Industry Events

There’s a new publishing model afoot, which is to lead with the ebook and just print what you need. That might be POD, and it might be press runs, if you can sell out whole press runs. If the ebook becomes a substantial chunk of sales and if ebooks maintain their prices, this looks like it could be a new way to do much lower-risk publishing.

Some very smart publishing people are moving in this direction. It had been the plan of the meteoric Quartet, which has already flamed out. It is part of the plan of Richard Nash, an experienced publisher (Soft Skull Press) and a budding entrepeneur. It is the model for a young and aspiring Irish publisher named Eoin Purcell. And last week, tor.com announced that it would be publishing books (this is distinct from its “parent”, St. Martin’s sci-fi imprint Tor) with an ebook first and POD methodology.

Can no pressrun publishing work? That’s a subject for discussion at Digital Book World in January, but, based on an interesting post by Kassia Kroszer, one of the four principals in Quartet, I have real doubts.

Kassia’s post makes it clear that direct sales at “full margin” (meaning no cut to anybody else in the supply chain) were an important part of Quartet’s budget and plan. They figured that by sticking to niches, and the first one was going to be romance, they’d be able to build up a direct audience and avoid sharing revenues with retailers and wholesalers. Kassia points out that savvy ebook readers (who apparently also hate DRM, high prices, lack of interoperability, etc.) are willing to support their “local” publisher, knowing that more money gets to the author that way.

This all makes me more skeptical about the model.

Savvy ebook readers are a large part of the current readership, but they won’t stay that way. If ebooks are going to become a business, than casual and uninformed ebook readers will have to join the party. Although I’ve been reading ebooks for 10 years, I’m one of those. I don’t shop around for my ebooks; I buy from what I deem to be the most convenient source. When I used to read on a Palm (in pre-Kindle days), there was no such animal, but Peanut Press followed by Palm Digital followed by ereader had to serve. Then Amazon and Kindle changed the game. And now B&N is providing me exactly what I need for my iPhone.

If a web site I was on anyway offered me an ebook I wanted that would work in my BN reader software, I wouldn’t be reluctant to buy it. But I will only be shopping at places that offer me a choice of things I want. It’s hard to imagine a single publisher doing that.

The web constantly reminds us of the value of monopoly. Amazon has a huge advantage in being the best place to shop for books because they’re the biggest. The size of the purchasing community adds value: more reviews, more data to make better suggestions or respond better to search queries, and it gives them the scale to add unique content through Kindle and BookSurge. In the same way, we’re likely to see a dominant horizontal ebook retailer emerge.

So no matter how good you are at selling your own stuff, if you want to sell to the public at large, you’ll almost always have to use intermediaries. And if you want to sell stuff to your own niche, you’re going to have to be an aggregator, not just a creator, to offer enough product to keep even a niche audience interested. And, if that’s true, then even within the niches, most of the small creators will have to share their revenue with an intermediary.

The loyal and informed crowd of romance readers may have learned that they can find the books they want at Harlequin.com or Ellora’s Cave, but there has to be a limit to the number of individual romance publisher sites the community will support. The right move for Harlequin would be to imitate tor.com and start selling their competitors’ books. (Tor hasn’t done this for ebooks, yet, but they have done it for print.)

The idea of building a niche presence for most subjects simply through publishing in it, rather than by building a real vortal or community site, seems futile. Another lesson from the web (so far; it could change) is that making your own content and selling what you make is not a viable model, except at the very highest price points. You have to figure out how to leverage other people’s content and community participation. That’s what Google does. That’s what PublishersMarketplace does. That’s what the future successful publishers I envision in the Shift speech will have done.

Cutting costs and cutting waste, which ebook-first publishing does, would certainly seem like a path to financial viability. But it takes revenue to pay the bills. If you don’t go out and reach customers where they are — at the big Internet retailers — you need to be selling ebooks to a very large community for sales to be substantial enough to run a business. And if you do use those retailers, they (quite reasonably) extract their share of revenue for delivering access to the customers.

It may be too soon for the ebook-first model to succeed, except in niches more tightly defined than “romance” (which, indeed, is a big part of Purcell’s initial approach) or when it is supported by another business (which is, if you think about it, tor.com’s approach.)

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When I did my two recent posts on ebook pricing — first one proposing “debut pricing” and then one taking it back as not viable — I got a note from a major company CEO saying that, of course, no publisher could discuss pricing with me because of anti-trust concerns. At the same time, I have been trying to staff a panel for Digital Book World on ebook pricing and was told by one of my Board of Advisors, who is from another of the big companies, that I shouldn’t expect any publisher to be able to discuss that issue.

So it was mildly refreshing to see that Arnaud Nourry, the global CEO for Hachette Books, expressed some pretty strong opinions about ebook pricing to the Financial Times in an interview. Nourry said publicly what I have only heard expressed privately before: that the aggressive pricing by ebook retailers (led by Amazon) where they actually sold ebooks at a loss could come to no good end.

