JB Speculates: eBooks, Book Contracts, Agents, and Libraries

I’ve looked in the crystal ball I hide under my desk and caught a glimpse of what ebooks will change in the next few years. Specifically I saw what will happen to:

  • Book Contracts
  • Literary Agents
  • eBook Aggregators and Libraries

After showing me the vision, the ball thanked me for shopping at Walmart. Weird.

PRINT ONLY CONTRACTS

The only reason to have a print publisher is to get distribution you cannot obtain on your own, or to get it more cheaply than it would cost you if you tried to get it on your own. That’s it. Now, it’s true publishers have excellent art departments and story editors. But you can contract out cover art, copy editing, formatting, and even story editing yourself.

Distribution is the main thing publishers offer that you can’t get anywhere else.

BTW, when I’m talking about distribution, I’m talking mostly about getting the books out to places people can see and purchase them. For example, publishers can get your book into hundreds or thousands of books stores all at the same time–Barnes & Noble, Hastings, Walmart, Costco, indie book stores, airport book stores, grocery stores, drug stores, etc. Publishers can get you display in those stores so consumers see your book. One form of that are the racks and new book displays. Another is one that Scholastic does so well, i.e. displaying and selling titles in tens of thousands of classrooms with its book catalogs. A single author just can’t do that. 

It’s also true publishers can convince some platform venues, that would never look at a self-pubbed author, to spotlight your book.  For example, it’s unlikely a self-published author will be able to convince Booklist, Publishers Weekly, and Library Journal, which have huge platform for library book purchasers, to review a book.  But publishers have no problem getting their stuff in there. Likewise, it’s often much easier for publishers to get endorsements from other authors or people with platform than it is for a single author.  Of course, there are so many places that have some kind of platform, that publishers don’t have a lock on them all, e.g. Goodreads and Amazon reader reviews.  But for the sake of simplicity, let’s just look at the distribution end.  

Because 90% of book sales are still hardcopy, the only way to have HUGE sales numbers, right now, is through a print publisher. I’m talking about the numbers you see in the Publishers Weekly top selling books, where you have to sell at least 100k copies in hard back, 500k copies in mass market, to even make the list.

Publisher’s lock on this ability will erode. We can see signs of this in the USA Today Top 150 already. I consider this to be the most accurate picture of what truly is selling the most. Here’s why. And ebooks are starting to be the best selling format for a number of books. On that list, they add up sales of a title in all formats and then list the best-selling format. So when you see an (E) at the end of the listing, you know it’s selling more ebooks than any other format. E’s are starting to pop up all over and we’re still in the early adopter stage for ebooks and ereaders.

So what does this mean?

If I put on my author business slacks (why does it always have to be hats we change?), I’d be crazy to turn down a publisher that wanted to offer me monster distribution. A bird in the hand is worth two in the bush. You offer me $500k now, I’m taking the money and running all the way to the bank and then the $6.99 Indian all-you-can-eat buffet.

Of course, I’m not likely to get that kind of an offer. We new writers are more likely to get an offer for, what were Hines’ numbers? $6k – $12k? And for that the publisher will want all our ebook rights and will tie them up for years and years and years. And then they’ll try to give us a fraction of what we could get selling directly. Furthermore, they don’t provide such books the same push to garner platform spotlight. They don’t spend the money to give them the prime display in bookstores. This means the difference between what they bring to the table for us smaller authors and what we can do on our own is much less. And the ebook has narrowed that even further.

How much further? Well, how many books would you have to sell to make that advance of $6k – $12k? If you’re selling your books for $2.99 for the Kindle, you get about $2.00 a book. That means you’d have to sell 3k-6k copies of an ebook to earn as much as that average advance. 

Do you think you can sell 3k – 6k copies of an ebook at $2.99?

Some authors will be able to do this. Some won’t. If you wanted to do that in three years, you’d have to sell about 150-350 books per month. For a more in depth comparison between traditional publishing and self-publshing ebooks, see Dean Smith’s blog on cash flow.  

