Tag s | Book Business

Implications of the Department of Justice Lawsuit Against Five Major Publishers

by Steve Laube

As you have heard by now the Department of Justice (DOJ) has leveled a lawsuit against Apple and five major publishers accusing them of conspiring to fix prices. There has been a lot written on the topic with varying degrees of understanding and a wide disparity of conclusions.

Authors are asking what this all means to them. And many are confused about the math involved. A great, and lengthy summary has been brilliantly composed at Shelf-Awareness. Read that article if you do not understand the details of the situation. It is important that every writer grasp the implications because it could affect how books are sold moving forward.

Already, three of the five publisher have agreed to settle without admitting guilt (HarperCollins, Hachette, and Simon and Schuster). And that settlement will take at least 60 days to finalize. This leave MacMillan and Penguin who have vowed to fight the suit. Such a fight could last years.

By the way, Random House was not named in the suit because they did not change their pricing policies until much later and thus cannot be accused of colluding.

At is core, the issue revolves around who gets to set the prices of books, the publisher or the retailer? When the retailer controls the sales price a company like Amazon has, in the past, used their clout to cut prices severely, even to the point of losing money on the sale of the books they sell. Since Amazon is so large and diversified in their products a books-only company like Barnes & Noble or Books-a-Million is at a disadvantage. The DOJ doesn’t care if the retailer of the publisher controls the prices, but they did take offense that five publishers and a major vendor agreed to the same terms at the same time. It has the appearance of collusion.

Years ago when I was in the bookstore business we were constantly being challenged by bargain pricing done at the warehouse clubs on selected titles. They would buy a book that retailed for $20 and with their buying power purchase the book for $10 net from the publisher. Then they would retail the book to the public for $10.88. There were stores in our area that had little purchasing clout and the best price they could get for the same book was at $12.00 net. To match the warehouse club price they would lose money on each sale.  You see the problem?

However

However, many authors do not understand that this “Agency Model,” the lawsuit, and its implications have had little effect on the rest of the publishing industry. While the Big Six comprise a huge portion of the market, they are not the entire market.

Read my previous blog about “Who Owns Whom in Christian Publishing.” The Agency model of selling books to Amazon and iBooks has not applied to the majority of Christian publishers. See that post starting half way down where there is a long list of publishers not owned by any of the Big Six.

Each publisher has had to negotiate their own agreement with Amazon to sell their ebooks and paper books. Unfortunately we are not privy to what those terms are. And Amazon and the publisher work together to set prices in most cases. If they are unable to come to an agreement Amazon has used their weight to pull titles from their site. IPG (Independent Publisher’s Group) in late February refused to renegotiate terms with Amazon. Overnight thousands of IPG books disappeared from the Amazon site. And to this day they have not yet been reinstated. (Read this article for full information.)

But that is an unrelated incident, other than being instructive as to the clout of Amazon. As for what will happen? Kristine Kathryn Rusch quite ably said in her very informative blog, “No one knows.”

Any Questions?

After you have assimilated the information linked above, do you have any questions? I will try to answer as best I can in the comment section below. Or use the green “Ask Us a Question” button to the right to send a private question.

 

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News You Can Use – Mar. 20, 2012

Why Finish Books – I loved this essay! He had me at the picture of C.S. Lewis…

Why Your Book Isn’t Selling – Suggestions from a book marketing expert.

The Publishing Industry May Not be Falling Apart After All – One author suggests that today’s crisis sound awfully familiar. And underneath all the talk of seismic changes and Amazon, she has a valid point. If you click all the way through to her original article you will find a “Live Journal” site that is hard to read on screen.

Free E-book on How to Attract Customers with Twitter – From Hubspot. Must submit registration info to get the free e-book. They offer a number of these papers on a regular basis.

Is Your Facebook Account Part of Your Estate? – Facebook says that if you die your Facebook account must be closed. So all your writing, pictures, etc. will disappear. And they don’t like it if someone else simply uses your password to keep it online. Goes to the heart of what you “own” and do not “own” on the Internet.

How One Man Started Writing for “Sports Illustrated” – He worked on his craft for six years before submitting something to an editor.

The Making of the Hunger Games Blockbuster – Whether you like the book or not is beside the point. Read the article to find out how this YA phenomenon grew via word of mouth and intentional marketing. Fascinating.

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Why Do I Have to Jump Through Your Hoops?

Recently, my assistant had a conversation with an author who did not send a complete proposal. The author was referred to our guidelines and gently reminded that we needed more material in order to make an evaluation. But instead of saying “thank you” for the guidance, the author declared they did not have to jump through any hoops, and took the opportunity to aggressively express their complaints about our review process.

What made this all the more frustrating to us is that it happens more often than you’d think.

Why All The Work?

Have you ever worked in an office where you could swear one of your coworkers could find something — anything — wrong with your work so they could get it off their desk and back onto you? Well, that’s not what we are doing when we ask for a proposal. We are not giving you busywork so we can get back to our soap operas and coffee.

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News You Can Use – Feb. 14, 2012

It has begun – The Welcome Assault on Costly Textbooks- But is this the best way to do it? Free online publisher-quality textbooks for five of the country’s most-attended college courses. Funded by big charitable organizations like The Bill & Melinda Gates Foundation. It could change the economic future of some major textbook publishers. I fear the homogenization of Education or the control of what is taught in college Biology class, just because it is free.

