The Canadian Publishing Market

In the past, I've written a little bit about the problems with understanding the publishing industry resulting from the paucity of good data. Much of the data we have comes from the US market and is based on an unrepresentative sample of US book sellers (see the discussion here, here and here).

In Canada, data on book sales can be also drawn from a survey of consumers run by BookNet, whose 2015 report was recently released: The Canadian Book Buyer 2015.

The survey of 4,277 individuals in early 2015 first asked people if they had bought a book in the previous month. Only 19% (784) responded that they had and all results are drawn from this subsample, which is modest in size but not insignificant.

The key findings:

1. Book buyers bough an average of 2.8 books each;
2. e-books account for 17% of sales, the same as in 2013. This is attributed to the shrinking price difference between e-books and print books.
3. Paperbacks account for 55% of the market, hardcovers for 25%, and audiobooks (and other) for 3%.
4. The typical book buyer is a college educated woman aged 45 or older working full time and living in an urban area.

These findings pretty much confirm what we have learned from the US data. First, the decision of publishers to raise e-book prices has led to a stalling of demand for this format. Second, book buyers are increasingly women which may explain why some men prefer to write under female or gender neutral pronouns.

More on the Publishing Industry

In addition to recently writing about the market for short fiction (which I have done here, here, here, and here), I have also been writing about the market for longer fiction and the publishing industry as a whole (here and here). Much of the debate in the latter has been about low incomes and sales for literary fiction, as well as about the relative role of eBook versus print and traditional versus independent publishers.

My summary of this debate was that, although the data are limited and hard to interpret, I thought that the fiction market was in decent shape driven by the expansion of independent publishers, but also supported by some strength (if not strong growth) in the sales of traditional publishers. I figure that the experiments that traditional publishers have been running with the pricing of eBooks probably explain some of their recent declining sales results and especially the decline in their share of eBooks. Much the same conclusion was reached by Mathew Ingram at Fortune in No, e-book sales are not falling, despite what publishers say.

These opinions have only been strengthened by the recent research that I have read. Or more accurately, by the older research that I have only recently read about the industry and the quality of its data.

Jim Milliot's post for the Independent Book Publishers Association Keeping Count: What Industry Statistics Do and Don’t Reveal does a good job reviewing the information available on the size of the publishing industry as a whole. In addition to the problems with the AAP numbers (data only from its 1200 members) and Nielsen BookScan (doesn't include eBooks), Milliot also reviews data from consumer surveys such as the renamed Nielsen Books and Consumers surveys of 60,000 book buyers. In summary: the data we have is limited and hard to interpret.

There are also good reasons to be skeptical over the quality of BookScan numbers beyond the fact that they do not include eBooks. On the accuracy of Nielsen BookScan data, especially for SFF titles, one useful analysis was provided by Suw Charman-Anderson Can Nielsen BookScan Stay Relevant In The Digital Age? in Forbes. The idea behind BookScan is that it requests data from retailers which it then aggregates and sells. It is limited to the extent that the retailers it requests data from are representative of the market as a whole.

This coverage has not always been great. For example, it was not until January 2013 that BookScan started capturing sales from Walmart stores. According to Charma-Anderson's article, it is believed that BookScan captures 80% of book sales in the US and 95% of UK sales, including all the major stores.

Nonetheless, there are some gaps in coverage. As Nielsen BookScan themselves note “library, professional, corporate, premium, export, and some specialty retail sales are not included in the BookScan physical panel.” This is a significant problem for SFF titles as the category "specialty retail sales" is likely to include your local SFF bookstore and almost all comic book stores.

As for information from the publishers themselves, as Dorie Clark points out in Harper Lee and Dr. Seuss Won’t Save Publishing for Harvard Business Review

If I were to self-publish on Amazon, I’d see thorough, up-to-the-minute sales data about how my book was performing. Publishing through a traditional house? Most of us get weekly Nielsen BookScan reports—courtesy of Amazon—and sales figures every six months from our publisher. It’s an 18th century level of opacity that seems shockingly out of date for authors trying to make smart marketing decisions about how and where to promote their books. How can you even know, if you get zero real-time feedback? (A hat-tip here to Penguin Random House, Portfolio’s parent company, which recently launched a comprehensive Author Portal that tracks weekly sales, putting them light years ahead of the competition when it comes to analytics.)

Although this may simply be the publishers strategy to keep their own authors in the dark, I suspect it reflects the fact that the publishers own data is not very good.

