Digital Strategy and the Future

It’s time for another Storify Post! This one is on comics & books industries, with a compare & contrast on digital strategy, overall vision, etc.

 

Nebulas Recap

 

Nebula ConferenceLast weekend, I had the fortune of attending the 50th Annual Nebula Awards Conference. I originally wasn’t planning on attending, due to an already-full con schedule, but a friend pitched me on the con, with an intent of having me participate in programming. And the panels being discussed were amazing.

Thanks to the fact that it was a professional conference instead of a consumer show, I managed to avoid coming back totally exhausted. So that’s already a win in my book, considering that I was sick for almost two weeks after C2E2.

A while back, I mused on Twitter that I wanted to see an honest-to-goodness SF/F ProCon, with a professional development focus, integrating self-publishing, traditional, and other hybrid paths. I am very happy to report that the Nebula Conference is in fact such a ProCon.

I attended programming that I wasn’t participating in, including panels on career longevity, Kickstarter, and more. It’s been a while since I attended much programming that 1) I wasn’t participating in or 2) didn’t include friends and AR authors. I usually just hang out and socialize, since not as many panels offer a lot to me these days, unless they’re more advanced in their discussions). And there was so much good programming that the fact that I was on four panel slots meant that there were even more good items that I had to miss.

My other programming highlight was the Ask an Expert sessions, where representatives from KDP, ACX, Patreon, Kickstarter, and other major companies were in attendance and making time for individual discussions. I got a lot of very useful, specific answers to questions I’d had about indie/self-publishing, and feel even more prepared as I move into being a hybrid author.

My own programming was some of the best that I’ve been a part of, and audiences seemed to get a lot out of the sessions. We had very good questions and comments from the audience in the Future of Racism panel, and my How To Hand-Sell presentation went over very well, though next year I will definitely want a projector or white-board in order to write out my Hand-Selling flow-chart.

Picture by Zak Zyz

Picture by Zak Zyz

The Moral Responsibility of the Storyteller panel was very powerful, and my fellow panelists and our moderator did a great job of handling a potentially fraught topic with a lot of grace and compassion. My last programming item – promotional boot camp, was incredibly efficient and well-directed, as our moderator (Fonda Lee) solicited questions/topics at the beginning and used those to guide the conversation rather than hoping we’d cover what people wanted to hear about.

The other big programming item for me was the Mass Autographing session on Friday night, open to the public. I sold several books, signed even more, and got to catch up with several friends. I had my iPad set up with the Genrenauts Kickstarter information to help spread the word and to be one more way for me to draw people to my table. It seemed to work pretty well!

Signing

Since the Nebula Conference moves every two years, it may be harder to build up momentum, and there’s definitely some more work to be done in local outreach to make sure that the autographing sessions reach the largest possible audience. But it was already one of the best signing experiences I’ve had.

And on Saturday night was the Nebula Awards ceremony itself. John Hodgman was a fabulous toastmaster, with a great stand-up set about science fiction, including Dune references, the role that SF/F literature plays in society, and his attempt at pitching a novel to the entire room.

And then the nominees and winners. What an an amazing list of works! It was a great night for Team Once and Future Baltimore, as Fran Wilde took home the Andre Norton Award for her debut Updraft, and Sarah Pinsker (with whom I host Dangerous Voices Variety Hour) won Best Novelette with “Our Lady of the Open Road.”

Fellow Tor.com Publishing writer Nnedi Okorafor won Best Novella for her excellent story Binti, which you should also totally read.

It was a night full of heartfelt appreciation and recognition of the breadth and depth of what SF/F has to offer, and it gave me a lot of hope and excitement for the future of the genre.

I am already thinking about my plans to attend the Nebula Conference next year, when it moves to Pittsburgh. I highly recommend the con to any SF/F writer looking to make connections in the field, participate in SFWA, and/or pursue professional development in craft and/or business skills.


The Genrenauts Complete Season One Collection Kickstarter is going strong, already 80% funded. Help us hit our goal and push onward to audiobook editions!

