February, 2009

First old publishing story: Brentano’s in 1962

My first real “job” in publishing was working as a sales clerk at Brentano’s flagship bookstore on 5th Avenue in the summer of 1962. I was deployed to the paperback department, which had opened only weeks before.

In those days, almost all real consumer paperbacks were “mass-market”, rack-sized paperbacks. And almost all of what we now call trade paperbacks were academic. My father had really started the concept of consumer-oriented trade paperbacks with the Dolphin line at Doubleday in 1958 and was just then building the Collier Books line for Crowell-Collier (which later acquired and became called Macmillan; all now owned by S&S and not today’s Macmillan via Holtzbrinck.)

In this new department, downstairs in the basement, housed with a tiny foreign language department off in a corner, the trade paperbacks occupied chin-high bookshelves through the middle of the sales floor. Against a wall were the mass-markets, displayed by publisher. That was because the Pocket Books, Bantam, NAL (Signet and Mentor), Ballantine (and other) reps came in and did detail work on their books on a weekly basis. So the store made it easy for them to take inventory and manage their restocking. 

The sales clerks, including me, took the inventory of the trade paperbacks and recorded the data on cards that went “upstairs” to Lillian Friedman and the buyers to make restocking decisions.

So you had to know who published the top authors, like Steinbeck, because that was how you found them.

This was a long time ago, but I remember two incidents as clearly as if they happened yesterday.

Because I am seriously hard of hearing and this was before the digital hearing aids I have had for ten years that now mask that problem, I had to do all sorts of things to compensate. In those days, there were no credit cards. When people wanted to charge something, they just told you their name and you wrote it down on the slip recording what books they were buying, along with their address, and the store sent a bill.

When people told me their names, I almost never could hear them well enough to get it straight, so I routinely would ask them “please spell it.” That was the simplest way to for me to get it right.

The embarrassing moment came when I asked John Dos Passos to “please spell it.” I became mortified on the “capital P-a-s…”

Another time a young man came to the register and said the charge was to “Mrs. Robert F. Wagner.” I heard that. “Address?”, I asked.

He looked at me like I was from another planet and said, as if I should have known, “Gracie Mansion.”

It is a good thing I found other work in book publishing then because I was really not well equipped to be the best bookstore clerk.


Publishing and cash

There are few moments as entertaining at any BEA or Frankfurt than the moments I spend shooting the bull with David Godine. But I just read an interview with David that left me scratching my head.

Early in the piece, David says: “First, we are privately held and cash flow is far more important than profitability. ”

I get that. I have observed for years that owner-managed companies often make smart decisions that larger corporate ones would not, because owner-managed companies are conscious of cash.

But then, about four words later, David says: “We own our own warehouse and ship our own books, so we can print for three or four years, and not just for a season.”

Print for THREE OR FOUR YEARS? When “cash flow is more important than profitability”? I think this policy is almost certainly a blow to both cash flow and profitability. I have always admired David’s ability to survive doing only books that he believes in. I am in even greater awe now, because he’s surviving despite the fact that he’s tying up cash in stock for years at a time and, undoubtedly, sometimes finding at the end of three or four years that he actually has enough stock to last (at then current rates of sale) for 30 or 40 years! I met a university press once that printed for seven years.

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Amazon’s competitive advantages: will they extend to an ebook world?

Will Amazon’s 70% or 75% or more market share of physical book sales online, plus the currently market-leading ebook reader, the Kindle, lead to a similar dominance of the ebook market as it grows? Despite the early lead of the Kindle, and the lock-ins provided by DRM, no interoperability, the largest selection of current titles, and a seamless (if closed) purchasing experience, the view from here is that it won’t.

Amazon’s twin advantages in the physical book market are its huge customer base and its mastery of logistics. The near flawless, certainly industry-leading, logistical performance has been a key from the beginning. With an inital data offering that included books no longer in print, tied to the concept (did they invent it? ) of a “promse date” for delivery that was always met or exceeded, Amazon really solved big challenges for consumers. It is perhaps hard to recall now that, before Amazon (pre-1995), it was hard to find out anything about an obscure book. Even if the book were “in print”, there was no guarantee a bookstore would even order it for you. And if they ordered it, you wouldn’t know when you’d get it.

Amazon changed that very quickly, even though they didn’t even hold much — if any — inventory in the early years. But they they translated the actual availability of copies at wholesalers Ingram and Baker & Taylor into clear expectations for the consumer. That was one of the big factors that helped them build their enormous lead in loyal customers. And the loyal customers led to other advantages, including more reader reviews and more useful and relevant suggestions from the “recommendation engine” than other online retailers could produce.

In the past 12 months, Amazon has built a similar customer-base advantage with Kindle. But as the ebook market grows and matures, the view from here says they won’t have the same success trying to grow it. In fact, we are probably at or near the high-water mark for Amazon’s dominance of ebook sales.

