Tag Archives: Amazon

Why Are Publishers Happy About Missing Out on the Digital Revolution?

The chart you see above is from Gallup and Pew measuring the percentage of adults in the U.S. who have not read a single book in the year measured.

It was 8% in 1978 and has been hovering at 23-27% in recent years. This is not a trend one associates with a growth industry. Meanwhile, I see newspaper editors, authors, and book publishers celebrating the death of the ebook without looking at this long-term trend of reading decline.  Are they dancing on their own graves?

It seems likely that print book reading has been in decline since around the time the Internet came on the scene because of new entertainment choices.  We know from many studies that people are spending more and more time engaged with content provided on a networked screen: Netflix, Amazon Prime, Facebook, Instagram, streaming sports, and so on.

Yet in the traditional book publishing industry, the collective decision was made to raise ebook prices to about what paperbacks sell for to save the old industry. And in the process kill the only networked screen innovation the book industry could participate in, the digital book for Smartphone and tablet reading. Vested interests across the supply chain published stories about the inferiority of reading books on a screen. How people remember less when reading digitally. An active campaign was undertaken to ward off innovation by The Establishment. (Them again!)

The inclination in the face of change is to duck one’s head in the sand and hope you can make it though the storm.  Maybe YOU can make it, but what about future generations who want a viable book industry? This is analogous to the old wooden ship builders deciding not to enter the iron age. Or the suits at Kodak who smugly looked at industry-funded Photo Marketing Association research, ignoring what was happening in the larger world. Just as with AAP research, the photo industry research ignored the emerging players and their market growth quietly occurring outside the normal competitive landscape.  Do you remember when supermarkets sold food but didn’t make it available to eat in the store? Someone smart decided competition was happening all around them at restaurants so along came Whole Foods, where people now eat right next to where others pay.  Brilliant!

We know from looking at traditional publishing financial results that publishers gave up easy profits when they chose to ignore the future of the ebook and hide in the print past. The only way the old business models have survived is through continued consolidation, which means pumping through more titles in lower volumes to fewer readers to just about stay even. For now. When the next recession comes, that will change again. Those higher number of titles coming from fewer traditional publishers with less staff  has to translate into a poorer experience for authors as a byproduct.

Crossing the chasm from the old, which provides most of the current income, to the new is nearly impossible. This is why competition almost always comes from the outside, from new players who have no investment in the old ways so are free to seize opportunities while the old plays a difficult balancing game. I experienced this firsthand when the 35mm photo industry had huge investments in obsolescent technology and equipment, while needing to  also invest in the digital new, the sum being a very expensive, unsustainable business model, which was too much weight for the likes of Sony, Konica, Kodak, and Polaroid.

The publishing industry seems to have throttled back the digital new more than was needed. No one I speak with in the book industry can answer the important question: “How many sales did you lose when you raised your ebook prices to the same as paperback?”  If you apply the strategic thinking of dividing customers into clusters of Most Engaged, Somewhat Engaged, and Not Engaged, I would expect many in the Somewhat Engaged group bought fewer books once ebook prices went up to the current high (I would say absurd) levels.  Yes, the Most Engaged are stepping up as they always will in continuing to support the old print business and indie booksellers, but can publishers survive well into the digital future in a highly competitive screen-based entertainment marketplace with just the Most Engaged?  I doubt it.

A possible better way to straddle the change would be to launch the hardcover edition that all publishers currently offer for those Most Engaged customers, and hold off on both the ebook and paperback editions until a year later when released simultaneously.  Price the ebook at $9.95 intended for the Somewhat Engaged shoppers. The $16-$20 paperback sales should not be hurt much by this change, as those who prefer to read in paperback will pay $10 more. And the net margins should be higher, without returns and printing costs. Bookstore sales should stay flat, especially when Barnes & Noble is out of the mix. The smart indie booksellers can do well in this overall environment that allows publishers to play a new game, as well as an old one.

