Barnes & Noble

The American Booksellers Association held their seventh annual “Winter Institute” in New Orleans this year, and it took place last week. When I had a meeting at Frankfurt in October with the ABA’s Chief Executive Officer, Oren Teicher, to recruit him to speak at Digital Book World 2012 (which he will do this coming week), he urged me to attend so I could get a taste of the optimism and innovative spirit of the independent booksellers who gather to share best practices and learn more, largely from each other, about how to run successful stores.

(Actually, Skip Prichard of Ingram captured this “learning from each other” zeitgeist beautifully in his opening remarks when he stopped talking and told the attendees, seated at round tables in the ballroom in front of him, to tell each other the most important new thing they had done in the past year. The room buzzed with activity for a few minutes and then Skip resumed his talk, confident that everybody in his audience had learned something during his time on the stage. It was an artful moment.)

I attended about half of the 3-day show and it is easy to see why a number of publishers are so enthusiastic about it. The publishers and other hangers-on (press and observers like me) are hardly noticeable in a sea of booksellers. And, indeed, this year (at least), they were a very optimistic bunch. The anecdotal impression was of many stores who had great years. Some attributed this to the demise of Borders but others thought there had to be another explanation because the closest Borders to them was too far away to be responsible.

There is data and anecdata that suggest that we’ll look back on 2011 as a year when the hockey-stick-like ebook growth slowed. (“Plateaued” would be too strong a word.) We may learn that even the Christmas devices-as-gifts effect on ebook sales wasn’t as strong this year as in years past because many of the “new” devices are actually “replacements”, which won’t spark the same sort of pipeline-filling buying spree that is apparently set off when people get their first ereader. Combined with Borders closing and the closing of other indies, this could have brought national store inventory more in line with more-slowly-reducing print book purchases in stores by consumers.

Anyhow, the vibe at WI7 was great. And so was the program. What I enjoyed most was bestselling author and fledgling Nashville bookseller Ann Patchett, who claims she not only doesn’t read ebooks or write a blog; she claims never to have even read a blog! (I was wondering if she does email.) But she talked about her experiences encouraging booksellers to handsell her work and the joy she gets from handselling the books she loves. Her talk was inspirational and witty and charming. Even though the only “practical” suggestion (not a bad one) was that stores find a local author to be part of their ownership-management (they do attract press coverage, as Ann pointed out), it was a highlight for most of the people there.

But there were two other sessions, which opened my eyes in one case and turned my thinking around in another, that delivered the most compelling additional insights for me.

Matt Sutko of ABA moderated a session of booksellers talking about their experiences selling ebooks. He delivered data before the panel discussion (ABA has visibility into the activity on many member web sites and can present an aggregate picture) and one particular element really caught my attention. This is the one that opened my eyes.

What I found startling were two things in juxtaposition. Matt reported that the percentage of ebook sales to total sales on ABA member web sites rose from 0.7% to 5.2% in 2011. That’s a 750% increase, which is impressive even though the Google eBook capability kicked in during that year. But it is also actually understated, because the total volume of business on these sites rose by 82%. So the share increase of 750% is in an environment where total sales nearly doubled.

(I only wish that Matt had given us a breakdown of the same data by half-year, so we could see the growth within Google’s first year. I think ABA would benefit going forward by tracking and reporting those stats by quarter.)

There is good reason to believe that kind of dramatic share growth can continue into the future. Many stores just got started with their ebook program (Chris Morrow of Northshire, one of the most successful and innovative indies in the country, told me he only started selling ebooks in December! He’s not alone.) And store after store reported steady efforts educating their staff, educating their customers, making things clearer on their web site, and learning how to be good merchants online as they are in their shops. (They also pointed to improvements in the infrastructure being made by Google at their request.) All of these things take time. But they also improve the customer experience and increase sales.

Many people acknowledge that Barnes & Noble performed a bit of a miracle with the Nook, moving to a strong second-place position in ebook sales in a year. But B&N is a chain; their booksellers are paid staff and their learning is all aggregated and reflected on one centrally-controlled web site. The ABA membership, somewhat fewer stores and less shelf space to begin with and without a highly-visible device to anchor their efforts, moves more slowly and with less cohesion into the digital age. But they’re moving and they’re making progress. And they have loyal customers who want to shop with them if they can.

So I personally will postpone writing off Google ebooks or the possibility that indies can be important ebook vendors until we see at least one more year of data.

The thing I got turned around on was World Book Night.

World Book Night, which will take place on Monday, April 23, is an “event” in which it is envisaged that about 20,000 people in the US will each give away 50 books to total strangers, for a total of 1 million books passed from human to human in one book-awareness-raising night. It was first done in the UK and was deemed a success: the books chosen for giveaways spiked in sales and the participating stores and publishers all seemed to think it gave the business a shot in the arm.

I first heard about this from a presentation by Madeline McIntosh of Random House at the BISG annual meeting last September. Certainly no fault of Madeline’s, but I just didn’t “get it” the first time. Twenty thousand people to give away books? Where are they going to find them? How much distracting effort is this going to take? The “harumph” in my brain overwhelmed my imagination, I guess.

But as Carl Lennertz, who quit his job with HarperCollins to head up the World Book Night effort, explained what had taken place and what would, imagination picked up the idea. (Maybe the “harumph” piece was rendered inactive by the overall vibe of WI7.) He described an effort that has already gotten contributions of paper and printing for the giveaway books, aggregating and reshipping (by Ingram) to the contact points, as well as permissions from publishers and authors to include the books and waive royalties. B&N is in. Libraries are in. Everybody is in!

But it was actually Oren Teicher’s appeal to the stores to get involved that brought back lessons of my youth to see the real virtue in World Book Night.

My first post-college “real” job was putting together the McGovern campaign in upstate New York in 1971 and 1972. We saw various hurdles we needed to jump — winning over delegates to the annual state convention of reform Democrats, holding a delegate nominating caucus in each congressional district, getting petitions signed to put the delegate candidates on the ballot, and then components of the primary campaign itself — as a series of discrete “organizing opportunities”. When you have a “cause” and you need help with a specific and comprehensible task, it brings out volunteers who will ask you to tell them what to do.

And that’s what World Book Night presents local stores: an enormous “organizing opportunity”. They get to galvanize their customers around their mutual love of books, enlisting them to participate in spreading the joy of reading. That strengthens the bonds to particular people and to the community at large. They get to take these efforts to the local media and give them a local spin and generate more conversation around these books and books in general. And that is something, as Oren pointed out, that 500 independent bookstores can do better than 500 Barnes & Nobles!

The collective effort of many individuals can have a galvanizing national impact, as we saw two years ago with the Tea Party and over the past few months with the Occupy movements. I’m not promising to stand on the corner of 2nd Avenue and 51st Street and hand out books next April 23, but I’m sure way past believing it is a waste of time to find 20,000 people who will do the equivalent in their neighborhood.

[Subsequent to posting this, I got a note from Jamie Byng of Canongate in the UK, whose idea this whole effort was. It's clear in that note that WBN is looking for 50,000 US volunteers to give books away, not 20,000 as I mistakenly reported here. I believe the target of 1 million total books as reported here is still correct.]

In addition to Oren Teicher speaking from the main stage at Digital Book World this week about indie booskeller data from last Christmas, the growth of the ebook program, and the business model experiments being conducted by various indies with different publishers, we’ll have a panel of indies discussing new business model approaches in a breakout session moderated by John Mutter of Shelf-Awareness. I hope to see lots of you at Digital Book World or at our kickoff Publishers Launch Conference on childrens books on Monday, also at the Sheraton. If you’re a reader of The Shatzkin Files and you see me, please say hello.

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One thing we try to do at Digital Book World is to present our audiences with useful, relevant, and, when we can, original data. It is a familiar complaint in our industry that we drive blind. Part of that is due to the sheer diversity and granularity of the “book business”. And another part is due to the blistering rate of change. The net result is that we are constantly trying to read tea leaves. We do our best to deliver some useful tea leaves to our DBW audience.

I make no pretension here to telling you all you’ll hear at DBW (which would be bad business even if I were able to do it!) But here is a roster of the data presentations and a small taste of what the DBW audience is going to get from each one.

We’ll start off with James McQuivey of Forrester Research doing a reprise of a high-level survey of publishing executives that they inaugurated at DBW 2011. Forrester got good participation in the survey, including getting fully filled-out responses from at least two of the Big Six executives.

One very interesting fact from the Forrester research is that the consensus for when the trade business will become 50% digital has moved up from 2015 to 2014. When Forrester announced the original number at DBW 2011, it seemed to many to be aggressive. A year later, it is not likely that the new prediction that it will come sooner is going to surprise a lot of people. We are apparently now used to the accelerating pace of change, but perhaps just in time to have to readjust to it slowing down. (More on that to follow.)

The team of the Milan office of A.T.Kearney (the big global consulting firm) and the Italian ebook retailer Bookrepublic have been tracking the spread of digital reading worldwide. They presented research at last year’s IfBookThen conference in Milan and followed it up with additional research presented at the Publishers Launch conference in Frankfurt. They’ve extended their investigation further — about devices, about internet purchasing, about ebook uptake, market-by-market around the world — for this year’s Digital Book World. They have added questions about self-publishing and piracy to the research they did previously and responses to them will be reported at Digital Book World.

One insight they’ve had is extremely provocative. They say, “We should stop thinking of self-publishing simply as a nice way for indie authors to be published. Viewed another way, measuring self-publishing activity calculates the amount of money Amazon (and others) are no longer sharing with publishers. And it’s growing.”

The data that will justify that insight will be part of the presentation we’ll see at Digital Book World.

