An American Editor

April 25, 2012

Are eBook Authors Unwittingly Losing Sales?

In a recent article at his blog eBookAnoid, another blog that I regularly read, Tony Cole asked this question: “Do you remember the name of the ebook you have just finished reading?” Although I have not written about this topic before, I have often thought about how I rarely remember either the author or the book title of the ebook I am currently reading or have just finished.

My experience is that I can tell you the storyline of the ebook I am reading, and if it is particularly well-written, I can name and describe many of the characters. Some good examples are The Promises to Keep quartet by Shayne Parkinson and many of Vicki Tyley’s mysteries (see, e.g., On Books: Murder Down Under). Long-time readers of my blog know that I cannot say enough good things about the books written by Shayne Parkinson, Vicki Tyley, and L.J. Sellers (see, e.g., On Books: Detective Jackson Grows and Grows). These are three authors whose names and books I can still recall, even though, for example, it has been probably 2 years since I last read anything by Parkinson.

Yet since reading their ebooks, I have read hundreds of other ebooks. Out of those hundreds, I can recall the names of a handful of additional authors, but all the others, no matter that I enjoyed their work, I cannot recall. I could look them up and have my memory triggered, but that is not nearly as valuable as recall. The ability to recall means the ability to talk about.

I asked my wife if she remembers, and her answer mimicked mine. I then asked some other ebookers I know the same question, and got the same answer from them. It is not that they never remember; it is that 95% of the time, they do not remember.

When I read a pbook, I have to physically pick it up. It is usually in closed form with a bookmark indicating where I left off the day before. When I pick it up to continue reading, I can easily see the book’s title and author, which acts as a reminder of what I am reading. In addition, pbook authors and publishers learned decades ago — if not centuries ago — about the value of constantly reminding the reader of the author’s name and the book title, and so invented the running head (or foot), the place on every page of the pbook that information about what I am currently reading can be found.

In contrast, ebook authors and publishers tend to view the ebook as a continuous flow document and so disdain the use of running heads. True, there are some ebookers who also complain when an ebook has wide margins, blank lines between paragraphs, running heads, nonjustified text, indented paragraphs, and anything else that might make it easier for the reader to read the story. Because someone else (Tony Cole) openly asked the question, I realized that I am not alone in not remembering book titles and author names. That made me realize that ebook authors have missed an important lesson to be learned from pbooks (and marketing in general): You must remind the reader of what is being read and who wrote it constantly. That reminder, especially if the reader likes the ebook, will induce the reader to speak about the ebook and look for other ebooks by the same author.

I am aware that ebooks are not intended to mimic pbooks; if we wanted a duplicate of the pbook, the solution would be PDF. But that doesn’t mean that when creating the ebook, things that enhance the readability of the ebook and that act as good marketing should be ignored just because they are in pbooks. Rather, authors and publishers should be looking at pbooks, which have a long history of success and still constitute 80% of all book sales, to discover what important design elements should be adopted for the ebook. To my way of thinking, the most important element is the running head, which will constantly remind the reader what is being read and who wrote it.

It strikes me that the one thing any author wants is not to be anonymous. An author wants readers to remember their name and look for their books. After all, is not getting one’s work read the purpose of writing and distributing? Yet ebook authors fail to do the one simple thing that would reinforce their “brand” (i.e., their name) to their audience — they fail to include (or insist that they be included) running heads in their ebooks.

Okay, as I noted before, some ebookers will complain (although I suspect that the vast majority would not). But so what. To complain about your book means they remember it and they are speaking about it. Few people would refuse to buy an ebook because it has running heads; fewer people would likely give much weight to a complaint that had nothing to do with the story or the writing as opposed to because it has a running head.

Authors need to sell themselves constantly. They need to do those things that make people remember them. Most authors are not going to write that ebook that everyone praises for clarity, style, craftsmanship, and the like; rather, they are more likely to write what is a good read that numerous readers can enjoy — think of it as the difference between To Kill a Mockingbird and The DaVinci Code. In the case of the former, the author and book are remembered because of the craftsmanship; in the case of the latter, the book and author are remembered because the book was a popular read even if not particularly memorable.

Adding a running head that repeats the book title and author name is an easy and proven method for getting readers to remember what they are reading and who wrote it. It is good marketing. I suspect that authors are losing sales because readers do not remember their name or the ebook title. This one little step could make remembering happen.

April 23, 2012

The Department of Justice vs. eBooks II

As I noted in the first part of this article (see The Department of Justice vs. eBooks I), the settlement proposed by the DOJ raises a lot of issues but doesn’t attack the central premise that agency pricing is okay.

I mentioned in part I that publishers could raise the list/wholesale prices of not-yet-published ebooks. But there is another option that could prove to be even more effective: Publishers are not obligated to give ebooksellers a 50% or higher discount as the wholesale price. Publishers could limit the wholesale discount to 30%, which would reflect the current 70-30 split that comes from agency pricing.

And there is nothing preventing publishers from limiting the format that an ebook can be sold in.

The point is, publishers do not have to think of themselves as helpless. I expect publishers will look at the situation as if they are helpless. They aren’t, but they need to be creative, something they are not known for. As the current debacle demonstrates, publishers are being led, they are not leading.

Let us not forget that the settlement proposed by the DOJ effectively separates book sales into two distinct markets: pbooks and ebooks. This could be important because one of the reasons the publishers gave for agency pricing is that they want to keep the brick and mortar stores alive. (It is worth noting that recent data show that even with the growth of ebooks, pbooks sales still account for 80% of all book sales.)

Well, the b&m stores rely on pbook sales, not ebook sales. Even Barnes & Noble relies on pbook sales. The only major bookseller of pbooks that doesn’t have b&m storefronts is Amazon. If publishers want to help ensure that the b&m stores continue to be competitors to Amazon, the simple way to do so is to not only insist that every bookseller get the same wholesale discount (there is no law that requires volume discounting) but then to supplement the b&m stores with higher co-op payments for displays, which would enable them to have additional funds for discounting to compete pricewise with Amazon.

