

This is a live Google Docs discussion. It examines the history and mechanics of the publishing industry as it exists today, analyzes the way the digital revolution reflects recent events in Egypt and the Maghreb, and considers a completely inappropriate YouTube video featuring a randy monkey and an unlucky frog. It clocks in at about 26,000 words, and reveals some pretty startling things.

We encourage everyone reading this conversation to tweet about it, mention it on Facebook or your blog, and post a review. Our goal is to get this information out there, because it benefits authors and could theoretically make legacy publishers smarter (the only reason we're charging 99 cents rather than offering it for free is because online retailers don't let self-pubbed authors post things for free). Help us spread the word—thanks.

Copyright © 2011 by Barry Eisler and Joe Konrath

The chimpanzee image used for the interior of this ebook is Copyright © Thomas Lersch and used under a Creative Commons license.

All rights reserved. No part of this publication can be reproduced or transmitted in any form or by any means, electronic or mechanical, without permission in from the authors or publisher.

Smashwords Edition: June 2011

## Table of Contents

Part One

The Rise of eBooks and Self-publishing

The Future of Paper

What Do These Changes Mean for Writers?

The Virtual Bookshelf and Dynamic Pricing

Readers: the People Who Buy the Eggs

The Revolution is Here

The NYT Bestseller List and Authors With Stockholm Syndrome

Digital Royalties and "Lookback" Provisions

Publisher Reaction and Counterarguments

The Tipping Point

Similar Risks, Different Context

The Long Tail: Long-term Benefits of Self-Publishing

Promotion and Marketing: Legacy vs. Indie

Legacy Publishers: Adding Value?

Paper vs. Digital Sales: A Zero-sum Game?

The Future: the "Self" in "Self-Publishing," E-stributors, and Indie Publishing

Part Two

Another Conversation? But Why? Answers to This and Other Questions

Bestselling Indie Author Amanda Hocking Just Signed with a Legacy Publisher. Doesn' t That Mean You' re Wrong?

What About the Glut of Self-Published Books? How Will Anyone Know Which Are Good?

But Don' t You Need an Editor?

Isn' t Piracy Scary for Indies?

Your Negro Baseball League Analogy Was Outrageous

Aren' t You Guys Forgetting How Much You Give Up On The Paper Side When You Go Indie?

Which Leads to The "Shame on Publishers Marketplace" Heading, to Make This Section Easier for Publishers Marketplace to Find

Go Indie, or Go Legacy? Here' s the Math

Who Will Be the New Players in Digital, and How Should Authors Pay Them?

A Few Misconceptions

Part Three

Is It Hypocritical for An Author to Self-publish and Also Publish with An Amazon Imprint? And What's in That Contract, Anyway?

Is Exclusivity Bad for the Industry?

A Working Definition of "Legacy Publishing"

Is Amazon a Legacy Publisher?

It Has to Be Either/Or. And Other Examples of Erroneous Thinking

Briefly Returning to the Question of: If The Big Six Are Legacy Publishers, What Do We Call Amazon?

And Now Back to Our Regularly Scheduled Erroneous Thinking Topic

How Do Brick and Mortar Bookstores Succeed in the New Publishing Landscape?

And How Do Literary Agents Succeed?

Next Steps in the Evolution of Ebooks

Be the Monkey

About the Authors

Also by Barry Eisler

Also by Joe Konrath

## Part One

## The Rise of eBooks and Self-publishing

**Joe:** To the casual observer, you appear to be heavily invested in the legacy publishing system. They've been good to you, they helped you get onto the NYT bestseller list, made you wealthy with several large deals, and seem to have treated you fairly.

**Barry:** Well, I don't know about wealthy, but I've been making a living writing novels for almost a decade now, which is a pretty great way to live.

**Joe:** You had six-figure and seven-figure deals. Logic dictates anyone offered a deal like that should leap at it.

**Barry:** You wouldn't.

**Joe:** But I never had the treatment you had from legacy publishers. I would walk away from a big deal now, most certainly, because I have two years of data proving I can do better on my own.

However, what if a NYT bestseller were offered, say, half a million dollars for two books?

Or, more specifically, let's say _you_ were offered that.

You'd take it. Right?

**Barry:** Well, I guess not... ;)

**Joe:** So... no BS... you were just offered half a mil, and you turned it down?

**Barry:** Yes.

**Joe:** Holy shit!

**Barry:** I know it'll seem crazy to a lot of people, but based on what's happening in the industry, and based on the kind of experience writers like you are having in self-publishing, I think I can do better in the long term on my own.

**Joe:** Holy shit!

Sorry. That needed to be said twice.

**Barry:** It's okay, I like when you talk dirty.

We are living in remarkable times, aren't we?

**Joe:** Indeed. " **Barry Eisler Walks Away From $500,000 Deal to Self-Pub"** is going to be one for the Twitter Hall of Fame.

**Barry:** Here's something that happened about a year ago. Anecdotal, but still telling, I think. My wife and daughter and I were sitting around the dinner table, talking about what kind of contract I would do next, and with what publisher. And my then eleven-year-old daughter said, "Daddy, why don't you just self-publish?"

And I thought, _wow_ , no one would have said something like that even a year ago. I mean, it used to be that self-publishing was what you did if you couldn't get a traditional deal. And if you were really, really lucky, maybe the self-published route would lead to a real contract with a real publisher.

But I realized from that one innocent comment from my daughter that the new generation was looking at self-publishing differently. And that the question—"Should I self-publish?"—was going to be asked by more and more authors going forward. And that, over time, more and more of them were going to be answering the question, "Yes."

This is exactly what's happening now. I'm not the first example, though I might be a noteworthy one because of the numbers I'm walking away from. But there will be others, more and more of them.

**Joe:** Over a year ago, you wrote a Huffington Post blog called  Paper Earthworks, Digital Tides. You basically predicted that digital would become the preferred reading format...

**Barry:** You're being kind to me—you predicted that switch way before I caught on to it. In that blog post, I was more building on what I've learned from you. But my general point was that digital was going to become more and more attractive relative to paper. First, because the price of digital readers would continue to drop while the functionality would continue to increase; second, because more and more titles would become available for digital download at the same time more brick and mortar stores were closing. In other words, everything about paper represented a static defense, while everything about digital represented a dynamic offense. Not hard to predict how a battle like that is going to end.

Apple sold 15 million iPads in 2010, and the iPad2 just went on sale. And Amazon sold eight million Kindle books in 2010—more digital books, in fact, than paperbacks. Meanwhile, Borders is shuttering 224 stores. So I think it's safe to say the trends I just mentioned are continuing. And the trends reinforce each other: the Borders in your neighborhood closes, so you try a low-priced digital reader, and you love the lower cost of digital books, the immediate delivery, the adjustable font, etc... and you never go back to paper. The reverse isn't happening: people aren't leaving digital for paper. There's a ratchet effect in favor of digital.

## The Future of Paper

**Joe:** In the history of technology, when people begin to embrace the new media tech, it winds up dominating the marketplace. CDs over vinyl and tapes, DVD over VHS. The Internet over newspapers. Even Priceline over travel agents—

**Barry:** Yes! Sorry to interrupt, but this is something that interests me so much. I can't tell you how many people I've heard saying, "But paper isn't going to disappear." That isn't the point! If you ask the wrong question, the right answer to that question isn't going to help you. So the question isn't, "Will paper disappear?" Of course it won't, but that's not what matters. What matters is that paper is being marginalized. Did firearms eliminate the bow and arrow? No—some enthusiasts still hunt with a bow. Did the automobile eliminate the horse and buggy? No—I can still get a buggy ride around Central Park if I want.

Now, some new technologies really have completely displaced their forebears. For example, there's no such thing as eight-track tape anymore. And yet some people still do listen to their music on vinyl, despite the advent of mp3 technology. The question, then, is what advantages does the previous technology retain over the new technology? If the answer is "none," then the previous technology will become extinct, like eight-track. If the answer is "some," then the question is, how big a market will the old technology continue to command based on those advantages?

**Joe:** You're talking about niche markets.

**Barry:** Exactly.

**Joe:** We've discussed this before. Paper won't disappear, but that's not the point. The point is, paper will become a niche while digital will become the norm.

**Barry:** Agreed. Lots of people, and I'm one of them, love the way a book feels. I used to like the way books smelled, too, before publishers started using cheap paper. And you can see books on your shelf, etc... those are real advantages, but they're only niche advantages. Think candles vs. electric lights. There are still people making a living today selling candles, and that's because there's nothing like candlelight—but what matters is that the advent of the electric light changed the candle business into a niche. Originally, candlemakers were in the lighting business; today, they're in the candlelight business. The latter is tiny by comparison to the former. Similarly, today publishers are in the book business; tomorrow, they'll be in the paper book business. The difference is the difference between a mass market and a niche.

**Joe:** I also love print books. I have 5,000 of them. But  print is just a delivery system. It gets a story from the writer to the reader. For centuries, publishers controlled this system, because they did the printing, and they were plugged into distribution. But with retailers like Amazon, B&N, and Smashwords, the story can get to the reader in a faster, cheaper way.

And publishers aren't needed.

Do you think publishers are aware of that?

**Barry:** I think they're extremely aware of it, but they don't understand what it really means.

**Joe:** I believe they've gotten their business model mixed-up. They should be connecting readers with the written word. Instead, they're insisting on selling paper.

**Barry:** Yes. There's a saying about the railroads: they thought they were in the railroad business, when in fact they were in the transportation business. So when the interstate highway system was built and trucking became an alternative, they were hit hard.

Likewise, publishers have naturally conflated the specifics of their business model with the generalities of the industry they're in. As you say, they're not in the business of delivering books by paper—they're in the business of delivering books. And if someone can do the latter faster and cheaper than they can, they're in trouble.

**Joe:** You say they're aware of it, and some evidence points to that being true. The agency model is an attempt to slow the transition from paper to digital. Windowing titles is another one. So are insanely high ebook prices.

**Barry:** All are signs that publishers are aware of the potential for digital disintermediation, but that they don't understand what it really means.

**Joe:** Because they still believe they're essential to the process.

**Barry:** I would phrase it a little differently. They recognize they're becoming non-essential, and are trying to keep themselves essential—but are going about it in the wrong way.

## What Do These Changes Mean for Writers?

**Joe:** You and I and our peers are essential. We're the writers. We provide the content that is printed and distributed.

For hundreds of years, writers couldn't reach readers without publishers. We needed them.

Now, suddenly, we don't. But publishers don't seem to be taking this Very Important Fact into account.

**Barry:** Well, again, I think they're taking it into account, but they're drawing the wrong conclusions. The wrong conclusion is: I'm in the paper business, paper keeps me essential, therefore I must do all I can to retard the transition from paper to digital. The right conclusion would be: digital offers huge cost, time-to-market, and other advantages over paper. How can I leverage those advantages to make my business even stronger?

**Joe:** We figured out that the 25% royalty on ebooks they offer is actually 14.9% to the writer after everyone gets their cut. 14.9% on a price the publisher sets.

**Barry:** Gracious of you to say "we." You're the first one to point out that a 25% royalty on the net revenue produced by an ebook equals 17.5% of the retail price after Amazon takes its 30% cut, and 14.9% after the agent takes 15% of the 17.5%.

**Joe:** Yeah, that 25% figure you see in contracts is really misleading. Amazing, when you consider that there's virtually no cost to creating ebooks—no cost for paper, no shipping charges, no warehousing. No cut for Ingram or Baker & Taylor. Yet they're keeping 52.5% of the list price and offering only 17.5% to the author. It's not fair and it's not sustainable.

**Barry:** I think what's happening is that publishers know paper is dying while digital is exploding, and they're trying to use the lock they've always had on paper to milk more out of digital. In other words, tie an author into a deal that offers traditional paper royalties, which are shrinking, while giving the publisher a huge slice of digital royalties, which are growing. The problem, from the publisher's perspective, is that their paper lock is broken now.

**Joe:** I feel all writers need to be made aware that there is finally an option. Not just an option, but an actual preferable alternative to signing away your rights.

**Barry:** It's inevitable that more writers will be realizing this is true. It's being demonstrated by more and more self-published authors: you, Amanda Hocking, Scott Nicholson, Michael J. Sullivan, HP Mallory, Victorine Lieske, BV Larson, Terri Reid, LJ Sellers, John Locke, Blake Crouch, Lee Goldberg, Aaron Patterson, Jon F. Merz, Selena Kitt, hopefully me... :)

**Joe:** You're on track to make $30,000 this year on a self-published short story. I'm not aware of any short story markets that pay that well.

**Barry:** Well, it's early yet, but yes,  The Lost Coast has done amazingly well in its first few weeks, netting me about $1000 after the initial fixed cost of $600 for having the cover designed and having the manuscript formatted. I plan to continue to publish short stories and I'll be getting the new John Rain novel, _The Detachment_ , up in time for Father's Day, and I have a feeling that each of the various products will reinforce sales of the others.

**Joe:** That's a really smart plan. My own sales, and the sales of other indie authors doing well, pretty much confirm that a rising tide lifts all boats. Virtual shelf space functions a lot like physical shelf space. The more books you have on the shelf, the likelier you are to be discovered by someone browsing. And when a browser reads you and likes you, she buys more of your work, and often tells others about it.

In other words, the more stories and novels you have available, the more you'll sell.

**Barry:** Gotta just jump in here to point out the significance of this. It means that a writer's best promoting tool is once again her writing. Advertising costs money. New stories make money.

**Joe:** I told you so...

**Barry:** You did. Glad I listened late rather than never. It's amazing: for most of the history of publishing, outside of a brief book tour and maybe a few public appearances throughout the year, a writer couldn't do much to promote. Then the Internet happened, and writers had to do a tremendous amount of online promotion—blogs, social networking, chat rooms—to be competitive. Now, with digital books, once again there's no more profitable use of an author's time than writing. Not to say that authors don't need to have a strong online presence; of course they do. But anytime you're thinking about some other promotional activity—a blog post, a trip to a convention, an hour on Facebook—you have to measure the value of that time against the value of writing and publishing a new story. The new story earns money, both for itself and your other works. The social networking stuff doesn't.

