February 11th, 2010

a bit, alright, a helluva lot more about e-books

Beginning with a link, forwarded to me by R. (he actually sent me the yahoo finance version, but it is this article):

http://www.nytimes.com/2010/02/11/technology/11reader.html

Consumers of e-books are not happy about the publishers "successfully" raising prices, er, moving to an agency model. Various consumers are interviewed complaining about specific instances of books which in paper form are remaindered but are still charging more than $9.99 online. Publishers "argue that new e-book shoppers will welcome the chance to buy digital editions at a level significantly lower than the typical price tag on a hardcover book."

I understand we won't know what the next wave of adopters are going to think of the agency model and its prices in practice (because, after all, we don't pay some "agency model"; we pay a price). Here's where I start to get annoyed, because this is a publisher and he is patronizing me:

{quote begins here} “There are people who don’t always understand what goes into an author writing and an editor editing and a publishing house with hundreds of men and women working on these books,” said Mark Gompertz, executive vice president of digital publishing at Simon & Schuster. “If you want something that has no quality to it, fine, but we’re out to bring out things of quality, regardless of what type of book it is.”{quote ends here}

I'm going to segue away from the NYT article at this point, but I may come back to it, depending on just how angry I'm still feeeling about Mr. Gompertz and his ilk. I have plans for Mr. Gompertz and his ilk.

Recently, I posted about putting together a spreadsheet of my most recent 12 months of book purchases, half of which were from imprints of the big 6, of which Simon & Schuster was not in the top 3 for my purchases, nor is it in the top 3 for market share, which I posted about separately. I can't speak to "quality" -- I can speak to whether I like it well enough to buy it, and whether other people do, too, and Simon & Schuster presumably cares about that. Might be an incorrect presumption, but hey. Oh, and they don't do that great on the NYT bestseller lists, either. Someone might want to point some or all of this out to CBS at some point.

Earlier than that, in a comment on another post about the very rapid transition to e-reading causing major problems for trade publishers, my friend P. suggested that if the publishers jack the price to try to slow that down they risk having some e-publishers come in and eat their cake. At the time, I was skeptical. Ignoring for the moment the fact that many name publishers are locked into long term contracts, it's so hard to take that big step away from the security of the big 6 after having worked so damn hard to get there that it was difficult for me to imagine that could happen en masse.

But P.'s remark stuck with me over the ensuing weeks, and I keep arguing with it in my head and I keep losing the argument. Really, the only question is whether I can successfully find books that satisfy my reading desires through sources other than the big 6. I've made big changes in my reading habits before when I became dissatisfied; there's no reason I couldn't make big changes again. And if I can find enough books that I like to read from somewhere other than the big 6, my spreadsheet matched against big 6 market share suggests that in general, the rest of the market could, too. I am not unrepresentative.

I have read e-published books without a print edition. The most recent example was _Liberating Lacey_, which I discovered through a favorable review over on SBTB. I knew, in general, about Ellora's Cave and Samhain. I knew that e-publishing did more than just romances, but I wasn't sure how to go about finding it. A little googling found a directory of "legit" e-publishers (they pay royalties and don't demand cash from the author to subsidize publication):

http://www.ebookcrossroads.com/epublishers.html

But wandering around epublisher websites wasn't inspiring me. However on one website (forgot which), one book was listed as having one an Eppie, and that reminded me that there had been epublishing awards for a few years now, which I had forgotten.

http://www.epicauthors.com/epicawards.html

From this link, you can look through 10 (and 1 more of nominees) years of Eppie winners, in recent years including nominees, and finely sorted by genre (and subgenre). Yes, erotica remains a big component -- if you shove something to the margins, it'll be the first to adopt a new way of doing things, because they aren't as bought into (or sold out to) the old way. But there's a lot to go around. Many recent winners and nominees are available on the kindle (with favorable customer reviews) for under $5; more for under $10. I bought 5 and I'm not done shopping. That's just the first cut -- many of these books are by authors who have written a lot, so if I like one or more, I've hit gold. This gets me some sense of which epublishers are picking what kind of work, and that's helpful, too. And I'll start to get a sense of what the review quality is of people who have already made the switch to e-published fiction. And they're out there:

http://bookutopia.blogspot.com

If you read a lot, and the library isn't getting it done for you, and you're strapped for cash to support your habit, $5 and under is compelling.

That's what I was going to write about, before my dear husband sent me that NYT article, in which Mr. Preston (yup -- I've mentioned him before) says:

“The sense of entitlement of the American consumer is absolutely astonishing,” said Douglas Preston...It’s this notion of not wanting to pay the real price of something.” (I left out the big about Wal-Mart, because really, Preston is making himself waaaayyyy too rich a target here.) Perhaps, after I've read my recent purchases (or, alternatively, decided they are too awful to continue with), I'll have a better understanding of why Mr. Preston deserves more money than, say, Kate Willoughby, Marie-Nicole Ryan, M.J. Fredrick, Phoebe Matthews or Shannah Biondine. The good news for me is that at least those authors have decent odds of meeting one of my first cuts for spending time with a new author: woman?

