Let’s start with the obvious: I’m not one of them. And I’ll tell you up front that if you are in the business right now I’m going to say a few things that will irritate you in this post. Some of them may seem to come from left field. Some bits may scream of ignorance (meaning mine). Thing is, that’s all okay with me. I only know and see what I know and see. Plus, I only reason within my capacity to do so. Worse yet? No crystal ball either.
I’ve tried to write about this stuff before, but let’s be frank: I’m a techie geek nerdhead all the way through. I see a business problem, and I start talking about software to solve it. Since I love the technical bits, this often means I don’t spend a lot of time talking about the business problem itself. This post is an attempt to rectify, clarify, elucidate, and also throw in the occasional serial comma.
I don’t promise that I’ll be “right” on any particular point, or even in the main thrust of my argument. I do promise that I’ll do my best to create a sort of logical framework, and that I believe there is reason to expect the role of “publisher” to change drastically in the near future–but maybe not as drastically as it already has in the recent past. In fact we may soon discover that the role of a publisher has cycled back to what it used to be, only using entirely new technology and a far more widely distributed playing field.
Here’s the first irritating bit: I don’t see a lot of difference between publishing (and I should tell you that within this post I mean something like “e-publishing,” because I’ll only be talking about digital content today) and the rest of the businesses selling digital content on the internet. Except that publishing seems to be stuck at least a decade or so in the past. (I actually suspect it’s almost two decades, with Amazon taking full–but unsustainable–advantage of this, but I figured I’d ease into saying that. This, for me, passes as tact. You’re welcome.)
I’ve been writing fiction for a while, with a couple of novels under my belt. And a bunch of stories, and I have some more stuff that should be complete and “published” fairly soon. But I have far more experience in the software development world. Which also, for me, means the “startup” world, and I know a little bit about selling digital content on a systematic basis. (I could also irritate a bunch of writers by telling them I see more similarities than differences between writing software and writing fiction, but I’ll save that for another day. Maybe next week?)
So, when I (as an outsider) look at publishing today, there’s a lot I just don’t see but think I should. For instance:
- Affiliate programs (the kind with teeth)
- An open market that allows specialists to prosper
- Widespread understanding of “platform” and its dangers
- Serious subscription management
- A rich and well-distributed startup ecosystem. Yes, there are companies trying all sorts of stuff. But most of them seem to be stuck in an obsolete paradigm (more on that in a bit).
I know: some of you quit reading back at “affiliate programs.” After all, who wants a bunch of MLM schemes? They’re so tacky. And besides, affiliate programs do so exist! To which I say: yeah, they sorta exist. Only they’ve got the “tail” and “dog” parts reversed. Fix that and the world looks very different all of a sudden.
I started thinking this through from a non-techie perspective last Friday because Nate Hoffelder wrote a post that he said was partly inspired by a comment I’d left on another of his posts…which I could also link to, but come on. Find it yourself if you really care.
Anyway, Nate’s a smart guy and I was flattered that I started his brain a-spinning. He wrote about an indie network of startups that would be able to seriously threaten Amazon, and went on to imply that Amazon may well be very aware of the danger. It would explain why they bought Goodreads, for instance.
Let’s back up just a little. Here’s the excerpt of my comment that Nate used in his post:
There’s no obvious reason these centralized systems have to dominate internet sales at all. Set up an easy-to-use system for content owners to offer their wares from wherever they choose to host ‘em, and handle sales by at least one common protocol, and the only central system of use will be an index…which will really only be useful to most insofar as it is also a recommendation engine.
By “centralized systems” I meant organizations like Amazon, B&N, Kobo, and so forth. When I wrote the above I was just thinking about a network of indie author/publishers and how easy it would be to design a system that worked very well, was widely distributed, and could be profitable for all concerned without skimming off 35-70%+ of the gross. If you could somehow convince people to use it once it was built (not my area of expertise…unfortunately this is clear to everyone who meets me). But you know what? I was starting from the wrong end.