Here’s what is going to happen in the ebook market in the next 24-36 months, and none of it is good for Amazon.

1. There will be more dedicated e-ink readers introduced.

2. There will be more readers introduced to be used on smartphones and smartphones will approach the ubiquity that cell phones have now.

3. There will be new app stores for iPhone competitors: Android and RIM, for sure, but perhaps also verticals by device manufacturer and/or telephone service provider.

4. There will be increasing recognition that “retailing” (having, selling, collecting, fulfilling) the file doesn’t entitle a vendor to nearly the same margin that “retailing” a physical product does. The days of retailers getting a pbook-like discount for ebook transactions are not going to last much longer.

5. The ebook wholesalers will make it easier and easier for every site to sell ebooks in their vertical. They won’t have the same need that affiliates have had to link back to Amazon or BN.com to do this (because the need was driven by the difficulties of managing pbook logistics.)

In short, the ebook market is going to fragment and the advantages of a capital-intensive infrastructure to support logistics don’t extend into the market for digital downloads.

Amazon’s dominance in selling things physical may last for a very long time. But it will not translate into a similar hegemony selling econtent, even with the springboard they already have.


TTS and audio “rights”

There are credible voices in the publishing world saying that the text-to-speech capability of Amazon’s new Kindle 2 constitutes a threat to the value of authors’ audio rights

The most extreme interpretation of the Authors Guild position is that protecting audio rights would extend to prohibiting parents from reading to their kids!

But the most recent voice taking issue on behalf of authors, Roy Blount, Jr. in this morning’s NY Times, explicitly rejects that “extreme” position.

Although I’m not a lawyer and even before Blount’s piece I didn’t take the hysteria about “reading to kids” terribly seriously, I find the authors’ basic position so logically dubious that it couldn’t possibly NOT be legally dubious. On the increasingly famous Brantley list, where serious minds gather to discuss these issues, I was inspired to respond to the idea this way:

Amazon is not selling an audio rendition. Amazon is selling an ebook file, which there is no disputing their right to do. And they are selling a TTS program which can convert any text to automated audio, which they ALSO clearly have the right to do. It is the consumer that “mixes the cocktail” in his/her own home. So, whom are you going to sue?

I then postulated that it was only a matter of time before there was an iPhone app that could do TTS, and it would be sold or given away separately from any specific ebook content. Then what?

Joe Wikert is promulgating the same notion. He raises the concept of an app on the iPhone that does TTS. How long can it be before there are three of them available at the App Store? Or ten?

Acceptable TTV (text-to-voice), a qualitative step up from TTS, is right around the corner. (Blount makes clear this morning that he knows that.) So you’ll be able to sample Grandma’s voice and have her read to Junior. Or you can sample John Houseman’s voice and have him read to you! (Actually, I think I’d go for Red Barber…) This opens up a whole new opportunity for lawsuits, of course, because now you’ll have famous names (voices) reading to you without paying them royalties!

Publishers and authors better start planning for the day when audio income joins book club revenue on the legacy revenue scrapheap, both done away with by technology that made the old model obsolete. There are a few years to go before this happens, but it is looking inevitable.

So it is almost right to say that the Kindle is a threat to authors’ audio rights revenue. What is precisely correct is that technology is posing the threat. It does that. The blacksmith’s job wasn’t protected from the effects of the car. And the produced audiobook isn’t protected  from technology either.


Prices of ebooks and related matters

A great conversation broke out on the blog for Bob Miller’s new Harper imprint, HarperStudio

I realized after I wrote a response that it summarized what might be useful thinking for publishers wrestling with the revenue potential of ebooks because it presents a frame, a way to think about it.  Because it starts at the beginning.

In the long run, money goes to scarcity. Another way of saying it goes to “value.”

I love booksellers, and I look for any way possible to support them (including allowing returns, although I think I’d go to an affadavit model for shared markdown instead in this day and age…). But I don’t see how a “bookstore” is any different from an “affiliate” when they sell an ebook. The book is actually being provided by a white-labeled archive. The bookseller doesn’t necessarily touch it. In the medium term, there will be only a small markup for retailers selling ebooks because they simply don’t add enough value selling them. In the physical world, where they pay the rent, lug the boxes around, and deal all day long with John Q Public, they earn a bigger piece of the pie.

Just like the web makes us all publlishers, in the ebook world we’ll all be booksellers too. Actually, in the Amazon (and BN.com) affiliate world, most of us are booksellers already! A “bookstore” will have aggregations of “books” by subject, but you can bet your bippy that ESPN.com (for example) will have an ebook “store” that they link to from stories, etc. all the time.

Decisions about price aren’t about fairness or equity, they’re about the market. I want to read books on my device. I choose a) from what’s available, b) what I like, and c) considering the price. I remember when I first got this ebook habit nearly 10 years ago, I paid $28 for an ebook bio of Grover Cleveland because (a) was very limited, so (b) got down near zero, and I was wanted to read something so I yielded on (c).

