Monthly Archives: August 2010

Showdown at the BN Corral

Circle September 28th in red on your calendar. That may be the last day of Barnes & Noble as we know it.

September 28th is the day of the company’s shareholders meeting. The fate of the world’s largest bookstore chain will be decided when its founder Leonard Riggio and the second biggest shareholder, billionaire Ronald Burkle, duke it out for control of the firm. You would not believe the contriving, conniving, jockeying and maneuvering going on as these sumos confront each other with hate in their eyes.

Hard as it may be to believe, because of sagging financial performance against its relentless rival Amazon, Riggio stands to be ousted from his own company’s managing board. If he is, what will happen to the company and some 1357 trade and college bookstores? No one knows, because Burkle’s intentions are unclear.  He has been articulate about what he doesn’t want – Riggio and his policies – but far from clear about what he will do with B&N if he gets his mitts on it.  (See What Does This Investor See in B&N That We Don’t See?). Burkle has not evinced much love for books, but he loves money passionately and he obviously sees plenty of value in B&N. Or is it the land that B&N’s stores sit on.

For a in-depth analysis of both men and the empire they are fighting over, read Andrew Rice’s splendid New York magazine profile The Billionaire and the Book Lover.

Richard Curtis

Every Blogger owes a debt of gratitude to newspapers and magazines. This posting relies on original research and reporting performed by New York magazine.

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Greeners Speak Up About Toxic E-Books

Raz Godelnik blogging on the website of the Independent Book Publishers Association asks Is E-Reading Really Greener? We’ve been asking the same question for far too long and it’s good to hear voices other than our own talking about it.

Godelnik’s is an important one.  He’s co-founder and CEO of Eco-Libris, a company working with publishers, authors, bookstores, and book lovers worldwide to promote green practices in our industry.

To determine which format – print or digital – has a smaller carbon footprint, the IBPA applied life cycle analysis “which evaluates the ecological impact of any product, at every stage of its existence—in this case, from cutting down trees for paper to the day when the iPad and the Kindle will end their lives,” writes Godelnik.

One test was revealing, demonstrating “that you need to replace a purchase of at least 100 physical books with 100 books on your e-book (or at least the iPad, the device used for the test) to make the device “a greener option from a carbon footprint standpoint.”

However, as one team of researcher assets, “the carbon footprint is just one part of the comparison. With respect to fossil fuels, water use, and mineral consumption, one e-reader has as much impact as 40–50 print-on-paper books. And with respect to human health consequences, they claim the figure is somewhere between 50 and 100 books.”

There’s one more important criterion to bear in mind as we consider our future choices:  “Someone who (like most Americans) reads only six to seven books a year and switches to a newer e-reader version within three to four years may not be going green.” What happens to your discarded e-reader is something you probably don’t want to know, but you really need to look in faces like that of the child in our picture sitting in a park – a park strewn with all the horrors of civilization.  (See Getting Rid of E-Trash? Dump It on Asia’s Poor and Which Is Greener, E or P? Count to Ten Before Answering)

Read Is E-Reading Really Greener?. And if you’d like to learn – and do – more, visit ecolibris.net.

Richard Curtis

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Did Jackal Screw Amazon?

Literary agent Andrew Wylie’s reputation as a shrewd, relentless businessman has earned him the sobriquet “The Jackal” but in the recent debacle of his failed raid on Random House he looked more like a chimp in a clown costume.

Sarah Weinman, writing in DailyFinance.com, wonders whether he “ever intended to be a digital publisher, or even fully understood what it meant. The origins of Odyssey Editions [the firm Wylie created for his e-book venture] seemed scatter-shot and unfocused at best, starting with a May 11 incorporation filing in the the state of Delaware, and a website domain registration six days later, on May 17, through the Wylie Agency, not Odyssey.”  Was Odyssey “a real business”, Weinman wonders, “or a publicity stunt?”

If the latter, not too many folks found it funny. Some of his authors must have been pretty shook up to be used as pawns in his chess game with Random House, which declared it would do no more business with him if he went through with his e-book scheme.

Nor could Amazon.com find much humor when Wylie offered them a two-year exclusive commitment that he then had to abandon because he didn’t quite own the rights to the books he was offering. “The question of who actually owns the digital rights to works written before e-books were even a gleam in the publishing industry’s eye is still unanswered,” writes Weinman. Wylie failed to heed Random’s warnings that it would not yield those rights without a fight, warnings that were sounded nine years earlier in a lawsuit against Rosetta Books and more recently when startup Open Road Media made a similar play. When Wylie tried the same thing we wondered Will Random House Chicken Out Again?

