Merrill R. Chapman's Blog, page 4

Where

OK, before I even start this review, I have a few questions I'd like to ask you, the reader. Here goes:

Do you know what relational database technology is?Have you ever been, or are you now, a DBMS programmer or administrator?Have you ever heard of SQL? Do you know what it stands for? Can you code in it?
Have you ever heard of Oracle corporation? DB/2? Postgres? Ansa? Borland?
Have you ever heard of dBase II? III? Most infamously IV? Have you ever heard of a company called Ashton-Tate?
Do you know who Edgar Frank Codd is? Have you ever read his 13 commandments for relational database management systems?Does it make you feel good to know that you know the difference between a
If you can answer yes to any of the above, then stop reading this review right now and go buy Esquelle and the Tesla Protocol by 

All done? I'm sure after you saw the book's cover, you understood precisely why you should buy this book. And you know that I've just brought a little extra sunshine and joy to your life and you'll be thanking me years from now. No need to weep for gratitude; I did this just because I'm that type of guy.


And if you can't answer in the affirmative, you should still buy the book because it's an exciting very cool read. And after you're done, you'll you may be 


I don't want to geek out you non-nerds out there 

By the way, in honor of this great book and topic, I'm running a little contest. During the 80s, many software companies released desktop RDBMS software packages for the IBM PC and some of the other competing systems. However, Codd was known to favor one particular product in particular?

What was the product and the name of the company?

The first five people to send me an E-mail with the above will receive a free copy of m

Amazonium Codexorum

On July 29th, Amazon made the following statement in defense of its position vis a vis its fight with publisher Hachette. This fight, once you strip away all the verbiage, boils down to the fact that Amazon does not wish to purchase any E-books via the agency model from publishers and wants more MDF as well. I write about the in the fight in this post.

Amazon's defense of its current pricing position can be read here in its entirety. The post is extraordinary on several levels, not the least for its incredible analysis of optimal book pricing. If you know anything about medians and data analysis, the entire section equals up to the number 42. More information in The Hitchhiker's Guide to the Galaxy . In fact, the entire statement can be thought of as a work of Vogon poetry.

But the line that caught my eye in particular was this one:

+++ Is it Amazon's position that all e-books should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99. +++

This amazing statement means that Amazon is proposing to put in place a system where certain books will be placed on a special list, a pricing codex, of titles approved to cost more than $9.99 and, one presumes, will be allowed to remain on Amazon's pricing codex as long as the legitimate reasons are adhered to.

This leads me to ask some questions:

What the "legitimate reasons?"Where can I apply for the codex?When can I apply to be listed on Amazonium Codexorum.Who maintains the codex?What are the codex rules?How will the codex be administered? Maybe there will be a committee an indie writer has to meet with? Maybe Jeff Bezos will preside wearing a robe and pointy hat a la the inquisition? Will there be candles in the room?How will I be punished if I violate the codex? I certainly hope no auto da fes are involved! That would be awful.
What are the legitimate prices?Does the existence of the Codexorum mean an implicit recognition by Amazon that the 35/65 retail usage fee imposed on indie publishers who price above $9.99 and below $2.99 is illegitimate?
The final question I have to ask is does anyone think that a $75 billion dollar company that currently controls 65%+ of the digital download market for E-books has any business acting as the price police?

By the way, don't bother asking these questions on sites such as David Gaughran's. I was just kicked off it for honing in on this point and after a whole lot of shucking and jiving and Amazon ankle diving, he dealt with the question by refusing to answer it and "banning" me from the forum.

Also, if you'd like to comment, I do have one request. Unless you are an Amazon representative, I don't want you tell me that Amazon has the right to price its products anyway it wants. I'm not the person who said:

+++ Is it Amazon's position that all e-books should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99. +++

They are. In July. It's time for them to start building out the codex.

October 06th, 2014

Up in the Sky! It's a Bird!, It's a Plane, It's Spandex Unbound! My Review of "Indomitable"

I ndomitable (The Push Chronicles Book 1) by J.B. Garner




File Size: 1296 KB
Print Length: 177 pages
Simultaneous Device Usage: Unlimited
Publisher: J. B. Garner; 2 edition (August 31, 2014)
Sold by: Amazon Digital Services, Inc.
Language: English
ASIN: B00N75SP70

I have a long and complicated relationship with comic books. I grew up in the era of Fredric Wertham, who convinced my mother and father and many other people's mothers and fathers that comic books Rot Your Brain. Subsequently, I was, formally, forbidden to own comic books during my childhood. (By the way, those of you who want to relive those glorious days of brain rotting fun should go visit www.superdickery.com. You will love it.)

Of course, this wasn't going to stick. Every other kid I knew or played with read comic books (usually Marvel). Bronx neighborhoods, from the standpoint of comic aficionados, were broken into Marvel and DC nations. My block stood with Stan Lee, and we scorned DC, particularly Batman, who in the 60s was not particularly grim nor angst ridden. Everyone felt more was going on there with Robin than a simple adoptive arrangement and we didn't approve.

Girls read Archie and those disgusting romance comics. If a guy was caught reading those, you were normally treated as if you were infected with hair lice.

Thus, I grew up in an atmosphere of deception and duplicity. I would buy comics regularly from the local lunch and candy stores, read them outside, hide them under my shirt when entering my apartment, and secret  them under the toy chest in the bedroom my sister and I shared when we were small. Eventually, the space would become crowded and a new purchase would edge out from its sanctuary like a flat, colored, Judas goat and tip off Mom. She would then rake the stash out and throw it down the incinerator. The cycle would then begin again. I guess we were both making a point. 

(Also, because of comics, I learned a painful lesson in personal family betrayal. But that's a tale for another day.)

When I hit my teens, the strictures against comics were relaxed and I continued reading them. However, I have to admit that as I grew older, I realized that the old trouble maker Wertham had a point about comics. Like soap operas, they didn't end nor truly progress in time. Fifty one years after he first swung across the New York skyline, Peter Parker is still a young man. As a kid I could identify with him, but now he's just an annoying millennial who won't get off the sofa and get a real job. It may be hard for him, though. Peter once made a living as a freelance photographer for a newspaper, but that job doesn't exist anymore. How does he earn money these days? I don't know. Maybe he drives for Uber or Lyft?

