Joe Wikert's Publishing 2020 Blog

Cheap Copies of the Original

That's what most content on my Kindle feels like today...cheap copies of the original.  Quite a few books look like the print to e- conversion was done so haphazardly that nobody ever bothered to look at the finished product.  As publishers we fret about the prospects of $9.99 price ceilings for ebooks and yet we treat that rapidly growing sector as a quick-and-dirty way to make an extra buck or two.  Where's the R&D, the investment in future platforms and products?  Btw, Walt Shiel recently wrote a great blog post related to this called Kindle Errors and Typos.

Walt is right that many of the problems we see today are the result of corners being cut and the e-opportunity viewed as nothing more than a way to squeeze a few more dollars out of the investment we already made in the print product.  That's OK to a certain extent, but for some publishers that's their entire e-strategy.

Here's the fundamental problem I have with this: As long as customers view these products as cheap copies of the originals they'll never even achieve the same value as the originals.  So if that's your strategy, get used to the $9.99 ceiling because it's not going up.

Cleaning up the conversion process is important but it's not going to change the $9.99 ceiling either.  What's really needed here is a fresh look at the way content is designed, acquired, developed and produced in the e-world.  And as a visitor wisely commented recently elsewhere on my blog, this issue will become even more important as ebooks become a larger percentage of the overall book market.  All that overhead and fixed costs found throughout large publishing houses simply can't be supported if the industry switches to a $9.99 model.

Ebooks won't become 50% of the market overnight, but the percentage is growing and isn't likely to stop.  There are a couple of options here.  Publishers can get leaner and meaner as they adjust to the new model or they'll choose to invest in the future and start building more compelling eproducts and eplatforms.  The ultimate winners will attack both of those fronts.

In-Book Ads? Let the Whining Begin.

It's going to happen.  It's not if, but when.  I'm talking about the day when you'll find ads throughout ebooks.  This Fast Company article provides a nice overview, including some info on a few related patents recently filed by Amazon.

If you're a purist and who's totally offended by the idea of ads in a book, get over it.  My guess is you'll have the option to pay more and still get ad-free ebooks.  Tightwads like me, on the other hand, will gladly deal with the minor inconvenience...and we'll save a few bucks along the way.  Heck, I miss the ads in the Kindle magazines I subscribe to, so what does that say?

The world of content is rapidly changing, including how it's monetized.  More options are a good thing, no matter how bad this idea sounds to you today.  I'm just curious to know more about what Amazon plans to do with the money they'll earn from all these in-book ads.  Will they pass any of the income along to publishers and authors?

Fast Company's Bezos/Amazon Cover Story

The latest issue (July/August) issue of Fast Company magazine features an excellent cover article about Amazon and Jeff Bezos.  As I read through it I highlighted a few excerpts and made a number of notes:

Recently, Bezos claimed that Kindle e-books add 35% to a physical book's sales on Amazon whenever Kindle editions are available. Put another way, for every three print copies of, say, Malcolm Gladwell's "The Outliers" the site sells, it also sells one Kindle e-book -- or about 25% of total sales.

This felt like an overstatement to me...till I sat down and checked the numbers.  It's true, at least for the top several titles I looked at from our O'Reilly list.  Quite a few of the books I looked at had Kindle sales that represented anywhere from 20-30% of the total Amazon sales.  The key point: If you're a publisher, you need to get your content into this platform.  Authors, if your publishers don't already have your content available on the Kindle, when will they?  As much as I hate the Kindle's closed nature there's no arguing with the results.  Of course, publishers are also free to sell Kindle content direct to consumers, just like we do at O'Reilly.

Jeff Bezos is trying to do to book publishers what Steve Jobs of Apple did to the music industry. With its iPod and iTunes Store, Apple carved out a largely virgin market so fast that it was able to wrest control of the digital-music distribution system and thus dictate what the record labels could do.

