Unbound Ideas » e-readers

E-Book Economics 101

Unbound Ideas — Fri, 12 Feb 2010 15:49:37 +0000

The popularity of E-readers and E-books seems potentially at a tipping point. But publishers and some prominent authors, in our humble opinion, are doing everything they can to keep the new dawn at bay. And why wouldn’t they? With the publishing industry showing record profits, growing like crazy, and connecting so well with customers, what possible incentive do they have for change?

Tap your sarcasm meter now if your needle didn’t register the tone of those remarks by flicking into the red zone. In the meantime, let’s think about what publishers are trying to accomplish by raising e-book prices and delaying e-book release dates….

The music industry dipped its toe into the digital waters with the arrival of the CD. People rightly complained that the album buying experience was diminished by the smaller packaging and narrower range of sound. But CDs prepared people for the real digitization of music. Napster turned songs into (illegal) data streams. i-Tunes legitimized that transaction, but more importantly, it set music sales at a price point that encouraged consumption — and not just any consumption, but “spur of the moment / try something new / buy stuff you’d lost but wanted to own again / own more than you can possibly listen to” consumption.

Record labels didn’t like it. But consumers and musicians largely benefited. i-Tunes now dominates digital music sales, but other economic models are also working. See emusic.com, etc. And music consumption overall is up. We’d get the numbers but we’re too lazy.

In the publishing industry, a good analogy to the transition to CDs is Amazon.com. Amazon prepared us for buying books online. Yes, it hurt independent book stores; but so did the prominence of the big chains. E-readers, and perhaps the i-Pad in particular, represent the i-Tunes stage. As record labels before them attempted to do, publishers are now trying to control that market by impeding it.

Publishers don’t want to cut into traditional book sales, which require people to go to stores or shop at Amazon and put an actual book in their hands. Publishers are delaying the e-release of some big books in order to encourage traditional sales. In what sane industry would you ever tell people to hold off on giving you their money? How many impulse sales are lost when someone gets over the euphoria of a good review or the excitement of a new release, and doesn’t find the time to visit the bookstore?

Then comes price. Amazon tried to set a standard $9.99 price, inspired no doubt by i-Tunes $.99 model. Publishers want that to be $14.99. New hardbacks are priced around $25, which already seems outrageous, but discounts generally lower that price to under $20. Is a $5 discount really going to encourage you to buy that book digitally? Unlikely, since book lovers like to hold books and possess them. An E-reader’s basic advantage is portability and impulse purchasing power. For business travelers in particular they seem like the perfect tool. But when the price of an e-book is close to an actual book, why wouldn’t you hold off on that purchase and see if you really want it later? Consumers know when they are getting squeezed. It makes no sense to be charged a similar price for a digital book when the costs of printing, binding, and shipping that item have been stripped away.

Imagine, on the other hand, a world in which e-books were priced low enough to encourage consumption. Since we’re in fantasy land, let’s say they cost $5 instead of $10. Or maybe you join a club where, for $25 a month, you can download 5 or 10 books. Wouldn’t you buy more books? Perhaps you wouldn’t read them all — perhaps you would only read some of them — but wouldn’t you be excited about them, and talk about them, and share your thoughts about them with your peers? If you really liked a particular book, we bet you’d even go out and get a bound version.

For publishers and authors, isn’t it possible that the margins on higher volume would be attractive? And if you were locked onto your customers digitally, perhaps you could sell them other works, and get direct feedback, and enlist them in viral campaigns?

Inevitably, and eventually, this will happen in spite of misguided efforts to prevent it. Publishers and authors, like musicians and music producers, deserve to be well-compensated for their talent and work. And we’d like to see the industry grow.

When book publishers benchmark the music industry

Unbound Ideas — Fri, 17 Jul 2009 16:03:54 +0000

The Kindle is becoming increasingly common as a reading tool. The iPhone is getting high marks as well. We’re seeing a migration from a print-bound world to an (excuse the plug) unbound one, in terms of how we access the published world. Like the record labels in the past decade, the book publishing industry is resisting the inevitable and overlooking the opportunities for reaching markets in new ways.

Have you ever pre-ordered a new book on Amazon? They’ll charge your card and ship it to you as soon as it’s ready. If you didn’t have that option, you might forget to make the purchase or change your mind. With e-readers, you’d think that access to a new book would be instantaneous. Technically, yes. But publishers are so set in their traditional business model that they’re actually trying to push back the release dates for e-books to give the paper versions a chance to hit the market. Read this article to learn the details.

Slate.com argues that publishing is going to get Napstered as a result. We think they’re just missing a huge chance to fulfill an actual need. Instead of selling more books to people who want them, they’re telling customers to buy them in ways that fit their century-old business model. Way to go guys.

e-reading at Book Expo America

Unbound Ideas — Tue, 02 Jun 2009 15:24:03 +0000

Book Expo America is one of the three major annual events in the world of publishing, along with the London Book Fair and the Frankfurt Book Fair. This year BEA is taking place in New York City. And the buzz is all about e-books.

