Barry Eisler

Amazon as a threat to steal big titles from big publishers is still a ways off


When Larry Kirshbaum, the longtime head of TimeWarner Publishing (purchased right after he left in 2007 by Hachette and now the company called Hachette Book Group USA) joined Amazon many people thought — I among them — that Amazon was about to become a threat to take big titles away from the major publishers and, by doing so, also put pressure on competing retailers who would either have to buy from Amazon or do without major books.

An article last week in The Wall Street Journal spells out just how futile have been Amazon’s efforts so far to upend the Big Six. Their two biggest headline acquisitions — a celebrity bio from actress Penny Marshall and the latest from bestselling non-fiction writer Tim Ferriss — are achieving paltry sales outside Amazon as measured by BookScan.

Michael Cader does some deeper digging to suggest that the high-profile books are not the place to be looking for the successes in Amazon’s publishing. They’re publishing lots of genre fiction and buying up some backlists.

Yet, I can’t believe that the high-profile output from the New York office meets Amazon’s original expectations or Kirshbaum’s. If they miscalculated the impact they could make, maybe it was for the same reason I did. An abrupt slowdown in ebook switchover took hold at about the same moment the Kirshbaum era at Amazon began. Big publishers are reporting that ebook sales are now approaching 30% of their revenue, which is about a 50% increase from what they said last year. That follows several years when ebook uptake increased by 100% or more.

(It is important to note here that the reported figures are a percentage of all revenue. Many titles are not “ebookable”: they’re illustrated books or little kids’ books and, if they have ebook equivalents at all, they don’t sell nearly that percentage. So the digital sales of immersive reading would constitute a somewhat higher percentage than that.)

Amazon as a publisher has advantages and disadvantages against more traditional competitors. They have the advantages of direct customer contact, which pay off in two ways. They can send you an email pitching a book as the logical next one to the one you just read; general publishers can’t do that. And, as the publisher, they have more margin to either pay the author more or charge the customer less, which, either way, increases an author’s revenue through online channels.

But their disadvantages are also significant. For most books, and particularly non-fiction (as both of which the high-profile releases the Wall Street Journal wrote about are), more than half of the sales still come from brick-and-mortar stores. Despite their attempt to secure that exposure by a licensing deal with Houghton Harcourt, the resistance to Amazon from Barnes & Noble and many independent stores and mass merchants has curtailed that distribution.

Apparently Amazon led at least some people to believe with their success on the recent Barry Eisler book that they could sell more copies through their own channels than big publishers could through the entire network. The claim that they had outsold all his previous NY Times bestsellers was made to literary agents in a letter that also cited other great successes, all with genre fiction. Without questioning anybody’s numbers, I was skeptical about the significance of the relative Eisler sales because, it seemed to me, whatever they could do for Eisler (whom they published) they could do for any other book they wanted to, whether they published it or not. So it seems illogical to me that they would somehow magically sell more than the whole trade combined on a book because they were publishing it.  It seems apparent that Amazon isn’t succeeding at persuading agents that the Eisler case, even if it is as portrayed, is replicable.

I saw reports of bitter comments from Tim Ferriss, complaining about Barnes & Noble’s apparently-effective boycott of their competitor’s publishing program. Maybe he would be doing that even if Amazon is selling more than his conventional publishers did before. But I doubt it.

This is not a final answer. Amazon’s share of the trade market — ebooks and online print combined — is still growing and shows no sign of abating. Most publishers would still report that Amazon is their fastest-growing account.

But shelf space erosion — a metric with no reliable index anywhere — seems to have slowed down. That means that, at the moment, we have a more stable book trade than we’ve had for at least five years. It is smaller, but it is more stable. In the US at least, our market of three big ebook players (Amazon, B&N, Apple) and two sturdy and persistent upstarts (Kobo and Google) is still welcoming some new entrants. Zola eBooks, promising some interesting merchandising innovations, and Bookish — the repeatedly postponed effort from three major publishers — are expected to join the fray soon. Sony and Copia and Blio are still trying to gain traction, but they’re also still here.

Amazon definitely has the most advantages. Their Kindle ecosystem is still the best-functioning, deepest in title selection, and benefits in numerous ways from having more readers and selling more ebooks (and books, for that matter) than anybody else. The growth in their genre title base that Cader points out increases their market share of dedicated genre readers, who read other things too. They have the most self-published titles and the best ecosystem for self-published authors to make money. And the big title growth enables them to build subscription or subscription-like capabilities like KOLL (Kindle Owners Lending Library) which do take customers out of the game for everybody else.

As their share of the market grows — as long as it continues to grow — their argument to authors to cast their lot with them gets stronger.

But, for now, it would seem that B&N definitely did the right thing for their own good by boycotting Amazon’s titles. And, for now, it would seem that most of the authors Amazon will get for their general list will be those who are annoyed at the publishing establishment like Konrath and Eisler or curious about working with a tech-oriented publisher like Ferriss.

Authors who want bookstore exposure or to maximize their total sales across the US bookselling universe will remain hard to persuade for the forseeable future. But probably a little less so with each passing day.

I note with sadness the passing of Senator George McGovern. I am proud to have worked on all three of his presidential campaigns: 1968 at the Democratic National Convention working for Pierre Salinger, two years on the 1972 campaign, and a weekend in New Hampshire trying to light a fire in 1984.

What motivated us to join Senator McGovern was primarily his opposition to America’s involvement in Vietnam, but his personal and political appeal went far beyond that. He was extraordinarily decent and straightforward. In my stretch of two years working for him in the early 70s, it was remarkable how consistently he took issue positions we young idealists could be proud of. A poorly-vetted choice for vice-president will always be part of the explanation for why he was crushed, but my friend Professor Wade — one of McGovern’s top strategists — told me years ago that it was the assassination attempt that crippled George Wallace that actually was responsible for the defeat. 

Nixon had won the 1968 election with a little over 40% of the vote. Wallace had taken a share in the high teens. The McGovern planning from the beginning assumed a similar race in 1972. When Wallace was eliminated by the assassination attempt, Nixon’s “Southern Strategy” made him the heir to the Wallace vote and a landslide victory.

In the end, of course, it was Nixon’s vice-president, Spiro Agnew, who went to jail and his administration that ended in disgrace. McGovern was always gracious and never bitterBut, as a country, we’ve never spent enough time contemplating how different things could have been if Bobby Kennedy hadn’t been shot in 1968 or if McGovern had won in 1972.

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Amazon’s growth and its lengthening shadow


The DoJ lawsuit and settlement, Amazon’s next giant step of growth in sales,  the Business Week article on Amazon pushing publishers to allow them to print slow-movers on demand, and then this morning’s New York Times story about a book driven down to a price of zero on Amazon (presumably by an algorithm), combine to raise again the questions of whether the traditional legacy publishing model is worth saving and whether it can be saved.

It really isn’t hard to appreciate the modernist, digitalist, Amazonian point of view. Trade publishing has historically been one of the least efficient businesses in existence. Most books don’t sell well; most authors are frustrated; and getting into the game requires jumping numerous hurdles to even get to the starting line.

The ebook model and online print distribution really are much more efficient than store distribution of printed books has been in reaching the part of the market that buys online. Returns really can be eliminated. In many cases, perhaps most cases, you really can just print the book when it is ordered, not on a wing and a prayer weeks or months before it is ordered.

If you start from the point that the manuscript is completed, it is easy to see why many aspiring authors would choose self-publishing, primarly through Amazon (because they reach the most customers), rather than take weeks or months to find an agent who will take weeks or months to put a proposal in shape to then take weeks or months to find a publisher. And the publisher will then take months, at least, to put a book into distribution. And that’s if you succeed. Most attempts even to secure an agent — just the first step — fail.

Failures overwhelmingly outnumber successes at every step. But, of course, they do in self-publishing as well.

You look at what the publisher will contribute, which is often described as making the book better and more saleable by copy-editing, putting on a decent cover, listing it for sale in places the industry and public can find it, and — for a while longer — putting print copies into stores. All of those things can be purchased, so theoretically you don’t have to give them up just because you self-publish, if you think they’re worth paying for.

And, of course, the author who goes the self-publishing route keeps a lot more of the consumer dollar than the one going through a publisher.