I've occasionally been concerned about this but I'm not sure there's much to fear after all.  I'm seeing more and more e-storefronts popping up every week and even though the Kindle is pretty popular it hasn't been the runaway success the original iPod was.  Even the iPhone itself is a worthy competitor to the Kindle.  Ironically enough, I think it's when Amazon fully opens the Kindle platform that we'll have to worry the most about this.  That will probably have to happen at some point, but Amazon doesn't seem to be in any hurry, so relax...for now.

Should that happen, book publishers would have more to fear than just being squeezed. Amazon could phase them out completely, treating them as the ultimate middlemen orphaned by a new technology.

Forget about Amazon.  Any publisher that isn't already worried about this in general is asleep at the wheel.  With all the great self-publishing services out there and the ever-growing importance of social media and author platform it's crucial for all publishers to determine the value they add to the ecosystem.

In some ways, book publishing operates like one of Joseph Stalin's five-year plans.

This statement made me laugh out loud.  Literally.  It's painful to admit but true that some publishers still try to lay out 3- and 5-year financial plans.  This, in an industry where most have had a hard time coming close to their latest annual and even quarterly forecasts.  Ugh.

Here's a doomsday scenario put forth by Richard Curtis, a literary agent and founder of E-Reads, an independent e-book publisher...

The rest of this excerpt would be pretty long, so let me summarize by saying that Mr. Curtis is concerned about Amazon using their BookSurge service to print all the copies they'll sell.  Is that really scary?  We're talking about a more efficient model!  If the unit cost (after factoring in the transportation savings) is less than an offset printing of those copies, why wouldn't the publisher want to do it this way?  If anything, it's a wake up call to the brick-and-mortar stores out there to figure out what value they add to the model.  Instant gratification.  Check.  How about beating Amazon at their own game though and offering print-on-demand of an infinitely long title list at the individual store level?

You might think that because publishers profit from this arrangement -- they don't have to pay for paper, ink, manufacturing, warehousing, and transportation or suffer debilitating returns -- they would be pleased. They aren't. Amazon is creating a sticky price in consumers' minds and redefining the cost of a "book" just as Apple did with music.

I disagree.  Speaking as a publisher I'm thrilled that Amazon is experimenting with pricing, particularly since it's on their dime.  I just hope they share the results with publishers so we can all learn together.  The Kindle has been out for more than 18 months though and I haven't seen any analysis from Amazon on this front yet.

Let's also not forget that a simple port of a print book to an e-format, which is pretty much all that's happening right now, is likely to have a lower value than the next generation e-books that truly leverage the platform.  That's when things get interesting and let's face it, that pricing model is completely unknown.

The cell phone is an excellent example of what I'm talking about.  Remember way back in the days when cell service was all about voice service and the number of monthly minutes?  The phones couldn't do anything else so the providers had to compete on monthly rates.  There was a time when you'd go from one provider to the next, just to get a better monthly plan.  Now it's all about who carries what phone and what additional services they offer.  Have you noticed how the monthly rates just keep going up, mostly because we're all adding more services to our plans?  Look at your iPhone 3G S today, compare it to your brick-of-a-phone from 15 years ago then look at your Kindle and think about the possibilities down the road...

There is more substantial evidence that Apple may be planning a move into e-books.

That's good news for everyone, except possibly Amazon.  Competition is a good thing though, so I hope Apple does introduce a product in this space.  I'll buy one.

Unfortunately for Bezos, not only is Apple far more skilled at designing beautiful products people are eager to buy, but it may also be a more desirable partner for publishers than is Amazon. While Apple drives a hard bargain and might be eager to grind publishers into pulp on price, unlike Amazon, it has little desire -- or history -- of attempting to usurp the publishers' role or to control content.

An elegant device and a financial model that would be no less appealing than Amazon's existing one?  Sign me up!  Again, competition is a beautiful thing.

As for book publishers, they benefit from a fragmented market with no single entity controlling the distribution pipeline. The more that Amazon and Apple duke it out, the better for them.