## The Virtual Bookshelf and Dynamic Pricing

**Joe:** Yes. But it's even more than that. Because there are two major differences between virtual shelves and physical shelves.

First, a virtual shelf is infinite. In a bookstore, they have a limited amount of space. Often, my books are crammed spine out, in section—and I'm lucky if they have a copy of each that are in print. Many times they only have a few, and sometimes none at all. But a virtual shelf, like Amazon or Smashwords, carries all my titles, all the time. And I don't have to compete with a NYT bestseller who has 400 copies of their latest hit on the shelf, while I only have one copy of mine. We each take up one virtual space per title.

Second, virtual shelf life is forever. In a bookstore, you have anywhere from a few weeks to a few months to sell your title, and then it gets returned. This is a big waste of money, and no incentive at all for the bookseller to move the book.

But ebooks are forever. Once they're live, they will sell for decades. Someday, long after I'm gone, my grandchildren will be getting my royalties.

Currently, my novel The List is the #15 bestseller on all of Amazon. I wrote that book 12 years ago, and it was rejected by every major NY publisher. I self-published it on Amazon two years ago, and it has sold over 35,000 copies.

**Barry:** That is insane. Aside from some major external event—a big movie release, something like that—it's almost unheard of for a backlist paper book to suddenly become a bestseller. Yet that's exactly what just happened to _The List_.

**Joe:** Because I dropped the price.

**Barry:** Well shit, legacy publishers use dynamic pricing to move books all the time.

**Joe:** Sorry, I just spewed beer all over my monitor.

**Barry:** I apologize.

**Joe:** No problem. But right, with digital you have the option to put an ebook on sale. I originally self-published _The List_ in April of 2009. It went on to sell 25,000 ebooks at $2.99. Now, two years later, I lowered the price, and it's selling 1500 copies a day. Things like that don't happen in paper. But in self-publishing, I'm seeing more and more books take their sweet time finding an audience, then take off.

Forever is a long time to earn royalties. So it makes sense for forever to begin today, not tomorrow.

If you had taken the deal for _The Detachment_ , when would it have been published?

**Barry:** This was one of the reasons I just couldn't go back to working with a legacy publisher. The book is nearly done, but it wouldn't have been made available until Spring of 2012. I can publish it myself a year earlier. That's a whole year of actual sales I would have had to give up.

**Joe:** We can make 70% by self-publishing. And we can set our own price. I have reams of data that show how ebooks under $5 vastly outsell those priced higher.

**Barry:** This is a critical point. There's a huge data set proving that digital books are a price-sensitive market, and that maximum revenues are achieved at a price point between $.99 and $4.99. So the question is: why aren't publishers pricing digital books to maximize digital profits?

**Joe:** Because they're protecting their paper sales.

**Barry:** Exactly.

**Joe:** It's awfully dangerous for an industry to ignore (or even blatantly antagonize) their customers in order to protect self-interest.

**Barry:** Not that it hasn't been tried before. Just never successfully outside a monopoly. And the advent of digital has broken the monopoly publishers used to have on distribution.

**Joe:** In the meantime, I'm selling 3000 ebooks a day by pricing reasonably. There aren't too many Big 6 authors selling that well. And I'm getting much better royalties than they are.

So what's going on with legacy publishers? It seems like either willful ignorance or outright stupidity. They're irritating their customers, alienating their content providers, and refusing to embrace the future.

Why?

**Barry:** I think there are a lot of things going on, some emotional, some institutional. Clayton Christensen wrote about a lot of this in a book called  The Innovator's Dilemma. Fundamentally, it's extremely hard for an industry to start cannibalizing current profits for future gains. So the music companies, for example, failed to create an online digital store, instead fighting digital with lawsuits, until Apple—a computer company!—became the world's biggest music retailer.

**Joe:** Simon and Schuster or Random House should have invented the ereader. They should have been selling ebooks from their websites a decade ago. Instead, an online bookseller, Amazon, is leading the revolution.

**Barry:** Exactly. The same outcome as in the music business. It's one thing for a single media company to make these mistakes—but one after the other? What's that Oscar Wilde line? "To lose one parent may be regarded as a misfortune; to lose both looks like carelessness."

**Joe:** Or, as your character Dox would say, "This isn't really about hunting, is it..."

**Barry:** That Dox has a way with words.

**Joe:** Those who don't study history are doomed to repeat it. I also think the Upton Sinclair quote is appropriate: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." Denial is a powerful opiate.

We both dig quotations too much.

**Barry:** And I think it was Nelson Mandela who said, "Where you stand depends upon where you sit." We're probably all victims of those kinds of pressures, to one extent or another. But you have to try to be as aware as possible of the dynamic. If you're not, you could lose a lot of money.

## Readers: the People Who Buy the Eggs

**Joe:** You might also lose your content providers. If you're selling eggs, don't piss off your chickens.

**Barry:** It's not just the chickens. It's the people who buy the eggs, too.

**Joe:** The readers. And the libraries. HarperCollins just announced they are putting a limit on ebook loans in libraries. After twenty-six check-outs, the library has to buy a new copy.

Talk about biting the hand that feeds...

**Barry:** Yes. The problem is twofold. First, by giving authors only 17.5% of the growth end of the business while keeping 52.5% for themselves, publishers are going to lose authors. Second, by attempting to retard the growth of digital—holding back digital releases until paper is ready, charging paper prices for digital books—publishers are  thwarting their customers. Take a step back and consider it, and it's hard not to see that this strategy is badly flawed. A business grows by giving customers what they want, not by insisting that customers take what the business wants them to have. It grows by cultivating its wholesale providers, not by alienating them with percentages so unfair that it motivates them to develop their own retail channels.

**Joe:** It reminds me of the golden age of television. You had three choices, ABC, NBC, or CBS. They dictated what you would watch.

But that model no longer works for TV. Now there are hundreds of channels. And it no longer works for books, either. If you look at the current Top 100 bestsellers on Kindle, 27 of them are self-published. Many of those authors were rejected by NY. Yet consumers are showing us what they want to read, and voting with their wallets.

The "gatekeeper" model, where agents and Big 6 Publishers decided what would be fit for public consumption, is eroding. YouTube has proven that viewers are okay with having unlimited choices, and happy to surf to find things that interest them.

**Barry:** Yes! I mean, which of the networks would have broadcast that monkey raping a helpless bullfrog?

**Joe:** It wasn't rape. It was consensual.

**Barry:** I don't know. I don't think the frog was conscious. I'm not sure it was even alive.

**Joe:** I—

**Barry:** After the first five minutes, I mean.

**Joe:** I'm married. I see this all the time. The frog was conscious. Just not very active.

**Barry:** Yes, but he couldn't speak.

**Joe:** So the frog croaked?

**Barry:** Aaaargh!

I still think about that frog. I feel sorry for him. What happened... it just couldn't have been in the lexicon of normal frog fears. Maybe he was worried the monkey would eat him. But then... he's thinking, "Dude, don't do this! You're a monkey, I'm a frog, it's not right, it's against nature, it's mmmmmmmpppphhhhh."

**Joe:** It's not easy being green.

How many people do you think followed that link and then, out of mistrust, never returned to our scintillating conversation?

**Barry:** Yeah, but the ones who returned will be our readers for life.

**Joe:** We're probably going to cut this entire section later.

**Barry:** A tear just rolled silently down my cheek.

**Joe:** You're twelve years old. I swear.

**Barry:** On my good days, yes.

I do want to go on the record at this point as saying that no frogs have ever been harmed in the production of my books.

**Joe:** But gay bashers are rightfully fair game.

**Barry:** Ask my character Larison, in The Lost Coast, about that... :)

## The Revolution is Here

**Joe:** So is this a revolution? Are writers and readers fed up with legacy publishing? And won't their opinions, and their options, hasten the Big 6's demise?

**Barry:** No question: there's a revolution going on here. In fact, there are parallels between what we're seeing in the publishing industry and what you see in social revolutions—the kinds with pitchforks and torches.

**Joe:** You need to elaborate on that. We once had an interesting conversation about kings and peasants which could apply...

**Barry:** I remember that conversation. That was the one with the mescalin, right?

**Joe:** No. That was the one when you confessed your secret love for me. This one was about royalty and peasants.

**Barry:** Oh, right... right. Part of what's going on in the industry now is that publishers are resisting the way technology is empowering writers. I'm sure some publishers will read this and disagree with it, but that's because they're genuinely unaware of the resistance.

**Joe:** Again, are they truly unaware? Or purposely ignoring it?

**Barry:** I'm not sure, but in the end it probably doesn't matter. For a long time, publishers' lock on distribution has given them enormous leverage in the industry, a leverage they've come to view as the natural, desirable order of things. Legacy publishers are part of an establishment, and if you're part of the establishment, you're of course going to like and support the establishment, and to resist any attempts to change or circumvent it. It's just human nature.

**Joe:** They think they're royalty, that they're entitled to certain assurances. And we're peasants, who need to listen to what our lords and masters tell us. Naturally, a peasant uprising is unthinkable.

**Barry:** I'd tweak this just a little. In America, the concept of royalty as such isn't popular, so no matter how many royal perks and prerogatives Americans might have, the people in question wouldn't want to think of themselves as royalty.

But that said, certainly there's a mentality in publishing about who has the power as between publishers and authors generally. There are exceptions—I doubt Stephen King's publisher thinks it has the upper hand in that relationship—but overall, publishers look at authors as needing publishers more than publishers need authors.

**Joe:** That's changed. And they don't seem to realize it.

**Barry:** Right. Before the digital revolution, there was some basis for this viewpoint. But today it's antiquated, and publishers are starting to need authors more than authors need publishers. If for generations you've been the lord of the land worked by your peasants, and you suddenly find yourself needing the peasants more than they need you, if you find them making new demands you don't have the negotiating leverage to resist, you'll probably find yourself resentful because damn it, this just isn't the way God ordered the universe!

**Joe:** And despite all this, legacy publishers don't realize a revolution is afoot.

**Barry:** I think they're aware of it, but in an abstract way. I talk to a lot of people in the business, and when most of them talk about digital and the changes it's causing in the industry, you can tell they're imagining a future that's safely abstract and far off. Something you acknowledge in conversation, of course—you're not in _denial_ , after all—but that fundamentally still feels to you like theory. Because you're still having your Tuesday morning editorial meetings, right? And you just launched a new title that made the NYT list, right? And signed that hot new author, right? Sure, there are rumblings in the provinces, but here at court in Versailles, the food is still delicious and the courtiers still accord deference appropriate to your rank. When you live in the palace at Versailles, the rumblings in the provinces always sound far away. Right up until the peasants are dragging you out of your bed in the middle of the night and setting fire to your throne.

**Joe:** Sounds like Egypt.

**Barry:** It is Egypt. You think Mubarak had any idea of what he was facing at any time before he was being escorted from the palace? At one point, he actually believed that offering to fire his cabinet was going to appease protesters. And at some point, publishers will believe that offering authors 25% or 30% of digital retail instead of 17.5% will put down the rebellion. In fact, this is probably their current backup, hail-Mary, worst-case plan. But it's already too late.

The royalty/peasant mentality is pervasive, largely invisible to the people who are part of it, and manifests itself in a lot of contexts. Look what happened when I published my blog post, The Ministry of Truth.

**Joe:** The one about your NPR essay?

**Barry:** Right, my essay examining Orwell's _Nineteen-Eighty-Four_ as a thriller, which I wrote at NPR's invitation. The blog post examined the way NPR edited the essay, and how NPR's edits revealed that fundamentally, NPR is an establishment media player.

**Joe:** Your editor was pissed.

**Barry:** He was. NPR called up Random House and complained about my blog post. And my editor then dutifully complained to me. At first, I didn't understand the complaints at all. I said, "Why don't they complain in the comments section of my blog? You know, the box where it says, 'Leave Your Comment.' Why not engage my argument? Why are they complaining to you in private?"

**Joe:** Because they didn't want to imply you were an equal.

**Barry:** Bingo. Their attitude was, "If we argue in public with this unwashed blogger, by implication it puts the blogger on the same footing as NPR." So instead, they called another establishment player, Random House, to settle it all privately. "Straighten out this peasant, won't you? He's making us all look bad."

The weird thing was how much sense the whole thing made to my editor and how little it made to me. I mean, it's not like I took a dump all over NPR; I just pointed out that they're an establishment media player playing by establishment media rules. An entirely legitimate and worthwhile argument. But they weren't concerned about the merits of the argument; they were concerned that the argument was being raised at all, and by someone without the appropriate status to raise it. I just didn't get it. I asked my editor, "what, is there some lese majeste law protecting NPR from respectful public criticism?" It's bizarre, how delicate establishment egos can be, how frightened they are of criticism from the wrong quarters.

**Joe:** Peasants aren't allowed to criticize the royalty.

**Barry:** Yes. People don't understand what this means. They see Fox fighting with CNN, Democrats fighting with Republicans, and they think they see real competition, competition that matters. But the old clans of Europe fought each other, too—they fought viciously. But you know what would bring them together as one?

**Joe:** A peasant uprising.

**Barry:** Yes. If a peasant spoke up, if a peasant suggested by word or deed that there was something fundamentally illegitimate about the very system within which the clans fought each other for spoils, that the system should be open to everyone—in the face of that, the clans would unite against the threat to the system itself. The clans hated each other, but they would work together to support the overall system.

**Joe:** Two beers and you're already getting political.

**Barry:** You should hear me after two coffees. It's worse. Anyway, "competition" between the major New York houses and other establishment players works the same way.

## The NYT Bestseller List and Authors With Stockholm Syndrome

**Joe:** Other establishment players like the New York Times Bestseller List. Which, according to my calculations, I should have been on...