Here’s what I should have been saying all along:
- From a technical perspective, Amazon’s content hosting and delivery, plus payment processing, is trivially easy to duplicate. This is becoming more true every year. (Incidentally, it’s also possible to buy the server space and bandwidth cheaply…from Amazon. Irony! Fun! Unless maybe that’s actually silicony!)
- The price they charge to publishers is awfully high for mere content hosting.
- Thing is, that stuff is just the plumbing. The real reason people go to Amazon (besides habit) is that Amazon helps them find what they’re looking for, or it suggests potential purchases in a useful way.
- I’ve read (but not personally verified) that, although the major non-Amazon e-bookstores have duplicated all of the infrastructure above, they most often recommend what they’re paid to recommend. In other words, they’re designed to please publishers rather than readers.
- There’s no obvious reason, if Amazon’s primary business is actually recommendations, why others couldn’t profitably get into the game…if they could do so without worrying about the hosting bits. Because that’s just the plumbing. Yeah, I said it again.
- This, if true, would easily explain why Amazon remains dominant. They don’t actually have competitors. They have cargo cult imitators.
And here are a few more points to consider:
- Publishers, large and small, seem to obsess over Amazon’s platform. This makes a certain amount of sense, because Amazon sells a lot of books.
- In the software world it’s fairly common for companies to trap themselves by using some other company’s platform. If sales are good enough in the short term it can be a reasonable choice to do so, but the situation is always time-limited–because the platform owner invariably starts incorporating whatever its “partners” do that seems to be making a profit. Sounds familiar, doesn’t it?
- The primary weapon smaller software companies have to counter this behavior is to offer “Software as a Service” applications, which typically generate the most overall profit when they’re set up to be offered on a subscription basis. This also sidesteps a lot of DRM and “piracy” issues.
So when I first got a taste of the current indie-publishing world, as a sort of reflexive reaction I started considering how I might offer subscriptions. I haven’t given up on that notion! But…I’m far from the only player in this publishing world, and while I might be able to make that work there are lots who could do it better. It seems to me that any of the major ebookstores, or any of the major publishing houses, could reshape the book publishing (and selling, and distributing) landscape almost right away. And this would be a good thing. For instance:
- What if B&N gave up on laying pipe and instead considered a business model designed to directly challenge Amazon’s? Couldn’t they immediately choose to become more of a middleman by encouraging publishers to offer them a data feed of the books they have available, and instead of trying to behave as if they had a proprietary interest in the content, B&N could simply charge a transaction fee for each book purchased? B&N already has a large number of readers accessing their site. They could let publishers set up subscriptions or any other marketing/discounting scheme they liked, and remain agnostic to it all: they’d just want their percentage. Of course this should also entail spending more time on developing their own recommendation engine–but that might be crowdsourced (see much more on this below). The primary point is that B&N could immediately charge a much lower transaction fee, if they would just accept that Amazon is the only Amazon and the way to defeat them is not to duplicate the more obvious features of their website. Perhaps ten percent? Five? The expenses are fairly low for this kind of setup. Publishers would (or should) be ecstatic at the opportunity. Press coverage would be everywhere. Amazon would…have to follow suit. Wouldn’t they? Then B&N could set up some fun stuff with affiliate marketing– there are lots of interesting implications, but again…see below for more of that.
- What if (and I like this version better) one of the major publishers decided to kick this off instead? How hard would it be to offer its wares via an affiliate program? Something like Commission Junction might work reasonably well right out of the box (assuming the publisher understood it was actually an “advertiser” in this context). Essentially the publisher would allow nearly anyone to set up an account. That person or company would become…well, either a distributor or a bookseller or both.
