Kirk Biglione

Big publishers have to be very happy about how things have been developing in the ebook world over the last six months or so. In that time, we have gone from a situation in which Kindle appeared to so totally dominate digital reading that Kindle-only publishing seemed an imminent threat to disintermediate publishers to one where it is not only Amazon’s hegemony that is threatened. Even their position as the ebook market leader isn’t safe.

Although one of the big factors in this change, the iPad, was unforseen at the time, we wrote around 16 months ago about the possibility that Amazon’s position leading the pack on ebooks would be hard to defend in one of the first posts on this blog.

As the ebook world has evolved (so far), we have the following “facts on the ground.” You will see from this recitation why so many people outside commercial publishing see eliminating DRM as a key to ebook marketplace efficiency. Our guess is that, regardless of the merits of the idea, going DRM-free is a non-starter for the big houses because it will be a non-starter with most big authors and most big agents.

1. If you buy an ebook from the Kindle store, you can read it on many devices within the Kindle reader software. That software is currently available for the iPhone, iPad, iPod Touch, PC, Mac, and Blackberry with Android reportedly on the verge. If the Kindle book has no DRM, though, you can read it on any reader that supports the Mobi format or you can use a program like Calibre to convert your Kindle book to epub, which can be read on just about all other devices.

2. But if you buy an ebook from Kobo or BN (through their “reader” software, not for the Nook), you can do the very same thing (and Kobo’s Android app is at least a bit ahead of Kindle’s; it was announced over the last weekend).

3. If you buy a book from iBooks, the iPad bookstore, you can only read it on an iPad and, soon, on an iPhone. That is, unless it were DRM-free which is, some are told, an option for publishers.

4. If you want to read on a Kindle device, you can only read books you buy from the Kindle store (unless you select from DRM-free mobi files, which leaves out the biggest books).

5. If you buy a Nook, you can theoretically read epub content obtained elsewhere by putting it through its DRM paces at Adobe Digital Editions, but it ain’t easy. My expert on these subjects, Kirk Biglione, points out that this is one of the big advantages of loading devices through wireless means (which sidestep having to deal with ADE) rather than computer synching. Because ADE is a challenge for most people, the interoperability across devices promised for epub files is, for protected files, more theoretical than real.

6. The Sony Reader is like the Nook: theoretically able to handle anything epub but made much more difficult by Adobe DRM. Sony is also suffering at the moment from having no apparent mobile strategy.

7. Bottom line: DRM creates hassles if you try to read on anything except the platform on which you bought. But Kindle, Kobo, and BN Reader (not Nook), provide a pretty seamless experience across devices.

8. The promise of the presumably-imminent Google Editions is that you will be able to read them on all systems that browse the web (except that Kindle’s browsing is not going to provide a terribly satisfying experience and Sony, which doesn’t provide a web browser, is probably left out of the Google Editions party).

So the e-ink devices generate the real lock-in, or, more often, lock-out, problem. It is your Kindle device that locks you into the Kindle store; your Kindle file can be ported to a non-Kindle device using the Kindle reader software.

This is a mixed, but probably mostly negative, blessing for future sales of Kindle devices. On the one hand, consumers who figure this out will be increasingly unwilling to chain themselves to a reader that makes them buy files they can’t use elsewhere. On the other hand, the spouse of a friend cracked her Kindle a few days ago and because of the hundreds of books she’d bought over the years from the Kindle store, couldn’t really consider purchasing any other reader as a replacement. So she bought a new Kindle.

So while the Kindle store almost certainly still has the most titles of any ebook retailer, Amazon is definitely facing some uphill battles selling devices to new customers. Even before the iPad hit in April, DigiTimes reported that Nook devices outsold Kindles in March. (Could this be the power of 700 retail locations talking after the cream of the online customer base had already been harvested by Amazon over the past 2+ years?) Then they reported yesterday that total e-ink monochrome ebook reader sales were 700,000+ for April and May, of which 37% were Nook and 16% were Kindle. In the same two months, of course, Apple reports selling 2 million iPads. So, in two months, iPads outsold Kindle devices about 20 to 1.

That means that even if 2 million new iPad owners, on average, buy 1/3 as many ebooks as 700,000 new single-purpose ebook device purchasers, the larger, full-color, web-ready screens sold in the last two months would be responsible for as much ebook consumption as the book-dedicated devices.

