Back in 2004 my wife and I owned a house on Hilton Head Island. Real estate was booming and it seemed everyone was a mortgage broker offering great terms. A guy who did some painting on our house also offered to broker a mortgage for us. Back in those days, being self-employed, I could get a no-income-verified loan. I know—shocking in the current environment, eh? I had to sign over my liver and kidneys and heart to get my current mortgage. And pay well above the going rate.
My wife reads the NY Times every day. The paper version. All of it. I mean everything in it. And she remembers what she reads. I keep track of numbers. And we both started to notice some disturbing things in 2003 into 2004:
- Mortgages were way too easy to get.
- The Fed was at 0%. It couldn’t go lower. It could only go up.
- Variable rates were as low as they were going to go. They could only go up.
- Like tulip mania (look that one up—Jen did), house prices just couldn’t keep going up. Yet everyone acted like they would.
So we talked about it, and even though we liked our house, we put it on the market. Even the realtor told us we were crazy (along with a lot of other people). We showed it 72 times. We sold it. We then moved to the other side of the island and rented on the intracoastal (a great place to live and where I set my latest Green Beret book, Chasing the Lost). We rented for eight years after that, because we felt things hadn’t yet bottomed out. (BTW the way, the puppy shot is just for fun)
Not long after selling our home, the housing bubble burst.
We watched a special on HBO about a neighborhood where everyone’s prices nose-dived and they interviewed the owners. And the one thing we heard again and again: “We never though it could happen to us.”
My wife and I were quite shocked because we always think anything can happen to us. Mine comes from my paranoid Special Ops background and my wife’s, well, let’s keep that to ourselves.
The ability of people to fool themselves into inventing their own fantasy world is phenomenal. Because reality sucks.
But it is reality.
I prefer to live in reality, even though it is difficult at times. At Cool Gus, we run our business on a reality base, not a wishful thinking base. What brings this to mind is something I’ve been watching that, for me, is a harbinger of where the publishing world is headed. Since 2009, Harlequin’s sales have steadily declined.
2009: $493 million
2010: $468 million
2011: $459 million
2012: $426.5 million
2013: $362 million.
Doing math, which is part of reality, we see an accelerating decrease. Those years coincide with the rise of indie/hybrid/Martian authors. As a member of the Romance Writers of America and a lot of other writers’ groups, I can tell you that RWA, by far, is the most advanced and savvy group of authors around. Surprisingly, SFWA (Science fiction, fantasy writers) is one of the least tech-savvy, business savvy groups. Romance writers have been leading the way in embracing indie publishing. Thus authors who might once have fought for a HQ contract are now doing it themselves. And some very successful romance writers have jumped ship and gone indie. Their defection has not been offset by successful indies going trad.
Add in a second factor: the decline of print sales. Spare me the numbers touted by publishing. Take out your top 5% of authors whose books get brought in to COSTCO on pallets, and print sales are dropping fast. Especially for mass market paperbacks, which is HQ’s bread and butter, much like garbage was the Sopranos bread and butter. We still make a lot of garbage but there is less and less shelf space for print books and more and more readers are going digital.
Jeremy Greenfield of Digital Book World had a recent article in Forbes where he interviewed the CEO of HQ. I found it a bit weird. Which harkens back to reality. At the end of 2013, people in trad publishing were breathing a huge sigh of relief, feeling they’d weathered the digital storm. An exec at one trad house even said, “Anyone who is going to buy an eReader has already bought one” just before Xmas. I get a sense of “things are going to be okay” from trad publishing.
That isn’t reality.
The CEO of HQ first blamed the revenue on pricing. He complained about eBook pricing. Which is odd since HQ gives the lowest royalty rates around to its authors, so they keep most of that income for very little overhead. I do agree that the .99 eBook is kind of low. But we use it for the first Atlantis book as a leader into the series and it works. We also use free on Section 8 Shadow Warriors as a loss leader into my thrillers. It’s been ranked #1 in Men’s Adventure and War on Kindle Free since we did that.
But, the point is HQ and trads can’t control how indies, who are their competition (which they don’t seem to take too seriously, yet complain about) price their books.
I thought years ago that HQ would be on the cutting edge of digital. After all, they have their niches locked down. Readers love their series, and are not particularly attached to specific authors. HQ did start Carina, but that looked like a step in the wrong direction. It was as if they were relegating digital to red-headed stepson status. I watched Carina bounce around, without much focus or direction. Pretty much working under the “let’s publish a lot of stuff and make a little bit of money off it” instead of using the HQ brand to branch off established lines into digital.
