Screen shot 2010-05-07 at 9.44.40 AM.pngSmashwords and ebooksellers like Smashwords (such as Books for a Buck) are the real threat to agency pricing and the Agency 5 (Macmillan, Hachette, Simon & Schuster, Penguin, and HarperCollins). The reason is simple: the combination of quality and low price.

I find it hard to justify paying $14.99 for a fiction ebook unless I am absolutely enthralled with the author, and even then I am more inclined to pass on the ebook than spend that kind of money on a read-once-throwaway ebook. No need to repeat all the reasons; they have been bandied about the Internet and the magazines for months. And if I don’t know the author, I certainly wouldn’t pay the agency price. Amazon may have had it right when it set a top price of $9.99.

But look at Smashwords and similar sites. They sell ebooks in many categories from authors with whom I am not familiar for a reasonable price. I’m much more likely to spend $3.99 on an unknown author than $14.99. Of course, that isn’t enough to be a threat to the Agency 5. The Smashwords threat comes by Smashwords’ authors also being available in the iBookstore and Amazon, but primarily in the iBookstore.

It is in the iBookstore that the Agency 5 are face to face with competing books that cost significantly less. In publishing, it isn’t the publisher who sells an ebook; it is the author, the story synopsis, the ebook itself. No one goes around and says “I bought a great Hachette ebook yesterday.” Publisher branding value among ebookers is nearly nonexistent and I suspect noninfluential in the decision whether or not to buy an ebook.

For agency pricing to succeed, by which I mean the Agency 5 at minimum do not see a decrease in ebook sales from the pre-agency days, ebookers have to equate quality reads with the names of the giant publishers. Otherwise, all that will happen is that the blockbuster bestseller from the Stephen King-/Dan Brown-recognition-level authors will sell at the agency pricing and less-recognized authors down to unrecognized authors without the Oprah kick will have less-than-stellar ebook sales.

It is these second- and third-tier authors who have to compete against the Smashwords authors and for whose readers price is a major component of the decision to buy or not. In a bricks-and-mortar world, the Smashwords authors stand little chance, but in the Internet world they stand an equal chance — the Internet is the great sales leveler.

The playing field is level because all books display a cover, offer a sample read, have similar story blurbs. The differences are price and publisher name, but the latter has little, if any, swaying power, especially when you get down to the subsidiary names with which few readers are familiar. (Can you tell me who owns Ballantine? DAW? Basic? Do you care?)

The advantages that the Agency 5 do retain really relate to the level of professionalism in putting together the ebook — the professional editing, the professional cover design. But that advantage is easily eliminated by Smashwords authors who could hire these services independently [see, e.g., Professional Editors: Publishers and Authors Need Them (Part 1) and Professional Editors: Publishers and Authors Need Them (Part 2)], and with the right pricing, is readily overlooked by ebookers. Even though I am an editor and find amateurish errors annoying (see On Words & eBooks: Give Me a Brake!), I am more forgiving of them in a $1.99 ebook than in a $14.99 ebook, where I won’t forgive them at all. (Perhaps the Agency 5 should rethink offering a warranty of quality; see A Modest Proposal II: Book Warranty.)

The big gamble that the Agency 5 is making is that ebookers will associate quality reading with their brands and be willing to pay an inflated price for that quality. The reality that will strike home eventually is that such thinking is delusional. eBookers do not equate quality with the Agency 5 brands; if anything, the Agency 5 have done such a poor public relations job with every aspect of ebooks that any association of their brands with quality have long disappeared. eBookers, as is true of most readers, look first for an interesting and seemingly well-written story. Then they look for pricing and production quality.

Combine an interesting and seemingly well-written story with a reasonable price and you have an ebook sale. The ebooker doesn’t care if the ebook is from Smashwords or Hachette. Consequently, Smashwords-type ebooksellers are the real threat to agency pricing and the Agency 5. The more Smashwords and its companion ebooksellers, like Books for a Buck, do to increase quality of the books they offer and the lower the prices they offer those books for, the more in trouble agency pricing and the Agency 5 are. I’ve yet to meet an ebooker who only buys Simon & Schuster ebooks. And we haven’t even touched upon the all the places that offer free ebooks, such as Feedbooks.

Smashwords, Books for a Buck, Feedbooks, and other smaller, independent publishers or ebook outlets are squeezing ebook pricing. eBookers want a good read at a reasonable price, which is what they get from these alternatives. The Agency 5′s plan to force ebookers to “value” ebooks by keeping pricing artificially high will not withstand the assault. Yes, the very top authors — the most popular authors — will probably be able to command the Agency 5 ebook prices, but they are not enough to sustain traditional publishers. There are too few Stephen Kings and JK Rowlings to build a business around the popularity of their books.