That is not to say that the story about flat eBook sales is necessarily entirely false, either. As pointed out on the Stratechery blog in Are eBooks Declining or Just the Publishers?, the Author Earning Reports snapshot shows flat revenues in total. This is inconsistent with what Amazon is reporting as a whole and may reflect the fact that randomness inherent in taking a single snapshot of the market.

In summary, the data are poor and it is hard to know exactly what is going on. More data please!

The Market for Short SFF (Continued)

The reaction to the Neil Clarke editorial continues to roll in. In addition to the posts that I summarized yesterday, today I came across a response by Steve Davidson from Amazing Stories. According to Davidson, Amazing Stories is currently what Clarke would call a hobbyist, in that it does not pay pro rates, but that is in the process of transitioning having recently paid pro rates in its inaugural writing contest.

Most of what Davidson has to say is tangential to the points I am interested in, but a few things stood out:

1. Galaxy's Edge should be added to my list of sugar-parent magazines.
2. Clarke's 'non-profit' category includes magazines that are crowd-sourced or privately funded. I am inclined to regard crowd-sourced magazines as self-supporting as long as there is an indication that the crowd funding source is stable. Privately funded, to the extent that it means some small group of wealthy person is covering the costs, I am inclined to regard as staff funded.
3. Davidson seems to agree that the traditional subscription based model is in its death throws.

   magazines like Strange Horizons, Lightspeed, Daily Science Fiction seem to be proving ... [that] the market has changed so drastically that old school doesn’t work (if it did there’d be a lot more “professional” magazines) and the younger market does not view crowd-funded magazines (and anthologies), or impassioned hobbyist efforts as lesser entities.

   I don't necessarily disagree, and am happy to interpret crowd sourced magazines as self-supporting.
4. Davidson is more concerned about the supply of short fiction declining. Pointing to self-published novels, he notes that

   Most of the new indie authors coming onto the scene these days head right for novel length work – because that’s where they’ll see the most immediate reward for their work, be it the sale of five electronic copies or a blockbuster like Weir’s The Martian. Rather than growing up from short fiction (in the magazines), they’re skipping that whole phase. Because they can, and because they have to. Why have to? Neil has definitely got it right – magazines need to pay more (and I say this despite the fact that endorsing that view is going to make my life more difficult). No aspiring author in their right mind is going to be attracted by 6 cents per word for a hard to write short story when they believe that they can write a novel that they’ll be receiving 70% of $3.99 for each and every electronic copy ($2.79). (Do the math: short story length runs to a max of 7500 words. At 6 cents per word, that’s $450. They’d need to sell 161 copies of their (super-fantastic best, most awe-inspiring SF novel) to earn the same amount, which is a number well within performance levels in the mind of most aspiring authors.
   
   Beyond that equation: new, younger authors are growing up in a culture that tells them that they do not need the vetting, the approval or the gatekeeping offered by a magazine’s submission process. They think sitting around and waiting to be accepted (even if the turn-around time is very short) is nothing but a waste of time. Many of them view the entire rejection process with complete disdain. (Who does that yahoo think they are? The editor of some magazine I never heard of before? Like that means anything.)
   
   It may be a sense of entitlement that’s driving this view, but even if it is, so what? If the vast majority of your supplier base thinks that someone or something else offers a better distribution deal, they’d be foolish not to take advantage.

5. Davidson recommends the hobbyist to aspiring route, although it helps to start by buying a recognizable brand:

   When Amazing started, it was nothing more than me wanting to preserve the name for the science fiction community. My wife and I made a coldly calculated business decision that the money we invested in the trademarks would be recoverable in future if only by selling it (to someone in the field). Finding a partner in the field that wanted to use the name was the initial business “plan”.
   
   But then it took nearly three and a half years for the trademarks to grant, during which time I was able to really survey the market and develop a plan that I believed I had the initial funding for and that would meet the goals of offering professional rates on a sustainable basis.
   
   The marks granted – but too late for me to be able to sell my other business for an amount that would fund the startup of Amazing Stories (the economy was going into its dive). But I’d already announced the acquisition and started getting a lot of pressure to “do something” with the name.
   
   Which necessitated a reversion to a “bootstrapping” strategy, one we are in the final stages of right now. With nearly 25,000 members/subscribers and internet traffic that is on par with all but a handful of the top online fiction sites and just beginning the first stages of purchasing and publishing fiction at professional (albeit unacceptable) rates. We’d not be where we are right now if I’d “known when to quit”.
   
