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What Amazon's ebook strategy means

It seems to me that a lot of folks in the previous discussion don't really understand quite what makes Amazon so interesting—and threatening, for that matter—to the publishing industry.

So I'm going to take a stab at explaining.

Amazon was founded in 1994 by Jeff Bezos. And today it's the world's largest online retailer.

I submit that, as with all other large corporations, you cannot judge Amazon by the public statements of its executives; they are at best uttered with an eye for strategic propaganda effects, and at worst they're deeply self-serving and deceptive. Rather, you need to examine their underlying ideology and then the steps they take—and the actions they consider legitimate—in order to achieve their goals.

Now, first, I'd like to introduce three keywords that need defining before you can understand Amazon:

Disintermediation

is the removal of intermediaries in a supply chain: "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. One important factor is a drop in the cost of servicing customers directly.

Disintermediation initiated by consumers is often the result of high market transparency, in that buyers are aware of supply prices direct from the manufacturer. Buyers bypass the middlemen (wholesalers and retailers) in order to buy directly from the manufacturer and thereby pay less. Buyers can alternatively elect to purchase from wholesalers.

It should be fairly obvious by now that the internet is an intrinsically disruptive force in traditional distribution channels because it makes disintermediation very easy.

Jeff Bezos recognized this very early on, and designed Amazon to be a disruptive disintermediary: to buy wholesale and sell retail, using the internet as a tool to reach remote customers directly. Initially Amazon relied on large warehouses, but as its database expanded they moved to just-in-time ordering, whereby obscure items would be listed as available but only ordered from the supplier when a customer requested one.

(So far, so good.)

But there are two other key aspects of Amazon that we need to understand.

Firstly, it's not an accident that Bezos' start-up targeted the book trade. Bookselling in 1994 was a notoriously backward-looking, inefficient, and old-fashioned area of the retail sector. There are structural reasons for this. A bookshop that relies on walk-in customers needs to have a wide range of items in stock because books are not fungible; a copy of the King James Version Bible is not an acceptable substitute for "REAMDE" by Neal Stephenson or "Inside the Puzzle Palace: A History of the NSA" by James Bamford. But books are bulky—a metre wide galley with books stacked spine-out can hold maybe 200 books on its shelves. It takes a lot of floor space to hold one copy of everything a reader might want to buy. Even a big box store may only have room to stock 20-50,000 different titles. In contrast, Amazon's database can hold millions of titles without Amazon having to hold them as physical stock.

Moreover, a big bookstore that stocks 20,000 trade books has to either sell them or return them undamaged for credit within 90 or 120 days. Someone is paying for that credit: either the wholesaler who bought them from the publisher, or the publisher themselves. (Or the bookstore may take a gamble and pay for the books, then keep them on the shelves until they sell—but this doesn't generally happen because bookstore owners aren't suicidal.) And the availability of that credit is limited by the retailer's plausible ability to pay. Amazon doesn't need to run on rolling credit. They can list everything in print as if it's available, and order it only when they have a confirmed sale. Neat, huh?

As noted, Bezos targeted bookselling because it was ripe for disintermediation. By purchasing from the publisher directly when a customer had already bought a copy, his company could keep its overheads down—and in particular, minimize its warehouse space (never mind the cost of running premium retail outlets and paying shop sales staff). This allowed him to buy wholesale and sell retail, at a big discount compared to the regular retail trade (with their higher overheads).

So. What's wrong with this?

Well, there's nothing intrinsically wrong with this way of doing business—if that's all that was going on. But it isn't. So now we come to our two new words:

Monopoly

exists when a specific person or enterprise is the only supplier of a particular commodity ... Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods.

Monopolies suck for their customers because they don't have to give a shit about product quality or price: they have you, the customer, over a barrel with nowhere else to go.

A monopoly is a consumer-side problem. In contrast, there is a less-well-known corresponding supplier-side problem ...

Monopsony

is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only or majority purchaser of a good or service, the "monopsonist" may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers.

Monopsonies suck for their suppliers because the suppliers are systematically starved of profits by the middle-men running the monopsony. Which can lead to suppliers going bust, and a reduction in the diversity and quality of goods available (via the monopsony) to consumers.

(It's kind of like inflation and deflation in economics. Inflation is bad; deflation, its opposite, is not good, it's simply differently bad. Similarly, both monopolies and monopsonies are bad.)

And the peculiar evil genius of Amazon is that Amazon seems to be trying to simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector.

You're probably familiar with predatory pricing. A big box retailer moves into a small town with a variety of local grocery and supermarket stores. They stock a huge range of products and hold constant promotions, often dumping goods at or below their wholesale price. This draws customers away from the local incumbents, who can't compete and who go bust. Of course the big box retailer can't keep up the dumping forever, but if losing a few million dollars is the price of driving all the local competitors out of business, then they will have many years of profits drawn from a captive market to recoup the investment. (Meanwhile, helpful laws allow them to write down the losses on this store as a loss against tax, but that's just the icing on the cake.) Once the big box store has killed off every competiting mom'n'pop store within a 50-mile radius, where else are people going to shop?

Amazon has the potential to be like that predatory big box retailer on a global scale. And it's well on the way to doing so in the ebook sector.

Until 2008, the ebook side of publishing was a vestigial, if not irrelevant, irritation from the point of view of the major publishers—at less than 1% of their turnover it was lost in the line noise. However, as subsidiaries of large media conglomerates, the executives who ran the big six had all been given their marching orders about the internet: DRM restrictions would be mandatory on all ebook sales, lest rampant piracy cannibalize their sales of paper books.

(This fear is of course an idiotic shibboleth—we've had studies since 2000 proving that Napster users back in the bad old days spent more money on CDs than their non-pirate peers. The real driver for piracy is the lack of convenient access to desirable content at a competitive price. But if your boss is a 70 year old billionaire who also owns a movie studio and listens to the MPAA, you don't get a vote. Speaking out against DRM was, as more than one editor told me over the past decade, potentially a career-limiting move.)

But publishers aren't software companies. They just want to sell books. And so they outsourced the DRM to the ebook resellers. Including Amazon.

Amazon has a history of investing hundreds of millions of dollars in loss-leading products and ventures solely to build market share. For AMZN, the big six insistence on DRM on ebooks was a windfall: it made the huge investment in the Kindle platform worthwhile, and by 2010 Amazon had come close to an 85% market share in the ebook sector (which was growing at a dizzying compound rate of 100-200% per annum, albeit from a small base). And now we get to 2012, and ebooks are likely to hit 40% of total publishing sales by the end of this year, and are on the way to 60% within five years (per Tim Hely Hutchinson, CEO of Hachette UK). In five years, we've gone from <1% to >40%. That's disruption for you!

Now, most ebook customers are not tech-savvy. It is possible to unlock the DRM on a Kindle ebook and transcode it to epub format for use on other readers; but it's non-trivial. (Not to mention being a breach of the Kindle terms and conditions of use. Because you don't own an ebook; in their short-sighted eagerness to close loopholes the publishers tried to make ebooks more like software, where you merely buy a limited license to use the product, rather than actual ownership of an object.) So, because Amazon had shoved a subsidized Kindle reader or a free Kindle iPhone app into their hands, and they'd bought a handful of books using it, the majority of customers found themselves locked in to the platform they'd started out on. Want to move to another platform? That's hard; you lose all the books you've already bought, because you can't take them with you.

By foolishly insisting on DRM, and then selling to Amazon on a wholesale basis, the publishers handed Amazon a monopoly on their customers—and thereby empowered a predatory monopsony.

I'm not going to comment on the Agency model which has drawn down the current US Department of Justice enquiry into Apple and the big six publishers. Let's just frame it as a desperate attempt by the publishers to get away from the wholesale model, which was allowing the monopsony incumbent (Amazon) to extort ridiculous discounts from their suppliers. If anything, the agency model simply means selling books the same way they were sold 30 years ago, and the way apps are sold in the iTunes app store or the Android Marketplace. It was unwise to give the appearance of collusion to establish a price-fixing cartel, but whether or not such collusion actually happens is a matter to be decided by a judge in the not too distant future.

I'm not going to lecture you about Jeff Bezos either, although I do want to note that he came out of a hedge fund and he's ostensibly a libertarian; these aspects of his background make me uneasy, because in my experience they tend to be found in conjunction with a social-darwinist ideology that has no time for social justice, compassion, or charity. (When you hear a libertarian talking about "disruption" and "innovation" what they usually mean is "opportunities to make a quick buck, however damaging the long-term side effects may be". Watch for the self-serving cant and the shout-outs to abstractions framed in terms of market ideology.)

Anyway, here's the important take-away:

DRM on ebooks is dead. (Or if not dead, it's on death row awaiting a date with the executioner.)

It doesn't matter whether Macmillan wins the price-fixing lawsuit bought by the Department of Justice. The point is, the big six publishers' Plan B for fighting the emerging Amazon monopsony has failed (insofar as it has been painted as a price-fixing ring, whether or not it was one in fact). This means that they need a Plan C. And the only viable Plan C, for breaking Amazon's death-grip on the consumers, is to break DRM.

If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").

And so they will deep-six their existing commitment to DRM and use the terms of the DoJ-imposed settlement to wiggle out of the most-favoured-nation terms imposed by Amazon, in order to sell their wares as widely as possible.

If they don't, they're doomed. And all of us who like to read (or write) fiction get to live in the Amazon company town.

759 Comments

1:

Great post. The only thing I'd add is this:

either we get to live in an Amazonian Company Town (obscure reference to the rubber industry of a century ago)....

...or crowdfunding sites start getting really popular with authors.

Crowdfunding books would be yet another level of disintermediation between authors and readers. While I can see a huge number of problems with this system (starting with an author saying, "I needed a business license? Shit!"), it's a potential alternative, especially once Bezos starts playing games with supplies and pricing.

2:

This is total BS. There are a number of authors who live outside of Amazon selling DRM-free books (myself included) on their own website. It's not difficult, and is trivially easy to run as a lifestyle business while you're writing other books. Amazon cannot maintain a monopoly on selling books or a monopsony on buying books even if it tried: Charlie Stross himself has a brand powerful enough that his enthusiastic readers (myself included) would be happy to buy from him instead of Amazon.

John T Reed wrote on his webpage on distribution (http://www.johntreed.com/distribution.html):
"As far as I can tell, the authors who still go with publishers and distributors lack self-esteem—big time. They are so interested in the cachet among ignorant laymen of “being published” and “being in book stores” that they will give up $100,000 or more a year to get that status.

How psychiatrically sick are these authors? How sick would you have to be to walk away from $100,000 or more a year?

In effect, they are willing to pay that much to be a “celebrity,” i.e., “being published” and/or “being in book stores.”

This is spite of the harm done by abandoning that money to their family, themselves, their retirement, their health that would be enhanced by their having more money and therefore more time for exercise and other good habits."

Unfortunately, Charlie Stross belongs in that category.

3:

Rubbish. There's this concept called "division of labour" that I'd like to remind you of; if I had to run my own self-publishing op I'd lose half my writing time to what is essentially a peripheral activity (from my point of view).

I diagnose a bad case of self-publishing disease here. (There's an echo chamber of folks who think that they can all get to be the new Amanda Hocking. Ain't gonna happen, but they get very annoyed if you point out the emperor's sartorial deficiency.)

4:

Well, isn't this an almost privileged moment in modern commercial history? - we get to see how a global commercial entity behaves in what amounts to laboratory conditions (in the sense that we can see, hear and analyse Amazon's actions as they unfold). I think that global corporations have reached a stage of development which is like a hybrid of cancer and morbid parasitism - corporations are driven by their primitive growth programming to expand, push, corrupt, and devour the surrounding socio/economic fabric, yet a certain self-preservation keeps them (or some of them) from overreaching and killing the host.

How will Amazon develop? And, more importantly, what will be the response of those with financial clout (and a stake in the game)? Is it possible that the big publishing houses might club together to create a global bookselling nethub to face down Amazon?

5:

Very clear. Thanks for explaining.

Cliff.

6:

As always, Mr. Stross, you make a lot of sense.

What do you think about the possibility of publishers selling non-DRM ebooks directly to consumers via their website and/or own mobile apps? Non-exclusively, of course. Seems like it would be a reasonably low-cost hedge against Emergent Monopsony X. Hollywood seems to be moving in this direction with content; i.e. I can stream new "Modern Family" episodes via iTunes OR Hulu OR directly from ABC's website/iOS app.

7:

Lack of DRM from the publishers also means that physical retailers have a chance. (Not a big chance, but it's there. Unlike now, where it isn't.)

8:

Think this gives me another reason for sticking to print books...

9:

Hmm. Well I seem to be buying Kindle ebooks almost exclusively now. Case in point, a few days back I had an opportunity to wander round a good 2nd hand bookshop on the Isle of Wight. In the fantasy/horror/sf section all 3 volumes of the Kim Stanley Robinson Mars trilogy were available, albeit foxed, creased, and slightly smelly, for a total of £7.50. Before making a decision to buy, I thought to check Amazon to find I could get the entire series on Kindle for £3.49 , and the author would presumably get a bit too. No contest.

That said, I'd happily buy a Drm free PDF of the next but one Laundry novel via Kickstarter. In many ways, the we pay a bit less but the author gets all the money, and up front to boot, model looks quite attractive from the consumer POV.


10:

The big publishers really aren't geared up for direct sales. Some of the smaller ones, however, are: Baen, for example, with their Webscription set-up have been doing so for over a decade.

The trouble, of course, is being discoverable by customers (and easy to do business with).

11:

The brand of one author is not that powerful. People who own Kindles frequently don't buy from anything but the Kindle store, and in some cases assume that any book not on the kindle store does not exist as an ebook.

And of course, where do you thinh our host *got* that brand, would you ever have heard of him if his publisher had not marketed his books in the first place? There's a massive amount of labor and money involved in building an audience yourself, and you can't crowdsourse until you have that audience.

12:

In economic terms, "monopoly" does not mean "the only seller." It means that you have sufficient market power and presence that you are largely immune to price changes. People selling a few thousand books a year off their website are not going to impact Amazon in any way. (But let's look at one exception here -- Rowling, who has enough power on her own to get Amazon to change how they worked. And she did it by not using DRM. Anyway.)

As for Amazon not being a monopsony... probably. But it's definitely an oligopsony, and is well on its way to monopsony. (Who does, for example, Tor get to sell to? Only a handful of companies that buy significant quantity.)

13:

And your self-publishing means I've never heard of you. Your book's not next to other books I enjoy in the shops. Amazon don't suggest you based on my purchase history. And of course there's the reputation of people who self-publish to be a bunch of kooks who couldn't get a real publisher to touch them.

And while I'm in a different industry, I *do* turn away $100,000 because I don't care for the stress and 120 hour weeks. I'm not Larry Ellison and I don't use my bank balance as a way of keeping score in life.

14:

I agree that an author totally self-publishing may be a waste of time/talent, although given that many authors work effectively at below minimum wage when writing novels it's hard to say they are monetarily worse off.

However ebooks without DRM do have an extremely low barrier to entry. Thus, a bit of word of mouth and some good google (or bing) search engine mojo can get another direct ebook-seller to show up easily when people go searching. And assuming the DoJ suit ends up invalidating the clause that a distributor can insist that no one else resell the same book at a lower price, a lot of the monopsony lock in to Amazon goes. Unless of course Amazon locks the Kindle. I think it is unlikely that Amazon will be able to insist that kindles only read amazon bought ebooks (both from a technical and legal/anti-trust standpoint) and I kind of doubt they would be stupid enough to try. After all with smartphones, iPads etc. you don't need a kindle to read lots of ebooks and if the kindle gets locked down then we'll all go an download some other ebook reading app for our non-kidle hardware devices and let the kindles whither on the vine.

Now having said that I do espect Amazon to try and make it more convenient and cheap to use a Kindle than anything else but I doubt they'll get to total market dominance levels. I supect we'll see something more like the Intel/AMD or Microsoft/Apple kind of market where Amazon has betwene 60% and 80% of the market but can't get to 90%

15:

PS http://madgeniusclub.com/2012/04/14/how-the-mighty-might-fall/ is interesting and on sort of the same topic

16:

So... DRM is dead. That's -- that's good, right? We can be happy about the ruling?

I'm sorry -- it's just, it's been so long since I've seen a news article saying things are generally okay and I don't need to be outraged about anything. I've sort of forgotten what it feels like.

17:

Dan, don't worry: it hasn't happened yet. It is still possible that the unpredictable combination of the DoJ, the publishers and Amazon will contrive to bring about a grim meathook future that is dismal beyond our ability to comprehend. There is no need to re-learn what it is like to feel happy just yet.

18:

Is it possible that the big publishing houses might club together to create a global bookselling nethub to face down Amazon?

This would be great, both for established authors, self-published authors and readers all around, but seeing as how it took a multimillion dollar lawsuit brought by the DoJ to get to the publishing houses to even consider doing this does not bode well. They could have done this 5 years ago and undercut Amazon, defanging the kindle right out of the gate. Instead they clung to their old ways and let Amazon colonize the ebook biome. Now they have to fight an invasive predator (the kindle model) and figure out how to stay alive (solvent) during a global economic crisis, all while shrugging off the public perception that they've already formed a price fixing cartel. A global bookselling nethub would be sweet, but if it happens, it'll have to be managed by an independent organization not directly affiliated with the publishers or with Amazon. The only candidate I see who has the infrastructure already in place for this is Google. make of that what you will.

19:

It's worth pointing out that although against the licensing agreement and requiring more than minimal computer skills there are various bits of software that are presented as "e book managers" that can be persuaded to hack your DRMed book (be it from Amazon or most other places) into a non-DRMed form and a different format.

Since I've blogged about doing so, I'm relatively easy about saying I've done it. I read one copy of the book but I prefer the iBooks interface to the Kindle interface on the iPad, so I break DRM and read via iBooks. My conscience is clear - although as yet untested by a judicial system. But I'm not sure how hard it is to do. One of the impetuses behind the recent UK proposed remodelling of copyright law and the like was that middle-England housewives were some of the biggest lawbreakers - doing things like cracking DRM to read on a different platform, lending eBooks to their friends and the like. There are a number of big business cases too but if the law says middle-England is all breaking the law then the law is wrong... or there's a revolution.

20:

The Bezos business model is so incredibly destructive for the publishing industry that I frankly don't see him as a problem in the long run, in any possible scenario.

He's not comparable to Wal-Mart. Wal-Mart is in it for the very long term. They want to be The Shop, forever, for the entire world.

He's doing essentially the same thing as company towns in resource-based industries. They go to a region, exploit its natural resources to the hilt, and then leave the area completely. The company town becomes a ghost town next to a slag heap, and the owners end up with fortunes.

Once he'll have sucked publishing dry, once the big names are totally dead or have left to concentrate on other media, once there is nothing left but reprints and small indie publishers with tiny profit margins he'll close down the book section and concentrate on more profitable things like selling electronics. One day, years after he's shuttered the bookstore, the small indie publishers will grow, some of them will merge, and a better publishing industry will arise. But in the meantime there will be no big English language publishing industry. It will have been gutted.

That's the hedge fund mentality.

Hopefully, someone will stop him.

Sinon, je vais devoir me contenter de nouvelles publications dans d'autres langues que l'Anglais, pour un bon bout de temps.

21:

I hope the publishers wise up and do something like you suggest, but I would never overestimate the wisdom of business executives. I worked at the Borders bookstores headquarters in the late 90's, and at company meetings, the CEO would gleefully - GLEEFULLY - boast how Amazon still hadn't turned a profit and wasn't a real threat at all.

I can't remember his name, but this was the CEO that they brought out of semi-retirement because his replacement was doing a bad job and he was so great for the company.

Business execs can be extremely dense, and unfortunately underlings all too often follow blindly (or are like me back then and just want a paycheck and don't really care who gives it to me).

22:

I think Piaw Na has more of a point than you give him credit Charlie. I mean sure he's suffering from a case of S-PD that's causing him a to be a bit nutty and insulting but in the long run the forces of disintermediation are going to force something like that to happen eventually.

Of course there is still going to be a division of labor but the structure of that division is going to change. Over the next decade or two the field of editing is really going to blossom when their contribution really makes itself evident. Only I think the authors themselves rather than the publishers are going to be hiring them. Or maybe agents will start taking over more of the back-end work and putting together editors, authors, and distribution set-ups.

I suspect though that eventually authors are going to take on most of primacy in the business mesh the eventually develops. The agency of being in charge is just going to be too attractive. And the fact is that the business crap is much simpler than the goons in MBA programs would like us to believe. Thirty years ago you'd be hard pressed to find a programmer or engineer who could cogently explain a stock option was now it's as much a part of the job as knowing what bubble sort is.

23:

*Waves hand*

I won't actually advocate violating license terms and conditions, but I'll cop to doing so myself (insofar as if I buy a DRM'd ebook, I think I'd be mad not to strip the DRM and make an archival copy strictly for my own future use).

24:

I think the interesting comparison to be made here is to Steam; PC games went through this whole drama 5-6 years ago and the market not only survived without either a monopoly or a monopsony but is being dramatically revitalized. But DRM is still alive and kicking.

Of course, Valve is not Amazon and the Gaben is no Bezos.

25:

Is it possible that the big publishing houses might club together to create a global bookselling nethub to face down Amazon?

You mean, form a cartel for the express purpose of raising prices and weakening a particular competitor?

26:

I worked at B&N in the early 00s, when the CEO said that he didn't care what we sold, books or hammers, because it was all widgets to him. I think this is closer to Bezos' business model than anything else. He'll sell book-flavored widgets for as long as there is a market for it. And despite all the articles claiming otherwise, there still is a huge market for book-flavored widgets in the English speaking world. The traditional publishers have an opportunity to wrest control of the selling of these back from Amazon, if they are smart. As you point out though (and as I and others can attest) they aren't smart and so will probably do something mind-numbingly stupid.

27:

The agency of being in charge is just going to be too attractive. And the fact is that the business crap is much simpler than the goons in MBA programs would like us to believe.

The angle you're missing is risk management.

Right now the industry is structured so that the publisher assumes the commercial risk of publishing: the author is along for the ride, and under some circumstances makes less money, but the iron rule of publishing, Yog's Law, states money flows towards the author: you don't have to pay for the expenses of publishing or marketing, you get a nice fat advance against your expected royalties (which you don't have to repay if the publisher doesn't turn a profit, or goes bust), and so on.

I am, as it happens, in a position where I could go from zero to self-publishing on a commercial basis in a handful of months. This is entirely deliberate: I have a "Plan B" to hand in case the publishing industry as a whole crashes and burns. But I'd rather not do that, because if I do, not only do I have to shoulder the workload of being by own publisher, I also have to assume the commercial risk.

(And I'm a child of a long line of self-employed entrepreneurs and business owners; it must be infinitely worse for someone who didn't grow up in a family where everyone was expected to run a business.)

28:

Interesting read. I hope that publishing industry learns a lesson that Hollywood and the music industry have not learned, people will pay for content if it is easy to access and reasonably priced. Sorry MPAA $9-18 for a CD is ridiculous and forcing movie theaters to convert to 3D and charge $15/ticket is just stupid. Get rid of the DRM, find a way to easily search and download content. People will buy.

One of my hobbies is fountain pens. Amazon has been sucking in the small Mom 'n Pop pen sites as 3rd party sellers. Of course these stores disappear and Amazon takes over. I've avoided buying pens and supplies through Amazon, because I do not want Amazon to have the same market share it now has with e-books.

29:

I like DRM free ebooks and being Canadian have been using ePub readers first a Sony and now a Kobo Vox.( Kindle was not available) With the vox I can download reader software to read any format and have actually bought one book from AMAZON. Yes they have basically locked down the US market and are making in roads to the rest of the world but if everyone else can start selling DRM free before they do it may disrupt their business. I dislike locked sandboxes and therefore have avoided Apple and Amazon.

30:

I really don't see DRM as anything but a distraction in this conversation. Having DRM doesn't force users to go to Amazon, and choosing to have DRM books on Amazon doesn't preclude having non-DRM books elsewhere.

Amazon owns the marketplace because a) they doing a pretty good job of running the marketplace, and b) they have scale. If libraries did half as good a job as running a marketplace, I'd get all my books for free from the library. But they don't, and so I discover books on Amazon, read reviews, and 9 times out of 10, purchase there.

As a self-published author who hasn't run afoul of Amazon yet (yes, I know, there are lots of horror stories), I'm pretty happy with the opportunity afforded me. I'm keeping a large portion of my book revenue (far more than I would with a publisher), and my sales are to the point where they can pay the rent. My Amazon sales are 97.7% of my total sales, so I certainly can't afford to live without them.

I assert that if you don't want Amazon to be the only game in town, then the trick is to build a better marketplace. It has nothing to do with DRM.

A better marketplace would likely involve a system of reviews shared among many smaller marketplaces. Imagine all libraries, independent bookstores and publishers sharing one large review database.

It would likely also involve a good recommendation system, like Amazon has. This can itself be crowdsourced, much as Netflix did with the Netflix Prize (a $1 million prize to beat Netflix's movie recommendation algorithm back in 2007). The recommendation system would need to have the ability to recommend items across marketplaces as well as within marketplaces. This can and should be transparent so customers can see when they are about to transfer marketplaces.

To keep friction low and offer an experience similar to Amazon, every part of the experience should be kept smooth and seamless. Checkout and shipping, for example should offer a centralized option, like Paypal that remembers payment and shipping information, although nothing would preclude a participating marketplace in the federation of marketplaces from offering their own payment options in addition to the common ones.

Unfortunately, I don't think we can count on the publishers to lead the charge. I've seen publishers speak at SXSW Interactive year after year, and they appear to be further and further divorced from the reality of the situation. (If you've ever been to SXSW Interactive, you may have noticed there's a lot of very smart people there. When the presenters are too busy being defensive against what the audience is saying to be able to stop and listen, it's a sure sign the presenters are in trouble.)

Personally, I'd like to see libraries lead the charge in building the marketplace. We don't have to doubt their motives: they just want to get books into people's hands.

31:
Of course the big box retailer can't keep up the dumping forever, but if losing a few million dollars is the price of driving all the local competitors out of business, then they will have many years of profits drawn from a captive market to recoup the investment.

Except that history doesn't end once Wal-Mart drives the small, expensive retailers out of business. If they jack up the prices, they sow the seeds of their own destruction - and they can't keep selling goods below cost forever. Wal-Mart is an apt example of that, because now they're scrambling to deal with the threat posed by Amazon to their DVD/BD and "High-End" product sales.

I pointed this out in the earlier thread, but let me re-iterate it: without government regulation, private sector monopolies are not long for this world - especially in anything related to the Digital Economy and Retail. They are ripe targets for disruptive innovations and changes in how we produce, sell, and market goods and services.

Yet this kind of fear-mongering turns up, over and over - that this time, it's different. This time, we're at dire risk of ending up in the "Amazon company town", in the grasp of Microsoft, trapped in AOL-Time Warner's "walled garden". I think it's as wrong now as it was with all the prior times when it came up.

32:

thank you. well explained. many moan about the big companies and what they do, the Evil Empire and so on. to me, these are capitalists behaving like capitalists. why do people get so outraged? do we really expect them to be different? do we expect these structures to suddenly grow bigger moral wings and fly above their modus operandi? we can look the other way; what happens when a country tries to control the economy? we have the absurdities of the old USSR. yes, maybe we will have an Amazon style Company Town; but I bet its own internal contradictions will bring its demise and some newer form will emerge with good and bad. . . . and there is where my hope rests, new forms emerge. every time I see a Company Town, I look behind it to see what is coming next. sometimes it is hard to see but it will be there and when it is not, we are all dead.

33:

Interesting piece, as always.

Steam is an interesting analogy, and indeed the biggest contrast with Amazon is that it seems to be run by people who to some extent care about the products they sell (and the same is true for some of the other digital pc game stores).
But the scary thing at the moment is not Valve, but it's customers. The customers that seem to be really prone to voluntary vendor lock in. Partly a trust issue, partly a convenience issue, partly a social issue, but in the end there is a big group that won't buy directly from a developer or competitor, only from Steam.
Which is something that I assume also happens with people that feel fine within the Amazon ecosystem (or Apple for that matter). And all those people are highly unlikely to take a chance and buy direct, making the dream of independent authors successfully selling directly or at least independent from the big sellers less likely.

34:

I'm not sure Bezos will ever abandon publishing, because he's set up a nice long-tail company that can make a tremendous amount of money, though having lots of small sales.

No. We don't know what will kill Amazon yet. It may well happen after Bezos is gone, but something will happen. And it's going to be an astoundingly stupid move, whatever it is that happens.

My favorite example of this phenomenon is nearby, where a local Korean grocery store is moving to take over an empty Sears big box nearby, and turning half the floor space into a mini-mall to sublet out to the restaurants, small shops, and hair salon that they already sublet to in their existing building. A century ago, Sears was a huge player in the catalog retail game all through the US. Now they're drying up and blowing away.

It's interesting to watch a Korean copy of a Japanese model (I'm not sure who the original was for this store design: Mitsuwa?) take over as a former giant falls apart. That Korean store is successful enough that it's already turning into a local chain.

35:

If you flip through old Baen books, you will see Jim Baen had a keen interest in exploring options other than the usual distribution chains right from the start.

36:

It's not about DRM or a company store or locking people into a platform

Amazon is a technical company and knows that DRM is not sustainable and the things like kindles are going to drop to about $25 very fast and they are in the end not going to come from Amazon.

It's about being the biggest and the cheapest, driving the price down, pressure the suppliers to the point where the margins are razor thin and the biggest and most efficient retailer wins due to technological and economy of scale advantages.

There is a real possibilities this will turn into a nightmare scenario for authors. They need to work with Apple, publishers and surviving retailers to develop their own distribution channels, that are COMPETITIVE on price and efficiency. It's not as hard as it sounds delivering a few million text files for pennies is child's play these days

37:

..If libraries did half as good a job as running a marketplace, I'd get all my books for free from the library...

As a librarian, I'd like to give this statement an award for the most poorly thought out analogy of the week, but I'm a librarian, and we don't have the funding for awards. Or keeping the lights on more than four days a week.

38:
He's not comparable to Wal-Mart. Wal-Mart is in it for the very long term. They want to be The Shop, forever, for the entire world.

Right. Does anyone believe that Bezos' ambitions for World Domination (Bwah Hah Hah Hah) are unique to him? That Walmart and Toyota and BP et. al. don't desire exactly the same monopsony/monopoly combination?

Maybe there's something to the notion that A-Z is uniquely situated to actually realize this state of affairs. But I haven't seen that argument made yet.

39:

Good points.

No. We don't know what will kill Amazon yet. It may well happen after Bezos is gone, but something will happen. And it's going to be an astoundingly stupid move, whatever it is that happens.

My guess is that somebody will come along with a new, successful business that directly attacks the heart of Amazon's business model. Amazon, like earlier giants, will struggle to respond, spend a ton of money trying to adjust without luck.

If they're lucky, they'll end up like Microsoft or IBM - successful companies that produce a steady supply of products that people want, even if they're not the Big Man of the Tech Sector anymore. Retail is pretty unforgiving, though, so they might just go out of business.

My favorite example of this phenomenon is nearby, where a local Korean grocery store is moving to take over an empty Sears big box nearby, and turning half the floor space into a mini-mall to sublet out to the restaurants, small shops, and hair salon that they already sublet to in their existing building. A century ago, Sears was a huge player in the catalog retail game all through the US. Now they're drying up and blowing away.

There's also the example of A & P, a supermarket chain that had a 75% market share as recently as the 1950s. I'm guessing that your first reaction (and most people's reaction) to this is "Who?".

40:
I won't actually advocate violating license terms and conditions, but I'll cop to doing so myself (insofar as if I buy a DRM'd ebook, I think I'd be mad not to strip the DRM and make an archival copy strictly for my own future use).

I think it apropos at this point to remember that for many people, ebooks aren't "owned" per se; what they own is the right to view a given title. Not the same thing.

Of course this state of affairs creates incentives for jailbreaking and creating a version of your acquisition that makes it actually, you know, yours.

41:

You can buy a Kindle and use Calibre to convert .epub to .mobi. This was you get a nice e-reader and damage AMZN (assuming they sell Kindles at a loss).

42:

Once he'll have sucked publishing dry, once the big names are totally dead or have left to concentrate on other media, once there is nothing left but reprints and small indie publishers with tiny profit margins he'll close down the book section and concentrate on more profitable things like selling electronics

Bullshit. You are missing two strategic points: 1) don't leave a flank, 2) code is law.

The first is obvious, the second means that intellectual property, such as it is, is not the same thing as a mountain full of coal.

That said, I think we live in disruptive times. If it wasn't Amazon, it would have been someone else. I like the current publishing model, but I don't think it matters what I like. I'm simmering some half-baked ideas (I couldn't pack another misplaced cooking analogy in there, which is why I'll never be published) on how one keeps authors whose names are not Rawlings or King both writing and not living under a bridge. Scale is a problem. I'm wondering it talking to authors, who likely know their local booksellers, pubs, coffee shops, etc. might be an angle. (That's part of the publicity angle; editing, art and finance are the other 240% of the problem. Honestly, finance, I think, is the easy part, assuming the rest comes together.)

43:

Crap, I fumbled the HTML. Sorry.

44:

Hat is tipped. This is a brilliant post.

45:

Suppose we find ourselves in the amazon.com grim meathook future. Shouldn't authors be able to come up with a few ways to collectively organize themselves to better survive?

I'm thinking something like a foundation or cooperative or guild that could run an author-friendly alternative to amazon.com's ebook storefront? Something run with an explicit mission to forward the mission of authors rather than enrich middlemen? Is such a thing possible?

46:

IIRC you have an agent already. What's to prevent your agent, and other agents, from turning into mini-publishers? A 5-man shop could handle that division of labor for you and a stable of other authors as well.

47:

Didn't look far enough. Bezos wants to disintermediate between authors and Amazon. What are these pesky publisher things between us and the content creators? *swat*

And another level of monosomy forms. With many more, much weaker sellers...

SFWA and the other writer groups need to have some serious Come to Jesus talks about which set of corporate overlords they want to work for and under what conditions ten years from now...

48:

The publishers need to compete with Amazon on distribution. Seriously, it's that simple. Stop crying into their beer about the good old days, stop the shady backroom deals, stop waiting for the government to save them, and just compete. The people that are doing that (B&N, Apple) are doing fine. Amazon is in now way unbeatable.

I know its been like a 100 years since they have had to do that, but most of the rest of the world does it every day.

If the big six publishers cannot get their shit together then the authors are going to have to find someone else to represent them or do it themselves.

49:

My guess is that somebody will come along with a new, successful business that directly attacks the heart of Amazon's business model.

I'm not sure what the heart of AMZN's business model is, but I suspect their cloud services have a lot to do with it.

50:

No comment.

51:

And another level of monosomy forms. With many more, much weaker sellers...

This is why I [heart] the big publishers. Well no, not really, but having a handful of competing, cumbersome, slightly inept, and not terribly voracious sauropods for a market beats having to sell to a market consisting of a single psychopathic tyrannosaur.

52:
I'm not sure what the heart of AMZN's business model is, but I suspect their cloud services have a lot to do with it.

There's that, since that's where they make their biggest profit margins.

53:

Supermarkets don't squeeze out the smaller shops by predatory pricing, while they sell at prices that the smaller shops would lose money at they don't lose money themselves in doing so. They are actually better at retail than their competitors. They have intrinsically lower costs due to having better lower cost logistics and better quality stock. When I was at university the TESCO Metro was much nicer (better lit, nicer decor &c.) with far more fresh food than the similarly sized independent supermarkets. Even when the small shops have gone out of business the other supermarkets provide ongoing competition or potential competition as the barriers to entry aren't that high. If TESCO are making exceptional profits in a local market ASDA or Wm Morrison or J Sainsbury or one of the various smaller retailers are going to see an opportunity.

54:

"I really don't see DRM as anything but a distraction in this conversation. Having DRM doesn't force users to go to Amazon"

Actually it does, you cannot read a DRMed book on a Kindle unless that book was bought from Amazon, and you cannot read a DRMed book bought from Amazon on anything but a Kindle.

Yes there are non DRMed books, but as Charlie points out, books are not fungible, and books that come with DRM are (usually, I've seen a few DRMed public domain books) not avialable any other way.

55:

I immediately thought of O'Reilly.

They produce one of the largest lines of technical books on the market and being smart people have been selling their books DRM free for years. (They are watermarked though, to discourage reposting).

Their market, of course, is tech knowledgable people who are quite capable of cracking DRM so they can use the books on multiple devices. So O'Reilly accept and embrace that.

Bad news though. A quick check shows that Amazon sell kindle versions of the O'Reilly ebooks at half the price of the ebooks on the publisher's website.

56:

I'm not so sure. The reason is that the Kindle *physical platform* is a bit of a technological blip. It basically exists because reflective screens are nicer for reading books - the competitor is smartphones and tablets. And on my Android phone, I have *both* a Kindle app and a Google books app. I've bought titles on either. I strongly expect smartphones to displace physical Kindles for the same reason they displaced Palm Pilots, they are near enough and good enough and you already have one. And once they displace kindles, the market for intermediaries opens back up.

