Hugh Howey

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

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Creating Space

Jamie McGuire recently announced that her CreateSpace print on demand title, Beautiful Redemption, will soon be available in Walmart stores. This is absolutely bonkers news, and just one more sign that the last bastion of traditional publishing is eroding. The announcement follows on the heels of a CreateSpace POD title becoming a #1 bestseller and being picked up by Random House for a 7-figure sum. The viability of print for indies is slowly following trends set by ebooks, and the implications are enormous.

Success in entertainment is all about possibility, not probability. No one is guaranteed to earn a living following their creative interests. What we should hope for, however, is that no one is barred from trying. For a long time, the vast majority of authors were barred from entry. We couldn’t discuss probability, because probability was zero. We fought for possibility.

Ebooks and self-publishing made so much possible, literally overnight. With the launch of Kindle Direct Publishing, anyone with a story and a keyboard could place their work right alongside Grisham’s and Rowling’s. Walls came smashing down. It wasn’t long before writers of all stripes were expecting equal sales and equal treatment, which is a testament to how quickly we adapt to monumental change.

Audiobooks have experienced explosive growth the last five years, an aspect of digital book consumption too often overlooked. But even more ignored is the power of print on demand. For a long time, I created POD editions of my works for reasons other than income. I wanted to hold the product of my labor. I enjoyed unboxing that first proof copy. I liked having those editions available for friends and family who only read in print, and it gave me something to sign and sell at small events around town. It also fleshed out my Amazon product page and made the ebook look like a bargain. All of these advantages were had at the cost of exporting and uploading a PDF. Any sale was a bonus.

When Wool took off, the power of POD became more obvious. Readers spread the word about the story, and other readers inquired at bookstores. As a former bookseller, I can tell you that when I had two or more people ask about the same book in a week, I ordered a few copies in for the shelves. This started happening with Wool. The CreateSpace printed title began appearing in Barnes & Noble and in top independent bookstores across the country. This, despite the policy of most stores to blacklist and ban any Amazon-printed title and author. Walls were being skirted by reader demand and honest and enterprising booksellers.

What Jamie’s deal shows is that there are other bookselling outlets available to indies. (Very large outlets, as a matter of fact.) Not long ago, Jamie gave up lucrative offers from a major publisher to move back to the indie space. She knew her publisher could not keep up with her pace of publishing, and that she could have more creative freedom, reach more readers, and earn more money on her own. She assumed she’d be giving up access to readers through store shelves, due to the blacklisting of Amazon-printed titles. Which is what makes the Walmart / CreateSpace partnership so interesting. Indie authors make decisions based on probabilities. When probability equals zero, that’s an enormous consideration. Probability just became non-zero. Time to revise our thinking.

John Scalzi recently blogged about his decision to take a long term, muti-book deal with his traditional publisher. No one can fault John for wanting the security of knowing what his income will be, at a minimum, for the next decade. But part of his reasoning, which is access to readers through bookstores, has suddenly become outdated. With change happening so fast in the industry, being locked into a 10-year deal is an enormous risk. Even worse is signing over rights that won’t expire until after you do. If Jamie can get a Walmart deal through CreateSpace, imagine what an independent John Scalzi or Neil Gaiman could do. JK Rowling showed what was possible with going indie with her ebooks. Jamie is showing us what’s possible in the print space.

I think it’s enormously prudent for authors to look at and understand trends in the publishing industry. Rather than make decisions based on what’s possible today, we should try to gauge what might be possible tomorrow or even in coming years. With Barnes & Noble posting more quarterly declines this week, it’s only a matter of time before: 1) Management there is replaced with people who want to offer what readers are interested in, rather than trying to earn profits by selling publishers marketing space. Or: 2) A bookstore willing to offer what readers are interested in takes ever more shelf space from stores that focus on merchandising and advertising.

Amazon has been the leader in this category, offering what readers want and taking market share as a result. Their bestseller lists are a measure of sales, unlike what you see on B&N.com and on the New York Times bestseller list (the latter of which changed their criteria the week before a POD work was to hit the list in order to keep it off the list). The companies blacklisting and banning books will not do well in a marketplace driven by word of mouth and reader demand. And those falsely curating their lists will find their credibility trends toward zero.