The law requires that similar parties be treated similarly. So if Amazon wanted co-op money, it would have to open b&m stores. In other words, publishers could help level the playing field without straying from the requirements of the DOJ settlement.

It has been stated on numerous blogs and forums that the key to fighting Amazon is to do away with DRM. Without DRM, people would navigate to the ebookseller with the best pricing and service. I do not think that is true in the absence of devices that can handle different formats. Most Kindle owners will continue to shop at Amazon because Kindles can’t handle ePub in the absence of conversion and side loading. Similarly, Nooks can’t handle Amazon’s proprietary format without conversion and side loading. The question isn’t whether converting and side loading are hard to do — they aren’t — but whether most ebookers would do so to save a dollar or two. I think not.

What Kindlers and Nookers always cite in defense of buying from Amazon or B&N, respectively, is the ease of buying and then seeing their purchase appear on their device effortlessly. Right now they could buy a lot of the indie books that they buy at Smashwords in the DRM-free format of their choice. But they don’t because then they would have to side load the ebooks; they aren’t automatically loaded onto their device. Why would habits change?

Ultimately, the real keys to ensuring competition remains are a single, uniform format that is device agnostic (and if DRM must be, then the DRM also be uniform) and agency pricing.

I can hear the uproar as I write about agency pricing, but consider that many of the electronic items we buy are either agency priced or have the same effect through resale price maintenance agreements. Every ad I see for an Apple iPad gives the same price. Every ad I see for a Kindle Touch lists the same price. Yet no one complains that there is no price competition for these items (where is the DOJ’s proconsumer department in these cases?); the complaints are all directed at ebooks.

Of course, the answer is that Kindles don’t compete with Kindles, they compete with Nooks and each vendor independently decided to set the prices. But it is the blind person who fails to see that there is really no difference in effect for the consumer and the purpose of the antitrust laws, ultimately, is to protect competition for the benefit of consumers. Whereas the DOJ recognizes that the Kindle and the Nook are not the same, it insists that the Stephen King and the Dean Koontz novels are the same, at least in book form.

And if the DOJ were really focusing on the effect on the consumer, it would take a look at the various formats and DRM schemes that lock most consumers into a particular eco system. How much more anticompetitive can one be than to capture an audience and make it difficult for them to stray elsewhere?

Here is another question: Where are the authors in this dogfight? The Author’s Guild has come out against the DOJ settlement, but where are the indie authors? Based on comments I read elsewhere, most indie authors are pleased by the settlement because it will make Amazon even stronger and the majority of their sales are at Amazon.

In the short-term view, the stronger Amazon is, the better it is for the indie author. But is that true for the long-term? I can only speculate, but based on Amazon’s attempting to squeeze publishers for more money, I think it is fair to expect that eventually it will turn to squeezing indie authors. The more dependant an indie author is on Amazon, the less the indie author can refuse whatever terms Amazon wishes to impose. And it must be remembered that Amazon owes its obligations to itself and its shareholders, not to its suppliers. Amazon is the Walmart of ebooks.

There is also one other potential negative effect to the settlement. If Amazon succeeds in establishing the $9.99 price point, indie authors who have not yet found a large audience for their books will be squeezed into even lower pricing than currently. More of their ebooks will be priced at 99¢ and free because the reading public will not see them as being worth more when one can by the well-established and well-known author for $9.99 or less.

How this will all turn out is of great interest to me. I am pleased that Macmillan and Penguin have the moxie to fight the DOJ settlement, as I do not think the settlement is in anyone’s best interest over the long-term. It may be of benefit over the short-term, but somewhere along the continuum, in the not-so-distant future, publishers, authors, and consumers will face a different reality.

What do you think?

April 18, 2012

The Department of Justice vs. eBooks I

As most of you already know, the U.S. Department of Justice (DOJ) has filed a lawsuit against Apple and 5 of the Big 6 publishers alleging collusion in the establishment of agency pricy pricing (see “Justice Dept. Sues Apple and Publishers Over E-Book Pricing; 3 Publishers Settle”). In several of the forums I participate in, ebookers are celebrating the expected lower ebook prices.

Yet, there are several things worth thinking about and noting. First, Random House, one of the Big 6 publishers, and Smashwords, the leading indie author distributor, both of which have agency pricing, are not named defendants in the DOJ lawsuit. That signals to me that the problem is not with agency pricing, but with the collusion aspects.

Second, the 3 publishers that settled with the DOJ, which settlement, it is worth noting, is not effective until approved by a court, are restricted from instituting agency pricing for 2 years, after which they can reassert agency pricing as long as they don’t agree over dinner to do so. This, too, indicates to me that agency pricing is not contrary to the law or necessarily thought to be anticonsumer by the DOJ.

The third notable matter is that the publisher with the greatest moxie, the one that first stood up to Amazon, Macmillan, is not settling with the DOJ and intends to fight, as do Penguin and Apple. That means that the DOJ case is not so strong that it cannot fail once tested. And should it fail, so will the settlement agreements with the 3 settlers fail. It appears that in Macmillan’s case, CEO John Sargent is alleged to have attended only 1 meeting with his fellow CEOs, which means that the DOJ will have to demonstrate that it was at that meeting that the collusion occurred, not an easy task unless the settlers will testify that that is when the collusion came to fruition and that Sargent was present when the decision was made. Hachette, one of the settlers, claims there was no collusion, so it makes me wonder how the DOJ will sustain its burden of proof. Allegations are one thing, proof is another. Simply that there was an opportunity to collude doesn’t prove there was collusion.

There are other problems with the lawsuit. It has been too many years since I last practiced antitrust law (last time was nearly 30 years ago), so I’m not current on the state of the law and I admit that I’m not sure exactly what the DOJ must prove to prevail, but it is clear to me that the Republican-dominated U.S. Supreme Court doesn’t look favorably on these lawsuits. It was a Republican court that upheld resale price maintenance agreements, which has the same effect — setting a floor price below which goods cannot be sold — as the agency pricing system.

