In his most recent newsletter, he makes some predictions about how e-books may effect our approach to writing. I've included the full article here with Randy's permission. It's fairly long, but offers new ways of thinking about the issues facing us as writers. I hope you'll check out Randy's website for more info, too.
The Future of Publishing
by Randy Ingermanson
The world of publishing is currently going through massive turmoil. Some people believe that the rise of e-books is going to be the biggest single change in publishing since Gutenberg's invention of movable type.
I'm not a prophet nor a seer nor clairvoyant. But I do have my eyes open, and in this column, I give you my best predictions for the coming years. They may be right. They may be wrong. Either way, one thing seems certain: Huge changes are coming.
I offer these predictions to suggest ways you might plan for your future. I'm using them to plan for mine.
Prediction #1: E-books Will Surpass P-books Soon
I define a "p-book" to be a book printed on paper. This term includes books created by traditional royalty-paying publishers (usually in large print runs of thousands or tens of thousands). This term also includes print-on-demand ("POD") books.
P-books are very wasteful and inefficient. To create a p-book, you must pay all of the following:
* The person who typesets the edited manuscript
* The person who cuts the trees to make the paper
* The person who turns the trees into paper
* The person who puts ink on the paper
* The person who binds the paper into books
* The person who puts the books in a box
* The person who drives the box to the store
* The person who unpacks the box in the store
* The person who puts the book on a shelf
* The person who rings up the sale at the counter
* The person who puts the unsold copies back in a box
* The person who drives the box back to the publisher
* The person who unpacks and shreds the returns
To create either an e-book or a p-book, you must pay all of the following:
* The person who writes the book
* The person who edits the book
* The person who makes the cover art for the book
* The person who markets the book
* The person who enters the book info into the store computers
E-books require one other player who must be paid once by each reader:
* The person who makes the e-book reader
I've left out a number of minor players in the above cast of characters, but I think these are all the main parts. The marginal cost to create an e-book is lower than the marginal cost to create a p-book. You can automate the sales process for an e-book and deliver it anywhere in the world almost instantly at almost zero cost.
The only obstacle here is the cost of those pesky e-book readers. That cost is dropping rapidly.
Furthermore, many phones and other mobile devices now include e-book reading as a standard feature, and numerous software products allow you to read e-books on your computer.
Apple's new iPad marked a turning point, because Apple promised to pay publishers a hefty 70% of the retail price of each e-book. Shortly after the iPad's announcement, Amazon began changing their payment model to be in line with Apple's. This makes e-books very profitable for publishers -- and potentially for their authors.
I believe that e-books will surpass p-books in market share within five years.
If you want some specific reasons why, I suggest you read the blog of Joe Konrath:
http://JAKonrath.blogspot.com
Read a few of Joe's recent blogs and see if you're not astounded at how well e-books can do in the hands of a competent marketer.
Prediction #2: E-books Will Become The "Minor Leagues"
A beginning writer faces a very long learning curve. It typically takes a writer several years to develop the skills and the contacts needed to sell a first novel to a major publisher. It's not uncommon to hear of a writer who took "ten years of hard work to become an overnight success."
During that 3 or 5 or 10 or 20 years when a writer is learning the craft of fiction, she earns nothing (or a pittance if she can find a magazine to buy her short stories). Typically, a writer writes several complete novels before she sells her first to a publisher.
That will change in the coming years. The reason is because we writers are an impatient lot, and we all believe that our work is unalloyed gold and that those philistine agents and publishers just can't recognize genius when it smacks them in the face.
I believed this before I got published. I believe it still about a couple of my manuscripts that crashed and burned before publication. You probably believe it too. In many cases, we're right.
In coming years, writers will simply short-circuit the traditional route by e-publishing their first book. It will probably sell a copy to Mom and to Aunt Mabel and to a few friends.
If the writer gets any encouragement at all from this first attempt, she'll e-publish another, and another, and another. As she improves, her books will sell to a wider and wider audience, eventually going far beyond her circle of family and friends.
When I outline this scenario to my writer friends, they're all horrified at the prospect of a market
"flooded with awful e-books."
My response to that is simple: The market is smart. Readers will ignore the "flood of awful e-books." They'll gobble up the e-books that are good and will recommend them to their friends. Those friends will do likewise. The cream will rise to the top. The dregs will not. It's that simple.
For those who live in terror of the coming "flood of awful e-books," I'll simply point out that the market is already flooded with hundreds of thousands of self-published e-books (and p-books). Did you notice? Were you flooded out of your house? Are you drowning in a sea of awful books?
No, no, and no.
The market chooses the quality books because the market is composed of people who know what they like and who talk about it. Word-of-mouth will sift the quality from the quantity, just as it always has. Only a very few people ever see any given "awful book." Most readers only come across a few "awful books." Lots of people see the really good books. The market efficiently finds
them.
