Remember Barry Eisler? He’s the bestselling thriller author who in March turned down a $500,000 deal with St. Martin’s Press in favor of self-publishing.

Last week, at Book Expo America, Eisler announced he’d just signed a deal for Amazon to publish his next book. The traditional publishing crowd sniffed their disapproval over his perceived turncoat behavior.

But as Eisler points out, the point wasn’t to self-publish. The point was to get the terms he wanted. Along came Amazon offering those terms, so he took them. In Eisler’s words:

“…it’s the terms that are important to me, not the means by which I achieve them. If these terms are a destination, self-publishing is undeniably an excellent vehicle for getting there. But it isn’t the only vehicle. And if another vehicle comes along that offers all these terms, plus a substantial advance, plus a retail wing that can reach millions of customers in my demographic… then, as a non-ideological businessman, I’m going to change rides.”

In a recent conversation with fellow author Joe Konrath, Eisler revealed some of the details that drew him to sign with Amazon:

• An advance “comparable” to that offered by St. Martin’s
• “Much better” digital royalties (one source says 70%)
• “Comparable” print royalties
• A three-month turnaround from submission to release
• Full control over the title and cover art
• No DRM on the e-book
• E-book released first, followed by paper

This deal shows that Amazon, as a publisher, is poised to cause major industry disruption, coming to market much faster and sharing royalties more equitably than traditional publishers, while bringing huge distribution and marketing muscle. Great news for authors, not so great for the old guard publishers.

The full conversation between Eisler & Konrath is a tremendously long but fascinating perspective on the current publishing industry and the changes that are occurring.

All of you know Amazon as a seller of books. What you may not have heard outside of book circles is that Amazon is moving into publisher territory. Over the past two years, it has launched several imprints. Three announcements have come in quick succession this month, showing that Amazon’s publishing program is picking up steam. All signs indicate the company is just getting started.

Amazon’s publishing debut came in May 2009, when it launched AmazonEncore and announced its first title, a previously self-published fantasy novel by 16-year-old Cayla Kluver. According to Jeff Belle, Vice President of Books for Amazon, the purpose of AmazonEncore was “to connect readers with great books that were overlooked the first time they were released.”

In May 2010, the company added AmazonCrossing, an imprint for translated works. Just as with AmazonEncore, Amazon announced its intention to monitor sales data to select the books it wanted to publish. Says Belle, “Our international customers have made us aware of exciting established and emerging voices from other cultures and countries that have not been translated for English-language readers.”

This past month, Amazon unveiled two genre imprints: Montlake for romance titles and Thomas & Mercer for mysteries and thrillers.

Now comes news that Amazon has hired Larry Kirshbaum, former CEO of the Time-Warner Book Group, to “assemble an editorial team that will develop and manage new Amazon imprints ‘with a focus on acquiring the highest quality books in literary and commercial fiction, YA, business and general non-fiction.’”

The careers page for Amazon Publishing currently shows 10 open positions ranging from Senior Acquisitions Editor to Publicity Manager. Very clearly, Amazon intends to continue developing imprints beyond the ones already launched, and it’s heartening to see business and non-fiction being specifically mentioned since so much of the current focus is on fiction.

What does all this mean for you as a non-fiction author?

To date, Amazon has not accepted manuscript submissions, instead using the power of its retail algorithms to cherry-pick existing books that are popular with readers but have so far not received widespread recognition or distribution. I can’t imagine its approach will change anytime soon. To open its doors to general submissions would flood the company with unimaginable numbers of unvetted manuscripts. Amazon’s retail data is its advantage over traditional publishers, who must assess manuscripts on gut instinct and best guess forecasts.

That means you won’t be able to actively pitch your book for Amazon to pick up. It does mean, however, that if you’re promoting your self-published book effectively, getting lots of positive reader feedback and achieving decent sales numbers, the Amazon eye might fall on you.

So far, there’s been very little available information about the terms Amazon offers as a publisher, so it’s unclear how an Amazon contract might stack up against a deal from a traditional publisher. More favorable? About the same? (If anyone knows details, please leave a comment.) Amazon’s press releases promise authors “marketing support and distribution into multiple channels and formats, such as the Amazon Books Store, Amazon Kindle Store, Audible.com, and national and independent bookstores via third-party wholesalers.”

