Sunday, June 29, 2014

More Konrants

I just got back from a wonderful vacation with my family with limited cell phone and Internet access. We had to communicate by doing something called talking, which is a lot like texting or emailing, but without emoticons or abbreviations.

I have now returned, and as I might have guessed, the stupid was strong on the world wide web while I was away.

This is probably old news to everyone but me, and I have other things I want to blog about, but I hate missing an opportunity to give clues to the clueless.

(Actually, the clueless rarely respond, or even acknowledge my gift of fisking. But hopefully some writers are paying attention, and can then make informed decisions.)

First off, Laura Miller said some ridiculous things in a recent Salon article.

Laura: Anyone who has followed the coverage of the ongoing Amazon-Hachette dispute knows that some of the most impassioned voices on the pro-Amazon side of the argument come from self-published writers. It’s easy to understand their impulse to defend Amazon’s e-book publishing programs, given that many had tried in vain to publish their books with traditional houses before opting for, say, Kindle Direct Publishing.

Joe: Sure, Laura. It's bitter losers, snubbed by the industry, who despise it because they had to settle for the meager compensation of controlling their own rights and making more money with Amazon. 

You're aware many have also tried to publish with legacy houses and succeeded. Then we discovered that legacy publishers had unconscionable contracts, archaic business practices, and overall behaved badly. But, as they were the only game in town, we lived with it... until Amazon came around.

Many authors are pro Amazon for a simple, easy to understand reason: Amazon treats authors better and pays them more.

Laura: The intense rage such experiences instill can lead to strange glitches in logic, such as the charge that it is publishers who have engaged in “monopolistic” practices because not everyone who wants to publish with a traditional house has succeeded in winning a contract.

Joe: Read Be the Monkey by me and Eisler. Publishers function as a cartel. They control paper distribution, and limited who could get in, which indeed functions similarly to a monopoly. How else could you describe this barrier to entry? (Hint: it's an oligopoly)

Laura: The Big Five compete with each other for the books they want to publish.

Joe: Compete how? The size of the advance?

Don't you find it curious that they don't compete by offering better contract terms in other areas, such as royalty percentage, rights reversion, length of term of rights, indemnity clauses, non-compete clauses, next options, and many other author-unfriendly provisions?

How about competing like other companies compete for employees? Insurance, bonuses, 401k, pension plans, severance packages, vacation time, paid lunches, travel compensation, expense sheets, etc.?

Oh, wait. Publishers only give those things to their own employees, not to the ONES WHO WRITE THE FUCKING BOOKS THEY SELL.

Is it real competition when all the major publishers somehow wound up offering lockstep 25% ebook royalties? Isn't it odd some publishers didn't try to attract authors by offering more?

Now perhaps all publishers coincidentally came to this figure independent of one another. But I think it is more likely that everyone secretly agreed that the only terms they'd "compete" on were advance sizes, except in the rare case of mega-bestsellers.

You call this competition? Or does this seem more like the Seven Sisters and OPEC? We have evidence of publishers colluding. Is there any reason to believe collusion is something new for them?

Laura: Publishers have long expressed concern that Amazon’s willingness to sell e-books at a loss (that is, less than it pays for the e-books themselves) is aimed at lowering the perceived value of books in the public’s mind.

Joe: Ah, the "value" meme.

I said long ago, value has less to do with the retail price, and more to do with how much an author earns. Selling ten ebooks for $2.99 each and earning an author 70% royalty have more value than selling three ebooks at $9.99 and earning an author 12.5%. Same $30 in customer spending, but one nets the author $21, and the other just $3.75. 

It's not a fad that customers prefer lower prices, and the lower something is priced, the higher number of units it will sell.

And BTW, loss-leads aren't something Amazon invented. They're part of a fad called capitalism, a result of the free market system.

Laura: it’s in the best interest of self-published authors that traditionally published books retain their higher prices. 

Joe: I'll bite. I have $25 to go buy two DVDs. When I get to Best Buy, the DVDs I want are $5 each, as are a slew of others. Do I only spend $10? Or do I spend all $25 (and possibly more) because the prices are so low?

BTW, I was discussing all of this in 2010. And I've watched buying habits of readers, and my predictions have been confirmed time and again. Readers binge with low prices. They hoard ebooks. 

Laura: Publishers don’t just supply professional services (editing, design, distribution, marketing); they are investors. Doesn’t mean they’re always right; publishers often aren’t. But publishing a book is always a gamble of sorts, and a traditional publisher has ponied up.
From the perspective of many readers, this is a meaningful testimonial. 
Joe: Which is why there are scores of people who look for Random House or Simon & Schuster emblems on the spine before they buy, and reject anything without that imprimatur. 
Oh, wait. Readers don't do that. Because they don't care AT ALL who the publisher is.