An interesting legal question, which may or may not be relevant to the DOJ lawsuit, is this: What constitutes the market? If all ebooks constitute the market, then ebooks are interchangeable commodities, an idea that is resisted by publishers and authors and even by many consumers. If the market is an individual title because you cannot substitute Dean Koontz for Stephen King, then wouldn’t the DOJ have to prove collusion among publishers to set the price for Stephen King, not collusion to set the mechanism for pricing of all ebooks? Of course, there are numerous variables to the market scenario, but they make for a fascinating legal chess game.

But all of this aside, the bottom line is that agency pricing is not illegal even in the eyes of the DOJ. Which leaves a lot of questions. For example, will Random House abandon agency pricing or continue with it? What about Smashwords? (Smashwords has already announced it will retain agency pricing and oppose the settlement agreement during the comment period.)

A more important question is this: Several of the Big 6 have — so far — refused to sign renewal contracts with Amazon because of demands made by Amazon. In the absence of agency pricing, will some or all of the Big 6 refuse to renew agreements with Amazon? Would such a refusal affect both pbooks and ebooks or just ebooks? If they do not renew the agreement, what can Amazon do about it?

The settlement agreement says that publishers cannot prevent a retailer from discounting the publishers ebooks except that it can require the retailer to make a profit across the publisher’s line. I find that an interesting proviso. Consider how secretive Amazon has been about how many ebooks it really has been selling. Amazon has only been forthcoming with broad numbers and in a few cases announcing that an author has joined the millions club. Will Amazon, who is not a party to the proceedings, voluntarily share sales information? I doubt it.

Yet the sharing of that information is necessary to make the exception meaningful. If the wholesale price, that is, the price the ebooksellers have to pay the publisher, of the new James Patterson ebook novel is $13 and Amazon sells it for $10 and sells 1 million ebook copies for a $3 million loss, somehow Amazon must sell enough other books in that publisher’s line to overcome the loss. How is that going to work?

Will Amazon offer the first 10,000 units of Patterson’s ebook for $10, the next 10,000 units for $16, the next 10,000 units for $13, and so on? Customers will be thrilled. Especially if they can buy the same ebook someplace else for $13 when Amazon wants $16.

Another problem with the settlement is that it does not — and cannot — establish a wholesale price for not-yet-published books. The DOJ could say that current agency-priced ebo0ks’ wholesale price is 70% of the current agency price, because that is what the publisher has been willing to accept. But what about future ebooks? The DOJ is not in a position to dictate individual pricing, so there is no reason why publishers cannot raise list prices to $30 and set wholesale prices at $15. The settlement speaks to discounting, not to setting of wholesale price.

There is more to say, but it needs to be said in another installment of this article, so this will be continued in my next post.

April 16, 2012

eBooks vs. pBooks: A Lesson in Value

Filed under: Books & eBooks,On Books — americaneditor @ 4:00 am
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This past weekend, my son and I traveled to New York City for the annual Antiquarian Book Fair sponsored (at least in part) by The New York Review of Books, which is the one magazine about books that I highly recommend. As a subscriber to the Review, I was given a complimentary pass and because my wife advertises her art (see her website for beautiful paintings of the Hudson River Valley and portraiture) in the Review, she was able to get a second complimentary pass.

I mention the complimentary passes because the cost of admission to the Fair should have given me a clue as to what to expect. A daily pass cost $20 per person, so I should have known this wasn’t like going to the local used bookstore. In addition, I am familiar with several of the vendors and know that they sell truly rare manuscripts. But none of the clues clicked and we went to the Fair.

The Fair demonstrated to me why pbooks are so much more valuable than ebooks. I’m not talking about convenience or that pbooks lack the interactive capabilities of some ebooks. I’m talking strictly money value.

eBookers know — or should know — that when they buy an ebook, they are buying a license; they are not buying the book in the sense that they buy a pbook. The ebook is intangible, a collection of bytes that are infinitely duplicable, which means there is no such thing as ebook scarcity. In contrast, there are limits to the number of pbooks produced. Even if, as in the case of the Harry Potter books, hundreds of millions of pbooks are produced, there is still a finite number that bear the first edition-first printing seal of scarcity.

I am a collector of first edition pbooks. As much as I prefer to read a book on my ereader — the book is easier to hold; when I finish I can easily move on the next; I can adjust the type size for easier reading; etc. — I still get enormous satisfaction out of being able to let my eyes scan across my library shelves and pause on a book that reminds me of the pleasure I had reading the book. There is an aesthetic beauty to the physical book that ebooks cannot duplicate. Scanning across my ebook library is a very sterile process.

As a collector, I am always looking for a “bargain.” I initially thought that although there would be some expensive items for sale at the Fair, there would books that interest me and that would fit in my collection that I could afford. One of my favorite authors to collect is Sinclair Lewis, an American author from the early to mid 20th century, best known for his books Elmer Gantry, Main Street, and Babbitt. I have for years desired to add a fine copy of Main Street to my collection and have expected to pay several thousand dollars for such a prize.

This was my first shock at the Fair. Staring back at me from a display case was a wonderful copy of Main Street with a wonderfully preserved dust jacket, something that is not often seen. So I asked the price: $165,000. I assure you, $165,000 is not a typographical error. Needless to say, I didn’t buy. Nor did I buy several of the outstandingly gorgeous “art” books that depicted drawings of birds and plants and that cost between $225,000 and $300,000. Alas, my budget was significantly more modest.

But that made me take a closer look at price expectations for other more recent books that were for sale. Before going down that path, however, let me say that if you ever want to see — and touch — books that have price tags in the $200,000 and $300,000 price range, this is the Fair to attend. Dealers came from Europe and the United States and had a vast array of beautiful manuscripts — the books that make editors so pleased to be editors — for sale in prices that easily climbed from a few thousand dollars to hundreds of thousands of dollars.

But back to the more recent popular books that were for sale. Familiar with Suzanne Collins’ Hunger Games Trilogy? The books are only a few years old in hardcover, with the first book originally published in 2008. They were for sale — first edition, first printing — for $3,000. John Kennedy Toole’s 1980 book A Confederacy of Dunces was available for $8,000. And the list can go on.

