How the Ruling Class manages America's collapse

The inimitable Mark Steyn, in his inimitable style, connects a few dots from the news in order to sketch a telling portrait of America's decline. This time he provides both a macro- and micro-view of the workings, and staggering costs, of our Regulatory State -- designed and managed by Ruling Class grandees and bureaucratic caliphs. Sample:

Plucked at random from the ObamaCare bill:

"The Secretary shall develop oral healthcare components that shall include tooth-level surveillance."

"Tooth-level surveillance"? Has that phrase ever been used before in the entirety of human history? Say what you like about George III but the redcoats never attempted surveillance of Gen. Washington's dentures. Why not just call it "gum control"?

The hyper-regulatory state is unrepublican. It strikes at one of the most basic pillars of free society: equality before the law. When you replace "law" with "regulation," equality before it is one of the first casualties. In such a world, there is no law, only a hierarchy of privilege more suited to a sultan's court than a self-governing republic. If you don't want to be subject to "tooth-level surveillance," you better know who to call in Washington. Teamsters Local 522 did, and the United Federation of Teachers, and the Chicago Plastering Institute. And as a result they've all been "granted" ObamaCare "waivers." Rule, Obama! Obama, waive the rules! If only for his cronies. Americans are being transferred remorselessly from the rule of law to rule by an unaccountable bureaucracy of micro-regulatory preferences, subsidies, entitlements and incentives that determine which of the multiple categories of Unequal-Before-The-Law Second-Class (or Third-Class, or Fourth-Class) Citizenship you happen to fall into.

And yet Americans put up with it. According to the Small Business Administration, the cost to the economy of government regulation is about $1.75 trillion per annum. You and your fellow citizens pay for that – and it's about twice as much as you pay in income tax. Or, to put it another way, the regulatory state sucks up about a quarter-trillion dollars more than the entire GDP of India. As fast as India's growing its economy, we're growing our regulations faster. Oh, well, you shrug, it would be unreasonable to expect the bloated, somnolent hyperpower to match those wiry little fellows back at the call center in Bangalore. Okay. It's also about a quarter-trillion dollars more than the GDP of Canada. Every year we're dumping the equivalent of a G7 economy into ever more ludicrous and wasteful regulation.

As ever, read it all.

Amazon moves into big-time publishing

Robin Sullivan, who is attending BookExpo America (aka "BEA"), reports that the really big buzz so far is that Amazon is moving into publishing, big time.

In contrast to the legacy publishers, Amazon has demonstrated that it knows exactly what it's doing, which is how it has come to dominate, first, online book marketing, then the ereader market, and then the ebook self-publishing market. Now it is diving into print publishing, too -- first with "CreateSpace" for self-publishing authors, and now with a number of genre imprints for select titles.

As I've noted before, Amazon clearly has the goal of achieving complete "vertical integration" in the book business: from attracting authors and their manuscripts, to publishing (Kindle Direct Publishing, CreateSpace, and a host of print imprints), to creating great sales platforms (online and the Kindle).

Amazon has allowed authors to bypass the need to hire agents before getting published; they have allowed authors to avoid getting trapped in the endless "query go 'round" with traditional publishers, hawking their manuscripts for months or years and waiting desperately for acceptance; they have let authors bypass the need to have agents or lawyers parse the fine print of book contracts (by offering a single, simple deal to all); and they've allowed authors to bypass bookstores and still be able to generate big sales.

Amazon also has dramatically accelerated the process of book publishing (from edited manuscript to publication within weeks, instead of a year or more), of paying author royalties (monthly, with just a 60-day lag, instead of semi-annually or even annually), and of generating marketing attention (through online linking, reviewing, and recommendations). In short, they've made the process of book publishing completely painless and author-friendly.

Now, they're taking those same practices into the print business and are planning to seduce bestselling authors away from the legacy presses with better deals. To head up this operation, they've hired the former CEO of Time-Warner Publishing. How good will their contracts be for authors? Well, even Joe Konrath and Blake Crouch, two hugely successful self-publishers, have been offered a contract attractive enough that they've agreed to let Amazon publish a print version of their new collaborative novel, Stirred -- an inaugural title for Thomas & Mercer, Amazon's new mystery and thriller imprint. Amazon also has launched Montlake Romance, its imprint brand for the romance genre, and is about to unveil a sci-fi/fantasy imprint, too. These are added to Amazon's existing imprints: AmazonEncore (the company's flagship general imprint), AmazonCrossing (dedicated to literature in translation), Kindle Direct Publishing (for self-pubbed ebooks), and CreateSpace (for print-book self-publishing).

As a measure of how much Amazon is disrupting the book industry -- from publishers to agents to bookstores -- check out this piece in Publishers Weekly, commenting about the launch of Amazon's Montlake Romance imprint. You don't have to read between the lines to see how worried they are.

UPDATE The NYT reports on BookExpo America, saying, "There is a Wild West quality to the book business these days":

E-books have exploded, surpassing print sales for some new releases. The struggles for many brick-and-mortar bookstores have deepened as their customers began downloading books onto their e-readers from home rather than heading to stores.

Easily eliciting the most chatter was Amazon’s announcement on Sunday that it had hired one of the industry’s best-known veterans, the publisher turned agent Laurence J. Kirshbaum, to head a new imprint for Amazon that will publish general-interest titles. On Wednesday Amazon said it had acquired a book by the thriller writer Barry Eisler, who had announced this year, with much fanfare, that he was abandoning a six-figure contract with his publisher out of dissatisfaction with the traditional book industry.

