Niche Publishing Math And Trashing Art

Not too many years ago, the rule of thumb said that trades publish around seven times as many nonfiction titles a year as fiction titles, but that the aggregate sales of nonfiction vs fiction titles are about the same. These numbers referred strictly to trade publishing, which roughly means books intended to be sold in general bookstores, as opposed to textbooks, professional books and religious books. I don't remember the source for this relationship between fiction and nonfiction, but it agrees with observations on the nature of niche publishing. For fiction and nonfiction books to sell the same total when there are seven times as many nonfiction books published by substantial trades, the average fiction book would need to sell seven times as many copies as the avergage nonfiction title.



So why do most self publishers make their living writing nonfiction, and why do most successful botique publishers focus on nonfiction as well? Even though the seven-to-one rule doesn't include self published books, you might think that the relative lack of competition would make fiction the low hanging fruit. It doesn't work that way because fiction is dominated by bestsellers that pull the average sales for fiction titles way up, and persist year after year as backlist titles long after most nonfiction books have become obsolete. While there are niches in fiction as well as nonfiction, they are not as sharply defined in fiction, and therefore serve a wider audience.



Take a large fiction genre, like Tolkien style fantasy books. Some readers might like stories with lots of dragons in them, some may prefer heroines over heroes or magic over swashbuckling. But the mainstream of that audience will read any well written adventure tale set in a distant past or future earth where there are no cars, some seemingly unremarkable young villagers destined for greatness, and plenty of good and evil. Yes, I'm sure there are subgenres where everybody is naked and the plot lines are little thinner, but even there, readers are paying for the author's story telling ability. Most fiction readers would rather pay a premium for "Book The Sixth" of a twelve book series than a read a free copy "Book The First" from an unknown, and that's a fact.



Now take a large nonfiction genre, like diet books, though many dissapointed readers may conclude that diet books should have be sold as fiction as well. While every year does yield a few bestsellers promising weight loss, there's an even larger market for specialty diet books, which promise everything from low environmental impact to longer life and cures for whatever ails you. And these diet books don't just give a chapter to each subject. Whole books, even series of books, are written about systems of selecting food, cooking and eating, that essentially target converts to the system. Most are from botique presses or self publishers, their print runs are short and they are usually sold at lectures, in specialty food stores or by mail order rather than through bookstore chains.



The math is really pretty simple. The smaller the niche, the less likely a commercial trade publisher will have any interest in targetting it. While a large trade may not automatically fire an acquisitions editor for sponsoring several books in a row that sold less than 5,000 copies, they'd be within their rights to do so since they need higher sales to make their overhead. So access to the true niche markets is basically restricted to small trades, botique presses and self publishers who have very low overhead, long time horizons, and a deep understanding of the market they are targetting. Large trade publishers can't afford to develop a deep understanding of a market that won't support the salary of the editor assigned to learn it. And niche publishing is ideal for website marketing, something the large trades seem incapable of learning.



So what about the fiction authors, graphic novel and comic book writers who do the convention tours and starve for their art? I've seen some really beautiful self published comics and graphic novels over the years, some were even critical successes, but I don't personally know anybody making a decent living at it through self publishing. There simply aren't the sort of natural audiences for creative art that exist in nonfiction for self identified cultists, do-it-yourselfers, and fanatics for every obscure branch of learning. The artistic markets are driven by popularity, and popularity is that funny thing that once it's acheived, you're no longer in a small niche.



Because popularity is the coin of the realm for fiction writers, and because that coin has much more value in the Internet age than it had just a dozen years ago, I believe that trade contracts for fiction authors will become much more restrictive in the future. In the days before POD and eBooks, large trades primarily worried about their authors moving to a different large trade. Today, it's becoming apparent that many of those authors, particularly those who scratch out a living but aren't getting rich, would do better cashing in their popularity by self publishing or forming co-ops. The large trades will figure this out, and will start moving all new fiction authors in the direction of romance writers, where contracts often give the publisher rights to the author's pseudonym, characters and brand. It also means that much of the advice aspiring fiction authors receive from established fiction writers will be of limited use. The world won't change that much for those authors who have already established and own their brands, but new fiction writers, even those with agents, simply won't get the same opportunities.