The point is that we often talk about the used book market being available for pbooks but not for ebooks, but the used book market is simply a way to recoup some of the purchase price; it isn’t the same as the collector’s market. I never thought that a good argument for a lower ebook price was that unlike pbooks, I can’t resell ebooks on the used ebook market. But after visiting the Antiquarian Book Fair, I realized that the collector’s market is a market that should not be ignored in the argument about value.

The bottom line is that an ebook is less valuable than a pbook. It is less valuable because it cannot be collected; it cannot provide the visual gratification that a physical library, like a piece of art, can; it is licensed rather than owned; and, most importantly, it has no ability to increase in value over time if properly cared for and curated because it has no rarity. The ebook versions of the Hunger Games Trilogy will never have an intrinsic collectible value of $50, let alone of $3,000. There will never be a scarcity of the ebooks.

I suppose one counter to this argument would be that a limited electronic edition could be created. I’m not sure what could be included that would make such an edition more valuable than a standard ebook or make it collectible, but one thing is for certain: even a limited edition could not become scarce because of the ease of duplicating bytes. It is so much more difficult, if not near impossible, to duplicate a first edition-first printing of a pbook. Ink and paper, for example can be analyzed and dated; pretty hard to do with bytes.

For the book lover, the person who not only has an insatiable appetite for reading but also wants to collect beauty and rarity, the pbook garners all of the value. The ebook is a loser in this battle. I expect that the collectible market will sustain pbooks for decades to come, especially as the number of book collectors is growing, not decreasing.

Do you agree?

April 4, 2012

eBooks: Is Agency Pricing Good or Bad?

Recently, there has been a lot of focus on the “conspiracy” between 5 major publishers and Apple regarding agency pricing and whether these 6 entities have violated antitrust law. The focus is not on whether agency pricing is good or bad, but whether the parties colluded. That question I’ll leave for the US Department of Justice.

I’m more interested in whether agency pricing has been good for me as a consumer. Various forums have been discussing this and Mark Coker, president of Smashwords, has written an excellent piece defending agency pricing (see Does Agency Pricing Lead to Higher Book Prices?) Mark Coker makes several salient points, but they are points from the author and distributor perspective, not the consumer perspective.

(Mark Coker does make, however, one interesting observation: Before agency pricing, there was the wholesale pricing model. A publisher would set a book’s list price at say $30 and wholesale to booksellers for $15. The booksellers were free to sell the book for any price they wanted, be it $5 or $10 or $25 or $30. The reality was, however, that no bookseller could sell all books at less than cost and survive, not even Amazon. At some point, a bookseller has to turn a profit or at least cover costs. Consequently, the wholesale price was, in effect, an agency price; that is, a minimum price at which a book could be sold without putting the bookseller out of business. In other words, there really isn’t much difference in effect between the wholesale scheme and the agency scheme as far as consumers are concerned. For retailers, the agency scheme ensures that the retailer makes a profit on every ebook sold.)

But what about from the consumer perspective, and even from the indie author perspective?

In the days before ebooks (i.e., my participation in the ebook marketplace), I spent, on average, $5,000 a year on pbooks, mainly hardcover. I am now into my fifth year of ebooking and each of those years has seen a steady decline in the amount of money I am spending on books overall. Combined, my pbook and ebook spending doesn’t exceed $2,000 in a year, and is often quite a bit less.

One reason, if not the major reason, for this is agency pricing. The traditional publishers, namely the Big 6 (Random House, Hachette, Simon & Schuster, Penguin, Macmillan, and HarperCollins), are overpricing their ebooks via the agency pricing. Consequently, I am simply not buying agency ebooks published by the Big 6. The newest James Patterson novel simply isn’t worth $12.99 or higher to me. They are good reads, but let’s face it — classic literature that I would read again and again and savor each phrase they aren’t. They are formulaistic books that provide entertainment but do not evoke a lasting passion.

Consequently, I consider agency pricing to be a positive for the consumer. It helps dissuade ebookers from spending excessive amounts of money on books that in an open marketplace, and without publishers setting a retail price that bears no correlation to the true value of the book, would not command such high pricing in perpetuity. It might command it for weeks or months, but not years.

Agency pricing has had another benefit for the consumer. It has made the rise of the indie ebook distributor, like Smashwords, possible along with the rise of the indie ebook author. It is not that these entities didn’t exist before; they did in the form of vanity presses for the pbook crowd. Rather, they have become legitimized, something the vanity presses never were able to accomplish.

Because the Big 6 agency pricing is so high, readers like me began to explore alternatives. And now I buy primarily indie authored ebooks at places like Smashwords. The competition among indie authors to get noticed and read has been such that ebooks are often priced at $2.99 and less, all the way down to free. Even here, however, agency pricing is beneficial because I can buy those books at Smashwords or Barnes & Noble or Books on Board or any number of outlets and not worry about price — it will be the same at every store.

I’ll grant that if my only interest in reading is today’s popular books by big name authors, what we used to call the New York Times Bestsellers but which name is no longer appropriate, agency pricing is a problem. After all, Amazon demonstrated that it was willing to sell those ebooks at a loss in order to gain market share. (Which raises another interesting observation: When Amazon was able to sell the bestsellers as $9.99 or less ebooks, it cornered nearly 90% of the ebook market. With the advent of a more level playing field, introduced by agency pricing, its market share has dropped to about 60%.) Amazon had the fortune to be able to sell at a loss because other product lines were making a profit and could support the ebook losses; most ebook sellers did not have that option if they wanted to remain in business.

Agency pricing doesn’t ensure the lowest price; the Big 6 demonstrate that daily. But from my perspective as a consumer, the advent of agency pricing has made ebook selling more competitive. Not because the ebooksellers are being price competitive but because the indie authors are being price competitive. Agency pricing has also ensured that there won’t be one supplier of ebooks, which is also important to me as a consumer.

