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February 24 2012

Publishing News: IPG says "no" to Amazon's new terms

Here are a few stories from the publishing space that caught my eye this week.

IPG stands up to Amazon

IPGlogo.pngThe Big Six aren't the only ones concerned about Amazon's growing hold on the publishing industry. This week, the Independent Publishers Group (IPG), the second largest independent book distributor for small, indie, and mid-size press titles, started pushing back. On Tuesday, IPG president Mark Suchomel sent a note to the company's distribution clients announcing that Amazon failed to renew IPG's agreement to sell Kindle titles of its books. As Suchomel explained in the memo (which can be found in full at PaidContent):

"As of today, the website no longer offers for sale any electronic titles from any of IPG's client publishers ... As has been publicly reported, is putting pressure on publishers and distributors to change their terms for electronic and print books to be more favorable toward Amazon. Our electronic book agreement recently came up for renewal, and Amazon took the opportunity to propose new terms for electronic and print purchases that would have substantially changed your revenue from the sale of both. It's obvious that publishers can't continue to agree to terms that increasingly reduce already narrow margins. I have spoken directly with many of our clients and every one of them agrees that we need to hold firm with the terms we now offer."

Melville House reported Wednesday that Amazon pulled the "Buy" buttons for all IPG Kindle titles — 4,443 according to the New York Times, as the post noted — "because IPG could not accept Amazon's new demands." The Melville post has a nice roundup of the story coverage and noted one of the larger underlying issues:

"These are the kinds of companies that don't have the resources to absorb something like this so easily. They will be more damaged, more deeply endangered, than a Big Sixer could have imagined. There's every likelihood that some of those little publishers sell most of their books on Amazon. This could put them out of business."

This could put them out of business, or force the small publishers to work directly with Amazon. The Melville post also suggests the situation may be an instance of Amazon sending a message to the Big Six and that things may be coming to a head: "There is in any event no question that this is a critical moment between the big houses and the monopolistic retailer."

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The battle to democratize the ereader continues

NookLogoOn the heels of an increase in sales, Barnes & Noble turned up the heat in the ereader battle, launching an 8GB Nook tablet for $199 and lowering the price of the Nook Color to $169. In a press release, William Lynch, chief executive officer of B&N, stated, "In the third quarter, our traffic and sales in stores were the highest we've seen in five years." According to the release:

"The consolidated NOOK business across all of the company's segments, including sales of digital content, device hardware and related accessories, increased 38% during the third quarter to $542 million, on a comparable sales basis. NOOK unit sales, including NOOK Simple Touch™, NOOK Color™ and the new NOOK Tablet, increased 64% during the third quarter as compared to the same period last year. Digital content sales increased 85% on a comparable basis."

B&N includes apps, newsstand and book sales in its digital content category. Reuters reported that "the Nook business is expected to generate $1.5 billion in the fiscal year ending in April."

The Nook line acquired a new sales outlet this week as well, as Office Depot announced Thursday that it would sell the devices, joining the likes of Target, Walmart and Staples.

Brick & mortar has come full-cycle: We're back to the indies

Novelist Ann Patchett appeared on "The Colbert Report" this week. She was introduced by Colbert as "an author who is working to save independent bookstores," at which point Colbert quipped, "Independent bookstores! I should buy one of those on Amazon." The five-and-a-half-minute segment was funny, of course, but Patchett recently opened Parnassus Books, a brick-and-mortar bookstore in her hometown of Nashville, and had a few interesting comments as to why she did this and why she thinks brick-and-mortar has a future:

"We had two huge bookstores [in Nashville], both over 30,000 square feet, one an independent, one a Borders — they both closed. Suddenly, I'm living in a town with no bookstore ... both of those stores were profitable every month they were open; they closed at corporate levels, so they had larger issues ... We've had the cycle: Little bookstore does well; it gets bigger. Crushed by the superstore — Barnes & Noble, Borders chains. They were then crushed by Amazon, and now we've cycled all the way back. Suddenly, people are saying, 'I want to have a place to take my kids for story hour on Saturday; I want to have a place to go to a book club or see an author read'."

