Tag Archives: ebooks

Jon Page: On ebooks, the agency model and ‘predatory pricing’

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Crikey posted an interesting article last week on the subject of agency pricing for ebooks and the sudden increase in some ebook’s prices. The article makes some very good points but it also overlooks a couple of issues.

The first one that ‘An international agreement between publishers has driven massive increases in the price of ebooks for Australian readers’ is not exactly accurate. Yes agency agreements have seen the price readers pay for some ebooks go up but the price of the ebook has not necessarily increased. Under the agency model retailers must sell the ebook at the price set by the publisher. Under the traditional wholesale model the publisher sets a list price (suggested retail price) and retailers can discount off that. Whether an ebook is sold under agency or wholesale the list price stays the same. To say an agency agreement has driven prices up is incorrect, the agency agreement just means the ebook is sold at is originally set price and cannot be discounted by the retailer. But it can be discounted by the publisher. You will not see flat pricing under agency (not if the publisher has half a retail mind). There will be days, weeks or even months when the price will drop, quite considerably in some instances, before going back up again.

The agency model is not new. Everything Apple sells is under the agency model from apps to music from Macs to iPads. In fact many electrical goods and kitchen appliances are sold in Australia under a similar agency model. Yes Apple instigated the agency model for ebooks when they launched iBooks in 2010 but it was not ‘a deliberate attempt by Apple to destroy Amazon’s dominance of ebook sales’. They achieved that just by entering the ebook market as did Kobo, Barnes & Noble, Google and every ebook retailer.

Apple does everything by agency. The reason the big major publishers jumped on board was because Amazon’s ebook pricing was destroying their business model. And yes there is a business model for book publishing both print and digital. There are costs that need to be recouped. Just because a book is in a digital format does not mean it cost 3 cents to make. An ebook does not exist in a separate world to the print book. They share the same costs of production as well as marketing.

Publishers’ sales of $US25 hardcovers were being eroded by Amazon selling the ebook a $US9.95 regardless of the price (retail and cost) that the publisher had set. The agency model allowed publishers to gain a 70/30 split (publisher/retailer) on ebook sales, much higher than the print book split which can be up to 45/55 for Discount Department Stores (usually 60/40 for bookshops). This meant an ebook at $US14.95 agency vs a $US25 hardback would be at a ‘price of indifference’ (indifference for the publisher NOT the retailer). Unfortunately there are some publishers who have not priced their ebooks at this ‘price of indifference’ and Crikey can rightly argue that they have ‘gouged the customer’ (both reader and retailer).

The real story is not one of ebook rip offs and global pricing inequality. The real story is that Amazon is actually predatory pricing (see ACCC definition). They are setting ‘prices at a sufficiently low level with the purpose of damaging or forcing a competitor to withdraw from the market’ and they are doing this with a proprietary ebook format and device. This has also made it next to impossible for new competitors to enter the market. If it wasn’t for the agency model there would be a lot less competition in the ebook market. Barnes & Noble would not have been able to claw back marketshare nor would Kobo have made the inroads it has made and I doubt there would be independent booksellers selling ebooks like you have in the US with Google or here via Booki.sh and ReadCloud.

While many consumers enjoy Amazon’s predatory pricing the end result is not good. Once competition is wiped out Amazon ‘can disregard market forces, raise prices and exploit consumers’ something that can be more easily done if you have already locked your customers in to a particular format and device. It is a complex issue and one that is far from over. But it is a lot more complicated than is being reported. What is at stake is a competitive market which ultimately is good for authors, publishers, retailers and most importantly readers.

Jon Page is president of the Australian Booksellers Association. This post first appeared on his Pages & Pages Bite the Book blog. 

Why the world needs editors, even if it doesn’t need books: Mandy Brett

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This edited extract from a talk Text Publishing editor Mandy Brett delivered at the Wheeler Centre first appeared on Crikey’s Culture Mulcher blog by W H Chong. You can also watch it online here.

My claim to fame is that I’m a book editor. It is in fact a pretty anaemic claim, and 95-97% of the time that’s the way I like it. Editors work with writers and we work out of the public eye. The spotlight is, as it should be, on the people who actually do the creative work. But sometimes obscurity can be a problem and that’s one of the things I want to talk about today—we’ll get to it a bit later.

I assume you’re all book lovers here today—I think they scan you at the door as you come into the Wheeler Centre—so you don’t need me to tell you this is a book. [Holds up the prize-winning Traitor, which she edited.]