In balancing the scale of good or bad, I think agency pricing is good for me as a consumer. It has saved me scads of money by limiting the number of expensive ebooks that I buy to a handful. It saves me money because I no longer spend as much on pbooks; I have too many ebooks to read in my to-be-read pile, so I buy fewer pbooks. It has broadened my reading. Before agency pricing I did as many readers and bought reasonably priced ebooks by name authors. Since agency pricing, I browse the indie author ebook offerings and buy indie ebooks at very reasonable prices.

One last observation: Even if the Department of Justice pursues the collusion matter, there appears to be nothing inherently wrong with agency pricing. I expect that at worst the 6 parties being investigated will pay large fines but I think agency pricing is here to stay.

What do you think? Is agency pricing good or bad for the consumer?

March 28, 2012

eBooks: Is it the Editor in Me?

Filed under: Books & eBooks,On Books — americaneditor @ 4:00 am
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Anyone who has looked at my On Today’s Bookshelf posts will see that I buy a lot of ebooks. And as I noted in the last On Today’s Bookshelf, my to-be-read pile of ebooks keeps growing, now numbering more than 500.

But that doesn’t mean I am not reading ebooks; rather, it means that even though I am reading ebooks as fast as I can, I am replenishing my stock faster than I can read. This would concern me if, in fact, I was reading every word of every ebook; but I’m not.

One of the “talents” I have developed over my 28+ years of professional editing is the ability to tell within a few sentences whether a manuscript is going to be particularly troublesome; whether the author has done a basically good job in writing and preparing the manuscript or is a terrible writer, prone to amateurish mistakes, and uncaring about how the manuscript is presented.

This “talent” doesn’t seem to be laid aside when I read an ebook for pleasure, which means that it doesn’t take many pages to decide whether to keep reading or hit the delete button, and much too often, I hit the delete button.

First, I need to dismiss, with a wave of the hand, the idea that the more a book costs, the better it will be. “It ain’t necessarily so!”

From ebook purchases I have made, it is clear that price is not an indicator of quality, especially not of editorial quality, as we have discussed on An American Editor any number of times.

Yet I have also discovered in discussions with other ebookers that quality has no universal meaning. eBooks that I have deleted after a dozen pages because of runon sentences, homonym miscues, and other annoying editorial matters, ebookers without the editorial eye have praised. It is not that they didn’t notice many of the same errors; they did. Rather, it is that they were more tolerant of the errors; they were able to look beyond the editorial problems to the story itself.

So this makes me wonder if I am not missing out some real gems — not necessarily literary masterpieces, just good storytelling — because of the editor in me. It also makes me wonder whether we will eventually devolve into two reading publics: one that cares greatly about the editorial quality of a ebook and so is unwilling to spend much money to buy an ebook and a second that cares little about the mistaking of hear for here and is focused on the story itself and thus willing to pay a higher price for a book as long as the story is interesting.

I also wonder whether American English is changing so rapidly that what editors today would declare error will tomorrow be declared acceptable or correct.

In any event, the problem for me is how to control my editing tendencies so that I can relax and enjoy the underlying story. How do I put aside my editorial hat for the reader’s hat? Should I do so?

The problem was less acute before ebooks. Before ebooks, traditional publishers took some pride in the quality of what they released, although the pride seemed to be diminishing in recent years. But once ebooks made the reading market open to all, the scramble publish pushed aside the need to ensure editorial quality. Part of this is the economics of ebooks; it is hard to justify spending $2000 on an editor for a book that will be sold for 99¢ or less.

Even recognizing the financial considerations, I struggle to read a book that makes me pause every few sentences to say: “The author meant whom not who” or “The author meant your, not you’re.” My neighbor says I’m too fussy. Am I really? Is it too much to ask that at least the basics of grammar and spelling be applied by an author?

What should an ebooker expect from an author, regardless of whether the author gives the book away for free or charges $9.99? Do not most readers have certain basic expectations? Or has the Age of Twitter hardened readers to accept anything goes?

I suspect that I will never be able to set aside my editorial hat when reading a book and so my delete button will continue to get a workout. Are you able to set aside your editorial hat?

February 23, 2012

Breaking News: Amazon vs. IPG

In today’s business section of the New York Times, I read “Amazon Pulls Thousands of E-Books in Dispute.” Then, at Nate Hoffelder’s The Digital Reader blog, I found a link in his “Morning Coffee” column to an article at PaidContent about the controversy, “Update: Amazon Yanks 5,000 Kindle Titles In Fight Over Terms.” Page 2 of the PaidContent article reprints a memo IPG sent to its publishers about the controversy. Both articles are worth reading and thinking about.

As you know, it is not my habit to run more than two articles (plus an occasional Worth Noting) each week, but this is an exception.

Recent news from and about Amazon has been disturbing. (Watch for tomorrow’s article, Worth Noting: Amazon is an Author’s Friend — Or Maybe Not, and for Priming the Pump: Amazon’s Prime Program, which is scheduled for March 5.) For quite sometime, I’ve been saying that the rosy picture painted of Amazon can’t last, and I think we are beginning to see that prediction come true.

I think the New York Times sums up the dilemma neatly: “Amazon is under pressure from Wall Street to improve its anemic margins. At the same time, it is committed to selling e-books as cheaply as possible as a way to preserve the dominance of its Kindle devices.” These are two conflicting goals and there are limited ways available to Amazon to meet them.

Exclusivity is one way. If consumers want certain books, make them available only on Amazon and ebookers will come. Most ebookers will buy a Kindle because they do not want to deal with stripping DRM (Digital Rights Management) and the conversion process, not matter how easy to do; most consumers want to buy and go.

The second available method is putting the squeeze on distributors and publishers, then authors, then consumers. The lost agency fight (remember how quickly Amazon capitulated?) demonstrated that as powerful as Amazon was, it wasn’t yet powerful enough to win a battle with the Big 6 publishers (Penguin, Macmillan, Simon & Schuster, Random House, Hachette, HarperCollins). Amazon has begun striking back at the Big 6 with the establishment of its own publishing arm and its exclusivity deals.

