The media would like us to believe that the Euro-zone is in the hands of Germany. After the Euro Summit of 8 and 9 December it certainly looked like it.
Frau Merkel succeeded in imposing her rules of the game to the whole of Europe: strict fiscal discipline and austerity. Growth that had been a French and Italian concern was firmly put on the back burner. Even firewalls to defend Euro-government in distress (including 200 billions to the IMF) have taken second place: none are at a level sufficient to defend a big economy like Italy's and they won't become operational for many more months, perhaps (in the case of the Stability Mechanism) next July at the earliest...
Still, there was a moment of enthusiasm. The media made a show of the 26 countries pulling together around Merkel's cure for the Euro while the 27th member of the Union - the UK - opted out with a flourish. Cameron claimed he vetoed Merkel's proposed amendments to the European Treaties to "protect the interests of the City" (which accounts for 10% of UK's national product).
The British bulldog is out of the European ring. The British media (see the UK Guardian article below) trumpeted that Britain can provide an "escape route" from the Euro that is collapsing, and thus "build a Europe outside the Euro". Conservatives crowed welcoming Cameron as their new hero. But City bankers and hedge fund managers begged to differ, as they now (rightly) feared that the City which needs Europe to be an active international financial center, runs the risk of becoming progressively marginalized.
With Cameron's precipitous and ill advised move, the UK has isolated itself from the European process of anchoring its currency and building "more Europe", as Merkel grandly calls it.
So tick off the UK. Regardless of what the British say in their press, they won't matter in the Euro crisis for some time to come.
So who matters?
This is first and foremost a financial crisis. To understand who is really pulling the strings in this show you have to look at the big financial players. And that's not the European political class, and least of all Merkel with her time-consuming cure aimed at the wrong objective: i.e. balancing budgets rather than stimulating growth. Only with growth is there a change to increase tax revenues and eventually achieve balanced budgets in future.
The market is fast and demands instant, credible solutions. Frau Merkel is slow and offers only long-run political solutions. If she has it her way, there will be plenty of time for the Euro to crash before European treaties requiring close fiscal discipline and coordination are amended and adopted.
Because there are forces at work right now to make the Euro crash: all those speculators who have placed their bets against the Euro. And it already hurts: there's a huge credit crunch going on at this time and European banks are scrambling to shore up their reserves. The last thing they're thinking of is to lend to their clients. Clearly a recipe for disaster and depression.
In these attacks against the Euro, American credit ratings agencies are playing a key role. They always issue warnings and downgrades at the most delicate junctures, precisely when a moment of silence would be welcome. Last week was no exception: before the Euro summit, they all announced that they were putting the Euro-zone members who still enjoyed an AAA rating "under surveillance". That means of course Germany and France. And small wonder: the German economic model, depending as it does on exports, is about to come crashing down as the recession deepens and demand for its exports collapses.
Because collapse it must. The handwriting is on the wall. The credit crunch that is paralyzing European banks is already felt in Asia, where loans and support to business acquisitions is slowed down or even frozen. If Germany cannot sell to Southern Europe on which it has imposed austerity and cannot sell to Asia because European banks have seized up, who are the Germans going to sell to? The Russians? They're facing an economic slowdown. The Americans? Come on, the Americans have still to come out of their own slow-moving recession and solve their unemployment problem...
Since the Euro crisis is exquisitely financial, it requires financial measures to solve. Not amendment to treaties. Sure, in the long run, Frau Merkel is right: close coordination of fiscal policies and measures are required for the stability of the common currency.
But is this the "fiscal compact" Mr. Draghi expected of Euro-zone governments? Surely he cannot hope for more from the European political class. Last week they gave all they had. And each country showed how committed it was to the European ideal: both Italy and Greece have gone to great pains to adopt belt-tightening measures. On the other side, in addition to the UK, Sweden and Hungary have also shown how little they cared about Europe. They might yet change their mind, but for the time being, they have opted out, saying they need to consult with their parliaments.