If you are privy to information showing the contrary, please present it. Because my blog is full of data from authors who sell more ebooks once they go indie. Start reading in April 2009 and go from there.
Laura: readers expect a higher average standard from traditionally published books and are willing to pay for it. The proof of this is in Amazon’s own bestseller list. As much as everyone likes to carp about the stinkers produced by the Big Five, the Kindle top sellers remain dominated by traditionally published e-books, despite their higher prices.
Joe: You mean they remain dominated by mega bestsellers with giant ad campaigns?
Gee, I wonder why this is the case. It must be because these authors were vetted by traditional publishers. Not because these authors are already famous, or because their work is available everywhere because publishers control paper distribution, or because they are being backed with massive marketing dollars.

No, the real reason James Patterson sells so well is because he's been curated. Or, according to Hachette, sifted. And readers know this, so they flock to his books.
Laura: Most readers are not willing to read dozens of sample chapters in order to find something acceptable or to rely on consumer reviews of questionable authenticity.
Joe: Can you show me the poll you took of "most readers"? I assume the sample was at least tens of thousands, right?

Have you ever been in a bookstore, looking for something new to read? Readers browse, whether it is legacy pubbed books, or self-pubbed ebooks. Sorta like you do when you Google something and find the website you want in the search results.

Google doesn't only list the vetted, curated, sifted websites. It lists them all. And the popularity of a website is based on reader preference, not sifting.
Laura: At present, the author of, say, a self-published thriller available as an e-book for $5 or less does not have to compete with Janet Evanovich, Alafair Burke, David Baldacci and John Sandford on even ground.
Joe: Ebooks aren't in competition with each other. It isn't zero sum. I refuted this two years ago.
Why do these old, tired arguments persist?
Laura: While there’s not much self-publishers can do to influence the outcome of the Hachette-Amazon dispute, this affair should serve as a cautionary tale about placing too much power in the hands of a single retail outlet.
Joe: Hachette authors aren't at the mercy of Amazon. They're at the mercy of Hachette.
Self-pubbed authors aren't at the mercy of Amazon, either. If you're concerned about Amazon, can you show me their history of squeezing and mistreating writers? Why worry about being eaten by wolves, when there is currently a lion feasting on your legs?

Hachette authors are getting screwed because they signed away their rights to Hachette, trusting that publisher to make business deals that best serve them. If Hachette can't make a deal with the biggest retailer of books in the world, Hachette is the problem.

I sympathize with Hachette authors, and with all legacy pubbed authors. But they need to accept that they signed the deal. I signed four legacy deals. I felt I had no choice, and no negotiating power. They were the only game in town, and I had to take it or leave it. So I took it, and I accepted full responsibility for my publishers' many mistakes.

Now that there IS a choice, authors must accept even more responsibility. Signing away your rights, when you're now able to keep them and self-publish, is a huge gamble. Because if your publisher screws the pooch, you're stuck. Forever.
Laura: A self-publisher is still a publisher and occasionally all publishers clash with the retailers who bring their wares to market.
Joe: When that time comes, I'll clash with Amazon. But I think I'll give them the benefit of the doubt for a bit longer. And I'm apparently not the only one.
Elsewhere on the interwebs, Mike Shatzkin said some silly stuff about Amazon. Mike is becoming quite a source of fodder for this blog, almost rivaling Scott Turow. Here are some highlights.
Mike: (concerning the Hachette/Amazon dispute) My “position” on all this is that it reveals an imbalance that only the government can fix. 
Joe: I agree. I'd love for the government to step in and take a good, hard look at author contracts and boilerplate clauses in traditional publishing for the past 30 years. I bet they'd be viewed as unconscionable, and that publishers have acted as a cartel.
That's when the government is supposed to step in, Mike. When an entity with too much power abuses that power. 
Amazon is an innovator who is responsible for a large amount of the billion dollar ebook market because they created the platform everyone wants. That is not an abuse of power. They're constantly striving to keep customer prices low. That is not an abuse of power. The govt doesn't step in to stomp on smart competitors. They step in when people are getting screwed.
Like authors have been getting screwed by legacy publishers, for decades, because they had no other choice. We either signed one-sided contracts, or didn't get our work into bookstores. THAT is what needs investigating, not Amazon exercising its right to sell whatever books it wants to sell.

On your blog, www.idealog.com, you post the content you want. Well, I'd like you to post different content, because your blog is one of the biggest pro-legacy publishing blogs, and you control much of that market segment. So I'd like the government to force you to post some anti-legacy publishing and pro-indie publishing posts.

Because, Mike, your choice is an imbalance that only the government can fix.
Mike: it makes it very hard, perhaps impossible, for somebody retailing books alone to compete with them.
Joe: Since when did it become ANY company's policy to promote competition? Do the executives at Coke sit around the board meeting table and say things like, "Wait a second, we're taking too much market share! We must do something to help our rival, PepsiCo, compete with us!"

