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Go Read This | the left room» Blog Archive » some quick thoughts on that report on author earnings

Much to think abut in the aftermath of Hugh Howey’s data dump! Thos is just one of the many god posts on it:

The reality is that publishing anything is a unique path. If you have a book, and you’re trying to decide whether to self- or traditionally-publish, there is only the apparition of help for you in these figures. It might be that you traditionally-publish and sell 100 copies, and would financially have been better off self-publishing. It may be that you sell a million copies through traditional publishing. That doesn’t mean that you’ve left money on the table simply because those million sales if self-published would have netted you more. You can’t say what might have happened had you chosen a different route – whether you would have got those 100 or those million sales or something different. This is one problem I see with Howey’s piece (and numerous others). The number of copies a book can sell is not some intrinsic part of its make-up. The way you choose to sell it, and what happens along the way, will play a huge part and can’t be discounted.

via the left room» Blog Archive » some quick thoughts on that report on author earnings.

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Go Read This | Waterstones up, Quercus down—what’s the story? | Independent Publishing Guild in the UK | IPG

Very good piece looking at the competing fortunes of Quercus and Waterstones. I’d add a small amount of caution here. Firstly, the Waterstones figures are for the year up to April 2013 whereas the Quercus figures are more up to date. Even so you can follow the logic through from April 2013 until today, in many ways that makes sense because the impact of the kind of policies highlighted here would be more dramatic on publishers in the key Christmas Trading period than at any other time:

Now, cash management is closely related to stock management, so it should come as no surprise that Waterstones’ stock has come down as their cash has grown. I have no knowledge of the state of Quercus’ stock management, but it’s a pretty safe bet that they’ve got too much stock, probably of extremely good titles, sitting in a warehouse, intended for those big orders that never came from the retailers with those challenging conditions.

For independent publishers to remain independent, and sadly it looks as though Quercus will not, we need a relentless focus on cash management and cash generation. Our businesses and the titles and content that make them need to be profitable, and we need to use the digital print and e-book technologies that enable us to hold the lowest stock possible. Easy to say, and probably pretty obvious, but if we don’t hold it as a top priority we can easily be caught out.

via Waterstones up, Quercus down—what’s the story? | Independent Publishing Guild in the UK | IPG.

Go Read This | The future of bookstores is the key to understanding the future of publishing – The Shatzkin Files

Mike is smart, very smart this paragraph nails the problems of booksellers and publishers too:

One distracting fact for analysts considering this question has been the apparent slowdown in the growth of ebook sales, suggesting that there are persistent print readers who just won’t make the switch. The encouraging fact is distracting because it is incomplete as far as predicting the future of shelf space at retail, which is the existential question for the publishers, wholesalers, and bookstores (and, therefore, by extension, for legacy authors too). We need to know about changes in the division of those sales between online and offline to really have a complete picture. If ebook takeup slows down but the online buying shift doesn’t, the bookstores are still going to feel pain.

via The future of bookstores is the key to understanding the future of publishing – The Shatzkin Files.

Go Read This | Smashwords: 2014 Book Publishing Industry Predictions – Price Drops to Impact Competitive Dynamics

Mark Coker continues to be one of the smartest and most insightful thinkers on ebooks, what they mean and where they are going. His predictions post for 2014 is interesting but this point in particular strikes me as very relevant:

Ebook growth slows – Here comes the hangover.  After a decade of exponential growth in ebooks with indies partying like it was 1999, growth is slowing.  We all knew this day was coming.  Year over year growth of 100% to 300% a year could not continue forever.  The hazard of fast-growing market is that it can mask flaws in business models.  It can cause players to misinterpret their success, and the assumptions upon which they credit their success.  It can cause successful players to draw false correlations between cause and effect.  Who are these players?  I’m talking about authors, publishers, retailers, distributors and service providers – all of us.  It’s easy to succeed when everything’s growing.  It’s when things slow-down that your mettle is tested.  The market is slowing.  A normal cyclical shakeout is coming.  Rather than fear the shakeout, embrace it.  Let it spur you on to become a better, more competitive player in 2014.  Players who survive shakeouts usually come out stronger the other end.

via Smashwords: 2014 Book Publishing Industry Predictions – Price Drops to Impact Competitive Dynamics.

