About Me

A blog wherein a literary agent will sometimes discuss his business, sometimes discuss the movies he sees, the tennis he watches, or the world around him. In which he will often wish he could say more, but will be obliged by business necessity and basic politeness and simple civility to hold his tongue. Rankings are done on a scale of one to five Slithy Toads, where a 0 is a complete waste of time, a 2 is a completely innocuous way to spend your time, and a 4 is intended as a geas compelling you to make the time.

Wednesday, February 19, 2014

Ebook-olution in action

Two interesting developments in the e-book marketplace in recent days.  One of which shall be used as a springboard today, this being the announcement that Richard Curtis has sold his e-Reads business to Open Road.  Like myself and several other leading agents in sf/f, Richard is an alumnus of the Scott Meredith Literary Agency, around twenty years prior to my time there.  He started e-Reads in 1999 when the e-book business was barely in existence, and interestingly, I've traveled in some familiar circles with agents with an interest in the e-book business.  My boss for 15 months at Scott Meredith after Scott died was Arthur Klebanoff, who founded Rosetta Books a couple years after Richard founded e-Reads.

The reason Richard Curtis gave in the press about the sale was that there was a perceived need to do more marketing of the e-Reads list, which would have meant stepping up the investment in the business, and that it seemed better to find a company that could do that rather than to make that investment or seek the investors that would make that investment feasible.

In some ways, Richard Curtis' decision has no bearing on what JABberwocky does with its e-book program.  e-Reads was a separate enterprise from Curtis' literary agency, publishing books by authors who weren't all Richard Curtis clients, designed to make money as a separate entity.  JABberwocky's e-book program is a service to JABberwocky clients, where we take our standard commission of 15% on most of the books in the program (we only take 50%, which is the Open Road model, if the author wishes to have us pay all conversion costs and limit us to recouping those costs solely from within the e-book program) rather than the 50% cut that often prevails with smaller e-book publishers or the 75% cut that often prevails with larger.

And one of the biggest limitations to our e-book program, though not to ours alone, is that we under-market it.  We have one staff person who devotes a good chunk of time to the e-book program, and especially as we have vastly increased the number of books in the program, most of that time has been spent on dealing with authors on sign-up issues, with the conversion house on the file conversions, with our cover artists and cover copy writers, actually getting the books up, and dealing with vendors.  (The vendor issue is a second limitation, which we will look at in another blog post.)

Since we are taking such a small cut, smaller than pretty much any other e-book publisher, I can forgive myself the under-investment in marketing, but it is nonetheless my hope that eventually we can devote more time and energy to this, either by re-tasking as we slow the pace of new books into the program or as part of an overall expansion at JABberwocky.

These are things our marketing person might do:

Send out review copies of our books.  Many of our titles predate the explosion of websites dealing with sf/fantasy, and those sites might cover our releases more or even review some of the books, which came out long before the websites themselves started.

Coordinate more sale pricing, including analysis of the effects of sale pricing.

Help willing authors (and not all are willing to put too much promo energy into their twenty-year old books) to do guest blog posts.

Maybe set up a separate Twitter account or other social media devoted to the e-book program.

Improve the website we have for the e-book program.

Have a small budget to begin experiments with on-line advertising using Google AdWords, Facebook, or other programs.


There's lots more that could be done, and I could easily spend close to $50K a year on salary, benefits, and other expenses for a full-time marketing person, even at entry level.

Absent making that marketing investment, our e-book program generally relies on reflected marketing for its success.  Simon R. Green, Tanya Huff and Jack Campbell all do very nicely with reverted backlist and/or collections of short fiction that are included in our e-book program. That is almost certainly because they have books being marketed and distributed by Big Five publishers, have had this for many years, and can rely on an audience that comes along from the Big Five books to discover ours.  In the next tier would be Rick Shelley, a deceased author who had fifteen books published by a Big Five publisher and who writes in an established sub-genre, military sf, that has loyal core readership.  Thereafter, the success of our e-book authors kind of tracks the success of their print books, and considering the nature of our program this isn't a surprise.  But it is limited; we don't have a good way other than word of mouth or reflected marketing to bring someone to a higher place.

Clearly, marketing would be a good thing!

But where is that marketing money going to come from?

