An American Editor

December 7, 2010

Will You be a Googler?

Yesterday, Google Books opened for U.S. residents. This is the long-awaited bookstore, although after a browse of it, I’m not sure why. The question that remains to be seen is whether this bookstore will be very competitive and whether it will challenge Amazon.

Also in yesterday’s news was the rumor/announcement that Borders, in conjunction with the private equity group that currently is keeping Borders afloat, plan to make a bid for Barnes & Noble. This will be interesting.

But the two bits of news really belong together.

Google Books has one thing going for it: it will be a way for independent bookstores to provide an ebook service to their customers. Powell’s in Portland, OR, has already indicated it will be partnering with Google Books. But a look at the Google bookstore doesn’t leave me chomping at the bit to buy books from it, whether print or ebooks.

Try finding customer service. I had difficulty finding it and, more importantly, had difficulty determining whether Google Books is a cloud-only service or a combined cloud-download service. The former I would never buy from (unless I absolutely had no choice) whereas the latter at least gives you the option of maintaining a copy of your purchase on your desktop. But what happens if I purchase a book only to discover after purchasing it that it is not downloadable, something that appears very easy to do at Google Books? Trying to get your money back and have the book removed from your cloud-based library looks to be a herculean task, in contrast to the ease of access to customer service at Amazon, B&N, Kobo, and Sony, to name a few competitors.

There are lots of problems with Google Books. One would think that a company as resource-rich as Google would hire better specialty designers, but I guess even money doesn’t cure the hit-or-miss school of design.

Yet, I suspect that in the not too distant future most of us will become Googlers, that is, buyers of books via Google Books, unless we become Amazoners. I think that the foretold shakeout of the ebook retail industry has just begun. Here’s why and what I would do —

I’d like to be sitting on the cash — note it is cash — that Google is because I would now take the steps necessary to thwart Amazon and Apple’s ebook business. First thing I’d do is buy B&N. Google can do it for cash; Borders can’t compete, Jobs doesn’t believe in reading and so won’t compete, and Amazon could never buy B&N and get past antitrust concerns. And no matter what Leonard Riggio thinks, a serious bid for B&N by Google would be insurmountable by Riggio. It isn’t exactly like he has been such a great leader in recent years that private equity would simply line up and beg him to lead a takeover.

Second, I would put Borders out of its misery. Buy it and merge it into Google Books. The only real value to Borders is its customer list.

Third, I would approach Sony and offer a deal for its ebookstore. I doubt Sony could resist any reasonable offer, especially if Google made a deal to scrap the nook device and help Sony make its devices more price competitive. The reality is that the Sony devices are probably the best dedicated reader devices available except that they cost so much more than the Kindle, nook, and Kobo (and other third-party devices), they can’t get the kind of traction in market share they deserve. Combine Google financial power with Sony technology and suddenly you would see a truly competitive ebook market.

Finally, comes Kobo. The Kobo device isn’t something I would write home about; it’s OK but not a class leader. But the Kobo ebookstore is a different story. If the ebook race were to be decided simply on the quality of the ebookstore and customer service, the race would be between Amazon and Kobo, none of the other major players would even be a blip on the horizon. Kobo is aggressive and provides customer service at the vaunted Amazon level. So what I would do is see if I couldn’t partner with Kobo, perhaps pay a fee to bury the brand and merge it into the Google Books brand but have the Kobo personnel essentially run Google Books.

Ultimately, I think the only ebook bookstore survivors of the major brands will be Amazon, Google, and Kobo. Sony’s ebookstore isn’t bad, but Sony hasn’t got a clue how to promote either its reading devices or its ebookstore. B&N and Borders are mismanaged; B&N does do some great promoting but drops the ball after the promoting. Borders doesn’t seem to do anything right. Apple is really a nonentity as regards ebooks. It’s hard to become a real competitor when the only person who matters doesn’t believe in reading.

Google Books is the unknown in the lion’s den. Google certainly has the fiscal resources to take on Amazon, which is the key player today, but whether it has the vision and the stamina to do so remains to be seen. If we begin to see improvements in the Google bookstore, especially in customer service options, and see Google make moves to create a true competitor to Amazon, then many of us may well become Googlers. Until then, I think Google Books will be last in the race.

September 7, 2010

Is This the Time to Take the Plunge? New Reading Devices Appear

Within the last 60 days there has been a bevy of announcements of new ereading devices. Amazon announced what is popularly called the Kindle 3 and Sony has announced 3 new models — the 350, 650, and 950. How far behind other makers will be is hard to tell, but the upcoming holiday season should be a good one for device buyers.

So the question is this: Is this the time to take the plunge and buy a dedicated ereading device if you don’t already own one? The companion question, of course, is if you own one that is more than a year or two old, is now the time to “upgrade”?

I’ve made it clear any number of times that I am not a fan of Amazon. But that doesn’t mean the Kindle isn’t a good device — it is. For me, the Kindle continues to suffer from the same design flaws as always — (1) it reminds me of my laptop with its physical keyboard and (2) it doesn’t accept DRMed (digital rights managed) ePub files that let me shop at, for example, Barnes & Noble unless I strip the DRM from the B&N file and convert the DRM-stripped file to a format the Kindle likes. But if you shop for books exclusively at Amazon (a practice that I think has bad ramifications for all consumers), the Kindle is a good device, especially the new K3 with the enhanced eInk screen called Pearl.

Amazon’s new Kindle has several things going for it. First, the greatly improved Pearl screen. Second, the device has been made thinner and lighter and smaller, although the screen size (6 inches) remains the same. Third, is Amazon’s great customer service, the envy of the industry and something B&N and Sony should be emulating. Fourth, ease of use. And, finally, great new pricing — top-of-the-line (covers both WiFi and 3G forms of wireless) comes in at $189 and the WiFi-only version comes it at $139.

Sony’s three new devices — the 350, 650, and 950 — are greatly improved versions of current models (the 300, 600, and 900) and are also known as the Pocket, Touch, and Daily Editions, respectively. Each also represents a different screen size: the 350’s screen is 5 inches, the 650’s is 6 inches, and the 950’s is 7.1 inches. Like the new Kindle, these are the new Pearl screens.