What that means is the book industry becomes a collection of Amazon-alike data silos, whether run by Amazon or the publishers directly, that contain books which refuse to transfer between silos but are otherwise able to exist along side one another.

57:

As for Amazon getting in trouble, I can see roughly four serious problems for them.

1. Amazon has a serious cloud crash, and spends the next few years afterwards in legal hell trying to get out of paying for it. Unfortunately for them (and us), they're big enough to be a target in cyber-war, but it doesn't take a day-infinity exploit when a disgruntled employee, cascading power outage, or major earthquake can probably do much the same thing.

2. Amazon gets sued by the DoJ for being scary, and broken up Ma Bell style (yes, that's sarcastic).

3. Amazon gets sued by the DoJ, but the real reason is that they refused to make nice with the American National Intelligence Apparatus (this for the tinfoil hat crowd. Distinguishing this one from the last one will be difficult until after the fact).

4. Something seriously disrupts international commerce, be it a human pathogen, war, a Snow Crash level computer virus, or whatever. Yes, this sucks horribly for all of us, but I think it sucks even more horribly for firms whose profits depend on cheap and fast supply chains, like WalMart and Amazon.

58:

I wish I was as optimistic about the publishers giving up on DRM. But business people have an imperfect record of following their own long term self interest.

It does seem like a slam-dunk argument to abandon DRM: if they do, they can disintermediate and sell directly.

Interesting possible confounds: (1) they let Bezos lock up a huge number of their potential customers --- "just throw away your Kindle and buy from us on..." what? I suppose iPads work, but letting AMZN and B&N lock up so many customers wasn't clever. (2) it could lead to a game of chicken over the physical book sales.

One elephant in the room that rarely gets talked about when the big monopsonists, AMZN and Apple are discussed is customer service.

I wouldn't argue that these companies are perfect, but the experience purchasing from them is wildly better than most of the alternatives. Barnes and Noble (and the late Borders) killed almost all US independent book stores, and I can tell you from unfortunate experience that their notions of customer service are some combination of infuriating and pitiable. It's hard to imagine them surviving much longer. Consider cell phone companies (at least in the US), big box retailers (again, in the US), and airlines. The experience is simply better with these two than most of the competition, unless you can afford boutique-y alternatives.

Somehow these companies have managed to get very large without acquiring a financial framework that confuses consumer happiness with "unacceptable drag on profits."

I'm nervous about the concentrating trends, too, but there's a reason why retail consumers buy from these vendors, and it's not just network effects. The alternatives are almost uniformly bad. Maybe it's time for CEOs to dump their Jack Welch Six Sigma porn and think again about their customers.

59:


@William

I agree with the host that DRM is key: just look at the music industry. There's no major seller of DRM encumbered music left.

Mainly though, it's not that easy. Netflix never used that algorithm they crowd-sourced http://arstechnica.com/gadgets/news/2012/04/netflix-never-used-its-1-million-algorithm-due-to-engineering-costs.ars?clicked=related_right

60:

O'Reilly is a great point of comparison. They have done one thing that the publishers seem to have flubbed completely: I buy a copy of the physical thing, and they offer to sell me a very deeply discounted copy of the e-book.

I have often wondered why, if I am willing to buy a first edition hardcover, the publisher wouldn't offer to throw in a PDF or other ebook.

I note by comparison that this is something that many periodicals will do: buy the expensive physical subscription and you get access to the web site free.

I'd be happy to participate in an offer like this, since it gives me the nice feeling of supporting the author more (by buying the hardcover) and the convenience without feeling exploited ("what? $20 for a book I don't even own?")

61:

Enjoyed this article a lot. I have two comments, neither exactly germane.

(1) I don't think Amazon is in the book business at all. I think they're in the customer data business. Anyone who has seen those "recommended for you" lists at amazon.com, or noticed that Amazon remembers the address of everyone you've ever sent a gift to, knows what I mean.

(2) I don't think Amazon is a villain. On the contrary. I'm an O'Reilly author. Amazon sells the printed version and Kindle versions of my books at a discount, but I just take Amazon's price to be the actual street price. What matters to me is that Amazon gives me huge publicity benefits and makes my book readily purchasable.

62:

1) "don't leave a flank" You're so extremely, perfectly obvious to yourself that I have no idea what you mean there. I'm an imperfect person and I can't understand secret ciphers.

2) Intellectual property like a novel comes from a source that has to be nurtured, processed, treated in a continuous fashion. Sure, it's more like farming than coal mining but in the end all that remains is also a dry wasteland, if you take a profit-only attitude and suck the land dry.

Charlie Stross can survive because he's got the computer smarts and comes from a family with a long tradition of entrepreneurship. But you don't have a breathing, living literary culture with a single author, or even two or three.

Bezos isn't into monopoly or monopsonies for the same reasons as Walmart or Toyota or BP, or IBM. They have all concentrated on one specialty each and they want to dominate the world in that specialty, forever, really forever, after their founders are long dead. This means that they want their suppliers to actually survive and also have to try for quality at times.

I used to think that Bezos also was willing to ensure some kind of quality, sometimes but over the last years he's flooded the bookstore with worthless self-published titles in both non-fiction and fiction. Watching for quality means some kind of gatekeeping and Bezos has revealed recently that he isn't at all into any kind of gatekeeping. He won't abandon book sales next year but he'll drop them presto when the sales flatten. I'm hoping that his sales will flatten before he's reduced English language publishing to a wasteland of reprints and translations.

63:

Wow. This is one of the best rundowns of the situation that I've seen, and that comes from someone working in ebooks for a relatively sizable publishing company. Thank you for this, and for the suggestions on how to manage our position. I think in one sense it may be too late to change our dependency on Amazon, but I am hopeful that the agency model won't go away (if wishes were horses, beggars would ride, I know, I know).

The difference between the wholesale and agency models is vast for us, and it really has damaged us to be stuck with wholesale with Amazon (and it doesn't even make sense! Amazon isn't buying ebooks in bulk! It's one master file that's copied!).

I'll try to advocate for this around the office.

64:

> mobi

Yeah, but Amazon bought mobipocket reader and gutted support for the software on anything _but_ their hardware. As I'm still cheerfully reading all sorts of books on one of the last general purpose computers sold, a Sony Clie TH55, I'm at a dead end because the formerly inept but occasionaly responsive support for mobipocket is now just a huge swamp of blogspam. Amazon ate it and turned it to shit.

65:

Charlie, I think this is generally pretty insightful about the nature of the problem, but I'm not sure you've actually got your finger on the solution.

Yes, ebook DRM is probably doomed in the long run, but it is very likely too late for that change to have any particular effect on the dynamics of this market. Ironically, the best example of this is the other big Amazon-vs-Apple showdown, over digital music. The Amazon music store launched selling unprotected high-bitrate MP3 files with the labels' blessing at the same time that Apple's contract with the labels still required them to sell DRM music. Then a few months later, Apple was able to drop their DRM as well. The upshot of this dramatic leveling of the playing field was...

...well, fuck-all, really. Amazon spent an enormous amount of money to claw themselves a 13% share of the online music market, while Apple still sits happily on a 66% share. (Google, Sony and a handful of bottom-feeders round out the remaining 21%.) And despite the presumptive portability of the files themselves, the vast majority of those files are still played on iPods and iPhones.

Sometimes getting there first with a product that is "good enough" is all it takes. In theory I should be annoyed about the various bits of DRM and licensing lock-in, but at the end of the day I can click a button, pay $10ish and have a book pop into existence simultaneously on my phone, tablet and laptop. The best that Apple and B&N have been able to offer against that so far is "kinda the same thing, only a little worse in one or two aspects." As anyone who went up against iTunes in the music business over the last decade can attest, that's not a story that gets you much traction.

66:

As public libraries and even the world class research libraries are getting dumped and abandoned by the communities who fund them in the first place -- even when the citizens of the communities fight to keep them -- and the institutions with which the research libraries are associated in the second case --

And, further --

as back catalog print books themselves within these facilities have disappeared in collaboration of themselves with google's digitization project and amazon's distribution and control of digitized new books --

We will left very soon finding our info only on --

two very large monopolies that control it all, google and amazon, and you will have to pay for it even on google --

Unless what you need for research is on Gutenberg, perhaps --

And if --

you can afford an internet service fast enough to download, when the corps make the different tier system a reality -- fast enough if you can pay for it.

Information no longer wants to be free, it wants to be paid, and paid for through the nose of the researcher and reader, because both the publishers and the consumers were too helpless to figure out something else viable.

The future in not equally distributed and neither is the fun of it.

Love, C.

67:

Anyone who ever thought amazon was a benign entity, has never read the accounts of what it's like and always has been like to work for them. They are worse than wal-mart, if you can believe that. Sweat shops, literally, among other horrible treatments -- and they Do Not Pay A Living Wage -- not even the minimum wage, because they know how not to.

Love, C.

68:

Very nice rundown of the issues.

I think there's an important distinction between having a monopoly and being able to exercise monopoly power. The first is legal, the second is not. Amazon has used predatory pricing as part of a range of strategies (lock-in) to garner a large market, but there's nothing inherently wrong with that. Where it becomes a problem is if in the future they can earn monopoly rents, i.e. can set higher than normal prices in the ebook market. I'm not an expert in the area, but ebooks, particularly DRM-free ebooks seem like a highly contestable market, which would make exercising monopoly power difficult.

69:
37: ..If libraries did half as good a job as running a marketplace, I'd get all my books for free from the library...

As a librarian, I'd like to give this statement an award for the most poorly thought out analogy of the week, but I'm a librarian, and we don't have the funding for awards. Or keeping the lights on more than four days a week.

Absolutely agree -- not to mention it displays utter ignorance as to conditions of libraries' funding -- thanks to many factors, but none of them as far as I can see have been created by librarians at all -- they are far and away the most responsive to changing conditions their communities of any entities, whether public, government or private, as in university libraries. But they've always been starved for funding and what funding they receive is always ear-marked by the funders for physical things that have nothing to do with books, much less salaries for professionally trained people.

It sounds like my brother who rotely repeats, "if such and such private business behave like such and such government something other blahblah," when in the breath just before that he was complaining how his corp's project is completed FUed because the private business vendors they're dealing with are so FUed up.


70:

If e-book DRM is dead, where's the DRM stripper for Apple e-books?

Yes, this is my purely selfish angle into the subject under discussion, but I'd kind of like one. As you note, Kindle customers have back doors for unlocking their purchases, and I suspect that Amazon doesn't care as long as the back doors are more of a hassle than one-click purchase. Apple should care even less (they *have* my money for the hardware), but the forces that cracked FairPlay for music and movies seem uninterested in doing anything about books.

71:

Hi Keith,

I'd love to understand why my analogy is so bad. My local library offers me the ability to reserve books online, at no cost, and to pick them up at my local library when they are available. They have a reasonably good selection of books. The system works when you know the book you want ahead of time.

However, what they don't offer is a good discovery experience. (And this is what Amazon excels at.) I can go to the Amazon site, and within a few minutes discover new books that I'm sure I'll be interested in. The combination of effective search, good description, abundant reviews, and a powerful recommendation engine guarantees that with five to ten minutes research, I can discover new books to read that I'll really enjoy. And the process is frictionless: I can pay for and ship my book with less effort than it takes for me to log into my library account.

This combination of discovery plus low friction is what makes Amazon powerful.

None of that has anything to do with DRM.

(Yes, DRM may be doomed, but it's still mostly irrelevant to the relationship between Amazon, publishers, authors, and readers.)

The reason I bought up the library is simply to show how powerful those features are: I'm willing to pay for a book at Amazon when I could get the same book from the library for free. I think that's a relevant discussion point. If you want to break Amazon's lock on the industry, it's going to take something pretty powerful to do it when even offering the content for free isn't enough.

72:

Hi Arthur: If you go on to read the article, Netflix does use the algorithms from the competition. It started doing so even before the competition ended. It doesn't use the winning algorithm in its completeness because of the computational cost relative to the incremental benefit. - Will

73:

FairPlay for ebooks was cracked earlier this year. The tools are out there. HTH.

74:

Charlie, I don't think you've read it right.

Imagine, in a fit of not-being-dicks, that the big publishers got rid of DRM tomorrow. What changes?

Well Amazon still owns the shopfront to the customer, and the books the customer 'owns' on their kindle are still locked in (for the great unwashed).

Imagine the big 6 publishers pushed their own bookstore, with books minus the DRM so they could be put onto the kindles, etc. They are still doing nothing that really hurts Amazon, since they are more steps away from the customer.

In short it's not till they STOP selling to Amazon (or charge them more, or delay shipping to them) that anything changes - and doing that doesn't really require getting rid of DRM. You can bet that Bezos would scream blue murder about being cut out, as would authors who would see less sales.

Amazon is out to remove the big publishers from the game entirely. Amazon will setup a workflow where authors can publish directly with them (already doing it to an extent) and they will woo big authors to their services. The big publishers will implode, and since they tend to be held by conglomerates, losses will be cut.

Can the big publishers save themselves?

Well, I'd suggest there is one, small, possibility. People are tending to move towards tablets for book reading, and away from eInk. Whatever some may think, the lure of a general purpose consuming device outweighs the value of reflective display. That dislocation switch gives the publishers one small chink of opportunity. If they create a reading/shopfront app for the tablets (sideload for Kindle) that offers a storefront/reader AND a 'get the eBook version of your paperbacks for free', they can wipe out Kindle. Short of that, they'd have to take the no-sale-to-Amazon route, and I think they would get court cased to death.

The best opportunity to not end up with a company store, however, is for authors to accept the big publishers are doomed and take ownership of the publishing arena. What I'm thinking of is an author-owned entity that creates (owns) a turnkey solution for an author, any author, publishing their wares. This would manage the workflow, integrated with the selling AND the author>reader CRM. In essence it would automate the tiresome tasks for a small fee - manuscript goes in/money comes out. It could also manage the up-front funding via a kickstarter type affair - although I think future potential authors are probably going to have to shoulder more of the up front risk, no matter what. Such an approach would require some big names to join to provide credibility.

The reason I think that's the best possible practical solution is that the only people who really value books are the authors and readers. Agents do to a degree, but the further you get along that workflow, the more it's just shifting watermelons. Thus it's the authors and readers that are going to shape the best solution, and they probably have to realise this and take action. Otherwise it's going to be no good in 5 years time whining that Amazon will only pay you 10% of the sale price - sheep get slaughtered.

Oh, and Apple would be as bad - they love lockin. If you had to have a big boy involved Google would be the closest to trustworthy, and even then...

75:

#71: What prevents you from browsing for books on Amazon (or B&N, or wherever) and then ordering them from your library? I know a fair number of people who do that.

Surely not because it's two clicks instead of one?

76:

Re publishers and direct sales: I had an interesting conversation with a textbook person from BigCo X yesterday, implying that they _are_ working on it. BigCo Y has already noted that it, and its peers, are working on a common online interface. Not all good news: My warnings about amazon were met with a response which implies the publishers aren't about to drop DRM. On the other hand, they saw Apple as enemy number one: I get the impression that apple's scorched earth approach to rights is making amazon's labour camp model look superficially attractive.

Amazon are of course capable of selling non DRM open format stuff: the money I give them gladly buys me MP3s, which is nice.

77:

my sales are to the point where they can pay the rent. My Amazon sales are 97.7% of my total sales, so I certainly can't afford to live without them.

Bing bing bing! And that's the problem. Since your comment didn't follow this up, allow me to. You are utterly dependent on Amazon. They pay your rent... because right now they give you 70% of the sales price. Now, if they achieve a monopoly position, they can invert the percentages and keep 70% for themselves and give you 30%. Boom, your income is less than half what it was.

Before you say 'but they wouldn't do that..." I'll ask... why not? By definition in this scenario they have no viable competitors. What are you and other authors going to do? There's nowhere for you to go if Amazon is in a monopoly position. Stross can tell Amazon to, er, perform carnal acts upon themselves and sell from his site. You and most authors probably won't be in that position.

78:

A few things: First, the existence of scatter-shot individuals hawking their own wares does not constitute a counter to an erstwhile monopoly.

Second, using yourself as an example when some of your own books are sold via amazon somewhat dilutes your point.

Last, John T Reed is not an unbiased expert in these matters, as he has a financial interest (selling his own self-published books on how to self-publish books) in providing this particular view, along with numeric estimates that seem rather inflated. I would no more trust his thoughts on self-publishing than I would trust the the real estate advise of 3am t.v. commercial real-estate "tycoons" hawking their opinions on the advantages of "no money down" real estate purchasing for the low low price of whatever they can squeeze out of you.

79:

Predatory pricing only makes sense if you can subsequently exact monopoly rents, this requires that there be fairly high barriers to entry as otherwise the extraordinary profits of monopoly attract competitors, some of whom have deep enough pockets to outlast you. Predatory pricing is expensive so you need to be making very large abnormal profits in order to make up for the substantial losses you suffer while doing it.

One reason the competition authorities are fairly blasé about price wars is they are inherently self limiting and in the short term benefit the consumer by lowering prices. They take a much more negative view of cartels and monopolies as they directly and immediately harm consumers by raising prices and can be sustained indefinitely.

80:

A lot of that technology already exists in the form of version control software, forum software, wikis and online, collaborative word processing software. Sourceforge is a very good example of how this might work.

What still needs to be done is for someone to code the business logic so that a wanna-be author can upload his/her manuscript and say, "Here's my first manuscript, I'll give 40% of the profits to one editor, one copy editor, one artist/layout person, and one publicist, as follows: ..." while being able to trust that the software can track these details appropriately. That way everyone associated with producing the book gets royalties and hopefully upfront payments are not required.

Ideally the software would also price the book appropriately given the author's/book's popularity and make it possible for fans to get discounts/rewards for paying into a project before it goes on sale. In other words, my first novel starts selling for 0.99, while Charlie's next opus starts at 12.99 (or whatever) with both books rising or falling in price as their popularity demands. Once the initial surge of interest in the book is done the book would move into "oldie" status with some kind of cheaper price.

81:

I wish you will proved to be correct re: DRM being on death row.

But doesn't that outcome depend on the 70 year old billionaires who own the publishing houses being not idiotic enough to avoid committing suicide? Given that they bought into DRM the first time around, it's not clear they will be smart enough to say yes to breaking DRM this time around....

Heck, the MPAA and the RIAA are still up to their same old tricks of antagonizing their customers... they tried to push SOPA, and you can bet that they will be trying to push son-of-SOPA as soon as this year's election season is over.

So while I wish you are correct, I remain somewhat more pessimistic about the publishing houses not being able to avoid committing suicide. And if so, authors will either have to get used to living in the Amazon company town, or finding other ways to get their products out to consumers.

82:

Hmm, sounds a bit like Economy 2.0!

(Actually maybe a bit 1.5-ish... 2.0 always gave me the impression of peer-to-peer predator micro economies coalescing into an emergent macro econo-fuck)

83:

I'm with Theodore Ts'o on DRM. There's really no reason to believe that the publishers are going to be able to see their way to giving up on DRM. They are so used to managing a business model based on scarcity that they are simply unable to envision a business model that accepts frictionless digital copying.

For my own small part in this, I've pledged to correct anybody who says "buy an ebook" because as all of us here know, we're buying nothing.

84:

Nice assessment of the situation. As to Amazon's business strategy, I think a big part of it comes from being born in the early years of the Bubble. The company wants to sustain a high level of growth to keep its stock value high. This means sales and growth are more important than profits, and that they have to be very concerned about Wall Street perceptions. Once you stop being a growth company, your stock value -- which depends on market perceptions of future growth prospects -- will drop. How much depends on how much real sustainable the company has.

85:

It'd be great if DRM on ebooks actually died, but I'm not holding my breath.

Many content distributors in many industries can't get it through their thick skulls that we'd be happy to buy their stuff if priced and presented reasonably. If people buy things now, even if they could just download it, why would they stop if DRM were removed?

I have a hard time hating Amazon: they provide a pretty good service, in some cases unique. Who else will sell me ebooks all over the globe? Almost no one at the moment.

86:

More than that Alex, there are lots of ways in which the way things are published can be revolutionised, neither publishers nor Amazon are particularly customer focused in their approaches there, I'm thinking. I'm not going to go into detail here, since the IP has value elsewhere as well, but the general model has much to offer in terms of true disintermediation terms.

Finally, a point to consider. You suggest that the book start off at a high price, and then drop. Consider the options for the reverse to happen, and what it would mean in the sales model ...

87:

Nice to hear you talking about the Amazon epub situation Charlie. Publishing right now seems weirder and more turbulent than any time in the 30 or 40 years I've been involved.

In February I decided to go for it and figure out how to make my own ebooks, porting some titles to the EPUB and MOBI formats.

This is, as you say, something of a second job and an immense time sink. Being a lapsed computer programmer, I've enjoyed it, up to a point.

A publisher or, for that matter, my current literary agency would be willing to do the port and distribution, taking of course a certain cut of the putative royalties. An ebook being an easier sell to a publisher than a print book these days.

So what I did so far was to make two books that would in fact be hard to sell and hard to put into print, due to their excessive lenght---these are my "Complete Stories" and "Collected Essays," live on my Transreal Books page, www.rudyrucker.com/transrealbooks

I'm selling them direct as well as through Amazon and B&N. When I get my now-depleted energies together, I'll put up a blog post explaining some of the methods and gotchas I've learned about.

As for novels, sure, I'm still hoping to continue placing my novels with "real" publishers, at least for now.

An upside with ebpub is that your book isn't so likely to become unavailable. Also, as mentioned, the book can be as long or as short as you like. And you can include color illos.

Side remark: One new gotcha I just noticed today is that Amazon charges $00.15 per megabyte of your book's length per sale, this comes off your royalty. So for a ten megabyte book (which might include, say, a hundred illos), that's $1.50. So you need to charge a bit more for the heavily illustrated volumes.

88:

Of course the big box retailer can't keep up the dumping forever, but if losing a few million dollars is the price of driving all the local competitors out of business, then they will have many years of profits drawn from a captive market to recoup the investment. (Meanwhile, helpful laws allow them to write down the losses on this store as a loss against tax, but that's just the icing on the cake.) Once the big box store has killed off every competiting mom'n'pop store within a 50-mile radius, where else are people going to shop?

I have read many descriptions of this phenomenon, but are there actual, documented cases of this happening on a wide-scale? Or even an individual scale?

(A side note: minor typo in bold, possibly: did you mean "competing?")

89:

I know people have brought up Steam several times. The interesting thing about Steam is that they don't always have the best price for "Steamworks" games. Case in point this RPS weekly feature [url]http://www.shacknews.com/article/73324/weekend-pc-digital-deals-the-darkness-ii-for-1249[/url]

So maybe there's a way for publishers to sell on the amazon platform (or any platform) by rotating deals. They could do something wild as well, like send in your physical copy of a book and for a reasonable price get a non-DRM E-book (probably a pipe dream) but it would help the post office too :)

90:

Sorry, guess I don't know the code for posting a url.

Mr. Rucker, I've enjoyed "Complete Stories" quite a bit. Thank you for doing that.

91:

Chris: different industry sectors. Textbook publishing and trade fiction publishing bear about the same relationship as building turboprop short-haul airliners and freight locomotives.

Having said that, this in no way invalidates what you say about textbook publishing.

92:

Your analogy fails because libraries don't have the money to compete with brick and mortar bookstores, let along Amazon's just-in-time delivery model. There are a number of reasons for this but chief among them is taxes. All those free services you love aren't free. They are paid for by local and/or state taxes, depending on the library. As you may have noticed, we've been cutting taxes here in the US for the last 30 years and now it's reached the point where some cities can't even keep the street lights on or staff fire departments, let alone fund services like the library.

Libraries are caught int he middle of a perfect storm of bad policies and trying to do the best they can but they need funding (in the form of taxes). The ALA has zero clout when it comes to publishers and we're just observers in this particular fight. Once there's a ruling we'll adapt the best way we can, so long the cost is minimal.

Getting rid of DRM would allow libraries to invest more in ebooks as it would make cross platform lending possible. But the publishers don't want that and neither does Apple or Amazon. The only ones who do are the customers/readers and some authors. And they are the last to be considered.

93:

Consider the options for the reverse to happen, and what it would mean in the sales model ...

Hi Ian,

Perhaps I didn't communicate very well, so let me make my idea clear: John Smith puts his first book, an S.F opus titled Surfing the Higgs Boson up for sale. The software knows he's a new author and therefore prices his book at 99 cents. Fortunately, John's a very good author who hooked up with the right publicist, editor, and artist, so he sees decent sales. The site software determines that the sales figures justify a higher price and increases the cost to $2.99.

Surfing the Higgs Boson gets good reviews from John Scalzi and Wil Wheaton, so sales increase dramatically and the e-book site increases the price to $5.99. The author gets a movie deal and the resulting publicity drives the price to $10.99. Once Meryl Streep announces that she'd like to play the female lead, the book becomes a best-seller and the site software prices it at $15.99.

Once the hullabaloo dies down, the book goes on the backlist at $3.99. Now that he's a best-seller, John Smith's next book goes on sale for $9.99...

94:

I'm guessing you live outside the UK.

Visit virtually any High Street in the UK and you will see nothing but chain stores. Heck, I could show you the empty shops round the corner from me that once housed family businesses.

And as a for the supermarkets - their tricks with land banks alone are frequently enough to shut down the competition.

(For an example - well lets name one, the Swan Centre development in Yardley Birmngham nuked the local business, and last I looked the damn Tescos hadn't even been built - they'd just bought the land and demolished the old shops).

It's not just the booktrade. The whole economic system seems to be designed to encourage monopolys, unethical practices and gouging. Certainly it penalises those businesses that don't.

95:

Rick - I agree completely. Did you think I was somehow arguing for Amazon's postion? No way. I'm completely in agreement that having Amazon in charge of the entire marketplace is bad.

They just happen to do a really good job of creating that marketplace, so it's going to be a challenge to beat. It's not just the pricing, not just the monopoly position, and not just the amazing user experience, but all of those things together.

96:

It's always astounding to see what grave misconceptions about Libertarianism are still in circulation.

Say, Mr. Stross, how could we, who strive after universally improved social cooperation, possibly exhibit social Darwinism? Considering your earlier, fairly specious comparison between the England of Dickens' time and our proposed ideal state I can't help but think that you let ideological bias cloud your view.

I would be delighted to see another one of your essays on this topic, though, as I figure this would be the perfect opportunity to disabuse any misconceptions.

~Bieser

97:

Dave, #71: I'd like to say "no, of course I'd just go get it from the library", but unfortunately it's just not true. If it was two clicks instead of one, I'd do it. But it's a login to another web app that won't keep me logged in, plus some tricky searching because the ISBN numbers are never the same, because the title search doesn't work well. It's ten minutes of friction.

My background is in web design, so I know pretty well the cost of any friction. The reason Amazon defended their one-click system so long is that it's worth billions of dollars in incremental revenue.

As an author, I do like to buy books too. I am supporting the author after all.

And please, I'm not trying to slam libraries here. I understand the funding problems, and I know that the vast majority of libraries get their software from one of a handful (two?) companies that provide it. My point is not that libraries are doing something wrong, but that Amazon is providing a very good customer experience, and that's the biggest challenge we would face in trying to replace their monopoly/monosoly.

98:

Alex,

Yep, there's also "bid to be one of the those to get the first edition a week early, 5000 places only", or individual prices depending on customer specifics (buy lots - you are an opinion former - get it cheaper), or "buy now, goes up to $10 tomorrow", or 'money off for spotting a typo', or indeed having the 'backlist' price actually being higher again, since those buying will be those who specifically want it.

The whole thing gets much more interesting and adaptive in the ebook world - different authors could employ personalised, customised and targeted models specific to their wants - but first they have to grab back control.

99:

The whole idea could also be applied to music. I've got a day job and a side project already or I'd be coding this stuff right now...

100:

"grave misconceptions"

My mind boggles.

Perhaps you could point to a working libertarian utopia so I could understand how such a wonderful system works?

Otherwise, it's no more meaningful than those who complain that they problem with communism is it hasn't been tried properly...

101:

Thanks Charlie for this excellent explanation of what Amazon is up to and what publishers could do about it. You may even find yourself being quoted in court by the Apple/publisher representatives.

To which the judge will reply with the legal equivalent of "Well that's nice but it's got bugger-all to do with this case so shut up and sit down." Amazon haven't been colluding to raise prices, so they're not under investigation no matter what else they've been doing. At best, some minds within the DOJ may start thinking about what else they should be looking into when this is over.

The DOJ investigation is also going to make Plan C no DRM tougher. When Apple first dropped DRM on iTunes music, prices went up. (And yes there was no technical reason to do so - music execs compensating for "piracy" ?) Not an encouraging precedent if the book publishers try to remove DRM all at once.

And suppose Amazon don't remove the DRM even if the publishers want it?

102:

Great analysis.

I only bought a single Kindle book before I found a way to remove DRM. Now my standard practice is buy a (Kindle) book, remove the DRM, export it to epub, and then upload it to my Dropbox account. Then I can read it on any computer or device I own - Mac, iPad, Android smartphone, Nook tablet, etc. And I can reasonably expect access to it for my lifetime, since ePub is an open format.

Consumers will be in for an unpleasant surprise when they try to switch away from the Kindle platform, and realize that DRM is locking them in.

I learned my lesson with DRM music from Apple. I love Apple, but hate DRM, and realize they had to use DRM to get the music labels to cooperate. But until they dropped DRM, every album I bought, I burned to CD and then ripped back as MP3 so I actually owned it free and clear.

And by the way, although I like the iBooks app for iPad, I have only bought a single book from iTunes - as soon as I realized there is no known way to remove the DRM, I was done buying ebooks from them. So now I often read my "Kindle" ebooks on iBooks on iPad as ePub, and that works very well. But I'm not locked in anywhere, which is what I demand.

I just see ebooks as a little behind that same curve. It can't change soon enough, to dropping DRM.

And by the way - notice no mention of piracy. I don't do that, i.e. "sharing" it with others. But I have the right to remove DRM from any ebook or other media I own, for my own use.

103:

Charlier @50 & Patrick @46. Eloquent non comment.

104:

(maybe this is trading one evil for another...)

Just idle curiosity - how much effort would it take for Bing/Yahoo/Google to scan their page index, figure out "this page has a DRM-free book for sale", put a standard wrapper page around it, then a soup-to-nuts site with a storefront, reviews, buy with your Google Wallet, samples, a "customers who liked this liked"....

Okay, so that's "Google Play", but with several missing parts - the biggest of which is only having partial catalogs from some of the major publishers. Include the self-pubs. The books that the publisher didn't buy and are sitting on the author's web site. The "hey my rights reverted back to me and I've redone them and am selling them for $5" gals. And, like you said earlier, Charlie: no-DRM. Your book has DRM?

105:

Google "Requiem 3.3 drm Brahms"

106:

(continued since I hit enter too early)
Your book has DRM? Oh, sorry, we can't sell it. We will watermark, but no DRM. Then include an easy way to load them onto your ereader (including the kindle), or your tablet, and (hopefully) voila.

107:

I think it's only fair to mention that when internet shopping was just starting out, a LOT of companies tried there hand at it. And they were bad. Really, really bad. Amazon was one of the only (possibly THE only) company that created a online shopping experience that didn't absolutely suck. And IMHO, Amazon is still the nicest place to shop online. I will actually start to try to buy something online, and then give up in frustration because I can't find it on amazon, and everyone else's shopping site is so bad by comparison. So give them some credit for innovation please. They made a darn good shopping site, while competing with a ton of other companies trying to do the same.

Good points about ebooks and DRM though.

108:

Interesting as hell, but the only time I got into ebooks was when I figured out that ******** allowed me to get several gigs worth of ebooks.

Most of which are madly out of print, or ridiculously overpriced (there's a few authors who only publish out in TPB, and, well, ahem, I won't share my opinion).

DRM is already pretty much dead. I have more books than I could read in a lifetime, right now. 10 gigs?

I do still stick to buying the books I enjoyed. Nice to be able to lend out, and supports the author.

109:

"business crap is much simpler than the goons in MBA programs would like us to believe." -- Yes and no, IMHO.

I know that an MBA is trivial to earn compared to a M.S. or PhD in Mathematics or Physics or Biology or Computer Science. I know because I ghost-wrote two MBA dissertations for Fortune 100 executives, from a major Business School. Grey area ethically, but they could NOT use the degree to get a job for which they were not qualified; they had the big bucks job already. I was a writer; money flowed to me; I learned what a MBA was, without paying tuition.

In The Closing of the American Mind, a 1987 book by Allan Bloom, he says (I paraphrase from memory) that an MBA is not a genuine academic degree, but pretends to be one, with the sweetener that it allegedly increases your income. By analogy, he says, imagine a degree in Sexology, that allegedly gives you better orgasms.

However, real business complexity emerges in earning a DBA -- Doctorate in Business Administration.

I think that Charlie's right about Amazon to first approximation. It is the second-order effects that we don't yet know, and that's DBA-level analysis, or professional Mathematical Economics.

110:

There's another possibility, instead of jettisoning DRM the publishers use the threat of doing do to force Amazon into giving them better terms. Amazon still makes lots of money but the publishers get to keep a slice. Less apocalyptic but it doesnt really impact customers (us) very much.

111:

I think Dean Wesley Smith and C.E. Petit (Scrivener's Error) have taken swings at answering that question. It's good exercise to go back through their archives and

112:

One correction I may make, having been there not long after the company came out of the garage. The decision to sell books was arbitrary and based on their regular shape and predictable weight, in addition to your "virtual" catalog theory. As company lore went, Jeff was driving from NY to Seattle in the same Civic he used for years into Amazon's existence, trying to think of what he could sell on the web.

At some point, the scales fell from his eyes and he realized the advantages of books. I'm sure there's a monument in South Dakota somewhere.

Keep in mind where the web was in 1994. This was a long shot and required a bigger investment than today but not as big as five years later.

The other thing to keep in mind is that you're thinking too small. This isn't a conspiracy about reading material. I submit that Jeff, who is smarter than all of us (I went to AMZN after working at MSFT, where I had the scary experience of meeting Bill), is working at a level one or two levels above where even the most paranoid are looking.

I wouldn't be surprised if Jeff's secret goal is to achieve Singularity in space by 2030. That isn't my guess, but that's the scope you should be considering.

113:

"Amazon has the potential to be like that predatory big box retailer on a global scale. And it's well on the way to doing so in the ebook sector."

Potential is not actuality. If Amazon engages in predatory pricing, it should be prosecuted for such. That is against the law.

"It was unwise to give the appearance of collusion to establish a price-fixing cartel"

Clever of you to downgrade the accusations, but in point of fact DOJ appears to have a strong case that publishers were in fact engaged in collusion, which is illegal. And, in point of fact, carries potential criminal penalties. They should count themselves lucky that DOJ has chosen to pursue purely civil remedies.

So let's see. Publishers have engaged in an actual conspiracy in violation of antitrust law. Amazon might do so at some indefinite point in the future. Goddamn, Amazon sucks massive time!

I'm no fan of Amazon and its penchant for DRM, but someone broke the law here and someone else didn't. Trying to prove how someone who didn't break the law did break the law is bullshit. You should shut up about that.

114:

I think you might be missing the middle. That is, we have the USA at one extreme, and the USSR at another, and yet there are a great many successful industrial economies which take a middle path. Germany, for instance, has laws on worker representation on company boards. They're not collapsing into chaos from that. There are different systems of paying for healthcare, different levels of regulation on banking, and all these systems, when looked at with a stranger's eyes, can look rather frightening.

I am pretty sure that, under the American system, I would be bankrupt and dead. I could be wrong, I am looking from the outside.

Is the typical American any more likely to be right about other countries? It's easy to point fingers at the Soviet Union, because their system lost. We don't have that indicator for other industrial alternatives.

115:

Does the long tail really exist?

It gets argued about, thats for sure. I've seen claims both ways. It's a selling point for Amazon that you can find the obscure that might never appear in any physical bookshop. Some of it is good though specialised, and other stuff is just rubbish: we're seeing that pattern with ebooks. At what point does Amazon decide they can cut some of that tail off?

116:

The ideas of ownership and of control overlap. It's worth remembering that there are a lot of variants short of complete ownership, but most of us never encounter them in our lives. Many of us rent homes, rather than buy them, but we make a single payment for an ebook, and that biases us to ownership as the status.

A library where we paid a fee for each book, that might be a model that we could handle. But I think the publishers might struggle with that. They come close with their attempts to limit how a library uses an ebook, but for it to work the "library" has to charge the reader. It needs new thinking all through the chain.]

117:

There are at least two sides to how Amazon appears. For the customer, they're pretty good. You can find what you want. order it, and it gets delivered.

I've looked at Amazon as a prospective ebook seller. They distribute from Luxembourg and exploit EU rules to minimise the tax they pay. But they pay me from the USA and embroil me in US tax law. They're acting as a US publisher, and the overheads in dealing with both the IRS and Britain's HMRC are intimidating, for the likely income. Charlie gets a payment from his US publisher, and has to go through similar procedures, but he is dealing with sums counted in kilobucks.

