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Two pieces of news last week that foretell changes in the ebook marketplace


Two pieces of news this past week and how things play out with them might foretell some things about the direction of the ebook market.

One news item is that reading on phones is really taking off.  More than half of ebook consumers use their phones at least some of the time and the number that primarily read on phones is up to one in seven.

The other is that the German ebook market will shortly be predominantly DRM-free. With Random House fast-following fellow global publisher Holtzbrinck in ditching the digital locks, one of the largest non-English markets in the world is going where the English-language market has determinedly refused to tread. [There are exceptions, of course — O’Reilly, Tor, Harlequin’s digital first imprint Carina, Baen, and other small, primarily genre publishers.]

It was less than a month ago that Holtzbrinck made that announcement and we figured Random House wouldn’t be far behind.

A lot of theories about ebooks are about to be tested.

My personal reaction to the switch to mobile phone reading is “what took so long?” I started reading ebooks on a Palm Pilot in 1999. I got excited about it because it brought books to a device I was already carrying all the time anyway. In the beginning to me, that was the whole point to ebooks: I didn’t need another device beyond the one I already had on my person all the time anyway. In 2002, there was a meme active for a little while which questioned the value proposition of ebooks. Why would anybody want them? I spoke at a Seybold Conference about that with a simple answer:

If you really use a Personal Digital Assistant each day, are among the growing number that carry one with you all the time, you don’t need anybody to explain the value and utility of ebooks. The converse of this is that if you don’t use a PDA regularly, ebooks are of very little value to you. There is some minor utility to having a book and reader software on your notebook, but not much.

It might have been that search for more “value” in ebooks that drove years of experimentation in making them something more than screen-fitted rendering of text, trying to add functionality using digital capability in a long succession of commercial failures.

My friend, Joe Esposito, one of publishing’s more imaginative thinkers, identified and named the concept of “interstitial reading” some years ago, by which he meant grabbing a few minutes with a book on a check-out line or waiting for the movie to start. I remember a former neighbor of mine who always had a book in hand when he got in the elevator on the 14th floor and read a page or two as we descended to the lobby. That was a peculiar habit with a printed book; it is going to be increasingly common practice as more of us read on hand-helds we always have in our possession.

It could be that publisher Judith Curr of the Atria imprint at S&S is hitting the nail on the head when she predicts that the future of reading is on phones and paper.

An important question going forward is how reading on the phone will affect the shopping patterns. Here we have an interesting dichotomy which depends on the individual use case. What kind of phone do you have, Apple or Android? And which ereading ecosystem do you prefer, Amazon Kindle, Apple iBooks, or somebody else’s like Google or Kobo or Nook?

Here’s why it matters. When you use the iBooks app on an iPhone, you can shop for books right in the app. I haven’t done it except to buy a book I knew I wanted. I usually read on the Kindle app and occasionally on the Google Play app. In both cases, I do my shopping from my PC on the Kindle or Google Play site. My purchase is instantly accessible on my phone after I make it, but it is a two-machine process for me to buy.

Of course, I can also go to the Kindle or Google Play sites through my phone’s browser. Going outside the app is a requirement, but using another device is not. (Frankly, it is just easier to do the shopping with a real screen and keyboard.)

The limitations on iOS devices are created because Apple insists on its 30 percent cut for sales made within their apps. Android doesn’t, so the Android versions of apps do allow shopping within the app. Still, as with almost everything, it appears that more content-purchasing and consumption takes place among iOS users than Android users.

One would expect that as phone reading increases, it will tend to favor the “home stores” for the phones themselves. Those are iBooks and Google Play. This is obviously not any sort of mortal blow to Kindle if my own experience, maintaining the Kindle habit almost uninterrupted, is any guide. But it is definitely a bit easier to buy within the app you read in than to have to go outside of it.

If is an often-made point that phones come with built-in distractions of email and text messages arriving all the time. But tablet computers — which have steadily been taking ereading share from print and dedicated ereading devices for some years now — have email arriving all the time too. And tablet computers offer the whole web as a potential distraction too, just like the phones do. I’m not sure that the distraction component has changed that much recently during the rise of phone ereading.

