Month: May 2011

Go Read This | Andrew Wylie – WSJ.com

Fascinating stuff this, well worth reading!

I think most of the best-sellers list is the literary equivalent of daytime television. This is a world in which Danielle Steel is mysteriously more valuable than Shakespeare. Now, she may be more valuable than Shakespeare for a period of days, months or even years, in purely economic terms. But over time? We have the Royal Shakespeare Companys collection of Shakespeare works, which pays a royalty each year, a strong royalty. So the business were in is to identify and capture and anticipate the value of books that are inherently classics, future classics. If publishers did the same there would be less of the wild weekend in Las Vegas approach to acquisition that distinguishes the industry and its decline.

via Andrew Wylie – WSJ.com.

No New Normal – The Value Web

For some reason this has been a very hard post to write. It’s a rather strange situation for me as in essence what I’m writing about is really a very basic idea. Maybe it is because I’m afraid that people will misunderstand it or take the wrong message from it. Which if I’m honest means I’m not writing it clearly enough. Oh well! Here goes nothing.

~~~

I want to write about this very simple idea:

That as the impact of digital distribution begins to be felt along the trade publishing value chain, what will emerge is not a NEW VALUE CHAIN as much as a new VALUE WEB, an environment that sees, not one way to generate value in the industry but many ways of doing so. What’s more, this state will persist because no particular method will emerge as the single ‘way’ of trade publishing (if that term even retains relevance), at least not for some time to come.

Everyone (at this stage) thinks that the trade publishing value chain is endangered. They’ve even created a word to describe it, disintermediation. And Everyone is right.

What I think they tend to ignore is the way in which the value chain is endangered. It’s not a simple change that we are experiencing, it’s far more dramatic and complex then is often imagined.

Until recently, the trade publishing value chain looked something like this:

Author > Agent > Publisher > Distributor/Wholesaler > Retailer > Reader

Some people fear that Amazon or Google or Apple will make a big move and the result will be something like this:

Author > Amazon/Google/Apple > Reader

And there’s some real danger of just that happening. You only have to look at how companies like Apple and Amazon have facilitated self-publishing and in so doing excised huge swathes of the old chain from certain sectors of publishing. Certainly on Amazon’s part the ambition to disintermediate the publishing industry has been obvious for some time, at least if you were paying attention, it was certainly clear long before they made this announcement, but sometimes it takes BIG HEADLINES to make people pay attention.

There’s an added complication in that authors themselves (or some of them at least) might just wish for something that looks more akin to this:

Author > Reader

And what’s to stop that? After all there is no reason why using Paypal or some other selling tool, an author could conceivably sell ebooks directly to readers and maybe even turn a small trade by doing so. You could argue that Amazon’s Kindle Direct Platform is a close approximates of that, but I think the platform ownership position of that player means its role is greater than just a service provider.

Hold on tight
But, and it’s a huge but, despite all this evidence of disintermediation there is absolutely no reason to believe that one way of reaching an audience or one way of delivering value will win out for ever and in every instance. For example:

  • Random House has just disintermediated the agent by doing a deal directly with Tom Sharpe for digital rights, and that is by far NOT the only way in which publishers, big and small are finding new ways to operate in the digital era.
  • Bricks and mortar bookstores, despite being at the coal face of the digital wave, are not against a bit of disintermediation themselves. B&N is quietly disintermediating everyone in the self publishing world (just like Amazon is) via Pubit service for their Nook platform. You should expect to see them take their print publishing arm (Sterling) even more seriously then they already do after Amazon’s announcement.
  • Agents are building direct channels to consumers and publishers, long the supposed victims of the piece are beginning to find direct selling attractive and capturing audiences to (hopefully) turn into readers.

The point being that as this digital distribution wave of change washes over the industry, it will radically reshape the value chain in unpredictable ways.

For some titles it will force authors to make hard decisions, it will reduce the predominance of publishers (or at least the traditional ones) while elevating the role of platform owners like Amazon, B&N, Apple and maybe even Google, but for some titles it will broaden the role of publishers and if they are lucky and smart maybe even the surviving booksellers.

