Ebooks and Self-Publishing Part 2 - Another Dialog Between Authors Barry Eisler and Joe Konrath

Barry Eisler and Joe Konrath Continue to Discuss Ebooks and Self-Publishing (with some help from Dean Wesley Smith)

Joe: So two weeks ago we released our 13,000 word dialog about ebooks and publishing, and it looks like a few people have read it.

Barry: Up until the part about the monkey and the frog, anyway.

Joe: People have brought up several interesting points--too many to respond to one at a time, so we’ve decided to address what seem like the most common questions and reactions here, in a quick follow-up dialog.

Barry: Quick for us meaning anything less than 13,000 words. In this case, it’s only 15,000 or so.

Joe: It’s true a few people thought the conversation was too long. But I think what they were really responding to was a lack of headings. We should have used headings--would have made the conversation easier to navigate.

Barry: Well, no reason we can’t add them now. This is digital. And maybe we should use some here, too.

And so...

BESTSELLING INDIE AUTHOR AMANDA HOCKING JUST SIGNED WITH A LEGACY PUBLISHER. DOESN’T THAT MEAN YOU’RE WRONG?

Barry: One of the most interesting aspects of Amanda’s and my simultaneous announcements is the way the whole thing has acted as a kind of inkblot test for people interested in the publishing industry. If you think legacy publishing is doomed, you see my announcement and say, “This proves legacy publishing is doomed!” If you think talk of legacy publishing’s doom is exaggerated, you see Amanda’s announcement and say, “This proves legacy publishing is a more attractive option than indie!”

Here’s one of my favorite examples of the way ideology is clouding logic on this topic. One tweet I saw said, “Eisler doesn’t know how much work self-pub is, walks away from $500k deal. Hocking does, signs w/ publisher. Hm..."

Joe: Hmm. Wouldn’t the opposite also be true?

Barry: Yes, you spotted the problem right away: it would be equally accurate to say Amanda doesn’t know legacy publishing as it is to say that I don’t know indie. In other words, in a situation that’s obviously roughly equivalent--two people, each leaving the realm that’s familiar to him/herself and entering the realm that’s familiar to the other--this guy could only see half the equation.

Joe: The half that bolstered his ideology.

Barry: Exactly. And the half that didn’t bolster the ideology got filtered out. I don’t mean to be too hard on him, by the way--there have been cognitive studies demonstrating we all do this to some extent or another. But you have to stay aware of it or you can come to some pretty silly conclusions.

Joe: But what do you think of Amanda’s move on the merits?

Barry: From her blog, it sounds like what Amanda was going for here was a better way to reach paper readers. I mentioned this possibility in an interview with The Daily Beast and I also recently discussed it with Amanda herself and with literary agent Ted Weinstein in an online conversation like this one (except shorter), and I think it could be a smart move. There’s no doubt an author can reach far more paper readers with a legacy distribution partner than without. There are a lot of “it depends” involved, but overall, if the new deal introduced Amanda to hundreds of thousands of readers who currently prefer paper, who otherwise wouldn’t have heard of her, and who will sooner or later switch to digital where they’ll become loyal customers of her self-published titles, it could work out really well.

Think of it as buying advertising for her self-published books (though “buying” might not be the right word, considering what they’re paying her). At a minimum, it’s a hedge: I’m doing well in one world, so I’ll establish a presence in the other world, too, just in case.

Or, to break it down a little further, look at it like this. First, I’ll stipulate that Amanda would almost certainly make more money from those four books if she published them herself. But money isn’t the only thing in play here, and neither are those four books.

So let’s take two scenarios--one worst case, the other best. Worst case, the publisher does a terrible job, the books reach relatively few paper readers, and Amanda doesn’t earn out. Best case, the publisher does a brilliant job, Amanda reaches millions of new readers, and the contract earns out. No matter how poorly or how well she does under the contract, it’ll be a challenge to make more money from these four titles than she could have by selling them herself at a substantially lower retail price and a substantially higher per-unit margin, but either way, worst case or best, the gap between what she earns from the legacy deal and what she would have earned by self-publishing the titles represents the cost of the deal to her.

But cost doesn’t mean anything unless it’s compared to value. I mean, if I said, “I paid ten dollars for it,” how could someone opine about whether “it” was worth the ten dollars if he didn’t even know what “it” was? And most of the negative reaction to Amanda’s decision I’ve seen has focused only on potential cost, while failing to take into account potential value. But whatever the cost is, if it results in a million new readers she otherwise wouldn’t have acquired, all of whom become customers for her high-margin self-published oeuvre, I’d say the deal was worth it. She gives up revenues from these four titles forever, but potentially gains revenue on all her other titles forever.

There’s one more intangible here we haven’t mentioned, and that’s the pleasure or the headache of working with a legacy publisher. As I mentioned in our earlier conversation, having to cede business and creative control to someone else has been frustrating and costly for me.

Joe: Me too. And we could both name dozens of other legacy pubbed authors who agree. But there are a minority who have done very well.

Barry: Right. Amanda could have a quite different experience than ours. In this regard, I think she’s chosen well. In thrillers, at least, St. Martin’s is the best in the business right now (look at the job they’ve done with Charles Cummings’ critically acclaimed The Trinity Six, to name just one), and if they execute in young adult the way they have been in thrillers, this could turn out to be a smart move for Amanda.

Last thought. One critical thing that’s gone overlooked here by everyone but Amanda herself is this: we’re now living in a world where an author takes a two-million dollar book deal--and has her judgment widely attacked for doing so! And who herself describes the deal as a risk she’s taking. Of all the signs of the times I’ve seen during early skirmishes of this revolution, I think this might be the most telling.

Joe: Amanda strikes me as smart, talented, and level-headed, and I hope her publisher gives her the star treatment and makes her an even bigger success.

Still, you have a good idea of what self-publishing is like, because you’ve been in constant conversation with me for the past two years. Plus, let’s be honest, fundamentally your last two books were self-published, at least in terms of marketing and publicity. Virtually every review you got, those blurbs from all the journalists and spies and military and movie people, all the feature coverage you got, the attention in the blogosphere, the free banner ads, the partnership with independent journalists... that was all you. And let’s not even go into the kinds of tours you’ve done, the--

Barry: Okay, fair to say I know a bit about what it’s like to publish a book without the effective involvement of a legacy publisher.

Joe: By contrast, Amanda has no experience with traditional publishing. If she’d had my experience, or your experience, or the experience of dozens of other authors we know, it would have given her more information on which to base her decision.

Instead, she based it on what she believes is the publishing ideal. Yet the ideal and the reality are often much different.

I hope she winds up getting ideal treatment from St. Martin’s. I think it would be awesome if they could turn her into another Stephanie Meyer.

Less awesome would be getting stuck with covers she hates, being obliged to do exhausting and unproductive tours, spending endless hours on the phone with editors and publicists and media, dealing with the countless mistakes publishers make, and having any of the dozens of problems with publishers that we’ve both seen so often that they’re considered normal.

And hopefully her agent struck the no-compete clause, so she can still self-publish other titles. But that might prove harder to do if she’s on a two-month tour and doing countless interviews.

Barry: I think it comes down to this. The theory of publishing is great: the publisher expertly handles every aspect of publishing the book, leaving the author to worry about nothing but writing it.

Joe: It’s a great theory. But how often does it work in practice?

Barry: Rarely, but not never.

Joe: We have a word for that. It’s called, “lottery.”

Barry: Hah. That’s actually another good framework for understanding some of the dynamics of a legacy deal.

Joe: If you’re willing to gamble, it’s something you can try, and something that occasionally pays off. But again, we both know scores of authors. How many have been dropped by their publishers? Lots. How many have even earned out their advances? Few.

Barry: Well, when you’re buying a lottery ticket, you can’t just consider the payout. You have to consider the cost of the ticket. Speaking of which, would you sign a two-million-dollar/four-book deal?

Joe: I wouldn’t even be tempted by it. I’ve worked with legacy publishers for over eight years, and I’ve proven I can do better on my own. Even if I never become a millionaire, the amount of fun I’m having right now, and the freedom and control I have over my career, have tremendous value to me, value I wouldn’t give up for $500,000+ per book. I’d also hate to be locked into a contract spanning several years, considering the state of flux the industry is in.

Barry: Agreed. A long deal is scary right now.

Joe: Right. I certainly wouldn’t sign a four-book deal, with the last book being released, when? In 2016?

