The Shatzkin Files

Learned (or figured out) at BEA 2012

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BookExpo America, trade publishing’s industry-wide gathering, just completed what must be considered another successful year at Javits Center last week. Attendance was pretty much what it had been last year and the lines for autographs on the convention floor certainly gave off the feeling of enthusiasm and excitement that publishers want to see.

Convention roundups are best delivered by people like Laura Hazard Owen and my Publishers Launch partner, Michael Cader, who make a real effort to take in the breadth of what is going on. I, on the other hand, have my meetings and chats with friends that seem to fill up the days so my impression of the overall is just that: an impression. An ad hoc impression.

One thing that seems pretty clear is that my forecast for the future of BEA from 2009 was unduly pesssimistic. I like to get to what I think is the heart of the matter, but in this case I was overly simplistic. I got it right that bookstores would continue to decline but I got it wrong to think that would doom BEA within three or four years. Although other retailers stock books more than they used to, there are nowhere near the number of opportunities for publishers to talk to customers that there were even in 2009. But publishers are that much more interested in talking to any source of shelf space that they can and, in fact, non-book retailers often aren’t hit by the field sales forces.

So there continues to be sufficient reason for publishers to exhibit to keep them coming (albeit with smaller stands and less staff than the big guys used to bring). And that brings a whole slew of other players, including the ever evolving set of companies with digital propositions looking to get the attention of publishers large and small.

Aside from our Publishers Launch conference, which made lots of news and was an altogether satisfying event from an organizer’s perspective with a number of really fabulous presentations, I had a handful of takeaways from BEA 2012.

1. Metadata is still a mess. For a BEA panel outside Publishers Launch, we reunited the incredibly engaging team of Newlin and Toolan to discuss metadata. Bill Newlin of Avalon, a division of Perseus, and Fran Toolan, the “Chief Igniter” (CEO) of Firebrand Technologies, know it all about metadata and are both passionate and extremely entertaining in discussing it. I heard from somebody who saw the session or talked to them afterwards that they might be getting bored with presenting on the subject. I checked in with Bill afterwards and he said he just had to freshen up the presentation; it remained important and he wouldn’t stop.

Then I talked to Karina Luke, who had spoken about metadata for us in London last year when she was at Penguin and who now is in charge of Book Industry Communication (BIC), the BISG equivalent in the UK which has, among its responsibilities, the monitoring of industry complicance with metadata standards and certifying publishers for competence. “Is this really still a problem?” I asked her. “Yes.” “Even among the big publishers? Don’t they have it all straight?” “No.”

Since metadata has, as Karina makes clear, literally replaced catalogs and sales reps as the most important and mission-critical source of information about a publisher’s books, this is a bit shocking. We had Jonathan Nowell of Bookscan do a presentation at Pub Launch Frankfurt last year which demonstrated pretty emphatically the relationship between metadata and sales. He’s repeated the presentation, first for us at Digital Book World, and then under other auspices. Apparently not enough publishers have seen it.

2. Still, nobody reports selling illustrated books effectively as ebooks. I have asked the question over and over of every illustrated book publisher I know. One Big Six house that is doing ebooks for all the titles in one of their divisions with a lot of illustrated titles, told me that most of the time sales of the digital edition are in the single digit percentages of the total sale. Very successful illustrated ebooks might do 15% of the print sale. For immersive reading, that percentage is a big multiple of that.

Illustrated books as ebooks have not yet demonstrated that they will work in the marketplace.

3. Still, nobody reports a formula that can deliver repeated commercial success with enhanced ebooks. We all know about a few instances that have worked, but, so far, no publisher has come up with a formula to make enhanced ebooks commercially sound propositions.

We introduced Ron Martinez’s “Aerbook Maker”, a cloud-based technology that makes it easy to build complex ebooks and apps and cuts the cost of doing so dramatically. Martinez’s technology will definitely reduce the cost of experimentation and allow a lot more titles to hit the marketplace. Maybe that can jump-start a business both by making the costs go down and by making it easier for the creative people, including the author, to engage with the technology.

There certainly isn’t a business yet.