The artwork in this blog post comes courtesy of curbside garbage on a public street that I happened to walk by just as the rain was starting. It's always bothered me to see people trashing art, and when it's framed art behind glass and you know somebody who needs picture frames, it looks like a crime. I rather like the top one, can't make out the artists name, though it may be something like Ruhl. If it will separate from the mat, I'll bring it home in a mailing tube. The third one is a numbered print by a Giora Oppenheimer, if I'm reading the name correctly, and I believe they are all works from students of the Bezalel art and design academy done in the 1970's.

Second Hand Book Pricing Models

The pricing model that most publishers use for books and eBooks today was received second hand from the previous generation of publishers. That pricing model and its underlying assumptions are being challenged by compound pricing models for eBooks, such as: reading device plus eBook cost, reader device plus subscription, reader device plus free download, paid download without dedicated device, and free. At the same time, paper book pricing models are breaking apart for bestsellers, as retail outlets cut cover prices to the point that the very concept of a cover price may become obsolete. Making the situation even more complicated are the pricing models for second hand eBooks and books, in those cases where eBooks can be legally and physically resold. The bizarre mathematics behind second hand paperback pricing models only has to work for the seller, but pricing for pre-owned eBooks and new books of all formats has to work for the publisher and author as well.

How is it that the publishing industry has survived with second hand book sales for as long as there have been books, but is threatened by second hand eBook sales? Two of the strongest reasons are that eBooks don’t wear out and that the Internet is a super efficient zero-cost mechanism for delivering “used” eBooks. If user-friendly eBooks are sold without Digital Rights Management (DRM) or license agreements that prevent the buyer from reselling the eBook, there’s nothing illegal in somebody establishing an eBook library or second hand eBook store, which might quickly become the first stop for eBook readers. Remember, the effectiveness of the DRM isn’t the issue since breaking the DRM is a violation of the Digital Millennium Copyright Act (DMCA) which gives the publisher a strong legal lever for preventing resale and recovering legal costs.

You might argue that book buyers buy new books to support the author and publisher and would do the same thing with eBooks. But buyers of new books buy them to get a new book, not a used book, and to get that book when they want it, rather than having to wait for a second hand copy to become available. If you believe that the Internet is a super efficient mechanism for selling used paperbacks, you’re forgetting about shipping costs. A couple dollars change hands every time a penny book is sold online. And you’re forget ing that paperback books break apart, lose their covers, and turn yellow with time. An eBook that transfers ownership without the device (laptop, reader, iPhone) it's stored on literally becomes brand new in the transfer process. If no DRM is used, resale can occur immediately with the original owner retaining a copy to read at a later date. And some enterprising readers may decide they have the right to sell as many copies as they choose, however they came by the first copy.

Let’s look at an example of how used book sales used to work. I purchased two second hand Conrad novels last week for my flight to Israel and received another one through a library discard gift. As it turned out, the cabin lights in plane decided not to work for the 10 hour flight, which means I would have been better off purchasing a USB reading lamp and one new copy of Conrad on bright white paper. In any case, it took visits to several second hand book shops to find the two used books I purchased, and the selling price turned out to be double or triple the new price when the books were printed. Over the years, I’ve paid from two to five dollars for plenty of worn out paperbacks in second hand book shops in the U.S. and in Israel that were originally priced at 25 or 35 cents. Does that mean paperback books should be the next hot investment area, maybe with their own ETF (Exchange Traded Fund)?

The pricing model for used paperbacks is structured around the overhead costs of the seller. The Conrad novel (Nostromo) that came free as a library discard was never even in the collection – they accept used books from patrons to fill out the discard rack. Current pricing for Nostromo as a Kindle eBook also starts at free, but you can pay several dollars for pricier Kindle editions. Nostromo is also available as a second hand book from Amazon where the price varies from a penny to many dollars, depending on the edition. The penny sellers make their thin margins on the shipping. Free eBooks versions of thess out-of-copyright books are available in numerous formats. Kindle sales are new sales by definition, and for out of copyright books, the republisher is the one who makes money.