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.

Agents may find their 10% under threat too, especially on backlist titles, unless they offer something more valuable then just conversion, after all, their authors are pretty much able to upload a file to a platform for conversion themselves.

Authors themselves will face greater competition both from the increased numbers of writers (Good and Bad) facilitated by digital distribution and the existing databases of ALL titles ever published digitized and available for distribution. If most authors already have low incomes, then they will get lower. Though I’d also expect the winners to become even more gigantic!

As the influence of bricks & mortar retailers wanes, especially the chains, so too will their ability to demand such high levels of discount. I’m pretty sure the platform owners will be able to squeeze most players for a greater share of the revenue. How powerful they will become remains dependent on just how easy it becomes to read a file you buy one place anywhere (currently easier then I’d have imagined).

None of them will go away though. For some books, print will remain a huge segment of the market and bookstores or supermarkets will remain the best place to sell them and traditional publishers will probably remain the best home for such books. For others, the author’s platform will be large enough to justify a going-it-alone route, but even for the biggest authors, for the right book. partnering with an agent, a publisher or a platform owner might be the right move. That’s where the web comes into play.

The tidy chain discussed at the start begins to look, and will be in real life, a whole lot more complicated.  Instead of a publishing value CHAIN, we have something more akin to a value WEB. Different actors can work together on different projects depending on their needs at a given time. And that means title-by-title projects, agents taking on roles more akin to producers (or publishers or retailers or maybe all of them doing so but not on every title). Of course for large parts of the business the platforms and self-publishing will suffice, but overall, the change will be dramatic and will, I think, look something like this:

It’s not all going to be plain sailing
Of course there are going to be losers. The least well positioned players in the game are wholesalers and physical bookstores. Their roles are uniquely challenged because of the shift in format from physical to digital. Yes, as I have said, some print market will persist but what size and shape that will have in twenty years time is anyones guess, what we DO know is that it will be smaller and because of that we’ll have fewer physical bookstores, but how that shakes out we cannot be sure.

I’m sure too that we’ll see casualties among the publishing houses that currently thrive. Some because they make bad decisions and fail to adapt and some from just bad luck. Other will lose market share and fall under the wing of other players, maybe they’ll be publishers too, or maybe they’ll be retailers or platform owners.

The funny thing about this disintermediation business is that the only clear winners are at the ends of the old chain, writers and readers. The writer’s win is tainted by the knowledge that though their options, the costs of and their routes to publication will have expanded greatly, their chances of earning a living from writing will have decreased rather dramatically too.

Readers on the other hand will be faced with a surfeit of choice, less of a problem then most people imagine, but still an issue if too much time is wasted in filtering through those options. On the other hand they can expect to see the price of individual pieces of content to fall, especially when the creator, however talented and however the web has coalesced to deliver that content, is an unknown.

Is Feidir Linn,
Eoin

Go Read This | Amazon Hires Publishing Veteran Kirshbaum for New Imprint – WSJ.com

They’re not messing around, are they?

In a move that fortifies its ambitious publishing program, Amazon.com Inc. has hired Laurence Kirshbaum to head a new general-interest imprint.

Mr. Kirshbaum, 67 years old, will start in early July.The popular publishing veteran stepped down as CEO of the old Time Warner Book Group in 2005. That business was sold to Lagardere SCA and is now known as the Hachette Book Group.

Mr. Kirshbaum said he will publish fiction and nonfiction titles, in both print and digital formats

via Amazon Hires Publishing Veteran Kirshbaum for New Imprint – WSJ.com.

Garret FitzGerald

Some years ago, when Ciaran Lawlor was auditor of the Literary & Historical Society, I was asked if I’d like to deliver a paper to the society. I, of course, said yes and used the opportunity to speak pretty forcefully (there are those who will say crazily) about the need for the EU to be an active (military) force for good in the world, because no-one else would do it.

One of the respondents, the one who cut me right down to size, was Garret FitzGerald (who served as a vice-president of the society) who very sadly passed away this week.