4. Publishers still haven’t focused on creating rights databases (which I identified as the biggest problem of the decade over a year ago.) This is a knotty problem for publishers. Sales of books are, in general, flat or down. Sales of rights, particularly in small bits and pieces (chunks), are going up. But without rights databases, the cost of those transactions can often eat the all revenue.

Exactly what to do is an extremely complex problem for any house to tackle and requires some high-level consideration, planning, and resource allocation. But I think it is obvious that the correction must begin with properly databasing the rights in current contracts as they are signed. Even this is apparently not happening yet in most places, according to the “support” industry that would help publishers change this.

Meanwhile, the “in” baskets in the permissions departments will continue to be piled higher and the number of unattended=to opportunities that might have been really remunerative or helped with the marketing of the book will be a subject to be considered at some future time.

(I recall now that my wife, Martha Moran, increased sales by some huge multiple in the 15 months she was doing special sales for Crown in the late 1970s. Her singular innovation was to create a set of form letters that allowed her to answer every request within a couple of days. The impact was immediate. It might well be the same when some publisher creates such a policy for its Rights and Permissions requests.)

5. The problems that distributors are facing with ebooks in the public library market are being duplicated in the K-12 library market. People in that space tell us that they suffer from the same concerns on the part of publishers that keep some players out of the public library market. Is there any way to offer ebooks in school libraries that won’t cannibalize sales of multiple copies in school settings? That’s as much a conundrum as the public library one, but it gets a lot less attention from the public or the publishers.

6. The slowdown in ebook share growth got a bit of conversation. Did I believe it was real? Sure, it is. And it is probably a very natural state of things. Before ebook reader prices plummeted, which they have really done in the past year or two, the readers only made real economic sense to people who read a lot of books. The first mover advantage Amazon gained with Kindle (which was the first device that was easy to load and also hooked up to a lot of titles) was huge because they self-selected the heaviest readers with their pricing. I’ve never seen figures that would prove it, but I’ll bet Nook also has found that ebooks sold per new device is declining from what they saw at first.

Another reason for this, besides the bias of heavy readers to be early adopters, is that so many devices being sold now are replacements. There is a tendency to “load up” on a new device. That’s not necessary on a replacement, particularly a replacement within the same retail ecosystem. So device sales have lost their power as a leading indicator of ebook share growth.

7. The most stimulating and exciting conversation I had at BEA was with Marcello Vena, the director of digital business at RCS Libri, a large book publishing group that owns Rizzoli and Fabbri Editori. RCS Libri is part of RCS Mediagroup, one of the largest EU media holding companies. They own a lot of media businesses including newspapers, magazines, radio, and online advertising.

RCS Libri is doing a large number of innovative things with ebooks, both illustrated and straight text. They’ve done an illustrated ebook on museums that has been a huge success in Italy and will be delivered in English by Rizzoli. They’re starting two new vertical imprints dedicated to genre series in Italian: Rizzoli Max for thrillers from Rizzoli and Fabbri Editori Life for romance novels from Fabbri Editori. All titles will be issued simulaneously as inexpensive hardcovers and ebooks starting this week. The initial list of the thriller series includes a book by my favorite self-published author, John Locke.

RCS is thinking globally and also innovating locally, including in the way they manage promotional pricing of their digital products online. Of course, what’s stimulating for me will probably be stimulating for an audience as well, so I’ve booked Marcello Vena to speak at the Publishers Launch Conference in Frankfurt on October 8.

I turned 65 during BEA. People older than I am are getting harder to find at industry events. But I really enjoyed seeing two of them at BEA.

Martin Levin is in his 90s. He went to law school after he retired from his publishing career, which concluded after he was chairman of Times Mirror Publishing, which then owned Abrams and New American Library. For the past two decades he has done M&A with the law firm Cowan, Liebowitz, and Latman. Martin greeted me with a big smile saying how happy he was that my career has gone so well. But he pointed out, accurately, “you’re not nearly as smart as your father.” Then he recalled some of Dad’s accomplishments, including putting in a vendor-managed inventory program at Doubleday in the 1950s.

