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Viewing: Blog Posts Tagged with: The Business of Publishing, Most Recent at Top [Help]
Results 1 - 17 of 17
1. Tools of Change 2012: Today. Tomorrow.

Time certainly does fly when you’re busy doing things, doesn’t it? One day, I was looking forward to the entirety of 2012. The next, I realize I’m leaving for New York and 2012′s Tools of Change conference in less than a week. Naturally, I reacted with typical aplomb…frantically gathering clothes to take to the dry cleaner.

I kid. Sort of. I have the conference dates circled with a big red heart on my calendar (what is better than spending Valentine’s Day with approximately 1500 of your closest friends? Nothing, I tell, you nothing.). More importantly, I’ve been preparing for the two panels I’m moderating (more at the end of this post). I am so lucky. I get to stand back while four (count ‘em, four!) of the most innovative people in publishing do their thing.

I am nothing if not an awesome moderator.

I’ve also been brushing up on the most current publishing news, a bit of struggle for me as it seems like so much of the industry is on round three or four of the same conversation while I am looking for something new. I don’t know if the conversations most of us have been having for the past, oh, six years were light years ahead, or, more likely, if there are so many basic questions the publishing (entire) industry needs to answer, we have to recycle them time and again.

For example, a recent Publisher’s Weekly article asking “Is the Time Right for Bundling?

Let me answer the question succinctly: yes. And no.

I am not convinced the book-buying public is clamoring for print/ebook bundles, just as they weren’t clamoring for “enhanced ebooks” — you know, those higher-priced books with marketing material appended to them. However, I am convinced there are instances where a print/digital combo makes perfect sense. And I think the public does want these sensible combos, even if they cannot articulate their desires.

Then again, I am convinced there are instances where the print book makes no sense at all. I recently purchased a book as part of market research for a project I’m doing. The content is only available in print, and this is something the authors are proud of. I do not have to worry about connectivity when it comes to finding the information I need.

Oy.

Nope, I just need to worry about hauling one more heavy item in my purse, and hoping the information in that print book is up-to-date. And if it isn’t, well, I can wait until the 6th (print) edition is available to see the corrections. If ever a book should be available as an app, this is it. Within seconds of ordering the print book, I regretted it. Moments after cracking the spine, I knew it was the last thing I wanted or needed.

Personally, the chances of me getting excited about a print/digital bundles for fiction are pretty slim. There is the rare, rare, rare book I love so much I want to display it on my shelves. When that book enters my universe, the joy cannot be described. Usualy, by the time I discover my love for this book, the opportunity to get in on the bundling deal will be lost (hey, make this a retroactive thing…then you’ve got something).

Non-fiction, as in the case I described above, is a different story. But it has to be the right kind of content to make sense. I like that Rachel Deahl, the author of the article, noted the logistical issues involved with bundling — how will those royalties be determined? She also notes the challenges due to the Agency Model (see: Brian O’Leary’s post on Ripple Effects).

I’ve said it before and I’m sure I’ll say it again: locking your entire business into a specific model during a time of rapid ch

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2. Change Begins at Home

In order for an organization to effectively implement and weather change, there must be an organization-wide mandate to move in a new direction. Senior management must support and model the changes they want to make. Change comes from the top, and, if the recent CEO panel at Book Expo America 2010 is any indication, that is the biggest problem facing publishing today.

There is no doubt that huge changes are facing the publishing industry. Many of these have been driven by readers and technology companies, the latter adroitly timing hardware and software to reach consumers just as their willingness to adopt ebooks was reached. Apparently, this is “radically wrong”. Well, it’s not like the publishing industry didn’t have over a decade to take control of the conversation.

I will note, before I begin ranting, that there are many leaders in publishing who both talk the talk and walk the walk. They may not like every aspect of the change they face, and they are aware that the entire industry is making it up as they go along. These leaders are on the ground, listening and responding. You know who you are, you run the companies that garner accolades from readers and your peers, and you are true leaders.

Since last Tuesday morning (also known as Day One of Book Expo America 2010), I’ve been reading variations of the following statement from David Shanks of Penguin USA. All seem to have the same gist, so I’ll go with Personanondata’s version:

D[avid] S[hanks] agreed emphatically that there will be a bigger market but we shouldn’t shouldn’t forget there needs to be big investment to buy reading devices.

This comment was made during what, by various accounts, was a frank — if not satisfactory to all who heard or read about it — debate between high level players in the publishing industry. This group, including Jonathan Galassi (Farrar Straus Giroux), Scott Turow (Authors Guild), Bob Miller (Workman Publishing), Esther Newberg (ICM), Skip Prichard (Ingram), Oren Teicher (ABA), and Shanks, revealed serious philosophical differences when it comes to issues facing their industry.

They also revealed some interesting biases. The quote above, I think, encapsulates it all. I’ll be frank: I am not convinced these CEOs fully understand the world of digital reading, and it scares me they are leading their companies into the biggest shift facing the industry since, oh, mass market paperbacks.

I get that staff handles the day-to-day work on this shift, but, as I noted in my first paragraph, change only works when there is buy-in from top management down. This buy-in needs to be reflected both internally and externally. As long as publishing leaders continue to equate “device” with ebooks, I will remain unconvinced they get what is going on in the real world. Expensive, exclusive hardware is not necessary for people to read ebooks.

