The secret war between readers, authors, publishers, platforms

With the Kindle 3 and the Kindle ecosystem Amazon is putting itself into position to prevent this war from happening. However, it might not be enough.

The safe ecosystems of the Kindle Store, Apple’s iBookstore, and B&N’s Nook Store are the only things stopping the secret war between readers, authors, publishers, and platforms from exploding into a disastrous and painfully apparent spectacle.

A War? Really?

Well, let’s start by attacking the illusion that everyone in this equation is sacrificing themselves for others.

Readers, Authors, Publishers, Platforms are all driven by self-interest

The first point on which everyone likes to deceive everyone else and themselves is self-interest and how it subtly affects everyone’s actions –

  1. Publishers love to talk about how there’s no money in Publishing. Yet, they still make profits and they still have power and fancy offices and salaries.  
  2. Authors try to attribute all the good to themselves and blame all the problems on Publishers. Yet they are quick to attack anyone and anything that threatens their position as the chosen ones – the only authors good enough to be published.  
  3. Readers are quite interesting – they manage to do quite a bit of wishful thinking when it comes to book prices and the profits authors and publishers deserve.  
  4. Platforms are perhaps the smartest and most forward thinking of the 4 – They have a viable replacement for the existing Publishing model and it’s one that would preserve the key parts i.e. authors, readers, books, quality of books. Their only sleight is not being forward about just how much power they will get and just how profitable their 30% cut will be in the long run.

None of these 4 parties would put the other 3 or anything else above their own self-interest. Yet, the first two spend a lot of time claiming exactly this and the third (readers) avoid the thought.

Each has their own power and their own self-interest and they are all trying to co-exist. This was easy in the old model of Publishing – for all its flaws the multiple gatekeepers model ensured that the publishers and authors couldn’t fleece the readers and readers couldn’t bleed authors dry. Without gatekeepers we no longer have stability.

Let’s take a quick look at why destruction is inevitable in a truly open system.

Equilibrium in a truly open system tends to chaos

Let’s say we have a perfect world in 7 years where authors only have to pay 20% of book sales revenue to platforms and readers get books for between $3 and $9. The only middle-man between authors and readers is the platform.

While most of us would gladly take this world it’s important to understand that we’d take it because it’s better for us than the current status-quo. $3 to $9 for books is much better than $12.99 and $14.99 and limited availability. 80% for authors is much better than 15% or even 25%.

Once we hit this equilibrium it wouldn’t last – Readers would feel books should be just $1 or $2, authors would feel books should be $10 and they should get 100%. Consider what we are seeing already – A bunch of readers who feel prices should come down from $14.99 to $2 and not $9.99, a group of authors who want 70% of $10 rather than to sell books for $3 or $5.

Both groups are fully justified in wanting what’s best for themselves. It’s perfectly alright if they attempt to create circumstances that benefit them disproportionately. It’s just intriguing that they can’t own up to wanting a better deal –

  1. Readers that wants super cheap books will try to win by claiming there should be no DRM, books should be lendable, there are no costs in making ebooks, information wants to be free, authors should work for the recognition, and by invoking other noble motives.
  2. Authors will try to win by claiming they are starving, that ebook costs should factor in the years they put in, by building up their brands, by creating scarcity, and by mastering their craft. They will claim that $5 per book is far too little on survive on, paint a picture of themselves as starving artists, and plead for $10 and $15.

It will be an intricate and amusing game – Rather than simply agree on a win-win situation readers and authors will constantly try to outwit and outmaneuver each other.

It’s human nature that the minute we reach perfect equilibrium we conjure up a reason that it’s a tiny bit unfair for us. If we have no choice or just enough choice we are stuck. If we have a lot of choice the free market takes over and we exploit our favorable situation.

For stability you need to have natural or unnatural restrictions

With the old model of Publishing there were natural restrictions – the financial investment, the risk factor, the cost of printing books, the time taken to master the various nuances, the cost of distribution, the cost of retail. There were lots and lots of things that prevented books from being ‘free’.

