There’s an irony worth pointing out in the story of the “Net Book Agreement,” which sounds like it ought to be something dealing with e-books but was actually a pact between British publishers and booksellers agreed to in 1899. The NBA specified that shops should sell books for prices set by the publishers; any discounting would lead to all major publishers refusing to supply any more books to the violator. In 1997, the Restrictive Practices Court ruled that the NBA was anti-competitive and therefore “against the public interest” — and henceforth, illegal. That might seem like a liberalizing, free-market decision, right? But maybe it wasn’t, since the NBA was a form of voluntary cartelization. From a pure laissez-faire perspective, there was nothing wrong with it.

I wrapped up my post on e-books with some happy talk about how what’s good for readers is ultimately good for writers — though I hedged that assurance with some qualifications. All hedging aside, however, is it really true that readers and writers have the same interest? Doesn’t the simple supply-demand relationship between readers and authors become more complex when publishers are introduced? (You could connect this to what I discussed in my earlier post about state and society.)

The Net Books Agreement provides interesting example. It may well have been the case for a time that the best arrangement for readers, writers, and publishers, taken together, was the one that existed under the NBA. That would, in fact, be the conclusion a believer in social harmony and laissez faire (in this sphere, anyway) would have to reach, assuming the NBA was as freely entered into and enforced as its Wikipedia article suggests. By contrast, the Restrictive Practices Court, in striking down the NBA, was acting on a theory of social conflict — that is, that the interests of booksellers and publishers coincided against the interests of the public.

This goes to show, I suppose, how complicated the relationship of procedurally “conservative” and “liberal” views of society to substantially “conservative” and “liberal” policies can be. It does seem perverse, doesn’t it, to call the court’s action here “conservative,” when it broke down a settled social arrangement in the name of free competition? But then, the cause of free competition might not really have been what this was all about, since pressure to get rid of the NBA came, as one publisher’s website says, from “the enormous growth of bookseller retail chains – like Blackwell’s, Dillons, and Waterstones – which have grown to take 30 percent of the U.K. market,” and the effect of scrapping the NBA has been to put independent bookstores out of business. In short, there seem to be fewer, not more, competitors in the market as a result of trashing this supposedly “anti-competitive” agreement.

(The same publisher’s website notes, “the demise of the Net Book Agreement makes the U.K. book market more like that of the U.S., and it can be viewed as yet another step toward globalization” — that is, globalization by judicial fiat, not free trade. The difference in this case may be moot, however: the NBA was collapsing anyway as booksellers and publishers voluntarily walked away from it.)

A thoroughly laissez-faire approach to trade would permit voluntary cartels, which might in some instance, as the example of the NBA suggests, actually lead to more rather than less competition. What exists in practice under the name of liberalism, however, is not laissez faire but a blend of liberal rhetoric, some “conservative” or “socialist” assumptions about state and society, and a variety of half-disguised concrete interests (in this example, those of the big retailers). Conservatives who favor regulating trade, meanwhile, should might think about how readily regulatory power is employed in the service of an ideology of openness and “liberalism.”

There’s a temptation in thinking about these questions to want to rationalize the vocabulary — to abolish any paradoxes or inconsistencies by imposing a strict definition on liberalism (or conservatism, or whatever else). Since these terms are used in a loose way in real life, however, it may be worth preserving the paradox to understand something about how politics — and political economy — works.

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The best analysis I’ve seen of the clash between Macmillan and Amazon over setting the prices for e-books comes from Paul Carr at TechCrunch. He provides some necessary publishing-industry background:

In the UK, way back in 1900, publishers corralled retailers into the Net Book Agreement (NBA); an agreement between British publishers and booksellers that books would be sold at the price specified on the cover. If a bookseller offered so much as a penny discount, then the publisher would simply withdraw all of their books from that bookseller and encourage other publishers to do the same. The arrangement suited everyone; book shops were the only place to buy new books and the NBA meant they didn’t have to worry about rivals undercutting them; this particularly benefited independent bookshops. For their part, publishers knew exactly how much they’d be getting for each title and authors knew how much of that would form their royalty.

All of that, however, changed in 1997, when a British court ruled the NBA anti-competitive. Discounting bookstores like Borders then opened in the UK, a great many independent bookstores closed, and both authors and publishers had to change their approach to selling books — no longer could all parties take their profits for granted:

Authors learned to adjust pretty quickly, especially as fewer than 20% of titles actually ever earn back their advance and start paying royalties. But publishers have remained annoyed. Deep discounting cuts directly into their profits. There was one area, though, where publishers could still make a killing on every sale: hardback books. The fact is that printing a hardback book, as opposed to a paperback, costs a matter of pennies more. But there is a perception amongst book buyers that they are far more expensive, a perception that it has been in no one’s interest to correct as it allows them to be sold for twice the price of paperbacks. Even with booksellers demanding deep discounts, the publishers still make a ton of profit on each hardback sale. By releasing the hardback book months before the paperback, publishers can subsidise a huge amount of their business from hardback sales, while booksellers can still discount highly to get people through the door.