Joe Friedman was a new sales rep at Doubleday when that program was instituted. He went on to a career leading sales at Penguin and then working for the ABA. He’s 76 now and hasn’t been in the business for a decade or more. He came in to Manhattan from Long Island on two separate days just “to see if anybody remembers” who he is. I was glad to see him. I wish I’d gotten his email address. I hope he found a few others with whom to discuss old times.

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  • Jimnduncan

    That Aerbook Maker sounds really interesting. Might have to check that out myself to see what it can do.

    • That’s why I linked to it!

      Not a client, by the way. I like Ron Martinez and I’m delighted to get him as a speaker at our conferences, but this is not a “paid tweet”.


  • Cathy

    Firstly, Happy birthday Mike! 

    Secondly, I think that the lack of an efficient permissions operation by publishers is just shooting themselves in the foot.  I did a lot of work in the mid 90s trying to clear permissions for our online courses and not one publisher I wrote to ever answered.  Gave up on trying to ask for permission and now just follow the copyright guidelines.

    I would note that in the recent copyright case involving Georgia State the judge ruled for GSU in 94 of the 99 cases of copyright violation.  The only ones she found in violation involved Sage works, and she cited the fact that Sage did have a robust permissions system set up to clear works (which was news to me, they seem to be hiding it.) 

    I think that many academic librarians and distance education administrators would welcome such a system, with two cautions:  1.  our budgets aren’t rising, the money’s got to come from somewhere, and it’s probably the book budget for most of us.  So keep the pricing reasonable.  2.  Many of these readings are last minute requests on the part of our faculty, having the speed of response you talk about is a must for us.

    • I am always a bit wary of passing off what I get out of things as any clear understanding of the law, but my impression of Georgia State is that it provided strong encouragement for publishers to enable digital licensing in an automated way.


    • I echo your concerns.  I remember some 15 years ago, we tried to get permission to reprint a book that was OP for a telecourse we wanted to continue. No copies were available from the publisher nor enough from used booksellers.  We needed 300 copies and had a printer ready to reprint.  We wrote the publisher who referred us to the agent who referred us to another agent who referred us back to Little Brown, who referred us to another office within Little Brown until finally we threw up our hands in disgust and dropped the course. The printer would not reprint the books without a release from the publisher.  We WANTED to give them money, but no one would admit to having the copyright.  Now, frankly, something like that should be really simple. 

      • Of course, it should be really simple. But it could have been, in truth, really complicated. If the publisher couldn’t fulfill an order, then it is possible that their rights might have been compromised. The normal course of rights reversion involves letters back and forth between the author and the publisher. How would that correspondence have been archived? How accessible would it have been? And, of course, 15 years later, they’d be looking for the same correspondence that is now 15 years older!

        These problems aren’t simple. The problem is that they are getting more urgent because opportunities like the one you were offering are becoming more common.


  • I’d really love to see publishers integrating librarians/InfoSci professionals into their businesses; metadata IS a mess, and we know how to fix it. Information Science professionals are not the middle-men we used to be, we are the experts on information and data: how to create it, how to wrangle it, how to make it useful. It’s painful to read about publishers confounded by metadata when so many InfoSci people are looking for jobs.

    • I don’t think it is knowledge that’s lacking so much as process improvement. Even the savviest librarian would be stymied by workflows that just don’t enable getting the right metadata to the right place at the right time.


  • William Ockham

    Do you know what else will cause a growing market to slow down (like the slowdown in ebook share growth)?

    Rising prices. That is a really well-known concept in economics. It’s called the supply-demand curve. Usually, we would expect the casuality to go the other way. That is, a lack of supply would cause prices to rise. If your theory was correct, we would have seen the average price of an ebook (not the average price of ebook titles) fall. But that didn’t happen. We know, and this is an easily checkable fact, that the average price of ebooks went up. I wonder what could have caused the prices of ebooks to rise recently while supply was going up? It’s almost as if there was sort of intervention in the market…

    • Good theory. Straight from the Amazon and anti-agency playbook. Unfortunately, the only problem is that isn’t true.

      Check this out.
      There’s a chart in the middle of it. Very big chart. It shows that the average prices of ebooks actually consumed (weighted average by SALES) actually FELL since agency.

      You will claim that is because people switched over from agency ebooks to cheaper self-published ones. Perhaps. I’d say that proves that the indie authors are benefiting by having certain price points where they’re protected from branded competition.