For years now, the decision to self-publish has made sense despite the lack of access to bookstores. Giving up the 70% earnings on ebooks in exchange for 12% earnings in print hasn’t made sense for most writers for a long time, especially as print readers moved to digital. I think Jamie’s deal is just a harbinger of what’s to come. Most print sales are now happening online, which makes them digital sales as well. Authors can complain about probability all they like — we’ve been doing this for eons — but the complaints about possibility will have to change. We keep pushing that conversation more and more toward an era of equal access. More barriers are being broken down, and the rubble of former walls now litters the publishing landscape. I expect this to continue.

39 replies to “Creating Space”

Excellent news and perspective. I can see why you advised me to wait a year or two before submitting anything to a traditional publisher. I’m willing to play the long odds of probability, as long as the Indie route is possible. Where do think think agents will fit into this new reality? Will they be the ones who approach Walmart or Target with the pitch to get POD titles on their shelves? Or will Indies have to do that for themselves? Of course I realize that the book/author must already be doing very well on at least digital sales to even be considered, but how do think the process of bypassing publishers to reach the shelves will play out?

Some authors have gotten into B&N and indie stores with their POD through Ingram and personal sales to store buyers. I know one who had a lot of success getting into stores, but returns made it a wash. I think the takeaway here is that it’s going to be rare for this to happen, but it’ll be rare for your work to take off in a bookstore if you do land a deal with a major publisher. A lot of good fortune either way. But the ceiling on the indie side just got lifted quite a bit.

By Post Author

“but returns made it a wash”

Hugh, do you know if Jamie is subjected to returns? Because if she is, that deal could very well end up being a poisoned one.

My hope is that Createspace works closely with Walmart in order to deliver just the right number of books.

As an indie author working with Lightning Source (and Createspace), I sometimes (especially near Christmas) have books ordered by bookstores, but I work only through outright sales. It’s much safer that way for me.

I can’t see how she would be allowed into WalMart without a returns option. All bookstores demand the option because otherwise they’ll end up with unsold stock and be unable to afford/unwilling to stock anything that won’t be guaranteed to sell.

She’ll probably end up with returns but hopefully it won’t cut into her profit much. Of course, I’m assuming she has an agent who managed to negotiate this as well.

And another one bites the dust.. It is looking more and more like the trad pubs and brick and mortar bookstores are, over the next decade or so, going to have to accept the reality that their way is no longer the only one.
The gates have been breached by the unwashed masses, and that smelly group isn’t paying a lot of attention to the professional reviewers, but rather to the word of fellow readers who can now post their reviews on line.
I don’t see Amazon becoming the only game in town, but I see agents role, if they survive, which I think they will, negotiating deals for the biggest names between the various publishers and sources, and always moving to sell the film/tv rights.

What’s also amazing about Jamie is that she got a sweetheart deal with a major publisher, tried that route, and went back to indie, where she’s very happy. Publishers are going to have to do more to retain talent. If they rely on the ever-flowing slush pile, they’re going to find the quality there keeps plummeting as more and more writers skip the pile altogether.

By Post Author

Well, Hugh, as you yourself pointed out in a previous blog, indies make more per copy sold than they would through a publishing house.
If a writer has an established name and doesn’t need to go the old route (unless they can get a contract similar to the trend setter you got where you retain e-book rights and they handle hard copies), it just makes more sense if the writer has all the parts in place (editor, cover art, etc.) set up and are ready to go.
I wonder what kind of impact those costs have on the profit margin? I’d assume, for a well read and sought after book such as you write or Jamie does, which has a following) could be a cost prohibitive thing.
My first cover I went through a website. I was NOT impressed. My second cover was freelanced and I am much happier with it.
Just gotta shop around until you find someone who can do what you envision. (I can’t draw a squiggly line, so there is no way for me to do my own cover.)

What would it take to get POD machines into stores? I imagine an interface like Redbox. This would do away with the issue of returns altogether.

My only real brick and mortar success (so far) came when my parents ordered a few copies and gave them to their local bookstore. They sold, so the owner kept reordering it, despite her inability to return them. She says the book sells well for her. It’s Books To Be Red on Ocracoke Island, on the outer banks of N.C. Great little store!