But now, as Carr explains, the popularity of e-readers has raised demand for e-books to the point where the latter are cutting into hardcover sales, depriving publishers of their highest mark-ups. You can infer from this by, the way, something of just how small the difference in production costs is between e-books and pulp. You might think that publishers would be content with the lower production costs of e-books offsetting the production costs of pulp; but the latter are actually low enough that this isn’t the silver lining one might expect. Most of the money that goes into publishing a book doesn’t go for printing, it goes into profits and creative work (that it is, not just the author’s creative work, but also the editor’s and the various graphic designers and whatnot whose contributions go a long way toward making what we read more attractive on all levels).

Since e-books pose a threat to profit-rich hardcovers, old-fashioned publishers would like to kill the new technology by harboring what is, after all, in many respects an inferior product (you can’t sell or loan an e-book, or impress your friends with it by putting it on the bookshelf) with a higher price. Carr believes that the upshot of this will be to drive piracy, much as the ineptitude of record companies in the 1990s drove illegal file sharing. Carr is probably wrong, or at best half-right, about that — some kinds of books, especially vastly overpriced textbooks, might be electronically pirated. But most book readers are older and wealthier than music consumers were in the 1990s; they’re not going to try to learn their way around BitTorrent for the sake of saving $30 on on the latest Dan Brown. Those who have already made the switch to e-readers will probably just pay the higher price, though the inconvenience of having to wait longer for a release that’s delayed so as not to coincide with the hardcover may be a greater incentive for some to return to hardcover books. The dirty secret here is that even without being able to re-sell, loan, or display them, e-books are in many ways a superior product to bulky pulp products.

Macmillan’s move might retard the adoption of e-readers among people who have yet to embrace them. But even that is open to doubt: wasn’t Kindle the most popular Christmas gift for middle class families last year? Won’t the Kindle and iPad be the hot gifts for 2010, too? Discounted prices for e-books were an additional incentive, especially when e-reader technology was new, but now e-readers have momentum of their own. To kill that momentum, one would have to charge more for e-books than for hardcovers.

If Macmillan realizes this, what they might be hoping for is not to kill the e-book, but to turn the e-book into the new compact disc. When CD’s debuted in the 1980s, they were quite expensive but everyone was assured prices would come down as the technology proliferated and manufacturing costs decreased. Except for the effects of inflation, that never really happened: at the height of the CD market in the 1990s, they were still retailing for much closer to their debut price than to the price of bygone LP’s and cassettes. Record companies locked in high profits on what was first seen a premium product and eventually became the industry standard. They never had to cut prices significantly. Of course, the upshot of that was when an alternative medium, file sharing, arose, CD’s took a massive hit. But the record companies got at least a decade of high profits out of medium.

The youthful music market, however, was driven by celebrities and a few rather restrictive promotional outlets — radio, mostly, and at one time MTV, when MTV still played the occasional music video. There was also a high barrier to entry for independent record labels because of the limited physical channels of distribution. You could start a record label in your basement, you might even put out some good music, but you weren’t going to get, say, Camelot Music in your local mall to sell what you were putting out. And you certainly weren’t going to get Wal-Mart to carry your stuff.

None of that applies to books in the Internet age. The organs of publicity are things like blogs, which can take a liking to a book from a small publisher as readily as they can to some Macmillan product. And a small publisher offering e-books for significantly less than Macmillan does could cut into the big boys’ sales, although there are several complications to that strategy, among them the cut of profits demanded by Amazon and Apple for including a product in the Kindle Store or iBookstore. With higher profits on more expensive e-books (as well as the capital they already have from the traditional book market), the big publishers will be able to pay authors better, and thus attract bigger names, than the smaller publishers can. But lower prices mean more sales; in other words, it will become easier for new authors to have breakout bestsellers with publishers (small or large) that charge less for their e-books, while established authors may be chagrined to see their sales limited by the old-fashioned price models of Macmillan and its ilk. My guess is that, over time — but maybe quite quickly — the smarter or smaller publishers offering less expensive e-books will win. Consider what already happens with paperbacks: they’re much less profitable for the big companies, and they have less prestige among readers, but they sell vastly better than hardcovers. E-books eliminate the distinction between “cheap softcover” and “pricey, prestige hardcover” for readers, so why not choose cheaper e-books over Macmillan’s? Even some authors will be tempted to forgo higher profits at the major publishers if they can sell significantly better through a cheaper publisher — and since the cheaper publishers might cut down on costs for the middle men (i.e., Macmillan executives), authors might not wind up with much worse deals anyway. Advances would be smaller for authors — vastly so — but percentages on sales could be quite a bit higher.