Unlike the Kindle, which is menu and button driven, the Sony’s use a new touch screen technology on which you can use either your finger or an included stylus. If you love your touch screen cellphone or iPod-type device, you are likely to love Sony’s touchscreen technology as well. For those of us who aren’t acquainted with the technology, there may be a short learning curve.

Sony also has its flaws. Perhaps the most significant flaw is the failure to include a firmware upgrade that would expand the DRMed ePub capability to include the B&N flavor of DRM. This is significant because there are now 3 major places where one cannot buy ebooks for their Sony without stripping the DRM from the files: B&N, Amazon, and the iBookstore.

The inability to buy DRMed books from Amazon is an industrywide problem; Amazon has chosen to limit access to Kindlers and those willing to strip and knowledgable about stripping DRM and converting file formats. But B&N and the iBookstore sell flavors of ePub and Sony should have made at least the B&N flavor available. I think what Sony is missing is the point that there is a format war (think Betamax vs. VHS or Blu-Ray vs. HD-DVD) and that winning the format war ultimately is more important than keeping customers from visiting other bookstores. (In this regard, the iBookstore doesn’t even amount to a blip on the radar screen. Steve Jobs and Apple would rather go down in flames than give up any control.)

The second flaw is in pricing. The Sony devices are more expensive than its competitors, although I think better built. The 350 is $179, the 650 is $229, and the 950 is $299. However, unlike the Kindle and the Nook (B&N’s entry), the 350 and 650 are not wireless. In this regard, I think Sony is right that most people really don’t care about wireless, not when they think it through. But it is the one point on which every reviewer downgrades Sony and upgrades Amazon. I think for a small (relatively speaking) group of readers, wireless is the decider, but if my experience is any guide, the lack of wireless isn’t even noticed. The Sonys are smaller and lighter than the Kindle but seem to be better quality in terms of build and components — and this is what Sony is banking on. The ultimate question will be whether consumers will think it is worth $40 more for a touchscreen and no wireless or $40 less for wireless but no touchscreen.

As I have said before, I own and love using a Sony 505 that soon will be 3 years old. My 505 works today as if it were fresh out of the box. It is solidly built and has several more years of life in it. But I think the time has come for me to upgrade. I thought about breaking down and going for a Kindle, but it isn’t going to happen. Instead, I’m likely to buy the new Sony 950 with its larger screen. It costs what my 505 cost 3 years ago and if it serves me as long and as well as my 505, it will have been worth every penny. My 505 won’t be going into retirement; my wife has claimed it.

How will I justify the price of the 950? One way is that I will be canceling my print subscription to the New York Times. Instead, I will subscribe to an electronic version of the print edition that I will receive on the 950 every morning when I’m ready to read the paper, not when my carrier gets around to delivering it. That will save me at least $25 a month, which means that in 1 year I will have earned back the cost of the 950.

But I began the article with the question whether now was the time to take the plunge. With the new improvements to the Kindle and Sony devices, I think the answer is yes — if you want a dedicated reading device. There are a lot of good, free and inexpensive ebooks available for all of these devices. If your reading interests extend beyond the bestseller lists, you can get a rapid return on your investment as well as be exposed to new authors.

I do suggest, however, that before deciding on any device that you compare features side by side. Kindles will soon be available in Staples and Target stores and Sonys are available at Best Buy, Office Depot, and Target. Don’t let reviewer hype of one feature sway you — check for yourself and think about how important a particular feature is or is likely to be to you. I don’t buy ebooks every day and when I do buy them, I tend to buy them in bunches of 3 to 5 books. To plug my 505 into my PC via USB simply is not much of a hassle, so wireless doesn’t count much in my decision-making process; other things are more important. You need to view these devices with your own priorities in mind.

Now is the time to think about the holidays and if an ebook reader is on your wishlist, to place your holiday order. For the Sony devices, see the Sony Style Store (350, 650, and 950), and for the Kindle, see Amazon (Kindle 3 and Kindle 3G). If past holiday seasons are any indicator, as soon as you decide which you want, preorder it. These readers have tended to sell out fast.

August 10, 2010

There’s No Joy in eBookville Today

Probably the biggest news of the past week in eBookville (and pBookville, or just plain ol’ Bookville to cover the universe of books and readers) is that Barnes & Noble may be put up for sale. The speculation in the blogosphere is that B&N is on a deathwatch. There is no joy in Bookville today!

From a financial perspective, B&N is pretty solid; the primary impetus for the possible sale is that some investors think B&N stock is too undervalued, that is, the company would be worth more to them if it were sold than if it were to continue to make money at a steady level. (Yes, I’m aware that they lost money, attributable to nook development, in the last quarter, but I prefer to look long-term and not focus on a quarter or two.)

This raises a lot of issues, not least of which is the focus of investors on making a quick buck. I’ve always considered the complaints about IBM stock as an example of misdirected investor greed. Consider that IBM is pretty consistently profitable, owns tons of valuable real estate and patents, and returns a regular dividend. Then compare that to, for example, Amazon. No more need be said on that score.

But the real threat if B&N goes under is to consumers of books. One blogger, Mike Cane, has suggested that Amazon should buy B&N and gives 15 reasons why (see Barnes & Noble Is For Sale: Amazon Should Buy It). Some of the reasons on the surface appear attractive for a company like Amazon and for consumers, but giving careful thought to the proposition might lead to a different conclusion for consumers. Of course, whether the Department of Justice would approve of such a purchase is uncertain and I think unlikely for lots of reasons, but those are not the subject of this article. Once again, Mike Cane and I disagree. (We also disagree about whether Amazon has won the ebook war; he says yes and I think the outcome is yet to be written. I agree that Amazon is winning, but until the finish line is crossed, anything can happen. More than one megalomaniac has fallen before crossing the finish line.)