E-books will be the minor leagues of publishing (to use a baseball metaphor). This means that new authors will try out their talents and rise to their own level. Agents and publishers will no longer have to play the role of gatekeepers who try to guess what the market will buy. The market will decide what it wants to buy.
I know there are some authors who think it will be a horrible prostitution of our art that the market should actually get to decide what sells. Tragically, the market has been deciding what sells for hundreds of years. In the future, it will do so better and quicker because the gatekeepers will vanish.
Prediction #3: Beginning Authors Will E-publish First
Beginning writers will e-publish their work long before they p-publish it. They will do so because all the other beginning writers are doing so. Nobody wants to get left behind. Everybody wants to be discovered. Everybody believes they are writing a heartbreaking work of staggering genius.
Some writers are.
Yes, really. Some writers are exceptionally good. Those writers will get discovered far quicker than they would have in years past. They'll earn money at their writing. They'll blog about their successes, making it clear that their road to success led through e-books.
Many other writers will follow and soon the majority of unpublished writers will be publishing their work first as e-books.
The result of this is that agents and editors will buy fewer and fewer unpublished novelists. Instead, they'll simply watch the e-market to see what sells. Then they'll acquire the p-book rights for those e-books that are proven successful.
This is the smart thing for them to do. Publishers have long joked that "The way to be profitable in this business is to only publish the bestsellers." In the past, nobody had any idea how to predict the bestsellers. In the coming e-future, it will be obvious. Successful e-books will make successful p-books.
I believe publishers will eventually refuse to take chances on any unpublished writers. Those writers will therefore be forced to publish themselves first as e-books, whether they want to or not. This transition will take time, but I expect that within five years, the overwhelming majority of all first novels will be published first as e-books.
Prediction #4: Mid-list Authors May Do Better
Mid-list authors have had a rough go during the last few years. Publishers have been chafed by shrinking profit margins. They've been willing to pay big bucks to the sure-thing bestselling authors. They've been willing to pay peanuts to new novelists in the hope of finding gold and raking in huge bucks. But they've been less willing to keep paying the mid-listers to write
book after book that just earns out its advance (or doesn't quite earn out but does still make a small profit).
In the coming e-future, mid-list authors will try their hand at e-books and discover that their fans love them in e-format just as much as in p-format. Mid-listers will decide that self-publishing an e-book for 70% of the pie is better than working with a traditional publisher for 7% of the pie.
This is rational behavior. Those mid-list authors who can market themselves at least 10% as effectively as their publishers would market them will decide to do so. They'll e-publish their own work and market it themselves, no longer subject to the whims of their publishers.
Some mid-listers will flourish in this e-culture.
They'll connect to their fan base and grow it. And the publishers will notice. The publishers are both smart and rational. They'll see which mid-list novels do best as e-books and will bankroll them as p-books.
Some mid-listers will refuse this route. I believe they'll do less well as time goes on. They'll find
their publishers increasingly fearful of publishing their work and increasingly stingy with advances.
In this world, publishers will finally achieve their goal -- they'll only publish the winners.
This may take longer than five years to sort out, since mid-list authors appear at first glance to have the most to lose. It will take them some time to see that they can do well in an e-future. I believe they'll see it eventually, and the sooner they see it, the better they'll do.
Prediction #5: Bestselling Authors Will Profit Most
Bestselling authors always profit most. The reason is because the market rewards best what it likes best. In the coming e-future, the market will operate more efficiently. That means it'll reward the best performers more quickly and more richly.
It's hard for me to predict how one aspect of this will play out. It may be that traditional publishers will retain their top-performing authors in e-book format. Or it may be that bestselling authors will e-publish on their own first and rake in all the e-profits, and only
then sell the rights to the p-books. Right now, I can't foresee which way it'll go.
I'm confident that p-books will live on and flourish. A strong segment of the market wants p-books. If publishers publish a p-book only after the novel has already proven itself in the e-market, then they'll benefit from better information and will not lose their shirts on wildly expensive gambles. Even if they publish a novel in e-format and p-format simultaneously, they'll benefit from the improved efficiencies in the e-market.
Prediction #6: Publishers Will No Longer Accept Returns
Currently, publishers allow bookstores to return unsold books for full credit. This practice began in the Great Depression, and it's been a curse on the industry ever since. Bookstores can order more copies than they expect to sell, because there's no risk. Anything they don't sell just goes back to the publisher.
What this has meant for the publisher is that returns on a book can kill them. It might make great PR to tell everyone they printed a million, but it's not so pretty if half a million come back as returns.
Returns are wasteful. E-books can't be returned. In the coming e-future, I suspect that publishers will decide that p-books can't be returned either.
This prediction is not a certainty. I don't think it's quite as likely as most of my other predictions here. But it seems rational to end the practice of accepting returns. I suspect that as soon as one of the major publishers makes this move, the others will follow.
