Mike Shatzkin talks about the impressive/scary growth of ebooks in the US market:

Michael Cader of Publishers Lunch reported you have to subscribe to use the links that BookScan numbers show a drop in unit sales of printed books of 4.4 % from 2009 to 2010.

But don’t take that number to any bank. It is already out of date. Cader did a further analysis of more recent BookScan data shortly thereafter showing that print book sales have dropped by over 15% compared to the prior year over the first six weeks of 2011! And the share of print sold online keeps rising, so that almost certainly means that print sales in stores has fallen even faster. Could print sales in stores have dropped 20% or 25% from a year ago? They certainly could!

Sales of iPads, Kindles, and Nooks exceeded most expectations for Christmas 2010. Dominique Raccah, the head of independent publisher Sourcebook, a company with a diverse trade list, reported on her blog that dollar sales at her company in January were 35% digital!

via From some perspectives, we are tipping right now and publishers’ metrics will show it – The Shatzkin Files.

The recent decision by Apple to reject Sony’s eReader app seems to have opened up a much larger and far more wide-ranging debate about in-App and non-iTunes purchases.

Amazon’s Kindle App sends readers to their buying system in Safari to avoid paying Apple’s toll (30%) but recent suggestions are that Apple are intent on stopping that and enforcing either full in-app purchases or at the very least offering in-app purchase as an option.

It brings to mind for me the need for publishers to have their own web strategy and not to become reliant on the platforms of others whose goals and plans are in no way aligned with theirs:

Apple has indicated the sales outside of iTunes can continue, as long as sales through its store are provided as an option. “Rest assured that we want our customers to be able to get their publications easily both from our App Store and obviously from websites or other ways they get them,” Mr. Cue said.V

Apple is tightening enforcement of a rule governing how some apps for the iPad must handle sales, a shift that affects online books as well as other electronic publications. Above, a customer looks at the Angry Birds game on an Apple Inc. iPad tablet computer at the Simply Mac store Salt Lake City, Utah.Apple hasnt disclosed details of terms it is offering publishers, but generally takes a 30% cut on such iTunes transactions. News Corp, which also publishes The Wall Street Journal, appears to be getting a similar deal for The Daily, which Apple helped develop. Rupert Murdoch, its chairman, said in an interview Wednesday on the Fox Business Network that his company is getting 70 cents of every dollar for the first year, with Apple getting 30 cents. He said the terms after that were subject to negotiation.

via Apple to Tighten Control of How Magazines, Content Are Sold for iPad – WSJ.com.

Fascinating way to make money, hard to argue with it as a service too, why shouldn’t the owner of a book scan it for their own convenience?

Consumers such as Yusuke Ohki, who has 2,000 books in his Tokyo apartment, are scanning them and accessing them through their iPads.

Ohki has since started up his own 120-person firm that does the same thing for customers. There are as many as 60 companies offering such a service, according to Bloomberg.

via BroadbandBreakfast.com: Japanese Book Publishers Up Against Wall As IPad Spurs Cottage Industry of Book Scanning.

Print publishers are screwing up what could be their biggest opportunity. Many continue to botch their Web strategy, and are now doubling down by getting their iPad strategy completely wrong.The core of the problem lies in how publishers think about the iPad. Just look at the headlines: “Will the iPad save print?” asks one; “Savior crucified” proclaims another.

via MediaPost Publications iDiots Guide To Publishing On The iPad 01/13/2011.

This is a fascinating development. I suspect a short lived one, at least for now, a factor of the initial enthusiasm of new ereader owners rather than the way the list will remain for the rest of the tear, however, a space to watch and a sign that ereaders and ebooks change change the industry quite rapidly:

Millions of gift-wrapped iPads, Kindles, Nooks and other digital reading devices resulted in an unprecedented surge in sales of e-books last week.USA TODAYs Best-Selling Books list, to be published Thursday, will show digitals new popularity: E-book versions of the top six books outsold the print versions last week. And of the top 50, 19 had higher e-book than print sales.Its the first time the top-50 list has had more than two titles in which the e-version outsold print.

via Week after holidays, e-book sales outdo print – USATODAY.com.

photo credit: TheTruthAbout…

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Price

Information Wants To Be Free!