Does PepsiCo go running to the government for help, crying, "It's unfair! People enjoy Coke products more than ours! Pass some laws so we can make more money!"
Actually, I'd like a piece of that action...
"James Patterson outsells me! His millions of copies of books are preventing my sales! I need the government to make Patterson write fewer books, and make it possible for my books to be next to his in every retail outlet in the world!"

That would be sweet.

And ridiculous.
Mike: Amazon will grow at the expense of all other book and ebook retailers and Penguin Random House will grow at the expense of all other trade publishers. Smaller publishers have already felt the pain and self-published authors will in the future. That’s what will happen naturally and organically from now on, unless a stronger force intervenes, and on the right side instead of the wrong side the next time.
Joe: Why do you think Random Penguins will grow? 
I've been predicting the paper business will become niche. It tends to happen when a new, superior tech overtakes an old, legacy one. Grandparents are getting iPads and Kindles, and children are learning to read without ever picking up a dead tree. B&N will close, which will kill the midlist paper market. New York and the world are woefully underestimating the allure and impact of self-publishing. Amazon is too large and powerful to bow to the demands of any publisher, no matter how many of them merge.
Or maybe I'm wrong. Maybe ebook sales really have plateaued, and Barnes and Noble will be around for fifty more years, and authors will continue to accept 12.5% ebook royalties for the opportunities that legacy publishers provide, and self-publishing only works for a select few, and Amazon will willingly accept agency pricing. And then monkeys wearing "Joe Was Wrong" t-shirts will shoot out of my ass and enslave the human race.

Next, Mike attempts to fisk Hugh Howey. I'll respond to the highlights.

Mike: I think that generalized advice to authors to eschew publishers in a world where print still matters and stores still matter remains, as of today, unwise. 

Joe: I once felt the same way about eschewing publishers. Then, in 2010, after 17 months of personal data, communicating with other authors, and careful observation, I realized that in most cases the perks that legacy publishers offer authors are outweighed by the negative aspects of publishing contracts.

In case you missed my post about going indie in 2012, here are some ways publishers hurt authors:

They have given us take-it-or-leave-it, one-sided, unconscionable contracts.
They have failed to adequately market works they have acquired.
They have artificially inflated the price of ebooks.
They have refused to negotiate better ebook royalties for authors.
They have forced unnecessary editing changes on authors.
They have forced unnecessary title changes on authors.
They have forced crappy covers on authors.
They have refused to exploit rights they own.
They have refused to return rights they aren't properly exploiting.
They take far too long to bring acquired works to market.
They take far too long to pay writers advances and royalties.
Their royalty statements are opaque, out-of-date, and inaccurate.
They orphan authors.
They orphan books.
They refuse to treat authors as equals, let alone with a reasonable measure of fairness.
They make mistakes and take no responsibility for those mistakes.
For every hope they nurture, they unnecessarily neglect and destroy countless others.
They have made accessories of the authors' ostensible representative organization, the quisling Authors Guild, and are served, too, by the misleadingly named Association of Authors' Representatives.
They have failed to honor promises made.
They have failed to honor their own onerous contract terms.
They've failed the vast majority of authors, period.

I'll also add:

They have failed to negotiate successfully with the largest book retailer on the planet, limiting sales.

Mike:  And you’d be forgiven if you got the impression from this that Hachette only wanted to control the price Amazon sells at, not the price everybody sells at, keeping it the same across retailers. It does matter how you frame things…

Joe: So your argument is that because publishers have always been able to control the retail price of books (what other product has prices directly printed on it?) that this is somehow a God-given right and they should be allowed to continue to do this with every business partner they choose?

Some companies do have the power and gravitas to set retail prices. Many video game manufactures won't allow retailers to sell their products unless they keep them at their set price. No reduced sale prices are allowed.

This is fine, if both parties agree to these terms. But both parties shouldn't be FORCED to agree to these terms.

If Gamestop doesn't want to sell a PS4 for $399 that Sony demands, even though all other retailers sell it for $399, Gamestop doesn't have to carry the PS4. 

If Amazon doesn't want to sell Hachette ebooks for the price Hachette sets, even though Hachette has managed to make all other retailers agree to their price-setting, Amazon doesn't have to carry Hachette titles.

Why isn't this the end of the discussion? Amazon is engaging in blatant acts of capitalism. So is Hachette. Enough said.

Mike: Publishers are trying to keep a print book physical distribution infrastructure alive. That’s not irrational. It is rational. 

Joe: It's also rational to bet on a horse that won a hundred races. But if the horse is past its prime, what is rational may not be what is wise.

It was rational for Kodak to continue to manufacture film and film cameras after digital cameras began to take hold in the consumer world. That's one of dozens of examples of what happens when a new disruptive technology arrives. Kodak had a lock on the picture industry. Film, cameras, film developing. We had 1 hour photo shops in every strip mall in America. Every drugstore sold 110, 35mm, 126, 240, and disc film (remember all of those?). 

We know what happened. Digital won. The infrastructure Kodak tried to keep alive collapsed anyway. And Kodak was left high and dry and bankrupt.