Kickstarter Card

Amazon: the Bricks & Mortar-ing

Well, the inevitable has happened – Amazon is opening Amazon Books, a Brick & Mortar test store in Seattle, WA.

Amazon Books storefront

From the Amazon Books announcement

Read that story first, and take care to study the pictures. That’s important.

And then, if you want some more info, check out this story from the Seattle Times.

I have so many questions. Some are first-store specific, others are for if this becomes a bigger thing.

The Seattle Times piece claims all books will be faced out, but looking at the picture above (from the Amazon announcement), I see some spine-out books. Are those just overstock, or is the Times article incorrect, and there will be some books spined-out? (Presumably workhorse backlist titles, presumably with strong sales records and/or review ratings).

Will Amazon Publishing titles be featured with tables/fixture placement? B&N and many indies have largely refused to stock Amazon Publishing titles, for understandable reasons. The Seattle Times piece indicates that the store won’t be just a showcase for Apub titles, but it seems highly unlikely Apub titles won’t get a solid push – possibly with a Kindle First fixture/table.

Will publishers be able to/be required to pay co-op for placement in these stores?

How will staff be instructed to interact with customers? Engaged and personal shopper-y like indies, or more of a zone defense Info desk culture like Barnes & Noble? Will the booksellers coming over from indies bring that approach with them, and how?

And most of all – how will titles be selected? I see sections marked “Genre <X> with 4.5 Star rating or Above,” “Highly Rated – 4.8 Stars and Above,” “Top pre-orders,” but also some traditional end-caps like “Gifts for the Gamer.”

Basically, I saw the news and wanted to hop on a red-eye to check out the store when it opens. Which is precisely what I imagine Amazon wants from readers. Not just Amazon die-hard readers, but also indie-loyalists, B&N fans, and so on. Making noise and getting attention is the first priority of a new business venture in terms of driving sales.

 

The Bigger Picture

If this test store does well, I could see Amazon Books expanding to a few stores in Seattle plus one in another 5-6 cities over the next year – probably based on Amazon’s “Most Well-Read Cities” lists they put out each year. That would take them to Portland, Las Vegas, Tuscon, Washington, D.C., Austin, etc. (Note that New York City is not on that list, despite being the home of traditional publishing.) It might even be faster – Amazon sometimes confounds by moving faster or slower than expected.

If Amazon Books succeeds and expands aggressively, I see it challenging the regional and smaller chains like Partners, Hastings, and Books-a-Million, and also posing a possible threat to Barnes & Noble directly on a long enough time-frame. The physical bookselling world achieved an equilibrium a while after Borders closed, but it’s not immune to further disruption.

Notably, I don’t think independent bookstores have as much to worry about here. Indie Bookstores have rallied to a big degree, with more American Bookseller Association members in 2014 than there had been since 2002. The current strong Indies have figured out a model that works – personal curation, community connection, and individuality. Each one has their own version of that model – part of the individuality part. And personally, I’ll take an experienced bookseller’s opinion over a Goodreads rating average any day (individual Goodreads reviewers = often good – On average, the #s are wildly undependable).

Amazon Books does have booksellers, and those booksellers could be excellent hand-sellers (most appear to have been recruited from indie stores). But if Amazon Books moved into a city with a strong indie, they might find themselves hard-pressed to beat out an established indie for community connection and individuality. They might end up not competing for customers as much as we’d think.

There could very well be room for everyone to thrive even with a wider-spread Amazon Books chain. I could see Amazon Books staying limited, bringing the .com experience into the retail space as much to sell .com as to sell books directly. But you can bet that booksellers around the country are going to be paying very close attention to Amazon Books this holiday season. And the smart ones will steal cool ideas from Amazon and apply them in their own storefronts as best they can.

So, if you’re in Seattle and want to do some investigation for me, please head into this Amazon Books location and report back. 🙂

Mike’s latest novel is Hexomancy, the fourth Ree Reyes urban fantasy, where geek magic squares off against a quartet of Fate Witches hell-bent on revenge.