We decided to take an intensive look at the romance genre because it is often considered to be the consumer segment that has moved most rapidly into the digital future. We were fortunate to enlist the help of the ebook retailer AllRomanceEbooks.com in our investigation. They circulated a survey that got responses from almost six thousand of their customers. The results of that survey will be announced at DBW and will be followed by a panel discussion with special attention to what other genres and segments of trade publishing can learn from what has happened in the romance market.

What caught my eye from the preliminary results was that only 4% of the ebooks All Romance sells have DRM. Since they carry the ebooks of all the major publishers, and all of those have DRM, what this statistic tells us is what a vast business exists in romance publishing outside the realm of the biggest players in the industry. I’ll leave the analysis to the experts we’ll have on stage for this discussion, but I personally wouldn’t leap to the conclusion that DRM-free is the only reason that 96% of the sales were of that category. Those books are undoubtedly cheaper as well. They may score higher on All Romance’s unique “flame” scoring system (which is all about how frequent and explicit the sex scenes are). But I would imagine that any big publisher hearing that statistic would, at the very least, have its curiosity piqued.

It turns out that a big component of All Romance’s sales success is that they took it upon themselves to add sub-categories describing romance — such as that flame index referred to above — that didn’t exist in the industry’s BISAC standard. That’s metadata!

Metadata isn’t ever going to be a “sexy” subject but it is certainly becoming an increasingly popular one. Our early polling of Digital Book World registrants indicates that our breakout session on metadata might be the most heavily-attended of the 30 breakouts on the schedule. (And everybody who goes will be glad they did. We just reviewed the content of the session with presenters Bill Newlin and Fran Toolan; it’s going to be great!)

Having been told for months and years that good metadata enables sales and bad metadata prevents them, I wanted to get some factual confirmation of that. So I asked Jonathan Nowell, the UK-based head of BookScan and the bibliographic source BookData, if he could do some research to connect the two (his being the only organization that has the information to tie metadata to sales data.) Jonathan did a presentation on this subject for Publishers Launch Frankfurt; he’s updating it for Digital Book World.

The most arresting takeaway last October at the Frankfurt presentation was that adding “enhanced metadata” elements to a basket of backlist books not only stopped their normal sales decay, it reversed it and actually made sales of those books rise after the metadata was improved. Everybody will really be able to visualize the importance of metadata after they hear Jonathan’s presentation.

Verso Media is an advertising agency with high digital consciousness and a deep interest in book purchasing and consumption habits. They survey book consumers looking for insights about the digital changeover. The single most startling takeaway for me from the preliminary results I saw from this year’s research is that the number of people who actually resist the idea of reading digitally has gone up from 49% to 51% of respondents. This data point is in line with other tea leaves that suggest that we might have started to hit real resistance to ebooks, slowing down the digital switchover from the rates of the past few years. And that certainly would not have been what I would have predicted. Jack McKeown, who has held senior positions at three major publishing houses, oversees the Verso research and will present it.

At our Publishers Launch “Children’s Books Go Digital” show on Monday, Conference Chair Lorraine Shanley recruited two trend analysts who are offering interesting trend and data observations of their own.

Amy Henry, VP of Youth Beat, observes that parents and kids are sharing personal experiences more than we remember from our youth. More than 2/3 of teenagers listen to music with their parents! The takeaway is that parents can be marketing conduits to their kids; they’re not just gatekeepers you need to sneak your way past, which is how they have often been characterized in the past.

Ira Mayer, Publisher of Youth Market Alerts, delivers data that tells us that two-thirds of the apps Moms get for their kids are either free or under a buck. Fewer than 10% are more than $3. These are sobering facts, but anybody entering the app space to make money better know them!

Kelly Gallagher, Vice-President in charge of research at Bowker, will have important data to share at both shows. His team has been surveying a pool of book purchasers on behalf of BISG for a couple of years and has charted the growth of the ebook market for the industry throughout that time. The data he’ll be reporting from the latest fielding is so fresh that it misses the deadline for this post. But it would seem likely that the data will show that the ebook switchover is finally slowing down after about five years of doubling or more than doubling annually. That would be of meaningful interest to everybody in trade publishing and would tend to confirm Verso’s finding that the point of more determined ebook resistance grows nearer.

Bowker also runs a study of the children’s book market and he will share appropriate data from that research at the Pub Launch show on Monday. Kelly showed me a couple of slides that suggest that young children’s print could be around for a while. Parents like the idea that a book isolates kids from what are otherwise constant digital stimuli. And what attracts kids to digital is portability (having access to more titles) which, broadly speaking, is more important as kids get older. And he’ll reprise that data presentation at Digital Book World on Tuesday, followed by a panel discussion among participating publishers in the study, including Disney, Scholastic, and HarperCollins. That discussion will be moderated by Kristen McLean, founder of Bookigee and former executive director of the Association of Booksellers for Children.

I don’t mean to suggest that data is all we do at our conferences, or even most of what we do. It isn’t. But we see it as part of our job to encourage the development of original information, such as we did in conjunction with All Romance and Nielsen, as well as to deliver information from efforts already underway within the industry, like the reports we’ll get from Bowker.

Digital Book World will also feature main-stage presentations from Amazon, Barnes & Noble, and Kobo which we expect will also be data-rich (as well as one on business model experimentation from Oren Teicher of the American Booksellers Association), helping us all understand what happened this past Christmas. Keeping up with this pace of change is hard enough; doing it without data is impossible.

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I have made previous mention of my notion that what has been one very cohesive trade book industry would “trifurcate”: break into at least three distinct businesses: 1) books that are straight narrative text intended for immersive reading; 2) adult books that are not straight text, either very chunkable (like cookbooks or travel books) or highly illustrated; and 3) children’s books. Admittedly, even this is an oversimplification.

This conjecture is built on the reality that we’ve learned how to move immersive reading from paper to screen in a way that satisfies the consumer. A pretty simple technological trick — “reflowing” the text so that it adjusts to the screen size alloted to it — makes the text “work” across a wide range of devices and reader software. There are definitely differences among Kindle and Nook and Kobo and Google and iBooks and they don’t offer precisely the same outputs and features on their own devices or on iOS or Android, but the differences are subtle and apparently most people are comfortable with the various consumption experiences.

So relatively simple conversion from the version prepared for print, which can even be done through automated services like Smashwords or through tools now being offered by The Atavist and Vook (and others), and are handled within the workflows of many publishers at a trivial financial cost, delivers an alternative to the print version of a book that is commercially viable. It isn’t costly, it isn’t complicated, and the person who formerly read her favorite novelist or subject in print could switch to device reading with relatively little pain or friction.

And they have. Ebook consumption has been going up by double or more each year since the Kindle arrived a little over four years ago.  (And there is evidence that the growth will continue. Amazon just announced the best Kindle holiday season ever — with over a million Kindle devices sold each week in December and with the single biggest day ever for Kindle book downloads on Christmas Day. — Note “downloads” not “sales”.)

So far, this has worked to the benefit of established book publishers, their authors, and for fledgling new authors as well. Ebooks are generally cheaper than their print counterparts (and sometimes quite a bit cheaper, despite some propaganda to the contrary) but publishers’ margins haven’t suffered. Authors are getting a bit less on ebooks than they did on hardcovers in print, but they get a bit more than they did on paperbacks. There are vocal consumers who protest the agency pricing that keeps ebooks at $9.99 and up during their hardcover life, but Kobo, the only retailer to discuss these matters, reports more unit sales in the agency price bands than at the low end where the self-published authors are.

We would not suggest that stability of prices or royalties or consumer behavior going forward is to be expected; we’re still in a time of great change. But, so far, the publishers of fiction and non-fiction that is delivered as straight text have had a relatively painless switchover from selling 100% of their output in print to selling an average of more than 20% of it in digital form, with shares as high as 50% being reported on some titles in the first weeks after publication.

Until the arrival of the iPad in April of 2010 and then the NookColor and the tablets from Kindle, Nook, and Kobo which have become available more recently, the dedicated reading devices wouldn’t handle complex page layouts and the iPhone screen was far too small for illustrated material to be usefully displayed. Barnes & Noble made serious efforts to get children’s books available for their color screens about two years ago. Kobo seemed hopeful this Fall about what they’d see in ebook sales for graphic novels, but they only have 300 titles so far so I’m not sure what impact that can have. I have not seen any reports about how illustrated material is selling through either retailer.

Some research we did says that Kobo has 995 titles “just for Kobo Vox: 33 art and travel, 332 comics and graphic novels, 29 home and food, 539 illustrated kids, 57 illustrated non-fiction, and 58 read-along kids. The breakdown for Kindle Fire isn’t as clearly spelled out, but they do have 100 “comics for Kindle Fire” and 691 “children’s books for Kindle Fire”. One interesting note is that the audio-video only works on Kindle’s iOS app,, not on the Kindle Fire device itself!

Of course, the iPad started all this and might still be the best device for consuming color and illustrated material.

Nook has by far the most illustrated material listed: 1210 children’s picture books and 596 “enhanced Nook books”. They might have as many as 5000 comics, graphic novels, and manga titles, but deeper investigation makes us question that number. They list 7700 “Cooking, Food, & Wine” titles for the Nook, but we don’t know how many of those are highly illustrated.

I have been asking publishers about sales of their children’s and illustrated trade material. I haven’t found anybody yet that says they’re going well. On the children’s side, where there have been pockets of success, the one Big Six digital executive who expressed an opinion to me felt that price was killing sales for the ebook versions of successful franchises. Children’s apps from such distributors as Touchy Books are priced quite low, generally $2.99 and less. But many branded titles like Eloise are $9.99 and $12.99 and up! This executive points out that paying that price for a novel you will spend many hours with is much less painful than paying it for a children’s book your kid will work through in 15 minutes or less.

