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

8 1/2 Unanswered Questions about the Future of Publishing in the Digital Era

It's evident from what I have been posting here that like everyone in the book business I'm preoccupied by the changes that are happening so swiftly in it. I'm looking forward to attending the Digital Book World conference on Tuesday and Wednesday of this week, where some of the smartest people in and around the industry will be speaking. In the last 12 to 18 months we've started to get some sense of how new technology is going to reshape publishing but the crystal ball remains extremely cloudy.

I thought on the eve of the conference I'd put down a list of what strike me as some of the most critical questions that will determine how publishing evolves in the years ahead--questions that I have as yet no good answer to. I'm hoping I may learn something at Digital Book World that will start to answer some of these--but I suspect it will be a year, or two, or five, before all the answers come into focus.

1. How much will piracy damage the sales of books now that scanners and e-readers make it easy to share files? We know books are being widely pirated already, and we know it's going to become yet more widespread. We don't yet know whether the sales lost to piracy are going to be an annoyance or a crippling problem. 
2. How badly will the ongoing collapse of traditional media affect publishers' ability to market their titles? As a serious nonfiction publisher I've seen the number of reviews my books get take a nosedive in the last two years, for the simple reason that book coverage in newspapers and magazines is disappearing. This has certainly affected sales. I firmly believe that blogs, viral  word of mouth, and other internet-based publicity is a great, and growing, medium for book marketing, but if your book got reviewed on a couple of dozen blogs, that wouldn't equal the readership of the Los Angeles Times Book Review or the Washington Post Book World, to name two major review sections that have recently closed.
3. What prices will consumers be willing to pay for e-books? And how will that affect the price of printed books? Right now major publishers are desperate to resist rock-bottom pricing of e-books, fearing it will devalue printed books along with it. So what gets established as the fair price for an e-book is a key question. If Amazon is successful in making e-books very cheap, the business may evolve one way; if publishers can keep e-book prices closer to print books, it may evolve another way. There is of course a different strategy on e-book pricing from what the big houses are straining for: make'em dirt cheap. This viewpoint holds that we could all sell a lot more books if we charged a few dollars for a new book instead of $16 or $30. So my "half-question" on this list is, Can publishers sell a lot more books if they move the price point down to $4, or $3, or $2? Some enterprising publishers are certainly going to experiment in this direction. It will be interesting to see what happens?
4. Will "enhanced" e-books ever be cost-effective enough to be viable? As I've said here, I have my doubts about this. But some publishers are pinning their hopes for supporting high e-book prices on the idea they can "enhance" them with videos and other additional content. (They should read Kassia Krozser's post about this notion, first, though.) 
5. How long will it be before the line between book and magazine publishing is obliterated? I'm surprised I haven't seen more commentary on this point. In a digital marketplace, we're not tied to the constraints, or expectations, of publishing in book-length chunks. "Book" publishers have access to authors who can, and often do, write essays or stories or reportage that may be a few thousand words, instead of a few hundred pages, long. And we are no longer shackled by the incredibly long lead times involved in traditional, printed book marketing. Why not sell a short story, or topical article by one of your authors online, instead of taking 12 to 18 months to put it out in a book-length unit? By the same token, if you're the New Yorker or The Atlantic, why not take advantage of the eyeballs you already attract and sell readers a long-form work by one of your writers? We have already seen publishers making deals to ally themselves with news/magazine sites (such as Perseus and the Daily Beast). 
6. Is general trade publishing obsolete? The perspicacious Mike Shatzkin sees a stark future for the book biz as we know it. He argues that in a world where anyone with a modem can "publish" material, performing that function will no longer make a viable business, and that for publishers to survive, they must become the home for communities interested in a particular subject--"verticals" to use his term. If he's right--and I fear he may be--venerable brands like Knopf, FSG, or Norton are all at risk, and it's imprints like Tor.com and PoetrySpeaks, already aligned with core audiences, that will be the future of publishing. 
7. Is the explosion of e-reading actually expanding reading? Jeff Bezos and others I call "e-vangelists" claim that it's so easy to sample and buy new books, and so convenient to read them, on the Kindle and other devices, that people who own these gadgets are reading more books than they ever did before. At least two people I know--including one of my Bloomsbury colleagues who already reads a heckuva lot--report it's true. They are reading more books since they got their Kindles than they did before. This could be  great news for the book business. Maybe e-books will lead to a renaissance of reading! If e-reading manages to grow the market rapidly in the next decade, perhaps that will counteract all the other trends I worry about here. I'm not ready to count these chickens quite yet, however.
8. Are e-books going to kill retail bookstores? This to me is the $64,000 question--the one whose answer will determine the fate of large (and probably many small) publishers.  E-books are a tiny but rapidly growing share of the market. But even if they only become 10 or 20 percent of the market, that may be enough to make bricks & mortar bookstores unsustainable--a loss of that much business may be the difference between profitability and failure for many stores, possibly including the chains. And if bookstores go, billions of dollars in sales, and the book publishing industry as we know it, go with them. Even the expansion of reading contemplated in question 6 may not happen quickly enough to save big publishing if this happens. Mike Shatzkin's post "How to Handle a Smaller Print Book Business" is essential reading for anyone interested in the future of the business, though he doesn't foresee quite the apocalyptic scenario that I'm worrying about. 