While there are obvious problems with the old pricing models based on the pre-Internet world of selling returnable books to people browsing physical shelves, that’s no reason for the publishing industry to commit collective suicide by adopting a pricing model that doesn’t pay the bills. Structural change that will lower the overhead for publishers has been underway for some time. Ironically, the Internet is the technology that has made massive outsourcing of design and editorial work possible. The challenge going forward is finding a model that will allow professional authors to earn a living, while allowing publishers to make a profit publishing books. So far, the pricing model we inherited from the pre-Internet generation does a better job of this than new models that are based on wishful thinking. If you read between the lines of many suggested solutions to the pricing challenge, they make the basic assumption that authors and publishers don’t really deserve to get paid for books, and that we should all go on the public speaking tour and work as entertainers.

Fiction Publishers Need Book Buyers, Not eBook Addicts

Everybody involved in publishing spends some time discussing the future of books and eBooks with their colleagues. A lot of passion goes into these discussions; passion for books, passion for being right, passion for making a living. I derive around 20% of my gross sales from eBooks, unlike most publishers who haven’t gotten to 1% but talk about 50% being around the corner. I’m skeptical that the current crop of eBook reader devices will benefit any of the existing business models, and that’s coming from a guy who wrote what may have been the first apocalyptic eBook reader story back in 1993.

The following is an edited version of my side of the correspondence with a colleague from last week. The discussion focused on the discount eBook model, and it turned out we agree that established trade publishers are better off staying away from competing on price, albeit for different reasons. We also argued about the recent Publisher’s Weekly viral issue.

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I don’t think all of the large trade publishing executives are as stupid as the ones who run around to media outlets talking about how half their sales will be eBooks in a couple years. Some established fiction publishers will figure out that losing money on every sale isn’t a business model and keep their prices higher to achieve the same margins they net on paper sales, as many already do with nonfiction. If fiction publishers are going to net 75% less on their books, they need to sell 4 times as many, and I don't see it happening. Talking about zero manufacturing cost is dumb when they are paying six figure advances. The problem for established trade publishers isn’t obscurity, it’s making a profit, and the main profit centers for years have been bestsellers and backlist. It can only hurt them to lower those prices.

Aggressive discount eBook publishing isn’t a viable long-term model for large fiction publishers. The only way to sign up name authors would be to grant deals even better than the 50/50 some superstar authors already get for print, with rights sweeteners thrown in and big advances. Successful authors have no reason to work for free, even if their publishers are that dumb. The surviving fiction houses will be the ones with smart managers who don't blow all the income from their backlists running up debt trying to make ridiculous business models work. All they have to do is play it cool and hold the line on pricing and they'll survive the next wash-out. Then they'll be the only ones left with deep enough pockets and pedigree to attract authors.

I don't agree that the current system creates scarcity. There is incredible selection in fiction and always has been, through all manner of channels, with and without gatekeepers. The problem isn't scarcity, it's human nature. The Long Tail head (80/20) turns out to be an underestimate for fiction. The more selection you offer, the more the commercially viable sales clump at the very top, because the second tier authors never get the momentum required to support anybody. If the penny eBook model wins, which I don't believe it will, all but a handful of bestselling writers will be retired hobbyists or people living Social Security disability because nobody else will be able to afford being a writer. Don't expect a new Eden peopled by independent fiction authors who stay free of “the system.” Any new authors that do break through will be wooed and won by the big trades, or at least, the big agents, because they don't really want to sit in out-of-the-way places working on an Internet connection and making a fair wage. They want to be BIG, and FAMOUS.

Wisdom is having a sustainable business model. Giving things away and hoping for the best is not a sustainable business model. If you were a stockholder in a publisher with hundreds of millions or even billions in sales, you'd be right to sue if they started giving away all their books in hopes of gaining market share. They should dig in their heels and stick with selling hardcover fiction and trade paperbacks based on their current lists, and if it means losing some sales over the next few years, so be it. Their option is to follow the path of the newspapers which turned themselves into permanent money pits by rushing into web publishing without a sustainable business model. The big trades will definitely have to focus on print, but they can do eBooks as well, they'll just do them at a premium and if people don't want to pay it, they can read free stuff. Just like the Internet.