Colbert also addressed the issues of discovery and of opting to shop at a bookstore versus the convenience of buying on the Internet.

You can view the entire segment in the following video.


March 10 2011

7 ways ebook apps can help brick-and-mortar bookstores

This post originally appeared on Joe Wikert's Publishing 2020 Blog ("Helping Bookstores Remain Relevant"). It's republished with permission.

My iPhone is always with me when I'm in the bookstore. Many times I've found a book that interests me, I pick it up and browse through it, then pull out my iPhone, open the Kindle app and grab the ebook sample (assuming one exists). I've even bought Kindle ebooks on the spot in a bookstore with my iPhone. I feel bad, sort of, but it makes me realize the enormous opportunity brick-and-mortar bookstores are missing out on.

Ereader apps

I should also mention that I have several other bookstore apps on my iPhone including ones from Barnes & Noble and Borders. I've never pulled either one of those out while I'm in those stores. Never. Why would I? All my ebooks are in my Kindle library and none of these other e-tailers have given me a compelling reason to switch.

There's something the physical bookstores could do to stop me from constantly defaulting to the Kindle app: Build functionality into their own mobile apps that makes me want to go to their brick-and-mortar store.

Here's what I'm talking about:

  1. Use location-based services built into pretty much every smartphone to know when I'm in one of your stores.
  2. When I open your app and you've detected I'm in-store, offer me special deals which are only good for the next hour. Make sure all the deals are fully redeemable using only my smartphone app. Don't email me coupons. Push them into the app so I can just flash my iPhone at the checkout counter and be on my way without fumbling through my email inbox.
  3. If you sell your own reader device, don't make me bring it to your store for all this. My iPhone is always by my side but I refuse to bring a larger device just to get a deal. All the promotions and redemptions need to happen with nothing more than my smartphone. Plus, I probably don't even own your device. I'm happy reading my ebooks on an iPad today, I might switch to an Android tablet soon and I don't want to be locked into your hardware platform tomorrow.
  4. Most importantly, since I'll soon be using your reader app, not Amazon's, you'll know my reading focus the deals on the things I tend to buy.
  5. Offer specials on ebooks, print books as well as combinations. And don't forget about all the other things you sell in your store (remember the cafe!). If I'm standing in your store and I just bought the ebook version of the latest Mickey Mantle bestseller, make me an offer on the Major League Baseball preseason guide you sell in the magazine section.
  6. Take a page out of Groupon's play book. Use your nifty new app to track how many customers with common interests are currently standing in your stores. Push a message like this to all of them: "You're a history buff but you've never bought this great ebook about FDR. If at least 100 of you commit to buying it in the next 10 minutes we'll give you all a special discount of x%. Stop by the Biography section to browse the book and see why we think it's perfect for you."
  7. Surprise me! Use this app's services to make me want to visit your brick-and-mortar store more frequently!

Everything described above should be free to anyone. All they have to do is download your free smartphone app and create an account with you. But don't stop there. Offer a more exclusive membership program for an annual fee where I'll get even more deals than non-members receive. How about giving paying members access to lengthier ebook samples? I'd love that!

Finally, ask all customers to opt in to an anonymous data collection program so that you can analyze the results of all these terrific campaigns and use that data to create even better ones tomorrow. And don't forget you could also sell that information to publishers.

If you do all this I promise I'll start using your apps and I guarantee you'll see more purchases from me.


Sponsored post

March 07 2011

Agency model may violate anti-cartel laws in Europe

ibooks2.jpg Random House's switch to the agency model for its ebook pricing structure last week delighted the American Booksellers Association and landed Random House in Apple's iBookstore, but not everyone is pleased with the agency model Apple requires. In a comment for a story in the LA Times, Dennis Morin, partner at BeamItDown Software, said:

The economic damage that Apple has wreaked on small ebooksellers is enormous. It is all pocket change for Apple, but life and death for many. There is something fundamentally wrong when companies can wield such power.