Yes, it is true that some sort of hardware is required, whether it comes in the form of a phone or a tricked-out workstation. Also, some sort of software. There is also firmware.

But for every purchaser of a Kindle, nook, Kobo Reader (still waiting for my evaluation device, ahem! Seriously dudes, I have a presentation coming up in about two weeks, call me.), iPad, iPhone, whatever, there are many more readers who have existing laptops and desktops. Put another way, the vast majority of digital reading is being done via those machines. It’s happening at home and at the office. Anyone who has ever held a job that requires extensive (more than one hour!) use of a computer knows this to be true.

It seemed like Bob Miller, Oren Teicher, and Skip Pritchard got that the world was changing while Jonathan Galassi, David Shanks, and

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3. Small Teams and Acquisitions: A Collection of Messy Thoughts

Since the announcement that HarperStudio was being shuttered and its staff, Bob Miller excepted, would be absorbed into the larger HarperCollins machine, I have been thinking about what this means for publishers. HarperStudio was a high-profile experiment that barely had time to emerge from start-up mode, much less to achieve goals great and small. From my outsider perspective, one of their greatest accomplishments was proving the effectiveness of small teams.

I may be romanticizing Studio, but it seemed to me an entity that functioned fairly autonomously within the larger HarperCollins entity. Yes, they could tap into the mighty HC machine, but the layers of bureaucracy that slow down the process were largely eliminated. Stripping away obstacles (and their associated meetings!) allows a team to focus on the book, not the potential roadblocks.

Small teams are tantalizing. Speed-to-market. The ability to innovate. Focused communication. Inexpensive experiments. Low-budget failures. Synergy. The lack of corporate baggage. Autonomy. Freedom.

The only other experiment of this nature is the on-the-verge Carina Press, Harlequin’s digital publishing start-up. From top to bottom, Carina took a different approach than Studio. Despite the different business models, both entities distinguished themselves by throwing back the curtain and exposing their business process. In an era where we are told big publishers cannot be “brands” (and, apparently, neither can editors), Carina and Studio proved the opposite.

Working fast, sharing successes, discussing next moves, addressing setbacks — Debbie Stier’s Formspring account is an awesome example of communication — and engaging readers, authors, industry observers, and even competitors…it’s nearly a textbook vision of how to work with small teams.

As the announcement that Studio was ending its experiment was being made, I was leaving the bubble of South by Southwest Interactive. After spending days with people focused on creating and doing, I wondered about the lessons publishers would take from the Studio experiment, and how publishers were going to find the skill sets they needed to take advantage of new ways to bring readers and books together.

I also wondered where the acquisitions in publishing were. It’s not hard to find interesting experiments in publishing. I would hazard that all the current innovative thinking (and doing!) we’re seeing in publishing is being done by individuals and small teams outside the industry as we know it.

(Aside: I am fascinated by the way the people behind these projects continue to knock on publishing’s doors, despite near-constant frustrations of meetings that never result in action. I would love to see more partnerships and experiments.)

Now that the iPad has landed, reality has splashed a bit of cold water on the idea that a single device can “save” an industry. The experience of reading plain text books on the iPad remains an option, but plain text books — silly page turning graphics or not — really don’t do much to leverage the technology. If anything, it highlights the fact that publishers continue to ignore the opportunities of browser-based reading systems. Oh, and that they haven’t done much to leverage that technology either.

(Man, when you think about it, there is so much potential waiting to be tapped. It’s exciting. Digital reading to date has been very much device focused — Kindle, Nook, iPad — and yet the vast majority of people engaged in this type of reading do so via PDF or browser. Imagine the impact on sales if people could, you know, access books in their preferred format.)

The chatter has moved from iBooks to multimedia, transmedia, enhanced books. These terms mean different thin

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4. Why Second Opinions Matter

Huffington Post has a slide show of the Creepiest Children's Books of All Time. It's a tough call, but One, Two, Three, Pull! is a contender for number one.

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5. Lisa Schroeder: Twitter from one author's point of view

As someone hesitant to dive into the Twitter pool, I found this post enlightening:

Lisa Schroeder: Twitter from one author's point of view

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6. The Week That Was

A lot happened in publishing this week — so much that just as I wrapped my head around one thing, something new popped up to either make me re-evaluate my previous thinking…or to send me down a different rabbit hole. Let’s just put it out there: once you’ve gone subterranean, things start to make a lot of sense.

Which probably accounts for my mood today. Here in the dark and dangerous world of the publishing underground, spirits are sapped and minds are bent. Sometimes you travel toward the bright light, only to find a seemingly insurmountable pile of “that’s how we’ve always done it” in your way. The intrepid, of course, find new routes and discover magical beings; they’re here, too. Follow the intrepid, I say, follow the intrepid!

  • An Old Twist on the Price Wars Becomes New Again: Remember Crown Books? They were going to Destroy Publishing as We Know It (this is not the same thing as merely Destroying Publishing). Luckily, family tensions destroyed Crown Books first. Sometimes you catch a break. Now we have Amazon, Target, Wal-Mart, and Sears battling each other for dominance; their weapons of choice are front-list, high profile hardcover books.