On Amazon’s current policy of selling many high-profile new releases at $9.99, FT quoted Nourry as saying: “That cannot last . . . Amazon is not in the business of losing money. So, one day, they are going to come to the publishers and say: ‘by the way, we are cutting the price we pay’. If that happens, after paying the authors, there will be nothing left for the publishers.”

Nourry also expresses concern about the reported one million public domain titles that Google is releasing as free ebooks. Although the article is wrong in its reporting that Amazon charges $9.99 “for all its e-books in the US” (Michael Cader has reported several times that many are higher than that and, of course, many are also lower), we can understand Nourry’s expressed concern that “all the rest will have to be sold at between zero and $9.99.”

I agree with Nourry’s characterization of the present condition as unhealthy and threatening, but I think things look a little better for him and his fellow large publishers than his comments would suggest. And as powerful as Amazon’s position in, there is reason to believe it is at a high-water mark in the ebook marketplace and that, at the very moment Barnes & Noble is stepping up, the conditions are perfect for a competitor.

The downward pressure on ebook prices has been apparent for some time. I reported that John Sargent, CEO of Macmillan, said at a panel discussion for agents (I was one of the panelists) several months ago that maintaining ebook margins was the key strategic concern for publishers over the next few years. Since Sargent made that statement, very shortly after the announcement of Kindle 2 and Kindle DX, we’ve had a reported surge in ebook sales, a host of new reader and retailer announcements, and the further entrenchment of the epub standard. These, combined with B&N’s entry into the market, are good news for publishers.

Epub is probably the publishers’ best defense against Amazon and the Kindle. With all other device manufacturers able to coalesce around a non-Amazon standard, we have a situation analogous to the VHS-Beta conflict of the 1980s and the Mac-Windows duke-out of the late 80s and early 90s. On one side, we have a standard that remains closed to enable “control” (Beta, Mac, Kindle.) On the other side, we have a wide-open standard to enable multi-player use (VHS, Windows, Epub.) In the two cases we know about because they are historical, the consensus was that the “loser” of the numbers race (Beta and Mac) provided a superior technological performance. Kindle does not seem to have even that element in its favor. Whether you use something larger that does e-ink (Kindle, Sony Reader) or something you’re carrying anyway that is backlit (the iPhone or any other smartphone) is a matter of personal preference. But does anybody doubt that a world full of hardware creators will soon make a device that is similar but demonstrably better than the Kindle?

Right now, Amazon has a huge head start on the narrative-reading consumer ebook market. By putting Kindles into the hands of (estimates are) 1 to 1.5 million of the heaviest book consumers, they jump-started ebook uptake and grabbed a huge lead in sales. Anecdotal information gathered from publishers and agents suggests to me that, right now, 70% of the ebook sales for most titles offered in Kindle and epub are Kindle. And a lot are still sold as pdf.

But Google just put a huge thumb on the scale by making one million public domain titles available in epub for free! Those can’t be read on a Kindle without a little bit of technological bridge-building. On the one hand, if Amazon makes that bridge-building transparent and shows that it is easy for people to load epub titles on the Kindle, they compromise the whole Kindle business model. But the perception of choice — and the relative number of titles that will show up under any consumer’s search — is attacking what has been one of Kindle’s greatest advantages: a bigger title selection.

Amazon made what looked from here like a major concession last winter when they released an iPhone app for Kindle. I am hesitant to read too much into my own behavior, but that was the catalyst for me to give my Kindle to my wife and do all my reading on my iPhone. So it was easy for me to switch over to B&N when they came back into the marketplace a month or two ago. And, you know what? The shopping experience is just as good as Kindle. My wife may buy Kindle books again, but I won’t. (The Kindle on iPhone mimics the worst fault of Kindle’s presentation on the device itself: it only presents justified lines, no ragged right!)

Of course, all this means that the blades and razors strategy is going too. When Sony launched the reader, it looked for all the world like they figured they’d make their money selling the books. That was Palm’s idea too nearly a decade ago. Amazon blew them away because they were real booksellers, which they parlayed into both more title availability (they had the contacts) and a better presentation.

It will be a big surprise to me if B&N and Indigo’s Shortcovers don’t rapidly become the dominant horizontal purveyors of epub-formatted titles. And every web site and blogger will sell ebooks in their niche (why not?) which will include offerings that might not make the full-line distribution system. The next question is how long it will take Amazon to start selling epub titles as aggressively as they sell Kindle and print books. Or make Kindle transparently epub-compliant, which amounts to the same thing. They’ll need to do one of the other to protect their overall franchise, but it might mean the end of a meteoric Kindle era (remember the Commodore 64?) when they do.

Oh, and one note on all that to Mr. Nourry. If I’m right about the overall situation, don’t worry about Amazon telling you they need more margin. Because they’re going to need your titles fully as much as you need their sales. Expect to start seeing movement on this first from the smaller publishers, some of which report that they have been pushed into relatively low-margin deals by Amazon. There will be competition among epub vendors; they’ll all want to have the biggest number of titles (and accept the challenge of curating and presenting that.) If you can get higher revenues by 25% or more in one channel, might you be tempted to try to “force” consumers to buy it there by withholding from the lower margin channel? You’d surely be tempted.