(Indeed, John Naughton argued at the Guardian's TheObserver, that Apple has ousted Google as the reigning evil enterprise.)

Agency pricing may not only be damaging to the little guy and helping to fund Apple's evil empire — it may be illegal. Investigators in the UK are looking into the ebook agency pricing that most major publishers have adopted, in part, to put ebooks on Apple's iBookstore shelves, as a possible cartel. Benedicte Page and Leigh Phillips reported in a Friday post at the Guardian that European Commission investigators raided several publishing houses earlier that morning:

Investigation teams have asked many of the biggest London publishing houses, including HarperCollins, Hachette and Penguin, for all records and documents relating to ebook sales.

The [Office of Fair Trading] said the investigation was "at an early stage", stressing: "It should not be assumed that the parties involved have breached competition law." It is thought the investigation could last a year.

A spokeswoman for the investigation team commented in the story that if investigators find publishers guilty of price fixing, the penalties will have lasting, far-reaching effects:

We have suspicions of collusion to keep prices high. But if our suspicions prove to be founded, this would have an impact across the EU because ebooks are sold across borders.

Such findings may also have potential to affect industry policies — and profit margins — worldwide.

Ronald Blunden, head of communications at Hachette, argued in the story that agency pricing is not a cartel, but rather a way to prevent retailers like Amazon from driving down the cost — and perceived worth — of ebooks:

It's important for the publisher to control the retail price. We don't want the items sold below cost, as the perceived value of books becomes damaged. Once this happens, can we expect online retailers to absorb the cost of financing the editing and publishing of books?

March 04 2011

Publishing News: Week in Review

Here are some highlights of what caught my attention in publishing news this week. (Note: These stories were published here on Radar throughout the week.)

HarperCollins decided ebooks would wear out after 26 uses

OverDrive CEO Steve Potash sent a notice to libraries about new restrictions and changes in OverDrive's territory policies. The notice, which sparked an outcry from libraries, library patrons and even some authors, announced that a major U.S. publishing house (later identified as HarperCollins) would be placing a 26-time lending cap on its titles.

In a lively #followreader discussion last Friday on Twitter, Peter Brantley, director of the Bookserver Project at the Internet Archive, suggested libraries respond with a touch of aggression to make a point:


Ron Hogan, author and host of responded to Brantley, taking it a bit further:


Neil Gaiman, a HarperCollins author, responded to the situation on Twitter as well:


Gaiman's suggestion of implementing PLR — public lending rights, a process used in the UK — in the U.S. was discussed in the #followreader session. You can see the entire session here or by searching Twitter for the hashtag #followreader.

Brantley also pointed to a second concerning item in the OverDrive notice:


The section of the note he's referring to states (via Librarian by Day):

In addition, our publishing partners have expressed concerns regarding the card issuance policies and qualification of patrons who have access to OverDrive supplied digital content. Addressing these concerns will require OverDrive and our library partners to cooperate to honor geographic and territorial rights for digital book lending, as well as to review and audit policies regarding an eBook borrower's relationship to the library (i.e. customer lives, works, attends school in service area, etc.). I can assure you OverDrive is not interested in managing or having any say in your library policies and issues. Select publisher terms and conditions require us to work toward their comfort that the library eBook lending is in compliance with publisher requirements on these topics.

Brantley responded:


Heather McCormack, Book Review Editor at Library Journal, commented on the HarperCollins situation in an e-mail interview. She highlighted the issue of trust:

The most obvious short-term consequence is what appears to be a mass obliteration of trust. Don't get me wrong — there was ample discontent with the ebook loaning model as it stood. DRM and Overdrive's interface have long been pointed to as stumbling blocks in providing easy access to information, and yet the model was largely tolerated. With the announcement of HarperCollins' loaning cap, however, a sizable contingent of librarians have had it. See "The Ebook User Bill of Rights" issued this week by a set of advocates led by Andy Woodworth and Sarah Houghton-Jan, and the charge to boycott HarperCollins content by librarians Brett Bonfield and Gabriel Farrell.

