Most small and medium-sized publishers who haven’t  YET decided to act on digital publishing wonder where to start. They are especially cautious if they have been in business for some time and have a backlist they are worried about converting. That’s a significant up-front cost for small publishers if they only have PDF copies of their titles.

In their minds backlists look like a cost sink rather than a potential digital profit centre. That’s because depending on who you talk to a backlist conversion from PDF to epub or .mobi will cost about €150-€250 and what’s more, it’ll be even more for a high-design title.

If you’ve been publishing say a modest 10 titles a year for ten years, then you’ve a back list of 100 titles and even at the most reasonable quote that might cost you €15,000 to convert. For a small company that’s a chunk of change equivalent to publishing a few new titles a year in cost terms.

Well to my mind, the first thing ANY publisher needs to do, even if they don’t have immediate plans for digital publishing, is stop making that backlist issue bigger and I’ve a pretty sensible strategy for how they can do that AND start preparing for digital publishing.

1) Stop only holding PDF files
Simple enough really, but if you are using in-house design programmes like Indesign or Quark, make sure you hold onto the Quark or Indesign files of your titles AS WELL as holding on to the PDF. If you are using out of company contractors, make it a condition that designers supply original files to you when they deliver the final files. Doing this means that you have files that are easier to convert then PDFs and will thus cost considerably less money when you decide to explore digital publishing and ebooks.
Cost to you: Nothing

2) Convert all new titles yourself
Many of the best in-house design systems offer conversion tools that publishers  can use to create epub and .mobi files themselves. There are other programs that allow you to create them from word files too, so this isn’t as difficult as it might sound. What’s more it future proofs your business going forward against the conversion fees I highlighted above. If you use an external contractor, make them convert the files at source and deliver the resulting files, this should not take them TOO long and for a modest cost at the time of origination you will be ready to sell ebooks.
Cost to you: Nothing to very modest

3) Audit your backlist
So you’ve stopped making the problem bigger and you’ve created files that can easily be converted to ebook formats of your choice. It is time to see just how big the problem is on the backlist. Go through your titles and find out what files you actually have for them. PDF, Indesign, Quark or Word. From an ebook creation perspective Word files and original design files are actually fairly easy to convert (with a little knowledge) so if you have those file types AS WELL as PDF files for your title, you are in a good place. Sort titles into two groups, those with ONLY PDF files and those with Word or Indesign/Quark files.
Cost to you: Time and frustration

4) Convert the easy titles
As I mentioned in 2 (above) in-house design suites will generally have plug-ins that enable you to convert your Indesign/Quark files and there are cheap commercial products that will convert word files. You can make headway in creating a digitzed backlist by converting the files in those formats before worrying about the PDF files. Likewise, external designers will charge MUCH less for converting those files then a PDF, if they don’t, they are probably over-charging you.
Cost to you: Nothing to modest

5) Start selling them
Of course this section requires some thought and strategic planning* before you forge ahead, but once you’ve done that and chosen the right path for your company, you actually have files in formats that can be uploaded to major ebook retail sites. Create accounts, add metadata and start selling them, or sign up with an ebook distributor who will do that work for you. Once the converted titles start to pay back some cash, use that to convert the tricky or PDF-bound titles.
Cost to you: Nothing to modest depending on the sales channel you chose

And there, in five easy steps, is a simple strategy for small and medium-sized publisher looking for somewhere to start on the digital publishing market but worried about their backlist problem.

*Which Green Lamp Media will be happy to help you with. We can provide strategic advice and planning, operations support or we can provide digital publishing services, depending on your needs.

Image Credits
Some rights reserved by RachelH_

Interesting stats these:

Falling prices and new business models will help U.S. e-book unit sales to grow from an estimated $313 million in 2009 to $2.7 billion in 2013, according to a new Yankee Group forecast. The research firm predicts that e-book downloads will outpace those of paid mobile apps during the period, growing at an annual rate of 83% compared to 72%.

via MediaPost – news and directories for media, marketing and online advertising professionals.

On the one hand it is amazing that we have this data on discounts from the UK general trade. Well done to The folks at The Bookseller* for analyzing it. It’s pretty vital that we know these things.

On the other hand, I do wonder how much we can draw from it. How much for instance is ‘lost’ to discounts in the TV market or the clothing market?

When you consider the Recommended Retail Price inflation that publisher engage into facilitate the subsequent discount you have to question how real the ‘lost’ amount is.

There is much to ponder here, but considering discounts  as money ‘given away’ is to ignore the sales made BECAUSE of the discount.