Hexomancy cover

The New Landscape – Access, Discovery, and Media De-centralization

Several things popped up in rapid succession that got me thinking. The first was this announcement regarding YouTube Red, the new ad-free paid tier of YouTube. The second was the news of a new Star Trek series, to be aired (almost?) exclusively on CBS All Access, a streaming service. And then, just as I was writing this post, Amazon announced Amazon Books – a Bricks & Mortar test store.

So now, I’m going to put on my digital media scholar hat once more and talk about some high-level stuff going on right now. Some pitfalls and pain points I see, as well as opportunities.

YouTube Red has been some time in the making. January of this year, musician Zoë Keating got a lot of shares and chatter with her post “What should I do about YouTube?” on this very topic. I see this move as part of an overall shift in the landscape toward more and more de-centralization of content, where 1st-party streaming systems and subscriptions replace once-agnostic content aggregation-esque systems like YouTube, Hulu, etc.

Here’s YouTube creator Hank Green discussing some of the ins and outs of this move.

I appreciate him spending the time to talk about the positives and negatives, avoiding a hard knee-jerk reaction. I’m worried about the independent creators who had found an equilibrium between Patreon, YouTube, and other venues who now have to pivot and adjust in a big way. It’s the way of life, but any logistical interruption costs creators money, because have to spend spend more of their time on admin and strategy rather than the actual creation.

And then, just hours later, I saw the news about the new Star Trek show, and that it was going to be almost exclusively available on CBS All Access, a paid streaming subscription which currently costs $5.99 a month.

It looks to me (and others, from what I’ve seen), that this is CBS positioning the new show as a Killer App for their streaming service, which I’d not heard of before today (I’m mostly out of the Media Criticism game day-to-day, thanks to having two other careers).

It’s potentially a very smart approach – and one that most of these proliferating paid services are following. HBO, Netflix, Hulu, Kindle Unlimited, all of them are bringing in or commissioning exclusive content to serve as Killer Apps for their individual services.

But here’s the thing about that proliferation – if every service has its own killer apps behind their pay walls, most consumers are very quickly going to max out on the $ they can or choose to pay for these services.

 

Consumer Side

An example – I have a steady, middle-class day job and I have a writing career. I’m married to someone who also has a steady job, and we have no kids. So we have more disposable income than a lot of US families. Between us, we pay for Netflix, Hulu, and High-speed internet. I get my razors on a subscription, I subscribe to a fiction serial (Bookburners), I’ve been an intermittent subscriber to Oyster and Scribd, as well as supporting a half-dozen creators on Patreon and intermittent subscriptions to broadcasters on Twitch.tv. As a household, we’re probably in the top quartile of subscription service users in the US. And I’m very much at the point of ‘Okay, that’s all I can do’ when it comes to subscription services. If I add one at this point, it probably involves dropping another.

And there are *so many* of them these days:

Twitch, YouTube, Netflix, Hulu, Crunchyroll, HBO Now, CBS Access, Spotify, Apple Music, Kindle Unlimited, Scribd, Amazon Prime, etc.

And that’s not even counting subscription boxes (L00tCrate, etc.) and subscription services outside of entertainment, like Harry’s, Blue Apron, StitchFix, etc.

Economic recovery in the US is happening, but it’s slow, and it’s accompanied by wage stagnation and income inequality (I can’t speak well to the economic situation elsewhere, so I won’t). So the % of people in the US that can afford numerous subscription services without seriously re-framing their budget is still not too large, from what I can tell. Whether this is part of an overall paradigm shift in how people budget and consume content is a different discussion (there are too many ways this could go – I have to focus).

 

Creator Side

Switching hats now – what does this look like on the creator side of the equation?

I see this proliferation of paid/gated services as a double-edged facet of the overall creative & commercial ecosystem. There are opportunities, but they’re potentially fraught.

Here’s what I see as the dominant progression for a creator trying to make money from their work (visual art, music, prose, comics, video, etc.)

Level 1 – Start small, give stuff away for free, sell some stuff. At Level 1, a creator is almost totally reliant on big systems, for both discovery and fulfillment/delivery. Basically no one knows who they are, so they join larger infrastructures and services to get the word out about their material through algorithmic and organic discovery.