And there are already lots of writers who do very short chapters (like the bestselling one of all, James Patterson) that readily satisfy the “interstitial reading” windows. It will take an analysis that there is probably no obvious metadata for to decide whether books that are already “chunked” benefit from the movement to phone-reading.

New reading habits do spawn publishing initiatives. Our friend, Molly Barton (longtime Penguin digital director), has a publishing startup called Serial Box that plans to parcel out long-form novels in self-contained chunks.

The German ebook market is much a smaller part of total book sales than ours, estimated at around five percent of sales rather than in the mid-20s. That is due to a combination of economic factors — including that Amazon is hobbled by fixed pricing that places ebook discounting off limits — as well as any cultural ones. (Online book sales in Germany are variously estimated between 15 and 25 percent — perhaps half what it is in the US. Amazon does have the lion’s share of that. Bookstores have half the business; the rest is split among direct sales, mass merchants, other non-bookstores, and catalogs.)

But one publisher after another has concluded that watermarking (what is often called “soft DRM”) is all the restraint on pass-along and casual sharing that is needed. Now all the big publishers will work that way.

My friends in Germany tell me that there are still small publishers who want to keep DRM, which they will probably be enabled to do for some time. In fact, the Adobe DRM holds the information about who is a valid purchaser, so it might not be simple for retailers to walk away from it even after the locks are no longer required if they want to do more than guess whether a customer wanting to re-download a prior purchase is actually entitled to. And it might be very difficult for the market to totally dismiss DRM, if the English-language publishers still want it applied to the English-language books sold in Germany. That’s substantial business and the retailers — particularly Amazon — wouldn’t want to force a situation where the output of US and UK publishers must either be DRM-free too or not available in the German market.

It has always been the concern of many publishers, agents, and big authors that removal of DRM would result in unfettered sharing which could really hurt book sales. A longtime DRM skeptic, publisher and industry thought-leader Tim O’Reilly, once characterized DRM as “progressive taxation”, which would seem to validate the notion that big authors have something to worry about. (O’Reilly publishes professional content which changes and updates often; precisely the opposite, from a fear-of-sharing point of view, of what James Patterson publishes.) Clearly, German publishers observing what has happened in their market don’t share that fear. American publisher and part of the Holtzbrinck publishing group,Tom Doherty, has also talked publicly about the (lack of) impact of Tor’s switch to DRM-free: “…the lack of DRM in Tor ebooks has not increased the amount of Tor books available online illegally, nor has it visibly hurt sales”.

Aside from increasing the potential to lose sales through pass-along, the other impact of removing the DRM requirement could be to make it easier for anybody to be an ebook retailer putting content on just about any device. The necessity of providing DRM has always been blamed for cost and technology barriers that kept retailers from going into ebooks in any casual way. Theoretically, the cost of being an ebook retailer in a DRM-free environment could be much lower, including a claimed and hoped-for diminution of customer service requirements. If true, that could be especially important for ebook sales in verticals, where a range of content could be a sensible add-on for a retailer’s offerings. People who sell hard goods don’t want to deal with DRM and the customer service requirements it creates.

The tech details of this run deeper than my personal knowledge, but people whose sophistication about it I respect caution me not to expect that much change in this regard. Watermarking (“soft” DRM, or DRM without “digital locks”) is also non-trivial from a tech point of view. New reading systems could proliferate without DRM-discipline, which could also create customer service requirements. It could be the claims for ease-of-use without DRM will turn out to be overblown. We will see.

It has always been my contention that the DRM discussion was more heated than the effect really warranted. Since I never really wanted to move an ebook from one ecosystem to another, or pass an ebook along to somebody else, DRM never got in my way. But it was also obviously blocking entrants from joining the ebook retailing ranks and creating major customer service issues for any independent efforts.

The two things to watch in Germany are whether ebook sales, particularly for top titles, are maintained or softened in any way by pass-along and, at least as important, whether new ebook retailing really is enabled by ditching the DRM requirement. The watermarking will help publishers find the source of ebooks that end up being publicly pirated or posted. I wouldn’t expect some explosion of piracy, but there will certainly be a lot to learn.

