The Guest Corner – Sig Rosenblum talks about Kindle’s impact on aspiring authors and publishing

Let’s Dream A Little
By Sig Rosenblum

What will happen–over the rainbow–when there are 20 million Kindle owners, not the mere 250,000 that some offer as a guesstimate? No one is an expert about the future. There are always unintended as well as unseen consequences. But isn’t the prospect exciting?

The old wisdom was daunting enough for writers: “You have to be smart to write a book. But you have to be a genius to get it published.” Yet now–as we all know–the odds are increasingly against those who simply want to write.

Publishers want a good manuscript, of course. But that’s last on the list. Authors must have “a platform,” roughly defined as a following, a ready readership, panting to buy. Bill and Hillary Clinton come to mind here. But a friend–a much-published workhorse with a world-wide reputation–and with seventy or so respectable volumes to his credit published by “name” imprints, was turned down recently because he did not have a sufficient “platform.”

Today, publishers also demand a powerful book proposal, a marketing plan, a willingness to fly to book signings, promotion parties, and radio and TV interviews. Is it any wonder that the despised “vanity publisher” has given way to perfectly respectable self-publishing, and awards by Writers Digest for the best in this new category?

Self-publishing–the kind that gives you bound volumes to mildew in your basement–is mostly a losing proposition for authors. And the books themselves are likely to have an amateurish aura, sloppy editing and ham-handed design that can’t help anyone’s career. Besides, the cost is substantial–often $1,500. And most bookstores still won’t carry a self-published title.

Enter Kindle. The new book reader from Amazon will probably change all this, once it reaches critical mass, once there are many millions of Kindles out there. First, writers can–at the moment–present their books online through Amazon without paying a fee. The uploading process itself is regrettably complex, so wise authors will not bother to learn HTML, or struggle with the mind-bending details, but will use a specialist to Kindle-ize their manuscripts.

The cost can be as little as $40 for an average volume. Authors can design their own covers with a little help from Microsoft’s PhotoDraw or other software programs. Personally, I find it a lot of fun. But if that’s not for you, a Kindle-savvy designer can knock out a cover for as little as $10, though one can pay much more.

Just seeing your book as a Kindle Edition on Amazon can be a heady experience that spurs you on. How much different than gazing longingly at the manuscript in your sock drawer or watching it dog-ear to death in the files. And when you have connected, when Kindle sales start coming in, and the deposits–however small–flow to your bank account, even a writer can grope for words.

Publishers like to say they are guardians at the cultural gates, filtering out the presumptuous barbarians who would foist unworthy works on an unwary public. They are a screen, a shield, a strainer. But all this is bunk. Many brilliant authors who went on to well-deserved fame had to publish themselves. Mark Twain comes to mind. And the record is filled with submissions that were rejected again and again by blunted publishers who couldn’t see the glittering gold before their eyes. Alice in Wonderland and Moby Dick are just two that drew scathing critiques.

Now–with Kindle–writers can toss their hats into the reading ring and reach the public directly, without the artificial and inefficient publisher-gatekeepers. And–in a more democratic spirit–readers themselves will decide the worth of each work.

Publishers may even benefit. Best-selling Kindle Editions will be scooped up for hardbound or paperback versions by alert firms. Those who need to refer to endnotes or index may also buy the conventional format. Indeed, this is what Amazon suggests. I doubt that any reading device will doom traditional publishers.

Of course, there will still be problems. Authors will need to drive readers to their books, lurking anonymously in digital-land. But a whole new promotional industry is likely to meet that need. And what about Kindle owners? They will be sitting pretty, taking their pick of more and more books, newsletters, newspapers and other offerings. Small specialty markets will be much better served, too. If only 100 brain surgeons need a thousand-page text, they can read it–economically–on their Kindles.

The Kindle concept is still in the testing stage. There will be new incarnations, surely. But I hope that Amazon–which is so impressively user-friendly–will simplify the often mystifying upload process. It is needlessly complex and user-frustrating. However, this is ungenerous nit-picking. The Kindle is a brilliant breakthrough which will change–dramatically–how we read, write, learn, develop and connect with one another. It may sound pretentious, but I do believe that–in time–the Kindle is destined to spark one of the great democratizing leaps in our long human story.

Sig Rosenblum is an author and former publisher. Here are his three Kindle Editions–with more on the way. You can also find his profile at booksummit.
Are you a Kindle author? Would you like to contribute to The Guest Corner? Please leave a comment.