[Holds up devices.] So is this iPad, and this iPhone, and these e-ink readers (Kindle, Sony Reader): they are devices for reading long-form narrative, or short-form if that’s what you choose to put on them. If we were in America right now, you would be very familiar with these. Current figures suggest US sales of electronic books are doubling year on year, and in January ebooks sales surpassed those of mass-market paperbacks.

Of course, paper books aren’t going anywhere for a while yet. However, if you don’t use an electronic reader now—and the figures suggest that as an Australian reader you probably don’t—at some stage you’re going to find the weight to information ratio or the instant download capacity compelling enough that you can get used to the different form factor. And then you’ll be part of the ebooks upward curve.

Or you won’t, and you’ll be part of a dwindling minority.

So there are big changes coming for how we read.

Not necessarily for what we read: if you look at the Kindle-style products in particular, they are dedicated book-reading devices that don’t do anything else but allow you to carry around a lot of texts in a convenient package. The makers of these devices are assuming there will continue to be a big market for conventional long-form narrative, and I agree. We readers aren’t suddenly going to lose our taste for the absorbing way the written story works on the human imagination.

I do think our numbers will dwindle as time passes, though. I think kids growing up now, with their social media and online games, will still read, but they will do less reading than we did, and fewer of them are going to feel devoted to it in that passionate way of: ‘This is what I do, this is who I am.’ They’ll grow up surrounded by interactive forms, too, expecting to comment and co-write and in other ways contribute to the development of written work. I think over time that will probably shape the nature of writing and reading: how they are made, and how they play out together.

In the short term, however, the changes are to do with the way people shop for, and buy, and pay for their books. The growth of on-line purchasing and the low retail price that’s become standard for ebooks are big problems for the book trade. It’s a challenge even to produce an ebook for the price set by Amazon’s aggressive pricing regime, and a bigger one to make a businesslike profit. We’ll deal with the changes in the end I think, but it is all going to take a while to shake itself out. In the meantime, it makes for uncertainty and insecurity and loss of confidence in bookselling and publishing. And you know how business hates uncertainty.

You would have seen the reports in the newspapers recently about Fairfax getting rid of their entire sub-editing staff and outsourcing the work to an outfit called Pagemasters, owned by AAP. I believe there was also a statement made at some point to the effect that it would all be OK; journalists would just have to submit cleaner copy.

This resonated for me. Newspapers of course run on a different business model from book publishers, and news sub-editors do a different job. But there are some relevant points to be made. Continue reading →

Sony forum: the trade talks ebooks

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Charlotte Harper rounds up the discussion at Sony’s ebook forum in Sydney:

Digital titles could make up between 20 and 30% of the trade book market within two to five years, according to attendees at a round table event on the future of reading hosted by Sony in September.

Sony Australia arranged the forum in Sydney to discuss the impact devices such as the company’s just-launched Readers will have on reading, writing, literacy and publishing. Panellists included Paul Colley, technology communications manager, Sony Australia; HarperCollins COO Jim Demetriou; REDgroup Retail managing director—ecommerce and digital, Singapore, James Webber; Australian Booksellers Association (ABA) CEO Joel Becker; Get Reading program director Cheryl Akle; and Alex Pollack, media analyst, Macquarie Group.

Their predictions, on the rise of the ebook varied—Akle said she could envisage an 80-20 mix in three years, Becker posited a 75-25 by 2015, while Demetriou guessed at 70-30 in five years, adding that he believed overall volume would increase as digital devices enticed particularly male readers into the market.

‘I’m really positive that more people will come to books,’ said Demetriou, adding that he expected there would be a lot of experimentation in terms of pricing, devices and enhanced ebooks before the market settled down.

The tipping point

The industry was already on its way to a tipping point in terms of ebook take-up, or would reach one within a couple of years as everyone from major players like Apple and Google to small independent booksellers began to sell ebooks.

Demetriou said the tipping point would come when ebook sales reached 10% or more of book sales, and that US ebook sales were still at around 7% but may reach 10% this Christmas. In terms of device availability and retail set-up the US was about 18 months in front of Australia, while the UK was around 12 months ahead.

‘We take our cues from the US and the UK, so I think the tipping point is still a ways off, but we’re definitely seeing signs of movement in the marketplace,’ he said. ‘Our sales are growing rapidly, but from a very small base.’

