The Authors Guild and the Book Publisher Antitrust Case

Today The Authors Guild issued a statement of position on the antitrust case ititiated by the United States against Apple, Penguin, and Macmillan. It is a very thoughtful and elegant analysis of the competitive dynamics book publishing from the point of view of the largest organization representing writers. Here it is:

Agency pricing, in which the e-book vendor acts as the publisher’s “agent,” with no authority to change the retail price of the book, was a reaction to a specific anticompetitive provocation – Amazon had been routinely selling frontlist e-books at below cost. Amazon’s predatory tactic wasn’t scattershot; it was (and remains – Amazon continues to deploy this weapon with the titles of non-agency publishers) highly targeted. When not constrained by agency pricing, Amazon chooses to absorb substantial losses on e-book editions of a specific subset of new hardcover books: those that are most likely to be stocked by traditional bookstores.

The Justice Department’s proposal, which would permit Amazon to resume using the frontlists of three major publishers for anticompetitive purposes, appears to be based on a fundamental misunderstanding of the market for trade books, particularly the interplay between the online market for print books and the e-book market. Amazon, which has long commanded 75% of the online market for print books, clearly understands that relationship well. The story of the introduction of the Kindle is largely a story of Amazon exploiting its dominance in the online market for print books to gain control of the e-book market.

 

Frontlist, Backlist, and the Rise of Online Bookselling

To understand the U.S. market for trade books, one needs to understand how online retailing has radically altered the competitive landscape of bookselling.

The literary marketplace has traditionally been divided into two broad submarkets: frontlist (the season’s new books) and backlist (everything else). Retailers faced the most competition in selling frontlist books – new hardcovers and new paperbacks were the most likely titles to appear on the shelves of stores (bookstores, airport newsstands, and big box retailers, among others) across the country. Backlist books were far less likely to be on store shelves, except for the relatively rare “core backlist” titles that had become steady sellers (To Kill a Mockingbird, Green Eggs and Ham, What to Expect When You’re Expecting, for example). “Deep backlist” books, a subcategory of backlist books that were sold almost exclusively through special orders or at used bookstores, were the least commercially available books.

With the rise of online bookselling, these categories still largely existed, but online booksellers, with endlessly long bookshelves made possible by inexpensive warehouse space and on-demand printing technology, came to dominate the market for backlist and especially deep backlist titles. For nearly all backlist books, representing roughly 90% of all in-print titles, the online market had become the market, and Amazon owned the online market. The deeper one traveled down the backlist, the more complete Amazon’s dominance. Amazon had even gained control of the furthest end of the long tail – out-of-print books – by buying up the major competing online used bookselling networks.

 

Online Print Book Dominance Dictates Amazon’s E-Book Tactics

From Amazon’s perspective, as it prepared to launch the Kindle, the print book market had two components: the part in which it faced significant competition (the market for new books and core backlist titles) and the part in which it didn’t (everything else). Amazon would leverage its online print book dominance to conquer the e-book market, protecting its profits on 90% of titles by focusing its predatory tactics on the other 10%, the books that were most likely to be on store shelves.

Brick-and-mortar bookstores were in the crosshairs, jeopardizing vital participants in the literary ecosystem. Bookstores remain critical showrooms for works by new or lesser-known authors and for entire categories of books, such as children’s picture books. Marketing studies consistently show that readers are far more open to trying new genres and new authors when in a bookstore than when shopping online.

It seems to come down to browsing versus searching. Brick-and-mortar bookstores are optimized for browsing; the stores’ “search engines” – their information desks – aren’t what draw in customers. A reader browsing the shelves and tables of a bookstore is often hoping to discover something unexpected. Virtual bookstores, on the other hand, are optimized for search – browsing isn’t the attraction. Readers behave accordingly, tending to use virtual bookstores as search engines to find books they’ve discovered elsewhere.

Publishers were aware of much of this and that the health of brick-and-mortar bookstores relied heavily on frontlist hardcover book sales, but Amazon persuaded them to break with established practice and release books in digital form at the same time they released them as hardcovers. The protection for the hardcover market (and brick-and-mortar bookstores) was implicit: Amazon agreed to pay the same wholesale price for e-books that it did for hardcovers.

Things didn’t work out. As Amazon launched its Kindle in November 2007, publishers learned that it would be selling a long list of frontlist e-books at a loss. As Scott Turow said in his letter to members on March 9th:

It was as if Netflix announced that it would stream new movies the same weekend they opened in theaters. Publishers, though reportedly furious, largely acquiesced. Amazon, after all, already controlled some 75% of the online physical book market.