It's just as bad with the other super folk. Batman and Robin are still creepy and should just come out of the closet and get married already. It's time for Wonder Woman to fess up to being a dominatrix, tie up Superman, and stomp on him with her stiletto heels. I don't have much to say about Aquaman. He was lame then and he's lame now, so I'll just leave him alone.

Yes, yes, I know. Reboots, alternate universes, different timelines. But how many times can you pull that stunt before it gets older than the life spans of some of these super folk? I mean, aren't Batman and Superman closing in on 100 by now? At a certain point, their super powers should consist of being able to throw used Depends at super villains at super speed. Crime would drop to almost zero in no time.

And have you ever actually worn a spandex custom? I suggest you never do. Even if you think you're in good shape, your self-esteem may not survive that first glimpse in the mirror. If I ever become a super hero, I want the super power of being able to make super heroes look good in tasteful cotton clothing. I'd be dating Supergirl in no time. (Not that I'd want to as I'm happily married. I'm just saying that she'd want to date me and I'd have to gently let her down.)

"But what about  Maus?," I hear you saying.    Yes, Maus is a piece of comic literature (Oh, sorry, I mean "visual novel.") But World War II was real and tragic. When Superman died at the hands of Doomsday, did anyone think he was really dead? Of course not. Did you feel a sense of real loss? No. Everyone knew we were just being set up to buy the collectible issue where he comes back to life. The bastards wouldn't even let the poor sweet body of Gwen Stacy rest in peace. They cloned her, the savages. 

(And no, Watchmen wasn't art. It was pretentious and if you didn't figure out the plot well before the end of the series you're dumber than The Rhino .)

The above is a very long winded way of saying that I realized comics are silly. 

So why did I agree to review Indomitable , a novel about men and women grokking the spandex? Because no one who has ever loved comics ever really stops loving them. We just put away childish things and become adults. But, at my age, I'm heading back down the road to childish so maybe it's time to give silly a bit of a break.

Indomitable by J.B Garner  kicks off with an origins tale. You see, our heroine, Indomitable, who starts life off as plain old Irene, has a boyfriend named Eric. Eric's parents died in a car crash. Eric misses Mom and Dad an awful lot and uses a mysterious quantum atomic particle combined with Irene's bio feedback machine to create a worldwide phenomena called "The Whiteout." The Whiteout in turn creates the "Pushed," ordinary people with super powers! When it's all over, Irene becomes Indomitable and she's joined by The Extinguisher, The Human Tank, Minds Eye, Hexagon, Medusa, et al and their evil counterparts. (I'll let you decide if you want to lower yourself to some Mystery Men  jokes at this point and give you time to get it out of your system.)

Eric is transformed into Epic. He's kind of a Superman, but with a will to power. Wouldn't you know it, Indomitable and Epic do not agree about the future of mankind in this new era and begin a tangled love/hate relationship which dominates the ongoing narrative of the book.

There's also an incredibly Evil Super Villainess. This unique character has the ability to destroy computer components with just the power of thought, erase all traces of  her dastardly deeds, bring thousands of innocents to the brink of ultimate despair and with just a single phrase paralyze the forces of justice and goodness. Her name is "Lois Lerner." 

OK, I just made that last part up, but you have to admit Lerner certainly looks like an evil super villainess. But there is a really evil super villain. Well, sort of. Part of the dramatic tension of Indomitable is maybe Eric is the real villain. Or maybe he's just misunderstood. Time, and the sequels to Indomitable, will tell!.

What's that I hear you saying? None of this sounds very likely? Oh, yeah, right. Like it makes perfect sense that a radioactive spider bite would give you super strength and the ability to crawl up walls. Or that being caught at ground zero during a nuclear test would turn you green and enable you to jump miles into the air. Or that a guy with mercury for skin rides around the galaxy in outer space where there's no water on a surfboard. So just shut up and let the review continue without any further carping. You want real science, go watch Bill Nye or something.

One of the great things about comics is the fun you can have renaming the super characters you read about with names you feel are more appropriate to their powers and abilities far beyond those of mortal men. For instance, there's a girl  turned into crystallized carbon early in the book. I have a feeling we may see her again. What should her super name be? Diamond Lass? Crystalline? I vote for Madonna Woman! Epic I've renamed "Superego." Indomitable, our heroine, spends a lot of time nagging Supere...oops, Epic about the big mess he's made of things (not that you can blame her), so from time to time I think of her as Kvetching Woman.

Now, how does Indomitable read? It's great, silly fun. The action is slam bang, the characters, within the limitations of the genre, are well realized, and at the end of the first book, I really wanted to know if Epic and Indomitable are going to one day work it out. It's a tale that will take you back to those rainy Saturday afternoons when you'd curl in your room with the latest releases of Green Lantern, the X-Men, the Fantastic Four and maybe a couple of annuals and rot your brain.

And dream, for just a moment, that you too could fly.

What Hugh Howey Won't Talk About (but Should). The Book Channel, Part VII of Several Parts. MDF and the Big Slurp

We finally reach the topic of MDF, an issue of continuous interest to most companies that have to deal with distribution and reseller channels. MDF stands for marketing development funds. Ostensibly, all MDF programs  are supposed to increase sales of products for both parties.

The reality is that many, though not all, MDF programs are designed to extract margin from suppliers regardless of a particular  program's performance. Suppliers in a wide variety of industries are well aware of this and regard many MDF progams with the same affection given an expired roach atop a wedding cake. Fights over how much MDF money will be handed over by suppliers to their channels is ongoing and endless. While it has been ignored for the most part by the press, the fight between Hachette and Amazon is not simply about agency vs wholesale pricing, but also about Amazon's great desire to increase its MDF charges to Hachette and the publisher's great desire to not pay them.

The types and quantities of MDF programs that will exist in any particular channel is dependent on the industry and what it sells. I will not attempt in this series to identify and list all the various book publishing MDF programs. That is another series. Channels are constantly creating new programs and modifying existing ones. They are also masters of MDF creation and sometimes not that picky about pushing programs that are less than stellar performers. 