    In any other situation, publishing would be thrilled to get so much free publicity (woe to those whose titles are not mentioned in every breathless news story!). However, this battle has bigger implications. Naturally, the industry fallback position is that these deep, deep price cuts will destroy the industry. No, but if the trend sticks, it’s going to add to the increased retailer pressure on book prices. Retailers will not subsidize the difference between wholesale and retail forever — as they’re doing here with print (and as Amazon, Barnes & Noble, and others have been doing with ebooks).

    Prices for a few books have dropped below nine dollars (yet, the new Stephen King ebook, discussed further below, remains priced at $35.00. For an ebook.). That hurts independent publishers, though the smart ones are also seeing opportunity. Why buy from traditional distributors when a trip to Wal-Mart will offer more margin. Poke ‘em in the eye! (Contrary analysis here, worth reading and deep thought)

    Where is the consumer outrage? Hint: there isn’t any. Or at least there’s not enough to note. That should probably give the industry pause. Luckily, the American Booksellers Association is on the case: they’re asking the Justice Department to investigate.

  • Stephen King Repeats The Stupid Meme: I am opposed to the current trend of delaying ebook releases until after the initial hardcover window. Especially when the stated reason is to protect someone or something (like, oh, hardcover sales). It’s false logic. You are not going to help independent booksellers by delaying the ebook release. That’s like saying eggs and lemons are interchangeable.

    No seriously, Stephen King, delaying the ebook to “help” independent booksellers (an irony you acknowledge, given the recent price wars) is about the silliest notion I’ve ever heard. How about this instead: if the ABA had a serious and robust ebook sales system, then the customer (reader, buyer) could purchase the format s/he wants from local booksellers. Delaying the ebook doesn’t “help” anyone (Scribner? that digital list price, even if these discounts weren’t happening, can you justify this?). People who prefer ebooks will not shrug and say, “Well, that’s okay, I’ll just buy print.”

    (Yeah, this means that publishers will have to get smarter about pricing ebooks. The current approach remains unsustainable and, let’s say it again, silly.)

    When publishers justify this behavior by noting staggered releases have long been the norm (”that’s how we’ve always done it”), they discount the reader, especially the rabid, money-paying, willing to buy books reader. Yeah, I should be treated with deference. I should get preferential treatment. I want to pay for these books right now, not borrow them from a library or a friend, not buy them used. Protecting the old business model only works if…oh, the market will remain frozen in time forever. It won’t.

  • Barnes & Noble Puts Up Its Nooks: When the Barnes & Noble ebook store was launched, I was underwhelmed. The store was slick, the prices were right, it had an iPhone app. It was…okay. Nothing made the store stand out from the others. Honestly, it felt rushed. Like maybe the competition was getting to them and they wanted to grab some of the land. Rumors ran rampant — like rumors often do — and facts sometime emerged. I was soon convinced that B&N was working very hard to Get It Right.

    The nook (apparently lowercase is correct) show much promise: wireless, wifi (in-store only, right now), EPUB support, other format flexibility, limited sharing, even expanding the ecosystem beyond Barnes & Noble stores. B&N understands that eInk can only do so much, but, ahem publishers who are not taking cover art seriously, also leverages other technology to make some of the experience visually interesting. Oh sure, it’s not perfect, it’s not magic, and it’s not going to kill the Kindle.

    But B&N has shown a willingness to push the envelope, if only a little. Amazon, following the iPod/iPhone development and release pattern, will likely debut new Kindle family members that compete with the nook, but I’m not seeing Amazon opening up to new ecosystems. Right now, they don’t need to. Who suffers most? Yeah, Sony. Develop faster, little Sony, develop faster!

  • Readers Have (Copy)Rights: I know, I know, it’s hard to believe, but the basic premise behind copyright protections included the idea that the public had rights and, in exchange for protecting the copyright of an artist, would be granted a sort of quid pro quo. In the early days, this came in the form of things like, oh, limited copyright terms, which encouraged further artistic expression. I call the change in attitude about copyright “The Mickey Mouse Syndrome” as laws have certainly changed due to the influence of the Walt Disney Company.

    In all the talk about about piracy and file sharing and just plain exchanging books among family members, the rights of readers have been lost. We, the consumer have deal with this attitude about basic (and limited) sharing of books, which, you know, actually encourages reading and future sales (from Publishers Lunch, probably behind paywall):

    One executive, speaking not for direct attribution [BS: Why not? Make your case to us.], told us “We will work it out with them. We need the competition.” But another articulated the concern about setting a precedent. While agreeing that they “will keep talking to B&N and haven’t ruled anything out because details are still coming and I want a strong offer” from them to promote competition, this person expressed concern that “if publishers agree to lending then every ebook offer now and in the future will come with this consumer feature. Over time, I’m concerned that lending won’t grow the market and in fact could hurt it. I’d be more open if I thought ebook lending created a sustainable competitive advantage for BN over the Kindle – but I don’t think it does.”