Freemium Model!

$9.99

Agency Model

Right now it seems the whole publishing industry is obsessed with price. The FT carried a piece on Tuesday about how Random House “Fear An iPad Price War“. Macmillan CEO John Sargent has been blogging about it, there is even a FREEMIUM SUMMIT in San Francisco on Friday (Contrary to what you’d expect tickets cost $449.00 rather than $0.00).

And who can blame them. Price is already creating enormous problems for publishers. And it’s not just things like Kindle users punishing authors with non-existent, delayed or expensive Kindle editions by giving them one star reviews (here and here for good discussion).

Price is a problem in the real world as well as the digital one. You only need to look to last winter’s price war in the US to see that. Amazon and Walmart kicked each other (and publishers) in the head to prove they had the best price for some key hardcover titles. The price point flavour of the day was $9.99. Then Target joined the fray.

The problem of course is that these price wars and ebook protests are driving a value perception home in consumers minds. On the one hand it reinforces the idea of ebooks being “worth” less than physical books and on the other, the price of physical books is too high, why else would retailers be selling them at such large discounts.

Bizarrely enough, until the enforced change to an agency model (which is by the by not across the board and is unlikely to become the standard if Amazon has its way), Amazon was selling ebooks at a loss, at least on new releases. And all three companies (Amazon, Target and Walmart) were selling their hardcovers at loss prices.

Free Will Increase Sales
And then there is the giving away stuff will help you sell more stuff argument. There are studies which seem to suggest that there are benefits. But the key point about those studies, is that they are by their nature, short-termist. This is not a criticism, just a reality.

As the aforementioned John Sargent noted about the longer term of “Free” (HT to Mike Cane for pulling this quote):

We had a car guide, Edmund’s Car Guide. That was a distributed line we had at one point.

Edmund’s decided to put a little content up on the web. We said, “Great, it’ll drive the sales.”

He said, “I’m gonna put it all up.” We said, “Don’t do it. You won’t sell books.” He said, “I’m gonna prove you wrong.” He put one-hundred per cent of his content up for free.

First year, sales of the book went up.

Second year, they went up again.

Third year, they dropped by fifty per cent.

Fourth year, we didn’t sell another book. You don’t find them on a bookstore shelf anymore.

So there is that danger of the experimental stage of, “I give it away free and look! — my sales go up.”

There’s gonna come a point in time where I give it away for free and my sales don’t go up and then there’s gonna be a point in time when I give it away for free and I ain’t selling shit anymore.

Pushing For More
From the perspective of a book publisher, price is about the only lever one has to drive revenue. Getting more for the books you sell is going to increase your top and bottom lines results. That is if you can control costs. So it seems like great territory for a fight, it seems like a great place to drag a bigger percentage from the other guys side of the maths to your side.

Apple provided the opportunity to beat Amazon with a stick and to actually enable that clawback. Publishers, by some thinking, would have been fools not to take it.

Besieged
There are many potential retorts to this post, so many “but what about x, or y, or z” but the logic of fighting on price, of resisting free, of pushing for a higher value on content seems inescapable to most publishers who have for so long been on the losing edge of the price war.

As some of the posts in this series have explored (Apple, Google, Amazon) as an industry the ground on which Publishing is built is being undermined.

The smartest heads in the building are seeing that the future is not necessarily rosy, that survival is not guaranteed. That places an awesome responsibility on the heads of managers and executives. No one wants to be the man or the woman who brought X Company down. That leads to defensive thinking.