Maybe you don’t think you can make those numbers. But maybe you can. The point is that if you think you can, then you can make as much on your own as you can with a publisher. This means there is absolutely no financial reason on earth to take the publisher’s deal. None. Now, if you have non-financial reasons, that’s another thing, but when looking at dollars and cents, it’s fairly clear the publisher’s ability to put you into their distribution channels isn’t worth what it will cost you. Especially since the ebook is forever and may keep selling for years to come AND because the market for ebooks is still in the early adopter phase–it’s only going to grow massively over these next years.

But this doesn’t mean paper publishing is dead. It’s not. Nor will it be for some time. Just because SOME authors can make as much in the ebook market on their own as they can with a publisher through their distribution channels doesn’t mean all of them can. Furthermore, publishers with distribution have something to offer even those who successfully publish ebooks themselves.

Let’s say you have an ebook series that starts to sell well for you, 1,000 per month. That’s $2k per month, $24k per year. If a publisher wanted to buy the rights to that from me, they would have to pay me MORE than $70k as an advance. MORE. Because I can make that on my own in three years selling it myself. In fact, since ebooks are forever, I have to look at the present value of all of those years of sales. That income stream is going to be a LOT MORE than $70k, even if we think sales will taper off after five or six years.

How many big publishers are going to want to pay that?

Probably none. Or, at least, I suspect those deals will be few and far between. But there is money to be made in paper, even if that market is shrinking. There will be some smaller publishers who, for the right price, will offer paper distribution. And if they can get me distribution that I couldn’t get myself for paper, or do it at a lower cost, then I’d want to sell them paper rights. Why not?

And so what I see in the crystal ball are some authors, the ones who do well selling ebooks, being able to sign contracts with publishers that sell paper rights only. I know the big publishers probably won’t go for that in the near term, but smaller publishers will see the value and step up to the plate.

AGENTS

What about agents? Are they going to die?

I think if we remember that literary agents are SALES agents, then their future becomes clear. The only reason to get a sales agent is because doing so makes my property worth more (same reason for getting a publisher, btw). If, by letting them focus on sales and letting me focus on getting more product out the door, I make more money than I would if I tried to do BOTH the selling and the producing, then I want an agent.

I want to sell as many rights as I can to as many people as possible–gaming, film, audio, foreign, merchandise, etc. I’d be a fool to say, well, no, I’ve got this little ebook gig going. I’m not going to sell any of these many other rights to anybody. No, I’m just going to let them sit in my basket and earn me nothing. Let them go to waste.

!?

A good agent should be able to sell more than I could on my own because they have a better ability to reach AND close editors AND other people that are in the market for purchasing rights to my property. They’ll also allow me to sell more because all the time I would have spent selling, I can now use to create more product. So not only do I have more books, and therefore rights, to sell, I can hopefully sell them for a better price and terms than I could on my own.

I’d be a fool not to increase my revenue. I’d be a fool not to have a good agent.

So as long as there are people who want to purchase these non-ebook rights, and an agent can make a sale I couldn’t or can make it for less than what it would cost me to do it on my own, then agents will be useful. Because of this, because we’ll always have more than ebook rights to sell, I don’t see a role for good agents ever going away.

EBOOK AGGREGATORS & LIBRARIES

When more and more people begin reading ebooks what happens to the libraries?

Ebooks cost less. So a lower price per book would simply allow libraries to purchase more books and expand the collection. But wait, they don’t need rooms and rooms to hold all the paper. You can store the world’s library in one computer room. Shoot, this means that housing the collection on a server instead of on the shelves would cost less. This would allow for an even bigger collection. But why maintain a server and manage your own collection if you can network to the collection down the road?

In fact, what if there were a mega service with millions of titles you could subscribe to? That would be even cheaper. Then you wouldn’t have to pay book purchasing agents or IT folks to keep your server running.