    A few authors and readers are fighting back because sharing is not pirating. The industry perception that sharing is stealing and that readers are engaged in evil will lead to serious backlash. It’s never good to treat your best customers as thieves (no really, it’s just not!). Authors realize there is benefit to them when books are shared.

  • Territorial Rights Is Good For Whom?: When Hilary Mantel won the Booker Prize, digiliterati noted that the book was not yet available in the United States (nor, I believe, were any of the other finalists). Neat. Book gets a boatload of publicity, is on the mind of readers, and the ability to purchase is, uh, not there? Ditto, as Ryan Chapman notes, for the new title from Stieg Larsson.

    Think about the publishing people: you have books people want to buy and read. And they can’t. Not in print, not in ebook form. Give me five paragraphs on why this is a smart business plan.

  • Minds Were Blown: Remember the intrepid? They never engage in hand-wringing: they are too busy doing for such nonsense. At last week’s Tools of Change Frankfurt, Peter Brantley and Keith Fahlgren debuted BookServer. Afterward, Kirk Biglione noted to me that it might have been the biggest, most important session of the conference. A week later, during the “Make Books Apparent” conference, Fran Toolan of Firebrand Technologies agreed: “What I saw, was many of the dreams and visions of e-book aficionados everywhere becoming a demonstrable reality tonight.”

    I am incapable of explaining the entire project, so I am going to recommend that each and every one of you find a conference where BookServer is being introduced and — this is important — attend the demonstration. Don’t get sucked into hallway conversation. The takeaway, the important message, the critical thinking is that BookServer creates a framework that allows people to access freely available books, purchase them, borrow them, and all of the above and more. Let me say that again: the system supports all models from free to pay.

    This is why I believe in the future of publishing, libraries, and booksellers.

    (And I’m not even getting into the incredible implications this has on accessibility.)

I’m sure I’ll more thoughts on these topics because, well, I always do. The common thread, for those who skimmed, is that removing barriers between books and readers is the new publishing imperative. It’s time for change. We’ll give the final word to Richard Nash:

Publishing will never be stable again.

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7. Stupid Publishing Tricks, Part 1,110,099

Okay, so Sarah Palin finished writing her 400-page book in four months. That’s some hard working. Harper, an imprint of HarperCollins, took one look at the manuscript and pushed the release date to November 17, 2009. As with Ted Kennedy’s memoir, initial print run will be 1.5 million copies.

Fine. All well and good so far. Nothing to consider, nothing to worry about. Unless the books don’t move, in which case, well, hmm, those poor trees.

The problem comes with this kind of thinking:

As with the Kennedy book, the digital edition of Palin’s memoir will not be released at the same time as the hardcover. “Going Rogue” will not be available as an e-book until Dec. 26 because “we want to maximize hardcover sales over the holidays,” Harper spokeswoman Tina Andreadis said Monday.

Publishers have been concerned that e-books, rapidly becoming more popular, might take away sales from hardcover editions, which are more expensive.

People, please. Get over yourselves. Yes, the ebook will drain away some hardcover sales — many of those customers are already lost to you. They choose ebooks for their own convenience, not yours. There is absolutely no evidence that withholding the ebook will encourage ebook readers to purchase the hardcover instead. None. Zilch. Nada. Not one iota. Zippo.

It’s more likely that withholding the ebook version will result in a lost sale. Let’s be realistic about this. The salacious and/or interesting parts will be excerpted and analyzed in the media (blogs, magazines, news sources) almost immediately after publication. Or, if the New York Times remains true to itself, before publication. That’s going to siphon off a good portion of the potential audience.

The ebook customer, a reader who for various reasons opts against print books, is going to carefully weigh the decision to buy this book over a month after initial release. If that reader remembers to make the purchase at all. This is a customer who makes a choice against print. They will not shrug and say, “Well, I guess I don’t have a choice. Gimme the hardcover.”

Maximizing hardcover sales over the holidays only works if a reader must absolutely have that book. Is the Sarah Palin memoir — premature, as many memoirs seem to be — going to be so compelling that it will be a huge holiday gift item (beyond her base)? There needs to be something amazing in this book to sustain interest over the long-term. Something that compels the ebook reader to make a purchase well after the good stuff has been dissected and analyzed.

Given the history of books of this nature, I’m not feeling it.

I suppose I am baffled by the business decision to alienate a growing segment of the reading public in an effort to protect another, especially when the result is most likely to be no sale at all. Makes no sense at all.

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8. Why The B&N Store Isn’t Competition for Amazon

Hot on the heels of the Amazon/1984 news came word that Barnes & Noble is entering the ebook retail space. Oh sure, they were already there with their purchase of Fictionwise, but now they’ve planted a giant flag in the sand. They have proclaimed we are here, we are serious, we are formidable.

Sort of.

While everyone applauds the competition, the truth of the matter is that B&N have just added to the confusion. Several times over the past few days, I’ve read comments from publishing experts, all of whom note that it is very important to keep Amazon from winning the digital book game. Alrighty then, I say, what are you doing about it?

‘Cause thinking the Barnes & Noble store is an “in your face, Amazon” move isn’t reassuring me.

