December, 2010

Selling the backlist (and other things) and finding the next battleground

My generation of publishers is distinguished by a few that really understand the opportunities and value to the enterprise of selling backlist and creating evergreens. Peter Workman is the master of this. Quite aside from the intrinsic quality and appeal of much of what he publishes — which is considerable — he has always pushed books based on their markets and the opportunities, not based on the date they were first issued. Charlie Nurnberg was the same way at Sterling. He has often reminded me that “every book is new to the person who hasn’t heard of it yet.”

Peter and Charlie, and other publishers and sales executives who also stressed the backlist, learned that in the physical world it became a game of managing inertia. The first challenge, with chains or independents, is to get a quantity in the store that will sell. The second challenge is to get it reordered when it sells. That requires fighting inertia because most books don’t get ordered for most stores and most books that are stocked only get an initial order and no re-order.

But after a while, you can get inertia on your side. If the book is seen to have “backlisted” (think Workman’s “What to Expect When You’re Expecting” or a perennial Charlie built called “Gemstones of the World”), it becomes one of the books that is put on auto-pilot with computers, and then it will get re-ordered as long as its performance passes a periodic review which is usually not frequent.

Most publishers “learn” (institutionally) that it isn’t worth promoting backlist. To begin with, most publishers aren’t staffed to do it: the head counts and working processes of publicity and marketing departments are built around the requirements of “launching” books, not “piloting” them. And there’s logic to this. Marketing should always be dedicated to books which are available for purchase. Up until 15 years ago, a book not in stores was not nearly as available as the ones which were. And up until very recently, the non-store sales for most titles was growing to significance, but actually growing pretty slowly.

The fact that the availability differential between new titles and backlist is sharply reduced and shrinking fast is a very significant change. When I came into the business, it was a sign of knowledge and savvy that you didn’t spend money promoting a book that wasn’t in the stores. That meant “don’t promote too soon before publication.”

And it also meant that any promotional opportunity for a backlist book was only seen to have value if you had the lead time to push books out before the promotional event occurred. This fundamental of publishing has been painstakingly explained to authors for years, usually triggered when they call their publisher to tell them they have a major newsbreak occurring the day after tomorrow.

This piece of wisdom becomes less important every day. Soon it will be anachronistic sophistication for those of us who are saddled with it.

Publishers, agents, and authors are all seeing bumps in backlist sales because of newly created ebook availability. It would be my hunch that, sure as there is such a thing as word-of-mouth, the ebook backlist sales will spark a pop in print sales for the very same titles. Alert publishers and the retailers that have stores and also have insight into ebook sales (you know who you are) will probably find ebook sales and online print sales good leading indicators of what should be brought back into stock in the stores as well.

Remember those ebook catalogs I suggested might be a good idea? Why not start by putting one with an entry for every title by an author into every ebook by that author? That’s a pretty obvious opportunity. I’ll make my last publishing prediction of 2010: anybody not doing this by the end of 2011 will be seen as “behind.” (It might be that any agent not already suggesting this, if not insisting on it, is behind now.)

Every ebook sold offers a publisher and an author a significant opportunity for engagement with a real human being who will, almost certainly, buy another ebook in the future. The Peter Workmans and Charlie Nurnbergs of 21st century publishing will build their success on that fact. How well that opportunity is exploited is a future success trait that should hit many consciousnesses soon. (That’s why we tried to stress the importance of direct-response marketing knowledge in two posts some months ago.) As people wake up to these opportunities, how they’re pursued is likely to become the focus of some extensive discussion along the value chain (between publishers and retailers, between publishers and authors, and among publishers).

PS. The first time I met Charlie Nurnberg was in about 1974 at the suggestion of my father. (Len said: he’s a smart guy; you ought to talk to him.) That day Charlie explained to me about granting permissions for excerpts. You do it, he said, and you require a credit line that reads “from Title X by Author Y, published by His Publisher, Address, book price plus $1.25 postage and handling”. That’s how he always did it and money just rolled in. Sometimes the credit line was appearing in Readers Digest with 20 million or more readers. Charlie worked for a small publisher called Frederick Fell at the time.  (They had one huge author, but that’s another story.) With a standard device, he turned regular engagements into revenue streams. There’s a thought worth preserving in that.