Random House didn’t chicken out but came out with excommunications blazing, forcing Wylie to retreat from his position and inform Amazon that the titles they thought they had were actually the property of Random House. Furthermore he had to cough up to Random the e-files Odyssey had created. Those files will still be sold on Amazon, yes, but not exclusively as Amazon had expected. E-book editions of those titles will be sold in the platforms of Amazon’s competitors, courtesy of Random House.

Now Wylie can go back to being a Jackal on the hunting grounds he is familiar with, but with claws and fangs banged up by his foray into a world he does not understand. Weinman’s observations are devastating: “Considering that it’s the offspring of a literary agency that represents 700 authors and employs far fewer personnel to handle those rights, Odyssey Editions smacks of a water-dipped toe, a publicity ploy, rather than a deep commitment to digital publishing.”

Read Weinman’s Random House’s Backlist E-Book Deal With Andrew Wylie Leaves Much Unanswered for complete details.

Richard Curtis

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PW to Review Self-Pubbers

Whatever ugly charges critics may level at traditional publishing, it’s hard to deny that when it comes to branding established authors and elevating new ones, the Establishment reigns supreme. You can talk all you want about the viral validation that the Internet bestows on self-published books, the good old book industry is still the place where literary reputations are made,  And that’s because literary agents, reviewers and book critics for high circulation magazines and newspapers, Big Six publishers and big-name editors remain the taste makers of our literary culture. (You can read all about it in Gatekeepers.)

For this reason, self-published authors have been unable to gain respectful attention in the marketplace, get noticed by Big Publishing and catapulted into fame and fortune and distribution in bookstores.  That frustrating circumstance is about to change.  Publishers Weekly has announced a new program called PW Select dedicated to reviewing self-published books and bringing the best ones (“most deserving of a critical assessment”) to the attention of traditional publishers and the public.

PW president George W. Slowik Jr,  who recent acquired the flagging book industry publication, seems determined to brand it, restore its relevance and bring it into the 21st century. PW Select is one such initiative and certainly one that is going to raise some eyebrows because authors and publishers submitting their books for review must pay a registration fee.

Anticipating the obvious question of whether the fee can influence review coverage, Slowik said “We briefly considered charging for reviews, but in the end preferred to maintain our right to review what we deemed worthy. The processing fee that guarantees a listing and the chance to be reviewed accomplishes what we want: to inform the trade of what is happening in self-publishing and to present a PW selection of what has the most merit.”

Here in full is his announcement:

We are returning to our earliest roots. PW dates to 1872, when it was first known as Trade Circular Weekly and listed all titles published that week in what was then a nascent industry. We have decided to embrace the self-publishing phenomenon in a similar spirit. Call it what you will—self-publishing, DIY, POD, author-financed, relationship publishing, or vanity fare. They are books and that is what PW cares about. And we aim to inform the trade.

To that end, we are announcing PW Select, a quarterly supplement announcing self-published titles and reviewing those we believe are most deserving of a critical assessment. The first supplement will appear in our year-end issue in December. Each quarterly will include a complete announcement issue of all self-published books submitted during that period. The listings will include author, title, subtitle, price, pagination and format, ISBN, a brief description, and ordering information provided by the authors, who will be required to pay a processing fee for their listing. At least 25 of the submitted titles will be selected for a published review. There will also be an overview of the publishing trends that can be identified from among the titles from that reading period. We will also focus on the opportunities that the self-pub world offers. A resource directory will accompany the section offering names of companies providing services in the DIY space.

The entire PW editorial staff will participate in a review of the titles being considered for review, and we’ll likely invite a few agent friends and distributors to have a look at what we’ve chosen. No promises there, just letting some publishing friends take advantage of the opportunity to see the collection.

The first reading period for self-published books will be from September 1 until the end of October. All submitted titles will be registered online by the publisher at www.publishersweekly.com/diy (which will be active before the start of the reading period); a processing fee of $149 will be charged. Once the registration process is completed, shipping instructions and a confirmation code will be issued. Additional copies of the supplement will be available for distribution.

We briefly considered charging for reviews, but in the end preferred to maintain our right to review what we deemed worthy. The processing fee that guarantees a listing and the chance to be reviewed accomplishes what we want: to inform the trade of what is happening in self-publishing and to present a PW selection of what has the most merit.

