Hugh Howey

Bestselling author of Wool and other books. Currently sailing around the world.

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Books are EXACTLY like razors

The timing of this is uncanny. After hearing from Snowflakes United that books are not like razors, and then blogging about how they used to be very much like razors, we have a story in the New York Times today about razors that could just as easily be about the publishing industry.

From the story (which you should go read), in which direct-to-consumer razor start-ups are taking millions of customers away from the multi-national conglomerates:

[the razor companies] are also part of a bigger push among e-commerce companies that see opportunities in selling products as varied as mattresses and eyeglasses, where the established companies are accustomed to plump profit margins.

 

“There’s kind of a game going on, where there’s way too much margin,” said David Pakman, a partner at Venrock, a venture capital firm that is an investor in Dollar Shave Club. “The big guys are overcharging you, while smaller companies like ours can give you the best products in the world for a fraction of the price.”

 

In 2004 Gillette reported a 60 percent gross margin before being bought by Procter & Gamble. Gillette’s blades now often cost $10 to $40, depending on the number of razor cartridges purchased.

 

This is where Michael Dubin, co-founder of Dollar Shave Club, saw opportunity. Mr. Dubin offered a subscription service online, shipping razors for $1 to $9.

 

The company said it expected to generate $60 million in revenue this year, triple its revenue for 2013. One million people receive the company’s products in the mail monthly or every other month through its subscription service.

Where the men’s grooming industry is different than the publishing industry is the reaction to sudden competition. Publishers responded to the rise of self-publishing by aligning themselves with the scam factory that is Authors Solutions (which David Gaughran covers brilliantly and damningly here), while the men’s grooming industry is choosing to mimic these upstarts and even embrace the challenge:

To defeat the new competition, some of the giants are trying to mimic some of their smaller rivals’ tactics. Procter & Gamble, for instance, now offers an online subscription service for ordering its Gillette razors.

 

“New entrants to our category stimulate more conversation about shaving, which is positive for us as the market leader,” Procter & Gamble said in a statement.

But here’s where it gets really interesting. One observer thinks these corporations will have a hard time competing directly. Why? Out of fear of upsetting established retail partners.

“The incumbents are kind of trapped,” Mr. Pakman said, partly because of marketing costs. For one new product, the ProGlide with FlexBall razor, Procter & Gamble reportedly set aside $200 million for marketing. “Gillette really can’t sell directly to customers because they can’t tick off the retailers. And they can’t cut their prices by two-thirds, because their whole business model would break.”

This is the exact same predicament the Big 5 publishers find themselves in. One of my foreign publishers lamented to me at not being able to lower the price of my ebook because of the threat from bookstores to not stock the physical title in retaliation. And one of the deals I did with a major publisher was on condition that I didn’t do a digital-only deal with an online company out of fear of being blacklisted by the largest brick and mortar chain in that country. The established players are entrenching themselves against these pesky upstarts. It puts the Hachette / Amazon dispute into perspective, doesn’t it? Now you see why the one-percenters are siding with the legacy industry. It’s their razor blade sales that are being cut into. What I don’t get is the Authors’ Guild taking the wrong side in all of this. Is it because the Guild is run by one-percenters? Have they so clearly lost their mission?

The AG siding with Hachette and against Amazon would be precisely like an auto workers’ union siding with General Motors in a dispute with the largest chain of automobile dealers in the country. Digest that for a minute. You’ve got a chain of dealerships selling more cars than anyone else in the country, and when General Motors threatens that relationship by refusing to negotiate with them at all, the auto workers union goes after the dealers. Now imagine the same auto workers union taking GM’s side as they collude with Ford, Dodge, Toyota, and Honda to fix higher prices on the customer while moving from 50% margins to 30% margins and making less money for the workers. Yeah, that’s what the AG has done and continues to do.

(If you want to see more parallels between publishing and the car industry, check out how dealerships are waging a legal war to prevent Tesla from being able to sell cars direct-to-consumer. Corporations are getting away with stomping on small companies, upstarts, and consumers by winning PR battles and winning in the courts. We can’t let that happen to the book trade, people!)

