Month: March 2012

Author, Niche & Power Shifts: What Pottermore MIGHT Point To

Mike Shatzkin has a fine post about the implications of the Pottermore move in terms of publishers and DRM:

Without DRM, as Berlucchi explained, anybody can sell ebooks that can be read on a Kindle. Once Pottermore decided they could live without DRM, they faced Amazon with a very difficult choice. The ebooks were going to go on Kindle devices whether Amazon wanted them there or not. Either they could ignore them or they could play along. I am sure the “play along” deal includes compensation to Amazon for the sales they refer (as it does B&N and, according to a quote from Redmayne, other distribution relations and affiliations will be enabled going forward.)

In other words, in a refreshing change from recent history, the content owner was able to present Amazon with a “take it or leave it” proposition. They decided to “take it”. They were wise. The game was changing either way.

I’ve long felt that the power balance between authors and publishers has shifted and will shift further as digital change drives home a point I made most clearly in my essay No New Normal: The Value Web (and reiterated here on Futurebook):

All of this will happen despite, or perhaps because of the fact that, the actual slice of value captured by each player changes in size and shape. Publishers will be forced to cede more revenue to authors, the idea that 25% Net is a defensible long-term ebook royalty rate is a farce best forgotten about quickly.

And even earlier (2006) when I wrote about Authors Driving Change:

E-books will push this change even more. There is no reason why authors’ royalties should be the same on e-books as they are for paper books and in many ways there is no reason why the authors cannot sell e-books themselves rather than through a publisher. Why should you sell a paper publisher your digital rights when there is no need?

I think Mike is right to say that Pottermore marks a decisive point of change. It is the point at which owning the brand becomes essential, the point at which the 25% slice for the author stops being enough and the changed power balance between author and publisher begins to bite really hard.

If publishers hope to use author brand and scale to attract readers direct then they need to persuade the authors to work with them. That’s gonna take money and a whole new approach to working with the author. I expect we’ll see more of that.

The other change I believe it will drive even further is that of Niche or community driven content publishing. If selling without DRM enables big  publishers to flourish as retailers (or for that matter niche publishers with scale in a single niche), then there is even more incentive for them to pull readers together in communities of interest (or rather to build stores that appeal to those existing communities of interest) and sell content to them directly rather than spending all their marketing on pulling them to a mass appeal site that only offers them content that works for that reader by chance event or a well placed cookie!

So I see Niche coming back with a vengeance, and community at its side, perhaps even a third horseman in the shape of an industry newly engaged in open standards, weak DRM and a willingness to innovate. That’s rather exciting if you ask me.

Go Read This | The null set – The Domino Project

Short and to the point as ever with Seth Godin. I’ve been saying for a while that the biggest competition online for publishers is everything else and that we need to respond quickly:

When we juxtapose an ebook with a movie, Instagram or pigs that attack turtles, the ebook often loses.

One of the very real truths of our culture is being hidden in the dramatic shift from paper to ebook–lots of people are moving from paper to ‘no ebook’. For now, this is being concealed by the superreaders, ebook readers who are on a binge and buying more books than ever before.

via The null set – The Domino Project.

Go Read This | Exclusive: Amazon Has Sold Over Two Million Kindle Singles | paidContent

See what I mean when I say gold? I’ve long felt that by far the biggest weapon in Amazon’s arsenal (after the platform itself) is the self publishing/publishing abilities of the platform which is a while new kind of threat for publishers and one that is becoming much more real and present a danger than just the shift to digital:

Amazon says that in the 14 months the program has been running, it has sold over two million Kindle Singles. Seventy percent of each sale goes to the author or publisher, and Amazon keeps 30 percent. Amazon wouldn’t disclose its total revenues from those two million singles, but the minimum price of a Single is $0.99 and most are $1.99 (the author or publisher sets the price). So with an average price of $1.87 multiplied by two million, a rough estimate of Amazon’s 30-percent cut is $1.12 million. (How much are some authors making? See our post later this morning.)

via Exclusive: Amazon Has Sold Over Two Million Kindle Singles | paidContent.

Go Read This | Exclusive: How Much Do Kindle Singles Authors Make? | paidContent

One of two absolute MUST READ pieces on PaidContent today about Amazon’s Kindle Singles program. A complete coup for Laura Hazard Owen and the rest of the crew over there. The pieces are filled with gold of which the below is only a small amount:

When I got my first royalty check from Amazon, I went to my boss at the bar and was like, “Mike, I quit, dude,” and he was like why, and I was like “Look at this check, man,” and he said, “I’d quit too.”

This is what I’m doing now. My three stories that are out have now sold in excess of 93,000 copies, and I have another Kindle Single that I’m working on for later this year, and hopefully working on a book.

via Exclusive: How Much Do Kindle Singles Authors Make? | paidContent.

There’s so much here but I think it warrants a bit of thought before I blog about it properly!

