Archive for May, 2008

News items pointing to a different model for book publishing

Thursday, May 29th, 2008

Individually recent news clippings might not mean much to an author. Taken together, there is an unmistakable pattern. The times are a-changing, and we’re getting glimpses of what’s in store — and how to take advantage of this.

R.R. Bowker, the company in the USA responsible for issuing and tracking International Standardized Book Numbers [ISBNs] announced that in 2007, some 411,422 books were published in that country. Not that many new titles were launched because an ISBN is assigned to each edition. So a title might have a hardcover edition, paperback edition and mass market edition, each with its own ISBN. About one-third of the ISBNs (134,773) were for new print-on-demand (POD) produced titles. [Wow -- that's a huge increase since I published the very first ever POD title in 1995 when founding Trafford Publishing.] Overall, the number of new books published each year has increased by 66% over 5 years.
What isn’t counted in the 411,422 are the eBook and audio book editions — add those in and I’ll bet the consumer (and retailer) is faced with choosing between over one half million new editions per year now. And that’s just the USA’s output.
What’s this telling us? There is more competition every day, so it is harder to get your story publicized. There are also more editions — publishers are electing to offer multiple methods to sell the same content, instead of focusing solely on a hardcover edition — this is what I refer to as the “multiple long tails” strategy.

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LibreDigital has a new partnership with OverDrive. LibreDigital provides a service for publishers whereby book content is displayed and repackaged and marketed in a variety of ways, through a variety of retail channels. The term for this service is “digital content aggregation”. OverDrive has established eBook sales relationships with over 7,500 libraries and retailers — LibreDigital’s publisher clients can now access OverDrive’s distribution channels.
What’s this telling us? Again, this is taking content and feeding it into multiple long tail channels.

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Microsoft has abandoned its Live Search Books program after dumping tens of millions of dollars into scanning tens of thousands of printed books. This program was Microsoft’s direct competition to Google’s Book Search.
Of note: Ingram Digital (which was doing the scanning of printed books under contract to Microsoft) is hoping to gather up publishers who participated in Live Search Books, signing them to Ingram’s own evolving digital content aggregator offerings. Ingram Digital is jockeying to become a one-stop portal for publishers to eBook and POD sales channels, and multiple publicity mechanisms (including Ingram’s own Search and Discover platform).
What’s this telling us? Even Microsoft, with its deep pockets, needs to pay attention to what is economically viable. It had no revenue stream attached to this ambitious undertaking.

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Publishers Weekly reports that:

eMusic.com has added about 500 DRM-free digital audiobooks to its selection from nine new publishers including Simon & Schuster, Hay House and BBC Audiobooks UK. Another 500 are coming soon. eMusic currently has an inventory of about 2,500 audiobooks; it is selling approximately 13,000 titles a month without DRM protection. Among its publishers is Random House which is expected to add another 3,000 titles shortly.

What’s this telling us? Digital Rights Management [DRM] has essentially been abandoned by the major book publishers, who are anxious to build new revenue sources. Is 13,000 titles per month a lot? Likely that is about $130,000 per month or under $2 million per year in gross sales — a drop in the bucket when royalties are split between all those publishers. Audiobook sales in MP3 format are growing fast, but they are not “there” yet. For an independent author, this illustrates where the market is headed, especially when cell phones get cheaper data transmission rates (coming soon).

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Harlequin Romance is steaming ahead with eBook production and other digital promotions — with some success in sales. Check out an interview of Harlequin’s Malle valik on CBC Sparks with Nora Young:

http://www.cbc.ca/spark/blog/2008/05/full_interview_malle_valik_on.html

Penguin (according to Publishers Weekly) has reported that e-book sales from the first four months of 2008 have surpassed the house’s total e-book sales for all of last year. According to the publisher, the spike is “more than five times the overall growth in sales, year-on-year, through April 2008.” Penguin Group CEO David Shanks said he attributed the jump, in large part, to the growing popularity of e-book readers.
What’s this telling us? eBooks are coming on stream quickly. Watch for ever-increasing sales across all retailers as cell phones become better eBook readers with larger screens. Authors: get your content into eBook format!

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New York Times stories report that Sony Music is trying to squeeze about $1 million per year in revenue from sales of old photos. In this business environment, “every million counts.” Warner Records is doing the same with their archival photos. Sony’s John Ingrassia said, “The difficulties in the business have opened people’s eyes to things we didn’t consider doing.” Universal Classics, a jazz label faced with drastically reduced sales of its CDs, is diversifying into managing artists and their tours.
What’s this telling us? The book industry is only a few years behind the recording business in terms of impacts from new technology (i.e. people buying — or pirating — music as MP3 downloads, instead of buying CDs). See these music giants squirming to cut costs and find new revenue sources. Changes are already starting with the biggest book publishing companies. Action generally comes after the denial stage. One top Canadian government official, who shall remain nameless, told me she met recently with the top people at all of Canada’s largest book publishing companies, and had never seen a group of business people who looked so scared about the future. Let’s hope they can agree to stop selling books on a returnable basis — and save an ailing industry billions each year.