Titles submitted for our first supplement must have been published in 2010 and have a valid ISBN. We will not accept manuscripts or e-books (this time). Only final bound galleys or finished books will be accepted. Books cannot be returned; once finished the copies are donated to Housing Works Thrift Shop, a worthy local charity.

Please, please send your book in a bio-sensitive package (i.e., no bubble wrap or plastic envelopes). Also, please use packaging appropriate to the book you are submitting: no boxes full of packing peanuts or paper stuffing. We recommend reusable and recycled paper envelopes. An acknowledgment of the book’s arrival will be issued via e-mail upon receipt.

We look forward to finding the gems worthy of attention, the sleeping indie giants—after all, books are our business.

Richard Curtis

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Does Random Raise in E-Royalties Signal Big Six Upshift?

Last January we made a pinky bet guaranteeing that e-book royalties would rise above the then ceiling of 25%. Did you take that bet? Pay up, sucker!

Faster than a double-click Random House has shifted its stance on e-book royalties and opened the door to an industry-wide raise in pay for authors as predicted here. A source close to the company says it’s prepared to abandon its fiercely defended 25% net e-royalty for a sliding scale topping out at 40%.

The source of this rapidly evolving story is Rachel Deahl of Publishers Weekly whose announced yesterday that the dispute between Random and agent Andrew Wylie was settled yesterday. Whereupon, without a missing a beat, the disclosure of Random’s liberalized royalty hit the news.

Many agents have “favored-nations” arrangements with publishers entitling authors to request a new royalty rate if the rest of the book industry adopts a higher one. It is now anticipated that agents will flood Random with requests for amendments replacing recently signed ones agreeing to a 25% royalty. It will be well nigh astounding if other publishers don’t fall into lockstep with Random’s royalty or something close to it.

The big question now is, will it stop at 40%? Many observers feel it won’t, so we urge Random’s contracts team to stay close to their keyboards in case they need to compose yet another amendment. (Full disclosure: E-Reads pays 50% net royalty and has done so from our founding ten years ago.)

Below is the relevant passage from Deahl’s article, which can be read in its entirety here.

Richard Curtis

The source said Random is offering a royalty built around a sliding schedule on e-book rights for backlist titles that can approach 40% “rather quickly.” The source explained that the royalty is based on a certain number of books selling over a specified period of time and, depending on what’s negotiated, the rate will rise based on the rate of sale.

The presumption is that Random House’s improved offer on backlist digital royalties–the source said this new approach is a “good rate” and notably better than the standard 25%–will spark the other major houses to follow suit with similar offers.

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Why E-Sales Dipped in Q2 – A Reader Says It All

We feel that a cogent comment made by Anne Marie Gilbert in response to our posting Why E-Sales Dipped in Q2 comes so close to capturing the mood of consumers that we are taking the liberty of reproducing it here in its entirety. Thank you Ms. Gilbert!

RC

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I am still downloading a lot of books, but definitely buying fewer of the overpriced e books, instead of buying 3-5 books a week, I’m buying 6-7 books a month. My book budget has not diminished but I just won’t buy some books I want to read but feel are over priced. My entire family read Jim Butcher’s Changes in a library copy rather than buy it at $12.99 for our Kindles. (We share an account with two of our grown sons, that way they can read my books but I don’t have to raid their homes to get them back.) We have all his other books on Kindle and would still download it to reread but not until the price comes down.

I’m not a $9.99 purist but for most new fiction it feels right. For back list works I would expect the price to be less than the paper version or I won’t buy it. My price points for scholarly and general non fiction works are much more flexible and I will and have paid a great deal more for those works. BUT I still will not pay more for the e version and expect to pay at least 20 per cent less than the print version of any book I buy. When the prices are low enough I am happily replacing my print books with their e versions. Less dust, less book case space needed, and easier on elderly eyes.

I am particularly unhappy with the Penguin price points as I read a lot of their authors and simply will not pay, (not can not but will not) what they are asking. $18 for Black Lamb and Grey Falcon to replace a many year old copy I already own in paper is greedy for them to ask and would be insane for me to spend. If books are priced well I’ll buy, if the price points set by some of the major publisher’s remain inflated, I’m going to be giving some serious thought to self scanning books I might otherwise just re-buy for kindle and spending my reading money on the sensibly priced books that are still out there and worth reading, not to mention downloading the public domain books that I could spend the rest of my life profitably reading and rereading.