Meanwhile, the device prices are coming down sharply. Kobo announced a $159 device on sale at Borders a month ago. Since then Borders announced their own branded device for $119. Then Barnes & Noble cut the price of the Nook to $149 for the wifi model and $199 equipped with 3G. Many had been anticipating a price cut before year-end by Amazon from the $259 level they have maintained; but the B&N move forced their hand and Kindle just announced they were coming down to $189. Because aside from all the competition that Kindle faces on the device side, the Agency model has made it harder for them to keep customers loyal with a pricing advantage on the biggest books.

What this adds up to is that a much more diversified marketplace is developing for ebooks than publishers would have dared hope for a year ago. This, in turn, makes the customized ebook offering that Ingram is enabling (as they announced last week in a deal with F+W) even more powerful, because more and more devices — and therefore consumers — will be able to readily take advantage of ebook offers that aren’t served up from the Kindle store. Since one of the great unmet challenges of book sales on the web is merchandising — making it quick and easy for consumers to find what they want — curated offerings on specialized sites might really work better for a lot of people. And then Amazon will feel some of the pain that big publishers do, being horizontal in an increasingly vertical world.

On the other hand, big publishers have apparently lived past the danger of a massive problem: the possibility that authors could find most of their audience by setting up with Kindle alone. There is still more complexity to be added. Google will arrive shortly with a big splash. Newcomers Copia (a client of Idea Logical) and Blio are still planning market entries in 2010, and they each have some unique propositions the current players do not. The more different places an ebook might successfully be sold; the more variety in the way ebooks get merchandised; and the more benefit that can accrue from effective distribution of files and metadata; the more a publisher with some savvy will look like a sensible option to an author who might be thinking of a do-it-yourself effort.

There was a conference called Untethered last week. I didn’t go because it was an “all publishing” conference about technology, and I am skeptical about any horizontal approach. But there was a panel of publishing CEOs asked to estimate how much of book sales would be ebooks five years from now. The high guesses were 40-50%. I think they’re low. And if the question is what percentage of the books that are narrative writing are ebooks by five years from now, I think they are way low. (Apologies to the first batch of people to see this post and those who got it by subscription because I hadn’t quite finished this thought when I put it up. I saw it later and fixed it.)

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Last winter, before the announcement of the Agency model as the path to ebook price maintenance, some major publishers had acknowledged out loud that enhancing ebooks in various ways would be the way to keep the public paying print book prices for content.

That got me thinking. First I thought about the CD-Rom debacle of the mid-1990s. But then I thought: if publishers are going to be spending time and money enhancing their ebooks, maybe this time around it can be done thoughtfully and knowledgably. And that’s where the idea for Enhanced Ebook University, E2BU, came from.

E2BU is a partnership of The Idea Logical Company and Digital Book World, the unit of F+W Media with which we work on an annual conference. We are providing the content and our Digital Book World partners are providing the hosting, tech, and marketing. We’re delighted that, so far, Aptara and Copia have signed on as sponsors. We’re starting out with three core offerings which we hope the larger community of the ebook-interested will find of value.

Our White Paper, entitled “Enhanced Ebooks Today and Tomorrow: A Survey for Authors and Publishers”, is a soup-to-nuts survey of the possibilities inherent in enhanced ebooks, written for the publishing people, not the geeks. We hired Peter Meyers to write it. Pete is the former editor of O’Reilly’s Missing Manuals series and, as near as I can tell, the person on the planet who has done more thinking about how the ebook experience can be enhanced than any other. Pete was already working on his own project, “A New Kind of Book” when we met. He has written a really solid study, which itself was “enhanced” by peer review from more than two dozen industry professionals.

E2BU will also launch a series of nine webinars for publishing professionals on June 29. The first session in the series will be free. The kickoff program describes the “state of the art” for enhanced ebooks today. In later sessions, we will cover the complex rights issues that ebook enhancements raise, the complications of multiple platforms, the options for and challenges to producing enhanced ebooks, and issues of analytics and marketing.

Our webinar moderator is Kirk Biglione, whose Oxford Media Works advises publishers and others on tech issues. Kirk is also the Chief Technology Officer for the whole E2BU project. Joining Kirk for the kickoff session will be Jessica Goodman of Wiley (who will talk about their amazing How to Cook Everything app), Theodore Gray of Touch Press (behind the renowned iPad app, The Elements), and Rhys Cazenove of Enhanced Editions in London (the creators of one of last year’s most successful enhanced ebooks, Bunny Munro.)