Will there be any bookstores left in 2016? Those reading this might be saying “Of course there will be, dummy!” But what if I said, back in 2006, “Will Borders declare bankruptcy and B&N’s stock reach an all time low?” Would anyone have agreed?

Barry: I wouldn’t have. I was in the middle of the 350-bookstore Last Assassin tour just then.

Joe: If bookstores do take a nosedive, and there’s no clause in Amanda’s contract guaranteeing her a minimum print run, then she was paid a lot of money to have someone publish her ebooks and sell them for $12.99. Methinks she’d sell more, and earn more, at $2.99. Without the ideal benefits of print, this isn’t a good deal. But she’s gambling it will be ideal, and she can afford to take this risk.

As it stands, I’ve been paid over $250k for my print deals, and these books are still in print and selling. But the last time I crunched numbers, six months ago, I realized I could be earning about $150k more, per year, if I had those rights back. When I check my latest royalty statements, I’m going to have to make sure I have the antacids ready, because I’m sure that number has gotten much bigger.

All that said, I think I understand Amanda’s reasons for taking the deal, and here’s hoping it works for her the way it could. She’s smart and talented and an inspiration to scores of authors, and hers is a true success story. I’d really like her to sell like crazy, even better than she already is.

Barry: Agreed. Now, let’s talk about you. What’s your price?

Joe: Well, if I were offered two million for a single book, I’d take it. But I think a likelier scenario is for the Big 6 to pool together two million and hire an assassin to gun me down. (I wonder how many people in the legacy publishing industry nodded their heads and smiled when they read that.)

What’s your price? Obviously not $250k...

Barry: I’m not sure. Jason asked me this in the Beast interview, and I’ll quote my answer here:

What’s that Winston Churchill line? “We’ve already established what you are, madam; now we are merely negotiating a price.” So sure, there’s always going to be a number—after all, legacy or indie, publishing is a business for me, not an ideology. I don’t know what figure would have done the trick; I never gave it much thought because it wasn’t really relevant. But it would have had to be a good deal more than I expect I’ll be able to make myself over the course of say, ten years (present value of money vs. long-term value). It also would have had to be enough to act as an insurance policy against legacy publisher ineptitude; to be worth giving up the joy and excitement of finally being in charge of all the aspects of publishing I’ve always wanted to be in charge of; and to offset the discomfort of being part of a system that I think is fundamentally flawed and that in many ways has become punitive both to writers and readers.

Joe: You haven’t answered the question.

Barry: I guess you’re right, but only because I just don’t know for sure. You have a lot of data and experience with indie that so far I lack. But I will say this. Whatever my price might be today? A year from now, I’m betting it’ll be a lot higher.

Joe: That’s fair. My data is your data, though. I’ve been open with revealing numbers since I started down this path, because I knew the best way to convince others was with dollars and sales figures.

Barry: A lot of writers owe you for that. Legacy publishers, not so much.

Joe: I get thanked a lot, and it’s fun to see writers who read my blog end up selling well, but no one owes me anything. I’m happy to share information that can make writers money, but seeing information and acting upon it are two different things.

Barry: Guess you’ll be turning down free drinks in bars, then.

Joe: Those I always take. It would be rude not to.

Barry: There’s one more important difference between my move and Amanda’s that I think is worth considering. Depending on the format they choose, St. Martin’s will be pricing Amanda’s books at somewhere between three times and as much as fifteen times what’s she’s been charging (higher self-published price of $2.99 vs an $8.99 paperback, or lowest self-published price of $0.99 vs a steeply discounted hardback rate of $15.00, or something in between). I know what I can sell in digital at $9.99 and at a minimum I’m cutting that price in half. It’s not yet known what Amanda can sell at legacy price points. I think this price delta presents a challenge, but not an insurmountable one, and again, if the new deal effectively creates legions of new fans for Amanda’s self-published works--especially fans willing to pay, and used to paying, legacy prices--it could work out well for everyone involved.

WHAT ABOUT THE GLUT OF SELF-PUBLISHED BOOKS? HOW WILL ANYONE KNOW WHICH ARE GOOD?

Barry: The best way to answer this question is to ask, what are people doing about the glut today? I mean, assuming book buyers don’t personally sample each of the 150,000+ titles published every year, how are they cutting through the clutter?

Joe: We have no problem at all surfing through YouTube to find something interesting to watch (like monkey-frog love), or doing the same on cable with 300 channel choices.

As I’ve said many times, readers are good at being the gatekeepers. They can separate wheat from chaff, and then help others do the same with reviews, lists, recommendations, and word of mouth.

Barry: Actually, there’s something I want to tease out from those two thoughts. Agreed that people use YouTube just fine without anyone fulfilling a gatekeeper function, so we know consumers don’t need a gatekeeper. What they do need is a way of narrowing the available choices down to a manageable amount from which they can make individual decisions. A gatekeeper, like a legacy publisher, is one way of doing that, although “narrowing” is a strong word to use when the result is 150,000+ choices a year. But “gatekeeping” is a way. It’s not the only way.

Joe: I’d also argue that gatekeeping isn’t the best way. I’ve made $17,500 in 12 days on a book the gatekeepers rejected 12 years ago. Apparently they aren’t always accurate in predicting what people want to read.

Barry: That is insane. And no doubt, the gatekeepers make plenty of mistakes. My point wasn’t about the quality of their gatekeeping so much as it was about the narrowing effect of the gatekeeping. In other words, the gatekeeper can make qualitatively terrible decisions, and still narrow the range of consumer choices. Of course, not in a way that’s necessarily good for the consumer.

Joe: Or for the writer. Though now I’m very grateful I had many early books rejected.

Barry: Yeah, you dodged a bullet on that one. Fate is a strange thing.

Anyway, what YouTube proves is that when you remove the formal gatekeeper, other means of helping consumers decide get introduced. Crowdsourcing, for example. For anyone who doesn’t understand what I mean here, just ask yourself this. If you’ve ever seen something you particularly enjoyed on YouTube, did you select it after first reviewing everything else posted on YouTube? Or did you rely on something else to narrow the choice for you? If the latter, then you know from your own experience that there are ways other than having a traditional gatekeeper to effectively narrow a glut of information.

Joe: Yes, part of the problem here, once again, is that people are conflating a function with the entity currently providing it, in this case assuming that there’s no way help the consumer decide other than a legacy gatekeeper. But right now there are close to a million ebooks on Kindle, yet new bestsellers are being discovered all the time. Cream can and does rise to the top. Especially in a situation where an ebook lasts forever. That’s a long time to find an audience.

Barry: This is another of those weird issues where people are frightened of some “change” being caused by digital and blind to the fact that the “change” exists already in the analogue world. Movies, restaurants, books, music, hotels... any time there’s too much product for the average consumer to be able sample a meaningful amount before deciding, players will arise to winnow the choices and help the consumer decide. I mean, even after publishers have done their gatekeeping job, who has ever walked into a bookstore and sampled every book available before buying the one she thought seemed best? It’s never happened and never will happen. Anytime there’s a glut, players and systems arise to help consumers choose. In fact, the more of a glut, the greater the opportunity for such players. This is one way in which digital is utterly like everything that’s come before it.

Joe: If you build it, folks will organize and categorize it. Google, anyone?

Barry: That is the best example yet. Of course: oh noes, what are we going to do with the information glut?! And God, with thousands of new blogs going up every day, how will anyone be able to find the good ones? Look, if the need is great, there will be many solutions. No one’s going to be left to just sit there stupefied in the face of expanded digital choice.

BUT DON’T YOU NEED AN EDITOR?

Barry: Actually, while we’re on the subject of misconceptions about the unique challenges of digital, let me address one of the FAQs I’ve noticed since we posted our long conversation. A lot of people have been asking, “Well, don’t you need an editor?” Look, of course I need an editor, as does every writer. But there are lots of ways of getting an editor without involving a legacy publisher in the process. Likewise every other still-critical function involved in turning manuscripts into books that get read. These functions have traditionally been fulfilled by publishers, but in the digital age, they will be fulfilled by other players more efficiently.

Joe: And less expensively.

Barry: One other way of thinking about it: unless a publisher has a comparative advantage in editing--that is, unless a publisher can offer editing more cost-effectively than another player can--over time, other players will assume this function and displace legacy publishers in the process. What’s prevented this displacement so far is the legacy publishing’s quasi-monopoly, built on paper distribution, which we discuss in more detail in the previous conversation. As for who the new players will be, we get into that a bit below.

