Verso Media

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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An aphorism that I picked up years ago that crosses my mind frequently in my professional life is that “a six-foot tall man drowns walking across a river that’s an average of three feet deep.”

The point is that aggregates and averages might mask important truths.

I thought of this when I read the news from the Forrester study of ebook take-up announced earlier this week. NB: Forrester is in partnership with my colleagues at Digital Book World and will present data — although not on this ebook study, but on another project — at the DBW conference in January. I haven’t been involved in those discussions and, like most of the readers of this blog, only know about the ebook study what I read in the releases and commentary.

Kat Meyer on O’Reilly Radar expressed her doubts about the Forrester data, and data just announced by Bain Consultants in France. Kat’s concerns go to methodology. Although I don’t know if we’re in a position to evaluate the methodology because I’m not aware that much has been revealed about it, I’d say her point is well-taken but it isn’t what really concerns me.

(My own first take on the headline numbers is 1) $1 billion in ebook sales now? If this trade only  – and there are some indications enumerated below that it might not be — then it is out of $15 billion which seems reasonable. If the number includes non-trade, which is $30 billion, then it is shocking for being low, not high.  2) Forecasting growth to $3 billion by 2015 from either base seems very conservative and the reduction in the growth rate over the next five years over what it has been the last two years is the story. I don’t think I’ve seen any accounts of the report that have characterized it that way. Being alone with this analysis makes me wonder whether I am missing something and don’t know enough to comment yet. That’s why this paragraph is in parentheses. It makes me feel better.)

The Forrester presentation of an industry study is one of several rooted in serious research that we’re planning for the conference. Last year we had reports from Verso Media about book readers, tracking their switch from print to electronic. Guy Gonzalez and his Digital Book World team have taken over that study and will update it for us with Verso. We also had a presentation last year from Bowker and BISG, who were just starting their study of ebook readers. They have done four fieldings since and will also be able to give us an update.

In both these cases, as long as the methodology of the studies has remained consistent, we’ll get important trending information, whether or not the precise percentages reported for various behaviors are accurate or not.

We got an opportunity to do another study when the team at iModerate, which has an online “chat” methodology to personalize research, volunteered to demonstrate what they do for our audience. We got to choose the topic and we decided to study the ereading habits on portable multi-function devices (smartphones and tablets). We chose that topic for two reasons: it is a new and rapidly-growing group of ebook readers and the color touchscreens and connectivity of the devices makes enhanced ebooks that might be hobbled on the Kindle or first-generation Nook fully accessible.

We will also debut work Bowker has done on the children’s book market supported by several publishers and organized with the Association of Booksellers for Children.

The headlines from the Forrester reporting were that ebook sales are approaching $1 billion and they expect that number to triple in five years. Also eye-catching was the fact that, three years into the Kindle era and more than six months after the iPad introduction, more ebooks are read on full-function personal computers than any other way. I say that was eye-catching; it goes to the heart of my concern about the data. It’s about the six-foot tall man.

It is my strong hunch that the content that is read on PCs is qualitatively different than what is read on portable and mobile devices. I am fully aware of the dangers of generalizing from one’s own experience, but I have never met a person who reads trade books on a PC. I know people who read on Kindles, Nooks, smartphones, and iPads. I am aware from having talked to people in the romance ebook business that people in offices reputedly read romances on their office machines (at lunch, of course).

But my intuition tells me that big chunks of that PC reading is professional and informational, not recreational and that this is where PDF sales are most likely. If 30+% of ebook readers consume content on regular computers, I’ll bet the percentages for O’Reilly’s Safari (whether reading a chunk of an ebook from that service is counted here is a good methodology question, but my intuition about interpreting the device data tells me it must be) are much higher.

So ebook reading is the river that’s an average of three feet deep. But it is only a foot or two deep near the shore (where the trade ebooks are read) and it is 15 feet deep in the middle (where the professional ebooks are read.) And the important point is that publishers who do one or the other are not usefully enlightened by data that puts those two distinctly different markets and environments together as if they were one.

This is not to suggest that nothing can be learned from Forrester’s research nor that any other study has a firm grip on this granularity. I asked a data-driven colleague who’s done a bunch of work in this area whether he shared my hunch about who’s reading those PDFs on PCs. He went into his files and ultimately agreed that the market parsing I was looking for was not evident in the extensive research he had done.

Obviously, there are people who know this. Amazon and B&N and Kobo know what devices the books they sell are read on. O’Reilly knows what devices the books they sell and the ones used in their Safari library are read on. When I interviewed the publisher of Ellora’s Cave at Digital Book World last year, she was quite conscious of the fact that many of her books were still sold as PDFs, implying a computer reader. The fact that this data has not been made ubiquitously available and parsed suggests that it is seen as having proprietary value by the people who possess it.