**Barry:** Yes, what the New York Times has been doing is a perfect example of the royalty/peasant mindset at work.

**Joe:** Let's set the Wayback Machine to 2009, when ebook sales began to really pick up speed. The NYT had ample opportunity to include them on their prestigious list.

**Barry:** Yes. Now, the natural, sensible, path-of-least resistance kind of thing would have been to include digital sales from the beginning, right?

**Joe:** Absolutely. Especially for a periodical that is considered the gold standard when it comes to reporting the news. It's a "bestseller" list, after all.

**Barry:** At least that's what it purports to be. So why didn't the Times include digital sales from the outset? Or at least from some point after digital sales became more than a niche. Why did they wait until Amazon was selling more digital books than paperbacks?

**Joe:** Perhaps reporting the truth was somehow not aligned with what the NYT perceives as its interests.

**Barry:** Please don't get me started on the Times' cowardly insistence on calling waterboarding torture only when it's done by other countries, and "harsh interrogation techniques" when it's done by Americans. That's their  official policy, by the way.

**Joe:** I noticed you managed to sneak that sound bite into the Freakonomics movie. Which, incidentally, you never even told me you appeared in...

**Barry:** I still can't believe I forgot to tell you that. But yes, I think it's important that in a variety of critical ways the "newspaper of record" sees itself as the government's partner and spokesperson, and believes that role is natural and desirable.

**Joe:** In the case of the bestseller list, I would assume that advertising dollars play a part. I'm a self-pubbed author. I don't buy full page ads in the Times for big bucks.

**Barry:** Surely this is no more than coincidence!

**Joe:** But even if we set aside the money, the Times has ample motive for not putting indie authors on their bestseller list. Newspapers, like Big 6 publishers, are remnants of the analog age. Printing and shipping paper is an antiquated form of distributing media. These companies are trying to stay relevant in a digital future, and aren't doing so well at it. Certainly the fact that I can sell more books than most bestselling Big 6 authors shows how ineffective the Big 6 are. So publishers, both newspaper and book, have an aligned interest in keeping digital at bay. Keeping it out of the public eye is one way to forestall things.

**Barry:** Right. Look, if the Times bestseller list were really just about sales—you know, if it were really just about the books that were "selling" the "best"—than you and a lot of other indie authors would be on it, because your numbers inarguably put you there. But the Times won't allow it. What we can infer from the Times' behavior, therefore, is that what they call a "bestseller" list is in fact a "those bestselling books we believe have been properly vetted and blessed by trusted establishment players with whom we see our interests as aligned" list.

**Joe:** That's a mouthful.

**Barry:** Sometimes the truth takes a little more explaining than the soundbite. Which is why governments, and Madison Avenue, like soundbites better. On the other hand, it's a pretty simple soundbite to ask, "Why are so many bestselling books not being included on a bestseller list?"

**Joe:** Because including digital would accelerate the transition from analog. And paper pushers don't want that.

**Barry:** Right. And there's more. What happened when digital sales became so big that even the Times recognized it was beginning to look undeniably foolish and antediluvian in pretending digital didn't exist?

**Joe:** They said, "All right, we'll include digital. But not by indie authors."

**Barry:** Yes. Apparently, bestselling indie authors aren't "real" bestsellers. Some sales are more equal than others.

**Joe:** Maybe I'll get lucky and the Times will publish a separate bestseller list for indie ebooks. "Separate but equal" is fair, right?

**Barry:** I almost wish they would. It would be pretty funny to see how many more books the indie bestsellers were selling than the legacy bestsellers.

**Joe:** It would be kind of like the old Negro Baseball League. The white establishment segregated them, and the Negro league wound up having the best players. Eventually, the establishment had no choice but to combine them.

**Barry:** It's always interesting to watch the gyrations and contortions someone has to engage in when he takes an illogical and otherwise untenable position, a position he knows he can't explain honestly and openly. Listen to the Times' editor, Bill Keller,  try to explain his position on the word "torture" and you might almost begin to feel sorry for him.

**Joe:** The Times, like the Big 6, are gatekeepers. But the gatekeepers aren't the only parties interested in keeping the status quo.

There are so many writers now defending the Big 6 that I liken their behavior to Stockholm Syndrome. As artists, we've become so used to the idea of breaking into the publishing industry by appeasing the gatekeepers that we've begun to revere them. We defend their decisions—even the wrong ones—because we've deemed them essential to the process. They're the powerful purveyors of wisdom who nod at worthy intellectual properties and welcome their creators into the fold.

**Barry:** If you can add one more "P" word to "Powerful Purveyors," you'll have a hit on your hand. You know, like "Nattering Nabobs of Negativism."

**Joe:** Powerful Purveyors of Preference.

**Barry:** I like it. One for the ages.

**Joe:** So when confronted with how unfair the gatekeeping system is compared to self-pubbing, some authors get angry and insist that the Big 6 must know better, and have our best interests at heart.

**Barry:** I've seen this from time to time in the comments section of your blog and also in the comments at Jane Litte's excellent Dear Author. I think of it as a peasant mentality, but absolutely, Stockholm Syndrome is a perfect reference.

**Joe:** The thing is, the notion that the gatekeepers know better is demonstrably untrue. While I've had good relationships with industry pros, they always boiled down to one thing: money. There's nothing wrong or dirty about that. Business is business. But as the artist, we have a lot more at stake in this business.

**Barry:** We have more skin in the game. A publisher can have hundreds of authors, but I'll only be able to write so many books in my lifetime. They can afford to have a few fail. I can't.

## Digital Royalties and "Lookback" Provisions

**Barry:** I want to digress here for a moment to show how in the current system this hidden asymmetry can work to the author's detriment. You know how legacy publishers are now agreeing to what are called "lookback" provisions on digital royalties?

**Joe:** You mean the clauses that says, three years after publication, the two parties will renegotiate the digital royalty?

**Barry:** Yes. The clause then provides, "And if the parties can't agree on a new royalty, the publisher will stop selling digital copies of the title in question." Sounds like an equitable solution, right?

**Joe:** Not to me. But I see why it'll fool some people.

**Barry:** It fools a lot of people. They think, "Well, that seems fair... if we can't agree on a new royalty, no one can sell the book until we do agree." Equally applicable to both sides. But as a percentage of the publisher's corporate earnings, that one version of one title is barely a rounding error. As a percentage of the author's earnings, it's massive. If there's a freeze, who's going to squeal first?

**Joe:** People need to understand this. I _need_ my books to make money, or else I can't make a living. A publisher needs books, but not any specific book.

**Barry:** A critical concept that applies to burglaries, too. A burglar doesn't want to rob your house; he wants to rob a house. When you understand this, you can take appropriate defensive measures.

**Joe:** Okay, back to your decision. Without—

**Barry:** Did I digress?

**Joe:** You never digress.

**Barry:** You're being kind.

## Publisher Reaction and Counterarguments

**Joe:** Without revealing who offered you half a million dollars, how did they handle your reaction?

There have been other authors who have turned down deals. Though hearsay and rumor continue to trumpet otherwise, I passed up legacy offers for Shaken, Endurance, and Trapped, and I pulled a second book in a two book deal with Berkley because I couldn't get them to understand that low prices and no DRM sells many more books, even though I have a lot of evidence that shows I'm right.

But I didn't give up half a mil...

**Barry:** Every time you say that you make me feel like a lunatic!

**Joe:** You might be, but not in regard to this situation. Obviously, I'm 100% on your side on this one. I'm on track to make half a mil in the next ten months. I know how lucrative self-publishing has become.

But I'm an outlier, remember? An anomaly. (Me and the dozens other writers who are doing the same.)

**Barry:** Here's another quote, this one from Gandhi: "First they ignore you, then they laugh at you, then they fight you, then you win."

As a news junkie, it's been fascinating for me to watch the way the publishing establishment has tried to marginalize you. First by ignoring you, and then, when ignoring you became impossible, by trying to position you as some sort of shrill, bitter, fringe player with nothing more than an axe to grind. The way legacy publishing has tried to de-position you is perfectly analogous to what The New York Times and other establishment media players have tried to do with Wikileaks.

I can't tell you how many otherwise smart and reasonably well-informed publishing people have said to me, "Well, yes, but Konrath was rejected by all the NY houses" (about the same number as the otherwise smart and reasonably well-informed people who've said to me, "Yes, but Wikileaks  indiscriminately released a quarter million top secret cables and has blood on its hands"). I tell them that's untrue, that in fact your legacy books have earned out and that you had offers on various others which in the end you decided not to take. And I ask them, "What do people say when they've been fired? 'I quit.' What do they say when their girlfriend breaks up with them? 'I dumped her, man.'" Maybe they even believe it, too, but that doesn't make it so.

And then they say, "Well, all right, but Konrath is a marketing genius."

**Joe:** That part's true.

**Barry:** It is true, but it isn't the point. They're trying to argue that you have to be a marketing genius to succeed in self-publishing, and that therefore no one else but you can do it. This is just demonstrably not the case. A talent for marketing is going to help you in any business endeavor, but there are too many people making money now in self-publishing for an outbreak of genius to be the explanation.

And then the next argument (contradicting the first one, by the way) is, "Konrath only succeeded in self-publishing because he had a legacy deal first." And then I point to your various blog posts where you show how much money is being made by self-published writers who have never had legacy deals.

**Joe:** I think I contradicted the "legacy deal first" argument pretty well  here.

**Barry:** You demolished it. The final argument I've been hearing—and it really will be the final argument, because after this, "then you win"—is that, "Okay, some people are making money in self-publishing, but it's always the same names."

But that list of names keeps getting longer. The critics are going to be reduced to saying, "Okay, some people are making money in self-publishing, but it's always the same five thousand names."

The critics will be self-publishing themselves before then.

**Joe:** I was in love with the publishing industry. It was my dream to land a Big 6 deal. And I still believe the industry is filled with intelligent, talented, motivated, exceptional people. I'm grateful to have sold as many books as I did (and continue to do).

My switch to self-publishing isn't personal. It's just business. I can make more money on my own.

Also, I see publishers doing a lot that's wrong. Things we've just discussed. It isn't a good idea for most authors to sign a legacy deal anymore.

You, however, are a NYT bestseller. This is important, you passing on a deal like this. It says something I haven't been able to say, and shows something I haven't been able to show.

**Barry:** Some people are reading this and saying, "Yeah, it shows that he is _demented!"_

**Joe:** Nah, that they already suspected. Actually, I'd qualify it as a tipping point. When big name authors start turning down major deals, the tides are truly turning.

## The Tipping Point

**Barry:** I think it's fair to say it's probably a kind of milestone. There will be many more, some we won't even be aware of except in retrospect, but yes, when authors start turning down half-million dollar book deals because they think they'll do better in the long run on their own, it's hard to argue "Nothing to see here, folks, just keep moving..."

**Joe:** I've said it to you in person, and I'll repeat it here. You have got some gigantic balls.

**Barry:** I don't know if it's that so much. It's more that I've spent a lot of time in this industry and a lot of time studying it. I've also spent time in other industries, and in the government, and there are certain dynamics at work in the publishing world that feel familiar to me. Plus I read your blog and I track the results of your experiments. You've created a lot of data that's providing a kind of roadmap through new and confusing terrain. Anyway, add all that up and it leads me to the conclusion that I'd be better off on my own. Doing the right thing isn't the hard part, I think; it's knowing what the right thing is in the first place. You've made that easier.

**Joe:** Dude, they're like two pumpkins in a sack. Your balls are massive. Other men fear your balls.

Now would be a fun time to reveal that I made up all of my numbers, and am only making $7 a week on ebooks.

**Barry:** Heh. Remember, if Amazon is playing with your numbers, they're probably inflating them just to tempt other authors to take the plunge, create a self-fulfilling prophecy, and hasten the transition to digital.

## Similar Risks, Different Context

**Joe:** We discussed that recently. How can we be sure Amazon, or any of the other etailers, are being honest in their accounting?

**Barry:** We can't. But—

**Joe:** But how can we be sure the Big 6 are honest in their accounting? Especially with reserves against returns and inflated print run figures?

**Barry:** Exactly. What's so interesting about this species of question is that it always ignores the same risk as it exists in a more familiar context. For example, "How do you know you'll be able to market your books effectively by yourself?" As though working with a legacy publisher automatically means you're going to be marketed effectively.

**Joe:** My fave is, "So, what if Amazon reduces the royalty rate from 70% once they dominate the market?"

**Barry:** Yes, that's the classic. I mean, they might even reduce it to 14.9%! And God, a 14.9% digital royalty would just suck.

Oh, wait...

**Joe:** LMAO.

**Barry:** One more related point. I know some people are going to be reading this and thinking, "Okay, but how will I ever cut through all that digital clutter? How will I ever get noticed without a publisher?"

**Joe:** How did anyone ever get noticed _with_ a publisher?

**Barry:** Exactly. Walk into a bookstore—even with today's diminished inventory, there are tens of thousands of titles. How do you get noticed? Getting noticed and other aspects of marketing is a challenge in any business, digital, paper, or otherwise. It's too big a topic to cover here, but for now, let's just say that it's hardly a unique challenge for digital books. And, as you and many others have demonstrated, it's hardly an insurmountable challenge, either.

**Joe:** I'd argue that marketing a digital book is actually easier. But we can come back to that. I want to ask, can you reveal who made the offer?

## The Long Tail: Long-term Benefits of Self-Publishing

**Barry:** I don't think it's a secret that the publisher was St. Martin's Press. And my demurral had nothing to do with SMP specifically—in fact, I think they're terrific people, and if I'd worked with them earlier in my career, I would have been much better off. Also, I had comparable offers from other publishers and thought the SMP people were the smartest and most impressive of the bunch. So my decision had nothing to do with SMP in particular, and everything to do with pervasive industry dynamics as I see them. To put it another way, from everything I've heard and seen, I think SMP would be an exceptionally strong publisher. But like all publishers, they're currently caught in a digital riptide and don't have a good way through it.