The Barnes & Noble ebook store is being touted as device agnostic. This is simply wrong. They are only selling books in their proprietary eReader format (likewise, when the world was aflutter about B&N matching Amazon’s ebook prices, few noted this was only happening in that same eReader format). I can read books purchased from B&N on my iPhone, Blackberry, or laptop/desktop. I cannot read books on my existing Kindle or Sony Readers. Or any other reader I might happen to own (note to booksellers trying to get in this game: the breadth of readers used by real people is astonishing; try to meet them halfway, okay?).

Unless “device agnostic” now means “devices, but not the ones you happen to own”, it’s not really device agnostic. It’s really just a variation of the Kindle ecosystem. It’s not competition for Amazon or the Kindle in any meaningful way. Jane Litte notes, and I agree, that the Barnes & Noble store won’t entice customers from Amazon. It’s possible that the iPhone app will convince regular B&N customers to try ebooks on their phones, but, like Jane, I seriously doubt existing iPhone ebook readers will be converted in great numbers.

For what it’s worth, I have six reading-related apps on my iPhone right now. No seven. I use two regularly. There is nothing particularly special about the B&N app to convince me to switch from the Stanza and Kindle apps, and I think that’s an important consideration. Offering a similar experience and similar pricing without actually adding something new and exciting to the mix doesn’t make for a game-changer.

(If the goal is open up the marketplace to other devices, that would have been the best possible way for B&N to introduce this store.)

In the near future, B&N will be offering the (large-size) device from PlasticLogic — I like this device, but see it working more for the business user than for the casual reader (it’s not purse-sized); they are also (apparently) developing their own reading device. Will that device be wide open and accept all types of files in an easy-to-manage sort of way? Or will the B&N reader, like so many others, only work with limited formats with a special emphasis on the eReader format.

eReader is a proprietary format. Rumor has it that, in the future, B&N will be selling in the EPUB format. In theory, this opens the door to owners of other devices. If and when EPUB is offered on Kindle, it will be wrapped in Amazon’s DRM. It would be a pleasant surprise if Barnes & Noble chose not to wrap their EPUB files in their own DRM, but ain’t nobody holding their breath for that one.

What is happening — to the surprise of very few — is an ever-increasing Landscape of Confusion. This doesn’t, actually, help publishers achieve their apparent goal of creating a competitive marketplace. Now if the goal were chaos, we have a winner! All these devices, all these formats, all these stores…and readers are reeling because they simply don’t know what formats work with what device (or, heck, operating system).

I’m not sure publishers can do anything about this. But the more confusing the marketplace becomes for ebook readers, the more comforting Amazon seems. It’s a seamless shopping experience. It has the most variety (c’mon Barnes & Noble, playing silly games with public domain works to bump up your numbers?). It’s wireless.

Okay, maybe there are things publishers can do. Set up a fund to help the ABA get its ebook marketplace up and running in a smart way. Sell ebooks directly to consumers in formats that are, ahem, truly device agnostic. I don’t know, maybe beg big retailers like Barnes & Noble to make it easy on readers.

The music industry really wanted, swore they wanted, competition. So they set out to create a marketplace to achieve this goal, aided and abetted by various and sundry services and devices. It was a disaster. In the meantime, music consumers were frustrated beyond belief with the industry’s refusal to listen to what they were saying. It wasn’t hard for Apple to dominate the music space with the right device and purchasing experience.

It’s great that Barnes & Noble is offering its customers an ebook option. But to pretend they’re creating serious competition to the Kindle ecosystem is madness. Let’s talk when they have a device and experience that makes the buying and reading of ebooks the best experience technologically possible.

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9. Someone Else’s Money

A long time ago in a job far away, we were schooled in the basics of distribution deals: at all times, you need to remember that it’s someone else’s money. You collect and report as if you are only passing the funds on to the real owner. For this, you get a percentage, a fee, [...]

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10. What, Exactly, Is A Sale, Anyway?

Tell us, dear friends, are you as amused as we are by the coverage of the Clive Cussler versus Philip Anschutz debacle? You know the one — Mr. Anschutz is accusing Mr. Cussler of, gasp!, overstating his sales in order to receive a bigger paycheck. Somehow (and this has never really been made clear), this [...]

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11. Flip Side: When Pirates Roam Freely

Okay, once again: piracy is bad. It is one thing for an artist to willing, knowingly, and, most importantly, understandingly give their work away for free. It is another for an entity to offer copyrighted works in flagrant violation of all laws and objections by copyright holders. Case in point: eSnips. eSnips is fully aware that [...]

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12. Netflix For Books: Follow The Money Trail

Every now and then, the tides of thought turn to the age-old question: why isn’t there a Netflix for books? Invariably thoughts will turn to one of the many so-called “swapping” services and someone will say, “Look, I found one!” Swapping services help readers but also cut into author compensation. Oh no, dears, not even close. While [...]

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13. Simon & Schuster Changes The Rules: Goodbye Reversion of Rights!

It is a general rule of life that the party who drafts a contract is the party who benefits the most. Sure, it’s not a law or anything. Think of it as more of a guideline. Thus, when Simon & Schuster announced (in a quiet, not designed to stir the waters way) that it was [...]