Amazon quickly captured the e-book market as well, bringing customers into its proprietary device-and-format walled garden (Sony, the prior e-book device leader, uses the open ePub format). Two years after it introduced the Kindle, Amazon continued to take losses on a deep list of e-book titles, undercutting hardcover sales of the most popular frontlist titles at its brick and mortar competitors. Those losses paid huge dividends. By the end of 2009, Amazon held an estimated 90% of the rapidly growing e-book market. Traditional bookstores were shutting down or scaling back. Borders was on its knees. Barnes & Noble had gamely just begun selling its Nook, but it lacked the capital to absorb e-book losses for long.

The publishers had made a huge mistake.

 

Taking Aim at One Percent

Even as it targeted the 10% of titles sold in bookstores, Amazon would be selective. Amazon could get the most bang for its buck by taking aim at the narrow band of books on which its brick-and-mortar competitors were most dependent – those new titles from larger publishers that bring readers into bookstores. Once in the stores, a reader might choose to purchase other books within the list of 10% of titles in which Amazon faced competition: it was best, from Amazon’s perspective, to keep readers out of bookstores and safely online, on Amazon’s turf.

So Amazon’s predation focused on a slice within a slice of the literary market. Amazon would sell at a substantial loss the electronic versions of select new hardcovers: the new bestsellers, near bestsellers, and might-become bestsellers from commercial publishers. Our best estimate was that Amazon’s predatory tactics focus on less than one percent of in-print titles.

Amazon’s highly selective predation not only conquered the e-book market, it paid immediate dividends in the print book market. Marketing studies confirm what Amazon no doubt guessed: readers who buy Kindles tend to dramatically shift their print book purchases to Amazon.

The strategy was brilliant, a predatory feedback loop in which online print book dominance allowed Amazon to absorb selective losses to gain control of the e-book market, which in turn gave Amazon an ever-larger share of the print book market. It was a tactic Amazon could continue indefinitely, as it offset its losses on the most recognizable new e-books by taking profits on e-books by lesser-known authors, on backlist e-books, and on its growing share of print book sales.

 

After Two Years of Predation, Agency Pricing Opens the E-Book Market

For more than two years Amazon’s predatory pricing went unchecked. Then, in January 2010, one month after B&N shipped its first Nook, Steve Jobs introduced Apple’s iPad, with its iBookstore and its proven iTunes-and-apps “agency model” for selling digital content. Five of the largest publishers jumped on with Apple’s agency pricing, even though it meant those publishers would make less money on each e-book they sold. Again, from Scott Turow’s March 9th letter:

Publishers had no real choice (except the largest, Random House, which could bide its time – it took the leap with the launch of the iPad 2): it was seize the agency model or watch Amazon’s discounting destroy their physical distribution chain. Bookstores were well along the path to becoming as rare as record stores. That’s why we publicly backed Macmillan when Amazon tried to use its online print book dominance to enforce its preferred e-book sales terms, even though Apple’s agency model also meant lower royalties for authors.

Agency pricing brought real competition, steadily loosening Amazon’s chokehold on the e-book market: its share fell from 90% to roughly 60% in two years.

Agency pricing allowed cash-strapped B&N to make substantial investments in e-readers with the reasonable hope of earning a return on those investments. Customers are benefiting from the surprisingly innovative e-readers those investments have delivered, including a tablet device that beat Amazon to the market by a full twelve months.

Authors in Amazon’s Kindle Direct Publishing program benefited as much as anyone, as Amazon more than doubled its royalty rates to match Apple’s agency model royalties.

Most importantly, agency pricing has prohibited Amazon from using the most popular new books from six large publishers to undermine the economics of bookselling. Agency pricing has given bookstores a fighting chance.

 

The Proposed Settlement Allows Amazon to Resume Its Predatory Practices

The Justice Department’s proposal undoes all of this. Its settlement with three large publishers would require the publishers to allow Amazon (and other e-book vendors) to sell e-books at below cost, so long as the vendors don’t lose money on the publisher’s entire list of e-books over a 12-month period. Amazon, a far richer and more powerful corporation than it was even two years ago, has every motivation to revert to its prior ways – it will take losses on the books that bring customers into bookstores, and make it back on less popular and backlist books. It will lose money on the one percent, and make it back on the rest.

The Justice Department is sanctioning the destructive, anticompetitive campaign of a corporate giant with billions in cash and boundless ambitions. The situation is bizarre, and without precedent, to our knowledge: the Justice Department is intervening to help entrench a monopolist.

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EBook Sales Are (no surprise) Up. Internet Book Sales Are (no surprise) Up.