That is why Publishers Fear Price and when you look at it from their perspective, they are right to.

photo credit: renatomitra

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Apple

On the day the iPad’s availablility in the US was announced (April 3 in case you missed it) I thought it suitable to discuss Apple. What’s to fear I hear you say? Hasn’t Apple provided the fodder to defeat Amazon’s nefarious $9.99 pricing demands and with the creation of the iPad opened a whole world of possibilities for publishers? To which the simple answer is yes but the complicated answer is yes, but.

Yes
You are right, most publisher probably don’t fear Apple. In fact they have welcomed their arrival on the publishing scene, seeing them as useful counterweights to Amazon. But they are wrong. Apple presents a real problem for publishers one worthy of fear.

Yes, but!
Apple has created leverage for publishers that much is true, but is that leverage actually worth anything? Apple seems to have thrown the balance in favour of book publishers in a struggle that is really peripheral to book publishers survival, but in doing so made that struggle look more important than it was. Price, especially the price on specific forms of content (in this case the Kindle edition ebook) is not the sole factor in book publishing’s future, there is much more going on. In fact, the leverage Apple provided has blinded publishers to the larger realities of change and has been, I would argue, detrimental to the industry as a whole.

As for the iPad it is a fine looking device, but the iBooks app which Apple itself describes as:

the best way to browse, buy and read books on a mobile product. The iBookstore will feature books from the New York Times Best Seller list from both major and independent publishers, including Hachette Book Group, HarperCollins Publishers, Macmillan Publishers, Penguin Group and Simon & Schuster.

will not even be native to the product but:

will be available as a free download from the App Store in the US on April 3, with additional countries added later this year.

Competition
So, video will be native to the iPad, so will Photos, Safari, Mail, Notes and a few other applications but not iBooks. Will YouTube I wonder? Think that through folks. iBooks not native, why? Why not build it in if the product is so amazing, so intrinsic to the concept? Because Steve Jobs reckons people don’t read anymore.

I guess what he means is that the people who do read will download that app anyway and that most people simply do not consume vast numbers of books in a given year and in some senses they never did, at least not in the way that they watched television or listened to music. So why go to the bother of including it for a few die-hards who will do the work for themselves?

What he means is that books are not central to the iPad as a device, but they make for good marketing copy. In fact books, as far as Apple is concerned, are probably already fringe media and so are not vital to the success of the iPad or else iBooks would have come pre-loaded sitting there ready to download books.

The iPad is about the things that people do a lot of, watch tv and video, listen to music and surf the web. People don’t read books very much on average and so books fail the mass market test. Publishers have been so eager for an ally in the battle with Amazon they’ve ignored the fact that their ally might not really care about their industry much at all.

Binding us more
And then there is the issue that by keeping publishers obsessed with the iBookstore and app creation Apple keeps publishers locked into a closed development system of Apple OS. Which suits Apple and blinds the publishers to the real opportunity they have, and have had for some time now, and which few of them have been embracing, web based content accessible over any device with the use of a browser.

If publishers had pursued web access for the last five years it wouldn’t matter if iBooks was native, Safari would be their Trojan horse allowing readers to buy access online, bypassing Apples 30% tax. Of course the more visionary have done something like this. The O’Reilly/Pearson created Safari Books Online now has some 40 publishers and I would expect to see that kind of platform thrive in a mobile multi-media device environment. At the very least it is in a position to take advantage of web broswers as well as iPad Apps something most publishers will not.

To sum up
Apple is making mobile computing cool, easy and non-geeky. Apple is making it easy to put video, games, music, photographs and just about any form of entertainment in the hands of everyone, everywhere in a cheap and attractive package. In fact, if Google represents the reality of competition with every book ever published then Apple represents the reality of competition for every second of attention with EVERY form of entertainment imaginable. As a publisher and knowing that reading has consistently lost in a straight attention fight with video, music and mass forms of entertainment, that would create quite a bit of fear. As Laocoön might have out it: “Do not trust the Horse, Trojans. Whatever it is, I fear the Greeks even bearing gifts.”