Let’s assume that Amazon currently controls 30% of the retail book market in the United States, which is a figure that has been bandied about in recent times. B&N is credited with a 20% share of that market. Between the two competitors, 50% of the U.S. book market — print and electronic — is controlled. That makes these two competitors an important outlet for authors, publishers, and consumers. For consumers, the value is in the competition between the two, which helps keep prices low. Add in Wal-Mart and Target, both of which are growing booksellers, and other similar box stores, and you have a pretty competitive playing field. (Remember the holiday price war between Wal-Mart, Target, Amazon, and B&N?)

Consumers who are focused solely on price need to look beyond today’s pricing and wonder about tomorrow’s pricing should Amazon own 50% of the book market. There are several reasons for concern. First, is Amazon’s attempt at vertical integration of the market by offering both publishing and retailing services on a grand scale. If an author is given a choice between publishing with an entity that controls 50% of the retail market or with a traditional publisher who controls 0%, with whom is the author likely to sign? Down the road will such integration really benefit the author or will it put Amazon in a position of dictating terms? I haven’t forgotten the problems of just 18 months ago when trying to negotiate contract terms with Amazon to sell books on the Kindle.

Second, we must consider to whom Amazon owes its loyalty. By law, if nothing else, Amazon owes its primary duty to its shareholders, shareholders who want maximum return on their investment (which is the problem B&N is facing with investors believing it is undervalued). I wonder whio is the largest individual shareholder of Amazon? I know it isn’t the consumer me. How do you get maximum return? By maximizing profits, which is often done by increasing the spread between costs and sales price. If Amazon owns 50% of the market and has no significant individual competition, it is in a position to set prices at whatever level it believes maximizes its return on investment. Even the Agency 5 would have to cave to Amazon’s pricing demands — 50% market share is a whole lot of market share. Isn’t this what Steve Jobs does at Apple? Once you get past Apple’s hype, is a Mac really worth that much more than a Windows PC? Why would anyone believe that what Jeff Bezos says today about being the consumers’ friend will still be true when he is in a position to dictate terms without competitive concern?

Third, is the question of open format. Mike Cane believes that Amazon’s buying of B&N would give Amazon the opportunity to drive the final nail through the heart of ePub, and he may well be right. But how does that benefit consumers? Has anyone noticed that Amazon refuses to let anyone else build a Kindle clone or include on their ebook-reading device the Kindle formats? Does this look like (smell like?) Apple yet again? Imagine if the market dominance of Microsoft and Apple were reversed. I wonder how much more people would be paying for a Mac than the premium they are already paying. I fail to see how Amazon’s replication of Apple’s closed system in ebooks would be good for the consumer; I can see how it would be good for Amazon, just not for me. If B&N goes under and the ePub format suffers a major blow, with Amazon’s unwillingness to open its proprietary formats, we would see the decline of other device manufacturers and ebook sellers — neither a pretty nor a desirable picture.

B&N or an outfit like B&N needs to survive to provide Amazon with competition. It is the competition between these two giants that best serves the reading consumer. Perhaps to survive B&N needs new management — I certainly wouldn’t give Leonard Riggio any kudos for how he has brought B&N into the 21st century, whereas I would give Bezos a lot of credit for what he has done for Amazon — but a management change is a lot different from a funeral march. If B&N is to be sold, then I have to hope for a particular buyer, which I hope is Wal-Mart because it could give Amazon a run for its money and even beat Amazon at its own game. Now that would make for an interesting competition!

July 26, 2010

The Screw You eBook Deal

Every week it seems something new is happening in eBookland to set the ebook cause back a decade or two. Always at the forefront of the reversal of fortune is greed.

This week’s menace to eBookland is literary agent Andrew Wylie and his new publishing venture Odyssey. Wylie could have summed up his actions in simple terms: to disserve both his clients and the ebook-buying public. What, you ask, did he do? He agreed to give Amazon exclusive rights for 2 years to his authors’ backlist titles; Wylie will publish the books and exclusively sell them through Amazon. The backlist includes authors like Philip Roth, Ralph Ellison, and John Updike.

This is tragic on many levels. First, unless he has been given exclusive information by Amazon, he really doesn’t know how much of the ebook market Amazon “dominates.” All Amazon says is “we’re #1” but has yet to actually prove it. Everyone assumes it is true, but without hard data, it is just an assumption (and you know what assuming does — it makes an ass of u and me!).

Second, even if Amazon has the largest single-vendor market share, it isn’t certain that how dominant a market share it has when all players are considered. Everyone assumes it does, but no one really knows — Amazon hasn’t put any real numbers on the table, just the hype, which makes me suspect that that’s all it is –hype.

Third, contrary to what Wylie thinks about his backlist authors, there is nothing out in the open that demonstrates that they are worth the $9.99 that is planned to be charged. What data does Wylie have to demonstrate that $9.99 is the ideal market price point for decades old books? I might reread Ellison at $1.99, but not at $9.99 — he (and Roth and Updike) just aren’t that good. Wylie complains about the Agency 5 pricing and then proceeds to draw a number out of the air himself.

Fourth, 2 years is a long time to exclude all other ebooksellers from having the ability to sell these books. It ignores the thousands, if not millions, of readers who do not buy from Amazon and who do not own a Kindle (and who do not want to read on their PCs or cell phones). If Wylie were my agent, I’d be looking for another one. As a writer I wouldn’t want thousands (millions) of potential readers excluded. As icing on the cake, no one knows whether at the end of the 2 years Amazon has an option to extend that exclusivity. It would fit Amazon’s usual tactics.

Fifth, if Wylie’s goal is to sell as many of his client’s books as is possible, why would he give exclusivity to a company who uses a format that is incompatible with every other ebook-reading device? I hear the pundits now: Because Amazon has an application that lets you read on nearly every device imaginable, just not other dedicated ebook reading devices.

This argument intrigues me. I understand James Patterson or Stephen King taking this position because they are currently writing bestsellers. The likelihood that someone will agree to read the latest James Patterson novel on their mobile phone or their PC is decent — not great but decent. But will these same people want to read a long ago Roth or Ellison or Updike novel that way? I have my doubts. I don’t personally know anyone who reads a book sitting at their desk on their PC or on their cell phones for pleasure (although I am assured that there are people who do), because that is what we are talking about — pleasure/leisure reading.