On top of all these restrictions you had Publishers who, mostly due to their own self-interest, were very interested in making sure the supply of books never exceeded demand. They had little interest in figuring out a way to make books cost just $3 each (whether or not it was possible). They had no interest in killing the profitability of books and it was, in some ways, a very good thing.

The new world of books is fundamentally very different.

There are several problems that crop up – anyone can publish, anyone can steal, anyone can encourage stealing, lots of good ideas justifying stealing have been conjured up, authors are greedy for money and recognition, publishers have no clue what to do, readers are used to stupid people who give away their product for free (like newspapers), readers find it easy to rationalize stealing.

There’s no way to restrict supply and readers feel they are entitled to get everything free.

The New World of Books needs restrictions

In our new world of books which is sans limitations and san restrictions self-interest can easily run rampant.

It’s very easy for readers to incrementally go from being reasonable (ebooks should be cheaper than books) to being a bit unreasonable (ebooks should cost just $5) to being wholly unreasonable (ebooks should be $1 and lendable and re-sellable).

It’s similarly easy for authors and publishers to go from being reasonable (we should pass on cost savings to readers) to being a bit unreasonable (we should pass on 50% of cost savings to readers) to being insane (let’s price ebooks higher than paperbacks and same price as hardcovers).

These were both parties that were limited by restrictions and now the absence of these restrictions and the new-found power has driven them a little crazy.

Platforms are the first good solution – unnatural restrictions that ensure books live on

You can look at the negatives – Platforms impose DRM and aren’t open, platforms don’t let you re-sell your books, Platforms make 30%, there’s no lending. Publishers and Authors can look at it negatively too – Platforms have their own rules, they own the customer relationship, they have too much power, they force us to keep prices low.

However, the positives far outweigh the negatives –

  1. For readers the Platforms are a golden age. Publishers are losing power and authors can self-publish, authors can get a larger share if they so choose, everything’s taken care of, buying books and getting them is easy, there are lots of features like reading across devices, eReaders have a ton of features like text to speech.  
  2. Platforms are very efficient – Earlier, readers were paying 15% to authors and 85% to middle-men and now readers will be paying 70% to indie authors and 45% to 55% to published authors who negotiate a fair deal with Publishers. That’s just a lot more efficient.
  3. For publishers, the Platforms are their only hope of survival. If the ebook revolution were to happen in an open system like the Internet they would not earn much money from ebooks. Everything would be free and stolen and it would be utter chaos.
  4. Publishers and Authors should be happy that they have been saved from the ‘Free’ and ‘Open’ diseases.

Yes, the platforms impose a lot of restrictions including some very unnatural ones – However, it ensures that readers and authors both get a fair deal.

The surest sign that our self-interest and our rationalization of it would destroy books is the amount of anger people demonstrate about things like DRM and Closed Systems and the inconvenience of not being able to use any format anywhere. The arguments of right and wrong and convenience and inconvenience are just surface level arguments. The more intelligent the people the more intricate the concepts used to hide their own self-interest.

Here are a few signs that a publisher or author or company or reader is trying to take advantage of others – talking about doing the right thing, talking about fairness and unfairness, pretending to sacrifice for others, talking about ethereal concepts that can’t be measured, talking about good and evil.

Where will the secret war lead us?

The four parties (readers, authors, publishers, platforms) each have their own agendas and strategies. The deliciousness of the situation is that each of the 4 has a perfect outcome in mind and that outcome involves the other 3 parties doing ‘the right thing’ and starving.

  1. Perfect outcome for readers – Books are free, books are supported by advertising that isn’t even noticeable. Authors get better and better and devote all their time to writing – they starve to ensure their legacy lives on. There are no middle-men and if there are they don’t get a cut. Readers get a lot of praise for donating their time and contributing so much by reading all the free books – What could be more valuable than time?  
  2. Perfect outcome for authors – They magically, without any effort, find a way to cut out everyone else. Readers pay $10 and $15 for books. Authors spread their ideas and legacy and people read their books for centuries.
  3. Perfect outcome for Publishers – Things go back to the way they were except that Publishers are the only middle-men left. Publishers get 85% of book sales revenue while authors get 15% or less. Publishers decide what books are good enough and what people should read and their old processes magically become super efficient and super profitable.
  4. Perfect outcome for Platforms – Books are between $3 and $9, there is a war with authors competing brutally and selling more and more. Publishers die out and Platforms can step in and ask for 60% instead of 30%. People buy and read a lot of books and pay good prices for them.

