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Export sales is one of the few areas of predictable growth for book publishers


For a client meeting last week, I was shown a chart that came from Bookstats of channel revenue for publishers. Bookstats is the recent (and now no longer) partnership between the AAP and BISG collecting book publisher shipment information. It has four years of data, which were arrayed in a neat bar chart.

Since the chart showed publisher shipments, it was an imprecise gauge of sales. The third largest channel was “jobbers/wholesalers”, and those books went somewhere else (if they got re-sold and not returned), but we don’t know where. Basically all the other channels got those books eventually.

But it is noteworthy that of the eight channels enumerated (one of which is “other”), only two showed increased sales from 2010 to 2013: online retail and export sales.

Indeed, export sales are one of the real growth opportunities for publishers, and particularly English-language publishers, in the future.

The reasons for this aren’t hard to understand. English is the most important second language in most countries that are not English-speaking. And, obviously, ebooks create no-inventory and little-friction distribution opportunities that make it easy for a publisher in New York or London (or Sydney or Toronto) to deliver to a customer separated by any distance or number of oceans.

In addition, the search engines are global so “discovery” can take place anywhere as well which can increase the demand for printed books as well as digital ones, even though the printed books present a more complex delivery challenge.

The opportunity brings along its challenges. One is that rights conventions need to change. Publishers often have their rights to distribute in some parts of the globe limited by contract. But even when rights aren’t an issue, marketing — including both customizing the metadata and the pricing to a very large number of local territories — can be.

This opportunity has grown rather recently at the same time that many publishers have been preoccupied with overcoming obstacles in their home markets. Both the US and UK markets have been roiled by the relatively sudden emergence of a strong ebook market and the concurrent (and related) weakening of the brick-and-mortar infrastructure for print. Publishers have been scurrying to change many of their practices: licensing differently, learning to do SEO well and employing other digital marketing techniques, shifting their internal structures and workflows, and grappling with the opportunities presented by social media. Many have expended effort on apps and enhanced ebooks which were time and money traps in markets that briefly looked promising but then didn’t pan out.

But in a more settled marketplace, which we have now (perhaps temporarily), the opportunities for growing revenue through export sales is going to get increasing attention from all publishers, who will be happy to know that entrepreneurial companies — some new but some quite established and familiar — have been building out the capabilities to help them.

There are three panels at Digital Book World that will really inform publishers that want to work harder to exploit this opportunity.

The mostly obviously relevant one is called “Global Publishing Tactics: understanding distribution, metadata, pricing, and marketing to maximize sales in different markets”. Two of the panelists are Marcus Woodburn of Ingram and Gareth Cuddy of ePub Direct — we have other conversations pending — and moderated by Len Vlahos, the executive director of Book Industry Study Group. Marcus and Gareth and the panelist(s) who will join them have experience selling around the world on behalf of many publishers. Their insight and advice will be gold for publishers looking to expand their export sales.

We also have a panel discussion “Global Market Spotlights: reports from markets around the world”. The four markets we’ll discuss are Germany, Italy, Brazil, and Russia. The panel will be moderated by Thomas Minkus of Frankfurt Book Fair. Our panelists — all of whom are local players — will talk about the switch to digital reading and online sales in those markets, but will also give specific insight into the market for English-language books.

Another discussion which is a bit more tangential, but will still be informative for publishers trying to grow ebook exports, is one on “How People Read”. What we’re trying to get at here is to use the knowledge that ebook platform providers have about the granular detail of reading consumption: about devices, how far people go in various kinds of books, whether they read more than one book at a time, and how they respond to pricing changes. All of our panelists — Micah Bowers of Bluefire, Michael Tamblyn of Kobo, David Burleigh of Overdrive, and Andrew Weinstein of Scribd — are superintending global platforms. Another aspect of what they’ll reveal is how these consumption patterns vary across markets, including how much English is read in various export markets. Chris Kenneally of Copyright Clearance Center, which also has an increasing international focus, will moderate.

We could well also learn more about global opportunities from the keynote talk we’ll hear from Brian Murray, the CEO of HarperCollins, and Michael Cader and I will certainly be asking Russ Grandinetti of Amazon about how publishers can maximize their export sales through them.

So if export sales is on your current agenda, a visit to DBW on Jan 14-15 also should be. And, in that case, sign up before the end of the day on Monday and save yourself some dough. Early bird pricing ends on Monday night.

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Much-trumpeted survey proves the opposite of what the surveyors seem to think it does


Do library eborrowers also buy ebooks?

Well, stop the presses. OverDrive, the leading aggregator providing libaries with ebooks, and Library Journal* have done research that proves that they do. (*My error hereby corrected: American Library Association, not Library Journal.)

The survey results are interpreted as evidence that the big publishers are making a terrible mistake being cautious about making ebooks available for library lending. And it is being reported that way. By one outlet after another, although one made the point that the publishers aren’t listening.

Perhaps the publishers aren’t changing their policies because they actually are listening. In fact, the survey proves that caution makes sense. Here are the followup questions.

“What makes you decide to buy an ebook rather than borrow one? Might it be that you’re buying the ebooks that are not available to you through the library?”

I’d offer two points to ponder.

One: what if the survey had said “we have found no overlap at all! The people who borrow ebooks from libraries never buy an ebook. They only borrow.”

If that were the case, would there be any reason at all not to sell ebooks to libraries? No! There would be no potential for sales cannibalization among that audience if borrowers and buyers did not overlap.

Two: I started reading ebooks on a Palm Pilot in 1999. Between 1999 and 2007, if you’d asked me, I would have had to say I still read print books as well as digital. Why? Because a lot of what I wanted to read wasn’t available in digital. So if I wanted to read it, I had to read the print.

Then in 2007, the Kindle came along and, with some helpful pressure from Amazon, publishers routinely made their most commercial titles available as ebooks. So I wasn’t compelled to read print anymore. And, in fact, I have read only one or two printed books since then. (I remember one clearly but I think there’s another one too.)

What if the book purchasers among the library ebook borrowers have precisely the same motivation? What if they’re buying some ebooks because those aren’t available in the library?

So I’d say “thanks for the information” and for evidence from an unbiased source that publishers are entirely correct to be wary and careful about making ebooks available for library lending.