But Amazon is probably powerful enough to win the fight against the mid-tier and low-tier distributors and publishers. It is testing the waters with the battle with IPG. If Amazon wins, especially if you combine the win with how cavalier Amazon is in its dealings with exclusive authors (see tomorrow’s Worth Noting), Amazon will not only dominate the ebook marketplace but be in a position to squeeze lower-tier publishers and distributors, and, ultimately, perhaps the Big 6’s margins to the point that they will not be able to survive. When that squeezing is done, the next in line has to be the authors, followed by the ebookers.

A monopolist is not anyone’s friend. The ebooker mantra that “Amazon is my friend and will do me no harm” is as false today as it was yesterday and as it will be tomorrow. Amazon is not anyone’s friend — it is a business that has to ultimately satisfy its investors by giving an acceptable return. There is nothing wrong with Amazon being a business; what is wrong is that so many ebookers are lulled by the way things are today and fail to look at the long-term implications of Amazon’s success in moving toward becoming a monopoly.

I am aware that many ebookers would be happy to see every publisher and distributor disappear, thinking that when that happens authors will flourish by directly dealing with megacorporations like Amazon and that the consumer will benefit from even lower prices. Unfortunately, history proves that such expectations, in the absence of government price regulation, simply do not come to fruition. Monopolies ultimately result in price rises for consumers and the continual squeezing of suppliers.

Once authors have to fend for themselves, they will be even more susceptible to being squeezed because they will have to stand alone against the 800-lb behemoth. I hope IPG stands firm; I hope it can stand firm. Other small distributors, like Publisher’s Group West, should think about their own vulnerabilities. Will they be next if IPG fails? Should they support IPG?

My questions are these: Once Amazon has squeezed the publishers and distributors dry, and once many authors have decided that they are better off self-publishing and dealing directly with Amazon, how long will it be before Amazon starts squeezing authors dry? And once authors are squeezed dry, how long will it be before Amazon starts squeezing consumers?

Contrary to ebooker belief, neither a monopolist nor a wannabe-monopolist like Amazon is the consumer’s friend.

January 30, 2012

Is There Hope for Barnes & Noble?

As readers of my columns know, Amazon is not my favorite bookseller. It is not because Amazon doesn’t offer value or quality service; it is because I fear Amazon’s attempts to monopolize the book marketplace vertically, that is, everything from acquiring and publishing to selling exclusively. Right now consumers, especially ebookers, are happy with everything Amazon because the prices are lower, the selection is existentially broader, and the customer service is great (especially as Amazon is more interested in market share than profit from the book division). But will all that change should Barnes & Noble follow Borders into the “I remember when” category: I remember when there was competition and prices were low and customer service was great — before Barnes & Noble went out of business!

Maybe I’m alone in my thinking, and maybe I’m alone in my willingness to pay a little bit more in hopes of keeping B&N and competition alive, but the demise of B&N is something I do think about. I have been thinking about it even more often with the latest revelations that B&N is thinking of spinning off its Nook business. My thoughts are now traveling along the lines of “what would you do if you were CEO of B&N?”

It is pretty clear to me that the future lies in the world of ebooks. I think that for at least the next 100 years pbooks will retain a significant place in our culture, but over those 100 years, the market share of pbooks will decline while that of ebooks will increase. This is the hurdle that B&N faces because of its brick-and-mortar (b&m) stores and publishers face as they have not yet come to grips with the reality that their growth and future lies in the ebook world.

Yet I think there is a role for the b&m store in the ebook world, and I think B&N needs to exploit this role, something that Amazon is not well-positioned to do. Thus I play “if I were CEO….”

The real value to B&N of the physical bookstores is the brand Barnes & Noble. That was really the only valuable asset of Borders when it went under. Consequently, I would look to franchise the Barnes & Noble name. Get the company out of directly owning b&m stores, and convert all current stores into employee- and/or small business owner-owned franchise stores.

As part of the franchise, require the stores to sell Nook products and B&N ebooks. But make it profitable for the franchisee to sell those ebooks. If it is to be believed that except for the heavily discounted loss-leading bestsellers, all other pbooks and ebooks can provide a decent profit, then B&N needs to offer franchisees at least 50% of the profit on an ebook in exchange for selling the ebook.

B&N showed some inventiveness with the Nook line. I grant that most of the innovation was done by others — for example, let’s give Sony the credit for the touch screen method that all of the competitors have adopted — but B&N needs to step to the plate and lead in innovating a seamless method by which I can enter a local B&N store, decide I want to buy a particular book but as an ebook, and buy that ebook before leaving the store, giving me the book, B&N the sale, and the franchisee the sale credit. I can think of a couple of ways to accomplish this, so I’m sure the engineers that B&N hires can come up with ways to do this as well.

This idea also has benefits for publishers. If Amazon succeeds, it is the publishers who will suffer the most first. Consequently, publishers need to become creative in how they support the local indie bookstore, including any B&N franchisee. One thing they could do is offer a payment to a store in exchange for the stores displaying a pbook version on the store’s shelves. There are other possibilities as well, things that can be done for a physical bookstore that cannot be done for a virtual bookstore, and that are not directly tied to a book’s price, thereby avoiding having to give the same break to Amazon. Something to think about, at least.

Then there are the indie booksellers. B&N’s survival is as dependant on the indie booksellers as it is on the Barnes & Noble branded bookstores. Even if not franchisees, these booksellers should be given the opportunity to participate in the ebook selling aspects. Because, as sure as the weather changes in upstate New York, if B&N neglects the indie bookseller, Amazon will not. B&N needs to follow Amazon’s lead and jump into a market area quickly and first. More importantly, B&N needs to think of its market in much broader terms than it currently does.

B&N needs to focus its efforts on the Nook and ebooks; it does not need to be distracted by b&m stores. Yet it cannot abandon the b&m market altogether because it is that market, which if carefully supported and nurtured by B&N from the outside, can lead to B&N’s ultimate survival and its ability to compete against Amazon.