Level 2 – Building Audience & Relationships — At this level, it becomes viable to sell some merch (T-shirts, mugs, stickers, patches, etc. Here, a creator can bring dedicated fans onto a growing mailing list. This level enables direct sales and stronger performance on retail sites, but the creator may still be largely dependent for discovery-enabled growth and a lot of fulfillment/delivery

Level 3 – Big Creators – Here, creators have a dedicated audience large enough they can get a living wage directly from their base, either totally direct or through Patreon/Kickstarter. Maybe they supplement their income speaking/appearance fees etc., being large enough that they are in demand not just as creators, but as entrepreneurs/thought leaders in their field. They may still use large systems, but if they do, they do so from a far stronger position – they are less dependent on any given system, since their base is strong, a base that is specific and mobilized, not platform-dependent.

This system is reductive, and by applying it broadly across media, I lose some nuance. Musicians can tour and get money from in-person appearances and sell merch there – novelists and poets largely cannot. Visual artists can sell commissions at conventions for solid income, writers have less opportunities in such situations. Etc.

Some take the pure indie path and are less reliant on the bigger systems, but then don’t have access to their discovery engine.

As the landscape moves toward more gated content, more push for exclusives as killer apps, more and more places to publish and publicize, creators have to have our eyes wide frakking open as we consider every new platform, every new distributor agreement, every new book deal, and so on.

Because things are moving fast, and these big platforms are only allies for as long as we’re useful to them. ACX changed its payout terms last February, and because ACX was the only real game in their town (self-publishing audiobook service), creators were forced to sign the new terms or walk from that service entirely. It’s the same type of choice YouTube creators have been forced into, though with notable differences (ACX was a flat-out rate cut, YouTube might come with additional payment, but requires more opt-in and cuts off other options). Any creator that relies on a single or small # of services/sites/retailers for a large % of their business is vulnerable to disruption, as Chuck says in the link re: ACX.

Anytime one of these big companies makes a shift, it causes huge ripples, and creators, especially those of us reliant on platforms for fulfillment, discovery, or other services/opportunities they offer have to roll with the changing tides.

In my opinion, creators right now have more to fear from Monopsonies and monopsonic behavior, than monopolies. Since so many creators are currently beholden to retailers and/or content services (writers and Amazon/B&N/Kobo/iTunes/Physical Bookstores, musicians and iTunes/Spotify/Pandora), if a creator wants to retail their work but doesn’t have enough reach/audience on their own, they use a seller/vendor. But if there are few enough vendors in their world, and those limited vendors exhibit monopsonic behavior, the result tends to be a major squeeze on the creators.

Paradoxically, the creators are the only reason the monopsonists can survive – if a majority of creators pulled out of monopsonic vendors, those vendors would collapse. But in the meantime, the lost income, the lost access could easily bankrupt a huge % of the creators pulling away from the monopsonist.

In a healthy market, there are a range of options, and creators can respond to a change of terms they dislike by removing their content from that platform. But for most video creators, removing everything from YouTube stands to present a loss of a huge % of their access and income, just as a prose writer would stand to lose a huge % of their access and income if they decided to not sell through Amazon.

Monopsonic behavior also impacts larger creator groups, like publishers – if one retailer or wholesaler gets too strong, it can create problems. It’s the WalMart problem. Wal-Mart pushes down prices, then makes up their $ in volume and by demanding better terms from their vendors, The vendors (publishers, manufacturers, etc.) then get to choose – pull out of the single-largest physical retailer, or accept the terms. Because individually, Wal-Mart doesn’t need most vendors. They need a plurality or majority, but as long as the selection adds up, individual vendors can come and go.

So when you’re one of those vendors, one of those creators, you end up in a really terrible situation. And that worries me. I want a healthy marketplace, where creators (authors, musicians, etc.) and the publishers/labels/etc that work with them have options, have recourse for if/when terms change in a way that becomes untenable.

The sky is not falling. But I will continue to point out rain clouds when I see them forming. Because then the smart folks can put out buckets and save on the water bill, or pull the lawn furniture inside before the storm breaks.

I’ll stop there before torturing the metaphor any further.