Managing MDF can be very complex. Companies exist whose sole purpose is to help book and other types of firms manage Amazon MDF programs alone. The only way to master a particular industry's structure is to study and understand it's unique idiosyncrasies. MDF programs can function in very different ways in different businesses even if they're called the same thing.

How Are MDF Programs Funded?

By the supplier, whoever the supplier is, and the payment is almost always in the form of increased channel margin. (One of the most interesting exceptions to this is currently Amazon's MDF Kindle Select Program, which demands exclusivity in return for participation, though authors do receive far lower margins on books "purchased" via the Kindle Unlimited and Kindle Library program components.) How much margin? Between 5% and 15% in book channels. It is not uncommon for a larger publisher to sell a book to a reseller at a 40% discount off list, then hand over an additional 10% to 15% extra margin in return for the right to execute MDF programs.

Types of MDF Programs

In print and online publishing, the most common type of MDF program is called "co-op." (This was also true in software retail publishing.) Co-ops are funded by joint deposits to a special account. In the ideal model, both parties provide matching funds, but this is not a hard and fast rule. Also, the larger the supplier, the more power it possesses to negotiate favorable co-op terms.

Co-op programs usually bundle several services into their framework and suppliers are, in theory, free to allocate funds among the various options offered. However, suppliers frequently find that the programs are mired in so many restrictions and red tape that they give up on using them. Sometimes this is a deliberate strategy on the part of a channel partner and in other cases, it's because the program is poorly administered. If you are a supplier to a channel, always ask to be shown how the program is administered and run. Dig into its payment components. Ask other suppliers how the program performs for them.

Traditional Publishing MDF Program Components

Advertising in appropriate periodicals and venues (this component is normally included in most co-op programs).Trade show signings and panel appearances.
Schedule interviews on radio, blogs and web/podcasts and perhaps TV.Direct marketing programs both via E-mail and an ever decreasing number of snail mail campaigns. In-store or book signings.In-store End caps, banners, and special displays.Catalogs, both online and mailed.
Bundles and discounts.
There are many others, but this is a good initial overview.

If a particular MDF component is not included in a co-op program, it may be bundled into another program or funded via increased reseller margin individually. The cost  is usually 1% to 3% additional margin, but this can vary widely.

Digital Publishing MDF Programs

From the standpoint of the channel, particularly Amazon, (but I'm sure the other resellers are rubbing their palms together in happiness) a glorious epoch of digital MDF is dawning. This is because resellers are now in the position to understand and analyze book purchases and customers in ways never before possible. This situation is akin to the Software as a Service (SaaS) revolution that took place in high tech in the mid 2000s. Prior to the rise of SaaS, software companies sold their titles and had no real idea of how the software was used and who used it.

But SaaS, which requires a subscriber to login (usually) into a Internet portal, enables the software company to precisely monitor and track every interaction a customer initiates with the system. The value of this to software firms has completely changed the industry. 

Resellers are now in the same happy spot as SaaS companies (and Amazon most of all, because its readers and file format are the defacto standards for E-books). Resellers can now track when, from where, what time, how much, how many and what type of books you bought. They can analyze societal and holiday trends. Cross index against genre, age, sex, and any other information you provide them. And on and on.

Making this even more wonderful from the channel's viewpoint (and certainly Amazon's)  is that devices and readers can, if so enabled, allow the reseller to track what in a book you read, how far you read (Amazon already does and ties your payment-- not royalty--into its Kindle Select MDF program), what you reread, etc. The potential ability to peer over your shoulder is almost frightening. 

Combine the two datasets and resellers in the future will be able to micro target audiences and niches in ways never before possible. Some of these programs are already being implemented by Amazon and other resellers and many more are on the way.

A Quick Overview of Amazon's Digital MDF Programs

Amazon's core MDF programs include:

Digital couponing and promotions.Enhanced product listings (links to video, animations, enhanced text, etc).
"Gold" and "Silver" promotional periods that enable a company to offer products at special prices for X period of time.Enhanced product listings on the Amazon system.A special data "concierge" service. Amazon will assign a dedicated person to work with your company to optimize your sales through its system. The cost of this starts in the low six figures and is only available to high volume customers.
From the standpoint of indie publishers, its most important MDF programs is Kindle Select. The program incorporates the following components:

Increased royalties on some international sales.
Participation in both Kindle Unlimited and the Kindle Owners' Lending Library.
Promotional programs that include a free giveaway period and discount period.
Over time, you can expect that many new components will be added to the Kindle Select program. Most, if not all of them, will be funded by paying increased retail usage fees (increased margin), to Amazon. Again, despite the "royalty" language the company insists on using, the revenue you receive from sales of your book will decrease the higher your MDF expenditures are.

How Are Traditional Authors Impacted by MDF Programs?

If you are traditionally published, MDF certainly impacts your royalties, though you are so cut off from the process that you don't feel it. As I stated earlier in the series, publisher don't want authors to dig into how the book selling channel operates.

If you are a well known and/or strong selling author, you will often be asked to participate in high profile events such as signings and interviews. These are paid for by increased margin to the reseller, and yes, your book may be on the discount list. But if you are a mid-list author, it's unlikely you'll be signing autographs in B&N soon. Traditional publishers almost always execute MDF programs only on behalf of their top-tier authors. (Yes, I know, life is unfair, but that's the way it is. But things are changing. Some of the changes you may like!)

How Are Indie Authors Impacted by MDF Programs?

Currently, the impact is low, but this will changing dramatically over the next several years. Channels love selling MDF and love the increased margins it brings. It also loves attaching MDF costs to things that currently aren't part of an MDF program. (Often times, this charge will be "buried" if you agree to participate in a MDF bundle.) Below are some new MDF programs and charges you can anticipate will be part of your indie future:

Charges for book storage.
Charges for enhanced book reporting.
Charges for enhanced product placement and display.Web based virtual tours.New micro targeted direct marketing programs.New micro targeted catalog mailings. 
Web hosting, creation, and SEO services.Possibly direct access to your book's readers via opt-in options (though I wouldn't hold my breath. Channels like to disintermediate suppliers from their customers and remember, as an indie, you're a supplier.)New micro targeted catalog mailings. Community enablement of your book.Integration of interactive components into your book.Promotional bundling.Enhanced couponing and discounting.
This is by no means a comprehensive list. The channel's fertile imagination will create many more programs.