Here’s what really strikes me about the article. First, the CEO says that quality will allow them to demand a higher price. Which insinuates that someone like indie author Bella Andre isn’t putting out quality, except her quality is good enough for HQ to give her a print only deal. Hmm.
The closer was the most interesting part: HQ is optimistic in its earnings report, predicting a stabilization in 2014.
Why? What’s changed? The wishful thinking that things are going to get stable kept people in houses that went further and further under water as the housing bubble imploded.
“We’re just in transition.”
How? The numbers say income is decreasing at an accelerating rate. How will that change? Of course, transition doesn’t always mean transitioning to something good. We can also transition to something bad.
The reality we see at Cool Gus is things are going to get much harder. The market is saturated and will get even more saturated. While there are great benefits to digital, a downside is that every book is out there forever. There’s no rotating on the shelves, so to speak. Actually not the shelves, but the store.
We believe it’s going to get harder for all authors: trad, indie, hybrid and Martian. The solutions are varied and somewhat different depending on each author’s platform and product (thus our focus on a handful of authors and tailoring our partnership to fit their needs). But I do believe trad authors really need to take a long hard look at their digital royalty rates and question how much their publisher contributes in that arena to take most of the income. I firmly believe an author must earn at least 50% of the price of the eBook. And get paid at least every three months, if not every month.
Also, once an author is no longer frontlist at their publisher, but it still controls their rights, the lack of marketing and low digital royalty rates will destroy careers and livelihoods. I can personally attest to how trad publishers deep six their backlist.
Yes. Reality sucks but it can be dealt with. The first step is to get past the denial.
*****Admin Note From Jen*****
Blog Contest for this Week: Sign up for Bob’s Newsletter and get your name put in for a drawing to win an AUDIO edition of The Kennedy Endeavor. Bob sends out a newsletter no more than 4-6 times per year. Besides interesting information about Cool Gus, Sassy Becca and Big Orange (Bob’s new Jeep), Bob also gives his newsletter subscribers exclusive content. You can sign up here.
Also, Bob is doing a Goodreads Giveaway. Here are the details.
I’m linking to an article I wrote that was published today in Kirkus:
Currently in Seattle where we infiltrated Amazon’s Death Star yesterday, Jen teaches at Bellevue Library tonight and I teach for PNWA down the road. Then then Emerald City Writer’s Conference tomorrow.
Okay, I coined “hybrid author” in June 2011 and this January it became all the rage as NY discovered it. Wow, pretty quick. Only 18 months.
Now we have Jedi Mind Tricks. Ah ha! I wrote about Amazon being the Evil Empire back on 2 April here. I labeled Jon Fine as Darth Vader, etc. etc. yada, I had the bisque. I mean really. I know we’re out in the sticks if we’re not in NYC, but self-correcting doesn’t seem to be working for the Big 6, 5, or whatever. Author Solutions as a solution? Come on. We didn’t collude but we’ll pay out as if we did?
I just saw a book deal in Publishers Lunch for 2015. Isn’t the Zombie Apocalypse coming before then? World War Z with Brad Pitt looking cute with an M-203? Don’t get me started on zombies, although I did watch Warm Bodies and it was a pretty brilliant spin on the genre which reminds me every idea has been done but not every story (but there was that Romeo & Juliet moment with the zombie and cute girl). Royalties are still being paid out as they were before the computer was invented. Really?
I digress. I’ve had a lot of thoughts about publishing this past six months, but I’ve been keeping my head down, something my first platoon sergeant (who had most of one leg shot off in combat) taught me: there are two firing positions in combat: the prone and the flying prone (which is when you got shot at and you’re not already prone).
He was quite correct.
He also told me “no one looks up”. What he meant was on patrol no one looks up and sees that sniper in the tree. But I also take it to mean few people look far enough ahead in a volatile and rapidly changing situation.
Frankly, everyone is grappling for answers and frankly, it’s kind of dumb to give them when
- Few are really listening.
- Those people are my competition.
- They’re not paying me for them.
The further we dive into the digital age, the more I realize what a unique entity Jen Talty and I founded with Cool Gus. And how the plan we laid out years ago is playing out as if we actually controlled things. And how our adjustments have fine-tuned that plan. A big example was back in January this year when we had a moment of enlightenment that we were not a ‘publisher’ but rather a partner to our authors where the author is in control and we support them, not vice versa. We’ve always had the mantra that authors create the product (which is story, not a book) and readers consume the product. Everyone in between must add value or else they are an impediment.
The concept of authors in charge is so anathema to traditional publishing that it’s a major issue. Frankly, I get it. A lot of authors are, shall we say it, assholes? They’ve got egos. Sometimes too big. And as I teach: every writer needs therapy because to sit alone and write 100,000 words is not normal. Writers are not in the bell curve and we’re not necessarily on the good side of it. 80% of authors have depression. 92% are angry. I made that last one up.