The New York Times says this morning that Penguin has announced a second set of “experiments” with ebook lending policies. The first one was with distributor 3M; this one is with Baker & Taylor. They have chosen time-limited (1 year) licenses as their gambit. As I told the Charleston audience last week, our client Recorded Books is about to debut an ebooks-for-libraries program that will give publishers the flexibility to control four aspects of the license: in or out of catalog; price; number of loans limit (if any); length of license (if limited). Obviously, the Penguin experiment could be conducted with the RB capability, with the advantage to them that they could vary the terms by title and change them over time (always honoring deals already made, of course.) 

Doing this requires a tool set for libraries to manage their ebook collections, which Recorded Books will provide. Over time, the RB capability should enable enough experimentation to bring far more titles into the library marketplace while allowing publishers to learn what works and adjust to what almost certainly will be a changing environment.

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More thoughts on libraries and ebook lending


On Thursday of this week, I’ll be at the Charleston Conference appearing in a conversation organized by Anthony Watkinson that includes me and Peter Brantley. Brantley and Watkinson both have extensive backgrounds in the library and academic worlds, which are the milieux of most attendees at this conference. I don’t. I am being brought in as a representative of the trade publishing community. Watkinson believes that “the changes in the consumer area will break through into academic publishing and librarianship.” I am not so sure of that.

I am imagining that what creates interest, and concern, among all librarians about trade publishing has been the well-publicized tentativeness of trade publishers to serve the public libraries with ebooks in the relaxed and unconcerned manner with which they have historically been happy to sell them printed books. Big publishers have expressed their discomfort with ebook library lending in a variety of ways. Macmillan and Simon & Schuster, up to this writing, have declined to make ebooks available to libraries at all. HarperCollins instituted a 26-loan limit for ebooks with libraries a little over a year ago. They received apparently widespread — certainly loud — criticism when they announced the policy, but it seems now to have been accepted. Penguin and Hachette delivered ebooks for lending and then stopped. Now both are putting toes back in the water with experiments. And Random House raised their prices substantially for ebooks delivered to libraries for lending.

So, six for six, the major publishers have struggled publicly to establish a policy for ebook availability in libraries.

The concern, as I’m sure my conversation-mate Peter Brantley will point out, extends to what rights libraries have when they obtain ebooks. I’ve expressed my belief before that all ebook transactions are actually use-licenses for a transfer of computer code, not “sales” in the sense that we buy physical books. When Random House declared the opposite in the last fortnight — that they believed they sold their ebooks to libraries — it only took Brantley a wee bit of investigation to find that Random House’s definition of “sale” didn’t line up with his.

Of course, his doesn’t line up with mine. I believe (he’ll correct me on stage in Charleston, if not in the comments section here, if I’m wrong) Brantley accepts the one-file-transferred, one-loan-at-a-time limitation that has been part of the standard terms for libraries since OverDrive pioneered this distribution over a decade ago. That control enabled ebook practices to imitate print practices (except for the “books wear out” part, which Harper was addressing with its cap on loans). Without it, one ebook file transfer would be all that a library — or worse, a library system — would need of any ebook to satisfy any level of demand. The acceptance on all sides of that limitation says clearly to me, without resort to any other information or logic, that there is an agreement — a license — that the library recipient of an ebook file accepts in order to obtain it.

People who spend a lot of time with libraries and library patrons are quite certain that the patrons who borrow books and ebooks often also buy books and ebooks. (Library Journal offers patron data that supports that idea.) Although library services are many-faceted and not primarily designed to serve as marketing arms for publishers, the libraries themselves see the ways in which they aid discovery by their patrons.

And they also see the patrons that couldn’t afford to buy the books or ebooks they borrow and therefore wouldn’t and couldn’t read them if they weren’t available in the library. Since these patrons become part of a book’s word-of-mouth network by virtue of being able to read it, it looks like this behavior by publishers is not only anti-poor and anti-public, but also counter to the interests of the author and the publisher itself. (In fact, most publishers acknowledge the importance of libraries to the viability and marketing of the midlist although that, until very recently, was adequately addressed with print alone.)

And, the libraries point out, the one-book, one-loan limitation means that all the hot books have long waiting lists anyway, so many patrons just cut to the chase and buy the ebook rather than wait. (In fact, schemes by which the libraries themselves can sell the ebook are beginning to develop as well.)

The view from the publishers’ perspective (and, it is important to add, from the perspective of the agents of many highly-compensated authors, who have enormous influence over publishers’ thinking) is quite different. Libraries, which can be the core market for many books published by academic and professional publishers, are more likely to be around 10 percent or less of an adult trade book’s sale. So the risk-reward calculation starts with a sharp limitation on what is the expected “reward”.

The risks are harder to quantify because they are much more complicated than just trying to figure out how many of the loans of an ebook licensed to a library cost the publisher a sale of that ebook through retail channels.

The big publishers are acutely aware that the ecosystem of bookstores they’ve depended on for a century is giving way to something new, which appears to be a mix of retail ebook platforms, community book information sites like GoodReads, author-based marketing, and, of course, publisher efforts to reach potential book buyers through community- and list-building, SEO, and collaboration with other websites.

Consumers will, of necessity, be changing their shopping habits as they migrate from reading print books to reading ebooks. Right now, as ex-Random House marketer Peter McCarthy points out, the key decision is which retailing platform they use. If you buy a Kindle, NOOK, Apple, or Kobo device, you’d be inclined to buy from their platform. It would definitely be easiest and on a Kindle, Nook, or Kobo device, it is really the only practical choice.

But on an Apple device or a tablet computer (or a laptop or desktop, for that matter, although fewer and fewer people will read ebooks on them), the consumer is actually free to use any of the ecosytem apps and, if they want to, choose by price. McCarthy makes the case that doing that on a title-by-title basis will become increasingly unusual. He’s probably right.

But we’re nowhere near the final stage of ebook development. It is going to get easier and it is going to become more widespread. Ultimately what concerns publishers is a vast reservoir of ebook content available on one website (your local library’s, or even a not-so-local library’s) for free while the merchants are trying to make you pay. That’s why such programs as KOLL (Kindle Owners Lending Library) have not gained favor with big publishers.

It really isn’t hard to imagine that in a pretty short time, libraries and KOLL (and some fledglings like the recently-announced “maybe we’re the Spotify of ebooks, or maybe we’re not” Oyster subscription service or Spain-based 24 Symbols) have robust selections available for free (libraries), as part of a broader offering (KOLL), or for very cheap (Oyster’s and 24 Symbols’ aspiration). If that happened, how many customers could be drawn away from the ebook retailer sites and effectively removed from the market for title-by-title purchasing of new books?