No trust means little to no communication, of course, and that's what scares me the most. Librarians have long been shut out of conversations about the ebook loaning model, so from where I'm standing, it doesn't make much sense for librarians to formally sever their commercial relationships with HarperCollins. Cap or no cap, they have a responsibility to provide access to information, and in order to fulfill their mission, they need to do the exact opposite of a boycott. They need to join forces on an unprecedented scale to lobby for value for their communities and collections: paging the blogosphere; paging ALA; paging the publishers who do support libraries; paging the sea of patrons who are ultimately affected.

As for long-term effects, I hope HarperCollins' move isn't replicated in its exact terms, but I do hope it will set a precedent of publishers and librarians engaging much more directly about new loaning models. A good, old-fashioned dustup can pave the way for clearer communication and progress.

It's important to note that a couple of the major U.S. publishing houses — Simon & Schuster and MacMillan — don't make their titles available for digital lending at all.

For more on these moves, check out related links posted at Librarian by Day, and commentary by Jane Litte at Dear Author and Martyn Daniels at Brave New World.

Retail bookselling moved to niche retailers to reach new audiences

ChronicleLogo.png As publishers struggle to adapt to the changing economy and the changing technological landscapes, distribution becomes more and more of a challenge. With large bookstore chains failing and consumers turning to the Internet to buy books, the sales agreements with traditional bookstores are starting to make less sense. Sheila Bounford, deputy managing director of NBN International, described the distribution problem in a recent blog post:

It is well known that when it comes to returns, bricks and mortar booksellers feel that they deserve equal discounts to those enjoyed by the online retailers whilst also maintaining that in order to offer range, they must have the right to return. What this ignores is that although the online retailers theoretically have the right to return, they almost never exercise it. Returns from online resellers run at less than 1% of invoice value. From the high street it is usually well in excess of 10% and often very very much higher. Returns are a drain on publishers' resources. Not just in terms of the cost of the book which is often unsaleable — but in terms of the cost of administration.

Some publishers are addressing distribution and point-of-sale issues with creativity. A recent New York Times piece looked at how publishers are selling books through non-traditional, non-bookstore retailers. These niche outlets expand sales reach, allowing publishers access to consumers who might never step foot in a bookstore. Another plus noted in the Times article: books sold through these channels are generally non-returnable.

One publisher tapping these non-traditional markets is Chronicle Books, which sells titles through Urban Outfitters, Nordstrom, Toys R Us, and Paper Source. In an e-mail interview, Kim Anderson, executive director of sales at Chronicle Books, said this model has worked very well:

Chronicle has long relied on non-traditional book retailers as an important part of our business model and long-term growth. The change in the book retail landscape over the last couple of years has only further highlighted the importance of this channel to our overall success.

Dana Newman on authors and the e-pocalypse

Trademark-symbol.pngAs the publishing industry wrestles its way into the digital age, a lot of conversation has centered around digital platforms, distribution woes, technological enhancement possibilities and how publishers and readers are adapting and adjusting to the new landscape. But where do authors fit into this mix?

In a recent interview, Dana Newman, a transactional and intellectual property attorney, talked about what authors need to do to protect themselves and their brands, in addition to their books:

Rather than think in terms of "I want to sell my book," think about "I want to license all of my intellectual property rights." Realize that it's not just your book, per say. It may be electronic rights, it may be multimedia rights — it may be all these other areas that your book may be exploited.

Before you enter into an agreement, make sure you understand it. Make sure you understand how you're granting those rights, and if you're granting all of your rights to one particular publisher, [ask yourself] do they have the ability and the plan to role out those other platforms for you?

Also, don't forget about trademarks. Authors are being told now they have to get out there, they have to market themselves. They are their brand. Don't forget to register your trademark — your name ...

During the interview, Newman also discussed the future of territory rights, embracing the "e-pocalypse," and why the film industry's experience with the digital transition contains lessons for the book world. The full interview is available in the following video:

Got news?

Suggestions are always welcome, so feel free to send along your news scoops and ideas.

Keep up with Radar's latest publishing news and interviews with our publishing RSS feed.

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