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.

 

 

Amazon Crowd-Sourced Publishing

According to multiple sources, Amazon is preparing to launch a crowd-sourced, almost reality-TV-style publishing program, where authors upload unpublished MSS and those that receive the most votes get considered for Amazon Publication (by the genre/category-specific imprints, or by a new imprint, I wonder?) with fairly generous terms.

Sources:

http://www.thebookseller.com/news/amazon-launch-crowd-sourced-publishing.html?utm_content=bufferc00c0&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

http://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/64103-amazon-launching-new-crowdsourcing-publishing-program.html

https://kdp.amazon.com/community/thread.jspa?threadID=207604&start=0&tstart=0

Thoughts? We’re in early days yet, but this looks to me like a feeder program for Amazon Publishing.

EDIT: You can sign up for updates re: this program here.

Kindle Unlimited

Earlier this week, news leaked out about Kindle Unlimited, an ebook subscriptions service for $9.99 a month, with a title list of over 600,000 titles, including Amazon Publishing titles, self-published titles, and several big-name exclusives.

The program is now live, and there are details on the page.

Terms – or ‘How Are Authors and Publishers Getting Paid?’

What that page *doesn’t* mention is how authors/publishers are paid.

UPDATE: There was a miscommunication on my contact’s part, and the content that was previously here is not meant to be public. As a result, I’ve redacted the term details.

UPDATE: I’ve received one confirmation from a self-published author (J.S. Morin) that their KDP Select titles were automatically included in KU. And the KDP Select page has been update to include KU as a feature. Interestingly, I’ve spotted at least one title I thought was on KDP Select but does not appear to be in KU. This may merely be a blip, however.

Takeaway

Unless the terms are terrible for authors across a variety of publishers, Kindle Unlimited is likely to create very stiff competition for the existing ebook subscription services such as Oyster and Scribd. It’ll be interesting to see how much volume of sales KU generates, and whether that changes other ebook purchasing habits. I see the subscription model as being best for voracious readers who want versatility as well as depth of selection, vs. less high-volume readers who may need to be more selective in their purchases, and will probably continue to shop based on individual authors and titles.

The publishing seas continue to change quickly, as they have for several years. May the winds be at your back, and a friend at your side come the next storm.

And to be mercenary for a moment, if you sign up for Kindle Unlimited, Shield and Crocus is in fact one of those titles you can read as part of the free trial. *wink wink*

Just Keep Swimming

You know how ducks swimming along look all chill, but if you look under the water, they’re paddling away? That’s me, right now. I’ve got a bunch of balls in the air, so I’ve been spending more time traveling for work, writing, and submitting than on blogging.

Here’s what I’m up to right now:

1) Doing a read-through of Hexomancy to set revision objectives. I’m 251 pages into a 318 page document, and so far, I think Hexomancy is the sharpest, most fun Ree Reyes story yet. I’m really happy with the rough, so I think revision should go fairly smooth.

2) Working with Agent Sara on project proposals to send out into the world. This includes the project Formerly Known As Metaphysical Fencing Academy as well as another project from from PITCHAPALOOZA. The third thing prepping to make the rounds is a Shiny New Idea that I’m particularly excited about.

3) Developing the Shiny New Idea. Said Shiny New Idea is especially exciting because it was created in direct response to my Business Brain going to Creative Brain like it was a TV executive or an editor and said “Hey, Creative Brain. I want to do X thing, business-wise, so bring me a saleable idea that fits models X and Y, preferably in Genre Q.” And Shiny New Idea was the result. I have so many different ideas that I get excited by that it was actually fun to give myself a market-based challenge, saying “I dare you (self) to come up with something cool that fits this business agenda,” and then to do it.

Guacamelee art - by Drink Box Studios

Guacamelee – by Drink Box Studios

In addition, I’ve been really enjoying a video game called Guacamelee, a Castlevania/Metroid-style Mexican Fantasy game starring a Luchador. It’s pleasantly bonkers, and really rather hard, especially since my USB controller doesn’t work with my laptop. I’d play on my desktop, but that’s hooked up to my standing desk, and I’m still recovering from the knee injury from back in February (I got X-Rays, so Medical Responses are in progress).

Other than that, I’m coming up to NYC this weekend to lead a Writecraft workshop at WORD Bookstore in Brooklyn. Hope to see you there!

Sword & Laser Hangout

I had the marvelous chance to appear on the Sword & Laser podcast for one of their Google+ Hangouts! We did the interview live on Hangouts on Air, and now the video is archived on YouTube:

I’ve been a Sword & Laser listener and sometimes participant on Goodreads for a few years now, so it was very cool and somewhat surreal to be a guest on the show.

