Readercon report #1: Alternatives to the Pay Per Copy System of Author Compensation

This was one program item I really wanted to see, so I made sure to get to the con on time for it.
Official Description:

Alternatives to the Pay-Per-Copy System of Author Compensation.
Mary Robinette Kowal, Barbara Krasnoff, Eugene Mirabelli, Ken Schneyer (L), Charles Stross.
Paying writers or publishers for each copy of the work sold is a system that developed in response to the invention of the printing press. Now that physical copies are no longer necessary, and may no longer be the most convenient or popular means of consuming literature, what method of compensation or revenue generation should be attempted? A donation system? A system of teasers, where the reader pays to see the remainder of the work? A “membership” system, in which paid members get special access to drafts or extra materials? A “service” system? Or does the end of traditional print copyright mean the end of fairly‐compensated authors?

I had to laugh when I read the description of this panel, in particular the last bit about fairly-compensated author, because the vast majority of writers under our current system of publishing and royalties are NOT CLOSE to being compensated fairly, and writers earnings have been on a steady decline since the 1940s. So anyone who is clinging to our current modes of 5% royalties on mass market paperbacks is probably someone who is selling in the millions of books (or is the publisher who pays them).
A note on my perspective. I’ve been working as both a professional writer and as an employee of trade book publishers for twenty years. I’ve seen it from both sides. The company I own, Circlet Press, has been on a long, uphill struggle to sell enough books to pay both our authors and our printers (I haven’t paid myself for Circlet work in close to 15 years). In the past 3 years I have seen both my print freelance work dry up and ebook publishing become one of my only steady outlets for my own writing, while Circlet has gone from being a money-losing traditional print publisher to a growing cash-flow-positive ebook and “digital first” publisher. So the digital revolution has affected me in every aspect of my business.
What follows is pretty much a verbatim transcript of the discussion with some paraphrasing and some of the repetitious asides left out:

Panel opens with Ken Schneyer introducing himself. College professor and lawyer as well as writer.
Eugene Mirabelli — author of 8 novels.
Barbara Krasnoff — writer, editor
Mary Robinette Kowal — writer, Campbell winner, current SFWA VP
Charles Stross — writer, also has well known blog
Ken says he was at a conference recently where the adage was repeated “People are trained not to pay for content on the internet.” Points out that as a stockholder of Apple and Netflix it seems to him that’s not true.
The reason we pay for single copies of books is that we had printing presses that produced books like ingots of iron.
We have
-the donation model (“please give me money if you like my work”)
-the Kickstarter model (“if I raise $5k I will write this novel”)
-the “ransom” model (“I won’t publish my next chapter until I get donations”)
-the subscription or membership model (pay a fee for yearly access)
-the “perks” model (make a donation and receive a special bonus scene)
-the merchandising model (buy my T-shirts, mugs, action figures)
-the collectibles model (buy my special leatherbound gilt edition)
-the company or support grant model (corporate sponsorship/gov’t grant)
-the voting model (“we don’t pay the Hugo winner, but what if we did?”)
-the hits/pageviews model (traffic=ad revenue)
etc.
Mary — there’s a difference between paying for books and paying authors. The traditional model is you pay the PUBLISHER. The author is mostly getting a lump sum. The internet is much more actually of a pay per copy model. As an author my focus is on how do I get money, not how does the publisher get paid.
Barbara–in my real life I am an editor on Computer World, we pay our authors and ourselves via advertising. That is still a viable way to go about it. I am still paid in a lump sum. We’re not taking about a complete breakdown.
Eugene — Most ebooks that are sold are actually sold by someone other than the author. Amazon suddenly decided that all ebooks would have all the same price… but only under pressure from Macmillan did they change that.
