The Future of Publishing - Part 4

June 12, 2012

About the Justice Department’s decision on Amazon and the case of publisher price fixing:

How can any publisher claim that Amazon is pricing eBooks at a loss when for DECADES paperbacks have been profitably sold at about $8.99 or less? A paperback requires everything an eBook requires in pre-sales and production, BUT paperbacks also require additional costs, including paper, printing, trucking, and distribution costs, making the break-even for an $8.99 paperback about $4.00. And, at that sales price and breakeven, they sell paperbacks profitably and give the authors about $0.28 to $0.63.  Do literary agents or authors complain that this price is too low?

On the other hand, selling an eBook, which requires none of the above except the distributors’ cut (and, if an eBook is sold at less than $10.00, Amazon gives the publisher 70% or $6.99 to divvy up, there’s an additional $2.00 beyond the $4.00 breakeven for a paperback.

So, as I read this, the publishers are complaining that Amazon is only giving them about $2.00 more than they would for selling a paperback.

The publishers are full of crap on this one. For another thing, lower prices increase sales (as traditional economics states, there is a lower intersection of supply and demand). So the publishers are actually stating that they want eBooks to sell fewer units. That’s crazy and it also implies that print publishers are actually using the higher price of eBooks to support their declining paper sales. If that’s so, then no one can deny that the print publishers are engages in price fixing, by setting prices for eBooks so that each and every eBook sold subsidizes the depreciation of the print factories owned by the largest print publishers.

The justice department is right going after the print publishers for their despicable behavior. But when they’ve done that, they need to ensure that Amazon and Barnes and Noble remain competitive so there is no monopoly in any format of (e)book sales.

Did our administration have pre-knowledge of 9/11?

 December 5, 2004

From a story reported on another web site (http://www.crooksandliars.com/House Hearings On State Department IG Shows Conflict) during September 2007 , Inspector General Howard J. Krongard testified before Chairman Henry Waxman of the Congrssional Oversight Committee. These hearings continued, and on November 14, the public discovered that brother, Alvin Bernard “Buzzy” Krongard, may be on Blackwater’s advisory board. Buzzy had previously served as the Executive Director of the CIA.

The most disturbing thing about Buzzy is on September 6 and 7, 2001, just before ’9/11,’ he initiated a number of (criminal) transactions in financial markets that indicate specific foreknowledge of the September 11 attacks on the World Trade Center and the Pentagon.

From a story reported on another web site (http://www.fromthewilderness.com/free/ww3/10_09_01_krongard.html), until 1997 A.B. “Buzzy” Krongard had been Chairman of the investment bank A.B. Brown. A.B. Brown was acquired by Banker’s Trust in 1997. Krongard then became, as part of the merger, Vice Chairman of Banker’s Trust-AB Brown, one of 20 major U.S. banks named by Senator Carl Levin this year as being connected to money laundering. Krongard’s last position at Banker’s Trust (BT) was to oversee “private client relations.” In this capacity he had direct hands-on relations with some of the wealthiest people in the world in a kind of specialized banking operation that has been identified by the U.S. Senate and other investigators as being closely connected to the laundering of drug money.

In the case of at least one of these trades – which has left a $2.5 million prize unclaimed – the firm used to place the “put options” on United Airlines stock was, until 1998, managed by the man who is now in the number three Executive Director position at the Central Intelligence Agency.

On September 29, 2001 – in a vital story that has gone unnoticed by the major media – the San Francisco Chronicle reported, “Investors have yet to collect more than $2.5 million in profits they made trading options in the stock of United Airlines before the Sept. 11, terrorist attacks, according to a source familiar with the trades and market data… The source familiar with the United trades identified Deutsche Bank Alex Brown, the American investment banking arm of German giant Deutsche Bank, as the investment bank used to purchase at least some of these options.”

The Middle East has always been a time bomb

February 24, 2011

The Middle East has always been a time bomb. It still is.

From the time the Jewish people migrated into the area now known as Israel, a few thousand years ago, until now, this area has known war without end. The Bible has a passage containing Moses’ use of spies to scout the Holy Land before they occupied it. (In North America, we did the same thing, but we didn’t just conquor the indigenous people, we eliminated most of them.)

Now, the Arab crescent is boiling over with unhappy young and disadvantaged people who have known only kings and dictators. Is it possible for democracy to succeed in such places?

In the United States, I believe we hope so. In fact, I’d bet most of the world hopes that the kings and dictators will be replaced with tolerant governments. Would this be good for the United States? Would it make a permanent peace with Israel possible? It’s very hard to say.