Enter the ebook aggregators–the Netflixes of ebooks (I know somebody somewhere is working on this business plan; is it you?)

I’m betting the whole library system goes national. I’m betting you’ll have some government aggregators, but they’ll probably be dwarfed by the private companies. You’d subscribe to the aggregator’s service just as you do Netflix today and many university libraries currently subscribe to electronic periodical collections.

The aggregators will probably charge users as Netflix does for a certain number of books checked out at the same time. If a large entity like a library wanted to subscribe, I bet the aggregator would charge access to the collection based on number of users at the library. The library would pass some of that fee onto patrons. The rest of the fee would be paid by the community’s tax dollars, just as those tax dollars pay for the current collections. You might even have device manufacturers coupling subscriptions with purchase of the product as incentives to buy their devices.

When the aggregators step in, we suddenly end up with a different mix of distribution channels that will coexist:

  1. Author –> ebook retailer (Amazon Kindle, B&N Nook, etc.) –> reader
  2. Author –> subscription aggregator –> reader
  3. Author –> subscription aggregator –> public and school libraries –> reader
  4. Author –> publisher –> subscription aggregator –> then option 2 or 3 above
  5. Author –> publisher –> current distribution channels

Surprised by #5? Well, the current distribution channels are not going away until every book can be read on an ereader and everyone who reads has and wants to read on such a device. That’s going to take some time, if it happens at all.

Why would readers buy individual titles ala distribution channel 1 above? Some people just want to own. Other readers will be happy to purchase the books because they don’t want to wait for a checkout slot to open up, e.g. I already have my allotted number of books checked out and I really want this one on hand all the time because it’s Suzie’s favorite. Other readers will want to customize a book with highlights, margin notes, links, etc. just as many of us like to mark up paper texts. We’ll need our own copy for that. Still, I think the bulk of reading will move to the subscriptions. For example, right now I purchase DVDs I love, even though I can get them from Netflix. But the number of DVD’s I own are a fraction of those I watch. Most TV and film I watch once and it goes back to Netflix until I want to see it again. And this checking out becomes even easier where there’s nothing physical to send through the mail.

Please note: there will probably be some form of gatekeeping with the aggregators. I doubt they will carry every scrap of anything ever written. They’ll carry a lot of stuff, but not every written word. Furthermore, when you have hundreds of thousands of titles, you’ll need mechanisms for helping your subscribers find great content suited to their tastes. A lot of “people who read this read that,” review services, etc.–the next generation of Netflix recommendations, Goodreads reviews, and Pandora like tools. 

Aggregators won’t be the only gatekeepers, however. The key is in getting notice. And there will be many places with platform that will be able to shine a spotlight on a book. Think about all the places you find out about movies today—radio movie programs, TV movie reviews, Rotten Tomatoes, Newspaper Reviews, Yahoo viewer and critic review summaries, Kids-in-mind, and on and on. Look at all the ways you find music. There will be just as many ways to find books.

As far as paying authors, I suspect aggregators will pay authors each time a book is checked out, or, if it’s a must-have name author, they will pay to list the title plus a per use payment.

So that’s the future I saw in my strange little ball. Feel free to comment or add your own thoughts.

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7 Responses to JB Speculates: eBooks, Book Contracts, Agents, and Libraries

  1. brycemdayton says:

    Now where the thinking gets fuzzy and quite interesting is how publishers and authors will have to deal with libraries once ebooks take off, especially if those libraries are all connected together.

    There will definitely have to be a pretty big amount of cashflow for the rights to a book. A physical copy of a book has to be replaced by the library every so often, when they’re damage or stolen. This puts money in the publishers’ and authors’ pockets. An ebook is forever. No damage, no way to lose it (short of an apocalyptic server failure).

    Right now, as I understand it (and please correct me if I’m wrong), the temporary fix for this new market has been publishers making libraries pay every year or so to “renew the rights” to a particular ebook. The libraries are also forced to put a number on exactly how many “copies” of their ebooks they have (which really cracks me up).