If I felt my ebook would earn kilobucks, I could give you the link for it now, but from my point of view as a potential supplier, Amazon are pretty ugly.

Two different viewpoints on the same company, two different answers. Charlie isn't somebody buying books, so what a customer sees—easy searches, and reliable payment and delivery—is secondary. Anyone who retails books has to provide that. Any author wants to sell his books to a distribution and marketing system which doesn't rip him off.

118:

I could say the same about Anarchism. It was, in 1920s USA, something of a political bogey man. And there were certainly individuals who called themselves Anarchists who fit modern definitions of terrorist.

But it is a rather broad label encompassing some rather different philosophies with some common roots.

The impression I get is that Libertarianism and Anarchism both depend on a respect for others. They both need a means short of violence to resolve disputes. And neither can work in the environment that has arisen in the USA, where the judicial and legislative systems have been corrupted by the greedy. Then you see a few who call themselves Libertarians, who worship at the altar of Ayn Rand and exhibit an inability to see others as people which is typical of a young child.

My liberty should not imply your slavery, but that seems the unavoidable outcome of Libertarianism in the current USA.

119:

My first ebook reader was a Sony PRS 505. Lving in austria I bought my ebooks from Waterstone. I was forced to Amazon when waterstone (and the UK publishers) decided not to sell any ebooks outside the UK. As there arn't many other alternatives for english ebooks to AmazonI didn't have much choice.

I invest about 30 € per month in ebooks and I always remove the DRM from the ebooks I buy. This is the reason why I also don't buy any ebooks from Apple. Besides I enjoy reading my books on epaper.To be honest since I own a kindle the probablity for me to buy a book instead of getting it from alternate sources has gone to nearly 100%. What Amazon gets right, as Apple got it right for music, is the ease in getting new books and the unobstructivness of the DRM scheme. I can read the ebooks on my kindle, Ipad and iphone without haveing to worry about the DRM.

120:

Whenever I can I'm buying my ebooks DRM-free (Baen, Angry Robot). But when the book in question is from a big publisher mos likely Amazon is the only option for me. It used to be Fictionwise, or Diesel but not anymore. Why? Because of the OTHER crippling factor called "geographical restictions". I can live with DRM (let's not get into details why or how ;-)). But when every non-Amazon ebook seller says that I cannot purchase book X because I have not the privilege to live in the USA I have no choice. Even at Amazon not every book is available for me (but more and more are), and those which are have their prices inflated by the cost of "free wireless delivery", but at least they are aware that world does not end on USA border.
So Amazon may be The Source of All Evil and Jeff Bezos - The Devil Incarnate, but as long as they will be the only ones selling me ebooks I will be buying from them. Plain and simple.

121:

I've never heard of you or your books.

But I'm glad you are making a living.

122:

This DRM nonsense is exactly why I only buy e-books from Baen Publishing directly. No DRM on any of their e-books and they take into account when pricing that selling an e-book does not require the purchase of paper and ink, a major expense when publishing physical books. They are formatted for most e-book readers and are even available as RTF and HTML files that can be read on any computer in a word prosessing program or web browser. I absolutely refuse to purchase any e-book priced the same as its hardback counterpart. And since their e-books have reasonable pricing, I can preview them before deciding if I want them in my library of physical books. And I do own many of the books in both formats. More publishers should follow thier example of using e-books to drive their physical book sales.

123:

Stopping doing something stupid is really difficult for companies or organisations or governments, and only slightly less diffciult for individuals.

One day we may learn to be better at it.

DRM, MPAA, war on drugs, Tory economics, whatnot.

124:

The scientific journals are a different market, I think, but the current row of scientists (and medical doctors etc) versus Elsevier et al and the evolution of PLOS One and other journals where the payment comes from part of the research grant rather than from the (library in which is sitting the) reader could be presented as contravening Yog's Law. And probably will since everything anyone can think of against it seems to be being passed around in an unedifying Cnut-like effort.

But actually the money flowed from the funding organisation, the grant-givers, _toward_ the authors, before being disbursed.

Self-publishing by sicientists is another collection of problems.

125:

That's what Microsoft tried to sell - a word-posessing program.

(sorry - not picking up typos, it seems germane to this argument, perhaps it was subconscious)

126:

It IS about DRM. Amazon's proprietary .azw file format is not an open standard and can only be read on the Kindle. What is less well understood is that although Kindles can read the standard .ePub and .PDF formats, they can only read ePub and PDF files without DRM.

What this means is that anyone who reads ebooks on a Kindle is locked in to the Amazon system - not only can they not (legally) read their Amazon books on another device, they can't read DRM'd ebooks from other suppliers on their Kindle. So it's all very well for publishers and others to bleat about how terrible it all is that Amazon have a monopsony, but as the article states, this is a problem of the publishers' own making.

127:

Getting rid of DRM would allow libraries to invest more in ebooks as it would make cross platform lending possible. But the publishers don't want that and neither does Apple or Amazon.

The real roadblock wrt. ebooks in libraries is that the USA does not have a Public Lending Right framework. Nor, given the way libraries are [locally] funded is it likely to get one, which means publishers will continue to see libraries as cannibalizing direct sales for the forseeable future.

(Note that editorial folks know about and value libraries because you don't end up in that job unless you were a voracious reader as a young 'un, and you don't end up in that job if your goal in life is to get rich. But big publishers are subsidiaries of large corporations run by bean counters who don't necessarily share these values and, even if they do, are required to prioritize the bottom line.)

Oh, and even if the US enacted some kind of PLR scheme, it would need to be funded, which brings us round to the library funding problem again.

Which is frustrating, because the advantage of a PLR scheme for ebooks is that it would allow libraries to reduce the amount of physical space needed for some physical books -- most likely the mass market fiction collections -- and focus their physical floor space on reference collections, community computing services, and other valuable activities. But I digress.

128:

Shorter version of my thoughts on libertarianism (which are not new and have taken some years to gel):

Libertarianism, like Leninism, is an attractive, internally consistent ideology which provides a prescription for achieving a utopian society populated entirely by frictionless perfectly spherical human beings.

Lenin and his followers tried to achieve their goal by, well, the political equivalent of chopping off all the spiky extrusions and compressing people into vaguely spherical shapes. We've seen how well that worked, and most of us said "no thanks". The trouble with Libertarianism is that because we don't have a clear, recent historical example of a Libertarian nation built on the same pile-of-skulls methodology, Libertarians can apply the "no true Scotsman" argument when defending their fundamentally broken model of human behaviour. Which is why they're so tiresome and persistent.

TL:DR; don't trust ideologues who come bearing attractive theories that over-simplify human behaviour.

129:

I know @42 has already been well beaten up upthread, but I just have to ask: Has anyone else heard of the world-famous multi-best selling author "Rawlings"?

(Here endeth the sarcasm)

130:

Two points.

1. I do business with some of the big six; it therefore behooves me not to pre-judge the outcome of an on-going lawsuit against them. Hence the circumlocution. If you carefully read my words you'll note that I am not offering any opinion as to their guilt or innocence.

2. You do not, ever, tell me to shut up on my own blog. Automatic yellow card. Do it again, and your ass is banned.

131:

Charlie,
How does the UK PLR system benefit the publisher? I know payments go to the authors. Do they also go to the publisher? If not, this could be one reason for the publishers attitude towards libraries and eBooks.

Frank.

132:

The UK PLR system doesn't benefit the publishers, true. In an ideal world, this would be addressed.

Alas, that's not going to happen under the Tories. They've axed the PLR agency, reduced the budget for payments to authors, and going by my 2011 PLR payments, UK library loans are down 30% from 2010-2011 -- probably due to library closures due to central government cuts.

133:

Please actually talk, and listen for a change, to actual libertarians. You have made some hateful remarks that show your ignorance.

Whenever accusing whole groups of people of venal intent, based solely on holding political or economic positions you disagree with, consider it may be a sign of your ignorance and not their evil.

134:

Scott, I regularly chew over politics with a local libertarian[*], in the pub, every week. I know plenty of libertarians, have been shooting with some of them, and I'm not accusing them all of venal intent: I'm accusing them of having an ideology based on a fundamentally broken model of how human societies work.

And don't get me started on Objectivism, which is to Libertarianism as Pol Pot's happy fun followers were to bog-standard vanguard party Leninism.


[*] This is Scotland; he's the only native-born libertarian I know here. If he'd been born in backwoods Texas he'd be a doctrinaire Little-Red-Book Maoist.

135:

Yes, and I would add to that that the current crop of international publishers are led by bean counters who haven't bothered to look at statistics correlating book sales and the presence of well funded public libraries with tons of books in them.

Decade after decade the statistics showed that towns / cities with large library systems and a regular input of "fresh" books were towns / cities where book sales were the greatest and prosperous bookstores were numerous. Towns / cities with small or nonexistent library systems (regardless of the level of income of their populations, since there were rich suburbs who opted to keep libraries out in order to keep their property taxes low) were also the places where book sales were the lowest. Readers would discover a book through a library and then want to own it, or they would discover it through a friend who borrowed it from the library (even if they would never set foot in a "stupid" place like a library)and then want to own it. Libraries created a reading environment in any community they served.

Before the rounds of publisher fusions and buyouts by huge media companies the North American publishers were run by people who knew all about readers and reading. They knew that libraries weren't competitors to bookstores, but an integral part of the book buying environment. They actually _courted_ libraries. Most of the large North American publishers had a special department for dealing with libraries in general and library systems in particular, offering them discounts, advance review copies, etc.

The current attitude of big publishers towards public libraries is insane.

136:

You are correct. I should also note that second hand bookshops also correlate with readers. (Mostly with readers who are too poor to buy books new, but who are enthusiastic enough to want to buy books. Like, oh, my 14-year-old self ... and s/h bookshop customers who get jobs that give them a discretionary income usually move on to buying new books by the authors they like.)

The point you omit is that the big "publishers" aren't publishers in the traditional sense ("companies that live or die by publishing and selling books") but are long-established cross-media conglomerates where the top levels are so divorced from the street-level view that ... well, try to imagine Mitt Romney hanging out at your local library or haunting a second-hand bookstore, then imagine a boardroom full of his ilk.

137:

That's quite fascinating, and matches everything I've heard about him from other sources.

(It also creeps me out a little, because I find his moral framework -- to the extent to which it is expressed through the company he has so successfully built -- abhorrent.)

138:

Not entirely sure what incorrect positions Charlie holds on libertarians...

When one of you can either show, or explain how such a society can work with real human beings I, for one, will stop being snarky about it.

139:

"... well, try to imagine Mitt Romney hanging out at your local library or haunting a second-hand bookstore, then imagine a boardroom full of his ilk."

I can't even imagine Mitt Romney sitting down and reading a book, not a single one. The possibility that he would read two in a year or go to a bookstore (or have a flunky go to one for him) boggles my mind.

http://slog.thestranger.com/slog/archives/2011/11/30/mitt-romney-reads-two-books-a-year-apparently

I would also think the same of the members of cross media conglo boardrooms.

The only billionaires I can think of who actually set time aside in their schedules to sit down and read books are Bill Gates and Steve Jobs.

140:

Charlie, in your FAQ you recommend that people who want to buy your books search Amazon for them. Is there another online retailer you could point me to that sends a bigger cut of the money your way? I'd like to pre-order the new Laundry book, but would like to avoid Amazon if I can. (I live in a town with no bookstore, I don't drive, and I don't work near anywhere near a bookstore either. So my options are kind of limited.)

141:

It would help if you could tell me which country you live in.

142:

Perhaps the functions of publishers need to be disaggregated, at least in discussion if not in reality.

There's the administration side of things, which you've estimated would take 0.5 of an administrative type person for 0.5 of an author, and which others on this thread have suggested could be done by fairly small teams of people for small groups of authors. That's probably a reasonably solvable one, in any case.

There's the risk management side. Assuming that the major risk is that the book doesn't sell (rather than cost overruns), that can be solved with something like Kickstarter. The traditional publishing way could also be separated out, or at least spelled out: an investor buys out a fraction of the future income stream of the book. Cash for equity. No need to entangle that with all the other things publishers traditionally do, at least in principle.

There's the discoverability and gatekeeping function, which is hard, but probably solvable given the Internet. Reputation systems are the Next Big Thing, after all, and have been for years if not decades. The biggest danger may be a tendency toward monopoly / oligopoly effects, as with the scientific publishing system (where their gatekeeping role now seems to overshadow their role in disseminating the results of scientific research), but that's by no means an inevitable outcome.


These are all rather off-the-cuff suggestions, but I suspect in any discussion of the future of publishing, it's probably better to disaggregate these aspects (and possibly others) rather than treating publishing as a single, amorphous blob. In the long run they will probably re-aggregate, but quite possibly in a different configuration.

143:

This is the approach taken by Barry Eisler, a spy novelist who famously walked away from a $500k contract from a legacy publishing house to self-publish. In the end, he didn't self publish, Amazon's new publishing arm picked him up. But he's decided that, in his case, the various functions publishers provide - editing, copy editing, cover design, publicity - are things that he can do better if he hires contractors. Eisler himself is probably an edge case, but his view of disaggregating publishing is a very smart one.

144:

D'oh. Should have said, I live in Scotland. Thanks!

145:

Again, that's only one aspect. What about the other two I mentioned? What about the commercial risk, did he just carry that himself? How about the discoverability and gatekeeping function?

146:

Well, if you're in Scotland, why not ping Mike at Transreal Books? It's the only real SF specialist bookstore in Edinburgh (or Glasgow -- unless you count Forbidden Planet), and Mike can arrange to get me to drop in to sign books before shipping. Or, if you're visiting Edinburgh, you can find it next door to Greyfriars Bobby!

147:

If he's getting $0.5M advances, he's very much in the 0.1% (or even 0.01%) at the top of the greasy pole -- that level of advance yells "New York Times top 10 bestseller". In which case, the risk calculation is very unusual.

148:

> Imagine, in a fit of not-being-dicks,
> that the big publishers got rid of
> DRM tomorrow. What changes?

Pretty much nothing, I expect.

*Most* of the casual readers I personally know buy a new book, read it, and then give it away or toss it in the trash. Reading the same book twice isn't on their radar. (and a majority of those people only read new books; they wouldn't touch a used book with a stick)

If their locked-in reader device stops working, all they've lost is the book they are reading at the time.


If you both read books more than once *and* keep more than a handful of books, you're out there on the edge of the demographic curve with people who talk to giant invisible rabbits.

149:

My thoughts exactly Spriggana. I use a Samsung tablet for ebooks with quite a few different readers including kindle loaded. I have a large ebook collection, however the only company I 'buy' from are Amazon, because they are the only ones that will sell to me.
I'm quite happy to support the big 6, but they have to start selling to me first.

150:

I think Charles Stross is right on the money when he says that a lot of people don't realise the potential threat Amazon represents.
It is clear that the intent of Amazon is to establish a monopoly and to also be the only market for the suppliers of books -- being authors and publishers. What other goals could they have? Without the publishers in the equation, where is there any competition in terms of royalties and advances? As an author, Amazon makes you an offer, and all you can do is accept. Yes, arguments can be mounted for self-promotion and self-publishing electronically, but does the average book buyer trawl the internet for these publications at present? No, because time is a precious commodity and Amazon provides the largest and easiest to navigate interface. And don't underestimate the desire people have to store all their books on one interface. It's the equivalent of having one bookshelf in your living room, rather than three piles of books in different rooms. This in itself creates a 'switching cost' for consumers to move to another platform. Amazon already have a huge first-mover advantage, in that they've already conquered the ebook marketplace by being the first to get in.
And if authors aren't being paid, then the quality of writing across the board will fall. It's naive to believe otherwise. You only have to look at the proliferation of self-published and barely edited titles on Amazon at the moment. At the very least publishers provide a 'signal' to me as a customer that someone has read through the manuscript to ensure the basics of grammar and characterisation are in play.
I firmly believe that a big factor in the explosion in ebook sales is due to the artificial price reduction by Amazon. It's not a simple case of books suddenly becoming digital because of the ease of using a digital book. The digital books are often cheaper, and this is part of the reason for the explosion in ebook sales. If you look at the quality of the kindle editions, the quality of the editing is almost always lower than the print editions, in some cases dishearteningly so. Cheaper ebooks have come at a cost, and one of those costs is the average fall in the copyediting of the electronic product. Many of the ebook editions appear to be direct scans of the print edition, with no further editing to remove glitches from the transferral process.
It's not as simple as predatory pricing and a supermarket comparison, because Amazon is also establishing a platform and a format -- the Kindle. What they are doing are creating barriers to entry at the same time as squeezing out the competition. A proprietary format creates a switching cost for a consumer. They can no longer use their cosy App bookshelf when they switch to a competitor. The Kindle becoming the standard handheld reader creates another barrier to entry, because it is designed for use with the Amazon interface. Hence the one-click purchasing and instant wireless downloading. Once the barriers to entry become insurmountable, it becomes unfeasible for new players to enter the market. A new player has switching costs to contend with (they have to entice people away from an established product), they have to overcome Amazon's first mover advantage (for example their massive brand name heft in online ebook marketing), they have to overcome the fact that the established format and hardware are Amazon's.
What all this means is that authors and publishers will only have one market for their product. Any price offered, they will have to accept. Who wants to be a full-time writer in that world?
And the more time passes, the more Amazon becomes the dominant player. Why? Because people like to collect books. The larger a person's bookshelf with Amazon, the greater the switching cost. At present, you don't really own the ebooks you think you own. They're only licensed to you.
For a long time I've believed removing copy protection to be opening the devil's floodgates (even back as a kid when all my friends were pirating Amiga games while I was buying them), but I think Stross has a point. I don't think it is a complete solution, though. I think Amazon have created a perception that ebooks are cheap through their aggressive pricing. Their prices undercut their competitors for the most part, copy protection or not. I suspect that the ebook price will creep up once Amazon have the barriers to entry they want, but I believe that it is on the supply side, dealing with publishers and authors, where they will be most dangerous.

Durand


151:

Maybe its time to abstract to a new layer of ideology - an ideology that creates ideologies suitable for the messy moment.

152:

In what way is our model broken? And why should it mutate everyone who adopts it into avaricious, social Darwinist "robber barons," as our detractors so often claim?

~Bieser

153:

It's easy to discard some principles if the means to the end requires it and The End is big enough. I can quite imagine him thinking: "FFS, its only *books*"

154:

Same can be asked of Marxists. That is, "true" Marxists.

155:

I agree that the big publishers will either drop DRM or die. I disagree on which one they're going to do.

156:

Well, yes, although the stakes are presumably also higher.

I guess I'm most interested in the last aspect I mentioned — the discoverability and gatekeeping function — because there are a number of ways reputation systems can go wrong and no obvious simple ways to do them right. Even the wrong but profitable ways seem to be rare, and what examples there are seem to be more historical accident than deliberate design. Maybe we're all asking the wrong question...

Obviously, this too would be very unusual in the case of someone who's getting $0.5M advances; indeed, that would seem to be the easy case.

157:

As far as I can tell, Libertarians idealize the idea of rights excessively, but have no corresponding ideal of responsibilities. While I have run into Libertarian idealists, none of them have confronted the question of how a society which puts rights up on an altar could be gamed by those who do not have an ideal of responsibility. We're watching this happen in the US right now, (Bill of Rights without a Bill of Responsibilities) and it's quite ugly.

158:

Maybe he's the poster boy for Amazon's company town.

On the other hand, the publishing industry is ripe for disintermediation - consider the chain of author -> agent -> publisher -> distributor -> retailer. Someone who can cut a couple pieces out of the chain, lower prices, relate intelligently to libraries, fans, and the used book market, and also put more money in an author's pocket will do very, very well indeed.

Unfortunately, I don't think Amazon has a good idea of the community of readers/writers, except as viewed through the abstract lens of statistics and used to sell more books right now rather than develop a long term plan which will encourage writing, reading and purchasing of books over the long run.

159:

Thanks for the primer..Now I understand the process of checking out an ebook from my local public library. I find it strange that when ever the book due date is near, instead of getting email reminders from the library, I get them from Amazon. When the book is due, I get a soliciting email from Amazon asking me to purchase the book I checked out of the library and just finished reading! The process for renewing is kinda hokey. I have to wait until the book is due instead of renewing it a couple of days before it's due; but it still saves all my notes and bookmarks.

160:

In the end it may be simply the author and retailer that survive.

161:

Unfortunately some of those chunks of chain are actual sub-assemblies; a manuscript (what an author produces) is not a book (manuscript with editorial input and layout). An agent is optional ... if the author is able to do the agent's job, i.e. handle contract negotiations with publishers. (I would really advise would-be authors against doing this, however, unless they have a background in contract law and publishing. They'll come off worse.) The publisher -> distributor -> retailer chain can be collapsed only if the publisher is geared up for direct retail sales. And so on.

162:

> You suggest that the book start off
> at a high price, and then drop.
> Consider the options for the reverse
> to happen, and what it would mean in
> the sales model

"If you want it, you pay the price?"

The only hardbacks I buy are engineering or other reference works, and since I've found quotes in later works often seriously misrepresent information in earlier works, I buy a lot of out of print or antique books. Once anyone slaps the word "collectible" on something, the price jumps substantially.

163:

Paper and ink is such a minor expense. You would think otherwise, but no. For a 2-color hardback, a college chemistry textbook (so closer to 8x11), the PP&B ( _just_ the price to physically print a book) was $3.65 (granted, this was a decade ago). So for a one-color Mass Market, I'd be astonished if it were more than 50 cents. the big costs are the cost of a company to pay its people, including the author, editor, IT guys, accountants, HR, etc.

The true price savings are from getting rid of the middleman(the bookstores), from a thinner distribution network (including sales people convincing bookstores to carry it), from the lack of resales, and from economies of scale because of higher sales. Which is why the iTextbooks were going to sell for $15, and that's WITH apple's 30% cut.

164:

@88:
> I have read many descriptions of this phenomenon, but are there actual, documented cases of this happening on a wide-scale? Or even an individual scale?

--

[waves hand] Over heeere!

165:

I do get all that. Obviously the agent is necessary as long as the publisher sets out to write a contract full of snares for the unwary. However, a publisher who wrote a truly fair contract could successfully disintermediate the agent. In the real world it probably won't happen (Sigh. Greed is Good. Sigh.) but the potential does exist.

Whether anyone can successfully play the "full disintermediation" card is another matter entirely. I suspect that anyone who tried it would immediately become The New Enemy.

Thanks, BTW, for hosting a truly informative and interesting discussion.

166:

In this day and age content is king and publishers that do not adapt will soon be done. I think Amazon is a juggernaut but it is not the all powerful entity that you make it out to be. The internet and digital distribution means that content creators no longer need "middlemen" including Amazon. Authors that produce work that people want to consume will always have several options to distribute that work. Louis CK did it with video and producing the written word is a lot easier and less expensive. An author producing great work that people want to read can do just as well without Amazon and without DRM for that matter.

167:

Fascinating stuff: a lot of these thoughts have a genesis in Charlie's writings about the book market from a couple of years ago, but I personally wasn't smart enough to pull the threads together until reading them all in one place here. It leaves me with a couple of questions:

1. What stops Amazon getting into print-on-demand? I am assuming that paper books will not entirely go away, and even if they do they will still take a few years to get that far; why wouldn't Amazon become their own printer? Possibly this ties back to the point that the physical cost of printing a book is not the large chunk of the cost of a book that everyone naively thinks it is, but it strikes me that printing one book costing X and printing 5000 books costing much less than 5000X is partially because of the economics of big runs but also partially because no-one's invested a shedload of money in trying to fix that. If Amazon can throw money at the problem to fix that and build a "book printer" which can print one book at roughly the same cost as a large print run at a printer, then they could open up physical shops which are the size of a cash register and allow you to walk in and buy any book imaginable and walk out with it, just like Waterstones but with no shelves needed. (Again, I assume that the concept of "walking into a shop" either isn't entirely going away or isn't going away for a few years at least.)

2. Watching how the DRM story has played out here and in music suggests the following unpalatable fact: the way to get a DRM-free market in some digital good is to (a) allow DRM to one specific vendor so they have an incentive to invest tons of money in *creating* the market for that good (Apple with iPod music, Amazon with Kindle books), (b) wait for that vendor to invest money in the hope of getting a monopoly, (c) wait for that now-monopoly vendor to inevitably use that monopoly power to screw everyone else, (d) wait for the everyone-else to feel very sad and angry about it, (e) point out that the only way to break that monopoly is by shifting to a no-DRM world. It worked with music, it's working with books; this suggests that the current state of video being dominated by Netflix is not necessarily a bad thing, assuming that it's midway through step (b) above.

168:

Amazon does do print on demand - Amazon Create

169:

Only author and retailer might work in a monolingual unified worldwide market. But in the varied world that exists intermediates that understand local rules and markets will still be important.

170:

> And if authors aren't being paid,
> then the quality of writing across
> the board will fall.

...and your point is? It's all "product" to the publishers, and the content between the covers is almost irrelevant. The important part is the cover art and blurbs that persuade you to buy the book; once the cash register rings, game over. If you liked it, you *might* buy another book by the same author, but that's nothing compared to the initial sale.

As for stuff to put between the covers, there are plenty of people out there who would be delighted to be a "real published author" for $100 and a box of author copies.

[cynicism mode only slightly turned up from default]

171:

Interesting article by an eBook publisher on CNN

The part I found interesting is the comment that authors are hiring their own people to do the functions that publishers offer. Clearly there are coordination issues, but it would be interesting to work out the economics and determine exactly what value publishers offer as an integrated business. I'm guessing the hard part is sales and marketing, but maybe not.

172:

Doublegood quackspeak, comrade.

(If you'd managed to cram any more cliches into that comment, it would have crystallized out as a perfect platonic solid of dotcommie propaganda.)

173:

why wouldn't Amazon become their own printer?

They already have.

(Which means they're in competition with their suppliers, which is never good.)

But Amazon are going to go into bricks'n'mortar high street retail around the time hell freezes over.

174:

Heh, hell isn't likely to freeze over soon. Point taken. :)

175:

Thanks, Dirk (and Charlie later); I didn't know about Amazon Create.

176:

It's all "product" to the publishers ... once the cash register rings, game over. If you liked it, you *might* buy another book by the same author, but that's nothing compared to the initial sale.

Wrong. Utterly wrong. Wrong with bells on it!

Publishers are -- or were until very recently -- in the business of buying authors, not books. That's why if you're a first-timer and you offer them a novel they like, they will counter-offer with a two or three book contract (even if the latter books are as-yet untitled and unwritten). New authors seldom earn out in their first couple of books; the real profits begin to show up some time down the line.

You want an example? Try Terry Pratchett. PTerry was midlist for about the first three books, which came out at 3 year intervals and sold very modestly. Even after "The Colour of Magic" his sales only built slowly but steadily; he was 6-10 books in before his career went A-list and then bestseller.

That's what they all dream about, of course. Get the next PTerry or JKR on the ground floor with a modest advance and a multi-book contract and the profit is enough to float a publishing house for a decade.

177:

There's one aspect you haven't covered. I never bought many hardcover books, most of the books I read came from the local library. My Kindle currently has over 150 bucks so the authors get a benefit that they wouldn't have had if it hadn't been for the Kindle.

178:

Amazon will never have a monopoly. If they do not provide customers with the goods and services they want, the customers will go elsewhere.

DRM is a non issue. Those that care can break it and most don't care. Most people are not obsessed with "ownership." they read a book once and move on. The price of technology will only get cheaper over time. Kindle owners can buy a different ereader. The purchase of a kindle does not beholden a customer for life to Amazon.

179:

It isn't that Amazon is doing such a great jab as it is the other publishers are doing so poorly.
When they lose the idea authors are chattels and readers are petty thieves to be controlled and taken for granted they can compete.
I expect them to commit mass suicide because the ideas are too big a leap for them to abide.

180:

"Those that care can break it and most don't care"

Not quite true. Those who care *most* are likely to be using GNU/Linux or a similar OS. Breaking the two most common DRM schemes (Amazon's one, and the Adobe one used by most smaller ebook retailers) requires extracting a key from the Kindle or Adobe software, which requires having a running copy of that software, which isn't available for GNU/Linux (or BSD, OpenSolaris, BeOS or whatever). (And no, they don't work well enough in WINE to do the DRM-removal).

"The price of technology will only get cheaper over time"
Between the increasing scarcity of the rare earth metals needed for a lot of current technology, the increasing cost of oil to produce plastics, and the increasing cost of transporting that technology from the plants where it's manufactured to other countries, I *very* much doubt that that's the case in the medium term.

181:

"... How much education people have helps determine how much — and how — they read, the poll shows. More than 7 in 10 college-educated respondents said they read 'a lot,' while only half of those with no college said they did. Those who went to college are also more likely to use an e-reader."

"Owners of e-readers are more likely to read books, read more books and spend more hours each week reading. About 4 in 10 said they devoured four or more books a month...."

["Even e-reader owners still like printed books, survey finds
The pleasure of reading endures in the digital age, a USC Dornsife/L.A. Times poll shows. Six in 10 people say they like to read 'a lot,' and young adults read about as much as many of their elders.", By Mike Anton, Los Angeles Times, April 14, 2012, 8:30 p.m.]

"... Until some new magic is added to MRI machines, full archives, with their many revised drafts, are as close as we get to seeing the mind in action, the actual creation of a work of writing that readers hold dear...."
["T.C. Boyle archives go to Ransom Center at UT Austin
The university is also home to material from Norman Mailer, Don DeLillo and more.", By Carolyn Kellogg, Los Angeles Times, April 15, 2012].

182:

First, you can do a lot of that with library online catalogs. But a library's cataloging mission isn't the same as a retailer's.

Second, for e-books etc. in libraries, and why the searching of them is such an impossibility, go here, which runs it down -- it's because of another monoply.

And then there is the pulling of e-book titles from library purchase by the Biggies, as part of their febrile attempt to push-back against Kindle and Apple.

These things are all inter-connected.

Libraries do miracles with less and less, but they are up against the final walls.

In poor communities the libraries are rapidly disappearing. In other communities, they are being sold to private contractors who don't even hire librarians, or else hire them part time by hourly wage.

183:

Bingo! I saw that in action a couple of years ago in the POD t-shirts market. A company, CafePress, built-up a huge stable of design providers and an even larger online marketplace. The model was this: The designer created artwork and put it on select merchandise (clocks, mugs, stickers, t-shirts, hoodies, underwear, tiles, boxes, cups, thermos-ware, etc). CafePress offered these items to the "shopkeepers" at a set cost and the shopkeeper selected their OWN retail price which CafePress then listed and sold on their CafePress MarketPlace. The shopkeeper kept the difference between the "retail" and the CafePress "cost" of the items sold. (as an example there were t-shirts that said "This is a $100 t-shirt" and were listed at that price in the CafePress Marketplace--and the t-shirt cost to the shopkeeper was $12.00).

And then the owner of CafePress decided HE wanted to hike his profits: CafePress changed the system to a flat 10% of retail, where CafePress set the retail price. I saw my income drop from hundreds of dollars a month to tens, others saw their income drop from $10,000 a month to $1,000, and many people even lost their homes.

The problem for the shopkeepers was two-fold: they lost control of the price and they lost control of the profit. Can you imagine going up to Disney and telling them "Hey, I think your Donald T-shirt is worth only $19.99 so that's what I'm going to market it at, and I'll give you just 10%." And artists should decide what his/her art is worth and let the market decide if that price is fair, not some hack how wants every t-shirt to be the same price.

What's to prevent Amazon from doing the same thing to ebook author/publishers after they wipe out the big companies, the only ones who can fight Amazon?

184:

There's one more perspective: authors. I just wrote a Kindle Single (Gutenberg the Geek) and decided to play by Amazon's rules to understand them better. I signed a six-month exclusive (but after that I can and will just put it up); in return, I got impressive promotion (I heard from many people who were on the other end of that promotion). Amazon gave me the option to turn off DRM, which I did (though I don't know in practical terms what that means to a reader). Amazon lets me give away the Single for free for a half-dozen days, which I'll experiment with next.

But most important: Amazon gives me 70% of the price and lets me set that price. *That* is what cuts out the publisher. Yes, I give up value from the publisher -- mostly my good editor. But I have not found my publishers' marketing and distribution to be impressive -- less so with the death of Borders.

So Amazon is sucking up to the next constituency: us. Alternatives?

185:

"Before the rounds of publisher fusions and buyouts by huge media companies the North American publishers were run by people who knew all about readers and reading."

I dunno. That was the lament when I got out of bookselling nineteen years ago. Seems to me that horse well and truly left the barn a long time ago.

186:

I wonder if Google will kill Amazon? (Like Daleks and Cybermen duking it out.)

If Google were to add a shopping cart and payment processing front-end to Google Shopping or Google Books (with opt-in and technical requirements for vendors) then there would be no need for middle men.

187:

The real roadblock wrt. ebooks in libraries is that the USA does not have a Public Lending Right framework. Nor, given the way libraries are [locally] funded is it likely to get one, which means publishers will continue to see libraries as cannibalizing direct sales for the forseeable future.

Right you are Charlie. Which is why, on top of the whole DRM issue for ebooks, libraries in the US are forced to deal with cartels offering shitty deals for ebook packages (this has been the sticking pint between Elsevier and university libraries for years-- forced to buy 1000 ebooks noone wants to get the 2 they do). There are a handfull of research providers who are selling (not leasing) unrestricted ebook packages, but they are tiny and only in a few research fields. Something similar would work for fiction but would require publishers to play along. Which yeah, not too likely.

188:

...forced to buy 1000 ebooks noone wants to get the 2 they do)...

That is forced "bundling", which I though was illegal in retail. If so, why doesn't that apply to libraries?

I always understood that university libraries "could" unbundle, it was just that the package offered for the bundle was just too attractive.

189:

It just struck me that if you presented publishers as "venture capitalists investing in writer startups" you might get through to a larger percentage of the dotcommie crowd... ;)

190:

Let me add to Charlie's "Rubbish." I self-published a short story in December. Since then, I sold fewer than 30 copies at $0.99 each. I've got seven more stories and novels in the pipeline, and I'm having fun and not complaining -- but I don't see $100,000 per year in my future, let alone a $100,000 differential between the vast sums I could make through traditional publishing and the EVEN VASTER amounts I could make by self-publishing.

My goals are far more modest: If I can make $10,000 through creative writing in 2015 I shall consider the enterprise successful.

Not that I don't dream of Rowlingbucks.

191:

Stunning revelations for me:

"Many of the ebook editions appear to be direct scans of the print edition, with no further editing to remove glitches from the transferal process."

Yet that does not stop sales:

"Because people like to collect books. "

People like to collect eBooks? Any genres?

I would have thought of eBooks as the kinds of flimsy things that attract people for whom books are disposables, not collectible.

Even more surprising,people still like to collect eBooks despite the glitches from the transferal process?

???

192:

"- not only can they not (legally) read their Amazon books on another device, they can't read DRM'd ebooks from other suppliers on their Kindle."

People keep saying this. It isn't true. i read my kindle stuff of on my Ipad and Iphone all the time.

It is true that specilaized eReaders block competing content, but they will be dead soon

193:

Jeff, other than the promotion, those are the standard terms for self-publishing on Amazon. You need a three-month exclusive contract to have the free days (which don't help with promotion very much, incidentally, because everyone who has written a three-page 'book' called Mi Grate Buk (For Fans Of J.K. Rawling) has taken advantage of that, so mow readers associate 'free' with 'unutterably bad'), but the 70% royalties (for books priced between $2.99 and $9.99) and option to remove DRM are standard and don't require any exclusivity at all.

194:

Thank you for writing the first article about this that I've seen that isn't about how Amazon is bad because it's ruining our literary culture, or some other grand, melodramatic statement. It's not a situation where one is the hero and the other is evil; both parties have created issues.

195:

What's to prevent Amazon from doing the same thing to ebook author/publishers after they wipe out the big companies, the only ones who can fight Amazon?

Nothing. Which is why the big six went for the agency model like passengers on a sinking liner fighting over the life belts. The agency model basically gives them back control over the retail price, and hence the profitability of the product. Which in turn stops Big Disintermediating Retailers from low-balling them into oblivion.

196:

One emerging trend that has the potential to stave off the need for a non-DRM solution is the emergence of app-based consumption of ebooks. If people read most (if not all) of their books on an iPad, they can easily switch between the major ebook providers. This means that they don't have to leave their library behind if they adopt a new provider, lowering or eliminating the switching costs completely. Most reading still happens on closed readers, but the emergence of tablets as a primary reading device is a notable development.

197:

There is a Plan C that you haven't contemplated. Rather than allow Amazon to control the DRM, the publishers could get together and embrace a common DRM standard that would be supported across e-reader platforms. That technically makes it easier for consumers to move content between machines without tying them specifically to Amazon, or the Kindle device, specifically. But I would agree that eliminating DRM entirely would be a far more disruptive factor to Amazon's business.

198:

Speaking only for myself and from limited experience, I can say that a basic eBook cover can be ginned up in about four hours. Dean Wesley Smith uses Powerpoint, I use an antiquated Photoshop, and we both come up with the same "covers are fast" for eBooks answer. If you can do this yourself, I'd say go for it.