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Because I am giving a keynote talk at the Writer’s Digest Conference in New York on September 18, I am thinking about “what do you tell a writer about digital change in publishing?”

The view of the media world that I proselytize, which is that it is “going vertical”, is hard to accept if you are “general” (i.e. horizontal) and it is hard to accept if you are small. Both general publishers and small publishers have always depended on aggregators to create a large enough offering to be commercially viable. General publishers need bookstores, primarily, and general book review media (pre-pub and to the consumer) as well. Small publishers have required wholesalers and distributors to organize a large enough product offering to be effective with bookstores and libraries. The intermediaries have always found it difficult to deal with offerings of a small number of titles.

The vertical vision says that aggregation is not just necessary at the “book” level, but also at the “subject” level. If the vision is accurate, publishers of just a handful of titles — even if they are in a niche — will find it prohibitively difficult and expensive to reach their audience.

One reason why life is getting so much more difficult for general trade publishers and small publishers is that the capital barriers to entry for publishing, particularly ebook-first publishing, have dropped to near zero. The aspiring book author 10 or 20 years ago needed somebody to print a run of books, hold them, and distribute them — mostly one-by-one — to points of distribution (called bookstores, libraries, and wholesalers) all over the country. That took capital and it took scale.

This isn’t true anymore. Anybody with a computer and an internet connection can be a publisher. You can publish a blog on a free platform. You can publish ebooks through Smashwords by sending them your Word file. You can publish a document for download through Scribd by sending them a PDF. You can make your property available as a printed book through a number of services — Author House being the largest — without any investment in inventory and only a modest set-up cost.

This ease of entry is part of what bedevils the established publishers. They’re still gatekeepers, but the gate isn’t attached to a fence or wall anymore so aspirants just walk around it. That doesn’t mean that getting published by a real publisher is of no value; it is still the only way to sell significant numbers of copies, and it will remain that for some time to come.

But most books, even those published by legitimate publishers, don’t sell large numbers of copies. And it is increasingly the case that the self-publishing of various kinds is the best way to get on the publishers’ radar screens and it has the additional benefit of beginning to build an audience and a response loop that are essential components of any successful writer’s platform.

In fact, when we discussed with a leading agent a panel we’re planning for our January Digital Book World conference called “Stalking the Wild Blogger: Scouting Blogs and Self-Published Content for Fresh Voices”, which is about agents and editors finding authors through blogs and self-published books, he said that is now something that “every agent does.” He explained: “it is now the standard way to find new clients.”

That means that blogs and self-published books using ebook and print-on-demand models are now part of the overall commercial structure of publishing. They are not something separate and inferior, as “vanity publishing” was in the past.

The best thing that can happen to a writer is still that an established agent takes on and sells their project to an established publisher for an advance large enough to constitute adequate financial compensation to the writer for her work. Most books published by mainstream publishers still do not earn out their advance and yield additional royalties, so getting paid upfront is still the best financial situation for the author, in the short run. (In the long run, failing to earn out advances and sell books will catch up with an author; it’s a trick getting harder and harder to repeat in a world where BookScan numbers tell each publisher how prior books have performed.)

So here’s a starter list of tips I’ll be offering writers on September 18, a list that would grow between now and then even withoutthe help I may get from readers of this blog.

1. Understand your vertical world on the web, and participate in it.

2. Blog. And build a following for your blog.

3. If you have finished book material, and it is not already in the hands of a capable agent managing the process of selling it to publishers, self-publish it in ebook form at least and promote it the best you can.

4. Join PublishersMarketplace for at least one month and use the deal database to find the agents that handle material like yours. Reach out to those agents and listen carefully to their feedback.

5. If you have a book with an ISBN, self-published or not, take advantage of your free web site at Filedby.com to promote yourself. (I am a proud co-Founder and shareholder of Filedby.)

6. Google yourself and find and fix your presence anywhere on the web where you can influence it, particularly bookish sites like GoodReads, Red Room, Shelfari, LibraryThing, and, of course, BN.com and Amazon.

7. When you talk to agents, try to discern how aware and conversant they are of ways an author can promote his or her own career. Can they coach you on using social networking and blog touring and your own posts to promote yourself? If they can’t, they might be a great 20th century agent and not right for you in 2009.

8. Link, link, link. When you write each blog post, link out to other sites. Have a blogroll of your favorite sites an encourage them to link back to you. Build your connections on Twitter, Facebook, and LinkedIn. And remember that the people you are linking with have their own agendas, which is not about helping you. Respect that.

I know a lot of readers of this blog specialize in helping writers; I don’t. I want the additional thoughts for writers that I’ve missed. You can post them here or send them to us at info@idealog.com.

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Back in 1993 or so, my friend Lorraine Shanley of Market Partners International and I went to a free half-day conference sponsored by Microsoft. At the time, Microsoft was really pushing the computer manufacturers to install CD-Rom drivers into new computers. They had a definite selfish interest, which was to reduce the cost of goods for their software, which was being delivered on multiple floppy disks. One CD-Rom could hold what a dozen or more floppies would hold and would cost Microsoft considerably less. Since the consumer was paying for what ended up in their computer, not the manufacturing cost of the shrink-wrapped product that got it there, Microsoft knew that making the delivery mechanism cheaper wouldn’t oblige them to cut the cost of their software; they’d just make more money.