As I mentioned above, I believe bookstores will go the way of record stores. I believe more and more people are reading on digital devices. I believe more and more people will eschew paper for its high cost, inconvenience, and lack of features. Those who refuse to read digitally are getting older and passing away. And an entirely new generation of readers is learning to read on digital devices, not dead trees.

Paper will become niche. It will only be able to support mega-bestsellers.

Luckily, we mid-list authors finally have an option. We can choose to go indie.

Mike: Up until very recently, there was no efficient means or mechanism for publishers to sell directly to readers. Their “customers” were bookstores, and they understood them very well.

Joe: So much wrong with this comment.

First, publishers had the capital and means to INVENT A DAMN EREADER A DECADE AGO. They also could have sold paper books online. Nothing prevented this. Just like nothing prevented the record companies from creating a store that sold mp3s. But they didn't, and now we have Apple and iTunes and a new way of listening to music that has become ubiquitous.

Publishers let Amazon eat their lunch because they're archaic, bloated, and refuse to innovate. And then they fed the monster they helped create with their own lack of vision.

Second, publishers treated many of their "customers" like shit. Offering big discounts to bookstore chains and big boxes made it difficult for independent bookstores to compete. They also offered these discounts to Amazon.

Publishers, in understanding their "customers", effectively marginalized themselves.

That sounds less like understanding and more like hubris and existence bias.

Mike: The important and relevant point is that we’re still waiting for the first major author to say “no” to a publisher. It will happen, but it hasn’t happened yet.

Joe: This is a fascinating perspective, and it's worth teasing out the meaning.

Me, Barry Eisler, Hugh Howey, and many other authors have turned down legacy publishing deals. Many more haven't even tried to pursue legacy deals. At first, we were called outliers. Then dozens and dozens of authors did what we did, and the term didn't apply anymore, because it was becoming the norm.

So it apparently doesn't matter to Mike that the mid-listers and newbie authors are leaving legacy publishing. Only that no "major" author has publicly done so.

That seems like limited thinking. If all but a few hardworking employees leave the factory line, the factory isn't going to be able to stay open very long.

Then Mike says, "It will happen."

So what are you arguing about, Mike? Timing? Authors should keep submitting to legacy publishers and accepting awful contract terms until JK Rowling begins to self-publish exclusively? Then, and only then, should all authors abandon ship?

Acknowledging it will happen is acknowledging the death of the legacy publishing industry. So why do you keep defending that industry and marginalizing self-publishing if you know it's doomed?

Mike: And the cherry on top is a biased characterization of the value and role of brick and mortar retailers.

Joe: I don't want to put words in your mouth, but I get the feeling that you seem to be saying paper is still viable, that authors shouldn't abandon it. I don't know any indie authors who abandon paper. They all self-publish paper books. It's the retailers like B&N and Sam's Club and indie bookstores who won't carry our self-pubbed (or Amazon-pubbed) paper books.

Perhaps I should ask the government to step in and force all brick and mortar bookstores to carry my paper titles.

But in reality, brick and mortar retailed indeed have no value and role for me, because I do well without them. I'm not the only author who feels this way. That's a paradigm shift you can't seem to see.

Mike: Recent data suggests pretty strongly that taking down pirate copies increases sales.

Joe: You cherry picked data there, Mike. For some titles, taking down pirate copies may increase sales. For others, it may lead to increased exposure. In the report's conclusion:

"For well known books and those by popular authors, online piracy mainly poses a threat to regular
book sales, while authors who are just starting out could bene t from the additional platform. My
results support this idea, at least for e-books."

So where did the study get the sales data used for research?

It was supplied by Digimarc, and RosettaBooks (which uses Digimarc to send takedown notices to pirate sites). There's a 27 page report that goes into detail.

According to the report, there was no record of how many copies of each of the 653 titles obtained through RosettaBooks were shared. The report also says:

"I ignore those titles that never enter piracy protection as those titles may be inherently different from those that move into piracy protection."

Instead the control utilized is the specific titles before and after Digimarc sends takedown notices. It would have been nice to see how much sales fluctuated without Digimarc's involvement at all.

It also would be nice to see a breakdown of costs. Did the supposed 15% rise in sales after Digimarc's actions make up for the cost of Digimarc's service?

Shouldn't these questions be asked before concluding that taking down pirated copies increases sales?

Mike: But, in fact, only authors who sell their books to publishers without competitive bids (which indicates either “no agent” or “limited appeal generated by the proposal”) are living on that 25% royalty. The others negotiated an advance that effectively paid them far more than that. And guaranteed it before the book hit the marketplace. Publishers are making a massive PR error not raising the “standard” royalty since they effectively pay much more than that now, but the authors signing contracts with them know the truth.

Joe: First of all, Mike, an "advance" is called an "advance" not a "salary" or a "sale". It is an amount of money fronted to authors that is to be paid back through book sales.