I write this in my home aerie, 17 floors above snow-covered 2nd Avenue, within 10 minutes by foot or subway from just about all of American trade publishing. Like everybody else, most of my information exchanges are online, but the intense proximity of literally ALL of consumer publishing’s editorial, marketing, and business decision-making is, at the very least, an extraordinary daily convenience. (Last week Connie Sayre and I saw seven major company CEOs for 30-to-60 minute meetings in between lots of other work. Try that in any other industry and any other town.) It is a frequent source of joy. And it is an indispensable component of whatever knowledge feeds my consulting practice and this blog. One question that it is fair to ask is whether, in a wired world where we SKYPE today and will have conversations tomorrow with a hologram apparently sitting in the next chair, does Manhattan still matter? I believe that it still does and that it still will but I will admit to being as sentimental about the dense and quick-paced Manhattan gestalt as some people are about the smell of the paper and the smell of the glue. (And I’m well aware of how sentimentality can cloud their thinking!)

And on that flight of fancy, I wish everybody a Happy New Year and a healthy and prosperous 2011.


A modest proposal for book marketing

It’s a pre-holiday week and a busy one following a busy one last week. So time for blogging is limited and, besides, all you readers have presents to wrap.

But there is one subject to ruminate on just a little bit that came up repeatedly during last week’s business. Constance Sayre of Market Partners and I are doing a joint exploration of ebook royalty rates for a presentation at the Digital Book World conference in January. We created a survey to allow agents to tell us anonymously what kind of deals they were striking and we got about 130 responses. (Market Partners’ newsletter, Publishing Trends, has a report in their current issue, released today, on what the agents said and the full data will be released for our attendees at Digital Book World on January 26.) We decided to balance our presentation by giving publishers an opportunity to give their side of the story, also anonymously (except, since we interviewed them, we know who they are. The agents, having responded online and in privacy, can’t be tied back to their answers. Connie and I are good at keeping confidences.)

We spoke to seven CEOs last week, a couple of whom were joined by colleagues who actually do the contract negotiating. What they told us about ebook contracts is what we’ll talk about at Digital Book World.

But just about all of them made an ancillary point and that’s our subject today. The point they made is that the main task ahead of them in the next few years is to completely reinvent book marketing. There was clear acknowledgment across the board of something that has concerned us for some time: that inevitably declining retail shelf space means a commensurate decline in critical merchandising capability.

Changes are definitely occurring. The big publishers are undeniably SEO-conscious, investing real effort thinking about what search terms apply to each book they publish. They’re all experimenting with Facebook and Twitter and other social networking sites as well. Various community-building tools, including the very ambitious Copia platform that launched a few weeks ago and the John Ingram-funded start-up Rethink Books and its new Social Book capability, are now being tried out. The established ebook vendors, notably Kobo and Kindle (on my radar screen; I’m sure Nook and Google too), are building social capabilities into their platforms. And the established book discussion networks like Goodreads and LibraryThing are continuing to add participants, books, metadata, and conversation that constitute raw material for marketing the next book from any publisher.

There are two questions big publishers need to be asking about all of this. One is “does it scale?” The other is “does it adequately replace the stack on the front table of a highly-trafficked bookstore as a way to generate attention for a new publication?”

If marketing efforts don’t scale, then a newcomer or a smaller press isn’t handicapped competing against a major. And if the new techniques don’t compensate for the lost front table spaces, then publishers are going to need something more. And effort that doesn’t scale takes time, which costs money. Publishing margins have never been robust enough to allow publishers to increase the percentage of revenue allocated to marketing and remain profitable.

Of course, book retailers share in the difficulty. As much as publishers have depended on retailers to sort the books out into sections and featured areas and to bring the customers into contact with them, the retailers have depended on the publishers to make the public aware that a book exists.

This is a big problem with many aspects to it and this is supposed to be a relatively short pre-holiday post, so I want to drop just two conceptual thoughts on it: one a principle and one a suggestion.

The principle is that “investment marketing” must replace “expensed marketing”. “Expensed marketing” is what publishers have always done: promotion for a single title that has no lasting payoff or value. That’s an ad in the paper or online, a press release that gets picked up and run immediately and has no value next week, or a free copy of the book that might result in a review of that book or, most of the time, result in nothing at all. (Thank goodness that, at least, those review copies can be far less costly to distribute in digital form and for that it is worth mentioning another relatively new service called NetGalley that facilitates distribution of electronic copies for promotional purposes.)

What I’d call “investment marketing” is an effort that yields a result of ongoing value: a batch of email addresses that can be pinged at no cost to promote a future book or a relationship with a web site or a blogger that adds to the promotional arsenal available in the future. This concept is particulary important on the social marketing side, which is labor-intensive.