**Joe:** So, were they shocked?

**Barry:** Well, certainly surprised and disappointed. And we tried to work out something a little different than what had originally been proposed, but in the end I just couldn't convince myself not to go it alone.

**Joe:** How about your agent? What was his reaction?

**Barry:** Again, surprised and disappointed. But it's led to a lot of terrific conversations about where the industry is going, and how agents will be changing their business models accordingly.

**Joe:** Did your wife want to strangle you?

**Barry:** If she did, it wouldn't be anything new. But she's amazing... totally understands how I think and feel about all this and is completely supportive.

**Joe:** Also, if you don't do well on this, I'll be the one she strangles.

**Barry:** She's told me exactly that.

**Joe:** What was the ultimate basis for your decision? Did it come down to pure dollars and cents?

**Barry:** Financial considerations were a big part of it, yes. You and I have discussed various models to understand what a publisher's advance represents: a loan, an insurance policy, a bet. On the loan model, the first place I heard the concept articulated was in an extremely ballsy and persuasive blog post by  Terrill Lee Lankford.

**Joe:** I like that analogy. I also believe signing with a big publisher is like signing a life insurance policy, where the payments keep getting larger while the payoff gets smaller as time goes on.

**Barry:** Yes. Now, of course there are numbers where the loan, the insurance, or the bet would make sense. If the loan is so big that you don't think you'd ever be able to make that much on your own, plus you won't have to pay it back, then sure, take it. If the insurance payout is so big that it eclipses the event it's supposed to protect against, okay. And if you find a publisher willing to put down so much money upfront that you feel they must be stoned because no one could ever earn that much back, then by all means, take the bet.

But short of that, you have to wonder if the person you're betting against isn't yourself.

Anyway, yes, much of this was financial. A lot of people don't realize—and I probably wouldn't have realized myself if you hadn't pointed it out—that the appropriate measure for determining how much your books can earn you in digital is _forever._ In paper, with rare exceptions, there's a big upfront sales push, followed by either total evaporation or by years of low backlist sales. Digital isn't like that.

**Joe:** Time is the ultimate long tail. Even with a big wad of money upfront, if something sells forever, the back end is what ultimately counts.

**Barry:** Right. So if you think you're going to die on Tuesday, for sure take the advance on Monday. If you think you're going to stick around for a while, though, and you have resources to draw on such that you don't need that expensive loan, don't take it. You'll be better off without.

**Joe:** Or to put it another way, getting half a million bucks and 14.9% royalties, forever, isn't as lucrative as no money up front and 70% royalties, forever.

**Barry:** Yes. Especially because you first have to earn out the half million at 14.9% per book. That could take a while. After which, as you note, you're still only earning 14.9% rather than 70%. You need to move five times the volume at 14.9%.

**Joe:** But currently, you're a paper bestseller.

**Barry:** Yes, which maybe makes my experience instructive. My books are probably pretty good examples of reasonable success in paper. The first two, Rain Fall and Hard Rain, are in something like their 15th printings eight and nine years on. So that's good. But I'm still only earning pennies on each copy sold. And my publisher of those books, Putnam, is still trying to charge $6.99 and $7.99 for digital copies, which is demonstrably too high if your goal is to maximize revenue (as opposed to, say, trying to shore up an eroding paper ecosystem).

I'm getting close to earning out on some of those books, which would be another sign of success—but even after I've earned out, I'll still be making only pennies because of low paper royalties and because 14.9% multiplied by sluggish digital sales caused by too-high prices doesn't make me much money.

I should add here that I don't begrudge Putnam—they have the rights and they can use them however they like, however mistaken I think they are in their digital pricing model. The point is that I would be making far more money from the books if I held the digital rights myself. At the time, holding the rights myself wasn't an option. Today it is, and I don't want to be kicking myself eight years from now when _The Detachment_ would be making me only pennies through a legacy publisher when it could have been making me a mint through the rights I refused to sell cheap.

**Joe:** Time also has to be an issue for you. Not just having to wait a year to publish _The Detachment_ , but the time it takes to promote it.

## Promotion and Marketing: Legacy vs. Indie

**Joe:** A few years ago, there was some idiot who did signings at over 500 bookstores during a summer. He wound up visiting 40 states and over 1200 bookstores.

**Barry:** I heard about that guy. Funny-looking dude.

**Joe:** Hah. But there was another idiot who came pretty close to that record, who personally visited over 800 bookstores in the last few years.

**Barry:** Heh. People who live in glass houses...

**Joe:** And I may be the only other person on the planet who knows the amount of time and effort that took. Time that you could have spent writing...

**Barry:** Based on what I knew at the time, it seemed like the right thing to do. Plus I've always wanted to see Montana.

**Joe:** I'm sure you saw that and more, driving those thousands of miles. But it was the right thing to do. We're both still in print, aren't we? How many of our peers who were published at the same time aren't?

**Barry:** That's a good point. Books were selling through bookstores, and I looked at booksellers as my frontline sales force. So I wanted to do all I could do develop a closer relationship with that sales force and help them sell books. Not an unworthy objective, even today, but what it fails to take into account is the opportunity cost involved. When you're driving (or whatever), you're not writing, and again the highest profit margin activity an author can engage in is writing. In retrospect, I realize this has always been true, but it's more true now than ever due to the numbers of units you can sell in digital, because of the tendency of a new digital customer to vacuum up an author's entire low-price, high-margin oeuvre in one purchase.

**Joe:** So this decision should allow you to be more prolific. Because, _dayam_ , a book a year is really fricking slow...

**Barry:** I think you'll see me writing a bit more in my new self-published capacity. And not just because I'm motivated. It's also because, contrary to conventional wisdom, in my experience publishers don't actually save you much time on the marketing front. Dealing with a legacy publisher can be quite time-consuming, and aggravating, too. Of course, publishers might say the same about authors! But that doesn't change the fact that publishers can take up a lot of your time.

**Joe:** Dealing with bureaucrats, large companies, or committees is always a time suck. Lots of effort, little result.

**Barry:** If you think about it, for years publishers have been steadily outsourcing their core business functions. Culling the slush pile went to agents long ago. A lot of editorial devolved to agents, too. Marketing has increasingly become the responsibility of writers, who are expected to blog and be social media demons. I think publishers felt comfortable outsourcing all these functions because they felt the lock they had on their core function—distribution—made their overall position impregnable.

The problem is, they've lost that lock, and they've already outsourced so many of their other functions that it's getting hard for them to offer a writer a coherent value proposition. For now, they have enough cash to offer advances, which most authors will need to live for the same reason most people need a mortgage to buy a house. But even that advantage is being eroded by digital, because with digital, you publish right away and start earning right away.

It's funny, what are the two most common, even pervasive, writer complaints about legacy publishers? First, that publishers don't know how to market and expect writers to do a tremendous amount of their own marketing. Second, publisher incompetence.

**Joe:** Yeah, the incompetence. Lots of people call me bitter, and I don't completely discount that. But it isn't because I couldn't land new contracts—I had plenty of those, even too many in retrospect, when I consider how much more money I could making on the titles I sold to legacy publishers. It's because my publishers have made a lot of mistakes. Some of them big. Some of them which cost me, are costing me, money.

Talking to other writers, I know I'm not alone. Almost every writer I know has gotten screwed by their publisher, in one way or another. I know hundreds of writers, and I can count on one hand the number of my peers who have no publisher complaints. Bad covers, title changes, editing conflicts, slow payments, unclear royalty statements, orphaned books, bad launches. The list is so long that I have to wonder if we're not being intentionally screwed...

**Barry:** This was part of the not-strictly-financial calculus in my decision. Of course, when a publisher makes a mistake, it costs the author money. That's a financial problem. But there's also the irritation of knowing that your publisher is making a mistake, the time you spend trying to correct it, the frustration of not being able to. I mean, imagine that your publisher thinks the appropriate cover for your thriller is a close-up image of  an olive-green garage door.

**Joe:** I've been fighting with a publisher for years now because not all my ebooks are available. How crazy is that? I'm not on all platforms, in all countries, yet they praise me for being one of their bestselling ebook authors.

You've got the rights! Exploit them, dammit! I'm one guy and I can get my self-pubbed ebooks up for sale without any problems! You're a multi-million dollar company with a big staff!

Years I've been dealing with this.

**Barry:** Yeah, there are a lot of frustrations. Now, in fairness, there are authors whose publishers have done everything right—and good for them. But it's a question of probabilities, based on empirical evidence.

**Joe:** Even a blind bird finds a worm every now and then.

**Barry:** Actually, I think it's a little different from that, and more tragic, too. I've heard some people say in response to a publisher success, "Well, even a broken clock is right twice a day," but that's not what's going on. Publishers actually have good instincts, and when the right property is being handled by the right team, a team that gets the book on a gut level, understands its essential marketing hooks, that knows which channels to push it through, when, and how, they can make magic happen. The tragedy is the cultural inability of legacy publishers to extract from those instinct-driven successes (and from their failures) objective, replicable lessons that they can then apply to increase the odds of success of books for which the publisher doesn't have that rare, spot-on gut instinct.

**Joe:** I gotta disagree with you here. Publishing is an unreproduceable phenomenon. Two books with similar topics can have similar launches, and then one tanks while the other is a huge hit. If the same things were done for each book, there is no way to learn what works and what doesn't.

That isn't to say publishers can't help a book find its audience. They do. But they only do it one out of five times. The other four don't make a profit. And I've heard the return rates are as high as 70%.

Guess what? Every single one of my self-pubbed books has made a profit. Now, some make more than others, and I can't account for why, any more than a legacy publisher can predict what will be a hit.

**Barry:** But is that all luck?

**Joe:** Yes. Randomness is a bigger factor than we like to admit.

**Barry:** My point on extracting and applying objective lessons isn't that the extraction and application of such lessons guarantees success, but rather that it increases the odds of success.

Look at it this way: does an image of an olive-green, static garage door decrease sales of a book? Of course it does. Mistakes cost. So it follows that the avoidance of mistakes, and the application of sound tactics, must increase the probability of success.

**Joe:** But according to your logic, every time a publisher does everything right, the book should be a hit. And it can be shown this is true, in retrospect. But this is called the sharpshooter fallacy. You're attributing significance to events after they've already happened.

**Barry:** No, not a hit, but the book should do better than it would have when they screwed up.

**Joe:** They still have too many misses, even when they do things right. It's luck, man.

**Barry:** That's a good point, and it might just be—probably is—the case that publishing is an inherently hit-driven business, like movies or venture capital. But with more sound tactics, the misses could at least be mitigated and the hits might do even better. Probably some misses could even be turned into hits. Not all, but no one needs to shoot for (or could obtain) a .1000 batting average. The point is just to increase the odds, and therefore the profits.

**Joe:** Odds can be increased, and I agree publishers can do that. Talent, knowledge, experience, and hard work can improve the chances for success.

But in order to prove publishers are good at manufacturing success, they should be able to apply their knowledge and predict hits. And they can't do this, even though they often believe they can.

**Barry:** Exactly. Here's another example of something I found frustrating: that one of my publishers just  didn't understand the principle of a good author bio—what the bio is for, how it should function. Now, is a good bio going to make a book a hit? Probably not. But a bad bio can't help, and since there's no cost to doing the bio right, why not do it right? Why not explain to newbies in the publishing house that this is what a bio is for and this is how it's done? Why not have a system for passing along that institutional learning? And it's not just bios, of course. It's packaging, it's  titles (and  titles)... learning just isn't part of the culture, and the inability to extract, apply, and transmit learning has cost publishers, and therefore authors, a lot. And remember, when a publisher screws up a book, it costs them fractionally. When that book is your book, it costs you one hundred percent.

## Legacy Publishers: Adding Value?

**Joe:** LOL. Get two authors together, and after a while they'll start bitching about their publishers...

A phrase I hear you use a lot is "adding value." I like that. In contracts, and even in our dealings with others, we should consider what value we're offering, and what value is being added.

Whether or not we agree on the luck thing, can we agree that sometimes publishers add value, but sometimes they take away value?

**Barry:** Definitely we can agree on that. And this gets to the heart of the conundrum facing legacy publishing.

There's no question that legacy publishers still add a lot of value on the paper side of the ledger. With paper, you need to actually make books, deploy a sales force, take wholesale orders, get the books on trucks, handle returns... there's a huge amount of infrastructure, which is what's given publishers the relative clout they've enjoyed for so long. Authors can't distribute paper nearly as well by themselves, or even with a service like Amazon's CreateSpace, as they can with a legacy partner.

**Joe:** Agreed, but I am making $120 a day through CreateSpace on my print books. In a year I'll earn more than my original advance for Whiskey Sour, my first novel.

**Barry:** Yes, you can definitely still make money through paper distribution even without a legacy partner, but probably not nearly as much.

**Joe:** That's changing, though.

**Barry:** Yes, like everything else, and I expect that as more authors turn to digital self-publishing, more paper fulfillment players will emerge and offer authors more choices and better margins. And of course if something like the Espresso Book Machine Print-on-Demand become sufficiently cheap and ubiquitous, writers will even be able to self-distribute through paper.

**Joe:** I was thinking more along the lines of: it's changing, because paper is becoming a subsidiary right. I think we both agree that digital is going to become the preferred format for books.

**Barry:** Yes, and that's the other side of the conundrum. On the digital side of the ledger, publishers don't add much at all because there's nothing to distribute. Or, to put it a little more accurately, what publishers can add on the digital side (editing, copyediting, proofreading, cover design, jacket copy, formatting) can all be done by other players at least as well. So what an author needs to consider today is fairly straightforward: "Is what I'm giving up on the digital side by taking on this legacy partner balanced or exceeded by the partner's paper muscle?"

The answer is going to be different with different authors. James Patterson, to use an extreme example, sells bazillions of books in every conceivable paper outlet. He's clearly better off with a legacy partner than he would be on his own. But as bookstores close and digital readers proliferate, more and more authors will decide that what legacy publishers take from them in digital sales isn't worth what legacy publishers earn for them in paper sales.

