Tuesday, May 10, 2011

Jim Butcher's Ghosts

Ghost Story: A Novel of the Dresden Files

Ghost Story, the next book in the Dresden Files releases this July. I'm a Jim Butcher fan. A rabid Jim Butcher fan. I want to know what happened to Harry Dresden at the end of Changes. Is he alive? Dead? Frozen in carbonite? Since there are only 3 months to spare, I went online to pre-order it on Amazon. I'm baffled with what I found:

Ghost Story's hardcover price: $14.71
Ghost Story's Kindle Price: $14.99

With Amazon's free shipping option, I can get a copy of Mr. Butcher's newest novel in hardcover for 28 cents less than the Kindle version. We're talking a book made from real paper, with a nice fiber binding, and a giant despondent Dresden cover. 

I was like, "Waaaa?"

I couldn't wrap my head around it. Ghost Story was going to arrive at my door nicely packaged in bubble wrap for less than the price of the digital file. It might even come a day earlier like Amazon new releases often do. I'm going to tear through it, place it on my Dresden Files altar, and pop open a nice ale before the Kindle version is even available. (Then my wife can read it in secret.)

Now this is great news for me, but it's bad news for the environment—and terrible news for Mr. Butcher. The incentives to steal couldn't have been set higher. The Ghost Story release is setting up to be a pirating fiasco.

So what gives. Why on earth is a hardcover book selling for less than a digital copy?

First let's clear up how this pricing mess didn't happen.

Misconception #1: This is Amazon's Fault

It's true that Amazon is able to reduce the cost of printed books. They do this storing their stock in very large, low rent warehouses operated out of tax lenient states. When I purchase books in California, they are shipped to me from Henderson, Nevada. There is plenty of open space around Henderson, and by keeping their staff and inventory in Nevada, Amazon avoids paying the steeper California taxes. (Under current law, it is my duty to report the sales taxes I owe to California.) Combine these advantages with Amazon's bulk purchasing power, and America's biggest online retailer can afford to offer print books at much lower prices than local brick-and-mortar competitors.

But while their business practices reduce the costs of material goods, Amazon does not set ebook prices. When you publish a book, you set the price. Amazon only skims a set percentage off the top.

Misconception #2: This is Jim Butcher's Fault

Mr. Butcher writes bestsellers. Mr. Butcher does not sell bestsellers. He sells rights to bestsellers. Mr. Butcher's agent takes his intellectual property to NYC and shops it to the publishing houses. The publishing houses bid on Mr. Butcher's rights, Mr. Butcher and his agent negotiate a contract, and his rights are signed over to a publishing house. 

In Mr. Butcher's case, the publishing house in question is called Penguin. Mr. Butcher picked which rights he wanted to sell to Penguin (print, e-pub, international, movie, comic book, etc.), but once he did, the whole book production process was largely out of his hands. If not explicitly stated by his contract, Mr. Butcher doesn't get a say in how his books are priced, or the number of copies to be printed, or even the covers slapped on the front them.

BTW, Penguin, the Wizard Harry Dresden doesn't wear hats. Please stop putting them on your book covers.

At least the SciFi Channel
 got something right.

The Truth: This is Penguin Publishing's Fault

Penguin is a traditional publisher, and traditional publishers have a problem. The game changed, but they're still playing by the old rules. You don't have to believe me, either. Believe them.

According to the AAP, the publishing industry's own trade association, print publishing is in serious trouble. If you compare January 2011 to January 2010 sales:

  • Adult hardcover sales fell from $55.4M to $49.1M (-11.3%)
  • Adult paperback sales dropped from $104.2M to $83.6M (-19.7%)
  • Adult mass market sales declined from $56.4M to $39.0M (-30.9%)

Taken together, that's a $44.3M loss (-20.5%)

  • E-book net sales increased from $32.4 Million to $69.9M (+115.8%)

Yep, you read that right. A 115.8% jump. That's over a single year. That's with most e-readers still costing over $150. That's before every grandmother in America gets a Kindle for Christmas this year.

Is anybody else seeing this?!?

The February numbers are even worse. Compared to last year:
  • ebook sales grew by 202.3%
  • hardcover sales declined by 43%
  • mass market paperbacks declineed by 41%

Holly calzones! That's an 86.5% jump in ebook sales in less than one business quarter!

But here's what's critical. Americans aren't reading fewer books

Total book revenue fell by only 1.9% last year. People aren't reading fewer books, they're just reading them differently. They're reading books on their Nooks, and on their Kindles, and on Kobos, and on whatever else Steve Jobs thinks up next. And this isn't the start of a trend. There has already been a tectonic shift in reading patterns. On Amazon, electronic books are already outselling hardcovers and softcovers. Electronic has become the dominate medium. The walls that had kept writers from readers have tumbled into the sea.

So what's a smart publisher doing?

They're moving fast. They're getting the heck out of their high rent New York offices and moving into into inexpensive suburbs with excellent internet connections. They're signing twice as many writers because they don't have to print twice as many new books. They're hiring web innovators to exploit social networking. They're training programmers to improve the appearance and interactability of their ebooks. They're hiring artists that understand how to create eye-catching web and e-ink graphics. They're managing their brand like an indie record label. People are going to know it—know it means quality—and devour everything that they print. 

And they're offering their authors sweeter deals—starting at 50% of sale price—because they don't have to move as many books anymore. Their overhead is now next to nonexistent.

What's Penguin doing?

Sacrificing Mr. Butcher's sales on the pyre of their crashing business model. Penguin has declared war on the reading public—but they're guarding a castle with no walls. I'm a crazed Butcher fan. I'd probably pay $30 bucks to read Ghost Story—but most people wouldn't. They're going to do the math. They're going to figure out that they can buy five low priced titles for the same price as one from Jim Butcher. Mr. Butcher is good, damn good, but Penguin is forcing him to compete against five times the reading experience. 

Worse still, to avoid paying such an inflated rate, many readers are going to pirate the ebook. The torrents will be up in hours. At $15, the incentive to steal is high.

This is a no-win for Mr. Butcher. Penguin is cannibalizing his sales so they can feed their dying hardcover business. I'm willing to gamble that Mr. Butcher will remember this. I'm willing to gamble that he's going to look twice before signing another traditional publishing contract. His readers love his books because he's Jim-freakin'-Butcher. They don't need to see Penguin's ROC label. If he moves to the web, they will follow him.

And I can guarantee other big name authors are watching too. 

Publishers no longer get to tell people what to read. They don't control the distribution channels anymore. Any writer can now turn their back on traditional publishing and reach their faithful readers straight through the internet. The people get to decide now. If a book's good, they give it five stars. If a book's bad, it sinks to the bottom of the heap. There's no complexity to this system. The people get to read what the people want to read.

The future of publishing is simple. Legacy publishers are either going to transform into value-adding partners that are focused on making inexpensive books even better—or they're going to be stuck on the sidelines banging cans for cash. The ones that don't get it can growl all they want. They're not even in the way.


Jim Butcher's Ghosts, Part 2
The 9.99 Boycott

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