I hear authors and industry insiders blaming Amazon for lowering book prices and reducing everyone’s profits as a result. (Same thing they said about Barnes & Noble back in 1986.) They claim this is now (ironically) why Barnes & Noble is on the ropes. I disagree. Barnes & Noble is on the ropes because they are caught in the middle, too large to compete with indie bookstores and too small to compete with Amazon. The core issue is not Amazon and lower book prices, but an overall shrinking market for book reading. That is the challenge people should be focusing on, not whining about how the shrinking pie is being affected by unfair competition. Ebooks were that path forward, as a new competition for other forms of digital entertainment, but pricing ebooks at $14.95 will never attract those less engaged potential book buyers. Duck and cover is not a winnable long-term strategy. You can’t go home again. You can be progressive or regressive.

It’s the same old question: do you see digital as a threat or an opportunity? It is in fact both, so don’t forget about the opportunities.

Missing out on the digital revolution is not an option for book publishers who want to operate well into the future. Actively promoting and celebrating the decline of the one new good thing that has come along to make the industry competitive with all other entertainment options, strikes me as self-defeating strategy.

Publerati Donating 100% of Publisher Proceeds to Worldreader for the Holidays

Publerati, publisher of literary fiction, is donating 100% of net proceeds to the Worldreader Organization for all titles sold between November 5, 2015 and December 11, 2015.

This goodwill promotion, aimed at helping Worldreader expand literacy in developing nations, applies to every Publerati title available in ebook format from all major outlets, as well as in trade paperback through the Espresso Print-on-Demand Book Network. Publerati ebooks can be purchased from Amazon, Apple, Barnes & Noble, Bookshout!, Book Baby, and others.

This is the third consecutive year Publerati has run this promotion, and the first year it applies to all titles.

Publerati is concerned with how publisher and megastore consolidation continues to limit access for literary fiction authors. One solution to this challenge is to utilize a different business model making titles available as $4.95 ebooks through a variety of resellers and $16.95 trade paperbacks through the Espresso Book Network.  Publerati authors receive 80% of ebook royalties and 50% of print-on-demand.

This different approach allows excellent literary fiction and midlist authors to make their works available to readers through new channels, while also supporting the growing number of independent bookstores with an Espresso Book Machine, who offer  mail-order or store pickup.

We encourage readers to  support our authors, as well as Worldreader, who is making a huge difference in the lives of teachers and children in developing nations.

See all Included Titles Here.

Amazon, Hachette, Russia, Israel…(Sigh)…

Gaza and Israel. Russia and the Ukraine.  Isis, Iraq, the United States. Amazon and Hachette…

Phew, people!  Can we all just chill out and love one another? (Song: C’mon, people now, smile on your brother…)

Just about every author on the planet has joined the Amazon/Hachette war this morning by adding their name to a NY Times author-paid ad calling for a ceasefire between these two entrenched huge corporations accustomed to getting their way. Unfortunately, unlike with the sale of pots and pans, a large number of authors are stranded on their own isolated mountaintops as these two huge armies duke it out. The authors are the innocent civilians, and I would argue in many cases, not particularly well informed.

I have been observing with interest how the remaining Big 5 publishers address the threat and opportunity provided by the only new invention in decades within books: the ebook.  From what I can see, most have continued doing business as they have in the past, publishing the $27 hardcover novel first along with a $15 ebook, then one year later along comes the $17 trade paperback as the print book backlist hopeful.

But some publishers, most notably HarperCollins from what I can tell, have shaken up their old business models and tried new approaches, including lowering ebook prices on new releases in conjunction with offering the other higher-priced versions (depending on the author, depending on the title), and I have to believe they have learned something about incremental revenue increases and total profitability from altering their overall pricing mix.

Every business wants and needs to create new customers to maintain a healthy future. Some customers are always leaving, so new ones are desperately needed. In and out. Might it be that Amazon and ebooks are responsible for the lion’s share of new customer creation for publishers and authors? New readers? I’m talking about established authors here, not self-published.