Great news! And don’t forget, it’s not 12% in trad pub print you’re giving up. It’s much less. My top non-fiction print books (with a huge traditional publisher) had a list price (MSRP) of $39.99. My royalties peaked at 12% but that was for “Publisher’s Net,” which is way down the line. My actual royalty (in the bank) was more like 5% of List. AND I was doing ALL the marketing/promo to end users—they didn’t do squat on that. So again, good news.

It’s good to hear that books are flooding the over the gates normally kept tightly shut by the industry. The same seems to be happening in the film industry with independent web series breaking through. Music also is changing with sites like bandcamp. I’m hoping this will herald the new age of the creative middle class rather than keep wealth in the elite and lucky few. Personally, if I could make $40k a year on my writing, I’d be happy.

Great post Hugh. Also it kills me how much Joe Konrath’s prophecies have come true. He said this would happen awhile ago. LOL!

Hugh, thanks so much for keeping us abreast of what’s going down on the indie scene. I also wanted to thank you for being so giving, sharing all you know about SP. I had been doubtful for a while about which way I would go. Just as little girls dream of that big wedding mine was of seeing my books in bookstores. But I was always dismayed by the lack of control authors have in the process. So, when SP came along, I said, humm. I decided to wait and see where things would go. But I have made up my mind and in a few months plan to launch my first book (KDP/CS). You have been instrumental in making this decision. Thank you.

I approached a friend who owns an indie bookshop on the North Shore of Sydney about doing a launch later this year for my recently released memoir. I did the interior design of the print edition and hired Jason Gurley to do my cover. I had Polgarus do the ebook. I gave my friend a proof of the book and he commented how much more professional it looked than MANY traditionally published books he sees. This is someone who has been in the book sales business for nearly 20 years.

It just goes to show that when you put your entire heart and soul into a creative endeavour like writing and self publishing books, good things start to happen. I haven’t sold many copies yet, but it’s only been just over a week since it was released. Nevertheless, I’m pleased with how things are proceeding.

I recently had someone ask who did the print layout for BEACON 23, with all the artwork and extra touches inside. Made me feel chuffed, having done the layout myself.

Imagine being a painter, handing someone your final canvas, and saying, “Frame it and hang it however you like. I don’t care how you light it. Or what color wall you hang it on. Or which side is up.”

No painter would do that. Just as no musician would go onstage without a sound check and getting everything just as they want it delivered to their audience. Only in publishing do we hand over the meat of our work and allow someone else to butcher it. Most other artists work from creation to presentation. When I painted, it started with building a frame, stretching a canvas, and slathering it with Gesso.

By Post Author

Hugh,

That’s an excellent analogy. Before I even finished my final draft, I had a good idea what I wanted the print interior to look like. I decided on Georgia 9.5pt for the font (which looks GREAT in print, by the way) and 28 Days Later for the chapter headings. Given that my book is about my year teaching English in Slovakia in the early 1990s, I wanted the headings to have a rundown or torn look. I also wanted to include several photos in the middle of the book, to give people a sense for what Slovakia (and I) looked like back then.

I suspect if I’d given over all the creative control to a publisher that none of my design ideas would have been accepted. While it’s true that a good number of writers don’t likely have the InDesign chops to make that all happen, I still think it’s vital that they learn it, if for no other reason than they can speak intelligently about design.

I would never have done the cover myself, however. I simply haven’t got the skills to do that well–or at least not as well as Jason Gurley did. Nevertheless, I understand the entire process, and that is a good trump card to have as a writer.

Hugh,
My favorite moment as an indie, who did everything but editing and cover art, was at AWP in Seattle when I handed you my book and you asked who had done this interior design and layout. I was chuffed! My only regret is I didn’t offer it to you to read! To much fanboy and not enough professional indie writer, I guess!

Thanks again for paving the way and helping us along. Glad it’s going so well for you!
Rob

What isn’t clear to me is how she got her book into Walmart…was it initiated by Walmart, CreateSpace or her? And what are the terms? If the books are returnable, and if the author is bearing the cost of those returns, then she is taking on an enormous financial risk. If the books are not returnable, then its notable that Walmart is willing to take the risk…unless CreateSpace has cut a special deal just to get their books on Walmart shelves.