Forget about what the JABberwocky cut is, but the total annual royalty revenue from our entire e-book program is under $100K.  Even if you say that we could increase overall revenue by 50% if we had better pricing, and then by another 50% if we had better marketing, the total royalty revenue might just scrape past the $200K mark.  No matter how you look at it, we'd be spending an enormous percentage of gross royalty earnings for the e-book program on the marketing, so where's it going to come from?

If I took a poll, I wonder how many authors in the JABberwocky e-book program would choose to give me another third of their income in exchange for having dedicated marketing, and would feel like they would come out ahead in that process.  Their sales would need to increase by 70% in order for them to break even.

And for the authors at the lowest end of our earnings scale, would it be worth their time and energy to self-publish their own e-books?  We make their decision to have us do it a little easier by taking a small cut of their earnings.  But a lot of our e-books earn less than $20 per month in gross royalty revenue.  How much time do you want to take to self-publish your e-book to save $250 or less over a year vs. having someone else do it?  Can all of those authors even find someone else to do it when the cost of setting a book up for an e-book can be $400, which can take several years to recoup?

Even though I want to spend more on marketing, it is magical thinking to say it will automatically pay for itself.  You can see why Richard Curtis would say he wasn't up for doing that.

From the perspective of the aspiring self-publisher, you must reflect on the fact that marketing expense is a real expense that comes from somewhere.  I am sure we can find examples of self-published authors who managed to succeed by word of mouth alone, just like we can find examples from Big Five publishers of little under-the-radar novels that went on to become something big.  But otherwise, someone has to do the marketing, and it has both a cost and an opportunity cost (what else you could be doing with the money).  When you realize that many people have day jobs, have children, have family or social or volunteer obligations, you can see why many people don't want to do that.  They want to have a publisher put some time and money into marketing their work.  Even if it's going to be one of those Big Five publishers that is very likely to under-market, it will likely be better than they can do on their own.

From the perspective of even the very successful author, let's look at a JABberwocky client like Brandon Sanderson.  He self-publishes his own e-books, and has the staff and support capability to do it.  At the exact hour of this writing, his self-published Kindle edition of The Emperor's Soul and of Legion are both in the 5000s on Amazon.  He makes real money at this.  Before we placed print rights with Emperor's Soul with Tachyon we had a long talk on the cost-benefit of different publication models.  We did this for his Hugo-winning novella The Emperor's Soul, we did this before selling two new Mistborn novels to Tor, and we will continue to do that.

Because even though Brandon Sanderson is underpaid for his e-book royalties, as all authors with the Big Five are, the low royalty rate isn't the only thing the Big Five offer.

Let me demonstrate this very clearly:
In 2013, Brandon Sanderson had two major NY Times bestsellers published, The Rithmatist and Steelheart, and these were among the things that his Big Five publishers did to support those books: outing to the Random House sales conference; major events at BookExpo America including booth signings, official autograph sessions, and the audio tea; national author tours; ads in magazines like Entertainment Weekly, and not just a couple but in a dozen or more; a reciprocal campaign with DC Comics; tens of thousands of books put into mass merchandisers like Walmart, Costco and Target; books on the most prominent "stepladder" displays at Barnes & Noble; other placements in endcaps, section tables and elsewhere that have been running for one book or another almost non-stop for the past nine months and with the release of Words of Radiance in two weeks may end up running for a year or more; a major promotion at dozens of Hudson Books travel locations.  I don't know the exact costs for many of these things, but can any of us doubt when you look at all of this that the publishers have spent well into six figures marketing Brandon Sanderson over the past year?

So we chose a hybrid model for The Emperor's Soul.  Tachyon Press doesn't offer the size of marketing spend that the Big Five can do, but it markets very heavily toward a different part of the sf/f audience than the usual Brandon Sanderson crowd.  And this was a very successful book for Tachyon, even without having e-book rights.  Brandon Sanderson has something for his self-publishing pipeline.  We send a message to the Big Five that we have alternate ways to do some things, and gives us some leverage there.  But should Brandon Sanderson test what would happen if he withdrew from the Big Five ecosystem entirely, and never had a year like 2013 with all that third party marketing investment behind him and his work?