    It’s total bull, since the library doesn’t have a lost or damaged copy of the ebook, and since a digital copy of a book could be shared a million gazillion times (that’s the true number, as I understand it), but since there’s not a better infrastructure in place, we’re essentially running on bull here. Printing our own money, so to speak.

    That always blows my mind when I think about it. I wonder how that infrastructure will change in the coming years when libraries start to move to a much larger scale ebook operation. I’d guess that the costs will probably be passed along in the form of a small membership fee for most libraries, which will give you access to some sort of massive ebook database. I’m also guessing that libraries will have to keep the “specific number of copies” model, since that’s the only way a publisher or an author could make any money at all.

    One scary thought for authors is the potential for several of those chains to dry up if libraries start to connect together without the “number of copies” model in place. If I can get a digital copy of the book at the library (where I’m already paying a small yearly or even monthly fee) on launch day, then I have absolutely no reason to visit the author’s website and buy the book from him, or from his publisher, or from amazon or anyone else. BAM, all the channels except the library are suddenly dry, and the author gets paid precisely one time. This is why I think that publishers and big stores like Amazon are going to make a concerted effort to lobby against any libraries working in concert to provide ebooks, as well as try very hard to keep the “number of copies” rule in place, or even find something better than that.

    Just my two cents.

    Now, piracy is a whole other issue. I’d love to hear your thoughts on how authors are going to keep afloat in a world where ebooks are the norm, and most people are becoming increasingly more comfortable with the idea of getting something for nothing for all forms of media.

  2. John Brown says:

    I think the pricing for libraries will be more like what we get with cable or a subscription to Lexis/Nexis that universities have or that large ERP software users have. It’s not based on number of copies of a book, but users. And then, as with ERP companies, you would have random audits of these big institutions to make sure the user count is accurate. Libraries may require fees or just use tax dollars. On the back end, the aggregator would pay authors, I’m thinking, like I said above. How do content providers for cable and satellite TV get paid? I’m thinking it would be similar. Or like Amazon, per checkout. Pricing to individuals might be the same as cable today or use the Netflix model.

    As for piracy, I don’t know. I think if it’s easier to get it legit, most people will. Piracy flourishes when you make it hard and super expensive to get a product. I don’t think we should let pirates run rampant and ignore them. But I think the first thing to do is simply make it easier to obtain it legit.

  3. daeruin says:

    I am curious if you know how demanding publishers are of digital rights at this time? If I send my new manuscript out, are they going to demand the digital rights? If I refuse, will it be a deal breaker? Because I wanna keep ’em. Unless it’s an apocalyptically good deal, I’m not going to sell my soul to the devil (i.e., sell my ebook rights). Because I’m pretty sure I can do a better job, for cheaper, and make more money, by selling my own ebooks than a publisher can right now.

    Ben

  4. John Brown says:

    As far as I know, the bigger publishers currently demand them. It’s a deal breaker. Which is why authors who can sell the quantities I mentioned above themselves, and who get the smaller offers, will have no reason to sell their ebook rights or take any such contract. The bigger publishers will insist. But I’m sure other, smaller, publishers will step up because there’s money to be had in paper. When an author gets a much larger offer, then it becomes a different situation.

    Of course, not all authors will be able to sell even the numbers I listed above.

  5. Dale Ivan Smith says:

    John,

    Thanks for another thought provoking post. I love your observations.

    As a writer I’m excited at the prospect of e-publishing. I’ve owned a Kindle for over two years, but I’ve wanted ebooks for much longer. I’m equally excited as a reader. It’s been frustrating over the years to discover that authors I enjoy were unable to continue publishing books in a series because sales had dropped below the numbers their publisher and book sellers considered successful. Big publishing became fixated on best sellers but not every book can be a best seller. As I believe you observed a while back, even the most popular books are not read by most people. The midlist has seemed to shrink to such paltry numbers that it must be very tough for full time midlist writers to make ends meet.