In addition to the webinar series, E2BU plans a special session especially for authors who, we believe, will find it increasingly necessary to know what ebook enhancement is all about and to be preparing material for enhancement as they create their books.

The third offering will be the E2BU Resource Directory. The Directory will be an increasingly robust guide to services on offer to help publishers with ebook enhancement. It will cover app and web developers, software, a/v, development tools, digital conversion, media production partners, DADs, content management services, analytics, and social media/ereading platforms. The Directory will launch with over 100 company listings.

The entire E2BU project is overseen by Jess Johns of The Idea Logical Company, who will take charge of the blog and field what we expect will be many suggestions for more webinars and Directory entries.

So what is a guy like me, who is a skeptic about many aspects of ebook enhancement and who makes a living trying to get publishers to do “the right thing”, doing creating a program like this?

I see signs everywhere that, even though the initial impetus for ebook enhancement — that it would help maintain prices — has receded a bit, the impulse to explore the possibilities remains very strong. Our analysis of publishing’s “shift” includes the observation that format-specific publishing will yield to format-agnostic publishing. Format-specificity was a requirement of the physical world; you couldn’t distribute printed books through the airwaves and you couldn’t embed in a magazine.  When content creators and audience owners deliver to their customers through files, constraints disappear. Files can be anything: words, pictures, sound, moving images, amination, games, productivity software. Newspaper web sites have had an explosion of video content in the past few years; reporters are often carrying flip-cams these days.

And publishers are feeling an increased need to master video. On a recent tour of HarperCollins, I was shown the new TV production facility they have in the New York office. They do author interviews whenever authors come in. Last week, Peter Kaufman, a longtime TV and publishing veteran, was explaining his ideas about a holistic approach to video creation for publishers which he believes could save them lots of money and deliver them much higher-quality footage for various uses.

On the same day, I saw the Managing Director of an independent literary publisher in London who is currently hiring a video professor for his staff. Earlier in the week, we had a visit from a game developer who wants to develop game “apps” for publishers built around the characters and plots of books they are already publishing.

In other words, publishers are going to be spending money and effort enhancing their ebooks, whether Mike Shatzkin’s instincts say that’s likely to pay off or not. It would be best if that were a thoughtful process. Publishers investing in enhancement should do so understanding the full range of possibilities and having absorbed an informed dialogue about what their effors are likely to mean to the reader and the author, critical stakeholders who are sometimes a bit inconvenient to consult during development. We’re confident that the whole E2BU program: the paper, the webinars, and the directory, will help publishers make sounder — and less risky — ebook enhancement decisions.

I would add that while all this is going on, I am currently reading The Girl with the Dragon Tattoo on my iPhone and wishing that they’d built in a way for me to identify all those Swedish proper nouns with a click. That would be enhancement I could really go for.

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I spent a chunk of yesterday working on this post while, with one eye, I was watching the news about the volcanic eruption in Iceland that shut UK air traffic. As I post this on Friday morning with a flight scheduled to leave tomorrow night near midnight, I’d guess the chances of actually getting there might be as low as 50-50. In fact, the post has already been edited because two people from one client I was going to work with there — Copyright Clearance Center — already had to cancel because of the air travel disruption. I hope the post will be of interest no matter how this turns out.

It’s been a running joke between me and my oldest friends (none of whom are in the book business or digital space or anywhere near it, having chosen careers long ago as teachers, lawyers, engineers, TV directors, and other “normal” comprehensible things) that all of them wonder “what the hell does Mike do?”

It has occurred to me that readers of The Shatzkin Files might wonder very much the same thing. So while I’m thinking through my planning for what promises to be a very busy time next week at the London Book Fair, it seemed to me that writing about it would both help me think and spell out a bit about how a book business consultant adds some value and earns a living. And hey, maybe we’ll promote some clients and some of these activities of mine at the same time!

My principal mission next week is to talk to UK publishers, mostly to the digital strategists but also to some senior management, about the following initiatives:

1. I am just starting to organize the program for the second annual Digital Book World conference, which will take place in New York in January, 2011. I’ll be doing a post here sometime after London to enlist the help of all my readers in brainstorming and planning this, but what I’m going to do next week is tell publishers what I have in mind and get feedback and suggestions. It is an article of faith among the US publishing community that we’re “way ahead of them” and, indeed, I am not aware of conferences dedicated to publishers in the UK that are comparable to Digital Book World, O’Reilly’s Tools of Change, or the Book Business Conference and Expo. (There is London Online, but that is not a conference focused on book publishing.) Since it would seem that the world of digital would bring publishers of different nationalities closer together, not further apart, I’ll be looking for possible speakers as well as ideas, and probing whether it makes sense for our partners at F+W to really market our conference in the UK to look for paid attendees as well.