Go Read This | Don’t blame Amazon, Facebook, and Twitter for the fact that technology changes behavior – The Shatzkin Files

It’s kind of remarkable that this still has to be repeated so often, but it does, it really does:

I spoke this past week with the communications director at a think tank who has their publishing arm reporting to him. He’s new to the world of books. He reports that his team keeps portraying Amazon as the enemy; from his perspective, they are “the answer”. Yes, he’s worried about whether their increasing hegemony over the book-buying public could ultimately result in some nasty cuts to his margins. In fact, probably they will. Amazon is likely the most profitable account for almost every publisher because their sales are massive and their returns are minimal. Some publishers report that even their demands for co-op spending are less onerous than Barnes & Noble’s. Of course, they will probably push the envelope over time and claw back more of that margin from publishers. Most retailers would.

via Don’t blame Amazon, Facebook, and Twitter for the fact that technology changes behavior – The Shatzkin Files.

With MatchBook Amazon Pushes The Envelope, Again!

Amazon.com  Kindle MatchBookWith the jam made, I can finally sit down and write about MatchBook. Amazon has gotten very good at releasing solutions to problems within publishing that many people have been talking about for some time but mostly (see comments below) doing nothing about. You’d have to wonder if the industry in general (and I include myself here) will get tired of allowing them set the pace of this digital transition and start working with start-ups to change that dynamic?

My initial response to the announcement of Amazon’s new  product was summed up in the tweet below and I think it still holds though I stress two things:

  • I expect the price points to grow in number (to the higher side) and
  • I expect most publishers to see sense and come on board (there’ll be rights to consider)

But it’s worth working through those points and explaining them.

Incremental revenue
The great thing about MatchBook is that in essence it’s making money for old rope. Customers who avail of it already bought the IP in the book they are “upgrading” and are paying simply to format shift. They’ve no real reason to do this, they are unlikely to do so at full price but a discounted price may well prompt them to buy increasing the overall revenue from that customer for that piece of IP and increasing revenues for Amazon, the publisher and the author. No one in the current chain loses anything in such a transaction (bookstores were never in the transaction to begin with). Sure complications arise where rights have been reverted, but authors can make print and ebooks available again, and here’s a great reason to do just that! This is driving revenue per customer and per title smartly.

E&P bundling & Reason to shift to Digital
Taking these together as they make sense that way! Lots of folks seem to think E&P bundling is a good idea. I’m not sold on the value for me, and I’ll still buy mainly digitally only. But for wavering print buyers, E&P bundling makes a digital transition completely risk free encouraging them to try digital and maybe, just maybe converting them in the process. That’s good for Amazon. It’s okay news for publishers who at some point in the process will begin to wish all their readers were digital ones to enable them to kill costly print runs! For authors it’s neither one nor the other.

Reason to switch to Amazon
This one is clever. So suppose you are a digital buyer from Amazon (or indeed anywhere) and your print purchases are mainly gifts or illustrated and you normally by them from local bookshops, MatchBook is a real incentive to shift those purchases to Amazon just to get your hands on the digital editions for a limited fee. And, if you are a print buyer who buys anywhere but Amazon, this encourages you to shift to Amazon or your print to ensure you can (if you want to) get a cheap eBook version!

Incentive to digitize
Most interestingly to me is that by opening up the hitherto closed incremental revenue option, Amazon is encouraging publishers and authors to make old books available both in print and as ebooks. This drives increased selection for Amazon making it better and more effective at its core goal (in this market of selling books in whatever format). The lure of potential sales will see more ebooks published especially for backlist titles that might once have had decent print sales an area that might see an uptick too.

Objections
I had a long twitter discussion with Tom Bonnick from Nosy Crow about MatchBook the other day and he’s posted a blog about it here

I think it’s fair to say that much of his case is based in this piece (though he might disagree so I’ll leave it for him to respond if I’m wrong):

Conventional wisdom is that Amazon have been pinning their hopes on eBooks as the key area which might one day make them a profit (they’re certainly not making any money on sales of Kindle devices, which operate on absolutely wafer-thin margins). Yet MatchBook seems to fundamentally devalue that core product: it treats eBooks as commodities with no inherent worth; as products that can be given away for nothing as promotional tools. Even if the norm is for a $2.99 pricetag, rather than a straight giveaway, the inescapable conclusion is that the e-format is nothing more than an adjunct to print.

