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Summary:

As Amazon and other e-book distributors like Kobo transform themselves into publishers, does that mean traditional publishers are extinct? No. But it does mean they have to work harder to try and add value for authors, who now have more ways to reach their readers directly.

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Hot on the heels of Amazon signing publishing deals with authors, and thus doing an end-run around their publisher partners, another major e-reader company says it plans to do the same: Kobo is launching its own publishing arm and looking to sign deals with authors directly. All of this is more proof (as if we needed any) that the Internet is potentially lethal to middlemen. Does this mean that traditional publishers will soon be extinct? No. But it does mean that they are going to have to work harder to try to do what Amazon is already doing — namely, making it easier and more profitable for authors to reach their readers.

For months now, Amazon has been busy ramping up its publishing unit, which it beefed up earlier this year with the hiring of publishing-industry veteran Larry Kirshbaum. It has signed deals with popular authors like Tim Ferriss, as well as thriller writer and former CIA operative Barry Eisler, who turned down a $500,000, two-book contract with a traditional publisher to self-publish and then accepted a deal from Amazon instead. Although Kobo is a relatively small player in the U.S., it has a strong presence in Europe, and CEO Michael Serbinis says adding publishing services for authors is now “table stakes” for a digital-book distributor — which raises the possibility that number two player Barnes & Noble could be the next to join the fray.

All that matters is connecting writer with reader

As I described in a recent post, Eisler said that what made the decision to go with Amazon easy was that the web giant promised to not only get his books to market faster — both in print and electronic form — but also offered to sell them at a lower price than the traditional publisher, and apparently (although the terms of his deal weren’t released) gave him a bigger share in the proceeds to boot. He told the CBC that he has been making “far more per unit than I would ever make with a legacy publisher, and I’m also selling the book in far more volume than I would have with a legacy publisher.”

Amazon executive Russell Grandinetti gave the most succinct comment about the new world that publishers find themselves in: a wakeup call that should be posted in giant letters in every publishing house and agency. In an interview about Amazon’s moves into signing authors directly, he told the New York Times:

[T]he only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.

Much like newspapers used to control the channels through which news flowed before the web came along, book publishers have always been the gatekeepers who stood between authors and their readers — for the most part, they determined whose books would be published, how much attention they got, how much they would be sold for, and so on. The web has disrupted that to some extent all by itself, but Amazon has poured fuel on the fire with its Kindle self-publishing platform, which has allowed authors like Amanda Hocking and John Locke to bypass traditional industry channels. Why wouldn’t an author want to sign up directly with the retailer who actually delivers their books to readers?

Amazon could find itself disintermediated as well

What’s interesting about Grandinetti’s comment, however, is that it doesn’t exclude Amazon itself — or other book retailers — from being disrupted. We’ve already seen what that can do to real-world booksellers like Borders, which had to enter bankruptcy liquidation, but Amazon and Kobo (which is part owned by Canadian book retailer Chapters Indigo) also have to prove that they offer something extra for authors too. Otherwise, some writers might decide to take a cue from Tim Pratt and use Kickstarter to finance their books and sell them directly to readers. Amazon gets a cut of Kindle sales like Amanda Hocking’s, but likely not as much as it does by signing an author to an exclusive publishing deal.

So what can publishers do? The same thing Amazon is doing: give authors what they most want and need. It’s a quick and painless way of reaching their readers — as many readers as possible, in as many different ways as possible. Also, make sure they are really adding value to that relationship with an author, not just counting on the former gatekeeper status to keep authors in their stables.

Simon & Schuster made an interesting move recently by offering its authors more sales data and other information about their books, as a way of providing something they couldn’t get elsewhere. That’s smart; many authors are looking for more of that kind of data, so that they can take charge of their own fates, instead of just waiting for a publisher to do everything for them. Amazon is also trying to add services for authors, like its @author program that makes it easier for writers to connect with readers. Those kinds of features are likely to become even more important selling points as books become more social.