Undoubtedly, another large factor mitigating against converting illustrated print book sales to digital is that ebooks don’t make good gifts and illustrated print books do.

I recently spoke with CEOs of two companies that publish primarily illustrated books. Both of them report being stumped by the challenge of making their illustrated print output into something that will work commercially as an ebook. “Fixed page layout” is the solution du jour, delivering the book page as a unit but where the pinch-and-spread touchscreen technology enables the reader to expand type to make it readable or pictures to make them more visible. Of course, doing that means that the whole page no longer fits on the screen. And that means that the smooth experience devices offer for immersive reading, where page-turning is effortless and one can read the text without stopping to think about the form factor, is interrupted and not nearly as satisfactory for books delivered that way.

More complex page layouts are more expensive to convert, can present thorny rights issues for images, and the books haven’t sold well in digital form. On top of that, the retailers can (and often do) ask for their own specific customization of the files. These factors combine to create a very unattractive commercial equation. Until the Fall of 2011, one ebook retailer told me there were 10,000 or fewer illustrated ebooks in the marketplace, out of a total of many hundreds of thousands, perhaps more than a million, straight text titles. The plethora of larger-screen and color devices that hit the market this past fall created a burst of conversion activity of these titles, perhaps doubling the number in the marketplace during the last quarter. We await reporting on the impact of the new devices and the additional illustrated product in the market, but nobody’s reported any breakout successes yet.

This has to be frightening to anybody in the illustrated book business. Bookstores are disappearing. Sales are moving to digital. We’ve had an iPad in the marketplace for almost two years. And we have as yet discovered no formula for success to convert a successful illustrated print book to a successful illustrated ebook.

(We have reports coming at Digital Book World from Kindle, Nook, and Kobo. We’ve asked them all to report on how illustrated books did this past Christmas. Each of them limits their reporting to what they think they can tell us without compromising their competitive position with each other. We’ll see what we learn.)

While many children’s books share a commercial challenge with adult books that aren’t straight immersive reading, they have more differences than similarities. Once you get past the commonality of “more expensive to create for less of a demonstrated market”, things really diverge.

Books for digital presentation for little kids particularly will require skills that book publishers never had to have, particularly for animation and games. App technology is overkill for books of immersive reading; it is very useful for content intended to interest kids. Indeed, children’s book publishers are finding themselves competing with (or employing or acquiring or collaborating) design and animation studios that weren’t thinking much about the book business until the book business morphed into something akin to what they were doing. (A slew of these companies will be on stage for our “Publishers Launch Children’s Books at Digital Book World” conference on January 23, co-located with the big Digital Book World extravaganza.)

The adult book challenges are much more varied. There are, broadly speaking, two kinds of illustrated books: those illustrated for beauty and those illustrated to inform. The latter require tight control of the placement of illustrations and captions in relation to the text, just the kind of challenge that causes agita when readying content for different sized screens. And the beauty books, of course, have to be carefully designed for aesthetic satisfaction.

But it isn’t just illustrations that stamp a book as “not immersive reading.” Books of content chunks, like cookbooks or travel guides, are also not “optimized” merely by making them reflowable. There are some fabulous apps for both (“How to Cook Everything” by Mark Bittman and ones pulled from Rick Steves’ books like guides to the Louvre and Versailles), but these are not direct “lifts” from the books. They are separately constructed products. However well they sell, they don’t provide the same cost synergy with the book production that the publishers of novels and biographies are getting.

These very well-done apps underscore one of the problems with simple “conversion” of books other than straight text for immersive reading. If I get all the words in the novel, nothing inherently provokes the question of whether something more should have been done to make it better. But whereas a printed book requires a still picture, in a digital rendition that could just as well be a video or an animation. Remaking those choices is very expensive; ignoring them means delivering content the consumer can easily imagine being better than it is.

As less and less shelf space is allocated to books of immersive reading, there may be some temporary opportunity opened up for the publishers of other books. Books and Books, a chain begun in Miami which is catching attention for its survival strategies during what are generally tough times for bookstores, is famously emphasizing illustrated books. Not only do these not convert well to ebooks, they aren’t as well displayed in an online shopping environment.

At the same time, there are specialty retailers like JoAnn Stores and Michaels that continue to sell books related to their primary businesses selling crafts and hobby materials. These outlets become more important to publishers as bookstore shelf space disappears, but they also become more important to consumers. Since the content these consumers want does not convert as well to digital consumption, it stands to reason that they’ll still want the printed books for some time to come. Publishers of these books will be redoubling their efforts to cover these stores and enable them to substitute for the bookstores being lost.

The publishers I spoke to recently have already “verticalized”; they’ve been publishing in very specific non-fiction subject niches. They’ve been focusing efforts on building up their special sales departments, the part of a book publisher that looks for sales opportunities outside the bookstore and library channels which publishers usually call home.

As digital shifts continue to reduce bookstore shelf space and the readers of novels and biographies spend less time in bookstores where they might see the children’s books and art books and how-to books that don’t work as well on devices, more imagination and innovation will be required of publishers who formerly could make their living selling their wares through those stores. One example is what Workman has done with their soft-reference franchise “1000 Places to See Before You Die”, which they are trying to turn into a monetizable community. This is a good idea and nicely executed; whether it will turn into a profitable one remains to be seen. And, of course, it is not a template that can be broadly applied.

This much is clear. Publishers of immersive reading can, at least in the short run, largely count on keeping the sales from readers they’ve always had. The problem for these publishers will be keeping the big authors (at a sustainable royalty rate) if the business becomes largely digital and most readers can be accessed without the capabilities of a major company operating at scale.

The publishers of the rest of the book output who have depended on the bookstore network would appear to have a far more onerous challenge. They have to largely reinvent their product and perhaps their business models to get some digital revenue without any blueprint for success. In fact, there may not be a replicable template for how we satisfy consumers of much of the non-immersive content which for hundreds of years has been presented in books. But the publishers of those books have no choice except to look for one. With increasing urgency.

Of course, the Holy Grail is to monetize the content in other ways, made possible by XML workflows, taxonomies, and lots of intelligent tagging. There are instances where this works: Wiley and Random House both have robust b2b businesses with their travel content. But it is a significant incremental effort to go from being a book publisher, even a niche-y one, to creating a profitable business model around multiple uses of the content and the community the content attracts. It has been the mission of the company that is our partner in Digital Book World, F+W Media. Their scale enables them to spread the cost of investments across a substantial number of communities. This is not just about technology. For example, their crack events team, which makes the complex DBW event run like an atomic clock, is employed by a variety of the 20 or more F+W communities over the course of the year.  

One of the DBW sessions this year is “The Digital Future for the Illustrated Book” which will feature speakers from Kobo, Time Home Entertainment, Quarto Publishing, and Aptara.

One other trick being employed worth mentioning is a digital add-on to the print book. Melville House, an innovative publisher tied to a bookstore in Brooklyn, calls these web-based efforts “hybrid books” and they call the enhancements “illuminations.” A variation on the theme has been employed by the innovative publisher Black Dog & Leventhal; they add a CD-Rom with all the artwork in the Louvre to add to their Louvre book and all the cartoons in the history of New Yorker, which would never fit into a print book. It was a BDL book on The Elements which spawned the breakthrough iPad app. These are useful ideas, but I’m not sure they solve the existential problem publishers are facing.

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This is the time of year for predictions. I’ve done mine in the spirit of the holiday season in years past, going back to the late 1980s when I did a “My Say” for Publishers Weekly. (I wasn’t able to find it — some sharp reader will — but I recall that one of my predictions was that publishers would strive to put out the audio of a title at the same time they released the printed book.)

In recent years, I’ve done the predictions for PW and I’ve done them right here. This year I contributed some thoughts to a nice roundup done by Jeremy Greenfield, the new editorial brain over at the Digital Book World site.

This year, I thought I’d try something different. Rather than predict the future for the industry’s biggest players, I am posing what I think are the biggest questions faced by each category of them. Some of the questions are within their power or responsibility to answer; some depend on outside circumstances; and some may never be answered at all. But any honest futurist (and I try to be one) has to admit that questions outnumber answers. (Note: there is a great Johnny Nash song called “There Are More Questions Than Answers” that’s about 50 years old and is just as correct today as it was then.) So this post focuses on the important questions we’ll be facing throughout the industry in 2012 and beyond.

The biggest publishers:

Can their use of tech at scale — SEO and pricing seem like top candidates — add demonstrable value, cost-effective for them and persuasive to authors?

How fast do sales of print in stores decline? And how efficiently can publishers de-scale to keep overheads under control?

Can they reorganize to take advantage of the opportunities offered to the quick and nimble in a digital world?

Can they extend the “protection” of agency pricing to distribution clients and, if so, can they charge a premium for that capability? (Could this be an unintended benefit to the Big Six of Amazon’s refusal, so far, to allow agency to any except the Big Six?)

What skills and capabilities does a publisher need now that they didn’t need a few years ago, and what’s the best way (acquiring a company, outsourcing, hiring in talent) to bring those talents into the fold?

Publishers bigger than small, but not Big Six:

Can these publishers fight their way out of the box that Amazon and Apple have them in, with Amazon insisting that ebooks be transacted on the wholesale model and Apple insisting on the agency model?

Can Amazon continue to be relied upon to discount from high publisher suggested retail prices (the basis of high wholesale prices for the retailer), or will Amazon sell more frequently at the publisher’s declared price to “encourage” publishers to cut their suggested retail priceas and therefore bring Amazon’s costs, and publishers margins, down?