   We’d also not be here right now if authors didn’t see some benefit to themselves in supplying us with copy at no charge; if sponsors didn’t see some value in funding us for specific projects; if a whole heck of a lot of people didn’t see some value in devoting a bit of time to reading the site.
   
   My “business model” (following that initial one) was predicated on the belief that the name of the magazine still carried enough cache and import to become a source of income through licensing. A source of revenue that is atypical and not an option for most competitors (though I do note that some of them sell t-shirts, associated collections and anthologies, posters). I think it safe to say that in the 21st century, a business may find that its flagship offering is not what brings in the majority of its revenue; it may very well be that the short fiction magazine market will need to move in the direction of offering its magazine as a loss-leader, offering other related product lines that have a higher profit margin. (You don’t sell razors – you sell razor blades.)
   
   Do I pay staff or contributors? Only in trade. Is everything we produce of professional quality? No. Are we on the path to addressing those issues and “doing things the right way?” You bet. I’ll not say anything else regarding that other than the fact that my original contention – that the name was capable of funding the magazine largely through licensing – is proving to be correct.

I also came across this older post of an interview with Scott H. Andrews from Beneath Ceaseless Skies.  Among the many points covered:

1. BCS in nearly seven years has published 350 stories
2. The Editor does a lot of work to make this publication go:

   We publish a new issue every fortnight. That two-week publication cycle begins with promoting the new issue on the BCS website and Twitter and Facebook. Then the preparation for the next issue starts immediately. I make the ebooks for that upcoming issue and send the files to our ebook distributors, including Amazon Kindle Store and WeightlessBooks.com. The ebooks go out a week early because our ebook customers and subscribers get each issue a week before it goes live on the website.
   
   I do all the production of the BCS Audio Fiction Podcast, so I coordinate the audio reading for each episode, whether it’s a guest narrator or I do the narration myself, and I spend two to three hours a day editing the audio narration. I’m an amateur musician, so I have a sharp ear for audio quality and the rhythm of the pacing and delivery.
   
   I spend about four hours a day reading submissions. That includes new submissions, whether passed up by my Editorial Assistant Nicole Lavigne, who reads the slush, or automatic pass-ups from writers who have sold to BCS before. It also includes line-editing accepted manuscripts and rewrites, which for me require several readings and writing the editorial emails to the author laying out my issue and some ways it might be fixed.
   
   Other tasks include compiling and releasing our anthologies, like our annual Best of BCS series that’s now in its sixth year or our new Weird West anthology Ceaseless West; promoting the magazine at cons and sitting on panels; submitting material for reviews or awards; etc.

3. There are many challenges to making a short fiction magazine work:

   There’s always the challenge of making F/SF short fiction zines financially viable. Ebook sales and crowd-funding have offered great new tools to help with that, but it’s not as easy as the high-profile success stories make it seem.
   
   There’s also the challenge of getting the stories to readers. The F/SF short fiction audience is much smaller than for novels, but I’m always hoping that we as a field can expand that audience and draw in novel readers; show them that short fiction does exist in the styles they love to read novels in, like epic fantasy, and interest them in reading it.
   
   The two huge pitfalls in F/SF zining are well-known: the huge time commitment it requires, and the need to have a realistic business model that fits your approach.
   
   The time commitment to run a zine in a professional manner, like keeping response times to submissions quick enough that it’s not an insult to writers, is massive, almost suffocating. If you aren’t cognizant of that, you’ll get behind and it can hobble your zine.
   
   There are multiple working business models in practice now–for example, BCS is a 501c3 non-profit, funded by donations; Clarkesworld is funded by ebook sales; others have used crowd-funding. But new zines can’t just copy a model and expect it to work for them as well as it works for the zine(s) currently using it. They need to choose or modify whatever model best fits their own strengths and needs.

Again, plenty more food for thought. The striking thing about these reports is how much the truly dedicated editors of these magazines are prepared to sacrifice to keep them going. As long as there exists a strong supply of these individuals, staff-funded magazines will continue to exist. When this is combined with the apparent abundant supply of authors prepared to publish for little or no compensation, there should be room for plenty of author-funded magazines, and so overall I feel confident in asserting that the market for short fiction in SFF should continue to exist.

But is there another way? Could a magazine along the academic model work for short SFF? I will present my revised calculations tomorrow.