2. We’re also on the verge of formally announcing a new program in partnership with F+W Media: E2BU, Enhanced Ebook University. The White Paper, being written by Pete Meyers, is expected to go out for “peer review” next week. Kirk Biglione of Oxford Media Works, our CTO, has been leading our effort to craft a multi-track webinar program that will also be part of the initial E2BU offering. Since this effort is all virtual, we’ll definitely want to market it in the UK. I’m expecting UK participants in our webinar sessions (as “faculty”) and we’re recruiting peer reviewers from the UK for the White Paper as well.

3. As readers of this blog know, we’ve been working with Copia, a new ebook platform with social networking integrated in (and six ebook reader hardware offerings as well). Copia offers some unique marketing opportunities to publishers that are simply not a part of any competitive platform. So we’ll be using the London Book Fair to meet with the digital heads of UK houses to jump-start the awareness of this new platform and sales channel among non-US publishers. The response to the Copia presentation among publishers and agents in New York has been unanimously enthusiastic. Meanwhile, from the Copia side, we’ve been seeing that we need to engage with publishers well beyond their ebook departments; really taking advantage of Copia will require the involvement and creativity of editors and marketers. I’m looking forward to seeing how the UK publishers react to the opportunity.

4. London Book Fair ends this coming Wednesday, April 21. Exactly one week later, I’ll be addressing the AGM of the PA (which everybody in the UK knows is the “annual general meeting of the Publishers Association.”) My remarks are already thoroughly planned, of course. I’ll be talking about where the world of content and publishing will be in 20 years, predicting a world where owning IP won’t be of nearly as much commercial value as owning eyeballs. And I’ll be talking about a couple of publishers who are already getting ahead of that change. Then I’ll discuss where the US book marketplace is going in the next three years, which I think has very significant implications for UK publishers thinking about territoriality and global markets. But I’ll be using the book fair to get somewhat more acquainted with how UK publishers see their market today, hoping to find additional bits of relevant information to sprinkle into the talk.

The London Book Fair is not just about meeting publishers and publishing operatives from “across the pond” or around the world. Sometimes it is presenting an opportunity for us to work in person with US clients who are not based in New York, or to introduce clients to US publishers who are not based in New York, as with these:

5. I have also written on the blog about our “freight forwarder” client, SBS Worldwide and their eDC supply chain solution. Steve Walker, the Chairman of SBS, is speaking at the BIC (that’s Britain’s Book Industry Communication, their rough equivalent to our BISG) Supply Chain Meeting, an annual London Book Fair event. So, of course I’ll go see that. In addition, we’re using the London Book Fair to introduce Steve and eDC to a couple of US publishers from outside NYC.

6. In the same vein, we’ll use London Book Fair to meet with our clients at Bookmasters. They have a very broad suite of author- and publisher-support services, which have grown organically from their roots as a short-run printer. The range of their services really extends across the entire publishing value chain: literally from getting the book written (if necessary), getting it set up for printing or digital distribution with an XML workflow, content conversion, printing (POD, short run digital, or offset), and all sales and distribution services up to and including a toll-free number to take orders. And, unlike others that approach that range of services, they’re a willing on-ramp to publishing for individual authors and tiny publishers. Bookmasters is based in Ashland, OH and they’ve just created a new position called Business Development Manager for Integrated Solutions and put a new executive named Bob Kasher in place who is making their very complex set of solutions accessible to potential customers. LBF gives us a chance to meet and refine the way the propositions are being presented in light of real customer reactions and responses.

Oh, that’s not all, of course. I’ve been invited to speak in Ljubljana at a digital publishing event next year and the person who invited me will be available for a chat in London. I’m having dinner with the head of one of the big DADs (digital asset distributors) that I hadn’t yet had the opportunity to know personally. I’m seeing a Boston-based publisher with which I’ve had some conversations about digital change to see if there’s a potential engagement. I’m meeting with an Irish publisher to be interviewed for a thesis he’s writing. And I’m seeing lots of old friends before my wife comes in and we head off with two of those old friends (and their dog) to spend a weekend seeing Scotland from our base at The Pineapple in Dunmore.

I certainly won’t be bored at the London Book Fair and now you know why new posts from me might be sparse until I get back to the States on April 29.

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