In regards to the production costs, I find it hard to believe for a product with no paper, ink, binding, packing, shipping, or warehouse costs and NO returns, somehow hardly any money is left for much of an increase in the royalty of the creators of said product. (This especially applies to iBooks/Kindle type books.)

4) Why is the royalty rate a percentage of net all of a sudden? 25% of net (the so-called new standard rate) is about 12.5% of retail, a measly increase over the current 10% of retail. Why are the big pubs all offering the same rate? Why is that not price-fixing?

Everybody is supposed to be becoming more efficient in recent years. Maybe the days of lavishing money on big offices in skyscrapers in Manhattan are coming to an end.

Meghan McCarthy said...

I found it very interesting that Thompson said that people are freaking about about digital books because they are the things that are showing MOVEMENT. Really 95% of the sales are still books. I had wondered that all along because from what I'd noticed no one was reading an e-reader on the train. I couldn't see any signs of it! All of a sudden I'm hearing TALK of people wanting to BUY them. This is because places like BN have taken away the book tables and replaced them with bright white plastic tables displaying electronic e-books. Now they're on people's minds because they're in they're FACES. The Kindle and the Nook are also on TV. I feel like it was hype before and now it might not be. Booksellers like BN were worried and they should have let it die. Instead they are going to be they're own downfall! Alas. We shall have to see what percentage of the people want to live with the digital I guess.

What my friend said to me is very true. I think this is a city thing. A commuter thing. I can't imagine a need for my parents to have one. They are huge readers and go to bed every night reading a book. But why on earth would they need to use an e-reader? I think it's more comfortable to read from a book. And you have that feeling of accomplishment when you're done because you SEE the pages get less and less. Um... e-readers can't do that. They never will be able to. And then you get to put the book on your bookshelf and say -- I read that book! You get to lend it out to other people. My parents often give the good books to my sister to read and so on. Can't do that with an e-reader either. Not yet anyway. Not legally anyway. And you all know how I feel about picture books. Just awful. Gross.


Meghan McCarthy said...

To the question above about do authors get advances on e-readers. No. Also, I was fascinated by the graph online you can look at of the kindle e-reader vs. traditional book costs. It's horrible. The publisher is just robbing the author blind. Thompson said this "Most of the costs are tied up with the overhead costs of running a publishing organization, the editorial time that goes into publishing and developing books, and all the design that goes into a book, whether it’s to be printed or not. And then, of course, there’s all your marketing and publicity expenditure." Well, if you are an author AND also the illustrator, you probably try your best to do most of the design yourself. And picture books don't often require a lot of editorial time... and I don't think authors should be required to cover the cost of "running an organization." And let's face it, most of us don't get any publicity. Marketing wise--I know our books get sent out to reviewers but I wonder how much time it takes to send out F&Gs. Oh... but I guess there would be no F&Gs! No time there anymore! They'd just hit a button! How much money would that cost? Thompson says "Where you’re really making a difference when you move to the electronic form of delivery is not with regard to publishers, it’s with regard to the other intermediaries in the supply chain and the real estate of the bookstores. The significantly cheaper price for an e–book you see online compared to a traditional hardbound book basically reflects cutting out the distribution, real estate, returns, and everything associated with the side of physically moving the books."

I KNOW editors work hard and the team works hard but they get a good salary and some of us authors are suffering. We don't get healthcare. We get paid here and there and now many publishers want to pay the last part of the advance AFTER the book gets printed! The deals just get worse and worse. All I want to see is a little bit more fairness here and thank goodness there are guys like Aiken who are in our corner. I don't think there are enough of them though to make a difference. He's right. There are a few heavy hitters who get their way and get HUGE money and leave the rest of us in the dust.

There's my little rant for the day! Thanks you Alvina for posting this. It was really interesting stuff. I might even buy Thompson's book. It sounds really interesting. I wonder if it might be over my head though?


alvinaling said...

Meghan, if a book was published as an eBook ONLY, then yes, a LOT of costs would eventually go down (once a publisher could even out the expenses required to adapt to the new format). If you want to publish as a digital book only, then go to a digital publisher! Otherwise, you have to account for all of the costs associated with every format. Of COURSE an author an illustrator helps cover the costs of running an organization!!! Publishers are in the business of publishing books. If you want your book published by a company, then you are creating the product that a publisher uses to make a profit. If you don't want your book to help cover the costs of running an organization, then self publish. And I take HUGE offense in the statement that pictures books require less design and editorial time. I've had many many picture books that have taken up many many more hours of working time when compared to novels. And same for the designer.

Anyway, that's MY rant of the day. I think this would be a good topic to cover in a podcast or something.

Oh, and yes, maybe publishers will eventually be forced to move out of NYC. It did always strike me as odd that such a (relatively) low profit business is housed in one of the most expensive cities in the world. Some publishers are already moving out the the city--to Westchester or Brooklyn.

Meghan McCarthy said...

I take it back the part about editors and designers not putting time in. They do. We all do our share! I'm sure on some PBs a ton of time is put in. So I'm sorry about that. Actually, on some of mine a ton of time has been put in. I just want to be paid more. I need money! I'm going to start picketing in the streets! Money money money!