The argument also discounts all the people who buy ebooks at, for example, Barnes & Noble, which also has applications for various devices and keeps adding them. Are we to be an ebook world of Amazon only, perhaps a little B&N, but no one else?

Sixth, is the arrogance factor. Wylie doesn’t like the Agency 5’s pricing. Fine. Most ebookers don’t either. But you tell me how giving Amazon 2-year exclusivity at $9.99 sends any message of dislike about Agency 5 pricing to the Agency 5 — or even to the consumer. The only message I get is the one to the consumer, which is “screw you! If Amazon is willing to pay enough for exclusivity, I could care less whether you can read my author’s books.” Reminds me of an old radio ad: “Money talks and nobody walks!”

I admit that John Sargent’s (Macmillan) response was laughable in light of his own actions as a founder of the Agency 5. But even so, his response was on target. This exclusivity deal is not good for anyone. Is the goal to discourage reading and drive sales down? If so, these long-term exclusivity deals are a good step in that direction. People are interested in buying books only if they are available when they want them, in the form they want them, and at a price they are willing to pay. Wylie’s exclusivity deal is a 3-strike out: the books aren’t available to many readers in a form they want at a price they want to pay for ghosts from the past — $9.99 is the price point for new bestsellers, not old books from has-been authors.

And did Wylie give any thought to what state of affairs he is helping to create in the long-term? If giving a 2-year exclusive deal to Amazon is his idea of long-term strategic thinking on behalf of clients, he needs to get off his meds. Giving Amazon these kinds of deals plays into Amazon’s long-term goals of dominating ebook publishing and being able to dictate all terms. Every exclusive deal adds a nail to the coffin of marketplace competition because once Amazon sews up a significant portion of the market in these kinds of deals, Amazon will be able to dictate terms — all other competition will have been buried because they can’t get product to sell and they won’t be able to sell for less than Amazon. (That is also one of the problems with the Agency 5 thinking but at least they make their books available to everyone.)

Now that I have castigated Wylie, a punch needs to be thrown at the Agency 5 who brought this about. What did the Agency 5 think Amazon would do in reaction to their concerted efforts to control pricing? Amazon has done the smart thing for Amazon (although not, ultimately, for the consumer) in pursuing these exclusivity agreements. If anything will undermine the Agency 5, it is these deals. Unfortunately, consumers will be collateral damage. The Agency 5 thought Apple would be their savior; they were willing to overlook the fact that Steve Jobs and Jeff Bezos are identical twins. And so they pushed Amazon and now Amazon has pushed back.

Wylie has made what I consider to be a fool’s deal, but the deal is of the Agency 5’s making. “You shall reap what you sow” should become the motto of the Agency 5; Andrew Wylie should resurrect as his motto “Money talks, nobody walks.”

July 16, 2010

Ethics in a World of Cheap

Filed under: Miscellaneous Opinion,Politics — Rich Adin @ 8:04 am
Tags: , , , , , , ,

In response to my article earlier this week, Striking Workers and American Editors, one commenter raised the question of the ethics of buying iPads and iPods when we know that the devices are manufactured in far from ideal working conditions — essentially under slave labor conditions — and specifically asked for my views.

Although the article noted the labor problems in Foxconn’s Chinese factories, the factories where Apple’s iPads, among other devices, are manufactured, the problem is much more widespread. And there is no easy finger of shame to point. But to address the commenter’s request, it is necessary to backtrack a bit and ask the fundamental questions: What is moral? What is ethical?

These are questions with no easy answers. Is it more moral/ethical to give a donation to your local church’s building fund or to the local foodbank’s food-buying program? Is it more moral/ethical to cut school aid or defense spending? Is it more moral/ethical to impose a higher sales tax that disproportionately affects the poor or to raise taxes on estate transfers valued at more than $5 million? Is it more moral/ethical to abort a fetus or to bring into the world a child who it is expected will be abused? Any one of these and myriad other such dilemmas can keep us occupied debating morals and ethics for centuries to come.

The Foxconn-type situation is being played out daily here in the United States and elsewhere. We deplore the conditions under which people have to work yet simultaneously want lower prices for the commodities we want to purchase. The question as posed by the commenter really is nearly impossible to answer because even if we were to agree on what is moral/ethical, that agreement would soon fall apart as we tried to apply it to an actual commodity — because we all value commodities differently. I see no value in an iPhone, but clearly millions of users do.

It is easy for me to say that the ethical consumer would shun every Apple product because Apple is an immoral, unethical company. Why is it so easy for me to say and do? Because I happen to think Apple is an unethical company and so I don’t buy any Apple products. But the kicker to that is position is that I have no need for any Apple product. But suppose tomorrow a major client came to me and told me that I had to either buy an Apple computer or lose all their business and that I had no way to readily make up that lost income, which would lead to a cascade of misfortune for my family. Perhaps ethics is a rich person’s luxury and not a poor man’s possibility.

The situation is similar with books. As a matter of principle, I do not buy books from Amazon. I consider Amazon to be the Apple of the publishing world. Amazon is constantly putting pressure on book prices, which is good for the book buyer but is bad for those of us in the book publishing food chain. If a publisher charges less for a book because of Amazon’s pressure, the publisher will strive to make up that “loss” by squeezing the supply chain — the Wal-Mart approach — which means less money for editors and other publishing suppliers. Editors have been seeing this trend in the United States for years with the offshoring of skilled, professional editorial work. Yet, although I and many of my colleagues recognize this problem, if you ask a book-buying editor where they buy their books, the answer is likely to be Amazon; after all, they would say, “How smart is it to pay $25 to your local indie bookstore when you can buy the same book for $10 at Amazon?” No thought is given to the entics or the morality of the purchase because ethics and morality are for someone else’s purchase, not theirs.