So on this particular day, they were hosting the publishing community to tell them what CD-Roms could mean to them. This was the first time that I was aware (although perhaps it had happened before) that the mainstream tech community was talking to the consumer trade publishing community and saying “have we got something for you!”

What Microsoft tried to demonstrate was that many things could be done with all the data that could be packed on a CD-Rom. They were in the process of creating their own CD-Rom encyclopedia, Encarta, and they wanted all publishers to get on the CD-Rom bandwagon. The message essentially was: “you’re the creative people; you’re the content guys. Look at all this cool stuff that CD-Roms can do. Now we don’t know what the product should be exactly and we don’t have a business model for you, but, don’t be Luddites, get off your duffs and start making some CD-Roms!”

Lorraine and I walked out of that meeting thinking, “this isn’t very helpful” to the content publishers who were our client base. So our two companies joined forces with another consulting company owned by Dan McNamee, got PW as a sponsor, and staged a full-day conference called “Electronic Publishing and Rights” (which turned out to be the first of two.) We had a plenary session in the morning, and then the afternoon proceeded on three tracks: consumer, education, and professional. (When we did the second show, we made it five tracks: consumer, school, college, sci-tech, and legal/accounting.) Both shows were sellouts and what I learned putting them together really pushed me, before the Web, before Amazon, and before ebooks had anything more than a 4-line display on an early Sony device, into the business of thinking about what the impact of digital delivery of content would be on consumer trade publishing.

Before long, the conferences we did led to the “Publishing in the 21st Century” program I described last week and the regular reminders that book publishing is many  businesses with quite different characteristics, not just one (which we had acknowledged at our EP&R shows with our afternoon tracks.)

And that leads us to Digital Book World, the new conference on digital change for consumer trade publishers that was announced yesterday. We’re now having conversations that go beyond our very illustrious Advisory Board about speakers and topics. What comes back to us over and over again is how important the trade book focus is.

For example, earlier this week we spent the day working with a client — a large aggregator — that wanted a little “ebook seminar” for their team to be part of our visit. In order to really focus the conversation, I asked for a list of questions and concerns. It became evident very quickly that this company needed information about sci-tech, college, and school ebooks and, of course, what I know best is trade. But I knew enough about the others to know that they are quite different, so I checked in with two smart industry colleagues (both of whom are members of our Advisory Board, as it happens) who know both the trade and non-trade spaces. We came up with a list of distinctions, but one really stood out to me.

In the trade space, one of the big ebook topics (which we plan to explore in depth at DBW) is “pricing.” What should ebooks cost the consumer? The convention among trade publishers has been to peg ebook retail prices to the least-expensive edition available in print. So if there is a cloth edition and a paperback edition, the publisher would be guided on ebook pricing by the paperback (usually setting at or slightly below the print book price.)

But in academic publishing, hardcover and paperback editions are often published simultaneously. The publisher figures that the paperbacks are for the students; the hardcovers are for the libraries. Since ebooks in the academic space are considered primarily library items, and because they have often become part of larger searchable databases, the academic publishers would set their ebook prices based on the hardcover, the more expensive print book available. He also said that sometimes they are even more expensive than the hardcover, because of the additional functionality they have, like links and embedded video.

This was important information for our client, who works across publishing segments. But if presented without a clear contextual frame, it could well be confusing information to a consumer trade publisher (or an academic publisher) trying to figure out a pricing strategy. Because we are tightly focused on consumer trade publishing, our panel(s) at DBW might not mention a tie-to-hardcover pricing, but if we did, we’d pose the model and talk about why it made sense in some other context, but not in ours. We’ll be talking about lots of other things that affect price: discounts, retailer strategies and control, the impact of the publisher selling direct to the consumer, and the extent to which there is enrichment or enhancement, for example. All of those things, as well, are somewhat different in the consumer space than in the others, where aggregation and value-added capabilities are critical components of ebook development.

Now that DBW has been announced, we’re engaged in conversations to refine the topics list and speaker suggestions we’ve gotten from our Advisory Board. We’ll be announcing speakers and panels as they are nailed down. We’re striving for a show that will scream “this is for me!” to consumer trade publishers. While we’re not doing a “call” for topics and panels (we did that ourselves, internally and with our Advisory Board, already), we certainly will happily entertain suggestions. If you have any you want us to consider, better to email my colleague Sophie Shepherd (at sshepherd@idealog.com) than to post them here (though you can also do both.)

This post and my last post last week and many you will see in the weeks to come will be making the distinction between “general trade publishing” and other book publishing. That distinction is a remarkably important one, but it is also going to be a disappearing one. In fact, the distinction between “book publishing” and “publishing” is going to be a disappearing one over the next couple of decades; we have talked before about the fact that format-agnosticism will increasingly characterize all media, not just publishing, as will verticality. While that means that there is a real need for Digital Book World, which emphasizes that distinction, it also means there is a place and need for the more tech-centric and publishing-type-agnostic program presented at O’Reilly’s Tools of Change. Personally, I’m planning to attend both.