Joe: I’m going to make myself a target and say that not every book written by every author requires extensive editing. The last four legacy books I turned in required minimal editing, and in many cases, those were lateral changes. "Lateral" meaning they made something different, but not necessarily better.

Barry: No doubt, different writers need different amounts and different kinds of editing.

Joe: I’ve written twenty-five novels and hundreds of short stories. I don’t require an editor to hold my hand and walk me through narrative structure, or tell me that my character isn’t dynamic, or that a scene is unnecessary.

Barry: Yeah, I can do all that for you just fine.

Joe: Heh. And I don’t have to pay you anything, other than scotch.

Barry: Your scotch is worth it. Plus, you return the favor.

Joe: When we vet each other’s manuscripts, we’re brutal with our criticism, and often tweak things accordingly. But even then, I don’t think either of us has ever found some gaping plot hole or glaring error in each other’s story.

I’m not saying books don’t benefit from editing, or that writers can fully edit themselves. Far from it. But I am saying that the value an editor provides is dependant on that particular book, and that particular editor. We’ve all read legacy published books where we wonder how the editor missed something vital, and I’ve read dozens of manuscripts by my peers and offered my critiques, and then watched these books get published with very little additional edits.

And no matter how good the editor is, is she worth paying 52.5% royalties forever? Especially when you’re only making 14.9%?

ISN’T PIRACY SCARY FOR INDIES?

Joe: While we’re on the topic of things that have always existed but are being treated as though they’re unique in digital, let’s touch on piracy. Actually, this one is unique to digital, or at least especially a concern with digital, but I’ve noticed a lot of people asking, “Aren’t you indie authors especially afraid of piracy?”

As I’ve said more times than I can count, the only way to combat piracy is through cost and convenience.

Barry: You can’t ever prevent it entirely, any more than a brick and mortar store can entirely prevent shoplifting. The point isn’t to prevent it entirely, but rather to reduce it to a level where it’s not materially hurting your business. Similarly, people who talk about eliminating terrorism are deranged--you might as well talk about eliminating murder or some other type of crime. Elimination would be impossible unless you wanted to live in North Korea (where terrorism isn’t so much eliminated as it is monopolized by the state). The point is to reduce the threat of terrorism to levels at which it poses no threat to our way of life. Same for drugs: the goal of any sane policy is not eradication, but rather usage levels that don’t have a materially adverse impact on society.

Joe: I knew we wouldn’t get through this without at least one political aside.

Barry: Hey, we’re just getting started.

Joe: Anyway, the only way to make piracy less of a concern is through cost and convenience. Piracy is less attractive for a $2.99 book than it is for one that costs more than four times that amount. So what legacy publishers are doing today is incentivizing new pirates, while indies incentivize people to pay authors a fair price.

Barry: The other thing about piracy is, people often assume a pirated book is a lost sale. That’s only true if the pirate would have bought the book if he couldn’t have pirated it. If not, the author lost nothing, and might even have gained on word of mouth. Overall, I think fears of piracy are greatly exaggerated, and in any event are much more of a concern for someone who wants to extract $12.99 for a book than for someone who plans on charging a third of that.

Joe: There has yet to be a convincing, unbiased study on piracy that conclusively shows it harms the artist being pirated. My own personal experience, in both seeing my books pirated and allowing them to be pirated, is that piracy hasn’t prevented me from selling the 3000 a day I’m currently selling.

Barry: But, playing devil’s advocate, might it not be 4000 a day if your books weren’t on all of those torrent sites?

Joe: My books have been on those torrent sites for years. And yet my sales are steadily increasing, month-by-month. While that is hardly conclusive, and we can’t go to an alternate no-pirate universe and compare my sales there to my sales here, I think sales growth is a pretty effective argument against piracy being harmful.

In fact, when I encouraged people to steal from me, my sales increased 600%.

Barry: I want to try that. “Okay, everyone: steal from Joe.”

Joe: Laws that try to prevent people from doing things they want to do just don’t work. The so called individual liberty laws, like drug use, seatbelts, sodomy...

Barry: Frog sodomy?

Joe: An especially anus crime.

Barry: Ugh.

Joe: Anyway, laws against those things have done little if anything to stop folks.

Piracy is something people want to do. Hell, we all do it, to some degree. If you lend a book to your mother, she read it without compensating the artists.

Barry: But you bought the book. The artist was compensated for that.

Joe: I could also buy the download, share it with Mom. We can play percentages all day, and it’s the argument of the beard.

How many hairs does it take to make a beard? If you agree on 3456 hairs, does that mean 3455 isn’t a beard? How about 3454?

If you buy a paper book and loan it to thirty people, how is it different than than posting it online and having 30 people download it?

But that isn’t the point I’m making. The point is that people want to be able to share media. It’s human nature, and an essential part of how we communicate.

You cannot effectively enforce laws that go against human nature. Education and eradication don’t work (War on Drugs, anyone?). Suing pirates, like the RIAA did, was a public relations nightmare that created better, smarter pirates.

Barry: Those scare tactics didn’t seem to do much to curtail piracy, but it made a lot of people despise the RIAA. Just like marijuana eradication efforts resulted in more potent pot.

Joe: It’s impossible to effectively police copyright in a digital world. So rather than fight it, make your work available easily and inexpensively, and I’m betting you won’t be bothered by it.

Barry: I don’t have your experience, but I’m persuaded by your arguments.

Joe: For an excellent open letter about piracy to Scott Turow, the current president of the Authors Guild, read this terrific piece.

YOUR NEGRO BASEBALL LEAGUE ANALOGY WAS OUTRAGEOUS

Joe: In discussing the New York Times insistence that only legacy-published authors can qualify as NYT bestsellers while indie authors, regardless of sales, won’t be counted, we made an analogy to the Negro Baseball League. We claimed that just as segregated baseball was doomed because it became so nakedly absurd to segregate black players who were obviously as least as talented as those in the whites-only league, the Times’ attempt to keep indie authors in a separate and lesser category was also doomed to fail.

Now, Mike Shatzkin and some others have pointed out that our analogy wasn’t historically sound because what really doomed segregated baseball was economics and competition--eventually, white teams couldn’t resist hiring the talent they saw in the negro leagues. We’re not historians, and Mike and the others who have made this point could certainly be correct, in which case our analogy wasn’t quite right. Fair enough. But the underlying point, it seems to me, is still valid: in both cases, you have an establishment attempting to segregate and marginalize talent it finds threatening. And in both cases, the attempt is an obvious farce and doomed to failure. That’s all we meant.

Still, some people got pretty pissed, claiming that we were suggesting the Times’ treatment of indie authors is as bad as racism.

Barry: So we just want to say what we think should be obvious: we didn’t claim, nor do we believe, that excluding bestselling authors from a bestseller list is racism. Or that indie authors who are being excluded this way are suffering the way minorities suffer from racism. I can understand sensitivity to anything that might trivialize the evils of racism (for the same reason, I loathe the promiscuous use of words like Nazi and fascist). But there’s no denying that some of the underlying dynamics in a racist system can be found in other systems, too. Analogies are intended to tease out those dynamics, and that’s all. If we’d intended to be literal, we would have just said, “The New York Times’ treatment of indie authors is racism.” Which would be a strange and unsupportable claim.

Joe: In other words, the analogy was limited, not literal. If anyone missed that and was offended as result, we hope this clears up the misunderstanding.

AREN’T YOU GUYS FORGETTING HOW MUCH YOU GIVE UP ON THE PAPER SIDE WHEN YOU GO INDIE?

Joe: Mike Shatzkin said: “They didn’t do the math on what the loss of print sales and print merchandising might mean in dollars and cents and how to address it.”

While we didn’t give it a lot of space, I believe we did address this issue. I’m on track to earn more for my self-pubbed print novels than I earned on my first legacy published book, Whiskey Sour. I’m not ignoring print. In fact, I’ll earn about $40k on print just this year.

Also, if a book is only available as an ebook, I mentioned that doesn’t automatically mean the loss of a sale (similar logical fallacy as for piracy). Someone who would have bought the print version could very well wind up buying the ebook version instead. Let’s say a book will sell 100 copies of print and ebooks combined. If we take away the print version, there’s a chance it could still sell close to 100 copies, all of them ebooks. So I think the loss Mike speaks of might be smaller than he thinks.