Typesetting is irrelevant in an eBook (sadly, Kindle loves to screw up formatting no matter what you do), and for POD it's pretty easy in Word. Places like Lulu send you a format file that you can bend your work to. It takes a few hours to properly format your manuscript. Actually, printing it out in manuscript format for an old-line publisher takes much longer than formatting it for POD, due to printer speeds for manuscripts that are hundreds of pages long.

Marketing is hard, but the big imponderable is editing. Not copy editing (which is mechanical--I've got one error per book using only myself and friends, which isn't bad, considering that none of us are English majors), but real editing to improve the quality of the text.

The problem with editing isn't that editors don't add value, it's trying to figure out how much value they add. For someone who is self-publishing, figuring out whether a manuscript would benefit from several thousand dollars of editing is hard to do. Primarily, it comes down to figuring out whether editing will improve sales enough to offset the cost of the edit, and that's a bit of a crap-shoot. This isn't to insult editors, it's just that every book is a bit of a black swan, and that makes such decisions hard.

199:

I'm sure that Mitt Romney has had some of his 'People' read these 'Books ' things of which you speak. These people would then have supplied The Grate Leader with a report on these 'Books ' that would be delivered by the Man Himself on Fox Moos to an electorate who don't actually 'read ' these 'books 'or 'Books' of any kind other than the Bible, but who do understand that 'Reading Books ' might be a GOOD thing for said Leaders to have done ...provided that they were the RIGHT sort of Books of course and that they didn't divert attention from the Truths exposed in The GOOD Book..... oh, and also in " No Apology: The Case for American Greatness " by Mitt Romney.

Romney might only read one or two books a year, but he reads them several times and I don't doubt he can quote from them Chapter and Verse as the Occasion demands... and his partisans would consider that to be a Good Thing.

As for Gates and Jobs ? They have " People " too and of Course they read the Right kind of Books at the Right kind of time and will mention them at the appropriate time and place, with copies left in just the right places that they might be discovered so as to establish verisimilitude in the Role that they are playing at any given time .. these people are actors on a World stage and everything they do is Scripted and Performed as Theatre.The performance even continues after their deaths. Death as Theatre ..as in famous last words?

http://www.guardian.co.uk/technology/2011/oct/31/steve-jobs-last-words

Jobs was an artist with a natural flair for beauty of design and it wouldn't surprise me if he'd rehearsed those famous last words...very enigmatic .. "what did he mean by that?"

200:

I think many posters on this thread are underestimating how much less tech-savvy (or more time poor or whatever, just think normal people) people will put up with Amazon and the way they do business. Thus they imagine that competitors will appear and ensure that Amazon will maintain certain standards or not make too big a profit.
Which may be correct in the long run, but {quote Keynes}.

The barriers to entry are larger than people think, not only do you have to build a decent website and supply contacts, you also have to make sure that enough people know of it and get to see how wonderful it is. QUite a lot of people are pissed off at Ebay for various reasons, but it seems to be taking an age to die and has still been profitable for years, or so I read.

201:

The only way to stop Amazon from gutting the publishing industry is to boycott Amazon. I don't own a Kindle and have stopped buying from the Amazon store. (If I can't find elsewhere, so be it.) If four or five million people did the same thing, maybe Bezos would look into his soul and reconsider his slash-and-burn approach to books and the book industry. Oh, I forgot: he sold that a long time ago.

202:

If four or five million people did the same thing, maybe Bezos would look into his soul and reconsider his slash-and-burn approach

You guys crack me up!

(Hint: Amazon's annual revenue in 2011 was 48 billion dollars. So unless the "four or five million people" you're talking about are each currently spending >$1000 per year with Amazon, the net effect on their bottom line will be lost in the line noise.)

203:
In what way is our model broken? And why should it mutate everyone who adopts it into avaricious, social Darwinist "robber barons," as our detractors so often claim?

Oh, a strawman - and one that actually answers the question you claim to be interested in.

No-one claims that in a libertarian society "everyone" would automatically act as a robber baron. The problem is that libertarians claim that under your system, there would magically be no robber barons - the ones who currently exist, and are held in marginal check by government regulations you scorn, would suddenly disappear.

As Charlie said, it's a system that would work well for perfectly spherical frictionless human beings. But it stops working the moment that the aggressive guy with a shotgun decides he wants his unarmed neighbour's cow. In the real world, it doesn't happen because the government would investigate the killing and arrest him, so he doesn't gain anything. In libertarian-world, it apparently doesn't happen because, um, magic.

If you can explain why it is that no-one in libertarian world would ever want to infringe on someone else's rights, then you might get taken more seriously. But since I've never seen any attempt to answer that question with anything other than magical thinking (the funniest version of which is the "insurance" answer), there's no current reason to do so.

204:

The problem specialized ereaders have is that Amazon did not allow other manufactures to simultaneously decode DRM protected Amazon and DRM protected epub files. Since most of these manufactures had their own content stores (or contracts with non-amazon stores) they all chose to remove compatibility with Amazon.

This all happened a couple of years ago and was probably an early move to keep their consumers as close as possible, and trying to stop them from getting used to access to multiple stores.

205:

Actually, if you read what comes up on a search for references to publishing on Hacker News (a prominent dotcommie hangout, as focused on business as technical issues despite the name), you'll see that a lot of them already do view publishers as VCs for books --- who offer terrible financial terms and bring little else to the table. (It's an article of faith that they outsource pretty much everything they can, including editorial and design work, and do very little marketing.)

So, if for some reason, you want to argue against them, this is what you're arguing against.

See this thread, for example: http://news.ycombinator.com/item?id=2049028

206:

breaking DRM isn't all that hard to do. I'm totally non-technical, and I do it all the time. You don't have to be a techy, you just have to know where to look for the tools.

207:

You can find me on HN as cstross. I am familiar with their doctrinaire mindset. Let's put it this way: there's some merit to it, but a lot of drawbacks most of the natives appear blind to. Goes with the territory, I guess.

208:

That is forced "bundling", which I though was illegal in retail. If so, why doesn't that apply to libraries?

Libraries aren't considered retail, for a lot of arcane reasons having mostly to do with taxes. And the bundling is being done by research cartels with near or actual monopolies on the content, like Elsevier. This is where it gets into a grey area, legally and morally, because Elsevier and other academic publishers aren't retail and so don't have to abide by retail rules. This is why they won't bat an eye charging libraries $10,000 a year for access to a database. Because they can. And since they paid for the peer-review process, and have leveraged sole distribution rites from the researchers and authors of the content, they have created a virtual monopoly on all the latest research being in done in several fields (most notably in the Healthcare industry).

Elsevier has attracted the most ire of late, because they've been doing overtly nasty and dickish things, like packaging advertisements for new drugs as journals and selling these fake journals to research libraries and universities, or rewriting access agreements to their proprietary database every year as an excuse to jack up prices and swap content. Licenscing ejournals and databases has become such a Byzantine process that sometimes it's impossible to tell if your library "owns" a specific journal title, because the rites may be orphaned or in limbo. I once described ejournals as Schrodinger's resources, because you never know if they exist or not and checking to see if they do may trigger their demise.

209:

I always understood that university libraries "could" unbundle, it was just that the package offered for the bundle was just too attractive.

Nope. Most EULAs forbid breaking bundles on pain of massive lawsuit. There are very few Academic publishers who sell a la carte subscriptions to databases/eBooks/eJournals. The few who do are tiny and have next to no content to offer.

If a fiction model were devised for libraries, it would most likely follow the cartel bundling model: pay X amount of $ a year, get all the ebook versions of the bestsellers from Publishing House Y. Add a few extra 000s to that subscription price and they'll throw in their back catalog of midlist authors. It wouldn't be optimal but it would be attractive form the budget management perspective of a strap cashed library director and the CEO of Publishing House Y, who has just found a market willing to pay them thousands of dollars a year for a product that requires no additional overhead (they were already going to convert those ebooks anyway and sell them one at a time).

210:

Well, maybe.

But maybe it's the other way around. Maybe the best way to re-direct Amazon from its current path in publishing is to actually buy more stuff from it, but other stuff than books.

And maybe the current market forces are already doing this.

Out of the 48 billion in Amazon revenue last year 28 billion was from electronics and other non-book, non-media purchases. This was a 56% growth from the previous year.

So, out of that 48 billion there was 17 billion coming from books, movies, music and other media.(and thus even less for books) and the growth rate was smaller than for "electronics and non-book".

211:

kill amazon? easy.
sell coffee at libraries.

212:

Okay, so several people in this thread are anticipating that amazon will rewrite the terms they currently offer to authors publishing via amazon to be much worse once the publishers are dead. Doing this would require amazon managment to get a lobotomy first - 30% for hosting a glorifed text file server is already monopolist pricing, and going further runs too high a risk of killing the goose that lays golden eggs. That is not amazons long term plan.

Their long term plan is to get all authors to take this deal, where you hand them a finished manuscript and they uncritically put it on their server, and the public uses amazons recommendation algoritms for slushpile sorting.

This plan allows amazon to collect 28% of all expediture on literature as pure rent for all eternity. You expect them to risk that ocean of cash for short term greed? Well, buisnesses have done dumber things, so I will not claim that it is *impossible*, but I think it a very low probability outcome.

What about advances and editing? These are valid concerns for authors. but Amazon has absolutely no need to care - It does not matter - to amazon - if author X writes slower because he or she has to work as a nightwatchman, when authors z, y and q, who are respectively on the dole, independantly wealthy, and insomniac are also handing them manuscripts.

Vernor Vinge was a professor while he wrote most of his work. Rowling was famously on welfare until Potter exploded. Many, many people just flat out like to write fiction, and will do so entirely on spec.

Editing? Well, I anticipate that some skilled editors will eventually work out a contract where they are paid a percentage of a books earnings, but again, amazon has absolutely no incentive to get into this part of the buisness - as doing so would require them to spend money in a way running servers do not.

213:

zornhau: Google has been trying to horn in on Amazon's various digital content sales markets for years now. What they have to show for it is the single worst effort/reward ratio fo any of the major players: they've burned an astonishing amount of money, all in order to stake out single-digit marketshare (or worse) in sales of digital books, music and movies. (And for that matter social networking.) As a former employee, I see no sign that this is ever going to change: the kind of smart that google makes a point of hiring is not the kind of smart that is going to buy them success in these fields.

Much like Microsoft, they'll never be a non-player, because they have infinite amounts of money to shovel at the project and can run their content sales operations at a loss without having the slightest impact on their bottom line. But they're never going to be a serious factor in these markets.

214:

Doing this would require amazon managment to get a lobotomy first - 30% for hosting a glorifed text file server is already monopolist pricing, and going further runs too high a risk of killing the goose that lays golden eggs.

Ahem: current terms they impose on publishers are between 50% and 70%. Yes, for hosting a glorified text file server! The deal they give authors who cut out the publishers and go direct-and-exclusively through Amazon is way sweeter than anything they give anyone else.

So I ask you: if they kill the major publishers, why would Amazon offer indie authors better terms than they offer the surviving [small] publishers? After all, collecting 70% rent on all literature for eternity has got to be better than collecting 30%, right?

215:

Nevertheless, individual acts of resistance matter, because if everyone waits for society as a whole to act nothing will get done. I can't think of any movement for social change that skipped over "small-scale actions that the target could ignore" to "complete victory." They are necessary, just not sufficient.

216:

Because the suppliers they are dealing with in the latter case are individual authors, not professional negotiators for a corporation - This is important, because that means they are regular people, rather than homo economicus. Squeeze to hard, and the following very predictable chain of events will take place

1: Someone else will start a glorified file server. Note that the barrier to entry in the buisness model they have is nigh-zero.

2: Lots of authors will use it instead, even if it intially pays less in absolute terms, because it does not violate their sense of fairness.

3: Oops, amazon just lost its position as default merchant. CEO that instituted the hike in the cut is murdered by angry shareholders.

217:

Your theory would hold more water if such alternative ebook publishing platforms didn't already exist. Ahem.

218:

It is not so much a theory as it is about strategy, repeat buisness and stable equilibriums.
Amazon squeezes publishers hard because they can. Publishers are profit maximisers, and will take 30% of 40000 sales over 70 % of 10000.

Individuals are much more likely to respond to such an offer with "Go take a long walk off a short pier". Which is why they dont, currently, offer those terms to individuals. And would be foolish indeed to do so in the future.

219:

Ah but they only have to get it right once...

Or perhaps it won't be them. Suppose PayPal created an aggregating site enabling you to search people's PayPal sites.

Given the number of resellers, Amazon is already on its way to becoming a glorified search engine and payment processor. Other people can also do that.

220:

It has little to do with the content providers, you have to convince the customers to come with you.

And those want a smooth experience, a store they feel they can trust, a recommendation algorithm that definitely does take more than nigh-zero to start. Oh, and competitive prices for the large part of the customer base that only cares about getting a good deal themselves.

And all of this at a level that is similar to that of your big competitor.

Which is a problem after you let one company rule the consumer connection for as long as the remaining publishers or authors will have at the point that company can start increasing their part of the pie.

221:

zornhau: See my earlier comment. "Getting it right" does not mean achieving rough feature parity with amazon: they've already done that. Getting it right means leapfrogging Amazon in terms of both features and user experience (users in this case being both authors and readers and to some unknown extent the publishers too) to the point where it's worth everyone's trouble to switch. I'm not saying that it's impossible that Google will do this, but if you're betting that they actually will? I'll take the other side of that wager at any odds you want to offer.

Apple hasn't been able to do this in the ebook sphere, and this is territory that is far less alien to them than it is to Google.

222:

(And Paypal? Not in a million, billion years.)

223:

This sounds like a bunch of buggy whip makers. If it was about cars you would be cheering. I'm a Ned Lud on book readers. But things change. Like or not.
Amazon may be becoming a trust. Nobody has used anti-trust laws for a long time.

224:

Interestingly, Richard Sears (Sears, Roebuck & Co.) used a similar model when they started their catalog business in the late 19th century. The simply printed the catalog with items that they did not order from manufacturers until the got firm orders.

225:

Publishers are profit maximisers, and will take 30% of 40000 sales over 70 % of 10000.

You mean "should." They should take smaller slice of the bigger pie.

When there's a large number of companies and so multiple tactics, they will tend to converge on an optimal solution - most of the time, and into the neighborhood of an optimum. Real economics are complex.

When there's only one actor involved, how can they know? If everyone is buying from the monopolists already, there's no information about how profitable alternative business models might be and good reason not to go exploring.

226:

al_zorra wrote:

Anyone who ever thought amazon was a benign entity, has never read the accounts of what it's like and always has been like to work for them. They are worse than wal-mart, if you can believe that. Sweat shops, literally, among other horrible treatments -- and they Do Not Pay A Living Wage -- not even the minimum wage, because they know how not to.

I do a lot of consulting. I also watch Undercover Boss, which has featured several places I patronize as a customer.

There are intrinsic disconnects between management clue, how employees are treated, how the company behaves to customers (abusive or constructive), how the company behaves to vendors or suppliers. If you make a 4-D map of that, you have companies with no clue and excellent coverage in the other areas, companies which are abusive to employees but excel in other areas, places which treat employees great but which I would never patronize as a customer, etc.

Waving a flag and pointing out that Amazon's workplace conditions are only legal minimum OK in the US (and not the arguably better performing and ethically "living wage" and constructive employee relations) is very different from any of the other arguments about Amazon's customers or vendor relationships.

It's arguable that Amazon would not exist today if from the beginning they had upped their cost equation 10% to be nicer to employees. The stock market and capital sources watched Amazon expand and catch market share and discover new market, losing money nearly the whole time, but Bezos could make a credible case that they were always right around the corner from profit if they chose to slow expansion. And they were right.

This thread's done a lot to show the negatives that came with that. But that's due to Amazon's inherent disruptiveness of the prior market model, and lack of settled future model (who intermediates for whom, who aggregates for whom, how many layers are there). Nobody knows the answers. We know that they're not the same ones. But I enjoy living in a world where Amazon exists and I can just order a lot of its stuff online. Previously, despite living for years in or near cities with some of the best bookstores in the world, there were things I just couldn't get. I could go to the UC Berkeley library, sure, but to own a copy at home? Go fish. Get a book for my computer? Sure, if it was out of copyright, and if Project Gutenberg had scanned it.

The old publisher system met the Internet and the new distribution models and went splat. Amazon was a large part of the splat, and is picking up pieces in a manner that is good for them. Apple's doing the same thing. It's not clear if the Publishers are yet. The Authors are largely on the sidelines alternating between concerned, befuddled, and excited.

Do I wish Amazon was nicer to its warehouse guys? Sure. Do I expect to see Bezos on Undercover Boss doing that stuff in person? No. Will I stop buying from them (at least for some stuff)? No. What's the future look like? You tell us. Not like the present, nor the past.

227:

I've never actually read Amazon's terms and conditions for eBooks. I had an Amazon account before eBooks existed at Amazon. I've also never had to agree to any terms and conditions before buying free eBooks from Amazon. Personally, I won't give Amazon any of my money for eBooks. I find Amazon's Kindle business repulsive. Bezos is a megalomaniac.

Anyway, since I've never read or agreed to Amazon's eBook terms and conditions, I don't think if I convert the free eBooks I've gotten from Amazon to be wrong.

228:

I find Amazon's Kindle business repulsive.

Why is Amazon any more repulsive than B&N, who tie their book DRM to your credit card number?

229:

"Paid for the peer review process." Well, not quite -- at least not in physics and astronomy. In my experience, the effort of the peers doing the reviewing is effectively donated by the institutions that employ them -- the same institutions that are paying for the subscriptions and (to some extent with grants) the page charges. The (smaller, specialist) journals each employ a handful of academic editors (working part time out of their institutional offices -- I think they get paid, but I couldn't swear to it) and a few actual office staff to wrangle the process, and maintain a website.

230:

haha! They sell coffee at Barnes and Noble, but they are still dying.

231:

I meant that libraries could buy an unbundled product. I've read elsewhere that Elsevier claim that this is always an option, whenever the bundling issue is raised, so they are not "forcing" libraries to buy a bundle, just that bundles are much more attractive to libraries.

Of course Elsevier are fighting open science initiatives which would undermine their business model. About time their model was challenged.

232:

Amusingly enough, Amazon has ALREADY sown the seeds of destroying its' monopoly. How, you say ? Via their "Cloud Reader". It's cumbersome now, but I'm quite sure someone will automate it fully soon.

How ?

Requirements: Amazon Account, Kindle App for your platform, Calibre E-book manager ( http://calibre-ebook.com/ )

1. Get the book from Amazon, have it delivered to your "cloud reader".

2. Then download it to your Kindle App.

3. From there, import it to Calibre.

4. Once imported, convert to Epub.

5. Voila! DRM Free! Ready to read on your non-proprietary reader of choice. (I have a Nook Color and a Kobo. . .)

6. And since this IS the Internet. . . . PROFIT !! (grin)

233:

This is not as black and white as you make it out to be. No one needs a publisher any longer, and pretty soon they won't need a retailer. HTML 5 makes it possible for any creative person to go direct to consumers without any intermediary. A lot of people are going to do that. In categories like movies, the economics of direct selling of catalog product is so obvious it is hard to imagine any film company missing it.

234:

While the original poster may need some advice on his tone, the idea that traditionally published authors don't do any marketing and sales work is just wrong. They spend HUGE amounts of time on promotions, tours, signings, social media, etc., etc. Your "division of labor"doesn't exist in any writing job that I know of in this day and age, and any cautious, moderate professional involved in writing and publishing at this point will be careful not to draw conclusions regarding self-publishing yet. The jury is still out, and the change is still underway. The industry of writing and publishing books won't remain the same regardless of how many lawsuits are filed or corporations are reviled (rhyme unintended).

235:

@srpaulsen - I'm sure the original poster and Charlie Stross are grateful to your insight into how the real-world writing and publishing business work.

236:

I can go direct to the public right now, sort of...
I assume you have seen my extract from TechnoMage and the purchase button on my site?
All I need now, for the 1 in 1000 who might be interested in buying it, is a few million people a month dropping in to view.

237:

Forced bundling doesn't apply to cable networks either.

238:

I take it that everyone is fine with paying high prices for their ebooks if they believe that Amazon is the devil and the publishers are poor victims? Prior to the agency model some level of price competition existed that had nothing to do with Amazon. The agency model destroyed it by "setting prices". Yes the industry is in transition and yes there will be winners and losers. At the moment authors might actually have an opportunity of winning if they will only chose to invest in some copy editing.

Amazon and ebook format gives any aspiring author a way to sell their material at a much higher rate than they will ever receive from a publisher. Right now most of it's drivel but there's always hope. As with everything nothing is ever black and white.

239:

And so -- I, as a reader, creator, and all around citizen am expected to sit back and go, O myes, here they are doing what is to be expected of monopoly congloms, devasting both labor and consumers at the expense of labor and consumer, and not complain or make any moves to change these conditions?

I have always refused to buy from amazon from the very beginning -- and have been called a luddite.

I call myself a boycotter of amazon, apple and all those others, who is looking into every way to avoid them all, while still getting royalties as creator.

Nothing's yet in place, all is up for grabs, so I read more and more into the history in the U.S. of the plutocratic monopolist wars of the late 19th century and the 3.5 decades of the 20th century -- and then how in the 7th and 8th decades of the 20th century, all those standards and regulations started to be dismantled.

Nothing happens in a vacuum and without context -- to protect oneself one needs information -- which I'm seeing every day becoming less accessible by these conglomerates.

240:

I'm afraid I haven't had time to even read the latest.

Question: Given the impending demise of DRM, what would you buy NOW? Despite my wife's experience with Microsoft abruptly going out of the DRM'd music business (and losing her entire classic music library), she has bought a kindle and now proposes to buy me one for my birthday so we can at least read together what she has purchased (ie rented from Amazon).

When I check Amazon US, they offer me besides a Kindle, a used Galaxy Tab and a used HP tablet with android installed. What would you suggest?

241:

This may be true for physics and astronomy but Elsevier dominates the health and medical journals with an iron fist.

242:

Can't understand how DRM is a boon for Amazon, as most books have very little repeat value, once I have read hunger games, having instant access on my nook is never an issue. Also, considering that I can access same book on my PC, mac, iphone, android, windows phone, blackberry makes moving to ibooks or like very easy.

Only reason kindle ebooks are very successful, is no one else created so seamless and compelling environment.

243:

Question: Given the impending demise of DRM, what would you buy NOW?

As an ereader?

Currently I have:

a Nook Simple Touch (6" eink, 800x600)
a Nook Color (7" LCD, 1024x600)
2 Motorola Droids, no longer in use as phones (4" LCD 852x480)
1 Motorola Triumph (4.5" LCD, 800x480)
1 Samsung Galaxy Nexus (4.7" LCD, 1280x720)

If you have good eyes and a limited budget, a used Droid or equivalent screen is over 300dpi and basically perfect. It is small, however. That's a plus for portability and one-handed usability.

If your eyes aren't 20/20 and your budget is limited, look for a refurbished Nook Color or similar Android tablet. The screen is large and clear and bright, and though the letters are slightly chunky, it's an esthetic call.

If you have money and need a new smartphone anyway, the Galaxy Nexus is beautiful in all respects except battery life.

I hear Google's going to sell a 7" tablet for $200 - $300 in July. Maybe. If so, it's probably a good bet.

The page turn speed of eink annoys me.

244:

speaking as a reader not a second hand book store owner for once
my biggest complaint about ebooks is the no share issue
I bought my son the Hunger Games trilogy box set on-line -he couldn't wait a week and bought the ebook
so great HE can read it on his ipad
but the other 4 members of the household nope bad luck

the ebook was half the price of the pb but value wise it is a single user/single use item
not to mention it would have lasted 5 seconds on the shelf at the shop once we had all read it

245:

You have an excellent point. This is a great long-term strategy.

You are totally naive. Once Amazon is the only publisher they will unilaterally change the contract terms.

Lather. Rinse. Repeat.

246:

I have a Kindle and a Galaxy Tab 7"

Tab Pros:
Great for PDFs.
Kindle and Kobo and other aps.
great web browser(s).
Expandable (microSD + Dropbox etc.)

Tab cons:
Hard on the eyes for long term reading.
Lots of reading? Charge every night.
Heavier than the Kindle.

Kindle Pros:
E-ink great on the eyes forlong term reading.
Kindle DRM easy to break.
Only have to recharge every 1 or 2 months.
Great for outdoor use.
Lightweight, not a pain to hold single-handed for long periods.
Inexpensive.

Kindle Cons:
No night reading without external light.
Can't read EPub.
Not great for PDFs.
Crappy web browser.
Limited expansion capability. (Kindle cloud only)

247:

The Amazon model basically is only compelling if either (a) there are bunchteen thousand physical titles to get to customers or (b) there's one master DRM key to rule them all.

Back in the day, the number of miles from your publisher to my house would have been a problem, but the number of milliseconds isn't, and an open-format ebook model would let multiple suppliers sell globally to people with whatever device. We may actually get there THANKS to Amazon's single-gateway DRM model!

We just need a credit card model that works across borders, an Internet, and not too much government insistence that I get my daily dose of Canadian Content.

Then too, my wife got a parcel from Zazzle on Friday; all we need to do is extend that model to books...

248:

The one thing that bugs me (Living in New Zealand) is region locking.
There are _ebooks_ on amazon that they won't sell me because im in asia pacific and the publisher is too dumb/lazy to let amazon sell them in APAC.

249:

The key point, I think, is that Elsevier does not pay the peer reviewers.

Or the authors.

This is what happens when you accidentally hand the keys to the reputation system to a private company.

250:

Amazon is evil. Doesn't the DOJ see the irony in their case in helping Bezos. His attack on free markets, his arm twisting against taxes, his obsession with global domination is the worst possible outcome for the world. Anti-trust!

251:

"breaking DRM isn't all that hard to do. I'm totally non-technical, and I do it all the time. You don't have to be a techy, you just have to know where to look for the tools."

No. First you have to know that DRM exists at all, and then you have to know that it can be removed. Two very large conceptual hurdles for most people, and ones that corporations work very, very hard indeed to put in place.

It is hard to break free if you are unaware of being a prisoner to begin with.

252:

I buy books on Kindle I would never bother to buy, let alone read in either hardback or paper. If there is a book I plan on keeping or an author I like, I buy their hardback.

I do find fascinating the abject prejudice against those of us who must resort to self-publishing in order to have our books see the light of day. I write in the genera of the history of the wild west. A good 80% of the books that are produced in this field are self-published. No publisher would touch them. The bitter irony is one of my books about Wyatt Earp has already produced more of a cash flow for me than a colleague who had a major contract. Because he refuses to even consider lowering himself to considering alternative routes for publishing, he has books that will never see the light of day.

No, my things are never going to be a best-seller. I know that. Why on earth would anyone in their right mind want a 528 page non-fiction about Wyatt Earp with nearly 2000 footnotes? Only a "buff" or a researcher would want it. I know just who my market is, how many books will sell, and what I must do to present them, properly.

I write in a field where we are probably some of the worst sticklers for accuracy, and provable fact. The irony is that someone comes along, gets a big contract, uses our work without citing us, and gets all the glory. It's not right, but that's the way of the world.

The world has changed. If we don't evolve, as authors, we are going to be left standing in the dust. Let's be honest about the publishing industry. If you aren't famous, have a scandal, or a "hook" you are never going to be considered. It's ugly, but true. You can make fun of authors such as moi, but at least we are actively working and do have a specific audience for our books. We'll never get rich, but how many writers ever do?

I was once ashamed of how I was working, but I'm not any more. I am bright enough to know that only a specific person is going to read what I write and there isn't a publisher in the world who would touch it this day and age. When you put 15 years of research into a subject, you really don't want to have some nit-wit assistant editor taking out terribly important historical information because they cannot even consider the fact that the OK Corral is not the name of a movie.

You either evolve or become extinct. I find the brave new publishing world to be quite exciting. The beauty of it is there is room to be very little. Remember, the dinosaurs went extinct but those tiny mouse size mammals survived.

As for the corner bookstore, where I live, in the middle of nowhere New Mexico, we don't have one. As a researcher, I still buy hard copies of books. For my current endeavor, I've bought at least 75 books, all from Amazon, most from used sellers. I remember having to wait 6 to 8 weeks for a local bookseller to finally get in a title I need. Those days are gone forever, and I, for one, am thankful for it.

If you really want to see dirty, check out the fine print with Apple's new app for publishing via their system. I was quite excited when I first heard about it. Forget it. At least Amazon doesn't require you to sign your life over to them, and then maybe they might now want your title to see the light of day - for political reasons.

Evolve or become extinct.

SJR

253:

Amazon's business model is embodied in its mission statement: to be the most customer-centric company on earth. That's business, not altruism, but you will find every aspect of its operation to be traceable to that idea.

254:

Having one company with 90% of the eggs is never a good idea - I don't think Amazon is evil any more than I think Apple is evil, but both companies, and all the various publishers, have long or short-term goals of gaining market share and maximising profits.

I'd like to see other strong e-tailers rise and I'm all for publishers dropping DRM, which will help, but Amazon isn't just deep pockets and a nice device. A competitor to Amazon needs to compete on:

- Serious devotion to customer service. Amazon is streets ahead of most competitors.
- Incredible search engine and recommendations engine.
- Vast inventory.
- Total ease of purchase and delivery to device.
- Self-publishers.

You are utterly dependent on Amazon. They pay your rent... because right now they give you 70% of the sales price. Now, if they achieve a monopoly position, they can invert the percentages and keep 70% for themselves and give you 30%. Boom, your income is less than half what it was.

Amazon has gone above and beyond to attract and work with self-publishers - and are making serious profits from them as a result. As Bezos noted in his last shareholders letter, "more than a thousand KDP authors now each sell more than a thousand copies a month".

No other major etailer gives self-publishers anywhere near the same opportunity. Oh, they list the books, but they don't promote them (through bestseller lists, etc) in anything like the same way. Amazon is doing a lot to lock in self-publishers and create a dependency - especially with the barbed offering of KDP Select (an exclusivity deal which is the worst thing they've come up with recently).

I don't want Amazon to gain absolute primacy because I think that would be bad for everyone. But the focus of discussion seems to be on trying to cripple Amazon rather than set up a powerful competitor. Perhaps Google Play will step up in the ebook arena?

[If publishers really want to cripple Amazon, the impact of withdrawing all their books for a couple of years would be immense - but I'm not sure the publishers would survive it either.]

255:

Hey Charlie,

253 comments later, I think I fully understand how this breaks down. So here's my question:

If a future-oriented publishing company can disintermediate the agent (thus making you 10% more profit) and distributor, (making you whatever $$ that brings) handle the editing, copyediting, layout and cover artist in a fashion which doesn't interrupt your work flow, bring out your next novel as an e-book anywhere in the world, use high-quality POD for people who want physical books, manage the publisher's part of the relationship with fans, libraries, bookstores, etc., in a rational way, and give you a 50% royalty on the e-books, all this wrapped up in a decent contract that covers the appropriate rights, do you take the deal?

Why or why not?

256:

If they're customer - centric, then why is it that they never test their Web interfaces on customers before putting them online?

257:

Al Zorra writes:

And so -- I, as a reader, creator, and all around citizen am expected to sit back and go, O myes, here they are doing what is to be expected of monopoly congloms, devasting both labor and consumers at the expense of labor and consumer, and not complain or make any moves to change these conditions?...

I encourage you to do whatever you feel like here, it's your life, money, and content.

I am just saying, the Internet broke a bunch of preexisting business models and it's not going back. That's not "today's net is the only future". That's "the future is not the past."

Travel agencies imploded. Newspaper classifieds will never come back.

Amazon is not "good". But it is - and the world changed. As a consumer I like a lot of the change, but am acutely aware of monopoly and monosomy risks. You seem to me to be stuck in the past.

258:

"...by 2010 Amazon had come close to an 85% market share in the ebook sector"

Yes, indeed it did. What Charlie has conveniently forgotten to mention, though, is that that figure is nowhere near true anymore. Since the Nook's and iBooks' rise in popularity, Kindle share has decreased quite a bit. Probably around the 50-55% mark now.

Still significant? Undoubtedly. But not as "monopoly-friendly" as Mr. Stross seems to imply. But hey, 85% does sound much more frightening, so there's that.

More importantly - so what if Amazon dominates the market? Who ever said that this would remain true till the End of Time? Go back 20 years and most people probably found it hard to see anyone other than B&N and Borders as dominant players, and now B&N is struggling to keep up and Borders is no more. Someone always comes along who figures out a better way to do what you're doing. Amazon will be no different.

All this brouhaha over Amazon's "monopoly" is severely exaggerated. The world is not coming to an end. Not even the world of publishing. Amazon dominates the market because they offer competitive prices and solid service. When NewOnlineRetailer comes along and offers better service and better pricing, consumers will jump ship; walled gardens aren't going to keep them in.

259:

I haven't liked what Amazon and Apple have been doing over the past few years. Locking out competitors undermines everything the Internet is for and creates monopolies that eventualy will not help customer.

I have always refused to buy Apple products and I no longer shop at Amazon, I would rather pay a few pence more.

260:

Alex R flies a kite: If a future-oriented publishing company can disintermediate the agent (thus making you 10% more profit) and distributor

You don't understand what an agent is for. They're probably the last intermediary that's going to be dissed, because what they do is negotiate, on commission, to get me more money from everyone else. Seriously. They cost 15% of the gross take, but an average to good agent can double the amount of money extracted from the rest of the supply chain by the author/agent team.

They also provide an intangible service that's not obvious to outsiders, but consider: as an author, I need to be on cordial working terms with my editor/publisher/the folks I do business with. There is back-and-forth involved in editing and book production processes, after all. This would tend to inhibit me from engaging in take-no-prisoners commercial haggling with these same people, whoever they are. But my agent is under no such inhibitions. So she can arm-wrestle aggressively for the best deal on my behalf, while leaving my good working relationship with my editor undamaged.

This is desirable because publishing business relationships are long-term things -- books may stay on sale for decades -- and so are author/editor relationships. We're looking at building a long term multi-book brand, not publishing one-shots. It's therefore helpful if my editor's stress levels don't rise every time he or she sees an email from me because they're wondering if I'm coming at them with a pointy stick to demand more money.

In your brave new world of fully disintermediated publishing, you neglected to examine how author brand management and supplier/publisher negotiations are handled. These are non-obvious things that are nevertheless vital to any long term media supply chain ...

261:

"In your brave new world of fully disintermediated publishing, you neglected to examine how author brand management and supplier/publisher negotiations are handled. These are non-obvious things that are nevertheless vital to any long term media supply chain ..."

Don't think you thought that one through Charlie. In a 'fully disintermediated' world, there wouldn't be "supplier/publisher" negotiations, particularly if the entity acting as the services supplier was author owned and controlled. More like flat rate for the job.

As for author brand management - what do you think you are doing here?

262:

I was reading through this conversation, and I kept having the nagging feeling that people were missing something obvious. Yet, I was having trouble putting my finger on it.

After a while, I figured it out. And the thing is, while I agree that DRM is a terrible idea, what I realized is that it's irrelevant. The problem isn't DRM (though DRM doesn't help). The problem is that Amazon (and Apple, and Google) aren't selling files. They're selling a service. And without some sort of legal framework to allow it, nobody else can compete with that.

So just to get started here, you need to stop thinking of what's being sold here as a file. It's not. What Amazon is selling is a web site you can use to read your books.

This should be clear if you can get past some of the (apparently, from comments) common misconceptions:

A) You don't need a Kindle to read an Amazon book. You can read them in a web browser. Or using a phone app. The same is true of Google books (indeed, it appeared that Amazon was just copying Google when they implemented this). Yes, it works in Linux.

B) You don't need the file, either. You can always just download it again and again. What you need is login credentials.

C) The file doesn't matter. Seriously. This is the point: Amazon is selling a way to get things (ebooks) and manage them in a pleasant fashion.

Nobody (well, almost) likes dinking around managing files all the time. People hate running backups. People forget where they put their files. Files get corrupted. It's a hassle.

Sure, if you buy a DRM product, you don't really own it. It's revokable. The company might fold. That's all true.

But the experience of going to Amazon (or Google) and having them manage all your stuff is just so much better, people are going to keep doing it. And from the customer's point of view, being able to get it in a web browser or an app is perfectly fine. There's no functional lock-in when it comes to using this stuff for most users. Sure, maybe Amazon will be dicks and try to block the Google books web site on a Kindle, but probably not. (The odd one out, of course, is Apple, which steadfastly refuses to play nice with others)

Of course this is in fact going to lead to a monopoly, just like Windows did. People are going to use the big two or three (at most) and that's it. And that's bad.

But being able to move your files around is irrelevant. If you want real competition to be possible, you need people to be able to move their library service around. You need to be able to hit a button and have all the Kindle books on your Amazon account appear in your Google account. And that simple isn't possible without some sort of law.

Of course, for the publishers, this still isn't going to help because of the other thing Amazon has: an actual good web site. People don't like maintaining dozens of accounts, or dealing with merchants that may or may not be shady. It's a hassle. Far better to just go to the big name with consistently mediocre customer service and somewhat useful recommendations and reviews.