What do you all think about these streaming service moves – YouTube Red, and Star Trek on CBS All Access?

Mike’s latest book is Hexomancy, the fourth Ree Reyes urban fantasy. Geek magic squares off against a quartet of fate witches hell-bent on revenge.

Hexomancy cover

The Many Sides of Bundling

Earlier this week, Tor announced that it had partnered with BitLit to offer discounted ebook editions to readers who already own print editions ($2.99 per book).

Books

Angry Robot has had a bundling promotion running for some time, offering free ebooks to customers who buy the physical from one of several bookstore partners, or at conventions.

Bundling has been an on-again, off-again hot-button topic in the publishing world, as readers lobby for getting the ebook edition for free with their physical purchase. A frequent argument I see is that if a reader pays for a book, they feel like they should be able to consume that book in whatever format they want – they’ve bought the content, so format shouldn’t matter.

The production realities in publishing aren’t quite that simple. The final steps in book production diverge between print and ebook – so the  work-hours that make an ebook are different work-hours, with different skills and programs needed, than the work-hours that produce a finished physical book.

 

Don’t get me wrong – I think print + ebook bundling should be universally available. TV and Film companies have already figured this out – in the US at least, consumers can by a DVD, DVD + BluRay, or DVD + BluRay + Digital Download. Sometimes there’s even a 3D BluRay in there. But the different formats are available together. And sometimes the programs involved in the digital download even work (and sometimes they don’t – I’m looking at you Ultraviolet).

To sell a bundled print + ebook edition, here’s what publishers have to do:

1) Partner with BitLit or similar companies, selling companion ebooks at a discounted price to verified print owners (who mark up their physical book to claim the ebook).

2) Create a separate edition (with a separate ISBN) for bundling. That bundling edition would likely cost $1-$5 more than the normal physical edition, just as the DVD + BluRay + Digital Download edition of a film/TV show costs ~$5 more than the DVD + BluRay edition (though digital films/TV shows tend to cost more than individual ebooks). This probably means creating a series of download codes for every book, printing a pull-off-sticker on the inside cover or the like. Printing download codes in plain sight in or on the cover would be incredibly rife for abuse, so some precautions are expected. Marvel comics does this as the default for some comics, offering a free digital download.

2a) As above, but offer universal bundling for no additional cost. That has its own difficulties, as expressed below in Show Me The Money.

3) Publishers broker deals such that every print edition retailer creates a partnership with ebook retailers to enable bundling up-sales at point of sale/checkout. Buy a paperback book, automatically get prompted to buy the ebook at a discounted rate. Amazon has something like this with MatchBook, though only a few publishers have signed on for the program.

 

 

Show Me The Money

Here’s the big question, the one I don’t see asked as often.Who gets paid, and how much?

How does bundling impact how authors are paid?

For this, I’m going to get very hands-on with #s and $. There will even be charts. You have been warned.

Royalties, the amount per sale that writers are paid (against advance or directly) is determined by the specific contract with the publisher. In self-publishing, the terms are not royalties, but instead the creator’s share (as the author-publisher).

But if a physical edition AND ebook edition are being sold at once, how is the royalty calculated? If the ebook is a free add-on, then the author only gets the paperback royalty despite that when looked at from the current paradigm, the book is being sold twice, once in each format.

Part of the trick here is that physical royalties are calculated differently than ebooks. In most contracts, print royalties are calculated off of list price (aka the published price on the cover), 6-8% for Mass Market, 8-10% for Trade Paperback, and ~12% for HC. These rates vary by contract.

Ebook royalties, however, are calculated on net sales, the publisher share of the list price. That’s usually 70% of list price in agency agreements, and usually 50% in Wholesale agreements.

This means that in many cases, authors can get more $ proportionally and in real $s.

Let’s do some comparisons:

For each format, I’ve market the highest royalty for the author in Bold, the 2nd best in Italics, and the third is left in plain text.

