By Jeremy Greenfield, Editorial Director, Digital Book World, @JDGsaid
With self-publishing tools proliferating and traditional publishing business models in flux, authors, agents and book-industry observers have been increasingly debating the relevance of publishing companies.
In his obituary to the year-long Domino Project, Seth Godin wrote that publishing companies and other traditional players that do not adapt to new modes of doing business will go extinct. Others have suggested the same.
Meanwhile, some authors like J.A. Konrath and David Gaughran have eschewed traditional relationships with publishers to create and distribute their work on their own. In the aftermath to the Book Country self-publishing tool launch from Penguin, some outspoken critics took the announcement as an opportunity to question publishers’ relevance.
Hachette Book Group, one of the world’s largest publishing companies, has a response. In a document leaked today to Digital Book World by someone inside the company, Hachette outlines just why publishers are relevant. The company has shown the document internally to employees and externally to a limited number of agents and authors.
“You have to take a long look at what you’re up to and how you’re changing and adapting,” said a Hachette executive who preferred not to be named and who confirmed the authenticity of the document. “We’re all trying to come up with good messaging.”
The executive explained that the document is a continual work-in-progress and would evolve as the publishing business evolved.
Related: J.A. Konrath Responds With Advice for Publishers | Exclusive Q&A With Hachette Digital Chief Maja Thomas
The document in its entirety below:
“Self-publishing” is a misnomer.
Publishing requires a complex series of engagements, both behind the scenes and public facing. Digital distribution (which is what most people mean when they say self-publishing) is just one of the components of bringing a book to market and helping the public take notice of it.
As a full service publisher, Hachette Book Group offers a wide array of services to authors:
1. Curator: We find and nurture talent:
• We identify authors and books that are going to stand out in the marketplace. HBG discovers new voices, and separates the remarkable from the rest.
• We act as content collaborator, focused on nurturing writing talent, fostering rich relationships with our authors, providing them with expert editorial advice on their writing, and tackling a huge variety of issues on their behalf.
2. Venture Capitalist: We fund the author’s writing process:
• At HBG we invest in ideas. In the form of advances, we allow authors the time and resources to research and write. In addition we invest continuously in infrastructure, tools, and partnerships that make HBG a great publisher partner.
3. Sales and Distribution Specialist: We ensure widest possible audience:
• Weget our books to the right place, in the right numbers, and at the right time (this applies equally to print and digital editions). We work with retailers and distribution partners to ensure that every book has the opportunity to reach the widest possible readership.
• We ensure broad distribution and master supply chain complexity, in both digital and physical formats.
• We function as a new market pioneer, exploring and experimenting with new ideas in every area of our business and investing in those new ideas – even if, in some cases, a positive outcome is not guaranteed (as with apps and enhanced ebooks).
• We act as a price and promotion specialist (coordinating 250+ monthly, weekly and daily deals on ebooks at all accounts).
4. Brand Builder and Copyright Watchdog: We build author brands and protect their intellectual property:
• Publishers generate and spread excitement, always looking for new ways make our authors and their books stand out. We’re able to connect books with readers in a meaningful way.
• We offer marketing and publicity expertise, presenting a book to the marketplace in exactly the right way, and ensuring that intelligence, creativity, and business acumen inform our strategy.
• We protect authors’ intellectual property through strict anti-piracy measures and territorial controls.
Related: Is Seth Godin Right About Publishing? | J.A. Konrath Responds With Advice for Publishers | Exclusive Q&A With Hachette Digital Chief Maja Thomas
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Hear more insight into what publishers have to say and about the future of the book business at Digital Book World Conference + Expo 2012, this January 23-25 in New York. More>>>
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Write to Jeremy Greenfield
“We act as a price and promotion specialist (coordinating 250+ monthly, weekly and daily deals on ebooks at all accounts).”
This might be the most important point in the document. It’s simpler to experiment with price when a title is distributed through one account, like Nook or Kindle. Coordinating deals through all digital channels is more difficult. As long as the market remains relatively diverse, that sort of pricing specialization will become increasingly important.
Hear, hear. Now if only such a rational response could be found to smooth the rift between self/non-traditionally published authors and those who work with publishing houses…we could all go back to writing more and sniping less.
Don’t publishing houses sort of need to disparage the self-publishing process? I am not saying Hatchette does this–I have reviewed for them and they’ve been great and I think this memo shows a lot of insight. But if the self-publishing process becomes too easy, too lucrative, then they’re going to lose revenue. They kind of have to root for it to fail.
@ Matt Mullin
\This might be the most important point in the document. It’s simpler to experiment with price when a title is distributed through one account, like Nook or Kindle. Coordinating deals through all digital channels is more difficult. As long as the market remains relatively diverse, that sort of pricing specialization will become increasingly important.\
Amazon is particularly adept at lowering the price of a self-published title to match the lowest price offered elsewhere automatically (createspace, bn, apple bookstore). I suspect that all of the ebook retail outlets have the same capacity. Raising the price is a bit more difficult.