What also fascinates me about this story is the steady flow of articles in the New York Times on how technology is disrupting industries around the globe. These stories are like clockwork. They have to do with the sharing economy, the success of videogame indies, the rise of online music stars, the inroads being made by Netflix, Twitch.tv, and deals being done by comedian Louis CK and musicians Macklemore and Ryan. But on the topic of the publishing industry, they have instead taken the side of multi-national conglomerates and against the indies and upstarts. A glaring difference. Would their coverage of the music industry be just as archaic if they had a New York Times Music Review supplemental in the Sunday edition? Or is it the fact that their reporters are by definition writers, and perhaps aspiring novelists as well? Or is it the $104,000 ads taken out by the one-percenter authors?

Marx would surely note the irony here that the means of production have finally fallen into the hands of the people, and that this trend is being derided by his otherwise ardent supporters. He might, of course, bemoan the fact that it was through capitalism that his dream came to fruition.

25 replies to “Books are EXACTLY like razors”

There is another side to this, a dangerous one. The market is also being flooded with crap razors in the same way the kindle is flooded with crap books. I do not mean someones genuine attempt at writing, I am talking about all those ‘how to make omoney on kindle books’, where they advise you to slap 20 pages of crap together and sell it, to put hundreds of little crap books on every subject you can think of on the kindle, they even tell you to retitle the book with different covers and sucker people into buying it more than once.
None of this will go away until Amazon publisizes the number of copies sold. I can easily put 20 crap books on the kindle and have 50 of my youtube fans review it and give them 5 stars, I am sure hundreds of copies will sell before i get enough bad ratings to stop sales. At least if I could see how many copies sold, I could give have a better idea.
Like Ebay, a seller might have a 100% feedback, that means nothing until you see how many feedbacks he has.

There’s another side to your point, a reasonable one. One big difference here is that Amazon often offers samples of the books they are selling. There’s not a lot of real risk for the reader. You download your sample and can clearly tell whether this is going to a book for you. Razor companies are not offering three free shaves with their product.

I also think your stance severely discounts the sophistication of shoppers. As a book reader I’m able to avoid the crap books with ease, and I appreciate the fact I have such a wide selection and I while take risks on unestablished authors. Campbell’s soup may come out with a new product next week and I may buy a couple cans to try it out. The New Guy Soup Company may show up on the shelf one week and depending on their label and nutritional information I may give them a try. I may find out I love it and it’s better than Campbell’s soup. I may hate it. This idea that shoppers shouldn’t be exposed to any risk is absurd.

This idea that Amazon has flooded the market with crap books is absurd. I spent many days and nights walking around Border and Barnes and Noble and there is quite a lot of stuff on their shelves I wouldn’t use to wipe my rear end with. Amazon simply has more “shelf” space and it doesn’t hurt them to make some the crap available. And as a shopper I’m grateful Amazon leaves the decision as to what I purchase to me.

I’ve read a few self-published books on the Kindle that authors previously tied to big publishers had passed over by their publishers. I’ve quite enjoyed some of those books. There’s one particular novelist who’s traditionally published work I didn’t enjoy too much. The stuff his publisher passed over I actually think is great.

If you can’t identify the crap from the good stuff as a shopper you simply don’t have discerning tastes and the “curating” service offered by traditional publishers was never anything you appreciated in the first place so it’s not anything that is going to be missed.

I definitely agree with your point of Amazon making the number copies of sold. I don’t agree with advertising the amount of people who finished the book. I can see how this is beneficial from an author or publisher perspective. But with paper books nobody knows whether someone has actually read a book or not. What I find interesting and what nobody really talks about is that Amazon has made data related to books more transparent yet they are being demonized when traditional publishers have kept their stats under wraps for decades while continuing to be far from forthcoming at all.

So saying Amazon should make this data point available and that data point without realizing that without amazon this data wouldn’t be available in the first place is somewhat comical.

In terms of authors putting out crap books and then having unethical reviews, this was occurring with people tied to Penguin imprints. Then there’s another side to that as well. How many books or products get one star reviews because it was lost in shipping? When I see 50 all positive reviews I just take a look at what other products or books the reviewer has done on Amazon. A lot of times they’ve only reviewed a single book. That’s a red flag to me as a shopper. I also think the impact of reviews on a buyers selection over what book to buy is supremely overrated. I often don’t read reviews until after I finish a book. Reviews aid in which book I may buy before another. I have two books in my to-read list and I’m not sure which one I want to dive in, reviews may sway which one a buy right then, but ultimately I end up buying both books.

I agree with Hugh. Books are exactly like razors. However, I don’t think books are purchased like razors. It’s not a zero sum game like it is with razors.

