Is Everything We Thought We Knew About Publishing a Lie?

Conspiracy theories may be common with Mulder and Scully, aliens, the Illuminati, and Bigfoot, but we don’t often get them in the erudite world of books and publishing. This week, however, we did.

As you are probably aware, in 2014-2015, Amazon engaged in a negotiation showdown with Traditional Publishing, most prominently Hachette. The common view was that the Big 5 wanted the right to set prices for their products when sold on Amazon–agency pricing. Everyone thought the outcome was that the Big 5 won the right, increased their prices, and made more money.

This week, several stories broke suggesting that everything we thought we knew was wrong.

Mike Shatzkin is a prominent publishing analyst who writes the Idea Logical blog. Based on conversations with publishing executives and even a source at the Department of Justice, Shatzkin claimed that although the Big 5 publishers wanted agency pricing in 2010, by 2015 they realized it was not to their advantage but were forced to accept it–by Amazon.          “[T]he big publishers had no choice about sticking with agency. Amazon insisted that they stick with agency.” Amazon also wanted and got a more favorable split of revenues.

Another analyst, Phillip Jones, agrees. Quoting other industry sources, Jones says that since Amazon dominates the eBook market, allowing publishers to overprice their books was a smart strategy that shifted sales from Big 5 eBooks to Amazon eBooks, allowing Amazon to rapidly grow its self-publishers and Kindle Unlimited market. Conversely, another blog, The Passive Voice, says this “revelation” is just propaganda designed to smooth over an imminent publisher reversal on agency pricing.

Perhaps even more startling is Shatzkin’s claim that the articles claiming “print sales rising in the US” last year was simply based on the fad for adult coloring books–which some people wouldn’t even consider books.

I will admit that Shatzkin’s “revelation” makes sense to me. I expected Amazon to fight to the death for what they wanted and to have the clout to win. Instead Amazon seemed to grant agency pricing to any publisher that wanted it. The story makes more sense if Amazon wanted the Big 5 to set their prices (higher) and focused instead on revenue stream. In any case, one thing seems clear–the agency pricing that seemed like such a must-have before looks like an albatross now.

What do you think?

See the debate continue at Idea Logical: http://www.idealog.com

Nate Hoffelder: http://ow.ly/Z7XRh

Philip Jones: http://ow.ly/Z7XNe

Looking Back on 2015–and Ahead to 2016

Everyone is saying that the two biggest trends in publishing for 2015 were adult coloring books and the surge in audiobook sales. If you’ve been reading the Red Sneaker newsletter for long, though, you knew audiobooks were hot a long time ago–and since you write books with words, you may not care much about coloring books.

Here are some more useful predictions for 2016:

  1. Two Worlds, One Family. The articles declaring that “print is winning” or “ebooks have stalled” are based upon sales data from the big NYC publishers–excluding Amazon and independent publishing sales. If you look at the whole picture, ebooks are huge and getting huger. Penguin’s recent decision to fire dozens of employees is probably due to the failure of their ebook program. The Big Five fought for agency pricing, got it, and now that they’ve raised the prices on their ebooks, the books don’t sell as well. Is this a surprise? No. But bear this in mind: according to Author Earnings, 45% of all books sold by Amazon Kindle are independently published. In other words, there are now two parallel markets, both almost equal in size. One is traditional Big Pub, which dominates print. The other is nontraditional Indie Pub, which dominates ebooks, primarily with adult genre fiction.
  2. Children’s Publishing is Poised to Explode. Audiobooks will continue to grow, but what you may not know is that children’s publishing has provided the biggest growth sector for traditional publishers for the past 3-5 years. Last year, the US market children’s book market grew by 13%. The Big Five will expand on this, not only in book publishing, but also by seeking media and licensing deals based upon children’s books. If you’ve got an idea for a children’s book, this is the time to market it.
  3. Rights Management Becomes Critical. As the Big Five become more dependent upon big authors, licenses, and multimedia partnerships, they will attempt to retain every right possible. Too often, authors have been willing to sign away rights for the thrill of getting a book in print. This has always been a mistake and will become even more so in the future. Never sign away rights unless you’re getting something of value in return. Never sign away rights unless there’s a term limit clause or a fair provision for the eventual reversion of your rights.