If you look at the 4 potential futures it’s hard not to notice that readers are the only party that would end up killing everyone else.

Let’s start with that future.

Readers would probably not delay gratification – If readers win all is lost

It’s easy to assume that if readers got power they would decide on a $5 fixed price and treat authors well. You would and every single reader as an individual would – However, the collective group of readers would eat up everyone else.

The minute $5 was fixed a group would start arguing for $4 – With ever smarter and ever more deceptive arguments. Once they got prices down to $4 they or another group would fight for $3. It wouldn’t be a surprise if we reached a stage where readers expected to get paid for bestowing the privilege of reading/appreciating the work of authors.

There are some independent authors who are already doing this – Buy my book for $3 and will send you a $5 gift card.

Readers would have zero concerns about what might happen in the long-term. They would focus on getting free books today and would just assume that their free books will be magically balanced out by something else tomorrow.

If the Platforms win we get a restricted but sustainable future

The platforms are very forward thinking – they are willing to take losses now for a steady stream of 30% of book sales revenue in the future. They are also putting in enough restrictions and checks to save readers from themselves and from Publishers, to save authors from other authors, and to ensure Publishers die out.

They are perhaps the only ones thinking about creating a sustainable system.

In a way it’s a good thing that they are likeliest to win – Since they want a steady income stream for decades (perhaps even centuries) they are approaching things very differently from readers who simply want free books, without any thought of the future, and from publishers who simply want to maintain the status quo.

If Platforms win we will be in good hands – they will be benevolent dictators that only ask for 30% and for the right to set the rules.

As a reader it might bother you inordinately that you have to pay for books and follow certain rules – However, if you are an author you should be happy since it will be a far better outcome for you than if readers or Publishers or even authors win out.

Publishers and Authors can’t win

There really isn’t any conceivable scenario where authors or publishers could win.

Authors are so used to believing that Publishers make their books ‘good enough’ that they simply can’t imagine a world where they have control. Freedom can be very scary and for every author who will jump at the chance to take control of her/his fate there will be 24 others who will be happy to find a Publisher surrogate.

In the unlikely case that Authors win they will turn on each other and we’ll end up with free books. It will be an amazingly impressive demonstration of how little loyalty authors have to each other.

Publishers are totally caught up in the past. They haven’t invested for the future, they don’t understand technology, and they see readers and authors as cattle. It’s really amazing that their entire industry is in the middle of a revolution – one that would improve things for readers – and they are fighting it tooth and nail. They’ve basically lost sight of who their customers are and what their role is.

In the extremely unlikely case that Publishers win they will try to take us back to the dark ages and cause a riot amongst readers. We would probably end up with a books market that was 20% the size of the current books market – everything else would be pirated.

Closing Thoughts

The secret war isn’t really very secret if you pay attention to the directions in which readers, authors, publishers, and platforms are trying to take books –  

  1. Everyone is trying to create an outcome that most benefits their self-interest.
  2. Everyone is firmly convinced that what they want for themselves is also the ideal outcome for books.
  3. It’s a war of ideas and illusion.
  4. Platforms are the only ones doing actual work and thinking about the future.
  5. It’s all on the surface level and rather shallow. The amount of nonsense being spouted (ebooks should cost as much as hardcovers, ebooks should be $1, it’s unfair that this $5 ebook can’t be resold) is amazing. It’s an erudite and intelligent group and the defences and lies are beautiful and convincing.

It’d be a relief if people were just super honest instead of pretending that what’s best for them is magically best for everyone else.

This post was inspired by Frederic Filloux’s article on Good Aggregators vs the looters.