Yet the European Central Bank so far hasn't moved...much. Last week (what a week!) it has indicated to Euro-zone banks that they could consider the ECB as their lender of last resort. That's a step in the right direction. But bond buying of Euro governments in distress is still off the books: so far, the Bank has bought some 200 billions worth of bonds, one tenth of what the American Federal Reserve has done over the same period of time. In other words, the European Central Bank is still toeing the German Bundesbank line of refusing any "quantitative easing". That's the fashionable term for resorting to the money printing press and it is something the Germans won't hear about, in the misplaced fear that this could cause some sort of hyper-inflation. Germans are obsessing over the hyperinflation they suffered in the 1920s and that brought Hitler into power.
But times have changed! If anything, we're headed towards deflation - and even the Fed's generous quantitative easing has not had any noticeable inflationary impact...
Add to the mix the role of the American credit rating agencies, and you have a recipe for disaster.
The solution? Two major steps, one easy, the other not.
1. The European Central Bank should act as a central bank normally does, and engage in quantitative easing as appropriate and whenever needed; that's the easy step: once the ECB pulls out its bazooka, speculators will scramble for their lives...
2. American credit agencies should be taken off the books of whatever Euro-zone government structures where their rating is still used as a reference for investment (usually pension funds). This is something that is already proposed by America's banking regulators: that all references to credit rating agencies should be removed from regulations and be replaced with a formula based on a company's cash flow, leverage and volatility of its stock price to assess the riskiness of corporate debt. American banks have until February 2012 to comment on the new proposal before final rules are issued by the competent Federal authorities (the Federal Reserve, the FDIC and OCC).
Likewise, Europe should move forward on this chapter and a new Euro-zone credit agency should be created to substitute for the American ratings agencies, since they are even discredited in their own country. Of course this is not an easy step - the Chinese have already done so and created their own agency but it certainly hasn't yet attained the required credibility to be effective beyond China -. The process is undoubtedly delicate and time-consuming and complex (like Merkel's cure for the Euro). Nevertheless, it should be started.
It makes no sense that the Euro-zone economic well-being should be in the hands of American credit agencies (whose customers are the speculators attacking the Euro). And it makes no sense that the Euro-zone has a common currency that no one, and least of all the European Central Bank, is willing to protect...
Image by gurana via FlickrWhat is the Right Price for an E-book?
Some people swear by the 99 cents price: they see it as the sweet spot for impulse buying.
Others claim that allowing your book to go free for a while is like a magical wand: it expands your market reach and brings in new readers who are then willing to pay for your other books.
Yet others - usually more conservative writers who believe in the intrinsic value of literature - think this sort of pricing policy is debasing. They can accept the idea that an indie will set prices below those practiced by traditional publishers in order to gain some traction in the market, but not much below - say around $10, or more precisely $9.99, the price where Amazon still pays a 70% royalty - because otherwise it would be like a public admission that one's books are not as good as traditionally published ones, that somehow indie books are second class!
Which price is right for a newbie selling a first book?
In the spring of this year, the debate raged, fueled by J.A.Konrath's regular sales reports on his blog, the Newbie's Guide to Publishing. Amanda Hocking, the indie author who shot to e-publishing stardom in just one year, making eventually a fortune with a fabulous advance from a traditional publisher, openly admitted that the 99 cents helped her launch her YA paranormal Trylle Trilogy. She used it systematically on the first book of her trilogy as a "loss leader", raising the price on subsequent books in the series (and so do I, by the way). Another indie e-star, John Locke - the man who famously sold one million copies in five months - still swears by the 99 cents price, claiming that it played a major part in his success. Let's note in passing that he also admits to using another marketing tool to great effect, what he has called "loyalty transfer" (i.e. finding like-minded readers who recognize the author "as one of theirs" and thus are eager and happy to buy his books) .
Konrath however presented a more balanced point of view. Openly sharing with everyone his monthly sales calling it a "price experiment", he eventually concluded that the magic sweet spot lay somewhere between $2.99 and possibly $4.99 but not higher. If he's right, John Locke by keeping his books at the 99 cents price level may well have foregone a considerable amount of revenue from his sales.
Now Konrath has sparked yet again another hot debate in the blogosphere publishing a post from one of his friends, author Elle Lothlorien who points to the marketing concept of "imputed value" as the correct way to set e-book prices. Using her own experience with pricing her novel The Frog Prince, she argues convincingly that the 99 cents is too low and books sell better at a higher price that adds "value", particularly in the eyes of readers who equate 99 cents books with trash. She claims that is what happened to her and that she started making more money and selling more books as soon as she raised the price of her novel.