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I did a panel yesterday at NYU as part of the summer publishing program on “New Visions” for publishing. The group was put together by Leslie Schnur. I shared the stage with four very articulate co-presenters who gave very diverse views of the future. Our audience was a full room of about 50-100 (I wasn’t counting; I didn’t know I’d be writing this piece) very attentive 20-somethings with a serious interest in publishing.

Dan Simon of Seven Stories Press spoke optimistically of a revival of book reading, as in printed ones, and he spoke passionately about the importance of editorial selection and advocacy as part of a social mission publishers have to bring good writing to readers.

Carol Hoenig, a writer and consultant who works with Author Solutions, told about her own experience successfully self-publishing a novel (she thinks selling 1500 copies is successful, and I agree with her) and explaining how Author Solutions helps aspiring writers “get past the gatekeepers.”

Brian O’Leary of Magellan explained the new business models enabled by print-on-demand and how to think about them. Brian pointed out that POD models make sense for books that sell as many as 500 or 1000 copies a year, and that caught Dan’s attention, because, as he put it, “a book that sells 500 or 1000 a year is solid backlist for us.” Dan has been comfortable printing a 3 year supply; Brian’s math suggests reconsidering that formula.

Will Schwalbe, who had a 21-year career as one of New York’s top commercial editors at Morrow and Hyperion, explained his new web business, Cookstr.com, which aggregates recipes from more than 300 of the top chefs and cookbook authors in the world. Since, as any reader of this blog knows without my having to report, I used my presentation time to talk about the shift from horizontal to vertical, Will’s presentation had the great virtue of reinforcing the message I had delivered three presentations before.

Will made good use of the audience. He asked, by a show of hands, how many people liked Italian food. Just about everybody. How many cooked? Almost everybody. How many people got recipes on the Internet? A lot. How many baked more than cooked? A good chunk. How many vegans? About none. How many vegetarians? A handful. How many would prefer a recipe with fewer than five ingredients? Quite a few.

He used that device to show how the tagging he invests in on his web site delivers a better user experience for somebody looking for precisely the right great recipe. What it triggered in my mind is “what an interesting way to collect information from an audience.”

After we all presented, there were lots of interested questions. What’s the business model of Cookstr? How does Seven Stories go about finding those great books Dan wants to publish? Does Author Solutions do publicity for books?

As the conversation evolved to a close, I realized I had a precious opportunity. Though I’m considered to be wildly (crazily?) forward-thinking in some circles, expecting print runs of books to nearly disappear in 20 years, for example, I am unabashedly conservative in others. For example, the idea of books as collaborative or social experiences leaves me cold and it really leaves me cold to think of interrupting good narrative reading to explore links and, particularly, to see video. Some people think storytelling will be reinvented to take advantage of things like this, which makes me scratch my head. But maybe it’s generational, I always think. Maybe today’s generation would find it boring not to have a video interlude interrupt unbroken text. Well, with all these very smart Born Digitals in one room, I’d use Schwalbe’s technique and ask!

So, with time running out, I got the indulgence of the organizers to ask the crowd a couple of questions. The first one was: “how many of you read ebooks.”

Two hands went up. Two.

The next question was not worth asking. But I sure got a dose of new information to ponder.

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I had the good fortune to spend a couple of days last week in Toronto to speak at a conference on “Giving it Away”, how the culture of “free” is affecting the book business. My workshop sessions were called “Giving It Away with a Purpose”, by which I meant using content as “bait” to build community.

Since this was a workshop, most of the 90 minutes in each session was spent hearing from my audience about their publishing and marketing challenges and trying to help them see how the concepts of vertical and community applied to their particular examples. One of the many pieces of wisdom I’ve picked up from Mark Bide over the years is that we often “learn what we think by saying it”; questions from the audience force me to articulate things that might have been lurking in the back of my mind but had been left unsaid, even internally.

And what I learned that I already knew from these exchanges has to do with “critical mass” and its role in the shift from horizontal to vertical.

I read a piece about a month ago (who knows where, but I think I was originally steered to it by the ReadWriteWeb daily email) about the “X of Y found this review helpful” found on Amazon. What the article explained is why you don’t, and won’t see this employed effectively on any other bookseller’s site. Of all the people who buy books on Amazon, only a small percentage of them write reviews. (Many books don’t have reviews on Amazon; you are often invited to be the “first” to review a book.) Then of all the people who read the reviews, only a small percentage of those will comment as to whether the review was helpful. And a small percentage of a small percentage is an tiny, tiny percentage.

So only when you start out with the number of book customers Amazon has, which is a multiple of BN.com’s customer base (which is, presumably, in second place), can you get enough reviews and enough ratings of the value of the reviews to get a meaningful “Y” for “X of Y found this useful.”

And that was not what we talked about in Toronto.