So far e-books represent 1 to 3 percent of total book sales. But they make up the fastest growing part of the industry, and publishers, authors and booksellers have no idea just how big they will become and how they might affect profits and reading habits in the future.

People will always want paper, but buy-click-download is going to revolutionize the way readers read and authors connect with the market.

M&A in the digital book industry

Unbound Ideas — Tue, 28 Apr 2009 16:14:45 +0000

It may not seem as noteworthy as two railroad giants merging in the late 1800s, but we did see an interesting move in digital publishing yesterday:

Maybe Steve Jobs doesn’t think there’s a market for e-books on the iPhone, but Amazon seems to. On Monday, it acquired Lexcycle, the company that developed the popular Stanza iPhone and iPod-Touch e-book reader application, for an undisclosed sum.

Alas, the competition between the two services seemed promising, but Amazon probably recognizes better than most that when it comes to digital content, consumers want a good e-reader, but they also want flexibility to move between devices. Stanza and Kindle can actually sync your bookmark even when you use your iPhone and your Kindle to read the same book.

I’m reading a vook

Unbound Ideas — Thu, 23 Apr 2009 22:44:56 +0000

This NYT article profiles Bradley Inman, a rare entrepreneur who combines Silicon Valley and New York publishing experience. His Vook.tv is a platform for embedding video and twitter feeds with text, a melding he thinks will be the natural evolution of the digital reader.

Although many thrillers seem “film ready” even on the page, we’re less sold on the idea that fiction should be merged with video and other communication tools. But the idea of turning a business book into a box containing text, online tools, video-cast lectures, and Facebook-style interaction seems not only plausible but exciting. Open the book and the author pops out, along with a social network of other readers with whom you can share and exchange ideas.

A reluctant convert’s unbridled enthusiasm for e-books

Unbound Ideas — Fri, 20 Mar 2009 18:43:01 +0000

At Unbound Ideas, we follow the development of the e-ink and e-reader technology with great interest. We think the “e” is a large part of the future of publishing, and will provide a dramatically new way for readers and authors to connect.

The Morning News is currently holding its Tournament of Books – an event that’s wonderful fun for lovers of fiction.

One of the judges had trouble obtaining one of the books and finally ordered an e-version through Amazon. He was able to read the book on both his Kindle and his i-Phone.

Prior to the experience, I imagined that reading on one of these devices is, for sure, inferior to reading a good, old-fashioned book. I was especially dubious about the iPod, since I’d found the device totally frustrating and unacceptable for reading online newspapers or articles. But I have to tell you, I actually found reading on the iPod totally pleasurable. In fact, I think it’s entirely possible that I read with deeper engagement and absorption than I would’ve had I been reading the physical hard copy.

What’s more the two devices kept in synch as to how far he’d progressed in the book.

When last we left off, I had described the futility of trying to acquire a copy of the physical book despite trips to more than a half-dozen bookstores (chain and indie) a mere four months after the book’s release. Yes, I considered the library, but our local at the time did not have a copy listed, and as I mentioned, I was aware that online options such as tourney sponsor Powell’s as well as Amazon could put the book in my hands within a few days, but I also already had a dozen other titles lined up and it became a low priority. If not for the tournament and more importantly, if not for City of Refuge advancing in the first round, there is no chance I ever would’ve come back to actually read the book as that passing desire would’ve quickly been buried under the avalanche of new books that made it onto my radar.

Our tale ended with me downloading a copy of City of Refuge to my wife’s newly arrived Kindle 2 and the Kindle “app” to my iPod Touch.

I’ve now read City of Refuge, and while I have some things to say about the book itself, I’m going to save them for the next round so I can stop talking about 2666, which mostly seems to annoy our readers.

Instead, I’m going to talk about the experience of reading City of Refuge on my iPod and the Kindle. Here’s the headline: Bookstores Are Screwed Unless They Adapt.

People have no idea how much it pains me to say this. I was, quite literally, raised in an independent bookstore that my mother founded with her partners when I was a year old. She was one of the owners until the year I graduated from college and the store still exists today a couple of storefronts down from its original location. The number of hours I spent reading in a special seating area in the children’s section cannot be calculated. I was practically a human display. Going back to do a reading at the store when Fondling Your Muse came out was one of the highlights of my career as a writer.

I love books, physical books. When I left Chicago for graduate school in Louisiana, the only things in my car were my dog, my guitar, and my books. As I type this, I am surrounded by books and if my office were bigger, I’d be surrounded by even more of them because I have easily twice as many stowed away in boxes. I can look at my shelves and remember the time and the place I read each book.