To explain this phenomenon, she refers to Starbuck's coffee pricing policy: by pricing their product at the higher end, Starbucks has imbued its coffee with an "imputed value" that customers are induced to look for and even if they don't find it, they will be reluctant to admit dissatisfaction since they have paid a high price for the coffee. Nobody likes to admit to making a mistake!
Is a book like a cup of coffee?
Probably not, even though there is a lot of truth in the simile. By raising prices - say around $4 to $6 - indie authors send out a strong signal, saying "look my books are good, they have value, and even though I'm an indie and have to price at a lower level than trad publications to sell, I price them at a level far from trash." Setting your book in a price environment that suggests it is a valuable product will surely help sales (and your income!)
But can this be proved in some way? I have friends who are convinced that lowering prices and making their books free for a short period are valid and effective marketing tools. They invariably tell you "I've seen a bump in sales, more people are buying my books, that is proof enough for me!"
They may well have seen a "bump" in sales but I'm afraid this doesn't prove much.
That bump in sales would be convincing evidence only if every other marketing tool in use were suspended: no more blog posts, no advertising, no participation in readers' fora, no interviews, no blog tours, no reviews, no articles, no comments on other blogs on publishing and books, no use of Twitter, Facebook, Google+, LinkedIn or any other social media - in short, if you put a full stop to your Internet presence and only play around with your book prices. Then you might see a result that you could attribute with a fair degree a certainty to your price changes.
Otherwise, no. No way. There are too many other factors at play to be sure that the price had the effect you are claiming for it.
In my opinion, use your common sense. Vary your price strategies: use the 99 cents as a "loss leader" but don't do it all the time and for every book - better restrict it to the first one in a series and for a limited period (in fact I shall soon raise the 99 cents price on Forget the Past, the first volume in my trilogy to align it with the other two). Ditto for a free price campaign: it should be kept as short as possible in order not to send out the wrong signal. Experiment with higher prices like Lothlorien and see what works for you: find the price you feel comfortable with, that is not degrading to you and that makes you the "right" amount of money...
Authors are rushing to self-publish as the digital revolution has removed the stigma attached to self-publishing. These days the once flourishing vanity presses are notably by-passed. The routes to self-publishing are several: from direct access to Amazon’s KDP and other digital platforms to using the services of Smashwords, BookBaby or others to upload ebooks. The blogosphere is abuzz with news of once traditionally published authors like J.A.Konrath who have struck it rich and the fabulous successes of new authors like Amanda Hocking and John Locke who’ve sold millions of copies.
I recently met with author Kelly McClymer, a traditionally published author who has decided to try self-publishing. Since 2010 she has been uploading her books on Amazon’s Kindle store and other major digital platforms and you can find her Amazon author page here. So far she has uploaded six books, four short stories, and her next novel The Impetuous Bride is due December 24th.
Kelly maintains a very attractive blog, Kelly McClymer’s blog, check it here
Kelly is a fascinating author for yet another reason: she specializes in genre-hopping and has published science fiction/fantasy short stories, YA fantasy, historical romance, and chicklit. Her first book was published by Kensington in 2000. In short, she has accumulated over ten years of solid professional publishing experience. And as the readers of this blog already know, I have also started self-publishing after traditionally publishing books in Italian here in Italy, the latest being Un Amore Dimenticato in 2007, a precursor of my Fear of the Past Trilogy. A coming of age story, it is also cross genre and contains elements of romance, historical fiction, paranormal and techno-thriller. You can find my Amazon author page here.
Claude: Why did you decide to self-publish? I did it after the rejections I got convinced me my book, being cross-genre, would prove a hard sell! I had achieved a fair degree of success in Italy with an earlier version traditionally published by a small press and I thought I’d try my luck with self-publishing. But you, as an already established author in the US, were you dissatisfied in some way? Did you self-publish to move forward? To expand your readership?
Kelly: Two words: Joe Konrath. I read his A Newbie’s Guide to Publishing blog and realized I had out-of-print books that (I felt) had never been given a fair shot at finding readers. I’m a scientist at heart (though math challenged, I’m afraid). Joe made it seem that it was all a matter of sweat equity and getting a good cover artist. I had the skills to prepare documents from a lifetime spent doing that for others. What did I have to lose? Other than a lot of time, which would still be a learning experience (scientist would be my dream job, if I could remedy my math-disability; student for life is my avocation). The books certainly weren’t earning me any money sitting in my basement...although the used copies were making money for used book sellers. I did worry I would be wrong about the desire for my books. Did you?