## Paper vs. Digital Sales: A Zero-sum Game?

**Joe:** And there's something else at work here, too. Let's say you have both a digital version and a print version available. You may sell one of each to two different readers. That's two copies sold. But if the book is only available digitally, that doesn't mean you'll only sell one copy. You could sell two copies to the same people—the one who would have bought a paper copy had it been available just buys the digital version instead.

**Barry:** Yes, many people assume sales is a zero sum game. For a car, it is. For low-priced items, not necessarily.

**Joe:** In some cases, I've had readers email me saying they bought a Kindle or a Nook just to read one of my ebooks.

**Barry:** Had the same experience with The Lost Coast—just for a short story! Very flattering, and a portent more generally, I think.

**Joe:** My point is, I don't think walking away from a paper deal means the loss of all those paper sales. Maybe some. But some of those who would have bought you in print, will buy you in ebook. And you may find ebook readers who would have never bought you in print.

This can also be applied to price. Right now, your best ranked ebook is your $2.99 short story. Why is it outselling your backlist? I'd say it's because of price.

If you controlled the price of your backlist, those same people who are avoiding those ebooks would likely buy them, as evidenced by those buying your short story.

**Barry:** Agreed. One of the things you've demonstrated is that digital sales don't behave like paper sales. I think this is primarily a function of two things: price, and intangability. A $2.99 download is an impulse purchase. Lugging around a ten-dollar paperback just isn't.

**Joe:** Sales 101: Don't make the consumer think about the purchase. Several things can impede a sale. Cost. Convenience. Tangibility. Even the use of money or a credit card.

Ebooks leapfrog all these roadblocks. A low price is an impulse buy, no guilt attached. You can own one with the press of a button—and a button press is much less painful than opening up your wallet. No getting into the car and going to the store is necessary. No ordering online and waiting for the mailman to come a week later. You can buy a book while in bed, and get it a few seconds later.

It's no wonder Kindle and Nook owners wind up buying more books than they ever did in print. It's easy, painless, cheap, and instant.

But instead of pouncing on this new technology and embracing this wonderful delivery system that turns readers into happy addicts, publishers are trying to slow down its adoption.

**Barry:** Yes. That's another key not-strictly-financial reason I couldn't do another legacy deal. I just don't want to be part of an industry that doesn't make sense, that's fighting change rather than taking advantage of it. I want to make money by giving readers what they want, not by seeking ways to deny it to them.

**Joe:** This conversation went on for several hours. It'll take a while to to edit, too.

**Barry:** We should leave the frog stuff in. That'll save time.

**Joe:** It will. But what would you say to someone who said, "But I thought you said writers should spend all their time writing?"

**Barry:** That's not what we said. We said that a writer's time is most profitably spent writing. There's more to life than profit, though, and sharing experience and insights with others who might benefit is a good in its own right regardless of what money it might make or cost you. I've never profited from all the articles I've written about the business of publishing, and the politics of my blog, Heart of the Matter, might even cost me readers. That's fine by me. And we probably would have made more money if this 13,000 word conversation were a jointly-written short story, instead. That's fine, too. Again, activity X might be your most profitable activity, but that doesn't mean activity X is the only thing you should do. It just means that activity X is what you should be doing when you're trying to make money. For writers today, activity X is indisputably writing.

## The Future: the "Self" in "Self-Publishing," E-stributors, and Indie Publishing

**Joe:** Which brings us back to the entire reason we're having this conversation in the first place, and why we've documented it for posterity (or to help other writers, or to clarify our own motives, or all of the above). Namely, you just turned down a half-million dollars to self-publish.

One of the things I've said, time and again in our conversations, is that ultimately writers will make more money by self-pubbing than by signing a legacy deal. Even if there is a nice chunk of money upfront, in the long run a 70% royalty wins. But there's more to it than that. As a self-publisher, you can get your books to readers much faster—often by a year or more—than a legacy publisher can. You don't have to deal with the ungodly amount of time we've both spent touring, booksigning, and travelling. There's no wasting time or getting frustrated with publishers' mistakes. You're in complete control of your own career, whereas before you were at the mercy of a corporation that treated you like just another product—a product that it wasn't very good at selling in the first place.

**Barry:** I want to interrupt to ask one question.

**Joe:** Damn, I was just building up a head of steam.

**Barry:** The terminology. I love the term "self-published" because it used to carry a stigma, and now it's being rehabilitated. Which makes sense. In America, the self has a lot of positive connotations. Self-possessed, self-actualized, self-confident, self-pleasure—"

**Joe:** Self-pleasure?

**Barry:** Well, everybody does it. Everybody likes it.

**Joe:** I guess that's true.

**Barry:** And you really are self-published, in that you manage everything yourself. But let's talk about what "everything" means for a moment.

**Joe:** Okay.

**Barry:** To turn a manuscript into an actual book and get it into the hands of a reader, we still need an editor, line editor, copyeditor, proofreader, jacket copy writer, bio writer, cover art designer, and digital formatter. Plus there are various marketing and sales elements, too. You manage all these functions yourself, and this is one way in which I'd argue that you really are, if not exceptional, then at least unusual.

**Joe:** I wouldn't disagree with that.

**Barry:** So as legacy publishing dies out, where will other writers turn to for assistance with the critical functions I mention above?

**Joe:** We've talked about this before.

**Barry:** I know. I was trying to prompt you in an unobtrusive way.

**Joe:** Right. Okay, unobtrusively, I think agencies will morph into what I call E-stributors.

**Barry:** I agree with the concept, even if I don't like the nomenclature.

**Joe:** You don't like "print," either.

**Barry:** Not when you're talking about paper. There's paper print and digital print. I think the better distinction is between paper and digital.

**Joe:** I know, I know. Anyway, E-stributors will be a combination of publisher and manager, handling all the elements you mention above for authors who don't want to manage those elements themselves. The ones that do it well will probably be able to make a good case for keeping their 15% cut.

**Barry:** As opposed to legacy publishers, which are keeping 52.5%.

**Joe:** Yes. Hard to see how legacy publishers will be able to compete with the digital model being adopted by agencies. They'd have to morph into E-stributors themselves, which would be a huge challenge given their attachment to a paper infrastructure. More likely, you'll see the most entrepreneurial editors jumping ship and joining agencies.

**Barry:** Sorry for the digression. I guess I was just wondering aloud whether the term "self-published" will be widely applicable after all. For some, no doubt. But maybe "indie-published" will be more appropriate across the board.

**Joe:** Could be. Regardless, the one trump card legacy publishers always had—the lock on distribution—is now gone. Writers can reach readers on our own through Kindle, Nook, Smashwords, Createspace, and Overdrive (a company that distributes ebooks to libraries).

Even with all that, however, it still takes a lot of guts to walk away from a half-million dollars.

But it's the right thing to do. And you're correct that you won't be the last to do so.

Allow me to congratulate you on being the first one to do so, my friend.

If I'm right, you may have just fired a shot heard 'round the world...

**Barry:** Thanks for the kind words, amigo. But you saw the way and blazed the trail. I might be doing something to make the way more apparent myself, but in the end I'm still just following in your footsteps.

## Part Two

## Another Conversation? But Why? Answers to This and Other Questions

**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 12,000 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 sadly 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 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 to 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 3,000 a day I'm currently selling.

**Barry:** But, playing devil's advocate, might it not be 4,000 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 3,456 hairs, does that mean 3,455 isn't a beard? How about 3,454?

If you buy a paper book and loan it to 30 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 at 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 than 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 5,000 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.

**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 do 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 $1,300 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 previous 13,000 word ebook dialog, we reached out to a few folks we respected and asked for their opinions. At least one person disagreed with one of the points we brought up in our long conversation, namely that agents could morph into a model I call e-stributors, 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.

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 e-stributor who takes care of all of that for them.

**Barry:** FWIW, I don't think either you 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.

I think a lot of writers will be happy to pay an agent/e-stributor 15% of the backend in exchange for the agent/e-stributor 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/e-stributor, 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.

**Joe:** 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 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 2,000 copies of a novel a month, 1,200 of a novella, and 500 of a short story. That's $6,575 a month I could have had, for life, because an e-stributor 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 e-stributor. Over ten years, that's $3,720,000.

With an e-stributor, I'd be able to do sixteen properties a year (four novels, six novellas, five short stories) that will earn $37,575 minus the e-stributor'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 e-stributor 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 e-stributor continues to market and promote my work, that's an added, continuous value that goes beyond the initial set-up costs.

**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 "Do you pay your gardener a percentage of your house sale?" 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 a percentage to the gardener for the sale of a house, but the gardener continues to work there _for life_.

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

Say an e-stributor 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 e-stributor 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?

**Barry:** A quick thought. If you think about it, the "percentage of forever" model works better for an indie published author than it ever did for a legacy published author. Why? Because in the legacy system, the agent makes most of her money at the time of the deal, by taking a cut of the advance. From the standpoint of the agent's bottom line, what happens after the advance is significantly less important. But an indie author's agent only makes money if the author's books are selling, and only for so long as they're selling, so indie author agents are motivated to make those books sell, and keep them selling, forever.

**Joe:** Good point. And there are more duties an e-stributor could perform. What if, out of that 15% we paid the e-stributor, 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 e-stributor also served as a publicist? Doing press releases, securing reviews, getting the author interviews and media attention.

Is that worth 15% yet?

I don't believe a writer should pay commission on sunk costs forever. But if there were ongoing duties the e-stributor 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 e-stributor 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 e-stributor, who only releases edited, formatted, polished material, could very well become a brand label. Much like a publishing imprint. A book released by E-STRIBUTOR 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 e-stributor 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 e-stributor 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 e-stributor 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%.

## 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.

## Part Three

## Is It Hypocritical for An Author to Self-publish and Also Publish with An Amazon Imprint? And What's in That Contract, Anyway?

**Joe:** Many exciting (and some strange) things have been happening since we chatted about ebooks in our  first and  second online conversations.

**Barry:** Something with monkeys and frogs?

**Joe:** The frogs are losing, man. Losing bad.

In the interest of keeping this installment under 10,000 words because we both have deadlines, let's curtail the monkey business for a moment.

You made big news at BEA with your announcement that you've signed with Thomas & Mercer, the new Amazon.com mystery imprint. The same imprint I just signed with for  Stirred (with Blake Crouch).

**Barry:** Yes! I'm thrilled about the deal. And fascinated by some of the commentary on  Kindle Boards and in the Twitterverse.

**Joe:** Seems like a lot of people have responded without thinking things through.

**Barry:** The most common complaint goes something like, "Eisler said he was going to self-publish, but now he's just with a legacy publisher again! Hypocrite!"

**Joe:** Funny how they were quick to jump on that without having read your contract.

**Barry:** From what people were claiming, you would have thought they'd read not just the contract, but my mind, too.

**Joe:** Why don't you give a quick rundown of what's in the contract?

**Barry:** The gist of it is, it's the best of both worlds, legacy and indie. The advance and marketing muscle you (might) get in a legacy contract; the kind of digital royalties, creative control, and time-to-market you get with indie.

**Joe:** I think this is a good place to give everyone a friendly reminder of what our goals are, because a lot of people seem to think that going with Amazon means our goals have changed.

**Barry:** Let me take a crack at that.

I've said many times that "publishing is a business for me, not an ideology" and that the right deal could certainly lure me back to the legacy world. That remains true. What's more important, though, is the nature of what could conceivably lure me back. And what could lure me back is precisely what I've never been able to get from any legacy publisher—not the two who have published me; none that I've negotiated with, either. Specifically:

  1. A _much_ more equitable digital royalty split.

  2. Full creative control (packaging, pricing, timing).

  3. Immediate digital release, followed by paper release when the paper is ready (no more slaving the digital release to the paper release).

As it happens, all these terms are available to a self-published author, so I decided to self-publish. What some people might be missing in that simple statement, though, is that it's the _terms_ that are important to me, not the means by which I achieve them. If these terms are a destination, self-publishing is undeniably an excellent vehicle for getting there. But it isn't the only vehicle. And if another vehicle comes along that offers all these terms, plus a substantial advance, plus a retail wing that can reach millions of customers in my demographic... then, as a non-ideological businessman, I'm going to change rides.

But "change" is a somewhat misleading word under the circumstances, implying as it does an overall either/or dynamic. And here's another misconception I've been seeing a lot: this notion that authors must somehow be classified into indie, legacy, or whatever. Reminds me a bit of apartheid South Africa's obsession with classifying citizens by their race—equally strange, though admittedly the authorial version is less invidious. Anyway, here's the thing: what really matters is that we're not living in an either/or universe. I now have four low-priced, self-published digital works, and if Amazon blows out the marketing for _The Detachment_ , those other works (and the ones to come that I plan on self-publishing) will benefit enormously. In the face of all this, why would anyone want to argue for some sort of either/or approach? It would certainly foreclose a lot of potentially lucrative business opportunities.

For a single title that doesn't encumber my ability to self-publish or otherwise publish anything I want, Amazon offered me all three of the items I list above (except for pricing, but regardless of what the contract says, we agree that digital books should be priced far lower than legacy prices), plus a massive, uniquely Amazon marketing push to its retail operation and otherwise, plus an advance comparable to what SMP had offered me (note, though, that the Amazon deal is for one book; the SMP advance was predicated on two books. When I say "comparable," I mean on a per-book basis, and sorry everyone if I wasn't clear about that in my announcement at BEA). In exchange, I've given up certain digital retail channels because the Amazon deal is exclusive to Kindle platform devices. And Amazon will sell paper versions through its retail stores and through wholesale channels to other retailers. Anyone who thinks this sounds like a legacy deal has been talking to legacy publishers I've never heard of.

Okay, your turn.

**Joe:** It's a brave new world, and someone has to be first.

But it's more than that.