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There’s a great article on NPR in the USA about Hachette’s new imprint called simple “12″ — as in publishing just twelve new titles each year. http://www.npr.org/templates/story/story.php?storyId=18664871
“Nobody has any idea what’s going to hit. I think that publishing is basically a corporate form of legalized gambling,” says Jonathan Karp, publisher and editor in chief of Twelve.
Karp’s team is bucking the traditional shotgun approach, to instead focus on quality and publicizing fewer titles (“think quality, not quantity”). Their publicist can now concentrate on promoting one title instead of 6 or more at a time.
What’s this telling us? For your own book, you’d be wise to focus on the QUALITY of writing, editing and design — and then hone your marketing. Add in a multiple long tails approach to sales and promotions, and you will be where the industry is going to be (not trying to emulate where it was and can no longer stay).

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thanks for sending me your thoughts,

Bruce Batchelor, Agio Publishing House

Returns could end “in a year or two” predicts head of Barnes & Noble

Thursday, May 22nd, 2008

Jim Milliot, reporting in Publishers Weekly, quotes Barnes & Noble’s CEO Steve Riggio as predicting it could be possible to find a solution “in a year or two” for ending the long-standing returns practice whereby publishers send books to retailers on consignment.

This returnable policy originated at the start of the Great Depression when cautious booksellers stopped ordering new product. Until that point all sales had been on a “firm sale” basis — as was and still is used by almost every other retail sector. In a panic, publishers offered to “guarantee sales” if bookseller would stock their books. Pay us after 3 or 6 months, or return the books was the special offer. Unfortunately that one-time special became the de-facto standard in the US industry and spread to other countries — the book business has been suffering ever since.

Returns add about 15% to the cost of producing and selling books. Thought of another way, that’s billions of dollars not going into the pockets of retailers, publishers and authors.

Who benefits from returns? Printers and paper companies profit from the massive overprinting of books — about 40% of all books printed are wasted. Shipping companies merrily transport books from the printing plant to the publisher’s warehouse, on to a distributor’s warehouse, to a bookstore chain’s central distribution center, then on to stores, back to the DC, back to the distributor, and so on until they end up in a waste paper recycling shipment headed to China. Distributors and wholesalers charge a healthy margin for handling all the bookkeeping, logistics and storage involved in this circular madness. That 15% in savings will come mostly out of their pockets when returns are ended and the pie is re-divided.

What will booksellers do in the new scheme? They won’t capriciously order pyramids of bestsellers “on spec” — instead they will order more responsibly. Books that aren’t soon sold will be marked down — giving customers an incentive to come into all the independent bookshops, seeking bargains. Right now a bookseller pays between 50% and 60% of the retail price. Marking a book down to 75% of list price (“25% off”) means the bookseller still makes 15% to 25% — on excess inventory — while drawing in appreciative customers. Where is the problem with that scenario?

In the Publishers Weekly article, Riggio speculated that “given the current environment, publishers might be more receptive to seriously looking to change the returns model”, which he called “insane” and “expensive”. Riggio’s reference to the current environment includes his own company’s weak first quarter sales, the firesale of competitor Borders, and layoffs at many of the major publishing houses. Add in rising fuel costs and the erosion of customers to eBooks and audio books, and the current environment for printed book sales is downright terrifying. That 15% in savings could be the lifeline to keep many companies afloat during these transitional times.

As the largest US bookstore chain — and the only financially-healthy one — Barnes & Noble has the clout to dictate terms. Riggio doesn’t need to wait for publishers to see the obvious.

Looking at Barnes & Noble’s own financial situation: first quarter sales were $1.16 billion with a net loss of $2.2 million. My message to Steve Riggio: “Wouldn’t that bottom line look happy if you added $150 MILLION every quarter to it? You go, Steve! Make this happen, my friend. Do the right thing. Declare how the new pie will be divided up, set a date [end of 2008] and force the issue.

The result will be a better situation for publishers, authors and retailers (large and small) — and the planet. Don’t expect the printing companies, shippers and distributors to lead this charge.

That’s how I see ch – ch – changes evolving in the publishing industry. Thanks for helping improve our world.
– Bruce Batchelor, Agio Publishing House

Kids in third-world countries may get an eBook reader before you do!

Wednesday, May 21st, 2008

Check out the latest version of the One Laptop Per Child project:

http://blog.laptopmag.com/first-look-olpc-xo-generation-20

There are great pictures and a short video. Of note is that this “laptop” is about the size of a paperback book and opens to a two-page spread. Presto: a great device for reading books.

promo shot from OLPC

There is no separate keyboard; instead it uses programmable touch-screen technology (like the Apple iPhone). That this device might be manufactured for under $100 is promising — someday those of us no longer defined as a “child” might be using these.

promo shot 2 from OLPC

Missing at this point is a smart cell phone, and there is no mention of audio capability, but those will surely be added for commercial models. Screen resolution will also need to be improved.