While no one owes anyone a living, most authors aren't able to live off advances that never earn out. Mega-bestsellers may get huge advances that won't earn out, but the rest of us are expected by our publishers to earn out our meager advances, or else our books are considered flops and we're dropped.

A legacy publishing advance at 25% royalty (on net, Mike, which actually means authors are making closer to 12.5% royalties off of list price) is really offering a ridiculously high-cost loan.

Would you take a deal that said, "I'll loan you $10,000, but you have to pay me 57.5% interest for the rest of your life plus seventy years"?

Because authors are giving up 57.5% royalties to their publisher, forever, just so they can get some money upfront.

It only takes some simple math (which I did years ago) to show how much money authors forfeit by not self-publishing. Even if you erroneously believe the majority of legacy authors get such high advances they never earn out, or are never meant to earn out, it's a rare thing that unearned advance money outweighs what an author could have done on their own at 70%.

Let's say I get a $50k advance from a legacy publisher and sell 20,000 ebooks at $5.99 in the first year. I made $15k toward that advance and still owe my publisher $35k. Let's also say I sold 12,000 paperbacks at $7.99. That's another $8k. So now I only owe my publisher $27k.

Or

I self-publish and sell 15,000 ebooks at $5.99. I made $63k and don't owe anyone a penny, except for the set costs of editing, proofing, formatting, and cover art. Let's call it $60k even.

As a self-publisher I sold less than half of what I did as a legacy pubbed author, but made more money. And in the second year of sales self-pubbing I'll be earning money every month, while in the second year of legacy sales I'll still be paying the publisher.

That's the "truth" authors need to know. Not your silly explanation.

Mike: It costs nothing to print, warehouse, or ship an ebook. But it cost something to create. And for many, if not most, publisher-published books, the publisher gave the author a substantial payment before publication.

Joe: Creation costs for ebooks are fixed, and inexpensive. They aren't worth giving up 57.5%.

And again you're talking about the advance as if it is not required to be paid back. While authors won't have to return unearned advance money, they're paying substantial interest on the money they have paid back via the lousy royalty rate.

An advance not meant to earn out is one of the insidious holds publishers have on authors. Rather than earn royalties every month, an author is forced to seek out another advance to sustain them. Living advance to advance isn't easy. Especially when an advance can be doled out over years. It's a company store mentality I've blogged about before, and it's why so many authors are afraid to leave their publishers; you have to stay with the company treating you poorly because you think you have no other choice. In order to keep your head above water, you need that next advance.

In reality, if you'd kept your rights, each book will continue to earn monthly income, making advances unnecessary.

Mike: Publishers live in a competitive marketplace in general but nowhere more than when it comes to signing authors. The 25% hasn’t moved, but every book that is signed based on a competitive situation (one agent told me that’s at least 2/3 of them; one big publisher believes they compete for 95% of what they sign) is getting an advance that is calculated on a much higher percentage than the “standard”.

Joe: I'll repeat what I said above. Publishers compete like oil companies compete. They've lock-stepped all contract terms except the size of the advance, just like an oligopoly.

Do you have information on how many submitted books get competitive publishing bids? I talk to a lot of authors, and I'm under the impression that most get only one offer. Perhaps because they are unagented, or maybe there indeed is limited appeal generated by the proposal. I'm also under the impression that publishers are constantly rejecting what other publishers wind up accepting. This seems less like competition, and more like having the control over an entire industry, allowing every publisher to pick and chose what they want.

And when did book sales become zero sum? Do you believe those who read Random Penguins books automatically shun books pubbed by Hachette? Can you show me how a #1 NYT bestseller is taking sales away from a #2 NYT bestseller? It's not like choosing between a Coke or a Pepsi when you're thirsty. Readers tend to read what they're interested in. For many, the only barrier is price--which publishers don't compete on, all adopting equal pricing structures that they print on their product (seriously, what other product does that?)

Mike: The Hachette authors are doing precisely the same thing Howey is doing: defending their biggest source of revenue.

Joe: No, Hachette authors, as I've already shown several times, are revealing their lack of understanding about how the business works, and eschewing blame for the situation even though they signed away their rights.

Howey isn't simply defending his biggest source of revenue. He's dispassionately analyzing the situation (much more dispassionately than you are, Mike--Howie didn't "slam" his fellow authors, and to say so is beneath you) and drawing conclusions based on logic and facts.

Mike: I think those making the argument that worrying about terms changing in the future is silly should at least acknowledge what has already happened!

Joe: I believe Mike is referring to Amazon cutting ACX royalties (I'm not sure, his link is dead).

Personally, I'm glad Amazon cut royalties. It will allow other companies to rise up and offer better terms. If Amazon does the same with KDP, that will encourage competition.

I'm pro author. I don't self-publish because of an idealogy, and I don't bash legacy publishers because of personal bias. I relish choice, and I'm not putting all of my eggs in the Amazon basket. (My two start-ups, Bookloco.com and eBooksAreForever.com should both be up and running by year's end).