In the course of my presentation, I talked about FiledBy.com, the new venture offering authors free web sites of which I am a co-founder. Carolyn Pittis of HarperCollins, a very acute thinker about digital strategy, pointed out from the audience that FiledBy is totally horizontal: it’s about book authors of all kinds. She wondered if my own new venture might contradict my own theory about verticals.

Temporarily, it might, although the initial “vertical” of FiledBy is book creators (there are sites there not just for authors, but also for illustrators, editors, and others who are credited with creative contributions to books that have ISBNs.) But the creators of FiledBy are very aware that as the number of authors registered with us grows, we will be able to put authors together by interest, creating sub-communities of mystery authors or history authors or knitting authors. And we intend to do that.

Earlier in the presentation, I had expressed the thought that Facebook and Twitter are like AOL for Internet 2.0. AOL (and Compuserve and Prodigy) made the online world, and then the internet, easy for everybody to use. As the internet itself got easier to use, the on-ramp wasn’t necessary anymore and, in fact, the parts of AOL that are healthy today are the verticals they created in the early part of the 21st century when they (belatedly) saw this coming. Soon we will see social networking and short messaging tools everywhere and we will be more likely to employ them in verticals, among people of similar interests, than in the world at large, which is what the horizontal communities are.

Communities require critical mass. It’s great be able throw out a question for the community to answer, but if nobody’s there, it is ineffective. If only 20 editors and 10 agents were on PublishersMarketplace, the deal database wouldn’t be worth much.  By the same token, growth in a community enables niching to get more and more narrow and deep.

Soon, publishers are going to see that they that they require critical mass by vertical in order to do cost-effective marketing. That is going to lead to a reshuffling of publishing portfolios, which will be the topic of a subsequent post.

Another big piece of ebook news landed this morning. ScrollMotion has announced that one million titles are on their way to them from LibreDigital! One always presumes that publishers want every title they have on every possible platform so that similar announcements will come from other ebook players soon, but this is another huge stride forward for the ebook business. And for ScrollMotion.

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On May 28, I gave a speech called “Stay Ahead of the Shift: How Content-Centric Publishers Can Flourish in a Community-Centric Web World” at BookExpo America. From today (June 12) through Monday morning (June 15), we are able to show you the video of the speech (below). We have also put the slides and full text on the speeches page of our site.

A transcript of the speech is viewable via a new annotation platform hosted by our clients, SharedBook. That platform enables comment on the speech, section by section, in what constitutes an experiment for SharedBook and for us. We hope many of you who see the speech will return to comment.

Please note that this platform is only available to IE & Firefox users. If you are having difficulty reading the justified text, we have found it is easier if you reduce the width of your browser.

After Monday, June 15, the speech can still be viewed on PublishersMarketplace by members only.

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Dinner Saturday night. 12 of us. Three spouses who had no particular interest in the BEA. Eight of us with one interest or another in the book business, but no possibility of personally being an exhibitor. And one publishing company CEO with a stand.

Of course, I got my money’s worth. I got in free as a speaker and live in Manhattan. I had several meetings with publishers and distributors on stands they were paying for that could result in assignments. I had other meetings with a bookstore chain and some technologists that came because of the publishers too that also could result in work.

An ROI of pretty much infinity. We all felt that way. Except for the exhibitor.

“No way it is worth it,” he reported. He even had to plan on having four people at the show on Sunday, just to cover the booth when he knew in advance there’d be hardly any productive business conversation. (BEA is fixing this next year by shifting to a mid-week schedule.)

I am always skeptical of any individual’s ability to characterize a show like this based on their own experience. After all, there were considerably more than 20,000 people there. There were dozens of panels going on that had great impact that I didn’t even know were happening, because I was engaged doing something on the floor. But, speaking for me, it was a great show. Lots of fun and lots of business.

Martin Levin, whose first ABA was in 1950 and who commented on my previous BEA post, argued with me about my prediction that BEA would soon come to an end. I had to remind him not to confuse what I say I think will happen from what I would hope would happen. It is work to keep those things separate.

Martin said, “being fat is no reason to commit suicide. This show is fat. It needs to go on a diet!” Another trade show veteran from one of the supporting technology companies said very much the same thing.

But wait, there’s another point of view. Make it bigger! Richard Nash and Michael Cairns (two smart guys I agree with a lot, but not this time) both suggest “open the show up to the public.” Frankfurt does! Book festivals in Los Angeles and Miami attract huge crowds! 

Sorry, public participation is not the “solution” for this show. What ails this industry is horizontality! What ails this industry is dedication to the book as a form! Publishers need to understand niches better; they don’t need to try to replicate the horizontal world that is disappearing in newspapers and bookstores through trade shows!