My argument would be there is no such thing as a ‘good’ aggregator (although TechMeme is a great site). You have the smart ones who create a win-win situation that benefits them for a long, long time and the stupid ones that try to take advantage of their partners. The more power a site gets the larger the share of profit it feels entitled to.

In Publishing we are doubly cursed – Not because everyone is focused on their own self-interest (nothing wrong with that). No, we are cursed because –

  1. Everyone is pretending they are doing ‘the right thing for books’ and they have convinced themselves of this lie.
  2. Both readers and authors are poised to illustrate the tragedy of the commons – readers are quick to ignore future consequences and focus on short term gratification and authors are quick to cut the throats of other authors without realizing they are cutting their own throats in the process.

All the people crying about closed ecosystems and having to pay for things and DRM have no idea how bad a truly open system would be. It’d be good for the first few years and then things would fall apart. Open = just a smarter, lazier way to gain control. Closed systems are honest about what you have to pay and they are sustainable.

4 thoughts on “The secret war between readers, authors, publishers, platforms”

  1. This is one truly interesting post.

    It’s fascinating to see that ebooks are creating the same issue mp3 and divx did…but a tiny bit later.

    The issue being: how do you sell an information?
    When culture was stiil attached to an object (a disk, a paper brick… someting your can hold and own), it was easy: you sold it, period.
    Now that it can be summurized to ones and zeroes, it’s an information, something you just pass on.

    What bothers me in this article is that it feels like (to me, and being french that can be just a langage issue) you think everyone’s ground state is greed.

    Of course we live in an economic society, of course money drive our world, and of course culture has always had a love/hate relationship with trading… but it had always adapted itself. Yep, people (me included) are greedy, but greed can be defeated by sensible thinking.

    Culture is the most resilient thing to civilisation changes.

    There is another “economic” model to find to this numeric change, and it will be found in cooperation in balance, because it has no other choice. Yes, some will try to benefit from it more than others, but I think moderate openess can actually be a guardian from that.

    There are 2 things left aside in your post, that can play a big part in this change:

    ***Medias, as a medium to find and filter all this flow of information so a reader can discover, choose and find what it wants to read. Platforms can play this part (with the help of reader’s reviews), but won’t we be reluctant to take advices from where we buy?

    ***Inertia. It’s, to me, the most important force in the world. And in our psychés. We have strong habits. We’re not open to change. Paper book still have a long life ahead and along with ebooks (just as CDs aren’t dead yet, and won’t be for a long time). So we can’t switch from one model to another. But we will have a new model adding itself to and slightly modifying the existing one.

    Anyway, thanks for this exiting view !

  2. I can’t comment on your position on authors, publishers, or platforms as I belong to none of these groups. But your description of readers does not sound like me at all and I wonder if it is truly representative of readers, or just the more vocal bargain hunters that love to complain.

    The most complaints that I read about regarding price don’t demand basement prices, but rather complain about e-books costing more than print books. This is not about readers being self serving, but about feeling like someone is taking advantage of you, which disinclines one from making a purchase, even if one would otherwise have paid that price.

    I personally envision most readers as demanding that books should be good, entertaining, thought-provoking, character driven, exciting, well-written, or any of a plethora of other criteria that one might have to judge a book as being “good” – rather than that they be cheap or free. What good is cheap or free if you get no satisfaction from them?

    Of course, the criteria that gives one satisfaction is going to be different for each of us. That is why reviews just do nothing for me. What is great to me is not necessarily great to others and vice versa.

    I am often leery of books that are all five star reviews because I tend to like books that are more polarizing than that – that make you think. I am also leery of Amazon suggestions for me because they are based on what I buy and what others buy and not based on what we actually liked. Samples help me weed out books that I can tell right away that I won’t like, but are certainly not enough to make any kind of judgment about a more complex book.

    I think there is an opportunity here to pay more attention to connecting people with the right books, rather than just the cheapest book. We are all more likely to read more if we like the books we buy. And we are then more likely to be willing to pay more.

    As it is, every purchase is a risk that you will be throwing the purchase price away. So we have to be more discriminating about what we buy or we have to look for bargains that don’t risk as much money if we have chosen unwisely.

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