Barry: In making my decision, I actually assumed I would sell no paper at all on my own and that none of my paper readers would follow me over to low-priced digital. I agree with you that this assumption is mistaken and contradicted by available evidence, but I wanted to be conservative in how long it might take me to beat the contract. The main thing for me was, “Can I make more in a pure digital self-published environment that I could make in a mixed digital/paper legacy environment?” If the answer is yes, it’s not that important to me how much paper vs digital I was selling before.

Joe: I have to say on this topic that the two anonymous comments made in the Publishers Marketplace coverage of your defection irritated me. The “senior publishing executive” said: “He’ll have to sell a hell of a lot more copies than he has ever before.” But that’s exactly backward--actually you can sell fewer books, and you’ll make more money, because you’re getting a much higher royalty on your own.

I hope this senior publishing executive isn’t in charge of accounting, because he/she apparently has no conception of numbers.

Barry: Yes, that was not a great moment in the history of anonymously sourced senior publishing professionals.

Joe: The other anonymous comment was: “Nielsen Bookscan figures show Eisler’s print book sales, which have always been driven by mass market editions, declining steadily from book to book.”

Well, duh. ALL print sales have been declining over the last few years. But apparently they weren’t declining to the point where a publisher didn’t want to give you half a million dollars. Also, your mass market edition for your last book isn’t even out, so there are no Nielsen Bookscan figures yet.

Barry: For what it’s worth, what’s actually going on with my paper sales is, they increased steadily over the course of the first six books, then dropped dramatically for the two books I did with Ballantine (though Fault Line and Inside Out still did well enough to land me on the extended NYT list).

Joe: But it doesn’t matter whether your paper numbers were going up or down or whatever--your move is to digital, so you really have to wonder what the second person was trying to accomplish by leaving digital out. “NYT Bestselling Author Leaves Legacy Publishing For Digital Self-Publishing,” and this person didn’t think what’s been happening for you in digital was even worth mentioning? It’s the only thing worth mentioning! Or at least, certainly more relevant than the format you’re leaving behind.

Barry: Yeah, what the second anonymous person forgot to mention, or didn’t realize was critical to the discussion, is what’s been happening for me in digital sales. Which is: my digital numbers have been exploding. Digital has become an increasingly large part of my overall sales, and at one point was responsible for 50% of sales of Inside Out. And that was at a punitive $9.99 price point.

Joe: Whether intentional or not, the way the information on your paper sales was presented was misleading. It was a way of suggesting you weren’t making it in legacy publishing and had no choice but to go it alone.

Barry: Which is doubly funny, since the other soundbite I’ve been encountering is that the only reason I can make this move is because legacy publishers have already built me a huge audience, giving me the luxury to go it alone. I guess it could be one or the other, but probably not both.

Joe: It’s neither. But people need to be able to pigeonhole you, and come up with excuses for what you’re doing. That way they won’t blame themselves for their own inaction in regard to similar choices they might make.

Barry: We already talked about the way anyone who presents a threat to an established order will be subject to attempts at marginalization by that establishment. So the kind of anonymous comments featured in the Publishers Marketplace piece were fairly predictable. In law, they teach you that if you can win on the law, argue the law. If you can’t win on the law, argue the facts. If you can’t win on the facts, argue policy. And if you can’t win on policy, attack the credibility of the witness.

Decisions like mine--and there will be more and more of them--represent a threat to various entrenched interests. It’s only natural that those interests would fight back by attempting to discredit me. Which is normal, predictable, and even comforting, in a “first they ignore you, then they laugh at you, then they fight you, then you win” way. But there is one thing here that does bug me, and I want to mention it.

Joe: If you’re quoting Gandhi, I didn’t think anything could bug you.

WHICH LEADS TO THE “SHAME ON PUBLISHERS MARKETPLACE” HEADING, TO MAKE THIS SECTION EASIER FOR PUBLISHERS MARKETPLACE TO FIND

Barry: Just this one thing. One of the most destructive, pernicious, slovenly aspects of modern journalism is the promiscuous use of anonymous quotes. Most news consumers are so inured to references to anonymous sources that they don’t even notice them. And though newspapers like the New York Times and Washington Post have strict rules about the use of anonymous sources, they routinely ignore them--ignore their own rules.

Here’s the thing. The only time a journalist is justified in using an anonymous source for a quote is when that source is a whistleblower or otherwise faces a legitimate fear of retaliation if her or his identity is revealed. That’s it. That’s the only circumstance. Anything else is at best lazy and more likely corrupt. So while I don’t really care that what the two anonymous Publishers Marketplace sources said was silly, wrong, and misleading, or that the two people who asked for anonymity are cowards, I do care a lot that Publishers Marketplace would offer the individuals in question the protection of anonymity. Were these individuals afraid I would retaliate or something? Smite them with one of my all-powerful indie author thunderbolts?

Joe: More likely they were afraid to look stupid by saying stupid things.

I allow anonymous commenting on my blog, because every so often an industry professional chimes in and wouldn’t want it known by their corporate masters they were either conversing with the enemy, or agreeing with the enemy.

Even then, anonymous posts carry much less weight than those signed with an identity, and they lose a lot of whatever effectiveness they might have had if the person had manned up and owned his own comments.

Barry: The main thing, though, is that when a journalist asks someone for a quote, gives someone the opportunity to be quoted in an article, there needs to be a damn good reason for offering that person anonymity. If the person insists on anonymity in the absence of that damn good reason, a good journalist will quote someone else.

Seriously, I would really like Publishers Marketplace to answer these questions in public:

Publishers Marketplace, why did you offer anonymity in your piece? Do you think this sort of anonymously-sourced journalism promotes accountability, encourages accuracy, and fosters meaningful discussion? Couldn’t you have found sources who would go on the record with such anodyne stuff? Why didn’t you? Was this a mistake? Is it in keeping with your own journalistic guidelines and consistent with sound journalism generally? If not, what will you do to improve the quality of your practices going forward and ensure your reporters don’t do this sort of thing again?

Joe: You really think they’ll respond to that?

Barry: If they’re good journalists and care about the quality of their product and the trust of their readers, they will. If they’re not and they don’t, they won’t. But I hope anyone who’s reading this--anyone who believes good journalism is vitally important and that bad journalism is pernicious and destructive--will tweet Publishers Marketplace with a link to this piece and tell them we’re calling them out publicly and urging them to do better. @publisherslunch--let ’em know any way you like, or just cut and paste “@barryeisler and @jakonrath call out @publisherslunch for pointless and promiscuous grants of anonymity,” with a link to this discussion wherever you found it. And if you want to learn more about becoming a more active consumer of news and about why we should all call out reporters for shoddy practices, be sure to read Dan Gillmor’s excellent new book, Mediactive.

GO INDIE, OR GO LEGACY? HERE’S THE MATH

Joe: In your Daily Beast interview, you broke down the math in a way a lot of people seem to have found helpful (and in a way those two courageous publishing execs seem not to understand). You should mention it again here for anyone who hasn’t seen it.

Barry: Okay...

Being so accustomed to, and dependent on, the legacy model, it took a fair amount of work for what I knew intellectually to start to penetrate at a gut level. The timelines, for example. I’m used to thinking in terms of publishing contracts, so let’s take a hypothetical two-book, $100,000 offer... or, okay, let’s make it real: a two-book, $500,000 offer. My tendency has been to focus too much on that big, seductive number. But to understand what the number really represents, you have to break it down. Start by taking out your agent’s commission: your $500,000 is now $425,000. Then divide that $425,000 over the anticipated life of the contract, which is three years (execution, first hardback publication, second hardback publication, second paperback publication). That’s about $142,000 a year. This is a more realistic way of looking at that $500,000.

But there’s more. Some people have mistakenly argued that, for my move to make financial sense, I’ll have to earn $142,000 a year for three years. But this is one time when you don’t want to be comparing apples to apples. Because the question isn’t whether I can make $425,000 in three years in self-publishing; the question is what happens regardless of when I hit that number. What happens whenever I hit that point is that I’ll have “beaten” the contract, and then I’ll go on beating it for the rest of my life. If I don’t earn out the legacy contract, the only money I’ll ever see from it is $142,000 per year for three years. Even if I do earn out, I’ll only see 14.9% of each digital sale thereafter. But once I beat the contract in digital, even if it takes longer than three years, I go on earning 70% of each digital sale forever thereafter. And, as my friend Joe Konrath likes to point out, forever is a long time.