How many? Well, we don’t know how many. That’s precisely the concern.

Another thing we really don’t know is what is the future of public libraries. As the relative utility of a building full of printed books declines, libraries correctly point out that they serve many other functions. One that is often cited today, but which I think will be more dated than the printed books aggregation ten years from now, is that libraries provide hardware and Internet access for people who otherwise wouldn’t have it. As devices and bandwidth get cheaper, and the social and commercial benefit of having everybody connected grow and become universally acknowledged and appreciated, that deficiency is likely to be cured by other means.

What is an ongoing need that is not likely to go away is the need for librarianship. The more sources of information there are and the more sophisticated people become about demanding the right information for any task or need, the more that professional help navigating the choices has value. But how will that help be delivered? Online, I reckon, not in a building that you go to and seek out the help. I don’t know the business model yet, but I do know that communities are going to be sorely tempted in the years to come to devote the cash they now spend on public libraries with books and computers in them to providing wider access to more materials through the Internet and providing the information experts, the librarians, outside the confines of a building full of the materials. The materials — with a variety of access and payment models — will be virtual and the librarian will help you get what you need at the price you want to pay for access.

And all of that sounds, and seems, a lot like what booksellers do today (except a lot more complicated).

Which brings us back to publishers and their concerns. Right now, the biggest publishers’ biggest worry is that they will end up in a world where Amazon is the only path to a majority of their potential customers. (Right now, for trade publishers, that number is probably more like 20-30 percent.) That’s why three of the biggest publishers (one being Penguin, so ultimately, this could involve Random House as well) are continuing to struggle to launch Bookish, a strategy that looks increasingly dubious to me. It is why they were so eager to help Apple launch the iBookstore and why they root from the sidelines for NOOK and Kobo and Google to be successful competitors.

Anything that takes business away from the ebook retailing network might be depriving one of Amazon’s competitors of the oxygen they need to compete. (That’s one of the reasons Bookish is looking like a bad idea.) But, more important, with the Internet now making it pretty easy to deliver a selection of reading material larger than anybody will ever plow through at rock-bottom prices, having libraries offer and promote free ebook availability could foster habits that will cost authors and publishers customers in the future.

Of course, all of this is speculative. The library community’s belief that making ebooks available through them will stimulate sales of those books is speculative. But so is the fear of the commercial authors and publishers that libraries in the digital age will have a significantly different impact on reading and purchasing habits than they did for print.

When the problem is lack of information, one of the best antidotes is to enable flexibility and experimentation. That’s why I’m very pleased to be working with Recorded Books on a new ebooks-for-libraries program that will give publishers enormous flexibility in how they structure the license for each book: with granular, title-by-title control of availability, price, a number of loan limit, or a time limit. This requires RB to also give libraries the information and dashboards necessary to manage their ebook collections in ways their print book collections never required. The flexibility will mean that publishers can experiment with a variety of models. The multiplicity of models will be a nuisance for libraries — although RB can do a lot to mitigate it — but it will make a lot more ebook titles available by giving each publisher the ability to control the risks as they see fit. Recorded Books expects to put the program in beta early in 2013 and roll it out by Q3.

It is my hope and belief that the various models offered and the libraries’ reaction to them (agreeing to the licenses or not) will lead to some consensus-forming around particular formulas for these deals. Of course, everything is temporary because everything is changing. And that will continue to be true for quite some time.

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Thinking more about ebooks and libraries and what big publishers should do


The reluctance of most big publishers to make ebooks available through library lending is a topic of widespread attention and concern. The AAP turned a chunk of its annual meeting over to the topic and Dr. Anthony Marx, the President and CEO of the New York Public Library, used his time to volunteer his institution for experimentation to find a model for ebook lending that would work for publishers.

I had occasion to talk to a number of Big Six publishers in the middle of last year about their position on library sales. When they registered their concerns with me, some of what they had to say made a great deal of sense.

What really rang true was the fear that the consumers in an emerging ebook ecosystem would “learn” that getting “free” ebooks from libraries was just as easy as getting ebooks from retailers and paying for them. Given that all this requires is pointing your web browser in a different direction, it looked to many of the publishers like a really poor bet to enable ebook lending by libraries. Sales of ebooks to libraries isn’t a huge market so the upside is limited. And with many ebook retailers struggling to gain traction in an Amazon-dominated marketplace, the consequences of even a small loss in sales could knock players out of the game.

Withholding or limiting sales of ebooks to libraries shares an important characteristic  with agency pricing. In both cases, publishers are implementing policies that they know will result in their revenue being reduced immediately in order to develop what they believe will be a stronger and more diversified distribution network for ebooks in the long run.

It’s worth making a point here. It is reasonable to argue that publishers are wrong on both counts.  These policies are about influencing the future development of the channel and forecasting the impact of various policies over time, so there is not yet any data to prove they’re right or wrong. All we have are guesses based on limited and unprojectable knowledge.

But the publishers are most emphatically not engaging in “short term thinking”. They are sacrificing immediate revenue for what they believe will be a long-term gain. In that way they are like Amazon, which famously will deep-discount or loss-lead today’s sale to build a long-term customer relationship. But Amazon gets credit for long-term thinking; publishers usually don’t.

As most people know who are following the tribulations of libraries trying to stock ebooks, four of the Big Six publishers are not making any ebooks available to libraries at all (except titles already sold in the past.) Random House continues to supply all their titles to libraries as ebooks with only the “one loan at a time per copy purchased” limitation, but they have just raised the prices of those books to libraries substantially. HarperCollins was widely villified a year ago when they introduced a limitation of 26 loans per copy purchased, but this is apparently now more widely being seen as an acceptable limitation. (Random House pricing and the others’ total withdrawal from the market are making 26 loans look good!)

I accept the major premise. If it were just as easy to get ebooks from libraries as it is from retailers, over time more and more customers would migrate to the libraries. But, the more I think about it, the less I accept the notion that total withdrawal from the library market is necessary to create a clear advantage for the retailer as a destination for ebook readers. In fact, it is possible that putting ebooks into libraries, in the right ways, could increase sales at retail. And the only way for publishers to find that out is to do some controlled experimentation in that marketplace. To my knowledge, that’s not taking place.

I have two anecdotes that I think shed some light.