      As the Boies/B&N letter to the DoJ points out, the agency-priced ebooks came with a benefit: shorter windowing. In other words, those ebooks weren’t made available in a wholesale-discount world.


      • Vaughnmr

        I’m just a lowly customer, so I probably don’t count, but the prices of the bestsellers rose 30-50% with agency.  I don’t even look at the big 6 published books anymore.

      • So I guess some authors not published by the Big Six are benefiting because you’re choosing from a pool that includes them and doesn’t include a lot of titles others might prefer — and, in fact, YOU might even prefer. Of course, those authors probably didn’t get an advance, they are less likely to have solid editing, they probably get less publicity that they don’t generate on their own, and they won’t get any print book money. So I’m glad for them that there are readers like you who shop for price rather than for quality in their reading material.


      • Mira


        Well, in my turn, I’m very glad for publishers that they don’t need to worry about losing readers due to high prices.  It must be very nice that they can say, “We will just wait for the readers who are worthy of the high quality books we publish, and who needs the rest of them?”

        Most businesses care about the opinion of their customers, but I guess publishers don’t need to worry about that.  I guess Houghton Mifflin was an isolated case.

      • Publishers are, as they have always been, obliged to seek the highest * margin* they can get on sales, which for ebooks means the highest revenue. If you cut the price in half, you have to do just a hair more than double the sales to break even. And that doesn’t count the potential impact on print.

        Don’t take it personally. But if publishers set prices so that the loss of readers due to high prices was zero, prices would be very near zero as well. And their revenues and their authors’ revenues would be much reduced.

      • Mira

        And if publishers set prices so high that they lose the bulk of customers, their revenue is much reduced.

        I’m not actually sure that the best practice is always to set a price high in order to get the highest margin on a sale.  I think setting a price low can not only double, but sometimes triple, sales. 

        Publishers might be interested in watching some of the experiments that indie authors are doing with pricing and promotion.  If Amanda Hocking sells over a million copies, because they were priced at around a dollar,  and makes over a million dollars on them, that is very interesting data.  I think many would agree she might not have made that sort of money if she had priced the book higher.

        I know publishers are very invested in the hardcover price, but they might consider some experimentation. 

        Unless, they were keeping e-book prices high in order to slow the transition to a new technology – away from print and to digital.  Then, they might have an investment in keeping prices high in order to slow the market down.  Which would be a dangerous practice, in that they will lose customers and are giving indie writers a clear field to play in.  It’s also illegal if it involves collusion, of course.

      • You’re not getting what I said.

        What publishers do is try to set the price where the units times the price gives the best result. They are taking into account how much sales would go up with a reduction.

        The equation is a bit more complex than that because print still matters to revenue. As I pointed out, some of those authors you’re buying because you’re skipping the Big Six really need your purchases because ebook sales are all they’ve got.

        And, if you didn’t know, Amanda Hocking is now delighted to be published by St. Martin’s. She thinks the editing is improving her books a lot. And she likes having the risk transferred to the publisher in the form of a big advance paid to her. Her books will not be as cheap, but she’ll make more money on each one, even with a publisher’s cut. And she’ll have to spend less effort on marketing and admin; more time for writing.


      • Mira

        Mike, I never said I was skipping the Big Six books.  That was the original poster.

        My point was that most businesses, when faced with a customer complaint, like Vaughnmr above, listen to the complaint, and respond by thanking them for their feedback.   

        They then actually think about the complaint.  They may consider that they are losing customers and that is affecting their bottom line.

        They may consider that maybe they need to re-think their algorithym for the completely impossible to predict amount that sales would go up if they lowered prices.  I say impossible to predict because there is simply not enough data, given how new e-books are, to support any predictions.

        What is not a prediction, but an actual fact, is a customer has informed you he is no longer buying your product because it is priced too high.  That customer probably represents several others.  It’s a good idea for a business to pay attention to that.

        In addition, it might be best not to imply that the customer has a problem with pricing because they are easily satisfied with inferior products.  They do not try to make the customer feel guilty or bad about their taste in books, because, in the middle of a recession, they do not want to pay high prices for an e-book.