But now that I’ve read City of Refuge on a digital device (70% on the iPod/30% on the Kindle), I can now see the future and it looks very, very different for publishers, writers, and booksellers.

Prior to the experience, I imagined that reading on one of these devices is, for sure, inferior to reading a good, old-fashioned book. I was especially dubious about the iPod, since I’d found the device totally frustrating and unacceptable for reading online newspapers or articles. But I have to tell you, I actually found reading on the iPod totally pleasurable. In fact, I think it’s entirely possible that I read with deeper engagement and absorption than I would’ve had I been reading the physical hard copy.

I know, blasphemy.

Rather than being a liability, the small screen is an asset because it makes it almost impossible to skim since there’s not enough text on the screen to bother skimming. If I lose focus while I’m reading a physical book, I often find myself skipping down the page, looking for a fresh point of purchase into the text. With the iPod, it was remarkably easy to stay absorbed in the text. (That City of Refuge is an absorbing book likely had something to do with it.) On the Kindle itself I had much the same sensation. Plus, whenever I switched between the two devices, thanks to some sort of magic fairy dust sent through the ether between them, each device always knew where I was in the book.

In the end, my experience reinforced what I think we all know, but are perhaps afraid to admit because it means reconciling with the change that’s going to come: it’s the content that’s important, not the container. I’m not saying that digital technology is going to wipe out printed books or bookstores altogether, but in an industry already in decline and needing very little to topple it over the edge, it is going to cause radical changes.

The good news is that I think most of them, ultimately, will be for the good. I don’t think anyone believes the Shamrock Shake limited-time-only hardcover release-and-return policy is viable. I also think books are a product that deserve and demand the chance to live beyond that three-month window that the current publishing model is tied to.

I think I know all the objections most people have to e-book platforms because I would’ve agreed with them until I actually tried them. The distribution system that’s tied to the Kindle is simply and literally killer. One of the commenters on the round where I offered my initial rant called my expectations to be able to acquire a book in less than three days at a price below list “ridiculous,” and while I’ll admit that those wishes have more than a whiff of entitlement, they exist because they are the reality of the marketplace as it exists right now. People almost never pay full-price for books, particularly hardcover books, and on-demand isn’t just a service on my cable, it’s the prevailing attitude of the American consumer. We can bemoan the prevalence of this attitude all we want, but those lamentations aren’t going to save publishing. We are where we are and trying to talk book buyers out of their wishes isn’t going to help much.

Now, I’ve got all kinds of qualms about Amazon’s digital rights management policy and the potential for them to choke out the e-distribution market. I’d love to see some kind of universal distribution format that would allow someone like tourney-sponsor Powell’s to compete on equal footing in this arena, because, in reality, even with a different distribution model, we’re still going to find most of our reading via good old-fashioned word-of-mouth (even if the mouth is the Internet, as illustrated below) and a company like Powell’s that is tied into readers and offers additional value to the book selection process in ways Amazon doesn’t and can’t, likeBrockman’s blog or their staff picks can be plenty competitive. One of the reasons I’m so exercised about this stuff is because I desperately want to sound the alarm so we can all get on the train before the whistle blows and it leaves the station with just Amazon on board.

If the bookstores we love are going to survive, they’re going to have to change to meet the new reality. I think the additional good news is that independent stores are in much better position to adapt to the technology than the big-box chains. The advantage Barnes & Noble has over most independents is the amount of inventory. With changes in distribution, this is no advantage at all. We already see Borders essentially circling the drain and Barnes & Noble suffering significant declines in sales. We’re still going to need places that support and nurture book culture and that’s what independent stores can do in a way that Barnes & Noble can’t. Independent stores that experiment and find a niche in the changing landscape will not only survive, but thrive, as long as they don’t bury their heads in the sand and try to wish away reality.

One last anecdote to reinforce how and why I think change is going to come. Some months ago, on Jessa Crispin’s Bookslut I read a short piece about the reissuing of Raven: The Untold Story about Jim Jones and His People to coincide with the 30th anniversary of the Jonestown Massacre. At the time, I filed this nugget away in my mental rolodex, thinking it sounded like a cool book that I should look for some time. As luck would have it, I literally tripped across it in the store about a week later and bought it, even though I knew that I had tons of reading for the ToB ahead of me because I also knew it was entirely possible, or even probable that when I did want to try to read it, I wouldn’t be able to find a copy.

Last night, for the first time since I started reading for the tournament I found myself looking for a new book and I chose Raven. As my wife clicked away happily on her Kindle next to me (she’s reading Trevor Corson’s The Secret Life of Lobsters), I cracked Raven and learned that the book had been out of print for many, many years since its original publication in 1982, something that would never have happened with digitally available books. I also realized that this monster is close to two pounds with big pages and small print and I could not comfortably balance it in on my chest with one hand.