What made BEA such a fabulous experience for those of us for whom it was that was the aggregating of all of the industry players from around the world. And not just publishers! What do Bowker, Bookmasters, and Klopotek (just to name three exhibitors who were important to me at this past weekend’s show) have to gain by having the public come in? The smartest publishers who are beginning to understand verticality — like Wiley or F+W or  Taunton — need to meet the public in verticals. They don’t need to spend a beautiful Sunday fending off people looking for a free novel or a free children’s book. (And, of course, the German model isn’t “free books for the public”. Exhibitors sell the books to the public off the stands! I wonder what the sales tax authorities in New York would say to that…)

I’d love it if Reed would keep BEA going for years and years, particularly when they bring the mountain to me on my very own home island. But I’m still having trouble seeing why publishers will keep paying and, if they don’t, no more show. I’m afraid that what will work for publishers is smaller and more focused, not larger and more horizontal. That may very well not work for Reed. I expect very shortly it won’t work for Reed. I think the rights-trading piece can be revived in a much cheaper form. The retailer-facing piece — horizontally — is a dinosaur. And all the PR opportunities occur because of the size and glitz. Like most horizontal PR opportunities for books, that won’t get replaced either.

My message of verticality is clearly not getting through! The Washington Post was kind enough to feature me on the front page of today’s Style section with a lengthy and, as far as it went, accurate summary of my Shift speech from last Thursday. But, you know what? Not one mention of the central theme: verticality!

These are twilight times for the good old days.

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I went to my first ABA (American Booksellers Association) Convention in Washington, DC in 1970. I had just written “The View from Section 111″ for Prentice-Hall, about the New York Knicks’ first championship season, which was going to be published that October. Prentice-Hall threw a party for authors with a book coming that Fall, and among the others the only name I knew was Senator Barry Goldwater.

I started to attend regularly beginning with the 1973 ABA in Los Angeles. Since then I think I’ve missed one, so this year would make number 37, including that first one at the Shoreham.

The ABA at the Shoreham was in the basement of a not terribly huge hotel. It was probably a bit bigger than this, but it felt like it was about the size as the exhibition at Book Business Conference & Expo at the Marriott was this year. The 1973 show in Los Angeles was bigger, indicating, I think, that there was growth the Shoreham wasn’t large enough to handle, because the ABA had been at the Shoreham for many years. After that it bounced around: frequently at McCormick Place in Chicago, split between two hotels in New York (before Javits existed) in 1975, San Francisco when they opened Moscone in the late 1970s. 

When I was a pup, the ABA was definitely an order-writing show. The number of independent bookstores who bought a big chunk of any trade list properly presented to them was in the thousands. (Now: what would you say? the dozens? wouldn’t hundreds be an exaggeration?) Only a few of the biggest publishers had sales forces large enough and disciplined enough to really cover them all, so most exhibitors encountered retailers who would do immediate business. Everybody had some sort of show “special” to encourage ordering. I think for many years it was “blue badges” that signified booksellers: you kept an eagle-eye out for them as the traffic streamed by and you knew exactly what and how you were going to pitch them.

Each night at the main convention hotels, several publishers — and all the mass-market publishers — ran “hospitality suites” offering liquid refreshment and munchies very deep into the evening. You’d make the rounds of those after you had gone to whatever events, dinners, and parties had taken place in other locations. I always found the time in the hospitality suites to be a highlight of the convention.

The show floor for many years was open all day Saturday, Sunday, Monday, and Tuesday morning. Friday was set-up day. On Tuesday night was the ABA banquet, and people stayed and went to it!  Those who know me that banquets aren’t my cup of tea, but for some reason I was at the one at the San Francisco ABA in 77 or 78. I remember it well because I was seated at a table with Jill Krementz, the noted photographer and wife of Kurt Vonnegut.

Roysce Smith was the longtime Executive Director of the ABA and he was the Major Domo of the burgeoning convention. Toward the end of his career Roysce’s legs couldn’t carry his large-ish body around the growing acreage of convention floor, so he cruised the aisles in a motorized vehicle.

Daisy Maryles was one of PW’s key reporters then. Daisy didn’t work from sundown Friday to sundown Saturday, so she really worked the hall on Friday while people were setting up. In those days, of a smaller industry and smaller companies and the ABA being a very important annual event, the executive team (maybe the CEO, certainly the sales execs) was in the hall in blue jeans on set-up day making sure everything was shipshape. So Daisy actually got much more bandwidth and information by working the hall on Friday than she would on Saturday, when the publishers’ attention turned to the booksellers.

The Walden and Dalton chains grew fast in the 1970s and 1980s, but the independents continued to thrive as well. So the ABA Convention continued to just grow and grow. I remember there was a point when there were only a handful of places in the country that could host it because the convention hall acreage required was so great.

Then in the 1990s, new ABA Director Bernie Rath, who had replaced Roysce when he retired. sold the show to Reed Exhibitions. First Bernie sold Reed 49% of the show in 1992 and then the additional 2% that gave Reed control of the show in 1996. After that, its name changed to BookExpo America.

Although “education” had become part of the show during the ABA’s tenure, Reed set out to expand that aspect of things and to make the show bigger and better. But their timing was terribly unfortunate. The long expansion of the US book trade, which had continued pretty much unabated from World War II until the mid-1990s, stopped and started to reverse in the internet age. Even worse for the industry trade show, consolidation of both big publishers and retailers accelerated. That meant fewer publisher customers to buy the booth space, and fewer retailers walking the aisles to make the booth space valuable.

