Archive for January, 2010

First thoughts about Apple’s iPad – what this means to publishers and authors

Thursday, January 28th, 2010

Author Val Pattee emailed me from Mexico, asking what I thought about the newly announced iPad. That got me thinking… I guess I am a bit disappointed that there wasn’t more innovation – the iPad seems mostly like a bigger iPhone or iPod Touch. I was hoping for more “magic” – something to amaze me. Perhaps some game-changing features will become apparent over the coming year.

One benefit to the book industry is that the iPad with its iBook store will break Amazon’s near-monopoly position on eBook sales. Amazon has already backed down from its previous position of insisting on keeping 65% of the retail price as its cut — earlier this week Amazon announced it would only keep 30%, which is what Apple is doing. So, rather suddenly, publishers are getting twice the margin! Publishers will now get 70% instead of 35%. That has to be good for authors too.

Also, Apple has agreed to a maximum price of $14.99 for new bestsellers. (Amazon was insisting on $9.99 maximum.) If a publisher is getting 70% of $14.99, that is $10.50. That is likely much more than the publisher would clear on a new hardcover edition retailing at $30. If the publisher is getting the same or larger profit by selling online – and none of the risk of returns and no up-front investment for offset printing – the economic outlook for the big publishers is suddenly looking much rosier.

The big publishers will now be happier to throw their full support behind eBook. That, in turn, will de-emphasize printed book sales. This could accelerate the collapse of the bookstore channel as we know it. Logically there will be more reason to end the practice of selling on consignment (returns).

The other advantage of the iPad is that it can display PDF format. At Steve Job’s launch of the iPad, there was no mention of selling PDF formatted books at the iBook store, only of selling ePUB format (which is essentially HTML), but an App will surely appear quickly to allow the purchase of books in PDF format. The advantage of PDF is that the book’s designer gets to create and lock in a particular look. By contrast, with ePUB, the book appears different to each user, depending on what default type font and size that user has in the iPad’s settings. The ePUB format might be fine for reading novels, but it is poor if you are wanting to read a how-to book with diagrams or admire photo arrangements and other illustrations.

Strangely missing from the announcement is whether the iPad will work with FLASH formatted files. FLASH is how many websites show videos. For example, YouTube shows videos in FLASH. FLASH is currently used at some websites (Amazon Search Inside, Google Book Search and many others) to display PDF formatted books in a manner that doesn’t allow the viewer to copy the document. Thus FLASH helps minimize unauthorized copying and piracy of books. Likely this question will be clarified over the next few days.

People have asked about how to “get my book into the iBook store.” I’m counting on to do that for us. We send out book files to Smashwords and they re-process the file into various formats, including ePUB, and distribute to a long list of eBook retailers. Smashwords will likely be at the front of the line for setting up accounts in the iBook store. The drawback is that we must take apart our beautifully formatted book files (in PDF) to create a somewhat clunky Word doc file version, which Smashwords then converts to many formats. The end results are not at all elegant, but satisfactory for novels and other text-intensive books. It will be nice to see our books selling at the iBook store soon, and we’ll be receiving that now-much-higher publisher’s margin.

thanks, cheers,

Facebook group embarrasses Borders (US) into starting “industry-wide dialog” about ending returns

Monday, January 25th, 2010

Hey, did you know that a Facebook group started by some upset Waldenbooks employees may have started the ball rolling to end publishers providing books to bookstores on a returnable basis? This could be HUGE: a paradigm shift in publishing.

The group was started to protest the dumpstering of unsold books as Borders Group begins shutting down its Waldenbooks stores. “Why not donate them to libraries and charities?” they ask.

Over 2,000 people were signing on per day as the word spread virally. Many posted messages that they will boycott Borders if it doesn’t donate the books.

Last week, when Borders execs responded by saying it wasn’t their fault because everyone does it (destroying books, especially mass market books), that didn’t appease the group members who started questioning why there is such a wasteful system in the book industry. The organizers did some research and found my website called where I present an analysis that billions of dollars are wasted every year because of returns – so they began emphasizing ending returns across the industry as a goal. Meanwhile, more consumers are joining the Facebook group and signing online petitions.

On Saturday, the Washington Post highlighted the Facebook group in an article titled “Consumer complaints have companies rethinking how to dispose of unsold inventory,” by Ylan Q. Mui.

Borders execs seem to be squirming under this heat. One of them sent out a mass email (damage control on a Sunday at 11:05 am!) to people who had emailed Borders’ head office with protest notes. Her email says:

Thank you for contacting Borders. We take seriously the many suggestions we
have received regarding product donations.

  1. We have a new relationship with Gifts In Kind International and all unsold items that we cannot return to publishers will be donated to local charities (you can read the news release here: — click on the “Other Borders News” right below the Keyword Search box).
  2. We will have all of our stores recycle product instead of disposing of it.
  3. We have started a dialog within the publishing industry to address industry wide practices – which all book retailers practice, not just Borders – that could possibly be changed with positive impacts on communities and the environment.

Sincerely, Mary Davis, Borders Group

It is part #3 that could be huge. I’m optimistic. How about spreading this news? If more consumers and people within the industry added their weight to the pressure, that might be incredibly helpful. At minimum, indie publishers might want to be included in the “dialog within the industry.”

Thanks for spreading the word,
cheers, Bruce

Duthie Books in Vancouver latest victim of bad business model

Thursday, January 21st, 2010

Canadian newspapers are reporting the scheduled closing of Duthie Books in Vancouver. As many comments at the Vancouver Sun newspaper website have pointed out, there was a significant lack of business sense at Duthie Books. Yet we needn’t single this store out: the entire book publishing sector is operating on a broken business model. McNally Robinson just closed two of its four stores.

Unlike other retailers who buy at about 50% off retail price, bookstore owners buy at only 40% off. How can they expect to be profitable? Why don’t the store owners read some of those business how-to books they stock?

The rationale for this poor margin is because the books are acquired from publishers on a “returnable” basis (i.e. on consignment). So bookstore managers merrily overstock and pay for shipping both ways on stock they don’t immediately sell. Instead of getting their stock at a better margin, and marking it down if it doesn’t sell at full price, they are stuck to this bizarre returnable practice like deer caught in the headlights.

This antiquated process is bankrupting not only booksellers, but distributors and publishers, too. Meanwhile the Canadian and provincial governments are handing over tens of millions of dollars annually to subsidize losses by incompetent executives.

It isn’t Kindle that is the biggest threat to bookstores, it is the reluctance to demand a reasonable business arrangement from publishers. The toll this inefficiency is costing the Canadian book industry? Over $300 Million each year. Check out the analysis at