If you’ve got the manuscript in hand and you have a choice between going that route and having books to show your friends within days at just about no cost, why wouldn’t you seriously consider it? Why wouldn’t you do it? It seems like a no-brainer. That explains the conviction with which writers who have succeeded through this means, even those who didn’t quite do it themselves but instead just agreed to be published by Amazon, are so unsympathetic to the concern that Amazon’s business practices could cripple the legacy publishing business.

Inefficiency gets its just desserts.

But it isn’t yet that simple and it may never be that simple.

There are (at least) four serious qualifiers to the logic advocating self- or Amazon-centric-publishing. One is in these words: “if you start from the point that the manuscript is completed.” A second is the assumption, never explicitly stated but tacit in the recurring arguments from Barry Eisler and Joe Konrath (who are the proud poster boys for Amazon-instead-of-a-publisher), that the print-in-store component already doesn’t matter.

Third is that legacy publishing delivers an integrated business model that bundles all the services an author needs together and also includes a shift in risk from the author to the publisher. Self-publishing shifts the risk back.

And fourth, and not trivial, is that legacy publishers sell ebooks for higher prices than the self-published authors do. Expressing things in percentages might elide realities in dollars.

Requiring the whole manuscript before you start doesn’t change things for most unpublished novelists because most publishers won’t buy a first novel on an outline. And it might change little for the most established novelists because they’ll presumably make money on whatever they do, so they just keep writing.

But most other books published by the existing publishing establishment are financed from a point long before completion, unlike the situation for every self-published author. And that financing model is a risk-shifter that any author who can get it should be reluctant to relinquish.

(Yes, I know that Amazon is now publishing books and paying advances, including a substantial one to Eisler. But, remember, when they do that the royalty differential isn’t four times the legacy publisher ebook royalty rate [70% to 17.5%], it’s double, because Amazon pays 35% to the authors they sign, not 70% as they do for self-published. And there’s still no store distribution, which reduces revenue and marketing. The Amazon retail price will be lower. That may drive up units, but it also confounds the straight percentage comparison of the author’s take. A meaningful comparison between the marketing Amazon can do that nobody else can to the publisher-like marketing Amazon might do but hasn’t demonstrated yet is simply not possible until they publish a lot more books.)

Publishers actually weaken their own case when they articulate their value as “curators”. That makes it sound like they’re squeezing our cantaloupes for us. Who needs that, right? We can be our own judge of what’s ripe and what’s not!

They’re doing much more than that. Publishers aren’t squeezing the cantaloupes. They’re deciding which cantaloupes to invest in before the seeds are in the ground. They’re deciding based on the farmer and the climate and the soil and the weather forecast which cantaloupe growers get to participate in the market. And, if they don’t invest, those cantaloupes don’t get grown and they don’t get squeezed by anybody.

And although I’ve been as Cassandra-like as anyone fearing the creeping trivialization of the bookstore channel, it is definitely not dead yet. In-store sales of printed books still constitute most of the sales for most of them (although, admittedly perhaps less than half for a lot of fiction.) And experts like Peter Hildick-Smith of Codex believe that in-store discovery is still a critical driver of online sales, print and digital.

There is no doubt that a lot of what legacy publishing spends its money on will no longer be necessary in a few years. If the stores are mostly gone, or aren’t critical to discovery or sales, then printing expertise, warehouse and distribution capabilities, and all the investments and workflows required to maintain them won’t be necessary either. However, that day certainly hasn’t come yet (even if the digerati think it has!)

But, even more important, and so frequently elided in the discussions of the value of legacy publishing and whether it is worth an effort to preserve it, are the investments publishers make in books that would simply not be written if they didn’t.

If legacy publishing had been run by modern business principles, much would have changed years ago. For example, the trade would get smaller discounts on the biggest titles. After all, if part of the margin given to retailers is for “marketing” (i.e. “discovery”), they need a lot less of it for Harry Potter or the latest Patterson than they do for a first novel. With today’s computers and business acumen to work with, it would seem silly to offer the same margin across all titles on a list, when some clearly need less than others to get placed and sold.

It is partly the standard treatment across all books that is coming back to bite publishers now. Amazon doesn’t discount all titles equally; nor does any other bookseller. They give back the margin on those where it benefits them to do that, selectively. The publishers could have pre-empted that opportunity, or at least made it much more difficult, by varying the margin they offered by the sales appeal of the book. They adjust margins on the royalty side of the equation by paying advances that don’t earn out to big established names, effectively delivering them a higher percentage of the take. But they give the same margin on every title, regardless of cost or appeal, to the trade.

Sharing media attenton with the accounts of Amazon and DoJ recently have been stories about Robert Caro, who wrote The Power Broker about master builder Robert Moses 40 years ago and leveraged that success into a life’s work series of books about Lyndon Johnson. Caro was working on negative cash flow — selling his house and with his family being fed on his wife’s paycheck — until Knopf took over supporting him. If they’re printing 300,000 copies of his next book (which they say they are), that’s probably five million in billing on the first printing, plus ebook revenue, in the immediate offing. They’ll get their money back.

But they had to decide to risk it. Publishers do that every day. Sometimes they don’t get that money back.

Yes, there is Kickstarter as the new spec funding source. But how many publishers would fund projects if they couldn’t manage the creative process or understand and control the marketing and distribution that would take place when the project is finished? Even “finished’ is a complicated concept in the world of publishing. It brings to mind the saying I heard once, but can’t attribute, that “works of art are never completed; they are only abandoned.” Deciding when a manuscript is “ready for publication” is a judgment call that is essentially commercial: when will more work no longer lead to more sales?

Since Kickstarter funders won’t have that kind of control, believers in a rational market would also have to believe that projects that many publishers would fund won’t attract the investment they require through Kickstarter. Perhaps a private equity fund tied to authors would work better, but that would require margins to pay authors and acquiring editors and repay the investors. Even then, you wouldn’t necessarily have the integration of services combined with assumption of risk that makes the current system, which is so beneficial to so many authors, also work for the publisher/investor.

Publishers may never have unbundled the big books from the others in how they treat them commercially, but an Amazon-led marketplace is now doing that for them. The less help an author needs from a publisher, the more appealing the fatter margins of self-publishing look. The less value there is in the retail channel for print, the less lost by giving up the retail distribution in favor of an online-only sales outlet.

Despite that, few big authors  have gone for Amazon’s money. Tell the truth: wouldn’t you have expected that with Amazon’s power, deep pockets, and an experienced book acquirer at the helm, they’d have attracted some bigger “gets” by now? I’ll admit that I did.

Besides delivering widespread print distribution and funding projects speculatively within a system that bundles services and accepts risk, there is one other thing that separates publishers from Amazon as a route to the marketplace for authors. It might be the most important thing.

Amazon ultimately only cares about sales made through Amazon and, if they were candid, would admit that any sale not made through them or an affiliate is a target for future growth. Publishers want as diverse a distribution network as possible; it maximizes sales and exposure for the books they’re charged with and, not at all incidentally, gives them a reason to exist.

This difference in perspective has big implications. USA Today, for example, considers the breadth of a title’s sales across retailers as a component of its bestseller calculations. A book that sells through only one retailer (and that would mean Amazon) doesn’t get the same consideration as one that sells the same number in multiple channels. Similarly, how would the New York Times feel about reviewing a book that isn’t available in stores or in all ebook formats? They might legitimately balk at reviewing something that many, if not most, of its readers won’t encounter commercially.

The divergence in point-of-view is illustrated in the conflict over print-on-demand that is discussed in the WSJ piece. From where Amazon sits, it is simply more efficient to print what they need of slow-movers when they need them. They can probably make an offer to publishers that looks “margin-neutral” or even more favorable. But publishers know they have to print for everybody else, and taking the Amazon demand out of the print equation — particularly for slow-movers — would really disrupt the overall economics for any title that weren’t already printing on demand. These overall marketplace economics aren’t Amazon’s concern.

So as Amazon continues, as any commercial entity would, to set prices, seek margins, and adjust practices and workflows in ways that work for its own business, it drives the industry to “efficiencies” that take the margin that finances all publishing activities — those that will fade away like print distribution and those that are indispensible like funding and developing new projects — out of the commercial equation.