Trying to understand a strand of the market that might be distinct was behind our thinking when we decided to have iModerate focus on portable multi-function devices. We figured that those readers might use and value enriched ebook features more than Kindle or Nook readers and we also see them as the market segment of ebook readers likely to grow fastest. So understanding that market segment in some more detail might help publishers lead the target a bit on product development.

We have written many times before that the book business is not one business. The professional ebooks read on a laptop by a programmer in the middle of an assignment don’t tell you much about what format you should publish a romance novel in. The big change in the ebook world that hasn’t really happened yet but will in the next couple of years is greater adaptation and consumption of illustrated books in digital form. Anything heavily illustrated now pretty much has to be delivered as PDF to a laptop; that won’t be true anymore at the outer edge of the current forecast window, which is 2015.

On the day I’m writing this, new ebook sales data was announced and Cader analyzed it in a post that is behind his paywall. He calculated that ebook sales comprise 9.5% of adult trade sales but only 1.7% of children’s. That’s really charting the river bottom in a useful way.

So we’d say give us data, let us try to understand its limitations and gain insight from it at the same time, and let’s remember that the world of digital change in publishing is simultaneously dynamic and diverse and that no single body of data is likely to give us the answers to what we should do next or what we should expect in the years to come.

It is precisely because data needs to be interpreted that we set the Verso-DBW, BISG-Bowker, and iModerate sessions at Digital Book World back-to-back-to-back and will follow their presentations with a panel discussion meant to shine some light on what we can conclude from what they say.

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There is certainly more than one way to build a conference program. I have been putting them together since long before I learned about the concept of “crowd-sourcing”. I’m a bit of a plowhorse about some things so the Digital Book World conference program comes together pretty much the same way as the first digital book conference aimed at trade publishers I organized, Electronic Publishing & Rights, back in 1993. I put together a list of topics for panels or presentations and a roster of people who could either speak or lead me to speakers. Then I engender a lot of conversations between the conference-creation team and the potential speakers and audience to craft the topics, the framing, and the ultimate presentation.

Two other important conferences which appeal to an audience that overlaps Digital Book World, O’Reilly’s Tools of Change in February and SXSW in Austin in March — seem to take a different approach. As near as I can tell, they do crowd-source a lot of their programming. It appears to me that Tools of Change throws out suggested topics and requests that panels and speakers put themselves forward as components of the show. Then, presumably, the people in charge at O’Reilly (the heads of the conference are Andrew Savikas and Kat Meyer, and both of them are smart, knowledgeable, and discerning) choose what will comprise the show. At SXSW it appears that the candidates are selected by an online vote. It seems to me that you therefore guarantee that you’ll get the panels sponsored by the best campaigners, but not necessarily what would give your ultimate audience the best show. But I guess it works for them.

I should declare myself here. I am a fan of Tools of Change. I participated in a day-long brainstorming session several years ago which O’Reilly Media organized to plan the first conference. I missed that one, which was in California in the summer of 2007, but I’ve attended the three annual February conferences in New York, 2008-2010. It’s a great show and a great rendezvous for people thinking about technology and publishing. As this piece makes clear, we can’t handle every worthy subject in two full days of conference programming at Digital Book World; there’s room for lots of other conversation and TOC is a useful one. On the other hand, I have never attended SXSW. The program didn’t look like it had much relevance to commercial trade publishing (although it covered a lot of other things that neither TOC nor DBW does.) Plus it comes in the same month that has a chunk taken out of if for me by baseball spring training. There are things in life besides digital change…

As I think through what we do and how it all works, it is hard for me to see how we could produce nearly as good a show without the conversations. We are helped considerably in our work by a Conference Council of more than 30 top players in the industry from across houses large and small, agents, members of industry bodies like BISG, Association of Booksellers for Children, and the Frankfurt Book Fair, and some other consultants. We talk to literally dozens of other people as we put the show together, getting advice about whom to contact to speak and shaping and re-shaping our formulation of the panels and presentations.

This does, indeed, start in my head. I wrote a post in May outlining what I thought might be the major topics. We got comments on the blog and then we pushed the list out to the Conference Council in formation to get more input.

Once the Council was formed, we put the topic list up on Survey Monkey for them to give us feedback. What we were mainly looking for is “of what we postulated might be on the program, what’s essential and what’s a yawn?”, but we also got thoughts about things that could be combined or reframed. Then at the end of June, we had an exciting and rigorous 2-hour meeting with many of the Council and a number of our F+W colleagues at which we solicited even more ideas and honed our thinking further.