Charlie — Much of the work a publisher does is essential and stuff the authors aren’t good at, but in the new model we can take out a lot of the middlemen. The 10% royalty we get is based on the fact that 70% of the book’s price goes to the middlemen in the supply chain. But a much more fundamental problem is that copyright is broken at a very basic level. International treaty law locks us into the Berne Convention. Two different problems here — the legal shenanigans of the movie and music industries suing their own customer base means copyright is held in contempt. We need a way to take copyright out of the public’s face and leave it where it belongs, out of the public eye between the publisher and author. It should be in the back office.
Other countries have library systems that remunerate authors. Public lending rights (PLR). You register the ISBNs of your books with a central body, and based on the number of loans of your books, the central PLR office pays you out a small yet significant payout. In the UK, it’s capped at about $10K per author, even JK Rowling. But there’s no incentive for readers to try to evade it. We could do something similar on the Internet, where you’d pay a small tax for using your broadband connection or mobile phone, and you’d be indemnified from legal repercussion of downloads you do. Once you’ve got that, there’s no incentive to hide what you are downloading, so now you could monitor it and provide for remuneration fairly to the copyright holders.
Mary — the music industry has something like that already, which is ASCAP. In theory.
Charlie — the problem is that ASCAP is a private company that keeps most of the money.
Mary — But the idea of someone else keeping track of the “tax” money and redistributing it is not new. ASCAP has been around for a long time. But it’s still a pay per copy system in that songs that are played more earn more from ASCAP. You can get away from the consumer paying per copy, but you haven’t gotten away from the author receiving payment on the per copy basis.
Ken — I was reading a Mike Shatzkin (of the Ideolog blog and chair of Digital Book World) article about paying per eyeballs. There are all these experiments going on. Does the experiment change the relationship between the author and the reader?
Charlie — we’ve got big problems in merchandising. Musicians make their money by going around playing gigs and merchandising, while the CDs act as advertising. Your average novelist didn’t sell their novel until they were in their 30s or 40s and they have the stage presence of a sack of potatoes. We’re not sexy. We’re not going to be able to emulate the musician model.
Barbara — some of us are more photogenic than others. Some can go online and collect a fangroup with social networking, but some aren’t going to be good at that.
Mary — it’s a learned skill. Musicians had to learn to play and perform. Mark Twain made most of his money on speaking tours. Jane Austen didn’t do that, but she probably could have earned more money from that. Instead of saying “authors aren’t good at this” it could be a learned skill. Neil Gaiman went to an acting coach before he did the tour for The Graveyard Book. It doesn’t mean that just because “authors aren’t good at that” we have to give up on trying.
Ken — But isn’t a lot of Scalzi’s popularity because people love his blog, not just his books?
Mary — Some guys, like Bruce Holland Rogers, had a track record and a following already before he started his subscription website. Cat Valente’s Girl Who Circumnavigated Fairyland was very successful but she was already known in commercial publishing with a very successful novel.
Ken — It’s chicken and egg, though.
Mary — It’s more of a ladder.
Eugene — People had this idea that the Internet would be a vast, level playing field, where the publishers large and small would all be equal, but that’s not so. The big publishes can pour a lot of money into making a presence on the web.
Mary — I disagree with that. I’m in theater. I don’t have a lot of money, but I have a presence on the web.
Eugene — but how do you get there if you don’t have a way to other than spending money?
Charlie — my blog gets 10K hits a day, but it took ten years to grow to that point.
Eugene — I had a very popular blog and I had to stop doing it because it was too much work.
Charlie — I don’t run adverts on my blog because the blog IS an advert. Its costs are pretty much break-even except that it really sells my books. I had Amazon affiliate links I took down because of a spat with Amazon, but they were making a few hundred a month for me. And people were buying more of my books and still are.
Barbara — a lot of authors just don’t understand how to use the blog to their advantage, though. They don’t know that there is a skill there to learn.
Mary — It does change the author-reader relationship, though, because it gives people more access to the authors. People have always wanted more time with authors. This freaks me out but that’s why people want autographs, for the “oooh! they touched this!” thing. Thomas Kincade didn’t have time to sign all his paintings (???) so he has specially formulated DNA ink that they silk screen his signature on to all his paintings.