One important point to not lose track of is that suppliers will be in position to demand high quality performance analytics from the channel. For example, if you wish to charge me for sending a micro-targeted mailing to a list of people who love book where a zombie apocalypse takes place in Newark, New Jersey (something about this sentence feels redundant), how many people exactly am I reaching and what type of conversion to sales figures can I expect to see?

If the channel is unwilling or unable to provide good data for its MDF program, you will know it's one you should steer clear of.

The next and last part of this series will discuss the future of the book publishers vis a vis the channel and the very real possibility that the resellers will use data and customer contacts to take complete control of book publishing. And where will you, the author, fit into the new world coming into existence around you?

Books Equal Razors. It's, It's, It's Howeyish!

I have to admit that reading Hugh Howey has become an increasingly enjoyable experience over the last several months. The blog is now a fascinating mashup of misstatements, invective, valuable insights into indie publishing (though we could certainly use more) Amazon fanboy enthusiasm and pure silliness. You never know what you're going to get.

I've been casting around for a word to describe Hugh when he goes off the rails and crashes into the hard concrete of reality and bounces up, like the super hero Rubber Man, and proceeds to go off the rails in almost precisely the same fashion soon afterwards on exactly the same track. He's not riding Amtrak, he's riding Acme.

Take, for instance, Hugh's latest proclamation on the book business. Books, Hugh proclaims, are "exactly like razors." No qualification, no irony, no self awareness. He means it. Read the article. (I do warn you that the rest of the piece is another mistake-littered mush of pseudo-Marxism, misstatements and misunderstandings of how car distribution works, and pronouncements that demonstrate that he doesn't understand channels and how and why they exist. And yes, I know he worked in B&N. But he didn't learn anything.

Now, anyone with a bit of understanding knows there's something very very wrong with the claim that books are "exactly like razors." (He means blades.) And no, I'm not making pretentious claims that books are "art" and "culturally" valuable and getting my nose all runny when I think of Shakespeare and Jane Austen and Twain and Conrad and so on. Some books are art and culturally valuable and some are awful and a waste of time and most fall somewhere in between that spectrum. And yes, obviously books must compete with other books and other forms of entertainment. And books do sell both directly and through channels as do other items.

But take a look at a pack of razors  and then open up two books and then think about what's different between the two experiences. You're a smart audience so I'm only giving you five seconds.

.....

Times up. Figured it out? Of course you did. You saw immediately saw that every razor looked, felt, and performed the same function. If any blade didn't, you'd head back to the store and demand a replacement.

But any two books are different and must be, of necessity. (And don't be a wise ass and talk about print runs or copies.) That's because every book ever written is, inherently, a hand crafted item. And while genres and categories of books exist, within them every book strives to bring a unique experience and slice of knowledge to the reader that can't be duplicated by any other book.

Not all books do this well. Not all driftwood lamps are attractive (well, none of them, actually) and not all hand-crafted furniture is well made. But once 1984 or Pride and Prejudice and yes, Wool was written, there could never be another one of them ever written again.

And this reality impacts the economics of book creation, production, and distribution.

So when Hugh says stuff like this, what do you say?

I say it's Howeyish!

Been Down So Long It Looks Like Up to Me. My Review of "SanClare Black" by Jenna Waterford

SanClare Black (The Prince of Sorrows) by Jenna Waterford





File Size: 4639 KB
Print Length: 362 pages
Simultaneous Device Usage: Unlimited
Sold by: Amazon Digital Services, Inc.
Language: English
ASIN: B00LDRM22S

Perhaps the greatest novelist of all time is Charles Dickens. I read Dickens extensively as a boy and recently have come back to him as I realized how archetypal his work is and how much fantasy writers owe him. As a recent example, the last episode of season "five" of the reconstituted Dr. Who was a retelling of A Christmas Carol.  This makes perfect sense, as Dickens is the father of all time travel stories.

SanClare Black descends from another great novel of Dickens, Oliver Twist , with Mark Twain sharing progenitor rights via " The Prince and the Pauper ." Twist was the first major novel featuring a child as the chief protagonist and blends Gothic horror with a fairy tale meme, all of it overlaid with strong homoerotic elements in the relationship between Fagin and the band of pick pockets he both cares for and manipulates. The arc of the novel  takes Oliver from poverty and despair to relative comfort and salvation, then plunges him back to the depths. At the end of the story, as befits a fairy tale, Oliver is finally restored to the safety and comfort of his adoptive family while those who have abused and kidnapped him receive their just punishment.

SanClare Black follows the basic template created by Dickens in Oliver Twist , but this is the 21st century and the novel is able to reach into dark corners of the human condition Dickens could only hint at. You may question whether some aspects of the tale are an appropriate fit to the fantasy genre, but the characters author Waterford can create because of her narrative choices are far more complex and varied than those found in most fantasy novels.

The novel begins with a warder, Jarlyth Denara, rushing to attend the labor of  the Queen of Serathon. He is a "sensitive," (a combination of telepath and empath) and already psychically linked to the baby boy about to be brought into the world, Prince Nylan. After the child is born, Jarlyth and the infant immediately head for Tanara Priory, a place where the very psychically active Prince will be educated and sheltered while he learns to toughen his mind and spirit against the constant bombardment of other people's thoughts and feelings. Up till his eighth year, our hero lives a life of comfort and privilege.

Things can't go on this way, of course, and Nylan is kidnapped by mysterious forces and eventually finds himself abandoned sans memory in the rather grotty kingdom of Camarat. At first, Nylan (now renamed "Michael") seems to have enjoyed the luck of a soft landing, but he is the "Prince of Sorrows" after all and at ten years things go to hell and our hero is thrown into the streets of Camarat with no food, money, or guidance. All the while, in a running subplot his mentor Jarlyth is searching for the child, guilt stricken by his failure to protect him.