Webber pointed out that the figures were likely to change dramatically again in a few years, once a generation that has grown up with smartphones, tablets and e-readers—and never reading physical books—comes of age.

He said REDgroup stores (Borders, Angus & Robertson and Whitcoulls) and their websites sold out of the original Kobo devices within three days of launch, and that four months on, ebook sales are two to three times what they’d expected. He said the company saw adding ebooks to their business as necessary. ‘People were thirsty for this change. There is no doubt that people here are wanting to get into this market.’ Continue reading →

And …

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I’m an absolute Twit. There, I’ve said it. I’m referring, of course, to the social networking phenomenon of Twitter, where (it could be argued) I’m spending way too much of my time. But it is a fascinating—and, I would argue, extremely useful and valuable—‘virtual agora’, where ideas and opinions are flying around in all directions, all the time (one of the reasons it’s so addictive).

I’m involved in a lot of threads on Twitter about ‘the future of the book’, and clearly a lot of the discourse revolves around digital publishing, ebooks, ereaders, etc. But I’m keenly aware that ‘the future of the book’ discussion is pulling in a few contradictory directions, and I’m increasingly concerned that far too much of the ‘noise’ is about an ‘inevitable’ shift to digital, about disruption and new ways of doing things;  and far too little is about print, and bricks-and-mortar stores, and the degree to which many things will stay the same … and that new and old will live alongside each other.

I’m increasingly placing myself in a position where I’m encouraging digital pundits (themselves online seemingly 16 hours a day, 7 days a week, iPhones gripped in cramped fingers from dawn till midnight …) to think of ‘and’ scenarios:

  • There will be ebooks and print books, alongside each other, for a long time to come
  • There will be small, dynamic publishers and big, slow ones
  • There will be more content with a global aspect and more things that are small and local
  • Large players will dominate and small players will have more access than ever to the mainstream
  • Authors will publish directly to readers, bypassing traditional gatekeepers and authors will want and need agents, editors, publishers and booksellers in order to reach their audience
  • Audiences will engage directly with authors and readers will seek the expertise and authority of gatekeepers (reviews, retailers, publishers)
  • Events will be small and innovative (Emerging Writers Festival) and large and traditional (Sydney or Melbourne Writers Festival)
  • Territorial copyright and separate editions will be old hat and will continue to be important.

Confused yet? I sure am! Enthused and energised by the changes, challenges and opportunities? I sure am.

But what do you think?

Kobo launch: forget about the device, look at the titles

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[a version of this article first appeared in Crikey on Friday 21 May as a subscriber-only story. Many thanks to Crikey and its editor Sophie Black for permission to reproduce it here on Fancy Goods—TC]

As the REDgroup rolls out its Kobo ebooks platform, let’s forget about the device for a moment and look instead at the title offer. Mainstream media stories seemed to be all about the Kobo ereader, but this launch represents a notable step in the development of a local ebook market not because of the gizmo but because it’s the first time an ebook retailer has been able to offer a significant range of Australian ebooks to sell, across a range of reading devices. (Dymocks, of course, was a pioneer in launching its ebook offer in 2007, but Dymocks arguably went too early and have been held back thus far by a lack of local content …)

The Kobo reader itself is cheap—at $199 it’s pretty much the cheapest dedicated ereader on the market, and it is pretty basic. But that’s not really the point: ereading is quickly moving away from proprietary devices and multiple formats toward files in a standard format (ePub) that can be read on a range of devices. One of Kobo’s stated advantages is that it is cross-platform: Kobo promises that its ePub titles—while still being restricted/protected by Digital Rights Management to prevent copying/sharing—will be able to be read on a range of devices from smartphones to tablets to laptops to desktop PCs. And if you have ePub or PDF files from other sources, they should be readable on the Kobo reader or in the Kobo apps.  (Frustratingly, if you have already bought yourself a Kindle from Amazon &/or you have Kindle ebook files downloaded on your computer or iPhone, you probably won’t be able to easily read those on the Kobo reader … Amazon supplies its ebooks in a proprietary format that ties them to either the Kindle reader device or Kindle app.)