The chances are pretty good that what will be learned will lead to DRM-free coming to the English language as well in the next couple of years.

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Seven-and-a-half days of conference programming coming up during 4 days in January


Blog posts have been scarcer for the past couple of months because I’ve been so engaged with a major responsibility: putting together what amounts to 7-1/2 days of conference programming that will be presented on four days next month in New York City.

As most readers of this blog probably know, we’re responsible for the programming of the two-day extravaganza that is Digital Book World. DBW 2013 — taking place on January 16 and 17 at the Hilton New York Hotel — will be the fourth iteration of the event, which aims to explore the commercial challenges facing trade publishing in the digital transition. DBW is not about technology per se; it is about the business problems publishers must cope with in an age of technological change.

DBW’s main two days are divided between morning plenary programming — all 1500+ people in one big room — and afternoon breakouts. We’ll have up to five simultaneous breakout sessions in each of three slots each day. So we have what amounts to 4-1/2 days of programming in the breakouts plus one on the main stage.

Because people really do come from all over the world to attend DBW, we were delighted to agree when they asked us at Publishers Launch Conferences (the conference business I own with Michael Cader) to add a show on each side of theirs to build out a week of programming. (The team at DBW itself are also putting together some pre-conference workshops that will run on Tuesday.)

So on Tuesday, January 15, we’ll do our second annual “Children’s Publishing Goes Digital” conference at the McGraw-Hill Auditorium (put together with the invaluable assistance of our Conference Chair and close friend, Lorraine Shanley of Market Partners). And on Friday, January 18, we’re presenting (in conjunction with the DBW team) a new program called “Authors Launch“, a full day of marketing advice for publisher-published authors. (Self-published authors are welcome and will learn a lot, but the program is framed for authors who are working with publishers, not looking for ways to avoid them.)

Programming the “Children’s Publishing Goes Digital” show revealed what we think will be the most important theme in the children’s book space for the next few years: the development of  digital “platforms” that, like subscription offerings (which some, but not all of them, clearly are), will “capture” consumers and make them much less likely to get ebooks and other digital media from outside of it. The list of platform aspirants in this space is long and varied: Storia from Scholastic; RRKidz from Reading Rainbow (the TV show brand); Poptropica from Pearson (which launched Wimpy Kid before it was a book); Magic Town; Disney; Capstone; and Brain Hive. All of them are presenting, as well as NOOK, which, like Amazon Kindle, has announced parental controls on its platform that encourage parents to manage their kids’ reading experience there.

There are other big issues in children’s publishing, particularly the creation of original IP by publishers so they can better exploit the licensing opportunities that follow in the wake of successful kids’ books. We’ll have data presentations from Bowker and from Peter Hildick-Smith of Codex to help our audience understand how kids books are found and selected outside the bookstore in today’s environment.

But we know that the digital discovery and purchase routines will be markedly affected by the platforms as they establish themselves. Publishers are faced with an interesting conundrum. They can’t reach the audiences that are loyal to a platform without going through the platform. But it is the presence of many publishers’ books that strengthens the attraction of the platform and, once it gains critical mass, the value of the content to it (and probably what it will be willing to pay for the content) is reduced. So publishers licensing content to these platforms may be strengthening beasts that will ultimately eat them. I think the roundtable conversation Lorraine and I will lead at the end of the day, which will include publishers Karen Lotz of Candlewick, Barbara Marcus of Random House, and Kate Wilson of Nosy Crow, will have interesting things to say about that paradox.

We’ve developed some “traditions” in the four years we’ve been doing Digital Book World. As we’ve done the past two years, the plenary sessions will open on Tuesday with the “CEOs’ view of the future” panel organized and moderated by David Nussbaum, the CEO of DBW’s owner F+W Media and the man who really dreamed up the idea of this conference. David will be joined this year by Marcus Leaver of Quarto, Karen Lotz of Candlewick, and Gary Gentel of Houghton Mifflin Harcourt. And Michael Cader and I will — as we have every year at DBW — moderate a panel to close the plenaries, “looking back and looking forward” with agent Simon Lipskar of Writers House; Harper’s new Chief Digital Officer, Chantal Restivo-Alessi, and Osprey CEO Rebecca Smart.