Do you think a POD only bookstore could work ? Assume you wanted a store with books on shelves as the onl product , emphasis on local POD independents, only need to break even plus say 1%, in other words not a not for profit ?

Trafford started out as a local to me company before they were sold. I talked with the founders and early employees a lot. Their original vision was not to be another vanity press but to leverage POD for a self-publishing revolution. (This is pre-eBook, almost pre-internet.) One of their long-term visions was bookshops that had printing equipment in back and printed books on demand from a catalog of all books available. This never happened. The market for POD books was, and is, far too small to support the capital costs of so many micropresses. CreateSpace and LightningSource have found a middle ground with a small number of strategically located printing plants from which they ship out orders. Customers can take advantage of this, but booksellers largely can’t.
Large booksellers such as Barnes & Noble see themselves in competition with Amazon and refuse to stock POD. (It seems to escape them that if a customer wants to buy Book A and they refuse to sell it to him or her, the costumer is more likely to buy Book A from someone else than Book B from Barnes & Noble.) Distributors also see themselves in competition with Amazon, et al. With more justification. Distributors make their money moving books from warehouses to booksellers, something POD handles with couriers. Distributors also have a lot of power. If the Big 6 are the Mafia of the publishing world, distributors are the Teamsters. A local independent bookstore that angers the distributors could lose access to most or all of the traditionally published product. WalMart spends enough money at the distributors to not worry about retaliation.
So, at this stage of development, the POD market is not large enough to support the capital costs of the printing plant in a single bookstore. As for stocking POD books printed elsewhere, if the titles are limited to POD it’s extremely low margin and bookstores are already low margin. I don’t think the market (both supply and demand) is large enough to support it at the moment.

Good analysis, Gordon. One other option for Stan or anyone considering this is to branch out and do what some high-end, brick-and-mortar photo labs/finishers have done in big cities like NYC and L.A. And that is: also serve the Photo Book market. TONS of photographers want to make photo books. And if you have an HP Indigo 5000/5500 press (the most popular digital POD press that CreateSpace, Blurb, and everyone else uses), then you’re in business! Of course, a used Indigo 5000 will set you back $50k+ plus all the consumables, experienced front- and backend help, etc. So run the numbers to see if it works. :)

I’m a new author (my first book went live less than a month ago), and I went with CreateSpace & KDP. I’ve found the economic realities to be quite surprising. My novel is fiction, weighing in at about 400 printed pages. CreateSpace only does paperback, not hardcover. So I polled my test readers to figure out what price point seemed “right” to them. The overwhelming consensus was $12.95. That’s “expensive” for a paperback, but not “greedy expensive.” At that price, after CS’s cost and Amazon’s cut (exclusive), I get $2.

In contrast, I make $3.50 on my $4.99 Kindle version. And I make $2.80 every time someone reads it through on KU/KOLL.

I’m seeing 40% of my sales in print, 40% in Kindle, and 20% in KU/KOLL. I haven’t done any promotions yet, except to set up “matchbook” of which nobody has availed themselves so far.

Why do I mention all this? Because my book can never be sold anywhere but Amazon using this pricing. The CreateSpace royalty arrangements and costs for “expanded distribution” which is how you escape the Amazon bubble and get into the bookstores (blacklist notwithstanding) and libraries and Walmart (I presume) say I cannot sell my print book for less than $14.25. That’s “greedy expensive” according to my test readers. And at that price, my royalty in the expanded channel would be: $0.00.

So, realistically, to have it make sense to go expanded, I’d have to price my paperback at something like $18 (the royalties through “expanded distribution” are a lot lower). Something tells me Walmart shoppers aren’t so interested in $18 paperbacks.

And, of course, you only get ONE list price. Which means my print edition would be $18 on Amazon, so I’d sell zero books there, too.

I’m not complaining about any of this. I think the deal I’m getting from CS & KDP & KU is amazing and awesome. And I think the production quality of CreateSpace is outstanding. But I don’t see any way for the economics to work outside the Amazon ecosystem. Not for 400 page books, anyway.