As long as they don’t accidentally lower it to $0 and give away your book for free (and then not pay you for the lost sales).
Amazon certainly did that exact same thing to me. About 8000 copies worth.
Guess it’s good promo for the next novel. I hope.
It’s true that publishing houses provide those services, authors just need to ask whether those services depicted warrant the (approximately) 85% they take on the sale of each book. Self publishing only takes 30% and leaves the authors more control over their rights.
Publishers take 85%? Do you mean that authors get 15% of list price as a royalty? Because that does not leave publishers with 85% of revenues. Retailers take a cut, too. From a book priced at $30, a publisher will get an average of $15 in revenue. The author, paid 15% list price royalty, gets $4.50, which is 30% of that $15 in revenues. It ain’t 70%, sure, but if you’re self-publishing e-books through Amazon it’s unlikely you’ll do too well by charging anything over $7.99. (70% of 7.99 is $5.60, by the way.)
Sure, but that’s for a hardcover. “Standard” ebook royalties paid to authors are 25% of the 70% cut that publishers get. On a $9.99 ebook, that means the author gets less than if the author published the book herself for $2.99.
As I said in my other comment, the tradeoff may be worth it for some authors. Authors may conclude that the net is that they make more money because they sell more, via more channels, with a publisher. Or because of the other things a publisher offers. Big-name authors may be getting better than the standard royalties also.
Echoing what Edward said…that’s based on 15% of suggested retail price royalty (normally you don’t start there and assuming an author doesn’t get screwed with some net-profit deal). Publishing houses used to provide A LOT more to justify the take they took. You needed them to get shelf space (but say goodbye to brick and mortar stores). And you needed them for advertising / marketing / publicity (but publishing houses are generally weak in those spheres and mostly rely on authors to do that, now) and you needed them to actually print the books (but that’s not the case now, either). So why should they still take the same percentage?
Also, as long as we’re playing with numbers…let’s look at an ebook. If I’m a publisher, I’m uploading the book and letting it sell, same thing an author would do. Let’s say we price the book at $9.99 from the publisher. As an author, I get 25% of NET on that sale…so the publishing house takes the 70/30 split from Amazon and gets $7, then they take out whatever overhead they use to justify their costs to upload the document..let’s be fair and say that’s only $2, which brings us down to $5. Now, I get 25% of that which is $1.25, less the 15% going to my agent…so that’s lik $1.07 on the $10 sale. If I as an author offer my material to readers at $5 (50% off publishing house cost) I get 70% of $5 which is $3.50…almost 3x what I get from the publishing house sale and they’re doing the same thing…Keep that in mind as the ebook market share continues to grow and the number of hardcover books greatly declines (paperback is another pricing model).
Yes, if I don’t have an initial deal then I don’t get an advance and I have to pay out of pocket. But why take an advance of $10,000 as a first time author and be splitting profits with a publishing house for the rest of my life… That doesn’t make sense to me. Especially when they buy it, take a portion of the profit, but don’t do anything to actually SELL it. An author might have to invest some money on an outside editor, but the upside of the backend easily justifies that.
Thoughts?
I want to say also that authors who self-publish may be able to keep more of their sales, but they will also be paying out of pocket for professional development editing, line editing, copyediting, design, cover art etc. or paying in writing time by learning how to do each of these things themselves. There is no free lunch here whichever way you look at it, and whoever has distributed and marketed their own quality ebook successfully and profitably has my deep respect.
I think it’s an accurate summary of what traditional publishers offer. But the lede is dead-wrong and bass ackwards. If I generate a properly formatted epub and mobi file, that’s \self-publishing\ the same way Hachette doing a print run is corporate publishing. I don’t handle the sales, but then again, neither does Hachette. I hire someone to do editing and covers the same way any sole proprietor contracts out various tasks. I’m not sure what Hachette hopes to accomplish with such a false and ultimately meaningless distinction.
Internet noise aside, the question has always been and remains how important those things are to authors and readers. As digital content continues to gain market share, the answer to that will probably be a moving target. I could outline a point by point rebuttal of for me personally, most of these items are not compelling. Another author might find nearly all of them compelling.
But it all comes down to whether enough bestselling authors stay with traditional publishers. That includes the bestsellers of tomorrow, some of whom will have built their success through self-publishing or alternatives like the new Amazon imprints. If they do stay with trad pub, the publishers should be just fine. If not, publishers are in trouble. For some authors, the standard 17.5% of sales price (note: I’m sure King, Patterson, Grisham, etc. get more) instead of 70% is a reasonable tradeoff for not having to drop $1000+ up front for covers and editing, not having to worry about distribution, and having the imprimateur of a publisher.