It’s also worth noting that Amanda Hocking, who became famous for making millions by self-publishing her books for young adults on the Kindle, signed a deal with a traditional publisher earlier this year. In a blog post about her decision, she said that publishers can still provide some necessary things, even for a self-published author — including a strong editor, as well as some marketing muscle and the ability to help writers move from just being successful to being global superstars. Unfortunately for publishers, Amazon and other e-book distributors like Kobo likely have their sights set on providing most of those services too.

Post and thumbnail photos courtesy of Flickr users Frederic Della Faile and Marya

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  1. Publishers aren’t middlemen. Publishers are part of the production end of content. They provide editorial and production support to authors, contract authors to write books, compile new and existing material into new books, etc. Novelists may not consider this “production”, but it is pretty important to the 90% of books that are not novels.

    Retailers, like Amazon and Kobo, those are middlemen. The reason they’re becoming publishers is to get out of being middlemen. I believe it also increases the number of publishers by two. Furthermore, the number of middlemen on the Internet, such as Yelp and Groupon who connect suppliers with buyers, seem to be on the rise. I’m not sure either publishers or middlemen are on the decline.

    1. Thanks for the comment, Sumocat — I would disagree though. Someone involved in “the production end of content” is a middleman by definition, if the middle you’re talking about is between author and reader. I agree that retailers can also be seen as middlemen though, which is why I included Amazon as one of the players who could be disrupted. And I’m not saying middlemen will die — just that they have to try harder :-)

      1. No, Mathew, you’re wrong here. Trust me, you do not want to read most author’s unedited manuscripts. The problem with the middleman label is that it’s perjorative and implies a lack of value add.

        Does this mean publishers shouldn’t change? Of course not. But if Amazon wants to put out high quality books, they need to do all of the production things done now by publishers from copy editing to proofing, to layout, promotion, etc.

        I bought Eisler’s book, but Barry’s an iffy example… he was very popular before The Detachment, was signed by Amazon to be a posterboy example and got front page promotion on amazon.com. Let’s see how they treat midlisters…

        But my main worry about Amazon or others becoming publisher isn’t any of that… it’s that we’re locking up books in DRMed, non-open formats. Right now I can read Kindle titles on most devices. 10 years from now, will the Kindle software exist? If so will it read Eisler’s book? Cleaning out some closets in my parent’s home recently I found books from high school. 35 years ago. Still perfectly readable. An open (or at least documented) format that has no DRM could be translated to a newer format. Can the existing Kindle? Amazon just announced that they’re moving from a variation of .mobi to an HTML 5 based format. Will they commit to making sure all future Kindles read .mobi or give people those books in the new format?

        For a traditional publisher, I can usually get the ebook in several formats so this is less of a concern. With Amazon, that’s not the case. We’re locking up books behind a single, proprietary standard.

      2. Rick, I know that unedited manuscripts would be a nightmare in many cases — that doesn’t make editors and publishers any less middlemen, however. I believe they add value — my point is they are going to have to try even harder to do that, and to prove that they do that. I do agree on the DRM issue though — that is a serious problem.

  2. POD (Print On Demand) is just one channel, albeit a changing one with today’s printing and digital technology, to get content from the writer to the reader. Amazon has a production facility, Createspace.com, which I have used for my independently published book. Authors no longer need publishers as all of the aspects of book production can be outsourced.

    I have found that both publishers and independent production assistants (book designers, graphic artists, editors, etc.) can produce crap to great work. Book publishers are not dying, it’s just the business, book, and content models are changing. People are still looking for good content to read, so writers will still be needed, it’s just the delivery methods, print, audio, video or web have made it so that content can be consumed based on the writer’s and reader’s agreement to deliver it in the form wanted.

    So the real question becomes: Do I want a book to read or to learn (video, web, audio)?

  3. Wolf Hoelscher Friday, October 28, 2011

    I agree that publishers must prove their value to authors to stay in the game, but why haven’t they been doing that all along?