Smaller publishers:

Can they keep up with the technological and contractual demands of digital publishing change?

Can they find niches that present opportunities they can seize to sell something other than “the book” (whether in print or digital)?

Can they create opportunities by being nimble, opportunistic, and vertical that make them more attractive than larger competitors as partners for knowledgeable agents, authors, and brands?

Amazon:

Can they marshall their considerable resources to sell individual titles so effectively within their network that they make up for what they miss outside their network?

Can they build any noticeable or sustainable advantage in having a repository of desireable content that is not available except through them?

Can they maintain their device and platform dominance as the competition moves far beyond the early adopter online book-reading audience?

Barnes & Noble:

Do books as gifts and objects deliver enough traffic to keep a bookstore chain successful as the sales of novels and biographies go away?

Can they create a profitable international strategy? They haven’t had one yet.

Like the publishers, can they manage down their physical plant and overhead base as the revenue it was built to serve diminishes? (We presume they can’t do it with Nook sales and services alone.)

Independent bookstores:

Will the lift they get from Borders closing and B&N cutting back on shelf space for books buy them time as print book sales in stores shift to ebooks and online purchasing?

Can they make something work with Google ebooks? Or will another solution arise that works to get indies into ebook commerce in a profitable way?

Will emphasizing the books-as-objects market (gifts and otherwise) work as the customers for narrative text find it less and less necessary to visit physical locations?

Authors:

How do they know that their agent understands the new range of publishing options and directs their business activity accordingly? (It’s as hard to be effective as your own agent as it is to be your own lawyer.)

How do they build their own online platform? (And every author who plans to make a living through writing and hasn’t yet built a platform has to think about having one.)

Will any author turn down a significant advance to self-publish in 2012? (So far, that behavior has been extraordinarily rare, with Tim Ferriss being the only one really close. Barry Eisler intended to, but he took an advance from Amazon instead.)

Will the number of successfully self-published mid-list authors continue to grow? Under what terms and royalty rates do these authors return to traditional publishers?

Agents:

How do they make sure the full range of knowledge about the digital publishing alternatives is within their grasp? (if not in their head…)

Do they know what they need to know to make a “profit-sharing” deal with a publisher?

Can they direct an author’s own online marketing efforts? And, if they do, is some adjustment to the standard practice of a 15% share of the author royalties going to be necessary, or possible?

Illustrated book publishers:

Is “fixed page layout” the answer? Or, more likely, is it the answer for some books and not for others? Which ones?

How do illustrated publishers cope with the plethora of native formats, file requirements, and screen sizes?

Do “illustrated books” delivered on good portable screens achieve the same consumer acceptance that straight text did making the same transition?

Are there new retail channels available to sell illustrated books as bookstores diminish?

Are new models, perhaps built on social or community but also possibly built on non-book commerce, possible to support and extend illustrated book publishing?

The industry:

As the global ebook infrastructure develops, does it show signs of staying diverse or does it tend to consolidate as Kindle?

Does the industry show signs it will trifurcate, with narrative text, adult illustrated, and children’s books becoming three largely different businesses?

With Amazon, B&N, Apple, and Kobo established as significant global ebook outlets, will any of the other players or fledglings — Google, Sony, Blio, Copia, Bookish, Anobii — start selling enough units to be an important contributor to ebook sales?

Will either white-label B2B or publisher-to-consumer sales grow markedly in significance as the time-honored sales, distribution, and monetization models atrophy?

This could well be the last Shatzkin Files post for 2011. It’s been a great year around here. We launched a new business, Publishers Launch Conferences, with our friend Michael Cader. We started the year with a great Digital Book World last January and are concluding this one putting the finishing touches on an even bigger and better one coming next month. An ebook and a print book edition of The Shatzkin Files, Volume One (the first two years, through last February) were published. We have some great new consulting clients about whom we think you’ll hear a lot in 2012. And, despite the reality that you can’t claim 50 years in the business (which I do) and remain a young person (which I’m not), good health and good cheer remain in abundance around here. Our view of publishing’s digital future seems to have been more confirmed than contradicted by the year’s events. So we’ll take a 2012 that largely resembles 2011 very happily if we can get it.

Best of the holiday season to all our readers. And may 2012 be as kind to you as 2011 was to us.

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I want to make clear at the outset that this post is not about “enhanced ebooks”, making something multiple-media out of a book that started as straight text. That’s a “want to do” problem that I’ve always been skeptical about and which I believe many, if not most, publishers are abandoning as “not commercially viable at this time”. Today’s ruminations are about moving illustrated books from print to digital, which many of today’s book publishers will find a “must solve” problem as the channels to reach consumers effectively with illustrated books — the bookstores — are diminished in number and power by digital change.

Amazon and Barnes & Noble are trading boasts about whose iPad-lite is better than the other guy’s. Kobo’s Vox is joining the party with Kobo now owned by Rakuten, a massive Japanese company that gives the former upstart the means to really compete with all the other players. We can be pretty sure that tablets that can deliver color-illustrated book pages will be in many hands very soon. (That’s in addition to the tens of millions of iPads and many millions of Nook Color devices that have been sold already.)

This is presenting publishers with illustrated books on their list with what seems like an enormous opportunity. But it also presents some equally enormous challenges.

It has been estimated by many that 25% of the print books sold are illustrated books. (I last saw this number in a slide from Michael Tamblyn of Kobo at our eBooks for Everyone Else conference in San Francisco on November 2d.) I am not sure what that means. Trade books only?

And even if I did know what it means, I wouldn’t know enough. Books that are primarily pretty pictures, which don’t require much integration of the pictures and text (the minority of the 25%, one would assume) are a considerably simpler proposition to port to digital than a book with pictures and captions that have to stay with them or text that needs to be on the same page with a picture or a chart.

A lot of work is being done to create new standards called HTML5 and Epub3 that will permit more faithful rendering of a publisher’s intentions through a web browser or an ebook than our current capabilities do. But there are two very big flies in the ointment that persist regardless of the technology.

One: illustrated books are considerably more complex and expensive to deliver to digital devices than straight text books. (Even if HTML5 and Epub3 accomplish everything their creators want and they’re fed by XML-workflows, converting the backlists will cost a multiple on a per-title basis of what straight text costs. And I suspect we’re many years away from relieving publishers of the need to make the decisions necessary to execute multiple versions of each book, new or backlist, as will be made clear further on in this post.)

Two: we really don’t know whether consumers with tablets or tablet-lites will choose to consume illustrated books on those devices. (I’d say we do know that people will happily read straight text on devices; what seems to be true in my experience these days is that most of the people who say they “prefer printed books” have not tried an ereader yet.)

So while many publishers are largely seeing eroding print sales for straight text more than compensated for by ebook sales, there is no guarantee that the same will be true of illustrated books.

The retailers selling the tablets and the publishers of illustrated books are excited about the possibilities. The development of HTML5 and its close cousin, Epub 3, promise to enable features and capabilities that heretofore were only available in apps to be delivered as ebooks. That’s a big deal because the app marketplace has two huge shortcomings: it doesn’t enable book discovery very well and it is loaded with very inexpensive products. Many publishers have come to the conclusion that selling apps isn’t a commercially-viable strategy going forward. They’d much rather have their IP on sale in an ebookstore.

To be fair, others (like Callaway Digital Media) think apps work just fine commercially (although I’d add that Callaway does children’s content primarily, and that’s different…) and there are more and more tools being delivered to make app-building cheaper and more economical than it was before. But I still agree with the doubters.

Getting ready for Digital Book World, we had a conversation in the past couple of weeks with a publisher that does illustrated books almost exclusively. He volunteered what we believe: nobody knows if the customer will buy these yet. And then he pointed to his enormous pain point: screen sizes.

The currently-touted solution for illustrated books on devices is “fixed page layout.” You don’t “reflow” the text, which is the technique used for straight text. Reflowing changes the number of words on the page to suit the screen size and type size. That means you are changing the amount of content that appears on the screen. If you did that for illustrated books, pictures and captions wouldn’t stay together and things you planned to be on the same page might very well not be. So you deliver a “fixed page” to the device, just like you do to a printer.

The dominant color tablet device has been the iPad, which has a 10-inch screen (this is a diagonal measurement). But the new tablet-lites have seven-inch screens. This cuts the viewing area by about 50%. There is really no way to present a “page” that combines text and pictures that works on both screen sizes. If you go from 10-inch to seven, the type will be too small to read. If you go from 7-inch to ten, the white space surrounding the page will be ridiculous, or the type will be ludicrously large.

And I haven’t mentioned the fact that the iPhone has a 3-1/2 inch screen. Imagine the fixed page for a 10-inch iPad on that!

Although tools exist that make it relatively quick and easy for a designer to see the page on the right screen size and move things around a bit, that doesn’t really solve the problem. An illustrated book publisher would really have to design and lay out each book at least twice (for the 10-inch and 7-inch screens) and possibly three times (to get the iPhone screen too.) Then those would be three different files, so you couldn’t actually move across your devices and have them auto-synch the way Kindle, Nook, Kobo, and Apple enable you to do now for straight text.

Would you get the files for all three sizes when you made the purchase?

There is a way to create the book for different sized screens with the same number of pages, which would be to use more area for the page than will fit on the screen vertically, and then scroll down to get more. Scrollmotion introduced this technique when they were making simple ebooks as a way to make ebook pages match printed book pages. But even employing that technique wouldn’t really save the illustrated book publisher any work. You’d still have to redesign each page for the particular device, and, anyway, I’m one reader who found I didn’t like ebooks that make you both scroll and turn.