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14. Harry Potter and the Pricing Problem

As the planet enters the final lap of the Harry Potter frenzy, doom and gloom scenarios abound. No, not about the ending — apparently, there is an unspoken pledge among news agencies to keep that a secret (this is a limited time offer, naturally) — but about the money being made on the book. After all, if all goes according to plan, Harry Potter and the Deathly Hallows will be the biggest selling book ever.

Staggered release windows are so last century.

With one notable exception.

J.K. Rowling will certainly rejoice. Her agent will both rejoice and panic, what with no sequel on the horizon (one hopes said agent has been saving for a rainy day). Scholastic and Bloomsbury, the U.S. and U.K. publishers of the book, will make their investors happy. Hmm, seems like someone in the profit chain is missing.

Ah, yes, the booksellers. Booksellers are not dancing in the street. Make no mistake: booksellers fully anticipate roaring crowds and record sales. It doesn’t matter if you’re a so-called big box retailer or an independent bookseller. Customers will come through the front door (virtual or physical) in droves. They will buy.

The problem is that market pressures have required steep, steep discounts for the new title. There’s a word for it…hold on…yes, competition. The free market system. All that stuff you learned in econ that you were sure would not be useful in the future is now coming into play. Probably even supply and demand. Who knew that supply and demand would be important?

Oh right, anyone who has tried to purchase gasoline over the past six months.

As with unleaded gas, the price crunches are borne by the retailers. While surely some costs have increased for the publishers — recycled paper, advances, promotional costs — market efficiencies and all that (more econ, anyone?) have also made other costs lower. Heck, maybe I should take promotional costs out of the “increased costs” column as surely the biggest effort the publishers had to make was announce a final release date.

The cost of books is, like it or not, a major factor for many consumers. Paying $34.99 is an investment. I know the arguments: it’s a book, it takes months, years, decades to create, it’s valuable above rubies, etc. Yeah, well, movies take months, years, decades to make and they, in a manner of speaking, retail for far less than a book.

But, but, you sputter right back at me, it takes longer to read a book than it does to watch a movie.

True, I agree, because I am agreeable. If we were to price items based on the length of time it takes to consume them, then salt water taffy would be infinitely more valuable than hard candy.

Booksellers can take some solace from the fact that, despite years of warnings, the publishing industry hasn’t figured out how to recapture the magic (hint: publishing something that crosses generational lines and speaks to many belief systems). While booksellers see a long continuum of sales, Scholastic and Bloomsbury, specifically, are looking at their last hurrah.

But this isn’t about the lack of a future business plan, it’s about how books are priced to entice consumers. It is conceivable that the same sales level would have been achieved had every retailer chosen to adhere to the printed (therefore it’s official) retail price*. It is far more likely that many consumers would think twice about paying more than $30 for a book. Many consumers — and I sometimes wonder if the publishing industry really grasps its market — find paying hardcover prices beyond their reach. These customers decide they will wait for the paperback and the publishing industry hopes those customers will remember the book when it finally wends its way to mass market bookshelves.

Do not assume that customers creating shopping lists. “Okay, hardcover spotted. Check. Make note to purchase this in paperback one year from today.”

Staggered release windows are so last century. We want it all now, baby, we want it today. Why, as books are competing with so many other forms of media, would the publishing industry want to create a vacuum where one needs not exist?

And just as the movie studios were forced to cut their wholesale prices on videocassettes and DVDs, it might be time for the publishing industry to rethink its pricing model. It makes no sense at all that one side of the business makes enormous profits while the other struggles to stay afloat. Just as we hear stories about gas stations that are going under because pricing pressures from consumers require that profitability be sacrificed — while oil companies post record high numbers — we will see the same thing happening to booksellers.

* - Why still print the price at all?

More reading:

13 Comments on Harry Potter and the Pricing Problem, last added: 7/21/2007
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15. Regnery Authors Sue For Lost Royalties

Longtime BS BS readers know that one of the dirty little secrets of the publishing industry relates to “club” sales. According to the New York Times, five Regnery authors are suing the publisher for lost royalties due to in-house/related party club sales and other deep discount related party transactions.

The book club is a simple, direct sales tools employed by publishers. Let the books come to the customer, the industry reasons, why make the customer do any work? These clubs were also popular in the music biz, you’ll recall from the time you were six and completed a form to receive ten free records, not realizing that you’d committed yourself to a lifetime of falling behind the eight ball when it came to preventing the shipment (and associated payment) of the next club selection and thereby ruining your future credit and preventing you from becoming the President of the United States.

Or so I’ve heard.

The Regnery authors who are suing are doing so because they have determined that the club sales made to readers unfairly penalized them. Some of you want to cluck your tongues and note that this is not a new thing, the contract is pretty clear, and they should have known this is how the cookie crumbles. Others, of course, are gleeful. Finally, you think, someone is talking about this huge loophole.

The problem with these club sales is two-fold. First, of course, is that there is (generally) no payment associated with the “free” books. The reasoning on the side of the publishers is “no money received, no money to pay”. The second is that the royalties associated with club sales are substantially less than those for traditional sales. Publishers like the UK’s Mills & Boon, who taught the game to Harlequin, built huge fan bases on direct sales. To this day, Harlequin pushes its clubs via advertising and throughout the eHarlequin website.