This is the problem with the question asked: Essentially, it is impossible to answer because the angle of approach is so skewed. I think people shouldn’t buy Apple products for lots of reasons and the Foxconn situation is simply one among many reasons. But I no sooner say that than I realize that for a product I do want or need, I price shop and so I create a Foxconn-Apple-type moral/ethical dilemma, just in another place.

In the ideal world, every product would be fairly valued, every service would be fairly valued, every person would be highly valued — but that’s in the ideal world. All I can do is strike a small blow for what I think is right based on my needs and values; I cannot honestly condemn the iPad buyer for encouraging the Foxconn labor situation without condemning myself for the BP oil spill as a gasoline buyer and for the poor working conditions on farms for migrant laborers? (Shouldn’t I bicycle only? But what about the low-wage factory worker who built the low-priced bicycle, which is all I can afford to buy because of the low pay I receive from publishers to edit books that Amazon insists not have a retail price higher than $10 because consumers now expect that as the top price?  Shouldn’t I be willing to buy strawberries at 3 times the current price to assure farmers a good return in hopes the farmer would better the laborer’s working conditions and pay?)

I have yet to meet a moral/ethical question that is either laser focused or capable of being addressed in a laser-like fashion. Simplifying either the complex moral/ethical dilemma or the complex response/solution to a 5-second media byte does a disservice to everyone and does nothing to address the underlying causes and dilemmas. Until consumers are willing to give up cheap, until corporations are willing to accept smaller profit margins, until politicians are willing to forsake graft, until churches and their members are willing to practice what they preach, I’m not certain that I — or anyone — can adequately respond to the commenter’s concerns about the ethics of buying an iPad or an iPod or any Apple product based on the Foxconn cesspool alone. What we really need and should be addressing is a wholesale makeover of our approach to material things and how we prioritize our values. Only then, perhaps, can we truly apply a laser-like focus on the Foxconn-Apple-type moral/ethical conflicts and arrive at a universally supportable and implementable resolution.

In the mean time, I will continue to avoid buying Apple products, Foxconn simply being one more good reason to do so.

June 15, 2010

From One eBook Market to Multiple eBook Markets: Who Wins?

Amazon has announced its new AmazonEncore and AmazonCrossing publishing ventures and has signed J.A. Konrath for Kindle distribution. Now Barnes & Noble has followed suit with PubIt! as a self-publishing platform with B&N distribution. eBooks are fragmenting the book market and the loser is the reader.

Amazon and B&N are only the beginnings of the upcoming slugfest. Each will try to entice both new and established authors to abandon their relationships with traditional publishers and publish their ebooks exclusively on one of these new platforms. At first glance, this looks great, especially for authors like Konrath who are midlist authors with allegedly declining sales. The problem is that these new ebook platforms are fragmenting the book market for the consumer.

Will Amazon make Konrath’s ebooks available for everyone or just for Kindle owners? OK, it doesn’t take much imagination to answer that question based on Bezos’ past practices — most of the reading world will not have access to the ebook for reading on their dedicated device. How long will it be before Amazon decides that although the future is ebooks, the present requires both e and p, and so wants exclusive rights to both versions? Or is that already part of the deal?

Traditional publishers, including the big 6 (5 of whom, in cahoots with Apple, are already screwing readers with the agency pricing model) have lots of faults but the bottom line is that they are better for readers than Amazon, B&N, or Apple ever will be — because they distribute their product to everyone. Granted I may not like their pricing policies, their insistence on DRM, and the ebook windowing, but I sure like those unfriendly policies a lot better than Amazon’s insisting that I buy from it and if I want a dedicated reading device that I buy the Kindle.

I can hear the uproar now: Amazon makes it easy to read on nearly any device through its different device-specific applications — as long as I don’t want to read on a competing dedicated ebook reading device. But if I wanted to read on my PC or my laptop or my cell phone, why would I have bought a dedicated ereading device? Why should I be forced to kowtow to Amazon?

But the issue isn’t can I read it on my laptop computer or my tiny cell phone; the issue is can I read it on the dedicated reading device of my choice. Ultimately, I think financial survival of authors — other than the big blockbuster authors like Stephen King and James Patterson — lies in the hands of those readers who buy more than 1-3 books each year; that is, the dedicated, avid reader, the reader who buys and reads lots of books and who will buy a dedicated reading device.

Authors who sign exclusive deals with Amazon, Apple, B&N, and other similar ebook publishers/sellers should be boycotted because of the harm they are doing to their fan base and to readers in general. How many of these reading devices will I need in order to read new works from favorite authors? Why should I be forced to use an inconvenient method to read just because a favorite author has signed an exclusive deal? Why should I reward the author for the hurt caused me by the author’s greed?

I don’t disagree that authors should be compensated — and compensated fairly — for their efforts. I’ve never hesitated (well, not too often) to purchase a hardcover book that interested me simply because of price. But I am much more cautious about what I spend on ebooks because of all the restrictions and because I do not want to reward flat-out greedy authors who sign exclusive deals that prohibit interested readers from purchasing their books. Konrath, for example, has lost my business.

A fractured ebook market is not good for either readers or authors, yet authors, when offered these exclusive deals with Amazon, seem to have a great deal of difficulty looking beyond today. Perhaps an author will see a short-term boost in sales, but I suspect that over the long run these exclusive platform deals will hurt authors. They certainly will hurt readers.

The rejoinder, of course, is that the books will be available for a lot less money than traditional publishers would charge and the author will make more money. I expect that both are true, certainly in the formative years. But I always have niggling in the back of my mind this: What will happen when 60% or more of the ebook market — both publishing and selling — is controlled by a single company? History tells us that when that occurs, consumer prices tend to rise and wholesale prices tend to decline. Didn’t we see that, for example, with Microsoft’s pricing of Windows and Office?

Too many consumers think that Bezos and Jobs are really their best friends, business leaders who are really only on the lookout for what is best for the consumer. Today that may be true, but will it be true tomorrow if Amazon forces B&N out of business, or if Amazon gains the type of dominance in publishing and selling of ebooks that Microsoft has in consumer operating systems?