New Statistics have been released by Bowker Pubtrak showing shifts in book sales by Channel and by format. The report compares  the second quarter of 2011  to the same period 2010. Not surprisingly Internet book sales are forging ahead. A lot of it was due to the closing of Borders. But  book sales have been shifting online for some time. And similarly unit sales of ebooks are continuing to increase exponentially.

First let’s take a look at the channels. That’s a fancy word for where books are being sold. As you can see by the chart, e-commerce has increased from 27.6% to 37%. Borders’ closing certainly has a lot to do with this. Even with Borders open,  last year Amazon barely beat out Barnes and Noble for the first time as the largest bookseller. We don’t know whether BN will come roaring back this year. After all, they stand to pick up the most from Borders’ closing. But Amazon, being the largest purveyor of e-books, may very well increase its market share as the largest bookstore.

Looking at some of the other channels, book clubs are becoming more marginal.  When I first entered the book business in the 1970s, book clubs were a huge presence. Now they are insignificant. At that time one of the largest venues for selling books was department stores. As you can see in the graph, department stores have pretty much discontinued selling books, replaced by ladys’ handbags and designer beauty products.

Chain store sales have declined from 30.6% to 27.3%. That is a lot less than I would have predicted, given the fact that Border’s disappeared. The only significant chains that are left are Barnes and Noble and Books-a-Million. I would have to assume that a lot of the Borders’ business has been picked up by these two companies.

Moving down to the independent stores, some nice news here. Market share has increased from 4.5% to 5%. It is still distressingly low. But indies are also benefiting from Borders’ closing.

Mass merchants and warehouse clubs have declined slightly. That would be stores like Costco, Wal-Mart, and Target. There was a time back in the 90s when Wal-Mart bragged that it would soon be the largest purveyor of books. They expected to sell 25% of all books. It doesn’t look like it will happen.

Ok, now let’s look at how  sales of book formats have been changing. Again these figures are for the 2nd quarter 2011 compared to the same period in 2010. The largest format is still paperbacks, both trade and mass market. But it has declined from 58.3% to 51%. Hardbacks too have declined significantly from 33.3% to 28.6%.  And as expected ebooks are continuing to increase exponentially  growing from 3.2% to 13.7%.

Will Apple Buy Barnes and Noble

There is a bizarre rumor floating around financial circles that Apple Computer may be interested in buying Barnes and Noble. Actually this may not be quite as farfetched as it sounds at first hearing. Check out the story on Investor Place.  The cost of acquiring BN is estimated at between $1 and $1.5 billion. This is pocket change for Apple. They are sitting on $76 billion in cash. In purchasing BN, Apple would have access to the huge selection of  BN electronic books and Nook customers   and enhance the Apple iBookstore that is struggling against mighty Amazon. Additionally Apple could use many of BN’s 800+ physical bookstores as locations for their own Apple retail stores. And, not insignificantly, Barnes and Noble is the largest owner of university book stores in America. Control of this would be very valuable to Apple for whom the college market is important.

What this means for us book lovers down here on the ground is hard to say. As a general rule I always think that any development likely to erode Amazon’s almost monopoly power over e-books is a good thing. Stay tuned for more information.

Buy E-book Downloads from your Independent Bookstore — Now!

I have been writing a lot about the role of the independent bookseller in the brave new world of e-books. A lot of people have been talking about this, usually  with sad-countenanced  head-shaking and hand-wringing. And it is true  that  indies are facing and will continue to face enormous challenges.  Recently I wrote an article in Publishers Weekly reprinted in this blog trying to provide some hope in this situation.  But it was pretty speculative. Today I am going to interview Len Vlahos, who is Chief Operating Officer of the American Booksellers Association, the trade association that represents over 1400 independent bookstores operating in more than 1700 locations nationwide. We are going to talk about the future of indie stores, their challenges and their opportunities, in the  age of  the  e-book.

Andy: Len, I assume that the ABA is not just sitting back and ceding the terrain of the e-book to Amazon and Apple. What is ABA doing to bring the Indies into the game?

Len: ABA offers members an  e-commerce product called IndieCommerce. Through this service, members can have a turnkey website with a great search engine, shopping cart, and robust content management tools. The sites exist at the store’s URL and with the store’s brand. A few examples:

 

http://www.politics-prose.com/

http://www.bookwormofedwards.com/

http://www.bookpassage.com/

We’ve partnered with both Google and Ingram to allow our members to offer e-books for sale to their customers in four different formats – Adobe (works with Sony eReader, Nook, Kobo), Palm/iPhone (works with iPad, iPhone, other smart phones), Microsoft (with the Microsoft Reader), and Google (works with most devices other than Kindle). Some of the Ingram titles are already live. Google will be live before the end of the year. Between these two aggregators, the 200 + IndieCommerce sites will have a robust catalog of titles, and will offer a competitive experience relative to the rest of the market place.

