February, 2011

From some perspectives, we are tipping right now and publishers’ metrics will show it

Sometimes, and it would seem quite often these days, the future comes faster than you expected it.

Followers of this blog, and of my speeches before there was a blog (this one’s from 2001!), know I’ve long been expecting ebook reading to supplant print book reading for many people. I’ve been wrong about the timing. (Ten years ago I’d have expected to be where we are now three or four years ago.) I’ve been wrong about whether a dedicated device for reading would make much of difference. (I read so comfortably on a phone, and before that on a PDA, that I figured few would want yet another device for reading only.) And I’m rethinking my expectations around enhanced ebooks and the utility of social reading.

But it has seemed clear to me for a long time that ebooks offered compelling advantages over print — portability, ease of purchase, and a lower cost basis that must inexorably lead to lower prices — that would increasingly sway many of the inevitably growing number of people who had a readable handheld screen in reach most of the time. And my long experience dealing with bookstore economics made it clear to me that the consequent sales subtraction from brick-and-mortar stores would lead to closures, which would lead to longer travel times for customers to get to the stores, which in turn would drive more people to purchase print or digital books online. And that would lead to more closures. This is a virtuous circle if you’re in the ebook business or sell print online. Or if you want to see Americans consume less gasoline.

It is a vicious cycle — a death spiral — if you’re a bookstore.

Michael Cader of Publishers Lunch reported (you have to subscribe to use the links) that BookScan numbers show a drop in unit sales of printed books of 4.4 % from 2009 to 2010. But don’t take that number to any bank. It is already out of date. Cader did a further analysis of more recent BookScan data shortly thereafter showing that print book sales have dropped by over 15% compared to the prior year over the first six weeks of 2011! And the share of print sold online keeps rising, so that almost certainly means that print sales in stores has fallen even faster. Could print sales in stores have dropped 20% or 25% from a year ago? They certainly could!

Sales of iPads, Kindles, and Nooks exceeded most expectations for Christmas 2010. Dominique Raccah, the head of independent publisher Sourcebook, a company with a diverse trade list, reported on her blog that dollar sales at her company in January were 35% digital!

No wonder she says, “We may well be at the tipping point. I suspect that we’re going to see some dramatic reassessment when publishers look at their numbers at the end of the first quarter, 2011.”

I have heard the argument from very smart people that ebook adoption will plateau at some point. Since it has been doubling or more for the past three years and was often placed in the mid-teens for new fiction and narrative non-fiction by the last quarter of 2010, we know that it can’t continue to double for the next three years without exceeding 100%. Nonetheless, predictions that ebook sales would achieve 50% in the next five years and that bookstore shelf space would drop by 50% in the next five years — which is what I thought would be the case — seemed pretty aggressive six months ago.

They don’t seem aggressive anymore.

The Borders share of the publishers’ revenue is estimated to be about 8%. They could be 10% or 12% of brick-and-mortar. So if Borders were to completely disappear tomorrow (and they aren’t about to do that) and even if every book they sold in their stores were somehow purchased at somebody else’s store (which won’t happen), the reduction of book sales in stores is so large that all the other stores would still, collectively, be looking at a substantial year-on-year sales decline.

All this means that 2011 that is going to be a real “fasten your seat belts” year for publishers. And Raccah is right that publishers are going to be a bit stunned at what they see when they look at their numbers for the first quarter of this year.

One impact that sophisticated publishers are well aware of but that is not obvious to the untrained eye is that as sales go down, returns percentages, inevitably and inexorably, go up. When a publisher calculates a returns percentage for any period — a week, a month, a quarter, or a year — they are measuring the returns received and credited in that period against the sales made in that period. But the returns actually come from the sales made in prior periods; even in the worst of situations, very few books are returned less than three months following their purchase.