That can only really improve things for authors that don’t need or want those functions. Since the most reliable big authors with savvy and competent agents are already getting 60 to 80 percent of the revenue their books produce guaranteed to them, it is not clear that even the notionally higher ebook royalties deliver a better deal than the publishers do now for that group. But  the scads of authors who can’t get, or don’t think it is worth the effort to find, an advance-against-royalties publishing deal will be happy with Amazon. Indeed, they’re probably happy now.

As bookstores continue to diminish, though, it will get harder for the publishers to continue to compete for the big authors, particularly if Amazon is the one picking up the share the bookstores relinquish. That could change the status quo and Amazon might start to get big authors then. If and when enough of the big authors move on, the legacy model will break and we’ll be in a different world.

When that day comes, I’m sure Amazon will recognize it and change their margins and practices to suit. Perhaps the Department of Justice will want to reconsider its thinking then as well.

Remember, the DoJ wants to hear from us about the settlement unfortunately (in my opinion) agreed to by three major publishers. We still have several weeks to get those in. I hope this post contains useful thoughts for some people formulating their response, which I am still doing. Whenever you’re ready, send your letter to:

John Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, NW, Suite 4000, Washington, DC 20530

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By one benchmark at least, we are probably halfway through the (r)evolution


A couple of major (Big Six) publishers have acknowledged that ebook revenues for them have passed 20% of their revenues. Of the 80% that remains print, I think it would be conservative to estimate that 20% of that is sold online. That’s an additional 16 percent of their business. Adding those together tells us that, for at least some very major companies, 36 percent of of their sales are being transacted online. That would leave, on average, about 64% of the sales for print sold through brick-and-mortar retail and other more minor channels. ”On average” should not be read as “typical” on a title-by-title basis. It isn’t. For immersive reading, or straight text like novels and biographies, the percentage sold in stores is already almost certainly substantially lower. My hunch, and nobody really keeps these figures (but I think I’ve found a way to get at them, which we’ll try to show at a future Publishers Launch conference) is that it may already be down to 50% print in stores for new titles.

(It adds both confirmation and confusion to note that Bowker’s PubTrack estimated that 30% of the dollars spent on books in 2010 were spent online. But they figured that only 2.2% of the dollars that year were ebooks. My own estimates are based on the picture of things we get from big publishers, who are perhaps more skewed to straight text than the industry as a whole. There are all sorts of explanations that would narrow the apparent differences between what Bowker describes and what I infer from what I know, but they’d require a different piece which, I think, would be less helpful in painting an overall understanding of where we’ve been and where we’re going than the one you’re about to read.)

Five years ago, early in 2007, it was a virtual certainty that 80%, and probably much more, of the sales of any trade book that sold a significant number of copies would take place in stores. There were almost no ebook sales. (The Kindle did not make its debut until November 2007; sometimes I feel like I was the only person reading ebooks before the Kindle arrived.)

Five years from now, by the start of 2017, I’d bet that 80% of the sales of any trade book that sells a significant number copies will be transacted online.

And that, even more than the ebook uptake that is a mere component of the store-to-online shift, is the story of our times that matters in trade publishing.

One thing I believe but won’t try to prove (which means “take it on faith”) is that more attention has been paid to the change from print reading to screen reading than to the change from store purchasing to screen purchasing. But the change in purchasing behavior is by far more significant in its affect on the industry than the change in consumption, at least in the medium term.

The shift in the way we consume what is now print may become more important as new presentation forms enabled by digital delivery — making use within the content itself of video, animiaton, links, social connections, and alternative content and navigation paths — are improved and gain commercial traction. (I’d argue that no enhanced or illustrated ebook solution has achieved that so far.)

But being halfway through the change in consumer buying habits in our decade of change has profound implications for all the big players in the publishing value chain. It would appear that publishers in both the US and UK are now accepting that the decline in numbers of bookstores and the shelf space they offer for merchandising is not temporary and not primarily recession-driven. (We heard that said more than once last year and the year before.) It is a fundamental societal shift that is inexorable and which shifts power away from publishers to their trading partners on both sides of them: the authors and the retailers.

In fact, even though the share of the overall business commanded by the brick-and-mortar retailers is declining, even they will, at least in the short term, gain clout with the publishers. The exposure they offer any book they carry will be increasingly appreciated as shelf space diminishes. And for illustrated books, print is really the only proven game in town because there is no digital presentation of such books that has demonstrated enduring viability in the marketplace.

The fact that we are halfway to a complete reversal of the online-offline sales ratio explains some conflicting behavior see in today’s marketplace. It is still true that brick-and-mortar placement is instrumental to building the reputation of a book or an author. And it is widely accepted that only a publisher employing a real infrastructure and customer network (its own or through effective use of a powerful distributor like Perseus or Ingram) can deliver that placement. At the same time, sales through online channels, particularly of ebooks, has reached a level of real commercial significance and those sales can be delivered with a fraction of the organizational capability that the declining model requires.

So we have authors like J.A. Konrath. He is perfectly content to eschew the bookstore exposure in favor of doing it himself. He keeps much fatter margins on the ebook sales, even though he probably has to charge lower prices for the same book than a publisher would. Konrath has argued for a long time that he is thinking of the future. He may be giving up some sales today, he acknowledges, but he believes he’ll be compensated for his foresight as the sales base moves away from bookstores and he has avoided forever paying 50% or 75% of his ebook royalties in an exchange for bookstore sales that will inexorably diminish.

Of course, he gives up advances against royalties too.

On the other hand, we have the author Amanda Hocking who built herself an online sales machine from scratch but yet happily sold her next four books to a publisher. She got significant advances, will now get bookstore exposure she never had before, and, from her perspective, also laid off many of the non-writing tasks of delivering a book to market. Those were tasks she found onerous; she’d rather write. I think she’s right that it is hard to do it oneself and I think it might get harder.

And then, taking a middle-ground position between these two, we have John Locke and Barry Eisler.

Locke was like Hocking. He started from scratch and built a big sales base online. He also was not getting the bookstore sales and exposure he’d get through a publisher. But Locke doesn’t mind the marketing work and he likes controlling his online presentation and pricing. So he made a “distribution deal” with Simon & Schuster for his print, getting the muscle of a real publishing sales and distribution organization working for him on a fee-for-services basis.

Eisler, who had done several books with major houses, turned down an advance from a publisher (ironically, the publisher was St. Martin’s, the same one who signed Hocking) and initially intended to self-publish. Instead, he took a deal with an Amazon imprint. This cuts the baby in half. He gets an advance. He gets the marketing attention of a big organization with unique capabilities. But he does not get bookstore exposure.

The reason all these different approaches actually make sense is that we are still in a period of transition. Konrath is banking on the fact that my analysis is right. From his perspective, he’s giving up bookstore revenue and marketing now because he doesn’t want to be paying forever for what he gets today. The same is true for Locke. Eisler and Hocking are pursuing more immediate benefits. Eisler is betting that Amazon’s direct marketing to consumers they know will propel him further and faster than going back to bookstores for sales yet again. And Hocking is banking on the fact that the bookstores and the publishers’ ability to place books in them will accelerate the growth of her fan base as well as laying off a lot of work she doesn’t want to do on somebody who is willing to fatten her bank account for the privilege.

The transition has another dynamic which is the growth of Amazon’s power in relation to every other player in the value chain. Going back to the stats at the top of the piece, the publisher who is seeing 36% of total sales and perhaps nearer 50% of immersive reading sales taking place online, is also seeing the percentage of their sales through Amazon grow as well. Amazon has about 60% of the ebook sales in the US and perhaps 90% of the online print sales. That would make Amazon (12% of the 20% sold as ebooks and 16% of the 80% print) about 28% of such a publisher’s volume now.

But using an overall number like that understates the reality of Amazon’s dominance. Their share of the sales of straight text books is almost certainly higher (because they sell most of the ebooks), so that share is almost certainly above 30% now. If things proceed as this piece contemplates for the next five years and nothing drastic has happened to change the shares retailers have of the ebook and online print channels, Amazon is likely to be something more than 50% of a big publisher’s business. All they won’t have is the 20% that is brick-and-mortar print, a sliver of online print, and the chunk of the ebook business that is sold by other vendors. And, as now, the percentage sold online will be higher on straight text.