Oh wait, three-fold. Perhaps the most egregious problem comes when the club is a member of the publisher’s corporate family. Now, we all now that corporate family trees can be very complex. Contractually defined parties can ensure that Entity A has no relationship to Entity B because Entity A signed the contract while Entity B lives on another branch. Oh sure, they consolidate up for tax purposes, but that’s the extent of the relationship.

Without knowing the specific language in the contracts signed by these authors, I can only surmise that the suit revolves around a clause that reads something to the effect of “sums actually received by Regnery”. In this case, the money is actually paid to whatever corporate entity nurtures the book club. That entity reports its results to Regnery who in turn reports to and pays the author. Thus Regnery only pays on what it “receives” from the club entity.

The NYT article notes this amount is 10% of Regnery receives. In the case of the free books that clubs give away like candy to entice new members, 10% of free is nothing. In other cases, it is more difficult to determine the sums because the in-house club “buys” the books at a deep discount from Regnery and then reports back on the results. I have no way of knowing the basis for the payment from one entity to another (it could be a flat per unit amount or a sliding scale based on varying criteria or other). The authors assert that the amounts received for these sales are substantially lower than what they would get via traditional venues, and my experience with other club transactions supports this assertion.

These policies come from a simpler time and place. They reflect the realities of a market that frequently involved true arms’ length deals between unrelated third parties. They also reflect historical economic factors. The business of direct distribution has changed and changed again since then, yet authors remain stuck with contractual terms that have not evolved with the times.

Obtaining and retaining club members is an expensive proposition for publishers. The cost is worth it if a long-term club relationship is established. Smart consumers, of course, take their free books and cancel immediately. The instances of bad debt are much higher for clubs than for other sales venues (major bankruptcies notwithstanding) due to people who simply don’t pay for the books shipped. Collection costs, too, are higher.

Still, publishers have determined that the ongoing, direct relationship with these customers makes these costs worthwhile.

However, when the contracting parties are part of the same parent, serious questions arise. Are the negotiations between the two entities truly conducted in a fair manner? Are the prices paid representative of market value? Are there behind-the-scenes transactions that push money from one ledger to another? Are these related-party transactions done to benefit corporate interests at the peril of authors?

The Regnery authors are taking a bold step with this lawsuit and have the potential to affect change throughout the industry. I think it’s about time.

4 Comments on Regnery Authors Sue For Lost Royalties, last added: 11/8/2007
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16. Joining The Kindle Fray

I had a choice yesterday: join the Kindle fray or watch the Kindle fray. Went with the latter, and, not surprisingly, the vast majority of the bloggers out there were as underwhelmed as I was when the device was initially announced.

It’s unsavory to pay to upload legally-owned content to a legally-owned device.

Kirk Biglione has a great analysis of the good and bad of the Kindle (please skip the first paragraph if you hate ugly truths!), making my job easy. Sort of like batting clean-up in a runaway game. I do want to disagree with Kirk on one point: the Kindle is not attractive. For my money (which, due to this tough job I have, I’m sure will eventually be spent on this device), too much real estate has been devoted to the keyboard. C’mon, look at how the Helio and iPhones rock the keyboard. You can offer flexibility while investing in good design.

And let’s be honest about that. Apple has set the bar very high when it comes to making good-looking products. What’s up with the Kindle’s singularly dull fashion sense? And what’s up with the color? As a long-time iBook owner, I can say that shades of white/putty/greige are dirt magnets. Given that this is a device that defines hands-on, it would seem that a lot of people will have the ickys when they look at the device six months from now.

I think that Amazon, like most companies entrenched in the publishing industry, doesn’t really understand its customers. Media coverage continues to look at a small slice of the ebook market when touting success or failure. The coverage neglects the thriving small press market (hey, Marketplace!, the Star Trek comment showed that you didn’t do your usual great homework). The media also fail to recognize who buys books in this country. Remember the women? The lack of aesthetics — from color to design to size to price — tell me that women weren’t considered as serious customers of this device. Which is a shame, because the first reaction I heard (and this is noteworthy because it came from what should be the target demographic) was “It’s ugly.” Followed by, “It’s too big.” Then, “I’d really be happier if the display was in color.”

This was a huge reader who immediately grasped the magic and wonder of a single device that stored gazillions of words. She got it. Too bad Amazon didn’t get her.

I have two more points to make before sending you off into the wild. First, the fact that this device makes Fort Knox look like an open bar really bothers me. The lack of PDF support alone should send everyone into therapy. Customers who buy the Kindle are locked into Amazon as supplier. Amazon owns that customer in a way that makes me very uncomfortable (and I say this as a customer who uses Amazon Prime like it’s going out of style). There is a cumbersome process for loading your own files onto the device, but, whoo-hoo!, you get charged ten cents for the privilege.

Please, publishing industry, stop treating customers like criminals. It’s really bad for you. It’s somewhat unsavory to pay to upload content I legally own to a device I’ve legally purchased.