So what’s happening right now is that shipments out are being depressed — no or very little Borders and diminished expectations everywhere else — while returns are rising because they’re coming back from orders placed against the higher expectations of the past six to 12 months. That means that the net sales numbers being created right now — shipments out minus returns — might, for many, be a disappointment verging on devastation.

And returns percentages aren’t the only percentages that are going to be troubling. Two others that publishers look at are also going to get more challenging.

The percentage of a book’s print price that is constituted by the “unit cost of manufacture” is one. The unit cost is extremely run-sensitive. If you’re printing fewer books and if you have to hold the line on retail prices (both of which will almost certainly be true), the percentage of revenue spent on creating the print books is going to rise.

The second trouble spot is that publishers like to think about the cost of “fixed overheads” as a percentage. Many publishers still follow the unwise practice of putting a percentage calculation of overhead into their unit cost calculations for every book. But if sales volume falls faster than overheads can be reduced, that percentage rises too. And you can’t fire your way to rapid overhead reductions very effectively. Shedding staff is often an illusion anyway; we keep hearing about freelancers getting work because publishers have fired the staff that used to do it. But, besides that, warehouse and office space costs and systems investments don’t rise or drop with volume (which is exactly why it is a logical error to calculate them as a percentage of revenue!) Publishers who are using a percent figure for overhead to calculate their margins on each title they acquire to sell are going to find those numbers need to be reconsidered as well.

While Barnes & Noble will be feeling the margin pain of all brick-and-mortar booksellers, they are, no doubt, also very well aware of their growing importance to all publishers in an upcoming Borders-less (or less-Borders) world. B&N will almost certainly be looking for better trading terms and publishers will almost certainly feel the weakness in their negotiating position dealing with those requests. And that’s aside from the fact that publishers really and truly want a healthy Barnes & Noble maintaining its ability to show their wares to the public.

So sales are going down, returns are going up, the cost of goods is going up, margins from sales are going down, and right-sizing overheads is going to be an accelerating problem. The good news is that ebook sales are rising and the margins from them — at least for now — have been pretty well preserved.

But the first significant sign that ebook prices are going to tumble has arrived with the news that 99 cent ebooks are now beginning to appear on the mainstream media’s ebook and combined bestsellers lists which come from The New York Times and USA Today. This creates some nasty problems. It puts previously unknown authors selling 99 cent books before the public as bestseller creators. And it encourages the established publishers to cut prices to register unit sales to get on those lists themselves.

At the very least, I’d expect publishers to start asking The Times and USA Today to consider the total revenue a book generates at retail (price times units) when creating the lists, not base them on unit sales alone. Since the established publishers buy a lot more ads than the 99-cent-book authors do, we should expect them to, at least, get a hearing.

Publishers are going to be scrambling to keep their business profitable and having second thoughts about many of their most time-honored practices in the weeks to come.


Introducing the North American Big Six

There’s a new Big Six in town. Or maybe not “in town.” But “on the planet.”

The Big Six is a term commonly used to collectively designate the behemoths of US trade publishing: Random House, Penguin, HarperCollins, Simon & Schuster, Hachette Book Group, and Macmillan. Although there are other large players, some of whom occasionally can compete with these companies for seven-figure authors, the lion’s share of the biggest author brands are published by one of these six houses.

But from the perspective of publishers or booksellers outside the United States, there is a new North American Big Six. These are the companies that have direct relationships with publishers — all of them that matter in the US (with one noteworthy exception) and, increasingly, those that matter overseas as well — to secure the rights to distribute ebook files wherever in the world the publishers have rights.

Why does this Big Six matter so much? Because as dedicated ereaders and tablets and smartphones that can effectively serve as ereaders gain increased market penetration anywhere, the appetite for ebook content will grow proportionately. In languages other than English, the number of published books currently in epub — and therefore deliverable as reflowable ebooks — is paltry compared to what we have. It will take a long time for the publishers in most countries to make enough content ready to satisfy that growing hunger in their local markets.

And the Big Six companies have the infrastructure, and, most importantly, the rights, to satisfy that appetite everywhere.