    Until very recently the received wisdom on self-publishing fiction was in general, don’t. It worked for Christopher Paolini and a few authors, like Larry Correa, primarily as means of leveraging a contract with a traditional publisher. But in the past year or so, that wisdom no longer necessarily holds. Here in Oregon, Colleen Houck, having self published her first novel through Amazon’s BookSurge program, saw the Kindle version take off and she was offered a large contract and also had the series optioned for film. But now we see the possibility of “going Indie” and becoming your own e-publisher, aiming at long term success in the ebook format.

    Kris Rusch stated in last Thursday’s installment of the Business Rusch that advances for new authors have shrank to as a low as $1500, well below the numbers shown in the Hines survey. Like you, she noted that publishers increasingly want electronic rights, and also world rights, denying authors the income they might receive from selling foreign rights on their own. Distribution is the big thing publishers can bring to the table, as you note, but that system has had problems for some time. I recall reading stories beginning the 90s with the major chains remaindering books that hadn’t even been unboxed and put out on the shelves.

    Up until very recently I had dismissed going the “Indie” route—because of a perceived stigma about self-published fiction (and the fact is, much of it isn’t very good), from the sense that traditional publishing was the only way to success. There was also the validation of being published by one of the New York houses. At the same time, I worried about my first book or books not meeting big publishing’s threshold for success, and that is with me focusing not on being a literary writer, but on being a story teller. Indie publishing changes all that. Of course, it brings in another set of challenges—you have to either contract out your cover art, layout, etc or do it yourself. You have to figure out how to market your book, what the audience is and how to reach them.

    The biggest issue I see for someone like myself, published only in short fiction (online only, and semi-pro markets only) is how to reach readers with e-books and avoid what I call the “pebble tossed into an ocean” problem. I have some ideas on how to do this but I’d love to hear your thoughts on this issue.

    I also thought your suggestion that libraries collectively develop (or subscribe) to a national ebook distribution system ala Netflix very appealing. I work for the largest library system in Oregon (over 400,000 patrons) and interest in ebooks is skyrocketing. Last spring Library 2 Go, the Oregon Digital Library Consortium, finally began making ebooks available online, after having offered access to digital audio books for several years. In the past month I’ve answered a number of questions from patrons concerning ebooks—how to get them, the fact that Library 2 Go typically only has a copy or two of any one title, and that title is usually checked out, so the e-Book must be reserved.

    A larger system, with access to more “copies”, perhaps even along the lines of Netflix’s streaming option, would prove very popular. Of course, authors and publishers need to be compensated.

    Another issue is making it easier to borrow an e-book. Just today I downloaded the Overdrive app for my iPhone, used it to check out an e-book. I had to create an account through Adobe and have just a week to read the book. Having a longer check out period would be nice, as well as allowing for more platforms to read the format.

    I’d love to see Kindle be able to read the EPUB format used by Overdrive, but that’s up to Amazon.

    By the way, I shared your thoughts on Ebook aggregators and libraries with my fellow reference librarians at my branch; definitely great food for thought that I hope will be shared with our entire library system and beyond. We in library land want to remain relevant to our patrons and to readers, and continue to serve as guides for our patrons in finding books, be those books print, audio, or electronic. The question is, how. Providing access is a crucial part of the answer, and book aggregation could provide that wider access. As you wrote, someone has to be working on this.

    Thanks again for another terrific post.

  6. John Brown says:

    Dale, I agree. Get your book vetted by readers you can trust then get it up for sale. You can shop it to publishers while it’s for sale as an ebook. As for getting notice, I’d check out Robert Sawyer’s site. He has a number of articles on it like this one: http://www.sfwriter.com/ow11.htm. Then I’d scour Konrath’s site and some of the other big-seller sites to see what they did. Then get another book finished and up. 🙂