Ken Auletta (cc photo: JD Lasica, socialmedia.biz)
In a lengthy New Yorker piece (4/26/10) about the Amazon/Apple battle over e-books, Ken Auletta paints some familiar heroes and villains:
The [publishing] industry’s great hope was that the iPad would bring electronic books to the masses—and help make them profitable. E-books are booming…. But publishers were concerned that lower prices would decimate their profits.
If Amazon gets away with selling e-books for $9.99, Auletta quotes one publishing CEO, “to my mind it’s game over for this business.” Amazon is depicted as controlling and mercenary:
Many publishers believe that Amazon looks upon books as just another commodity to sell as cheaply as possible, and that it sees publishers as dispensable…. Publishers maintain that digital companies don’t understand the creative process of books. A major publisher said of Amazon: ‘They don’t know how authors think. It’s not in their DNA.”
Publishers, on the other hand, are remarkably altruistic: “Publishers’ real concern is that the low price of digital books will destroy bookstores, which are their primary customers,” Auletta writes. But they’re equally concerned about the well-being of authors:
Good publishers find and cultivate writers, some of whom do not initially have much commercial promise. They also give advances on royalties, without which most writers of nonfiction could not afford to research new books…. Although critics argue that traditional book publishing takes too much money from authors, in reality the profits earned by the relatively small percentage of authors whose books make money essentially go to subsidizing less commercially successful writers. The system is inefficient, but it supports a class of professional writers, which might not otherwise exist.
It’s a good story—but it belongs in the fiction section: The idea that publishers need to break Amazon’s $9.99 pricing structure in order to be profitable is self-serving spin. As the New York Times‘ Motoko Rich reported in a story that bent over backwards to give the publishers’ side (FAIR Blog, 3/2/10), publishers make about as much from a $10 e-book as they do from a $26 hardcover: $3.51–$4.26 vs. $4.05, by Rich’s estimates. The higher prices that publishers claim are necessary to keep the industry alive will actually give profits a nice boost: to as much as $5.54 for a $12.99 e-book; Rich doesn’t give figures for a $14.99 book, but much of that extra price would go to the publisher.
Although Auletta allows publishers to pat themselves on the back for their “author-oriented culture,” they give themselves a much better deal than they give writers on e-book sales: While a traditional hardcover sale nets about the same amount of money for author and publisher, with e-books the publisher takes almost twice as much in profits as they give out in royalties.
The publishers’ goal is to get an e-price that gives them sharply higher profits per unit with far less investment—and isn’t that every capitalist’s dream? It’s a shame that Auletta feels the need to dress that up as some kind of salvation of literature, though.
To me, the New Yorker piece suggests (unintended) weakness and desperation, and I finished reading it feeling genuinely concerned for the mag’s future. I hope it’s just bad journalism and not a sign of deeper problems that lie ahead for The New Yorker.
While the New Yorker piece was bad journalism, your piece here doesn’t address the reality of the situation. It’s been clear for some time that Amazon would coerce publishers to sell their books for much less that the $26 ebook list price, driving down profits for both publisher and author. When one company controls 80% of the market, they can do that–look at Apple’s affect on music pricing. Publishers weren’t waging a war against the current state of things, but rather the inevitable future.
And while I agree that publishers aren’t giving authors a fair shake on ebook royalties at the moment, where do you get “with e-books the publisher takes almost twice as much in profits as they give out in royalties?”
I get that from the calculations from the New York Times’ Motoko Rich–and a friendlier reporter publishers could not hope for. Check out the link; her figures are quite eye-opening.
Publishers are about as pro-author as the music bidness is pro-musicians, which is to say, not very.
A good many musicians have been able to bypass the record labels and use the Internet and touring to make a comfortable, albeit not extravagant, living doing what they love. Absent the revenue stream of live performances, I’m not sure there’s an analogous scenario for book authors. But the old models of the two industries are almost identical, and they’re both dying for the same reason.
I liike Amazon. I don’t like the NYT.
Rich is indeed “bending over backwards” to give publisher’s a fair shake. So much so that her version of author’s royalties bear little resemblance to reality. Aside from the rarity of a 15% royalty, the longest section of any book contract is that concerning royalties and it is a long list of circumstances under which the author will NOT be paid the full rate, including a few circumstances, like direct sales, where the publisher recovers nearly the full cover price yet still the author’s royalty is to be halved. My last royalty statement was on a book long in profit but the rate paid works out to be 6% of the cover price as opposed to the fictional 10%. I’d give my right arm for a honest 15% rate.
With my Kindle I pay 9.99 for a book for one reader. I recommend it to my Kindle friends and they buy for 9.99. Before Kindle our 24.99 books were passes around to 6-10 readers. Shouldn’t the equation consider the one Kindle sale = one reader reality?
I’m a writer and my co-authors and I got nothing beyond the small advance. They paid us about 30 cents per book sold – which they took back against the advance. The only way we made any money was through their policy of selling authors their OWN books, which we could then go out and peddle for a higher price at book talks.
Perhaps they felt they were making up for the fact that they did little promotion. I do like the “GloriaJ” comment, though, because she’s right. People don’t pass a Kindle around like they do a book.
I hear libraries are starting to buy Kindles – could be an interesting new development to watch.
There’s a component to this that I would like to see FAIR investigate. Most of the book selling shows are on NPR. Diane Rehm devotes her second hour Mon-Thurs on books. But NPR has a real problem with conflict of interest. Here they are caught in serious conflict of interest with their music coverage as caught by the Ombudsman. Books any different? Let’s find out.
http://www.npr.org/blogs/ombudsman/2010/04/15/126028684/jakob-dylan-scores-big-at-npr?sc=nl&cc=omb–20100420
One day soon a self-publishing writer will have a best-sellers with Amazon’s Kindle, proving once and for all that in the day of digital publishing the “publisher” is actually irrelevant, which terrifies the publishing industry. That’s why I suspect big publishers have cooked up some scheme to blacklist aspiring self-publishing writers from Apple’s iPad which only provides e-books of writers already associated with a publisher.
Anyone ready any good Antitrust books lately?
Bookmarked your wonderful web site. Fabulous work, special way with words!