I was glad to have the concept validated in a conversation with a leading digital marketer that we recruited as a speaker for Digital Book World. She agreed that in order for digital campaigns to make sense, they should be on behalf of a block of books — by an author or on a subject — rather than pushing one title.

This is a sea change for publishers who have always marketed one title at a time. It is particularly important to implement as the distinction between backlist and frontlist for promotion — which was always partly rooted in the reality that backlist might not be available at retail months or years after its initial publication — makes less and less sense.

The suggestion is to attack the search and discovery problem, the browsing problem, the serendipity problem, the substitute for the stack of books problem. Or, maybe we’re better off envisioning this as the “replacing the marketing clout of the book clubs” problem.

Introducing a simple concept: the book shopping or book marketing app.

I would happily pay a subscription fee to somebody who would put into app or ebook form a periodically curated catalog of recently published books on baseball history. I want to see the title, author, precis, table of contents, sample material, publisher selling copy of all kinds, and reviews. I don’t care if the purchase is “in app” or if I can click my way to the landing page for the book at my favorite ebook retailer (and I’m easy: I have four of them!)

I am sure regular fans of romance, sci-fi, historical fiction, business books, popular science, and many other subjects share the same frustrations I do with shopping for ebooks now. Any search you do returns more dirt than diamonds, more chaff than wheat, more noise than signal and, for the subjects nearest and dearest to me, far more books I have either already read or already rejected than that are new and of interest. It would be ever so much easier to have all this information presented in an app or an ebook that I could peruse at my leisure, online or off, and which would have proper navigation rather than a constant struggle with pointless links and back buttons.

I think we’ll see publishers and retailers delivering this, or something like it, before the end of 2011.


How will you win at ebook retailing?

I read all my books on my iPhone and my idiosyncracy is to have different books open in various ebook readers at the same time. This is a drastic change from my lifetime habit of reading one book at a time. I never knew I’d enjoy reading this way because the physical limitations of carrying paper around never encouraged me to consider it.

At the moment, I’m reading “Joe Cronin” by Mark Armour and “Crossing the Chasm” by Geoffrey A. Moore on Google Books; “Washington” by Ron Chernow on the Nook reader (which I see now has lost my place and is forcing me to figure out where the hell I was, which is not a good thing); “Brooklyn Dodgers: The Last Great Pennant Drive” by John Nordell in Kobo; and “The Autobiography of Mark Twain” in Kindle. I have the iBooks reader on the phone but I never shop there because I never saw any particular advantage to the reader and they have distinctly fewer titles to choose from than everybody else.

Now, did you care about the details of that? I’ll bet most of you didn’t, except to the extent that you expect me to make a conceptual point that makes it worth knowing that highly personal detail (which, of course, I will.) My hunch is that most of you would have been just as happy to move on from the first short paragraph above and not require the detail from the second one which, frankly, is not really necessary to make the point. But a few of you are very interested (but please don’t tell me your details; I’m part of the majority.)

Where I buy the books is very haphazard. My order of preference for reading (at the moment; it changes and I use them all) is Kobo, Kindle, Google, Nook. Kobo, Kindle, and Nook have built-in dictionaries; press (not tap) on the word and you get a definition and an opportunity to make a note or link out to Google or Wikipedia. The problem for me is that, on the iPhone, I can’t always make this feature work. My personal experience is that the functionality is most reliable on Kobo, and considerably less so on Kindle and B&N, but whether that experience is representative of what others will find with different iPhones, different fingers, and different titles, I don’t know.

Google doesn’t yet offer this capability or even simple dog-earing of pages (which the others all have), but I’ll bet they will have it before long.

None of the platforms delivers perfect performance in my anecdotal and ad hoc experience (and yours might differ). I have had Kobo “lock up” so I had to reboot my phone to get it working again. I just got a rendering of “Mark Twain” from Nook that was a formating disaster on my iPhone. (I told some people at B&N about it; perhaps it is fixed by now. When I asked the publisher, UC Press, I was told the file worked on the Nook device, but I know it didn’t work in Nook on my iPhone. It reads fine on the iPhone in Kindle.) Kindle is frustrating for me because I strongly favor reading ragged right and, as far as I can tell, Kindle always delivers justified pages with no way to turn justification off. I find Google and Kobo deliver the navigation that feels most intuitive to me and the most control of the reading experience. Nook doesn’t seem to have a way for me to lock in the vertical screen, so you can’t read in bed and have the type conform to your head if you lie on your side.