Which, in reverse, leads me to this: this is a business, not a love fest. I see authors tweeting and blogging how much they “love” their agent, their editor, their publisher. Yeah. And wait until the day your contract isn’t renewed and see how far that love goes, because, bottom line, their love is based on numbers. I see trad authors desperately defending trad publishing (can we say Authors Guild, and BTW, Scott, your books are still for sale on Amazon, huh?). I saw the interviews from BEA declaring the rise of the eBooks is over (yawn, learn math) and everything is just fine damnit, while I saw zero QR codes on those huge banners hanging everywhere.
Which, in reverse, leads me to this: After The Gold Rush. Yeah, Neil Young.
The gold rush is over for the indie authors. Oh yeah, we still got our Bella’s, our Hugh’s, etc. but what I’m seeing is a deluge of titles, a rapid reshuffling of bestseller lists in digital, and a growing sense of desperation and frustration from a lot of authors who were doing pretty damn well just a year ago. Even some of those who are raking in 7 figures annually are fraying around the edges. How many books can they write a year? How long can they keep the pace? Hell, Sylvia Day’s tweets exhaust me, and she’s living them. How many Bookbub ads, .99 specials, frees can one do until it’s all been tried? Then try them again as even more people are trying them?
A fundamental of Cool Gus was something one of my former students at the Maui Writers Conference told me when I saw him in New Orleans. He’s an extremely successful businessman. Head of the Bourbon Street Business Owners Assoc. We met for coffee at a hotel on Bourbon St. then walked across the street to one of his businesses, Ricks Café (you know Rick, Casablanca?), and he unlocked the door (it was early, before business hours for an upscale strip club even in the big NO). We went upstairs to a private room where I could only imagine what happened on that big table there (I doubt even Sylvia Day or EL James could either). And he told me . . .
See. That’s the point. Why give it away? In my Who Dares Wins consulting business I get paid more for one day of my expertise than most Harlequin advances.
The biggest issue is most people are reacting, not acting. A strategic plan, aka as in Write It Forward, is key to succeeding in the digital world. Most of the big publishers are reacting. Frankly, most indie authors are reacting, going to the thing that works now, rather than positioning themselves for what’s going to be working 2 or 3 years down the line.
Which is the last thing I’ll note for authors: if you don’t value yourself, no one else will. No matter how much you ‘love’ your agent, editor, publisher, indie bookstore, the Death Star, Kobo, Barnes & Noble, Brad Pitt and his M-203, the person your really need to love is your reader.
Our Book Expo Experience.
Thursday night we found ourselves inside the Death Star, surrounded by Darth Vader (he thinks he’s Obi Wan, yeah, right) and his cronies from Planet Amazon. Apparently there is also a Darth Mar now. And a Countess from South of Broad in Charleston, who was wearing a cast on her foot, broken playing polo with other hoity-toities from CreateSpace (apparently they break every afternoon for a match, if that’s what you call it), which actually would be the title of a really cool science fiction novel: CreateSpace. Or that could be a thriller. I haven’t decided yet, but I’m using the title.
There were some interesting juxtapositions. We met with Amazon, Apple and Google among others. Want to talk about corporate cultures. Amazon, well, they’re like laid back except they’ve got metrics and algorithms and really don’t seem to care what anyone else is doing; which is actually our motto at Cool Gus. We’re doing our thing. We don’t really need to worry about what everyone else is doing, because they aint us. I had Jen Squared with me, which I’ve shortened in talking to my wife, to JT and JP. Jen Talty and Jen Probst.
We actually talked to a human at Apple; which was like a major breakthrough. And while they don’t have Amazon’s laid back attitude, they were very nice and very to the point (we literally got 15 minutes with them, and I think they were timing us). We got boilerplate from them, but good boilerplate. JT was still sitting in the Delta Crown room at LaGuardia downing cranberry juice and trying to figure it out while I was taking off and she emailed this morning saying she’d broken the code, which is good. And BTW, you might notice we’re not telling you what it is. Not because we’re mean, but we’ve come to the understanding that we paid to fly to NYC, stay there, register for BEA, spend two 18 hour days walking the floor and talking to people, and you know what? We got our info and contacts the hard way: we earned them. It’s a service we provide our authors as their publishing partners.
Plus there’s always the Death Star out there.
Google was also interesting. They were worried we wouldn’t find their room, but they were across from the bathroom on the lowest level, so not a problem. Like I always emailed Terry Brooks when I’d be on book tour in, I think, Lexington KY where this bookstore had photos of authors hanging on the wall and Terry’s was across from the door to the men’s room and I’d tell him I saw him the men’s room in KY.