263:

That will depend on the contract. How much say will I have in the cover design? Do I get a choice in who edits the book? Is there a stringent non-competing works clause that puts unfair restrictions on how I can develop my writing career? Is there a sensible reversion clause or have that stops the publisher hanging on to the rights forever? And what happens if the publisher goes bust?

Plus there's the problem of avoiding all the flying pigs while I'm considering this fantastic deal.

264:

I love the Mars trilogy, so I went to check. I'm pretty sure what you've bought is "The Martians", a collection of short material flagged as being connected to the Mars Trilogy, which IS under four quid. As far as I can tell you can't buy the mars novels, or any but the last couple of his works, on kindle UK at all.

Which is a shame: I really want the Three Californias.

265:

I'm not so sure of all the details, but that doesn't look a crazy way of looking at the problem. But the question of what Amazon are selling doesn't change the dangers in the monopoly/monopsony situation which Amazon have created. It might affect some of the possible solutions, but they all come down to the existence of alternatives to Amazon.

Have Apple figured out what they're doing? It's likely. The problem is that the DoJ seems unable to recognise a monopoly. and are disrupting a possibly ill-planned counter to that monopoly.

There's an old British joke (names of organisations have changed): why is there only one Monopolies and Mergers Commission? This affair might be taken as an example of why a single regulatory agency might not be so wonderful idea. The other agency could "win" by spotting the blindingly obvious.

266:

About that... have a look at CASH Music, which is an example of another creative industry's attempt at (near-)complete disintermediation.

267:

"Speaking out against DRM was, as more than one editor told me over the past decade, potentially a career-limiting move"

For what it's worth, I've been arguing against DRM at Macmillan for years, and while I haven't won the argument yet, I've never felt it limited my prospects or damaged my standing.

Just a data point -- I'm not gainsaying anybody else's experience.

268:

"You don't need a Kindle to read an Amazon book. You can read them in a web browser. Or using a phone app. The same is true of Google books (indeed, it appeared that Amazon was just copying Google when they implemented this). Yes, it works in Linux."

No it doesn't. Unless you have a physical Kindle, or a copy of the Kindle software (which works only on Mac, Windows, iOS and Android) you can't purchase books in the 'cloud reader'.

And Amazon weren't doing it to copy Google, but to get round Apple. Apple insisted that any book sales through the Kindle software on iOS devices include a commission to them, so they created an optimised-for-iOS website for people to read the books on their Apple devices without giving Apple a cut.

269:

I had hoped that the Google Books debacle would have been the test case that created a regulated "dumb pipe" that spat out e-books. Sure, the original plan would've resulted in the same monopolistic practices that Amazon is engaging in, but the blatant mission of housing all the books ever would more immediately attract regulatory action. One solution in that case would be making online book storage and distribution something like a public utility. Google or some independent agency would have all the books and receive a set rate to process payment per contractual instructions attached to each book. Before the settlement imploded, it looked like Google was nearly amenable to something of the sort. If the judge had laid some ground rules, and Congress had managed to address the orphan works problem we might have had a kludgy but regulated and workable alternative to various walled gardens fighting each other for supremacy.

Amazon is just a retailer that increasingly doesn't have to care about books as a product line. If they wanted to be supervillains and demolish the entire publishing industry, they really could manage it without unduly disrupting their bottom line. It's conceivable that they might want to take down publishers and established authors simply because contract negotiations with that many savvy suppliers is a headache. Since there are competitors, it would be hard to maintain an anti-trust action. Anti-trust law tends to work in industrial terms and would not likely take into account the non-fungibility of books. Amazon very well could show that they don't have a dominant enough position to control the market in books as a whole-- just the good books.

I worry that Amazon is such a big player that win or lose they're going to be detrimental to the publishing industry. If they follow their current trajectory, they will be able to exert iron control over the entire industry. If they crash and burn or get taken out by legal action, they're responsible for enough sales that authors everywhere would be scrambling until someone else eventually comes along.

Just looking at the direct effect that supermarkets have exerted on the industry in past decades-- pricing pressure, format, etc-- and how they are a tiny segment of retail compared to Amazon's position. The potential for harm is scary.

270:

Patrick, I could name names at Hachette. However, the vibe changed rather dramatically a few months ago. Can't think why ...

271:

Alas, the Google Books settlement (RIP) was flawed for a whole bunch of different reasons which are too tedious to drag up in public at this point, seeing that it's dead and gone.

(A good part of our woes boil down to the particular model of copyright we've ended up with. It's pervasive, it's broken, it has unpleasant failure modes that were utterly unpredictable at the time it began to assume its shape, and it's mandated by international treaty laws.)

272:

I enjoyed every part of this article, except this: "This fear is of course an idiotic shibboleth—we've had studies since 2000 proving that Napster users back in the bad old days spent more money on CDs than their non-pirate peers."

Napster users are not otherwise equal to their non-pirate peers. It is likely that Napster users were attracted to Napster BECAUSE they spent more on CDs and, therefore, stood to benefit the most from piracy. If so, the implication of the quoted sentence, that piracy encourages spending, is false. If so, the author included a shibboleth in a sentence intended to identify a shibboleth.

Great article, though.

273:

The thing is though that Amazon doesn't represent disintermediation in the classical sense (the sense that we all talked about enthusiastically in 1995). What it represents is actually *reintermediation* - because if you want to sell a book, it has to be available via Amazon.

Disintermediation isn't disintermediation when you're turning yourself into a layer between the creator of the work (the author) and the consumer of the work (the reader). All Amazon has done is taken advantage of the internet to displace other intermediaries.

274:

#100 - Communism hasn't been tried properly. This isn't a complaint but a statement of fact.

#234 - FYI, the first time I met Charlie he was networking with booksellers at a Science Fiction convention. He was good enough to include me in the converstation, I bought a copy of Glasshouse as a result and... How many of the self-publishers in this thread can make that sort of claim?

Libertarianism - I'm a libertarian (for values that say that if John and Jane Doe indulge in extreme BDSM in private that's no-one business bar their own as long as they don't try to force Jo Bloggs to join them in a 3some against Jo's will, as long as I don't place others at risk I should be allowed to drive as fast as I want... This does not remove the Does of their responsibility to not flog people who don't ask to be flogged, or to stop doing so when asked, or me of my responsibility to slow down when passing a school at 08:55 on a schoolday...)

Amazon - Yes, I buy stuff from Amazon, but not just entertainment media products. I've bought razers, DVD players, clothing, model kits, partly on convenience (for values of convenience that say it's more convenient to read a website and get stuff by post 3 to 5 days later than to soend £200 and 3 days on a trip to shops that offer me an actual choice), and partly because I'm finding vendors through Amazon who're charging less including P&P than the retail sticker price that the maker's website and all high street (include other "name" websites) all normally charge.

275:

Oh indeed. The Google Books Settlement was a warty beast that deserved to die without some serious revision help from people that just weren't involved in the process. I was a librarian when the scanning started and conceptually I couldn't help rooting for a fait accompli of Google having every book ever and forcing international law to be rewritten to accommodate such a handy thing.

I suspect that the next time we have a bite at that apple it will be when some entity like the Pirate Bay figures out a secure way to aggregate and deliver copies of all the content on the planet. Unfortunately, it will likely be Amazon or some similar company reducing authors to the same state as session musicians that will justify tossing books into the hopper along with software, music and movies. By then the idea of a regulatory framework or payment system will be long gone.

276:

Mitigating, but while the color models are doomed (or will be thinly veiled tablets, the way the Nook Color is heading), but the e-ink models aren't going anywhere, backlit screens are uncomfortable to read by a decent chunk of the population (completely aside from the ability to finish a book before the battery dies).

With the exception of the tiny subset of the population neophilic enough to have an e-ink reader but not to have a smartphone or tablet, you can expect anybody still using e-ink to continue to do so pretty much forever.

277:

Boycotts and courts are not the answer.

The answer is age old. It's called competition. The barriers to entry are not too high (a well done website.) But you do have to become competitive. Which means...

What does Amazon do right? First it's a brand. To compete, you need to develop a brand (which will not happen over night.)

Then realize you have two sets of customers: authors and readers. What do each need and want?

Readers need to be able to find what they want which includes easy purchase of a reader device. No-DRM. Reader reviews and suggestions. They want to download, read and share without the need to become a tech. wizard.

Authors need editing, cover design, publicity, etc., without a large upfront cost. Let the author set the price of his work and give a flat commission to the brand (20%?)

Keep it simple for everybody. Compete.

278:

These solutions only work for established author, not many people are going to back a kickstarter project from an auther that has no previous work to back them up, that means years of giving crap away for free before you can consider hiring an editor.

How exactly would reputation systems deal with genre seperation? A book can be a massive bestseller and still fail to appeal to people who aren't fans of the genre. If you just ignore people who don't like the style of the book you're just left with a bestseller list (with the same self-reinforcing problems bestseller lists have now).

Hmm, there are massive privacy implications, but you could set things up to consider rep entirely from people who have similar taste to you, which I suspect is the same thing Amazon is doing...

279:

I can see how Amazon sucks for suppliers and their relative monopoly on reliable online shopping makes them hard to ignore for physical items.

I may be harsh when I say this, but I blame suppliers alone for not competing with Amazon on ebooks, and that includes the authors. Publishers are being stupid? That's an opportunity for disruption: several authors could collaborate to make it easier for authors to self-publish, with things like an easy way to hire reliable editors.

280:
More importantly - so what if Amazon dominates the market? Who ever said that this would remain true till the End of Time? Go back 20 years and most people probably found it hard to see anyone other than B&N and Borders as dominant players, and now B&N is struggling to keep up and Borders is no more. Someone always comes along who figures out a better way to do what you're doing. Amazon will be no different.
20 years ago I didn't know either of those booksellers existed - though I spent ages in Eason's, Hodges Figgis, Waterstone's, etc. Amazon is a gorilla in the market this side of the pond too, though, and that's new.
281:

"Patrick, I could name names at Hachette. However, the vibe changed rather dramatically a few months ago. Can't think why..."

And yet, if you scroll to the end of the article here [1], there's a quote from the CEO of Hachette made just two weeks ago, and it seems that he's still in favor of DRM. Maybe he's the 70-year-old billionaire, but until he kicks the bucket, I don't see change happening. Or maybe that publishing house will have to go out of business. Quite frankly, as long as they engage in what I as a book-reading consumer consider to be hostile practices, it's going to be very hard to make me care...

[1] http://paidcontent.org/2012/03/31/419-will-hachette-be-the-first-big-6-publisher-to-drop-drm/

282:

Somewhat off-topic, but the self-publishing evangelists have struck a nerve with me.

I don't see the self-publishing mantra of tearing down the current publisher model completely and having authors strike out on their own being at all sustainable. In the long run, we would probably end up with publishing houses again-- all of the off-loaded tasks of editing, marketing and contract negotiation would encourage those specialists to club together rather than be completely freelance. The groups that are best at providing these support services would be able to be selective about who they represent, and likely their mark on the work would be enough added value to be marketable. So we're back at gatekeeping and tiers based on quality.

It's possible the interregnum of the book market being made up of unedited slush, vanity projects, and a reduced output of established authors working without a financial net would sour the public on reading altogether. If not, demand for more and better work would attract capital to recruit and maintain good authors and voila the book advance is reborn.

Rather than cheer the fiery death of the major publishers, I would prefer that they just manage to reform enough to quit sucking at all of those tricky technology things. Getting out from under their media conglomerate empires would help immensely.

A more fragmented market with lots of viable publishers would likely be better than the way things are now. Making every author a publisher seems like way too far to go. Pitting each author individually against their primary employer/buyer (Amazon in this case) without backup is just awful.

283:

I'm curious about Amazons ambivalent attitude to piracy. They know exactly what you have on your kindle every time it synchronises, but the don't seem to care if it is packed with sideloaded publications of dubious origins. This alo applies to books from their own bookstore that they know haven't been purchased by that user.
The only thing they seem to care about is not being seen as responsible. Is this part of their plan?

284:

Pedantic alert! Dante's deepest hole notwhistanding, of course. How is it that this man's concept of hell fas so pervaded Western culture and yet the "Hell Freezes Over" quip has always ignored that circle in which the actual Satan resides?

285:

Not to mention the Inuit who took on christian beliefs initially insisted hell should be in the sky and cold, versus heaven which would be warm and protected below ground.

286:

People only reading half the book?

Robert Horley @ 283: they could be ambivalent and say "I can't see it," or they could be proactive and delete suspected pirate material, and then deal with the volcanic backlash after Amazon eats all the Calibre news source epubs, Smashwords self-published work, free zines, etc. When people talked upthread about Amazon's commitment to customer service, they weren't fooling: they know better than to pull this kind of stunt.

287:

There are good reasons for Amazon not to be too picky about what's on their customers kindles, and not just a nod-and-wink at privacy.

Consider what would happen if AMZN appointed themselves the police and took a look at what's on my Kindle. They'd find all sorts of stuff that "shouldn't be there" -- copies of "Hull Zero Three" by Greg Bear and "Children of the Sky" by Vernor Vinge that I didn't buy, for example. Other stuff like "Impulse" by Stephen Gould that they don't even sell.

But if they tried to remotely delete them ...?

I could nail them in court. All three of those items are on my Kindle because I was asked to cover blurb them, either by the author or their editor. And the one AMZN doesn't sell isn't going on sale for another eight months.

Am I atypical? Sure. But I'm not alone, and for Amazon or any other ebook platform vendor to start policing their customers' devices too closely would be an open invitation to a class action lawsuit.

288:

For Hell to have "frozen over" requires all of it to be covered with ice, not just one part of it.

(Hell in Norway is the other possibility. I'm now annoyed to note that I passed within a kilometre of it back in January without registering it at the time. Hmm, we even went through the Hell Tunnel. Oh well. I can report that the vicinity, while snowy, was not frozen over.)

289:

4 a month is a lot? Eesh. I bought and read (kindle app) the entire Wrinkle in Time Quintet, plus 1 more, this weekend!

(and as a side note from someone else's comment, I reread regularly. I have an inordinate number of ebooks that are repurchases of books I've owned physical copies of for years. It's so very easy to buy something I'm in the mood to reread while traveling for work....

290:

The president of the Authors Guild, Scott Turow, said, "The irony of this bites hard: Our government may be on the verge of killing real competition in order to save the appearance of competition."

[Op-Ed, "E-book overkill
Justice Dept. trustbusters should've left Apple and book publishers alone.", Michael Shermer, Los Angeles Times, April 16, 2012]

291:

You don’t need a Kindle to read an Amazon book. You can read them in a web browser. Or using a phone app. The same is true of Google books (indeed, it appeared that Amazon was just copying Google when they implemented this). Yes, it works in Linux.

While it’s true you don’t need a Kindle to read your books, that’s not what people do. The overwhelming majority of people don’t read books in their Web browsers or using phone apps, they do it in their Kindle.

The Kindle, particularly more recent, more inexpensive versions, is what’s driving the boom in e-publishing. Those other ways of reading ebooks have been available for years, and yet ebooks never became popular.

So while you can do all those things, people aren’t interested in doing them. They want to read their ebooks on inexpensive epaper devices.

Sure, maybe Amazon will be dicks and try to block the Google books web site on a Kindle, but probably not.

I’m not so sure. Microsoft and Yahoo did it. I’d end your sentence on the word “Kindle.”

You need to be able to hit a button and have all the Kindle books on your Amazon account appear in your Google account. And that simple isn’t possible without some sort of law.

You may be right about that — this might be an area where aggressive regulation seems to step in. Unfortunately, this is precisely the kind of regulation that society currently has a superstitious dread of.

292:

"For what it's worth, I've been arguing against DRM at Macmillan for years, and while I haven't won the argument yet, I've never felt it limited my prospects or damaged my standing."

Yes, but you're in the Flat Iron building, so (a) you get an exemption for cool, and (b) you can ram other buildings like in Monty Python :)

293:
... for Amazon or any other ebook platform vendor to start policing their customers' devices too closely would be an open invitation to a class action lawsuit.

I just don't see any reason for Amazon to take on the role of copyright police on their devices. It will cost them money and not make them any more money. It's not their job.

Also, IANAL or Cory Doctorow, but I think it would open Amazon open to liability by removing the company from the safe-harbor protections of DMCA.

294:

"I'm curious about Amazons ambivalent attitude to piracy. They know exactly what you have on your kindle every time it synchronises, but the don't seem to care if it is packed with sideloaded publications of dubious origins. This alo applies to books from their own bookstore that they know haven't been purchased by that user.
The only thing they seem to care about is not being seen as responsible. Is this part of their plan?"

I'd put my money on 'yes'. The minute that Kindle started roaming your computer *and* screwing with your stuff (so that you noticed) is the minute that they'd lose massive market share.

295:

Digression
Once the big box store has killed off every competiting mom'n'pop store within a 50-mile radius, where else are people going to shop?

That's a great line, but I'm not sure how often it happens in Real Life.

I moved to a small town (population 22,000) a decade ago. Two years later, Wal-Mart came to town.

Downtown _has_ changed: we now have boutique stores, restaurants. They knocked down the mill that was the core of the downtown area (it was already closed), built an office block on the site.

The two hardware stores are still in here. One I patronize because the guys running it know stuff. And also my son likes the boutique root beer they sell at the counter. The other expanded into equipment rental. They seem to be doing fine, although I don't know their financial particulars.

Wal-Mart is where I go when I need something after hours, like a plumbers snake.

The existing smaller but chain retail stores are still here. The area where Wal-Mart went up has gone from a weedy dozen acres next to a quarry to a series of strip malls with yet more small stores and restaurants.

296:

"I could nail them in court."

Actually, you could not. They'd waive the EULA in the judge's face, and then take you away for sacrifice (like it says on page 666 of the EULA).

297:

I do enjoy the drive-bys dropping in with the "music/video is easy to produce and distribute online, therefore obviously so are books" opinion.

Or we can re-write it as: The mouse and the elephant are both grey, therefore obviously they can both fit through a letterbox.

Simple, really.

(Sorry, more sarcasm.)

298:

That's not quite true...
You can read anything you buy at AMZN on any kindle software, which runs on PCs, Android, iOS and of course the actual Kindle hardware.

So you're correct in that you're stuck in the walled garden, but the garden isn't locked into the kindle hardware.

And you can read non-DRM books on Kindle. (I know you didn't say you couldn't, but just wanted to throw it out there.)

299:

Charlie writes:

You don't understand what an agent is for. They're probably the last intermediary that's going to be dissed, because what they do is negotiate, on commission, to get me more money from everyone else. Seriously. They cost 15% of the gross take, but an average to good agent can double the amount of money extracted from the rest of the supply chain by the author/agent team.

What is this "rest of the supply chain" of which you speak?

Amazon Global Publishing will con-veniently cover all print markets...

(someone will pip up about Hollywood / film rights next. Bezos plans an app for that, too...)

300:

Serious Reply: Charlie is in the United Kingdom, and there are several relevant statute laws which don't appear to have an equivalent in the USA. A general legal principle is that a contract can't create a breach of statute law. I suspect that there are EULA terms in anything from the USA which would be stamped on by any court in Europe.

Frivolous Reply: Amazon would never see anything untoward, Charlie's Kindle is remarkably well-laundered.

301:
While it’s true you don’t need a Kindle to read your books, that’s not what people do. The overwhelming majority of people don’t read books in their Web browsers or using phone apps, they do it in their Kindle.

I actually don't know what the statistics are, but the overwhelming majority of the people I know read ebooks on their cell phones and tablets. Some of them have a Kindle too, but that just means they have more than one device they access the books on.

The biggest advantage of the actual Kindle in this regard is in my view is the battery life (admittedly a side effect of the e-ink), not the fantastical greatness of the display.

302:

Came across this yesterday, a recent series from The Seattle Times:

Behind the Amazon.com smile.

303:

@300: "Charlie is in the United Kingdom, and there are several relevant statute laws which don't appear to have an equivalent in the USA."

I would like to know more, from Dave Bell, Charlie, any commenter here, or hotlinked useful citation.

304:

Heh, you seem to have partly replied to yourself: any reasonable reputation system will be more fine-grained than a simple scale; when my tap is leaking, I want someone who has a good reputation as a plumber, and I don't care what reputation they have as a classical singer. For some of their other reputations, it may even be illegal for me to care.

In any case, genre separation is not the problem, the author can do that quite reliably. The reputation system is for sorting through what's good and what's not.

As for reputation systems vs what Amazon is doing, sure, it's a kind of reputation system. However, you don't want to hand the keys to the reputation system to a private company, not if you can help it.

305:

So why don't the publishers cut out the middle man, and sell their books directly to the consumer, at the prices they want to charge? The big six, especially, don't really NEED Amazon. They can tweet/blog/promote their own releases, have their own "recommended" method, maybe even going one up on Amazon. Let's say I like a book, like Scorpio Races. I could specify what I like about it: Pace, style, characters, genre, etc, and they'd tell me something else they publish that I'd like too. Make the ebooks work across platforms, no DRM, and let me share it the way I would a physical book.

Yes, there might be some piracy, but as someone who used to pirate? The main reason I did was because I wasn't sure I was going to like the music/book/movie, and I didn't want to spend what little money I had for entertainment on things that were longshots. Piracy led me to discover a lot of awesome artists, that I ended up buying the whole collections of, once I could afford it. To me, it's no different than checking something out of the library, just more convenient. And, in the case of movies, I didn't need to sit through 20 minutes worth of BS before getting to the menu. If you make the content easy, cheap, and accessible, people will buy it.

306:

I myself don't know how to crack the Kindle books, but I am to assume that if I were to, wouldn't I be a target for a lawsuit, if Amazon wanted their ebooks back? Wouldn't they be able to tell if I changed the code?

307:

Charlie, I don't suppose you know a publication date for Impulse? Searching Gould's site doesn't seem to show anything.

308:

Personally, I'm not sure I'd take an agent in the US, if only because there are no limits on who can be an agent in the US.

That said, I'd certainly contact an attorney with experience negotiating contracts, every time I have to negotiate a contract. And I'd hire an accountant to help work through the receipts. The nice thing about these people is that they work for flat fees, rather than 10% of something (something ranging from 10% of your advance to 10% of your lifetime earnings, depending on what you negotiated with your agent).

As for turning an agent into your publisher, that's about as bright as marrying your divorce attorney. The attraction might be there, but who's going to negotiate for you when things get rocky?

309:

Great blog post. However the comments chain has a bias to the desires of the author community and not the realities of their end consumer's price preferences. As a generic reader I don't want to buy most of the services bundled in the price of a book. Agents? Not interested, please take amazon's standard T&Cs. Printing, distribution, returns and working capital? Well yes, but only the $0.01 e-logistics costs. Typesetting? Editor should do the small bits that are not irrelevant anyway due to reflowable e-readers. Marketing? Hell no, inefficiently wasteful spend. Maybe this is part personal, but much like Hollywood movies I rarely find top ten books to my taste, so that's a lot of dollars aimed at the median consumer creating little value add for me. The only marketing spend I want as a consumer is R&D on the recommendation algorithm (inc. some human input from editors and readers) so I receive this 'marketing' spend only at point of sale and only targeted to me.

In fact the only parts of the chain I really value are author, editor and recommendation (nb. all largely fixed costs, hence suggesting a low price high volume pricing strategy in most cases). Amazon IMHO are vulnerable to competition on the latter two elements (I've given up trying no-names on kindle due to wasting too much time reading unedited dross where I did not understand the recommendation). Google, Netflix, Apple, Facebook etc all get recommendation engines (increasingly more than Amazon which has been filling my inbox with spam of late). Also, while dinosaurs, some of the big six may survive if they gut their marketing departments (or spin these off as add agencies focused on top 10 authors only), define more standard T&Cs (which they will get away with with their new authors, whereas the big names who could negotiate a better deal will anyway be hiring editors by the hour and publishing direct on amazon etc) and change business model to promote not authors (who are fundamentally un-ownable now you can easily self or amazon publish) but rather their own editorial abilities. E.g by promoting both the publishers name and the editors name in ebook titles (and refuse to sell to stores where these are not equally as browsable attributes as author and title - unlike movies currently I only rarely know the editor/publisher of my favourite books) and redirect remaining marketing spend to fund fan/reader groups to gain 'seed knowledge' to push recommendations as to who will like their new authors (ie feeding 'if you liked the books of Charles Stross, why not try Richard Winslade's new opus' into amazon's recommendation engine, but with an eye to maximise the authors/editor/publishing houselong term brand appreciation rather than short term sales through erroneous linking only to top 10 authors).

On a related point, I tend towards the the argument 'FFS it's only mainstream books not medical supplies, why do we care so much if a company that has profited diddly squit in 20yrs gets a monopoly in a low entry barrier market by eliminating a bunch of costs consumers don't value'.. However if you happen to be a competitor/publisher, I do think some posters are underestimating the barrier to entry of the users past purchase library if DRM survives. I believe the habits of the average consumer will alter to start reading certain books more than once when he carries them with him anytime a sentimental urge hits. So the library has a real monetary value quite aside from humans psycological collecting habits. Now you may say 'that lock-in is only as great as the hassle of downloading a drm stripper'. However most people won't and even among those who know how, I for one would feel uncomfortable uploading details of my stripped library to a competing store for fear of a knock on the door from the copywrite cops (dont fancy explaining to a judge that I only strip it if I own it). The consequence is that Amazon may end up with the only recommendation engine that knows my reading habits (inc what i tried and gave up) and that is a major barrier to entry (even if I try a new service, I don't come back as the recommendations are rubbish). All of which is just another way to agree that Charles is right and that replacing drm with watermarking is the only viable plan c for publishers (though I'd also suggest to add in my cost cutting plan above and hire a tech firm like kobo etc. to launch their own brand Facebook linked e-reader apps with a 6month release window advantage on their own big name authors while they still have locked-in big name authors to speak of!)

Thanks and sorry to be so verbose, this post is probably a good example of why editors are still needed.

310:

There's also the 1984 issue, in that case Amazon did delete what Amazon demonstrably knew were definitely infringing copies, as they had been sold by Amazon in areas where the book was still in copyright. And they faced a massive backlash. On that instance Amazon were vulnerable to being sued by the Orwell estate if they didn't act when placed on notice and faced significant negative publicity if they acted.

Following the debacle Amazon changed the contract terms so they couldn't do this. Before hand if they were aware of the breach and didn't act they could be sued for not taking reasonable action to prevent further harm to the right holder after being placed on notice, both from further sales of the unlawful content and by revoking previous unlawful sales and refunding the customers. With the changes in terms the revoking of sales would be a breach of contract in itself and therefore would not be a reasonable approach to take when placed on notice.

If Amazon are unaware of infringing content they have a pretty good defence for doing nothing about it, and have actually amended their contract so they have a decent argument for going very slow when they can't deny that they know about infringing content.

311:

As for turning an agent into your publisher, that's about as bright as marrying your divorce attorney

I can however point to the opposite case: Colin Smythe used to be Terry Pratchett's publisher. He very sensibly realised that his publishing business was entirely the wrong scale to cope with Terry's popularity, and renegotiated to become his agent instead.

(He still publishes, but he's very much a traditional gentleman publisher.)

312:

One thing to keep in mind that steam isn't just about games, at this point it's also about the platform. A lot of times I'll buy on steam, even it is slightly higher priced, partially because it's an easy way to manage my games.

313:

Re: O'Reilly & Amazon. Yes, Amazon sells O'Reilly titles at lower prices than O'Reilly. If there's less than $5.00 difference, I buy from O'Reilly; otherwise I buy from Amazon. But then I go to O'Reilly, pay them $4.99, and download non-DRM *.mobi, *.pdf and (if I wanted) *.epub files of the book. Win-win.

Amazon facilitates buying *mobi texts from them, but they don't insist on it. Third-party files aren't "suspect" in fact, Amazon facilitate loading them by providing an email address for the purpose. They advise you to check out Project Gutenberg and other out-of-copyright sources for free texts. And they allow 3rd-party publishers to email their *.mobi texts to your Kindle address for downloading.

Finally, you're not required to keep texts on the Cloud to view them on other devices. That's an option for saving disk space & forgoing file management, not a requirement.

I have about 75 books on my Kindle. I think 2 are newly released books "Big 6" titles purchased from Amazon at full price. A few are "daily deals" or other discounted items. Most are out-of-copyright texts downloaded from Amazon. The rest are from O'Reilly (some via Amazon, some not) and Pragmatic.

Take a look at the Kindle forums on Amazon. The real threat to publishing is all the readers who think most of the cost of producing a book is in the paper and ink, so no e-text should cost more than $5.

314:

anonemouse & bellighame
Erm, Hell has ALEADY frozen over ... according to the only man supposed to have toured it.
See Cantos: XXXII - XXXIV "Divine COmedy " book I.

316:

I suppose the most obvious answer is the same one as the author who doesn't want to design their own books might give - because they don't want to waste time and resources doing something that they don't really initially at least know about when someone else can do it better and they can share the proceeds equitably. But you know what's better than one other entity helping you sell yout stuff? A lot of other entities helping you sell your stuff, each of them bringing their own skills.

There are also the various holds that Amazon and other users of strong arm tactics have over publishers, from most favoured nation terms, which make it harder to compete on price, to the fact that Amazon might just delist every one of your books, print and e, if you look at them funny. You need deeper pockets than most publishers have to ride that tiger.

I'm not really sure what the endpoint of saying that publishers (or authors) need to compete with - for which, all too often, read 'kill' - Amazon is when really we just need an Amazon that doesn't make dick moves. It sounds a bit like saying that if you don't want your employer to exploit you either quit and start your own business or shut up. Plus, if every publisher did this at roughly the same time...

317:

I don't believe it has been assigned a definite publication date yet -- what I read and offered a quote for is a submission-grade mauscript, not yet edited.

318:

"... the philosophical issue of DRM, which on a personal level I find unnecessary for the books I write, and which from a business point of view may actually become an economic hindrance to publishers in the long run. Charlie Stross mused about this recently, and I recommend his thoughts to you. Other authors may feel differently than I do on the philosophical and economic desirability of DRM for their work, and that’s fine, and I support their choices. My belief is every author should have the ability to say how their work is presented to consumers in the marketplace."
DRM On My Books
April 16, 2012 By John Scalzi
http://whatever.scalzi.com/2012/04/16/drm-on-my-books/

319:

Correct, insofar as being a literary agent is not a statute-defined profession. In fact, I'm not aware of any educational or professional development framework for training agents; it mostly happens via informal personal apprenticeship. However, it takes little effort -- just a bit of common sense -- for an author to do the basic due dilligence ...

You look at (a) their background, (b) their client list, and (c) their business structure. That should tell you 95% of what you need to know in order to decide if they're what you need.

If the agent has a bunch of "name" clients you've heard of, this is a good/bad sign. Good because it means they know what they're doing, bad because a new client will be relatively low down the pecking order. Good again because you can approach a client and ask, "would you recommend your agent to represent me?"

If you don't recognize their clients but they're part of a big name agency, then what you're looking at is a junior agent with lots of room for new clients but also with a solid framework within which senior agents will mentor them.

And if they've got no track record at all as an agent, it's nevertheless worth checking their background.

When I hooked up with my current agent ... she had no clients: I was Patient Zero. However, (a) she had a long and visible career as a senior editor in my genre sector behind her, and (b) she was publicly switching careers and teaming up with a well-known agent to form a new business. So I was reasonably confident that she knew the business, that I'd be reasonably high on her list of priorities, and she had a mentoring arrangement in place for deaing with the stuff she didn't know.

So: not as fraught as you might think, as long as you apply some common-sense precautions when vetting prospective agents and don't let your desires blind you to potential problems.

320:

My understanding is that Amazon retains the technical capability to delete books from users' kindles. However, there's a mandatory requirement now that any such deletion may happen only on the personal say-so of Jeff Bezos himself, and would presumably happen only if the fallout from not doing so (big lawsuits?) would exceed the PR damage incurred by the process.

321:

The prospect of a class action is likely to give Amazon pause in its international business, but here in the States the Supreme Court has recently upheld corporations' ability to write terms of service that require customers to waive their right to join a class action. Content providers like MS and Sony have already updated their TOS's to include such waivers, and if Amazon hasn't yet, I'm sure it will soon.

There IS still the court of public opinion, and as Brett @ 310 notes Amazon doesn't want to risk that kind of backlash again.

322:

Note that Amazon stock is being sold at a PE of 134. They don't have to make a profit to let Bezos sell stock and pocket a lot of dollars. In the last 2 years this has been hundreds of millions of dollars.

It looks to me that his goal may be take home dollars not a lasting legacy company.

323:

You have probably gotten this infer already, but the newest version of Requiem will crack and strip FairPlay DRM from books sold through the iBooks store.

324:

So why don't the publishers cut out the middle man, and sell their books directly to the consumer, at the prices they want to charge? The big six, especially, don't really NEED Amazon. They can tweet/blog/promote their own releases, have their own "recommended" method, maybe even going one up on Amazon.

There are probably a lot of other reasons, but that would be more difficult for me as a book buyer. I couldn't use just one store to buy all the books, but instead I would need to use at least six other book stores, and I probably wouldn't remember which publisher sells which books without trying each of them. Amazon provides an easy marketplace for (almost) all the books.

That's not the end of it, of course. Most of my book-buying nowadays is roleplaying games, and many (small) publishers run their own web-stores. This means I use those stores to buy the books. I do it because it's my hobby, I follow the small companies closely and I can remember who publishes what.

This is probably also because I want to support the almost-hobby publishers. I don't have the same kind of devotion to the publishers of, for example, Charlie Stross, even though I do like his books.

That's one reason why not.

325:

@320 - I think that any wifi-connected device (like the Nook) has this capability. People just know about Amazon because of the 1984 debacle.

326:

Jonathan asked how the law concerning consumer contracts (including EULAs) differs in the UK. Well, in the UK we have The Unfair Terms in Consumer Contracts Regulations 1999. This says in §5(1):

"A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer."

And in §8(1):

"An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer."

So if Stross were to sue Amazon for remotely deleting the books on his Kindle, Amazon would not be able to use the EULA to avoid liability.

327:
Communism hasn't been tried properly. This isn't a complaint but a statement of fact.
Actually, communism not only has been tried properly, but works fine. It has worked fine for hundreds of thousand years: communism is the default social mode for the Homo genus, and has been since before we tripled our cranial capacity.

The problem of communism isn't that it doesn't work since it does. It's that it doesn't scale. Communism works as long as each individual is capable of holding responsible all others individuals within the "community" sphere.

Communism breaks down against the Dunbar barrier. Once the number of people you're interacting with starts going above 150, you become incapable of managing their existence relative to yours. You become incapable of making sure they provide "according to their capabilities". Accountability breaks down, and with it the social compact.

And for hundreds of thousand years, we were incapable of dealing with that. As a result, everytime a social structure went against that limit, it broke into fragments that separated and no longer interacted; the social compact was restored, and the society went on.

Then we invented civilization instead of communism, and we no longer needed to break social units into smaller pieces.
328:

Yes, that's the impression I've been getting lately, that he'll cash out at one point, once he's gotten a certain amount of assets / money.

However he'll need a lot more than a few hundreds of millions of cash to buy up Lockheed-Martin (or one of the few comapnies with real experience in getting a payload into orbit), once he realises that rocket science is a lot harder than he first thought when he started Blue Origin.

329:

Amazon carries two main kinds of ebooks - books from Real Publishers, which cost ~50% more than mass-market paperbacks, and mostly-self-published ebooks in the $1-3 range. For instance, Rule 34 is US$7.99 for mmpb, $12.99 ebook, and they're apparently dumping the hardbacks at $10.38 (formerly $25.95, probably discounted.) I'm sorry, but to me an ebook is like a paperback book without the dead trees or associated distribution cost attached, and an ebook with DRM is like a ratty used paperback. (I guess they've got some price variation - Steven Brust's recent ebooks are $9.99.)

I got a Kindle as a vendor door prize at a trade show, so the price was right. It's wonderful for reading on airplanes, ok for reading at home, and useless for reading in the bathtub, and with help from Calibre, it's been great for reading books from Project Gutenberg, last year's Hugo nominees, books from DRM-free publishers, samples from Baen, etc. Amazon's Kindle ordering system is annoying enough that even aside from price I haven't used it to buy ebooks there, though I've happily bought dead-tree books and other merchandise from them in the past.

330:

I do wonder if the reason that so many execs fear piracy so darn much is because it is what they'd do in a heartbeat if they could. It is pretty much a prerequisite of rising to the top in any industry that you be a sociopathic, opportunistic, fiend, it is their business model. They don't realise that most regular people (insomuch as there is such a thing as a "regular person") would not take an opportunity to chib their own granny for tuppence.

331:

> You need to be able to hit a button
> and have all the Kindle books on your
> Amazon account appear in your Google
> account.

How are they going to do that? Bear in mind there's no wifi here, and even if I was inclined to pay for some kind of cellular-data service for a phone/pad thing, I regularly travel to places where there's no cellular (or dialup) phone service. And those are the places I'd most want to bring a reader device to.

Considering how few bookstores there are to serve the population, I'm guessing the vendors' attitude would be "F you, we have enough customers in urban areas, we don't need you."