The Market for SFF Short Fiction

Recently, I used the controversy over The Offing magazines decision to charge submission fees as the basis for exploring whether the academic model of journal publishing would work for genre (or literary) fiction. I concluded that it might, although acknowledged that my calculations on profitability and my understanding of the market itself were very poor so that I might be very wrong.

Recently, Neil Clarke, the editor of Clarkesworld Magazine, Forever Magazine, and Upgraded, weighed in with an editorial on the state of the market for short science fiction and fantasy. This spurred a significant debate which revealed a number of facts about the market which have led me to revise my calculations on the feasibility of the academic model for genre fiction. Out of this discussion, I find reasons to be even more optimistic about the prospects of the academic model, but also some reasons to be more pessimistic.

In this post, I will review the debate arising from Clarke's editorial, before returning to my calculations on the feasibility of the academic publishing model in a future post.

Clarke divides the markets for short SFF into those that generate enough revenue to support themselves and those that do not. There are only three magazines that are self-supporting, paying their authors pro rates, compensating their staff and covering overhead and other costs out of revenue raised from sales and advertising:

1. Analog
2. Asimov's
3. Magazine of Fantasy and Science Fiction

Of those that are not self-supporting, Clarke offers five classifications. I did not find his classification scheme all that useful and instead prefer to classify markets according to where they obtain additional sources of revenue and/or support:

1. Sugar-parents. Supported by a parent company, as with Tor.com and Subterranean (now closed).
2. Staff. Clarke calls them 'conceivable' who pay authors pro rates but rely on editorial staff volunteering their time to make ends meet. I think he includes Clarkesworld here.
3. Authors. Clarke calls them 'hobbyists'. They are distinguished by paying their authors little or nothing.

(Clarke identifies two other groups of publications. First are 'non-profits' including Strange Horizons and Beneath Ceaseless Skies. I am not sure what he means by them. If they can pay pro rates to authors, can compensate their staff, and can cover overhead, even if they do not make a pure profit, then I think of them as self-supporting; if not, then where is the money coming from?

The second are 'aspirants' who pay pro rates but haven't worked out how to cover costs. Again, I ask: where does the money come from? I presume it is coming from an 'owner' who is also editor, and so I will classify them as staff financed.).

Clarke's article then points to problems in the market for short SFF. The main symptom of a problem is that none of the non-self supporting publications have managed to become self-supporting. Ever. Many have died despite generous fundraising and volunteer efforts from supporters. And, in his opinion, the situation is only going to get worse. As digital publication has become easier and cheaper, more and more publications that aspire to be self-supporting have entered the industry. This has made the competition to publish good stories tough, and the competition to attract new readers fierce. With the total number of readers (and possibly also authors) of short SFF not growing very fast, he sees a declining quality of published stories and thinks the industry is ripe for a market correction. He even encourages increasing the level of pro rates in order to encourage that correction.

There may be some reasons for optimism that Clarke is neglecting. Perhaps the controversy over this years Hugo Awards will attract more people to the genre and, in particular, to the short fiction part of the genre? It has had that effect on me (I have read many times as much short fiction this year as in years past) and perhaps it has affected other people in the same way. But absent this, and absent a reversal in the greying of fandom, he is probably right to be concerned.

A couple of other interesting factoids emerged in the article, or in the ensuing discussion:

1. it costs a lot of distribute a print version. In Clarke's words:

   The amount of money necessary to launch a print-based aspirant-level market with national distribution is staggering. You could fully-fund a digital publication for well over a year with the same amount and that’s not even taking into consideration warehousing expenses, the headaches caused by the distributors and their antiquated returns system, or the USPS and their continually increasing postal costs.

2. On revenue sources, Clarke has more to say in the comments to his own post:

   Sales and advertising are not the only source of revenue magazines should be pursuing, but they are the dominant source of income for the most financially successful. Honestly, advertising is a distant second and can often be ignored by less-established magazines. There are many other sources of income that can add up, but even in total, they are overshadowed by impact that subscriptions/sales can have. Subscriptions may not be the proper course of action for someone who is running a charity, loss-leader (they are making their money elsewhere, probably sales of something else), or hobby, but it certainly doesn't hurt.