Last year I noticed something and I noticed it again this year. We are in the digital age right? There are eBooks, correct? Why wasn’t there a single QR Code at any booth where someone could scan it and get a free ARC of whatever book was being promoted? There weren’t as many print ARCs as before but the Fedex station was still full of boxes and I saw plenty of suitcases being packed full of print ARCs. Nice, but not efficient. Seriously. Put a QR code on that huge banner. Or give out postcards with them on it. Heck, at Cool Gus we’ve got QR codes on the back of our business cards. Direct people to a web site where they can download the appropriate format with DRM (which I don’t like but might be appropriate in this case) and then shut the web site down prior to pub date.
And I just saw a video where someone was interviewing Richard Russo (whose books I love) and some other authors at BEA and they were saying digital has plateaued, the whole eBook thing has run its course, yada, yada, I had the bisque. When I stopped laughing, I didn’t even know where to start, but a basic course in math might be in order for those crowing about the “slow down” in digital growth.
I digress again.
While we were in the Death Star we had lots of storm troopers coming up, including some admirals and death cruiser captains and ask how they could help, which is such a digression from traditional publishing. Help sell books, you mean? Hmm. I think that is the business we’re in. Actually, we sell stories, not books. Different mindset, which we have at Cool Gus. Authors create story, readers consume story, everyone in between has to add value.
I say story because ACX had their own booth at BEA, celebrating their two years in existence, and I love working with them. Between the royalties and the $1 bonus per download, it’s very nice for the author. And they’ve treated me, particularly Nicole who actually tracked me down almost two years ago when I hadn’t even heard of ACX, very well over the past year with merchandizing and promo, so I’m very grateful. I also had directed Bella (whose code name is The Shark) Andre to them a while back and I guess she’s selling a lot of her audiobooks there. I just made that shark thing up, but I like her business attitude toward publishing. It aint about ego. It’s about getting story to readers.
We also met with some people from Sourcebooks, including their CEO, Ms. Dominique Raccah, and they wanted Jen T to talk algorithms. Ms. Raccah made a key point. Smaller and leaner publishers can do more interesting things and take more risks than bigger publishers. We can change faster. Adapt or die. I remember in bayonet fighting there is only the quick and the dead.
I prefer quick.
But this was also an interesting change from last year: this year because we had JP, aka Jennifer Probst (aka The Hammer), with us, who BTW happened to be the 6th bestselling author on Amazon last year, people started to understand Cool Gus is a publishing partnership where the author comes first. In our meetings, people focused more on JT than me because she’s the person who does the grunt work. I just grunt once in a while. Cool Gus is where authors have final say on the price point, pub date, cover art and copy, etc. but have a single point of contact to do this with and extensive experience they can tap into for advice. At one point with Apple, as Jen T talked HTML, algorithms, trajectory of the Death Star, etc., JP, The Hammer, and I just looked at each other, like, dude why are we even here taking this meeting? So I’m thinking we send JT to BEA next year alone and both stay home and write, because that’s what we’re supposed to be doing.
We stopped by the Cool Kid’s booth—the indie authors with combined sales over 10 million. Bella, Barbara, CJ, Hugh, Stephanie, and Tina. I only give first names, but they all also have secret code names I cannot reveal (wait, I think I just did with Bella?), because those of us who have sold over a million eBooks also have the secret handshake; which has something to do with writing a lot of books and working your ass off.
And there was a rep from Amazon there in their booth, I think Bobba Fett, with a little notepad, asking how the Death Star could improve Author Central. Like how they could improve the way they treat authors? Throw me in the briar patch.
Oh yeah. We also saw a banner from Douglas County Libraries, to whom we’d made a direct eBook deal earlier this year and we stopped to talk to them and there were people repping a bunch of CA libraries and we’re very excited to be working with them in the future, getting eBooks into libraries directly from Cool Gus. Personally, I spent my childhood in the library in the da’ Bronx, so I’m very happy about that connection. When I wasn’t bayonet fighting.
I’m seeing tweets now from NY where Bella The Shark and Patrick Brown of Goodreads are doing a panel, which is cool. We also met the guy who runs Nanowrimo while inside the Death Star.
I know I’m forgetting some stuff, but my brain is still fried, and apparently there was a snake somewhere in the vicinity of the yard while I was gone, so my wife, the story streamer, is not happy. I told her they taste like chicken, from my snake-eater days as a green beanie, but somehow that doesn’t seem to make her feel better.
And that is why men really can’t write romance.
And let’s not even go there with the snake imagery, or the light saber angle, Mister Darth Vader.