My personal opinion is that the current unrest in the Middle East was inevitable. It is a repeat of history not just from that region, but from the world over. Look back to the mid-nineteenth century’s revolts in Europe, where Prince Metternich played a prominent role. From the mid-1840′s to World War One, there was a time of conflict in Europe between the rich and poor leading to a few mostly-failed revolutions. During the Great Depression (the one in the 1920′s and 1930′s, not the current one), global conflict between the rich and poor intensified. World War Two ended that conflict, but it’s happening again all over the planet. What’s happening in the Middle East is more visible that what’s happening in the United States, but greed for power among the rich and a desire for a decent life among the poor will always set the stage for violence and change.

History repeats itself. It’s not that we don’t learn lessons from history. It’s that greed and power are what motivate those who seek to govern. The real lesson is in our DNA. We’re built like this.

Expect the worst to happen. Be surprised when, or if, it doesn’t. As for me, the current unrest is marvelous fodder for spies and their roles in political power shifts. As a fiction writer, it’s time to sit and watch.

After all, the Middle East has always been a time bomb.

Wisconsin and the Middle East

February 28, 2011

Wisconsin and the Middle East. Two places, so dissimilar, but with a common bond so strong it is undeniable. Can you guess what that commonality might be?

People in both of those places are now revolting against their governments.

I’d be among the first to agree that elections have consequences. In Wisconsin and other states, voters were faced with difficult choices where the outcomes might express more or less than the choice on which they voted. But, governments are more complicated in their governing than the opinions which got them elected. It is truly difficult to understand what issue or issues caused any voter to make their (often binary) decision. When a politician uses that decision as a claim for everything they personally deem within their own voting purview. I cringe and shudder.

Likewise, when Middle Eastern despots claim their right to absolute rule, I can understand the reaction of those of their people who want them gone. The protests in Wisconsin have taught me.

We – all of us everywhere – seem to have little patience for those who govern. We have no tolerance for others with an opinion unlike ours. And since most people lie in the middle of the proverbial bell-shaped curve, we are now a planet ruled everywhere by extremists. Fundamentalists of every description. Religious fundamentalists, Christian, Moslem, and Jewish want us to obey their versions of correct behavior. Political extremists of every kind claim the right to govern us, even when the issue at hand has little to do with what voters were thinking when they elected the politician. Without consensus, economic and financial experts claim they know best the regulations we should permit, even though most of us haven’t the skill to understand to follow their apparently well-disguised intentions.*

Special interests and greed continue to own unmitigated power. Whether it is duly elected Republican governors in the United States, desiring to eliminate the right of labor unions to collective bargaining, or despotic rulers of poverty stricken countries who have privately pocketed funds that might have been used to elevate the education level of their citizens, the result widens the gap between the socio-economic lives of the richest and poorest of us.

It is ironic, then, that this intended result has the unfortunate unintended consequence of the likelihood of massive political unrest and upheaval. We’ve all witnessed the revolts across the Middle East. I predict we’ll see voters revolt across America in the 2012 elections. Why? Because, the majority of voters are moderates, while left and right-wing extremists dominate the news. If Americans cannot find a moderate candidate to vote for, the extremists elected from the party that lost the previous election will once again again claim that they were elected to put in place their own extremist agenda.

The solution in both the Middle East and in America is moderation. Back in the 1950s, we had moderates practicing a moderate form of politics, promoting moderate religious views, practicing moderately regulated banking and economics, and life was good. I fear we’ll never see the likes of those days again.

Poisoning the Well – The Publishers and the Libraries

April 7, 2010

“Once upon a time,” two tribes fought over which one had rightful access to the crops growing in a local field. One of the angry tribesmen took matters into his own hands, dropping a powerful poison into the well of the opposing tribe. Soon, the opposing tribe’s populace began dying. The poisoner announced his act to the leaders of his own tribe. They rewarded him. But, then the poisoner’s tribesmen started dying, since they were downstream from the opposing tribe. In the end, no one survived.

The story illustrates a principle that publishers have forgotten. Publishing is a vertically integrated business, but it is also horizontally organized. There is a food chain, with the publishers selling to distributors and libraries, who are one step closer to the retail public. But publishers also have competing product lines in hardcover, paperback and eBook lines, and to keep their hardcover business alive they have artificially priced their eBook price much higher than it should be, IMHO. I believe (and have said here before) that, as the $2.99 price Amazon permits as a basic eBook unit price becomes the de facto price, this may eventually maim most traditional publishers and could kill many of them.