Garret may have destroyed many of my arguments with considerable eloquence but he was also the one who before and after I delivered the paper was full of amazing stories and funny lines about his various adventures, and when he spoke of them, they did sound like adventures. He had no sense of superiority about him and engaged with everyone as equals.

I felt honoured then and I feel even more honoured now. More than that though I feel lucky, lucky that I have lived in a state that was home to such a man, that I had the fortune to meet and speak with him and had the opportunity to experience a firm intellectual drubbing (good for the soul) from him. I feel lucky to have lived in a time when his leadership was a force for such good in the country.

There’s just no replacing Garret FitzGerald. We are, as a nation, impoverished by his passing.

Go Read This | Women help fuel rise in e-book piracy

How do you know you are doing something wrong?

When 35-year-old women are a problem for your industry. Seriously, does ANYONE really believe that this age-group are pirating ebooks because they ‘hate’ publishers or dislike copyright?

No, they are downloading ebooks from illegal sources because they can’t find legal ones, the prices at legal sites are well beyond what they think are fair or simply because they haven’t been reached by legitimate publishers.

Doesn’t make it right in itself but it does suggest there is work to be done by the industry that isn’t ENFORCEMENT work.

ON top of which the report continues with the whole one illegal download = one lost sale nonsense which just drives me mad!

According to the Digital Entertainment Survey, conducted by Entertainment Media Research on behalf of Wiggin, a media law firm, one in eight female tablet or e-reader owners over the age of 35 admits to downloading “unauthorised” copies of e-books.

via FT.com / UK / Business – Women help fuel rise in e-book piracy.

Go Read This (NOW) | Seths Blog: The future of the library

A really excellent post by Seth Godin on the future of Libraries in the digital world. I think that in it, he approaches the truth for far more then Librarians!

The emphasis added in paragraph two is my own. And I’ve added it because I believe that the role of impresario is currently waiting for someone to step into it. That might mean publishers, librarians, author or booksellers, who it is hardly matters in some senses, but there is a clear opening for someone to act as a central coordinator and promoter. Godin gets this, maybe some folks will listen to him.

And then we need to consider the rise of the Kindle. An ebook costs about $1.60 in 1962 dollars. A thousand ebooks can fit on one device, easily. Easy to store, easy to sort, easy to hand to your neighbor. Five years from now, readers will be as expensive as Gillette razors, and ebooks will cost less than the blades.

Librarians that are arguing and lobbying for clever ebook lending solutions are completely missing the point. They are defending library as warehouse as opposed to fighting for the future, which is librarian as producer, concierge, connector, teacher and impresario.

Post-Gutenberg, books are finally abundant, hardly scarce, hardly expensive, hardly worth warehousing. Post-Gutenberg, the scarce resource is knowledge and insight, not access to data. The library is no longer a warehouse for dead books. Just in time for the information economy, the library ought to be the local nerve center for information. Please dont say Im anti-book! I think through my actions and career choices, Ive demonstrated my pro-book chops. Im not saying I want paper to go away, Im merely describing whats inevitably occurring. We all love the vision of the underprivileged kid bootstrapping himself out of poverty with books, but now, most of the time the insight and leverage is going to come from being and fast and smart with online resources, not from hiding in the stacks.

via Seths Blog: The future of the library.

Go Read This | Kindle to Generate $5.42 bln Revenue in 2011 for Amazon: Analyst – International Business Times

How do you like them apples? Very much indeed. Even if this is out by say 20-30% the numbers are impressive!

First mover seems to have an advantage in this game. Those headline figures are pretty eyewatering. Nearly $8 billion by 2012? What’s more look at those margins circa 25% by 2012. Who wouldn’t take that?

“Since mid-2009, competition in the eBook market has been intensifying but, in our view, Kindle remains the most compelling eBook device and a material contributor to Amazons non-core business growth. In our view, in 2011 Kindle can generate revenue in excess of $5.42 billion and $1.21 billion in gross profit; by 2012 we expect at least $7.96 billion in total revenue and $2.00 billion in gross profit,” said Sandeep Aggarwal, an analyst at Caris.

Book titles reached 945,026 in May 2011, increasing by 47,000 over April 2011 5 percent month-over-month increase and by more than 740,000 since Kindle’s first anniversary.

via Kindle to Generate $5.42 bln Revenue in 2011 for Amazon: Analyst – International Business Times.