Looking Back: My 2008 Publishing Predictions

Amazon Changes the Digital Landscape

Published in the Summer 2008 issue of
 The Center for Independent Publishing newsletter

 

Recently, the industry was shaken by an announcement by Amazon that the company was changing its order fulfillment policy. In a nutshell, Amazon threatened to disable a book's "Buy Now" button if that book's publishing company did not subscribe to Book Surge Print, an Amazon owned print-on-demand (POD) printing service. Many called it a blatant attempt at a monopoly, because Book Surge is the only POD option available if one wishes to sell books through Amazon using its "Buy Now" button.

As the market evolves and embraces digital distribution options, we at the Center for Independent Publishing (CIP) find Amazon's move both troubling and exciting. Amazon wants to be active all the way along the digital supply chain from production to marketing to distribution. By force of will its Book Surge gambit will make Amazon the de facto virtual digital warehouse for hundreds of thousands of digital book files. What role will Amazon play in helping (or hindering) our members to make better use of their digital assets?

It strikes me that from Amazon's large and powerful river might flow not just POD books, but e-books, books disaggregated and re-purposed for mobile hand held devices, audiobooks and other digital derivatives -- whether now known or hereinafter invented. Our hope is that in the swirl of that digital river, we will see new digital revenue streams emerge for smaller and independent presses. If Amazon remains committed to the indie press segment, and acts as a bridge not just between publishers and traditional readers, but between publishers and digital readers, it becomes an enabler, and, perhaps, the best friend an indie publisher could have. However, Amazon's favoritism to Book Surge is a slippery slope that could easily decrease diversity. Amazon is steering consumers to books that are produced by its owned-and-operated press.

While it doesn't look like the cost of gaining access to the number one online bookstore has gone up (except for duplication costs associated with files formerly entrusted to other POD printers), the CIP is concerned about Amazon’s monopolistic intentions. The company’s claim that it is not seeking exclusivity (i.e., requiring POD titles be printed exclusively through Book Surge), seems to be a subtle bit of specious reasoning. Amazon's gain is the ability to monopolize the POD market. It is offering a single printer option. Just as Amazon deserves our praise for having been a good publishing partner for our publisher members, it deserves our scrutiny as it moves from online bookstore to what is beginning to look suspiciously like a celestial publishing house.

Traditionally, bookselling was separated from publishing, with booksellers (including Amazon) realizing the benefit of combining the wares of many publishers. Now that Amazon has the ability to perform all of the activities that take place between delivery of an edited manuscript and delivery of finished books to readers, the publishing industry needs to take a hard look at its current business model. Publishers have the potential to get squeezed on both ends. For example, there is the Barnes & Noble - Sterling combo with an increasing number of book sales being titles self-published by B&N. It is the same deal with Amazon, which is actively going after new product to self-publish with Createspace as well as original audiobook projects from Audible. To the extent publishers covet virtual shelf space at Amazon (with one-click ordering), Amazon's move should give indie publishers pause.

What if this virtuous publishing partner determines that it is profoundly profitable to publish their own books? If Amazon does not use its great size and ability to bring its own books to the attention of readers, we will be very surprised. When Amazon does this, we fear it will be at the expense of independent publishers whose distinctive personalities are reflected in the books they publish. To date, Amazon has been a good partner, but operating under the aegis of a publicly traded company who has shown the ability to act arbitrarily is disconcerting to the CIP and our publisher members. Publishing is a competitive business. It is likely to become more competitive if Amazon starts favoring its own self-published books

So, as a general proposition, vertical integration is a bad thing. Perhaps, the market will correct itself, as publishers move over to www.barnesandnoble.com, and other digital asset distributors and e-retailers pop up. Likely, that won't happen. Book distribution is not sexy enough, and Amazon is like the slightly abusive partner we tend to tolerate for the benefit of the kids. If the industry doesn't get an order of protection from the Justice Department, then perhaps we need a Plan B.

