The Sony Hack

I don’t think anyone is surprised at the reaction of North Korea to Sony’s movie “The Interview”. The “Supreme Leader” is a delusional despot with some serious insecurity issues. He sees threats everywhere and cannot stand any type of criticism whatsoever. Compare this to U.S. President Barack Obama who openly made fun of himself on the Stephen Colbert report.

 

I’ve always found it interesting that socialist governments have viewed the Arts with distrust. Art, in their minds, can only be Art if it perpetuates the message that they themselves want. The USSR during the Communist era didn’t add anything to the world of creative expression and China certainly clamps down on anything that might appear to not fall in line with their thinking. But in the past each of these countries never interfered with the countries of the Western world as they created movies and books in which their countries were always on the bad side of the story line. James Bond has famous run-ins with Russian spies and the only ones he doesn’t fight are the ones he goes to bed with.

 

The hackers that infiltrated Sony’s company apparently did so on the instruction of North Korea. So fragile is their hold on government and so threatened are they by a silly comedy that they went to extreme lengths. At first when it was just emails that were released I was appalled by the complete lack of judgement by Sony executives in the messages. Working for a technology based company you’d think that they’d realize that once it’s written on a computer it’s never ever deleted. Ever. But then we started hearing about the threats against this movie. We heard that Sony cancelled premiers in various locations; we heard that Sony was scaling back and then we heard the whole thing got cancelled.

 

We probably shouldn’t be surprised by this. These are the same decision makers who ignored concerns about a possible threat from their own IT department; these are the same decision makers who used poor judgement in their email content. These people are showing that they should not be in positions of authority as they have no grasp on common sense, managing, decision making and art.

 

Art has always pushed the boundaries of people’s comfort zones. Nazi Germany held many a book burning because the content differed from their ideology. True, some have used the “Art” label for nefarious purposes but for the most part painters, authors and movie makers just want to stretch the boundaries of people’s thought processes and hopefully entertain them to some extent.

 

As a publisher of fiction I’ve read my fair share of what some called art and I just called bad writing. There’s a lot of very talented people out there and what they produce isn’t going to be agreeable to everyone. In fact just last week I received an email – a complaint actually – on one of the stories that we published. The story was based on a down on his luck wannabe musician who inadvertently gets mixed up with drug dealers. You can imagine the dialogue that occurs between these individuals isn’t really high end. The complaint rested on the fact that we a) published a story that involved drugs and b) allowed not so flowery language to exist within it. I explained to the complainant that all kinds of stories exist and quite often authors take snippets of real life and fictionalize it in some way. Drug dealers exist and their conversations are probably not polite. Even fiction based story lines must be true to their characters.

 

Sony’s complete caving on the hacking scandal has only proved to embolden future hackers. It was yet another bad decision in line with many others that they’ve made recently. Any movie maker, publisher, author, artist, gallery etc must be prepared to stand by their work. If the content makes the audience uncomfortable then that means their comfort zone is expanding. I have no objection to somebody expressing their opinion to me (positive or negative) about something I’ve published. I would never take away their right to freedom of expression, but by that same token I would never want my freedom of expression limited by someone else’s ideology.

 

Take care and happy reading!

 

Darlene Poier

Publisher

Ficta Fabula

Inspiring Imagination

All Over the World

www.fictafabula.com

www.pagesofstories.com

The Magazine Publishing Conundrum

For most of my life I’ve been an out of the box thinker. This is one of the reasons I wasn’t terrifically successful in the corporate world.

 

So it shouldn’t come as a surprise that when I ventured into magazine publishing I would try to do it differently. I wanted to find ways to run this business and still serve the areas that are important to me. It’s taken me a while, but I’ve finally narrowed down what my three main challenges are with the current magazine publishing business model. But first, I’ll recap the typical business model.

 

Magazine publishing and distribution (for the large, well known magazines anyway) goes something like this (this is really rough and high level and may not specifically apply everywhere, but you get the idea). Content creators get together with magazine management and decide the direction of the magazine issue. Other sales staff start marketing and promoting it based on this content. The magazine is created and printed with ads, graphic design, and informative or entertaining content. Some of the issues of the magazine are mailed out to people that have specifically requested and paid for it and the rest end up in newsstands and magazine racks everywhere. It sounds simple but it is a little more complex than that and you’d think that as a magazine publisher I would have gotten my head around it much earlier in this entrepreneurship thing. But here’s why it never really worked for me.