At a conference I organized a few years ago, we heard about a giveaway that publishers Spiegel & Grau did of a Suze Orman book through Oprah. They gave away 1.1 million unprotected PDF downloads in 33 hours on Oprah. The book sales popped immediately on Amazon, of course. But more impressive, and more important, is that the book acheived a return run of several more months on the NY Times Bestseller list. It had fallen off in October. In other words, the substantial number of giveaway copies sparked a rebirth of interest in what had already been a very successful book that appeared to have concluded its run some months before. (Of course, being on Oprah has an effect of its own whether or not there is a giveaway. I think the 1.1 million giveaways helped spur the sales, but, at the very least, they didn’t prevent the Oprah effect from taking place in a big way. The publishers had not expected anything like the commercial result they got.)

And here’s another. About two or three years ago, I was looking around for data that would tell us whether ebook sales were cannibalizing print or adding incremental units. Our friend Rick Joyce at Perseus said “they add incremental units” and he could prove it. I was skeptical, but he convinced me.

What Rick said was that Perseus had converted a number of backlist books that had an established print sales pattern into ebooks. Then they looked at what happened to sales of the overall “basket of titles”. Their print sales went up even though the ebook was selling too. Perseus attributed this to the increased awareness of the books generated by their presence in the ebook marketplace.

But perhaps of even greater significance, the beneficial effect on sales of the ebook publication increased as they went down the long tail. The deeper they went into the backlist, the greater was the lift created by the ebook publication.

It is a stretch to analogize the effect of an ebook being available in a library today with what making an ebook for sale did to print sales two years ago, but it is not a ridiculous hypothesis to test. What if a similar impact resulted from library availability? Might there be some titles you want to window, but others where it would even make sense to sell them to libraries cheaper because of a marketing effect? Could there even be some books that it would be worth giving to some libraries for free?

Both of these examples, being as they are more than two years old (and, in one case, about PDFs, which are a pretty limiting way to get an ebook file), can’t be simply taken as prima facie evidence of what would happen today. People who downloaded the Orman file and found they liked it and wanted to read the whole book would indeed have wanted to purchase a more readable copy. In 2008, that would have meant “print” for the vast majority of people. Perseus did their backlist analysis at a time when they had lots of good backlist not yet available as an ebook and not many consumers read that way. Neither of these things are true anymore. The migration of sales from print to digital is too rapid now for very many titles to maintain their recent print sales rate, let alone increase it on the back of some increased discoverability. (Overall sales might increase, but not print as a stand-alone.)

Nonetheless, these two pieces of anecdata together suggest at least the possibility that the sales the big publishers are losing by withholding from the libraries is a larger number than just the ebooks they’re not selling for loan. They may also be losing other sales that come from discoverability and library-reader-generated word-of-mouth.

It now seems to me that making ebooks available through libraries when the titles are on a downward sales trajectory at retail could generate new life for them, as the Oprah giveaway did for Suze Orman. Yes, this is windowing. If publishers did it on their big ebook titles, they’d be doing exactly what Hollywood is doing with DVDs of major movies, which are also withheld from library distribution until the theatrical and early DVD revenues have been harvested.

The big publishers I have spoken to seem most focused on keeping “friction” in the library ebook experience to approximate the inconvenience of print book borrowing, where you have to go to the library to pick up the book and then to bring it back. In fact, the imperfect interface from OverDrive already provides a good deal of that (except for Kindle loans, which bump over to Amazon and work seamlessly). The absence of any new titles from four of the Big Six may not provide “friction”, but it certainly would drive many readers to a retail channel. (In fact, without some huge change in the way publisher-library relationships operate, there will always be a much larger number of titles available from retailers than from any library.)

What publishers are correct to be worried about is the way the market could change over time. With most book readers still reading print, we don’t really know yet what the marketplace will look like in five or ten years when I’d expect the vast majority will probably read books on screens. That was part of what was behind Harper’s 26 loan limitation. It is also a principle behind Bloomsbury’s “Public Library Online” program (working in the UK for a while now and just being introduced here), by which a “shelf” of books is licensed to libraries one year at a time. (Public Library Online enables multiple users through any flash-enabled browser, but does not support even as basic a user tool as “place-holding”; each time you return to a book you would have to remember where you were.)

In general, time-limiting seems  a much better strategy to me than loan-limiting, although it might not produce the same level of additional sales on bestsellers as loan-limiting.

If any big publisher asked me for an opinion about a library policy (and none has), this is what I’d say today.

1. Start immediately experimenting with “baskets” of titles, because the data on sales trends for a group of titles will be far more reliable than on any single title. If titles are put into groupings of cohorts (fiction in a genre, topical non-fiction, big author brands), you increase your chances of getting data that lends itself to interpretation that enable useful adjustments in tactics.

2. One set of experiments that should be productive would be on titles that have already had their high-volume run. Put 10 or 20 of those titles into library distribution and look at their print and ebook sales results week-by-week for the period before and then after the library release. (And promote the library release to maximize the potential impact.)

3. Look at the “make” books on an upcoming list: those that aren’t by big name authors that are already guaranteed to sell well. Split them in half. Put one half into libraries and withhold the other half. See if you can detect a library effect, positive or negative.

4. License titles for two or three years rather than limiting the number of loans. This will enable the publisher to withdraw them from library circulation in the future if the market shifts. This is a separate question from whether you allow multiple simultaneous loans. That limitation probably needs to remain (although with a loan limit like HarperCollins has applied, I don’t see why it is necessary.)

5. Explore ways for libraries to sell ebooks to patrons who discover titles through them but, for whatever reason, want to purchase them. Referral to existing retailers, with libraries getting the referral revenue, would seem like the cleanest and best way for this to happen. Libraries could sell the ebooks directly, but that approach could exacerbate the concern that library patrons would be “lost” to the retail network.

Publishers’ concerns about the impact of library lending are reasonable. But responding to that concern by simply “freezing” is not helpful to anybody and it may actually be damaging the sales of the books the publishers are trying to protect. I don’t know and the librarians don’t know what the marketplace impact will be of branded ebooks being made available through libraries, but the publishers don’t know either. It is time for all of us to start finding out.

I think big publishers have widely accepted a similarly flawed perspective about the impact of  piracy. It is likely that piracy, like library loans, will have a net cannibalizing effect on some titles and a net promotional effect on others. If you accept the truth of that statement, then you should see that telling which titles are which is the most important starting point to creating policy in either case. How many houses today are consulting their marketing departments when they make their piracy policies? It would seem like a good idea.

