Guest Post: The Future of Publishing Revisited

Once a month I publish an article from Randy Ingermanson's worthwhile free newsletter. He has some fascinating comments on the future of publishing. Whether you're angling for traditional or self-publishing, or (like me) still trying to decide, you need to read this column.

The Future of Publishing Revisited, by Randy Ingermanson

In July of 2010, I made a set of nine predictions in this e-zine about the future of publishing in light of the current e-book revolution. If you want to go back and read that issue, you can. All issues of this e-zine are archived on my web site here.

Today, I want to update that set of predictions in light of what I've learned since then. Let's look at them in turn and see how clairvoyant (or obtuse) I was:
Prediction #1: Sales of e-books will surpass sales of paper books within five years.

When I made this prediction, it seemed aggressive. However, I now think it'll happen quicker than that.
The most recent estimates I've heard are that e-books are currently about 20% of the total book market (up from about 4% a couple of years ago).

I'm going to guess that e-books will hit a 50% market share within the next two years.

Prediction #2: E-books will become the "minor leagues".

I think this is already happening. The numbers I'm hearing are that about a million e-books are being
published each year in the US. That compares to a couple of hundred thousand paper books.

In March, Amanda Hocking signed a deal with St. Martin's Press. Hocking made her name late last year with her self-published paranormal YA e-books.

In August, John Locke signed a distribution deal with Simon & Schuster to handle sales of the paper editions of his massively popular self-published e-books.

Expect to see more of this in the next couple of years. Five years from now, I expect this will be commonplace.

Prediction #3: Beginning authors will e-publish first.

This is already happening quite a lot, and I expect it to become the norm within a few years. One of the
writers in my local critique group, Traci Hilton, has done extremely well with her e-book series of
mysteries.

What has surprised me is that some traditional publishers are now offering first-time authors e-book-only contracts for their first book. This past July, one of my former mentees, Mike Berrier, published his first novel, CASH BURN, in an e-only edition with Tyndale House, a mid-sized traditional publisher that has been very successful in paper for many years.

Prediction #4: Midlist authors will do better.

This is hard to measure because numbers are very difficult to get. Most authors don't even get their
sales numbers from their publishers until months later, and they rarely share those numbers, even with their closest friends. So it's hard to know for sure what the status quo is.

However, I do know for sure that most of my midlist author friends have been hard at work in the past year putting their backlist novels into print as e-books. And they're much more able and willing to tell their numbers for those.

The numbers I hear from them vary, but it's fair to say that a midlist author can reasonably expect to earn anywhere from a few tens of dollars per month up to more than a thousand dollars per month on each backlist book they put into print as an e-book. This is free money.

It's unclear to me how things will shake out long-term, but I think this prediction is still a good one.

Prediction #5: Bestselling authors will profit most.

The clearest test of this will come when superstar J.K. Rowling gets her new "Pottermore" site rolling. It's currently still in beta testing.

I would not be surprised to see Rowling make this a massive success.

It's an open question whether other A-list authors are going to follow suit with their own e-book initiatives, but my hunch is that they will. A-listers tend to be smart business people and they go with the money.

Prediction #6: Publishers will no longer accept returns.

I've seen no evidence that this prediction is coming true. The reason is clear to me -- the major bookstore chains have been even more financially stressed than the major publishers. Borders, after a long fight, lost its battle with bankruptcy in July.

Returns are a major cost for publishers of paper books. (Not so for e-books, since there is nothing for a
bookstore to return if an e-book doesn't sell.)

If the publishing world were logical, returns would not exist. But they do, and it's possible that this
prediction will turn out to be simply wrong. We'll see.

Prediction #7: Agents will stop reading slush.

Again, I see no evidence that this is happening. Yet. Most of my agent friends still get enormous amounts of slush. They still read some of it and scan a lot of it, but I suspect it's the worst part of their jobs.

Give this prediction time. When self-published e-books becomes the normal way for budding authors to break into the business, agents will quit reading slush and turn to the e-book best-seller lists for their new clients.

Prediction #8: Publishers will become more profitable.

Yes, they will. Because they'll be publishing more winners. Because they'll be choosing which books to publish from the e-book best-seller lists. Because authors will be e-publishing first, before they go to
paper.

Note that this means that publishers will be publishing fewer books. But the ones they publish will do better.