At this point in most fantasy novels, a kindly wizard, troll, elf, rogue et al typically shows up and things move along the heroic path trod by so many other stories. SanClare Black goes down a darker, and far more realistic, path. As happens to children worldwide when they are pried out their familial cocoon, Nylan falls victim to child abuse and rape, and eventually must make a living as a boy prostitute. The prose and passages describing his victimization and degradation are not overly explicit, but they do make for some tough reading. You have been warned. (If you're the sort of person who buys the book precisely because of the aforementioned, please keep that to yourself and don't ever contact me.)

In addition to a compelling story, one of the best things about SanClare Black is the writer's smooth, professional writing. The novel is not marred by the cracked prose and clunky descriptions that afflict too many of the indie books that have been submitted to me for review. This is professional wordsmithing and I appreciated the experience. I also enjoyed watching the character of Nylan being created and realizing that his ordeals and traumas will enable the story to explore a persona who will face memories and choices not normally touched by fantasy.

One teeny tiny point. If you're a regular fantasy reader, you're familiar with those little maps many books sport that provide you with a visual guide post of their make believe world. I've always thought those maps were a bit silly, but after reading SanClare Black, I cared enough about the universe it creates to want one. A tribute to the author's imagination.

SanClare Black is a strong, fascinating first release in a projected series. I look forward to reading the next book.

The Silo Blows its Stack! Hugh Howey Sends New York Times Reporter David Streitfeld Sky High

(Breaking News: Message from the future via "Wool" silo received today: "David Streitfeld. Worst. Person. Ever.")

Boy O Boy, is Hugh Howey mad this morning! He thinks New York Times Reporter David Streitfeld is the worstest human being in the entire world. Ever. Since evil was invented.

How bad is David Streitfeld? He's THIS bad:

"David Streitfeld of the New York Times has now cemented himself as the blabbering mouthpiece for the New York publishing cartel, and while he is making a fool of himself for those in the know, he is a dangerous man for the impression he makes on his unsuspecting readers."

"After reading this, I'd be very, very careful.  A dishonest man with access to a pulpit is like a poisoner with access to a well. David Streitfeld is a dishonest man."

Boy, that is bad! I kinda expect to next see David Streitfeld nominated for membership in the ISIS drone hit list.

Now, just what has David done to deserve such opprobrium?

Well, he wrote an article that's mildly sympathetic to the Hachette authors who are caught  in the cross fire between the publisher and Amazon. Link here. If you've just read Part VI of my series on book channels, you know that the fight is over agency vs. wholesale pricing. Amazon doesn't want to buy any books under the agency model, primarily because it shifts pricing power to the publishers, and the publishers don't want to sell all their books under the wholesale model, primarily because they wish to optimize revenue when they launch new books by well known authors. (For even more reasons on the part of both parties, read the article.)

I also don't quite understand Hugh's carrying on about Hachette and agency because, as I point out, Amazon uses a modified version of that model in regards to indie publishers. If it's sauce for the indie, why shouldn't Amazon baste in the same rub?

Now, when casting thunderbolts at poisonous blabbering mouthpiece Stretifeld, Hugh makes some very specific comments backing up his call for summary execution, but dunno. Some of these seem a bit sketchy to me. For example, this one:

"We obviously have a reporter here in the pocket of monied interests,..."

I don't know, maybe it's just me, but if you're going to basically accuse someone of taking bribes, perhaps you should offer some evidence of this? Is Hugh Howey prepared to substantiate this serious charge?

And this seems rather problematic as well:

"Douglas points out that: (Douglas is Hachette author Douglas Preston, also unloved by Hugh):

Anyone contemplating ordering his latest novel, “The Lost Island,” written with Lincoln Child, is warned it might take as long as three weeks to arrive. That, as Amazon and its customers know, might as well be forever."

Hugh points out how utterly foolish this argument is by stating:

"Without mentioning the fact that this delay is due to Hachette’s shipping inefficiencies."

Whu? Huh? But, but, but, Hachette has been shipping books to Amazon for years! Amazon never claimed those damn Frogs don't know how to put books in boxes and ship them to us on time! At least, not until now. And print books are also shipped through distributors and they know how to break bulk. Can't Amazon obtain those books from, say, Baker and Taylor?

Hugh goes on:

"Why should Amazon sell pre-orders for books when it has no lasting contract with Hachette? Why should it stock predictive quantities of their titles in warehouses when it may not be able to sell that stock in the near future?"

Can't this question be asked another way? Like this?:

Why shouldn't Amazon buy some of Hachette's books via the agency model and let the market demonstrate if Hachette is acting foolishly or wisely in terms of maximizing its revenues? Why should Amazon attempt to dictate the pricing structure of E-books when authors, publishers and buyers can find that out for themselves?

And finally, Hugh lets loose a lament designed to pull tears from heaven. He wails that the NYT has empowered a:

"...reporter who sings the praises of a handful of elite authors in exchange for 6-figure ads while dismissing the thousands of authors who disagree."

But wait a second. Hugh himself has told us that 200,000 people signed a petition supporting Hachette and the publishers. Hugh doesn't seem to like these people and calls them "whales." (I don't KNOW why. Maybe he actually thought the signatories were whales, though one look at those flippers and you can guess they'd have problems with a pen. Maybe they used a voting app that responds to ultrasonic squeals.)

Anyway, the whole article goes on like that and all I have to say is that I were a whale, Douglas Preston, or David Streitfeld and I saw Hugh Howey standing near me with a harpoon, I'd respectively dive deep, run away quick or hide myself well until Captain Ahab had cleared the area.

What Hugh Howey Won't Talk About (but Should). The Book Channel, Part VI of Several Parts. The Resellers and Agency vs Wholesale Pricing and MDF, Oh My!

Agency vs. Wholsale Pricing

The crux of the battle between Amazon and the book publishers is over two pricing models and whether Amazon will be forced to purchase some E-books from the major publishers via the agency model vs. the wholesale pricing model. Note that the battle revolves mainly around digital properties, not paper. The two sides in the battle are in most cases quite happy to sell and buy print books from each other via traditional wholesaling.