But offering more probing and prescient observations, this guy calls the BEA shindig "industry dinosaurs on parade":

The New York Times claimed that “e-business is the buzz” at BEA. Not a chance. Read between the lines of the action on the floor, listen to the people in the trenches of publishing and selling books, and you see an industry that still hasn’t begun to comprehend the e-media revolution that is rapidly engulfing it. The industry is a mass of silent film stars telling each other that the talkies are no threat.

I attended BEA on Tuesday and found that, overall, interest in technology is superficial at best. In the eyes of the industry — that is, as one person put it, the old white men in their 60s and 70s who run the big publishers –- e-books and what they represent are a curiosity and maybe potential opportunity. But they aren’t vital to to the industry because its captains think they have all the time in the world to understand and exploit it.

Their focus is still on paper, on cutting deals and cutting costs, on keeping business, as much as possible, as it always has been. And, understandably, you can’t walk easily walk away from the bulk of your business. However, the publishers have fought progress rather than embraced it. Collectively, publishing decided to stick its big toe into the ocean just as a series of 8-foot waves are about to hit the shore. The result will be ugly.

That's how I see it, too.

UPDATE #2 -- Author Michael A. Stackpole explains why traditional publishers are going the way of the Dodo bird, and author & publisher Dean Wesley Smith adds his thoughts in a blog post and some appended comments.

Meanwhile, Publishers Lunch -- a quasi-official daily e-letter covering the industry from the vantage point of legacy publishers -- reports in its 5/26/11 issue the following:

Eisler's Next John Rain Novel to Amazon's Thomas & Mercer

At our Publishers Launch Conference Wednesday afternoon [at BookExpo America], [best-selling thriller author] Barry Eisler announced that, rather than self-publishing, his next John Rain novel THE DETACHMENT will be published by Amazon's new mystery/thriller imprint Thomas & Mercer in both digital and print formats. "What Amazon has offered is everything that was so great to me about self publishing on the one hand, but everything you want from traditional publishing," including marketing and distribution. "I get the best of both worlds," he added.

Amazon is also paying Eisler an advance, one "that was comparable to what St, Martin's was offering in the deal I ultimately decided didn't make sense." They [have] also given him "control over the packaging and consultation over the pricing of the book," with a royalty he called "much more favorable" than a traditional deal. (It's for world rights, and includes audio as well.)

The royalties offered for the print edition are also "comparable" to the St. Martin's deal, and Eisler suggested that "paper has become a subsidiary right" with "independent advertising value"....

When an audience member asked about the nature of Amazon's contract, Eisler (who is trained as an attorney) said "I've never seen a better publishing agreement than what Amazon presented me. It's readable, it's understandable, and it's transparent."

Eisler went on to explain that the ebook deal from Amazon was so sweet that he was willing to take more modest royalties on his print edition, so that the book would do well in bookstores and generate lots of attention for the ebook. This pricing strategy infuriated traditional booksellers at BEA:

In the following panel, however, ABA [American Booksellers Association] COO Len Vlahos took issue strongly with Eisler's contention that booksellers should be happy to sell low-priced print versions of books which Amazon publishes digitally. "Organizationally we could not disagree with Barry Eisler more." Vlahos objected to having "one entity [Amazon] basically use [print] books as a loss leader and devalue books.... I applaud his innovation, but I think it's grossly misguided. If you do the math on what he is talking about, Amazon is going to lose a lot of money on their contract with him, and you have to wonder about that."

To which I say: Ha! Amazon has demonstrated that it's anything but stupid. What really frosts the legacy press is the fact that Amazon is starting to woo away their bestselling authors with far better deals; that it will no doubt cut the cover prices of print books; and that it will still make money -- which they can't.

Major publishing executives confirm their utter incompetence

Executives representing traditional publishing companies, on an industry panel this week at BookExpo America, demonstrate their utter cluelessness about how to address the ebook revolution. Here's a sample, to give you a clear grasp of their self-admitted incompetence:

Though none of the panelists, publishers all, were ready to say they don’t care about consumers—Random House Digital President Amanda Close immediately responded that “we have always cared deeply about our consumers”—they admitted that they’re facing stiff challenges in getting readers to discover new e-books. “Publishers do not know how to market e-books yet,” said Evan Schnittman, Managing Director of Group Sales and Marketing at Bloomsbury. Or, rather, they know how to market the new titles that they’re simultaneously marketing in stores, but the older titles that publishers are converting into e-books present more of a challenge. “Let’s be honest with ourselves, we’ve never marketed backlist before,” Schnittman said.

"Backlist" refers to older titles, the ones that the publishers no longer push. The way the industry has worked to date, they throw out a book for a few weeks, wait for the sales (and unsold returns) from bookstores, then forget about it (and its author) and move on to the next book, hoping for a bestseller. For authors, this means that their books have little chance of being discovered by readers before their publishers abandon efforts to sell them, and they become "backlist titles" -- which one exec admits "we've never marketed."

The ebook revolution has allowed authors to (sometimes) reclaim from publishers the rights to these older titles, then self-publish them. Books that are years old are now discovering new readers as ebooks, and some are selling hugely. But traditional publishers are sitting on vast archives of these works, and haven't a clue what to do with them.

Here's another report about the same panel. Skim it, then try to answer two questions: (1) What the hell are these self-important idiots saying? and (2) What author in his right mind would entrust his work and career to this collection of lame-brains?