Publishing Downturn

There is literally too much digital news to know where to start

Eoin Purcell

But start we must
So how about with this piece from Crain’s New York about a new ebook publishing house (strangely sans website yet) OR Books. The house is run by, John Oakes and Colin Robinson, two veterans of New York’s independent literary scene. To my mind the most interesting tidbit in the article was in terms of their business plan:

Publishing only e-book and print-on-demand editions, OR won’t have to deal with any returns. The company also won’t share revenue with distributors, wholesalers and bookstores, which together can collect as much as 60% of sales. The savings will go into online marketing campaigns that will run about $50,000 to $75,000 per title—huge sums for so-called mid-list books.

Print-on-demand trade paperbacks will sell for $15 apiece, but the partners have yet to decide what to charge for e-books. Typically, prices for new titles range from around $26, or the same as a hardcover, to the discounted $9.99 that Amazon charges for most of its Kindle titles.

OR will also make a small number of books available to cooperating bookstores on a nonreturnable basis. And it will consider a title a success if it sells just 5,000 electronic copies.

I’ve added the emphasis there. That, frankly seems a pretty significant sum to be even contemplating in ad spend online (or will that mean print ads for ebooks? And the ebook price is not yet set? Stranger and stranger I say.

Wherever Spanish is read
Everywhere online and digital if the latest reports are to be believed. The top three Spanish publishers have joined forces to create a digital distributor. Seems eminently sensible. A much fuller article can be read on Publishing Perspectives a relative but very interesting newcomer to the publishing news scene, focused on international views and opinions. from the text it seems like these major players have developed a pretty sensible model too:

In negotiations with the Association of Spanish Literary Agencies (ADAL), the publishers have agreed to price ebooks at 80% of a printed books cover price, with a standard 25% royalty rate. Booksellers will be offered a maximum discount of 50%.

The truth, plain and unvarnished
I’ll only cover three items today and perhaps do a follow up post tomorrow, but that third item must be Andrew Savikas’ really gauntlet throwing down piece over at o”Reilly Radar in which he basically calls B*llsh*t in people who think the value is in theur conent. twitter has been abuzz with publisher types praising it all day and with real reason. it is clear, concise and devastating for those who disagree with his perspective:

“But people are still buying content when they buy a book or an album,” the argument goes. Yes, they are. The same way that you’re buying food when you go to a restaurant. You are purchasing calories that your body will convert to energy. But few restaurants (especially those you visit frequently) have ingredients any different from those you can get yourself at the corner store, for much less money. So it can’t be true that your primary goal is to purchase food; you’re purchasing a meal, prepared so you don’t have to, cleaned up so you don’t have to, and done so in a pleasing and convenient atmosphere. You are paying for the preparation of the food and the experience of eating it in the restaurant, not the food itself [2] (beyond the raw cost of the physical ingredients, which in the case of digital content is effectively zero).

And to finish the sad news, for the staff of Borders in Blanchardstown, the book buyers and the publishers of Ireland is that the only Irish store in the UK arm is closing along with four UK based branches. It is a real shame, I liked the store though I will freely admit I got there irregularly. I wish there was some way to avoid this outcome.

Not happy this evening,
Eoin

All your base are belong to AMAZON

Eoin Purcell

Sometimes you get tired of being outmaneuvered

In some senses, what Amazon launched yesterday with Amazon Encore is neither that amazing a project, after all there have been several small-press or self-published titles taken on board by large publishers as I’ve mentioned on this blog before, nor is it even that innovative, Authonomy is at its core a way to tap the self published and slush-piled manuscripts out there in the wild.

But the key point is that this moves Amazon directly into the role of publisher as James Bridle makes clear on his post on the topic:

It’s been a while coming, but some of us have been predicting this move for some time: Amazon have finally made it to the penultimate step on the publishing chain. I say penultimate, because although they are now, by any definition, a publisher, they still appear to be cherry-picking from existing books rather than seeking out their own authors.

I think this move suggests a couple of key questions:

    1. 1) Who benefits most from this (and conversely who hurts the most because of it)?
    1. 2) Can it be extended?
    1. 3) Will there be a reaction?

First, Cui bono

On the face of it, this seems like an amazing opportunity for the author, reading her Amazon blog she certainly seems happy. Amazon’s platform (and as Personanondata point out platform is pretty key) allows for so many things that the average (or small press) publisher cannot. View for instance the neat homemade (and windy) video that amazon have on the main product page. The extra push that Amazon can give a product is really impressive. It will certainly be interesting to see how this works. I think it is fair to say then that the author gets a fair shake of this tail, though it would be interesting to see how the royalties split out.

As for the publisher who backed the book in the first place (always assuming that this encore element remains true) the deal is a win-win. So long, that is as rights for the project were acquired to begin with. A smart author would try and retain the rights for any potential Amazon Encore deal if that was even remotely possible. but allowing for the rights being with the publisher, they will surely gain something from the deal, though if the split of revenue is as one sided as in the case of the new amazon blogs-on-kindle deal (70-30 in favour of amazon) it’ll not be a huge amount. So there is a sense that the publishers who are “chosen” will benefit. But a note of caution from two sources Personanondata & James:

Amazon as producer is a subtle but important change in the operations of the largest retailer. I often mull what would happen to some of the largest publishers if they lost their top two or three authors to Google or Amazon. It may be that the Amazon Encore program sets the stage for a much larger program by Amazon to establish their own publishing and media production operation – their content supply – that feeds their retail presence. There may be further ramifications from this seemingly innocuous press release.