Even though I love marketing and want to do more of it, I am extremely dubious of the Open Road business model.  When I look at the cost of marketing vs. the likely return for my own little e-book program, how can Open Road justify itself?  As they say on their website "Open Road creates connections between authors and their audiences by marketing its ebooks through a new proprietary online platform, which uses premium video content and social media."

To be sure, Open Road can gain benefits of scale in its marketing.  If I have a marketing person who markets 100 books by 20 authors and Open Road has 4200 books by eight hundred authors...  At the most basic level, any website they are in contact with for marketing or any social media anything they have for marketing can be used for many more authors.  It doesn't take much more time to us an email to Pat's Fantasy Hotlist to pitch ten giveaways instead of one or two.  Another benefit of scale:  shortly after we transferred several Simon R. Green titles to Open Road, they were able to get a Kindle Daily Deal for Simon, and in all likelihood we at JABberwocky could not have.  Amazon pays more attention to Open Road because Open Road is bigger, has deeper pockets, many more prominent authors.

However, you also start to come up against limitations of scale.  The acquisition of e-Reads will bring Open Road's catalog to over 4,000 books.  If they scale up their marketing by 30% because e-Reads scales up Open Road, they can.  But ultimately, the marginal cost of hiring an additional publicist, an additional sales person, an additional whomever, is going against the marginal author and the marginal book.  So they have to make choices just like the big publishers do.  Even at JABberwocky, we have to make choices.  When I first went to London Book Fair in the late 1990s, I could include every JABberwocky author in a catalog that I could put together myself, and which was a few dozen pages at most.  The current layout for our 2014 catalogs is over 100 pages divided between a main catalog, YA/middle grade catalog, and special mini-catalogs for our two biggest clients.  How can we feature important backlist which we feel is undersold in the translation markets, major #1 bestselling authors, ongoing bestselling series a level or two down, deserving new clients, and still have room to mention the books we sold in 1997 that are now long out of print?  The bigger we make the catalog, the less impactful it becomes for everyone, and the added expense of going from 100 pages to 120 pages would be allocated against the books we sold in 1997 that are now long out of print.  The expense cannot be justified.  I and the Big Five and everyone else could choose to allocate things differently and say to ourselves the new marketing spend is dedicated to the top of our eco-system, but that isn't how economics works when trying to run a profitable business

The bigger Open Road gets and the more selective it has to become, the more it becomes like the Big Five publishers, only with a better e-book royalty rate.

So we will look closely at how well the Simon R. Green titles do, because we are very curious to see what happens to the sales revenue for those titles.  If Open Road can't increase sales revenue by at least 50% from what we can do on our own, there isn't any good reason to consider having other of our books with Open Road or with other third-party vendors rather than keeping as much by our clients within the JABberwocky program.  If Open Road can increase sales revenue considerably, then we want to have more books with Open Road or other vendors.

But that creates another problem.  Third party vendors will exercise more selection over the books they choose to include.  They will happily take our best and most successful authors, but the JABberwocky e-book program then becomes a little like the health insurance marketplace, subject to adverse selection risks.  We have fixed costs that now have to be allocated against our least successful titles only.  That makes it hard to justify even as a service, and ultimately could force us to stop offering the service for the authors who could most benefit from it, or to increase the subsidy.  (Or, to turn it into e-Reads, scale it up as a separate entity, and be able to offer it as a package.)

This blog post has come rather far afield from a discussion just of e-Reads or just of the marketing of e-books, but I've also tried to approach it with some real rigor, and to give an understanding of how an easy real world question like "JABberwocky should spend more on marketing" which is a simple and inarguable truth, just like it is for all the Big Five publishers we deal with, gets very complicated very quickly when put into the real world.  Not just for us, but for all the authors we deal with, who have many options themselves for publishing and marketing their books.  You'll also see, or I think you will, that I'm not asking and answering these questions from a pre-conceived agenda that there is only one way to do things.  The goal is to go where the evidence leads.  But it takes a lot of trial-and-error with different approaches for different sorts of authors and different sorts of books going down different paths to find all that evidence, so even the search for the best way to make money doing this ends up being a costly one.

I've hinted above at some of the benefits of scale which an Open Road offers vs. JABberwocky, and that is the thread I'll pick up on in my next post on these topics.

1 comment:

Jessica Strider said...

It's cool seeing the inner workings of things like ebooks. Thanks for taking the time to post about the business side of things.