B&N needs to focus its efforts on its brand and making people think of B&N first when it comes to book buying. I think B&N can pull this off, but only with much more creative thinking by its management than has been shown to date. B&N has unwilling allies in the indie bookstores because Amazon is a threat to all booksellers and because Amazon is very nimble in addressing marketplace needs. B&N has to convert these unwilling allies into willing allies because all their futures are intertwined.

We will know within a few short years, if not sooner, whether B&N has the wits to survive.

January 16, 2012

Why Won’t Amazon Compete in the ePub Market?

Since the beginning of the “modern” ebook era, when Amazon entered the marketplace with its Kindle, I’ve wondered why Amazon chose to follow its own path as regards format and DRM rather than adopting the ePub standard and a more benign or universal form of DRM. I’ve wondered because by choosing its own path, Amazon has decided that readers who are not Kindlers (by which I mean consumers who read on dedicated e-ink devices that are incompatible with Amazon and thus cannot buy ebooks at Amazon unless they are willing to strip the DRM and convert the file, which the majority are either unwilling or unable to do) is not a demographic to woo.

What is it about ebooks that makes them different from virtually every other market that Amazon is in? Amazon sells, either directly or indirectly, all kinds of universally usable electronic equipment and entertainment. It does not sell, for example, digital music or movie DVDs that are incompatible with the devices consumers already own or buy at Amazon or elsewhere. Only in ebooks has Amazon struck a different path.

In every other category of goods for sale at Amazon, Amazon tries to woo every consumer it can. Only in ebooks does it deliberately exclude millions of potential customers. Why? What is it about ebooks that warrants this divergence by Amazon from its very successful business plan? Granted that Amazon would prefer to sell you a Kindle and lock you into its eco system, but that, at least on the surface, makes no sense as a reason to exclude millions of other ebook consumers from being able to buy ebooks at Amazon. One would think that Amazon’s priority is to sell ebooks on which it makes a profit, not reading devices on which it is said to lose money.

Try as I might, I see no obvious reason for this discrepancy. Amazon could sell its Kindles and also sell ebooks in a Kindle-specific format alongside an ePub format. Or it could sell its Kindles and simply make Kindles ePub compatible. Yet it does neither. It prefers to exclude millions of ebookers who are using devices that require the ePub format.

So I ask again: What makes the ebook market different from the other entertainment markets in which Amazon competes?

It surely can’t be because Amazon doesn’t think it can have a winning hand. Amazon has competed and continues to compete in the hardcover and paperback market on equal terms with all competitors, yet it is the dominant bookseller in those markets. I would expect Amazon to dominate in the ePub ebook market as well, simply because of its marketing prowess, its reputation for value and low prices, and its willingness to operate at a loss fiscal quarter after fiscal quarter.

Although no one has accurate numbers, I think it is reasonable to speculate that Sony, Kobo, and Barnes & Noble have sold millions of ereading devices, not one of which is compatible with the Amazon ebook store. Yet every B&N-branded device is compatible with the Sony and Kobo ebookstores (and every ePub ebookstore except Apple’s) — buy a book at Sony, download it to your computer, and sideload it onto your Nook. No questions asked. Similarly, Kobo and Sony devices work the same with any ePub ebookstore except B&N and Apple.

Why is Amazon willing to ignore the millions of readers in the ePub market? Strategically, Amazon has always tried to make people want to shop at Amazon because of price, selection, and ease of buying. Isn’t that the rationale behind the patenting of the 1-click system? And this is the strategy Amazon follows in everything it sells — except ebooks. Why?

I wonder about this but have no answer. I’m certainly open to suggestions, but I struggle to see how ebooks are different from movie DVDs, digital music, televisions, baby diapers, or any other commodity within Amazon’s sales world. The rationale for establishing an exclusionary system for ebooks when all else is inclusionary eludes me.

What else also eludes me is why Amazon thinks this is good policy for Amazon. Amazon has always worked on the principle that if a person buys their hardcover or paperback books from Amazon, they will also buy their TV from Amazon. So if a person won’t or can’t buy their ebooks from Amazon, are they likely to buy their TV from Amazon? Does this exclusionary policy on ebooks have a snowball effect on other items Amazon sells and on the other markets in which it competes?

Consider this difference as well: Amazon has gone to great effort to create the Kindle, its own dedicated reading device using a proprietary format and DRM scheme. But it hasn’t gone to that effort for other devices such as a DVD player. Why? What makes ebooks and the ebook market different from every other commodity that Amazon sells and every other market in which Amazon competes?

The only answer I have come up with, and I don’t find it a satisfactory answer, is that of all the industries represented by the goods that Amazon sells, the weakest in every sense of the word is the publishing industry, making it the one industry that is highly vulnerable to a direct attack by Amazon. Amazon can become a major publisher because of the industry’s weakness and thus be a vertically integrated enterprise — something that would be much more difficult and costly if attempted in the movie or TV production industries.

Of course, the same question can be asked about B&N’s choice of a DRM scheme, but at least B&N has made it freely available to all other device makers. That it hasn’t been adopted by Kobo or Sony, for example, does make me wonder if B&N hasn’t made a major error in not changing its DRM scheme to be compatible with Sony and Kobo. I think given a choice between the Sony, Kobo, and B&N ebookstores, most ebookers would shop at B&N, even if they prefer the Sony or Kobo device over the Nook.

What do you think?

December 14, 2011

eBook Exclusivity — A Good or Bad Idea?

The answer really is “it depends.” It depends on who you are and where you are in the ebook world.

Recently, Amazon started a program for its Prime members: they can borrow 1 ebook for free each month, choosing from a list of more than 30,000 titles (and the list is growing). The source of these ebooks appears to be the Kindle Direct Publishing (KDP) program. Amazon is encouraging self-publishing authors to participate in KDP. KDP will “lend” books in its program to Amazon’s Kindle Owners’ Lending Library, which is part of the Prime membership.

