This past month we saw the birth of AuthorEarnings, a website created by best-selling author and self-publishing guru Hugh Howey, in trying to expose what kind of money authors, both trade and self published, are really making. Howey’s data has raised a bit of controversy, with rebuttals coming from several trade-publishing supporters such as Mike Shatzkin, Dana Weinberg at DBW, and agents such as Donald Maass calling the whole study such things as “incomplete”, “a stellar example of what not to do”, and saying that it “raises more questions than answers”.
I’m not going to argue Hugh’s numbers here. I feel they speak for themselves and people will twist them to support whatever agenda they have. Unlike other studies, Howey provides the raw data for just that purpose. One thing that I did notice in the many responses was the insistence by the trade-pub crowd that the numbers meant little, that it was simply not how the trade publishing world worked. They say this despite offering no data to support their argument. Regardless, they fail to see (or tactfully ignore) the main question that the reports attempt to answer; Is a new writer better off pursuing a trade-pub deal, or going it alone with self-publishing?
It’s often said that publishers no longer view the reader as their customer, the customer for the publishing industry is now accepted to be the book store. The reader is now viewed as a persona, a variable to plug into an algorithm in an attempt to find the next 50 Shades of Grey.
So, from a Big Publishing House point-of-view, what kind of reader are you? Most would answer by genre; I like Thrillers and Science fiction, or by author; I like Bella Andre and H.M. Ward. I think trade-pub sees the reader in an entirely different way. To trade-pub, you the reader fall into one of three categories;
The Voracious Reader: This is the reader who spends his entertainment time and money on books and little else. They put one down and immediately shop for the next one. They make up the smallest percentage of the reading public but spend the most dollars-per-person by a large amount. Most were early adopters of the e-reader, and due to their reading appetites seek out lower priced books. They are the group most likely to try an unknown self-published author.
The Casual Reader: This is the reader who divides their entertainment time and money among several other different sources, be they TV, movies, or newspapers, in addition to books. They stick to authors they know, usually best-selling names, and rarely divert from them. Their busy lives and short supply of free time limit their reading to less than 12 books a year. Price is not much of an issue due to the low volume of books they purchase. They prefer paperback and hardcover or are late adopters of e-books. They are also the group least likely to try an unknown self-published author.
The Social Reader: This reader prefers to get their entertainment from sources other than books, reading perhaps one or two a year at the most. However, they are by far the largest population of readers out there. They read mostly for social reasons; when the Casual Readers in their social group are all talking-FaceBooking-Tweeting about a book they will not hesitate to pick it up. They are the group most likely to be seen reading the hot book-of-the-moment, and also the ones telling the world via every social connection they have what it is they are reading, thus promoting it even further. The Social Reader is what makes a book a blockbuster. By their nature they are nearly impossible to market to. The Social reader requires a Casual Reader to stimulate their reading/purchasing of a book.
Most industries would target the voracious consumer as they would logically be their most valued customer. If your product were candy bars this would be true. Books however, are much different in flavor and ingredients. They also cost a significant amount of money to produce and a different recipe is required every time. It is much more profitable to make one candy bar that everyone likes and sell it millions of times than it is to produce millions of different candy bars and sell one of each to millions of people.
As book prices rose, voracious readers found other means than buying new to feed their habit. Libraries, used book stores, book swaps, etc. In example, for every reader who bought Stephen King’s latest in either hardcover or paperback, there were probably fifty who didn’t buy the book new but read it anyway. To test this I visited my local library when King’s book 11/22/63 came out back in July of 2012, I reserved it on the library list, and was informed that I was number 234 in the queue. That means 233 people who wanted to read his latest, but weren’t willing to pay retail for it, were willing to wait behind up to 232 others. I still have yet to receive a call telling me that it is now my turn. With low-priced ebooks, these readers are buying again, it’s very cost effective and there’s no wait. They can do so without leaving their chair. Here is where Big Pub is making a big mistake, again. By slapping high prices on ebooks, they are discouraging this group. The Author Earnings reports prove (to me) that this “shadow” market is now being served by indies.
Consider this quote from Mike Shatzkin, made on his blog titled “Vendor-managed inventory: why it is more important than ever“, April 23, 2013;
“Looking at the store’s records for the month, 65% of the units sold were single units: one copy of a title. Only 35% were of books that sold 2 or more. (I didn’t ask the question, but that would suggest that 80-90 percent of the titles that sold any copies only sold one.)
Then, the following month, once again 65% of the units sold were singles. But only 20-30 percent of them were the same books as had sold as singles the prior month. Upwards of 70% of them were different titles. And upwards of 70% of the ones that sold one the prior month didn’t sell at all.”
What Mike is describing is Casual Reader purchasing activity. A book a month and a different title each month.