Exactly!  And you can replace "publishers" with "authors" in that first sentence and it's just as accurate.

Looking long-term, as readers migrate to digital books, there is a real possibility the basic form of the book will change.

It's not a "real possibility."  It's a certainty and it's also why I'm so excited to be part of this industry.

Recent Thoughts About the Amazon Kindle

I made a few notes while reading this Book Business magazine article over the weekend.  It's well worth reading, btw, but here are a few items I underlined:

The innovation of the Kindle was not to improve e-reading—many earlier e-readers offered a very similar reading experience—but to dramatically alter the purchasing experience through its wireless capability.

So true and yet so easily forgotten.  The Kindle could have simply become Newton 2.0 without this important feature.  Customers come for the eInk display but Whispernet is what keeps 'em coming back.  (It still blows my mind that no other Kindle competitor has figured this out...)

...obviously publishers could do better by designing online-oriented cover versions that would not only be more eye-catching and dynamic, but potentially even interactive.

Another obvious but overlooked point.  We're all still applying the print rules to the e-world.  Just put a two-dimensional image of the print book's cover on the Kindle edition's product page and you're all set.  When will we start seeing that precious screen real estate occupied by something that's much more engaging and dynamic?

This analysis suggests that e-books could, as a stand-alone business, be priced far below Amazon’s current $9.99 pricing and dramatically lower than p-books.

I have no doubt some e-books can be priced below $9.99.  Heck, quite a few print books are already there (e.g., mass market paperbacks).  I'm also a big fan of the idea that lower and lower prices will cast a much broader customer net, meaning you'll attract quite a few customers who otherwise would have ignored your product.  But as Apple's iPhone App Store has proven, while there's a big difference between sales of a $4.99 app and a $9.99 app, there's a much bigger difference between a free one and a 99-cent one. 

Experimentation is the key here, of course, and thanks to the e-book model, it's pretty easy to make price changes on the fly.  As I've also mentioned before, I think sponsorship will have a role in the e-book marketplace.  Just like ads make the magazine world work, sponsorship is likely to help keep certain e-books at an irresistibly low price.

Finally, I wanted to toss in another idea I'll bet Amazon will spring on us at some point.  Why haven't they bothered to insert any "Where do I go from here?..." links at the end of Kindle editions?  If I just read a great book by Joe Author, why aren't they inserting links to other books written by Joe Author at the end?  Enable one-click buying and boom, they extend their e-commerce reach even further.  If not other books by the same author, what about simply utilizing the "customers who bought this item also bought..." functionality of their website by inserting it at the end of the Kindle edition?  If I just had a good experience reading this book (or magazine, or newspaper) I'm more likely to buy something else from you; why rely exclusively on email blasts and other e-marketing strategies from the 1990's?

Btw, when Amazon does implement something like that last item (and they will!), they'll make even more money off it by structuring it like their other online placement/marketing campaigns.  Publishers will have to pay for the privelidge to be included in these links. I'm not suggesting that's good or bad...just pointing out it's yet another way Amazon can make a few more bucks along the way (and possibly reduce the price of the Kindle hardware?...)

Textbooks: A Market Begging for Change

Every day brings more news about the book industry's ongoing evolution.  Whether it's a shiny new e-reader, a recently-opened e-storefront or some other development, it's clear some experimentation is taking place...maybe not as much as you'd expect, but there's some happening nonetheless.

One area where experimentation efforts should be ramped up significantly is the textbook market.  Seth Godin wrote his own rant about this over the weekend and I think he makes a number of excellent points.  College students are some of the most clever, resourceful and imaginative people on the planet.  They're no more tired of getting hosed by overpriced textbooks than their parents, but they're fortunate enough to be in college at a time when e-alternatives are all around.

