October 26, 2009

Publishing in the News

Two items lit up the publishing world this week: The debut of Barnes & Nobles’ “Nook” e-book reader and the hardback book price war between Wal-Mart, Target and Sears. Let’s take a look at those issues.

Barnes & Nobles’ Nook

nookThe Nook is, in most respects, a cheaper Kindle2. The differences: it has a small color LED screen to display true-color covers and includes navigation like an iPhone. It has a more useable keyboard. The machine supports more than the Mobipocket e-book format (Kindle only supports a variation of same); it also does PDF, ePub and the Fictionwise proprietary file (owned by B&N). The features that attract attention are the 2-week sharing feature – allowing you to lend the book to friends on almost any platform for a finite time; and the instantaneous Wi-Fi hook-up when you enter a B&N – allowing you to browse any title in the database and read for free.

At first glance, not a lot to get excited about.

Nook & Sharing

What has many upset is the free lending feature (Kindle allows up to 6 other readers to share the file (or 6 different platforms) for an unlimited time, but no-one’s made much of it). If you like the book – or know a few friends who want the book but aren’t willing to pay for it, all you have to do is send it to them with a keystroke. This feature seems to guarantee casual piracy, as did Napster.

This point of view tends to ignore the true life-cycle of books. For example: Person A buys Book B, reads it, and gives it to a Friend C, who, after finishing it, gives it to Friend D (or leaves it in a hotel for Maid F), and on and on. At some point, something else happens to the book: it’s either so tattered it gets tossed, it’s donated to a library or charity, or it gets sold at a garage sale/eBay/Amazon. The publisher never gets a cut of the book except from the first buyer. That’s the way of things, and always has been.

[A variation on this is that Book B gets sold to Library A, who then lends the book out to multiple readers until at some time they “deassession” the book by selling it at a Friends of the Library sale or tossing it in the Dumpster.]

Rather than fight the tendency of humans to share a book with other people, I really think publishing has to wake up and create licencing fees and possibly even time fuses embedded in e-book files. In that way, publishers can finally be reimbursed for the entire lifecycle of the title, instead of just its primary sale.

Likelihood of this happening in the next 5 years? Nil. But a girl can dream.

Nook in-store Wi-Fi connection

There are those who are incensed that books can be read for free when the e-reader is in one of B&Ns 700 stores. Uh, folks, you can read any of the paper books in the store for free, too. In point of fact, judging by the amount of coffee-stained returns I get back from B&N, I’d say they could almost call themselves a library.

The plus of this feature is that for the first time ever, a customer, upon not finding a paper book of his/her desire can go on-line to and buy/download it immediately. In this way, both publisher and bookstore win, since the sale is consummated. No telling how many sales are missed annually when books are not in stock and lazy clerks won’t order for the customer (if the customer even bothers to ask). I’m entirely on board with this feature.

Price Wars

booksaleThis week, Wal-Mart, Target, Amazon and Sears (Sears???) got into a hardback price war, lowering the price of many hardback books to $9. Publishers immediately pitched a fit; indy booksellers raised such a fuss, the American Booksellers Association (ABA) sent a letter of complaint to the Department of Justice arguaing that the practice was “predatory pricing.”

As with so many things, this has two sides. On the “Don’t Worry, Be Happy” side is the fact that publishers cannot control what price a company sells it’s books. As long as the publisher is duly compensated, it doesn’t matter whether the list price of, say, $19.95 is honored or not. Amazon routinely discounts books at or below break-even, figuring several million pennies are more attractive than a few thousand dollars. Meanwhile, on many book pages, the title is offered by Amazon Marketplace Sellers at ridiculous prices ($300? $2700?). All part of the fun. Obviously, if the folks selling for top dollar are regularly raking it in, a wise publisher might raise the price.

