Amazon, Crossings, and J. A. Konrath: Is This Week a "Game Changer"?

Sarah Weinman has a good post up at Daily Finance about two announcements this week from Amazon: first that they have made a deal to publish a new, original book by crime author J. A. Konrath in their Amazon Encores program, previously devoted to republishing older and out-of-print titles. Konrath, who has promoted his own work very effectively on the web and has blogged about how successfully he has sold his work at a very low price on Kindle, parted company with the trade house who had published his earlier books and now will sell his work directly through Amazon.  Weinman points out that, alongside the second announcement--that Amazon will start a wholly new publishing program called Crossings that will publish literature in translation (books formerly unavailable in the U.S.)--that the online retailing behemoth will now be competing directly with publishers, in an arena where Amazon has some powerful advantages. 

With an admirable trace of hesitation at trotting out the buzzword of 2010, Sarah calls these developments "game changing" and quotes the ever-brainy Mike Shatzkin in support of the statement. Meanwhile the also-savvy MJ Rose has a great post at her blog making a seemingly contrary statement: she says there are no game changers any more.  So has the game changed, or not? 

At the risk of saying "everybody's right," I have to take a different point of view: I agree with Weinman and Shatzkin that it's a momentous development if Amazon is really going to start competing head to head with publishers. They have already started picking off the backlist of major authors like Stephen Covey and Paulo Coelho, and if they are now going to get into the frontlist business things will get more interesting. But if you look at the larger picture, it's this: EVERYTHING is changing. So many elements of the industry as I've known it are in play that the one thing we can be sure of is, the game is going to be different five or ten years from now. But I think it's way too early to know whether this particular play of Amazon's is going to be decisive in their favor. Here are some things we don't know that will bear on the answer:

The market for books in translation (as Mike S. points out) has historically been pretty small. Can Amazon's retailing power make it much bigger? If not, the Crossings move may be less significant. 

Will Amazon really want to be in the editorial business? It's one thing to find worthy or marketable backlist titles or new books by authors who have proved themselves. Seeking works undervalued in the current marketplace--like translations--is a logical next step. But to truly compete with publishers, Amazon will need editors--people who find new books and attempt to choose ones that will connect with readers. This process is inherently unpredictable and therefore risky and inefficient--very different from their algorithm-driven business of selling existing books, even obscure "long tail" titles. I suspect Amazon Crossings will find, even with the company's unique ability to reach, say, "readers who bought French novels by women in translation," that some titles on their list do much better than others. 

How big a share of the e-book market can Amazon retain as e-readers proliferate? This question is complicated by the fact that you can read Kindle books on devices beside the Kindle, but whether authors are willing to give Amazon exclusivity on their e-books will surely depend on how much of the market they risk giving up.

Or, will Apple decide to compete with Amazon in the same way? The explosive growth of the iBooks store is going to give Apple similar power to Amazon's in presenting authors to readers. So far they have taken a very different approach, dealing only with the biggest publishers and a few aggregators. But they deal directly with thousands of suppliers in the App Store, and may well move in that direction once iBooks are well established.  

How will contract terms shift between authors and publishers in the coming years? Konrath points out that he makes more money self-publishing via Kindle for $2.99 a copy than he might have in a conventional print deal with a major house, Hyperion, at $14.99. If author/publisher deals evolve, as they are likely to, will the marketing and distribution power of a big publisher become less easy to give up? 

How many authors will be able to replicate Konrath's success at marketing himself? Amazon didn't pick Konrath to sign up just because of the quality of his writing. He has been a creative and assiduous promoter of his work, as Jason Pinter observes in a HuffPost piece. In my experience only handful of authors have the marketing savvy and drive Konrath has shown. If you're already a bestselling author, or a celebrity, you may not need Konrath's smarts. But the model that works for Konrath or Covey may not work for a majority of authors. (This of course still leaves the danger for publishers of Amazon creaming off the most profitable books at the top of the sales curve.) 

How will the role of agents affect the way all this unfolds? I'm not the first person to notice that if there's a danger to publishers in disintermediation, there's a real risk of it for agents too. If all an author needs to do to make $400 a day is upload titles to the Kindle store (as Konrath says he's doing), does she need an agent for that? There's a disincentive for agents to move toward a world where they can't auction projects to Random, Hachette et al. Will they push authors in a different direction, and how many authors will value their agents' advice more than the revenue the agents carve off the author's income? 

I realize I'm much better at asking questions on this blog than at giving answers. But my point here is that with the book marketplace in flux in so many different directions (the above are only a few), it's not even totally clear what "game" we're playing, much less whether even big news like this week's has "changed" it. 