3. Clarke has advice for those wishing to start their own magazine:
1. Know when to quit: how much money are you willing to lose?
2. Start small and grow: where do you want to be in three years? Work slowly towards it.
4. Some commentators (for example, this excellent blog post by nerds of a feather) have argued that the market for short SFF is driven almost entirely by aspiring authors of short SFF.
5. This ties into earlier arguments by Jonathan McCalmont, among others, who believe that:

   Genre culture’s ability to produce short fiction now so comprehensively outstrips its ability to engage with short fiction that the odds of any given story receiving much attention are rapidly approaching zero. Dozens of anthologies can drop out of print without ever being reviewed and entire magazines can launch, acquire a following, lose vital editorial staff, and collapse without anyone ever bothering to comment on the nature of their output. Little wonder that Hugo voters now find it almost impossible to pick five short stories that stand out against the deafening hum of cultural production. Increasingly dominated by a suite of free online publications, the genre short fiction scene is becoming a literary niche in which readers are entirely optional. As with academic publishing, many of the institutions supporting genre short fiction are less interested in reaching an audience than they are in providing the rungs for a vast aspirational ladder:
   

   • Your first sale makes you a ‘proper’ writer.
   • Your 10,000th published word makes you a ‘professional’ writer.
   • Your first appearance in a Year’s Best anthology makes you a ‘notable’ writer.
   • Your first appearance on an award ballot makes you a ‘promising’ writer.

6. Nerds of a feather also argues that we need more short SFF magazines focused on publishing the kind of SFF that's sells well in longer formats. What kind is this? In an echo of the puppy complaints, it is " what might variously be called 'popular' or 'commercial' genre fiction" and not "self-consciously 'literary' stories where science fictional or fantastic elements function as literalized metaphors." McCalmont makes similar arguments about publications needing to find a consistent voice and contrasts the recently released Uncanny and Terraform magazines.
7. In a series of tweets, Clarkesworld have revealed more information about their business model:
1. Data on submissions by author. From October 2014 to September 2015:

   More interesting data. In the last year (Oct-Sept), 75% of all submissions were by authors who only sent us one story in that period.

   — clarkesworld (@clarkesworld) October 2, 2015

   14% sent two, 5% sent three, 2.5% sent four, 1.4% sent five. Most we received from one author was 25.

   — clarkesworld (@clarkesworld) October 2, 2015

2. The link between submitting authors and readership is weak:

   We saw an increase of over 200 submissions a month simply because we changed the guidelines. No change in readership +/- 3 months.

   — clarkesworld (@clarkesworld) October 2, 2015

3. The size of their market:

   Ok, we have over 35K online readers/3K subscribers/10K listeners. Even assuming overlap, it doesn't map to the number of authors submitting.

   — clarkesworld (@clarkesworld) October 2, 2015

Overall, I take two things away from this discussion. First, the perception that the bulk of the readership of SFF magazines are aspiring writers in the genre is not exactly true (see points 2 and 3 from Clarkesworld's twitter feed), but they are significant. To the extent that this 'aspirational ladder' exists, the academic model has a good chance of success. Second, the size of the market for short fiction is smaller than I had thought. This necessitates significant changes in the way an academic style SFF magazine would have to fund itself.

I'll return to this in tomorrow's post.

More Reaction to Recent Facts About the Fiction Market

I recently wrote about some evidence on the state of the market for fiction. I was predominantly concerned with how small the sales numbers were for some recent highly praised literary releases, and what this might mean for author incomes in SFF.

A number of other authors has weighed in on similar issues, motivated in addition by three recently released studies on author incomes and book sales. The first study summarizes the results of a survey of members conducted by the Authors Guild. According to Publishers Weekly, the survey revealed that "the majority of authors would be living below the Federal Poverty Level if they relied solely on income from their writing."

This is a scary conclusion. Is it correct? There is some evidence that the survey sample may not be representative of the wider population of authors

is based on responses from 1,674 Guild members, 1,406 of whom identified either as a full-time author, or a part-time one. The majority of respondents also lean older—89% are over the age of 50—and toward the traditionally published end (64%).

Specifically, the sample seems to exclude a lot of self-published authors, focusing on older, more established and traditionally published authors. But punting on its accuracy for now, the numbers are grim

Given that a single person earning less than $11,670 annually sits below the poverty line, 56% of respondents would qualify, if they relied solely on income from their writing. The survey also indicated that not only are many authors earning little, they are, since 2009, also earning less. Overall, the median writing-related income among respondents dropped from $10,500 in 2009 to $8,000 2014 in 2014, a decline of 24%. The decline came for both full-time and part-time authors with full-time authors reporting a 30% drop in income to $17,500 and part-time authors seeing a 38% decrease, to $4,500.