I wasn't the first person to upload my ebooks to Amazon using DTP.

However, I was the first person to start posting my royalty figures. This helped to inform other authors so they could make their own decisions. I've lost count of the number of people who have thanked me (over a thousand) because I was transparent in what I was doing, and because I actively disseminated the information.

Still, my main goal has been to sell books. That doesn't mean I can't help some authors along the way.

We owe no one explanations. While the self-pub culture has become pretty open about sharing figures, the legacy-pub culture is still closed-lipped.

Closed-lipped doesn't help anyone. The more information we all have, the better off we all are. Which is why we continue to talk numbers and disclose what we're doing.

My goal isn't to save the world. My goal isn't to take down the Big 6. My goal is to make a good living doing what I love.

But if I can also help a bunch of writers, and help destroy a greedy, bloated, ignorant industry, it's an epic win for writers and for readers.

Be the monkey! Remember the old saying, monkey see, monkey do? Monkeys tend to teach each other what they've learned.

The first thing you did, mere minutes after signing the Thomas & Mercer deal, was do a live interview and talk at length about contract terms. You didn't say, "Sorry can't discuss that" over and over again. Instead, you broadcast (and continue to broadcast) how this deal is better than any you've ever had before. Not because of money. But because of the great terms it offers you as an author.

**Barry:** Just to be clear, it's not just the substance of the agreement that I think is so excellent. It's also the structure and style. It's an amazingly clear, easy-to-understand document, and it's free of the kinds of punitive provisions legacy publishers use to maintain dominion over writers. I love that Amazon gets that its publishing contract is a key sales tool.

**Joe:** Which will no doubt bring more authors to them.

**Barry:** Yes. Exactly the kind of competition we need in the industry, but that we've never had.

**Joe:** If the Big 6 were smart, they'd begin offering authors similar terms. For decades, the only way they competed with each other was through bidding wars, offering the largest advance. But Amazon's author-friendly contracts are about more than just the advance. Wouldn't it be great for authors if every legacy publisher suddenly realized, "We're going to lose our authors! How do we woo them back?"

Which is what will happen, but I haven't seen any wooing. I haven't even seen any acknowledgement that there is a problem.

**Barry:** A last thought about what one author owes others. While I certainly am guided by self-interest, I'm also profoundly motivated by the desire to make publishing a better industry for readers and authors (for anyone who doubts me, see the For Writers section of my website). During the course of our negotiations, I worked hard to persuade Amazon to jettison various legacy provisions that gain publishers little and that authors loathe. It's a huge credit to Amazon that they listened to my arguments and changed their template accordingly, and it's satisfying for me to know that other authors will get the benefit of the more enlightened template I helped forge—both from Amazon directly, as it expands its publishing wing, and from legacy publishers, who will be forced to compete with Amazon's more enlightened terms.

**Joe:** What about the fact that your deal with T&M is exclusive?

**Barry:** Right, it's a world deal for digital, paper, and audio rights. The ebook, again, will only be available on Kindle-format devices. My calculus was: on this one title, I'm giving up something like 20% or 30% of my digital retail channels, but Amazon's marketing muscle will mean I sell more Kindle copies with them than I could have sold all-format copies on my own.

## Is Exclusivity Bad for the Industry?

**Joe:** You don't think format exclusivity is bad for the industry?

**Barry:** I love when you play devil's advocate.

Though I think I understand why they're doing it, I think Amazon is making a mistake with the format exclusivity. I also think they're going to change the practice and allow Nook and other devices to download books from the Amazon store. The store itself offers a first-rate customer experience, so I think they'd make more money giving more devices access to it. Plus it would be good for authors, too.

But on balance? I would argue that the kind of pressure required to improve legacy publisher performance and practices can better be exerted by Amazon and self-publishing together than by self-publishing alone. Because I believe legacy performance and practices are a much bigger hindrance to readers than the unavailability of this or that title on this or that platform, I do think that on balance readers will be better off in the presence of deals like mine than they would be in their absence.

**Joe:** Exclusivity is the new currency. Look at the videogame wars. Each system (Wii, PS3, 360) has exclusive games that help the customer determine which system to buy. This is good, not bad, for consumers, because it promotes competition. The more competition, the more technology improves, and the more prices drop.

Thomas & Mercer will allow us to reach more customers, even though it isn't an epub release. The paper distribution will be much farther reaching than we could achieve on our own, and the level of marketing Amazon does will let us peak higher on the Top 100 list, selling more ebooks (at least initially) than we could with a self-pub release, even taking into account fewer sales to Nook, Sony, and Kobo customers. I say fewer rather than zero because we're releasing without DRM, meaning the files can be formatted to epub for free.

But let's think farther ahead. Technology has become disposable. When we upgrade a cell phone or printer or iPod or TV, we dispose of the older one. We suffer from abundance.

When I was a kid, we had one black and white television. Now my family of three has seven flat screen monitors in the house, plus two laptops. We each have an iPhone. We have five iPods. I just got an iPad. And we have a Wii, a PS3, and a 360, so exclusivity doesn't matter to us. We buy the games we like.

I can see a day where it isn't a choice between a Kindle or a Nook. People will own both a Kindle and a Nook. The concern of many who haven't bought an ereader yet is exclusivity, and losing purchased ebooks if the format changes.

But ebooks are digital. While you can't play an 8 track on your iPod, right now, using free software, you can format Kindle mobi files into epub files, playable on Nook, Sony, and Kobo. You can also strip DRM and format epub into mobi, if you know what you're doing.

Exclusive is more good than bad, and there are ways around the bad.

## A Working Definition of "Legacy Publishing"

**Barry:** You know one thing I think has been missing in all the online conversation?

**Joe:** More monkey/frog video links?

**Barry:** Don't tempt me. A simple definition of what "legacy publisher" means.

**Joe:** We were both at BEA this week. I heard the term dozens of times. Which amused the hell out of me, since you coined it.

**Barry** : And you popularized it. It's really a perfect descriptive term (and by the way, there's a great discussion about it going on right now on  Lee Goldberg's blog). This is Wikipedia's definition of "Legacy System":

A **legacy system** is an old method, technology, computer system, or application program that continues to be used, typically because it still functions for the users' needs, even though newer technology or more efficient methods of performing a task are now available. A legacy system may include procedures or terminology which are no longer relevant in the current context, and may hinder or confuse understanding of the methods or technologies used.

**Joe:** Amazon doesn't fit that definition. They're innovators. They pretty much single-handedly popularized ebooks, which had been around for years without taking off with the public. Funny that publishers complain Amazon has too much power in this area, when nothing prevented them from inventing a popular ereader, or selling ebooks from their websites.

**Barry** : Also, have you ever heard of a traditional publisher with a powerhouse retail wing?

**Joe:** Or a traditional publisher who actually listens to their authors? I've been screaming about how legacy publishers need to step up their game, and have even told them how to do it. For years. None listened. Except for Amazon.

So let's put this misconception to rest: Amazon is NOT a legacy publisher.

**Barry:** Reasonable people might differ and we can argue at the margins, but here's what a legacy publisher is to me. It's a publisher that offers authors a shockingly low digital split—17.5% of retail, or 14.9% after the agent's cut—while keeping 52.5% for itself; that insists on controlling packaging, pricing, and timing decisions; that slaves the digital release to the paper release because its business imperative is to retard the growth of digital and preserve the position of paper. Am I missing anything?

**Joe:** The legacy system is based on an ineffective, archaic business model. The shelf life of paper titles is getting shorter, it's getting harder for authors to make money, returns are a terrible waste, and not all books are treated equally. The few with large coop budgets and widespread distribution don't enhance reader choice; they restrict it.

**Barry:** That's the gist of it, anyway. If your business model revolves around: (i) maintaining the primacy of paper (in significant part, by delaying the release of digital books and pricing them too high); and (ii) offering punitive financial, creative, and other terms to authors, you're probably a legacy publisher.

We should come up with a ten-part questionnaire or something: "If you answer more than four of these questions 'yes,' we're sorry to say that you're probably a legacy publisher."

**Joe:** Another one I'll add is the inability to deal with change. It's the music industry all over again. They should be embracing new technology and innovating ways to improve their business model. I'm not seeing this. I'm seeing fear, anger, and denial.

**Barry:** Agreed. Anyway, I wanted to have a working definition to be clear that whatever else anyone might claim about my decision to publish _The Detachment_ with Amazon, one thing I haven't done is gone back to legacy publishing. Not that I wouldn't, by the way; I've always been clear that for the right terms, I could go back (assuming they'd have me, and assuming there's anything to go back to). But the right terms are what Amazon offered me. That's the point. That, and the fact that legacy publishers, because they're trapped by their own infrastructure and mentality, seem incapable of offering those terms.

## Is Amazon a Legacy Publisher?

**Joe:** Here are some quickie comparisons between legacy publishers and Amazon's Thomas & Mercer imprint.

Legacy publishers set their prices for ebooks. Amazon went with the list price I desired.

**Barry:** Gonna chime in here to say that in my contract, Amazon has the power to set the price.

**Joe:** Yes they do. No publisher will ever give up pricing control. But so far they've honored my wishes.

**Barry:** Based on my discussions with them; on the dynamic of their battle a year and a half ago with legacy publishers over ebook prices; and on your experience with them, I know we're philosophically aligned: ebooks should be priced far lower than the legacy norm. So I have no problem with their contractual right to set the price. I understand why they want it and they've demonstrated they'll use it wisely.

**Joe:** Legacy publishers demand DRM. My Amazon ebooks have no DRM.

**Barry:** That's good to know. Someone just asked me that today on Twitter and I wasn't sure. Agreed that DRM is stupid.

**Joe:** Legacy publishers pick the cover and the title. At Amazon, I pick the cover and title.

**Barry:** Right, same here. This one is huge for me. Too many  olive-green garage door covers in my past. Amazon was fine with my choosing the cover and making all other packaging decisions, though because they're smart, experienced, and thoughtful, we're already organically collaborating on what would work best. If your publishing partner is smart, you _want_ to collaborate with them, regardless of what's in the contract. And if they're enlightened, they want to collaborate with you.

**Joe:** Legacy publishers insist on windowing the ebook release until after the print release. With Amazon, the ebook can be released first—as it should be, because it's easier to create than a paper version.

**Barry:** Again, same here. Thomas & Mercer and I talked about timing and they were totally game for releasing the digital book first.

**Joe:** Legacy publishers take from six to eighteen months to release a book after it is turned in. My next Thomas & Mercer book is due in August and coming out in November.

**Barry:** I think my turnaround might be even faster than that.

Jeez, better turn in that manuscript.

**Joe:** Legacy publishers offer lousy ebook royalties. Amazon's are much better.

**Barry:** I don't want to get too into specifics, but my new digital royalty split is _nothing_ like what legacy publishers insist on. And the paper splits are all comparable. Though even there, Amazon is showing their innovative DNA—we're discussing a lower cut of paper sales for both of us as a way of boosting brick and mortar paper margins. As  you have blogged and as  Mike Shatzkin has pointed out, paper is becoming a subsidiary right—but a special kind of subsidiary right, with a lot of advertising value.

**Joe:** Yeah, I was talking about that a year ago. Whoever gets their name on the  most pieces of paper, wins.

**Barry:** So there's a great play in here for smart bookstores and authors: sell paper rights for less, achieve more paper volume, and sell more digital via the advertising value of paper.

Legacy publishers, by the way, would find such a notion heretical. Amazon looks at it and says, this could be good.

**Joe:** Legacy publishers have convoluted royalty statements and cut checks twice a year. Amazon has easy-to-understand royalty statements, and pays quarterly.

**Barry:** I've noticed that. I have two shorts up (The Lost Coast and  Paris Is A Bitch) plus a political essay (The Ass Is A Poor Receptacle For The Head), and the royalty statements are completely transparent.

**Joe:** The imprint statements are also transparent. And the payments are on time. I know several authors whose legacy publisher royalties have been delayed, and the delays are getting longer.

**Barry:** The timing of advance payments is terrific, too. Execution and publication, half and half. Simple, fair, easy to track.

I have to emphasize again the fact that these entirely sensible and obviously better business practices have never emerged in legacy publishing is further evidence (as though further evidence were needed) that legacy publishing has always functioned as a quasi-monopoly. If there were competition in the industry, new entrants would force improvement.

**Joe:** Well, that new entrant is Amazon.

**Barry:** Indeed.

**Joe:** Legacy publishers often do little promotion. Amazon promotes like crazy.

**Barry:** That's the bet I'm making. Fundamentally, I'm giving up certain retail channels in exchange for Amazon making a huge push on all its retail platforms and through the paper wholesale channels its developing.

**Joe:** Legacy publishers have one-sided contracts. Amazon's are the smartest (and best) in the business.

**Barry:** The contract they sent me was the best publishing agreement I've ever seen: short, transparent, easy to understand. And the really bitchin' part? Former licensing attorney that I am, I had a ton of suggestions for how they could make it even better, and they listened. They get that treating authors well confers on them _a significant competitive advantage._ I'm telling you, their new template is a wonder to behold—substance, structure, and style. A lot of authors are going to benefit—directly, as Amazon expands its publishing business; and indirectly, as the Amazon contract pressures legacy publishers to do better or die.

**Joe:** I just spent a few days talking at length with various members of the Amazon team at BEA. They're smart. They're efficient. They understand what they're doing.

**Barry:** And man, they like beer.

**Joe:** All smart people like beer.

Also, as you said, they listen. Really listen. Having a publisher who actually pays attention to what I'm saying, and acts on requests I make, is incredibly fulfilling. Especially after years of my raging against the machine.

**Barry:** We could have included "ignores author input" as one of the definitions of legacy publishing.

**Joe:** Timecaster, my sci-fi novel with Berkley/Ace, is being released in a few days. I signed a two book deal with them, and pretty much begged for them to concede on a few marketing and pricing issues I had. They flat-out refused. So I bought back my second book and am releasing it myself (for $2.99 and without DRM).