What is Wholesale Pricing

Wholesale pricing is the most common reseller method of buying and pricing in the world, and is used in thousands of industries other than books. We are all familiar with it. Below is a highly simplified model of a wholesale priced book. Please remember that the retail price of the book is normally assigned by the publisher if you are formally published and serves as the foundation for your royalty payments.
Wholesale Price of Book

$12.00 Reseller Markup

100% Retail Price

24.00 This pricing model is sometimes expressed in terms of a book being sold to the reseller at a 50% wholesale discount. Use whatever terminology you find makes the most sense to you, but the numbers will come out the same.

In the wholesale model, while the publisher may assign a retail price (in the software industry, the typical term was SRP--suggested list price), the reseller does not have to sell the book at that price. They are free to adjust their resale charge up or down based on their assessment of the market and their promotional strategy.

What is Agency Pricing?

Before we look at the agent model, let's first clear up some misstatements and misconceptions about agency pricing. First, this model is not exclusive to book publishing. It is widely used in other industries as well. In software, the equivalent to agency was called MAP (manufacturer assisted pricing).

Second is the fact that agency (MAP) pricing is not illegal. Claims that it is are ignorant. Apple resells books via the agency model. Apple and the major publishers were found guilty of price collusion in their dispute with Amazon, not for attempting to negotiate the use of agency pricing. The current Hachette vs. Amazon dispute focuses around Hachette's insistence on selling some books to Amazon via agency and Amazon's insistence that Hachette sell its books using wholesale pricing (and pay more MDF). The courts are neutral on this topic. If the other publishers also insist on selling books via the agency model, Amazon will face some tough choices and the courts will not assist them in their struggle (unless Amazon can again prove collusion).
Publishers Stated List Price


$24 Reseller Price of Book


$24 Reseller's % of Sale (assumes 33%)

$7
As you can see, in the agency model the supplier (publisher) controls the retail price of a product sold to a reseller. The reseller, of course, has the ability to reject this, but normally won't want or be able to.The reason is that only a company with a dominant market position and premium product(s) has enough leverage to negotiate for this type of pricing model. To return to software for a moment, in the early 2000's, companies such as Adobe and Microsoft negotiated MAP pricing with their channel. The reason they could do so was in desktop operating systems and advanced professional graphics tools, both companies had achieved effective monopolies in their respective categories. This is why to this day, in retail channels a copy of the latest version of Windows always costs the same unless the supplier has agreed to sponsor a special promotion.

Why do the Publishers Like Agency Pricing?

For several reasons. They include:

The ability to protect what they perceive as "premium brands," in other words, popular or well known writers with proven sales and/or prestige. The reality is that people wll pay more for a Steven King horror novel about the zombie apocalypse than one written by Stefan Konig.The desire to control reseller promotions. Under the wholesale model, the reseller is free to price purchased products at whatever level they wish and can even sell products at a loss (a loss leader) to drive purchases of other products. Suppliers tend to hate this as they believe it damages brand equity (and they're usually right).To maintain their leverage for future pricing negotiations. The more premium brands you build and maintain, the more power you have.To support new brands that are being built. It is easier to introduce new premium products to the market when you already have a stable of them.To control their future financials. Premium products are always more profitable than "standard" or "discount" brands.To protect the pricing structure of the print market. If the gap between E-books and printed books grows too large, the pressure will grow to reduce the prices of print books.
Many publishers have multiple imprints and will not attempt to negoriate for agency purchases for their entire catalog of books, only their top-tier lines. Nor does the agency model have to be in place for the lifespan of a book. The contract between the publisher and reseller may call for the agency model to be in place for only X period of time and then revert back to wholesale. Earlier in the series, I noted the different prices Amazon charges for older Stephen King novel; these are being sold to Amazon via the wholesale model. In an earlier battle, Macmillan told Amazon it could buy new E-books from Amazon seven months after the book's release, but until that time, Amazon would have to purchase the titles via agency pricing. In retaliation, Amazon began to limit the availability of Macmillan titles on its site, but backed off. Macmillan won that fight.

Why Does Amazon (and other Resellers) Like Wholesale Pricing?

Wholesale pricing provides them with maximum promotional flexibility. The ability to heavily discount a premium brand is valuable and enables a reseller to add a great deal of perceived value to a promotional bundle.Wholesale pricing enables a reseller to establish themselves as a value leader via heavy discounting.Wholesale pricing shifts power from suppliers to the channel by enabling the resellers to ultimately assign brand value via pricing. A brand's value decreases over time if the product or service associated with the brand is constantly being discounted.
Wholesale pricing enables Amazon to pursue its high availability, lowest price model with a minimum of interference from suppliers. Channels always seek to price their inventory independent of their suppliers in the wholesale model. The tug of war between the two parties is constant. And agency pricing just makes Amazon's DNA itch.
Wholesale pricing assists Amazon to gain control over a very valuable market, the E-book market. This is a market with inherently high margins and low production costs. Amazon badly wants to manage this market because its other business lines, most of which involve shipping physical items, is low margin and often unprofitable.Wholesale pricing helps Amazon become Walmart. (And Walmart, not the book publishers, is Amazon's true competitor. In the eyes of both companies.)
The last point deserves some more explication. Walmart is the largest reseller in the world, with revenues close to $500BM in 2013. Amazon's revenues are about $75B.

Amazon was founded upon the premise that because it was an Internet company, it could eventually out-compete WalMart and its brethren by offering the widest possible inventory at the lowest possible price. (I, personally, think that Amazon is right. In my novel, Rule-Set , I describe a world of the future where stores are entertainment centers and serve as a way to run promotional and loss leader programs. The point of these programs is to persuade buyers to integrate your product into their "purchasing manifests," subscribe-to-buy lists that automatically reorder most staples and many optional goods. Day to day delivery of purchases is carried out by 24/7/52 drone delivery fleets and personal and local 3D or "maker" printers.)