Pinterest Boards for Book Lovers – Ten places to try out the latest social network phenomenon.

Five Ways to Maximize the New Changes on Facebook – Confused by yet another change to Facebook? This should help.

Is Self-Publishing a Ponzi Scheme? – Richard Curtis, as usual, is brilliant and insightful. Do think this is out of line? or cutting close to the truth?

Is it Time to Bundle the E-book with the Physical Book in Online Sales? – I asked this question of Hachette 2 1/2 years ago during a Digital Initiatives presentation and was told no. Dennis Johnson of Melville House Publishers discussed the issue with great insight.

Lady Solves Wheel-of-Fortune Puzzle with One Letter – This article shows that it wasn’t luck but years of study and preparation. Sort of like something thinking they can just sit down and write a whole book in a weekend.

Happy Valentine’s Day!


Source:LiveScience

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News You Can Use – Feb. 7, 2012

Author Says McGraw-Hill Cheats on Royalties – Details of a pending lawsuit.

What is Pinterest? –  The latest craze in Social Media Networks. AuthorMedia shows you the simple steps to sign up and tips on how to use it in the next article below.

Three Ways an Author Can Use Pinterest – Last week an editor told me how she was following a couple of her authors on Pinterest and how much she liked it.

5 Ways to Break Out of the Social Media Doldrums – Well said by Aubre Andrus.

10 Ways to Ensure No One Will Read Your Blog Post – Ali Luke give great insight

How Hard Can it Be to Write a Kids Book? – Sally Lloyd-Jones helps dispel a common myth.

A very cool six minute video envisioning a future technology. Imagine computing being done on glass walls, desks, and even National Parks. From Corning. By the way, Corning makes the “Gorilla Glass” that you find on the iPad2.

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Fresh Formulas

Some have a hard time appreciating the talent involved in writing genre fiction. By genre fiction, I mean novels that fall into a defined category such as contemporary romance, historical romance, romantic suspense, or cozy mystery. Many of these novels are published by mass market publishers (like Harlequin) and fit in lines they have formed for the sole purpose of selling the genre.

These are distinguished from Trade fiction where there isn’t necessarily a specific line that has been formed to sell a genre, although there are exceptions to that “rule” like the “Love Finds You” series from Summerside Press. In publisher’s lingo “trade” means a 5 1/2″ by 8 1/2″ trim size and is probably between 80,000 and 100,000 words in length. “Genre” or “category” fiction can mean the 4″ by 6″ trim size (also known as mass market) and between 50,000 words and 70,000 words.

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Clarification on Sale of Heartsong to Harlequin

New information has surfaced regarding the sale of Heartsong to Harlequin.

In my post on Friday I made the assumption that the sale included all the backlist and the currently contracted titles. This was reflected in point #5 in the post.

That is not the case. Harlequin did not buy the backlist or the currently contracted titles. Those will remain the property of Barbour Publishing. Thus future repackaging opportunities remain for those titles. That also includes the Heartsong e-books that Barbour is releasing under the “Truly Yours” banner (also mentioned in #5 in that previous post).

Harlequin bought the brand name and the club mailing list, not the books themselves.

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Barbour Sells Heartsong to Harlequin

Today Barbour Publishing announced they have sold their Heartsong Presents line of inspirational romances to Harlequin.

For those of us who have been wondering about the eventual buyer, this comes as no surprise. We have known they were being sold since last Fall. In December I spoke with Barbour’s president, Tim Martins, and he confirmed that the sale was in its last stages of negotiation but he could not say who the buyer would be. With their Love Inspired lines of Christian romance, suspense, and historical titles and a strong member subscription base Harlequin is well suited to sustain the Heartsong line for years to come.

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Your Brand is Not a Limitation

It is All About Expectations

What if you bought a recording from a music group expecting their usual collection of ballads, only to hear guitar anthems? Or what if you picked up a book with a pink cover that promised a love story but ended up reading a novel where hapless and nameless victims suffered gunshot wounds on every page? You’d be disappointed, right? I would be. You don’t want to disappoint readers, so branding has become a consistent topic.

Your Best Friend

Some writers find the concept of branding to be limiting. When they think of branding the TV show “Rawhide”  and Cattle comes to mind.  And despite the awesomeness of such a theme song, they want to keep their options open.

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Deadlines and Taxes

Two certainties in the life of a writer. Deadlines and Taxes.

You know what a deadlines is. It has the word “dead” in it for a reason. And intrinsic to the reality of taxes is that April 15th filing deadline.

But what about those taxes?

Many articles appear in early April about taxes when approaching the filing date. But I thought we should explore a couple items now so there won’t be any surprises come April.

First, the obligatory disclaimer. I am not a tax attorney or a tax accountant. I am merely discussing concepts and ideas which you may or may not use in your situation. And, as always, when it comes to your taxes, make sure to consult a professional.

Some of you may roll your eyes and say, “I already know this.” But remember there was a time when you did not. I get many “beginner” questions each year from debut authors who are discovering much of the business side of this industry for the first time.

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