If iBookstore sales aren’t significant for the Agency 5 at the higher end of the agency pricing scheme, and if iBookstore sales for the Smashwords-type publishers/sellers show growth, the Agency 5 are doomed. Of course, it doesn’t help the Agency 5 that Random House is sitting on the sidelines. Imagine if its ebook sales continue to grow while the Agency 5′s sales decline.

Editor’s Note: Rich Adin is an editor and owner of Freelance Editorial Services, a provider of editorial and production services to publishers and authors. This is reprinted, with permission, from his An American Editor blog. PB

12 COMMENTS

  1. Rich,
    I know I have disagreed with you about a lot of things over the past few months (mostly on the impact that e-books will have on literature), but I have to agree with you 100% on this one.

    With a few exceptions, publishers are not on the list of things that readers look for when choosing what books to buy or read. They look for authors whose work they have enjoyed before, genres that they are interested in, perhaps a specific series of books (particularly true if they like media-based fiction (for example, the Star Wars/Star Trek series)) and yes as you pointed out, they might also be pulled in by the cover of the book or the blurb on the back (and the sample chapters that are often offered for e-books).

    So who are the exceptions? Simple, those publishers who have done something specific to make themselves stand out.

    I suspect more people know of Harlequin than any other publisher… especially amongst those not generally interested in books. Who hasn’t had a mother, sister, friend or girlfriend who might read as many as a half dozen of their disposable romances every week? They have essentially turned their publishing house into a brand that their many fans follow.

    Baen is another example (and one far closer to my interests in reading :)). Until e-books started picking up steam, Baen was one of many science fiction publishers with little to distinguish itself from others. But their early adoption of e-books, reader friendly policies and reasonable pricing have earned them, as a company, many, many fans who are now more likely to give a book a shot if its published by Baen than they might have otherwise (It also helps that most of their current authors offer at least some of their work online for free).

    If the Agency five wants to succeed, they are going to need to do something to convince people that their books are worth more than the those published independently or by other, smaller publishers (who also charge less). I am not sure what it is they can do though?

  2. Thanks for the mention, Rich. At BooksForABuck, we’ve always believed in the power of affordability.

    Went to hear an agent talk the other night. Her point was one I’ve heard before but it definitely related. The mid-list, she said, is dead. It’s all either big names or nobodies.

    It’ll be interesting to see how the big publishers react to the threats you mention. I fear they’ll react by closing lines, by going more after the Stephen Kings and Nora Roberts and not taking chances. The flip-side is that Stephen and Nora are big enough names that they could leave the publishers and go directly to distribution themselves. Considering some big-name authors work when they decide they’re too big for editing, I hope they hire some editors before they do that, though.

    Rob Preece
    Publisher

  3. Great article. I actually hope that you are right, although let it be said that I wish no ill on any author.

    In many ways, I think Agency 5 went into the Apple agreement believing they would leave behind the authors (backlist authors uploading out-of-print books and self-published authors) who had found an convenient path to publication via Amazon. After all it’s much harder to get permission to upload material to Apple stores. But Smashwords filled that niche and did so in a hurry.

    These last couple of years have been very interesting. I think the next two will as well.

    Maria

  4. “Publisher branding value among ebookers is nearly nonexistent and I suspect noninfluential in the decision whether or not to buy an ebook.”

    I’d agree with Mr. Adin to a certain extent, but there are plenty of exceptions where genre fiction is concerned. I know lots and lots of gay romance readers with loyalties toward particular e-publishers, simply because they know that those e-publishers produce good-quality e-books. And while I doubt that many people know who owns Basic, I’ll bet that many SF readers know who own Baen, simply because (as Bill McHale points out above) Baen’s e-publishing system has become so popular.

    My point being that, the better an e-publisher is known, the more likely they are to receive brand loyalty. And of course that has always been true in publishing; particular print publishers, such as Penguin, have attracted readers who would buy the books simply because those books were published by a press they liked. So the Agency 5 have an opportunity to gain brand-loyalty e-readers . . . but only, as you say, if they price themselves competitively.

  5. I have been an avid reader all my life and have never bought any book because of who published it – or paid any attention to who published it. Not a single one of my friends who are readers has ever mentioned who published what to me when talking about books.