Big thanks to Veronica and Tom for having me on!

Angry Robot Books Open Door Period (Updated!)

W00t! It’s that time again, folks – It’s Angry Robot Open Door time!

“But Mike, what are you talking about? I am conveniently unaware of the Angry Robot Open Door periods for informative purposes.”

Angry Robot, being constantly on the lookout for fresh blood and new approaches to the genre, periodically open our doors to unagented submissions, allowing writers to submit directly to the publisher for consideration. We’ve acquired a number of books this way, and some of those have gone on to be our stronger sellers.

 

Updated:

The doors have now opened!

Bonus: If Angry Robot acquires your book, you and I will get to work together!

A Geek’s Insider View of the Publishing Industry Pt. 1

Since I’ve been doing my job as a sales representative for a year and a half now, and I continue to get to explain what it is I do, I thought I’d do a series of posts here about my view of the publishing industry, centered on the ‘what I do in my job’ aspects, but also covering things like eReaders, agents/copyright/publication, and so on. For this series I will rapidly switch between my professional hat and my writer hat.

Item the first: Who I’m talking about — I sell to independent bookstores, museum stores, book wholesalers, and some specialty accounts (in a category we call ‘special sales’). My accounts range from online-only children’s bookstores to local mom and pop bookstores to small chain bookstores. My business is, these days, a very small percentage of the overall book business. Independent bookstores (as in not Borders, Barnes & Noble, Amazon or the chain Books-a-Million) comprise only 8-15% of the book business these days. The big money is in fact in the chains and Amazon/online retailers, and more and more in eReaders and the electronic book market. What is important about the independent bookstores is both the local business aspect and the fact that the indies have a strong effect on award recognition and reviews.

What this means, though, is the fact that the people who do my job for Amazon, B&N and Borders are incredibly important and can have a strong effect on a book’s potential. In the book biz, we call these accounts the ‘major accounts’ or ‘national accounts’ — and therefore one can be a ‘major account rep’ which grants a large degree of cache because your company has trusted you with handling a crucial part of the business.

Given that I’m still relatively new (especially compared to people who have been reps for 20+ years), I’m not yet selling to the major accounts, but I do have my own specialties which I have developed to help push our business the best I can. One of the ways I do this is by assisting buyers with social media — this will deserve to be its own post, later on. The other thing I do is take the lead for our Science Fiction/Fantasy/Horror publishers, which will also be its own post.

So who are the people at these bookstores? Many of my accounts have been in business for 20+ or 30+ years, and some have become inter-generational now, with the business being handed down or partially run by the younger generation within their family. Some stores are newer, open for a handful of years and one account that opened just this fall — proving that there is more than one trajectory for indies. Most of my buyers are women between the ages of 30 and 65. I have some male buyers but I’d say they are less than 1/3 of my account’s buyers. As a rule, my buyers are tremendously bright, very well-educated, and left-leaning (sometimes notably left-leaning compared to their area). It’s been fantastic to get to know these people who are on the ground-level, selling books in the trenches and doing their best to get good books in people’s hands. They’ve got a combined cache of experience that would fill the Library of Alexandria, and I’ve really enjoyed learning from them.

Many of my accounts are also closely connected to their local school districts, buying children’s books and/or educational materials to sell to educators as a group or individually. This means that my children’s books are an essential part of my business and by selling them, I know that I’m part of enriching the education of kids across the midwest (which warms my heart).

My independent bookstores range in size from hole-in-the-wall to old houses filled with books, bookstores in malls, and bookstore/specialty stores in tourist towns, and more. Each store has its own demographic based on their location and based on the readership which they court. Two bookstores across the town from one another can have wholly different readerships based on their focus as a store as well as their location within a town.

In addition to the indies, I also sell to some museum stores, which is fun because then I get to hang out in the museums/gardens/exhibits. I also sell to some wholesalers — wholesalers buy the books on a higher discount and then re-sell to their own list of retail customers. Some wholesalers are the clearing house for a set of bookstores, some are notably different (one account is a re-binder, that buys paperback children’s books, re-binds them into hardcovers and sells them to libraries), and each of them requires a different approach for selling.

One of the things I had to learn most quickly about this job is how important flexibility and adaptation are to my success. I can have my general strategy, but to get the best orders I can and most effectively serve my accounts, I try to filter the material to present the books with the best potential for the market while also probing to see where there is other demand or where there have been difficulties that are facing a category (‘travel books don’t sell for me anymore’).

Many people are in a gloom-and-doom mode about independent booksellers, but I think that it’s premature at worst and mere anxiety at best. But that’s a whole other can of worms.