Exclusive deals between authors and hardware+publisher+seller companies are not in the reading publics’ best interest. I believe that consumers are best served when publishers are separated from the sellers.

June 10, 2010

There’s No Apple in My Eye!

I am probably an anomaly in the digital age. I do not own any Apple products (except the free version of QuickTime that has been forced on me) and have no plans to acquire any Apple products. I am not particularly impressed by the iPad or the iPod, and see the iPhone as just a money sinkhole.

I used to think how great it would be to be able to build a computer to my own specifications and use the MacOS, but that never occurred because Apple doesn’t permit it. Of course, that was also in the days when I believed the hype about how much better Macs were than PCs.

Something else I never do is buy from Amazon. I occasionally buy from independent sellers who are using the Amazon platform, but not from Amazon itself. A very long time ago I did buy a few things from Amazon, but the last time I did so, was so many years ago, I can’t even remember when it last happened.

As I was drinking my morning tea and reading the newspaper press release about the new iPhone, it occurred to me that the only two consumer companies I intentionally avoid patronizing are Amazon and Apple, which got me thinking about why I avoid them. In the final analysis, it was because each company is the flip-side of the same coin and neither is different from the other — in both instances the company leaders are people who I do not admire and do not trust and both companies want to control too much of me.

In Amazon’s case, I simply do not approve of Bezos’ naked attempts to mold the publishing industry to his view. I think this is ultimately anticonsumer and only good for Bezos. The deception is that Bezos presents himself and his company to the consumer as if they are their champion because they want lower pricing. Unfortunately, lower pricing is not a panacea for all of mankind’s ills — just look at how rock bottom pricing from China has affected us, or how BP’s cost-cutting attempts in the Gulf of Mexico will affect us — and cost us — for decades. Similarly, having been on all sides of the publishing equation except that of author during my quarter century in publishing, I can see how concentration of market power and pricing power in the hands of a single person like Bezos could be devastating to readers — perhaps not today or tomorrow, but not so far down the line. It also irks me that Amazon insists on a closed system for its ebooks, refusing to adopt the ePUB standard and a common DRM scheme. Consequently, I have chosen not to support Bezos’ quest to dominate publishing and do not buy from Amazon.

Apple, however, presents a slightly different problem. In some market segments it is dominant and has set the ground rules, but that really doesn’t bother me because there are any number of powerful competitors to Apple who could bounce Apple from its perch. The problem with Apple is Jobs and his insistence on closed systems and his arbitrariness (for a recent take on the arbitrariness theme, see the Ars Technica column “Apple’s ‘Evil/Genius’ Plan to Punk the Web and Gild the iPad”).

Maybe Adobe’s Flash is problematic; maybe that political video is insulting; maybe that book uses too many 4-letter words. Maybe, maybe, maybe — except in Jobs’ world where it is definitely, absolutely, and without question. I fundamentally object to Jobs telling me what I can and cannot do. Why should every application for the iPad or iPhone require Jobs’ approval? I bought the hardware not a nanny — or did I? (And the SDK kit for application developers is as controlling as Jobs can make it.)

Jobs assumes that the experience that I want to get from an Apple product is the experience that he wants me to get; that I have no idea of what is a good experience or a bad experience. I do not want to encourage the control mania that Jobs seeks to exert; consequently, I do not buy Apple products. If I want to read James Joyce’s Ulysses, I do not want to first check whether it is on Jobs’ approved list — I just want to read it, 4-letter words and all.

I also do not want to encourage Jobs to think that I acquiesce to his power grab over hardware and applications I buy. Today, Jobs permits Barnes & Noble and Amazon to have iPad applications, but will he permit them tomorrow if he discovers that they are making 90% of the ebook sales that are being made to iPad owners? It would be more true to form for him to find some reason why the applications need to be banned or for him to revise the operating system to make the applications incompatible.

I know that Apple devotees believe that when you buy an Apple-built computer or other Apple product you are buying the best; but that isn’t really true. You are buying the best that Apple has and the various components do work well together, but the individual pieces are not necessarily the best available for what I want to do. For example, few video gamers would put an Apple at the top of their wishlist to play games. More importantly, at least for me, is that Jobs has decided this is how the hardware will be configured and who can write applications for his operating system and I will buy it whether it truly meets my needs or not. Jobs wants me to adapt to him, yet one would think that in the consumer age the seller would adapt to the buyer.

In the end, it boils down to arrogance. Both Jobs and Bezos arrogantly believe that they know what is best for me and either I agree or they will take home their ball so no one can play. In Apple’s case, I wonder how many people look beyond the shiny new toy; in Amazon’s case, I wonder how many people look beyond the price; in both cases, I wonder how many people have read George Orwell’s 1984 and recognized that it might apply to something other than nations.

May 3, 2010

The Decline & Fall of the Agency 5

April 2011 is the month to prepare for armageddon in ebookdom. It is when the 2010 agency model pricing scheme will be buried by publishing’s 2010 savior, Steve Jobs and Apple. You read it here first.

All the stars and moons and planets will align and the caterwaul of panic will be heard throughout ebookdom, because that is when the Agency 5 — Macmillan, Simon & Schuster, HarperCollins, Penguin, and Hachette — will realize they have been snookered by the snooker master.

“Why is April 2011 so important,” you ask? Because it turns out that Steve Jobs did the Apple version of bait and switch on the big 5 — the agreement for agency pricing was/is only for 1 year. Come April 2011, I’m willing to bet that Jobs will drive the final spike into the agency pricing system for ebooks. Not necessarily the agency model, just the pricing — $9.99 (or less) will become the Jobs mantra.

In April 2011, publishers will discover that the iBookstore is a losing proposition. Oh, Apple will have sold many millions of iPads, fulfilling expectations for a successful tablet, but the buyers, it will soon be discovered, either aren’t buying ebooks at all (maybe 1 or 2) or what they are buying they are buying from Amazon or Barnes & Noble or Smashwords. (By the way, nothing could be worse for the Agency 5 than if Smashwords is a bigger success on the iPad than the iBookstore, because that success would be price based.) If the iBookstore is a flop for Agency 5 books, the Agency 5 are out of the catbird seat and Amazon is back in.