Mr. Preston goes on:

“It gives me pause when I get 50 e-mails saying ‘I’m never buying one of your books ever again. I’m moving on, you greedy, greedy author.”‘

Nice to know you're paying some attention, Mr. Preston. If you don't have anyone buying your books at any price, you may be looking for a new gig. Then again, perhaps you've made your nut and could just retire and do whatever it is retired people do (me, I spend it reading, keeping small children alive -- things like that. I understand some retired people have time for golf.).

There's some discussion about how other things compete for the book-dollar, altho, sadly, no one mentions beer. We must have lost all the beer-or-book people long ago. Then a comment about piracy, and limited time-budgets. Publishers are all happy that _they_ get to experiment with price points, which is basically the point at which I realize _they are morons_. They _seriously_ think they're going to find a better price point than _Amazon_? Ah ha ha ha ha ha. Oh, that's really funny. It gets better.

{quote begins here}“We may introduce a book at $14.95 for a year and then move the book to $9.99 when we would have put out the trade paperback edition,” said Dominique Raccah, chief executive of Sourcebooks, an independent publisher.{quote ends here}

I didn't recognize Sourcebooks, but I was prepared to cut them some slack -- they're an indie, and I had a general policy in place before the Macmillan v. Amazon showdown that indie and academic publishers got to charge more on the premise that their markets were smaller. So I went to their website to find out what they sell.

http://www.sourcebooks.com/products/bestsellers.html?limit=25&orderby=product_sales&DescOrderBy=ASC&keyword1=&keyword2=

The good news is the first 8 books appear to be relatively recent publications. The less good news is that as you continue, there's a shocking amount of Georgette Heyer in the top 25. I _love_ Georgette Heyer. I really do! Possibly my favorite romance author of all time, despite the complete and utter lack of sex. But she has been dead for decades. Worse news: several other titles are spinoffs/homages/sequels to Jane Austen's works. Yeesh. Also, more than one baby names book. Good luck, Sourcebooks, with your pricing experiments. You clearly have a theory about who your market it. And let's just say, it's not me.

At the end of all this ranting, I maintain some of what I said earlier:

(1) The publishers taking the hit for raising prices for e-books to a more stable level is good for Amazon. They don't get blamed, and they get to actually make money.

(2) A lot of readers who were paying hardcover prices aren't going to give a rat's ass about $9.99 vs. $13.99 vs. $15.99. Even if they could get it cheaper in paper (remaindered or used or whatever), the convenience of not having those stacks of books to dispose of may just keep them paying what the big 6 choose to charge, as long as it is not significantly more than commonly available discounting on the hardcover at the time of release -- that could lose them some customers.

(3) I still don't know how hard it's going to be to find e-published only books that satisfy my reading desires. But I will soon.

disintermediation != walmart

I realize that what Wal-Mart does (and takes the hit for a lot of other people doing the exact same thing, viz. getting The China Price) is distasteful. However, there is more than one way to seriously cut the cost of producing a substitutable good and pass the savings along to the customer. It is disingenuous to claim that all forms of cutting costs are morally equivalent to paying child slave labor to make toxic crap for our children to play with.

Here are a few examples:

The transition from minicomputers (think DEC) to personal computers (think IBM PC, Intel, Microsoft, etc.). I don't think at the time that anyone was running a fab in China, but even if they were (or you want to say that where they were running a fab was equivalent then to China now, which is a dodgy proposition, but hey), the savings between minis and PCs did not arise from that kind of savings. It arose from a bunch of disruptive innovations that could be summarized as worse is cheaper -- and it turned out there was a serious market for worse if it was cheap enough.

A series of transitions in computer storage technology. Again, in all cases, technology that amounted to worse is cheaper. And to worse, we owe a bunch of really nifty gadgets from Apple like the Nano, which is now so well known that people think of that device when they hear the word nanos, rather than nanotechnology. Which is disturbing, weird and was probably inevitable.

Using typewriters instead of writing everything out longhand.

Steamshovels instead of, er, shovels.

Publishers have delayed the transition to e-books for long enough that they appear to be experiencing several cost-cuts simultaneously.

(1) E-publishers do not suffer from costs associated with distribution uncertainty (you don't have to ship copies to everywhere you think a book might sell, and then ship it back or destroy it at your cost or whatever). Publishers had an opportunity to experience this transition earlier, had they been willing to make some modifications to their relationship with booksellers -- the same modifications that virtually every single other kind of retailer in the country had already made sometime since the end of WW2.