332:

I am about to publish an e-book through Amazon, and I will opt for no DRM restrictions so that my memetic message has a better chance to propagate far and wide across the Internet. I will also opt for the lowest possible price on my e-book. There is no reason why any e-book should cost more than U.S. #9.99 and the greedy publishers had better get used to the modern age. They are all a bunch of trust-fund kiddies anyway, and they want the glamor and cachet of being hoity-toity publishers without the existential angst that the rest of us live with. The People, Yes; The Poetry, No.

333:

What i would like to know is exactly which devices cannot do this because amazon's "we promise not to do this again" does not fill me with confidence. They should not even be inspecting the damn things in the first place.

334:

[If publishers went direct] I couldn't use just one store to buy all the books, but instead I would need to use at least six other book stores, and I probably wouldn't remember which publisher sells which books without trying each of them. Amazon provides an easy marketplace for (almost) all the books.

But intermediaries might fill in the gaps. You could imagine, say, LibraryThing (or something of its ilk) collecting reviews and gathering a comprehensive enough catalog to serve the discovery functions that Amazon does now (for at least some of their customers), while referring potential purchasers to the publishers' site (whichever it might be for a particular book) when they'd actually decided to buy.

(There are certainly precedents for this sort of thing --- travel aggregators like Orbit and Travelocity. Ror that matter, Abebooks will find used books from small sellers across the US right now if you know what you're looking for, though they're weak at best on current editions and "more like X" discovery.)

335:

#333 the only devices that are totally safe from this are ones that are not wifi enabled, or ones where you never turn the wifi on.

336:

> Amazon was founded in 1994 by Jeff
> Bezos. And today it's the world's
> largest online retailer.

You know, looking through this thread, I realized Amazon reminds me a lot of another company - Sears, Roebuck & Co.

Back in the late 1800s, Sears offered something nobody else (in the USA, at least) was doing - a printed catalog where you could browse tens of thousands of items, from light aircraft and prebuilt homes to buttons and tableware. Just flip through the catalog and write your selections on one of the tear-out order forms, drop it in the mail, and you didn't even have to hitch up the horses and drive them to town.

Basically, the same thing Amazon is offering - a comprehensive catalog, fast (for the day) service, and things you probably couldn't buy locally, delivered right to your door.

Sears ran atop the US Postal Service - catalogs went out that way, orders came in that way, and orders were delivered that way. Amazon runs atop the internet and still uses the USPS for some of its shipping; at least, that's how some Amazon orders have shown up at my door.

Sears had a hammerlock on retail sales for generations. It finally ran head-on into something new - the local department store. Plus some suicidal mismanagement, of course. And now the wheel has turned again.

Looking further into the future, it's interesting to speculate what new thing might bring Amazon down.

337:

Possibly but i don't think anybody really knows if for instance it 'calls home' when you connect it to usb, there are models of photocopier which do this for example. The carrier iq clusterfuck shows we have no real idea what is baked into off the shelf devices, rooting 'em has to be the only way really.

338:

@336:

"local department store"

Make that, "local chain store."

339:

Alain writes:

Yes, that's the impression I've been getting lately, that he'll cash out at one point, once he's gotten a certain amount of assets / money.
However he'll need a lot more than a few hundreds of millions of cash to buy up Lockheed-Martin (or one of the few comapnies with real experience in getting a payload into orbit), once he realises that rocket science is a lot harder than he first thought when he started Blue Origin.

Elon has only put low hundreds of millions into SpaceX.

Rocket Science is a lot harder than he thought, too, but they're generating cashflow quite nicely now and have a perfectly workable medium launch vehicle and HLV in progress, and a nearly man-rated capsule.

Elon didn't buy BoeMart. And won't. He hired a few mammals out of BoeMart, but in a striking turn of events Boeing and LM both formed startup-like tiger teams to do their capsules, as they felt that their existing infrastructure would probably fail.

340:

Honestly, I don't understand the Amazon animus. Everyone expects it to start turning on its authors (and customers) as soon as it succeeds in eliminating all competition. Nonsense!
The company's core values include a customer-centric focus and a commitment to keep margins low. I have been thrilled at their ability to keep to those values. I have never had a bad customer experience from Amazon and believe me, I have bought a lot of stuff, including hundreds of e-books. I cannot imagine their turning on us and destroying the image they worked so hard for.

341:

Bill, the MMPB of "Rule 34" has not been published yet, and won't be out until July. When it comes out, the ebook price will drop to match it.

You're comparing pre-orders with available products and drawing the wrong conclusion.

342:

All this wringing of hands about Amazon becoming the next evil empire is wasted effort. Unfortunately, as a baby boomer, I am part of the last generation of book readers. Looks at the statistics over the last decade, fiction readership of books has be declining steadily. In other words, as future generations get older, the book (print or digital) is pretty much doomed, with the exception of some nonfiction works (and of course textbooks).

343:

There is a missing comparison when comparing Amazon to the "traditional publishers," which relates to the fact that the trad pubs integrate into physical networks of brick and mortar stores.

If a book is to be published and distributed through Barnes & Noble (or Chapters, or WH Smith, or whatever chain one might consider), then books need to be physically distributed, generally in fairly small quantities, to each location. In my country, there are several hundred Chapters stores, and, generally speaking, any book that is to be distributed by Chapters gets distributed by nearly every location. There may be exceptions to that, but this is the common case, and it's worth poking at it a bit.

If I have a book that seems popular enough that they want to sell it, they have to pull in some number of crates of it, and distribute them across their supply chain.

A book that is not quite that popular will have a challenge getting chosen altogether.

And in practice, there may be a few copies of the book at each store, and, with the vagaries of peoples' desires, some stores sell out, perhaps leaving some readers unsatisfied, and other stores fail to sell all their copies.

Amazon (or, in my country, Indigo, a "branch" of the Chapters empire) changes this up. They can estimate sales, in much the same way that 'brick and mortar' stores do, but they do something rather different. They merely buy a few crates of that book. The "impedance mismatch" where some stores have too many copies and other stores have too few disappears. Rather, when someone orders a copy, they merely pull a copy from the box and ship it out.

And Amazon can lower their thresholds, which is nice for authors of slightly less popular works. That book on Erlang or Haskell, that wouldn't sell enough copies to make it worth hawking at a book chain that won't sell too many copies outside "tech neighborhoods," can sell nicely to just those that want it. And if that book turns out to be unexpectedly popular, they can pretty likely cash in on that more easily than someone sitting at the end of a supply chain that looks longer.

344:

I didn't see anything on the incredible profit the publishing houses earn via DRM publishing. Perhaps the book sells for less, but the cost to produce the book is practically nothing, which means the profit percentage must be huge compared to traditional publishing. Times change, traditions change, and so must businesses. Viva the innovator who can create a new industry.

345:

I realize you're probably a drive-by commenter, but for anyone else who is going to assert that ebooks should be free, or near so, because they're free to produce: Charlie has a link, right on the right side of his blog, that answers that. Common misconceptions about publishing

346:

Printing a paperback book costs (see URL in link) about £2.20 if you want two thousand - some vanity-publishing services charge twice that, probably if you're printing ten thousand and don't mind them appearing in a container at Guangzhou dockside it'll cost less than half that. So you are making a couple of pounds per book more if you sell an ebook rather than a paperback for a given price.

347:

Distributors are where the big money is; deals with small publishers for distributors who are distributing to lots of large bookshops might well ask to keep two thirds of the cover price!

348:

Amazon definitely have the ability to remote-delete things from Kindles, because that's what enables them to allow you to refund ebooks; which is awesome, you can buy an ebook and, provided that you notice within a week that it's one that you would hurl at the wall were it on paper, you can get your money back!

349:

And then there's the Kindle Select program for authors, which attempts to get (especially the popular ones) them to sell ebooks through Amazon only,by offering incentives, most of which will not pay off well except for the popular authors. But Amazon wants everyone, on the very reasonable grounds that nobody can actually predict which authors will become popular.

The fact that this will help competitors wither on the vine--oh, well. Amazon sees value in becoming the biggest slush pile on earth, because if they have rights to all of it, they'll have the rights to the gems. Unfortunately for their competitors, the vast proportion of ebook sales for non-well-known authors do come through Amazon, which gives the lesser known an incentive to go through with Kindle Select, thus adding to Amazon's advantage.

Given the limited space of most print publishers, and the fact that 90% of everything is crap also means that 10% of everything is not-crap, means that a lot of unknown authors are going to give up on print (often after several years of attempts) and move into electronic publishing.

Especially when some reasonably well-known published in print authors have also publicly thrown up their hands and moved to independent publishing. Of course, these people already have a fan base for say, Attack of the Rockoids vol. 32, which lesser known authors do not.

However--if one has to wait three years for a submission to be read by _anybody_, there are some good new authors who aren't even going to bother. I know one guy who had a reasonably well-known author for a mentor, who hand-delivered the manuscript to a well-known editor with that author's recommendation, and it really has been three years after the editor swore they'd look at it by Christmas. (I have read the book and I laughed my butt off, in a good way. Christopher Moore has competition).

So Amazon is trying to lock up *all* sides of the market, and the print publishers aren't doing very much to look at the author's side. They don't have the time to read slush, and I suspect have a select list of agents they pay attention to for new stuff.

I don't know what the solution to that end is going to be yet.

350:

One perfectly good reason for the Amazon animus is that they treat their warehouse employees badly.

I'm no expert on the subject, but from my reading it appears that they are no worse than other online merchants.

Nonetheless, I am a frequent Amazon customer.

351:

Non-"e-reader" Android devices (or cracked Android e-readers) running non-bookseller e-reader apps - I use a B&N Nook Color running the CyanogenMod Android flavour, and the Aldiko reader. This does make buying books on the go hard, though - which can be diluted as an issue by having Calibre serve your library over the internet.

352:

Unfortunately, as a baby boomer, I am part of the last generation of book readers

This isn't actually a fact. Draw your own conclusions about dirty hippies, boys with funny haircuts, baggy/skinny trousers, etc, etc.

353:

I think part of the reason Amazon is so railed against online is that Amazon serves the masses. It isn't a nice, neat, relatively hard to access, little club. It's just there and it has what you want. Mass market is always despised.

354:

Elon Musk hasn't hired a few mammals from Boeing and Lockheed Martin, he's seduced thousands of top notch young engineers from those places (and other corps), to come and help him define and bring to fruit his space vision.

He's also seduced Congress, the White House and parts of NASA into thinking that his effort is vital to the survival of the US as a space faring nation.

The guy is a master seducer at the Steve Jobs level, and he has even more computer smarts than Steve Jobs ever had.

Most of all Musk is still very young. He can afford to put in 20 years of effrot in order to reach his goal to get to Mars, and in the process, bring along quite a few of his eager employees.

Can Jeff Bezos do the same?

Does he want to do the same?

There's no disintermediation possibility there, no excess fat to cut, no way to get to space any easier than the way Spacex is doing. It's all science, engineering science, engineering issues, and then still more engineering science which might in the end give some very bad answers.

While there is a remote possibility of a certain future cash flow for Blue Origin, it's very tiny (compared to the cash flow from selling TVs and other consumer electronics, and hum, er, books, on the Web) and it's heavily subsidized by US tax dollars. There's a sharp limit to that. There's an even sharper limit to the number of repeat trips by nerdy millionaires once they've flown once, just once, on a few orbits or on a sub-orbital flight.

355:

Alain wrote:

Elon Musk hasn't hired a few mammals from Boeing and Lockheed Martin, he's seduced thousands of top notch young engineers from those places (and other corps), to come and help him define and bring to fruit his space vision.

He doesn't have thousands of employees, it's 1500 as of last month. Many came out of college or from non-aerospace fields. (Disclaimer, though no active project is going on, I have had discussions with SpaceX about buying launch vehicles for various projects in the past).

He's also seduced Congress, the White House and parts of NASA into thinking that his effort is vital to the survival of the US as a space faring nation.

It is. Space activists understood the issue as soon as Columbia was done hitting the ground. NASA got it - very significantly - within the year after that. When Bush had his senior WH science people have NASA take the long step towards moving away from Shuttle and towards colonization, it was clear to everyone that basic manned access to LEO was not going to be NASA affordable anymore. They had to focus on going beyond. The Station people got right behind COTS. Dragon started development in 2004, and there were a number of competing projects running along by the time COTS solicitations went out in 2005. They didn't even win in the first COTS round.

During the original 2005 COTS industry day, senior persons at NASA who will remain nameless admitted to the assembled crowd of proposers that the Station was doomed to abandonment and burnup shortly after the last Shuttle flew if they couldn't find commercial cargo and eventually crew delivery services.

The guy is a master seducer at the Steve Jobs level, and he has even more computer smarts than Steve Jobs ever had.

Perhaps. I never met Jobs, I have met Elon briefly.

Most of all Musk is still very young. He can afford to put in 20 years of effrot in order to reach his goal to get to Mars, and in the process, bring along quite a few of his eager employees.

Probably. Note that SpaceX becoming commercially viable is a necessary step along the ways; he can't fund much more R&D out of pocket, and their cashflow level just recently stabilized operations costs.

Can Jeff Bezos do the same?

Probably.

Does he want to do the same?

Probably.

There's no disintermediation possibility there, no excess fat to cut, no way to get to space any easier than the way Spacex is doing. It's all science, engineering science, engineering issues, and then still more engineering science which might in the end give some very bad answers.

This is news? I've been doing space stuff since the 80s...

While there is a remote possibility of a certain future cash flow for Blue Origin, it's very tiny (compared to the cash flow from selling TVs and other consumer electronics, and hum, er, books, on the Web) and it's heavily subsidized by US tax dollars. There's a sharp limit to that. There's an even sharper limit to the number of repeat trips by nerdy millionaires once they've flown once, just once, on a few orbits or on a sub-orbital flight.

He's not in it to disintermediate. You're taking a narrow view of Bezos. You're suggesting that he's a one-trick pony.

You're also suggesting that suborbital hops are the totality of his goal. Which he's explicitly said goes out to Orbit and beyond, so I don't know why you'd say that...

356:

Authors are not customers

357:

Apologies for posting anon -- I am on my walled-garden iDevice and cannot be bothered to fill out the registration on it to create an account.

But still: Steam's customers are prone to voluntary vendor lockin? Have you TRIED any of the alternatives? They're horrible.

Having said that they carry their horribleness over when they cross publish on Steam too. No, EA, I do not want an account with you, nor you, Microsoft, I already have a Steam account. What's that? I can't play the game I just bought on asthma unless I create an account with you anyway? Bah!

358:

And speaking of walled garden idevices... That would be 'Steam' not 'asthma'. Honestly?

359:

"He's not in it to disintermediate. You're taking a narrow view of Bezos. You're suggesting that he's a one-trick pony.

You're also suggesting that suborbital hops are the totality of his goal. Which he's explicitly said goes out to Orbit and beyond, so I don't know why you'd say that...
"

No, that,s not what I'm suggesting. I'm suggesting that there it is very unlikely that there is room in space for libertarian capitalists.

To get the steady stream of billions necessary to go to high obrit and then to Mars you have not only to accept money from big government bureaucracies, you also have to court them, seduce them, work with them, and of course see to it that taxes stay high enough to generate those billions.

Then again, maybe both SpaceX and Blue Origin will fail and maybe the French and the Germans will underwrite ESA funding for the British Skylon project and Bezos and Elon will eventually get to Mars by way of Heathrow and the Rosa Luxemburg Station.

I just can't wait to see the video of Speaker To The Plants cuting the ribbon to the hatch of the first true spaceplane.

360:

Remember also that communism (in the Dunbar number limited community described here) happens among the wealthy, as well as the poor.

I'm pretty sure that "communism of the rich" has been tried as a governing strategy, and found wanting. Generally, it appears when bank presidents get wrist slaps for crimes that ordinary people go to prison over.

361:

Alain wrote:

No, that,s not what I'm suggesting. I'm suggesting that there it is very unlikely that there is room in space for libertarian capitalists.

You had a funny way of saying that, then.

And I have little faith that your current statement is true. There's room in space for anyone who can afford to play there. Right now, that's essentially a bunch of telecommunications companies and five governments.

SpaceX was founded in part to try to get the ball rolling on the lowered launch cost raised launch demand curve which the economists thing is out there.

Also, because Elon wanted to launch this tiny little fractional-spin-gravity mouse biology test sat into orbit for a few months and was essentially launch providered into such a frustrating state that he was convinced he had to be able to do better. (Thank you, Mars Society...).

To get the steady stream of billions necessary to go to high obrit and then to Mars you have not only to accept money from big government bureaucracies, you also have to court them, seduce them, work with them, and of course see to it that taxes stay high enough to generate those billions.

Alternately, one figures out how to do things with hundreds of millions of dollars instead of billions, and then with tens of millions of dollars, then with millions of dollars, then with less. And just goes and does them.

The "NASA WAY" of doing Falcon 1, Falcon 5 (now cancelled), and Falcon 9 would have been 3-8 times as expensive depending on how you cook the numbers. People were for a long time convinced he was cooking the books. Finally, the NASA cost model and DOD cost models have taken the SpaceX actual costs and manpower into account.

That's not to say everything they do will be 5x cheaper. But it's something. The more you open up and make cheaper, the more opportunity awaits.

362:

Actually they are both very easy to produce and distribute online.

However, if you want to publish them online, that's a stone-cold bitch, because someone has to program the legal systems which run music and books into a website. The problem comes very close to being non-trivial.

363:

I'm assuming a very fair contract for the sake of this thought experiment. The contract would have good flexibility, including a clause which says something like, "If you pay for the editor/copyeditor/cover artist, we will increase your reimbursement by X, as we are not bearing this expense."

364:

Even that number is deceptive. It costs the publishers far, far less than that, even for smaller print runs, because of gang printing.

I had this same sort of conversation about digital comics, where people believe that the cost of producing the actual object the work is on is vastly more expensive than it is.


365:

Charlie, thanks again for pulling back the curtain. I really enjoy your posts about publishing.

That being said, it seems like there are two sets of cases where you need your agent. One of them can be handled by software and should be part of the "package" under discussion. For example:

if books_sold=10,000
then
charlies_percentage=percentage+1

or whatever the actual numbers might be. Software can also handle issues like how long a book has been in print, or how many books you've written. (Though if you sold a book on Perl through O'Reilly instead of through Futuristic Publisher that might cause problems with the software - at that point you need someone to call Author Services and sit on hold...)

The other cases involve intangible issues that can't be handled by software, such as "Emma Watson says she wants to play Mo, so Charlie should get more money." Obviously it requires a human being to understand and negotiate this one.

You've also identified something that doesn't make sense to an outsider. Why are you negotiating financial stuff with your editor? Shouldn't the artistic functions and financial functions be handled by different people? Can you explain why this issue is handled by the editor instead of someone else? It seems like the same logic which says "Charlie should be spending his time writing books, so someone else handles the business end," would also say, "Patricia Neilsen Hayden should be editing books, not negotiating financial issues."

366:

For the rest of us, what is "gang printing?"

367:

Bezos definitely knows (at least now) how hard it is to get into space. And he hired a lot of experienced aerospace people for Blue Origin, and has done a pretty good job of giving them the freedom they need to do their job. It doesn't necessarily make a lot of sense from outside because they're so secretive (when I interviewed there, I had to sign a pretty restrictive NDA just for the interview), but they know what they're doing. It's just not my cup of tea (plus I didn't really want to move to Seattle).

368:

To the person about big box stores driving out the local small stores when I moved to Nerang 25 years ago there was a Mitre 10 hardware store (Small franchise chain) at the post office strip mall on the quieter 'old' part of town across the river, a BBC Hardware (mid size chain) across the Highway, a small old school hardware store down the road from the supermarket centre sort of opposite the BBC which had been there for like decades - you could still buy individual nails and screws there - sorted into little boxes...
and another small retail store in a strip mall up the road from where I lived.
Then Bunnings the hardware equivalent of Wal Mart in Australia opened in a sort of out of the way but geographically central part of town. In three years only the little store up the road was left and he survived by going into swimming pool maintenance in a big way.

369:

Charlie@341 - Thanks, that makes sense.

370:

Just an example of EU consumer protection law, though I don't see anything which would directly apply to Amazon furkling around in my Kindle.

http://ec.europa.eu/consumers/cons_int/safe_shop/fair_bus_pract/ucp_en.pdf

There's a couple of items in the blacklist which might apply to Amazon's unfortunate habit of advertising items they aren't supposed to sell in Europe, because of local distribution rights.

371:

At a minimum, if you do remote uploads you need to be able to check for free space. There's a less clearcut reason for deletion ability, in material such as newspapers and magazines.

I don't think there's a single good answer for all products and all readers.

372:

Then again, maybe both SpaceX and Blue Origin will fail and maybe the French and the Germans will underwrite ESA funding for the British Skylon project and Bezos and Elon will eventually get to Mars by way of Heathrow and the Rosa Luxemburg Station.

I just can't wait to see the video of Speaker To The Plants cuting the ribbon to the hatch of the first true spaceplane.

That sounds almost crazy enough to be a plausible prediction. It might be something of a prestige project, but Europe has high speed rail. And David McAllister is State President of Niedersachsen. Sometimes reality starts to sound rather like a Japanese cartoon series...

373:

Gene, you don't see anything about the huge profits publishers make, because it isn't true. You want to know why? here's how books are made. Note that the difference between a paper book and an ebook is the last couple of steps ... out of 17.

The "huge profit" you think is in there actually mostly goes to the supply chain -- either wholesalers and bookstores (each of whom make more than publishers and author combined) or to Amazon.

374:

Tom, that's not what it costs to print a paperback book. That's what Grosvenor House would charge you for a shedload of paperbacks. GH are a profit-making business targeting ignorant self-publishers, and if you paid them that much you'd be ripped off blind. Actual costs for printing a paperback in quantity, I'm told are on the order of 50p in the UK -- more like 50 cents in the USA.

375:

Alex, you did a bit of a fly by on my point: Equating the production of (professional or near-professional quality) music or video with that of books (specifically novels) is flat wrong.

(I do agree with your point that in the case of any produced content, it's easy to just throw something out onto the web, but without some kind of legal framework it is most definitely not published)

376:

Alex R: Why are you negotiating financial stuff with your editor? Shouldn't the artistic functions and financial functions be handled by different people?

Because job titles do not reflect the reality of what people in various occupations do.

Let me give an example: one of my editors at a big six publisher. She's a senior editor. What this means is that her job is not to edit: it's to curate an imprint, which means acquiring new titles that fit within the imprint's brand identity, and managing a production line that emits 100-150 novels each year, coordinating with Marketing and Production and Sales to ensure that the incoming manuscripts are turned into professional-looking books. Her job is way too high-level to edit books in person: it'd be like a general officer trying to micro-manage a platoon. Just reading every title she acquires so she knows what she's talking about in the meetings is a full-time hobby for a voracious reader. So most of the editing is out-sourced, as is the copy-editing, and the proofreading, and the typesetting.

Do you want to know who edits my books that come out through this editor's imprint?

.... My agent.

But. This is just how things work with one publisher. Things work differently elsewhere. Other publishers keep different parts of the picture in-house. At Tor, for example, you'd find over a dozen editors working gainfully on the imprint that senior editor at $OTHER_PUBLISHER is responsible for, and each of them is acquiring, curating, and editing their own authors in their own sub-list.

(Which should explain, in miniature, why talk of ditching particular specialities as "unnecessary" is dangerous and deceptive, and why the nice clean lines of the block diagram of "the publishing process" don't actually always correspond to what's going on in real life.)

377:

The difference in price between a paper and eBook is not paper minus 50p. It's paper minus (50p times percentage of the overall markup) from that stage onwards, minus physical distribution costs.

378:

I do enjoy the drive-bys dropping in with the "music/video is easy to produce and distribute online, therefore obviously so are books" opinion.


Having spent 2 years independently producing an album, for both on-line and physical sale, writing the music, re-tooling the studio to record it well, networking with musicians across the world to find collaborators, recording, editing and mixing, sourcing professional mastering services, designing artwork, packaging, etc, sorting the legal requirements with performance and royalty agencies, sourcing ISRC and barcode data (mandated for online sales by the aforementioned Amazon and iTunes), identifying a digital distro company, engaging with online and print media post launch in the hope of the odd mention/play/review here and there, I can assure you that the word "easy" is not one that ever actually came to mind.

The end result might be consumed in maybe an hour whereas the end result of OGHs hard labour might take a little longer, but easy? Er.. No.

379:

Every creative process looks easier from the uninformed outside.

"Painting? That Picasso dude, nah, that's easy! Just get some paint and a canvas and slap out a couple of rectangular women ... money for nothing ..."

380:

"money for nothing and chicks for free." as Mark Knopfler sang.

381:

Hope you don't think that I was trying to say that one is easy and one is hard, I was trying to point out that it's not really possible to equate the creative process for one medium meaningfully with that of another, and people doing so are almost always dead wrong.

In fact, it's seldom correct when comes to the creative process even in a single given medium to say anything like "$creative_artist was successful using $process, therefore everyone using $process will be successful".

Aside: Speaking as someone who couldn't carry a tune in a bucket, I have nothing but the greatest respect (even awe) for those who can and do create music.

382:

I've heard that kind of argument about s/w writing.
It usually runs along the lines of: Some teenage hackers have broken into secret military sites, so all you need to write your DSP algorithms and code them up in SHARC assembler to interface with custom C++ code is a bright teenager - why are you charging so much?

383:

Corrollary for the "why are you charging so much", made by senior management within the software industry: Sure practically anyone can do your job, and what do you really do all day; so why are we paying you so much?

384:

Not to mention s/w writing in the movies, where a teenage touch typist knocks out a few hundred lines of code a minute, while I spend a substantial portion of my time not typing at all.

385:

And I can "write"* 7 statements a day.

* For values where write means doing requirements capture, design, coding, testing and documentation. Coding is actually the easy part.

386:

Perfect code, knocks out a couple of hundred lines of perfect code, on a system that they've never seen before, that runs first time with no bugs.

Grrrr!

387:

But it does take them several minutes to "break the encryption".

388:

The distant popping noise you just heard, was my head.

I find myself repeating the mantra "it's just make believe" every time a scene involving computers shows up in a movie -- it's the only way I can avoid committing acts of not-so-random violence.

389:

Exception for Jurassic Park, where the visual file mangler was part of an actual SGI X-interface.

390:

Occasionally Hollywood gets it right, but I suspect that it's more by accident than design.

391:

There's no such thing as a monopoly (except for state monopolies which are maintained by violence).

Even if Amazon were the only company selling books, they would still have to be competitive against others waiting in the wings for them to fuck up.

Notice that all companies with a large market share lose it eventually.

392:

Rob Fisher: There's no such thing as a monopoly (except for state monopolies which are maintained by violence).

You are a doctrinaire libertarian and I claim my $5.

Seriously, you'll need to do better around here than simply to regurgitate talking points so old they're cliches.

393:

Never mind computers, or indeed any other 'speciality' subject; so many films break basic physics - or indeed basic arithmetic - in ways that I knew were wrong before I went to college (or left primary school, with the maths) that I make an effort to turn my brain off before starting.

Mind you, a depressing number of authors do the same, even if it isn't nearly so universal. One of the books I read over the weekend featured a curse lasting exactly a hundred years[1]. The male lead was in his early twenties when the curse broke; it had been cast when his grandfather was about seven or eight. That's one hell of a generation gap, especially for minor nobility in twelfth century Ireland. (Or the scifi book where an interstellar communication lag of several seconds was explained as being due to the time it took a laser beam to travel several light-years, or....)

[1] also every other cliche you can name

394:

Oh, the big game publishers can be horrible that much is true.

But the experience from buying directly from small publishers or developers, from smaller stores as Gamersgate or GOG has always been positive for me.

But I have to admit, that results in the fragmentation of the library and loses some of the features steam offers (which I personally do not care about). But the properties of steam that make it an attractive store discourage a section of it's users to look elsewhere. Which is what I wanted to express with 'voluntary vendor lock-in'.

A similar process can be expected at one point with ebook sellers. With a section of the customers going to the big known store where they already have access to their existing library. Regardless of better deals or unique content elsewhere.
A positive message of the online game distribution process seems to be that specialized smaller stores seem to be viable in some genres. With the caveat that the number of games released is tiny compared to the number of books.

395:

My main language is Ada; I may have used the word "exception" more advisedly than I first realised!

396:

Now, I guess we'll all have to sit tight, get some pop-corn and see for ourselves how the situation will develop.

Either way, it looks like the only solution viable in the long-term would be a small flat-rate subscription fee paid to internet providers for all media-content consumed.

The crux lies in its distribution among the content-creators - in the absence of an Accelerando-style rating system plus the tracking of actual consumption of products it will be really tough to fairly distribute the gains.

Were there in existence a single infrastructure for users to get their media and vote their satisfaction once they've consumed it, apportioning profits to media-creators would be relatively easy.

Until then, the majority will buy from where its easiest, and the tech-savvy minority will use IRC and torrents to get what they want for free. If the copyright gangsters make torrent use punishable, as it seems to be happening, people will simply migrate to i2p where tracking ip's is architecturally impossible.

In the meantime, the temporary means I see for authors to reap some benefits from pirate populace is to include some tokens in their books allowing the "pirate" users to pay a small sum of money - at their own discretion - directly to the author. Something like the "donate" applets commonly used for apps in the android market, e.g. CoolReader's "bronze, silver, and gold" donation apps.

I will make a confession - as a Russian, I find it relatively expensive to purchase media-content at the exaggerated (at least for our economic conditions) prices. This goes for the works of Mr. Stross, as well. I am not going to purchase any hardcopy books - I simply do not need them. But if there were a simple point-and-click mechanism for donating, say, 5 to 10 bucks - I'd gladly use it to send my regards to the author of one of the best sci-fi books I've ever read. Perhaps even use it several times over a longer time period.

397:

I gave you the benefit of the doubt because you also called it the "visual file mangler". That made me giggle.

@393: Chrisj, I would raise you the entire Star Trek canon (what is this "physics" of which you speak?), but I suspect that I've derailed the thread far enough already; I sense the ban-hammer hovering!

398:

My point is not that libraries are doing something wrong, but that Amazon is providing a very good customer experience, and that's the biggest challenge we would face in trying to replace their monopoly/monosoly.

Which is why in the US so many "main street" businesses got destroyed by first malls, then big box centers.

When I was growing up we mainly had main street stores downtown. Town had 32K people. We lived 3 miles from it. Nearest bigger city was a 4 hour drive away on a good day.

Main street stores did not want to pay overtime so they closed at noon on Wednesday and were open 8 to noon on Saturday. A grocery open till 9 PM was unheard of. Parking was a pain. And many times you had to move the car if you had multiple stops not near each other.

Women could not work as a practical matter. Unless husbands worked a non traditional job schedule there was rarely enough time for him to do any shopping except for his direct needs.

I still remember when we got a KMart in my later teens. It was like Sears only cheaper stuff (in all meanings of cheaper). But you could go to Sears and KMart and a new longer hours supermarket and buy 95% of your weekly stuff in only 3 stops instead of 10 or 15.

399:

But if there were a simple point-and-click mechanism for donating, say, 5 to 10 bucks - I'd gladly use it to send my regards to the author of one of the best sci-fi books I've ever read.

Ahem: FAQ: Why there is no tip jar on this blog.

400:

It's hard to over-estimate the appeal of "convenience" to most people. It takes a lot to make the average MOP do something that increases the effort they have to put into a mundane task (especially when you can't immediately see the harm that the convenient approach may cause).

401:

In the intro of my eBook I am putting a suggestion that if the reader is reading a pirated version, and they like it, to send me some money. I really don't care if a million people download it illegally and never read it or hate it. It's the ones who like it who ought to pay for it.

402:

Stopping doing something stupid is really difficult for companies or organisations or governments, and only slightly less diffciult for individuals.

Because it usually entails admitting or having others point out you were wrong. People and organizations really don't like doing that.

403:

Sorry about that - gang printing is a process where they are able to use the printer more efficiently. It's not something you can do if you are producing just the one title.

But large publishers have the advantage of that and a huge economy of scale when it comes to the printing process. As Charlie mentions, it's something fifty cents for a paperback, not hardcovers are actually not that much more expensive.

What most people (not you, probably, nor most readers here) don't realize is that what you are paying for with aa hardcover, really, is the ability to read it first.

Likewise, when you buy a book, the actual cost of the phyical object is probably the smallest percentage of the costs that go into producing it, so reducing the cost of a digital book by the same amount results in an ebook that basically costs the same.

The main cost for books, in terms of what you're paying, is almost always the general distribution costs, by which I mean the chunk the retailer and the distributor are taking. Ebooks may change that, either a little or a lot, depending.

404:

"In the meantime, the temporary means I see for authors to reap some benefits from pirate populace is to include some tokens in their books allowing the "pirate" users to pay a small sum of money - at their own discretion - directly to the author. Something like the "donate" applets commonly used for apps in the android market, e.g. CoolReader's "bronze, silver, and gold" donation apps."

I set up a donate button, easily available and usable, for my (heavily pirated) comic book. I've gotten precisely zero donations.

So I am dubious about the value of this.

(I am not bothered by the piracy, mind - there's nothing I can do about it and I don't believe it affects my actual profits one way or another. I was just curious about whether this would work.)

405:

If it costs 50p to print a book which sells in the shop for (say) £10 then the eBook should *not* sell for £9.50. It should sell for considerably less because that 50p is being marked up by each middleman by their percentage. Typically a bookshop would pay around £6 for the book, so at a minimum the bookshop should charge £9.16 without the printing contribution being added into the markup.

406:

That's what they all dream about, of course. Get the next PTerry or JKR on the ground floor with a modest advance and a multi-book contract and the profit is enough to float a publishing house for a decade.

So their business model is almost identical to venture capitalists?

407:

Thanks for the link, I see your logic.
Though, I'd rather prefer ordering a bottle of scotch or whatever it is that you favor to be delivered at your doorstep, instead of having a part of my payment benefit the middlemen at the publishing house (and paying for shipping of a hardcopy book I don't need more than for the book itself). That's impossible, I guess, since you're unlikely to publish your home address for obvious reasons. I'll consider the FAQ-solution you linked, though.

@404
"I set up a donate button, easily available and usable, for my (heavily pirated) comic book. I've gotten precisely zero donations."

Yes, I remember similar experiment by a Russian sci-fi\fantasy author, with similar results. I didn't pay him for a single reason: it was inconvenient (going to a bank, filling in paper forms, paying commission). For some reason, I feel a compulsion to donate to Mr. Stross (it must be the exquisite quality of his works), so I'd even go for a wire transfer in his case. But at the same time, I have a strange aversion to sharing this money with publishers, don't know why.

408:

The barriers to entry are larger than people think, not only do you have to build a decent website and supply contacts, you also have to make sure that enough people know of it and get to see how wonderful it is.

Amazon started with books. And a lot of people went there for the books. But I know many of them that buy almost anything there that doesn't require a touchy feel experience. Clothes (standard designs from the majors), electronics, linens, heck even toilet paper holders.
www.amazon.com/gp/product/B002S0NP84/ref=oh_o01_s00_i00_details

I was doing some searches for home gas fired furnaces as mine needs replacing and wanted to learn more about the various choices. Turns out you can buy them from Amazon. (Installation not included.)

So to compete with Amazon for "regular" folks books alone will not do it.

409:

Dirk, you forgot VAT is chargeable on ebooks in the UK at 20%, while VAT on paper books is 0%. At least, in the UK. In other bits of the EU VAT on ebooks varies from 3% up to the regular full-fat rate -- iirc in France and Germany it's 4-5% rather than 20-23%.

The USA of course does not have quite the same problem here.

410:

What's the approximate breakdown for a fiction book? Who gets what?

411:

Who gets what?

Very roughly (the figures may vary a bit, depending):

10% of the cover price - materials and physical product and packaging.

10% - production costs (editing, typesetting, proofing, marketing)

10% - publisher's cut of the profits.

10% - author's cut of the profits.

30% - wholesaler

30% - retailer

OR

30% - Amazon.com

30% - discount AMZN passes on to public in order to draw them in

Note, however, that when Amazon offers a 30% discount to the public, they try to buy at a 70% discount off SRP, rather than a 50-60% discount (normal for most booksellers). And they're big enough they can often get it, which means a smaller slice of the pie for everyone else.

412:

Since Amazon is both wholesaler and retailer it immediately grabs the 60%?

413:

The problem surely is that the teenage whizzkid woudln't listen to them regarding the spec or what they wanted and wouldn't be able to communicate in much more than grunts. And wouldn't walk off the job halfway through complaining of being bored.

414:

A single data-point on reader lock-in from a voracious reader: While I don't like DRM and would prefer that it go away, Lock-in isn't something I worry about the way I did for DRM'ed music. I simply don't often revisit fiction.

For when I do, or for non-fiction/reference works that I might read & use over the course of years, I recognize that my approach as a tech-savvy user is not available to all. (That approach being the one often decried as the reason for DRM in the first place-- teh piratical acts! Which I always find ironic, when I am driven to pirate something I legitimately own because of that object's attempt to limit piracy.)