Among the presenters on the main stage who will be unlike what our audiences usually hear at a digital publishing conference will be Teddy Goff, the digital director for the Obama campaign, who will talk about targeting and marketing techniques that might serve us well in the publishing world; Ben Evans of Enders Analysis in London, who will tell us how publishing fits into the strategies of the big tech companies (Amazon, Apple, Facebook, Google, and Microsoft) that he tracks regularly*; ex-Macmillan president and now private equity investor Brian Napack, talking with Michael Cader about the investment climate in publishing; and Michael D. Smith, Professor of Information Technology and Marketing from Carnegie-Mellon, talking about a study he and his colleagues have done on the real commercial impact of piracy.

(We’ve also scheduled a breakout session for Teddy Goff so he can talk more about the Obama campaign for those in attendance who want to learn more of its lessons to apply.)

We’re also delighted to have gotten Robert Oeste, Senior Programmer and Analyst from Johns Hopkins University Press, to deliver his wonderfully insightful, entertaining, and informative presentation on XML, the subject so many of us in publishing need to understand better than we do. And we will after he’s done. (We’re also giving Oeste a break-out slot to talk about metadata which I’ll bet a lot of our audience will choose to attend after they’ve heard him on XML.)

(*Late edit: Ben Evans had to cancel.)

Some authors have had remarkable success without help from publishers in the past year, but few or none more than Hugh Howey, the author of “Wool”, who has just signed a groundbreaking print-only deal for the US with Simon & Schuster. His dystopian futurist novel has sold hundreds of thousands of self-published ebook copies and rights all over the world and to Hollywood. We’ll have a chat with Howey about how he did it and we’ll be joined by his agent, Kristin Nelson, for that dialogue. Kristin will stick around to join a panel of other agents (Jay Mandel of William Morris Endeavor, Steve Axelrod, and Jane Dystel from Dystel & Goderich) to talk about “Straddling the Models”: authors who work with publishers but are also doing some things on their own.

We will have several panels addressing the challenges of discovery and discoverability from different angles. One called “Closing the New Book Discovery Gap” teams Patrick Brown of Goodreads with three publishing marketers — Matt Baldacci of Macmillan, Angela Tribelli of HarperCollins, and Rachel Chou of Open Road — and is chaired by Peter Hildick-Smith. That will focus on what publishers can do with metadata and digital marketing to make it more likely their titles will get “found”. Barbara Genco of Library Journal will share data on library patron behaviors and then helm a panel discussion with Baker & Taylor, 3M, Darien Public Library, and Random House exploring the role of libraries in driving book discovery and sales. Another session called “Making Content Searchable, Findable, and Shareable” introduces three new propositions from Matt MacInnis of Inkling, Linda Holliday of Citia, and Patricia Payton of Bowker, along with SEO expert Gary Price of INFODocket. Publishing veteran Neal Goff (who is also the proud father of Obama’s digital director) will moderate that one. MacInnis, Holliday, and Payton offer services that will help publishers improve the search for their books. Price will talk knowledgeably about how the search engines will react to these stimuli.

We’re covering new business model experimentation (with Evan Ratliff of The Atavist, Brendan Cahill of Nature Share, Todd McGarity of Hachette, and Chris Bauerle of Sourcebooks) where publishers discuss ways to generate revenue that are not the old-fashioned ones. We’ll underscore the point that we’re about changes caused by technology rather than being about technology with our “Changing Retail Marketplace” panel, featuring publishers and wholesalers talking about the growth of special sales (through retailers that aren’t bookstores and other non-retail channels).

The future for illustrated books will be discussed by a panel with a big stake in how it goes: John Donatich of Yale University Press, Michael Jacobs of Abrams, Marcus Leaver of Quarto, and JP Leventhal of Black Dog & Leventhal. Two publishers who have invested in Hollywood — Brendan Dineen of Macmillan and Pete Harris of Penguin — will talk about the synergies between publishing and the movies with consultant Swanna McNair of Creative Conduit.

We will have major US publishers and Ingram talking about exports: developments in the export market for books — print and digital. And we’ll have some non-US publishers joining Tina Pohlman of Open Road and Patricia Arancibia of Barnes & Noble talking about imports: non-US publishers using the digital transition to get a foothold in the US market.