Amazon's mission is a difficult one. Its low price strategy shaves margins to the bone. To make money, it must pursue the highest possible operational efficiency. (When the robots eventually take over the world, they'll first have held their first steady jobs at Amazon.) How hard this is to do can be seen by the fact that Amazon has never been consistently profitable. Some years it makes money, some years it loses it. Sometimes a lot. In 2014, losses are projected to be in the area of $1B. But, to date, Jeff Bezos had been able to placate his shareholders with promises of future profits and play the long game.

In addition to one day surpassing Walmart in size, Amazon also wants to wield the type of power the world's largest retailer enjoys in its relationships with its suppliers. Trips by vendors to Bentonville, AK to visit Walmart buyers are accompanied by the same level of hope and fervor as exhibited by lepers going to Lourdes. Suppliers will build, package, and price their products according to Walmart's requirements and diktats. A successful launch in Walmart can make a company. Failing to gain access to its shelves can break it.

Amazon likewise enjoys some of the same power over its suppliers. The publishers, however, with their control over the best selling content in the book market, are an anomaly in the eyes of Amazon. It badly wants to bring them to heel.

How Are Writers Impacted by the Wholesale Pricing Model?

There is almost no impact. In the case of published authors, your royalties are calculated off the retail price of the book. And since Amazon and its counterparts have no interest in buying books at wholesale from indies and deciding how to mark them up and promote them (remember, Amazon is a channel, not a publisher), the issue is likewise of little interest to you ink-stained wretches striking out on your own.

How Are Writers Impacted by the Agency Pricing Model?

This is a more complex issue and is highly dependent on your brand position in the market. If you are a high selling, well known author, agency is probably a benefit to you because it maximizes your book's revenues during its launch. And agency pricing will help support your premium reputation in the market. As I wrote earlier in the series, the public will pay a premium to obtain access to new works sold by established authors. Price your product at too low a level and the increase in the volume of sales generated by this strategy will not make up the loss of revenue. 

Of course, the above is dependent on other factors. How good are your reviews? Does the publisher properly estimate what level of premium pricing you can command in the market? What types of promotions are being run to support your book? Does your publisher know when it's time to shift back to the wholesale model and activate your book's long tail?

If you are a new, published author, the issue is not that important to you. Your publisher will probably sell your book into the channel at wholesale pricing and your book will takes its chances with the market. If you sell well, your next book may earn an agency pricing gold star.

For indie authors, the answer is that you already exist in a modified version of the agency model. (It's very ironic reading Amazon advocates such as Hugh Howey and Joe Konrath damn agency pricing and not realize indie publishers are living it!). First, Amazon's margins are already dialed in at 30% a la typical agency models. The larger publishers, BTW, do not pay retail usage fees. Second, you are locked into Amazon's $7 pricing box (handing over 65 points to a channel is not financially viable). This pricing regime is not in the best interests of indies and claims that it is are financially incoherent. We'll discuss (and show) why in an upcoming article. We'll also finally reach the margin slurping topic of MDF in the next article.

What Hugh Howey Won't Talk About (but Should). The Book Channel Part VI of Several Parts. The Resellers and Agency vs Wholesale Pricing and MDF, Oh My!

Agency vs. Wholsale Pricing

The crux of the battle between Amazon and the book publishers is over two pricing models and whether Amazon will be forced to purchase some E-books from the major publishers via the agency model vs. the wholesale pricing model. Note that the battle revolves mainly around digital properties, not paper.  The two sides in the battle are in most cases quite happy to sell and buy print books from each other via traditional wholesaling.

What is Wholesale Pricing

Wholesale pricing is the most common reseller method of buying and pricing in the world, and is used in thousands of industries other than books. We are all familiar with it. Below is a highly simplified model of a wholesale priced book. Please remember that the retail price of the book is normally assigned by the publisher if you are formally published and serves as the foundation for your royalty payments.
Wholesale Price of Book

$12.00 Reseller Markup

100% Retail Price

24.00 This pricing model is sometimes expressed in terms of a book being sold to the reseller at a 50% wholesale discount. Use whatever terminology you find makes the most sense to you, but the numbers will come out the same.

In the wholesale model, while the publisher may assign a retail price (in the software industry, the typical term was SRP--suggested list price), the reseller does not have to sell the book at that price. They are free to adjust their resale charge up or down based on their assessment of the market and their promotional strategy.

What is Agency Pricing?

Before we look at the agent model, let's first clear up some misstatements and misconceptions about agency pricing. First, this model is not exclusive to book publishing. It is widely used in other industries as well. In software, the equivalent to agency was called MAP (manufacturer assisted pricing).

Second is the fact that agency (MAP) pricing is not illegal. Claims that it is are ignorant. Apple resells books via the agency model. Apple and the major publishers were found guilty of price collusion in their dispute with Amazon, not for attempting to negotiate the use of agency pricing. The current Hachette vs. Amazon dispute focuses around Hachette's insistence on selling some books to Amazon via agency and Amazon's insistence that Hachette sell its books using wholesale pricing (and pay more MDF). The courts are neutral on this topic. If the other publishers also insist on selling books via the agency model, Amazon will face some tough choices and the courts will not assist them in their struggle (unless Amazon can again prove collusion).
Publishers Stated List Price


$24 Reseller Price of Book


$24 Reseller's % of Sale (assumes 33%)

$7
As you can see, in the agency model the supplier (publisher) controls the retail price of a product sold to a reseller. The reseller, of course, has the ability to reject this, but normally won't want or be able to.The reason is that only a company with a dominant market position and premium product(s) has enough leverage to negotiate for this type of pricing model. To return to software for a moment, in the early 2000's, companies such as Adobe and Microsoft negotiated MAP pricing with their channel. The reason they could do so was in desktop operating systems and advanced professional graphics tools, both companies had achieved effective monopolies in their respective categories. This is why to this day, in retail channels a copy of the latest version of Windows always costs the same unless the supplier has agreed to sponsor a special promotion.

Why do the Publishers Like Agency Pricing?