Physical distribution of books is largely the preserve of large conglomerate publishers and a handful of large independent distributors. It’s not a pretty business. It employs the equivalent of Yankee peddlers who hand-sell books to brick and mortar stores, with full return privileges for oversold books. If we extrapolate, the Book Surge gambit may be seen as a relatively painless first step in managing the digital distribution of titles to e-tailers and licensees. Amazon has the amazing ability to manage and organize content. It also offers a painless online experience for the consumer. Instead of Amazon merely being the recipient of digital assets, it’s easy to imagine Amazon providing comprehensive consultancy services to our members, helping them prepare their content for digital distribution for and beyond the traditional Amazon platform. Is the Book Surge gambit a disguised opportunity for indie publishers? Perhaps. Indie publishes are the small furry mammals scurrying around the legs of large dinosaur publishers. The digital meteor has hit. To survive, indie publishers need to be able to present content in a variety of digital formats. Is Amazon a friend or a foe? Only time will tell.

If I had to guess, I'd say in the next 24-months Google buys Ingram (Googlegram?) for its digital group assets (including Lightning Source), and it out-Amazons Amazon by creating the ultimate digital warehouse/distributor in the sky.

If Google were to exhibit digital favoritism, it would steer book buyers to its wholly owned and super- efficient Lightning Source imprint. Amazon owns the online store. Google owns the web. Amazon merchandises books. Google sells them contextually. Balance is restored to the planet.

The short- to mid-term changes in trade publishing are going to be dramatic. Large publisher dominance is shrinking in the new media economy. When the change comes, we believe the main winners will be independent publishers. They music industry taught us that. Amazon has confirmed it.

Lloyd J. Jassin
Chair, Executive Committee
Center for Independent Publishing

Postscript / Scorecard

Welcome to 2016! Glad you could make it.

It's time to assess my fortune telling abilities. So, how did I do in predicting the future of publishing? As predicted, Amazon's was the catalyst for profound changes in the publishing industry.  

These are the five publishing predictions I made in 2008: 

Prediction No. 1: Amazon acquires book publishing companies.
Verdict: Correct. In 2012 Amazon acquired Avalon and Dorchester.

Prediction No. 2: Google skews search results to favor its own content.

Verdict: Correct. As of this writing (late 2017), Google is appealing a record €2.4bn (£2.2bn)fine levied by the EU over search engine results. 

Prediction No. 3: Amazon will crush the competition. 
Verdict: Correct. In 2015 Amazon controlled 74% of the eBook market. 

Prediction No. 4: Google Acquires the Ingram Content Group.
Verdict: Okay, not yet. Give it time.

Prediction No. 5: The big winner will be independent book publishing. 
Verdict: Correct. "[N]on-traditionally-published books now make up nearly 60% of all Kindle ebooks purchased in the US, and take in 40% of all consumer dollars spent on those ebooks," according to a 2015 report by the AAP (Assoc. of American Publishers).

The Future of Publishing: Know Your eBook Rights

 

Do publishers control eBook right to their legacy titles?

"Arguably, yes, but not for much longer."
-- Lloyd Jassin

 

 On September 28, 2010, Publishers Weekly and the Book Industry Study Group held a seminar at the Random House building entitled The Future of Publishing: Know Your eBook Rights.   It was moderated by Jim Milliot of PW.  I was honored to be on the dais with Paul Aiken, Exec. Dir., Authors Guild; Neil de Young, Exec. Dir, Hachette Digital; and  Scott Waxman, Waxman Literary Agency.  The following concerns future technology rights and the threat copyright termination -- and Andrew Wylie -- pose to legacy publishers.

JIM MILLIOT (PW): Great. Thanks very much. Lloyd?

LLOYD JASSIN: If Paul (Aiken) is a glass half full kind of guy, then you’ll slit your wrists after I’m done speaking. (laughter) I’m Lloyd Jassin and I want to thank Publishers Weekly and the Book Industry Study Group for inviting all of us here. Because I’m an attorney, I evoke a lot of hostility so let me lay a little foundation.  

While I am an attorney I also consider myself a part of this industry. I started out in book publishing 25 years ago, originally at St. Martin’s Press, and then Simon & Schuster. I was a director of publicity for a division of S&S that published long-shelf-life branded nonfiction, which was a good idea then and is even a better idea now for a variety of reasons dealing with electronic publishing. So I’m an exile from publishing. I then went to law school and worked in television and syndication distribution, doing a lot of trademark licensing. I’m also an author. I currently have a boutique law firm, and I represent franchise authors, midlist authors, some literary agencies, midsized book publishers, and the like. So I don’t see things just through the eyes of an attorney/advocate, or a publisher/author. I think I see things a little differently. Plus I have a lot of friends in the music business and we all know what’s happened to them.