One session I think has been needed but never done before is called “Clearing the Path” and it is about eliminating the obstacles to global ebook sales. That one will start with a presentation by Nathan Maharaj and Ashleigh Gardner of Kobo where they will enumerate all the contractual and procedural reasons why ebooks are just not available for sale in markets they could reach. And then Kobo will join a panel conversation with Joe Mangan of Perseus and agent Brian Defiore to talk about why those barriers exist and what might be done in the future to remove them.

Oh, yes, there’s much much more: audience-centric (what I call “vertical”) publishing; the changing role of editors; the evolving author-publisher relationship; and a conversation about the “gamification” of children’s books. David Houle, the futurist and Sourcebook author who wowed the DBW 2012 audience, will return with his Sourcebooks editor, Stephanie Bowen, to discuss their version of “agile” publishing: getting audience feedback to chunks before publishing a whole book.

We will also do some stuff that is more purely “tech”. We have a panel on “Evolving Standards and Formats” discussing the costs and benefits of EPUB3 adoption, which will be moderated by Bill McCoy of IDPF. Our frequent collaborator Ted Hill will lead a discussion about “The New Publishing IT Department”. Bill Kasdorf of Apex will moderate a discussion about “Cross-Platform Challenges and Opportunities” which is about delivering content to new channels.

But purely tech is the exception at Digital Book World, not the rule.

And purely tech won’t show up at all at Authors Launch on Friday, January 18, the day after Digital Book World.

Authors Launch is what we think is the first all-day marketing seminar aimed squarely at authors with a publisher, not authors trying to work without one. It is pretty universally taken as a given that authors can do more than they ever have before to promote themselves and their books and that publishers should expect and encourage them to do that. But, beyond that, there is very little consensus. What should the publisher do and what should the author do? That question is going to be addressed, in many different ways, throughout the day.

The Authors Launch program covers developing an author brand, author involvement and support for their book’s launch, basic information about keyword search and SEO, use of metrics and analysis, a primer on media training, when and how to hire a publicist or other help, and a special session on making the best use of Goodreads. We’ll cover “audience-centric” marketing, teaching authors to think about their “vertical” — their market — and understand it.

The faculty for Authors Launch includes the most talented marketers and publicists helping authors today: Dan Blank, co-authors MJ Rose and Randy Susan Meyers, journalist Porter Anderson, David Wilk, Meryl Moss, Lucinda Blumenfeld, agent Jason Allen Ashlock, and former Random House digital marketer Pete McCarthy.

We have assembled a group of publishers and an agent to discuss how an author should select the best places to invest their time from the staggering array of choices. (Facebook, Twitter, YouTube, Pinterest, etcetera.) That panel will include agent Jennifer Weltz of The Naggar Agency as well as Matt Baldacci of Macmillan, Rachel Chou of Open Road, Rick Joyce of Perseus, and Kate Stark of Penguin. Matt Schwartz, VP, Director of Digital Marketing and Strategy for the Random House Publishing Group, will conduct the session on metrics.

A feature of both our Kids show on Tuesday and the Author show on Friday are opportunities for the audience to interact with the presenters in smaller groups so each person can get his or her own questions answered. At Kids we’ll do that at lunchtime, seating many of our presenters at tables with a sign carrying their name so our attendees can sit with them and engage. At Authors Launch, we’ll be conducting rounds of workshops, crafted so that the authors can get help in their own vertical (genre fiction, literary fiction, topical non-fiction, juvies, and so forth), and on the topics of greatest need for them.

We are sure the week of January 15-18 will prove to be an energizing and stimulating one for all of us living in the book publishing world. We hope you’ll join us.

Digital Book World Week | January 15-18, 2013

Children’s Publishing Goes Digital | Tuesday, January 15, McGraw-Hill Auditorium
DBW Pre-Conference Workshops | Tuesday, January 15, Hilton New York Hotel
Digital Book World Conference + Expo | January 16-17, Hilton New York Hotel
Authors Launch | Friday, January 18, Hilton New York Hotel

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