Paperback Price ($) Royalty ($) 8% Ebook price ($) Royalty ($) – Agency 70% Royalty ($) – Wholesale 50%
Mass Market (8% Print royalty) 7.99 0.64 6.99 1.22 0.87
Trade Paperback (10% Print Royalty 14.99 1.49 9.99 1.75 1.29
Hardcover (12% Print Royalty) 25.99 3.11 12.99 2.27 1.63

 

So we see that Agency Ebook is the best deal for the author in paperback, but Hardcover tends to pay more than even agency. This is due to the fact that ebook prices scale up as the formats get more expensive, but not at the same rate that print edition prices increase. There’s been major consumer pushback against fiction ebook prices above $10, and especially over $12-13. Ebooks for titles released in Hardcover would need to be priced at $17.99 for the ebook to earn a higher $ royalty than the Hardcover.

N.B. – These price levels are not universal, nor are the royalty rates. Angry Robot prices all ebooks for individual books at $6.99, and Saga Press’ recent release of Ken Liu’s Grace of Kings is priced at $7.99 in ebook, even as the hardcover sells for $27.99.

Price elasticity of demand is a thing, here, and it’s likely that when a book is cheaper than the physical edition, they ebook may sell proportionally more, makin up the per-unit royalty loss with volume sales. Several publishers have tried this approach, and it is the default approach for author-publishers, who tend to set the print $ far higher than the ebook price to show the discount, while usually pricing ebooks at $4.99 and below (sometimes far below). And yet some of these author-publishers have made incredibly good $ selling at those bargain prices, even with a lower author’s share due to vendor agreements (bringing in 35% per sale instead of 70%).

Given that authors tend to receive a better $ royalty for ebook sales when the title’s physical edition is a paperback, how do publishers adjust the sale royalty for a bundled edition?

If the bundling happens with its own edition, how will royalty be calculated – List or Net, and at what rate?

I’d propose that a bundled edition, being sold as a physical book, would probably need to be based off of the print royalty, with a bonus for the ebook, maybe around +5-8% of list.

 

So 8% of list for the MM, but +5% bonus for the ebook, for 13% of list. The reader is effectively paying $2 extra for the ebook, and the author is getting about 2x the royalty as they would on a $7.99 MM.

The result would look like this:

Bundle Edition Price ($) Royalty $
Mass Market + Ebook (13% List) $9.99 $1.30
Trade Paperback + Ebook (15% List) $17.99 $2.70
Hardcover + Ebook (20% List) $29.99 $5.99

 

The royalty gain is higher in Hardcover due to the fact that the promotional price increase of adding $2 is very small in a Hardcover, and publishers margins on a Hardcover are quite good, so I added 8% to the royalty rate instead of 5, especially since Hardcover books are the ones most vulnerable to losing sales to their ebook edition counterpart (due to the larger price difference).

The question then is – would readers pay these rates to get print + ebook as a default? I know I would, as I like to have both editions when I can. you have other thoughts on how to implement a bundling model? Do you want bundled ebooks with physical editions? How would you want them?

Do you have any other thoughts on how to implement a bundling model? Would you want bundled ebooks with physical editions? How would you want them? How much extra is a fair price to get a bundled ebook?

The Content Wars Come to Publishing – KU and Subscriptions

or Veteran of a Thousand Content Wars 

(with apologies to Hawkwind)

We’re well and properly in the era of The Content Wars in the US entertainment industry – internet music subscription services like Spotify and Pandora, but also into TV/film with start-ups like Netflix, Hulu, and Amazon moving into the content-generation business, all-you-can-watch services that gain market share by having the best selection and supporting both the “I want to watch something” and “I want to watch this specific thing” audiences. Subscription services jockey for exclusive content, either by out-bidding one another for partnerships with distributors or by bringing in people to generate exclusive content.

The result? Unparalleled access for consumers, but for *comprehensive* access, we end up paying out several times. I can watch Community on Hulu, but I need Netflix if I want to watch the new street-level Marvel shows (Daredevil, Jessica Jones, etc.). And I need HBO to watch Game of Thrones, and Amazon Prime to watch more of Chris Carpenter’s. And many of us are still paying for cable access, and then add on these subscription services.