      • I’m not a publisher. I can suggest whatever I want. I’m not selling to anybody.

        Sorry for confusing you with the original poster.

        Publishers are doing price experimentation all the time. They raise and lower prices of books and see what happens. As do indie authors.

        And, believe me, *almost *no matter what price anybody charges for anything, they will have people tell them they’re charging too much. It is extremely rare to have a purchaser say “you know what, I’d have given you double for that!”


      • Mira

        Mike, I know you’re not a publisher, but I understand that publishers hire you as a consultant.  I assumed that you would model a good response – how you might recommend a publisher respond to a dissatisfied customer.

        In terms of price experimentation, I’d love to see some examples of that.  This whole DOJ thing happened because publishers were upset that Amazon was lowering prices to a terrible 9.99.  Which is somewhat higher than their own paperback prices.

        I don’t believe it is a common occurance for a customer to tell a businesses they are charging too much and the customer is taking their business elsewhere.  I also think that there is an understanding that if a customer takes the time to write a letter letting the business know the above, they most likely represent many other customers who did not take the time to write such letter.

        But, regardless, it’s not really on me to convince publishers, or those they consult with, to take a consumer complaint seriously.  If publishers don’t mind losing business, again, I congratulate them on their financial security.  Although I do wonder about their foresight.  Ignoring public opinion and fostering ill will with consumers is not always a good strategy for a business facing a major technological change.  A current example of this, of course, is when a busniess is sued by 37 States for taking money out of customers pockets through collusion to set prices high,  

      • I think you should read the David Boies letter before you go repeating the DoJ’s and State AG allegations. Politicians like to look like heroes, as if they’re saving constituents money. But the truth is not always with the politicians, even the good ones. The fact is that device prices have gone down sharply, the ebooks that “cost more” are often titles that would have been withheld if there were no agency pricing, and the price of hardcovers has dropped since agency. And it appears that ebook prices, overall, have dropped since agency.

        As for “responding” to price complaints, I think very few businesses do that. And any business that just lowers their prices because some customer or another says they should is on a spiral downward to damn near zero.

      • Mira

        I didn’t say a business should lower their prices because customers complain about prices.  I said they might consider lowering their prices because they are losing business, i.e. the customers are going elsewhere.

        In terms of e-book prices dropping overall since agency, that may have to do with the large number of indie price experiments.  Regardless, that does not answer a complaint that agency cost customers money.  That prices may have gone down some does not mean the customer wouldn’t have saved more money without agency.

        But listen, I feel that I’ve taken up enough of your time, Mike.  I appreciate the discussion.  Even though we never found a point of agreement, it was stimulating to argue with you.   I suppose we represent two fairly distinct and opposed viewpoints, and it’s always a good thing for people who see things so differently to challenge each other.

        Thanks for the debate!

      • My pleasure. Civil disagreement is always welcome.


      • NoTalentHack

        Hi Mike,
        Happy (belated) birthday.

        Thanks for pointing out that chart on eBook sales. I find it very thought provoking.  First and foremost, if I read the chart correctly,  the average has been fluctuating between $7and $8 since the April of 2010.  Prior to that, there was a steep drop that began in October of 2009.  If we peg the day Agency pricing went into effect aso April 3, 2010 – the release date for the original iPad and debut of eBooks in the Apple store – then why would weighted prices have started their steep decline before that ?  On the other hand, if (as some claim), after Agency, consumers began switching to cheaper, self-published eBooks, why the steep decline leading up to April 2010 ?  I’m not sure the data adequately explains either scenario. Any thoughts ?

      • I really don’t have a theory to answer your questions. I personally make no claims about whether prices have gone up or down or why. I find it interesting that both Barnes & Noble’s and Simon Lipskar’s analyses suggested that consumer ebook prices overall were not boosted by agency, since I find that counter-intuitive. One thing that has gotten little examination is that Amazon doesn’t discount *everything*. I have, both before after agency, bought wholesale model ebooks for more than $15 on Amazon. Perhaps the phenomena than are newbies like Amanda Hocking and John Locke, selling for $0.99 to $2.99, sell in such numbers that they affect the averages and throw things off, but that doesn’t answer the question about why things move at the times that they do.