But right now, Amazon is a godsend for authors. Even with 40% ACX royalties (which still beats any legacy audio deal).

Amazon cutting KDP royalties would lead to author exodus. Amazon knows this. I don't believe it would be in their best interest to do so, but maybe I'll be proved wrong in the future. Until then, I'll happily take the 70%.

But this is more than just about royalties, Mike. This is about owning rights.

If Amazon becomes the Great Satan, I own my rights. I can sell my ebooks elsewhere.

Right now, Hachette authors are screwed. Because Hachette has their rights. Once you let someone else take the wheel, you're at their mercy. I'd much rather do the driving.

Mike: Who knows what is the “the very worst that Amazon might do”?

Joe: I've been urging Amazon for years to drop KDP Select exclusive. I don't believe it is in anyone's best interest. I protested when they removed reviews. I thought that was wrong. I haven't liked some recent A-pub terms, specifically with their new foreign publishing wing, AmazonCrossing, and we had some epic debates over it. Amazon isn't perfect.

Perhaps, in the future, self-pubbing on Amazon will require granting Amazon full exclusive rights, like a legacy publishing contract.

THAT'S the worst Amazon could do. Take our rights, forever.

As for that AmazonCrossing German deal I disliked? Amazon has sold 12,000 copies of the German edition of Whiskey Sour this month.

I now feel much better about the terms I accepted. :)

Mike: Because many authors are still being very well paid and well served by publishers.

Joe: Many don't know any better. Many are afraid to leave. There is plenty of Stockholm Syndrome. Plenty of company store mentality.

But what I see very little of is authors lauding their legacy publishers, claiming they are well paid and well served by them. Yes, there is the idiocy of Turow and Patterson, who do indeed fit that description. But I believe the majority have big problems with their publishers, and are defending their bad decision to sign because it would be ego crushing to admit being wrong, or they feel trapped and don't know how to get away from their legacy masters, or they are afraid to go it alone, or they haven't discovered self-publishing yet because they were conditioned to believe legacy is the only way.

That's a far cry from many authors being well paid and well served. The happy indentured servant mentality is bullshit.

Mike: Amazon’s decision to “make a pittance” on certain products, including some ebooks, is tactical, not altruistic.

Joe: We found something to agree on.

Perhaps Amazon may some day find it tactical to keep the majority of book royalties, demand rights forever, and raise ebook prices.

But Amazon's track record shows otherwise. They haven't demanded authors' rights, have maintained high royalties (even 40% ACX royalty is high), and kept prices low.

The ones demanding rights (among other unconscionable terms) and high prices and low royalties are legacy publishers. They prefer to feather their nests at authors' expenses while Amazon chooses to tactically keep profits low and innovate.

We'll see who comes out on top, and who attracts the most authors.

Mike: The unreality in the suggestion that publishers are trying to put Amazon out of business is mindboggling.

Joe: Hugh didn't suggest that. You're not getting the concept in context. I'll quote Hugh:

Hugh: Publishers should have engineered Amazon from the ground-up. A company that invests in distribution networks for their products rather than pocketing profits. And instead of celebrating all the hundreds of benefits, like pre-orders and customer reviews and the savings on print runs and returns that Amazon’s algorithms provide, they are trying to figure out how to put their best resource out of business. It boggles the mind. Like those authors who fear Amazon might take royalties away tomorrow, so are happy to give up those royalties today, publishers are siding with companies that are hurting them today out of fear of their greatest ally getting even more market share tomorrow. And readers and writers are the victims of this illogical behavior.

Joe: In trying to control pricing, Hachette is indeed marginalizing Amazon's ability to sell Hachette's own ebooks, and Amazon is responsible for much of Hachette's profits.

In fact, Hachette made bigger profits when Amazon controlled pricing.

I knew the agency model stunk when I first heard about it. I would LOVE it if I could sell to Amazon at wholesale, say for $12.50 a unit, and Amazon paid me full wholesale price while selling my titles as a loss lead for $7.99. So would ANY AUTHOR WITH HALF A BRAIN.

But publishers feared this would cannibalize their paper oligopoly and hasten the growth of ebooks. Rather than embracing ebooks, and perhaps creating their own version of Amazon (by making their own online stores and ereaders), publishers windowed ebooks, colluded to price fix, raised prices, and basically acted petulant and fearful even as they made record profits.

Fail. If publishers truly want to wrest control from Amazon, they have to STOP SELLING THEIR BOOKS ON AMAZON.

Instead, they whine publicly when Amazon removes their pre-order buttons.

Hugh is right. Publishers can't have it both ways. They're shitting where they eat, and foolish for doing so. And their authors are suffering.

Mike: a large number of authors got an advance that already pre-paid them for the royalties they could conceivably have earned by doing their own self-publishing when the publishers’ sales died.

Joe: Again you're harping on about the advance. You really seem to have convinced yourself that advances aren't meant to earn out, and somehow constitute publishers paying authors more than 12.5% royalties, when publishers regularly drop authors for not earning out their advances, and print runs are calculated in part based on advance amount.