Publishing

The Content Wars have already been waging in publishing – one has to look no further than Amazon and Hachette’s multi-month impasse, resulting in diminished or non-existent access to Hachette content, in-service diminishing of available content, with the service specifically directing attention away from Hachette content to content from providers they were on better terms with. And before that, we had B&N’s impasse with Simon & Schuster, where new S&S books were passed entirely by the chain in many cases, completely tanking the sales of many books that launched during that window.

And now, the subscription model has come to publishing in a bigger way, with Kindle Unlimited making a lot of noise, though it was beat to market by Oyster and Scribd. Libraries have long served as a way for readers to get access to a large amount of content at a single price (usually free-though-you-pay-for-it-with-your-taxes).

But in the last week, there’s been some more chatter about Kindle Unlimited, Amazon’s subscription service. The inciting incident is this article on the New York Times, from David Streitfield. (Looking at Streifield’s previous Amazon articles shows some Anti-Amazon slant, but in this article, I think he’s dead-on).

Former SFWA president and Dude Who Knows A Lot About Publishing John Scalzi talked a bit about KU on his blog, and identified one of my major concerns about Kindle Unlimited: it creates a Zero Sum Game for Authors:

In the Kindle Unlimited scheme, the pool of money available to authors is strictly limited by a corporation whose purposes, short- and long-term, are not necessarily aligned with the authors’, and every time someone with a Kindle Unlimited account reads another author’s work, every other authors’ share of the pot  becomes that much smaller. In the traditional publishing model, it’s in my interest to encourage readers to read other authors, because people who read more buy more books — the proverbial tide lifts all boats. In the Kindle Unlimited model, the more authors you and everyone else reads, the less I can potentially earn. And ultimately, there’s a cap on how much I can earn — a cap imposed by Amazon, or whoever else is in charge of the “pot.” As an author, I won’t be able to ever earn more than Amazon wants me to (especially if Amazon requires my title to be exclusive).

Personally, I think Amazon has really flubbed this one. The implementation is wonky (that’s a technical term, folks) – KU borrows seem to count more than ebook sales in the algorithm (anecdotally if not officially confirmed), which skews Amazon’s much-obsessed-over ranking-based discovery engine. I also think they’ve overplayed their hand by limiting KU to KDP Select (and its exclusivity). With the borrow rate notably below the author share for a $2.99 book (where AMZ’s preferred pricing share kicks in, giving authors 70% of retail instead of 35%), all that we’re going to see is more flooding at the $.99 price point as authors try to make back money by gaming the KU system.

And beside all of this, the way KU is working is damaging AMZ’s otherwise-largely massive favor with indie authors, which generate a huge amount of passive income for AMZ retail. Amazon wants indie authors to favor their KDP platform, either as first-among-equals or as an exclusive partner. KU undermines that status for many, though I’m sure there are some authors making a killing in KU – there are always winners with a new system like this, writers whose works are just the right kind of thing for the tastes of the majority of Kindle Unlimited users. By marrying KU access to KDP exclusivity for indies (save for the small minority of indies who are such a large draw that they can command better terms), Amazon is moving the goal posts and forcing authors to chose between anti-competitive exclusivity and access to where Amazon looks to be moving their market.

At the end of the day, so much of this comes down to controlling the territory. The Content Wars, from Hulu/Amazon/Oyster’s perspective, are all about making yourself indispensable, about becoming a Utility – something you pay for every month because you need it to live the way you prefer. Amazon wins when consumers do all or almost all of their reading on Amazon – if your consumer never has a reason to leave your walled garden, they’ll get everything there, and you control what they consume, how they consume it, and what they’re advertised along the way.

Another possible problem with subscription services is that while subscribers might end up reading more books overall, they might pay less for those books – with more of their reading on subscriptions. Oyster/Scribd/KU rely on the gamble that on the whole, enough subscribers will read less than their subscription prices’ $$ worth of books in a month, so that the service can be profitable.