The problem here isn't that the customers are not willing to try new alternatives to the tired old textbook.  No, the real problem is with the system itself.  Publishers, schools, authors (which oftentimes means "professors") and campus bookstores all have plenty at stake and have enjoyed the current model for far too long.  It's yet another case of The Innovator's Dilemma.  You'd think it would be an excellent opportunity for an upstart to come in and completely obliterate the system, sort of like what Craigslist did to the newspaper industry.

Kudos to efforts like what Governor Schwarzenegger is trying to do in California.  Then there all the open textbook programs that have been sprouting up.  All well and good but I'm not sure any of this will have a material impact on the current model.  Something bigger has to take place first.  Maybe it will come from several states joining forces and saying "enough is enough!", but California probably won't influence market-wide change on its own.

On a related note, for-profit schools like ITT and Devry are growing in popularity, partially because of the better value they offer compared to the traditional four-year institutions. As a publisher I've found these schools to be very open-minded about choosing the best course materials.  If the pendulum continues to swing in their direction maybe this is where the new model will arise.  They'd be wise to follow the "chapterettes" model Godin describes towards the end of his rant.

The Blurb Solution

A good friend of mine was recently telling me about her (almost) 13 year-old daughter and her poetry.  She told me I needed to read some of these poems to believe them.  (They're so good, in fact, that her teacher thought she plagiarized them; I thought you were presumed innocent till proven guilty in this country!)  She also wanted to know how she could go about trying to get them published.

I told her I knew nothing about the poetry publishing world, but that they'd have to either find some publishers to approach or a good agent to represent them...or, they could just go the self-publishing route.  I gave her information on a couple of options and she wound up choosing Blurb.  Within a very short period of time, my friend had her daughter's poems loaded into Blurb and ready for sale.

Self-publishing rocks!  Where else could an (almost) 13 year-old get their poems published, virtually overnight?!  And btw, her mom is right.  See for yourself by reading a couple of the poems in her new book, Thirteen: My Poems.  Use Blurb's preview feature to read the one called "I Tried to Touch the Sky" and tell me this kid doesn't have remarkable talent!

The author's name is Annie Mackowick and it just so happens that tomorrow, June 11th, is her 13th birthday.  I'm about to order a copy of this one for myself.  If you'd like to make an aspiring author's 13th birthday extra special, be sure to order a copy of your own.

P.S. -- I have no financial interest in this.  It's just my way of helping spread the word for a great service (Blurb) as well as an up-and-coming author.

"Gutenberg 2.0"

"Gutenberg 2.0"  That's what this Boston.com article calls the future vision from BEA.  It's worth reading but I feel compelled to add my two cents on a few points:

One said the recording industry shot itself in the foot by not releasing singles in compact-disc format, accelerating the shift to downloading.

I think they're suggesting the music industry could have averted disaster by just selling singles CDs in brick-and-mortar stores.  I have a hard time believing that.  The music business wasn't affected so much by the need for the granularity of content as it was by the immediate gratification of e-distribution.  IOW, a bunch of singles on CDs in your local music store  wouldn't have stopped the Napster tsunami.

The article goes on to say that sales of individual chapters will help the book publishing industry avoid the same fate.  Although I think there's an opportunity for e-chapter sales I'm starting to believe that opportunity has plenty of limits.  Certain genres simply don't lend themselves to it but others certainly do.  The more important point is that quick print to e- conversions aren't likely to move the needle much, and simply selling print chapters in e-format falls into that category.

...(Symtio is) an alternative to Amazon, which with its Kindle reader represents a "closed marketplace." Users can buy its e-books only at the website.

The Kindle is viewed as a closed marketplace but that's starting to change, no thanks to Amazon! At O'Reilly we sell e-book bundles of our titles which include Kindle editions in .mobi format with no DRM.  So in this case, the publisher has established its own e-storefront.  Kindle owners don't have to go to amazon.com to buy Kindle content.  Other (smart) publishers are likely to follow suit.  I also expect to see other non-publisher e-storefronts pop up to serve Kindle owners with paid content (think Feedbooks, but for paid content).