Claude: The desire for my books? Yes, of course I was worried! Because Fear of the Past had found success in its Italian version didn’t mean that it would be successful once I had an American version (the protagonist is an American computer whiz kid in search of his family roots in Sicily). However I figured that the Italo-American community would enjoy it, particularly the family saga aspects as my protagonist meets his forebears going back 900 years! But once I had decided to self-publish, that’s when my real problems started! First I had to find someone to do the file conversion for me so the book could be uploaded on the various digital platforms. I’m a hopeless technology dunce! I bought guidebooks that promised me it would all be very easy to do and I tried. And tried again. And got nowhere! In the end, I gave up and used BookBaby’s services. How did it work out for you? Did you use Smashwords?
Kelly: Again. Joe Konrath. He helped me skip a lot of the fumbling. I found the Smashwords guide and found it made complete sense. I still do my own formatting now using Jutoh. I like doing it...except when it goes wrong. How easy was it to use a third party? Just send them the file and get back the correctly formatted files in return? What kind of turnaround? The good/bad of doing your own is the timeline is totally up to you. Turnaround can be quick, or very, very slow -- it all depends on the family drama and other work stacked up on the desk. Sometimes I wonder if I should outsource.
Claude: I think you are that rare bird who can do her file conversion herself and no sweat! Sure you don’t depend on anyone else and that’s a big advantage. But for common mortals like myself, one needs to be very careful about who does the file conversion. There a lot of experts out there offering their services, but it’s advisable to use someone trustworthy – for example someone suggested by your very source of reference: Joe Konrath. Or go to a service with a known reputation, like Smashwords or BookBaby. The difference betweent the two is however noteworthy and requires some thinking: Smashwords takes a % cut for their services while BookBaby charges a flat rate. Considering an ebook is on that virtual shelf forever, as Konrath would say, it would seem advisable to pick BookBaby and be done with it. Smashwords however offers additional services, like hosting and selling your book on their site. So, it’s a very personal decision in the end. But I'd like to add a word of caution: one has to be very careful in using all the freelance services available on Internet. Before hiring someone, look at a sample of their work. Because there is a problem here: people who work free-lance don’t have to answer to anyone for their mistakes, quite unlike staff working for a publisher…So mistakes are answerable only to you! Once the book is up on that virtual shelf and readers start complaining, that's when you realize the services you got were not quite as good as you thought. I think this is equally true for any proof-reader or editor you find online. What is your experience in this respect, Kelly? Any trouble with the quality of proof-reading or editing you’ve bought online?
Kelly: I agree. When you indie publish, the buck stops at your desk, even if you outsource. I find myself quite nervous every time I outsource editing, or proofing, or covers. But I’ve always been very pleased with the result. So far. And I’ve had plenty of nightmare editing/proofing in traditional publishing, so I know the grass is not greener on the other side (copy editors who like to change your researched facts are extremely annoying).
Claude: That’s interesting! My experience in publishing here in Italy has been very positive: editors and copy editors were very helpful and in my view improved my manuscript. So I guess it takes all kinds to make the world! But not so regarding book covers. On this, I’d have to agree with you. On my children’s book an illustrator was imposed on me by the publisher and I positively disliked her art. I was lucky with my second publisher who allowed me to use my own paintings. But book covers are unquestionably a big hurdle for self-pubbed authors. While I knew I could provide the art for the cover, I was totally unable to handle the typography for the title and general layout of the cover. For a professional looking cover, I used BookBaby’s services and I think they did a pretty good design. How did you go about it?
Kelly: I love your covers. They’re beautiful. No wonder, if you’re a painter! My first set of covers were created by a local young artist I knew. They were beautiful, but a little too modern for my books, so I then (again, per Konrath) had them redone by someone with experience creating romance covers. I’m probably going to get them completely redone again sometime in the next few months, as I’m releasing the last two books in the series, and my former cover artist is not taking more work. Do you think you’ll always use your own paintings? Maybe even create paintings to go with your books as you write them? That seems like it would be powerfully creative (if you are talented at art, which I am not, sadly).