For a $9.99 subscription, that means reading less than $20 worth of books in a month, or 2-3 books a month (presuming that the publisher’s share is modeled on a 50% WHS model). Whether that’s viable remains to be seen. The users who would be most attracted to this model, I’d think, would be super-users, the kind of readers who tear through 10 romance novels a month. But what these subscriptions need to be solvent are casual readers who like the access, the idea of being able to read whatever they want, even if ‘whatever they want’ is actually a tiny percentage of all books currently on the market.

Worst-Case Scenario

Here’s my worst-case scenario, which I don’t think is likely but is very possible:

1) Subscription service(s) become the majority platform for ebook discovery and consumption.

2) Said subscription service (s) pay based on a fixed pool, where retail price or comparative value of books is erased in the process of paying out creators.

#2 is basically the Spotify model for books, which is what Kindle Unlimited is already using. The payout per-borrow is better than Spotify, to be sure, but it’s already trending down from where it started.

The Content Wars are nastiest, from what I can tell, in music, especially for creators. iTunes is the biggest dog in digital music sales, and if you’re not on iTunes, Pandora, or Spotify, your discovery chances are incredibly low (YouTube is your game, in that case).

Spotify and Pandora pay fractions of pennies per play. Imagine your favorite author getting paid $.50 for a read of their brand-new hardcover novel. An industry-dominant subscription model paying on a pool determined by fiat would be disastrous for authors. Consumers might win, and whoever owns and operates that subscription would win, but again, without competition, content providers lose a lot of leverage – they need to be in the only game in town (or one of the only games in town – a small oligopsony is almost as bad as monopsony), unless they’re big enough (like Taylor Swift) to pull their content and use other distribution models.

Kindle Unlimited is not nearly a Spotify, but it’s the closest thing to it. Amazon stands to benefit from making KU more like Spotify, as long as they can keep enough content in the program and deliver a stronger user experience to edge out Oyster and Scribd and therefore control the subscription market the way they control the Ebook market (in the US that is – other territories have a different market share distribution).

Summary

I believe subscription services can be beneficial for publishing, including authors. Oyster’s model is, I think, a good one. They pay full royalties for each time that a user reads beyond the 10% mark in a book, and for now, the publishers that work with them are mostly offering backlist to the service. This means that Oyster can serve as another way to monetize the backlist and get consumers caught up so that they then get excited to pay full price for the newest book.

And really, all of this is still early days for subscriptions, both in publishing and in TV/film and music. I predict that we’ll see metaphorical blood shed in 2015 over these subscription services, but I hope that it’s not the blood of creators.

What do you all think? Do you use Kindle Unlimited, Scribd, or Oyster? And for my fellow creators, what are your thoughts on subscriptions? What would a good subscription service look like to you?

 

Simon & Schuster’s New Deal with Amazon

So, this news broke yesterday: http://time.com/3525993/amazon-simon-schuster-hachette/

With precious few details.

Context: My books Geekomancy, Celebromancy, Attack the Geek, and The Younger Gods are all published by Simon & Schuster. I’ve got a lot of literary skin in this game. I also have work out with Amazon Publishing, who published Shield and Crocus, and are contracted to publish an original graphic novel in that world.

As a S&S author, I received a note last night from S&S CEO Carolyn Reidy, indicating that the deal was advantageous to S&S and authors, maintaining author’s share of sales.

So the big question is: What is the new deal? Agency pricing for ebooks has typically been a 70/30 split, with publishers taking 70% of list, and the retailer taking 30%, which they can discount out of (sometimes, depending on the deal).

If this means that S&S ebooks are moving from Agency Lite to a new Agency, then individual author share is not likely to change, consistent with current reports. But this is likely to be a different kind of Agency deal, and there may be small print aspects to the deal that change the math.

I’m hoping that more details will come out, especially as a S&S author:

In the meantime, I have far more questions than answers:

What’s the publisher/retailer split?

What are the ‘limited exceptions’ where Amazon will be able to set the price of some books?

And what went differently in the S&S negotiations than those with Hachette? It’s unlikely that the exact details will be made publicly available, but if various Big Five publishers end up with notably different terms with Amazon, it behooves authors to know at least some of the details about those differences as we make our decisions about where to submit and publish our books.

UPDATED 1:01 PM with more details.