More than £10m was also given away by retailers on sales of the latest edition of Guinness World Records Guinness, £20, which sold for just £9.65 on average, and Nigella Lawsons Kitchen Chatto, £26, which retailed at £13.84 on average.

Fiction was the most discounted genre in percentage terms last year, with an average of 30% knocked off the price of novels, for a total giveaway of £199m.

Adult trade non-fiction and childrens titles were discounted by an average of 26% in comparison, while adult specialist non-fiction titles were discounted by a far -shallower 17%.

via 2010 retailer discounts total £600m | TheBookseller.

* I writer occasional pieces and column for The Bookseller.

There’s an issue I’ve been exploring on this blog and elsewhere for some time. It’s about digital change and what it does to large and small markets, especially when the rates of change in these markets differ. I’ve called it the differential rates of digital change problem and I think it is time I put a solid definition on it.

So here it goes. The Differential Rates Of Digital Change Problem occurs:

When a large publishing market undergoes a more rapid shift towards digital delivery and consumption of books than a smaller publishing market.

This change has many significant implications but the three I want to focus on here are:

• Rights pressure on small market publishers
• Sales pressure on small market publishers
• Growing disparity between ACTUAL digital change in small markets and OBSERVABLE digital change

Let’s look at these one by one.

Rights Pressure
I’ve highlighted how larger market publishers increasingly have an incentive to acquire global digital rights in works, whereas, as of yet, smaller market publishers have little incentive to hold on to those rights, though they know that in the future they will need them. I’ve pointed to one possible way to meet both needs here.

Sales Pressure
This is almost a bigger deal for small markets. And it has a few forms.

1. Digital sales of titles not necessarily available in the smaller market to customers in the smaller market recorded as sales in larger markets (eg Kindle Sales to Irish customers via Amazon.com or .co.uk)
2. Digital sales of titles available in smaller markets physically AND digitally but made through sites that record those sales in the larger market (eg titles published by local publishers or foreign publishers available on Amazon.com Kindle store)
3. And of course, if a small market publisher sells global digital rights to a book they publish, then the digital editions of locally published books will sell through the larger market
4. The quietest form is of course digital sales to residents who have retailer accounts in other territories, ie English Address for Amazon.co.uk Kindle sales (small I’d wager but without the stats who knows)

These sales are starting, slowly but surely, to leak sales from small markets to large markets. The levels are unquantifiable right now in anything but the most sketchy way, but they are surely growing with each Kindle,  Kobo reader, iPad, iPod Touch, iPhone and Android device sold into a small market. The proliferation of devices offering ebooks sold through large market retailers  MUST be driving sales from those markets. When those retailers start sharing their data (and how likely is that) we will know for sure.

Over time the sales impact will become pronounced, especially if the small markets don’t develop a local infrastructure for selling ebooks. Imagine for instance if all digital sales in Ireland were made through Amazon, Apple, Google and Kobo with maybe a small share for the rest? If the system remains as now, no digital sales will ever be recorded and the market for books will shrink dramatically OR at least  it will seem to.

Actual Vs Observable Data
This is a bigger issue than it sounds like and is deeply relevant. As digital change moves on, small markets get a false idea of how rapidly their market is shifting, or at least publishers native to that small market do. If sales are happening in the estores I’ve already highlighted then the local market doesn’t see them. If 20% of the market shifts to digital, but buys its books from foreign retailers, then the market will fall by 20% and it would still look like digital has no presence.

Clearly there are offsets here. For instance, if a local publisher starts putting their titles on those outlets they will start selling books and will realize that the digital shift is ALREADY happening, or perhaps they will realize that even if it isn’t happening, they can sell some of their books to a global customer base.

What’s more, local offices of large publishers (quite a few of which exist in Ireland) will be able to see their rising ebook sales through their corporate parents and will know well enough how quickly digital sales are growing.

But even so, the data for the smaller market as a whole will be fractured and patchy, controlled by outside forces whose good will cannot be relied on and all the time digital will seem, because there is little reliable evidence to the contrary, to be a marginal market.

In this strange  scenario, local publishers remain unwilling to invest in digital because they feel the market is small but equally the market to them remains small because they have not even invested to get a few titles digitized and for sale on these foreign platforms. The only way to see beyond the apparently tiny size of the market is to take the leap and invest a small amount, but companies, in the absence of data, are rightly reluctant to do so.

Conclusion
So there it is, the Differential Rates Of Digital Change Problem. It’s not a problem for larger publishing markets of course and I don’t see any real way of addressing it until figures for digital sales begin to be shared more freely by the large companies like Apple, Amazon and Google who are not really minded to share it.