For several reasons. They include:

The ability to protect what they perceive as "premium brands," in other words, popular or well known writers with proven sales and/or prestige. The reality is that people wll pay more for a Steven King horror novel about the zombie apocalypse than one written by Stefan Konig.The desire to control reseller promotions. Under the wholesale model, the reseller is free to price purchased products at whatever level they wish and can even sell products at a loss (a loss leader) to drive purchases of other products. Suppliers tend to hate this as they believe it damages brand equity (and they're usually right).To maintain their leverage for future pricing negotiations. The more premium brands you build and maintain, the more power you have.To support new brands that are being built. It is easier to introduce new premium products to the market when you already have a stable of them.To control their future financials. Premium products are always more profitable than "standard" or "discount" brands.To protect the pricing structure of the print market. If the gap between E-books and printed books grows too large, the pressure will grow to reduce the prices of print books.
Many publishers have multiple imprints and will not attempt to negoriate for agency purchases for their entire catalog of books, only their top-tier lines. Nor does the agency model have to be in place for the lifespan of a book. The contract between the publisher and reseller may call for the agency model to be in place for only X period of time and then revert back to wholesale. Earlier in the series, I noted the different prices Amazon charges for older Stephen King novel; these are being sold to Amazon via the wholesale model. In an earlier battle, Macmillan told Amazon it could buy new E-books from Amazon seven months after the book's release, but until that time, Amazon would have to purchase the titles via agency pricing. In retaliation, Amazon began to limit the availability of Macmillan titles on its site, but backed off. Macmillan won that fight.

Why Does Amazon (and other Resellers) Like Wholesale Pricing?

Wholesale pricing provides them with maximum promotional flexibility. The ability to heavily discount a premium brand is valuable and enables a reseller to add a great deal of perceived value to a promotional bundle.Wholesale pricing enables a reseller to establish themselves as a value leader via heavy discounting.Wholesale pricing shifts power from suppliers to the channel by enabling the resellers to ultimately assign brand value via pricing. A brand's value decreases over time if the product or service associated with the brand is constantly being discounted.
Wholesale pricing enables Amazon to pursue its high availability, lowest price model with a minimum of interference from suppliers. Channels always seek to price their inventory independent of their suppliers in the wholesale model. The tug of war between the two parties is constant. And agency pricing just makes Amazon's DNA itch.
Wholesale pricing assists Amazon to gain control over a very valuable market, the E-book market. This is a market with inherently high margins and low production costs. Amazon badly wants to manage this market because its other business lines, most of which involve shipping physical items, is low margin and often unprofitable.Wholesale pricing helps Amazon become Walmart. (And Walmart, not the book publishers, is Amazon's true competitor. In the eyes of both companies.)
The last point deserves some more explication. Walmart is the largest reseller in the world, with revenues close to $500BM in 2013. Amazon's revenues are about $75B.

Amazon was founded upon the premise that because it was an Internet company, it could eventually out-compete WalMart and its brethren by offering the widest possible inventory at the lowest possible price. (I, personally, think that Amazon is right. In my novel, Rule-Set , I describe a world of the future where stores are entertainment centers and serve as a way to run promotional and loss leader programs. The point of these programs is to persuade buyers to integrate your product into their "purchasing manifests," subscribe-to-buy lists that automatically reorder most staples and many optional goods. Day to day delivery of purchases is carried out by 24/7/52 drone delivery fleets and personal and local 3D or "maker" printers.)

Amazon's mission is a difficult one. Its low price strategy shaves margins to the bone. To make money, it must pursue the highest possible operational efficiency. (When the robots eventually take over the world, they'll first have held their first steady jobs at Amazon.) How hard this is to do can be seen by the fact that Amazon has never been consistently profitable. Some years it makes money, some years it loses it. Sometimes a lot. In 2014, losses are projected to be in the area of $1B. But, to date, Jeff Bezos had been able to placate his shareholders with promises of future profits and play the long game.

In addition to one day surpassing Walmart in size, Amazon also wants to wield the type of power the world's largest retailer enjoys in its relationships with its suppliers. Trips by vendors to Bentonville, AK to visit Walmart buyers are accompanied by the same level of hope and fervor as exhibited by lepers going to Lourdes. Suppliers will build, package, and price their products according to Walmart's requirements and diktats. A successful launch in Walmart can make a company. Failing to gain access to its shelves can break it.

Amazon likewise enjoys some of the same power over its suppliers. The publishers, however, with their control over the best selling content in the book market, are an anomaly in the eyes of Amazon. It badly wants to bring them to heel.

How Are Writers Impacted by the Wholesale Pricing Model?

There is almost no impact. In the case of published authors, your royalties are calculated off the retail price of the book. And since Amazon and its counterparts have no interest in buying books at wholesale from indies and deciding how to mark them up and promote them (remember, Amazon is a channel, not a publisher), the issue is likewise of little interest to you ink-stained wretches striking out on your own.

How Are Writers Impacted by the Agency Pricing Model?

This is a more complex issue and is highly dependent on your brand position in the market. If you are a high selling, well known author, agency is probably a benefit to you because it maximizes your book's revenues during its launch. And agency pricing will help support your premium reputation in the market. As I wrote earlier in the series, the public will pay a premium to obtain access to new works sold by established authors. Price your product at too low a level and the increase in the volume of sales generated by this strategy will not make up the loss of revenue. 

Of course, the above is dependent on other factors. How good are your reviews? Does the publisher properly estimate what level of premium pricing you can command in the market? What types of promotions are being run to support your book? Does your publisher know when it's time to shift back to the wholesale model and activate your book's long tail?

If you are a new, published author, the issue is not that important to you. Your publisher will probably sell your book into the channel at wholesale pricing and your book will takes its chances with the market. If you sell well, your next book may earn an agency pricing gold star.

For indie authors, the answer is that you already exist in a modified version of the agency model. (It's very ironic reading Amazon advocates such as Hugh Howey and Joe Konrath damn agency pricing and not realize indie publishers are living it!). First, Amazon's margins are already dialed in at 30% a la typical agency models. The larger publishers, BTW, do not pay retail usage fees. Second, you are locked into Amazon's $7 pricing box (handing over 65 points to a channel is not financially viable). This pricing regime is not in the best interests of indies and claims that it is are financially incoherent. We'll discuss (and show) why in an upcoming article. We'll also finally reach the margin slurping topic of MDF in the next article.)