Not only does it matter that the iBookstore may be a flop in terms of Agency 5 sales, but if Steve Jobs determines that agency pricing is hurting his income or the iBookstore, he will scrap agency pricing in a heartbeat — or even quicker if he can (again, pricing parameters not the model for the split). eBookers know who to blame for the high pricing, and if they don’t, Amazon reminds them constantly and Amazon controls (or so it is claimed) 80% of the ebook market.

Even if Amazon’s share of the ebook market drops to 50% by April 2011, it won’t have dropped enough to salvage the agency pricing system. To salvage it, the iBookstore has to command at least 35% of ebook sales and probably 50% of Agency 5 ebook sales — plus there can’t be much dropoff in sales of Agency 5 ebooks from pre-agency levels. The Agency 5 are already losing a significant percentage of money on the agency split as compared to the traditional wholesale split, so a drop in sales will compound the problem.

So what’s the backup plan? My bet is there isn’t one. It will be more of the same crying and complaining from the Agency 5, a wailing lament about how ebookers simply do not value ebooks. And then the moment of truth will come — that moment when Apple and Amazon each pressure the Agency 5 to lower prices; that moment when Amazon decides that the Agency 5 needs Amazon more than Amazon needs the Agency 5; that moment when authors decide it is better to cast their lot with Amazon than with the Agency 5; that moment when the Agency 5 realize they have doomed themselves to oblivion unless they take immediate, bold steps.

Jobs and Apple have demonstrated repeatedly that they are no friend of anyone but Jobs and Apple. (Do we need to go any further than the raid on the reporter’s home at the behest of Jobs because one of Jobs’ minions lost his cell phone?) Apple proclaims an open system as it closes its doors; it offers a carrot to publishers while hiding the stick. And there is no doubt that Jobs and Apple will decide on “proper” ebook pricing based on what is good for Jobs and Apple, not for anyone else’s survival.

April 2011 will be the moment in ebook history that historians will be able to point to as the turning point. If the iBookstore succeeds in eliminating Amazon’s dominance of ebook sales and in selling a lot of Agency 5 ebooks, then agency pricing may have a longer life. But if Apple fails to topple Amazon and if the iBookstore sales of Agency 5 books aren’t spectacular, agency pricing will die. The clock is ticking. If I were one of the Agency 5, I’d be working on a new plan and doing a lot of heavy public relations work in preparation for doomsday. Will Google be proclaimed the next industry savior?

April 7, 2010

Agency in eBooks: Just the Start?

With all of the hullabaloo lately about the shift to the agency model of pricing brought about by Apple and 5 of the big 6 publishers, the question of what this means for the future of all publishing has been sidestepped. (For those unfamiliar with the model, essentially it means this: publishers set the retail price for an ebook and every ebookseller sells the ebook at that price. The ebooksellers aren’t really sellers in this scheme; they are simply conduits — a funnel for money to go from buyer to publisher and for delivery of an ebook to the consumer. For their efforts, the ebooksellers receive a commission.)

Let’s assume that the publishers (and Apple’s) motive for the agency model in ebook pricing is pure as the driven snow before the dog is let outside. Let’s also assume that the move was necessary to preserve “quality” publishing by ensuring that publishers and authors receive a fair return for their work effort. And let’s further assume that publishers play and will continue to play an important role in getting “quality” manuscripts from the oven to the table.

Yes, I know that for some of you these are mighty big assumptions and that it goes against the grain, like a fingernail scraping across a chalkboard, to give any credence whatsoever to these assumptions, but their credibility really doesn’t matter in the real world. What does matter is what the agency model for ebooks portends for publishing as a whole, and here is where publishing may well meet its Waterloo (further discussion of publishing meeting its Waterloo is found in Will Apple’s iBookstore be Publishing’s Waterloo?).

If the agency model works for ebooks, why won’t it work for pbooks? What separates the ebook and the pbook in terms of preserving the value of the work? Why should one be treated differently?

Logically, there is no difference between an ebook and a pbook. Yes, there is a form difference and yes, there is a slight production cost difference, but there is no difference in the content — and isn’t content what is really being sold? If the sale is really the format and not the content, then why pay authors? Why not just sell gibberish? Every reader, every author, and every publisher knows that content is king — it matters greatly whether that novel was written by me or by Stephen King and it matters greatly how the same words are strung together (presumably Stephen King strings them better than me).

If the agency model is designed to preserve the value of the content of an ebook, shouldn’t it be used to preserve the value of the identical (except for format) pbook? (Further discussion of value is found in Valuing a Book: How Do Publishers Decide on Value?) Isn’t this where we are heading now that the floodgates have been opened?

The ramifications of the agency model haven’t really been thought out by any of the players. If it works for ebooks, it will work for pbooks. If it is imposed in pbookland, publishers will, in one fell swoop, eliminate their largest headache — returns (for a discussion of returns, see It’s Raining, It’s Pouring: Returns in an eBook Age). It will also stabilize pricing — no more battles based on price between Wal-Mart, Amazon, Target, and Barnes & Noble, for example.

If agency pricing works with consumers (still unknown), publishers will be able to raise pricing on paperback books — after all, if an ebook that the buyer leases sells well at $14.99, why sell a paperback that the buyer owns at $7.99?

And if agency pricing works, why not further consolidate and eliminate booksellers altogether? Oh, that can’t be easily done tomorrow because consumers like the one-stop shopping that bookstores and ebooksellers provide, but it is only a matter of putting some thought to the problem to figure out a solution, a way for the publisher to reap 100% of the money — no need to split with an agent who provides minimal service.

Apple is one culprit here. Blinded by its dislike for Amazon (among other companies that Jobs seems to have a fetish about), Apple offered publishers what seems to be the ideal solution to Amazon’s power grab. Amazon is the other culprit in this story. Blinded by its desire to dominate the nascent ebook market like Apple dominates the emusic market, Bezos made several strategic blunders, each inflaming the publishing industry and fanning a belief (a well-founded belief, I think) that the enemy is Amazon and it must be brought to its knees. Unfortunately, the ebook consumer became the first casualty in this war and, ultimately, all readers are likely to become book war casualties.