Again, give this prediction time. This won't happen until it becomes the norm for authors to e-publish
first and establish the saleability of their books in the Darwinian market.

Prediction #9: Some will do better; some will do worse.

This is a no-brainer. Whenever you have massive change, some will do better and some will do worse.

The ones who do better will be those with an entrepreneurial bent. The ones who do worse will be the
other kind.

The above is my original set of predictions from July, 2010. Now I have two more to add here:

Prediction #10: The race to the bottom will end.

This is not really a prediction. It's an observation of what I already see beginning to happen and which I expect will continue.

A year or two ago, the greatest fear I heard from authors was, "They're going to devalue our work by
pricing it too low. We'll all starve to death."

Authors were shocked when they heard of heretics selling their e-books for $2.99. They were mortified at the success of authors like John Locke, who sold over a million copies at a $.99 price point. And they were absolutely terrified when they learned that some wicked writers were pricing their e-books at $0.00.

What if all e-books became free? Then how would authors earn a living?

That was the fear I heard voiced over and over.

What I have seen happening in the last month or two is a price bounce. Authors have learned that you can move a lot of copies at $.99, but when you do that, you're lumped in with the shlock and you don't earn much.

The trend I'm seeing (and this is very recent) is for the quality authors to price their books higher. I
believe that very soon $2.99 is no longer going to be considered the optimal price for a self-published
e-book by an established author.

I believe that good authors will actually sell MORE copies at a price point above $2.99 because readers have begun to realize that you get what you pay for.

Prediction #11: Prices of e-books will correspond roughly to quality.

We'll always see free e-books. But more and more, a price of $0.00 will be seen as a sign of low quality. The same will be true of the $.99 e-books.

Authors will price their books at a level to maximize their total revenue. (They should do this. It's the
only rational way to price an electronic product.)

This means that the best books will cost more and the worst books will cost less. The market is smart and will swiftly sort things out. If the online retailers provide e-publishers tools to dynamically set prices, this will happen automatically.

If this happens, the worst books will have the lowest prices and the best books will have the highest prices.

This is great news for authors. We need not fear that we'll work like dogs and earn peanuts for our efforts. If this prediction comes true, for the first time in history, authors will earn exactly what they're worth. No more, no less.

Won't that be spectacular if it comes true?

An open question: What about piracy? Will it kill publishing?

I don't know, but I doubt it. I tend to agree with those authors who believe that "piracy is not the
enemy, obscurity is the enemy."

Right now, I think the empirical data is too thin to know for sure, so I'm going to withhold making a
prediction just yet.

Another open question: Will the wheels fall off of traditional publishers?

Again, I don't know. This could happen. It's a very real possibility. Here's why:

Most traditional publishers pay their authors only 25% royalties on the net sales of e-books. (A few pay even less.) Virtually all authors and agents consider this royalty rate to be massively unfair.

A small number of authors have abandoned traditional publishers because they believe they can do better by self-publishing electronically.

The hazard for traditional publishers is that their A-list authors will leave in droves. A-list authors are
the ones who write the books that earn the publishers most of their money. If they all left their publishers at once, then the wheels really would fall off. Rapidly.

That is a horrible, train-wreck scenario. Could it REALLY happen?

No, it can't happen all at once, because most A-list authors are somewhere in the middle of long-term contracts that may take years to work through. So don't expect any sudden disasters.

But yes, it could happen over time, like a long series of dominos falling in sequence.

Will it happen?

Maybe. I consider this the biggest question in publishing at the moment. A lot depends on how much
publishers are willing to bend on the royalty-rate issue.

My own best hunch is that A-list authors will eventually leave their publishers if they can't get a
royalty rate on e-books above 40%. (The authors I've talked to think that a truly fair rate would be at
least 50%, but I suspect they'd settle for 40%.)

Will the traditional publishers ever raise their royalty rates? I'm guessing they will, but they'll need
to do so before their A-listers leave. And they'll need to raise the rates high enough to make their authors happy.

Award-winning novelist Randy Ingermanson, "the Snowflake Guy," publishes the Advanced Fiction Writing E-zine, with more than 28,000 readers, every month. If you want to learn the craft and marketing of fiction, AND make your writing more valuable to editors, AND have FUN doing it, visit http://www.AdvancedFictionWriting.com.


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What do you think of Ingermanson's predictions? Is he on the right track, or way off base?