Ballantine managed to sell about 10,000 combined digital copies of my last two books at a $9.99 price point (a price point that was earning me $1.49 per unit sold, BTW) in the latest three-month period for which I have data. Call that 5000 of each book for three months, so 1,667 of each book per month. If I cut the Ballantine price in half and still can only move 1,667 units a month, at a $3.50 per unit royalty ($4.99 x 70% = $3.50), that’s about $5,833 per month. But unlike paper books and digital sold at paper prices, low-priced digital books sell steadily, so it seemed to me that I could make about $70,000 per year, per book on my own. Assuming nothing changes and digital doesn’t keep growing (and that would be crazy–Charles Cummings’ critically acclaimed spy thriller The Trinity Six just sold three times as many digital copies as hardback in its first week), I should be able to make $140,000 a year for the two books I could have sold in a $425,000 legacy deal, instead. $70,000 for the first year, then $140,000 for each year thereafter, when I’ll be selling two books instead of just one. So if I’m right about all this, and I’m pretty sure I am, I should be able to beat the contract about halfway through the fourth year. And again, all of that ignores the continued growth of digital, the way low-priced digital books reinforce sales of other such books, etc.

To develop some data to go with the theory, in February I self-published a short story, The Lost Coast, featuring one of my series characters, a very nasty piece of work named Larison. I priced it at $2.99, which is a premium price for a short story, just to see how my writing would do in the new environment and even with the handicap of a relatively high price. It’s been selling steadily and is currently at #1,088 on the Kindle list (and #13 and #17 on Amazon’s short stories bestseller lists, which is good because the top twenty come up in the first page view). It definitely got a boost from the online discussion that followed my announcement, but even before all that it was on track to earn me about $30,000 in a year through Amazon, B&N, and Smashwords—not bad at all for a short story.

There was a lot more, too. Estimates of how much I could reasonably expect my paper sales to grow (they were growing through the first six books, then declined dramatically for the two I did with Ballantine, though still putting me on the extended NYT list). Estimates of how much more digital I could sell on my own (at a much higher per unit royalty, of course), and what not having a legacy partner would cost me in paper sales. All of which might sound like a lot to some writers, but from my first book back in 2002, I’ve always believed the writer has to be an entrepreneur and CEO, too, with all that entails. A few days of careful thought and examination can make or save you a hell of a lot of money, so I think it would be foolish not to invest that time.

Joe: We figured this out in a blog post I did a while ago. It was about you, but I said it was about a female peer who was offered $200,000 per book. I didn’t want to screw up your negotiations, which were ongoing at the time, so I didn’t mention names and changed a few details. It was interesting to see how people reacted.

Barry: I remember that one--a lot of your commenters were saying, “She should just blow off the legacy money and go indie!” And I was thinking, “Easy for you to say!” What I didn’t realize at the time was that, when you really run the numbers, indie becomes an awfully compelling option.

Joe: Exactly. Because, while beating the contract is terrific, it’s once you beat the contract that the real money comes in.

Barry: Speaking of which, literary agent Ted Weinstein put together a very handy spreadsheet that you can use to plug in your own numbers to determine how long it would take you to beat your contract.

Also, if anyone who’s reading this knows how to create a graph comparing the legacy vs indie outcomes and wants to take a crack at it, we’d publicize the hell out of it. It would be great if people had a visual tool for understanding what three years of $142,000 looks like vs $70,000 in year one, then $142,000 for every year thereafter forever. I could draw it easily with a pencil and paper, but something we could link to would be better.

(here's one sent to us by Jack Albrecht)

Joe: In the meantime, here’s a simple way of understanding the difference. If someone offered you a one-time payment of a million dollars today, or $100,000 per year for the rest of your life, which would you take?

Assuming you weren’t faced with an emergency that made you need the million immediately, the only question worth asking would be, how long do I expect to live? And, leaving out questions of time value of money which would affect your decision at the margins, the answer is obvious. If you expect to live another thirty or forty years, you’d be nuts to take that million.

Barry: You know why authors are going to make so much more money in indie?

Joe: They already are.

Barry: More and more of them, I mean. Look, it’s basic math again. A publisher charges $10.00 for a digital book and I get $1.49 out of it. If I charged that same $10.00, I’d get $7.00. On my own, I’m making nearly five times as much per unit. That is huge.

Joe: It’s more than huge. It’s vast.

Barry: But there’s more. I’m not charging $9.99 for a digital book--I’m charging $4.99, and will get $3.50 out of it. By cutting the price in half (or more--again, Ballantine is currently selling Inside Out for $12.99), I should sell more units, all at over twice the per unit amount I was getting from Ballantine.

Joe: In indie, you make money two ways--higher volume, higher per-unit revenue.

Barry: I don’t know of any studies that have been conducted on this, but look, let’s say you go to a department store, where you plan to spend a hundred dollars on clothes. Turns out there’s a sale. Do you spend that same one hundred?

Joe: No. I spend more.

Barry: Exactly. When the consumer perceives better value, the consumer spends more. Now, add in an impulse purchase dynamic--extremely low prices and immediate gratification. Plus intangibility--no paper books to cart around or stack on top of the TBR pile. What you get?

Joe: A shitload of books being bought.

Barry: Yes. A lot of people think that what places a general limit on how many books people buy a year is time. In other words, the average person can only read, I don’t know, a book a month, so the average person will only buy one book a year. Doesn’t matter whether the book costs one dollar or twenty, the limiting factor isn’t price, it’s time.

But this is wrong. Most people have always bought more books than they can read--this is where TBR piles come from. I don’t know what the overage is; maybe 80% of books that get bought get read? Or maybe it’s 50%? I don’t know. But in digital, I’m betting the overage is far more significant--at least 50%, maybe as high as 80%. The prices are so low, the purchases so instant, and there’s no tangible sign of the purchase afterward like a taller TBR pile...

Joe: Last fall, my wife was feeding squirrels. They took all the nuts that she offered--far in excess of anything they’d need to get through the winter.

I’ve seen the same thing with digital books. Hell, I’ve done the same thing. I have over three hundred ebooks on my Kindle. The likelihood of me reading them all is slim. But that hasn’t stopped me from continuing to buy things that look interesting. I’m sure others, like me, can’t pass up a bargain, and there’s some satisfaction knowing that if I want to read that ebook someday, I’ve got a copy of it.

Barry: So with digital, people are buying far more books than they ever did before, and authors are making a far higher per-unit profit than they ever did before. And higher per-unit profit x dramatically increased volume = insane revenues.

Joe: My buddy Blake Crouch is currently earning over $1300 a day on his self-published books, and he’s wondering if that number will hold. I told him that it wouldn’t. It will go up.

Here we have a model that allows writers to reach readers without having to pay intermediaries (legacy publishers) the majority of the royalties. So writers can make more by selling fewer copies, and they can adjust their prices to entice customers.

That’s a big advantage to the writer. Another advantage is this model encourages ebook hoarding by the consumer.

And we haven’t reached a saturation point with ereaders. Even at this accelerated adoption rate, global saturation will take years, if not decades. And as children grow up, there will be a new crop of consumers. In a global marketplace, will I continue to be able to sell a million ebooks a year?

Not only is that possible, it’s likely. And if my sales ever begin to slip, I’ll publish new titles.

Authors who aren’t paying attention to this are going to lose out.

Barry: This is the fundamental choice between legacy and indie today. A lot of people don’t get it yet, but as more and more people make money in indie and the idea becomes more and more proven, more and more people will recognize what they’re giving up with legacy publishing and will go indie instead.

Joe: In the meantime, we’ll be undercutting them on price.

Barry: You weren’t supposed to say that. It’ll create more competition for us.

Joe: Knowing it is one thing. Acting on it is something else. Besides, at lower prices, no one is in competition. Readers can buy all of my ebooks, all of your ebooks, and still have enough change left over from a hundred dollar bill to buy pizza and beer.

Barry: Still, just to be sure, I want to be clear that self-publishing low-priced digital books carries a terrible stigma, and that authors would be much better off--they’d enjoy higher status, greater mental and emotional health, and more active and varied sex lives--by having their books published and priced by legacy publishers.

Joe: The stigma is a heavy burden. It’s certainly not worth some trivial thing like selling far more books at a far higher per-unit amount.

Barry: That’s more like it.

WHO WILL BE THE NEW PLAYERS IN DIGITAL, AND HOW SHOULD AUTHORS PAY THEM?

Joe: Before Barry and I went live with our 13,000 word ebook dialog, we reached out to a few folks we respected and asked for their opinions.