Going from 80 to 90 percent of book sales being made in stores to that same percentage being made online in a decade’s time certainly justifies anybody’s pronouncement of profound and disruptive change. Having a single account that delivers half of publishers’ business — more on many titles — is unprecedented and perhaps unsustainable.

Although what we’ve seen in the past five years looks to me like it points very clearly to what we can expect in the next five years, it is hard to tell whether these realities are being taken on board by the players from whom power is shifting away. (Nobody is going to call me and say “Mike, our business is melting away!” even if that’s what they’re thinking.) I’m pretty sure it is all well understood, and expected, by the player who is seeing the power move in its direction. But they aren’t calling to tell me that either.

The death of the senior John Sargent last week – he was for a time my father’s boss at Doubleday in the 1950s — gave me reason to recall this piece I wrote in the blog’s very early days on Leonard Shatzkin breaking the color line at Doubleday in the 1950s. I didn’t have very many readers then compared to now. I thought it was worth calling my now-much-larger audience’s attention to it, even though it has nothing to do with today’s post. I think many of you will enjoy it.

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No predictions this year; just questions


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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True “do-it-yourself” publishing success stories will probably become rare


Getting ready for our eBooks for Everyone Else conferences, I discovered an author named Bob Mayer who impressed me with his self-publishing zeal and apparent success. Bob has written lots of military fiction, science fiction, even a romance novel, and some non-fiction: dozens of books over the years for major publishers. Most of it was mass-market, most of it reverted relatively easily and Bob systematically secured those rights reversions for years.

He caught my attention with the bare bones of his story. He started putting his work up as ebooks in January, when he sold a few hundred books. By July he had more than 40 titles available and was selling a total of over 100,000 units a month. I had long wanted to put an author before my conference audiences who had achieved self-publishing success to talk about how s/he’d done it.

Joe Konrath and, more recently, John Locke had politely turned me down. I booked a 1-on-1 conversation with Barry Eisler at our Publishers Launch Conference at BEA right after he announced his decision to turn down a 6-figure advance to self-publish. Alas (for this objective of mine), the morning of the event Barry signed a contract with Amazon to do his next book with them. Although he has self-published some short fiction. Eisler’s story became that he is an Amazon-published author, not a self-published author. That’s a good story and we had a good session on-stage that the conference audience benefited from, but it was not a a self-publishing report from an author who truly did it on his or her own.

(Eisler’s wife, the literary agent Laura Rennert, reported at eBEE in San Francisco that Amazon is succeeding very well with Eisler’s current book, The Detachment — which I read and enjoyed – and that his substantial advance has already been earned out.)

So I was pleased to learn with a phone call that, not only was Mayer an enagaging talker, but that he was willing to make the journey from his home in Seattle to San Francisco to discuss his success with a conference audience.

But what became clear when I had a further conversation with Mayer the day before our conference, buttressed by what was said by many other participants at the event, is that the Hocking-Konrath-Locke story — an author managing all the pieces of their publishing program and and achieving a totally private success — is a Dodo bird. Unless we consolidate down to an only-Amazon ebook world, which, despite Amazon’s best efforts, doesn’t seem likely anytime soon but would undoubtedly create a whole new rule book if it ever arrived, the work and expertise required for successful publishing will lead inexorably to one of two results.

Either an author will get help to publish their own material — a distributor like Constellation or Ingram or a publisher — or they’ll find what they built to serve themselves would be better and less-expensively maintained with the work of additional authors to go along with their own. There’s enough work and expertise involved in what had first seemed to many such a simple process that it requires building a bit of a machine to do it. And once a machine is built, it is just wasteful to leave it idling between the works generated by any one writer.

This point was made by Mayer when he told me that he is now recruiting other authors to publish. He started out by finding a partner to handle the technology component and mechanics of his efforts. In his already-substantial experience in less than a year, he has learned that proper editing is essential, as are eye-catching covers, as is the right metadata. He told me and our audience that a single complaint from a reader to Amazon about a typo in one’s book can result in the ebook being taken down for a required correction. He has learned, as others have, that maximizing revenue requires changing and re-changing your prices, which is more work.

Bob says he has even fixed plot errors that were pointed out by Kindle readers.

(Another view of this aggressiveness to satisfy customers was offered to me by a Big Six executive a few months ago when he related the story of a book published by his house that had been taken down. There the “culprit” was vernacular language that was interpreted by a reader as poorly copy-edited grammar. There was nothing wrong with the ebook, but one reader thinking there was resulted in a takedown that cost everybody sales for several days until the ebook could be put back up!)

Bob says books can disappear from major retail sites for no apparent reason as well. He says that anybody who believes that ebook publishing is like “sending the book to a printer, after which you can forget about working on it” is mistaken.

And he believes that any author whose work is good and wants to take a self-publishing route would be wise to cede a percentage of sales to him, or somebody else, who has learned what he has and equipped themselves to prepare books properly for sale and manage them after they’re launched.

This is establishing ever so much more clearly that publishers are right when they say there’s a role for them in an ebook world. Amazon itself makes that clear by the difference in the deals it offers self-published authors and authors it signs for its imprints. Although authors will continue to self-publish, the debate that matters in the future is what the basket of services will be that authors require and what will be the right price for them. The lines are drawn for that discussion and the opinions are really all over the lot.

There are ebook publishers — the granddaddies eReads and Rosetta, Scott Waxman’s Diversion Books, and the giant in the space: Open Road — who are saying the “right” ebook division between author and publisher is 50-50. (We should make clear that this is the division of the revenue obtained from the retailer or “sales agent”, which would normally be 65-70% of the selling price or 50% of a publishers suggested list which could be discounted, depending on what kind of sales arrangement is in place.) Smashwords, an entirely automated service, and BookMasters, a service provider, provide distribution for 15% of the take. Two agents speaking on our panel in San Francisco, Deidre Knight and Laura Rennert, are capping their agency’s take at 15% of the revenue as well, as they walk the ethical line that is perceived by some to require that they make no more money self-publishing an author than they would selling the rights to a publisher.

Then there are many other service offerings with prices that fall in between 15% and 50%.

Amazon’s rules offer some insight on this. If you work with them through their KDP service, you get 70% (if you set your price within their accepted bands). But, as Mayer and others at our conference made clear, through KDP you can’t even purchase any special merchandising or promotion. But if you are published by Amazon’s imprints, the take is cut in half and the author gets 35% of retail, but you get lots of promotion by positioning. (Deals are private, and the details of Eisler’s deal have not been revealed, but the presumption would be that he earned out his rumored six-figure advance from Amazon at the 35% rate.) Thirty-five percent matches what a 50-50 publisher could deliver if they had an agency-like deal with the retailer.

Amazon agreements also come with the requirement that you participate in their other programs, including library lending in cooperation with OverDrive and, presumably, the new subscription program they have just announed. (It appears they chose not to include all KDP titles in the subscription program; there are only 5,000 titles announced for that initiative and since we know that Smashwords has nearly 100,000 titles, it is likely that KDP has more than that. On the other hand, late reporting by Publishers Lunch on Thursday spells out that Amazon will simply “buy” copies of any non-agency titles it wants to lend. That means they make one purchase for each loan, so it is expensive for them, but it demonstrates again that only publishers with agency arrangements have control of their distribution and how their books might be used to strengthen any one distributor’s ecosystem.)

The comparisons get complicated, but, if a conventional publisher is providing the full range of services that our speakers said is needed to maximize sales: good covers, changing covers, dynamic pricing, constantly improved metadata, monitoring to catch glitch take-downs, as well as developmental editing, line-editing, copy-editing, and proofreading, the author wouldn’t be doing badly at all to get 35% of the consumer’s dollar for an ebook. Throw in real print book distribution and sales and the royalties and marketing from that, plus a publisher’s core marketing effort (being part of a “legitimate” list gets attention from reviewers, bloggers, library collection development, and other places that matter), and, perhaps, some dedicated marketing as well, and it can be a relatively profitable exercise for an author to be with a publisher for even less than that.

