Liability vs. leverage

How writers lose when "piracy" gets harder

[Editor’s note: Be sure to catch Cory Doctorow’s opening keynote at next month’s TOC Author (R)evolution Day in NY.]

How much will your publisher pay you?

There’s a short, easy answer to this: as little as they can. Not because they’re heartless monsters, but because businesses pay as little as they can for their supplies, and charge as much as they can for their products*.

But that’s an abstract answer. The more concrete one — exactly how much will your publisher pay you? — hinges on how many other people have books that can fill the same niche for the publisher, and how many other publishers there are looking to fill that niche. In other words, the amount you get turns on supply and demand.

When you start out writing, you are in competition with all the other unpublished writers out there. There are a lot of you, with more publishable books than the big houses can absorb, and so, by and large, writers are paid very little for their early works. If you become a bestselling, big-name writer, you will command more money — not just because the publisher believes they will make more money from you, but because it is harder to replace an established writer than it is to replace an unknown. If JK Rowling writes for you, you can’t fire her and hire JK Rowling II to write books of equivalent profitability for you. It’s a poorly kept secret that very successful writers often draw “advances” that are so high that they’ll likely never earn out — a sneaky way of paying an effectively higher royalty rate without setting business-wide precedent.

Writers write because they can’t stop

So, it’s down to supply and demand, and the news isn’t good. Writers write, by and large, because they can’t stop. The writers who say that if they can’t get paid they’ll get a real job and stop writing are either kidding us, or kidding themselves. Most successful writers spend years working for pittances, with no reasonable expectation of breaking out. “I plan on writing for a living” is about as realistic as “I plan on buying winning lottery tickets for a living.” If enough people try it, some will succeed, but it’s not what you’d call economically rational.

This means that there’s an oversupply** of writing in the market. And to make things worse, there’s a chronic, and accelerating undersupply of publishers. If you’re a writer, you want there to be lots of publishers, in competition with one another. Competitors bid each other up, and whether you’re a lucky beginner or a big name, the likelihood that someone else will pay you more for your book goes up when there are more companies vying to buy it.

For writers, an industry with a single publisher that publishes 10,000 titles a year is much worse than an industry with 100 publishers, each publishing 100 titles. If a company is the only game in town, then everyone has to play by its rules. Monopolies suck***.

In a world where the number of “real” publishers is contracting, and where the remaining giants are stuck in the trap of wanting to innovate, but not at the expense of existing (but dwindling) business, you’d expect lots of innovative little “publishers” to spring up, each of them trying new things. That’s what we’ve got today: from indie one-writer productions who do it all themselves to venture-funded startups trying all kinds of novel things, there is a burgeoning world of technologically enabled upstarts with nothing to lose by abandoning the traditional economics of publishing.

Which gets us back to how much your publisher will pay you. In an industry dominated by three or four players all making their money the same way, the offer made to writers is likely to be the same everywhere you go****. When there are lots of players, making money in different ways, your product — your book — has lots of different parties bidding for different reasons, and when that happens, the seller***** commands a higher price in the deal.

All of this is straightforward Econ 101, the law of supply and demand, familiar to anyone who’s played Dope Wars or Lemonade Stand (or who’s run a business).

The complex world of piracy

Now, let’s talk about piracy. Piracy is complicated. We tend to assume that writers and publishers are on the same side — after all, when they lose, we lose, right?

That’s true, to the extent that piracy actually results in fewer sales******. But that’s not the whole story. That’s just an argument about whether the glass is half full or half empty, and this question only matters to writers if they get some of whatever’s in the glass. Publishing lobbyists love the copyright enforcement tools the entertainment industry has gotten for itself, and publishing associations are always in the pack when Big Content bays at the government’s doors for even more power to enforce copyright online.

If writers’ and publishers’ interests were the same, then proposals like last year’s SOPA and the ongoing international Trans-Pacific Partnership treaty would stand to benefit both of them equally. But these proposals (like all Internet-era copyright laws) will only have a piddling effect on online infringement. What they will do is make it harder for writers to get fairly paid by publishers.

That’s because, to a one, the indie publishers, upstarts, one-writer shops, VC-funded money-fountains, and everything in between, depend on public infrastructure provided by Internet services. They post their book trailers to YouTube. They use free mailing lists, Facebook, Pinterest and Twitter to promote their works. They take in money with Square, or Paypal, or Google Payments. They sell through Amazon Kindle self-publishing systems, or Lulu, or BookBaby. They put their wares in Google Play or the App Store. They rely on Goodreads and book-bloggers to get the word out, and they share their production files on Dropbox and YouSendIt, and get free, book-specific email addresses through Gmail. They buy search keywords on Bing and Google. You get the picture.