The authors who are really hurt by the transformation e-books are wreaking are not the Dan Browns, who will sell very well regardless of what channels are used, and who may in fact claim higher percentages on profits through e-books, nor the toiling would-be authors who can hardly get a break from the publishing industry as it exists now — e-publishing should make getting published much easier, even if you might not get an advance. No, the authors who are really hurt are the second-tier types, like those who produced the spate of Freakonomics knock-offs a few years ago. To understand why this is, you just have to know the cardinal rule of modern publishing: publishers are extremely risk-averse and prefer to produce variations on books that have already sold well rather than put their money behind an uncertain venture. When authors pitch a proposal to a publisher, they’re usually expected to suggest a few “similar” books that have sold well. So if you can write well for a mass audience and you want to publish something, you pitch a knock-off on Twilight, maybe with werewolves instead of vampires. Publishers now are willing to pay big advances for such rubbish, on the accounting logic that by paying healthy advances to a handful of such authors each season, one is guaranteed a reasonable profit if even one of them succeeds in becoming the next Stephanie Meyer. If there are three or four failures for every success, well, one big success can still pay for them all.

Needless to say, I don’t think the quality of our literature would be harmed in the least by the absence from the Kindle store of Twilight With Werewolves or More Economics for Hipsters. The only worry I have is that I’m not sure just how much the midlist will be affected — a proliferation of new authors and unsaleable books is good, since a few will be worthwhile; the sustained power of big-name, low-quality authors will be the same under any model; but what happens to authors who have published a couple of good books who want to make more money in order to continue writing? The largesse of the publishing industry has sometimes been good for them, although there’s been a lot less largesse in recent years. My guess is that we’ll see some inventive financial models arise — perhaps even a return in part to the old traditions of patronage and subscription.

We’ll see. But in all this, there’s a general rule to keep in mind: what’s good for readers, including lower prices and wider channels of distribution, should ultimately be good for writers, at least in purely commercial terms. Whether we would all be better off without the printing press, let alone e-readers, is a question a few great minds have taken up, but I won’t get into that here.

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The TAC website was hacked to death the night before Apple’s iPad launched, so my initial reactions to the shiny new gadget went out via Twitter rather than this blog. I wasn’t too impressed — like a lot of critics, I concluded it was an oversized iPod Touch, which is already a product in search of a point.

A week later, I’m not so sure. If I was once willing to follow Ann Kirschner in pronouncing the mere iPhone a Kindle killer, the iPad ought to be the real thing. Having grown accustomed to the Kindle as an easy-on-the-eyes reader for free PDF’s, I’m not eager to adopt the iPad as a replacement. But despite Amazon’s gangbusters Christmas sales, there are still a lot of people out there who might want just a reader, and for them the iPad may prove irresistible. The appeal of e-ink only became apparent for me once I had tried a reader that uses it; with the iPad now on the market, many consumers won’t even want to try an alternative. (Especially since you can’t try a Kindle in stores.)

Beyond its uses as a reader, could the iPad be revolutionary as the first couch computer — a device with no pretenses to being a business machine? Sure, it’ll have some ancillary business uses, but that’s not the iPad is about, whereas the personal computer has always had unavoidable associations with productivity. It’s a business machine that has taken up residence in your home and follows you on vacation. The iPad, on the other hand, is responsibility-free. At first I thought that must be a drawback, but maybe it’s a selling point: the iPad is the first truly casual computer. You could hardly get any work done on it if you tried.

I suspect there is a niche for such a thing, but not a big one. You might leave it lying around the living room or kitchen to check sports scores, movie times, and TV schedules, as well as e-mail. Maybe that’s a bigger niche than I realize, though: instead of powering on a desktop or laptop or squinting at a phonescreen, why not pick up an iPad for whatever kind of browsing you need to do when you come in from mowing the lawn?

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One of the media transformations I expect to take place over the next 10 years, if not sooner, is that book publishing will become more blog-like — that is, micropublishing, the interest of the New York houses in putting out blockbusters, and the decline of the industry (and its retail counterpart) generally will lead to a proliferation of vanity presses that will, over time, lose their stigma. Publishing is still treated as if it ought to be a mass-market industry, but it has speedily been transforming into a niche-market industry. The idea that a book has to sell thousands of copies from a major house in order to be taken seriously is going to change. Books will become more like blogs in some respects — deprofessionalized and personalized — but in other respects they’ll become more like poetry, a small but prestigious market.