Whichever way the above gets started (and I think this is an inescapable development), suddenly it will become straightforward for many, many book lovers to get into the game. Do you have a popular book blog? Great; now you can either sell the publisher’s books directly or get paid for traffic you send to the publisher’s (or B&N’s) site. Are you Amazon? Same thing. You’re only as special as your sales numbers. (So obviously it works better if the publishers do this themselves. But if B&N pulls the trigger first…next week maybe…my guess is it’d be a while before anyone tried to cut them out entirely. And even then they’d just keep selling books as best they can, same as everyone else.)
In this new paradigm, I strongly suspect that specialists will rise to the fore in many categories. Trying to sell “everything to everybody” is a tough business. But what if I want to sell only Pacific Northwest thrillers, and I put a lot of time into finding my target audience and reviewing/selling this type of book? All of a sudden I can sell the books, from any participating publisher, directly on my site. Or not–it’s up to me.
Speaking of which, what if I want to build a brand-new business based on getting print books into bookstores? Well, how good are my sales numbers? I’ll bet some of the stores in the Pacific Northwest would look at them. Maybe give me a little piece of the action in return for my recommendations. It doesn’t necessarily have to be much–just enough to keep me interested.
For a publisher this could be fun. Like: here’s my price for this book. Or you can get a bulk rate for sales on your own site if you earn that. Or you can sell it as part of a subscription of some sort. Would you like to set up your own subscription plan, using eligible books and basing this on search criteria you select? Or would you like to form your own curated list, which we’ll even make exclusive to you if you sell enough subscriptions? Or do you have another idea we could try out? Because trying out new stuff is fun, because as a publisher I don’t actually care which downstream business models actually work. I just make stuff available in various ways, and keep track of the numbers, and talk to people.
A lot of folks at all levels of this would make…well, coffee money. Sometimes. Which is actually fine! Some would make millions, and most people would mostly be involved because they love the game. There’s room for everybody, and those who developed a following could be directly paid for the influence they wield.
Confession time: I hate centralized systems in general. It’s the geek in me. They’re designed to be non-responsive to stimuli, and they’re designed to have single points of failure. Yech. So I naturally expect ’em all to fail in really ugly ways, and real soon too. Which doesn’t mean I’m right in any particular instance.
But…think of all the problems that simply go away when all this happens! Maybe!
In this new ecosystem, nobody would have to design a book review system that worked for all books everywhere. The very idea would become silly. Instead, lots of people would recommend what they liked or found worthwhile, and those who earned a substantial following would…again…be paid for it. On the other hand, there might well be a bunch of generalized book review sites that all somewhat work, and they’d all make whatever money they’d earned.
There might or might not be any value in a sort of “central index” of books for sale. There could be several of these, and of course anybody at all could sell nearly any book…but the index itself is nothing compared to the recommendations. And just how hard is it to subscribe to a bunch of publisher feeds to create that index, anyway? This service won’t make much money, will it? Hmm. Maybe people ought to focus on giving readers what they want instead?
There will be room for lots of new businesses. Want to help indies put a subscription or an anthology or both together (please)? Want to build and sell an app that helps people (Facebook users?) gather major-publisher feeds and sell the books they select on their own sites (or from Facebook pages, or from LinkedIn, or…)? Hey, do you have an idea for a new sort of subscription or combo product? Cool. Try it out!
Where’s Amazon in all this? Unless they get out in front and help make it happen, they’re probably nowhere. They for sure won’t be charging 35-70% plus “applicable” fees per transaction for very long. Right away they’ve got a problem: current ebook prices include paying 35-70%+ to Amazon. So what if Joe Schmo can sell a book on his own site but chooses to go only 10% above his cost (which is, by no coincidence whatsoever, the same as Amazon’s)? Suddenly…everybody else may be able to undercut Amazon’s current prices. Everybody. For fun, as a hobby, without paying the author/publisher any less than they’re making now and without depending on those sales to make a living. So what does Amazon do about it? Price-match, keep their cut the same, and irritate authors/publishers by paying them even less than they do now? I don’t think Amazon could take that kind of hit. They’d have to get out in front of it, and change the way they do business. And see just how well selling everything to everybody works, in the long run, with lots of specialized competition.