Three of the North American Big Six are well known and would be immediately identified just about anywhere. Although Amazon, Apple, and Google have not yet opened their ebook “stores” in every country in the world that can buy ebooks, it won’t be long before they will. These three global giants all derive more revenue from outside the book business than they do from ebooks (and only Amazon, of the three, has any commercial interest in selling books except for ebooks.) But they are past (Amazon), present (Apple), and future (Google) game-changers: companies that have such an enormous presence that their entry into any area, certanly including ebooks, causes every other player in the market to sit up and take notice.

There is a fourth player like them, relatively tiny Kobo,.Kobo is also an ebook retailer. Over the past two years, they have been extraordinarily successful at getting publishers to establish direct relationships with them. (I didn’t track this with great precision, but I believe Kobo was the only company besides Amazon to have all the agency publishers on board the day agency selling started last April.) Kobo has “white-labeled”, or powered, an ebook store for Borders in the US and Red Group in Australia (two booksellers who, coincidentally or not, have just filed for bankruptcy protection). Kobo also has, according to their executive, Michael Tamblyn, at Tools of Change, “more than two million registered users.”

All four of these companies will be competing as ebook retailers in every market in the world and in every language in the world. They all start out with a robust aggregation of US-published ebooks. Apple is the laggard here. They don’t carry Random House books yet — the “noteworthy exception” referred to in the third paragraph above — and they have fewer available titles than any of the other three. But Apple comes with its own significant advantages in the form of the wildly popular iPhone and iPad. These devices assure a certain minimum amount of traffic to their iBookstore, even if Apple doesn’t move ahead with in books with the power play they’ve just exercised over subscription sellers of magazines and newspapers. (And so far we have only rumors and stretched intepretations of what they’ve said and done to suggest that they will do that anytime soon.)

Because American hegemony is resented in much of the world, Kobo may have a built-in advantage in international competition against the other three. Kobo is a Canadian company. They are also not disrupting people’s lives or terrifying them by monopolizing online print sales in any market (like Amazon), or by delivering devices designed to capture audiences and wall them off from competitors (like Apple), or by digitizing first and asking permission later (like Google.) All three of the Biggest Three (of the Big Six) have enemies and detractors. Kobo doesn’t.

Kobo doesn’t have their effectively unlimited resourcces either.

There are already retailers active in every country in the world, operating in the local language, who want to be the ebook resellers of choice in their own countries. For them, the other two members of the North American Big Six are potentially critical resources: Ingram and Overdrive.

Ingram is well known throughout the book business worldwide (and is sometimes, and currently, a client of ours.) As the biggest and most innovative wholesaler in the US for four decades, they have built both a customer base and a supplier base all over the world. They’ve been the principal wholesaler of ebooks to US independent ebook retailers since the begining of ebook time. They have deep and strong relationships with every US publisher of any size, rooted in their wholesaling business. They can set any retailer up with a wide selection of US ebook titles.

Ingram’s competitor for the role of delivering English-language (and, ultimately, all non-local language) ebooks to resellers all over the world is Overdrive. Overdrive has been in the digital content business since the 1980s and pioneered ebook distribution to libraries from the dawn of the current ebook era in the late 1990s. They also have a very broad base of publisher suppliers and can, like Ingram, provide an ebook reseller local to any country with a robust selection of other-language ebooks to vend, with an emphasis on those provided by American publishers.

Could any upstarts join the Big Six as credible providers for local competitors to the four global ebook retailers? I see three possibilities.

Barnes & Noble certainly has the relationships with publishers globally to assemble an ebook title selection that can rival anyone’s (and they’ve done it.) They are already the number two ebook reseller in the US market, miles ahead of Apple and Google and Kobo. But, so far, they have continued their brick-and-mortar strategy of sticking to the US market. It seems to me that the economics of their successful Nook family of devices and the ebook store they run would benefit from extending to a global base. But every company has to make choices about resource allocation and focus, and it is hard to quarrel with the success B&N has had competing with Kindle and iPad considering their prior experience with hardware (none). They’ve leveraged their retail presence to do it and they don’t have that resource to employ outside the US.