Definitely a development to watch.

The blogosphere has been buzzing in the last month with news of two high-profile authors and their publishing choices.

On the one hand:
Barry Eisler, a bestselling thriller author, just turned down a $500,000 deal with his traditional publisher, opting to self-publish his next book instead.

On the other hand:
Amanda Hocking, an author who’s already made millions selling her self-published novels, has chosen to sign with a traditional publisher for a $2-million contract.

What gives? One successful author turns down a lucrative deal with an established house in order to self-publish, while a successful self-published author chooses to sign up with an established house. These seem like opposite strategies.

But both Eisler and Hocking have their well-considered reasons.

Hocking says it’s not about the money for her.

“Let’s be honest – if I self-published the Watersong series on my own, I could probably make $2 million within a year or two. Five years tops. I am fully aware that I stand a chance of losing money on this deal compared to what I could make self-publishing.”

Instead, Hocking’s looking for distribution muscle and mainstream exposure.

“Having large distribution is part of the reason why I wanted a deal, and part of that is having books in stores… I am getting an increasing number of emails from people who go into bookstores to buy my books for themselves or friends or family members, and not only does Barnes & Noble not carry my book, they can’t even order it for them. People are requesting my books, and they can’t get them.”

“I want to be a household name. I want to be the impulse buy that people make when they’re waiting in an airport because they know my name.”

Eisler feels ‘legacy publishers’ are out to lunch when it comes to the digital revolution. He wants the freedom to publish faster, charge what he considers optimum prices for e-books ($.99 to $4.99) and keep more of the revenue.

“I just don’t want to be part of an industry that doesn’t make sense, that’s fighting change rather than taking advantage of it. I want to make money by giving readers what they want, not by seeking ways to deny it to them.”

Hocking wants print books in bookstores. Eisler wants to focus on e-books.

Eisler says authors are leaving money on the table. Hocking says she doesn’t care about the money.

So who’s right?

They both are. Publishing with a traditional house has its benefits and its drawbacks. Same with self-publishing. One isn’t awful while the other is virtuous. It comes down to knowing what you want from your book and your writing career, having a realistic understanding of what each publishing route can offer, and choosing the one best suited to your goals.

Need help deciding? Try the 10-question quiz in our free Author’s Guide to Publishing Options. We profile both royalty publishing and self-publishing, along with the potentially tricky subsidy publishing model, laying out the pros and cons of each.

The business of print publishing — producing physical books and shipping them here and there — has taken two more serious blows in the last month.

H.B. Fenn, Canada’s largest book distributor, filed for bankruptcy on Feb 3, leaving major publishers like Macmillan in the lurch.

Borders, the second largest book chain in the US, filed for bankruptcy on Feb 16. Though the company hopes to restructure and emerge with a pulse, it has set about closing more than 200 of its current locations.

These announcements are simply two in a long string from the past year, including the dissolution of Canadian publisher Key Porter and the closure of indie bookstore after indie bookstore.

The economics of moving print books across the country and around the world are becoming increasingly untenable. It’s relatively expensive to create, ship and store physical books, and with already razor-thin margins, traditional publishers, distributors, and booksellers are feeling the pinch.

But what does it all mean for you as a self-published author?

Physical space for selling books is decreasing
Sobering fact: Your book has less than a 1% chance of being stocked in an average bookstore. With shelf space dwindling, competition for what’s left is fierce. You think it’s hard getting your self-published book into a bookstore now? Expect it to get even harder. The thing is, while mainstream bookstore distribution is great if you can get it, for a lot of business authors, it’s not the only game in town.

Exploit other channels
You’ve got all kinds of other sales channels available to you, such as back-of-room sales at speaking engagements, bulk sales to special interest groups, direct sales to your client base, and online sales through Amazon. Use them.

Lock in your digital strategy
Yes, a print book still confers the most cachet, which is important for the freebies you give as gifts to clients and contacts. But don’t neglect the e-book market — it’s booming and will only continue to grow. At the very least, make sure your print book is available on all the major e-reading platforms. It’s not hard to do.