  6. I’m not a Smashwords reader. I’ve downloaded a few free titles when available, but none have been read yet. They just haven’t looked interesting enough. I’ve read a few other indie novels and they were, at best, OK, and nothing to recommend. Smashwords must overcome the perceived obstacle of mediocrity to gain me as a reader and buyer. Price and DRM are secondary and rarely factor in my buying. However, I’ve only bought one book priced over $9.99 out of 100 plus titles and that was before the Agency model.

    If someone can recommend a really good novel from Smashwords, I’ll give it a serious look. Maybe I’ve overlooked something. I prefer crime, science fiction (hard over sci-fi), or perhaps something more literary.

  7. Greg, give Randolph LaLonde a try for sci/fi. For crime, I just finished reading “Fatherly Love” by B. A. Wallace. Excellent crime novel IMO; fast, fun pulp style read.

    I write cozy mysteries and cozy fantasy–so probably not your thing. I’d also recommend Jim Chambers for a non-fiction look at American in the 50s (Recollections is the title). It’s a nostalgic look back–easy fun reading.

    Maria

  8. I’m not sure if it’s misplaced snobbery or just laziness on my part, but I’ll admit that when I go to the Fictionwise site every Monday to check out the new ebooks, I generally only look at the secure titles. I first look for authors that I’m already familiar with, and then for new (to me) authors in my chosen guilty pleasure, mysteries (more cozy than thrilling). I’ve generally assumed that the publishers have made the first cut for me, weeding out the totally unreadable, and doing at least some editing/proofreading. So I guess that I do place some value on mainstream publishing, in general, if not on any particular publisher.

    I can usually tell in the first few pages if I’m going to enjoy a book. I don’t require a great plot if I’m comfortable with the writing style and characters. If the main female character shrieks, tosses her head, bites her lip, rolls her eyes, sighs, stamps her foot, slams down the phone, whirls around, and stomps out of the room, all in the first chapter, then I don’t read any further. I’d be much more likely to buy unfamiliar authors/publishers if I could read the first chapter online before buying. I think ereader used to have this feature, but it’s not there now.

  9. Sue,

    Smashwords and Amazon both allow sampling. With Smashwords, you can download a sample or just view the HTML sample online. With Amazon, you have to download their free Kindle for PC to read the sample (or the book). Sony has a free application and so does Nook. Once you have the free application you can download free samples from the related sites.

    I use the PC applications to read books all the time. The sample feature works with the readers as well; not sure about fictionwise and sampling because I haven’t used fictionwise in a while!

    Good luck,
    Maria

  10. @Greg M:

    Try this. Go to Smashwords, select an appropriate category, then click “Highest Rated” and for now, click “Free ebooks”. If you’re not interested in short stories, click “Longs”. Find an e-book in the list that sounds interesting and click it.

    Looking at the listing, check the category (sometimes there are multiple categories). Read the description. Read the reviews. Read the sample—for free e-books, you can read the whole thing online if you want to. See what you think.

    Somewhere over 90% of my e-book library is from Smashwords. Yes, there are duds. But there is a rating and review system to help.

    Also check the title over at Barnes & Noble. They carry a number of Smashwords titles, and you’ll usually find more ratings and reviews over there.

    And you know, we all end up buying a book/e-book every now and again that we wish we hadn’t bothered with. Smashwords is no different, except that the cost is usually a lot lower. Especially if you start with the free titles as I suggested above.

  11. Ironically, the independent ebook publishers who lived in the digital ghetto for more than a decade actually do succeed because they’ve branded their names. If you observe carefully, you’ll often see them talk about Samhain books or Ellora’s Cave books. In fact, the only mainstream publisher with that kind of brand recognition is Harlequin, and I doubt it’s coincidence they were the first to jump on the ebook wagon with enthusiasm.

    Without big-name authors or huge marketing budgets, the only way a small press, especially a small digital press, CAN succeed is to develop their brand, backing it up with quality books.

    As for Smashwords being a haven for mediocrity, that strikes me as biased. Lord knows there’s more than a little mediocrity coming from the mainstream, and some of them are bestsellers. I’m all too aware that some readers insist on holding small presses up to a higher standard, as if every book they produce has to be perfect in execution and brilliantly written. It’s not fair, but we deal with it.

    And yes, there is a lot more mediocrity coming from non-mainstream publishers, but that’s a factor of the sheer number of indie ebook publishers combined with the business model that demands they release X number of titles every month to keep the revenue stream going. Very few, if any, operate with a huge line of credit. So, they’re more likely to publish a less-than-stellar book if they need it to fill a slot.

    On the other hand, there IS Dan Brown.

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