[Today's blog post is an excerpt of a lengthy online conversation between writers Barry Eisler and Joe Konrath. To see the discussion in its entirety, go to: http://barryeisler.blogspot.com]
Barry: This is a live Google docs discussion I had with my good friend, novelist Joe Konrath. It examines the history and mechanics of the publishing industry as it exists today, analyzes the way the digital revolution reflects recent events in Egypt and the Maghreb, and considers a completely inappropriate YouTube video featuring a randy monkey and an unlucky frog. It clocks in at 13,000 words, and reveals some pretty startling things.
Joe: To the casual observer, you appear to be heavily invested in the legacy publishing system. They’ve been good to you, they helped you get onto the NYT bestseller list, made you wealthy with several large deals, and seem to have treated you fairly.
Barry: Well, I don’t know about wealthy, but I’ve been making a living writing novels for almost a decade now, which is a pretty great way to live.
Joe: You had six-figure and seven-figure deals. Logic dictates anyone offered a deal like that should leap at it.
Barry: You wouldn’t.
Joe: But I never had the treatment you had from legacy publishers. I would walk away from a big deal now, most certainly, because I have two years of data proving I can do better on my own.
However, what if a NYT bestseller were offered, say, half a million dollars for two books?
Or, more specifically, let's say you were offered that.
You'd take it. Right?
Barry: Well, I guess not... ;)
Joe: So... no BS... you were just offered half a mil, and you turned it down?
I know it’ll seem crazy to a lot of people, but based on what’s happening in the industry, and based on the kind of experience writers like you are having in self-publishing, I think I can do better in the long term on my own.
Joe: "Barry Eisler Walks Away From $500,000 Deal to Self-Pub" is going to be one for the Twitter Hall of Fame.
* * * *
Barry: There’s a saying about the railroads: they thought they were in the railroad business, when in fact they were in the transportation business. So when the interstate highway system was built and trucking became an alternative, they were hit hard.
Likewise, publishers have naturally conflated the specifics of their business model with the generalities of the industry they’re in. As you say, they’re not in the business of delivering books by paper--they’re in the business of delivering books. And if someone can do the latter faster and cheaper than they can, they’re in trouble.
Joe: You say they're aware of it, and some evidence points to that being true. The agency model is an attempt to slow the transition from paper to digital. Windowing titles is another one. So are insanely high ebook prices.
Barry: All signs that publishers are aware of the potential for digital disintermediation, but that they don’t understand what it really means.
Joe: Because they still believe they’re essential to the process.
Barry: I would phrase it a little differently. They recognize they’re becoming non-essential, and are trying to keep themselves essential--but are going about it in the wrong way.
Joe: You and I and our peers are essential. We're the writers. We provide the content that is printed and distributed.
For hundreds of years, writers couldn't reach readers without publishers. We needed them.
Now, suddenly, we don't. But publishers don't seem to be taking this Very Important Fact into account.
Barry: Well, again, I think they’re taking it into account, but they’re drawing the wrong conclusions. The wrong conclusion is: I’m in the paper business, paper keeps me essential, therefore I must do all I can to retard the transition from paper to digital. The right conclusion would be: digital offers huge cost, time-to-market, and other advantages over paper. How can I leverage those advantages to make my business even stronger?
Joe: We figured out that the 25% royalty on ebooks they offer is actually 14.9% to the writer after everyone gets their cut. 14.9% on a price the publisher sets.
Barry: Gracious of you to say “we.” You’re the first one to point out that a 25% royalty on the net revenue produced by an ebook equals 17.5% of the retail price after Amazon takes its 30% cut, and 14.9% after the agent takes 15% of the 17.5%.
Joe: Yeah, that 25% figure you see in contracts is really misleading. Amazing, when you consider that there’s virtually no cost to creating ebooks--no cost for paper, no shipping charges, no warehousing. No cut for Ingram or Baker & Taylor. Yet they're keeping 52.5% of the list price and offering only 17.5% to the author. It’s not fair and it’s not sustainable.
Barry: I think what’s happening is that publishers know paper is dying while digital is exploding, and they’re trying to use the lock they’ve always had on paper to milk more out of digital. In other words, tie an author into a deal that offers traditional paper royalties, which are shrinking, while giving the publisher a huge slice of digital royalties, which are growing. The problem, from the publisher’s perspective, is that their paper lock is broken now.
Joe: I feel all writers need to be made aware that there is finally an option. Not just an option, but an actual preferable alternative to signing away your rights.
Barry: It’s inevitable that more writers will be realizing this is true. It’s being demonstrated by more and more self-published authors: you, Amanda Hocking, Scott Nicholson, Michael J. Sullivan, HP Mallory, Victorine Lieske, BV Larson, Terri Reid, LJ Sellers, John Locke, Blake Crouch, Lee Goldberg, Aaron Patterson, Jon F. Merz, Selena Kitt, hopefully me... :)
Joe: You're on track to make $30,000 this year on a self-published short story. I'm not aware of any short story markets that pay that well.