One prominent ebook executive I know told me that there have been about 1000 illustrated ebooks available until a month or two ago but that the conversion houses in India have recently been working overtime to deliver more for the plethora of new tablet and tablet-lite devices hitting the market . Now they’re cranking out approximately 1000 illustrated ebooks a week so that by the end of the year, we might have 10,000 illustrated ebooks to choose from on many of the platforms.

That’s still paltry, compared to a million or more straight text ebooks, but the sudden leap in illustrated ebook titles available and screens to read them on must, one assumes, generate a real sales increase. Maybe we’ll start finding out what works and what doesn’t. This same executive, working for one of the major ecosystems, is trying to help publishers set their priorities for what books to convert. (Much of the conversion expense right now is being borne by the device-maker-retailers, so they get to call some shots.) But meaningful data points are so scarce that they offer very little guidance.

As bookstore shelf space disappears, the urgency of solving this problem grows. The sales of illustrated books have reportedly been going up in the bookstores, which is good news for as long as it lasts. It makes complete sense that retailers would emphasize the things that seeing and touching make you more likely to buy. But I’d be concerned that even the sales of illustrated books will suffer as more and more of the straight text consumers find what they want without visiting a bookstore. And a closed bookstore doesn’t sell any illustrated books at all.

I learned something interesting lately from a travel book publisher with a robust web presence that might be a useful clue. I was told that photo albums are a big new moneymaker for them. People who are traveling to Paris love the opportunity to look through a series of photos of Paris. Each photo is a new screen with new ads on it. That is creating some really easy additional revenue for this publisher’s web sites.

I think that a “500 photographs” series of ebooks could also do very well, particularly with the digital ability to present them in sequences determined by metadata. If 500 Paris pictures were properly tagged, I could see “Eiffel Tower”, “churches”, “19th century architecture”, and “Champs Elysee” pictures grouped together by clicking on a menu.

And that kind of a book, with no associated text necessary (“captions” could be on a jump screen), could be designed once for all size devices.

Of course, whether it would have a commercially-viable print counterpart is yet another question.

I have concerns that converting how-to books to digital success is going to be a very frustrating experience. The ebook will not deliver the printed material well, unless the same care is exercised optimizing the content to each different digital screen as is put into designing a book. And there will be so much more the ebook could do with video and audio and animation and interactivity that would make sense for most subjects that “converting” a book will just leave too much opportunity behind.

But publishers have to try. With millions of devices in consumer hands, some illustrated ebooks are going to sell impressive numbers. We saw what happened with “The Elements” when the iPad came out (even if comparable success hasn’t seemed to happen for any other content-based app product since).

Creating a truly interactive book-type digital experience has been the objective of countless thousands of high-quality person-hours for two decades, since even before the CD-Rom era. Nobody has cracked the code yet, by which I mean nobody has come up with a formula which will repeatedly satisfy consumers so that a publisher can approach the marketplace for digital content with something approximating the confidence that it does with straight text books. As an industry, we’re about to throw a lot more time and money at the problem. Maybe we’ll find an answer. Or maybe there isn’t one.

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The week I spend each year at the Frankfurt Book Fair is always the most stimulating week of my professional year. The concentration of the best thinkers and most powerful people in publishing always seems to lead me to a new burst of understanding about our global publishing world, particularly in these times of rapid change.

I saw one Big Six CEO who noted that I had said last week that I expected the US publishers to be living in an 80% ebook world pretty soon although the global head of another of the Big Six companies had just stated the belief that the switchover to digital would stop, or slow down significantly, at 40%. I respectfully disagree, but will save that argument for another post. The one I talked to, who chuckled about the wide disparity in these two predictions, didn’t express an opinion about which of us was right, but the implications of the two predictions are so different that it behooves the people running the biggest companies to at least consider mine, even if they believe his.

I also talked to a business development executive for one of the tech companies that has been converting backlists from print and pdf to epub. He made the point that his business remains robust but moves around the world as new markets discover serially that they need to get their intellectual property into digital form. We agreed that those of us who make a living on the digital transition — and that certainly includes me at the moment (what are you reading this blog for?) — have a few more years ahead of us before we’ll have to figure out how to make a living on the new reality (if we need to keep making a living when it arrives…)

With the deals announced at Frankfurt by Kobo with the English retailer WHSmith and the French retailer Fnac along with the quickening pace of store openings by Apple and Amazon, the future shape of the ebook retailing landscape has been more clearly defined. It looks to me like we’ll have three principal global players that will be active in every market — they being Amazon, Apple, and Kobo — plus perhaps a local contender in each market as well. Barnes & Noble has played the latter role extremely successfully so far in the United States; Waterstone’s will attempt the same in the UK starting next Spring; there is local competition in Germany; and certainly there will be in many other countries as the ebook revolution laps at their shores. Google, being Google, will not go away, but they will remain a relatively marginal player unless and until they put considerably more energy into their solution and into promoting what they have.

The Kobo deals are the game-clarifiers, if not game-changers. A sage observer of the digital scene stopped at my stand here in Frankfurt to discuss the WHSmith-Kobo arrangement with me and he wondered whether this was the best deal for both sides. Should Kobo have been trying harder to make a deal with Waterstone’s? Is it wise for WHSmith to be making a deal where they sell the devices but connect them to a Kobo-branded store?

But that, of course, is the key to the deal. The economics of the devices don’t work unless you also can sell the ebooks to go into them. (That’s the answer to all the geniuses who think Barnes & Noble is being thick not implementing an international rollout of the Nook!) Neither WHSmith nor Fnac is principally a book retailer: books are just another product line in stores that sell other things and have a broader identity. By selling a reader attached to an ebook store that serves customers well, they buy themselves relevance to the book consumer during the transition and extend their lives as booksellers. They demonstrate recognition that building and maintaining a ebook store is not a trivial undertaking and, in the face of several global competitors, not something they want to undertake from their position as a country-specific, and more general, retailer.

By tying up with Kobo, both WHSmith and Fnac can get into the market with ereading devices at about the same time as Amazon brings in the Kindle. And WHSmith launching for Christmas 2011 should be terrifying Waterstone’s, which will be months behind with devices and almost certainly delivering a less consumer-friendly store off the bat than the experienced Kobo offering will be.

Barnes & Noble has achieved startling success at establishing a strong second-place position in the US ebook market, but their situation may prove to be unique. First of all, they’re in the biggest single ebook market (by value, even though poorer markets may pass them sometime sooner in units) we’re likely to see for a decade or more. Second, they are a very serious book retailer that has built strong relationships among book publishers worldwide over many years. And third, their execution was nearly flawless. Even with their precedent as an example, there is no guarantee that Waterstone’s, or anybody else, can pull off what they did in another market.

So if it is a global game and you have to be a global player to be competitive, as well as a “whole ecosystem” game that requires devices attached to a well-stocked and well-presented econtent retailing environment to succeed, we can see the steep uphill fight to be waged by the other players trying to compete with Amazon, Apple, and Kobo, whether they be Google, Copia, Sony, Baker & Taylor’s Blio, or the new entrants financed by publisher collaboration: Anobii in the UK and Bookish in the US.

All other things being equal, I can see a global ebook marketplace that some years from now is 90-95% controlled by Amazon, Apple, Kobo, and a local player in each country, with Google getting most of the rest. Google may punch above its weight on the long tail because discovery of the obscure or highly niched content might be their forte; one scholarly publisher told me at Frankfurt that he is already seeing some real growth in his Google sales, which no trade publisher has said in my earshot yet.

But all other things may not remain equal. One informed member of the European digerati told me he believes that the European Competition Commission may outlaw the agency model in the European Union. Were that to happen, that would tilt the playing field substantially toward Amazon. It is ironic that the biggest, strongest, and most deep-pocketed competitor for global ebook sales could be handed an enormous competitive advantage by bureaucrats ostensibly trying to foster a competitive marketplace. Publishers may have deficiencies in their understanding of the digital transition, but it would appear that the government bureaucracies the world over might be far more confused than the publishers are.

I’m posting this before I leave the Frankfurt Book Fair on Sunday afternoon, European time. I won’t have the opportunity to respond to any comments until at least Monday night London time. I drive with a friend and the charming little hotel we stay at in Monschau doesn’t have wifi and I don’t have the digital dexterity (with “digital” in this case referring to “fingers”) to do lengthy replies on my iPhone.

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As the shift from a print-centric book world to a digital one accelerates, more and more digital publishers are creating themselves.

The biggest publishers, with the resources of sophisticated IT departments to guide them, have been in the game for years now and paying serious attention since the Kindle was launched by Amazon late in 2007. But as the market has grown, so has the ecosystem. And while three years ago it was possible to reach the lion’s share of the ebook market through one retailer, Amazon, on a device that really could only handle books of straight narrative text, we now have a dizzying array of options to reach the consumer on a variety of devices and with product packages that are as complicated as you want to make them.

Free or very inexpensive service offerings through web interfaces suggest to every publisher of any size, every literary agent, and every aspiring author “you can do this” and, the implication is, “effectively and without too much help”. Indeed, services like Amazon’s KDP (Kindle Direct Publishing) service, Barnes & Noble’s PubIt!, and service providers Smashwords and BookBaby, offer the possibility of creating an ebook from your document and distributing it through most ebook retailers, enabled for almost all devices, for almost no cash commitment.