(2) E-publishers have equal access to customers as big 6 publishers. If the publishers had collectively introduced a DRM-ed platform (their own kindle), rather than forcibly stopping gadget companies who made them (RocketBook) and leaving the field open to book retailers (kindle, Nook), they could have made it very difficult for anyone outside the big 6 to create books readable on that platform. They could even have given the readers away for free, as long as the customer bought full price on that platform, they still would have made money.

(3) Worse is cheaper formatting: complain about the kindle all you like, but as near as I can tell, what you have to do to set up an electronic file for typesetting and printing is at least as technically difficult as setting up an electronic file for the kindle or any other reader. The big guys may have it all down pat and automated, but this leveled the playing field. A lot.

(4) Disintermediation. Amazon really did a number on the industry with this one, partly because they used all that free cash flow from the way the book supply chain worked to bootstrap themselves -- and that was long before they added the kindle to the mix. Once the kindle is in place, you have to start asking yourself: just what is the publishing house supplying? And once you start to understand how slush piles, query letters, agents, and all the rest of the grinder that takes manuscripts and turns it into print books works, and how eager fastselling authors are to get enough power to _stop_ publishers from doing that grinding to their manuscripts, well, at that point you start thinking, I'd kinda like access to that slush pile. I'm not convinced what you're sending me is that much better than what you sent back to the author.

BTW, kudos to HarperCollins for doing this:

http://en.wikipedia.org/wiki/Authonomy

And then, of course, there's the Penguin/Amazon discover new authors deal.

Regardless, as that article in the NYT Magazine about James Patterson made clear, the big 6 aren't really interested in new talent anyway. They're much more interested in finding reliable bestsellers. If you've already decided you're not that interested in the bestsellers they are pushing, you need to go somewhere else. Closer-access-to-authors is a plausible strategy.

I'm sure there's more. But the big 6 have been unbelievably successful at preventing significant change in the industry (okay, _that's_ arguable). Time to pay the piper. And badmouthing your customer? Lame.

"Tangled Labor Relations"

That's a chapter title in _Railroads and American Law_. It is _sooooo_ inadequate.

Quotations to follow taking from pages 252-5.

"In May 1877 The Pennsylvania Railroad announced a second 10 percent wage reduction. Other eastern carriers soon followed suit. A spontaneous strike began on the Baltimore and Ohio Railroad in July and soon engulfed much of the rail network. Although the national leaders of the brotherhoods publicly took no part, the strikers successfully halted rail traffic in much of the nation. Tensions mounted, and the governors of several states summoned the militia. The strikes in some cities quickly assumed the character of riots and there was massive destruction of railroad property. Pittsburgh was the scene of a pitched battle between the militia and rioters, and there was widespread looting and burning of railroad cars and buildings. In some communities the crowds were swelled by persons who were not strikers but who harbored a deep resentment at railroad operations on city streets."

Hayes stalls as long as he can, sends federal troops out after things have calmed down, everyone hates him. Poor Hayes. "The toll exacted by the strike was staggering. More than one hundred persons were dead. Property damage in Baltimore, Chicago, St. Louis, Reading, and other communities was estimated at millions of dollars. The outcome of the strike could be seen as inconclusive. Some strikers were fired, but the practice of wage-cutting was stopped."

Nevertheless, it took them another 10 years to pass the Arbitration Act of 1888, which called for _voluntary arbitration_ and a presidential commission to investigate the causes of labor controversies. The Pullman strike of 1894 is when things finally started to change, but here's what it took to motivate people:

"Angered by an imposed wage reduction [yeah, they really learned that lesson], the employees of the Pullman Palace Car Company went on strike...To make the work stoppage effective, strikers and sympathizers forcibly blocked railroad transportation and the passage of mail through Chicago. This action in late June paralyzed much of the national rail transportation network. President Grover Cleveland ordered federal troops into Chicago, although no rioting had yet occurred, in order to ensure that trains moved. This triggered mob disturbances and destruction of hundreds of rail cars. Matters rapidly spun out of control. As violence spread from Chicago westward to California, the Cleveland administration obtained a sweeping injunction from the federal circuit court in Chicago. The court ordered union officials and all persons conspiring with them to cease hindering any train operating in interstate commerce or carrying the mail. This injunction, coupled with the military intervention, broke the strike by late July."