Most established authors I speak with do not realize that 40-50% of their print book royalties have been coming from Amazon over the past decade, plus 80% of their ebook royalties. Surely Amazon knows how to sell books! That is their job as a reseller. Well done. Hats off. Good for you.

Many Hachette authors are now learning with recent royalty statements what this ongoing war is doing to their livelihood, and they blame Amazon. (A publisher’s royalty statement does not show where the sales are being made so authors would not have known in the past just how important Amazon is.) But I think this is truly unfair. A reseller is in business to resell the items they want to sell at the terms they mutually agree to.

Retailers have no commitment to product producers, let alone authors. Their mission statements all say to conduct business ethically, blah, blah, blah…but in the end they decide what to sell. The DVD of the movie Sandlot is not always available at Walmart, Target, Stop & Shop, and Blockbuster. Same for many other notable movies.  Do you hear those copyright holders crying in public against the retailers?

I am confident Amazon has the best data on the effect of different price points on sales and profits in this particular war. They believe digital content priced over $10 will not sell nearly as well as under $10. To me, as a consumer, this seems obvious.  (Mass market paperbacks sold much better at $4.95 than $5.95 and the profit return was better.)

I have found book prices in general over the past two decades indicate a lack of concern for consumer pricing by the publishers. $28 for a hardcover novel?  You couldn’t have made me feel a tiny bit better and priced it at $27.95? $18 for a 128-page novel in paperback? Not $17.95? Throw me a bone here, will ya?

The future of publishing lies within this overall pricing challenge. The audience for hardcover fiction is shrinking, not growing, so the publisher needs to get as much out of that shrinking group of purchasers as possible.  People who love hardcover novels might well pay $35 for all I know. I think there are some people who would pay $10 for the Sunday New York Times in print to keep it alive. If those options can be managed without too much churn by the publishers, good for them. They are taking care of more customers with acceptable choices.

But Amazon has a unique point of view about digital content, armed with mountains of price-testing data.  Ebooks are where the new readers can be found, in the sub-$10 price points, using interesting new “tech toys” such as Kindles and iPads, the exciting developments of our time. Impulse buying works. Ebooks can be downloaded anywhere anytime immediately so lower impulse prices make sense. (No one is measuring how many sales are not made due to the price being $1.00 too high.) There is a reason retailers put sub-$5 items at the checkout and not higher-priced ones. Retailers do know what they are doing sometimes, shocking, I know!

Hachette needs to be profitable, which is tough enough in books, hence all the T-shirts and bags one sees in what used to be “book stores.” The problem with big retailers when they set low prices, is those already low prices will come down further beyond the established point in retail wars of digital competition. (Yes, more wars, sigh.) I do not believe manufacturers should ever dictate what retail prices will be  as that leads to worse forms of monopoly. Hachette gets paid the same invoice price regardless of the retail price, a fact most authors I speak with do not understand, so the publisher gets their money, but then they have to manage the “chaos on the field” of other resellers complaining they cannot compete. And they have to worry about the erosion to their print book profits.

This has been the name of the retail game for decades now. In books, Barnes & Noble drove down retail prices first back in the 1980s.  Staples did it for office supplies;  Home Depot for hardware; Walmart for everything on earth, and so on and so forth.  And now Amazon. Consumers love these bargains.

As a consumer of books, I hope I can buy new ebooks within the first few years of their release for under $10. I will spend much more than I do now if that happens and try more first-time novelists.  I don’t need to read a new novel first in hardcover, and in fact most of the books I read have been available for five years or more by the time I get around to them. (Many are freebie pass-alongs, with the average popular book read around 77 times I believe is the stat? As in bought once, read 77 times.)

Clustering customers into their appropriate “buckets” is what is needed by the publishers: those who need to buy first (hardcovers, the avids); those who want a reasonably-priced paperback (the early mainstream), and then the mainstream and laggards with ebooks priced $9.95 or lower– the same price they pay to go enjoy a three-hour movie.

But they don’t have this data. Amazon does. Working together they could both learn a lot.

Anyway…(sigh)…peace be with you.

— Caleb Mason from Publerati