Illustration: Matrix Chessboard, via Wikimedia Commons

Alice Goes Down Rabbit Hole, Pops Up on iPad

As readers here know I still have some doubts about how desirable "enhanced" e-books are going to be. Nonetheless, as with any medium, innovative people will use platforms like the iPad to create some nifty new content (whether that content is really "books" is another question). One of the most delightful things I have seen amid the iPad frenzy is this specially adapted version of Alice in Wonderland, which is now available as a separate app in the App Store.

This may not be as satisfying for a first-time reader as simply sitting with the old-fashioned printed book--but if you know the book and love Tenniel's illustrations, as I do, seeing them come to life in this way is a new sort of pleasure.

Haven't yet got my hands on an iPad long enough to do any reading, but I will soon, and will give the obligatory report on it as a reading device.

Update: Interesting article by one of Alice for iPad's creators here, on how they did it.  And several other children's books for iPad are already on the market--featured in this CNET article.

Cutting Through Some of the Nonsense about E-Book Prices

I’ve been trying not to let e-books monopolize this page, but it’s a subject that’s hard to avoid with so much happening. This week we had a New York Times article about the ever-contentious topic of e-book prices, on which vast quantities of hot air are expended.

The Times notes that many readers are complaining, not to say outraged, about the idea of paying more than $9.99 for e-books—the price that Amazon has aggressively promoted in its effort to sell Kindles. 

At Publishers Lunch, his indispensable blog/newsletter, Michael Cader had a terrific piece yesterday debunking some notions implicit in the NYT article, and urging publishing people do to a better job of explaining to the public the widely held fallacies about e-book prices. I’ll write more about this myself, but his points are so cogent that I might as well start by quoting some of them:  

* $9.99 never was the top e-book price; people pay more than that every day
[When there was no Kindle, many e-books, including those for Sony Reader cost well above $9.99. And from the beginning of the Kindle store, plenty of titles were above that price. As Cader notes elsewhere, three recent surveys, two presented at Digital Book World, one this week by Goldman Sachs, strongly suggest that while price is important to e-book buyers, there are—as you’d expect--more important elements to a buying decision, such as author reputation.]

* The implicit, false promise of cheap e-books was made by the people who profit, at very nice margins, from selling the devices, not by publishers. Please blame them if you feel deceived.  [Right. Amazon has sold “millions” of Kindles by Jeff Bezos’s account. Which means, at the prices they charge, they are raking in hundreds of millions on Kindle hardware. Was it a coincidence that Amazon had its biggest profits ever last year?]

* Publishers are lowering their ebook prices
Most stories say publishers are raising prices. We in the trade know that publishers are preparing to lower their ebook prices by 50 percent or more, and reduce their own profit margins. But customers don't; they hear that publishers are raising prices. [Another key point. Publishers are actually looking to take less per book than they have been getting from Amazon. And in general e-book list prices are coming down.]

* The new "top price" is going to be $12.99 more often than not
[Cader notes that this will depend on what deals publishers arrive at with Apple, but in general we’re talking about a rise of a couple of dollars.]

Cader’s piece also makes one other important point:

Publishers are hoping to protect smaller and local retailers and ensure that customers have a wide range of real bookstores and online e-bookstores to choose from.

Right again. Low prices are a weapon used by big, deep-pocketed merchants, typically chains, to crush their small, local competitors. Publishers don’t want to see a marketplace that consists of nothing but Amazon and Barnes & Noble. This is, to be honest, partly because most of us in the business have a sentimental attachment to old-fashioned bookstores, the kinds of places where most book-lovers love to hang out.  It is partly because we know that it’s in those independent stores that surprise, hand-sold hits can catch fire and turn into bestsellers. But it’s also because we don’t want to find ourselves with nothing but 600-pound gorillas for customers.

Playing Chicken: Publishers, Apple, and Amazon

My post this morning raised the key question that I thought had been ignored in the first round of coverage on the iPad as e-reader: why would people pay $14.99 for an e-book in Apple's iBooks store when they can get the same title for Kindle at $9.99?  But in fact the trusty Walt Mossberg of the WSJ asked that very question of Steve Jobs at the iPad launch event--the video is now posted at All Things Digital (I found it via E-Book Newser). 

Jobs's answer has huge implications--though it's open to different interpretations. He says "the pricing will be the same." Mossberg asks, "the price will be $9.99?" Jobs: "The prices will be the same...Publishers are actually going to pull their books from Amazon because they're not happy." 

I take Jobs to mean that the prices won't be $9.99, because the higher price is what publishers have been desperately concerned to establish in the Apple deal. But obviously a $14.99 price for e-books can't be sustained if Amazon is going to keep selling the same title for less. For publishers not to undercut Apple, they would in fact have to withdraw their titles from the Kindle store. That would be a real throwdown--especially because right now, publishers are making more money on Kindle e-book sales than Amazon is. (But let's not forget that Amazon is still making loadsamoney on selling the Kindle device itself.)  It would be a significant threat to Amazon's Kindle business, and one has to wonder whether Amazon will retaliate, as they have done at other times, against publishers' print-book business. For both sides, print books are still a much larger business than e-books, so there's plenty to lose. It may be an interesting game of chicken. 