If you combine this statement with the reader personas, then add in the economics of book production and distribution, it’s not hard to come to the conclusion that the targeted reader for the BPH’s, the one they spend their marketing efforts on, is the Casual Reader. Once you realize this every baffling practice adopted by Big-Pub falls into place; the select list of big-name authors, the monthly new releases, the high cost of trade-pub ebooks, Windowing, the purchased coop space, the limited marketing push for new authors, the six-month shelf life, the lack of marketing for the existing mid-list. It all makes sense now.
More importantly it leads to this; There is an upper limit to how many Casual Reader Authors a publishing house can have at any one time.
Following this profit-maximizing strategy is the way they position themselves for the elusive blockbuster novel. This is the book that attracts the Social Reader, the reader who was the real target all along. Once this happens that book becomes pure profit for the publisher.
While the Casual Reader is the target for all the Big-Pub marketing, the end-goal is always the Social Reader that they cultivate. Whether it be by word-of-mouth, social networks, or just peer pressure, they are the trigger that produces the blockbuster. It’s a trigger that Big-Pub cannot pull on their own. The Voracious Reader, and the authors they read, are viewed as the unfortunate cost of reaching the Casual Reader. The six-month trial period a new author/title gets is simply how long it takes Big-Pub to determine whether or not the Social Reader has come into play or not.
Trade-Pub lives in fear of losing the Casual Reader. They want to increase their number of Casual Readers without turning them into Voracious Readers, to do so requires that they feed them on a regular basis. If a Casual Reader were to become a Voracious Reader that would lead to less Casual Reader Authors being read, Big-Pub does not produce enough of them and if they did the cost of reading them all would be very high. If this were to happen it would reduce the chances of the blockbuster trigger being pulled. This is why Big-Pub regulates the release of Casual Reader Authors titles, slowing them down to a schedule that discourages the Casual Reader from becoming anything else. The Social Reader is an elusive animal, but their numbers are HUGE. 50 Shades of Grey did a lot to support this, most readers admitted that they had never read a book in that genre before, yet the book sold millions of copies.
This is further supported by the hand-written note made by Carolyn Reidy, CEO of Simon and Shuster, on the margin of an E-mail made to Eddie Cue of Apple in regard to the Big 6-Apple price fixing case;
“Higher prices slows Ebks/casual purchaser/keeps retailers/stops authors leaving”
The Apple/Big-6 case points to just how afraid the publishers are. Price is usually the defense of the collusion charge, but the real reason is simply that Amazon can do something that they cannot; target the Voracious Reader.
In the beginning Amazon was like most on-line businesses, they just have a more forward thinking guy at the helm. He saw a future for books that they did not. Amazon was the first company that had a motivation to turn Casual Readers into Voracious Readers.
Jeff Bezos modeled Amazon around the idea that selling one unit each of a million products would make the same amount of money as selling a million units of one product. Books were the perfect product for this, particularly in digital format. The only thing he lacked was the means and the content. This lead to the invention of the Kindle (the means) and the creation of Kindle Direct Publishing (the content). Amazon simply needed more content, a tsunami of it if you will, than the Big-6 were willing to produce.
Trade-pubs biggest fear is due to the fact that they have no way to copy or compete with this. If they join Amazon (without the aid of collusion) they lose a large degree of control (read; Pricing). Remember, Trade-pub depends on the Casual Reader > Social Reader > Blockbuster Model. They count on the Grisham’s, Patterson’s, Brown’s and King’s to keep them afloat and provide the funds necessary for them to throw mid-list spaghetti at the wall hoping for the next 50 Shades to stick.
To be fair, Amazon, and the self-publishers they enable, are doing the same thing. Most are also hoping to trigger a blockbuster. They are just doing so by way of the Voracious Reader > Social reader > Blockbuster Model. The big difference is that while doing so they are keeping their copyright, maintaining complete control of their product, publishing on their own schedule, writing what they wish to write, giving the readers longer than six months to discover them, and according to Hugh’s data, making money when, under the traditional model, they’d probably still be waiting to be accepted by an agent.
As soon as writers realize that Big-Pub is not even looking for the next John Grisham, and is only looking for the next E.L. James, will they still go the way of the query letter? Will they still spend months on submissions and hand over 15% of a advance to an agent, all while they wait a year or more for their book to get its six-month chance at the lottery, a lottery that may not even exist as they think it does? What will the mid-list authors currently under contract do with their next book?
What will the Big Publishers do when the quality writers no longer submit their work? What will happen when the successful self-published authors refuse to be cherry picked, turning down million dollar offers, or be culled, as one agent recently put it? Without content and a steady supply of fresh spaghetti to throw at the wall, where will they go?