Copia and Blio are upstart ebook platforms. The independently-owned Copia has its social component as a unique feature (although Kobo has some pretty cool social stuff and there’s an upstart called Rethink Books with some technology that provides social capabilities around books independent of the ebook platform.) When Blio started, they seemed to offer an opportunity for publishers to enhance their ebooks readily. But the tool set that would enable hasn’t been delivered. Both of these offerings have a distance to travel to catch up with the Big Six, all of which have been in the game a long time and built up a network of suppliers and customers that it is not a trivial challenge to duplicate.

If there’s going to be a Big Seven, my bet would be on B&N.

Right now, publishers and retailers seeing the book tsunami coming closer to their shores will want to focus on the North American Big Six. If I were a publisher in any language, I’d be sure they all had my books. If I were a retailer in any country, I’d be looking at them as possible competitors or collaborators. Understanding who these companies are, what they have to offer, and what they have in mind is going to be an important component of every publisher’s and retailer’s strategic thinking for the foreseeable future.


From where I sit, you can’t actually “sell” an ebook

This comes up often and I grit my teeth every time.

You can’t have a discussion of any length about ebook sales and pricing and DRM in any sized group of digital publishing observers before you hear that it is somehow wrong or unfair that a “purchaser” can’t do everything with an ebook they’ve bought that they do with a print book they’ve bought.

That is: various “controls”, sometimes deliberate (DRM) and sometimes circumstantial (tech doesn’t always work smoothly) make it hard or impossible to lend, give, or re-sell an ebook in the same way that you do a printed book. Have enough of these conversations and you will become educated about “first sale” rights, which are enshrined in law, which basically say that when you buy something you own it and can lend, give, or re-sell it.

So the way the complaint often goes is that those damn publishers are putting this damn DRM on my ebooks so I can’t do all the things with them I can do with my print books.

This has always struck me as highly questionable on its face. First sale rights make complete sense with something physical. They make no sense with something digital. When you lend, give, or re-sell a print book, you don’t have it anymore. When you lend, give, or re-sell a digital file, you still have it and you could lend, give, or re-sell it again and again without limit. Surely, that’s a distinction that justifies a departure from the physical world paradigm.

The complaint that first sale rights are being abused — often delivered as a complaint about publishers — proceeds from a fundamental misunderstanding that publishers themselves are entirely responsible for creating. You don’t actually “buy” an ebook the same way you buy a physical book. What you actually buy is a license to access a digital file, which — in the developing world of the cloud — you may or may not ultimately “possess” in any machine or device you own. (Of course, you can own the machine or device, which is physical. If you lend, give, or re-sell it, you won’t have it anymore.)

Publishers promulgated this misunderstanding. From the beginning, publishers analogized ebook distribution to print book distribution. They started out using about the same retail price and about the same discount structure to intermediaries as they did with print books. Some, at the very beginning, even tried to make the royalties the same (in the neighborhood of 5 to 15 percent of the retail price.) It seemed simple and it seemed logical. It has turned out to be neither.

There is a core reason why publishers promote this nomenclature of misunderstanding. Publishing contracts vary widely, but one thing is pretty common among all of them and has been for a very long time. They enumerate the splits between publishers and authors on rights sale revenue for a long list of possible transactions: first serial, second serial, book clubs, paperbacks, cheap hardcover editions, foreign editions in English, foreign editions in foreign languages, and others.

And then they almost all say — almost forever have said — that all rights transactions not enumerated will see revenue divided between authors and publishers 50-50. In fact, according to some agents, even in contracts where an ebook royalty is specified, the sale of electronic book rights are almost always specifically designated as a 50-50 split.

