Recent news reports have noted that as gasoline prices have risen, the President’s popularity has declined commensurately. From a practical point of view this makes no sense, because the President has absolutely no control over energy prices.  He can’t even reduce or increase taxes on gasoline unless the Congress passes legislation, and he certainly can’t set gasoline prices.

In economic terms, crude oil and gasoline are what are known as fungible commodities, that is, there’s no price distinction between light crude from the United States, Saudi Arabia, or elsewhere.  The only price differential in the marketplace is the transport cost from the point of production, and since Middle East oil has a lower cost of production, in most cases, transportation costs don’t affect the price of crude, only the price of refined gasoline. What that means, among other things, is that “Drill, Baby, drill!” isn’t going to make a measurable difference in gasoline prices. In fact, as U.S. production of oil has increased over the last few years, it’s made no appreciable impact on gasoline prices because world-wide demand has increased and will continue to increase as countries such as India and China build and use more cars and trucks.

The only time in the last 60 years when a President attempted to control gasoline prices was during the Nixon administration when Nixon imposed price controls [through legislation he requested and Congress passed].  The result was a disaster.  Because oil companies could not pass on the costs of higher-priced crude oil, they stopped buying and producing it because to do so meant losing money on every barrel of higher-priced oil.  The result was gasoline lines blocks long all over the nation and fuel shortages.

On the other hand, North America is literally awash in natural gas at present.  Interestingly enough, even though natural gas prices are close to all-time lows, which means that most homes heated by natural gas have seen real heating costs decline, this doesn’t seem to translate into greater political approval for the President or anyone else.

What continues to be overlooked in the debate over Romneycare/Obamacare [The Affordable Health Care Act] is the issue of “transferred costs.”  Because hospitals are essentially required to provide health care for those who need it, the costs involved in providing such care to those unable to pay have to be “transferred” to someone else – or the hospitals would go broke. Because doctors can refuse to provide services to those who cannot pay, the uninsured overuse hospital health care, especially at hospital emergency rooms, and that drives up health care costs. Because they cannot pay, the hospitals transfer costs to other paying patients, or their insurance companies, or governments. There are two classes of uninsured – those who could afford insurance and choose not to pay for it and those who either cannot get it or cannot afford it.  The thought behind the Affordable Health Care Act was to provide insurance to those who could not afford it and require those who could to purchase insurance or pay penalties, thus addressing the cost issue and theoretically redistributing health care away from overuse of expensive hospital facilities.  Regardless of whether one agrees with the Act or not, the driving force was the accelerating cost of health care and the economics behind it – and, so far as I can see, none of the opponents of the Act have come up with a viable and workable way of addressing those economics.  They don’t want to require universal insurance; they don’t want a single payer system; they oppose any cost-cutting measures that will make a real difference; and they don’t want to deny health care to anyone. Under those parameters, health care costs in the U.S. will continue to rise, even though they’re the highest of any developed nation… and our health is below average.  The issue is economics, and no one wants to confront that reality.

Whether it’s gasoline or health care prices…it’s so much easier to cast stones… especially at politicians, and especially when they deserve blame for other things.  But right now, on too many economic issues, people are blaming politicians, and politicians are trying to blame anyone else… and none of them want to look at the economics.

The “Money Report” section of the April issue of The Atlantic Monthly contains a fascinating comparison between what Americans spent as a society in 1967 and what we spent in 2007.  The facts are sometimes in agreement with popular perception… and sometimes rather wildly at variance with them.

The area where spending has gone up the most is, unsurprisingly, that of health care, and few would dispute that.  In constant dollars, adjusted for inflation, health care costs have gone from 8.1% of spending to 18.0% – more than doubling.  Likewise, the percentage we spend on business services, things like advertising, accounting, legal services, insurance other than for health care, real estate fees, and consulting, has also more than doubled (this is also where those billions in financiers’ bonuses fit in, as well as the  additional costs of such services as tax preparation, various attorney’s fees, and all the money management fees).  Recreation and entertainment spending have also increased by 80%, so whether we want to admit it or not, we’re either pampering ourselves more than we did forty years ago or the entertainment and recreation moguls are charging more for the same things.