One galley that seemed to exemplify several trends was for "Level 26," the first "digi-novel" from Anthony E. Zuiker.  Every 15 to 20 pages, Zuiker tells the reader to log into level26press.com to access a "cyberbridge" video that builds off the printed product.

That's asking a lot of the reader.  I also worry about the mixed media solution.  Someone reading a print book probably doesn't want to go back and forth between the book and a computer screen.  The better approach is to turn this into a 100% e-product, not one that straddles the fence between print and e-.  It sounds like a product that's tailor made for Vook.tv, btw.

Google Wave and Publishing

Have you heard about Google Wave?  It's been described as "how email would work if it were invented today."  So instead of simply tacking on new features to existing email clients, Google Wave offers a clean slate approach.  In fact, it looks like Google Wave will offer a new, intuitive way of communicating while still using some of the email/IM/etc. features you've grown to know and love; IOW, it will offer the best of both worlds.

Think about this now in publishing terms.  The Sony Reader is just a convenient way to access books in electronic form.  The Kindle took it up a notch by enabling wireless delivery of more content forms, not just books but also magazines and newspapers, for example.  At the end of the day though, both of these products still mostly re-render print content in e-form.  They don't do much to fully leverage the e-platform, mostly because they're working with content that was built for print, not e-use.

What the publishing industry needs is a product like Google Wave more fully leverages e-content capabilities while still supporting all of the useful features of print.  If you haven't watched the Google Wave demo from last week's Google I/O you need to (see below); and even if you can't spare the almost 90 minutes the full demo/keynote required, just watch the first 10-12 minutes and you'll have a good feel for this amazing service.  And when you watch it, think about how an approach like the one used for Google Wave would create an enormous splash in the publishing industry (books, magazines, newspapers, etc.)

Thinking "instead about the future of reading"

I spent part of this past weekend in Detroit with my son attending Game One of the Stanley Cup Finals.  As Penguins fans the game was a bummer, but as a father and son road trip it produced a host of memories we'll have the rest of our lives.  So what in the world does this have to do with the business of publishing?

See that picture on the left?  It's a shot of what's left of glorious old Tiger Stadium, also in Detroit.  Click on it to blow it up and see just how sad the image is.  We're talking about a stadium where Ty Cobb and other Tiger greats once played.

As I considered that scene Sunday morning I couldn't help but think of the publishing industry.  For some reason it also reminded me of this recent Wired article by Clive Thompson.  The key quote is:

We need to stop thinking about the future of publishing and think instead about the future of reading.

So true.  We spend so much time thinking about how to port from print to e- and other quick-and-dirty solutions.  We're so focused on how publishing works today and not spending enough time thinking about how reading has changed over the past several years and how it's likely to evolve in the future.

Here's a subtle example.  At the recent BEA conference Smashwords founder Mark Coker had an interesting exchange with a Penguin executive.  (That's "Penguin" as in the publishing company, not the hockey team, btw!)  I retweeted his summary of how the exec asked if Smashwords supports DRM, Mark said "no", and the exec asked if he'd like his card back.  Nice.

The Penguin exec is focused on the current state (and what he thinks will be the future) of publishing, not the future of reading.  DRM is the technology equivalent of a dead man walking.  Customers don't like it and they don't want it, so why continue pushing it?  DRM is not about the future of reading.

Publishers who focus on things like DRM and not on the future of reading will struggle mightily in the future, and the future is already happening.  Those who get too caught up in the way they want things to work rather than what readers want had better change soon.

Bloggers at Firebrand's BEA Booth

I'm not heading to BEA but if you are be sure to stop by the Firebrand Technologies booth (#4077) to meet some of the industry bloggers they've lined up for the event.  A full schedule of which bloggers will be there throughout the Expo is available here.  I think you'll agree it's a very impressive lineup.  And if that's not enough to get you to stop by, Firebrand is also raffling off a Sony Reader, so be sure to hit their booth and tell Fran Toolan I sent you! ;-)