So if somebody asked me about the future of book publishing, which I think is the subtext of this morning’s discussion, I’d say, to paraphrase one of my music business friends, “the future of publishing is bright, but the future of the ‘Big 6’ publishing industry is cloudy.” I think publishing has always been in disaster mode, and it will reassess and reform and maybe get smaller, but it’ll adjust to the changes. So big publishing is in peril; you don’t need me to tell you that. But I don’t think it’s just the recession, I don’t think it’s just disintermediation. It’s the fact that, in large part, older contracts didn’t contemplate the digital future. That is an error that you can lay at the feet of the publishers, because they drafted those contracts, and future technology clauses have existed for at least a hundred years. I handed something to Paul that he probably is familiar with, which is Mark Twain’s contract, in his handwriting, which talks about future technologies. So it wasn’t that they didn’t know about future technologies. It’s just that the lawyers were asleep at the wheel, in my opinion.

So respectfully, and it’s very respectful because I’m here at Random House, I disagree with Marcus Dohle, Random House’s CEO’s statement that the vast majority of backlist contracts granted Random House e-book rights. I believe he wasn’t speaking just for Random House but for the industry.  Those contracts need to be reviewed on  a case-by-case basis. Some contracts  granted them e-book rights; a lot of them certainly didn’t. But I think whether they did or didn’t may  actually moot, and what I mean by that is, evenif they did grant Random House and Simon & Schuster and their brethren electronic book rights, they have them only for the short term, not the long term. The Copyright Act giveth and it taketh away, and already, and with greater velocity in two years, authors will be able to exercise their statutory termination rights. These are rights found in the Copyright Act that allow authors who didn’t know their worth when they negotiated their publishing contracts 35, 56, 75 years ago, the right to go back and negotiate  a better deal. Is it fair to publishers? It’s really not a question of fairness; it’s the law. And wherever you come out on this issue, the copyright termination provisions of the Copyright Act are going to allow authors to reboot their pre-Internet contracts, and clear up any of the ambiguities regarding e-book in the author’s favor.  So, if the question is, do publishers control e-book rights to their legacy titles?  Arguably they do, but not for much longer.

What happens when the right to reprint classic titles is threatened  is the subject of another evening, but what it comes down to is, agents and publishers disagree on two key issues.  Who controls e-book rights? I think the question’s been answered, whether it’s the Rosetta books decision which Random House lost, or the reversion of rights in favor of  heritage or legacy authors. The historical irony is that 301 years ago, the Copyright Act gave authors the exclusive right to control their writings and other intellectual property and authors in turn gave publishers an exclusive monopoly over their works. The reason authors needed publishers was that publishers controlled the printing presses.  That’s what came between readers e and the writers of the time. Now that the printing press is less important and authors can control their own printing presses, I think we’re going to see a dislocation, a disruption, in the way business has been done for a lot of years.

I did the math and 2013, which is first date rights can be recaptured, is two years, 95 days, and approximately 16 hours from now. That’s when the copyright termination or “contract bumping recapture” first time bomb goes off.  It will threaten publishing’s backlist and all of the books on the backlist that begin with the words “Vintage,” “Classic,” ”Heritage”; titles published 35, 56 and 75 years ago are at risk. When a publisher’s backlist has to be renegotiated, it has profound implications for the industry, and makes authors and publishers reassess their relationship. I think what will happen is old contracts will be renegotiated – publishers will  compromise rather than lose authors. And, it’s generally a good idea to leave the dance with the party you came to the dance with, so while authors have the ability to put a knife to the throat of publishers—it’s the Copyright Act that allows them to do that—I think there’ll be accommodations. If you synthesize  this, agent Andrew Wylie, by settling for a 40 percent royalty on backlist titles for his legacy authors, makes me question his negotiation skill. It could be that Random House had pictures of him in a compromising position in Frankfurt. I don’t know.  Perhaps, he didn’t consult his  attorney before accepting Random House’s offer.  Why?   In in two, three, four years, all the rights he bargained away are going to revert to his authors.  Before long, it’s going to be a 50 percent – or better – deal that authors and agents will be striking.  Maybe Mr. Wylie  got large advances in exchange, and it’s a short-term license, so there are lots of ways that you can work things out. Forty percent wouldn’t look so bad to me if I got several million dollars up front. Money today versus money tomorrow. 

[The full interview will run in the Spring issue of The Authors Guild Bulletin]


Resources

The Copyright Termination Time Bomb