Andy: I pointed out in my article that the new model for e-book pricing is for the publisher to set the price of the book. It seems that Amazon.com has always succeeded in gaining market share  by price completion. Can you describe the new plan. Is it going to help Indies?

Len: In the traditional  (often called “wholesale”) model of publishing, publishers set a suggested retail price for a book and  then sell that book to a retailer at a discount. The retailer then sets its own retail price and sells that book to a consumer. Under this model, chains and big Internet retailers  have been selling popular titles — in both conventional editions and digital editions — at significantly below-cost pricing and with loss leader marketing in what appears to be a blatant attempt to acquire market share and to concentrate power in a small number of mostly online retailers.

 

Under the  new and developing  “Agency” Model, a publisher sets a retail price for a specific book and engages an agent — typically a retailer — to facilitate the sale of that book to a consumer, at that price. In this model, the retailer is bound by the price set by the publisher. To date, this model exists only for digital content. The retail price set by the publisher reflects production costs — acquisition, editing, marketing, printing, binding, shipping, etc. — which vary significantly from book to book.

The artificially low prices at which e-books have been sold are threats to any profitable business model for writing, publishing, and selling books.  They offer consumers only a fleeting bargain while enacting serious long-term losses. Ultimately such below-cost pricing is very likely to drain the resources publishers need to discover, develop, compensate, and successfully publish new authors, a loss of diversity that ABA believes will have very bad long-term effects on many fronts.

ABA strongly favors the “Agency” Model for the sale of digital content. The benefit of the Agency Model to our members — independently owned bookstores — is obvious. It’s an essential defense against predatory pricing, and it allows for a wide diversity of retailers in the marketplace. It also helps to ensure the continued distribution of books by smaller, independent publishers with a variety of viewpoints, ultimately benefiting consumers by showcasing not just discounted bestsellers, but a wide selection of writers. Finally, it will help prevent the concentration of power within the hands of a few megastores and chains. Such a narrowing of options would significantly harm consumers and our society.

Andy: Do you see any other models for  e-book distribution on the horizon that also would offer opportunities to independents?

Len: A long-range goal would be to partner with a technology company to use geo-locating software to allow a customer in an indie store to download an e-book to her smartphone from within the store, and then have the bookseller be credited with that sale. This is down the road a bit, but should be possible. It opens up interesting opportunities.

Andy: It is a little unclear to me how indies can provide a kind of convenient channel for downloading the e-books. One of the nice things about e-books, as they are being sold by the big guys,  is the seamless way the book buyer can order books without getting off his tush.

Len: With Google in particular, we will provide just as seamless a solution if you’re using your iPad, Android, or other tablet or smartphone. You can sit on your couch in your PJs at three in the morning, or sit in the airline frequent flyer lounge, and search for, purchase, download, and read your e-books, all from one device.

Andy: And do you visualize independents as selling e-readers as well? At the very least, that seems like a way of showing that indies are serious about being in the e-book business.

Len: This is trickier, as we’ve yet to identify the right device partner, but we’re still looking.

Andy: You might as well prognosticate about the future. Everyone else is, after all. Are e-books going to spell the end of the traditional book? How are independents positioned to benefit from the trends?

Len: ABA firmly believes that print books are here for the long haul. But to think that e-books are not already impacting print book sales would be a bit of a stretch. The focus of our channel must be on serving our customers how, when, and where they want to be served, and to sell the right book to the right customer in the format of that customer’s choice. That’s what we’re trying to empower our members to do.

Andy: Thanks, Len. I just clicked on my favorite bookstore, Book Passage;  and I see that they are, in fact, selling e-books for immediate download in Adobe and Palm format. So I urge you all out there with e-book readers to go to their website and start downloading.

iPad versus Kindle (and Nook)

There is a terrific article in the current issue of The New York Review of Books. The article is by Sue Halpern  and is called “The iPad Revolution“. It is a very good comparison of iPad and Kindle and the relative differences in the approaches of Apple and Amazon. Bottom line is that neither of them are perfect. (We already know that). But  it is the best thing I have read on this issue so far.

Sarah Palin Book Income Update

Why is Sarah Smiling?

Publishers Weekly just came out with its list of the best selling books of 2009.

For all of you readers out there who thought that Going Rogue by Sarah Palin was a joke, the joke is on you.  Sarah’s publisher, HarperCollins is laughing all the way to the bank. And so is Sarah.  Yes. Going Rogue was the #1 non-fiction best-seller of the year. It sold 2,674,684 copies. Nobody else came close.