When agency publishers pay 25% royalties, they are giving the author 17.5% of the paying customer’s dollar. Everybody will draw their own lines, deal by deal, but that doesn’t strike me as totally crazy as long as print sales remain more than half the total and the publisher is paying an advance that carries with it some risk that the actual royalty paid will be higher than what the contract stipulates.

That’s a moving target, of course, I personally don’t expect print sales to remain at half the total very much longer. But if major publishers were paying 50% royalty on a 70% agency sale, they’d be matching the 35% Amazon pays the authors it publishes. Amazon can do much more to promote on Amazon (which panelists at eBEE said is what really moves the needle); but publishers make noise in a lot of other places Amazon (yet) doesn’t. Presumably Open Road and Diversion and eReads and other 50-50 ebook publishers can’t match the agency terms with Amazon (they can get 70% through KDP, but that comes with pricing restraints and required agreement to those other deals we discussed earlier), so only the Big Six, who can apply agency across all accounts, can offer a comparable deal with a manageable percentage payout.

Amazon is demonstrating what they see as the value of securing the loyalty of digital book consumers for its ecosystem by their willingness to pay full wholesale price for an ebook that will then get lent once, as well as their penchant for pricing for sale well below their cost. The evidence that agency pricing is the only wall between a multi-channel ebook business and a single-retailer monopoly continues to grow. But as long as print in stores matters, and it will for a while longer, the Big Six have a legitimate commercial argument to defend ebook royalties between 25 and 50 percent. After that, everybody except Amazon will be hoping that that the Nook, Kobo, Google, and Sony market share is enough to keep it essential to an author to cover them all. And that means of discovery and merchandising will emerge that are a meaningful alternative to what is provided by the world’s biggest virtual retailer.

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John Locke and S&S show us another kind of deal we can expect to see again


OK, now we know another new paradigm for book publishing in the digital age with the announcement of self-publishing author John Locke’s new deal for print distribution with Simon & Schuster.

The big publishers have said for a while now that they won’t be signing up books for print rights only. That makes sense, up to a point.

It is logical that with print declining and digital sales rising, publishers don’t want to be investing in an author only to control the getting-smaller part of the sales. We’re in this moment when print sales are still vitally important but less so every day. Ebooks don’t require the same organizational scale as distributed print, so authors legitimately feel that they can get the substantial part of that sale without giving up the 75% of the ebook royalties big publishers demand as the price to gain access to the print distribution capability that makes real use of big publisher scale.

But there are limits to the publishers’ logic to walk away from print-only deals. Publishers also have the challenge of feeding the big organization they’ve built to deliver print to its shrinking marketplace. It is hard to ignore sales volume you need to support expensive operations.

The first crack in the wall of “we don’t do print-only” was Houghton Harcourt’s deal with Amazon to publish the print edition of some titles originated by Amazon imprints. Houghton made the point that although it might look like what they were doing was a print-only deal, it really broke no precedents. They pointed out, accurately, that when a publisher acquires paperback rights to a book another house did in hardcover (the most common sort of licensing deal 30 or 40 years ago but not so common now), the ebook rights would stay with the originating publisher. That, they said, was all that was happening in this case.

As a fan of Locke’s Donovan Creed books (I just finished reading another one yesterday!), I had already done some analysis and written that I thought he was leaving a lot of money on the table working exclusively on the ebook side. (I ignored a deal he had with “Telemachus Press” to do print of his books because I figured they’d hardly sell any; the deal announced today would tend to confirm that assumption.)

Although the details of the Locke deal with Simon & Schuster haven’t been revealed, it is characterized as a distribution deal. Strictly speaking, that would make Locke himself the publisher and the party responsible for the cost of inventory. S&S would warehouse that inventory and handle all the mechanics of distribution, including billing and collecting. Then they would remit the larger portion — probably more than 70% and less than 80% — of the revenue they receive to Locke.

How profitable Locke’s print sales will be for him depend on his costs for print (which are in turn a function of how well he and Simon & Schuster match what is printed and distributed to the demand for his books), the retail price he sets, and, of course, the numbers he can sell.

There is another way Locke will profit. The increased awareness of his books that he’ll gain by having them in stores should generate more ebook sales and he presumably doesn’t share those with his print distributor.

There have been a number of signs this year that the publishing world is changing dramatically.

In March we had Barry Eisler, who had sold many books through conventional deals with major publishers, decline a six-figure deal with a major house. At first, Eisler was going to self-publish, but then he decided to take a (presumably) six-figure deal to be published by Amazon instead.

Amanda Hocking, who had started (like Locke) as a startlingly successful self-publishing author, accepted a deal with a major house to continue her career, pretty much the opposite of Eisler’s originally-intended path (although closer to what he actually did in the end).

Then J.K. Rowling, the author of the Harry Potter series, announced she was creating her own online destination, Pottermore, to deliver ebooks. Rowling is apparently not just disintermediating her publisher from her ebook sales; she’s leaving out many of the online retail channels as well.

Last week we had the news that superstar non-fiction author Tim Ferriss became the first truly marquee signing for Amazon’s own publishing efforts.

And now we have Locke entirely self-publishing, but working through a major house to get his printed material into the supply chain.

When we discussed Eisler’s original decision, we talked about the fact that self-publishing left the substantial revenues from print untapped. The Hocking and Ferriss deals are similar, even though hers is with a traditional publisher and his is with Amazon. They are both pursuing what they think will be the most lucrative alternative for them, choosing from among options by which they get paid and somebody else does all the non-writing parts of the work.

Rowling’s initiative and Locke’s are both real self-publishing plays. I am skeptical that Pottermore is worth tracking as a commercial example by any but a small handful of wildly successful authors. It’s an anomaly in many ways. Harry Potter to publishing in the past decade is like the Beatles to music in the 1960s; nothing else comes close to its level of commercial success. What Rowling is doing might work just fine (although I have my doubts that it will reach more readers than if she used more conventional means, she might make more money and she might build a platform for other opportunities), but that doesn’t mean it would work for anybody else.

Locke might be an outlier as well. Nobody else except perhaps Hocking has achieved his level of self-publishing success. And, unlike Hocking, who is a writer who just wants to be a writer and is delighted to have a publisher take over her business responsibilities, Locke is an experienced businessperson who seems to prefer managing his own commercial affairs.

In the Locke deal, though, we can see the outlines of future arrangements by which publishers can reconfigure their dealmaking to adjust to changing times. It isn’t just agents who are changing their business models or offering new services to accommodate the reality of self-publishing fostered by the growing ebook market share (and Locke’s agent, Jane Dystel, is one that has announced that her office is doing just that), publishers will adjust as well.

The model of “self-publishing through a major house ” can be a workable one for all sides if it is restricted to authors whose commercial appeal has already been established. Since all the major houses have distribution deal models, it might not be long before there’s a person at each one assigned to making sure that authors and agents are as well taken care of as “clients” as they were in the past working through their editors.

These deals will morph. For example, does Locke really have to pay the printer, or will S&S cover him on that and just take the costs out of proceeds? If S&S were doing a deal like this for books that hadn’t already been published digitally, would they be able to extract a modest share of ebook sales as compensation for doing the ebook setup? And deals like this could evolve to also include some other costs — like copy-editing or cover creation – being fronted by the publisher, or I guess I should say “the distributor”.

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Tim Ferriss’s deal with Amazon is both an outlier and a harbinger


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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Would million ebook-selling author John Locke be better off with a publisher? I think he very well might…


The experience of the most successful self-published author I know of, just described in his newest book, makes a powerful but unintended case that authors who want to really make money are still better off with a publisher.

I discovered the author John Locke a few months ago when I was learning a bit about the self-publishing world from Joe Konrath and Barry Eisler. I tried one of his 99 cent books and loved it. Now I’ve read four. He strikes me as a cross between the long-dead Jim Thompson and the very current Carl Hiaasen. More sophisticated readers than I have told me his plots are derivative. None of the books struck me that way, but it could well be that savvy acquiring editors would have dismissed him if had no track record of commercial appeal.