As for other issues, Kirk has far more enthusiasm for the EVDO connectivity than I do; my guess is that’s because he has great faith in cellular technology. Kirk, it should be noted, rarely leaves headquarters and doesn’t use a cell phone. I am more concerned about dead zones and my ability to connect from places like, oh, Europe. Why not wireless?

Oh right, I said I had two more issues (turned out to be three, sue me). The final one is the biggie. Money. While I am slightly amused by the notion that I will need to pay to access content that is free — and I am curious about how much of my payment is going to compensate Sprint for use of the EVDO network versus the amount going to content providers (who apparently signed NDAs with Amazon) — I am even more amused by the fact that Amazon didn’t put much effort into making the reading of said paid content optimal. How hard would it be to use a standards-based browser. One blogger accessed his own content via a 14-day free trial…and found the experience rather disappointing.

But all of that is not as important as the other part of the money flow. I quote from the much-maligned (but, honestly, given the target audience, not as bad as portrayed) Newsweek article:

Readers have long complained that new books cost too much; the $9.99 charge for new releases and best sellers is Amazon’s answer. (You can also get classics for a song: I downloaded “Bleak House” for $1.99.) Bezos explains that it’s only fair to charge less for e-books because you can’t give them as gifts, and due to restrictive antipiracy software, you can’t lend them out or resell them.

. . .

Publishers are resisting the idea of charging less for e-books. “I’m not going along with it,” says Penguin’s Peter Shanks of Amazon’s low price for best sellers. (He seemed startled when I told him that the Alan Greenspan book he publishes is for sale at that price, since he offered no special discount.) Amazon is clearly taking a loss on such books. But Bezos says that he can sustain this scheme indefinitely. “We have a lot of experience in low-margin and high-volume sale—you just have to make sure the mix [between discounted and higher-priced items] works.”

The article also indicates that the average cost of digitizing a book is approximately $200. The reaction of Mr. Shanks suggests to me that publishers aren’t eager to explore new economic models for their industry. I’d like to note that compensation for digital sales is the root reason for the current WGA strike in Hollywood. Publishers need to rethink how much they charge retailers like Amazon…and how they pay authors. They also need to think long and hard about what they’re charging consumers — since customers are really the lifeblood of the industry.

I know, I know, you’re thinking that it’s time to move on to other topics. Turkey. Shopping. Smashed potatoes.

Have a great holiday!

11 Comments on Joining The Kindle Fray, last added: 11/28/2007
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17. Globe Pequot and Amazon: Exclusive Is Another Word For Alienating Readers

So I’d like to talk about disenfranchisement of readers. It’s happened twice in this political season, and I think we need to talk openly about it before it becomes a serious trend. You all remember that little issue with Chelsea Green and the decision to bypass traditional bookstores in order to make a POD splash at the Democratic Convention?

These deals seem sexy, with tossing off the words like “exclusive” in the press release.

Now we have Globe Pequot Press offering biographies of the potential First Ladies (in 2008, that’s a slightly annoying term), prior to print release, to Kindle customers only. In the case of the Cindy McCain biography, that one only goes to print if her husband wins the election. You’ll be able to get the Michelle Obama biography win or lose, apparently.

Now, I applaud Globe Pequot’s smart decision to make these books available in electronic editions prior to print release because these election cycles, though they seem endless, move rapidly, and we simply don’t have time to wait for traditional publishing practices. When books are clearly time sensitive, it makes sense to use non-traditional means to get them into the distribution stream rapidly (see article from the Wall Street Journal for more emphasis on this point. Amazon’s statement notes this with a touch of neener-neener-neener:

“We’re pleased to offer Amazon Kindle customers the chance to read Cindy McCain’s and Michelle Obama’s biographies months before the print editions come out later this year,” said Ian Freed, vice president of Amazon Kindle. “Using Kindle’s wireless delivery, customers who purchase these timely books can start reading them in less than 60 seconds.”

Of course, what is not noted is that is exclusive deal leave out readers who, oh, own the Sony eReader, iPhones, Palm devices, laptops, desktops, and other devices suitable for reading electronic books. It should be noted that the non-Kindle ereader population vastly exceeds aggregate Kindle ownership.

Basically, Globe Pequot has decided that it’s so important to get these books out to the reading and voting public in a timely manner that they’ve…cut out the majority of the potential market. Go progress!

Amazon has a vested interest in forging exclusive deals to both solidify its market share and hogtie its customers to a device (as a Kindle owner, I am both happy with the ease of purchase and uncomfortable with what this seamless relationship between Amazon and me means). Globe Pequot has a vested interest in, what? I’d imagine that making its customers happy would be a start.

These deals surely seem very sexy, what with tossing off the words like “exclusive” and satisfaction in “less than 60 seconds”, but, until the Kindle reaches iPhone-like market penetration (and not seeing that happening, for reasons outlined in Kirk’s article), exclusive means disenfranchising readers at a time when fulfilling reader wants — convenience, flexible formats, and good prices — should be wallpapered in every publishing office in the world.

Your customer doesn’t care about corporate bragging rights. Your customer wants the book now or as close to now as is possible. Not only should readers who want ebooks get the format they prefer, but readers of print books shouldn’t have to wait so long for books that might not be relevant weeks from now. Things change too fast to play by the old rules.

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