This process eliminated a number of topics that were on my initial list. Some of them were dropped because the group thought interest would be low (usually because they were too narrow or specialized); for others we couldn’t see who could speak to them effectively. But among those we knocked out were:

* Will non-US publishers start to establish a virtual sales presence in the US as ebook sales grow?

* How do publishers deal with image rights for old titles becoming new ebooks?

* What changes are on the horizon for publishers’ relationships with the library market?

* Are trade shows becoming an anachronism in the age of digital communication?

* How much of the solid print backlist is still locked up by rights issues?

* To what extent do publishers view single-title marketing as a practical endeavor?

All of these topics are “worthy” but, against very stiff competition, they didn’t make the cut.

The survey and Council conversation also helped us refine how we’ll approach a number of subjects.

Author royalties for ebooks will be handled as a survey and presentation, not, as first occurred to me, primarily through a panel of agents.

Our Council felt that how publishers make the business decisions to acquire content not necessarily intended for first use in a book was worthy of discussion. A subsequent conversation with potential speakers convinced us that “making books out of content that started another way” would be a relevant extension and should be in that same discussion.

Marketing and metadata were identified as topics that I should have included but hadn’t. As a result, we will have two metadata panels (one on core, one on enhanced) and we’re getting great help from BISG Executive Director Scott Lubeck (on the Conference Council, of course) putting these together. Although we have several panels that touch on marketing, I’m still thinking about the best way to tackle how single-title promotion has changed (which it has: profoundly).

What I had imagined as “The Tools Every Publisher Must Have in 2011″ morphed into a conversation about “industry solutions” — such things as Edelweiss and NetGalley and Filedby. A further refinement from our first idea is that we’ll have a panel of publisher-users discuss these, rather than go with my initial idea of inviting the companies themselves to present their solutions.

We knew we needed to discuss the future of bookstores. Our Conference Council meeting yielded the suggestion that we have analysts who follow industry stocks discuss that topic (and a hat tip to Michael Cader for that idea.) We’ve recruited Marianne Wolk, a market analyst who follows Amazon and Google, to speak, and she’s helping us look for other analysts or investors to join that discussion. And we’re also putting together a panel of independent bookstores; we’ve already talked to more than half-a-dozen and will talk to several more to pick the three or four that can deliver the freshest, most relevant, and most articulate content for our conference. (I would hate to leave this to self-selection.)

A panel I’d thought we needed on “ebook first” was dismissed as old news and too narrow.

We lean heavily on expertise that we know and trust.

Apparently, sometimes our technique gives us the same result as our counterparts’ crowd-sourcing. Liza Daly is the most compelling thinker I’ve encountered on ebooks. Last year we had her do 20 minutes on “ebook basics” which was one of the most-praised components of our program. I knew we had to have her back and a fast conversation with Liza quickly yielded the subject. She’s going to talk about “cost-effective development of enhanced content: how to display on multiple platforms without multiple headaches.” I’ll bet many attendees will find this the most useful 20 minutes at the show. I see that O’Reilly has her on their Frankfurt TOC program. That’s a good decision no matter how they arrived at it. (And I’d advise SXSW to make sure the ballot box is properly stuffed for Liza if she’s a candidate for their event next March.)

We had outlined three different research projects we wanted to present. Two are follow-ons from last year. Verso Media has a panel of “book” consumers and Bowker, working with BISG, has a panel of “ebook” consumers. This year, Digital Book World is sponsoring a follow-up effort with Verso and so the reports from both of those groups of consumers will be updated. (The BISG-Bowker effort was already ongoing.)

But then we discovered a new data-gathering opportunity with a company called iModerate, which does both surveys and online qualitative research, and we put them on an assignment of studying in depth a particular subset of ebook readers: those that read on multi-function devices like iPads and smartphones. Michael Cader suggested some ways to help the audience get maximum value from the data. As a result, we put those presentations together on the program, will distribute some data to the audience in advance, and have the presenters join in a panel after they say their own pieces. We thought that was a great idea; we’re doing it.

Maria Campbell, the veteran scout who has been on the foreign rights scene for decades, knows the players trading international rights better than anybody. So we drafted her to help us find the right person to lead a discussion of how the growth of ebooks will affect territorial rights. That right person is Cullen Stanley of the Janklow and Nesbit Agency, with whom we’re now working to craft the right combination of agents and publishers, American and foreign, to make this a balanced and informed discussion. The inclusion of agents is a key point of differentiation between Digital Book World and just about every discussion about the digital future I’m aware of. There are many aspects of the conversation about the digital future that simply can’t be sensibly conducted without the involvement of agents.