The only way beyond it is to accept on faith that digital is growing in smaller markets but in hidden ways, then to step beyond that and start offering your products digitally. This doesn’t have to be a huge investment (and if you doubt that, spend some time online reading about ebook creation from text files) but it does need to happen and it needs to happen soon.

There is a lot to ponder in B&N’s move and Mobylives gets to the core:

So what gives? Speculation and anger were neck and neck at most publishing houses in New York yesterday. Many in the indie world feared that the firing of Marcella Smith meant the company would be paying less attention to the work of small presses. But on the other hand, the company also fired its cookbook buyer, and it’s not going to stop selling cookbooks — probably its first or second biggest selling section.

Which only makes the reasoning here all the more opaque: What possessed B&N to not only fire such important employees, but to do it in such a cynical (or is it desperate) bad-publicity-be-damned style?

via MOBYLIVES » Is the Borders crash freaking out Barnes & Noble?.

Too fatalistic by far in my view, but there is some truth in this piece. Publishers need to change, to adapt and to look for new ways to employ their content if they are to win out.

Publishers have been taking steps in this direction by shifting their ad spending to online, and having staff get up to speed on Facebook and Twitter as promotional outlets. But for the most part, this effort has been limited to a few relatively junior people working on a campaign-by-campaign basis and trying small-scale experiments.

In short, I don’t think publishers will figure all this out in time, which is why retailers will dominate the customer relationships in the future. They can amass enough of a consumer base that they can market a book to hundreds of millions of consumers and, more importantly, get enough of those consumers to buy the book. With those 100 million billing and messaging relationships, Apple and Amazon would only need to achieve a reasonable 1 percent conversion rate to help an author sell 1 million books, a level few authors today reach.

via Why Online Retailers Will Squeeze Out Publishers In The Book Business | paidContent.

Bloomsbury have been making very savvy acquisitions on the back of their Harry Potter bounty. I’d expect to see trade publishing become a smaller part of their business over time as academic and professional elements grow more significant!

Within the past two years, Bloomsbury has focused on diversifying into academic and professional publishing. The company said its investments in that area, including Methuen Drama and the Arden Shakespeare, were “progressing well”.

via FT.com / Media – Bloomsbury book sales driven by Booker win.

Everybody in the trade is feeling the impact of Agency pricing. I’m not a huge fan of it, but then again I can see the arguments in its favour. Well worth reading this in full and pondering its implications for you and your business.

The question is do consumers understand the industry? “Isn’t this a cartel? Is this not illegal? I thought the Conservatives abolished price-fixing on books back in Thatcher’s time? I will write to my MP and see what response I get.” That is “Joe” on Amazon.co.uk’s Kindle discussion forum in the thread following Amazon’s open letter to customers explaining why it had to adopt the agency model for some titles—and Joe’s tone is pretty much in keeping with the rest of the posts.

via Questions for 2011, part 1: Will the agency model hold? | FutureBook.

Borders is not looking like it can pull through this, in fact it looks like it is in its final stages of life as a company.  Some of its stores might survive as either a smaller chain or part of a new entity, but the chain as a power is all but finished.

The lessens for booksellers and publishers in Ireland and the UK (which has already suffered the loss of Borders) is that the Bricks & Mortar supply chain that we rely on so much is not invulnerable and can and will fail in the years ahead.

“It would have a significant, concrete and immediate impact on sales,” said one publishing executive who requested anonymity as the person’s business relationship with Borders is confidential. “We would just sell fewer books period.”

Traditional book outlets such as Barnes & Noble (BKS.N) and Borders account for about 49 percent of book sales in the U.S. according to Albert N. Greco, professor of marketing at Fordham University who follows trends in publishing and retail.

While people can go to other retail outlets such as Wal-Mart, there are typically fewer selections.

Wal-Mart, for instance, carries around 1,400 to 1,700 titles, said Greco, while Borders’ superstores stock well over 100,000 books.

“If the chain went out of business it could be a serious blow… the whole value chain could be adversely impacted,” Greco said.

via Analysis: Book publishers may suffer in world without Borders | Reuters.

photo credit: alancleaver_2000

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.

Authors

I wrote the bulk of this article across on my personal blog, but it warrants a full exploration here on Green Lamp Media. You might wonder why publishers could fear authors, the life blood of their business? Let me explain the reasons.

Currently the bulk of authors are in a fairly powerless position relative to publishers. Publishers have money, access and publishing slots. Publishers finance the editorial and production work that goes into a book and have the relationships that ensure distribution, advertising and shelf space. This has been changing rapidly over the last few years.