Is it really that simple? One suspects not, since literary agencies are creating ebook publishers (for example: The Scott Waxman Agency’s Diversion) and baskets of services (for example: The Knight Agency in Atlanta) and consulting to help their authors. And a bit further upstream, ebook distribution companies (for example: MintRight) and ebook-first publishers (for examples: Open Road, Rosetta, and the granddaddy of them all, Richard Curtis’s e-Reads) are creating more alternatives, sometimes propositions explicitly addressed to the agents. If publishing ebooks to all channels were really a simple matter of uploading a file, it would hardly seem necessary to build all this infrastructure.

We know that small publishers, literary agents, and authors are becoming publishers at an astounding rate. Two years ago when I was trying to organize a panel of literary agents to talk about working with authors on a charge-for-services basis instead of a share-the-royalties basis, it was hard to get volunteers to discuss new models. Two weeks ago, a major agent outside New York said to me, “we all have to think about it now; we have no choice.”

In short, it isn’t just the big publishers who are compelled to develop a digital strategy to adjust their businesses to changing times. Their smaller competitors, the agents they depend on to deliver their content, and even the authors that have always just depended on the publishers to handle the business of getting a book from a manuscript to a purchase, are all assessing the new landscape. They are considering what new approaches might reduce or eliminate their need for a publisher, or at least reduce the publisher’s share of the take.

Although the correct strategy for any entity would depend on the factors that prevail in each case, there are things it would seem that everybody entering this arena needs to know and understand.

First of all, what are all the things publishers do to get from manuscript to sale, are all the steps necessary, and what do they cost? Developmental editing, copy-editing, mark-up for design, creating metadata: these are all things publishers do routinely. Are they critical for every book? Would a purchaser-reader notice if a publishing newbie left any of them out? Will the services that promise to make and distribute an ebook without a cash investment do these things well?

The ebooks themselves have gotten increasingly complicated. The ebook standard epub (used for just about every ebook not intended for the Kindle ecosystem) has risen to the challenge posed by apps to be able to accommodate color and video and audio and software elements. Everybody who knows that “you get what you pay for” expects complicated ebooks to take more effort and money to create than ebooks of straight narrative text. But what constitutes “complex”? And how much more money does that additional effort cost the publisher that wants to deliver an ebook more complicated than just simple text?

Marketing ebooks also requires a whole new set of knowledge and skills. The key to all ebook marketing is the accompanying metadata: coding that travels along with the file specifying its core bibliographic information and price, but which can also tell a retailer or a search engine much more than that. Search engine optimization (SEO) is the art of delivering metadata that makes the book more likely to be found in response to various searches and queries; that’s yet another set of understandings new ebook publishers have to acquire.

That is just the beginning of what is possible (and therefore necessary) in ebook marketing. Sample chapters can be given away. Web sites can be invoked as partners.

And authors and publishers can, and therefore must, engage in “social network marketing”: using Twitter and Facebook and commenting in high-profile streams to catch attention and gain credibility with core audiences for the books. This is more knowledge to acquire.

Any new publisher will need to understand the paths to market. Yes, Amazon gets more than half of the US ebook sales and Barnes & Noble gets half of the rest. But it isn’t that way on every book, ignoring the others leaves a big chunk of the market unexploited, and things are changing quickly. Amazon’s market share has dropped by a huge percentage in the past two years.) OverDrive is the primary path to libraries. Ingram aggregates many independent stores. Baker & Taylor is opening up markets among mass merchants. Kobo is as important in Canada as B&N is in the US and works in markets all over the world. Google has the ebook ecosystem making the most serious penetration of independent book retailers. Sony is about to introduce new devices that could increase their importance. And Apple is doing its best to dominate sales to its own device holders, who constitute a large wedge of the ebook customer pie.

One can go to all of these channels directly but there are also a slew of services to handle what is the increasingly complex job of delivering to and administering the multiple channels. Perseus Constellation, Ingram Digital, INscribe Digital, LibreDigital (just bought by Donnelley), and Bookmasters as well as the automated services like Smashwords, BookBaby, and MintRight we mentioned above, and others offer service packages to do that and to help with the creation and marketing needs as well.

As we said at the top, nowhere is the change in publishing greater than in the agent community. What has been a stable business model for generations is now, suddenly, changing. There seem to be as many new models and approaches as there are literary agencies. That adds another thing that all of the fledging epublishers — some of which are agents, others being small publishers and authors — need to know about and understand. The relationships among authors, agents, and publishers are getting much more complicated and everybody needs to spend some time thinking that through and discussing what it means.

If all this strikes you as a set of topics worthy of a day’s discussion, we’re in agreement. We think it is too. And that’s why our new Publishers Launch Conferences partnership with Michael Cader is delivering a day-long event called “eBooks for Everyone Else” in New York (in conjunction with The Center for Publishing at New York University’s School of Continuing and Professional Studies) on Monday, September 26 and in San Francisco (co-located with F+W Media’s new StoryWorld conference) on Wednesday, November 2.

Not only do we have an expert-packed lineup to deliver the information, we’ve carved out time for our attendees to get their own specific questions answered by the experts and by the providers of many of the services that are part of the new ecosystem. If the business of ebook publishing is part of your future strategy, you’re bound to get the knowledge and make the connections you need at eBooks for Everyone Else.

Among the leading service providers who will participate in eBooks for Everyone Else in New York and be available for “speed-dating” conversations with attendees are our global sponsors Copyright Clearance Center, Constellation, and Bowker, as well as supporting sponsors Ingram Content Group, INscribe Digital, B&N’s PubIt!, Kobo, and BookBaby. (Kobo and PubIt! will be speaking from the main stage as well.)

Our New York show features an all-star lineup of literary agents including Jane Dystel, Robert Gottlieb, Sloan Harris, and Scott Waxman. We have a distinguished group of publishing veterans — including Jack Perry and David Wilk, Smashwords founder Mark Coker, Renee Register, Iris Blasi, Rich Fahle, Ron Martinez, and Joshua Tallent — who will present advice and insight to help you develop a comprehensive ebook strategy. Most of them will be available at the breaks and alongside the speed-dating sessions to lead small group discussions and answer your questions about creating, marketing, and distributing your ebooks. (The San Francisco roster is slightly different, but just as powerful.)

Michael Cader and I will be moderating all the day’s activities, asking questions, and helping to put an enormous volume of facts into a strategic context for an audience with a staggering array of choices as to how to proceed with ebook publishing.

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News of the 7-figure Tim Ferriss deal with Amazon that hit the news this (Wednesday) morning must have leaked out to the press yesterday (Tuesday) because I got a call from a reporter asking for comment on Amazon’s “big new hardcover” book deal. The question confused me yesterday, but seeing the announcement about Ferriss today featuring the hardcover makes it clear what the trigger was for that call.

I’d call this deal both an outlier and a harbinger.

It’s an outlier because Ferriss clearly did it for reasons that weren’t strictly financial. According to The New York Times and Publishers Lunch, Ferriss called Amazon seeking the deal. Ferriss decided he’d rather be with a technology company than a publishing company. Ferriss is excited by the unenumerated opportunities he sees having a publisher that has direct relationships with the ultimate consumers.

To analyze the competition between the big publishers and Amazon, I think we need to think about four components of the deal and the publication.

The first thing on many authors minds is the advance against royalties they can get for signing a contract. This deal is reported as 7-figures. We know that Amazon has deeper pockets than any publisher. So they can compete with advances. Since Crown (a division of Random House) had reportedly paid 7-figures for Ferriss’ last book in 2008, perhaps Amazon offered only a sensible competitive number here. But publishers, all too aware that Amazon competed in the ebook marketplace by selling big titles at a loss, have to be concerned that they might be willing to sign some big authors at a loss as well.

The other components to think about are the main channels of sale for the book. I will stipulate in advance that this is a bit over-simplified but I think simplification here promotes understanding (and unncecessarily complicating things would obscure it).

Ferriss is a non-fiction author. For big non-fiction books today, the largest sales channel is usually print sold in stores. Generalizations are dangerous (and generally wrong), but it would be reasonable to think that Ferriss sells 50% of his books that way. If so, that’s a problem for him with Amazon because store sales of print will be the hardest for Amazon to get. Barnes & Noble recently made clear that they would only consider stocking an Amazon-originated title if they could sell the ebook (Nook) edition as well as the print. Amazon hasn’t stated a policy on that, but, to my knowledge, all the publishing deals they’ve made have required ebook exclusivity for the Kindle.

At our on-stage conversation at the Publishers Launch BEA show, Barry Eisler — who had just done his own book deal with Amazon for a substantial advance — admitted that Kindle exclusivity was the one part of the deal he wasn’t crazy about. More on what that means to ebook sales further down in this post, but it would appear that ebook exclusivity is blocking print store sales at the largest possible outlet. Unless Amazon has some distribution cards up its sleeve that we haven’t seen yet, the loss of brick store print sales (and exposure) would appear to be the biggest negative for Ferriss in doing this deal.

It is likely that Amazon expects to sell a lot of those hardcover books through the next channel to consider, print books sold online. In this case, Amazon has a very high percentage of the total market, perhaps in the 80-to-90 percent range. Given their ability to give a book of theirs exposure and perhaps even using that direct customer knowledge that Ferriss seems so intrigued by, it isn’t unreasonable to think that they can sell more than their fair share of those books. It’s also seems likely (generalizing again) that 25% of Ferriss’s publisher-generated revenue could come from print sold online. Maybe Amazon is paying him a higher royalty than the standard on that as well.