The "my way or the highway" attitude has sent me to the highway, where I'll sell a lot more books and make a lot more money.

**Barry:** As you've said before, if you're selling eggs, don't piss off your chickens.

**Joe:** Amazon treats their chickens well. The Kindle Digital Platform and Createspace programs are expressly for self-publishing, so there are no more barriers to reaching readers. And their various imprints now give authors some of the benefits of the legacy system (advances, no author costs, widespread distribution, marketing) without the many disadvantages we've discussed over and over.

When each of us signed with Thomas & Mercer, we weren't turning our backs on self-publishing and embracing legacy ways. Instead, we were getting much of the same control we have with self-pubbing, but with a powerhouse behind us that will ensure we sell more books than we could have on our own.

That said, I'm still self-pubbing like crazy. I'm not going to give that up.

## It Has to Be Either/Or... And Other Examples of Erroneous Thinking

**Barry:** This is another widespread misunderstanding. It's not either/or, everyone! I'm still self-publishing short stories and essays and I don't know what I'll do with future novels. But every low-priced, self-published digital work I have available will get a huge boost from Amazon's promotion of _The Detachment_. Again: publishing is a business for me, not an ideology. And self-publishing is a means, not an end. The end is fortune—the financial kind and the happiness kind both. For that, a mix of self-publishing and the Amazon models seems perfect to me for now.

**Joe:** Seems obvious. But there are a lot of people out there who don't get it.

**Barry:** Some of the most misguided thinking I've seen on this issue came from an otherwise good editor I've worked with myself, who said of my deal with Amazon, "So much for self-publishing." But... I'm still self-publishing lots of other works, all of which will benefit from the Amazon deal! And suggesting that because I've decided to publish _The Detachment_ with Thomas & Mercer rather than self-publish it means self-publishing isn't real... come on. What's most significant about everything I'm doing now is what's missing: a legacy publisher. Thinking that one author's decision to publish a single title with Thomas & Mercer means he's turned his back on self-publishing, or that self-publishing isn't real... well, let's just call it wishful thinking.

**Joe:** It's not about either/or—

**Barry:** Wait, I gotta tell you one more  amazing comment I came across.

**Joe:** Go ahead.

**Barry:** This one's from Susan Petersen Kennedy, president of Penguin Group USA. The New York Times quoted her this way: "'There's a tendency to think that the other guy's piece of the pie is so much easier, and you can just jump in and do it,' Peterson said on Tuesday afternoon with a hearty laugh. 'It's good for Amazon to go into publishing. Maybe they'll develop some respect for how hard it is. Come on in, try it. Go ahead. It's not so easy.'"

**Joe:** That's similar to something you often say, in a slightly different context. Just because someone knows something, doesn't mean she can execute.

But here's a newsflash, Susan. Amazon CAN execute. They published my Jack Daniels thriller  Shaken as an ebook in October 2010, and in paper this past February. I've made more money on that book that I did on my last two legacy books, and soon  Shaken will make more money than _any_ of my other legacy novels.

So I don't know about easy, but they are doing it in a way that's smart, efficient, and beneficial to the author.

I've worked with Penguin. I don't anymore, because I left. I paid them so I could leave.

I don't see myself leaving Amazon anytime soon.

**Barry:** Again: treating the chickens right... not a bad practice if you're in the egg business.

**Joe:** Or to use another food analogy: Smart businesses don't try to take your piece of the pie. They make the pie bigger for everyone.

**Barry:** The thing that struck me was Peterson Kennedy's thinking, or purported thinking. I mean, is it true that people go into new businesses because they think it'll be easy? Is that why Amazon got into book retailing, because it looked easy? Is that what drew Peterson Kennedy to publishing?

My take on why Amazon is getting in to publishing? The same reason Michael Dell got into computer retail: they recognize legacy publishing's quasi-monopolistic practices are so screwed up that a better way will create a devastating competitive advantage. That, and the fact that through their "agency model" pricing policy, legacy publishers were forcing Amazon to charge too much for digital books. It's like Del Monte insisting on pricing a can of green beans for $10.00. Sure, the grocery store will stock it, but they'll sure as hell also develop a store-brand canned green bean, too, because they know there will be a bigger market for the lower-priced option and they'll make more money with it.

I'll tell you, if publishing looks easy, it's probably because legacy publishers are so screwed up they're making it hard.

And wait, as long as we're on the subject of denial, here's another one—a tweet from a Curtis Brown literary agent: "so the Eisler story meant nothing. he eats at Amazon table for his supper instead of St Martin's."

**Joe:** What the hell does that even mean?

**Barry:** You have to deconstruct it a little. I think he's saying my decision to leave legacy publishing is meaningless because ultimately I decided to publish _The Detachment_ with Amazon.

**Joe:** Sounds like he needs to turn Amazon into something comparable to what he's used to dealing with (St. Martins) in order to fit it into his worldview and dismiss the threat. Weird terminology, though. Makes you wonder what's going on in his head.

**Barry:** Yes. It's another instance of an apparently powerful urge to believe, "Amazon's just like a legacy publisher! So if an author decides to publish a book with Amazon instead of self-publishing it, it means self-publishing is no threat to legacy publishing after all!"

**Joe:** Denial.

**Barry:** In fairness, it's not just him. Here's another, this one from an author: "So Eisler isn't really going it alone, he exchanged one corporate master for another. Better terms, apparently, but not a revolution as such."

**Joe:** You have a corporate master? Does he have a leather hood and make you wear a ball gag?

**Barry:** When I ask nicely. And all this time, I thought I ran my own business and was hiring distribution partners who worked (albeit often ineptly) for me. Who knew?

The comments about supper tables and corporate masters reveals a lot about the worldviews of the people who are making them. The first suggests a kind of serf mentality; the second, one of self-slavery. But aside from the psychological projection at work, which is interesting, the substance of these arguments is just silly. I depend on Amazon, Barnes & Noble, and Smashwords to distribute my self-published works. I depend on my web hosting company and on PayPal to fulfill orders through my website. Am I therefore eating at the "supper tables" of these companies, and are they my "corporate masters," in this context, too? Why the one but not the other?

**Joe:** As I've heard you say in related contexts: when the voices in someone's head get too loud, he can't hear what's actually being said.

**Barry:** Yes, and he loses the ability to tell the difference.

We've talked in our earlier conversations about how some publishers are in denial, some agents are in collusion, and some authors are in the grip of a weird combination of Stockholm Syndrome and a peasant mentality. The quotes above are evidence—anecdotal, yes, but still suggestive.

**Joe:** I can't get over the "exchanged a corporate master" one. How about: "Exchanged a crippled horse for a new Ferrari." That works better.

I used to call working with legacy publishers a partnership, back when I thought they were smart enough to know how to make money. My take was that if I made money, they made money, and we'd help each other to that effect. But then I started to realize how hidebound they were, that there was this whole set of infrastructure and a worldview that was actually inhibiting them from making money. Then I began to think of them as backers or investors, but with too much say so and power. The one thing I never thought was that _I_ was working for _them_. Usually when you work for a company, they show a minimum concern for your base needs and future security. An editor works for a publisher, and as a result get things like an office and health care and a 401k plan.

So now I think of them as assailants who force you to thank them after they beat you up.

**Barry:** The terminology reveals the mindset. A lot of writers think of themselves as employees of the publisher, not as CEOs of their own companies, with the publisher as their customer/investor/distributor.

**Joe:** Well, at least those folks offered some humor value. And the psychology is interesting, too.

**Barry:** There is that. Mind if I mention just one more?

**Joe:** Fire away.

**Barry:** This one is from a  literary agent. She says, "I'm keeping a very close eye on a couple things: the reaction from Minotaur; the reaction from Dan Conaway; and what term Eisler will now use to describe Amazon since 'legacy publisher' appears to describe everyone else."

**Joe:** Dan was your agent, right? With Writers House?

**Barry:** Yes. We parted ways after I decided to self-publish _The Detachment_ because we couldn't come up with a model for self-publishing that worked for both of us. And Minotaur was a reference to St. Martin's Press, the publisher that offered the deal I walked away from—Minotaur is an SMP imprint.

Anyway, I thought, "That's it? Your big concerns aren't about these seismic shifts in the industry and how they'll affect your clients, but are instead about gossipy, personal stuff? Are you a literary agent, or a staff writer for Us Magazine?"

**Joe:** She writes that blog to impress her existing clients and attract new ones, presumably?

**Barry:** Presumably.

**Joe:** Wow. Hey, isn't this the same agent who when you first announced you were going to self-publish said she wasn't optimistic and people should see how it was working out for you in a year?

**Barry:** That's the one. Apparently she thinks the appropriate finish line for measuring whether an author has been successful in digital self-publishing is one year, as though after the first year you stop making money or something.

**Joe:** Does she maybe have a personal issue with you?

**Barry:** Not that I know of. Anyway, I'm just responding to the substance of her thinking—not because it's unusual, by the way, but rather because it's representative of other erroneous thinking I've come across. And there's a tendency out there to treat the personal stuff as more relevant than broad industry dynamics, just as there's a tendency to think a self-published book only makes money for a year or something, when in fact it makes money forever.

## Briefly Returning to the Question of: If The Big Six Are Legacy Publishers, What Do We Call Amazon?

**Joe:** So what do you call Amazon?

**Barry:** That's a good question, and I haven't come up with anything that feels entirely right. Again, there's a good discussion on  Lee Goldberg's blog on this topic and I'd be very interested to hear anyone's thoughts on what would be the most appropriate nomenclature. Speaking of which, I think the right way to approach the question is this:

Are Amazon and, say, Random House, which are clearly both publishers, the same in all relevant aspects?

If not, what are their relevant differences?

And how can we reflect those relevant differences in the nomenclature we use to categorize them?

Trucks and sedans and sports cars are all just types of automobiles. Yet no one would say, "Why do we need all this new nomenclature? They're all just automobiles, right?" And before the Internet, stores were just "stores." But then we had online stores, and the previous variety became known as "brick and mortar" stores, so that we could distinguish.

At a sufficiently high level of generality, everything is the same. All matter is, in the end, made of molecules. Yet we don't refer to people and chairs and trees as "molecule conglomerations"—and that's because the similarities are less relevant in everyday conversation than the differences. So noting the presence of similarities isn't really the proper way to approach the nomenclature question. The nomenclature question exists because of the presence of differences.

If you believe that Amazon and, say, Random House are in all relevant respects identical, then you won't find any use for a system of nomenclature that distinguishes them. If you believe that in various relevant respects they're different, you'll search for a nomenclature that conveys those essential differences. For the reasons I note above, I think "legacy publisher" perfectly conveys the essential differentiating qualities of what are also colloquially known as The Big Six. I haven't come up with an equivalent for what Amazon's doing. But I'm working on it, and again would love to hear anyone's thoughts on the topic.

**Joe:** For now, I'd just call Amazon "much better than anyone else."

**Barry:** Can't disagree with that.

## And Now Back to Our Regularly Scheduled Erroneous Thinking Topic

**Joe:** Getting back to that literary agent's quote, if I were an agent, my thinking would be: "Great! I now have another publisher, Amazon, to whom I can sell my clients' work." But I suppose watching and waiting to see what other people say is safer than acting.

**Barry:** Anyway, sorry for interrupting. Just had to mention those. You were talking about the thinking behind your overall publishing strategy.

**Joe:** Yes. Right now, self-pubbing has incredible advantages over the legacy system.

That does NOT mean I'm a "self pub or die" evangelist.

Self-pub was a  terrible business model prior to 2009. It may someday be a poor choice once again.

I  change my opinions as new facts come in, and I change my tactics as new opportunities become available. Anyone married to a single ideology, who doesn't constantly test it and question it, is an idiot. A big idiot.

**Barry:** Let me approach the either/or issue this way. If Thomas & Mercer wanted to release all your books, would you do it?

**Joe:** No. I like self-pubbing too much, and I dislike deadlines. I'm thrilled to be working with Thomas & Mercer, and a book a year fits perfectly into my schedule while still allowing me freedom to do whatever I want, when I want.

**Barry:** Plus T&M's marketing push for the book you're doing with them boosts all your self-published books, too. In the face of all this, only an ideologue would suggest an author's approach should be either/or.

## How Do Brick and Mortar Bookstores Succeed in the New Publishing Landscape?

**Joe:** Let's veer slightly and talk about bookstores.

**Barry:** Good. We haven't been veering enough.

**Joe:** When Amazon announced the launch of the Thomas & Mercer imprint, some independent bookstores in a Yahoo group refused to carry my titles.  Blake Crouch and I recently blogged about it, and our post has gotten close to 400 comments.

**Barry:** Hey man, one of those was mine.

**Joe:** I'm disappointed that some bookstores would rather blame authors for signing with Thomas & Mercer and point fingers at Amazon for hurting their business instead of responding to some of our suggestions as to how they might improve their sales.

**Barry:** Yes, what people need to understand is that a lot of the problems bookstores are having are caused by legacy publishers. I know this will sound cold, but in business you have to identify opportunities. And right now, there's a huge opportunity for retailers to disintermediate the publishers who are inflating the costs of books. Amazon is already doing it. If B&N is smart, it will, too. And, as you and Blake suggested (pleaded, in fact) in your blog post, there's no reason indie booksellers can't buy direct from authors, too. Promise to sell a lot of our books and we'll even sell 'em to you cheap, knowing we'll make it up on volume and in the advertising power of paper.

**Joe:** Capitalism is about competition. But indie bookstores (or all bookstores, for that matter) need to realize Amazon is only doing well because they're giving customers what they want. The customers are the ones who are changing their buying habits.

If you're a young bride and your husband is cheating on you, you don't blame the other woman. You blame your husband. He's the one who should have been loyal. The other woman doesn't owe you any loyalty, and doesn't have to play fair.

Don't want him to stray? Make him want you more.

There is a lot of talk about "unfair business practices." Is business fair? Is life fair?