And I love your comment "when publishers' sales died."

Haven't you heard, Mike? Ebooks are forever. They continue to sell, for eternity.

Many publishers are refusing to revert rights for out of print books, claiming ebooks are considered "still in print" (which makes one wonder why the reversion clause even exists). This is because publishers continue to earn on these titles, theoretically to the point where EVERY SINGLE BOOK WILL EVENTUALLY EARN OUT ITS ADVANCE.

Which completely blows your whole argument. When all advances are earned out because ebooks never cease selling, advances truly function as the high interest loans I mentioned earlier.

Mike: They (small presses) are forced (by Amazon) to sell their ebooks on “wholesale” terms, which means giving much more of the retail price they set to the supply chain.

Joe: Wha?

Correct me if I'm wrong, but haven't ALL BOOKSTORES AND PUBLISHERS for AS LONG AS THERE HAVE BEEN BOOKSTORES AND PUBLISHERS operated on the wholesale model? No matter how big the publisher was, that's how it has always been.

The only difference between paper and ebooks is that wholesale paper distribution usually involves distributors who get a cut.

Let us remember that Amazon adopted the wholesale model for ebooks from Big Publishing, because that's how they bought paper books.

It was Apple that introduced agency pricing to publishing, which the publishers quickly embraced, then they colluded to force Amazon to accept it.

Small presses, or big presses, or bookstores, or etailers, aren't forced by Amazon to do anything. Amazon has no monopoly or monopsony. Amazon can dictate whatever terms it likes to its partners, and its partners can decide whether or not to sell books through Amazon.

Mike: The desire to make villains out of the industry establishment is the most unattractive trait of what should be a hero class: intrepid authors who forge ahead without institutional support to make success happen.

Joe: I don't try to make a villain out of the industry establishment. Its own actions make it a villain. I simply shine a light on the villainy.

However, I think a truly unattractive trait is to be an apolgetic for villainous publishers, as you continue to do. You make excuse after excuse for inexcusable behavior perpetrated against authors by the legacy industry.

Early in the post you said, "When I wrote what I intended to be a balanced piece about the Amazon-Hachette battle, it brought out the troops from the indie author militia in the comment string to call me to task and accuse me of many things."

First of all, we are not troops in a militia. We are artists trying to earn a fair wage. Artists who have been screwed for decades.

Second of all, the reason you get called to task in your comments is because you are wrong. Consider the amount of detractors in your comments compared to me, or David Gaughran, or Passive Guy, or Kris Rusch, or Courtney Milan, or Bob Mayer, or Dean Wesley Smith, or any number of others who blog about the publishing business.

Certainly, if there are so many authors being "well paid and well served" by publishers, they'd show up on our blogs like militia troops and disabuse us of our foolish notions.

But they aren't. Why is that? Why do you get taken to task on your blog, but we don't?

Intrepid authors who forge ahead without institutional support and make success happen aren't heroes. They're lucky. And if they manage a degree of success and share their experience with others, they're both lucky and helpful. And that includes when they take you to task for the ridiculous nonsense you spout on your increasingly irrelevant blog.

Mike: But author success has been achieved in a wide variety of ways and the way Hugh Howey has done it is still very much the exception, not the rule. We shouldn’t leap to conclusions from unusual cases.

Joe: Sort of like assuming authors stick with publishers because they are well served and well paid? I'd call well served and well paid authors the exception, not the rule. But let's focus on indie publishers.

Sure, Hugh is an exception. So am I. So are dozens of other indie bestsellers. As I said earlier, how many outliers does it take before it becomes normal?

Did you read the recent post on Passive Voice, with authors admitting how they've given up their day jobs? Do you ever visit www.kboards.com? Have you studied the www.authorearnings.com data?

This isn't about exceptions. This isn't about Hugh specifically. This isn't about some big name author who will, as you predict, one day self-publish.

This is about a very real revolution, happening right now, that you and legacy publishing can't seem to admit exists, other than as a slush pile.

I don't care if legacy publishers, or their pundits, know how empowering, potentially lucrative, and all around good self-publishing is for authors. I'm not trying to overthrow an industry. I'm not trying to promote Us vs. Them. I don't view legacy publishers as the enemy.

But I do want authors to be informed, so they can set attainable goals and make the best decisions for their careers. Which is why I'm going to keep fisking you. And it's also why your most popular posts are the ones where indie authors chime in to disagree with you.

Mike: And I think it is an iron rule of nature that it is dangerous to generalize from one’s own personal experience.

Joe: I agree. But Hugh speaks for more than himself. He and Data Guy are speaking on behalf of 50,000 titles they've been tracking.

Whom do you speak for, Mike?