But what about the list of titles on offer? Kobo seems to have energised and engaged with Australian publishers in a way that the overseas players (Kindle, Apple, etc) haven’t so far. Australian readers will now be able to go to one place to buy ebook versions of books published by up to 100 local publishers, ranging from the local offerings of the multinationals: HarperCollins, Simon & Schuster, Pan Macmillan and Hachette, for example; to books from Allen & Unwin (which has offered many of its titles as ebooks for a number of years), MUP, UQP, Scribe, Text and many others from Australia’s diverse independent publishers. ‘The offer is about us trying to offer as many Australian titles on this open platform as we can,’ REDgroup’s communications manager Malcolm Neil said. Here are some authors whose titles you can buy now on Kobo you can’t (yet) get on Kindle: Kate Grenville, Shane Maloney, Peter Temple, Malcolm Knox, Thomas Kenneally … Continue reading →

Excuse us while we take a moment…

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We’re pretty snowed under here at Bookseller+Publisher headquarters, putting the finishing touches on the July issue after getting out this week’s bumper issue of the Weekly Book Newsletter.

Last week, Matthia was sweating it out at Darwin’s Wordstorm writers festival (you can read her post on Wordstorm here) and this week Andrea is soaking up Sydney Writers Festival (and heading to tonight’s Book Design Awards to see what titles are declared Australia’s best-looking: see the contenders here). This is what Andrea’s desk looks like now:

Also, as we reported in the Weekly Book Newsletter, REDgroup Retail, which owns Borders Asia-Pacific (and Angus & Robertson and Whitcoulls in New Zealand), launched its Kobo ebook platform yesterday, as well as its Kobo ereader: Continue reading →

Google Editions: about ‘surfacing books’ not replacing bookstores, says Palma

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The article below originally appeared in our Weekly Book Newsletter, back in February, but with the recent mainstream coverage of the fact Google is planning to sell ebooks, we thought it might be worth re-posting here: 

As an addendum event to the digital publishing symposium in Melbourne, a ‘digital chat’ session featuring Google’s Chris Palma, was held in February at the State Library of Victoria.

Palma took the audience through the concepts of the Google Books publisher partner program, in which publishers allow Google to scan the full text of books and then make percentages of this content viewable by customers on the publisher’s website or through Google’s search engine.

Interestingly, Palma said that when publishers in the program increased the percentage of the full-text that was viewable, the hits on the publisher’s ‘buy’ button for those books increased. While he did not recommend making the full 100% available to read he did say that ‘north of 20%’ resulted in more purchases.

Google Editions
Palma also outlined the workings of Google Editions, an ebook warehouse ‘in the cloud’ that would allow readers to purchase ebooks (in the case of Google Editions a license to read the electronic version of the book anywhere ‘in perpetuity’) via Google, a publisher’s website or through retailers’ sites (the latter being Google’s professed preference).

Under the Google Editions model, a book’s publisher retains 63% of revenue from a book sale while Google retains the remaining 37% or splits it with any retailer (in a split that is individually negotiated).

Some in the audience voiced concern that Google would ultimately push booksellers out of the supply chain, a claim that Palma insisted was not the case, emphasising that Google was not good at ‘merchandising’ and that its speciality was its search capability. ‘It’s about surfacing books’ for Google users who might not otherwise even have considered purchasing one, he said.

[Then] Australian Booksellers Association CEO Malcolm Neil [update: Neil has since joined REDgroup Retail, owner of Borders, Angus & Robertson and Whitcoulls in Australia and New Zealand, as Communications manager] said he was not concerned about Google’s entry into the digital supply chain and that it could in fact be of benefit, especially to independent booksellers. ‘I’m particularly excited about Google Editions,’ he said. ‘In the world of internet behemoths Google is more bookseller-friendly than most.’

Why can’t Australians buy the ebooks they want?

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In the past few months, the world seems to have gone ebook mad. First the Amazon Kindle was made available locally, now we await the Apple iPad, due at the end of May. Plenty of people are already reading on iPhones and other mobile screens, and there are quite a number of other readers available and an ever-expanding choice of online stores from which to buy ebooks. The reader devices vary in price and features, but for Australian users one complaint is common: I’ve paid for the gizmo, now why is it so hard to buy the ebooks I want to read on the damned thing?

The short, but far from simple, answer is that it’s due to territorial copyright, contractual arrangements between authors and publishers and the long-established ways of book publishing—and it’s nothing to do with Parallel Importation regulations (PIRs) in Australia’s Copyright Act (the restrictions that were such a hot topic of debate last year). That’s because PIRs only cover print books. Electronic files are only considered in the Copyright Act if they’re in physical form—i.e: burned onto CDs/DVDs. There is currently no provision in Australia’s Copyright Act that covers ebook files.