The whole concept of underselling is irrelevant to fiction, it’s only making noise in self publishing circles at the moment because there’s a limited number of penny titles available for multi-hundred dollar eBook devices. The fiction market doesn't compete on price and there's no reason to suspect it will. Starting free and raising prices works for introducing products that people use and replace on a regular basis, not for products that they use once, or in the free Kindle downloads case, products that they look at once and never use. Judging by the hundreds of thousands of authors who are paying to get books printed every year, there will be essentially infinite input stock for free and penny books on Kindle when the idea catches on - if Amazon continues to allow it. Just wait for the first success story and then it will be all over. These new futures are all funny one time only.

Most viral book marketing is about tricking people into showing brief interest in something they wouldn't have bothered with otherwise. Works once for each genre, then it's dead. Free and dirt cheap eBooks for proprietary readers as a way to break through the noise fall into this category, because nearly everybody will try it. It’s all great fun for little publishers and unknown authors who are just trying to get noticed, but it would kill the large trade fiction business model if enough people owned eBook readers. Free eBooks are a good promotion model for the first few unknown fiction writers who get discovered that way, but as soon as the market floods, nobody will rise above the noise without a promotion campaign that would have worked regardless of price. Free eBooks in and of themselves are neither new nor compelling.

The reason the majority of viral promotion these days is happening on Facebook and Twitter is because it's painless to try. There’s no cost (other than time) and no real rejection since it’s not really face to face. It might work for one in ten thousand goes, but it’s not going to be a business model for anybody other than the gurus and consultants who promote it and charge for advice. It's just more "new economy" speak that will turn into "what we're we thinking?" If you count on the Internet to run popularity contests for new fiction talent, it will be worse than the teenage vampire stuff that dominates today. It will be teenage dominatrix vampire stuff, and only the top two authors will earn a dime.

I don’t accept the notion that normal people want to buy cheap eBooks just to have them on a device in case they feel like looking at them. There may indeed be a small percentage of the population willing to shell out small amounts of money to have a lot of titles loaded on a device because they feel insecure about running out, but that's not how most readers live. People buy fiction books with the expectation of being entertained for a fixed period of time, and that’s why they prefer above all buying thick new books from bestselling authors they have read in the past who write with some reliable formula and won't let them down. I'm guilty of the same thing, though instead of bestsellers, I read books from the 1800's that were popular enough with somebody to survive on the shelves in collected editions. I stopped reading contemporary fiction fifteen or twenty years ago, despite the fact it was a short walk to the library, because I hate sitting down with a book for the evening, struggling not to give up, and finally laying it aside in disgust. The cost isn't dollars and cents, it's in time, just like Chris Anderson preached in Free. Does anybody walk through the supermarket and take one green bean and one pea in the organic section because it doesn't really cost anything and it doesn't matter that they aren’t a meal because you're just going to throw them away? Normal people are not going to spend money downloading eBooks just to check them out. Not people that I know. And reading a few pages is no big investment? I value my time more than that.

There has always been a subculture of people involved in computers who invest tremendous time and effort into downloading “free” software and fooling around with it. There was freeware even before the PC was invented, before Microsoft and Apple existed, and some of it was very good. But most people don't want to spend their time rummaging through random collections of software, and the same is true for books. That’s why bestsellers exist, why name authors exist, why Hollywood stars command premium salaries and why people go to see aging rock stars in football stadiums. People place great value on their leisure time and are willing to pay a premium for reliable entertainment. Readers are much more willing to take a chance with nonfiction, when they are searching for answers or professional help.

I’ve spent some time looking at the rankings of Kindle books on Amazon, and I’ve seen a number of publishers experimenting with “spare change” pricing for both original and classic fiction. Some of those books are downloaded in huge numbers. But when I look up the print editions of the same books from the same publishers, they aren’t selling at all. The only Kindle bestsellers I’ve seen paralleled by print bestsellers are instances where the print version would have been a bestseller on its own. The one thing the free Kindle version earns the publisher is a place on a conference panel for one of the employees who can claim involvement in the “success.”