Locke has just published a new book explaining (and titled) “How I Sold One Million eBooks in Five Months”. It reveals a hard-working, tightly-focused, very sophisticated marketer with a clear plan and the discipline to follow it. Every self-publishing author should read it, of course, which is the market Locke identifies. One of his key tenets is to really understand whom a book is intended for so that the content itself and the marketing approach are always aimed at precise targets.

One of the problems Locke sees with publishers is that he thinks that they will always push to broaden the appeal of a book, which he thinks would diminish its appeal to the core niche audience that he sees as the key to successful author brand-building. I’m about to reinforce that stereotype because it is obvious to me that he really missed identifying a key target audience with his new book. Editors and marketers in publishing houses ought to read it. They have a lot to learn from John Locke’s insights and techniques.

His book will help them make better publishing decisions and marketing decisions. His book will help them make more money.

But if John Locke’s also interested in making the most money, he ought to rethink whether issuing his books at 99 cents without a publisher is really the best commercial strategy.

Let’s do the math. Locke has sold 1 million ebooks at 99 cents each. He gets 35% of the revenue, so that amounts to something less than $350,000 (credit card fees are deducted from the net). There are some production costs involved (he hires a cover designer and he gets help formatting his books), so knock off another ten or fifteen grand. That means his net for nine novels averages out to about $35,000 each. He’s getting no apparent revenue from print and he’s getting no print exposure in stores which would further stimulate online sales. At 35 cents per copy, he’s earning less than the per unit royalty he’d get from a publisher selling his books for about $2.99, the point at which the 70% payment from agency re-sellers would kick in, even if the publisher didn’t yield at all on the now-prevailing 25% royalty standard. And if his books were $9.99, he’d be getting $1.75 a copy from a publisher, or about five times what he’s getting now.

Of course, if Locke himself sold the ebooks at $2.99, he’d be taking in six times more per book, or about $2.10 a copy.

But, either way, he seems to be leaving a lot of money on the table. Without a publisher’s efforts, he’s certainly leaving a lot of marketing on the table too. And the print in stores is only the single most important part of it. Selling even a modest 10,000 hardcovers would net him in excess of $20,000 in royalties, or more than half of what he’s averaged so far from each of his ebooks.

It would be facile, and I think it would be mistaken, to attribute Locke’s success primarily to the fact that his books sell for 99 cents. In fact, Locke himself bristles at that notion. He points out in his new “how-to” book that there are a lot of authors selling for 99 cents that haven’t achieved the sales that he’s achieved. He downplays the degree to which that would be due to the appeal of his writing but instead attributes his sales to his thoughtful and systematic marketing efforts.

I agree that his thoughtful and systematic marketing efforts are more important than his 99 cent price. (That’s sort of the point to this whole post!) But there is nothing about what he’s done that couldn’t be just as well done to support a book from a publisher that is in hardback at $20 or more and is a $9.99 ebook. Would he sell as many as the 100,000 or so units he’s averaging per title that way?

Nobody knows for sure, but with the same effort on his part and the additional marketing, exposure, and accessibility he’d gain with a publisher, my own hunch would be that he’d sell more. I’ve read four of the books featuring his major character Donovan Creed and I’m nowhere near sick of him yet. I’m as cautious as anyone about generalizing from my own experience, but I know that if the next one were ten bucks instead of one, it wouldn’t deter me. I pay ten bucks or more for most of the ebooks I read, as do a lot of people.

One of the things that the ebook retailers know for sure but that publishers can only guess about is the degree to which the purchasers of 99 cent books are a market separate from the purchasers of “branded” books at $9.99 and up. Many believe, and I’m among them, that there are distinctly separate groups of buyers here and that people like me, who mix it up, are the exception. If that’s true, there would be some risk for Locke (and to an acquiring publisher) in switching him over to a model which requires that he get his success from a different pool of customers and makes it hard for his existing readership to come along.

But if the markets are distinct, there is also some great potential reward. If there are people who only choose from the cheap books, there are also people who want to choose from the professionally validated books, the ones from the major publishers. The more you believe the markets are distinct, the more opportunity there could be for Locke in using what he’s done to launch himself independently as the springboard to a career as a published author with a major player.

Amanda Hocking succeeded with an independent effort but then signed with a major house. Barry Eisler intended to leave publishers behind and do it himself, but quickly found that Amazon’s publishing program — how long before we start referring to the Big Seven? — actually suited him more than doing-it-himself. Now we do the quick math on Locke and find that it constitutes a weak argument for the economic benefits of self-publishing.

It is important to for us all to remember that we’re still in a world where most of the books are sold in print and in stores; that this is more true outside the US than it is here; and that it will remain true outside the US for quite a while longer than it will here. The challenges of the digital age for publishers are very real and the self-publishing option is much more viable than it was a decade ago, or even three years ago. But there’s still plenty of life in the legacy model. I’d be surprised if some big publishers aren’t preparing offers for Mr. Locke that he’d be obliged to consider seriously if his goal is to make the most money from his writing that he possibly can. If Amanda Hocking could get $2 million for four books, how well is John Locke really doing financially getting less than 20% of that for nine?

The most frequently persuasive argument I can think of for self-publishing is speed to market, particularly for an outsider who doesn’t even yet have an agent. Finding an agent takes time. Getting a proposal up to an agent’s professional standards takes time. Publisher consideration and contract negotiating following offers take time. All of this can often take a year or more; it is rare to accomplish it in six months. And then the publisher will need persuasion to deliver it to the market in less than six months. (This is not irrational on the publishers’ part; maximizing sales in print still requires a long runway because the planning in mass merchant outlets requires assigning specific titles to slots many months in advance. That’s a marketplace reality, not an invention of publishers.)

I think self-publishing as a path to publisher discovery may become a new standard and, if it does, the ebook operations being set up by literary agencies may ultimately be viewed in a different light.

My prediction with Locke is that he will end up getting an offer he can’t refuse from a publisher to create a new character. The Donovan Creed series and his westerns will continue to be issued for 99 cents, but something new will be done the conventional way. And, unless my hunch is way wide of the mark, for the next several years the ones done the conventional way will make Locke a lot more money.

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Which flies the coop first? the chicken or the egg?


There are lessons that can be taught or learned in one segment of publishing that can then apply to another. Well over a decade ago, Mark Bide and I were discussing the business model for journals. The way it works is that the university pays the professors a salary and rewards them with promotions and tenure for writing publishable material for the journals. Then the journal publisher pays nothing for the article (although they spend lots of money managing peer review and doing other things associated with editing, curating, and delivering the content.) Then the university pays for the IP all over again by buying (now licensing) the journal.

From our earliest understanding of the Internet and its potential for disintermediation, this seemed like a very vulnerable model. “How will we know when there’s a problem developing with the model?” I asked Mark. “When the publishers are having trouble getting submissions,” he said. “The problem will become obvious on the supply side before it becomes obvious on the demand side.

One of the challenges for a retail player trying to be a publisher is the difficulty of getting other retailers to play along. Even the most dominant US retailers, Amazon in the online world and Barnes & Noble in brick stores, don’t have a total monopoly on the customer base. People buy books online through outlets other than Amazon and people buy books in stores that aren’t owned by Barnes & Noble. And, of course, either of the two delivers grossly incomplete access to the total customer base without the other.

Barnes & Noble has been acquiring content directly for a long time. They’re very aware of the dichotomy between having a monopoly on content for your stores’ benefit versus making it more broadly available in the content’s best interests. Almost from the minute B&N acquired Sterling, Borders stopped stocking Sterling books (a problem that matters much less today than it did a few years ago.) And Sterling had a real sales force, retailer-friendly sales policies, and all of the systems necessary to support moving their books through intermediaries. Amazon does not.

Amazon took the first steps to fill that gap by making a deal with Houghton Mifflin Harcourt a few months ago, giving HMH a right of first refusal (apparently) to purchase paperback rights (excluding Amazon, we’d assume) to the books Amazon was publishing through their proprietary imprints. I have no inside information, but I would assume that one of the things Larry Kirshbaum will figure out early in his new role there will be how to get real print book distribution for the books he will be acquiring.