My only prediction is that we see some serious shakeups in 2012. I can’t say that it will be big authors jumping ship, but there are too many different new forces for things to remain in roughly the same situation a year from now as now. The big news in 2011 was publishers winning the battle over price – their latest sales numbers show that readers are paying what they’re asking. The other big news was Amazon’s challenge to the publishers’ core business making its first real steps. I’d say the latter is what has the most potential for fireworks in 2012.
Great comment, Edward.
I think one thing not being asked here is, are there large, ambitious projects that absolutely require a large company behind them to accomplish and cannot be accomplished through self-publishing?
My imperfect analogy might be something like, it takes a big company to build a train.
Are there “trains” in book publishing? I would suspect there are. That said, many books are not “trains.”
That is an excellent question, Jeremy. And I suspect you’re correct that there are some.
The whole issue is that individuals need to weigh the pros and cons. The Hachette release is essentially an advertisement – a list of everything they offer, spun in the best possible light. The fact that they felt the need for such a document is more significant than anything the document actually says.
What’s the big deal? This “leaked” document contains nothing new. It is worded to make legacy publishers look as good as possible, of course, but contains no new information or perspectives. The validity of every one of the points made in this document has been argued thoroughly and vehemently over the past decade.
If Hachette limits their definition of self-publishing to digital distribution, that’s their mistake. Done right, self-publishing includes most, if not all, of the services they claim to offer their authors. Those services just take a different shape (and happen much faster) when they aren’t backed by a bureaucracy.
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the point about royalties is very well said. as a writer, i finally have my life, as a writer, in my own hands. I like it that way. tired of fighting through the lit agents to get to a publisher who pays me 15% in royalties. Rather do it all my self, and for that matter, i’ll do it better.
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Almost all of this is patently false, but most especially this joke: “We identify authors and books that are going to stand out in the marketplace. HBG discovers new voices, and separates the remarkable from the rest.” <– this from the publisher of Twilight, the Ozzy medical memoir, and other dreck.
No, the truth, plain and simple, is that publishers are capitalist businesses, and they do what makes money for them. That is the only defense they need. I am a capitalist, as well. If I want to make money, then I will endeavor to partner with an established capitalist in the self-same industry. If they do not wish to do business with me, then I will locate another route, and if in the process of working toward my own capitalist success, some older, more traditional businesses fail, then that is not my problem. I will not stand with whatever imagined coalition there is that holds that big publishers are some kind of ardent defenders of romantic/artistic ideals.
We're business people. Some will rise. Some will fall. Time will tell.
And, quitters never win.
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Self-publishing doesn’t exist?
Well, self-delusion is apparently alive and well.
Some of this verges on surrealistic humor. The idea that publishing companies are necessary to find talent is so backwards-headed you don’t know which side of your head to scratch. It’s like the \gatekeeper\ thing–only meaningful in the outmoded context.
The idea of publishers start-up financing writers is practically disgusting. Yeah, after spending years trying to get a contract, that three thousand dollar advance will keep you humming along, all right.
I thought about the idea that there are projects so large and ambitious that they require publishing companies, but kind of wonder. I have had a project like that in mind myself, for years. I always thought of it terms of working under the aegis of of a publisher, but at this point wonder if it wouldn’t just be better to do it independently, and reap realistic returns.
Don’t banks finance such things? Do you think a loan officer would look around for gatekeepers (or adult supervisors or whatever these outmoded companies thing they are) if Amanda Hocking or John Locke came to them proposing hiring a team to launch some big literary project?
(My guess is, they’d be happier than if Hatchette came by with hats in hand)
You look at the online serial community, as shown best on Web Fiction Guide and you see some pretty large, ambitious projects. Dan Leo, for example. Completely independent. And with the capacity to spin out ebooks and even print books with zero capitalization. (POD SP means that customers finance the means of production)
It’s just one more example of straw-clutching.
A good test for whether my unknown comments challenge a poobah of that fairly dysfunctional industry comes in that first statement that there is no self-publishing because putting an ebook up on amazon somehow entails so much more than all that. You can be a self-employed construction contractor, apparently, but not a self-published writer.
The phrase \bringing a book to the market\ is the big clue of inability to shift past the current safe decks of the Titanic. Every day some big publisher announces that they no longer print books.
Wouldn’t it be less wordy to just start singing \Nearer my God to thee\ and not try to handicap the chances of writers and publishers working the new models?
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Hatchette’s “leaked” memo is right on the money. Big publishing houses will need to work fast and smart to compete in this rapidly changing world of publishing. I represent a small primarily digital publishing house which is experiencing rapid growth due in large part to assertive adaptation in this market. We are thoroughly enjoying the new frontier of digital publishing which is (for now) leveling the playing field. There are great rewards for authors and publishers who are willing to collaborate, adapt, and take risks.