Claude: Goodness, yes! I really enjoy doing my own book covers. Painting is so relaxing compared to writing! I love to move back and forth between the two. For my Fear of the Past Trilogy I was inspired by the lions decorating the façade of the Circolo di Conversazione of Ragusa – the place that inspired the setting of my novel and indeed gave me the whole idea! I’ll never forget when I walked in that Circolo some ten years ago: it was filled with people that looked just like ghosts! For my next book, Rich, Fat and Bored, you can easily imagine how the title suggests the painting to go with it! But let me turn to the biggest problem for indie authors: book promotion! There are really two major tools available for book promotion: pricing and advertising on one’s website or blog and other social media. Let’s start with pricing, because that’s the single most important marketing tool in the hands of a self-pubbed author! Freedom to set your own price, to decide on “loss leaders” – like I’ve set the first book of my trilogy at 99 cents but the others cost more! And I won’t leave that price for much longer either. Are you a believer in the 99 cents price as the prime mover of “impulse buying”? Have you ever set books for free (at least for short periods) to boost sales?
Kelly: As it happens, I have experience with both the 99 cents loss leader and the free giveaway. I did a 99 cents promotion beginning on Mother’s Day 2011, and going through much of the summer. It was centered around the fact that my daughter was newly engaged and I wanted to give her a nice family-centric wedding. The promotion sales built slowly, but then went through the roof. Sales of my other books did very well. In fact, the boost from that promotion continued into the fall, even after I raised the price back to $2.99. However, sales began to drop in October, so in early November, I tried a free promotion. I gave away more than 40,000 copies of The Fairy Tale Bride. Sales of the other books bumped back up nicely, too. Timing is everything, though. I may have tried the free promotion a little early to capture the big Christmas e-readership. Only time will tell. The scientist in me is gleeful at having so much interesting data to chew on. The mother in me is pleased that I should be able to afford my daughter’s modest (for our big family) wedding in late summer. By the way, speaking of expanding sales -- how do you feel about Amazon opening sites in Spain and Italy? You’re already ahead of the game, because you can translate your own work. Do you see that as a potential sales bonanza for you?
Claude: Yes and no. I can’t speak for Spain but in Italy we’re still eons away from the Digital Revolution. Few people own e-readers, you never see anyone walking around with a Kindle – an iPad, yes, but as everyone knows iPads don’t tend to be used as much for reading. One thing that might boost sales is the fact that the $2.00 surcharge Amazon slapped on its Italian customers will be taken off (apparently that’s their policy: remove the surcharge once a Kindle store has opened in the country). But perhaps it won’t make that much difference anyway because Europeans are used to paying much more for their books on average: prices of $20 to $30 don’t scare anyone off – so lowering the price on books set at $3.44 – which is what one pays for purchasing a book priced at 99 cents in the American market – probably won’t change the game…Turning now to the other big aspect of book promotion: building your presence on Internet. Turning yourself into a “brand” – and that means using actively Twitter, Facebook, Google+ and LinkedIn. These seem to be the major ones an author would need to be on. Do you use others like StumbleUpon and Tumblr or do you do videos and use YouTube? I haven’t done a video yet so I confess I’ve done nothing in that direction. How about you?
Kelly: I’ve been tempted to do webcasts or podcasts, using my teaching experience to create inspirational writing tips and tricks for everyone else who’s struggling with getting the words just right, or even trying to decide where the art stops and the business side begins. Time is a factor. At the moment I think Twitter and my blog are my two favorite “platforms.” Facebook is third. I don’t understand StumbleUpon or Tumblr yet, but I’m trying. To get off topic a little, I am “starring” in a Kickstarter video for the startup game app company my son and I started. It is rather horrifying, if I must be honest. But for a good cause -- our games are meant to boost core reading skills for people with dyslexia. Having done that video, I know what not to do next time. It does help that my younger son is a videographer who is a whiz at FinalCut. Now all I need is someone to manage my makeup and wardrobe.
Claude: Your wardrobe? I love your hat and I hope you’re using it in that video! I agree with you: because of a lack of time I also rely mostly on my blog (as most of my readers know). I don’t even have a writer website (though I have a website as a painter). As a writer, it is however essential to maintain a blog to connect with your readers, to share not just your books but your interests with them! I’ve heard that in the US even if you’re traditionally published you need a blog. Because unless you’re a Big Game Author, traditional publishers don’t really do the book marketing for you. Have you found that to be true in your experience?