Ask The Agent made an educated guess that Palin received a $6,000,000 advance for the book.  Truthfully, we were blowing smoke. We have no idea what that advance really was. But for comparison, it was reported that Senator Edward Kennedy’s received  an $8,000,000 advance for his autobiography, True Compass. It was  #5 on the non-fiction best seller list selling 855,843, about a third of Palin’s sales.

Now that the sales are in, it is a lot easier to calculate how much Palin actually made on the book and how well her publisher did.

Whatever Palin’s advance was, it was an “advance” against royalties. Royalties are based on actual sales of a book. An author doesn’t receive royalties until the advance is “earned out”, i.e. royalties exceed the advance that was paid. Typically the royalty rate is 15% of the list price, which, in the case of Going Rogue, was $28.99. So Palin made $4.34 on each book or a total of $11,608,128.56. Not bad for a book she didn’t even write.   She may have paid some of this out to her hack ghost writer. We don’t know how much, but $1,000,000 would be a lot for this kind of work. And shabby work it was!

But  wait! It gets even better. The numbers we are talking about are for US sales of the hardback version only. It doesn’t include the following: world English sales, translations, e-book sales, electronic apps, movie options, audio books, condensations, serializations, and merchandise (calendars, t-shirts, mugs, video games, and posters). And let’s not forget book club sales. And the Conservative Book Club is a huge driver of sales, frequently in the seven figures. We don’t know these numbers and probably never will.

But wait! It gets even better. Those numbers are only for sales in 2009.  Going Rogue is still a best seller juggernaut. Her Amazon ranking is (as of today) #266 and her Kindle ranking is #573. Trade and Mass Market paperbacks will be rolling out sometime this year. By comparison, the best-selling non-fiction trade paperback in 2009 was Glen Beck’s Common Sense selling over a million copies.  Assume 8% royalty on a $16.00 paperback (that is conservative), Palin stands to reap another  $1,250,000 plus change on these sales.

Feel sorry for the publisher, HarperCollins, for shelling out all that dough for royalties? It’s ok. Don’t worry. Let’s look at publisher costs. Typically a publisher will receive about half of the retail price of a book which would be for this book $14.47. HarperCollins out of pocket costs would be approximately $3.00 for preproduction (editing and the like), $2.50 for manufacturing, and $2.00 for marketing. Add to this Palin’s $4.34 royalty. The publisher’s profit  should net out at $12,383,786. (This does not account for publishers fixed overhead costs). And they also stand to make lots of money on continuing sales, paperback sales and other subsidiary sales.

I wish I was Palin’s agent. Let’s see….15% of author’s net income. That’s $1,741,219 and counting.  Sweeet!

Battle of the (E-book) Titans

Ask the Agent has been covering the developing story of the changing models for selling e-books and the struggle for market share between  Amazon and Apple.

An article appeared in the New York Times on March 17 that adds a new and troubling wrinkle to the story.

90% of the retail sale of e-books is now done by Amazon. This would be a monopoly by any reasonable definition. Amazon is cementing its dominance in the marketplace by offering  e-book downloads that can only be read by the Kindle, a media device that is manufactured by Amazon and sold exclusively  through Amazon. Thus if you own a Kindle, you can only buy e-books from Amazon. If you buy e-books from Amazon, you must buy a Kindle to read them.

Amazon has come to dominate internet retailing by aggressively discounting products in order to increase market share. They did this to great effect with books from the very beginning. They have been doing the same thing with e-books. Publishers have been selling e-books to Amazon for approximately $12.50. Amazon has been selling below cost at $9.95 for their  e-book  best- sellers.

If you ask the  major publishers how they feel about this, they will tell you privately, as they have told me,  that they are profoundly troubled by the market power of Amazon and are concerned that the deep discounting practiced by Amazon will devalue  what the marketplace thinks is a fair price for books. Last month the sixth largest American publisher, Macmillan, announced that it was changing its retail terms for e-books to the “agency model” which would not permit Amazon to discount titles. Amazon retaliated by pulling  “buy” buttons for all Macmillan books both electronic and physical.   This lasted only a week, but it should be a cautionary tale regarding the dangers of monopoly power in the distribution of ideas in a society or, in the case of Amazon, in the world.

Enter Apple and the iPad. It is difficult to imagine that Steve Jobs can be considered the friend of the little guy and a force against monopoly. Certainly the clout that Apple exercised with  the music industry in forcing them to accept   the iTunes model has done considerable damage to the music companies and artist royalties. But in publishing, as in Mid-East politics, the principle that “the enemy of my enemy is my friend” rules.