Copyright enforcement

Here’s the problem: these are exactly the services that the entertainment industry (and its members in the mainstream publishing industry) expect to bear the costs of copyright enforcement. In lawsuits like Viacom’s suit against YouTube, in legal proposals like SOPA, in treaties like the TPP, and in heavily lobbied-for laws all over the world, the entertainment industry has taken the position that if there should be no “safe harbors” online. If you process payments, you should be sure that none of that money is implicated in illegal file-sharing. If you host message-boards or social media, you must ensure that no infringing content or links are posted to your service. In other words, if you provide a service where all comers can post content, at low or no cost, you are responsible for reviewing tens — hundreds — of millions of individual pieces of content every day, and for removing any that infringe copyright.

Of course, this is nonsense. YouTube receives three days’ worth of video every minute. All the copyright experts ever born, or yet to live, could not stem that tide. The only way it could work is if YouTube, Blogger, Twitter, and a thousand related services, all played by the same rules as cable TV, where nothing goes out to the public unless it is explicitly approved, negotiated, and lawyered-over.

Scaling back the Internet

In other words, by asking governments to ascribe liability to these “intermediaries” (services that sit between creators and audiences), the entertainment industry is demanding that the Internet be scaled back to something that’ll fit in cable TV’s bathtub. Something where only people with a lot of capital and clout can speak and be heard. Something where big entertainment companies can use their money and power as a wall to stop anyone from challenging their pride of place.

When a big star goes into a record-company negotiations, she isn’t limited to saying, “Sorry, that deal’s not good enough, I’ll see what I can get across the street at your competitor.” Now she can say, “That’s not good enough, I can do better on my own, like Trent Reznor did.” Or, “That’s not good enough, I can hook up with a new kind of music business,” like Madonna did. But only if the intermediary liability is small enough to allow all these different kinds of companies to clamor for artists’ attention and products.

When a successful beginner like Amanda Hocking or EL James comes before a big publisher who wants to take her from indie to pro, the worst deal they can offer her has to be better than the best deal she could get for herself, or from one of the new startups.

Put it another way: There’s never been a time when tight controls over distribution were good for artists: fewer labels always means worse deals for musicians; fewer studios always means worse deals for filmmakers, actors, and other film professionals; fewer publishers always means worse deals for authors.

Piracy, obscurity, and income

Tim O’Reilly famously once said “The problem for most artists isn’t piracy, it’s obscurity.” That’s true, but it’s not the whole truth. These online services are, indeed, places where people infringe copyright a lot*******. It’s true that being widely pirated can also make you widely known, but you can’t eat fame.

In other words, 20,000,000 YouTube views and $3 will get you a seat on the MTA.

But here’s the thing about fame: although it’s hard to turn fame into money in the arts, it’s impossible to turn obscurity into money in the arts. It doesn’t matter how you plan on making your money — selling books or downloads, selling ads, getting sponsorship, getting crowdfunded, getting commissions, licensing to someone else who’s figured out how to make money — you won’t get the chance unless people have heard of your stuff.

When the entertainment titans of the last century struggle to lock down the Internet, they claim it’s to stop piracy and protect artists. But if they shut down the Internet and all the innovation and opportunity that comes with it, who will protect us from them?

* Which is why you got the best deal you could on the computer you used to write your book, and why you’d like your publisher to pay you as much as possible.

** In economic terms — that is, there are more readable, publishable books written than the world wants to pay to read. That doesn’t mean that in cultural terms these books are unimportant.

*** So do duopolies, triopolies, and other constricted industries. When the big six publishers become the big five, then the big four, etc, it’s bad news for everyone who sells to them — writers especially.

**** Yes, sometimes big books are auctioned off between multiple parties, or a big name is poached from one house to another with a big offer, but this is a rare outlier, and happens less and less as the number of bidders/competitors dwindles.

***** You.

****** “Fewer sales,” as opposed to “lost sales.” If you want to eat, you need to focus on how to get as much money as possible, not how to get paid by everyone who enjoys your books. If piracy creates more new sales (through publicity) than it costs (through substitution), then you’re ahead of the game.

******* They also do everything else there: work, learn, love, create, politic, bicker, worship — everything we do today involves the Internet, everything we do tomorrow will require it.

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