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Libraries and publishers don’t have symmetrical interest in a conversation


Because libraries are, at most 5% of a general trade publisher’s business and far less of the ebook business, and because the market is changing so rapidly and because every retailer except Amazon can be said to be struggling to carve out a sustainable position in the global ebook marketplace, there are many legitimate reasons for the biggest publishers to take a wait-and-see attitude about libraries and ebooks. The fear is of a “shopping and consuming” experience at the libraries which is comparable to what the retailers can offer. That potential is largely mitigated now because most of the big books don’t go to them. But, if they did, publishers fear the market could shift away from retail.

That fear is not just about a “lost sale”. It is also about a “lost channel” of sales, or a pipe to the consumer that runs entirely through Amazon.

Of course, libraries view this differently because the big books from the big publishers are a lot more than 5% of their patrons’ interest. This is an imbalance that would explain the difference in attitude of the parties, for anybody who cares to accept the reality of it. That is, the atavistic “instinct of self-preservation” leads libraries and publishers to somewhat different conclusions about what the best outcome would be and how quickly the industry should move to it.

Saying this within a list conversation provoked a question from somebody from a library-centric point of view. Was I saying that the principle fear is that Amazon could “own” the lending experience, and that the traditional library channel and whatever sales it might secondarily bring would be lost? Or was I saying something else?

Now, I actually hadn’t thought about that, although the way that the libraries collaborated with OverDrive to structure the deal for Amazon lending, that possibility became far more likely than it had been before.

What I meant was that we already face the possibility that we’re headed for a single retailer for ebooks and print online called Amazon. Every other channel to the consumer, libraries and retailers both (whether they know it or not) are ultimately fighting for their digital lives. Publishers don’t want to do anything that weakens Kobo, Google, Barnes & Noble, or anybody offering a commercial channel to customers. It is perceived (intuitively, without data, although I would actually argue that there are great limitations to the value of data because we’re talking about the consequences as the ecosystem changes over time, not the situation at the moment) that giving ebook consumers ways to get what they want without paying for it weakens the other retailers.

And, wouldn’t you say by Amazon’s behavior encouraging lending through libraries and outside them, that maybe they see that possibility too?

I always expect an entity to act in its own self-interest, particularly when survival could be involved. (And Amazon, trading at 135 times earnings and facing the likelihood that their sales tax advantage in the United States is on the verge of being eliminated, is entitled to think that way too.) I think we should all understand that intelligent people on all sides feel that they are fighting for their survival. That includes Amazon, the publishers, the competing retailers, and the libraries. Our problem is that the interests don’t align and what I think people sometimes have trouble accepting is that it is possible they never will.

The library fan was trying to understand “my argument” and attempted to summarize it. In the summary, the innocent conflation was made that I was suggesting that each library loan could translate to a sale lost and that even if they were divided propotionately, I was suggesting that Amazon’s competition would be hurt more than they would.

But I really wasn’t trying to take sides or endorse any particular position in this dispute at all. I’m personally not sure whether library loans would spur sales or cannibalize them at the moment and, even if I thought I knew that, it would be another big leap to assume that today’s situation would persist into a different future. And I don’t think the publishers who are concerned are thinking about sale-for-sale; what they’re thinking about is the overall eco-system that is developing.

I am glad I am not a big publisher who has to make these decisions. I only decide when I have to and I’m actually deliberating now on behalf of a bunch of books I control, without having made decisions. But whatever I do, I wouldn’t assume that Simon & Schuster should do the same thing. (Sometime in the next few weeks I’ll have to decide about DRM and about library lending across a range of ebook titles for which I inherited rights, and POD files, from my Dad.)

There are a number of paths, from what OverDrive is already doing to the Bloomsbury shelf idea to the 3M “lend a device” idea to Recorded Books’ subscription concept to withholding completely that are all reasonable tactics in the current marketplace. People don’t lose too much by staying out at the moment nor do they risk too much going in (when the technology is still pretty klunky and most of the big books aren’t in anyway.) Random House is taking advantage of the situation very adroitly, and no doubt causing their Big Six competitors to grind their teeth, just as they did when they delayed agency. (They’re continuing to supply libraries without limitation, but they’ve raised the prices on the “library editions” of their ebooks.)

I’m really not inclined to make judgments because there are too many things I don’t know about each company’s situation, where they are balancing agent relationships and, in the case of the three publishers that are investing in Bookish over here and two others investing in Anobii in the UK, plans to develop the channel themselves. But I think most of us agree that the price-per-read major publishers will be able to capture is very likely to go down. (Some optimists would argue that the number of reads will go up, but, of course, that’s of questionable comfort if the number of authored books available also goes up, and it will.) So publishers are highly conscious of that in ways they never had to think about when the price of what they sold was bounded by physical realities.

These aren’t moral decisions, they’re commercial ones (even when they’re being made by not-for-profit entities.) I would expect smaller publishers to take advantage of most of the Big Six not being in the libraries by getting more sales and discovery for themselves (maybe the same way Random House is, at premium prices!) If the sales turn out to outweigh any risks or negative consequences, then the Big Six will come back in and that piece of the market will change again to the detriment of the upstarts. Meanwhile, some authors will have been discovered that wouldn’t have been if the Big Six had been there all along.

It’s a very long multi-player chess game, not the Super Bowl. I tend to watch and scratch my head, not cheer for any particular team.

I noticed in the most recent report about B&N’s results that their sales of print books through dot com is declining. A trusted resource who follows these things more closely than I do says that has been the case for a while. This looks to me to be a real negative for both B&N and the publishers going forward.

The right way to think about how the future is shaping up is not to watch the split between ebooks and print books. That’s misleading. What matters is the split between books purchased in stores and books purchased online. Books purchased online are both print and ebooks.

Intuitively, it would seem certain that print sales through online channels are rising. Certainly some of the former Borders store business went that way, and the trend should be in that direction regardless of any particular store or chain closing. If B&N’s print sales online are down in absolute dollars, then they’re getting really clobbered in share. When the history of Amazon’s growing dominance in the life of the book business is written, their dominance in online print will be an important part of the story.

When Amazon bought The Book Depository, the UK Competition Commission made what feels to me like a massive logical error by looking at the book business as a whole, rather than recognizing that the growing online piece and the shrinking brick-and-mortar piece were really two different businesses. Although BD’s sales were mostly outside of the UK and their share of the UK online print business was miniscule compared to Amazon’s, they were a working platform that could have been a springboard to global competition for somebody; now they’re consolidated into the Amazon world. As I wrote recently, we’re headed to a time where most of our sales will occur online. Growth in Amazon’s share of online print adds to their potential industry dominance just as surely as Kindle growth does.