So if publishers called their ebook transactions what I believe they really are — rights licenses — they’d have what looks to me (but I’m not a lawyer) like a contractual obligation to pay authors half the revenue. Since that is double what many publishers, and all the big publishers, think is “fair” and commercially viable, there’s no motivation to move the conversation back in that direction, even if it would make the consumer interaction, and the restrictions policed by DRM, sensible.

Of course, smart agents have been thinking about this question too. They see very clearly that ebook sales are different from print book sales. First of all, ebook sales are — almost without exception — governed by a contract between the publisher and the consumer’s source. That’s not true (with very rare exceptions) for relationships between publishers and print retailers or wholesalers. But it is true for the relationship between publishers and book clubs. In fact, the book club paradigm has much more in common with the ebook marketplace than the publisher-bookseller relationship does. Book club deals are covered by licenses. Book clubs “print” their own editions, just as ebook resellers deliver the books in their own proprietary format or DRM.

It is worth emphasizing here that the publisher is (in today’s world) very seldom delivering the file directly to the end consumer. The fact that the publisher gives the intermediary a clean digital file, which the intermediary then manipulates and copies (or, we could say, “prints” in its own proprietary edition) to deliver to its customers underscores that there is activity betwixt publisher and consumer that falls under a license. And it is a license that is spelled out in a contractual relationship.

But agents have apparently chosen, at least for now, not to fight the royalty battle with publishers on these terms. For any agent to do so would be employing a sort-of “nuclear option”; they might be right and they might even win in court (eventually), but they’d effectively deal themselves out of the game from the moment they attempted to enforce this position.

This is symmetrical with the publishers’ restraint on the non-compete clause. From the publishers’ perspective, it is transparent and obvious that an ebook edition competes with a print book edition of the same book. All book contracts have non-compete language. But no publisher has yet used that particular argument to strongarm an author who wants to self-publish an ebook when their print contract didn’t contemplate ebooks. Both sides — despite the flare-up that occurred last year when Andrew  Wylie appeared to go toe-to-toe with publishers for a little while before he apparently backed down — want to continue doing business and prefer to negotiate solutions rather than attempt to impose them, even if they have a very strong position.

And agents are aware that they and their authors might also benefit from the misunderstanding about whether the ebook transaction is a sale or a license. If it is a license that doesn’t explicitly grant first sale privileges (and, by the way, it actually often is already: check your Kindle agreement with Amazon!), then consumers might insist on paying less for it than they do for print. At least, that has been a component of their restraint. Now that ebook prices, most dramatically for hardcovers, have been coming down in relation to the print prices (first through Amazon’s deep-discounting initiative, and then made permanent by publishers lowering their established prices when they switched to agency), consumers are getting a dollars-off deal as compared to print much (though not all) of the time.

Even though authors don’t sell their copyrights to publishers (they license their use) and publishers don’t sell inventory or even production masters to ebook resellers (they license them to replicate and distribute the publishers’ ebook files), the fiction that Kindle or Nook or Kobo or Google or iBookstore is selling the book to you or me will persist. If we had truth in labeling here, it would make the restrictions comprehensible. It would even make consumers understand why Amazon was within its rights (and upholding its responsibilities) when it chose to “cancel” the licenses it granted erroneously for an edition of “1984” a couple of years ago. We can all recall the high dudgeon among many observers when they infamously reached into people’s Kindles and erased a file they were given by somebody who did not have the rights to grant those licenses to it. But truth in labeling would also eliminate an ambiguity that works in favor of publishers’ margins today.

What would worry me if I were a publisher is that someday somebody who is not an agent trying to keep things sweet with publisher customers will file a lawsuit to make the case that ebook sales are licenses already covered in just about every publishing contract. That would suggest a potential liability equal to half the ebook revenue minus what has been paid so far on every ebook ever sold under any contract where that kind of rights split language still governs. Publishers have perhaps mitigated their exposure by putting new ebook agreements in place with many authors, but they still wouldn’t want a court poking its nose into this particular problem.