Those who suggest they’ll just keep picking stuff up from the little guys hasn’t been paying attention. In the last five years Amazon have, in addition to dominating online bookselling, bought a book social network, a major print-on-demand supplier, a complete end-to-end self-publishing system, pretty much the entire used books marketplace, the biggest audiobook distributor, the best iPhone ereader, and designed, built and delivered the only truly mass-market dedicated ereading device, with a proprietary format that sets them up to be the iTunes of eBooks.*

It’s big, it’s scary, it’s Amazon. But the publishing industry is under so many different pressures at the moment, this is unlikely to be as big as it could be: Amazon don’t want to annoy their major suppliers, not too much, and not yet. They will though, and by that point, they’ll be past caring. Like Google with their ebooks programme, they’ve been given so much leeway for so long, they think they can do whatever they like, and chances are, they’re right.

So, there is a benefit but they might just eat publishers lunch next week, next month, next year or next decade!

Second, Extension

Sure this can be extended and it is clearly being set up to do so. Amazon is in a great place to carry out their program to almost any conceivable scale. That in itself should indicate that they intend to extend. If you don’t believe it look at what Barnes & Noble have done in Classics and Rediscovered titles and you will get the idea.

But add to it the previously mentioned POD set up, they wouldn’t even need to expend extra capital on print runs, they’d be able to deliver books on demand so even if a huge proportion of the titles failed, their costs would be lower than the major publishers and the bookstore publishers too. That competitive advantage would be added to the fact that they wouldn’t have to pay a retailers discount unless they were selling to the retailers themselves. In effect, aside from what the author and their agents can grab from the chain, Amazon with Encore has successfully placed itself in control of the entire value chain of which I wrote some more about last week but didn’t quite count this in.

And third, reaction

In many ways, there is nothing publishers can do. Amazon is a major customer and now (or for some time, quietly) a competitor. No action that publishers can take in the short term will change that. In order to really reacte, publishers will need to change the game with a much longer term and strategic move. So far most of the discussion seems to centre on the idea of community building and niche curating. I think this is certainly a useful suggestion though as I have mentioned before, the other arm of Amazon’s tool shed (self-publishing & POD) suggests that even that niche strategy may not be a feasible bolt hole.

Conclusion

The long and the short of it is the best reaction is to wait-and-see, to plan and to strategize and quietly (or nosily if you wish) put in place the blocks that will move your position away from an over dependence on Amazon. To that end I am pleased that Ireland is as yet somewhat immune to the Amazon leviathan. Despite our proximity to the UK market, sales through Amazon remain somewhat restrained, firstly by postage and secondly I think, by the more conservative nature of the Irish consumer who seem to be a bit slower in embracing internet retailers (not that some people aren’t taking advantage of the bargains available online).

Still tired of being outmaneuvered but thinking through how best to react in the long term.

Eoin

PS: For those who don’t get the title reference see here

Amazon’s new terms

Eoin Purcell

All’s fair
On the face of it, Amazon’s latest ploy is a fairly decent deal for publishers. For only 2% extra discount you can get paid after 15 days. That’s wonderful, it reduces the time between selling a book and receiving the cash and hopefully therefor makes a publishers cash-flow work better.

But think it through, firstly this is THE PUBLISHERS Money. Secondly if you opt out here is what will happen:

Those publishers who do not offer the extra discount will see their payments made on Amazon’s “standard terms”—effectively 60 days. This means a publisher who sells a book through Amazon in April would not be paid until the end of June. Under the revised terms, a publisher would be paid on 15th May—a full 45 days earlier.

Ouch. That 60 day window is fairly significant.

And I have another fear. If amazon get you onto this 2%-15 days option, what happens in two years time when they make it 2.5%. Once you are on a 15 days cycle, you’ll not want to come off it, especially if Amazon is a significant customer.

Yes, I’m not sure this is a good idea. Far better to accept the longer trade terms and savagely manage the cash-flow issues it presents I think!

Weather is changing this evening,
Eoin

The Final 2008 Numbers

Eoin Purcell

So much for our angst
The figures for week 52 of 2008 are in and the good news is that the Irish Consumer [books] Market crushed the 2007 figure both in volume and value terms.

In 2007 the total value of sales for the year was €153 Million. That figure for 2008 was €165 Million (give or take a few 100k). That is a stonking 7.8% year on year increase in market value. I’m pretty sure that is an unexpected result for most publishers. It seems the 20% of voters who thought the market would beat 2007 were on the money.

The fly in the eye of these figures though is volume which is up even more than the value figure with an increase of just under 15.5%. I’ve some digging and calculations to do but that means the Average Selling Price per book is well down.

Enjoying the break!
Eoin

Houghton Mifflin Harcourt stops acquiring books?

Eoin Purcell

UPDATE: PUBRANTS SAYS THIS DOESN’T INCLUDE KIDS! HERE
No seriously they have
Here & Here:

It’s been clear for months that it will be a not-so-merry holiday season for publishers, but at least one house has gone so far as to halt acquisitions. PW has learned that Houghton Mifflin Harcourt has asked its editors to stop buying books.

I don’t understand this entirely but I do see this as being an enormously worrying development!
Eoin