Lorraine Shanley, a member of our Council, is not only a consultant but also one of the leading executive recruiters in publishing. We wanted to examine how skill sets are changing in publishing. I thought I’d put together a panel of recruiters. Lorraine suggested that it made more sense to create a panel of executives who came to publishing from other industries. We liked her idea better and we now have Charlie Redmayne of HarperCollins as the first of the executives who will join Lorraine for that conversation.

I don’t mean to suggest we’re unique in doing things the way we do. Mark Dressler, who puts together programs for BookExpo America and for the Frankfurt Book Fair (and who will interview me about the Digital Book World program at a Halle 8 stage on Frankfurt Wednesday), is also a micro-programmer and very highly consultative and interactive in his program creation. I am sure some of what you see at TOC and SXSW resulted from interaction, too. I just can’t help thinking when I hear “calls” for programming how much the conversations we have inform and improve what we offer. Although I’m the proud Conference Chair who gets credit for putting together the Digital Book World program, it’s consultation with the most knowledgeable players in town that makes it what it is. Perhaps it is “crowd-sourcing” of a different kind.

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Michael Cader did a brilliant analysis of Thursday’s New York Times piece on ebook pricing, published exclusively for paid subscribers to Publishers Lunch. The Times piece’s shortcoming was that it tended to sensationalize the news that the prices the public will pay for current brand-name ebooks will be going up. If you observe the book business for fun, you can perhaps afford not to have access to content like Michael’s analysis. But if you’re in it for a living and you want to seriously keep up with what’s going on, I suggest you save $20 somehow on other publications each month and reinvest it in a Publishers Marketplace membership. I am not the only blogger moved to make this suggestion by this piece.

I am working under the rash assumption that Cader will not sue me for quoting his remarks without regard to fair use limitations (particularly after the commercial in that first paragraph.) Of course, I do my best to add some Shatzkin Files value to my quotes and paraphrases as well.

Michael’s overall point, as I read it (and these are my words, not his): “we in the business know what’s going on with ebook pricing; apparently reporters outside the business do not. And therefore a great deal of misunderstanding is circulated among the book-buying public and it behooves the trade publishing community to get the word out to make sure that the public understands what’s really behind what they pay for ebooks.”

His device to illustrate this point is to describe some common misunderstandings fostered by the Times piece — all of which are real misunderstandings and none of which are just convenient straw horses — and knock them down.

Frankly, it is only the overall point on which I’m not sure I agree. I am not convinced it makes much difference whether we push the “truth” out or not. Amazon’s recent “concession” statement over the Macmillan dust-up tried to channel potential consumer anger at Macmillan and away from them. That’s an effort that is bound to fail. Everybody who buys from Amazon knows that they’re buying from Amazon. On the other hand, “Macmillan” is not an active book imprint at the moment in the United States. The books the corporation called Macmillan puts out are under the imprints St. Martin’s, Farrar Straus, and Holt, and their subsidiary imprints. My wife found the Macmillan Dictionary for Children online and that book is published by Simon & Schuster! So good luck to Amazon trying to get the consumer to punish a corporate entity whose name isn’t on the cover of its books.

But the myths Cader describes are ubiquitous misunderstandings and they were clearly promoted in the Times piece. As Michael describes them (in italics):

* $9.99 never was the top e-book price; people pay more than that every day.

The Times piece makes a big deal out of consumer expectations of the $9.99 price. Cader points out that recent data from the ebook retailer Kobo described at Digital Book World — which shows that at Kobo they sell as many books for more than $9.99 as they do for exactly $9.99 — and Amazon’s own data undercut that notion. Cader says surveys of Amazon data have shown that 30% of the SKUs are priced higher than $9.99.

I have been told directly by a responsible person at Amazon that 4% of the titles they sell are deep-discounted to $9.99 and those represent 25% of the total sales. Of the other 75% of the sales, many (most) are less than $9.99 without necessarily deep-discounting, according to Cader, 30% are more. I have personally bought many Kindle books for more than $9.99 and some for more than $14.99.

But what I’d see as the biggest fallacy in this whole “customer expectations” meme was not mentioned by Cader. So far we have a relatively small percentage of book readers who have ever purchased an ebook at all! General consumer expectations can not be set by a sliver of the group who are early adapters. In fact, publishers are being smart precisely because they are tackling this consumer pricing problem before the market really does become general and a large population of book readers do have experience with the current price structure.

* The implicit, false promise of cheap e-books was made by the people who profit, at very nice margins, from selling the devices, not from publishers.