1)      Environment

I’ve done my best most of my adult life to respect the environment. Gary and I recycle and reuse as much as possible and avoid creating waste where we can. A typical magazine prints thousands and thousands of copies of each issue (not me). They mail out the ones to those that have requested it and then a distributor picks up the remainder and sends them out to bookstores, grocery stores, and anywhere there is a magazine rack. The distributor also does this for many other magazines and thus can determine which magazines are selling best in a particular location.

 

Each retail location must pay for the entire delivery of magazines and any unsold issues are eventually credited back to the store. I spoke with one store owner and he estimated that they sell approximately 40% of the magazines that are delivered to their location. Another store owner also gets paperback books from the distributor and expressed a desire to scrap the magazines all together and just have the books. But they aren’t allowed to do that. She also confirmed that their percentage of magazines sold versus inventory was pretty low.

 

The website of the distribution company explains the reasons for having so many of each magazine was that they wouldn’t want to have the store run out which would put them in a detrimental situation. On the off chance that there’s something in a particular issue that’s suddenly appealing to a greater percentage of the market, they don’t want the store to be without.

So, the end result is that there are millions and millions of pieces of paper created and printed with the full knowledge that they won’t ever end up in the hands of a customer. This is wasteful and irresponsible. Aside from the obvious and glaring environmental hazards that this produces, it’s kind of a crazy business model for a store owner.

2)      Advertising Costs

A free magazine that boasts delivery to thousands and thousands of households, a free newspaper that boasts readership in the hundreds of thousands and a magazine that isn’t free has verified circulation in the tens of thousands with a reach in the hundreds of thousands. Advertising rates are based on these circulation and readership numbers so the cost is usually in the thousands of dollars for any ad size. Every magazine will have a media kit (that’s what I was trying to do when I started down this rabbit hole!) that shows circulation and readership numbers and all sorts of other information to help an advertiser decide whether this would be a good investment or not. So in order to attract advertisers and justify the costs the magazine needs to make this kit as pleasing as possible.

 

Without going into too much detail, many media kits displayed their readership numbers in large bold font and sometimes of a different colour. Why? To ensure that the attention of the advertiser can see this usually massive number. As far as I can tell, there is no way to accurately verify the readership number as it’s based on a multiple of the circulation number and can reach in the hundreds of thousands and even millions. The idea is that if one person buys the magazine, it’s subsequently read by 2 or 3 other people. Sometimes the definition of readership includes those people that flip through the magazine while in the store.

 

So what we ultimately end up with is a business that pays thousands and thousands of dollars for an ad that may or may not be seen by the market that it’s going after.

 

For me, my passion is promoting reading and creative thinking and using those imagination muscles so I make ad space extremely affordable so that more people can participate.

 

3)      Providing Value

Ultimately any magazine wants to provide value to their end reader. That value can either be entertainment or additional information and the magazine works hard to ensure they provide one or the other, and sometimes both.

 

When the content is perceived to have higher value, there appears to be a greater number of ads that accompany these pieces. I picked up a People magazine issue from August of this year. The cover has a picture of Angelina Jolie in her wedding dress which is clearly going to drive sales. In this issue there are 136 inside pages plus the inside front cover and inside back cover. Guess how many full page ads there are in that issue? Out of 138 total pages, at least 70 are full page ads. I wanted to confirm these numbers with a trade magazine of some kind so I picked up the most recent Success magazine. There are 88 pages plus a CD with interviews that the publisher does with his guests and the two inside covers for a total of 90 pages; 10 have ads in them.

 

The argument that People magazine would put forward is that they have pages and pages of pictures from the celebrity wedding as well as a fairly lengthy article. Angelina Jolie and Brad Pitt are astute business people and know that their brand has significant value and would have charged the magazine a substantial amount of money for that kind of access. The argument would also be made that Success magazine has a motivated and dedicated market. People magazine publishes 53 times a year and Success publishes 12 times a year. It may seem that I’m comparing apples and oranges, but I’m not really.

 

People magazine has 66 pages of content and Success has 80. As I was flipping through the People magazine, the only reason I even noticed the ads was because I was counting them.