One of those people was writer Dean Wesley Smith. Dean is the bestselling author of over a hundred novels and more short stories than he cares to count. He’s been a publisher and even an editor for Pocket Books. You can find his many opinions about publishing at www.deanwesleysmith.com. He has already posted this section on his terrific blog.

Dean strongly disagreed with one of the points we brought up in the dialog, namely that agents could morph into a model that I call estributors, and take on both agent and publishing duties for a writer in exchange for the same 15%. This would include editing, proofing, creating cover art, formatting, uploading, and ultimately paying authors the same way they've been doing--taking out their commission and passing the check along.

Dean: I hated and I do mean HATED, the part where Joe thinks that agents will start being a form of packager or publisher (he calls them estributors) and taking a percentage.

Everyone who reads my blog knows how I feel about giving a percentage of any kind of your property for day labor. (Like giving the gardener a percentage of your house for trimming a hedge.) I feel that goes back into the area that Kris talked about, the "must be taken care of" aspect of writers’ belief systems.

By the way, there is one major agency already doing this and taking 50%. If you do the math, it turns out the writers would be better served staying in traditional publishing than giving an agent 50%. And this agency is getting tons of stupid writers signing up who think they are jumping onto the indie published movement. They are just leaving one pan for a very stupid and hot fire.

How to avoid this: As Barry said he did with his short story. Pay a day job labor fee to have someone for a set price do the things you don't want to learn how to do yourself, such as covers and launching and so on.

One time fee.

NEVER PAY ANYONE A PERCENTAGE OF YOUR PROPERTY.

Sorry, Joe, I just believe you are wrong on that and it's old thinking you haven't cleared out yet.

If a writer is going to jump to self-publishing, keep all of the seventy percent.

Joe: I like to call old thinking "analog thinking" but I don't think I'm acting analog in this case.

You and I and Barry and your wife (writer Kristine Rusch) are savvy enough to do everything on our own. Editing, formatting, uploading, cover art, proofreading, etc.

But I know a lot of writers, and the ability to run a small business is an entirely different skill set than it takes to be a writer (and once you self-publish, you are the president of a small business.) They simply aren't cut out for it.

So I believe some writers won't mind paying 15% to an estributor who takes care of all of that for them.

In fact, I often think I'd pay that too, just so I could focus entirely on my writing, and not on running a business. I spend a lot of time doing stuff other than writing. If I didn't have to do all of that, I think I could get more writing done, which would offset the cost of paying someone to do all that stuff for me. Plus, I love writing, but don't love stuff like formatting epub files or uploading metadata, so if I could write more but do less of the the business stuff, I think I could make even more money.

I believe agents, and some publishers, will become estributors, allowing writers to write, and managing all the other stuff.

Barry: FWIW, I don't think either Joe or I was arguing that indie writers should pay agents a percentage; we were more predicting how agents will morph their business models and predicting that many writers will find the new model attractive.

You, Joe, and I are probably not great examples because we're do-it-yourself types, but I think a lot of writers will be happy to pay an agent/estributor 15% of the backend in exchange for the agent/estributor taking care of everything but the writing. I’m a do-it-yourself type so I don’t know that I’ll go that route myself, but in theory, I could be enticed.

For example, if Joe decided to quit writing and become an agent/estributor, I'd gladly pay him 15% to handle everything but the writing. He knows digital publishing cold and he’s a marketing genius. Plus he prefers Red Bulls to sleep. The extra writing I'd get done, and the additional product I'd create, would make it a good deal for both of us. So for me, the percentage thing is more a practical problem than a theoretical one, if that makes sense. Regardless, that's just me and I could be wrong.

Dean: My point isn’t that most writers don’t want to be business people. Sadly, most don’t, I agree. Scott Carter (Young adult writer) and I have taught a course to 40 self-sufficient professional writers who want to learn how to do it all themselves. And we’re doing another class this summer and another next fall. Last one was in October and had over 40 professional writers from around the country here on the Oregon Coast. Great fun. We taught them how to do covers, how to layout books, how to launch them, and how to set up a Wordpress web site, all in two days. (grin) They all launched short stories before they left town.

And Cindie Geddes (a nonfiction writer) started a business called Lucky Bat Books where she has a menu of services, all flat fee, to do different tasks for writers. And she is constantly turning down writers who want to give her a percentage. As writers, we are all trained in giving the gardener who trims our hedge 15% of our house. So I’m going to keep pushing writers who don’t want to do it themselves to search for programs where they remain at 70% instead of giving 15% of the 70% away.

So on that one tiny point we’re going to differ on the outcome. But I do agree completely that most writers are not do-it-yourself types like we are. (grin) And most writers are going to need help, no doubt on that at all. We just differ on the type of help they should get. (grin)

One prediction I will make. In thirty years, the long term writers, the survivors, will be writers like the three of us, willing to take the chance, willing to take the responsibility. And those that want traditional publishing to take care of them will be “what-ever-happened-to?” for the most part. That’s a safe bet. (grin)

Joe: Again, you're making some great points, but you haven't persuaded me yet about the 15%.

You told me you and Kris have 900 backlist titles (books, stories, etc.) If you had someone to help you get all 900 of your titles live, with great covers, on all platforms, by the end of the month, you'd easily offset the 15% you'd give that person with massive increased sales across the board.

Every day an ebook isn't live, is a day you aren't earning money. You and Kris are sitting on a ton of property that isn't earning you anything. And if you were to pay a good cover artist, proofreader, and formatter for each title (which would cost over $800 a title), it will cost a fortune to launch all 900 ($720,000), and also take hundreds of hours (hours you could have spent writing), and unless you have super powers (you may) it will take you years to get all of your backlist titles live.

Yes, you're going to be VERY rich. :) But that money could come within a few weeks, rather than a few years, if you had help doing all of the business stuff. And if an estributor, besides covering all of those sunk costs, also did marketing and advertising, I can see how that's worth the same as an agent's commission.

That said, I ultimately do agree with you that giving away a percentage of income forever, in my specific case, probably isn't wise. But I'm not 100% sure of that, because if an estributor saves me so much time I'm able to write more ebooks, then I could ultimately be better off long-term. I spend an awful lot of time doing business stuff when I'd rather be writing.

Dean: Again, not disagreeing with the fact that most writers are not like you and me and Barry. Most are not willing or even capable of learning all this stuff, and don’t want to for limited time reasons. That I agree with completely.

But that does not mean anyone has to give a percentage away of the property. I don’t have the will, the tools, or the time to go out and do yard work, but that does not mean that to get someone to do yard work on my property, I need to give away an ownership right in my home. That kind of thinking is old writing thinking that was forced on us by publishers and the agent model.

So, as I’m going to talk about in my series on Think Like A Publisher, I’m suggesting that writers think like a publisher.

When a publisher needs a cover done, they don’t give away a part of the percentage of the book. They hire one done. If they want to get the book up electronically or get it laid out or get it proofed, they don’t give away a percentage of the profits, they hire it done.

All the things you are talking about are one time “day job” work. (Mike Stackpole’s term.) So my suggestion, and something Kris and I are working toward because of our vast backlist is hiring a “managing editor” as any publisher would do. Why would we ever want to give away 15% of all our future earnings when we can pay someone a simple salary?

But, alas, writers are short of money all the time and it seems logical to give away a percentage to keep out of cash flow binds and get things up quickly. Right? That’s a very good point.

So here is the trade-off in math terms.

To do a cover, layout, and putting the book up maybe ten hours for a day labor job. Longer if also putting it up on POD. So say 15 hours of time total for a professional designer. To go to Lucky Bat Press,( to mention only one of many who are working on menu flat fee rates) that might cost in the neighborhood of $500.00 for the novel for all those services. More with some firms, less with others.

The book over ten years sells 10,000 copies at $4.99 (my price, not yours (grin). 1,000 copies per year or less than 3 per day average.) 10,000 copies x $3.25 = $32,500 x 15% = $4,875.00.

So your are paying $4,875.00 for a $500 job.

Over ten years a book could sell 100,000 copies or more at $4.99. Same math, only now for the $500 job you are paying $48,750.00 for those 15 hours.

Now imagine your grandkids still doing the math and the bookwork on this in 50 years....

And THAT IS NOT COUNTING the time it’s going to take you every month to divide out the 15%, do the math from the 15 different sources of income and send a check or PayPal the money to the person. Every month, or every quarter. And, of course, if you have the person get all the money first, like an agent, then you are back into the “trust me” mode, or Stockholm Syndrome using your terms. And not counting the 1099 tax forms every year you would need to file and so on and so on. To ugly for me to even consider.

