Kindle Review – Kindle Fire Review, Kindle 4 Review

At first, it was rather confusing to hear both John Grisham and John Irving express concern for new authors -

1. John Grisham (via the BookSeller) -
   

   … if a book is worth $10 then suddenly the whole industry is going to change, you are going to lose publishers and book stores, and though I’ll probably be alright, aspiring authors are going to find it difficult to get published.”

2. John Irving (via Pedablogue which also has an interesting article around the topic) -
   

   If I were 27 and attempting to publish my first novel today I might be tempted to shoot myself … I think it’s much harder to be a young writer starting out today than when I started out.

   I think it’s a lot tougher to be a first novelist today. I wonder what’s going to happen to those good, younger writers.

   I don’t think the book is in any particular peril. I think the book is going to survive.

We are, after all, on the verge of the golden age of self-publishing. Authors ought to benefit from the new democratization of Publishing.

However, there is a dangerous possibility that flits amidst the golden visions of tomorrow.

Perhaps authors (and publishers) will not be able to take advantage of all the changes that are happening. Perhaps authors will be worse off.

No one knows who will take control of Publishing, or what will be left for Authors

Look at what we currently have – a total break-down of how things are done and how profits are broken up.

While this creates the opportunity for authors and publishers to grab a larger share of the profits, it also creates the possibility that they get marginalized and their work starts being considered close to worthless.

For the record, this is not Amazon. Amazon gives self-published authors a very healthy 35% (they also cover bandwidth costs) and gives Publishers somewhere between 40 and 55%.

This is

1. Any business model that destroys the value of books. Advertising based models are on the borderline.
2. Any company that makes books loss leaders. This is what John Grisham talks about -
   

   What’s so troubling in the current situation is that none of the companies involved are engaged primarily in the sale of books.

   They’re using our most important products — mega bestsellers, which, ironically, are the most expensive books for publishers to bring to market — as a loss leader to attract customers to buy other, more profitable merchandise.

   The entire book industry is in danger of becoming collateral damage in this war.

There are probably two big factors that will determine how authors (and publishers) do -

• Who takes control of publishing. This includes company and business model. 
• What the perceived value of books is in the new model.

Lets consider the possibilities.

What Business Model might win? What would the perceived value of books be under each model?

Here are a few possibilities -

1. The blogs and search engine model where the search engine decides what sites to feature and runs ads. The sites and blogs run ads too. Competition means you have to charge for things other than content. Value of eBook: $0.
2. The Apple App Store model – You can charge for content. However, the amount of competition means people start undercutting each other and we get a lottery model i.e. the top 1% do exceptionally well, the rest of the top 5% do well, and everyone else starves to death. Value of eBook: $2 to $5.
3. Distributed Independent Author driven model - Lots of cheap books from various independent authors constantly putting pressure on full price books. Equilibrium would be established authors’ books at $5 or so.  
4. The Kindle Model - Books are half in price ($10). The Kindle Store becomes super important. Authors’ cut would be 20-25%.  
5. The Publishers’ Dream Model – No company wins and so Publishers can keep $10-$15 ebook prices and maintain control.  Authors’ cut would be 20-25%.
6. The Authors’ Dream Model – A channel partial to authors is created that sells ebooks at $5 to $10 and lets Authors keep 50%.

Consider things from a readers’ perspective – It suits readers most if prices are very low.

All we (readers) need is some sort of explanation that makes us feel authors are not being exploited and we’ll jump at cheap or free ebooks.

Any of these would suffice -

1. Authors make it up on volume.
2. Advertising pays authors.  
3. Authors get recognition.  
4. Authors make money off of other sources.

What this means is …

Cheap/Free is bound to win because users’ interests align with non-publishing companies’ interests.

We have three constituencies -

1. Readers.
2. External companies trying to create a new model.
3. Established Publishing companies trying to survive as Publishing evolves. This includes retailers like B&N and Amazon.

When you consider a model where -

Authors are expected to work for next to nothing – for the love of their craft.

3rd party companies take the lion’s share of profits from advertising and other sources.

Readers get very cheap ebooks.

This model has a very high chance of succeeding because 2 of 3 constituencies would benefit. Democracy .  

Publishers and Authors could survive by banding together

Will authors and publishers band together? Not really.

Will they fight for the value perception of ebooks? Not as long as they get the cut they want.

Take Amazon’s $10 prices. Publishers are complaining it’s unsustainable – yet, they are happy to take $14 per ebook and let Amazon sell for $10.

It’s spectacularly amusing that they are missing the fact that ebooks are already at $10. There is no way they can ever go back to $14.

$10 is just the start

Another company will come in and promise them $14 from advertising – and will sell ebooks for $5. Publishers will say – Yes, gladly.

Then books’ perception will fall to $5.

Soon, there will be no value because we would be selling $2 books based on other revenues (or promise of other revenues).

the twist of the knife

Then whatever company controls the flow of books at the $2 price point will stop paying Publishers $12 and give them just 90% of the book price.

The company will just keep the $10 of advertising revenue for itself.

This is the magic trick Publishers are not seeing. They won’t – until it’s too late.

Which leaves Authors to fend for themselves. Will they stick together?

Filed under: publishing Tagged: | author tips, race to zero