    It’s not like it’s hard. Though Amazon, Kobo, and others may be speeding up the publication process, why is it that articles hailing the rise of self-publishing can only cite Hocking and Locke as their poster children for the trend? Where are the other success stories? Know of any first-time writers who have made it to the big leagues by self-publishing their first book?

    I spoke to a small bookstore owner last week who refuses to stock self-published books anymore because they don’t sell. And I know quite a few authors who’ve gone the self-publishing route and wasted their time and money.

    It’s hard to publish a good book that sells. It’s a team effort and the curation and refinement of content is still something writers need. That’s the value publishers can provide. The larger houses might have lost sight of that, instead believing that large advances and fancy cocktail parties are what authors crave.

    But the smaller independent publishers have a closer connection with their writers and their readers. They understand that quality writing and not industry buzz is the key to better, more sustainable profits. And though Amazon and company will likely be important players in the future of this industry, it seems to me the smaller independents will play the most important role in the years to come.

    1. Thanks for the comment, Wolf — I agree, good publishers have probably been doing a lot of these things already. And smaller houses are likely closer to their authors, as you suggest, which should help them weather the storm.

  4. You can apply this to books, music, TV. There used to be generally one middleman who took care of all the details: publisher, record label, network. They funded, optimized, distributed, advertised and monetized the creative work.

    On a case by case basis these days, the delineation of the steps has shuffled around. Mostly for books and music. Live dramatic work (TV/Movies) will be the hardest nut to crack because of the high start up cost.

    Aren’t we all just waiting, as proof of concept, for the first great TV show that equals big studio ratings and advertising revenue to be distributed online only?

  5. Nathan Weaver Friday, October 28, 2011

    “The only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.” Technically an editor stands between me and my readers, and without an editor(s) I can look pretty stupid.

    1. Yes, the point is not that they don’t need to exist — simply that they face both risk and opportunity, just as publishers do.

  6. Oh how the times are a changing. I had my first “traditionally” published book put out in 2010 and it was the best, and worst, thing that ever happened to me. It taught me that they aren’t needed.

    I love this quote. “[T]he only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.”

    Absolutely! There is a revolution going on. I’m writing about it daily over at http://www.nopublisherneeded.com, I’d love for you stop by and continue the discussion about the dying industry, and where it’s going.

  7. By the way Mathew, Kickstarter only takes “creative projects”. So good luck trying to get your non-fiction book through their application process. I know, I tried, they rejected me. So I went and did it myself and raised over $30k in 30-days direct to consumer. http://www.businessaroundalifestyle.com

    1. Thanks for that, Jim. Well done.

  8. OBX Publishing Group Friday, October 28, 2011

    To beat this statement to death, “The only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity,” is really a half truth.

    While it is easier than ever for a writer to get his or her book to readers, the majority of writers don’t want to wear 17 hats being the book marketer, the publicist, the designer, the editor, the proofreader and the distributor. Many don’t know how and that’s where the opportunity comes for publishers. The rising trend is that more and more writers are rushing to self-publish, but after all is said and done, the majority of those writers are not selling their books. It takes old fashioned marketing, promotion and good design inside and out to sell books and even that is not enough.

  9. For some insight from the perspective of authors, check out “Be the Monkey” by Barry Eisler and Joe Konrath at http://www.amazon.com/Be-Monkey-Self-Publishing-Between-ebook/dp/B004SV2IPC/ref=sr_1_1?s=books&ie=UTF8&qid=1319878699&sr=1-1

  10. Every industry is being completely disrupted from the technical revolution. It’s a huge wakeup call to long-established industry juggernauts. I call them the gatekeepers. Many of these gatekeepers are in serious trouble due to their denial of the inevitable and their resistance to necessary drastic change. As physical mediums (CDs, DVDs, the printed page) are utilized less, their control diminishes. The tables are turning. They will soon need the individual more than the individual needs them. The quality of their services will become the primary focus. The gate has been knocked down, let’s hope they treated those on the other side well.

    1. Yeah, we just have new gatekeepers, namely Apple, Amazon, Google, Netflix, etc…

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