If I buy twenty razors from Gillette, I’m not wasting my money buying twenty BIC razors. If I buy Stephen King’s entire library that isn’t going to stop me from buying J.K. Rowling’s entire library. I may not be able to buy them both at once but such is the world of personal finance.

As long as I buy Gillette razors I am never going to buy BIC razors because of the inherent redundancy there. I can buy every Stephen King book and every J.K. Rowling book and every Hugh C. Howey book and experience no such redundancy.

In terms of production books and razors are the same.

In terms of consumption they are entirely different.

My mood and tastes don’t enter the decision over what razor I’m going to buy. When I need razors I buy razors. I can have twenty unread books on my shelf or in my kindle and I will still buy another book.

Yes, and Amazon (like most retailers or product manufacturers) allows a customer to return a product that wasn’t good enough. So… what terrible risk is there? You can download a sample and check the writing level and the table of contents. You can often “see inside” to check the last page, for goodness’ sake. If you buy the book and don’t like it, you can return it for full price. Where’s the risk? I have more risk going to the mailbox to check my mail.

What I get from the “too much crap” types of post is a desire to have “us” separated from “them.” Us the good writers (even if NY didn’t want us back when), the ones who can afford to pay for “editing”, the ones who would pass the gatekeeper’s test if there was a gatekeeper. So we should get priority, right? We should sell more! I agree. Geez, I should really sell more. I’m WORTHY.

But I will admit, at least, it’s not “all that crap” that keeps me from selling more. If anything, my great quality should really stand out, right? :) I’ve seen “quality” writers (we’re mostly self-described– the “Crap” writers are always someone else) even call for a return of the “gatekeeper.”
A couple thoughts:
1) Some of those “crap” books sell well. To their readers, they’re not crap. Some of the books which have achieved cult status– beloved by many thousands– wouldn’t pass my inner-gatekeeper test. Yet… they must be doing something right.
2) One thing they might be doing right is seeking their readers, rather than expecting their readers to find them. We don’t need to worry about a lot of crap over there if we’re guiding our readers to “right here” where we are on nice sweet-smelling dry land.

I guess, while I think my writing is pretty elite, I’m always waiting for someone to relegate my books into the “crap pile.” I’d rather let reader decide that than my fellow writers, some of whom, after all, think they will benefit by my lack of success.

That would be great! Goodreads frustrates me, because once you’re “currently reading” a book, if you don’t finish it, the only option is to mark it “read” or to completely delete it from your books list. I think a “chose not to finish it” option would be useful for other readers. Ditto on Amazon.

You can create that bookshelf yourself. I’ve got one called “Stopped Reading.” Create the shelf, then go into Edit shelves and mark the Exclusive column. That shelf then works the same as “Read” or “Currently Reading.”

Excellent analogy Hugh. I also get the feeling that it is the highest earners in that union, seeking to preserve their privileged status with the corporations and maintain the status quo, consciously or not, who are misleading their entry-level ‘brothers’ with their delusions. It’s hard for me to see it any other way.

“The AG siding with Hachette and against Amazon would be precisely like an auto workers’ union siding with General Motors in a dispute with the largest chain of automobile dealers in the country.” – if you complete the analogy by pretending that the only people allowed into the auto workers’ union were the people working for General Motors (at least until very, very recently) and the plant owners told the union rep, “look, it doesn’t matter that we pay you pittance, if a plant goes down because of those dealers, we’re all out of work. And it won’t stop with one plant (publisher) in the coming months it will spread to all the other plants (publishers) and the whole union will be out on the street with us.” It suddenly seems a lot more understandable. There are very good reasons that unions are industry wide and not just factory by factory. Collective bargaining is painful even in the best of cases. But without constant pressure to stick with the group and hold out for their demands, it becomes pretty much impossible. By only allowing independent authors into the Guild halfway through the dispute, the leaders of the Authors Guild put themselves into a non-negotiable position. All the publishers have to do is frame the argument as a frightening threat to the entire infrastructure. By creating an enemy outside, they make everybody inside work together. The Authors Guild doesn’t allow anyone outside the guild to offer information to their members (that’s their own policy). So without anyone outside the plant/publisher to challenge and reframe the issue to where it ought to be, the union (or guild) ends up right where they are. Stuck fighting for something that will never, ever benefit them in any way.