Apple iPad: Is It Actually an Amazon Trojan Horse?

As anyone on Planet Earth knows, Apple announced its new iPad device Wednesday with enormous hoopla. There's particular excitement among publishers because Apple has agreed to sell books in an iTunes-like store at prices somewhat higher than Amazon has been charging for new titles on the Kindle.

The excitement is somewhat paradoxical because although Apple is giving publishers a better split of sales proceeds (70 percent vs. Amazon's 50), these sales will actually make the publishers less money: Apple "iBooks" prices will be capped at $14.99, while right now, Amazon is paying publishers half of a list price that could be $25 to $30.

Furthermore, what no one has mentioned so far is that Amazon already has a Kindle reader app for the iPhone which allows you to buy books and read them--and supposedly all iPhone apps will work on the iPad.  So will you potentially have a choice of buying an e-book from
Apple's iBooks store for $14.99--or, buying the same title from Amazon, on the same device, just as conveniently, for $9.99?

I feel as though I must be misunderstanding something, because this seems like a setup to make iBooks completely irrelevant in a hurry.  This will be no skin off Apple, because the iPad will be just as good an e-reader with a Kindle app as it is with iBooks. So it could be a "Kindle killer" in the sense of luring potential customers of Amazon's device. But it could at the same time actually strengthen Amazon's hold over the book market--the exact opposite of what publishers hoped would happen.

In that case, our joy at the tablet will be short-lived. Not as short-lived as Adolf Hitler's, though, in this latest expression of the unquenchable internet meme:

Amazon "Fires Missile" at Book Publishers--But Is the Target Really Apple?

I had hoped to avoid writing about e-books for a while, not because I don't think they are interesting but because I'm reluctant to have one topic monopolize this page. But  developments are coming fast and furious in this quarter of publishing so you can expect to see a lot more about this here for the foreseeable future.  Witness two events of the last couple of days: First, we learned that Apple has been in discussion with the "Big Six" publishers about terms for making e-books available on their much-bruited new tablet computer. According to Michael Cader at Publishers Lunch, these discussions center around an "agency model" in which--unlike other e-tailers (notably Amazon)--publishers will own their book files and set prices while Apple will in effect take a commission on those sales rather than buy and resell the books to consumers. Although the functional difference between "reselling" and "licensing" is trivial, as Cader points out, it's huge to publishers because it gives them control over pricing and allows them to experiment in this area, instead of acceding in Amazon's attempt to commodify all titles at $9.99 or less. 

Almost simultaneously with this news, Amazon announced a new e-book model for publishers and authors, offering a 70 percent royalty (a big improvement on their usual terms) with certain key conditions--including a) the e-book must be priced no higher than $9.99 and b) it must be at least 20 percent lower than the printed book price.  

There seems to be some confusion about what this announcement means. Henry Blodget, at The Industry Insider, hollers that this move "fires a missile at the book industry" and will force publishers to cut their prices for e-books; also that it " should also solidify Amazon's already tremendous dominance of the ebook business" by enhancing the popularity of the Kindle. 

I think Blodget has it backward: Amazon is staring at the possibility, even likelihood, that a host of new e-readers--numerous models have been announced--will rapidly grab much of its share of the e-book market. Many readers, me included, actually prefer buying e-books via the Kindle store, then reading them on iPhones with their crisper more responsive display. When we can read them on a large-screen Apple tablet--and buy them via an elegant, simple Apple-designed e-book store (or through iTunes), we won't need either Amazon or Kindle. 

In other words, Amazon is trying to compete on price while Apple and others compete on quality and features. So far, Apple has been highly successful at that kind of contest. In short, I see this as a would-be preemptive strike by Amazon in anticipation of the Apple tablet. Amazon is going to be a major player in this market for the foreseeable future, but rather than being the game-changing "missile," their current move seems like an admission that they will no longer be a sole 600-pound gorilla. 

So far these events seem like good news for publishers. With several players competing to sell e-books to the public, we're less likely to be bullied by one of them, and with these differerent business models in effect we may be able to accelerate the necessary process of trial and error regarding pricing, timing and so on. 

Still, one aspect of the new Amazon pitch has the potential to further destabilize the marketplace and threaten publishers. The 70-percent royalty is surely meant to attract authors to make direct deals with Amazon, cutting out publishing houses altogether. Amazon may well offer even better terms to carry a certain e-book exclusively. This has already happened with one bestselling author, as I've discussed here. If this becomes a major trend, it could really damage publishers' profits and they can't afford to take this threat lightly.