Once these devices are in circulation, we’ll see a huge shift in book publishing. Prices for books in digital format will drop to the $1.99 to $4.99 range as publishers scramble to grab market share. [Even at these much-lower retail prices, publishers’ margins will actually improve without the printing, shipping, distribution and returns costs.] Printed books will rapidly decrease in popularity, necessitating an increase in retail price when economies of scale for the printed edition decrease. And we’ll see bricks-and-mortar bookstores going under, as consumers access new content over the Internet only.

As an author, you can be optimistic. The playing field is being leveled: your story will be able to compete shoulder-to-shoulder with all the “blockbuster bestsellers” being released by Random House, HarperCollins, Simon & Schuster and others. What you need to focus on is QUALITY. Write the very best book you can, then hire a great editor to make it even better.

End of printed O.E.D. is Q.E.D.

Sunday, May 11th, 2008

Today’s New York Times presents more proof — if any more was needed — that the printed book is doomed.

Check out:

http://www.nytimes.com/2008/05/11/magazine/11wwln-medium-t.html?th&emc=th

for an article by Virginia Heffernan, titled Lexigraphical Longing.

Virginia interviewed the current editor of the Oxford English Dictionary, Jesse Shiedlower, who confirms that Oxford University Press has no intention of ever printing another paper edition. The last printed edition was published in 1989.

Now, to access the Oxford English Dictionary, one needs to subscribe to the online edition through www.OED.com.

So printed versions of dictionaries and encyclopedias (encyclopediae? Man, I need to look that up) are toast. What’s your guess at the next book genre to pass over the great divide to digital and online only?

Are we at the tipping point for returns?

Wednesday, May 7th, 2008

Edward Nawotka, writing on Bloomberg.com in an article titled As Books Fill Dumps, Publishers Target Return Policy, points out that US publishers and retailers are becoming increasingly aware of the insanity of selling books to stores on “returnable” terms. He quotes industry statistics that, in 2005, some 465 million books were wasted in the USA.

Can we dare hope that the tide is turning? No longer is the concept of ending returns considered heretical. Now we are seeing many prominent people clearly stating that the practice is financially terrible for publishers, booksellers and consumers. And the environmental problems may push us over the tipping point. Can we, in good conscience, squander so much paper, fresh water and other resources? As fuel prices rise, so does the cost of heating and air conditioning all those warehouses of extra books. And the shipping of books back and forth and back and forth across the continent will be an expense that eats any hopes of profits.

USA-based publishers may not be aware that Canadian publishers have commissioned a study to pin down the actual cost of returns, and to examine alternatives. The study is being conducted by BookNet Canada. Remember: these are Canadians, generally a cautious people, so don’t expect radical pronouncements. However, it is a step in the right direction and one of the many we’ll need to take to get the book publishing industry over that tipping point.

BookNet itself may consider it best to “better manage” returns, since that’s in line with BookNet’s mandate – providing timely sales data. I’m on record for dumping the whole return system entirely, so we save all the human resources as well. With a tightening labour market, bookstores will eventually have to pay more than minimum wage to those clerks who are doing inventory, wrapping and shipping any returns.

Let’s seize the opportunity to re-figure the discounts and divvy up the savings to the advantage of publishers, booksellers, authors and consumers. Imagine allocating a few billion dollars of savings every year.

Making the jump to online

Monday, May 5th, 2008

Sure, magazines do not generate the same experience for readers as books do. Yet book publishers would be foolish not to keep an eye on the magazine industry to see which publications are surviving — even thriving — while other magazines are failing.

There is a inspiring article in today’s New York Times online edition (I assume it is also in the print edition) about one magazine publisher who has jumped heartily into the online world and is making a great profit on this transition. IDG is no tiny player, with $3 Billion in revenues and hundreds of publications most of which are technology related. The most widely-known would be PCWorld, MacWorld, InfoWorld, ComputerWorld and CIO.

According to Steve Lohr’s report, IDG has been able to take a money-losing print-and-online magazine (InfoWorld) and convert it to being a profitable online-only publication. IDG will be phasing out the print editions of other magazines soon.

Publisher Tested the Waters Online, Then Dove In
By STEVE LOHR
The niche publisher I.D.G. has been working out the answers to some big mainstream questions. The biggest: Can print media survive the transition to the Internet?

Some book publishers are embracing change. Harlequin Romance comes to mind, with their commitment to having digital editions of its new titles available, and moving toward delivering those as digital downloads on a subscription basis. They are in the same “content” business, and are wisely broadening their distribution channels.