Except for Art History books, Museum catalogs, graphic novels and military history that has a lot of maps, I don’t expect to be buying anymore paper books in the foreseeable future and once there is good color e ink those purchases will be made for Kindle as well. I love books, but it’s the content I’m interested in, using them as a decorating statement has long since gotten old. Yes some books are works of art in format as well as content and those books if one is lucky enough to own them are to be treasured but they are the exception not the rule.

I never thought I would come to this point but I’m done buying hard copies of books just done with it and the authors who will be profiting from my spending are the ones whose publishers do not leave me with the feeling that they are the pirates and I’m the one being ripped off. For the works I want from those publishers I’ll just use the very fine library to which I’m lucky enough to have access and feel bad for the author who will be losing a sale.

Anne Marie Gilbert

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Random and Jackal Settle. Sounds Like Random Won But at What Price?

Rachel Deahl of Publishers Weekly reports that Random House and agent Andrew Wylie, locked in mortal combat over Wylie’s decision to become a publisher for his own clients’ ebooks, have settled their differences.  We were waiting to see if Random House chickened out again. They appear to have regained face.

Writes Deahl:

“Random House, which charged last month that The Wylie Agency might be in murky legal waters by releasing e-book editions of titles by some of its authors, seems to have won the showdown, so to speak. The publisher and the agency have just released this joint statement:

“We are pleased to announce that The Wylie Agency and Random House have resolved our differences over the disputed Random House titles which have been included in the Odyssey Editions e-book publishing program. These titles are being removed from that program and taken off-sale. We have agreed that Random House shall be the exclusive e-book publisher of these titles for those territories in which Random House U.S. controls their rights. The titles soon will be available for sale on a non-exclusive basis through all of Random House’s current e-book customers. Random House is resuming normal business relations with the Wylie Agency for English-language manuscript submissions and potential acquisitions, and we both are glad to be able to put this matter behind us.”

More to come on this as we reach out to both parties.

Read it here RH and Wylie Come to Terms; Random ‘Wins’

Was this all a ploy for Wylie to wrest a higher royalty than the 25% that Random is offering everyone else?  If so, a lot of authors and agents will not rest easy until they know what RH agreed to.

RC

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Why E-Sales Dipped in Q2

We’ve been so spoiled by triple and quadruple jumps in e-book sales that when there’s a dip we wring our hands and wonder if the long-dreaded Topping Out has arrived.

A few of us felt a chill wind the other day when the monthly statistics furnished by the American Association of Publishers and he International Digital Publishing Forum reported that sales in the second quarter of 2010 showed a light decline to $88.7 million from the $91 million reported by the industry in the previous quarter. See E-Sales Soften – if You Call Double “Soft”

Given the fact that Q2-10 sales were twice those of the prior year, most analysts felt it was nothing to get hung about.  But we were curious and asked a few knowledgeable professionals if they could shed light on this small reversal.

One said he thought that the kicking-in of the agency model, which broke e-book prices out of the $9.99 list price ceiling that Amazon had tried to establish, had something to do with it. (See Apple Promoting a New (and Radical!) Model for Selling E-Books?). Consumers just rebelled against paying $12 to $14 or more for e-books.  This view was supported by this comment posted on our website: “Second quarter is when I started feeling the sting of agency pricing for e-books, and I cut way back on my e-book buying. I imagine a few other folks did, too.” (Thanks Stacy!)

The so-called Big Five publishers that switched to the agency model not only took a hit in sales but took in less revenue per e-book sold. Plus many independent e-book retailers did not and in some cases still do not have signed agreements to sell some of the most popular titles.

Another observer reminded us that a huge number of people bought e-book reading devices or received them as gifts for the Christmas holiday in 2009, and that led to their purchasing tons of e-books in January 2010, still the biggest month in e-book history. In subsequent months there was no place to go but soft.

Okay, so a cloud darkened the sky momentarily.  But one glance at the charts reassures us that the prediction for years to come is sunny with a chance of a sprinkles here and there.

Richard Curtis

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Bundling – Publishing’s Next Battleground

The following question is deceptively simple, and we urge you to take your time responding. How much time?  Three or four months. You’ll need that much.  A lot rides on your answer.

Here’s the question:

When you purchase a print book you should be able to get the e-book for…

  • a) the full combined retail prices of print and e-book editions
  • b) an additional 50% of the retail price of the print edition
  • c) an additional 25% of the retail price of the print edition
  • d) $1.00 more than the retail price of the print edition
  • e) free

The subject of this little quiz is bundling, a common marketing tactic in which two or more products are packaged and sold at a single price. In this case the package is a printed book plus its e-book iteration.