And it is a post for another day, but we’ve just gotten a clear reminder that Amazon can adjust its trading terms as its position strengthens. I wonder if the voices that celebrate the consolidation of the business under Amazon are taking into account that the same thing could happen to them someday.

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What smaller publishers, agents, and authors need to know about ebook publishing


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Are open markets for ebooks a race to the bottom on price? Maybe our London show will help me understand


Sometimes something seems very obvious to me, but other people — smart people I respect — don’t see it that way and it makes me wonder if I’m missing something.

What I’m thinking about that way today is the future of “open territories” in the ebook world.

When English-language rights are sold to US and UK publishers, some territories outside the home markets are “closed” and others are kept “open.” Closed territories are reserved to the publisher who owns them; in open territories a US edition and a UK edition can both be legitimately sold.

For most of my career in publishing, Europe was an open market. Both the American and British editions of a book would be available there. Although currency fluctuations came and went and could temporarily change these things, most times the US edition carried a lower cover price (when converted to the local currency) but the UK editions were usually more widely available. Sales reps from the UK tended to call on the once-small but persistently growing number of bookstores that carry English-language books. British publishers had warehouses that were closer, shipping costs that were lower, lead times that were shorter, and customer service groups that were more comfortable dealing with Europeans.

With the coming of the EU, British publishing has moved to formalize and make contractual what was previously just their natural advantage. British publishers pointed to the fact that once an American edition was sold in Europe, EU rules would allow its importation into the UK itself! So unless the European market were closed to US editions, Britain itself was not closed to US editions. And that, quite naturally, was not a situation that British publishing could accept.

Of course, for an American edition to wind up on a British shelf would require two trips across the water: one from a US warehouse to Europe and then another from Europe to the UK. It might seem that this double-shipping would wipe out any presumed US pricing advantage, and I don’t recall any evidence of US-published imports showing up in any number. Nonetheless, for the past several years, UK publishers have succeeded frequently, if not universally, in excluding the American editions from Europe.

As with all things in publishing this subject is being revisited as publishing adjusts to ebooks.

As we know, the ebook market started to take off in the US in late 2007 and has grown to be a solid double-digit percentage of publishers’ sales with much higher numbers, often 50% or more, of the units sold in the opening weeks for major titles. In the past few months, British ebooks have started on a similar, perhaps even more accelerated, growth trajectory. So ebook revenue is squarely on the radar screen of the English-language publishers who are increasingly cognizant of English’s position as the world’s leading second language. Nowhere is this effect more evident or the future sales expectations greater than in Europe.

Right now, the European ebook market is still miniscule. Germany, one of the countries with the most advanced local-language digital infrastructures, recently reported ebook sales of one-half of one percent of the market. But it is not uncommon for German bookshops to see double-digit sales percentages of English-language books in their shops so we know there’s an English-language market there. English-language publishers, with the experience of explosive growth in their home markets under their belts, have good reason to expect the same thing to happen in Europe and for them to be among the principal beneficiaries.

But there’s a problem. Or, at least, I think there’s a problem.

The open-market competition for print books is waged primarily around service. The reps that call on the stores tend to take business away from the companies that call less often. The advantages of proximity and familiarity favor the British; sometimes the advantage of price can favor the Americans. But no trade publisher in either country tries to create cheaper, locally-priced editions of trade books for the European market.

In the ebook market, the competitive factors that prevail in print are moot. If a store sets up to sell ebooks, it will list every one in the catalogs it offers. As the ebook market matures, that will mean that, if the territory is open, both the UK and US editions will be available to the consumer. And with no other basis on which to make the decision of which to buy, the customer will almost certainly choose the ebook edition with the lowest price.

The logic of this seems inexorable to me. As the market grows, as the publishers become more aware of it, and as the consumers learn more about what is on offer, offering a lower price will be the only effective way to grow share in an open territory. This is damaging to everybody except the ebook consumer, who will get windfall price cuts. The publishers will gain share, but lose revenues. The authors, operating on a piece of the sale price, will lose revenues. And the lower prices for these English-language ebooks will further erode local-language sales and further undercut brick bookstores.

(European bookstores are extremely vulnerable to sales erosion as the market shifts to digital because the English-language selection they offer will look increasingly paltry compared to what will be available online.)

But some very smart agents seem to see something different from what I see. At our “eBooks Go Global” conference at BEA last week, Simon Lipskar of Writers House specifically declined to insist on closed markets and celebrated the virtues of “competition” on behalf of his writers. In another BEA session, Stephanie Abou at Foundry was quoted by one reporter saying “our goal to get authors the best shot at being published the best way. what that means is we have this fight to keep Europe non-exclusive.”

Of course, timing is everything in life and in dealmaking. There really is no European market for ebooks to speak of yet. There are structural impediments to growth. A panel including Google, Kobo, Ingram, and OverDrive at “eBooks Go Global” spelled out some of the complex local compliance issues that make it take time to set up a store in each new country. My concern about a “race to the bottom” assumes a much more developed market than we have today, with both US and UK editions made ubiquitously available in a European ebook market that resembles what we’re seeing today in the UK, if not in the US. That may be two years away, or even more.

So maybe Simon and Stephanie do see what I see but they might also see it as far enough away not to be relevant yet for deals they’re making now. But maybe our difference is more fundamental. They both referenced “competition” in expressing support for open territories. It is precisely my concern about the effects of price competition that it seems to me they’re ignoring.

It feels to me like I must be missing something somewhere. Not only do I think the agents should be moving to close markets in the interests of their clients, I think publishers in both New York and London should be moving to close markets because they’ll ultimately make no money on the books for which the markets are open. I’d say it is better to control a closed market for half your list (or even a third of it!) than have an open market for all of it.

This subject is of great interest in the US but it is existential in the UK. Sales made in Europe are already critical to UK-based publishers, on titles where Europe is open as well as on titles where they control it contractually. Since UK publishers are already trying to close the market in their favor for print, one can hardly expect them to be less zealous about closing it for digital books. But their leverage to close Europe, for digital or print, is primarily based on their ability to sell print in the UK. Those are the sales they can make that nobody else can. And those are the sales that finance serious advances that nobody else will pay.

But will that leverage vanish as bookstores diminish and the sales of print become less important?