So, how do I wrap this up? If we assume that each page of content is a page of value to the reader, then there is less value in the general entertainment magazine ads than there is in a dedicated trade magazine. In a marketing course that my husband took recently, they cited a statistic that only 3% of the population is actually willing to buy something at any given time. That means 3% are looking for make-up, a different 3% are looking for a vehicle etc. So, all those ads are directed at the 3% and most readers will flip the page to go to the next piece of actual content. It seems to me that if publishers and advertisers know that 3% statistic, why are they wasting 97% of their reader’s time with an ad?

 

When I was studying the cost of ads, one magazine had the statement in their media kit that magazine ads drive more traffic to a website than any other media form. So, I did my own very unscientific and informal survey and asked the question if anyone has ever gone to a website based on an ad in a print magazine. From the responses I got, not one did.

 

There will always be far more content in any Pages Of Stories publication than there will be ads.  We appreciate and respect the time that our readers have and want to give them the best bang for their buck. The goal of our publications is to provide some entertainment in their day, and perhaps through a careful selection of limited ads, find other pieces of similar entertainment.

 

I believe these three challenges that I have are not uncommon.  There’s a great deal of waste which harms the environment ; businesses are paying for those magazines based on questionable data; and unless it’s a trade magazine, there is less value to the end reader.  I believe that like the book publishing industry, the magazine publishing industry needs to change. I don’t believe that the current business model of businesses really subsidizing a magazine can continue. It doesn’t seem like the ads provide the value to the business and the excessive number of ads per magazine takes away from the value to the end reader. Sadly, I don’t think that this industry is going to change in the short term. As long as there are businesses willing to believe the numbers and pay those fees, then magazines are not motivated to make any kind of a change.

 

There is good news! I also believe that when the magazine publishing industry does change, what we’ll be left with is a far more robust and relevant industry. We’ve got a ways to go, but it’s totally doable.

 

For my part, I’m willing to pay more for a magazine without ads. What’s your preference?

Caught in the Middle

Last week I received an email from Amazon asking me to send a note to Hachette Publishing about this dispute. They asked that I email Hachette and cc them. As I'm a bit crusty and non conformist, I did the opposite.

This is my response (the initial email is lower down):

*********************************************************************************

Dear Amazon,

I'd like to point out to you that when you first started to introduce your magazines and newspapers your offer to publishers was a 70 / 30 split with you taking 70% of the takings. It was only when Apple entered the magazine and newspaper field that you had a grand announcement about the reversion of the 70 / 30 split. You have a long ways to go in building credibility (http://www.cnn.com/2010/TECH/mobile/11/09/kindle.newspapers/index.html?hpt=Sbin).

And unless your other terms for magazine publishers has changed recently, they were also kind of crazy (I've attached what was sent to me). You stated in your terms that a magazine could be pulled at any time if the content wasn't agreeable. You offered no recourse, no discussion and no process for which publishers could or could not abide by. In an email to your Amazon beta group I had concerns about sections 3.2, 5.1.4, 5.2 and 5.3. I would be happy to forward on the email that I sent to Sean Paul. I found this to be particularly offensive considering at the time it was discovered that one of the self published books that could be found on Amazon was written by a child molester for other child molesters on how to rape children (http://abcnews.go.com/Technology/amazon-removes-pedophilia-book-store/story?id=12119035) .

Once again credibility is an issue with you.

I no longer believe that this dispute is about the cost of e-books and your interest in lowering the price is not altogether altruistic. I've no doubt that your math is correct and Hachette would sell more books if they lowered the price, having said that, it's neither your place nor mine to make that dictation to another business. If Hachette has chosen to sell their books at $14.99 or $19.99 that's their call, not yours. Nor is it up to you to determine what percentage goes to the author and what percentage stays with the publisher. That's a relationship between the publisher and the author and you have no business intervening. Ultimately, if your honest, your revenues would go up significantly if Hachette lowered their price of e-books.

 

If you want to get into the publishing world, then become a publisher otherwise don't create unnecessary disputes.

Furthermore to offer up suggestions for the recipients of this email to use in sending a note on to Hachette is laughable. One of your suggestions is for us to suggest to Hachette not to use authors as leverage. The only one that put those authors in the middle of this dispute is you. You made the choice to not sell those authors works, no one else made that choice. No one made you do anything, no one forced your into anything. You Amazon, made that choice.