415:

I did something unusual. I had illegally downloaded Charlie's books. All of them. I read one and I liked it a lot. When I started another one and I was sure by that point that I like the stuff, I ordered 5 paperbacks from Amazon. Gave 2 of them as presents to people that might think of buying more if they like them. I did the same with Iain Banks. I don't have the slightest idea where all this stands at the ethical scale of things.

416:

I stand corrected. It appears people are "claiming " they read more. However,
sales of books
have been declining, which does NOT seem to jive with this survey.

417:

They immediately grab the 60%, and they try to grab even more if the publisher doesn't negotiate really hard.

418:

I am going to try my usual attempt at rephrasing the issue from a different perspective. With over 400 comments here already, I am probably going to get lost in the noise. But I will at least have soothed my feelings.

First, Amazon also faces some systemic risks from the internet. The issue here is that books are "old fashioned media". Whatever they do, some of the roles that used to be served via book publishing will be instead served by internet distribution of content. Ebooks and ebook readers (and their associated contracts, which try to gain rights to the output of people capable of writing good ebooks) are an example of this issue.

Second there's another potential interesting tangent based lurking behind the "economics" curtain. The short form is that economists has a tradition of underestimating economic risks. A longer writeup at: http://triplehelixblog.com/2012/04/fractal-finance-a-rogue-mathematician%E2%80%99s-search-for-answers/

(I mostly mention the economic thing because of the "libertarian" mention in the article, but it has been impossible for me to get a libertarian advocate to give me any sort of rigorous mathematical treatment of the subject.)

So, anyways, one underlying issue here has to do with the nature of value (and risk) in the context of information and its presentation.

419:

On an ethical scale, I'm cool with that. Not sure what my publishers would say officially but I suspect that unofficially individuals working there would be more or less cool with that.

420:

"economists have" not "economists has" argh.... *sobs*

421:

Not to mention s/w writing in the movies, where a teenage touch typist knocks out a few hundred lines of code a minute, while I spend a substantial portion of my time not typing at all.

Then there's always that one guy who breaks the averages. A friend who a software developer and know very well how hard it is to produce good code works with someone who is off the charts.

This guy is blind. But has an Eidetic memory. Over a years time will write on average about 1000 lines of code a day. And it is mostly error free.

But he is totally off the charts.

422:

I find myself repeating the mantra "it's just make believe" every time a scene involving computers shows up in a movie

It was even better in the 70s when someone would break into a data center (at night when no one was around) and dump out the data set nicely formatted from data on 9 track tapes. All in about 10 minutes.

423:

I'm not sure how unusual it actually is, especially if you replace "illegally downloaded" with "read for free", which encompasses a much wider range of activities - many of them entirely legal, but almost none of them involving payment to Charlie and his publishers. (The exception to the last part being "borrowed from a public library in a country with a PLR system".)

My experience is that people who enjoy things want to share them with others, and most people are basically honest (or at least recognise that if they don't pay for creative works they like, there might not be any more from that source). People reading a book from the library and then buying a copy for themselves - and one for a friend - isn't at all unheard of, at least in some circles.

424:

Oh, I remember. My favourite one from contemporary movies is where the data center is located on the top floor of the high rise office block that also houses the HQ of the company. I just have to laugh.

425:

@396:
> Accelerando-style rating system

[Like] ?
[number of followers] ?
[tipjar hits] ?
[GBH threats per hour] ?

I don't remember Charlie putting much detail into that. It wouldn't be an easy system to design, because you'd be looking at multiple levels of metadata. Not just the ratings, but the people who make the ratings, and the ones who rate them, and little fleas to bite them, ad infinitum.

Remember, you'd have to figure out how to defend it all against people gaming the system, like the war between the search engines and the spam sites.

There was a considerably simpler system in Glasshouse, but that was more of a bludgeon than anything else.

The *intent* of a reputation system might be to establish a credibility rating for dealing with strangers, but in practice... consider, say, the Japanese Army schools of the 1920s and 1930s, or groups of fundamentalist Wahhabi, or neo-Nazi skinheads. There's a tendency of people online to cluster in little pockets where everyone things pretty much alike. When that happens, social pressures tend to urge conformity, often laced with extremism. No doubt Osama bin Laden's reputation rating would have been solid gold among his social group. Same with Jim Jones and his people in Jonestown, for that matter.

426:

The cross breeze at that height keeps it cooler.

427:

Isn't that assuming the hot air from senior management is being properly routed away from them? Whereas vents and ducts always seem to lead somewhere useful.

428:

For a while - then the self-publishing overhead (because demand drives market drives innovation drives efficiency) becomes ever-smaller, so that self-publishing becomes the preferred way for not just a few, but most authors, at least for part of their product.

429:

Amazon:

http://market-ticker.org/akcs-www?singlepost=2726167

"Now here's the problem: Amazon has a 2.58% (ttm) profit margin and a 3.14% operating margin. This is less than the benefit they get from evading the state sales tax system.

In short, this is a firm that only exists because of its ability to evade that tax structure. When, not if, that ends the company is a literal zero."

But don't mind him. Keep blowin' that doom horn an' humpin' that chicken!

430:

The major book publishers should follow Baen Publishing's example. All their new books (and many of their older books) are available as ebooks as soon as the book is released. They are available in all major ebook formats, with no DRM. They sell new ebooks for $6.00 while some of their older books are only $4.00. Baen has been doing this for over a decade, and has been very successful.

431:

Amazon Prime.

Especially as a big-ticket sales tax avoider scheme, but even with tax it's just darned convenient to get a pretty good price on a pretty large selection delivered to the home or office pretty quickly for free.

I just wish there was a Half-Price Books Prime (alas Amazon's equivalent just doesn't have the best prices, and for those that are close there's no Prime). $0.99 for a very-good condition hardcover, nearly $4 for shipping :p

432:

I'm curious as to these ebook sales figures.

Does anybody have a breakdown of what titles or sorts of titles are actually selling as ebooks?

I have my suspicions, but would like to see some actual data.

433:

Especially as a big-ticket sales tax avoider scheme,

In the US the federal tax law (for itemizers only?) allows you to put in your local sales tax rate and then take a deduction on how much you likely paid in sales tax. But I bet these formulas don't account for how much you avoided by using places like Amazon. And of course here in NC we have to pay an estimated amount that we bypassed by using internet purchasing. And I'm sure there's no correlation between these two numbers. Or at least any coordination at this time.

Oh, well.

434:

Perhaps I missed it, but why is Baen not mentioned in this discussion. They manage to sell e-books in a range of formatting, Kindle compatible included. A good 25% of my books this year have been purchased from Baen's website.
Perhaps I'm missing something, but they seem to be doing fine with the publishing changes. I've been buying twice as many Baen books since I've gotten my Kindle and I don't believe my experience is unique.

435:

80% of everything is crap. Who do we want to help us filter this, so we can get the 20% that we want? The publishing houses did this for books - and did a job. A good job? A bad job? No way to know, since there isn't another model to compare it to. Now, like music, movies, TV, and software, this centuries-old business model is dying. What will replace it as a filter? How will we find that wonderful 20% of content that has meaning to us?

I don't know what will replace it, but I do know that between GoodReads, Amazon, Scalzi, Stephenson, and Glenn Reynolds, I haven't made a book purchase based on a books placement at a bookstore for over a decade. Heck, that is why I automatically buy anything with the words "Stross" on the cover. Reputation, recommendations, and trust will be the new currency. And the people who I trust will be my choice, not random people, randomly placed, in offices 1600 miles away.

I know it is scary. I am in the software industry. Putting stuff in the App Store, or out free as a demo, or getting a Kickstarter is very hard work. But the success is much sweeter, better distributed, and much more fair than it was back when we had to suck up to an Electronic Arts sales guy. And then watch EA keep all the money.

Authors, it's your turn.

ps. The DRM thing got figured out in music a while back. Just be patient.

436:

Doing professional production can range from frighteningly difficult to downright easy, depending on the quality of the artist you're working with. Some can almost go from a live show to a professionally mixed CD, others require many hours of massaging. I remember once when I was involved with music doing audio on a show with two bands. One performance was letter-perfect, and could pretty much have been shot straight to CD without any problems.* The second band sounded like shit. Same audio engineer, same gear, same room.

The second band (run by a friend of mine) accused me of deliberately making them sound worse. I explained that this is what they sound like. This is exactly what they sound like. They didn't believe me. Since the one issue is so variable, I don't really claim to address it at all.

* Yeah, I know it's more complicated than that, but they really were amazingly clear and beautiful live with almost no work on my part.

437:

Mr. Stross trots out the usual monopoly argument: "big box store drives small stores out of business, then raises prices to screw the consumer". That would be a great argument if even one such real life example of this tragedy, could be produced; unfortunately, it can not. This hypothetical has never happened and never will. Most typically, antitrust enforcement is bad for consumers, as in the Alcoa antitrust settlement, where Alcoa was forced to permanently raise its prices; and while monpolies do exist, without exception they are government creations. Mr. Stross also rails against some libertarian "social-darwinist ideology that has no time for social justice, compassion, or charity". That too is fantasy, to the extent that it is not nonsense - what is "social justice"?

Getting back to books, with government getting involved, consumers can expect again to get screwed. In my ideal world, government would get out of the picture completely. We would get rid of all laws regarding DRM. Let the creators and consumers battle it out and find the balnce they want between "DRM so secure it's impossible for anyone to actually use" and no DRM at all. I suspect we'd already be a lot closer to the latter in a free market. I'll pass on buying anything of value with DRM because as technology marches on, inevitably everything DRM'd will become inaccessible, as either the hardware or software (or both) required to acces it, is obsoleted. Only the DMCA, another obscenity, allows content producers to foist DRM on consumers in the first place.

438:

At the end of the day this just might be the way things are in the internet age. In this case maybe there will only be small boutique publishers who take on writers who make their name by themselves and then look for someone when successful. I don't know.

But when I look around I see eBay, Autodesk, Microsoft (PCs), Apple (computers for entertainment), Intuit, etc...

Intuit might be the best case to study in terms of Amazon.

Go back 10 to 15 years, Quickbooks was under $200 (I think) and payroll processing was about $100 a year for a small business. By 5 to 10 years ago QB had driven out most of the competition. Especially for vertical market software. Such software that used to cost $2000 to $5000 every year or few basically vanished. If you were an architect with under 100 employees software specific to your business vanished for all practical purposes. Enough people switched to QB that the market dried up. Now there are some products out there but, shall we say, things are different. Products are more expensive, complicated and require servers and annual maintenance contracts and not as well maintained as the cheaper stuff from years ago due to smaller markets.

Now many/most need the Premier edition of QB for $400 or so plus payroll is now just under $400 per year. With no competition they can now raise prices annually even if the "new" products don't offer much of anything new. And the payroll service is the heroin. Once you go onto it it is very painful to stop. And you can't use a version of QB more than 2 or 3 years old and still use the payroll service. And most accountants in the US REQUIRE you to give them a copy of your "Quickbooks" file or pay extra.

The question in my mind isn't will the marketplace for decent mid-tier books remain intact but will any of the mid sized stores/markets survive. Sporting goods, linens, heck even Target in the US.

Look at this:
http://www.zdnet.com/blog/perlow/retail-in-2021-when-clicks-have-buried-bricks/19344

Company towns suck hard. Company towns with only the company store suck harder.

439:

The anti-libertarian bigotry is unnecessary, as is the removal of DRM. All that's needed to break Amazon's "death grip" on the customer is for somebody else to come along who'll offer an equal or better deal, with equivalent customer service. It really is that simple. The "Agencies" don't give a rat's butt about the customer -- they're so far in reverse that their minions in agent-land still brag about how much they can sell a book for (and when's the last time THAT was a viable economic strategy?).

If it wasn't Amazon, it'd be somebody else, and "monopoly" is not the same as "currently winning in the market," a condition which will evaporate the nano-second Wal-Mart smells an opportunity to muscle in.

440:
...he's ostensibly a libertarian; these aspects of his background make me uneasy, because in my experience they tend to be found in conjunction with a social-darwinist ideology that has no time for social justice, compassion, or charity.

Gee, why exercise any critical intelligence? Why bother to acknowledge the immense variety of Mankind, even within ideological communities? Why not slander all of us because of the handful of cretins you know personally?

A friend has recommended your books to me. You just blew that recommendation out of the water, Charlie.

441:

Not only is Baen successful within their niche, but Tor owns 33% of them, and Macmillan owns Tor, and Macmillan's board are intimately familiar with Baen's sales figures and profitability (being shareholders and distributors).

Now. Imagine you are the CEO of Macmillan. Can you come up with an argument for pivoting your business -- a multi-billion dollar corporation -- to follow the model of this particular n-levels-down partially independent subsidiary?

442:

"They can list everything in print as if it's available, and order it only when they have a confirmed sale. Neat, huh?"

Er, no.

Interesting piece, but flawed premise -- this is not how Amazon actually works, as people like me who rely it for >50% of nongrocery purchases can attest. Almost everything I order from Amazon is shipped the same day and arrives in 1-2 days, which would be impossible if they had to order it. They actually tell you whether it's in stock when you order.

Give me the social-darwinists over the social-creationists (you know, the leftists who think they can "intelligently design" an economy) any day of the week. Libertarian ideas have made the world richer and freer.

443:

Ah, the zestful joy of the libertarian war of all against all!

I just love idiot drive-bys.

444:

Every creative process looks easier from the uninformed outside.

Charlie, any time you want to sing that song, I'll hum along.

I'm working on an online app that will allow people to research history and store the results online with granularity going down to the level of taking notes on an index card. The people I'm working with who don't program lose it when I come back a month later and say, "I've got comments working" (this is a side project, I also work 40-hours a week) and then they freak out about how I haven't implemented everything they were talking about in my limited free time.

I explain that they can "see the elephant," but actually creating an elephant requires implementing the elephant "one cell at a time." They never get it. It's always, "why are you creating cells? We wanted an elephant."

Drives me crazy, it does. Just makes me nuts.

445:

Almost everything I order from Amazon is shipped the same day and arrives in 1-2 days, which would be impossible if they had to order it.

Are you sure it is not coming from a non Amazon warehouse? With Amazon just forwarding the order to another distributor or the manufacturer with a requirement they ship it with Amazon labels and paperwork?

446:

David L.,

I can see how one might suspect that, but no, Amazon has to fulfill. The whole (and wholly awesome) premise of Prime is built around that. Amazon has gigantic warehouses for their own products, and they also fulfill for 3rd-party sellers.

http://en.wikipedia.org/wiki/Amazon.com#Amazon_Prime

447:

They never get it. It's always, "why are you creating cells? We wanted an elephant."

But the real fun starts when they say "We've changed our minds. We really want a hippo. That won't be too hard will it. Just loose the tusks, make it a little shorter, and turn the trunk into a flat nose. Easy. Right? Oh yeah, we also have a client that really likes giraffes. Let's think about the simple mods to make the hippo into a giraffe for version 2. So what, this sets us back what, a week?"

448:

Not sure I agree with any of this. How can Amazon be a monopolist when I can download books from ManyBooks and Baen to read on my kindle? If Amazon tries to profit from market share by jacking up book prices (and the evidence seems to be that it is trying to move the market in the opposite direction) what is stopping me from getting my books elsewhere? Right now I primarily buy books from Amazon because I like the convenience and price.

BTW, loved Saturn's Children.

449:

I know they have a huge warehouse structure. But I also suspect they use drop shipping. Even for Prime customers.

450:

If the Government's case is not defeated at trial and through all appeals, there will be a consent decree entered by the District Court, which will impose a de jure regulation via the District Court's jurisdiction, cf U.S. v. AT&T settlement; hencehe fox will be in the hen market house.

451:

How can Amazon be a monopolist when I can download books from ManyBooks and Baen to read on my kindle?

Try downloading books from Amazon to read on your $THIRD_PARTY_MOBIPOCKET_READER. Then get back to me.

NB: Amazon sell 60% of all ebooks sold in the USA. Down from 85% before the big six shoved the agency model at then two years ago.

452:

David L. -- No, they come from Amazon, they have an Amazon return address (unless of course they are not fulfilled by Amazon). Also, from my decades working in supply chain I can tell you the notion of managing a drop-ship network with thousands of manufacturers integrated in near real-time with Amazon's own systems is, let us say, very very impractical.

And that setup wouldn't work even if they could somehow manage the IT integration. After all, it's not like a mfr can just respond by turning on a magical make-anything machine with zero setup time and no fixed costs in order to produce the precise qty of what some Amazon customer ordered an hour ago; they have to work off of forecasts, which are planned over the weeks and months prior. All that stuff then has to be warehoused somewhere, so it makes far more sense for Amazon to just warehouse it themselves so they can fulfill, which is the side of the business they're good at.

453:

Here's a nice overview of Amazon's fulfillment service:
Amazon Fulfillment Services

"FBA listings are displayed with the "Fulfillment by Amazon" logo, so customers know that packing, delivery, customer service and returns are all handled by Amazon."

"Step 2: Amazon stores your products.
Amazon catalogs and stores your products in our ready-to-ship inventory.

Amazon receives and scans your inventory.
We record Item dimensions for storage.
You monitor inventory using our integrated tracking system."

454:

I have to dispute the author's belief that Amazon's becoming a "monopoly" is bad for the consumer. A "monopoly" in a free market economy can only exist as long as the company with the "monopoly" provides the best service/product at the lowest cost - to the point that no one else can compete with them. If, as the author states, "[the company doesn't] have to give a shit about product quality or price..." then someone who does "give a shit" will come in and steal customers away from the "monopoly." That is why free enterprise works so well. A true monopoly can only exist if the government deems it to exist and provides a charter of monopoly to a corporation or individual. The Supreme Court decided in the 1824 decision, Gibbons vs. Ogden that the government did not have this right.

455:

Dave L, it's actually even better than drop shipping to a degree. Amazon's 10K indicates that they average 74 days accounts payable. In non-accounting speak, that means they can acquire product for their huge warehouses and don't pay for it on avg for 74 days. That's more than 2x as long as any other major retailer.

No one knows better than AMZN how many per unit time something sells; so they can order just enough to guarantee they will sell the item before they have to pay for it. Indeed on average a given item in AMZN's warehouse sits there 30 days before shipping out.

So this is better than having drop shipping (paying for an item when you sell it) as AMZN gets paid a month before they have to pay for the item. Nice.

Also, AMZN does not offer Prime on everything. It varies. Some items you buy apply but many don't. For the long long tail stuff, they can elect not to offer the two-day shipping option but nevertheless present it on the Store as available to order and in inventory as long as at least one warehouse has it. If you live close enough to where it happens to be, you get a Prime offer.

456:

There is a recurring lie that Libertarians do not have a country. However that overlooks the vast territory they in fact DO have, you are using it right now. Yes, the Libertarian Utopia is indeed the Internet itself. Think about it, then get back to me. :)

457:

Please do not play an economist without a degree. Your facts are a bit wrong; your understanding of them as well.

If you want to argue your version of economic theory, please do it somewhere else; I recommend Paul Krugman's blog.

458:

Steam, for me, is the best option because of their incredible sales. I have a library of over 300 games for the computer. All legal. All accessible across all of my computers.

Gamestop, Best Buy, etc. They just can't or won't lower their prices to what consumers (at least this one) consider to be reasonable for digital distribution. Amazon's downloadable PC games are starting to dig into this, I've been buying a few from them at better prices than Steam.

I don't know enough of this argument, but I love Amazon. Their digital book prices are still absurdly over-priced IMO, but they're incredibly convenient. And I've managed to obtain a much larger library than I would have been able to otherwise, including all of Mr. Stross' books.

I'm not quite sure what the kerfluffle is all about. Apple scares me far more than Amazon. Heck, Amazon has the foresight to send a thank you card for being a loyal customer. They respond to customers, etc. What company does that these days?

459:

The internet is a libertarian utopia?

Tell that to this guy. Or this one. Or this one.

460:

Don Pettengill @ 437
and while monpolies do exist, without exception they are government creations.
Assuminmg you are a USSAian ... never heard of the Seven Sisters? (Oil monopoly cartel)
Don't even know your OWN history!
what is "social justice"?
NOT shitting on peole, just because you can, for a start. Being fair and honest.
Or don't you subscribe to those values?

DRM was and is a product of those wonderful non-guvmint private companies you appear to lurve... erm.

Francis Porretto @ 440
BEcause these supposed libertarians really don't seem to care about other people, and repeat the mantra that guvmint is bad (except for the miltary of course ... which does make one wonder.

David L @ 447
You JUST DESCRIBED defence procurement!

Generally
I suggest some people need to read G. B. Shaw's play "The Apple Cart", where noting new or improved got made, because of "Breakages Limited" - who simply bought up improvements and shut them down.
And it does happen


461:

Anyone else beginning to suspect that a link to this blog has been posted somewhere with a bit of a high libertarian demographic in its usual readership?

462:

Just possibly.

The moderators have been given a heads-up. I'm off to the pub.

463:

Enjoy the pub! (Envious parental unit here...)

464:

Greg -- The Seven Sisters (see Wikipedia) cartel was formed by gov't action, initiated by the U.S. State Dept. Since then, OPEC (an open gov't conspiracy to set oil prices) and state-owned companies have waxed while the 7S have waned.

DRM was enabled largely by the 1998 Digital Millenium Copyright Act (see Wiki) which made circumventing DRM illegal, and has been opposed by CATO and other libertarians.

It's a mistake to confuse libertarianism with support for corporatism. The first instinct of any successful business is to use gov't to extract economic rents -- it's very often the best investment.

465:

ecause in my experience they tend to be found in conjunction with a social-darwinist ideology that has no time for social justice, compassion, or charity.

... neatly referring to just about every stereotype there is about libertarians.

466:

NOT shitting on people, just because you can, for a start. Being fair and honest.

Yup. These.

Thinking there is more to human life than the accumulation of material goods. Funny thing, I keep reading libertarians online saying that it's all about Freedom but it always seem to come down to the Freedom to keep more of "their" money and sometimes the freedom to smoke dope etc...

There is not one example of a libertarian society which can be said to have worked. Like 'perfect' communism, it just doesn't exist (I might defer to an earlier poster that actually communism does work in small family units, but not libertarian ones.)

Anyway, it's always fun to read the comments.

467:

Alex R, if ever you get your online history app to a beta test stage, and need any beta tester historians, feel free to give me a shout. I work with coders on a regular basis and know what to expect.

468:

I also find that history project very interesting indeed. Good luck and hope it comes to something.

469:

Polls show most people want a real libertarian government. They don't want others messing with them. The Libertarians we have want to mess with people without that evil government stopping them. The libertarian party is funded by the same people who fund the far right. Its someplace to go after you are feed up with the GOP. Someplace harmless. They have no use for the commie pink Libertarians who don't want to mess with anybody. In the real world I don't think it would work for long.

470:

Dave L, it's actually even better than drop shipping to a degree. Amazon's 10K indicates that they average 74 days accounts payable.

Well that makes more sense. If you get to keep it for 2 1/2 months before paying for it then warehousing any and everything becomes feasible.

471:

Anyone else beginning to suspect that a link to this blog has been posted somewhere with a bit of a high libertarian demographic in its usual readership?

ZDNet

Way over the top geek crowd. Sheldon lives there.

472:

What is this odd thing about bagging on libertarians?

We want to be left alone, our rights respected and yours as well. The golden rule, etc. Worship who you want how you want as long as you don't blow up people in the process. Marry and love who you want. Trade with, ingest, and use whatever you want. It's your life and your body.

This is obviously an evil philosophy and must be crushed. Like Christians who are coming to your town to do good works. Evil fundies. Feeding the poor and all.

Advocating a small, responsible, and ultimately *accountable* and efficient government, social programs dealt with by society, not some central governmental strongman. High speed, low drag. This is obviously stunning people into abject terror.

Jeez, Mr. Stross. Between reading your moderation policy and "Halting State" you seem to have one hell of a hard-on of... well hatred may be too strong a word, but contempt seems adequate, for US folks.

Idiot drive bys? How about completely misunderstanding a political ideaology? That's not too impressive an accomplishment either.

Toodles, Happypants. Look forward to your next rant about American psychos in book form.

473:

@Scott

The thing is, libertarians really don't just want to be left alone. You want to impose a libertarian society on us even though the overwhelming majority has made it abundantly clear that they have absolutely no desire for such a change.

If you want to go off on your own and build a libertarian country, go with our blessing. But leave us in peace. If you want to stay, accept that we do not want a libertarian society and let the matter drop.

You can't stay and agitate for an anti-democratic imposition of your values and (with a straight face) claim that you respect our rights.

474:

We want to be left alone, our rights respected and yours as well. The golden rule, etc. Worship who you want how you want as long as you don't blow up people in the process. Marry and love who you want. Trade with, ingest, and use whatever you want. It's your life and your body.

Except that isn't the whole story is it.

That's the warm and fluffy bits of libertarian theory that's hard to disagree with it. The problem is all the stuff in the "It's your life and body" rider you put on there.

It is. But it's also my life and body and I have to share the same geography as you do and life is just a tad more complicated these days than being left alone.

I should be free to ingest whatever I want. But I shouldn't be free to go for a drive afterwards in a tonne of steel with a motor.

You might not want to pay to do something about starving people in the street, or happy to let sick people without insurance die, but you have to live in places where, generally, most humans don't like seeing that or where most humans realise if you leave an underclass lying around with no hope, you have a fairly negative net effect on everybody elses standard of living.

In short. I'm happy for you to be left alone, as long as you keep off my lawn, and by *my* lawn I mean the country I have to share with you and the services which we all have to share... like roads that don't have holes, bridges that don't fall down, police and fire services that work for everybody, universal standards of healthcare provision, education services to make sure we have a well educated and competent population, and the opportunity for the market place to actually work without devolving in the monopolies, that contrary to the rhetoric around here, do happen all the time.

475:

Libertarian philosophy is OFF TOPIC.

There's a lot of comments, so please scroll back to the top and read what the topic is before you decide to comment, please.

476:

Just what about the internet makes you think it's free from government control and economic regulation and what exactly makes you think that would necessarily be a good thing? As shitty as governments can be more often than not I'd rather take my chances with a democratically elected government than a corporation.

477:

In libertarian-world, it apparently doesn't happen because, um, magic.

You are confusing libertarianism with anarchism. In libertarian-world, there is still law enforcement.

478:

Veering back on topic, I should add, Amazon does of course practice consignment (meaning an item isn't on their books except at the moment of sale) but of course consignment inventory has been around for centuries, if not millennia.

I think Amazon's major advantages are the following:

1 - Warehouses are cheaper than retail space -- this is the main reason bookstores are going under. Since there is practically zero value-added to having physical access to the books (unlike, for instance, furniture), book customers have flocked to Amazon.

2 - Virtualization -- there are (iirc) something on the order of millions of published books; being able to search a user-friendly database for, say, a copy of Zelazny's classic "Jack of Shadows" is hugely advantageous over trying to find it in a retail space, even asuming there was one near you and it could be large enough to have everything you wanted. And this naturally extends to other things as well -- compare wandering through a Home Depot to searching Amazon (which will often have better selection anyway).

3 - Reviews! Being able to see feedback is huge. Buying something without reviews now seems practically Neolithic.

4 - Revenue over profit -- Bezos cares far more about revenue than profit, to a nearly absurd degree, which has led to some interesting business choices, and I think that's something people who believe in compassion, charity, and social justice (and more generally the betterment of the poor) should particularly love him for -- it's a major reason why the Kindle and Kindle Fire are so accessible to people of modest incomes.

479:

Thanks Charlie, I'll contact Transreal.

480:

Trying to be on topic. The problem with somebody competing with Amazon in this space is they have the advantage of having been able to pump billions of dollars into infrastructure at a time when the money was extraordinarily easy and, relatively speaking, cheap to raise.

They have the warehouses, the supplier systems, the distribution set up, all with extremely good grandfathered in terms - not to mention, they are trying to tie up a huge piece of the supporting infrastructure with technology like AWS, EC2, Kindles and the like.

I quite like the current publishing paradigm over the App Store approach to it, purely because there is a degree of content control, albeit, one I don't always disagree with. I think Charlie is quite right that going over to the lowest common denominator of anybody can publish, anything for the 30% Amazon (or Apple) tax will mean an explosion in content, but a dramatic reduction in the general quality and make it that much harder to identify good content over poor.

You just have to look at the ridiculous sums of money currently being invested into Application Store review and prioritisation technologies to see that this is already seen as a huge problem in the app market.

The thing is, we might already be too far along the curve to pull out of it, and having single companies with their hands on the control of creation, supply, distribution and deliver should, really, scare the hell out of anybody who thinks about it for more than a few seconds.

481:

Amazon is a great example of how markets can produce unexpectedly superior outcomes. I think if you told people in 1990 what Amazon did today, most business executives would have said it was impossible, if not ridiculous.

You might not want to pay to do something about starving people in the street, or happy to let sick people without insurance die, but you have to live in places where, generally, most humans don't like seeing that

And those people should be completely free to do whatever they like about that, as long as it doesn't involve taking my property from me by force.

Interestingly, Nobel nominee Rudy Rummel has shown that every single famine of the last 100 years has been caused by gov't action, often quite deliberately, and you are also roughly 10x more likely to be denied treatment by rationing than by lack of ability to pay (this is why the U.S. does 2x as many MRIs and organ transplants as the OECD average, as well as having the highest cancer survival rates). The evidence suggests the best way to not have people dying in the streets or denied medical treatment is to keep coercion out of it.

[ Moderator's note: You have been warned twice. This is your yellow card. ]

482:

And those people should be completely free to do whatever they like about that, as long as it doesn't involve taking my property from me by force.

So you'd rather set up systems where by that's the most likely outcome?

Shakes head in bewilderment.

I'll ignore the old canards and fake stats about healthcare because my side has them too... and MRI machines do not healthcare make.

483:

Interestingly, Nobel nominee Rudy Rummel...

I think that Nobel WINNER Paul Krugman is a more interesting reference source on matters economical myself. Especially relating to healthcare and monopolies and the like.

484:

Interestingly, Nobel nominee Rudy Rummel...

Hmmm... sorry to do 3 posts but I came across this note somewhere online in a bio for Rudy Rummel:

"Rummel used to publicly claim that he was a finalist for the Nobel Prize for Peace, based on an AP report, reprinted in his local paper, about an alleged Nobel short list of 117 names. He has retracted the claim,"

485:

#392: Charlie, I am (where do I send the $5?) But doctrine? It's rational to realise when you are running a business that you are threatened by disruption from below all the time. This happens, empirically. Microsoft was supposedly a monopoly once and they are just about hanging on to the one part of their business they do well at and it is not a sure thing.

The point of it is that it's not as bad for the consumer as "monopoly" suggests because Amazon won't be able to get *that* bad.

486:

Scott @ 472
Except many USian so-called "Libertarians" seem to be interested in what people do in bed, and which BigSkyFairy they worship.
Which means they are not "real" libertarians, they are theocrats.
Which is why we are very suspicious, of all of them.

487:

I just wanted to address this quickly because it seems to be awfully off the mark as to what I subscribe to.

Except it is the whole thing.

I have no problem with government and shared benefits of fire departments, police etc.

Libertarianism to me is all about humanism. It's not exclusive. It's inclusive.

There are many who give it a bad name, and they're posuers, or hybrids. Many people, many beliefs.

I'm not sure how my insisting on governments respecting my civil rights and staying out of people's personal lives is somehow going against the will of democracy. We're a republic anyway.

The Tea Party demonstrations are pretty good proof that the theme is more widely resonated than thought previously.

So please, don't ascribe silly notions to what I believe, and I'll do my best not to eviserate the idea of communism just not having been tried properly yet. (He said with dripping contempt.)

I have nothing else to add, so please go back to your regularly scheduled programming.

488:

Nobody's seriously discussed a novel's graphical metadata yet.

Back in the days when books were all printed on paper this was called a book cover.

In order to get a good book cover you needed a good artistic director (usually working on salary for a publisher but not always) and a good cover artist (usually freelance but not always) with a good relationship going on between each other and with higher-ups. And yeah the artistic director actually read the book.

When innocents saw the price for the cover they would yelp at the idea of putting up so much money "just for a drawing", not knowing that there were long years of study and experience behind the price and ignoring the fact that this was a really tiny part of the production costs.

Mostly, though, those innocents ignored the even more important fact that the majority of readers were very much influenced / helped by visual cues, despite their love for reading books in text-only form. Visual cues, book covers, the graphical metadata of any publication was unimportant only for a minority of the book-buying human race. A minority very often made up of computer programmers, musicians, and other non-visual types, by the way.

These days I see some self-publishing authors who pooh-pooh the importance of graphical metadata and actually boast of how they make up a cover for their book after only two or four hours on photoshop. I think that if they are outstanding off-the-chart geniuses with a rare unofficial drawing experience, a rare self taught culture in the graphic arts and publishing history,then it might work. Yes, they might just be able to make usable covers for their books this way. Otherwise, their covers are useless and a lot of people, a great many people, will skip over their books in the graphical browsing environment provided by online book sellers.

But the most amusing (or depressing, depending on my mood that day) self-published authors are the ones who actually take the trouble to seek out a good freelance artist and commission him (or her) to draw something for their cover and/or graphical metadata identifier. They fail miserably, because they're not pro art directors. Sure, the drawing is nice (and even beautiful, sometimes)and it's more or less related to what's inside the book. But it's not useful as a way to make their work stand out in a Web-based graphical browsing environment.

It gets even worse.

In so many genres, so many fields the way that you can spot a rotten self-published novel, a rotten book put out by a vanity press , is by just taking a glance at its cover. You have a field of a hundred or so book thumbnails on your screen and immediately you see sticking out the ones that are worthless hack jobs or the unpalatable fruit of innocents.

So, that's why I think eBook self-publishing is a bad idea,unless you're willing to actually recreate all, and I mean all of the skill sets that a _good_ traditional publisher (there are rotten ones) offers to authors, including the too often underrated and underestimated art of covers and/or graphical metadata.

How does this relate to Amazon's current policies for eBooks?

With their latest self-publishing programs they're shoving the slushpile right in front of readers. The readers (or The Market if you buy into their philosophy) are supposed to decide by themselves which self-published books are gems and which ones are spamclumps. Decide by reading recommendations? Most recommendations are a bad joke. As in any other browsing phenomenon the first level of filtering is going to be by visual clues. Your book cover / graphical metadata looks amateurish? Fail!

489:

According to Wikipedia (I know, but it's easy) your Rudy Rummel "used to publicly claim that he was a finalist for the Nobel Prize for Peace, based on an AP report, reprinted in his local paper, about an alleged Nobel short list of 117 names. He has retracted the claim, although it still appeared in one of his books."

According to the same source, he supports the Iraq War, but thinks that global warming is a scam. Hmmmm....

http://www.hawaii.edu/powerkills/NH.HTM

The Nobel claim's there. Read the web page, decide for yourself. I'll go for "almost as amusing as L. Ron Hubbard"

490:

I just wanted to address this quickly

because of the multiple warnings about discussing libertarianism?

Please stop. It's not on-topic to say why you like it, it's not on-topic to say why you hate it; it's not on-topic to discuss who supports it or why. No matter what your position is, you are not going to convince anyone of anything, other than that you are wrong, prompting them to respond and point out. And that got old decades ago.

Also, once again, since people seem to keep missing it: this blog is not in the USA. It is not even in the Americas.

491:

My "physical book" filtering mechanism includes reading the first page of a book. Dead giveaway for me is names; slightly too many apostrophes, or overuse of the letters "z", "q", and "x"... are a sign that the author is trying a bit too hard to be "different".

Mr Rummel's book cover art (see link in #489) fails your filter, of course 8-)

492:

Every creative process looks easier from the uninformed outside.

Oh, c'mon, Charlie, you can type 40wpm, you should be able to crank out that novel in a week. (Kerouac actually could have done it in 1/3 that time at 120wpm, but he'd have had to spend the rest of the week scoring more amphetamines.)

I'm really surprised that your senior editor farms out the actual editing to your agent as opposed to somebody from her publishing house - I thought that was the part they wanted the most control over. Is this a publisher you've been with for a long time, or somebody you started working with after you had a reputation?

Will@435 - The publishing houses did this for books - and did a job. A good job? A bad job? No way to know, since there isn't another model to compare it to.
Actually there is - go ask editors you know about the stuff that's in their slushpile. Or buy some random samples of 99-cent self-published ebooks on Amazon. And one model you can compare it with is Amazon's recommendation and reviewing system, which has been evolving for a decade or two (including evolved "features" like reviewers who'll happily give anything a positive review in return for your positive review of their book.)

493:

Charlie,

Small thought occurs. You say if you personally had to do everything associated with eBook publishing, you'd only write half as many books? But you receive 10% of the cover price.

In purely monetary terms, wouldn't you be up on the deal?

And assuming you wanted to push the work off onto others, couldn't you arrange the division of labour such that you did 1 manyear of writing, and ANOthers did 1 manyear of other tasks? 50%:50% split.

Either there is 10x as much effort/resources needed to get a book into someone's hands as it takes to write it (in which case the workflow is ripe for improvement), or you get screwed over with only 10% of the cover price...