Debs was one of the people named, and he brought it all the way up to the Supreme Court trying to get a writ of habeas corpus (which I keep spelling wrong). Did not get it. "Speaking for a unanimous Court in the case of In re Debs (1895), Justice Brewer denied the writ and forcefully asserted federal authority "to brush away all obstructions to the freedom of interstate commerce or the transportation of the mails." Invoking the public nuisance doctrine, he declared that the government could summon military force to compel obedience to law. Brewer broadly upheld the equitable jurisdiction of the federal courts to prevent unlawful interference with commerce. He sustained injunctive relief on the basis of both the government's property interest in the mails [!!!] and the sovereign power to protect the general welfare. Rendered long after the Pullman strike had ended, the Debs opinion was most significant for placing the Supreme Court's imprimatur on the growing use of labor injunctions."

I've read _a lot_ about railroads at this point, and I know a little bit about the history of labor law. But I learned a frightening amount I _did not_ know in the last couple chapters of this book. I'd been trying to get the scoop on the WW1 government takeover of the trains -- and was still a little disappointed by Ely's coverage, because he mostly focused on the legal ramifications of it, and my interest in it is a bit more far-reaching.

In other railroad books, I read extensively about batshit crazy union work rules that were insanely expensive to the railroads. I read about how the ICC being slow and keeping things cheap made it impossible for the railroads to do basic maintenance. I read about how government bureaucrats just made crap up to "prove" that the new highways weren't taking business away from the railroads, or at least, not enough to matter. And on, and on, and on. After the Pullman strike was over, the federal government was willing to get a lot more involved in the business of railroading, but they still didn't want to own the railroads. During WW1, they gave workers huge raises -- and they ran through across the board rate increases to pay for them. They also created a superstructure of who-does-what work rules that the railroads were stuck with after the war. From one perspective, that's the government being "inefficient". From another perspective, once the government was directly engaged with the problem, the shippers whining about how rates were too high no longer made any sense -- and once they really saw who was being paid what, they knew it would be a lot cheaper to pay the workers a living wage than it would be to hire a bunch of thugs to keep them working/stop them sabotaging at starving wages.

The railroads were what tied this country together. Everyone relied upon them, one way or another. When the railroads stopped moving, it was The End of the World. When the people working on that road had the power to stop it, and the motivation to do so, chaos ensued. The issue of just what should have been done to prevent that from happening (again) was such a powerful issue that Heinlein was still getting mileage out of it in "The Roads Must Roll", decades later, in a science fiction story set in his "Future History" (unsurprisingly, Heinlein wasn't too sympathetic to the unions).

We do need to reorient our transport policy -- the non-policy we have in transport is probably second only in scale to the non-policy we have in health care. There is terrible waste, terrible social injustice and terrible cost in dollars and lives. Hopefully, we'll remember that the reason we wanted to build all those "free" highways was in part because we wanted to make for damn sure that no one -- or even many -- could ever bring all movement in this country to a halt again. Hopefully, we'll remember that we have never been able to fully replace railroads with those "free" highways -- we have to have them for the efficient movement of heavy, bulk commodities, and we could benefit by using them for more than just the heavy, bulk commodities. But most importantly, we do need to realize that it was numerous shippers grabbing the ear of the government by outshouting the carriers that _really_ led to the strikes. Obama is right to try to listen to all sides -- not both sides, all sides. It is too easy to mock that as a partisan, but the strategy is definitely the right one.

column at WaPo about the "agency model"

http://www.washingtonpost.com/wp-dyn/content/article/2010/02/07/AR2010020701168.html

I disagree with this statement, and what follows from it:

"The balance of power has swung back to publishers, and they're making the most of it, especially when then know they can play Amazon off against Apple."

and, of course, what follows from it.

Time will tell as the chess match plays out. But it's a really interesting column.

I promise to stop after this

http://blogs.zdnet.com/sommer/?p=775

This is _so_ juicy. I can't really leave it alone. The author makes a really great point: some people don't read very much, or at all. He notes that he reads "dozens". He even takes a look at the total size of the book market, which it had not occurred to me to consider: $26-40 billion a year, presumably the US market. He then makes major error #1:

"That works out to a maximum of $133/US citizen."

Nope. _Average_, taking the high end of the range. Also, he should know that is not a meaningful operation, given he's already demonstrated the extremely wide range of purchasing behavior. Median and mode are also useless, altho I had to think about that for a bit.

"It is a convenience for those who like to read. More specifically, for those who like to read a lot. Sadly, I’m not convinced that this describes a lot people. No, we’ve got generations of citizens who get their political knowledge from Jon Stewart’s comedy show"

Oooh, big error here. People who get political info from Jon Stewart are really well informed -- this has been documented. Also, they buy a _lot_ of books.

Comments thread wasn't rewarding enough for me to persist in, also, the navigation of it really kinda sucks.

His remarks about the installed base on the kindle potentially not wanting to switch are interesting, altho of course they fail to understand how thoroughly that part of the decision tree has been locked down by Amazon already -- Bezos doesn't really care if you read content you bought from Amazon on a kindle, an iPad or an iTouch or an iPhone.