I'm a very small magazine publisher that decided some time ago not to have my products on your shelf. Already this dispute has challenged other publishers to rethink how they do business with their readers. HarperCollins is now selling print on demand books and e-books off their website (http://www.digitalbookworld.com/2014/harpercollins-pivots-to-sell-print-and-ebooks-directly-to-readers-through-main-website/) and it's only a matter of time before other publishers do as well. Hachette can just as easily go that route.

Amazon, your arrogance will eventually turn your customers off and they will go looking elsewhere. If other publishing houses decide to sell POD your selection will deteriorate and I've no doubt that Google is watching this dispute closely waiting for an opportunity.

Honestly Amazon, you need to take a look at the message you're sending out there. You've created this dispute with Hachette, Warner Brothers is also on your hit list - who's next? You're going to lose face with the public and they'll start to go elsewhere. You have competition from other sites now selling similar products to you (non literary), you need to be careful the image that your portray so that your customers can still find value in you.

Honestly, I hope this dispute ends because I truly believe both you and Hachette have some maturing to do. Neither of you have acted professionally or with any kind of class. If I could put both your CEO's in a room I would probably bang their heads together.

Amazon and Hachette, you can end this dispute. I would strongly recommend that you both grow up and get back to the business of running your businesses.

Thank you for taking the time to read this.

Take care and happy reading.

 

Darlene Poier

Publisher
Ficta Fabula
Inspiring Creativity and Imagination
www.fictafabula.com
www.pagesofstories.com

 

-----Original Message-----

From: Kindle Direct Publishing [mailto:kdp-support@amazon.com]

Sent: August-08-14 11:41 PM

To: Darlene Poier

Subject: Important Kindle request

Dear KDP Author,

Just ahead of World War II, there was a radical invention that shook the foundations of book publishing. It was the paperback book. This was a time when movie tickets cost 10 or 20 cents, and books cost $2.50. The new paperback cost 25 cents – it was ten times cheaper. Readers loved the paperback and millions of copies were sold in just the first year.

With it being so inexpensive and with so many more people able to afford to buy and read books, you would think the literary establishment of the day would have celebrated the invention of the paperback, yes? Nope. Instead, they dug in and circled the wagons. They believed low cost paperbacks would destroy literary culture and harm the industry (not to mention their own bank accounts). Many bookstores refused to stock them, and the early paperback publishers had to use unconventional methods of distribution – places like newsstands and drugstores. The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.” Yes, George Orwell was suggesting collusion.

Well… history doesn’t repeat itself, but it does rhyme.

Fast forward to today, and it’s the e-book’s turn to be opposed by the literary establishment. Amazon and Hachette – a big US publisher and part of a $10 billion media conglomerate – are in the middle of a business dispute about e-books. We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive.

Perhaps channeling Orwell’s decades old suggestion, Hachette has already been caught illegally colluding with its competitors to raise e-book prices. So far those parties have paid $166 million in penalties and restitution. Colluding with its competitors to raise prices wasn’t only illegal, it was also highly disrespectful to Hachette’s readers.

The fact is many established incumbents in the industry have taken the position that lower e-book prices will “devalue books” and hurt “Arts and Letters.” They’re wrong. Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books. On the contrary, paperbacks ended up rejuvenating the book industry and making it stronger. The same will happen with e-books.

Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.

Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We've quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger.

But when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move. It was never in George Orwell’s interest to suppress paperback books – he was wrong about that.

And despite what some would have you believe, authors are not united on this issue. When the Authors Guild recently wrote on this, they titled their post: “Amazon-Hachette Debate Yields Diverse Opinions Among Authors” (the comments to this post are worth a read).  A petition started by another group of authors and aimed at Hachette, titled “Stop Fighting Low Prices and Fair Wages,” garnered over 7,600 signatures.  And there are myriad articles and posts, by authors and readers alike, supporting us in our effort to keep prices low and build a healthy reading culture. Author David Gaughran’s recent interview is another piece worth reading.

We recognize that writers reasonably want to be left out of a dispute between large companies. Some have suggested that we “just talk.” We tried that. Hachette spent three months stonewalling and only grudgingly began to even acknowledge our concerns when we took action to reduce sales of their titles in our store. Since then Amazon has made three separate offers to Hachette to take authors out of the middle. We first suggested that we (Amazon and Hachette) jointly make author royalties whole during the term of the dispute. Then we suggested that authors receive 100% of all sales of their titles until this dispute is resolved. Then we suggested that we would return to normal business operations if Amazon and Hachette’s normal share of revenue went to a literacy charity. But Hachette, and their parent company Lagardere, have quickly and repeatedly dismissed these offers even though e-books represent 1% of their revenues and they could easily agree to do so. They believe they get leverage from keeping their authors in the middle.