Tom’s logic assumes that Amazon is committed to digital sales (which, while currently true, may not always be so) and only digital when clearly, so long as a customer spends on Amazon, it largely doesn’t matter hugely to the company what format the customer buys content in. Amazon’s strategy then could be simply to improve the value of its ecosystem in its entirety to book readers and encourage them to upgrade from one format purchases to two format purchases driving incremental revenues per sale and per customer and per customer lifetime. If Amazon can gain customers from a bricks & mortar outfits because of this development and it can also drive increased revenues per existing customer then this could really grow its business.

A second key section in Tom’s post is this one:

who will want to continue paying the full price for eBooks as standalone products (which they have, at long last, managed to establish themselves as being) if they’re available for little or nothing when you buy the print edition? And what will MatchBook do to the general assumption about what eBooks “ought” to cost? What will that shift in buyer behaviour do to Amazon’s bottom line, I wonder?

The answer is that just as many people will be unmoved by the offer of a cheap upgrade from print (those who never intend to shift to digital and are not in any kind of wavering camp likely to be attracted to such offers), many (like me) see absolutely no use for print in most circumstances. In fact I view print as a nuisance for most of my reading (though I see it as incredible for several other circumstances). That Tom does not see this suggests he sees print as always having value, but in truth, often it does not have any value at all and so people like me will pay the full price for ebooks because they don’t need or want print.

Tom’s final concern is about bookshops. Actually Tom sees a potential upside of bookshops can get themselves into the bundling game:

But I think this could be a great opportunity for high street retail, rather than a death knell. If bookshops can get in on the act and start offering bundling as well, they may well be in a better position to take advantage of it. For a start, bookshops’ core products are print, rather than e-books, and so unlike Amazon, they won’t be undermining their own health by giving away the e-format. They’re also in a great position to be able to up-sell to customers: there’s no competition between an engaged and enthusiastic bookseller and a website algorithm. And if bookshops can build the right infrastructure, they might be able to offer customers e-editions in non-proprietary formats for more than one sort of device, rather than just the Kindle edition.

While, as you might imagine, I’m not sold on his logic for the benefits, I do see how bundling and up-selling (and I’d say not just up-selling of ebooks, but experiences and more) to print customers offers some potential for book shops. However, as I cautioned earlier, some print buyers simply have no interest in ebooks, arguably (though I may be mistaken) print buyers in local bookstores are probably the most resistant to them, making ebooks perhaps not the right up-sell for them!

On the other hand, Amazon’s very existence is a problem for the bookshops so MatchBook will not really change the nature of the problem, merely perhaps the keenness with which it is felt.

All things considered, I don’t see a negative for MatchBook from Amazon’s perspective drives forward where most others just have yet to push too hard. It may actually help drive adoption of E&P bundling and grow revenues for everyone (except bookshops!).

What Lagardère’s First Half results Doesn’t Say

To be fair, Lagardère’s first half report does draw attention to its success in digital, in fact, on the publishing side, it says the following:

Digital books continued their rise in English-speaking countries, accounting for 34% of Adult Trade sales in the United States (vs. 27% at end-June 2012) and 31% in the United Kingdom (vs. 22% at end-June 2012). Digital books now account for 11.3% of Lagardère Publishing’s total net sales, compared with 8.4% at the end of June 2012. In France, the contribution of digital sales to Adult Trade sales remains low (3.2%), although rising sharply.

But you need to actually work the sums to see what that means. It means that in Fast-half 2013 Lagardère saw €103.61million in digital sales (Based n 11.3% of Net Sales for the division of €907million). So digital is now worth over €100million in net sales to Lagardère. That €100million is €27.59million more than First-half 2012.

That €27.59million represents just over 3% of overall net sales for the publishing division meaning practically all the like-for-like growth in the division and more  than all the reported growth in the division came from digital. Without digital, Lagardère Publishing would be a shrinking business.

Perhaps more interestingly, while digital is clearly growing well, another part of the business is also booming, their Partworks unit. Different ends of the spectrum in some ways, but driven by trends obvious in digital too, branded and licensed content and subscriptions with a healthy dose of direct-to-consumer thrown in for good measure!

Fascinating.