If I think of a book I want when I’m reading another one, I’m most likely to just buy it in the reader I’m in just because I have it open. Thanks to the combination of agency and 24/7 price monitoring, there is unlikely to be any financial advantage to shopping around. If I know exactly which book I want, there’s also no particular distinction among the four for ease of use or speed of transaction.

There is one dynamic that clearly favors Kindle. I own a Kindle device, one I bought in the first week or two they became available. I read many books on it over the first year or so. I gave it to my wife when Kindle made its vast selection available on the iPhone. Martha reads a lot more books than I do; we read relatively few in common. But when I decided I wanted to read Stieg Larsson, she’d already bought it for Kindle so I read it in the Kindle reader (it’s all one account.) And when I bought the new Ken Follett from Nook, she accessed it in New York while I was reading it in Frankfurt by using the iPad that we share (but which neither of us favor for reading books because it is too heavy.)

All of which leads to the conceptual question which I promised above was coming: what’s a retailer to do to create loyalty and lock-in among customers? And in addressing that question we must also keep this in mind: small groups matter.

We will look back and say that it was a relatively small group of early adopters to Kindle that were the key catalysts to profound and accelerating change in book publishing (change which is still in its infancy.) Amazon was in a unique position to deliver a real value proposition to the people who could benefit most from a lightweight reading-only device. And they captured and, for a while, locked in a relatively small group of very heavy readers, because the more books you read the greater is the relative benefit of Kindle, functionally and financially.

There may well come a day when the (relatively) closed file format of the Kindle becomes a handicap to sales but it is hard to see why it would be now, particularly if Amazon delivers on their recent announcement of a browser-based Kindle reader coming shortly. (I should add that I’ve read reports that Google books work fine in a Kindle device through the Kindle web browser. Since my own Kindle is an original, without wifi and with a very slow connection, I’m not in a position to confirm that.) But, for now, Amazon has many millions of happy device owners for whom buying a book any other way is likely to be more trouble than it could possibly be worth.

So, how else does the retailer lock the customers in? Google has tried to sell the value of being the manager of your “locker” where all your books will be available to you all the time, on any device, etc. The idea seems to borrow from the iTunes concept, but this is another example which reminds us that “books ain’t music.” It matters to have all your music in one place. I will never have any reason to need “Washington” and “Joe Cronin” in the same reader but I could listen to a song from 1958 and a song from 1992 consecutively anytime.

So the keys to iTunes were a) enabling you to rip your CDs easily, for which the database of linked metadata was actually the critical feature and b) enabling you to buy any other music you wanted as downloads into the same hosting system. I may be a bit extreme in the disorganization of my reading habits, but I think very few people would require anything like the aggregating capabilities of iTunes for their reading material.

So, how else? Copia (our client for most of the past year, which will be on my iPhone as soon as their iPhone app is available) has a proposition that addresses this, which is to deliver a social network application in conjunction with the reader. If I were on Copia and had all the books I am talking about in their application, you would have been able to see the detail I presented in the second paragraph without my having to say so.

And that takes us to the second point: that small groups matter. Because, clearly, there are people who do care about what others are reading and who want to annotate what they read for others to see. And if I did care about sharing my reading experiences, I would want all my books in Copia. That’s lock-in. And, who knows, maybe I’ll find that sharing information with other baseball history nuts will be worthwhile. (Although I wonder if I’m the only person who finds the subtle underlining in Amazon that will tell you when moused over that “87 people highlighted this passage” both pointless and distracting.)

Locking in a small group is likely to be what Kobo has in mind with the new social reading capabilities they just introduced. They are available right now only in the iPad version of the app, but they “track” your reading for you, give you badges for finishing a book, and easily enable you to broadcast to the world where you are in your latest doorstop. The people who find this compelling, and there are some, will now have a reason to use Kobo and nothing but Kobo, just like the people who own Kindles have a reason to use nothing but Amazon and Copia hopes to gather socially-minded readers who would get less value anywhere else.

I expect that the core capabilities will even out over time. Google will add outbound links to dictionaries and reference sources. All of the platforms will improve the responsiveness of their iPhone app to my stubby fingers. If Kobo’s social statistics prove a draw to consumers, the others will add something similar.