Ah! say some, But it’s hurting indy booksellers! The thinking is that no one will go into local bookstores and buy the book at full price. Well, that may be true to some degree – note that Wal-Mart, et al aren’t selling ALL titles for $9, just the marquee names – if your customer is already in your independent bookstore, s/he is likely to buy the book while it’s at hand, rather than go to the bother of messing with Wal-Mart.

Remember the furor when Amazon sold Harry Potter on the cheap? Oh, the wailing and gnashing of teeth! Yet when indy booksellers staged midnight sleepover/book releases, people were happy to plunk down full price, rather than order the book from bad old Amazon.

Besides, this offers a unique opportunity to booksellers: independent retailers can now buy top-of-the-bestseller-list hardbacks for less than regular wholesale from Target! Beats the bill from Ingram….

The Darker point of view sees this as the beginning of the end for publishers getting anything like a fair price for their books. Look at how the price wars in Britain almost broke the backs of publishers there! Consumer interest in lower-priced titles creates retailer demand for lower-discounts on publishers’ entire catalog. Now we’ll be stuck with a 70% discount on short-run books! And this on top of the $9.99 price point enforced by Amazon on its Kindle offerings!

Sorry for all the exclamation points, but it gets pretty hyperbolic.

These times are critical to publishers and indy booksellers. My guess is that most indies will simply fail unless they find a way to make substantially more money selling more than just books (and then are they a bookstore?). Book publishers are looking at a wholesale change in delivery mechanisms and price models. The Wal-Mart game has been pretty brutal to begin with (they demand a minimum 60% discount – and yes, they’ve heard of returns). Enforcing a $9 retail price point is the type of thing they do to all their vendors (how do you suppose China became the manufacturing hub for the U.S.?). I suppose we could all stop selling to Target and Wal-Mart. That’s our right. Then they simply wouldn’t have books in their stores. And those are sales we would have missed… oh wait, that doesn’t seem like a solution either.

Although the price war bears watching, I don’t think it’s something that can or should be a source of panic. But like the Nook (and the Kindle, and the Sony, and the fabled iTablet), these are signs this ain’t your grandma’s publishing business anymore. Here at Beagle Bay, we are now doing weekly reviews of where the industry seems to be heading and planning accordingly.

Don’t get left out of the changes to come. Understand what the issues are, ask questions, evaluate answers and then act!


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  • Interesting post, Jacqueline.

    However, I don’t think it is cost-effective to attempt to pursue licensing arrangements for loaned or resold books. Totally unmanageable and destined to alienate even more customers. Think DRM annoys people? Just try this concept on them.

    And publishers are not the only ones affected by such “lost revenue.” Artists, to one of whom I am married, get zero revenue for artwork resold. Ever.

    There are far more profitable things on which to spend our time, energy, and resources in my opinion.

    Having said all of that, I would also contend that there is a real difference between a p-book and an e-book. The p-book is a physical, tangible thing you can hold in your hands. An e-book is an ethereal something that exists only because we can manipulate electrons. Which is why I continue to contend that e-books must be priced significantly below the price of an associated p-book — with the e-book, you don’t really own anything tangible.

  • You should know that you are completely wrong about the lending feature. Actually the Nook lending feature is about as good as it could possibly be. It uses smart licensing through and through. Here is what happens. You lend the book out from your Nook. It goes to the person you lent it to. They get a free license to read it for two weeks after which it auto expires. In the meantime YOU cannot read the book until they return it or the two week term expires. The person it is lent to cannot lend it onward. You cannot lend it again while it is checked out. When you get it back you are free to lend again.

    In other words only one person at a time can read.

    Even better – you can lend to non Nook devices (like an iPhone).

    And that is about how I would want it to work…

    • I’m sorry, I don’t see how I’m “completely wrong” in this post. I did point out that it has a time fuse. The KINDLE does not.

      If, as you say, the share feature disables the owner form viewing the book, that’s news to me. I read the B&N press release. It doesn’t say anything about that. Or not that I saw.

      That said, it would be nice if it does do this. I’d like to get my mitts on that bit of coding, because this would be a great platform to build textbooks on.

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