Joe: I trust my agent. Her accounting is meticulous and she's as honest as they come. If she became my estributor, that would also mean less work for me. She'd send me her yearly 1099 like she usually does, and I wouldn't have to worry about hiring all of the people I normally do (proofreaders, cover artists, formatters) so taxes would be a lot easier.

Dean: If you give a person 15% to do a cover and such for the life of the product, can you ask them to change the cover for no extra charge every year? Or every six months? And is that in the agreement??? I would think if a person can get a couple hundred grand for a few hours work, they should be forced to work if changes need to be made.

Joe: Yes. That's another advantage to the estribution model. I can't tell you the number of times I've changed covers or descriptions to try and find the one that worked best. I'd much rather let someone else do that tweaking and fine tuning. Plus, there's the general upkeep. If I release a new title, I'd like the first two chapters to be in the back matter of my other titles. That would require new formatting and new descriptions for 30+ ebooks.

It's a time suck. I'd much rather have someone doing that full time. And I wouldn't have to pay the estributor each time, which is great if I'm strapped for cash.

Dean: Here is another solution to the upfront cash flow problem that writers have who don’t want to spend the time to learn how to do it themselves.

Give a percentage, such as 15% up to the $500.00 and then that ends it. That limits all the problems. You still have the problems, but it at least limits them. You still have accounting issues, but they will end shortly.

But that said, imagine a New York publisher trying to work like that. Give the book designer 15% up to a certain fee, give the cover artist 15% up to a certain fee, editor 15% up to a certain fee, and so on. Of course that’s silly.

So I stand by a simple way of solving the problem. Hire it “day job” labor. And learn how to do most of yourself up front until the money flows enough to pay for a managing editor as any publisher does.

Joe: I like that you broke down the numbers, so I'll do the same.

The time I spend tending to my media empire (as my wife and I jokingly call it) is time taken away from writing.

For each book I must:

● Obtain cover art both for ebook and print

● Get the book formatted in various ebook formats and in print

● Write product descriptions, unique to each format

● Upload files to Amazon kdp, PubIt, Smashwords, OverDrive, IndiaNIC, and soon Google Books and possibly Scribd. There will no doubt be others cropping up, Mike Shatzkin [link] talks about some upstarts worth keeping an eye on

● Very often repeat some of these steps when errors or typos are discovered, or to add new excerpts in the back matter

I can safely say that the above require a solid 10-15 hours of work on my part, per project.

In the last 12 months, I've created thirteen original properties. The time to bring all of these to market took between 130 and 195 hours.

I write 750 words an hour. If I had that 130 hours back to write, I could have cranked out an additional 97,000 words.

For me, that's an extra novel, plus a novella and a short story. Three more intellectual properties.

On average, I sell 2000 copies of a novel a month, 1200 of a novella, and 500 of a short story. That's $6575 a month I could have had, for life, because an estributor freed up some time for me.

Let's do the math over ten years, assuming flat sales.

Thirteen properties a year that I upload myself (three novels, five novellas, four short stories) will earn me $31,000 a month, without an estributor. Over ten years, that's $3,720,000.

With an estributor, I'd be able to do sixteen properties a year (four novels, six novellas, five short stories) and earn $37,575 minus the estributor's 15%, which equals $31,938.75. That's $3,832,650 over ten years--over $100k more.

This also doesn't take into account the money I pay to bring a title to market. $500 for cover art, $230 for formatting, $200 for proofing. That's over $12,000 in costs I've had to pay by doing it myself, where an estributor would absorb those costs.

And I can't tell you how much I dislike the business aspect of self-pubbing. I'd much rather write the books, let someone else do all the busy work. That's worth a lot to me.

Plus, if the estributor continues to market and promote my work, that's an added, continuous value that goes beyond the initial set-up costs.

Dean: Joe, I also agree with your math. I am not arguing that writers could use the help. Not in the slightest. I think most could, and from the looks of some of the early covers I did on some short stories, I could have used a ton of help as well. (grin)

And trust me, I too would rather be writing than doing publishing work. I enjoy the publishing work, honestly, and always have, but I enjoy writing more, to be honest. So no argument there at all.

What I am arguing against is giving a percentage for the life of the work.

Or in other words: How You Hire the Employee.

I am arguing against what I call “a forever percentage.”

If a writer doesn’t have the upfront money to pay for contract help, they might need to give a percentage to get the professional help with covers and such. I understand that. But unlike an agent, just give a percentage for a set time.

For example: If it takes the 15 hours at $20.00 per hour to get a project launched, that’s $300.00 worth of labor. One time labor. Day Job Labor.

So either pay the person the $300 up front or pay them the 15% up to $500.00 and then cut off the payment at that $500.00 amount. That returns you to the full 70% you have been talking about.

The point I am worried about is the life plus 70 years nature of this medium. Sure, this might not last for three years, I got that, but just in case the work going up now lasts for much, much longer, how many years do you want to do 1099 tax documents to the person you are paying the 15%?

Or ten years from now, when you total up your sales and you have paid a person who worked 15 hours ten years before over $50,000.00, and you are still paying, won’t you be in the slightest bit upset? I know I sure would be.

So that’s my point. It’s fine to get work up quickly. But pay for day labor help as day labor help. And if you have no money to pay for the help up front, give them extra as a percentage, but cap the end point.

I’m just getting writers to get out of the “agent-think” mode and think like a publisher. No issue with getting help on problems and craft issues and getting more time to write. Just pay for it like a publisher, not a writer.

And one more point...

The accounting on this is just off the charts. I know I want all my money first and then I pay an employee (unlike the agent model used now, where an agent gets all the money and all the paperwork first, then you have to trust them to send you your share).

So with help like you are talking about, I would be paying an accountant more than I already pay one and sending out 1099s every year to each person who I gave a percentage to. And then after I die, the poor people who get my estate would have to do that as well. Ughh. That one fact alone would stop me from doing as you suggest.

But am I hiring help with our self-publishing? Yup, worked for an hour today with an artist who is doing covers for us. We had the Grayson covers done by a professional graphic designer. We have the Fey covers being done by a fantastic artist out of Germany. We have hired some proof readers for the novels. And down the road we have lined up a managing editor we will put on salary.

So, yes, I agree writers need help. I need help as my wife and friends will tell you. (grin)

I am only arguing against the 15% for life thinking that writers have gotten into because of agents. Nothing more.

Barry: I think the argument here is narrower than it appears. We all agree that it would be useful to have a business manager or COO to handle all the aspects of self-publishing other than the writing itself. The question is how useful, and at what price. Different people will have different answers to that question, depending on how much they like a do-it-yourself approach, what the COO has to offer, etc.

In my experience with service professions--lawyers, accountants, literary agents, PR people, etc.--40% are incompetent, 40% are competent, 16% are excellent, and 4% are magicians. The magicians are rare and hard to find. But in exchange for the right range of services, I think they’ll be able to justify a 15% cut of an indie author’s earnings. The rest will be overcharging.

Which is where I think the gardener-type analogies start to show their limitations. First, because the condition of your lawn is unlikely to have a material impact on the selling price of your house; second, because cutting grass is a pretty fungible skill set and easy to hire out to a variety of people who want the work in exchange for a flat fee. The right (or wrong) business partner, on the other hand, has a much more significant impact on your overall fortunes, and might be someone worth motivating by making him a partner rather than simply an employee.

Anyway, fundamentally, I think we’re all just saying that an author shouldn’t pay more than necessary. If you can get the job done for a flat fee, go for it. But if you find a magician, and maybe even someone who’s “merely” excellent, you might make more money paying that 15% than you would have through some other arrangement.

Joe: Agreed. Perhaps a better analogy is you give 15% to the gardener for the sale of a house, but the gardener continues to work there for life.

In the estributor case, there is added value that would be more difficult and expensive to do on my own.

Say an estributor has forty clients who work in the same genre as I do. She could do excerpt exchanges, and promote both my backlist and frontlist titles in their ebooks. She could also set up a hub, like Goodreads, where readers visit to interact with each other and authors. Such a hub would have user-aggregated content, both from fans and from writers. Chats, forums, contests, freebies, excerpts, updates, mailing lists, newsletters, catalogs. It would be a destination, and get more hits than my current hubs (Facebook, website, blog) because the estributor has me on that site, plus other authors, all with the latest information about what is being released next. I haven't updated my website in forever. I haven't had time.