And start to think about ways you can establish your e-book as the premium gift. How about giving top prospects an e-book reader skinned with your book cover and a link to a free download of your book?

The print book market will be around for quite a while yet, but it will get increasingly harder for self-published authors to get distribution through mainstream channels. Pursue that distribution if you like, but don’t let it be your only or even primary strategy. Multiple channels for reaching readers are your best insurance.

A key economic concept is that of spirals — trends that self-perpetuate. A spiral can happen, for example, when a product moves from early adoption amongst a select few to general adoption amongst a wider audience. At first a few people purchase a cell phone, then more and more; finally a great wave of people purchase one and the product becomes ubiquitous (except for the few Luddite holdouts).

The same thing happens with pricing. When only a few cell phones are sold, each one is very expensive. The higher price limits the number of people who will buy one. But once there are more sales, the production process can enter what is called an economy of scale. There are cost savings from producing many cell phones at once. These cost savings are passed on to buyers in the form of cheaper prices (plus some retained profits for the manufacturers). A lovely cycle is created where the more a company produces, the more cheaply it can sell the product and still make great margins – as long as market share keeps growing. This is an upward spiral.

However, if the market starts to slow, the great momentum of the spiral turns down. Fewer cell phones being sold (like Nokia is experiencing right now) means production costs go up, which leads to prices needing to go up. Higher prices make it less likely for people to purchase the product. At some point, the downward spiral ends in a predictably bad place for the company that now makes a product that’s too expensive for the market.

With the incredible surge in the e-book market (greater than any predictions), we’re starting to see a corresponding decline in p-book sales. Gradually, there will be fewer copies of each paper book produced. At first this won’t create a big difference in the economies of scale and therefore price of a book. But over time, as print runs become smaller, the price of p-books will have to go up.

Over time, higher book prices will lead to fewer copies sold, which will lead to more expensive production costs, which will necessitate higher prices, which will lead to fewer copies sold, and so on. The downward spiral of p-book publishing will accelerate. And the 3-format book future will come about – fast.

P.S. Thanks to Mike Shatzkin and Eoin Purcell for reminding me of my economics background.

Sometimes being a sci-fi geek has its benefits. It’s often said that not everything written about in science fiction exists, but everything that’s discovered in science existed first in science fiction. Now, sci-fi is leading the revolution in book packaging that we discussed in a previous blog post.

A new book by Daniel Wallace, The Jedi Path: A Manual for Students of the Force, won’t be your usual reference tome. With a hefty US$99 price tag, the promise is a full-color interior, “missing” pages, removable trinkets, flashing lights, sound, and movable parts. Oh, and there’s even an actual printed book to read somewhere in the package. Clearly not your usual hard cover edition.

With all the new formats — e-books, vooks (video books), audio books, enhanced books, collector editions with special features — it can seem like a confusing time. Or is it just the most exciting opportunity we’ve ever seen for creating new ways of communicating with your audience?

UPDATE – July 13, 2010 - Well, it’s happened already. Sony just broke the $100 e-reader barrier. Looks like there will be e-readers for everyone this holiday season! – R.S.

May 1st was a big day for the e-reader market. That’s when the Kobo, at $149, became the cheapest and most stripped down e-reader you could buy. Soon after, Borders started selling a competitive but cheaper reader, the Aluratek Libre for only $119.99. Now Barnes & Noble has a version of the Nook at $149, and Amazon Kindle promptly slashed its price to $189. Sony, not to be left out of the fun, has also dropped their prices. What’s really going on here? Is it simply competitive pricing, or something more?

Let’s look to the printer and toner pricing structure for a possible answer. Each day, printers are sold with more features, and at lower prices. The catch is the toner: It continues to be ridiculously expensive. I break out in hives when I have to buy toner cartridges for my colour printer. I even purchased a new printer once because it was cheaper than buying the toner! Don’t worry, I found the old one a new home at a recycling charity. Seems e-books are the new toner, and e-readers the new printers.

The first e-readers were expensive ($359 for the first Kindle), and e-books were cheap (typically about $9.99 per book). The publishers didn’t like it, but they had to live within a model where the retailer set the price. When Apple’s iPad launched this spring they forced a change that swept the industry, and now retailers have less discount wiggle room. Not surprisingly, e-books prices have shot up to the $12 range today.