One thing I have found that is really cool about reading on the iPhone is the ability to do a screen grab as a photo, which then allows me to send the photo as an email. There’s a fabulous graph in Robert Reich’s new book “Aftershock” which makes plain as day the fact that the one thing that tanks the American economy is the top 1% of the people getting too much of the national income. I loved being able to grab that chart as a photo and send it around to friends. I think one iPhone screen of content has to be small enough to be legitimate “fair use”. (That’s my story, and I’m sticking with it.)

But what matters most to me is the merchandising and shopping experience, which Kobo has the best so far but not by enough to matter a lot of the time. (And, as I pointed out above, if you know which particular book you want before you shop, they’re all the same and really hard to improve on.) There are many ways the shopping experience can be improved by all of them, but I’ll save my thoughts on that for another post.

So most of the horses are out of the starting gate and Amazon has clearly taken the early lead. But anybody who thinks the race for retailing ebooks is over should contemplate this: we don’t even know yet what distinguishing feature set will win, let alone who’s going to have it in the long run.

I realize this analysis is incomplete. It doesn’t account for stand-alone readers like Liza Daly’s IBIS Reader nor does it account for independent ebook retailers such as the pioneering Diesel Ebooks. It doesn’t cover Sony, which might still have a larger chunk of the market than Kobo (although, if they do, I predict it won’t be for long). Back in the days before Kindle, when I read my ebooks in Palm format on Palm and other PDAs, I shopped at Diesel. I don’t write off anybody’s chances at such an early point in the development of the ereading infrastructure, but I think my iPhone and this post capture the sources that offer the biggest selection of content that would interest me. And I’m reasonably certain that I’m reporting here on the players that serve up the overwhelming majority of the ebooks read in the US, well over 90% and probably closer to 95%.


A hot Christmas may be followed by a chilling Spring

No new facts today, just some perspective.

Google has launched and Copia has launched. Kindles and Nooks are on sale in consumer electronics stores far and wide. iPads continue to roll out by the millions and recent evidence suggests that consumers are very happy reading ebooks on them.

I’ve made the point on the blog before that every book purchased online is another nail in the coffin of brick-and-mortar bookselling. All ebooks are purchased online (despite some charming, but futile, fantasies to the contrary.) Even with the Google proposition enabling all stores to participate in the ebook marketplace, which may motivate Amazon to try a similar proposition (and, considering the hostility of competing book retailers toward Amazon, good luck with that), it all adds up to less support for brick-and-mortar. Google ebooks might help some bookstore owners generate some margin, but that doesn’t mean it will keep more stores open.

(Look at it this way. If you ran a bookstore and found that through Google you were able to sell more and more virtual goods while your brick-and-mortar sales were declining, would you invest what you were earning through the new and growing channel in the old and declining one?)

This is not the moment for chewing over stats. We’re in the middle of a huge acceleration in digital reading. I have seen it suggested that this year might mark the first when Christmas will be the book business’s biggest sales day, because all those ereader recipients unwrap their presents and immediately go online to load up their machines.

There will be lots of opportunities for statistics-based observation after the turn of the year and we’ll be doing a lot of it at Digital Book World. (We just got some early data from iModerate, which is looking at ebook consumption on multi-function devices for us, and it is provocative.)

I’m expecting that what brick-and-mortar booksellers will experience in the first six months of 2011 will be the most difficult time they’ve ever seen, with challenges escalating beyond what most of them are now imagining or budgeting for. If I were programming a show for six months from now for the book industry, I’d plan for that to be Topic A.

Things happen “gradually, then suddenly.” I think the next six months will make what we’ve been experiencing for the past year look very gradual. I know smart people who have thought for the past year that there would be some flattening coming soon in the ebook switchover. It doesn’t feel that way to me.

I linked immediately above to a post of mine from last Spring in which I got something pretty damn wrong: figuring that iBookstore’s early success would be sustained and that Random House would find it “necessary” to switch to Agency, even though I saw the logic in their initial decision to stay out. As it has turned out, iBookstore’s share appears to have declined, even as the use of iPads and iPhones as ereaders has grown. Many more ebook titles are available for those devices through other sources which now, emphatically and ironically, include Google. Because Google is delivering a lot more illustrated and complex-page ebooks to the market than there were before, it will make the iPad even more valuable. So as Google Ebooks succeed, iBookstore doesn’t benefit but Apple very well may.

I’m a baseball fan and I think both hitters and future predictors should be happy if they bat .300. I’m not embarrassed to be pointing out one of the times that I made an out.