These certainly aren't the only questions that will determine how the book business unfolds over the next several years, but they're the ones that I have been overheating my cranium pondering. What are yours?

The Problem with "Enhancing" E-Books, or, Another Premature Obituary for Print

As I noted in my previous post,  Wired online recently previewed Ray Kurzweil's multi-platform e-reading technology called Blio. I think Blio is nifty but I stop short of sharing Wired's opinion: that it means "the end of the paper book. Right now, e-books are poor copies of paper books, with a single advantage: convenience. A book is just a container for text, not its natural home."


Wired is right that so far e-books are inferior replacements for books printed with ink on paper. For all their virtues, no e-text display is yet as pleasant or easy to read as an old-school book. This, I believe, is the main (not only) reason why consumers don't like to pay print-book prices for e-books. It's not that readers calculate, as various opiners have done, that publishers' cost of goods and distribution is lower with e-books and therefore we should lower our prices. Nor is it that Amazon has nefariously conditioned Kindle customers to believe $9.99 is what a book is worth. It's simply that, notwithstanding the ease of obtaining or carrying an e-book (and for some readers, the hugely useful ability to make the type larger), no e-book serves the purpose of reading (or browsing in, studying, or annotating) a text as well as its printed cousin.


But I don't want to rehash the e- vs. p-book debate here; I want to take up the implications of Wired's comments on Blio.  I assume what Wired means by the line quoted above is that what makes e-books now superior to printed ones is not that they do the same job better, but that they can present content in a way mere ink on paper cannot. They, along with Mike Shatzkin who has also posted about Blio, wax enthusiastic about the platform's capacity to add all sorts of multimedia goodies--videos, soundtracks, animations, hyperlinks--to book texts.


It's an alluring vision--imagine a history of World War II that includes not only a narrative, and the grainy photo insert such books have had for decades, but newsreel footage, FDR's or Ed Murrow's radio broadcasts, animated battle maps, or later interviews with survivors of Pearl Harbor or D-Day; it could include not just footnotes but hyperlinks to every source cited, or for that matter every New York Times article about the war from 1939 to 1945. 


Wouldn't that be cool? And you can imagine similar "enhanced" e-book treatments of all sorts of titles, from cookbooks to celebrity biographies. There's just one problem, and it's a big one. To create all this multimedia content is incredibly expensive. Leaving aside the cost of obtaining the rights, in my hypothetical WWII example, to newsreels, radio broadcasts, and six years of the New York Times--all of which could be prohibitive in itself--the time and energy involved in developing such material editorially (and which would probably involve both a book author and talented in-house staff) would be the equivalent of creating probably half a dozen text-only titles, or more. Simply creating hyperlinked footnotes--something I'd love to find in a digital book--could take up weeks of someone's time. 


Yes, digital publishing allows us to create vastly richer products. But richness doesn't come cheap. You can create an amazingly sophisticated straight-text book very economically, because the sophistication comes from the author's mind. To create an equivalently sophisticated multimedia book is far more demanding. It's like the difference between creating a floor plan and building and furnishing a house--and requires an equivalent increase in person-hours and resources. 


Don't forget, we've been down the road with multimedia books before--back then they were on CD-ROMs. Books on CD failed, not only because consumers weren't ready for the technology, but because very few of them, in my opinion,actually delivered on the promise of the medium. And those that did tended to be priced far higher than what readers were used to paying for books. 


In effect there are two ways to go with "enhancing" e-books. There's the low budget, easy way, where you attach some video or audio content alongside of what's basically conventional text. And there's the expensive, difficult way, where you really reconceive the work and develop the content in all the ways digital makes possible.  I can't see any means of making the latter economically viable without charging prices that are at least three or four times what hardcovers usually bring.  Now, we may find the market will bear such prices. Would you pay $75 or $100 for the fabulous WWII e-book I described above? As a history buff, I might. But unless I, and thousands like me, actually will, I think Blio and its kindred will remain an underutilized technology.  


Even if a high-end market is established for such truly enhanced e-books, it's hard to see them displacing straight-text display (whether that's a printed page or e-ink) for a long time. The written word is still by far the most efficient and economical way of conveying information. "Enhancements" may add value to it, but they subtract efficiency. 