Amazon’s strategy appears to be that they’ll use their checkbook, the offer of 70% ebook royalties from the most powerful ebook platform, and their close connection to the online consumer, to get the books they want on the terms they want. And what they seem to want most for the books they pay for is “Kindle exclusive”: the ability to build up an inventory of titles available through Kindle but not through Nook, iBookstore, Google, or Kobo, let alone the stores here and abroad served by Ingram and OverDrive.

Barnes & Noble is familiar with that idea. They wouldn’t let other stores sell their Sparknotes study guide line. They never made it generally available through Sterling’s organization because they perceived value in having it be uniquely available through their stores and online channels.

But they didn’t avoid that dichotomy. The value they perceived is to the retailing entity, not to the content holder. Since their retail business was something like 50 times bigger than Sterling, it might not have been seen as a terribly difficult decision even though the content holder is always better off if the book is sold in as many places, online or offline, as possible.

Last week, PW did a story introducing Amazon’s “summer list”: ostensibly the books being published by them in the next few weeks. Obviously, these books were signed up before Kirshbaum’s arrival.

I’m not a bookseller. I have no expertise to apply to look at a list of books and decide what should be in any particular bookstore. But nothing on this list looked like a “must have” for an independent bookseller. To make sure, I reached out to a smart one I know and asked her to look at the PW list. “Would you stock these books?” was my question.

Her answer was interesting. “I don’t know about any of these,” she said. “For the most part, I learn about books by sales reps visiting our store and telling us about them. Nobody has ever told us about these.”

I had my staff do a little bit of searching. We couldn’t find a consolidated list of Amazon’s summer offerings online. What we found was the press release announcing 32 titles that PW referred to, but that release only listed 19 of the 32. We couldn’t find anything on any of these books at the Houghton Harcourt web site. We were able to find 14 more titles by looking under the various Amazon imprints (including Seth Godin’s Domino partnership with them) for a total of 33 coming or having been released from last March through November. Is this the “summer list”? Maybe, with global warming…

We found nothing about any of the titles on the Houghton site. Oddly enough, they did publish a prior title by one of the Amazon authors, Max Allen Collins, but they haven’t listed the current one, a collection of short stories.

(Here’s an ironic thought. You think Amazon will place an ad in the PW Announcement Issue to get this all straight?)

So, as far as we can tell, the Amazon summer list contains very few books that the old publishing guard, publishers or booksellers, will suffer much for having missed.

Except, of course, that maybe Amazon can create demand among the millions of online customers they have for books and ebooks. If they do, and the word of mouth grows to a point that independent booksellers find they must stock these books, Amazon will really have created a new publishing paradigm. That certainly seems to be what Godin is counting on.

Nobody — or at least very few — outside Amazon knows what new capabilities will be put in place to support the publishing programs Kirshbaum will build. Barry Eisler indicated at our Publishers Launch BEA conference that he had received a six figure advance for the book he just signed directly with Amazon to publish. He seemed to expect, or at least had hopes for, a robust bricks-and-print strategy along with his high ebook royalty. But he’ll have the same problem with Barnes & Noble and independents that Sterling had with Borders: it will take the perception of a very high level of demand to compel them to stock a book from a company they think is taking the bread right off their table.

A related development is that Arthur Klebanoff, one of the original ebook publishers founded on the idea that the big publisher standard of 25% ebook royalties creates opportunity for entrepreneurs, told the British AAA (the agents) this past week that he’d be delighted to publish their backlists and pay a 50% royalty. To agents who are already planning to do this themselves (and quite a discussion has broken out in the UK about whether that is a legitimate thing for agents to do; the AAA has decided it is) Klebanoff points out that things can go wrong with ebook publication (it might not sell, for one thing) and agents would be wise not to jeopardize their relationship with an author client when there are alternative ways to get a high royalty.

Klebanoff seems here to be jumping squarely into competition with Jane Friedman’s Open Road, which has been signing up content with very much the same pitch. (Open Road also has other attributes to tout, primarily some very talented digital marketers and a focus on developing tools and techniques to do that work effectively.)

Meanwhile, other agents are setting up their own digital publishing capabilities and service offerings continue to mushroom. Agents tell me — two were in the office this week talking about this — that their authors are frequently asking about self-publishing.

Does the insight Bide offered to me late in the last century about scholarly journals end up applying to trade publishers? Will the most obvious sign of a challenged model become the resistance of authors to their blandishments and their advances? There seem to be a lot of entities betting on the idea that it will.

It is worth noting here that there’s one dog that hasn’t barked. Richard Curtis was the first ebook publishing agent. He set up his E-Reads business over a decade ago. He also pays 50% royalties. Richard did not create E-Reads to compete with publishers on royalties but because when he did publishers just wouldn’t do the ebooks. He has built his enterprise since that time to nearly a $1 million annual business (meaning that he’s delivering half-a-million a year to authors for properties that, at least until very recently and perhaps still, would never have been put into ebooks by a publisher.) But his name is noticeably absent from the chorus using higher ebook royalties as a public prod to bedevil publishers.

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“A Global Perspective on Digital Change” will be our first show in London


The first Publishers Launch Conferences show outside the United States, “A Global Perspective on Digital Change”, will be at the Congress Centre in central London on June 21, with the Publishers Association serving as our partners in putting on the event. We also owe special thanks to the PA’s group of Digital Directors, who were extremely generous with their time and insight. If you can be in London that day, you couldn’t find a better way to spend it than with us.

We’re still putting the finishing touches on what will be a one-day conference packed with illuminating conversation, but we can tell you quite a bit about it already. We aim to deliver strategic, practical, and focused discussion of near-term issues and opportunities. This won’t be a showcase for cool products or a venue to debate what the future might look like some day. We’re examining essential issues — ebook “export” opportunities; what happens to territorial rights; hiring and retraining to meet today’s challenges; revamping publishing systems for a dual print and digital paradigm; getting “found” on digital shelves — that publishing professionals should focus on now to thrive in the days to come.

The UK market is in between the US and the rest of the world in its migration from print to digital reading. Kindle and iPad sales really took off last Christmas and, while ebook penetration may be a fourth or less of what it is in the US, it has grown enough to be disruptive and to generate a consensus acceptance that very substantial change in the industry is inevitable.

On the one hand, my PLC partner Michael Cader and I have followed the developments in the US very closely so we have some firsthand experience with some aspects of what the UK trade is going through. On the other hand, we know history won’t repeat itself precisely. There are important differences in the markets and there is a substantial group of companies with experience and capabilities developed in the North American market that can hit the ground running in Britain or anywhere else in the world. That alone will make everybody else’s experience different than what happened in the US.

In order to be sure we were talking with the UK industry, not at it, we took some preparatory steps. In February, we put a large number of ideas for panels and topics up on Survey Monkey and invited 70 players in the UK book trade to express their opinions on them. In five days, 40 of the people responded.

Then we followed up by spending three days in London meeting with about 50 people to discuss our ideas and theirs. Our partners at the PA provided invaluable assistance, hosting our conversations and inviting us to join a regular meeting of the Digital Directors to get the insights of the most knowledgable people in the UK market. Those conversations were crucial in helping us focus properly on topics and in locating some key sources of insight. Frankly, despite our long experience working with the British publishing community (I have visited London on business three or four times a year for 35 years), putting this conference together would have been impossible without the help we got.

But because of that help, I think we’ll be presenting the UK publishing community with a lot of very useful discussion that hasn’t taken place at the many prior gatherings that have discussed book publishers and digital change.

One topic that we identified very early is the opportunity we see for publishers in Britain and Ireland to sell into the US market now without payng for a distributor infrastructure or taking an inventory risk. When we started to explore this topic, we learned that, of course, people are definitely starting to plan for it. Some are starting to exploit it. This was something we thought should be happening below the radar, and it is.

This is a peculiar opportunity, because it might be more important for independent UK publishers large and small than it is for the biggest global players. We’re still filling out the panel for this one, but we have Helen Kogan of Kogan Page, an independent whose company was already working in the US market (and therefore has some helpful experience to pass along) but who is seeing the expanded opportunity presented by digital, and Jean Harrington of Maverick House Publishers in Dublin. Jean is also President of Publishing Ireland and we invited her to join this particular conversation for a reason. The Irish diaspora in the US has a particularly strong identity with the old country and we expect books of Irish history and Irish fiction will find a substantial additional market through ebook sales in America.