494:

iTunes had DRM when it started. Everyone cried about how this meant that Apple was taking over the digital-music market, about vendor lock-in, about how they could "turn off your music", about monopoly, about monopsony.

Five years later and nobody gives two shits about whether iTunes files have DRM or not, which they generally don't.

495:

Ian: there's a couple of questions you need to ask yourself.

Imagine, if you will, you are interested in developing the great new app for iPhone - the barrier to entry is low - $99 for the iTunes App Store, free for Android... you can code, but you need a graphic designer and somebody who knows some PR and maybe some other people.

Now, off you go and find some people to do that on a revenue share... it will be a lot harder than you think, unless you're in a position to pay upfront.

Moving this to publishing. The assumptions needed to be made, so that Charlie would be 'up on the deal' would include the costs for: graphic designers, editors, somebody to handle his PR related activities and somebody to look after other stuff AND the interest payments to cover the cost of paying them and yourselves some money while you're writing.

All of this assumes that your actual 'sales' won't go down when you do this so there is more of a pie to go around.

There is a reason why recruitment consultants stay in business despite being seen as parasites by most of the people who use them.

496:

I love the fact that someone's brought up the pernicious effects caused by a monopsony. FYI, the biggest monopsony coming is the single payor healthcare system that is the holy trail for the progressive left.

497:

They don't care because people did complain... and because the record labels got scared enough of Apple to give a better deal to Amazon (lower prices, and no DRM). Which is a bit ironic.

498:

You're not being subtle, and your attempts at discussing politics are not appreciated. See earlier warnings.

499:


This is an interesting subject with only one thing certain about it - nobody knows what is going to happen. However, there are things that are either certain, or very probable.

E-readers are going to get a lot cheaper. The Nook is $100 now. No idea if that's subsidised by B&N, or marked up to make money - but there's no doubt, it will get cheaper.

There will be cheap, high quality ereaders that will only read open formats. It's interesting that the computer field has oscillated between general purpose computers and devices intended to fulfill single roles - which then acquire additional functionality. The mobile telephone becomes a portable computer, with a vast range of programs able to run on it. Will the ereader become a multi-function device, or will it stick to doing one thing well? The devices will be computers, so either is possible. It's also possible that tablets will become the device of choice for reading ebooks.

The share of the market for print books will continue to decline - until at some point, some kind of equilibrium is reached. Hardback books persisted even when a cheaper, more convenient alternative existed - there will continue to be a market for print, but we don't know how big it will be. It may turn out to be negligible, or substantial.

Amazon have been the big success in e-retailing, but they aren't impregnable. Apple have become very successful selling digital content - mostly music. They have a very restrictive model for this, using iTunes and the iPlayer. However, it seems to be holding up so far. Other companies that have tried online retailing have failed in a big way, so it's obviously harder than it looks.

Amazon are able to market a vast range of material due to the tiny marginal costs. Having a long tail doesn't impact them negatively, because any sale is profit.

The problem that publishers have is that they are many competing businesses, and Amazon and Apple are single entities. However, their interest is clearly in avoiding being entirely dependent on Amazon, much as the suppliers are at the beck and call of Tesco. Can they do this? Ultimately, it comes down to where customers will prefer to shop. If people persist in using Amazon to buy books, Amazon will own the market. If some alternative becomes popular, the balance will shift.

500:

Rummel seems to have a blind spot for famines caused by warring warlords. And a carefully crafted definition of democracy that seems to have been retroactively designed to exclude those democracies, as most of us would define them, that fight inconvenient (for him) wars with other democracies.

501:

Am I supposed to daunted by your reputation or something because your argument method is quite unimpressive. Tell me from your vast knowledge how someone stays ahead of the competition when they offer bad service and bad products at lousy prices. Lets assume that everyone is operating within the law.

502:

Tell me from your vast knowledge how someone stays ahead of the competition when they offer bad service and bad products at lousy prices. Lets assume that everyone is operating within the law.

The opportunity cost associated with changing to a competitor is either very hard, or you're otherwise locked in.

I have exactly three options for broadband internet where I live. They're all expensive, and they're all pretty poor and they all seem to have pretty lousy customer service.

I have exactly one option for my electricity, my gas and my water/sewerage services.

While there are LOTS of options for my bank, it's such a right royal pain in the arse to change bank that I've only done it once in the last 25 years.

In other words, there are LOTS of perfectly legal examples.

I've already bought enough stuff on my Kindle that I'm unlikely to move to a Nook...

503:

E-readers are going to get a lot cheaper. The Nook is $100 now. No idea if that's subsidised by B&N, or marked up to make money - but there's no doubt, it will get cheaper.

There will be cheap, high quality ereaders that will only read open formats.

They ARE subsidized at $100.

What magic fairy dust is going to make ereaders NOT tied to an ecosystem cheaper as they will not have subsidies?

504:

Here's what I don't understand. Your entire post seems to be written from the point of view that publishers are suppliers. As an author yourself, you should understand better than anyone that in the book business, publishers are intermediaries; the suppliers are the individual authors.

In traditional (paper) publishing, the publishing companies were a necessary supplier for most authors, because they didn't own their own printing press, warehouses, etc. But in the world of ebooks, publishers are far from a necessary intermediary. As someone has already pointed out, the costs of setting up your own website and distributing your books yourself is trivial. Yes, you'd have to do your own marketing and that would cut into writing time, but you'd then get to keep 100% of the profits. Or you could let Amazon do it for you and keep 70% of the gross. (Not the net profits, the gross sales.)

But what about the problem of Amazon becoming a monopsony and putting the squeeze on the authors, the real ebook suppliers? Well, as Dave Freer points out, they'd have to go a long way before the deal they were offering became worse than the deal traditional publishers are offering authors now. Key paragraph from Freer's article: "Let’s play through from a minor author’s point of view these terrible fates. Let’s start with the squeeze… quite plausible. At the moment they’re paying 70% of gross. Publishers are paying… 25% of Net. Or, to take the deceptive terms out and allow comparison of frink-fruit with frink-fruit, a gross (after agent’s commission) of somewhere around 14.5%… That’s a LOT of squeeze before it gets that low. And a lot of gap for competitors."

So am I worried about Amazon becoming a monopsony in the ebook market? Not in the least. As long as they offer authors the choice of whether to put DRM on their ebooks or not, customers won't be exclusively tied to the Kindle platform, and so authors will be able to sell directly to customers if they decide Amazon's deals are getting too bad. If Amazon ever started telling authors "If you e-publish with us, you must use our DRM or no deal" then they could pull off a monopsony -- but only among the authors who settled for Amazon's terms instead of setting up their own bookstore (or going with Fictionwise, ebooks.com, etc. -- all Amazon competitors in the ebook market).

In other words, the inherent low barriers to market entry in the ebook market make a monopsony inherently impossible. The only people who stand to lose if Amazon wins are the old intermediaries, the traditional publishers. And if (as I hear from many authors these days) the traditional publishers are really paying their own suppliers (the authors) only 25% of net profits, then it's the publishers who were the real monopsonists, and I say good riddance to them -- their fall can't come soon enough.

505:

I am neither arguing nor debating with you. If you want to go have a fight about economic theory and fact, please do it elsewhere.

As a reminder, please go read the moderation policy.

506:

Charlie, in a word yes. The parties mentioned committed crimes in their native lands, they should have stayed completely virtual. They could have done precisely the same kinds of things (sans Dotcom, who couldn't have made real millions) if they had been virtual citizens of a virtual paradise. Given the largely rough and tumble nature of the Internet itself, it is still largely self-policing with opprobrium being the main curtailing force. Your comment blog is a great example of this. Admittedly you need to keep out trolls, but many of them are just bots and agents (same for spammers). Over time, the sites themselves will be intelligent enough (with their own agents) to resolve for this.

Libertarian philosophy isn't always about wealth creation although admittedly it has been bannered about by those who have achieved wealth by other means and feel that Libertarian ideals are the most likely way for others (or themselves if they were young again) to achieve success (again). Conversely as the funnel narrows due to ever more egregious statism, the likelihood of newcomers entering the "fold" of the wealthy will be equivalent to the camel and the eye of a needle metaphorically speaking. :)

507:

Under the circumstances, I think that what Scalzi calls the Loving Mallet of Correction needs to get deployed now, Sean.

I am normally up for a completely off topic "Libertarianism - l or L, Threat or Menace?" (as a little-l libertarian, myself) but it's been one of those weeks, North Korea and Iran are both up to no good, and Charlie's already unhappy. Mallet away...

508:

Incidentally, nothing I just wrote should be read as dismissing the possibility of Amazon becoming a monopsonist in the physical goods market (whether those goods are books, clothing, or anything else Amazon sells), where the cost barriers to entry are much higher. There, Amazon could easily pull off a monopsony if they become the sole buyer for their suppliers. But in the ebook market, the inherent structure of the market makes that impossible in the absence of ubiquitous DRM. (Yet another reason why the traditional publishers' insistence on DRM is short-term thinking, that's going to end up costing them big in the long term.)

509:

"Still another time have I come to a place where it is very difficult to proceed. I ought to be hardened by this stage; but there are some experiences and intimations which scar too deeply to permit of healing, and leave only such an added sensitiveness that memory reinspires all the original horror. We saw, as I have said, certain obstructions on the polished floor ahead; and I may add that our nostrils were assailed almost simultaneously by a very curious intensification of the strange prevailing fetor, now quite plainly mixed with the nameless stench of those others which had gone before. The light of the second torch left no doubt of what the obstructions were, and we dared approach them only because we could see, even from a distance, that they were quite as past all harming power as had been the six similar specimens unearthed from the bookstores we had previously examined.

"They were, indeed, as lacking - in completeness as most of those we had unearthed - though it grew plain from the thick black pool gathering around them that their incompleteness was of infinitely greater recency. There seemed to be only four of them, whereas Lake’s bulletins would have suggested no less than eight as forming the monopsony which had preceded us. To find them in this state was wholly unexpected, and we wondered what sort of monstrous struggle had occurred down here in the dark of capitalism.

"Authors, attacked in a body, retaliate savagely with their pens, and our ears now made certain the existence of a writers' retreat far beyond. Had those others disturbed such a place and aroused murderous pursuit? The obstructions did not suggest it, for goose quills against the tough tissues of the online publishers could hardly account for the terrible damage our approaching glance was beginning to make out. Besides, the huge writers we had seen appeared to be singularly peaceful. "

--H.P. Lovecraft, The Kindles of Madness

510:

Daveon,

I'm aware of all those things, and more - I'm not exactly new to looking a business model/process shapes. The point being made is a sanity check on the assumptions. Things don't tie up, and thus something is wrong, somewhere.

Particular in a time when the whole industry is in the midst of a revolutionary change, now is the time to understand how you reengineer the workflow model to your advantage (which is what Amazon are trying to do). Holding on too tight to assumptions that how things were done in the past, therefore that's how they will operate in the future, is a critical mistake you can make. As is letting things happen to you - as I said above, sheep get eaten.

We know that the warehousing/distribution/selling aspects are significantly changed by eBooks - indeed collapsed would be the right word. Since they take a large pie piece of the gross, it's sensible to consider if they can be done differently such that volumes are either only slightly affected, or increase - whilst costs are slashed. I think that is true. I also think the value of certain other elements is not reflected in the price/volume equation and can be adjusted. I think the net effect is that incomes for authors could rise significantly, if they were prepared to act strategically and en masse.

511:

Great news. Amazon are looking for warehouses in Australia to open an Australian Branch. This will smash open the protected Asia Pacific book market. When I wrote to them a while back complaining about restrictions for Australian book buyers, they actually replied and said the publishing cartel were to blame, and that I should be patient as they were working on the problem.

512:

As a graphic designer I can tell you that finding someone to work on spec isn't that difficult. When your young and someone has the next "insert giant cash cow here" killer that they are offering you a tiny slice of it's hard to say no. Especially when your not in an industry known for huge financial rewards.

I had a professor try to beat it into our heads that the cardinal rule is to always get paid.

Someones offering you a percentage? Get the money up front.
Someones offering you a royalty? Get The Money Up Front!
Someones offering you a...GET THE MONEY UP FRONT!

I thought it was a funny lesson at the time....I'd tell you how many companies I ended up with a single digit % stake in but that's going to be the topic of my self published novel.

It's going to be horribly written, but the cover will be nice.

513:

Ian: I'm pretty sure that Charlie has pointed out that costs of production and distribution of the physical entity are a relatively small part of the total, hence e-books not actually being a lot less to produce than the printed article.

That leaves the rest of the business related puzzle, and I think that's probably a more significant amount that you're allowing for it. It is in the App business, which is the business I see most frequently used as the direction some people would like to see publishing going in.

Financing (advances etc...), marketing, editing, art, promotion and PR are all parts of the puzzle - and if an author suddenly finds he owns all of them, to be paid for out of his 70% - I'd not be in the least bit surprised to find that he ends up back at 10%, with a LOT more work to do that has nothing to do with writing.

514:

Really? Because as a person who pays for graphic design, I've struggled to find anybody willing to take stock in exchange for design work.

Barter, yes, stock, no thanks, cash please.

Frankly it's been driving me nuts for a couple of years now.

515:

Hi,

I worked for AMZN from Nov 98 to Mar 03, in Seattle. I was aware of most major policies at that time, especially until 2001.

You say: "obscure items would be listed as available but only ordered from the supplier when a customer requested one."

AFAIK, this statement is erroneous. Items marked as available were in distribution centers. It's possible that this included the inventory inside Ingram when Ingram was doing drop shipping for AMZN, but that's it (it didn't last long - Bezos realized he was teaching a competitor how to perform a core part of AMZN's strategy).

What's true is that AMZN could hold a single copy and list it as available throughout the country, whereas B&N could only compete by having the item in several stores.

What's also true is that AMZN turns its inventory much faster than even the most efficient bookstore chain. Therefore, on a majority of its sales it gets paid by its customers before the time it needs to pay its suppliers (by law, the terms are roughly the same through the industry in the US). That's the source of its cash efficiency.

As a side note, WRT book pricing, I wonder what you think of the French Lang Law:
http://en.wikipedia.org/wiki/Lang_Law

Cheers,

JD

516:

Daveon,

Suggest you look upthread (@411) where Charlie himself points out that roughly 60% goes to wholesale and retail.

60% is a sizeable chunk in anybody's terms, particularly when eBooks disrupt/collapse that segment particularly.

In general, you have to access what the value added of each stage is, in the new world.

Take, for example, cover design. If you took a simple, low cost approach, to producing a JPG vs a professionally produced cover design, what does that mean in the eBook world? Cost vs value - its not rocket science, but I'm betting that you don't have to climb too far up the quality scale before you reach negative marginal returns when what you are talking is eBooks.

517:

I can only speak for myself and the others in the field I know but every time I've taken stock it's been for one of four reasons. It was a friends business. If I had the time for a long shot. If it was a product I was interested in or I truly thought the product or business had incredible potential.

Now most of these things happened early in my career and today no single one of those is enough. For instance I'll end up illustrating a friends cover for his e-book when I have time for a sliver of the profits. Odds of making anything? Negligible. But I enjoy illustration work and don't get alot of it in my normal freelancing.

Would I take on designing an app on a revenue share? It would have to be a VERY interesting idea. Would someone fresh out of school want to? Much more likely.....but then, you get what you pay for.

Now to bring this slightly back on topic. How long till Amazons publishing back-end scans your uploaded manuscript, then goes out to one of the stock image houses and pulls up an image you can use for you cover design (which they can slice a few points off of for themselves)?

518:

Okay, I haven't conducted a market study or anything, but I besides my kindle (which I love) I got a phone from Verizon on which I can read all my Amazon books. I say again, what is the big deal?

519:

Ian Smith@516 - The difference between a typical self-publisher's cover and a professional cover isn't an issue of hi-res four-color-separated printable image vs. JPG, it's an issue of quality of artwork not only as art but as a marketing tool that will attract readers. The attractiveness is somewhat different for ebooks vs. paper, and I've heard any number of authors rant about the relationship of the artwork to the actual story in the book [#insert filk song about "There's a bimbo on the cover of my book"], and UK authors especially rant about the US covers that US publishers decide will sell, but it really does affect sales.

Charlie gave 10% as physical production cost, 30% as wholesale, and 30% as retail, but with physical-space books, the wholesale cost is mostly related to the fact that books are physical inventory that needs warehouses, physical distribution, cost of money for inventory, and risk of sales timing, and partly related to the cost of selling to retailers. That really does disappear with ebooks, and IMHO it's not appropriate for Amazon to take all of that. (Amazon obviously disagrees, and as a consumer I'd prefer to see that reduced cost reflected in a lower sales price compared to physical books, since I'm getting a generally less useful product.)

The retail part includes the cost of physical bookstores, distribution, costs, and also costs of selling the books (as opposed to marketing), and has a lot of complexities like buyers deciding what books to buy, in what quantities and time schedules. Some of this persists with ebooks (among other things because the selling process and publisher relationships are often tightly tied to the dead-tree books), while other parts disappear. They still have to get the customers to show up and browse the shelves, even if they're only on a web server.

520:

Ok, Ian, to be clear there that's 30% on wholesale, 30% on retail...

Under the current eBook models somebody is taking that 30% regardless.

So, it isn't 60% going back into the 'pot' it's more like 40% - and this all assumes 100% is e-distribution.

And none of this addresses:
- upfront funding of the process
- management of all the bits and the process
- all the other 'bits'
- and the other issue I have with this of what the actual money looks like

The assumption I'm hearing from many sources is that all these 'middle men' are ramping up the cost of books and that a direct market could be made where authors sell direct and make more from a lower cover price.

I'd want to see some numbers to show that the market for novels is that price elastic that reducing the prices by, say, 50% would increase sales enough for the model you're suggesting as a thought experiment to do anything than make what is, for most, a marginal occupation, even more marginal.

521:

Right... which is pretty much what I suspected. We've had moderately successful apps - 100K downloads ish, which have made us a few hundred dollars. Revenue share isn't all that good.

Even a pretty damn successful e-book is likely to make all that much at $2.99 a book or so.

Interestingly, I know a couple of artists who do a lot of book covers. The art is amazing and the make good livings at it.

It would be interesting to hear Chris Moore or Jim Burns opinions on this topic.

522:

Nothing can stop Amazon from doing anything, except the fear of spending money on something it could get for free.

But using a stock photo for cover design is way too dumb. You immediately lose any chance of establishing the book's unique identity as a digital object, or as a printed document.

I mean, take a look at this stock photo of a girl in red, holding a pistol:

http://www.crestock.com/image/271384-Girl-with-a-gun.aspx

Now go and take a look at the cover Alberto Seveso did for our host's latest novel, Rule 34. You just type or copy and paste Charles Stross Rule 34 in Google Image view.

There's no contest. The stock photo is a throwaway image. The illustration by Seveso is memorable and unique. That's what you get when you pay an art director and an artist. That's what anyone who's seriously thinking of self-publishing fiction should go and get.

523:

Okay, I haven't conducted a market study or anything, but I besides my kindle (which I love) I got a phone from Verizon on which I can read all my Amazon books. I say again, what is the big deal?

Bingo! This is the attitude of oh, Id hazard a guess at a good 80% of ebook readers. Probably more like 90% but let's be conservative.

The more I think about it, the more I think what really is going on here is the early days of the ebook format wars, epub vs kindle. But unlike with the Beta/VHS or HD/Blu-Ray kindle ebooks can be read on quite a lot of devices easily. Epub the same. The only reason both formats aren't universal is because of the recalcitrance of Apple and Amazon, respectively. But these are policy matters, not technical ones. And they could easily change, rendering the whole DRM issue moot. DRM ceases to have a meaningful effect if you can download a free app onto any device to read whatever book you want. Imagine how the VHS/Beta debate would have ended if all you had to do to make a machine play either was flick a switch?

524:

I previously posted on a similar topic here. I even broached the word "disintermediation" somewhat prior to our esteemed host (at least in this context). I stand by my previous statement then. Apple (in court as we speak for both practices mono-* in the OP) has provided both a reader (3 actually) and a market wherein the product can be sold. Unfortunately for the consumer, they appear to have colluded on pricing. We only need a third strong player and the McKinsey magic can begin.
BTW it was a friend and author who frequents this site (not to worry Charlie, he writes textbooks, lots of them) who sent me this quote:
Libertarianism, like Leninism, is an attractive, internally consistent
ideology which provides a prescription for achieving a utopian society
populated entirely by frictionless perfectly spherical human beings.
I can be forgiven for wanting to talk libertarianism then can I not?

525:

As far as what the author will have to do him/herself in the self-publishing or ebook-through-Amazon world:

Finances (advances, etc.) - no advances when you self-publish or publish through Amazon, so this goes away. You still have to manage your income yourself, but you were already doing that (surely you balance your checkbook), so no added costs there.

Graphic design (book covers, maybe other things like posters or website design) - this is an added cost. If you're an author who wants to self-publish, find a good graphic designer ASAP and establish a long-term relationship with him/her; it will pay off big in the long run. You could do it yourself, but chances are it will look terrible (most authors are not artists).

Editing: another thing authors shouldn't try to do for themselves. An author who edits her/his own book is like a lawyer who defends him/herself: they each have a fool for a client. Again, this costs.

Marketing, promotion and PR: Ah, here the author will be better off doing it him/herself. Who else feels as passionately about the book as the one who wrote it? Sure, the author doesn't have the contacts in the bookstore industry that the publisher does, but s/he isn't trying to sell to bookstores, is s/he? And unless s/he was a bestseller, how much did the publisher really do for her/his book, anyway? Have you ever read Sarah Hoyt's article/rant entitled "He Beats Me But He's My Publisher"? Let's just say that she's... unimpressed with how the publishing industry markets the books of most of their authors.

Distribution and warehousing: As has already been pointed out, this cost disappears with ebooks. Given the size of an ebook file, if your Internet bandwidth costs are starting to rise, then you're already selling millions of copies. Plenty of authors would kill to have this problem.

So what this boils down to is two things (cover design and editing) that an author considering going indie will have to contract out for, and another thing (PR) that s/he will probably have to do for her/himself. Somehow I can't see the costs of cover design and editing going anywhere near 60% of gross. And while the work needed to do PR will certainly cut into time the author could spend writing more books, what's the proportion going to be? Especially since many of the most time-consuming parts of PR (attending cons, booksignings, and other events) is stuff the author would already have to do anyway...

Let's pull some numbers out of a hat and look at them. Let's give some very pessimistic estimate for the cost of cover design and editing at 15% of gross, each. 30% total. You're now looking at taking home profits 40%, not 70%, of the gross. Then let's also say that PR will eat up fully half your writing time, which means your next book will take twice as long to come out. This is the equivalent of cutting your profits in half, so you end up at 20% profits. This is still twice as much as the 10% of gross that you were estimating authors get from their publishers under their current contracts.

Personally, if I were an author pondering whether to go with a conventional publisher or whether to go indie, I'd jump indie in a heartbeat with those kinds of numbers. And I'm pretty sure I was being pessimistic in my estimates.

526:

Alain your preaching to the choir on the quality difference between stock images and an actual cover designer. But the majority of the self published authors who would have slapped something together themselves would never hire a designer or illustrator. But if after uploading, Amazon spits out a cover design for the low price of $20 let's say, which will be a fraction the quality of Alberto's work but exponentially better than what the author would have done themselves I could see them biting on that.

The author can feel like they got a "real" cover, as awful as it may be.
Amazon can pocket another $10-$15 bucks without any sales of the book.
Illustrators and designers can shake their fists and/or cry in there beer.

It's a win win as long as your not in group three, or you know, have taste.

Not that I'm advocating for it mind you. Far from it. Just seems like something they could implement fairly easily.

527:

Robin Munn, Daveon,

You're still missing the point I think - the primary point is that the world of eBooks is a revolution, a primary scale disruption, to the literary marketplace. The workflow, the sale price, the economics and practicalities of the new world are not likely to be the same as the old one.

As I pointed up, and Robin agreed, 60% of the current gross price is likely to end up at ~10%. Lots of ways to make that happen, and I'm sure Amazon are working most of them already. As such at least half of the price we are currently supposed to play is up in the air EVEN IF NOTHING ELSE CHANGED.

However we can be fairly certain that the other elements WILL change. Maybe the publishers will go under, maybe copy editing and layout will be significantly automated, maybe nobody will care about layout and it will be done automatically on the fly to fit the screen. I point out the covers not to kick off an argument about how valuable a designer is - but to point out an eBook cover and a hardback cover are DIFFERENT THINGS, doing DIFFERENT JOBS, in a DIFFERENT SCENARIO. Who's to say you don't have multiple cheaply produced different covers, targeted and personalised to individual customer predilections? We aren't in Kansas anymore, it's a new game.

The more you look back, rather than forward, the more you get it wrong.

And at this point, when it's all to play for, it's an opportunity for the authors, as a species, to make sure they come out of it ahead. To me, there appears to be a model where most of the non-writing tasks are still offloaded, but authors have the option of much more control and 3-4x the margin on similar or greater volumes.

Maybe I'm wrong, but I'd suggest the possibility - compared to the alternatives, means it's worth considering.

528:

Eliminating DRM on Amazon's ebooks is not enough to make them acceptable, because they attack readers' freedom in other ways too. See http://gnu.org/philosophy/the-danger-of-ebooks.html.

Ethical ebooks must respect, both in principle and in practice, all the rights that we have as owners of printed books. And until they do, we must campaign against them.

Selling ebooks to anonymous purchasers is a challenge, but not
impossible. Physical stores can do it. Selling ebooks for cash could be an added business for physical bookstores.

529:

Ian, Robin. I want to make one thing clear. IF you are an author who wants to self publish in this 'brave, new, world' then have at it.

I don't think that, for most new authors, the rewards will be all that to write home about and, in all honesty, probably worse when you factor in all the non-writing work you do than the current system.

The assumptions in your logic I struggle most with are:
- prices stay the same... I already seen a LOT of people here complaining about prices because 'e-books cost much less to produce', and I'm seeing a lot of indie people publishing in the 'app' prize range of $1-$2 a unit... that's not far off what a published author with a publisher gets now... so no real win if you only get 50% of that price!
- volumes remain the same or go up. Again, I see no evidence of that. I can't speak for others but my consumption of the written word, i.e. the price elasticity of my consumption of novels is basically flat. There is a fixed number of books I can read a year and lower prices won't mean I buy more... the converse might be true and at certain high price points I'll stop buying
- that the 'soft' non-writing functions are all easy to replace. As a small business owner who hires marketing and PR people and others because they're not simple skills, I think you're strongly underestimating the complexity of those tasks

530:

You'll let the author's politics decide what fiction you'll read? That's like going vegetarian because cattle aren't monogamous. As I see it, libertarianism has bright , shiny aspects that appeal to the unappealing, who will ignore the aspects that might prove to be a positive. Your movement has become a stalking horse for enormous money.

531:

A final note before I sleep...

I strongly suspect that marketing and PR will be what actually save 'traditional' publishing. If the supply of books increases the way I think it will, and readers are being used to filter the slush pile, I think there will be a LOT of hobby writers earning roughly $0.00 a year, actually, probably -$$$ and people still buying books from Tor and others because they know what they're getting.

I also suspect that those that do well from indie stuff will probably end up taking contracts with conventional publishers too.

The indie stuff might change the entry route to being a published author but unless people find a lot more hours to read new books all the time, I'm not sure how all this supply translates into anything but a hobby.

532:

I've seen the same reaction to Charlie's comment from several unfamiliar comment posters.

What part of "in my experience" isn't getting across?

This is what Charlie wrote:

I'm not going to lecture you about Jeff Bezos either, although I do want to note that he came out of a hedge fund and he's ostensibly a libertarian; these aspects of his background make me uneasy, because in my experience they tend to be found in conjunction with a social-darwinist ideology that has no time for social justice, compassion, or charity.

You all seem to have hooked onto the "libertarian" and skipped over the "hedge fund" element, and then claimed that Charlie's experience is no more than the parroting of a stereotype.

I could certainly argue that success in the hedge fund business is something that correlates with patterns of thinking that would warp any political or economic philosophy a person might claim to support.

The apparent Libertarian reaction in this comment thread does the ideals of Libertarianism no credit. My understanding is that you are expected to make your own free choices, and the way in which you blithely skip over part of the evidence, even hide it, leaves me wondering whether you can be trusted.

533:

Yeah, you're right. Amazon could do that but then they would be violating YOG's law openly, blatantly instead of sort - of - indirectly as they are doing now.

Pocketing that $15 for a stock image cover _before_ making any sales would establish them automatically as vanity publishers. Right now they're craftily skirting that extremely dangerous status.

534:

Just thinking about cover design for ebooks, I'm not sure that current physical book cover designs would work well for an ebook.

We see thumbnails and other small images on the web pages selling the book.

Most ebook readers only display monochrome images.

All this works against current design trends. I'm not talking about things such as awkwardly-posed humans, fun though it is to diagnose the spinal conditions apparent. Drop the colour and shrink the image, and do you have anything left?

What I am seeing are some striking differences between paperback and Kindle editions of the same book. "The Mote in God's Eye" is a good example. The Kindle image is essentially title and author names in very large text. The paperback still has the title clear, but about half the area is clear of text.

And there are past cover styles which would work fairly well for ebooks. Look at the original corporate style for Penguin—bold bands of colour, a clear title, it is something they have revived for their ebooks.

I think a sensible amateur, who checked the grey-scale version, could make a good enough "cover" for an ebook. Or they could completely botch it. But it is a different problem, and the answers don't need to include dramatic scenery, ominous castles, or brooding half-clad heroes. It would maybe have more in common with a newspaper headline than with a Frazetta painting.

535:

I have just realised that now have an excuse to write a story about the unexpected sinking of a warship, which will be entitled "Gotcha"

Incidentally, Charlie has an advantage in the ebook cover-design game: "Stross" is short and unusual. You can see a two-line "Charlie Stross" as a strong design element. It's already something of a brand.

536:

Eh, why? If you succeed at selfpublishing, that means you have already demonstrated either the skillset or the contacts to do without the services of a publisher, so what concivable upside is there to signing over that much of your revenue?
If anything, there is a strong financial incentive for authors with traditional publishers to jump ship and hire the services of an editor directly, because they have something a new selfpublisher doesnt ; a fanbase.

537:

Well, this took me a couple of days to do, including have Fiona dress up in Trafalgar Square. It's rather indicative of London that nobody noticed.
http://www.neopax.com/technomage/covers.jpg

538:

Because you want to write, not run a business?

Also, potentially, because the money you are offered is more than you are making as a successful selfpublished author even if you are getting a lower percentage of revenue. Amanda Hocking's deal was reported at $2 million. And bear in mind that an ideal endstate for many might be a mixture of a contract with a traditional publisher for one set of books, a one-off deal with Amazon for an exclusive eBook, a Kickstarter funded selfpublished collection of essays and a stream of short stories you release and distribute on your own for free or near as damn it. Infinite diversity in infinite combinations.

Sidenote: the sets of readers and fanbase are not equal.

539:

#488 You really think so!?
Ok, cover 1 is a plain acid yellow, with the words "Rule 34" and "Charles Stross" on it in black sans serif.
cover 2 has the title "The Dragon-hiker's Guide to Lost Covenant at Foundation's End" (thanks to Dave Langford) by "Joseph Bloggs" and an Anne Sudworth painting.

Do you actually think may people are going to buy Dragon-hiker over Rule 34 on the covers?

540:

My previous comment on this subject disappeared into moderation, probably because I was posting too fast. So, having waited an hour or so, here's my comment again.

Daveon, you wrote:

I'd want to see some numbers to show that the market for novels is that price elastic that reducing the prices by, say, 50% would increase sales enough ...

I found some numbers for you. Dave Slusher did some analysis on sales numbers that J. A. Konrath had posted to his blog (Konrath's blog post seems to have disappeared so I can't link it, but I'll trust that Slusher got his figures correct since his graphs look entirely plausible to me). I won't copy his graphs here since filling the comments section with a bunch of IMG tags would be kind of rude to our gracious blog host :-), but you can click over to his post and look at the graphs for yourself. What he found was that the $2.99 to $3.99 price point was the ideal price point for ebooks if your goal was to maximise total revenue. Lower than that and your sales aren't increasing fast enough to recoup the price drop, but too far above the five dollar price point and your sales drop too fast, and again you don't make as much money as at the $2.99 price point.

P.S. Also, you can click on the "he did raise prices based on his observation of data" link in Mr. Slusher's article to read J. A. Konrath's thoughts about the whole thing.

541:

Ah - I found J. A. Konrath's original numbers: http://jakonrath.blogspot.com/2009/10/kindle-numbers-traditional-publishing.html

542:

That's a fascinating read, but it finishes

"It’s a failure of clarity in my original article, but I’m not advocated for $2.99 as the perfect One True Price for all ebooks forever. That was true for this data set, which is already a year old. This might well change over time, differ from author to author, genre to genre or publisher to publisher. What I do want injected into the thinking is that these numbers are calculable and measurable."

so he is not, in fact, saying that he found the $2.99 to $3.99 price point was the ideal price point for ebooks if your goal was to maximise total revenue.

I would add to that we need to know more about how eBook pricing will work over a longer period of time to know what the initial pricing should be and if, and how, it should change.

543:

Ian -

As I pointed up, and Robin agreed, 60% of the current gross price is likely to end up at ~10%.

I'm not sure I agree with that, because I'm not entirely clear on what you're saying with that sentence. :-) If you're saying that authors' net take-home, even under self-publishing routes, is going to end up being around 10% of gross revenue, then I think I disagree. But my numbers are guesswork, and I'm open to being corrected from the actual experience of published authors. (I'm not one of those, though my sister is -- but one book, published just last year, is not enough of a data point to draw any conclusions from.)

But I do agree with your point that ebooks are a revolutionary technology, and that the future of the book market probably looks a lot more different than most people are imagining. If I was advising a new author, I'd tell them -- okay, well first I'd tell them to go to someone with a lot more experience than me, since I've only gained my knowledge of the publishing industry second hand :-) -- but if they still wanted my advice, I'd tell them to explore self-publishing first. And if they did sign a contract with a publisher, to make darn sure they don't sign away more rights than they intended. What about audiobooks? What about the right to price the book at a loss leader price point for a few days? What about the right to movie contracts? (Not gonna happen for most authors, don't get your hopes up -- but don't sign away rights to anything without thinking through the possible ramifications first.) What about the rights to the Virtual Holo-Reality(TM) adaptation using technology that will be invented in 2036? Et cetera, et cetera, et cetera -- I'd sure you get the point.

Point is, in a rapidly-changing market like the ebook market, it's the nimble and adaptable that have the best chance of thriving. If you chain yourself to a slow-moving dinosaur with a legacy publishing contract that restricts your rights too much, you're going to find yourself unable to adapt to rapidly-changing market conditions nearly as well as Joe Self-Published over there. You know, the guy who just signed a lucrative deal for those Virtual Holo-Reality(TM) adaptation rights that you signed away without thinking about them.

544:

CS Clark -

Not for all ebooks, no. It's still worth experimenting with the price. But that doesn't mean you can't usefully extrapolate from his data set. And it does mean that an author would be wise not to bind her/himself too tightly to contracts that let the publisher set the price for her/his books, because then s/he'll be unable to experiment with prices and find what price point is ideal this year/quarter/month.

And if you look at his graph, it does show that for the data set in question, $3-$4 was the ideal price point to maximise author revenue.

545:

The link you posted doesn't work: I get a "404 - page not found" message. Pity, it looked from your description like an argument worth reading.

[[ Moderator: I have patched the HTML to remove the trailing full stop on RMS's link ]]

Very interesting post and subsequent discussion, Charlie. Thank you.

546:

I'm not disagreeing with any of that, I just wouldn't want people to take away PRICE > $3.99 = SELF-DEFEATING GREED for all eBooks regardless of all the other factors. We're already in a discussion where what are actually lots of different industries called publishing are treated by most people as the same thing.

And it does mean that an author would be wise not to bind her/himself too tightly to contracts that let the publisher set the price for her/his books, because then s/he'll be unable to experiment with prices and find what price point is ideal this year/quarter/month.

If we change author to publisher and publisher to Amazon aren't we're back where we started?

547:

Ian, we can be fairly certain that the other elements WILL change. Maybe the publishers will go under, maybe copy editing and layout will be significantly automated, maybe nobody will care about layout and it will be done automatically on the fly to fit the screen.

Yes/no/maybe.

Publishers going under: some will, some won't. Copy editing can't be automated, it's an AI-complete problem: merely running text through a spelling checker won't catch all mis-spellings (where there's a valid word substitution -- e.g. their, there) let alone grammatical infelicities and continuity errors, much less work out the correct way to canonicalize usage for internal consistency. (Author used "Doctor", "doctor", "Dr.", "Dr", or "dr" at various points in the text: which do you settle on?) Layout ... can be automated, to a very limited degree, for plain text as in a novel, but again, there are huge gotchas and it depends on the author getting it mostly right in the first place. (How do you introduce a new paragraph? Or indicate continuous dialog across a paragraph break? What hyphenation rules do you want to use? How about right-justification versus ragged margin, and what are you going to do to minimize ladders and runs in auto-reflowed layout?)

From a distance, all problems look easy. Up close? Not so much.