The conclusion many have drawn is the one pushed by Mary Rasenberger, executive director at the Guild: “Authors need to be cut in more equitably on the profits their publishers see, or we’ll stop seeing the quality of work the industry was built on.”

The second study was conducted by Association of American Publishers (AAP), whose 1200 members include the “Big Five”: Penguin Random House, HarperCollins, Simon & Schuster, Macmillan, and Hachette. The results were summarized by Alexandra Alter in the New York Times in an article whose title The Plot Twist: E-Book Sales Slip, and Print Is Far From Dead summarizes the message:

Now, there are signs that some e-book adopters are returning to print, or becoming hybrid readers, who juggle devices and paper. E-book sales fell by 10 percent in the first five months of this year, according to the Association of American Publishers, which collects data from nearly 1,200 publishers. Digital books accounted last year for around 20 percent of the market, roughly the same as they did a few years ago.

E-books’ declining popularity may signal that publishing, while not immune to technological upheaval, will weather the tidal wave of digital technology better than other forms of media, like music and television.

The Times article also cites the rebound in the number of independent bookstores as evidence that print demand is stabilizing.

It is important to note, however, that the AAP study also focuses on sales of traditional publishers and ignores independents. Some evidence on independents can be gleaned from the third study, the recently released Author Earning Report, which looks at eBook sales through Amazon, and which finds that

the “Big Five”: Penguin Random House, HarperCollins, Simon & Schuster, Macmillan, and Hachette — have seen their collective share of the US ebook market collapse:

• from 45% of all Kindle books sold down to 32%
• from 64% of Kindle publisher gross $ revenue down to 50%
• from 48% of all Kindle author net $ earnings down to 32%

Other authors have weighed in on this, and the data I discussed earlier this week, with some varying opinions.

Chuck Wendig weighed in with his thoughts in Peaks and Valleys: The Financial Realities of the Writers Life. Like me, he also noted that the sample may not be representative by pointing out that neither he, nor most authors he knows, are members of the Guild. As for whether excluding eBook sales matters, Wendig points to this:

Of course, what you also need to note is that publishers set the e-book prices, and have in the last several months bumped those prices up, up, up — and Amazon undercuts those prices by dropping the physical copy cost.

John Scalzi has also weighed in with eBook Sales and Author Incomes and All That Jazz. Scalzi addresses both issues raised above. On declining author incomes, he points to alternatives sources of incomes for writers that are probably not counted in the Guild survey:

But with respect to writer incomes dropping via the Author’s Guild survey, this is one place where I wish we had better (which is to say more comprehensive and in some way independently verifiable) reporting from indie authors, because I suspect there’s a lot of money not being reported out there, not only in terms of direct indie/self-publishing unit sales, but through other avenues like Kickstarters and Patreons, which I anecdotally see adding a non-trivial amount of income to writers’ bottom lines. I suspect these are avenues that a lot of writers who are used to particular income paths are either not aware of, or exploiting — or perhaps can’t exploit because their established audiences are used to paying in them in particular ways. I’d love to see the figures on who crowdfunds, in terms of age; my suspicion is that it skews younger.

Would this money I suspect is going missing substantially move the needle in terms of overall author incomes? I don’t know. I suspect it might, but it’s possible not as much as some people cheerleading indie/self-publishing would like to admit.

I’ve noted before that I think in general there are three kinds of authors: Dinosaurs, mammals and cockroaches, where the dinosaurs are authors tied to an existing publishing model and are threatened when it is diminished or goes away, mammals are the authors who rise to success with a new publishing model (but who then risk becoming dinosaurs at a later date), and cockroaches are the authors who survive regardless of era, because they adapt to how the market is, rather than how they want it to be. Right now, I think publishing might be top-heavy with dinosaurs, and we’re seeing that reflected in that Author’s Guild survey.

What we’re missing — or at least what I haven’t seen — is reliable data showing that the mammals — indie/self-publishing folks, in this case — are doing any better on average. If these writers are doing significantly better on average, then that would be huge. It’s worth knowing.