As simple as it sounds, bundling is shaping up to be the battleground for clashing publishing philosophies, and the time will soon come when publishers will have to choose one of the above strategies and put it into effect. Misjudging consumer attitudes could prove to be a big mistake and possibly a ruinous one.

The essence of bundling is to offer customers a discount for selecting the combo instead of the individually priced components, so choice a) above is a non-starter.  But choices b), c) and d) reflect just how aggressive a discounter wants to be and the various thresholds at which consumer resistance is expected to melt.  A good argument can be made for each and as the bundling issue warms up you can expect to hear them all endlessly debated.

Yet even the cheapest package – a dollar or even less than a dollar over the cost of the print edition – may not suffice to capture the consumer’s fancy. Why? Because many people believe they’re entitled to get the e-book free with purchase of the print book. How large is public support for that position?  We need to take a poll to find out, but if anecdotal reports are any indication, they may be in the overwhelming majority and they are unquestionably the most vocal. You will certainly hear their outpouring of joy when one publisher steps up to offer a print and e-book combo for the price of the print edition alone.  Our own prediction? Free will become the standard, and even ten cents above free will be a competitive disadvantage.

Economic factors aside, consumer negativity toward double-charging is a contributor to piracy. Comments sent to us in response to postings about piracy strongly suggest that the public expects digital versions of books to be tossed in for nothing when a printed book is sold, and if it isn’t tossed in, many of those customers will feel no compunctions about downloading an unauthorized copy. They simply feel entitled to it. Libertarian spokespeople like Cory Doctorow have articulated this sense of entitlement, and though some feel that their arguments go too far, there is a solid core of realism in their position. We can condemn the immorality of consumer attitudes ’til the cows come home; and we can (quite reasonably) complain that if people were willing to wait for the paperback reprint they should be willing to wait for the e-book reprint. It makes no difference: the public’s sense of entitlement creates an environment susceptible to the allure of piracy.

With so many sound arguments in support of heavily discounted bundles, why have we seen so little of it in book marketing? The answer is that it is harder to assemble print/e-book packages than it looks.  Publishers that control both formats are in the best position to do it but the technology is not yet in place.  Customers purchasing the latest James Patterson or Nora Roberts novel in a bookstore have no simple way to download the e-book in the same transaction. The publisher might offer a discount coupon but that requires a number of steps  and clicks that discourage a quick and easy procedure.

What is wanted is a one-click experience: “Click here to order the print and e-book.” Such a deal might best be offered by a publisher on its website.  However, the price of that bundle might undercut the prices offered by retailers or e-tailers for the individual components, and for publishers to compete with their own retailers is to cut their own throats.

Amazon is in a good position to offer print/e-book bundles but hasn’t done so yet, probably because it recognizes the complexity of the issues.  Book pricing is already fraught with so much angst that adding bundling to the debate will undoubtedly induce cardiac infarction among book people already near apoplectic with worry.

For the record, we at E-Reads strongly support the position that the e-book version should be included free of charge with the purchase of one of our print editions and are working to overcome the technical obstacles to implementing our conviction.

We invite your comments and look forward to seeing the debate over bundling heat up on the next stretch of road to the future of books.

Richard Curtis

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June E-Sales Soften – If You Call Double “Soft”

The Association of American Publishers (AAP) and International Digital Publishing Forum (IDPF) have released e-book sales stats for June 2010, and they’re a tad soft, but only contrasted to the dizzying triples and quadruples of recent note.

Trade e-book sales were $29,800,000 for June, a 219% increase over June 2009 ($13,600,000). Q2 sales took a slight dip to $88.7 million from the $91 million reported by the industry in Q1

Just to keep “soft” in perspective, bear this in mind: sales for the first six months of 2010, totaling 179.7 million, exceeded total sales for the entire year of 2009 and sextupled sales for 2007, a mere three years ago! [Italics, exclamation point, and slightly hysterical tone provided by E-Reads]

Red line =first six months of 2010: $179.7 million

All of 2009: $ 169.5 million
All of 2008: $ 53.5 million
All of 2007: $ 31.7 million

IDPF reminds us that:

* This data represents United States revenues only
* This data represents only trade e-book sales via wholesale channels. Retail numbers may be as much as double the above figures due to industry wholesale discounts.
* This data represents only data submitted from approx. 12 to 15 trade publishers
* This data does not include library, educational or professional electronic sales
* The numbers reflect the wholesale revenues of publishers
* The definition used for reporting electronic book sales is “All books delivered electronically over the Internet or to hand-held reading devices”

RC

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