We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture. We’d like your help. Please email Hachette and copy us.

Hachette CEO, Michael Pietsch: Michael.Pietsch@hbgusa.com

Copy us at: readers-united@amazon.com

Please consider including these points:

- We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.

- Lowering e-book prices will help – not hurt – the reading culture, just like paperbacks did.

- Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.

- Especially if you’re an author yourself: Remind them that authors are not united on this issue.

 

Thanks for your support.

The Amazon Books Team

P.S. You can also find this letter at www.readersunited.com

Change Is In The Air

Absolute power corrupts absolutely

For many that know me, they know that I often speak of the weather. I beg your forgiveness because I grew up in an area where the weather channel was the most watched TV station. This newsletter is a little delayed in part due to the fact that the snow has melted, the sun is high in the sky and the temperature has risen significantly. Summer has arrived and I intend to get as much Vitamin D as I can.

That's really no excuse for the delays, but when Winter comes and I'm complaining about the weather, remind me of this article.

There is a saying out there that goes something like: "The only guarantees in life are death and taxes." I believe we should add one more to that - change. Everything is changing: climate, the work life balance of the Western world, the environment, all sorts of industries with publishing in particular.

As a self-employed publisher who does this in the evening and on weekends, it's sometimes challenging to follow everything in the industry. Publisher's Weekly does a great job of keeping me up to date as do the recently discovered Google Alerts (thank you Debbie Elicksen!). There are some things I pay particular attention to.

Canadian publishers, Amazon and most things technology based (sorry, it's my day job and I can't seem to shake it off).  The recent news about HarperCollins buying Harlequin Enterprises still gives me concerns. I've always believed that no matter what business a person is in, they should act with integrity and honesty. I haven't seen any evidence that Rupert Murdoch (owner of HarperCollins) follows the same philosophy.

Amazon and Hachette Publishing are nowhere near burying the hatchet (did you see how I did that??? :) ). Amazon recently offered Hachette a deal where the authors could have their work posted on Amazon and Amazon would generously pay them 100% of the revenue. Except...it's not 100% and it's a deal that is good for no one but Amazon. The authors are still left in the middle of this mess and the readers have fewer options available to them.

HarperCollins (ugh, I know...again!) has recently decided to sell printed books off their website, which is meant to be a kick in the pants to Amazon. HarperCollins - I think - has totally underestimated Amazon's delusions of grandeur.

I bring these examples up because I believe each individual running these companies (Harlequin, HarperCollins, Hachette and Amazon) believe in a world of lack and that one must not play fair in order to win. They believe that in order to win they must take from others - but they miss the point. You win by giving to others.

Traditional publishers didn't run a successful business model and that allowed Amazon to come along and take a piece of the pie. While each of these ruled their dynasties, they allowed their minds to become corrupted to change and growth. Traditional publishers believed that they only had to stay the course and the world become right again. Amazon believes that they can force companies and authors to their way of thinking without realizing they are totally delusional. Each of these (traditional and Amazon) believed that they were impenetrable and this absolute power allowed them to become corrupt - absolutely.

But there is good news! Change must occur and as a result a new industry of independent publishers is emerging - some with better business models than other. Some only provide a platform to get the eBook out there and others offer a more of a co-op approach. The good news is that authors aren't restricted to traditional publishers or Amazon, and readers aren't restricted to the bland formulaic approach traditional publishing likes to push on the main stream reader.

Between independent publishers and independent book sellers, the future is bright for those that are creative thinkers and writers and those that are creative readers. If we want our imaginations to soar, then it is our responsibility to go looking for and provide literary works that are unique and entertaining.

I believe it is uniqueness that will inspire creativity and imagination. You don't know where ideas come from and where they spread to, but it is everyone's responsibility to share a good story.

I hope you share yours today.

Take care and happy reading!

Darlene Poier
Publisher
Ficta Fabula
Inspiring Creativity and Imagination
www.fictafabula.com
www.pagesofstories.com