The ebook world is going to change enormously over the next several years. We’re still in a great period of proliferation: of formats, titles, concepts for the books, retailers, retailing “styles”, readers and devices. The Kindle and iPhone have a kind of dominance in the tiny market we have now; they may or may not be number one in what will be a much larger market three or five years from now.

One thing that concerns me (on behalf of publishers and authors, of which I is one) is the proliferation of “free” offers. It will shortly be possible for people to have a large (a) and a manageable (b) choosing among things for which the answer to (c) is zero. That will be when every publisher, untethered from cost in a promotional giveaway, starts using the “free” device all the time. Seth Godin or Michael Cader will create the website for ebooksforfree.com (I haven’t checked whether the URL is available) and get the publishers to POST their promotions on it. (Maybe they’ll get them to pay.) And I’ll shop there and won’t have any time to read purchased ebooks because I won’t get through all the free ones.

So my advice on pricing is “watch what’s out there.” EVERY DAY. And don’t think you need to stick with the same ebook price tomorrow that you had yesterday (yes, I know the problems of changing data in everybody’s system — start sussing that out.) Monitor the free offers. Know what the books most competitive with yours cost. Don’t impose a “strategy” until you’ve learned a lot through activity. Because the facts around the strategy will change before you implement it.

Two other important points to keep in mind.

1. Ebook distribution responsibility within the publishing houses has been the province of digerati. It needs to move to the sales department. When all the phone and device companies have their own app stores, and all the various developers have their own version of a book (the Stanza version and the Scrollmotion version will look quite different…), you will have to WORK the accounts. You’ll have to fight for merchandising and make decisions about coop spending. And you need to do that in conjunction with your p-book sales strategy. This is a big change that has to be made soon.

2. As Cader loves to point out, this isn’t 1% of the business yet. It’s peanuts. You can do whatever you want. You can’t get rich or go broke whether you price the ebook 50% too high or 50% too low. Try everything. You’ll never have a cheaper opportunity to experiment.

Since I wrote this, the cogent and canny Kassia has posted on the same subject. We agree a lot.

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Welcome to The Shatzkin Files

When Joe Esposito first told me about blogs in about 2001 or so, there were very few. Michael Cader had PublishersLunch, but if Michael knew that it was an emailed blog, he didn’t tell me. And then blogs “happened”, as things do: gradually, then suddenly. And now I’m late to have one of my own. Really late.

I’ll admit that I fiddled with this a couple of times before. I started up at least twice, maybe it was three times. I decided I’d try it for a while, see if I could get into the pattern of writing regularly, and then reveal it to the world when I’d piled up a month or two of posts. But I never GOT to a month or two of posts. And because I was keeping what I was doing a secret, I had no traffic, no comments, and none of the rewards of interaction which provide the motivation to keep going. So I didn’t keep going.

I admired my friends Gwyn Headley and Michael Cairns for starting their blogs and sticking with them. Gwyn started by making a list of 365 things he could blog about, so he could refer to his list every morning if he needed to. It would take me five years to make a list of 365 things I could blog about.

But I’ve been getting some signs that “now’s the time.”

One follows from having been on Peter Brantley‘s mailing list for a couple of years. Twenty, thirty times a week, Peter sends us a link to something he’s found about publishing and digital change and invites comment. The posts and comments have increasingly sparked a response from me that amounts to a blog post. Once in a while Peter would ask me to extend a comment as a post to one of his blogs, PubFrontier. Then last week David Rothman flattered me by turning another Brantley list comment into a post on his Teleread.

Then, thanks to my friend Laura Dawson, I hired a really smart woman named Tess Strand Alipour and her partner Hamid Alipour to help me optimize traffic to idealog.com. They rebuilt the site so the speeches can accept comments, which was never the case before. They did other things that have boosted our traffic by a gazillion percent in the past two months. And they’ve told me that traffic will get even better if I post whatever I have to say to my OWN site rather than always to other people’s.

And then two weeks ago I started using Twitter. I was a bit slow to get it, but Tools of Change accelerated the process for me. The complementarity of Twitter and a blog seem pretty apparent.

On top of that, I’m involved with a large number of exciting new initiatives even in these troubling times. Filedbyauthor, a new venture I’m co-founder of being headed by my longtime friend and colleague, Peter Clifton, will be live with a web page for every author with an active ISBN in another month or so. FotoLibra, an open-source photo stock agency based in the UK that I’ve been involved with since its founding a few years ago, has achieved orbital velocity. We’re working out details, to be announced shortly, to take our StartWithXML project to London soon. We’re doing a research project on “Shifting Sales Channels” with BISG that has an online survey component and will culminate with the Making Information Pay conference on May 9.

So there should be plenty to write about.

Please write back.