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:

Two New Approaches to Publishing: Notes from Digital Book World

I’m just back from attending the Digital Book World conference. I thought briefly about attempting to give an overview of  the whole thing, but there’s way too much ground to cover. For what might be called the strobe-light account, I recommend searching Twitter for #dbw, where many participants tweeted updates from the panels. And Publishers Lunch has posted summaries of most of the key sessions.

Out of many informative and sometimes provocative presentations—and unfortunately I missed several because I could only be in one room at a time—two new “business models” that people talked about yesterday especially intrigued me. One might be called an attempt to fix what’s most broken with the traditional big-house trade publishing business. In that sense it’s backward rather than forward-looking, but a smart and promising way of addressing our problems. 

First, the profit-sharing model of HarperStudio, as explained by founder Bob Miller, where instead of traditional advances and royalties (he reports), the publisher pays a small advance, but splits all revenue, minus direct costs (but not overheads) evenly with the author. The beauty of this approach is not only that it drastically decreases the house’s unearned advance risk, but that it aligns the interest of publisher and author more closely throughout the process.

Marketing budgets and strategies, for instance, can come out of a conversation between publisher and author, not the kind of negotiation where the author and publisher haggle over whether to spend on a book party or a publicity tour.  Bob’s account of the warm fuzzy feelings between HarperStudio and its authors sounds almost too good to be true, but as someone who has always tried to make the author part of the publishing team, even with a more conventional contract, I think there is a lot going for his program. (Roger Cooper’s Vanguard Press, which also offers authors less money up front, more later, plus a guaranteed marketing budget, is a similar and also appealing consultative approach.)

If HarperStudio and Vanguard are smart attempts to fix what’s broken in Big Publishing, Richard Nash’s Cursor is an attempt to “skate to where the puck is going to be,” in Wayne Gretzky terms. Looking forward to the likely future (see my post from Monday) when general-interest publishing is a relic and the publisher’s relationship with a community of interest is its key asset, Cursor envisions selling those dedicated readers not just books, but a variety of ways of interacting with authors—expensive, deluxe editions; 99-cent e-books; even classes or other forms of in-person access. As Richard noted in his presentation, paying $25,000 for an MFA, as thousands in our country do annually, is really a very expensive way of buying access to established writers.  Also novel is his plan to make contracts with three-year terms (and no advances), in the belief the publisher should earn the author's ongoing loyalty rather than aking him  (His session, too featured some other innovative models, Eoin Purcell’s Greenlamp and Angela James’s digital-first Carina Press at Harlequin. Cursor seems to me the most ambitious of the three.)

These ventures have been much written about already,  and in truth it's too early to say how well the results will pan out over the long term.  But they look to me like really welcome developments which, if they work, could point the way for publishers large and small to follow. I wish them all success and will be following them closely.

Arrrh! The E-Book Piracy Nightmare Scenario

Just yesterday my first Unanswered Question about the future of publishing was, Is pirating of books, which is now so easy to do, going to be an annoyance--i.e. a perpetual problem, but one that is not large enough seriously to affect the industry--or is it going to take a huge, crippling bite out of sales as it seems to have done in the music business? Right on cue, Sathnam Sanghera of the London Times has stepped in with an article that offers his own alarming answer, looking at how digital downloads have affected the music industry. Citing the Digital Music Report 2010, he writes that the industry

has been decimated. Even though legitimate digital sales have grown nearly ten-fold in the past five years, overall the music industry’s global sales have fallen 30 per cent over the same period. Illegal downloads still account for 95 per cent of music downloads worldwide.

I don't happen to believe that the music business is a perfect analogue for book publishing. For one thing, the experience of listening to a song from your iPod is he same as listening to it from a CD, but reading a book on your Kindle is not the same as reading a hardcover.  So I suspect printed books are going to remain a much bigger piece of the market than either CDs or vinyl did.  


I also think Sanghera's article conflates different approaches to "free" book content. He treats publishers deliberately giving away free samples to spur sales as if it were the same as illegal file sharing. Nonetheless, it's salutary to be reminded of just how cavalier consumers can be about paying for the sweat of an author's brow.  To go from the faceless statistics of the Digital Music Report to the anecdotal evidence of one candid ripoff artist, just read this eye-opening interview from The Millions with one file-sharer calling him- (or her) self The Real Caterpillar. 

In the past month, I have uploaded approximately 50 books to the torrent site where you contacted me. I am much less active then I once was. I used to scan many books, but in the past two years I have only done a few.

"Only" 50 books uploaded this month!

Caterpillar has a complicated morally self-justifying calculus by which he/she doesn't pirate new books by some authors, to "avoid causing noticeable financial harm to the author whose work I love enough to spend so much time working on getting a nice e-copy if I were to do so." But Caterpillar cheerfully acknowledges "it is clear that morally, the act of pirating a product is, in fact, the moral equivalent of stealing" while continuing to do so. 


It seems pretty likely most file-sharers don't even bother to think about the moral issues this much while they do their Blackbeard act on authors', and publishers', livelihoods.  Having read these two articles back to back today makes me feel that anyone who doesn't think piracy is going to be a really significant problem in the coming years is being willfully naive. 

(illustration by the great Howard Pyle, from Howard Pyle's Book of Pirates--copyright expired!)

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?