Ken — there’s been an assumption that the reader wants to pay for the experience of reading a book or the artifact of the object of the book. But what if they would pay for access to the author?
Mary — Well, there is the thing that must be paid for and that’s the setup costs, the time to write it, to typeset it, etc… but you have to balance that with the scarcity/desirability of the object. If there is a limited number of something, sometimes people want it more. But in an ebook it’s unlimited supply.
Charlie — the ‘cost’ of a book is a full nine months of work hours including the author writing it, the editors, proofreading, copyediting, designers, etc etc.
Mary — When we buy a book we are paying for the thing. And the decision we make is “do I want this thing?”
Charlie — think about it. If about 60K titles are published in the USA per year, and it costs about $20K per book to produce, it would only take a half billion dollars to fund the entire enterprise of everything worth reading. Maybe Google should just BUY the whole industry.
Mary — I think they’re trying to do that already. (laughter) You really have to account for the artist’s time, though.
Charlie — not just the time spent but the opportunity cost of what they could have earned doing something else during that time.
Mary — Yes. No matter what format it comes in, whether we have the “brain dump” instead of book, you’re ALWAYS going to have that “setup” cost of the author or artists time.
Questions from the Audience:
1. PLR is calculated in some countries by surveys and even by book sales. How are you going to price on bandwidth?
Charlie–you have to do it based on what they are actually downloading.
Mary — which would be a lot of porn. (laughter)
Charlie — when I said a tax on bandwidth, I meant a tax on the bandwidth channel. Like the way the BBC works in the UK, you have to pay to have a television, which goes into a central pot that the BBC uses to make programs that allows them to show them without advertising.
2. Aren’t you always working on the next thing? You write a book send it off and you have to start working on the next thing or you can’t keep up a career But now you have to do audience building blogging etc… right?
Ken — But that’s always been true.
Eugene — all artists, composers, writers. etc have to spend at least 30% of their time on marketing. Working your networks takes time in all the arts. It does take time and effort and a lot of work to have a blog, and you aren’t writing your novel when you are writing a blog.
Charlie — we have this hangup on the “arts” being pure and noncommercial. It’s a business. It’s a job and you have to treat it as a business.
3. I’d like to mention a different scheme. I’m stymied and still in neutral. I registered a domian name “DimeStories.com” that we have many more stories than we have outlets for them. So someone like Charlie could put a 3000 word story on it where people could read a sample and then a meter showing the release fee for it, so when all the dimes add up to $500 or such… but I never did anything with it.
Mary — That’s the Kickstarter model.
Ken — It’s kind of like the old investment model, except that investors had a capital interest in the end product.
Mary — Well, it’s sort of like that. Give this amount, you get a copy of the book. Give this other amount you get the T-shirt. etc.
4. Songwriters association in Toronto conference — had this suggestion for a PLR type thing, but so many people wanted to tack on taxes that it would have meant $4000 a month would be your Internet bill.
5. Richard Stallman had the idea that you should be taxed on your storage medium instead of the ansible.
Charlie — I just bought two terabytes for less than what my first 10 meg hard drive cost. Storage has just gotten insanely cheap and jumps so quickly you couldn’t tax that.
Barbara — and of course so many people are storing so much “in the cloud” now.
6. How much market is there for personal touch, value add merchandising and such? I have books I like but I don’t really want their T-shirt. Only the A-list authors can really get a piece of that.
Mary — the B-list authors still exist. They plug along and then when it doesn’t sell, they have to change their name. You’re right they aren’t going to have the same opportunities. Some A-list authors will reach the point where they don’t need a publisher. They can just hire an editor and then self-publisher.
Ken — we’re at a very new stage like when the printing press was first invented. A dominant paradigm will eventually emerge. Not a single one, but a dominant one. But it’s going to take time.
And then we were out of time!