Finally, Mike said this in the comments:

Mike: And the whole self-publishing option only is commercially viable to a small minority of authors anyway. I'll write another post on this but there are only two categories of successful self-published author: those who reclaimed their backlist and those who write in genres and write a LOT. You take those two types out and the number of successful self-publishers is vanishingly small. In commercial publishing, on the other hand, these two types are a small minority.

Joe: Paul Draker did a good job of dismantling this nonsense in the comments, but I'll also offer my take.

First, legacy publishing is commercially viable to an even SMALLER minority of authors than self-pubbing. Not only do legacy authors make less (thank you AuthorEarnings.com), but when we take into account all the authors making money self-publishing who were either rejected by legacy publishers, or never bothered pursuing self-publishing, we're talking about a lot of authors paying bills who never could before.

Second, you're missing something blindingly obvious. If an author can make money on backlist books they reclaimed, WHY THE HELL WASN'T THE PUBLISHER MAKING MONEY OFF THOSE BOOKS? Why would any publisher let an obviously lucrative title revert back to the author? How incompetent is that?

I made a few hundred thousand dollars from my legacy contracts. I've made ten times that on my own. That's how poorly my publishers did.

Third, as Paul said:

"Pretending there are "only two types of successful self-publishers" is just self-serving silliness, and your outdated claim that the number of successful self-publishers is "vanishingly small" is illogical nonsense that doesn't bear any resemblance to the highly visible reality of publishing success today. There are a few thousand of us indies who first started writing in the ebook era and never bothered with all this quaint, old-fashioned querying stuff, yet are already earning a full time living from writing. And when big publishers approach us with unsolicited offers after seeing us outselling them in the top retailer charts time and time again, we turn them down as often as not.

It's 2014, Mike. :)

What year is it on your planet?"

Fourth, I wrote about the importance of virtual shelf space years ago, in this post on ebook promotion.

The more books you write, the more virtual shelf space you occupy, the likelier you are to be discovered. Some of those who discover you will buy you, and some who buy you will buy more of your books. So the more ebooks you have, the better your odds are at selling more of them.

But while prolific authors with big back lists may have better odds, no one knows which book will become a hit. I'm pretty sure Hugh Howey had a hit with Wool before the novel was even finished (he released it serially). If I remember correctly, Amanda Hocking only had a few books out when she became a bestseller. Every so often I'll look at the Kindle Top 100 and find a new author I've never heard of, and see they have a limited backlist (or no backlist at all).

Odds are a funny thing. The odds of hitting red on roulette are little less than 50/50. There are 18 red pockets, 18 black pockets, and 2 green pockets in US roulette. The more numbers you bet, the likelier you are to win.

Pretend those numbers are ebooks. If you have fourteen ebooks, the odds of the ball landing on one of your books (in our analogy that would indicate a sale) are better than if you only had one book.

But occasionally you can bet on one number and win big. And there are many examples of this happening. Right now, at #19 in the Kindle Top 100 Bestseller List, is Black Lotus by E.K. Blair. It's only her fourth book. Sweet Addiciton by J. Adams is #52, and it's her only book. The Atlantis Gene by A.G. Riddle is his third book, and it's at #88.

Anyone who wants to spend a little time on the Amazon bestsellers list can no doubt find many other examples. But Mike doesn't like the facts to get in the way of how he views the world.

Finally, I was amused to find my name brought up in the comments.

Mike: I haven't read much (of Konrath). He's one of the VERY few people who has posted stuff I've deleted from the blog. He'd write 1000 or 1500 word comments. As long or longer than some of my posts. I tried to give him a 20 word answer and then he'd do it again.

Joe: That's because you wrote such BS, Mike, it took more than 20 words to refute it. A wise man once said; the energy required to refute stupidity is exponentially larger than the stupidity itself.

In 2011 your blog was terrific. You were a forward thinker with an open mind. You valued debate. What happened to you?

Mike: I tried to recruit him as a Digital Book World speaker in 2010 when he was pretty early in his self-publishing career and he said he was too busy writing to do anything else. Apparently, he's now got the time for writing that he doesn't sell. Good for him.

Joe: I found my email reply to you:

"I'm flattered you'd ask me to speak, but I've given up public appearances. As you may know, I've visited well over a hundred libraries and book fairs and conventions, and signed at over 1200 bookstores.

Right now the best use of my time is staying at home and writing. I took myself out of the public speaking circuit (where I had offers as high as $10k to speak) because it became a full time job. My goal has always been to write for a living. Now I can do that without all of the stress and hassle of running around the country, flapping my jaws. I also cut out pretty much all self-promotion, including interviews."

But I never stopped blogging. I consider it a public service.

I think about stopping, though. All the time. It's a time suck, and other bloggers (not you) are doing a fine job educating authors about the industry. The publishing world would get along just fine without me.

However, whenever I think that I should quit, someone sends me something ridiculous, like a link to your blog, and asks me to respond.

Please, Mike. Stop spouting nonsense. Then I would be able to get more work done.

But, on the off chance you'd like to reply, I'll give you more than 20 words to do so. I'm generous that way.