The Indie Revolution

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I would like to give Liberty’s readers an update about technological progress regarding a device that some thought would never change: the book.

A number of years ago Amazon.com, the huge online bookstore, developed an invention, the Kindle, which was a mini-computer (what would now be called a “tablet”) for reading books. Once the technology was perfected, the Kindle represented a paradigm shift in the book publishing industry. Previously the price of a book had been deeply connected with the cost of printing it. The bigger the print run, the more the publisher could achieve an economy of scale and lower the per-book marginal unit production costs. This meant that in order to be cost-effective a print run had to be large. And because of this a small group of highly successful publishers came to dominate the book publishing industry.

This group, sometimes called the “Big Six,” was, for aspiring authors, “both the gatekeeper and the gate.” If you found a literary agent who had connections to editors then you could get your foot in the door and get published and get into bookstores. If not, you were shut out. Self-publishing developed a horrible stigma, but this is simply because it was not cost-effective and there was no economic impetus to change popular perceptions.

Enter Kindle. The Kindle works by downloading electronic files from Amazon.com, which can then be read on the device itself — no printing costs. This made Kindle ebooks much cheaper than print books. Amazon.com began by instituting a practice of dramatically slashing the retail price of its ebooks, such that most of them cost $0.99 to $3, whereas comparable print books cost $10 to $14.

The Big Six rebelled. They used their pressure to switch ebooks to the “agency” pricing model. Under the traditional pricing model the publisher sets the list price, which is basically the wholesale price that the publisher receives, while the retailer sets the retail price, which is the price that consumers actually pay. Under the agency model, the publisher, not the retailer, sets the retail price. The agency model enabled the Big Six to force Amazon to sell ebooks at prices roughly comparable to paper books. The Department of Justice and FTC recently launched an antitrust lawsuit arguing that the Big Six were trying to prevent Amazon.com from competing on price. Several Big Six publishers have agreed to settle the antitrust litigation, although a few of the Big Six continue to fight in court. The antitrust litigation is interesting and complicated, and it also involved Apple, which used its iBooks store to help the Big Six exert pressure upon Amazon. It is still unclear how ebook pricing will look in the future.

Self-publishing once carried a horrible stigma, but this is simply because it was not cost-effective and there was no economic impetus to change popular perceptions.

Kindle instituted another major change. Now, with no production manufacturing costs, you can self-publish on a zero-dollar budget. In 2010 a young woman named Amanda Hocking wrote a “paranormal romance” novel (half fantasy, half romance) and self-published it on Kindle, using Amazon’s newly developed self-publishing program, “Kindle Direct Publishing” (KDP). She was working as a waitress at the time, and put her novel up on Kindle after many rejections from agents and publishers. She didn’t spend any money to promote her book, which she titled “Switched.” She just sent review copies to a handful of book blogs. Initially she sold several thousand copies, and she considered this a success.

Then in late 2010 and early 2011, her sales rose to several hundred thousand copies. From 2011 to 2012, estimates are that she sold over one million copies of her novels. Her books, priced from 99 cents to about $3, have made her a self-published millionaire. I have read what Hocking wrote about her success, and I don’t think even she knows how she sold so many copies, other than by writing a high-quality novel in what was then a wide-open market. These days the many thousands of novelists (me included) who have been rejected by the gatekeeper Big Six and their literary agents have been lured by the Amanda Hocking dream into self-publishing. We don’t even call it self-publishing anymore; we call it indie publishing, “indie” meaning “independent.”

When I decided to self-publish my own novel, Rob Seablue and the Eye of Tantalus (which can be found on Amazon), the selling points of going “indie” were simple. You make a royalty rate per sale of about 65%, in contrast to the Big Six’s typical 25% or less (not including the literary agent’s cut), you get published immediately instead of waiting three years for your book to come out (6–12 months to get an agent, 6–12 months for the agent to land a book deal, and one year of pre-release publicity), and you have a very tiny possibility of success either way. You typically have to do your own book promotion, even if you can get a Big Six book deal, because the Big Six care mainly about their established bestsellers, not their unproven debut authors. Within the last two years I estimate that at least 10,000 books have been indie published, and the number grows every day.

The Big Six are very much afraid of losing the “browse” effect. Most book sales used to happen, so it was said, from consumers browsing through shelves in a bookstore. Browsing’s ebook replacement is the book blogging community: there are now over 2,000 book blogs, where bloggers write a constant stream of reviews. The Big Six have some advantage in promoting their ebooks, but the book bloggers don’t favor them as heavily as the browse effect did.

Most successful indie authors write romance novels. The frequency with which e-readers like Kindle are used for this genre has prompted some to speculate that women feel less embarrassed reading soft-core erotica on Kindle than reading a print book with half-naked men on the cover. But indie fantasy and science fiction (which is what I write) are also growing. Hocking herself has said she thinks book publishing is moving toward a model in which most debut authors go indie, then successful ones attract the attention of the Big Six and sign major book deals, leaving the many unsuccessful authors to fade away. Hocking herself signed a major book deal, although she still uses an indie format for some of her books.

A postscript: enjoy your local bookstore while it still exists. After Borders went bankrupt, Barnes & Noble emerged as the only major chain bookstore left. B&N has come out with an e-reader, the Nook (which is very nice, but doesn’t sell as well as Kindle). It has a self-publishing program called PubIt, although it doesn’t yet care about PubIt as much as Amazon cares about KDP. Barnes & Noble’s fate is deeply connected to the Big Six, and to the public’s continuing to go to “brick and mortar” retail stores to buy books made out of paper. B&N is caught in a tight spot between clinging to the paper book business model and getting 100% behind Nook and the e-reader business model. I go to my local Barnes & Noble a lot, mainly to drink coffee and look at magazines, and the place still looks as if it does a lot of business in-store. But Barnes & Noble is in danger, and knows it: it has hedged its bets by promoting the Nook heavily within its stores.

Your local library won’t be around forever, either. The Google Books Project has tried to scan every book in ten libraries, so as to create a huge digital and searchable public library. Google ran into legal trouble about the copyrights of old books and is stalled by ongoing litigation, but it is only a matter of time before paper libraries are replaced by more efficient online digital ebook file repositories.

As for book publishing, it isn’t clear what the future will look like. But I think the indie movement and ebooks are not going away. The summer of 2012 might be looked upon as the birth of the indie movement. History has shown that technology and economics are two hugely powerful forces behind social change. So don’t be surprised if a dramatic shift happens within the next five to fifteen years, not unlike the “dotcom” shift of the 1990s, when the internet took off: the Big Six and paper bookstores will collapse, and the book universe will consist of hundreds of thousands of indie titles, all available for 99 cents with the push of a button.




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Comments

Dave

There is not as much selection, but who knows how it will end up? They also lend audiobooks that can be played on a cell phone or tablet.

Victoria

At times, I feel sad that "brick and mortar" bookstores will be increasingly rare, but then, every time I go to one and look at the prices, and then compare that to the Kindle prices, I lose sympathy. I think there will always be physical books out there, but thanks to e-books, more and more people can actually afford to read. Our interest should be in reading the book, and people being able to access it, not physical paper that looks pretty on a shelf. Reducing the price of a book from something like $15-17 to $3 is amazing. Thank you, capitalism.

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