This parallels an amazing book which describes an authoritarian New World Order maintaining control over a captive citizenry through deception and intimidation. The central authority imprisons the population in a sealed environment, controlling all thought and imposing fear via a carefully manipulated view of a toxic, engineered landscape outside.

In the end, the truth is revealed when the right person climbs a hill to see the world as it truly is.

:-)

Well said, and i think Authors United will end up like the traffic controllers union, they will push until they are all replaced. The traffic controllers put themselves out of a job with their demands, just as AU will put its members on the back shelves of the future.
As this drags out over the next few years, and entire generation is now getting books from online sources, And if Hachette doesn’t wake up, along with the AU, they will be forgotten because a generation of children will never had heard of any of their authors.

Why waste the money on the NYT?
Spend it at the WP and target the DOJ. Maybe urging them to look at the “industry standard” contract terms, rights squatting, etc.
Might be just enough to scare the BPHs out of lockstep.

This is an issue (no pun intended) the comic book industry’s had for years. Once comics started being sold almost entirely in dedicated comic book stores in the late 70s/early 80s—as opposed to the newsstand model that had been the standard for the first 40 or so years of the industry—the comic book publishers found themselves somewhat handcuffed when it came to what they could do. It was nice to have a more guaranteed and steady source of income, but in return, for a long time, the publishers could only do things the comic shop owners were okay with, since the comic shops were just about the publisher’s only customers. Consequently, an awful lot of otherwise good ideas were tossed in the bin.

“I’d love for them to advertise the percentage of people who finished the book. That would be very useful to shoppers.”

I think this is a terrific idea.

What would you think about a system where KU/KOLL borrow payouts were based on finishing a book, at least in part?

Amazon currently pays authors (about $2) when “borrowed” books are read to the 10% mark. What if they paid $1 when the book was read to the 10% mark and $1 when the book was read to completion? I wonder if that might help reduce the number of “crap razors.”

Once we accept that books are consumer goods, and act like widgets, there are all kinds of lessons that can be applied to books. The same with authors. When we see them just like widget makers, the economics fall into place like they have with a zillion other producers.

The next step is to acknowledge books compete with each other just like all those other consumer goods do.

Hugh wrote: “What I don’t get is the Authors’ Guild taking the wrong side in all of this. Is it because the Guild is run by one-percenters?””

Yes.

“Have they so clearly lost their mission?”

Yes.

Next question?

P.S. “Snowflakes United”—LOL! Indeed.

In basic economics: if one group hoards the resources then the rest of the people either have to pay whatever that group decides to ask for it, or they have to go find/make/build their own resources. It is the very foundation of supply and demand.

Yes, indeed: this is Ricardo’s Law of Rent in a nutshell.

A couple of centuries ago, farmland in New England was a scarce and prized resource; rents and land prices were high. If you were a farmer’s son in New England and wanted to have a farm of your own, you had to pay a big price to get it. Then the opening of the western frontier created a huge supply of cheap land – free in some cases – and all those landless farmers’ sons packed up for Illinois or Ohio. The price of land back in New England plummeted, and because the land was rocky and the soil not very rich, millions of acres went out of cultivation and reverted to forest and wilderness.

A decade ago, shelf space at Borders and B & N was a scarce and prized resource; the rent was high. If you wanted to put a book on those shelves, you had to go through the publishing cartel, which had to reject 99 books out of 100, and could afford to reject any book arbitrarily, no matter how good. (The publishers that turned down J. K. Rowling look silly in hindsight – but none of them went broke because of their decision.) Then Amazon opened up a new frontier – a virtual bookshop with unlimited shelf space – and the unpublished and unwashed mass of writers went there. And because brick-and-mortar retailing is much more costly and less efficient than Amazon’s business model, the value of those retail shelves is disappearing, and a lot of physical bookshops have shut their doors.

This is what the Amazon–Hachette dispute is really about. Hachette wants to go on collecting rent on a resource – access to retail shelf space – that it no longer owns, and that anybody can have just for the asking. Amazon does not want to pay that rent. Hachette has only one card to play: it still has control over particular books and authors because of its contracts with authors. But when the authors are the scarce commodity, the authors will inevitably receive the rent, not the publisher or the retailer: that is, just as soon as the more intelligent and teachable of them realize what century they are living in.

Fantastic comparison. And the common factor to a lot of these stories is the internet’s ability to disseminate information. The internet isn’t anywhere near finished with transforming society yet.

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