Barry: Well, it’s early yet, but yes, "The Lost Coast" has done amazingly well in its first few weeks, netting me about $1000 after the initial fixed cost of $600 for having the cover designed and having the manuscript formatted. I plan to continue to publish short stories and I’ll be getting the new John Rain novel, The Detachment, up in time for Father’s Day, and I have a feeling that each of the various products will reinforce sales of the others.
Joe: That's a really smart plan. My own sales, and the sales of other indie authors doing well, pretty much confirm that a rising tide lifts all boats. Virtual shelf space functions a lot like physical shelf space. The more books you have on the shelf, the likelier you are to be discovered by someone browsing. And when a browser reads you and likes you, she buys more of your work, and often tells others about it.
In other words; the more stories and novels you have available, the more you'll sell.
Barry: Gotta just jump in here to point out the significance of this. It means that a writer’s best promoting tool is once again her writing. Advertising costs money. New stories make money.
Joe: I told you so...
Barry: You did. Glad I listened late rather than never. It’s amazing: for most of the history of publishing, outside a brief book tour and maybe a few public appearances throughout the year, a writer couldn’t do much to promote. Then the Internet happened, and writers had to do a tremendous amount of online promotion--blogs, social networking, chat rooms--to be competitive. Now, with digital books, once again there’s no more profitable use of an author’s time than writing. Not to say that authors don’t need to have a strong online presence; of course they do. But anytime you’re thinking about some other promotional activity--a blog post, a trip to a convention, an hour on Facebook--you have to measure the value of that time against the value of writing and publishing a new story. The new story earns money, both for itself and your other works. The social networking stuff doesn’t.
* * * *
Barry: To turn a manuscript into an actual book and get it into the hands of a reader, we still need an editor, line editor, copyeditor, proofreader, jacket copy writer, bio writer, cover art designer, and digital formatter. Plus there are various marketing and sales elements, too. You manage all these functions yourself, and this is one way in which I’d argue that you really are, if not exceptional, then at least unusual.
Joe: I wouldn’t disagree with that.
Barry: So as legacy publishing dies out, where will other writers turn to for assistance with the critical functions I mention above?
Joe: We’ve talked about this before.
Barry: I know. I was trying to prompt you in an unobtrusive way.
Joe: Right. Okay, unobtrusively, I think agencies will morph into what I call E-stributors.
Barry: I agree with the concept, even if I don’t like the nomenclature.
Joe: You don’t like “print,” either.
Barry: Not when you’re talking about paper. There’s paper print and digital print. I think the better distinction is between paper and digital.
Joe: I know, I know. Anyway, E-stributors will be a combination of publisher and manager, handling all the elements you mention above for authors who don’t want to manage those elements themselves. The ones that do it well will probably be able to make a good case for keeping their 15% cut.
Barry: As opposed to legacy publishers, which are keeping 52.5%.
Joe: Yes. Hard to see how legacy publishers will be able to compete with the digital model being adopted by agencies. They’d have to morph into E-stributors themselves, which would be a huge challenge given their attachment to a paper infrastructure. More likely, you’ll see the most entrepreneurial editors jumping ship and joining agencies.
Barry: Sorry for the digression. I guess I was just wondering aloud whether the term “self-published” will be widely applicable after all. For some, no doubt. But maybe “indie-published” will be more appropriate across the board.
Joe: Could be. Regardless, the one trump card legacy publishers always had -- the lock on distribution -- is now gone. Writers can reach readers on our own through Kindle, Nook, Smashwords, Createspace, and Overdrive (a company that distributes ebooks to libraries.)
Even with all that, however, it still takes a lot of guts to walk away from a half-million dollars.
But it's the right thing to do. And you're correct that you won't be the last to do so.
Allow me to congratulate you on being the first one to do so, my friend.
If I'm right, you may have just fired a shot heard 'round the world...
Barry: Thanks for the kind words, amigo. But you saw the way and blazed the trail. I might be doing something to make the way more apparent myself, but in the end I’m still just following in your footsteps.
Joe Konrath is the author of more than 20 novels and hundreds of short stories, written under the names J.A. Konrath (the Lt. Jacqueline "Jack" Daniels series), Jack Kilborn (Afraid, Trapped, Endurance, Draculas), and Joe Kimball (Timecaster.) He began self-publishing on Kindle in April 2009. As of March 2011, he's sold more than 200,000 ebooks. On his blog, A Newbie's Guide to Publishing, he has chronicled his writing journey. His website is www.JAKonrath.com.
Barry Eisler spent three years in a covert position with the CIA's Directorate of Operations, then worked as a technology lawyer and startup executive in Silicon Valley and Japan, earning his black belt at the Kodokan International Judo Center along the way. Eisler's bestselling thrillers have won the Barry Award and the Gumshoe Award for Best Thriller of the Year, have been included in numerous "Best Of" lists, and have been translated into nearly 20 languages. When not writing novels, Eisler blogs about torture, civil liberties, and the rule of law. You can find out more at www.barryeisler.com.