**Barry:** The frog would say no.

**Joe:** The frog _should_ have said no.

**Barry:** Um, I don't think it could say anything, under the circumstances.

**Joe:** Hard to talk when your mouth is full.

**Barry:** Mmmmmmph, maybe?

**Joe:** Well, the monkey wouldn't have listened regardless.

**Barry:** Hey, let's not include a link this time. I think we've done enough damage.

**Joe:** How about just this one? This isn't about a monkey taking advantage of some poor, helpless amphibian. It's about thinking outside the box.

**Barry:** I have to admit, I clicked on that link with substantial trepidation. But it was totally safe for work. And interesting.

**Joe:** And therefore probably disappointing to anyone who's clicked on any of the other monkey links. Sorry, guys.

The thing is, customers are speaking with their wallets. The one who gives the customer what she wants is the one who gets that customer dollar. That means thinking, and innovating, and listening. You don't make money pointing fingers.

**Barry:** You make it by solving problems and adapting to situations, like the monkey in the link.

## And How Do Literary Agents Succeed?

**Joe:** But you don't have to figure this stuff out all on your own. There are folks who can assist you.

Dean Wesley Smith recently had a blog entry about how some unscrupulous agents are adopting the estributor model and charging clients 50% to perform publishing services (cover art, formatting, uploading) that Dean insists should be one-time costs.

**Barry:** I just want to jump in here and beg anyone who's reading to come up with a better term than "estributor." That is one butt-ugly word.

**Joe:** You know you love it.

**Barry:** I know we need something to distinguish the "agent helping authors self-publish" model from the "agents helping authors sell publishing rights" model, but please... not that.

**Joe:** Heh. I think it's too late, my friend.

Anyway, I respect Dean, and understand his argument, but I don't agree with him. Here are some reasons why.

I know a few agents who are becoming estributors. They cover all costs, and only take 15% (and they don't recoup their investment first).

Right now I've got 32 self-pubbed books available on 8 platforms (soon to be 10). It's a full-time job just dealing with properties that already exist.

I just released a new ebook, which took dozens of hours to launch–hours I could have spent writing.

I don't have a problem giving an agent 15% for negotiating a contract. That's worth it to me.

Doing the cover art, formatting, and uploading, along with all of the potential benefits of a vetted imprint, is a lot more work, and also worth 15% to me.

It isn't worth 50%. That's a rip off.

But I already hire folks to help me: My cover artist, and formatter, and proof reader, and then I upload them myself. This is a time suck. More importantly than that, even though other people are doing the work, I was still forced to learn an entirely new skill set in order to understand who I was hiring.

I wish I didn't have to deal with all of that. I wish I could just write the book then pass it on to an estributor.

Which, in fact, I'm going to do. And the time it saves me should more than make up for the cost.

One day, I plan on building a house. I have a specific idea in mind of what I want to build. But I DO NOT want to micromanage the building process and hire/oversee every individual contractor. The thought of spending all that time doing mundane things like picking out PVC pipe or getting permits would make me want to shoot myself.

**Barry:** One thing I know you will micromanage is the choice of bidet.

**Joe:** Inside joke, people. I just bought a bidet (because I tried one at Barry's—monkey see, monkey do) and am now experiencing a level of clean that I never knew existed. It even has a blow dryer.

I love my life.

Getting back to building a house, I'll hire someone I trust to do the overseeing. It's worth it to me. That way, I don't have to immerse myself in doing the hiring myself and learning the construction business.

Of course, you could do it all yourself, and take even more time away from your writing (as well as hurt your sales because you won't do as good a job as an expert.

**Barry:** Definitely there are estributors who charge an unreasonable amount, take advantage of authors, do a poor job, etc. That doesn't mean some aren't worth what they charge. You don't avoid going to a doctor (and you certainly don't perform surgery on yourself) because a certain number of them are quacks.

**Joe:** Right now, I'm making so much money, I'll gladly pay someone to do the things I hate and that eat into the most profitable use of my time, which is writing. And just as there are unscrupulous agents who will rip you off, there are most certainly unscrupulous independent contractors who could wind up costing you more money. It's not as if all agents are bad and all cover artists are honest and know what they're doing.

It's also worth noting that there isn't a conflict of interest if an agent becomes an estributor. Agents are there to sell rights to books that their clients write. Is there any difference between selling to a Big 6 publisher, or helping the client upload to Amazon? As long as the agent does what her client wants, it's all about offering a service.

I know agents who have hundreds of authors with projects they couldn't sell, or backlists that are out of print. If publishers don't want those books, Kindle and Nook and Smashwords and Kobo and Sony and Apple and Google and Createspace and Scribd do. An author could do it herself. But an author could also negotiate a deal with Random House on her own.

**Barry:** For me, the way to put to rest the suggestion that authors should never pay anyone a percentage is this. What about an excellent estributor who charges only one percent? Still too much? Even if that one percent would come to less than a flat fee for the same service? What about if you could clone yourself and hire the clone for 15%—not worth it? Okay, but then I'd say this is starting to be a matter of an ideology against percentages, which means there's no room for further discussion. But if the problem is the _amount_ of the percentage, then, to paraphrase Churchill, we're just haggling over price.

**Joe:** I suppose I could hire someone full-time to oversee the freelancers and run the ongoing business, but I believe the estribution model will allow for greater ongoing opportunities and ultimately higher income. Group advertising, imprimatur, excerpt exchanges, marketing, and a centralized author hub, to go along with continued subsidiary rights sales and translations, is worth 15%.

If you don't think it is, don't do it. But understand you're taking time away from your writing to do it on your own, which is a very high cost indeed.

**Barry:** For me, the argument really comes down to, "Don't pay more than you have to." If you can pay a low flat fee instead of a percentage, jump on it. If the percentage is 50%, don't touch it. If it's one percent, jump on it. If it's somewhere in between, maybe. It's all just a matter of, "Make sure you're getting value for the price, and don't pay more than you have to." Not really so controversial, I think.

**Joe:** Also, like any business relationship, know who you're dealing with and what you're buying. Get recommendations and references, ask for samples, become informed, don't be afraid to negotiate terms.

**Barry:** One more thought about agents and... damn, I really wish we had something better than estributors to call them.

**Joe:** Muwahahahaha. I coined that a few years ago and it seems to be gaining traction.

**Barry:** If Amazon's approach—an easy-to-understand and fair contract; simple, transparent royalty statements—becomes the standard, some of the value traditional agents have offered as interpreters in these areas will diminish. Smart agents will find ways to offer new value to offset what's been lost. So the move to an estributor model will become even more important for agents.

**Joe:** This is all happening pretty quickly, so don't feel bad if you don't know what you're doing. Just try to avoid snap judgements and acting without thinking. Right now the publishing world is in a state of transition.

**Barry:** AKA, "State of Confusion."

## Next Steps in the Evolution of Ebooks

**Joe:** Which leads me to something else I noticed at BEA. Though ebooks are now outselling paper, the ebook section of the convention was minuscule—by my rough estimation not even 1/10 of the overall floorspace.

If I were a Big 6 publisher, I would have put an extra booth in the ebook section. There were tens (hundreds?) of thousands of paper books being given away, yet I lost track trying to count all the ereaders and iPads in the hands of attendees.

Why wasn't there an ebook signing booth? The technology exists. Why weren't publishers pushing this new ebook format, which on Amazon is now outselling paper?

But then again, if I were really a Big 6 publisher, I wouldn't have blown all that money attending BEA in the first place. It was like Mardis Gras, but the currency was denial instead of beads. The gigantic booths (meant to broadcast prosperity?) seemed to me more like whistling past the graveyard. What a waste of money and manpower.

However, in the Digital Book section, Blake Crouch and I met with several smart, hungry start-ups in small, modest booths. Among them Overdrive, Kobo, Vook, Autography (where authors can sign ebooks), adboku, Bookrix, and Smashwords. They see where the future is headed, and they're innovating to ensure their place in this future.

These are the companies working to make the pie bigger.

Ebooks are by some measures now outselling paper, but they're stilll an early adopter product. The general masses haven't embraced them yet, as they have with DVD players and iPods, though all signs point to that happening.

When a technology reaches that tipping point and becomes a "must buy" for folks, innovation increases dramatically. Right now, ebooks are basically text in an electronic format. They don't do much more than print books do.

**Barry:** The car was known as the horseless carriage. Initially, television was talking head radio.

**Joe:** Soon, ebooks will be more than just a replacement. We've talked about what the future of ebooks might be. I believe it will change the way people think about fiction, and bring people to fiction who might have avoided it in the past.

What's your opinion about the  book as a social network?

**Barry:** I think it's another example of you thinking so far ahead of the current state of affairs that initially a lot of people won't understand what you're getting at. But yes, I think it's a great idea, and I was knocked out by the way Amazon not only listened to it over those disco fries, but by the way they refined and expanded on it, too—all while taking notes. Again, can you imagine a legacy publisher ever having a skull session like that with its authors? Let alone listening and adding value along the way?

**Joe:** I could imagine a legacy publisher doing that. But it would remain strictly in the realm of imagination. Also, for the uninitiated, disco fries are poutine—French fries with cheese and gravy. I'd been searching my whole life for a way to make fries unhealthier.

**Barry:** Heh. I swear, you want to get Amazon's attention? Say, "I have a new idea."

**Joe:** Years ago, I proposed that ebooks would someday be free, supported by ads. But whenever I mentioned ads in ebooks on my blog, I got a lot of resistance from people, just as I did when I proposed that books could be social networks. Well, this is exactly what adboku is trying to do.

## Be the Monkey

**Barry:** One thing I'm learning from the whole changing publishing landscape is that a lot of people just don't like change. Their arguments—their _perceptions_ —flow from that.

**Joe:** The legacy publishing world seems to offer up similar resistance to change, and makes a lot of the same excuses as to why the old ways are the good ways.

It's natural to dislike change. Change is scary. It's also natural to assume that because _you_ don't like an idea, _no one_ will like an idea.

But the reason we live in such a cool world now, and why our lives are so much better than our grandparents', is _because_ of change.

So here are some parting words for authors resistant to ebooks, booksellers resistant to Amazon's imprints, and even Big 6 publishers who want to survive the next five years.

**Barry:** Assuming you're going to offer fewer than a thousand parting words, I just want to congratulate us for getting this bad boy in at under 10,000 words.

**Joe:** Yeah, at 9,400 this one is a little short. But I think it covers what needed to be covered.

**Barry:** We probably should have included a few more monkey links. Maybe next time.

**Joe:** Here's the thing. Change will happen. The more you fight it, the more you'll fall behind to those who embrace it.

Your goal shouldn't be to fight over a larger piece of the static pie. Your goal should be to make the pie bigger.

That means paying attention to what readers—and writers—want. It means innovating. Experimenting. Learning. Embracing change, and thinking up ways to utilize all of this incredible technology that's coming at us.

You don't want to be the last dinosaur. You want to be the first primate.

You want to be the monkey.

## About the Authors

**Joe Konrath** is the author of more than twenty novels and hundreds of short stories, written under the names J.A. Konrath (the Lt. Jacqueline "Jack" Daniels series), Jack Kilborn ( _Afraid_ , _Trapped_ , _Endurance_ , _Draculas_ ), and Joe Kimball (Timecaster). Joe has a lot of names, apparently. He began self-publishing on Kindle in April, 2009. As of March, 2011, he's sold over 200,000 ebooks. On his blog, A Newbie's Guide to Publishing, he has chronicled his writing journey. You can visit him at www.JAKonrath.com.

**Barry Eisler** spent three years in a covert position with the CIA's Directorate of Operations, then worked as a technology lawyer and startup executive in Silicon Valley and Japan, earning his black belt at the Kodokan International Judo Center along the way. Eisler's bestselling thrillers have won the Barry Award and the Gumshoe Award for Best Thriller of the Year, have been included in numerous "Best Of" lists, and have been translated into nearly twenty languages. The first book in Eisler's John Rain series, _Rain Fall_ , is now a minor motion picture (kidding, it's reasonably major) starring Gary Oldman. Eisler lives in the San Francisco Bay Area and, when he's not writing novels, blogs about torture, civil liberties, and the rule of law. You can find out more on his website, friend him on Facebook, and follow him on Twitter. He was also in the movie Freakonomics, which he forgot to tell Joe.

## Also by Barry Eisler

Fiction

Rain Fall

Hard Rain

Rain Storm

Killing Rain

The Last Assassin

Requiem For An Assassin

Fault Line

Inside Out

The Lost Coast

Paris Is A Bitch

The Detachment (Coming soon)

Non-fiction

The Ass Is A Poor Receptacle For The Head: Why Democrats Suck At Communication, And How They Could Improve

## Also by Joe Konrath

Origin

The List

Disturb

Shot of Tequila

Jack Daniels Stories (Collected Stories)

Crime Stories (Collected Stories)

Horror Stories (Collected Stories)

65 Proof (Collected Stories)

Truck Stop

Suckers by JA Konrath and Jeff Strand

Wild Night is Calling by J.A. Konrath and Ann Voss Peterson

Babe on Board by J.A. Konrath and Ann Voss Peterson

FLEE: A Thriller by J.A. Konrath and Ann Voss Peterson

SERIAL by Blake Crouch and Jack Kilborn

SERIAL UNCUT by Blake Crouch and Jack Kilborn

KILLERS by Blake Crouch and Jack Kilborn

KILLERS UNCUT by Blake Crouch and Jack Kilborn

BIRDS OF PREY by Blake Crouch and Jack Kilborn

SERIAL KILLERS UNCUT by Blake Crouch and Jack Kilborn

Floaters by JA Konrath and Henry Perez

Planter's Punch by J.A. Konrath and Tom Schreck

Draculas by Blake Crouch, Jack Kilborn, Jeff Strand, and F. Paul Wilson

Endurance

Trapped

The Screaming

Symbios

Shapeshifters Anonymous

Banana Hammock