The only lever left to support the rapid rise of digital book sales (and save the publishing industry) is for e-reader prices to continue to drop. Cheaper means much more accessible, and the number of people who own an e-reader will explode. Back to my printer and toner analogy, almost anyone can buy a colour printer these days, but the toner is a whole other story. We need to keep an eye on e-book pricing, and take bets on which e-readers will survive the price wars (the iRex has already filed for bankruptcy protection in the USA), and which ones will go down with last year’s colour printer models.

As Bette Davis/Margo Channing said in the movie, All About Eve, “Fasten your seatbelts. It’s going to be a bumpy night!”

The e-book self-publishing world is about to get a little more crowded. With the launch of Pubit! this summer, Barnes & Noble (B&N) has inserted itself directly into the publishing process, joining other retailers like Amazon and Sony. Pubit! is a DIY option for independent publishers and authors to deliver their works digitally through B&N’s site and e-book store.

While this may on the surface seem like great news for the indie publishing crowd, there are definite issues. For example, B&N has been noncommittal up to this point about royalty information, which makes it difficult to know if Pubit! can offer a more attractive deal or not. Another challenge authors and publishers face with an ever growing list of retailers offering self-publishing is how to choose. Which retailer might offer the best audience and reach? Does it make sense to manually publish with every major retailer, one by one, to make sure the playing field is covered despite the time and effort?

In order to make this really work, and work well, we’re going to have to see some consolidation happen. A company that is already running ahead with this is Smashwords. Publish with them and they do the distribution for you to their own site, as well as Kobo, Apple, Amazon, Sony, and even B&N. One site, one process, and one revenue payment makes it simple and transparent. What a concept! Big book retailers like B&N should consider taking a page out of Smashwords success manual.

Amazon has recently announced two changes to its Kindle publishing program that will be of interest to self-published authors.

1] International authors now have access to Kindle publishing.

Up until last week, only US publishers were able to create and sell Kindle versions of their e-books through the Amazon site. Now the Kindle publishing option is available to publishers worldwide. Payment to all international publishers is made by cheque, direct deposit still being available only to those in the United States.

2] Amazon will soon offer publishers royalties of 70% on e-books.

Yesterday Amazon announced a new program that would allow publishers and authors to earn 70% of their e-book’s list price, net of Amazon’s delivery costs. Currently, publishers earn 35% of list on Kindle books. At first blush, the new program seems generous — which it is — but it’s also Amazon’s way of enticing publishers to play by its rules about pricing and availability. To qualify for the new royalty rate, the e-book must meet certain criteria:

• Have a list price between $2.99 and $9.99
• Be priced 20% below the lowest physical book price
• Be made available for sale “in all geographies for which the author or publisher has rights”
• Participate in a bundle of features, including text-to-speech
• “Be offered at or below price parity with competition”

Both the old and new royalty programs will exist side-by-side and publishers will be able to choose which one they wish to participate in. The new program comes into effect on June 30, 2010. Note: the 70% royalty option will initially be available to US publishers only.

Bowker, the agency that administer ISBNs in the United States, has cut its prices on ISBNs blocks. A block of 10 ISBNs is now $250 instead of $400.

The Bowker website states that the price cut was made in response to publishers requiring so many more ISBNs because of multiple formats and editions. Many books are now published not only in hard cover and soft cover, but in a wide variety of e-book formats as well.

Bowker recommends a different identifier for each e-book format, so that your Kindle edition, for example, would have a different ISBN than the Sony Reader edition. There has been heated debate about this practice in the industry. Many small and independent publishers say they simply can’t afford to use so many ISBNs for each title, and that a single ISBN for all e-book formats is appropriate.

Others remain firm in their opinion that different numbers for each format is the best way to help sales channels and consumers know what they’re getting. Industry consultant Laura Dawson, who runs a weekly Twitter chat about ISBNs, states it succinctly:

ISBNs are for saying “this one is not that one”.

So which way should a self-published author go? We recommend giving each format a different number. A block of 10 ISBNs, which now costs just $250, should be enough to handle all the different versions of a single first edition title. It’s a worthwhile investment to keep confusion to a minimum.