Prediction #7: Agents Will Stop Reading Slush
In the old days of publishing, publishers received enormous numbers of manuscripts from hopeful writers. The manuscripts went into a large stack (called the "slush pile") and publishers hired staff to sift through the slush looking for gold.
Few publishers these days will even open a manuscript from a writer they don't know. Instead, they rely on agents to submit manuscripts. Effectively, publishers have off-loaded their slush piles to the agents.
Agents were already overworked, and this has put a massive strain on them. Their real job is to represent their clients. Now they also have to sift through mountains of slush, written by people whom they don't represent and most of whom they will never represent.
In the coming e-future, agents will stop reading the slush pile because they'll have a much more effective method of finding new talent. They'll ask to see sales numbers on e-books by prospective clients. If a writer can't show a good enough track record for sales of e-books, then the agent won't even consider representing the writer.
In effect, the agents will off-load the slush pile to the market. The market won't mind, because the market is extremely efficient. The market will ignore writing it doesn't like and reward writing it does like.
Please note that I didn't say "the market will ignore bad writing and reward good writing." I do believe there is such a thing as good writing and bad writing. The problem is that there isn't any consensus on which is which. I like one kind of writing. My wife likes another. My best friend likes a third.
"Good" and "bad" are multi-dimensional concepts when applied to writing. That makes it very difficult to choose what to publish. It really is true that one man's meat is another man's poison.
However, sales numbers are one-dimensional. There is a world of difference between selling 10 copies and selling 10,000.
The market efficiently translates its likes and dislikes into hard sales numbers. In the future, I
believe that agents (and of course publishers) will do their initial sifting simply by looking at those numbers. Then, from the novels that have a good track record in e-sales, they'll select the ones they like.
If this prediction is correct (and I can't prove that it is, but it seems reasonable), the life of agents
will get a bit easier in the future.
However, I believe that fewer books will be p-published in the future, and that probably means that fewer agents will be needed. So I foresee a winnowing of agents. Those who are currently successful will be more successful or will have to work less hard. Those who are currently marginal may well go out of business.
Prediction #8: Publishers Will Become More Profitable
I believe publishers will be more profitable, but they'll publish fewer titles.
They'll be more profitable because they'll publish only those authors that have a strong track record in the e-market (or an exceptional track record in sales of past p-books). It's got to be more profitable when you only publish the winners. It's got to be more profitable when you have more information about potential sales before you publish a book.
Publishers will publish fewer titles because not all books are winners. Some books just don't do well in the market. In the past, publishers had to guess the winners. In the future, publishers will read the winners off the e-book charts. They'll ignore the losers on those same charts. That has to mean fewer titles.
This does not mean the public will have less choice. The public will have much, much, much more choice in the e-market. It will have less choice in the p-market, but those choices will have higher average quality. That's a net win for the public.
While I think it very likely that publishers will have higher profit margins in the future, it's an open question whether they'll earn more in gross revenues. I make no prediction on that. Naively, it seems that they would gross less. However, they might conceivably gross
more, depending on complex factors that I can't foresee.
Prediction #9: Some Will Do Better; Some Will Do Worse
I believe that talented authors will do somewhat better in the e-future. I believe effective agents will do better and so will most publishers.
I foresee a burgeoning market for freelance editors (who can help writers polish their work before taking it to e-market). Likewise for freelance graphic artists (who can create great covers for e-books).
I foresee a larger, better array of choices for the reading public.
However, not everybody will do better. Some people will do worse. Let's make a list of them. We already discussed these people before, but let's list them here again:
* The person who typesets the edited manuscript
* The person who cuts the trees to make the paper
* The person who turns the trees into paper
* The person who puts ink on the paper
* The person who binds the paper into books
* The person who puts the books in a box
* The person who drives the box to the store
* The person who unpacks the box in the store
* The person who puts the book on a shelf
* The person who rings up the sale at the counter
* The person who puts the unsold copies back in a box
* The person who drives the box back to the publisher
* The person who unpacks and shreds the returns
None of these people contribute actual value to the story. They only contribute value to the medium -- the handling of paper and ink. As the demand for paper and ink shrinks, so will the demand for these folks. That may be cruel and Darwinian, but it seems to me inevitable.
In addition, I also think that brick-and-mortar bookstores will become smaller (as measured in square footage). It's hard to say for sure if they'll also become fewer in number, but it's a good bet that they will. That's been the trend for several years, and I suspect it'll continue. It's possible that they'll become a bit more profitable, since they'll be stocking only p-books that are marketplace winners. But they may face increasing pressure from the online merchants for
p-books, which can stock a much larger choice. I make no prediction on their profitability.
Those are my predictions for the future. I can't prove that any of them will come true. But I'm making my own plans based on this vision.
It's not the gloomy-doomy future that many writers see ahead of us. However, it's a future that will require serious adjustments from just about everybody in the publishing industry.
In five years, we'll know whether I'm right or wrong.