Five of the six largest book publishers fell into the arms of Apple and negotiated a new  sales model that allows the publishers to control the retail price sold to consumers of the book. But Steve Jobs is not Mahatma Gandhi and has imposed his own stringent conditions on the publishers. Under the new agreements with Apple, publishers will not be permitted to allow any other retailer to sell books below the price that is sold by Apple.

Amazon has reluctantly gone along with the new model, but is insisting on having a 3 year contract that would lock publishers into the current arrangement and guarantee that no other retailer will get better terms. Publishers are reluctant to agree to such a contract. The whole e-book market is in flux. Nobody knows what the e-book firmament will be like in three years.

But according to the New York Times, it gets a lot worse. Amazon has only agreed to the new “agency model” for the six largest publishers. The other 10,000 smaller publishers have not yet signed on with Apple. Amazon  has been speaking to them and telling them that they prefer to stick with the old model where Amazon can sell books for whatever price it chooses.

 These same publishers have spoken to Apple and have been told that Apple will only work with them if they sell to all other retailers under the same terms as  they are selling toApple. In other words, there is reason to believe that in order to do business with  Amazon, publishers will not be able to do business with Apple –and vice versa. A tough choice for the smaller publishers and a distressing possibility for the consumer.

The message Amazon sent forth during  last month’s negotiation between Macmillan was eloquent and persuasive.  That message was that  a publisher who doesn’t agree to Amazon’s terms risks having their books not be carried by the largest book retailer in the world.

Book publishers, and particularly smaller book publishers, are clearly getting whip-sawed by the two giants. The stakes are high for both Apple and Amazon. But the stakes are even higher for book buyers and the free marketplace of ideas.

Laurie McLean on Genre Fiction

Laurie McLean

Laurie McLean is a literary agent specializing in genre fiction. That is a term of art for such categories as: romance, thrillers, mysteries, fantasy, horror, westerns, science fiction, etc.. Laurie has been a literary agent for 5 years and works at the Larsen Pomada Agency in San Francisco. The agency’s website is at: http://www.larsen-pomada.com/lp/pages.cfm?ID=15. She has a fantastic blog, Agent Savant at: http://www.agentsavant.com/as/, which is a good place to start learning about genre fiction.

Today I’d like to talk to Laurie about genre fiction.

Andy: Laurie, can you give us a definition of genre fiction? I mean, don’t all book subjects fit into a genre?

Laurie: The term, genre fiction, is used by marketing folks inside publishing and bookstores to help book buyers, also called readers, find the type of books they like to read. If one is a reader of mysteries, then it makes sense that a bookstore would shelve all mysteries together to increase overall sales. That’s really why the term genre fiction was coined—to differentiate these specific genres from general commercial or literary fiction.  It’s also similar to the way non-fiction is shelved by interest rather than author.

Andy: I’d like to go through each of the genres and have you describe them and tell me what publishers are looking for now.

Laurie: Science Fiction: It seems that the UK is the biggest audience for hard science fiction, while US readers prefer space opera and softer speculative fiction. There is also cyberpunk, where man has integrated with computers; time travel; alternate history; military SF; and the newest craze, post-apocalyptic or dystopian speculative fiction.  Think Cormac McCarthy’s The Road. 

Fantasy: Epic fantasy, also called sword-and-sorcery or high fantasy, is the coming of age quest tale like the Lord of the Rings or the Sword of Shannara books. It has gone down in popularity today by what is called urban fantasy, stories that revolve around the conceit that supernatural creatures, mainly vampires, werewolves or other shapeshifters, ghosts, demons, etc., have lived among us forever but are now recognized by humanity and begrudgingly accepted—until a rogue creature starts wreaking havoc and humans and preternaturals must team up to put things back in balance.  It features a lot of ass kicking but no quests.  There is also interest currently in steampunk, where everything from appliances to weaponry to transportation runs on steam and the devices and clothing are very Jules Verne-esque; futuristic fantasy; superhero fantasy, etc.  Fantasy and Science Fiction can sometimes genre blend or bend and are often located in the same section of the bookstore.

Romance: When you have a hero and heroine who meet, with sparks flying, then internal and external conflicts keep them apart despite their mutual attraction until the end of the book when a happy ever after ensues, you know you are talking about the largest genre in fiction by far: romance. More than 50 percent of mass market [pocket size paperbacks] fiction sales in the United States each year are genre romance.  The biggest trend in genre romance lately is paranormal romance, but there are also contemporary, historical, comedies, romantic suspense, inspirational and erotic subgenres.