As far as eBooks, he is inclined to think the data reflect short run factors related to traditional publishers relationship with Amazon:

I don’t think declining eBook sales from publishers means they’re doomed, doomed, either. This is in part because (and this seems to be a point of some confusion) there’s more to publishing than maximizing eBook sales numbers in the short term. Publishers, for example, might decide that it’s in their long-term interest to stabilize and even grow the print market, and price both their eBooks and print books in a manner that advantages the latter over the former in the short term.

Why would they do that? For a number of reasons, including the fact that Amazon is still 65% of the eBook market in the US, and publishers, as business entities, are appropriately wary of a retailer which a) clearly has monopsonist ambitions and tendencies, b) has been happy to play hardball with publishers to get its way. Investing time in strengthening alternate retail paths makes sense in that case, especially if, as the article suggests, consumers are happy to receive the book in different formats for an advantageous price. If people fundamentally don’t care if they read something in print or electronic format, as long as they get a price they like, that leaves publishers a lot of room to maneuver.

He also points to other short term factors associated with the rise of the eBook market itself, such as this point made by a publisher:

.@scalzi A publisher's take: ebook sales inflated as people bought up backlist releases. Now down to more realistic levels overall.

— Beth Meacham (@bethmeacham) September 23, 2015

Cedar Sanderson, an independent author, gives us her two-cents worth in Publishing’s Bellwether. Sanderson pays particular attention to problems with data on book sales:

See, here’s the thing. Print books are, in theory, externally trackable through the Nielsen BookScan data, which is notoriously unreliable. In theory, publishers ought to know what their sales numbers are, but there are two problems with that data. First, they aren’t going to release proprietary and sensitive information to the public. Secondly, publishers themselves often rely on BookScan, and as Dorie Clark writing for the Harvard Business Review put it “Shockingly” slow and outmoded: “Publishing through a traditional house? Most of us get weekly Nielsen BookScan reports—courtesy of Amazon—and sales figures every six months from our publisher.” Studies compiling data from both BookScan and the Association of American Publishers have ‘holes’ in their data. “The AAP and Nielsen data, while providing useful information that can point to important trends, does have some holes. As mentioned, AAP data doesn’t cover the entire industry, while Nielsen BookScan data doesn’t cover e-books. And lack of reliable e-book data is the most important omission.”

Sanderson interpret the sales data that I talked about last time as evidence of cross-subsidization in book selling and, in particular, the subsidization of "literary" work by best-sellers:

So the books that pay off for the publisher obviously subsidize the books that are published solely on ‘literary merit’ and the scapegoat trots off blithely into the desert to take his chances with the fickle public. With the rise of Indie Publishing, the scapegoat is no longer a necessary thing. No one can force an independent to bear the burdens of his less fortunate fellow authors, who write for awards rather than to sell books and make money.

The flock is hearing that bell jingle, and they are changing their path to follow him toward the good green pastures. “It’s a world where authors with plenty of Big 5 sales experience choose to say, ‘You know what, I’m not playing this game any more.’ Where authors make a positive choice to walk away from the terms offered by good, regular publishers. This new era of publishing is one where authors have a meaningful choice.”

In her mind, the rise of independent publishing will result in the end of this cross-subsidization.

Amanda S. Green has views that are similar to Sanderson's.

I think there is a lot of truth in each of the above opinions. I suspect that the fiction market is in decent shape driven by the expansion of independent publishers, but also supported by some strength (if not strong growth) in the sales of traditional publishers. The experiments that traditional publishers have been running with the pricing of eBooks probably explain some of their recent sales results and especially the decline in their share of eBooks. I do not think this bodes well for their long-run financial health but suspect that they will eventually realize that they need to reform their eBook pricing model.

As for the end of cross-subsidization, I would point out that the inherent riskiness in publishing---it is hard to know in advance exactly which titles will sell---means that publishers will always release a portfolio of books knowing that some will do better than others. Ex post (after we know how sales turned out) some books will turn out to make money while others lose money. This looks like cross subsidization but is really just the outcome of holding a diversified portfolio of titles.

That does not mean that there is no ex ante cross subsidization: some well-known authors are no doubt surer bets than many new authors. But how much cross subsidization is going on here? I suspect the well known authors are commanding much bigger advances and more lavish supporting expenditures. But if there is cross-subsidization, I think Sanderson is correct that some of these bigger authors will eventually take the independent publishing route in order to collect some more of the profits that they generate. However, nothing in economic theory says that cross-subsidization is inevitably bad for consumers, and so in contrast to Sanderson's opinion, ending this system need not be a good thing for consumers as a whole.