The panel that will explore this subject at our “Global Perspective on Digital Change” conference in London on June 21 will be my next chance to be enlightened on this subject and shown the flaw in my thinking if open territories for ebooks are not a race to the bottom. We’ll have publishing CEOs Richard Charkin of Bloomsbury and Toby Mundy of Atlantic Books and agent David Miller of Rogers, Coleridge and White discussing this topic with Philip Jones of Future Book moderating. I’m sure this panel, along with many others on that day, will be opening some minds. Mine is lined up to be among them.

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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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Introducing the North American Big Six


There’s a new Big Six in town. Or maybe not “in town.” But “on the planet.”

The Big Six is a term commonly used to collectively designate the behemoths of US trade publishing: Random House, Penguin, HarperCollins, Simon & Schuster, Hachette Book Group, and Macmillan. Although there are other large players, some of whom occasionally can compete with these companies for seven-figure authors, the lion’s share of the biggest author brands are published by one of these six houses.

But from the perspective of publishers or booksellers outside the United States, there is a new North American Big Six. These are the companies that have direct relationships with publishers — all of them that matter in the US (with one noteworthy exception) and, increasingly, those that matter overseas as well — to secure the rights to distribute ebook files wherever in the world the publishers have rights.

Why does this Big Six matter so much? Because as dedicated ereaders and tablets and smartphones that can effectively serve as ereaders gain increased market penetration anywhere, the appetite for ebook content will grow proportionately. In languages other than English, the number of published books currently in epub — and therefore deliverable as reflowable ebooks — is paltry compared to what we have. It will take a long time for the publishers in most countries to make enough content ready to satisfy that growing hunger in their local markets.

And the Big Six companies have the infrastructure, and, most importantly, the rights, to satisfy that appetite everywhere.

Three of the North American Big Six are well known and would be immediately identified just about anywhere. Although Amazon, Apple, and Google have not yet opened their ebook “stores” in every country in the world that can buy ebooks, it won’t be long before they will. These three global giants all derive more revenue from outside the book business than they do from ebooks (and only Amazon, of the three, has any commercial interest in selling books except for ebooks.) But they are past (Amazon), present (Apple), and future (Google) game-changers: companies that have such an enormous presence that their entry into any area, certanly including ebooks, causes every other player in the market to sit up and take notice.

There is a fourth player like them, relatively tiny Kobo,.Kobo is also an ebook retailer. Over the past two years, they have been extraordinarily successful at getting publishers to establish direct relationships with them. (I didn’t track this with great precision, but I believe Kobo was the only company besides Amazon to have all the agency publishers on board the day agency selling started last April.) Kobo has “white-labeled”, or powered, an ebook store for Borders in the US and Red Group in Australia (two booksellers who, coincidentally or not, have just filed for bankruptcy protection). Kobo also has, according to their executive, Michael Tamblyn, at Tools of Change, “more than two million registered users.”

All four of these companies will be competing as ebook retailers in every market in the world and in every language in the world. They all start out with a robust aggregation of US-published ebooks. Apple is the laggard here. They don’t carry Random House books yet — the “noteworthy exception” referred to in the third paragraph above — and they have fewer available titles than any of the other three. But Apple comes with its own significant advantages in the form of the wildly popular iPhone and iPad. These devices assure a certain minimum amount of traffic to their iBookstore, even if Apple doesn’t move ahead with in books with the power play they’ve just exercised over subscription sellers of magazines and newspapers. (And so far we have only rumors and stretched intepretations of what they’ve said and done to suggest that they will do that anytime soon.)

Because American hegemony is resented in much of the world, Kobo may have a built-in advantage in international competition against the other three. Kobo is a Canadian company. They are also not disrupting people’s lives or terrifying them by monopolizing online print sales in any market (like Amazon), or by delivering devices designed to capture audiences and wall them off from competitors (like Apple), or by digitizing first and asking permission later (like Google.) All three of the Biggest Three (of the Big Six) have enemies and detractors. Kobo doesn’t.

Kobo doesn’t have their effectively unlimited resourcces either.

There are already retailers active in every country in the world, operating in the local language, who want to be the ebook resellers of choice in their own countries. For them, the other two members of the North American Big Six are potentially critical resources: Ingram and Overdrive.

Ingram is well known throughout the book business worldwide (and is sometimes, and currently, a client of ours.) As the biggest and most innovative wholesaler in the US for four decades, they have built both a customer base and a supplier base all over the world. They’ve been the principal wholesaler of ebooks to US independent ebook retailers since the begining of ebook time. They have deep and strong relationships with every US publisher of any size, rooted in their wholesaling business. They can set any retailer up with a wide selection of US ebook titles.

Ingram’s competitor for the role of delivering English-language (and, ultimately, all non-local language) ebooks to resellers all over the world is Overdrive. Overdrive has been in the digital content business since the 1980s and pioneered ebook distribution to libraries from the dawn of the current ebook era in the late 1990s. They also have a very broad base of publisher suppliers and can, like Ingram, provide an ebook reseller local to any country with a robust selection of other-language ebooks to vend, with an emphasis on those provided by American publishers.

Could any upstarts join the Big Six as credible providers for local competitors to the four global ebook retailers? I see three possibilities.

Barnes & Noble certainly has the relationships with publishers globally to assemble an ebook title selection that can rival anyone’s (and they’ve done it.) They are already the number two ebook reseller in the US market, miles ahead of Apple and Google and Kobo. But, so far, they have continued their brick-and-mortar strategy of sticking to the US market. It seems to me that the economics of their successful Nook family of devices and the ebook store they run would benefit from extending to a global base. But every company has to make choices about resource allocation and focus, and it is hard to quarrel with the success B&N has had competing with Kindle and iPad considering their prior experience with hardware (none). They’ve leveraged their retail presence to do it and they don’t have that resource to employ outside the US.

Copia and Blio are upstart ebook platforms. The independently-owned Copia has its social component as a unique feature (although Kobo has some pretty cool social stuff and there’s an upstart called Rethink Books with some technology that provides social capabilities around books independent of the ebook platform.) When Blio started, they seemed to offer an opportunity for publishers to enhance their ebooks readily. But the tool set that would enable hasn’t been delivered. Both of these offerings have a distance to travel to catch up with the Big Six, all of which have been in the game a long time and built up a network of suppliers and customers that it is not a trivial challenge to duplicate.

If there’s going to be a Big Seven, my bet would be on B&N.