Apparently, the suicidal tendency of some of the publishers goes beyond what I saw as merely irrational. On my way back to Northern California from Seattle, I read in a newspaper that some publishers have tried to limit the number of times a library may loan an eBook before having to repurchase the title. The unintended consequences of this path are the deaths of both the libraries, who can’t afford to continually reacquire eBook titles, and the publishers, who will lose the library market and the young readers who use libraries. There is an even more insidious consequence: Given the current budget problems that trickle down from the Federal government to our local governments, libraries are already being tightly squeezed, and so are public schools. Forcing libraries to spend cash they don’t have simply means they won’t have many eBooks available at all. Children who used libraries because they can’t afford to buy books will lose their access and may stop reading. Fewer eBooks means fewer readers. Fewer readers means dumber adults. Dumber adults means a less competitive country, with us all suffering as a result. Here’s a case where poisoning the well is a national security issue.

Anyone have a different opinion? Please, express it here!

The Future of Publishing

February 23, 2011

Over this past weekend, I attended the San Francisco Writers Conference. I sat in sessions and soaked up lots of useful stuff, from ways to improve my writer’s tradecraft, to short courses in publicity for writers. I made connections with some literary agents and editors. It was a useful weekend. I also listened to my peers. They expressed concerns about what is currently happening in the publishing industry and how it might change their careers.

As the former CEO and publisher of an eBook company for almost a decade, I think I may have something useful to contribute in that discussion.

Everyone who watched the demise of the old infrastructure of the music business already understands what is happening. My opinion is that it provides more than an object lesson. The fate of the old lions of the music business looks to me to be the fate of the larger publishers. Yes, there are significant differences in the infrastructure of the industries, their product composition and the consumer attitudes toward change, but the lessons are there and to ignore them is to remain in denial.

Music went through several technological improvements in delivery before the major impacts hit the companies. First, we went from wax cylinder to 33 1/3 record to CD. Each of those left the record companies with no choice but to adjust their fixed asset base with massively changed equipment, and then amortize the costs across the sales of their products. Rough, but possible to survive the changes. The last, biggest change was the one of distribution, and this was the killer. Once record sales were replaced by song sales, and sold not in physical format but MP3, delivered over the Internet, the effects of change were massive. Brick and mortar stores were unnecessary. Trucks, warehouses and other infrastructure were assets the companies could no longer amortize and they became useless. Barriers to entry became a non-issue. Distribution was the only issue. Now let’s look at publishing. Each of the factors here is the same except for two: No one buys books by the chapter, and everyone uses software and possibly an eReader, if not a cell phone to read. Taken as a whole, the similarities outweigh the differences. Publishing is undergoing a change of seismic proportions.

In their current form, publishing companies won’t survive. They must jettison the unneeded fixed assets and find a way to become relevant. I’m not sure what they can do with all the trucks, warehouses and printing presses, but there is no way they can charge these off against the price of an eBook and get customers to go for it. Not when literary agents can become the publisher of record for eBooks sold through distributors such as barnesandnoble.com and amazon. Within five years, there won’t be any bookstores. The price of an eBook won’t be much above $9.99. Smaller organizations like literary agencies and writing critique groups will become the ‘publishers.’ The financial failure of Borders is proof enough of this as a forecast of the future.

Libraries will lose their relevance as printed books become scarcer and more expensive. With neither bookstores nor libraries, printed books will be bought in short runs by the author and sold at signings conducted at restaurants and senior centers. For the most part, publicizing a new book will likely become a blogging event.

To see what will happen, no one need go farther than read T. S. Kuhn’s short monograph, published in the 1950’s, The Structure of Scientific Revolutions. He uses several historical examples, and concludes that those who cannot adjust to technology changes cease to have economic relevance.

Writers will still become authors, and literary agents will still be the arbiters of quality. But, any literary agent who can’t find a way to take advantage of the incredible opportunity offered by a time of massive change will find themselves gone from the planet.

Writers will need to learn how to be marketers. Promotion and Marketing will be their biggest post-writing activities, and these activities will be quite different from what they did pre-eBook. Some will jettison their paper publishers after getting a few titles in print and begin selling eBook titles to their established customer base. J. A. Konrath has done this and it works. Others will stick with their paper publishers and pray they can survive. Should the publisher adapt to the new world. It might work. Paper publishers currently provide the prime advantage of the stamp of quality to what goes out in print, and it is a formidable advantage for an unknown writer.