In some areas, such as education, housing, and transportation, there’s been little change in the proportion of income we spend.  With the high increase in the cost of higher education, that suggests that spending on primary and secondary education, in real dollar terms, has dropped, and from what I’ve seen in state and local education budgets that’s definitely been the case.

On the other hand, the percentage of our spending going to food and drink has dropped by 40%, even though proportion spent at restaurants has increased by 75%. And the percentage we spend on clothing has dropped by more than 35%, no surprise to me, given the way most people look in public.

But, most surprising to me were the numbers spent on government/taxes.  In 1967, over 18% of income went to government through fees and taxes.  By 2007, that had dropped to 13.2% – a decrease of over 25%.  So… in real dollar terms, government is costing us less of our income today than it did forty years ago.  Somehow… this message hasn’t gotten across to anyone.

Admittedly, most people just look at the dollars, and in nominal dollars, the figures show that government budgets increase every year, but over time, those budgets haven’t increased as much as inflation.  Of course, neither have the earnings of the middle class, but even their earnings have only declined, in real dollars, very slightly – not the 25% real decrease we’ve seen in government spending. Is it any wonder we’re facing a crumbling infrastructure in areas such as highways and bridges, especially when a larger fraction of declining real federal revenues has been devoted to fighting overseas wars?

Of course, I doubt that these numbers, or anything resembling them, will ever show up in the political arena. But I thought some of you ought to know.

A recent internet review of  Empress of Eternity claimed that it was “the least inspiring” of any of my recent books.  I cringed when I read those words, not because the reviewer didn’t like the book – Empress tends to polarize readers; they either like it or hate it, and I understand that – by what the “reviewer” wrote wasn’t what he meant to sat.  The book was inspired.  I had to be inspired to write such an intricate and involved weaving of timelines across millions of years and make it all come together. But what the reviewer meant was that he didn’t find it inspiring.  He wasn’t inspired.

In a nutshell, this is a small example of one problem with the whole gamut of internet publishing, reviewing, and commentary.  Too many people are using words and grammatical constructions, not to mention facts, that they don’t understand… and setting themselves up as authorities.  All it takes is some eye-catching graphics, a catchy and/or pretentious title and… voila!  Another sage is born.

And if no publisher will take on a book?  Then e-publish it!  List it for sale on Amazon, and Jeff Bezos will be happy to try to sell it and take his cut.  It costs him next to nothing.  List it for $1.99 or even $.99, and maybe it will become a Kindle bestseller.  But does that tell any reader whether it’s any good?  Over the years, I’ve had reader after reader tell me that they buy books from certain publishers because they know exactly what they’re getting and what the quality is.

Established publishing firms – and magazines – tend to have standards, although I will admit that sometimes those standards and procedures do keep a good book from being published, but after 40 years in the field I can say that, for every good work that didn’t get published by a major publisher, there were thousands they didn’t publish that never should have been published… not because of censorship or anything so sinister, but because those unpublished books were just plain bad.  Such standards don’t exist on the internet, and I have doubts that they ever will.

That is what publishing firms have been for – to find, refine, and publisher works of a minimum acceptable literary quality (and hopefully much better) that appeal to the tastes of readers.  Especially in today’s fast-paced world, very few people have the time or the inclination to sift through manuscript after manuscript (or self-published e-book after e-book) in hopes of finding passable, or quality or thought-provoking entertainment.  Yet the combination of e-publishing and Amazon may very well create a huge gulf in writing/literature, with, on the one hand, the mainstream publishers only able to publish “super-titles” and a handful of other “literature” titles, while leaving readers to struggle through a sprawling mish-mash of e-novels, ranging from a comparatively few well-edited and coherent works at the top down through a vast plethora of sub-mediocrity to an even vaster array of abysmal attempts at fiction.

Welcome to the post-literate e-world!