One way it has been changing is self-inflicted, publishers shedding costs by shedding editors (and, some would argue, quality as they do it). But the other more visible way it is changing is in economic terms as the cost of making a text widely available drops very close to zero via effective digital publishing.

[pullquote]Why should you sell a paper publisher your digital rights when there is no need?[/pullquote]

In 2006 when I was only starting to think clearly about digital change (and had only been writing a blog for some 4 months) I wrote a post called Authors Will Drive Change, it was part of a short series of articles on what was changing the publishing industry.

The point is that publishing is no longer just about books and even more it is no longer about waiting for a publisher to decide your work is good enough for print. Options abound and as more and more writers realise that they will take advantage of it.

E-books will push this change even more. There is no reason why authors’ royalties should be the same on e-books as they are for paper books and in many ways there is no reason why the authors cannot sell e-books themselves rather than through a publisher. Why should you sell a paper publisher your digital rights when there is no need?

What I didn’t address back then and what has become clearer now, is how established authors will also drive change and in doing so, make a much bigger impact. After all, if ebooks begin to account for 20-30% of the market (or more) and of that major authors generate the lions share of sales then their departure from your lists will make a huge dent in revenues.

But even authors with moderate (still impressive but not BLOCKBUSTER) sales can see the benefit of direct sales and cutting the publisher out. The most recent example of this is JA Konrath who writes The Newbies Guide To Publishing blog. He has been posting for some time now about his rather impressive success in selling books via Amazon’s Kindle device:

In short, this market is perfect for a one-person operation.

I’d certainly entertain an offer from a large publisher, if they wanted to buy rights for one of my books. But I’m not going to go out looking for the opportunity. Especially since I’ll make more money in the long run if I keep my rights.

I could even make more money in the short run.

According to my recent royalty statement, my horror novel AFRAID sold about 54,000 copies in all formats, earning me around $27k.

If I released a Jack Kilborn ebook on my own, and it sold like my current ebooks are selling, I’d make $20k in a year.

It’s doubtful I’ll make $17K next year on AFRAID, since it’s no longer getting coop on bookstore shelves. But I’m sure I’d make $20k, or more, on a self-pubbed ebook.

So in two years I can make more money on my own on a self-pubbed ebook than a book released by a major publisher in hardcover, trade paper, paperback, and ebook formats, supported by a tour and advertising.

Unless it’s a big offer, I can’t imagine selling rights to my work ever again…

And There Is More
The IDPF released the figures for February ebook sales. They are pretty stunning. I’ve written elsewhere about my skepticism regarding ebooks and the industry’s obsession with price and a single format, but when one sees figures like this, it is almost understandable that they get excited and distracted by them.

Mike Shatzkin writes about what this seemingly rapid shift towards digital means for the print side of the business and it is an interesting perspective:

If by the end of 2012, 25% of sales for a new book are digital, then about half of new book sales will be made through online purchases if we count the print book sales made through online retailers (mostly Amazon.)

Online print sales can be served through inventory generated on demand. So, if these estimates are right, we are less than three years away from a publisher (or author) being able to reach half the market for a book without inventory risk!

Having half the market reachable without print-run risk or inventory storage; having half the customers connecting with their reading through online paths that make them at least theoretically identifiable; and having a quarter of those customers reading through a medium that enables interactivity will make all the changes we’ve seen so far in trade publishing appear trivial. And if the very perspicacious Carolyn Reidy, her unnamed counterpart, and I are right, that disruption is going to take place before many books now under contract reach their publication date.

Personally I caution about moving from current trends towards future results. I’m unsure if the sales will continue at their current level never mind continue to explode in such an impressive fashion. However, even if we allow that Mike and the trends are half right and we see say 33% or 40% of the market reachable via no-risk required methods by 2012, then the savvy authors like JA Konrath will see little reason to work with a publisher at all. Why, if they don’t require the finance that is one of a publishers strongest assets, would they?
[pullquote]as the market becomes more digitally biased, the greater the risk that lead and mid-list authors see first the advantage of retaining their own digital rights[/pullquote]
This is not to say that publishers don’t offer more than finance, they do and in abundance, but for some authors, the skill set that publishers offer is affordable and at a more reasonable cut than they currently allow publishers to keep.

In my view, as the market becomes more digitally biased, the greater the risk that lead and mid-list authors see first the advantage of retaining their own digital rights, then later the advantage of retaining all rights and exploiting them for themselves.

The future, for all that it offers great promise to authors and thus they WILL drive change, may not offer such great promise for publishers and certainly not as they currently exist and hence why publishers fear Authors!