To survive, after shedding the unnecessary fixed assets that now burden them financially, publishers will probably purchase the literary agencies that are publisher of record. By itself, this changes everything. If they can’t come up with a better idea, or if they don’t begin acquiring the literary agencies that “own” the best writers, they will surely perish from carrying the weight of their current fixed asset infrastructure without the counterbalance of direct access to talented writers.

That’s my prediction, for what it’s worth.

If you’re a writer, take heart, the times may be interesting now, but the future is still bright. If you’re a literary agent, you hold all the cards if you play them right. If you’re a print publisher, the time has come to stop wondering what will happen and choose which literary agencies you want to become close with. Pick carefully; the clock is running.

Plotting Your Story Using Screenwriting Tools: Soth versus Schechter

Publishers will want to wrangle every last penny of revenue from anyone’s first novel. One of their best sources is the movie that can be made from a novelist’s first publication. The major reason is that movies drive incremental book sales for the author, years after the book has backlisted.

With that as their reasoning, for decades, book publishers now tend to read every potential book with their eyes imaging it in a movie theatre. The inevitable result is that novelists have started studying screenwriting to ensure they can fulfill the publisher’s unstated demand: Could a movie be made from this manuscript?

Since the most important way to develop character is through dialogue and stage direction of the character (what they do when they feel something), screenplay writing skills have become increasingly important. Teachers like Eric Witchey use tools like E-D-A-C-E (Emotion leads to Decision leads to Action leads to Conflict needs to another Emotion), and A-B-C (agenda leads to backstory leads to conflict) where dialogue and behavior driver character development.

My literary agent returned from meetings with NY publishers with a third and fairly new requirement for fiction manuscripts, based on what they feel is commercial: Eliminate all set-up and backstory (except what can be medicine-dropped into the dialogue of the characters), and have the story be solid action with no breaks. This is what you see when you’re at the movies.

There are two superb teachers of screenplay writing, Chris Soth and Jeffrey Alan Schechter. Soth (www.milliondollarscreenwriting.com) has a PDF eBook called Million Dollar Screenwriting: Make Money with the Mini-Movie Method, available from his website for less than $50. Schechter wrote a PDF eBook called Totally Write Guide to Bulletproof Screenplay Structure Guide, which he made available from his website, but it was later turned into a software product called Contour, available from Mariner Software (http://www.marinersoftware.com/products/contour/) for less than $50. Each one has a system that is far advanced past the old three act structure that Chris Voglar (The Writer’s Journey) suggests for story development. The objective is to produce two-minute scenes, ideal for a movie.

I reviewed Schechter’s system and started using it several years ago as a result of a conversation with Dennis Phinney of ActFourWriters.com. Linda Rohrbough (a former ActFourWriters.com member) suggested Soth’s system and I examined it last year. While there were similarities, I found the mini-movie system offered a simpler design to my plot. But, it wasn’t complete. When I cross-indexed the two systems, I finally had a product I could use, complete with a way to justify the times when I would have to break the rules. I developed a Microsoft Excel workbook that you can use, complete with the cross-index embedded within, called BLANK Outline and Grading Sheet.xls.

I use the tool to craft the early stages of my story. The instructions are simple. Enter your chapter and page number and the Description of the scene into columns A, B and F, and ensure they correspond to the aspect of your novel’s theme related to the scene in column G. Do this for all 44 plot points, all 8 mini-reels. Each scene should be about two minutes of real-time action in a movie, since the 44 plot points would then become an 88 minute movie. The other way to see it is that all 8 mini-reels would become a 96 minute movie. Examine the spreadsheet and do the math. It works. In effect, your time line becomes what a movie of your story would require in terms of minutes.

When you are finished, write the manuscript. When it has gone through all of the critiques necessary to complete its improvement cycle, review it against the Excel workbook and make corrections to the workbook so they correspond in all aspects (page number for each chapter, and all plot point descriptions. Send the workbook out with the manuscript to your test readers, and ask them to enter letter grades (column H) and comments (column I), enter evaluations (letter grades and comments) for every principal character (rows 66 through 7), and grades and comments for every aspect of the manuscript (rows 92 through 167). When you receive the returned workbook, review their comments and make your final changes.

If you are working on plotting a novel and want to use the BLANK Outline and Grading Sheet.xls, you can download it from my web site (http://dskane.com/wp-content/uploads/2012/12/BLANK-Outline-and-Grading-Sheet.xls).