A common misconception is that it is Australian publishers that are restricting access to ebooks that are available to readers in other countries; but this isn’t really the case. On the whole it is US (and in some cases UK) publishers who are setting geographical restrictions on ebooks based on (a cautious reading of) their existing book contracts.

In the simplest (and for this example the best) case an author would sign a global contract with one publisher to sell their book in all markets and in any and all formats. In reality, for the vast majority of books, authors grant only certain rights to their publisher, and usually they choose a different publisher in each major territory. So a US publisher may well acquire print and electronic rights for a particular book for the US market only; meanwhile the author (via their literary agent) is shopping around for the best offer and will try their hardest to sell separate rights to publishers in the UK, to Canada, to Australia and translation rights to other countries, and they may or may not sell electronic rights along with print ones. At the moment, the US is leading the way when it comes to ebooks, so any geographic restrictions imposed on the US publisher in a book contract are coded into their ebook files at the time of their conversion and are a layer of the Digital Rights Management (DRM) that virtually all publishers insist on—and with which retailers have no choice but to comply.

Few ‘global’ books

Publishing is increasingly international, with about half a dozen dominant global players (Penguin, Random House, Hachette, HarperCollins, Macmillan and Simon & Schuster), but there are very few global books. Even the most recognisable of international bestsellers will often be published by a different company in each territory (for example, Stieg Larsson’s Millenium trilogy is published by Quercus in UK, and that edition is distributed via Murdoch Books in Australia, but Random House is Larsson’s publisher in the US). In a borderless online world, you can begin to see the problem: if an Australian customer downloads an ebook from Amazon.com in the US, which publisher receives the revenue? Continue reading →

The week that was: Friday round-up

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The longlist of that iconic award, the Miles Franklin was announced this week, with the ratio of male to female authors—that’d be nine men versus three women—troubling some (especially following the recent Australia Post author stamps controversy). The fact that a woman won this year’s regional Commonwealth Writers Prize, the announcement of this year’s Orange Prize longlist and the presentation of the Barbara Jefferis award for ‘the best novel written by an Australian author that depicts women and girls in a positive way or otherwise empowers the status of women and girls in society’ made up some ground. (Though this might have tipped things back again.)

There was controversy in the form of a book-related defamation case and a footballer’s memoir, a new batch of Popular Penguins were unveiled and the poms admitted we are better at cricket than they are (on the book front anyway).

The 7.30 Report took a look at ebooks (the mainstream media also having just got wind of the fact that Borders and Angus & Robertson will soon be selling them).

Oh, and an author is in the running for this year’s Cleo Bachelor of the Year ….

Our dark and private spaces

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Citing the rise of text-based social interactions such as Facebook and Twitter, Margaret Simons made the point at last night’s first official ‘Meanland’ event, that ‘text is everywhere, there is more text being used than ever before’. Like fellow panelist Sherman Young (The Book is Dead, Long Live the Book), she predicted that ereading would soon be widespread. ‘In 10 years most of our reading will be on ereaders’, with coffee table and children’s picture books remaining in print, along with ‘precious’ books: ‘I have no intention of throwing out my Jane Austen collection.’

None on the panel, which also included Marieke Hardy and Peter Craven, doubted that ereading would soon be upon us (Simons herself thinks ‘you’ll see ereaders everywhere by the end of the year’); the question that remained was whether reading on a screen would change what we read or the way we create.

Sherman doesn’t believe ‘screens will make us do things … that paper doesn’t’. So long as we still write and publish it, we will still be reading long-form fiction. But Simons didn’t seem so sure we would remain unchanged by the digital age. Social networking and developments like the forthcoming Google Wave are enabling a public collaborative process that may dilute our sense of the author, she suggested. Reading and writing ‘becomes less private’.

Authors on Twitter update followers on their works in progress, responses altering the work. Blogging authors invite readers to help decide the fate of their characters. The idea of collaboration in fiction writing is at least as old as, well, the word editor, I suppose, but Simons was suggesting something more dispersed than that–and that new technology was hastening it. We are in danger, she says, of ‘losing our dark and private spaces’. Fellow-panellist Hardy exhorted writers to ensure they were not being ‘watered down’ by their social networking, urging creators to be ‘light online’ but complex in their works Continue reading →