A person who you constantly hire to help you has a name: a full-time employee.

What is the difference between hiring a fulltime employee (who you will need forever) or paying someone 15% forever?

But there are more duties an estributor could perform. What if, out of that 15% we paid the estributor, 3% went back into marketing and advertising? Print and radio ads, Facebook and Google ads, promoting my books.

Take it a step farther. What if the estributor also served as a publicist? Doing press releases, securing reviews, getting the author interviews and media attention.

Is that worth 15% yet?

I'm with you that a writer shouldn't pay commission on sunk costs forever. But if there were ongoing duties the estributor performed--like that lifetime gardener--then I not only have more time to write, but I'll likely sell more books because of that extra effort.And it goes without saying that the estributor would also be constantly looking for new venues to sell rights; foreign, translation, audio, film, enhanced mutlimedia, etc.

Take it one more step re: adding value. There's a concern that the ebook market will become glutted with poorly written crap. A savvy estributor, who only releases edited, formatted, polished material, could very well become a brand label. Much like a publishing imprint. A book released by ESTRIBUTOR X could have a logo which automatically signifies to readers that this ebook has been vetted and is quality. I believe, in the upcoming years, such a stamp of approval could become very valuable. It has been in the past (people would buy all Arkham, Gold Medal men's adventure, or even more recently all Leisure horror titles without caring who the author is, because they knew they'd be getting a certain kind of book.)

Plus, there are probably things an estributor could do for me that I haven't even thought of. Such as help me create enhanced interactive multimedia ebooks.

Guess what? Most publishing contracts drawn up before 2010 give interactive multimedia rights to the author.

Think about the importance of this. My legacy publishers, which have my backlist titles and will likely never give them up, are keeping 52.5% of the royalties on ebook prices they set.

But if I released an interactive multimedia version of those titles (I have specific ideas about the content, but am staying hush hush for now until I work things out), I could release an enhanced version Of Whiskey Sour or Afraid or Timecaster for a lower price than my publisher's bare-bones version.

Of course, that would require a lot of extra work on my part. Audio recording, interactive games, links that lead readers to specific websites, footnotes and annotation, artwork, and perhaps even added video.

If I had an estributor do this for me, I'd pay them 15% in a heartbeat.

I'm fine with paying my agent for the work she does. If she took on estributor responsibilities as I've outlined above, I believe she would be adding a great deal of value to our relationship, by saving me time and money, and selling more books than I could on my own. I think, in the business model I've described, that's worth 15%.

Dean: Joe, you make some great points, and I hope to have good help working for us doing exactly as you describe. Only difference is that I will be paying the person a salary instead of 15% of the 700 plus products Kris and I will have in the next year.

And when the person goes south or flips out or becomes impossible to work with, I can fire them and find someone better, a top person as Barry said, a new miracle worker for whatever is happening in five years.

So our only difference is that forever is too long for me to give anyone part of my work. I need and will hire the help, and might give short-term limited percentages. But the idea of giving someone 15% forever just does not make good business sense to me and is a toss-back to bad publishing practices.

And that one place is just about the only place we are disagreeing.

But great fun talking about it. Thanks, Joe! Thanks, Barry!

A FEW MISCONCEPTIONS

Joe: Any misconceptions you’ve noticed following your announcement that you want to clear up?

Barry: Just one, really. I’ve noticed a few people suggesting that, in making my decision, I broke a contract. I want to address that mischaracterization for two reasons: first, because if it were true it would reflect poorly on my integrity; second, because it obscures an important aspect not just of legacy publishing, but of business generally.

First, all St. Martin’s and I had agreed on was high-level potential deal terms: price, number of books, territory. Three months then went by before SMP produced a draft contract (not uncommon in the industry). I reviewed the draft and recognized it wasn’t something it would be in my best interests to sign. As I’ve said before, this had nothing to do with SMP in particular; the terms of their contract were not so different from terms publishers try to include generally. Anyway, we then discussed ways of making the contract mutually acceptable and weren’t able to agree on anything, and at that point I walked. There was no contract and no contract was broken.

Second, and more importantly, I’ve always hated the mistaken notion that when two parties shake hands on high-level potential deal terms, they now have a deal. This is what publishers want authors to believe, because the longer the gap between the handshake “de facto” contract and the execution of the real thing, the longer the publisher can keep the advance money in the bank, where it earns the publisher interest. Similarly, when a writer shakes hands on high-level potential deal points in a potential film deal, the first thing the party trying to acquire the option does is start shopping the rights, and the last thing he does is pay for the rights. The longer he can stretch the gap between the first event and the last, the longer he can shop your book around and determine market interest. Then, if interest is wanting, he’ll walk away. If he finds an interested party, he’s still maintained his flexibility, and earned interest on his money, for as long as possible.

So it’s important to recognize that when the other party to a potential deal is getting back to you slowly, or drafting or revising paperwork slowly, or doing anything else that slows down the pace of turning a handshake into a legally enforceable contract, he is doing so at his risk, not yours. And doesn’t that make sense? If the reward for slowness is his, the risk should be, too. And if you let the other party make you feel like once you’ve shaken hands, you can’t walk no matter what he presents to you and no matter how long it takes him to present it, you’re being a chump.

My attitude is: okay, we’ve shaken hands on the high-level potential deal terms, but there’s nothing real here until we’ve both signed, so if you want to bind me, you better strike while the iron is hot. Get me the paperwork. Revise it quickly. Act efficiently. And then we’ll have a deal.

Why is this important? Well, consider the opposite attitude: “Hey, take as long as you like to get me the paperwork, I’m sure we’ll get this thing signed eventually, and I know how busy you are. And I’ll wait around no matter what.” People respond to incentives, and if they already have a built-in incentive to move slowly and you don’t give them one to move fast, the best you can hope for is that eventually you’ll get something signed and that in the meantime you’ll have given them a de facto interest-free loan of money that, with proper incentives, they would have paid you in a timely fashion.

Joe: All this coverage, and just the one misunderstanding? I think that’s pretty impressive.

Barry: Yeah, I thought the online conversation, or at least those parts I was able to keep up with, was really smart. Even comments I disagreed with tended to illuminate the underlying dynamics of legacy vs indie.

Joe: Agreed.

Barry: Ah, one other thing, because a lot of people asked. It’s too early to give details, but The Detachment will be available in paper, in audio, and in foreign editions.

How about you. Last thoughts? Until next time, anyway?

Joe: Just this. For some reason, some people seem to think we’re insisting that print books will be wiped out by digital. I’d like to go on record saying that while I believe digital will become the most popular format for reading, print isn’t going to go away.

Barry: Yeah, we discussed this at length in the previous conversation. The one thing that would improve the Internet most would be if people were forced to read things before discussing them.

Joe: This is not about the end of the paper book. It’s about authors taking advantage of a new technology and distribution system that enables us to make higher royalties and reach readers without publishers.

I’d also like to reference the monkey and the frog video (speaking of which, here is an entirely different monkey doing the same thing--is this an epidemic?)

Barry: I think it’s a different monkey. But is it the same frog?

Joe: God, I hope not. I thought that frog was having a rough time of it already.

Actually, we can apply this apparently widespread monkey behavior (here’s another) to the publishing industry. To wit: if you’re going to be one of these two animals, don’t be the frog. Better to be the monkey.

Especially if there are other monkeys around.

Barry: I always knew there was some relevance to our mention of the monkey and the frog. I’m glad you figured out what it was.

Joe: Yes. You were eerily prescient.

Barry: Prescient meaning fixated.

Joe: Now, I’m not saying you should start taking unfair advantage of helpless amphibians. But if one party has to be the monkey and the other has to be the frog... be the monkey.

Barry: Be the monkey. Words to live by.

Joe: The balance of power has shifted. Act accordingly. And don’t do anything to marginalize yourself, like this monkey is doing. (A behavior that also seems to be surprisingly common.)

Barry: I really hope not too many people clicked on those links.

Joe: If there’s one thing you’d like writers to take away after reading this follow-up dialog...

Barry: Other than don’t take your children to the zoo?

Joe: ...what should it be? Mine is: think hard before you make your next move in this industry, because it is going to affect you for quite some time, good or bad.

Barry: I’ll borrow a line from Wayne Gretzky. If you want to win, don’t skate to where the puck is. Skate to where it’s going to be.