Okay, so if any book can be sold for less, how is there still money in book sales? Well…sometimes there might not be much. I think the way you sell books for money is through customer loyalty and appreciation. Let’s face it: that’s how it works now, too. You have to earn that kind of response from readers. If you can’t…try another business, I guess.
Incidentally, besides buying up sites like Goodreads (which, if it became a major source of influential book recommendations, would also bring about the distributed future I envision–because I don’t think many people would choose Amazon as their primary source of books if they could either find lower prices or be guaranteed that the author/publisher would receive more of the purchase price elsewhere, and again I say setting up the plumbing isn’t too hard or expensive), what else can Amazon do to protect themselves?
Well…they can keep buying startups as Nate suggested, for as long as that remains practical. And they can get as much contractually exclusive content as they can, while that still seems reasonable to writers. But hey–wait a minute! If they were worried about this and thought they could get away with it because nobody was really paying attention…wouldn’t their imprints require exclusivity for the life of the copyright? And wouldn’t they also do this with Kindle Singles, and Kindle Worlds? Oh wait. That’s exactly what they’re doing, isn’t it? Hmm.
Hey David. Aren’t you one o’ them rabid indies? Whyfore are you suddenly talking about publishers? Good question! The answer is that a publisher who did this would be offering me an actual service. One that would be worth money to me. Sure, I could probably duplicate the tech eventually and offer my own feeds, but who would care? Also, just how good at managing multiple-author subscriptions and anthologies am I really going to be? And do I really want to jump feet-first into this new world, where Amazon’s algorithms may well play second fiddle to personal relationships with those who successfully recommend and sell books? I mean…sheesh. This is what a publisher should do. From my perspective, anyway. Probably not just mine, but you never know. Sometimes I’m odd.
Okay, so I’m a publisher and I want to remake the ebook world. What does this mean I need to do, in simple terms?
- Set up affiliate programs.
- Allow not just referrals to your site, but also actual sales on affiliate sites.
- Pay more to those who sell on their own sites rather than yours. Because you want them to build a successful business. You want lots of businesses out there selling your stuff. That way nobody’s an Amazon anymore.
- Speaking of that: always pay the affiliates well. Pay them lots of money. Offer something like what you’re currently paying Amazon, and maybe even a little more in special cases. They’re doing the actual work of selling the products; honor that and see if you can make up the difference (or more) in volume.
- In other words: crowdsource your sales team. Partly, at least.
- Also crowdsource reviews and recommendations wherever possible. Don’t you already mostly do this?
- That’s all automated, once the basics are built. What you actually do is spend your time building and maintaining relationships with influential sellers/distributors/recommenders. Do lunch. Talk to people. Get them excited.
- Occasionally try a new idea, if it looks like it might work.
I think it means “professional publishing” is what you need to do. Only in this century. Amazon? So 1990s.
Okay, there are caveats. Can traditional publishers actually do this today, without violating whatever contract terms they generally have in force? Beats me. On the other hand…if they need to renegotiate those terms to get the necessary rights, and they have something to offer writers, could they do so? I don’t see why not.
How about newer and smaller “indie” publishers? Can they get together and start doing this? Come to think of it, since Smashwords automatically opts all its authors in to new distribution channels…could Mark Coker find a way to make this happen all by himself? Maybe. (Also, where’s his indie-book-of-the-month club? Come to think of it, why doesn’t Smashwords have twenty of them?)
Here’s the thing, though. I think whoever gets this rolling needs a larger market share than Smashwords has, if it’s going to happen quickly. And probably needs to offer bestsellers too. Though…I could be wrong. Maybe we just need the right catalyst. That’d be cool.
So, who wants to try? Anyone? Anyone? Bueller?
Have fun out there!