How do you guarantee quality in such an environment? Some printers will have better reputations than others, and that side of things shouldn’t be too problematic. Editorial quality will have to be guaranteed by branding. Institutions that have reputations for quality in their fields — whether those institutions are publications, think tanks, or traditional publishing houses — can lend their imprimaturs to books that meet their criteria. In some cases, authors will have to pay dearly for the privilege (already authors often have to pay for indexing their books). Other, more reputable authors will be essentially given credit by their editors/publishers — if an author is known to produce clean and polished prose, and if he’s known to have some kind of market, editor-publishers can trade their services upfront for a percentage on the sales, a fairly traditional model. This will be bad for new authors, who will probably have to pay out of pocket, but that “defect” will actually help keep some unserious people out of the market. (Indeed, young authors might have to seek patrons to get their first works published, and that wouldn’t be a bad thing. I expect, in this day and age, the patrons will be institutional rather than individual. It’s not unusual even now, by the way, for books to be subsidized — God and Man at Yale was published in part because William F. Buckley Sr. paid Henry Regnery to defray some of the costs.)

Many people wrongly think that publishing any book makes you “famous.” That isn’t true now, and it’ll be even less true in the micropublishing era. Publishing a book will have about as much cachet as having a blog. (The analogy extends to the various levels of blog prestige: having a Blogger or Angelfire blog is like publishing with Xlibris; having your own URL is a sign of some status, and being connected with an institution is a sign of higher status, though not necessarily higher traffic/sales.)

Already the Internet publishing and micropublishing age has been great for me as a consumer. Most of the books I buy are older, hard-to-find volumes purchased used through Alibris or Abebooks. I’ve downloaded enormous amounts of reading in PDF form to my Kindle, for free. I have not purchased any imprimatur-free self-published or vanity-press books. But I have quite a few hard-copy Mises Institute books printed-on-demand. Things that might have been totally uneconomical to produce 15 years ago, like some of the obscure works of Garet Garrett, are now economical and readily available. One of the surprising things about the Internet in this regard has been the extent to which is has brought the past into the present — things long out of print are now more widely available than they were when first published. This is something to ponder when considering whether the micropublishing revolution is good or bad for authors: it’s pretty darn good for long-dead, long out-of-print authors. For living authors, I suspect it will be a wash: some of them would have gotten lucky and received nice advances and healthy sales from traditional publishers. They won’t be rewarded as lucratively in the new era. But a lot of authors who would never have been published under the old system, or whose books would have languished for lack of promotion, will be able to get their work out there now, even if only for 200 readers. (Won’t the book still languish for lack of promotion? Yes, but the consequences won’t be as damaging: when a book has a set print run and the author receives an advance, it can be quite damaging to his publisher’s finances, and his reputation, if it only moves 200 copies. It can hamper his ability to publish more in the future — he’s a failure. Under the model I foresee, though, 200 books sold could be profitable, if only marginally, for everyone involved, and everyone would have an incentive to produce more.)

The danger in niche-writing and micropublishing lies in losing touch with the cultural mainstream. But a new mainstream will eventually arise out of this — it’s happened before, after all, as a few literary gems have washed up amid the great floods of rubbish in publishing booms past. Editorial branding, I think, will be the key to getting through the transition with some standards intact.

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M.E. Bradford on John Dickinson’s Letters From a Farmer in Pennsylvania:

The manner of Dickinson’s twelve letters is well suited to their matter. In form they belong to the “high” or “sober” tradition of English political pamphleteering — as does Common Sense to its “rough and ready” but popular counterpart. In the one company we find Milton, Swift, Addison, and Burke — plus numerous other deliberate and magisterial considerations of important public questions issued through (or from the shelter of) some usually transparent classical personal: “Cato,” for instance, suggesting not personal feeling but public spirit. Cicero’s epistles were the archetypes for these performances. For almost two hundred years these pamphlets formed a pattern of serious, intelligent exchange on affairs of the day unmatched in any other free society. The other quasi-prophetic school had its roots in the Puritan revolution and the emotions antecedent to that explosion. It found its model in the Scripture. It tended toward the merely personal, the paranoid, and the pugnacious. Usually its object was to draw the adversary’s blood. Some English writers had skill in both veins. But not serious, “old-school” Whigs: not men (ordinarily lawyers) who believed in the prescription of British history and the importance of circumstance in interpreting what a precedent means when a prudent choice must be made. For the deepest teaching of that history was that persuasion, even if incomplete, leaves the social bond intact. Calumny, claims of divine sanction, and rigid arguments from definition (asking, for instance, “What is man?” or “What is a republic?”) have a contrary effect.

This parallels the distinction I was trying to draw with my “high church conservatism” essay. Of course, the Tom Paine rhetorical style is highly effective, and there’s a place for polemics. But what Bradford describes as the “high” or “sober” tradition ought to take pride of place for conservatives.

Here’s a PDF link to Bradford’s essay, which is also the title essay of A Better Guide Than Reason.

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