Over the past several months, I’ve had blog comments, emails, and questions at appearances about why my publisher insists on demanding a higher price for an ebook than a hardcover. The simple answer is that my publisher doesn’t, no matter what it may seem to readers, but… obviously some explanation is in order.

So… I’ll give some examples, but please note that the prices I’m giving are those in force as I’m writing this… and they could change.

My last two published books are currently Scholar and Lady-Protector.  The book immediately published before Lady-Protector was Empress of Eternity.  At present, the hardcover of Scholar on Amazon or Barnes and Noble costs more than the Kindle or Nook version.

The hardcover version of Lady-Protector sells for $.32 less on Amazon than does the Kindle, although the Kindle price will drop on March 27th, when the paperback is released.  The hardcover price of Lady-Protector at Barnes & Noble remains above the Nook price.

The hardcover version of Empress of Eternity currently sells on Amazon at something like $6.67, less than the Kindle version, as an irate reader noted.  Amazon purchased that book from Tor for around $12.00 and has chosen to sell it at the discounted price, in all probability, in order to unload it, because the hardcover was published roughly 16 months ago, and very few hardcovers of any book sell that long after publication. Barnes and Noble has kept the hardcover price at the original level.

The reason for these disparate prices is that hardcover books are sold at wholesale to Amazon and other retailers or distributors, usually at slightly more than 50% of the cover price, and retailers and/or distributors can sell them at any price they wish.  The prices on electronic books, on the other hand, are set by the publishers, as a result of the nasty fight between all the publishers and Amazon several years ago, when Amazon insisted on selling all ebooks at a loss, subsidized by its profits in other areas, thus attempting to fix prices at a lower level and gain control of the market.

Some readers have claimed that ebooks should be far cheaper than either hardcovers or paperbacks because the ebook does not require paper, ink, printing, and physical distribution.  That’s true, but an ebook does require all the other costs of production, and at present, the “difference in cost” between ebooks and hardcovers, on average, it runs from about $2.50 to $4.00 per hardcover, depending on the number of pages and the print run, which is roughly the price differential between the price Amazon or B&N initially charges for a hardcover and the initial Kindle/Nook price.

The bottom line is that, at present, subject to an on-going legal battle and a Department of Justice proceeding, the publishers have control over the retail ebook price, but not over the retail hardcover price, and Amazon has a practice of playing games with hardcover prices as part of their on-going fight with traditional publishing… and letting readers place the blame for the “high” ebook price on the publishers, which, in fact, is half-true.  The publishers do set those prices, but selective use of low hardcover prices is totally under the control of the retailer.  Macmillan, the parent company of Tor, has a policy of dropping the ebook price to match the paperback price on the day the paperback is released.  Amazon is usually reliable in doing so… but not always, but, again, failure to drop the ebook price is not necessarily the fault of the publisher and has to be assessed, unhappily, on a case by case basis.

As an author, fortunately or unfortunately, I have no control over any of the retail prices charged for my books that are published by Tor. Nor does any author whose books are issued by a major publisher.

The other day I was going over sales figures with my editor, and we got to talking about where the publishing market is going.  I knew that paperback sales had taken a huge hit, but just how huge I didn’t realize, although I was certainly aware that my own paperback sales had taken hits. According to my editor, on average, once you get below the huge best-sellers, like A Game of Thrones, Twilight, The Hunger Games, etc., on average paperback sales are now running at 20-30% of what they did fifteen years ago, if not lower in some cases. Authors who could count on selling 100,000 copies or more in paperback are now selling 20,000 -30,000, and the same is true of newer authors whose hardcover sales are at the low New York Times bestseller levels.  In more and more cases, publishers aren’t even issuing some books in paperback, but only in hardcover or trade paperback and then ebook format.  It’s not just a matter of price, either, no matter what readers claim, since, in real dollar terms paperbacks are either lower or only slightly higher in price [depending on which measure of inflation is used] than they were fifteen years ago.

What’s happened?