Kelly: Yes. Even my traditionally published books need a little push from my end, although Simon & Schuster has been good about making sure libraries and bookstores know about the books I publish with them. I do find that having my blog helps my readers find me, whether they are reading my traditionally published books, or my indie republished backlist books. I was never good at keeping my diary up to date, but I find that inviting guests to blog helps keep things hopping. I really enjoyed it when you guested a few months ago to talk about the inspiration for your books, and so did my readers. Do you have any tricks to keeping your blog duties manageable?
Claude: And I really enjoyed being on your blog! Tricks to keep blog duties manageable? Not really. In my case, current events can get me really worked up, like the Euro crisis for example. If the Euro crashes, so will Europe, and mind you, so will America and the rest of the world. We risk a big recession that’s going to make the Big Depression look like a Sunday ride! And all this because a bunch of people – the Germans in particular – are making serious mistakes, imposing austerity instead of focusing on measures to revive growth. That’s the sort of issue I feel compelled to write about now and then, even though it has nothing to do with books and publishing. Mind you, a Big Depression would hurt the book market too! I’m not sure that blogging about such issues helps my blog traffic. For maximum traffic, you’re supposed to operate within a “niche” and address yourself to “your” audience – what is my audience given my far-flung interests? Oh well… sigh! The only lesson here for new bloggers is: pick a niche where you’re an expert and stick to it! Lately I’ve turned to other social media. Like Twitter where I’m active since March. How about you?
Kelly: I’m a magpie, too -- interested in many things and unable to keep to a niche. I love Twitter (more for what I glean from so many useful links to articles and blog posts of interesting to me than for what I can communicate to others). Facebook has always been more about keeping up with family for me. My page is beginning to grow a nice “Like”-ership, so I’m trying to take it more seriously. It helps that I’m doing a lot and have a chance to share quite a bit. I also like Goodreads as a place to share information about books and reading. Is there any other social media you’ve been interested in trying?
Claude: Quite a few, really, including Goodreads that I enjoy very much. I’m also trying to maintain a presence on Facebook, LinkedIn and Google + but I’m finding it difficult to find the time to follow and post everywhere! Recently I’ve just had an article “What is the Real Use of Twitter?” accepted and published on EzineArticles.comIt looks like a very interesting and lively site, full of authors and journalists. We’ll see how it goes… Given all the work from book production to book promotion, are you happy with your choice of self-publishing? Has it worked for you and would you recommend it to a midlist author? To a newbie?
Kelly:I have been re-energized in my own writing career by being able to see how many people have been interested in my books. In fact, I’ve used my daughter’s upcoming wedding as an inspiration to promote my out of print historical romance (the series is Once Upon a Wedding, so it seemed like a natural fit). Because of that inspiration, I’ve had a great deal of success with my historical romance books. Books I’d expected never to make any money for anyone but used book sellers again. Plus, I had fun writing a short story to complement my YA novel Must Love Black, as requested by a reader. Interestingly, I now have more understanding of what a good publisher can do for you (emphasis on good). Sadly, more and more publishers are expecting the authors to do all the promotion work, even as they pay smaller advances. I don’t rule out another traditional publishing deal (in fact, I just had an idea that I think would appeal to a traditional publisher). However, my future books will not spend years languishing in an agent/editor’s To Be Read pile. If I think they will be better served at a traditional publisher, I’ll submit and see if an editor agrees with me. If they don’t in six months or so, then to Amazon and Barnes & Noble I go. After editing and professional cover, of course. The freedom of that choice makes me giddy. I do advocate this as a path for any writer, newbie or old hand. However, newbies do need to make sure to get the stars out of their eyes and see their manuscript for what it is. If it isn’t ready, you’ll do yourself no good getting it out there.
Claude: Thanks Kelly for the interesting discussion and I’d like to end on the optimistic note you’ve just sounded! And I support your word of caution to newbies: make sure the quality is there! And be prepared to work much harder at your book promotion because, unlike authors who have been traditionally published, you don’t have readers out there yet…
You can find Kelly McClymer’sbooks available at many ebook retail sites. For a complete listing, visit her at BacklistEbooks.