Julius Caeser book Sig Rosenblum
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Assignment in Antibua
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Executive Compensation at Financial Institutions – A few interesting figures

As various financial companies merge, go bankrupt, get bailed out, etc. it’s instructive to see what their top executives have been earning in the last few years. These figures are collated from all over the web, with a large number being from Forbes.

  1. CountryWide Financial: CEO: Angelo R Mozilo.1 year pay: 102.84 million. 5 year pay: 391.88 million. Shares owned: 8.3 million shares. Age: 69.
  2. Lloyd C Blankfein. Goldman Sachs Group. 1 year pay: 73.72 million. 5 year pay: NA. Shares owned: 382.4 million. Age: 53.
  3. Richard S Fuld Jr. Lehman Bros Holdings. 1 year pay: 71.90 million. 5 years pay: 354.03 million. Shares owned: 436.8 million. Age: 62.
  4. Bear Sterns: Over five years, from 2002 through 2006, Former CEO Cayne earned total compensation worth $156 million. Current CEO Schwartz made $141 million. Former Co-President Warren Spector, earned $168 million.
  5. Washington Mutual – Washington Mutual’s new CEO Alan Fishman — who had been on the job a measly 17 days — was paid nearly $20 million for babysitting WAMU through the last of its day. WaMu became the biggest bank failure in U.S. history, as it was seized by the federal government and then sold off, in part, to JP Morgan Chase.
  6. Merrill Lynch – Merrill Lynch & Co. paid its chief executives the most, with Stanley O’Neal taking in $172 million from 2003 to 2007 and John Thain getting $86 million (unsure of how long he served).
  7. Goldman, Morgan Stanley, Merrill, Lehman Brothers Holdings Inc. and Bear Stearns — paid their 185,687 employees $66 billion in 2007.
  8. Morgan Stanley – Morgan Stanley’s current and former chief executives, John Mack and Philip Purcell, were paid about $194 million over the last five years.
  9. Wachovia CEO Ken Thompson -2003 – $16.1 million.  2004 – $18.1 million. 2005 – 40% of the 2006 salary. 2006 – $23.85 million in 2006. 2007 – $21.2 million.

Also credit where credit is due –

American International Group Inc’s former Chief Executive Robert Willumstad has rejected a $22m severance payment. Willumstad e-mailed his successor, Edward Liddy, of his decision to forego the severance since he was not able to execute the restructuring plan he had developed.

$700 billion Bailout Bill – reading through the 40 pages of the discussion draft before Congress

4:15 pm – Dow Down 777.68 (6.98%). This delay was because it took 15 or so minutes to collate all the latest transactions.

4:13 pm – Dow Down 770.59 (6.92%)

4:10 pm –  Dow Down 6.60% Nasdaq Down 9.14%.

Breaking News: The House has defeated the $700 billion bailout bill. This is the very definition of huge unexpected breaking news. Dow Down 5.53% Nasdaq Down 6.66%

Edit: 2pm. Paul Kedrosky and the Campaign spot is where I got news updates from. Also have BBC news on. Dow Jones now 4% down, and NASDQ down 5.69%. Also 207 yeas and 226 nays. 218 yeas are needed to pass the bill. The BBC is going crazy – they can’t understand that the vote can be kept open.

Edit: 1:55 pm. (courtesy The Campaign Spot) Currently, the vote on the Bill is 205 yeas to 228 nays. They can keep the vote open, and will try to swing the requisite votes so they can get the bill approved.

The stock markets are seeing massive losses – DOW down 3.7%, NASDAQ down 5.81%. GOOG goes below $400 for the first time in 2 years. AAPL is down 16.49% (two analyst reports also had a part).

Edit: These are my thoughts after reading 60% of the Bailout Bill. I’ll think through my thoughts and finish the bill and add more later –

At this point my 5 main takeaways would be

  1. The Secretary  is going to be the most powerful man in the world if this Bill passes.
  2. The bill postures to ‘save taxpayers’ – however, the facts seem to indicate that troubled financial institutions will be the primary beneficiaries. I say this because the mechanisms to help taxpayers are at best vague (encourage institutions to reduce foreclosures etc.) whereas the benefits to financial institutions is clear (buying their trouled assets with the $700 billion).
  3. There is very little transparency.
  4. The bill talks about and explains the solution. However, it does not explain why we are in this mess, and how the bailout will actually solve the problem and prevent it happening in the future.
  5. This is socialization of the economy with profits to the banks and losses shared by the taxpayers.

The huge emphasis on ‘trying to save the taxpayers’ doesn’t vibe with the fact that all of the $700 billion will go from taxpayer money to bail out financial institutions.