Of course, the main commercial reason for both sides to do this deal is for sales of the ebook, the Kindle edition. On the one hand, Kindle sales are said by publishers I’ve spoken with to have fallen from 90% to 50-60% of the total ebook sale. (Barnes & Noble’s Nook is credited with the lion’s share of the rest.) But the publishers don’t know how much of Kindle’s sale (or Nook’s sale or Kobo’s sale) is consumed on the proprietary device. If I read on a Nook and Kindle has an exclusive on a book, I’m stuck. But if I read Nook books on my iPhone or iPad and Kindle has an exclusive on a book, I can just switch over for that one book without a problem.

That means that some big part of the 40-50% of the ebook market that isn’t Kindle is accessible through the Kindle reader on an iOS or Android device. It’s a guess, but I think a reasonable one (maybe even a very conservative one) to say that 35% of Kindle reading is done on non-Kindle devices. Adding those people in would suggest that the Kindle store has meaningful access to anywhere from 67% to 75% of the total ebook marketplace.

And we’d assume that Ferriss is getting a 70% royalty from Amazon on those sales, four times what he’d get if a publisher gave him 25% of the ebook royalty (because they’d be dividing the same 70%.)

My bottom line on this is that Ferriss would get a sliver of what would be half the business (print in stores). He could well get as little as 10 percent of that potential (or 5% instead of 50% of what would have been his total publisher revenue.) Depending on the royalty structure, he’ll get at least as much and perhaps a bit more on the online revenue piece, so let’s call it 30% instead of what would have been 25% of his total publisher revenue. So on those two pieces, he’d be getting 35% of the former total whole, rather than 75%, or a bit less than half.

But on the ebook side, he’ll get about 4 times the royalty on about 70% of the sales, or 2.8 times as much revenue as he would have gotten from a publisher. If that had been 25% of revenue of the former “whole”, it would be 70% of the former whole now. Added to the 35% he’s getting from what would have been the other 75%, that back-of-the-envelope set of guesses delivers him 105% of what he would have gotten from a publisher, even giving up almost all the print store sales.

And, of course, he has high expectations for what he and Amazon can do together with all that customer knowledge. If he’s right about that, he could do considerably better.

This is sobering math for the big publishers. The numbers would look better for Amazon if we were generalizing about fiction, where the percentage sold as ebooks is somewhat higher. But, more important, the segment of the business where Amazon is disadvantaged — print in stores — is shrinking inexorably as a total of the whole. When we run this same exercise a year from now, the percentage assumptions we’ll be making will be lower for that component and higher for the other two.

So it’s clear why the deal is both an outlier and a harbinger. Giving up the store sale is a difficult thing for any author to do, particularly when the math works out to be so close to breakeven (and we haven’t factored in the marketing impact of books in stores, which is real.) It took an author with a particular personal bent to pursue that choice. But it is a harbinger because the math would appear to be moving in Amazon’s direction. The one way I can see for publishers to improve their chances of looking good in this calculation is to raise their ebook royalty percentage. Of course, there’s no reason that Amazon couldn’t do the same thing.

If you’re going to Frankfurt, you must consider attending one of our Publishers Launch Conferences events there. On Monday, October 10, we’ll present “eBooks Around the World”, which will include lots of original data, talks from every major global ebook retailer, the scoop on the growing importance of collective licensing, documentation of the benefits that a medium-sized publisher got from a digital workflow, an instructive presentation connecting metadata quality and sales results, and (as they say) much, much more.

On Tuesday, October 11, we’ll deliver a half-day event called “Children’s Publishing Goes Digital”, chaired by Lorraine Shanley of Market Partners, which will explore creation, marketing, rights, brand new product types and brand new players in what might be the fastest-changing part of our business.

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One very lucky thing for those of us who are in the habit of predicting the future is that very few people keep score on us. We mostly keep score on ourselves. When I want to remind readers of something I said previously, I link back to it and call it forward it again.

But there is one belief I had and stated repeatedly early in the ebook era that was wildly wrong, hopelessly wrong, and then proven clearly to be wrong. I bring it up now because it belongs in this post identifying a more current error, one which hasn’t been proven yet but about which I’ve learned enough to want to walk back.

When I started reading ebooks in about 1999, there were a couple of dedicated ereaders just becoming available: the Rocket Book and the Softbook. Neither of them interested me or very many other people either. Both failed pretty quickly.

Just about simultaneously, ebooks were first being delivered to hand-held devices. I discovered the magic of putting books on my Palm Pilot, a device I had in my pocket all the time. I had started carrying a personal digital assistant in 1986; that was a Psion Organiser with a 2-, then a 4-line screen, which would not have worked for ebooks. But the Palm, which could carry a chunk not so different in extent from what I see now on my iPhone, worked fine.

The original dedicated devices came and went without much notice from anybody. Meanwhile, I continued to read on my Palm and its successors. The shopping experience at Palm Digital was terrible, the choice of titles was extremely limited, and the ebooks cost just about as much as the print books. But I shifted over, as much as I could, because I was hooked both on the utter convenience of always having books in my pocket and because I genuinely found it preferable to read on something so small and light and have book reading, for the first time, totally manageable with one hand.

When the Sony Reader arrived and didn’t do much, I wasn’t surprised. Sometime before it debuted, I wrote or said somewhere that if you carried a personal digital assistant, nobody should have to explain the value of ebooks to you. And if you didn’t carry a personal digital assistant, they might not actually have any value for you. At that point, most ebooks purchased were read on laptop and desktop computers.

That’s why I was pretty sure the Kindle wouldn’t work. Who wanted another device to carry around just to read books, I figured? What’s the advantage in that?

I neglected to think through that people do things for lots of different reasons. And I really underestimated the degree to which the book-sized page is a requirement for a lot of people, even though it might be a transitional one. Anyhow, I was really, really, really wrong. And even though I switched back from Kindle to iPhone reading the minute the vast selection available through Kindle (and now through Nook, Kobo, Google, and Apple) was available to me on the device I was always carrying, I fully accept that most people are willing to carry something around to do their reading on a regular-sized page. Lesson learned.

It is now clear to me that another concept that was an important part of my future view is in pretty desperate need of reassessment. It also appears to be being proved wrong.

It was evident pretty early that the Net facilitated the formation of communities around interests. Putting that together with my thinking about the distinction between the unit of sale and the unit of appreciation (shortcut to understanding: the former is the album and the latter is the song; the former is the cookbook and the latter is the recipe) made me think that the big online aggregation of content for sale would also ultimately be challenged. If you went to a web community to get advice about how to build a deck or plant a vegetable garden, I figured, you’d just pick up whatever were your content purchases — books or whatever else, physical or virtual — from that same site. You wouldn’t need a separate site to go buy content from.

In other words, I expected one of the ways to monetize a community would be that you could sell it stuff, particularly content.

Although I know that O’Reilly operates in a special marketplace, I saw the success they have had selling directly to their community — both their own publications and their subscription aggregation Safari — as a sign of what we could expect to develop in other verticals.

I don’t think so anymore.

The first rude awakening for me was when OpenSky changed its business model. OpenSky began with the proposition that they would facilitate just about any web site to sell just about anything. As I understood it, if you had a blog about cooking, you could arrange to sell your favorite pots and pans right off your own site. OpenSky would source the product and operate the back end. You’d just have to pick out what you wanted and decide how much margin you could demand.

Well, apparently that business model just didn’t work. They’ve switched OpenSky from a commerce platform for bloggers to a “social network for shopping” with celebrity, expert, and author curators. I’m not much of a shopper, online or offline, so I’m not one to judge how appealing it might be compared to competition. There is some evidence that the new model works and OpenSky feels like they are now taking off. But it isn’t any longer the perfect match for the vision that I had when I first saw it, and it probably didn’t work because my vision was wrong.

By extension, I had been figuring that publishers needed to sell direct as well. Big publishers had good reasons to resist that idea which I understood, but which in themselves make me question the idea. Big trade houses are highly dependent on the goodwill of Amazon and Barnes & Noble as well as other retailers, and going into competition with your key channels is risky and problematical. And my vision of the future wasn’t really built around general publishers, anyway.

This month, J.K. Rowling opened her Pottermore site, which is intended to be the exclusive vendor of Harry Potter ebooks. Now, there’s a vertical. It appears you won’t be able to get them at Amazon, B&N, or Google (although Google checkout is “the preferred third party payment platform”); if you want them, you’ll buy them from the Pottermore site (or, as some would point out, get them from a pirate source if that’s easier.) In a ‘d’uh” moment, I read this piece making it clear that this kind of fragmentation didn’t work for musicians and ultimately wouldn’t work for authors. (The book business isn’t the music business, but some lessons do carry over.)

So mark me much less bullish on publishers selling direct than I used to be. It can add value and margin to a vertical site if the costs of running the store can be tightly managed, but it is not likely to produce much in sales very quickly.

In fact, I’m quite sure that fewer Harry Potter ebooks will be sold by the Pottermore strategy than if they were just made available through the standing ebook retail network. The margins might be higher with no retailer to pay, assuming that advantage isn’t completely swallowed up by their own costs of infrastructure (and it probably won’t be.) But not everybody who buys a Harry Potter book from Amazon or B&N (or a Nora Roberts book or a Janet Evanovich book or a James Patterson book) is a devoted fan. Some of them are just choosing their next read and if Roberts or Evanovich or Patterson wasn’t shown to them, they would have bought something else on offer.

There is evidence out there to contravene this post and confirm my original thesis. Our friends at F+W Media, with whom we deliver the annual Digital Book World conference, report success building their retailing business through their communities. A senior executive there tells me they are selling “tens of millions” in content, product, and services through 25 stores attached to the community sites they have developed over the past few years. They achieve an average order value of $40 — not too shabby — and credit a combination of true community focus which builds them large and powerful databases of names, unique curation that includes offering things that aren’t available elsewhere, selling content in multiple forms (book-like, video, webcasts), delivery of “online learning”, and special bundled packages for their success.