The E-Book Wars Have Really Begun

It seems quite likely that we will look back on this week as the moment when the e-book wars officially began. We may have forgotten it, but electronic books of one kind or another have been with us for a couple of decades (beginning with ill-fated ventures into books on CD).  For most of that time, the actual market was negligibly small. In the last few years the e-book market became significant, but although it generated vast amounts of chatter—ranging from dark mutterings by publishers to utopian visions from technophiles—a sort of uneasy calm prevailed at the frontier where authors and agents, publishers, and Amazon and its competitors eyed each other warily.  There were occasional skirmishes and plenty of saber-rattling (over matters such as Kindle prices or Digital Rights Management) but no party seemed ready to make a move aggressive enough to start a real fight.

But that has now changed—inevitably, because the e-book market has exploded and digital books are the hottest (perhaps the only) growth area in the industry. The calm is over, and real punches are being thrown. You might say the first jab came from three houses (Simon & Schuster, Hachette, and HarperCollins) who announced they were going to delay releasing e-books of their titles until several months after hardcover publication. I agree with the analysis of Mike Shatzkin that these houses are not so much concerned over pub dates as trying to find some leverage to use with Amazon over the pricing issue. 

But the timing kerfuffle was minor compared to the dustup that broke out on Friday when Random House CEO Markus Dohle declared, with chutzpah one can only admire, that the house controls e-book rights for thousands of backlist titles whose contracts made no mention of such rights. This was drawing a line far out in the sand.  Dohle’s bold assertion is, essentially, that e-books are just another kind of “book,” so the contractual language that gives Random exclusivity over all editions of a work includes e-books—even though they had not been invented at the time most of these contracts were signed. 

It’s hard to believe Random can make this claim with a straight face. They went to court with this argument years ago and didn’t get very far. But you can see why they’re trying it on. At stake is potentially millions of dollars in backlist revenue that the house could lose out on if authors take e-rights of their old titles elsewhere.  Even though Random’s argument may be legally weak, by making a show of defending this territory they are presumably hoping to discourage authors from battling them for it. Agent Richard Curtis, who is himself a an e-publisher, observes at his blog, "Someone would have to have a lot at stake to be willing to spend hundreds of thousands of dollars to go up against Random House in court.”

Random may be betting that for individual authors, it won’t be worth the fight. But now that we are seeing explosive growth in e-book revenues, I believe there’s too much money at stake for authors not to contest this ground. The Authors Guild has already blasted back at Dohle, calling Random’s position on the backlist a “retroactive rights grab.”

The Guild also points out that Random House rewrote its contract boilerplate in 1994 and specifically added language to cover e-book rights, which wouldn’t seem to be necessary if they were already bundled in with the rights acquired. I worked at Random House at the time, and well remember sitting in meetings where we discussed the new contract language. I certainly don’t remember anyone saying, “well, we already have these rights, but let’s throw in some extra language about them just to make sure.” The conversations I recall were much more like, “Hm, our old contract language didn’t say anything about electronic books so we’d better make sure we get them from now on.”

In the end, just as the fight with Amazon over pub dates is largely about pricing, the fight over who owns backlist e-rights is largely about royalties. After all, Random House is a hugely potent marketer of books and content; to an author, it’s not clear there’s any company out there that’s going to do better selling your backlist title, and there’s clearly an advantage to marketing print and e-editions together. But Random is paying an e-book royalty of 25% of net receipts, while others offer a 50-50 split or better. That’s a lot to leave on the table.

And that brings us to the second roundhouse blow landed this week. I’ll talk about that in tomorrow’s post. 

(illustration: The Taking of Lone Pine  by Fred Leist) 

Hanging Out with Poe, Coleridge, and Terry Jacobus

A recent post by Mike Shatzkin about "verticals" (a key publishing topic that I'll write more about later) led me to PoetrySpeaks.com. This is a really interesting new site that brings together all sorts of content for poetry lovers, including not just the text of classic and new poems, but audio recordings and in some cases videos. You can read or listen to Shelley's Ozymandias, Poe's The Raven, or Tennyson's Charge of the Light Brigade. (The sound quality on the latter is so poor I wonder whether it's a very early recording of Tennyson himself? Fascinatingly, it's listed as the most popular poem on the site.). You can hear contemporary poets reading their work. Or you can even upload your own spoken-word recordings to a section called "YourMic."

Speaking of Poe, an unexpected benefit of being in the Twitterstream is that I learned about the funny and poignant poem below from a tweet. Here are just the first few lines.

So Edgar Allan Poe Was In This Car

Terry Jacobus

So Edgar Allan Poe was in this car goin' the wrong way on ol' 66

and it's snowin' hard and he's pissed off and worried about

everything so he manages to pull over to the side and his woman

gets outta the car to check out the situation but Edgar won't get

out and his woman realizes that he isn't gettin' out so she goes

to wunna them phone stands near a big pole by the Wrong Way

sign

And calls up his friend Sam Coleridge and Sam says, "Okay,

Hold on, I'll be right out there." ...

The full text (and audio) is on PoetrySpeaks here.