The Shatzkin Files


Observations on a conversation with Hachette’s digital leaders


I really enjoyed listening to David Young and Maja Thomas, Hachette’s Chairman/CEO and top digital strategist, respectively, chat with industry veteran and blogger Charlotte Abbott on Blogtalk radio. All three are friends and people for whom I have a lot of respect. I generally prefer reading to listening as a way to take in information, but this was a crisp and informative conversation that is engaging from start to finish. I recommend it.

Some of what they said triggered some thoughts and observations.

Abbott observed that ebook sales are now reported as 3% of Hachette’s sales. All parties agreed that there are factors in place that should accelerate that growth, particularly new devices coming online bringing with them the ability to move ebooks beyond straight text to include juveniles, photo books, and how-tos that have heretofore been left out of the conversation. There was a brief acknowledgment that some observers expect ebook sales to triple in 2010 (data was cited to suggest that Hachette’s December over December ebook sales did much more than that). That could take ebooks to 10% of the business in 2010 and into the high 20s in 2011, unless it slows down.

What would make it slow down? What would the business look like if ebook sales were in the mid-20s before Obama runs for reelection? Neither of those questions were touched. Perhaps that’s just as well; it might have taken the whole show if they were.

Abbott challenged the contention by Young and Thomas that the agency model, by which discounting of ebooks would, effectively, be stopped (or extremely curtailed) would result in lots more ebook retailers on the web. Abbott may share my skepticism that there is much of a place for ebook vending for independents and, although I wrote about this before the agency model was introduced, I still think it is true.

But Thomas expressed a lot of confidence that new white label solutions for independents, combined with level pricing, will result in a much greater proliferation of purchase points on the web, and she thinks we’ll see that this year. While I do agree that price equality will enable much more diversity in points of availability, I think it will be monopolized by platforms. They will continue to include Amazon, B&N, the iPhone App Store, and Kobo (from the big retailers and Apple) for sure, as well as the new Apple iStore, Google Editions, and the platforms from Blio (from Baker & Taylor) and our current client Copia (an upstart, but an extremely well-funded upstart with six ereading devices and ubiquitous OEM relationships with major hardware manufacturers giving them a tenable foundation). All these will be around for quite a while. Considering that for the past couple of years, 80 or 90 percent of consumer ebook sales have been driven by Kindle, that’s great marketplace diversity by comparison. And independents can sell Google Editions and, possibly, Blio. But only time will tell if Thomas’s optimism or Abbott’s skepticism (and mine) will be borne out.

Abbott’s questions about the ebook backlist elicited some very useful new information. Young and Thomas explained that just about all of the straight text backlist at Hachette is now available as “straight” ebooks. There has been the impression promulgated by readers, and reported by Abbott, that a lot of backlist from big houses is not available. Not true from Hachette, they say. Young says there are only “a handful of authors” whose contracts were unclear enough to require further negotiation and he admits there it does rarely happen that an author who didn’t previously grant those rights just doesn’t want to be in that format. “In that case, their wishes must be respected.”

Thomas said that the iPublish experiment — a failed attempt by the Group (then the TimeWarner Book Group, some years before the Hachette acquisition) to create a digital-first publishing company — provoked them to change their boilerplate before other publishers did. That reduced the number of problems they had when they wanted to go to ebooks.

Good point, I thought. And it shows the benefits of early digital awareness, even if the overall iPublish effort failed.

Thomas also suggested that we might see quite a few experiments in enhanced ebooks coming from the house in the next few months. She said they were looking first to the authors they considered their “digital pioneers” to do the enhanced projects. But when asked to name them, she gave us pretty much a who’s who of the top of the Hachette list: Meyer, Patterson, Baldacci, Connelly, Meltzer. Thomas also made the point that they look at books to see what would work “in enhanced form or app form; they’re different.” That’s a distinction we’re all going to get to understand better in the weeks to come.

Both Young and Thomas made it clear that the enhanced ebook creation was still in its experimental stage. Young emphasized the fact that “we hear from our readers” as he noted was not possible previously in the history of publishing. It was the reader reaction, Young declared, that would tell them what was working and what wasn’t with the ebook enhancement experiments. The topic that this introduces which must be followed up on another time is, “how do big trade publishers make the best use of the direct consumer contact they get in the digital age?”

For me, the most poignant moments came at the end. Abbott asked an open-ended question about the industry’s future, and Young launched into an entirely true but painfully ironic tribute to the virtues of the brick-and-mortar bookstore. He said his biggest concern was that “we need bookshops, which are the heart of supporting new writers. We need these showcases and professional and enthused booksellers” to help people find what they didn’t know they’d want. Recent industry data from Bowker PubTrack underscores the point that many book purchasing decisions are made in retail stores or because of the merchandising that took place in retail stores.

Unfortunately, retail stores are increasingly threatened. They have been disappearing pretty steadily for about 10 years now with the pressure created by online and used book sales, with only minimal erosion (thus far) due to ebooks. This conversation made it clear that ebook growth will continue to be substantial and that bookstores are critical. Both are right. But the combination of the two is more than most of the big players can comfortably wrap their brains around. And it is the skill in navigating the continuing erosion of retail shelf space that is going to separate the survivors from the roadkill over the next few years.

Dominique Raccah of Sourcebooks gave a presentation about “running two companies” (the one in the old business and the one creating the new business) at TOC which I was sorry to miss. (I can’t remember what I thought was more important at that moment.) However, Book Business magazine has an article by James Sturdivant on that same topic which quotes me heavily. Are you surprised that I agree with a lot of it? (I hope Dominique does too.)

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  • geneschwartz

    Mike -

    I wouldnt discount the likelihood that human beings will continue to want to rub shoulders from time to time in a real space – avatars and virtual reality notwithstanding. If that is the case, books can continue to be the stuff of retail ambiance in “enhanced” coffee shops as is now become the case in neighborhoods and towns around the contry — counterculture and threadbare as some are for sure — but on the way. These may not support celebrity authors and mainstream trade as we know it, but they – and open mike readings in community nightspots — will provide venues for discovery and some of the new forms of “handselling” — imho.

    Gene Schwartz

    • /blog Mike Shatzkin

      I agree with you, Gene. Books will be gathered in retail locations for a
      long time. But I don't think that changes the thesis. If you go down to
      Bleecker Street in Greenwich Village, you can find House of Oldies, which
      not only sells recorded music (rare enough) but only vinyl records! But I
      wouldn't try to make a living getting national distribution for one these
      days!

      Mike

      • geneschwartz

        Thanks, Mike-

        Understood

        In a message dated 3/20/2010 9:56:50 AM Eastern Daylight Time,
        writes:

        Mike Shatzkin wrote, in response to geneschwartz:

        I agree with you, Gene. Books will be gathered in retail locations for a

        long time. But I don't think that changes the thesis. If you go down to

        Bleecker Street in Greenwich Village, you can find House of Oldies, which

        not only sells recorded music (rare enough) but only vinyl records! But I

        wouldn't try to make a living getting national distribution for one these

        days!

        Mike

        Link to comment:
        http://www.idealog.com/blog/observations-on-a-c

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