F+W is not unique. A smaller company that is their competitor in some spaces, Interweave, also has a community focus and sells direct. Both companies have the content to build a number of different verticals to amortize the cost of a common merchandising and retailing platform.I don’t doubt F+W when they say they’re making it work, and apparently Interweave is too, but that still leaves the question of whether they, like O’Reilly, are sufficiently unusual cases that it would be very hard for other publishers to follow their lead.

I still have my fingers crossed that the Google ebooks program could spawn some unique shopping experiences that will make a difference to the ecosystem in the long run. (This is taking powerful faith at the moment because Google has only barely detectable sales in their first half-year of operation.) By offering the opportunity for curation with personality to be done by a large number of different entities (about 300 bookstores have already started with the program in the US), the Google initiative still offers the possibility of a wide variety of curation choices, or bookstore front ends.

Of course, none of these individual Google ebook stores will have the resources of the big retail players to apply technology to their merchandising. But perhaps they can provide selection and positioning that will create its own following. Whether they apply what they know and their own unique intellectual resource base (because every bookstore has one) to highly local subjects or other verticals with global appeal, they have the opportunity to create online stores that at least some people will prefer to shop. Thousands of such entrepreneurs around the globe might produce hundreds — or dozens — of survivors with large enough customer bases to create the kind of diversity in the ebook retail network that would offer publishers the kind of opportunity they need to add value for a long time. And to do it the way they always have, by managing intermediary opportunities, not by selling direct.

This is not to suggest that publishers don’t need to be building direct contact with as many consumers as they can. Just as authors should do. But forget the idea of a huge number of vertical purchase points for ebooks all over the net. I will.

Google also announced an affiliate program for Google ebooks. That will enable any web site to sell their ebooks and get paid, extending a concept that both Amazon and Barnes & Noble have employed successfully for print books. It looks to us like Google pays more. An affiliate can earn 6-10% from Google, 6% from B&N, and 4-8.5% from Amazon.

This isn’t the original OpenSky vision, however, because that was about all kinds of products, not particularly (or even necessarily including) books or ebooks. Of course sourcing could always have been done through Amazon, but there were differences in the merchandising and pricing opportunities in the original OpenSky model.

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A big ebook shoe dropped on Sunday. It dropped on Kobo first. And it has nothing to do with Borders.

Kobo just delivered a new iOS (that’s Apple’s operating system for iPad and iPhone) app that no longer contains the direct link to the Kobo bookstore within it. That means that buying new Kobo books requires going to Kobo.com through the browser (not hard, but additional steps) rather than from a single click from within the app.

Later news on this developing story is that the Google app has been “pulled” and that the Nook Children’s app no longer has a link to the store. We have to expect that the Kindle and main Nook apps will undergo the same change very shortly. That will mean that the simplest and most seamless way to buy and read ebooks on the iPad or iPhone will be through Apple’s iBookstore. It will almost certainly mean a growth in iBookstore market share at the expense of all the other ebook retailers. It will also almost certainly mean that a lot of people who read their ebooks on an iOS device (I’m one of them) and prefer to use any of the other ebook retailers (and I’m one of those too) will be inconvenienced and annoyed.

However, it is also true that Apple will benefit from this move that many of their customers will resent.

The point most emphatically made by all of this is that the book business is a cork floating on a digital device stream. We don’t control our environment. We must keep adapting to what bigger players, some of which have pretty minimal bandwidth to engage us in a dialogue and pretty minimal interest in what’s best from our point of view, see as the best strategy for them.

I have been guilty of a publishing-centric view of the possibility that Apple would enforce the rule that leads to this change since it was first prominently rumored last February. That is: with wishful thinking, when I first heard about this possibility six months ago I thought they wouldn’t do it. I talked myself into believing that because Apple had benefited substantially from the presence of the book apps on their platform, and because there are millions of us who read ebooks on our Apple devices with a distinct preference for using other readers and other ebook stores, that Apple would not enforce the rules which, through a couple of iterations of clarification, say that the way these apps and stores operated was outside their rules.

I will try to remind myself not to be making that mistake again. One of the other big companies recently congratulated me on the ease with which I accept the idea that companies (and people) act in their own self-interest. That’s what Apple has done here.

What this means depends very much on where you sit.

Barnes & Noble (Nook), Google, and Kobo all benefited enormously from Apple’s arrival on the scene in April 2010 because they brought with them the “agency” sales model that leveled pricing across all outlets for the ebooks that come from the biggest publishers. Without agency, many believe (and I’m one of them) that Amazon Kindle’s aggressive loss-leader pricing policies on the biggest books would seriously have diminished the competition.

B&N needs every penny it can spare to invest in device development and marketing; they’d be seriously handicapped if they had to give away margin to compete for consumers.

Google has signed up about 300 independent stores in the US to be partners in its ebook program. They might not have 10% that many if the indies thought they had to compete with loss-leader pricing on the biggest books even to play. When Random House switched over to agency at the beginning of March this past year — 11 months after it began — one of the motivations they cited was to respond to the desire of independent stores to sell ebooks which they heard over and over again depended on agency pricing.

Kobo has always had a global strategy that could enable them to thrive even if they had also-ran status in the US market. But they were trying hard to compete with Amazon pricing in the pre-agency days and as the smallest of the big global ebook players, they would have to be considered the most vulnerable in an environment characterized by loss-leader price warfare.

This change must mean they’ll all lose sales. It is hard to see that it could mean anything else.

Amazon will lose sales too, but they may win overall just because life gets a bit harder for B&N, Kobo, and Google.

All of these retailers have gotten an enormous (but unquantified in data revealed to them) lift from the massive success of iPads and iPhones and the retailers’ ability to access all those devices pretty seamlessly and at no cost. Amazon and Barnes & Noble sold many Kindles and Nooks, of course (Kobo’s device has been a competitor and Google is about to have one), and they’d be selling lots of ebooks if there were no iOS devices. Publishers know that, of the 55-65 percent of their ebooks sales that go to Amazon and 20-30 percent of their ebooks to Barnes & Noble, some of those sales go to the dedicated devices and most of the rest to the iOS devices. But they have no idea what the split is. Now they will start to find out as they see those sales shift from the other retailers to the iBookstore. (Sales to iBookstore, Kobo, Google, and others constitute no more than 15-20 percent of sales and often far less.)

Anyhow, the unambiguous benefit that Apple and the iOS devices used to represent to the retailers is now reduced in value, but agency pricing remains (cheering everybody but Amazon), as does the ability of their customers to use iPads and iPhones to consume their content.

Some publishers will need to reconsider their strategies.

Because Amazon will only allow agency terms to the Big Six publishers (they have ways to offer a competitive 70% share of sales, but they won’t play ball with giving up control of pricing), because some publishers aren’t comfortable with the agency model, and because the iBookstore has not been as aggressive about sourcing content as their competitors (I don’t know this for sure, but it definitely feels like all of the other ebook players have much bigger teams chasing content than iBookstore does), there are publishers selling to the other players and not to Apple. I’d imagine those might be expecting a sudden drop in sales through iOS purchases, although they never actually knew how much of their sales were iOS purchases.

And this points out a big difference between the publishers and the retailers. The retailers know how much of their sales are coming through their app customers. They also know how much of the reading of their ebooks is done on iOS devices. Publishers have no idea. In the longer run, this shows how publishers can benefit if the new players they are creating — Anobii in the UK (who has told us they will share data with publishers) and Bookish in the US (which we have heard less directly will do the same) — get some market share and can provide visibility into consumption that publishers do not have now.

And that takes me back to the book business cork bobbing in the larger digital device stream. There was no ebook business to speak of until Amazon delivered the Kindle device, put massive muscle behind selling it, and used the ability they had then to sacrifice margin to create a powerful commercial proposition that was the catalyst to create the market. There was no serious competition for Amazon until Barnes & Noble’s new management delivered the Nook with an equally powerful commitment to establishing it, using their presence in stores to introduce ebook reading to new audiences and, with further innovation of the devices, contributing to the explosive growth of reading in digital formats.

There was no restraint on Amazon’s ability to use their deep pockets to discount publishers’ content in pursuit of their own market share growth until Apple’s new device, the iPad, created a whole new sales model that forced price stability in the marketplace and, at the same time, handed publishers a new capability to maximize revenue and to use price as a marketing tool.

There was no effective way to introduce book readers to the convenience of digital reading without the investment in a dedicated device until the iPad put the capability into millions of hands that didn’t know they wanted it.

There was no great motivation for ebook retailers to introduce interoperability across devices until many ebook device owners also became iPhone and iPad owners.

We note that all these changes in the marketplace were created by others, not by publishers. That’s not necessarily a bad thing, or even a new thing. Publishers also didn’t spring for the investment that created superstores and then Amazon in the 1990s, all of which increased their sales. A publisher’s role is to use the channels that are available to get books into the hands of readers.

From most publishers’ perspectives, this change might have very little impact. Any iPad or iPhone reader who wants a book can still find and buy one. If the Apple store is strengthened at the expense of Kindle and Nook, that constitutes marketplace diversification that is good for them. (If the impact somehow fell disproportionately on Nook, though, that might not be.)

But the happy symbiosis between the ebook retailers and Apple, by which the retailers got access to customers they would not otherwise have had and Apple was able to readily deliver their customers content they hadn’t otherwise aggregated, appears to have come to an end. And the iBookstore, which had been fighting others for the scraps after Amazon took half or more of the US ebook market and B&N took much more than half the rest, is about to be a much more significant competitor.

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