Edit: This is where i originally started – Paul Kedrosky linked to The Discussion Draft of the Bailout Bill. I have to confess that although both my parents are in the stock market I have zero idea of the financial ramifications and what the underlying issues are – why does the US need a bailout? Why are there so many takeovers? And why do the US taxpayers have to pay 700 billion to save the banks?

I’m not even sure if these are the correct questions to be asking. So what better than to read through the whole document – surely, this draft being presented to congress would offer a good clean explanation of the necessity for a $700 billlion bailout.

And since I don’t really have a ‘personal’ blog I might as well put down my thoughts and findings here. Note that although it is primarily commentary on what the document says, by virtue of my being human it does include some of my gut reactions. I’ll also mark out where I quote directly from the Discussion Draft as a blockquote.

The Discussion Draft – 110th Congress 2D Session.

To provide authority for the Federal Government to purchase and insure certain types of troublet assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting tax-payers, and for other purposes.

This Act may be cited as the “Emergency Economic Stabilization Act of 2008”.

This is followed by a Table of Contents which I just skimmed over. A further discussion on purposes lists among other things providing authority to Secretary of the Treasury to restore liquidity and stability to the financial system of the United States. And to ensure that that authrity is used to protect home values, college funds, retirement accounts, and life savings. Basically from the purpose it seems that the aim of the bill is to help US taxpayers.

There’s a definition for terms used, and that brings us to Title 1 – Troubled Assets Relief Program. The Secretary will establish a TARP, and has total freedom to buy troubled assets from any financial institution on any terms the Secretary determines. Also, following the rules in the Bailout bill itself.

Also the Secretary will consult with the Board of Governors of the Fed, and a few other people representing governmental agencies.

An office of financial stability will be setup and be headed by an assistant secretary of the treasury appointed by the President (with the advice and consent of the Senate).

Now there’s an interesting part where the scope of the Secretary’s activites and freedom is spelled out –

  1. Appoint people to carry out the Bill.
  2. Enter into contracts.
  3. Designate Financial Institutions as  financial agents of the Federal Government.
  4. Establish vehicles to purchase, hold, and sell troubled assets and issue obligations.
  5. Issue regulations and guidance to carry out the bill.

After this there’s a discussion of how within 2 days of purchasing troubled assets the Secretary will publish program guidelines. I guess this is about transparency.

Preventing Unjust Enrichment

This little piece really caught my eye –

In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing the sale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset. This subsection does not apply to troubled assets acquired in a merger or acquisition, or a purchase of assets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code.

This is just too full of vagueness and loopholes. And it doesn’t seem to look at the reality that very very few, if any assets have a market value of what they were bought for. I think this is one of the finds for me – its the equivalent of a blank check.

Moving on, there’s another really big thing i.e.

Insurance of Troubled Assets

Basically this part says the Secretary will be able to give guarantees for any troubled assets originated or insured prior to March 2008. And also be able to determine the terms and what the premiums for these guarantees will be.

There’s a whole section on premiums which lets the Secretary determine what premiums should be, let them vary based on level of risk, etc.

A few boring subsections, and we’re on to another interesting section –

Sec 103 – Considerations

This section basically again spells out how the Bill is aiming to help taxpayers, and help families keep their homes and stabilize communities.

This section is actually more of a ‘everyone we’re trying to help, everyone we’ll help, we’ll be fair, we’ll save the taxpayers’ section.

Sec 104 – Financial Stability Oversight Board.

This is basically a ‘make sure everything is above board and things are being done well’ board, with membership including –

  1. Chariman of the Board of Governors of the Federal Reserve System.
  2. The Secretary of the Treasury.
  3. Director of the Federal Home Finance Agency.
  4. Chairman of the SEC
  5. Secretary of Housing and Urban Development.

Also that the chariman of this board will be one of the members, excepting the Secretary of the Treasury.

An interesting thing is that they’ll meet 2 weeks after formation, and then every month. However, their reporting to Congress will be every 6 months. That just seems too far apart, given that banks are collpsing every week.

Sec 105 – Reports

The Secretary of the Treasury will report to Congress every 30 days. These reports will include details on purchases of troubled assets, explanation of valuation method, justifications, future outlook, etc.

Also, these reports must come in 7 or less days after every 50 billion dollars is spent.

25% through the Bailout Bill, A Break and My Thoughts.

I’m a quarter through the report, and I  must say that the Secretary of the Treasury is beginning to look like the most powerful man in the universe.

Also it’s interesting the number of times altruistic terms like ‘saving taxpayers’, ‘saving retirement funds’, and ‘saving families’ homes’ are mentioned.