Last year’s convention in Los Angeles was the first where it really felt slower and sparser. At the time, BEA was scheduled to go to Las Vegas in 2010 and it seemed to me that, if they did, it would be the last convention. Things had evolved to the point where publishers were paying good money for booth space to be sitting targets for consultants and new tech propositions to put forth their propositions. How long, I wondered, would publishers pay good money to make prospecting for work efficient for me and others like me?

The BEA got the same message. It has been announced that the show is in New York from now on. That makes sense in that the publishers who pay the most for booth space can now, at least, avoid the great expense of flying New York staff somewhere else in the country and putting them up. That forestalls Armageddon, but it can’t be permanently avoided. New plans have been announced to make the trade show run mid-week, rather than across the weekend. That anticipates what will be this year’s embarrassment, which is that hardly anybody will be there on Sunday.

The BEA of today isn’t the ABA of old. The booksellers are just about gone. The late-night hospitality suites don’t exist anymore. And hardly any publisher goes to the show expecting to write orders. It is time to organize a betting pool where the question is: how many more BEAs before, like its Canadian counterpart, it simply ceases? Three? Four? Hard to see more than that.

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Just had a very busy day at the London Book Fair. It is hard to post from here; I don’t have my normal 12 or more hours a day at the keyboard of my laptop. But what Book Fairs are all about is the compressed opportunity to encounter smart and knowledgeable people and I had the chance to check out and validate some thoughts I’ve been having about ebooks.

1. The proliferation of formats, devices, screen sizes, and delivery channels means that the idea of “output one epub file and let the intermediaries take it from there” is an unworkable strategy. Here are two simple reasons for that (I’m sure there are many others):

*Epub can “reflow” text, making adjustments for screen size. But there is no way to do for that for illustrations or many charts or graphs without human intervention (for a long while, at least.) Even if you could program so that art would automatically resize for the screen size, you wouldn’t know whether the art would look any good or be legible in the different size. A human would have to look and be sure.

*The link between text and footnotes, and the easy ability to jump back, is a huge variable among ebooks in different formats. There is apparently some sort of manual work and quality control here that isn’t necessarily done by a downstream converter.

Publishers will find that they must do a QC check on every version of their ebooks which is offered, and a “version” can occur every time a component of the supply chain changes.

2. The branding of ebooks is a mess. The publisher brand is being obliterated. You are buying a Kindle ebook or a Stanza ebook or an Iceberg ebook or an eReader ebook and not Random House, HarperCollins, or Hachette. Publishers are apparently just allowing this to happen. This is pretty ironic because most of the same publishers are mistakenly trying to imbue their brands with consumer significance. For the general trade publisher, that’s not actually possible (since they are not distinguished by their content or their audiences). But if it were possible, the quality of their ebooks should be a big part of it going forward and they’re relinquishing the role of “owning” that voluntarily.

In some ways, they’re also relinquishing their primary responsibility as a publisher, which is to control the quality of the product they deliver for their authors to the authors’ readers.

3. The evolving discount structure for ebooks can’t possibly be sustained. Retailers always use margin to gain share. If publishers sell ebooks to eretailers for 50% off, consumers will soon be buying them at 40% off.  On the one hand, we are ten years into a paradigm of imitating brick-and-mortar pricing and terms and it is difficult to change it. On the other hand, ebooks are still only 1% or so of most publishers’ sales, so any change made now will be “early” in the overall scheme of the ebook business.

Somebody’s got to start building a glide path to a sensible structure. This will be complicated, because publishers in the long run will be much more likely to sell digital downloads direct to consumers than physical books. That means that just going to net pricing wouldn’t be much of a solution. With the publisher selling the books online, any intermediary would be able to calculate what percentage of the retail-to-consumer they were being asked to pay.

The conversation about the prices of ebooks have centered around the costs that publishers don’t incur: printing, binding, cash tied up in inventory, warehouse, returns. But publishers say the manufacturing cost of a book is only about 10% of the retail price and we still have to maintain the operation to do all the printed book stuff and we are still investing to build the infrastructure to do the estuff.

Everybody’s right, but we’re ignoring the retailer side of it.

Retailers also avoid a lot of cost: rent, clerks, cash tied up in stock, shelving, returns. They also have front end investing to do to build an infrastructure to process a digital download business.

I think if I were a big publisher, I would make it clear that the era of 40, 50, 55, 60% off retail for digital downloads is one that must come to an end. I’d lean to a phased reduction and, in the short run, all kinds of support (including additional margin) to help “retailers” (Stanza, B&N Fictionwise, Apple’s and RIM’s App Stores, and every store served by Ingram and Content Reserve) build their offering and their capability. 

The big publishers will have extraordinary leverage to recreate the paradigm. When there’s an ebook market of a size that matters (getting close), people will search Google for their favorite title if the search at their favorite ebook retailer doesn’t deliver the title. There will definitely be retailers that will take the business at lower margins, as can the publisher itself. Boycotting high profile books will be a very dangerous strategy for a retailer.

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