Mysteries/Suspense/Thrillers: I’ve lumped all these together, although they are all different. In mysteries you have a murder in the first scene and the remainder of the book is spent trying to figure out who dunnit.  In Thrillers, the fate of the world is at stake and the clock is ticking.  Suspense novels are somewhere in between where a family could be in jeopardy, or a town or group of friends and the protagonist(s) must save them with, again, time against them.  You’ve also got subgenres within these categories such as cozy or detective mysteries; legal, crime, action, disaster, conspiracy and religious thrillers; and more.

Horror: While horror, now sometimes called Dark Fantasy, is more popular on the movie screen than in books, you have everything from serial killers to splatterpunk (think the Saw movie series) to dark fantasy, to more psychological horror.

Young adult: This is not a genre, per se, but one of the healthiest and fastest growing categories in fiction. The young adult, or YA, category was created by a savvy bookseller who observed families coming into the bookstore, the young children going to the children’s section, the parents going to the adult stacks and the teens going to the coffee shop. The young adult section was created and all of a sudden teens had a comfortable place to shop for books about subjects ranging from chick lit and teen fantasy to more contemporary realistic gritty fare about teen suicide, pregnancy, drugs, sexuality preferences and more. Urban fantasy and post-apocalyptic fantasy are currently big trends for teens.

Andy: In the greatest works, doesn’t genre fiction cross over into literary fiction? Isn’t the greatest romance novel ever Wuthering Heights? Can you give us some examples of contemporary works in the genre that are also literary masterpieces?

 Laurie: When a genre book is superbly written and an instant classic, it rises out of the genre shelves and migrates over to the general fiction or bestseller stacks.  Think anything from Jane Austen or Georgette Heyer for romance—or modern names like Nora Roberts and Jayne Anne Krentz; Stephen King or Dean Koontz for horror; Terry Brooks, Neil Gaiman or J.K. Rowling for fantasy; John Grisham, Dan Brown and Tom Clancy for thrillers; William Gibson, Neal Stephenson, and Orson Scott Card for science fiction; Janet Evanovich or Sue Grafton for mysteries; Stephenie Meyer and Scott Westerfeld for young adult.

Andy: Which of these categories are hot and which of them are not?

Laurie: Hot: Young adult, steampunk, paranormal romance, urban fantasy, political thrillers, apocalyptic fiction.

Not hot: Chick lit, contemporary and inspirational romance, epic fantasy, quaint cozy mysteries.

Andy: Do you think that the rise of the e-book offers opportunities or challenges for genre fiction? It seems to me that these titles are perfect for the new electronic formats.

Laurie: Erotic romance was one of the first genres to do well in the eBook format and some credit this subgenre for the rise of eBooks today. Ellora’s Cave was a pioneer in racy romance. But really all genres do well in eBook format. They are perfect for this digital format in terms of storage (you can fit a lot of vacations reads on your eReader but not in your suitcase) and anonymity (no one can see that you’re reading a “bodice ripper”, the disparaging term for romance novels).

Andy: You ran a public relations agency for 20 years in Silicon Valley. Why did you get out? How do you like being an agent?

Laurie: I got out of high tech public relations when the lucrative nature of the business could no longer hold my interest as the challenges declined and ethics began to get compromised.  Being a literary agent, to me, combined the best of both halves of my brain, similar to the way being a publicist allowed me to be creative and strategic simultaneously. I love the publishing industry because it really is about the writing. They money’s not the greatest unless you’re a bestseller or handle a stable of bestselling authors, but every day is different, the pace is often bracing and exhilarating, and the people I deal with on a daily basis are wonderful. I think I’ve found my calling!

Andy: How has your experience in public relations been helpful in your second career?

Laurie: All the facets of what made me successful in PR—time management, marketing savvy, the ability to think on my feet, contract negotiations, interpersonal skills, a diligent hard work ethic, attention to details, the ability to think outside the box—all come in handy for a literary agent.

Andy: When we had lunch the other day, you astonished me by saying  that you receive 1200 unsolicited queries a month. How do you manage to address this ocean of pitches?

Laurie: Well, this is kind of like the frog in boiling water analogy. If you put a frog in boiling water, it jumps out immediately. But if you put a frog in cold water and turn on the heat, that frog will boil to death because of the gradual nature of the temperature rise. I started off with a small number of queries each day and could easily give personal suggestions for improvement and reasons for rejections. When I got busier, I switched to a form rejection letter where I could add a few sentences of advice in many cases.  But by the end of 2009 I was receiving more than 1200 queries a month. I was boiling. So, I’ve had to change my submission process. Now I have a separate email address for queries only (query@agentsavant.com) where I have an automated reply that informs the writer that I’ve received his or her submission, but they will not hear from me again unless I want to read more of their work. It’s not something I ever thought I’d do, but once I’d given up my spare time, some of my sleep and meal time, and it still wasn’t enough, something had to give. Now I don’t have the monkey on my back screaming and clawing at me. I can read queries on the weekend, as many as I can fit in the hours I have, and ask for more from those that interest me.