      • Another Steve

        Mike said, 

        “One thing that has gotten little examination is that Amazon doesn’t discount *everything*. I have, both before after agency, bought wholesale model ebooks for more than $15 on Amazon.”  

        I say:  

        I’m one who has examined this, and posted my findings in various online forums, especially the Amazon Kindle Forum.  Somebody would claim that agency prices were higher than Amazon, and I’d show that to be a gross oversimplification.  And I challenged anybody to do the same type of analysis.  Amazon deletes dead threads, so I don’t have a record of any of this stuff.  But I’ve repeated this several times, and I’ve always gotten the same results.  

        There was a period when we could actually compare Big 6 Agency prices with Big 6 Amazon non-agency prices.  That was when Random House was non-agency and the other five were agency.  During that period, I would compare books from comparable product lines.  For example I would look at Tor (Macmillan, agency) and Del Rey (Random House, non-agency).  Amazon’s Advanced Search function made it very easy to do this.  

        This is what I found out:  

        Books currently in mass market paperback are cheaper at Amazon prices.  A book with a paperback list price of $7.99 will typically sell for $7.99 under agency and $6.39 under Amazon pricing.  

        Electronic editions of books out in trade paperback are a wash, seem to be about the same.  These usually go for $9.99 or $10.99 under either system.  

        When we get to the current hardcover releases, then things get more complicated.  If it makes the Amazon bestseller list, Amazon will automatically knock the price down to $9.99.  (Arguably, these are the ones that don’t need to be discounted.)  However, if it’s not a bestseller, then the agency prices would be lower.  The most common (mode) agency price was $12.99, while the most common Random House price was $14.30.  Excluding the $9.99 bestsellers, the highest, lowest, and most common price points were all higher under Amazon’s wholesale pricing.    

        So, if you read ebooks of a lot of new stuff that comes out in hardcover, and you don’t always read what’s popular, you’ll pay less under the agency system.  Sci-fi imprints such as I’ve mentioned above rarely make the bestseller list, so if that’s your preferred reading genre, agency will save you money.  

        On the day that Random House switched over to agency, I did another experiment.  I’d pick out some random Random books (always new hardcovers), and then do a Google search and check the price in the Google cache.  Invariably, the previous day’s price (that Amazon set) was higher than the new price set by the publisher.  

        The idea that the agency system raised prices is an oversimplification.  The truth is some prices are higher under agency and some lower.  

      • I have often said to friends and colleagues that one of the things I like best about my blog is the quality of my readership and the things I can learn from them. (I tell my nieces and nephews that one of my life rules is “you are your friends; they define you.” Extending that to this context, I like to think that the quality of my readership defines the value of my posts.)

        This is great insight. Your methodology sounds very sensible. It was great thinking on your part to use Google the day after RH went to agency to do that checking. What you’re also telling me with this is that there could be another explanation for RH going to agency that I hadn’t thought of: they might not have been gaining the pricing advantage across the board on Kindle we all believed they did when they were wholesale.


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  • Wouldn’t it make sense that illustrated books aren’t selling simply because they target young children, whose parents don’t want them touching their (expensive) devices?

    • Sure, that could be part of the reluctance as long as devices are expensive, but there is certainly plenty of evidence that the fear you mention isn’t universal.

      Kids books are doing better than illustrated adult.


  • Bob Mayer

    I flew in for one day of BEA.  My last one was ten years ago and it didn’t seem like much had changed.  I blogged about it at Digital Book World, but the main impression is that everyone is still very invested in print.

    The atmosphere at Amazon, both their KDP/Audible booth and their imprint booth, was a lot different than that at most other places.  There was a palpable sense of excitement.  I had extended conversations at both and liked what I heard.  Once more, the focus there is on “How can we help you”, which is different from what I heard in 20 years with the Big 6.

    The Digital Book Shelf where we bought advertising space was a complete waste as it was so far off the main floor we had to ask directions to find it.  Why not put interactive screens next to the corrals for the booksignings?  You’ve got a captive audience standing there.

    A lot of the technology stuff seemed boilerplate with some innovations here and there.  Digital ARCs would seem like a good idea.  There were a lot of people lugging a lot of paper.

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