The immediate suspicion is that the “lost” paperback sales have been replaced by ebook sales, but the sales numbers don’t support that in the case of paperback books, although there’s a fairly good correlation in the sale of hardcovers, that is, for a number of authors, hardcover and initial ebook sales [at the higher price] are fairly close to former hardcover sales alone, although this results in lower author royalties.

There are a lot of other explanations for the paperback book sales decline out there.  Many cite piracy and ebooks as the reason, and just as many claim that “pirated” editions actually increase sales, although I’m skeptical of the latter argument on this. Here’s why. Over the past year or so, I’ve received more than a few emails and comments along the lines of “I first read one of your books as a pirated download.”  All of those who contacted me with that line went on to say that they now purchase my works, for which I’m grateful.

BUT… this raises several another questions.  Just how many readers out there are there who read one of those pirated editions and said, “Forget it!  This just isn’t for me.”?  And how many others read a few pages and turned away?  And how many people in that reading and interest bracket would have bought and tried a paperback twenty years ago?

These questions are very relevant, especially in the case of the decline of paperback sales.  Before the advent of ebooks and the subsequent widespread piracy – and it’s everywhere – a reader had to get a hold of a physical book, and that physical book had to be paid for, and that counted in sales. Even if the reader didn’t like it, and threw it in the trash or gave it to a friend, a copy of the book was sold, and someone had to make an effort to do something with the book.  In addition, after having invested in buying the book, a great percentage of readers would struggle through the book. In my case, this is particularly relevant, because many of my books are so complex that they develop slowly.  All you have to do is look at all the reviews to see that. In the “old” days, I suspect I hooked more readers because they didn’t want to “waste” their money.  Today, when readers scan a pirated ebook, they’ve invested nothing, and there’s no cost to them, and many, I believe, just turn away from something that doesn’t provide immediate gratification.

Add to this something I’ve also heard and read a lot about in the last year, and that is an attitude of entitlement – that readers “deserve” to know whether they’ll like a book before they pay for it.  What?  If you go to a movie, or rent one, or purchase a DVD, you don’t get to see it and make a decision to pay for it after the fact.  Even if you see in on cable or satellite, you’re essentially paying for it.  You can read up on restaurants, but you don’t get to eat the meal and then refuse to pay for it because you didn’t like it, at least not for long, and not without a great deal of unpleasantness.

Then… there’s simply the vast number of websites offering free downloads of books.  There are literally scores offering my books.  Would they all be doing this if there weren’t a demand?  I don’t think so.

I’ve been fortunate, in that, while I’ve taken some considerable hits in the pocketbook from this so-called market shift, I still sell enough that my publisher continues to publish my books in hardcover, mass market paperback, and ebook format. There are all too many good writers who have not been that fortunate and who are not good web-and-internet promoters… and their books no longer see print… or much in the way of new readers even when e-published.  In essence, they’ve been pushed out by cheap and usually inferior works by writers who aren’t as good in writing but who are far more effective at promotion… by a class of works that might be called “internet penny dreadfuls” [mixing anachronism and technology, so to speak].  That’s not to say that there are not some good authors who are e-publishing their own works, but they’re a very small minority among the flood of self-published ebooks.

Publishers can’t compete with this new class of “penny dreadfuls” – and they won’t.  To stay in business, they’ll have to chase the popular best-seller market, as is already happening with the proliferation of books about vampires, werewolves, zombies, or those which glorify violence of all kinds [yes, I do mean The Game of Thrones] while retaining those authors who have a dedicated following and discarding those whose sales drop off, while Amazon pushes for cheaper and cheaper ebooks [with the unwitting help of the U.S. Department of Justice].  The old model of publishers developing authors has almost vanished, and current trends will likely finish it off.

Technology changes things, including popular attitudes, and most of them won’t change back, and that means that the publishing field is changing and will continue to do so.  But…please don’t make the argument that pirated ebooks are good for authors, books, good writing, or literature.  They’re only good for the ultra-popular writers and the great self-promoters… and that narrows the range of available books in a very practical sense.