On the other hand, it would certainly make things a lot clearer and stop a lot of silly conversations if we all understood that ebook access is granted by license, not sale.

Looking forward to lots of hellos at Tools of Change this week. I’m sure, as always, it will be a jam-packed and stimulating couple of days.


Opportunity doesn’t knock, it pounds!

In a recent post, I contemplated the developing ebook markets around the world, and particularly in Europe, and observed that ten years or more of digitization efforts in the English-speaking world would have a sizeable impact on the ebook markets in other language countries. When I wrote about this earlier, it was to enumerate the challenge I think publishers in other languages should expect to see arising in their own local markets.

Today I want to view that same circumstance from the opposite perspective and consider the opportunity from the standpoint of the English-language publishers, Indeed, it is possible that it is so substantial that it will postpone Armageddon for large general trade houses, whose challenges from the inevitable decline of bookstores have concerned me for several years and which has been the subject or subtext of many posts on this blog.

I want to describe an opportunity which is devilishly difficult to size precisely. We want to know how many candidates to read books in English are in the US, in the rest of the English-speaking countries, and then in the non-English countries. Wikipedia says the world contains 914 million English speakers, of which 251 million are in the US, 232 million in India, and 168 million in the non-English countries in Europe. But that data has provenance of no consistent timing, and the US data, for example, is from the 2000 census.

One source I talked to recently who holds a statistics-oriented job and who has reason to know, insists the world has 600 million native English speakers and 1.4 billion English speakers in other countries. If that were true, the US would have less than a sixth of the total within its boundaries.

The US, by almost anybody’s measure, contains fewer than a third of the world’s English-speaking people. And everybody seems to measure “English- speaking”, not “English-literate.” But the English-literate market in non-English countries, whatever it may be today or when it was measured, is almost certainly growing faster than the native markets are. So if we accept the premise that ebooks ultimately put these potential ebook readers within reach of publishers in America (and Britain, Canada, Australia, and other English-speaking countries, of course), we are watching the access roads being built to a customer base that could double or more what has really been available previously.

The biggest single part of that growing secondary English market, certainly from a literature consumption standpoint, is in Europe. My trip to the IfBookThen Conference in Milan this past week, staged by the fledgling Italian ebook retailer Book Republic in partnership with the 4IT Group, gave me a great opportunity to further understand just how exciting this prospect should make the entire community — publishers, agents, and authors — that share the revenue from the sale of English-language writing.

I have some uncommon personal experience to help me anticipate what this is going to look like to the French, German, Italian, etc. consumer as s/he begins to discover the virtue of ebooks. I found out how incredibly convenient and satisfying it could be to read on a small screen when I started reading on a Palm Pilot 10 or more years ago. “Always having my book(s) with me” is an advantage too seldom emphasized in the print-versus-ebook comparison (partly because it wouldn’t apply in the same way to people who read on a Kindle or Nook or iPad as it does to those who read on an iPhone or any other phone or PDA that one always has in a pocket), but it is powerful. It was powerful enough to totally hook me once I discovered it.

But when I started reading that way, I was in a tiny minority and remained in one for many years. The few of us reading ebooks before Kindle pretty quickly encountered a problem that those French, German, Italian, etc. consumers will start to encounter, regardless of what device they read on. There just wasn’t enough to choose from! I remember routinely spending 15 or 20 minutes poring through the choices, seeing what I’d already read each time I went shopping and not nearly enough that I wanted to read but hadn’t yet. That was why, until Kindle arrived and the number of available titles exploded, I found myself making some odd choices: reading Tarzan (glad I did) and buying and reading a biography of Grover Cleveland for which the ebook cost $28! (I was glad I did that too.)

Shopping required an extraordinarily frustrating expenditure of time and inadequate title availability was the reason why I continued to read some print books for the first several years after I would have happily switched over completely (which I have since done.)