On with the Bailout Bill …

Second Quarter of the Bailout Bill

Basically gives the Secretary of the Treasury total powers to do any sales, exercise, purchases. That’s what the wording seems to indicate.

Sec 107 – Contracting Procedures

The Secretary may waive specific provisions of the Federal Acquisition Regulation. Must report this and justification with 7 days. There’s a subsection there Sec 107 c) that totally flew over my head.

Sec 108 – Conflicts of Interest

Truth is this whole section is pointless because its basically saying – the Secretary will determine hw to avoid conflicts of interest, and go ahead and do what he has to do and send you an assurance that no conflict of interest occurred.

Another really interesting section –

Sec 109 – Foreclosure Mitigation Efforts

A section on how the Secretary will take advantage of HOPE for homeowners program to try to minimize foreclosures. It does limit participation to the extend possible by mortgages taken on by the government.

There’s also an interesting Sec 109 c) subsection on ‘Consent to Rasonable Load Modification Requests’.

Another really interesting section –

Sec 110 – Assistance to Homeowners.

Note: It’s not very clear to me whether we’re exclusively discussin the Fed and Fed controlled mortgages or all mortgages.

Again, talks about how ‘whoever has the rights to your home/home loan’ will try to use the HOPE for homeowners plan to help you out, and avoid foreclosures.

These methods of helping you may include –

  1. reduction in interest rates
  2. reduction of loan principals
  3. other similar modifications

These plans have to be developed by the Financial institutions within 60 days of the passing of the Bailout Bill. And they have to report to congress every 60 days.

Sec 111- Executive Compensation and Corporate Governance.

Any company that sells troubled assets to the Fed has to adhere to the executive compensation requiements under certain sections of the Internal Revenue Code of 1986, section 302.

It specifically puts limit on the top 5 executives of any corporations that sell the Fed troubled assets.

Its a really complicated section – I don’t understand it much at all. There are so many conditions that you get lost in the weeds.

Sec 112 – Coordination with Foreign Authorities and Central Banks.

Secretary shall coordinate with foreign financial authrities and central banks towards the establishment of similar programs by them. And, perhaps i have this wrong – however it seems to say that the Fed could buy these troubled assets off of them.

Sec 113 – Minimization of Long Term Costs and Maxmization of Benefits for Taxpayers.

Actually most of this section seems to deal again with the powers of the Secretary – holding assets for as long as ideal, determining best prices, using market mechanisms, encouraging private participation, and so forth.

Sec 113 is probably the biggest and most important section – why is it mislabeled as ‘maximization of benefits for taxpayers’ when it’s actually ‘maximization of powers of the Secretary’.

Sec 114 – Market Transparency

A section I like – within 2 days of any purchase the Secretary will make available in electronic form the details of the deal.

The section on requiring financial institutions to disclose all details to the public is weak – all it says is that the Secretary will ‘recommend’ that the institution reveals details. Would you offer someone a loan without knwoing their financial health?

Sec 115 – Graduated Authorization to Purchase

This is really interesting – initially the secretary has access to $250 billion. On Presidential approval, another $100 billion will be available. And on joint passage of ‘some sort of approval’ by Congress, another $350 billion will be available. If news reports are accurate, this is courtesy Nancy Pelosi.

Then some details on ‘joint approval’, procedures, etc. There’s basically 5 or so pages detailing what this joint approval means, how to get it, how to fast track it, and so forth.

Sec 116 – Oversight and Audits.

Comptroller General of the United States will commence ongoing oversight of the performance and activities of the TARP.

A whole bunch of criteria for this oversight and auditing. This is another huge section (3-4 pages) and makes little sense to me.

Sec 117 – Study and Report on Margin Authority

This is the most fascinating part to me – the Comptroller General will undertake a study to determine to what extent leverage and sudden deleveraging of financial institutions was a factor behind the current financial crisis.

Sec 118 – Funding.

Securities issued under Chapter 31 of title 31, United States Code will be used for funding the administrative and other costs of doing all these Bailout Bill activites. (i think they mean running costs).

Sec 119 – Judicial Review and Related Matters

Something I don’t understand at all.

Sec 120 – Termination of Authority.

This is a compelling section – The Bailout Bill expires Dec 2009. It may not be extended any longer than 2 years from when it is initially enacted so October 2010. I hope i read this right.

It seems to be the right place to cut it off. We’ve gone through 60% or so of the Bill and skimming over the rest shows me that I’ll need a lot more time and energy to make sense of it. I’m adding my conclusion at the beginning.