Exactly. There’s an extra 20% cut of the list price that goes to the distributor. This actually is a distributor and not Amazon wearing another hat. Extended distribution allows bookstores to order your book through their current distributor. That 20% of list added to production costs and Amazon’s cut make it impossible to price a POD book competitively with a similar traditionally published book.
As for the WalMart deal, WalMart is going to want a lot of books. They will probably be run on an offset press, which is cheaper. Also, they may use their own distribution network, which means the books may not pass through a traditional distributor and not incur the 20% cut. The WalMart deal is almost certainly not the same as the extended distribution option. Extended distribution is still a sink, but the existence of the WalMart deal suggests another option exists for the few books and authors that achieve exceptional success.

I’d say $12.95 is a really good price for a trade paperback. Most of the TPBs I’ve seen are usually north of $14.00.

The KU payment will be constantly adjusted for some time. It’s a new thing and Amazon was guessing when they set up the original numbers.
Amazon will adjust the cost of a KU subscription until they find a sweet spot where it is attractive to customers, but the average number of reads at that price point does not represent a decline in their ebook (sale and KU combined) revenue. Note: not every borrow represents a lost sale, Amazon knows this. Some books will be read simply because they can be included in the already paid subscription, but the reader wouldn’t buy them separately. Some books will be bought after having been borrowed. How Amazon is going to estimate this, I have no idea. But Amazon is very good at algorithms and extrapolation. And they like making money.
The KU payout to authors will also be adjusted until a sweet spot is found that keeps authors happy enough to enroll in KU and doesn’t cost Amazon money. KU cannot run without good books to populate it. Even Amazon’s imprints would do them no good if authors didn’t sign on. Amazon’s existence as a bookseller depends on acquiring quality books and that depends on keeping large numbers (not all) of authors (and publishers) happy.
Amazon wants one thing; to make money. The best way to make the most money is to keep customers happy enough they keep buying and authors happy enough they keep submitting quality work to be sold.
Yes, KU payouts may drop more. The initial payout levels were a guesstimate. But Amazon has no interest in reducing the amount of money they might have made. For their own self interest they will not let KU cannibalize sales.
We may see some interesting innovation from Amazon. For example, KU borrows might all include a link at the end to purchase the book just read for a reduced price. If this increases after borrow sales enough over after borrow sales that would occur without the discount to cover the loss of revenue from the discount, then it would be in Amazon’s interest.
Amazon sees the highest, stable revenue when it can balance the happiness of itself, customers, and authors. That is also when authors as a cohort see the highest, stable revenue.
Amazon isn’t out to get authors. It needs authors. And it can’t exclude from the market authors that refuse to play by its rules. Amazon is the biggest player, but there are healthy alternatives. If Amazon annoys authors enough, those alternatives will prosper. Amazon knows this.

“For their own self interest they will not let KU cannibalize sales.”

I don’t know, Gordon. It appears to me that Amazon has already decided that the ebooks were mainly a loss leader which aim is to attract new customers to the website. While KU is not profitable, Amazon hopes that these new customers will spend their money elsewhere on the site.

If you look at it closely, KU is already cannibalizing sales. The paid tab on Amazon gives you better credibility than the free tab. For authors who are savvy marketers, that’s a no brainer: each time your ebook is borrowed on KU, your ranking improves, and the authors who sell had much more borrows than sales in July and August. It’s natural: you borrow more when you just have to pay $9.99 a month.

This greater visibility of the ebooks borrowed add up for all the authors who go exclusive with Amazon. That means that the ebooks that will increasingly be ranked in the top will be KU ones. But the payment for these ebooks is lesser than with the classic system (something like $1.12 for an ebook of 200 pages in July, less now).

And it will probably decrease, because KU, as it is, is not sustainable by itself.

So, yes, the indie authors become increasingly competitive, and the traditionally published ebooks will suffer a lot more. But the amount sacrificed by the authors will be staggering.

Look at my blog post here: http://alanspade.blogspot.fr/2015/08/how-amazon-has-us-ensnared-in-our-own.html

It’s easy to check whether I’m right or wrong, though you’ll have to wait until 2015 is finished. I believe that an ebook ranked #5 in 2012 made more money than a KU ebook ranked #5 in 2015 that have the same price. The more time will pass, the more the difference between the pre-KU era and the KU era will increase in favor of the pre-KU era.

KU would not have cannibalized sales, if the borrows hadn’t boosted the ranking of the ebooks. But that is not the case.

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