Amazon v. MacMillan: The End of the Affair

Well, it looks like as of yesterday, Amazon has restored the “buy” buttons for books published by Macmillan.  During the past week, Macmillan has been negotiating terms with Amazon. Apparently they have reached an agreement. We don’t know the details. Two days ago, Macmillan CEO John Sargeant said: “Amazon has been working very, very hard and always in good faith to find a way forward with us.” Good faith, huh!  I’m not sure that pulling a publisher’s books from the digital book shelf  during negotiations is indicative of bargaining in good faith. It certainly showed no good faith to the Macmillan authors whose books were unavailable for a week and to the readers seeking those books.  As more major publishers revise their terms for e-books, it will be interesting to see whether Amazon will stop selling those titles while negotiating in “good faith”.

This entire affair has highlighted some very important issues that go well beyond the squabbling over crumbs by  two large corporations.  You can read some of the comments on this blog and others. What are the dangers of  monopolistic concentration  in the distribution of ideas? How important are e-books in the literary future? How do commercial values conflict with literary values? What is the role  of the community book store as books turn to digital? How will authors be fairly compensated for their work under the new e-book business model? What provides the better reading experience: e-books or paper books? Are the major publishers dinosaurs? How much is a book worth?

And then there is this  notion that “information wants to be free”. We have discussed this in a previous blog entry about the book, Free by Chris Anderson.

 Amazon was playing to the house throughout this affair by implying that they were trying to protect consumers by offering e-books at a good (i.e. loss leader) price. Amazon fans made their opinions known with numerous comments that books weren’t even worth $9.95.

Humorist Roy Blount Junior, who is president of the Authors Guild,

 made a brilliant and witty statement about this curious notion in the Authors Guild winter newsletter. I’ll quote it here:

“Then of course there is the school of thought that books shouldn’t cost anything, because “information wants to be free.” One thing wrong with that notion is that just as a pie is more than its ingredients (and does anyone other than a child living at home expect pie, or even pie ingredients, to be free?), a book is more than information. It’s someone’s –several people’s—work.

“Another thing wrong with “information wants to be free” is that it is espoused, it’s my impression, by three categories of people:

“One: People who are paid by universities to teach occasional seminars and write books that not many people would want to buy anyway if they could help it. To send one’s child to one of these universities costs (say) an author maybe $50,000 a year. How about College wants to be free?

“Two: People who have invented a high-tech gimmick that has enabled them not to need any more money the rest of their lives. How about High-tech gimmicks want to be free?

“Three: People who live at home with their parents.”

Good for you, Roy Blount! Once again the best weapon against bombast is ridicule.

Amazon vs. Publishing 3: Authors Guild Weighs in

 

The Authors Guild, the largest advocacy organization for authors in America, weighed in on the Amazon-MacMillan affair yesterday. Their position is, I believe, a fair and balanced position on the interests of authors as it relates to the controversy. In a rare show of solidarity, Author’s Guild has given unqualified support to the position of large publishing.   Authors Guild linked to another article by Fast Company that is a little less nuanced but probably a little more articulate of what this fight really means.

Their statement addressed a point that is worth considering relating to the long-term interests of authors on this issue. Amazon pulled the plug on Macmillan Books without notifying Macmillan or its authors. This was done on Thursday, January 28. On Sunday, January 31, Amazon made a smarmy statement characterizing Macmillan as having a “monopoly” on their books and insinuating that they were going to lose the battle. We all assumed they were conceding. As of this morning at 8:30 PST, the buttons have not been replaced on Macmillan titles. This is becoming a real problem for Macmillan authors who rely on Amazon to sell 75% of all sales on their book on-line.

Clearly Amazon is throwing its weight around and continuing to send the message to publishers that they, like the Wall Street banks, are “too big to fail”; or, at least, too big to cross. Their position is arrogant and points out eloquently the correctness of the concerns of publishers, authors, and agents that Amazon has  asymmetric market power that has become a danger to our industry. It is Amazon, not the commercial publishers, who are seeking to establish a monopoly.

 This is not the first time Amazon has removed buttons from titles, but it is the first time they have done it with all titles of a publisher.

This affair is not a tiff between quarrelling parties. It is really a struggle for the future of book publishing. Stay tuned.