Right now, publishers and retailers seeing the book tsunami coming closer to their shores will want to focus on the North American Big Six. If I were a publisher in any language, I’d be sure they all had my books. If I were a retailer in any country, I’d be looking at them as possible competitors or collaborators. Understanding who these companies are, what they have to offer, and what they have in mind is going to be an important component of every publisher’s and retailer’s strategic thinking for the foreseeable future.

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All publishers and book retailers are global now


One of the key building blocks of my career was the six years I spent working on a program called “Publishing in the 21st Century” with Mark Bide and a team at Vista Computer Services (now Publishing Technologies) led by then-Chairman Denis Bennett, John Wicker (now at Tata Consulting Services), and Martyn Daniels (now at Value-Chain International). Every year we picked a digital change theme: organizational structure, content to context, etc., and did some research around it. Then we’d present our findings in a White Paper and conferences.

I think it was Martyn who observed that our exercise was like “looking into the same house through different windows.” That is, the subject was really always the same — digital change in publishing — but taking a different slant on it each time would deliver different observations and insights.

And so it continues. The subject of digital change in publishing continues to prove an endlessly fascinating one for observation, analysis, and speculation. And each time you think about it from a different point of view, you learn something new seeing what you have seen before.

This entire experience was critical to my own intellectual development for two reasons: it gave me subsidized (paid-for) time explicitly devoted to thinking about the future and it gave me a lot of smart people, inside Vista and among publishers and other stakeholders whom we interviewed in our research, to discuss with and learn from.

The topic of digital change outside the English-speaking world was placed on my radar in 2008 when I was invited to speak in Copenhagen to Danish booksellers and publishers. It was already the case that a large percentage of the books sold in Denmark were in English. (I have recently heard it said anecdotally that sales of English-language books in Denmark have climbed to 25% of the total!) I observed at the time that digital disruption, which would make books more ubiquitously available outside their home territories, would result in increased intrusion by books in English. It seemed to me, at first, that booksellers would be better able to adapt to this change than publishers because booksellers are not nearly as tethered to their language as publishers are.

I got another chance to focus on how things look outside the US and the English-speaking world when I spoke at the Sao Paolo Book Fair last August. What slapped me in the face there (a sort of “d’uh, I shoulda known that” moment) was the paucity of titles available in epub format in Portuguese. That meant that Portuguese-language ebooks were PDFs, which are not reflowable and very clumsy to read on a device. What is obvious immediately is that holds back the ebook market in Brazil. What is obvious on second thought is that those Brazilians who want to read on devices and who can read in English will find much more of what they want to read in our language than in their own.

Now, with the US having reached a point that ebook sales are substantial, providing meaningful revenue, threatening mortal damage to the print book distribution infrastructure, and upsetting the publishing value chain we’ve known for a century, more or less, the rest of the world knows it is going to follow suit. The UK, frankly as much because they operate in English as for any other reason, is beginning to catch up noticeably. The rest of the world isn’t so noticeably yet, but we all expect they will begin to very soon. And that means disruptive change is coming to the book businesses of the world and they’re looking to the US experience to understand the nature of that change and what to do to prepare for it.

It is clear already that 2011 is going to be a year for me to be discussing the US experience and trying to discern its global implications with publishers and booksellers and agents all over the world. Some of the plans in that regard aren’t quite ready to be announced (although they will be very shortly) but the first such opportunity will be at the IfBookThen conference in Milan where I’ll be speaking on February 3.

I got an insight (another “d’uh” moment) talking to a French sales executive about the local French ebook market a couple of months ago. He said he’d be urging French ebook retailers to make sure to carry titles in English. Why? Because Amazon, Apple, and Google (and he didn’t mention Kobo, but he could have) would all be serving titles in all languages to French consumers. If the local retailers don’t compete that way, they’ll quickly be bypassed by consumers.

So the reality that everybody in the world has to deal with is that English-language title availability in epub dwarfs that of all other languages and that we’re also exporting a developed infrastructure that can make those titles available everywhere and very quickly.

All of these players (and Kobo, Canada-based with a worldwide base of investors) are sourcing titles in all languages, have multi-device platforms, and are each developing a separate and siloed content-focused app market. Standing on the sidelines (internationally; they’re a US-only play at the moment) with many of the same capabilities is Barnes & Noble, who could decide at any moment to be a global player and would have a big infrastructure and title base from which to do it. Copia, which has been our client, Baker & Taylor’s Blio, and Sony also have many of the necessary components in place.

And all of them have designs on getting some content exclusively if they can.

What I’ll tell the conference-goers at IfBookThen in Milan is what the local booksellers and publishers should be thinking about as digital change in their neck of the woods accelerates.

The local retailers must, as the French sales executive said, endeavor to carry titles in all languages, particularly English. (There are tools from the US infrastructure available to enable that too, particularly from our clients at Ingram and our longtime friends at Overdrive.) They have to deliver multi-device functionality: an easy ability to shop and consume ebook product on all of the most popular devices. They have to keep up with features like lending and notes and internal dictionaries. They have to deliver impeccable customer service. And for those retailers that have brick-and-mortar stores, they should learn the lesson from Barnes & Noble’s delivery of Nook that retail locations are very effective places to introduce readers to ereading devices.

Retailers based locally have some other advantages to employ against the global players. They can provide local propositions for content and marketing of use to libraries and institutions. They can be better partners for local authors and local brands. They can maximize their knowledge of local content silos, such as IP that is developed by governments and local corporations and not-for-profits. And, presuming they are more successful than the global players at harvesting content in their local language, they can garner important revenue by selling to their own-language customers globally.

The challenges and opportunites are somewhat different for publishers. I am looking forward to discussing those, as well as going into more detail about the American experience and what lessons can be drawn from it, when I get to Milan in ten days.

In the meantime, next Tuesday and Wednesday we’ll be looking at this from the other end of the telescope at Digital Book World. We’ll have a conversation with a European member of the IDPF board, Cristina Mussinelli, about the emerging market for English-language ebooks in Europe. We’ll have a session moderated by agent Cullen Stanley with an American, a French, and a British publisher talking about how rights carve-ups might be changing going forward. We’ll have presentations from both Amazon and Google. And, perhaps most important of all, we’ll have separate sessions on core and enhanced metadata moderated by Scott Lubeck of BISG, along with a conversation between Lubeck and consultant Michael Cairns about ebook identifiers. Metadata that is accurate and robust is the key foundation for publishers with digital ambitions anywhere in the world.

All publishers are global now. All book retailers are global now. The publishers and retailers who embrace that reality soonest will have the best chance to be around the longest.

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