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You are absolutely right! Big publishers looking for talent? Maybe. But first and foremost, they are looking for manuscripts they think will make money. They saw the sudden success of Twilight and, all of a sudden, readers were swamped by countless vampire/werewolf books. Were they truly looking for talent or were they really capitalizing on the mood their target market was in? I think the later… Any business savvy writer can do what they do, the only difference is they have deeper pockets and better print distribution channels. These advantages matter a lot less when it comes to e-books.
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I wish the WERE just looking for bottom line. They pretty obviously aren’t…unless they are failing the majority of the time. The percentage of their books that turn a profit is abysmal.
No, one of the “heritage” things they suffer from is the whole idea of giving buyers what they think they should have. And agents make it that much worse.
They FARMED THEIR SEARCH OUT OF HOUSE. How stupid is THAT?
And if you think agents are driven by bottom line, instead of what they think is wonderful, just go through Agent Query sometime, looking at the profiles. How big is the market for “judaica” for crisakes? Yet vast amount of agents and editors are looking for it.
Meanwhile they are overlooking writers that often end up doing quite well on their own hook.
And, sorry, there IS a free lunch. I do my own editing, covers, etc. It’s not like that’s time costing me from writing–if I could just sit down and sell everything I wrote, immediately, it would be wonderful, but nobody expects that.
The technology involved in creating an ebook and selling it online is so friction free that it’s ridiculous even comparing it to what goes on at a publishing house.
Bottom line… they are plagued with legacy nonsense that’s bringing them down. They offer 100% return on wholesale orders. How stupid is THAT?
They pay advances against royalties, often huge ones that they end up eating. How stupid is that?
They let agents decide what books and writers they get to see. Guess what, not all readers out there are NYU lit majors in Manhattan.
These are not normal business practices and are self-destructive. The advent of ebooks and online buying has brought the weaknesses to light and they are edging out of print production.
Take away the capital advantages of that, and why are they needed?
More important, why are they viable?
They’re viable because most of the authors making them a profit are sticking with them. And because readers are willing to pay high prices for ebooks by those authors. If either of those facts change, publishers will start to be in trouble. But those facts have not changed. No matter how much you or I might find much of what they do unnecessary, the people making the publishers the money still do not, and that is big name authors and the majority of readers.
That could change. It could change quickly. Konrath has been saying for a couple years that it will change. He may be right. But that’s the only thing to look for. If the sales numbers don’t keep increasing as much relative to paper, or if multiple top 10 NYT bestellers walk, then they’re in trouble. The rest of the speculation about what they can and should do is irrelevant in the face of those two variables.
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I have but one question, was this ‘leaked’ or planted?
Good question. Rhetorical, I suspect. Either way, glad it sparked the discussion here.
This is “rear view” of the situation. “They’ll be OK if things go on like they used to.”
They won’t. And aren’t.
And as they continue to drop print books and ebooks become the standard, it will happen more and more.
It’s not all about the older, established authors. There are new authors, remember?
Switching to windshield view tends to give a different slant on this whole thing.
Just as viewing from perspective other than “these are OUR jobs in peril here” makes for a different conclusion.
As Rowling has done, the real sales monsters could start doing their own thing at any time. In many ways, they are the most valid candidates for jumping off.
BTW, anecdotally, of the writers I know who are making decent livings from published books, about half are either letting contracts lapse or heavily considering it, while putting out books on their own.
There’s another, more weirdly compelling way of looking at this battle of publishers vs. self-publishers: it’s ebooks vs. physical books. As I understand it the physical book market is still about 70% of the pie, but from what I’ve read the self-publishing community isn’t interested in it — these authors think physical books (and the location-based bookstores that sell them) are obsolete and doomed, so they don’t bother considering them.
And, frankly, I don’t think it’s just the chain bookstores that propel them to this verdict; they associate physical books with legacy publishing (i.e., groveling for an agent, collecting rejection slips from East Coast snobs masquerading as editors) so closely they’re just as inclined to dismiss indie bookstores.
*That’s* what I think is significant about this confrontation. Even a year ago it never occurred to me that publishing and distributing physical books would be the subject of such contempt from aspiring writers. (If you don’t believe me, hang out at http://www.thepassivevoice.com blog for a week or two and see.) And the other side of the coin are genre ebook *readers* who’ve been radicalized by Amazon’s no-ebook-over-$9.99 legacy to sneer at any publisher who dares to charge more. They’re convinced — and not without reason — that the Big Six and their ilk use higher ebook pricing to subsidize dwindling hardcover and paperback book sales.
Strangely enough, it almost doesn’t matter whether Hachette’s defense of its value-add to publishing is true or not. So many readers and writers have become ebook militants they consider it a form of heresy to recognize the validity of the old-school publishing model.
Like John Reed in *Ten Days That Shook the World*, they’ve seen the future and it works.
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