The ultimate question for publishers, however, is will the agency model actually work to the industry’s benefit? What benchmarks have the big 5 set to evaluate the effect of the agency model on ebooks? How dedicated to book buying is the reading public? Have ebookers become so enamored with pricing wars that they will forsake agencied ebooks? There are lots more questions that need asking and answering, but I suspect that the big 5 are unprepared to either ask or answer them — at least not objectively. In the end, I think the near-term winners will be Random House and those indie publishers who forsake the agency model.

Which leads to the final question to be answered: What will publishers who have agreed to the agency model do if the iBookstore turns out to be a small molehill at the foot of a mountain rather than the expected mountain? Someone who buys a Kindle or a Sony Reader buys one because they are a reader; who knows why an iPad was bought. It’s the difference between buying a dedicated device and a multifunction device. Hard to tell which of the multifunctions was the impetus for buying the device and which functions are secondary or tertiary considerations, if considerations at all.

April 5, 2010

Will Apple’s iBookstore be Publishing’s Waterloo?

Publishers have bet the store, so to speak, on Apple’s unproven iBookstore. Publishers knew what they had with Amazon, Sony, and Barnes & Noble, but forsook the known to engage with the unknown. If the iBookstore fulfills publisher dreams and becomes a real competitor to Amazon, it is likely that the agency model will expand. But what if the iBookstore becomes a Newton?

The problem is that if the iBookstore doesn’t fulfill all of the big 5 publisher’s prayers, they may not be able to retreat, having burned their bridges behind them. And if they do retreat, they may do so in the face of much more powerful Amazon than the Amazon that originally sent them into Apple’s arms.

The iBookstore experiment has several problems, not least of which is that it will be impossible to know how the agency model fares against the wholesale model on a same-publisher basis because once a publisher chose agency it was crammed down all ebooksellers. This would have been an important experiment for publishers. It is important to know whether agency decreases, increases, or has no effect on profitability and revenues. For the agency publishers, this knowledge will be lost.

Another problem is the possibility of being Newtoned. It is pretty clear that the initial adopters of the iPad are the hardcore Apple fans. But there are only so many of them and no one knows how many of them are ebook readers. Long-term viability is significantly more important than short-term sales spikes. And for publishers, of even greater importance is how many ebookers will purchase an iPad and shop the iBookstore.

iPad’s shortcomings have been well discussed in the media. Chief among them for ebookers are the difficulty of reading in bright light (outdoors), lack of annotation, and the weight. eBookers are generally, as I use the term, avid readers, the people who buy more than 5 books a year. The casual reader, the person who buys 1 or 2 books a year won’t make the agency model and the iBookstore a success for publishers; ebookers are needed. How happy will ebookers be with the weight and limitations of the iPad?

What happens if the iPad and the iBookstore are Newtons (flops)? What is the backup plan? Have publishers cut their own throats by forcing ebooksellers to accept the agency model? If the agency model is a flop with consumers, will publishers simply have given Amazon the dominant position they were trying to undermine?

The iPad is a nice gimmick and for all the hype, I don’t find it a compelling buy — and I’m looking for a larger screen ebook device. When I sit down to read, that’s what I want to do — read, not just for 5 minutes but for hours. And I buy lots of books; last year I bought more than 200 books (so I’ve got a huge to-be-read pile to which I am constantly adding). But I can’t imagine reading on a 1.5-pound device for very long; it would be uncomfortable to hold and would constantly require both hands. And I like to read in the sunshine when the weather is nice, something I can do on my Sony Reader. Convenience and comfort are two reasons for buying an ereading device. So the iPad is not on my list and the iBookstore, with its proprietary DRM is also not on my list.

What will publishers do to keep me buying books? Higher pricing is certainly not an incentive to buy books; if anything, it is an incentive to buy significantly fewer books, especially as I just lease the ebooks rather than own them. Locking me into a proprietary DRM leasing scheme and a particular ebookstore — whether Amazon’s or Apple’s — doesn’t appeal to me.

If ebooksellers like Smashwords continue to price aggressively, I am more likely to buy books from their indie publishers than I am to buy from the big 5 at inflated prices. So I and others like me, who do not fall for the Apple hype, are a problem for the big 5 and the higher agency model pricing. Don’t get me wrong. I am not one of the ebookers who believes that $9.99 is the magical sweet spot; I’m willing to pay more or less than that price point, but I’ll only pay more if I perceive the value in doing so. That’s where publishers fall down: they fail to convince me of the value of their ebooks.

The big 5 have declared war on me (and like-minded ebookers) with agency model pricing and aligning themselves with the iBookstore. This may well be their Waterloo, yet it is a battle the publishers cannot afford to lose. If the iBookstore’s sales numbers do not at least meet the sales numbers of the wholesale model, publishers will have won the battle (imposition of the agency model) but lost the war (decline in sales and revenues).

What remains to be learned is how the agency model publishers will evaluate whether the agency model is a success or failure. If the goal is to kill ebooks, then a decline in ebook sales will equal success; that is a fool’s goal, however, because ebooks are clearly the growth area of the future. If such a decline is not accompanied by a parallel increase in pbook sales, all the big 5 will have accomplished is lowering their overall sales and revenues. How will they view success or failure if the ebook market continues to grow but their share stagnates or declines?

Will they have succeeded or failed if Amazon’s, Sony’s, and B&N’s ebook market share continues to grow and the iBookstore only captures a very small percentage of the ebook market? How will the big 5 view the experiment if Smashwords’ share of the iBookstore market is greater than their share? Most importantly, if the iBookstore is a failure, how will the big 5 extricate themselves from the debacle?

Needless to say, it is much too early to determine success or failure, but it is not too early to plan a retreat. Placing all one’s hopes on unproven entities (the agency model and the iBookstore) is begging to be Waterlooed.

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