We’re working on adding another British publisher and an agent to that dialogue.

Another topic arose out of a conversation that longtime UK consultant Mark Bide and I had while we were at Tools of Change in New York in February. How long will it be, I wondered, before half of UK sales are digital? Mark said he wasn’t sure about the timing, but he was sure that the publishers’ systems, overhead allocations, staffing, and infrastructure would require a lot of adjustment to be ready for that day. That’s a good conference topic, we thought.

Then, in our conversations at the PA 10 weeks ago, Anthony Forbes Watson, the MD of Pan Macmillan, told us he had charged his team with thinking through the question exactly as we had defined it. Anthony wants to know “what does 50% ebooks look like? What do we have to do to be ready for it?” The next day we talked to James Long of Pan Mac who told us that, yes, he was actually the person in the company with the primary responsibility for thinking this question through.

We decided the best frame for this conversation was “thinking about the future.” James, as he will tell us on June 21, is largely focused on what Pan Mac needs to do in systems development and integration, workflow changes, and skills development to be ready for a 50% digital world.

But there are two other aspects of preparing for the future we felt could be illuminated by other panelists we recruited.

Perseus, a US company whose Constellation division that provides digital services to smaller publishers is a global sponsor of Publishers Launch Conferences, is one of several companies in the world (Ingram in the US is another; so might Random House be in the US and the UK) that are investing in warehouses and print book distribution capabilities at precisely the time many publishers are disinvesting in them, precisely because they know that most publishers will have to disinvest in them. They’re trying to be there for publishers who want to dispose of fixed cost overheads for the shrinking print book market. We put Rick Joyce of Perseus into this conversation to cover the sensitive topic of consolidation on the physical side (a subject that Dominic Myers, the MD of Waterstone’s, famously put on the UK publishing community’s agenda a couple of months ago.)

Copyright Clearance Center, the US RRO which is also a global sponsor of Publishers Launch Conferences, has steadily called our attention to another industry-wide challenge: the need to manage rights more effectively and on a more granular level to take advantage of emerging opportunities to license chunks and fragments for apps, ebooks, and web sites. We thought that the voice for this topic in London should be local, and we were pleased that Sara Faulder, head of the Publishers Licensing Society, agreed to join this conversation.

Mark Bide has agreed to moderate this group in what I think will be a dialogue about publishers and the digital future unlike any the audience will have heard before. (Except, that is, if they are at our Publishers Launch BEA show on May 25, where we’ll have a different version of this conversation, one more focused on export and rights sales than infrastructure, but also covering the change we’ll see to selling more and more fragments.)

We’re not above stealing our own ideas and giving them a local spin. One panel that was extraordinarily successful at Digital Book World last January was one we describe in shorthand as “new skill sets”. It’s about capabilities publishers need to get that they don’t have and it is about process and workflow changes and the use of cross-functional teams as well as hiring in or training people with new skills. Charlie Redmayne of HarperCollins did that panel for us in New York in January and is reprising it at our BEA show. In London, he’ll be joined by Juan Lopez-Valcarel of Pearson and Jacks Thomas, the CEO of Midas Public Relations, on a panel moderated by Jo Howard of Mosaic Search & Selection Ltd. One of the key elements in the New York discussion of this, which we expect will arise again in London, is “when is it best to hire in the skills and when is it better to retrain the people I already have?” This is a subject every publisher needs to be thinking about that isn’t discussed in public very often.

We’ll have three of the top digital leaders of UK houses — George Walkley of Hachette, David Roth-ey of HarperCollins, and Sara Lloyd of Pan Macmillan — joining Michael and me for a dialogue about the big companies who have cut their teeth on the US market and are now taking their capabilities worldwide, starting in the UK. We’ll be talking about Amazon, Apple, Google, Kobo, Ingram, and Overdrive (the six clearly-declared and clearly-capable global ebook players) as well as Sony, aspirants like Copia and Blio, and US titan Barnes & Noble (which has shown no clear signs of global interest yet.) It looks to us like there is only one UK player with a global perspective, still-tiny cell phone provider Mobcast, but we’ll be learning from our panelists whether there are others we should be considering. And our audience will learn more about the North American companies which are bound to be a big part of the local market’s ebook life in the years to come.

We’ve reached a time when “metadata” is an important subject to discuss, no matter how dry or back room it has seemed. We were fortunate to get Graham Bell of EDItEUR to moderate a dialogue about this for us. He’s recruited Jon Windus of Nielsen and Karina Luke of Penguin to discuss it with him. We’re now looking for a retailer to join them. The condition of metadata in the marketplace is not good enough in enough places yet. This is costing publishers sales. This panel will explain why that is and what every publisher should do to make sure this isn’t a huge hole in the side of their boat as online sales, print and digital, grow and the impact of metadata grows right along with them.

We are also going to have a discussion of the future of territorial rights. Richard Charkin of Bloomsbury, a well-known skeptic about them, and David Miller, an agent with Rogers, Coleridge and White Ltd., have agreed to participate. We’re looking for a full-throated defender of the current territorial regime to join them in what will be more of a conversation than a debate. We wonder whether territorial rights make as much sense in a 50% ebook world as they do in the 5% ebook world we might now be in. The agent’s voice in this conversation might be the most important one because, after all, they decide whether the deals are acceptable or not.

One thing that the territorial rights dialogue will certainly entertain is what we should expect to see in terms of author initiatives. That topic is bound to come up in two other discussions as well. There’s one we’re now calling “experiments, best practices, and out of the box thinking” which is really about innovation. But we are going to focus on innovation in business models and practices and innovation in marketing, not on product innovation. We are still working on putting this group together, but we were very impressed with our preliminary conversations with two of the panelists.

Marc Gascoigne is at Angry Robot, a sci-fi imprint started by HarperCollins and then bought by Osprey. Angry Robot’s better mousetrap is its community focus; Gascoigne will make the case that doing that right (which many publishers say they want to do) requires that everybody, and that means every editor and everybody else, communicate directly with the audience. It is hard to see putting that across in many established trade houses.

Richard Mollet of the PA will moderate the conversation with the innovators.

Also on that panel will be Peter Cox, an agent with Redhammer. Cox is changing his own business model (providing more in the way of services to his authors, but charging them more for it and looking to represent fewer authors, not more) but he’s effectively changing the author-publisher relationship as well by making the author an active marketer and community gatherer. He’ll have examples and he’ll have ideas that will challenge the thinking of many publishers and agents in the audience.

The last panel of our day is intended as a Grand Finale. Michael Cader and I will sit with Stephen Page of Faber, Rebecca Smart of Osprey, John Makinson of Penguin, and agent Jonny Geller of Curtis Brown. We’ll get their take on the speed of the ebook takeup and its consequences.

How will British publishers cope in a market that may soon have no full-line bookstore chain? How will the industry cope with the rise of self-publishing? Is there any real danger of a consolidated English-language world in which London becomes subsidiary to New York? Or, in some companies, might it be vice-versa? Will both agents and publishers be changing the core business models which have prevailed for the past century over the next few years?

What excites me about the last panel — aside from the sheer smarts and savvy of the people we got to join us — is the diversity of their perspectives. The publishers run companies of different sizes and with very different approaches to building their publishing lists. The agent joining us has gained a reputation as one of the most digitally savvy players in the UK market. Michael and I thrive on spirited conversations with very smart people; we think we’re going to finish the day very stimulated and with big smiles on our faces.

And we think our audience will too.

Of course, before we get to London, we’ll be running our “eBooks Go Global” show aimed at international visitors and their trading partners at BEA. At that show, we’re particularly excited about two panels we won’t be doing in London. One is with a few booksellers already working with the new Google Ebooks capability reporting on how it is functioning for them. The other takes a slightly different approach to the “selling in the US” opportunity. Patricia Arancibia of Barnes & Noble, which has aggregated about ten times as many ebooks in Spanish as most people in Spanish markets will tell you exists, will open a lot of foreign publishers’ eyes to the possibilities that exist for them in the US market. We’ll also have a chat with Barry Eisler, the author who turned down half-a-million bucks to self-publish. And that’s not all. Tickets still available… And tickets still available for London as well.

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