Eoin

This Scares Me >> Amazon plans to launch 2 tablet PCs in 2H12

It’s a slightly unsettling and sinking feeling I get whenever I hear discussion about booksellers and others moving away from E-Ink based ereaders towards tablets. It’s not a hatred of backlit screens and the like, in fact I like them quite a bit.

Rather it’s that such a move is an implicit acceptance that the stand-alone ereader device is moving from a top priority to a secondary one. The concern for me is that as apps, movies, tv shows, music and games become bigger and better businesses for these players, books become less and less important. With such a shift, books become simply PART of a larger media mix as opposed to being the MAJOR element.

This is not a spurious concern either. B&N indicated that their Tablet device was proving a more successful product for them than their E-Ink device was. Especially because it opened up more opportunities and markets. I’ve written a bit about this previously, particularly around the launch of the Kindle Fire:

There is only so much audience attention to go around and as mobile gaming, tv and film watching and web browsing become possible for everyone, it is just possible that digital books will lose out*. Of course maybe the audience that moves digital will be big enough for this to not be an issue, but even so book publishers and authors will need to compete with movies, games and music much more directly and immediately than they have in the past.

The possibility then that the Kindle Fire presents is one where the dedicated device that has done so much to build the digital book market is, however distantly, headed for a quiet retirement and the publishers who think they have it all so sorted now are going to faced a changed game yet again.

So perhaps you understand why the brace of DigiTimes reports on the topic read this morning left me cold:
ONE

Amazon shipped 3.98 million Kindle Fire tablet PCs in the fourth quarter of 2011, taking up a 14% share of the global tablet PC market as well as the second position in the vendor rankings, according to market data.

Due to strong sales of Kindle Fire, Amazon has shifted its focus from e-book readers to tablet PCs, and so plans to launch a 10-inch model in the second half, instead of an 8.9-inch model projected previously, the sources revealed.

via Amazon plans to launch 2 tablet PCs in 2H12, say sources.

TWO

Global shipments of e-book readers are expected to reach only two million units in the first quarter of 2012, down from nine million shipped the fourth quarter of 2011, according to Digitimes Research.

Via Digitimes Research: Global shipments of e-book readers to slip to 2 million units in 1Q12

Why Storia Is Important

You may have read this piece (or one of the several pieces on the topic) yesterday or this morning:

Storia is in beta now and available for Windows PC through the website; an iPad version is coming later this month. The app itself is free and comes with five free e-books. A store contains over 1,000 other children’s e-books—many available in digital format for the first time—that can be sorted by grade level, reading level, age and character/series.

When the app officially launches in the fall, it will contain over 2,000 titles, reports the AP, “that can be bought directly from the publisher or from retailers.” But the Storia website also says, “Since Storia eBooks come with special features to enhance your child’s reading experience, Storia eBooks can only be read on the Storia eReading app.” I’m clarifying this with Scholastic—if these books are essentially apps that won’t be sold through e-bookstores like Kindle and Nook, that is certainly noteworthy.

via In Major Digitization Effort, Scholastic Launches E-Reading App For Kids | paidContent.

It is  a pretty interesting move and one that I am not surprised by. The shift by Apple some time go makes this kind of move very attractive to publishers of large lists, as I wrote some time ago Apple has created an opportunity in the App space for publishers:

Apple’s more recent decision to enforce tough rules on in-App sales of content has been less popular. It has forced Amazon, Google, B&N and Kobo among others in publishing and other creative industries, to change their Apps to disable links to their ebook or content stores. Further it made it impossible for an ebook retailer to sell an ebook through the Apple in-App purchase system without giving 30% to Apple. Nasty eh?

The opportunity this created and that everyone missed , even me (till this weekend when it dawned on me), is for publishers to go direct to consumers and launch their own apps selling ebooks to readers.

Think about it, ebook retailers cannot make money from selling ebooks via Apple’s in-App sales because their margins simply won’t stretch that far. In the case of Agency titles they would be losing money, even on self-published works they might be losing money. However, a publisher, selling direct through their own app, or even a branded app in partnership with a number of other publishers in a given genre, could easily afford the 30% charge and even an administration charge too so long as it was kept low.

Apple has shifted the economics of the App-economy to disintermediate the distributors and empower the content producer. Sure, in doing so they have gained power and revenue potential for themselves, but they have created an opportunity for a savvy publisher who has a brand that readers identify with.

I would expect to see more of these from larger publishers as well as specialist ones (Witness for instance Amber Books’ Military History app). They make sense and they will hopefully sell books.

The question is whether they lead to the building of relationships with readers, a crucial gap in what iOS offers publishers. That lack of customer data was reportedly one reason why the FT eschews the app store for their own HTML based apps and subscription options.

There are many angles to cover and such apps can only form part of an overall strategy but I think Storia suggests large publishers are looking for opportunities and acting when they seem them!

Eoin