Amazon hasn’t ignored compensation, either. It has set up a pool of money ($500,000), which is the pool for the first month (Amazon plans to set aside $6 million for the 2012 pool). Every indie-author-participant whose book is borrowed will receive a share of the pool based on the number of times the book is borrowed as a share of total borrowings of all particpating ebooks. Presumably, if your book is borrowed 100 times and the total number of borrowings is 500,000, you would receive $1 for each borrowing (hopefully my math is correct). If, on the other hand, your book is lost in the ever-growing list and not borrowed at all, you will receive nothing except for whatever royalty you are due in the normal course of business with Amazon as a result of sales.

So far, so good — or so it would appear.

Let me say upfront that I am not a friend of Amazon. I disapprove of Amazon’s attempts to dominate the ebook market. But I do admire Amazon’s creativity. The one thing I truly feel confident in stating about Amazon is this: whatever Amazon does, it has carefully thought about how it will ultimately benefit Amazon and further Amazon’s dominance interests. In other words, Amazon is a business’ business. Unfortunately, a corollary to that equation is that what is good for Amazon may not be good for consumers and/or authors and publishers in the long-term. Amazon is proving adept at focusing everyone outside Amazon on the short-term and assuming that the long-term will be equally glorious. As the song goes, “It ain’t necessarily so.”

The deal with Amazon is this: The author/publisher agrees to give Amazon’s KDP exclusive rights to the ebook. The author/publisher agrees that the book will not be available at any place other than Amazon, not even the author’s own website, during the exclusivity term, which term runs for 90 days and is automatically extended unless the author/publisher takes affirmative action to withdraw from the program — with the long-term consequences of withdrawal not currently known.

Exclusivity both bothers me and worries me. It bothers me because Amazon’s environment is a closed environment (yes, I know one can strip the DRM but most consumers can’t and won’t, and I know that Amazon has application for nearly every reading device known to humankind, but that means that even though I’ve chosen Sony or Barnes & Noble over Amazon, Amazon is pressuring me to kowtow to it), unlike virtually every other ebook retailer (with the notable exception of Apple). To read an Amazon DRMed ebook, you must use an Amazon device or application; with most other ebook retailers all that matters is that your device be ePub capable. (And, yes, I do know that there is a DRM problem with B&N and even more so with Apple.) So the exclusivity program bothers me because Amazon is locking up authors and their books to the Amazon platform, whether I want to be on it or not.

Yet worse is what worries me about this program — all the unknowns. I know that Amazon’s big ebook authors — its million sellers like J.A. Konrath (whose books I have never read or bought) — signed on but what I don’t know is whether they signed on under the same terms as Sally Unknown has to sign. More importantly, however, is that Amazon is trying to get the Agency 6 to sign on and is rumored to be offering them a set fee for each borrowing, that is, they would not participate in the pooled money.

If the deal being offered the indie authors is such a sweetheart deal, why isn’t it the same deal as being offered to others? The mighty shaft is rising and it’s not aiming for the Agency 6!

I am also concerned that authors may feel they must join this program in order to stay within Amazon’s good graces. After all, for most authors currently, the bulk of their sales are via Amazon. Yet, there is something that indie authors need to look at, and do so carefully: how are their sales trending?

Jeff Bennington, a suspense writer, explains at his The Writing Bomb blog his decision to participate. Personally, I don’t find his arguments convincing. Bennington states he is joining because 97% of his books have sold via Amazon. One needs to back up a bit from giving that fact too much credence. For example, that number represents past sales not future sales. More important than past sales is the sales trend: has growth on Amazon plateaued while sales at B&N are growing at a 30% rate? What has the author done/not done to promote his book at the Sony store? Have all his promotion efforts been geared to Amazon?

Ultimately, the exclusivity arrangement will hurt lesser-known authors for several reasons: (1) once on the exclusivity bandwagon, it will be difficult to get off (not only must one take affirmative steps to get off, but one has to overcome the fear factor of doing so). (2) Amazon dominates the U.S. market but does it dominate elsewhere? As I understand it, the exclusivity is worldwide. (3) Authors face the same problem in KDP that they face outside KDP — who knows of them or about their book? If KDP already has more than 50,000 participating titles, what are the odds of someone picking your book over another book? (4) If Amazon is successful in getting the Agency 6 to participate and that participation includes the top-tier authors — the Stephen Kings and Clive Cusslers and Ruth Rendells of the publishing world — how likely is it that someone will pick Sally Unknown’s ebook to read for free as opposed to one of Stephen King’s ebooks, especially when the reader can only borrow 1 ebook a month?

What exactly is the indie author getting by participating — not what does the indie author hope to get by participating? All I see that is definite are benefits flowing to Amazon, which has put itself in a no-lose situation; it is wishful thinking and hopes that flows to indie authors.

One other issue matters, I think. What KDP indie-author-participants earn is based on the percentage their sales represent of all sales (unlike the Agency 6 who get paid a set amount each time a book is “borrowed” and who knows what the million ebook club members get). Who has the right and is going to audit the program to verify that the numbers are correct? As far as I can tell, authors are not given the right to audit the entire program, which seems to me to be fundamental to determining whether exclusivity with Amazon is the right move for your book. When Amazon sends you a check for $10, how do you know that it shouldn’t be for $100 if you cannot audit the whole program? And if this is such an up-and-up sweetheart deal for the indie author, then why can’t an indie author or a group of indie authors audit the program? I guess it all boils down to believing “Amazon is my friend and will do me no harm.”

As I noted earlier, I am not a friend of Amazon. I fear what will happen when the only choice for buying an ebook is Amazon, and Amazon is doing everything it can to hasten that day. It is worrisome when indie authors are willing to jump on Amazon’s bandwagon without looking in depth at Amazon’s KDP program and its exclusivity arrangements and the red flags that should be arising. Instead of joining the herd and singing the mantra “Amazon is my friend, I need not worry,” indie authors should be singing the mantra “Amazon is Amazon’s friend, and I do need to worry.”

Indie authors — and all publishers and authors — need to think and look long-term and not be seduced by the possible but uncertain short-term. The waters are shark infested.

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