But even back in the early years of the past decade, the number of ebooks available in English dwarfed the number most European language consumers will find this year or next. The incredibly paltry number of books converted to epub in most European countries absolutely assures that our European friends will encounter the same annoying frustration I did.

Until they shop for ebooks in English.

And they will. Indeed, they do. I reported in the prior post that we’ve heard anecdotally that 25% of the printed books sold in Denmark are in English. A friend in tiny Slovenia reports that more than 15% of the books sold there are in English. A Scandinavian bookseller with several stores in Scandinavia and Berlin whom I met at IfBookThen reported that 20% of the books he sells are in English. And those sales are being achieved despite the cost (and, therefore, price) and supply (and, therefore, choice) barriers inherent in physical goods.

(The consultants A.T. Kearney did some research with the Book Republic team to prepare for IfBookThen. They found 100,000 epub titles in German and 50,000 in French, fewer than 2/3 and 1/3, respectively, than Amazon had in English more than three years ago. And they found far fewer than 10,000 available in Spanish, Italian, or Swedish!)

And while northern Europe is more English-friendly than southern, I picked up an interesting fact (from a Brit, not an Italian) while I was in Milan. French was the second language taught to all Italian children in schools until 1991 when it was switched to German. German had a very short run. Since 1997, the second language all Italian kids learn is English. So the Italian schools will be turning out customers for English-language publications and increasing their presence in the local population from now on. That’s symptomatic of change taking place all over the world that keeps delivering English-language publishers new customers.

One American friend at a large general house not in the Big Six told me last week that 10% of the ebooks he’s selling are from outside the US (and that wouldn’t be including the UK.) A global ebook retailer told me that 7% of their English-language sales today come from non-English countries. Those numbers will rise inexorably, and sometimes in explosive spurts, for many years to come. It would require one to see around more corners and over more mountains than I care to attempt to forecast how high a percentage of English-language ebook sales might ultimately be made in non-English countries, but it would surely seem that figuring they’ll reach 25-35 percent over the next five or ten years or so wouldn’t be an outlandish guess. (Whether five or ten will be much clearer in one or two.)

And while some people wonder whether the ebook sales they’re making now are cannibalistic or incremental (almost certainly, they’re both!), the sales that will be made abroad in non-English countries are far more likely to be incremental. They could be adding more sales over the next five years than the problems at Borders today will subtract.

This is not some future scenario about which people can be relaxed and wait. This is an immediate opportunity.

It must mean the end of open markets for English-language ebooks, and soon. Open markets have worked for years for print, giving multiple players an incentive to exploit a sales opportunity with effort and service. But open markets for ebooks will almost certainly reward one attribute and one attribute only: the lowest price. Since ebooks benefit from relatively reliable enforcement of differential prices by market (for those that curse DRM, this is one more reason it isn’t going anyplace anytime soon), the non-English consumers will shortly be able to identify the open market ebooks. They’ll be the really cheap ones!

Agents can’t let this situation persist. Those that aren’t closing open markets for ebooks already certainly will be imminently. The UK publishers have been trying to close Europe in their favor for a few years now; I picked up anecdata (love that new term!) in Milan to suggest that American publishers have woken up to this and are now increasingly taking open markets back.

It would seem logical that the open market for ebooks will go to the publisher that writes either the biggest check or the first check, and that will more often be the American publisher.

This also calls for a new awareness of global (actually, more accurately, “glocal”, which I’d describe as “global, but targeted”) opportunities in marketing, particularly as it is done more and more through online means. To take one recent example from my own personal reading, Ken Follett’s “Fall of Giants”, there are hooks galore in the story to interest readers across Europe, but particularly in Russia and Germany, where much of the action takes place. Fall of Giants is a novel; the opportunities will probably arise even more frequently with non-fiction. I don’t know exactly when this calls for every American house of a certain size to put a person on “glocal marketing” or to add a “glocal marketing component” to many books’ rollout plans, but it might be now. It certainly won’t be long.