This is true for the $9.99 books offered by Amazon and Sony and, now, Barnes & Noble. Other etailers, like Kobo or B&N before the Nook, were offering that same price to keep up with (keep down with?) Amazon. But the central point is right. Amazon created the expectation of $9.99 pricing to sell readers; publishers didn’t create it to sell books!

The two companies most likely to save publishers from an Amazon stranglehold on their future general readership, Apple and Google, would also place “margin from ebook sales” very low on their list of objectives for participation in the ebook supply chain.

If the market really could stabilize with three or more reliable paths to the general ebook consumer, with price competition among the content,  but not price-competition driven by external forces, it would be one of the most important strategic accomplishments of the current generation of publishing management, to whatever degree their policies enabled it to happen.

* Brand-new ebooks sold at $9.99 are generally sold at a loss by the retailer.

And, as Cader goes on to point out, this is led by a retailer with a $50 billion market cap with an implicit expectation that it will drive smaller retailers out of the game. Publishers are taking the steps they are explicitly to encourage a more diverse marketplace. So, Mr. and Ms. Consumer, whose side are you on?

* People who can afford an ereading device can afford all proposed ebook prices.

Cader is making the point that conscientious reporters should make put price complaints into context. I’d personally dwell more on the “dog bites man” aspect of reporting that people favor lower prices. Has anybody ever found a consumer who favored higher prices? Has anybody ever found anybody who would prefer to pay more for anything they buy? From here it would seem that all reports of what people say they want to pay or say they would pay in some hypothetical circumstances are pretty much meaningless. Michael says “put them in context.” I really wonder whether this kind of senselessly speculative commentary ought to be reported at all!

* Publishers are lowering [my emphasis] their ebook prices.

Cader captures the massive irony of what is going on here with this one. From reading this piece or from reading Amazon’s note to Macmillan, you’d get the impression that “greedy” publishers are “raising” ebook prices. That’s not actually the case. The publishers going to the Agency model are actually reducing their price per unit sold; they’re just insisting that booksellers not sell those books as loss leaders. As Cader put it, “we in the trade know that publishers are preparing to lower their ebook prices by 50 percent or more, and reduce their own profit margins. But customers don’t; they hear that publishers are raising prices.”

* The new “top price” is going to be $12.99 more often than not.

The public reporting is that the Agency-priced books from Apple will be $12.99 and $14.99, with no additional detail. Cader seems to know that most, or at least a large number, of those books will be at the lower of those two prices. Undoubtedly, some people will refuse a book they want to read on a device they paid over $200 for because of a $5 difference in price ($14.99) from their prior expectation ($9.99). But somewhat fewer will be reluctant at $12.99, which is where the price will apparently be a great deal of the time. Certainly, nobody writing for a newspaper knows the future balance between those two price points.

* Surveys show many people will pay more than $9.99 for ebooks.

Cader points out (and my personal repeated experience confirms) that people often do pay more than $9.99 now, even according to the stats we’ve seen. But what he doesn’t point out, so I will, is that those stats are stacked!  Amazon prices all the hottest and most desireable books at $9.99, and therefore so does Kobo and other Amazon competitors. So the clustering of consumer purchasing around that price is largely driven by the appeal of the product at that price point.

That is: people bought the book, not the price!

* Goldman Sachs says ebook prices are not the biggest factor in purchasing a device–but expensive devices are an obstacle.

This is from a survey that Cader has seen and I have not. But the point is that portability is the main benefit consumers see in ebook devices, with price running second and ease of purchase nearly even with price as a perceived benefit. Ebook purchase decisions are not made on price alone.

What this data also would tell us is that ebook reading is going to spread because the price of devices is coming down and the circulation of ebook-able devices, smartphones and iPads, is increasing regardless of dedicated reader prices.

* Publishers have rewarded and honored early ereader adopters with a lot of free book giveaways, and some very inexpensive price promotions.

Much has been made in other places (not in the Times piece and not in Cader’s report) of the fact that the Kindle “bestseller list” contains a lot of free or almost-free books. Some of those are public domain titles, but many are not. Those that aren’t are provided by publishers as promotions, usually an offer of an older book by a multi-title author who has a new one just out. Does any retailer billboard the publishers who “have made books available for you for free?” Not that I’ve ever seen.

I do believe that the price of content will be driven down over time because of the laws of supply and demand. The amount of content being made available every day is staggering. However, the established publishing companies still have pretty much a monopoly position on curating and branding it. Curating and branding save consumers an enormous amount of time and effort; that’s why they are willing to pay for them. Publishers and the authors whose brands they are enhancing and maxmizing are operating in an increasingly competitive world, but they are both totally sensible and totally unremarkable in trying to maximize the rewards for their efforts.

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